Claremont real estate remains a hot commodity
by Steven Felschundneff | firstname.lastname@example.org
Anyone with a passing interest in buying a home undoubtedly has heard that prices are rapidly increasing. Fueled by a combination of low interest rates and the scarcest inventory in a generation, many locales are experiencing bidding wars that were a hallmark of the big run up in prices back in 2006 and 2007.
“The first quarter of 2021 has been the craziest three months the Claremont market has ever seen,” Ryan Zimmerman, broker associate with Wheeler Steffen Sotheby’s International Realty, said.
Just about any Claremont home that is priced right and marketed well is selling within a week, with many receiving multiple offers, and the best properties selling for up to $100,000 over asking price. Given the frenetic pace, what should a prospective buyer do to ensure they come out the winner?
“That is a tough question. Honestly, I’d have them put their best foot forward right off the bat with a strong offer,” Mr. Zimmerman said. In the past a good strategy was to leave some room to make a counteroffer, but with so many homes receiving multiple good offers, there is little chance that even a well-qualified buyer will get the chance to counter.
It helps to have a pile of cash, but if one is financing, then make sure that all preapproval documents are in order prior to submitting an offer. Plus, if sellers receive multiple offers they will likely pick the buyer with the fewest number of contingencies.
Homes under $1 million are drawing the most competition with seven to 10 offers. However, the condominium and townhome market is not nearly as hot, even though these homes tend to be priced well below $1 million in Claremont. Mr. Zimmerman said condos are still selling well, but more similar to a normal market rather than a super heated one.
One reason the condominium market may be lagging is the changing profile of the typical Claremont home shopper. Traditionally, those looking to buy in Claremont have been locals moving up to a nicer or larger abode and seniors seeking to downsize. But there is a new pool of potential buyers—people from the westside of L.A. County who are bargain shopping. Those buyers may be selling a cramped condo for very good money and have their eyes on a single family home.
Mr. Zimmerman said he had a client who sold a condo in Burbank for $750,000 and was looking at homes in the $900,000 range. But for that extra money, the buyer was getting a large plot of land with one or two extra rooms and maybe even a pool. Plus, the amenities Claremont offers including the Village restaurants and of course, Claremont Unified schools.
In the first quarter of 2021, the median sales price of a home in Claremont was $780,000, an increase of 12 percent from one year ago. The median is the price point at which half of the homes sold for more and half sold for less. The average sold price over that same period was $870,441, an increase of 17.6 percent. Sales volume is up as well, from 77 sold homes during the first quarter of last year compared with 87 this year, a 13 percent increase.
In Southern California, home prices soared in March, with the six-county region’s median home price surging 14.5 percent from a year earlier to $630,000, according to real estate tracking firm DQ
News. In Los Angeles County, the median price rose 17.2 percent to $750,000. San Bernardino County showed the biggest increase by percentage, rising 18.3 percent to $429,500.
So what is driving the sharp increase in prices? It’s the simple economics of supply and demand.
The low inventory of available homes may be the primary reason, combined with historically low interest rates that make borrowing money cheap.
The coronavirus is another complicating factor because for the last year many potential home sellers were nervous about having strangers in their homes opening cabinets and generally touching things. That is less of a concern now as more people get vaccinated but it remains a lingering factor.
Many homeowners who may want to cash in on the hot market are hesitant to do so because that would thrust them into the buyer’s market. And since everybody has to live somewhere, once they sell, they would either have to rent, which is also very competitive, or could end up paying a premium for their next home.
Add to that the fact that many employers, large and small, have come to realize they don’t need to have all of their workforce in the office 9 a.m. to 5 p.m., five days a week. Hence, workers are no longer tied to the concept of keeping the daily commute short and can explore living farther away from the big city.
One change that could cool the market would be if mortgage rates were to increase, which is a real possibility as the national economy recovers from the coronavirus, bringing with it rising inflation.
“The reason prices are going up now is the lowest inventory ever, relatively cheap money and an increase in demand. It’s just basic economics. Extreme high demand and extreme low supply results in increased prices,” Mr. Zimmerman said.
There has been plenty of speculation that prices are due for another correction, however, for the moment that seems unlikely. Most significantly because the dynamics of this bull market are vastly different from the one that triggered the Great Recession. Mortgage brokers, banks and other lenders are not taking the types of risks with borrowers that were common 15 years ago, which eventually imploded.
“That is not the case this time, [banks] are not giving bad loans to people who cannot afford them,” Mr. Zimmerman said.
As of last Friday, there were 28 Claremont homes listed for sale via a popular website which gives the public access to the local multiple listing service. Eighteen of these homes, including condominiums and townhomes, were priced under $1 million. The lowest price single-family residence was a three-bedroom, one-bath house with an accessory dwelling unit priced at $660,000. The most expensive was a remodeled four-bedroom, 5.5-bathroom craftsman in the Village for $3,488,000.
“Money is too cheap right now so the frenzy continues,” Mr. Zimmerman said.