Businesses Are Preparing for Smaller Thanksgivings

Throughout the US, COVID-19 is threatening to put a damper on people’s Thanksgiving celebrations. Families don’t want to break tradition, but many will have to settle for smaller gatherings of only close family members. With fewer people, the normal Thanksgiving fare will surely create plenty of leftovers, even with the tradition of stuffing yourself to overfull. Luckily, businesses are ready for it, so you don’t have to buy a 25 pound turkey.

Some companies are offering measly four-pound turkeys — wouldn’t cut it during your traditional festivities with all your distant relatives, but perfect for a family of six. Restaurants are preparing full meals, available for takeout, serving four to six people. Others are banking on people bucking the trend and buying prime rib, pork, sausage, ground beef, or even lobster. Vegan restaurants are also making necessary preparations. One thing is for sure, though: grocers and restaurants are definitely not going to be losing money. They’re actually expecting far more sales, since there will be a greater number of smaller celebrations.

Photo by Annie Spratt on Unsplash

More: https://www.lancasterfarming.com/farm_life/food_and_recipes/smaller-turkeys-yams-to-go-or-a-thanksgiving-lobster-covid-19-will-transform-holiday-meals/article_b68d5e9c-54ea-53a0-a571-2207005ed16a.html

Real Estate Sales, Oct. 2020

We’re looking at sales in the South Bay area of Los Angeles a little differently than usual this month. Typically we analyze the area as a single entity. This month we’ll divide the South Bay into four parts, allowing you to see a greater level of precision about those four areas.

Within each area the homes will be more similar, both in style and in pricing. We started by combining the four beach cities, El Segundo, Manhattan Beach, Hermosa Beach and Redondo Beach. Each of the cities has it’s own unique character, but they share many common traits. (If your home is in Hollywood Riviera, you can consider yourself one with the beach cities.)

The cities on the Palos Verdes Peninsula come together naturally, so we’ve combined Palos Verdes Estates, Rolling Hills Estates, Rolling Hills and Rancho Palos Verdes.

While Torrance does have it’s own beach, most of the city has more of an inland character, so we’ve combined it with Lomita and Gardena. One immediate benefit is the median prices are more representative of actual prices in those three communities.

Finally, we conjoined San Pedro, Long Beach, Harbor City, Wilmington and Carson, collecting the harbor area cities together.

Beach Cities

Prices have been trending up at a pretty rapid pace for most of the year, so it was a real surprise to find the median price in the Beach Cities had dropped by 6% from the September numbers. Last month the median price was $1.5M, while October only came in at $1.41M. Likewise, the number of sales dropped by a surprising 20%, from 209 sales in September, to 167 in October.

Year over year, beach prices increased by an impressive 17%, from $1.2M last October to $1.4M this October. Over the same time frame, sales volume went up by 45%, climbing from 115 units in October 2019, to 167 units in October of 2020.

Photo by Nathan Dumlao on Unsplash

Palos Verdes

On the Peninsula is where you really want to be in 2020. Prices and sales volume increased month to month and year to year. From last month to this month was on par with most of the South Bay, with the October median price of $1.68M coming in 5% above September’s median of $1.6M. The sales volume increase was a modest 3%, going from 95 units to 98.

The real treat for the PV cities is the 2020 over 2019 sales prices. October of last year showed a median price of $1.2M versus $1.68M this year. That’s a whopping 36% median price increase in 12 months. At the same time, October unit sales jumped 51% from 65 homes sold in 2019 to 98 sold in 2020.

Inland Cities

Going just a short distance away from the sandy shores of the beach, or from the bluffs of Palos Verdes, makes a huge difference in property prices. Like the coastal cities, the inland cities showed a 6% increase in prices from September to October. In contrast to the beach and the hill, the median price only went up $40K, from $719K to $759K. Like the beach cities, fewer inland homes were sold in October falling 11% from September. The drop wasn’t as great, going from 183 units in September to 163 in October of 2020.

October of 2020 versus October of 2019, the inland cities had median prices go up by 9%, from $600K to $656K. At the same time, the number of sales dropped by unit, from 164 homes sold, to 163 homes sold this October.

Photo by Dominik Lückmann on Unsplash

Harbor Cities

Median price in the harbor cities is typically lower than anywhere else in the South Bay. Similarly, price increases are slower. For example, while the rest of the areas saw 5-6% increases in month to month sales prices, the harbor came in at 3%. From September to October, the median increased from $636K to $656K. During the same time frame, the number of homes sold climbed 5%, from 435 to 457 units.

Comparing last October to this October, homes in the harbor area enjoyed a slightly more sustainable 9% rise in median price. The median for October 2019 was $600K compared to $656K this October. Sales volume jumped by 15%, from 397 units last year to 457 this year.

Why These Crazy Numbers?!

They are crazy, you know. There is no way prices can continue to climb at 5-6% per month. That’s more like what we would expect on a year over year increase.

October2020September2020ChangeM-M
Med Sales $Sales #Med Sales $Sales #Med Sales $Sales #
Beach1,407,5001671,500,000209-6%-2%
PV1,682,750981,600,00095+5%+3%
Inland759,000163719,000183+6%-11%
Harbor656,000457636,000435+3%+5%
So Bay820,000885799,500922+3%-4%
It’s been a long time since we’ve seen Beach Cities prices decline. We’ll be watching November closely.

The answer lies in the interest rates. One the borrowing side, mortgage interest rates have been under 3% for some time now. With rates that low, many people who couldn’t afford to buy a home before, now qualify for a loan. Those who are still employed despite Covid-19 are buying homes if at all possible.

The demand created by that phenomenon has created a plethora of bidding wars. Homes with 20 offers on them are not uncommon. All those offers are pushing prices up at clearly unsustainable rates.

October2020October2019Change %Y-Y
Med Sales $Sales #Med Sales $Sales #Med Sales $Sales #
Beach1,407,5001671,202,00011517%45%
PV1,682,750981,233,0006536%51%
Inland759,000163680,00016412%-1%
Harbor656,000457600,0003979%15%
So Bay820,000885699,00074117%19%

Adding to the entry level buyers who are driving the market at the low end, there is another group who have cash in the bank. Unfortunately, that cash is only earning 1%, or less. Those buyers are watching the price of real estate climb astronomically, and are hoping to cash in on a windfall profit. Some of them will.

The Crystal Ball

Watching the median price drop at the beach by 6% is a hint at what’s coming next. We can’t be sure when it will happen, but steeply escalating prices inevitably plummet in a subsequent correction. Current increases are reminiscent of the rapid run-up of prices in 2006-2007 which resulted in the Great Recession.

Further complicating matters, today we have government and consumer response to Covid-19 as a uncontrollable factor. The third quarter of 2020 looked really good compared to the second quarter, until we remember the coronavirus struck in March. Business during the second quarter was essentially nil.

We can’t forget the election. Fallout from the presidential election could push the economy in any one of several directions depending on who the President is, and the degree of polarization in the Federal government.

One would need a crystal ball to forecast this winter, but I predict a volatile ride for the real estate market.

Crystal ball image by Jamie Street on Unsplash

Investors Expect Remote Work Trend to Continue


In a previous post (found here: https://www.beachchatter.com/2020/10/29/post-covid-real-estate-predictions/) we made some predictions about which trends during the pandemic may be permanent and which may be temporary. In that article, we predicted that the drop in urban desirability as a result of being able to work from home would be temporary, and though people would be moving South, others would eventually take their place in urban industry centers. Investors seem to be willing to bet on remote work, though. We do see people moving away from industrial centers such as San Francisco to cheaper areas like Sacramento, at the same time that commercial investors are putting money into Sacramento. The consensus appears to be that even though job centers will recover slightly after the pandemic is over, there are enough businesses embracing remote work that putting money into cheaper areas now before their popularity skyrockets is a worthwhile investment, and expensive urban areas aren’t a solid investment anymore

Photo by Austin Distel on Unsplash

More: https://journal.firsttuesday.us/commercial-investors-are-betting-the-remote-work-trend-will-continue/74870/

Stop Water Damage Before It Happens

As we’re approaching the winter months, we’re likely to see an increase in precipitation. Most areas of California don’t get snow, but rain could be an issue if it’s able to cause water damage. Fortunately, there are several things you can do to prevent water damage from the rain. Preventative maintenance does cost money, but it’s usually a worthwhile investment, since repairing damage after the fact can often cost even more.

One thing you can do yourself if you don’t want an extra expense is to clear gutters and drains of debris that could prevent the rainwater from draining, though you can also hire a professional to do this for you. The same is true of tree trimming in wind-prone areas. You can hire a contractor to inspect your windows, doors, skylight, and roof to ensure tight seals and detect any potential issues. Something you’ll definitely want a trained professional for is inspecting the foundation, retaining walls, and concrete sloping for defects.

Photo by Danielle Dolson on Unsplash

SoCalGas Stations Will Begin Using California-Sourced Renewable Fuel

For the past year, Southern California Gas Co. has been using renewable natural gas (RNG) sourced from out of state. Now, they’ve partnered with a California company, Calgren, to source their RNG from in-state. Calgren is the largest dairy biogas company in the US. Incentive programs in California will likely bring other companies to do similar, and it’s expected that California will have over 160 RNG facilities with the next three to four years.

The RNG Calgren produces is derived from methane from cattle waste. This is doubly effective because it not only is a source of renewable energy, but also prevents large amounts of methane from reaching the atmosphere, where it would function as a greenhouse gas to accelerate climate change, unlike the renewable fuel produced from it. California has also recently enacted legislation to allow for other sources of renewable natural gas, such as dead trees, which will help the process of becoming carbon-neutral.

Photo by Jakob Cotton on Unsplash

More: https://sempra.mediaroom.com/index.php?s=19080&item=137843

The Impact of Climate Change on Real Estate

Climate change has been a hot topic for debate for decades, but what no one seems to be discussing is how it has affected real estate. Climate change can drastically affect the frequency and severity of natural disasters. Natural disasters such as wildfires and hurricanes are known to temporarily displace evacuees, but in many cases displaced people remain in their new location much longer than expected, either because they are unable to return or simply choose not to. Even the threat of a natural disaster that hasn’t occurred yet can prompt people to move away from a disaster-prone area

What does this mean for real estate? It means that disaster-prone areas are losing significant value, and less prone areas are gaining an influx of new residents that they may not have the ability to house. After all, the housing shortage is still in full effect and the displaced residents may not be able to afford much, due to the likely lesser value of their previous home. People across the real estate industry need to work together to identify the key factors of where people may want to leave, where they may want to go, and how they’re going to acquire housing, as well as work to reduce our environmental impact.

Photo by NOAA on Unsplash

More: https://magazine.realtor/daily-news/2020/10/16/experts-displacement-from-climate-change-may-alter-industry

Harvard Professor Explains How Masks Work

Joseph G. Allen is an Assistant Professor of Public Health at Harvard and Director of their Healthy Buildings program. The New York Times has worked with him as well as several other professors to explain the process behind masks, to demonstrate that they do indeed work. In essence, particles get bounced around inside the fibers and trapped there. Interestingly, in the case of most masks, which are generally made of tightly woven cotton, the particles least likely to get trapped are medium size particles, as they’re big enough to be less influenced by surrounding air molecules yet small enough to not randomly make contact with the fibers as often. Large particles are most likely to get trapped, followed by small particles. Coronavirus particles are small and often get carried inside large particles, so they are in the two categories more likely to be caught by the fibers.

Photo by Photoholgic on Unsplash

NY Times has created an infographic demonstrating the process. You can find that here: https://www.nytimes.com/interactive/2020/10/30/science/wear-mask-covid-particles-ul.html

Second Project Homekey Purchase Approved


Los Angeles County and the City of Long Beach have been working with Project Homekey, a California state project designed to create more affordable housing by converting hotels into homeless housing. The project was started during the pandemic. The purchase of a Holiday Inn location in Long Beach had already been approved on October 13th, and on October 20th another location was approved in Los Angeles, the Motel 6 on 5665 E. Seventh St.

Long Beach is aiming to purchase another yet undisclosed location as well. The city has asked for up to $36 million from the Project Homekey fund, majority funding for which is from Coronavirus Aid Relief Funds. The city council isn’t expecting to be approved for the full amount, but is hoping to get at least $15 million to go toward acquisition and operating costs.

Photo by Gabriel Alenius on Unsplash

More: https://lbbusinessjournal.com/supervisors-approve-purchase-of-second-hotel-for-conversion-to-homeless-housing

The K-Shaped Recovery: What Is It?

You’ve probably heard of a W-shaped recovery, even if you don’t know what it means. This refers to a false start in recovery, whereby the economy is improving in one sector, but doesn’t have the momentum to continue recovering, so it wobbles a bit. This has been what experts believed the current recovery would be like. Now, though, some people are wanting to call the recession and recovery K-shaped. What does this mean? It means that some sectors will recover and retain their momentum, while other sectors haven’t yet left the recession and continue downward. In other words, the recession has very clearly disproportionately affected various groups.

More specifically, this recession has had comparatively little impact on wealthy individuals. People with higher paying jobs are more likely to work in fields that can be done from home, so they haven’t been out of work during the pandemic. People who have the capital to invest in stocks as their primary means of income don’t have to worry so much about the pandemic, since stocks can’t get sick. They’ve actually been on an upward trend since before the lockdowns even began. Even those higher-income workers who did experience losses won’t have as much necessary expenditure proportional to income as those living paycheck to paycheck. This means that the recession has significantly widened the already large income inequality gap.

Photo by Volodymyr Hryshchenko on Unsplash

More: https://journal.firsttuesday.us/2020-recession-stretches-income-inequality/74733/

Incorporating a Home Office into Your Home


The trend of home offices is continuing to rise, and wasn’t just a result of the pandemic. In fact, it was already on the rise before the pandemic started. Some people already had spaces for a home office, others attempted to make do with what space they had. Now, builders and renovators are catching on and looking for ways to incorporate home offices into their plans.

The problem that designers are tackling is creating a space that works for everyone. Builders know that the space needs to be flexible, so they’re making flex spaces, usually on the main floor. But many people also want their home offices to be private. Sharing office space, even with someone who lives with you, can be loud or distracting. Combined with the fact that many homes don’t have a lot of space to work with, spaces for home offices must be large enough to do the work you need to do, yet small enough to be a separate space. It’s a difficult balance.

Photo by Standsome Worklifestyle on Unsplash

More: https://magazine.realtor/home-and-design/feature/article/2020/10/homework-the-rise-of-the-home-office