Ron Trujillo | Aug 21, 2019 | 0
Apartment life: Pay more, get less space
By Ron Trujillofirstname.lastname@example.org
Feeling the squeeze, in the wallet and between the walls? Well, you’re not alone, apartments nationwide — and in much of California — are costing more and getting smaller.
California has the smallest average apartments in the nation at 837 square feet, compared to the national average of 882 square feet. New apartments in the state are the primary reason, decreasing in size 12% — or 116 square feet — during the past 10 years.
Blame the Bay Area and it’s high housing costs for more pint-sized apartments? Nope, point the finger at Southern California, really.
Los Angeles-area apartments shrank by 18%, the third most “shrinkage” in the nation, with irvine close behind at 16%. San Francisco-area apartments actually increased in square footage by 13% compared to 2008.
How rent and space have changed in California compared to 2008:
- San Jose: Up 63% to $2,722; 4% less space
- Los Angeles: Up 46% to $2,404; 18% less space
- San Diego: Up 47% to $2,160; 9% less space
- San Francisco: Up 65% to $3,591; 13% more space
- Irvine: Up 24% to $2,365; 16% less space
Nationwide, the average apartment is 941 square feet, 5% smaller (about 47 feet) than a decade ago. Meanwhile, rents have increased 28% during the past decade, according to RENTCafe.
Photo of apartment building in Pasadena by Sundry Photography/Shutterstock
Equity up $37,000 in Q3 vs. year ago
California homeowners should celebrate. Even with a market slowdown, the state boasted the largest equity gain during the third quarter in the U.S. compared to a year ago, according to CoreLogic.
The state’s average home value increased $37,000 during the July-through-September period, outpacing second place Nevada ($33,000) and Washington state ($27,000).
As homeowners enjoy hefty equity gains, few are facing negative equity. Only 2.3% of homeowners with a mortgage are considered “underwater,” where they owe more than the current value of their home.
California’s negative equity rate is one of the lowest in the nation, led by Utah and Washington state at 1.5%, according to CoreLogic.
San Francisco has the lowest negative equity rate among cities in the nation at 0.6%, with Los Angeles at 1.6%.
Photo of Santa Monica bungalow by Divanov/Shutterstock
Flipping activity, profits decline in Q3, could serve as ‘canary in the coal mine for a cooling housing market’
The dream of buying, fixing and flipping homes became more like a nightmare during the third quarter, falling to the lowest level since first-quarter 2015, according to ATTOM Data Solutions.
Flippers sold 45,901 homes during the July-through-September period, a 12% decline compared to a year ago. Flipped homes accounted for 5% of all home sales in the third quarter, the smallest percentage since third-quarter 2016.
And the dream of a big financial gain has declined, with the average home flipped selling for an average of $63,000 more than the purchase price, down from the all-time high of $68,000 gross flipping profit in the first quarter — and off from the $65,000 profit a year ago. The “flipper” profit margin is the lowest since second-quarter 2016.
Some housing experts say a decline in flipping activity and drop in profit are a negative sign for the overall housing market.
“Home flipping acts as a canary in the coal mine for a cooling housing market because the high velocity of transactions provides home flippers with some of the best and most real-time data on how the market is trending,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “We’ve now seen three consecutive quarters with year-over-year decades in home flips. The last time that happened was in 2014 following the mortgage rate jump in the second half of 2013, but it’s still far from the 11 consecutive quarters with year-over-year decades in home flips extending from second quarter 2006 through fourth quarter 2008 and leading up to the last housing crash.”
ATTOM Data Solutions did not release state or metropolitan area data. However, California and regions in the state were not specifically cited in the quarterly report.