Hello Mid City residents and Real Estate enthusiasts! Nathan Derry here, your dedicated Realtor with JohnHart Real Estate, bringing you the latest market insights for May 2024. Let's take a closer look at the current market trends and discuss how the new California law AB12 might impact our real estate landscape.

Absorption Rate and Market Activity

In May 2024, Mid City, 90019, experienced an absorption rate of 27%. This means out of the 37 active listings, 10 properties were sold, indicating a steady demand in the area. The average sales price for these transactions was $1,667,500, and homes spent an average of just 22 days on the market (DOM). This relatively short DOM suggests a brisk market where properties are moving quickly.

Understanding the Absorption Rate

An absorption rate of 27% indicates a balanced market, leaning slightly towards a buyer's market. This figure is crucial for both buyers and sellers as it helps gauge the demand and supply dynamics in Mid City. For sellers, it means pricing the home competitively is essential, while buyers can anticipate a reasonable selection of properties to choose from.

Impact of California's New Law AB12

One significant legislative change that all investors should be aware of is California's AB12, which has introduced new regulations regarding security deposits. Here’s a breakdown of the key provisions and how they could affect investors:

1. Security Deposit Cap:

   • AB12 caps security deposits for residential properties at one month's rent. Previously, landlords could demand up to two or three months' rent, providing a financial cushion for potential damages or unpaid rent. This cap aims to reduce the financial burden on tenants at the start of their lease.

2. Advance Payments and Mutual Agreements:

   • The law allows for an advance payment of at least six months' rent if the lease term is six months or longer. It also permits landlords and tenants to mutually agree on additional charges for specific alterations requested by the tenant, which are outside of regular cleaning or repairs.

3. Handling and Returning Security Deposits:

   • Landlords must hold security deposits for the tenant who is a party to the lease and cannot use these funds for any purpose other than those specified, such as covering unpaid rent, repairing damages beyond ordinary wear and tear, and cleaning the premises.
   • Within 21 days after a tenant vacates, landlords are required to provide an itemized statement of deductions and return the remaining deposit.

4. Initial Inspection Rights:

   • Tenants have the right to request an initial inspection before the end of their lease term to identify any issues that need addressing to avoid deductions from their security deposit. This encourages transparency and allows tenants to remedy problems before moving out.

Potential Implications for Investors

• Financial Adjustments: With the cap on security deposits, investors might need to adjust their financial strategies. The reduced security deposit amount could mean less immediate financial protection against potential damages or unpaid rent.

• Tenant Relations: The requirement for initial inspections could lead to better-maintained properties and fewer disputes over deposit returns. This transparency can improve landlord-tenant relationships and potentially reduce vacancy rates.

• Market Appeal: AB12 makes renting more accessible by lowering upfront costs for tenants. This could broaden the tenant pool, making properties more attractive to potential renters and possibly leading to higher occupancy rates.

By staying informed about these changes, homeowners and investors can make strategic decisions to navigate the evolving real estate landscape. If you have any questions or need further assistance, feel free to contact me at 424-303-0440.

All the best,

Nathan Derry JohnHart Real Estate

📍JohnHart Real Estate

📞(424) 303-0440

📧 nathan@jhagents.com

👨🏽‍💻 itsnathanderry.com

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