Timely Real Estate News………………………….1 August 2016
Between January and June of this year, 432 homes sold, which is 20 more than the first half of 2015. During the same period, Brentwood saw a 16 % increase in the number of homes sold in that period compared with the same quarter last year. There were 37 home sales, compared to 32 the previous year.
Beverly Hills and Pacific Palisades both saw an annual dip of 40 % and 44 % in home sales, respectively, but of the top five L.A. neighborhoods for home sales, the two ranked in the no. 2 and no. 3 spots. There were 26 homes sold in Beverly Hills and 25 in Pacific Palisades in Q2. Rounding out the top five neighborhoods, Santa Monica and Sunset Strip Hollywood Hills West both saw a year-over-year increase of 14 % and 10 %, respectively.
Luxury homes could face challenges under new ruling
In an effort to stop the use of laundered monies being used to pay cash for properties over $2,000,000, effective 28 August 2016, any properties being purchased for cash or in an LLC will have to be vetted prior to the deeds being recorded. There will be a 120 day trail period before this goes into permanent effect. This requirement which is already in place in both New York, and Florida is a requirement of the US Treasury Department, and is working quite well.
Los Angeles has long had a history of some exciting real estate purchases, including some criminals who had hidden the sources for their monies. Under the new rules, buyers will not only have to reveal their personal identities but also provide photo identification. This process — so far — is going to be managed by both the title and escrow companies. They are working out the details as to how to handle these new requirements
“In some cases, this is going to be interesting and a challenge,” Carole Schiffer stated, “as it could very well cause delays in getting proper identification. For example, who is to verify that the photo submitted is actually the person purchasing the property. Hopefully it will not present too many delays in how these transactions will be handled.”
NOTE: Please look out for The Schiffer Line’s July 15 comprehensive report on your community where we analyze median sales prices, days on market, and overall sales volume. If you are not getting your e-copy, please respond to: email@example.com The price is right… It’s free!
Housing market competitive…in U.S. and in California
Based on pending home sales, in separate reports from both the National and California Realtors Associations, the housing market remains competitive. California is moving slightly ahead as its June Market Pulse Survey which was taken by the CAR reflected a slight increase in sales with three or more offers over the previous year, particularly in homes priced $300,000-$399,000, which climbed from 8% in June 2015 to 18% this year.
Based on signed contracts, on an annual basis statewide pending home sales rose in June, with the Pending Home Sales Index increasing 3.2% from 123.4 in June 2015 to 127.3 in June 2016,. With pending sales on a rising trend in the past couple of months, June’s increase should portend for higher closed transactions in July and August.
Nationally however, the results were uneven — pending home sales were moving ahead in the Northeast. But in the West, pending homes sales were slightly down. “Pending home sales is solid indicator of future ‘closed’ sales and reflect the number of homes which have formally entered the escrow process,” Carole Schiffer stated. “We always look for ‘what’s in the funnel, and it appears that for California, we’re keeping the pipeline full.” “ As we go further down the calendar for the remainder of the year, it is important for us all to remember that what we are seeing as completed sales or closed escrow, are actually sales that took place in the previous 2 -3 months”.
Los Angeles County was up 5.5% for pending sales compared to last year.
National pending sales up slightly
On a national scale, however, the US Pending Home Sales Index inched 0.2% to 111.0 in June from 110.8 in May and is now 1.0 % higher than June 2015 (109.9). With last month’s minor improvement, the index is now at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level in April (115.0). “This is a good news for the housing market nationwide,” Carole said.
According to NAR’s chief economist, Lawrence Yun, “unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6% from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”
One of the more positive signs according to the NAR is that the number of homes sold to investors, who have focused on distressed homes for re-investment purposes, has come down from a high of 18% to 11%. This will result in more available homes for first-time buyers.
Job #1 is “curb appeal” — get the buyer out of the car
What good is it to have new bathrooms, an up-to-date kitchen and a beautiful interior if the homebuyers don’t get out of their car when they pull up to your home? It is estimated that 50% of all home-buying decisions are made before the prospects get out of the car — that’s how powerful curb appeal is. Curb appeal is considered by many to be the best marketing tactic for selling a respective property, and for good reason.
Even though most buyers start their home search with their computers and smartphones, eventually they show up at your curb. First impressions count…and nothing else has the potential to attract more prospective buyers than a good looking home. At the very least, a well-maintained front yard will increase exposure and interest, two invaluable aspects of selling a home in a timely and profitable manner.
However, much like the housing market itself, the way we view curb appeal is constantly shifting. And in these shifting times, especially in Southern California where water restrictions have caused major changes in what buyers see from the curb, one has to be savvy-smart about presentation and providing low-maintenance landscaping. Buyers immediately envision the impact your landscaping has on their role in maintaining the property, in good and bad water crisis. They also look at the potential expense of maintaining a garden that is landscaped no or a few water tolerant plants.
“She loves me. She loves me not” — Fed holds off rate increase
OK, she loves me this month. Following a two-day meeting, central bank officials voted to keep the federal funds rate at between 0.25% and 0.5%, where it has been since December.
Federal Reserve policymakers said last week they were holding a key interest rate steady but signaled a hike could come this fall as their concerns have eased about a slowing job market and the fallout from Britain’s vote to leave the European Union. ”However, not to be a skeptic, we have danced to this tune before, and I personally do not see any changes until after the November election”.
Economy hits a bump in the road…..More somber news recently arrived when the Commerce Department announced a “surprisingly anemic” 1.2% annual growth rate for the second quarter. As reported in the Los Angeles Times, according to economists, “…the economy’s performance could cause the Federal Reserve policymakers to hold off on another interest rate hike until at least December.”
After the poor first half of 2016, economic growth this year is likely to tumble below 2% this year. That would be down from the 2.6% growth last year and below the sluggish pace that has marked the recovery from the Great Recession.
Like it or not…FICO scores still matter
Want a home loan? In a recent Los Angeles Times article, the value of maintaining your FICO score was discussed. In a review of the credit-granting industry, most mortgage lenders still rely on your FICO score, even though there’s a burgeoning cottage industry in finding “other ways” to judge a borrower’s ability to repay a loan. For decades, the FICO score has been the dominant metric for deciding whether a borrower is creditworthy. When applying for a mortgage, a car loan or a credit card, chances are that a FICO score is one of the first things a lender looks at.
Over the last few years, a new breed of online lenders and credit scoring firms have started developing their own methods of judging whether a borrower is a good bet. Some are focused on consumers who don’t have enough financial track record to have a FICO score. Others simply believe that they have a better method. These lenders may have their ‘own system’ of evaluating borrowers’ credit history and will take into consideration whether you studied in college or your current job performance.
At the end of the day, your FICO score remains the #1 starting point for major lenders in evaluating a person’s ability to repay debt. It’s that simple. More than 200 million Americans have a FICO score and 695 is the average score. Paying your debts on time remains the #1 measurement lenders look at, which is reflected in your FICO score.
We’re selling homes faster, it just may not seem like it
Robin Williams said it best…”Did you ever get the feeling that the world was a tuxedo and you were a pair of brown shoes?” Well, perhaps you might be feeling that way when you read that homes in Los Angeles are selling faster by one full week compared to a year ago. And yours isn’t budging.
Of course, diminishing supply spurs increased prices and shorter periods on the market because of increased demand. The average selling time in June was 78 days until cthe closing of escrow (recordation of the deed transferring title to the new owner)…but in 2010, the average time on market was 10 months!
Los Angeles homes moved off the market at a median 64 days in June, the same as last year, but inventory dropped almost 8%. The median home value in the L.A. metro reached $572,400 in June.
I will have a complete report on Days on Market, Pricing, and Sales volume in my August 15 SchifferLine. Email me for your online copy — it’s free: firstname.lastname@example.org
This and that
Do you like Sergio Mendes? I have some extra tickets to see him at the Hollywood Bowl on Friday the 12th of August. The price is $60.00 each, and a portion of your ticket purchase will go the Coldwell Banker Community Foundation. If you want to join us, please give me a call right away at 310 442-1384. It should be a lot of fun and great music to boot!
As we head into August, and the start of school toward the end of the month, the market most likely will be a little slower as families fit in their final family holiday. Inventory is still quite light and as mentioned elsewhere in this issue of the Schiffer Line, well priced properties are being snapped up both as purchases and leases. In working with my buying and leasing clients we have missed a few properties that they wanted but did not act quickly enough, so the word to the wise… do not hesitate… Speaking of hesitating, please give me a call to let me know how I can assist you or someone you know with any and all of your real estate needs.
COUNT ON CAROLE!
Financial Acumen Counts
Knowing real estate financing…how it works…and having great resources are key to overcoming financially challenging transactions. More importantly, you’ve got to truly understand the ins/outs of real estate finance to insure your clients are protected every step of the way and in maximizing their opportunities. Financial acumen counts.
Carole Schiffer. The Westside Expert