Timely Real Estate News……………………………………………………..15 July 2016
End of tunnel not in sight — climbing out of the shadows
We’re half-way through the year, and we still don’t see the end of the tunnel. Sales volume through the first six months of 2016 was 6.8% below last year’s total of $1.670 billion at $1.555 billion, which is an improvement when compared to last year at this time when sales were down by 17% compared to the previous year. But like last year, sales gradually picked up and by year’s end, we were 1.7% ahead of sales for the previous year (2014). So….it appears we are coming out of the shadows, slowly. And with the economy picking up steam after the disastrous May jobs report, perhaps the housing inventory (the anchor around our neck) will perk up, too.
Median sales prices through the first six months…for the five communities I report on regularly (Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood/Century City and Brentwood) June’s news was a mixed blessing, again. This keeps happening every month — some cities are up, some down, and the road remains bumpy. Beverly Hills, always the leader in median sales prices, was up only 1% at $5.237 million; Beverly Hills Post Office was up 9% at $2,225 million; Bel-Air was down 13% at $2.184 million; Westwood/Century was up 12% at $1.900 million; and Brentwood was down 4% at $2.710 million.
One of the communities in which I also do business is Malibu, which held its own volume-wise this year….with sales of $226 million vs. $225 million through the first six months. Median sales prices by the end of June was $2.635 million vs. the previous June 2015 at $2.226 million. Median sales prices in the past several months have declined a bit with sales for May at $3.300 million vs. $2.900 for June. But overall, Malibu has remained a very steady real estate market.
“One can see that median prices continue to fluctuate as inventory dips, driving prices up,” stated Carole Schiffer. “Sales volume, of course, depends on the supply of residential housing — less homes for sale, less sales volume. But as you can see, compared to a year ago, when sales volume was down by 17%, we are making progress…not as much as I would like to see, but it’s encouraging. Small steps.”
Comparing June 2016 to a year ago…..There were three bright spots in my core communities — Bel-Air was up 16% over previous June 2015 at a median sales price of $2.877 million….Westwood/Century City was up a whopping 64% at $2.814 million, and Brentwood was up 5% at $2.974 million. Beverly Hills was down 5% to $6.700 million and BHPO was down 37%, an anomaly, to $2.307 million. These up/down averages will keep changing from month to month as they always do. Again, the value of your home is hugely dependent on your specific location, neighborhood, presentation (condition). Demand remains high in all of these communities, from Malibu to Playa Vista to Bel-Air and throughout the Westside. “We have one of the most desirable places on the Earth to live… demand will always remain strong,” Carole stated.
Are we punishing potential homebuyers? “Yes” says Realtors
After a reassuring jobs report in June, economists are breathing a sigh of relief…the economy is stabilizing. However a major question remains within the housing industry: Have the barriers to obtaining a home loan been stacked unfairly against some Americans?
“Yes” says the National Association of Realtors (NAR). In an effort to focus their attention on lawmakers, the NAR has written two letters to Congress (one to the House, another to the Senate) urging the government to take legislative steps that would open the doors of opportunity for potential homebuyers. “Insufficient or non-existent credit histories are holding back buyers who have the means to responsibly purchase a home,” said NAR President Tom Salomone in an emailed statement. “Even if someone has years of on-time payments for utilities, rent, or other expenses, not all credit scoring models take those payments into account.
It’s the opinion of the nation’s leading real estate lobbying organization that lack of a broader credit evaluation is really holding back potential homebuyers, and it particularly affects young, minority, and first-time homebuyers. Some reasonable proposals to address this issue have been put forward, and the NAR is hopeful that they’ll continue to gather support as we spread the word about why this is so important.
With a coalition of 13 additional organizations, including the Mortgage Bankers Association and the National Association of Hispanic Real Estate Professionals, NAR requested support from members of Congress for the proposed pieces of legislation.
Fannie Mae and Freddie Mac still rely on credit scoring models from 1995 to 2000 that fail to take into account indicators such as on-time rent payments. By allowing government-sponsored enterprises (GSEs) the ability to view borrowers through updated and alternative scoring lenses, The Credit Score Competition Act of 2015 would give qualified Americans, especially minorities and first-time buyers, a better chance at securing a loan.
Ultra-luxury properties slows globally, but not in LA
According to a report from the Los Angeles Times, on the heels of Brexit, the health of the ultra-luxury housing market is in question. “Mega-mansions and lush estates in Los Angeles are prone to price cuts,” the report says, “but the slowdown was somewhat expected this year even before Britain’s vote. The price of crude oil turn down, global economics and rising home prices in the U.S. have all added fuel to the fire.”
In their annual study, Luxury Defined examined data from 100 luxury real estate markets worldwide, finding a general slowing in growth among most markets. So while the number of Los Angeles’s $1 million-plus sales are still growing, it’s at a more modest pace than earlier.
New York City slid backward in growth by about 5%, and Miami fell by a sliver. In some markets such as Atlanta, with a growing entertainment industry, luxury home sales increased 25% annually….Portland was also up — growing 40% in the luxury market.
Smart-up your home…it’s the smart move
Smart home technology is here to stay. While the concept of smart homes is still relatively new to the average homeowner, there are many ways to ‘smarten’ up your home without spending a fortune. Adopting smart-home technology no longer requires investing heavily in an expensive solar panel system or a water- conscious plumbing systems. There are cheaper, incremental steps that can introduce smart-home technology to a property without breaking the bank.
For example, some companies have discovered that there is a sizable market for people who want to test the waters. Instead of forcing homeowners to commit to revamping their entire home, some innovative companies discovered ways to add elements to existing appliances to make them smarter. If you are not already aware, the Nest thermostat represents the epitome of smart-home technology and for a very reasonable $250. A bit of advice…you need to shop the cost around, I called my HVAC contractor and their piece was a good deal higher than $250.00
Nest is much more than a device that regulates the temperature of a property; it learns the patterns of homeowners and implements them in a way that is more convenient and energy efficient.
This is only one example of what can be done. If you are not in the market for a thermostat, there are several smart-home additions that can enhance the prospects of a home without breaking the bank. Choose the ones that you think will give you the biggest advantage, and use them to your benefit.
Voice Command — another technology to consider
Voice-control devices are now hitting the home front with the rising popularity (and promotion) of products such as Amazon’s Echo which can be used to communicate with smart-home technology and lock doors, arm security systems, adjust temperatures, open garage doors and adjust light fixtures. Of course, Echo doesn’t operate all of this on its own — it simply conveys electronic messages to the smart device be it a garage door, thermostat, or security system.
More voice-command devices will be hitting the market in the future — and these devices will be much more dependable than they used to be, with the projected rate of error dropping from 23% in 2013 to a modest 5% over the course of last year. It’s safe to assume the trend will continue to bring more smart-home technology that will be affordable and efficient.
What is your home really worth?
This is a question that comes up on every listing presentation I have ever made in the 30+ years in the real estate business. How much is our home worth? Most homeowners do not have a good idea of what their house may be worth before they put it on the market, and they will either rely on their own perceived valuation (hearing what others are doing or consulting online valuation programs that are usually not that accurate)….Or they visit a neighbor’s home at an open house and then base the value of their home on their neighbors …..Or they rely on the agent to make a sophisticated analysis using current comparables and understanding other market conditions.
Homeowners everywhere in the U.S. are seeing home prices skyrocket and believe that their home, too, should be worth more than they paid for it. But according to a recent research study, the Home Price Perception Index, those perceptions are off by about 2% (2% of $2 million home is $40,000!)
It was found in the study that appraisers valued homes at 1.93%lower than what homeowners expected. This is a wider gap between appraiser and homeowner opinion than in May, when the difference was 1.89%.
“Of course, home values given by trained appraisers and real estate agents can be arbitrary and at the end of the day, what the home sells for is the true, current value of the home,” Carole Schiffer stated. “Always, I try to give a very objective analysis of a home’s value before I put it on the market. To do otherwise,” she said, “is a complete waste of time and money for everyone, and at times can be painful as generally owners feel their home is worth more than the buyer will, and the buyer is the true “evaluator” of a home’s worth!.”
Potential Changes to Building Codes!
Do you know that the Los Angeles City Council is currently evaluating new regulations, commonly referred to as the Mansionization codes that could dramatically impact the future development of what can be done in your community? Some of the proposed changes could limit the size of new construction and/or remodeling for an existing home. There is also a plan that is in the mix to revise some of the zoning codes in the entire city. This is planned to take place in the next two years. Since there are a number of variables to the proposals, too many to highlight here, I suggest that you contact your local city councilman’s office for specific details and let them know how you feel about the proposed changes. It is important and they need to hear from you!
What Brexit means for us?
The market/economy is in a constant state of flux. Immediately after the Brexit vote everyone was wringing their hands as to its impact on the economy and the local real estate market, in Los Angeles particularly. Most seasoned economists recommended staying on the side lines, not making any judgments and just giving things a chance to get settled. It is for that reason, I am choosing to take their advice and not making any predictions. As many pundits as there are, there are as many differing opinions. I am keeping my head to the grindstone and doing my best to serve all of my wonderful clients to sell or lease their properties.
My current listings
I have two lovely listings for your consideration. 2120 Dean Circle in Mouintaingate. We have just reduced the price to $2,350,000. It is a 4.4.5 bedroom with amazing views, and a great lease at 12361 Ridge Circle, also Mountaingate. It is a 2/2.5 plus den with a view of the north golf course and we are asking $6,900. For photos of both of these great properties, please visit my web site, caroleschiffer.com, and while you are at it, please friend me on http://www.facebook.com/CaroleSchifferRealtor and http://www.linkedin.com/in/caroleschiffer
After 30-plus years of representing buyers and sellers on the Westside, I am proud to say I remain one of CB’s top Realtors on the Westside. It’s not an accident…and the key to my success has been my experience in marketing small to large homes to and for a highly discriminating and demanding clientele. Trust me, experience counts.
Carole Schiffer. The Westside Expert