Timely Real Estate News………………………..15 March 2015
2015 starting slow but prices remain steady
We get our local real estate statistics around the 7th of each month, so it’s the first time we can see “how we are doing”. Of course, everything is relative. One might be concerned that sales activity for the five communities I report on — Beverly Hills, BH Post Office, Bel-Air, Westwood/Century City and Brentwood — is down 10.8% for the first two months from same period in 2014. Last year at this time, properties were continuing to move quickly upward during our “recovery”, through the first two months in 2014 sales were up over the previous year (2013) by more than 37% I have learned, however, to take all of these “stats”, as we call them, in stride. Some months are up, some down.
It has taken us since 2007 when the economy and the real estate market bottomed to build back our median sales prices and sales activity. For example, total sales at this point in 2013 were $200 million, which was the first time we had broken that barrier, and today, our sales are now $367 million, or 83% greater than two years ago. Yes, we are down a bit from the $406 million we had this time last year, but we are still making progress.
Our median sales prices remain ahead of last year in three of the five communities — Beverly Hills is down 32% and Westwood/Century is down 2%. But Beverly Hills Post Office is up 4% over last year at this time; Bel-Air is up 3% through 2015, and Brentwood is up 6%. And I as I have said so many times, it’s too early to tell how the year is going to turn out, and has happened before, when we enter the Spring selling season, we expect to see a resurgence in the market in general.
February 2015 sales compared to a year ago show that only Bel-Air was up — 12%….Beverly Hills was down 29% from a February a year ago…BHPO was down 3%….Westwood/CC was down 23%, and Brentwood was down 32% in median sales prices vs. February 2014. But as you see above, Brentwood and BHPO median sales prices were up for the year. It was reported that a major sale of $6.650,000 was not recorded at the MLS, which would have raised sales activity, but really less than 2% and would have marginally affected Bel Air median sales price.
Selling Price to Original Listing Price (SP/OLP) has remained stable over the past several months — Beverly Hills is at 91%; BHPO is at 81%; Bel-Air is at 95%; Westwood/Century City are at 100%; and Brentwood is at 98%. The largest sales in these communities were in Beverly Hills ($31.8 million), Beverly Hills Post Office ($9.5 million), Westwood ($5 million), Brentwood ($13.7 million), and Bel-Air ($11.2 million).
So now what? Sales activity for Carole Schiffer has been strong starting out of the gate this year and expects that the balance of the year is going to be strong. Of the 42,400 agents in the country Carole was recognized by NRT, Coldwell Banker’s parent company, for being one of the Top 1,000 real estate agents, or in the Top 3%, for the last quarter in 2014!
Freddie Mac reports mortgage rates up…..
As we stated in the SchifferLine in late 2014 mortgage rates were expected to increase in 2015, and while we had a flurry of rate reductions, then increases — since then (more like a yoyo), we are now seeing that Freddie Mac is reporting lenders were offering conventional 30-year home loans at an average of 3.86%, up from 3.75% a week ago. This reflects the financialcommunities’ reaction to the rise and fall of the stock and bond market values respectively.
The increase brings rates back to about where they started the year, Freddie Mac deputy chief economist Len Keifer said last Thursday as the home finance giant released its weekly report.
The 30-year fixed-rate mortgage has averaged below 4% since the week ending Nov. 13. The low for 2015, 3.59%, was recorded in early February. Freddie Mac said the average rate for a 15-year mortgage rose to 3.1% this week from 3.03% a week ago. The start rates for adjustable loans rose as well.
The strong report on unemployment bolstered the view of many investors that the Federal Reserve would act to raise interest rates as early as June. So, the once red-hot housing market has slowed despite the low rates, with many potential buyers saying there are too few homes on the market that they can afford.
Freddie Mac asks lenders early each week about the terms they are offering to solid borrowers seeking mortgages of up to $417,000 that conform to the guidelines of Freddie Mac and Fannie Mae, the nation’s major mortgage-financing companies.
Larger mortgages could face more foreclosures
According to numbers from real estate analytics firm Core Logic, the country’s foreclosure rate fell to 1.4%, the lowest level since March 2008….while the overall market is well on the way to recovery, elevated foreclosure rates persist at the high end. Compared to 1.4% for homes under that level in December, the rate for mortgages of $750,000 or more was 2.5%
This disconnect has characterized the 2008 crash and its aftermath, says Sam Khater, Core Logic’s deputy chief economist. High-end housing had traditionally seen fewer foreclosures than the market at large, but, he notes, the last decade’s recession turned that convention on its head.
The Core Logic data shows that in January 2006, the foreclosure rate for mortgages of $750,000 or more was 0.1%, compared with an overall rate of 0.5%. By March 2008, though, these numbers had crossed over, with the high-end rate up to 1.5%, versus 1.4% for the overall rate.
Ultimately, the foreclosure rate for $750,000-plus mortgages topped out in May 2012 at 6.8%, almost double the peak of 3.6% that the overall market reached in October 2011. And while both rates declined for the last 2½ years, the upper end of the market continues to see higher foreclosure levels. Find your new home now ..
What accounts for this role reversal, which runs contrary to the broader U.S. trend of accelerating gains at the top of the income bracket? One key factor, Mr. Khater says, is that the 2008 housing crash was accompanied by a stock-market crash that disproportionately affected wealthier homeowners.
Conserve water — it’s everyone’s responsibility
We are facing one of California’s most drastic water shortages in history. Because of the severe drought that we have endured in California for the past several years, the attention on the precipitously low rain and snow fall throughout the state brings into sharp focus the severity of our water shortages. Data from NASA satellites show that the total amount of water
stored in the Sacramento and San Joaquin river basins — that is, all of the snow, river and reservoir water, water in soils and
ground water combined — was 34 million acre-feet below normal in 2014. That loss is nearly 1.5 times the capacity of Lake Mead, America’s largest reservoir.
Statewide, we’ve been dropping more than 12 million acre-feet of total water yearly since 2011. Roughly two-thirds of these losses are attributable to groundwater pumping for agricultural irrigation in the Central Valley. Farmers have little choice but to pump more groundwater during droughts, especially when their surface water allocations have been slashed 80% to 100%.
As difficult as it may be to face, the simple fact is that California could be running out of water according to leading water experts. And the problem started before our current drought. NASA data reveal that total water storage in California has been in steady decline since at least 2002, when satellite-based monitoring began, although groundwater depletion has been going on since the early 20th century.
So what can we do about it? According to water management recommendations –such as the city’s Department of Water & Power — each one of us has to take responsibility for doing our part. Here are some simple things you can do to cut down water usage inside the home –1) take shorter showers, 2) get leaks fixed fast, 3) don’t always flush if you don’t have to, 4) use the dishwater less often, 5) only use a full load on your washing machine, 6)and don’t hose down your driveway. Most importantly, be cognizant of mandated water restrictions on watering your lawn or using water outside like for washing your car.
We all have to do our part. And yes, we love our sunshine, but our water needs are enormous, and we need to reduce our reliance on this precious natural resource.
Off the beaten path, Coronado is like our own private island…..
Away from the maddening crowds and freeways of Los Angeles, our family has found its own happy place, our ‘home away from home’ for sure — the beautiful island of Coronado in San Diego Bay. It’s a quiet, formally-sleepy town that sits on an island connected by a thin strip of land called the “Silver Strand” and the Coronado Bridge. It is home to just under 25,000 full-time residents, where we have spent our vacations for the past 34 years. Our unit has a commanding view of the ocean
And the beach below, declared by the director of Coastal Research as the “Best Beach” in the United States. It’s a storied beach as the US Navy Seals can be seen working through their demanding exercises on the beachfront right in front of our house. It is really quite thrilling to see them work so hard. Watching them run up and down the beach, it is almost possible to see who is going to make it through the program, and who is going to wash out as the training is very vigorous.
Coronado, of course, has its Spanish roots — it is Spanish for “The crowned one”, and the centerpiece of this island community is, of course, the world-famous Hotel Del Coronado, completed in 1888. Dominating the skyline and preserving its continued luxury and first-class service, the “Del”, as it is affectionately called, attracts the rich and famous to its storied property, where “Some Like It Hot” starring Marilyn Monroe, Jack Lemmon, and Tony Curtis was filmed in 1959.
What makes Coronado so special is that it is really off the beaten path — it’s not downtown San Diego…there is no freeway (thank God) passing nearby….and only the Coronado Bridge connects the island directly to downtown San Diego. And perhaps one of our most delightful, fun times is the annual July 4th traditional fireworks and Parade which features no fancy floats or big bands….just s small, patriotic display of residents of all ages and sizes who take part in this quaint tradition. The shops are small and crowded on a summer’s day and during the holidays….and in the winter there remains this peacefulness that only a place like Coronado can provide.
Most of all, I love the “quiet beauty of it all” — the ocean wind that streams in from the Pacific through our outdoor patio. You never get tired of the view or the sound of waves crashing below or the smell of the ocean….it’s pure paradise for all of our family. It’s tough sometimes to get away…but when we do, it is, indeed, paradise.
We are at the beginning of the rolling spring break season which also helps launch the beginning of the most active of the home selling season. We are still dealing with limited inventory and the up and down of interest rates and the stock market and bond market and the strengthening of the US dollar against the weakness of the Euro and other monies throughout the
world. My sister who lives in West Vancouver in Canada (a truly beautiful part of the world) is telling me that the homes in her neighborhood that are priced at the $2,000,000 range are selling like hotcakes and for the most part are being torn down and being replaced with large homes (similar to the mansionization we are dealing with here). Conversely, the more expensive homes in the price range of $11,000,000 and up are sitting. Given the difficulty of the winter other parts of the country has experienced for the past two years, we are expecting to see a large influx of people moving across the country to enjoy our excellent life style.
Open house activity is quite high with an average of approximately 25 groups visiting homes each week, and as always, the properties that are well priced are selling very quickly with multiple offers. I was even involved in a multiple offer situation (7) on a property for lease.