Timely Real Estate News………………………………..15 September 2016
Silver lining? Earnings boost helps US economy
We’ve been facing less-than-spectacular growth for some time, but according to the Census Bureau this week, steady job growth and the biggest earnings boost on record helped sharply lower the nation’s poverty level and finally provided relief to the long-running stagnant incomes. “This could be the silver lining we’ve been looking for,” stated Carole Schiffer.
In its annual report on income and poverty, the Census Bureau reported that the share of people in the U.S. living in poverty dropped to 13.5% in 2015, marking one of the biggest annual declines in decades. That was down from 14.8% in the prior year, but still considerably higher than the 12.3% poverty rate in 2006, the year before the Great Recession began, and the 40-year low of 11.3% in the year 2000.
The report also provided some encouraging news for a change on average American incomes. The median household income — the point at which half make more and half less — was $56,500 last year. That was up a substantial 5.2% from $53,700 in 2014, after adjusting for inflation.
American families still have a way to go….” we’re not there yet” the report stated, but we may have turned the corner. The bureau also reported that the number of people in the U.S. without health insurance fell further last year to 9.1% from 10.4% in 2014. The drop was expected, thanks mostly to the Affordable Care Act, also known as Obamacare, which saw its second full year of impact in 2015.
Are you tired of treading water? Sales volume doesn’t move needle
I’m sorry I can’t report that the sales needle made any great moves in August, traditionally one of the hottest sales periods for any real estate year. Sales through August 2016 vs. August 2015 remained 4.5% behind last year’s total for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood/Century City, and Brentwood.
Sales for these five communities were $2.108 billion through the first eight months of this year compared to $2.208 billion to same period last year. While the margin is narrow ($100 million), based on our last quarter’s sales performance we are likely to see a bump and may surpass last year’s total by year’s end. We did see the sale of the Playboy Mansion for $100 million which closed escrow in August 2016. It was originally listed at $207 million. The seller, Hugh Hefner is able to stay in the house for the rest of his lifetime, and the buyer lives next door.
In another hot real estate market on the Westside, the Venice-Playa Vista-Playa del Rey area experienced a 6% sales increase in volume, from $295 million in 2015 through August to $313 million for this year. “Silicon Beach, our technology answer to Silicon Valley, is spurring real estate activity, especially among the new techies moving into the area,” Carole Schiffer stated.
Median sales prices up, down, and around…..As I have always said, watch the median sales prices for the year, not the month. We’re now entering our Fall selling season, which actually caps off the summer season as sales reports are of escrows closing in September but were executed in July and August, the busiest time of year. Median sales prices year to date included: Beverly Hills which continues its upward movement, plus 7% over previous eight months in 2015, with median sales at $5.370 million vs. $5.000 million a year ago. Beverly Hills Post Office was up 2% for the year, settling in at $2.492 million, Westwood/Century City was also up — 11% for the year at $1.800 million. Bel-air was down 5% at $2.257 million and Brentwood was off 3% at $2.65.
Median sales prices for Venice were up 2% at $1.900 million; Playa del Rey was down 11% at $1.487 million; and Playa Vista was off 4% for the first eight months.
Just looking at August’s numbers, Beverly Hills had a whopping 100% increase in median sales prices, from $3.020 million in 2015 to $6.050 in 2016, which elevated it’s year-to-date median sales average. Comparing and Brentwood was down 16%.
Remember — median sales prices reflect the “middle number” of prices for homes sold — not the standard average. Half of the homes are below the middle # and half above — so it’s not about throwing in a large $100 million sale that is going to skew the median sales price. Helps volume, of course. So, please be patient as we track all of the areas on a monthly basis, and now we are seeing a majority of 2016 playing out before us, Carole noted.
Six ways to sabotage your mortgage approval
Perhaps you’re one of the lucky ones who has avoided mistakes in processing a mortgage loan application. It can be a frightening experience — a slip here, a missed # there. And let’s not forget the stress of waiting for the email, letter or phone call — “you’re approved.”
Executives with Chicago Financial have taken the time to make a list of the six common mistakes to avoid in applying for a mortgage loan: 1) Don’t close your credit accounts — you will need two current lines of credit; 2) Pay down balances — don’t eliminate them — Get your ‘credit utilization’ # under 50%; 3) Don’t take out a major loan while applying for a mortgage —this can hamper your debt-to-income ratio, and you don’t want to do that! This means things like buying/leasing a car, making any major purchase (furniture/appliances, etc.) and that includes writing a check for them as well as putting that transaction on a credit card. 4) Don’t pay off old debts if you don’t have to — look at your state’s statues on time limits to collect old debts — old debts outside of the time limit will not hurt your credit score. But check this out; 5) Don’t go on commission from salary — it’s easier to verify income with a salary than with commission income; and 6) Waiting to cash in investments — don’t be too anxious to convert investments during this loan approval process. Beef up your cash reserves, and if you have to sell, sell your securities before you seek pre-approval.
Loans continue to be available at their lowest rates in years, but the loan process has become more rigorous and demanding. If you want help during this process, please call Carole Schiffer at 310-442-1384. Thanks.
Is it worth buying a fixer-upper? Maybe yes, maybe no.
It depends on where you live and the “as is” price vs. the potential to add real value. Actually, the thought of ‘finding a bargain’ crosses most home buyers’ minds at one time or another, but in checking on the findings of a national survey conducted by Zillow of “fixer-upper” discounts from the median priced home, the average is 7.6% or in $11,000 to break even.
According to this new analysis, national trends show home listings that require serious improvement might not be financially worth it for homebuyers. Compared to the market value, fixer-upper homes — which, for this purpose, have keywords like “good bones,” “TLC” and “fixer-upper” in their listing description — list for 7.6 percent less. For the median priced fixer-upper, that’s a savings of $11,000.
While $11,000 can be a serious chunk of change, it wouldn’t cover major renovations like a kitchen over-haul or projects that cover a home’s structural integrity. And, naturally, the savings are hugely dependent on a home’s location.
The study covered 70,000 listings throughout the nation, comparing their estimated values based on whether the home is considered to be a fixer-upper or a move-in ready home. San Francisco, already one of the nation’s highest-priced markets, would provide the highest value of finding a fixer upper, saving buyers 9.5%, which would give them $54,000 for renovation.
Where can you find fixer-upper opportunity? Look east — Chicago, Baltimore, Cincinnati, Pittsburgh, St. Louis, and Philadelphia. In major urban cities like Los Angeles, New York and Washington D.C., the survey pointed out that the margins are too low to count on making a profit from purchasing a fixer-upper.
Keep your home in top shape….here are four handy tips
We average 14.93 inches of annual rain fall in Los Angeles, which isn’t going to move the weather needle — after all, that’s why we live here. Yes, occasionally we have earthquakes (seldom), floods (think mountains), and certainly fires (think mountains again).
Keeping your home in shape depends on some rather simple tasks — and here are four handy tips that are easy to do: 1) Service your garbage disposal by grinding several cups of ice cubes — 2) Examine, repair and replace caulk and grout around your kitchen and bathroom sinks, bathtubs and showers. 3) Pour one gallon of water down unused drains….and 4) Check your fire extinguisher. Refill or replace as needed.
Luxury real estate — it starts here
Driven by the entertainment and media industries in Los Angeles, the Westside has always enjoyed the fame and fortune of luxury real estate as seen by others around the globe. The signature Bel-Air, Beverly Hills and Rodeo Drive brands attract the rich and famous, and in real estate, we have seen the mega estates that create headlines when they come on the market and sell.
As the leading real estate company in Southern California in residential housing, we at Coldwell Banker keep track of all of these sales, starting with homes in the $5 million-plus category, the starting point what one might call the “luxury market”. According to latest compilation of high-end sales (over $5 million) on the Westside of Los Angeles, the market continues to produce strong sales reports in some of the lower-priced categories.
For example, in last months ‘report, there were 326 closed sales of $5 million-plus homes this year, vs. 324 sales at this time last year, which has been about the norm in our market over the past several years.
There were 88 closed sales of homes in the $10 million-plus category vs. 90 sales last year, just slightly lower than the previous year. But in the $20 million-plus area, there have been 15 sales this year vs. 28 homes last year, and 5 sales of homes $30 million-plus vs. 12 homes last year.
Future of luxury real estate…In a recent article in an International Real Estate survey, certain wealthy groups including “millenipreneurs” (affluent millennial entrepreneurs) and high-income workers from the growing tech industry will continue to impact the high-end real estate market. There will always be revolving factors that influence housing prices, inventory and sales.
One thing is certain in the luxury sector, despite fluctuating stock markets, exchange rates, regulatory issues and financial and political concerns as well as instability within one global region, UHNW (ultra-high net worth) individuals continue to be active in the luxury real estate market.
The expansion of the high-end real estate market is an overall promising sign for the industry. Obviously, investors can and should be prepared for short-term challenges, but they are willing to meet them with a long-term goal in mind.
The survey noted that the wealthy will continue to invest in luxury real estate, well, because it works. When compared to the ups/downs of the financial markets, it remains one of the safest investments. The stability of the American economy remains an anchor in investment strategies, and real estate, especially on the Westside, attracts the investors who see a secure future in our communities.
The international luxury market is a complicated but evolving sector. There are countless factors at play in the current international marketplace such as global influences and buyers who have ever-changing financial goals, diverse lifestyles and different preferences in property than investors from a few years ago.
The investment opportunity and opulent lifestyle that accompanies luxury homeownership encourages foreign buyers as well as U.S. purchasers. When cities are home to new industries and a general upbeat economy, they always attract interest from affluent buyers. That is what is happening in Southern California with the emerging Silicon Beach, attracted first by the burgeoning entertainment industry. This is an area that as a Previews Director for Coldwell Banker, I am very well versed in dealing with and working in this arena!
The information I shared with you in the last Schiffer Line regarding the new Federal government guidelines pertaining to all cash transactions was not totally correct. These guidelines pertain ONLY to transactions where an LLC is involved. Any other all cash transactions are not impacted. Sorry for any misunderstanding and wrong information.
Fun and play in Coronado for Labor Day
I was very lucky to spend the Labor Day holiday in Coronado with my Mother, Sister and Brother in Law who live in Vancouver. British Columbia. While we were there, we were able to celebrate my Brother in Law’s birthday, and visit with a new member of our family, “Peg Leg” the seagull! It seems that this handsome guy who is missing one part of one his legs, likes to come and visit with us on one of the ledges of our condo and eats any extra chicken, and ONLY chicken we have. He is a picky guy, in the past I have tried to give him pieces of bread, and he really squawked and let me know that was not acceptable!
There was also a new event at the World Famous Hotel Del. They held Polo Pony races on the beach. For both Saturday and Sunday, these fund raisers were held. It was really fun to watch.
COUNT ON CAROLE
Creativity Counts I market for my clients the way I market for my business…always facing challenges, and always finding solutions. It’s about market knowledge, financing, networking, and having the experience to ‘find a way’ – regardless of the challenge. Yes, creativity counts. Carole Schiffer. The Westside Expert