Timely Real Estate News……………………………………15 November 2016
Sales strengthen in Westside market…that’s good news
After playing “follow the leader” for the past 10 months, sales volume surge ahead as a result of a few blockbuster sales in the last few months, two of which took place in October — the ball started rolling with the sale of the Playboy Mansion in the late summer. Interestingly enough, all of the sales took place on the same street. There aren’t too many neighborhoods where that can happen, and it pushed sales for 2016 to more than $3.322 billion, more than 20% ahead of last year’s sales through October 2015. Will this lead last through the end of the year? “Too early to tell,” Carole Schiffer said.
While these two sales were the prime mover for a robust October, sales were strong in the other five communities I report on — (Beverly Hills, Beverly Hills Post Office, Bel Air, Westwood/Century City and Brentwood). Because of the way median sales prices are computed, the additional $190 million did little to move the median sales price needle. Since median sales prices are based on the middle price of all sales — measuring half below and half above — a big number doesn’t necessarily have the impact in the final MSP figure. In the case of Bel Air, it only moved the needle a fraction to $1.410 million. Even so, there are lots of smiles on Carolwood in Holmby Hills these days.
Like California Adventure’s roller coaster, prices out for a spin
Frankly, it can be a little daunting when one is looking at the sales stats each month. It is a see-saw battle between five communities whose median sales prices reflect the roller-coaster ride at California Adventure…for example, October found Westwood/Century City median sales price were up 36% for the year ($1.690 million), while Beverly Hills was down 5%, Bel-Air was still down 6%, and Brentwood down 4%. BHPO was also up…2% for October. One month doesn’t make the year, and we have two more reporting months to go — some months they’re up, some down.
In reviewing the number of what Coldwell Banker refers to as “luxury homes” (anything over $3 million on the Westside) ….Beverly Hills had nine sales over the $3 million mark, with $14 million the highest…Beverly Hills Post office had seven over $3 million, the highest was $6.6 million…Bel-Air/Holmby Hills had four over…with the two record sales of $100 and $90 million. Westwood/Century City had six, the highest being $5 million…and Brentwood had nine, the highest being $11 and $12 million.
The diversity of homes in these five communities represent every price category — from under $1 million to super estates of $100 million and up…. currently, we have one home listed for $200 million.
California housing affordability holds steady….
According to the California Association of Realtors, even though Californians experienced rising wages and interest rates were slightly lower, the state’s housing affordability remained flat compared to the 2nd quarter of this year. The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2016 remained at 31 percent, unchanged from the second quarter of 2016 but was up from 29 percent in third-quarter 2015, this all per C.A.R.’s Traditional Housing Affordability Index (HAI). The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
This is the 14th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent. California’s housing affordability index hit a peak of 56 percent in the second quarter of 2012.
Homes were slightly more affordable in the third-quarter 2016 compared to third-quarter 2015, when the affordability index stood at 29 and the median home price was $487,420. An annual income of $98,350 was needed to make monthly payments of $2,460.
The affordability of condominiums and townhomes also were flat compared to the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a $418,230 median-priced condominium or townhome in the third quarter of 2016, and an annual income of $81,290 was required to make monthly payments of $2,030.
Seven counties in the state experienced declines including Los Angeles, San Bernardino, San Luis Obispo, Madera, Merced, San Joaquin, and Tulare.
Financing down payments and renovations
Whether you’re a professional property developer or a single homeowner, financing your property ambitions comes above all else. Even professional property developers with a proven system of acquiring and renovating comes, condos and business properties can run into financing issues.
With the help of Simon Atik of First Capital Mortgage, the mortgage broker connected with Coldwell Banker, I have examined the benefits of financing with a higher down payment, and/or making renovations and the cash purchasing options available for those of you looking to buy and upgrade your home. So here are some of the issues you need to consider:
Why Save For a Greater Down Payment? Particularly after the financial meltdown of 2007-2008, banks and lenders want lower risk scenarios and that ultimately comes down to their having a preference for higher down payments if possible, even though with the increase of purchase prices, lenders have been coming up with lower down payment programs in the last few months, versus 10% down. In general, the higher the down payment, the lower the interest rate can be.
Why Save For Renovations? Renovations and upgrades obviously provide that wonderful ability of allowing you to transform your new home into your own dream living space. But aside from that, they can also allow you to significantly improve your home’s resale value. Consultants strongly advise making wise additions to your home that will ultimately boost your bottom line.
Per US News Money, these are the renovations and replacements that will bring the greatest % return on investment: • Entry door replacement: 96.6%; • Deck addition (wood): 87.4%; • Attic bedroom: 84.3%; • Garage door replacement: 83.7%; • Minor kitchen remodel: 82.7%;
Renovations that yield the smallest return: • Home office remodel: 48.9%; • Sunroom addition: 51.7%; • Bathroom addition: 60.1%; • Backup power generation: 67.5%;• Master suite addition: 67.5%; • Entry door replacement: 96.6%; • Deck addition (wood): 87.4% • Attic bedroom: 84.3%.
Here is an interview with noted national real estate consultant Tom Ferry and California Association of Realtors Vice President of Research, Leslie Appleton Young….Part 1 of 2 parts.
Tom Ferry: I have one primary question for you, Leslie: The central theme of my concerns today is that among many agents, there is an underlining fear that we’re going back into the 2007 – 2010 market — what’s your take on this?
Leslie: Absolutely not! What we’re seeing in California is that while we have a steady economy, jobs are growing, interest rates are low and unemployment is down. But we have very little inventory. We’re not building enough nationally…just not enough product. So therefore, what we are seeing nationally is a continuation of migration. This is a permanent change.
Tom: OK — I get that. So we have sellers who are now waiting on the sidelines….and the buyer is feeling that I’m going to wait for the election before I make a decision.
Leslie: There is no pattern regarding elections in the past…whoever wins the election is going to cause some concern. One thing I have noticed in this election, however — the candidates are not talking about housing. This doesn’t appear to be a very important topic.
California has been relatively steady in recent years….GDP has stayed under three percent for the last 10 years…so we’re going to continue to see moderate growth. Because interest rates are so low, this is really a good time for the government to invest in infrastructure because we need it.
We still see signs that we are just not growing the way we should — se still have a lot people out of work, depressed, not looking. We’re really not cresting…we’re just chugging along.
Tom: Is there any segment of the market that is doing well?
Leslie: Well, the high-end market is selling very quickly — lot of money coming in from
China, Canada and other places. Compared to the rest of the world, we have a lot buyers. But now the high end has flattened out. What is really a tough is the market for millennials. We need to educate the millennials. 80% have never heard of the FHA.
What is happening also is that there is a lot of data out there. What I like about your approach, Tom, is that you tell your clients that ‘marketing is data’…and the focus needs to be on the data in your market…what happens is that the data is flat but the seller believes the data is showing a dramatic increase in pricing…which creates challenges. What people should do is get more realistic about the value of their homes or wait it out.
Part 2 will be covered in the next Schiffer Line on December 1. Please note this interview took place in October before the election last week.
What is next for real estate with our new President Elect Trump?
Now that the elections are over and the people have spoken, there are so many questions and opinions as to how the results will impact us as pertains to the economy, interest rates, real estate values, and business in general. Since none of us have crystal balls, there is no way for us to know but to wait and see how it all rolls out.
What is going on with me and my business?
I am busy and looking forward to see how we all fare. I am working with several buyers who like most buyers today are more knowledgeable, and sophisticated and indicated with the interview with Leslie Appleton Young. When we find properties that are properly priced and fit their priorities’ and needs they move quickly to make an offer, and many times find themselves in a situation of multiple offers. As has long been the case, those properties remain on the market until the prices are adjusted to reflect the value the buyers feel more appropriate and the sellers also find acceptable. It is always interesting to me to see how buyers react.
I am working with some buyers who wish to purchase a condo at the beach in Santa Monica that their family can use as a pied-a-terre. A week ago I called them about something that I thought would work for them, which it did. So we made an offer, which as it turns two other buyers did also. The offers started below the asking price, and ended up selling over asking. The sales price started put well below asking and quickly escalated. My clients decided to not get caught up in the bidding war. With the emphasis on video and social media, buyers today more than ever are shopping on line, so much so that approximately 85% pretty much decide if a property will work for them before they even get out of their car!
At the moment, I have two lovely offerings for your consideration. Both are located in the great community of Mountaingate and have golf course views! Mountaingate offers secured access for its residents, community pools, and is close to all. One is a lease of 2 bedrooms with a den, 2.5 baths, new floors, fresh paint. The asking price is $6,500 a month. The other is a great 1 bedroom, plus den which can be used as a 2nd bedroom, 1/1.5 baths. We are asking $1,175.000. Come see these wonderful homes waiting for you to come and enjoy with their light, high ceilings, tons of closets.
I am very thankful for all the wonderful things in my life: My family, my friends, my health, my career and all of you! I give thanks every day for these things.
What are you doing for the holiday? I am very much looking forward to spending them with my family in our home in Coronado. For Thanksgiving, it will just be my Mother & I and some friends who live there full time, and then for the Christmas holidays it will be a “full court press with everyone flying in, and our little local family will grow to 9! Fun times. Please share your holiday plans with me at Caroleschiffer.com or firstname.lastname@example.org.
Count on Carole
What makes a successful Realtor on the Westside? A quality network. A network of professionals from many fields – finance, legal, escrow, and many more areas of expertise that come into play to make a transaction happen. I have one of the best networks in real estate. Networking counts.
Carole Schiffer. The Westside Expert