Timely Real Estate……………………………………………15 March, 2020
Happy St. Patrick’s Day….everyone loves the Irish
This year, St. Patrick’s Day will be observed on Tuesday, March 17. Even if you’re not Irish, you can be on March 17. The significance of March 17 is that it’s said to be the date of St. Patrick’s death in the late 5th century (circa A.D.) Today, it is a day of revelry and a celebration of all things Irish. Just don’t forget to wear green!
Los Angeles doesn’t have an official St. Patrick’s Day Parade like New York, which has been cancelled — most of our celebrations take place in local Irish pubs …or at home. Ireland, on the other hand, has suspended all St. Patrick’s Day parades because of the coronavirus. I wish all of you Irish out there (the real Irish and the one-day-only Irish) — Happy St. Patrick’s Day and wearing of the green!
Sales “boom”…up 34% through February
We continued to see strong sales volumes through February as buyers took advantage of historic low mortgage rates in the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood. Sales in these five areas were up 34% compared to this time in 2019, with a total volume of $542 million vs. $403 million a year ago.
March appeared to be clicking along at the beginning of the month, but to be quite honest, these February numbers reflect what was happening in the market before the real impact of this global virus took hold and for the most part reflect sales that took place at the end of 2019. The good news is that mortgage rates remain very low and, yes, it’s a good time to buy or refinance. I’m going through a re-fi now and the rates have gone up slightly in the past few days, but they’re still near historic lows. Basically, for me, my loan adjusts in October, and so while my payment is low and will continue to be so until October, I decided to take advantage of the interest rates now as we don’t know what they will be in the fall.
Year to date, sale volumes were up in Beverly Hills by $54 million compared to volumes at this time in 2019, and Beverly Hills Post Office was up $90 million and Westwood/Century City was up $24 million vs. 2019. Bel-Air/Holmby Hills, the major leader in recent months was down $6 million, and Brentwood was off $26 million vs. February 2019. Santa Monica February sales were $98 million.
Median sales prices up, too
This is not a new trend — median sales prices in our area have continually moved up over 12 months, with some areas up, some down each month. Beverly Hills is the “down” area this month, with its median sales price of $6.520 million — down 11% compared to 2019 of $7.400 million. But Westwood/Century City MSP was up 40% for this past February compared to 2019 at $2.607 million. Bel-Air/Holmby Hills was up 21% at $1.940 million vs. $1.604 in 2019 at this time. Brentwood was also up — 19% at $2.995 million over 2019 February of $2.512 million. Santa Monica came in with $2.374 million median sales price for February 2020.
What is interesting to note is that “Days on Market “for homes listed in these five communities continue to show modest improvements as homes are selling closer to the original sales price, which means we are seeing less over-priced homes which languish in the marketplace. In comparing February’s DOM vs. January’s DOM, most of those properties sold in anywhere from 16% to 64% less time. Buyers are much more sophisticated today and they shy away from overpriced homes for obvious reasons.
Mortgage forbearance options available…
The Federal Housing Finance Agency announced that borrowers who are unable to make their monthly mortgage payments due to COVID-19, also known as the coronavirus, have options to postpone payments. FHFA Director Mark Calabria reminded mortgage servicers this week to offer forbearance options to those who are affected as the virus continues its spread through the U.S.
“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said in a statement. “For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer.”
Economists say now’s the time to lock in low mortgage rates
This is good advice: If you’re thinking of buying or re-financing, economists across the board are urging you to get your paperwork ready now. Mortgage rates reached the lowest point in 50 years last week, and one economist predicted they could possibly go lower. As we all know, interest rates are tied into the bond rates, and when those rates go to low as they did recently, mortgage rates go up to protect the bond market. The Treasury yield began last week by hitting a record low as well. Should consumers consider locking in a mortgage rate now or, instead, play the waiting game? Most say ‘yes’.
Lending Tree Chief Economist Tendayi Kapfidze said it’s hard to anticipate what rates are going to do, but if you’re a consumer and there are already savings on the table, “a bird in the hand is worth two in the bush.” He recommends you go ahead and lock in a rate…. We don’t know how this is going to play out he stated.
Please note — there are fees often associated with a rate lock, but if the rate is so low — and expected to rise — the actual cost could be negligible. Short-term rate locks — those of less than 60 days — range from free to roughly 0.25-0.5%of the total loan. If you need a longer period, the rate goes up.
Get ready for spring…spreading your roots!
Yes, it’s that time again. Although Spring officially arrives March 19, it feels more like winter, doesn’t it? Here are some handy hints from noted landscape designer Nan Sterman…. #1 — With or without rain, your smart irrigation controller should adjust to schedule based on the weather, which has been cold and wet recently…Make sure it’s working correctly. #2 — when it starts to warm up, prune away dead leaves and stems…now is a good time to do that. #3 Finish pruning your flowering shrubbery and perennials before flower buds form.
One of the key points she recommends is to renew your garden mulch…using a 3-inch layer that will hold the moisture in the soil, moderate soil temperatures, and keep weed seeds from sprouting. These are always irritating.
As the organic matter breaks down, it feeds beneficial soil microbes, improves draining in heavy soils and improves the water-holding capacity of fast-draining soils. And always, keep mulch a few inches away from stems and trunks.
GenXers most likely to be denied mortgage
According to the National Association of Realtors, mortgage applicants 40 to 54 years old—those in Generation X—have the highest loan denial rates. In their 2020 Home Buyers and Sellers Generational Trends report, low credit scores and high debt-to-income ratios are the chief causes—perhaps lingering problems from the Great Recession. Lenders denied 7% of Gen Xers’ applications, compared to a 5% denial rate across all other age groups.
Generation X has a higher share of denied mortgages because they are most likely to have sold a distressed house or have been underwater during the recession. Plus, they may have taken on more debt from their children’s student loans according to Jessica Lautz, NAR’s vice president of demographics and behavior insights, told Yahoo! Finance.
15 % of Gen Xers also have sold a distressed property since becoming a homeowner. That is the highest of any other age group, according to NAR data. Many Gen Xers have also taken out student loans for their children. Credit card debt and student loan debt are big burdens on this age group, the data shows.
The Ultra-Rich are investing more in real estate
This is not a surprise — at least not to us on Los Angeles’s Westside — but the ultra-wealthy may be looking to expand their real estate portfolios. The industry is watching closely as the number of high-net-worth individuals grows: About 31,000 more ultra-rich people emerged globally in 2019, which is an annual growth rate of 6%, according to a new report from U.K.-based real estate firm Knight Frank and a New York based real estate fire. The growth rate of the ultra-rich, or those with a net worth of at least $30 million, was 4% in 2018.
North America saw the highest uptick in this segment, adding 13,911 people in 2019—higher than Asia’s 11,788 and Europe’s 4,682. Ultra-high-net-worth individuals’ ranks are expected to grow by about 27% over the next five years globally, according to the report. By 2024, there could be about 650,000 people around the world who each have at least $30 million. The countries seeing the fastest growth among this population are India (projected to see a 73% increase by 2024), followed by Egypt, Vietnam, and China.
About 43% of 620 wealth advisers who manage the mega-rich’s money say they would increase their real estate exposure in 2020. Notably, Asian buyers have made the U.S. their top destination for residential real estate outside of their home country.
Buyers can expect Spring bidding wars
With a severely limited supply of homes on the market and the lowest mortgage rates in history, house hunters should expect steep competition this spring. The new coronavirus remains a wild card for the housing market, but if the scare is short-lived, buyers are poised to swoop down in droves. The wild card in all of this is the uncertainty of the impact of the stock market and the global economy. With my new listing at 2218 Canyonback in Mountaingate, after being on the market for 5 days, we received a fairly decent offer, which we have issued a counter offer, unfortunately the buyer elected not to proceed. At my open house last weekend, we had about 8 guests, with most of them expressing interest in the house!
What is happening in my world?
We have had a strong response to my listing at 2218 Canyonback in Mountaingate. Given the drippy weather, concerns about the corona virus and the stock market, it will be interesting to see if it continues.
While the concerns about the virus are certainly real and valid (my Mom is 97 so we are watching her very carefully and keeping her quarantined in the house for the most part – cabin fever comes into play), I personally am also trying to keep this whole thing in perspective, do whatever I need to do to stay healthy and hope you all are as well.
In my next mailing which will be the quarterly update, I will be sending you a copy of the recent reminder all property owners in Los Angeles County received regarding brush clearance. Given that we have had two major fires in our area in the last two years, it is imperative that we all make sure that the brush clearance on our property is taken care of.
For those of you who receive the Schiffer Line via snail mail, I am inviting you to participate in a fun cross word puzzle contest. In order to win, you will need to email me a photo of your completed cross word puzzle to firstname.lastname@example.org You can use the information in the various articles in this issue of the Schiffer Line for the clues. The first person who submits the correct answer will receive a gift certificate for Trader Joes. I love doing cross word puzzles and hope you do also!
Please let me know how I can assist you with any and all of your real estate needs and/or answer any questions you might have. Looking forward to seeing you.
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