Timely Real Estate News………………………….15 October 2018
******************************************************************
Managing Expectations and making some adjustments
For the last few years, it has been a sellers’ market and as such sellers have for the most part been able to get away with being somewhat aggressive with setting the prices for their homes. With the adjustment of the market and economy, it is necessary for both buyers and sellers to change their attitudes somewhat. We all, realtors, buyers, sellers need to “listen to the universe”. If we are not getting the prices on our listed properties we would like, then I suggest that those prices need to be adjusted so everyone can move on with their lives.
************
Fall off to slow start — sales remain behind last year
After relatively active spring and summer quarters, compared to a year ago as we enter the final quarter of the year we find ourselves still behind in sales volume. Sales volume for the five areas I report on each month — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood — is more than 7% behind 2017 levels. Sales volume for the first three quarters was $2.670 billion vs. $2.869 billion in 2017, a 7% drop. Last October, we were 21% ahead of sales over the previous year (2016). And, of course, we know the culprits — low inventory and higher prices. Now, we are seeing a jump in mortgage rates which could have an impact on sales going forward through the end of the year. I say “could” because demand is still very high for our market, and the challenge is not necessarily always financing for our buyers: it’s lack of choice, inventory. There is another issue, it is called, managing our expectations. For a long time, the experts have been saying we are due for a correction not only in the real estate market, but in the economy in total. It appears that we are there or heading there. Recently everything has heated up so much, it honestly it has to level at some point.

In looking over the MLS stats, we are seeing sales volume declines for September in all of my areas — Beverly Hills was down $124 million in volume, BHPO was down $66 million, Bel-Air/Holmby Hills was down $62 million, Westwood/Century City was down $34 million and only Brentwood was up…. $70 million. Please remember there are still private sales that are not included in the stats that I provide in the Schiffer Line each month which would impact the overall sales volume report. Beverly Hills did have two large sales of $26.5 million and $27 million, and Brentwood had two, one for $11.3 and another for $15.45 million. Santa Monica, which is one of the communities in which I work extensively, the sales volume, was down 14% to $498 million.
************
Median Sales Prices improving
This comes as no surprise as median sales prices in our market continue to rise. Westwood/Century City had the biggest jump for the year showing a 36% jump in median sale prices to $2.772 million. Bel-Air/Holmby Hills has registered a 19% increase, and Beverly Hills, already streaming upward, is up 9% in median sales price. Brentwood remains even with 2017 through nine months at $3.100 million. Only BHPO is down, minus $13% for the year.

Median sales prices for September were mixed compared to September a year ago — Beverly Hills was up 13% over 2017, BHPO was down 42% to $2.650 million, Bel-Air-Holmby Hills was up 117% to $5.282 million, Westwood/Century City was down 25% to $2.431 million, Brentwood was up 5% to $2.720 million and San Monica was down 4% at $2.728 million.

As I have pointed out regularly in The Schiffer Line, the true measurement of our monthly benchmarks is ‘year-to-date’ median sales prices as they are more representative of the composite pricing occurring in our area. And remember that median averages represent the home price in the middle — half of the homes are above the middle, and half below.
************
Just, where are we? Coldwell Banker’s view
In a comprehensive review of California’s and the nation’s real estate market, Coldwell Banker released its view of what is going on across the board. In reviewing California’s situation, CB noted that after suffering the largest annual drop in GDP (since 1946), in 2007 we have made a strong recovery, with the lowest unemployment in 19 years, mortgage rates are up, unit sales are up slightly, and mid-year Southern California sales were up five months after declines.

Although the unemployment #s, less than 4%, are statistically pleasing, the reality is that for a number of reasons, millions have left the workforce since 2009, and those seeking employment have dwindled. Some of the primary contributing factors are our very large homeless rate, as well as those who simply have exhausted their unemployment benefits. As a counter point, California is looking to rebound in the coming three years as the aerospace industry and tech sectors continue to improve.
Another key point that CB made was while our median sales price in California was; $584,460, it is not quite as high as it was in 2007 ($594,530) and when you factor in inflation, we are really off 15.5% in real dollars

For the first time in three years, mid-year active listings increased, and inventory is highest in the high-end ($5 million plus) but 30% of listings have had price reductions. Single-family residences are expected to increase, but are still behind a year ago at 423,200. The median sales prices increase was up 8.2% year-to-date statewide.
************
Affordability is the issue
California Association of Realtor’s Affordability Index is at 27%, meaning only that # of individuals can afford to purchase a home in the state at median price range — it was 53% in 2012, which is huge drag on all home sales, new and existing. National pending home sales are also down 1.8% in August.
With the Feds raising interest rates in September, mortgage rates are moving up again. Another Fed hike is expected before the end of the year. As a result, mortgage rates have gone over 5% and are expected to plague first-time buyers. It’s a major affordability issue facing the entire housing industry. We could possibly be looking at more interest rate hikes in 2019… But let’s have a reality check… We have been horribly spoiled with the interest rates we have had for the past few years, but in reality, even 5 or 5.5% for a 30-year fixed rate loan is still low… just not as low as it has been. In 1982 I bought my first condo to live in in Westwood (I had been buying conversions to flip prior to that), and was very happy with the 13% interest rate that I got for my loan. In 1984, we were dealing with 18 & 19 % loans… it was a nightmare. We are not even close to going anywhere near there. I am just trying to help all of us, myself included to keep everything in perspective.
************
The UCLA Anderson Forecast
UCLA released its 3rd quarter Anderson Forecast late last month. According to Jerry Nichelsburg, Anderson’s senior economist, the U.S. will continue to see a strong economy reaching an increase of the growth of 3% by the end of this year, down to 2% in 2019, and 1% in 2020. However, warning signs continue to be the trade war with China, which could hurt California more critically than other states, and if Proposition 10 passes, Nichelsburg predicts housing starts will be revised lower in California.

Inflation rates are moving from 1% to 2% with oil going from $70 a barrel in 2019 to $76 a barrel in 2020. Already, as you well know, we’re seeing gasoline at $4.00+ a gallon now. That isn’t helping anyone. A primary cause of this increase is the tariffs that have been put in place.
Anderson also predicts that there will four rate hikes in both 2019 and 2020, and if China doesn’t buy any bonds, interest rates will increase further due to bond rates going higher. And all of this means that new home starts will continue to disappoint. The biggest risk Anderson sees down the road — the continued trade policy of the Administration.
************
Key Stats on latest MLS report
Homes for sale are up 11.9% year over year (YOY), and in the upper end ($5 million plus) they’re up 23.6%. However, closed unit sales are down 20.9% YOY, from 6,465 to 5,113 units. And even worse, pending sales are down 41.3% YOY.

Homes are sitting on the market longer — median-priced homes are on the market 15% longer, and the average-priced home is up 5.4% days on market. The absorption rate YOY is 6.2 months, up 87% and in the upper end, absorption rate is up to 9.6 months.

On a very positive note, the CB report noted that Anderson called out that California’s employment is up 16% from the depth of the 2007-09 recession, payroll jobs are up 21%, which includes a two-day work week. One in four jobs created in California is in construction, logistics, and state employment.
So where does this leave us? We can expect to see home prices continuing upward, inventory behind previous years, and minor improvements in unit sales. But as noted above, California and the nation are facing housing challenges with rising rates, less new home construction, and affordability issues, especially with Millennials, the largest home-buying generation in the U.S.
************
Earthquake early warning system…. getting close
Californians are used to being wary of the slightest tremble, and if you’ve lived here long enough to have experienced the 1971 Sylmar or 1994 Northridge earthquake, you know how a really, powerful tremble can feel — it’s nerve shattering, frightening, especially if you’re near the epicenter.
California has always been noted for its earthquakes, the most devastating one, of course, the 1906 San Francisco quake that destroyed a good portion of the city. But we have been making headway in trying to find the solution for an early-warning system that is scientifically sound and actually works.
According to a recent article in the Los Angeles Times, scientists are saying they’re getting closer to what will be the world’s most sophisticated earthquake warning system, with officials announcing they were expanding the test program in the coming months in advance of a future public rollout. Even a warning time of a few seconds can save lives, allowing utilities to turn off large high-pressure fuel lines, doctors to potentially stop surgeries, transit agencies to slow trains and schoolchildren to shelter under desks.

Earthquake warnings work on a simple principle: Seismic shaking travels at the speed of sound through rock — which is slower than the speed of today’s communications systems. Earthquake sensors that detect a big earthquake that starts at the Salton Sea and has begun to travel up the San Andreas fault can sound an alarm in Los Angeles, 150 miles away, before strong shaking arrives in the city, giving Angelenos perhaps more than a minute to prepare. It’s not here yet, but there’s a promise that we can avoid, at least, the loss of life and limb with such a system
************
Bundling insurance can save but….
It’s the perfect sales pitch…by bundling your insurance policies (home, auto, life, and umbrella, etc.) with one insurance company, you can save as much as 20% to 25%. That’s the good news. Homeowners insurance typically gets the biggest discount since your home’s value is likely far greater than your car’s. Although homeowner’s insurance is always part of the ‘bundle’, insurance companies really don’t make much money on them. For example, if your home and auto insurance is bundled, you might receive discounts of 10% on your auto policy and 15% on your homeowner’s insurance. If you bundled your auto insurance with a renter’s policy instead, you might see up to a 5% discount.

The bad news is: Bundling policies encourages a “set it and forget it” mentality, but automatically renewing year after year with the same company could come at a cost. You’re less likely to check out competitors’ rates if you have to switch to two policies instead of one, especially if one is paid automatically.

Prices tend to increase at policy renewal time, and they can inch up well beyond what you would pay with another company if you don’t check rates Companies are not always equal on pricing and coverage, and my recommendation is to always review your insurance policies on an annual basis — before their year-end date, and compare. You could save a bundle by unbundling them, too. A word to the wise, just be careful to check before you automatically renew your insurance.
************
What is going on with me? You might see me walking with a new companion. The weekend of the 13& 14th of October, Coldwell Banker is sponsoring a national Pet Adoption program with the philosophy of having a pet, primarily a dog or cat adds to the feeling one has of having a home, so I worked helping people adopt a new pet for themselves. I love dogs, but honestly do not have the time to really give a dog the time they need and deserve, but I might cave in if I fall in love with one of the pups the shelter we are working with are bringing to the event. Fingers crossed that I don’t weaken!

 

As for work, I am very busy with my real estate life; offers on properties, managing escrows, and selling homes. We just reduced my wonderful listing at 11736 Gwynne Lane in Bel Air Crest to $1,940,000. This represents a $50,000 adjustment in the price and is an example of listing to the universe. The house is great and has been staged. Please get in touch with me to see it.

Don’t forget to check out my app. Carole Schiffer.

Timely Real Estate News………………………………1 September 2018
***********************************************************************
California’s housing market took a step back
As I have been reporting the past few months, our housing market continues to suffer from two primary challenges: #1 — rising prices, which is keeping many out of the market, and #2 — lack of inventory, which is causing rising prices everywhere. As reported in my last issue of The Schiffer Line, sales volume and the # of units sold in the areas I cover are behind over 5%from last year’s total as of July 2018.

On an annual basis for the third consecutive month according to the California Association of Realtors, the state’s housing market backpedaled in July as higher interest rates and rising home prices eroded housing affordability and dampened demand.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 406,920 units in July. July’s sales figure was down 0.9% from the revised 410,800 level in June and down 3.4% compared with home sales in July 2017 of 421,460.

CAR reported the Southern California Region housing market was essentially flat compared to last year with sales ticking up 0.1%. Ventura County led the region with a 9.4% sales increase, followed by a modest uptick of 1.3% in Riverside. The core employment centers of the region continued to struggle as Orange and Los Angeles counties saw sales declines of 0.9% and 1.4%, respectively. Sales in San Diego inched up 0.7% in July. I will give you a complete updated report on our local housing market in the September 15 issue of The Schiffer Line as well as the quarterly update at the end of September.
************
Home buyers want to “simplify” the process
It’s no surprise many home-buyers reach a point of total frustration in the process of purchasing a home these days. Paperwork and more paperwork. Fannie Mae’s National Housing Survey revealed home buyers want the mortgage process to be less onerous and faster. But they also want more personal interaction as they navigate a transaction and very big decision in their life.

According to the survey, as the Amazons and Ubers of the world continue to raise the bar for ‘consumer-grade’ experiences, home buyers have made it clear that it’s also time for the home purchasing and mortgage processes to change. I have been in the process of re-financing both the loans on my home in Coronado and here in LA and the process has been painful at best. The amount of paper work they require is crazy, particularly as in both cases, we are staying with the same lender who currently has the loans and we are in excellent standing for both. But with the changing regulations that exist today, in some cases that doesn’t really matter.

Overall, borrowers say they want less paperwork. They said gathering the necessary financial information to apply and get approval for a loan is the most difficult part of the mortgage process, which was particularly true for those over the age of 45 or those who’ve purchased more than one home in their lifetime. A few highlights…
* 72% prefer to fill out application online
* 70% prefer to submit all documents online
* 65% prefer a person to explain mortgage terms, options
* 58% prefer a person help in reviewing documents

Borrowers do like the idea of a digitizing the application if it would speed up the process. The majority of home buyers surveyed also said they’d like to see the mortgage process—from application to closing—completed in one month. That is five days less than the current median process takes, which averages about 45 days.

But in the end, home buyers want more personal interaction in the process. And that’s where a good real estate agent can assist in the process. Generally the lender I work with has some excellent programs that will make the entire process much easier and faster.

************
Germs love your kitchen
And why not? It’s their restaurant. Prices are good (free). Great menu (same as yours). Self-serve (means immediate gratification). Open 24 hours (open holidays). Think of ‘germs’ as your permanent (unwanted) house guest who pay no rent, and can be so very hard to get rid of!

In a report issued by NSF International, who tracks this sort of thing, it was found that the kitchen, not the bathroom, was the “germiest” place in the house. Luckily, you can easily conquer any potential contagion with a little elbow grease, bleach and a bunch of coffee to ramp up your motivation and tackle all the surfaces and more in your kitchen. Here are some handy tips….

* Dish sponge — put in microwave to clean and toss every 2 weeks
* Kitchen sink — don’t put raw meat in disposal and clean every two weeks with tablespoon of bleach and gallon of water.
* Pet bowls and toys — ranked the #4 dirtiest place for germs. Rinse well and wash pet toys regularly
* Coffee reservoir —germs love dark places. Put in white vinegar and rinse. Read brewer’s instructions.
* Knives in holder — another popular place. Clean out wood holder with bleach, rinse, dry thoroughly. Only place ‘clean’ knives in holder.
Germs love humans…and we’re our own best enemy, are we not? YUK!!!!

************
Home prices to continue rise, no let up
Is this good news? Depends on where you sit. If you’re sitting in your living room, looking at the for-sale sign in your front yard, there’s a smile on your face. If you’re a homebuyer, looking at the for-sale sign from your car, not so much.

CoreLogic, the San Diego-based real estate research firm and truth sayer, reported that while the U.S. median sale price has risen by almost 7% over the past year, the principal-and-interest mortgage payment on that median-priced home has increased more than 14%.

Moreover, in their latest Home Price Index Forecast, CoreLogic suggests U.S. home prices will be up 5.0% year-over-year in May 2019, while some mortgage rate forecasts suggest the mortgage payments homebuyers will face at that point will have risen close to twice that. And this comes in a market that has marked differences between what home sellers want and what homebuyers can afford.

The U.S. median sale price in May 2018 – $226,674 – was up 6.7% year over year, while the typical mortgage payment rose 14.3% because of a nearly 0.6 percentage point rise in mortgage rates over that one-year period. In a review of projected mortgage rates, CoreLogic concluded that rates will rise about 0.31 percentage points by May 2019.

So, it’s a matter of whether you’re sitting in your living room or in the car in front of your dream home as to what’s fair or not fair. One thing is happening in our Westside neighborhoods, sales volume has been below last year which means that price over reaching doesn’t always work. One national firm predicts that by 2020, the U.S. housing market is going to become a buyer’s market. My recommendation to sellers — be price sensitive and competitive. Over-pricing doesn’t work.

************
“Go Bags” for Emergencies
The recent earthquake in Los Angeles County, registering 4.4 in La Verne, should prompt all of us to be prepared for any emergency that might require us to evacuate our homes. Here is a list of items you’ll need as recommended by FEMA and fire departments:

#1 Pick a backpack or a nylon camper’s laundry bag with a drawstring.

#2 Take photos of all the rooms along with your valuables, and scan all of your important documents which should include all of your medicines, first aid kits, driver’s license, deed to house, will or trust, medical records, proof of insurance, social security cards, birth certificates and list of personal contacts, kids immunization records, pet’s paperwork. and any other heirlooms or valuable antiques, art. Place on flash drive or upload it to the cloud (I use carbonite).

#3 Enough supplies to last at least two weeks — water, (one gallon per day/person), non-perishable food, first-aid kit, flashlight, batteries and chargers, clothes, diapers, pet supplies, charging cords for all devices, laptop, radio, (portable and/or hand-crank and batteries for same) multi-use knife, duct tape, toiletries, rope, whistle, cash (plenty), blanket, work gloves, running shoes or boots, several days’ worth of clothes, moist towelettes, garbage bags, and plastic ties for sanitation purposes, local maps in case GPS is not working. .and breathing masks for all. Also, we should never let the gas tank in our cars go below ½ because if and/or when the power goes out, the gas pumps will not work.

These “go-bags” should be in our homes, cars and offices. In addition, FEMA recommends you have an escape plan and route for all family members, and insure your phones are charged fully every day. Emergency kits should be stored in every family car as well. Be safe. Not sorry.

************
Time out: It’s time for some “forest bathing”
Let’s take a pause, OK? We all spend way too much time on our ‘devices’, too much time on the freeway, and finding parking spaces. Isn’t it time to get away from all of this for a well-deserved respite?

May I suggest: “Forest Bathing”. What is this? “Forest bathing” does not involve soap or rubber ducks, but it is an adaptation of the Japanese practice shinrin-yoku, which translates to forest bath, or taking a relaxed walk through nature. The Japanese government has recognized the practice since 1982 as a scientifically proven way to reduce stress, improve mood and even boost the immune system.

Offered originally at the Los Angeles County Arboretum in Arcadia, the concept of Forest Bathing can occur anywhere where one can immerse themselves in a plot of pure nature — tall trees, flora and fauna, and the quietness of the forest where only your thoughts can be heard.

Forest Bathing guide, Ben Page, reflected that by consuming the power of nature in the forest, one becomes more relaxed and peaceful…you can feel the energy emitting from these bastions of nature and you realize how much you have been missing by simply going into the forest and experience nature as it was intended. “You can see so much in a tree, it will blow your mind,” Page said.
The next time you’re on the 405 or 10, think about taking a “forest bath” and taking some well-deserved time off with Mother Nature.

************

Housing market feeling more ‘bearish’
While the housing market continues to be somewhat of a challenge: Nationally housing starts grew only 0.9% in July from the prior month. This isn’t necessarily good news. Rather than a mere aberration, this could signal the emergence of a bearish “new normal” in housing. Why? A slowdown in the growth rate of the adult population is one factor. The less obvious trend is behavioral: Today’s young adults (think Millennials) are no longer rushing to set out on their own—and their parents are no longer yearning for an empty nest. Barring a drastic reversal in this trend, the housing market will have to cope with sustained slow growth for years to come. More than a third of Millennials are still living with their parents — delaying marriage, and thus delaying a need for a home.

America remains mired in by far the weakest housing market of the postwar era. New housing starts over the last 12 months weigh in at of +1.2 million. That’s barely half of where it stood at the peak of the last business cycle. And, in fact, it is lower than at the peak of any business cycle going back almost all the way to World War II. Historical data on the U.S. housing stock reveal that even the America of then — the 1950s –out built the America of the 2010s. I find that amazing.

We don’t have Baby Boomers to carry us through another robust housing growth period, and we’ll have to either be satisfied with the new ‘low-growth normal’ or figure out a way to spur housing development. That doesn’t seem likely, does it?

************
Speakers Corner
I know I am aging myself, but there is a fabulous classic song, “September Song” that makes me feel realize just how quickly this year is passing. With that having been said, I hope you had a wonderful Labor Day holiday!

What is happening in my life, both real estate and otherwise. First personal: my wonderful, cute 96-year-old Mom continues to enjoy her life partially to the assistance we have from her two caregivers, that make our lives so very much easier by being there 24/7. Thank you Enriquita & Rosie.

Professionally, I am very busy. I have a new listing coming up in Bel Air Crest after the holidays as we need to finish painting, and staging it. It is a 3/2.5, plus den for $1,995,000. I can probably start to show it the end of the 2nd week of the month, so if you have anyone for it, please let me know. With my listing in Mountaingate, the buyers who want to be in either of those two communities keep me on my toes.

I do want to share some of my thoughts about pricing and “listening to the universe”. At the end of the day, what matters as pertains to price is what the sellers and buyers will agree to, and if one has a property that is not properly priced, and continues to linger on the market and receive offers substantially below what they are asking, then in my humble opinion that is the universe talking to us, and we all need to be listening.

As always, I am here for any and all of your real estate needs, big or small. My personal app, Carole Schiffer is being launched this week, so keep your eyes peeled for the notice and don’t forget to follow me at Facebook page http://www.facebook.com/CaroleSchifferRealtor, my LinkedIn page http://www.linkedin.com/in/caroleschiffer and @caroleschifferrealtor on Instagram.

CalBRE 00677619
©2018 Coldwell Banker Real Estate LLC. Coldwell Banker is a registered trademark licensed to Coldwell Banker Real Estate LLC 234567An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC.