Timely Real Estate News………………………………….. 1 June 2019
Improving inventory giving buyers more choices
One of the most frustrating conditions of the recent housing market has been the lack of inventory. Buyers faced a hotly competitive environment, with multiple offers a common experience for quality listings. Effective a few months ago, that changed.
According to the National Association of Realtors, nationally the total housing inventory at the end of April increased to 1.83 million, up from 1.67 million existing homes available for sale in March and a 1.7% increase from 1.80 million a year ago. Unsold inventory is at a 4.2-month supply at the current sales pace, up from 3.8 months in March and up from 4.0 months in April 2018.
“We see that the inventory totals have steadily improved, and will provide more choices for those looking to buy a home,” stated Lawrence Yun, chief economist for the NAR. He notes that sellers have to realize that price growth has moderated. “When placing their home on the market, home sellers need to be very realistic and aware of the current conditions.”
Properties remained on the market for an average of 24 days in April, down from 36 days in March and down from 26 days a year ago. 53 % of the homes sold in April were on the market for less than a month.
Yun says that college student debt continues to hinder millennial homebuyers. “Given the record high job openings in the construction sector, some may want to take a gap year to work and save, and thereby lessen the student debt burden: Yun indicated the hottest markets were Boston, Lafayette (Indiana), and Sacramento-Roseville.
Home prices are falling in many metros
Homebuyers are not only benefiting by increased inventories across the country, but prices are softening as well. Not everywhere, but it’s a trend in the U.S. housing market according to the NAR.
Home prices are up nationally, but buyers are finding that values are starting to fall in a handful of areas. One in five metro areas are seeing decreases in home prices compared with half as many a year ago, according to realtor.com.
We are seeing this happening on the Westside, too, as inventories have marginally increased since the first of the year, and median sales prices are down in two of the five areas that I report on regularly (Beverly Hills Post Office and Bel-Air/Holmby Hills) and but up in three (Beverly Hills, Westwood/Century City, and Brentwood). Buyers, quite frankly, have reached their tipping point — pulling out of the market rather than trying to compete.
Sales in the five areas (as listed above) are down 13.5% for the first four months of 2019, which is an improvement from March when year-to-date sales were down nearly 25%. According to the NAR, the hottest markets in California are also showing price declines — San Jose, median price is down 8.4%. Oxnard is down 5.4%, and San Francisco is down 4.9%.
Credit scores are moving up…
According to Experian, one of the nation’s leading credit tracking services, credit scores are creeping up for most Americans. The average U.S. credit score was 680 in 2018, up from 675 the year before, the report found. That’s the biggest one-year jump since 2008, but not quite back to the 685 average that year as the Great Recession deepened.
The State of Credit report — released this week – looked at a statistically relevant sampling of Experian’s consumer credit database, checking data from the second quarters of 2008, 2017 and 2018. It used the Vantage Score credit scoring model, which — like its competitor FICO Score — ranges from 300 to 850.
The 2018 data showed: The highest credit scores again belonged to the oldest consumers (those 72 and older), who clocked in with an average of 732. The lowest scores were seen for those 18 to 21 years old, whose scores averaged 639. Americans ages 22 to 35 had an average score of 644. People in the 36-to-50-year-old group averaged 662, and people ages 51 to 71 had an average of 706.
Experts advise using no more than 30% of the credit limit on any card, the lower the better. The best scores go to people who use less than 10% of their limits. Experian found that the average consumer was using about 30% of available credit in 2018, unchanged from 2017.
Tariffs are affecting home building
The prospect of a strung-out tariff battle is already affecting retailers and home building companies. According to the National Association of Home Builders (NAHB), an array of American businesses — such as retailers and manufacturers — consider their ability to pass rising Chinese-import tariff costs onto consumers a new “fact of life”. Homebuilders are now joining the club. That translates to more expensive housing.
According to the National Association of Home Builders (NAHB) as much as $10 billion in goods imported from China are used in homebuilding. Clearly boosting the cost of those goods by 25% would impact profit equations in homebuilding.
Even though new construction is picking up, the overall pace is slowing. This is even harder to reconcile with recent data from the NAHB showing that the monthly index of homebuilder sentiment jumped to a seven-month high in May.
What factors are driving up prices? The cost of the principal materials (land, labor and lumber) used to build is rising. The prices of these key inputs are all on the rise for differing reasons. The current U.S.-China trade tensions may make things worse.
The bottom line? Unfortunately, the limited supply of properties to choose from may be the case for a while. Homebuilders aren’t likely to alleviate the supply shortage if import tariffs are imposed.
Purple Line gets County OK — think 2027 finish
The long-needed link between downtown Los Angeles and West Los Angeles has been green-lighted at an estimated $9.7 billion budget and a 2027 completion date, just in time for the 2028 Olympics. Los Angeles County transportation officials approved the last major contract needed to build the Purple Line subway extension to the Westside, a significant step for the region’s most anticipated rail project in a generation.
The Metropolitan Transportation Authority’s board unanimously hired a joint venture coalition led by Sylmar-based Tutor Perini Corp. to build two subway stations and install the tracks and signals inside two massive tunnels beneath Century City and West L.A.
Most of the $9-billion Purple Line will run beneath Wilshire Boulevard, the most-traveled mass transit corridor in the county. Metro expects to finish the subway by 2027, the year before Los Angeles hosts the Summer Olympics.
“It’s going to be done before the Olympics,” said Rick Clarke, Metro’s chief program management officer. “With all the contracts awarded, it’s a certain thing that the project is going to get completed.”
Metro plans to open the Purple Line project in three phases: from the current terminus in Koreatown to La Cienega Boulevard in 2023; to Beverly Hills and Century City in 2025; and to Westwood and West L.A. in 2027.
California’s drought officially ends
With all the rain and cool weather, we’ve been having, it isn’t hard to figure out that the drought appears to be over. But is it really? Yes, it is!
According to the U.S Drought Monitor, which started in 2000, the longest duration of a drought in California lasted 376 weeks beginning on December 27, 2011, and ending on March 5, 2019. The most intense period of drought occurred the week of October 28, 2014 which affected 58.41% of California land.
While California is officially free of drought after more than seven years, rainfall this winter has further alleviated the drought conditions although 7% of the state remains “abnormally dry”.
Los Angeles passed its official annual average of 14.93 inches of rainfall on February 14. Some of the season totals to date for 2018-19 include 23.87” for Hollywood, 19.48” for Northridge, Agoura — 22.41”. Sepulveda Canyon — 30.83”, and Pasadena 27.51”. It’s been a delightful wet winter for us Angelenos. Unfortunately, with the record amount of rain we have received, plant growth has been stimulated which could potentially lead to a dangerous summer and fall with a lot of “food” for the long hot summer and fall that has been predicted. Please make sure that you have prepared by trimming back your brush and have your emergency plans in place. Please see previous Schiffer Line issues for special recommendations for your emergency preparedness plans.
Green light given by The Public Utilities Commission
California regulators just approved the ability for the utility companies to cut off electricity to possibly hundreds of thousands of customers to avoid catastrophic wildfires like the one sparked by power lines last year that killed 85 people and largely destroyed the city of Paradise in Northern California. The California PUC and the individual companies were charged with doing a better job of educating and notifying the public, particularly those with disabilities and other who are vulnerable and must also ramp up preventive efforts, such as clearing brush and installing fire-resistant poles. The precautionary outages could mean multiday blackouts for cities as large as San Francisco and San Jose. Pacific Gas & Electric and So Cal Edison as well as the Department of Water & Power that serves Los Angeles County. anticipate cutting the power only in “truly extreme fire danger weather”
This only reinforces the need for all of us to have emergency backup power plans for our homes. I just installed a garage door opener with a backup battery at my home and am in the process of installing a backup battery for my home as well. We owe it to ourselves and families to be prepared and safe.
What is the story with the “real driver’s license”?
For those you like myself you renewed your driver’s license early last year, (Mine happened in February), it was discovered that the licenses that were issued then have an error which makes them slightly invalid because we only had to supply only one proof of residence. The DMV will be sending out letters asking us to verify that proof of residence, sign and return the letter.
If the mailing address on your letter is not correct — perhaps you have moved since your Real ID was issued — you will need to check the No box. In that case, you will need to sign the letter, place two proofs of residence in the envelope that show your new address and return in the envelope. You can see what proofs of residence are required on the DMV website.
The DMV also will ask if your address is incorrect, that you go online and update your address. This is important
you will need to have a Real ID license to board an airplane, although a U.S. passport will also qualify. The Real ID will not qualify for international travel — your passport is all you will need. If you don’t receive a letter, no worries, there is nothing for you to do.
Some of you may recall that I talked about the 3 day 97th birthday celebration we had planned for my Mom during Memorial Day Weekend. All I can say is that it was magical! Mom was thrilled and I have not seen her as happy in a long time. As you can see in the photo, the candle would not go out and it wasn’t even a trick candle! She had her whole family with her, three grandchildren, children, care givers, and a lot of laughter and music. She had not seen my daughter and son-in law in a few years, and we replicated the photo we took at that meeting and replicated it exactly as we are today. The kids formed a family Facebook group and we all are busy Facebooking back and forth!
As for business, we have had some near misses with my two lease listings, but unfortunately for one reason or another, they have not worked out so they are both still available. I did however just lease a lovely client one of the Custom homes in Bel Air Crest and am working with a few buyers as always looking for that special property. If you are a Custom homeowner in Bel Air Crest, you may have already received a letter from me as I have two buyers each of which have somewhat specific needs (one more than the other). Please contact me if you are at all interested in selling your home.
In the interim, I am looking forward to a beautiful summer and hopefully spending some time in Coronado (it has been a while since I have been there), and to hearing from and seeing you.