Timely Real Estate News…………………………………..15 December 2017
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So how will the fires affect real estate prices?
That’s a big question we all have. California already faces enormous pressure on housing availabilities without the costly and tragic eradication of homes and rental units up and down the state during these two-major fire disaster, one of which (Santa Barbara) continues to rage on. It could “exacerbate an already challenging market for buyers,” says Chief Economist Danielle Hale of realtor.com. “People will probably look more toward apartments.” But there aren’t enough affordably priced rentals to go around either.
In all of California, nearly 2,045
,000 homes are deemed at high or extreme risk from wildfires, according to the 2017 Verisk Wildfire Risk Analysis. That’s 15% of the state’s households, according to the insurance, natural resources, and financial services data
analytics company based in Jersey City, NJ. Usually after a major disaster, real estate prices drop. Buyers don’t want to look out their windows to see the burnt-out remains of their neighbors’ homes. Whole neighborhoods can become loud and messy construction zones as residents rebuild their beloved communities. And of course, there are always fears that another disaster could strike.
The October fires in Northern California killed 44 people, damaged more than 21,000 homes and 2,800 businesses, and cost more than $9.4 billion in insurance claims as of Dec. 1, according to the California Department of Insurance. About 100,000 residents were forced to flee their homes.
However, hold on to your hats, but prices are actually going up…. But instead of prices going down, they actually shot up in Sonoma and Napa counties after the tragic wildfires. For example, Median prices of single-family houses rose 6.1% in Sonoma and 7.5% in Napa from September to November, according to real estate brokerage Pacific Union.
In Santa Rosa, the Sonoma County city that was devastated by the fires, median home prices have risen about 9%, says a local real estate agent. They typically fall this time of year as the market slows down ahead of the holidays.
What’s going on? Despite the destruction, this is still an incredibly desirable area to be—so much so that folks are willing to take the risk. Many of the residents who lost their homes still want to remain in the area, and will pay whatever is necessary to do so.
That’s why in these sorts of anomalous places, prices can rise as a result of the disaster, says Orell Anderson, a national real estate appraiser with Strategic Property Analytics in Laguna Beach, CA. The fact that there weren’t enough homes on the market before the crisis only exacerbates the situation.
Undamaged homes are now receiving multiple offers and going as high as $100,000 to $200,000 above asking. And many buyers in the wealthy area, whose high-end homes were damaged in the flames, have the means to pay all cash.
“The majority of people here are saying, ‘This is my home, this is my neighborhood, this is my community,'” say the locals who want to stick around as they fix up their homes. “We’re going to rebuild and we’re going to make our community and our homes nicer than they were,”.
That kind of topsy-turvy post disaster price appreciation may not occur in Los Angeles and the other counties affected by these latest infernos. After most natural disasters, homeowners can expect to absorb a roughly 10% discount if they put their properties on the market, says a real estate appraiser.
People buy neighborhoods…. they stick together
Real estate research has long proven that people buy neighborhoods as well as homes. So, properties that were miraculously spared on burnt-out blocks are going to see the biggest discounts. (Buyers are unlikely to want daily reminders of the devastation.)
Los Angeles has some of the nation’s most expensive real estate, but the city is very different from the wine counties up north—vastly larger, more diverse, and perhaps less predictable.
Generally, most people after a disaster are risk-averse, and yet most will rebuild says. All we can do and take a ‘wait and see’ attitude about all of this. The Skirball Fire claimed 6 homes in Moraga, Linda Flora, all of the vines at Moraga Vineyards and on Casino…. but no homes were damaged or destroyed at Bel Air Crest or Mountaingate. Each of the communities have well-established land-clearance practices and Emergency Preparedness procedures in place. In fact, Bel Air Crest has its own water-fire truck which was on the scene immediately after the fire was first reported.
Of course, I will keep you all posted about this…. a most critical topic for some time to come. Thank all you and the first responders for their tireless support and sacrifice.
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Prices accelerate upward…sellers happy
Depending on your point of view, there are two ways to look at the continued rising home prices in our communities especially on the Westside. From the seller’s view, rising prices mean more money in their pockets, but from a buyer’s point of view, the rising prices just add to the stress of finding a home one can afford and avoid the increasing competitive bidding for ‘gem-level’ homes (priced competitively, good location, well presented). Inventories continue to lag well below demand, but we are seeing moderate increases in availabilities. But they all come with a ‘price’.
Median sales prices continue to move up for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood — all have shown strong “year-to-date” price increases. Beverly Hills leads the pack with a 27% Y-T-D increase since January 2017, and by the end of November, the median sale price was an even $6.000 million. Beverly Hills Post Office posted a 26% for the same period at $3.235 million….Brentwood was 16% ahead — $3.157 million — since last year…Westwood/Century City was at $2.015 million or 9% plus and Bel-Air/Holmby Hills was 6% over 12 months ago at a median sales price of $2.286 million. I also report on Santa Monica which had no change in its median sales price at $2.500 million.
Sales volume continues strong, too!
The five communities I report on accumulated more than $3.463 billion in total sales, a 11.7% increase over this time last year, which demonstrates the strength in the market which has been positive all year. Frankly, with lower-than-desired inventories and our continued strong demand, I don’t see prices ebbing any time soon, even though buyers continue to look for bargains…there just aren’t any. Santa Monica remains 16.1% ahead of sales for 2016, however prices remain steady there.
Across the board, there were strong year-over-year increases in median sales prices in all of the communities…for example, Bel-Air/Holmby Hills was up 61% in November 2017 over same month last year…Westwood/Century City was up 28%…BHPO was up 20%…Beverly Hills was up 23%, and Brentwood was still up 8%. The trend lines all reflect a demand curve that doesn’t appear to be declining.
On another front though, the average “days on market” — always a bellwether for buyer demand in real time is averaging 98 days in Beverly Hills, 65 days in BHPO, 78 days in Bel-Air, 35 days in Westwood/Century City, and 34 in Brentwood…inventory priced correctly is moving quickly when it appears on the scene.
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Fed does the expected…raises rates
The Federal Open Market Committee announced that it will increase the federal funds rate by 25 basis points to a range between 1.25% and 1.5%. This marks the third increase of 2017, with three more rate hikes expected in 2018.
However, even with the Fed rate hikes, which were anticipated, the Fed anticipates faster growth in the coming year, noting in a statement it expects “economic activity will expand at a moderate pace and labor market conditions will remain strong.” This is good news.
Despite no signs of inflation on the horizon, the Fed offered almost no change to interest-rate projections. The average 30-year fixed rate mortgage stands at 4.08%, still near historic lows. Not only does this present potential borrowers with an opportunity to purchase a home with a low rate in the coming months; it represents an opportunity to refinance, particularly for those with an adjustable rate mortgage.
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Retirees fret about paying off mortgage….
Many retirees are worried if they’ll ever be able to pay off their mortgage. Forty-four percent of 60- to 70-year-old retirees have a mortgage in retirement, according to American Financing’s 2017 Retirement and Mortgages Survey. Thirty-two percent predict it will take still take them more than eight years to pay off their mortgage.
Baby boomers are carrying mortgage debt into retirement more than previous generations, a survey by Fannie Mae showed earlier this year.
Sixty-four percent of 60- to 70-year-olds say, as of now, they plan to remain in their current home. Sixty-two percent say they plan to one day leave their home to their children or their estate, according to the survey of 800 consumers between the ages of 60 and 70 across the U.S.
Fifty-eight percent of boomers say they have refinanced their loan at some point, mostly motivated to do so in order to lower their mortgage rate. But 19% say they do not know what a reverse mortgage is.
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Impressive job #s fuel economy…..
According to the National Association of Realtors’ Chief Economist Lawrence Yun, November marked another impressive month for the labor market, adding up to now over 2 million net new jobs over the past 12 months.
From the deep recession in 2010, 17 million new jobs have been created. In fact, current employment levels are way above the pre-recession levels by nearly 10 million. That means an abundance of new potential homebuyers in the near future. Yet, the construction employment is still slow in coming.
Even the though the latest month’s job growth rate in the construction sector of 2.7% is twice as fast as the overall growth rate, total construction jobs are still well below the pre-recession levels by roughly 20%. Without more skilled construction workers and more hiring in the sector, the housing shortage will continue well into 2018.
Economically speaking, with a strong market, low mortgage rates (still), low unemployment and job growth, 2018, indeed, looks like an early Holiday present.
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Luxury home buyers want “over the top”
We just happen to experience a unique lifestyle on the Westside where the outrageous is, well, not so outrageous after all. However, this philosophy is not limited to Los Angeles, there are some crazy “over the top luxurious items being added to homes all over the country! It seems people are trying to outdo their own fantasies of creating something “over the top” …and that’s the trend we’re told by leading spec developers Nothing is being held back.
As one developer noted…” it’s the buyers who are making demands…the market is pushing us to fulfill their dreams.” For example, developers in Los Angeles are focusing on expanded floor plans with the finest upgrades in luxurious amenities. Specific rooms are receiving bigger and better improvements than others, especially those where residents spend the greatest amount of time while at home. One room in particular — the bathroom, is receiving more of attention over the others more recently, due to the increasing need to relax and retreat from the harsh stresses of daily modern life. On a more practical scale, buyers have in mind a specific list of highly desirable wants when it comes to a luxurious bathroom. At the top of the list is a soaking tub to wash away the stress and strain of daily life. Buyers also want an oasis of greenery, especially if the room does not have any windows.
Some of the over-the-top amenities include indoor golf simulation room, wine cellar with fully ventilated cigar room, large movie theaters, bowling alleys, and of course, full-on automated and smart home technology throughout. Outdoor summer kitchens that operate year-round is gaining traction as is roof-top patios and gardens that provide that ‘extra view of the world.’
There appears to be no limit except a buyer’s or developer’s imagination.
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Reflections on the Fires
I must tell you, it was/is a horrible thing to wake up and see that HUGE, ugly ball of fire looming at what could be your front door. While it was/is terrible, we in Bel Air Crest were very lucky that the winds blew in the direction they did or we would have been in a much more difficult situation. Our Emergency Preparedness volunteers were amazing, and the first responders of both the LAFD and LAPD, along with the fire fighters from all over, including Northern California, Oregon and Washington State were life savers, literally. I also learned more about voluntary vs. mandatory evacuation. The fire dept. was more causal about having us evacuate, while the police were much more strident about it, and so for a while we were getting conflicting instructions.
Finally, the LAFD — because of the liability — agreed with the LAPD, and the final mandatory evacuation order was released. Even with that, I estimate that approximately 30 % of my neighbors did not leave. Having been evacuated from my house for four nights, gave me a new perspective on what I hold valuable and dear, and what I should think about the next time this happens, and unfortunately it will happen again. I also learned a lot.
Here are some things you may want to think about for yourselves:
1) Does your home owners’ insurance policy have a “brush fire” exclusion from their coverage? Apparently, there are some that do.
2) When you are preparing to pack up and go, and you should have your “go” bag with meds, cash, credit cards, important papers (even though they should all also be on “the cloud” – deed to house, birth certificate, etc.) family photos, clothes for a few days, you should also think about your art work. Again, check your homeowners’ policy about your art, and I also highly recommend taking a video inventory of all of the items in your house that may need extra coverage, art, jewelry, china, etc.
It is really sad that the Skirball fire was started at one of the many homeless encampments that we have in the Sepulveda Pass area. Hopefully we will be able to assist these folks in re-locating to another location that will be better for all involved.
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Real Estate News
While it is quiet in my office, real estate life does go on, and there are still sales & transactions being made. Open house activity is good, and the buyers are out there wanting to participate on the market. At my open house in Mountaingate last week, I had 4 guests, all of them buyers, and this was after the fire! After the first of the year, I have a number of listings coming up and will be happy to share the information with you then.
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Happy Holidays….it’s that wonderful time of year
As we await the arrival of Santa Claus with his momentous job of delivering all of the gifts throughout the world in one night, and are now enjoying Hanukkah, I want to wish all of you the happiest greetings for the Holidays. We have much to be thankful for…and even though our December was visited by the fire tragedy, the losses could have been much worse. We should all be thankful for that. For many of us who have friends and relatives who have suffered losses in other parts of Los Angeles, Ventura, Santa Barbara, Napa, and Sonoma counties our thoughts and prayers go out to them all.
I hope you have a wonderful, safe and happy holiday!!!!!!!!!
Mine was lovely, but a little strange and different. I spent it at my home at the beach in Coronado, and it was HOT!!! The temp was 94 on the beach, leaving no energy for doing anything including eating turkey. I cooked it, but we ended up having an omelet as that is all we had the energy for. Fortunately, it cooled down and we were able to enjoy the rest of the weekend. 
Hopefully when the whole family gets there for the rest of the holidays, the temp will be more normal.
The brunt impact of the “Tax Cuts and Jobs Act” on California home owners is merely one of the insights to emerge from a new state-by-state analysis by NAR of the tax bill that passed in the House on November 16.
Based on signed contracts, year-over-year statewide pending home sales dropped in October on a seasonally adjusted basis, with the Pending Home Sales Index declining 2.6% from 119.1 in October 2016 to 116.0 in October 2017. California pending home sales were also down on a monthly basis, decreasing 3.3% from the September index of 120.0.
climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm. The increase defies record job openings and a 4.1% unemployment rate, the lowest in 17 years. Not surprisingly, a much larger portion of younger Millennials age 18 to 25 (59.8%) live with relatives, but that figure generally has fallen the past few years after peaking at 61.1% in 2012.
More dramatically, it is women who are using home…and its invention…as a tool for economic and creative improvement.
proposed plan for the development of a Think Tank on the undeveloped 450 acres just south of Mountaingate between Sepulveda and Mandeville Canyon.
Yes, the market is slowing down, but we are also experiencing multiple offers on properties within days of them coming on the market, so while there may be slowing down while people are waiting to see what is happening with the tax bill, and the holidays, depending on the properties and prices, it is an active market. Case in point, last Sunday (Thanksgiving weekend), at some open houses held by my colleagues there were more than 40 groups (or guests) in attendance, and one of those open houses created a multiple offer situation of 6 offers. In another example, two homes in Santa Monica that I sent one of my clients to the previous weekend, had just come on the market and are now in escrow. As always it is a case of pricing and filling the needs of the client.
after the first of the year. They are in Bel Air Crest and Mountaingate and will be in the mid $2,500,000 range. In addition, we will be putting a home in the Sunset Plaza area on the market soon, and that will be in the $4,000,000 plus range. If you have any interest in either of these homes or know someone who would (the Sunset Plaza home will need updating but has a fabulous view!) please let me know. 310 442-1384
the country. However, you can’t tell it by sales volume — which is driven by demand, forcing prices up and up — demonstrated by the fact that these communities were up 13.5% over 2016 for the first 10 months at $3.136 billion compared to $2.751 billion a year ago at this time. But, please remember, there are many private sales in the $10- and $20-million-plus category that are not officially reported to the Multiple Listing Service, so sales volume is significantly more for the Westside. According to last month’s high-end sales report, there were 42 homes selling over $20 million, 19 of which were private sales, meaning they were not included the stats that I get from the multiple listing service. However, the median sales prices would be slightly higher for those sales not included.
One of the key statistics I look at each month is comparing how a community is doing on a year-to-year basis, and October was really an eye-opener. For example, Beverly Hills’s median sales price in October 2016 was $3.102 million but in 2017, it was $7.860, a 153% increase. Bel-Air/Holmby Hills was 83% over a year ago…Brentwood was up 73%, Beverly Hills was up 37%. Westwood/Century was, however, down 3%. As I mentioned in the past one months’ price increase doesn’t make a trend, but we are seeing extremely strong price increases in our most popular communities on the Westside. All of Beverly Hills nine sales were over $3 million.
volume for Marina del Rey through October 2017 nearly doubled. Located next to the Venice canals and literally dug from a swamp/wetlands area in the 1960s by Los Angeles County, Marina del Rey has been developed into a community with condos and lovely single-family residences. In comparison with October 2016 — total sales through the 10 months of this year was $111 million vs. $58 million a year ago at this time…. an 88% increase in volume. Median sales prices were $1.410 million through October. This can mostly be attributed to Silicon Beach as we have discussed in the past.
— recently retired and is starting off her retirement with a move to Normandy, France, for six months. She and her husband, a retired attorney, decided to sell their house before leaving. It’s a lovely home on a tree-lined cul-de-sac in Brentwood, walking distance to Sunday’s Farmer’s Market, and has this fabulous, large lot, with a guest house and large BBQ area, towering trees and is beautifully landscaped.
your home if you’re thinking of about putting your home on the market. It’s a way to add dramatic impact to your home without costing you a fortune, and it’s relatively easy to accomplish.
ignore the ceiling: If you pick the wrong color and have not taken into consideration the ceiling color, you could end up with a mess. “…paint properly, giving the edges along the top a sharp cut in will make the wall pop!” Also, the best color for a ceiling is one that will add to the feeling of height of the ceiling (everyone loves high ceilings!), and 5) Add an accent wall to an odd place. There’s nothing like putting a distinctive color on one wall that is not expected. Adding a pop of color to an accent wall is a popular choice…but don’t make the move ‘jarring’. Use samples and swatches…think about it until you feel comfortable before you commit. If the colors are too bright or too bold, it could turn off buyers.
dropped precipitously, with Manhattan plummeting in the PWC index, while Chicago’s drop was “severe” according to the well-regarded study, issued annually by PWC and the Urban Land Institute.
expected to approve the use of commercial drones —This will be a boon for companies as Amazon who have already tested innovative product delivery. This will not affect the recreational user, but there a many uses already being tested for commercial use.
exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin can also be held as an investment. According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
local family owned market here in Brentwood at Thanksgiving to collect food and cash for the Westside Food Bank. This took place last Saturday, the 11th and as always it was a truly exceptional day It always amazes me that people who look like they don’t have two Nichols to rub together, come out with shopping bags full of food.. The concept is that people go into the store, purchase nonperishable foods, which they in turn put in the barrels for the food bank to distribute to their clients. Over the years, we have learned that some of the clients at the food bank, had in previous years been donors themselves! This year we filled 4 barrels to the top, and collected $550.00.
My wonderful listings in Bel Air Crest and Mountaingate are patiently waiting for their new owners to enjoy them. The house in Bel Air Crest is 3 bedrooms/3 baths and has been done to the nines and is very sophisticated and is priced at $2,225,000.
brush ready” for its new owner and is priced at $2,130,000. Both homes are in gated communities. The holidays are a great time to look for a new home, and sellers are most anxious to show off their holiday decorations. Please give me a call at 310 442-1384 so we can make an appointment and get together.
Southern California market. The median price for the six-county region soared nearly 10% from a year earlier, to $505,000, data firm CoreLogic said last week. That matches a price level reached in 2007 before the housing bubble burst and the economy cratered.
California (it’s true), so you might be confused by the news that new-home sales are, indeed, up — to a 10-year high, but that’s in the U.S. not here.
of Realtors, California pending home sales dwindled for the third consecutive month, suggesting that the housing market will slow as the end of the year winds down. Based on signed contracts, year-over-year statewide pending home sales dropped in September on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 6.0% from 127.7 in September 2016 to 120.0 in September 2017. California pending home sales increased on a monthly basis, rising 2.5% from the August index of 117.0.
ago, 
Based on current construction estimates, the work to relocate the utility lines will begin on January 2. They will be using Lot 36, at the corner of Wilshire & Veteran for their staging area. Work will be done “a block at time” (or thereabouts) and will be done at night and on weekends. In those periods, Wilshire Blvd. will be reduced from eight lanes to two lanes.
based company that starts at $250. Shoppers will then be able to select in-home delivery on the Amazon app.
gift 
We reduced the price of my listings. 12357, The Ridge in Mountaingate is now $2,130,000 and has been done to the 9’s!!!. My sellers have purchased their new home and want to sell this one, please do come and see it http://www.12357ridge.com.
Also my listing at 11737 Ipswich Court in Bel Air Crest has also been reduced to $2,225,000 and again has been updated as well.
number of homes sold compared to a year ago. This time last year, we had a total of 610 homes sold in the five communities I report on (Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood). According to the MLS records, as of September 30, we had 650 homes sold. That’s a modest 6.5% increase, but inventories have been flat and this has frustrated buyers, all of whom have been fiercely competing for premium listings. We are still in that hot competitive mode, and we have a long way to go to get back to decent inventory levels. Still, it’s a good sign to see home sales increase.
With pressure on inventories, home prices continue to steadily climb. Significantly, when looking at median sales prices a year ago, Beverly Hills is up 7% at $5.237 million; Beverly Hills Post Office is up 24% at $3.050 million; Bel-Air/Holmby Hills is down 3% to $2.211 million; Westwood/Century City is up 7% at $2.039 million, and Brentwood is up 16% at $3.100 million. Bel-Air is one of the areas where median sales prices constantly fluctuate and I don’t regard this as a trend. As always, we need to keep in mind that there are always large sales that skew the numbers as well as private sales that are not included in the MLS numbers.
one home at $25 million. Beverly Hills Post Office had 8 over $3 million, Bel-Air-Holmby Hills had 10 over $3 million with one selling for $17 million, Brentwood had 7 with a sales price of $17.2million. Westwood had 6 over $3 million with the highest priced at $4.4 million.
high-end sales with 434 closed sales of $5 million-plus thus far this year, versus 361 as of last year. That’s a 20% increase. Of these sales, 134 were $10 million-plus vs. 106 last year, a 26% increase. But the biggest difference is in the $20 million-plus category. There have been 40 closed sales of $20 million-plus vs. 19 at this time last year…a 111% increase. Nineteen of these sales were $30 million-plus vs. 8 last year.
workers receiving unemployment benefits fell to 1.89 million by the end of September — the lowest such mark in 44 years! And according to the agency, new claims for unemployment benefits dropped 15,000 to 243,000 in the first full week of October as the job market bounces back from hurricane damage even faster than forecasters expected.
anticipating that factors slowing down inflation will pass, and that will lead to the economy hitting the 2% inflation mark that the central bank believes is consistent with healthy growth. If this holds true, the FOMC indicated that a third increase in 2017 of its benchmark funds rate is warranted. Traders now broadly expect the Fed to hike interest rates in December. Past hikes in the past year have not dampened the real estate market or mortgage rates. According to most experts, another hike most likely will have the same effect. There are other factors that may impact a change in mortgage rates, such as the international situation, but we will have to wait and see what happens there as well.
Roughly 60% of American homes are underinsured by an average of about 20%, according to CoreLogic, a company based in Irvine that provides data to home insurers. That means someone whose house was valued at $500,000 (not including land), for example, would be short $100,000 on the cost of rebuilding after a disaster.
Napa Valley and Anaheim Hills as stern warnings to all of us, especially those of us who live in the hills of Southern California. It’s happened before, and we have to remain vigilant.
years, as demand increases along with job growth, stated a report released last week. In Los Angeles County, average rents in 2018 are forecast to hit $2,304, up 3% from the previous year. In 2019, rents are expected to climb another 3%, to $2,373, according to the annual USC Casden Real Estate Economics Forecast.
showers as a focal point and the growing role of high-tech features in bathroom products,” said Houzz Principal Economist Nino Sitchinava. “Additionally, today’s master bathroom renovations are marked by timeless and durable elements, from natural stone finishes to curbless shower entries, a benefit of having older generations in the driver’s seat.”
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