The SchifferLine
Timely Real Estate News……………………………1 March 2022

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Pre-owned homes sales surged last month
The surge in sales of previously owned homes last month reported by the National Association of Realtors last Friday reflected buyers are rushing into close contracts in anticipation of mortgage rates rising further. Investors made up the largest share of transactions in six years last month.

Mortgage rates have climbed to levels not seen since 2019 as the Federal Reserve is expected to start increasing interest rates next month to tame soaring inflation. Economists are anticipating as many as seven rate hikes this year.

“This is the rush to get in before borrowing costs move higher,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “Unfortunately, first-timers are being priced out of the increasingly expensive purchase.”
Existing home sales jumped 6.7% to a seasonally adjusted annual rate of 6.50 million units last month. Sales rose in all four regions, with strong gains in the Midwest, the most affordable region. Sales soared 9.3% in the densely populated South, which is experiencing an influx of residents from other regions as companies embrace remote work.

Economists polled by Reuters had forecast sales decreasing 1.0% to a rate of 6.10 million units. And home resales, which account for the bulk of U.S. home sales, fell 2.3% on a year-on-year basis.

Strong demand for housing against the backdrop of a strengthening labor market and massive savings is outstripping supply, curbing sales. Builders have been unable to significantly ramp up construction because of shortages and higher prices for inputs like softwood lumber for framing as well as cabinets, garage doors, countertops and appliances.

According to a report from the National Association of Homebuilders, delivery of these products was taking “months,” raising construction costs and delaying projects started raced to a record in January.

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War in Ukraine could force Fed raising rates
We are all connected, and the Federal Reserve is taking notice of the war in Ukraine as it could have an impact on inflation pressures already being felt in the U.S. The war in Ukraine is not likely to prevent the Federal Reserve from raising interest rates next month, but any worsening of inflation pressures could force the central bank to tighten policy even more aggressively than already hinted by senior officials. All of this circles back to mortgage rates which are trending upward since January.

In public comments and interviews last week, Fed officials endorsed plans to lift rates at their March 15-16 meeting. They said it was too soon to tell how the war will affect the economic outlook, but they are monitoring developments carefully.

Their problem is that they had anticipated U.S. inflation, now running at a 40-year high to peak this quarter. Geopolitical developments that push up prices through the spring, particularly for energy and commodities, could force the Fed to accelerate rate increases this summer, which would raise the risk of a recession next year.

During geopolitical shocks, the Fed generally avoids taking steps that increase uncertainty. But with inflation running far above its 2% target and the Ukrainian crisis threatening to push prices even higher, the Fed could face considerable urgency to continue with planned rate rises.The global economy has been recovering from a series of “supply shocks” in which shortages of goods or services drive up their prices. Textbooks call for central banks not to react to one-off increases in prices that result from temporary factors, such as natural disasters, and to instead focus on broader underlying inflation pressures.

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Climbing mortgage rates hurt potential homebuyers, re-fi markets
Rising mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

“Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.06% from 4.05%, with points rising to 0.48 from 0.45 (including the origination fee) for loans with a 20% down payment.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

The average purchase loan size in the MBA weekly survey did not increase, but at $450,200, it stayed very close to the survey’s record high of $453,000, which was hit the week ended Feb. 11.

Home prices have been climbing steadily and did not let up in 2021. The S&P CoreLogic Case-Shiller Home Price Index was released last Tuesday, and 2021 registered the highest calendar-year increase in 34 years, according to Craig J. Lazzara, managing director at S&P DJI. Prices nationally were up 18.8% in 2021 versus a 10.4% gain in 2020.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

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Home prices slowed in 4th Quarter, albeit still moving upward
The fourth quarter of 2021, much like the third quarter, saw home prices continue to increase, although at a slower pace. Fewer markets in the last quarter experienced double-digit price gains.

According to the latest quarterly data, out of 183 measured markets, 67% of the metros reached double-digit price appreciation compared to 78% in the prior quarter. Nationally, the median single-family existing-home price rose at a slower rate of 14.6% year-over-year to $361,700 compared to the year-over-year pace in the previous quarter (15.9%).

While the third quarter of 2021 witnessed all regions achieve double-digit price gains, the fourth quarter saw only the South experience double-digit price appreciation (17.9%), and single-digit price gains in the Northeast (6.8%), Midwest (8.6%), and the West (7.7%).

California led the way with five metros in the top 10, along with five other areas, including: San Jose-Sunnyvale-Sta. Clara, Calif. ($1,675,000; 19.6%); San Francisco-Oakland-Hayward, Calif. ($1,310,000; 14.9%); Anaheim-Santa Ana-Irvine, Calif. ($1,150,000; 23%); San Diego-Carlsbad, Calif. ($845,000; 14.2%); Los Angeles-Long Beach-Glendale, Calif. ($797,900; 15.9%).

“Homebuyers in the last quarter saw little relief as home prices continued to climb, albeit not as fast as earlier in the year,” said Lawrence Yun, NAR chief economist. “The increasing prices are indicative of a seller’s market, with an abundance of eager buyers and very limited supply.”

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Homeownership climbed in US to 65.5%
In a report just released by the National Association of Realtors, U.S. homeownership rate climbed to 65.5% in 2020, up 1.3% from 2019 and the largest annual increase on record.

More Americans are likely to own a home now than during any year following the Great Recession (65.4% homeownership rate in 2010); however, Black Americans continue to face significant obstacles along the path to homeownership, according to the NAR. The homeownership rate for Black Americans – 43.4% – trails behind that of a decade ago (44.2% in 2010). Conversely, White Americans (72.1%), Asian Americans (61.7%) and Hispanic Americans (51.1%) all achieved decadelong highs in homeownership in 2020, with the rate for Hispanic Americans setting a record and reaching above 50% for the first time.

NAR’s report examines homeownership trends and challenges by race and location to explain current racial disparities in the housing market. Using data from the 2021 Profile of Home Buyers and Sellers, the report looks at the characteristics of who purchases homes, why they purchase, what they purchase and the financial background for buyers based on race.

“As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans.”

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Guess who is grabbing land near big cities. Self-driving trucks!
The prospect of self-driving trucks could further intensify a land grab near big cities, one that is already fueled in part by the increase in long-haul trucking during the pandemic.

Alterra Property Group, a real-estate investor based in Philadelphia, said last week that it has launched a partnership

with autonomous-truck company Embark Trucks to buy property across the U.S. near major city hubs.
Embark, which went public in November in a $5 billion deal, plans to commercially launch the first trucks using its software in Sunbelt states such as California and Texas in 2024. The autonomous trucks would drive on highways, then pass on the trailers to human-driven trucks for the final stretch of city deliveries.

To do that, Embark needs numerous so-called transfer hubs close to highways on the outskirts of cities to park and switch trucks. Under its partnership, the company plans to initially lease these sites from Alterra.

The emergence of self-driving trucks comes as Americans’ voracious demand for electronics, household wares and other goods during the pandemic has been boosting amount of truck traffic. Truck operators need land near big population centers to store their vehicles.

But that land is scarce. For one, developers have been buying up outdoor facilities for use as e-commerce warehouses. And strict zoning rules mean that few sites qualify for truck storage. “You can’t just put a truck anywhere,” said Alterra’s co-managing partner, Matthew Pfeiffer.

That is creating a significant supply-and-demand imbalance. Investors are looking to profit by buying up these hard-to-find sites and renting them out to logistics or traditional trucking companies under five- or 10-year leases.

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Realogy, Coldwell-Banker’s parent, grows market share
Realogy earned $8B in 2021 revenue, $2B in Q4, as the parent of Coldwell-Banker, market share grew as well. Strong transaction, sales volume and market share growth boosted Realogy’s revenue as CEO Ryan Schneider says platforms like Zillow are company’s true competitors.

Despite a topsy-turvy real estate market marred by inflation, increasing mortgage rates and rock-bottom inventory levels, Realogy reported $8 billion in revenue for 2021 — $2 billion of which the company earned in the fourth quarter.

From September to December, Realogy’s revenue increased four percent year over year to $2 billion — a slight decline from the previous quarter’s $2.2 billion. The franchisor’s net income also grew from $29 million in Q4 2020 to $47 million in Q4 2021. Likewise, the basic earnings per share rebounded from $0.24 per share to $0.40 per share.

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Is there help in the wings for concerns about fire insurance?
Given all of the recent attention and concern about the increased potential and length of wildfires, and the difficulty for those of us who live in fire prone areas to get fire insurance, according to a recent article in the Los Angeles Times state officials have issued a “Safer from Wildfires framework.

The framework lays out a list of upgrades that individuals as well as local governments and community groups should take. I have shared some of those suggestions in past Schiffer Lines but will do so again. These suggestions are drawn from best practices outlined by the consumer group United Policy Holders, the Institute for Business & Homes Safety and Cal Fire, among others. The recommendations are the results of an effort begun a year ago by Insurance Richard Lara and several state agencies involved in firefighting and prevention.

Today, 13 insurers with 40% of the market in the state are offering discounts to homeowners who have made fire-related safety improvements or who live in communities that have done so.

Here are six (6) recommendations to help making your home more fire resistant – Installing a roof rated Class A for fire resistance – Creating a 5 foot wide zone around the house for example laying down gravel or stone walkways in place of mulched flower beds – Removing combustible material such as untreated siding – blocking the entry of burning embers by covering vent openings with fire-resistant metal screens – installing double pained windows or fire resistant shutters – Enclosing the eaves to prevent burning embers from drifting into your attic. I will have more information on my next issue of Schiffer Line on the 15th of the month. Stay tuned!

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My Life
Recently I have been living the highs and lows of life in celebrating my birthday last week. The amount of celebrating with friends and family has been amazing. Between the flowers, and candy, it has been awesome// THANK YOU ONE AND ALL!

As some of you may recall, we lost my darling Mother almost two years ago, and due to some complications, we have just closed escrow on her house. Selling the house both my sister & I grew up in was very sad in closing that chapter of our lives, but sweet in the hopes that the young family who will be living there will enjoy it as much as we did. Mom had been a docent at LACMA and had an amazing art book collection which was donated to them and now will be the Kelly Schiffer Library, and some of her fabulous clothes have been given to the Music Center to be used as costumes which would thrill her, in fact she had said that some of them she wanted to be used in that fashion! Thank you to my amazing sister for making that happen!

In the meantime, I continue to work with my buyers and hunt for properties to sell them. There really is a dearth of properties out there, so if you have an inkling of selling, please do let me know. I have some new videos on you tube. Here is the link. https://www.youtube.com/channel/UCjgqPmbfG1ERg5egYACFKKQ. Also, please subscribe to itThey can also be found on my business face book page for the next 10 weeks every Thursday.

I look forward to seeing and speaking with you. Please do not be a stranger. I celebrate that life is somewhat returning to normal (whatever that is or was), and we can all be out and about again. As I was told at a memorial service this past weekend, tell people that you love how you feel about them… let them know how important they are to you… please know that all of you are very important.

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The SchifferLine
Timely Real Estate News………………………..15 February  2022

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Sales volumes rocket upward to start 2022
Make no mistake, there is a buying frenzy going on as we start advance into the New Year as we see sales volumes all across the board including the five communities I report on. In these communities the comparison of sales volume has climbed 139% compared to last year at this time. Sales volume for January was $483 million for 2022 vs. $202 million in 2021. That is the highest annual increase I have seen in my 30-plus years selling real estate on the Westside, and there doesn’t seem to be many roadblocks to increasing sales volumes in the future, unless, of course, inventory becomes a more critical issue. At the moment, the recission rate is 14 days which in the past has been 3 – 6 months. This means that the minute a property comes on the market and if it is positioned properly, the sellers can expect to have an offer within the first week!

Starting out of the box for 2022, Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, and Brentwood, all saw strong sales volume increases. Leading sales volume increases for January was Beverly Hills Post Office which saw a $145 million increase over last January’s performance. Beverly Hills, always the leader, was $63 million ahead of January 2021, Bel-Air/Holmby Hills was up $50 million, and Brentwood was up $34 million compared to last year. Only Westwood/Century City showed a decline in sales volume compared to a year ago of 2%. I also cover Malibu, which saw a sales volume increase 18% from $49 million to $58 million over January 2021.

Notably, Beverly Hills had five homes over $10 million, highest selling for $22 million. BHPO had six homes over $10 million, with $15 million being tops. Bel-Air/Holmby Hills had two over $10 million, with the highest at $14 million, Brentwood had four over with $17 million the highest. Sales on Los Angeles’s Westside appear stronger than ever, even as the pandemic continues to simmer throughout California. I expect to see continued sales volumes but, perhaps, more moderate as rates go up. As we continue to fight the inventory battle, sales prices are just going to keep moving up. That is what we are living with today.

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Median sales prices take a big jump, too!
Along with continued robust sales comes robust increases in median sales prices. Compared to early 2021, when median sales prices were in the 4-5%/month increases, we see for January 2022, median sales prices have taken on new strength. For example, Bel-Air/Holmby Hills saw a 112% increase in median sales prices to a new high of $4.450 million, followed by Beverly Hills Post Office which experienced a 77% increase in MSP to $6.024 million.

Beverly Hills started out 2022 with a median sales price of $6.997 million, an increase of 34% over last year. Westwood/Century City had a modest increase of 6% in median sales price at $2.680 million, and Brentwood was off 20% from a year ago at $2.900 million. Malibu had a big jump in median sales price of 83%, growing to $2.581 million.

There is no question that this is a seller’s market. With inventory still behind pre-pandemic levels, buyers are faced with a shrinking market and choices, and multiple offers have become the norm. For many, it’s a stressful experience — waiting in line, even with a bonafide cash offer — doesn’t seem to be enough…you are just one of many swarming over your dream home. And what is interesting is that there are still sellers out there who are over-pricing their homes — and will have to eventually reduce their original listing price so it will sell. My advice — get solid, professional real estate advice before you even enter the market. I can help you avoid a lot of the mistakes many buyers and sellers are making in this tough market.

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How does the increases in mortgage rates factor into the equation?
First of all, we all need to remember that should interest rates increase to the mid to high 5%s, they are still quite low. I remember a few years ago when they were in the 6% range. We have been somewhat spoiled with how low they have been for the last year years.

The increase in interest rates will definitely close some buyers out of the market, conversely it will also act as anincentive for some buyers to take advantage of the current rates and add more pressure on the inventory.

Some of you may recall a situation with an offer I was involved with in early December where there were 25 offers. That escrow just closed escrow, hold on to your hats… for $1,000,000,000 than the asking price. With that same buyer this week, we were involved in another multiple offer for a house in Santa Monica. In this case, there 15 offers. Unfortunately, my client was not the prevailing buyer. We don’t know what the final price will be, but our offer was almost $300,000 over asking!

Look at how many jobs have been created recently. Another factor in the crazy prices we are seeing is the increased cost in land itself (hard to find here), materials, etc. Builders are passing these costs on to buyers and the buyers are paying them.

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Bubble? What bubble? Experts say “No!”
Sorry to burst your bubble, but we’re not in one, housing experts say. Today’s rising home prices and a persistent seller’s market differ from the 2007 housing bubble in a few keyways, economists told Inman. In short, don’t expect bubbles bursting anytime soon.

Historically low inventory leads buyers to make rushed decisions. Bidding wars help push up record high housing prices. Many in the nation’s largest homebuying generation are being priced out of markets nationwide. Are these the signs of a housing bubble?

It is hard not to look at the unpresented territory of the U.S. post- COVID housing market with a twinge of fear that the country is returning to conditions that existed before the collapse around the Great Recession (2007-2009).

As common as the question is these days, economists say today’s market boils down to the simple economic principles of supply and demand. “I was thinking, “What is really a bubble? “Said Selma Hepp, chief economist of Core Logic. “There is no firm definition of a bubble”.

“To some people, high appreciation is going to be a bubble. To others it’s high speculation,” Hepp said. “Generally, among economists we think when there is an increase in speculation, when people are buying based on expectation of appreciation as opposed to that need for housing, that’s when we could be in a bubble.”

Yet there are many more signs that point to a healthy market that was sped up due to unique conditions brought on by the coronavirus pandemic. And in a way, the pandemic may have led buyers who ordinarily might have purchased a first or second home in a few years to do so much sooner.

“One question we don’t know for sure is how many people moved forward to buy a house because of the stimulus and low interest rates that they would have bought this year or next year,” said Doug Duncan, chief economist at Fannie Mae.

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Westside high-end home sales continue upward.
It comes as no surprise but 2022 is starting out with a ‘bang’ for high-end home sales for January. It is interesting to see how the year is beginning after finishing the best year ever in high- end sales. We are almost already even with last year.

There were 66 closed sales of $5 million-plus in January, versus 63 at this time last year. 20 of those were $10 million-plus, versus 23 in January. We are ahead in the sales of $20 million-plus, there were 2 at this time last year and there were 6 in January, 3 of these were over $40 million.

A good start to the year with 101 pending listings of $5 million-plus and 34 of these are $10 million-plus. And it becomes clear, that the record-setting home price trends set in 2021 are continuing as we move into the first quarter for this year. Time will tell, of course, but the continued upward pace of home prices clearly demonstrates the unique values and attractiveness our Westside communities possess.

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Pending home sales decline in December
According to the National Association of Realtors, pending home sales fell in December, denoting two straight months of declines. All four major U.S. regions posted both month-over-month and year-over-year drops in contract activity.

The Pending Home Sales Index, a forward-looking indicator, created by the NAR, of home sales based on contract signings, fell 3.8% to 117.7 in December. Year-over-year, transactions decreased 6.9%. An index of 100 is equal to the level of contract activity in 2001.

“Pending home sales faded toward the end of 2021, as a diminished housing supply offered consumers very few options,” said Lawrence Yun, NAR’s chief economist. “Mortgage rates have climbed steadily the last several weeks, which unfortunately will ultimately push aside marginal buyers.” Even with December’s slowdown in transactions, Yun says last year was an overall great period for housing in terms of sales and price appreciation.

“The market will likely endure a minor reduction in sales as mortgage rates continue to edge higher,” he added. Yun forecasts the 30-year fixed mortgage rate to jump to 3.9% by the fourth quarter and existing-home sales to dip by 2.8% to 5.95 million units. The index in the West decreased 10.0% in December to 95.0, down 16.2% from a year prior.

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What did we leave behind? Home prices also increased in the U.S.
The fourth quarter of 2021, much like the third quarter, saw home prices continue to increase, although at a slower pace. Fewer markets in the last quarter experienced double-digit price gains.

According to the latest quarterly report from the NAR, out of 183 measured markets, 67% of the metros markets reached double-digit price appreciation compared to 78% in the prior quarter. Nationally, the median single-family existing-home price rose at a slower rate of 14.6% year-over-year to $361,700 compared to the year-over-year pace in the previous quarter (15.9%).

While the third quarter of 2021 witnessed all regions achieve double-digit price gains, the fourth quarter saw only the South experience double-digit price appreciation (17.9%), and single-digit price gains in the Northeast (6.8%), Midwest (8.6%), and the West (7.7%).

“Homebuyers in the last quarter saw little relief as home prices continued to climb, albeit not as fast as earlier in the year,” said Lawrence Yun, NAR chief economist. “The increasing prices are indicative of a seller’s market, with an abundance of eager buyers and very limited supply.”

You can bet those sellers in Nevada, Arizona, Texas, Oregon, Idaho, and even Florida — are waiting for Californians to make their move.

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Moraga Drive — a private enclave away ‘from everything’
There is something so special about Moraga Drive — close to everything, but so far away. This small neighborhood tucked away in the recesses of Sepulveda Pass, you’d never find it by just driving around…it is truly off ’the beaten track’, and that is why it is so special.

Moraga Drive, 90049, is steps away from Getty Museum, freeway close, comprised of 49 one- and two-story homes built since the mid-1950s, many of which have been rebuilt or remodeled.

This is a remarkable, lovely street with a wonderful feeling of “country in the city. Every time I drive down the street, I am reminded of the “allees” in France with all of the tall lovely trees and their branches joining together. No sidewalks, tall trees, and manicured lawns. Moraga Drive is also home to the Westside’s only producing vineyard – world-famous Moraga Vineyards, 17 acres of cabernet, merlot, and chardonnay grapes. And yes, the Vineyards give the area this unique, out-in-the-country feeling that is also expressed in the luxurious homes in this hideaway — an elegant hideaway where your neighbor is one of California’s prestigious wineries. Please contact me if you are thinking of =buying or selling on this very special street… 310 442-1384 or ceschiffer1@gmail.com

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Award

I am very grateful and proud to share with you that I am among the top 7% worldwide of all of the Coldwell Banker agents! Thank you to all of my wonderful clients for their business in “getting me” here! My goal for 2022 is to be in the top 2%. Looking forward to all of you with us working together to get there.

In order to reach my goal, I need your assistance. I have a number of buyers for properties in Bel Air Crest, Mountaingate, Brentwood Circle, Bel Air Park and Brentwood proper. We have seen everything on the market. Please if you are thinking of selling, please get in touch with me. We might be able to get your home sold without putting it on the open market.

HAPPY VALENTINES DAY!. Today is the day to share with your loved ones how much you love and care for them. I hope you all have a wonderful day filled with love, celebration and perhaps some chocolate

 

 

 

The SchifferLine
Timely Real Estate News………………………15 January 2022

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Welcome to the first issue of the Schiffer Line for 2022!

The real estate train just keeps on moving’….
By the time we reached the end of 2021 — what has been described as a horrific year for so many — we continue to be amazed at the astounding stats for real estate during this pandemic. For the communities I report on each month — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood, sales for 2021 were up 56% over 2020, rising to $6.142 billion, compared to $3.919 billion a year ago. We have been seeing these increases every month since mid-summer, and it does not look like it is going to abate any time soon. We saw more than $2.220 billion more in sales for the past year over 2021. That is a ‘billion’!

Culver City, one of communities I cover also, saw sales reach $383 million vs. $233 million in 2020, a 64% increase.

Leading the sales train in 2021 was Beverly Hills, which saw a $920 million increase in sales volume over 2020. Brentwood was next — at $621 million over 2021….Beverly Hills Post Office was up $280 million, Westwood/Century City was up $240 million and Bel-Air/Holmby Hills was up $140 million. These are impressive numbers, and all these sales were pocketed by sellers, happy to contribute to these new sales records.

With regard to buyers they are still pursuing the market, willing to stand in line and do whatever it takes to purchase a home. I have several buyers anxious to see properties and have the cash in hand. Bottom line — demand far exceeds supply, and yes, the real estate supply chain challenge is real, and I do not expect it is going to disappear anytime soon. Reason? Homeowners are flummoxed over where to go if they do sell. We have been dealing with a shortage of inventory for a few years. Hopefully that situation eases up soon.

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Median sales prices are not being left behind…
Sellers are taking advantage of this market — as prices continue to rise across the board. As we have seen a surge in median sales prices during the past quarter, we continue to see strength in the in all my communities I report on. Bel-Air/Holmby Hills reported a 33% increase in median sales price to $3.139 million, a record. Beverly Hills was up 16% to $7.500 million…Brentwood was up 14% to $3.800 million, Westwood/Century City was up 13% to $2.657 million, and BHPO was up only 6% to $3.400 million. Culver City’s median sales prices grew 11% last year to $1.680 million.

Sellers for the most part are pricing their homes competitively as most of the homes sold last month were at 99% when comparing Selling Price to Original Listed Price…and average days on market were at 55, which has been the norm for the past 12 months.

Individually, these communities all benefit from their adjacency to one another as we travel from one area to the next, with no defining boundaries, resulting in a blending of world-famous neighborhoods, manicured front yards and estates, and spectacular homes that showcase the wealth and attractiveness of these communities. It is no wonder that our prices are rising rapidly in this tight real estate market — the schools and lifestyle play an important part in people’s decision as to where to move.
Also, as always, we must remember that all these median sales numbers are impacted big sales for example, in Beverly Hills there were fourteen transactions over $3,000,000 including some ranging between $$9,900,000 and $20,000,000. In Beverly Hills Post office there were twelve over $3,000,000 including five (5) between $,6,250, and $64,900,000. For Bel Air it was thirteen over $3,000,000 and eight (8) from $6,800,000 to $13,850,000. Brentwood brought twenty-six over $3,000,000 with fifteen between $7,200,000 and $56,500,000 (clearly the winner in terms of the number of high-end sales!). Westwood had five (5) over $3,000,000 with the highest sale there at $16,750.

Culver City which had a $4,000,00 sale in November, had two sales over $2,000,000 in December.

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What impact does the inflation and interest rates play in all of this?
While fixed rates are still low at 3.5% with a projection of 4% by the end of the year which is the highest they have been in about two years. This plays havoc with buyers as they decide where they go from here. The projection by my lender, Simon Atik at Guaranteed Rate Affinity is that we will see more buyers getting adjustable rates rather than the fixed ones they are getting currently. Everyone is watching to see what the Federal Reserve does with interest rates.

The forecast is that this increase in mortgage rates interest will most likely create more inventory (Yea) and perhaps cull some buyers from the market. Also, there is still a great deal of cash out there.

We can also expect both Fanny Mae & Freddie Mac to increase their interest rates on second homes. No indication yet as to what those numbers will be.

Currently we are looking at an inflation rate of approximately 7%. I do not know about you, but I see it everywhere. While it is not tied to inflation, it amazes me to see the empty shelves in the markets on staples, such as bread, etc.

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Fed calls inflation a real threat
With the latest inflation news that saw prices increase 7% this past December compared to a year ago, Fed chair Jerome Powell called high inflation a “severe threat” to a full economic recovery and said the central bank was preparing to raise interest rates because the economy no longer needed emergency support.

Mr. Powell said he was optimistic that supply-chain bottlenecks would ease this year to help bring down inflation as the Fed takes its foot off the gas pedal. But he told lawmakers at his Senate confirmation hearing that if inflation stayed elevated, the Fed would be ready to step on the brakes. “If we have to raise interest rates more over time, we will,” he said.

He said nothing to push back against expectations that have firmed in interest-rate futures markets over the past week that the central bank would begin a cycle of interest-rate increases in March. As it relates to real estate, we are witnessing tremendous increases in prices throughout the U.S. market, and as reported in December, November prices were up 18% compared to previous year. And we are seeing that here, too, in my communities I report on.

The Fed noted that the major increases in energy (gasoline at the pump) was a major factor, along with furniture, restaurant and food costs. Rents were tracking at near 4% increase over a year ago.

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2021 was banner for luxury residential market
By all measures, 2021 was a banner year for the country’s luxury residential market, despite the economic uncertainty caused by the continuing global pandemic. We have certainly seen that on the Westside as we have experienced record sales of homes in the $5 million-plus market.

At least forty properties in the United States sold for $50 million or more last year, a 35% increase from 2020, and at least eight sold for at least $100 million, a 300% jump from the prior year, according to data compiled by appraisal firm MillerSamuel and The Wall Street Journal.

The biggest sale of the year was the roughly $200 million sale in December of an approximately 340,000-acre Montana cattle ranch located near Yellowstone National Park. The purchasers were media mogul Rupert Murdoch and his wife, Jerry Murdoch. The property includes twenty-five homes, a 28-mile-long creek filled with trout, and around 4,000 elk, eight hundred antelope and 1,500 mule deer.

Real-estate experts attributed the increase in activity to low interest rates, as well as a surge in wealth created through gains in the stock market and alternative assets like cryptocurrencies. While deals in the ultraluxury sector do not always speak to a broader surge in real-estate values, in 2021 they did coincide with a general uptick in the overall housing market.

As of November 2021, existing-home sales were on track for their strongest year since 2006, thanks to low mortgage-interest rates and a robust job market, The Wall Street Journal reported.

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Culver City — a dynamic city on the move
Located just a few miles from the beach, Culver City has kept a low profile since its founding in 1917 by Harry Culver. With a population of just 41,000, it has always been a center for film and later television production, best known as the home of Metro-Goldwyn-Mayer and Sony studios.

What makes Culver City so attractive is its diverse areas of shopping, restaurants and nearby recreation facilities being centrally located. The city went through a ‘rebirth in the 1990s and 2000s via a successful revitalization program that featured a renovated downtown, new shopping centers, and expanded its movie studio franchises. There is an influx of art galleries and restaurants which in turn attracts buyers to handsomely priced homes that populated the city from its beginning as well as its excellent school system.

Still one of the most competitively priced residential areas on the Westside, Culver City has become a beacon for first-time buyers and residents who want that ‘home-town’ feeling. They can get it all here.

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Pending home sales slipped in November.
According to the National Association of Realtors, pending homes sales receded slightly after a previous month of gains. Each of the four major U.S. regions witnessed contract transactions decline month-over-month. Year-over-year activity mostly retreated too, as three regions reported drops and only the Midwest saw an increase.

The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, fell 2.2.% to 122.4 in November. Year-over-year, signings slid 2.7%. An index of one hundred is equal to the level of contract activity in 2001.

“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” said Lawrence Yun, NAR’s chief economist.
“While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some prices and a lack of available homes, have created a much tougher buying season.” consumers with affordability.”

Yun notes that housing demand continues to be high, explaining that homes placed on the market for sale go from “listed status” to “under contract” in approximately 18 days. “Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” he said.

Yun adds that a countrywide surge of the omicron variant poses a risk to the housing market’s performance, as buyers and sellers are sidelined, and home construction is delayed.

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If you home could talk…,what would it say? “Help!”
We all have our little secrets when it comes to our living spaces. Over time, we find there are important maintenance tasks that we seem to put off…they are either too ’nasty’ to take on…or they are out of sight, out of mind…or we just prefer to ignore them. So, as you enter the new year, and Spring Cleaning is just around the corner, what are some of those little ‘dirty secrets’ you have avoided doing in 2021. Here are some, as suggested by the Wall Street Journal…

Refrigerator cleaning — who wants to do that? But we all know that lurking in your ‘refrigerator’ are items seldom or never used, and are hidden in the dark recesses, out of view…but your refrigerator knows…Cleaning your refrigerator ranks as one of the most common ‘deferred maintenance items’. Another is: Cleaning out the garage. I’m guilty of this, and my New Year’s resolution is to take care of this, and by the next time The Schiffer Line comes out, it will be cleaned. I already started working on mine. Today I had three boxes of items shredded with a company that came to the house and shredded them on the spot! It felt great. Next project, the reorganization of the garage and building cabinets for everything.

Oven cleaning is one job none of us like to do. Oh, sure, we have these automatic oven cleaning dials, but we tend not to use them according to the WSJ’s survey. Dirt accumulates, and we all know that it really must be done. Next? Tree pruning. Or any pruning. This is something that we need to do not only for the health and growth of the trees, but with most of us living in high fire danger zones, we are required to do. Gutter cleaning —With the record amounts of rain we experienced in December, it was critical that our drains were clean and clear of debris. If not, it overflows and then we could experience that dreaded roof leak. I would also suggest that you have gutter guards installed so that they catch all the debris including those leaves so that the water has a clear flow channel when it goes into the gutters.

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What is going on in my world?
I had planned to go to Vancouver to spend the holidays with my family, but as my departure date got closer, I got increasingly more uncomfortable with the thought of flying. Seeing all those crowds in the airport did me in.

I had not seen the kids for two years, but it simply was not worth the chance of getting sick. I am hoping to be able to go in March. I was also very busy and the stress of leaving while I had a lot going on, put me over the top in deciding not to go.

For those of you who like myself who live in the Sepulveda Pass, the power outage we experienced last weekend was miserable. There were seven hundred homes impacted from 10:00 am Friday morning until 5:00 am Sat am, and then it happened again on Monday. I think they are still working on fixing the problem. I can tell you that I was more than thankful for the emergency backup battery I have for my garage door, and if you have not yet invested in one, I urge you to do so soon. I am also very thankful for my friends that took me in for a while on Friday night as they had power while I tried to figure out why NONE of my emergency lights in my house did not work (still have not figured that one out yet).

Work wise, I am still on the hunt for homes that might be coming up for sale. Currently I have about four -5 buyers in the price range of $1,900,000 – $3,500,000 just waiting for something to come on the market they can purchase. The all have needs specific to them but are solid buyers. So please if not after the holidays you are contemplating a move, please do let me know and perhaps we can make a match…… carole@caroleschiffer.com , ceschiffer@gmail.com or 310 442-1384.

 

The SchifferLine
Timely Real Estate News………………..15  December 2021

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Sales volume reaches $5.101 billion…a record
It comes as no surprise as sales volume for the first 11 months of 2021 reached a record $5.101 billion, a 48% increase over the same period in 2020, for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood. While the percentage of increase over the previous 11-month period is a bit lower than at the end of October, the numbers are really staggering. It doesn’t seem to be abating. Mind you these increases are not particular to these communities but are all across the board. I am just discussing these five areas.

This record reflects the sustained success we have had for attracting buyers by offering the world’s most beautiful homes and neighborhoods…so really it is no great surprise that we continue these incredible sales achievements. The usual suspects continue to lead the sales increases — Beverly Hills was up $768 million in volume compared to a year ago, Brentwood came next with an increase of $419 million, followed by Westwood/Century City at $189 million-plus, with BHPO adding $163 million and Bel-Air/Holmby Hills bringing in $156 million. Marina del Rey, another area I specialize in, enjoyed an 86% increase in sales volume, reaching $214 million through November 2021 compared to $115,851 a year ago for the same period.

Homes are now selling at near 100% of original listing price, which is a positive upturn as some of the areas last month were experiencing as much as a 15% decline between the original asking and final sale prices….what does this mean? Sellers are getting better educated and are pricing their homes competitively. Some areas, where multiple offers were just ‘out of control’ were up 105% over original listed price. Just this past week, I was representing a buyer who is a long time client of mine in the attempt to purchase a fabulous home in Santa Monica. Seems that a number of potential buyers felt the same way about the house as there were 25 offers! It came on the market for $2,595,000, but the price was increased 2 days later by $100,000 and while we are not sure what it sold for, it

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Median sales prices….coming up roses !
Beyond record sales prices, we are also seeing record median sales price increases across the entire area. The isn’t new to those reading the Schiffer Line as I have been pointing out that our pricing continues to steadily move upward, and as the year has matured, our prices are also making increased gains in every area.

For example, Beverly Hills median sales price for November 2021 is $7.500 million, up 15% over November 2020. Beverly Hills Post Office is up 14% to $3.383 million….Bel-Air/Holmby Hills is up 30% to $3.025 million. Brentwood was up a whopping 73% through the first 11 months for 2021 at $3.874 million, and Westwood/Century City experienced a 13% increase to $2.626 million. Marina del Rey was up 18% for 2021 at $2.012 million.

November can be a bit crazy sometimes, because traditionally, it is the period of the once-assumed ’slow season’, which — as you can see — is not slowing down much. When you compare my areas’ performance of November 2021 to November 2020 (month-to-month), there are some stark differences. Bel-Air/Holmby Hills was up 246% in median sales prices to $7.987 million from $2.305 million, quite a jump. Beverly Hills was up 28% to $7.500 million (over November 2020), Westwood/Century City was up 97% to $5.200 million, Brentwood was up 63% to $5.200 million. However, BHPO was down 28% to $1.925 million, unusual for this very ‘hot’ area. Please remember my oft pointed out comment, when there are some high number sales such as the two in Beverly Hills a $16,050,000 and $21,500,00 respectively or BHPO for $21,500,000 or Bel Air for $9,000,000 or Brentwood for $13,000,000 and $16,645,000 and lastly in Westwood $12,800,000. These numbers obviously impact the averages. I must also remind you that these are transactions that went through the Multiple Listing Service, thus any and all private sales and there are many are not covered here.

My broken-record speech — the best measurement is to watch the trend lines of median sales prices over a period of a year…everything evens out over time, and the true value of properties emerge through the analysis of accumulated month-to-month data we get from the MLS. We’re in a good place — mortgage rates remain low (even in the mid-3’s — and Fannie Mae and Freddie Mac have increased the conforming loan limits to $970,800 which will enable many buyers to avoid obtaining a jumbo loan whose interest rates while still low are higher than the prevailing rates for a non jumbo loan.

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Re-financing takes dramatic upturn
A brief drop in mortgage rates, due to the first news of the omicron variant, caused mortgage refinance demand to rise dramatically last week. The rate drop wasn’t all that dramatic when looking at the weekly average of the 30-year fixed. However, the rise focused on how homeowners are now looking at ‘remote work’ continuing for some time and are adjusting to improving their home environments…hence the need for re-financing.

For loans with conforming loan balances ($548,250 or less through the end of 2021), fell to 3.30% from 3.31%, with points decreasing to 0.39 from 0.43 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association.

Again, that was the average. Rates had dropped sharply at the end of the previous week and then stayed there for a short period of time. However, it was enough time to cause a 9% jump in refinance applications week to week, seasonally adjusted. They were still 37% lower than the same week one year ago. Mortgage rates were 40 basis points lower at this time last year. Still, these are great rates compared to pre-‘Covid when rates were approaching over 5%.

Government (FHA) refinance demand saw an outsized 20% weekly increase. The refinance share of mortgage activity rose to 63.9% of what it had been in the past.

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High-end sales 
The high end of the Westside residential market just keeps getting stronger and stronger. There have been 1,032 closed sales of $5 million-plus so far this year, versus 636 at this time last year…that’s up 62%! Of these, 341 were $10 million-plus, versus 181 at this time last year, up 88%. Ninety-two (92) $20 million-plus were sold and there were 49 at this time last year— up 88%.

Twenty-nine (29) were $30 million-plus, versus 16 at this time last year or up 81%. Fourteen (14) were $40 million-plus, versus six at this time last year, up 135%! Seventy (70) of the 92 were $20 million-plus were sold to American buyers or 76%. Of the 92 $20 million-plus sales, 37 were not officially listed when sold. It is interesting to note how the highest-priced sale for the past three years has continued to rise.

The highest priced sale in 2020 was $165 million, and for this year, $177 million. Maybe we will have a $200 million sale in 2022.

The second top sale this year was in Malibu. The top sales in the other areas are Pacific Palisades for $83,000,000 and was unlisted when sold. And Bel Air had an unlisted home sell for $69 million.

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Rent hikes are heading our way, big time in 2022
Not only are we seeing dramatic increases in median sales prices in Los Angeles area and beyond, but we should also expect to see rental housing increases like never before. In some areas of the country, rents are doubling from a year ago. The reason is — huge demand and lack of supply.

We’re currently behind as much as 2 million housing units in California, where development of new housing encounters continued red tape at every level, and cities/counties simply cannot process the paperwork to keep up with demand.

But the problems aren’t confined to the law of supply/demand. Rents for single-family homes across the country jumped more than 9% on average in August 2021 from the prior year, according to a report from the analytics firm CoreLogic. It is estimated that rental housing has become so expensive in California that more than 50% of a renter’s income goes for housing. However, it is worthy to note that a state law states that a landlord may not increase rent more than 5% annually, plus the CPI increase.

Mark Zandi of Moody’s Analytics said the strains on the housing construction market were building well before the pandemic took hold in the states. “There’s a lot of evidence that the lack of housing closer to where the demand is and urban cores is having a meaningful negative consequence on long-term economic growth.“

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Pending home sales increased in October
Pending home sales increased in October, rebounding after a decline the month prior, according to the National Association of Realtors (NAR). Contract activity rose month-over-month in each of the four major U.S. regions.

On a year-over-year basis, however, transactions were split, as two regions reported drops and two others posted gains. The NAR Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, rose 7.5% to 125.2 in October. Year-over-year, signings fell 1.4%. An index of 100 is equal to the level of contract activity in 2001.

“Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later,” said Lawrence Yun, NAR’s chief economist. “This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low.

“The notable gain in October assures that total existing-home sales in 2021 will exceed 6 million, which will shape up to be the best performance in 15 years.” And while the market is expected to remain robust, Yun forecasts home prices will rise at a gentler pace over the course of the next several months and expects demand to be milder as mortgage rates increase.

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Environmental update
California regulators voted last week to ban the sale of new gas-powered leaf blowers and lawn mowers starting in 2024 and portable generators by 2028, the latest step in the state’s aggressive effort to reduce harmful pollutants and transition toward a carbon-free economy.

The new regulations by the California Air Resources Board require all newly sold small-motor equipment primarily used for landscaping to be zero-emission by the target dates, with some exceptions.

The agency’s decision is based in part on the belief that battery technology will improve, and zero-emission gear will become more widely available before the requirements kick in — though there will be an annual review to determine whether they are on target and whether regulation needs to be altered or delayed.

The restriction applies to homeowners and commercial landscapers alike, and the ban also includes gas-powered weed trimmers, chainsaws and power washers. The regulation does not ban existing gas-powered equipment, however, which can continue to be used.

Combined, these small gas-powered engines create as much smog-causing pollution in California as light-duty passenger cars. There are approximately 15.4 million small off-road engines in California, and they produce about 141 tons of smog-forming emissions per day, according to the agency.

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So, what about me?
It is not about me at all… As previously noted, while the office is a little quieter than usual, the market and my business is moving along at a brisk pace! None of my buyer clients are a breather in their quest for a new home. I have been working very hard to put my escrows to bed in the hopes that I will have a quiet and hopefully restful holiday It is a challenge, but I am working at it. I still have a number of potential buyers who are ready, willing and able to buy their new home, so sellers if you want to move, contact me… Carole@caroleschiffer.com or 310-442-1384. I am here to make it happen!

For the Thanksgiving holiday, I had some guests for dinner and then at 10:30 at night after we cleaned up my sister brother-in law and I headed down to our home in Coronado where none of us had been since February 2020. This house is our family “happy place” and it was wonderful to be there once again. We have a pet Seagull there whom we have named “peg leg” as you can see, he has only one leg. It was amazing to us that after not being there for almost 2 years the minutes we opened our window blinds in the am, there he was sitting on our window ledge waiting for his breakfast! He came back for every meal. Wonder who has been feeding him while we were gone?

We had our office holiday party last week, and I was able to visit with Santa Claus and share my wish and gratitude for this excellent past year.

I hope you have a wonderful holiday and have the ability to spend the holiday with family and friends

Thank you all again.

Merry Christmas,

Happy Kwanza and

Happy New Year!!!