The Schiffer Line 1 September 2019
Timely Real Estate News………………………………….. 1 September 2019
Good news for SoCal sales, prices
Real estate sales hit its stride this summer. Lower interest rates, softening prices and more inventory pushed median prices up 1.9%. In a reprieve for Southern California’s sluggish housing market, home sales rose in July from a year earlier. It was the first sales increase in 12 months.
The six-county median price — the point at which half the homes sold for more and half for less data last Wednesday, attributed a 3.7% sales gain to a variety of factors, including falling mortgage rates, moderating prices and a rise in inventory.
Also, there was one additional business day last month compared to July 2018. Accounting for the difference could yield a small drop in sales, but over the last year, monthly sales had been falling by an average of 10% each month. “The flattening of price growth and lower some,” said CoreLogic analyst Andrew LePage.
When tracked across the six-county region, price gains were modest compared with years earlier, when homes flew off the market after aggressive bidding wars and the median price consistently rose by mid to high-single digits.
Economists have blamed the lack of affordability for drastically slowing the housing market toward the end of last year and causing the region’s median home price to fall slightly in March from a year earlier — the first decline since 2012. Now, few economists expected a huge decline, citing a relatively healthy economy and a lack of home building.
More good news — Mortgage rates move steadily down
As a result of the increased inventory and softening of prices, mortgage rates have since come down steadily, which real estate agents say has helped increase demand and firm up prices. The average rate on a 30-year fixed mortgage was 3.55% recently, down from a recent high of 4.94% in November, according to Freddie Mac. Depending on the amount of the loan, the drop would save approximately $352 on a monthly mortgage payment for a $540,000 house.
The interest rate drop helped lead to an increase in the number of L.A. County households that could afford a home, even though most remain locked out. In the second quarter, the percentage of people who could afford a median-priced home stood at 29%, up from 26% a year earlier.
When broken down by county, the market was mixed in July. In Los Angeles County, the median price posted the largest gain since November, while in Orange County the median still fell compared with a year earlier: 1) In Los Angeles County, the median rose 5% to $635,000, and sales were flat. 2) In Orange County, the median fell 0.8% to $729,000, and sales dropped 1.7%. 3) In Riverside County, the median rose 2.9% to $395,000, and sales climbed 8.6%, and in 4) San Bernardino County, the median rose 4.6% to $340,000, and sales climbed 3.3%.
This is great news — combined with the increase in sales volume locally for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood. Sales were up 10% through the first seven months of 2019. We are looking for a strong Fall selling period.
Homes selling above list price returns to past levels
Another positive sign in the real estate industry is that the share of homes selling at or above list price has returned to levels comparable with the early 2000s, according to CoreLogic, a San Diego-based real estate data firm. As I have mentioned in the past, I track sales in a number of different categories every day, and while the numbers of closed escrows at asking price or over is lower, there still are a fair amount in that category. The properties that are selling at asking or over the asking price is not for the most part in the high-end price range.
Annual home price growth began to slow in the third quarter of 2018. As such, the share of home buyers able to negotiate a better price began to rise. In the second quarter of 2018, the share of homes selling at or above list price peaked at 43% of total sales, which is nearly triple the level during the housing crisis in January 2008.
As of June 2019, the share of homes that were sold at or above list price dropped to 39.2%. That is still 10 % higher than the average since 2000, CoreLogic researchers note.
San Francisco had the highest share of homes that sold above list price. 83 % of homes there in June sold for at least the list price. Seattle and Minneapolis followed at 74% and 62%, respectively. On the other hand, of the 20 metros tracked, Miami had the lowest share at 19% of homes selling at or above the list price in June.
Not-so-good on the high end
While we’re seeing a stronger performance for the broader real estate market across Southern California and in the nation, we continue to see a lag in high-end sales on the Los Angeles West Side. We consider the price of $5,000,000 to be the high end here on the West Side, but it varies in other parts of the city, such as the San Fernando Valley where the barrier is a little lower. For the West Side, there have been 339 closed sales of $5 million-plus homes this year, compared to 402 a year ago, a 16% drop. Of these, 90 were in the $10 million-plus vs. 111 homes in this category last year, down 19%.
Twenty-four (24) were $20 million-plus this year, vs. 33 in 2018 by this time last year or a drop of 24%. In this range, 13 were sales of $30 million-plus in 2018 vs. 12 so far in 2019. There are 6 homes of $40 million-plus last year vs.5 this year.
There are 50 pending sales of $5 million-plus as of the end of August, and notably two are in the $40 million plus range.
The buyers are mostly American, followed by Saudis, Chinese, Qatar, English, and Bulgarian. Most of the sales were in Beverly Hills and Bel-Air.
If you’re buying a home, cash is no longer king
Just a few years ago, more than a third of home buyers didn’t blink at throwing down cold hard cash to make their purchases. But the share of all-cash home buyers has trended down since 2014, and the decline has accelerated in recent months. In June, just 16% of home buyers paid in cash, down from 23% in February, according to the National Association of Realtors.
The rest bought their new homes the old-fashioned way – by taking out a mortgage. Applications for home loans jumped 9.5% last month from a year earlier, according to the Mortgage Bankers Association. The shift can be traced to several factors, including a less competitive, more buyer-friendly market and tumbling mortgage rates.
The trend could be good news for a sluggish housing market in which existing home sales fell 4.2% the first half of the year compared with the same period in 2018, according to NAR figures.
Staging your home helps it sell faster, higher price
As prospective buyers view your home, a question they will undoubtedly be asking themselves is, “Can I see myself living here?” As the seller, your job is to make their answer a definitive yes! Use visual cues and consider the following points, to guarantee your staged home is attracting potential buyers in all the right ways.
Here are some easy-to-understand tips on getting your home ready to sell: #1 Depersonalize your space…stow away all personal items, photos so buyers can easily plant themselves in your space; #2 De-clutter — clean it all up and make your space simple and without all of the clutter, the space will look larger: #3 Paint one wall a different color — go with a trendy, but neutral color, that brings some zest to the visual. #4 Get rid of pet orders. #5 Let in the light — open up the blinds, curtains. #6 Dress up the bed and bath — invest in duvets, pillows, and throws…. #7 Add natural harmony — fresh flowers, in-door plants well placed (there is a lot of discussion today about the popularity of the Fig tree as an interior plant). #8 Add light with pillows — every woman loves pillows and they can lighten up a room with bright colors. And #9 Create vignettes — create attractive and inviting place settings where prospective buyers can easily place themselves into the scene.
All sales are emotional…it’s not just about price. Appeal to the emotions of your prospective buyers. After all, you’re in ’show business’!!
Is recycling really working?
It is shocking to see how many things we think are being recycled that end up in landfills. The recycling market has changed and the waste that has been collected and sold to other countries is no longer happening. You can see some pretty gross photos of it just floating in the water! Moreover, people are tossing garbage into those blue bins that they shouldn’t be.
“People are engaged in wish recycling,” says Mark Oldfield, public affairs director at Cal Recycle, which runs the state’s recycling program. “They think: ‘This should be recycled. I’m going to put it in the bin “. It’s amazing what people put in recycling bins,” Oldfield continues. “Dirty diapers. Broken crockery. Old garden hoses. Some of the worst offences are old batteries. Recyclers these days don’t want items with mixed material such as paper and plastic, or cardboard and tape. It doesn’t pay to tear the stuff apart. Off to the landfill. Moreover, what used to be California’s — and the world’s — largest overseas market for recyclables recently shut its door.
What doesn’t go in the Blue bin: ovenware, ceramic pottery, cups, dishes, plastic wrap, plastic motor oil bottles, frozen food boxes, micro food boxes, books, anything with gummed or blue bindings, paper towels, napkins, paper plates,, pet food bags, scrap metal, light bulbs, styrofoam or aluminum foil boxes, sticky notes, and disposable diapers, and anything with food particles on it. These all go into the black bin (trash).
What does go in the Blue bin: All cardboard boxes and chipboard, all refrigerated, shelf-stable, aseptic packaging, all clean dry paper, all plastics, all glass bottles and jars, all aluminum, tin, metal, and bi-metal cans.
Also, as a reminder, don’t forget the SAFE recycle centers around the city for your electric and hazardous waste. I go to the one at UCLA on regular basis. It is so very easy; you just drive up and they take it all out of your car. The center is located at 550 Charles E Young Dr. West and is open Thursday – Saturday, but only take E waste on Sat.
“Summertime and the Living is Easy” – With Labor Day this week end, and school back in session, Summer is winding down. The year is going by so very quickly. For us hard working stiffs, we are in the office every day, but I say that it has been quiet and there haven’t been a ton of people in the office. I am looking forward to a full compliment of my associates coming back to work next week. As a reminder, my lease listings in Bel Air Crest are still available, 2370 Brookshire, 4/3.5 pool, elevator den, and downstairs bonus room for $12,750, and a lovely custom home that can be seen before it comes on the market officially with 5/4.5 pool, some recent remodeling, and behind its own gate, $23,500 furnished, and $22,500 furnished. Please give me a call to see them. Both owners are most anxious to lease these lovely homes.
On another note, it appears that the possibility of some type of development of the Berggruen Institute may be gearing up. Currently there is not a lot of public information being released, but I am working to find out as much as I can and will share it with you when I know it is established fact and not just gossip which is what we are dealing with currently. If you want any information on any of this, please do not hesitate to contact me at 310 442-1384 or carole@caroleschiffer.com. Please let me know how I can assist you with all of your real estate needs.
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at carole@caroleschiffer.com www.caroleschiffer.com
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Price gains occurred in most metro areas in the U.S. under marginal inventory growth in the second quarter of 2019, according to the National Association of Realtors. Single-family median home prices increased year-over-year in 91% of measured markets in the second quarter, with 162 of 178 metropolitan statistical areas showing sales price gains. That is up from the 86% share in the first quarter of 2019. The national median existing single-family home price in the second quarter was $279,600, up 4.3% from the second quarter of 2018 ($268,000).
Millennials, at 36%, were the most likely age group to call real estate their top long-term investment choice. Other generations also favored real estate, including generation X (31%), baby boomers (30%), and the silent generation (23%). “Millennials who are higher on real estate than any other age group, have cooled a bit on cash, and still aren’t keen on the stock market when investing for more than ten years,” says Greg McBride, Bankrate’s chief financial analyst.
Still, many investors don’t pay all cash and rely on mortgage financing, which allows them to leverage the size of their cash investment, just like homeowners. About one in five purchases by small investors finance one-third or more of their investments. “Small investors” are defined by researchers at the Federal Reserve as those who purchase between three to 10 properties.
Even though we have somewhat recovered from the drought (we had a great snowpack this winter in the Sierra), the lush, dry-brush landscape is just perfect fuel for fires, and they will come (we just had one in the Sepulveda Basin on the 30th – it was set off by propane cannisters). Remember last November, the Woolsey Fire — straddling the LA and Ventura County lines, it consumed over 97,000 acres as it marched from Thousand Oaks to Malibu. That fire cost 3 lives and 1500+ structures destroyed.
In my interview with Robert Feldman, one of California’s top fire and earthquake insurance professionals, he urges you to review your policies for both potential disasters. Remember, most home owner policies with a wrap-around do NOT cover smoke damage. And Feldman noted there are many options beyond what California plans that offer fire or earthquake insurance that can give you the coverage you need.
According to the latest survey there are $236 billion worth of homes at risk of wildfire damage. Riverside is where the most homes are at a high risk of being damaged by wildfires, the study shows. An estimated 477,039 homes worth approximately $268 billion are at high risk — or a very high risk — of being damaged by wildfires. Riverside has more than $40 billion worth of homes at least at high risk, based on data pulled of “at-risk” homes flagged by the U.S. Forest Service. Sacramento is the metro with the second-highest number of homes at high risk, with slightly less than 55,000.
The six-county region’s median price — the point at which half the homes sold for more and half for less — clocked in at $541,250 last month,
NRT (Coldwell Banker’s parent company) CEO & President, M. Ryan Gorman recognized Carole Schiffer for her outstanding performance in the fourth quarter 2018 for being one of the company’s top performers, placing in the top 500 agents out of 47,000 who work for NRT’s retail residential brokerage. NRT is the nation’s largest residential real estate firms. Carole offices at NRT’s Coldwell Banker’s Brentwood office on San Vicente, one of the company’s most successful brokerages in the U.S. Thank you all again for helping me get there! I really appreciate it.
What impact will this have on the economy and in particular, real estate? Economists don’t agree on its impact — some believe the small cut will have little impact since the real estate industry had already anticipated the cut and had already lowered mortgage rates. Most corporations haven’t had trouble getting credit or loans, and lowering borrowing costs probably won’t boost car sales, which have already peaked after years of strong pent-up demand.
New US Census data shows that homes in homeowner’s associations are taking up a larger share of new construction and new sales than ever before. According to new data from the U.S. Census Bureau, there were 840,000 single-family homes completed in 2018. Of those homes, 64% or about 535,000, were part of an HOA. That compares to only 306,000 new, single-family homes that weren’t part of HOAs. Please remember this report is national. Unfortunately, we do not have the land available to build more gated communities in West Los Angeles. That is what makes the homes in our local gated communities all the more valuable.
One of the rooms in a house that everyone looks at when they are considering making a purchase are the bathrooms It is where buyers increasingly are making key decisions on whether to purchase the home. It’s not just a matter of tubs, sinks, faucets, and tile — it’s the little things that can make a different. It is very personal.
Did you know that August is back to school month and has been since the 1960’s? I remember when I was going to school, traditionally it started in the fall, and ended in late spring. It was always still hot, particularly as the majority of the class rooms did not have AC. The reason for this was to allow the children of farmers in our agricultural society to help with planting and harvesting. Today, with families now living in urban and suburban areas, those needs have changed. With the change is school schedules, families that typically had taken their vacations in August, are now doing so in July, which has an impact in a lot of areas including the real estate market. I remember how much fun it was to to shop for all of those new school clothes and school supplies including the new lunch box/kit and back pack!
We just leased the house on Folkstone to a lovely new tenant who will be moving in with her two young children in mid Sept. The fabulous home on Brookshire is still available for lease, but with the owner being gone now, I am not showing it until they return, and my other lease in Bel Air Crest on Weybridge for $23,500 is still being re-financed and until that process is finished, which be in the next few days. I can only show it as a “pocket listing”, so if you know of anyone who wants to lease a GREAT home in Bel Air Crest, preferably furnished, please let me know. At the moment, I am working with about 6 – 7 buyers, all of whom are looking for that “special” house in Bel Air Crest, Brentwood, and Santa Monica. With one of those clients we looked at a house the other day that had amazing ocean views, but was up a narrow and windy road and was basically on the edge of a cliff (certainly not my cup of tea, nor that of my client either). It is always fun for me to explore other areas.
In looking deeper at the MLS stats for last month, Beverly Hills had five homes over $10 million, the highest on Rodeo Drive at $19.5 million. Bel-Air/Holmby Hills had two over $15 million, with the highest at $31 million. Brentwood had a sale of $22.7 million.
The Pending Home Sales Index is based on contract signings, climbed 1.1% to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases.
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