Timely Real Estate News………………………15 June 2018
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Treading water…. maybe it’s the weather?
It’s almost Summer…and with it, perhaps we will get more clarity about our real estate market, which has been treading water since the first of the year. Sales volumes are meandering around last year’s levels, and while median sales prices are bumping up (and down) in every community, we are still fighting low inventories. Open houses remain robust because demand is far exceeding supply in every community, and buyers are scrambling now to lock up financing as the Fed marches on with new rate increases (see below).

In the five communities I report on each month — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood— the total sales volume for these markets is slightly down for the year…. going from $1.516 billion in May 2017 to $1.499 billion for May 2018. That is not a big drop, for sure, but usually by this time in the Spring selling season, we are seeing more aggressive numbers, which tells me that we may well just be treading water a bit longer in 2018.

The culprit of course, is inventory. More inventory, more sales….and median prices are fluctuating as they always do. For example, Beverly Hills leads the market, of course, with a median sales price through the first five months of 2018 at $6.120 million, but just a 2% increase over 2017. Bel-Air/Holmby Hills was up 25%, going from $2.084 million to $2.670 million. And Westwood/Century City was positive at 8% up over last year, with a median sales price of $2.268 million. Beverly Hills Post office was down 10%, Brentwood was down 1%, and Marina del Rey was up 2% over 2017. Marina del Rey’s median sales price is $1.500 million through May and Marina del Rey’s total sales for the first five months of 2018 was $51 million vs. $48 million last year at this time.

There were some notable sales in May…two homes in Bel-Air/Holmby Hills were sold for $56 million and $68 million respectively, not unusual in our market. Beverly Hills, BHPO, and Brentwood all had sales of $10 million plus. I must share with you…as has been usual, not all of the high-end sales are listed with the Multiple Listing Service but are handled as private or “pocket sales”. There were 6 homes over $20 million that were not listed with the MLS last April and are not reflected in our total sales numbers. This occurs every month and is not unusual as many buyers simply want to go “off line” and not make their transactions immediately public. As I have pointed out in the past, one big risk a seller takes when marketing/selling their property in this manner, is that by not exposing their home to the open market, they may end of getting a lower price.

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May sales…. a mixed bag
May sales, compared to last year, were uneven throughout these communities. Beverly Hills median sales price for May was $5.625 million, down 13% from a year ago. Beverly Hills Post Office, however, was up 35%, at $4 million. Westwood/Century City was up 10% at $2.330 million for May, but Bel-Air/Holmby Hills was down 32% to $2.527 million…Brentwood was also down 12% at $3.163 million…and Marina del Rey was off 6% at $1.021 million.

You can see that for the most part, we’re treading water — not sinking, but not making much progress in one direction or another. That’s OK…because that’s the nature of our real estate market. Keep your life preserver handy.

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Fire season is here to stay…please get prepared.
According to the Los Angeles Fire Department, we are in a year-round fire season in Southern California. The lack of rainfall this year has left many areas vulnerable again…and the fire that erupted in Benedict Canyon recently is a critical reminder that you have to get your property in shape to protect your home and possessions….and keep it that way…12 months a year. It’s non-stop for homeowner protection.

The “villain” in this fire, which covered 35 + acres, was a “Weed Wacker” that ignited the blaze, which quickly ran up the hillside, threatening nearby homes and neighborhoods. Los Angeles fire officials urge us to use licensed contractors who follow safety rules – such as avoiding metal blades and carrying fire extinguishers. The irony of this is that the “Weed Wacker” was being used to clear brush

The LAFD’s quick action prevented a major fire running up the Canyon, and it serves all of us as an urgent reminder to keep our property clear of clutter, unnecessary brush, and making sure you have your home and yourself properly prepared — inside and out. Please see the LAFD web site for more information on this critical issue: https://www.lafd.org/fire-prevention/brush

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Taking it a step further
I recently received a vehicle disaster supply kit for any kind of emergency. I thought I would share some of the key items with you: First aid kit, Clothing – blanket(s), jacket, comfortable walking shoes, gloves & extra socks, Tools – batteries, flashlight(s) radio, tarp, Specialty Items – whistle, insurance papers, important phone numbers, CASH, Food – canned food &juice with an opener, plastic utensils and cups. For a complete list and more information, please go to

http//www.fema.gov/areyouready/assemble_disaster_supplies_kit.shtm.

Not sure about you. But I think we all will need to have SUV’s for all of this plus the everyday things we keep in our cars!

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Federal Reserve kicks it up a notch…. more rate hikes coming
As expected, the Federal Reserve raised its benchmark short-term interest rate but it also upgraded its forecast from a total of three hikes this year to four amid an improving economy, falling unemployment rates and slightly stronger inflation. The move is expected to cascade through the economy, in particular nudging up rates for variable-rate consumer loans such as credit cards and adjustable-rate mortgages.

This has been anticipated since their last meeting. It’s also likely to push up bank savings rates for Americans, who are finally realizing higher returns on CDs, bonds and other fixed-income assets after years of meager yields. As noted in the Fed’s monthly statement, the main takeaway is that the economy is doing very well, and “most people who are looking for a job, can find one,” according to Fed Chairman Jerome Powell.

The Central Bank lifted its federal fund rate — which is what banks charge each other for overnight loans — by a quarter % point to a range of 1.75% to 2%. That’s within shouting distance of its longer-run forecast of 2.9%. It’s the second rate hike this year and the seventh since the Fed began bumping up rates amid an improving economy in late 2015.

For the years after the Great Recession of 2007-09, the Fed kept its key rate near zero to stimulate sluggish growth.

In perhaps a telling sign, the Fed removed its previous assertion that its key rate “is likely to remain, for some time, below levels that are expected to prevail in the longer run.” That suggests the Fed could push up rates more rapidly. Powell, however, said it simply means rates are getting closer to normal levels.
In talking with my mortgage lender contact, this may have some dampening effect on loans, but with the economy booming as it is now, and with the stock market more up than down, higher-income buyers are not going to be hampered by modest loan increases. Affordability for first-time buyers will be impacted more, as there is just a very limited inventory of houses (including condos) available to this market.

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Will California split into three states?
This is your chance to “leave” California as you know it. Placed on the November ballot is another proposal to split California into ‘like-minded areas that would become official if voters approve and the State Legislature (both houses) approve it, essentially putting them out of a job. Then Congress has to approve it as well. Let’s forget the sure-to-come lawsuits that will spring forth if it somehow passes.

According to the Los Angeles Times, “California’s 168-year run as a single entity, hugging the continent’s edge for hundreds of miles and sprawling east across mountains and desert, could come to an end next year — as a controversial plan to split the Golden State into three new jurisdictions qualified Tuesday for the Nov. 6 ballot.”

It’s been tried before…. but if a majority of voters agree, a long and contentious process would begin for three separate states to take the place of California, with one primarily centered around Los Angeles and the other two divvying up the counties to the north and south. Completion of the radical plan — far from certain, given its many hurdles at judicial, state and federal levels — would make history.

If this happens, it would be the first division of an existing U.S. state since the creation of West Virginia in 1863.

One of the many issues facing such an event would be whether this could be legal via a ballot initiative, contrary to California’s state constitution. In the already ‘war of words’ engendered by this ballot initiative, the debate rages around the legality of the whole initiative process, and there is no assurance of the outcome with respect to who would end up in power in each of the newly created states. Critics cite the aversion of seated politicians risking their place in the state legislature or Congress to approve their job elimination under such a plan.

It will be fascinating to see this going on over the next five months…Did you see the movie…” La La Land”? Only in California.

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$1.5 trillion student loan debts aren’t going away easily
Yes, “trillion”! Student loan debt is now the second highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans. And it’s not going away easily.
According to a national report from “Make Lemonade”, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. The average student in the Class of 2016 has $37,172 in student loan debt. This is crimping mostly the lifestyle and home-purchasing desires of millennials, the largest single home-buying group in the U.S. today.

The latest student loan debt statistics for 2018 show how serious the student loan debt crisis has become – for borrowers across all demographics and age groups. This is one of the main reasons that millennials are moving back home with their parents — nearly 34% of this generation are living at home, trying to save money and eliminate their student loan debts.

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Do home prices influence birth rates? You bet they do!
Economists don’t miss a trick when it comes to figuring out future home-buying trends. Inventory, lack of supply and demand, price growth, foreclosure rates, mortgage rates — these all play a role in their ability to determine the future of the housing market.According to a recent national analysis, birth rates among 25- to 29-year-old women decreased in counties with the fastest home-price appreciation. On average, a 10 %-point rise in home values correlates with a 1.5 %-point drop in birth rates.

The trend is most noticeable in Los Angeles County where home values increased 31% from 2010 to 2016. During the same time period, birth rates fell 17%. That means there were 2,588 fewer babies than would otherwise be expected, noted the report.
Young couples said financial stability, or the lack of it, is an important factor in their decision to have children. But true financial stability may be out of reach for most as home prices continue to rise, the report said.

At the end of the day, millennials in particular are much more cautious about making a move to purchase their ‘dream home’, with a third staying home with parents until they can afford the move. That includes, obviously, the decision to start a family when living with mom and dad.

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My Real Estate Perspective
The inventory woes definitely impact my business. I have about 10- 15 buyers, some with more specific needs or requirements than others, and it is very difficult to find available properties for them to purchase (both listed and privately available). I have written to a number of you asking if you are considering selling your properties, with a very low response. Once again, if you are at all considering selling your property, please let me know as it might work for one of my clients.

In the meantime, please do not forget my lovely listing a 12547 Promontory in Mountaingate. We recently reduced it by $90,000 to $2,450,000 and currently are working with one or two buyers who are interested in it. In addition to showing it by appointment, I am there on Sunday, so please stop by and say “hello”.

 

I also just listed a wonderful home in the hills of Tarzana, 4311 Coquette Place, located on a cul-de-sac, this single story 6/6.5 home is being offered at $1,825,000. You can preview of them on my web site www.CaroleSchiffer.com.

 

 

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CalBRE 00677619                                                                                                                                                                    ©2018 Coldwell Banker Real Estate LLC. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Owned And Operated By a Subsidiary of NRT LLC.

Timely Real Estate News……………………15 May 2018

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Treading water is better than….what? Sales volume steady.
My usual opening line is…”sales volume is up again.” Come April, after a robust March, sales volume for the five cities I report on didn’t move the needle. For the cities of Beverly Hills, Beverly Hills Post Office,           Bel-Air/Holmby Hills, and Brentwood, sales volume through the first four months of 2018 were statistically even…$1.092 billion through April 2018 vs. $1.093 billion through April 2017. For Santa Monica, one of my key communities also, was down 34% in sales volume to $156 million.

That is OK. Sales volume has continued to rise each month and I expect that trend will continue. We are seeing a strong selling season with open houses attracting large numbers and multiple offers this Spring. On the transaction side, as an aggregate total, we sold three more homes through this April than last year — a total of 234 homes in these five communities.

The real question remains: How are home prices holding up? In looking at median sales prices for these five cities, Beverly Hills fetched a remarkable $6.235 million median sales price, a 4% increase over last year at this time. Bel-Air/Holmby Hills was up 44% to $2.775 million over 2017, and Westwood/Century City was up 8% to$2.285 million. Beverly Hills Post Office was down 15% at $2.391 million, and Brentwood was down 16% $2.995 million. Santa Monica’s median sales prices were up 34% to $3.085 million.

We’re only looking at the first four months of this year, and we have witnessed slow starts before. You can count on these communities’ prices fluctuating from month to month, so the best way to get a handle on your home or your neighborhood is to get reliable comps (online comps can be off as much as 15%, so be careful). I will be more than happy to help you evaluate your home value…just give me a call at 310-442-1384.

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April hasn’t always been a great month…
When you step back and look at a strong March and weak April, you realize that over the years, the early months of any year reflect both economic transitions and market conditions. We have seen the market According to Market Watch, Fed notes indicate there could be two more rate increases this year, and the low unemployment rate of 3.9% doesn’t appear to be stoking inflation worries, even if it overshoots its 2% goal. One also needs to be very careful in just looking at the low unemployment numbers. There are a lot of people out there whose benefits have run out as well as some people who are not even trying to find work. These need to be factored into the low unemployment numbers. The good news out of the Fed is that wages are expected to grow, even though we haven’t seen much wage growth since January.

All of this portends steady mortgage rates for the near term, and lenders are anxious to make more loans, too — if only there were more transactions (more housing inventory would help).

In looking at my market, four of the five communities I report on were down in median sales prices for April 2018 when compared to April 2017. Beverly Hills was down 34% in MSP, Beverly Hills Post Office was down 60% compared to April 2017, Westwood/Century City was down 20%, and Brentwood was also down 25%. Only Bel-Air/Holmby Hills was us an impressive 111% when comparing April 2018 to April 2017. Santa Monica’s median sales price for April was 69% higher than last year at this time.
I mention these numbers because it demonstrates the market’s volatility right now. Local trends are embodied in monthly, trending median sales prices, but there is a fallacy here, too. The MLS does not report private sales and as in my March report, 15 of the homes selling for more than $20 million last March were not included in the MLS totals. However, MLS still has the only and best data available to us on a consistent basis.

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Is there a solar panel in your future? CA says yes!
In a move to cut greenhouse gas emissions that critics say will end up raising home prices in the already expensive market, California has become the first state in the nation to mandate solar panels for all newly constructed homes. In a unanimous 5-0 vote last week, the California Energy Commission approved the policy. Experts ae saying the inclusion of these solar panels could cause an increase of $10,000 to construction costs for a single-family home. On the flip side, the commission says, the panels could yield much more in energy savings. For residential homeowners, based on a 30-year mortgage, the Energy Commission estimates that the standards will add about $40 to an average monthly payment, but save consumers $80 on monthly heating, cooling, and lighting bills.

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California is now 5th largest economy in the world
Do we really want this title? Let’s not look at California from 30,000 ft…let’s be practical: What’s it like on the 405 freeway after 3 p.m.? How long does it take get to UCLA from Santa Monica during rush hour? How much do you have to pay for an apartment, condo or to purchase your own home in Los Angeles? You know the answers…but it’s worse if you are asking these questions in the Bay Area, where soaring housing prices are forcing many to leave the area for even basic needs. And traffic is no better there, trust me.

A blessing has been the state’s strong environmental focus and posture on emissions, development, and human services. But it has all come at a cost, particularly for housing. We need an average of 186,000 new housing units every year to handle our population growth — but we can only build 100,000 units (apartments, condos, homes).

Even so, what this has brought to our state — according to the Center for Continuing Study of the California Economy, is that “we welcome immigrants and diversity, while reducing greenhouse emissions. And in spite of the roadblocks government puts in the path of developers, California is an “attractive state for talent, innovation, and entrepreneurship.” Somehow, you just don’t feel it when stuck on the 405.
How does this all affect housing? Pressure and more pressure. Inventory remains a problem on the Westside and everywhere in California, and even though it’s marginally better, we don’t see an end to this drought.

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Three ideas that will make your kitchen happy….
Everybody’s favorite room is…the kitchen. It’s where it’s happening…where people gather at parties…where grazing and stealing are permitted. It brings people together…to have fun and enjoy good food, good spirits.
Developers know first-hand that kitchens are probably the key sales tool for any new home. And at a recent Kitchen and Bath Show, here are the three most popular kitchen trends….

#1 Create a “smart kitchen’. This includes wireless appliances, LCD screens on the refrigerator for ordering food, making lists, calendar reminders…. voice-controlled lighting and increased safety through connectivity apps.

#2 Choose easy-to-maintain finishes. Homeowners are turning away from high-maintenance granite and marble countertops, wood floors and traditional stainless steel. Manufactured quartz is “in” and millennials in particular are looking for low-maintenance ‘everything’ in the kitchen. And…

#3 Bring on the color! Yes…it’s time to spruce up the traditional white or wood-paneled kitchen with colors that fit a more contemporary taste. Dark hues can highlight kitchen appliances and the outside…and neutral colors work perfectly for selling your home — let the buyer imagine what works best. There are so many options now available for the homeowner or seller to work into the ‘best room in the house.’

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Millennials’ tail is wagging the dog….
Whether you like it or not, millennials have become the tail wagging our dog. Millennials, in fact, are purchasing more homes than any other generation. They made up 36% of home buyers last year, up from 32% in 2013, according to the National Association of Realtors (NAR).

Homeowners typically stay in starter houses for about five years before trading up, NAR’s Chief Economist Lawrence Yun says. But by waiting to buy until their job status and income grow, millennials have been able to land their dream houses at an earlier age, he says.

During and after the 2007-09 recession, many Millennials had to take lower-paying jobs that didn’t utilize all their skills. But their incomes began noticeably rising two to three years ago, leading to an increase in home purchases, says Sam Khater chief economist of Freddie Mac.

Also, many young adults are moving from high-cost areas like New York City and the Bay Area to relatively inexpensive Southern and Western states, enhancing their ability to buy pricier homes, Khater says.
Meanwhile, there’s a shortage of houses generally across the U.S., but it’s particularly severe for starter homes. The number of starter homes was down 14.2% in the first quarter from a year ago, and prices continue to just go up and up. It’s not easy being a millennial these days.

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Guess who’s coming to live with us….?
According to a recent national survey, the rate of Southland millennials that live at home with their parents has gone up by more than 60% in just 10 years.

A recent study found that in 2016, 30.2% of millennials – defined as those aged 24 to 36 – in the Los Angeles-Long Beach-Anaheim metro areas still resided with their parents. That’s up from 18.4% in 2005.
The study found that the median monthly rent in the Los Angeles and Orange County metro areas is currently at $2,753. It was determined that a typical renter in this region spends an average of 47.3% of their gross income on rent.

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“Googie” (not Google) is making a comeback
It’s retro. It’s cool. It’s so Hollywood and LA. It’s the architecture of the ‘40s and ‘50s that permeated our city and culture, where the traditions of World War II era clashed with the Jet Age. To prove it, we only have to look at iconic “Googie” examples — the LAX themed restaurant…John Lautner’s famous “Googie’s” restaurant in West Hollywood or the fabulous iconic76 gas station in Beverly Hills. And then there is Norms…still going strong. “Googies” was intended to be derogatory term by an architectural critic…but it didn’t work out that way. One of the best — Bob’s Big Boy in Toluca Lake!

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My News
I am happy & busy! After having been out with an injured back for almost 5 months, my longtime assistant, Jacqueline is back at work, YEA!!!

We have reduced my lovely listing at 12547 Promontory in Mountaingate by $90,000 to $2,450,000…and are having a great deal of activity and hope to have it in escrow very soon. My clients are ready to move to their new home. Right after the first of the month, I will be bringing out a great, single story home in the hills in Tarzana. It is 5 bedrooms, good sized yard, and a real swimmers pool. The price will be $1,825,000 and I am in the process of looking for a new home for them. There are also some leases in Bel Air Crest coming up soon.

In addition, my sweet, cute Mother will be turning 96 in a week or two, and my family is in the process of planning a surprise visit to celebrate. My niece Morgan and her fiancé Ben and nephew Connor and his girlfriend and my sister & brother-in law will all be here to join in the fun.

Please check out my web site, CaroleSchiffer.com. I have a new sold reel which presents a number of properties that I have sold through the years. If you would like to have your home featured in it as a property sold by Carole Schiffer, give me a call. 310 310 442-1384.

 

Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office
CalBRE 00677619
©©2018 Coldwell Banker Real Estate LLC. Coldwell Banker is a registered trademark licensed to Coldwell Banker Real Estate LLC 234567An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC.