Timely Real Estate News…………………….15 January 2018
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Happy New Year!  

2017 ends strong – price lead the way 

It’s no surprise 2017 was one of the strongest years since the downturn in our economy in 2007.  While it’s been 10 years since the start the Great Recession, we continue to witness the accumulation of equity, with home prices surging every month in every area of the Westside (and elsewhere), and there doesn’t appear to be an end to this trend any time soon.

Every month, we see home prices escalating as the lack of supply continues, even with small gains in number of homes available on the market.  Driving demand is no surprise either: We reside in one of the most attractive and luxurious markets on the Planet, and people with means want to live here.  This has always been the case. Every New Years Day as I watch the Parade and Rose Bowl game, I cannot help thinking about the difference in our weather and that of other places in the world (look at the horrible weather they were experiencing on the East Coast then!). It seems people make the decision to move west when they see those differences.

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Median sales prices up in all areas 

The Schiffer Line reports monthly on these core communities – Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood.  Each month I also cover one of the surrounding communities where I continue to work, and this issue it is Venice.

For the year ending December 31, all these communities’ median sales prices were up over 2016 year-end numbers.  Beverly Hills was up 22% to a MSP of $5.950 million; Beverly Hills Post Office was up 34% to $3.397 million, Brentwood was ups 17% for the year at $3.172 million; Bel-Air/Holmby Hills was up 8% to $2.296 million; and Westwood/Century was also up 8% to $2.045 million.  Venice was up 2% to $1.990 million.  As I have pointed out over the past 12 months, some community median sales prices will fluctuate up or down, but what we have seen this year, as opposed to the past, is that all of these communities continue to show strong price support each month in 2017 even with marginally increased inventories.  Increased inventory continues to be our big need.

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Sales volume surges up 10% for year 

Sales volume for December was strong again for the year, up 10% for the year’s total sales, a clear sign that our market enters 2018 with a strong base.  And, of note, this was a record year for high-end sales.  There were 515 closed sales of $5 million or more versus 514 last year on the Westside.  And there were 10 $40 million sales this year versus only 4 last year, an increase of 150%.

Within the communities I cover each month, Beverly Hills had six homes selling for over $20 million in December, the highest was $26 million…Beverly Hills Post Office had three homes selling for over $20 million, the highest being $26 million also.  Bel-Air/Holmby Hills had five homes over $20 million with the highest $40 million, and Brentwood had one home over $20 million. December was a very good month all the way around.

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In sum, 2017 was a very good year 

All in all, the Westside market proved resilient, attracting buyers from around the world Prices continued their rise as home equities were replenished…. however, we’re not all the way back even though prices are the highest ever, but when you factor in11% inflation versus sales prices today, we still not all the way back to 2007 real-values.  The downside in all this sales-happy story is the continue inventory lag.  This is not only an issue here but everywhere.  In California alone, we are only adding less than 100,00 new housing units a year, but the demand is over 180,000.  Our strong economy and continued growth is good news, but it attracts workers who cannot find affordable housing.

Average home prices are skyrocketing, too, in many parts of the country, especially in places like San Francisco and Silicon Valley where the average home prices are now over $1 million.  We seem to be setting price and sales records every month recently, and there is no end in sight for this to change.

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The year of the seller? You bet! 

Buyers beware.  As you search the Internet for housing you will have already figured it out – it’s going to be difficult and challenging to find affordable housing on any level.  The leading opinion from economists is the obvious – sellers will still control the market as inventory is quickly snapped up, forcing many buyers into a competitive frenzy to lock down a sale.  On a national level, we have used the 50-year average of 1.5 million new units to meet demand, and while we had an uptick in housing starts this past year, we’re still way behind.

According to a 2018 housing market forecast, a whopping 25% of homes sold within two weeks or less during the peak of the buying season in 2017, and nearly one in five homes, or 19%, left the market in less than a week.

For example, we are seeing “days on market” in the five communities I report are trending down.  Beverly Hills” days on market” is 77 days, Westwood/Century City is 41 days, BPHO is 81 days, Bel-Air/Holmby Hills is 74 days, and Brentwood is 57 days.  Venice is the lowest at 46 days.  You have to remember that we are dealing with average home prices in the $2 million-plus range and frankly, these take a bit longer to move than a home selling for under $1 million.

According to the NAR, mortgage rates are expected to rise this year on average to just 4.5% by the end of 2018, and changes to the tax code may actually de-incentivize home ownership and could tip the balance of power to buyers and give them more room to negotiate, especially in luxury markets. We will have to see what the change in mortgage deductions does to the health of the market.

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Winter is a good time to sell or buy 

Most buyers and sellers mistakenly wait for the Spring selling season to begin their home buying or selling process…that means waiting another three to four months before you start this journey.  But my advice is to start now…and why is that?

First of all, for home buyers, it can be less expensive, sellers are ready, and there may be fewer choices, thus the buyer becomes the star.  And secondly, buyers are in a great position to negotiate because they are more motivated as there may be less buyers out there, thus the less multiple offers.

There can typically be less competition during the off season, too, which means buyers can get more ‘bang for their buck.”  About 40% of homes on average are sold in May, June, July and August according to The Housing Wire.  Research shows that those who buy a home during the peak selling point usually pay an average premium of $1,500, but those who purchase homes in, say, the Winter months, paid $3,100 less than average.

Sellers are more attentive, more eager to sell as soon as their home gets on the market, which means the buyer – who now has less competition, may be able to mke a better deal with the help of their experienced agent.  And sellers are typically wary of having their house getting swept away with the flood of new listings hitting the market in the Spring or Summer.  That’s why sellers are in a more receptive mood before the selling season hits.

Also, with mortgage rates remaining low and getting in on this hot market before the selling season starts in April would be a good decision for buyers and homeowners looking to move this year.

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Protect your property all the way through escrow

Former Yankee catcher Yogi Berra said it first, “it ain’t over ’til it’s over!”  In the world of titles and escrow, that is so true.  I cannot tell how many times over my 30-plus years in real estate that houses have dropped out of escrow for all sorts of reasons.  If you live long enough, you know what I mean – houses are not “sold” until the escrow officially closes.  And one of the major problems escrows fail to close is because there are problems with the title.

To protect your investment in the event you have a problem with your title, here is a list of the common problems…

• Clerical or filing errors in the public records
• Unknown liens placed on the property in connection with debts of previous owners
• Questionable deeds, such as deeds executed by a minor, a party in bankruptcy, or a person of unsound mind
• Missing or unknown heirs, or undiscovered beneficiaries claiming rights in the property, which may turn up years after the transaction has closed
• Forgeries or falsification of documents that could affect property ownership
• Unknown easements held by government agencies, utilities or others, which restrict the new owner’s use of the property
• Boundary disputes, as when a neighbor or someone else claims ownership to a portion of the property

Some of these title defects can be cured or corrected before closing but other shortcomings could take years.  My advice:  Make sure that your experienced real estate agent has checked on your property before you begin the seller process.

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Homes valued under $1 million are decreasing 

Yes, the number of homes that are valued under $1 million is decreasing at a rate we’ve never seen before. In 2002, the number of homes priced under $1 million was 98.2% of the entire U.S. housing market – and today, that number is 95.7%, which may not seem like a big reduction, but that just underscores what we are seeing on the Westside as well.  The average Los Angeles County house is now $556,000 but the average median price listed for sale is $625,000.  Remember, this is for all of LA County. One of my mentees was on the market as a first-time home buyer for herself and her family.  Like all buyers, they had some requirements for their condo which put them in the $900,00 price range.  During the course of December of last year, they made 5 offers, all of which ended up being multiple offers until they finally prevailed and opened escrow on a lovely unit in Brentwood this week.

The top 0.01% of American earners – those with an average of $6 million income, have seen their incomes surge by 320% between 1980 and 2014 according economists.  That compares with just 42% growth for middle-income workers, which points to the affordability crisis we’re experiencing in the U.S. This explains why homes valued at $5 million or more is growing even faster as we have seen on the Westside in high-end sales.

Here is the list of five metropolitan areas with the largest share of homes worth $1 million or more in 2017:  1) san Francisco – 66%; 2) San Jose – 56%; 3) Los Angeles – 23.6%; 4) Fairfield County, CN – 17.7%; and 5) Long Island, 17.4%.

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My personal thoughts and outlook 

First of all, my heart breaks for all of those who lost their lives and homes due to the recent mud slides in both the Burbank and Montecito areas. One of my friends who was a top agent in Montecito lost her life, and another his home. I pray for everyone for their losses.  Hopefully when we get more of our much needed rain, we will not sustain any more losses.

Going into the year, it appears that I am going to be a busy girl, with multiple buyers looking for homes in gated communities, both to purchase and to build.  I am also getting a listing of a lovely home behind the gates in Mountaingate.  It will be coming on the market in the next two weeks, so keep an eye out for it.  There are a number of other properties and /or clients that I am working with, so please keep up with me on my web site. Caroleschiffer.com and/or caroleschiffer/realtor @facebook.com

Don’t forget the public forum for the Berggruen  Institute this coming Sunday at Skirball from 10:00 – 12 Noon.  It is very important that they hear from the community about their plans.  Please see the link as reservations are required.  https://berggruen.app.rsvpify.com/

Here’s to a great 2018 for everyone!

 

Timely Real Estate News…………………………………..15 December 2017
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So how will the fires affect real estate prices?

That’s a big question we all have. California already faces enormous pressure on housing availabilities without the costly and tragic eradication of homes and rental units up and down the state during these two-major fire disaster, one of which (Santa Barbara) continues to rage on. It could “exacerbate an already challenging market for buyers,” says Chief Economist Danielle Hale of realtor.com. “People will probably look more toward apartments.” But there aren’t enough affordably priced rentals to go around either.

In all of California, nearly 2,045,000 homes are deemed at high or extreme risk from wildfires, according to the 2017 Verisk Wildfire Risk Analysis. That’s 15% of the state’s households, according to the insurance, natural resources, and financial services data

analytics company based in Jersey City, NJ. Usually after a major disaster, real estate prices drop. Buyers don’t want to look out their windows to see the burnt-out remains of their neighbors’ homes. Whole neighborhoods can become loud and messy construction zones as residents rebuild their beloved communities. And of course, there are always fears that another disaster could strike.
The October fires in Northern California killed 44 people, damaged more than 21,000 homes and 2,800 businesses, and cost more than $9.4 billion in insurance claims as of Dec. 1, according to the California Department of Insurance. About 100,000 residents were forced to flee their homes.
However, hold on to your hats, but prices are actually going up…. But instead of prices going down, they actually shot up in Sonoma and Napa counties after the tragic wildfires. For example, Median prices of single-family houses rose 6.1% in Sonoma and 7.5% in Napa from September to November, according to real estate brokerage Pacific Union.

In Santa Rosa, the Sonoma County city that was devastated by the fires, median home prices have risen about 9%, says a local real estate agent. They typically fall this time of year as the market slows down ahead of the holidays.
What’s going on? Despite the destruction, this is still an incredibly desirable area to be—so much so that folks are willing to take the risk. Many of the residents who lost their homes still want to remain in the area, and will pay whatever is necessary to do so.
That’s why in these sorts of anomalous places, prices can rise as a result of the disaster, says Orell Anderson, a national real estate appraiser with Strategic Property Analytics in Laguna Beach, CA. The fact that there weren’t enough homes on the market before the crisis only exacerbates the situation.
Undamaged homes are now receiving multiple offers and going as high as $100,000 to $200,000 above asking. And many buyers in the wealthy area, whose high-end homes were damaged in the flames, have the means to pay all cash.
“The majority of people here are saying, ‘This is my home, this is my neighborhood, this is my community,'” say the locals who want to stick around as they fix up their homes. “We’re going to rebuild and we’re going to make our community and our homes nicer than they were,”.
That kind of topsy-turvy post disaster price appreciation may not occur in Los Angeles and the other counties affected by these latest infernos. After most natural disasters, homeowners can expect to absorb a roughly 10% discount if they put their properties on the market, says a real estate appraiser.
People buy neighborhoods…. they stick together

Real estate research has long proven that people buy neighborhoods as well as homes. So, properties that were miraculously spared on burnt-out blocks are going to see the biggest discounts. (Buyers are unlikely to want daily reminders of the devastation.)

Los Angeles has some of the nation’s most expensive real estate, but the city is very different from the wine counties up north—vastly larger, more diverse, and perhaps less predictable.
Generally, most people after a disaster are risk-averse, and yet most will rebuild says. All we can do and take a ‘wait and see’ attitude about all of this. The Skirball Fire claimed 6 homes in Moraga, Linda Flora, all of the vines at Moraga Vineyards and on Casino…. but no homes were damaged or destroyed at Bel Air Crest or Mountaingate. Each of the communities have well-established land-clearance practices and Emergency Preparedness procedures in place. In fact, Bel Air Crest has its own water-fire truck which was on the scene immediately after the fire was first reported.
Of course, I will keep you all posted about this…. a most critical topic for some time to come. Thank all you and the first responders for their tireless support and sacrifice.

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Prices accelerate upward…sellers happy
Depending on your point of view, there are two ways to look at the continued rising home prices in our communities especially on the Westside. From the seller’s view, rising prices mean more money in their pockets, but from a buyer’s point of view, the rising prices just add to the stress of finding a home one can afford and avoid the increasing competitive bidding for ‘gem-level’ homes (priced competitively, good location, well presented). Inventories continue to lag well below demand, but we are seeing moderate increases in availabilities. But they all come with a ‘price’.

Median sales prices continue to move up for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood — all have shown strong “year-to-date” price increases. Beverly Hills leads the pack with a 27% Y-T-D increase since January 2017, and by the end of November, the median sale price was an even $6.000 million. Beverly Hills Post Office posted a 26% for the same period at $3.235 million….Brentwood was 16% ahead — $3.157 million — since last year…Westwood/Century City was at $2.015 million or 9% plus and Bel-Air/Holmby Hills was 6% over 12 months ago at a median sales price of $2.286 million. I also report on Santa Monica which had no change in its median sales price at $2.500 million.

 

 

Sales volume continues strong, too!
The five communities I report on accumulated more than $3.463 billion in total sales, a 11.7% increase over this time last year, which demonstrates the strength in the market which has been positive all year. Frankly, with lower-than-desired inventories and our continued strong demand, I don’t see prices ebbing any time soon, even though buyers continue to look for bargains…there just aren’t any. Santa Monica remains 16.1% ahead of sales for 2016, however prices remain steady there.

Across the board, there were strong year-over-year increases in median sales prices in all of the communities…for example, Bel-Air/Holmby Hills was up 61% in November 2017 over same month last year…Westwood/Century City was up 28%…BHPO was up 20%…Beverly Hills was up 23%, and Brentwood was still up 8%. The trend lines all reflect a demand curve that doesn’t appear to be declining.

On another front though, the average “days on market” — always a bellwether for buyer demand in real time is averaging 98 days in Beverly Hills, 65 days in BHPO, 78 days in Bel-Air, 35 days in Westwood/Century City, and 34 in Brentwood…inventory priced correctly is moving quickly when it appears on the scene.

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Fed does the expected…raises rates
The Federal Open Market Committee announced that it will increase the federal funds rate by 25 basis points to a range between 1.25% and 1.5%. This marks the third increase of 2017, with three more rate hikes expected in 2018.

However, even with the Fed rate hikes, which were anticipated, the Fed anticipates faster growth in the coming year, noting in a statement it expects “economic activity will expand at a moderate pace and labor market conditions will remain strong.” This is good news.
Despite no signs of inflation on the horizon, the Fed offered almost no change to interest-rate projections. The average 30-year fixed rate mortgage stands at 4.08%, still near historic lows. Not only does this present potential borrowers with an opportunity to purchase a home with a low rate in the coming months; it represents an opportunity to refinance, particularly for those with an adjustable rate mortgage.

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Retirees fret about paying off mortgage….
Many retirees are worried if they’ll ever be able to pay off their mortgage. Forty-four percent of 60- to 70-year-old retirees have a mortgage in retirement, according to American Financing’s 2017 Retirement and Mortgages Survey. Thirty-two percent predict it will take still take them more than eight years to pay off their mortgage.

Baby boomers are carrying mortgage debt into retirement more than previous generations, a survey by Fannie Mae showed earlier this year.
Sixty-four percent of 60- to 70-year-olds say, as of now, they plan to remain in their current home. Sixty-two percent say they plan to one day leave their home to their children or their estate, according to the survey of 800 consumers between the ages of 60 and 70 across the U.S.
Fifty-eight percent of boomers say they have refinanced their loan at some point, mostly motivated to do so in order to lower their mortgage rate. But 19% say they do not know what a reverse mortgage is.

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Impressive job #s fuel economy…..
According to the National Association of Realtors’ Chief Economist Lawrence Yun, November marked another impressive month for the labor market, adding up to now over 2 million net new jobs over the past 12 months.

From the deep recession in 2010, 17 million new jobs have been created. In fact, current employment levels are way above the pre-recession levels by nearly 10 million. That means an abundance of new potential homebuyers in the near future. Yet, the construction employment is still slow in coming.

Even the though the latest month’s job growth rate in the construction sector of 2.7% is twice as fast as the overall growth rate, total construction jobs are still well below the pre-recession levels by roughly 20%. Without more skilled construction workers and more hiring in the sector, the housing shortage will continue well into 2018.

Economically speaking, with a strong market, low mortgage rates (still), low unemployment and job growth, 2018, indeed, looks like an early Holiday present.

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Luxury home buyers want “over the top”
We just happen to experience a unique lifestyle on the Westside where the outrageous is, well, not so outrageous after all. However, this philosophy is not limited to Los Angeles, there are some crazy “over the top luxurious items being added to homes all over the country! It seems people are trying to outdo their own fantasies of creating something “over the top” …and that’s the trend we’re told by leading spec developers Nothing is being held back.

As one developer noted…” it’s the buyers who are making demands…the market is pushing us to fulfill their dreams.” For example, developers in Los Angeles are focusing on expanded floor plans with the finest upgrades in luxurious amenities. Specific rooms are receiving bigger and better improvements than others, especially those where residents spend the greatest amount of time while at home. One room in particular — the bathroom, is receiving more of attention over the others more recently, due to the increasing need to relax and retreat from the harsh stresses of daily modern life. On a more practical scale, buyers have in mind a specific list of highly desirable wants when it comes to a luxurious bathroom. At the top of the list is a soaking tub to wash away the stress and strain of daily life. Buyers also want an oasis of greenery, especially if the room does not have any windows.

Some of the over-the-top amenities include indoor golf simulation room, wine cellar with fully ventilated cigar room, large movie theaters, bowling alleys, and of course, full-on automated and smart home technology throughout. Outdoor summer kitchens that operate year-round is gaining traction as is roof-top patios and gardens that provide that ‘extra view of the world.’

There appears to be no limit except a buyer’s or developer’s imagination.

 

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Reflections on the Fires
I must tell you, it was/is a horrible thing to wake up and see that HUGE, ugly ball of fire looming at what could be your front door. While it was/is terrible, we in Bel Air Crest were very lucky that the winds blew in the direction they did or we would have been in a much more difficult situation. Our Emergency Preparedness volunteers were amazing, and the first responders of both the LAFD and LAPD, along with the fire fighters from all over, including Northern California, Oregon and Washington State were life savers, literally. I also learned more about voluntary vs. mandatory evacuation. The fire dept. was more causal about having us evacuate, while the police were much more strident about it, and so for a while we were getting conflicting instructions.

Finally, the LAFD — because of the liability — agreed with the LAPD, and the final mandatory evacuation order was released. Even with that, I estimate that approximately 30 % of my neighbors did not leave. Having been evacuated from my house for four nights, gave me a new perspective on what I hold valuable and dear, and what I should think about the next time this happens, and unfortunately it will happen again. I also learned a lot.

Here are some things you may want to think about for yourselves:

1) Does your home owners’ insurance policy have a “brush fire” exclusion from their coverage? Apparently, there are some that do.
2) When you are preparing to pack up and go, and you should have your “go” bag with meds, cash, credit cards, important papers (even though they should all also be on “the cloud” – deed to house, birth certificate, etc.) family photos, clothes for a few days, you should also think about your art work. Again, check your homeowners’ policy about your art, and I also highly recommend taking a video inventory of all of the items in your house that may need extra coverage, art, jewelry, china, etc.

It is really sad that the Skirball fire was started at one of the many homeless encampments that we have in the Sepulveda Pass area. Hopefully we will be able to assist these folks in re-locating to another location that will be better for all involved.

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Real Estate News

While it is quiet in my office, real estate life does go on, and there are still sales & transactions being made. Open house activity is good, and the buyers are out there wanting to participate on the market. At my open house in Mountaingate last week, I had 4 guests, all of them buyers, and this was after the fire! After the first of the year, I have a number of listings coming up and will be happy to share the information with you then.

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Happy Holidays….it’s that wonderful time of year
As we await the arrival of Santa Claus with his momentous job of delivering all of the gifts throughout the world in one night, and are now enjoying Hanukkah, I want to wish all of you the happiest greetings for the Holidays. We have much to be thankful for…and even though our December was visited by the fire tragedy, the losses could have been much worse. We should all be thankful for that. For many of us who have friends and relatives who have suffered losses in other parts of Los Angeles, Ventura, Santa Barbara, Napa, and Sonoma counties our thoughts and prayers go out to them all.

I hope you have a wonderful, safe and happy holiday!!!!!!!!!