Timely Real Estate News………………………………….. 1 August 2019
It’s Hot, hot, hot… summer’s here and so is fire season
We can easily check our phones to tell us exactly how hot it is, by the hour, by location, and we’re seeing August roll in with 90+ degrees every day. What that means — fire season is here. It never left. As the LA Fire Department warns everyone, it’s a 12-month season.
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.
One more thing — make sure you have your Emergency Preparedness kits for home, office, and automobile.
$236 billion worth of homes at risk from wildfires
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.
Affordability is a drag on housing
This is no surprise as I have been focusing on critical housing shortages in California for the last decade where affordability has become a red-hot issue across all parts of our state. According to CoreLogic, the San Diego-based real estate tracking firm, there are just a lot of folks priced out of the market an analyst says, leading to a sales decline in Southern California as home prices rose only 1.2% in June from a year earlier, while sales fell 8.8%, reflecting a broad slowdown in the region’s pricey housing market.
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,
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.
“Affordability has gotten to the point where there are just a lot of folks priced out,” said Jordan Levine, an economist with the California Assn. of Realtors. As I have also pointed out, buyers are becoming pickier and more sophisticated in their purchasing decisions. Frankly, they’re smarter and much more discriminating.
Mortgage interest rates have steadily declined this year, however, what I have seen is that we have been able to draw some people back into the market. This last week, the average rate on a 30-year fixed mortgage was 3.75%, down from 4.94% in November, according to Freddie Mac. For a $500,000 mortgage, the change would lower a borrower’s monthly payment by $280.
Carole Schiffer named in top 500 for Colldwell Banker in U.S.
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.
Carole’s achievement is one of many she has received from NRT over the years, as she specializes in gated communities as well in properties in Bel-Air, Brentwood, Westwood and Century City, Santa Monica, Venice and Marina del Ray. Carole is a native of Los Angeles, graduating from UCLA with a BS in business, and receiving her MBA from UCLA’s Anderson School of Business. She has been a resident of Bel Air Crest since 1992 and has served in a variety of leadership posts. At Coldwell Banker’s Brentwood office Carole has served as a mentor for nearly 20 years and currently is a board member of the company’s non-profit foundation, Coldwell Banker Residential Community Foundation.
As expected, Fed cuts interest rate
Fed Chairman Jerome Powell announced Wednesday the Federal Reserve would cut interest rates from 2.5% to 2.25%, a modest cut. Economists have been expecting this for months, and Powell indicated further cuts could be on the way. It’s the first cut in rates since 2008.
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.
So, what’s the beef? Some economists feel that the lowering of the rates now will give the Fed little room to manage its firepower if and when a real downturn comes, but it could also add fuel to stocks and other assets that are already a very high level.
As for as our local real estate business — the lower rate cut really doesn’t impact sales today as our mortgage rates are still low and attractive to buyers who are in the market. Most economists feel the impact will be felt for those with short term car loans, home equity loans, etc.
Rising home vacancies are a hidden part of inventory crisis
It’s not only the inability to find affordable housing, another reason may be that buyers can’t even find a house. Most of the focus over the housing crisis has centered on a shortage of homes for sale. But housing analysts and a new report from the National League of Cities are raising the issue that vacant and abandoned homes nationwide remain part of our housing crisis.
In some smaller cities and rural areas, vacancy rates have pushed upwards to 20% of the housing stock. Abandoned homes can sit for years and become a real drain on the local government according to Kim Hart, managing editor at Axios.
Cities hit hardest by housing vacancies are in the ‘rust belt and Northeast. In California, the Governor is actively pushing cities and developers to do more to alleviate the housing crisis.
Cities are exploring how best to tackle the blight. For example, some lawmakers plan to demolish many of the abandoned homes to clear the lots and make them more attractive to developers to add affordable housing. Some of these are homes that ended up in the foreclosure debacle and are still sitting there, — empty.
But demolition of a deteriorated home isn’t always the most feasible path financially. experts say it costs about $10,000 to demolish a single-family home—calling that estimate on the conservative side. And some cities are exploring other ideas such as taking possession of an abandoned or near-abandoned property and work with nonprofits to rehabilitate the homes for first-time buyers.
Buyers flocking to gated communities
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.
Census data on the number of homes sold is even more lopsided: Americans bought 472,000 newly constructed HOA homes in 2018, but only 145,000 without HOAs. As a long-time resident of one of the largest gated communities on the Westside — Bel Air Crest — I can attest to the popularity of these private communities.
As a specialist in gated communities on Los Angeles’s Westside, I can attest to the rapidly growing interest in these projects because of the many advantages they have over traditional residential neighborhoods. Privacy and security are the primary reasons buyers are flocking to these gated projects, and also one of the major benefits is that an HOA-managed community can better maintain the roads, parks, common areas, and even the homes themselves.
Real estate developers also point out that is gated communities are great for the local government in the longer run because homeowners in HOA communities pay property taxes, but the local government doesn’t have to provide all the same sort of benefits.
Bathroom economics — it pays to upgrade
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.
Here are four effective ways to help elevate a bathroom’s look…
#1 A “luxe” shower head — Let’s face it, everyone loves a great shower and there are a number of deluxe shower heads available on today’s market — an abundance of choices…it also helps to raise the shower head. It can be done for very little cost.
#2 Clean the tile grout. Grout has the potential to make a bathroom look cleaner. Just make sure the grout blends with your tile.
#3 Towel racks. If you’re not on a budget, install heated racks, but for sure, make sure the racks are properly placed next to the shower and are if possible large enough for two towels.
#4 Sink Faucets. A personal choice always that comes in many different shapes and sizes. According to one-bathroom designer, the key is to find one that ‘basically makes a statement’ in your bathroom. Have plenty of room around the faucets…. it’s easier to clean and manage.
Back to School Month
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!
What is going on with me?
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.
I hope you keep cool in this hot weather, and please let me know how I can assist you in this “hot” real estate market. I look forward to seeing you soon.
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at carole@caroleschiffer.com
CalBRE 00677619
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