The SchifferLine
Timely Real Estate News……………………………………..1 August 2020
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Existing home sales surge to record in June
Existing-home sales rebounded at a record pace in June, following three consecutive months of sales declines, the National Association of Realtors (NAR) reported this past week. Each of the four major regions of the U.S. posted month-over-month increases in June, with the West posting the largest jump.
Nationally, total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—increased 20.7% from May to a seasonally adjusted annual rate of 4.72 million in June, NAR reports. Sales, however, are still down 11.3% from a year ago. I will have our local stats in the Schiffer Line on the 15th of August issue. Without having the specific local stats, I can tell you that homes that are well positioned (well-priced and presented well – staged) are selling quickly and many times with multiple offers. There is a home here in Bel Air Crest that sold in 4 days, and there are two potential back up offers, with one buyer stating they will pay $50,000 over asking!
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” says Lawrence Yun, NAR’s chief economist. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
Housing inventories, a big obstacle for buyers before the pandemic, have tightened further. Inventory levels in June fell 18.2% compared to a year ago, NAR reports. The low inventories continue to press on home prices. NAR pegs current inventory to be 4.0 months, down from 4.3 months one year ago.
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Fed maintains stimulus commitment as outlook dim
The U.S. economy faces a long road to recovery that will require greater public vigilance to prevent the spread of the coronavirus pandemic and more spending from Congress and the White House according to Fed Chairman Jerome Powell after the July 29 meeting.”
Fed officials did not announce new policy steps at the conclusion of their two-day meeting and reiterated their pledgeto maintain aggressive measures to support the economy. “The path of the economy is going to depend to a very high extent on the course of the virus, on the measures that we take to keep it in check,” Mr. Powell said at a news conference. “We can’t say it enough.”
The economic backdrop has weakened according to the Fed since its rate-setting committee last met seven weeks ago. After surprising rebounds in employment in May and June, many states have seen significant increases in virus infections, learning to renewed curbs on certain commercial activities and a dampening of consumer confidence.
Powell said various data sources the Fed monitors suggested hiring and consumer spending had slowed recently. He encouraged greater adoption of measures to contain the virus by disputing the idea of a tradeoff between virus suppression and a resumption of commercial activity. “Social distancing measures and fast reopening of the economy actually go together,” Mr. Powell said. “They’re not in competition with each other.”
“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed stated. According to real estate analysts, this show of support will continue to keep mortgage rates low.
The officials have been weighing how to provide more support for the economy after moving quickly this spring to cut interest rates to near zero, to ramp up purchases of government debt and to establish an array of emergency lending programs to stabilize funding and credit markets.
The economic backdrop has changed notably since the Fed’s rate-setting committee last met seven weeks ago—mostly for the worse. After surprising rebounds in employment in May and June, many states have seen significant increases in virus infections, leading to renewed curbs on certain commercial activities and a dampening of consumer confidence. So, we will see how the virus continues to play out as it dampens our economic recovery.
With Congress scrambling before they leave on their month long recess and scrapping over various bills dealing with more unemployment support and a second round of a stimulus package, we have to wait and see how it all plays out.
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Working remotely is changing ‘life at home’
It has been less than five months, and many companies are now compelling all workers to “stay at home”, or what has become the new trend — Working From Home or WFH according to a recent report in the Wall Street Journal. Not only has the WFH altered home life by re-arranging work and living spaces, it has had a major impact on our total living environment.
Beginning in late March, employers moved quickly to disperse employees from occupied offices and sent them home packing, many with a new desk, new computer, and an ergonomic office chair. New network software and Internet connections were installed for WFH users, and during the first four months, the word was in “We want to stay at home.”
Not so fast. The Wall Street Journal pointed out that researchers surveyed more than 2,000 employees in March and April of this year in Australia, France, Germany, New Zealand, Singapore, the UK and the United States. They found that the pandemic is impacting mental health around the world.
Over 40% of people said their mental health has declined since the COVID-19 outbreak. In that same time period, the number of people who describe the state of their mental health as a 3 or less on a 10-point scale has doubled. Workers report more anxiety and stress.
On the positive side, other studies show that almost 60% of Americans think COVID-19 has changed the way we work for the better. Indeed.com pointed out that workers who were in the WFH crowd, stated that they had more independence, increased their productivity, improved their technical skills, and did not experience office distractions. From where I sit, working from home has benefits, but losing the congenial and supportive office environment we have at Coldwell Banker cannot be replaced by working 24/7 in my office at home.
In the last issue of the Schiffer Line I talked about the trend that we have experienced the last few years, where buyers prefer open floor plans rather than separated spaces. Then along comes Covid and we are all working, teaching, and just plain living at home together and now the separated spaces do not look so bad. I have some clients that are selling their condo in Culver City that has the separated spaces, and while buyers love the condo, they want an open floor plan and are finding the cost to remove walls, etc. too expensive. Bottom Line -there just is not a right answer, we just need to find the right buyer who likes the floor plan the way it is, and it looks like we did as they just got a full price, all cash offer with a 14 day escrow!!!
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Despite a pandemic, high-end sales doing just fine
Considering what is going on with the pandemic, we are doing just fine in the high-end real estate market on Los Angeles’ Westside. There have been 280 closed sales in June of $5 million-plus so far this year, versus 298 at this time last year, just down 6% compared to 13% negative in May.
Of these, 88 were $10 million-plus and there were 83 $10 million-plus sales at this time last year, up 6%. 21 were $20 million-plus this year and there were 23 closed sales of $20 million-plus at this time last year, down 11%. 10 of these sales were $30 million-plus for both years and five were $40 million-plus this year, versus three $40 plus million sales at this time last year, up 66%.
There are 79 pending sales of $5 million-plus now, of which 20 of these are $10 million-plus. Five are $20 million-plus and one is $30 million-plus.
Who are buying these homes? — of the 21 sales of $20 million-plus homes this year, the buyers are still mostly American — 18 Americans, two Taiwanese and one Chinese.
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Foreclosure filings hit all-time low…. but for how long?
During the first six months of 2020, foreclosure filings hit an all-time low of 165,530 properties, according to a new report by Attom Data Solutions. During the first six months of 2020, there were a total of 165,530 properties with foreclosure filings — an all-time low, down 44% from the same time one year ago and down 54% from the same time two years ago. (Foreclosure filings are qualified as default notices, scheduled auctions, or bank repossessions.)
As pointed out by ADS, foreclosure starts, and completions were already declining rapidly last year because the housing market and the economy were riding so high. But now they are down to lows not seen for at least 15 years as the federal government has banned lenders from pursuing most delinquent loans until at least the end of August 2020 to help people weather the pandemic.
The elephant in the room — how long will the federal government continue to support banning foreclosures after August, which certainly does not seem to be the ‘end’ for the pandemic? Whenever the fed decides to call an end to preventing foreclosures, we can expect a jump in foreclosure filings, which is a lengthy, painful process. Hopefully, for the millions out of work or sidelined with reduced income, there will be help along the way for them during this national crisis.
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When is the ’sweet spot’ to buy a home?
Is there a sweet spot for homebuyers when it comes to matching ample inventory with a reasonable sales price? According to a new analysis by NerdWallet, the answer is “yes!”
Although late spring and summer are often popular seasons for homebuyers, there is reason to believe there are better times of year to buy a home, according to a new study released by NerdWallet, a consumer data tracking firm.
By analyzing the 50 most populous metro areas in the U.S. with five years of sales data from the National Association of Realtors. NerdWallet found that in 44 out of 50 metros, home sales prices are most expensive in June and July, and least expensive in January and February. However, inventory is often highest in June and July and lowest in January and February, leaving homebuyers the tough decision between having fewer options to choose from or paying a premium to have more options. When is the right time to buy?
NOW!, says NerdWallet. The time usually starts at the end of July and lasts through October, when inventory starts to fall dramatically. This is the time because we still have strong inventory at levels we haven’t seen for quite some time, and homes competitively priced are getting purchased by ’smart buyers’ — who come prepared with pre-qualified approvals and are able to compete, which means negotiate, aided by a smart agent (like me!). So, the answer is, “yes!”, this is a good time to buy.
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Accessory Dwelling Units (ADU) are on the rise
The Covid-19 pandemic has spawned a rise in ADUs. As the housing inventory crunch has sparked a dramatic increase in the number of accessory dwelling units in the U.S., most notably in high-cost areas that have seen growing populations over the last decade, Freddie Mac reports in new study on ADUs.
Freddie’s research identifies 1.4 million ADUs in the U.S., including granny flats, garage apartments, and in-law suites. These ADUs can be either attached or detached from the main residence.
Freddie Mac researchers examined 600 million MLS transactions dating back to the late 1990s to study the growth of ADUs in the country. In 2019, 70,000 properties with ADUs were sold, which is 4.2% of homes sold on the MLS, the research shows.
ADUs are fast growing in California, Florida, Texas, and Georgia, with Los Angeles having one of the highest increases in these new living quarters.
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My Business
I am busier now than I have been in a long time. I was incredibly lucky to be referred to some buyers who knew exactly what they wanted to buy, and we found it. YEA! We are closing escrow in a few weeks. Sometime in the next week or so, there will be fabulous home in Brentwood proper that is an Art Lover’s Paradise” with soaring ceilings, white walls, and great natural light from the many windows! It is incredibly special, and has had a great deal of updating done in the last few years. It will be priced just under $4,000,000. In addition, my buyers and I are running fast to find a home that works for them, and not be involved in multiple offers.
Please let me know how I can assist you with any of your real estate needs and or just to talk.
310 442-1384.
PLEASE STAY SAFE, BE SMART AND WEAR THAT MASK!!!!!!!
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