The SchifferLine
Timely Real Estate News……………………..1 August 2021
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Federal Reserve holds steady on interest rates
There is good news for mortgage rates and the housing industry. The Federal Reserve last week held its benchmark interest rate near zero and said the economy continues to progress despite concerns over the pandemic spread. As expected, the Federal Open Market Committee (FOMC) concluded its two-day meeting by keeping interest rates in a target range between zero and 0.25%.
Along with that, the committee said in an unanimously approved statement that the economy continues to “strengthen.” What this means for the mortgage business is that rates should not be moving up as many had predicted after the last inflation new
Despite the optimism about the economy, Chairman Jerome Powell said the Fed is nowhere near considering a rate hike. “Our approach here has been to be as transparent as we can”.
We have not reached substantial further progress yet,” he said. “We see ourselves having some ground to cover to get there.”
Powell indicated that substantial further progress on inflation and employment is the benchmark the Fed has set before it will tighten policy, which would mean slowing and stopping monthly bond purchases and ultimately raising interest rates. His statement noted only that “progress” has been made, and the FOMC will continue to watch conditions to see how close they get to the Fed’s goals.
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Strong demand pushed median home prices up in U.S.
As you have seen in past issues of The Schiffer Line I have discussed and shared with you the continuation of seeing median home prices climbing upward, especially in our Westside communities.
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ccording to the National Association of Realtors (NAR), there continues to exist a strong demand which has pushed the median U.S. home price to a record high in June, though the national house-buying frenzy cooled slightly as supply ticked higher. Depending on the property and importantly the price point, I too have seen somewhat of a slowing of the demand. Yet, the buyers are there and when a property comes on the market that is ‘properly positioned” which means appropriate price for its location and condition, it sells very quickly and many times with multiple offers selling over asking price, thus raising the Barr for the next one that comes along.
Nationally, existing-home sales rose 1.4% in June from the prior month to a seasonally adjusted annual rate of 5.86 million. June sales rose 22.9% from a year earlier.
Also, nationally, the median existing-home price rose to $363,300, in June, up 23.4% from a year earlier, setting a record high, NAR said, extending steady price increases amid limited inventories.
Separate figures on the labor market showed that the number of people receiving jobless benefits fell to the lowest level since early in the pandemic as states withdrew from participation in federal pandemic relief. First-time applications, meanwhile, rose as supply constraints continued to dramatically impact home demand, thus raising prices as buyers enter hotly competitive bidding wars. The housing market boom, however, is easing slightly, as rising prices are prompting more homeowners to list their houses for sale. Homes sold in June received four offers on average, down from five offers the previous month, said Lawrence Yun, NAR’s chief economist.
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Will housing frenzy cool in coming months? Maybe.
According to the National Association of Realtors, there were 1.25 million homes for sale at the end of June, up 3.3% from May and down 18.8% from June 2020. At the current sales pace, there was a 2.6-month supply of homes on the market at the end of June.
Market watchers expect the housing frenzy to continue to cool in the coming months, as the number of homes for sale increases and high prices force some buyers out of the market.
Home builders however don’t believe we will continue to see the kinds of price increases we’ve seen in the last 12 months. As noted in the NAR survey, builders don’t believe these continued price hikes are sustainable.
First-time buyers or those who can only afford to make small down payments are struggling the most to compete. More than half of existing-home buyers in June who used mortgages to buy a property put at least 20% down, according to the NAR. Buyers are also making their offers stand out in this competitive market by agreeing to buy houses without contract terms that typically protect buyers, such as inspection requirements. Knowing that loan qualification and mortgage terms can possibly force potential buyers out of the market, lenders such as mine Simon Atik have and are creating more mortgages that have friendlier terms for those potential buyers with low down payment options. For more information, please contact me and I will be more than happy to connect you with my lender. 310- 442-1384.
Sales were especially strong at the high end of the market. Sales of homes that were priced at more than $1 million more than doubled in June compared with a year earlier.
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First-time buyers facing new hurdles — larger homes
It may not seem like a big issue — but the supply of entry-level homes, which Freddie Mac defines as homes up to 1,400 square feet, is near a five-decade low, and data on new construction om the National Association of Home Builders shows that single-family homes are significantly bigger than they were years ago.
Homeowners from previous generations had access to smaller homes at the start of their financial lives. In the late 1970s, an average of 418,000 new units of entry-level housing were built each year, according to data from Freddie 
Mac. By the 2010s, that number had fallen to 55,000 new units a year. For 2020, an estimated 65,000 new entry-level homes were completed.
Entry-Level Housing Supply Annual average number of new homes up to 1,400 square feet us declining, because as a result of the pandemic, homeowners want more space, which means they’re designing and building homes in excess of 1,400 square feet.
This phenomenon is affecting real estate in ten of the largest states, according to an analysis from Freddie Mac. In Florida, the share of homes with living areas up to 1,400 square feet was 58% of new housing supply in 1985. Thirty years later, the share plummeted to 12%. Housing sizes today dramatically affect home prices — whether or not they’re considered a ’starter home’. These numbers reflect a national story, not specifically local.
For example, a 1,400 square foot in Los Gatos, CA, is selling for between $1.7 million and $2.5 million, while a home the same size in Culver City is going for $1,082,000…hardly “starter-home price
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Is U.S. housing market losing its ‘mojo’ for foreign buyers?
Is it over? Are foreign buyers leaving the U.S. market? Well, not exactly. Nationally, foreign buyers purchased $54.4 billion worth of U.S. existing homes from April 2020 through March 2021, a 27% decrease from the previous 12-month period and the fourth consecutive annual decline in foreign investment in U.S. residential real estate.
That’s a big decrease. But there is a logical answer for some of this decrease. Foreign buyers purchased 107,000 properties, down 31% from the prior year, as the COVID-19 pandemic led to a strong global economic contraction and a decline in international tourist and business arrivals. As a result, the dollar and sales volumes are the lowest since 2011, when those figures were $66.4 billion and 210,800 properties, respectively.
In the NAR’s annual Profile of International Transactions, foreign buyers who resided in the U.S. as recent immigrants or who were holding visas that allowed them to live in the U.S., purchased $32.4 billion worth of U.S. existing homes, a 21% decrease from the prior year and representing 60% of the dollar volume of purchases. Foreign buyers who lived abroad purchased $22 billion worth of existing homes, down 33% from the 12 months prior and accounting for 40% of the dollar volume. International buyers accounted for 2.8% of the $5.8 trillion in existing-home sales during that time period.
I continue to see a strong influx of foreign buyers at my open houses and I’m getting calls from far away as Dubai, Turkey, and Europe. The pandemic obviously had a major impact on all data when comparing last year to this year. It will last for some time. Particularly as travel restrictions continue to exist in the light of the resurgence of Co
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“Au naturel” swimming pools are trending this summer
According to the Wall Street Journal, some homeowners will be swimming in their backyard pools au naturel. “The iconic, aqua-blue vessels of chlorine-treated water are starting to see competition from the leafy, greenish waters of natural pools” was the WSJ’s view of this growing trend.
With us experiencing the second summer of the pandemic, waiting lists for in-ground pools and a chlorine shortage are sparking interest in these so-called bio pools, which are chemical-free. Swimmers are invited to lounge, naiad-like, close to water mint and water lilies as dragonflies hover.
“Prices are going through the roof on chlorine tablets if you can even find them,” says one pool maintenance owner. “It doesn’t look like the demand is going to decrease.”
They are a tiny fraction of the U.S. residential pool market, which is dominated by pools that use chlorine and other chemicals to keep bacteria and microbes at bay. They are a sustainable choice, requiring less energy to operate.
The result is green water—somewhere between a mossy hue to a jade color. The roots of aquatic plants, such as water lilies, and materials like gravel create a naturally occurring ecosystem with biofilms called a regeneration zone. Water is kept clean and algae-free as it recirculates over the film of micro-organisms.
Newer technology replaces this regeneration zone with a smaller, self-contained, plant less biofilter, which uses material such as lava rock and gravel to build up a biofilm.
The appeal to homeowners is water free of chlorine and other chemicals that keep pool water bacteria-free. Natural pools cost about $125 a square foot, excluding decks, electrical and landscaping. That is about 10% more than installation costs for a chlorine pool. But they are slightly less expensive to maintain. A traditional 500-square-foot pool costs about $1,800 to $3,200 a year during a season, according to Home Advisor.
The energy costs for a natural pool are one-half to one-third of a traditional pool, from $35 to $50 a month, and there are no chemical costs. Natural pools can be made of a rubber membrane or gunite, and pool sides may be lined with river rock or special sandbags. You just want to jump right end — bringing Mother Nature to your backyard. Does this sound inviting to you?
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A view from top of the hill….
As a pioneer resident of Bel Air Crest since 1992, I have witnessed some dramatic events during the past 29 years. Yes, 29 years ago, BAC opened its doors as one of the most beautiful, gated communities in all of Los Angeles.
Most notably our community of 365 homes — both Custom and Canyon homes — has evolved into a close-knit group of homeowners who vigilantly guard their properties and community assets. What greeted us in those early days as we drove up Bel Air Crest Road, both North and South were young tree plantings and shrubbery that have now grown into mature, lush trees and are now surrounded by beautiful, landscaped gardens. We are finalizing the plans for the remodeling of the club house which will give us a new gym, party room, managers offices and rest rooms. Over the years we have added a children’s playground, doggy park, and a small pitch & putt golf course. Our exercise area and tennis courts continue to be magnets for our residents who call Bel Air Crest home.
We’ve had the rich and famous here — and still do, but our community was designed to provide a private enclave for those who appreciate privacy and luxury at the same time. We have been threatened repeatedly by fires a few times, but thanks to the LA Fire Department and our own volunteer emergency preparation committee which keep an eagle eye out for fires and any other emergencies including earthquakes. I urge you to PLEASE practice safety, in clearing brush around your property and to enforce our No Smoking rule in the community.
Being tucked away on top of the hills of the Santa Monica Mountains, we are fortunate to enjoy the spoils of a gated community, which prides itself on hospitality while keeping a vigilant eye on community safety and security yet being close to the major areas of Los Angeles proper.
I will be spotlighting various communities in the next issues of the Schiffer Line. Stay tuned to see which community will be
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What Does My Business Look Like?
As I have mentioned previously, I am busier than I have been in a long while. Every day I am getting calls from buyers who want to buy property that isn’t on the market. That leads to contacting potential sellers that might consider selling their home. I am also working with potential sellers discussing the value of their properties, dealing with the condition and what they might do to enhance their property prior to marketing it. Potential renters who are looking to lease a home.
I am also a mentor to new licenses (7) at the moment all of whom are in various stages of developing their careers Needless to say, this in addition to servicing my current listings and managing my escrows keep me hoping. I love the energy!!!
I also want to thank the residents of Bel Air Crest for their confidence in me to once again be one of the Canyon Home representatives to the Bel Air Crest Master Board of Directors. I very much appreciate the support. Please let me know if you have any issues or concerns that I can assist you with. I am here for you.
Also, with the variant and Covid 10 once again sweeping our country and city specifically, please take care, wear those masks and if you or someone you know has yet to be vaccinated, please do so. It is not only important for your health, but for all us.
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