SchifferLine 1 December 2013 | SchifferLine

Timely Real Estate News………………………………………………….1 December 2013

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Westside sales continues strong in Fall……

The leaves have turned to gold and browns, and the real estate market remains on the “golden side”, with volumes for four Westside communities strongly up for the year, through October 2013. The SchifferLine will be covering these communities in addition to Beverly Hills, BHPO, Bel-Air, and Brentwood that I have been reporting on since we started our newsletter some 10 years ago. And from time to time, we will be looking at other Westside communities as well.

Westwood/Century City, Marina del Rey, Santa Monica and Pacific Palisades have posted strong numbers for the last MLS reporting period with combined sales volume up 17% for the year through the end of October, with more than $1.516 billion in total sales, compared to $1.288 billion for the previous comparable period.

In looking at the year-to-date stats for all of the areas I report on, sales volumes and median sales prices are all up in each of the eight communities, which is a very healthy sign. For these ‘new’ communities, we find that Westwood/Century City is up 10% in median sales prices through the end of October; Marina del Rey is up 29%; Santa Monica is up 7%; and Pacific Palisades is up 13%.

Pacific Palisades median sales price for the year, ending October 2013, is $1.968 million; Santa Monica is $1.825 million; Marina del Rey is $1.320 million, and Westwood/Century City is $1.278 million. Compare this to Beverly Hills which has a median sales price for the same period of $4.675 million and Brentwood with $2.345 million for example.

While comparing the likes of Beverly Hills, Bel-Air, and Brentwood to these other communities, each is showing strong recoveries for 2013, especially in terms of Days on Market. Westwood/Century City’s DOM is 35; Marina del Rey is 55, Santa Monica is 32, and Pacific Palisades is 76. But these are significantly better than the afore-mentioned communities because they reflect a lower-price average. While we are seeing improvements in Days on Market, we are still experiencing low inventories, which, of course, are driving up prices, too.

But like all of the communities I report on, we can see median sales prices up for the year but down for a month, so don’t pay too much attention to just one slice of the pie. For example, Westwood/Century City was down 20% when comparing October 2012 to October 2013, but up for the year; the same for Santa Monica–which was down 11% for the same comparable periods, but was up 7% Year To Date. Pacific Palisades, on the other hand, was up 7% for October 2013 over October 2012; and Marina del Rey were essentially even when comparing both 2013 and 2012.

The trend? The trend is moving upward — based on the strong sales volumes and positive median sales prices in all four of these areas. No, we’re not totally back to where we were in 2007, but we’re getting there. In order for you to see how all of the numbers of the different areas fit into this puzzle we call West Los Angeles, I will keep you informed on these other “new” areas as well..

We’ve been reporting positive news for the spring–summer selling season in The SchifferLine, and while the latest
news from the National Association of Realtors (NAR) reveals a slowdown, it isn’t at all bleak, more like a correction to normal rather than what has been “off to the races. One of the agents in my office recently reported that a condo she was representing in Santa Monica in the Ocean Park area has been on the market for three weeks, is already sold and each open house is gaining about 45 – 50 in attendance each Sunday.

The NAR’s latest report indicates that existing home sales fell nationwide in October, a decline attributed to tight inventory and declining affordability. Sales of previously owned single-family houses, town homes, condominiums and co-ops fell 3.2% from September to a seasonally adjusted annual rate of 5.12 million. It was the second-consecutive month of declines.

“The erosion in buying power is dampening home sales,” Lawrence Yun, the association’s chief economist said in a statement. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country.”

Where is the good news? Sales are 6.0% higher than October 2012. The median sales price rose 12.8% from October of last year to $199,500 last month. The number of homes for sale fell 1.8% from September, although slackening demand made those homes languish on the market longer.

Again, I want to re-iterate that this is a national story that does impact our local economy or market – it doesn’t reflect what is happening in your neighborhood, a point that I make practically every time we talk about a national story lands on the front page of the Los Angeles Times.

The NAR says that if homes continued to sell at their October rate, there would be a five-month supply, in September, that figure was 4.9 months. A six-month supply is considered to be a balanced market. Sales fell in all regions. In the West, sales fell 7.1% from September. It was the only region in which sales dropped below last year’s pace.

According to the NAR, what effect, if any, the partial government shutdown in early October had on sales is unclear. Most experts seem to feel that the biggest impact it had was the delay in the close of escrows. It is clear, however, that we continue to see tight inventories for quality homes on the Westside — a fact that keeps demand and prices higher than they have been. We’re still some 25% behind our 2007 real estate high in many areas on the Westside, and a few areas are ahead. For example in my office in Brentwood we currently have 65 active listings vs. 90 a few months. As you will see from the stats from Pacific Palisades, the sales in the Palisades is “off the charts”!

Since the recession began we have seen the onslaught of homes sliding into foreclosure and the results were not pretty. Foreclosed homes and short sales in your neighborhood negatively impacted home prices as lenders were anxious to unload these properties from their books. Appraisals were being skewed by a few ‘bad apples’ in the barrel, and homeowners were reluctant to put their homes on the market at depressed prices. Then things changed….the economy got better and we’ve seen less and less homes being sold with a “distressed tag”.

According to a recent story in the New York Times, as the economy improves, the number of borrowers who are seriously behind on their mortgage payments continues to decline. The enhanced outlook is such that even those in delinquency are feeling more optimistic about their circumstances and homeownership in general. The share of borrowers delinquent by 60 days or more is down in all 50 states compared with a year ago, according to an analysis of 52 million mortgages by TransUnion, a credit information service.

While this is a “national story”, it reflects the growing economic trend — The national delinquency rate, 4.09 percent, is down from 5.33 percent at this time last year, according to TransUnion. That is still well above the 1.5 to 2 percent delinquency rate that was the norm in the 1990s, before the housing bubble. But it marks the seventh consecutive quarter of improvement, said Tim Martin, TransUnion’s group vice president for domestic housing.

The largest year-over-year declines were in California, Arizona, and Nevada, where rates fell 32 to 38 percent.

“They were some of the states that had the biggest run-ups,” Mr. Martin said. “They’re seeing high percentage decreases because they got so high to begin with.”Although an expected rise in interest rates may hamper some delinquent borrowers’ ability to resolve their financial problems, delinquencies will most likely continue to fall in coming months as the problematic older loans work their way out of the system, he said. According to CoreLogic, a residential property information provider, completed foreclosures in September, at 51,000, numbered 39 percent fewer than in September 2012. The foreclosure inventory, which includes all homes in some stage of foreclosure, was down 33 percent, to 902,000 from 1.4 million homes.

Access to refinancing continues to be a significant problem for delinquent borrowers, according to the latest Fannie Mae Monthly Housing Survey — a monthly snapshot of 1,000 consumers. Almost 30 percent of the delinquent borrowers surveyed said they had tried unsuccessfully to refinance in the last three years. (These were borrowers who were 60 days or more behind, but not in foreclosure.) Among those who said they had chosen not to refinance, the main obstacles were an inability to qualify or to obtain affordable terms.

The extent of the loan barriers may be overstated, in that “there’s some misperception among delinquent borrowers as to whether they can refinance,” said Steve Deggendorf, Fannie Mae’s director of strategic research. “They’re not always aware of HAMP,” he said, referring to the government’s Home Affordable Modification Program. Still, these financial difficulties haven’t soured delinquent borrowers on homeownership. Some 67 percent agreed that a home purchase is a safe investment, which represents an increase over the last three years, when only 53 to 57 percent felt that way. It appears that the enthusiasm generated by the improving housing market and rise in home prices has trickled down to those struggling to pay their mortgages, Mr. Deggendorf said. The rebounding numbers make sense, he noted, given that previous Fannie Mae research has consistently shown lifestyle preferences and emotional ties as holding more sway over homeownership than financial concerns.

“Delinquent borrowers still have a very strong attachment to their home,” Mr. Deggendorf said, “and I think a lot of them want to preserve their homes because of all the lifestyle benefits they receive — shelter, security, safety. They’ve been through a bad time, yet they still have these ties to homeownership.”

In her confirmation hearings last week incoming Federal Reserve Chairwoman Janet Yellen signaled that the Fed’s current Bond purchase program will continue, as the economy is still running below its potential rates. This could mean that the mortgage bonds and loan rates are expected to remain similar to current rates.

With current Federal Reserve Chairman Ben Bernanke stepping down at the end of January, it’s important to know that the Fed has been purchasing $85 billion in Bonds and Treasuries each month to stimulate the economy and the housing market. This includes Mortgage Bonds, to which home loan rates are tied.

According to First Capital Mortgage, which is a part of Coldwell Banker this could mean good news for mortgage
rates for 2014. The Fed has said that its decision regarding when to taper its Bond purchases will be dependent on economic data. It will be important to monitor economic reports in the coming weeks, as they will determine whether the Fed begins to taper its purchases later this year or in 2014.

The timing of this decision could have a big impact on home loan rates heading into 2014. The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels.

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My office is on the move again….Sometime after the 15th of the month, we are moving to 11661 San Vicente Blvd, 10th floor.. All of the contact information will be the same. I personally hope that our new space will be ready after the first of the year, but we shall see, but it will be a beautiful office and I am very much looking forward to being at the eastern end of San Vicente again! Please feel free to stop by and pay me a visit, it is in the Union Bank Building.

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Once again, I hope you all enjoyed a wonderful, happy and safe Thanksgiving & Chanukah holiday and look forward to a continued great holiday. I spent the Thanksgiving in my home in Coronado, and will be joining my “northern family” in Vancouver for Christmas.

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