Timely Real Estate News…………………………………..I December 2017
How was your Thanksgiving?
Mine was lovely, but a little strange and different. I spent it at my home at the beach in Coronado, and it was HOT!!! The temp was 94 on the beach, leaving no energy for doing anything including eating turkey. I cooked it, but we ended up having an omelet as that is all we had the energy for. Fortunately, it cooled down and we were able to enjoy the rest of the weekend. Hopefully when the whole family gets there for the rest of the holidays, the temp will be more normal.
For those of you who receive the Schiffer Line via snail mail, I hope you are getting ready to celebrate Hanukah as it starts on the 14th of the month. Get those latke party invitations out!
Home Values could take big hit in new tax bill
In looking at the proposed tax bill in its current iteration, the National Association of Realtors analysis of new data of the tax bill now being considered in Congress could potentially negatively affect California home values by more than $56,550 and owners could be exposed to $30,000 in new capital gains taxes under a House tax proposal that would cap the mortgage interest deduction at $500,000 and alter tenure requirements, new data indicates.
The brunt impact of the “Tax Cuts and Jobs Act” on California home owners is merely one of the insights to emerge from a new state-by-state analysis by NAR of the tax bill that passed in the House on November 16.
Within the national analysis, the impact on Californians is the most severe, with approximately 6.9 million owner-occupied homes, nearly half valued at more than $500,000, effected by the new proposals. According to NAR, 4.3 million homeowners claimed a mortgage interest deduction and under the House bill many would be exposed to $28,875 in capital gains taxes.
“Of the approximately 6,943,000 owner-occupied houses in California in 2016, 71% had a mortgage,” according to the authors of the NAR analysis, released last Wednesday. “49.1% of the housing units with a mortgage had a value higher than $500,000 while 9.0% of the owners paid over $10,000 for real estate taxes. Vacation homes accounted for 2.7% of the housing units in California.”
I will keep you posted on this evolving story as it is one of the most important stories for our real estate industry and the country in general. If you have any questions, don’t hesitate to contact me….firstname.lastname@example.org or call me at 310-442-1384.
No signs of cooling…market stays “hot”
Housing shortages across the U.S. is fueling a “hot” real estate market as September home prices rose 6.2%, up from 5.9% in August, according to S&P CoreLogic’s National Home Price Index. The surge marks the strongest price growth in over three years. The highest year-over-year gains were recorded in the cities of Seattle, Las Vegas and San Diego.
“Home prices, after multiple years of fast growth, still show no signs of cooling because of the ongoing housing shortage in much of the country,” said National Association of Realtors Chief Economist Lawrence Yun. “This fast appreciation over income growth is not sustainable over many years.
Continued low mortgage rates, low unemployment, rising rents, and a short supply of housing are fueling this surge and will likely continue according to leading economists. The biggest challenge facing the national housing market is…affordability as many are being squeezed out by these continued high prices. One of the leading components leading the market is new construction. We are seeing a good amount of that here in West Los Angeles.
While prices rise, pending home sales shrunk
California pending home sales shrank for the fourth consecutive month, posting the lowest level in six months. Pending home sales are those homes that have been entered in escrow and are a measurement of future, final sales. The California Association of Realtors (CAR) reported that even with the home-buying season winding down, there are slight increases in open house traffic and listing appointments/client presentations compared to a year ago.
Based on signed contracts, year-over-year statewide pending home sales dropped in October on a seasonally adjusted basis, with the Pending Home Sales Index declining 2.6% from 119.1 in October 2016 to 116.0 in October 2017. California pending home sales were also down on a monthly basis, decreasing 3.3% from the September index of 120.0.
Pending home sales were down 7.3% from October 2016 in Southern California. Los Angeles and Orange counties registered lower annual pending sales of 4.7% and 4.9%, respectively. Double-digit, annual pending sales drops occurred in Riverside
(-14.0%), San Diego (-11.4%), and San Bernardino (-10.4) counties.
In another report on comparing sales prices to asking prices, CAR reported that the shares of homes selling above asking price fell from 28% a year ago to 23% in October, while the share of properties selling below asking price was up from 44% to 46%. The remaining 30% sold at asking price, which simply means, pricing is a critical factor in how the home is received and acted upon. I have always maintained that overly aggressive pricing is going to lessen the chances that your home is going to sell quickly.
Millennials are back in the news, again
Here we go again….the share of older Millennials living with relatives is still rising, underscoring the lingering obstacles faced by Americans who entered the workforce during and after the Great Recession.
About 20% of adults age 26 to 34 are living with parents or other family members, a figure that has climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm. The increase defies record job openings and a 4.1% unemployment rate, the lowest in 17 years. Not surprisingly, a much larger portion of younger Millennials age 18 to 25 (59.8%) live with relatives, but that figure generally has fallen the past few years after peaking at 61.1% in 2012.
I have been reporting on this important demographic for years, and the obvious shortcomings inthe real estate and housing market are negatively impacting Millennials. Those Millennials at the bottom range of their age demographic are actually competing better for jobs and opportunities because, well, they ‘cost’ an employer less money to hire.
For example, a 24-year-old techie without family and just graduating from college or grad school, may not have to support a family, and therefore, may need less and will might possibly take a lesser salary. We’re seeing that in Silicon Beach, which is exploding with new housing constructions (new condos and apartments).
The trend for Millennials living with parents isn’t about to end soon, and some predict as the housing market suffers from inertia, it could become more prominent.
A woman’s touch is the future in house flipping…
Did you know that women make up more than 63% of licensed real estate agents according to the National Association of Realtors.
More dramatically, it is women who are using home…and its invention…as a tool for economic and creative improvement.
In Los Angeles particularly, female real estate investors are making a huge impact on inventory and resale prices. We are seeing more and more women who are ‘flipping’ homes and garnering substantial profits.
Once primarily a man’s game, flipping has now slowly moved to women because as women are becoming better and more educated, and earning higher salaries, they appear to be just as venturesome as their male counterparts. Women look at flipping as a “natural, yet exciting adventure”. Having flipped a few houses a few years ago, I certainly understand and appreciate the creative process.
Mark your Calendars
Representatives for the Berggruen Institute will be making a community presentation on their proposed plan for the development of a Think Tank on the undeveloped 450 acres just south of Mountaingate between Sepulveda and Mandeville Canyon.
We are all urged to attend this presentation on Sunday the 21st of January from10:00 to 12:00 at Skirball Cultural Center. Make your voices heard.
The proposed project site is on the former Castle and Cook property. Current entitlements would allow the following:
* Construction of 28 residences with access through Mountaingate.
* Building would occur on two ridges — Ridge 1 East (Stony Hill Ridge) and Ridge 2 West (Canyonback Ridge) l.
* East Ridge would house three buildings — #1 the Institute, with courtyard where 26 fellows each would live in a monastic style setting with a library, dining hall and lecture space…#2 Sunken courtyard houses (12) for shorter-term scholars that would integrate into the landscape and not hinder the view, and #3…Chairman’s residence, comprised of four, one-story buildings. The lecture hall will seat 250.
* The primary access for the Institute would be off of Sepulveda via a new Serpentine Road.
* There would be 18 special events during the course of the year during week days from 5 – 7 Pm. Of those 18 events, 15 would have 250 attendees and 3 could have up to 450.
*The Days of operation would 7 days a week, and would operate from 8:00 am – 7:00 for daily operations, 24 hours a day for residents, and for events until 10:00 with load out until 11 pm.
* a Helipad is proposed for Ridge #1.
* The proposed time frame for construction is 24-36 months, with access off of Sepulveda.
* There would be 350 parking spaces, 280 for the institute, 15 for cottages on the West Ridge,50 for Valet, and 5 for the Chairman’s Residence.
* The facility will not be leased out for private events.
What is really happening with West Los Angeles Real Estate in particular?
Yes, the market is slowing down, but we are also experiencing multiple offers on properties within days of them coming on the market, so while there may be slowing down while people are waiting to see what is happening with the tax bill, and the holidays, depending on the properties and prices, it is an active market. Case in point, last Sunday (Thanksgiving weekend), at some open houses held by my colleagues there were more than 40 groups (or guests) in attendance, and one of those open houses created a multiple offer situation of 6 offers. In another example, two homes in Santa Monica that I sent one of my clients to the previous weekend, had just come on the market and are now in escrow. As always it is a case of pricing and filling the needs of the client.
I am working with some of my clients to get their homes ready to come on the market immediately after the first of the year. They are in Bel Air Crest and Mountaingate and will be in the mid $2,500,000 range. In addition, we will be putting a home in the Sunset Plaza area on the market soon, and that will be in the $4,000,000 plus range. If you have any interest in either of these homes or know someone who would (the Sunset Plaza home will need updating but has a fabulous view!) please let me know. 310 442-1384
Be sure to check out my Facebook page (www.facebook.com/CaroleSchifferRealtor) and or my web site. Caroleschiffer.com.