Timely Real Estate News…………………..1 February 2019
Welcome to the Year of the Boar 5 Feb 2019 – 24 Jan 2020!
All of the projections for those born under this 12th sign of the 12-year cycle in the Chinese Calendar are to have a joyous and prosperous year. There are some foods that one should eat to celebrate this occasion. They include:
Fish — an Increase in Prosperity. …
Chinese Dumplings — Wealth. …
Spring Rolls — Wealth. …
Glutinous Rice Cake — a Higher Income or Position. …
Sweet Rice Balls — Family Togetherness. …
Longevity Noodles — Happiness and Longevity. …
Good Fortune Fruit — Fullness and Wealth.
How to Decorate for Chinese New Year: The Top 7 Decorations
Chinese Red Lanterns — Drive Off Bad Luck. …
Door Couplets — Best Wishes for the Coming Year. …
Paper Cuttings — Luck and Happiness. …
New Year Paintings — a Symbol of New Year’s Greetings. …
Upside-Down Fu Characters — Luck ‘Poured Out’ …
Kumquat Trees — a Wish for Wealth and Good Luck
Kung Hei Fat Choy Have fun and enjoy!
Fed passes on rate increase, takes cautious stand
The Federal Reserve adopted a market-friendly, cautious position by not raising interest rates in their meeting on January 30. The Federal Reserve held its key interest rate steady and said it will be “patient” as it weighs further hikes, signaling a new wait-and-see approach until it gets a better read on a slowing economy and volatile financial markets.
“The case for raising rates has weakened somewhat,” Fed Chairman Jerome Powell said. The U.S. economy is in a good place, but he added there’s growing evidence of “crosscurrents,” such as slowing growth in China.
Powell stated that in light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to its key interest rate will be necessary to meet its goals of a strong economy and labor market and about 2% annual inflation.
This is good news for mortgage lenders as rates have come down and is helping buyers get the loans they can afford.
Buyers reluctant to ‘pull trigger’
As the housing market cools, buyers are shunning making a purchase decision, thinking that if they buy now, it could be at the “top of the market”.
With that in mind, it is no wonder today’s buyers are becoming somewhat more reluctant to pull the trigger on purchasing their new home. After nearly seven years of sometimes fevered price hikes, the Southern California housing market has slowed markedly in recent months. Sales have fallen from year-ago levels and price appreciation has shrunk.
For example, in Los Angeles and Orange counties, year-over-year price increases peaked at 8.2% in April of last year and have declined every month since. In October, home prices in these counties rose 5.5% over the previous year, according to the latest available data from the closely watched S&P CoreLogic Case-Shiller index.
But in deeper research on buyer psychology in Los Angeles, Dr. Robert J. Swiller, a Nobel Prize winning economist, stated that sellers are particularly prone to “suspend disbelief” about what a home is truly worth. Sellers can be wide apart from buyers’ view of what is the ’true’ value of a home. After all, sellers justify their prices — “This is Los Angeles!” And according to Swiller, these attitudes can lead to booms and busts!
One of the realities in today’s market is simple: Buyers have been increasingly priced out. If prices aren’t rising as much, or at all, it takes some of the edge off the psychology that has helped drive home-buying in Southern California for decades.
The other side of the coin is that with the interest rates staying lower, as well as prices, it is opening up the market for First Time Buyers who have been priced out of the market. It will be interesting to see what happens in this regard.
California home sales ended down as prices gain
California home sales declined for the eighth straight month in December, and a stagnating market for much of the year pushed sales lower in 2018 for the first time in four years as reported last week by the California Association of Realtors.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
December’s sales were down 2.4% from the revised 381,400 level in November and down 11.6% from home sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.
According to CAR, the housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months. This trend is expected to continue as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.
This comes as no surprise as I reported last week on Linkedin that home sales nationally fell 3.1% year over year. We saw sales volume in the communities I cover — Beverly Hills, Beverly Hills PO, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood — down over 9% for 2018 compared to previous year, combined with a slight increase in inventory. As I have mentioned before, I run a “Hot Sheet” with information from the Multiple Listing Service every day which tracks new listings, price adjustments, closed escrows, etc. In checking the prices of closed escrows vs asking prices I am still seeing about 30% of these transactions showing closed escrow prices of asking price or above. Granted it is not as much as it has been in the past, but certainly not a case of doom and gloom. Please remember that this is for the entire West Los Angeles area, and where a good deal of the stats for California mentioned in some of the other articles, I am sharing with you are statewide.
Pending home sales slid 2.2% in December
National pending home sales, a key forward-looking indicator, declined as a whole in December for the second straight month according to the National Association of Realtors. Of the four national regions, only the West experienced a slight increase.
The Pending Home Sales Index, which is based on contract signings, decreased 2.2% to 99.0 in December, down from 101.2 in November. Additionally, year-over-year contract signings fell 9.8%, making this the twelfth straight month of annual decreases. Pending home sales show how many homes have entered the escrow process and is an indicator of future, final sales.
Lawrence Yun, NAR chief economist, cited several reasons for the decline in pending sales. “The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” he said. Yun has reported also that January sales would be positively influenced by lower mortgage rates which have fallen in recent weeks and is confident the housing market will see improvement in 2019.
IRS releases rule on 20% tax break for business…
The new tax code offers a 20% tax break for pass-through business owners. According to tax experts these small business owners and their accountants can rest a bit easier. The Internal Revenue Service has provided the long-anticipated final word on how small business owners can claim one of the biggest perks in the 2017 tax overhaul.
The regulations detailing the new 20% deduction for pass-through business owners are of crucial importance to the operators of such entities, who range from mom-and-pop convenience store owners to private equity investors.
The policy, issued last week despite an ongoing partial government shutdown, can cut those business owners’ tax bills by as much as one-fifth. The rules would govern what many say is one of the most complex changes in the new tax law.
The IRS made a series of changes to make it simpler for businesses to determine whether they can get the tax break, a senior Treasury official state.
What? Another Sepulveda Pass project? You guessed it….
It didn’t take long before planners got the itch to start figuring out how to “finally fix” the burgeoning traffic through Sepulveda Pass. The last major Sepulveda Pass project, completed in 2015 at the cost pf $5.1 billion took over five years to complete. It really didn’t make a difference. The latest idea? — build a rail line from the Valley to the Westside through Sepulveda Pass.
As was recently reported in the Los Angeles Times, planners and traffic experts have been scratching their heads on how to connect the dots via a rail line. But how, where? The Metropolitan Transportation Authority has some news for you.
Since the congested 405 Freeway has no space or capacity for a reliable transit option, the MTA indicated it is studying a tunnel or tunnels through the Santa Monica Mountains, as well as a monorail system that would run above ground on some of the terrain. Both approaches would pose significant engineering challenges.
A Metro report in 2016 estimated that building two 8.8-mile rail tunnels would cost between $7.4 billion to $9.2 billion and would take seven years. Metro typically builds a separate tunnel for each set of tracks, but is also considering one larger tunnel that would accommodate both directions of travel. I heard about this at a presentation from Metro in November, but like most of us in the room, just scratched our heads in wonder at the thought!
Keeping busy and some exciting news!
Coldwell Banker is instituting some new marketing programs which will be very exciting and fun. One of them will be a monthly drawing for you, my clients and friends of a drawing for a trip, gift certificate, etc. What this means for those of you who receive the Schiffer Line on line, is that starting the 5th of February, you will be receiving one (1) additional email a month from me, through Coldwell Banker, inviting you to join the contest. The winner for each area will be announced each month. For those of you who currently receive the Schiffer Line via snail mail, and wish to be part of the contest, please let me know your email contact information, and you will be added to the distribution list.
Also, we will be adding a weekly TV show to our CB marketing programs for all sale listings, and some lease listings as well. If you are interested in learning about all of these programs, please give me a call (310) 442-1384 and I would love to get together with you and share all of the news!
Currently, I have two great lease listings in Bel Air Crest. One is a 3/2.5, plus den that has been beautifully remodeled and is available for a multiple year lease for $10,900, and the other, also available for a multiple year lease is elegant and luxurious with 4/3.5, family room, pool and bonus room, available furnished for $15,025 a month. Please let me know if you have any interest or know anyone who might be interested in these properties. Coming up in the next few months, I have a few sale and lease listings in Bel Air Crest, Mountaingate, Westwood Hills and Westwood. I will keep you posted on timing, etc.
One More Thing
Happy Valentines’ Day – Hope you spend or spent the day with someone special in your life!