The SchifferLine
Timely Real Estate News………………………1 February 2022
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Happy Chinese New Year….
It is the year of the Tiger for this year’s Spring Festival, or the Lunar New Year. It is observed by Asians the world over everywhere. One fourth pf the world’s population celebrates this holiday. Their celebrations begin on New Year’s Eve and officially begin the first day (February 1) of the first month of the Chinese Calendar and ends February 15. It is traditional for every family to thoroughly clean their home, to sweep away any ill fortune and to make way for incoming good luck.
There are many traditions attached to this celebration. Some of the traditions are tied into food. Some examples – For wealth – dumplings and sweet rice balls. For longevity – noodles – for Prosperity – fish. For fullness and wealth – fruit primarily orange in color. I know we are ordering Chinese food while we watch the football games this weekend.
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Federal Reserve signals rate hikes in March
There is a rate hike coming soon, as the Federal Reserve signaled it would begin steadily raising interest rates in mid-March, its latest step toward removing stimulus to bring down inflation based on the minutes from their Wednesday meeting last week.
Fed Chairman Jerome Powell said the central bank was ready to raise rates at its March 15-16 meeting and could continue to lift them faster than it did during the past decade.
“This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we put in place to deal with the economic effects of the pandemic,” he stated after their meeting.
This past week we have witnessed the huge swings in the stock market as it has reacted to geopolitical issues, the continuing supply chain issue, inflation and the virus.
Following up on the Fed’s projection, we have witnessed before in December 2019 that interest rates did go up, but they are not always automatically followed by rising mortgage rates, and in fact, when the Fed raised rates, mortgage rates went down. I do expect to see more volatility in rates as inflation takes hold and will influence all market conditions, especially in real estate. Speaking of interest rates, the projection is for rates which have been historically low the past few years to adjust to still low numbers in the 4% range. Over the course of this year, most likely depending on what the Feds do we might see some rates in the high 4% range. This will most likely largely impact first time buyers more than any other category; thus, the obvious recommendation is to not wait, but to get started on your hunt, even with the low inventory we have.
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After a ‘bust’ 2020, economy surges in 2021
The rate increase announcement from the Federal Reserve came just before last Thursday’s Commerce report that the U.S. economy grew last year at the fastest pace since Ronald Reagan’s presidency, bouncing back with resilience from 2020’s brief but devastating coronavirus recession. The nation’s gross domestic product — its total output of goods and services — expanded 5.7% in 2021. It was the strongest calendar-year
growth since a 7.2% surge in 1984 after a previous recession.
The economy ended the year by growing at an unexpectedly brisk 6.9% annual pace from October through December as businesses replenished their inventories, the Commerce Department reported last week.
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Homeowners seeking to re-finance is down….
The number of owners who can save by refinancing is down by more than half from the start of this year to 5.9 million, according to Black Knight data. Black Knight, a real estate tracking company, considers refinance candidates as 30-year mortgage holders who have a maximum 80% loan-to-value ratio, a credit score of 720 or higher, and a likelihood of reducing their current first lien by at least 0.75%.
The average 30-year fixed-rate mortgage has climbed by about 50 basis points in the first weeks of the year. Still, even with recent mortgage rate increases aside, many of those 5.9 million borrowers could still see savings of $275 a month per borrower, according to Black Knight. More than 1 million of them could save at least $400 a month, and 661,000 borrowers could trim $500 or more from their monthly mortgage at current rates.
The remaining borrowers may have missed the opportunity to save by not refinancing when mortgage rates were below 3%. The number of refinance candidates has dropped significantly from about 11 million at the start of the year and is down by about 20 million in late 2020. I am still talking with many clients who want to stay put and are thinking of re-financing so they can improve their current home as the pandemic continues to thwart inventory everywhere.
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SoCal home prices hit another all-time high in December
Capping a year of sharp growth that left many first-time buyers frustrated while homeowners counted their equity gains, home prices hit another all-time high in December.
The six-county region’s median sale price reached $697,500 last month, up 16.3% from a year earlier, real estate data firm DQNews said Friday. It marked the 10th time the median set a record in 2021, a frenzy driven by low rates, millennial buyers and a desire for more living space during the pandemic.
Some economists forecast that prices will rise again this year, but the increases are expected to be smaller as affordability — already an issue for many — becomes an increasing barrier to homeownership.
Whether that happens is another question. Inventory is at rock-bottom levels, meaning buyers still must fight to get into a house even as the market has cooled a bit in recent months.
According to L.A. County data although fewer offers faced bidding wars last month than in December 2020, 59.7% of offers still had competing bids in the final month of 2021.
Economists and real estate agents blame the supply shortage on a variety of factors, including a lack of new construction and homeowners who have locked in low mortgage rates and don’t want to move in a competitive housing market. As I have reported in the Schiffer Line in the past year, we have seen record median sales prices in all the communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood.
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Existing home sales decline in December
After three solid months of sales increases, existing-home sales declined in December according to the National Association of Realtors (NAR). Each of the four major U.S. regions witnessed sales fall in December from
both a month-over-month and a year-over-year basis. Despite the drop, overall sales for 2021 increased 8.5%.
Total existing-home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 4.6% from November to a seasonally adjusted annual rate of 6.18 million in December. From a year-over-year perspective, sales waned 7.1% (6.65 million in December 2020).
“December saw sales retreat, but the pullback was more a sign of supply constraints than an indication of a weakened demand for housing,” said Lawrence Yun, NAR’s chief economist. “Sales for the entire year finished strong, reaching the highest annual level since 2006.”
Yun, however, does expect existing-home sales to slow slightly in the coming months due to higher mortgage rates, but noted that recent employment gains and stricter underwriting standards ensure home sales are in no danger of crashing. He forecasts rates to remain below 4% by year-end and wages to hold firm due to a tight labor market.
“This year, consumers should prepare to endure some increases in mortgage rates,” Yun cautioned. “I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.”
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Westside sales just keep roaring upward.
We have just witnessed the best year ever in high-end sales on Los Angeles’ Westside. There were 1,319 closed sales of $5 million-plus in 2021, versus 725 in 2020 — up 82 %. Of these, 395 were $10 million-plus, versus 219 in 2020, up 80 %. And 101 were $20 million-plus, versus 61 in 2020, up 60%.
Some of the biggest moves, however, were in the higher price range — 33 were $30 million-plus, versus 19 in 2020, up 74%. And 21 were $40 million-plus, versus 8 in 2020, up a whopping 163%.
Of the 101 sales of $20 million-plus, 62 were sold to American buyers, (61%). The other buyers were: 3 Chinese, 2 Danish, 2 Indonesians, and 1 each from Australia, Canada, India, Afghanistan, S. Africa, Australia and Saudi Arabia.
Where were these transactions? The 101 sales of $20 million-plus were distributed thusly — 26 in Beverly Hills, 23 in Malibu, 12 in Brentwood, 10 in Bel Air, 6 each in BHPO and Palisades, 6 each in Sunset Strip and Holmby Hills and 1 each in Santa Monica and Century City.
38 of the $20 million-plus sales were not officially listed when sold. (38%). The two top sales of the year were in Malibu, which sold for $177million, the other was in Bel Air, which sold for $133 million — both were unlisted when sold.
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Bel Air Park — quiet elegance, away from it all
If you are the type who craves quiet neighborhoods away from it all yet still having the finest shopping and dining close by…and do you also appreciate the elegance of your surroundings in a neighbor-friendly environment…. then Bel Air Park is the ideal place for you.
Sitting atop a beautiful mountain crest overlooking the Getty Museum, Bel-Air Park (sometimes referred to as Upper Casiano) is a guarded community that features 145 single-family homes on wide streets.
Located just off world-famous Mulholland Drive, many of the homes are on large lots, some with magnificent views. Bel Air Park is adjacent to the world renown American University of Judaism and Stephen S. Wise Synagogue School and is a neighborly “community” unto itself.
I have represented this unique enclave of beautiful homes for the past 30 years, and while homes rarely come on the market, I am usually one of the “first to know”. If you are looking for something elegant and quiet, Bel Air Park may be for you, so please give me a call. Carole — 310-442-1384.
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Food banks experience critical volunteer shortages
Food banks across the country are experiencing a critical shortage of volunteers as the Omicron variant frightens people away from their usual shifts, and companies and schools that regularly supply large groups of volunteers are canceling their participation over coronavirus fears.
The result in many cases has been a serious increase in spending by the food banks at a time when they are already dealing with higher food costs due to inflation and supply chain issues.
Coldwell Banker has a monthly client for life campaign where we generally offer gift certificates for different companies like Home Depot, etc. This month however we are spotlighting food banks and their extreme needs for donations and volunteers. Please let me know if you wish to receive these monthly emails on our campaign. A number of my clients have won in the past and you too could be a winner!
Every November, the week before Thanksgiving myself and a number of my colleagues here in my Coldwell Banker Brentwood office go to a local Brentwood supermarket and collect non-perishable foods as well as cash for the Westside Food Bank. This past November we collected approximately 6 barrels of food and about $1000 cash. The representatives from the food bank told us that a number of their clients were previous donors! Please take a few minutes to donate to your local food bank… it means a lot! “Food banks rely on volunteers. That’s how we keep the costs low,” said Shirley Schofield, CEO of a food bank in Alabama. “The work still gets done but at a much higher expense.”
Food banks generally use volunteers to sort through donations and to pack ready-made boxes of goods for distribution. It is common practice to arrange for local companies or schools to send over large groups of volunteers, but that has left the system vulnerable to those institutions pulling out all at once.
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What is happening in my world?
I don’t know if you were impacted by the power shortage we experienced a few weeks ago, but I was, and it was a strong reminder of what we all need to do to help and protect ourselves when these things happen. The power outage impacted over 700 homes and lasted about 14 hours! We had another one two days later, but that one only lasted about an hour or two.
In July 2019, the California legislature passed a law requiring all garage door openers to have a back- up battery. I had already done so, and it really came in handy as I was able to keep my car in the garage and leave again before the power was restored. I was also reminded for the need to not only have those emergency back- up lights through your home and to regularly check their batteries and if the lights are working. In my case, I had not done so, so that the flashlight in my car did not work, and none of the lights in my house did either. Fortunately, one of my friends and neighbors gave me one of her torches to use. I urge you all to make sure you are well prepared for these types of events. You might also want to look into back- up generators or solar walls.
One of the fun things about the new year is gearing for a fun and exciting year. I had an amazing year last year,
THANK YOU AGAIN TO ALL OF MY WONDERFUL CLIENTS! I am looking forward to another year with more adventures. At the moment, I am on the search for a number of homes in both Bel Air Crest and Mountaingate. The needs of my clients vary both in size and price points, so once again, if you are entertaining selling, please do contact me. Carole Schiffer, 310-442-1384 or ceschiffer@gmail.com. I also have a buyer or two for Brentwood Circle and Brentwood proper. Let’s talk.
I am looking forward to the world opening up some and possibly doing some traveling. Would love to hear from you and to hear what your plans are for the year.
In the meantime, please stay safe and healthy.
Happy Valentine Day!
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