Timely Real Estate News…………………………………… I June 2017
Managing Client’s Expectations in A Hot Seller’s Market
It sounds like the same old story, week after week, month after month. Prices are soaring and inventory is stagnant. It reminds me of Bill Murray’s iconic “Groundhog Day” where every day is a repeat of the previous day. It never changes. As we move into Summer, we are seeing the hot seller’s market getting hotter. Prices are rising everywhere in the U.S., while inventory, in many cases are stagnant or even receding. This only spells trouble for buyers and sellers. One of the most important jobs I have as a real estate agent is to manage my client’s expectations, and that is not always an easy job!
For buyers, the lack of inventory only means one thing: Scrambling and competing in an extremely limited market where choices are fewer than ever against a sea of other well-armed buyers who can be ultra-aggressive in the “multiple offers wars”.
For sellers, the challenge may be to avoid greedy appetites and pricing yourself out of the market, thinking that since inventory is so low, ‘my house’ will be snapped up immediately. However, if not priced competitively, that will not happen, even in today’s market.
Yes, prices are escalating, although still below 2007 levels in most Westside markets, and homeowners are, indeed, happy to have some of their equity back. But in this competitive market, managing expectations for both buyers and sellers is critical, if only to maintain one’s sanity. So here are a few recommendations:
* For buyers, it will be important to start early in your strategic planning for buying your home. That means, your first call should be to an experienced real estate agent, like myself to help you manage your expectations and map out your course of action. For example, home specifications, location, and financing are the three critical issues you will need to discuss and settle on before entering the market. If you are buying this property with a partner, I strongly suggest you both review what it is you want. You may be surprised that you both want different things. Your agent can assist you in identifying markets and options for your home location and pricing, and can also help you manage your pre-qualifying process, because you’ll need that from the very start. Then the fun begins.
* For sellers, this is the big challenge — when to sell, for how much, and how to deal with after-sale issues as, just as where to now? Through my 30-plus years of experience, I have witnessed so many homeowners who have made the mistake of not having a game plan or overpricing their home, and that’s especially true now in this market. False expectations of a home’s value can lead to disastrous results — homes that are not competitively priced will sit and sit and eventually get tainted and leave the market, and the seller will be disenchanted. While arriving at the proper price is by no means an exact science, I can help you avoid this “seller’s syndrome” and help guide you toward structuring your marketing campaign that will take advantage of local market conditions, competition, recent comps, and your home’s position in terms of pricing and location.
We’ve learned many lessons during the past 10 years when the Great Recession started, and it’s hard to believe it officially ended in June 2009. We are getting back to a normal market, but for now, this hot seller’s market demands both buyers and sellers be extremely well prepared when entering this market…but it takes planning and expertise at the highest level. I would like to help you…so please call me at 310-442-1384. Thanks, Carole Schiffer.
Home prices rise across U. S…. on a fast-track
I wasn’t kidding…. home prices across the U.S. were up 5.8% annually in March, the fastest pace in nearly three years, as supply shortages continued to drive a run-up in offers. The rise in the S&P CoreLogic Case-Shiller national index was up from 5.7% the prior month. The pace has accelerated in 2017 after year over year increases held steady at a healthy 5% or so from 2014 to 2016.
S&P Case-Shiller 10- and 20- city indices, which track the largest metro areas, increased 5.2% and 5.9% from a year ago, respectively, unchanged from February. Monthly, the national index rose 0.3% seasonally adjusted while the 10- and 20-city indices each increased 0.9%. Seventeen of the 20 cities reported monthly increases after seasonal adjustment.
Inventory remains down in U.S.
Nationally, there’s a 4.2-month inventory of existing homes for sale, down from 4.6 months a year ago and a normal level of about six months. “People are staying in their homes longer rather than selling and trading up,” says David Blitzer, managing director of S&P Dow Jones’ index committee. “If mortgage rates, currently near 4%, rise further, this could further deter more people from selling and keep pressure on inventories and prices.” But he adds “there’s no way to tell” when rising prices and mortgage rates will cool off the market.
Median home prices in LA reach all-time high
To be more specific, let’s bring this home. The median home price in Los Angeles County has reached the all-time high set in 2007, a milestone that follows five years of steady recovery but comes amid renewed concerns over housing affordability. Home prices rose nearly 6% in April from a year earlier, hitting the $550,000 level where the median plateaued in summer 2007 before a sharp decline that bottomed out in 2012.
According to the report on regional home prices released last week by CoreLogic, other areas in Southern California also are hitting record levels. The record median prices, as calculated by CoreLogic, also are nominal values that do not take into account inflation. The L.A. County median is 12.4% below the 2007 peak after adjusting for rising consumer prices.
Lower mortgage rates also have made housing more affordable than last decade.
To rub it in…home sales dropped 11.4%
U.S. sales of new homes last month registered the biggest drop in more than two years. The Commerce Department reported last week that new home sales skidded 11.4% in April to a seasonally adjusted annual rate of 569,000. It was the biggest monthly drop since March 2015. Economists had expected a more modest retreat from March sales of 642,000, which were the highest since October 2007. Sales in April were still up 0.5% from a year earlier.
Sales fell in every region of the country, led by a 26.3% plunge in the West, the biggest drop since October 2010. A healthy job market is expected to give Americans confidence to buy homes. Employers added a solid 211,000 jobs last month, and the unemployment rate is at a decade-low 4.4%. Last month, the median sales price of a new home slid 3% to $309,200.
Turning historic buildings into art treasures.
There is a renaissance going on in the world of art and historic Los Angeles buildings that have not been realized until recently. The California artist-architect Millard Sheets (1907-1989) designed the imposing edifice on Wilshire Boulevard for the Masonic Brotherhood (a fraternal society with roots in medieval builders’ guilds), planting his own symbolic murals and mosaics throughout. The Marciano Art Foundation bought it in 2013 for $8 million.
“When you find something this beautiful, you want to preserve and restore it,” said Maurice Marciano, co-founder of Guess, who is in retirement and has been overseeing the building’s reformation.
“It’s been interesting for us to turn something very secretive and formidable into something friendly and curiosity-driven,” added Kulapat Yantrasast, the project architect. “It’s especially interesting for L.A., because we tend to love what’s new and shiny instead of investigating history in this way.”
The Marciano Art Foundation is not alone in going the historical route. Several new arts institutions in development that will expand the city’s museum landscape have opted to reimagine existing buildings rather than build sleek new ones, as the Broad museum did in 2015 with its Diller Scofidio + Renfro design.
And as contemporary art has grown in its scale and ambitions, the trend of converting industrial spaces to provide less expensive and flexible space has also taken off.
There is so much more going on in Los Angeles…. stayed tuned to The SchifferLine as we bring you more “art + architecture’” highlights in your city.
New home sales are down, too….
Millennials and first-time buyers are finding it more difficult to move into a home of their dreams. U.S. sales of new homes last month registered the biggest drop in more than two years. The Commerce Department reported last week that new home sales skidded 11.4% in April to a seasonally adjusted annual rate of 569,000.
It was the biggest monthly drop since March 2015. Economists had expected a more modest retreat from March sales of 642,000, which were the highest since October 2007. Sales in April were still up 0.5% from a year earlier. Sales fell in every region of the country, led by a 26.3% plunge in the West, the biggest drop since October 2010.
While I don’t normally report on new home sales, it’s all part of the housing recovery mix. Inventory — whether it’s a new or old home, apartment or condo, the housing market is all interconnected. Millennials who might be prepared to move into their own home or condo, are prevented for lack of inventory and out-of-reach prices, and hence, remain in rentals, whose prices continue to rise. It’s like a cat chasing its tail. Unfortunately, unless we get inventory levels up, this will continue for a while.
U.S. economy is revised upward…a touchIt wasn’t much, but the growth rate for Quarter 1 was moved from 0.7% to 1.2%, still well below Trump’s ambitious economic plans. Growth in the gross domestic product, the broadest measure of economic health, is down from a 2.1% annual growth rate in the fourth quarter and marks the weakest result in a year, the Commerce Department reported last week.
The upgrade to 1.2% reflected new-found strength in consumer spending, business investment and state and local government spending. Many economists believe that growth in the current April-June quarter will rebound sharply to above 3%, helped by stronger consumer spending that reflects solid employment gains and an unemployment rate that has fallen to a decade low of 4.4%. Moreover, part of the first-quarter weakness reflected various temporary factors such as unusually warm winter weather.
CBRE is ‘star’ on the global real estate stage
With headquarters located in Bunker Hill downtown, CBRE Group, which is part of Coldwell Banker is one of the world’s largest real estate services firm. And it’s riding high after a long real estate boom. The company finished the first quarter 2017 with its profit up nearly 60% compared with a year earlier to $130 million after posting record revenue of $13.1 billion in 2016.
Los Angeles has notably benefited from the boom too, and looks to continue doing so. Los Angeles ranked No. 1 in a recent CBRE survey of global real estate investors looking to buy property this year in North America.
“L.A. is the Clayton Kershaw of destinations for institutional capital,” said Chief Executive Robert Sulentic, who has led the company since 2012 and previously was chief executive of Trammell Crow Co. This low-profile firm has clients in over 100 countries with 75,000 employees. Sulentic is high on Los Angeles….”One of the key things is that there is good job growth here in LA — more than in San Francisco and San Jose combined. We have a cross-section of what millennials like: It’s the entertainment capital of the world with beaches, mountains and edgy places like Venice and Hollywood to live. Tech companies like that.
“One of the problems Silicon Valley has is no office space. We have a decent amount of empty space in L.A., and that’s a good thing. It’s also cleaner than other international cities. The whole emissions-control program has been a big difference maker.”
Coldwell Banker’s reach is far and wide around the globe. “It is such a great company to work for…and its brand is stands for quality and performance,” Carole Schiffer stated. We have a very strong commercial and investment component in my Brentwood office that can assist you with any of your commercial or investment needs.
Grauman’s Chinese Theater announced
Almost 100 years ago this month in May 1919, showman Sid Grumman announced ambitious plans to open “a string of picture theaters” throughout the country, including his first in Hollywood, which would become Grauman’s Egyptian Theatre, which opened in 1922.
The announcement, which was reported by the Los Angeles Times, came just over a year after the successful opening of his first “picture palace,” the Million Dollar Theater in Downtown Los Angeles at Third Street and Broadway.
The Grumman Chinese Theater opened in 1927 with Cecil B. DeMille’s “The King of Kings”. Today, the world-famous theater is an IMAX theater with 932 seats and one of the world’s largest theater screens. TCL, a Chinese tech firm, owns the naming rights to this legendary theater.
Kelly’s 95th birthday!
A great time was had by my family while we celebrated my Mom’s 95th birthday. Everyone flew here from parts North & East and we spent the weekend at our home in Coronado. It was great fun and went much too quickly. I am off to Montreal to see my nephew Connor graduate from Concordia, and for him now the fun begins as he hunts for a job in either Montreal or back home in Vancouver.
Real Estate Update
While we were in Coronado we looked other units for sale in the complex, Coronado Shores as we are considering purchasing a second one that my sister & her family will use part of the time and rent out the remainder of the time.
We found one that we all loved, but that market like the one here is super-hot and this unit had been on the market only 5 days and sold before we could get our act together.
Back here at the ranch, I am still looking for sellers for Canyon homes in Bel Air Crest as well as Mountaingate and spending a good amount of time showing my two lovely lease listings in Bel Air Crest, 11813 Gwynne for $10,500 and 2223 Queensborough for $37,500. Please let me know how I can assist you with any and all of your real estate needs. Carole@caroleschiffer.com, caroleschiffer/realtor @facebook.com.
COUNT ON CAROLE
You entrust one of your most valuable and precious investments with your Realtor. A responsible Realtor will be straightforward and honest about the true valuation of your home. Carole knows how best to price your home. Count on it!
Carole Schiffer. The Westside Expert