Timely Real Estate News…………………………………… 1 June 2018
$150 billion added to home equity…good news? Depends.
If you’re a homeowner, you’re pleased with the escalation in home prices, but according to the National Association of Realtor’s chief economist, Lawrence Yun, it is not always good news,especially if you are first-time home buyer.
“The solid gain in home prices of 6.5% in March added roughly $150 billion to housing wealth during the month. But the continuing run-up in home prices above the pace of income growth is simply not sustainable.” He noted that from the cyclical low point in home prices six years ago, a typical home price has increased by 48% while the average wage rate has grown by only 14%.
Rising interest rates also do not help with affordability. Therefore, more supply is needed to level out home prices. Homebuilding will be the key as to how the housing market perform in the upcoming years.
On the other hand, existing home sales dropped
Yun added that after moving upward for two straight months, existing-home sales retreated in April on both a monthly and annualized basis. All four major regions of the country saw no gain in sales activity last month.
Total existing-home sales. which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 2.5% to a seasonally adjusted annual rate of 5.46 million in April from 5.60 million in March. With last month’s decline, sales are now 1.4% below a year ago and have fallen year-over-year for two straight months.
“The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” Yun stated. “The NAR states the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”
So, at the end of the day, we see good news in rising home prices both locally and nationally, but the continued lack of inventory plagues us here. I’m seeing increasing turnouts at Open Houses and multiple offers on all price levels. I don’t expect there is going be a major change in our market conditions over the rest of the year.
A pleasant surprise…higher-end sales are strong, again
In my monthly review of high-end sales — homes selling for $5 million and up — we’re seeing total numbers moving slightly ahead of last year for the first time. There have been 217 closed sales of $5 million-plus homes this year compared to 214 a year ago. There were 67 closed sales of $10 million-plus homes, vs. 73 last year at this time. Of these, 21 closed over $20 million and 24 closed last year. Of these, 11 were over $30million but only 12 were over $30 million last year. Four of these sales were over $40 million, the same as a year ago.
Of the 21 closed sales of $20 million-plus, buyers were mostly American (76%) — 16 Americans, 1 from Monaco, 1 from Mexico, 1 Japanese, 1 English and 1 from Canada. There were five sales in Malibu, four in Beverly hills, three in Bel-Air, two each in Sunset Strip in Beverly Hills Post Office, Holmby Hills and Pacific Palisades, and one in Brentwood. Again, it is worthy to note that six of the 21 sales over $20 million were not listed in the MLS which primarily affects sales volume.
If you look at the history of Los Angeles, you will see that the majority of early residents were attracted to the warm climate, clean air, and the architecture of Spain, this includes iron balconies, terra cotta roofs, courtyards and fountains, and ornate details evoke the magic of Spain brought here centuries ago. Especially in our beautiful Westside, the Mediterranean home remains a part of our fabled past. Sometimes referred to as Spanish Modern, Mediterranean houses are mostly concentrated in warmer climates like California or Florida. If one were standing in the middle of Spain today, you could be looking at landscape similar to that found in Southern California. During my first trip to Spain, I had to remember that what we have here is not found in mostparts of the country as people were amazed by the sight of palm trees, bougainvillea, etc.
A Mediterranean home’s most iconic feature is a low-pitched, terra-cotta roof, and the exterior paint is typically a light cream or off-white. The homes can be one or two stories and vary in size, although they tend to be expansive.
Some common characteristics of Mediterranean homes include large windows, iron balconies. open floorplans, stucco exteriors, ornamental details, arches, higher, vaulted ceilings, and courtyard entryways. You’ll find throughout the Westside entire neighborhoods and developments devoted to Mediterranean-style homes. It has been a very popular style, and some home builders try to preserve authentic treatments such as cemented tile roofs, carved beams and ornate window treatments.
Today, we are seeing more construction of “farm style “homes, with white wood facades. In the past we have also see the popularity of the ranch style homes that was introduced by famed architect Cliff May.
Are millennials really going to stimulate housing?
According to sociologists studying this generation, they just may not be the solution we’re looking for our housing market as was hoped, Yes, we have a vibrant economy now, and job growth is strong around the country, but what is possibly masking our current good fortune is there are hard times being endured for men and women in their 20s and early 30s, who are responsible for increasing the size of their families by having children.
“This young generation, Millennials, I think they still feel pretty uncertain, as if they can’t afford to make this big long-term commitment” to raising a family, says Karen Guzzo, a sociologist at Bowling Green State University. “They have these standards: ‘I want to live in a good neighborhood. I want to have a house. I want to be able to have good child care and take time off from working.’”
What she points out is that while unemployment is below 4%, the ‘twenty somethings’ have not fully recovered from the recession. As of April, it was down 2.4% points for men age 20-24 (to 68.4%) and 2.2% points for men age 25-29 (to 83.7%) compared with the last business cycle peak, December 2007, according to the Bureau of Labor Statistics.
The answer is that Millennials are trailing in entering the higher income brackets and as a result, housing affordability is a huge challenge facing them. And their mindset, according to Guzzo is that they are reluctant to jump into a long-term commitment of buying a home. And many, after college, are ‘drowning in debt.’ Surely you know someone in your family who is in this age group and perhaps are fighting these same issues, I know I do. Consequently, kids are waiting longer to get married, longer to have children, and more than a third are still living at home.
Having children and raising a family are two of the key motivators for young adults to buy a home…they need the space and they want to start building their American dream. As this trend continues, the upward push for home buyers can remain tepid.
CA now 5th largest economy….so what now?
From a housing perspective, the upward push of our real estate market contributes to our ranking as the fifth largest economy in the world, but after you have finished digesting that global morsel, now what? Housing continues to be a major challenge in this state with an annual demand of 186,000 housing units…but we can only manage less than 100,000. Why is that? What happens to these 86,000?
What is happening in California? Thirty-one % of California households could afford to purchase the $538,640 median-priced home in the first quarter of 2018, up from 29% in fourth-quarter 2017 but down from 32% a year ago. A minimum annual income of $111,500 was needed to make monthly payments of $2,790, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.44% interest rate.
Thirty-nine % of home buyers were able to purchase the $449,720 median-priced condo or townhome. An annual income of $93,090 was required to make a monthly payment of $2,330.
It’s a bird, it’s a plane…no, it’s a bird after all
No, it’s not Superman. It’s actually a scooter you’ll find all over the city these days. In case you haven’t already seen them speeding by, motorized electric rental scooters from startups including Bird and LimeBike have landed in a big way in several American metros, especially on the West Coast. Their proliferation around city streets — they can be discarded anywhere thanks to modern location sensors and apps — have prompted an outright clampdown from local governments. Operating off an “app” (of course), the owners can locate and provide maintenance…but while there is an 18 & over age restriction, all you need is a credit card to activate the app and ‘off you go.”.
Residents in many cities, including Los Angeles, seem to be of two minds about whether they are in favor of the new wheeled sensations. If there’s any consensus, it’s that the scooters are a mixed blessing — and a fun idea that could help sell an area to buyers, especially Millennials.
But on the flip side, they can be off-putting to people not in that age range, those who do not enjoy stepping over scooters carelessly left on the sidewalk as they explore a neighborhood. There is another issue overlapping all of these ‘storage’ problems: Scooters zipping down sidewalks or between car lanes have become a major traffic and pedestrian hazard. Senior citizens are finding it difficult to navigate a sidewalk blocked by abandoned scooters or dodging ones from behind or ahead of them…and motorists cannot easily see these meandering scooters moving in and out of traffic lanes. One other major issue facing the usage of these scoters, is the noncompliance with the helmet law. The majority of injuries that have been incurred have involved the rider not wearing a helmet. The enforcement of the requirement of using helmets is being researched.
Silver Tsunami —Baby Boomers downsizing….
I know, this isn’t a shock to most of you…. the older you get, the more stuff you have and after a while, you’re tired of all the stuff and want to get rid of it and live a simpler, less complicated life. George Carlin was right…we have too much stuff. And Baby Boomers are tossing stuff overboard, moving on and downsizing in large numbers.
It’s call the “Silver Tsunami” — an apt name for a good idea. Millions of Baby Boomers — those men and women born between 1946 and 1964 — could seek to downsize end masse in the coming years as they approach their 60s and 70s, prompting a rush to build smaller and more affordable homes, according to Josh Lehner, a senior economist and author of a new report recently released.“Turning to the data shows that it kinda, sorta does happen on a small scale,” writes Lehner, referring to families who downsize in their golden years, a phenomenon that has largely been accepted as conventional wisdom despite little rigorous investigation. Another thing I have seen for a number of years is the desire to live in a single-story home. Since we have a shortage of land in Los Angeles proper, and not an enormous number of single story homes, we are seeing an increase for the desire for condos or more “senior housing” facilities.
Changes in the tax code and longer life expectancy could further accelerate the shift to smaller homes while delaying an inevitable move to senior or assisted living facilities, according to Lehner, who cited a report from Jordan Rappaport, an economist with the Federal Reserve Bank of Kansas City.An increase in the standard deduction, a cap to property taxes that can be deducted and a capital gains exclusion of up to $500,000 for joint filers — or $250,000 for single filers selling their primary home — may make today the best time to downsize.
Take it from economists in the know…. downsizing is on the way.
A look into what is going on with me
Business first. If you know someone who wants to live in Mountaingate in a lovely home with views of the driving range or green itself, please have them contact me regarding my lovely home at 12547 Promontory, which is priced at $2,450,000. It is 5 bedrooms/ 4.5 baths. I am open on Sunday from 2 – 5. Coming up in the next few weeks, I have a 3-bedroom, 2.5 bath home in Bel Air Crest which will be priced at $8,950. For someone looking to live in the lovely hills in Tarzana, I have lovely 5 bedroom, 5 ½ home with pool, that has been remodeled priced at $1,825,000. I am looking for a home for these clients in either Bel Air Park or Bel Air Sky Crest so if you know of someone who is interested in selling in either of these communities or perhaps it is you, please let me know.
On a personal front, as you may remember we celebrated my lovely Mom’s 96th birthday last month with fun celebrations for a busy weekend. The party included a BBQ at my home with entertainment from a Mariachi band that was hired by my Mom’s companion. I am still waiting for the photos and will share with you when I get them, but I can tell you all loved it and cried we were so happy, particularly when Mom got up from her chair and started to dance to the music! It was amazing to see and be a part of. Thank you all for your celebratory wishes.
Please include me in your Facebook page or Linkedin pages: http://www.facebook.com/CaroleSchifferRealtor,http://www.linkedin.com/in/caroleschiffer, and make sure to visit my website www.caroleschiffer.com.
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