Timely Real Estate News…………………………….. 1 March 2016
Existing home sales highest in six months
The National Association of Realtors reported that existing-home sales crept forward in January to the highest annual rate in six months, and subpar supply levels propelled price growth to the fastest increase since last April. The West was the only region to see a decline in sales in January….however, Carole Schiffer noted that as a region, the Westside traditionally bucks regional trends. “We’ll know more after the local MLS releases February statistics,” she stated.
Nationally, the total existing home sales — which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, inched up 0.4% to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Sales are now 11.0% higher than a year ago – the largest year-over-year gain since July 2013 (16.3%).
Lawrence Yun — NAR chief economist, says existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015 (5.48 million). “The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints,” he said. “Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession.”
Around the country, the median existing-home price for all housing types in January was $213,800, up 8.2% from January 2015 ($197,600). Last month’s price increase was the largest since April 2015 (8.5%) and marks the 47th consecutive month of year-over-year gains.
Nationally, total housing inventory at the end of January increased 3.4% to 1.82 million existing homes available for sale, but is still 2.2% lower than a year ago (1.86 million). Unsold inventory is at a 4.0-month supply at the current sales pace, up slightly from 3.9 months in December 2015.
First-time buyers stay in the game…
Lower interest rates have helped first-time buyers, but overall again throughout the country, their entry into home ownership remains the same — the share of first-time buyers remained at 32% in January for the second consecutive month and is up from 28% a year ago. First-time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013.
All-cash sales were 26 % of transactions in January (24% in December 2015) and are down from 27% a year ago. Individual investors, who account for many cash sales, purchased 17% of homes in January (15% in December 2015), matching the highest share since last January. Sixty-seven% of investors paid cash in January.
Days on market — always a key indicator…..Properties typically stayed on the market for 64 days in January according to the NAR, an increase from 58 days in December but below the 69 days in January 2015. Short sales were on the market the longest at a median of 77 days in January, while foreclosures sold in 57 days and non-distressed homes took 61 days. Thirty-two% of homes sold in January were on the market for less than a month.
“What we have been seeing in the communities I report on each month, days on market have been markedly down from a year ago. Lower inventories account for the competitive landscape, of course,” Carole Schiffer said, “but the demand for quality residential neighborhoods continues to speed up the buying process. Even lower-priced neighborhoods that have not traditionally been ‘hot’ — such as those east and south of the Westside — have become the ‘next-big’ thing for Millennials and first-time buyers. Where else can they go?” Carole also points out that the booming Silicon Beach areas of Venice, Playa Vista, Santa Monica and Culver City are ‘on fire’ right now.
Home prices are also moving up…..in LA and Orange counties
You just read where home sales are up across the US, well, home prices are showing strength according to S&P Case-Shiller Index released last week. Los Angeles and U.S. home prices are showing renewed strength, even amid concerns over the general health of the national economy.
Nationally prices climbed 5.43% in December compared with a year earlier — the fastest pace since July 2014, according to the S&P/Case-Shiller. In Los Angeles and Orange counties, prices surged 6.17%, a slight pickup from the prior two months and ahead of the mid-5% range seen in the beginning of 2015. The acceleration bucks the prediction of many economists for weaker home price growth.
The robust figures also suggest that the market is withstanding jitters about the direction of the U.S. economy, which began with wild stock market swings in August because of the devaluation of the Yuan and concerns about China’s slowing growth. But economists said low mortgage rates, job growth at home and few houses for sale are driving up prices in the U.S.A.
A major factor in the price increases is the lack of homes for sale, which Carole Schiffer noted above.
In the Los Angeles region, there was a 4.8-month supply of homes for sale in January, meaning that if homes sold at their current rate there would be none left after that time frame. That compares with a 5.5-month supply a year earlier and a six-month supply economists consider a healthy balance, according to the California Assn. of Realtors.
2050 is coming….and it will be vastly different for our world
It’s not Orwellian to think of 2050 as another 1984, which was most famous for the introduction of the Apple Macintosh incidentally, but according to demographers and futurists — life on our planet will be vastly different than today according to real estate guru Inman. For example, the world’s urban population will reach 6.3 billion by 2050 according to the United Nations, from 3.9 billion currently.
Two-thirds of the world will live in towns and cities, compared to 54% today, and there will be more — what the UN refers to as —“megacities”, defined as cities with populations of more than 10 million. And there will be 41 megacities by 2030 from just 28 in 2015.
For the real estate market, this means higher prices per square meter and shrinking living areas in city centers — a trend already present in Asian cities such as Hong Kong and Tokyo. Average Japanese flats are now 14% smaller than 10 years ago, currently just 60 square meters, according to The Economist.
Inman’s article last week noted that society is on the brink of a new era that will be shaped by major advances in technology and lasting demographic transformations. Over the next 20 years, changes in consumer models and behavior as well as the environment will affect how we do business, the value of property investments and even the global real estate market as “we know it” today.
Here are the megatrends we can expect in upcoming years. 1) population growth; 2) aging demographics; 3) environmental laws; 4) e-commerce advances; 5) smart-home technology; 6) telecommuting; 7) distance learning, and independent travel. Inman also noted that by 2025, housing supply in big cities will be under more pressure, which will make buy-to-let residential property a good long-term investment. Living in downtown areas will be even less affordable and will force people into ever-growing suburbs.
So, what are your real estate choices for the future? According to a leading economist, “…mitigate the risks posed by the current trends by choosing reliable and clear markets like the USA, the UK and Germany. When studying investment opportunities, keep in mind the possibility of adapting it to future needs and possibly changing its function.”
Another good piece of advice is to choose property in good locations with good growth potential over the next coming 10 to 15 years. Yields may be lower, but price growth should compensate for the smaller annual revenue. For bigger budgets, retirement homes and warehousing facilities are a good bet thanks to growing demand and higher yields than most market segments. The report went on to say that investors with up to $1 million should consider residential property because
everybody needs a home, especially in the age of the Internet. “Isn’t this why the Westside remains so attractive to buyers seeking not only a safe haven but who want the quality life style we uniquely offer?” states Carole Schiffer.
California home foreclosures get help…..
A California program intended to prevent home foreclosures that was expected to shut down next year is instead being expanded and extended following a new influx of federal funding. Keep Your Home California, which already had been awarded nearly $2 billion, will receive up to $463.5 million in additional federal money to aid troubled borrowers.
The program has assisted 54,010 California homeowners as of Sept. 30, according to the U.S. Treasury Department. Treasury announced the increase Friday as part of a $2-billion expansion of its Hardest Hit Fund, which launched in 2010 and earmarked $7.6 billion to 18 states and the District of Columbia.
California will receive about $213.5 million in the first distribution of new funding. The state could get an additional $250 million in a second phase, which the department expects to award by the end of April.
El Nino — where are you?
If you’re like millions of Southern California Smartphone users, when you look at the weather app, one thing is clear: No Rain in our future. Like that old ‘70s song — “It never rains in Southern California”, our weather forecasts have a certain validation to a lifetime of unkept promises by weather forecasters.
It wasn’t surprising to see Steve Martin, the weatherman in the film “LA Story”, pre-record his weekend weather forecast so he could keep a date with his new girlfriend in Santa Barbara…”It’s sun, sun, sun…everywhere” as Martin throws Velcro-backed suns onto Southern California’s weather map. Only problem, it rained that weekend. Martin’s character was fired on Monday. What we need now is Martin to take another vacation to Santa Barbara. We need him back on the air.
That’s all, folks…..
.Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office
310-442-1384 (office) or e-mail me at email@example.com www.caroleschiffer.com
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