Timely Real Estate News………………………..1 November 2016
3rd quarter GDP growth spurs economy…. It is about time!
We’ve been waiting nine months for some good news, and the Commerce Department finally provided some — the gross domestic product for the third quarter was 2.9%, a strong number considering most economists were pegging the growth at 2.6%. It’s the biggest gain in two years.
The economy expanded at an anemic 1% average pace the previous three quarters. As a result of the oil sector downturn, a sluggish global economy and a strong dollar that drove up export prices, business spending has been listless since late 2014. Also, disappointing sales led companies to add little to inventories. But oil prices have partly rebounded this year and the dollar generally has stabilized.
“In the short term,” Carole Schiffer stated, “the increase in consumer confidence added to the new growth numbers give buyers and sellers a fresh, positive outlook on entering the housing market.”
Per the Department of Commerce economists, companies, are starting to spend again, at least modestly. Business stockpiling contributed 0.61 percentage points to growth after being a drag on the economy for five straight quarters.
And business investment grew 1.2%, up from 1% in the second quarter. Spending on structures jumped 5.4% as oil producers began to resuscitate drilling activity, but outlays for equipment fell 2.7%, the fourth straight decline. Some firms have suggested they’ve reined in capital spending in part because of uncertainty surrounding the presidential election.
Interestingly, consumer spending slowed to 2.1% (after 4.3% rise in the second quarter), but consumption, which makes up 70% of all economic activity, has been propping up growth as steady job and income growth continue.
Southern California home price gains dampen overall sales
This is not news to my readers — as inventory struggles, prices rise. Law of supply and demand remains in full force, especially for our Westside residential market.
Core Logic, one of the nation’s most respected real estate trackers, revealed that for the Southern California region “. sales in the six-county region fell nearly 1% in September compared to a year earlier. The region’s median price also fell 1% to $460,000 from August but is still up 5.7% from a year earlier — and close to the nine-year high of $465,000 recorded in June.
The sales and price slips could signal a flattening market after years of strong price appreciation, or it could be typical fluctuations in the data. And as we have seen the #s for August and September, sales begin to slip as we move into the slower Fall season. “We’ve already seen buyers making decisions in the spring and summer before school starts,” the report stated.
Economists who are from the “half-empty” school of thought predict that as supplies worsen, prices are just going to continue to rise, making affordability a mute question, especially for first-time buyers. First-time buyers, who are gainfully employed, are pushing into new territories that have not seen gentrification in new neighborhoods outside the main stream. “This is the only place where they can find affordable housing to purchase,” Carole Schiffer stated. “Homes in Atwater, for example, use to sell for $400,00 two years ago are now topping out at $800 to 900,000!” But this is happening all over Los Angeles she said.
California pending home sales improves…. but warning signs
Per the California Association of Realtors, statewide pending home sales increased in September rising 5.3%. This is based on signed contracts, not closings. “But it is an indicator we focus on to see how sales are progressing through the system,” Carole Schiffer stated. One of the recent observations made by Simon Atik from Frist Capital Mortgage is that in recent weeks he has had a fall out of transactions of about 25%. This is not due to buyers not qualifying for their loans, but because of unrealistic expectations on the part of both the buyer and seller as to the amount of credit the buyer might receive from the seller for various items, and basically along the same theme, how the seller might handle these buyer requests. These requests are generated by the buyers doing their due diligence in their inspections. As I have said many, many times, “getting a transaction through escrow is where I as your realtor earn my commission”. It is one of my biggest jobs to manage my client’s expectations in a way that will satisfy them whether they are the buyer or seller, and in some cases, both. “As I have gone thru my 30-odd year career selling real estate, I have developed the skill set to navigate these muddy waters, and trust me muddy, they do get”.
On a year-to-date basis, however, pending sales were up 15.3% and Los Angeles, Orange, and San Diego counties all reported healthy gains — 15.9%, 13.3% and 15.7% respectively.
The share of homes selling above asking price rose 23 % from a year ago to 31 % in September. Conversely, the share of properties selling below asking price dropped to 40 % from 46 % in September 2015. The remaining 29 % sold at asking price, down from 31 % in September 2015. These stats are on an area to area basis, as some areas garner much more activity than others. As you have seen from the proceeding story, the gains vary from one part of the country to the other.
Up and down the state, the real estate market continues to deal with limited inventory and rising prices no matter what town or city you’re in. But it is interesting to note that for the past year, Los Angeles County has a healthy increase in # of pending home sales compared to the rest of the state. And now that the summer buying season has come and gone, there is less competition for housing out there. That will help first-time buyers.
Los Angeles County luxury home sales still strong in $5 million-plus
Every month, we count the number of homes sold in the upper categories, starting with $5 million and up. And for this year, we have been consistent in our performance of homes selling for $5 million — there have been 403 closed escrows of $5 million plus this year, compared to 393 last year now.
In the $10 million and up category, there have been 109 homes closed this time last year. But we’re still behind in the $20 million-plus category — 20 closed sales this year vs. 35 at the same time last year. Of those, eight homes were over $30 million vs. 13 over $50 million last year.
In this market, we’re not fazed by these large sales — as typified by recent sales in Holmby Hills where we had two sales of $100 million plus one for $90 million in 2016 already, and there are 4 properties on the market between the price range of $79,000,000 and $200 million! Currently, there are 21 pending sales of $10 million plus and three of those are over $20 million. One interesting fact is the majority of the ultra-high buyers are American.
Home sales in US rebounded strongly in September….
Per the National Association of Realtors — existing-home sales rebounded strongly in September and were propelled by sales from first-time buyers reaching a 34% share, which is a high not seen in over four years, per the NAR. All major regions saw an increase in closings last month, and distressed sales fell to a new low of 4% of the market.
Total existing homes sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, hiked 3.2% to a seasonally adjusted annual rate of 5.47 million in September from a downwardly revised 5.30 million in August. After last month’s gain, sales are at their highest pace since June (5.57 million) and are 0.6% above a year ago (5.44 million).
All-cash sales were 21% of transactions in September, down from 22% in August and 24% a year ago. Individual investors, who account for many cash sales, purchased 14% of
homes in September, up from 13% both in August and a year ago. Sixty-five percent of investors paid in cash in September.
Properties typically stayed on the market for 39 days in September, up from 36 days in August but down considerably from a year ago (49 days). Short sales were on the market the longest at a median of 118 days in September, while foreclosures sold in 67 days and non-distressed homes took 38 days. Forty-four percent of homes sold in September were on the market for less than a month.
The Standard & Poor’s Core Logic Case-Shiller 20-city home price index rose 5.1% in August, after a 5% gain in July. Portland, Seattle and Denver reported the strongest year-over-year increases for the seventh month in a row, with gains of 11.7%, 11.4% and 8.8%, respectively.
Steady hiring, low mortgage rates and some early signs of rising pay have encouraged more Americans to buy homes. Sales of existing properties increased 3.2% in September from August, the National Assn. of Realtors said last week.
“This is really good news for the national housing market,” Carole Schiffer stated. “You can get confused by the statistics generated by real estate tracking companies who focus on our region or even our County, but these national numbers indicate that after the school-buying season was over, there was less competition for what was left, and that enabled first-time buyers to get their oar in the water.”
I have a lovely, sexy one bedroom with sitting room and den that can be used as a 2nd bedroom for sale in The Terrace in Mountaingate. As is typical with the majority of the homes in the community, the scale of the rooms is quite large, it has high ceilings, generous kitchen with a breakfast area, a deck off of the living room, 2 fireplaces and wonderful views of the famous Mountaingate Country Club golf course. It is gated, the community has a pool and BBQ area and is priced at $1,175,000. I also have my lease in The Ridge that is a two bedroom/two one half bath, plus den. It is an end unit and as such as a large back yard area, also is gated with a community pool. The asking price is $6,750. Both of these homes are vacant and waiting for a new family to make it their own!
Once again, myself and some of my office associates will be at Vicente Foods on San Vicente in Brentwood on Saturday the 19th of November collecting food for the Westside Food Bank. I invite you to please come by and hello and if you find an extra bit of nonperishable foods that you would like to donate, that would greatly appreciated.
For those of you who live in Westwood Hills, I look forward to meeting you at your annual meeting on Tuesday the 1st at the Westwood Presbyterian Church. Please come by my table, say Hello and enter your name in the drawing for three $75 American Express gift certificates (just in time for the holidays!).
As always, please do not hesitate to contact me so that I can assist you with any of your real estate needs and don’t forget to visit my web site, caroleschiffer.com or friend me at firstname.lastname@example.org.
Count on Carole
Savvy Counts All the education, all the experience doesn’t count squat if you are not street savvy in these competitive times. You can’t learn ‘savvy’ in school – it comes from years of interaction with buyers and sellers…learning ‘the ropes’…having ups/downs…trial by fire. Being a savvy Realtor is what I bring to the table. Savvy counts.
Carole Schiffer. The Westside Expert