Timely Real Estate News……………………….I November 2017
Southern California home prices tied for all-time high
“White hot” was the description one real estate economist used to describe the Southern California market. The median price for the six-county region soared nearly 10% from a year earlier, to $505,000, data firm CoreLogic said last week. That matches a price level reached in 2007 before the housing bubble burst and the economy cratered.
In some corners of the Southland, home prices have already risen past their peaks. For example, in Los Angeles County, the median last month was $575,000, up 9.5% from a year earlier and $25,000 higher than its 2007 peak.
In Orange County, September’s median was $710,000, up nearly 11% from a year earlier and $65,000 from the 2007 height.
Economists said the latest upswing is more sustainable, driven not by risky lending but by an improving economy, historically low mortgage rates and a shortage of homes for sale. It’s important to note, however, when adjusted for inflation, prices in all counties are still under their 2007 peaks; the Southern California median is about 13% below its peak
This is not all good news, however….
A UC Berkeley poll this year found 56% of voters considered moving to find a more affordable home, with a quarter saying they’d probably leave California to do so. Business groups say employers are having difficulty recruiting workers from outside the state, which some economists cite as one reason job growth has slowed this year.
The surge in home prices isn’t limited to California. Values are up nationwide as the economy expands. But affordability is a far greater problem here, with even lower-cost areas commanding a significant down payment. In Riverside County last month, the median hit $360,000, up 7.5% from a year earlier. In San Bernardino County, prices “climbed 8.7% to $325,000.
Experts point out that developers are simply not building enough new housing in California, a state that has experienced both job and population growth. This just adds to the affordability crunch with an expanding shortage of housing combined with soaring rents. Even as you drive around Southern California and see cranes and new apartment complexes rapidly rising from the ground, it isn’t enough. Not nearly.
Slightly good news, new-home sales up in U.S.
I know that I just wrote that developers are not building housing fast enough in California (it’s true), so you might be confused by the news that new-home sales are, indeed, up — to a 10-year high, but that’s in the U.S. not here.
According to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built single-family homes rose 18.9% in September. Compared to last year, new-home sales are 8.6% above their level during the same period in 2016.
“New-home sales have bounced back from a few soft months and have returned to the strong growth trend we saw earlier this year,” says National Association of Home Builders Chief Economist Robert Dietz. “As existing home inventory remains tight, we can expect new homes sales to continue to make gains in the months ahead.”
New-home sales increased in all four regions of the country, rising 33.3% in the Northeast, 25.8% in the South, 10.6% in the Midwest, and only 2.9% in the West. Home sales in the South had been greatly hampered by hurricane-related setbacks. All regions showed an increase in sales from last month, and all regions except the Midwest also show growth when compared to a year ago.
Governor Brown has been pushing for legislation to streamline the approval process for new housing — on all fronts. Frankly, it just isn’t moving fast enough to deal with tremendous housing crunch and affordability issues facing thousands of Californians.
Pending home sales down…
One definitely needs “a program” to keep track of all the real estate statistics thrown at us every month, but it’s important to know and understand the #s because they affect all of us. The construction industry, especially housing, is the lifeblood of our economy, and with the housing shortages we’re facing in Southern California, particularly in Los Angeles County, we must meet the challenges every day, every month.
According to the California Association of Realtors, California pending home sales dwindled for the third consecutive month, suggesting that the housing market will slow as the end of the year winds down. Based on signed contracts, year-over-year statewide pending home sales dropped in September on a seasonally adjusted basis, with the Pending Home Sales Index (PHSI)* declining 6.0% from 127.7 in September 2016 to 120.0 in September 2017. California pending home sales increased on a monthly basis, rising 2.5% from the August index of 117.0.
What this means is simply this: The precursor of future real estate actual sales will be less, and when you consider that pending home sales has declined for eight of the past nine months, puts a cramp on the affordability issue indicating that the pace of growth is slowing down, which de-incentivizes home builders.
We have been seeing slower open house traffic in Brentwood and the office recently has been quiet compared to earlier in the year. We remain optimistic as the economy remains strong, healthy, and job growth is fueling a resurgence, especially in Silicon Beach.
Mortgage rates highest since July
Mortgage rates reached their highest averages since July this week (10/30). Ten-year Treasury yield surged this week, jumping 12 basis points says Freddie Mac’s chief economist, Sean Becketti. The 30-year mortgage rate followed suit, increasing 6 basis points to 3.94%, the highest rate in three months.
15-year fixed mortgage rates average 3.25% with an average 0.5 point. A year ago, it was 2.78%. These rates are still attractive, and I recommend that if you’re looking to move, buy or sell, it’s a good time.
Good news on the high end…
Affordability is a “relative term” in the real estate industry. If you’re traveling in the $5 million-and-up circle, then the news on the Westside of Los Angeles is rosy for sure. In our September report, we found that there have been 461 sales of $5 million-plus homes so far this year, versus 415 homes at this time a year ago, a 11% increase. There have been 147 sales of $10 million-plus homes this year, versus 120 last year, and in sales of $20 million-plus homes, there have been43 homes versus 25 in 2016. Of these 43 homes, 20 were over $30 million, versus 33 of $20 million plus all of 2016.
That’s a big jump across the board. Significantly, Americans are outpacing all other nationalities — of the 43 $20 million-plus buyers, 32 were Americans, 3 Chinese, 2 English, 1 Indonesian, 1 Scottish, 1 Canadian.
The areas of the sales include: 11 in Malibu, 9 in Beverly Hills, 6 in Bel-Air, 6 in Beverly Hills Post Office, 3 in Sunset Strip, 3 in Holmby Hills, 2 in Santa Monica, and 1 each in Los Feliz, Westwood and Palisades. Eighteen of these properties were not officially listed.
Metro’s Purple Line Info & Other Street Stuff
It’s going to be a long slough. At the Westwood Hills Community Home Owners Association meeting last week, Eric Geier, the Community Relations Representative for the Purple Line Extension outlined the projected timetable for the construction of the Purple Line which will run under Wilshire Boulevard. His presentation dealt with the relocation of the utility lines portion of the project, and was quite detailed and lengthy. I strongly suggest you contacting them at 213 922-6934, or firstname.lastname@example.org for specific and up to date information. Ultimately, the Purple line will have seven destinations such as the Miracle Mile, Beverly Hills, Century City, and Westwood, covering nine miles.
Based on current construction estimates, the work to relocate the utility lines will begin on January 2. They will be using Lot 36, at the corner of Wilshire & Veteran for their staging area. Work will be done “a block at time” (or thereabouts) and will be done at night and on weekends. In those periods, Wilshire Blvd. will be reduced from eight lanes to two lanes.
Most of you have also been impacted by the work being done on Sepulveda also in stages. They are replacing very old gas lines, which unfortunately they did not address when they were working on the 405 project. They too are doing this block to block which makes it annoying. The reason they are working in this manner is that they are using a robotic camera which is running the entire length of the area they want to work on, they then study the pictures, and decide which area is the worse, get bids on that portion of the street, complete that work, and then start the process again. I hope we all have a ton of patience and good music in our cars as we sloth through this process. It is going to take a while!
Would you let Amazon into your home?
Amazon is launching a service next month called Amazon Key that would allow delivery people to walk into your home and drop off a box when you’re not there. Those who want to use the service would need to be an Amazon Prime member and would have to buy a camera and a Wi-Fi-connected lock from the Seattle-based company that starts at $250. Shoppers will then be able to select in-home delivery on the Amazon app.
When the delivery person shows up, he or she will knock first and scan the package, then Amazon will make sure the delivery person is at the right home and unlock the door. No codes are needed and the indoor camera will record the in-home delivery.
The company said its in-home delivery service is covered by the Amazon Key Happiness Guarantee, which covers delivery issues, property damage or theft. Amazon said the deliveries are carried out by drivers who are vetted with background checks and driving record reviews. I don’t know about you, but it sounds somewhat risky to me!
Sliding into the Holiday Season
We saw some pretty interesting costumes for Halloween yesterday. Now that is behind us, the catalogues have been filling my mail box and the holiday gift season is upon us. Historically some people feel it is the time to slow down in their buying and selling of real estate. Those stories are” old tapes”. I have found that the real buyers are out there, and with sellers decorating their homes for the holiday, love the warm, friendly, family feelings these homes evoke. Even though the market has slowed down somewhat, the buyers are definitely still there. My sales manager is retiring this month, and has put her wonderful home in Brentwood on the market, as she and her husband are going to be traveling the world for a bit. In 4 days they had 8 offers on the house. I do not know how much over asking it will go, but believe it will be substantial. The house is on a GREAT lot, but needs updating with an old, but charming kitchen and bathrooms, and every buyer was an owner/user.
We reduced the price of my listings. 12357, The Ridge in Mountaingate is now $2,130,000 and has been done to the 9’s!!!. My sellers have purchased their new home and want to sell this one, please do come and see it http://www.12357ridge.com.
Also my listing at 11737 Ipswich Court in Bel Air Crest has also been reduced to $2,225,000 and again has been updated as well.
Both homes are available to see by appointment and are open on Sundays.
Please do not hesitate to allow me to assist you with all of your real estate needs. Remember the majority of my business is based on referrals and repeat clients’