The SchifferLine
Timely Real Estate News………………………………1 September 2020
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Southern California home sales and prices jump
You wouldn’t know we were in a pandemic if you only saw how the real estate sales and prices have markedly improved. In July, households brushed off economic uncertainty and rushed to take advantage of rock-bottom mortgage rates.
Across the six-county Southern California region, sales of new and previously owned houses, townhouses and condos rose 27.7% from June and managed an increase of 2.5% from the prepandemic days of July 2019, according to data released last week by DQNews.
The Southland’s median sales price — the point at which half the homes sold for more and half for less — climbed by the most since 2018, rising 8.5% from a year earlier to a new record of $585,000.
The July numbers are the latest evidence of a housing market rebound from spring, when stay-athome orders and fear over the coronavirus froze buying.
This past week, the National Assn. of Home Builders reported that its monthly gauge of homebuilder confidence tied a record high, while the Census Bureau released data showing buildersn are increasingly breaking ground on new homes.
This is the kind of news that continues to drive a new sense of optimism in our real estate market. I have always had confidence that we will endure the downsides of the market and whatever hits us, including this pandemic. The next story really makes a strong case for being optimistic!!!
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Some Great News…. High-end sales rebound
Across the board, high-end sales on Los Angeles’s Westside have rebounded with sales for homes selling above $5 million, are 7% ahead of last year at this time. There have been 373 closed sales of $5 million-plus this year, versus 349 at this time last year, (up 7%).
Of these, 123 were $10 million-plus, and there were 95 at this time last year, (up 29%).
Thirty-three (33) were $20 million-plus this year and there were 25 closed sales of $20 millionplus at this time last year, (up 36%). Twelve (12) of these sales were $30 million-plus this year, and there were 11 $30 million-plus sales at this time last year. Six (6) were $40 million-plus this year and there were 5 $40 million-plus sales at this time last year.
There are 101 pending sales of $5 million-plus as of now, with 20 of these at $10 million-plus and 5 are $20 million-plus. Of the 33 sales of $20 million or more this year, the buyers are still mostly American: 28 Americans, 2 Taiwanese, 2 English and 1 Chinese. The areas of the 33 $20 million-plus sales are: 10 in Beverly Hills, 5 in Bel Air, 4 each in Malibu and Brentwood, 3 each in Sunset Strip and BHPO and 2 each in Holmby Hills and Palisades.
This really is great news for our market as we have been experiencing a definitive decline in high-end sales for over the past 18 months…but despite the pandemic, we are thrilled to see this great rebound.
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Federal Reserve approves major shift in interest rates
The Federal Reserve approved a major shift in how it sets interest rates by dropping its longstanding practice of pre-emptively lifting them to head off higher inflation, a move likely to leave U.S. borrowing costs very low for a long time. This is good news for borrowers.
It will not lead to a significant change in how the Fed is currently conducting policy because it had already incorporated the changes it formally codified last Thursday.
But the shift marked a milestone. Had the strategy been adopted five years ago, the Fed would have likely delayed rate increases that began in late 2015, following seven years of short-term rates pinned near zero. It amounted to the most ambitious revamp of the central bank’s policysetting framework since the Fed first approved a formal 2% inflation goal in 2012.
By signaling it wanted inflation to rise modestly above its 2% target, the Fed revealed how the global central-bank principle of inflation targeting, widely adopted over the last quarter century, might have outlived its usefulness in a world of lower interest rates.
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Controversial new fee on mortgage re-fi’s is delayed. A reprieve has been granted for extra fees on mortgage re-finances. Fannie Mae’s and Freddie Mac’s regulator is delaying for three months a controversial new fee on most mortgage refinances that could raise costs for borrowers. The 0.5% charge will take effect December 1, not September 1 as initially planned.
The agency also said loans with balances of less than $125,000 will be exempt from the fee, meaning it will not affect many people with lower incomes.
Lawmakers and industry groups have criticized the fee, arguing that it is inappropriate to make refinancing loans more expensive during the COVID-19 pandemic. The added charge could also hurt people who are eager to take advantage of historically low borrowing rates.
In its statement, the Federal Housing Finance Agency defended the fee, saying it’s necessary to cover pandemic-related losses for Fannie and Freddie that are projected to reach at least $6 billion.
The companies, which have been under the government’s control since the 2008 financial crisis, have pursued several costly actions during the economic slowdown to keep renters and homeowners in their residences, the agency said.
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More news from Freddie and Fannie
Fannie and Freddie are extending their suspension of mortgage foreclosures through at least the end of the year. They are also extending their moratorium on evictions on so-called real estate owned properties also until at least the end of the year instead at the end of August. Combined, these companies backstop approximately $5 trillion in loans.
FHFA Director Mark Calabria whose agency regulates Fannie and Freddie said the extensions will protect more than 28 million borrowers with a loan guaranteed by the companies. Congress has also protected homeowners from foreclosures who have been affected by the pandemic by allowing them to delay their monthly payments for more than a year without going into default. That provision was part of the $2trillion stimulus bill that was approved in March. The eviction moratoriums apply only to tenants living in houses that have not been foreclosed on.
This will add $1.1 billion to the $1.7 billion in expenses that Freddie and Fannie have already absorbed. Fannie and Freddie buy mortgages issued by lenders and package them into securities that are then sold to investors. Bondholders are guaranteed payment even if borrowers default.
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Listing price growth puts sellers in the driver’s seat
Listing prices are experiencing the fastest growth since January 2018, realtor.com reports. The median listing price in the U.S. is 10.1% higher than a year ago, buoyed by low inventory and strong buyer demand, according to realtor.com’s latest Weekly Recovery Report, covering the week ending August 15.
“With supply and demand moving in opposite directions, sellers are clearly gaining the upper hand in the market as buyer competition builds up and prices gain momentum going into the fall,” says Javier Vivas, director of economic research for realtor.com. “Buyers hoping to close on a home this year should expect some hot competition, especially if they are looking at more affordable or entry-level housing.” Buyers who want to get ahead of the competition should consider getting preapproved for a mortgage so they’ll be ready to make offers quickly, Vivas adds.
More new listings are gradually coming to the market, which will open up more choices to buyers. “The lack of options of homes for sale has been a key factor limiting buyers in the market, so continued recovery in new listings is key for home sales and overall market health in the coming months,” realtor.com® reports. Homes are spending less time on the market, selling four days faster than last year.
A caveat to this information is that buyers are very knowledgeable and sophisticated today, and while they understand the need to move quickly, homes that are not priced properly within the perimeters of the current market, and are not positioned well will continue to sit unsold,, thus sellers must remain realistic in their pricing of their homes. Also, it is imperative that buyers getmpre-approved before they start searching for their new home. My favorite lender has a wonderful program where they can pre-approve a buyer through the underwriting process (this is generally he part that takes the longest in the loan approval process), so that the buyer can compete with an all cash offer. For more information, and to begin this approval process, please contact me at ceschiffer@gmail.com
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Mortgage applications down but home purchases still a bright spot
According to a new survey by the Mortgage Bankers Association, purchase applications are up 33% compared to a year ago — the 14th straight week of annual gains. Mortgage applications fell 6.5% from the previous week in the 
week ending August 21, but continued to rise compared to a year ago, according to a weekly survey from the MBA.
MBA’s Market Composite Index, which measures mortgage loan application volume, decreased 6.5% on a seasonally adjusted basis from one week earlier and dropped 7% on an unadjusted basis, MBA said in a press release.
Refinances accounted for 62.6% of total application activity, down slightly from 64.6% the week before. The trade group’s Refinance Index declined 10% from the previous week but increased by 34% compared to the same week one year ago.
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What has the pandemic brought? New priorities at home
If you look at Home Depot’s or Lowe’s market price lately, both are zooming upward, experiencing strong gains as more homeowners are in the DIY mode.
Among all the shifts that have happened this year, is the fact that businesses rely on a distributed workforce which has become an accepted fact; as a result, we know homeowners spend the majority of their time in their houses and condos. This has proven especially true in the luxury real estate market, where buyers are often remote-working professionals with the means to afford a property that supports this new lifestyle.
Here’s a snapshot of what is happening with many who have now ‘enjoyed’ over six months in our shut-down…. #1 Space is trending upward — buyers are looking for more space, more flexibility in floor plans so they can expand for office, gyms, entertainment. #2 Outdoor dining is priority — built-in outdoor kitchens and amenities are a big plus, and having a place for these new areas also is important. #3 Amenities for all age groups — some buyers are looking for tennis courts, and swimming pools…. boat owners want to live near Marinas. #4 Reworking the workplace —Moving permanently to your home office? It’s a big trend, and homeowners are reconfiguring their workspace to reflect their day-to-day office needs! #5 — Remodeling outside — landscape projects long forgotten are now coming back to life. Guilt takes over and homeowners are now getting creative with their outdoor spaces. #6 Prioritizing practical luxury — vacation homes are turning into four-season homes. Homeowners want the luxury they had with other homes found in the deserts, beach or ski resorts. They are leaving the city for luxury resort living — all year long. These are all the latest trends…and I am seeing this every day with my clients — looking to improve their surroundings and ‘mindset’.
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The Second Emergency we are facing
The fires raging across our beautiful state are heartbreaking to watch. I am sure we all know people who have lost their homes to this tragedy. Being a wine lover myself, I cannot think of the damage that has been done to the wine 
industry, in the Napa/Sonoma area and how this will impact all of us for years to come. Also, with the heat we have been experiencing, we need to reduce our water consumption as well as energy. I know it is not easy, but remember it takes a village!
How many times, have we witnessed careless, thoughtless drivers toss their cigarettes out their car windows? We all need to be vigilant about being careful and observing the No Smoking signs all over. I must also remind you about doing everything you can to protect your property from fires, including maintaining the brush clearance, clearing away any combustible materials away from your property, and possibly install the fire prevention vents on your house (again, please contact me for more information on this potentially valuable resource for our homes).
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What is my news?
After a struggle with a lender who could not seem to get their act together (asked for the same condo information 5 times!!!), which is another reason for you to use my lender, Simon Atik at Guaranteed Rate Affinity, we finally closed the escrow on 12541 Promontory Road in Mountaingate. Please meet and great your new neighbors!
It seems these days I am working with more buyers than sellers, and have a number that in some cases are basically looking at the same thing. Hopefully we will settle on what they want soon and get them into escrow also. In the interim, we are looking for homes from Malibu to Century City and all points in between. I love it, it is sooooooo much fun to see all of these houses!
As always, I am here to assist you with any and all of your real estate needs, answer questions, or just catch up with one another in these trying times. Please reach out and let’s talk.Carole – ceschiffer @gmail.com or Carole@caroleschiffer.com
Please stay safe, wear your mask and remember that social distancing
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