Timely Real Estate News………………………………15 April 2016
Numbers can be deceiving and numbing, too. When I scan the sales volume and median sales prices for the first quarter in the communities I report on, I might get a bit down because sales were down by almost 5% for the first three months of 2016. But, wait! Sales were actually up in four of the five communities — Beverly Hills was up $23 million over the first quarter in 2015…Beverly Hills Post Office was up $19 million, Westwood/Century City was up $29 million and Brentwood was up $14 million. So, what gives? Bel-Air was up $88 million — but down $112 million from the previous first quarter in 2015 of $200 million. But a huge sale of $46,260,000 in Bel-Air that occurred in March 2015 skewed the comparison for this year. Otherwise, Bel-Air would have been ahead also.
Large estate sales in Bel-Air during the first three months of both 2014 and 2015 brought the comparison volumes for this year down, of course, but there were other dips, too, in median sales prices. Beverly Hills was off 8% for year-to-date median sales prices through March 31, Bel Air was down 24%, Westwood/Century City was down 4% and Brentwood was down 7%….only Beverly Hills Post Office was positive at 45% median sales price increase over last year’s first quarter. “What we’re seeing is adjustments in how the first quarter’s economy affected everything in the U.S. housing market,” Carole Schiffer stated. “We can’t look at any one segment of the market, like sales volume, and come to a conclusion. We’re still in the early part of 2016, and the Spring Selling season is starting strong, at least from my view.”
One of the hot areas on the Westside is Culver City. The median sales price for a home in Culver City for March was $1.107 million, up from $970,000 a year ago. Median sales prices for the first quarter came in at $1.047 million, up from $950,000 a year ago. Sales are low in Culver City — with $36 million in 2015 but down to $32 million through three months of 2016. The school district is one of the reasons for the increase in value of real estate in this lovely community. The arts and restaurant district are clear demonstrations of the changes that have taken place in this community over the last few years!
What will be important to watch for as far as tracking prices on the Westside, which has always been one of the leaders in the U.S. on pushing home prices upward, will be to see how the median sales prices hold up through April. Comparing median sales prices for March 2016 vs. March 2015, Beverly Hills was down 19%, BHPO was up 65%, as they have bene up all of 2016….Bel-Air was down 38%, Westwood/Century City was down 24% and Brentwood was down 12%.
But let’s be clear: These are median prices, not specific prices that may be in your neighborhood. The MLS, which provides this data, does a good job in tracking home sales, but none of the private sales are included. I cover all of these private sales in my Quarterly Update which you received on April 1. If you haven’t received it — check out my website: www.caroleschiffer.com….Quarterly Update. You will find the complete archive of all of our SchifferLine editions as well as the quarterly updates for each community I cover.
We can’t keep up….new construction can’t meet rental demand
If you have kids or grand kids and they’re complaining about a lack of affordable housing, believe them. It’s happening all over Los Angeles and Orange Counties. If this is one their reasons for wanting to move back home, they may not be kidding.
According to the USC Casden Multifamily forecast which was released last week, sky-high apartment rents in Southern California are expected to climb further in coming years; as construction fails to keep up with population and job growth. The average rent in Los Angeles County is expected to hit $1,416 a month in 2018, an 8.3% jump from last year, while in Orange County, average rents are likely to rise 9.4% to an average of $1,736.
According to the forecast, completed by Beacon Economics and USC’s Lusk Center for Real Estate, the projections come even as developers are building. Permits for more than 38,000 multifamily units were pulled last year across Los Angeles, Orange, San Bernardino, Riverside and San Diego counties — the most since before the recession, But much of the new supply is on the pricey end, and economists say much more construction is needed because California has consistently built too few units relative to population growth.
Last year, a report released by the California Housing Partnership Corp. said Los Angeles County needed more than 500,000 additional below-market rental homes if low-income residents were not to live beyond their means or in overcrowded apartments.
L.A. County rents rose nearly 5% to $1,307 last year from 2014, a pace that will slow to 3.1% this year, 2.4% in 2017 and 2.5% in 2018, according to the forecast. A similar slowdown is expected in other Southern California markets.
“We have been reporting the trend of kids moving back home for some time,” Carole Schiffer said, “and based on our current situation with high demand and low supply in affordable housing, that’s not going change much in the future.” So, mom and dad, what to do?
Urban Land Institute issues forecast. Highlights
The Urban Land Institute released its ninth semi-annual Real Estate Consensus Forecast last week, a compilation of data based on a survey of 48 analysts and economists from 36 real estate organizations. The resulting three-year projections (2016 through 2018) in the areas of GDP growth, vacancy rates, housing starts and prices are compared to past years’ numbers up to 2004 as well as a 20-year baseline average. The reported numbers are the median of the collected forecasts.
Although much of the forecast emphasized commercial space, here the focus will be on what was said about residential real estate and broad economic indicators. Economic state and predictions….Overall, the economy is expected to continue expanding, but analysts are projecting a slower growth pace than we’ve experienced over the past two years. The real GDP growth has hovered at or below the 20-year average since 2010 when it climbed out of the negative.
The economy is expected to grow but at a slower rate, continuously falling below the long-term average, GDP growth is predicted to decline slightly from 2015 to 2016 and marginally fluctuate into 2018. Employment growth, which also bottomed out in 2009 with 5 million jobs lost, is expected to remain above the 20-year average but decline between 2015 and 2016 by about 11 percent to 2.5 million jobs gained. That number is expected to continue downward, with a predicted 1.5 million jobs gained in 2018 (the lowest annual growth in eight years).
In real estate, with the exception of single-family housing starts and other factors more specific to commercial real estate, most indicators specific to residential are predicted to be better than their 20-year averages in 2016. And home prices are expected to decline slightly during the next two years for existing-homes.
Keep your home in top shape with eight simple tasks that you can do yourself:
1. Test your smoke detectors and carbon monoxide alarms. Change batteries every 6 months when we
change our clocks.
2. Drain approximately 2 gallons from your water heater to eliminate sediment.
3. Clean your clothes dryer vent duct (the lint trap should be cleaned out after every load.. Often
overlooked…but a big cause of fires
4. Vacuum your bathroom vent covers.
5. Replace or clean your furnace filter. This is an easy job.
6. Clean your refrigerator’s condenser coils to keep it operating efficiently.
8. Clean around your air conditioning compressors and make sure that it gets sufficient air flow. t
Fed faces challenges…
The Fed is facing a challenging balancing act right now. The U.S. economy continues to grow, which theoretically means that we will be facing increasing inflationary pressures. However, the rest of the globe continues to struggle. Central banks continue to attempt to boost their economies, while our Fed works to keep our economic growth on track. Last week saw money flowing into Treasuries which reinforced perceptions of fewer rate increases this year. This led to lower mortgage rates mid-week, with rates then trending slowly back upward.
What’s coming up????
I am furiously looking for sellers of Canyon homes in Bel Air Crest! Like most agents (I know I get those post cards too), I have a number of buyers anxious to move into the community, so if you are considering selling, please contact me… firstname.lastname@example.org or 310 442-1384. Also come the end of the month, I have a fabulous home in Mountaingate coming on the market. It is 4/4.5 in great condition with views of both golf courses at the Country Club as well as great city views. We will be asking $2,545,000…. So if you know anyone that would like to see it, again, please give me a call. We cannot get into it until the end of the month.