Timely Real Estate News…………………….15 August 2018
Sales improve but prices mixed thru 2018
The good news for July is that nationally and regionally sales improved from being down 10% in June to only 5% down in July 2018. That may not seem to set the world on fire, but we’ve been languishing behind our sales performance for 2018 compared to a year ago. Why is that? It’s because we have a continued lack of quality inventory that has historically been in high demand. Demand is still here.
For the January-July period, median sales prices are up in the three of the five communities I cover each month — Bel-Air/Holmby Hills was up 11% through the first half of this year, Westwood/Century City was up 12%, and Brentwood was up 4% through July. Beverly Hills, our leader in pricing and sales, was down 7% and Beverly Hills Post Office was down 9%. This isn’t the end of their worlds for sure, but every month it’s been our history to have some areas up, some down. One of the key communities that I also cover is Malibu, where the median sales price was down only 1% through July 31. Again, as always, these stats are from the Multiple Listing Service only… Private sales are not included. Also, one large sale in an area will always skew the numbers. A measure that more buyers are using today than they have in the past is cost per square foot (in the past that generally was used more by appraisers, but now I am hearing it from a good number of buyers as well). In a report I received from my title company dated the 6th of August of this year, they broke down the cost per square foot in most of the areas I report on monthly. This report with the exception of portions of Bel Air which includes Moraga, Moraga Estates and Lower Casiano (average sales price per square foot was $657.00) and Brentwood East of Brentwood Circle ($1,416 average sales price) reflected more than one sale whereas the others were for just one sale in the month of June, Bel Air Crest – $633.00, and Mountaingate – $548.00. Please remember this report reflects just one months’ sales and not the entire year, and again is all sales not just those that went through the MLS.
Volume up to $2.093 billion
Sales volume for July 2018 was $2.093 billion versus $2.214 billion for the same period in 2017. In looking at the sales for each community, the biggest loser was Beverly Hills, down more than $135 million in sales volume through July compared to first six months of 2017. BHPO was down $50 million, Bel-Air/Holmby Hills was essentially even with the year before through July. And Westwood/Century City was down $10 million vs. 2017. Brentwood’s sales volume through July was up $8.6 million. Malibu sales volume was off $82 million compared to a year ago at this time.
July was actually a good month for median sales prices when comparing 2018 to July 2017. For example, Beverly Hills’s median sales price for last month was up 25% to $6.024 million over July 2017. Beverly Hills Post Office was 8% at $2.425 million. Westwood/Century City was up 18% at $2.005 million, and Brentwood was up 21% at $2.780 million. Bel-Air/Holmby Hills was down 7% to $1.750 million and Malibu was down 26% from last July to $2.280 million.
What we are seeing in total sales volume is a gradual claw-back to levels of last year. We have the buyers — they’re here. The challenge is finding properties that meet their tastes, and 10 years ago, in our ‘boom years’, we had a lot of inventory as people were moving up or out. Not so much today, because while I am seeing strong showings at open houses, we’re not getting the number of homes to meet buyer demand. Affordability is generally not the problem on the Westside. Could that change as interest rates increase? Most likely. The equation is also changing in that inventory is increasing, slightly but increasing none the less. Also, as a general rule with the LA Schools starting this week, families took the month of August to take their vacations, etc. and the oppressive heat we experienced for the last month did not help in the sales volume dept. On the other side of the coin, we experienced about 2 times the number of multiple offers in my office in the last few weeks.
Rental amounts remain steady in Los Angeles
When everything is going up these days in real estate, we got a surprise: Rents are essentially remaining steady in Los Angeles. The median price of a one-bedroom apartment in Los Angeles was $1,360 in July.
That’s right where prices stood a month ago—and a month before that. Two-bedroom prices have also remained at $1,750. Over the past year, rents have risen just 1.3%, slightly above the national average (1.2%), but under the average gain of 1.8% across all of California. And after facing years of escalating prices, LA renters are getting something of a reprieve in 2018, as prices have more or less flatlined.
That doesn’t mean rents here are affordable. Nationwide, the median price for a two-bedroom apartment is $1,180, nearly 33% below the LA price. But it must be pointed out, that these rent stats are based on U.S Census data and do not necessarily reflect what’s happening in your neighborhood. In upscale areas, a two bedroom will go for $2,500 or more and one bedrooms are renting for $1,750. Also, please remember these numbers reflect apartment lease amounts, not condos which always tend to be more expensive.
According to USC Lusk Center, rent growth in LA may have slowed in response to new housing construction and the ability of some renters to buy rather than continue leasing property.
Mortgage applications volume fell 17% in last year
One of the key statistics we watch to determine the strength of the real estate market is ‘mortgage applications’ — predicting future completed sales that must start with an application to finance the purchase.
Total mortgage application volume fell 17% from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted report. And the applications fell 3% just in the past week.
The market has been especially tough on new homebuyers, with data showing a downward trend in purchase volume. Applications to purchase a home fell 2% for the week, and were also down 2% from a year ago. Soaring prices are sapping mortgage demand. In June, home prices rose 6.8% from a year ago, according to a report from CoreLogic.
“Despite recent data indicating a strong U.S. economy and job market, including signs of wage growth, overall mortgage applications fell for the third straight week as housing continues to be hampered by the lack of homes for sale and crimped affordability,” said Joel Kan, vice president of economic and industry forecasting for the Mortgage Bankers Association. The projection is for at least 1 more interest rate increase this year, perhaps as soon as next month.
Inflation, tariffs, slow wage growth affect CA economy
Yes, we’re the world’s fifth largest economy, only making us more vulnerable to the vagaries to global economic trends and challenges. With inflation on the rise, slow growth in wages, and looming tariffs, consumers are going to be facing some challenges in the future as we start feeling the effects of higher fuel prices, raw materials and a possible range of tariffs across many industries.
The consumer price index, the government’s primary measure of inflation, rose 2.9% in June from a year earlier, the fastest increase in six years. Starbucks said in June that it had raised the price of a regular drip coffee, and McDonald’ssaid it raised prices when it reported its latest sales figures.
The Federal Reserve, which tries to keep inflation at or slightly above2%, has been raising interest rates to make sure that price pressures don’t get out of hand. Though President Donald Trump has criticized the central bank for raising rates, economists expect increases again in September and perhaps December.
However, U.S. wholesale prices went unchanged in July after two months of large increases, a sign that inflation pressures may have softened. This could affect Fed increases. Procter & Gamble, one of the biggest makers of consumer products, had said last week that Pampers prices will increase by an average of 4% in North America, while the Bounty, Charmin and Puffs brands could show increases. Gas prices have already surged more than 24% in the past year.
What to look for in an agent when buying or selling your home
After more than 30 years of high-level real estate sales in West Los Angeles, I’m asked by friends and associates — what are the key attributes you believe a real estate agent should have? I am passing on these ‘pieces of advice’ as I would to anyone looking to pick a top agent to guide them through the purchase or sale of one of the most important decisions in their lives.
Here are 10, easy-to-remember guideposts in selecting your real estate agent.
1) The agent most be responsive — 24/7. All the time
2) Has experience in your price range. Don’t pick someone who is over their head from the start;
3) Must be pro-active. In this competitive market, you need an assertive, and pleasingly aggressive agent to assure you get in the transaction.
4) Avoid a family friend or relative. This can be a disaster and toxic as these relationships can put a strain on negotiations and deal-making as well as the relationship itself.
5) Must have a flexible schedule. In these times when the market is sometimes crazy, you have to have someone who can adjust their world to meet yours.
6) Have market and industry knowledge — this is key. They must be an expert in finding properties and helping clients through the entire buying & selling process.
7) Know the community. It’s not enough to just know about the real estate — you need someone who truly understands the community and what it offers in shopping, schools, dining, and culture.
8) Rely on an agent who respects your financial limitations and condition. Have an agent who will protect you at all times in all situations. Don’t overpay or under sell.
9) Agent must have a sophisticated web presence, know social media and have solid testimonials online. Your agent should also have a good relationship within the brokerage community. They will be working hand and hand with their fellow agents.
10) They know your needs and desires and know how to meet them. Chemistry is important. Trusting your agent is imperative.
If you haven’t already done so, check me out. I know I provide this high level of service and requirements. At your service.
Sitting on a bunch of equity? You’re not alone.
Americans, and Californians in particular, are sitting a pot full of equity. Strong home price appreciation has handed Americans more than $5.8 trillion of equity they could be tapping into and at this point, more than double the level in 2011, according to data provider Black Knight Inc. At least part of that reluctance stems from rising interest rates, which means debt with adjustable rates will keep growing more expensive. It also stems from the history that a number of longer term home owners remember how many people used their homes as ATM machines and ended up “under water or upside down” when the value of their homes went down and they owed more on their homes than it was worth, thus the short sales we experienced for a number of years.
Last decade’s mortgage crisis in 2007-09 has probably made consumers hesitant. Home prices fell 35% after the bubble burst, and as much as 75% in California, leaving many borrowers owing more than their houses were worth. People who tapped their equity to pay off their credit cards ended up struggling to meet their obligations.
The banking industry is now encouraging homeowners to take a little more risk.
Banks are finding success with their new marketing initiatives. They have the money, and they are eager to put their bank’s money to work…doesn’t earn them anything sitting on their books. And they are much more confident about the real estate market than 11 years ago when the whole industry collapsed because of horrendously bad loaning
Selling real estate is not only financially rewarding, but is emotionally rewarding as well. As I have mentioned before, it is wonderful to meet and get to know new people all the time, getting involved in their worlds for however long the buying and/or selling relationship lasts, only to last way beyond that time. I have become friends with so many of my clients through the years. There is not an occasion when I meet someone when I am not asked “how is the business, what is happening in the market”. Seems everyone wants to know what is happening.
My listing at 12547 Promontory in Mountaingate has been reduced to $2,390,000 which has induced increased interest in the house. If you know someone, even yourself who may be interested in this lovely 5/4.5-bedroom home with golf course views, good sized yard and very close to the community pool, please let me know. Don’t forget my listing of the great home in the Tarzana hills.
I also have a listing of a 3/2.5, plus den with spa coming up in Bel Air Crest. We are doing some work on the house and will be launching it for sale in a few weeks. A few leases in Bel Air Crest are coming up soon as well.
Of note.. my new email address is firstname.lastname@example.org… Please change your data base. Speaking of which, I am in the process of cleaning mine up and as soon as it is done in the next week, you will be able to connect with me through my app… Carole Schiffer. You will be receiving a notice when it is up and running.
I invite you to visit my web site comwww.caroleschiffer.com, my Facebook page http://www.facebook.com/CaroleSchifferRealtor, my LinkedIn page http://www.linkedin.com/in/caroleschiffer and @caroleschifferrealtor on Instagram
In the meantime, please let me know how I can serve your real estate needs and stay cool as we ride out the rest of this hot summer.
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