Timely Real Estate News………….15 December 2015
Happy Holidays! I hope you have enjoyed Hanukkah and/or looking forward to the Christmas/Kwanza holidays, too. This is a time for ‘new resolve’ — Send me your most dedicated “New Year’s Resolution” (or “Most Outrageous”) and we’ll reveal your choices on my new website at www.caroleschiffer.com
Sales flat lined but median sales prices jump….
November 2015 statistics from the MLS clearly show two trends — sales activity has leveled off as we near the end of the year and median sales prices have taken a ‘jump’ in four out of the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood/Century City, and Brentwood. Total sales volume for 2015 through the end of November was $2.925 billion vs. $2.878 billion through same period in 2014. That is just under a 2% increase.
Median sales prices continued strong throughout the Westside. Beverly Hills median sales prices were 15% ahead of 2014 MSP for the 11 months ending November 30. BHPO was up 1%, and Bel-Air was up 8%. Brentwood was also up — 3% ending in November but Westwood/Century was down 3% for the year. It is interesting that Beverly Hills had an over-the-top November 2014 with an average of $6.2 million but settled back to earth this year with an MSP of $4.7 million for this year’s November, down 24% compared to a year ago — but that’s an anomaly. BHPO was up 13% from over a year ago for November, while Bel-Air was up a whopping 54%, Westwood/Century City was up 8% and Brentwood was up 26% from a year ago. As you can see, prices are not only remaining firm as we near the end of the year, they’re moving substantially ahead of where they were 12 months ago.
And when you look at the trending on median sales prices between October and November of this year, we are seeing large increases in Beverly Hills over the previous month — 52%; and in Bel-Air, which had a 116% increase between October and November as well. Only Westwood/Century City declined over this two month period by 3%.
Venice continues its strong showing
Once the sleepy, off-the-radar market, Venice Beach is moving into the ‘major leagues’. With Silicon Beach exploding (the area from Santa Monica south to Playa Vista and Culver City), Venice is well positioned to take advantage of a previously neglected residential market by flexing its muscles. Sales to date from January to end of November was $408 million, 2% over its previous year sales totals of $400 million. Median sales prices have escalated by 13% to $1.575 million, and it remains a strong contender for first-time buyers and entrepreneurs being recruited for the trendy hi-tech jobs in Silicon Beach.
Days on market, final sales price reflect market strength
One of the key indicators in our real estate market is the time houses ‘sit’ waiting to be sold. The average “days on market” for listings in Beverly Hills is 65, BHPO 110, Bel-Air 55, Westwood/Century City 41, and Brentwood 53 days. Venice is averaging 83 days on market. Going back several years, these numbers of “days on market” were in the 100s — houses would sit and sit on the market because sellers could not accept the dramatic drop in equity and prices….”not our home.” As the market turned around however, prices rose — not to pre-2007 levels except in some areas — but they continue their upward climb.
Another important earmark is the final selling price…and that’s an interesting facet of pricing strategies. Some real estate agents will accept a listing even knowing the price isn’t realistic, and as a consequence, it will sit and sit and sit, in the industry, that is referred to as “buying the listing’ something I do not do. However there have been times when I have not gotten the listing because another agent came up behind me and gave the sellers a “better” price, and they have been right, and I have been wrong. As this is not an exact science it is almost impossible to really know what a “willing seller and a willing buyer will accept for a property”. “I’ll never deceive a seller into thinking they can ‘outwit’ the buyers who are very sophisticated today. They are very shrewd about measuring value vs. price,” Carole Schiffer said.
For example, Beverly Hills selling price (SP) vs. listing price (LP) was 97.2%, but when you measure their selling price (SP) vs. original listing price (OLP), it was a bit higher at 97.5% — which indicates the original pricing strategy was ‘spot on’….very little changed. Westwood/Century City’s SP/LP is 100% vs. 96% for SP/OLP; Brentwood’s is SP/LP is 98.4% vs. 97.4% SP/OLP. BHPO is 96.5% for SP/LP and 94.1% of the SP/OLP.
Venice SP/LP is 100% vs. 96% for SP/OLP, which simply means, the original pricing was 4% higher than what the owner received.
Overall — it is not a great year, but it’s solid
Obviously, lower inventories are playing their “supply/demand” card, as sales volumes have decreased compared to other previous years when year-end sales were still holding a 5% to 9% increases over the previous years. “Still, looking at our robust Westside market,” Carole Schiffer stated, “we are doing much better than other parts of the country in terms of median sales prices, where increases were in the 4% to 5% range. We have dramatically seen lower “days on market” and we’re holding our own in setting the price.”
Market volatility is a given this week — Fed may rise to the occasion
Even with some late-week volatility in stock markets, mortgage rates mostly held steady last week. The most important economic data point of last week — Retail Sales — managed a 0.2% increase. As was expected, most of the focus from traders, pundits, and analysts has remained on the Fed’s meeting next week. It’s been nearly ten years since the Fed has moved its Fed Fund Rate from 0.25%.
The overwhelming majority of experts believe that come Wednesday, December 16, the Federal Reserve’s “liftoff” will begin. While taking this step is very significant, in terms of market psychology, it is likely to have limited impact on mortgage rates. In the weeks before each of the recent Fed meetings, mortgage rates have climbed upward in anticipation of this increase.
After each meeting, rates drifted back downward as the Fed has stood pat. Once again, rates are positioned for this increase. If the Fed stuns the market, and fails to act, then rates are likely to begin another slow drift downward. However, if the Fed
does move, then we may see a new floor set for mortgage rates for some time.
Homeowners can reap benefits from remodeling — whether they are selling or not
Whether or not you’re thinking about selling your home, remodeling has major benefits according to the National Association of Realtors (NAR). Homeowners preparing to sell often make improvements, both big and small, to their homes that can help yield positive results and garner top dollar from buyers. Also, remodeling projects can also bring major benefits to homeowners who choose to remain in their homes.
According to NAR’s 2015 Home Remodeling Report, which uncovers the reasons homeowners choose a remodel and the increased happiness certain projects bring once completed, 64 percent have experienced increased enjoyment in their home after completing a remodeling project. Additionally, 75 percent of respondents said they felt a major sense of accomplishment when thinking of their completed project. Fifty-four percent of respondents felt happy about the changes to their home, and 40 percent felt satisfied. As for their reasons to complete a remodeling project, 38 percent of homeowners said they wanted to upgrade worn-out surfaces, finishes and materials; 17 percent wanted to add features and improve livability; and 13 percent believed it was time for a change.
The top choices for remodeling include: kitchen upgrades, complete kitchen renovations, bathroom renovations and new wood flooring as the interior projects that most appeal to potential buyers. Similarly, the NAR study ranked projects based on expected value at resale (without accounting for project price); the projects that ranked the highest in this category were complete kitchen renovations, kitchen upgrades, bathroom renovations and the addition of a bathroom. New roofing, new windows, new garage doors and new landscaping are most appealing to potential buyers and are highly valued upon resale (both considering project price and disregarding project price).
“In my 30 years of experience selling real estate on the Westside, buyers have become much more discriminating and demanding in their choices. Fixer uppers are now ‘tear downs.’ And few homes ever sell well ‘as is.’ Homeowners have so much to gain from remodeling their homes whether they sell or not. It’s just that simple,” Carole said.
Home prices are peaking in 2015 according to national report
According to a leading, national real estate tracking firm, RealtyTrac, the median sales price of U.S. single family homes and condos in October was $207,500, up 1 percent from the previous month and up 10 percent from a year ago — the highest year-over-year percentage increase since February 2014. “While this is a national statistic, this is just another sign that our residential market is gaining strength,” stated Carole Schiffer. “As you have seen above in the SchifferLine, the Westside communities I report on are seeing solid signs of stability and strength in our housing prices. Median sales prices are up in the majority of markets I am reporting on.”
The big news on the national front is that the 10 percent increase in October 2015 came following 20 consecutive months of single-digit annual increases in median home sales prices and marked the 44th consecutive month with a year-over-year increase in median home prices. Despite nearly four years of increases, the U.S. median sales price in October was still 9 percent below the previous peak of $228,000 in July 2005.
“Home price appreciation did not go into hibernation in October even as the housing market entered the typically slower fall season,” said Daren Blomquist, vice president at RealtyTrac. “More than one-third of the nation’s major housing markets have now reached new home price peaks this year, and nearly 90 percent of markets posted an annual increase in home prices in October. Home sellers are sitting pretty in this market, realizing an average profit-since-purchase of 16 percent — the highest in any month since December 2007, on the cusp of the Great Recession.”
Metro areas that have reached new home price peaks in 2015 include Detroit, which hit a new peak in October with a median sales price of $155,000. Other metros that reached a new price peak in 2015 include Dallas, Houston, Atlanta, St. Louis, Denver, Pittsburgh, Charlotte North Carolina, Portland Oregon, San Antonio and Columbus, Ohio.
There were a total of 2,815,704 single family homes and condos sold in the first 10 months of 2015, according to public record sales deeds collected by RealtyTrac. That was a nine-year high for the first 10 months of the year and a 6 percent jump from the same time period in 2014, when there were a total of 2,667,436 single family and condos sold in the first 10 months of the year.
Among 94 major metropolitan statistical areas with 500 or more sales with home price data available in October 2015, 84 (89 percent) saw an increase in sales prices from the previous year, while only 10 metros saw a decline in median sales prices from a year ago.
I cannot tell you how many times during the course of the years that I have been selling real estate that I get asked,” is it a good time to sell your home during the holidays” and “doesn’t the market slow down during the holidays”? My response is always the same, “situations change from year to year, but in general, selling your home during the holidays is generally one of the best times of the year to do so”. Here are some of the 10 best reasons why: 1 People looking are generally more serious buyers.2. Serious buyers have fewer houses to choose from, so you have less competition.3. Houses are especially appealing with holiday decor.4. After the holidays the supply of listings increases substantially, which lowers the demand for your home. 5. Buyers tend to be emotionally motivated at year-end.6. Buyers have more time to look with less constrained work schedules than non-seasonal times.7. Many people will purchase by year-end for tax purposes.8. You can still be on the market, but have the option to restrict showings to 6-7 days during the holidays.9. Sell now, and specify a delayed closing or extended occupancy until early next year if needed.10. By selling now you have an opportunity to buy during the spring, when many houses are on the market.
By listing now, you may have fewer actual showings, but more qualified buyers.
The reason: You have less competition!
I can also tell you that I am busier now than I have been in months with a number of transactions that have all sold either in November or December, and all of them are closing in January!