Happy Holidays everyone…
It is that time of year for us to celebrate…even in these pandemic times, we need to count our blessings and cherish our family and friends. With so many holiday traditions going virtual, this is all so new for us. There are fun things we can do…having a Zoom Holiday party is probably on your list. How about a contest on facetime or zoom where you dress up as your favorite holiday song, and everyone has to guess what/who you are, I know what I will be dressed up as, what about you? Our Thanksgiving Zoom call was so successful, we are doing it again, and are opening our presents together! However you celebrate the holidays I just want to wish you all the very best for the New Year!
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Get ready for the Roarin’ 20s….so says UCLA
UCLA economists issued an optimistic forecast the other day, predicting the U.S. economy will experience “a gloomy COVID winter and an exuberant vaccine spring,” followed by robust growth for some years. Almost sounds like the Farmer’s Almanac.
“The ’20s will be roaring, but with several months of hardship first,” according to the quarterly UCLA Anderson Forecast. “These next few months will be dire, with rising COVID infections, continued social distancing, and the expiration of social assistance programs.
The Forecast, which assumes mass vaccination of Americans will take place by summer, predicts that annualized growth in the nation’s gross domestic product will accelerate from a weak 1.2% in the current quarter to 1.8% in the first quarter of next year, then to a booming 6% in next year’s second quarter and consistent 3% growth each quarter thereafter into 2023.
“With a vaccine and the release of pent-up demand, the next few years will be roaring as the economy accelerates and returns to previous growth trends,” wrote Leo Feler, a senior economist with the Forecast. “We expect a surge in services consumption and continued strength in housing markets to propel the economy forward.”
California’s recovery will ultimately look similar to the U.S. trajectory, the Forecast predicts. Let us hope this all comes true…wouldn’t that be a relief!!!
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With this positive outlook…. challenging times still ahead Despite this positive outlook, there will remain challenges regardless how effective we are with the vaccine and getting people back to work. For example, the Forecast states there will continue to be a dearth of affordable housing along with wildfires, power shutoffs and the working-from-home trend could push more folks to move out of the state even if their employers remain.
Even if the state builds more homes, commercial construction is unlikely to revive soon. If the higher rates of working-from-home and online shopping persist to a moderate extent after the pandemic is over, we’ll be over-supplied on office and retail space.
There may be little demand for additional commercial investment, at least in urban cores. State and local construction is likely to take a hit as state and local governments reduce infrastructure budgets in response to lower tax revenues and the need to replenish rainy-day funds.
Even after a vaccine takes hold, the UCLA Forecast predicts, for better and worse, some parts of the economy will never be the same. I do also want to point out, that the Forecast did not duel on the potential impact the also projected impact forecloses and mortgages that were put aside might have on the market. We shall have to see how that plays out.
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Westside sales catching up as 2021 approaches
We haven’t seen the late-year push we experienced in 2019 when sales volumes overcame early-year doldrums, but for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood — sales volumes have inched closer through November, with a total of $3.426 billion, down just 5% from 2019 at this time. Last month we were short by 10% through the first 10 months of 2020, so we have sliced our deficit by 5%.
The big winner in sales volume increases was Beverly Hills Post Office, which gained some $230 million compared to the first 10 months in 2019, but the other areas were behind with Bel-Air/Holmby Hills off by $249 million and Beverly Hills down $120 million for the year in sales volume. In the last week or so, a number of mega sales of over $60,000,000 have been reported in both the Beverly Hills Post Office and Bel Air. These sales will be reflected in my Annual Report which I will be sending out after the first of the year.
For Malibu and Malibu Beach, sales volumes have been exceptionally strong, logging in over $1.194 billion in total sales through November 2020, compared to just $662 million in 2019, for an 80% increase.
We’re seeing an increase in inventory, but at the lower price points, and buyers are still anxious to find quality housing in safe neighborhoods and communities, for which our Westside prides itself.
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Median sales prices continue their climb
The Westside’s continuing median sales price continue to increase across the board as we near year’s end. This isn’t new news…it has happened for most of 2019 and 2020, and across the country. With inventory being squeezed in many areas, demand has accelerated price increases combined with low mortgage rates, we find that home prices have continued their accent through November.
Home median sales prices have moderated somewhat — Beverly Hills is up 4% through the first 11 months at $6.475 million; BHPO is also up 4% at $2.950 million. Bel-Air/Holmby Hills moved up 3% to $2.230 million, Westwood/Century City was up 7% at $2.360 million, and Brentwood was even for the past 10 months at $3.233 million.
As Malibu and Malibu Beach experienced a tremendous increase in sales, median sales prices were highest on its prestigious Beach area with prices up 18% to $7.745 million. Malibu was up 2% at $2.876 million.
High-end sales continue to have a terrific year (see below), so bottom line: Our real estate market continues to look stronger and stronger as we move into next year.
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2020 Shaping up to be best ever for $5 million-plus homes
While overall sales volumes lagged behind 2019, there is some really positive news in the $5 million-plus homes category. The number of closed sales of $5 million-plus so far this year is 619, versus 504 at this time last year. (up 23%). Of these, 181 were $10 million-plus this year and there were 150 $10 million-plus sales at this time last year. (up 21%).
Fifty (50) of these were $20 million-plus this year, and there were 41 closed sales of $20 million-plus at this time last year (up 22%). We are even in the $30 million-plus sales, with 16 for both years. We have had seven (7) $40 million-plus sales this year, and there were eight (8) at this time last year. And there are 70 pending sales of $5 million-plus at the moment, 16 of these are over $10 million.
The buyers are mostly Americans — 40 Americans purchased homes of $20 million-plus. Other buyers included residents from Taiwan, England, and China.
On a national front…. Demand for million-dollar homes is growing faster than any other price tier in the pandemic-driven U.S. housing boom. In October, applications for mortgages larger than $766,000 jumped 59%, the biggest gain for all segments measured by the Mortgage Bankers Association. By comparison, the increase for mortgages from $150,000 to $300,000 was 13%.
I expect this trend will continue well into 2021 as buyers are looking for enhanced, higher-quality home environments, learning from the past eight months of staying at home that environmental improvements need to be made.
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Mortgage amounts surge to record highs
As median sales prices continue their upward climb, home buyers are taking on bigger mortgages as they compete in a fierce housing market and face higher home prices. The average home purchase loan amount reached $375,000 last week, according to the Mortgage Bankers Association. That represents the highest average home mortgage since the MBA began the survey in 1990.
Tight housing inventories across the country mixed with strong buyer demand are causing home prices to quickly appreciate. As I reported in the last SchifferLine, the median existing home price for all housing types jumped 15.5% year over year to $313,000 in October.
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You need to update your insurance after a remodel
Many homeowners have updated or improved their homes during the pandemic. Major remodeling
upgrades could result in homeowners needing to update their insurance, too. Otherwise, the home may be under-insured if a disaster ever strikes.
Remodeling your home can lead to higher insurance rates, since a home remodel often increases the rebuild cost of a home. Your dwelling coverage limit should match the rebuild cost of your home. So, please make sure you review your home insurance policy after your remodel.
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Buyers are now craving luxury pantries….
Looked in your pantry lately? Would you say that your pantry is deluxe? According to a recent study the walk-in pantry has emerged as one of the most desirable kitchen feature for home buyers.
As a result of us staying at home and eating at home more, pantries, once simply closets or cupboards for storing a few perishables, have become much more elaborate. More than 85% of homes larger than 3,500 square feet feature a walk-in pantry.
Luxury pantries for larger homes are now a “must have”. Pantry options can vary from 40 to 80 square feet that can include built-in shelves, stone countertops, and hardwood floors. Also featured are spice-rack pullouts, wine storage columns, and built-in lazy Susan’s for added storage.
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Another factor in us spending more time at home
Home warranty companies, plumbers, electricians, and other home repair business are reporting an 15% increase in business as we use our washer/dryers, ovens, etc. more they tend to break down with the increased usage also.
I know a number of people do not like home warranty policies, but I can personally tell you that over the years t I have had one on my home, they have been a life and huge money saver replacing things from my water heater, dishwasher, ovens, washing machine, etc. Please contact me know if you want/need any information on the various companies out there and the pros and cons.
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The Public Hearing on the Berggruen Institute’s Plan for Developing in the Sepulveda Pass
On the 8th of Dec. there was a virtual public hearing dealing with the Environmental Impact Report and the proposed construction of the Berggruen Institute on the last undeveloped acreage adjacent to Mountaingate.
Following are the notes from that hearing: 28 acres of 447 acres to be developed. 2 ridges; ridge 1= institute, offices, and residential units for guests and staff, ridge 2 = scholar living quarters (3 units up to 10,000 sq ft each). Trails not impacted. Main entrance from Sepulveda and serpentine road. Ridge 2 entrance from Mountaingate / Canyonback Rd. Stoneyhill is only for emergency access. Helicopter pad only if required by LAFD. 18 events per year with up to 250 people, 3 events per year with up to 450 people, no 3rd party events. Events end by 10 PM. Haul routes have not been determined. Entrance on Sepulveda, design is not available yet for review. Public comments due by Dec 21st, via mail or e-mail (addresses to follow in another e-mail). Another public comment period after draft EIR distributed.
Unlike other virtual meetings, only the City and Berggruen panel members could be seen, and written questions were not visible. Attendees had no clue if questions were being skipped or paraphrased. A question about the entrance on Sepulveda was eventually read but the city did not have a drawing or an idea of what the design will be. No comment from the Berggruen panel on that question. There were a lot of comments suggesting that it be built elsewhere, but the city planning members responded that they are only reviewing the request as submitted. Zoning variances come up a lot. Brush fires, wildlife, noise, and traffic comments as well.
This definitely will be a long time coming if it does come to pass, as there are lawsuits requiring Berggruen to comply with the original plan to develop the approved 29 homes which were part of the purchase agreement between Berggruen and the previous owner.
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As we enter the celebration of Hanukkah, Christmas, Kwanza and the New Year and the “dark winter” we have been warned about, my prayer for you is for your celebrations be as joyous as possible, even with the losses we all have sustained this year.
Stay safe, stay home, and wear your mask!
Please let me know how I can assist you in any real estate need/questions you might have. I look forward to seeing all of you in what hopefully will be a better year for all of us!
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