Timely Real Estate News………………………………………………….15 February 2014
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Important Information to Remember
Before I cover the “median sales price” data, I want to point out several issues that relate to last month’s (and every report as well), 1) these are really “trailing” performance #s — representing the actual sales of these homes that closed escrow in the month of January, which provides a reliable, month-to-month tracking of sales data — both volume and median sales prices; and 2) the homes that are reported as sold, really means closed escrow, and actually were sold in the previous months at some point (some had 30-day escrow closings and some had as much as 90-day closings or even longer). What this means is that the actual sales activity for January occurred in the last quarter, not
in January. Of course, this applies to every month’s reporting #s — please just be aware that when we talk about
comparing sales between one month to another, we are really talking about the sales activities for the prior months
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January started off with bang, just like last year…..a good omen?
I don’t believe in “omens”, but perhaps I should. One month does not make a year, but it was refreshing to see how January 
2014’s total sales performed compared to January 2013. Total sales for the four areas I regularly report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood — were $151 million for January 2014 versus $124 million for the same period last year for a 22% increase. That compares favorably to an overall 25% increase of January 2013 over January 2012, and we had a solid year for the preceding 12 months in 2013. For this issue of the SchifferLine, I am also covering Westwood/Century City — and it, too, showed a big increase in sales volume (albeit significantly smaller) — from $7 million in total sales in January 2013 to $13 million this past month, or an 85% increase. This month, I am also covering the stats for Westwood/CC, as we move around West Los Angeles to cover other communities as I did last year.
Median sales prices are mostly strong…..
Three of the four areas I regularly report on showed strong increases for January 2014 over January 2013. Beverly Hills Post Office was up 25% in median sales price; Bel-Air was up 27% for year-to-date comparison; and Brentwood was down 9%. Westwood/CC was up approximately 9% when comparing the January 2014 to January 2013 prices. The January sales reflected continued strong sales in Beverly Hills, however, median sales prices were down 16% compared to a year ago. A year ago in January 2013, the median sales price in Beverly Hills was $6.200 million, vs. $5.198 million for 2014, and that last year’s number was one of the highest ever median sales prices recorded in Beverly Hills. So it is not surprising that Beverly Hills had a ‘big hill’ to climb to overcome a strong January 2013.
When you compare median sales prices for December 2013 to January 2014, Beverly Hills was down 16%, Beverly Hills Post Office was up 4%. Bel-Air was up a strong 40% for last month compared to the previous year, and Brentwood was down 8%, while Westwood/CC was also down 7%.
Again, remember — we’re reviewing sales data from transactions that have occurred in the previous months, not in January per se.
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How are sales prices holding up in this market?
You can always measure the strength of home prices when you compare the “average sales price to the average list price” — how much “less” does a home sell for compared to its listing price. For simplicity’s sake, let’s see how these communities fared: Beverly Hills had a 98.0% average sales price compared to average list price; Beverly Hills Post Office was 96.8%; 
Bel-Air was 102%, with the price “over” the listing price; and Brentwood was also at 102%; Westwood/CC was at 98.9%.
In Beverly Hills, there were 10 homes sold, and 8 were over $3 million; in Beverly Hills Post Office, there were 11 homes sold, with 4 over $3 million; in Bel-Air, there were 10 homes sold and 4 over $3 million; and in Brentwood,
there were 11 homes sold, with 3 over $3 million; Westwood had no homes over $3 million but there were 2 sold, both over $2 million.
What this tells us is that demand is high and supply, as I will mention later, is low — therefore, the homes on the market are getting almost 100% of their asking price or over that. That reflects the lack of inventory and that multiple offers are prevalent across the board — because these are averages….meaning, some homes were over 100% in all areas.
And this brings me to this next, critical point of view — Where is the inventory?
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“The more the merrier” doesn’t always ring true in real estate…
As a seasoned realtor with more than 30 years selling real estate in West Los Angeles, I’m confounded by the lack of inventory in the market. I’m not the only who feels this way: Our Coldwell Banker executives across the nation have been underscoring the lack of inventory for the past year. This dearth of listings on the West Los Angeles means one thing: Intense competition for what is for sale. Buyers are scrambling to find a quality choice….multiple offers become the ‘rule of the day’…..and buyers are getting frustrated by the inability to get the home of their dreams. No one likes ‘standing in line’.
What confounds me is that sellers are not taking advantage of this market condition. Let me be blunt: This is the perfect time to put your home on the market because of the lack of competition. The buyers are out there, thirsting for quality choices. Buyers are willing to pay the right price for the right house in the right neighborhood.
For example, one of my associates at my Brentwood office had a buyer for a property in the Pacific Palisades on a busy, major street priced in the high $800,000s. This was a home that needed work (like being completely remodeled)….1,700 square feet, on a 4,000 square-foot lot. Other than the location of being in the Palisades and a lower price, it really did not have a lot going for it. But it was one of the lowest-priced homes in Pacific Palisades. There were 10 offers, and my guess is that it will sell for over $1 million.
What’s the point? The point is buyers are willing to step up now and pay for the right opportunity. That opportunity was buying a home in Pacific Palisades for a relatively low price — it’s one of the lowest prices for entry into one of Southern California’s premier communities. Location still means everything especially if it fills a buyer’s needs.
Aren’t prices going to rise in the spring? Can’t we get more then?
Of course, that’s always on the table. Prices are going to rise this year — as they have steadily during the past several years — but not at the 20% to 30% increases we have seen in the past 12 to 24 months. It’s estimated that housing prices will rise between 5% to 10% for this year — becoming a more “normal market” — meaning we are stabilizing our market and not experiencing the wild swings we’ve had in the past.
A word to the wise…..I call this the “Teflon” syndrome: Some buyers believe that regardless of what they read in the 
papers, they’re immune to market trends. They believe that the market dynamics that apply to us all, do not apply to them. Unfortunately that generally is not the case. Only by diving into the pool of reality will people wake up and discover they’re swimming in the same water as the rest of us. Yes, there can be bargains out there — but as the market has improved lately, the bargains are few and far between.
To give you an example, I received a call from a buyer who wanted to buy a $1 million tear- down in Beverly Hills or Bel Air. When I queried them….”why those 2 locations and what was their budget?” They responded by saying that friends of theirs had purchased a fixer in Beverly Hills for $1.2 million in Beverly Hills, fixed it up.. I asked them “when did your friends purchase the house”….”oh, two years ago!” I politely told them that would not happen today: That same house would be priced around $2,000,000 today. When we discussed this further, they said that “yes they had read that in the newspaper and heard it on the news”, but still hoped they would find the miracle home to suit their needs. Other West Los Angeles locations were not suitable. Thus the Teflon syndrome! The situation was the same a few years ago, when the value of homes was falling, “it was always their neighbor’s home, but never their “castle”.
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Commercial opportunities
I am always asked if I also provide real estate services in residential investment properties…and the answer is, yes! Being the owner of industrial property in Santa Fe Springs, I continue to keep up to date on the latest trends in commercial, industrial and residential real estate investments. I have a broad network of top-notch associates who can assist me in finding exactly what you need — from duplexes to multi-unit apartment complexes to strip malls, or manufacturing facilities such as mine. As in residential real estate, there are opportunities for both buyers and sellers these days — you just need a sharp team of experts to help you. Call me regarding any questions you may have about investment opportunities on the West Los Angeles or elsewhere.
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In real estate, bigger is not always better
I cannot count the total number of homes I have been in, inspected, and reviewed for clients on the West Los Angeles since I entered the business over 30 years ago. I can tell you the number is in the “thousands”. That’s my job.
I am expected to know the market — literally, inside and outside the house. I hear clients talking about what they like, don’t like. What they want in their new home, and what they don’t. If you want to succeed in this business, you learn to “listen”. And so it is not surprising to me to see the trend in “designing quality, not quantity” into homes these days. In several stories on homes being built in the Northwest and the South, it was interesting to read how one owner/designer went about planning for their “not-so-big house”. For example, they decided not to skimp on what would be considered luxury items — mahogany-framed windows, heated Brazilian teak floors, and other high-end amenities. They included a sweeping outdoor deck that provided them sweeping views of Puget Sound. And the only item they skimped on: The size — just 1,888 square feet. The owners stated they thought that smaller was better and wanted to have a place that is beautiful but no overbearing in their life.
Luxury in American homes has long been defined by size — a newly built home grew from an average of 1,660 square feet in 1973 to over 2,500 square feet today, according the U.S. Census Bureau. Now, top-end buyers are asking agents to look for smaller homes with high-end luxury finishes.
And as “boomers” move from a larger home that was once ideal for a family of four, smaller now becomes more appealing. It is interesting that many of my clients in Bel Air, Brentwood and Beverly Hills are not always willing to give up space: 
They want “both” — space and quality, but perhaps a tad smaller is OK.
What distinguishes the neighborhoods in West Los Angeles are the variety of styles, qualities, and sizes. Quality of new homes — both new construction and re-hab — remain extraordinarily high — hence the top-of-the-chart in average sales prices. But for the most part, buyers are much more discriminating in judging luxury features and demanding them. The standards of quality have certainly been raised in recent years, especially with competition in the market place. I have consistently counseled my clients — both buyers and sellers — to recognize the quality of all amenities — inside and out when purchasing a new home or putting their home on the market. Many times these quality improvements are not only what you can see, but inside the walls as well. They are looking for and are impressed with many of the “smart home features” that are out today, such as automated lighting, sound and alarm systems.
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What’s in $2 million? It’s one of the fastest-moving segments in California
Brother, can you spare $2 million? California’s $2 million-and-up home market is bursting at the seams, even as the rest of the market continues to play catch-up according to San Diego-based Data Quick. According to records, which started in 1988, home purchases in the $2 million range and up was at an all-time high — and about 400 more than the previous high set in 2005.
Data Quick — one of the most reliable and oft-quoted market research firms — pointed out that with the real estate market in a recovery mode in both sales prices and volumes, there are a number of homes in the $1.9 million price range that just morphed into the next bracket. What the numbers are showing is that the higher-priced homes are recovering faster than the overall market. The $2 million-and-up category accounts for 1.65% of total homes sales in the state, also a record.
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Please don’t forget.. The 80 hour closure of the 405 in the Sepulveda Pass this weekend!!!!!!!
Los Angeles transportation officials are alerting I-405 and regional freeway motorists of an 80-hour northbound, I-405 Freeway closure operation in the Sepulveda Pass this Presidents’ Day weekend, February 14 to 18, 2014, and asking motorists to help prevent multi-hour freeway delays. The closure consists of a partial daytime lane reduction and a full 
nighttime closure of the freeway’s northbound lanes between Getty Center Dry and Ventura Bl. Approx. 5.6 miles long, the closure equals two-thirds of the length of the entire I-405 Sepulveda Pass Improvements Project. During daytime hours, two northbound lanes will remain open while three lanes will be closed. During nighttime hours, all five northbound freeway lanes will be closed. While the southbound lanes will remain open during daytime hours of the closure, up to two lanes will be closed during nighttime hours.
Sections of the closure will reopen as they are completed.
Sepulveda Bl. will remain at full capacity during the closure, although that street does not have the capacity to move all the traffic diverted from the northbound lane closures. Traffic control officers provided by the Los Angeles Dept. of Transportation will help guide drivers at each I-405 northbound on-ramp. Transportation officials ask drivers detouring from the closed I-10 connectors to use freeways rather than local streets.
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Jumbo rates just got more attractive…..and that’s a big deal
If you have been frustrated in being unable to close a transaction because others were able to make a cash offer or financing at a higher and better rate, then perhaps some new federal regulations may be just the thing for you.
According to the National Association of Mortgage Professionals (NAMP), interest rates on jumbo mortgages are now easier to obtain. Interest rates on jumbo mortgages used to tower over conventional mortgages, because they are considered riskier. But the rates for jumbos have dropped because of economic conditions, and are now almost on par with conventional mortgages – or sometimes even lower.
In addition, new federal regulations that went into effect in January don’t apply to jumbos, making them more flexible for buyers who want things like interest-only loans or who have a high net worth but complicated finances.
This convergence of factors is helping move along the recovery according to the NAMP. And because jumbo mortgages are so enticing, they are luring home buyers to consider “move-up” purchases, which, in turn, frees up inventory at the lower end of the market.
This is fueling a re-birth in the higher-end market. In some areas of the country, the rate parity actually flips — and jumbo mortgages are actually lower, depending on the credit-worthiness of the borrower and the length of the loan. Until recently, banks kept jumbo mortgages on their balance sheets instead of selling them on a secondary market. With interest rates low, banks are luring buyers with discounts of an eight of a percentage point or more. So this is all good news.
If you are interested in pursuing this further, why don’t you give me a call — Carole Schiffer — 310-442-1384. I’m here to help.
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