Timely Real Estate News……………………………. 15 February 2018
Chinese New Year — Year of the Dog 新年快乐
It begins Friday, February 16 — the annual Chinese New Year celebration across the globe, and it is one of the world’s most prominent and celebrated festivals, lasting approximately 23 days! There are many symbolic foods to mark this event. Here is a link for you to see and possibly include in your own celebration… Enjoy
January sales volume up….so what’s new?
2017 didn’t start out with a bang, not even a whimper — sales were down 20% compared to the previous year. The usual suspects were to blame — lack of inventor, rising prices, and credit was still tighter than normal. What is different this year? Sales volume is up 15% for January from January of last year, for the five communities I report on each month — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood. Sales volume for January was $220 million vs. $192 million compared to January 2017.
What this tells us is that inventory has made some improvements, but most importantly, the strength of our residential real estate market continues to be strong demand, primarily attracting buyers who continue to recognize the value of the long-term values for the Westside. And yes, we have seen some significant increases in median sales prices, driven, of course, by lack of inventory in some neighborhoods, but as reported in the last Schiffer Line, sales of high-end homes has been remarkable…and it seems that inventory — once exposed to the marketplace, is quickly snapped up.
A good example is what happened in January in Bel-Air/Holmby Hills, which had a record median sales price of $7.372 million vs $1.445 million in January a year ago (a 410% increase).
That is an outrageous increase, however let me explain the $66 million sold in Bel-Air/Holmby Hills in January were all sales consummated in late 2017, but closed in 2018. Of that number, $57.5 million was from four homes, which demonstrate the appeal of high-end homes in our market. Bel-Air/Holmby/Hills ended the year with a median sales price of $2.803 million in December, which showed how far the median sales price had risen during the past year. But the odd-ball January we had is an anomaly.
Overall, median sales prices were up in Beverly Hills — 32% at $7.652 million over January 2017…Westwood/Century City was up 20% to $2.264 million…and Marina del Rey was up 2% to $1.805 million. Only Beverly Hills Post Office was down — 20% to $2.361 million and Brentwood down 1% to $2.064 million. Again, I want to always throw in caution in looking at median sales prices — as the Bel-Air/Holmby Hills situation can happen in any one of the communities I report on. The key: Look at the median sales prices for the year — an accumulation of data that reflects a longer trend than just one month.
For all of the six communities covered in this report, there were 41 homes that closed escrow in January 2017 vs. 47 homes in 2018. Doesn’t sound like much — but that’s a 14.6% increase…and if that continues, that’s good news.
Good news is catching…sales, prices up in U.S.
The National Association of Realtors reported there was an “uptick” in existing home sales (units) in the final three months of 2017, which pulled down housing inventory, and that, in turn resulted in price growth moving steadily upward.
The national median existing single-family home price in the fourth quarter was $247,800, which is up 5.3% from the fourth quarter of 2016 ($235,400). The median price during last year’s third quarter climbed 5.6% from the third quarter of 2016.
Compared to a year ago, Single-family home prices last quarter increased 92% of measured markets, with 162 out of 177 metropolitan statistical areas showing sales price gains in the fourth quarter. Twenty-six metro areas (15%) experienced double-digit increases (11% in the third quarter), and 18 metros eclipsed their previous peak sales price. Overall, home prices are now at their all-time high in 114 markets (64%). What we are seeing on the Westside of Los Angeles is an extension of national trends — but it doesn’t always work out that way. In many cases, we will have counter movement in prices (up) vs. what’s happening across the country (down). But with the strong economy and market booming (and not booming), we seem to be experiencing steady growth in inventory and pricing.
Lawrence Yun, NAR chief economist, says 2017 capped off another year where home prices in most markets ascended at a steady clip amidst improving sales and worsening inventory conditions. “A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” he said. “Remarkably, home prices have risen a cumulative 48% since 2011, yet during this same time frame, incomes are up only 15%. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”
Added Yun, “These consistent, multi-year price gains have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation; however, the shortage of new homes being built over the past decade is really burdening local markets and making home buying less affordable.”
What we are witnessing in Los Angeles is the rapid increase in median prices as homes in LA County have now surpassed their 2007 peak, but that doesn’t take into consideration the 13% inflation factor we’ve had since — so we’re still behind.
What does it take to buy a home these days?
Of course, that depends on where you want to buy a home. The Westside is hardly the “affordable real estate market” and what you have seen with the growth of median sales prices in all of Southern California, there are few places one can call “affordable.”
The national family median income rose to $74,492 in the fourth quarter, but overall affordability still edged downward compared to a year ago because of the combination of rising mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $55,585, a 10% down payment would require an income of $52,659, and $46,808 would be needed for a 20% down payment. Of course, these are not Westside #s…but it gives you the national challenge we have in housing. And when we understand that California’s annual demand for housing is nearly 185,000 homes, we only produce less than 100,000 housing units (apartments, condos, homes) annually.
“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” said Yun. “In areas where home building has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”
The reality: It’s not pretty. California continues to drastically lag behind in providing housing on just about all levels. And prices here in LA County are continuing their upward climb, when you consider purchasing a home in trendy in some of the less expensive parts of the city, today you can expect to be looking at nearly $1 million or more.
Home buyers not fazed by rising mortgage rates or the new tax bill
Buyer demand has not waned in spite of rising prices and modest increases in mortgage rates, nor the tax bill, at least at this juncture. Demand continues to remain high despite bustling home prices, low inventory and the recently passed tax reform which included changes to mortgage interest and state and local tax (SALT) deductions that many homeowners use. So, what would drive down demand?
Not much. According to the latest national survey with lenders, mortgage rates are expected to rise to 4.5% this year, some would assume that buyers would back off from homeownership plans and wait for rates to lower, but only 6% of respondents said they’d cancel their home buying plans if mortgage rates exceeded 5%. We all need to remember that the current new interest rates are still low in comparison to what they were a few years ago.
Sixty-nine % said they’d “slow down” their search, and begin looking for more affordable home prices in other areas or “increase their urgency” before rates rose any higher. A quarter of respondents said they wouldn’t change their plans at all. In California, home buyers unable to afford the steadily rising home prices are going out of state (Nevada, Texas and Arizona where prices are much more moderate) …and some will extend their job-drive times to get lower housing cost in outlying areas such as Riverside and San Bernardino counties.
Earthquake insurance business is booming….
Stimulating interest in ‘disaster’ category insurance was a string of fires, floods and mudslides across the state, and now, Californians are buying earthquake insurance in larger numbers. Last year the earthquake authority saw a record increase of 90,000 new customers, compared with an average annual increase of 7,000 over the previous decade.
A horrible run of natural catastrophes crystallized people’s thinking about the need to be protected according to the California Earthquake Authority, a non-profit organization that oversees the insurance program.
Also helping lure new customers were more aggressive advertising by the authority and the introduction of new offerings, including lowering the minimum deductible to 5% of a home’s value, from 10%. Because of the dramatic increase in insureds, future rate increases are expected to be in the 2% to 4% range annually.
Boost your home’s curb appeal
It is estimated that nearly 50% of buyers will make their decision to purchase a home before they even get out of the car. With Internet searches consuming homebuyers with intimate ‘tours’ at homes, neighborhoods, and communities, buyers come armed with a wealth of knowledge before they even step foot in your home.
What research has proven is that curb appeal plays a significant role in swaying a buyer’s state of mind before they even get out of their car. Neglecting the exterior can be a huge deterrent for many home buyers, and so it’s critical to make a good impression. The goal — make the outside as good as the inside.
Here are some handy tips — 1) Make sure all the clutter is gone from around the house, especially in the front and on the sides…put the kids scooters and toys out of sight, and erase the chalk on the sidewalk…2) Spruce up all of the planting beds, give them a fresh look, fluff up the soil…3) Put color where appropriate to give some “life” to the first impression…4) Replace the house numbers, doorbell, door knocker, handle and mailbox — and paint and/or refinish the front door — this is your ‘grand entrance’ and should be treated as such, and finally 5) if you need a new roof, replace it. Remember, first impression count!
What does it look like in my real estate world!
I am very busy! In addition to my own real estate business, dealing with listings coming up, and buyers ( some specifically looking for a lot or house with a lot of 20,000 or more in a gated community in West Los Angeles (multiple buyers with this requirement – if your home or if you know someone who might whose home would fit into this category, please let me know, another buyer looking to move from Minnesota back to West Los Angeles – who would blame them!?!), my mentees are all doing very well with their clients, some moving into their own first condo, another with investment property buyer, and a third with an out of country buyer, so they are keeping me busy also. In addition to trying to dodge the flu bug that is going around. Hope you have dodged it also.
If I can assist you with your real estate needs, please do not hesitate to contact me, 310 442-1384 or com, or my web site, firstname.lastname@example.org
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office
310-442-1384 (office) or e-mail me at email@example.com www.caroleschiffer.com
CalBRE 00677619 ©©2017 Coldwell Banker Real Estate LLC. Coldwell Banker is a registered trademark licensed to Coldwell Banker Real Estate LLC 234567An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC. Coldwell Banker does not guarantee the accuracy of square footage, lot size or other information concerning the condition or features of property provided by the seller or obtained from public records or other sources, and the buyer is advised to independently verify the accuracy of that information through personal inspection and with appropriate professionals