Timely Real Estate News………………………………………………….15 January 2014
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As Frank said….”it was a very good year.”
If Sinatra were around to voice his opinion about Westside’s real estate success for last year, he would no doubt sing….”it was a very good year.” And it was. In the four communities I report on a regular basis — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood — total sales for last year was $2.631 billion, up 4.1% over the previous 2012 calendar year. Now that may not sound like a number you’d write headlines about, but when you consider that 2012 was a year when we really made robust progress in the residential market, with sales volume up a substantial 21.5% over 2011. What this increase demonstrates is that in a slow-but-recovering economy, we are seeing volumes increase across the board in each of these communities.
Sales Volumes maintains strength
Beverly Hills led the way in 2013 with a sales volume of $900 million (over just $899 million in 2012. Brentwood is in second place at $719 million, followed by Bel-Air at $564 million, and Beverly Hills Post Office at $447 million. The biggest leap in sales volumes over 2012, however, was Beverly Hills Post Office with $42 million, Bel-Air with $30 million, and Brentwood with $22 million. And while the previous year saw a more dramatic increase in some neighborhoods, especially in Beverly Hills, the business is “there” — and it’s an active market. Last month there were a number of major sales in Beverly Hills, including two over $5 million, 1 over $6 million, 2 over $8 million, 1 over $9 million, 1 over $12 million, and one more at $13 millioin. Brentwood also had some big sales with 4 over $4 million , 1 over $5 million , 1 over $8 million, 1 over $12 million, and 1 at $16 million In addition there was a private sale in Bel Air at $11.5 million, which is not included in the stats as I am only using those provided by the MLS.
What about prices?
Let’s look at the key indicator for these four communities — Median Sales Prices for the 2013 year. Beverly Hills was up 17% over 2012 for the twelve months ending December 31, 2013….Beverly Hills Post Office was up 8%….Bel-Air was up just 3%, but Brentwood was up 33% — a major turnaround for this community which has struggled in the past.
For the most part, these same communities were mostly up when comparing December 2013 to same period a year ago — 
Beverly Hills was up 17%, BPHO was up 44%, Brentwood was up 20%, but Bel-Air was down 20%….not unusual. Remember, median sales prices continue to fluctuate from month to month and I always focus on the Year-to-Date numbers as I do every end-of-year period. And while we had some terrific monthly increases in December 2013 over November 2012, they all fit into the annual trend of a slowly upward trend in real estate prices. Comparing December to November prices, Beverly Hills was up 29%, BHPO was up 23%, Brentwood was up 15% and Bel-Air continued behind the other three areas at down 32% (but don’t forget, Bel-Air was up for the year, too!).
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Typical buying/Selling Real Estate Cycle
As a general rule, in mid January the market warms up after the holidays and the Spring Selling Season goes strong until late March. Slows down somewhat due to tax season and starts warming up again mid May, then goes strong until June and slows down due to Dads, Grads and 4th of July. Mid to late July it heats up again with the Summer Selling Season and goes strong until late August. It takes a dip due to last minute vacations and then…Heats ups a bit in mid September after the kids are back in school and then slow down in late October with the holidays.What was considered to be a period of “very slow” year-end activity has actually become more active because of buyers’ scramble to find quality housing. The lack of quality inventory has created this rush….and there is an old real estate axiom: If you can’t find what you want, keep looking! And that’s what frustrated buyers are doing – they’re out there looking very intensely these days, especially now.
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So what is new in Silicon Beach and beyond?
Never heard of it? You’ve heard of Silicon Valley and now we have established Silicon Beach, appropriately named, don’t you think? This is a three-mile-wide area that stretches from Santa Monica, thru Venice, and into Playa Vista — it’s the “hot tech zone” for Los Angeles County, and prices are zooming upward in these areas and have been for the last few years.
Silicon Beach is a Mecca for start-ups and sophisticated, larger technology companies such as Google and Yahoo, who
established a beachhead in Southern California years ago. New entrepreneurs, flush with venture capital, are pushing the real estate envelope for both commercial and residential housing, and they are driving demand higher and higher. The excitement of Abbot Kinney in Venice has rubbed off on a number of its side streets, and again brought with it some new and interesting restaurants. All this translates to higher real estate prices. Forget the sleepy ol’ Culver City and the off-the-beaten path Mar Vista and Palms areas — these areas are growing to be future hot spots in the not-too-distant future.
Playa Vista is a collection of high-quality condominium and apartment complexes that attracts buyers and renters of all 
ages. It is at the former Hughes Aircraft facility that included the runway where Howard Hughes developed many of his aircraft. It went through a rough period at the get go and experienced a fair amount of short sales and foreclosures, but is now in a good strong position. The real estate activity in Playa Vista is really just getting started in terms of resales –there were only nine sales in Playa Vista during 2013, with the average median sales price of $1.333 million. The first sale was a condo in May 2013 for $1.250 million and three were sold in December for a $1.460 million median sales price. In addition, with the increased development of the Playa Vista area — including Senior Citizens housing – the Runway project (which is a mixed-use project) and is anchored by Whole Foods, the value of the Playa Vista area is projected to continue its major growth pattern. I have both sold and leased properties in the community and am very familiar with what is going on in the community.
In the last number of years, Culver City has also experienced major growth especially with the development of its “Arts District” and the rush of new and exciting restaurants!
Median sales prices in these areas have strong price increases for the past 12 months. Venice’s median sales prices were up 12% to an average of $1.371 million for 2013 over 2012. Santa Monica was up 25% for the same period with a MSP of $1.950 million, and Culver City was up by 26% for a MSP of $800,000 for the year (over 2012). Just a few years ago, one could purchase a smart-looking, quality bungalow in Culver City for under $400,000 — not any more. Santa Monica’s median sales prices are in the $2 million plus range at the end of the year even though the area. experienced a downturn in median sales prices when comparing December 2012 ($2.398 million) to December 2013 ($1.510 million), but the strength of their market overall for the past year was very, very strong which demonstrated its resiliency even with a slow December. As I have stated so many times, one month does not a trend make. And these beach-side communities continue to grow and prosper especially when you measure home prices and value.
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And that brings me to a key point in all of this…..
It’s all about “supply and demand”. Frankly speaking, we are short on supply (re: inventory). Our inventory in all of these communities on the Westside has not been what it used to be. This causes a pent-up demand for more quality
housing and we simply don’t have the inventory to meet demand we have been used to showing in the past. But it’s improving.
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Projections for 2014
As the economy strengthens, we will get back to our old, more “comfortable normal”. So what is “normal”? It simply means there will be no big swings one way or the other in real estate prices — we will see a steadying of the real estate ship — prices will continue to rise, but not in huge jumps. And we will still experience the ups/downs each month in each community.
Advice to buyers, sellers
So what now? My advice to buyers is that as the bond market continues to change and impact interest rates — which are still historically low — it is better to get in now (sooner) than later.
My advice to sellers is “now is the time to consider putting your home on the market. Why? Because we are exiting a somewhat slower period (November and December 2013), That is the perception…the market is slow. But it isn’t — not in our Brentwood office at Coldwell Banker. We are seeing multiple offers on sales — some buyers and sellers took time off for the Christmas holidays, but now — with less inventory — it also means less competition. Homes are more closely scrutinized now — because buyers are not rushed like in the hectic Spring selling season. There is still a scramble for quality homes, and if you’re in the marketplace with a home for sale — that is well presented and priced right — it’s going to sell.
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Here’s a poke in your eye…..blended ratios
Just when you thought it was safe to ask “Mom and Dad” to co-sign for your first home loan (or any home for that matter), 
you discover that they can still do that, except that with the new Qualified Mortgage and Ability to Pay Rules, one still has to qualify on their own. What this means is when a borrower needs a non-occupant, co-borrower such as a
Parent, most lenders are required to evaluate the loan risk based on the proposed occupant. So even with a very strong cosigner, the occupant of the house MUST qualify on their own.
However, I have learned that there are, indeed, many lenders who are going to continue to allow blended ratios and still consider the co-borrower for the loan while utilizing this new program. This is good news. Since this new rule just took effect January 1, we will have to wait and see how it plays out.
The point is this: Call me for any questions about blended ratios and how this new Rule will apply to you or family member. I can help you!
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Our New OfficeWe moved into our new offices on the 17th of last month. While we are working in construction site, (still waiting for them to finish our private restrooms, etc.), I love our new office. The views are awesome!!!.. Every afternoon as the sun is setting those of us on the Westside of the office are visited by our office mates admiring the amazing sun sets! If you get a chance, please stop by and say hello – 11661 San Vicente Blvd, 10th floor. .`I would love to see you!
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