SchifferLine 15 January 2018

Timely Real Estate News…………………….15 January 2018
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Happy New Year!  

2017 ends strong – price lead the way 

It’s no surprise 2017 was one of the strongest years since the downturn in our economy in 2007.  While it’s been 10 years since the start the Great Recession, we continue to witness the accumulation of equity, with home prices surging every month in every area of the Westside (and elsewhere), and there doesn’t appear to be an end to this trend any time soon.

Every month, we see home prices escalating as the lack of supply continues, even with small gains in number of homes available on the market.  Driving demand is no surprise either: We reside in one of the most attractive and luxurious markets on the Planet, and people with means want to live here.  This has always been the case. Every New Years Day as I watch the Parade and Rose Bowl game, I cannot help thinking about the difference in our weather and that of other places in the world (look at the horrible weather they were experiencing on the East Coast then!). It seems people make the decision to move west when they see those differences.

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Median sales prices up in all areas 

The Schiffer Line reports monthly on these core communities – Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood.  Each month I also cover one of the surrounding communities where I continue to work, and this issue it is Venice.

For the year ending December 31, all these communities’ median sales prices were up over 2016 year-end numbers.  Beverly Hills was up 22% to a MSP of $5.950 million; Beverly Hills Post Office was up 34% to $3.397 million, Brentwood was ups 17% for the year at $3.172 million; Bel-Air/Holmby Hills was up 8% to $2.296 million; and Westwood/Century was also up 8% to $2.045 million.  Venice was up 2% to $1.990 million.  As I have pointed out over the past 12 months, some community median sales prices will fluctuate up or down, but what we have seen this year, as opposed to the past, is that all of these communities continue to show strong price support each month in 2017 even with marginally increased inventories.  Increased inventory continues to be our big need.

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Sales volume surges up 10% for year 

Sales volume for December was strong again for the year, up 10% for the year’s total sales, a clear sign that our market enters 2018 with a strong base.  And, of note, this was a record year for high-end sales.  There were 515 closed sales of $5 million or more versus 514 last year on the Westside.  And there were 10 $40 million sales this year versus only 4 last year, an increase of 150%.

Within the communities I cover each month, Beverly Hills had six homes selling for over $20 million in December, the highest was $26 million…Beverly Hills Post Office had three homes selling for over $20 million, the highest being $26 million also.  Bel-Air/Holmby Hills had five homes over $20 million with the highest $40 million, and Brentwood had one home over $20 million. December was a very good month all the way around.

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In sum, 2017 was a very good year 

All in all, the Westside market proved resilient, attracting buyers from around the world Prices continued their rise as home equities were replenished…. however, we’re not all the way back even though prices are the highest ever, but when you factor in11% inflation versus sales prices today, we still not all the way back to 2007 real-values.  The downside in all this sales-happy story is the continue inventory lag.  This is not only an issue here but everywhere.  In California alone, we are only adding less than 100,00 new housing units a year, but the demand is over 180,000.  Our strong economy and continued growth is good news, but it attracts workers who cannot find affordable housing.

Average home prices are skyrocketing, too, in many parts of the country, especially in places like San Francisco and Silicon Valley where the average home prices are now over $1 million.  We seem to be setting price and sales records every month recently, and there is no end in sight for this to change.

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The year of the seller? You bet! 

Buyers beware.  As you search the Internet for housing you will have already figured it out – it’s going to be difficult and challenging to find affordable housing on any level.  The leading opinion from economists is the obvious – sellers will still control the market as inventory is quickly snapped up, forcing many buyers into a competitive frenzy to lock down a sale.  On a national level, we have used the 50-year average of 1.5 million new units to meet demand, and while we had an uptick in housing starts this past year, we’re still way behind.

According to a 2018 housing market forecast, a whopping 25% of homes sold within two weeks or less during the peak of the buying season in 2017, and nearly one in five homes, or 19%, left the market in less than a week.

For example, we are seeing “days on market” in the five communities I report are trending down.  Beverly Hills” days on market” is 77 days, Westwood/Century City is 41 days, BPHO is 81 days, Bel-Air/Holmby Hills is 74 days, and Brentwood is 57 days.  Venice is the lowest at 46 days.  You have to remember that we are dealing with average home prices in the $2 million-plus range and frankly, these take a bit longer to move than a home selling for under $1 million.

According to the NAR, mortgage rates are expected to rise this year on average to just 4.5% by the end of 2018, and changes to the tax code may actually de-incentivize home ownership and could tip the balance of power to buyers and give them more room to negotiate, especially in luxury markets. We will have to see what the change in mortgage deductions does to the health of the market.

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Winter is a good time to sell or buy 

Most buyers and sellers mistakenly wait for the Spring selling season to begin their home buying or selling process…that means waiting another three to four months before you start this journey.  But my advice is to start now…and why is that?

First of all, for home buyers, it can be less expensive, sellers are ready, and there may be fewer choices, thus the buyer becomes the star.  And secondly, buyers are in a great position to negotiate because they are more motivated as there may be less buyers out there, thus the less multiple offers.

There can typically be less competition during the off season, too, which means buyers can get more ‘bang for their buck.”  About 40% of homes on average are sold in May, June, July and August according to The Housing Wire.  Research shows that those who buy a home during the peak selling point usually pay an average premium of $1,500, but those who purchase homes in, say, the Winter months, paid $3,100 less than average.

Sellers are more attentive, more eager to sell as soon as their home gets on the market, which means the buyer – who now has less competition, may be able to mke a better deal with the help of their experienced agent.  And sellers are typically wary of having their house getting swept away with the flood of new listings hitting the market in the Spring or Summer.  That’s why sellers are in a more receptive mood before the selling season hits.

Also, with mortgage rates remaining low and getting in on this hot market before the selling season starts in April would be a good decision for buyers and homeowners looking to move this year.

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Protect your property all the way through escrow

Former Yankee catcher Yogi Berra said it first, “it ain’t over ’til it’s over!”  In the world of titles and escrow, that is so true.  I cannot tell how many times over my 30-plus years in real estate that houses have dropped out of escrow for all sorts of reasons.  If you live long enough, you know what I mean – houses are not “sold” until the escrow officially closes.  And one of the major problems escrows fail to close is because there are problems with the title.

To protect your investment in the event you have a problem with your title, here is a list of the common problems…

• Clerical or filing errors in the public records
• Unknown liens placed on the property in connection with debts of previous owners
• Questionable deeds, such as deeds executed by a minor, a party in bankruptcy, or a person of unsound mind
• Missing or unknown heirs, or undiscovered beneficiaries claiming rights in the property, which may turn up years after the transaction has closed
• Forgeries or falsification of documents that could affect property ownership
• Unknown easements held by government agencies, utilities or others, which restrict the new owner’s use of the property
• Boundary disputes, as when a neighbor or someone else claims ownership to a portion of the property

Some of these title defects can be cured or corrected before closing but other shortcomings could take years.  My advice:  Make sure that your experienced real estate agent has checked on your property before you begin the seller process.

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Homes valued under $1 million are decreasing 

Yes, the number of homes that are valued under $1 million is decreasing at a rate we’ve never seen before. In 2002, the number of homes priced under $1 million was 98.2% of the entire U.S. housing market – and today, that number is 95.7%, which may not seem like a big reduction, but that just underscores what we are seeing on the Westside as well.  The average Los Angeles County house is now $556,000 but the average median price listed for sale is $625,000.  Remember, this is for all of LA County. One of my mentees was on the market as a first-time home buyer for herself and her family.  Like all buyers, they had some requirements for their condo which put them in the $900,00 price range.  During the course of December of last year, they made 5 offers, all of which ended up being multiple offers until they finally prevailed and opened escrow on a lovely unit in Brentwood this week.

The top 0.01% of American earners – those with an average of $6 million income, have seen their incomes surge by 320% between 1980 and 2014 according economists.  That compares with just 42% growth for middle-income workers, which points to the affordability crisis we’re experiencing in the U.S. This explains why homes valued at $5 million or more is growing even faster as we have seen on the Westside in high-end sales.

Here is the list of five metropolitan areas with the largest share of homes worth $1 million or more in 2017:  1) san Francisco – 66%; 2) San Jose – 56%; 3) Los Angeles – 23.6%; 4) Fairfield County, CN – 17.7%; and 5) Long Island, 17.4%.

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My personal thoughts and outlook 

First of all, my heart breaks for all of those who lost their lives and homes due to the recent mud slides in both the Burbank and Montecito areas. One of my friends who was a top agent in Montecito lost her life, and another his home. I pray for everyone for their losses.  Hopefully when we get more of our much needed rain, we will not sustain any more losses.

Going into the year, it appears that I am going to be a busy girl, with multiple buyers looking for homes in gated communities, both to purchase and to build.  I am also getting a listing of a lovely home behind the gates in Mountaingate.  It will be coming on the market in the next two weeks, so keep an eye out for it.  There are a number of other properties and /or clients that I am working with, so please keep up with me on my web site. Caroleschiffer.com and/or caroleschiffer/realtor @facebook.com

Don’t forget the public forum for the Berggruen  Institute this coming Sunday at Skirball from 10:00 – 12 Noon.  It is very important that they hear from the community about their plans.  Please see the link as reservations are required.  https://berggruen.app.rsvpify.com/

Here’s to a great 2018 for everyone!