Timely Real Estate News………………………………….. 15 January 2020
2019 ended with a ‘bang’ — sales up 18%
We started slow, but we ended the year on a very optimistic note with sales volume up over 18% compared to a year ago as of December 31 at $4.084 billion in total sales volume vs. $3.460 billion the previous period. At the end of 2018, sales volume was down 10% compared to the previous year, so this is good news.
What is more encouraging is that while there were a few large sales that pushed the volume up — one for $150 million in Bel-Air in December — the big increases in volume came from Beverly Hills, up $300 million over 2018 and Bel-Air/Holmby Hills up over $500 million. Each of the five communities I watch — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Brentwood, and Westwood/Century City— were generally near or above last year’s volumes. Malibu, one of the areas I cover, was off 45% in volume from $495 million in 2018 to $269% for last year.
In reviewing the December MLS data, the final sales prices were generally down from their original listing price. For example, Bel-Air/Holmby Hills Sales Price vs. Original Listing Price was down 65%, one of the lowest ever for this prestigious area. Beverly Hills was at 84% of original price, BHPO was at 90%, Westwood/Century City was at 92% as was Brentwood. Malibu was at 82% of original listing price.
Median sales prices barely moved the needle
In contrast to the stats for the sales volume are the stars for median prices. Prices generally held steady in these six communities for 2019. One would surmise that with the high demand for our neighborhoods combined with lower mortgage rates, the median sales prices would be more robust, but they weren’t.
Comparing 2019 to 2018, Beverly Hills, again, leads the group with a 4% increase in median sales price for 2019 at $6.200 million, followed by BHPO at 1% increase at $2.817 million, no change in Brentwood at $3.175 million, and Bel-Air/Holmby Hills was down 18% vs. 2018. Bel-Air had the largest sale of the year at $150 million but it really doesn’t factor in the median sales price math. Malibu’s median sales price was at $2.75 million, down 5% from a year ago.
What is trending in our communities? The flood of buyers has moved sales volumes up but have not impacted sales prices as we are seeing slight improvements in inventory. Inventory is the real estate “safety valve” — by having enough choices to select from, the feeding (buyer) frenzy doesn’t take over the market and sellers are getting their homes sold, but not always at what they originally asked for. Median prices will continue to remain near the current pricing mix, and volumes will continue to zoom up as the economy continues its hot streak. As reported below, 2020 is predicted to be a very strong economic year, so that bodes well for our real estate market as well.
2020 is a good year to buy a home
According to Market Watch, economists believe that 2020 will be a very positive year for the housing market. With low mortgage rates, slightly improving inventories in California and around the nation, and with demand stronger than ever, buyers, sellers, and renters can take advantage of the strong economic situation for this year.
UCLA’s Anderson December Forecast predicts California will have a strong economy in 2020 and does not predict a recession, but there is always a chance of a down turn if the tariffs are not worked out. Overall, we will be experiencing job and wage growth, although we still have a tremendous shortage of housing in the state by some 100,000 units annually.
If the past year is any indication, Market Watch predicts the housing market’s trajectory a year or more out can be something of a fool’s errand. At this point in 2018, mortgage rates had just hit their highest level in years and seemed poised to crack the 5% threshold in 2019. The view is that signing a major tariff deal has both good and bad news: If the trade deal serves a positive across the board in major market sectors, that will further boost the economy but also lead to possible inflation. And if that occurs, then mortgage rates could be going up, too. Bottomline: It’s too early to tell. We’re watching.
New construction sales jump…that’s good news for the economy
One of major crises facing the U.S. is the housing shortage, but the U.S. Census Bureau reported that sales of newly constructed homes in the U.S. increased 1.3% on a monthly basis in November to a seasonally adjusted annual rate of 719,000, the Bureau reported last week.
While the November sales volume represented a monthly increase, that’s only because the data for October were revised. Previously, the government had said that new-home sales occurred at a 733,000 annual pace, which brought new-home sales to an increase of 19.4% on an annual basis in November.
The median sales price for new homes in the U.S. was $330,800 in November. The government estimated there was a 5.4-month supply of new homes available for sale, up slightly from October’s 5.3-month supply. The supply of new homes last peaked at the 7-month level back in December 2018. New-home sales increased in the Northeast (up 52.4%) and the West (up 7.5%). Sales volume dropped 4.1% in the South and remained flat in the Midwest.
Did you know? California needs 180,000 new housing units every year to meet demand but can only produce 88,000 units on average. Affordable housing is a major issue for our state and there appears to be no improvement in sight.
Smaller cities will boom in 2020 economy
As larger cities attract more residents and are transitioning to higher densities with transportation networks crisscrossing the urban landscape, many are opting to move out to smaller, less congested cities.
The National Association of Realtors identified a growing number of cities that are seeing an influx of new residents, “escaping from the urban lifestyle” Cities in these markets generally benefit from strong economies and comparatively lower housing costs, though they too could end up seeing the kind of price inflation that has bedeviled bigger metros if they don’t add enough supply.
This shift toward secondary cities has been ongoing for some time now, and the NAR report notes that the trend won’t be limited to next year. But it’s still significant that the U.S. is currently seeing — and will in 2020 continue seeing — a pattern of migration to smaller and more affordable metros.
We’ve seen this in Los Angeles for decades, after all, we invented urban sprawl, so we know all about moving out to the “burbs”. The NAR report noted that one of the downsides will be that these ’smaller cities’ will create the same urban mess its new residents wanted to escape.
Luxury market may be in for good news in 2020
Around the globe, there is growing optimism that the luxury market, which had ebbed in 2019, is going to come back because home prices are still treading water in major global markets, and the world’s wealthiest clients are stepping back into the market.
According to global real estate consultant Knight Frank, home prices in relatively stable areas continue to sink into bargain territory and in even a few cities, such as Paris, are showing price increases.
Los Angeles is a bright spot in the $2 million to $10-million range and is expected to show only a 2% increase in prices. At the present time, with the Chinese retreating from the U.S., Los Angeles is more of a domestic market according to Knight Frank.
New design ideas for 2020 and beyond
Our homes become our emotional cocoon — they provide us the environment to live out our dreams and provide the living spaces that enrich our lives. As one leading designer put it..” people are really looking for their homes to be these kind of calm, quieting, soothing spaces where than can unplug and recharge,” as stated in Design Ideas for 2020 in the Los Angeles Times.
You may not be old enough to remember the 1970s, but you can probably picture the groovy living rooms, wood paneling and shag carpets of the era. Home and lifestyle design set the stage for our memories, experiences and collective history. It reflects the mood and attitudes of our times, showcasing triumphs of technology and artistic aspirations.
In today’s high-tech world, however, homes are becoming your office, your gym, your entertainment center, and therefore, all of this is inspiring how we want our homes to become. There are two important trends happening — sustainability and global inspiration for our designs.
We will be covering some of these very innovative and exciting design ideas in future editions of The SchifferLine.
Famous Adler Creek Grove of giant sequoias saved
One of California’s and the world’s greatest treasures — the giant sequoias at Adler Creek — have been saved, thanks to an ambitious fund drive across the planet. Save the Redwoods League raised nearly $16 million — more than half of it in four months — to close a deal for 530 acres of the Alder Creek Grove of giant sequoias.
The century-old conservation group took title to the Sierra Nevada property in December, realizing a long-held dream of acquiring the world’s largest private holding of the world’s largest trees. League officials said the $15.65 million from individuals and foundations is the most the organization has ever raised in purely private donations for a single conservation project.”
The Alder Creek property boasts 483 giant sequoias with diameters of at least 6 feet, including the 3,000-year-old Stagg tree. As tall as a 25-story building and wider than a two-lane road, the Stagg is the fifth-largest giant sequoia, as measured by trunk volume. That makes it the world’s fifth-biggest tree on record.
This and that
I hope you all had a wonderful Holiday celebration. Mine was very busy with my
family from Canada all joining us. Now it is back to work, and I am busy with both Buyers & Sellers. It should be a strong market again this year, so please call me and take advantage of it.
One very important thing to remember this year, PLEASE I have a listing coming up in Mountaingate in the next week or so as soon as we get it staged. It is 4501 sq. feet with 5 bedrooms/4.5 baths with lovely golf course views and will be priced at $2,775,000. I can show it now before it officially comes on the market.
MAKE SURE YOU WRITE 2020 ON ALL OF YOUR FINANCIAL DOCUMENTS. Leaving the 20 office could invite someone to out in a different year and cause you great financial distress!
January 25 is the official day for the Chinese New Year!. Enjoy those noodles for a long life and other symbolic foods to celebrate. Also just heard that they have some of the funding for the rapid transit line for the connection from the San Fernando Valley, through West Los Angeles, eventually ending at LAX! The projected finish date is 2033.
Please get in touch with me for all your real estate needs. I am very much looking forward to working with you.
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at email@example.com www.caroleschiffer.com
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