The SchifferLine
Timely Real Estate News………………………15 January 2022
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Welcome to the first issue of the Schiffer Line for 2022!
The real estate train just keeps on moving’….
By the time we reached the end of 2021 — what has been described as a horrific year for so many — we continue to be amazed at the astounding stats for real estate during this pandemic. For the communities I report on each month — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood, sales for 2021 were up 56% over 2020, rising to $6.142 billion, compared to $3.919 billion a year ago. We have been seeing these increases every month since mid-summer, and it does not look like it is going to abate any time soon. We saw more than $2.220 billion more in sales for the past year over 2021. That is a ‘billion’!
Culver City, one of communities I cover also, saw sales reach $383 million vs. $233 million in 2020, a 64% increase.
Leading the sales train in 2021 was Beverly Hills, which saw a $920 million increase in sales volume over 2020. Brentwood was next — at $621 million over 2021….Beverly Hills Post Office was up $280 million, Westwood/Century City was up $240 million and Bel-Air/Holmby Hills was up $140 million. These are impressive numbers, and all these sales were pocketed by sellers, happy to contribute to these new sales records.
With regard to buyers they are still pursuing the market, willing to stand in line and do whatever it takes to purchase a home. I have several buyers anxious to see properties and have the cash in hand. Bottom line — demand far exceeds supply, and yes, the real estate supply chain challenge is real, and I do not expect it is going to disappear anytime soon. Reason? Homeowners are flummoxed over where to go if they do sell. We have been dealing with a shortage of inventory for a few years. Hopefully that situation eases up soon.
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Median sales prices are not being left behind…
Sellers are taking advantage of this market — as prices continue to rise across the board. As we have seen a surge in median sales prices during the past quarter, we continue to see strength in the in all my communities I report on. Bel-Air/Holmby Hills reported a 33% increase in median sales price to $3.139 million, a record. Beverly Hills was up 16% to $7.500 million…Brentwood was up 14% to $3.800 million, Westwood/Century City was up 13% to $2.657 million, and BHPO was up only 6% to $3.400 million. Culver City’s median sales prices grew 11% last year to $1.680 million.
Sellers for the most part are pricing their homes competitively as most of the homes sold last month were at 99% when comparing Selling Price to Original Listed Price…and average days on market were at 55, which has been the norm for the past 12 months.
Individually, these communities all benefit from their adjacency to one another as we travel from one area to the next, with no defining boundaries, resulting in a blending of world-famous neighborhoods, manicured front yards and estates, and spectacular homes that showcase the wealth and attractiveness of these communities. It is no wonder that our prices are rising rapidly in this tight real estate market — the schools and lifestyle play an important part in people’s decision as to where to move.
Also, as always, we must remember that all these median sales numbers are impacted big sales for example, in Beverly Hills there were fourteen transactions over $3,000,000 including some ranging between $$9,900,000 and $20,000,000. In Beverly Hills Post office there were twelve over $3,000,000 including five (5) between $,6,250, and $64,900,000. For Bel Air it was thirteen over $3,000,000 and eight (8) from $6,800,000 to $13,850,000. Brentwood brought twenty-six over $3,000,000 with fifteen between $7,200,000 and $56,500,000 (clearly the winner in terms of the number of high-end sales!). Westwood had five (5) over $3,000,000 with the highest sale there at $16,750.
Culver City which had a $4,000,00 sale in November, had two sales over $2,000,000 in December.
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What impact does the inflation and interest rates play in all of this?
While fixed rates are still low at 3.5% with a projection of 4% by the end of the year which is the highest they have been in about two years. This plays havoc with buyers as they decide where they go from here. The projection by my lender, Simon Atik at Guaranteed Rate Affinity is that we will see more buyers getting adjustable rates rather than the fixed ones they are getting currently. Everyone is watching to see what the Federal Reserve does with interest rates.
The forecast is that this increase in mortgage rates interest will most likely create more inventory (Yea) and perhaps cull some buyers from the market. Also, there is still a great deal of cash out there.
We can also expect both Fanny Mae & Freddie Mac to increase their interest rates on second homes. No indication yet as to what those numbers will be.
Currently we are looking at an inflation rate of approximately 7%. I do not know about you, but I see it everywhere. While it is not tied to inflation, it amazes me to see the empty shelves in the markets on staples, such as bread, etc.
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Fed calls inflation a real threat
With the latest inflation news that saw prices increase 7% this past December compared to a year ago, Fed chair Jerome Powell called high inflation a “severe threat” to a full economic recovery and said the central bank was preparing to raise interest rates because the economy no longer needed emergency support.
Mr. Powell said he was optimistic that supply-chain bottlenecks would ease this year to help bring down inflation as the Fed takes its foot off the gas pedal. But he told lawmakers at his Senate confirmation hearing that if inflation stayed elevated, the Fed would be ready to step on the brakes. “If we have to raise interest rates more over time, we will,” he said.
He said nothing to push back against expectations that have firmed in interest-rate futures markets over the past week that the central bank would begin a cycle of interest-rate increases in March. As it relates to real estate, we are witnessing tremendous increases in prices throughout the U.S. market, and as reported in December, November prices were up 18% compared to previous year. And we are seeing that here, too, in my communities I report on.
The Fed noted that the major increases in energy (gasoline at the pump) was a major factor, along with furniture, restaurant and food costs. Rents were tracking at near 4% increase over a year ago.
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2021 was banner for luxury residential market
By all measures, 2021 was a banner year for the country’s luxury residential market, despite the economic uncertainty caused by the continuing global pandemic. We have certainly seen that on the Westside as we have experienced record sales of homes in the $5 million-plus market.
At least forty properties in the United States sold for $50 million or more last year, a 35% increase from 2020, and at least eight sold for at least $100 million, a 300% jump from the prior year, according to data compiled by appraisal firm MillerSamuel and The Wall Street Journal.
The biggest sale of the year was the roughly $200 million sale in December of an approximately 340,000-acre Montana cattle ranch located near Yellowstone National Park. The purchasers were media mogul Rupert Murdoch and his wife, Jerry Murdoch. The property includes twenty-five homes, a 28-mile-long creek filled with trout, and around 4,000 elk, eight hundred antelope and 1,500 mule deer.
Real-estate experts attributed the increase in activity to low interest rates, as well as a surge in wealth created through gains in the stock market and alternative assets like cryptocurrencies. While deals in the ultraluxury sector do not always speak to a broader surge in real-estate values, in 2021 they did coincide with a general uptick in the overall housing market.
As of November 2021, existing-home sales were on track for their strongest year since 2006, thanks to low mortgage-interest rates and a robust job market, The Wall Street Journal reported.
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Culver City — a dynamic city on the move
Located just a few miles from the beach, Culver City has kept a low profile since its founding in 1917 by Harry Culver. With a population of just 41,000, it has always been a center for film and later television production, best known as the home of Metro-Goldwyn-Mayer and Sony studios.
What makes Culver City so attractive is its diverse areas of shopping, restaurants and nearby recreation facilities being centrally located. The city went through a ‘rebirth in the 1990s and 2000s via a successful revitalization program that featured a renovated downtown, new shopping centers, and expanded its movie studio franchises. There is an influx of art galleries and restaurants which in turn attracts buyers to handsomely priced homes that populated the city from its beginning as well as its excellent school system.
Still one of the most competitively priced residential areas on the Westside, Culver City has become a beacon for first-time buyers and residents who want that ‘home-town’ feeling. They can get it all here.
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Pending home sales slipped in November.
According to the National Association of Realtors, pending homes sales receded slightly after a previous month of gains. Each of the four major U.S. regions witnessed contract transactions decline month-over-month. Year-over-year activity mostly retreated too, as three regions reported drops and only the Midwest saw an increase.
The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, fell 2.2.% to 122.4 in November. Year-over-year, signings slid 2.7%. An index of one hundred is equal to the level of contract activity in 2001.
“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” said Lawrence Yun, NAR’s chief economist.
“While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some prices and a lack of available homes, have created a much tougher buying season.” consumers with affordability.”
Yun notes that housing demand continues to be high, explaining that homes placed on the market for sale go from “listed status” to “under contract” in approximately 18 days. “Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year,” he said.
Yun adds that a countrywide surge of the omicron variant poses a risk to the housing market’s performance, as buyers and sellers are sidelined, and home construction is delayed.
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If you home could talk…,what would it say? “Help!”
We all have our little secrets when it comes to our living spaces. Over time, we find there are important maintenance
tasks that we seem to put off…they are either too ’nasty’ to take on…or they are out of sight, out of mind…or we just prefer to ignore them. So, as you enter the new year, and Spring Cleaning is just around the corner, what are some of those little ‘dirty secrets’ you have avoided doing in 2021. Here are some, as suggested by the Wall Street Journal…
Refrigerator cleaning — who wants to do that? But we all know that lurking in your ‘refrigerator’ are items seldom or never used, and are hidden in the dark recesses, out of view…but your refrigerator knows…Cleaning your refrigerator ranks as one of the most common ‘deferred maintenance items’. Another is: Cleaning out the garage. I’m guilty of this, and my New Year’s resolution is to take care of this, and by the next time The Schiffer Line comes out, it will be cleaned. I already started working on mine. Today I had three boxes of items shredded with a company that came to the house and shredded them on the spot! It felt great. Next project, the reorganization of the garage and building cabinets for everything.
Oven cleaning is one job none of us like to do. Oh, sure, we have these automatic oven cleaning dials, but we tend not to use them according to the WSJ’s survey. Dirt accumulates, and we all know that it really must be done. Next? Tree pruning. Or any pruning. This is something that we need to do not only for the health and growth of the trees, but with most of us living in high fire danger zones, we are required to do. Gutter cleaning —With the record amounts of rain we experienced in December, it was critical that our drains were clean and clear of debris. If not, it overflows and then we could experience that dreaded roof leak. I would also suggest that you have gutter guards installed so that they catch all the debris including those leaves so that the water has a clear flow channel when it goes into the gutters.
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What is going on in my world?
I had planned to go to Vancouver to spend the holidays with my family, but as my departure date got closer, I got increasingly more uncomfortable with the thought of flying. Seeing all those crowds in the airport did me in.
I had not seen the kids for two years, but it simply was not worth the chance of getting sick. I am hoping to be able to go in March. I was also very busy and the stress of leaving while I had a lot going on, put me over the top in deciding not to go.
For those of you who like myself who live in the Sepulveda Pass, the power outage we experienced last weekend was miserable. There were seven hundred homes impacted from 10:00 am Friday morning until 5:00 am Sat am, and then it happened again on Monday. I think they are still working on fixing the problem. I can tell you that I was more than thankful for the emergency backup battery I have for my garage door, and if you have not yet invested in one, I urge you to do so soon. I am also very thankful for my friends that took me in for a while on Friday night as they had power while I tried to figure out why NONE of my emergency lights in my house did not work (still have not figured that one out yet).
Work wise, I am still on the hunt for homes that might be coming up for sale. Currently I have about four -5 buyers in the price range of $1,900,000 – $3,500,000 just waiting for something to come on the market they can purchase. The all have needs specific to them but are solid buyers. So please if not after the holidays you are contemplating a move, please do let me know and perhaps we can make a match…… carole@caroleschiffer.com , ceschiffer@gmail.com or 310 442-1384.
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