Timely Real Estate News………………………………………………….15 June 2014
**************************************************************************************************************Hope Hope you had a Great Father’s Day…..
To all of you “dads” out there, I sincerely hope you enjoyed your Father’s Day. I fondly remember my dad who passed away over 10 years ago, and the wonderful memories and the lessons linger on, and will for the rest of my life.
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UCLA’s Anderson Forecast — rebound this spring to 3 percent annual growth rate
The Anderson Forecast has always been a very reliable source of analyzing and predicting our immediate economic condition….and their latest report, issued last week, asserts that the harsh winter weather that ravaged much of the country caused slower than expected national growth in the first quarter of the year will still result in an economy that should rebound by the end of spring.
While we enjoyed the sunshine in Southern California, much of the US was under siege from one of the severest winters in history — weather-impacted activities, such as factory production, automobile sales and construction, however, are expected to make up for time lost over the winter, leading to GDP growth in the 3 percent range. That rate is forecast to persist through 2016, boosted by increased housing and business investments, as well as gains in consumer spending. This is great news.
Anderson’s first report of the year for California focuses on the recent drought, analyzing the impact of the dry weather and the complex relationship between the state’s economy and its water supply. While the drought may affect certain agricultural sectors, the state overall will not be greatly affected by the unseasonably dry weather conditions.
However, the UCLA Anderson Forecast team took a hard look at a variety of problems still plaguing the Los Angeles economy, including the high cost of housing and commuting, a poor environment for business and the relatively low education levels of the local population. These continue to be serious issues facing local governments — as businesses (such as the automobile, entertainment, and high-tech) are being courted by other states: They feel that California is very vulnerable to losing major companies, as witnessed by Toyota’s announcement to leave for Texas. Texas is in California lobbying for Tesla’s new battery factory as well.
The National Forecast
In light of the nation’s expected 3 percent GDP growth, UCLA Anderson Forecast Senior Economist David Shulman 
forecasts increases in overall job opportunities. In his report, he writes, “We can visualize the economy creating between 200,000-250,000 jobs a month with the unemployment rate dropping to 5.4 percent by late 2016 … total payroll employment will surpass the prior 2007 peak, but the economy will remain well below its pre-Great Recession growth path.”
Anderson also expects an uptick in inflation, anticipating the core consumer price index to increase from 1.8 percent in 2013 to 2.5 percent in 2016, which is still moderate compared to other inflation rates in past history. As inflation rises, wages will rise as well. For most Americans, the increase in wages will be most welcome the report said, but it can also lead to increased inflation that should cause a “yellow caution flag.”
The California Forecast
The California forecast report points to the severe impacts that the ongoing drought and dry weather are having on the 
California economy. According to Anderson, the report notes that in California there are four sources of demand: agriculture, fisheries and the environment, households and industry. Agriculture, by far the largest segment of demand, consumes about 80 percent of all delivered water. So water becomes an integral part of any economic recovery.
Anderson notes that while we have had drought conditions over the years, we have managed to get through these dry spells by using other mitigating methods of supplying water to both agriculture and industry. But given our fragile recovery from the Great Recession, Anderson stated that the potential for this drought to drive industrial and agricultural structural change towards an adaptation to a more arid environment, a prudent incorporation of the drought impact would be to lower the forecast employment growth rates for the next few years by about 0.2 percent. This is more a recognition that disruptions are not without cost than a significant change in our economic forecast for the Golden State.
The latest forecast for California calls for total employment growth (payroll, farm and self-employed) of 1.8 percent in 2014, 2.2 percent in 2015 and 2.1 percent in 2016. Non-farm payroll employment is expected to grow at 2.2 percent, 2.3 percent and 2.0 percent for the three forecast years. Real personal income growth is forecast to be 3.1 percent in 2014 followed by 3.8 percent and 3.7 percent in 2015 and 2016. The unemployment rate for the three forecast years are expected to be 7.8 percent, 6.9 percent and 6.0 percent respectively, with the rate going as low as 5.7 percent by fourth quarter 2016.
Problems/Solutions for LA’s Economy: Human Capital, Public Education, and Migration 
UCLA Forecast Economist William Yu examined a variety of conditions plaguing the Los Angeles economy. These include the high cost of housing and commuting amid an unfriendly business environment. He continues his examination of the First 5 L.A./UCLA City Human Capital Index, which measures the education levels of various metropolitan populations.
Los Angeles has ranked near the bottom of major U.S. metropolitan areas in terms of job growth since 1990, joining only Cleveland and Detroit as cities with negative job growth in the last 23 years. His report, titled “Problems and Solutions for Los Angeles’ Economy: Human Capital, Public Education, and Migration,” suggests that Los Angeles’ economy is somewhat bifurcated, as better-educated West Los Angeles has had healthier job recovery compared to other parts of the city.
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What about the numbers? — Sales activity, median sales prices up
Spring, good weather, and a pent-up demand for quality housing are again driving up sales activity, along with some 
mammoth sales that are eclipsing last year’s activity by a substantial margin. With two very large sales closing escrow in May 2014 — $45 million in Bel-Air and $40 million in Brentwood, these two sales have help provide a 29% increase in total sales activity on the five communities I report on.
Sales activity through the first five months of this year was $1.338 billion vs. $1.036 billion in 2013. “We have had other large sales in these communities over the years,” Carole Schiffer stated, “and having two in one month is not unusual, given the demand for quality, large estates that is being generated by limited inventory.” Please do not forget the sale of the house in Bel Air in April for $125 million. Also, please remember these numbers are from the stats through the multiple listing system and if there were any private sales, they are not in these numbers.
Median Sales continue strong across the board
While these two large sales would greatly impact the average sales price in any region, the median sales price statistic is used by most analysts such as Data Quick and the National Association of Realtors. And it is the ongoing statistic
that I point to as being the primary barometer to measure how we are doing over a “period of time.” With five months under our belt, we continue to feel the pressure of increased demand, which is driving up the median sale prices 
everywhere, not just here in our communities.
Beverly Hills has had some large sales since the first of the year, and based on the first five months of this year, median sales prices are up to $5.325 million with 11 homes sold (out of 14) that were over $3 million. Beverly Hills Post Office is at $2.435 million and had 4 out of 12 sales over $3 million….Bel-Air is up to $2.981 million — with 8 out of 15 homes sold over $3 million…Westwood/Century City is at $1.766 million — 3 homes sold out of 16 over $3 million, and Brentwood is strong with $2.947 million with 12 homes sold out of 22 over $3 million. Of course, these ratios fluctuate from month to month as we have seen in every report.
If you can imagine, we are still behind where we were in 2007, but we are climbing our way back on sales activity and median sales prices. Inventories are slightly increasing, which is relieving some of the pressure on buyers, who are not scrambling as much as they have been in recent months.
The growing strength of home prices….
Based on all of the information we are seeing, it is likely that prices will increase throughout the remainder of the year, but at a slower pace than we have seen earlier this year. Remember, we are comparing median sales prices (above) to a year ago, when prices were still well below the 2007 levels. When comparing April 2014 median sales prices to May 2014 sales prices, there are some examples of a slowing — for example, Beverly Hills Post Office is down 24% for May 2014 vs. the previous month….Bel-Air is down 53% from May compared to April 2014….but Westwood/Century City is up 14%, Brentwood is up 16%, and Beverly Hills is up 52%. So there you have it — some up, some down. Again, a month does not make a trend.
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Job growth is back….and outpacing national gains
As noted in the Anderson Forecast, Southern California fell harder in the recession than the rest of the country and took longer to recover, but now the region’s job gains are outpacing the national employment upswing. According to the Los
Angeles County Economic Development Corp. report released to the Los Angeles Times last week, “while we have not gotten back all of the 435,000 jobs lost between December 2007 and January 2010, “we passed an important milestone in recovering all of the jobs lost in the recession in the U.S., but that gives us only partial satisfaction because we continued adding to the labor force throughout that period,” the report said. “And that’s every bit as true at the local level.”
Cheery economic reports showing rising home prices in Southern California, along with steadily recovering personal income, will help boost optimism. But new opportunities will lure more job hunters into the labor force, requiring employers to add more jobs to keep unemployment rates low.
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I swear that was the name of the town…..lost towns in Southern California
Settlers didn’t always get their way as we find out. Westwood and Beverly Hills didn’t start out that way — in their original “place” were Sunset and Morocco (yes)…and they’re not the only towns that changed their original names.
For example, the street grid of Morocco once stretched across the same gilded real estate occupied today by Beverly Hills. The ruins of a town named Minneapolis lie beneath Atwater Village. The independent city of Tropico melded into Glendale.
In an earlier age, geographic names were more ephemeral — especially during boom years like those of the 1880s. Maps from that period, like the 1888 official Los Angeles County map, read as a catalog of failed real estate developments:. Kenilworth. Studebaker. Nadeau. Gallatin. Clearwater. We have seen this happen since, of course, such as California City in the Mojave Desert that is still there but isn’t.
Many of these settlements were never more than paper towns, existing only in the drawers of the county recorder’s office.
Between 1884 and 1888, developers platted more than 100 towns in Los Angeles County — some on the fringes of established cities like Los Angeles and Pasadena, others on the open plains of former ranchos. Lots changed hands and fortunes were made, but few of the towns actually made an imprint on the landscape by the time boom turned to bust. (A few that succeeded: Burbank, Inglewood, and Glendale.)
In some cases, it’s only the names that have perished; the towns survive to this day under new identities. That’s true of Marian, which we know today as Reseda. The town of Ivanhoe became Silver Lake. Toluca was first renamed Lankershin, then North Hollywood.
There are ghost cities, too — once-independent communities swallowed up by larger municipalities, often losing their identities in the process. Most have heard of Eagle Rock, Hollywood, San Pedro, Sawtelle, Venice, Watts, and Wilmington — all independent cities that eventually consolidated with Los Angeles. But there was also Hyde Park, which the metropolis absorbed in 1923, followed by Barnes City in 1927. Long Beach merged with Belmont Heights in 1909. And the city of Tropico, which incorporated in 1911, became part of Glendale in 1918.
And if you look at our modern Southern California cities — you’ll discover that Leisure World became Laguna Woods….Laguna Niguel was partially annexed by Dana Point and even the Ritz Carlton of Laguna Niguel is now located within the city boundaries of Dana Point.
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Did you know…..?
I’ve been fortunate in having a very successful real estate career, starting out in Marina del Rey and then moving to Fred Sands Realtors in Brentwood in 1982. One of the things that I love about this business is that everyone brings something to the table and through the years I have had the opportunity to meet and befriend some wonderful people. One of my friends says I should write a book about some of my experiences in this business, but I think I am going to pass!.” As I have many clients that I am still working with, and watching us grow older together has been most rewarding, I am blessed that new clients continue to come aboard and allow me to help them find their new dream home.
When Fred Sands sold his business to Coldwell Banker in 2000, I joined a much larger organization, and I must admit, I had some reservations at first, but Fred Sands or as I call him “Uncle Fred” assured me that I would do well with the 
structure of a bigger company, and he was been correct. I have been so pleasantly surprised at how “local” and “independent” we are — we just happen to have one of the most progressive, most technologically advanced real estate firms in the world….not just in Brentwood. There is a spirit and enthusiasm in our Brentwood office that is simply infectious. So, I thought I would share a few facts with you….
* Did you know that Carole Schiffer is in the Top 10 in one of Coldwell Banker’s top real estate offices in the US? She has been a consistent leader in Coldwell Banker since she joined the company in 2000.
Did you know that Carole Schiffer is among the top 5% of Coldwell Banker agents throughout the country?
* Did you know more than half of Carole’s sales are NOT in Bel Air Crest and Mountaingate. She works throughout Southern California, from San Diego to Northern California (?);
* Did you know that Carole Schiffer has sold more than $1.5 billion in real estate in Southern California? That’s a lot of transactions and more importantly, it’s a track record of tenacity, perseverance, professionalism and personal service.
* Did you know that prior to selling real estate, Carole was a professional fund raiser and continues to be involved in that capacity on a volunteer basis and also produced and managed Great Tastes in Brentwood for 20 years which raised money 
for the local public schools.
* Did you know that Carole has a daughter who is married and lives in Bend Oregon where she owns a bicycle touring business called, Cog Wild.
* Did you know that Coldwell Banker is #1 in residential real estate sales in the United States? We dominate the US, California, and Los Angeles County markets.
Contact Carole at 310 442-1384 or Carole@caroleschiffer.com to learn more!
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