Timely Real Estate News…………………………15 June 2015
Spring hasn’t “sprung” yet….sales activity trails through May
The spring selling season has encountered a small bump in the road with sales activity through the first five months of 2015 falling behind last year’s performance at this time. Sales through May 31 indicate that for the five communities I report on are down an aggregate of seven percent (7%). Putting that into $$, the total residential, single-family home sales for Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood/Century City, and Brentwood was $1.249 billion thru the end of May compared to $1.345 billion for the comparable period last year — or a $96 billion behind 2014.
The biggest drops in sales activity were in Beverly Hills Post Office, which was down $76 million, and Bel-Air was down nearly $25 million from the previous year. “This isn’t a trend in the making,” Carole Schiffer stated. “We see these ups/downs throughout the year. Last month, we were essentially even with sales to date for 2015. I expect to see our sales climb back up as we hit our stride during the spring/summer selling season.”
Median sales prices hover in the positive….
A deeper analysis of our residential real estate market reveals our median sales prices for these five communities that I report on show that we are keeping pace with last year, even though sales volume is down a bit. Bel-Air is positive with a one-percent increase year to date, and Brentwood is four percent ahead compared to 2014 at this time of year. Beverly Hills is down seven percent….Beverly Hills Pos Office is down 18 percent, and Westwood/Century City is down only three percent. “What is happening,” according to Carole, “is that some qualified buyers continue to be on the sidelines waiting for prices or interest rates to drop farther, but that’s not the reality in today’s market. If you analyze the selling price (SP) vs. the original listing price (OLP) in these communities, prices are not dropping that much.”
For example, in Westwood/Century City, the difference between the SP vs. OLP is 101.6%, meaning in some cases, buyers are paying over the listed sale price. In Beverly Hills and Beverly Hills Post Office, the ratio is 96%, and 97% in Brentwood….Bel-Air is at 93%.
Days on market reflect buyers are snapping at faster pace
Homes are selling faster in 2015. From 2007 until recently, homes could be sitting on the market for months on end. I remember writing about the issues surrounding homes that were not moving — and usually the culprit was over-enthused homeowners who felt their properties were worth more than buyers were willing to pay. In today’s climate, with the economy improving and with strong demand from foreign buyers and upwardly mobile entrepreneurs moving into the Westside, we are seeing homes move faster off the market.
Average Days on Market for Beverly Hills was 46, BHPO was 92 (high for our five communities), 59 for Bel-Air, 28 for Westwood/Century City, and 61 for Brentwood. There were periods not too long ago when homes were sitting on the market for 100 to 150 days.
Today, homes properly priced are going to move quickly. Buyers are more sophisticated and savvy, armed
with up-to-the-minute comparables and are very discriminating, — they know what they want. They are demanding homes that feature the most up-to-date improvements especially in kitchens and bathrooms. And competition is keen because we continue to have a shortage of homes available. Being nimble and quick in these times — plus having an experienced Realtor (like me) are key to getting the house you want.
UCLA Anderson Forecast sees CA improving
According to UCLA’s Anderson School June 3 Forecast, California is slowly on the mend. The state’s unemployment rate is expected to match the national rate by in 2017. The decrease will be driven by improvement in the construction and automotive industries, and by increased business investment and consumer demand, the economists predict.
The state’s jobless rate, which fell to 6.3% in April, will average 6.2% this year, then 5.2% next year before reaching 5% a year later, according to the quarterly report.
But the forecast contains caveats. Recent economic expansion has come paired with “an unusually large spike in the number of long-term unemployed” that appears to be linked to the decline in manufacturing and movements in the finance, legal and professional services sectors, said UCLA economist Jerry Nickelsburg. “This puts them in a position where their current skills, rusting from years of disuse, have not been in high-enough demand to bring them back to work,” he said.
One of the challenges of the current economy is that California is not adding higher-paying jobs to the state’s payroll. While the unemployment rate improves and should be even with the national level in two years, we’re still seeing slow growth in incomes. This puts a drag on the housing industry where monthly income levels must be high enough to qualify for a traditional mortgage. The new federal loan packages that call for a minimum of just three percent down helps many entry-level buyers.
The UCLA report singled out the high-tech industry in Southern California as lagging behind other leading tech centers. Economist William Yu noting that although the industry is developing fast nationwide, “Los Angeles is not among the top leaders in terms of patents, capital or salary.” The region does, however, host a number of small businesses that together constitute a sizable information sector, Yu said. Further boosting Los Angeles’ cachet as a high-tech hub would attract better-paying jobs — key for residents in an area known for its high cost of living, Yu said.
Nationwide, economic growth lagged for the second straight year following stormy weather early in the year. Still, UCLA economists anticipate that the GDP (Gross Domestic Product) will reach a 3% growth rate by the third quarter — a pace that will remain through the end of next year.
And although consumers so far have taken advantage of lower gasoline prices — a roughly $150-billion annualized reduction — largely by paying down debts or buffering their savings accounts, economists foresee an eventual boost in spending.
Foreclosures are down — but not forgotten
There was a time when we were seeing nearly 25% of the homes in U.S. cities that were underwater by as much as 75%. If you looked up/down the I-5 in California, from Modesto south to Riverside, homes had lost between 25% to 75% of their equity. Today, however, a lot of that lost equity is back, but not all of it. Foreclosures remain a fact of life in our real estate life.
Core Logic, a San Diego-based real estate research firm, released its Foreclosure Report and stated that foreclosure inventory in the U.S declined by 24.9 percent year over year from April 2014 (approximately 694,000 homes) to April 2015 (approximately 521,000 homes). Completed foreclosures declined by 19.8 percent year over year from April 2014 (approximately 50,000 completed foreclosures) to April 2015 (approximately 40,000 completed foreclosures).
This is good news because it means that fewer distressed properties are on the market, which has historically forced nearby properties to lose value when they are competing against homes that are priced to move quickly. According to Carole Schiffer of Coldwell Banker, Brentwood, “this has a very positive effect on the overall market in Southern California, while there still are forecloses or distressed properties on the Westside, the amount of them has decreased appreciably.”
Lenders are anxious to sell these foreclosed properties because of the maintenance and insurance liabilities, not to mention the monthly losses. Short sales, while once wildly popular just a few years ago, are still around, and there are associates of mine at Coldwell Banker who continue to do a robust business in this market. Call me for details if you’re interested in learning about any of these properties.
Don’t go near the water. Many still believe we’re in housing crisis
According to the MacArthur Foundation How Housing Matters in their 2015 survey, 61 percent of Americans believe we are either “still in the middle” of the housing crisis or that “the worst is yet to come”. That’s a big number! And for many, “perception is reality”, and it’s especially a negative when it comes to real estate.
Fifty-four (54) percent of respondents said they had to make at least one sacrifice or tradeoff in the past three years to cover rent or mortgage financial responsibilities. Twenty-one (21) percent of Americans took on an additional job or worked more to make mortgage or rent payments, and seventeen (17) percent stopped saving for retirement. Sixty-seven (67) percent of Millennials and sixty-four (64) percent of city dwellers also made sacrifices or tradeoffs.
Seventy-nine (79) percent of Americans said it’s more likely for middle-class people to fall into a lower economic class than for lower economic classes to rise into the middle class. This belief persists across political party, age and income.
Yes, good news is more than welcome in the real estate industry. And remember, everything is relative: What happens on our wonderful Westside is not the U.S. — we have continued to prosper even though we have a few bumps in the road.
New Truth in Lending program going into effect 1 August 2015
Effective 1 August 2015, the Federal Government is effecting a revised version of what we all know as the Truth in Lending program. We are still gathering all of the necessary information to better understand how it will work, but basically, for every real estate sales transaction that involves a loan, a revised disclosure statement will need to be issued that has to be signed by both the Buyer & Seller before any loan can be funded and the escrow closed. This means that any changes to the financial terms of the transaction, i.e. interest rate, amount of down payment, length of loan (years), credits from seller to buyer have to be included in this disclosure. It cannot be issued any later than 3 business days prior to the close of escrow, which according to escrow officers, lenders and title officers will most likely delay the close of escrow for a few days.
As I get more information, I will share it with you.
My World and Welcome to It
First of all to all of you who have wished my Mother a Happy 93th Birthday..THANK YOU! We had a scare about a week after her birthday, as it appears that she contacted an e coli infection from some food she ate on the plane and spent 4 days in the hospital. She is good now and back to her normal self!
I am, as are other agents, dealing with a long list of buyers and a lack of inventory to show and sell to them. It is difficult for clients to understand that there are a number of buyers out there who are looking at the same type of property they are and so when a new listing comes along that fits that buyers’ particular requirements, it is always surprising to them to see other buyers looking at the property at the same time, and if they like it and do take some time to decide to write an offer, to find out that it has already been sold… We need more well priced property on the market. As you can see from the above story dealing with “days on market”, there are still as there always are…. those properties that come on the market that are well priced and positioned are gone in a matter of days, and those that are not, are just sitting there. Trust me, the buyers are there, they like their agents are just waiting for those properties to come on the market.
Please let me know how I can assist you with any and all of your real estate needs, and help you sell those well priced properties.