Timely Real Estate News…………………………………..15 June 2016
Sales improving on Westside…but could be better
Sales activity picked up in the five communities I report on each month….even though sales were down from a year ago by 6% for a total of $1.187 billion — it is better than it was last month, when sales for April vis a vis 2015 were down over 10%. Is this progress? Well, sort of. We’re still fighting inventory shortages as home prices seem to climb in some areas, not so much other communities. We can tell at open houses, there are lots of hungry buyers out there vying for the limited number of homes available in our popular communities. Multiple offers — if a home is priced correctly — are now the ’standard’. Home not properly priced will sit…and sit. One thing to know about multiple offers however, it doesn’t automatically mean the house will sell over asking price as has been the standard recently, it just means there are Multiple buyers for the same type of home.
I report each month in the SchifferLine on real estate in the communities of Beverly Hills, Beverly Hills Post Office, Bel-Air, Brentwood, and Westwood/Century City — what I call the heart of the Westside. This prestigious enclave is made up of some of the most beautiful neighborhoods in the world and buttressed by the world’s finest collection of shops, restaurants, schools, and cultural assets. In many ways, what happens here is not the ’norm’ for what transpires throughout the rest of the nation, although we do get impacted by national events (like Federal Reserve rate changes, etc.).
Median sales prices — three up, two down
It is seldom that a month goes by when all of the communities I report on are all up or all down…one community or area generally sticks out for not following trends. The reason for the un-evenness in data we get from these five communities from month to month is simple: They’re all different and each community has their own nuances in character, residential inventories, and demand Also, has we have seen in the past, they may have been some exceeding higher priced sales, which always skew the numbers. Through the first five months of this year, Beverly Hills median sales prices were down 12%, coming in at $4.250 million. Bel-Air was also down last month by 11% to $2.136 million, however, Beverly Hills Post Office was up 21% to $2.435 million….Westwood/Century City was up 2% to $1.737 million and Brentwood was up 6% to $2.650 million.
When you look at May’s median sales prices compared to May 2015, Beverly Hills was down 15%. BHPO was down 16%, Bel-Air was down 20%, but Brentwood was up 33%, Westwood/Century City was up 16%. Confusing? It can be…and each month I try to make sense of these numbers which can be, quite frankly, numbing. But the cut-to-the-chase key numbers is volume and median sales prices. And we are seeing gradual improvements in each community.
I also report on one of the more popular communities outside of my core five areas each month…and this month is Palms/ Mar Vista, a burgeoning, hot real estate area these days. Median sales prices for the first five months of this year are $1.295 million, up 8% from a year ago. Palms/ Mar Vista is also up over 66% in median sales prices for May 2016 compared to a year ago. So you can see that once ’sleepy’ Palms/ Mar Vista is waking up. In looking at some homes that are new listings in the Palms/Mar Vista, while they all need some work and “tender loving care”, there are in fact a few homes that are coming on the market just under the $1,000,000 mark or in some cases, a little over, which amazing enough as it sounds makes them good prospects for first time buyers! Please let me know if you know of anyone who might be interested in seeing any of these homes, either as owner users or as investors!
Home equity is improving…and that is good thing
In a report released last week from one of the nation’s leading data-tracking firms, Core Logic, it was reported that Los Angeles had the fourth highest percentage of homes in a positive equity position — 96.1%. Where are the areas that are in slightly better shape than we are? San Francisco area came in #1 at 99.4%, followed by Houston at 98.3%, and the Denver area by 98.3%. If there is a positive, then there is a negative, right? Leading the negative areas are Las Vegas, Miami, Chicago, Washington, and New York-New Jersey areas.
Core Logic issued a report last week that showed more than 268,000 homeowners regained their equity in the first quarter of this year. Nationwide, home equity increased year over year by $768 billion in the first quarter, rising to 46.7 million homes or 92% of all mortgaged properties. The total number of mortgaged residential properties with negative equity stood at 4 million, or 8 percent of all homes with a mortgage, in Q1 2016. This is a decrease of 6.2 percent quarter over quarter from 4.3 million homes, or 8.5 percent in the first quarter of 2015.
Equity is coming back — that’s the good news. “In just the last four years, equity for homeowners with a mortgage has nearly doubled to $6.9 trillion,” said Frank Nothaft, chief economist for Core Logic. “The rapid increase in home equity reflects the improvement in home prices, dwindling distressed borrowers and increased principal repayment. These are all positive factors that will provide support to both household balance sheets and the overall economy.
Economic recovery turned 7, then how come it feels so weak?
In a major economic overview in the Los Angeles Times a few weeks ago, despite the fact that our economic expansion is the fourth-longest since the end of World II, overall we’re not doing as well as we all would like. That’s the opinion of the chief economist for the UCLA Anderson Forecast. “We’ve come a long way from the bottom of 2009,” said David Shulman, senior economist at the UCLA Anderson Forecast. “But compared to the historical growth track, we’re so far below it that it’s staggering, and that’s the unease the public feels about the economy.”
You’ve already heard about the low jobs growth report several weeks ago, but that’s just one item of concern. According to the report, while job growth sputtered in May, the total economic output is expected to grow only about 2% this year, well below the 3.4% average from 1950 to 2007. The pace of our recovery has been the slowest and leaves us a precarious situation….and as one analyst put it…“when you’re growing slowly and bad things happen, as they do, you get knocked toward zero too quickly,” According to this report, the growth perspective is still positive, but it would be more comforting if all of the aspects of the economy were more positive.
Demand for single family homes weak…but there’s a reason
We have had what appears to be strong employment (now at 4.7% unemployment rate), but that doesn’t really tell the whole story. Wages are not rising fast enough to support the housing recovery where affordability is a key issue facing many first-time buyers. Despite unusually low mortgage rates, demand for single-family homes has been weak, especially among young adults, many of whom are still living with their parents, paying off college loans, and suffering from lack of adequate down payments.
Builders, meanwhile, have complained about soaring regulatory costs and a shortage of affordable lots. Their response has been to build more apartments and fewer but larger homes that yield bigger returns. Lenders, too, have been going after higher-end customers, making more jumbo loans. All that hasn’t helped the first-time buyer or the broader housing market.
We’re a global village, right? And then there is the global economy….we’re seeing a higher percentages of Americans purchasing properties on the Westside where there has always been a strong contingent from Asia, Canada, and South America. However, there is the lingering uncertainty over China’ s economic slowdown, which clobbered financial markets early this year. Currency swings and interest rate hikes by the Federal Reserve could roll countries with large debts. Political turmoil in the Middle East and North Africa could further disrupt oil markets and propel outflows of refugees into Europe.
Fed does the expected — no rate increase.
The pundits were right — the Federal Reserve announced there would be no rate increase at their June 15 meeting. Controlling inflation is one of the goals with rate increases, and Chairman Yellen deferred to possible rate increases at their next meeting in August. So, no surprise today. Mortgage rates remain low, under 4 percent….and the economic growth, hovering at 2 percent, is not threatening inflation. Stay tuned.
If you want to impress buyers, better start at the curb
Did you know that nearly 50% of homebuyers make their decision before they get out of the car? That’s why “curb appeal” is critical to sellers to make sure their home and their landscaping is in top shape. According to the National Landscapers organization, 84% of Americans agree that the quality of a home’s landscaping would affect their decision to buy the home. Here are four landscaping suggestions:
1) Be “welcoming”. It’s the first impression individuals get of the house and perhaps the whole neighborhood. The landscaping should be attractive enough to make prospective buyers want to walk through the front door.
2) Keep property well-maintained. Exterior needs to look sharp, and up-to-date, just like your interior. Shrubs and trees need to be trimmed and make sure your flower beds and lawns are properly maintained, even in our drought conditions. In one of my listings, my clients changed their entire yard to drought tolerant plants which has completely impressed the prospective buyers. It is not an inexpensive proposition, but with the recent forecast of La Nina, which is a warm, dry weather situation it might be time for all of us to look at how we can make a difference and improve our landscaping palates at the same time.
3) Stay within community norms….look around the neighborhood and make sure your property doesn’t stick out — not too gaudy and not out-of-the-ordinary either….and
4) Be energy-efficient. You can create a visually attractive landscape by using low-water and drought-resistant grass, plants, shrubs and trees, and it’s especially popular these drought-driven days of summer.
It hard to believe but most schools in the area are out for the summer, and we all are busy planning our summer holidays!.. WOW.. Where did the time go? I am very much looking forward to spending a few days in my home in Coronado. However, life goes on and I have been very busy showing my listing on Dean Circle in Mountaingate, we are busy preparing a 2/2.5, den townhouse for lease in the Ridge, also in Mountaingate. We have not yet set the price, and it should be ready for you to see in about a week or so. Please let me know if you are interested or know someone who might be.
Also, please check out my web site… Caroleschiffer.com, or www.facebook.com/CaroleSchifferRealtor or firstname.lastname@example.org