Timely Real Estate News……………………………… I5 June 2017
Sales volume…up, up and away. Market sizzles
Summer hasn’t even arrived, but the Westside real estate market is sizzling hot in some of its most prominent markets— Beverly Hills, Beverly Hills Post Office, and Bel-Air/Holmby Hills, three of the six cities I report on each month. Combined, these three cities increased sales volume over a year ago by a total of $308 million, which is somewhat phenomenal for any market. Beverly Hills was up $135 million over 2016 at this time of year…Beverly Hills Post Office was up $81 million, and Bel-Air/Holmby Hills was above last year’s figure by $93 million. In addition, I also cover Brentwood and Westwood/Century City, which were marginally even with last year. Total sales volume for the five cities was $1.511 billion through May 2017 vs. $1.199 billion through May of last year.
Contributing to the robust sales volume were three large transactions for the month of May — two in Beverly Hills for $20 million and $15.9 million, respectively…and one for $27.5 million in BHPO and another $27 million in Bel-Air/Holmby Hills. “These sales provided the impetus for the large increase we have had through the first five months of this year. It isn’t really that there were some large sales, but the quantity of them is what really pushed the numbers for the month of May. For example, in looking at sales over $3 million there were 14 in Beverly Hills, 10 in Beverly Hills Post Office, 9 in Bel Air, 3 in Westwood, and 8 Brentwood. As a contrast, using the same criteria for last year again in the month of May, there were 6 in Beverly Hills, 4 in Beverly Hills Post Office, 5 in Bel Air, 4 in Westwood, and 16 in Brentwood. Also, just as a reminder, these are the sales that are posted in the MLS, there may be some others that were private sales which would skew the numbers again! Bottom line, there is a lot of money out there folks!
Median sales prices are up, too — mostly
Beverly Hills continues to lead the way in our market. Median sales price for a single-family home in BH was $6 million vs. $4.250 a year ago, a 31% increase (again impacted by the number of large sales). BHPO was up 18% at $2.965 million, and Westwood/Century City was up 15% at $2.076 million. Brentwood was also up….19% over last year at this time of year at $3.155 million. Only Bel-Air/Holmby Hills was off, just 1% at $2.109 million.
One of the key areas I work in is Santa Monica, a ‘city by the sea’ that has always been a popular community for its tremendous selection of shops, dining, and recreational assets up and down its beautiful shoreline. Santa Monica sales were up 4% for the year at $279 million…but median sales prices took a brief hit, down 21% to $2.312 million.
Days on Market — an interesting ‘take’. It goes without saying that if a home is not properly priced, it’s going to sit on the market for days and months. Homes priced competitively are ‘gone’ within a normal, measured “days on market” (DOM). The “Days on Market” for the six cities mentioned above are — Beverly Hills, 54 days; BHPO, 76 days; Bel-Air/Holmby Hills, 118 days (the highest in our area); Westwood/Century City, just 32 days (the lowest), Brentwood, 63 days; and Santa Monica, 47 days.
No surprise…. Fed hikes interest rate
Predictably, the Federal Reserve raised its key short-term interest rate Wednesday, held to its forecast of another hike this year, and announced a plan to shrink its $4.5 trillion asset portfolio in a move that will push up long-term rates over time.
The plan to unwind the balance sheet, beginning this year, represents a milestone in the eight-year-old recovery as the Fed grows increasingly confident the economy can move forward without the extraordinary support it has provided since the 2008 financial crisis.
Despite a recent downshift in economic growth and inflation, the Fed lifted its benchmark short-term rate by a quarter percentage point to a range of 1% to 1.25%. It marks the second such hike this year and third since December. It’s another vote of confidence in a recovery that, while sluggish, has whittled the unemployment rate to a 16-year low of 4.3%.
Homeownership hits 50-year low. What happened?
There we were…going along nicely and suddenly, Bam! We hit a pothole on the real estate highway. Despite steadily improving local job markets and historically low mortgage rates, U.S. homeownership rate is stuck near a 50-year low because of a perverse mix of affordability challenges, student loan debt, tight credit conditions and housing supply shortages.
I could say I “told you so” …but I won’t…. other people have, though. Housing supply shortages, in my opinion, are the prime culprit, combined with steadily rising prices and burdensome student loan debt which is forcing many first-time buyers OUT of the market.
According to findings of a new white paper authored by the National Association of Realtors last week, NAR Chief Economist Lawrence Yun and UC Berkeley Hass Real Estate Group Chair Ken Rosen, which stated that the dip and idleness in the home-ownership rate is a drag on the economy and we have to figure out a way to get more buyers into the market. Given the many benefits of home-ownership to individuals, the decline and stagnation in the home-ownership rate is a trend that’s pointing in the wrong direction, and must be reversed. There is also, the impact of long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs, and some young adults who witnessed the hardships of their family and friends.
There are signs of hope on the way, however. Fannie Mae has released a 3% mortgage down payment package aimed at first-time buyers, and there are several mortgage lenders who just recently introduced a 1% down payment plan (true story). “This is a serious challenge we’re facing in the U.S. economy,” Carole Schiffer stated. “In many ways, we become oblivious to others who are not inside the tent yet…it’s like the “last man” theory — I’ve got mine.” This is a problem that is NOT going to go away quietly or easily.
Go North, young man….to Montreal
Looking for property in beautiful Canada? Looking to spend under $300,000 for a lovely condo in one of the most beautiful areas on the Planet…Montreal? You can do just that, and what’s happening in Montreal is a bellwether for real estate savvy investors who want to get real value for their real estate dollar (US). Demand in Canada’s second-largest city has heated up enough to put Montreal-area home prices on track to rise 6% this year, the biggest jump since 2010, according to the Quebec Federation of Real Estate Boards. That’s up from a January forecast of just 1% growth. Job creation, robust consumer confidence and new immigrants are fueling demand.
“I just spent five splendid days in Montreal to see my nephew graduate from college,” Carole stated. “We took an hour’s drive outside the city and, Wow! is all I can say. It’s beautiful, a countryside you’ve always wanted or dreamed about with wineries, cheese farms, etc. And you’re only an hour from Vermont or New Hampshire.
Currently Montreal does not have the same Canadian real estate tax on foreign investors that exists in Vancouver or Toronto…so as a foreigner you won’t be saddled with an extra tax when purchasing real estate in Montreal as you do in Vancouver and Toronto where there is a 15% tax on foreign investors. This tax has changed the foreign investor picture in both of those cities. While I was there, we looked at some condos in Montreal, in the Vieux Port section of the city, and they are lovely, and again a short drive from the upstate New York or Vermont borders.
A $50 gallon of blue paint nets $5,400 or more…. yup! Color is a powerful marketing tool in selling your home. According to a well-known real estate analyst, just painting walls in a fresh, natural looking color, particularly in shares of blue or pale gray not only make a home feel larger, but also are neutral enough to help future buyers envision themselves living in the space.
For example, homes with bathrooms painted in a powder blue or periwinkle shade sold for an average of $5,400 more — the highest sales premium of all colors analyzed. When it comes to a home’s exterior, neutral tones, such as ‘greige,’ sold for $3,496 more than comparable homes in a different color. Furthermore, homes with front doors painted in shades of dark navy blue to slate gray sold for an extra $1,514. On the other hand, buyers seem to be put off by style-specific features such as terracotta walls, which resulted in a $2,031 dip in sales prices. But even more than that, prospective owners seem to hate white walls: Homes that had no color whatsoever sold for an average of $4,035 less.
California will increase jobs, but not enough to really stimulate economy
The UCLA Anderson Forecast, released their latest opinion last week that predicts employment in California will increase by a modest 1.4% and personal income will grow by 3.1% this year. Earlier projections were more optimistic. Over the last several months, President Trump has promised to pour money into a “great rebuilding of the armed forces” and has pushed a $1-trillion investment into upgrading the country’s roads and bridges.
“Congress seems to be so tied up in considering healthcare and taxes that they aren’t ready to take on a massive infrastructure bill,” said Jerry Nickelsburg, a coauthor of the UCLA Anderson Forecast. So, time will tell what’s going on with this proposed infrastructure bill, if it ever gets out of Congress onto the President’s desk.
Rising costs put renters in a hole….
With home-ownership out of reach for so many, renting is often touted as an affordable alternative, but recent studies have revealed that renters are feeling the pressure of rising rents just as much as buyers are struggling to find reasonably priced homes. According to the National Low-Income Housing Coalition’s latest study, “Out of Reach: The High Cost of Housing,” the average full-time worker must make $21.21 per hour to afford a basic, two-bedroom apartment and $17.14 per hour to afford a one bedroom.
For some, these hourly wages may seem easy to reach, but NLIH says the average hourly wage is $16.38 — $4.83 lower than the two-bedroom housing wage, and 0.76 cents lower than the one-bedroom housing wage. And rental inventory constraints are pushing rents higher, and builders will need to create 7.4 million affordable rental homes to close the gap and bring prices back down for low-income and middle-income families. Will this happen? It is doubtful that builders will want to earn less $$ these days. As a result, we will continue to face the rental crisis.
It was a very proud and happy day last week, when my nephew graduated from Concordia Business School with his degree in Business Management and Marketing! There were 750 students that earned their diploma that day, and it was fascinating to me to see the students from all over the world! It had been a family effort of love and support, and now the work begins for him to find a job and get settled. He is looking in both Montreal and Vancouver.
Leases in Bel Air Crest
Please do not forget my two beautiful leases in Bel Air Crest, 11813 Gwynne Lane, 4.3.5, den & office. Updated and in beautiful condition, patiently waiting for its new resident and priced at $10,500. 2223 Queensborough Lane, 5/6.5 family room, large yard with views and again updated and is sitting lonely for you to come and live there. We just reduced that price to $28,999. If you know of anyone who is interested in living in our lovely community or has any other real estate needs, please do not hesitate to give me a call.
COUNT ON CAROLE
Location, location, location. Right? Wrong. Sure location is critical in the marketing of your home – but two other factors – presentation and price — are equal if not more important. Carole can show you how you maximize all three. Count on it.
Carole Schiffer. The Westside Expert