SchifferLine 15 June 2022 | SchifferLine

The SchifferLine
Timely Real Estate News………………………….15 June 2022

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Lets’ Deal With Our Elephant In The Room

Yes, both the bond and stock market have taken hits the last few days, and yes, the blame falls into the lap of the increasing perspective of inflation brought on by the conflict in Ukraine, the horrific price of gas, food and other everyday items in our lives. This has in fact brought on an increase of interest rates and the potential impact on housing prices, etc. However, however much it hurts to see these prices, there is another reality to all of this; We are looking at the interest rates to stabilize sometime this summer (hopefully), home prices in “our neck of the woods” are currently continuing to go up, and the forecast is for that to continue.

Once again, we are being told to advise our clients to buy NOW. If you know anyone who is waiting for the market to crash, please tell them to stop holding their breath as unless something dire happens, the market simply is not going to crash, and they will have missed the opportune moment to get into the real estate game. Some may be uncomfortable obtaining a new loan at today’s higher interest rates and might think about getting a “swing or bridge” for their purchase, thus paying all cash and then re-finance the new loan at a later date. I think we all know that at the end of the day, real estate is the best investment we can make. The bottom line… There is no time like the present to purchase real estate.

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Some Buyers Pause Amid Rising Rates, Prices…

Some home buyers are backing away from the market, with a plan to wait six or even 12 months before they resume their search, according to a new survey of 900 real estate professionals conducted by Home Light. About 35% of real estate professionals reported that they have seen buyers drop out of the market completely.

Recent surveys confirm buyers’ hesitation: Mortgage applications recently dropped to their lowest level in 22 years, according to the Mortgage Bankers Association. Also, existing-home sales in April fell for the third consecutive month, according to the National Association of Realtors.

Does the departure of so many buyers position the housing market for a collapse similar to 15 years ago? “I would probably say no, in part because incomes are strong and there’s still a shortage of inventory,” Michael Neal, a principal research associate in the Housing Finance Policy Center at the Urban Institute, told MarketWatch.

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The Theory of Real Estate Relativity… Even Einstein Would be Shocked!

It’s all relative. Albert Einstein would surely be shaking his head if he came back and saw the enormous prices sellers were getting for their homes. With median prices for a California home in 1940 around $2,800 and triple that (and more) in Beverly Hills, home prices continue to rise across Los Angeles’s Westside. We continue to see mega mansions going on the market for excessive millions, only to be brought back to Earth as the market figures it out. Yes, Albert Einstein would surely be scratching his head at today’s cost of living in our ’neck of the woods’. Are we getting used to this? Yes, I think so. For the four major communities I cover — Beverly Hills, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood — the MLS data reveals a mixed bag of median sales prices increasing or falling back. Bel-Air/Holmby Hills had a 61% increase in median sales price of $3,995 million through May 2022 compared to a year ago at this time, while Brentwood, with a May median sales price of $2.001 million, was down 48% versus last year at this time. Westwood/Century City was not much better off, down 48% to $990,000, but this is surely temporary. Beverly Hills was up 2% to $3,350 million for the first five months of 2022. Culver City, another market I cover, median sales price was up to $1.738 million.

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Inventory Is Another Mixed Bag…

What we have noticed is some growth in inventory over the past two months — Beverly Hills inventory increased 2.5% over April 2022, Bel-Air/Holmby Hills was up 30%,

and Westwood/Century City was up 400%….true…they went from one new listing in April to 5 new listings in May. However, we also saw Brentwood’s new listings for May was down 26%. Culver City had 80 active listings and 56 pending listings. The lack of broad increases in inventory, especially during the ’super selling season’ (like now) reflects homeowners’ reluctance to move in these challenging economic times with rising inflation and mortgage rates starting to climb again. So, it is quite amazing to see a more affordable community such as the Westwood/Century City area with only one listing in April.

Another key factor I look at each month is “Days on Market” and overall, we are seeing a significant drop. For example, the average DOM for Beverly Hills went from 46 days to 27. Bel-Air/Holmby Hills went from 42 to 32, and Brentwood went from 26 to 14 days. Those were significant reductions. Westwood/Century City, however, increased DOM — up three days from 11 to 14. Culver City had an average of 20 days on market. What does this tell us? Buyers are quick to pounce on just about any home that is competitively priced and in a good location. The increase in all-cash offers is a major driving force, too. That’s not new news, but we are seeing DOM #s as we have not seen before. Are buyers desperate? I think many are…and I have several strong, pre-qualified buyers who are anxiously looking for a home right now. Call me — Carole — 310-442-1384.

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Westside Keeps On Moving, Onward… Upward

For Los Angeles Westside (covering areas from Beverly Hills north to Malibu), we are still ahead of last year in high end sales. There have been 477 sales of $5 million so far this year, versus 451 at this time last year, up 5%. Of these, 165 were $10 million-plus this year, versus 148 at this time last year, up 11%. Forty-two (42) of these sales were $20 million-plus this year, versus 38 at this time last year, up 10%. Twenty-one (21) were $30 million-plus this year, versus 11 at this time last year, up 90% (wow!). And 13 were $40 million-plus this year and there were 6 at this time last year, up 115%. At the moment, there are 96 pending sales of $5 million-plus, and 28 are $10 million-plus…8 are $20 million-plus and 3 are $30 million-plus. The areas of the 42 sales of $20 million-plus are 9 in Malibu, 8 in BHPO, 7 each in Bel- Air and Palisades, 6 in Beverly Hills, 2 in Hancock Park and 1 each in Sunset Strip, Holmby Hills and Brentwood.

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Agent Housing Stock Prompts Remodeling Boom!

The country’s aging housing stock is prompting homeowners to make more home renovations, particularly younger owners who have faced limited housing inventories for sale. Nearly half of U.S. homeowners plan to upgrade or remodel their homes this year, according to a survey conducted by National Association of Home Builders. The trend is most prominent among homeowners between the ages of 25 to 44, who are undertaking the most renovations and looking to bring current trends and renovations to the aging homes they purchase.

The median age of a home in the U.S. is 39 years old. The aging housing stock signals a growing remodeling market ahead, according to a new report from the National Association of Home Builders.

As homes age, they need repairs or updated components such as appliances. Homeowners may add amenities to older homes as well, to have them better compete against more modern home styles and amenities. “Rising home prices also encourage home owners to spend more on home improvement,” the NAHB says on its Eye on Housing blog. The aging housing stock also likely will lead to rising demand for new construction over the long run as homes get older, the NAHB notes. More than half of owner-occupied homes were built before 1980. About 38% were built before 1970. Meanwhile, new-home construction has not kept up the pace over the past nine years, with the share of new homes dropping from 15% in 2006 to 7% in 2019, according to the builders’ trade group. The share of housing stock built 50 years ago or more jumped from 30% in 2009 to 37% in 2019.

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How Are We Doing With Water Conservation? Lousy…

“Irresponsible” might be another good word to describe California’s response to conserve our precious water resources. Coastal Southern California (of which we are a part) increased water usage by more than 25% for the month of April, lagging behind most other parts of the state in conservation and appearing to dismiss dire warnings of supply shortages.

According to data released last week by the State Water Resources Control Board, cities and towns in the South Coast hydrologic region — an area that includes Los Angeles and more than half the state’s population — used 25.6% more water in April than in April 2020, the first year of the current drought.

Statewide, urban residents used 17.6% more water, marking a small decline from March, but still far less than what officials say is needed to weather a historic drought. The poor numbers in Southern California put more pressure on residents to follow sweeping water restrictions that went into effect on June 1 and were ordered by the Metropolitan Water District. “These are not the numbers we wanted to see, and they are not the numbers we need to see,” MWD general manager Adel Hagekhalil said in a recent statement. “We are in an unprecedented situation, where our water supplies from the State Water Project are so limited by drought and climate change that they do not meet demands. Southern Californians must decrease their water use. I know we can do it.” Well, it is all up to us. Please adhere to the mandates from the City and County regarding water usage. There is no substitute.

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Our Cities Grand Architectural History Is Still Here To Enjoy

OK, let’s face it. Los Angeles is not London, Rome, or Paris. We have young, but strong roots in our communities that were, for the most part, developed in the mid- to late-1800s. During that time, we have created some memorable monuments to our culture….a California culture like no other. Where would you find such an enthralling, still-wildly popular place like….

Grauman’s Chinese Theater on famous Hollywood Boulevard.

Showman Sid Grauman’s over-the-top theater opened in May 1927 with the premiere of Cecil B. DeMille’s epic “The King of Kings.” Its equally famous forecourt is paved with cement squares into which stars have embedded handprints, footprints and signatures. Legend says that practice began when film star Norma Talmadge, invited by Grauman to inspect the work in progress, stepped into wet cement, and Grauman realized he had a double attraction. How many of us have reached down to put our hand into the handprint of Marilyn Monroe or Douglas Fairbanks….or see John Wayne’s ‘fist punch’ in cement? Mister Grauman certainly knew he had an attraction when famous actress Norma Talmadge accidentally stepped into the just-poured concrete.

Avila Adobe House — Olvera Street

At 204 years old, it is the oldest house left standing in the city of Los Angeles. Its builder and first resident was the rich pioneer rancher Francisco José Ávila, the city’s mayor in 1810. For nine days in January 1847, Commodore Robert Stockton took over the building as his headquarters in the Mexican American War, joined by the fabled scout Kit Carson.

The Ávila family moved out in 1869, and the place slipped into desultory habitation. It was almost lost twice: when the city condemned it in the 1920s, and the “mother” of the re-created Olvera Street, Christine Sterling, undertook to save it; and again, in the 1971 Sylmar earthquake. The adobe was restored as an example of L.A. life in the 1840s.

Gamble House, Pasadena

This is the flagship of Craftsman houses, built in 1909 by the Greene and Green architectural firm for the Gamble family, of the Procter & Gamble fortune. It cost $55,000, twice as much as the midsize school going up in Pasadena at the time.

The supersize California bungalow fit into the contours of the land and was designed with art glass and natural wood throughout. The Gamble family heirs gave it to Pasadena in 1966; 11 years later, it was declared a national historic landmark. Of course, you may remember this as Christopher Lloyd’s home in “Back to the Future”. It is a magnificent display of pure craftsmanship exhibited by the Green & Green brothers.

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Happy Fathers Day!

For those of you who are lucky enough to still have your fathers to celebrate with, please enjoy this special day to honor and enjoy them. There are so very many ways to remember all of the wonderful things our fathers did and do for us.

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Happy Juneteenth!

Happy Juneteenth. a federal holiday to celebrate Liberty, something special we have to honor and cherish.

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Looking Ahead…

We continue to see strength in our market, especially on the high-end. The question is going to be what happens if we are heading for a recession?

The past has taught us that while the real estate market may indeed suffer because of first-time buyers being priced out of the market or unable to qualify for higher interest rate mortgages, we have survived. As you can see, our wonderful Westside continues to attract buyers from all over the world — no safer real estate investment than what we offer here in our communities. And who can compete with our cultural, shopping, dining, and recreational assets — not to mention the gorgeous weather we have had lately.

I just want you to know I am here for you. The past year has been invigorating for me …and more importantly beneficial to my clients — both sellers and buyers. I wish you the best as we dive into Summer…Enjoy!

Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at carole@caroleschiffer.com www.caroleschiffer.com
CalBRE 00677619
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