Timely Real Estate News…………………………………..15 May 2016
Existing US home sales predicted best since 2006….but not by much
Even though supply constraints and home price growth are outpacing wages the National Association of Realtors (NAR) is predicting existing-home sales are still on track to come in at their highest pace since 2006. Lawrence Yun, chief economist for the NAR, monthly existing-home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher (5.29 million) than last year’s overall annual pace (5.26 million). Demand has mostly remained strong – especially in the top job-producing metro areas – and is being upheld by mortgage rates near three-year lows and the 14 million jobs gained since 2010.
While the increase is slight over last year, “…the housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fueled by the grossly inadequate number of new single-family homes being constructed,” said Yun. “The good news is that pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer.”
In Los Angeles, “….we see these national real estate stories from authoritative sources, such as the NAR, and we have to temper these statistics with — what is happening here, especially on the Westside. As you will see in this issue of the SchifferLine, sales volume is down by 11% for the communities I report on,” Carole Schiffer said. “Median sales prices are also down in four of these areas as well. Because of the lack of affordable housing, one of the many factors we need to be aware of is that with the increase in sales prices, however slight they may be, we are locking out many first-time buyers, some of whom are part of the Millennial generation. When you combine that with their student and government loan burden, the challenge cannot be easily overcome, even though we have some of the best mortgage rates in recent times.”
Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million – the best year since 2006 (6.48 million). After accelerating to 6.8 percent in 2015, the national median existing-home price is forecast slightly moderate gains to between 4 and 5 percent this year. And on the topic of first-time buyers, Yun stated that their ongoing absence is the missing link to a full housing recovery; this is, amazingly, during a time when conditions should be ripe for a larger share of them buying homes.
Yun pointed out that today’s prospective homebuyers are the luckiest in a generation because of low mortgage rates but are the ‘unluckiest’, too for the roadblocks — such as student loans, high home prices, and lack of choices — hampering their ability to buy a home.
June gloom comes early….sales volume off, listings down, too
The ‘marine layer’ comes in at night and leaves mid-day this time of year, but June gloom for the real estate industry arrived a bit early and thus far is not leaving so quickly. According to Beth Styne, Vice President, Chief Operating Officer, Coldwell Banker Residential Brokerage for the Greater Los Angeles Company, real estate sales in California are down 7%, closed escrows are down 9.5%, homes in escrow are even worse — down 28%. But the average sales price is up 4.3%, and the absorption rate is +21%. California continues to follow national trends in all areas.
In Los Angeles, Beth reported that listings are down 9%, closed escrows are down 6.5%, and homes in escrow are way behind, down 34%. And what’s bothersome to sellers, average sales prices are down 7.9%. So what does this all mean?
More specifically, in the communities I report on, overall sales volume reached $855 million for the first four months of 2016, off by 11% from the $962 million reached in 2015. Yes, there were significant large sales last year that skew the sales volume (think $73 million Bel Air sale in 2015), but Beverly Hills was down $40 million through the first four months, Bel-Air was down $150 million in sales volume compared to last year, but sales volumes were slightly up in Beverly Hills Post Office, Brentwood and Westwood/Century City (mind you there were three large sales in Brentwood in April – $9,775,000, $12,000,000 and $19.715.787) that will once again skew the numbers.
Another one of my areas of focus is Pacific Palisades, and sales volume was down 23% from last year to $236 million, from $309 million thru April 2016. “So, what we’re seeing is that traditional large-volume sales from Beverly Hills and Bel-Air just aren’t happening like it did in 2015…but that’s OK…these figures tend to run in cycles as we have noticed over the years,” Carole Schiffer said. “What is interesting is the total number of homes sold this year in these communities was 237 homes compared to 227 homes in 2015. So we sold more homes so far this year, but the average sale price was lower.”
Median sales prices in Beverly Hills were down 19% to $4.250 million…but Beverly Hills Post Office was up 29% to $2.525 million. Median sales prices were down in the other areas —Bel-Air down 17%, Westwood/Century City down 2%,Brentwood down 18%, and Pacific Palisades was off 4%.
When you compare median sales prices for April 2016 to April 2015, Beverly Hills is down 51%, BHPO is up 10%, Bel-Air is down only1%, Westwood/Century City is up 4%, Brentwood is down 26%, and Pacific Palisades is down 7%.
“What we are witnessing is basically a normal market: If a home is properly priced, it sells quickly. If it isn’t, it sits on the market. We have lots of buyers out there,” Carole stated, “and they are sophisticated and demanding. Inventory is actually increasing in our market, so that’s good news`”. As some of you may remember, I am also a mentor to the new licensee’s in my office, and of the 10 of them, three of them are moving through our training program quickly and in one case has completed two sales in about two months.. “It is very exciting to me to see these beautiful flowers blossoming so quickly”.
Are we really “unaffordable”? No simple answer – Depends on how you look at it!
One cannot compare Malibu to say, Boyle Heights — the asking price for the home is Malibu is $1,118 per square foot, vs. $269 per square foot in Boyle Heights. If it were that simple, buyers would opt for communities that they could afford, but even within predictable communities where the “average” may well be within the range of a first-time buyer, however on closer inspection, the price differential can — and is often — deceiving.
Homebuyers are combing the hills, valleys and neighborhoods of what might appear to be “un-discovered, untouched” areas that have recently been in the spotlight — such as Venice, Culver City, Palms and Mar Vista. But those areas are no longer undiscovered or untouched, particularly with the growth of Silicon Beach. Lower prices can be found in Mount Washington (as low as $155 per square foot), El Sereno ($163), East Los Angeles ($173) and Hollywood ($186) that are all less expensive than the lowest priced property in Boyle Heights ($188). Recently one of my mentees wrote an offer for her clients in the Atwater Village area. The house was listed at $650.00, which generated 38 offers, and sold for a whopping $825,000 with no appraisal contingency! This is what I have been referring to with first time buyers being priced out of the market.In the particular case, the top price these buyers could pay was $725,000 and that is what they wrote their offer at, but obviously were “blown out of the water”. Also now the barre will be raised for similar homes in the area at $825,000.
My advice is to keep an open mind on looking at “opportunities” in a variety of neighborhoods. “There can be ‘jewels’ among areas that might at first seem out of reach…the trick is to persevere and yes, work with an experienced real estate agent who can help you discover these nuggets.”
How can we get to “affordable” from “unaffordable”? CAR has an answer
That’s the question on many people’s minds — what can we do to get first-time buyers into a home? In a recent report on the ’state of affordability’, saving up to buy a home in Los Angeles or San Francisco is increasingly challenging. First-time homebuyers, if they continue to save at the same pace, will have to wait 20 years to buy a home in Los Angeles and nearly 28 years in San Francisco. “That can be quite daunting!
The California Association of Realtors (CAR) is aiming to ensure that owning a home is not a pipe dream. In a two-year study, CAR formed an Affordable Workforce Housing Task Force to provide California residents with the appropriate tools to find and finance affordable housing. The task force also examined the state’s current policies to make changes that could positively impact the housing market.
What they did was work with the California Assembly to provide $1.3 billion for affordable housing programs, including rental housing, farmworker housing, shelter programs and seismic retrofits. The largest pool of money — $500 million — is proposed to fund rental housing for lower income working families or those making 60 percent or less of the area median income. Another $300 million in tax credits would help to fund private developers to create more than 3,000 homes. Construction, rehabilitation and acquisition of 5,700 multifamily rental homes is expected to cover $200 million in funds. Also included is $400 million to go toward homeownership and rental housing opportunities for individuals who need down payment assistance, homeownership assistance and rental housing. Its ambitious program, and much needed in California.
So, what’s hot….here are the hottest-selling neighborhoods in Q1
Let’s face it, some areas are hotter than others. And there are surprises to many who follow this stuff. For example, all four communities in Westside-South this year, which includes Culver City, Inglewood, Ladera Heights and Park Hills Heights, saw an increase in average sold price for both condos and single-family homes. Days on market fell for the most part as well.
The one exception was Ladera Heights, which saw a 73% increase in days on market. However, this community saw a massive jump of 85% in the number of sales.
If you think that building a $2.2 billion stadium in your city is going to help real estate values, well, you’re right. Home prices are going up, inventory is steady, but days on market saw a drop of 54% on condo sales. Average sold price was up 22 percent. The Rams score again.
In Eagle Rock, home sales in the first quarter increased 48% and prices increased 14%. In Hawthorne, home sales rose 38% and prices for single-family residences went up 13%.
Coastal communities, overall, didn’t fare that well in the first quarter — however, Westchester saw a whopping 175% increase in sales but the pool of condo sales is still small, increasing from four to 11 sales. The most notable price increases took place in Malibu and Santa Monica (single family residences) and Venice (condos).
We’ll see how the year unfolds, but neighborhoods to watch continue to be Sherman Oaks, Eagle Rock, Atwater, Hawthorne, and Monrovia.
What is in your wallet?
Mortgage rates are still moving down….that’s not a big surprise. Based on tracking national indexes, it was noted that with the manufacturing index posting a decline, and the services index moving upward, both indices remain above 50, which indicates that each of the two segments of the economy continues to grow.
While only 160,000 new jobs were created last month, with minor downward revisions to previous months. The unemployment rate remained steady at 5.0% even with the participation and size of the labor force slipping downward slightly. But that actually helped the mortgage rates last week with lower rate near the best levels of the year.
Key to affordability for first-time buyers are lower-interest loans, and that appears to still be on the table. Yes, prices are moving upward, faster in some areas than others, and inventory is slightly improving on the Westside in Los Angeles. “It’s not much, but any upward movement in inventory is a welcome sign,” Carole Schiffer noted. “With lower interest rates, we hope to see stronger demand from first-time buyers. And that will help keep more $$ in homebuyers’ wallets.”
What is happening with me and my business and life? I am very busy working on selling my lovely new listing at 2120 Dean Circle in Mountaingate. It has amazing views of both of the Mountaingate Country Club golf courses, city and ocean views, and is stunning. It is priced at $2,545,000. I also have another home in Mountaingate that http://www.facebook.com/CaroleSchifferRealtor should be ready for a new tenant sometime in June. Please let me know if you would like more information on these lovely homes or any other real estate needs.
As you may know, I am on the Board of the Coldwell Banker Community Foundation and we have organized and fun and tasty fund raising event. On Monday the 6th June, if you take the flyer from the attached link to the Brentwood Store ONLY of California Pizza Kitchen, and either eat there, order on line or have takeout, 20% of your bill will be given to the CB Foundation for the Children’s Hospital of Los Angeles!
As for the other parts of my life,…recently I attended a fun, fund raising event put on by the Center Theatre Group Affiliates, a Cabaret where they raised $133,000 in one evening! My family & I are busy planning the birthday surprise of a fun filled weekend for our Mom’s 94th birthday! My sister & her family are flying in from Canada, and she has no clue… Can’t wait to see her face when she sees them here.
Be sure to check out my web site, Caroleschiffer.com and my facebook page http://www.facebook.com/CaroleSchifferRealtor as well as my linked in page, firstname.lastname@example.org