SchifferLine 15 November 2014

Timely Real Estate News…………………………………………………………………………15 November 2014

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Happy Thanksgiving….gobble, gobble time.

I want to wish all of you a very Happy Thanksgiving. It’s a great time of year — very festive everywhere you go. This year, I was hoping to spend Thanksgiving with my family in Coronado, but unfortunately we sustained some water damage and “humpty dumpty will not be put back together again, so we will be here instead. Thanksgiving used to be the start of the “holiday shopping period” but as we all know, it starts earlier every year. Still, we love to take “time out” for the traditional turkey and dressing, and don’t forget all of those football games. Yummy Thanksgiving dinner always gets my vote. Enjoy!

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Sales activity still holding, median sales prices push ahead...

The economy got some good news with U.S. unemployment number edging down to 5.8 percent, the lowest it’s been in six years. And we continue to see strong support for our real estate market in the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood/Century City and Brentwood. Sales activity through the first ten months was more than $2.643 billion vs. $2.440 billion for the previous 2013 10-month period. That is an 8.3% increase, down from the previous nine-month reporting period when sales through the end of September were up by 12%.

With the spring and summer selling season somewhat behind us as we move toward the end of the year, it is obvious that these five communities remain resilient in the face of a relatively flat California economy, I still must remind you that sales reported in last month’s statistics are really sales that entered escrow several months prior to that end date. Sales activity in four of the five communities remain ahead of last year at this time, and only Beverly Hills is lagging slightly behind 2013 totals.

Median sales prices….
In analyzing our real estate performance for the year, we are seeing that we are still tracking strong median sale price increases in all but Beverly Hills. Beverly Hills — which had some extraordinarily large transactions last year — was down 8% for the year in median sales prices and the other four areas were up — Beverly Hills Post Office as up 15%…Bel-Air was up 12%….Westwood/Century City was up 23%, and Brentwood was up 18% for median sales prices through October 2014.

In comparing median sales prices between October 2013 and October 2014, we see that Beverly Hills was down 50% from the previous years (but only down 8% for the first 10 months)….BHPO was down just 2%, Bel-Air was down 16%, but Westwood/Century City was up 27% and Brentwood was up 17%. Beverly Hills had 7 homes selling for over $3 million — the largest was for $21 million; BHPO had four homes over $3 million and the largest was $8.2 million; Bel-Air had 3 homes over $3 million, the largest was $13 million; Westwood/Century City had five homes over $2 million, the highest was $4 million; and Brentwood had 4 over $3 million, the highest going for $13 million.

I can see that your eyes are beginning to glaze over a bit, mine, too. The reason I share these statistics with you is to give you a very real sense of what is happening on a year-over-year basis (median sales prices through the just-ended monthly period) as well as what is happening right now. We can’t look at just one month, as I have said so many times before, and draw any single conclusion about the state of our real estate (and your real estate investment), and yes, every neighborhood and community is different. What we continue to see on the Westside is a very strong performance in building our market back up to 2007 levels, which still remains about 20% from where we are now. I get questions all the time from clients who see some of these large estates selling in the “gazillion” dollar price range, and wonder if they can also see a higher price for their property..

We get used to the “splash”, but the bread/butter homes are still the focus
The “evil word” in our business has been “inventory”. There definitely is a little more inventory than there has been in a while, however, there is a BIG difference in that for the most part the increase in inventory is reflected in properties that are “not really marketable”. What do I mean by not really marketable…. basically the property is overpriced, or has condition issues, etc. In essence, there is a growing chasm between properties that are properly priced and those that are not. The ones that are not are part of the group that is sitting on the market for 40 days or more, are those that are “spot on” and are selling immediately, again many times with multiple offers. This past week I was involved in a bidding war for a lovely home in the Rancho Park area that had been remodeled and was priced at $1,329,000. It is located two doors north of Pico with a McDonald’s on the corner, and yet they had seven offers, and it sold for $1,400,000 after being on the market for about five days! Unfortunately we did not get the house as my client decided that Mickey D’s was not her favorite restaurant to have a as a neighbor and so we pulled out of the running. However the quest goes on!

We continue to see the large, exciting homes that come on the market, like the one recently making headlines all over the world for $195 million in Beverly Hills (Palazzo di Amore). Does it help your home value? I would say that if you lived next door, most likely, it probably does. In the mean time, we are seeing the average “days on market” remaining the same — not dropping, but more importantly, not going up, either, unless again the house has “issues”, . Beverly Hills DOM was 97 for last month; BHPO was 88 days; Bel-Air was 64 days; Westwood/Century City was 48 days, and Brentwood was 54.

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Luxury property around the world grew less than before

The value of luxury property in 33 of the world’s top cities grew just 4% in the year to September, 2104, and 0.2% in the third quarter, its weakest result in two years, with the US outperforming Europe, says Knight Frank. Luxury real estate prices in the world’s leading cities grew just 4% annually in Quarter 3, 2014, down from 6.6% a year earlier, according to new data.

The Prime Global Cities Index, produced by Knight Frank which tracks luxury residential prices across 33 cities, rose just 0.2% in the third quarter 2014, its weakest performance in two years. Jakarta, Indonesia, still tops the rankings, with prices rising 27% in the year to June, according to the latest data, but that is unlikely to last as in the first six months of 2014, values increased just 2.5%.

Los Angeles was second with a 16.3% annual rise and Tel Aviv, Israel, third on 14.0%, but both are calculated using Quarter 2 figures.

In fact, only Dublin, Ireland, which is 12.7% up year-over-year and 1.4% up from July-September, provided up-to-date data among the top five annual performers. Although Jakarta tops the rankings, with prices rising 27% in the year to June (according to the latest data), the city has seen a sharp deceleration in prices with prices rising by only 2.5% in the first half of the year. In another major city — Dubai, the rate of luxury price growth has declined. This is in part due to temporary factors such as Ramadan which led to weaker buyer activity but also due to the UAE Central Bank’s mortgage cap which is stricter for those purchasing properties above AED5million.

The moderate price growth is partly attributable to much of the world having summer holidays, which usually slows sales and price increases.

However, prime city luxury property prices continue to outperform the mainstream sector. The average price of a luxury home is 36% higher than at the index’s lowest point in the second quarter of 2009, whilst the average price of a mainstream property has risen 14% over the same period.

The prospect of negative European economic news, tightening monetary policy in the US, the Scottish referendum and ‘mansion tax’ debate in the UK and the persistence of cooling measures in key Asian cities have also had an effect.
Despite US financial concerns, three cities – Los Angeles, San Francisco, and Miami – were in the top 10 annual rankings and New York was just outside at 11th, whereas only Dublin and London, in 10th, made it. On average, luxury prices rose by 10.5% on average across North American cities annually compared with only 1% in European cities. And for the first time, Seoul in South Korea joins the index. Since reaching a low in 2013, luxury residential prices are continuing to recover, rising by 4.1% in the year to September.

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Los Angeles votes to — again — curb “mansionization”…..maybe

Six years ago, the Los Angeles City Council passed two anti mansionization regulations, entitled the Baseline Mansionization Ordinance, with one for the” hills” and the other for the “flats”. This was to curb the issue of smaller/older homes being
torn down, and replaced with new/larger homes or as they are called, “houses on steroids” that impacted not only the homes on either side of them, but the street and neighborhood in general. Unfortunately, there are a number of loop holes in those regulations that have enabled builders, both individuals and spec builders, to continue the practice of tearing down the older/smaller homes to replace them with newer and in some cases much bigger ones. Some of these loop holes or exceptions include a bonus of 20 – 30% if the design of the house created an environmentally friendly home or if the builder was able to adhere to certain scaling requirements of home facades and upper floors. This continued practice has created a good deal of ill will and at times bitter fence fights over the look and feel of some of Los Angeles’ neighborhoods.

Now, there are moves afoot to strengthen those ordinances and in some cases put a stop to any construction of new homes in an area. More than a dozen neighborhoods would be included in the new city ordinances to temporarily block home teardowns. This process of working out the details is expected to take approximately a year-and-a-half.

City officials are still determining the exact restrictions for the targeted neighborhoods, which will come back before city lawmakers for final approval before being imposed. According to planning officials, the restrictions could vary from neighborhood to neighborhood, ranging from an outright ban on home demolitions to limiting the size of new homes that replace teardowns. The Los Angeles chapter of the Building Industry Assn. has previously warned in a letter to lawmakers that such restrictions could throw hundreds of pending home sales into “a tailspin of uncertainty,” potentially spurring lawsuits from buyers who didn’t get adequate warning that they couldn’t tear down or significantly expand the properties they purchased.

The neighborhoods targeted for the temporary restrictions on home demolitions include Sunset Square, Carthay Square, Holmby-Westwood, Oxford Square, the El Sereno-Berkshire Craftsman District, South Hollywood, La Brea Hancock, North Beverly Grove, The Oaks, Valley Village, Faircrest Heights, Old Granada Hills, Larchmont Village and Miracle Mile.

Stay tuned to this one. It’s complicated, and there are no simplistic answers for a process that is fraught with potential law suits and delays.

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It’s getting tough out there with lenders with foreclosed homes

We are all very sympathetic with families who lose their homes, however left in the wake of a family who moves out of the neighborhood, is the mess that many times the neighbors who are stuck with the blight of unkempt homes that are so distressing to everyone. For those who didn’t have to leave their homes, the foreclosure crisis probably seems very far away from Los Angeles where housing prices are slowly inching upward, and the housing market is coming back.

But the after-effects can be seen in many places where the abandoned (or abandoned-looking) houses have been left behind. Four years ago, Los Angeles created a foreclosure registry for bank-owned houses with the goal of preventing them from bringing down their neighborhoods, but a recent audit found the program has largely failed. And even when houses remained unsightly and not maintained to even minimum code standards, not a single fine was issued.

Los Angeles’s four-year-old foreclosure registry program was supposed to help Los Angeles cut down on the blight and safety hazards that come along with derelict, foreclosed houses, in part by serving up hearty fines to offending property owners (i.e., banks). But it didn’t do its job at all.

LA City Controller Ron Galperin summed up the matter: He found that the ordinance that established the registry “cast too wide a net” and required registration at the wrong point in the process, meaning many property records in the database remained incomplete and never got the necessary follow-up. More startlingly, the penalties that were supposed to motivate property owners into maintaining houses and keeping them relatively decent-looking were never once collected—not a single one. There were also no “formal processes” in place to share the information in the registry with, say, the LA Department of Building and Safety, which would theoretically have done the work of inspection and enforcement. They are in the process of changing this situation where enforcement will begin.

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Old Tapes

I cannot tell you how many times in conversations the subject of real estate keeps coming up – it is probably the most popular cocktail party topic I know. Now that we are heading into the holiday season, people want to know — “how active is the real estate market” especially now that we are heading into the holidays– ”no one wants to buy or show their home during the holidays”.

I must tell you – these are old tapes. I am very busy working with buyers who want to buy right now, and as well with sellers; they want to be in their new homes right after the first of the year! Also — with the additional decorating of homes for the holidays, I can assure you that homes look their best with their “holiday faces” on.

As a result, I just closed escrow on a fabulous, sexy, multi-level condo in Brentwood and we also just closed escrow on a lovely home in Bel Air Crest. I am seriously looking for homes for a number of clients in the Santa Monica/Venice, Rancho Park areas. Sometime next week, I will be listing a lovely home in Mountaingate that is 4 bedrooms, 4.5 baths (we are going to stage it first before putting it on the market). We will be doing a sneak peak as soon as have our “party face on”. The price will be around $2.900,000. Please let me know if you are interested or know someone who might be. Also, please keep a look out for it on my facebookpage..caroleschifferrealtor@facebook.com

I hope that you have a great Thanksgiving Holiday!