Timely Real Estate News………………………………….. 15 November 2019
Sales volume increases in October
Buyers were active last month as they spent more than $463 million in October, surpassing last October 2018, by 36%. Beverly Hills and Bel-Air/Holmby Hills were the main recipients of the increases which saw a dramatic bump in year-to-date sales volume of 14.1% through October 31 to $3.403 billion vs. $2.981 billion a year ago.
The increases came in five of the communities I work in — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood. More than $160 million increase in year-over-year sales in Bel-Air/Holmby Hills were from major sales for homes selling for $94 million, $27 million, $19 million $12 million and $10 million respectively. Other notable sales were in Beverly Hills for $32 million, $30 million and $15 million. While these numbers are impressive, overall, high-end sales are down on the Westside compared to a year ago.
The encouraging news is that we should be finishing out 2019 in positive sales numbers, which didn’t happen in 2018, when we ended up with sales down 9.1%
Median sales prices – bouncy, bouncy
Again, some areas’ median sales prices were up, some down. Tigger would describe these monthly performances…as “bouncy, bouncy”. Beverly Hills’ median sales prices were up 3% for the year, but Bel-Air/Holmby Hills, which scorched October sales, was down 16% for the year. Beverly Hills PO was up 6% but Westwood/Century City was down 3%. Steady Brentwood was up 5%, is now at $3.262 million, its highest ever. Pacific Palisades median sales price for October was $2.808 million.
I have always maintained that to really get a handle on trends in our real estate market — look at the year-to-date #s, not monthly performances.
Yes, October was quite the month in our market — all but one of the five markets’ median sales prices were up compared to October 2018. Beverly Hills was up 16%, BHPO was up 36%, Bel-Air/Holmby Hills was up 1%, Westwood/Century City was up 101% and Brentwood was down 9%. You can see how all these #s gets messed up from month to month. The good news is sales volumes are moving upward but median sales prices have greatly moderated. The sales of large, luxury homes are driving the volumes, but prices are trending near zero growth. With low mortgage rates, this is a great time to buy.
NAR’s chief economist predicts slowdown, no recession
The highly respected National Association of Real Estate Economist Lawrence Yun stated this week that while there will be a slowdown in the GDP and job growth next year, residential sales will be strong.
Yun pointed out that compared to a year ago, the economy is on firmer footing, and the outlook for residential real estate is improving….“a year ago, conditions were soft, mortgage rates were close to 5%, and consumers were backing off. But when housing is positive, the economy doesn’t go into a recession. There will be no recession if there is no major trade war.”
Yun foresees GDP growth of 1.6% next year, down from 2% in 2019, while 1.5 million jobs are expected to be created in 2020, a slower pace than this year’s forecast of 2 million. Home sales have been buoyed because of the Federal Reserve lowering interest rates three times this year, and current mortgages rates for 30-year fixed loans are in the vicinity of 3.7%. Yun says rates should remain under 4% for the year ahead.
Sales of new homes to rise in 2020
Sales of new homes probably will rise to a 13-year high in 2020 as the U.S. dodges a recession, according to the National Association of Realtors. New-home sales probably will jump 11% to 750,000, which would be the highest reading since 2007. I see it when I am driving around various neighborhoods including where my Mom lives in Beverlywood. Currently there are 19 homes under construction there!
Sales of existing homes likely will increase 3.7% to 5.56 million in 2020, the highest tally since 2017. Some loosening in inventory will happen in 2020, and so we expect home sales to rise according to NAR economist Lawrence Yun He expects the median price of an existing home in the U.S. to be $270,400 next year, rising 4.3% from 2019. That would be a slower pace than the 4.9% annual gain in the median price he forecasts for 2019 and the 5.7% recorded for 2018.
Significantly, he predicted that mortgage rates would remain under 4% through 2020. That is good news.
Lot values surge to record highs
“Honey, why don’t we just buy our own lot and build our dream home?” Great thought…however there’s a big “but”. Finding a lot these days isn’t what it used to be. Builders, developers and investors are gobbling up spare land as fast as they can as prices are skyrocketing, especially for prime spaces in urban markets.
The National Association of Home Builders noted that with median single-family lot prices outpacing inflation, reached a record high in 2018. And it’s not getting any better. Lots are getting smaller, materials and labor costs are also increasing, and combined with increased regulatory costs, building a home on a vacant lot is challenging for any lot owner.
In the NHAB’s latest survey, The Pacific division—consisting of California, Oregon, and Washington—have the smallest lots in the nation, but median lot values reached $87,000 last year, the second priciest in the nation. On LA’s westside, it’s impossible to find a lot for that amount…think $500,000 plus. The point is — vacant land values are not going to decrease any time soon. If you’re in the mood to build your own dream home, better start looking now.
Step right up…we have mortgages
It’s like a carnival these days…the barker is yelling — “Step right up….get your low mortgage rates. There’s still time, brother!” For many, this is welcome news. With mortgage rates still under 4%, it is opening the market to more buyers.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2019 edged up 3%, from 30% in the second quarter of 2019 and up from 27% in the third quarter a year ago, according to California Association of Realtors. California’s housing affordability index hit a peak of 56% in the third quarter of 2012.
31 % of California households could afford to purchase the $613,470 median-priced home in the third quarter of 2019, up from 30% in second-quarter 2019 and up from 27% a year ago.
However, at the bottom of the affordability list was San Francisco, Los Angeles and Orange counties. We still have ways to go.
The butterfly man…what he tracks is important
A UC Davis Professor has an obsession few have on this planet — butterflies. For the past 47 years, this professor has been studying butterflies in California at all elevations, from the high Sierra to our state’s coastal regions. He’s an expert, renown for having the one of the most complete, in-depth research programs on butterfly species in the world.
He notes like other living things on our planet, butterflies face an unknown future, but one thing is certain: The overall abundance of butterflies is declining.
Through his butterfly treks across the state, he didn’t notice it at first, but in 1999, 27 years after monitoring his sites, something strange happened: the populations of 17 species of butterflies at his low-elevation sites tumbled all at once. What he and his colleagues found is the number of butterflies had decreased significantly. He stated that 2018 was the worst butterfly season he ever experienced. The number of species across all elevations was down, something he had never seen before.
As far as he can tell there is a reason for the decline but was encouraged to see an increase in butterfly sightings this summer. The professor said that insect populations are volatile, plummeting in years when weather conditions are unfavorable and, because they can reproduce so quickly, rising when conditions are just right. The next time you see a butterfly fluttering in your garden, say a small prayer for them…they need all the help they can get. They are also Good Luck.
My World & Welcome to It
I must admit that the Getty Fire threw me off my game a little. With the FHA having lowered the requirement as to how low aircraft can fly as they approach Van Nuys Airport, I had gotten used to hearing the sound of them during the night, but with them being so low at 1:30 am as to wake me up and looking out my windows and seeing the plumes of smoke and flames again in our back yard, my first thought was “Oh No, Not Again”. Fortunately, the winds were going against Bel Air Crest, so as long as they stayed in that direction, at least we were safe. By the way, check out, Windy.com which is a great site, you can dial it down directly over your street and not only see where the winds are, but where they are predicted to go and when. It took me a bit to get settled again, particularly as one of my longtime friends in my office lost her home, car, EVERYTHING in the fire.
Has this impacted the real estate market in Brentwood? Not particularly as I have been watching the new escrows and closed escrows in Brentwood even on Tigertail and Mandeville Canyon, and in talking to the agents involved in those transactions, any conversation about cancelling if it was held at all, was very brief. I am still seeing,hearing and experiencing a good amount of activity both on the hot sheet I run through the MLS every day as well as with my colleagues and myself.
I attended the annual meeting the other evening for the Westwood Hills Property Owners Association and garnered a bit of information that I want to share with you. First of all, the work on the Purple Line of Metro is continuing along at its merry pace. Here is the link for you to get more information on construction schedules and timing or you can call 800-464-2111. https://www.metro.net/projects/westside/. A few streets in the community have employed a license plate reading service and it has proved to be effective in dealing with some potential criminal activity. If you want/need any additional information, please call me at 310 442-1384 and I will be glad to share the name of the company they are working with with you.
Speaking of security, I also learned that we need to be careful in doing our marketing in the Westwood community, as apparently some “bad guys” are removing purses from shopping carts while we are looking the other way. I always bury my purse under my shopping bags and look to see if I spot someone watching me as I take things out or put things in my trunk. The police who were at the meeting, reminded all of us to not leave anything in our cars that might be considered valuable, and not to cover them up with sweaters/jackets. Just put them in the locked trunk.
Wishing you a wonderful Thanksgiving!
Carole Schiffer, Realtor Coldwell-Banker/Brentwood Office 310-442-1384 (office) or e-mail me at email@example.com www.caroleschiffer.com
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