The SchifferLine
Timely Real Estate News……………………15 November 2021
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Sales volume zooms upward 62%
Compared to a year ago, sales volume for 2020 is up 62%, which underscores the buying frenzy in today’s hotter-than-hot real estate market. Will it slow down? Perhaps, but it does not appear likely in our neck of the woods. We have made incredible strides in sales volumes for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood, which saw sales volume at $5.005 billion through October 2021 compared to $3.077 billion at the end of October 2020. That is just amazing to see these numbers continue to accelerate upward. There were some whopping sales prices which I will get into a little later.
What is notable is the nearly $2 billion increase over last year at this time reflects the strong attraction our homes and neighborhoods are getting from buyers everywhere. Multiple offers are still happening (I have been involved in two in the past week alone!) so, buyers beware — expect to stand in line, and be prepared before entering this market. What does it mean to be prepared? – have a pretty good idea of what you want to buy, where you want to live, and have most important pre-approval letter in hand, along with a great agent to get you where you want to go.
Beverly Hills led the pack with a $854 million sales volume increase over the previous year, which is almost $1 billion more….Brentwood was over $488 million, Bel-Air/Holmby Hills was up $230 million, Westwood/Century City — $212 million, and Beverly Hills Post Office up $175 million.
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Median sales prices increased in October, too
Not to be outdone, median sales prices are also showing greater signs of increases across all the communities I report on. Notably, all five communities’ median sales prices were significantly up this month compared to same time last year. Beverly Hills was best ever — $7.500 million median sales price for a single family residence or 16% for the year…BPHO was up 13% at $3.397 million, Bel-Air/Holmby Hills was up the best so far — 26% — to $2.331 million; Westwood/Century City was up 10% to $2.411 million, and Brentwood, was up 18% to $3.837 million.
These median sales price increases represent the largest leap in years as buyers are grabbing homes quickly. If homes are priced competitively, they’re going to move quickly, but while prices are up, we also saw last month a significant lag between original sales price vs. final sales price, with Beverly Hills showing 85% of its OSP vs it final selling price. BHPO was at 89%; Bel-Air/Holmby Hills was at 90% and Brentwood was at 95%. Only Westwood/Century was at 100% — a testament to this Westside powerhouse community. What this means is sellers are much more optimistic about what their homes are worth — off by as much as 15%. The house is worth exactly what someone is willing to pay for it and what the seller is willing to sell it for, and while there is a buying frenzy going on, buyers are not stupid. The do their research and in today’s data-driven world, which is no surprise. I know — I deal with very demanding, sophisticated buyers every day!
Pushing the sales #s was Beverly Hills, again, with 9 homes selling over $10 million, the largest was $63 million, and two in the $20+ million range. BHPO had one for $10 million and Bel-Air/Holmby had two over $10 million. But mostly, the
tremendous overall increases in pricing and sales volume were homes that were selling for under $10 mil
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Westside high-end sales are up…Way Up!
So, what is behind the continuing surging sales volume on Los Angeles’s Westside? This year marks the best ever in high end sales…the number of closed sales of $5 million-plus so far this year are 939, versus 569 at this time last year, up 90%. Of these, 313 were $10 million-plus this year and there were 165 $10 million-plus sales at this time last year, up 90%. 87 were $20 million-plus this year and there were 46 closed sales of $20 million-plus at this time last year, up 89%.
We are ahead in sales of $30 and $40 million-plus as well….Of the 87 sales of $20 million-plus, 28 were $30 million-plus, versus 13 at this time last year up a whopping 115%. Sixteen (16) were $40 million-plus and there were six currently last year, up 166%.
There are 128 pending sales of $5 million-plus now and 43 are $20 million-plus. Of the 87 sales of $20 million-plus, the buyers are mostly American — 71 or 82%. The other buyers are: 2 from Denmark, 2 Chinese, 1 S. African, 1 from India, 1 Saudi Arabian, 1 from England,1 Indonesian and 1 Canadian. The other six were not identified.
The areas of the sales are: 23 in Malibu, 22 in Beverly Hills, 8 each in Palisades and Bel Air, 6 each in BHPO, Brentwood, Holmby Hills and Sunset Strip and 1 each in Westwood and Santa Monica. Of the 87 sales of $20 million-plus, 34 were not listed at the time of sale or 39% unlisted. This is another “Wow” month for Westside sales.
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We saw it coming…Zillow closes home-flipping unit
Realtors and agents across the U.S. were not surprised to see Zillow pulling the plug on its tech-powered home-flipping operation after deciding that its pricing algorithms weren’t accurate enough to build a stable business. The company plans to take write-downs of as much as $569 million and reduce its workforce by 25% as it winds down the business in coming months as reported in the Wall Street Journal.
The decision comes as the company’s third-quarter results showed it lost more than $380 million in the flipping operation, called Zillow Offers. The business hit a major snag in recent months as the company’s algorithms caused it to overpay for houses just as the heated U.S. market began to cool slightly, forcing it to list properties at a loss.
As an experienced real estate agent for more many years on Los Angeles Westside, I have witnessed so many homeowners thinking they can get from 8% to 10% more than what the comps were showing and what was my professional estimate…”but Zillow says…” Well, that came a halt, finally, after the company’s ill-conceived home flipping suffered gigantic losses. Zillow estimates never had any traction with seasoned real estate professionals.
The company expects to buy roughly 9,000 homes in the fourth quarter and said it will take a write-down of as much as $265 million on home purchases that will close in the final three months of the year. The verdict is not in as to how Zillow is going to survive this. Many times, I have told the story, which I believe to be true that the owner of Zillow, based on their “Zestimate” bought his own home here in Brentwood and over paid because of the inaccuracy of the Zestimate. It has been very effective in getting my sellers to list their homes based on the comparable’ s I have presented them with.
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Higher home prices help those in ’trouble’
Trouble, we have trouble….or do we? The good news is that homeowners are keeping up with their mortgage payments or arranging for loan modifications with their service providers. But housing analysts say that while the real estate market still faces pandemic-related fears about a wave of delinquencies, higher home prices are helping to alleviate some of those concerns. The overall delinquency rate fell to the lowest level since the onset of the pandemic, CoreLogic, a real estate data firm, reports. “However, the decrease in delinquencies masks the serious financial challenges that a part of the borrower population has experienced,” Molly Boesel, economist at CoreLogic, writes for CoreLogic Insights.
“In the months prior to the pandemic, only one in five delinquent loans had missed six or more payments. In August 2021 one in two borrowers with missed payments were behind six or more months. Fortunately, large increases in home prices [have] given most borrowers a large home equity cushion, making foreclosure far less likely.”
The nation’s overall delinquency rate was 4% in August, which reflects homeowners in some stage of delinquency, considered to be 30 days or more past due on their mortgage payments, according to CoreLogic. That is a decrease of 2.6% from August 2020. Delinquencies, however, are still slightly above the early pre-pandemic rate in 2020 of 3.6%.
This is, indeed, good news. Still looming of course, is the eviction issue which has not gone away, at least in California. We shall s
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Will inflation have a negative impact on rates, sales?
As I have mentioned in previous SchifferLine editions, the Fed is expected to raise mortgage rates next year. The latest rise in inflation helps to explain why investors are increasingly asking not whether the Federal Reserve will raise interest rates next year but rather how much and how quickly it may do so.
The Labor Department reported Wednesday that consumer prices rose strongly in October, up 0.9% on a seasonally adjusted basis from the prior month. Over the last 12 months, inflation is up 6.2%. So-called core prices, which exclude food and energy items, rose 4.6% over the past year. Both are the largest annual increases in more than 30 years.
The figures highlight why Fed officials have been backing away from characterizing recent price pressures as “transitory.” Even though senior central bank leaders still believe inflation should slow as supply-chain kinks abate, they now see that process taking longer than they expected earlier this year, extending into 2022. That is in part because the spread of the Delta variant of the coronavirus has extended a series of disruptions in the economy.
Based on previous Fed rate increases, we can expect mortgage rates to increase, but with the latest rounds of data released by the Commerce Department, mortgage rates have actually gone down below 3% again. We did not see a bit hit when the Fed raised rates, so perhaps, we won’t again. But do not bet on it. I recommend if you are looking for financing, do it now.
Renters who left town, come back to “sticker shock”
So much for waiting for the dust to settle. While many think they see the light at the end of the pandemic tunnel and return from their rural adventure, they are shocked to see how rental prices have move upward, to many, out of reach.
According to the Wall Street Journal, it turns out you cannot go home again. At least, that is the case for many of the Americans who left their homes in major metropolitan areas during the pandemic, relocating to the countryside for more living space and access to nature.
Now they are returning in droves as vaccines become more widespread, employers call their workers back to the office and schools reopen for in-person instruction. They are arriving to find bidding wars and skyrocketing prices in their former neighborhoods, where everyone now wants the same things: outdoor space, a home office, and move-in readiness. In Los Angeles, rents have increased 10.4% over the past year. Only a handful of large cities, such as San Francisco and Minneapolis, still have rents discounted from pre-pandemic levels.
Welcome home
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Brentwood — one of America’s favorite places to live
Brentwood, 90049, is nestled in the foothills of the Santa Monica Mountains. Some of the homes have commanding
views of the city, stretching from Beverly Hills to Malibu and the Pacific Ocean. Home to many celebrities in entertainment, media and the corporate world, Brentwood is adjacent to thriving Santa Monica and Pacific Palisades to the West and Westwood and Century City to the East.
Noted for its small-town, country-like atmosphere, Brentwood features a wonderful neighborhood of shops, fine restaurants, and an active lifestyle of sports enthusiasts who jog up and down beautiful San Vicente Boulevard in the meridian to nearby Santa Monica Beach.
What makes the various Brentwood neighborhoods so charming are its tree-lined streets and magnificent homes. Many streets, for example, do not have sidewalks. There truly is a country feeling, a sophisticated casualness about the community. But Brentwood residents are full of pride and very protective of their community and lifestyle.
The community’s larger homes and estates are usually found north of San Vicente or world famous Sunset Boulevard along streets that meander up to the foothills and through the canyons of the Santa Monica Mountains. Upscale apartments populate the area south of San Vicente, intermingled with shops and restaurants.
Brentwood is also home to several, highly rated private schools – The Brentwood School and Archer School for Girls, two the most prestigious schools in California, plus the community features one of the finest public education systems within the city.
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How am I doing you say?
Life is busy and interesting! My sister & brother-in-law have been here two weeks, two weeks off working in Mom’s house getting it ready to sell. They have done a tremendous and enormous job. We are almost there and have 3 or 4 potential buyers we are working with. Having them stay with me has been great and fun, and I really miss them when they are back home.
Work has been keeping me hopping and “the busy holiday season” has not made a dent in my working seven days a week, nonstop. I love it but am also looking forward to taking a little time off and taking a breath or two. As you may recall, I am a mentor to new licenses, and one of them has an offer on his first listing. It is such a joy to me to see the excitement and zest for learning and accomplishment in putting a transaction together. Unfortunately, I do not think this offer will come together, but working with him and guiding him to widen his horizons is for me what this is all about. It is the same as meeting someone new who comes to me as a buyer or seller and adding more dimension to my life.
I have one listing in Mountaingate that we thought we had sold, but unfortunately it just fell out of escrow, again, (which is a common occurrence today), however we put it back into escrow two days later, and I hope it sticks this time. I am as always looking to find properties to fill my large pool of buyer’s needs, so again, I you are at all thinking of selling, please do contact me.. Carole Schiffer – 310 442-1384
I hope you have a wonderful and restful Thanksgiving with your family and friends. Would love to hear how you celebrated the holiday with it being the first time in a long time that we can be with family and friends again.
Take care – stay safe and ENJOY!!!
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