Timely Real Estate News……………………………………I5 October 2017
Sales volume up, of course, but sales up, too!
It’s all relative, of course, but we’re making headway on one important front — the number of homes sold compared to a year ago. This time last year, we had a total of 610 homes sold in the five communities I report on (Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood). According to the MLS records, as of September 30, we had 650 homes sold. That’s a modest 6.5% increase, but inventories have been flat and this has frustrated buyers, all of whom have been fiercely competing for premium listings. We are still in that hot competitive mode, and we have a long way to go to get back to decent inventory levels. Still, it’s a good sign to see home sales increase.
Sales volume is up everywhere — more than 21% over 2016 for the first nine months of the year. For the five communities I report on, we have sold a total of $2.859 billion vs. $2.356 billion through same period a year ago. That’s not surprising although sales volume has picked up over last month when it came in at a 17% increase over the previous year.
Median sales prices get a boost
With pressure on inventories, home prices continue to steadily climb. Significantly, when looking at median sales prices a year ago, Beverly Hills is up 7% at $5.237 million; Beverly Hills Post Office is up 24% at $3.050 million; Bel-Air/Holmby Hills is down 3% to $2.211 million; Westwood/Century City is up 7% at $2.039 million, and Brentwood is up 16% at $3.100 million. Bel-Air is one of the areas where median sales prices constantly fluctuate and I don’t regard this as a trend. As always, we need to keep in mind that there are always large sales that skew the numbers as well as private sales that are not included in the MLS numbers.
Venice is one of my most ‘favored’ communities….and its median sales prices were up 20% to $2.000 million on sales volume through September 30 of $439 million, a 25% increase over last year. Venice, along with Playa del Rey and Playa Vista, continue to be hot markets as Silicon Beach expands and millennials/tech families move in. In just the past year, Venice’s median sales prices through the first nine months were up 29% versus a year ago.
Mid-priced homes popular in September
In looking at the home prices last month, the homes priced between $2 million to $5million were a big hit in our market. Beverly Hills had 9 homes over $3 million with one home at $25 million. Beverly Hills Post Office had 8 over $3 million, Bel-Air-Holmby Hills had 10 over $3 million with one selling for $17 million, Brentwood had 7 with a sales price of $17.2million. Westwood had 6 over $3 million with the highest priced at $4.4 million.
We’re now through three quarters of 2017, and prices and sales are strong but inventory could improve. While we have reached the 2007-pre- recession levels in median home prices, we’re still behind value-wise because these #s don’t take into consideration the 11% inflation factor. But we’re getting there. And what is also significant is that we are not seeing sales prices matching original listing prices (SP/OLP), with some communities in the 80% range and the others in the low 90% range — which means only one thing: Sellers are getting price-aggressive but eventually settle back down to more realistic prices.
Best year ever (thus far) in high-end sales
We’re hitting our stride, the Los Angeles real estate market is having its best year ever in high-end sales with 434 closed sales of $5 million-plus thus far this year, versus 361 as of last year. That’s a 20% increase. Of these sales, 134 were $10 million-plus vs. 106 last year, a 26% increase. But the biggest difference is in the $20 million-plus category. There have been 40 closed sales of $20 million-plus vs. 19 at this time last year…a 111% increase. Nineteen of these sales were $30 million-plus vs. 8 last year.
Of the 40 closed sales of $20 million-plus, most of the buyers were American….32 American, 3 Chinese, 2 English, 1 Indonesian, 1 Canadian and 1 Scottish.
The areas of the 40 closed sales were 10 in Malibu, 8 in Beverly Hills, 6 in Beverly Hills Post Office, 6 in Bel-Air, 3 in Holmby Hills, 2 in Sunset Strip, 2 in Santa Monica and 1 each in Los Feliz and Westwood. One other point of interest, of the 40 $20 million-plus sales, 15 of them were private sales!
Unemployment hits lowest mark in 44 years
If one of your measurements is tracking unemployment #s, then you have encouraging news — the Department of Labor reported last week that the total number of laid-off workers receiving unemployment benefits fell to 1.89 million by the end of September — the lowest such mark in 44 years! And according to the agency, new claims for unemployment benefits dropped 15,000 to 243,000 in the first full week of October as the job market bounces back from hurricane damage even faster than forecasters expected.
Low new jobless claims are a good sign. They indicate that layoffs are rare, and accordingly that job creation is strong. According to the report, the labor force is moving back into Texas and Florida quickly after the disastrous hurricanes busted up their states. Yes, this is a great news.
Fed hike in December…probable
According to members of the influential Federal Open Market Committee they are anticipating that factors slowing down inflation will pass, and that will lead to the economy hitting the 2% inflation mark that the central bank believes is consistent with healthy growth. If this holds true, the FOMC indicated that a third increase in 2017 of its benchmark funds rate is warranted. Traders now broadly expect the Fed to hike interest rates in December. Past hikes in the past year have not dampened the real estate market or mortgage rates. According to most experts, another hike most likely will have the same effect. There are other factors that may impact a change in mortgage rates, such as the international situation, but we will have to wait and see what happens there as well.
More baby boomers retire with mortgage debt
According to Fannie Mae, retiring baby boomers are less likely to be mortgage-free compared to people their age in previous generations, this could potentially hurt boomers’ financial security and exacerbate the housing affordability crisis.
Slightly less than 50% of the oldest baby boomer homeowners in 2015 were mortgage-free, 10 % points lower than the number of Silent Generation homeowners who were in the same age group in 2000 and mortgage-free, according to Fannie Mae. Between 2010 and 2015, when the housing market was recovering from the crash, baby boomers were paying off their mortgages at an accelerated pace. But even if that trend continues, researchers predict, the rate of boomers who own their homes free and clear in retirement is unlikely to keep pace with previous generations.
Fire-ravaged home owners have another fight: Insurers & Contractors For the hundreds who lost their homes in the fires sweeping across Northern and Southern California, they now face another burden or two — dealing with insurers and contractors. Some are almost certain to experience a rude awakening.
Roughly 60% of American homes are underinsured by an average of about 20%, according to CoreLogic, a company based in Irvine that provides data to home insurers. That means someone whose house was valued at $500,000 (not including land), for example, would be short $100,000 on the cost of rebuilding after a disaster.
The problem is that homeowners are sometimes misguided by formulas for insurance coverage that doesn’t capture all of the rebuilding costs. In other cases, homeowners fail to update their policies after making improvements.
As with any home (or structure) you own, it is imperative that your insurance policies are kept up to date. Adding improvements — such as a new deck or updating your kitchens, bathrooms, or adding a room — will impact the value of your home and therefore, it will necessitate you increasing your insurance coverage. Our prayers and condolences to those many families who have lost their homes or loved ones and suffered severe losses.
As for contractors, there are some recommendations that one needs to follow, and these are good guidelines for all of us to follow any time we employ a contractor to work on our properties:
1: Check to see if they have a contractor’s license and get the number 2: go on line to https://www2.cslb.ca.gov/onlineservices/checklicenseII/checklicense.aspx (I know it is a long address)3: Check the status of their license including checking to see any violations or negative reports. 4: Do not give them any money until you read the contract first 5: Never give them all the money up front.
A California contractor’s license number doesn’t contain any alphabetic characters. Each contractor’s plastic pocket license will show their respective license number. Begin the entry of the license number at the left portion and it should not exceed 8 digits in the number.
The other side of the coin!
Given the amount of destruction our friends and neighbors are experiencing with the loss or damage to their homes, we are sure to see enormous growth in rebuilding those homes, and a possible increase in jobs, even though there is a shortage of craftsman to fill some of those roles.
Emergency Preparedness — Get it done!
I cannot over emphasize or understate the need for all to get your emergency preparedness supplies together for you and your family. Please take the fire disasters in Napa Valley and Anaheim Hills as stern warnings to all of us, especially those of us who live in the hills of Southern California. It’s happened before, and we have to remain vigilant.
Please check out the emergency preparedness steps you need to take now. Go to: www.readyla.gov — Prepare or purchase kits for your home, office, and auto. Make a plan. Keep all family members connected.
Rents zoom…Surprised? No.
Was there any doubt about this? Don’t think so. With housing shortages and affordable housing options dwindling, it became obvious that demand for rental housing is skyrocketing…and so are rental amounts.
Southern California apartment rents are expected to get even pricier over the next two years, as demand increases along with job growth, stated a report released last week. In Los Angeles County, average rents in 2018 are forecast to hit $2,304, up 3% from the previous year. In 2019, rents are expected to climb another 3%, to $2,373, according to the annual USC Casden Real Estate Economics Forecast.
Many residents already are struggling to get by, a fact that’s pushing some tenant groups to lobby cities for new or more robust rent-control ordinances. Economists generally agree that the root cause of California’s affordability crisis is that for decades too few homes have been built relative to population and job growth.
In 2015, 31% of renters in Los Angeles and Orange counties spent more than half of their income on housing costs, according to the latest study from Harvard University’s Joint Center for Housing Studies.
The large millennial generation was singled out in the USC report as one key reason rents will rise over the next two years. We are also going to see the need for rental properties by those who have been displaced by the recent fires in our area.
Homeowners want large, high-tech bathrooms
In the Houzz 2017 Bathroom Trends Report, homeowners are looking for large, high-tech bathrooms with sleek color palettes and finishes.
“This year’s Bathroom Trends Study sheds light on two key trends in master bathrooms, showers as a focal point and the growing role of high-tech features in bathroom products,” said Houzz Principal Economist Nino Sitchinava. “Additionally, today’s master bathroom renovations are marked by timeless and durable elements, from natural stone finishes to curbless shower entries, a benefit of having older generations in the driver’s seat.”
Who’s splurging on bathrooms? On average, homeowners spent $21,000 to remodel bathrooms exceeding 100 square feet. That cost drops to about $12,300 for homeowners with smaller bathrooms that are less than 100 square feet.
When it comes to age demographics, baby boomers (aged 55+) spent the most on remodeling their bathroom ($13,900-$22,800), since many them (58%) reported that they don’t plan to sell their home anytime soon.
Meanwhile, millennials, who see their home as a short- to medium-term residence, are choosing to invest less in bathroom renovations. Out of the 4 % of millennials who renovated their bathrooms this year, most spent $9,200 to $12,500.
My real estate world!
I invite you to visit my lovely listings, with their new prices and ready & willing sellers! My customized and remodeled home at 12357 Ridge Circle in Mountaingate is a treat to see and experience. It is a 3 bedroom/4 bath home with a golf course view and quality and luxury throughout. Priced at $2,190,000, my clients have purchased another home http://www.12357ridge.com/
My other lovely and again luxurious listing is at 11737 Ipswich in Bel Air Crest, and is a very special home with 3 bedrooms/3.5 baths waiting for its new residents. Newly priced at $2,250,000. http://www.11738ipswich.com/.
I also have some homes that are available for lease but are not yet on the market as well as one or two homes that will be coming on the market for sale in the next few months. , so please let me know how I can assist you with all your real estate needs.
One Last Thing
Once again, I am collecting coats and jackets as part of the One Warm Coat campaign. If you have any coats or jackets you and your family no longer ware or need, please let me know (310) 442-1384 and I will come by and pick them up from you. I take them to the Ocean Park Community Center for their programs in assisting the homeless. Thank you!