The SchifferLine
Timely Real Estate News……………………15 October 2021
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Sales volumes continue upward push
Buyers are thirsty, and they are quenching their lusty thirst by spending millions on homes on the Westside as sales volumes continue their rapid rise each month in the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood. Sales volume increased over 64% to a record $4.492 billion through the first nine months of 2021, which compares to $2.740 billion a year ago. Of course, the law of inventory supply and buyer demand come clashing together each day in our market, as buyers are scrambling to capture their dream home, often fighting through a line of other home seekers, eager to kick up their offers to close the deal. It has been mostly a civil process as many buyers walk away, hopelessly disappointed as for many, this is not their first loss….but they keep looking.
Sales volume leaders were Beverly Hills with an increase of $626 million over comparable sales for 2020. Brentwood was up over $506 million through the first nine months of this year…Westwood/Century City was up $208 million, Bel-Air/Holmby Hills was up $201 million, and BPHO was up $195 million through September compared to 2020.
Particularly notable was the dramatic increase in sales volume in Pacific Palisades — another area on which I focus — where they experienced an increase of $754 million in total sales through the first nine months of this year compared to 2021.
None of this comes as a surprise since we have witnessed these enormous increases in sales volumes since the first of the year — a year fraught with the ongoing Pandemic that continues to plague many parts of our economy.
A worthy footnote — There were a number of large sales in all the areas I specialize in – Beverly Hills – 6 homes between the $6,000,000 – $17.000,000; Beverly Hills Post Office — 4 homes between $6,800,000 – $16,000,000: Bel Air — 4 between $4,000,000 – $$9,500,000: Brentwood — 6 between $7,000,000 – $23,900,000; and Westwood , 4 homes between $4,000,000 and $8,200,000. As a reminder these are only sales that were recorded in the multiple listing service and does not take into account any private sales. However, you look at these numbers it certainly skews the stats for both sales volume and median sale prices!
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Median sales prices are not sitting on silently by
For the most part of 2021, we have been experiencing moderate median price increases — in the 4-6% range for most of the communities I report on monthly. But September was a break-out month for MSP, all but one in double-digit increases.
Beverly Hills’s median sales price was up 18% through the month of September at $7.424 million; Beverly Hills Post Office was up 12% at $2.297 million; Bel-Air-Holmby Hills was up 24% at $2.900 million; Westwood/Century City came in at $2.648 million, up 8% and Brentwood rose to 16% at $3.700 million. Pacific Palisades was up to $4,037 million, up 21% for the year.
All in all, median sales prices remain the primary barometer of how our market is doing. We continue to experience tremendous MSP growth since the mid-point of the pandemic, which one would think the opposite would happen. It did not. And we can expect to see the same price growth through the end of the year, even though the Fed signaled it might re-instate higher rates in 2022, but let us not forget, inflation is raining down on us now…up 5.6% this past September, meaning inflation will also affect home pricing, like everything else. We have seen a rise in median prices in various communities more so than in others. For example, in Bel Air Crest we had two homes that sold within days of coming on the market for $400,000 more than their listing prices. This practice is somewhat unprecedented in the community for the past 25 years that I have been living here. This happened in the portion of the community with the smaller (Canyon Homes), not so much in the portion of the community with the larger Custom-built homes.
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Jumbo mortgages surge as prices rise
It is no surprise mortgage lenders are reading the same data you see here and elsewhere: The projection for the cap of a conforming Freddy Mac and Fannie Mae loan interest rates that is currently $548,250, will possibly go to $900,000. After the conforming loan amount the loan category would be a jumbo loan which traditionally has brought higher interest rates. However, currently this is slightly different in that the rate for jumbo loans is slightly lower than a conforming loan. Please contact me and I will be more than happy to share the information with you…Carole Schiffer…310-442-1384.
Mortgage loans that exceed conforming loan limits set by Freddie Mac and Fannie Mae are estimated to reach $550 billion this year Bank of America estimates. A large share of that has been held in bank portfolios, but more is being securitized or sold to investors as private mortgage-bond deals, MarketWatch reports.
Home prices have increased by 20% compared to a year ago. Home buyers are stretching their budgets to try to afford the higher prices. The average mortgage amount averaged $410,000 the last week of September, according to data from the Mortgage Bankers Association. That marks the highest average mortgage amount since May.
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Pending home sales rebound….
Pending home sales rebounded in August, recording significant gains after two prior months of declines, according to the National Association of Realtors. Each of the four major U.S. regions mounted month-over-month growth in contract activity.
However, those same territories reported decreases in transactions year-over-year, with the Northeast having the highest impact, enduring a double-digit drop.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, increased 8.1% to 119.5 in August. Year-over-year, signings dipped 8.3%. An index of one hundred is equal to the level of contract activity in 2001.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.” Such an imbalance in the market is unsustainable over the long-term, according to Yun.
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High-end sales continue hot streak….
It just gets better and better, and more interesting. There have been 858 closed sales of $5 million-plus so far this year, versus 489 at this time last year — up 75%. Of these, 280 were $10 million-plus this year and there were 151 $10 million-plus sales at this time last year — up 85%.
We are seeing some sale numbers that appear to be in the stratosphere and there is no end in sight.
Seventy-six (76) were $20 million-plus this year and there were forty-four closed sales of $20 million-plus at this time last year, an increase of 73%. Twenty-six (26) of these sales were $30 million-plus this year, versus thirteen at this time last year, up 100%…and fourteen, were $40 million-plus this year and there were only six at this time last year, up 133%.
What is continuing good news is there are 119 pending sales of $5 million-plus at the moment and fifty-two of these are $20 million-plus, three are $30 million-plus and two are $40 million-plus.
Of the seventy-six sales of $20 million-plus, the buyers are mostly American — 57 or 75%. The other buyers are two Chinese, two Danish, and one Canadian, one Indonesian, one Saudi, one Canadian and one South African and twenty were in Malibu, 15 in Beverly Hills, eight in the Palisades, seven in Bel-Air, six each in Sunset Strip, Bel-Air/Holmby Hills, BHPO and Brentwood.
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UCLA Anderson Forecast — sizzle to ho-hum
I remember reading that the Covid-19 virus would probably be short-lived, and by Summer, if not Fall, it would all be behind us. That was 2020. And UCLA forecasters took note of the initial optimism in early 2021 that our economic recovery was going to be like the “Roaring ‘20s”….then they moderated their vision — “euphoric”, then to “boom time”, and now? “Ho-hum”. The Delta variant continues to take its toll on us, the economy and on forecasters’ predictions.
With the entrenched vaccine resistance and rising deaths in many states, consumers are hesitant to go out and spend on entertainment and restaurants, workers are retiring rather than risk infection on the job, business and international travel are dormant and global supply chains are going haywire as the virus closes factories abroad.
UCLA predicts gross domestic product will grow this year at 5.6%, down from the 7.1% rate forecast in June. It expects the economy to expand by 4.1% next year, down from the 5% anticipated earlier.
As consumption and investment shift into the future, 2023 growth could be 3.1%, up from the previously forecast 2.2%.
Not until the third quarter of 2023 would GDP reach its pre-COVID-19 trend, according to the new calculations. UCLAs Anderson School releases its economic forecast every quarter…let’s see what comes next??
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Floods? Not here in Southern California, right?
It was reported this week in the LA Times that summer 2021 is the driest we have had since 1895. It does not ever rain here — we are all beginning to feel that way (and, no, a drizzle is not rain).
But here is some sobering news: About 25% of all critical infrastructure, or about 36,000 facilities, in the country is at risk of becoming inoperable due to flood risks, according to a new report from the First Street Foundation, the creators of Flood Factor, a nationwide flood risk tool.
About 23% of all road segments, or nearly two million miles of road, are at risk of becoming impassable. Further, 20% of all commercial properties, or about 919,000–and 14% of residential properties, 12.4 million—also are at risk.
Our canyons, some denuded by recent fires, will also pose a threat to flooding — just ask Montecito residents about the disastrous 2018 flood that killed twenty-three residents caught in cascading floodwaters and mud.
Please check your insurance policy for flood (and fire) insurance. Do not assume your homeowner’s policy automatically covers flood damage.
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My world and welcome to it.
First of all, the best news, after not seeing one another nor being together since Feb ‘2020, my sister & brother-in-law were here for 2 weeks and will be back this coming week for another 2 weeks to work on cleaning out our mom’s house and getting it ready to put on the market. It was wonderful seeing and being with them. They stayed with me, and it was great catching up with one another. Depending on how much gets done on this next trip, there will be another trip in November, perhaps, even for American Thanksgiving (they celebrated Canadian Thanksgiving this past Monday!). Now that the borders between the US and Canada are open again, I will be celebrating Christmas with them in Canada!!!
In the meantime, my work has been keeping me busy. Hopefully, sometime soon you will have the opportunity to meet my assistant, Miguel, who I call Mr. M. He has been of great assistance to me in handling my business. My lovely listing in Bel Air Park sold after being on the market for a little less than 3 weeks, and my last listing in Bel Air Crest, leased in 13 days for over asking! I also am working with about 10-15 buyers all of whom are looking to purchase homes in the Bel Air Crest, Mountaingate and or Beverly Ridge areas, with the lack of inventory we are all dealing with, I am searching for properties to put them into…SOOOOOO if you ate at all considering selling your home in any of these areas, or any other for that matter, please contact me…Carole Schiffer, 310-442-1384.
I know we are all looking forward to a fun-filled Halloween and have decorated our homes for this fun event. If you want to share your photos, please send them to me…
ceschiffer@gmail.com , and I will post them.
HAPPY HALLOWEEN – STAY SAFE
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