Timely Real Estate News……………………..15 September 2018
Winnie-the-Pooh and the Blustery Day….
The Santa Ana winds blew and blew. Piglet was snuggled behind Pooh, who was standing guard under the Old Tree, making sure that no branches (or limbs) would fall on his dear friend during this terrible wind storm. Tigger was racing about, fighting the blustery gales as he tried in vain to stop them. He gave up. He was all blustered out.
And like the real estate market, we can feel that way some times, all blustered out — hot Santa Ana winds sweeping across the Los Angeles plain, with prices going ever higher and inventory ever lower. But I muse and smile — Winnie was there to comfort me, so I know everything will be okay, eventually.
As a fan of A.A. Milne, I sometimes long for the ‘normal’ days when we had lots of inventory and prices were within reach for a lot more people who wanted to live in our “neck of the woods”, just like Winnie. Each month, I review the sales for the previous month and to my mild surprise, sales are still behind last year at this time.
I thought as we exited August, we’d be ahead, but we’re not. Total sales volume for the five communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood, are down 6.6% through the eight months of 2018. In August 2017, we were ahead by 18.8% over the previous year (2016). That’s a swing of 24+%.
Sales volume for the five communities I report on was $2.362 billion vs. $2.519 billion a year ago. Sales volumes were down significantly in three communities — Beverly Hills (-$139 million). Beverly Hills Post Office (-$62 million), and Brentwood (-$114 million). Of course, there’s an explanation for all of this — inventory is down. We have lots of buyers, and I’m getting many buyers at my Open Houses who are looking ‘everywhere’. They want to live in our neighborhoods, but the choices are just limited.
Median Sales Prices continue up
It’s no surprise that prices are marching upward. No gale-force winds are stopping price increases here. Although homes are not selling as close to the original asking price, they are, overall, recording increases in four of these five communities — Beverly Hills’s median sales price was up 8% to $$6.008 million through August 2018; Bel-Air/Holmby Hills was up 19% to $2.480 million, Westwood/Century City was up 13% to $2.480 million, and Brentwood was up less than 1% at $3.2187 million. Only BHPO was down — 3% to $2.650 million. As always these are the numbers only from the Multiple Listing Service, and while there were a good number of sales in BHPO (16 in 2018), there were more in 2017 (19), and that too impacts the over all median price. For example, in 2017, the highest sale for $14,500,000 vs. $7,500,000 this year.
In Venice, Playa del Rey and Marina del Rey, which I also cover, median sales prices for Venice were up 3% to $2.060 million, Playa del Rey down 8% to $1.644 million, and Marina del Rey up 28% to $2.389 million. Sales volume for all three cities were up 7% to $417 million.
Median sales prices — where half of the homes are selling above the MSP figure and half below it – is the clearest signal as to the status of pricing in your community. In this very eclectic real estate landscape, we have had difficulty in comparing home values on a square-foot basis. We’re starting to do that now.
Home sales not lingering….
I have always maintained that homes competitively priced, well presented, and in good locations are not going to be on the market long. As mentioned above, we are seeing the fastest pace in “days on market” on the Westside in years.
According to the National Association of Realtors in a recently released report reviewed on inventory and interest rates of the major metropolitan areas in the country stated that homes for sale are not lingering on the market for long. Properties on the market typically sold in 27 days, shorter than the 30-day median from a year ago.
The area that saw some of the quickest sales in July was the District of Columbia, where properties sold in just 17 days. Utah was next with 19 days, followed by Colorado, Idaho, Michigan, Ohio, South Dakota, and Washington, all at 20 days. San Jose (26 days), San Francisco (30 days) were two of the top three markets.
Eighty-six % of Realtors responding to the NAR survey reported that home prices remained constant or rose in July 2018, compared to levels one year ago (91% in July 2018). First-time buyers accounted for 32% of all sales vs. 33% in July 2018. Obviously low inventory and interest rates are the two major issues affecting transactions in July.
Americans ‘love debt’ — banks, too!
One would think that after the Great Recession, American financial institutions would do a turn-about and change the way they interface with their customers — the people to whom they rent money. A lot of it. But in looking at the enormous growth in debt Americans are facing, we are piling up record levels of housing and credit card debt yet again.
A decade after the financial crisis, many households are no more prepared for an economic downturn today than they were then. And though there’s less risky lending in some areas, new worries have emerged.
For example, in 2005 and 2006, the peak years before the crash, government-backed loans accounted for only about 35% of all new mortgages; by last year, that figure had risen to 70%, according to the Urban Institute. Another example, in 2007 and 2008, industry leader Lending Club — who is one of the country’s broad-based consumer loan companies — made a mere $25 million in loans. So far this year it’s lent $3.8 billion. Investors say they’re not sure how these new types of loans will perform in a downturn.
Student and auto debt have soared, new types of loans backed by untested technology have hit the market and the average American has benefited little from the roaring stock and housing markets. But as one economist observed, “…if there’s a blowup in the housing market, it will not impact the banks like it did in the last cycle.”
Middle income rose, poverty rate declined
While Americans are piling up debt, the economy is showing increased strength for middle-income workers. Middle-class income rose to the highest recorded levels in 2017 and the national poverty rate declined as the benefits of the strong economy lifted the fortunes of more Americans, the U.S. Census Bureau reported last week.
According to their data, the median U.S. household earned $61,372 last year, meaning half of the families in the country brought in more income than this and half earned less. Crossing the $61,000 mark signals the American middle-class may have finally earned more than it did in 1999, although the Census Bureau cautions that median income last year was not statistically different from 1999 or 2007. All of the above #s have been adjusted for inflation.
Economists have been worried about why wage growth has been so sluggish lately, but Americans are compensating for that by working longer hours or having another family member find employment. Job openings hit a record high in July, the Labor Department reported last week, and there are now more jobs available than unemployed workers. Isn’t that crazy? Hundreds of thousands of jobs are going unfulfilled in the U.S. because of a shortage of skilled workers.
With wages stagnant, home equity appears to be the only new source of current income for middle-class Americans. Home equity withdrawals accounted for more than 9% of disposable personal income just before the housing bubble burst, then “dried up overnight,” as Michael Calhoun of the Brookings Institution puts it, intensifying the post-crash economic slump.
Fire season not over, be prepared
This year alone, California has lost 1,200 homes, 12 people, and more than 1.2 million acres to wild fires across the State. And it’s not over. Our ‘traditional’ fire season is just getting started, and during the next month, California is expected to see above-normal fire activity after a hot summer dried out grasses that grew long thanks to the state’s brief reprieve from drought. Expected Santa Ana winds will exacerbate any fire that starts. In other words, as a LAFD spokesperson stated — “our fire season is now all year long!”
This summer, more than a dozen fires were burning at the same time throughout Southern and Northern California, including some of the largest single wildfires in recorded state history. The amount of land that has burned at this time this year is almost equivalent to the 1.4 million acres that burned all of last year, according to the California Department of Forestry and Fire Protection. It’s a significant uptick from the last nine years.
Unfortunately, California holds the top spot for acres burned, followed by Nevada and Oklahoma, and accounts for 10% of all acreage burned in the U.S. since 2000. Firefighters who have been on the job for decades have repeatedly expressed alarm about the changing behavior of fires, which have become more intense and less predictable, and the increasingly elongated fire season. : Here’s the LAFD web site https://www.lafd.org/safety/disaster-preparedness
Transferring title in probate can be vexing
Sometimes, heirs face challenges in getting clear title to property after a loved one passes away. The easiest solution, of course, is that there is a will that makes the transfer easier. But even then, problems can arise. If there is a will, a representative of the deceased can submit the will to probate, and the property will be transferred according to the terms of the will. If the person has died intestate – meaning without a will – then the property will be awarded by the probate court in accordance with the laws of “intestate succession.”Problems can arise when a will is not probated. If the property changes hands as set forth in the will, but legal title has not been transferred by a probate court, the new owner may have difficulties when he/she wants o ell it because legal title is still in the name of the deceased.
It is worth noting — that when both spouses legally hold title to the real property, when one spouse dies, then transfer of title to the surviving spouse may occur without probate. However, if the surviving spouse was not named on the original deed, and the property was the decedent’s separate property, then ownership is determined either by the deceased’s will or by the laws of intestate succession (in the absence of a will). Best advice, check with your accountant and attorney to make sure all of your documents are in order and that you know how to properly handle the property transfer.
I have a fabulous new listing in Bel Air Crest! It just came on the market the 14th, but as soon as it hit the MLS, I got calls for 2 showings that day, but I have shown it to two buyers, and both of them are considering writing offers. It is a 3/2.5 plus den that has been partially updated in the last few years. It has one of the rare 3 car garages, however, one of the spaces is currently being used as an office. The garden is very charming with a spa and a few citrus trees. The price is $1,995,000. My listing in Mountaingate is also still available. It will be open this coming Sunday, the 17th from 2 – 5, so please stop by and say hello.
I am also very excited to announce that my app… Carole Schiffer is now live. It is very easy to access. just go to app store on your phone, type in my name and you will be in business. It has all of the available listing in whatever area you want to look in and the information is accurate and live as it is coming from the MLS. There are a number of other functions and features I hope you will enjoy also.
Lastly, for those of you who celebrate, Happy Yom Kippur and I hope you have an easy fast!