Timely Real Estate News………………………………….. 15 September 2019
Sales up, prices mixed as Fall comes
With a total sales amount of $2.577 billion versus $2.377 billion this time in 2018, an increase of 8%. The sales surge began July 2019 with a big jump in sales volume that had been preceded by six months of stagnant and lagging sales performance in the communities of Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood.
Notable increases came in Beverly Hills, which saw a jump of $200 million in sales volume over this time last year, and Bel-Air/Holmby Hills came in with $190 million more than a year ago. The other areas were either down or had no real change in sales volume — BHPO was down $40 million in total sales compared to 2018, Westwood/Century City was down $20 million, and Brentwood was off $30 million. But we all know; a month doesn’t make a year or a trend. What is good news is the buyers are “out there”, and they’re picking up quality homes at competitive prices.
Median prices were mixed across the board
There were no ‘stars’ this past August — there was little momentum up or down, while volume fluctuated among our five communities. Beverly Hills led the way with a median sales price of $6.200 million, up 3% over August 2018. Beverly Hills Post Office was also in positive territory — 3% ahead of last year at $750 million. The other median sales prices all hovered in the less-than-5% range — Bel-Air/Holmby Hills was down 4% at $2.194 million…Westwood/Century City was down 5% at $2.150, and Brentwood almost broke even, at -01% over last year at $3.175 million.
What does this mean? It simply means that with all of the chaos going on in our economic world of trade wars, stock markets zooming up and then down…we’re seeing a ‘steadiness’ in our real estate markets, with the perennial stars (BH and BHPO) staying above the fray but others are close behind.
On a more sobering note, there were some recent monthly stats that bothered me — Comparing median sales prices for August 2019 to August 2018, we saw Beverly Hills leading the pack with a 33% increase over last year, and Brentwood with a modest 2% increase…the other areas’ median sales prices for August were down – notably BHPO and Bel-Air/Holmby Hills were down 25% and 46% respectively, Westwood/Century City was off 28% compared to a year ago. Palisades was up just 1% in median sales price over August 2018. This isn’t a trend, it’s just one month. I’m predicting we’re heading in a positive direction.
Keep your eye on “year-to-date” median sales prices — because it is the accumulation of sales performance month after month that gives a true picture of pricing trends. Volumes, on the other hand, can zoom up and down as we tend to have large sales occurring in sporadic moments.
Home prices projected to rise 5.4% thru July 2020
If you thought we were leveling off the home-price increase binge we’ve been on these past few years, Core Logic, a San Diego-based real estate data tracking company, said ‘forget it’. Home prices will continue to increase on an annual basis with the CoreLogic Forecast indicating annual price growth will increase by 5.4% by July 2020.
On a month-over-month basis, the forecast calls for home prices to increase by 0.4% from July 2019 to August 2019. The CoreLogic HPI Forecast is a projection of home prices calculated using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for
“Although the rise in home prices has slowed over the past several months, we see a reacceleration over the next year to just over 5% on an annualized basis,” said Frank Martell, president and CEO of CoreLogic. “Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force. These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future.”
Forced out, young adults moving far away
It’s not “Go West, young man” any more…. it’s “go where the money is”. If it isn’t nearby, young adults are heading for areas where the investment climate is more ‘user friendly’.
Millennials who have been priced out of their local housing market are jumping online and searching for investment properties to buy elsewhere a leading observer of real estate trends, reported.
Their study found that millennials see the investment landscape very different than their parents do. They’re jaded by the home buying story, they’ve seen people overpay during the peak and be upside-down (owning more than their home is worth) in their homes, and they see stock market volatility and don’t have an appetite for it. They want something that offers a departure from the rollercoaster ride.
That doesn’t mean they’re shunning homeownership. They believe it’s still lucrative to own, but when they live in an area where it’s harder to achieve, they’re finding
another way to break into ownership. New technologies are making it easier for them to search and find properties that appeal to their budgets now but offer longer-term investment returns than if they looked locally. These younger real estate players are tech savvy, searchers on steroids and willing to break away from the traditional model of buying where they live. The apple is falling farther away from the tree these days.
Extreme wildfire risk with Los Angeles leading the list
According to the 2019 Core Logic Wildfire Risk Report, approximately 776K homes in Southern California are at extreme risk of being damaged. The reconstruction cost value
of repairing those homes has been estimated at $221 billion. Homes within Southern California face the greatest risk, with Los Angeles, Riverside and San Diego metropolitian areas having 42% of their residences at high-to extreme wildfire risk and claim potential.
We all need to be vigilant in making sure that our properties are as safe as they can be by keeping the brush around them clear, obey the no smoking regulations in the area, make sure that others obey them as well, have emergency plans including evacuation if necessary. As most of you know, this is a HOT BUTTON item for me.
Want a loan? FICO plays a key role, and scores are up.
Where did this guy, FICO, come from? FICO is an acronym for Fair Issac Company, which introduced its credit scores in 1989. The scores are a three-digit number meant to help lenders determine how much risk a potential borrower represents. Lenders rely heavily on FICO scores, among other factors, to evaluate the credit worthiness of potential homebuyers.
FICO scores are now at an all-time high. There have been nine consecutive years of increases in the national average FICO Score to bring this year’s average to 706. Average scores had previously bottomed out a decade ago, in October 2009, during the housing and financial crisis. At that time, the average score fell to 686.
A FICO spokesman attributed the new high average scores to “increased consumer awareness around FICO Scores and credit education.” The company also pointed out that consumers have managed to purge from their files negative credit information that they accumulated during the recession, thus boosting their scores.
It is important to remember that with the 3 credit reporting agencies, they all rate the scores differently and that lenders use the score differently depending on what time of loan application.
When buying a home, do you renovate or tear down?
It’s a question we all consider when looking at homes to purchase, (or just fantasying what you might do if you bought that house). For those actually in the purchasing mode, it’s a critical issue that requires a lot of forethought because it gets down to dollars and cents — fix it up or tear it down?
Purchasing a property in need of a lot of work can be a smart investment, or it can quickly turn into a money pit. If an investor decides to go that route, the first decision they will need to make is whether to undergo renovation work to make the property not only livable but enticing, or if the entire home needs to be torn down.
Bobby Montagne, the CEO of Walnut Street Finance, put together some tips outlining crucial points when deciding whether you should tear down the as-is property you just purchased, or try to fix it up.
The most important task you need to do: Set a budget. A couple of small fixes can increase the value of a home and come at a low cost, but a full rebuild can prove much more costly. You should always allocate additional money for overages. “If you’re sure you’ve got enough, that’s great,” Montagne wrote. “But remember – if you run out of money during a rebuild, your partially-built house could turn into a massive money pit.”
Montagne also said that time is a significant factor. If it’s going to be a primary home and you need to move in quickly, you might not have time for a full rebuild, but if it’s an investment property that doesn’t need to be occupied right away, you can take the time.
Buyers should also consider different financing options. If you’re looking for a full rebuild, you can get a construction loan, which can be issued in installments, meaning investors can move through the different phases of a project without worrying about money running out.
There are no easy answers — knowledge of costs is critical in the decision process…and having experts help you gather ideas and costs to go with them are essential.
Ms. Monopoly is here…it’s their game now
Being someone who loves Real Estate. I was thrilled to learn that Hasbro, the toy maker of Monopoly has come up with a new version – Ms. Monopoly!
What is this all about? It’s a new game and new take on the classic Monopoly game that will now celebrate female trailblazers. After all, Monopoly was invented by a woman over a century ago! True story. The modernized reboot of its iconic money-making board game meant to celebrate female trailblazers and create a world where women make more money than men. There is a new mascot on the game’s cover, too: the brunet Ms. Monopoly, niece of the dapper, top-hat-wearing Mr. Monopoly (also known as Rich Uncle Penny Bags). Alas, she does not sport a monocle, but she does wear some pretty mean M-shaped earrings. Glad they caught up with this century!
Speaking of real estate, please do not forget my lovely lease listing on 2370 Brookshire Lane, a 4/3.5 home with an elevator and pool as well as my lease listing at 2367 Weybridge. It is 5/6.5 bath with a lovely garden & has been recently remodeled. I am also looking for some off-market Canyon homes. I have two well qualified buyers who have seen everything currently on the market. For more information, please contact me at 310 442-1384 or firstname.lastname@example.org
One last thing – September 16th is the celebration for Mexican independence – El Grito (the shout). Perhaps you might have enjoyed a celebration or two.
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at email@example.com www.caroleschiffer.com
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