The SchifferLine
Timely Real Estate News………………………………15 September 2020
************************************************************************|
Sales volume down…but improving
Nothing surprises us these days, especially in the real estate market. Median sales prices continued their climb in August while total sales volume was down a touch for the five communities I regularly report on — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City and Brentwood. Our market’s performance for the year has reflected what has been happening across America during this pandemic: Price increases reflect a strong demand, especially when supply remains somewhat tepid, and sales volume continues to lag behind 2019.
Nationally sales volume was down 11% through August 2020, reaching $2.295 billion vs. $2.602 billion through the first eight months.
Locally, the sales volume leaders through the end of August were Beverly Hills Post Office, up $180 million through August, and Brentwood, up $128 million. However, the other communities were down substantially in volume compared to this time in 2019— Beverly Hills down $110 million, Bel-Air/Holmby Hills down $197 million, and Westwood/Century City down $63 million. Santa Monica, another one of the areas I cover, sales volume was even with 2019 at $391 million vs. $392 million last year.
As I have reported many times, sales volume can be strongly influenced with several large sales of $20 to $40 million-plus, which happens frequently in our market.
***********************************************************
Median sales prices are up
For the most part, median sales prices continued their strong upward movement as mortgage rates reached all-time lows and buyer demand generated multiple offers across the board. Buyers are hungry and armed with rates below 3% for the first time since 1971, sellers are taking advantage of the strong Westside market.
Median sales prices are up in all of the five communities I report on — Beverly Hills is up, but barely, just 1% above last August 2019 at $$6.250 million; Beverly Hills Post Office was up 12% at $3.975 million; Bel-Air/Holmby Hills was up 6% at $2.332 million; Westwood/City Century was up 19% at $2.575 million , and Brentwood was up 4$ at $3.350 million. Santa Monica was down 1% to $2.700 million.
What we are seeing on the Westside is that our real estate market continues to show its resiliency month after month. I am not concerned about the sales volume, because as we have seen over the years, a few blockbuster sales self-correct this statistic in a matter of months, not years.
What is important to look at is that Days On Market reflect buyers and sellers coming to agreement on price. Excluding Beverly Hills, the average DOM in August listed for those communities above was only 23 days — that is incredibly short. Beverly Hills, because of their substantially higher prices, was 112 DOM for last month. Even with Beverly Hills thrown in, the average DOM was just 39 days. This tells us that our market is not out-pricing itself and values are reflected in competitive prices. This is all good news going forward as we march through these challenging, pandemic times.
***********************************************************
Mortgage market recorded best quarter in years
Even though this pandemic, we are seeing bright spots in the housing industry. The mortgage market recorded its best quarter in years this spring, a reflection of how the housing market is booming in 2020 even as much of the economy stumbles.
Lenders issued $1.1 trillion in home loans between April and June, according to mortgage-data firm Black Knight. That was the biggest quarter in the company’s records, which date to 2000. Lenders extended roughly $2.5 trillion in home loans in all of 2019.
Refinancing, up more than 200% from a year ago, drove the increase. Mortgage rates hit new lows multiple times this year, falling below 3% for the first time in July. The low rates have made millions more Americans eligible to save money on their monthly payments.
Purchase mortgages, though, fell 8% from a year earlier. But there remain serious challenges as stimulus money is not entering the economy, homeowners, and renters — unable to make mortgage or rent payments — could be facing evictions and foreclosures when moratoriums are over. So, while mortgage rates are at their lowest in nearly 50 years, there is good news for those who have incomes, jobs, and the ability to weather this pandemic storm.
***********************************************************
No surprise…. New homes larger, apartments smaller!
Times are a changing. New homes have gotten larger, many with a room dedicated to each family member, plus a guest bedroom. On the other hand, apartments are feeling more cramped. With the ’stay-at-home’ and shutdowns rampant throughout the country, homes are now being re-purposed as never before.
For example, new single-family homes have increased 18% in size, or 143 square feet, over the last decade, according to new research from StorageCafe.com. That is about the size of a new bedroom according to their research which analyzed the evolution of new-home and apartment sizes from 2010 to 2019.
The average size of a new single-family home built in 2019 was 2,611 feet. While new homes get larger. Apartments, though, have dropped in size by nearly 90 square feet over the last decade, averaging 1,156 square feet in 2019 according to the study..
The main reasons for the boost in square footage in new-home construction are that builders are maximizing plot sizes and buyers are showing an interest in larger homes—a trend which could grow even more during the COVID-19 pandemic. New or larger home office, gym, entertainment room/center — are all being phased into new home design.
***********************************************************
July home prices set 2-year record
According to CoreLogic last week, home prices grew in July by the fastest rate in nearly two years, a 5.5% annual gain. The firm’s leading indicator Home Price Index (HPI), showed that the month-over-month change was 1.2%. The company said it was the one-two punch of strong purchase demand – bolstered by falling mortgage rates and further constriction of for-sale inventory that has driven upward pressure on home price appreciation.
CoreLogic reported that on an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic. A long period of record-low mortgage rates has opened the flood gates for a refinancing boom that is likely to last for several years according Frank Martell, President and CEO of CoreLogic.
The Index report noted that after a momentary COVID-19-induced blip, purchase demand has picked up, driven by low rates and enthusiastic millennial and investor buyers. Spurred on by strong demand and record-low mortgage rates, we expect to see more home building in 2021 and beyond, which should help support a healthy housing market for years to come.
************************************************************
Millennials are driving US housing market recovery
Millennials, long viewed as perennial home renters who were reluctant or unable to buy, are now emerging as a driving force in the U.S. housing market’s recent recovery.
Demand from millennials, who today range from their mid-20s to late 30s, has been increasingly important to the housing market since at least the middle of the last decade. But more recently, these new homeowners have been pushing aside older generations to become an even bigger influence.
Millennials reached a housing milestone early last year when the group first accounted for more than half of all new home loans, and they consistently held above that level in the first months of this year, the most recent period for which data are available, according to Realtor.com. They made up 38% of home buyers in the year that ended July 2019, up from 32% in 2015, according to the National Association of Realtors.
Moreover, millennials now account for more than 50% of all mortgage applications. Last year, millennials surpassed baby boomers as the biggest living adult generation in the U.S., according to the Pew Research Center. The largest cohort of millennial births was in 1990, Pew said, meaning that group turns 30 sometime this year.
According to one major lender — “Millennials are roaring into home-buying age. It is what we have been talking about for years. It’s now happening!”
***********************************************************
Kids in college with leased units? Good luck.
The abrupt conversion from in-class to remote teaching is now causing a swell of vacated units in college towns across the U.S. Landlords are scrambling to figure out what to do with leases that were signed by parents in January and February, before the pandemic, and how to recover.
For many landlords, who have saved for years to buy investment properties near colleges and universities, are now faced with vacated units and a signed lease that is not being honored. Breaking a lease is not inexpensive prospect, and in some areas, students return to college and occupy a near-college unit but still work remotely. Others return home and let the chips fall where they may
Landlords are filing suit or they are getting creative, filling the units with non-students eager to get an apartment or share a home…and getting offers of a move-in discount to fill up the empty property
***********************************************************
Engulfed by smoke and ash, LA deals with fire, again
We are no strangers to fire, and as we are seeing daily now, smoke hangs over most of us in Los Angeles as the El Dorado and Bobcat fires burn incessantly in our local San Bernardino and San Gabriel mountain ranges. The scenes of the horrible air and the amazing brilliant orange sun and sunset are shocking to witness.
Here are some tips in handling the poor air quality from the Air Quality Management District
• Stay indoors, if possible.
• Keep windows and doors closed.
• Check local public health alerts and the Southern California Air Quality map
• Find an air-conditioned place, like a designated LA County Cooling Center
• People with heart or lung disease (including asthma), the elderly and children should take extra precautions as they may be more likely to experience poor health if they breathe in wildfire smoke.
• Avoid vigorous physical activity.
• Run your air conditioner if you have one. Make sure it has a clean filter and that it is recirculating the indoor air to prevent bringing additional smoke inside.
• Create a clean air space in your home by using a portable air cleaner instead of or in addition to your air conditioner. Do this in one or more rooms with the doors and windows closed.
• Avoid using a whole-house fan or a swamp cooler with an outside air intake.
• Avoid using indoor or outdoor wood-burning appliances, including fireplaces and candles.
• Do not rely on dust masks for protection. Paper “dust masks” can block large particles such as sawdust, but do not protect your lungs from the small particles or gases in wildfire smoke. Disposable masks such as N-95 or P-100 respirators can offer some protection if they are worn properly and have a tight fit.
***********************************************************
Moving and Cleaning Out
Starting today, they are going to be remodeling my Coldwell Banker office, so until sometime in November, I along with my assistant Antione will be working out of my house. We have working together in my CB office in Brentwood. Cleaning the office out and moving everything including the computers, gave me the opportunity to purge a lot of “stuff”, and I made a promise to myself that I will not start collecting “stuff” again once I am back in the office.
We are also in the process of doing some cleanout of my Mom’s house. WOW, she had a lot of stuff. One of the challenges I have been facing is finding a safe place to bring her unused meds. If you know where I can do that, I would appreciate hearing from you with that suggestion.
While I am working at home, the best phone number to reach me is 
310 471-2007 or ceschiffer@gmail.com.. I have a complete office set up here at home and can fulfill all of your real estate needs.
Stay safe and vigilant!
HAPPY NEW YEAR!
You must be logged in to post a comment.