Timely Real Estate News………………………………….. 15 October 2019
Sales volumes continue climb…up 8.7% over 2018
Along with solid numbers in the economy, real estate sales on the Westside continue to climb, up 8.7% over this time last year. With regard for the five communities I report on regularly — Beverly Hills, Beverly Hills Post Office, Bel-Air/Holmby Hills, Westwood/Century City, and Brentwood, sales through the end of September were $2.910 billion vs. $2.677 billion last year at this time. This is good news as we have seen volume increases across the board for the past five months after struggles in the first and second quarters.
The big leaders in sales volume were Beverly Hills with over $158 million positive compared to 2018 at this time and Bel-Air/Holmby Hills up $186 million. Only Beverly Hills Post Office was down significantly — $112 million negative, but it tends to experience ups/downs throughout the year. What is interesting about these stats is that there was a sale in BHPO for $42,750,000. It is the sales price of other homes that pulled the overall numbers down. Please remember that these stats are from properties listed in the multiple listing service, and do not include any private sales.
One of the other stats I do not mention on a regular basis, is the percentage of the average sales price vs. the listing average price. Mind you, the listing price does not necessarily reflect what might have been the original listing price if there has been a correction. In Beverly Hills it is 90.2%, Beverly Hills Post Office 92.3%, Brentwood 97.5%, Bel Air 93.5% and in Westwood 98.4%. Also let’s look at the days on market: Beverly Hills 89, Beverly Hills Post Office 120, Brentwood 70, Bel Air 58, and Westwood 50.
Santa Monica, another area of my focus, was at $424 million in total sales for the year through September, down $64 million from a year ago. In Santa Monica average sales price vs. average list price (again not taking into consideration any price adjustments that might have been made) is 97.9% and the average days on market was 40.
Median sales prices hold steady….
As I have mentioned in the past, evaluating real estate trends can best be measured by the progress of median sales prices through the year, not for one month. We’re now through three quarters, and median sales prices are holding steady, just slightly below 2018 prices.
For example, Beverly Hills median sales prices through September were 1% ahead of 2018 at $6.200 million; Beverly Hills Post Office was plus 6% at $2.835 million. Bel-Air/Holmby Hills was down 3% at $2.200 million; Westwood/Century City was down 4% at $2.167 million compared to 2018; and Brentwood was down 5% at $2.750 million vs. 2018. Santa Monica was down 7% at $2.750 million. Again, we tend to experience month-to-month fluctuations as well.
Sifting through the MLS data sent out each month, there are surprises to be found. Beverly Hills Post Office, for example, was up 107% in median sales prices at $2.416 million for September 2019 compared to same month last year. Brentwood was up 51% at $2.730 million…. but Bel-Air/Holmby Hills was down 57%. So, the numbers can be crazy-looking and do not a trend make on a month-to-month basis. Overall, as we near the end of year, our real estate market appears to be withstanding the tariff wars and other ’stuff’ going in our nation’s capital. We can point to exceedingly attractive communities, residential neighborhoods, and let’s not forget the weather, which has been absolutely lovely lately.
Nationwide home prices rose in August
Home prices rose both year over year and month over month nationally by 3.6% from August 2018. On a month-over-month basis, prices increased by 0.4% in August 2019 according to CoreLogic, the San Diego-based real estate tracking firm.
Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth will increase 5.8% by August 2020.
On a month-over-month basis, the forecast calls for home prices to increase by 0.3% from August 2019 to September 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 each state.
CoreLogic reported that 40% of the homes in the top 50 markets including Los Angeles, 40% were overvalued, 16% were undervalued, and 44% were at value. The national survey found that approximately 75% of millennial renters indicated they will likely purchase a home in the future.
Bidding Wars Haven’t Ended
Home buyers should not think that bidding or multiple offers wars are a thing of the past. In August, there was an average of three offers or every home sold, according to the National Association of Realtors. That figure has stayed mostly consistent since October 2015, when the NAR started tracking this data. It is totally a function of price. Buyers today are very sophisticated and knowledgeable, so when they see a property that they feel is well priced, they are there with their checkbooks. In Bel Air Crest recently, we had a home that came on the market that needed a significant amount of work, but it was priced approximately $50,000 less than a similar home that still needed some updating but was generally in better condition that had just closed escrow. The less expensive home sold in about two weeks and is scheduled to close escrow very soon.
Competition tends to be highest during April and May. But low mortgage rates are propelling a strong fall home-buying season, even as fears of a slowing economy mount. The report noted an increase in buyer traffic nationwide, excluding North Dakota and Illinois. The strongest buyer markets were in Idaho, Wyoming, and Wisconsin. California is a stable market along with Oregon, Nevada, Colorado, Nebraska, Louisiana, Mississippi and Florida.
Nationwide, properties were typically on the market for 31 days in August. Forty-nine % of homes sold in August were on the market for less than a month, according to NAR’s existing-home sales report. The NAR survey also reported low inventory and interest rates as the main issues that were facing transactions in August. “As expected, buyers are finding it hard to resist the current rates,” NAR Chief Economist Lawrence Yun says about recent strength in existing-home sales. “The desire to take advantage of these promising conditions is leading more buyers to the market.”
Overall, 73% of contracts closed escrow within the specified escrow time frame. 74% of those contracts contained contingencies, with the most common ones pertaining to home inspections, getting an acceptable appraisal, and obtaining financing. These three important contingencies, are generally what delays the close of an escrow. Banks today are many times ordering two and three review appraisals because they want to make sure that the value of the property is there as they really don’t want to be in the position of owning homes if/when the market depreciates.
It’s a good time to buy — more than half say so
As evidenced by the preceding article, new consumer findings survey show that more than half of polled Americans believe that now is a good time to buy a home according to the National Association of Realtors (NAR).
Optimism fared well in the third quarter of 2019 as 63% of people said they believe that now is a good time for a home purchase, with 34% of those respondents saying they believe that strongly.
NAR’s chief economist Lawrence Yun said the favorable outlook also contains a degree of caution. “Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” he said. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.”
Among those that stated that now is a good time to purchase a home, the silent generation (those born between 1925 and 1945) were most likely to express that belief. Seventy-five % from that demographic said that now is a good time to buy. They were closely followed by younger boomers (those born between 1946 and 1954), as 72% from that age group agreed that now is a good time to purchase a home.
Statewide rent control is on its way.
The future for renters and landlords is coming sooner than later. Gov. Gavin Newsom signed Assembly Bill 1482 last week which establishes for the first time a statewide rent control law. While supporters celebrate its potential to stanch the flow of people who are priced out of their communities or onto the streets, landlords are grappling with what it means for them.
The rent-cap law covers buildings older than 15 years and applies to single-family homes only if they are owned by corporations or other institutional investors. It expires in 2030 and won’t override stricter rent control ordinances in places such as Los Angeles and San Francisco.
According to the Los Angeles Times how property owners will react to this change will go a long way in determining whether this is going to be the happy ending renters envision. Today, landlords of non-controlled units can generally tell long-term tenants to leave in 60 days for no stated reason, as long as they are not breaking their lease. Landlords have had no experience with the state law mandating certain legal protections (and proceedings) dealing with tenants. We shall see how this all plays out.
Pending home sales increased in August
After a prior month of declines, the NAR reported that pending home sales rebounded with each of the four major regions of the country reported both month-over-month growth and year-over-year gains in contract activity.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.6% to 107.3 in August, reversing the prior month’s decrease. Year-over-year contract signings jumped 2.5%. An index of 100 is equal to the average level of contract activity.
All regional indices are up from July, with the highest gain in the West region. The PHSI in the Northeast rose 1.4% to 94.3 in August and is now 0.7% higher than a year ago. In the Midwest, the index increased 0.6% to 101.7 in August, 0.2% higher than August 2018.
Pending home sales in the South increased 1.4% to an index of 124.4 in August, a 1.8% bump from last August. The index in the West grew 3.1% in August 2019 to 96.4, an increase of 8.0% from a year ago.
“With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020,” said Yun. “Unfortunately, so far in 2019, new home construction is down 2.0%. The hope is that housing starts quickly move into higher gear to meet the higher demand. Moreover, broader economic growth will strengthen from increased housing activity.”
During a ‘re-do’…move out or stay?
That’s the dilemma many have when they make the decision to do a major remodel in their home — should they move out or stay home?
For many homeowners, remodeling means months of camping out in their own homes. Dennis Gehman, treasurer of the National Association of the Remodeling Industry, estimated that 90% to 95% of all homeowners remain in place during renovation work on their homes. Even in the luxury home segment, roughly 50% of homeowners stay. It can be painful; I know personally when I did a small remodel on my master bath and could not wait to “move back into my bathroom again”!
National spending on home remodeling has jumped 31% to $448 billion since 2013, according to the Harvard Joint Center for Housing Studies. All of the homeowners interviewed said they felt that living in their projects not only saved the cost and hassle of moving, it helped avert design or engineering snafus and increased communication.
Contractors, on the other hand, aren’t always thrilled to work around their clients. They argue that any money homeowners save renting another place can be lost to the additional costs involved in allowing them to stay put, which contractors estimate can add anywhere from 5% to 20% to a job.
Best advice for homeowners entering the ‘re-do’ phase of their life — interview several contractors, get their estimates with respect to time and price, and query them about their opinion of whether they prefer homeowners to move out or stay. After checking their references including their license with the contractors board with the State, pick the one you like the best because you’ll be spending a lot of time in their world if you stay. One of the things I always tell my clients when they ask me about remodeling is that we all have to remember, there is more than one cost to the remodeling, they are the actual cost of doing the work as well as the angst of living through the work being done.
1 billion tons of food wasted each year….
Across the planet, more than 1 billion tons of essential, nutritious, life-sustaining food goes to waste each year. It is being eaten by weevils in sub-Saharan Africa and inadvertently passed over by harvesters in the rice fields of Southeast Asia. It gets scraped into the trash in restaurants in North America, and sometimes left to rot on the vine on farms in Europe. In today’s economy, it can be cheaper for farmers to leave perfectly good food in the fields than to sell it.
Roughly one-third of all food produced on Earth is wasted or lost somewhere along the way from the farm to our bellies, according to a 2011 report from the United Nations’ Food and Agricultural Organization. That translates to about 1.3 billion metric tons of food loss per year. And if that proportion doesn’t change, the amount of wasted food will balloon to 2.1 billion tons per year by 2030, experts say.
All this wasted food isn’t just an ethical problem — it’s an environmental problem as well. Agriculture accounts for at least 8.4% of total greenhouse gas emissions across the globe, according to the U.N. (Meat, dairy and rice production are the biggest offenders.) Currently, emissions associated with food that is lost or wasted adds up to about 4.4 gigatons of greenhouse gasses per year. That means that if uneaten food were its own country, it would be the third-largest greenhouse gas emitter in the world, just after China and the U.S.
The U.N. has adopted a global plan to reduce food waste by 50% by 2030, and it will take everyone from food growers to harvesters to eaters to change what we’re doing. A tall order.
What is happening with me?
A few weeks ago (4 to be exact) I had a stem cell procedure on both of my arthritic knees. The change has been amazing. I still have another 4 more weeks for healing, but the process is amazing and remarkedly easy, and one I would highly recommend as a possible choice of avoiding knee replacement. If you have any questions, please ask me. I am a huge fan of the process. The only negative is that at this time, it is not recognized by the government as it is considered experimental, so there is no insurance coverage. They are working toward changing it, but for now, that is what the situation is.
Back to business. I am busy with potential sellers and buyers, including one in Santa Monica. In looking for a home in the Ocean Park area of the city, it is interesting to see the values of some of these homes and how many want to live there. I also still have my two lease listings in Bel Air Crest that are looking for new residents.
For those of you who celebrate, I hope you had a wonderful Rosh Hashana and Yom Kippur including an easy fast and I am having fun digging out my Halloween things and getting ready for a fun night of “trick or treaters”. Hope you are also!
Please do not hesitate to reach out to me for any and all of your real estate needs. Please call me at 310 442-1384 or firstname.lastname@example.org or email@example.com
Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at firstname.lastname@example.org www.caroleschiffer.com
©2019 Coldwell Banker Real Estate LLC. Coldwell Banker is a registered trademark licensed to Coldwell Banker Real Estate LLC 234567An Equal Opportunity Company. Equal Housing Opportunity. Owned and Operated by NRT LLC