Timely Real Estate News………………………1 June 2020
The Highs & Lows of the High-End Market During Covid-19
The entire Real Estate market took a dramatic drop in April and the high end here in Los Angeles was no exception. This drop was across the entire country. A significant drop in high-end sales since the pandemic started in mid-March was not unexpected as we are seeing sales of home of $5 million-plus down 44% for the period of March 18 through May 25, with 57 closed sales versus 101 a year ago. As you will see below, it has changed dramatically for the month of May.
Of these, 21 were $10 million-plus versus 27 at this time last year, which is down 22%, four were $40 million-plus this year, versus two in 2019, up 50%. Please don’t forget these numbers are from the Multiple Listing Service, and do not reflect any private sales, of which there were two in Bel Air Crest (1 for $8,000,000 and another for $6,000,000).
Sales from January 1 through May 25 of homes $5 million-plus were 180 versus 200 for the same period a year ago, down 10%.
The good news is that we are seeing a lot of pending sales in this market, which is running contrary to what is happening elsewhere in the U.S. While some homes have fallen out of escrow since March, there are now 56 pending sales of $5 million-plus and 12 of these are $10 million-plus and two are $20 million-plus. There are 13 buyers of the $20 million-plus homes this year — mostly American (11), and two are Taiwanese.
What this is telling us is that, yes, sales are down, but we’re still making sales…, the prices are holding, and that’s the important fact to keep in front of us. With mortgage rates near or at historic lows, buyers are anxious to make a deal now, and if you’re thinking about putting your home on the market after this Covid-19 phase loosens up, sellers will be facing much stiffer competition. My advice: Buy or sell now.
Real estate fighting Covid-19 headwinds in April
It’s no surprise the pandemic is negatively impacting our real estate market. The latest existing-home sales numbers show a housing market facing the headwinds of the COVID-19 pandemic in April. Existing-home sales fell 17.8% last month compared to March, marking a two-month decline in sales, the National Association of Realtors reported last week.
Still, home prices remain resilient in the face of the pandemic. The median existing-home price for all housing types in April jumped 7.4% compared to a year ago ($286,800). All four major regions of the U.S. saw annual gains in home prices, too.
However, total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and co-ops—fell to a seasonally adjusted annual rate of 4.33 million in April. Sales were down 17.2% compared to a year ago (5.23 million existing-home sales in April 2019). Existing-home sales are at the lowest level since July 2010. ”
This has turned around in May. We are seeing an enormous increase in activity for May with multiple offers again (20 for a house here in Brentwood listed at $2,750,000, (I am not sure what is it in escrow for). Most everyone in my office, myself included is busy. The thinking is that we are all tired of being “cooped up”, and along with thinking about the changes we want to make in our current homes, want to take advantage of the interest rates, and the lower inventory: buyers are starting to make those purchases now. We all know that as things open up more from Covid – 19, there will be more inventory, and more buyers = more competition. Why not take advantage of the situation now?!?
Home dwellers get creative, upgrades coming
If ever there was a positive outcome of the Covid-19 pandemic and Stay-at-Home order, one of them would be that homeowners discover that “we’ve got to make some changes.” And changes they are doing.
Homeowners are prioritizing remodeling projects centered around home offices and master bedrooms during the pandemic, according to a new survey of 1,000 consumers by a home renovation and resource site.
While consumers put off some remodeling projects when the coronavirus outbreak first began in the U.S., they were less likely to put off projects related to those two areas of the home. Also, outdoor remodels and improvements have been prioritized during the pandemic, as have more involved projects such as a kitchen renovation.
The survey finds 79% of homeowners surveyed say they’re now considering major home remodeling and design projects after spending more time at their home during the pandemic.
They also expressed their desire to change the home’s decor, upgrade or add lighting, add storage, and improve home office space. The list goes on…suffice it to say that camping out at home appears to have some spin-off benefits.
Remote workers say: We want to continue working remotely
In a recent poll, more than 80% of employees working remotely, want to stay working from home if at all possible and given the opportunity. Guess what? Some employers are embracing this concept for the most part.
Remote work was on the rise well before the coronavirus pandemic. In 2018, the latest figures available, some 24% of those employed worked at least part of the time from home, according to the Bureau of Labor Statistics. Under the Covid-19 quarantine, that percentage has surged. Even senior executives, long reluctant to leave the Executive Suite, now realize they can work from home and, economists predict, some may want to keep that option, changing homes and floor plans of the future.
Home listings that include the word “office” have increased every year since 2017, according to real-estate listings website Realtor.com. On average, homes with an office sell nine days faster and fetch a price-per-square-foot premium of 3.4%.
“It is highly likely that going forward, there will be a premium on residential environments that provide a dedicated quiet workspace,” says Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA.
This also has major ramifications as remote working relates to the future of commercial office space, traffic, commuting, and suburban property values.
Go suburban, young man, go suburban
What the pandemic has wrought appears to be a transformation in how people view their work and where they do it. More than 50% of Americans in New York, Seattle, Boston and San Francisco said they would move if they could work remotely according to a recent poll last week.
The survey showed a “seismic demographic shift towards a desire for smaller cities,” citing remote work trends as a result of Covid-19. Roughly 40% of respondents were not working remotely before the shutdowns but were able to during the shelter-in-place orders. Twenty-eight % of those respondents said they expect to continue to work remotely or have that option.
In my conversations with clients and other agents, I have noticed that ‘locals’ are not looking to move away from the Westside — “we love it here”, but they are re-thinking the whole ‘working remotely’ option. Tall buildings may have challenges…. time will tell. We are seeing that searching in the Multiple Listing Service is much higher for single family homes, and lower for condos as people feel safer and more secure in a home.
Fire season has never left us…but it’s worse now
The Los Angeles County Fire Department has issued warnings about protecting your home from wildfires, but is now also pointing out the need for families practicing Safer-At-Home guidelines during the Covid-19 period that every home needs a fire escape plan, too.
As we have learned in the last couple of years, fire season is now lasting 12 months, and while we are aware of precautions for preparing your property for wild fires, the Fire Department is now stressing the need to have an Escape Plan that does not include traditional kitchen and living room exits (where doors are located). They recommend you locate windows that have no obstructions as one the prime requirements for your escape from fire and smoke.
As we do each spring, the Schiffer Line points to these tips on how to prepare your property for a potential fire:
* Clear leaves and other debris from roofs, gutters, and decks
* Remove flammable materials like firewood stacks and low-hanging trees around your roof to create a defensible space around your home
* Prepare your family’s “Ready, Set, Go!” wildfire action plan;
* Protect vents near eaves and consider installing double-pane windows;
* Make sure your address is visible to firefighters.
It’s imperative you review your family escape plan — for both in-home and out-of-home. Fire season is always with us.
They are also warning us that due to the additional staffing needs dealing with Covid, fire and emergency personnel availability are being stretched.
Mortgage applications decrease but are ahead of 2019
Mortgage applications decreased 2.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 15, 2020.
On an unadjusted basis, the Index decreased 2% compared with the previous week. The Refinance Index decreased 6% from the previous week but was 160% higher than the same week one year ago.
Applications for home purchases continue to recover from April’s sizeable drop and have now increased for five consecutive weeks. Purchase activity – which was 35% below year-ago levels six weeks ago – increased across all loan types and was only 1.5% lower than last year.
How am I faring in all of this craziness?
As I have shared with you in the past issues of the Schiffer Line, while I enjoy the comfort and convenience of working at home, I must admit that I miss going into the office and seeing all of my colleagues. Lately I have been working at the office more than at the house. I also have gotten quite busy and since I seem to have on-going computer/phone issues, it has been easier to work at the office. At the moment I am working with a few potential sellers, as well as buyers. I have previously mentioned the guidelines that we are all under in both showing and selling property today, and those guidelines in some ways change every day. It keeps you on your toes to make sure we all follow them and get the necessary signatures on the proper form. In addition to making sure you take all of your vitamins to stay healthy, one really needs to take them to keep your energy up!
Personally, I am also very busy. My darling Mom turned 98 last weekend! We had a mini party for her as I was/am the only member of the family here with everyone else stuck in Canada or Oregon. One of her caregivers hired a 6-piece Mariachi band (3rd year in a row) and they came to her house for a 45 minute concert. The same caregiver who has worked in various different capacities for over 40 years also has a darling 2 year old grandson, and he joined us dressed up as the 7th member of the band. We all really enjoyed the concert, and the baby with his hat and guitar and dancing to the music. The chocolate cake was yummy too!
We are all very fortunate that we are all fine, healthy and safe.
If you are at all thinking of buying or selling, please do not miss the opportunity to act now. I am here to answer any questions you have as well as assisting you with all of your real estate needs, anywhere on the planet!
Also, as my office is still basically closed I am still not sending either the Schiffer Line or quarterly update except via email. If you know of anyone who would like to receive it in this manner, please ask them to get in touch with me at email@example.com