The SchifferLine 1 May 2020

The SchifferLine

Timely Real Estate……………………………………………1 May, 2020

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Fed to take aggressive action to support recovery

Fed Chairman Jerome Powell sounded the alarm bells recently, announcing that while the U.S. economy has deteriorated due to this global health crisis and pledged to take aggressive action to support an eventual recovery. With the GDP falling to an annual pace of 4.8%, which is the fastest decline any time since the Great Recession, economists quickly pointed out that the first quarter included January and February months of modest ‘calm’.

The central bank “is committed to using its full range of tools to support the U.S. economy in this challenging time,” officials said in a statement released after the conclusion of their monetary policy meeting on April 29. “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and could pose some risk to the economic outlook over the medium term,” the statement said. Powell referred to the latest data as an “extraordinary shock” to our economic system.

With the varied opinions on the speed and type of the economic rebound due to the novel coronavirus pandemic, Powell walked a line between shoring up confidence in policy makers’ response to the crisis. After several frenzied weeks creating emergency lending programs, the Fed has turned its focus to getting them up and running making sure that the money gets to the appropriate recipients, leaving aside for now difficult questions about how to stimulate the economy once more commercial activity is allowed to resume. The Fed cut interest rates to near zero at two unscheduled meetings in mid-March.

More about this later in the Schiffer Line.

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As expected, housing sales fell on Westside

One thing we do like in real estate – we love data. As data driven as we are, we are not always reflecting what is going on “now” in our industry. For example, the high-end sales for LA’s Westside showed that from January 1 through April 15, we were spot-on even with total sales for the same period last year.

However, if one counted sales from the start of our lockdown on March 18 through April 20, housing sales fell markedly behind a year ago. There were 33 closed sales in 2020, versus 50 during that time last year, (down 34%). During that same period, there were 10 closed sales of $10 plus million in 2020, versus 14 during that period last year, (down 28%). Of these, there were for closed sales of $20 plus million in 2019, versus one during that period this year, (down 75%).

What that tells us is that the robust sales we had during the first three months of 2020, really doesn’t reflect what is going on now. Since January 1, 2020, there have been 151 sales of $5 plus million through April 15, 2020, and there were 151 sales of $5 plus million at this time last year, alluding to a strong start for 2020, but not so.
Some of these sales were/are in the pipeline – with 53 pending sales of $5 plus million at the moment, 15 of these are $10 plus million and three over $20 million. While it is clear that total sales are down, sales are being obviously being made as I write this…I have four active buyers looking for properties now. Low mortgage rates, which may go even lower, are attracting buyers into our own, attractive market.
Before you start wringing your hands in despair, the other side of the coin is that prices are holding! So, while, the number of sales is lower, the discounts for sale prices are not happening.

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How Covid-19 will change our housing preferences, lives
Are we in for a paradigm shift in the way we live? Ever since COVID-19 hit, most of us have been in a “qurantinathon” in our respective places of shelter. By now, we have likely used every nook and cranny of our homes to the max…. the dining room table has quickly turned into the home office, the conference room and possibly even the home-schooling hub. The living room is the new “Zoom” center for video meetings.

Sometimes, the corner of a bedroom is the only place to find some quiet time to take that phone call. The kitchen is now the work and school cafeteria, stocked with a coffee pot that’s always on and full and a food-serving counter that’s open 24/7.

There are four potential changes coming…#1 Less dense living. After going through the pandemic, people may opt for single-family homes vs. condos, high-rise apartment buildings, congested lobbies and elevators…people want immediate access to their living quarters…#2 Functional spaces. People may want two master bedrooms or an expanded one to include a home office.

#3 Amenities. Larger entertainment centers, expanded backyards with larger decks, home movie theaters, computer and game rooms. #4 Location. Moving out of the urban core, working remotely more often than not, even going off grid or buying a tiny home for primary or second residence. And so on. Our lives are in for changes for sure, the big questions are: How, when, where, and what? When will we finally exit this ‘lockdown”?

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Wastewater reveals critical Covid-19 data
From Stanford to the University of Arizona, and from universities around the world, researches have been ramping up wastewater analyses to track the spread of SARS-CoV-2, the virus that causes COVID-19. Initial studies show that sewage monitoring, or “wastewater-based”

epidemiology,” could not only tell us how much the virus might be spreading in a community – but also when the virus has finally gone away.

Understanding the true scale of COVID-19 has been a major stumbling block across the country, as officials struggle with testing shortages, false negatives, and people who are infected but have no symptoms. Sewage data could potentially help fill these gaps by capturing critical information in the aggregate.

Americans might find the idea gross, but wastewater early warning systems have helped catch norovirus, Hepatitis A and other diseases around the world for decades. In Israel in 2013, a polio epidemic was detected in the sewage before any clinics had reported cases. This heads-up gave the government enough time to launch a vaccination campaign and contain the virus.

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set years candles party Numbers …. COVID-19 hurting real estate The coronavirus has already had a massive impact on our personal and professional lives. And there is no question that the real estate industry has been hit hard by the pandemic.

For example, new home construction starts in March marked the biggest drop since 1984, with multifamily construction slowed by 32% and single-family by 17.5%, and along with job losses in the construction industry, plus depending on the part of the country and market, rising debt could spell trouble for the housing market.

Major banks are not taking any more risks than necessary – Chase was among the first to raise its credit score and down payment requirements for new borrowers, reflecting the lender’s desire to offset increased risk presented by COVID-19-related job losses and anticipated post-quarantine foreclosures..

Many buyers are delaying home purchases, and sellers are also delaying listing their homes. Buyers are expecting at least a 10% decline in prices, but sellers, not so much. We are seeing a much lower drop in prices if the property is priced properly in the first place. If not, it will as has been the case in the past, sit on the market.

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Covid-19 is changing our environment, common-day life
If you haven’t noticed, there are few if any cars on the roads these days. Downtowns are deserted, restaurants and cafes closed, shopping malls are ghost towns, and in Los Angeles County, on a 100-degree weekend, our beaches were deserted, too.We know what gives: It’s the damn coronavirus. And the drumbeat for re-opening gets louder and louder as over 40 million are out of work, and cabin fever has set in, regardless if you have Netflix or not. Climbing walls has become a new sport.

On the other side of the coin, we have seen an extraordinary turnaround in places we have rarely ever witnessed – deer, bears, and coyotes are roaming Yosemite’s Valley floor at will. Deer are meandering through neighborhoods and canyons in the San Monica and Gabriel Mountains. Wildlife has become the best ‘new attraction’ in Southern California.

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Debunking the expectation of large numbers of foreclosures

In talking to a number of buyers and potential buyers, a good number of you are telling me you want to wait as “you know we will be seeing a lot of foreclosed properties in the next few months”. I am here to tell you, that.. you are not correct.

Here is why……. First, the downturn in today’s market, is markedly different from the one in 2007 and 2008. A good majority of the homeowners today have a healthy equity in their homes, vs. very little the last time. This gives them the ability to draw from the equity.

Secondly, with the government forbearance programs in place, it will be a good 6 months or more before any properties show up as foreclosures, or short sales.

Third – , because of buyers understandable hesitation and the “safe at home” policies in place now, the pool of active buyers is small now, but the desire is there and once the restrictions are gone, that pent up demand is most likely going to create a large pool of buyers and the competition for properties will be strong.

Fourth – Look at the current interest rates. Why not take advantage of them? Most likely they will not stay as low as they are today

This is not Carole Schiffer talking, but this is what I am hearing from other top agents that I have been speaking with all over the country. We all basically think the same thing.

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What is the story with the banks and City of Los Angeles regulations today?

We all need to know and understand that the situation changes on a daily basis, sometimes multiple times in the same day so that makes it difficult to tell you definitely what is the policy/program today will be the same tomorrow.

City of Los Angeles regulations have different requirements for showing property as to its occupancy. Generally it is much easier to show property that is un-occupied, but as of 29th of April, we can once again show owner occupied properties (we need to have written permission from the tenant to show a tenant occupied property). In all cases, there are forms that need to signed before gaining access to a property, masks, gloves and shoe covers must be worn, and only 2 people plus an agent can be in the property at one time.

These same regulations pertain to appraisals and any inspections that take place while the property is in escrow.

In addition to the disclosures that need to be signed by all parties, we need to have proof of funds dated no later than a few days before the showing, and a pre-approval letter from the lender dated that day.

Regulations for the County of Los Angeles as well as others are different from the City of Los Angeles.

With regard to the banks, purchase loans are being made as well as refinance loans for owner occupied properties. It is more difficult to get jumbo loans today, but they too are being made. It is highly recommended that buyers go to a mortgage broker rather than a bank directly

as the broker has more lenders to draw from, and it is also recommended that buyers double apply to assure they have broadened their options in not only getting a loan, but a good rate as well. Banks have been known recently to change their rates at the 11th hour, so strong, consistent communication not only with your agent (me), but your lender a number of times a week is highly recommended.

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My update

Like all of you, while I love my house, I am ready to be sprung. I am reading more than I have had time to do in the past, working on small projects in the house, but I can tell you that unlike a lot of folks, I am not cooking or baking more. I don’t want extra food in the house!

Because I am on Mom duty, I am also spending more time with her, making sure that she and her caregivers have everything they need including meds and food. I am also making those phone calls and checking in with past clients and friends, so please don’t be surprised when I give you a call.

Also, with the numbers of ZOOM calls from my office and those wonderful webinars, my days are full.

Everyone in my family continues to do well and stay safe. We are all working hard to keep it that way.

I did a fun thing for my sister’s birthday a week or so ago, I organized with my niece’s help a video of her friends calling to wish my sister a happy birthday, and am at work on doing something for Mom for Mother’s Day and Mom’s 98th birthday the end of May. Doing these things has enabled me to learn new tech trips, including ZOOM.

Mother’s Day is coming up next week.. How are you celebrating, particularly in this day of “social separation”? I would love to hear how creatively you are planning on celebrating.

What are you doing to keep yourself busy, safe and sane? I would love to hear from you. Also, the Teddy Bear in the window campaign is still going on, please don’t forget to see my little stuff animal in the window of my house.

Please let me know if you need anything or just want to chat. I am home most of the time and love talking to people.

Carole

310 471-2007

ceschiffer@gmail.com

Carole@caroleschiffer.com

Carole Schiffer, Realtor Coldwell-Banker Residential Brokerage/Brentwood Office 310-442-1384 (office) or e-mail me at carole@caroleschiffer.com www.caroleschiffer.com

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