Friday, June 8, 2018

Skinny's notes on the market

*Though overall sales numbers were up slightly in the first quarter of 2018 in comparison to last year’s first quarter, we definitely get the sense it was a slow start to the year for most Westside realtors. Things have really picked up in the second quarter but escrow closings are down around 7% compared to last May and inventory is starting to creep up across most price ranges. The majority of buyers are no longer jumping at everything that is on the market and not going after properties unless they feel the pricing is around the true market value. The market is still appreciating and in the seller’s favor with 47% of the listed homes that have sold in LA, selling over the asking price and homes selling at a faster pace than last year, yet the tempo does not feel similar to what we have been used to the past seven years. The one exception to this is the entry point market for zip codes which are still very hot.

 *The major Chinese investment in single family housing that we saw between 2012-2016 has definitely died down. (article)— However, that void is being filled by an uptick in Middle Eastern wealth investing on the Westside as well as wealthy Westside families not afraid to purchase multiple homes in upscale neighborhoods either as homes for children or rentals. The explosion of wealth in the tech industry as silicon beach expands, is another key element.

*Based on what we have heard from multiple economists and what we are hearing from our buyers, we expect the Westside market to continue to appreciate at moderate levels through 2019. The new California tax reforms combined with increasing interest rates will start to stall out market momentum once people start feeling the tax hit in April of 2019. Pacific Union believes the market will power through that and not face much resistance till the end of 2020.

*The older single-story home in a great neighborhood might not be the tear-down everyone thinks it is. We have quite a few 60 year-old+ buyers out there that are looking to downsize from their bigger family homes. With amazing weather and all their social connections Los Angeles has to offer, those reaching the golden years want to stay put but prefer a stylish one-level home. The key in development is adding square footage and maximizing a lot’s value but it should be noted that a serious premium will be paid by this type of a buyer for a luxurious one-story in some LA’s priciest locations.

*According to a Redfin Survey, just 6% of Homebuyers would cancel plans to buy if mortgage rates surpassed 5%. 27% say it would cause them to slow the search for a home and 25% said it would have no impact and 21% would increase their urgency in finding a home. This was a national survey of more than 4,000 people. Another key takeaway is that in California, the tax reform and how it impacted taxes was the biggest concern.

* The median rental price for a one-bedroom apartment in the Marina del Rey/Playa Vista neighborhoods, was $2,900 this February, up 15 percent from 2015, according to Zumper.

Inside Dirt- 511 9th Street sells for almost $600K over asking- This 2+2 Spanish Hacienda with detached studio on a 7,500 lot hit the market for $2.895M. The house was a major fixer but has a nice charming feel. The $2.895M list price felt light. The market agreed. They received 16 offers and the vast majority of them were end-users. After a round of counters, it sold for $3.450M with strong rumors of back-up offers near $3.50M. The winner of the multiple apparently did a phenomenal job of standing out as the right buyer for the property in more ways than just price. Presentation matters!!

Thursday, June 7, 2018

Pacific Union International Launches Private View - the ultimate online real estate marketplace

Private View, is the industry’s first online marketplace designed for both buyers and sellers to privately view exclusively-signed listings before they are widely marketed to the public. The platform launched in Southern California in late May, and will go live in Northern California this summer. The homes on Private View are not found on the MLS, Redfin or Zillow.
“With Private View, Pacific Union is building a revolutionary way for both the public and real estate professionals to view new listings long before they appear on the mainstream public listing services,” Pacific Union International CEO Mark A. McLaughlin says. “In essence, this creates a futures market for new listings, and with Pacific Union’s substantial market share in our respective markets.  It gives our real estate professionals and their clients a powerful edge.” 
Private View currently consists of 48 properties equaling close to $170 million in volume.
Check it out:

Mortgage rates fall for second consecutive week

Following last week's decline, mortgage rates fell for the second consecutive week.

The 30-year fixed-rate mortgage averaged 4.54% for the week ending June 7, 2018, down from 4.56% last week, but up from 3.89% last year.

The 15-year FRM decreased to an average 4.01% this week, down from 4.06% last week and up from 3.16% in 2017.

The five-year Treasury-indexed hybrid adjustable-rate mortgage decreased to an average 3.74% this week, down from 3.80% last week. This time last year it was 3.11%.

 Source: Housing Wire

What's in a home value?

The California Association of Realtors just released an info-graphic that is worth checking out regarding invisible factors and how they impact a properties value.  See below!

Sustained Success- THANK YOU

Thanks to a wonderful referral base of clients and friends we are able to have sustained success without constantly badgering everyone with 24/7 marketing.  THANK YOU!

Saturday, November 18, 2017

Skinny's notes on the market

*Please remember to pay your property taxes! They will be considered late if they are not received by December 10th and the fines are hefty!

*According to National Association of Realtors (NAR) 34% of home buyers nationwide are millennials.

*The city of Santa Monica is requiring earthquake retrofitting for over 2,000 buildings over the next four to six years. Depending on the building age and size, the cost per unit could be $8,000++. This new disclosure has led to buyers wanting a credit from sellers to help pay for the assessment if the building does not have a strong enough reserve to absorb the cost.

*The Pango group (owns multiple escrow companies in Southern California) reported that they had 951 escrow openings in October with 685 closing, leading to a 73% close rate. In October 2016, they had 839 openings and 671 closings for an 80% close rate.

*The two main financial forces we are seeing behind buying property on the Westside are from the technology sector (i.e. Silicon Beach) and families that are already living in the area and purchasing property or providing major assistance when it comes to a down-payment for their children. From a Silicon Beach perspective, the elite are making a lot of money and tend to be fairly young. As Silicon Beach grows to become a major player worldwide, Westside real estate looks like it will continue to appreciate over the next few years unless something unforeseen happens.The areas benefiting the most are Venice, Mar Vista, Santa Monica, Playa Vista, Culver City and Westchester.

*It is really difficult for typical single family home buyers below the $1.5M price point. Since land has become so valuable along with the demand for luxury homes in West L.A, Mar Vista, Playa Del Rey, Westchester, etc being so strong, developers/builders are willing to knock down or add square footage to a home that would otherwise easily be fixed up by a young family. The builder comes in with an all-cash offer with a very limited contingency period that a normal buyer acquiring a home cannot compete with.

*Typically, multiple offers are a close fight but in speaking with colleagues, the majority of multiple offers are won by one party that is paying significantly more than others. One quick example- A home listed for $1.750M in Hollywood Hills with just five offers ended up selling for $2.250M…the next closest offer was below $2M.

*Los Angeles County is expected to add 1 million more residents by 2035. With housing already scarce, development restrictions in place in many areas and people living in their homes longer than ever before, how is Los Angeles going to deal with this influx?

*If Trump’s new tax plan passes in the manner that it is currently constructed, it will not only take away important deductions from the majority of homeowners in the Westside/South Bay, but it will also further discourage current homeowners from selling, further intensifying the inventory shortages that are plaguing the region.  Check out our latest blog post on the subject which includes key highlights and tons of information from our economist.

Trump's new tax plan limits deductions and could further intensify inventory shortages

While the proposed tax plan promises to save an American family about $1,182.00 per year, some of the proposed changes will negatively impact current and future California homeowners. Even with favorable changes to the tax bill in the Senate version, many of the proposed changes will be a challenge to the California housing market, especially in Los Angeles.

Here is a quick summary of a very informative article on the subject provided by our chief economist Selma Hepp. We highly recommend you check out her recent Economic Straight Talk as well as this recent article in the Los Angeles Times - Realtors are worried about Trump’s new tax plan. California homeowners should be too

A few key takeaways-

*The tax proposal increases the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples. Thirty-four percent, or about 6.12 million, California taxpayers itemized their deductions in 2015, with average total itemized deductions equaling about $36,800. This will make a notable difference in their adjusted gross income.

*Removes the ability to deduct state and local income taxes which will markedly increase taxes for many California residents with incomes above $75,000.

 *The proposed changes are more impactful on future homebuyers since some of the proposed changes would apply to newly originated mortgages.

*The lower cap on the mortgage interest deduction would be particularly detrimental to buyers in Los Angeles communities where median prices exceed $1million. For example, a buyer of a $1.2 million home with a $1 million mortgage would pay almost $40,000 in amortized interest in the first year. However, at the $500,000 mortgage interest deduction cap, the buyer would be able to deduct only half of that interest, thus losing about $20,000 in deductions. Again, if this is a first-time buyer and falls in the income range of between $100,000 and $200,000, the loss of a $20,000 mortgage interest deduction would make a notable difference, not only in the resulting tax bill but also on the decision to purchase a home. (The current senate proposal has adjusted this cap back to $1 million.)

*While the proposed tax plan reduces the number of tax brackets, not everyone’s tax rate will decrease, and these deductions will play a big role in where a household falls along the income spectrum.

*A $10,000 cap on real estate property taxes would also impact those buying a home priced above $1 million, since California property taxes are around 1.2 percent. In Los Angeles metro, 20 percent of home sales year to date were priced higher than $1 million. For example, a buyer of a $3 million home would lose $20,000 in property-tax deductions. 

*The proposed change that limits the capital-gains exemption used by homeowners when they sell would be another major blow for supply conditions. Under the new proposal, homeowners must have owned and lived in the home for at least five of the last eight years to qualify for the exemption. Currently, the rule is two of the last five years. The exclusion would also be limited to one sale every five years rather than one every two years. In addition, households with incomes over $500,000 if married or $250,000 if single lose the exclusion. With the current capital-gains exemption limit at $500,000, it already poses a constraint on many current owners whose homes have appreciated significantly since they purchased them and who consequently choose not to sell. Further limiting the use of the capital-gains exemption will slow housing turnover even more. At the end of the day, while severely undersupplied inventory may help push prices higher, the proposed changes would lead to fewer home sales and an even more difficult environment for first-time buyers.