News

NEWS

Rents on the Westside are highest in the U.S.

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When it came to pricey rental markets, the Los Angeles area was always near the top (as New York City and San Francisco battled for #1 and #2). But the times they are a’changin’: A new report from rental website Apartment Guide says the very highest prices in the nation can be found right here in sunny SoCal. Specifically, Santa Monica leads the country with median monthly prices of $4,799 for a 1BR unit. That’s significantly higher than Manhattan, where median rents run $4,562mo for 1BR. Venice, which the report treats as a separate market from L.A. (even though it’s not its own city—yet), is 5th on the list, with median rents of $3,922.

Speaking of Venice, we JUST LISTED a charm-filled 2BR/2BA 900 sq.ft. home this week at 854 Superba Ave. (pictured) for $6,495mo. The reaction? Renters are throwing money at us.

Also on the Westside, Playa Vista and Marina del Rey place high on the website’s list (17 and 18), with median rents of $3,327 and $3,320, respectively. Other pricey hoods include West Hollywood ($3,180), Culver City ($3,161), and Hollywood ($3,110). The take-away? Stop paying someone else’s mortgage and contact us about buying a home!

A Generation of Renters Starts to Buy

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Rental prices are sky-high. Last week, I rented a SanMo beach-adjacent 1BR/1BA  849 sq.ft. condo for $6,300 mo.–paid a year in advance. Conventional wisdom is, “Why pay someone else’s mortgage?” First-time buyers are heeding that advice and are rushing to buy homes after a decade on the sidelines. Tracking home sales to a particular age group is hard, but a series of data points form a mosaic of a generation of younger people ready to buy: The number of new-owner households was double the number of new-renter households in 2017’s first quarter, the share of first-time buyers is creeping back toward the historical average, and mortgages for first-timers are on the ascent. 

Another indicator: In the 1st quarter of 2017, 31% of the speculative homes built by major CA builders were smaller than 2,250 sq.ft., indicating they were in the starter-home range. That is up from 27% a year ago and up 24% over 2015’s inventory. 

The return of first-time buyers is a somewhat astonishing statistic: They have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae, which defines first-time buyers as anyone who hasn’t owned a home in the past three years. 

What a Difference a Day Makes

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Sales of Los Angeles homes surged in March, according to a new report from the CA Association of Realtors. The median sale price in L.A. County was $465,810, down from $470,200 in February but well above the $441,700 price that median single family homes were selling for a year ago. If those prices seem low, that’s probably because the association does not factor newly-constructed homes into its calculations, which are typically more expensive. For comparison, a recent report from CoreLogic, which does include new houses in its analyses, found the county’s median sale price in February was $525,000.

According to the report, total sales were up an impressive 45% since last month and 8% over March 2016. Meanwhile, the median amount of time homes spent on the market before finding a buyer dropped below 30 days—from 39 days in February and 43 days last March. That’s the shortest amount of time on the market in more than a year, according to the Realtor association. Example: A recent listing of mine (pictured and hot-linked) at 718 N. Alpine Drive in Beverly Hills was under contract 8 days following an over-asking price multiple offering that settled at $8,100,000.

Economists suggest that strong sale numbers statewide may be the result of rising interest rates and persistent warnings of future hikes that have inspired home buyers to make purchases sooner rather than later. Whatever the reason, the uptick in sales has cut into the total supply of homes available for purchase—which could, in turn, lead to higher prices this summer.

House of the Rising Prices Pt. 2

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Our local spring selling season is reflective of the fact that U.S. home prices are on the rise as more buyers chase fewer available properties. 

Standard & Poor’s CoreLogic Case-Shiller national home price index (released this week) increased 5.8% in February, the most in 32 months. Some analysts say such strong price gains and slightly higher mortgage rates may eventually cool demand. For now, sales of new and existing homes are robust. March’s sales of existing homes reached their highest level in a decade. The strong market however, hasn’t enticed more Americans to sell their homes. The number of houses for sale has dropped to the lowest level in nearly 20 years, which makes finding one the toughest challenge awaiting potential buyers in this buying season.

Many homeowners have benefited from the sharp price gains of recent years, but those increases have also made it harder for them to trade-up to a bigger house, discouraging them from selling. Others have very low mortgage rates and may be reluctant to sell if doing so would force them to take on higher borrowing costs. Interesting times…

House of the Rising Prices Pt. 1

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We have currently got several condominiums in escrow, and are frequently asked a question that historically has had an easy answer: Do single-family detached homes appreciate in value faster than condos? The standard answer has been: Of course single-family homes appreciate faster. They are what most people prefer to live in, so there’s stronger demand. They come with their own piece of land—and land is a crucial driver of value. Condos, on the other hand, tend to be smaller and more complicated. They come with boards of directors, association fees, rules and restrictions.

But research out this week from Trulia suggests that these assumptions could be giving way to changing market trends. According to data on millions of properties in the U.S.’s largest metropolitan areas between 2012 and 2017, the median appreciation rates of condos outpaced those of single-family houses (SFR’s). Median condo market values rose 38.4% over the 5-year period, while median SFR’s appreciated 27.9%. In some local markets, especially those that have seen either significant new condo construction downtown (like Los Angeles) or that have little available land suitable for detached housing, the median value of condos exceeds median values of SFR’s in the surrounding suburbs.

Trulia’s analysis stems from their automated valuation model which estimates ongoing property values both for properties that are on the market and those that are not. For this reason, some take issue with Trulia’s conclusions. The National Assn. of Realtors (of which I’m a member) says based on closed sales prices—not automated estimates—SFR’s appreciated an average of 4.7% annually between 2010 and 2016, while condos averaged 3.4% per year. What to make of the new Trulia data? Clearly condos are playing a key role in some cities’ value and growth—specifically in L.A. ‘hoods like West Hollywood, Century City, and Santa Monica. In other markets around the country, condos continue to be more affordable than SFR’s and may be appreciating in value faster as a result.