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.
By John SkinnerTHE SKINNY ON THE WESTSIDE MARKET: Still in the seller’s favor however higher-end listings in most micro markets are sitting despite low inventory and strong LA economy
Over the past few weeks I have participated in a few realtor networking groups and spoken with fellow top producing agents to get a gauge on the market. The general consensus, with very few exceptions, is the entry to mid-level range in each micro area (ex: North of Montana in Santa Monica, North of Venice in Mar Vista, Huntington Palisades, etc) is soliciting multiple offers and continuing to push home values higher in that range. On the flip side, the higher-end properties in these same areas are experiencing a slow-down and sitting on the market longer, with the volume of interested buyers much less than what it was six months ago.
It is also important to note that we typically hit a bit of a sales lull as we head into the holidays. We experienced it last year but it started picking up again in December…so will see if that pattern repeats itself for the higher end properties. The entry and mid-level properties aren’t showing signs of a slow-down.
Additionally, I attended a presentation by Myers Research, who primarily focus on the Southern California economy, specifically housing trends. They were extremely upbeat about the health of the LA economy and investing in real estate, especially on the Westside. They believe inventory levels are going to continue to stay at record lows while the region continues to add well-paying jobs. The Westside is still affordable compared to most luxury markets internationally and with cities like Santa Monica trending toward discouraging new development, it will only make land in the area more valuable.
Myers Research felt the impact of any national or international economic hiccups would be minimal on Westside real estate. The major concern when it comes to future appreciation would ultimately be affordability ceilings, which they are seeing becoming a problem in San Francisco, a market they feel is “over-heated.”
They failed to address what the impact would be on the Westside if the technology sector had major issues in 2017.
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The areas that have benefitted the most from Silicon Beach…-Mar Vista, Culver City, Westchester to name a few…
The tech boom has benefited Los Angeles as a whole, but the residents that should be thanking their hi-tech friends the most are in Mar Vista, South Santa Monica, Playa Vista, Culver City and Westchester. These areas used to be considered the “affordable” adjacent areas to the uber expensive locales of Venice, North Santa Monica and Manhattan Beach.
Fun facts to know-
*The average 2015 sale price in Playa Vista was up 38% vs. 2014.
*In 2011, Mar Vista had 1 home sell for over $2M…in 2015, 31 sold for over $2M with three homes selling for over $3M.
*The average sale price in Westchester was $798K in 2013…in 2015, it was $1.040M.
*The average sale price in South Santa Monica was up 14.5% in 2015…Culver City was up 19.3%!
*A home in South Santa Monica on 32nd street between Pico and Ocean Park is in escrow for around the $3.8M asking price.
