2018 Real Estate Market Wrap-up

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Regionally, SoCal’s home sales fell at the end of 2018, deepening a retreat from a sustained housing market that placed home ownership out of reach for many. In a report out this week from CoreLogic, the 12% drop in year-end sales from a year earlier was the 4th consecutive monthly decline for the 6-county region. However, housing experts aren’t ready to declare a boom is going bust: The falloff in sales so far this year is still less pronounced than in 2014. And 2018’s regional median price still rose slightly—3.5% from end of 2017, to $522,750.
The report likens end of 2018 to what happened in 2014: Back then, the 6-county region’s housing market cooled following a surge in mortgage rates and a run of double-digit price appreciation. The regional sales decline then was deeper and more pronounced then than it is now, with sales falling for a consecutive 14 months between October 2013 and November 2014. The worst 4-month decline also averaged out to 13%, compared to 12% today. Home values didn’t tank during that last slowdown. The report showed price appreciation slowed—and then accelerated at the end of 2015, eventually leading to 2016’s sky-high prices.
In L.A. County specifically, the end-of-year median climbed 5.8% to $600,000, hitting another all-time record. And although 5.2% more homes were on the market end of 2018 over end of 2017, an overall lack of inventory in highly-desirable neighborhoods was still in keeping with a “seller’s market”—albeit to a lesser degree than 2016-2017.

The weather outside ain’t frightful

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Below are 10 years of “winterizations;” re-imaginings, if you will, of a few of the homes we’ve listed–and sometimes represented the buy side, too. Some pictures were designed as printed greeting cards; others were used to celebrate digitally. You’ll also see unretouched originals. 2018′s “holiday house” is a dazzling Mediterranean once owned by author Aldous Huxley, and was sold in 5 days for $4,300,000 ($1,058 per-square-foot).
This has been a year for the record books in real estate–and a record-breaking 12 months of giving at L.A. Luxe Group. Throughout 2018 (and for over a decade), a donation from every sale went to an L.A.-based animal welfare organization–which is why beloved, adopted creatures sometimes squeezed their way into (or dominated) the Photoshopped images. Look for a pug, Blank (his name is a long story), in the example from 2013 used for this introduction.
We wish you peace and joy this holiday season, and a prosperous 2019!

Millennials Slouch Toward Home Ownership

Long presumed to have less interest in the non-stop consumption of goods that underpins the American economy, millennials might not be different after all, according to a new study out this month from the Federal Reserve. Their spending habits are a lot like the generations that came before them—they just have less money at this point in their lives, the Fed found. The group (born between 1981 and 1997) has fallen behind because many of them came of age during the financial crisis.
The Fed’s findings are grounded in an analysis of spending, income, debt, net worth, and demographic factors among different generations. And although millennials spend freely on luxury cars and clothing, housing and food (avocado toast wasn’t specifically tracked) are 2 areas where millennials have spent less than previous generations, with the younger cohort paying more for education.
Millennials are at somewhat of a full-stop when it comes to saving for a home, with most swimming in student loan and credit card debt. Consequently, their prospects for buying a home—and having a 20% down payment to do so—are next to impossible, unless parents or grandparents contribute some hard-earned cash to their home buying efforts.
At least now relatives know what to get their millennial family members for Christmas.

Color Me Profitable

The restorative power of a fresh coat of paint should not be underestimated—but who knew the right color could fetch as much as $6,271 more for a home than expected? In a report out this week, Zillow analyzed 135,000 photos from homes sold around the country between 2010 and May 2018. Black or charcoal front doors produced that top $6K+ premium. Light taupe living rooms netted $2,793 more than homes with white or other color walls, and light blue bathrooms cashed-out at $2,786 more.
Although Pantone’s Color of the Year is “Ultra Violet” (deep purple), Zillow says no to dramatic colors: Red kitchens knocked an alarming $2,310 off sales, dark brown dining rooms sliced $1,684, and sunny yellow exteriors melted $3,408 from sale prices. However, Greige (a blend of light gray and warm beige) netted sellers $3,496 (used inside or out).
While choosing the wrong color can dent a sale, a sterile bleached look might be the biggest loser. Zillow reports that bathrooms painted an unadulterated white sold for an average of $4,035 less than bathrooms with off-white or eggshell hues.

Existing Home Sales on the Rise

A report out this week says sales of previously owned U.S. homes rose in October for the first time in 7 months. But the market remains relatively soft, with sales down 5.1% from a year earlier, the biggest drop since 2014. The report from the National Assn. of Realtors (NAR) said that the annual rate of existing-home sales increased to 5.22 million from the previous month; economists had predicted 5.2 million. The median sales price rose 3.8% from a year earlier, while the inventory of available homes expanded 2.8%, the 3rd straight increase.
Other reports this week gave a mixed picture of the sector: Sentiment among homebuilders dropped the most since 2014 in November amid pessimism over both current and future demand, while government data showed housing starts rebounding slightly in October. Federal Reserve officials are still expected to raise interest rates in December for the 4th time this year and continue tightening in 2019, as consumer spending is seen remaining solid.
At the current pace, it would take 4.3 months to sell all homes on the market, compared with 4.4 months in September, below the 5 months’-supply mark that NAR consider consistent with a tight market. Existing home sales account for about 90% of the market and are calculated when a contract closes. The remainder of the market is made up of new-home sales, which are a timelier indicator as they’re tabulated when contracts get signed.


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