Not mentioned was the list price was $7,000,000 (on April 2nd), and the listing agent represented the buyer too:
Even in the throes of a pandemic, the offers started coming in almost immediately.
The day after an off-market opportunity in Beverly Hills was made known in late March, as Los Angeles County residents adjusted to new stay-at-home orders, the listing agent found his inbox flooded and his phone ringing off the hook. Seemingly everyone wanted a piece of the property, which was marketed by email. Within the first 24 hours, there were dozens of calls on the property and 18 offers made.
“I knew we’d see some action, I just didn’t know how much,” said Paul Salazar, the listing agent with Hilton & Hyland.
The home on North Bedford Drive, a popular street in the Flats section, received a total of 22 offers, according to Salazar. The potential buyers were a mix of end-users — buyers who wish to remodel and live in the home — and developers looking to tear down the existing structure and build. Ultimately, it was an end-user that purchased the property for $6.75 million.
The Italianate-style house, built in 1928, has four bedrooms, 3.5 bathrooms and more than 3,500 square feet. A large motor court sits off the front of the one-third-acre property.
Salazar believes marketing the home as an off-market opportunity gave it more exclusivity, but the excitement began to wear off as “everyone began watching the news” and reality of the coronavirus set in. Additionally, about one-third of the buyers, specifically those carrying mortgages, were ruled out over concerns that loans might be frozen due to the pandemic.
“It looked like it was going to be a big bidding war, but it ended up being a long negotiation with 3-4 buyers going back and forth,” Salazar said. Had the pandemic never happened, Salazar believes the property would have sold for about $1 million more.
While the coronavirus has stifled sales throughout the Southland, L.A. County’s high-end market has continued to produce a steady stream of multimillion-dollar deals.
In April, there were eight sales of $10 million or more including two deals north of $36 million in nearby Bel-Air. Last month, there were five sales of $10 million or more including two transactions of $21.5 million or more.
I went to the grand opening today of these $2,000,000 tract homes and thought because of the rain that I might be the only one there. Wrong! There were hundreds of people – and this isn’t Carmel Valley – not even close:
The bidding for the “Brady Bunch” house got down to a horse race, listing agent Ernie Carswell said, but it was HGTV that ultimately pulled away from the pack. So, just how much did the cable network spend to secure the television-famous property? About twice the asking price.
HGTV paid $3.5 million to buy the Studio City residence, or $1.615 million more than the list price of $1.885 million. The sale closed Friday.
Interestingly, only four of the 10 largest metros in the study – Washington D.C., Seattle, Austin and Denver – are considered overvalued. This indicates that despite the growth in home prices in metros like San Diego and Boston, other economic factors such as low unemployment, people choosing to rent, and access to high-paying jobs, have kept these regions within the normal range.
When you find the right home, don’t lose it. Get Good Help!
NAHB regularly conducts national polls of American adults and home buyers in order to understand new trends and preferences in the housing market. This is the third in a series of posts highlighting poll results, as presented during the 2018 International Builders’ Show in Orlando, FL. See previous posts on tiny homes and driverless cars.
A recent poll revealed that most prospective home buyers actively involved in the search for a home have been looking for a significant amount of time. In fact, 61% have been trying to find a home to buy for three months or more, while the other 39% have been looking for less than three months.
The natural follow-up question to those who have been unable to find a home after searching for three months or longer is why?
Forty-two percent say they ‘can’t find a home at a price I can afford,’ 36% ‘can’t find a home with the features I want,’ 34% ‘can’t find a home in the neighborhood I want,’ and 27% were able to overcome all these obstacles but ‘continue to get outbid whenever I make an offer.’
This result shows there are several important reasons why prospective buyers haven’t been able to pull the trigger, but the most important one is lack of affordability – not being able to find a home at a price point they can afford.
Here we only have to pay 5% to 10% over list….if at all!
It is no secret the housing market is on fire. Last year, almost a quarter of all U.S. home sales were above asking price, according to real-estate listings website Zillow. But the average premium over asking for those homes was $7,000—not $700,000. Even in the hottest real-estate markets, where there is a severe shortage of inventory, the highest bid typically isn’t more than a couple hundred thousand dollars over asking.
What often distinguishes the houses that go way above asking—half a million or more—is a feature that the other homes in the neighborhood just don’t have, says Toby Lumpkin, a real-estate broker with Realogics Sotheby’s International Realty in Seattle. That can be a better view, more southern exposure, an especially tasteful renovation, a three-car garage in a parking-challenged city, or a side yard, which is what set apart Mr. Malcolm’s house. It’s also often a price low enough to attract attention.
When Kerry Bucklin saw a house for sale on Mercer Island, Wash., on the waterfront, he thought its price of $1.995 million was too low. The Midcentury Modern home, built in 1959, needed updating and shared 210 feet of waterfront with five other houses. But it was the closest of the houses to the shore, offered unobstructed views in a parklike setting and allowed him to go paddling on Lake Washington without having to load a canoe on his car. At the same time, the property was close to the freeway, shaving 6 miles off his commute to work.
Mr. Bucklin, 55, a real-estate lawyer, had been looking for a couple of years to replace the large family home mid-island, where he lived alone since becoming an empty-nester. He bought the home in June by paying just over $500,000 above asking, beating seven other offers.
Mortgage rates have risen almost one-half percent this year, and are around 4.50% with no points today (conforming and jumbo). Because rates haven’t moved much in recent years, the half-point increase sounds dramatic, and could cause a few people to reach for the panic button.
But home prices didn’t back off – instead, our NSDCC median sales price has risen 40% since July, 2013!
But aren’t we closer to a new market peak now, and higher rates will just be the beginning of the end? After all, the last two readings of the SD Case-Shiller have declined month-over-month, and those are calculating county-wide sales that are generally lower priced than NSDCC.
While the higher-rates/higher-prices/tax reform/insert-your-favorite-doom will likely cause nervous buyers to pause, the market has always been made by the buyers with less caution and more horsepower.
They might be more selective going forward, which means only the cream-puffs will be selling for retail, or retail-plus – the inventory of those is too tight, and the competition will drive the sales price.
It’s the sellers of homes that are lingering unsold who might want to sharpen their pencil on their list price. Once you’ve been on the market and not selling for 2-3 months, do you really need to keep pressing for that extra 5% to 10% on top of what the last guy got – and risk not selling at all?
If higher rates do become an issue, it is a problem that is easy to fix, unlike tax reform or higher prices.
Buyers can either opt for a 5-year or 7-year fixed rate to stay under 4%, or ask the seller to buy down the rate. Sellers who are getting a 5% premium over last year’s prices shouldn’t mind paying 1% or 2% to make the deal.
When you look at the 2nd half of 2012, you can see that a surge was building – and in 2013 we had one of the biggest frenzies of all-time. The end of 2017 was less enthusiastic – the worst second half since 2014. It makes you think that we might get off to a slower start this year:
NSDCC Detached-Home Sales
1st Half Sales
2nd Half Sales
2nd Half MSP
We can do all the analysis we want, but the bottom line is that if buyers see something they like, they just lunge at it these days. I’ve already seen three new pendings today that were outrageously priced, yet it didn’t stop somebody from tying them up.
There are other variables, but the amount and quality of the inventory will determine our fate in 2018. Even with our Sandicor MLS logging duplicate listings, our count of houses for sale between La Jolla and Carlsbad dropped about 10% this year!
It wouldn’t matter if we cut back on the number of higher-end listings – there would still be plenty to go around. Where did the shortage happen this year?
# of Listings Under $1M
# of Listings Over $2M
Total # of Listings
The number of high-enders were remarkably about the same as last year – the shortage this year was almost entirely on the lower end.
Today, there are only 41 houses for sale priced under $1,000,000. There will be more, but I think we can expect the number of sellers willing to take less than a million to drop even further in 2018 – less than 1,000 for sure, and possibly as low as 700-800 listings.
There were 882 NSDCC houses sold this year under $1,000,000 (so far). We could still have close to that many sell again in 2018 if the frenzy picks up on the cheapies and virtually every listing sells.
Now that the tax reform is happening, what will it means for housing? We already have a natural cycle that has been maturing, and how buyers and sellers interpret the tax reform could exacerbate the issue. It will take healthy employment and incoming retirees to keep the party going!
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