Los Angeles Home Prices Still Holding Strong!

Southern California's housing market settled into a typical seasonal pattern in September with sales falling from August, but prices continued making big gains from a year earlier, a market tracker said Wednesday.

However, the median has increased year-over-year for 18 consecutive months, DataQuick said. The increases have been in the 20 percent range for the last nine months as distressed properties have been weaned from the market and sales of more expensive homes increased.
Last month sales increased 7 percent to 19,112 properties from 17,859 a year earlier. Sales fell 17.1 percent from 23,057 in August as the summer buying season wound down.
"We've seen a fairly normal downshifting in the housing market this fall. Couple that with the rise in inventory, higher mortgage rates and the ongoing gradual drop in purchases by investors and cash buyers, and it's no wonder prices have leveled off in recent months," DataQuick president John Walsh said in a statement.

What is not yet clear is how the government shutdown, which ended last Wednesday, impacted the housing market. That won't be known for several months, Walsh said.
In San Bernardino County during September the median price jumped 32.4 percent to $225,000 from $170,000 a year earlier, the biggest increase in the region. Sales increased 15.4 percent, also the region's biggest gain, to 2,358 properties from 2,044 a year earlier.
Los Angeles County's median price increased 25 percent to $425,000 from $340,000 a year earlier and sales increased 5 percent to 6,494 from 6,188 in September 2012.
DataQuick tracks sales and prices of new and previously owned houses and condominiums.
During September the number of homes that sold from $300,000 through $800,000 -- a range that would include many move-up buyers -- increased 25.5 percent year-over-year. The number that sold for $500,000 or more jumped 42.1 percent from one year earlier, while $800,000-plus sales rose 43.4 percent.

Transactions involving foreclosed homes and short sales also continued trending down.
In September sales of homes foreclosed on in the prior 12 months accounted for 6.3 percent of the Southland's resale market, down from 6.9 percent in August and down from 16.6 percent a year earlier.
Last month's foreclosure resale rate was the lowest since 5.5 percent in May 2007. During the downturn foreclosure resales hit a high of 56.7 percent in February 2009.
Short sales, deals in which the sale price fell short of what was owed on the property, accounted for a 13.1 percent share, down from 13.3 percent the month before and down from 28 percent a year earlier.
September's level was the lowest since a 12.9 percent share in May 2009.
Absentee buyers, mostly investors and some second-home purchasers, bought 26.3 percent of the Southland homes sold last month. That was down from 26.7 percent the month before and down from 27.7 percent a year earlier.
DataQuick analyst Andrew LePage said that the market is downshifting a bit.
"I've heard of fewer multiple offers and properties are staying on the market a little bit longer," he said. "And there are some drops in asking prices. Some sellers are really trying to reach for the stars based on the appreciation we were seeing during the summer. The market has cooled somewhat from then."

WELL SAID! THE VALUE ADD OF EXPERIENCED REAL ESTATE AGENT IS ON AVERAGE $25k OVER NEW AGENT

The Price of Real-Estate Experience: $25,000

Veteran real-estate agents vastly outsell their rookie counterparts, according to one study

By Sanette Tanaka

Can you put a price on experience? In real estate, you can. It is about $25,000 for the average house.
Veteran agents sell homes for an average of 12% more than their less experienced counterparts, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va. Veteran agents also tend to list more new properties, more townhouses and condominiums and larger properties.

 

Associated Press

Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did.

"The more experience you have, the more likely you are to sell the properties that you list, the more likely you are to sell it at a higher price and the less time it stays on the market," Prof. Waller says.
Prof. Waller, along with Ali Jubran, a student at Longwood University at the time, examined 10,065 real-estate listings in a mid-Atlantic multiple-listing service from March 1999 to July 2009. They divided the listings into three groups—ones listed by agents who have been licensed for two years or less (called rookies), agents who have been licensed for two to 10 years and agents who have been licensed for 10 years or more (called veterans). They controlled for property characteristics such as size and location to isolate the "experience variable," and then compared the results for rookies and veterans. The study was published in the Journal of Housing Research in May 2012.

Prof. Waller became interested in quantifying experience when he noticed an increasing number of agents who chose not to renew their licenses after two years. Real estate has "very, very, very low barriers to entry," he says. But brokers then face a steep learning curve and many struggle to reach a level of expertise that is profitable, he adds.
Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did. That may be because rookie agents have to be more flexible in picking up listings, even if the chances of selling are low.

"If a house is priced ridiculously, they might say, 'Fine, I'll take the listing,' " Prof. Waller says.
Generally, experienced agents have greater knowledge of the neighborhoods and a larger network of buyers and sellers, as well as relationships with home inspectors, appraisers and mortgage brokers.
For some, confidence comes with time. James Stroupe, a real-estate agent at Realogics Sotheby's International Realty in Seattle, says he used to take listings priced above-market, but now, with nearly 20 years of experience under his belt, he isn't afraid to suggest an alternative price.

And then there are the lessons learned. Michael Rankin, principal and managing partner of TTR Sotheby's International Realty in Washington, D.C., began selling real estate right out of college, so he faced the twin pitfalls of inexperience and youth.

"I would meet people and say I'm a real-estate agent. They would joke and say, 'I've got children older than you. Are you sure you're a real-estate agent?' " he says.

Mr. Rankin says he didn't get referrals until his third year in the business. Referrals now make up about 70% of his sales. His listings stock also has changed dramatically. In his 20s, his average sale price was about $300,000 to $400,000. Now, it is more than $2 million.

Experience taught him how to deal with consumer behavior. "Residential real estate is really an emotional transaction. I don't think I was prepared for any of it. It's about understanding and knowing people. That, to me, is what an experienced broker brings to the table," he says.

When Pamela J. Hagan first began practicing real estate about 30 years ago, she had a listing that just wouldn't sell. After zero offers in eight months, she asked a more experienced agent to help. "We tweaked the price and staged it properly, removed clutter and everything. I just didn't think of that when I was new," says Ms. Hagan, of Century 21 Beggins Enterprises in Longboat Key, Fla. "After we got it all set up and dropped the price, we sold it within 30 days."

Write to Sanette Tanaka at sanette.tanaka@wsj.com

Home Sales Crush Expectations, Surge 6.5%

Existing home sales crushed expectations climbing 6.5% in July to an annualized pace of 5.39 million units. This was up 17.2% year-over-year. 
June's numbers were revised lower to show a 1.6% fall to 5.06 million units.
Meanwhile, total housing inventory was up 5.6% at the end of July to 2.28 million. This represents a 5.1-month supply at the current sales pace. The median time that most homes spend on the market was 42 days in July, this is up from 37 the previous month
The national median price for existing homes was 13.7% higher than a year ago at $213,500. This is the seventeenth straight monthly rise. A key finding was that first time buyers were down from 34% of all purchases a year ago, to 29% this time around.
Distressed homes, which include foreclosures and short sales accounted for 15% of July sales, the same as June.
Economists have been watching for the impact of the run up in mortgage rates on existing and new home sales. The 30-year mortgage rate stands at 4.4% according to Freddie Mac's primary mortgage market survey (PMMS).
"Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," said Lawrence Yun chief economist at NAR in a press release.
"The initial rise in interest rates provided strong incentive for closing deals.  However, further rate increases will diminish the pool of eligible buyers."
Economists at Credit Suisse expect existing home sales to fall to the lowest level in three months and post the first consecutive decline in over two years.
"One percent increases in mortgage rates over a two-month span are rare," they write. "When they have happened in the past, home sales — both existing and new — usually register a monthly decline in the second month of the two-month back-up (in our case, that's July)."

But their July monthly survey of real estate agents showed that most buyers don't expect mortgage rates to go much higher and they're waiting to see if there's a pullback in rates that could create a buying opportunity.

"There is still not a lot to choose from for homebuyers, and this tight inventory continues to limit sales gains.  Other headwinds include tight underwriting standards, protracted bank approval processes, and a delayed selling process."
Existing home sales account for a larger share of the market than new homes.

How Our Miracle Mile Got Its Name

Circa 1940 view of the Miracle Mile sign on Wilshire Boulevard, with the May Company department story in the background. Courtesy of the Dick Whittington Photography Collection, USC Libraries.

In 1921, the stretch of Wilshire Boulevard now known as the Miracle Mile was a 20-foot-wide dirt road, flanked by oil wells and barley fields. Today, the strip is a busy thoroughfare, home to museums, the La Brea Tar Pits, and a collection of historic Art Deco structures. The story of the Miracle Mile's stunning transformation from cow path to commercial artery -- told through selected images from the region's photographic archives -- is part of the larger narrative of L.A.'s decentralization, as electric railways and automobiles encouraged sprawl and drained the downtown retail district of its vitality.

The Miracle Mile was the brainchild of real estate developer A.W. Ross, who in 1921 paid $54,000 for 18 acres of land along the south side of Wilshire Boulevard between La Brea and Fairfax avenues. Ross envisioned a retail district there, subdividing the land and offering it to suitors for as little as $100 a front foot, but the tract's commercial potential appeared bleak to many. Retail was then concentrated in the downtown business district, and with no electric railway line along Wilshire, the remote location was inaccessible to many Southern Californians. Ross' detractors dismissed the tract -- surrounded by grain fields, a primitive airport, and an active oil field where asphalt seeped up from the ground -- as "Ross' bean patch" and "Ross' folly." Ross pressed forward with his plan anyway.
"I went to men of wealth," he told the Los Angeles Times in 1939. "They turned me down; I was visionary. Even friends who had the means to help me laughed and wished me luck."
But the developer foresaw how the rise of the personal automobile would change settlement patterns and upset the balance of power between downtown and what were then the city's hinterlands.
"When I started out to plan the Miracle Mile I saw Beverly Hills gaining ground in the west, Hollywood progressing to the north, business forging nearer from the east and fine residences going up in the south," he told the Times.

Located within a four-mile drive of the city's most fashionable residential districts, Ross' subdivision boomed as L.A.'s population continued to swell and fill in the automobile suburbs west of downtown. First, a structure consisting of two small storerooms rose sometime before 1924 at the corner of La Brea and Wilshire. Then, a two-story building at Cochran and Wilshire appeared, followed by a fruit market at Curson and Wilshire.
It was not until 1928 that the Miracle Mile acquired its glamorous appellation. Ross originally gave his development a much less-memorable name: Wilshire Boulevard Center. According to a story -- perhaps apocryphal -- Ross was describing his vision for the development when a friend interjected: "From the way you talk, A.W., one would think this is really a miracle mile." The name, with its obvious promotional value, stuck.
But what finally signaled the Miracle Mile's success was the 1929 arrival of a Desmond's inside the Wilshire Tower at Dunsmuir Avenue. With three downtown locations, the department store validated Ross's foresight by placing its fourth branch miles west of the central business district.
When it opened on March 15, 1929, the Wilshire Tower fronted an entire city block and featured an 11-story Art Deco tower. Desmond's main entrance opened onto the sidewalk, but many shoppers entered through the rear; in a nod to the automobile's ascendency, the store's owners built a large parking lot behind the store and reserved additional space for future parking needs.
Other retailers soon followed Desmond's to the Miracle Mile, and they, too, provided ample parking for their customers behind their buildings. Silverwood's arrived in September 1929. In a move laden with symbolism, Coulter's shuttered its downtown location in 1938 and opened its Miracle Mile store at Hauser and Wilshire. Two years later, the May Company opened its new Wilshire Branch at Fairfax.

By 1930, when this aerial photo was taken, buildings fronted much of the Miracle Mile. This view looks west down Wilshire Boulevard. The oil field on the top-right is the present-day site of Park La Brea. Courtesy of the Photo Collection, Los Angeles Public Library.

1929 view of the newly-opened Desmond's department store. Courtesy of the Security Pacific National Bank Collection, Los Angeles Public Library.

The May Company under construction, circa 1939. Courtesy of the Dick Whittington Photography Collection, USC Libraries.

Coulter's, circa 1939. Courtesy of the Title Insurance and Trust / C.C. Pierce Photography Collection, USC Libraries.

Circa 1940 view of the Miracle Mile, facing east. Courtesy of the Dick Whittington Photography Collection, USC Libraries.

Circa 1950 view of the Miracle Mile. Courtesy of the Security Pacific National Bank Collection, Los Angeles Public Library.

In the 1960s, Santa Claus would greet shoppers, some of whom arrived by bus, in the Miracle Mile. It was one of several gimmicks that Miracle Mile retailers employed in the face of new competition from suburban shopping malls. Courtesy of the Metro Transportation Library and Archive. Used under a Creative Commons license.

Eventually, the Miracle Mile was overwhelmed by the same forces of change that once made it a success. Increasing reliance on the personal automobile and uncontrolled sprawl ushered in the age of suburban shopping malls, which challenged older, automobile-oriented retail districts like the Miracle Mile just as the Miracle Mile had previously challenged the pedestrian-oriented retail district downtown. Unable to compete, retailers once at the vanguard of L.A's decentralization relocated, leaving vacant storefronts and shabby discount stores in their place.
By the 1980s, the mile-long stretch of Wilshire Boulevard was in need of a second miracle. Even the president of the Miracle Mile Residential Association compared the area to "a slum." Representing local residents, he called on the city to declare the Miracle Mile a historic district, hoping the designation would spur revitalization and attract interest in the area's many elegant Art Deco and Streamline Moderne structures. But property owners rejected the call, and despite preservationists' protest, many cherished buildings have since fallen to make way for apartment complexes.
Instead, it was museums and office centers that injected new life into the Miracle Mile. Patrons flocked to the Los Angeles County Museum of Art (LACMA), which had moved to Hancock Park in 1965. Across the street, the former Orbach's department store found new life in 1994 as the Petersen Automotive Museum, and four years later the abandoned May Company building at Fairfax and Wilshire reopened as LACMA West.
With LACMA, the Petersen, and other museums -- including the Craft and Folk Art Museum, the Page Museum at the La Brea Tar Pits, and the Architecture and Design Museum -- the Miracle Mile has gained a reputation today as L.A.'s museum row. Meanwhile, publications like Variety, The Hollywood Reporter, and Los Angeles Magazine now call the district home. While the Miracle Mile can no longer claim to be the city's premier retail district, the area once derided as "Ross' bean patch" remains fertile commercial ground.

Southland Home Sales Decline As Prices Continue To Rise

LOS ANGELES (AP) — Southern California’s surging housing market stumbled last month with home sales falling as strapped homeowners refused to sell, fewer investors bought and the median sales price rose to $385,000, its highest level in more than five years, a real estate research firm reported Wednesday.

There were 21,608 houses and condominiums sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, according to San Diego-based DataQuick. Sales were down 6.2 percent from May and 2.1 percent from June 2012. That year-over-year decline was the first for any month since September.

“Investor and cash buyers are starting to back off a bit,” said John Walsh, president of DataQuick.
At the same time, the median sales price of $385,000 was the highest for any month since April 2008. It was up 4.6 percent from May and 28.3 percent higher than the June 2012 figure, according to the real estate information company.

The median price has regained more than half of the value it lost after the market crashed from the peak of $505,000 in the spring and summer of 2007.
However, there are signs that the “blistering pace” may slow, Walsh said.
“If mortgage interest rates shoot up again then that’s virtually a given,” he added.
Middle- and high-end home sales did well while lower-cost properties languished. About a third of sales were for $500,000 or more, up a bit from May, while the number of homes that sold for less than $200,000 dropped.

“Weak demand isn’t the culprit,” DataQuick said in a statement. “The main problems are a fussy mortgage market and an inadequate supply of homes for sale. Many owners can’t afford to sell their homes because they still owe more than they are worth, and lenders aren’t foreclosing on as many properties, further limiting supply.”
About 16 percent of sales were short, meaning the price was less than what was owed on the property. That was the lowest level in nearly four years, DataQuick said.