Southern California Home Buyers Face International Competition

Home buyers in Southern California markets have been seeing more and more  competition lately. We have seen several listings sell with multiple offers, which is not a rare occurrence in our market. However, 27 offers on a single property is a bit out of the norm for us!

Recent research from the California Association of Realtors (C.A.R.) has provided some insight into this interesting phenomenon. According to C.A.R. survey, “U.S. ranks as top destination for international home buyers, specifically the counties of Los Angeles, Orange, San Diego, Riverside, Contra Costa, and Santa Clara.” 

Viewing the country as a safe place to put their money, international home buyers preferred purchasing properties in the United States over other countries, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2013 International Clients Survey.”

85 percent of international buyers said they only considered purchasing a home in the U.S., citing that the stable government and financial system would guarantee their home investment. International buyers also chose to purchase in the U.S. for its desirable location and climate (20%), to be closer to family and friends (20%), investment opportunities (9%), changes in work and employment (9%), educational opportunities (6%), and affordable prices (4%).

International buyers purchased a property in the U.S. primarily for investment purposes or tax advantages (18%) or to rent out (14%), contrary to traditional home buyers, who purchased primarily because they were tired of renting (23%).

Looking at California specifically, Los Angeles County was the top location where international buyers purchased properties (35%).  International buyers also purchased homes in Orange (22%), San Diego (20%), Riverside (14%), Contra Costa (7%), and Santa Clara (7%) counties.

Additional findings from C.A.R.’s 2013 International Clients Survey include:

• Sixty-nine percent of international buyers paid all cash for their properties, compared to 27 percent of traditional buyers who paid all cash.
• Thirty-two percent of international buyers purchased the home as a primary residence, compared to 75 percent for traditional buyers, and 33 percent purchased the home as an investment or a rental property, compared to 19 percent of traditional buyers.
• While the primary language of many international buyers was Chinese (36%), 70 percent communicated in English, illustrating a highly educated international clientele.
• International buyers typically spent five weeks looking for properties, compared to 10 weeks for traditional buyers.
• Forty-four percent of international home buyers purchased homes with designer kitchens, 26 percent purchased homes with a wine cellar, and 9 percent purchased homes with a sauna.  Other home amenities that international buyers wanted include private beach, putting green, heated floors, and outdoor kitchens.

The International Clients Survey was conducted via email to a random sample of REALTORS® statewide who worked with international home buyers. Eligible respondents all closed escrow on their homes within the 12 months prior to October 2013.  Access the full report on the survey findings here: http://www.car.org/marketdata/surveys/other/ and view the webinar presentation here: http://www.car.org/marketdata/videos.

According to the Wall Street Journal, these are 10 countries racing to buy American Homes:

  1. United Arab Emirates (UAE) - 352.2% (Growth in prospective homebuyers from 2009)
  2. Switzerland - 269.7%
  3. Hong Kong and China - 254.2%
  4. France - 190.0%
  5. Italy - 178.4%
  6. United Kingdom - 153.8%
  7. Australia - 121.9%
  8. Canada - 107.7%
  9. Sweden - 100.0%
  10. Germany - 95.2%

U.S. Home Sellers Return for Spring 2014

Last year we experienced an extremely low inventory for listings in our area. However, the properties that were up for sale had such high demand that the values of these few listings skyrocketed. Now, as the market’s busiest season approaches, those increasing values are spurring more listings as homeowners regain equity lost in the crash. The supply increase is poised to damp price gains while high mortgage rates cut into demand.

According to Jed Kolko of SF-Based Trulia, “prices won’t be rising as much as they were rising last spring. It will be a less frantic market with more inventory and fewer investors.”

Inventory rose most in some of the tightest areas, from Arizona and California and Georgia to Florida, where leaps in prices erased negative equity and encourage homeowners to lock in profits. (Realtor.com)

Paul Diggle of Capital Economics Ltd. has stated that prices nationwide will climb 4 percent this year compared to 2013′s expected 11 percent gain. Increasing mortgage rates also will weigh on prices because the higher costs will push some buyers out of the market, while forcing others to look for cheaper deals.

Capital Economics Ltd. projects 30-year fixed mortgage rates of 5 percent by the end of the year. (Compare that to 4.31%, which is this week’s national average.) Rates will climb as the Federal Reserve scales back bond purchases that have bolstered the housing recovering by holding borrowing costs down.

We saw an uncharacteristic increase in listings at the beginning of the year, due to the fact that homeowners are getting a jump on the spring selling season and listing their properties earlier than usual. According to an agent from Redfin, Paul Reid, sellers are “nervous about what the spring is going to bring. They don’t know if everybody will list this spring then you’ll have a big counterbalance toward too much inventory, or if there’ll be a crunch again.

First time buyers accounted for 27 percent of completed home purchases in December, down from 30 percent a year earlier. This may be due to the fact that adjustable-rate mortgages may not be an option because of stricter lending standards adopted after the housing crash.

 An increase in supply would indicate the housing market is moving toward more normal conditions as it rebounds from the five-year slump that started to turn around in 2012.

Mark Zandi, chief economist for Moody’s Analytics Inc., states “inventories had been very, very low and still are despite this turnaround. It’s part of the process toward normalization, although the weakening in demand needs to be watched very carefully if demand does not pick up in the spring, that’s going to call into question the strength of any recovery.”

Buyers of existing homes will face less competition from investors, who have caused shortages in many areas. Bulk purchases will start to slow as the foreclosure crisis fades and bargains disappear.

 

Marina Del Rey Boat Parade

It’s that time of year again. Time for the 50th Annual Marina Del Rey Boat Parade. A tradition that started with a parade of only 20 boats (keep in mind there was only 100 boats in the whole Marina). The parade has become an annual holiday activity for thousands of Marina residents and has grown exponentially in popularity (and number of participants) over the years.
muralwithfireworks550

This year’s parade will take place on Saturday, December 14th (That’s this Saturday!!) and will start with Fireworks at 5:55 pm. The actual boat parade will start shortly thereafter at 6:00 pm and will last until 8:00 pm.

boat

Each year there are two Grand Marshals who become the face of the parade. This year we will be a very special one, in that we have two very notable Marina/Playa residents who will take the reigns. Phil Jackson and Jeanie Buss!

Marina-del-Rey-Boat-Parade_0

If you interested in participating in the parade or want more information with regards to the best viewing  and parking spots you can find ample information on the Boat Parade Website

Playa Vista Update

A few weeks ago we provided some information regarding the new developments that are in the works for Playa Vista. If you didn’t have the chance to read through that, you can find it here.

The following map was recently released and gives a better picture of how the next phase of Playa Vista will be laid out.

Playa Vista Map

We are very excited to see these new “neighborhoods” develop. If you would like more information on the upcoming additions to Playa Vista please feel free to give us a call at 310.424.5512 or shoot us an email at info@bermankandel.com