Luxury Homes Spur Bidding Wars in L.A. as Market Rebounds
By Nadja Brandt
May 17, 2012 10:35 AM EDT
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A week after Christine Lynch listed her house in the Brentwood neighborhood of Los Angeles for $3.625 million, she had seven offers. Within 10 days, a deal was reached for the five-bedroom, six-bathroom home — and for $225,000 more than she asked.
“My first reaction was, ‘Wow, I guess we’re really doing this,’” Lynch, 55, said in an interview. The all-cash transaction was completed on April 23. “I was really surprised by this level of interest and how quickly it sold,” she said.
Bidding wars are breaking out for luxury homes in such wealthy Los Angeles enclaves as Brentwood, Beverly Hills and Bel Air as an increasing number of buyers bet on rising home prices and investors return to the market. Even properties in need of extensive renovation are being fought over by shoppers who expect to resell them for more after a remodel or rebuild.
“The percentage of people who think prices are only going to go up is the greatest I have ever seen in my career,” said Syd Leibovitch, president of Rodeo Realty Inc. in Beverly Hills.
Sales of Beverly Hills homes priced at $2 million and higher climbed 11 percent in the first quarter from a year earlier to 39, according to DataQuick, a San Diego-based provider of property information. In Brentwood, whose residents include actress and singer Julie Andrews, they increased 56 percent to 25, and in Malibu they gained 64 percent to 23.
Throughout the U.S., residential-property sales of $1 million and higher rose 7.2 percent in March, the most recent month for which figures are available, from a year earlier, according to the Chicago-based National Association of Realtors, whose price categories stop at that amount.
Across U.S.
Demand has been rising for high-end homes in the northeastern U.S., including Boston and New York; on the California coast; and in parts of the southern U.S. amid a recovery in financial markets, according to Paul Bishop, vice president of research at the Realtors group.
In Brentwood and Beverly Hills, homes usually start between $2.8 million and $3.2 million for those on smaller lots in low- lying areas, and can go as high as $20 million for larger plots, according to John Gould, manager of Rodeo Realty’s Beverly Hills office. Properties in hillier areas, which usually are larger and have views, tend to range from $5 million to $75 million.
In the Los Angeles area, multiple offers — as many as a dozen per home — have reduced listing times for the highest- priced houses as bidders worried about losing out act faster than they have in the past two years, according to Stephen Shapiro, cofounder of Westside Estate Agency in Beverly Hills.
Acting Quickly
While luxury properties used to linger on the market for weeks and months as recently as 2011, offers now come in on the day of the first showing, a phenomenon that was common during the 2007 buying frenzy, Shapiro said.
“In recent history, buyers would look at homes and return six months later to find the same home was still on the market,” he said. “Now if buyers hesitate, the house is often sold by the time they come back. And each time one sells, the next one comes on at a higher price.”
Sales remain less than the record reached from 2005 to 2007, said Leibovitch of Rodeo Realty. In Beverly Hills, where celebrities including Sharon Stone have homes, first-quarter transactions for properties priced $2 million and higher were 40 percent below the 65 homes sold in the third quarter of 2005, and in Brentwood the 25 purchased were 49 percent below 2007’s second quarter, according to DataQuick.
Too Few Sellers
Deals are being held back in part by a shortage of willing sellers. Nationwide, about 2.37 million existing homes were listed for sale in March, the fewest for the month since 2005, the year U.S. home sales reached a record 7.08 million, the National Association of Realtors reported April 19.
“We could have twice as many sales if we had more inventory,” Leibovitch said.
A total of 19,284 houses and condominiums sold in Los Angeles and five other Southern California counties in April, DataQuick reported yesterday. That was down 3.4 percent from March, and 21 percent below the average for April since 1988.
Jack Massopust listed his 92-year-old father’s Brentwood home, which boasts views of the city, the Pacific Ocean and Catalina Island, on April 3 for $1.55 million. Within about a week, more than 100 shoppers had come to three open houses, and the 3,200-square-foot (300-square-meter) house, which Massopust’s father bought new in 1960, had received 11 offers. Eight were at or higher than the asking price.
‘Very Surprised’
The property, listed through Mary Lu Tuthill of Coldwell Banker Previews International in Brentwood, is in escrow, expected to close May 23, for about $1.705 million. The purchasers agreed to a “buy as is” condition, Massopust said.
“I have always appreciated the location and the view,” said Massopust, 64, a retired transportation engineer for the city of Los Angeles. “That’s in my opinion what sold the house for that price. But I was still very surprised.”
Sales volume for homes priced $5 million and higher at all of Coldwell’s West Los Angeles offices was up 35 percent this year through May 8 from a year earlier, according to Joyce Rey, the Beverly Hills-based head of the estates division at Coldwell Banker Previews International.
“There’s an added degree of confidence in the future and that prices are likely going to go up,” Rey said. “There is a definite change in consumer attitude.”
Tuthill, who also brokered the sale of Lynch’s house, said an increasing number of homes sell within a week of being listed. One 6,000-square-foot property on Tower Road in Beverly Hills, in escrow and scheduled to close by the end of the month, came on the market at $7.295 million and within a week received five offers, the highest of which was for more than $2 million greater than the asking price, Tuthill said.
Speculators Back
The increase in demand for high-end properties is being driven in part by investors looking to make a profit, a buyer pool that’s been almost nonexistent the past couple years, according to Rey. She said investors have grown to about 20 percent of the shoppers she represents since the beginning of the year.
Throughout Southern California, the portion of investor purchases was close to a record last month, and the share of buyers paying cash was double the historical average, according to DataQuick.
“The speculative buyer is back,” Rey said. “This is the first time since 2007 that I have investor clients again.”
That’s buoying an increase in bids for homes that need major work, she said.
Bidding War
One house on a 25,000-square-foot lot in Brentwood hadn’t been on the market in more than 50 years and was considered a “borderline tear-down,” according to Tuthill. The home, with original 1930s kitchen and bathrooms, was listed at $5.495 million at the beginning of March and received five offers, the highest of which was $5.6 million. After the seller countered at $5.695 million, two bidders upped their offers to $5.7 million and one jumped to $5.75 million, the eventual selling price.
“We were always joking that we were holding it together with bubble gum and paper clips,” Tuthill said. “The initial reaction was that this property was priced too high for recent comparables. But what brokers underestimated is the pent-up demand.”
A home on Bel Air Road in Bel Air came on the market in mid-March at $10.25 million and the final purchase agreement was signed for $1 million more. Escrow is scheduled to close next week.
Major Renovation
The mid-century house, once owned by the late television host Art Linkletter, hadn’t been on the market in 40 years. The buyer is considering a major renovation or tearing it down, Tuthill said.
“Those types of properties are more in demand than ever,” said Leibovitch of Rodeo Realty. “With interest rates as low as they are, investors can really get a good deal.”
Competition is so fierce that one couple looking to buy in Santa Monica had their daughters, ages 8 and 10, write a letter and draw a picture of the home to try to persuade the elderly seller to choose them over other bidders.
The neurologist and his wife, who asked not to be named because they don’t want his patients to know details of the purchase, agreed in mid-April to pay $155,000 more than the $2.695 million asking price for the four-bedroom, three-bathroom house, located two blocks from the beach.
Lynch and her husband, who’d owned their Brentwood home for 18 years, bought a smaller, three-bedroom house in the West Los Angeles neighborhood of Rancho Park, because they now spend about 40 percent of the year on the Hawaiian island of Kauai. They’re relieved they decided to act now, she said.
“We didn’t really have to sell,” Lynch said. “It was more of a lifestyle choice, a question of where do we want to be 10 years from now. But with this type of response, it seemed like it was meant to be.”
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized.
The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report today. In the fourth quarter, only 29 areas had gains.
A development in Oswego, Illinois. Photographer: Daniel Acker/Bloomberg
May 7 (Bloomberg) — Michelle Meyer, a senior economist at Bank of America Merrill Lynch, talks about the U.S. economy and real estate market. She speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)
The U.S. housing market is showing signs of bottoming as improving employment and record-low mortgage rates boost demand while inventories of available properties tighten. At the end of March, 2.37 million previously owned homes were available for sale, 22 percent fewer than a year earlier, the Realtors said.
“The housing market is still depressed but it had a good quarter,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a telephone interview today. “We’re on the mend but it’s still something that will take two or three years before we’re back to normal.”
The national median existing single-family home price was $158,100 in the first quarter, down 0.4 percent from the first three months of 2011, according to the Realtors group.
The best-performing metro area was Cape Coral, Florida, where prices increased 28.1 percent from a year earlier. Prices rose 19 percent in Grand Rapids, Michigan; 16.9 percent in Palm Bay, Florida; and 16.6 percent in Erie, Pennsylvania.
Kingston, New York, had the biggest decline, with the median selling price tumbling 22 percent in the quarter. It was followed by Stamford, Connecticut, with an 18 percent decline; Mobile, Alabama, at 14.7 percent; and Atlanta at 12 percent.
The median selling price is influenced by the mix of homes on the market and probably was boosted by a smaller share of transactions involving distressed properties. Those homes, which sell at discounts, accounted for 32 percent of first-quarter sales, down from 38 percent a year earlier.
Prices are more volatile than normal because they are affected by the prevalence of distressed sales and “sudden upswings” in buyer interest in some areas, said Lawrence Yun, the group’s chief economist.
“We have broad shortages of lower-priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges,” Yun said in the report. “This is good news for many sellers who wish to list now, or for those waiting for prices to improve.”
Sales of previously owned homes rose 5.3 percent in the first quarter from a year earlier, according to the report. Purchases climbed 11.7 percent in the Midwest, 6.6 percent in the Northeast, 4.1 percent in the South, and 1.4 percent in the West.
Fannie Mae, the nation’s biggest mortgage-finance company, today reported a $2.7 billion first-quarter profit after a $6.5 billion loss a year earlier, citing smaller declines in home prices as one of the reasons for improvement. The Washington- based company said that it won’t need Treasury Department aid to balance its books for the first time since it was seized by federal regulators in 2008.
To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
Malibu High School is the 52nd best high school in California and the 265th best in the nation, according to the U.S. News & World Report.
The rankings were released Tuesday in the publication’s 2012 Best High School rankings. It was not immediately clear how many California schools were included in the rankings.
MHS Principal Mark Kelly said he was proud of the students, staff and teachers for the ranking.
“It’s very nice to have that recognition and be ranked as high as we are,” Kelly told Malibu Patch.
The annual list ranks schools based on student performance on standardized tests as well as student participation in Advanced Placement (AP) or International Baccalaureate (IB) programs. MHS was analyzed alongside 22,000 public high schools in 49 states and the District of Columbia.
U.S. News says it partnered with the Washington, D.C.-based American Institutes for Research in developing the ranking methodology.
In addition U.S. News awarded more than 4,850 gold, silver, and bronze medals to the top-performing schools.
Malibu High School won gold for its high level of student performance.
If there is one goal within the Malibu real estate industry, it may be this: Get to 200 sales this year. Two hundred home sales used to be a standard practice. During the glory years of 1999-2005, even 300 sales was common. But six years of slowing, slumping, dropping and depreciation have passed, as sales tallies below 200 units of single family homes in the 90265 ZIP code have been the hallmark of these tough times. 2005 was, indeed, the last year more than 200 deals closed escrow in Malibu.Early signs this year are for new life. Throughout the industry, positive energy of a recovering market is borne out by the numbers. Through February in Malibu, 27 homes had closed escrow. While that translates into 162 for the whole year, several factors below the surface provide encouragement (that is, encouragement for the industry and future sellers, but not for future buyers).First, 27 sales is a lot better than recent years. Typically, the January-February total is less than 20 and leads to a year of barely 100 sales (such years of starvation were yielded in 2009 and 2011).Second, the sales represent the slowest reporting period of each year. Market activity usually slows in November and December and escrow closings during the first two months of the year are seasonally light in general. A pace of 162 sales by this point should accelerate, and make a 200-sale year probable.But a third, otherwise unseen, factor is this: The number of new escrows has skyrocketed. Indeed, there is action in the marketplace! At press time, there were 48 homes reported in escrow in the 90265 ZIP code. Usually at this time of year, it is less than 30.The nature of those escrows points to a market phenomenon that translates to a better market in the near future. link wheel . Most of the action is in the lowest price ranges. For the market to recover, a boost at the low end is the natural first step. That boost has arrived. Thirty-one homes listed under $2 million are currently in escrow, an unmistakable jolt to the industry.Homes listed specifically for under $1 million have become a distinctly hot commodity. Jablotron . Fifteen such listings have pending sales – and only 12 remain active on the market. It has been a long time since any sector of the Malibu market had a circumstance that more than half the listed homes were in escrow. kitchens . But the low-end home in Malibu, like the low-end condo last year, has brisk activity.Through February, the median price for the 27 closed sales has been $2.1 million, about the same as last year. Buyers are profoundly turning away, however, from higher priced properties, as only four of the sales topped $3 million so far this year (all were between $5 – $6 million, in fact).Furthermore, while the latest trend may be positive, the overall health of the industry remains wanting. The total dollar volume for the 27 sales this year has only been about $60 million. That translates to an annual pace of $360 million. Malibu needs a volume of at least $600 million to be rendered healthy by the very minimum of standards. In the heyday of 2005, the volume was nearly $1 billion. Even in the nightmare year of 2009, the volume was $420 million. So Malibu still has volume issues. That is a function of the vast majority of action being at the low end, as encouraging as that is.Back to positive trends, however, and this factor: The inventory is seemingly on its way down. The local inventory of homes for sale dropped precipitously in January and February. The supply tally was less than last year for both months. Such a year-over-year decline in inventory is something new. Buyers, long in control of the proceedings, may gradually find a double-whammy building against them: more competing buyers and fewer available choices.In summary, the numbers of homes sold, in escrow and currently available, tell a story of hope if you own a lower-priced home, and dire odds if you own a more expensive home:- Homes under $1 million have had six sales through February, 15 are in escrow and only 12 are available at this writing.- Homes between $1-2 million had six sales, 16 are in escrow and 56 are available.- Homes between $2-3 million had 11 sales, five are in escrow, 47 are available.- Homes between $3-5 million have had no sales, six are in escrow, 50 are available.And the upper end of Malibu:- Homes between $5-10 million have had four sales, five are in escrow and 61 are available.- For more than $10 million, no sales so far, one in escrow and 35 available.One Malibu home over $10 million selling, out of 36 possible is not a good trend for two months’ effort.Of the entire landscape of $3 million-plus properties four have sold, 12 are in escrow and 146 are languishing, miles from the reality of the marketplace. That is not a good place to be.Contrast that to 21 homes selling out of 34 that are sub-$1 million brings hope for the whole industry. Even if they are smaller deals, getting to 200 this year may be possible and a key first step to recovery.
http://la.curbed.com/archives/2012/02/heres_adele_recording_at_malibus_famous_shangrila_studios.php
Zillow (via Curbed National) has tipped us off that music producer Rick Rubin bought Malibu’s famous and somewhat endangered Shangri-La, where Bob Dylan, The Band, Eric Clapton, Van Morrison, Weezer, Metallica, and kajillions of other artists have all recorded (Dylan and Clapton even crashed there for a while). The owners also perpetuated some crazy rumors about the studios, like that they started life as an upscale bordello in the fifties and that Mr. Ed was stabled there in the sixties. In addition to the studios, the property has four bedrooms and a guesthouse on 1.73 acres and the whole thing was put up for sale in 2011, asking $4.1 million. According to Zillow, Rubin (who has produced just about everyone, from Tom Petty to Jay-Z to Aerosmith) bought the studios last August for $2 million. But before that, he brought Grammy darling Adele there in 2010 to record her ridiculously high-selling album 21. And they shot a video there to go with her song “Rolling In the Deep” (there was also another, more elaborate video for the song). Watch it below and enjoy the estate, the views, and the voice.
Grand Opening of Rambla Pacifico Road Opens and will add value to Local Home at 3217 Sumac Ridge, Malibu CA
The Rambla Pacifico Road Opened today at high noon with the Malibu City Council, Fire Crews and Police in attendance along with local residents to celebrate to Grand Opening of the road that has been closed for 28 years. Originally the road slid and was not repaired by the County or State until local residents took it in their own hands to privately fund the road to re-open. What was once a 10-12 minute drive will now be 1 1/2 minutes to the PCH.
Today is momentous day and will ease the passage of motorists to see the amazing home for sale at 3217 Sumac Ridge, proudly listed for sale at $3,450,000 with Sotheby’s International Realty, Shen Schulz. For showings call 310-980-8809
The new, gated road will is 1,800 feet long and 20 feet wide. It will be privately funded and maintained by the road owners association. However, as part of the project, a five-foot wide trail easement has been granted to allow for the re-establishment of the Malibu Pacific Trail. People will be able to access the trail through small entries located next to the vehicular gates on foot, bicycle or horse. This is a great Day for Malibu and will add a surge to values in home prices for the amazing architectural home at 3217 Sumac Ridge, located just at the top of the new road. This home is newly constructed as of 2008, has every conceivable high end finish and sweeping views of the Pacific Ocean. This ultimate Malibu residence is a great value and one of the few truly inspirational home in Malibu. Now with the new road being open plus the La Costa Beach and Tennis rights this home is an incredible value in lifestyle, function and design.
