Happy New Year to all!
2023 closed with positive news to usher in 2024.
- The stock market reached an all-time high.
- The 10-year Treasury (which drives mortgage interest rates) is under 4% again off of its ~5% peak.
- The Federal Reserve expects to cut rates three times in 2024 as Fed Chairman Powell reported Dec 13th. This is a nice change after 11 rate hikes since March 2022.
- Measure ULA drove big sales in Q1 before the new transfer tax law took effect. Activity finally started to expand in the luxury segments over $5MM by December.
- The Hollywood strikes impacted much of the local economy. Buyers are coming back into the market now after a long pause in the 2nd half.
- Sellers are still in the “cat bird seat” especially of homes under $5M or homes that are move in ready or located on the most coveted streets. They too seem ready to go on a list.
- In our neighborhood, there were only 156 single-family home sales versus 256 in 2022.
- Average market time continues to be about 30 days and average prices are $3MM, up from $2.8MM. Over 63% of Sellers wisely priced strategically to sell and sold 2.5% over asking within 30 days. Often in multiple offers for the most coveted streets. Those who were overly ambitious on price to start chased the market and sold for far lower than necessary AND likely had substantial carrying costs and stress in the process.
- A refresher: a new real estate transfer tax went into effect in the city of Los Angeles on ALL real estate sales priced above $5 million (houses, condos, apartment buildings, condos, industrial buildings, hotels, etc). Under the new ULA Tax, properties priced over $5 million incur a 4 percent transfer tax, and those properties priced over $10 million are taxed 5.5 percent, which in both cases, the seller must cover. As a result, some Sellers are choosing to postpone due to the lack of financial incentive to sell. Several court challenges at the state and federal level have been thrown out and many speculate that the issue will be revisited on the November ballot. Citywide there was a surge in home sales leading up to April followed by a plunge afterward.
- In Hancock Park there were 20 sales over $5MM versus 32 in 2022. Most of the sales closed before April 1 when ULA took effect. May took big price cuts off their original list prices. Since then, there have only been 7 sales in the area. Several closed just under $5MM to avoid the additional 4% transfer tax.
Thoughts for 2024
- Expect more inventory as many Sellers paused in 2023 and are getting ready for market and prices will likely hold given pent up Buyer demand.
- Keep investing. Our 100-year-old homes are very unique in the city and in the context of the broader world as well. You have the opportunity to treat them well for your own benefit and for future generations. Please reach out to others if you need good tradesmen or advice. Local clubs have approved capital campaigns and memberships wait lists are long.
- Consider getting involved in improving your neighborhood. Opportunities to volunteer abound – be a block captain, enroll in a Rylan program for preparedness, support the Ebell or Rotary, Keep Larchmont Clean, participate in the Taste of Larchmont or the Family Fair etc. This our community and we can continue to make it great. If one can buy a Martini now on Larchmont, anything is possible!
- Expect less inventory and higher prices for rental properties in 2024. Landlords already face headwinds and now under AB 12, effective July 1, 2024, a landlord will only be allowed to demand a security deposit for a residential rental in an amount up to the equivalent of one month’s rent. This is a very modest amount to cover damage that could easily occur.
- Life is precious so if it is time to move on for whatever the reason, you are likely sitting on a good deal of equity and a local professional agent can help you or a loved one realize a new dream.
Happy New Year ~ may it be healthy and joyful for you and yours.
Loveland Carr Group