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What can YOU AND I do to curb rising inflation? I hate to tell you this, but we could actually do LOTS. In an unreal world. But we live in the real world, so……
One of the key drivers of inflation is the cost of housing. In many parts of the country COVID has fueled new audiences. Housing costs, accounting for almost a third of the Labor Department’s consumer-price index, were the largest single driver of inflation in the Atlanta area and similar places in 2021. We in the real estate profession are helping facilitate rising prices …..often MASSIVE price hikes. Have you EVER said to any of your clients in a multiple bidding scenario to take the asking price instead of the offer 10% over ask because it’s their patriotic duty to keep inflation down? HAH! I wouldn’t even attempt to do so. I know the answer. Have you ever told your sellers or landlords not to raise prices when the market is rising? The reality is we live in a free market system driven by supply and demand. I have yet to meet a lottery winner who wishes to redistribute their wins to everyone who lost. I have yet to meet a seller/owner who wishes to take a lower price to help the US economy tame inflation too…..
The reality about inflation is that when demand far outstrips supply, prices rise. That excess demand is fueled by multiple factors. And thrown into the mix is some good old fashioned greed…..and why not if everyone else is doing it? Why not, if we live in a free market capitalist system? We are reaping the rewards on the rise: chances are we will also feel the pain when the markets shift. They always do. I don’t ever recall myself sympathizing with a retail store when they had to discount their products deeply because of a lack of demand……I do recall the pains of real estate markets when we had to slash prices and accept low offers…..or had no showings and no offers. Markets change and they always will. We all play a role in them, consciously and unconsciously…..
Because of COVID, many parts of the US are reeling from even higher inflation rates because those moving in from more expensive parts – accustomed to far higher housing costs and higher wages – are willing to pay much higher prices than traditional ‘local’ pricing. When housing costs rise for locals, they command higher wages. More people moving into one area fuels demand and diminishes supply. Higher wages add to inflation by triggering rising corporate pricing on the goods and services they sell to pay for this.
So next time I complain about rising prices, I will turn to the mirror and ask myself: am I truly innocent of playing a role in this “BECAUSE YOU CAN” pricing moment? No, we are not responsible for inflation but to better understand it, we are witness to its primary causes each and every day. And we are part of the process that facilitates it. Most people will sell something for a higher price – if they can – regardless of costs.
And yes, prices can and do come down…..triggering DEFLATION and discounting…..and we will be active participants in that too when/if the time comes. Free market pricing is all about supply and demand.
by Leonard Steinberg
We are in the midst of a rather exciting revolution. It started decades ago when in 2006, US President George Bush – a Texan – boldly claimed: “America is addicted to Oil”. That was a startling admission. Now Texas – the US’s largest oil producer – produces about 7,352 megawatts of new wind, solar and energy storage, the most in the US. The runner-up, California, produces about 2,697 megawatts. I seriously doubt oil is going away, but it is incredible to witness how we are in the midst of a massive transition to more, cleaner (and possibly cheaper) energy.
We are experiencing a massive transformation in our cities, states, towns – and homes – as electric vehicles will shift issues around ‘filling up’, charging stations, power storage, air and noise pollution, energy use, and geopolitical risks associated with energy-related commodities. Auto executives say more than half of U.S. car sales will be EVs by 2030….that’s very soon! Imagine quiet garbage trucks and delivery vehicles in bigger cities. Quieter highways. Our entire infrastructure will need to be updated, not unlike the internet and cable TV which required similar changes decades ago. We are also seeing a rapid growth in Solar use amongst individual homeowners, buildings and corporate America that is adding massive swaths of energy producing entities to buildings and warehouses…..not just because they want cleaner air: Many are doing so for PROFIT and SAVINGS, possibly the best motivator of all.
Around 50% of a home’s energy use is for heating and cooling. The average US home has around 40 lightbulbs…..switching from 60 Watt incandescent bulbs to 8 Watt LED’s reduces lighting energy consumption by 90%! The EPA estimates that the average homeowner can save 15% on heating and cooling costs (11% of total energy costs) by simply adding insulation in attics, crawl spaces, and basement rim joists. A new modern combi boiler is likely to save between 20-35% on gas usage. Ah, the combination of high and low technology can serve homeowners well!
While we currently are suffering from dramatically higher energy costs – mostly driven by Opec’s monopoly – the upside is these higher costs may be the ultimate motivator for towns, cities, states, countries, corporations and individuals to produce their own energy – preferably clean, renewable energy – to reduce the exorbitant healthcare costs (Air pollution from fossil fuels costs each American an average of $2,500 a year in extra medical bills -Reuters) and suffering (Some estimate 100,000-200,000 Americans die each year related to air pollution) associated with pollution. Not to mention the big savings most experience when creating their own clean energy. Ask Walmart that has become a power company creating a big chunk of their own energy usage. Ikea reduced its outside energy use by 57% at a Baltimore location. The rooftops of US big-box stores offer enough solar potential to power the equivalent of 8 million American homes…. Homes with (attractive) solar generation now sell for a premium in areas. Lots has to be done to make solar more attractive for homes and integrated rooftiles seem to be the best solution but they still require some refinement.
Most revolutions are a bit messy and can hurt. Governments sadly mostly don’t plan in 10 and 20 year segments, remaining more focused on election cycles. We are experiencing this pain right now. But the future is very bright. Soon we may be living in a cleaner, quieter, healthier world. Far from perfect as all energy sources have their downside too. Bravo to our Texan friends and colleagues for setting such a great example for what is possible!
We would like to get your take on this article since we found it informative so what do you think? Let us hear from you! Have a great day!
by Leonard Steinberg
When calculating how much your home has increased in value, you have to identify its COST BASIS – meaning anything and everything that you spent to pay for the product. The IRS defines a capital improvement as a home improvement that adds market value to the home, prolongs its useful life or adapts it to new uses. Minor repairs and maintenance jobs like changing door locks, repairing a leak or fixing a broken window do not qualify as capital improvements. Capital improvements and things you can put in your COST BASIS include:
* The price you paid for the property, including settlement costs, such as: title fees, legal fees, recording fees, survey fees, and any transfer taxes or fees you paid in connection with the purchase.
* Additions: An added extra bedroom or bathroom, a deck on the back of the home, a new garage, an added porch or patio….anything that adds value to your home.* Lawn and grounds improvements: Value-adding landscaping projects, driveway or walkway construction, a new fence or retaining wall, adding a swimming pool, etc can qualify as property improvements.
* Exterior improvements: New windows, a new roof, and new siding are examples. Any and all renovation costs including ANY and ALL costs related to that renovation work.
* Insulation: This includes insulation in the attic, inside walls, under floors, or around pipes and ductwork.
* Systems: Installing a new heating or air conditioning system, new ductwork, adding a central vacuuming system, wiring improvements, installing a security system, solar, geothermal, generators, batteries, and putting in lawn irrigation are improvements.
* Plumbing: Installing a septic system, water heater, or soft water system adds value.
* Interior improvements: New appliances, kitchen renovations, new flooring/carpeting, the installation of a fireplace, etc.
* If you needed to make home improvements in order to sell your home, you can deduct those expenses as selling costs as long as they were made within 90 days of the closing.
COST BASIS does NOT include hazard insurance premiums, moving expenses, or any mortgage-related charges (mortgage insurance, credit report fees, and appraisal costs are out) and general repairs that are essential to keep something working do not qualify. Yard maintenance, HOA fees, and real estate taxes don’t count.
Always check with your accountant when in doubt. Keeping tabs of these costs throughout the lifetime of a house is wise.
by Brant Cox – original article
Every decent city in America has their escape place. New York has the Hamptons and the Jersey Shore, and Chicago has, well, Wisconsin. And Los Angeles? We get Palm Springs. Only the best escape destination in the entire country. When you have a town that was created solely on the idea of sitting by the pool and getting as hammered as f*cking possible, there’s little to complain about.
Where should you be eating in between all those mojitos and dancing at Coachella though? Between the classic old haunts where Marilyn Monroe used got her freak on, to the new, modern spots popping up all over downtown, Palm Springs is a culinary destination to be reckoned with. Here’s our updated guide on exactly how to navigate it.
Breakfast / Brunch
701 E. Palm Canyon Dr
It’s not often you eat brunch in an abandoned Denny’s and want your friends to see it on Instagram. Located inside America’s hipster safe house (Ace Hotel), King’s Highway is the all-day cafe for everyone who just can’t with the pool anymore. Don’t be fooled though. With a recently overhauled menu of things people like to eat before noon, King’s Highway has sneakily become one of the best breakfasts in town and has a not-cheesy retro atmosphere going for it, too.
Wilma and Frieda’s Cafe
73575 El Paseo
Wilma and Frieda’s is out in Palm Desert, but wherever you find yourself after a long night of Mai Tais, this is a brunch must. Open only from 8am-3pm, Wilma and Frieda’s is next to a Saks Fifth Avenue in a high-end shopping plaza, but don’t let that fool you – this place is all about comfort. Think short rib eggs benedict and a blackberry vanilla custard French toast. And with everything hovering under $15, it’s really affordable too.
4200 E Palm Canyon Dr.
Norma’s might not have the best brunch in Palm Springs, but it definitely has one of the best patios to eat it on. Technically serving as the all-day cafe at Parker Palm Springs, Norma’s at 12:30pm on a Saturday is an all-out scene — the kind of scene you came to Palm Springs to experience. Rich old women drinking chardonnay before lunch, stressed-out bridal parties guzzling mimosas, and you and your friends going to town on taco salads and Bloody Marys before hitting the pool for the next 72 hours.
622 N Palm Canyon Dr
If you hear someone shout “brunch!” in Palm Springs, it probably means they’re on their way to Cheeky’s. Open only until 2pm each day, this cafe has become the absolute go-to morning dining destination in Palm Springs. Just be warned: the line gets ridiculous. But for those who tough it out, a fantastic rotating menu of all the breakfast foods your hungover stomach wants awaits. Two words: bacon flight.
415 S Belardo Rd
When the Viceroy Palm Springs became the Avalon Hotel, it not only gave us a fantastic new place to stay, but also a great new poolside restaurant to go along with it. It’s a calm, tranquil setting, and the Latin-tinged brunch menu is a perfect complement.
The Purple Palm
572 N Indian Canyon Dr.
In the heart of Palm Springs sits the fantastic Colony Palms Hotel. And at the heart of the Colony Palms sits Purple Palm – the immaculate all-day poolside restaurant straight from your desert dreams. The weekend brunch goes from 8am-3pm, ideal for all your hazy Coachella mornings, and there’s a special sunset menu from 3-6pm for when you just need a breather from the mayhem. The American-ish menu is very solid and the ambience can’t be beat.
The Real Italian Deli
100 S Sunrise Way
The Real Italian Deli is one of those places everybody wishes they had around the corner from their apartment. The small, order-at-the-counter spot is located in a run-down stripmall a few miles outside of downtown Palm Springs, but despite its lackluster surroundings, it’s home to some of our favorite sandwiches in town. You’re going to want the Parma sandwich (prosciutto and mozzarella) on a housemade torpedo roll with a side of their fantastic mac salad. Bonus: There’s a grocery component here too if you’re in the mood to cook up an Italian feast tonight at the vacation rental.
1501 N Palm Canyon Dr.
Most day-drinking scenarios in Palm Springs revolve around strongly poured cocktails by the pool, but Draughtsman is here to change that (or at least give you more options). The massive bar/restaurant on the north side of town has a solid craft beer list, good bar food (get the burger), and is the kind of place you come for a quick bite to eat and end up staying for several hours. Why? That side patio with all the games you could ever want. There’s cornhole, hook and ring, foosball, and life-size Connect Four.
Sherman’s Deli and Bakery
401 E. Tahquitz Canyon Way
One can come to expect certain things from Palm Springs. Plenty of pool time, lots of golf, and drunk old people at stop lights asking you if you know their grandson. But an NYC-style kosher deli in the heart of the city? Not particularly. And yet, there’s Sherman’s, a Palm Springs institution, dishing out immensely respectable versions of all the old classics. It might be 114 degrees out, but sometimes a hot pastrami on rye is simply what needs to happen.
The Barn Kitchen at Sparrows Lodge
1330 E Palm Canyon Dr.
Located in one of the most underrated little hotels in Palm Springs, The Barn Kitchen at Sparrows Lodge has expanded its menu to include a lunch situation that’s open to the public (dinner is not) and has quickly become one of our favorites in town. The ham and mustard melt has no business being as good as it is, and the smoked salmon spread is all you need as the temperature hits triple digits. This is the casual, hidden lunch oasis you can’t find anywhere else in Palm Springs.
540 S Indian Canyon Dr.
Frankinbun is a small joint on the south end of downtown Palm Springs serving hot dogs like you’ve never had before – on French baguettes. But if you’re not feeling one of their traditional dogs, we recommend going for the currywurst, chicken and waffles on a stick, or something they call the tornado potato. This is your power move when brunch got a little too drunk and you need some further sustenance to get through your Saturday.
707 N. Palm Canyon Dr.
Lunch is often the forgotten meal in Palm Springs and Trio is hell-bent on changing that. How? Well, for starters, an eight-hour happy hour isn’t too shabby. And if that doesn’t suit your needs, you can go for the $19 three-course prix fixe menu. Ultimately, Trio nails the casual walk-up vibe you want for lunch and is also big enough for your whole crew to find a seat.
Ruben and Ozzy’s Oyster Bar
241 E. Tahquitz Canyon Way
Not everything has to be a big deal in this town, and in the case of Ruben and Ozzy’s, they made a business out of providing an alternative. You come to Ruben and Ozzy’s because the midday sun is taking zero prisoners and you need a beer and some oysters. This is a glorified dive bar with a great patio to get your buzz on for cheap. And with $4 alcoholic oyster shooters, danger is near.
4200 E Palm Canyon Dr.
Counter Reformation is one of the newest spots in all of Palm Springs, but it’s already operating on a higher level than just about everyone else. Hidden in a corner of the massive Parker Palm Springs, this is a wine bar that happens to have some of the best food in town. The place is small (it’s one long bar with counter seats), but the vibe is fun and cool. You’re going to want the cheese plate, the beef charcuterie, and the hen of the woods. Also, lots and lots of wine. More places like this please, Palm Springs.
621 N. Palm Canyon Dr
As far as Palm Springs is concerned, Copley’s still might be considered a relative newcomer. And yet, this decade-old restaurant is easily one of the best restaurants in town. Located in the courtyard of the former Cary Grant estate, the almost entirely outdoor space (with ridiculous mountain views) is that essential Palm Springs setting you came all the way out here looking for. Not to mention, the food is pretty good too. If you’re looking for that quintessential Palm Springs date night, this is it.
800 N Palm Canyon Dr
Farm-to-table (desert-to-table?) menus have quickly become the norm in Palm Springs dining culture, but Workshop’s still stands far above the rest – making it one of the most popular dinner spots in town. You probably didn’t think you’d come to Palm Springs and eat octopus carpaccio or duck leg confit, but here you are and you’re going to love it. The restaurant is also located inside a ridiculous all-concrete, chapel-like space that puts even some of LA’s great spaces to shame.
Rooster And The Pig
356 S. Indian Canyon Dr
Taking a page out of the LA dining handbook, Rooster And The Pig proves some of the best food in town can be found in weird strip malls. This is modern Vietnamese food and despite being open for a few years now, there’s still nothing else like it in Palm Springs. The space is small and modern, but with an atmosphere that makes you feel welcome the second you walk in. If you’re looking a good dinner in PS that doesn’t involve the usual long waits and big slabs of steak, make moves to Rooster And The Pig.
196 S Indian Canyon Dr.
An Austrian-fusion restaurant might be the last place you’d choose to go to in Palm Springs, but this 15-year-old institution has other plans. The atmosphere inside this homey restaurant is quiet and casual, with fantastic service, good wine, and a schnitzel that had us at hello. If you’re looking to avoid that overcrowded tourist scene, you should go here.
Truss & Twine
800 N Palm Canyon Dr.
For as much fun as it is to look at all the furniture stores you can’t afford, the north end of Palm Canyon can get a little sleepy when it comes to nightlife. But Truss and Twine is here to change that. The all-concrete bar certainly has the industrial look on lock, but if you’re looking for some snacks and a well-made cocktail before a night on the town, this is your spot. The waitstaff is friendly, there’s a daily happy hour from 4pm – 6pm, and they have these prosciutto-wrapped pretzel things that are downright addictive.
1050 E. Palm Canyon Dr.
The L’Horizon resort underwent a massive overhaul and came out looking like its old 1950′s glamorous self. And with it came SO.PA, the beautiful all-day, all-outdoors restaurant with a heavy Middle Eastern lean. Think crispy California squid with spicy yogurt, Alaskan trout with lentils, and a housemade hummus we’d buy tubs of. Your date night in the desert is set.
Edit 400 S El Cielo Rd. Ste A
Solid Mexican food in Palm Springs is not always easy to come by. Which is why you need to know about Felipe’s. Open for breakfast, lunch, and dinner, this family-run cafe is serving familiar Mexican classics better than anybody in Palm Springs. The tiny spot is out by the airport, perfect if you’re flying in for Coachella or aren’t in the mood to deal with the downtown crowds. The Hawaiian torta is a must.
622 N. Palm Canyon Dr
Right next door to Cheeky’s (with the same address) is Birba. Home to hands down the best pizza in Palm Springs, Birba is also the perfect casual big group jumping-off point before a night out in Palm Canyon. With bar, lounge, and table seating, you can make Birba into whatever you damn please. Expect a lively (but not sceney) courtyard atmosphere and a lot of white pizza in your mouth.
200 W. Ramon Rd.
Not so much a throwback as a perfectly-preserved relic, Melvyn’s was a favorite of Sinatra and the rest of the Rat Pack. Stay on the staff’s good side (not an easy task), and they’ll treat you to some carefully-practiced banter as they prepare their famous Steak Diane (pan-fried beefsteak with pan juices served tableside). Put away your iPhone, tuck in your shirt young man, and enjoy a classic dinner from a different era.
330 E. Amado Rd
With an old-school Miami supper club vibe, The Tropicale is a grown-up, kitschy oasis and perhaps your best spot to finally pull off that flowered button-down you got in Nassau. This is certainly a fine dining experience (and a great one at that), but with a fantastic cocktail list and an even better back patio, the recipe is right for things to get weird. The Tropicale is down to party.
701 W. Baristo Rd\
Pressed up against the base of Mount San Jacinto Mountain in The Palm Springs Tennis Club, Spencer’s is an icon and one of the all-time great restaurants in the city. Come for a wine-soaked power lunch on the patio with your interior decorator or bring the parents along for dinner to get a glimpse of how the upper crust really do it. You don’t come to Spencer’s to skimp, and that means the Black Angus Petit Filet is your order.
Well, we’re not usually the type to forward links to our friends and clients….but we felt this was really useful info which you will hopefully get to enjoy in person sometime soon. The link below lists the best restaurants here in the Palm Springs area. I think we both are going to start going down the list of these and give them a try.
by The KCM Crew
If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.
The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer, or can be found at a discount.
Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.
The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.
But not all who are buying luxury properties have a home to sell first.
In a recent Washington post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:
“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”
The best time to sell anything is when demand is high and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs, and are looking to step into a luxury home… Now’s the time to list your house for sale and make your dreams come true.
by President Jamie Duran, Orange County, San Diego, and Desert Companies
We want to Thank President Jamie Duran of Coldwell Banker Residential Brokerage for this Presidents Message! And we were honored to have been the ones that handled the Sells of these hallmark properties that were features in numerous books and received several architectural awards for its “timeless architecture.” As quoted by us :These are stunning estates with rich history, remarkable design, and incredible vistas. The transactions fell into place beautifully and we were fortunate to be involved with the sales”
346 Tamarisk Rd – Zanuck Estate – Sold /$4.9M
64725 Acanto Drive – Pond Estate – Sold /$7.5M
2212 Southridge Dr – Boat House – Sold /$1.75M
We Cat Moe & John Nelson of Nelson-Moe Properties Coldwell Banker Presidents Premier Properties would also be HONOREDif given the chance to SELL your “Timeless Architecture” Estate as well! Contact us TODAY!
We were very HONORED to have been the ones that listed this Iconic architectural property in the desert of Palm Springs!
Earlier this year after four years of working with Lloyds Bank of London, we announced the listings of the iconic architectural properties at Southridge. Today as an update we are proud to announce the successful closing of escrow of the famous Lautner/James Bond House. This sale marks a historic bench mark as the highest sale in Palm Springs history – a sign of a healthy direction in our Real Estate market as Palm Springs continues to attract the next generation of successful investors from outside the area. We are honored to have another very happy client and appreciate the opportunity given to us. Known as the Elrod House this monumental, world famous residential sculpture was designed by 1968. Organic shapes, monumental construction and world class design create an extraordinary experience of space that Lautner himself described as “timeless” architecture. The 60′ wide circular living room has a conical dome that fans out in nine petals between nine clerestories angled up to bring in light. Retractable curved glass walls open the entire living room and pool terrace to panoramic views of Mt San Jacinto, Mt San Gorgonio and the full sweep of the valley below and mountain ranges beyond. The very rock of the ridge is incorporated into the design throughout the home. A very rare opportunity to acquire an inspiring example of architectural perfection. SOLD!!!
But surprisingly, it’s located in the desert of Palm Springs
Text by Jennifer Tzeses Posted July 8, 2016
The “ship” is situated next to a road and surrounded by palm trees.Photo: Courtesy of Hawaii Life Real Estate Brokers
Part irony, part wishful thinking, this Palm Springs, California, home, aptly named Boat House for its shiplike exterior, happens to be located in the heart of the desert. Built in 1992 by architect Michael P. Johnson for race-car driver Jim Jeffords, the property is located on the side of a hill in the gated community of Southridge. Inside the towering glass walls, the interiors feature 14-foot ceilings. Vistas of the arid landscape and valley take center stage in the living room at the bow of the “ship.” There’s also an open-plan kitchen with sliding privacy screens, a dining area, and three en suite bedrooms, including the master suite, which features a skylight and fireplace and overlooks the living room. Outside, there’s an infinity pool and large sun deck, both with beautiful views. Listed for $2 million, this 3,905-square-foot home has 3 bedrooms and 3 baths. Contact: Coldwell Banker, 760-325-4500; coldwellbankerhomes.com
Walls of glass and wood beams surround the living room.
Photo: Courtesy of Hawaii Life Real Estate Brokers
A skylight crowns the master suite.
Photo: Courtesy of Hawaii Life Real Estate Brokers
The pool area offers amazing views.
Photo: Courtesy of Hawaii Life Real Estate Brokers
Thank you Jennifer Tzeses with Architectural digest for including our “Boat House” listing as one of your recent articles you can also see it here: http://www.architecturaldigest.com/story/ship-home-palm-springs
Famous for appearing in Diamonds are Forever, the concrete masterpiece returns to the market
by Patrick Sisson
A famous modernist home in Palm Springs designed by John Lautner, known by many for its brief appearance in a Bond film, has recently been re-listed, quickly drawing attention and offers. The one-of-a-kind dwelling, which hasn’t been open to the public for years, returns to the market after a lengthy legal battle and is asking $8M, according to The Desert Sun.
Real estate investor Michael Kilroy purchased the Elrod Home, as well as two other properties (the Steve McQueen House and Boat House), for $11 million. Years later, Kilroy fell on hard times and in 2012, UK-based lender Lloyds Bank sued Kilroy, claiming he had stopped payment and owed $1.8 million. In addition, the nearby Southbridge Property Owners Association also sued, claiming Kilroy owed $150,000 in fees.
Last April, Kilroy filed a petition for bankruptcy, and the creditors agreed he had until the end of 2016 to sell. Last week, local broker Nelson Moe Properties listed the home.
Designed for a noted interior designer and considered a key example of Lautner’s exemplary means of blending architecture and nature, the Elrod House is one of the most famous Modernist homes in Palm Springs. Highlights of the home’s layout include a circular concrete canopy framed by glass windows and a projecting pool deck that seems to float above the landscape.
This isn’t the only John Lautner-designed home to be in the news this year. In February, it was announced that his famous, dramatically slanted Sheats-Goldstein Residence, which made a cameo in The Big Lewbowski, was donated to the Los Angeles County Museum of Art (LACMA).
2175 Southridge Drive, Palm Springs, California [Nelson Moe Properties]
Thank you Patirck Sisson with L.A. Curbed http://www.curbed.com/authors/patrick-sisson for including our iconic famous high end real estate home as one of your articles!
Article by Diana Olick
Rampant volatility in the U.S. stock market is showing up in the high-end housing market. But as with all things real estate, the impact depends entirely on location.
2016 started with a severe stock swoon, and that had an outsized impact on homebuyers with a higher net worth. Historically, high-end housing suffers most in a market downturn.
“As you go up the income quintile, into the top 10 percent, 5 percent, 1 percent by income, their stock exposure increases,” said Sam Khater, chief economist at CoreLogic. “For the typical family, the bulk of their equity is tied up in home equity not stock equity. It’s the reverse for high income.”
Source: Sam Khater/CoreLogic
Khater compared the share of million-dollar home sales to the S&P 500 and found a distinct correlation. While the share of $1 million or more homes is very small, just 1.2 percent of all home sales historically, it can move dramatically depending on stock market gains or losses. From the worst of the financial crisis in 2008 to the peak of the equity markets in May 2015, the share of million dollar and more home sales nearly doubled, according to Khater.
Read More Homeowners and the Super Tuesday vote
“Since its peak in May 2015, the S&P index declined 10 percent as of mid-February. This decline in the S&P index was matched by a 30 basis point or 15 percent decline in the $1 million or more share,” Khater said.
The correlation, however, is far more acute in certain locations.
In New York City and San Francisco, where the local economies are tied most to financial markets, sales of high-end homes have weakened, and supply is rising. That jump in inventory will likely affect prices down the road, as supply outstrips demand. Nationally there was a 9.3-month supply of homes listed at $1 million or above in December 2014, but that increased to 13 months by December 2015, according to CoreLogic.
“With more than a year’s supply of inventory, prices, for the most part, won’t be increasing,” Khater said.
Read More House flipping: Deja vu all over again
In Washington, D.C., however, the stock effect is far more muted. Government, and the high-priced lawyers and lobbyists that surround it, are a steady denominator.
“Demand is higher, even though the stock market has gotten in the way and the snowstorm has gotten in the way, but demand is there, people are feeling very good about the economy,” said Nancy Taylor Bubes, a 30-year veteran of high-end D.C. real estate and currently an agent with Washington Fine Properties.
She was standing in a $5.75 million listing that received a solid offer in just 10 days. Taylor Bubes, who specializes in the area’s high-end neighborhoods, says she has sold six million-dollar-plus listings year to date, three times what she did last year. Her buyers, mostly domestic and local, are not swayed by Wall Street.
“I actually think the stock market is good for my business. I think people are going to really think about divesting a little bit and putting it into something they would really enjoy,” Taylor Bubes said.
In southwest Florida, however, where real estate is primarily driven by wealthy retirees from the Northeast and Midwest, the story is very different. Sales have slowed dramatically.
“The stock market volatility has definitely impacted the luxury homebuyer in Florida, particularly in Naples and Sarasota,” said Kristine Smale, a senior consultant with John Burns Real Estate Consulting who is based in Florida. “Seasonal traffic is still strong, but would-be buyers are slow to commit this year due to the significant hits to their portfolios. Builders are disappointed, and some are increasing incentives to generate sales,”
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The direction of the luxury real estate market now depends entirely on both the trajectory of the stock market and on inventory levels. Supply of less-expensive homes is extremely tight, and homebuilders are leery of building to that market, as it is harder to meet margins at lower price points. Early last year, before the stock market began its fall, the CEO of Pulte Group, Richard Dugas, said the company would focus more on high-end product, because that is where the demand is.
If the stock market settles, the spring housing market could see a resurgence on the high end. If not, supply will surely increase, and prices will chill.