Everyone by now knows that inflation has been steadily rising in the U.S., and of course, home builders are feeling the squeeze. A gauge of US homebuilder sentiment declined for a 9th straight month in September as mortgage rates continued to climb, further accelerating the housing-market cool-down. The National Association of Home Buyers/Wells Fargo gauge the decrease by three points to 46.

One of the most prolific home builders on the Westside in the past 10 years is the Thomas James Homes company. Like their product or not, the market for the homes they build remains hot and although the cost of building has risen sharply, they continue to buy and sell properties as if “business as usual” is their motto – though profit margins have no doubt diminished.

The rise in interest rates is also making it more expensive for home builders to borrow money to build new homes. The 30-year fixed mortgage rate hit the 6% mark for the first time since 2008 – rising to 6.01% – which is essentially double what it was a year ago. The cost for capital has always been a sore point for developers, but those with deep credit lines and well-established funding sources are still very much in the market for new projects.

The combination of all these factors is putting a strain on home builders and slowing down home construction. In September, the Single-Family starts fell 7.3% in April to an annualized pace of 1.1 million units, the lowest level since December 2016, according to the Commerce Department.

Like most high-end beach cities, Santa Monica is somewhat immune to interest rate hikes. Here in Santa Monica, home prices have increased 8.2% in the past year, while wages have only increased 3.7%.

Looking forward, home builder sentiment is not expected to improve anytime soon. The National Association of Home Builders/Wells Fargo gauge is forecast to remain below 50 in the coming months, indicating that builders are pessimistic. If you’re thinking about buying a home, now may be a good time to act as you may not be competing with as many developers as you might have last year or the year before. Be sure and contact me as there are always off-market opportunities that never reach the MLS, Zillow or Redfin.

Here is your North of Montana Real-Time Real Estate Update

There are currently 19 active listings North of Montana Avenue in Santa Monica. 

The most recent listings are:

426 Georgina Avenue – Listed for $10,995,000. Single story “lot value” on a 22,000 sqft lot. First time on the market in over 50 years and features a full size, lighted tennis court.

472 23rd Street – Listed for $4,895,000. French Country home originally built in 1923. This 3,000 sqft home has been updated, and while perhaps not to everyone’s liking, is quite livable. This price point has been pretty active, so I won’t be surprised to see this house under contract quickly. Last sold in 2009 for $2,250,000 and features an ADU that is of the highest quality I have seen.

518 Euclid Street – Listed for $3,950,000. This is priced above lot-value for a 7,500 sqft lot, but the curb appeal may limit the broad Buyer appeal. There is a fair amount of square footage and an ADU for creative Buyer’s to work with as a base.

724 Euclid Street – 

Listed for $3,300,000. This lot-value, 7,500 sqft lot should entice multiple offers from builders and end-users alike. A little close to Montana Ave but more people than ever now see that as a positive, not a negative.

1241 Georgina Avenue – Listed for $4,995,000. Classic 1920s Spanish with all the charm and character that excites our market. Just under 2,500 sqft with some nice updates plus an ADU on a large 9,500 sqft lot. The floor-plan is a little odd and the home is fully priced but the style is popular so I am sure it will sell.

101 Foxtail Drive – Listed for $8,500,000. This is a 17,000 sqft lot being sold with fully approved plans to build a 10,000 sqft ocean view architectural. I sold this home in 2015 for $3,900,000 and the owner has invested millions getting the entitlements since then.

There are 6 properties in escrow

611 10th Street – Listed for $4,480,000.

304 14th Street – Listed for $5,495,000.

323 15th Street – Listed for $3,650,000.

439 21st Street – Listed for $3,995,000.

707 21st Place – Listed for $5,495,000.

825 Woodacres Rd – Listed for $10,995,000.

And 4 properties have sold.

457 15th Street – Listed by Pence Hathorn Silver and sold over-asking in multiples offers for $4,570,000. Originally listed at $4,495,000.

214 15th Street – Sold for $4,475,000. Listed for $4,650,000.

410 15th Street – Sold for $6,025,000. Originally listed for $5,949,000. 

740 18th Street – Sold for $7,300,000. Originally listed for $7,395,000.

101 Larkin Place – Sold for $4,260,000. Originally listed for $3,995,000.