Friday, April 30, 2010

Notes on a Realtor's Scorecard

** Today is the last day that a purchaser can qualify for the $8,000 federal tax credit. A fully executed contract must be completed today and escrow must close by June 30th to receive the credit. Starting May 1st, the state of California is offering a $10,000 tax credit that can be spread over a three year period on the purchase of new construction…speaking of which, the new single family residences in Playa Vista known as the “ICON” development will be releasing its next phase for sale on May 22. There will be eight homes ranging from 3,200 sq. ft. to 3,800 sq. ft. Pricing will start in the $1.1M range.

** Great web-site for those shopping for a home loan: The website, tracks wholesale loan rates available to brokers. On Thursday morning they said such well qualified borrowers who paid 0.7% to 1% of the loan balance upfront to a broker could get a 30-year loan at 4.875%.

**Fixer Frenzy: 850 Norman Place in Brentwood (1 mile North of Sunset off Bundy) debut early this week on the market for $1,450,000. The 4+3.5, 2,794 sq. ft. house on a 10,0018 lot has already received 6 offers and most are above asking with two of them supposedly being presented by builders. This home will either be torn down or gutted.

**Fixer Frenzy Part II: Fixing in the hood is hot! Check out this LA Times article: Flipping houses is back in South LA

** Celeb Corner
- The Bel-Air estate recently owned by actor Nicolas Cage that went to a foreclosure auction with no bidders is back on the market for $12.75 million. This is a gargantuan drop from the debut list price of $35 million in the past two years. The foreclosing lender was one of six holding a total of $18 million in loans on the 11,817 sq. ft. monstrasity featuring a 35-seat home theater, six bedrooms and nine bathrooms…Wow…talk about the false tale of American Treasure.

- Former William Morris chief Jim Wiatt has put his latest creation in the Pacific Palisades on the market for $19,500,000. The modern style Georgian mansion is 11,544 sq. ft. on just under an acre of land and was built in 2007. The house takes about 15 minutes to walk through and definitely defines luxurious living. I can see this home easily falling into the lap of another Hollywood Executive. The one downside to the property appears to be the lack of kitchen space for a home this spectacular but Wiatt has entertained for hundreds and wanted to have a true family style kitchen. I think it will be tough for this property to command a sales price north of $15 million but will see…you never know what can happen in this price range…

Wiatt is planning to move to New York to see if it is a good fit for the family but I think he will eventually be back in the Palisades since he is so entrenched with the movers and shakers of Los Angeles along with having some of the best paddle tennis courts in the country at his disposal. Wiatt is known for building some very nice houses in Los Angeles over the years but don’t expect him to build again if he does come back. . .

**When the Santa Monica Place opens in August, the third floor dining area will include views of the Pacific Ocean, six chef-driven restaurants and a wine bar and beer garden…talk about an upgrade from its predecessor…another great reason to live on the Westside!

**We will have an analysis of April sales posted next week along with an anlaysis of certain homes sales in specific price ranges! Make it a great weekend!

Latest Westside/Manhattan Beach Real-Time Market Data

*click image to enlarge

Mortgage Rates Unchanged This Week

Mortgage interest rates were little changed this week, according to the latest Freddie Mac survey, which showed lenders were offering 30-year fixed-rate loans at an average of 5.06%, down from 5.07% a week before.

The average rate on mortgages fixed for 15 years was unchanged at 4.39%, Freddie Mac said.

On both types of fixed mortgages, borrowers would have paid an average of 0.7% of the loan amount in upfront fees and discount points to the lender. Additional third-party fees such as appraisals are paid separately.

The lenders in the survey provide a combination of rates and fees they are offering on loans of up to $417,000 to well-qualified borrowers who have downpayments or home equity of at least 20%.

A Look at the Quarterly Numbers in Manhattan Beach

Like most high-end coastal sections of Southern California, the Manhattan Beach market west of Sepulveda finally started to pick-up in the 4th quarter and the 1st quarter this year was strong relative to last year with several listings selling quickly and some going into multiple offer situations.

If you look at the chart above based on closed sales in the MLS, you will notice the area is still well behind what a normal pace would be considered.
Sales were up 30% over 2009. The 25 closed sales last year in Q1 –2 per week, between Jan.-March 2009 – reflected a pace that was less than one-half the average for the decade.

(*Sources: Manhattan Beach Confidential and The Multiple Listing Service)

New Residential Purchase Contract In Effect

The California Association of Realtors has updated and modified the Residential Purchase Agreement which went into effect on April 28th. Quite a few changes were made to the document and most realtors and legal professionals agree the document is easier to navigate and properly spells out issues that caused problems in the past.

Here is a quick overview of some of the changes:

*Separate paragraphs for the first and second loan.
*The loan period no longer needs to be specified.

Wood Destroying Pest Inspection
*The allocation paragraph only specifies who pays for the inspection only. The WPA addendum can still be attached to the contract but the new contract makes it easier for termite costs to be negotiated. Seller’s will probably start putting caps on what they are willing to pay for in terms of termite work.

*Defaults to 5pm on the date of the close of escrow

Contingencies and Cancellations
*Last date of a contingency or cancellation period CANNOT fall on a Saturday, Sunday or holiday. EX: If the last date of the contingency period falls on a Saturday and Monday is a holiday, the contingency period will actually extend until Tuesday.
*The notice to perform is 2 days and not 24 hours.

Other quick hitters:
*Delivery to mean by personal receipt by principal or agent, whether sent by fax, email or other. It was not clearly defined before.
*Buyer’s investigation: Language added to clarify that buyer is obligated to turn over reports to the seller even after termination of the agreement.
*Title and Vesting: Listing agent’s need to get a statement of information from clients within three days of opening escrow since the contract requires the seller to give a statement of identity or similar form to title at the commencement rather than the end.

Lots of other items can be discussed but no need to bore you further. However, It is very important that you work with an agent who properly understands the new agreement and can advise you correctly. Most major companies like Prudential have required agents to attend seminars led by the company’s general counsel so they can properly advise clients.

Thursday, April 22, 2010

Deals of the Week

(Please call or e-mail our office for more information)

*Westwood-Century City: North of Olympic/East of Beverly Glen: List Price: $995,000- This approximate 2,000 sq. ft 3+1.75 storybook charmer is nestled on a 5,837 sq. ft. lot. The house features a redone gourmet kitchen, hardwood floors, remodeled bathrooms, great master and central air/heat. Compared to other properties in the neighborhood, this should go out at asking or above.

*Brentwood: North of Wilshire, West of Bundy: List Price: $990,000- This 1,392 sq. ft. 2+1.5 home is being sold for land value and sits on a 6,000 sq. ft. lot. The bones of the home are decent if someone wants to work from the studs but the real value would be for a builder to tear down and construct a 3,000 sq. ft. home. Tear down lots of this size tend to sell for above a million dollars…

*Mar Vista: North of Palms/East of Walgrove/West of Centinela: List Price: $829,000- *short sale. This 2,036 sq. ft. 3+3 home sits on a 7,200 sq. ft. lot is tucked in an area that is one of the best kept secrets of Los Angeles. The home is in very good condition and will drive lots of interest once the bank approves a short sale price.

*Westchester: Just East of Sepulveda/South of 78th: List Price: $539,000- At just over 1,000 sq. ft, this 3+1 home on a 6,070 sq. ft. lot needs to be remodeled and updated. However, it is situated on a nice street and priced below market. They have already received 6 offers and will definitely go above asking.

New Mental Health/Treatment Facility North of Montana (90402) Concerning Neighbors

In late October of 2009, The Bridges To Recovery psychological treatment center received a license (*copy below) from the state of California to treat up to 6 patients in a single family residence located at 1820 San Vicente Blvd.

This past weekend a flyer along with a copy of the permit was distributed to residences located near the facility. Most neighbors had no idea that such a facility was operating in the neighborhood and have expressed concern.

Confusion exists about what type of treatment goes on at that facility and what type of patients are at the clinic. These facilities are usually protected by civil rights laws to operate in most communities without objection.

*click image to enlarge

Latest Westside/Manhattan Beach Real-Time Market Data

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Notes on a Realtor's Scorecard

- Mortgage Rates: The typical rate being offered this week for a 30-year fixed-rate home loan was unchanged at 5.07%, with borrowers paying 0.6% of the loan balance in upfront lender fees, Freddie Mac said Thursday.

- Existing-home sales (National), which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.Total housing inventory at the end of March rose 1.5 percent to 3.58 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace, down from an 8.5-month supply in February. A normal market has under 6 months of supply and excludes some substantial shadow inventory.

- Playa Vista: Steve Soboroff is stepping as chairman and chief executive of Playa Capital Co. LLC, the developer of the 1,000-acre Playa Vista community near Marina del Rey.

Management responsibilities now fall in the hands of Patti Sinclair and Randy Johnson. His decision follows the Los Angeles City Council’s April 6 approval of the second and final phase of the development. A legal challenge from project opponents is expected.

Sinclair and Johnson both said their focus will be on selling the land for the final phase to developers. The 111-acre site is entitled for 2,800 homes, a shopping center and office buildings.

Playa Capital is in talks with potential developers of the property, including Rick Caruso, developer of the Grove and other Los Angeles-area retail centers. Caruso was slated to build a shopping center at the site before a delay in the entitlement process killed the deal.

- Commercial Note: As expected, Westside vacancies are up and Class A asking rents are down to $3.81, off from $4.21 from a year ago. Rates for Class B space actually increased six cents to $3.06, but were off more than 15 percent from 2009’s first quarter. The bright spot is that at a 10.5% vacancy rate, West Los Angeles has the lowest vacancy rate in the country.
In comparison, Downtown’s Class A asking rent is about $3.27.

- SM Foreclosures: According to Foreclosure Radar, there are 211 properties in some stage of foreclosure in Santa Monica. The breakdown by zip code is as follows: 90401 (8), 90402 (26),90403 (52),90404 (61), 90405 (64)
**For the foreclosure numbers for your specific area, please e-mail us.

- A measure (SB 401) signed last week by Gov. Arnold Schwarzenegger waives state taxes on mortgage debt forgiven in a foreclosure or short sale

Borrowers are required to be owner-occupants of the principal residence, show financial hardship and have a first lien mortgage originated on or before Jan. 1, 2009 with a principal balance that does not exceed $729,750. In addition, the borrower’s total monthly mortgage payment must be greater than 31% of his or her monthly gross income.

Manhattan Beach Update

The pace of Single Family Residence (“SFR”) sales slowed down a bit in the first half of this month, with 7 homes going into escrow. For comparison, in the whole month of March, we saw 24 homes go into escrow.

Inventory has hit the market at about the same pace as March, with 14 new listings in the first part of April – March saw 27 for the whole month. Please note this is just a two week look at SFR sales. Total inventory moved up by 4 listings over the end of March to 85 SFRs total at mid-month. Still pretty lean in comparison to Westside area like Santa Monica and Pacific Palisades. The Sand and Tree sections each have 35 listings while the Hill checks in with 15.

(*sources: Manhattan Beach Confidential, MLS)

Thursday, April 15, 2010

Quotes from Industry Leaders on the $1M+ Home Market

“The traditional market weak spot – homes in the $1 million-$2.5 million range – has come back to life,” said Tom Dunlap, general manager at Prudential California Realty in Beverly Hills. “There is a lot of cash parked on the sidelines and the price is coming down now to where people who have been watchful are coming off the sidelines.”

Leslie Appleton-Young, chief economist at the California Association of Realtors in Los Angeles, sees the movement in luxury homes as the next phase in the recovery of the housing market, which started its collapse as subprime loans soured. The problems took longer to reach affluent home buyers, who had enough assets and income to wait out the market. But now even the owners in swanky neighborhoods need to sell and have dropped their asking prices significantly, especially as job losses have taken their toll on all wage groups.

“You’re seeing values at the high end,” Appleton-Young said. “Also, the spread of foreclosures starting a year ago has affected the high end. You’re seeing more nondiscretionary sellers now than earlier in the recession.”

*Sources: Los Angeles Business Journal

750K and Below Market Update

For homes selling for less than $670,000 that qualify for Federal Housing Administration-backed loans are seeing multiple offers and are being overbid by as much as 10% in some cases due to a lack of inventory.

This week, I submitted an offer on behalf of my clients for a 3 bed/2 bath remodeled house in the Holly Glen/Del Aire area with a listing price of $569,000. The offer was well over asking with short contingency periods and my clients didn’t get the property. They received 8 offers and only 1 of them was under the asking price. Many of the buyers were putting over 30% down. This type of demand will continue unless inventory significantly picks up and liberal FHA loan terms remain in effect.

Notes on a Realtor’s Scorecard

(i.e.- weekly neighborhood notes, school info, random real estate news, etc):

*In the ritzy 90402 Santa Monica zip code, the cost of buying a home (based on a 20% downpayment and 5.5% interest rate) is about double the cost of renting. . .

*The Santa Monica City Council unanimously approved St. Monica’s development plan which includes adding a new 27,500 sq. ft. community center, 7,700 sq. ft. of new classrooms, three levels of subterranean parking and renovating the auditorium and athletic facilities. They hope to begin the project sometime next year and should take three to four years to complete. Please read more at . This will be great for the community and help St. Monica’s schools continue to improve their academic reputation. However, this project combined with the California Incline project means serious traffic issues for North of Wilshire residents.

*Manhattan Beach’s sand dune hill (extremely popular with fitness enthusiasts and sports teams) will finally re-open but with restrictions requiring people to reserve online and expected to pay a $3-5 usage fee. The fee will be used to help maintain the area and it will also cut down on usage by 70% to appease the neighbors…don’t be surprised if a similar fee is enacted at the Santa Monica stairs in the next few years…fitness enthusiasts beware.

*Prudential Southern California had 1700 transactions in March which is the best March the company has had since 2005. In fact, the company is already profitable for the year, two months earlier than last year.

* Foreclosure Radar reports that notices of default (NODs) recorded in California for February amounted to 31,004, a jump of 20% from the 25,904 in January. Notice of trustee’s sales (NOTS) filed in February increased by 4% to 28,195, from 27,220 in January. Both the increases in NODs and NOTS reverse the three-month trend of decreases seen since the November cyclical slowdown in foreclosures at the end of each year.

A Day At An LA County Foreclosure Auction…

If you've never been to an L.A. County foreclosure auction, it's a sobering experience. The auctioneer, who would identify himself only by his first name (could be a flashpoint to anyone bent on revenge), first reads off a ton of addresses and why those properties' auctions were either postponed (mutual agreement was often the reason) or canceled (bankruptcy was a common cause). That leaves about 20 properties on the docket for the day's auction. The scenario is repeated five days a week both in Pomona and at the county courthouse in Norwalk.

The auction has a start time of 10:00 or 10:30 a.m. but it's more like 10:50/11:10 before the action begins due to the cancellations. The regulars bring collapsible canvas chairs and carry cashier's checks to make their purchases. Some read books during the wait or make phone calls as the day doesn’t usually end until about 4 pm.

In the pecking order of the auction, the front row is usually reserved for registered bidders and the order of the auction is determined by the auctioneer.

In less than a minute, ownership of a property can revert back to the lender. Successful bidders must have cashier’s checks ready in the amount they are willing to pay for the property. Most seasoned veterans bring a cashier’s check for the minimum bid and cashier’s checks in smaller amounts up to the amount they are willing to pay for the properties they want.

You must have cash to purchase the property and you are buying it without the right to rescind. A buyer can really get burned if they do not know what they are doing and understand the neighborhood they are buying in. However, companies and individuals that specialize in these types of purchases can make out like a thief and turn a 50% profit in as little as three months. Quite a bit of homework must be done by the purchaser. Don’t think this is your typical auction…

*Sources: Los Angeles Business Journal and Dan Gura

Latest Westside/Manhattan Beach Real-Time Market Data

*Click image to enlarge

Wednesday, April 7, 2010

Looking Back at the 1st Quarter of 2010

The first quarter of 2010 was the busiest 1st quarter in a long time for most of the Southern California market, especially the Westside and South Bay. As you can see from the numbers posted on this blog, activity is way up thanks to the convergence of three main factors:

1) Sellers pricing more realistically (at least 15% off market heights)
2) Low inventory
3) Low interest rates/fear of higher rates

Reminiscent of days in 2003-2006, we saw quick sales, multiple offers, cash buyers and people getting asking prices and beyond. The micro markets of the Westside/South Bay definitely did not match what was going on in other parts of the nation where sales were flat or down year-over-year. We are definitely seeing what the value of wonderful weather and having an international fascination with your city can do to stabilize housing prices.

What the Westside/South Bay saw in the first quarter did seem to be more typical of higher-end housing markets in several parts of the U.S., as reported by CNBC and others last week.

"People are not as uptight as they were a year ago," says mortgage lending company exec Steve Habetz. "It seems as if they are more comfortable in thinking the high end housing market is not collapsing. Home values have stabilized and it's been a matter of following the leader. One person sees others buy or sell and they join in. That's been happening."

Simply put, this confidence has created some stabilization in housing prices on the high end which has been struggling while other Westside/South Bay locales under a million dollars were recovering.

With realtors fielding quite a few calls from both sellers and buyers seriously inquiring about the market, activity should stay strong through the second quarter but the market will probably cool down some with the government beginning to quiet its involvement in the market (Federal Tax credit expires April 30th and no longer buying mortgage backed securities) and interest rates beginning to climb.

As the finance and economic blog Calculated Risk (I highly suggest book-marking this site- great source for constantly updated economic news) noted this Monday, a strong drop in refinancing’s is to be expected now: “With the yield on the Ten Year Treasury increasing to 4%, and the end of the Fed MBS purchase program last week, mortgage rates will probably rise and refinance activity will fall sharply.”

However, rates aren’t the only thing that drives the market. It might bring prices down but as long as the overall economy continues to recover, the market will probably not see a major double dip which some economists are predicting…Who knows, if I had a crystal ball I wouldn’t be writing this blog right now and would be playing golf at Pebble Beach:)

Remember, if you are thinking of buying or selling real estate you should call our office. More than ever it is important that you align yourself with a real estate professional that is trustworthy, hard working, covers the details and truly understands the market. We pride ourselves on exactly that.

LAUSD Rescinds Permit Change For Now

Some 12,000 students and panicked parents won a reprieve on Tuesday when Los Angeles schools Supt. Ramon C. Cortines said most students who attend schools outside of the district can continue to do so next year, a retreat from a recent, more restrictive policy that provoked an outcry from parents, other school districts and some members of his own Board of Education.

But whether students who live in the Los Angeles Unified School District will be allowed to continue to attend schools elsewhere after the 2010-11 school year remains unresolved. Cortines said he expects to return to the board in September with a new policy.

Last year, L.A. Unified released more than 12,200 students to 99 other Southern California school districts, including 945 to Beverly Hills, over 700 to Santa Monica, 1,700 to Torrance, 1,400 to Culver City and 1,400 to Las Virgenes.

Please see full articles below:
Daily Breeze
LA Times

Dogtown Station Condo Project Update

The pricey (*still a bit overpriced in my opinion) Dogtown Station condominium project at 700 Main St. in Venice is undergoing an ownership change. The developer RAD Ventures, LLC is going to buy out its equity partner, California Public Emplpyees’ Retirement System “Calpers” after a dispute in how to handle lagging sales. RAD is also in final steps to getting a new mortgage for the project.

“Calpers would have been happy to accelerate sales and get out of the project and move on. I am more interested in taking my time,” said RAD Managing Partner Robert D’Elia, who opted to not lower prices, which range from $575 to $600 per square foot. “It’s a delicate balance between maximizing price and the cost of money.”

The $40 million dollar 35-unit project was completed in January 2009.
Dogtown has found some recent success with a marketing campaign that highlights how the units can serve both as residences and offices. Units are built with open floor plans and include rooftop patios or balconies. The high ceilings and loft layouts have attracted live-work occupants.

75 percent of buyers have said they will use the lofts as live-work spaces. Owners include artists; producers; and actors, such as Dylan McDermott, who will house his production company there.
(*Source: Full Article: Los Angeles Business Journal – Daniel Miller)

March Sales Data for Single Family Homes + Analysis

*Click image to enlarge

*The most expensive listing sold in March for $18 million, reduced significantly from its original listing price in July 2009 of $29.9 million. This 8 bedroom, 11 bath mansion sits on more 4 acres in BHPO. Even this remarkable estate shows that now is the time to buy for a steal of a deal.

*Sales were up significantly in the month of March. A large jump up in the Manhattan Beach area, but still down 50% from 2007 and the height of the market. Significant upward sales trends also in Westchester, Venice, Mar Vista, and Pacific Palisades, but again much smaller numbers than 2005 and 2007.

New Listings and Pended Sales Data for March from Malibu to Manhattan Beach

*Click image to enlarge

Friday, April 2, 2010

Mortgage Rates Heading Into The Weekend

CONFORMING 30 year fixed up to $417,000
5.125% / 1 pt
5.375% / 0 pt

CONFORMING 5 year fixed up to $417,000
3.875% / 1 pt
4.125% / 0 pt

FHA 30 year fixed up to $417,000
5.125% / 1 pt
5.375% / 0 pt

FHA 5 year fixed up to $417,000
3.625% / 1 pt
4.000% / 0 pt

CONFORMING 30 year fixed up to $729,750
5.25% / 1 pt
5.50% / 0 pt

CONFORMING 5 year fixed up to $729,750
4.125% / 1 pt
4.375% / 0 pt

FHA 30 year fixed up to $729,750
5.25% / 1 pt
5.50% / 0 pt

JUMBO 30 year fixed up to $2,000,000
5.375% / 1 pt
5.625% / 0 pt

JUMBO 5 year fixed up to $2,000,000
4.375% / 1 pt
5.375% / 0 pt (note small difference on this one between 30 year fixed and 5 year at 0 pt)

Please note, this doesn't take into account some positve adjustments for lower than normal LTV's, or higher than normal FICO scores, or some negative adjustments for specifics such as combination of above for condos and so forth, but nonetheless, is still accurate and gives you a good idea.

(*Source: David Rubenstein, Home Services Lending)

Latest Real-Time Market Data

*Click to Enlarge

Thursday, April 1, 2010

North of Montana Sales 90402


Mortgage Rates Jump/Eyes are Turning to Investors

LA Times-The increase in mortgage rates from 4.99% last week to 5.08% this week left fixed rates at their highest level since the first week of this year, Freddie Mac economist Frank Nothaft said. Please read full article below.

Article #2-With home prices stabilizing and an economic recovery beginning to take hold, the hope is that private investors will filter into the market. Please read full article below. AS FED'S MORTGAGE PURCHASES END, EYES TURN TO INVESTORS

Tax Credits Expire April 30th/Cali Home Prices Surge in January

LA Times-With special tax credits set to expire at the end of April, applications for loans to purchase homes are at their highest level in five months, a mortgage trade group said Wednesday. Please read full article below.

Article #2-A national index of home prices rose unexpectedly in January, with California cities posting strong gains. Please read full article below.

LAUSD Permit Battle Heating Up

Some interesting, yet vaild points brought up by County Supervisors regarding the transfer permit battle in the LAUSD.

"Supervisor Zev Yaroslavsky said students should be allowed to finish out their education at their current elementary, middle or high schools before being forced to attend an LAUSD school."