Market trends of the week and random noteworthy thoughts

Trending: Multiple offers in all price points from $500,000 up to $5,000,000 is the reality of the moment. And yet, as wonderful as that sounds, proper pricing is critical to achieving robust interest in any home. We are not in a market climate that can absorb overpricing. Bottom line: Buyers need to be pre-approved for loans because you are competing with “all cash” offers and Sellers need to be sensitive to recent comparable sales to create the optimal pricing strategy. 

Million dollar home sales continue to climb statewide: According to an article in the LA Times last week, Million-dollar-or-more home sales statewide surged in the second quarter to the highest level since the third quarter of 2007 as the economy and mortgage availability improved.  The 7,763 homes sold at $1 million or more from April to June represented an 18.5% increase from the same period last year. It was the most sales in this price range for a quarter since 2007, when 10,946 closings were recorded.  Though this is good news, we are still at less than half of the highest quarter number of sales for $1-million or up houses which was the third quarter of 2005, when 15,898 homes changed hands.

Be weary of what you read on the internet: I monitor many real estate blogs, especially those that have been bearish about Westside real estate over the past eight years.  They provided good information that I could pass along to my readers, especially from 2005-2010, but many of them have either stopped posting or are providing erroneous information to try and prove the market is unhealthy.  As late as last month one site tried to claim the 90402 zip code is down over 20% compared to last year when in actuality it is up around 10%.  On the end of the spectrum, I appreciate sites like the Santa Monica Distress Monitor who started off writing about inflated real estate prices but has adjusted with the market and gives a balanced look at the market.

Information from a great realtor is key: Some people are weary of hearing information from realtors thinking it will be jaded and that is understandable as some in this business do not have great ethics, but you are far better off finding a trustworthy professional who provides real time info so you can make the right decision.  The media is usually a few months behind what is going on and that difference can cost you tens of thousands of dollars and/or missing out on a wonderful home.

Appraisals causing headaches for refinances and purchases…what can be done to help?

You are not alone if you are in the process of getting your home refinanced or are purchasing and the appraisal is lower than what it should be.  Many people are stuck in the same boat with appraisals trailing the market 3 to 6 months and reluctant to accept the recent upward momentum of Westside real estate.
 
If you are in the refinancing boat and as long as rates stay low as anticipated, you will be in a solid position to get a higher appraisal in the next 6-9 months so staying patient is key.

Another important aspect with refinancing and purchasing is working with a lending representative with local knowledge.  Banks randomly assign appraisals and you can end up with an appraiser without local knowledge or an understanding of the Westside/South Bay markets.  

A lender with local ties might have a sense the appraiser assigned might not understand the area as well and help you figure out ways to get a different appraiser before they come out to the property.

In terms of a purchase appraisal, it is extremely important the listing agent meets the appraiser at the property and provides them recent comparables and neighborhood tidbits that add value.   Some appraisers will not engage in these conversations but most appreciate the info, especially when it comes to off-market activity. 

Please let us know if you have any questions related to this topic as we know of some excellent loan representatives at different banks we would be happy to put you in touch with.

Traffic nightmare near: California Incline rebuild project approved

The Santa Monica City Council voted in July to move forward with a construction project that will replace the aging California Incline Bridge connecting Pacific Coast Highway and Ocean Avenue.  Construction is expected to start sometime in the fall or winter of 2013!

A major access point into downtown Santa Monica, it is a major artery into the heart of the city.

Under the proposed project, the existing structure will be replaced by a 750-ft.-long by 52-ft.-wide concrete bridge and will require a 12- to 18-month closure of the popular connecting byway.

City staffers are asking that construction take place from 7 a.m. to 10 p.m. Monday through Friday and 7 a.m. to 9 p.m. Saturdays. They estimate the extended hours would expedite construction by about 25 percent above the option of working during standard city construction hours.

Santa Monica Mayor Richard Bloom promised an open dialog with residents, who have aired concerns that construction will bring traffic neighboring areas to a complete standstill.

Articles to read on the topic:

Major redo of California Incline Approved - Santa Monica Patch

Palisades Post Article on Impact of California Incline Construction

*Sources: Santa Monica Patch and Palisades Post

Multiple Offer Mayhem Part III: Pacific Palisades

Like Santa Monica and Brentwood, Pacific Palisades also finds itself in a strong market with quite a few listings going out in auction like fashion:

1147 El Medio - 3 bed/3.50 bath, 3,144 sq. ft. Mid-Century on a 12,820 sq. ft. lot. The low list price of $2.365M created a ton of interest in the property with the listing agent receiving 16 offers. The captivating ocean and city light views combined with recent updates helped push the final sale price of this home to $3.080M, 700K over the asking price and at 979.63 per sq. ft. Rumor has it that counters were issued to the six highest original offers.

745 Swarthmore - 4 bed/2.75 Bath, 2,477 sq. ft. Traditional on a 9,000 sq. ft. lot. Located blocks from the village and recently renovated, this home with a desirable open floor plan received 4 offers and sold just above the $2.495M list price at $2.5M. The final price per square foot= $1009.29

1039 Las Pulgas Road - 3 bed/2.50 Bath, 2,021 sq. ft. Traditional on a 11,425 sq. ft. lot. This Marquez area home provides a great example of the current marketplace and what has been happening over the past 5 years. In 2007, this home was completely remodeled with a gourmet kitchen and providing great indoor/outdoor flow and sold for $2.150M in multiple offers. The house resold 3 years later off the market on 9/23/2010 for $1.759M, representing just over an 18% drop in value. On March 21st of this year, the home was listed at $1.759M and immediately received over 6 offers and sold for $1.825M, about a 4% price increase and it would probably have been 6% if it the market in the past few weeks.

Multiple Offer Mayhem Part IV: Brentwood

How about 35 offers on one house followed by a neighboring house coming on weeks later and receiving 15 offers! What about almost a million over asking? Here we go-

1750 Westridge Road- 3 bed/5 bath, 4,754 sq. ft. Traditional on a 32,246 sq. ft. lot - Fellow Partner Scott Carmody had a firestorm of buyers on his hands with a $2.195M list price. The property received around 8 offers for the rare opportunity to build or remodel on a lot this size and that rarity apparently drove some to bid over $2.5M (350K over asking) for the property. The escrow is still very young so we will be tracking this one.

117 South Medio- 4 bed/5bath, 5,365 sq. ft. Traditional on a 8,000 sq. ft. lot - This stunning traditional home created an unbelievable buzz when it first hit the market due to a ridiculously low list price of $3.295M. Many agents felt the property was worth over $4 million and it ended up selling for $4.251M almost $1M over asking! In total they received over 11 offers and countered back to 6 of them. Congrats to Partner Vicki Driscoll for helping her client see the value of the home in this marketplace despite the deceptive list price.


1353 Beckwith- 3 bed/2 bath, 2,259 sq. ft. Ranch on about a 9,000 sq. ft. lot - The polo fields of Brentwood are getting a ton of attention but no one expected the property to garner 35 offers at the $1.495M list price. This major remodel/teardown is rumored to be in escrow between $1.650-$1.7M with an all cash buyer.

 On the heels of 1353 Beckwith going into escrow, fellow Partner Richard Stearns listed 1341 Beckwith a tear-down with an 11,140 sq. ft. lot at $1.595M. The trust sale was only open for the broker caravan and garnered 15 offers and an offer was accepted this past Thursday.

Low Mortgage Rates Attracting More Short-Term Borrowers

As mortgage rates sink deeper into record territory, homeowners are refinancing into 15-year loans at a pace not seen in a decade, aiming to pay off their debt in time for retirement.

Check out the LA Times article.

National News: Short Sales of Homes Soar 25% to Three-Year High

From the LA Times:

“Financial institutions are agressively seeking to move through their inventories of homes in default or scheduled for auction,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at UCLA. “This is a positive sign in the sense that clearing out this shadow inventory is a precondition for the full healing of the housing sector.”