Timely Real Estate News………………………………………………15 August 2011
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If you love roller coasters, you must be having fun..…..
I’ve never been a big fan of roller coasters. Friends tried to convince me that riding Long Beach Pike’s famous “Cyclone Racer” would be fun; the closest I ever got was on the on Santa Monica pier. The “Cyclone Racer” in Long Beach; an all-wood, death-defying roller coaster, which hung out over the water, was never my idea of fun. Built in 1930 and torn down in 1968, it might well serve as a symbol of what is happening in our economic waters today — a careening, screeching, open-pit car that chugged slowly up its first big climb, only to throw you mercilessly down its dual track iron-rail highway at breath-neck speeds that could rip your head off if you didn’t watch out. You held on for dear life, and when it was over, many would just jump into another car to do it all over again.
Well, that’s what’s happening today. We’re on a modern-day roller coaster ride that delivers chills and thrills. We can’t escape the good and bad news. There are days when I just avoid the gloom and doom, and there are days when I hear the market is way up, only to be mercilessly thrown down, again, when the market is way down. I can personally tell you it is hard on one’s nervous system.
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So, just what is the mood in the Westside on the overall economic situation?
Everyone I talk to is committed to riding out the highs and lows of the current economic situation — however long it takes. Each of us have our own set of economic issues — and as a homeowner, too, we’re all in the same boat together. The people I have spoken to are not going to sell their stocks, or trade in their gold jewelry…. “Just going to hang in there”.
For us, a part of the question is how is of this upheaval impacting the West Los Angeles Real Estate Market? All I know is our real estate market in the four communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood are not in horribly bad shape. Over all, we are looking at more stability as I have reported each month. I am seeing strong attendance at open houses, and starting to see more offers. As we have been hearing in the media, and I am personally experiencing, leasing remains a popular option for those who want to “rent out the market” and continue to hedge their bets. However, the market is still full of buyers who are eager to make deals today. Why? Because there are excellent prices on Westside residential properties….there continues to be low interest rates. I am constantly being asked about the foreign buyers are coming to our communities to take advantage of current market conditions. There definitely has been an increase in the number foreign buyers, for example the 23-year-old-woman from England who paid $85 million for the Spelling residence in Holmby Hills (this sale greatly impacted the percentages in the Bel Air stats for July). We are seeing multiple offers on homes that are priced properly. However, I can tell you this: I’m still no fan roller coasters — over the water, on land. Every month, I give you a snap shot of what has been going on the past month. July was a good month. Stay tuned.
We’re holding steady on the Westside….improving in sales volume
I love presents — and every month, I open the MLS statistics report to see what good news Santa has brought me. And for the July 2011 period, it was mostly good news. Probably the best news was that the median sales prices for three of the four areas I report on — Beverly Hills, BHPO, Bel-Air, and Brentwood — three remain in positive #s, while Beverly Hills continues to lag behind as it has for some time. (That will change soon — see below.). Median sales prices for 2011 — from January thru July — are up in Beverly Hills Post Office — 20%; Bel-Air was up 3%; and Brentwood was up 22%. Beverly Hills was down 9%.
Contradicting its year-to-date performance, Beverly Hills was up 46% for July vs. June 2011. And that doesn’t include the sale of Jennifer Anniston’s home or the home that designer Vera Wang purchased for $10,000.000, Beverly Hills Post Office was up 39% for the same period, while Bel-Air went down 32%. Brentwood was up 8% for July over June. (Do you have that ‘rolling’ feeling yet?)
When you compare July 2011 to July 2010, we are seeing the same up/down #s — Beverly Hills is down 7% compared to July 2010; Beverly Hills Post Office was up 76%; Bel-Air was down 14%; and Brentwood was up 34%. You can tell — we’re on a roll…..
Sales volume for the four communities I report on is good news: Sales volume for the first seven months of 2011 was $1,170,000,000 (that’s billion) vs. $1,170,000,000. or a 15.5% improvement over 2011. We were up just 6% as of June 2011 over the previous year. Sales volume does not include some large estate sales as well.
Some background — the statistics that are shown in the MLS do not reflect what is happening Vis a Vis the economy today — they reflect the sales that closed escrow in the past month, meaning these sales were made primarily during the past 45 – 90 days. For example, there are major estate sales that are not in the monthly stats for July. Jennifer Anniston’s home sold for a reported $35-38 million and closed escrow in July, which is not shown in the Beverly Hills July 2011 stats. She bought the home in 2006 for $13.5 million, gutted it, and did extensive remodeling over the next four years — putting it on the market in the spring 2011 for $42 million. It’s a spectacular property and even though she didn’t get her asking price, getting $38 million is still remarkable in this climate. This sale should eventually show up in the MLS stats, perhaps by September when the sale becomes public information, which will skew the stats again for Beverly Hills.
All in all, the key #s to watch are the Year-to-Date Median Sales Price numbers since these tend to even out the vagaries of each month’s up/down, roller coaster performance. Look at this way — you’re getting a free ride on our Westside Cyclone Racer — its chugging uphill one month, and then throwing you mercilessly down the next. Hang on. We’re not done yet.
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How are appraisals impacting home values?
According to a recent article in the Wall Street Journal, the problems we have been dealing with and loan appraisals is continuing to negatively impact home values, and thus sales prices. There is one quote that describes the process as buffoonery! Appraisers are meant to be unbiased assessments of a property’s value. Disputes over valuations are rising. It is a multi-fold problem: “The banks need to be protected from future investors who purchase their mortgages, some sellers are not realistic about the value of their homes, and the sweeping Dodd-Frank financial overhaul law that went into effect in 2010 built appraiser independence by regulating both the industry and the fees that the appraisers were being paid.”
This resulted in banks using appraisal-management companies who then hired less expensive appraisers, many of whom are totally unfamiliar with the properties and the areas in which they have been doing their appraisals. This situation has
been compounded by laws that prohibit both lenders and agents from directly contacting the appraisers to discuss the appraisal or even in some cases provide them with comparables on the subject property.
For the most part, I have been very lucky in my contacts with appraisers. Over the years, I have received many, many calls from appraisers asking my opinion on the value of a property and because of my strong belief that appraisers are a major part of my transaction team; have gone out of my way to assist them in any way I could. Recently those beliefs were paid back in that I needed an appraisal done quickly on one of my transactions, so when the appraiser called me and it was someone that I worked with in the past, he was more than happy to accommodate me!!!!
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Credit-rating issues — One out of three is bad!
We all know that America’s credit rating was downgraded from AAA to AA+. While two other credit rating services did not follow. What Iconoculture.com among others is saying about all of this is worth repeating: “We should recognize that credit-rating agencies themselves have been in hot water. There’s evidence that folks like Standard & Poor’s, Moody’s and other credit raters contributed to the Great Recession (and the Not-So-Great Recovery) by rubber-stamping financial instruments and portraying risky investments (mortgage-backed securities, credit default swaps) as safe, easy money. The raters are in a fight for their lives, a fight that depends on reestablishing their credibility as objective, neutral evaluators of creditworthiness. And, as uncomfortable as it may be to admit, signs point to the fact that the US simply is not what it used to be in terms of macroeconomics.”
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Make sure you have a carbon monoxide detector……listen up!
You may not be aware that California now requires single family residences to have carbon monoxide detectors alongside your smoke detector. It is not yet required as a point of sale compliance, and I’m not really sure how they will “police” it. So people tend to not pay much attention to the risks. I received a troubling email from very dear cousins who live back East – and I am so thankful they did use good judgment and survived their experience. With their permission, I am passing this warning along…This is their story…
“Dear Friends, We had an experience yesterday that was both frightening and eye opening. We have a carbon monoxide detector in our basement that the alarm went off. We really did not see that anything was wrong, so Bob changed the batteries and we did not think about it again. One half hour later the alarm went off again. We called our Gas Company, they said they would send someone out but we should call 911 and leave the house. We called 911 and the operator said she would send someone right out and to again leave the house. We took the dog and went outside. To make a long story short, Bob and I probably would not have gotten up this morning had we not had this inexpensive battery operated detector. The fire department and the Gas Company found the gas/carbon monoxide leak. The levels were high throughout the house but especially high in our bedroom. Carbon Monoxide is both odorless and colorless and hard to detect. Without symptoms of nausea, headaches, sleepy, of which neither of us had any of those symptoms. Carbon Monoxide is a Killer. According to the fire department if we had not had a detector warning regarding the carbon monoxide we probably would not have gotten up today. The fireman’s words were “I am not sure who you believe in but whoever it is give extra thanks today”.”
Most of all, to all of my friends, family and clients, these detectors, fire, smoke and carbon monoxide are so important. My cousins are living proof that they do save lives. If you do not have them please get them as soon as possible.
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Roundup — Renting becomes fashionable……
In these uncertain economic times, many are contemplating their next move: Sell or buy. For many, it’s waiting out the market — staying put. Others want to sell and jump into their next dream home. But for many, it’s “circle-the-wagons” time — and leasing. Many are selecting this option — and as a result, rent prices are moving up. The leasing market is strong, and property owners are taking advantage of leasing their homes and being price aggressive. Please give me a call if you would like to talk about your alternatives to buying, selling or leasing.
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Going, going gone? Back to school.
Summertime and the livin’ is easy. I’m sad to see the back-to-school ads on television. While it brings back many fond memories of my early days in school, it also is a reminder that Father Calendar is alerting us that summer is nearing its end. It’s August, hot, and sometimes humid. But I love this time of year — it’s the best time to enjoy the outdoors, the ocean, mountains and having dinner under the stars. And it’s also the time to think about planting fall colors in your garden and making sure you have adequately prepared your home in case of fire. Autumn in California is also fire season.
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Start and Stop – Again
As part of the continuing work on the expansion of the 405 and Sepulveda, the very detailed work schedule for the Bel Air Crest front entrance that I provided in the last issue of the SchifferLine never happened. We never heard why the work wasn’t implemented. Based on the information we received — the work will resume in September. Will it? Stay tuned!
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Fellows of Contemporary Art
As those of you who are regular readers of the SchifferLine know, one of my areas of interest and passions is art and that I have been a member of the Modern and Contemporary Art Council at LACMA. I just recently expanded my involvement in this world by joining another group called the Fellows of Contemporary Art which was formed a few years ago by a friend of mine. The group is a very interesting one, again with some very knowledgeable and involved art collectors. I am very much looking forward to furthering my education on this arena and will share some of my experiences as I move forward. I am also continuing my involvement with the Glass Alliance of Los Angeles; in fact I am attending a lecture by a glass artist from Israel next Sunday.
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Cell phone recycling
The average lifespan of a phone is around 18 months. – it’s just that people simply want the latest and greatest features that marketers convince us we must have although with the latest generation of phones, I have to admit some of the features are very handy indeed.
However, our new, top of line phone is relatively worthless in a very short time; so the phones are often stashed away or thrown out with the household rubbish. While the cell phone industry has created a lot of jobs, the level of consumption has also created an environmental nightmare. Aside from the massive amount of resources used in production, its estimated there are over half a billion discarded cell phones in the US – both tucked away or in landfills. In 2008, a survey by Nokia in 13 countries found that only 3% of people recycle their mobile phones. Some of the toxins your phone may include:Lead,Mercury,Arsenic,Cadmium,Brominatedcompounds,(PVC),Antimony,Beryllium,Barium,Selenium,Chromium.When disposed of in landfill, these chemicals leach into the soil and ground water. Many of the toxic compounds in cell phones are persistent and bio-accumulative. They build up in the fatty tissues of creatures, and then are concentrated at the top of the food chain.
Cell phone recycling is easy
There are so many recycling options now for cell phones the phones are either: repurposed – e.g. given to charities, refurbished – spruced up and then resold, sometimes to people in poorer countries who can’t afford the latest models, recycled – precious metals, plastics etc. extracted.
You can recycle your phone along with other electronic items at the UCLA toxic waste site. If you wish, I will be more than happy to come by and pick them up for you. Just be sure to clear out your address book before you get rid of your old phones.
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As for my personal business, I continue to be busy showing my listings in both Bel Air Crest and Mountaingate, managing my escrows, as well as working with a number of well qualified buyers! At the moment I have two listings in Bel Air Crest, one a Canyon home and the other a Custom lot, and in Mountaingate I have four listings in Mountaingate ranging in price from $1,595,000 t0 $2,595,000 and that includes one of the homes available for lease as well.
