Timely Real Estate News………………………………………………….15 May 2007

**********************************************************************************************************************************************

The financial markets remain strong….boding well for the rest of 2007
John Ciolino of First Capital Mortgage pointed out in his recent online newsletter there is potentially good news on the horizon….with bonds and home loan rates ending up slightly improved for this past week overall, it bodes well for the second half of 2007.

 “First, the Fed’s favorite gauge of consumer inflation, Core Personal Consumption Expenditure Index (PCE), showed a year over year reading of 2.1%, which is very close to the Fed’s target zone of 1 – 2%,” John stated.  “Secondly, with inflation moderating, the Fed might start thinking about making a cut to the Fed Funds Rate in the 2nd half of 2007. This tame read on inflation was very good news for Bonds, as the value on their fixed returns get eroded by the impact of inflation.”

In this sophisticated Westside community one doesn’t need to dwell on economic statistics since most of my clients and friends are active investors…but being in the world of selling/buying real estate and working with clients who do need to obtain loans (not everyone pays cash, you know)….how economic conditions affect key real estate financial indicators are extremely important.  I feel it’s my job to help you understand how these economic conditions affect your home investment. Your recent credit history can greatly impact the interest rate of the loan you obtain. This is very important for everyone young and old to understand, with the current sub-prime market conditions we are in, lenders are looking a lot harder at a potential borrowers credit history, particularly the most recent before they commit to making a loan.

*********************************************************************************************************************************************
The market remains strong….the microclimate at work
I continue to be pleasantly surprised at the dynamics of the Westside real estate market.  While I work through the Westside communities, my focus has been in Beverly Hills, Bel Air and Brentwood, and as you have seen in past Schiffer Lines I have noted the monthly fluctuations of the median sales prices of homes in these three areas compared with the previous year.  In some months, you’ll find  ups and downs from one market to the next like we had in March 2007.

This past April, the MLS stats showed the following….Beverly Hills experienced a 14% drop in the median sales price for homes sold in April 2007 vs. April 2006 (March 2007 showed a large increase over the previous year)….Brentwood suffered a 10% drop from April 2007 over last year, but Bel Air experienced a 27% increase in median sales price over April 2006.  What this tells you is that when you compared year-to-year overall statistics, the MLS shows that overall, these three Westside communities are up, whereas other areas in Southern California, such as Newport Beach, are seeing sale price declines of as much as 40%.  Not here. Some of these stats are impacted by a large number of sales prices that are not being reported, which has impacted the average… To that point, effective May 10 2007, the local MLS will no longer allow the non publishing of sales prices, so we shall soon see a “truer” percentage rate for prices.

Market slowing down?  In checking the actual sales of homes in April 2007 vs. a year ago (April 2006) in the three primary markets — Beverly Hills, Brentwood and Beverly Hills — Beverly Hills show a small increase —from 55 homes sold this April vs. 53 last April.  Decline in # of homes sold in April 2007 vs. April 2006 occurred in both Brentwood and Bel Air — Brentwood had 86 homes sold last year but only had 78 sold this April….and Bel Air experienced a similar decline from 49 homes sold last April vs. only 37 this past month.  As you can see by these fluctuating stats generated by the MLS every month, we continue to see some areas experience increases in sales or prices one month, down the next.  Overall, these three communities continue to show strength overall, especially when you consider the downward trends in other areas of Southern California and across the nation.  

Have a safe and happy Memorial Day and I will talk to you soon.

Timely Real Estate News………………………………………………….30 April 2007
**********************************************************************************************************************************************

Hey, big spenders….take a look at this

If you’re in the market to spend your next $25 million; you won’t have to go very far to find the castle of your dreams….it can be right here on the Westside.  For example, Jeff Bezos, the founder of amazon.com, just purchased a home in Beverly Hills for a tidy sum in the mid-$20 millions (final price is confidential)….Johnny Carson’s beautiful estate in Malibu just sold for a measly $38 million, and a country-sized home in Brentwood Country Estates went for just $29 million. A home in Beverly Hills was just listed for $125 million!!!!

Who would have thought 20 or 30 years ago that such properties existed right in our backyard.  But the reality is that homes over $7 million are booming on the Westside.  For example, in the last four months, there have been 56 homes of $7 million plus that have closed escrow. In January, there were seven homes over $7 million, with the highest price home going for $21 million; February there were 12 homes, the highest — $23 million; March saw a big climb in this price range with some 16 homes selling for over $7 million; and in April, we had 25 homes over the $7 million mark, the highest was $38 million (Carson’s estate).

We’re in the ‘hot property’ zone for sure….from Malibu to Beverly Hills, but what about your property?  Where does it sit in today’s market?  Buyers are looking at properties on both ends of the spectrum…. Either homes that are new or ‘like new’ and that means more than just “fluffing up” your home, we are talking about new electrical and plumbing systems, or homes that they would consider tear downs.. and that is what they are doing… tearing them down and starting over… a home that has not been updated or have kept their ‘status quo’ since you bought it…. and is not priced properly to reflect their condition, are the ones that are lingering on the market today.

Hot is hot…and it’s not always on the high end…
On the Westside, there are still two hot markets, with variations  or submarkets within those markets as well — homes selling under $2 million and homes over $4 million.  The ‘slow range’ — if there is one — is in the $2 – $4 million price range.  Demand is high for the low and high-end priced homes — multiple offers are common in all categories, providing the homes are priced competitively.  If your home is over priced, it doesn’t matter where it sits within the hottest market — homebuyers are extra cautious and smarter these days.

A CB Factoid of interest….Coldwell Banker dominated the upper end market on the Westside in 2006….CB sold more than 75% of the homes priced above $5 million last year…and 37% of the homes under $5 million were CB represented…an impressive achievement. 

Regardless of what you read in the news, the Westside continues to run counter to what you see nationally or even in California.  Slowly, the media seems to be catching on… In April’s Los Angeles Magazine and in the April 29th edition of the LA Times…they finally acknowledged what I have been saying for months:  The real estate market on the Westside is different from other parts of the county.  Our market continues to be strong.  That’s the good news!

**********************************************************************************************************************************************
Oh, the throes and woes of finding the right college….a personal note

My niece, Morgan, who resides in West Vancouver, BC, is such a delightful young lady…an honor student, editor of her school newspaper, vivacious, and just what every Mom and Dad want for their child.  As many of you have learned, surviving the transition of a bright young offspring from high school to college can be the most unique journey. Morgan was accepted at USC, UC Santa Barbara, Reed College, Scripps, University of British Columbia, McGill and the University of Washington.  Where is she going to go? She is a pre-med and journalism major. She loves Southern California, and I suspect she’ll end up somewhere here….I just don’t know yet, but we’ll keep you posted.  (I suppose, as a true UCLA alum, I could deal with a USC student in my home on weekends….).  In any event, it’s a wonderful journey of youth and spirit, and I’m just happy to be a part of it.

**********************************************************************************************************************************************

Great Tastes in Brentwood — Mark your calendar for October 7, 2007.  We have a terrific raffle of a week for two with  “Tuscan Women Cook” — a weeklong cooking adventure in Tuscany…cooking classes, visiting local wineries, cheese farms, restaurants, local markets….150  tickets will be sold at $100/piece….value is $7,500…this is a trip of a lifetime, for sure. All funds go to the local public schools in Brentwood and Pacific Palisades. 

 

Timely Real Estate News………………………………………………..17 April, 2007
**********************************************************************************************************************************************

It all depends on your point of view….
Look at what the Los Angeles Times said last Friday….”Congress is talking about bailing out homeowners facing foreclosure. Lenders are filing for bankruptcy. The National Assn. of Realtors is predicting a drop in U.S. home values this year for the first time since it began keeping records 40 years ago.  Doom, any number of forecasters and bloggers will eagerly tell you, is at hand for housing. Yet the median sales price in Southern California went up again in March, crossing the half-a-million-dollar mark, a real estate data service reported Thursday.”

So, there you have it….doom and gloom across the board on the housing market, but right here in Southern California, the market is strong.  I have always made the case that West Los Angeles is a unique market — outside the box of traditional Southern California and national statistical tracking.  Let’s take a look at March MLS sale price statistics — Bel Air was up more than 71% for March 2007 over the previous March 2006.  Brentwood was up a modest 2% over the same year-to-year period, and Beverly Hills, experiencing a rare drop in median price over the past year of 13% — March 2006 was an especially robust sales period in Beverly Hills with several large sales that skewed the average median sales.  Days on Market (DOM) are down 10% for Beverly Hills compared to a year ago, and DOM for Bel Air and Brentwood are almost identical to a year ago. 

What this is telling us that we do live in a micro-climate.  Even more illustrative of this trend is that in Brentwood, between the price range of $1,100,000 – $9,500,000 there were 256 sales of which 17 were in Mountaingate for the March 2006-March 2007 period.  This compares to 225 sales in the previous year (March 2005-2006) with 17 sales in Mountaingate.  Similarly, in Bel Air in the price range of $1,400,000 – $9,500,000 there were 82 sales during the same March 2006-2007 period, with 24 sales in Bel Air Crest.  The previous period — March 2005-2006, there were 137 sales in Bel Air and 14 in Bel Air Crest.  Bottom-line — sales remain strong in all of the key Westside communities for this past year.

So what about the ‘lender’ crash?  How does this affect me?
There is no question that the fall of sub-prime lenders has affected the home loan market.  “Sub-prime lenders difficulties have resulted in a tightening in the home loan market up the food chain,” according to Jim Greenwald of First Capital, a major mortgage-lending firm in Los Angeles.  “This factor has worked up to mid-prime lenders, and as a result, all lenders are now tightening loan requirements, especially for first-time buyers.  So, yes, the loan market is a bit tougher today, but we still are not feeling it much since our market is not affecting upper-income buyers who want a home loan.”  That’s good news. 

There is no bad news….I’ve been busier than ever.  So, it’s all a matter of where you live, isn’t it?  Count your blessings for living in one of the world’s best real estate markets. 

Timely real estate news…………………………………………………….2  April 2007

**********************************************************************************************************************************************

A short story….

Once upon a time, there were many happy people living in a magic land called Southern California.  It was a paradise…a land filled with verdant valleys and canyons that stretched from the mountains to the blue waters and white sandy beaches of the Pacific Ocean.  The weather was always superlative — it seldom rained and it was never really cold, and even in the worst of times, the people would stand out in the rain just to feel the rare rain drops on their face.  The community bonded through its many educational, cultural and industrial enterprises, each world class in every way.  It was the idyllic place to live.

 Homeowners were even happier when they saw their ‘castles’ appreciate beyond their wildest expectations.  For years, eager buyers would be on their doorstop, offering what seemed like outrageous sums to live in this paradise.  Sellers were only too happy to accept the money.  Because there were so many who wanted to live here, buyers soon learned that offering just what the owner wanted was not enough.  Multiple offers above the asking price became a common practice.  It was a feeding frenzy not seen before in this land and many thought it would go on forever.

 But times changed.  The economy slowed down.  There were still many more homeowners who wanted to reap these rewards, but soon supply outpaced demand.  Homes that were over priced and not presented well languished.  Unhappy homeowners were looking out their windows for buyers who never came.  Weeks turned into months, and smiles turned into frowns.   

 What have I done wrong?  “Your home is overpriced,” the wise Realtor would say.  “But, look!  The home down the street sold for so much more than I am asking.”  “Yes, it did.  But let’s look at the facts;   the house was properly priced, in great condition, and in a slightly better location than your home.” “All of those factors have to be taken into consideration”.  After months of seeing buyers drive pass their home, the unhappy owner decided to take his home off the market.  He/they needed help and called the Realtor who sold the house down the street.  Obviously, the owner thought, she would have the answers.  And she did.  They cleaned up his home so it was presented properly….lowered the price to a more realistic level…and it sold in a short time.  It was a happy ending. 

It is a story told many times over the past year. And while many longed for the ‘good ol’days’ in paradise, the wise Realtor reminds us daily that these are normal times so it is not a time to panic.  Be patient, but be wise, too. 

 This is not a fairy tale — it happens every day, right here on the Westside.    

 I believe we still live in a Land of Fairy Tales — where dreams do come true.  Our great cultural, educational, and industrial institutions enable each of us to live out our dreams.  And once in awhile, if we are lucky, we can walk outside and feel the raindrops.   

And as a Realtor, who, incidentally, is really enjoying this market, I like to remember the good old days, too.  But these days are good, too…so long as we live in the present and respond to the market in a realistic way. 

 Have a wonderful Easter!

 

Timely real estate news………………………………………………… 12 March 2007

**********************************************************************************************************************************************
Gated Communities — To be or Not To Be
What lies behind those gates?  Isn’t this the question you always ask yourself as you drive by and see those impressive looking iron gates?  If you’re a resident of the twelve gated communities in the Beverly Hills, Brentwood and Bel Air areas, the gates offer a real sense of security in these insecure times, and provides, more importantly, the privacy many of us seek in a very cluttered world.  What a Realtor will tell you, however, is that gated communities can add between five to seven percent value to a comparable home outside the gates.  And that never goes away.

In some areas, like the Malibu Colony, the appreciated value can be higher simply because of the lack of outside-the-gates home — there is only one beachfront, one access, so exclusivity adds as much as 10-15% to the value.

The oldest gated community in Los Angeles is Larchmont which installed gates in 1908.  And gated communities have become the standard in ‘new areas’ like Newport Coast, the desert, and in other outlying areas where privacy and security are the two of the most important factors in selecting a place to live.

The twelve gated communities in the Westside are: Bel Air Crest, Mountaingate, Moraga Place, Brentwood Circle, Bel Air Park, Brentwood Country Estates, Beverly Ridge Estates (Beverly Hills Post Office), Mulholland Estates (Beverly Hills Post Office), Beverly Park (Beverly Hills Post Office), Stoneridge Estates (Bel Air), and The Summit (Beverly Hills Post Office).   There are other gated communities in Pacific Palisades.

Each of these communities place a premium on their gates, and as a recent article in the Los Angeles pointed out, “residents cherish the privacy and security.  But it isn’t cheap to operate the gated system — outside firms provide the staff, and sometimes, there is turnover with companies who provide these services, because well, homeowners can sometimes be sensitive to customer service and efficiencies.  The added cost to operate a gated community, however, is offset by a minimum of five percent added value, and on a $5 million home, you can add $250,000 to $400,000 to the price”. 

In the end, the peace and serenity gated communities provide are wonderful to have — if you can afford it and if you can find your dream home there.  It’s not for everyone, as the Times reported, but for most, gated communities are highly desirable.

**********************************************************************************************************************************************
Westside is a collection of micro-real estate climates
Confusion it seems reigns in the media every day.  The stock market is up, the stock market is down, and the economy is up, the economy is down… all I know is real estate…. And here is what’s happening… There was good news — existing home sales were up more than expected in January (warm weather)…bad news — Freddie Mac is tightening home loan requirements and new homes sales were down by 16.6% over December, the biggest one month drop since 1994.  So what gives?

What gives is that what you have been reading about since our market has returned to ‘normal’ — not too hot, not too cold — prices and market conditions vary greatly around the country. 

However, in our little ‘neck of the woods’, the Westside is enjoying strong home appreciation.  In comparing February 2006 to February 2007 median sales prices, here is what we find:  Beverly Hills had a 23% increase over last year….Brentwood had a 12% increase over February 2006, and wow, Bel Air jumped nearly 55% over a year ago.  If you’ve been reading The SchifferLine, you’ve seen fluctuations in all of these markets, but the recent upswing in real estate on the Westside (my business is up over 200% over last year at this time)….is that we are blessed with a wonderful ‘micro-climate’ where the changes of weather and market conditions do not seem to apply to the Westside.  Real estate is heating up in other Westside communities, too — Mar Vista and Westwood are two examples of areas that show prices really escalating as well. 

Yes, we’re blessed with great weather (where is the rain, damnit?)…and a wonderful real estate climate to boot!  What could be finer?