Timely Real Estate News……………………………………….November 1, 2007
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Goodness Grief….Where was Charlie Brown when we needed him?
My sincerest sympathies to any of you who either directly experienced a loss of property or who has friends/relatives who lost their homes or businesses. Perhaps Charlie Brown could have come to our rescue, but he, too, would have been challenged this time around.
The fires that devastated much of Southern California last week never come at a good time. We’ve grown to expect them –, if it’s October, it must be fire season. We never get use to it, and the fires have taken their toll again across our normally beautiful landscape. In addition to watching the horror of these fires, it is possible that the question may arise in most people’s minds — how will these fires affect us here, even if you were not directly in the line of fire?
What can we expect from the results of these fires? In a practical sense, we can probably count on insurance costs going up — the costs will be spread across the board (meaning all of us). Insurance companies are traditionally risk adverse, and the closer we are to a situation such as we have experienced, the higher their rates are initially, but then they tend to decrease again. Mortgage rates should not be directly affected — they don’t ‘redline’ in determining rates, although what state you live in can affect your base rate according to Jim Greenwald from First Capital. The lenders, as we all know deal with the loan to value ratios among other things. Jim did mention that if a property is currently in escrow, particularly if it is near a “fire area’ the lender will definitely do a second and perhaps even a third appraisal to assure that the property is in the same condition it was in at the time they did their first appraisal.
If history is a benchmark, then we can expect temporary downturns in real estate values where the fires occurred — Malibu, Orange County-affected areas, Lake Arrowhead, and much of San Diego County, already suffering from the real estate doldrums. But here in Beverly Hills, Beverly Hills Post Office, Bel Air and Brentwood, there will be little after effect because of these fires. After the Northridge earthquake in 1994, property prices sank a bit, but resumed their steady climb a year later.
Why? The answer is quite simple — people love living here, the weather, and incredible choices of amenities Southern California offers — fires, floods, and earthquakes and all. People tend to rebuild their homes in the exact same spot as the one they lost. Case in point, my attorney lives in Las Flores Canyon in Malibu and he and his wife have rebuilt their home twice! They just love living there. Given the fact that people do rebuild or fix their homes, there is a strong possibility that the building industry, and all of the facets of same may see a resurgence of business and may actually aid the economy (according to the Los Angeles Times) of Southern California.
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Sepulveda Reversible Lane is “On”
In case you missed last week’s Los Angeles City Council meeting or the mention in the news media, the Reversible Lane Project has been officially approved. Starting sometime in early 2008, probably March, the City will begin installing the equipment to electronically control the flow of traffic on Sepulveda Blvd. — three lanes south in the morning; and three lanes north in the evening. Right-hand lanes have to also be installed. The project is expected to take one year, completing in spring 2009.
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Worried about higher mortgage rates? Look at the past — you’ll feel much better
We need to count our blessings when it comes to real estate mortgage rates. Yes, I know — when we get a 1/4 or 1/2 point rise in loan rates, we all moan/groan. But seriously, Coldwell Banker distributed a chart showing the past 25-year history of mortgage rates for conforming loans — and what do we discover? 1983 — rates for a conforming 30-year fixed rate mortgage was 13.95%….in 1987, it was down to 11.36%….1992 — 9%…1997 — 8.27%, and just in 2002, it was 7.18%. Today, average 30-year fixed rate mortgage is 6.78%! The amount of a conforming loan in 1983 was $103,000, and today it is $417,000.
And on top of that, foreclosures across the United States are less than one percent (.065%) of all mortgage loans….meaning that 99.35% of all loans are solid!
So what does this tell us… yes, the market is slower than it has been in the past, and yes properties in general are staying on the market longer than they did in the past, but our local real estate market is certainly not in the “tank” as has been described in the media. The articles in the newspapers only speak about what is going in general with their headlines, etc., and get to the information about West Los Angeles at the bottom of the article if they get there at all. The facts speak for themselves.
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On a personal note…..
As I mentioned in my last Schiffer Line, a reader pointed out that I was missing a hyphen in Bel Air. The person wrote again that I am spelling name Bel Air incorrectly. To wit — I researched it far and wide. The results? Google does not use a hyphen. The Bel Air gate on Sunset has one place with a hyphen, but prominently atop the gate there is no hyphen in the name. Given the fact that there doesn’t appear to be a consistent way of spelling it, I think I will stick with Bel Air without the hyphen rule. But again, thank you for reading my newsletter and caring.. I really appreciate it.
China is calling — and when you read this, I will be riding a sampan in Shanghai. My two and one half week trip takes me to all the major cities and attractions — I am very excited about seeing all of China’s historical places, including the Great Wall, the Terra Cotta Soldiers in Xian, the magical mountains of Guilin, the hustle and bustle of Hong Kong, and to hopefully visit a few of China’s premier glass artists in Beijing and Shanghai. This is a life-long dream….and I’ll fill you all in on my return.
Please be assured that my office will be open and available to you in my absence. Not only will my assistant Jacqueline be here for you, but I will also have another agent covering for me as well. While I am gone, I do want to wish you a Happy Halloween, and hope that if you do go to a masquerade party that you have fun time playing with your costume.
I will speak with you soon.
