Timely Real Estate News…………………………………………… 1 November 2009
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We leave Halloween 2009 behind us, maybe the recession, too!
I don’t know about you, but one moment I’m hearing the recession is officially over (the GDP is in the positive)…and then we hear disturbing news that because of the stimulus package in the financial sector and the success of the now-ended clunker program in the last quarter, we get a nice bump. The only reality for me is still: Westside Real Estate! The latest UCLA Anderson Forecast (9/16/09) predicted that the nation will have the weakest economic recovery of the postwar era, and California won’t lead the way out. Its forecasts see no improvement on the jobs front until 2011, and we are continuing to see an increase in foreclosures – not only in the residential sector, but also in the hotel industry. The words from Public Enemy’s hit song title rang true once again last week when the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart below, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years.
While most media outlets were giddy about the news and started the hype that the recession is behind us, it’s important to remember that there’s more to the economic data than just the headlines.
The temporary “Cash for Clunkers” program has now expired, but was a big part of last quarter’s GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary…
Chart: US Gross Domestic Product (By Quarter)
New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month’s 7.3 reading, it’s still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply The recent news of the downturn in home building has had its predictable negative impact on California’s lumber and construction industries….so I just stick to what I know best — real estate news in the four communities I cover — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood.
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We are seeing positive signs on the Westside….and that’s good news
I wish I could look at tea leaves or Taro cards and feel comfortable at predicting the future of our real estate market: I’m just don’t believe in that stuff. But what I do see are some very positive signs on the Westside. I review what we call the “hot sheet” , which I get off of the MLS every day, always wanting to be on tope of what is happening, new listings, properties going into escrow, closed escrows (particularly on properties that I am watching either for myself or one of my clients) The hot sheets show the details of all residential real estate sales in the perimeters for the areas I am interested in which is from Hancock Park, to and through Malibu including Marina del Rey, and the usual West Los Angeles suspects such as Bel Air, Brentwood, Beverly Hills, and Beverly Hills, Post Office, and Westwood. I run this information on single family homes, condos, leases, income property, and land. These past few weeks, there have been a number of transactions that have sold over asking. In Brentwood, a home listed for $1,695,000, sold for $1,700,000. This small fixer-upper sold in 21 days. In Bel-Air, a small house that was also a ‘fixer’ — but on a big lot — sold for $200,000 more than the asking price of $1,895,000 in 10 days! And there were three sales — two in Bel-Air and one in Brentwood — that all sold for full price. One of these (Bel-Air) sold for $10.9 million and was on the market for 295 days, but the other two sold for full price in 11 and 12 days respectively.
This is very positive news, and it bodes well for the future. So, keep your heads up. We’re making progress. Yesterday, I held an open house on my beautiful listing in Marina Del Rey. There was a new listing about 2 blocks away that had just come on the market for $1,399,000 vs. my listing of $1,930,000. While they are in the same general area, the less expensive house was much smaller, the quality was not like mine, and it is located on a busy street, it pulled in a lot of traffic to my open, and the house itself has already generated two offers over asking, so that bodes will for my listing also. I do know that I was very busy yesterday with people coming to see what is going on in the area. Imagine being able to live only one block from the beach in a 4,000 sq foot home that is really beautiful (check it out on my web site).
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Good news for first-time buyers….tax credit extended
I know that most of my clients and homeowners in the communities I cover are not first-time home buyers; however, you may have children or relatives who would qualify for the tax credit. There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit. The White House wants to extend through 2010 the $730,000 ceiling on loans eligible for purchase or guarantee by Fannie Mae, Freddie Mac and FHA. Also, there is a need for more financing for the affordable-housing trust fund now that Fannie Mae and Freddie Mac are being held in conservatorship by the government.
Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.
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Just a thought
Many times I hear the comment, from prospective buyers and sellers that “I am waiting for the prices to come down some more”. While I certainly understand that philosophy, there is as always another side of the coin which I do want to share with you, and this is while there certainly is a possibility that prices may in fact come down a little more, there is also the fact that we are seeing record low interest rates, and as the economy does strengthen, those low rates are going to go up, in fact we are already seeing that, and so if we look at the equation, while your purchase price may be lower, if your payments are higher, you are in essence paying more for the property, and also while your property might sell for less than you wanted to get for it, if in fact you are purchasing something else, you can also take advantage of that low price for your purchase!
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More good news for the home appraisal challenge
As you know, we all have been complaining for the past year about the mess the current home appraisal system has been causing havoc with home valuations. Because of the increasing numbers of home foreclosures, appraisers pegged surrounding home values based on the ‘lowest comparable sale’, meaning that nearby homes were sometimes valued on the sales price of bank-owned homes, often 30% to as much as 50% less than existing home values. This has caused a wave of angry homeowners and realtors who saw home equities plummet, which prevented many buyers and sellers from concluding their sales transaction or re finance. In the legislative hopper is legislation to create a new Consumer Financial Protection Agency which would also possibly eliminate the Home Valuation Code of Conduct, created last May to ensure appraiser independence. The measure would compel the new watchdog to use regular administrative procedures and public comment periods to develop a new set of appraisal rules. Should the CFPA legislation fail, housing and mortgage trade groups that oppose the HVCC will continue to support a separate bill calling for an 18-month freeze on the code. This would mean we can start to order our own appraisals again. We can hope!
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Winners of Garden Contest – Drs. Larry and Lisa Rubenstein
Congratulations again to Dr. Larry Rubenstein, and his daughter Julie for winning my last contest, the Gardens of Southern California. Drs. Larry and Lisa Rubenstein with Carole receiving their $100 gift certificate to Whole Foods for their correct answers to Carole’s “The Gardens of Southern California” contest. Larry and his daughter Julie, who is the photographer of this photo, worked on the answers together, with each of them contributing to approximately 50% of the answers. They had been to all but one of the gardens and used the Internet to confirm their answers before submitting them for the contest.
The correct answers were:
Garden #1 LA County Arboretum Located: Arcadia
Garden #2 Exhibition Park Located: Los Angeles
Garden #3 Descanso Gardens Located: La Canada – Flintridge
Garden #4 Getty Center Located: Los Angeles
Garden #5 Hannah Carter Garden Located: UCLA
Garden #6 Huntington Gardens Located: San Marino
Garden #7 Lotusland Located: Santa Barbara/Montecito
Garden #8 Murphy Sculpture Garden Located: UCLA
They were the only contestant who got 100% correct. Larry and Lisa are both physicians with active careers at the VA facility in North Hills and are both on the faculty at UCLA Medical School. They are West Los Angeles natives, but met at a boarding school in Arizona and have been married for 41 years. For the past 15 years, they have been living in Bel-Air Park, with their three children.
Julie, who got married last year, lives in San Leandro in Northern California, and her two younger brothers are still deciding where they want to further their education. Congratulations and enjoy your gift certificate to Whole Foods. Thank you to all of you for your participation. I am working on my next contest, so stay tuned!
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News about Morgan
My niece, Morgan, from Vancouver, BC, Canada, had a health setback a couple of weeks ago and continues to recover from what ‘appears to be an intestinal viral infection’, although that hasn’t even been confirmed. She spent over two weeks in the hospital while everyone tried to figure out the problem. As a result of having lost so much class time and mid terms, she is taking a medical leave for the semester and is planning on spending her off time back home, while she is working in a dental office doing some training for her career as either a dentist or doctor. She will back at it in January, when school starts again. In the meantime, she is having fun with her sorority sisters and enjoying all that Southern California has to offer.
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We’re moving. Coldwell-Banker combining Brentwood offices
It will be strange….driving to a different office every day. Since 1982, I’ve worked at the same place at 11611 San Vincent Blvd. Initially it was for Fred Sands Realtors, but when he sold the business to Coldwell Banker, nine years ago, they moved one of their smaller offices into my office. Come the beginning of December, we are combining the two Brentwood offices into one POWER office and so we are moving down the street to 11999 San Vicente, one block east of Bundy. I’ll miss the old neighborhood, it will be strange to be at the other end of San Vicente, but then change is also always very exciting, and I am looking forward to the move. . There will always be a free cup of delicious coffee or cappuccino waiting for you when you come by and see our new digs!
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Recommend The SchifferLine to a friend……it’s free!
It is always so rewarding when I meet one of you for the first time, and you tell me how much you enjoy the SchifferLine. I have writing it. If you are already receiving The SchifferLine online edition — but your neighbors aren’t, why don’t you recommend our real estate newsletter to your friends and neighbors. Just tell your neighbors to drop me an email, and I will make sure they get added to The SchifferLine — our twice-monthly, valuable Real Estate Newsletter that is written especially for your neighborhood!
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Food miles and sustainability
As we begin the holiday season, I thought it might be interesting to see where does our food come from? Lately more and more restaurants and buyers for the markets are making an emphasis on “buying local”. With family in Canada, they have been focusing on this issue for a long time. How many miles does your food have to travel before it hits your dinner plate?
Not so long ago, for most of humanity, the majority of our food came from areas we could walk to or at least from within our own countries. These days, our food is increasingly from many thousands of miles away. More and more of us are moving to try and change that. It is amazing that we can enjoy many foods out of season and at relatively low cost; but the price paid in terms of environmental damage can be very high.
The environmental impact is mainly related to freight and shipping – more trucks, more planes, more ships, more consumption of oil and more greenhouse gas emissions. Also, food imported from some countries may have been grown in very unsustainable ways. For example, rainforests may have been cleared, toxic effluent released into the environment from processing and inappropriate use of pesticides and herbicides applied to crops.
The food mile problem is an increasing one in the western world. In a report from the UK Department for the Environment, Food and Rural Affairs, it was stated that food miles increased by 15% cent between 1992 and 2002. 95% of fruit and 50% of the vegetables in the UK are imported. The food for an average meal for a North American has traveled well over a thousand miles and possibly many times higher if the meal contains out of season fruits or vegetables. It’s simply not a sustainable approach to our diets.
Take a look in your cupboard and freezer and you may be surprised as to how many food items you think are locally grown aren’t sourced from within your own country. For example, while preparing a pizza, I noticed the anchovies were from Morocco and the prawns from Thailand. Cost is a major factor for many people when buying food and I’m very much a cost conscious shopper, but I’ve been increasingly examining my purchasing habits and trying to make some changes to a more sustainable diet.
For years now, trade associations have been encouraging us to buy local. The reasons they usually give relate to quality or supporting local industry – a very strong patriotic approach. Important points they tend to leave out in their marketing campaigns are the environmental, sustainability and food mile aspects mentioned above. The introduction of these issues could be enough to get many more people buying more local products.
However, we don’t need to wait for these trade associations to convince us. You can take action on your next shopping trip Try to buy local where you can – even if it’s just one or two more products that you regularly use. Read labels on cans and learn more about what
foods are in season within your country and try to utilize those more. Bear in mind also that out of season foods grown locally may require huge amounts of resources for production e.g. the heating of greenhouses.
Better still; you might consider starting a vegetable garden for your back yard using heirloom and heritage seeds. It will greatly reduce your food mile impact from thousands of miles to a few feet – plus saving you money!
Every little bit helps!
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Please do not forget to supply me with your e-mail address for receiving my market information. I am moving toward sending all of my newsletters and cards on line rather than “snail mail, and would greatly appreciate your support of this goal. Also please take a few minutes to look at my wonderful, beautiful listings in Bel Air Crest, Mountaingate, and Marina Del Rey. I appreciate all of the referrals I have received lately, and am looking forward to receiving yours soon.
Take care
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