Timely Real Estate News………………………………..1 November 2011
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Fall back….it’s time to turn your clock back.
I always thought we changed our clocks back on the last Saturday of October, thus ending Daylight Saving Time (DST). Not so. We changed the DST date in 2007. The official time to make the change this year is 2:00 a.m., Sunday, November 6, 2011. Most of us do it when we turn out the lights and go to bed. And many use this reminder to change the batteries in our smoke and carbon monoxide detectors (good idea). One side benefit is that many bars keep pouring after they reach 2:00 a.m. and then turn back the clock so they can have another hour to keep customers happy. But the really ‘big’ benefit is getting an extra hour to sleep in!
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Celebrating our military on Veterans Day on November 11
World War I hostilities were officially ended at the 11th hour on the 11th day of the 11th month in 1918 when the Germans signed the “armistice.”.
This day was known as Armistice Day, first recognized by President Woodrow W. Wilson. It has been an official national holiday since 1926, and traditionally, there are parades and most federal offices and banks are closed. I particularly love driving by the cemetery between Veteran and Sepulveda seeing all the flags that have been planted on every grave site, it I truly beautiful and very moving. Many communities continue to have Veterans Day Parades with bands playing John Phillip Sousa marching music…..and to this day, Canada, France, and Britain also recognize November 11. It is of note that until 1953, this holiday was officially known as Armistice Day in the US until a fellow named Alvin King in Emporia, Kansas, felt we should honor all veterans, not just those from WWI. With the help of the Chamber of Commerce, and a local Congressman Ed Rees, they persuaded Congress to pass the change and President Dwight D. Eisenhower signed the bill in 1954 officially declaring it Veterans Day.
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In case you missed this, the economy is recovering….
In the latest news from Washington (October 27), economists were upbeat about the 3rd quarter that showed the most solid rate of expansion in a year. Gross domestic product rose to 2.5 percent during the July-September third quarter, “considerably better than the 1.3 percent gain in the second quarter and the miserable 0.9 percent rate of growth for the first half of 2011.” And it looks like the Europeans have cobbled together an economic plan to resolvetheir debt crisis in countries like Greece, Spain, Ireland, and Italy, thus avoiding a total collapse of Europe and a US debt downgrade.
On the real estate front, the latest Case-Shiller Index
on existing US housing prices across the country showed that their index was up (.02%) for August over July 2011. It’s been the fifth straight month that the Index has been up over the previous month. Remember, the recession was officially over in June 2009. But in California, the three major markets covered in this Index showed that Los Angeles’ home prices fell 0.4% in September compared to August, 2011; San Diego prices declined 0.2%, and San Francisco saw a dip of 0.1%. And we are grasping for air over the state’s budget deficits and high unemployment….and with 27% of homes in California under water, our recovery seems elusive. The troubling news seems to hit us square in the face…..every day. October was a much better month than September was.
There are two trends emerging in this continued housing crisis according to Christopher Thornberg, principal for Beacon Economics: Values are declining for homes in distress — those properties that are either foreclosures or cases where the homeowners are delinquent on their mortgages, but other homes are fetching higher prices now. “The biggest problem is not credit, it is not confidence, it is equity,” Thornberg said. “No equity, no move-up buyer; no move-up buyer, you get a slow market.” One of the things I am seeing is that some move up buyers are taking a long time to decide that they want to move and most likely sell their existing home and purchase a new one. The thing they seem to forget is that while the purchase price of the home they want to purchase may be going down, the value of their existing home may be going down as well. Also as we head into the holiday season, I am asked a great deal about when is a good time to put my home on the market. Obviously, we can all be distracted by all of the holiday events, but we also must remember that many times for tax purposes, etc. a buyer or seller needs to close escrow by the end of the year. Also the type of property could impact the timing in that a home that would not be conducive to being a “family home” (for children, etc.), is not as impacted by the time of year as homes where one is thinking of having children registered in school, etc. In essence, there is no bad time to sell your home.
As I reported in the last SchifferLine, three of the four communities I report on — Beverly Hills Post Office, Bel-Air, and Brentwood — have median sales prices that are up over the previous year. Only Beverly Hills is down for the year compared to 2010. But as we have seen during the past seven years I have been producing our bi-monthly SchifferLine, Beverly Hills has always been a leader in increased home values and sales volume, by a large margin.
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How does one keep their sanity in this up/down market……?
As a real estate agent on the Westside for the past 25 years, I have learned this career is fraught with many anxiety-driven events — falling home prices, disappearing equity, higher loan rates, or tighter credit. But I have also learned that the Westside, especially within the communities I report on, has an amazing resiliency not found in many other places on the Planet. We’re not just lucky — we’ve planned and built incredible communities that are the envy of the world….and you know what? The world is coming to our front doors as never before. Foreign buyers are dramatically increasing in our area: They know where to put their money.
I’m a voracious reader of news, observer of the latest financial and real estate trends, and keep my ear to the ground of the neighborhoods I cover. I am in the real estate trenches every day, doing transactions on multi-million-dollar homes with a broad, cross-section of buyers, young and old. To be successful in this roller-coaster market, knowledge is strength. And I always want to operate from a position of strength because it gives my clients a position of strength, too. If I’m strong, my clients are strong.
In drilling down to the core assets necessary to operate successfully in real estate, one must be aware of what’s going on around you….in your neighborhoods….talking with neighbors….reading the daily paper, talking with other agents, networking. One has to connect the dots because you can pick up the Los Angeles Times one morning — as I did last week — and read about the number of homes in the United
States that are under water (26%) and then, the next day, read about the massive # of foreclosures that will continue to hit the market (some 2 million homes in the wings). Did you know that 11% of the homes in the US are abandoned?
Sure, the government is trying to put their finger in the dyke to avoid further collapse, and we all know that the economy must turn on a healthier housing construction industry. But the reality is, new housing construction is not
what is going to have any real impact in Beverly Hills, Bel-Air or Brentwood. What happens outside of our communities has less impact than what is happening right here at home.
We continue to hold our own in terms of real estate sales volumes (even with the previous year after discounting Bel-Air’s out-of-the-ordinary sales increase), and median sales prices are slowly. So, that’s the good news. Bottom line: Don’t panic and slash your wrists when reading about national Indexes or what’s happening in Nevada, Arizona or Florida. Even in California, we have bright spots – we are living in one of them! Stay tuned — I try to give you an objective perspective about our real estate world on the Westside. But if you ever want to just sit down and discuss your personal situation when it comes to buying or selling, I’m here for you.
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Government gets into act to help homeowners fight foreclosure
With hundreds of thousands of homeowners facing foreclosure and an estimated 2 million or more waiting in the wings, US regulators will let qualified homeowners refinance mortgages regardless of how much their houses have dropped in value. The Federal Housing Finance Agency will also enhance the Home Affordable Refinance Program (HARP) by eliminating some fees, reducing others, and waiving some risk for lenders. HARP, which was introduced in 2009 to help homeowners get lower interest rates, was originally limited to borrowers whose mortgages were no greater than 125 percent of the value of their homes. To qualify, borrows must be making on-time payments on loans owned or guaranteed by Fannie Mae or Freddie Mac.
Another new bill is moving through Congress that would allow owners to pull up to $50,000 out of their 401K plans without penalty. The money could be used in a lump sum to pay down the delinquent mortgage balance or to fill shortfalls caused by reductions of household income. It could also be used as part of a loan modification agreement with lenders designed to avert a foreclosure. Put together by two members of Congress from Georgia — Senator Johnn Isakson and Rep. Tom Graves, the HOME Act, as it is called, is just one of the many proposals the Obama administration is considering to resolve the current financial crisis amongst homeowners who are in the middle of the foreclosure process or about to enter it. There are downsides to the program, however, as it relates to future tax and investment contributions.
It seems ‘everyone’ is trying to find a way to work our way out of this mortgage and underwater mess — again, stay tuned!
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COLDWELL BANKER REAL ESTATE SURVEY REVEALS HOME BUYING DIFFERENCES bETWEEN OLDER AND YOUNGER BABY BOOMERS
While Majority of Agents Report Economy is Delaying Boomers’ Plans to Sell Homes, Many Are Still in the Market, Especially for Investment Properties
PARSIPPANY, N.J. (Oct. 11, 2011) – A new survey from Coldwell Banker Real Estate finds that 87 percent of 1,300 agents and brokers polled agree that the economy is delaying baby boomers’ plans to sell their homes. That said, the desire to purchase and own a home, or more than one home, remains strong in this demographic cohort, especially so in the investment market segment. Another 87 percent said they have baby boomer clients who already own or are looking to own an investment property, including 22 percent of agents who report that at least half (50 percent) of their boomer clients either own or are looking to own such properties.
“The baby boomer generation has driven the U.S. economy for years, and like many Americans, they may be anxious
about their next real estate decision,” said Jim Gillespie, CEO of Coldwell Banker Real Estate. “I know baby boomers are a very diverse group and cannot be described in generalities, but our survey clearly indicates that those boomers who are financially secure are actively seeking to buy their retirement home, or a second home, and they are taking advantage of the opportunities and value available in today’s market.”
The survey also underscored that by dividing boomers, which account for 79 million Americans, into two age categories, a more dynamic picture of the real estate market emerges. Here are the additional findings:
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Younger Baby Boomers (Ages 47-55) |
Older Baby Boomers (Ages 56-64) |
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| Second Homes: | More than one-third (34 percent) of agents say younger baby boomers (ages 47-55) are interested in purchasing a second home. | 22 percent say older baby boomers (ages 56-64) are interested in purchasing a second home. | |
| Looking For Larger: | 31 percent of respondents say that younger baby boomer clients are selling their current home and looking for a larger. home. | Compared to 6 percent of older boomers. | |
| Downsizing: | 80 percent of agents say that older baby boomers are more likely to want to downsize than younger baby boomers (52 percent).
Although the economy has impacted boomers, the reason for downsizing is not only about the desire to save money. According to the survey, 49 percent of agents say the primary reason boomers want to downsize is because they desire a simpler lifestyle, while only 28 percent said the leading reason boomers are downsizing is to save money. |
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| Single Family Home or Other Options: | Younger baby boomers are much more likely to prefer a single family home than older baby boomers (82 vs. 47 percent of agents agree). | For the older baby boomers, agents say about half are (47 percent) are looking for a townhome or condo.
27 percent of agents say their older boomer clients prefer an active adult community. |
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Survey Methodology: Coldwell Banker Real Estate conducted an online survey among 1,333 Coldwell Banker real estate professionals across the United States about housings trends for baby boomers. The survey was fielded between September 6 and September 15, 2011.
*Some answer percentages in the above may not total 100 percent, if only the most popular responses are listed. In other cases, respondents had the option to check all that apply, which may mean that percentages total more than 100 percent.
