Timely Real Estate News……………………………………………………. 1 November 2012
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“Franken storm”causes widespread damage in East….
Watching the images of the damage caused by Franken storm is sickening and heartbreaking to see. All of our hearts go out to the millions that have been directly impacted by Hurricane/Cyclone Sandy this week. Thus far it has inflicted over $40 billion worth of damage on 50 million Americans and their communities, and the bill is still going up. It will take years to get these communities and metropolitan areas back to what they were like before the storm hit….and some areas or a portion thereof will never come back…. Gone forever! The economic impact it could have on the entire country is still unknown, i.e. the price of gas because of the closure of gas refineries for example. I hope that none of you or those near and dear to you suffered any loss.
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Did you have a “trick” or a “treat “Halloween?
Halloweens’ past brings back memories of “Trick or Treating” in my neighborhood in West Los Angeles — when it seemed calmer and less troublesome then — we were tucked away in a quiet neighborhood just south of Pico near Century City, and Halloween was always a ‘treat’ for my sister and me. At the corner of Pico & Beverwill there was a restaurant called Willards that specialized in Fried Chicken. Early on we learned the trick that if you went to their back door, your treat was Fried Chicken! As I related to you in the last issue of the SchifferLine, Halloween is now our #2 retail holiday of the year, if you can count one day as a “holiday event” this is it!. Halloween has now become a “major event” on the calendar.
I’m sure you’ve noticed that Halloween is not just celebrated on October 31, restaurants, retailers, theme parks, movie theaters, and many of your friends/associates seem to stretch this “fun celebration” over weeks, some starting in early October. Halloween was originally just for the kids — to get dressed up in some ghoulish or monster costume, parade around the neighborhood for an hour or so, and collect as much “candy” (none of which was really healthy for anyone, but who cared?)…and back home shortly after dark. I’m surprised the American Dental Association doesn’t put out some ‘warning’ label on all the candy found in Halloween “treat” bags. At my sister’s home in Vancouver, British Columbia, when the kids are trick or treating, they are also collecting money for UNESCO (they have little cardboard houses that they carry). I have also seen that done here.
The tradition of Trick-or-Treating (or “guising” as it was originally called in the late 1800s), is a beloved and customary tradition not just in the United States, but in many countries. It seems parents also like to get into this ‘dressing up’ as much as kids do….and some homes and entire neighborhoods set about to really put on a Halloween display.
In looking at its history, Halloween is a relatively recent tradition when children from Scotland disguised in various costumes in the 19th Century went from door to door for food and coins, many carrying lanterns made out of scooped-out turnips, searching for cakes, fruit, and of course, money. As Halloween has been promoted and popularized by retailers, candy-makers, and costume manufacturers, we have seen this become an $8 billion enterprise, and it’s growing every year. I do remember that the only response I ever expected when my sister and I yelled “Trick or treat!”, was the sound of candy being dumped into the paper bag we were happily carting around. If there was no treat, we probably just shrugged our shoulders and moved onto the next house. We didn’t have any “tricks” up our sleeves.
Hope you had fun at your Halloween celebration!
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The state of the mortgage lending market — an interview with an “insider”
Steve Eckhoff is on the “inside” of the mortgage industry. Steve is an Oklahoma native and has been in the home mortgage business in West Los Angeles for the last 20 years and is First Capital Mortgage’s in-house Loan Officer for Coldwell Banker’s Brentwood office (for the past 14 years). He works every day with CB agents in putting transactions together — a challenge he thrives on even in these tough economic times.
Steve lives, eats, and breathes mortgages, on a 24/7 basis. A cliché he acknowledges, but in order to survive in this crazy and competitive market, Steve knows he must be “on the top of his game” because the pressures of dealing with the mortgage lenders (banks mostly) has been difficult for the past several years.
What do you mean, difficult? “Well, the toughest part of my job is dealing with underwriter’s requests that border on the inane. Since the economic ‘realignment’ of 2008, the underwriters have become absurdly challenging — making the entire process of applying for a home loan tedious, stressful, and downright frustrating at times,” Steve said. “Oh, we have the usual fallout of loan applications because of inspection turn downs, appraisals or double apps, but in the end, we have to do unbelievable amounts of research to fit the loan applicant into the lender’s tiny box, and each lender is different and each box can change from month to month,” he said.
What are lenders focusing on these days? “Lenders are requesting very unreasonable things — such as insurance declaration papers on other properties owned by the applicant….verification of deposits…a paper trail for a family loan repayment of $1,500….nit-picking files to death,” he noted. “Well-qualified applicants get through all of the hoops, but this laborious process can ‘try a man’s soul’!”
What is the forecast for interest rates in the near future? According to Steve, the Fed fund futures “…are expected to remain relatively low until the end of 2014. Fannie and Freddie rates should remain in the 3s for the next two years, and super jumbo loans of $1 million or more should stay in the low 4s.” Steve stated that “Federal Reserve Chairman Bernanke would not raise rates for two years, although everyone knows he would love to, because that would mean that the economy has turned around.”
What is the mood of banks today? “It depends on who, when and why. I don’t want to say the banks are upbeat, but they expect rates to remain about the same, and that’s good news,” he said. “The guidelines will probably remain about what they are today for the next two years — through the end of 2014 — so we remain optimistic. First Capital is both a mortgage broker and a direct lender, and we are one of just a few firms in California that are able to do 2nd mortgages in conjunction with a down payment of just 10% — or what is called an 80-10-10 package on a purchase price of almost $850,000. We also have a lender who will go with a $1,175,000 purchase with 15% down and allow a 2nd as part of the transaction. But buyers are very intrigued by the ability of the 10% down option….it’s stimulating a lot of loan activity.
What are their hot buttons? “Simple. Income.” Lenders are looking for solid history on income. With variable income applicants — they will want to see two years of earnings history and will use the NET income.
And finally, what about ratios? Steve stated that if the loan amount is $625,000 or less and you have a good file,
you can get a loan with a 50% debt-to-income ratio. If the loan amount exceeds $625,000, and you have an average
profile — nothing spectacular — you can get an A+ loan with a 45% ratio. He said there are other factors that banks look at, too — such as credit history, payment shock and post-closing reserves. For example, he tells the story about a couple in the Marina who were living in a condo and the husband’s career grew quickly into a substantial income…and they wanted to purchase a $3.5 million home (which they could now afford)…but the loan approval was exceedingly difficult to get because their monthly housing debt went up 700% with the new home…those are the things that banks are now looking at closely.
Steve loves his business. And he and his family (two kids, 5 and 8) live on the Westside, and he’s doing the ‘soccer/mom/dad’ thing these days….it’s basketball and Cub Scouts. On the work side, he says, the key to his success is getting everyone to pull together in the same direction. “Yeah, some days it sure doesn’t feel that way,” he notes, “but in the end, we are getting virtually all of our loans closed and making people happy. And that makes me very, very happy, too!” Steve says that life is looking up!
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U.S. Housing making a slow recovery, gaining momentum
It isn’t all doom/gloom by any means. We are seeing real estate sales in the four communities I report on.
Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood doing well. Sales through the end of August 2012 were $1.708 billion, up 7% over the same period in 2011. The previous month I reported on (July 2012), sales were up only 4% through the end of the July 31, 2012, period. Sales for previously occupied homes rose 7.8 percent in August from July to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors (NAR) said last week, and that’s the highest level since May 2010, when sales were aided by the federal home-buying tax credit.
This is great news on a national level, and as you can see in our strong local market on the Westside, we are seeing signs of improvement in total sales volume. This is especially significant for 2012 since we have not had some of the publically reported blockbuster sales in the $40 million and up range, including last year’s famous $85 million Aaron Spelling’s estate sale.
The housing market recovery is happening also on the new-home construction front when US builders broke ground
on 2.3 percent more homes and apartments in August than July. “We have a real housing recovery taking root,” stated Sal Guatieri, senior economist at BMO Capital Markets, “and that has positive implications for the broader economy. If home prices continue to rise, so, too, will household wealth and consumer confidence.”
But I don’t want you to get too excited about this — the NAR still acknowledges that we have a long way back to full
health. Sales of previously occupied homes remain below the more than 5.5 million that’s consistent with a thriving market. In better economies, the NAR stated, homebuilders start with twice as many homes. Strict credit standards and bigger down payments have made it harder for many first-time buyers. But to help the economy continue to grow, the Fed is going to spend $40 billion a month to buy mortgage bonds for as long as it thinks necessary to make home buying more affordable.
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Home maintenance — keys to keeping your home in order and safe
Over the years, I have been talking about home maintenance, especially in the fall fire season, which is followed by the rainy (flooding) season. Here are some tips for the Fall Season:
Tree trimming –– Tree pruning can protect against storm damage and the danger of falling limbs as well as the overall health of the tree itself. This is particularly a concern for trees along pedestrian paths, driveways, and surrounding buildings. Also, it is recommended pruning trees with low-hanging branches in certain areas in order to eliminate interference with pedestrian and vehicular traffic. We endure periods of high winds in the Sepulveda Pass and surrounding mountains, so it is imperative you make sure your trees are properly pruned and cared for to avoid damage to home, vehicles and people.
Clean up and clear the mess around your home — The quickest way to encourage fires attacking your home is to provide the kindling (miscellaneous cuttings, rubbish, and boxes, etc.) that is located next to any of your property’s structures. Don’t wait until Spring to do this dirty work — do it now — because you’ll never know when a fire hazard will turn into the real thing and then, it’s too late. Clear all of the debris, trash and rubbish around your perimeter walls, and make sure you keep these areas clean all the time.
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Chewing Gum And The Environment
Chewing gum? You could well be chewing fossil fuel. Who would have thought???
Myth it may be, what caught my attention was the primary ingredients of chewing gum these days: Butyl rubber and polyisobutylene.
Neither sound particularly appetizing – both of these (and the latter is a derivative of the former) are made from fossil fuel. I had totally forgotten about gum’s crude oil connection.
The problem with chewing and bubble gum aside from the fact it sticks to just about everything is that it takes so long to break down – I’ve seen 5 years bandied about on the web. Others say it doesn’t biodegrade, but like many plastics, just breaks down into smaller pieces over time. Chewing gum waste is everywhere – I don’t think there would be too many urban dwellers who may not have chewed a piece in their life, but didn’t end up with a glob of the gunk stuck to the bottom of their shoes at some stage.
Chewing gum pollution became so bad in Singapore, the country totally banned it in 1992; although twelve years later the ban was reversed, but for therapeutic purposes only. Back in 2006, the chewing gum industry cranked out 1.3 million tons of the stuff globally and signs were the volume would increase. I had no idea gum was such a big business.
Humans can’t digest the stuff – and neither can anything else. It’s these little things we don’t give much thought to that can significantly add to our collective environmental footprint.
Chewing and bubble may have some benefits; but perhaps we don’t need to be consuming as much of it as we do. I’m sure some local governments (who foot the bill of chewing gum pollution) would heartily agree.
There is some good news – there are more natural products around.
Tip: the only responsible method of gum disposal is wrapping it up in some other waste and putting it out with your trash. While it ending up in landfill isn’t ideal, it certainly should not be flushed down the toilet or thrown into waterways (or anywhere else).
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Need Property Tax Help?
I was shocked when I opened my property tax bill for this year to find that not only had is NOT gone down, but in fact had gone up!! If you need assistance with applying for a reduction of your property tax before the deadline of 30 November, please let me know. I am more than happy to help. 310 442-1384 or carole@caroleschiffer.com. First you need to go to assessor.lacounty.gov, then go to forms, and then assessments. Once you have the form, I will give you the necessary comparables you will need. This is free!!!
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Plan Ahead!
I don’t know about you, but as I have watched and heard all of the reports about Hurricane Sandy for the last week or so, I found myself thinking…..what natural disaster would I rather be faced with, earthquakes, fires , hurricanes , snow
storms, tornados and or cyclones? Frankly I don’t think there is a correct answer… they are all horrible. But I can
tell you that one of the most important things we can do for ourselves is to be prepared for whatever disaster may present itself to us/you. That includes getting the necessary supplies, making arrangements in your home and with your family, and possibly obtaining the necessary insurance to assist you if and when you might need it.
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