Timely Real Estate News……………………………………………….15 April 2012
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Shifting mentality between buyers and sellers
The difficult job for a real estate agent today is to create the “meeting of the minds” between the buyers and sellers. With good properties, properly priced — as I have been saying — there is a plethora of ready, willing and able buyers out there.
Buyersâ – Definitely want to take advantage of the lower prices and interest rates; No always willing to jump in and make an offer.. Seem to want to wait, but also know that the âbell is ringingâ and that the mood is shifting.
Sellersâ – Very defensive about the value of their home. Know the value has probably gone down or what they would like for it to be, but that doesnât apply to their house, sometimes just because it is their house.
Two weeks ago, I was working with a young couple who were looking for their first home together in Pacific Palisades, Santa Monica and Brentwood. We found a beautiful home that everyone loved, including his parents. The home had just had come on the market, and we were there for the first open house. It was a popular open house — potential buyers were streaming in and out of the house while we were there and we all assumed it would sell quickly. Our plan was to scoop it up before anyone else did. We made an offer but it was substantially lower than the listing price. We negotiated for two weeks and but we couldnât come up with a price that everyone agreed on. In the interim, some of the other houses we had seen when we first started this house-hunting journey had already been sold, some with multiple offers and all were in the same basic price range. So the question my clients had, âif this house is so great, why are we the only ones making an offerâ? We ended up walking away, as we could not agree on the sellers final counter offer price. It is now on the market at that reduced price, and now it should sell.
So, what’s the answer here? Price! Even though it was a great house, the initial price was not realistic because it would have sold immediately. It didn’t.
Another example of how these differences impact the sale of house: Just last week, there were 11 offers on a home in Brentwood, three of which were all cash, and it sold over asking price. With another house in Pacific Palisades which had been on the market for a month, the sellers had gotten a few offers way under their asking price, and then they got three offers over asking price last week. It can be very frustrating for buyers in that they have all heard that it is a buyerâs market filled with anxious desperate sellers, and then they encounter the multiple offer scenario and they really donât know what to do or think about this. What does this mean? It partially means that one of the most important jobs a good real estate agent has is to work with their both buyers and sellers to manage their expectations. Many buyers, who have been in the position of having made an offer on a property and lost it in a multiple offers scenario become gun shy and walk away — or they go with gusto and go way over what they might have initially paid because they just want to get a house!
Sellers who have had their homes on the market awhile and not have much activity, on the other hand, wonder: âWhat’s wrong with my houseâ? And 99.10% of the time — it’s the price. Their price is just too high! Sellersâ who procrastinate too long and see their price drop, end up losing more money in the end then if they had started at the âright priceâ from the get go. My recommendation is to adopt a smart strategy: Take the emotions out of it, and start with a strong, aggressive price, because at the end of the day, you will end up selling the house for more money than had you trailed the price down. The numbers speak for themselves.
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Strong sales volume continues through first three months
Residential sales volume for the four communities I report on all showed sales increases for March 2012 over the same period for 2011. Total sales volume for these four communities through the first quarter 2012 was $394 million vs. $333 million for 2011,a 18.6% increase. Notably, Beverly Hills had approximately $123 million in sales for March vs. $115 million in March 2011;
Beverly Hills Post Office had $81 million vs. $60 million March 2011; Bel-Air had $90 million in March 2012 vs. $71 million for 2011 period; and Brentwood had $98 million vs. $85 million. What is encouraging with these sales volumes is that the increases are spread evenly throughout the four communities â a very healthy sign.
Specifically, looking behind these sales volume numbers, Beverly Hills, had 19 sales in March 2012, nine in ranging in price from $1,100,00 million to $11.8 million with 10 over $4,000,000, vs. 14 sales in March 2011 (with six ranging in price from $3 million to $9 million).
In Beverly Hills Post Office, there were 11 sales in March 2012 with prices ranging from $1,125,000 – $4,544,000 and only one over $3 million at $4.5 million vs. March 2011, with 12 sales with one at $3.7 million and one at $6.999 million. Bel-Air had 15 sales with prices ranging from $ 451,180 to $11.5 million and 5 over $4,000,000 vs. eight homes in March 2011, with one sale at $890,000, one at $7.4 million and one at $21 million.
In Brentwood, there were 18 sales in March 2012, starting at $928,000 and with four ranging in price from $4.8 million to $7 million vs. March 2011, with 13 sales prices starting at $1,100,000 with one at $3.6 million and another at $26 million.
I have avoided referring to the MLSâs #s for median sales prices because of the wide variances we get from their summarized data each month vs. the detail (behind the #s). Suffice it to say, the volumes and pricing appear to be on a rising trend in these four communities â which is nothing but good news for all of us.
One of the statistics I haven’t shed a lot of light on is “Days On Market” — which compares the statistics for the actual number of days a home is listed to the day it enters escrow. From March 2012 to March 2011, these numbers are skewed by human foibles because even though the Multiple Listing Service has a “fining system” in place, for changes in a transaction status, many agents neglect to post their changes in a the required time frame. Therefore the monthly MLS stats for âdays on marketâ are skewed by misinformation put in the system. That is one of the key factors a buyer looks at when considering an offering price. We also use that number when setting a listing price.
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Income property…..rising rents are spurring new demand
You may not be interested in buying a new home or selling your current home, but perhaps you want to consider purchasing income property. According to specialists in income property on the Westside, now is the time to make an investment in income property. Prices are down, interest rates are still low – 4 – 5%. As reported last week in the Los Angeles Times, rental prices are risingâŚ.indicating a strong incentive to invest in income property.
Another factor in your decision, of course, is that property values are still down from their highs of 2006 and 2007, you can get positive cash flow which is something we have not seen in a while.
According to the property income specialists who recently spoke at my office sales meeting, the approximate down payment for âAâ area units (Beverly Hills, Bel-Air, Brentwood, parts of Venice, Santa Monica) is 50 – 55% down. And for properties in âBâ areas it would be approximately 40% down payment – (Culver City, Mar Vista, West Los Angeles, other parts of Venice, and some parts of Los Feliz and Silver Lake). For example, what would $1,000,000 buy you in income property today⌠a quality four-plex in aâ Bâ area.
Retail/office building update: There is also a strong market for retail/office buildings. A lot of owner-users are now buying buildings these days. What is very hot now is the Abbot Kinney retail area in Venice. Abbot Kinney retail and office area attract boutique, one-of-a-kind merchants, which gives the area a unique, local flavor. And on another front, Target is coming to Westwood – taking over the old Home Expo space — across from Trader Joe’s (in back of Ralph’s).
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Fortune report indicators show housing market on mend…
One of America’s most respected business journals, Fortune Magazine, observed that “if you’re waiting for home prices to go up, then you’re missing signs the troubled housing market has finally turned around.” The article points out that many economists have concluded the US housing market has reached a turning point and is healing. Now, this may sound hard to believe after hearing about the glut of some 3 million homes in the foreclosure pipeline…lagging California employment #s…but these same economists
believe that while home prices have remained depressed compared to the 2006 bubble high, the recent pick-up in sales is what we should pay attention to according to economist Paul Dales at Capital Economics. After all, he stated,â prices tend to be a lagging indicator, and that it should take six months for any improvements to show in the market, if not longerâ. “Even if the asking price
is at the right level when the home is first listed, it may still take a few months to find a buyer and another month or so before the contract closes,” Dales stated. “The selling price that is registered at the end of this process, therefore, relates to the market conditions somewhat earlier.”
Fortune points out that the evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions in history. “The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties come off the market as opposed to any steady rise in prices, which some think won’t happen for years”, Dales said. Currently, the inventory of unsold homes in the US has dwindled, falling in January to 6.1 month’s worth of supply, the lowest since March 2005, and six months is considered ‘ideal’ for a healthy housing market.
As I have reported in the SchifferLine recently, there is not a lot of quality inventory in the marketplace, and in some cases, it will take several days to a week to get an appointment to see a home that is priced right and has the quality buyers are seeking.
And on the heels of Fortunesâ somewhat optimistic view comes the report last week that nearly a 1 million foreclosures will hit the market in 2012. Fortunately, the majority of these homes will be in the already hard-hit markets of Nevada, Arizona, Central California and Florida. But all of these factors — increased sales, stagnant pricing, foreclosures, and continued tight credit — all play pivotal roles in how our real estate market fares. The good news? We are in one of the most vibrant, most asset-rich areas in the world — Los Angeles’s famous Westside. We’ll fare better than most — so stay tuned
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The SchifferLine will take you on a tour of sites to see in Southern California
As part of my concentration of fun things to do close to home, the SchifferLine will begin pointing out to our readers the unusual, the rare, the different and unique sites of California’s rich heritage and history….our first stop is Pasadenaâs famous Huntington Japanese Gardens which was recently opened after its restoration…..
Return of an Icon â Pasadenaâs Huntington famous Japanese Gardens
After a year-long closure and a $6.8 million renovation, the historic Japanese Garden opened to the public on April 11, marking its centennial as one of the most beloved and iconic landscapes at The Huntington Library . Completed in 1912, the nine-acre site, with its picture-postcard views of Koi-filled ponds, distinctive moon bridge, and historic Japanese House, has attracted more than 20 million visitors since the institution opened to the public in 1928.
âThe Japanese Garden is arguably the most popular spot at The Huntington,â says James Folsom, the Telleen/Jorgensen Director of the Botanical Gardens. âIt is a garden that functions on multiple levels at once. Itâs a magical place, intimate and inspiring, yet at the same time it teaches us about Japanâs unique landscape traditions, craftsmanship, horticulture, and rituals.â
Several new elements will enhance this âmagical place.â Among the new features visitors will see is an authentic ceremonial teahouse, situated on a ridge above the existing Japanese House and set within a traditionally landscaped tea garden. A newly created waterfall cascades down the slope, visually connecting the tea garden to the ponds below. The teahouse was donated to The Huntington by the Pasadena Buddhist Temple. Built in Kyoto in the 1960s, it made a return trip to Japan for restoration in 2010. Kyoto-based architect and craftsman Yoshiaki Nakamura (whose father built the original structure) oversaw the restoration. The restored teahouse was then shipped back to San Marino and painstakingly reassembled here under the tutelage of Nakamura and other expert craftsmen who had traveled from Kyoto for the project. Its location on a picturesque ridge will provide visitors with a stunning new vantage point from which to admire the vista below.Restoration of the Japanese House, a structure built in Japan around 1904, was led by preservation architect Kelly Sutherlin McLeod. Her research revealed a number of original architectural features that had been covered over or removed during the course of the past century. Elements such as the distinctive curves of the roof line, an elaborately carved ornament atop one of the gables, and original plaster and wood finishes have been restored, giving the house a dramatically different appearance, but one more authentic to the buildingâs past.
A Storied Past
The Japanese Garden is among the oldest and most elaborate of its kind in America. Begun in 1911, it was inspired by widespread Western fascination with Asian culture. The Japanese gardens exhibited at worldâs fairs and expositions in St. Louis, Chicago, and San Francisco helped to fuel the trend. Henry E. Huntington shared this interest, and at the urging of his superintendent, William Hertrich, he decided to build his own Japanese garden on his San Marino estate. Many of the gardenâs plants and ornamental fixtures came from a property in nearby Pasadena that had failed as a commercial venture. Purchased in its entirety by Huntington, the materials also included the Japanese House, an example of a type of upper-class Japanese dwelling typical of the 19th century. The moon bridge, commissioned by Huntington, was built by Japanese craftsman Toichiro Kawai. After the institution opened to the public in 1928, the Japanese Garden became a major draw for visitors. But by the advent of World War II, staffing shortages and the political climate caused the Japanese Garden to be neglected, with parts of it inaccessible to the public, and the Japanese House fell into disrepair. The Huntington (as it is now called) is closed Tuesdays but open the rest of the week — please check their web site for directions, hours, and pricing: www.huntington.org
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Please donât forget to join us at the Bel Air Crest Emergency Preparedness Fair Sunday, April 29th 11 â 1.It is open to non Bel Air Crest Residents .You will be to purchase supplies, make arrangements to get your home, see presentations by the Los Angeles Fire Dept and the Red Cross and the children will be able to climb on the fire truck. There will be food and games. Please call 310 471-3755 to RSVP.
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What is happening in Carole Schifferâs Real Estate Worldâ
I just closed two escrows this week, one a lovely home in Mountaingate to a couple of first time buyers, and another home in Bel Air that is now up for rent for $7,000 a month until the owner moves here from Hawaii next year. I have a great custom home in Bel Air Crest also available for lease for $20,000 a month as well as a number of lovely homes in Mountaingate, some already on the market and a few coming on in the next week or two. As always I am ready to assist you with all of your real estate needs and I look forward to seeing you at the BAC Emergency Preparedness Fair on the 29th of the month.
C
