Timely Real Estate News…………………………………………….15 February 2010
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Happy Valentine’s Day…..an ancient rite. Go to the movies?
Gene Shalit on NBC’s Today Show said it all — “Valentine’s Day” is the best Valentine present you can give. You may want to augment the movie with a nice card, and perhaps colored roses, and dinner. Did you know that in a recent survey noted by the Today Show on Thursday, February 11, 67% of females felt that their Valentine’s Day celebration “failed their expectations…” Guys note that one! And further, did you know that women much prefer colored roses to the standard red roses so often selected by the male? Of course you didn’t. This is totally contra to all of the surveys that I have read with red roses signifying love, and all of the other colors having different means, so like everything we see today about the state of economy, another mixed message.
The history of Valentine’s Day — and its patron saint — is shrouded in mystery. But we do know that February has long been a month of romance. St. Valentine’s Day contains vestiges of both Christian and ancient Roman tradition. So, who was Saint Valentine and how did he become associated with this ancient rite? Today, the Catholic Church recognizes at least three different saints named Valentine or Valentinus, all of whom were martyred. I know, men, you probably feel ‘martyred’ at times, too.
The three legends revolve around a priest named Valentine: 1) who secretly put young couples together because Emperor Claudius II wanted only single men for his army and Valentine objected, and when found out, was put to death; 2) Valentine was killed because he helped Christians escape from Roman prisons (not very romantic), and 3) while in prison, Valentine fell in love with the jailer’s daughter and wrote her love letters, signed “From your Valentine”….it didn’t help either: He was still put to death. Hence his place in history.
However you choose to spend your Valentine’s Day, remember it’s the thought that counts. I hope you have a lovely day!
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2010 starts off with a real estate ‘bang’….sales volume zooms
If one was only to look at the sales volume to measure Westside real estate progress, you’d be jumping for joy after seeing the record 90% increase in sales volume for January 2010 vs. the same period a year ago. For the communities of Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood, sales volume was over $92 million vs. $48 million a year ago. When you analyze the numbers, the volume reflected a doubling of the sales of single-family units (37 vs. 18). There were some large sales this January, but there were large sales last year, too, as there was in 2008, when sales volume was $148 million for January….before the storm hit. For example, in looking at the actual sales in January 2008 in Beverly Hills, there were 45 sales, eight of which were over $3,000, 000, in ’09, that same number was 3, with none over $3,000,000, and in’10 there were 10, and again nothing over $3,000,000. In BHPO, in ’08, there were twelve, with five over $3,000,000 including on at $18,000,000, ’09, four, and in 2010, four, with three over $3,000,000, and one at $7,000,000. In Bel-Air in ’08 there was a total of nine, with two over $3,00,000, in ’09 the number was one, and in ‘2010 it was nine with one at $18,000,000, and for Brentwood, ’08 the number was seventeen, with five over $3,000,000, and one sale at $6,895,000 one at $16,000,000 another at $15,000,000 and another at $17,500,000. In ’09, there were eight sales in January, and none over $3,000,000, and 2010 the number was thirteen with three over $3,000,000. All of these numbers are coming from the MLS, and there are private sales that are not included in these figures.
Median sales prices, however, were not measuring up to the standards we have seen in the good times. Comparing year-to-date prices (January 2010 vs. January 2009), Beverly Hills was down 30% from an average of $2.413 million in 2009 to $1.687 million in 2010; Beverly Hills Post Office was down by 20%, from $2.676 million to $2.150; Bel-Air was down 52%, from a high of $3,230 million to $1.550 million; and Brentwood actually was up 20%, rising from $1.715 in 2009 to $2,052 for 2010. While these decreases (vs. one increase) do not bode well for these markets, one month does make a trend. Beverly PO was actually up 25% in January 2010 over December 2009 as was Brentwood, up 16% for January vs. December.
As we have seen over the past two years, when the real estate industry begun its slide, the Westside has overall been resilient — resisting the drastic downturns in median sales prices. What is behind the depressed median sales prices that we are seeing every month….they seem to shift from community to community; nothing is consistent?
Some of what you are seeing is the impact of bank-owned homes coming on the market, creating opportunities for buyers to get into neighborhoods they have longed for at prices that can be as much as 30% to 50% under existing property values. Hence — the great increase in sales volume. Sales nearly doubled in January over a year ago because these bank-owned homes are beginning to have an impact — not only on median sales prices — but on your equity, too. We all are feeling it.
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Shadow inventory can force home prices higher….
In speaking with buyers who are interested in properties, but are “holding off” in moving forward, they are waiting for and expecting that once the banks release their “shadow inventory’ there will be a flood of properties that the prices will come down.
While, the impact of bank-owned homes on our market cannot be overstated. These homes owned by banks are what we call, “shadow inventory”. They are sitting on the bank’s ledger and if dumped on the market at one time, it would be a disaster. Banks don’t want that — nobody does. The banks want to get as much as they can from the assets on their books — and by slowly releasing these homes onto the market, they can actually force home prices higher by limited supply. The National Association of Realtors says that 30 percent of all existing home sales involve foreclosures or short sales. What happens? Increased volumes. Lower median sales prices.
But not always. Bank-owned homes are not on every block or in every neighborhood. So location, again, counts. Fortunately, we live in communities that have, for the most part, fared better than most cities across the country. If your neighborhood happens to have no bank-owned homes for sale, then you can expect your property values will not diminish greatly. But if you do, then you can see comps coming in substantially less than what you think your home is worth (or was previously appraised at). Short-term? Be patient. Increased sales volumes indicate strong demand for our area — and the supply — as long as it is limited — will keep your home values high.
Because lenders, mortgage insurers and investors have big financial incentives to keep excess inventory off the market, they’re developing alternatives to selling. For example, Fannie Mae has introduced a program that allows troubled homeowners to transfer title back to the company, avoid foreclosure and then remain at the property at tenants.
Under the “deed for lease” program, distressed homes do not show up foreclosures on Fannie Mae books while owners avoid the financial and psychological damage of a forced move. Because Fannie Mae would be receiving a monthly income, and has not maintenance or insurance expenses that they would have with an empty house, it also have an incentive to sell rented properties at a loss. With sale and lease-back transactions, the company can wait months and years for the local economy to come back.
“The Fannie Mae concept may well be adopted by other lenders”, says Realty Trac’s Chairman and CEO Jim Saccaio. “If so, it will be possible to have both an expanding shadow inventory and yet not materially increase the supply of distressed properties actively for sale. That’s an approach which is very much in the public interest.”
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What does the future hold for interest rates?
According to the Los Angeles Times, 2/12/10, “…..average interest rates for traditional 30-year fixed mortgages have fallen below 5% again according to Freddie Mac. The giant mortgage buyer’s weekly survey, conducted Monday through Wednesday (2/8-2/10/10), pegs the average rate nationally at 4.97%, with 0.7% of the loan balance on average paid in upfront charges, or points.
“Last week, 30-year rates averaged 5.01%. That continues a trend so far this year in which the average has come in either just above or just below 5%. The survey asks 125 lenders across the country the rates they are offering to borrowers with good credit and a 20% down payment or at least 20% equity for those refinancing their home loans.
“The approaching end of Federal Reserve purchases of Freddie Mac and Fannie Mae mortgage bonds is expected to result in rate increases later this year. The Mortgage Bankers Assn. estimates the typical interest rate might rise by half a percentage point. If the average 30-year fixed rate rose half a point to 5.5%, that would still be unusually low by historical standards.”
So, in the end, we are still enjoying historically low mortgage rates. Is this a time to buy? You bet. Is it a time to sell? You bet. Count on Carole for an honest appraisal of what may be your best opportunities…..
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A green Valentines Day
As we have already seen, Valentine’s Day is a holiday celebrated on February 14 and while it has a very long history dating back hundreds of years.
Some fast consumption related facts about Valentines day:
– Around a billion valentines are sent each year globally, making the day the second largest card-sending holiday of the year behind Christmas. 25 percent of all seasonal cards annually are valentines. Over 36 million heart-shaped boxes of chocolate are sold each year.10% of engagements happen on Valentine’s day (my parents eloped on Valentines Day after only knowing each other for 3 months, and were married for 62 years!!!!).Those statistics come from American Greetings Corporation
– Valentines Day is big business and as such has the potential to have substantial impact on the environment. For example, the one billion cards laid end to end would stretch around the world 5 times! That’s a lot of trees.
Valentines day gifts with the planet in mind
Here’s some ideas:
– Cards made from recycled or tree-free paper (this will be indicated on the card)
– Consider sending an e-card instead using one of the many quality services around.
– Fair trade and/or organic chocolate
– Choose organic and/or locally grown flowers
– – Arrange dinner at a local restaurant specializing in organic or locally grown food. Eating locally cuts down on food miles.
Enjoy
