Timely Real Estate News………………………………………….. 15 January 2012
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What are you doing January 23? Happy Chinese New Year!
You don’t have to be Chinese to celebrate Chinese New Year. Also referred to as the Lunar New Year and Spring Festival, Chinese New Year is the most important of traditional Chinese holidays. It marks the end of the winter season, and the ‘festival’ begins on the first day of the first month in the traditional Chinese calendar and ends with the Lantern Festival which is on the 15th day. Now don’t refer to your Gregorian calendar to get your dates right — doesn’t work… This celebration began centuries ago and is scheduled this year for Monday, January 23, 2012 — the year of the Dragon. Where is the best place to be? Hong Kong would be my vote. Plan B would be Beijing!
Interestingly, the Chinese have figured out the right foods to eat on New Years to guarantee wealth, happiness and luck for the coming year — bamboo shoots (symbolic for wealth); black moss seaweed (symbolic for wealth); dried bean curd (happiness); fresh tofu is not served because the color “white” symbolizes death and misfortune; chicken (happiness); eggs (fertility); egg rolls (wealth); whole fish (prosperity); Chinese garlic chives (everlasting, long life); lychee nuts (closed family ties); noodles (long life); oranges (wealth); peanuts (long life); pomelo (abundance and prosperity); lotus or watermelon seeds (having a large number of children); and finally, tangerines (having a lot of luck)!
Every Chinese restaurant worth their chopsticks will have a broad selection of these items on their New Year’s menu….and Monterey Park is the place to be if you can’t get to Hong Kong or Beijing! G?ng X? F? Cái. Happy New Year!
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There may be a way to derail the foreclosure juggernaut
One the biggest factors in dragging down home prices — and your equity — are the glut of foreclosed homes that keep coming on the market. There are an estimated 4 million homes in the foreclosure pipeline — homes that have begun the three-step foreclosure process combined with those already past the “save me” mark — which is over 2 million. These homes have been an albatross around our economy’s neck, but federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.
The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae and Freddie Mac to investors in bulk. The properties would then be converted into rentals.
Me thinks this is an outstanding way to keep these foreclosed properties off the market, thus helping to preserve the ‘normal’ market price for your home. When bank-owned homes come into our neighborhoods (yes, even in Beverly Hills or Brentwood or Bel-Air), they can dramatically affect the comparables, which are used by appraisers and buyers to determine the ‘true’ value of a home. These devalued properties, in turn, affect your home’s price, and obviously, lessen your equity. These devaluations can amount to as much as 30% in some Westside neighborhoods, and in the inland California counties, the price reductions (re: equity) can amount to more than 50%.
The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.
In addition to getting the properties off the government’s books, officials are hoping putting the homes back into productive use which will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.
The agency is not releasing details on how the rental program would work, instead saying it is “proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012.”
Administration officials said they are continuing to work with the agency to develop the program. Stay tuned — this could be a positive program to stave off future foreclosed homes negatively impacting our home prices and equity.
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2011 is history….and it ended on a relatively high note. What will 2012 bring us?
I always am nervous about the monthly stats I receive from the Combined Los Angeles Multiple Listing Service (CLAW) — our semi-official tracking organization that handles the goings/comings of our residential real estate market. I have to confess I don’t always ‘trust’ these numbers — because we have seen in recent years there is a tendency to double record home sales (two registered sales for the same house by different agents involved in the transactions), and these have skewed the median sales prices which many of us count on as the barometer of how we’re doing. They have promised to be more diligent about keeping these double recordings out of the system, but I have yet to see them make that change so I have my own ‘methods’ of deleting these double-dip sales.
December 2011 stats are in: And what we find that year over year, overall sales for the four communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood — are up 9% over 2010. We sold just under $2 billion — $1.998 billion to be exact. And that’s over the 2010 year-end number of $1.835 billion. So, the market has made some progress in overall sales volume, but this increase also has an asterisk next to it: Last year’s total sales included some rather large transactions that made a bigger-than-normal impact on the #s — including Jennifer Aniston’s home which sold for $39 million and the Aaron Spelling estate, which sold for $85 million after being on the market for nearly three years at $150 million. But one must always remember, too, that every year, we have these anomalies in some form or another — we have many large estates on the Westside, especially in Beverly Hills and Bel-Air, so when these $20-million-plus homes are sold, they greatly affect the ‘median sale prices’….but over time, these all even out, too.
Median sales prices are the key to understanding the market rather than looking at short trends (like from month to month), and the year-end numbers continue to show a steady market – one that is holding its own. Beverly Hills, the community with the highest median sales price on the Westside, was down 10% over 2010, at $2.863 million for 2011, compared to $3.181 million for last year. Beverly Hills Post Office was up 12% over 2010 — with a median sales price of $2.050 million vs. $1.850 million for 2010. Bel-Air stayed even with 2010 median sales prices — $1.609 million for 2011 vs. $1.600 million for 2010. Brentwood inched up 4% in median sales price over 2010 — with $1.793 million vs. $1.722 million for 2010.
Beverly Hills Post Office ended 2011 on a high note, however — with an 84% increase in median sales price for December 2011 over November 2011. And compared to the previous year, December 2011 #s for BHPO were 13% ahead of December 2010. Likewise, Brentwood showed a 26% increase for December 2011 over November 2011; and a 28% increase for December 2011 vs. December 2010.
What does this tell us?
We did make progress over the previous year — still not back to where we were four years ago….but we’re slowly climbing our way back out of this hole we’ve been in. The volumes indicate that buyers are applying for loans and getting them. There are enthusiastic, active buyers who are coming to Open Houses every Sunday, and that’s the best indicator for where we are right now. My business for the 4th quarter was the best for all of 2011, and quite frankly, because of the surge in real estate spending during the months of November and December, I feel confident that this trend will continue through the end of the year.
While you may read about the softening of home prices throughout the US, our #s in the four communities I report on clearly indicate there is a resiliency and strength in our ‘product’. We have the best residential real estate product in the nation, if not the world. Who can compete with the quality of life of Beverly Hills, Bel-Air, and Brentwood? Few areas can. And that’s why we’re seeing more foreign buyers who have cash to spend now. Everyone who has researched real estate as an investment damn well knows that our market is one of the best investment areas on the Planet. We prove it — in good and bad times. So cheer up. We’re making progress.
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In case you haven’t heard — your kids need a ‘small loan’. Mom & Dad banks thriving today.
There’s a new bank in town……The Bank of Mom & Dad. Perhaps you’ve heard of it. More and more kids are turning to the nation’s most popular bank that offers low-interest (or no interest) loans….who will listen to your pleas for a down payment….and who will hand over the funds and put their arm around you….”you are just like my son. Oh, you are my son! Even better!”
About a third of first-time buyers in 2011 got either a gift (26 percent) or a loan (7 percent) from their families to help finance their home purchases, down slightly from 2010, but consistent with assistance levels seen during the last decade, according to data from the National Association of Realtors (NAR). This isn’t surprising news to most of us, and yes, I will confess that I went down this road to make my first real estate purchase in the 80’s, and I know many of my friends and associates who have either gone to Mom and Dad or are Mom and Dad.
In November, 2011, all-cash purchases among first-timers hit a high of 13 percent, according to Guy Cecala of Bethesda, Maryland-based Inside Mortgage Finance, a mortgage industry newsletter publisher and researcher. That’s up from 6 percent in 2009, when IFM first began tracking it. While the company’s surveys don’t ask about the source of cash, Cecala said that when first-time buyers buy outright, it’s likely their parents who are purchasing on the children’s behalf.
What’s encouraging these all-cash purchases now? Home prices are way down – with the median price in November 2011 at just $164,200, down 3.5 percent from a year ago, according to NAR. Mortgage interest rates, too, remain at all-time lows. According to mortgage researcher HSH, the average rate on fixed 30-year loans fell steadily from 5.1 percent at the start of 2011 to 4.09 percent in December.
As a real estate agent in a price range that usually starts at $1 million, we are still seeing young parents who have the down payment — or even the full amount — in their pockets and are key to our recovery. They play an important role in the lower end of our market — and we welcome them with open arms.
Indeed, in some markets, without parental help, many first-time buyers wouldn’t qualify for the best rates or even a loan on the types of property for sale. To qualify for loans backed by Freddie Mac or Fannie Mae, borrowers need at least a 740 credit score and a minimum of 20 percent down payment — or else they’ll pay private mortgage insurance and additional “risk-based pricing” fees on their loan, IFM’s Cecala says “As the government rethinks the role of the two mortgage giants, these tighter lending standards may be here to stay, or be tightened further”.
To be sure, many baby boomers want to help. More than a fifth of them have co-signed a home loan for an adult child or given a gift or loan to help them buy, according to a September survey by Better Homes & Gardens Real Estate and
Research Solutions Inc. More than half of those earning at least $75,000 said they wanted to help their children finance a home purchase. If you are in the position of considering either giving or receiving a private money loan, please check with your financial advisor for all of the “ins and outs” of the IRS requirements as well as tax implications before you get too far down that road.
It is also advisable to work with an outside party to draw up a formal loan agreement and repayment plan, and to record the loan locally as an added lien against the property. Doing so makes the adult child accountable but also turns the interest on the intra-family loan into one that’s tax-deductible as mortgage interest.
In these challenging times, the real estate business has always had the Mom & Dad Bank — it’s just in these days when we have such sophisticated tracking technology, we’re seeing it more transparently than ever before. After all, if you’re a seller, you really don’t care if the money comes from Mom & Dad Bank, do you?
Happy Parenting…..
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Non-food uses for olive oil
Our use of olive oil dates back prior to 3500 BC and today over three quarters of a billion olive trees are cultivated around the world. One of the amazing things about olive trees are the conditions in which they can grow. While originating from the Mediterranean, there are thriving olive industries in many countries, including Australia, and I’ve seen them thrive in some very harsh conditions over here.
Olive oil grades
In case you’ve ever wondered about the various olive oil grades, here are a few of the common ones:
Extra-virgin: comes from the first pressing of the olives; the best quality; Virgin: has an acidity less than 2% and no refined oil content; Pure olive oil: Usually a blend of refined olive oil and virgin olive oil. Refining is carried out using charcoal or other chemical filters; Extra light: More of a marketing term than a grade. Usually highly processed, may be mixed with other oils, or may be just pure olive oil grade. The “light” refers to flavor rather than caloric content; Pomace, cake or lampante: not intended for human consumption, and generally used for industrial purposes, such as soap making or lamp oil.
Non-food usage tips for olive oil
We’re familiar with olive oil in relation to cooking, but there are so many other ways it can be used; often avoiding the need to use synthetic chemicals, compounds and substances that aren’t very environmentally friendly. For these tips, you don’t need to use the best grade of olive oil.
– After polishing copper or brass, rub it with a little olive oil to slow down the reoccurrence of tarnish
– Can be used as a stainless steel cleaner; apply sparingly
– Rub olive oil into wooden cutting boards to help prevent cracking, repel staining and marking
– Remove paint from hair or skin by dabbing a cotton ball dipped in olive to the affected area
– Use it as an alternative for those squeaking hinges
– Olive oil can help with stuck zippers – use a cotton bud to apply
– Apply a little olive oil to your shoes to restore their shine
– Old leather can be made more supple by rubbing in olive oil (spot test first)
– Coat garden tool blades with a thin layer of olive oil to prevent dirt sticking to them and to help prevent rusting. This works really well!
– Mix one part lemon juice with 3 parts olive oil to make wooden furniture polish
– Rub into to fingernails before and after manicuring
– A small amount of olive oil applied after shampooing can substitute hair conditioner.
– Extra light olive oil can be used as a massage oil
– Olive oil can replace shaving cream or shaving oil
– Dip a razor into olive oil after use to prevent the blade rusting
– Can be applied to chapped lips to relieve the dryness
– Use as a makeup remover
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As for me, the New Year has started out with a bang! We had an offer on one of my listings on New Year’s weekend (unfortunately it did not go), but seems to have set the pace for what it looks like will be a very busy and active year for me. I have a wonderful new listing in Mountaingate and have some listings in both Bel Air Crest and Bel Air Park coming up in the next month. Also all of my properties that I have leased are renewing and some have expressed the desire to purchase these homes, which the landlords are all agreeing to. Once again, I am so grateful for all of you who stop me on the street to tell me how much your enjoy reading the SchifferLine.
