Timely Real Estate News………………………………………………15 November 2012
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Happy Thanksgiving. Well, perhaps not for our traditional turkey!
Yes, the Holidays are upon us. And fall is finally here in full color, although where is the rain (wait, it’s coming!)….Halloween has come and gone, and now we face the “big bird” — our traditional Thanksgiving Feast — and if you’re like most, turkey is on your menu.
Now that’s not great news if you’re a turkey, of course, but we’ve been celebrating Thanksgiving with turkeys since the Pilgrims came to our shores….and what you probably don’t know is that Ben Franklin wanted the turkey (and not the bald eagle) to be our national symbol: He argued passionately on behalf of the turkey because he felt that while the turkey was “vain and silly” it was a better choice than the bald eagle because he felt it was a “coward” (Ben’s words, not mine!). So, if Ben had his way, we’d be having stuffed bald eagle instead of a stuffed turkey. What is my family’s traditional Thanksgiving dinner you ask, honestly we do not have a one, except that I cook a fresh turkey, stuffed with my famous cornbread and sausage stuffing and a fresh cranberry/orange relish, everything else is whatever else we feel like having with our dinner and of course plenty of leftovers.
According to the U.S. Department of Agriculture, we consume more than 45 million turkeys at Thanksgiving — that’s 1/6 of all the turkeys sold each year in the U.S. And did you know that the average turkey weighs 28 lbs….and it’s a $4.37 billion industry?
Ah, yes, the Holidays….hopefully you will be able to take some time off and enjoy a wonderful Thanksgiving — with family and friends. It is, indeed, a time to be thankful.
My best Holiday greetings to all of you
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A global view of our real estate future:
One of my clients headed up a large real estate investing platform in Asia for a major US investment banking firm for many years….he recently returned to the US where he was educated and offers his candid opinions on the “state of our global and US real estate market….”
1) What do you foresee for next year (2013) for the economy? In the US? Globally?
“Hard to predict the future as I often have a hard time remembering the past (as it really happened). The impact from Sandy aside, macro headlines for next year (for the US) should be a continued recovery next year. This financial crisis in terms of its complexity and magnitude is unlike anything we’ve seen in recent history. So it is only reasonable to assume that it will take longer to get back to normal or to a “new normal”. Despite slower overall recovery, I do expect stock and the (residential) real estate market to perform relatively better than rest of the economy. At the start of this down turn, someone much wiser than me said “patience will be well rewarded”. I believe that and try my best to practice it (very difficult as it means overcoming your usual worst enemy, yourself). As many things are cyclical in our economy, it’s worth paying attention to “timing”. “As for rest of the world, Europe will be messy for awhile. It’s not due to lack of efforts or the intelligence of participants but herding cats is difficult work and not very fun at the end. But unlikely it will get much worse than where it is at now. It is what it is and we just have to be aware of additional volatility it will cause”.
The much talked about China’s slowdown is what it is as well. Since no country can grow at a same high rate forever, it’s only a matter of time before it slows down. But relatively speaking, China will continue to drive a significant portion of world economy. At the end both countries (US and China) need and depend on each other (though we share very little in common).”
2) How do you look at the difference to what is currently going on in the real estate market in the US vs. the global economy? “
US residential real estate market got hit first and the most in this downturn so it is likely it will recover the earliest and its upturn should be significant (relatively) as well. Except for a few coastal cities, the US residential market is very local and I believe local economies will continue their recovery. ”
3) What impact will the Bush Tax cuts have on our economy — if we keep them? And if we don’t?
“My personal view is that tax policies rarely produce the outcome desired (good or bad). It is very hard to influence people’s actual behavior through rules and regulation. All the politics aside, I think the historical data usually points to higher overall productivity generated when the tax rate is generally lower and enforced equally and evenly for everyone. There are countries that practice this (HK and Singapore @ 17-8% flat income tax) and they’ve done well historically. And remember these are places with very little resources of any kind. ”
4) What countries do you see as continuing to have strong economies?
“ The developed Asian countries, Brazil and US. These places have the right underlying demographics that could support a stronger growth than the rest.”
5) Overall, how do you perceive the near future for us economically?
“They say time heals all things. This seems to be true so far in my own life. My guess is that things will be better than before but much more complex to navigate through. Survival of the fittest will continue as it has been for a long time. Education, awareness and hard work always pay dividend no matter what happens to the world economy.”
“One more thing, despite all its faults, I absolutely believe America still is the best country on this earth.”
Thank you for your insight and comments… they are most helpful.
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Westside real estate market gathers steam….sales volume up….but prices remain ‘mixed’
You had to be there….our sales manager, Ellen Bergeron, announced that the Brentwood Coldwell Banker office sales volume for October 2012 was the highest for this month in the last five years — over $97 million! That is great news, and yes, we have seen an increase in sales activity in the four communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood. And while home prices remain mixed in terms of getting back to previous highs, the strength of the market is encouraging. Sales volume for these four communities reached $1.907 billion for the year through the end of October 2012, compared to $1.758 billion last year, which is an increase of 8%. We have been hovering around half of that average increase for the year, so the bump reflects the homes that were sold in the summer and early fall and have closed escrow in October.
Beverly Hills continues to shine in terms of holding its median sales price for the year — BH is ahead of 2011 median sales price of $2,987 million by 55% at $4.640 million….which reflects a continued upward trend in home prices for this world-famous community. The sales volume for Beverly Hills is made up of higher-priced homes, for sure. — Beverly Hills Post Office was down for the year by 10%, average $1.854 million for this year through October vs. 2011’s $2.062 million….Bel-Air was up 9% for the year-to-date at $1.800 million vs. $1.650 million, and Brentwood was down 4% at $1.801 million vs. $1.875 million last year. There have been some big sales that are not being reflected in the Multiple Listing, which will come out in the public records in the next few weeks, for example the home that Michael Jackson was renting just closed escrow for $19,000,000!
In comparing this October vs. October 2011, Beverly Hills was 34% ahead of last year…BHPO was 66% ahead of last October (2011)….Bel-Air was 107% ahead of October 2011, and Brentwood was down by 8% compared to October 2011. The point is: These numbers change every month…..the major trend line is what the median sales prices tell us each month, and even these numbers can be very volatile. We have seen these swings before where one community looks low and then, all of a sudden, it leaps to the top of the heap in sales volume because each our communities I report on contain a broad mix of home values/prices that range from under $1 million to $40 million plus. So averages (median or otherwise) tend to even out over a 12-month period.
Sales volume is a key statistic but we all know that home prices are lagging behind the highs of the mid-2000s. I know it may sound very confusing, but over time, we have found tracking these trends help us keep our perspective — we’re not in dire straits as many areas are in the US….so be thankful you live in one of the world’s most attractive, most sought-after areas anywhere.
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Southern California’s housing market accelerated in October as home sales spiked with more buyers looking to move into pricier homes.
As I have indicated above, sales volume is rising in our four communities by 10% for the year compared to 2011 (January thru
October). In the latest report from nationally respected real estate tracking firm, Data Quick, sales rose 18% from the prior month and were up 25.2% from October 2011, hitting a five-year high for that month. An estimated 21,075 newly built and previously owned homes sold throughout the six-county Southern California region last month. Yes, October appears to be a solid month throughout our region.
“Watching the market rebalance itself is fascinating,” Data Quick President John Walsh in a statement. “In some categories and in some neighborhoods, demand outstrips supply, pushing up prices. In other areas, the market is still largely dormant.
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Appraisals can be your home’s Achilles heel
Just when you thought it was safe to plunge into the real estate market and put your home up for sale or re-finance your property, you’re shocked when you discover that not everybody agrees with your perception of just how much your home is really worth. The Los Angeles Times reveals in story last week that many homeowners are finding out that appraisals of their homes are coming up short. The report states that “….the appraisal process has become a headache for homeowners looking to secure historically low interest rates and buyers and sellers hoping to reach property deals.”
“The combined issues of stringent mortgage lending requirements and appraisal frictions are hampering otherwise qualified buyers from purchasing a home in a timely fashion and in some cases are preventing them from buying at all,” Lawrence Yun, the Realtors group’s chief economist, said in a statement accompanying the survey results.
The Realtors group and others say sometimes problems arise because appraisers, employed by large appraisal management 
companies, may not have sufficient experience in a neighborhood. The article pointed out that appraisers were not even visiting the property….made their appraisals based on photos from the MLS….did not evaluate the current activity in the neighborhood. Why is this happening? Lenders are loathe to make the same mistakes they made during the real estate meltdown and have become ultra cautious, which is then transferred to appraisers. “Go low” seems to be many appraisers’ starting point.
“My advice to anyone who is getting their home appraised to put on the market or to get it re-financed is to deal with a real estate agent who is thoroughly familiar with your neighborhood and knows how appraisals are being conducted. More importantly, an experienced agent will know who the appraiser is and can help you in the process if you don’t get the appraisal you deserve. We run into this much too often, and in these crazy economic times, there is a lot of frustration with bad appraisals. Call me any time if you need advice on how to get the right appraisal and an evaluation of your home’s current value”
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Home maintenance tips — getting ready for the cold weather, rain
Don’t believe me? Well, we have rain in our forecast. We average about 14 inches of rain annually in Los Angeles, not the nearly 500 inches Kauai gets every year, but we do live in a semi-arid desert,? We camouflage our desert with lots of trees, flowers, and landscaping that makes this really appear like “paradise”, and it is. But now it’s time to get some home maintenance items in place:
Gutters, drains….We have talked about this before, but really, the rains are coming and soon (like this weekend)….so again, please make sure you clean out your gutters and clear out all the debris around the drains — in your gardens and lawns, in the patio and driveways.
Repair the cracks – now
Nothing hurts like spending money on repairs you could have easily avoided by taking care of a crack in your pool or driveway/patio that would require a minimal amount of attention and care. One of the biggest flaws I see on my inspection tours when I sell a home is the seller neglected to take care of a then-simple task of repairing a crack in the pool or driveway and then we discover a multi-thousand $$ repair that could have been handled by a few hundred dollars. So, inspect your property and make those repairs now before it’s too late with winter-coming rains….and they will come.
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Which is greener – plastic wrap or a reusable container?
About plastic wrap
Plastic wrap used to be made from PVC, but concerns were raised about the risk in transfer of toxic plasticizers from PVC into food. PVC plastic wrap is still used in some catering applications, but the wrap you buy from the supermarket is likely to be LDPE While the use of LDPE doesn’t have the same health and environmental concerns of PVC; the big problem is LDPE is a no.4 plastic; meaning you likely can’t put it your curbside recycling bin.
The amount of wrap used to protect a sandwich might seem tiny when you scrunch it up into a ball and throw it away; but think about how much plastic wrap you go through each year. Now think of millions of households that do the same – it translates to a significant amount.
So is the answer a reusable plastic container?
Reusable plastic containers
A reusable plastic container can be a greener way to go, depending on two things – the quality and the type of plastic used.
Quality is an important issue because if you consider the weight of a container compared to plastic wrap and if that container only lasts a short while before the lid warps or the container cracks; that plastic container is the equivalent to a lot of plastic wrapping.
Adding to the potential to be a very un-green option is the type of plastic used. When shopping for plastic containers, look for a triangle with a number inside – this signifies the plastic resin code.The two resin codes to look for are either 1 – PETE or 2, which is HDPE; High density Polyethylene.Of those two, the better (and likely more available) choice is probably HDPE as PETE is intended for single use, although many people do reuse PETE bottles – me included. And no, reused PETE bottles do not leach dioxins when reused – that is an urban myth. The biggest concern is bacteria buildup. HDPE is a good choice as it won’t leach chemicals into your food, is hygienic and it’s easily recyclable.If you simply can’t give up your plastic wrap for whatever reason – just use less of it as that would be a good green start. Perhaps you could also reuse other plastic bags you have laying around for the task of wrapping food – assuming they are in suitable condition of course.:)
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An Icon is Back!!! I don’t know about the rest of you but I am thrilled that the Bel Air Bar & Grill is once again open for business. They are starting with dinner on the 16th of November, and the Shack with their fabulous sandwiches and tacos (so I have been told) is already open! The building with its façade of roses is beautiful and a lovely addition to our neighborhood. I am looking forward to seeing some friendly faces at the restaurant soon.
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Holiday Plans..
What are you doing for the holidays? I would love to hear from you. I am heading to my home in Coronado for Thanksgiving and to my sister’s house in Vancouver for Christmas. We have a great family reunion with my nephew Connor home from college in Montreal, and my niece Morgan and her boyfriend Ben in from Denver where they are both attending the University of Denver, and my brother in law’s brother Don in from Smithers, which is a very small town on the border between British Columbia and Alaska. It should be fun with some time spent in Vancouver and some in Whistler! I am looking forward to catching my breath after a very busy year.
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