Timely Real Estate News………………………………………15 October 2010
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Johnny Carson’s first autumn in Southern California….color it brown
Our lovable Johnny Carson aptly noted on his first show broadcast from his new Burbank digs after moving from New York in May 1972….”You can always tell when it’s autumn in Southern California. That’s when they change the green plastic plants for the brown plastic plants.” Yes, it’s autumn but feels like summer, so no need to bring out the brown plants just yet.
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But what you can bring out is a ‘drum roll’…. (Drum roll, thank you)….we’re seeing some positive, sustained upward movement in Westside real estate these past several months, and that’s encouraging for everyone. Buyers are snapping up quality homes at attractive prices still. Sellers are getting better prices than a year ago, and Realtors, like me, are seeing increased sales volume, especially in the higher-end homes. In my office in Brentwood, our best month of the year for sales volume was June, and thus far, August was our worse. We actually had the same number of sales in terms of units for September as we had in August , but the prices were higher so it was a better month (I received this information from my sales manager and verified that in having a better September than August, we did not have any sales over $3,000,000, thus there were no sales that skewed the numbers).
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How are we “trending”? The most remarkable trend we’re seeing from this past September is that three of the four areas I report on — Beverly Hills, Beverly Hills Post Office, and Bel-Air, are all showing positive Median Sales Prices for year-to-date in 2010. This is the first time in a while that all three of these areas have been in the ‘black’ so to speak: Beverly Hills, the overall sales volume leader for 2010 on the Westside with more than $470 million (63% of the total volume), is an even plus .003% over 2009, but above water. Beverly Hills Post Office is 3% ahead of 2009 Y-T-D, and Bel-Air is 6% ahead. The past nine months have seen some ups, and some downs compared to 2009, but now, all three areas are in the positive. Brentwood, down as much as 26% in median sales price for the year, is bouncing back — with only 13% down compared to 2009. They’re not quite there yet, but there were some large sales in Brentwood in 2009 that have kept the MSP down.
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While days grow short in September….the autumn flame is in the higher-priced homes.
2010 has shown remarkable strength especially in the upper-priced homes. For example, of the 58 homes sold in these four areas in September, (BH, BHPO, Bel-Air, and Brentwood), 33 homes were priced over $2 million: 11 in Beverly Hills; 7 in Beverly Hills Post Office; 1 in Bel-Air; and 14 in Brentwood, one of the reasons that Brentwood is staging a comeback. That’s nearly 57% of the homes in this price bracket, indicating a continued strong demand for these “luxury homes” (as defined by the National Association of Realtors, which is anything over $1 million).
This is pushing the total sales volume as well — we are now at $1.344 billion total sales through September 2010, which is 30.6% ahead of 2009. Only last July, we were at the 25% level and in August we saw a climb to just 30%….and so this higher number for September indicates the market is coming back. It is interesting to note also that in 2009 at this time of year, Brentwood sales volume was ahead of Beverly Hills. .
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Foreclosures — are they on or off? Stay tuned.
Wrecking havoc with every tractable # in the real estate industry has been the effect of sales of foreclosed homes
in every neighborhood. The Westside is not immune to these bank-owned sales — I see them, we all have. . What this foreclosure tsunami of equity-busting home sales does to neighborhoods is that we see equity — built up over years of careful investment and property nurturing — collapse, with many homes losing as much as 50% of their value. Bank of America’s decision to halt all foreclosures (they have 126,000 homes in foreclosure phase right now just in California) could play havoc down the road. In a Wall Street Journal story on Tuesday, October 12, a Citi home-building analyst Josh Levin cited some possible outcomes to this decision to halt foreclosures:
• In the one scenario, the issues are simply technical, the situation is resolved and the foreclosure process continues. Many believe housing won’t recover until the glut of foreclosed homes clears the market.
• In another scenario, litigation ensues and the matter takes years to sort out. That will inflict more pain onto the already troubled housing market.
Other banks have joined BofA in this — and attorneys general across the US are suing the banks over their handling of the foreclosure mess. Yes, it is a mess, and one that I wish would go away, soon.
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Meanwhile, back at the bank……
With 11 million residential properties worth less than the mortgages on them and with more than 15 million Americans still out of work, the effort to stimulate the housing and construction industry has been one, loud thud. Hitting a record low of 4.32% for a 30-year fixed loan, everyone — except the house-buying public — expected to see a ‘rush’ to the bank to buy their dream house. Hasn’t happened yet. Credit remains tight. and banks are wary of lending to anyone, even though the mortgage ‘candy’ sure looks and tastes great. In August, for example, new home sales were running at the second-slowest pace on record, and existing home sales were down 19% from a year earlier on a national basis. My experience with the banks has been frustrating at best. I encourage you to get your loan through a qualified mortgage broker, such as John Ciolino, who is one of Coldwell Banker’s mortgage lending consultant at First Capital Mortgage. They’re not committed to just one lending institution and seek only the best loan that fits your profile and needs.
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New laws going into effect 1 January 2011 that may affect you!
For the next 8 issues of the SchifferLine, I will be sharing with you the new laws pertaining to real estate that go into effect next year.
No Short Sale Deficiencies: Starting January 1, 2011, a seller’s first trust deed lender cannot obtain a deficiency judgment against the seller after a short sale. Providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan. This law applies to first trust deeds secured by one-to-four residential units, but does not limit the lender from seeking damages for fraud or waste by the borrower. So what does this mean? After a lender has accepted a short sale agreement on a loan, the lender of the first trust deed must accept that approved amount as payment in full and cannot attempt to collect additional funds. The exception to this would be if fraud had been committed against the lender or waste had been committed by the borrower.
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Reuse vs. recycle
The recycling movement has gathered plenty of steam in recent years which is wonderful as there is far less waste hitting our landfills and far more resources being reclaimed
However, there is concern building that the recycling wave is allowing us to still be rampant consumers, a throwaway society; and recycling some justification for maintaining this mindset while the energy required to recycle the aluminum in a soft drink can is one twentieth of that to produce the can from raw materials; when you start thinking in terms of billions of cans; it’s still a lot of energy consumed. You can buy the equivalent of 5 cans in a plastic PET recyclable bottle and I suspect (I’m not sure on this) that the recycling process would require less energy (although PET bottles are actually down cycled).The down cycling aspect is another trap many of us fall into – down cycling is different to recycling in that the packaging being processed is made into something of less value. True recycling is where more of the same product is made; but the term has been extended to cover a variety of different actions.
The case for reuse In terms of larger items, let’s say an old busted washing machine – we can send it to scrap merchants who may strip it of useful components for recycling which is great; but Fred from down the road is handy with washing machines and he may find that it just needs a fuse or some cheap component. Fred may be able to make use of it or resell the item. Reuse extends the life of a product before it has to hit the recycling stage. You may have saved Fred (or someone else) some cash in having to buy a new washer, so there’s also a definite feel good aspect to re-use aside from the consumption issue.
According to a (rather old) article on the US EPA’s Institute for Local Self-Reliance site, “New recycling-based manufacturers create 25 times the number of jobs as land filling. Some reuse operations employ 200 jobs for every one job at a disposal facility.”
With the growing number of people understanding that reuse is the first option before recycle, all sorts of groups have started up where you can offer your items for free to others who can make use of them. One such service is The Freecycle Network™ which currently has nearly 7.6 million members globally.
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Another interesting service is ecofreek which searches over 45+ sources for free and swappable items being given away by people who no longer need them. There are also an increasing number of trash removal services that will sort through your waste for you, diverting whatever possible for composting, recycling and reuse. These services cost a little more, but in my opinion are well worth the money.
So, recycling (in all its forms) is bad then?
While some will understandably frown upon the heavy emphasis of recycling for the reasons above; recycling is an incredibly important thing to encourage. Aside from the reclamation of resources, recycling is a “gateway” green action.
So many people start their green journey by recycling. It’s these easy actions than can encourage bigger changes down the track. For those of us down the green road a little however, the reuse vs. recycle issues are something we should bear in mind.
Even more importantly, we need to reduce the amount we consume – that’s why the 3R’s of green living are in the order they are – Reduce, Reuse, Recycle.
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Just a reminder, I have some wonderful properties available in Bel Air Crest for your consideration.. I have two Canyon homes for lease 3/2.5 – $6,500, 4/3.5 $7,500; two beautiful Canyon homes for sale 3/2.5 $1,475,000, and 4/3.5 $1,500,000 and one fabulous Custom home for $4,750,000. They are all easy to see. Please contact me if you or someone you know would like to see any of them.
