Timely Real Estate News……………………………………15 September 2011
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Halloween comes early….why this can’t be easy! More tricks than treats.
It was simpler growing up in West Los Angeles when I would dress up for Halloween out the door with friends I would go for “trick or treating”. I remember knocking on doors and this lovely neighbor would say something, like, “Oh, my, aren’t you cute!” I would dutifully hold out my paper sack and in would drop a variety of sweet treats — all the stuff I loved to eat. I particularly remember a funny, special time when we went to a restaurant on the corner of Pico & Beverwil called Willard’s. They had the best fried chicken around… We would go to the back door and out would come with a hand and a few pieces of that yummy chicken. Then we would get really bold, run home, change costumes, and come back again for more. I am sure they knew what we were doing, but we were set for our lunches for a week! Those are the ‘sweet memories’ of Halloween, which is just around the corner.
Halloween was popularized by Robert Burns in 1785 “Halloween”, and traditionally meant the “end of summer”. Said to have been started by the Scots in the 16th Century, it has been attributed to the “night before All Hallows Day. When I was younger we couldn’t wait to go “trick or treating” — and that tradition holds forth still, but now I look forward to seeing all of those cute neighborhood kids and their costumes. But what many of us have come to know, we Americans know how to turn a holiday into a retail bonanza — Halloween is the #2 Retail Holiday in the US — after Christmas.
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Dealing with the today’s market — a challenge
In today’s topsy-turvy world of real estate, I look back fondly on those simpler times when life was not so complicated. I look at the latest stats from the Multiple Listing Service and shake my head: September wasn’t exactly ugly, but it was close. Were the real estate Gods playing tricks on me? I look at the monthly sales reports that we get at the beginning of each month and scratch my head: Sales volume is up for the year — always a good sign. But after looking at this bag of “tricks”, however, I notice that in the four communities I report on — Beverly Hills, Beverly Hills Post Office, Bel-Air, and Brentwood — there are some warning signs that cause me to pause.
For example, sales volume for these four communities through September 2011 are up 17.6%, a great increase over last year, which was not a stellar year compared to….say, 2007 or 2008 before the recession hit real estate hard. So, on the surface, I like the “uptick” but then realize that nearly100% of this increase comes from just one community — Bel Air, where sales value (year-to-date) was $255 million in 2010 and $450 million in 2011! Total sales volume for the year in these four communities was $1.555 billion for 2011 vs. $1.346 billion in 2010. Obviously, several large luxury home sales pushed Bel-Air’s volume way ahead of a rather bland 2010.
Digging further, I am not surprised to see that the Sales Price vs. the Original Listing Price stats continue to be stuck in the high 80% range in all four communities — Beverly Hills OLP is 88.6% of the sales price; Beverly Hills Post Office is 85%; Bel-Air is 87%; and Brentwood is the highest at 89%. All of this continues to support today’s reality that buyers are in the driver’s seat. In a seller’s market, the OLP #s would be in the 90% range in all four communities. But these are different times.
While there continues to be active buyers in the market today — we see this every weekend at our Open Houses — we recognize that buyers are much more sophisticated and discerning in negotiating for a new home. I face this reality every day, yet I find that many sellers are still clinging to the ‘good ol’days’ which are gone. My challenge is to present the reality of today’s market — not yesterday’s — to my clients about the need to competitively price their home. One of the other newer aspects I am seeing today is that buyers are much more interested in figuring the price on a cost per square foot basis. This is not something that residential buyers generally have done in the past, but has been more limited to commercial property values.
I am very empathetic to homeowners who have seen their equity slip away, and sometimes, they point to the increase in median sales prices — that I report on every month — and they see the monthly increases that they immediately transfer to their own property. So, it’s important for me (and you!) to not always look at the MLS stats as “gospel” and assume that we’re back to the good ol’days. We’re not. Every home, every neighborhood, and every ‘location’ are faced with their own realities each and every day. We’ve all seen it, and I’m afraid these changing and sometimes volatile conditions will continue to be with us through this year and most likely next year as well.
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So, what are the MLS stats telling us?
As I have said the past, trying to gauge the real estate trends in these four communities is best viewed by the year-to-date median sales prices, which level out the monthly vagaries. Through September 30, 2011, Beverly Hills was down 5% in median sales price at $2.957 million; Beverly Hills Post Office was up 11% through last month at $2.075 million; Bel-Air was up 3% at $1.650 million; and Brentwood was up 9% at $1.887 million. Beverly Hills has been playing catch-up for most of the year, because of large sales completed last year.
In comparing median sales prices for single family residences in September 2011 with September 2010, Beverly Hills was down 34%; Beverly Hills Post Office was down 9%; but Bel-Air was up 40%. Brentwood, on the other hand, was down 49% from the previous year. So you can see how one can justify pulling their hair out when you try to figure out just where you are each month. And when you compare last month to August 2011’s numbers, you will see that Beverly Hills was down 54%, BHPO was up 4%, but Bel Air was down 15% and Brentwood was down 18%. I will be more than happy to have coffee with you and give you an overview why our Westside real estate industry is the way it is. My treat! No tricks!
Mortgage rates tied to job growth….and Freddie Mac continues
According to the latest Lender Survey conducted by Freddie Mac, mortgage rates starting with a “3” are becoming harder and harder to find. Even if you have stellar credit, they say, lenders are moving up the prime loan rates to over 4%. The big-government-controlled loan buyer reports that lenders are offering loans to well-qualified borrowers at an average of rate of 4.12% — which is a jump higher than the 3.94% two weeks ago. Remember, that the ‘below-4%’ rate is the first time in 40 years since the survey has been taken. Freddie Mac insures loans up to $417,000.
John Ciolino, Coldwell Banker’s mortgage lender consultant, asks the question: What did last month’s tepid job market report (+103,000 jobs) mean for home loan rates? “It’s important to remember that when our economy is struggling, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense…in times of economic struggle, good home loan rates can help kick start our economy in other areas.”
“Yet,” John stated, “when good or better than expected economic news hits the wires, like it did with last month’s job report, investors often move their money out of bonds and into stocks in an attempt to take advantage of these gains. And that’s a big reason why we saw bonds and home-loan rates worsen two weeks ago.”
The most important thing to remember, John states, is that now is still a great time to purchase or refinance a home, as home loan rates remain near historic lows.
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The good news? Location. That’s our treat!
I want to share a few treats that have surfaced lately. I know, like you, we can get very tired of street or on/off ramp closures and unexpected traffic delays caused by a variety of construction projects including the 405 widening. At the same time, it’s a treat when our thoroughfares open up and we zip seamlessly along Sunset or Sepulveda or Wilshire. So it was not surprising to receive three calls this past week from families who are looking to locate in our neighborhoods. They currently reside in Malibu, Santa Monica, and Beverly Hills. They have done their research and decided the best place to be was closer to the schools their children were attending. They are just tired of fighting traffic across town and know it’s not going to get better for a while. While we all look at the negatives these construction projects cause, families want to move here because we have great schools. So location, location, location matters.
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Autumn in Montreal
How many times do people say that we don’t really have seasons here in Southern California, while I dispute those claims, even though the recent heat waves belie those beliefs, they truly do have a change of seasons in Montreal, Canada. My sister and brother in law recently visited their son to enjoy Canadian Thanksgiving together.
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Sugar.White sugar vs raw sugar
How raw sugar is made. Sugar cane is initially pressed and the juice is then mixed with lime to achieve the desired ph balance and to help settle out impurities. The resulting liquid is reduced through evaporation, then a centrifuge used to separate sugar crystals. It is then dried further to produce granules. The brown color of raw sugar is due to presence of molasses.
How white sugar is made. “White” sugar is created in a couple of ways. Mill white sugar is the result of sulphur dioxide being introduced to the cane juice before evaporation. It effectively bleaches the mixture. In the production of refined white sugar, which is the most common product in the Western world, the raw sugar syrup is mixed with a heavy syrup and run through a centrifuge again to take away the outer coating of the raw sugar crystals. Phosphoric acid and calcium hydroxide are then added to the juice which then combine and absorb or trap impurities. Alternatively, carbon dioxide is used to achieve the same effect.The resulting syrup is then filtered through a bed of activated carbon to remove molasses and then crystallized a number of times under vacuum. It is then further dried to produce white refined sugar like we buy in the store.
Brown sugar. Brown sugar is refined white sugar with a molasses syrup mixed in, then dried again.
Sugar cane and the environment. Environmentally speaking, the less processing required means the less energy used, less waste products and fewer chemicals. While whole or crushed sugar cane can be difficult to source in the city, out of the options remaining, raw sugar is the more earth friendly option and brown sugar oddly enough is the worst choice. The bad news about sugar and the environment doesn’t end with how the syrup is processed into a final product. Effluent and waste from sugar mills creates major problems for local environments. Pesticides and herbicides applied during cultivation contaminate the ground and water supplies. Added to these problems is the firing of sugar cane prior to harvesting which pumps millions of tons of carbon dioxide and other chemicals into the atmosphere each year. Natural habitats in sensitive areas are often cleared in order to grow sugar cane to meet increasing demand.
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What about my personal real estate world? My world also has been topsy turvey – up one day and down the next. What all of the quietness for the various holidays and the perfidies of the market and economy itself, I have been on my own personal roller coaster. I am now very busy, working with a number of buyers, and have about 3-4 listings coming up. I also leased a house on Bel Air Park even before it came on the market. It was a very special house and it was leased totally furnished to a lessee that needed exactly that. Please let me know how I can assist you with all of your real estate needs including property management
Happy Halloween!