Timely Real Estate News…………………………………………17 August 2007
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Don’t panic….the only thing we have to fear is…..
FDR said it best….”the only thing we have to fear is fear itself.” Certainly, he wasn’t referring to the real estate market, but after reading/hearing all of the doom and gloom media since I last wrote to you two weeks ago, you would think the sky has fallen. It hasn’t.
The media focus, for the most part, has been on the demise of mortgage lenders who are (or were) carrying significant and various kinds of sub-prime loan paper. This market has deteriorated quickly in the past six months as you have all seen and heard. Additionally, investment firms with large portfolios backed up with sub-prime loan paper have also seen their assets diminish.
Let me share with you some background about our venerable Westside: According to an article in the Los Angeles Times last week, in the past two years only eight out of 519 loans in Santa Monica’s 90403 zip code were sub-prime loans. We can contrast that with the San Fernando zip code of 91340 where 186 out of 690 loans were sub-prime.
In addition, though there have been over 17,000 foreclosures in California since the beginning of the year (eclipsing the record set in 1996). When we add up the Westside zip codes of 90049, 90272, 90402, 90403, 90210, 90077, 90025, 90024, and 90265 we see a grand total of only 25 foreclosures all year (since January 2007).. (Thank you Los Angeles Times for this information).
I have been extolling the strength of our Beverly Hills-Bel Air-Brentwood market — we live in a microclimate of a strong, enduring economy here in the Westside that continues to hold its home values (up 4% overall since January ‘07). And when you factor in the enormous wealth and sustainability of our communities, we can weather almost anything — certainly better than most.
What about the future?
Just today, the Fed reduced its prime lending rate by 1/2 point, which sent the Dow up 233.30. Points In a relative nano second, the market changes….investors are ‘happy’ with the Fed and a little more optimistic about the future….but we’ll wait and see what happens Monday. Every day it is something new. The point is: It’s too early to tell how the real estate market will actually perform, but so far for 2007, we should be pleased, even though homes not properly priced on sitting on the market longer. Our open houses are still getting a good amount of traffic of buyers, not “looky loos” or nosey neighbors. We just have to remember and understand that some buyers are being more cautious and taking longer to make their decision.
So what should I do if I am in fact looking to sell your home or buy a new one?
First of all, you need to work with an experienced realtor, who knows how to navigate through and around the issues we are dealing with today. If you are a seller, through your real estate agent you need to know several key things about the buyer: 1) What/how much is the buyer borrowing; 2) how credit worthy are they? and 3) be prepared to be patient with the process, short loan contingency periods cannot work today, and 4) you should also require the buyer to “lock” in their interest rate and to sign the loan documents as quickly as possible. This will prevent the lender from changing the terms of the loan or pulling their approval after they have in fact approved the loan (unfortunately that is one of the things that is happening today as the terms of the loan itself are changed mid-stream). It’s tougher to get loans these days — as you have read, so just allow some time. If you are buying, you need to get your credit in top shape…get your loan commitment locked in and in writing, sign the loan docs right away. Another thing….the loan conditions are going to be very important (these are the items that the lender calls out as additional requirements after they have issued loan approval, but not FORMAL loan approval.. formal loan approval is actually granted at the very last minute after the loan documents are signed, sometimes the day before the escrow is scheduled to close),(only after the conditions have been approved or removed).. These conditions are the items the lender is hanging its hat on to pull their final approval — Another thing…. check the loan conditions very carefully.
Lenders are now loathe to accepted stipulations that they would normally have accepted in the past. Not now. Be careful only work with a lender, preferably a mortgage broker that you know and trust who will hold your hand through the process and do what they said they would do.
If you live in Brentwood, Beverly Hills or Bel Air, the future looks solid — prices are continuing to hold and if you do sell — and you don’t want your home on the market too long — price it right from the beginning! Getting a sophisticated, seasoned Realtor is key. Call me!
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405 Widening Public Hearing — Skirball Center, August 22, 6:30 p.m.
Be there! If you want the facts on this very important project that will affect all of us on the Westside, I urge you to put this meeting on your calendar and to attend.
Labor Day is around the corner….I have only one question: Where did the summer go?
