2009 end of year wrap-up and list!

Hey, it’s the time for year-end lists and predictions, right? Why not from a local Realtor? So here are the most important real estate trends that I observed in 2009. Again, this is a very local, personal take, and is not necessarily in order of importance.

Mega-Listers of REOs/Foreclosures. Lots of foreclosures seem to be concentrating in the hands of a very few Realtors. Just try to buy one of these. Heck, just try to find out information on these. If you’re a mega-lister, please hire more staff and train them to answer questions, please. And please don’t pretend something is available when you’ve already sold it yourself. Deplorable.

The experts were wrong. Who was it that said, “Nobody knows anything”? How many times were we told by experts and statisticians that the market was crashing, it would have lost 50% of its value by this time, it would never come back, etc, etc? Yes, I know that there are regions that are in far more dire straits than ours. And the “foreclosure crisis” may not be over. But it appears, in spite of expert predictions and bubble market blogs, the local real estate market bottom has come and gone. To quote Elvis Costello, I used to be disgusted, now I’m really just amused.

Real estate marketing is more and more on line and less and less in print. This trend has been occurring for quite some time but it has become more evident this year. I can’t remember when I last placed a print ad in L.A. Times, for example. And the LAT doesn’t seem to care -- it doesn’t even have a real estate blog anymore, let alone a real estate section. I’m surprised, however, at how few Realtors really take advantage of all of the internet outlets out there. Not really surprising.

People still want to buy houses. Again, many buyers were scared off by bubble predictors and experts (see above). Many, however, still feel that a house is a worthwhile thing to own, even if one is not making money from it. Hey, we all need roofs over our heads, right? And with such low interest rates… Encouraging.

More and more properties are difficult to show. Realtors, most notably foreclosure listers, seem to be getting away from the call-first-then-use-the-supra-lockbox form of showing property (in fairness, this has never been big on the Westside or with high-end listings). Instead, it’s been “call for code” but your calls are returned, or “text for code” and good luck with that. Last weekend, for example, I placed calls to 17 Realtors for codes. Only two ever called back. See my mega-listers comments above. Frustrating.

Flippers are back. Many property flippers lost their shirts in 2007, 2008 and parts of 2009. I think it was because it looked easy, and many amateurs got into the flip business and didn’t realize the time and effort it took. Thanks for nothing, HGtv. But now, the pros are back – they seem to be buying up properties in bulk at court sales. The results have been mixed. I had a very good experience with a pro flipper on a NoHo house this summer – the house was well priced and well remodeled. I also just had a very bad flip experience just recently in Pacoima. Overpriced and NOT well-done. Mixed.

The bloom is off the lofts. Loft living in an urban area is really fun if you’re young, single, and have lots of money for your mortgage (these places aren’t cheap). But the loft concept trend/fad seems to be over – or is it just that there are too many lofts and condos out there fore sale? Predictable.

Multiple offers and deliberate underpricing. See past posts for more details. Who knew we’d ever see multiple offers again in our lifetimes? And as for underpricing, I don’t think it gets a sale made any faster than proper pricing (for example, see my listings on Birmingham, Lincoln and Chandler. Priced at what they’d likely sell for and sold fast). It just creates a lot of excitement, and heartbreak for buyers who would never be able to afford the house anyway. Frustrating.

Okay, this should be the part where I predict what’s going to happen in our local market in 2010. But I truly don’t know – and after the wild 2009 ride, I think I’d be crazy to predict!

My visit to mostly northeast, mostly Hispanic L.A.

Although I don't usually sell properties in San Fernando, Sylmar, Pacoima and Panorama City, clients Melinda and Gerardo and I looked at several townhomes and gated communities there this weekend. Home prices are much lower than they are in, say, Studio City. There are many short sales and foreclosures in all four of the communities. Here are my other impressions.

San Fernando: nicely laid out, quaint and quiet, probably because it's a separate city. It even has a cute trolley! We found several nice, newer townhouse communities and PUDs.* The home we liked the best had three big, beautiful chickens on the patio. What's that got to do with anything? Nothing, I'm just an animal lover.

*PUD stands for planned urban development. These communities consist of several stand-alone homes on smaller lots and have home owners associations and governing rules. They usually don't have more than 20 homes a piece, and a 5-home community is not uncommon. While few have amenities like pools and tennis courts, many have small outdoor yards and green belts. In my opinion, these communities are great ideas as they offer less congestion than condo communities. However, most developers don't agree as they can't make as much money by building them.

Sylmar: Actually in the L.A. city limits, and a little farther out than San Fernando. Again, nice, newer condos and PUD communities. Sylmar also has many communities with land leases. This means that you can purchase a home, but can only lease the land it's on. The upside is that the homes are much less expensive.

Pacoima: More urban, more congested than the other two. Hansen Hills, close to Hansen Dam is the nicer area, but Pacoima also butts up against many industrial areas. There were many street food vendors along Glenoaks Boulevard, and some had some pretty big operations going on. We were actually in escrow on a house in Hansen Hills, but it didn't appraise and it had lots of physical problems. That's right, it was a flip.

Panorama City: Much more congested than the other towns. Lots and lots of large condo developments, many of which are looking a little run down.

Happy and Merry!

Have a great holiday! I'll be back at going on about real estate next week.

Not much new as we head into Xmas

There's only a little r.e. news this week. The LAT and Daily News report that foreclosures are down and prices are up. One of my escrows is still wobbly, thanks to our favorite lender, Bank of America. (Apparently, BofA wants us to put a new roof on a fixer house that was sold at a fixer price.) Another escrow hasn't "set up" yet as we're still dealing with inspection issues. And I'm preparing for two new listings at the beginning of the year. Ho Ho Ho.

Don't flip this house

As has been reported here and elsewhere, the flippers are back. And these aren't the moms and pops who watch a lot of HGtv. These are the hardcore investors who buy properties for all cash at sheriffs' sales, run crews of workers through the house, and put them back on the market a month later for $100k profit. This past summer, I had a very good experience with a pro flipper of a house in North Hollwood.

It seems the fast, cheap and out of control pro flippers are back, too. This past week I've seen two of the sloppier, cheaper flips of the year. Yes, they have nice coats of paint and granite counter tops but, uh, hey the heater hasn't worked in years. They couldn't be bothered to replace funky old windows, scrape ceilings, strap water heaters, or make sure that kitchen cabinets don't bump into appliances when they're opened, among other things. Do they think that potential home buyers don't notice? Yes, when a buyer is initially dazzled by a house, they may over look things. But then there's this little inspection period, see? where the buyer is looking for reasons to walk. And during that period, we'll notice everything. Advice: flippers, do it all the way or don't do it at all.

An NYT explanation of why loan modifications aren't working

I always find Gretchen Morgenson, New York Times business columnist, to be very user friendly and readable. Here's her article from yesterday's New York Times about why loan modifications aren't working out so well. An interesting quote:

"The terms of loan modifications also make them especially failure-prone because the government calculates “affordability” (how much mortgage debt a borrower can actually manage) in a highly unusual way — raising serious questions for the housing market over all and for the program’s effectiveness for borrowers. For example, in devising what it considers an affordable mortgage payment, the program doesn’t account for all of a borrower’s debts — the first mortgage, second lien, credit card debt and automobile payments. Instead, it calculates affordability using only the borrower’s first mortgage payment, insurance and property taxes."

The article also goes on to address the issue of high-interest second mortgages held by major banks.

How to cut your monthly nut by at least one third

Okay, owning a home isn't for everybody. And I know I'll take flak for this. But.

The house in the picture is 9953 Aldea. It just closed. I'd been working with the buyers for quite awhile, and they went through the same thing that all buyers are going through now -- short inventory, rising prices, multiple offers. They finally decided to buy the house that they have been renting and living in for the past three years.

With me so far? Okay, their monthly rent was $3000/mo. Typical for a mid-Valley, 2500+ square foot pool home in good shape. Their mortgage now is $1568/month. Yes, property taxes will add an extra $500+ a month. They paid $565,000 and yes, their down payment was large. But still, thanks to today's low interest rates, they cut their monthly housing expense by about one-third. And that's not even taking into consideration the mortgage tax deduction.

Not bad, if you ask me. Just sayin'.

Rumor: stated income loans may make a comeback

I heard a rumor yesterday that stated-income loans may be available again after the first of the year. These are loans eliminate the verification of income requirement, and were popular until the real estate market started to go south. No lender has made these for many, many moons. I'm told the requirements, such as FICO scores, will be much stricter and there will be no 100% stated-income loans.

Opinion: the jury here is out. This will be good for many folks in the entertainment industry and other industries here in L.A. who have decent incomes, but are 1099'd instead of w-2'd because they go from job to job. The downside is that many folks will also take advantage and wildly overstate their incomes in order to get homes they can't really afford.