Monday, July 30, 2012

See?! It's NOT our imaginations! Inventory IS short!

Here's a terrific article from yesterday's L.A. Times about our short inventory.  I'm copying the whole thing (and bolding some very pertinent info), but for those of you who want a link, here it is.

Shrinking supply of homes for sale has upended market dynamics

The stock of homes listed for purchase has fallen significantly from last summer, in turn raising prices and homeowners' equity stakes and reducing total sales.

By Kenneth R. Harney

July 29, 2012

WASHINGTON — Though many home shoppers who assume they are still in a buyer's market find it hard to believe, one of the sobering fundamentals shaping real estate this summer is shrinking inventory: The supply of houses for sale has fallen significantly in most areas compared with a year earlier, sometimes dramatically so. And that is having important side effects by raising prices and homeowners' equity stakes and reducing total sales.

In major metropolitan markets from the mid-Atlantic to the West Coast, the stock of homes listed for purchase has dropped by sometimes extraordinary amounts — 50% or more below year-earlier levels in several areas of California, according to industry studies.

In Los Angeles, available inventory is 49% lower than it was last summer, San Diego by 53%, reports Redfin, a national online realty brokerage. In Seattle, listings are off 41%. In Washington and its nearby suburbs, listings are down 28%.

According to the National Assn. of Realtors, the total number of houses listed for sale across the country in June was 24% lower than a year earlier. The dearth of listings is often more intense in the lower- to mid-price ranges, less so in the upper brackets.

Just south of San Francisco, Redfin agent Brad Le says inventory in Silicon Valley is down so drastically — and demand so strong — that the bidding wars are spinning off the charts.

"We're not just talking about 10 or 15" offers, he says, "but sometimes 40 and 50."

Some buyers are inserting escalation clauses into their contracts to keep pace with counter-bids, and waiving financing contingencies, inspections and even agreeing to increase their down payments to counter any differences between the accepted sale price and the appraised value. One modest, 1,700-square-foot house recently was listed at $879,000. It drew more than 50 competing offers and sold to an all-cash buyer for $1,050,000 in less than a month.

Silicon Valley is in its own special economic niche, but inventories have declined nationwide. Online real estate and mortgage data firm Zillow reports that some of the steepest declines are in places hit the hardest during the bust, and where sizable percentages of owners still are underwater on their mortgages. In Phoenix and Miami, for example, 55% and 46% of owners, respectively, have negative equity.

Both cities have seen significant drops in inventory, and both are experiencing strong appreciation in home prices. Phoenix prices are up 14.7% for the year and Miami by 9.7%, according to data from research firm CoreLogic.

What's behind the widespread declines in listings?

Analysts say negative equity plays a major role — it discourages people who might otherwise want to sell from doing so. They don't want to take a big loss, especially in a slowly improving price environment. So they sit tight rather than list. Banks with large stocks of pre-foreclosure and foreclosed properties are doing the same, creating a so-called "shadow inventory" of houses estimated to total 1.5 million units.

Where's this all headed?

Stan Humphries, chief economist for Zillow, says the likely trend is for more of the same: Constricted supplies will lead to price increases, especially in segments of local markets where demand is strongest. Longer term, price increases will gradually rewind the cycle, increasing owners' equities and convincing more of them to list and sell. This, in turn, should put a brake on price increases, especially under today's super-strict mortgage underwriting and appraisal practices.

Bottom line for anyone looking to list or purchase any time soon: Though conditions vary by location and price segment, lower supplies of houses available for sale are changing market dynamics — putting sellers in stronger positions than they've been in years.

Sunday, July 29, 2012

R.E. follies of the week

Here's how the week went. 

My client and I are still waiting to hear about his bid on a Silverlake property being sold by Better Shelter.  If you're not familiar, BS does a lot of very nice rehabs, mostly on the eastside.

Other clients and I were so excited to learn that a home they liked in Sherman Oaks was actually available.  Yes, it had had other offers, but was not in a bidding war! Sound too good to be true? Well...the agent insisted that her client would take nothing less than full price.  The seller needed to find a replacement home, but that was not a contingency for selling the current home.  So we wrote a full-price offer.  And were then told that the seller needed at least a 30-day rent-back, or longer, after close of a 45 day escrow, as she didn't want to move twice.  Long-term rent-backs are extremely rare and very unpopular, so we declined and the negotiation ended.  The seller then raised her list price by $10k.  Good luck with that...

And here's another reason that inventory may be short: sellers are selling their homes privately.  I was about to list a nice home in Woodland Hills, but the neighbors approached the sellers with an offer first.  No Realtor is involved.

Obligatory Olympics post: how is r.e. like the Olympics?

Okay, I know this is stretching it, but I'm trying to be topical here.  How is real estate like the Olympics?
- Sometimes it's an endurance sport, especially lately;
- Sometimes it's a game of speed;
- There's lots of competition (especially lately);
- And a lot of disappointment;
- World records (or at least in-my-memory-records) keep getting broken;
- There's a parade of nations.

Friday, July 27, 2012

Tentative short sale approval in West Hollywood -- yippee!

My West Hollywood buyer client and I learned that his short sale has been tentatively approved yesterday for a September closing.  Whee!  For those of you who aren't yet familiar with short sale timetables, here goes:

- My buyer wanted to submit the offer in February when he heard the home might be coming up as a short sale.  However, the seller didn't get his paperwork into the listing agent in a timely manner, so the property didn't list until late April.  The seller is ill and living out of the area, so he has a true hardship.
- Buyer conducted an inspection right after the property listed, so he would be able to write an offer without an inspection contingency.  Side note: the buyer lives close to Marix in Weho (pictured above) and we were all excited about going there for margaritas after the inspection.  But it was Tuesday Taco night and we couldn't get in.  Bummer.
- Buyer submitted his offer in early May and it was accepted by the seller soon after.  It was then uploaded to our favorite bank, BofA, aka the evil empire.
- No word for a long time.  Then, the bank-ordered appraisal was done in June.  Apparently, it was done by a Realtor "assistant" who took pictures for ten minutes and that was all.  No Realtor or appraiser ever actually entered the property.
- Here it is at the end of July and we've just heard that the sale has been tentatively approved. 
- We're supposed to close in September.  So, that's seven months since the seller determined to short sale the property, and four+ months from acceptance to close.  That is, if there are no further hiccups along the way.

Thursday, July 26, 2012

Panel discussion of blogging -- with me!

John Aaroe Group will be holding a panel discussion of blogging next Monday, July 30 at its Sunset Blvd. office, and I'll be one of the panelists.  I'm honored and excited.  What do you like/not like about my blog posts?

Monday, July 23, 2012

Scenes from a crazy local market

You've heard me complain that everything is selling for over the listing price these days.  Here are some examples from the past week.  Some were my transactions and some were my colleague's transactions.

Tujunga - Five offers on an unapproved short sale, all over the list price of $499k.
Studio City - Six offers on a home listed for $649k.  We offered/countered at $685k and it still went out higher.  In my opinion, there may be appraisal problems there, but I'm obviously the only one who is concerned.
Burbank - Cute home got three offers/counters at least $20k over the list price but it still went out higher.
A home on Hartsook in Valley Village had 31 offers.
And best yet: a home in Westwood that went out at $2,700,000 in multiple offers. 

The other thing I'm seeing: although it seems like it takes no time at all to get offers, it seems to take forever to get a response on them.  It's taken about a week to hear back on everything which seems like an agonizingly long time to wait. I know; I'm guilty of this too.

Wednesday, July 18, 2012

Yes, local home prices went up last month and here are the stats

Did it seem to you like local housing prices rose last month? This L.A. Times article says they did; local prices have risen 5.3% in the last year.  Of course, as I've always said, there are lies, damn lies and statistics, but I have seen an overall price uptick in the areas I serve.

Sunday, July 15, 2012

The 3.8% "real estate tax," home equity lines and more -- Sunday reading

Have you been getting lots of emails warning you about the 3.8% tax that you'll pay on your house sale? Your worries are over -- L.A. Times explains it all for you here.  For those of you that don't want to read the whole article, here's the dope: "Say you and your spouse have adjustable gross income (AGI) of $325,000 and you sell your home at a $525,000 profit. Assuming you qualify, $500,000 of that gain is wiped off the slate for tax purposes. The $25,000 additional gain qualifies as net investment income under the healthcare law, giving you a revised AGI of $350,000. Since the law imposes the 3.8% surtax on the lesser of either the amount your revised AGI exceeds the $250,000 threshold for joint filers ($100,000 in this case) or the amount of your taxable gain ($25,000), you end up owing a surtax of $950 ($25,000 times 0.038)." A surtax of $950 on a $525k profit? Stop complaining.

And from Gretchen Morgenson at the NY Times, here's a column about the looming equity line of credit resets -- just when you think everybody's first mortgages are no longer such a problem, up pops the resetting interest rates on the LOCs, which are mostly 2nd mortgages.  My take is that the LOCs' interest rates were always higher because they are riskier.  Shouldn't the lending institutions take on some of this risk?

Thursday, July 12, 2012

Why foreclosure reform might be a good thing

This property is 10633 Chiquita in the Universal City area of Toluca Lake.  I sold this to Carlos and Elaine back in 2007 for $867k.  It had been extensively remodeled and was gorgeous.  Unfortunately, Carlos and Elaine fell on hard times (didn't everybody?) and attempted to modify their loan last year.  RCS, the servicer, gave them the run-around.  At the beginning of this year, just as the owners began to consider the short sale process, the lien holders foreclosed on the owners.

And then turned around and sold it to an investor for $440,000, stating that it was a 2+1 instead of a 3+3.

But somehow, before that, RCS couldn't be bothered to reduce the interest rate for Carlos and Elaine even a little bit, let alone write down principal.  Or give them time to short sale it.

Why not? If the lien holders were willing to take such a big hit, for way under market value, why couldn't they modify the original loan? Your guess is as good as mine.

Something is really, really wrong here.

By the way, the house is back on the market now in the mid-$500's and the listing agent (and I) think it will go for the mid-$600's.  That's a tidy little profit for the current owner.

Tuesday, July 10, 2012

Check out my new Yelp review!

I was thrilled to receive this Yelp review from my client on recently-closed Weslin in Sherman Oaks: 

Judy recently handled the sale of my aunt's home in Sherman Oaks for me. As executor of the estate and trustee of the trust holding the deed, there was a lot of unfamiliar territory for me. After reading reviews for real estate agents in the area, I selected Judy to list the home. I was glad I did!

From the beginning, Judy adopted her role as the "seller's agent" with a high degree of professionalism and enthusiasm. Her advice proved to be spot on, and I appreciated her calm demeanor when things became even more complicated (17 wildly different offers for the home flooded in the first week). This was not your typical sale due to differing disclosure requirements, legal issues, etc., and I am very glad that Judy was there to help me navigate the process.

I cannot recommend her highly enough.

Saturday, July 07, 2012

Coming soon: Hollywood Hills midcentury modern by Ralph Soriano

On your marks and get set, MCM lovers -- a refreshed Ralph Soriano home is coming to market soon in the Hollywood Hills.  As you may know, Soriano was one of the titans of mcm design and not many of his homes still exist.  It will list at almost $1.2 million and features 2 beds plus office, 1.75 baths, A LEGALLY RENTABLE 1+1 GUEST HOUSE (which will help you qualifiy for a higher mortgage), skyline views, and more.  The redo was done with the highest quality materials by a lover of MCM.  It's not on the market yet, and it isn't my listing - total bummer - but if you're interested, call me.

Friday, July 06, 2012

Revelation neighborhood: Sunland and Tujunga. It's true.

Just when I think I've learned about every neighborhood in the county, I get surprised by a new community.  This time it's Sunland and Tujunga.  Sure, I've shown property there before.  But this time, I've discovered a couple of new neighborhoods that are very nice and off the beaten path.

And the beaten path is Sunland Boulevard, which turns into Foothill.  This long stretch of road is anything but impressive, and kind of actually makes you wonder about the neighborhoods on either side.  However, take for example, 7818 Beckett, pictured above.  This is in a beautiful residential neighborhood close to Apperson Elementary.  The other homes on the street are equally nice.  This is a 1600+sf, 3+2 with den and is in move-in condition.  And the price is an unbelievable -- to me anyway -- $409,000.  There's another home on the street that is similarly sized for $385,000.  As for Tujunga, I saw a home there yesterday in a neighborhood that reminded us of Carmel without the ocean.  It is 2500+ sf for $499,000 (it's a short sale and will likely go out for more). Oak trees, mountains, greenery...

And yes, the neighborhoods are a little bit remote.  But they are close to Pasadena and Glendale and all those communities have to offer.  And it's not a bad commute to downtown L.A. or Burbank.  So if you're looking for this price range, here's a new area that's definitely worth considering.