Sunday Reading: On-Line Housing Search Tools

Here's an excellent article from today's L.A. Times about house-for-sale search engines. The writer notes that most of them ask the searcher to sign in, and several sites then forward the searcher's info to a real estate agent. Of course. They're "lead driver" sites, and they make their money by charging Realtors for the leads, or even by charging Realtors to subscribe. They have to make money somehow, right?

Not to plug my company, but I think Dilbeck.com has an extremely user-friendly site.

Avon, the local r.e. board, IndyMac and the beach

Here's 934 N. Avon. It was listed for $699,000. Not that you care, but due to a clerical mls reporting error, it was reported as sold yesterday for $547,900. Not hardly. It is in escrow and is set to close on August 5 for much more than that. And for those of you that think the local r.e. boards are useless (now, who thinks that?), it has taken me a cumulative two hours and several faxes just to get the info corrected -- and the list price is still wrong. This has been so frustrating that it's making standing in line at IndyMac look as pleasant as a day at the beach.

Good news for buyers and sellers...

Even though there is turmoil in the financial markets, there are still loans to be had with small down payments. A buyer needs only 3% down for a conforming FHA loan and the seller can contribute up to 3% in closing costs. Other loans can be obtained with only 5% down.

And, interest rates are down a little bit. They are still fluctuating, but nobody expects much of a rise there over the next few weeks.

"Stated income" loans are also still possible. These are loans for people who don't get a regular paycheck, are self-employed, or small business owners, etc. A buyer needs 2 years' worth of tax returns and good credit to qualify.

So, if you need to buy a home now, you might find the lending possibilities to be broader than you thought.

...And not so good news for buyers

No, there's no news here about IndyMac or Fannie or Freddie. The news is that there are actually quite a few less listings in the east San Fernando Valley than there were at this time last year. According to the local mls's, we're down about 25% from the amount of listings we had at this time last year. (This is not true for Santa Clarita; the amount of listings are way up.) Traditionally, this part of the summer is slow for new listings. It will likely be worse in August and get a little better after Labor Day. But I think that sellers are reluctant to sell now if they don't absolutely have to.

Australia + Burbank = Wha?

This is a bad picture, I know. But can you read the sign? It says Australian Immigration Service and it's on Magnolia Blvd. here in Burbank. Why is this here? Are Australians clamoring to move to this country, specifically Burbank? If so, why? What do we have, except our just all-encompassing wonderfulness and Zankou Chicken, that they don't have in their own country? Can we get them to bring some koalas with them?

Lenders aren't listening. What a surprise.

For your Sunday morning reading pleasure, here's an article from the New York Times' Business section. No, it's not about Fannie, Freddie or IndyMac. It's about how impossible it is to get in touch with your lender to arrange a work-out on your mortgage. The article is long, but it contains lots of anecdotes, and I've heard stories like this from several people here. I've already blogged about how long it's taking to arrange a short sale, especially with Countrywide -- same thing here. The lenders are just not equipped to deal with what's going on.

Also for your reading pleasure, here's today's NYT Ben Stein's column. It's about applying investing advice to your love life. Why didn't I get this guy before?

Longest escrow ever, or when bad escrows happen to good sellers

Here’s the story of my client, Marc, who was caught in the crossfire of this transitioning market. Marc bought 1210 N. California (pictured above) in Burbank in 2002. Subsequently, he and his fiancée bought a home in a new development in February 2007, with a closing set for June 2007. They planned for the sale proceeds from 1210 to cover much of the cost of the new house.

So far, so good. The r.e. market was still humming along at this point, and we put 1210 on the market in March 2007 for $780,000.

By early summer 2007, we had lowered the price twice and had negotiated three low-ball offers. No sale. Marc refinanced 1210 to cover the down payment of the new house, and the new place closed as scheduled. A qualified buyer for 1210 soon appeared and we opened escrow with a purchase price of $700,000 in mid-July. The buyer wasn’t putting much down, but neither were any other buyers at this time.

Then August 2007 came, and the real estate lending market screeched to a halt. The buyer of 1210 couldn’t get a loan. Neither could anybody else. Marc was now making two mortgage payments, with no end in sight. What to do?

Marc rented the house to the would-be buyer on a lease-option deal. The buyer would then pursue getting a purchase-money loan in early 2008. Why the wait until then? Because we all hoped the lending market would loosen up by then.

Spring ’08 came, and the buyer began to work on getting another loan. The lending market had indeed loosened up. Sort of. Loans still aren’t that easy to get, and this particular one was no exception.

And, by this time, housing prices had come down. The house re-appraised at $630,000. Although he wasn’t happy about the price reduction, seller Marc is a realist. He didn’t want to be stuck paying two mortgages forever. Plus, he and his fiancée just wanted to get on with their lives. The Realtors involved (me, my brokerage and the buyer’s agent and brokerage) shared some of the pain by reducing our commissions (gulp).

The almost-a-year-long escrow finally closed last week. My seller took the hugest hit, obviously. I think this story is instructive as an excellent example of the pain absorbed by individual sellers in this new real estate market.

News on our old friend 2304 N. Sparks

Remember this house? It's a short sale which has been on the market for a very long time. It had an HGTV-redone kitchen. I blogged about it here last February and got in trouble for doing so by the listing agent. My bad. And when Peter Viles of L.A. Times blog LaLand rode along with me for caravan, he blogged about it, too.

It's in escrow, and here's the skinny. The buyer's agent is in my office, so that's how I got this info. The selling price is $485,000 -- way less than the $699,000 it originally listed for. There were apparently several offers. I was told there were offers on it back in February -- for $550,000, no less -- though I don't know why they weren't acted upon then. But short sales are taking a very long time to get approved these days.

The buyer is an investor who put down a lot of cash. I'm told he plans to have a relative with school-age children move in so the kids can go to Muir, the middle school.

No posts for a few days

I will not be blogging for most of the week. But I hope to return next week with a post about the longest escrow ever and another about selling junk- and trash-filed houses.

Short sales and Countrywide

The latest that I've heard on short sales is that it's taking Countrywide over 12 weeks to approve them. This info is from a Realtor colleague with 4 short sale properties where Countrywide has the 1st note. In other words, if you make an offer on a short sale property, don't expect to hear anything for, uh, awhile. OMG, why? Apparently, Countrywide is completely backed up on processing these -- I'd say they're more likely overwhelmed.

Foreclosure and homelessness

Many people who've been reading and posting on housing market blogs lately think that large numbers of foreclosures won't lead to serious social problems. The thinking seems to go, "If you're foreclosed on, no big deal because you can always rent." (Forget the kids' good schools and where the pets will live.) No-big-deal posters, here's an article for you. It's from AOL, and here's a quote:

"Nearly 61% of local and state homeless coalitions say they've seen a rise in homelessness since the foreclosure crisis began in 2007, according to a study released in April by the National Coalition for the Homeless. According to the study, which let respondents offer multiple replies when asked where they're headed once their property is foreclosed on, 76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets. Nearly 61% of local and state homeless coalitions say they've seen a rise in homelessness since the foreclosure crisis began in 2007, according to a study released in April by the National Coalition for the Homeless. According to the study, which let respondents offer multiple replies when asked where they're headed once their property is foreclosed on, 76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets."

Okay, you NBDs, if you think the government has no place in helping those whose homes are facing foreclosure, I think it's time for you to pony up and start contributing to homeless charities.

We have nothing to fear but fear itself...and high interest rates

Okay, in the grand scheme of things, my real estate world is pretty small. But in my experience: In the last week, three separate buyers of three separate properties got could feet about even making an offer. They're convinced that prices will go down, and are too afraid to buy now. I'm hearing this from every agent I work with.

And maybe there's good reason. Due to rising interest rates, another buyer client couple that I work with will be paying $500 more a month on the same mortgage amount that they would have paid in April, even though their own financial picture hasn't changed. Yikes.

Did you see me on the news last night?

If you saw Fox 11 news at 10 last night, or the Channel 13 news at 11, you saw an interview with me about the Countrywide lawsuit. I received a call from a reporter yesterday afternoon regarding this, and they met me at an early evening showing. I was quoted as saying that Countrywide gave away loans like candy, and anybody who could fog a mirror could get a loan. I also said that while Countrywide is the biggest mortgage lender who engaged in dubious loan practices, they were certainly not the only ones. I said more but it was edited down to sound bites, of course.

Your house hasn't sold? Maybe that's because it hasn't been shown.

If you are selling your home in the current market, you’ve probably spent lots of time and money getting your house in top condition. But if you have your agent conducting showings for you instead of installing a lockbox, you are not helping your sale.

As part of their services, most listing agent/Realtors in high-end areas set up appointments with buyers’ Realtors and their clients and then meet them at the property. However, it has been harder and harder to get showing appointments lately.

I’ve recently encountered the following:

• In trying to schedule showings of five properties with a day’s notice, only two appointments could be arranged;
• I had to call one agent five times to get one return call for a showing appointment.
• One agent insisted that we meet her at precisely 3:00 pm. While we were there at 3:00, she was 10 minutes late, announced that we only had 20 minutes to see the house, and had scheduled two other showings at the same time.

I could go on, but you get it.

In my opinion, there are only two reasons that a lockbox shouldn’t be installed: 1) if uncontrollable pets are home alone; and 2) if children are home alone. All valuables and collectibles should be removed from premises prior to showing. That’s just common sense.

Electronic lockboxes and key pads are safe and reliable – only licensed agents have them, and they all have a pin code that must be input each time one is opened. Identity of an entrant can be easily, quickly tracked on line. An agent can call the listing agent or occupant to say they will be showing the house at a particular time, and then go to see the property directly. So if you’re a seller, do yourself a favor and have your Realtor install an electronic lockbox. Your number of showings will definitely increase. And the more showings you have, the sooner you’re likely to be in escrow.

Readying a house for sale

From the "Maybe if you don't believe me you'll believe it if you read it in the LAT" Dept.: Here's yet more Sunday reading from the LAT regarding readying a house for sale. While I think the "door" example is a little extreme, this is terrific, accurate information that helps homes sell faster and for more money.

FHA may shut down "gift" programs

For your Sunday reading pleasure, here's an article from today's L.A. Times regarding the charitable gift "programs" that allow sellers to give a lot of money back to buyers. The way it works is this: a seller contributes up to 6% of the sales price to the organization like Nehemiah, which is set up as a charity. Then, for a fee, the charity gives it back to the buyer as a grant for their home. There are restrictions on both sides, of course -- but I've often wondered why this isn't looked upon as money laundering. So this comes as no surprise to me.

New listing at 13523 Bessemer, Valley Glen

I've just listed 13523 Bessemer in Valley Glen. I hope to have pictures and details up on the regular website later today. This great 3+2, 2000+sf has been immaculately maintained and features one of the nicest kitchens I've seen, which opens to a vaulted-ceiling den. There are gorgeous hardwood floors, updated bathrooms, new custom paint, a spa, and lots of upgrades. List price is $659,000.

And, the sellers of 934 N. Avon (see below) in Burbank have accepted an offer. We'll open escrow tomorrow. Plus, 848 Idlewood in Glendale is closing next week.

Another explanation of how it all happened -- population estimates were very inflated

For your Sunday reading, here's an article from the Arizona Republic (I'm in Phoenix). This is a fascinating look at how a government's own statisticians can be way off the mark in estimating future populations, and the serious consequences those predictions can have. It looks at the community of Buckeye, which was a hell hole and not even a suburb yet when I grew up in Phoenix. Somehow, however, the estimators predicted that this place would have a population of 2 million by 2030, and it began to grow accordingly. Now, it's ground zero for the foreclosure bomb (although I have to say, the other vast suburban metro areas of Phoenix don't appear to be hit that hard at all).

More from the LA Times clipping service here...

And here's another great column from today's L.A. Times about timing the real estate market.

The Short Sale Process

There's a very good article about short sales in LATimes.com. It will be in the Sunday LAT as well. Here's the link. Keep in mind, the banks lose more if they foreclose than if they allow a short sale. They have to manage the property, pay the costs of the sale, keep the insurance up, etc.

Don't open the champagne yet, but pending sales are on the rise

Let's not get too excited yet, but today's L.A. Times reports that pending sales rose last month. Here's the link to the story. The numbers are national, not local, but that would dovetail with what I've been seeing. Increased lending equals increased home buyers, equals increased sales. The end of the article contains a quote from L. Yun, the spokesperson for National Association of Realtors. I'm not sure he's right about a rebound in 2010, but let's dare to dream.

Another great open house

Attendance was terrific as yesterday's open house. See below for a picture and details about 934 N. Avon. I was a little nervous beforehand due to our gloomy economic news on gas and food prices, but attendance was actually better than it was at the first open house I held on Avon. It was actually even better than the usual attendance at open houses during the "boom" years. Once again, the majority of buyers were young couples with kids. No surprise, since this home is on the same street as Roosevelt Elementary, an outstanding public school. But did the house sell? Stay tuned...

Open house in great school district

If you've read any of my blog posts, here or elsewhere, you know how important good public schools are to a neighborhood's real estate market stability and a particular home's desireability. If you're looking for outstanding public schools, come see 934 N. Avon in Burbank. It will be open on Sunday, June 8, from 2:00 to 5:00. You can check the latest API ratings on my regular site on the public and private school page. Roosevelt Elementary, just down the street, posted APIs of 850.

This gorgeous tudor features 4 bedrooms, 2.5 baths, 1647 square feet, lots and lots of updates including a remodeled kitchen, dual zone a/c, all copper plumbing, newer electrical, newer windows, etc. It is listed at $729,000. You can find more pictures and info on my website, or call me for more info. I hope to see you on Sunday.

A little glamour here...

No, I have nothing to do with Britney Spears' real estate (how lucky could a little Realtor-from-the-Valley schmo get?). But for those of you that bemoan the lack of celebrity stuff on this blog, please check out "10 Most Beautiful, Unique and Amazing Celebrity Homes" here. This was sent to me by a new site, International Listings, or intlistings.com. What do you think?

From ICanHasCheezburger.com

Update June 12: This little guy/lady (or someone that looked just like him/her) was scampering across the top of my patio fence last night. I love urban wildlife.

My Downtown Trip

The husband and I spent two days at the L.A. Convention Center this weekend. The occasion was Book Expo America, the annual publishing business trade show convention. It rotates cities (NYC, D.C., LA, Vegas) every year and this year was L.A.'s turn.

This was my second BEA convention and my first trip to the L.A. convention center in many years. The crowd seemed to be about half that the NYC BEA had last year, and I'm told that NYC publishing industry people don't like to come to L.A. because of the vast distances, lack of public transport, etc. For me, I think the Convention Center has a really confusing layout. And believe it or not, it needs more Starbucks and eating options.

I worked downtown for many years and really enjoyed the area even before it was gentrified. It has truly changed since then and I can sorta see what attracts people to expensive lofts. What is still missing, though, seems to be essential services: drug stores, grocery stores (I didn't see the new Ralphs), dry cleaners, street parking, mechanics. Are they out there?

NYT: Letter from Buyer to Seller, and Response

Friday's New York Times featured a sample letter from a potential buyer to a seller of a home they wanted to buy. And the response back from seller to buyer. The title should link to the entire article, but here are the highlights:

Dear Seller:
I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs.
But given that my offer is well below your asking price, I also feel I owe you an explanation.
First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index.
That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent.
Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply.
So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique. Few homes are. I know this may be hard to hear, since you’ve spent years creating memories here. But you may be waiting a long time if you hope to find a buyer with the same emotional connection that you have.
My mindset is hardly unique. We’ve all been reading the headlines. The accompanying articles appear prominently in major newspapers and sit on the Web pages where people check their e-mail every day. Everyone sees them, and the psychological impact is real.
Has your real estate agent laid any of this out for you? Maybe so, and you didn’t want to believe it. But it’s also possible that your agent, afraid of offending you and losing the listing, simply doesn’t want to initiate that sort of discussion. It may be worth sitting down for a candid reassessment.
It will be tempting to view my low bid as an insult. Please don’t make that mistake. Your home is genuinely appealing, and I wouldn’t have written this note unless I was serious about buying it. Getting a firm offer in this market is an accomplishment. So congratulations!
Oh, and one more thing. You presumably need someplace to move. My guess is that you’ll find these same points compelling when it’s your turn to buy. You just might succeed in buying for a better price, too.
I look forward to hearing from you soon.
Yours Truly,
The Realist

Dear Bidder:
Thanks so much for your note. I’m truly glad that you like our home as much as we do. You’re right that my family and I have many great memories of this place, and we hope someday you will, too.
And I just want you to know that I’m not insulted in any way by your offer. The fact is, none of us are very good at buying and selling homes. We don’t do it often, and as much as we know we’re not supposed to let emotions get in the way, it’s hard not to. After all, few people buy or sell anything else as expensive as a home in their lifetimes.
That said, your offer disappointed me. You seem to believe that I’m not aware of how bad things are out there or that I’m in denial. But I do read the headlines, and I priced the house accordingly. I knew I might have to wait awhile to sell it.
I should point out that your data draws on what has already happened in the housing market. Instead, I’d ask you to consider what’s about to happen.
One big reason for the falling prices is that it’s harder to get mortgages. Lenders went from giving money to anyone with a pulse to demanding higher credit scores and larger down payments. All sorts of buyers simply couldn’t make the numbers work anymore.
That may now change. Starting June 1, Fannie Mae and Freddie Mac, which buy mortgages from lenders and help make it possible for them to lend more money, are loosening restrictions on the sorts of loans they’ll buy in many markets. That is supposed to make it easier for people to buy a home with a down payment of 5 percent, or even less. Many more qualified buyers should mean more bids, and I’m willing to wait to see if it turns out that way.
I know you talked about having choices, but presumably we wouldn’t be engaging in this correspondence unless you liked my home best. Given that, I’d ask you to think about something: How often do you find a place that you can actually imagine living in? Sure, there are a lot of other properties out there. But an increasing number are in foreclosure and probably have problems lurking within the walls. So don’t let fear of a falling market keep you out of a home that you truly want.
It’s probably obvious by now that I’m not going to counter with a particular number. This doesn’t mean that I do not want to negotiate. I’d just like you to consider what I’ve said and see if you find it convincing. In the meantime, other shoppers who are interested in my home now have a price to beat. So thanks for helping me out with that.
Just one more thing. Please take another look at whatever mortgage calculator you’re using and see how your monthly payment will change if you brought your price up a bit. It almost certainly is not going to be enough to break you. But it may be enough to get us to a deal.
I look forward to your reply.
Yours,
The Undaunted

I'm reprinting this because I think it is indicative of the current mind-set out there in the real estate market. Of course, all markets are local, and I think any buyer writing such a letter should use local stats. I also think that sellers should almost always counter, even if an offer seems low. You can't win unless you get in the game.

I'm quoted again in the Burbank Leader

I was quoted again regarding house prices in today's Burbank Leader. The headline title here should link to the article. The article is also on my website.

Play banned in Burbank

Burroughs High in Burbank banned the production of a play about the murder of gay teenager Matthew Shepard (pictured, right). The critically-aclaimed play is called “The Laramie Project” and it was produced in 2002 at The Colony Theater here in Burbank – I saw it and remember it well. However, the students who proposed the play to the school in the first place have found a new venue for production – again at Burbank’s Colony Theater. Read the L.A. Times link here. Way to go, students.

The Burroughs principal was quoted as saying this production “would tear this community apart.” (He has subsequently supported the students’ off-campus production.) But Burbank, what’s going on? Are we living in Mayberry R.F.D.? Here’s the irony: the play is just as much about small-town narrow mindedness as it is about the actual crime – sound like anybody you know, Burbank?

C'mon, Burbank, get over it and enter the 21st Century. Theater was my major in college and I still believe it’s a vitally important form of artistic expression in our culture. I really believe that if you want students to learn, and love, this form of expression, don’t just give them big musicals to perform. Give them big ideas, too.

Yikes! My Visit to the Dreaded Americana

I visited the dreaded Americana in Glendale for the first time last Saturday. The husband and two friends from West Hollywood were along for the ride. Our friends frequent The Grove, and were interested to see how this new Caruso project stacked up.

First, is it possible that it truly has boosted Glendale? Local restaurants were packed. Far Niente was booked until 9:00 pm and Tam O’Shanter was packed at 5:30.

And Americana was packed, too, of course. Our friends thought the crowd was different from the usual Grove crowd. Not surprising. I thought it looked like a Disneyland crowd with fewer children. Of course, the Cheesecake Factory had a long wait, but traffic in most of the stores was kinda light. I didn’t get to do much poking around in the stores – except for Barnes & Noble -- as I was with 3 guys and my husband’s shopping mall anxiety kicked in pretty quickly.

My take: it seemed much more like Universal City Walk than a mall. I think that once the dust settles, it will be a destination for young people who want to hang out rather than a major retail hub. And as far as the retail outlets go, I think the few national chains like Barnes & Noble and Chico’s will survive, but the high-end local stores like Barney’s Co-Op and Michael Stars may not be the same in a year or so. I think most shopping dollars will still be spent across the street at the Galleria, with its plethora of major retail chains like Macy’s, Target, Gap, etc. The Galleria was still mobbed at 9:00 pm, btw. That’s just my opinion, though.

And the condos, priced from $600,000 to over $1 million. Will they ever sell them all? I just can’t see it at those prices. Again, they are going to have to attract affluent young people who want to live over Disneyland.

I was curious about the decisions to build this, so I asked Patrick Duffy, of MetroIntelligence, a commercial real estate consulting firm, for his opinion. He says “…I'm a big fan of The Grove, and saw how its development helped raise property values throughout the surrounding area …I'm also a big fan of Glendale due to its location, somewhat small-town ambience and mix of uses, but I think Americana will certainly pull retail visitors from throughout the SFV and SGV areas. What remains to be seen, however, is how successful the residential components are, although people have been willing to pay a nice premium (i.e, 20-30%) for living in mixed-use communities such as this. But do people want to live in Disneyland every day? I personally like my quiet, suburban neighborhood…that's still 20 minutes from most things I want to do, and prefer to avoid the noise/congestion/constant activity of downtown Hollywood, downtown L.A. and perhaps large mixed-use communities such as this…”

Thanks Patrick. It will be interesting to see how this all turns out.

Homes for Sale in South Pasadena and La Canada

In the last few days, I've looked at several properties in South Pasadena and La Canada/La Crescenta. These are not areas I look in often, but I'm working with a buyer who'd like the excellent public schools these lovely communities offer. I was amazed at how few properties are available for under $1 million. There's really not a lot of inventory at all in any price range. If home prices are coming down in these areas, I certainly didn't see any evidence of it, nor did I see any short sale or REO properties. I know this is anecdotal, but I think it's additional proof the current housing crisis has pretty much skipped over the more affluent areas of Southern California.

Coming soon: Judy goes to Americana

Short Sale, Lending and PMI News

Here's some more good news from the lending sector:

Fannie Mae scraps higher downpayment requirements
Friday May 16, 9:54 AM EDT
WASHINGTON (AP) — Fannie Mae says it is doing away with higher minimum downpayment requirements for borrowers in distressed real estate markets.
The government-sponsored mortgage financier said Friday it will require minimum downpayments of between 3 percent and 5 percent for all loans that it guarantees.
That replaces a December policy that required a higher minimum if the loan was for a home in a market with declining real estate prices.
Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market. Thanks, Dana Dukelow, for the article.

Other lenders are doing the same; however, it appears that the market for second mortgages is shrinking. For the average buyer, this is a mixed blessing: once again, you can get a home with only 5% or 10% down. That's the good news. The bad news is that rather than have two loans (say, one for 80% and one for 10%), a buyer will now have just one loan, but will pay "private mortgage insurance" every month.

In short sale news, it appears that the lenders are finally streamlining the process and it isn't taking so long to get an approval on a purchase contract. Also, in short sale cases where there is both a first and second loan, the holders of the 2nd loan are pretty much giving up and going away for a pittance (about $1000). No wonder the lenders of 2nd loans are dwindling!

Open House Traffic is Better than Expected

Sunday, May 18, I held an open house for my listing at 934 N. Avon in Burbank. It's a great 4 bedroom, 2.5 bath Tudor with both character and modern updates, and it's in a fabulous area of Magnolia Park. I had it advertised in both print and on the internet, of course. The turnout was much better than I expected. Here are my numbers. We had about 19 to 20 groups in (a group can be 1 person or 10 people, but they are all together and represent one purchase). The "normal" number of groups last year, before everything went dead in August, was about 15 groups. It was a first open house, so usually the neighbors account for at least 5 to 6 of the groups. Here, there was only one couple who were neighbors. Everybody who came seemed to be a serious house-hunter. Almost every group was at least a 30-yr-old plus couple and at least half the groups had kids. Of those, several had infants. As we all know, couples with kids are the backbone of the middle-class real estate market. And, the temperature in Burbank was over 100 degrees. Nobody visits open houses when it's that hot except for serious lookers.

What does it mean? Is the housing/credit crisis over? No. But I think last month's loosening of credit -- the first since August -- is certainly responsible for buyer activity. Will we get an offer from this? I'll keep you posted. I expect at least several second looks.

Angry renters = scamming conservatives

I know I'm not the first to blog about this story (thanks, Peter, from LALand, for bringing it to my attention). But the site AngryRenter.com is produced by anything but. Here's the link to the WSJ story. And here's a quote.

"Though it purports to be a spontaneous uprising, AngryRenter.com is actually a product of an inside-the-Beltway conservative advocacy organization led by Dick Armey, the former House majority leader, and publishing magnate Steve Forbes, a fellow Republican. It's a fake grass-roots effort -- what politicos call an AstroTurf campaign -- that provides a window into the sleight-of-hand ways of Washington."

I love my Republican friends. And there are arguments to be made against a tax-payer funded bailout. But c'mon! This is just typical of the dirty tricks that a bunch of rich conservatives pull to make working people think they're on their side. Is it any wonder that we non-conservatives are always looking for conservative hidden agendas? It's because they're always there! And the agenda is to sell little people ideas that will enrich big people.

I don't believe arguments that "they all do it." I've never seen evidence that the progressives in this country have the lie machine -- or are even as organized, unfortunately -- as conservatives. Allright, enough rant.

It's over, says the Wall Street Journal

Per yesterday's post, here's a May 6 article from the Wall Street Journal. The Journal is usually very conservative, so perhaps there's some political agenda here; I don't know. But it's interesting reading, anyway. While I don't agree with everything the author says, I think their analysis of the relation of housing prices to income is spot on.

The Housing Crisis Is Over
By CYRIL MOULLE-BERTEAUXMay 6, 2008; Page A23
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading. [emphasis mine]
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Is, or isn't, the real estate sky falling?

The national media, after convincing us that the real estate sky has been falling, is now beginning to question that assumption. Link to LaLand's story here. Apparently, not that many people are walking away from their homes unless they're in serious financial trouble. I, too, have bought into the Chicken-Little-End-Of-Life-As-We-Know-It, only to find that it doesn't accurately represent the areas where I work. Yes, foreclosures are rampant in Palmdale and the outlying areas. But as a percentage of homes here in SFV, it's still quite a small number. Hmm.

The World Is Your Litter Box at Trinkets & Treasures

Trinkets & Treasures, a very cool jewelry/accessory/gift shop in Studio City's Tujunga Village, hosted a signing for my husband's book on Saturday. The book is called The World Is Your Litter Box and it's a hysterically funny how-to manual for cats, by Steve's cat Quasi. We sold quite a few books and got to hang out in this great area for awhile. Thanks to Linda, Suzanne and staff of T&T for making this such a success. The book is available at book stores everywhere and also on Amazon.

Happy Mothers Day! And Sunday Morning Reading

Happy Moms' Day to all you mothers out there. There are some interesting real estate-related articles in today's papers. First and foremost, from the L.A. Times, is an article titled Appraisal Shake-Up Sparks Ire. My take on this: a computer in, say, Des Moines, can't appraise your house. It can't determine your upgrades or ambience (which, yes, do make a difference to prospective buyers). The other articles are from the New York Times. Gretchen Morgenson's first several paragraphs are interesting. You can skip past that. I've also included "When Should the Fed Crash the Party" and an article on storage space "foreclosures." Yikes.

Rim of the Valley is Safe for Now

A bill that may begin preserving open space in the mountains that ring the Valley was signed into law this past week. Actually, it calls for a study by the Department of the Interior on expanding the Santa Monica Mountains National Recreation Area. Click here for an article about this from the Burbank Leader.

Return of the 10% Loans

10% loans are back for conforming loans (up to $417,000) and for some jumbo-conforming (up to $729,000) and jumbo (over $729,000) loans. Most programs, however, do require full documentation and good credit scores, and very few allow "stated income" documentation. I'm told that Countrywide has a 10% program without mortgage insurance. That's the first I've ever heard of that, although I'm also told the rate is higher. While we're on the subject, here's a clarification: although in recent months many people have referred to "stated income" loans as "liar" loans, that's not necessarily the truth. Most people who are w-2'd by their employers can easily get full documentation loans. Most folks (like me) who are independent contractors, have their own businesses, and/or receive 1099s instead of w-2s are "stated income" buyers as their income can change year to year.

New Listing! Remodeled Tudor in Burbank

I'm pleased to have this new listing at 934 N. Avon. It's priced at $749,000, and more pictures can be found on my site. Here are the details: 4 bedrooms, 2.5 baths, vintage charm + modern updates + the best Magnolia Park has to offer. This gorgeous, 1674 sf. Tudor offers a formal living room with built-ins, formal dining room, remodeled sunny kitchen with new maple cabinets, and new, long countertops and appliances. The circular floor plan also features a special central living space that would be perfect for a breakfast area, a family computer or a play area. Three bedrooms and 1 + ½ baths are also downstairs. The private new master suite is upstairs and features a peek-a-boo view, new luxe bathroom with separate shower and tub and lots of closets with built-ins. A custom bonus office is wired for digital video. Of course, there’s a special security parking area plus a two car garage. The rear of the home features a charming patio area with custom brick work and a large green backyard with a solid shed and lemon tree. Other features include dual zone a/c, newer all-copper plumbing, newer electrical, newer windows and cat 5 wiring throughout the home.

Jacarandas are back in bloom

Ah, the Jacarandas are in bloom again. To me, the lavender blossoms are the first sign of spring...no, summer, no, June gloom season here in the Southland. For great vistas of lots of Jacarandas, drive down Glenoaks towards Glendale or up Kenneth to Burbank.

Brooklyn is cheaper than the San Fernando Valley

Believe it or not, there's a super-affordable home in Brooklyn, NY. Features include Completely redone top-to-bottom, front-to-back!* Tumbled stone entrance walk* Renovated Bath* Renovated Kitchen with newer stove, new cabinets and new stacked washer/dryer* Bedroom with Murphy Bed + 'Built-ins' ... (doubles as a den)!* Walkout to fenced patio* 100 Amp service* 2 Satellite Dishes and Receiver * Window Air Conditioner Available. All this for only $179,900! You can't get a price like that in the Valley yet. Oh, yeah. One other thing. It's 300 square feet on an 800 square foot lot. But it's in hipster capital of the world, Brooklyn! I bet they'd thrown in the window a/c for a full price offer. Thanks, Paula, for the tip.

3 Ways Sellers Sabotage Their Sales

The current real estate climate here in Southern California has changed considerably, as we all know. It is a buyers’ market now, just like it was a sellers’ market a short time ago. These days, there are fewer qualified buyers, lower house prices and more inventory. Somehow, though, many sellers have just not gotten the message, no matter how loudly it has been broadcast. If you’re a seller, here’s what not to do.

1. Price your home according to what you “need” to get in proceeds
I can’t tell you how many times I’ve heard, “If we price it that low, we won’t have the money to buy a new house.” Or, “We need to get X amount of dollars because…well, we just need to.” What a seller needs to get and what a home is worth in any market are two different things. I’d love for you to make a fortune off your sale and retire, but that’s probably not going to happen, and you need to price your home according to your local market now. To price your house correctly, look at comparable sales. “Comps” are those sales closest in time (no more than 90 days old), closest in size/amenities, and closest in distance. Then, listen to advice from broker caravans and also see how many showings you’re getting. The less showings means the more over-priced you are. The sooner you adjust your price to reflect the market, the more likely you are to get maximum proceeds. The longer you wait to appropriately price your home, the less likely you are to realize profits in a declining market.

2. Assume that the Condition of your Home Doesn’t Matter.
It’s tempting to think that buyers with vision will see past your home’s defects. Nope. They can’t and they won’t. Buyers these days are very educated. Buyers are watching the fix-up shows on HGTV, visiting model homes, going to open houses, and looking at beautiful interior shots on the internet. You’re competing with other homes, so please do what you can to make your home show really well, starting with the outside. I’m not asking for a remodel, just garden, clean, clear, paint, contemporize and repair if necessary. See my showing tips page for ideas.

3. Refuse to Work with Offers.
As a seller, you may receive offers that you think are too low. Don't get mad. You’re probably right – it is too low. But I’ve heard several rationales for dropping an offer: “We haven’t been on the market long enough,” and “Those buyers don’t realize how nice this house is,” etc., etc. If the buyers didn’t really like your home, they wouldn’t have put in an offer in the first place – and these days, they have plenty of choices. They, too, want a good deal, and are probably willing to negotiate. You’ll never know what that offer can work into unless you submit a counter offer, or two, or five. Don’t let your pride get in the way of a sale – work with every offer that comes your way. You can’t win unless you get into the game.

I'm So Sick of Hearing About Americana Part II

Just in case you've been living under a rock somewhere and could have possibly missed this, Americana at Brand in Glendale is now officially open. Talk about p.r.! LACurbed has been taken over with Americana news, there was a full page ad in the first section of the LA Times, and there was even a story about it on NPR. Here's an item from LACurbed about the condos there:

. The 100 units are still under construction, but this is the finished unit they're showing off--it's a 1,700 square foot, 2-bedroom that's listed for $1.024 million. The leader of the tour noted that the windows have sound-proofing to entirely muffle all outside sounds. The tour guide also dropped some more information about that fancy concierge service: Apparently, they will dutifully do such chores as send birthday cards to your family members every year if you give them the dates. (That was the example given.) Overheard #1 on the tour: "Nice, but that's expensive." Overheard #2: "This is like Vegas living." Overheard #3: "The elevator is too small." Wow. Who needs a nice vintage Spanish with a view on the hill when you can get somebody to send your birthday cards for you?

Taste Burbank, er, Chicago

I was thrilled to note that today's L.A. Times' food section listed Burbank's own Taste Chicago in their list of the most excellent hot dog stands in the L.A. area. The deep-dish pizza is pretty excellent, too. LAT says, "The excellent balance of elements makes this the most satisfying Chicago dog around."

Listing news - Coming soon and update

Update to the update: the price on Idlewood has been reduced to $585,000 as of May 1!

Update on 848 Idlewood in northwest Glendale: this house is all spiffed up and shows really well. If you saw it before, you may want to see it again. Here are the details: 3 beds, 2 baths, living room with fireplace, dining room with fireplace, den, a/c, hardwood floors and new carpet, big galley kitchen, almost 1800 sf., offered at $620,000.

Coming soon in Magnolia Park: a rare (for MP) four bedroom, 2-1/2 bath remodeled Tudor, redone kitchen and baths, separate dining room, office in garage, fabulous floor plan, vintage charm plus contemporary updates, gorgeous landscaping and more. It will be offered at $749,000 and should be available to show by May 5. Pictures will be coming soon.

Sunday Morning Reading from the New York Times

Our favorite Republican business columnist, Ben Stein, has another great article in today's New York Times (the title should link, but if it doesn't, here's another link here.) For those of us who have wondered exactly how this credit crisis could happen, Ben spells it out by quoting investor David Einhorn extensively. One of Ben's quotes about Wall Street: "It looks to me as if the inmates are running the asylum. One truth, that deregulation is sometimes a good thing, has been followed down so long and winding a road that it has led to an immense lie: that deregulation carried to an extreme will not lead to calamity." You tell them, Ben.

Swat Team on San Jose - Update

Update 4/30/2008: This is hearsay, but a coworker says it was a gang-related shooting. Great. And Burbank P.D. doesn't want to publicize it, because they don't want even MORE gangs here. It's 3:00 pm, and San Jose from Glenoaks to 6th is blocked off. A Burbank PD swat team is assembling, and there appears to be a covered up body in the road. Anybody know what's happening?

Beam Us to Aroma for More Celebrity Sightings

Everybody's favorite ironist and space ship captain, William Shatner, was spotted at Aroma the other day. Aroma, in Tujunga Village is one of the best coffee places/cafes around and is profiled on my "Best of Studio City" page on my regular website. It goes without saying that WS knows what's cool.

L.A. county foreclosures by zipcode

What we've all been waiting for. You can now search for the number of foreclosures per county zipcode, thanks to the L.A. Times. This link will give you monthly statistics, but won't give you actual addresses. Thanks, Peter Viles of LALand! Okay, so I just checked my zipcode. There were four foreclosures at this time last year, and now there are eleven. Out of 8700+ properties. I read all the bad foreclosure news, too, and expected a much greater number based on what I've read. Just goes to show that all real estate stats, like politics, are local.

New Loan Restrictions on New Condo Complexes

This is a rumor, but if it's true, it's not so great news for condo developers: As of May 1, Countrywide will not fund any purchase money loans for condos in developments that aren't at least already 50% sold. For example, if you'd like to buy a condo in a new development with, say, 40 units, at least 20 units need to be already sold for you to get a loan from Countrywide. Okay, you may not want a loan from Countrywide (who would?) but this is just another restriction on your choice of lenders. And if Countrywide is going this way, expect the rest of the lending industry to follow.

Rising Rents - Just as I Predicted

Here's another side effect to the foreclosure crisis -- the cost of rentals is rising. Check an AOL article here. As more people lose their homes and have to rent, and as more renters wait for home prices to drop, rental unit inventory drops and rental rates rise. The statistics are frightening: a prediction of 5% rise overall, with some markets, like San Francisco, going up much, much more.

Difficult Loans for 2nd Properties

Mortgage loans are still hard to get. I won't name names or give addresses here, but an escrow of mine just bombed. The buyer already owns a home and wants to downsize. He was in escrow on a smaller house and planned on renting out the house he currently owns and occupies. The underwriter didn't like that somebody who wasn't retired wanted to downsize without selling, and would only approve the purchase as investment property.

So what's the problem? Investment property requires a down payment of more than 20%. My buyer had 20%, but not more. And the interest rate was higher. Bye bye escrow. While my buyer is pretty philosophical, the people who are really hurt here are the sellers. They are not in good health and were counting on the sale proceeds for help.

Good News - Cheap Ice Cream!

How much better can it get?! 31 cent scoop night is back at the Burbank, Toluca Lake and Studio City stores (and all stores nationwide) Baskin-Robbins stores on April 30 from 5:00 to 10:00 pm. Is this promotion a sign of a recession? Isn't ice cream a steady seller during both good and bad economic times? Who knows! Who cares! At this price, get two scoops and worry later about the calories.

The World Is Your Litter Box

Happy Passover, humans. This isn’t about real estate but I hope you’ll indulge me anyway. Here’s the cover of my husband’s cat’s new book, The World Is Your Litter Box. It was written by Quasi with minor help from (husband) Steve Fisher and is a wildly funny how-to manual for cats. While it is all-age appropriate, it's not a kids' book. Published by Sterling, it’ll be out May 6, but we received an advance copy yesterday and we’re thrilled. I’ll post book signings as they are scheduled but the first is at the Encino Barnes & Noble on June 12.

The link to the book’s website is above, and Quasi’s blog is http://theworldisyourlitterbox.blogspot.com. Cat blogs are more fun than real estate blogs, if you can believe it. The latest post is the cats’ story of Passover, which is referred to by cats as Purrover.

Elmwood Finally Closed

Finally! After six months and seven offers, 1047 E. Elmwood in Burbank finally closed. It had been listed at $849,000 and the sale price is $800,000. It's a two bedroom, one bath with a redone kitchen and guest house. What made it so desireable? The flat, buildable 15,000+ square foot lot.

Good Articles from Sunday's New York Times

Here are links to a couple of good real estate articles in today's (April 13) New York Times Business Section. The first, by columnist Gretchen Morgenson, is entitled "So You Thought You Had an Equity Line" and is about the increasing bank freezes of home equity lines of credit . Yikes. The second is from sometime-tv-star Ben Stein (see my post on him from February), and is yet another call -- from a Republican, no less -- for more regulation of the financial markets.

Coyote Sighting

We've heard over and over that urban wildlife is getting bolder and less afraid of humans. Here's more evidence. On Friday, at 10:30 in the a.m., I saw a very healthy-looking coyote galloping down Kenneth towards Alameda. That's pretty far into human territory. That's pretty late in the day, too -- usually they're hiding after dawn. He/she was making no attempt to hide, either. Please keep your kitties indoors.

Another Distinguished School in Burbank!

Joaquin Miller Elementary here in Burbank has been named a California Distinguished School for 2008, after a rigorous, months-long application and assessment process. Read the Burbank Leader article here. This is huge -- now all of Burbank's elementary, middle and high schools have received the award at one time or another. This is another reason that Burbank rocks as a community and a good place to live. For you folks without children (and I'm one), a community with good schools is still a preferred place to live because good schools tend to keep an area, its housing stock, and values more stable.

More graven animal images in Burbank -- this elephant guards a bar

What we've all been waiting for...more graven animal statues in Burbank! This elephant guards the alley entrance of a cool bar in Burbank called The Blue Room. Note that he's ready to fire his gun at any wrong-doers. I don't know what the hoop in the other 'hand' signifies...perhaps something having to do with a sobriety test? And he only has one tusk. But considering this is an all-drinking-ages bar is peaceable, I don't think he'll need more than one. The Blue Room is located on San Fernando just above Alameda, and is the coolest tavern in Burbank now that Bar 21 is closed.