Rising mortgage interest rates and home sellers and buyers - what it means

By now, you've probably heard that mortgage interest rates are rising and may go up as high as ('gasp') 5% by the end of the year.  That's still historically very low, but here's how it will affect you.

If you are selling your home in Burbank, Studio City, Toluca Lake, Sherman Oaks or any other place in our region, rising rates will have a dampening effect on activity.  Some buyers will be knocked out of the market and that should "stabilize" prices a little bit.  Higher interest rates usually exert a downward pressure on prices.  That doesn't mean that you won't get multiple offers for your home if it's priced right; it just means that there may be less offers than we've been experiencing. The offers may not be quite as high, either, especially if home inventory increases. However, your home will sell if it's priced right and marketed correctly.  (See the marketing page on my website at JudyGraff.com.)

If you're a home buyer in the San Fernando Valley, all of the above will be good news for you except the interest rate part.  Yes, it will cost you more to buy a home.  But you won't have as much competition (some of my Valley home buyers wrote eight to ten offers before getting one accepted) and prices won't be rising as much.  And if inventory increases, that will have a downward effect on prices.  So keep looking.  Your house is out there.

If you're a buyer and you're currently in escrow, make sure your lender locks in your interest rate.

Caveat: some of the neighborhoods here in the Southland are immune to the effects of rising rates.  The really, really expensive high-end L.A. markets are still awash in cash, with a lot of that coming from overseas.

How can we miss you when you won't go away? Or the story of the Studio City condo

This is the story of the Studio City condo that my buyer closed on last month.  The names have been changed to protect the guilty.  Yes, this was one of the bad ones.

My buyer had made several offers already when this condo came on the market in early February.  Our offer on it was immediately accepted. Yay!  It was a short sale, but the short sale was approved in record time – also “yay” and “it’s a miracle” -- and we prepared to close 30 days later in mid-April.

A week before closing, the seller’s dad announced that they had no idea the condo was closing and they not only would not be leaving, they also would not sign the necessary paperwork to close it.  We were incredulous. How could that be? Well, turns out that they just hadn’t found a suitable place to move to yet.  At that point, not only had my buyer made moving plans that were difficult to alter, but his loan documents were ready, and the condo itself was about to go to foreclosure if it didn’t close shortly.

Through the coming days/weeks, the seller’s dad refused to give us a closing date or a move-out date.  Contract? Ha! It meant nothing to the sellers.  Nobody could budge them.  The communications were extensive – I have over 400 emails about this in my file and that’s just me (so much for you guys that think we Realtors just open doors and say, “Here’s the kitchen.”)  The sellers stopped communicating with those of us who they believed to be “against” them.  I pretty much assumed that this was a lost cause.

Where was the listing agent? Missing in action. Why didn’t my buyer client cancel the sale? Because the condo was perfect for him and, sadly, by late April he was already priced out of the Studio City housing market.

Although it is typically discouraged, my buyer reached out to the seller dad.  And seller dad began to communicate directly with the buyer.  They actually got somewhere (by this time the seller dad had pretty much alienated everybody else on the team, and my buyer has the magic touch.) Of course, my buyer had to do the accommodating. The foreclosure was postponed again. Whew!  And a month after it was supposed to close, the seller dad gave my buyer a date for both closing and for possession.  My buyer was able to move his plans around to accommodate the new date.

And the closing finally, finally occurred. The sellers moved out.  As much agony as we went through, my buyer client’s efforts made this happen.  We were thrilled to celebrate on his new patio last week, and toast the buyer’s persistence.

Prices of homes for sale increased locally, as if you didn't know

In case you did not see the L.A. Times, home prices increased 24.7% year over year.  And not just for homes in Burbank, Toluca Lake or Studio City either -- this is an average of five counties.  L.A. county home prices increased 30.2% to an average of $410,000 per house.  Here's the link to the article.

621 N. Keystone in Burbank closed today

621 N. Keystone in Burbank closed today for $607,500.  It originally went into escrow at $615,000 but there were some needed repairs that lowered the price.  We held our breath on the appraisal but it came in to value and is now the highest price by square foot in the neighborhood. The sellers are wonderful and the buyers are, too.  It was something extremely rare -- a smooth escrow (very unusual these days).  I hope the buyers and their baby daughter will be very happy in their new house and I wish my wonderful seller clients the best of luck, too!  Thanks to Gary Mazziotti, my partner on this transaction, and the terrific buyers' agents too.

New interest rates and new r.e. stats

Yes, interest rates went up this week.  Again.  Conforming loan rates are now hovering around 4.2%-4.3%. The lenders that I've spoken with don't expect them to go down much in the near future, if at all.  They are still at historic lows, but that probably doesn't make you feel much better if you're a buyer.

And here are some interesting local stats from California Association of Realtors:

- From 2001 - 2007, all-cash purchases were about 6.2%-8.4% of total sales,

- In April 2013, all cash purchases were 29.3% of total sales,

- 27% of California sales are to non-U.S. citizens,

- 66% of investor buyers are holding for the long term,

- 75% plan to hold for about 6 years,

- 25% are flippers,

- 67% investors are paying cash,

- For those who sell, the return on investment is around 14%,

- 78% of investor purchases were single family homes,

- 14% were multi-family homes.

Will this all change? Of course.  When? I don't know.  But the real estate market has really surprised all of us with its quick turn arounds in the last few years.

Real estate in Spain

Just what you wanted to know -- how's the real estate market in Spain?  Well, since I was there last week I'm able to tell you.  The Spanish economy is not good.  Unemployment is really, really high and of course the Spanish are experiencing somewhat of the same kind of real estate market that we did in 2008+.  A lot of smaller areas have new developments that are unsold and, in some cases, not even finished.  The picture above is of a town in Don Quixote country.

...But of course, in the highly desirable centers of the bigger cities, premium apartments and homes in the bigger cities are going up in price.  Sound familiar?

But what of all those lovely character homes in the centers of the old cities? Wouldn't it just be fabulous to own one of those? Apparently, nobody wants them.  There is no place to park.  The streets are just a few feet wide.  (Imagine trying to get your brand-new front-loading washer dryer set delivered.)  All electrical wiring is on the outside of the building.  It's a real problem to get anything fixed as the municipalities won't let you make changes to the outside of the residential buildings.  Sellers have to hang for-sale signs from their windows as there are no yards to put posts in (see above).  So as interesting as this all was, I think I'll stick to San Fernando Valley real estate for now.

I'm leaving the country...

...because Studio City real estate and Burbank real estate have been so rough.  Seriously, I need a break and am taking a short vacation from San Fernando Valley homes and condos.  I will be posting again in early June when I'm back.  Have a great Memorial Day.

HGtv's House Hunters Renovation

I shot an episode of House Hunters Renovation last week with some clients who recently purchased.  It was really fun -- the crew were really nice and very professional and of course I love my clients. Unfortunately I can't tell you any more than that right now and I don't yet know when it will be on.

229 N. Beachwood in Burbank closed last week

This is 229 N. Beachwood.  It was a flip, and was purchased by my wonderful clients Scott and Robin.  The escrow went off without a hitch (what a nice change)!

You may remember Beachwood when it was on the market in 2012.  That's it, above.  It was, uh, fanciful.  Whimsical.  With halls leading to dead-end rooms.  Everything was painted a different color.  There were lots of cats (my fave!).  The flippers who bought it opened it up, redid the landscape, kitchen and bathrooms, and flooring but kept lots of the character features.  My clients fell in love when they saw it.  

The flipper group were also very willing to address all issues that came up during the inspection (not uncommon with a flip).  Thanks, Mike Toledo, for being so heads up.  And Scott and Robin, how will you decorate all that new space?

Houzz.com

I've just discovered another monumental time-suck Houzz.com.  It's like Pinterest, but it's just for decorating and finding contractors.  You want real estate decorating porn? Well, here it is, baby!

Closed last week: 16909 Flanders, Granada Hills

My listing at 16909 Flanders in Granada Hills closed last Friday for $539,000.  We had it in escrow for $550,000 but the appraisal came in at lower, so everybody took a haircut.  I have a history with this house.  I sold it to the previous seller, sold it for them to the current seller, and now have sold it to future sellers.  In the meantime, I went to a lot of fun parties there and was even naked in the pool (see below -- it was in the line of duty).  If you're a buyer, it's worth it to check out this neighborhood.  The housing stock is really nice, prices are still reasonable and Granada Hills High just won the state academic decathalon.

Realtor rap: "All the houses gettin' sold"

Realtor rap: "All the houses gettin' sold" by Brian Block in North Virginia.  Brian, it's like that too, here.

Multiple offer winners

Our manager has helped this week with several multiple offer situations.  Here's what she tells us are the winning combination of elements for the buyers who ultimately bought the properties:

1.  Contingency removal forms accompanying offers.
2.  Buyers releasing money upon removal of contingencies...some earlier than that.
3.  Lots of letters and family pictures.
4.  Buyers making clear no repairs, no credits.

Red alert! Buyer clients got an offer accepted!

Buyers, it can happen to you, too! My buyer clients just got a purchase offer (in the low $500's) accepted for a home in Valley Glen. Thanks to wizard agent and heavy lifter Amber Dolle.  The buyers have written about ten or eleven offers before this, and obviously all were rejected.  Moral of story: if you're a buyer, hang in there.  Be prepared.  Your home is out there.

Open today, Sunday, 4/21 from 2 to 5 - 621 N. Keystone, Burbank

Come visit Steve and me at this gorgeous character home in the heart of Burbank.  You might even be able to see Rusty the cat (that's him in the dining room).  It features 3 beds, 1 bath, 1272 square feet, all the original details you could hope for in a character home, a redone kitchen, redone bath, huge backyard, and central Burbank location.  It is listed for $635,800 and we'll be there today from 2 to 5.

Good luck finding a house? Now, good luck finding a Realtor, too!

This will make you hate us Realtors even more.  But many of us are now turning down the opportunity to work with buyers, especially in certain price/location ranges.  Why? Because we can't find you anything.  Not only that, but we already have two, three, or even four client groups looking in the same price range/general vicinity and we can't find them anything either.  Oh, if only inventory would increase...

Sunday morning reading for those that didn't go to Coachella

Two great articles about real estate have appeared in today's Sunday papers.

First is an article re bubble market tactics.  It's by Kenneth Harney for the L.A. Times.  It discusses the pros and cons of escalation clauses, no-contingency offers, and low listing prices to draw lots of bidders.

Next is an article from the esteemed Robert J. Shiller for the New York Times entitled "Why home prices change or don't."  It's a bit wonky, but among other items, it discusses how technological advances in home building have helped keep costs down.  I thought it was really interesting.  

Happy reading or happy hanging out at Coachella.

Coming Monday: Darling 3+1 character home in Burbank for $635,800

Listing on Monday: this adorable 3 bedroom, 1 bath Tudor revival at 621 N. Keystone in Burbank.  It features all of the architectural details one could hope for in a period-style home, plus a remodeled and expanded kitchen and updated bathroom. Hardwood floors, sun porch, fireplace, central a/c and heat, and big dining room complete the picture. The third bedroom opens to a covered patio, plus another deck overlooks the big backyard.  This home is ripe for thoughtful expansion -- or to just live in and love like past generations have done.  Yes, it's centrally located in Burbank (and less than a block away from the donut shop on Keystone and Magnolia!). Stats: built in 1929, 1262 square feet, 7072 sf. lot, and listed for $635,800.  The first open house will be on Sunday, April 21, from 2:00 to 5:00 and more pics can be found on my website at judygraff.com.

What do robots have to do with real estate?

I received a box from California Association of Realtors the other day.  Actually, it was from their ad agency.  It contained this robot (which, yes, spins and shoots fake lasers) and a card announcing a new ad campaign.  But can somebody tell me what robots have to do with real estate?  Is this new equipment that we'll be required to buy?

The wild and wool-y real estate market

Well, pardners, my experience in the local market has been like a buckin' bronco lately.  Yes, I'll have some campfire stories to tell y'all, but first I have to get all the cattle driven back into their pens.

Here's some good news, though: 1122 N. Cordova in Burbank has closed for $540,000.  That's $5000 over list price.  We originally had it in escrow for $545,000 but those buyers wanted $11,000. We said "happy trails to you" and got another buyer.  This buyer paid cash at $540,000.  Now, if we can only get the Cordova sellers into a new home.