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.