Market News-Have we turned the corner?

Warmington starts building anew, Phase 2 of a gated neighborhood in Chatsworth, 12/2011 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>I like to touch base any time I think you'd appreciate my latest market take. The Real Estate market is getting stronger, aided by seasonal activity (a preponderance of sales take place in the four months May June July August), sales remain steady in all areas of the market. I must emphasize this is locally in Southern California. On a national basis you'll see all kinds of gloom and doom. Foreclosures continue to rise unabated. Floods in the Midwest. Gigantic wildfires in the Southwest. But not here in So Cal! In The SFV-Malibu-Conejo-Topanga markets where I do most of my business, foreclosures seem to take up a smaller and smaller portion of the market. I know this firsthand, because I have an investment group that actively seeks these out. Flips are still very possible in this market. This brings me to a phenomena I associate with market bottoms- the CASH buyers are very active in our market. Maybe you've noticed, maybe you haven't, but sales volume in the equity (stocks) markets has tumbled. Any guy on Wall Street will tell you the retail buyer has disappeared. That's because there's more money to be made in real estate. There's also the big brokerages like Goldman Sachs forming investment groups, with what appears to me to be a 3 or 5 year window. They are paying top dollar- often in excess of list price. According to the National Association of Realtors monthly Realtors Confidence Index survey, cash buyers are a steady 35% of the market at the moment. You always see "hot money" at the market bottoms. Also, in the hottest locations, developers have started building again. Look at Warmington. They are finishing the "phase two" of all their gated developments. There's one on Topanga north of Devonshire. So if I were to venture an educated guess, this market is at or near a bottom, and has been so for about seven months, bumping along, with maybe another eight to ten months to go. If you're one of those "waiting for things to go down" buyers, well, look around, they have! I'm not trying to panic you into anything- I think you probably have about six months, maybe more, to grab a good deal at these prices. I sent a very similar letter to my buyers back in 1992. That was the bottom then, and things took another two years to get cooking. So keep looking, there are great bargains out there. The only wild card to me is how long interest rates stay at the bottom like this. I am available any time for your questions, and don't be afraid to leave your number. I have a lot of people in my database. You won't get called relentlessly. I simply do not have the time.

5 Things To Do NOW If You Want to Buy A Home In 2012

By Tara-Nicholle Nelson | Broker in San Francisco, CA. At this point in December, it can start to feel like the New Year – along with all our hopes, dreams, wishes and expectations for it – are barreling down on us. Personally, I’m a rabid Resolution-setter, and I have a pretty strong track record of making New Year’s changes actually happen – and stick. But what I know after years of using the New Year as a great excuse to set and meet some goals is that it’s very, very helpful to get a head start, ramping-up to new habits, behaviors and target goals achievements starting in December. If you’re one of the millions who has an eye on 2012 as the year in which you’ll buy a home (first or not), here are five things you can do now to put yourself on the right path: 1.Check your credit. Take my word for it: there is no bad surprise worse than a bad credit surprise. Okay, maybe there is one thing worse – a credit surprise you receive while you’re in the midst of trying to buy a home! Recent studies have revealed that a record high number of real estate transactions are falling out of escrow, and that credit “issues” are a leading cause of these dead deals. Your best chance at catching and correcting score-lowering errors and other derogatory items before they destroy your personal American Dream is to start checking and correcting while you still have time on your side. 2.Do your research. The more rapidly the real estate market changes, the more it behooves smart buyers to study up before they jump in. And now’s the time – you can start doing online and in-person research into topics ranging from: · Target states, cities and neighborhoods. Whether you’re relocating or simply trying to narrow down the local districts to focus on during your 2012 house hunt, December is a great time to start your online research into decision-driving factors like tax rates, school districts, neighborhood character and even prices in various areas. Resident ratings and reviews sites like Trulia and NabeWise can help you make the neighborhood-lifestyle match. Once you narrow things down and start speaking to local agents, ask them to brief you on the local market dynamics, including how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search. (And yes, Virginia, there are areas where homes sell for more than asking, even as we speak!) · Real estate and mortgage pros. If you don’t already have your pros picked out, now is the time to get on the horn or drop an email or Facebook message to your circle of contacts, asking them for a referral to a broker or agent they love. Follow up by: checking whether these pros are active in answering questions on Trulia Voices, searching for their name and seeing what sort of feedback on them you can cull from the web, then giving them a ring and launching a conversation about whether you and they might be a good partnership. · Short sales and REOs. Distressed property sales are not for the unwary. If you want to target upside down or foreclosed homes, or are planning to house hunt in an area where many of the listings are described as short sales or foreclosures, get educated about what you can expect from a distressed property purchase transaction before you get your heart set on a short sale. · What you get for the money. Online house hunting is a powerful tool – especially when it’s cold and wet! But there comes a point in your house hunt where you’ve got to just get out into the actual physical homes you’re seeing online in order to get a strong, accurate sense of what home features, aesthetics and location characteristics correlate with what price points. · Mortgage musts. You can read a bunch of articles about mortgages and get yourself pretty far down the path toward qualifying for a home loan, but you can only get a personalized action plan for a smooth road ‘home’ by talking with a local mortgage broker and having them assess your basic financials. They might say you need to move funds around, pay a bill down or off or produce some sort of documentation from your employer. And the time to start all that is now. 3.Fluff up your cash cushion. So, you’ve saved up your 3.5 percent down payment. Perhaps you saved a little extra for closing costs. Or maybe you’re even one of those uber-aggressive 20-percent-down-ers. No matter how much you’ve saved, you’ll find that you could use more once you activate your home buying action plan. Mark my words – after closing, you’ll crave extra cash to do some repairs, upgrade a couple of things, buy appliances or even just to hold onto in order to minimize your anxiety about depleting your savings! So, if homebuying is on your personal 2012 action plan, don’t go hog wild on holiday gifts. Instead, wait until next year and give yourself the gift of a home. 4.Shed some stuff. Sell it. Donate it. Give it to relatives who’ve always coveted it. Just get rid of it. If you do it before year’s end, you can kill three birds with one stone: (a) getting some cold hard cash to go toward your savings, (b) getting some tax receipts so you can deduct the value of your donations in January, (c) minimizing money spent on holiday gifts for loved ones and these two bonus birds – clearing the mental clutter that physical clutter creates and prepping for your move in advance. 5.Sit very, very still. Sometimes, the best way to further our goals is to stop tripping ourselves up. In that vein, commit right now to refrain from making any major financial moves until you buy your home. Don’t quit your job to start that personal chef business (yet), don’t pull a bunch of cash out of your savings account (without getting clearance form your mortgage pro first), and don’t start buying cars and boats on credit – even if you do love the idea of putting the red bow on the car you give your wife, like in the commercials. I assure you, the bow you’ll be able to put on that house or condo will be much bigger, redder and more tax-advantaged!

Foreclosures redux

To the right is the interior of a gorgeous bank owned home in Bell Canyon. I just got off the phone with the bank and they had an accepted all cash offer as of last week. Guess what? For some reason the buyer couldn't (or wouldn't) perform. So this thing is on the market again. It's a monstrous house with a wonderful design and some really creepy issues lurking. Remember that the banks do not have to disclose anything. You're on your own. This particular property is high stakes. All cash offers only. Listed at a million three. Fixed up, a clear 1.6 million or more kind of property. Problems? There is NO landscaping on the entire 35000+ sq. ft. Lot. The retaining wall in the back yard is illegal and has to come down. There are City and County Notices of illegal grading. there is an "issue" with the septic pumping system. Inside the home is the framing of an illegal room built OVER a two story living room. A real "what the hell?" structure that makes absolutely no sense. There's a leak that appears to be a bad connection in the upstairs spa tub. These problems are the apparent ones. Lord knows if there are any issues with the electrical.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>BUT
If you want to take a big bucks flyer on this place, there are big bucks to be made.
The investors bidding on this place know this,and they all have their own formulas that lead them into what to bid. There are even sophisticated algorithm based programs that will tell you what to bid. I actually have one of these. I'm going to assume the winning bid to be around 850k. Maybe up to 925. Then you have to fix the retaining wall and yard. I'd go with natural landscaping and a small grassy area together with a shallow pool and spa that doubled as an architectural landscape feature:probably about 60k. Add the cosmetic repair of removing the framing in the two story living room. About 20k. Paint and repair upstairs tub leak. Another 20k.
Reserve for issues that appear: 50k. You're into the property for a million and fifty thousand. Flipping? Get it staged, another 10k. List at 1.7 million.
Take the first offer you get over a million five. Pay closing costs. Et Viola. a cool $350,000 profit. All in 90days if you do it right.

Who's with me?

Existing-Home Sales Rise Unexpectedly in October

This via Linked In's news arm, DSNews:
Sales of previously owned homes got an unexpected boost last month while the number of homes on the market continued to decline, according to data released Monday by the National Association of Realtors (NAR).


The trade group recorded a 1.4 percent month-over-month increase in existing-home sales in October, pushing the annual rate of sales to 4.97 million. NAR’s latest reading is 13.5 percent above the 4.38 million-unit sales pace in October 2010.

Housing inventory fell 2.2 percent to 3.33 million existing homes available for sale as of the end of October, which represents an 8.0-month supply.

That’s down from an 8.3-month supply in September. NAR says the housing supply has been trending gradually down since setting a record of 4.58 million in July 2008.

Distressed homes – foreclosed REOs and short sales – slipped to 28 percent of October’s transactions, down from 30 percent in September. They were 34 percent in October 2010.

NAR says 17 percent of last month’s existing-home sales were foreclosures and 11 percent were short sales.
Market analysts were expecting up to a 3 percent drop in overall existing-home sales between September and October. Forecasts ranged between an annual rate of 4.76 million and 4.80 million.

According to NAR, October home sales should have risen higher than the 1.4 percent the trade group recorded.

According to Lawrence Yun, NAR’s chief economist, contract failures reported by Realtors jumped to 33 percent in October from 18 percent in September. Only 8 percent of contracts fell through in October of last year.

“A higher rate of contract failures has held back a sales recovery,” Yun said. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents, and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process.”

NAR’s report shows the national median existing-home price was $162,500 in October, which is 4.7 percent below October 2010.

“In some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” Yun said. “Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers.”

Yun adds that extending credit to responsible investors would help to absorb distressed inventory at an even faster pace, which he says “would go a long way toward restoring market balance.”

NAR’s data indicates investors purchased 18 percent of homes in October, while first-time buyers accounted for 34 percent of transactions. All-cash sales made up 29 percent of last month’s purchases.

Certainly this has been the case in my neck of the woods, which is Malibu/Topanga/Calabasas/Conejo Valley. Activity and sales both have been strong with traffic up significantly. There is pent-up demand that is the driving factor underlying all this.
Give me a call if you'd like to know what your home is worth in today's market

Foreclosure vs. Short Sale: study shows some surprises

This From Harris University's Real Estate Insider News:

How much impact does a short sale have on FICO® Scores? How about a foreclosure? Since I frequently hear these questions from clients and others, I thought I’d share new FICO research that sheds light on this very subject.

The FICO study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680, 720 and 780, respectively. I say “representative profiles” because we focused on consumers whose credit characteristics (e.g., utilization, delinquency history, age of file) were typical of the three score points considered. All consumers had an active currently-paid-as-agreed mortgage on file.

Results are shown below. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.




All in all, we saw:

■The magnitude of FICO® Score impact is highly dependent on the starting score.

■There’s no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.

■While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed.

■In general, the higher starting score, the longer it takes for the score to fully recover.

■Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.

This study provides good benchmarks of score impact from mortgage delinquencies. However, it is important to note that research was done only on select consumer credit profiles. Given the wide range of credit profiles that exist, results may vary beyond what’s in the charts above.
-------------------------------------------------------------------------------------
The only surprise to me was the minimal difference in FICO damage between a Foreclosure and a short sale. Brings into question all the extra hoops and such necessary for a short sale. There is one difference though; it appears at ground level that there are time differences as a short sale often takes six months or more to resolve. Six months opportunity to save for a new start might be significant to many folks.

More as this story develops.

If you have questions about this research, I encourage you to post them here on the blog.

Buy a House, Get a Visa: Congress Looks to Lure Foreign Nationals

Attention Canadian snowbirds, well-heeled Brazilians and boom-era Chinese nationals looking for a little piece of that increasingly elusive thing called “The American Dream.”

America has your number and, literally, it’s $500,000.

In a comprehensive bill that aims to spur foreign travel and spending in the U.S., Senators Charles E. Schumer (D-NY) and Mike Lee (R-UT), have proposed providing a three-year residential visa to foreign nationals who invest at least $500,000 in residential real estate in the U.S. At least $250,000 must be spent on a primary residence where the visa holder will live for at least 180 days out of the year while paying taxes to the U.S.

Investor Warren Buffett offered an early version of this real estate inducement back in August. During an interview on PBS, Buffett suggested that if the U.S. altered policy and opened the door for “rich immigrants,” those resources would be welcomed in a struggling U.S. economy, especially in the area of residential housing.

Inducements for foreign national purchase of U.S. real estate is seen another important step towards bolstering prices and shoring up markets in foreclosure-centric areas.

“There is no silver bullet out there. And really, the path forward is a lot of small steps like this that we’re going to take,” according to Stan Humphries, Zillow’s chief economist.

Real estate analysts have said this proposal could lift demand for U.S. homes and help ease the housing crisis. According to Humphries, foreigners spent more than $80 billion on U.S. homes last year, a 24 percent increase from the year before. A quarter of those buyers were Canadian. Another 25 percent of foreign investors in residential U.S. property is made up of investors from China, Mexico, United Kingdom and India — a percentage that could be boosted should the proposal become law.

Humphries is not alone in advocating myriad measures for alleviating the real estate doldrums. Editorial writers at newspaper around the country are also weighing in.

“Offering smart and abundant pathways to foreign investment in our domestic markets and legal immigration have always been important to America’s long-term economic growth. We wish there were political will to provide even bolder solutions. But it is gratifying to see Lee and Schumer reach across the aisle to identify these politically palatable and modest ways to provide for increased tourism, foreign investment and residential immigration,” said the Deseret News in Salt Lake City, UT.

However, critics question whether the measure is an unnecessary, if not unwarranted, inducement. Debate is being waged around key issues:

■Given the level of investment already, do foreign nationals need further incentive?

■Will foreign buyers actually help spark another real estate bubble, at least in some specific markets generally attractive to non-U.S. investors?

■Is the U.S. housing market’s recovery more dependent on far more broad recovery of the entire U.S. economy?

■Is the residency visa a political ploy to fend off criticism that incentives are being given to foreign investors instead of U.S. citizens, many of whom have been forced out of the U.S. real estate market?
Schumer’s office said the inducement extends beyond the actual real estate purchase. If foreign nationals with cash to buy $500K homes are on U.S. soil, then they are spending money on gas, groceries and other goods and services that bolster local economies.

With a three-year time frame applied to the residency visa, the proposal would also create more enforcement demands. Are foreign nationals living in those properties? What happens when the visa expires?

But Congressional supporters say The Visa Improvements to Stimulate International Tourism to the United States of America Act (VISIT-USA Act) would remove bureaucratic red tape that stifles travel and investment in the U.S. Foreign buyers would not be granted work visas and they would still be subjected to criminal background checks and other safeguard measures.

The proposal has gotten the thumb’s up from the U.S. Chamber of Commerce, the U.S. Travel Assocation and the American Hotel & Lodging Association.

An Update on Housing and Financing

by Abbie Higashi

The housing market continues to bring in mixed reviews. As median sales prices and 2012 home sales predictions edge up slightly, we continue to struggle against market forces such as funding challenges and a continued stream of distressed inventory that detract from upward sales trends. Even positive events such as declining interest rates have a certain negative market impact. With, mortgage interest rates edging back down to historic lows, homeowners jumped on the opportunity to refinance into long term, fixed rate loans. While such activity is generally seen as a positive economic force, the unfortunate tangential effect was to overload processors with loan files. Even with financial institutions prioritizing purchase files for closing, the unforeseen increase in volume invariably caused delays in file reviews simply due to capacity. Many of our realtors in fact experienced delays in closing of their transactions due to such heightened residential mortgage activity where closings scheduled for September pushed into October.

Also, the major financial institutions all appear to have experienced continued funding challenges related to appraisals. As HVCC (Home Valuation Code of Conduct) metamorphosed into the industry standard for appraisals, mandated appraisal independence and advent of AMCs (Appraisal Management Companies ) have, as many feel, sacrificed local knowledge – whether produced by the Realtor, consumer, or local appraisers - for the sake of preserving an objective standard of independence. Shifts in liability and indemnification to the individual appraiser have also produced a level of conservatism that, in conjunction with other levied standards, have inadvertently led to arguably inaccurate and undervalued appraisals. As a result, transactions are delayed while homebuyers and sellers scramble to renegotiate pricing terms, seek an additional appraisal, or pull together funds to make up for the difference in originally stated loan to value and revised loan to value amounts.

Further challenges related to home financing have also surfaced directly from the lending institutions themselves. Many real estate professionals have experienced last minute conditions or de novo file reviews on the part of underwriters while operating under the belief transactions were clear to close. These have occurred with all major national lenders, including Bank of America. These unforeseen issues frustrate home buyers and home sellers not just because of the delay in closing needed to clear the conditions, but also in the many “hoops” buyers are suddenly subjected to in order to produce the information needed to meet the conditions. Many of us have heard our Buyers’ exasperated claims of having to dig through their attics to find old documents to prove, for example, that prior liens have been cleared or other properties are owned free and clear and made to feel that they are now the cause of the delay.

If there’s strength in numbers, perhaps knowing that real estate professionals across the nation are experiencing the same struggles allow us to find the strength to pull through these challenging times. Additionally, major lenders are also taking definitive steps to improve upon their underwriting and fulfillment processes and set hard standards for on time closings, with built in guarantees to consumers. Lastly, implementation of the UAD (Uniform Appraisal Dataset) in January 2012 should also assist in improving the quality and consistency of appraisals. With this in mind, we should all be able to look ahead with a degree of real optimism to balance the current sense of frustration.

.Abbie Higashi is the Corporate Broker at ZIp Realty, Inc.

Winter in Monte Nido?

Yeah, it was 100 degrees in the Valley but in Monte Nido Wednesday they created a winter wonderland using snow blowers for a Lexus Commercial on Cold Canyon Road. I often write of how much I love this part of Malibu Canyon, and there are some fantastic properties for sale here. It's funny to see it in snow, which never (well. almost never) happens. Reminds me of Taos, New Mexico.

Good News: Malibu Condo prices remain low: Bad News: Malibu Condo prices remain low

Per The Malibu Times:

Tough condo market suggests housing recovery still far off
By Rick Wallace / Special to The Malibu Times
Published:
Tuesday, October 4, 2011 11:00 PM PDT


In 2008, even amid the national housing collapse, the median price for a single-family home sale in Malibu rose from $3,050,000 to $3,250,000. It seemed Malibu's pricey lifestyle was immune to market calamity. But only on the surface.

That same year, warnings of impending doom were evident in the very same 90265 ZIP code: the condo market. While home prices were flying high, condos stopped selling. Only 44 condos sold in all of 2008, where there had been 87 such sales just two years earlier. Most particularly, condos not located directly on the sand lost their appeal to a stingier buying public: only 30 inland condos sold, compared to 70 just two years earlier.

Malibu's condo market, particularly the typical inland version, is the link between the luxurious Malibu real estate market and the rest of the real world. When the buying public wants to make a move from Santa Monica or Agoura Hills into the Malibu market, the condo market is the first point of impact; it is priced most similarly to the next lowest-tier from which the buyer steps up (or down) in wealth.

Malibu's condo market shows the way for all market prices above. Want to know how your $5 million estate is doing in the marketplace 18 months in advance? Looking at condo sales at the low end now might be a solid indicator. Homes priced at $1 million today are probably looking at market results in six months similar to what low-end condos are doing now, as a general guess.

And what are low-end condos doing now?

Not much.

Sales in 2011 have been poor, nearly matching the collapse of 2009, offering little inspiration that a recovery is coming to the housing market any time soon.

The local condo market saw a median drop from 2008 at $1,095 million to just $560,000 by 2010 for all condos, including ones directly on the sand. This year, it has inched up slightly to $590,000, hinting at some price stability. On the other hand, while 64 condos sold last year (after 40 sales for all of 2009), this year projects to 57, a slight drop. The total volume of sales is projected to be less than last year, also. Instead of a boost in the market, there has been retreat.

The median annual sales price for inland condos is even more discouraging: $1,030,000 in 2008, dropping to $505,000 last year. So far in 2011, that figure is only $495,000. Values are less than half of what they were three years ago.

During 2007, the very lowest condo sales price in Malibu was $567,000. Last year it was $252,000. So far in 2011: $272,000.

Since condos showed the way to this darker market environment, it is the commodity trusted to guide the higher price tiers out of the doldrums, to be the indicator of better times to come.

Consider how many complexes throughout Malibu are performing:

* One of Malibu's two lowest-priced neighborhoods, the 104-unit Malibu Canyon Village along Civic Center Way, had 10 sales in a spirited 2010, all at $430,000 or less. This year, there have been only four sales so far, with the highest going for $390,000.

* The Malibu Villas, near Paradise Cove, have been decimated unlike anywhere in Malibu. After a couple of sales over $1 million in 2006, (and a half-dozen sales above $800,000 during the glory days), literally nothing sold in 2008, despite dozens of listings that year. The 15 sales since have been for $500,000 or less, including a paltry three deals this year for around $400,000 each.

* The Zumirez View Terrace at Zumirez Drive and Pacific Coast Highway had many sales over $700,000 during 2005-2007, followed by a two-year slowdown. A few sales of less than $500,000 have been made in the last two years.

* Even more illustrious complexes like the Zuma Bay Villas, on the backside of Point Dume, have felt the squeeze. Just two sales have been made for 2010-11. Both of have gone for less than $1 million. By contrast, through 2006-2007, nine units sold for an average of more than $2 million.

Slim sales tallies at surprisingly low prices are the norm for virtually every complex in town. It was not supposed to be that way in 2011. The great, long-awaited hope-that a booming leap of condo sales would lead to price stability, followed by upward movement of single-family home values and a housing recovery-will have to wait longer.

Couple of things here. There's no direct link between Malibu Condos and Malibu housing. Statistically perhaps, but the number of 15 million dollar plus sales this year exceeds those of years past. It's the PRICE POINT that has changed. What HAS happened in the price point where Malibu condos languish: Single family residences have declined at that price point to where they represent a much better value for the money. Also, the writer is concentrating on complexes that just aren't the hot tickets in Malibu that other like-priced condos are. He's using medians and in a thin market that gets you into trouble with your conclusions. This complex near Latigo Canyon for example. Take a look at the location:


This complex(also pictured above the lead for this story)will always see sales because it's right on the sand. The problem with Malibu condos is that the preponderance of them are NOT on the sand, often up to a mile or more away. So there's that.

Also, Malibu condos have notoriously high HOA fees. When you factor them in it makes more sense to go SFR, and you get a private pool and yard with ocean view ( labrador not included)

Ocean this way>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
So dear reader, accept the statistics quoted in the article with a grain of sea salt.

Housing and Economic Forecast Points to Rising Activity

Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.

Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”

Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.

“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”

Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.

Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.

Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.
Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.

Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”

Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.

Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.

Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.

Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to home buyers,” Nothaft said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries

FHA to offer 12-month grace period to unemployed borrowers

The Federal Housing Administration says the extended grace period for out-of-work borrowers applies only to FHA-backed loans.

Some unemployed Californians facing foreclosure may be able to delay or avoid losing their home. Starting August 1, the FHA will allow qualified homeowners with backed mortgages to stop making monthly payments for 12 months before the foreclosure process begins. Banks servicing the loans would need to approve of the deal.

Gugin said allowing some unemployed homeowners to go without making a monthly payment for twelve months will help some families. About a fifth of the home loan market in California are mortgages backed by the FHA, Gugin estimates.

"I don't think we're going to see a point where we go from 25 (thousand foreclosures) back to five in a year. I think it's going to be a gradual decline and perhaps this is the year where we see the gradual decline because we haven't yet," Gugin said.

"There's still the middle person in the servicer that has to implement the program, and that can still remain a challenge regardless of what the policy (is), Gugin said. "It gives us another option, but it's not a silver bullet."

The extra grace period also applies to homeowners in the government's Making Home Affordable modification program.

Internet Bargain?

ONLINE

I found this, or rather, one of my clients found it, which brought it to my attention. I'm always amazed at what my clients find searching our ZIP Realty Website. The market is currently chock full of opportunity, and interest rates haven't been this low since post war America, and by that I mean post WW1!
So, back to this place: looks pretty neat, huh? The price is 50k under the market in that neighborhood. I get pretty excited. Then I visit there. Ho-ly shit. I'm not sure what kind of filter the guy that took these pictures used, but I want one. The place was a hodgepodge of poorly done and mismatched improvements, the floor reminiscent of the haunted miners shack in Knotts Berry Farm. There were roaches and spiders scurrying everywhere. That garage looking thing back there? Bootleg guesthouse. The bones of this house are 1941 vintage, but I suspect it was more of a bunkhouse back then; there were several large ranches it could have been a part of in that era. The exterior paint was amateur and the wood peeling everywhere. Major termite damage was visible just upon casual inspection. I told my client who was looking at it (her hands were drawn up tightly together at her chest, body language tells all!)that it would never do for her. There's another guest unit behind the bootleg one, which purports to be permitted. So there's kind of upside if you can save that roof, bring back the garage and get rid of all the termite infested siding. In the home, you'd better plan on jackhammering the slab, and repouring it. While you're at it, add on another bedroom/bath. The tab for all this would probably be about 50k. That makes it even with the neighborhood comps, and you could probably use it as income property.
But the condition in person vs the photo online was like night and day. I imagine internet dating is a lot like this.
The moral of this tale? BUYER BEWARE! ALWAYS SEE THINGS IN PERSON.
REALITY

Gallup: Time Is Right to Buy

By Steve Cook at RISMEDIA
RISMEDIA, May 5, 2011—Consumer attitudes towards the housing markets are echoing views in the years immediately preceding the peak of the housing boom, according to a new national survey by the Gallup poll. Americans continue to see a buyer’s market in housing, according to an April 2011 Gallup poll. Sixty-nine percent of respondents say now is a good time to buy a house.

Historic Gallup data shows that many Americans also thought it was a good time to buy between 2003 and 2005, when housing prices were increasing and getting financing was relatively easy. Those attitudes began to change in 2006 as some homebuyers began to realize a housing bubble was taking shape in local markets across the country.

Men (74 percent) are about 16 percent more likely to see now as a good time to buy a home than women (64 percent). Those living in the West are the most likely to hold this view (75 percent), 17 percent more than those living in the South (64 percent). Americans making $75,000 or more a year (86 percent) are 18 percent more likely to see 2011 as a good time to buy a home than those making $30,000 – $75,000 (73 percent), and 72 percent more likely than those making less than $30,000 (50 percent).

Americans’ expectations for home prices in their local markets are slightly better now than they were in January. Currently, 30 percent of Americans say home prices will increase and 28 percent say they will decrease in the next year.

Research Firm Says U.S. Housing Has Never Been This Undervalued

The continuing depreciation of residential property values at the end of last year has made housing look more undervalued relative to income than ever before, according to analysts at the research firm Capital Economics.

Based on the latest Case-Shiller home price index, Capital Economics’ study shows that in the fourth quarter of 2010, housing was 21 percent undervalued when compared with disposable income per capita.

Looking at data included in the index published by the Federal Housing Finance Agency (FHFA), the firm found that housing in Q4 was 15 percent undervalued as measured against individuals’ disposable income.

Capital Economics says its results illustrate “housing is exceptionally undervalued,” and the gap is getting bigger. In its third quarter 2010 report, the research firm pegged the Case-Shiller index readings as 19 percent undervalued and the FHFA index as 14 percent below what would constitute a balanced housing value in relation to income.

The recent fall back in house prices, coupled with low rates, explains why the initial monthly mortgage payment on a median priced house bought with a 20 percent down payment has fallen to a record low of 13 percent of the median income, Capital Economics pointed out in its report.

Home prices in 29 states hit a new cycle low in the fourth quarter of last year, and the research firm says on both
the FHFA and Case-Shiller house price indices, housing now appears close to fair value when set against rents.

Such favorable valuations mean there is plenty of scope for housing to perform well in the medium-term, according to Capital Economics, but over the next year, the firm says the combination of weak demand, high supply, and more forced sales of foreclosed properties will push prices lower.

As Capital Economics pointed out, the sharp fall in the mortgage delinquency rate at the end of last year means there are fewer homes in the foreclosure pipeline, but the elevated number of defaulted properties still in process means home values will continue to be negatively impacted by the presence of distress for some time.

On top of low prices, mortgage rates have fallen back a bit in recent weeks, leaving them even further below the 20-year average of 7 percent, the firm’s analysts wrote. Last week marked the third consecutive week that rates have continued to decline. A national survey conducted by Freddie Mac shows that the average 30-year fixed-rate has dropped to 4.87 percent, while the 15-year fixed-rate has slipped to 4.15 percent.

When you wrap declining home prices and historically low mortgage rates together, Capital Economics says, “The incredibly favorable affordability and valuation environment is the housing market’s one big positive.”

But despite this fact, mortgage applications have remained subdued. While buyer demand is notably weak by conventional standards, Capital Economics says the decrease in mortgage apps of late reflects, at least in part, the prevalence of cash buyers.

The company says the recent “de-valuing” of housing stock appears to be attracting cash buyers and investors back into the market.

They have driven 70 percent of the increase in existing home sales seen since last July, particularly among heavily discounted foreclosed homes, Capital Economics pointed out. Over that same period, first-time buyers have been responsible for just 6 percent of the increase in sales of previously owned homes.

New Home Development in Western Malibu

IF you're driving up around Leo Carrillo and venture a little North on PCH to County Line Beach, there's a little Beach Shack style dive called Neptune's Net. They used to feature seafood so fresh it was still alive in tanks out back. Many's the time I made a special drive just to get a plate of their steamed clams and sit on the patio at sunset. I don't know if the place is as good any more as my memories from then. There's a road that winds up the bluffs above Neptune's, and you may have noticed the fervent activity of earth movers and graders there. This is part of the western outpost of Malibu,the Gated community of Marisol. Honestly, this really IS an outpost; I think Malibu officially ends about six hundred yards north of here. While many question the wisdom of building on these oft-shifting bluffs, the technology to stabilize these hillsides known for their kinetic activity has developed to such a point that multi-million dollar homes are being built there.

This from the Los Angeles Times :

A luxury planned community has opened at the western end of Malibu and listed its beachfront showcase home at $17 million.

Called MariSol Malibu, the gated community will contain 17 properties on 80 acres. The 13 oceanfront estate sites have beach frontage ranging from 130 to 210 feet.

The showcase estate, sited on an acre, has 6,800 square feet of living space containing a 60-foot-wide great room with 14-foot ceilings, two bars, a refrigerated wine cellar, a gym, two master bedroom suites, two additional bedrooms and six bathrooms. Outdoors is an additional 3,000 square feet of sheltered courtyard space. There is parking for 10 cars.

Luxist, a blog whose name says it all together with top rate writing and style points, has this to say about Marisol:

Malibu hasn't seen this level of pristine land since May Rindge locked up her gates and tried to block the railroad and county road from coming through her home. The Rindges bought the 13,300 acres of Rancho Malibu for $10 an acre in 1892 and while developer Richard Morris is certainly looking to fetch a little more, you can totally see what the Rindges saw way back when. It's just a breath-taking location, and as they say, nobody is manufacturing any more oceanfront land, are they?

Marisol Malibu features a 10,000-square-foot single-story main home. It has a 60-foot-wide great room with 14-foot tall ceilings, a fully equipped wet bar and two master bedroom suites both with oak ceilings and views of the surfers below. There are two other bedrooms with mountain views. The home has a state-of-the-art home theater, an open chef's kitchen, refrigerated wine cellar, gym and landscaped grounds with an infinity-edge lap pool and three patios. There is an outdoor dining pavilion and an ironwood deck on the 4,000 square foot bluff "beach." The home has a water wall of rock quarried from the site and set in a a fern and oak garden. The driveway is made of hand-hewn cobblestones of native rocks. There is parking for 10 cars. All the electronics are centrally controlled b a Creston smart system and 10 security cameras patrol the property.

Including the showcase property, Marisol has 13 oceanfront one-acre estate sites and three two-acre flat sites for estates to be built elevated above the oceanfront sites. There is also a 57-acre hillside retreat that overlooks the whole project and 10 miles of rugged coastline. The lots range from $4 million to $9 million.

Jack Pritchett of Pritchett-Rapf & Associates of Malibu, and Chris Cortazzo of Coldwell Banker Malibu, share the listing.

Not sure how they can refer to up on the bluffs as "beach frontage" But the way the acoustics work up there, you can hear the waves, which is worth a lot. But 17 Million? Not sure about that.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
If you've got 17 million to spend chances are you've got another 17 to match the first, in which case you might be in the ballpark for this landmark Malibu Estate on the pinnacle peaks off Kanan Road:

Yes, Rocky Oaks reduced the price back in December from 65 million to 49 million. Located in the new "wine corridor" of the Malibu hills The estate has its own award-winning vineyard, a large Tuscan home, plus additional pads for a potential helicopter landing site, guest house, and guard gate. The acreage includes terraced vineyards and orchards of approximately 75 citrus trees and 50 fruit and nut trees. The hillside location also offers panoramic views of the ocean and distant vistas of city lights in all directions. This area is home to at least ten active producing wineries by my count, and this estate ranks among the most baronial in feel and presence. If they turn you down for 34 million, that's just crazy, in my opinion. But call me and I'll provide you with several logical alternatives if you want a similar property in this price range.

Architect's Masterpiece in Pacific Palisades

This home isn't for sale, but it's so gorgeous I had to share. Besides, it will be someday, and when it does, you'll already be familiar with it. From this article in today's Los Angeles Times by Sean Mitchell, which is a wonderful tribute to the man Ray Kappe. This home was built on a Palisades lot that was considered unbuildable because of the high water table; a small stream actually runs through it. So, much like Frank Lloyd Wright's Fallingwater architect Ray Kappe chose to incorporate the streams and hillside into the home rather than create a grade pad. The effect is stunning and transcendent.


Front entry-note the stream bed.


Master Bedroom. Note the use of built ins.
Lack of stair rails enhances the view, but increases the vertigo. The vista produced here is magnificent . The thing about an architectural piece is every way you look in the home there is interest for the eye.

Great kitchen with all the bells and whistles, and a great informal dining place.

What a wonderful fireplace and conversation area. The green carpet is intended to bring the outside in. The wall/window ratio is 50%, which is not permissible today.
I know most of the players in the architectural specialty market. I prefer to deal with everyone as it's a more democratic approach to the market. If you have a specific interest in architecture, give me a call and let me know your needs.

8 Tips for Adding Curb Appeal and Value to Your Home

By: Pat Curry

Appraisers and real estate agents offer advice for adding curb appeal that both preserves value and attracts potential buyers.
Effort: Med Up to 1 wk Investment: Med Up to $5,000

Curb appeal has always been important for home sellers. With the vast majority of today’s home buyers starting their search on the Internet, the appearance of your property is more critical than ever. You only have a few seconds to catch their attention as they scroll through listings online to get them to stop and take a closer look.

But the role of curb appeal goes beyond just making a good first impression. The way your house looks from the street can impact its value. It can also shorten the time it takes to sell your house.

We asked real estate agents, appraisers, home stagers, landscape designers, and home inspectors which curb appeal projects offer the most value when your house is on the market, both in terms of its marketability and dollars. Here is what they told us:

1. Paint the house.Hands down, the most commonly offered curb appeal advice from our real estate pros and appraisers is to give the exterior of your home a good paint job. Buyers will instantly notice it and appraisers will note it on the valuation.

“Paint is probably the number one thing inside and out,” says Frank Lucco, managing partner of Houston-based IRR-Residential Appraisers and Consultants. “I’d give additional value for that. If you’re under two years remaining life (on the paint job), paint the exterior because it tends to show wear badly.”

Just make sure you stay within the range of accepted colors for your market. A house that’s painted a wildly different color from its competition will be marked down in value by appraisers.

2. Have the house washed.Before you make the investment in a paint job, though, take a good look at the house. If it’s got mildew or general grunge, just washing the house could make a world of difference, says Valerie Torelli, a California real estate agent with a background in accounting.

Before she puts a house on the market, Torelli often does exterior makeovers on her clients’ homes, a service she pays for herself to get higher selling prices. Overall, she says her goal is to spend less than $5,000, with a goal of generating an extra $10,000 to $15,000 on the sale price.

Torelli specifies pressure-washing—a job that should be left to professionals. Pressure washing makes the house look “bright and clean in addition to getting rid of unsightly things like cobwebs, which may not be seen from the yard but will detract from the home’s cleanliness when seen up close,” she says.

The cost to have a professional cleaning should be a few hundred dollars—a fraction of the cost of having the house painted.

3. Trim the shrubs and green up the yard.California real estate agent Valerie Torelli says she puts a lot of emphasis on landscaping, such as cutting down overgrown bushes and replacing them with leafy plants and annuals mulched with beautiful reddish-brown bark. “It runs me $30 to $50,” says Torelli. “Do you get a return on your money? Absolutely. It sucks people in.”

You also don’t want bare spots. Take the time to fertilize the yard, throw out some grass seed, and if need be, add some sod.

4. Add a splash of color.It could be a flower bed of annuals by the mailbox, a paint job for the front door, or a brightly colored bench or an Adirondack chair. “You can get a cute little bench at Home Depot for $99,“ Torelli notes. “Spray paint it bright red or blue and set it in the yard or on the front porch.”

It’s not a bad idea, but don’t plan on getting extra points from an appraiser for a red bench, says John Bredemeyer, president of Realcorp in Omaha. “It’s difficult to quantify, but it does make a home sell more quickly,” Bredemeyer says. “Maybe yours sold a couple weeks faster than the house down the street. That’s the best way to look at these things.”

5. Add a fancy mailbox and house numbers.An upscale mail box and architectural house numbers or an address plaque can give your house a distinctive look that stands out from everyone else on the block. Torelli makes them a part of her exterior makeovers “I’ve gotten those hand-painted mailboxes,” she says. “A nice one runs you $40 to $50.” Architectural house numbers may run as high as a few hundred dollars.

6. Repair or clean the roof.
Springfield, Va.-based home inspector and former builder Reggie Marston says the roof is one of the first things he looks at in assessing the condition of a home. He’ll look at other houses in the neighborhood to see if there are a lot of replaced roofs and see if the subject house has one as well. If not, he’ll look for curls in the shingles or missing shingles. “I’m looking at the roof for end-of-life expectancy,” he says.

You can pay for roof repairs now, or pay for them later in a lower appraisal; appraisers will mark down the value by the cost of the repair. That could knock thousands of dollars off your appraisal. According to Remodeling Magazine’s 2010-2011 Cost vs. Value Report, the average cost of a new asphalt shingle roof is about $21,500.

“Roofs are issues,” Lucco says. “You won’t throw money away on that job. You gotta have a decent roof.”

Stains and plant matter, such as moss, can be handled with cleaning. It’s a job that can often be done in a day for a few hundred dollars, and makes the roof look like new. It’s not a DIY project; call a professional with the right tools to clean it without damaging it.

7. Put up a fence.A picket fence with a garden gate to frame the yard is an asset. A fence has more impact in a family-oriented neighborhood than an upscale retirement community, Bredemeyer says, but in most instances, appraisers will give extra value for one, as long as it’s in good condition. “Day in a day out, a fence is a plus,“ Bredemeyer says. Expect to pay $2,000 to $3,500 for a professionally installed gated picket fence 3 feet high and 100 feet long.

8. Perform routine maintenance and cleaning.Nothing sets off subconscious alarms like hanging gutters, missing bricks from the front steps, or lawn tools rusting in the bushes. It makes even the professionals question what else hasn’t been taken care of.

“A house is worth less if the maintenance isn’t done,” Lucco says. “Those little things can add up and be a very big detractor. When people say, ‘I’d buy it if it weren’t for all the deferred maintenance,’ what they’re really saying is, ‘I’d still buy it if you reduce the price.’”

Georgia-based freelance writer Pat Curry has covered housing and real estate for consumer and trade publications for more than a decade, including covering new home sales and marketing for BUILDER, the magazine of the National Association of Home Builders.

MARKET TURNAROUND UNDERWAY

Green shoots appearing in the Real Estate Market?


I'm seeing some interesting signs which in my experience and opinion point towards a turnaround in the local scene. IN the past downturns I noted things which later proved to be signals that things are turning around. My personal observation in past cycles has been that marginal properties , such as those on busy streets or with other incurable defects , begin to sell. THAT is happening all over the West Valley. Whether the home is on Victory Boulevard or has a backyard that is overlooked by a multi-story commercial building, these properties are starting exhibit "SOLD" signs. The next sign is a little more subtle and not apparent to the casual viewer. I'm seeing investment groups from the East Coast, Malaysia and China, put together by guys like Goldman Sachs, buying properties for ALL CASH at LIST PRICE or ABOVE LIST PRICE! What this indicates is that "hot money" sees value (and upside) in local properties and is buying with an eye towards future appreciation. NOT FLIPS. They plan to get cash flow as a rental and sell in a future appreciating market. These guys are not where they are today by being wrong. Bear that in mind before you tell me Dr. Housing Bubble or Nouriel Roubini says there's more downside to come. Finally, a sure sign that something is happening is that LOTS , dirt unimproved lots, are starting to sell. I'm working with a builder right now and we are on the front line with this. About 4 out of the 15 lots we were interested in since November have sold. People don't buy lots unless they are going to build for the most part, so this indicates there will be some action in the previously moribund construction trades. So, things are looking up!
If you'd like to speak with me regarding buying or selling into this newly dynamic market, I'm available @ (805) 907-5211.