“When would be a good time to sell my home?” 

We have gotten many calls over the last few years about “timing the market.”  In stock market parlance, it is referred to as “catching the falling knife!”  As they say, “Prediction is difficult especially about the future.”  The following is an overview perspective of what has happened in the last few years and how it relates to our current Westside housing market, especially in north Santa Monica. 

Home values have dropped significantly in many of our national market places, from 20-50+%.  Here are some of the statistics for our Westside neighborhoods:

Brentwood home values are down 22% from their peak in 2006 with the number of sales down from 329 sales in 2005 to 182 sales in 2008.  In 2009 the number of sales increased to 244.

Pacific Palisades home values are down 30% from their peak in 2007 with the number of sales down from 335 sales in 2005 to a low of 184 sales in 2009.

Santa Monica’s 90402 home values are down 19% from their peak in 2006 with the number of sales down from 172 sales in 2003 to a low of 78 sales in 2009. 

The rest of Santa Monica, 90401, 90404, 90405, home values are down 11 % from their peak in 2007 with an uptick in values over the last four months.  The number of homes sold is down from 149 sales in 2005 to a low of 79 sales in 2008, with 88 sales in 2009.

The most important indicator in value trending is the available inventory for sale at any point in time.  The Westside markets are experiencing a reduction in inventory (especially saleable inventory).  The first six months of 2009 saw a substantially reduced number of sales especially north of Montana.  Starting in May that trend shifted as values reached a point where many buyers that had been sitting on the sidelines decided to jump in.  Many of the Westside markets are down 30-35% in inventory.  North of Montana is leading the pack with a reduction in inventory from 57 listing in the spring to 13 currently, a whopping 77%! 

What does all this mean if you are thinking about selling your home in the next 12 months or if you were one of those who tested the market with little success over the last two years?  Regardless of what the future holds, right now is a great time to sell your home, if you are willing to sell it at market value.  The values for the moment are holding steady.  The inventory of homes for sale (your competition) is at a two year low.  There is speculation about millions of foreclosures that are being held off the market which could affect inventory and prices in the near term, in some areas.  The more exclusive areas are not likely to be affected by the foreclosure market but we are getting more calls from people wanting to reduce their debt load with slower businesses.  Lastly, the attrition of real estate agents has left many of the most experienced agents for buyers and sellers from which to choose.  This can be especially important now, dealing with the difficult task of managing seller and buyer expectations and all the instability in the financial and mortgage marketplace. 

We have been in business for over 31 years and have experienced three of these down cycles. If you are looking for the most experienced agents to help with your home sale or home purchase call us now for a confidential appointment to discuss your needs.

Click Here to download the entire Winter 2010 Newsletter

If I had a dollar for every time in my nearly 23 years of selling Westside real estate I have been told “Oh my gosh – you should write a book” well, you know the rest. Over the years there have been some incredibly funny sales situations, some horribly tragic and all points in between. In this article I will share a few of the fun ones.

There was a woman who came to look at a house I was holding open one Sunday and asked me to leave the open house and drive her to the bus stop. She needed to get back home so she could write a letter to George W. Bush, requesting the money needed to purchase the home – she really loved the house! I suppose Bush didn’t like the house or maybe she never sent the letter as I never heard from her again.

I know only 3 phrases in Farsi (I can say “50X150”, “60X150” and “Goodbye”) so you can imagine the look on the faces of some prospective purchasers when I interrupted the conversation they were having, in Farsi, discussing among other things the lot size of the property they were visiting. I am pretty sure they were making some other disparaging remarks about the house, as well as quoting the wrong lot size because when I corrected them on the lot size they looked mortified, obviously worried that I was aware of every negative comment the group had made (the home was being sold for land value only). They were greatly relieved when I assured them that I only understood a few phrases. Although we all had a good laugh – the house was sold to a young couple who bought it and built their dream house on the site.

Another client that was very much into the ancient system of Feng shui, which is a Chinese system of aesthetics believed to use the laws of both Heaven (astronomy) and Earth (geography) to help one improve life by receiving positive energy flow. This Buyer absolutely loved the house that we had listed but once the Fung Shui Master pointed out that a huge palm tree was planted near the street (in the parkway between the street and the sidewalk) directly in line with front door entrance she gave the Seller two options; Move the tree a few feet in either direction or cancel the escrow. Well of course the City made moving the tree nearly impossible so the the transaction did not go through. Luckily we found a Buyer that was not so into Feng shui and eventually the property was sold.

My most recent book worthy experience was by far the most interesting in a very long time and again the Chinese have a hand in it (according to Wikipedia anyway).

Ever heard of a “void-of-course moon” condition? Well neither had I until a young woman that had recently inherited a house wanted me to get it sold. A “void-of-course moon” occurs when the moon in transit makes its final major ‘aspect’ before it changes from one sign of the zodiac to the next. It ends when the moon enters the next sign. In astrological terms it is a period when human judgment is impaired, ventures are bound to fail, business deals collapse, journeys are delayed, and important decisions can be disastrous. Got your attention? Well that concept sure got mine since it seems like most of my time is spent asking people to sign things and make important decisions. And now it made sense to me that she would always say “Can I call you back in a few minutes?” Turns out she was consulting her Chinese Astrology “void-of-course moon” schedule and did not want to meet during such VOC’s. She seemed a little reluctant to explain this to me but I was relieved to know that with her using her VOC calendar the odds were better that we would have a solid transaction – which we did.

Click Here to download the entire Winter 2010 Newsletter

Could the controversial appraisal system strong armed nationwide by the New York Attorney General with political aspiration — and now tied to lowball property valuations, busted home sale transactions and higher fees to consumers — be on its way out? It just might be. Under a bipartisan amendment approved Oct. 22 by the House Financial Services Committee, the “Home Valuation Code of Conduct” would be terminated early in the existence of a proposed new Consumer Financial Protection Agency.

This controversial Valuation Code impacting appraisals ordered by banks and mortgage brokers has wrought major distress upon home buyers, sellers and refinancers. The code has created job security for poorly qualified appraisers bidding “low-ball” appraisal fees for the independent third party appraisal management companies established to take away the choice by banks and mortgage brokers who traditionally sought out the reputable local market appraisal firms.

The amendment would require the agency’s director to replace the code with an improved set of rules developed through regular administrative procedures. Though virtually no one disagrees with the goal of appraiser independence, critics say the code went overboard and created its own set of problems. According to home builders, real estate agents and consumers who signed protest petitions, the code has encouraged many lenders to use appraisal management companies, some of them owned by or affiliated with the lenders themselves. Those management companies, in turn, often pay appraisers much less than their standard fees but hit home buyers and refinancers with full charges or higher at closing. The appraisers who are willing to work for rock-bottom fees tend to be less experienced and more likely to accept assignments far from their geographic areas of competence The National Association of Realtors and the National Association of Home Builders have conducted member surveys that found that the appraisal system often produces valuations below the agreed-upon price in sales contracts, causing delays and disputes among sellers and buyers.

Mortgage brokers and local bankers complain that the code has cut them out of their traditional role of choosing qualified local appraisers and has forced some loan applicants to pay for multiple appraisals. When applicants are quoted an unacceptable interest rate or the application is rejected by one lender, other lenders often won’t accept the original appraisal. In other words, appraisals under the code no longer are “portable” as they had been traditionally, when brokers could send consumers’ application files to multiple lenders using a single appraisal. The net effect is that we now have a dysfunctional system that’s holding back the housing recovery. Incompetent, low appraisals not only hurt individualsales, but depress property values in entire neighborhoods unfairly.

The amendment that would terminate the code still has a long way to go before becoming reality. Legislation creating the Consumer Financial Protection Agency itself faces an uphill battle. Though the House Financial Services Committee bill has the strong endorsement of President Obama and could pass the full House as part of a larger regulatory reform package, its future is uncertain in the Senate, where big banks and mortgage companies are massing forces against it. What happens if the consumer agency bill falters? Housing groups will still lobby for the 18-month moratorium. Congress has now sent a clear message: “Your appraisal code is not acceptable.”

Joseph Levy is the Owner of Affiliated Capital Resources, a mortgage banking firm in Santa Monica, CA. Mr. Levy received his MBA Degree in Real Estate Investment Finance from University of Connecticut.

Click Here to download the entire Winter 2010 Newsletter

What will 2010 look like in the Westside real estate market? Many of the real estate professionals, with whom I speak have said they believe 2010 will be much like 2009. I don’t agree. Even though we seem to be in a similar paced market, the variables which affect the market have changed and in turn there are some significant differences.

In the beginning of last year we saw a halted market. Three primary factors contributed to this- the inaccessibility of mortgages (we all know this story), sellers’ failure to acknowledge the declining market and buyers’ fear to pull the trigger. These factors culminated in a market where the buyers and sellers were in a “stand-off,” and in the unlikely event that there was a consummated deal… the banks were there to crush it.

As the year progressed, money began to flow. Sellers who had to sell lowered their prices to attract buyers and the new price points brought buyers out of the woodwork who could now buy in neighborhoods that they never thought they could afford (as long as they were still gainfully employed). We experienced a nice little run in the third quarter where much of the good, well priced inventory sold. As Charles explains in his article, after the dust settled we found ourselves in a market with house values from 2003-2004.

The end of last year and heading into the New Year, we found ourselves once again in a slow market. But even though it may have seemed like early 2009, it was slow for different reasons. Money was and is more accessible than it was in the beginning of 2009 and there are plenty of anxious buyers searching for a home in the new low-priced market. Unfortunately, a new problem has ariseni.e., a lack of good inventory. There is nothing left to buy! We are hoping that the New Year will bring a splash of new listings.

What does all of this mean for a buyer or seller in 2010? We are no strangers to a low-inventory market. In the past it has brought us multiple offers and unbelievable appreciation. Today’s market is different in that it follows a recession and large decline in value. I think buyers are ready and able, and we will see multiple offers and fast sales on good listings. Sellers need to put their best foot forward and make sure they are perceived as one of the “good buys.” They need to be diligent in pricing their homes well and preparing them for sale. Buyers, in multiple offer situations, are going to be faced with difficult decisions in how much they are willing to pay to win the property. I think they will step up to a point but will be cautious not to over bid the market.

These indicators point to a slower moving market with relatively low volume and gradual appreciation. I’ll take that over a declining market any day.

Happy New Year!

Click Here to download the entire Winter 2010 Newsletter

For the last three or four years North Santa Monica had been strolling along, seemingly unaffected by the housing meltdown around the world.  The inventory of homes for sale was increasing, but not at an alarming rate.  Homeowners that HAD to sell were few and far between. If a buyer wanted to own a home in Gillette Regent Square or anywhere north of Montana Avenue they had to “step up” and pay what was required, to encourage the owner to sell.  It wasn’t until the economy and the banking systems began to fail that values in the area started to respond. 

As the financial turmoil came to a peak in the fall of 2008, we saw the highest sales prices ever recorded for new construction and lot value properties north of Montana.  The larger newly constructed homes were selling upwards of $5.5 million and lot values were selling for upwards of $2.5 million.  In the spring of 2009 things changed.  From January  thru June of 2009 the average sales prices north of Montana dropped, on average, 16.5%.  Land value was hit the hardest with a declining of approximately 25% because lenders wanted nothing to do with builders or new construction projects.  The only new construction money available was either very expensive private money, or came from private bankers lending to high net worth individual depositors. In other words, they were lending clients their own money.

The number of homes for sale during that six-month period increased to approximately 58.  Too many appeared high, given that in the spring of previous years, the inventory had dropped to 5-6 homes for sale.  To put things into perspective,  at the peak, in the spring of 2009, there were 58 homes for sale out of a total of 2,532 properties. This represented 2.29% of the total number of homes north of Montana Avenue.  In 1994, there were 215 homes for sale in the same neighborhood, which represented 8.5% of the total properties.

By the beginning of 2009, contiguous neighborhoods, like the Pacific Palisades and Brentwood, had already seen a drop in values of 30% and 22% respectively.  Why the lag in a downturn in north Santa Monica?  There are several reasons why I think Santa Monica nearly escaped the downturn all together. 

First, many of the residents are wealthy and don’t have to sell to resolve a change in their living situation.  Many that didn’t need to move just stayed put, others just said, “lease it and we’ll sell when the market recovers”. 

Secondly, for the first time it was the same for many builders, instead of selling and taking their lumps they leased the home hoping for better days.  Last year we did 54 leases!

Thirdly, the available inventory for sale has driven the demand up.  Some telling statistics:  Only 47% of the homes that came on the market for sale over the last 36 months have sold, the rest have been withdrawn from the market.  In the last seven years, the number of homes sold north of Montana has dropped from 190 down to 72 in 2009.  With fewer homes to choose from, buyers competed more vigorously for the homes that were available.

By June of 2009, the buyers began returning to the market in Santa Monica, driving the home inventory back down into the 26-29 homes for sale range.  In the spring of 2010, sales activity was brisk for the saleable homes, leaving only the over-priced homes by summer.  There are still many buyers in the marketplace looking for their dream homes but they will not overpay, they would rather wait until they can find a home they like, priced at today’s market.  Of the currently available inventory, only 15-20% are priced in a competitive range that would attract one of today’s serious buyers.  Today’s REAL buyers are very savvy and are willing to pay fair-market value; they are generally not bottom feeders expecting the unreasonable.

All in all our market is solid.  Properties that need to be sold, need to be “priced to market value” to sell.  If a seller will only sell “if we get our price” or wants to “test” the market for that “perfect” buyer, they should not enter this market, as it will prove to be very frustrating and unproductive.

The most important information a seller can have entering the market today is the chart that follows.  There are NO homes that are an exception to the following statistical information.  The following chart indicates the correlation between what a property sells for in relation to whether the property needed ANY reduction from its original asking price before it sold.  Keep in mind that the statistics in this chart only reflect SOLD properties (remember, currently only 47% of the properties that enter the market for sale actually sell).

On the Westside, in the $2 million-$3 million price range, 209 homes sold WITHOUT a price adjustment, 174 homes sold but needed at least one price adjustment, however large or small.  The homes that sold WITHOUT any price adjustment, sold on average, for 4.5% more than those that required ANY price adjustment.  They also sold in an average of 42 days as opposed to 174 days for the properties requiring a price reduction.  The average differentials for all homes sold, in all price ranges on the Westside, was 8.77% higher prices and 75% fewer days on the market for homes that were priced-to-value.  As you look at the chart some price ranges are substantially more affected, in the $3 million-$4 million price range the differential is 17.56%.  As you can see, pricing a property to sell is critical in this market if your expectation is to get the highest price in the shortest period of time.  Around 90-95% of all multiple offers happen when the property is priced at or below market value.  Contrary to public opinion, homes that are listed below market value sell with multiple offers, many well above market value and in some cases, as much as 10-15% over market value.

For any further questions about market conditions in your area, or a detailed plan for getting you home sold for top dollar and purchasing another home, please call us at 310-500-1288.

Click Here to download the entire Winter 2010 Newsletter

A Bird’s-Eye View of Santa Monica Canyon, 1884 Credit: Santa Monica Library

Surely, you have heard of the Santa Monica Canyon. However, did you know that The Santa Monica Canyon lies between Santa Monica and Pacific Palisades and makes up less than one square mile? Did you know that it is actually not in Santa Monica?  That’s right Santa Monica Canyon is in the City of Los Angeles though it has a Santa Monica address and 90402 zip code.

“The Canyon” was originally home to the Gabrieleno Indians and had been under both Spanish and Mexican control before ‘Alta California’ was ceded to the United States in 1847.  It was under the Mexican rule when historic land grants were issued to Francisco Marquez and Ysidro Reyes  1834.

Francisco built his first home on what is today San Lorenzo Street; and Reyes built his ranch house near where Chautauqua and Sunset intersect today. The Canyon began to attract other, near-by Angelenos, and small tents dotted the mouth of The Canyon for picnicking and camping. By 1872, a hotel opened near the waterfront advertising, “Come and enjoy yourself- A week at the beach will add ten years to your life.”

Given the growing popularity of The Canyon, unclaimed land was to be sold at public auction. Advertisements for the July 15, 1875, auction read: “On Wednesday afternoon at one o’clock we will sell at public outcry to the highest bidder, the Pacific Ocean draped with a sky of scarlet gold”.

 By December of 1875, a railroad had been built to Shoofly Landing where Colorado Ave reaches the beach today. The Canyon was now accessible to hundreds of people. Traveling characters enjoyed days of croquet, horseback riding, and, of course, bathing. Evening entertainment, lasting into the early hours of morning, was marked by music and dancing.

One of the biggest surprises in The Canyon is hidden on San Lorenzo Street. Because the nearest Catholic cemetery was more than a day trip away, Francisco Marquez set aside a portion of land for a cemetery within view of his adobe house.  It is believed that the cemetery was established in the late 1840’s.  Over the years, members of the Marquez and Reyes families, along with their close friends, were buried there.  The early graves were marked with wooden crosses, all of which have long since disappeared.  Canned peaches, spoiled with botulism claimed the lives of 12 family members over 5 days after a picnic here on New Year’s Eve.

The Canyon enjoys some of the highest priced and most affordable real estate in the 90402 zip code and is home to an award winning LAUSD Canyon Elementary school.

Click Here to download the entire Winter 2010 Newsletter

Forced repurchases of soured U.S. mortgages may be the biggest issue facing banks, even as errors in the foreclosure process draw attention to other industry risks.  Future losses from repurchases of home loans whose quality failed to meet sellers’ promises will likely total $55 billion to $120 billion for the next five years accordingly to leading mortgage-bond analyst reports recently issued.  While a firestorm of news sparked by some loan servicers decisions to halt action on defaulted loans is drawing renewed attention to banks’ mortgage repurchase risks, the foreclosure issues themselves are mostly process oriented problems that can be fixed. 

The buybacks demand in turn upon banks is a result of bad loans sold by the banks primarily to Fannie Mae and Freddie Mac.  Those two agencies purchased nearly $267 billion in nonperforming loans out of mortgage-backed securitization pools during the first half of the year, a figure that potentially could lead to massive foreclosures down the road if the government-sponsored enterprises (GSE’s) cannot rework these problem loans.

The acquisition of nonperforming loans (NPL) from MBS trusts was a record by far and it appears both GSEs, for now, are winding down their repurchases.  Fannie bought $170 billion in NPLs out of trusts during the first half of 2010.  Freddie repurchased $96.8 billion, according to a public filing with the Securities and Exchange Commission.

But the acquisitions could also foretell more foreclosures.  Investors in the nonperforming loan market, foreclosure vendors and Wall Street analysts are keeping a close eye on GSE delinquent loans as a harbinger of where the market might be headed.  The problem is that repurchase requests have not peaked and will remain at their elevated level for at least three years, according to lawyers who represent banks and mortgage servicers.  Estimates vary but some mortgage advisers and analysts predict that foreclosures could total upward of 7 million units over the next three years. 

Joseph Levy is the Owner of Affiliated Capital Resources, a mortgage banking firm in Santa Monica, CA.  Mr. Levy received his MBA Degree in Real Estate Investment Finance from University of Connecticut and was formerly Investment Director of Aetna Life and Casualty.

Click Here to download the entire Winter 2010 Newsletter

We all know people who have fallen on hard times due to the economy, but there is a bright side to some who have been saving for years to buy their dream home… and are still gainfully employed.

For a young family, living in an area with a good school district is of the utmost importance.  Private schools’ extortionary fees, and the declining quality of the majority of public schools, make quality public schools the Holy Grail for young families.  I know firsthand, as I have two children that will be starting elementary school in the next few years, that there are only a handful of decent public schools on the Westside.  Most of these are in areas where real estate prices are out of reach for most young families… at least until the arrival of reduced prices and rock bottom interest rates.

Over the past decade, I have seen many families make the move over the hill – to the “Valley” – to the land of more affordable housing and good school districts.  Not that anything is wrong with living in Calabasas, renowned for its excellent schools, but most of the Westsiders  I know would like to remain on the Westside.  This year I’m seeing more first time buyers and families that have outgrown their “starter” homes looking to buy new homes in good Westside school districts (i.e. Santa Monica, Brentwood, Westwood, and Beverly Hills.)

A perfect example of this would be a family that I am currently working with.  They own a 2000 square foot house in the very well regarded Westwood Charter School District, they have 2 children and a dog, and they are ready to move up to a “grown-up house” with a big kitchen and luxurious master and swimming pool.  They always thought that when they made this move it would be to Woodland Hills or Calabasas.  The house that they want in the area where they currently live would have cost $2.4 million dollars just a few years ago and interest rates were at about 6%.  If they would have put down the $600,000 they had in savings and house equity, they would be carrying a $1.8M mortgage with payments of almost $11,000 on a fully amortized loan.

Today, they can buy that house for 2.1M and have a mortgage interest rate of 5%.  The will have lost some equity in the house they are selling, so they now only have $500k to put down.  With the same fully amortized loan, their payments are now only $8,500 per month, which is well in their budget.  All of a sudden they can afford their dream home on the Westside.  Needless to say, they are currently in escrow to buy their dream home in their own neighborhood, and could possibly be the happiest people in the Los Angeles.

Likewise, the couple buying the “starter” from this upward moving family, never thought they would be buying a house…they were saving for a condo!

It’s great to see that there is an upside to our miserable economy.  Rates should stay low next year, so I’m sure we’ll see more families moving into the Westside neighborhoods that they never expected to be able to afford.

Click Here to download the entire Winter 2010 Newsletter

We have entered a new era of real estate.  We have a new world economy, new banking guidelines, potentially new tax ramification for homeownership, new expectations from buyers and sellers alike, new communication and marketing technologies and a new breed of real estate agent.  When you mix it all together what effect is it having now and what effects will it have on the future of our Westside housing market?

Raw data:

• From peak to trough home values have changed in the following ways.  Prices have decreased 22% in Brentwood, 30% in the Pacific Palisades and Santa Monica 20% overall (16% north of Montana).
• Inventory has dropped between 40% and 70% in these Westside locations.  North of Montana dropped from 57 homes for sale in early 2009 to 11 homes in early 2010 (total number of homes north of Montana, 2522); of late it has fluctuated between 18 and 25 homes.  Comparatively, in 1993, there were 215 homes for sale in 90402.
• The number of homes sold in these areas has been in steady decline since 2003, averaging -53%.  Annualizing 2010 number of home so compared to the low point for each area: Pacific Palisades (low year 2008) increase would be +41%; Brentwood (low year 2009) +27%; North of Montana (low year 2009) +23%.
• The commercial lease market on Montana has improved dramatically with vacancies decreasing by 50+%.

There is good news.  People are buying homes again and in all price ranges.  The luxury markets, $5,000,000 and up, are very busy with more sales above $10,000,000 in 2010 than all of 2009.  The highest sale in Southern California in the last five years just closed in Beverly Hills for around $50,000,000.  Buyers realize values have dropped about as far as they can expect on the Westside and have decided now is a good time to buy. 

The number of homes for sales is down considerably but the number of saleable homes is down drastically!  What do I mean?  When the home inventory over the last 18 months began to sell, the first homes to sell were the homes priced to current market value.  Much of the unsold inventory were the homes that were overpriced, needed too much work, had less desirable locations, short sales or homes that were on the market too long.  More than 50% of the homes on the market today still fit into this category; consequently buyers are having a difficult time finding a home to buy at current market value.  This has caused a price upswing for the “best” new inventory priced to market.  We are again seeing multiple offer situations with a few properties selling over the asking price. 

The most difficult part of the market right now is balancing sellers and buyers expectations.  Sellers feel the market is recovering and consequently expect better prices.  Buyers on the other hand, express concern about the economy, expecting better value, translation, lower prices, more work done by the seller during escrow or larger credits to do the work themselves after close of escrow.  Also, buyers are going overboard during the inspection process, forensics comes to mind.  It is not uncommon to have 5-10 inspections on each home stretching out over seven to ten days.  Some physical inspections routinely taking 12-14 hours, larger properties can take multiple days. 

Another major battle in the sales process is the lenders, even for the most qualified buyers.  Lenders want everything imaginable and sometime hysterically unimaginable.  We recently had a lender ask, as a condition of funding the loan, for “collision” insurance on the elevator in a condominium building.  Last year an agent had the lender request the loan proceeds be returned from escrow at 10 a.m. on the closing day just before it was to be recorded as a sale with the county recorders office, they had been taken over by the FDIC that morning.  Try and explain that to the buyer and seller.  They are now reading every document including some physical inspection reports.  They want to know if there are any credits being given to the buyer from the seller and specifically for what it is being given.  They may insist that any credited work or items found in the inspection reports be completed or repaired before close of escrow.  We can no longer depend on the loan process.  The loan guidelines for banks and the Feds are constantly changing affecting everybody, not just the credit impaired.  There appears to be an adequate supply of money but far fewer lenders, so the process is continuing to be bogged down.  Many buyers are asking for a thirty days loan contingency period even when the escrow period is 30-45 days.  It is relatively common to have two full appraisals done by the lender and a review appraisal before the loan is funded.

Another new dynamic is the proliferation of information on the Internet.  Approximately 88% of all buyers and sellers start their sale process on the Internet but only 4-5% find their agents on the Internet.  Sellers can get very confused with all the information they find in the local papers, on Redfin or Zillow.  These sites predict property values.  The problem is, in the luxury home marketplace every house and lot are unique and therefore have to be evaluated on an individual basis not as if it were in a planned community with only three floor plans from which to choose. 

Another issue has been the relative inexperience of some real estate agents to these market conditions.  Some currently active agents began in real estate in the late 1990’s when transactions were much less complicated.   Many had no formal training for a “normal” real estate market, like the current real estate market.  This has put an added burden on the best, most experienced agents.  They now have to train these cooperating agents, on the fly, how to successfully close a transaction.   They have to teach them, how to understand what their buyers and sellers are feeling in this marketplace.  They may have to help them with lenders, inspectors, how to negotiate many facets of the new process including foreclosures and short sales.  Short of this the experienced agents are managing both sides of the transaction.

It feels like we are in the trough of the real estate downturn on the Westside so I expect that we will stay flat for a period of time as the economy shakes itself out.  The interest rates are still historically low, the money supply is adequate for qualified borrowers, the inventory of homes for sale is decreasing and the attitude in the marketplace is much more positive.  So, all in all, I think we are experiencing a better overall market than we have seen in the last three years.

There are some great properties available currently, so if you have any interest in buying or selling real estate please call us.

Click Here to download entire Summer 2010 Newsletter

The federal investigative behemoth sometimes resembles a supersized oil tanker: slow to be brought about but hard to stop when it gets up a head of steam. The banking industry is about to see this federal redirection of its firepower incorrectly pointing the blame of the financial crisis, with firepower arrayed for a broadside assault against the financial services industries. The irony of that change in course is that, until very recently, banks were on federal life support, making them off limits to prosecutors. But the tide has turned.

Banks, including investment banks, now displaying financial vitality, are painted as villains by a political establishment casting about for people and institutions to blame for the financial crisis. Never mind that a root cause of the mortgage meltdown was an orgy of government-inspired subprime loans designed to achieve a political and social objective starting with Bill Clinton and Henry Cisneros that was deemed better than a chicken in every pot: everybody a homeowner, even those for whom the financial math did not add up.

So why are federal investigators and prosecutors now looking back and seeking to lay blame on banks for the financial crisis? One does not need to believe in grand political conspiracies to nonetheless conclude that those with common political aims look for scape goats. This turnabout of investigative interest coincides with consideration of so-called financial reform legislation, now mired in legitimate debate about the role of integrated financial institutions in our economic system and which parts of what they do should be subject to greater regulation. A year and a half after the country came perilously close to economic collapse, average Americans are sitting up and taking notice of the debate in Washington over financial reform. No one wants another financial crisis, and consumers of all stripes are agreed that financial reform is needed.

There is also broad agreement about the primary issues on which reform must focus, including ending the notion that any one institution is “too big to fail” and closing regulatory gaps that let securities firms and other nonbanks create huge problems for the economy. The legislation pending in Congress takes some positive steps toward addressing these matters. But it falls short in several areas and goes overboard in others. Traditional banks, particularly the biggest mortgage players did bring about the financial crisis. The mission of the banks was to create financial products, and the mortgage lenders were lobbied to sell the products which the banks gobbled up for their subsequent securitizations. One only need look at Jamie Diamon, Chairman of Chase who is beating on the mortgage industry to lay the blame. However, his bank Chase, as one of the largest mortgage players, was busy creating the mortgage products, underwriting and approving the loans which they package and sell for very profitable gains from the unsuspecting municipalities spanning all over the globe billed as relatively risk free bond obligations. Yet he continues to point away from himself while looking in the mirror.

On the flip side, the bill before the Senate is an overreaction and unfortunately contains provisions that would hinder the ability of banks to serve their local communities effectively, thus crimping the credit that local economies so badly need to get back on track. Consider, for example, the plan to create a Consumer Financial Protection Bureau.

It sounds great in theory. But in practice, creating a bureaucracy will produce more problems than it will solve, by putting government in the business of deciding what products are right for bank customers. Then there is the issue of uneven enforcement of the rules. The new consumer rules would apply to both banks and nonbanks. Ending “too big to fail” is crucial, yet the Senate bill falls short in this regard. It also contains provisions that will restrict credit for consumers and small businesses, and it does not provide for adequate oversight of accounting rules that greatly worsened the crisis. Bankers support financial reform, but it needs to be done well — and it especially needs to be done with a careful eye toward the impact on communities. These issues are important, and vigorous debate should be encouraged. The consequences of getting reform wrong are too great to be treated lightly.

Joseph Levy is the Owner of Affiliated Capital Resources, a mortgage banking firm in Santa Monica, CA. Mr. Levy received his MBA Degree in Real Estate Investment Finance from the University of Connecticut.

Click Here to download the entire Summer 2010 Newsletter