Real Estate News
Is The End of the Down Market Near?
Written by: Julian Munoz November 29, 2011
Could it be that the local real estate market has hit bottom? Or are we just at a momentary pause in further decline in values? Based on the average sales price it appears that more affluent markets have seen a steady surge in values over 1st and 2nd quarter of 2011, the Toluca Lake market sputtered in the 3rd quarter and gave back that appreciation; a possible explanation is that the Toluca Lake market on average has much less transactions due to its smaller market size and greater fluctuations can be anticipated. The Studio City market slightly came down in the 3rd quarter as well, but has platued significantly above recent history. All other markets have continued to steady and Glendale seems to be slightly rising. If all conditions were to remain the same, the light of the end of the tunnel is beginning to show, unfortunately outside factors that will determine the strength of the real estate comeback is still locked up with a direct relationship of job growth and all that affects it. In a recent LA County Business Federation poll it found that 80% of small business owners in Los Angeles County plan to freeze or lay personnel off in 2012. By such pessimism by the small business sector, we can anticipate that job growth will continue to drag out and a slow recovery will continue. Luckily the entertainment sector resides in this corner of the San Fernando Valley, that continues to do well and is one of the stabilizing economic drivers to this micro economy. In my opinion values may still slide over the winter months and slightly improve during the spring and summer, the markets have become more seasonally sensitive. The more affluent communities will have to sustain their values for a few more quarters to demonstrate the they are on the mend. The bottom of the barrel type of properties will dominate much of the market and quality homes will continue to fetch a descent price, selling quickly if priced fairly.
3rd Quarter Statistics Pointing Down
Julian Munoz - September 29,2011
3rd Quarter 2011 Everything Pointing Down Except for One Market Area. Studio City seems to be doing better compared to last year, but it is only +1.2%, at least it has leveled off and could be a market that is stabilizing. Many other markets drops in value have not been as dramatic as others as well with 5% or less; Glendale 4.1%, Sun Valley 5.1%, Sylmar 3.1%. The biggest question for Buyers and Sellers is if values will continue to come down as banks seem to have ramped up foreclosures, nearly doubling last month, will they glut the market with the inventory or will the market absorb them as quickly as they are released? I guess the answer is "it just depends", if the value represents a payment nearly as much as rent I am willing to guess it will get absorbed at a descent pace. I have noticed many investors are coming in and snatching up the better homes to turn around to rent out. There rate of returns on certain properties are better on what they can earn the roller coaster stock market with the added advantage of sheltering the income with the unique benefit of depreciation that other investments don't have. What is interesting is that buyer behavior for owner-users is always a bit late to react when conditions are rock bottom, they wait to see when prices begin to go up before they jump in. Any buyer today is basically in a very unique situation to take advantage of unprecedented low rates and low prices that has not been seen in over 60 years. Real Estate has always been a long term investment and if you have a steady income and buy within your means you just can't lose in making a move today. People that need to sell and think that prices are coming back any time soon are just not seeing the reality of it all, holding at this point is not going to benefit you only if you are willing to wait another 5 years or more. The world economy is continuing to hiccup its way to recovery and the trauma it has created will take years for it to get over. That's my opinion and I'm sticking to it! TT
Home Buyers and Sellers Prefer RE/MAX
RE/MAX Ranks Highest in Customer Satisfaction in
2011 J.D. Power and Associates Study
DENVER, CO – Results from the J.D. Power and Associates 2011 Home Buyer/Seller StudySM, recognize RE/MAX for providing the highest overall consumer satisfaction for both home buyers and home sellers. In last year’s study, two different companies ranked the highest in each category, but this year home buyers and sellers both rated RE/MAX the highest.
"It all comes down to professionalism and a commitment to a premier level of customer service," said RE/MAX Chairman and Co-Founder Dave Liniger. "Because RE/MAX agents average more experience and training than other agents, they are better prepared to deal with home buyers and sellers in any kind of market. And, consumer preferences tell the story . . . nobody sells more real estate than RE/MAX."
This is the fourth annual study of home buyer and seller satisfaction with the largest national real estate companies, conducted by J.D. Power and Associates. For the home buying experience, three factors were considered: agent/salesperson, office and a variety of additional services. Four factors were examined for the home-selling experience: agent/salesperson, marketing, office and a variety of additional services.
Details from the study indicate that on a scale of 1,000, homebuyer respondents ranked RE/MAX with a score of 805 and home sellers put RE/MAX on top at 791. The 2011 study includes more than 4,200 evaluations from 3,680 respondents who bought or sold a home in the U.S. between March 2010 and April 2011.
In two other 2011 industry surveys of the country’s top real estate brokerages, RE/MAX agents averaged more transaction sides than agents at the other national franchises. The RIS Media Power Broker Survey and the REAL Trends 500 both showed that RE/MAX agents averaged over 14 transactions sides, more than double the average of many competitors.
The success of RE/MAX agents is the result of its comprehensive educational platform, RE/MAX University, which offers over 1,100 educational programs on-demand, and available online, on television, on smart phones and in classrooms around the world.
About the RE/MAX Network:
RE/MAX was founded in 1973 by Dave and Gail Liniger, real estate industry visionaries who still lead the Denver-based global franchisor today. RE/MAX is recognized as a leading real estate franchise company with the most productive sales force in the industry and a global reach of more than 80 countries. With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised more than $100 million for Children’s Miracle Network Hospitals, Susan G. Komen for the Cure® and other charities. Nobody in the world sells more real estate than RE/MAX. Please visit www.remax.com or www.joinremax.com.
About J.D. Power and Associates:
Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and
Year over Year Values Drop for 2nd Quarter
July 13, 2011
The Burbank and San Fernando Valley Area Real Estate markets suffered a drop in values year over year due to the increased insecurity of consumer confidence in our current economy. Low employment growth, high energy prices and food prices has stifled consumers in purchasing homes. Not all areas were affected the same, higher income demographic areas suffered much more in dropped values ranging from 3.5% - 6.1%, the only anomaly was the Toluca Lake market that actually gained value of 5.1% for the quarter. The Toluca Lake real estate market is much smaller of the rest and the few transactions that do occur can vary in range of value by a huge number. So only a few of the higher valued homes that sold in that particular market can tip the results to either extreme. Lower income demographic markets suffered much less in decreased values ranging from 3.1%-4.3%. This is actually good news since the values of these homes are near or at bottom prices. The expense of renting and buying in the lower priced markets are so low that renting in some cases is costlier than buying in the short term(3-5years). If fuel prices continue to lower as well as basic needs such as food, greater employment, and continued righting of state and federal government budgets, a stabilization of values will be realized in the next few years.
Carbon Monoxide Alarms Now Mandatory As of July 1st, 2011
July 11, 2011
In the state of California carbon monoxide alarms are now a mandatory requirement all residential property of 1-4 units. The purpose of the ordinance is to protect the general public of this toxic gas that can be produced by a defective combustible fueled appliances. Carbon Monoxide is an orderless gas that is produced during combustion of natural gas and other fuels. If a resident has gas appliances such as stoves, fireplaces, water heaters and heating units or has an attached garage; this gas can be produced if the units are in disrepair or defective or naturally occurring. There has been several cases where a whole households died in their sleep due to this very dangerous condition. Since the gas is orderless and colorless it is very difficult to detect. The most common side effects are sleepiness, slurred speech, lethargy, and or headaches to the afflicted individual. It is strongly suggested that all households install this rather inexpensive alarm in your home, these alarms can be easily installed and found in most hardware stores. No formal disclosure is required by a seller, only a transfer disclosure statement stating if the property has one. There are penalties for noncompliance. Also, a buyer can not back out of a purchase if a property does not have one, possibly they can be awarded $100 plus attorney fees. For more details in regards to the exact language, you can go to the link provided below.
http://www.car.org/legal/disclosure-folder/carbon-monoxide-detectors/
Unintended Consequences to a Short Payoff
July 11, 2011
“Short Payoff - When a lender is willing to settle a debt for less than the total indebtedness; receiving a payoff short of what was owed. “
Beware of the potential consequences to your credit worthiness. I just had a case where a buyer was disqualified from a FHA loan for a purchase. A short payoff was granted to this client two years ago while trying to negotiate a loan modification due to a divorce. At the time they understood that it may affect their credit, but only as a "Settled Account". Usually this term is used for any sort of credit or loan account and it does not have a lasting effect. Also, they were told that the short payoff shouldn't affect their credit to purchase a new home later on like a Short Sale or Foreclosure. After the short pay off was offered the lawyers in the divorce determined that it would be better to sell the home. At the time short payoffs did allow the owners to profit from a subsequent sale of the home and that the lender had no recourse to pursue them for the money owed.
Now two years later the short payoff factored in on an attempted purchase, the rules had changed, HUD stated that if the short off happened prior to having an accepted offer that they could qualify for a new FHA loan. Unfortunately, for my client their situation was that the payoff occurred 1 week after they had accepted an offer, since they were cash strapped to pay off the settled debt right away. Since this was their situation HUD stated that it counted as a short sale and that they could not qualify for a loan for another year. Currently, after a short sale transaction occurs, a 3 year waiting period is required for all FHA loan borrowers.
Also, there is no guarantee that this waiting period will be extended in the future since rules can be changed at any time by HUD.
So, be careful for what you wish for, you just may get it in the end with warts and all.
Burbank Area Real Estate Market Trends Vary
May 23, 2010
Interesting results came out for the first quarter of 2010 in various markets in the Burbank area. Burbank and Glendale showed continued stabilization in price and virtually did not vary from fourth quarter of 2009. North Hollywood rebounded and went up close to 10%, obviously the North Hollywood market has a wide range in values that are much more affordable compared to Burbank, Glendale, Studio City and Toluca Lake. Also, there are many pockets of North Hollywood that have superior amenities where there is solid demand. Sun Valley did not fare as well, even though the affordability is even greater and much of a surprise. Sun Valley also has a great variety of values, but what affected this market was the large amount of short sale transactions that closed diluting value even greater. Studio City and Toluca Lake also were down compared to last quarter which was expected since values are higher and the most affluent did not suffer as greatly since they did not rely on risky financing. The only properties that are selling are of people that are underwater in value or that are forced to sell. Quality homes with affluent owners can afford to keep thier homes through the low cycles.
Burbank Department of Water and Power Sets New Conservation Requirement
October 28, 2009
The city of Burbank due to the serious water crisis that the state of California is experiencing has rolled out a new requirement for multi-family residential units, commercial and industrial properties. These types of real estate are now required to comply to certain water effeciency measures that must be installed prior to June 30, 2010. The customer needs to fill out a "Certificate of Compliance' assuring that the necessary work has been done. Failure to executing the changes and turning in the "Certificate of Compliance" by the deadline to the BWP will result in a 25% surcharge for the following 12 months, and 50% after that if compliance has not been attained. Of course the BWP will send out a person to verify work if you go past the deadline for the submission of the "Certificate of Compliance. For further details of the process and a copy of the form, go to http://www.BurbankWaterand Power.com
TIP OF THE MONTH
SHORT SALE OR NOT TO SHORT SALE, THAT IS THE QUESTION....
By Julian Munoz, Realtor, SRES
I am sure you have heard that there are foreclosed properties in the market that are great buys, if you are looking to get in on a home on the cheap. A short sale property is the infamous pre-foreclosure properties that you might have also read about in the press as well, these are heavily discounted properties that are about to go into foreclosure or are in the beginning stages(owner beginning to miss payments). The short sale offering is not short in time length by any stretch of the imagination and there are some inherent risks to the buyer that you should be made aware before getting involved. Hopefully, after reading this article you will have a better understanding what a short sale is, the process that is necessary to close this type of transaction, and the risk involved as a buyer.
The short sale is named after what the lien holder (bank or Mortgage Company) will have to discount the debt so the transaction can close successfully; they are being shorted on the debt of money. Yes, that means the bank or Mortgage Company is giving away to the seller money that is owed on the property. There are only certain circumstances that a lien holder will accept this type of transaction, that is where the owner has had a significant economic hardship, the mortgage will more than likely go to foreclosure due to this hardship, and that the property has never been refinanced since it was originally purchased. This last one is not always true, especially if the hardship is severe enough, and each lender has a slight different twist to the requirements. The motivation for the lender to move forward with this is if there is a financial benefit in selling the property today rather than to wait 6 to 8 months before the property goes into a foreclosure sale. In the current market there is that opportunity since values are declining and each successive month brings on additional foreclosed home in the market, continuing to delude value and lenders hate taking a property back due to the additional cost of maintenance and management. A short sale can actually lesson the losses to the lender if they can sell it today if prices are on track on falling another 10% in the next 6 to 8 months. Also the lender with the cash can start making profitable loans with the money that is recovered.
Risk for the buyer are many: 1.) The lender has to approve the short sale; lenders are very bureaucratic and several sets of eyes have to review the file to get it approved. Approvals can take anywhere from 2 months to 12 months. 2.) The lender may accept another offer that comes in after yours if it is higher in value. 3.) The lender may not believe the seller that they are not going through a real hardship and they want to chase them for more money 4.) The lender may still foreclose on the property because they think they can do better on their own. 5.) You have to depend on the listing agents experience, if he doesn't know what he is doing he could be wasting everybody’s time. So a buyer can get into escrow, wait for an extended period of time, and still not have a deal. Only 1 of 10 short sale transactions closes successfully.
The process is not too dissimilar than a regular sale except for the addition of bureaucracy of the lenders loss mitigation department of the lien holder. So you start with an accepted offer, you open escrow, a short sale package is made by the seller that includes: list of assets, explanation of economic hardship, your offer to buy and a variety of other documentation. The lender then reviews the package and the your offer that has been accepted, they will send out their own independent broker to asses a value and at times they will get three separate opinions. Compare the accepted offer and the Broker Price Opinions, and review any other offers that have happened to be submitted during this process. They just want to be sure they got the best offer. This means the acceptance of the seller of your offer does not mean your offer locks everyone else out, even though you were the first one to step up. Now if the lender is satisfied with the hardship, value according to the independent brokers opinions and market conditions, then they will accept the offer to their choosing, give a specific deadline to close after approval. If you can not close on the deadline or prior to the deadline the bank can refuse to close and still foreclose on the property. This is true even if it is not the buyers fault, i.e. ... buyer couldn't get their lender to fund the loan on time.
This type of transaction is not for everyone. If you are the type of buyer that needs to know if the sale is going to happen or you need it to happen in a specific period of time, I don't recommend it for you. Short sale listings though are usually heavily discounted, usually from 5-20% below market, for an investor it can be very rewarding to go through the hassle. This was a quick explanation of what a short sale is and hopefully this helps in your understanding. Please feel free to contact me if you would like more information or criticism of this article.