Palos Verdes Source

The availability of Jumbo Loans have affected the sale of Palos Verdes real estateover $1,200,000. It is a little tricky because there are jumbo loans available at rates that match May of 2008 – 6.875%. However, the number of buyers who can qualify for those loans has been diminished because these loans must be have full income verification and the borrower must have FICO scores of 700 or above.

And the higher the purchase price, the larger the down payment required. A loan of less than $1,000,000 requires 20% down. A loan between $1,000,000 and $1,500,000 requires 25% down, A loan of $1,500,000 to $2,000,000 requires 30% down payment. Loans above $2,000,000 require a minimum of 35% down payment.

On a sales price of $2,000,000 with $500,000 down payment where the borrower has no other debt, that buyer will have to document $375,000 yearly income (which is 1% or less of the population) for a loan of $1,500,000. Additionally, the lender will require the borrower to have cash reserves post closing of at least $150,000 and those funds have to have been in the bank account for a minimum of 3 months (Retirement accounts do qualify as cash reserves.) The issue seems to be that probably half of those borrowers who are making $375,000 or above are self employed and write off business expenses to lower their income for income tax purposes. The net income figure on page one of the tax return is what the lenders use as documented income. Jumbo loans are available but fewer borrowers qualify because of the above parameters.

There were 19 homes on the Palos Verdes real estate Broker’s Tour. We currently have 293 active single family homes for sale in Palos Verdes ranging in price from $749,950 in Rancho Palos Verdes to $18,900,000 in Rolling Hills ( the low in Eastview is $529,000). There are 57 townhomes/condos for sale priced between $209,500 and $950,000. My favorites were:

Michael and Nadia Foster’s 2620 Via Valdez, Palos Verdes Estates (above left), is a 4 bedroom, 4 bath, 3,395 square foot home for $2,148,000. This upper Lunada Bay home has been completely remodeled (just finished this year) with a gourmet kitchen with 2 center islands and ocean views from 4 balconies. My own listing at 3005 Via Rivera, Palos Verdes Estates (above right), is a 4 bedroom, 4 bath, 2,980 square foot home just reduced to $1,395,000. This beautiful Lunada Bay traditional home features a gracious formal entry, over-sized bedrooms with walk-in closets and a private cul-de-sac location.

Chris Fitzpatrick’s 18 San Clemente Drive, Rancho Palos Verdes (above left), is a 4 bedroom, 4 bath, 3,218 square foot home for $1,750,000. This wonderful Island View home boasts a fantastic maser suite, a pool & spa, and a large private 21,000 square foot lot. Megan Neel’s 6908 Purple Ridge Drive, Rancho Palos Verdes (above right), is a 4 bedroom, 2 bath, 1,617 square foot home for $999,000. This Los Verdes home has been fabulously upgraded with a remodeled kitchen, crown molding, and just a short walk to Vista Grande Elementary School.

Photos courtesy of MRMLS

Palos Verdes Peninsula Unified Schools again ranked in the top 10% of schools statewide based on Academic Performance Index scores. Great schools are one of the reasons that Palos Verdes real estate is so attractive to both buyers and current property owners.

“The top score in all of South Bay, 968, went to Cornerstone at Pedregal Elementary in Rancho Palos Verdes ” according to the Daily Breeze. API scores for all of the South Bay Schools as printed in the Daily Breeze can be accessed by clicking here.

All Palos Verdes Elementary Schools scored in the 900s – from 904 to 977 ( A perfect score is 1000). Palos Verdes Intermediate and High Schools saw an increase in their scores this year. Palos Verdes Intermediate received a 947, Ridgecrest received a 936 and Miraleste Intermediate received an 899. Palos Verdes Peninsula High School received an 879 and Palos Verdes High School received an 854. API scores for the district can be accessed by clicking here.

Photo above is Malaga Cove School

Last week Area Appraisal Management Company spoke at our Palos Verdes real estate office meeting to bring us up to date on the new appraisal rules – HVCC or Home Valuation Code of Conduct that went into affect May 1st. In the Sunday LA Times, Kenneth R. Harney wrote an article on the very same subject. They both gave the same information and it is not necessarily good.

Lenders can no longer order the appraisal themselves (and thus keep an eye on appraisal fees). They are now being ordered through a third party management company. Appraisal fees have gone up and the fee being paid to the appraiser is going down. Someone in the middle is pocketing the difference.

The appraiser management companies can send out any appraiser willing to work for the lower fee which means your appraiser can be from out of the area and not familiar with local values.

Lenders may not order a second appraisal if the first one is low. You are finished with that lender and must reapply with a new lender and start the process again.

The appraisal must be paid for upfront with a credit or debit card (instead of paying for it out of the proceeds of the loan) and there could be add-on fees such as no-show penalties ($50-100) or an additional charge of $50 to $150 if the property is worth more than $500,000.

Fannie Mae and Freddie Mac passed these new rules to improve the accuracy of appraisals and keep an arms length distance between the lender and appraiser. I don’t know if this is a knee jerk reaction to the financial mess experienced last year or a well thought out plan to restore some credibility in the lending market. Time will tell but we may experience a little pain in the meantime.

The 22nd Annual Palos Verdes Street Fair and Music Festival will take place Saturday, June 6 (10 am to 10 pm) and Sunday, June 7 (10 am to 9 pm). The theme this year is “Taking the Greener Path”.

The Palos Verdes Street Fair will feature 2 days of events and live music, jazz festival, nearly 200 street vendors, eco-friendly goods, “Living Green” Demonstrations, Carnival & Kiddie Rides, Pony Rides & Petting Zoo, International Food Court, Student Art Walk and Top Dogs dog show. This year the Carnival Rides will also be open on Friday, June 5 from 6 pm to 10 pm.

The Fair is located on Crossfield Drive in Rolling Hills Estates between the Promenade on the Peninsula and Peninsula Shopping Center. There is free parking at the Promenade parking structure (enter on Indian Peak Road). Click here for a map and parking information. My suggestion is to get there between 10 and 11 because the parking is easier and it’s a bit cooler before the mid day sun.

Photo courtesy of Palos Verdes Peninsula Chamber of Commerce

There were 16 homes on the Palos Verdes real estate Broker’s Tour. We currently have 294 active single family homes for sale in Palos Verdes ranging in price from $799,950 in Rancho Palos Verdes to $18,900,000 in Rolling Hills (the low in Eastview is $529,000). There are 58 townhomes/condos for sale priced between $209,500 and $950,000. My favorites were:

Laurie Hurley-Fuszard’s 2648 Via Anacapa, Palos Verdes Estates (above left), is a 4 bedroom, 3 bath, 2,506 square foot home for $1,795,000. This Lower Lunada Bay home has been completely remodeled, has an ocean view and you can walk to the bluffs. Marge Rankin’s 6714 Kings Harbor Drive, Rancho Palos Verdes (above right), is a 5 bedroom, 3 bath, 2,265 square foot home for $1,099,000. This Los Verdes home has a remodeled kitchen, a huge attic and is located on a cul-de-sac.

Charlene O’Neil’s 31 Empty Saddle Lane, Rolling Hills Estates (above left), is a 5 bedroom, 5 bath, 3,350 square foot home for $1,695,000. This Empty Saddle Club home has a luxurious pool, a barn and wide hillside views. Astrid Naviaux and Sharon Crum’s 4937 Elmdale Drive, Rolling Hills Estates(above right), is a 4 bedroom, 3 bath, 2,176 square foot home for $1,020,000. This Silver Spur home has city, mountain and coastline views, a wonderful open kitchen and a master suite.

Photos courtesy of MRMLS

Statistics for single family homes for the month of April for Palos Verdes Real Estate are now available. April 2009 had 3 less closed sales and 5 less pending sales than March 2009. Inventory of active listings/homes for sale rose again slightly for the fourth consecutive month which is great for buyers. The average price for homes that closed in April increased 20%.

For the month of April, there were 26 closed sales (29 in March) and 26 pending sales (31 in March). Active single family homes for sale rose to 291 (from 284 in March). Average price for homes that closed in April increased to $1,513,000 from $1,259,000 in March. Average days on market in April increased to 108 (from 68 in March). Months of inventory (months it would take to sell existing inventory at the current rate of sale) increased to 11.2 months (from 9.8 in March). Entire charts can be accessed by clicking here or on the “Statistics” tab above.

Currently, there are 295 single family homes for sale on the Palos Verdes Peninsula. Additionally, 41 homes have pending sales, 46 homes are in esrow accepting backup offers and 7 homes have sold/closed escrow in the first 11 days of May. The homes in escrow in pending and backup have increased nearly 70% since this time last month!

Palos Verdes Peninsula has a total of 67,162 residents as of 2008. The city of Rancho Palos Verdes has the largest population at 42,964. The city of Palos Verdes Estates has 14,046 residents. Rolling Hills Estates has 8,185 residents. Rolling Hills has 1,967 residents.

The Palos Verdes Peninsula measures 26.3 square miles. Palos Verdes is the oldest city (incorporated in 1939) and located on 3,038 acres. Rancho Palos Verdes is the youngest city (incorporated in 1973) and the largest city located on 13.6 square miles. Rolling Hills Estates encompasses 4.18 square miles and was incorporated in 1957. Rolling Hills also incorporated in 1957 and covers 3 square miles. Additionally, there are about 500 homes in Academy Hills and Westfield which are two unincorporated areas governed by the County of Los Angeles and are located off Palos Verdes Drive North.

Palos Verdes is known for its outstanding public schools and there are over 12,000 students enrolled in kindergarten through 12th grade. On the California statewide level, the Palos Verdes Peninsula district is in the top 1 to 5% in achievement. There are also several excellent private schools on the Peninsula – Chadwick, Rolling Hills Country Day, Rolling Hills Preparatory, Peninsula Montessori and Peninsula Heritage.

Prices for Palos Verdes real estate have not been fluctuating as much as other areas. However, when one looks at the average price for single family residences at the end of March 2009 (1,259,000) compared to March 2008 ($1,608,000) there is a 27% decrease but what those numbers do not show is that the number of sales under $1,000,000 are currently the bulk of sales (40 out of total sales of 82 since 1/1/09) which lowers the average price as the number of high end sales is at historic lows. Since the first of the year, out of 82 sales, only 8 were over $2,000,000; that’s 8% of sales. In 2008, 16% of sales were over $2,000,000. The difficulty in getting jumbo loans is definitely affecting that segment of the market. As a point of reference, in 2008 sales under $1,000,000 were only 25% of total sales.

What this means to buyers is that they will not be getting a huge discount when buying property on the Peninsula. We certainly have had a decrease in market price but no where near the numbers that are indicated when one looks strictly at average price. This was discussed in a lengthly article in the Los Angeles Times entitled, “Not that cheap”. The chart above shows how the increased sales in the under $300,000 market have skewed the median price in Los Angeles County. There were several stories about disappointed buyers losing out in multiple offer situations. There was even a story about a “frustrated” couple who made an offer for $1,000,000 on a home that was listed for $1,700,000 and the seller said no thanks.

The media has been giving buyers straight sales statistics without explanation for months and now that buyers are back in the market with great low interest rates loans, they are surprised to find sellers who are not willing to severely discount the price on their homes. It’s best to look at the recent sales comparables for the particular area of your interest, keeping in mind location and condition of the home.

Clients often ask what the school boundaries are in Palos Verdes. For High School it is an easy answer – Currently there is open enrollment for both Palos Verdes High School and Palos Verdes Peninsula High School; incoming students may choose either. See my article from 1/30/09 with particulars about each school by clicking here.

We have 3 intermediate or middle schools in Palos Verdes – Palos Verdes Intermediate School, Ridgecrest, and Miraleste. Enrollment at these schools are based upon where you are living on the Peninsula. You can check your address using this link to see what school your child will attend.

The same is true for the following Palos Verdes Peninsula Elementary Schools – Dapplegray, Lunada Bay, Mira Catalina, Miraleste, Montemalaga, Pointe Vicente, Silver Spur, Soleado and Vista Granda. Cornerstone @Pedregal Elementary is a charter school and entry is by lottery. Currently, Rancho Vista Elementary has open enrollment. Check with the Palos Verdes Peninsula School District at 310-378-9966 for more information as some of these schools are impacted and families moving into the area may be assigned to another school.