Palos Verdes Source

I have had several clients ask questions regarding foreclosure properties.  There have not been too many on the Palos Verdes Peninsula.  Foreclosures are not your normal purchase and a buyer is usually on his own (unless he hires a Realtor to act as his Buyer’s Agent to help him navigate through the process).  Here is the time-line for the process.  A NOD property is one that has a Notice of Default filed against it; the owner has 3 months to reinstate before the bank can foreclose.  A NOT property is when the bank files a Notice of Trustee’s Sale which is the actual sale/auction on the courthouse steps.  A REO property (is bank owned) has been taken back by the bank as it did not sell for the bank approved price at the foreclosure auction; usually a REO property will eventually be listed with a Realtor.

There is a new twist to the Foreclosure Sale/Auction - Duval County in Florida will be the first in the country to hold and Internet foreclosure auction next month.  The LA Times Business section had an informative article regarding the pros and cons (mostly cons) of allowing these auctions to be held on the Internet.  Currently, Florida is the only state that is not required to hold a public sale after notice has been given.

Buying foreclosure properties are not for the feint of heart.  Currently in California on the courthouse steps, “the auctioneer announces a property and bidders shout out their bids, raising them in $100 increments.  If they win, they have to pay the entire sales price, often within the next few minutes.  That usually means signing over that cashier’s check and collecting any change.”  Prior to the auction, “bidders have to research the properties’ histories, understand the local market and actually visit the homes” (usually just a drive by as the homes are still occupied).  Allowing foreclosure auctions on the Internet could open up potential problems for buyers who are lulled into a false sense of security by the property information  that is available on the Internet not realizing how much information they may be missing.

Statistics for the month of August for Palos Verdes Real Estate are now available.  There were 29 closed escrows, 26 pending sales in August and 51 closed escrows and 26 pending sales in July.  The number of closed escrows are down compared to the last 5 months.

Average price for homes that closed escrow in August was nearly the same at $1,480,000 compared to July at $1,496,000.  Average days on market for properties that closed escrow in August rose to 89 days from 52 days in July.  Sold prices compared to list prices was 96% which was slightly increased from 95% in July.  The most significant increase was 9.3 Months of Inventory (how many months it would take to sell existing inventory at the current rate of sale) for August; July had dipped down to 5.4 months.  Entire charts can be accessed by clicking here or on the “Statistics” tab above.

Currently, there are 285 single family homes for sale on the Palos Verdes Peninsula.  Additionally, 28 homes have pending sales, 24 homes are in escrow accepting backup offers and 11 homes have sold/closed escrow in the first 12 days of September.

The Los Angeles Business Journal article, ”Median Home Prices Persist in Steady Decline” on September 8, 2008, indicates that Palos Verdes Estates (zip code 90274) showed a 9%  increase in median price for August 2008 compared to August 2007.  Rancho Palos Verdes (zip code 90275) showed a 2%  increase in median price for August 2008 compared to August 2007. 

Statistics for the month of July for Palos Verdes Real Estate are available and the results were mixed again for July - more closed escrows and less pending sales.  There were 38 closed escrows and 45 pending sales in June vs. 48 closed escrows and 21 pending sales in July.  The days on market for sold properties in July was only 52 days compared to 67 days in June.

Average price for homes that closed escrow in July was down at$1,489,000 which could be an anomoly (please see entire chart by clicking here or on the “Statistics” tab above) as was the $700,000 spike upward for December 2007.  Average prices for some individual neighborhoods like Lunada Bay actually posted an increase of 30%.  Large swings can be caused by the specific homes that closed that particular month.  Months of Inventory (how many months it would take to sell existing inventory at the current rate of sale) fell from 7.1 months in June to 5.8 months in July (a good sign).

Currently, there are 278 single family homes for sale on the Palos Verdes Peninsula.  Additionally, 27 homes have pending sales; 22 homes are in escrow accepting backup offers; and 22 homes have sold/closed escrow since August 1st.  Overall, 15% of single family homes for sale are in escrow!

It’s finally happened!  The news media is discussing the turn in the real estate market.  Although they do not specifically mention Palos Verdes Real Estate, statistics are given for the Los Angeles area.  Recently, Barron’s Jonathan R. Laing had a lengthly and well- documented article which is worth the read (click here for link to article).

National statistics in the April S&P Case-Shiller Index showed that prices actually rose in 8 out of the 20 markets covered (versus only 2 in 20 markets for March).  “Jim Paulsen, chief investment strategist of Wells Fargo’s primary investment unit, expects home prices to steady by year end…”  Mr. Laing finishes his article by saying, “…long-term buyers in the top 20 U.S. metro markets have seen their properties appreciate by 70% since 2000.  Home prices often take five to 10 years to recover fully from severe declines such as this.  But at least the available data suggest the scary dive in home prices soon will be over.”  As you can see from the Barron’s chart below, Los Angeles actually experienced 107% appreciation since 2000.

Statistics for real estate on the Palos Verdes Peninsula for the past 15 months are available by clicking here or on the “Statistics” tab above.

Today’s Tour Tip for Palos Verdes Real Estate Broker’s Tour is my own listing at 838 Rivera Place, Palos Verdes Estates, which has spectacular panoramic ocean and Catalina views - and is a 4 bedroom, 3 bath, 3,025 square foot home on a 14,600 square foot lot for $2,499,000.

This is a lavishly remodeled home with a private courtyard entry and ocean views from nearly every room.  This exquisite home was designed with meticulous attention to quality and detail.  The custom cabinetry throughout resembles fine furniture.  It’s perfect for entertaining with a ground level kitchen, dining room, living room open floor plan with dramatic ocean views.  The downstairs family room has a full bar (with 100-bottle wine refrigerator, humidor, draft beverage dispenser, dishwasher, refrigerator and ice-making machine) and leads to a covered patio and gardens, all with incredible ocean views.

Please come join me today, August 12, between 11:00 and 1:00 to view this beautiful home.  There will also be a public open house on Sunday, August 17, from 1:00 to 4:00.   View property website at www.838Rivera.com

Statistics for the month of June for Palos Verdes real estate are available and the results are mixed - holding as far as price is concerned and down for number of transactions.  The average price for single family homes sold in the month of June was $1,786,000 up from $1,677,000 in May ($1,699,000 average for the last 12 months).

The statistics are different for number of pending and sold transactions which are both down.  June ’08 had 35 pending and 37 sold compared to May with 41 pending and 43 sold.  Inventory of homes for sale is up - 270 in June vs. 258 in May.  Months of Inventory (how many months it would take to sell existing inventory at the current rate of sale) was also up to 7.3 months in June vs. 6 months in May.  Average Days on Market for properties that closed escrow in June was 69.  There are 5 graphs available by clicking here or on the “Statistics” tab at the top of the page.

Currently, there are 265 single family homes for sale on the Palos Verdes Peninsula.   Additionally, 51 homes have pending sales; 21 homes are in escrow accepting backup offers; and 17 homes have sold/closed escrow since July 1st.  Overall, 21% of single family homes for sale are in escrow!

Where exactly is the real estate market going?  Owners of Palos Verdes real estate as well homeowners across the country would love to know the answer.  In addition to the “in your face” reporting about real estate (which can be pro or con depending on the reporter and which forecast he is looking at) there are other subtle indicators.

Recently Newsweek had an article buried on page 61 entitled “Finance - Cash, on The House” talking about a new take on reverse mortgages.   There are several lenders now offering a new loan product where the lender will share future changes in value 50-50 with the borrower.  The borrower must not sell the house for at least five years.  The example given was a $71,000 loan on a $500,000 home.  After five, years when the property is sold if it is worth $600,000, the borrower owes $121,000 (original $71,000 plus $50,000 which is half the appreciation).   If the home only sells for $400,000, the borrower pays the lender $21,000 (original $71,000 minus $50,000 which is half the depreciation).

This is not an altruistic gesture on the part of lenders.  They are betting the market will be up in five years – not flat, but up.  Lenders are looking to make a profit.  Historically, real estate has been an excellent long term investment.

I wish I had a crystal ball to tell sellers of real estate in Palos Verdes what price their home will sell for.  There are the obvious variables - location, condition, amenities like views, etc. and the “forgotten” variables like the market perception of the buyers.  As we have experienced, the media also plays a large part in the buyer’s mood. 

As more and more buyers begin their home search on the Internet, they identify quickly a well priced home.  Wouldn’t the seller want to be perceived as well priced when they first put their home on the market as statistics show that a home gets the largest audience/views within the first two weeks of being placed on the market.   Otherwise, they risk becoming a stale listing, whittling away at their “high” price and losing potential buyers. 

In this market, pricing is key and Realtors and sellers both need to “be brave” and price a home the same or less than the last comparable home that sold.  The buyers ultimately set the price (not the seller or Realtor).  The failsafe for a price that may be too low is that buyers will recognize the low price and multiple offers will result.

Lew Sichelman in a LA Times article, “To sell home, make sure the pricing is right” has several suggestions for sellers including “sellers need to know how fast properties in their specific market segment ae being sold…how much competition…and market statistics such as absorption rates…inventory…and days on market.”  If you want your your home sold quickly, put on a buyer’s hat for a bit when pricing your home.  Or you could, in effect, be “buying back” your home for yourself.

Statistics for the month of May for Palos Verdes real estate are available and indicate our market is holding.  Average price for single family homes sold in the month of May was $1,677,000 vs $1,667,000 in April.  Number of homes reported sold (closed escrow) for the month of May was 43 which was the same for April.  Number of homes pending for the month of May was 39 vs 40 in April.  Inventory of homes for sale was nearly the same - 258 in May and 254 in April.  Months of Inventory (how many months it would take to sell existing inventory at the current rate of sale) was virtually the same; 6 months for May vs 5.9 months for April.  There are 5 graphs available by clicking here or on the “Statistics” tab at the top of the page.

Currently, there are 244 single family homes for sale on the Palos Verdes Peninsula.  53 homes have pending sales; 21 homes are in escrow accepting backup offers; and 14 homes have sold/closed escrow since June 1st.  This is still a buyer’s market.  Well-priced homes are selling quickly.  Interest rates (30-year fixed) are higher this week — 6.375% conforming and 7.5% jumbo.  Overall, 23% of single family homes for sale are in escrow!

Are open houses an efficient sales tool for sellers? I am up front with my clients selling Palos Verdes real estate.  I tell them that I will hold occasional public open houses for them; statistics show that only 3% of homes are sold to buyers walking into an open house.  Plus there is the security issue.  I cannot be in every room at every minute and we receive periodic notices from other Realtors whose clients have had items stolen during open houses. 

The Sunday LA Times Real Estate section had an article dealing with the open house issue.   The Los Angeles Times reported that some sellers are now questioning the importance of open houses as a selling tool.  There is the usual feeling of displacement as the seller has to vacate his home for several hours on the weekend as well as the feeling that his privacy is being invaded.   The article infers that public open houses actually benefit the Realtors as it is an opportunity to meet new potential clients and that open houses draw people who “are more likely to be looking for decorating tips”.

A great reason for open houses is the instant feedback from the public regarding the condition and price of the home.  And there is always that 3% chance that you could find your buyer.   Do I agree with this article?  I have mixed feelings about public open houses.  I absolutely recommend broker open houses to my clients as 40% of buyers come from Realtor contact.