Financial update through the week of August 9, 2013

The summer doldrums have hit the stock market as the Dow finally broke its longest weekly winning streak since last August. This was a week without a lot of economic data and very low volume giving traders little to react to.  The Dow ended the week at 15,425.51 down 1.49% from last week’s close of 15,658.36. The Nasdaq closed out at 3660.11, off .8% from last week’s close of 3,689.59. Even the S&P 500 was down, ending the week at 1,691.42, a drop of 1.07% from last week’s finish of at 1,709.67.  It should be noted the markets are up almost 20% for the year!

 

Once again, concern over the Fed’s taper of the bond-buying program was responsible for much of the downturn. Richard Fisher, president of the Federal Reserve Bank of Dallas, stated on Thursday that he believed that cutting back on the stimulus program could begin as early as next month  as long as economic data continues to improve.

 

Data released this week showed that U.S. wholesale inventories fell .2%  in June even though a gain of .4% had been expected. This was the second month of wholesale inventory declines.  Lower inventories can lead to higher prices, so this is a statistic that is looked at to forecast inflation risks.

 

The yield on the 10-year treasury note also slipped this week ending at 2.57% down from last week’s 2.63%. The rate was around 1.63% one year ago. The 10 year treasury note directly affects home mortgage rates.

 

This week the President spoke in Arizona addressing the issue of the housing bubble in 2007 and calling for mortgage reform. His proposal in part involves greatly diminishing the roles of Fannie Mae and Freddie Mac, the industry giants which own or guarantee over half of all home loans currently. There is a bipartisan bill in the Senate calling for a winding down of the two organizations. The Obama administration has indicated a desire to replace Fannie and Freddie with a system that allows the private market to buy home loans from lenders and then repackage them as securities for investors. The government would still be involved because it would insure or guarantee those securities at a cost to investors. Obama called for private capital to take a larger role in the mortgage market and also asked Congress to push through legislation to make it easier for homeowners to refinance at lower rates. As part of his focus on housing this week, he hosted a chat with online real estate syndicator Zillow and took questions via Twitter.

 

CoreLogic released a report showing that the Los Angeles metropolitan area topped the country in single-family home price gains among the 100 largest cities in June showing a 20.7% increase from a year ago. Home prices in California overall appreciated the second-highest in the country, up 21.4% behind only Nevada. 

 

This week’s interest rates showed a slight increase. The Freddie Mac Weekly Primary Mortgage Market Survey showed a 30-year fixed rate at 4.40% up from last week’s 4.39% while the 15-year fixed held steady 3.39%.   This time last year the survey showed a 30-year fixed rate of 3.59% and a 15-year fixed rate of 2.84%. With the treasury bond rates dropping the last two days rates today are slightly lower.

 

Although we have seen some seasonal slowing the real estate market is still very active. Prices are still rising, but it seems like they are not rising as sharply as they were in the last few months. Inventory levels are still at all time lows, but are higher than they were in May, June and July. Fortunately, I am part of a company that is taking a much higher number of listings propionate to the number of agents at other local brokerages.  At the same time our buyer controlled sales are also much higher per agent than our competitors.  If you want to know more, feel free to reach out to me at 310-963-7384 or [email protected] .  Revi

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Growing up in Toronto, we took the subway downtown almost every Saturday.  Imagine the freedom of being a teenager and being able to get to places without a car or without having a drivers license.  Imagine being a parent and not having to drive your teen around town.  Sounds pretty good, eh?

Fast Forward 30 years and here I am in LA.  A place that has inspired a song called “Walking in LA”. A song that is about how nobody walks in LA.  Why does everyone drive?  Well, it could have something to do with our lack of easy public transit.  Until now!  Have you heard of the new light rail that will cross the city from downtown and make it all the way to the beach?  It is a reality folks…the day will come (very soon)  where you can board a train in Downtown LA (and points in between) and make it to the beach without setting foot in your car.  Currently, you can get from Downtown to Culver City.

I have a prediction about how this light rail system will affect real estate in the surrounding areas.  For those that know me, I rarely (if ever) make Real Estate Market predictions.  How can I possibly know if the market will go up or down next year?  Well, without a crystal ball, the truth is that no one can make those predictions with any level of accuracy.  I can however give you very accurate info on today’s market place and what I think will happen to a certain area of town over the next 5-7 years.  Why am I willing to do something I rarely do?  Because I believe in the light rail.  I believe in public transit.  I believe that a system like the one being built will greatly affect Real Estate development in the coming years.

On my last visit to Toronto, I noticed a few things when talking to my old friends.  People are worried about the environment and their expenses.  They are making changes within their families to minimize their affect on the aforementioned.  People have one car families now.  Not everyone, but some.  Families are getting by with one car because they live in a city where you can get almost ANYWHERE using the subway and bus system.  Mark my words, I believe that in 10 years time, the people of LA will realize and appreciate the value of a public transit system that works.  Property values will reflect that realization and LA real estate developments will be like nothing you have seen.  If you don’t believe me, look up the city of Toronto and see what has been going on over there in the past 15 years.

So, now to the title of my blog….if you want to discuss investment opportunities and how they tie in to the Metro Light Rail, give me a call and let’s start investing in your future and in the future of Los Angeles!

Revi Mendelsohn, Realtor
Rodeo Realty Beverly Hills
310-963-7384 (cell/txt)
[email protected]
www.ReviMendelsohn.com

  

About 3 weeks ago, a dear client and friend of mine texted me early one morning to let me know that they were thinking of moving out of state and selling their home.
Here is the backstory; In 2010, we searched high and low until we found their perfect home.  It was a well preserved “1950’s special”.  You know those houses that only had one owner since it had been built? Well this one had been owned by the Langer Family (Of Langer Deli fame).  This was the home that they had started and raised their family in, and it had the orange shag carpet to prove it.  With some finesse, a high offer price and a lovely letter, (not to mention some roundabout connections that I discovered), we were chosen as the successful bidders.

My clients spent months and several hundred thousand dollars lovingly planning out a gorgeous remodel.  The took out the false ceiling in the living room to create a vaulted ceiling.  They turned the kitchen into a ‘KITCHEN” with a 10 ft island to name just a new of the upgrades they made….I could go on and on.

Ok, so now back to March 2013….
Our first step was to bring in a stager (although there was not much for her to do as the house was already quite perfect).  We did need some advice on furniture placement in a couple of rooms though.  I hired my stager to come in and do a consult with my client.  The next step was to get some repairs done in the home.  There were some scuffs and dings that needed to be taken care of.  The yard needed some colour.  I went to the store to buy some flowers and plants.  I stopped by another store to pick up some cushions and other decorative items.  We are now just 4 days into the process and the ball is rolling pretty quickly.  My client is motivated and full of energy.  She got more things done in 4 days than I have seen sellers do in 4 weeks.  How did I get so lucky?

Through our conversations, my clients tell me that they would prefer not to hold their house open as they do not want hundreds of strangers to come through their home.  Also, they have cats and it would be too risky to have the doors opened several times, as we would likely lose a cat or two.  As a Realtor, I know that the only way to get the best possible price for a property is to expose it to the largest number of people.  It seems I was not that lucky after all…my hands were tied…..What would I do?  My clients did not feel that getting top dollar was their priority.  Selling their house quickly and to a nice family was! (I can tell you that I have never come across a seller like this in my career…especially in a seller’s market!  Looks like Karma still exists in the world!)  I assessed the value of the property, the sellers came up with a number that would work for them and I did what I was told to do….Sell the house for the price they wanted and show it to the least amount of people…or only do private one on one showings…no open houses.

We also decided that we would proceed with preparing the house to be put on the open market after spring break was over (Just in case Plan A did not go through, we would have the house ready for Plan B–open houses).

I contacted a friend of mine that had been looking for a house in the area.  I showed her the house.

I am pleased to report that from the morning that I received the text from my clients letting me know that they wanted to sell, to finding the buyer for her house, less than 7 days elapsed.  No open houses, only one couple visited the house, and they bought it!

My clients have already submitted an offer on a house in their new state (Thanks to the wonderful agent I was able to refer them to), and we are working together to get both escrows closed concurrently.    Now that is a happy ending!

Who wants to be next?

  

A couple of weeks ago I came across a listing for a home that I have seen exchange hands several times over the years.  I looked up the listing and could not believe what I saw.  I decided to put together a list of things that you must do when selling your home.

1. Market your listing with at least 10-15 pictures of your home.
This listing had one exterior shot.  ONE? In today’s technologically advanced market?  As a Realtor, we must stay on top of the latest technological advancements, or we run the risk that our clients will think we are dinosaurs. Also, if you limit the photos shown, the average buyers jumps straight to the conclusion that the inside of the house is awful.  If the home is not yet ready to photograph, wait until it is before you add your listing to the world wide web. Over 90% of buyers shop online these days. We must give them something to look at and to fall in love with.  The only way to sell a house is to get people to walk through the door.  If the listing is not enticing enough for them to stop what they are doing, get in their car and come look at the house, then you will not be able to sell your home.

2. Timing your listing launch and open houses.
Time your open house in such a way that it is about 3 days after the launch of your listing. The first open house for the property in question, is not for another 3 days.  However, the property has been on the market for 6 days already.  That is 9 days on market (DOM) with no showings!  You should definitely have some time between list date and first open house (this gives the listing a chance to get some exposure, but 9 days is way too long).  If the house is not ready to show, see point number 1 above.

3. Allow your agent to show your home on his/her own.
The listing says that the Owner or agent will show property.  The owner was at the broker’s open house and at every open house.  I am going to guess that he was at all private showings too.  I don’t care what anyone says, but the owner should almost NEVER show their own home.  There are ways to position and market things that only a Realtor will know how to do.  The owner is almost always very emotionally attached to their home and you don’t want that type of presentation made to a potential buyer.  Can you imagine if the seller and the buyer rub each other the wrong way and that is what kills the potential deal?  Sure, they could love each other, but the chances of things going south are very good.  We always keep the buyer and seller apart until the deal is just about done.  Some times, they never meet.

4. Hire the agent that is best and most qualified to sell your home.
Do not hire someone JUST because you are related to them.  In this case, the seller made a point of letting me know that his cousin was his Realtor.  Hire someone because they are qualified for the job, they love what they do, and you like them as a person.  Real Estate transactions are very tedious and complex.  You will spend many hours with your Realtor.  If you like them as a person, things will be that much easier.  The same goes for discounted services.  If the listing agent’s fee is discounted below what everyone else is charging, then the service is likely discounted too.  If you hire a Realtor, it is because you do not have the inclination, interest, capability or time to represent yourself in your home sale.  What is it that they say about attorney representing themselves???
Let the professional that you selected do what they are hired to do for you.  Stay on top of the market and educate yourself.  Does what the Realtor says make sense?  Have you spoken to their past clients to see if they endorse that agent?  What is their typical number of Days on Market before an offer is procured?

These 4 things were what I noticed within 30 seconds of looking up the listing online.  There may be others, but these were the things that I noticed first.  By the way, the house did end up going into escrow, albeit after 20 days on the market.  In the seller’s market that we are in, most homes, if marketed and priced well, sell within the first 5 days on the market.  Some go on day 2!  This home ended up selling for $200,000 UNDER the asking price.

Want to talk about this blog post or any other Real Estate matter?  Feel free to call or email me at 310-963-7384 or [email protected]