Monday, July 25, 2011

On October 1, 2011 a lot of folks in the Manhattan Beach-Beach Cities real estate market are going to be very upset. That is the day the FEDS have targeted to lower the conforming loan limit from the current $729,750 to $625,000. The downward shift in the conforming limits isn't just going to affect buyers but also homeowners who have been waiting to refinance their existing loans.

If you haven't filled out loan documents by August 15, 2011 you may not be able to take advantage of the current conforming limits for your loan. In fact Bank of America is no longer making conforming loans over $625,000 even thought the official cutoff date is September 30, 2011.

So how will the decrease in conforming limits affect you?


Manhattan Beach-Beach Cities Homeowners:
Many homeowners have been waiting to see how low interest rates will go before they refinance to take advantage of lower rates. If you purchased your home a few years ago with a loan amount of $729,750 and want to refinance... DO IT NOW! If you wait and your loan amount is over $625,000 you will have to take out a jumbo loan which may have tougher guidelines and will certainly have a higher interest rate.



South Bay-Beach Cities Buyers:
For many buyers in the Manhattan Beach-Beach Cities the lower loan limits mean they are going to have to get a jumbo loan to buy the same property they could have purchased a few months ago with a conforming loan or come up with a significantly higher down payment. That means tougher qualifying guidelines and a slightly higher interest rate. As an example;e a buyer looking at a $900,000 purchase price today would be able to purchase with 20% ($180,000) down and a loan of about $720,000. When the conforming limits change a buyer would need to come up with slightly more than 30% ($275,000) down for a conforming loan of $625,000 to purchase the same property.


There are a lot of folks trying to get the FEDS to leave conforming levels where they are for at lease another year for the higher priced areas of the country. However I don't think it will happen. There is a bit of good news. More lenders willing to make jumbo loans are stepping into the market. Also the difference in rates for conforming and jumbo are fairly close... conforming fixed are about 4.6%-4.75% and jumbo rates are 5.125%-5.5%. However that could change if Congress doesn't stop playing King of the Hill with each other and the administration.

The boys in D.C. lament the fact that housing continues to be an issue in most of the country, yet they can't seem to understand that much of the fault lies at their doorstep. There is a new guideline/rule/formula change every few months as the government tries to put the horse back in the barn that burned down. If the folks in D.C. want to see housing markets make a comeback they need to leave the process alone for awhile and let things settle. Ultimately local real estate markets will find their way through the muddle if folks aren't waiting on a daily basis to see what the next new thing will be.

Classic South Redondo Beach Home

Real estate sales in all the Beach Cities are down and much slower than last year at this time. Buyers remain unsure about where the economy is headed. The reports that come out of Washington are mixed.. one day the news is great and the next not so hot....



I was reading an article this morning that puts some interesting perspective on the "economic recovery". The article notes that it has been 2 years since the recession ended but not much has changed in the overall economic picture.



While real estate values in the South Bay -Beach Cities have held up better than in other parts of Los Angeles County we have seen values decline. The current market seems to be on the flat side but that could change in October when the conforming loan limits drop from the current $729,250 to $625,000. Home prices have declined but losing $100,000 on conforming loan limits will have an effect on how buyers perceive the market... even if the effect is more perception than reality.




While the difference might not be felt as much in Manhattan Beach or Hermosa Beach, it will affect the Redondo Beach and El Segundo real estate markets as entry level prices are lower. Currently the difference in interest rates for a jumbo vs a conforming rate is not a large amount but qualifying guidelines may well be a factor. If you have a loan over $625,000 that you are planning to refinance now is the time to talk with your lender.





Beach Cities: Sold May 2011

A Time to Remember... Memorial Day 2011







Every May when I was a child Veterans would hand out poppies made of red, white and blue paper on the street as a sign of remembrance for those who died in the service of their country. The poppies were to be used to decorate the graves of the soldiers. At that time it was still called Decoration Day. Over the years the name has changed and Memorial Day is now more often thought of as a three day holiday than as a time to honor the dead.

How we view the military has changed over the years and we see battles in the streets as part of the nightly news. But one thing remains constant... the loss of our men and women in combat. So take a few moments from your celebration this weekend to remember those who have died in the service of their country.



Local Memorial Day events:


Hawthorne

A ceremony for war veterans will take place at 10 a.m. Monday at the Hawthorne Memorial Center, 3901 W. El Segundo Blvd. A free lunch will follow at noon at American Legion Post 314, 14124 Prairie Ave. For information, call 310-675-1313.



Lomita


Lomita VFW Post 1622 will hold a memorial service at 11 a.m. Monday at Veterans Park, 25700 Walnut St. (at 257th Street just north of Pacific Coast Highway). A luncheon follows at the VFW Hall, 1865 W. Lomita Blvd. You must have a flier to attend the luncheon. Fliers will be available at the memorial service.

For information, call 310-326-7132.


Redondo Beach

The city of Redondo Beach will hold its annual Memorial Day tribute from 1 to 2 p.m. Monday at the new Veterans Memorial at Veterans Park, adjacent to the Redondo Beach Pier

Donations are being accepted for the Redondo Beach Veterans Memorial. For information, visit www.RBVeteransMemorial.com/.

The Redondo Beach Elks Lodge 1378 is sponsoring a Memorial Day barbecue in the Elks parking lot south of the lodge next to the park. The barbecue is free for all veterans and members of the military. A $5 donation is requested for all others.

The Rev. Bhagavan Friend will hold his annual Empty Chair Memorial to America's Fallen Soldiers - All Services - All Wars. The service is dedicated to fighting men and women who have sacrificed their lives for the country.

The ceremony will be at 11 a.m. Saturday at 124 Sapphire St. It will feature distinguished speakers, a bagpipe player, harpist, bugler and color guard. Refreshments will be served. Attendees are invited to bring flowers to place around the memorial.

For information, call 310-540-6044 or visit www.emptychair.org/.

American Legion Post No. 184 is hosting a Memorial Day potluck picnic with hamburgers, hot dogs and potato salad. The public event is from noon to 3 p.m. Monday at 412 S. Camino Real, Redondo Beach.

Proceeds from donations will be used to purchase calling cards for the troops at Christmas.

Rancho Palos Verdes/Green Hills Memorial Park
The Memorial Day Observance begins at 10 a.m. Monday at Green Hills Memorial Park, 27501 S. Western Ave.


The event include a parade of colors presented by all branches of the armed forces, the mounted posse from the Lomita sheriff's station, musical performance by the 300th Army Band and Cabar Feidh Bagpipe Band, aerial flyovers and the release of 100 doves. Also the Boy Scouts and Girl Scouts will place roughly 8,000 American flags on the grave sites of veterans at Green Hills.

South Bay- Beach Cities: SOLD April 2008-2011








Although April sales in many areas of Southern California were down significantly, April home sales in the South Bay-Beach Cities were a bit of a mixed bag. Some Cities were about the same as previous years while others did see a significant slip in numbers.



May sales are looking to be a bit better than last month for many Beach Cities. Hermosa Beach is going to be the May winner with more sales than they have seen in the last few years. I expect to see similar sale numbers for the rest of the year.. some months good and some not so good depending on the city and the inventory mix. Prices are also bouncing around in the Beach Cities. As usual prime properties near the water are holding value better than those across the highway.



One of the biggest challenges the South Bay -Beach Cities are going to face in the fall is that the conforming loan level... currently $729,750... is going to fall. I expect to see conforming loans at $645,000 but there is a real possibility that they may drop lower. I'll be writing a post about the consequences of this action soon.

South Bay-Beach Cities: Sold April 2011

 New Construction Redondo Beach: May 2011

The good news is that closed sales in March were a major improvement over those in January and February in all the South Bay-Beach Cities. The bad news is that closed sales in April are not looking as good as those in March. However pending sale numbers are holding fairly steady with not too many surprises. Inventory is creeping up a bit but not overly so for the time of year.

All in all what we are seeing is a lackluster but fairly steady market. Buyers want homes that are priced to sell, in good condition and in a good location... and they tend to sell very quickly. Marginal properties command significantly lower prices and seem to stay market for long periods of time unless they see major price reductions. Buyers are picky and willing to spend a long time looking for the right house. There is no sense of urgency in this market... yet.

The big surprise for many is that new construction is beginning to hit the market. Redondo has 13 properties on the market listed as new construction. Builders in Manhattan Beach are again picking up properties to tear down and build spec homes. While there are not many of these projects yet... the fact that builders are returning to the market indicates that our local Beach Cities real estate market may be starting to see some stability.

That said... short sales and foreclosures will keep the market in check for a little longer. Rising interest rates may be an additional factor to consider, although the last time rates soared in the late 70's and early 80's prices remained flat rather then declining by a huge percentage. As always the only constant in this market is change...

South Bay-Beach Cities: Sold March 2011