If you are in escrow or thinking of buying a home in the Manhattan Beach or the Beach Cities then financing is of utmost importance. Shopping rates and getting pre-approved is something all buyers should be doing before they step foot in a home that is for sale. Last week conforming** 30 year fixed rate loans of $729,750 or less were around 6.3% with 0 points or 6.125% with 1 point. My... my... how life has changed.

If you are a buyer in escrow or thinking about making an offer... lenders are tripping over themselves to give you a good rate. My buyers that were looking at 6.125% with 1 point on Friday are now looking at 5.75% with 1 point. One of my lenders tells me he can do 5.675% with 1 point. I'm getting rate quotes from every lender I know. This is great news if you are within conforming limits.**

But as with life in general... while some things are sweet... others can be a bit bitter. If you are not within conforming limits the news is not so hot. Jumbo loans over the $729,750 limit are still stuck in no man's land. A fixed rate jumbo ($729,750 +) 30 year loan is 7.75%-8.3% depending on the lender... while a fixed 5/1 ARM is 6.125%-6.25%. However it looks as if some lenders may be thinking about going back to giving customers of their bank a break.

Craig Filson of Wells Fargo tell me that Wells has a new approach for their clients who need larger loans. Wells is going to offer borrowers who maintain accounts with $50K + at Wells, have a Fico score of 720+ and who are looking for a loan to value(LTV) of 75% or less some very good rates. They are offering a jumbo 30 year fixed at 6.875 with 0 points and a fixed 5/1 ARM at 6.50% with 0 points. It you are willing to pay a point you may get a better rate.

I'm sure BofA and others will follow suite in a very short time. Many years ago it was standard procedure for banks to offer their customers with larger accounts a better rate on home loans then they offered non-customers or those with less money in the bank.

I suspect that we will see a number of old ideas resurface in the coming months. I think you are going to see sellers offer to pay points on a loan to buy down the rate for buyers. I fully expect to see some homeowners offer to take back second trust deeds or even carry the first trust deed if a buyer has a large enough down payment. You can expect to see the Bank of Mom & Dad make a comeback as buyers realize they need more money down. FHA loan limits have gone up making these the perfect vehicle for buyers looking at less expensive property who don't have much down.

Buyers are realizing that buying a house takes more preparation today then it did a few years ago. They need to get their credit score in order. They need to start saving money or save more money for a down payment. Expectations will change as buyers realize they can only buy so much house and no more. The idea of a starter house will not be looked down on but rather become a sensible choice once again.

** Just a reminder... As of January 1, 2009 the conforming loan limit will be reduced to $625,000 from the current level of $729,750.

Affordable is a term that changes depending on who, where and how the term is used. When used in conjunction with the word housing it can take on a slew of meanings. When I use the word affordable I mean a price where an owner can make the monthly payments without worrying about having to declare bankruptcy. An affordable home could be $400,000 or $4,000,000 depending on your financial situation. In Manhattan Beach an affordable home townhome is usually thought to be under $1 million. In Hermosa the range is about the same. In South Redondo and El Segundo the range is $700,000 or less; while in North Redondo it's generally homes under $600,000.

Sometimes it seems as if nothing affordable in the South Bay-Beach Cities but the fact is that the inventory of affordable homes is growing. Entry level homes, townhomes and condos in all the Beach Cities in good shape are selling... although the market time in Hermosa, Redondo and El Segundo is longer then in Manhattan Beach.

Entry level properties are selling.... A little one bedroom REO on Manhattan Beach Blvd found a buyer in 6 days with a list price of $320,000. A 2 bedroom townhome on 12th Street went into escrow after a week at a list price of $575,000. A 2 bedroom on Manhattan Beach Blvd at $569,000 went into escrow on Friday and a 3 bedroom on Manhattan Beach Blvd at $585,000 is still looking for a buyer.

In North Redondo there are 42 properties priced under $600,000. 16 are single family homes and 26 are townhomes. Prices start at $425,000 for a 3 bedroom 1 bath home near the Galleria. In South Redondo there are 41 properties under $700,000... 6 single family homes, 28 condos and 7 townhomes. In El Segundo there are 16 properties under $700,000. 3 are single family homes and 13 are condos and townhomes. The least expensive is a 1 bedroom 1 ba unit on Imperial priced at $339,900. In Hermosa Beach there are 18 properties under $ million... 9 single family homes and 9 townhomes/condos. The least expensive is a 1 bdrm 1 ba in the Victorian on prospect listed at $399,000. In Manhattan Beach there are 25 properties under the $1 million mark. 15 are single family homes and 10 are townhomes/condos. Prices start at $585,000 for a 3 bedroom 2 bath condo on Manhattan Beach Blvd.

If you are interested in a beautiful unit with a peek of the ocean and a great PV view take a look at .....222 S. Irena in South Redondo ( $624,500). This is a lovely unit that has had a number of upgrades including a new kitchen and hardwood floors. It has had offers but there was a timing issue for the escrow period. Now that the issue has been resolved and I expect it will sell soon.  Give me a call  (310) 721-7438  or e-mail me if you would like to see this great unit....

This morning President Bush signed what has become know as the housing rescue bill. I doubt that it will truly rescue many people but it seems to have a little of everything for everybody. Our South Bay-Beach Cities real estate market may benefit slightly as the conforming loan limit has been permanently raised...the bad news is that it's only to $625,000 rather then the $729,750 we had thought would happen.  If the financial markets feel the bill makes the housing market more stable then we may see rates be less volatile then in the last few months. So the good news is that it just may bring some stability back to the financial markets... the bad news is that taxpayers could be paying for a long time if things get worse.

Last week I noted that our local real estate market has changed since 2005. Home prices have come down from the high points of 2004-2005. Inventory is up slightly in all the Beach Cities while prices seem to be trending toward small declines or are just flat when checking median prices. We are still not seeing many foreclosures. Redondo Beach has more foreclosures then the other Beach Cities but the numbers are still very low. If you are a seller lower prices will not make you happy but if you want to buy there are deals to be made. This is part of the market cycle... prices go up and they go down...and they go up... and they go down... you get the idea.

Sales volume is low but relatively steady in all the Beach Cities. July closed sales are going to be lower then those in June but a number of homes went into escrow in the last 30 days so August and September might actually post decent numbers. a few potential buyers are waiting in the hopes that the entire market will crash and they will step in at prices last seen in '95. Not all buyers see the market in those terms...which poses the question...who is buying in this market?

The answer is the same people who usually buy a home... the ones who want/need to buy a house because it's what they choose to do. Some buyers are also sellers.. some are not. Some buyers need a larger place... they are expecting another child, have a family member moving in or need space for a business they run out of the house. A few want to be in a specific school district. Some buyers want a yard. Others are getting divorced and want a new place without old memories. Some are getting married and want our home not yours or mine. Some people need to move because their current house is too large or they have a physical problem that makes their home unsuitable. Some buyers are just tired of renting and want a home of their own. Some buyers think the present market is not a bad market.. you can negotiate price and rates are still on the low side so they are willing to take the plunge.

Now not everyone wants to own a home. Not everyone needs to buy a home. As the past few years have proved not everyone should buy a home. Some renters will become homeowners... others won't. There are people who will always rent rather then own a home.. which is good if you happen to own a rental property.

3612 Poinsettia Manhattan Beach


In the last few months I've written posts on Starter Homes in Manhattan Beach , Prices not crashing .... no kidding and buyers and sellers Thinking Outside the Box along with a number of other posts on Manhattan Beach real estate. These posts were about the market in general and often about my listing on 3612 Poinsettia in particular. Many who commented on these posts blasted me on everything from home prices in Manhattan Beach to my general lack of knowledge about the declining real estate market. The bottom was going to fall out of the local housing market and Poinsettia was wildly overpriced at $849,000.



But a funny thing happened a month ago. Suddenly 3612 Poinsettia was not the wallflower at the prom. Poinsettia was on the short list for Prom Queen. The property was being shown many times every day. Not only did we wind up with multiple offers but it went within a matter of days and I had to turn away of number of people who wanted to make offers. I won't release the sales price until the house closes escrow in July but I will share a bit about the sale.


First the deal is very solid with the buyers having a huge down payment well in excess of the standard 20%. The agreed price is very close to full price. The buyers have released all contingencies. I'm still receiving calls from people who want to make an offer if it falls out of escrow and are not blinking when I tell them they have to look at full price or more. People are now making comments about what a great little home it is and how lovely and private the yard is compared to many others in the same price range.


Buyers who made low ball offers suddenly found themselves wanting a chance to increase their price to whatever we wanted. The buyers who offered the winning bid didn't mess around with multiple low offers. They wanted the house and recognized the value of the property and made their offer accordingly. 3612 Poinsettia went from mouse to Prom Queen in less then a week.



So what's the point of this little tale? It's pretty simple.. you have to know what is happening in your local market. The buyers who lost on this home were those who paid too much attention to what was happening in markets outside the Beach Cities and Manhattan Beach. The buyers are local people. They grew up here. They are going to live in this house and make changes as their life changes. They bought the home they could afford in the location they wanted. They bought an entry level home that they will turn into the home of their dreams over time. They absolutely love this home. In 5-7 years they will be considered "lucky" to have bought at such a cheap price.



Starter homes that were scoffed at 3 months ago as overpriced are quietly selling. Smart buyers are taking advantage of rates that are still on the low side and sellers who are pricing homes to sell. One by one these homes are moving as buyers begin to realize that Manhattan Beach and the Beach Cities are some of the best places to live in Los Angeles County.



This doesn't mean you should buy a home if you are not ready to buy. What it does mean is that if you are financially stable and are planning to buy in the next few months you might want to take a look at what is happening in the local city where you want to live. There are good prices on a lot of property in Manhattan, Hermosa, Redondo and El Segundo.

Buying a home in the South Bay/ Beach Cities can be a daunting task whether you are a first time buyeror have purchased a home in the past. Many buyers aren't sure about prices... will they go down a lot or a little or not much.  Should you buy  a home or a townhome or a condo or maybe a duplex.  How about financing... how much money will you need to buy a property in the current market. There is a lot of advice in the media about buying a home, townhome or condo in today's real estate market. The best hint I can give to those thinking of buying a home is to slow down.

I know that sounds a bit strange in our current market...after all according to the media you have all the time in the world if you are thinking of buying.  However if you want to buy and get the best deal possible, then you need to focus on those things that will help you accomplish that goal. Too often buyers are scurrying around looking at open houses, talking to their friends about the market, reading media items and just generally doing everything but thinking about what they need to do and the best way to do it.  Price is important but if you really want to be a homeowner then you need a plan.

The 7 Things to Know When Buying a Home :

1. Gather all your financial documents together.. that's bank accounts, stocks, check stubs, birthday money from Aunt Jane and Uncle Harry... anything that has a bearing on your finances.

2. Find a good lenderand talk to them about the various types of mortgages, interest rates, the costs of the loan and your credit. If your credit is bad find out what you must do to repair it. You may need to wait another year before you buy if you have to clear up your credit and pay off bills.   If you need to save another $100 a month then figure out how many lattes you can't have.. Get your financial house in order before you look at one more open house.

 3. Find a good agent. Call your friends and ask for referrals. Go to open houses and talk with agents. Get on the internet and check out agent websites and blogs. Pick someone who shares information... a lot of information with clients on their sites and in person. Remember how much you loved your kindergarten teacher because of all the things you learned.... you should like your agent just like that... for the same reason.

4. Look at property. Be ready to meet with your agent if they tell you a great property has come on the market in your price range.  Don't get caught up in the idea that because inventory has increased there will lots of homes you will like in your price range.  Many times an increase in inventory is not an increase in homes that fit your budget and needs.  If you are too busy going out with your friends or are just too tired or not in the mood to see homes then you might not be ready to buy. Buying a home is a grown-up decision.. if you aren't ready.. pass until you are ready. Never buy a home if you are not financially and emotionally ready.

5. Figure out why you want to buy a house. If you plan on making a quick buck and selling for a profit in a year then you are not very realistic and may wind up in trouble in the future. Thoses days are long gone.   Remember buying is a grown- up decision..if you see a home as shelter for you and your family and as a long term investment that you are willing to make a few sacrifices to obtain.. now just might be a good time to buy.. Interest rates are still low and a lot of sellers have realized that the market is not going up anytime soon and are willing to negotiate price and terms.

 6. Be realistic.. start with a property you can afford.. which may not be the one you dream of owning..  Yes,  prices have declined but in many areas they have not dropped as much as buyers were hoping to see.  If you are looking in Riverside or San Bernardino Counties prices have really dropped.  However if you are looking in the Beach Cities prices are certainly less then they were two years ago but they are still on the high side. You need to know where prices are in your market. 

7. Listen to your agent not your buddies or co-workers. If you don't trust what the agent tells you then you need to find an agent you do trust. Your friends are not in real estate.. they don't know the market. Your real estate agent knows the market and will guide you if you pay a bit of attention.  If you have chosen your agent well,  they will offer you good advice.  That's why it is important to choose someone you trust.   I know there are a lot of people who don't think this is the time to buy and it may not be for them. But if you are ready this may be the right time for you. Trying to time the market is almost impossible. Generally by the time you figure out it's time to buy .. the best deals will be gone.

This is a very tough market for many potential buyers.  Unlike the market of a few years ago,  you will have to have cash for a down payment along with very good credit.  This isn't something new or scary...this is just common sense.