Redondo Beach: Craftsman Homes

I’ve always maintained that if we had a major recession all bets would be off about what would happen with home prices in Manhattan Beach and the Beach Cities. I think it’s safe to say that we are definitely in a recession. The recession, combined with the ongoing upheaval in the stock market and the continuing lack of credit in the financial sector, will ultimately lead to lower prices for all the Beach Cities.

The big question facing our local real estate market is whether or not we will see small declines in value or get hit with some big losses. The truth is I don’t know and neither does anyone else. So far the South Bay economy has held up fairly well. We haven’t had a lot of local companies posting large layoffs. We seem to be diversified enough at this point that we don’t have any major employers in big trouble. That could change but so far so good.

The same is true with the housing market. We have seen some foreclosures in the Beach Cities but compared to other areas of Southern California we are not doing too bad. However that doesn’t mean we are not seeing changes in the housing market. Small signs are beginning to appear… townhomes in Manhattan Village and single family homes in East Manhattan Beach priced under $800,000…homes and townhomes in North Redondo under $500,000… these are just a few of the signs of a changing market.

While we are not seeing a collapse of the market… I suspect that we will see further declines in value. However the Beach Cities should maintain value better then neighboring communities. Properties close to the ocean will maintain value better then those east of Sepulveda. South Redondo and Hermosa will likely hold up slightly better then North Redondo. El Segundo will continue at its own pace… following a slightly different drummer.

Here’s a surprise… even with all the ups and downs since September 15, 2008… the Beach Cities are seeing higher sales volume in October of 2008 then in October of 2007. Pending sales in November are running about one sale per day… not great but better then many anticipated at this point.

South Bay-Beach Cities: Sold October 2008 (click on graph to enlarge) 

South Bay-Beach Cities: Sold September 2008 South Bay-Beach Cities: Sold August 2008

South Bay-Beach Cities: Sold July 2008

South Bay-Beach Cities: Sold June 2008

South Bay-Beach Cities: Sold May 2008

South Bay-Beach Cities: Sold April 2008

South Bay-Beach Cities: SOLD March 2008

South Bay-Beach Cities: Sold February 2008

South Bay-Beach Cities: Sold January 2008

South Bay-Beach Cities: Sold November 2007

South Bay-Beach Cities: October SOLD 2007

South Bay-Beach Cities: September SOLD 2007

South Bay-Beach Cities: August SOLD 2007

South Bay- Beach Cities: July Sold 2007

South Bay-Beach Cities: Sold June 2007

South Bay-Beach Cities: Sold May 2007

South Bay-Beach Cities: Sold April 2007

South Bay-Beach Cities: Sold March 2007

South Bay-Beach Cities: Sold February 2007

South Bay-Beach Cities: Sold January 2007

The current economic climate is of great concern to everyone. The stock market ups and downs have made Dramamine the drug of choice for many who find their stomachs a bit queasy at the end of the business day.

Consumers are cutting back on things that are not considered basics. My nieces have been performing in a Clogging group at Disneyland. We were there Friday and no lines… which was a little surprising but thought Thanksgiving week would be far more crowded. Yesterday we were there again and there were far fewer visitors then usual during Thanksgiving week.

No one knows where out local real estate market is headed. We know we can expect to see further price declines in all the Beach Cities…we just don’t know whether they will be minimal …7%-10% or larger 15%-20%. Interest rates dropped dramatically yesterday but could well be up again by Friday. Much will depend on how much confidence the new President can muster and how quickly consumers perceive better times ahead.

Even in the difficult times we find ourselves facing there are still a lot of things to be grateful for…Tomorrow is Thanksgiving and I wanted to share with you some of the things I am thankful for in my life. I wish you all a Happy Thanksgiving ……..

8 ideas about selling your home in the South Bay-Beach Cities of Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo.

I’ve written a lot of posts about selling homes in the Beach Cities. For a long time the advice was pretty standard… price it right…make sure it is clean… spruce up the landscaping… advertise it everywhere and price it right. These items are market basics and should be part of any plan to sell. But in today’s South Bay- Beach Cities real estate market a seller may need a few more innovative ideas to get their property sold. One of the good things about being in real estate a long time is that while every market is different they are also a lot alike. The California real estate market is one of booms and busts. It is cyclical by nature and usually changes every 7-10 years. As markets change sellers need to change with them and often must start thinking outside the box. In today’s market it is even more important for Sellers to think outside the box if they need to sell.

So what can a seller do to get their property sold? Here are 8 ideas that may improve your chances…

1. Make sure that you are a seller: I know that sounds a bit strange but a lot of people with homes on the market are not really sellers. They are might be sellers… that is if they get an offer they like and if they find a new home they like then they might sell their home… These sellers are generally not serious about selling and will rarely get an offer they like. Having a home on the market is difficult at best. You have to always keep it neat and be ready to show at short notice. These sellers would be much happier if they took their homes off the market and waited a few years for the market to change or until they really need to sell. Don’t think taking your home off the market until the Spring will make it more valuable…. it won’t. Right now the best you can hope for is that prices will reach the point where they flatten out sometime next year. I don’t think you will see prices begin to move upward again for another 4-5 years.

2. Price it right and keep the price right: This is the # 1 item on everyone’s short list. But it’s not always as easy as it sounds in today’s market… especially now that it is taking longer to sell a home. You can look at all the comps, spiff up the house, be right on the money and still not see offers very quickly as buyers are taking their time. Then in a few weeks a new listing hits the market that is significantly lower in value because it is an REO or a desperate seller and suddenly you have new market values. You need to be aware of what is happening in the market all the time. Recently a number of listings in Manhattan Beach saw some major price reductions. If you have a home in competition with those listings the value of your home just went down. So you need to know your market and where it is headed.

3. Have a clear idea about what you want to do before you list: If you want to buy another home then you should have an idea about prices where you want to move. If you plan to rent then you need to know in advance what the rental market is like. If you are downsizing to a smaller place then you should start to go through things you may want to give to friends or relatives or to Good Will. These are seemingly small decisions that can take a lot of time. If you get a buyer who needs to move today you don’t want to lose him because you are not ready to move.

4. Consult a Stager:. You know you will probably have to clear clutter, paint , possibly put in new carpet and landscape so why not get someone who knows how to do this give you a hand along with some great ideas. Sometimes a short consultation with someone is enough to determine how to make your home shine and show off the best features.

5. Make sure the house always looks great: If you are working full time or have a large family this might mean hiring a professional to spruce up the house once a week. Consider this a bonus for always having to be in the mode to show.

6. Leave the house during showings: I know a number of sellers who have lost themselves bunches of money by being too chatty with a potential buyer. It’s one thing to talk about a roof problem that you have had fixed but quite another if you start discussing how you have to sell asap because of a move to New York. Remember that you are always in negotiation with the buyer and their agent. Keep your lip zipped when talking about money.

7. The First Offer may be the best: I don’t know why this is true but it is almost 90% of the time. Don’t disdain that first offer that is a few dollars less then you want in a down market. It could not only be the best offer you receive but the only one for a long time. Now that’s not to say that all first offers are good ones… sometimes they are way off the mark… but you need to carefully evaluate the offer before dismissing it. For instance an offer that allows you to stay in the property rent free for a month if you are waiting for a home to close escrow in another area might be worth more then you think when compared to having to rent a place short term or get a hotel room and put all of your possessions in storage. If you are buying a new home then a quick escrow with cash in the bank might just get you a better deal on your up leg purchase. Again you must evaluate all offers as there is a definite time factor of money that comes into play.

8. Think about taking back a 2nd TD: While some sellers have little or no equity in this market there are still a lot that have a a great deal of equity in their homes. As lenders become more persnickety about the amount they will loan even to well qualified buyers it might be to your advantage to take back a 5%-15% second at a good interest rate if the buyer has a sizable down payment. I would not suggest it if the buyer has less then 15% down but it is something you might consider for buyers who have 15%-20% with great FICO scores but need a bit more room if the lender decides at the last minute they want 25% down which is happening a lot in our market. It’s also a way to make up a little money if you settle for a lower price. You will be able to get the current market rate which will be better then rates offered by banks. I just had a long discussion with the sellers of 511 N. Dianthus about this. We went over all the good and bad points and decided that it makes sense for them to take back a note.

Selling your Beach City home in today’s real estate market can be a challenge. However with some forethought and a little luck it will happen. Be patient and remember a sense of humor always helps. If you can laugh at the small absurdities of life the big ones get a bit smaller….

Last week there was a little good news for buyers and sellers in the South Bay-Beach Cities. The MLS is now utilizing a system called CARETS which will give agents and the public listing information on homes from most of the major MLS systems in Southern California. The more information that is available the better it is for consumers.

The map above shows the MLS systems and areas currently part of the new CARETS system. The expectation is that the system will ultimately cover all of So Cal including San Diego and eventually encompass the entire state of California.

Things are still in a state of flux as the new system gets set up and information is downloaded from all the participating MLS providers. Ultimately we will have access to all listing and sale information including the history of a property for the last year. Each individual MLS will continue to have property information for their areas for a longer period of time.

What this means for consumers is that you will now have access to listings that are listed by out of area agents who in the past may not have put the listing on the local board. It also means that searches for properties in other areas will be easier and more information will be available.

The downside right now seems to be the number of duplicate listings in the system. As an example I belong to the Westside MLS and the South Bay MLS… so I might put a listing on both systems. With CARETS the listing will show up twice.. once from the South Bay system and again from the Westside system. I’m guessing that glitch will be fixed later this month along with the promised information on sold and property histories.

It seems as if there is no magic bullet to help resolve the current financial crisis. Paulson and the FED may have thought the bailout/rescue bill would pop the rabbit out of the top hat but so far no such luck. A lot has happened since I posted Part I and Part II on the FED bailout/rescue…. the good…the bad and the ugly. Over the last two weeks we’ve seen a lot of ugly, more bad and not much good as the markets continue to crumble. The financial sector just doesn’t seem to care what governments around the world are proposing in their efforts to bring back stability to the credit markets. Even a worldwide lowering of rates this morning didn’t calm the markets… although by the afternoon the market had improved slightly.

Credit remains very tight while companies and states try to stay afloat. The State of California will have to rethink their recently passed budget … which might be the best thing to happen in years. I think we are going to see some financial common sense finally return to the market even if we have to bring it back kicking and screaming.

Most of us are concerned about how the financial market will affect our local South Bay-Beach Cities real estate markets. Both buyers and sellers have legitimate concerns. We know the market is going to face more changes…we just don’t know how severe the changes will be. If we see a lot of people in our market lose their jobs then we can expect to see a bigger impact on the real estate market then if we are faced with a stagnant job market… few actual job losses but no new jobs being created.

I’ve had a number of people ask about buying in this market. My response is pretty much the same to everyone. While some markets appear to be better then others within the normal real estate market cycle; there really is no good or bad market if you need a home… as long as you are thinking long term. If you are a short term flipper don’t buy… you will definitely lose money. If you don’t have some solid financial reserves then this may not be the best market for you. At best this market is going to be flat which means if you have to sell in less then two years you will probably lose money on the transaction.

Historically in our area if you held onto your home, even in a bad market, you made money… no matter when you bought in the cycle. For those who have solid financial resources and want to buy a home this might be a very good market. Sellers are negotiating.. even bank REO’s have seen the light. If you plan to own the property over the long term then getting a low long term fixed rate loan could be a very good move. In fact you just might see some investors returning to the real estate market in places that have held their value. If you had stock in Bear Sterns, Lehman or WAMU you are out of luck. You can’t wait out the market for your stock to go back up because it doesn’t exist. However if you buy a property in Manhattan Beach or any of the Beach Cities…even if the value declines in the short term it will go up over the long term. I think we may well see investors reconsider tangible assets as a place to park funds for the long term.

If you are a seller you have other concerns. We are looking at about 4-6 months as an average market time. Many homes have been on the market close to a year or more. If you have to sell in a given time frame then you will probably not get as much for your home as you might if you could take more time. If you need a quick sale then you will have to adjust the price accordingly. A lot of buyers may have 20% down, good FICO scores and make great money but may find that lenders only want to make loans with a 70% LTV (loan to value) so sellers may need to consider owner financing to help move the process along. Owner financing used to be fairly common but with lower rates and less stringent qualifying it went by the wayside. I think sellers may need to explore this concept once again.

Even in the worst of markets people buy and sell homes. The current financial market is shaping up to be one of the worst we have seen in a number of years. It will take at least a month before the FEDS get the bailout/rescue plan working. Once it is up and running it will take a longer period to see if it is actually going to work and by then we will have a new administration with a new set of issues. We may squeek our way out of this mess but it will take some time before we know how it will all play out. In the meantime for all those hoping for a total market collapse…be careful what you wish for as you may not like it so much if you get your wish.

UPDATE: 10/09/2008… Weird stuff is happening in the loan markets… The LIBOR index which should have declined yesterday after cuts in the European funds rate went up… meanwhile rates on 30 year fixed loans dropped today. Most ARM loans are tied to a major index so these rates can be very important when ARM loans adjust. If the LIBOR, the Prime rate or Treasury Bill note rates fall then resets on loans will be lower then expected which means borrowers may see decreases rather then increases on their loan rates…that’s good news for homeowners. On the other hand if these rates rise then resets will be on the high side and that will push up rates on loans that are resetting which could lead to more foreclosures.