Los Angeles rents are lower by 4%
The average rent in Los Angeles County fell almost 4% in 2008 as apartment occupancy rates dropped and new units came online. According to the annual USC Casden Forecast, the decline should continue this year as more renters lose their jobs.
“In L.A. County alone, 41,000 people moved out of apartments last year compared to the 29,000 people who moved in during the last five years,” said forecast director Delores Conway.
To keep their units occupied, some landlords are lowering rents or offering concessions for signing a lease, such as a month of free rent or a reduced deposit, she said.
Rents should level out in 2010 as the economy recovers, the report said. The average one-bedroom apartment in Los Angeles rented for $1,397 a month at the end of last year.
The Westside remains the priciest, while Pasadena and Burbank are stable with little change in occupancy or rents. Rents in Hollywood and central neighborhoods such as downtown Los Angeles are being weakened by new condominiums that are being leased rather than occupied by owners.
(*Source: LA Times)
By John SkinnerMontana Avenue strongly feels retail distress
Montana Avenue which has been called a “mini Rodeo Drive” and the home to high-end boutiques has fallen victim to a combination of high rent, low patronage and retail distress due to the tough economic times.
This has spelled doom for a substantial portion of the businesses on Montana Avenue. From June 2008 to the end of April, roughly 35 businesses — representing almost 20 percent of the total merchants on Montana — will have left the shopping district, leaving empty storefronts up and down the street, the majority of which are between Seventh and 17th streets.
The kind of conspicuous consumption that used to be done at boutiques has come to a screeching halt. Department stores, which carry similar items are discounting deeply and boutiques typically don’t have the financial resources of bigger stores.
People working in many of the stores say that business has been slow for months and many shops are devoid of customers on weekends that would have been very busy a year ago.
Montana Avenue has some of the highest rents in the city, from about $6 per square feet to more than $9.
Notable store closings: Babystyle, La Partie, Saylor, KidsBiz, Starbucks, II Primo Passo, Jane Smith and Miel
(*Sources: Santa Monica Daily Press and Los Angeles Business Journal)
Speaking of loan modifications
The Federal Housing Finance Agency, said that Fannie and Freddie modified the terms of nearly 24,000 loans during the fourth quarter of 2008. That was a 76% increase over the third quarter, according to James B. Lockhart, director of the agency.
The figures were contained in a quarterly report on foreclosure prevention by the agency.
The number of foreclosures during the quarter fell by nearly 27%. But he noted that various federal and state moratoriums on repossessing homes played a big role in that statistic. Those moratoriums are now expiring, causing foreclosures to shoot higher once again.
Tips on the loan modification process
The loan modification process can easily take up to 90 days and requires careful note-taking, a calendar to mark, and a willingness to use the telephone again and again. The process is not fun but the old adage of “persistence pays off” definitely rings true when dealing with modifying a loan.
The article below by real estate agent and speaker Ralph R. Roberts advises borrowers to ask several questions upfront, whether they are dealing directly with a lender or working through a loan modification specialist.
Besides the questions he provides, Roberts also strongly counsels to not expect lenders to call you back to keep you current on your situation. They will not. If a deadline to hear something passes, get on the phone yourself, the next day, and ask why.
In addition, other options may be better than a loan modification like consulting a real estate agent about listing your home for sale or talking to a mortgage broker or loan officer about refinancing. Speaking with a bankruptcy attorney to find out whether filing bankruptcy is also a last resort option.
Roberts also advises to have all default and foreclosure actions frozen while you are trying to restructure the loan, but adds: Lenders rarely put a stop on the foreclosure process until a workout solution is fully in place.
Home market under $850,000 springs into action
The number of homes and condos sold and in escrow throughout March is higher than January and February combined. . FHA financing helps buyers get off the sidelines. .
After a brutal start to 2009, the housing market has finally sprung into action, especially in the home and condo market under $850,000. Besides the typical spring time activity surge, the market has been aided by record low interest rates and the availability of FHA financing (up to $729,000 in California) requiring borrowers to only put 3 to 5% down for a purchase. FHA loans also allow buyers without superior credit to still qualify for competitive mortgage rates.
I have represented clients in five deals in over the past three weeks. Each property ended up getting multiple offers and they were located in Mar Vista, Culver City and Westchester. All of these situations involved a seller that priced the home at or below the true market value. Buyers in this market must perceive a good value in the property for them to write an offer within the first two weeks.
The majority of the offers being submitted are through FHA financing. In fact, the deal in Westchester initially wanted to only accept offers from buyers qualified with conforming loans. They did not receive any offers. Once they lifted that requirement they promptly received three offers and are in escrow at very close to the asking price.
Overall activity has picked up substantially in March compared to the previous four months. However, it is still below normal volume levels.
Please see the statistics of single family residences (SFR) and condos (CC) for selected areas below from March 1st thru March 26th. This information was gathered from the Multiple Listing Service (MLS)
Pacific Palisades: 20 In Escrow; 11 Sold (25 SFR and 6 CC)
Manhattan Beach: 27 In Escrow; 16 Sold (34 SFR and 9 CC)
Santa Monica: 42 In Escrow; 22 Sold (15 SFR and 49 CC)
Mar Vista: 16 In Escrow; 20 Sold (24 SFR and 12 CC)
West Hollywood Hills/Sunset Strip: 30 In Escrow: 10 Sold (38 SFR and 2 CC)
Brentwood: 25 In Escrow: 14 Sold (20 SFR and 19 CC)
Culver City: 30 In Escrow: 18 Sold (26 SFR and 22 CC)
Westchester: 19 In Escrow: 12 Sold (26 SFR and 5 CC)
Marina Del Rey: 18 In Escrow: 13 Sold (2 SFR and 29 CC)
Beverly Hills: 13 In Escrow: 7 Sold (13 SFR and 7 CC)
Beverly Hills Post Office: 5 In Escrow: 10 Sold (15 SFR)
Playa Vista: 5 In Escrow: 3 Sold (8 CC)
Hermosa Beach: 13 In Escrow: 6 Sold (13 SFR and 6 CC)
North Redondo: 22 In Escrow: 26 Sold (11 SFR and 37 CC)
* One glaring exception is Malibu Beach. According to the MLS the area has only 1 deal in escrow and zero sales for March!
New construction plagues Palisades Riviera
After shrugging off the real estate downturn and showing appreciation when the market as a whole was down, the Palisades Riviera is headed towards a significant downturn in 2009.
Sitting on the mesas above the famed Riviera Country Club, The Palisades Riviera is a neighborhood of homes with gracious lot sizes, wide streets and a climate that has attracted the wealthy and famous for over 75 years. Most home sales in the Riviera are above 4 million and can be 20 million plus.
The tough economic times and lack of jumbo financing is obviously the main cause for a stagnant market. However, adding further downward pressure is 6 newly built homes that are on the market from $6,495,000 to $11,850,000.
In the past few weeks, 981 Napoli was reduced to $6,995,000 from an original asking price of $8,600,000. The same developer just finished the house next door and that debut this week at $6,495,000 (1,000 sq. ft. smaller 981 Napoli). According to sources, 981 Napoli has received offers but not at a price and terms the developer is comfortable with. After closing costs, it looks like both of these properties could sell at a loss.
532 Spoleto Drive (over 10K square feet) has been reduced within 70 days from an initial asking price of $13,850,000 to $11,850,000. This property could easily see a further reduction into the low $10,000,000 range before they start getting serious interest.
The cause for the Spoleto and Napoli properties is further hindered by two newly built homes hitting the market within the past three weeks priced at $8,995,000 and $9,495,000.
With developers having equity tied up in these homes and construction financing being extremely difficult to find, the tear down lots available in the Riviera are also stagnant and seeing price reductions. Currently, the Riviera has eight tear down lots available with half of them providing views. Slightly over a year ago most of these lots would be sold before they even hit the market.
According to the MLS, only 1 home in the Riviera is in escrow. 3 sales have closed in the area (1 off market) this year.
The good news for the Riviera residents is that buyers are out looking. The broker caravan this week was the busiest it has been all year with people touring properties with realtors.
The high end is starting to pick-up with a flow of jumbo money becoming available in the next few weeks. A few Westside properties priced over $4,00,000 went into escrow this past week.
The bad news for the neighborhood is that buyers have plenty of options, leaving the developers to continue to drop their prices at an accelerated pace if they want to get out of this market anytime soon.
New restaurant coming to Santa Monica
Chef Jean Francois Meteigner, who owns and operates La Cachette in Century City, has leased a space in Santa Monica where he plans to open a bistro version of his popular French restaurant this summer.
La Cachette, which is known for being stylish but not snooty, will operate in more than 4,000 square feet indoors and also serve food on a 1,500-square-foot patio.
The restaurant will be located at 1733 Ocean Ave. just north of the Viceroy Hotel and across the street from the Loews Santa Monica Beach Hotel.
Mortgage rates hit record lows
The average rate on 30-year fixed-rate mortgages hit a record low this week, after the Federal Reserve announced it would purchase Treasury securities over the next six months, Freddie Mac’s chief economist said on Thursday.
The 30-year mortgage averaged 4.85% for the week ending March 26, the lowest point since Freddie Mac’s weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.
It is a good time to contact your lender if you need to refinance!
Please contact me if you would like to discuss the market and potentially take advantage of these rates in a down market.
Article on Mortgage Rates: Mortgage Rates Hit Record Low
Jumbo financing in the pipeline
Bank of America, the country’s largest mortgage lender, is rolling out a large program to finance loans between about $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range. The loans will be available through the bank’s retail network and through its Countrywide Home Loans subsidiary.
If you’ve been postponing a purchase, sale or refi because the loan amount you need is too big for Fannie, Freddie or FHA, check out the new, non-Wall Street sources of jumbos.
Full Article by Kenneth Harney of the LA Times: New supply of ‘jumbo’ financing in pipeline
Small lot in 90404 zip under $400K
Yes, you read that right, a very small (1,400 sq. ft.) lot with a house in a great location, just south of Wilshire and near Centinela with an asking price of around $400K.
The lot currently houses a 700 sq. ft. 1+1 house which isn’t very functional. This is a classic case of a flip gone wrong. The lot and house was bought for $490,000 in 2005 and the “flipper” had plans to add a second story master bedroom and reconfigure the 1st story. The only progress they made was to put a few upgrades into the 1st story before pulling the plug. With the second story addition, this can actually become a great condo alternative home with views. Perfect for a young couple or a bachelor.
This is a “short sale” which are difficult and can really test your patience. However, I see upside with this project over time, especially if you can pick it up for under $400K. Please contact me if you would like more information and possibly see the property.
