Foreclosure inventory is down nationwide (according to Corelogic’s National Foreclosure Report), and by almost 20% on a year-over-year basis.
What difference does this make to the value of your home, you ask? As the number of homes in distress goes down, the price of homes selling in your neighborhood is more likely to go up. This is one important piece of the housing recovery puzzle.
At the same time, buyers today are very well educated about the local real estate market. Did you know that you can find out what properties are in some stage of the foreclosure process on Zillow.com for free? As with many facts today, this raw information can lead people to some flawed conclusions.
If you look at Eagle Rock, 90041, on Zillow, you see a number of homes in some form of distress -- 82, in fact. These homes are what is called Shadow Inventory (properties that are in some stage of mortgage default.) Since there are only 17 properties currently for sale in 90041, this would seem to indicate that the Shadow Inventory is 4 times the current inventory. Doomsayers might say this means that if all or most of the shadow inventory came onto the market at the same time, it would have the effect of flooding the market with distress sales and would bring prices down. Therefore, they conclude, prices are depressed in Eagle Rock.
That’s kind of like saying if everyone who came to a traffic light suddenly decided to run the red light, we would have a whole lot of accidents and insurance rates would go up. Probably true, ifthat happened, but the idea of everyone losing their minds at the same moment is unlikely. The likelihood of all or even 10 of the 82 distressed properties coming on the market at the same time is also practically non-existent.
But some people like to look at the worst possible outcome. Many buyers are hoping that the housing market will continue to be distressed so that they can still jump in and get “a deal.” Many of these same buyers have been looking for a home off and on for several years and have passed up many “deals.” I have talked to a few of these people and many of their friends who have discussed how Joe Smith should have bought that cute little house on XYZ street last year when he had the chance because now he is going to have to settle for a much smaller house for the same money.
It is very difficult to know how much a home is “worth,” especially when you are a buyer in a multiple offer situation. It’s almost as difficult when you are the only buyer about to make an offer on a house. But ponder this: what would you be thinking about the deal you made on a house if you bought it 2 or 3 years ago?
Too much information can be a bad thing. If you are expecting all this Shadow Inventory to give you the opportunity to get a great deal on a house, you're going to be waiting awhile. The reality of today's real estate market, at least in Eagle Rock, Highland Park, and the surrounding neighborhoods, is that there is low inventory available to buy, there are multiple offers on most homes, and sales prices are typically going over the asking price. Yes, even that house that you think needs a new kitchen is getting multiple offers - because there are buyers who realize that they want to buy a house now, and the longer they wait, the less house they can buy.
Not a super exciting choice at first glance, but the Ford Focus Electric has a range of 100 miles, top speed of 100 MPH, is in stock and the list price is about $40,000, which is barely acceptable with the tax rebates figured in on top of that. It is hard to get past the fact that the electric version is over twice as high in sales price as the gas version. But in reading reviews of the Focus, several people talked about leasing it. Why lease? The electric car battery technology is changing and improving so fast, people are unsure of committing to a purchase at this time. News flash! You still can qualify for tax rebates and pay about $450/month for a 3-year lease contract. This sounds like a pretty good compromise. Especially when our gasoline prices are spiking up by pennies a day, over 50 cents per gallon in one week!
If you’ve been sitting on the fence about whether to proceed with selling your house as a short sale, you should read this article by Lew Sichelman.
A short sale is a transaction in which the homeowner owes more on the home than they can sell it for. What is owed includes the mortgage debt owed to the lender as well as the closing costs they will incur when they sell, such as commissions, title and escrow fees, taxes, etc. The property can’t be transferred unless the lender agrees to take less than they are owed because the lender has a recorded lien against the property that has to be satisfied before the title can be transferred to the new owner. Of course, a lender isn’t going to forgive the debt unless there is no hope of having it paid in full, and that’s where the homeowner’s distressed financial situation has to be evaluated. Also, there is a penalty to be paid which has been both a big black mark on the homeowner’s credit score and a tax penalty by the government for what is called “debt relief.” This tax penalty has been lifted for the last 5 years because of the severity of the economic downturn.
As the article points out, this 2007 tax relief law expires at the end of 2012, but short sales and foreclosures can take several months to complete. If you have been hanging on to your house, hoping for the market to return to 2007 levels so you can sell it, you may want to reconsider your strategy. In our market area of Northeast Los Angeles, Pasadena and surrounding communities, the average sales prices are mostly still down 20% to 30% from 2007 levels.
There are buyers looking for properties to buy now. Mortgage interest rates are still very low. Inventory is very low. These conditions make it a perfect time to put your house on the market–if you can sell it for what the market will bring you. We are experiencing the best time in the last four years to sell a home. Some homeowners have had the pleasant experience of thinking they would have to short sell their home and finding that it sold for enough to be a regular sale! We would be happy to meet with you confidentially to discuss your own situation.
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We brought this Midcentury Ranch home on the market at the end of March for $549,000. Featuring three bedrooms, two baths, plus a den and a private cul-de-sac location (north of Hill Drive), 1143 Arbor Dell Road quickly went into escrow. This week we closed escrow with a sales price of $549,000. Our seller has lived in this home since the 1960s and is ready to move on to something new. We welcome the new homeowners into the neighborhood!
Listed for $549,000
Sold for $549,000
3 bedrooms, 1.75 baths
1,840 sq. ft. on a 9,090 sq. ft. lot
Built in 1953
For more pictures and details visit www.1443ArborDell.com.
ACTION ALERT UPDATE:
Despite several years of intensive advocacy and significant public outcry, the Moore House (Lloyd Wright, 1959) in Palos Verdes Estates (PVE) was demolished on Wednesday, April 25.
The demolition occurred less than a day after the PVE City Council denied the Los Angeles Conservancy's appeal of the City's earlier decision to allow the home's demolition.
The Moore House was a unique, irreplaceable, and extraordinarily significant modernist residence, designed by Lloyd Wright, renowned architect and son of Frank Lloyd Wright.
The environmental impact report (EIR) for the replacement project didn't evaluate a single sincere preservation alternative that would have maintained the Moore House's eligibility for listing in the National Register of Historic Places and the California Register of Historical Resources.
The California Environmental Quality Act (CEQA) is a state law that requires the evaluation of a range of alternatives. It also requires that those alternatives be analyzed with the public's interest in mind, not the property owner's -- even for a private residence.
When the EIR for this project failed to provide a reasonable preservation alternative, the Conservancy commissioned our own. It provided for a sensitive addition to the Moore House -- a standard approach to increasing the size of an existing home. We met with the owner to present this alternative, yet it was disregarded by both the owner and the City.
With no protections in place for its historic resources, the City of Palos Verdes Estates can continue to erase its architectural heritage, one demolition at a time. If you live in PVE, please let your elected officials know that you care about your city's tangible history and want it preserved for future generations.
Thank you to the hundreds of people who submitted letters of support on this issue, and for the people who attended the City Council meeting Tuesday night. Your voice will continue to be heard as we work to preserve other historic places throughout Greater Los Angeles.
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Alright, Eagle Rock homeowners, we have proof that our real estate market is getting better. This is truly an amazing sale - and sets the new highest price per square foot for a three bedroom, two bath home in Eagle Rock since 2007! 2035 Ridgeview Avenue, located near Occidental College, features three bedrooms, two baths, completely upgraded and remodeled with style throughout:
We came on the market at $649,000 and received several offers. After a week we raised the price (causing many eyebrows in the community to do the same) to $724,900. Soon after that we opened escrow, with the requirement that there be no appraisal contingency because there were no comparable home sales like this home. No one thought it would appraise at the new asking price - little did they know what we were actually in escrow for!
This week we closed escrow and can finally reveal our sales price - $760,000! That is $562 per square foot (the average price per square foot for a three bedroom, 2 bath home in 2011 was $329). Not only that, but it did appraise for that amount. This shows what a great house with high quality finishes in a great Eagle Rock neighborhood can do.
The whole neighborhood will miss our sellers, but we are also gaining a fantastic new member of the community! And of course they may decide that Eagle Rock is the place to be (as we all know it is...) and work their magic on another home here.
Spring-time is commonly known as the "buying season," and we've definitely seen some more movement in the Northeast LA and Pasadena-area real estate market recently. Home buyers are out there making offers on homes for sale. In fact, several Eagle Rock homes have sold in multiple offers for over the listing price. If you are thinking about making a move, this could be a great time to do so. We'd be happy to sit down and discuss your home selling options, just call us for a consultation. In the meantime - get ready to stand out from the competition with these spring cleaning tips:
Visit houselogic.com for more articles like this.
Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®
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