Saturday, April 21st...a free must-attend seminar for Home Sellers and Successor Trustees.
Cynthia S. Radom
Certified Seniors Specialist
Specializing in Trust Sales
Financial Crash - Post 2008
|It's been ten long years since the U.S. real estate bubble that precipitated the Great Recession and all the misery that followed. However, according to an article in Realtor.com, the 2008 financial crash has rebounded big time in most housing markets, but in a different way. Recall that rising prices did not cause the housing crash. It was stoked by subprime and low-documentation mortgages. Let's take a look at what has occurred in the past decade.
- Ever-steeper home prices: Buyers (still) clamoring for a home as mortgage rates remain historically low. Investors scooped up foreclosures and short-sale properties to renovate and sell for a high profit. Sellers are staying put causing low housing inventory resulting in even steeper home values for frustrated Buyers (supply and demand).
- Tight standards: The biggest change is the tightest lending requirements in the last 20 years. Passage of the Dodd-Frank Act requires lenders to prove that a borrower can repay the loan (barring most retirees from mortgages). Lack of financial stability created the 2008 crash when adjustable rates went to higher fixed rates, and people could not afford loan payments. The market crashed!
- Home flippers: In 2006, almost 20% of all home sales were bought by investors who had multiple loans on the property. Tight lending laws brought down the multi-loan rate to 5% of all sales in 2016.
- Building constraints: Tighter lending laws played havoc on construction of new homes contributing to low inventory. Today's market is well below normal for new construction starts and this is playing a big part in low supply.
- Market drivers: Unemployment hit a 17-year low last October; less than half of 2010 levels in 60% of the largest U.S. areas. Home price corrections will occur eventually as Buyers can't afford a home and seek to rent.
NOTE: The LA area housing market took four years before prices started to rise post-crash...2008 to 2012.
|Playboy Mansion's new owner promises to renovate, read more
|The CA Association of REALTORS® (C.A.R.) is attempting, once again, to overhaul Prop 13 and other related legislation for State voters on the 2018 November ballot. The initiative would expand tax breaks for home owners age 55+ and those owners who are disabled.
Currently, under Prop 13:
- a 2% cap is placed on annual property tax assessments
- a tax transfer can only be used once
- Prop 90 limits the transfer benefit to only eleven reciprocal counties that accept the lower property tax amount.
- The purchase price of the replacement home needs to be equal to or less than the sale price of the primary residence that was sold.
C.A.R. believes that older and disabled homeowners feel "locked in their home" because they're reluctant to give up low Prop 13 assessments when buying a new residence. The proposed revision would:
- not limit the times a low tax base could be transferred,
- require all 58 CA counties to accept the low tax base, and
- allow the replacement home to be more expensive than the home being sold.
NOTE: if the price is higher, the overage would be assessed higher than 2%.
Four similar measures have been proposed since 2008 and have failed to pass. The issue continues to be low and limited revenue for county coffers. In LA county, a home Buyer pays about 1.25% of the purchase price for property tax ($12,500 per million dollars). Under the proposed revision, someone could transfer an existing $2,000 tax base to a multi-million dollar replacement home. As of this date, C.A.R. has obtained the required signatures for this measure to be on the November ballot. Fifth time may be the charm!!
There is another group trying to take a Prop 13 revision to the voters that eliminates and reassesses taxes higher for corporate-owned properties.
|When a property owner receives a purchase offer, the Buyer usually requires the Seller to pay for an owner's title insurance policy. Unless otherwise agreed to, in writing, the Seller normally complies. Title insurance is assurance that the property is readily transferable to the Buyer, thereby free and clear of any liens, encumbrances or claims. Paragraph 13, Title and Vesting, of the Purchase Agreement, details what title reports the Buyer will receive for approval, prior to acceptance, beginning with a preliminary title report.
- Preliminary Title Report: is prepared prior to issuing a policy of title insurance that shows the ownership of a specific parcel of land, including any liens, title defects or encumbrances thereon, which will not be covered under a subsequent policy. If there are any objectionable items, the Buyer can seek removal prior to acceptance.
Note: After signing a listing agreement, I immediately order the Prelim and forward to a Buyer, prior to a counter offer, so the report can be approved.
- CLTA/ALTA policy: As stated in the Purchase Agreement, the Buyer will receive this most comprehensive homeowner's policy of title. The CLTA provides basic "standard" insurance against loss or damage by reason of matters appearing in the public records. The ALTA portion expands covered risks and some that may arise in the future. This policy can only be issued if the owner is vested as an individual or a Trust; not an LLC or a corporation.
- Lender's Policy: When a mortgage is obtained, the Buyer will pay for an added title policy insuring the lender. This assures the lender's priority of their lien, in case of default, and that the lien is enforceable and valid.
- Interim Binder: When a Buyer intends to resell a property within four years, they will buy a binder for substantial savings.
Information provided by Equity Title Company.
|Please notify me if your e-mail address changes or you would prefer another e-mail for this e-Newsletter.
|Permanent Watering Crimes
Anyone caught wasting water in CA may be fined as much as $500 under new rules being considered by the State water board. Adopted regulations would make it a crime to commit any of the stated wasteful water practices, effective April 1, 2018. The following would be permanent prohibitions on water use, if adopted:
- Over-watering lawns in which water flows into the street.
- Washing down driveways and sidewalks.
- Washing your car using a hose without an automatic shut-off nozzle.
- Watering lawns and landscapes within 48 hours of one-fourth of an inch or more of rainfall.
In addition, hotels would be fined for not asking guests to skip daily laundering of towels and linens. Cities and counties would have until 2025 to comply to a watering restriction on street medians that have no community recreational or civic function. Ending grass medians in CA will be among the biggest change enacted in the new regulations.
Water conservation has become a way of life in CA with a foreseeable on-going drought. Regulators would rely on citizens to "rat out" water wasters for enforcement through online complaint sites for violators. Should a user continue to waste water, the State can rescind the holder's water permit or license. If the violator ignores the order, the State board can ask the Attorney General's office to take action.
NOTE to homeowners: Look at your sprinklers to ensure
all are working properly and accurately targeting vegetation. And, when it rains more the 1/4"...do not water your lawn for 48 hours; gardeners are not responsible. Also,
conserve water by moving to a condo or an apartment!
|When selling any one-to-four dwelling units (a single-family home to a fourplex), the Seller must complete several forms to disclose any known issues about the property. While some questions may seem redundant, the transfer disclosure forms are extremely important to both Buyer and Seller.
A Buyer normally submits a purchase offer and places a value on the property prior to inspections. The Seller disclosure answers will give the Buyer an initial indication of any known or possibly potential issues, which may also be found during inspections. (NOTE: As a listing agent, I always forward all the Seller disclosure forms, the preliminary title report and the natural hazard disclosure report to a prospective Buyer prior to a counter offer).
A rule of thumb for a Seller is: if you know it, disclose it. Put yourself in the Buyer's position...would you want to know (whatever) if you were buying your home?
Exception: When the homeowner is deceased and their Trust is selling the home, the Trustee is exempt from completing the forms. However, if there is a known material fact (i.e. the owner died in the house), then the Trustee must answer the disclosure questions.
Tidbits of News
- New tax laws may affect CA real estate prices. Time will tell, but some industry insiders believe that downward price adjustments are coming sooner than later. Are Buyers waiting to see if prices drop as 2018 is off to a very slow start?
- LA City Council unanimously passed an ordinance to institute a fee on all new residential ($8-15/sq. ft.) and commercial ($3-5/sq. ft.) developments to pay for affordable (low-cost) housing.
- Watermark (Westwood Horizons) is closing for a two year renovation.
- Mortgage interest rates spiked to its highest level in three years. However, in 2008 rates were 6-8%; they are now only 4.625%.
- Hilton Hotel BH owners again revised plans to build one 23-story residential tower, with 140 condos, in lieu of two shorter towers. Charmed third revision?
- Breaking News: Retreat at Benedict Canyon- Insurers are required to renew fire victims' policies once. Subsequently, homeowners could be forced to insure with a costlier specialty company.
could be the name of a new luxury resort and mini residential community on 33 acres atop of Benedict Canyon.
and stay tuned.
- One Coast Pacific Palisades: 53 ocean-front residences along the bluffs, click here for more information.
- 75% of LA residents can't afford to buy a home in LA. An annual income of $112,000 is needed for payments on an average home.
- Nate 'n Al's is purportedly being sold and moving to a nearby location in BH.
- New BH condos are now selling at 321-327 S. Elm Dr.
- Westside Pavilion is converting to mostly offices...read more.
Here are some odds and ends about the
SoCal housing market
- Two weeks was the average time on market for a home to enter escrow.
- 63% of all home sales received multiple offers (average four per sale), the highest ever, citing lack of supply.
- 33% of all listings sold
above the asking price.
- All cash sales in 2017 almost doubled since 2006, but down over recent years.
- Second mortgages are almost non-existent now.
- Investors, the biggest competitor for first-time Buyers, bought homes to rent (
76%) or to flip...
fix and sell (
- Largest drop in international Buyers with only
3% of total homes purchased.
- Priciest LA neighborhoods
including the median sale price: Malibu
B.H. ($9.3M, 18%
over 2016); Malibu's
; Bev Hills,
north of Sunset
- Best year ever in high-end sales: 602 sales over $5M; 185 sales $10+M; 52 sales $20+M (23 were $30+M and nine were $40+M, the biggest gain of 150%).
- Americans purchased 38 of the 52 $20+ million dollar homes followed by: 4-British, 4-Chinese, 2-South African, 1-Scott, 1-Canadian, 1-Indonesian and 1-French.
- Top five estate sales to these Buyers:
454 Cuesta Way $88M (Beyonce/Jay Z)
22108 PCH $85M (Mark Walter)
1187 Hillcrest $65M (Even Metropoulos)
859 Woodacres $41M (Kevin Washington)
1520 Gilcrest $38.5M (Sir Tom Hunter)
- CA captured 77 of the top 100 priciest zip codes for U.S. home sales in 2017.
The new Federal tax plan, approved in December 2017, is feared by many to have a negative effect on the CA real estate market. Stay tuned...
New on the Corridor
Pre-opening sales have started at The Liddel, a brand new seven-story luxury condo residence at 10777 Wilshire Blvd. A total of 56 condos including one- to four-bedroom units, priced from
$1.3M to $4.3M. Amenities include:
a wine room,
a community lounge, a gym and a library for owners. Designs offer an open floor plan and European finishes. Move-in is expected to be May. Call me for more information: Cynthia (310) 288-0479.
New! CC Condos for Sale
Now open for pre-sales is the new model showroom for the luxury condos being built in Century City, across from the fabulous Westfield shopping center.
Two models include: one for
Fairmont Century Plaza Residences (within the hotel,
; another for
The Century Plaza Residences
(within the two on-site towers, opening 2020).
Call me to schedule a showing, or let them know you were referred by Cynthia (REALTOR) Radom,
LA's Most Expensive Listings
for a list of top mega estates that are for sale in the LA area.
|When a homeowner decides to move, there are two decisions that need to be weighed...before installing a sign in front:
#1. Sell or rent: the existing home
#2. Buy or rent: a replacement home
Existing Home: Sell or Rent
If you are moving to a condo or to a smaller home, you will probably sell and pay cash with proceeds from the sale. When there is no need to take advantage of Prop 13 (to transfer the low property tax), then renting the family home is an option. (A discussion with your heirs about pros and cons of keeping the house as an investment is needed.) If you're moving to a skilled-living residence, because of poor health, possibly bide some time and rent the house, hopefully eliminating capital gains. The law is unchanged whereby you must live in your home for two of the last five years to utilize the tax-free capital gains benefit ($250K for each owner). Becoming a landlord is not always a wise choice.
Replacement Home: Buy or rent
Identifying your future home must be decided before listing your current residence. In this fast-paced selling market, you may need to co-ordinate and/or negotiate a leaseback if the replacement home is not ready when you sell. Deciding to buy or to rent, before listing your current residence, should be based on: personal finances and an ability to maintain a home. As a tenant, renting is carefree with upkeep left to the owner.
Finding a place to rent or to purchase may take time. Explore the options long before you are ready to move. Get an idea of where and how you want to live.
Buckingham Palace, home of the British royals, consists of
52 royal and guest bedrooms,
188 staff bedrooms, (only)
78 bathrooms and
92 offices. Future, younger, royals may opt for smaller living quarters
where upkeep is less expensive,
and forego residing in the Palace. (Ah, the joys of downsizing.)
Go Go Grandparent
is easier than
because you can
on the phone instead of hailing a ride from an app. Also,
will send a text to your designated family member as an alert when you are picked up and when you arrive back home.
and sign-up for
19 cents a mile,
Homeowners and Successor Trustees
This is for you!
A seminar to learn the
basics of selling a home
in CA: what you need to know and do. A
small group setting where you are
to learn and enjoy.
Bring your list of questions for the Q & A session.
to register your attendance and a
friend or family member to join you.
A $100 restaurant gift certificate will be given to a lucky drawing winner.
|If you prefer the "Real Estate Newsletter" mailed to you, please e-mail: Cynthia@RealtorRadom.com
|Respecting your privacy and confidentiality, names and e-mails will only be used for providing pertinent material by Cynthia S. Radom and will not be shared with any other organization.
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is a registered trademark licensed to Coldwell Banker Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Owned By a Subsidiary of NRT LLC. This is not intended as a solicitation if your property is already listed.