We saw a nice improvement in the number of homes sold here in the Hollywood Riviera (27% more) in this last, 4th quarter of the year vs. the same quarter of 2007!  Lower interest rates may have gotten many media-scared buyers to finally realize what a great buying opportunity it really is!  Although for the year overall we saw 30% fewer homes sold (91 in 2007 and 64 in 2008), our average selling price was only down about 6% (attributed to more lower end sales and fewer higher end sales).  The average days on market nearly doubled (66 days this year vs. 39 last year).  The biggest part of the slow-down for number of homes sold occurred in the $1.2 million + price range.  There were 30 homes sold in this range in 2007 and only 21 homes sold in the higher end of the market this year.  A big factor for this was the lack of loan programs available in the jumbo market.  However, the good news there is that the average sales price of homes over $1.2 million in 2008 was $1,467,421, nearly 5% HIGHER than the $1,398,800 figure for 2007!

Most of us have heard the news from December 16th that the Fed is targeting the Fed Funds rate in the range of “0% – .25%.”  What this means is they dropped their rate .75% to .25% but left the flexibility to cut another .25% and take the rate to 0%.

That’s all well and good but the real news for us lied in the commentary:  €œthe Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets €œ.   The buying of these securities is what directly impacts mortgage rates-investors buy securities, the prices go up and yields (and mortgage rates) go down.

This commitment is huge as it will also prompt other investors to jump in and we should see rates dipping into the mid 4% range!  This is historic as we are now at levels below the previous all-time lows seen back in June of 2003.

 Red Alert!

Stop Proposed Tax Withholding Change!

The Legislature will shortly be considering a budget proposal that, among other things, would require a 3% withholding on all payments to independent contractors.  We are opposed to this measure, along with the California Association of Realtors.

Action Item

Please call BOTH your legislators RIGHT NOW to OPPOSE this provision!!

Call your Assembly Member at (916) 319-2053.

Call your Senator at (916) 651-4028.

Talking Points

•  There is no evidence that independent contractors are failing to pay their income tax obligations. The proposed withholding requirement is merely intended to accelerate income tax payments so that the state can make money from the interest (the “float”) that’s earned while the funds are in its possession.

• The proposal fails to recognize the significant administrative burden that would be placed on individuals who are now required to file 1099MISC information reports with the Franchise Tax Board. Under the proposal these individuals would now need to also calculate the required withholding amount and remit that amount to the state.
• There will be significant administrative costs to the Franchise Tax Board that will be faced with making refunds to those independent contractors whose withholding amount remitted to the state exceeds their income tax obligation.
• The withholding proposal fails to address the systemic problems associated with formulation of the state budget and is nothing more that the “smoke and mirrors” with which state government has attempted to meet its budget obligations in recent years.

 
(Photo courtesy of Johnny Jet)

Holiday spirit and cheer won’t be hard to find tonight – Manhattan Beach is hosting its annual Holiday Fireworks Festival down at the Manhattan Beach Pier.  The events schedule is as follows:

3pm – Bounce Park Opens
4pm – Snow Park Opens
4pm – Santa Arrives
5pm – 7:30pm – Musical Entertainment
6:30pm – Fireworks Begin

This is a super event and the best part is its FREE!!  Bring blankets, beach chairs and coolers to pick a free spot on the sand for the spectacular show! 

In reviewing the 4th quarter Hollywood Riviera sales data, it’s hard to believe but the numbers make for a rosey picture.  14 homes have SOLD this quarter already – October 1st, 2008 – thru today, December 8th.  That is a 100% increase over the number of homes sold this same period of time in 2007.  2007 saw only 7 home sold during that time!  Hard to believe and even more hard to believe is the fact that the data reflects an increase in the average price of the 4th quarter homes sold in 2008.  The average is $1,055,000 (of the 14 homes sold in 2008) vs. $968,000 for the 7 Hollywood Riviera homes that sold in 2007’s 4th quarter (partial – Oct 1 – Dec 8th, ‘07)

With this in mind, I would still report to you that we’ve seen a drop in average price overall in the Hollywood Riviera.  We will analyze the entire year 2008 vs. 2007 to come up with that data – it would be my impression that there has been about a 10% drop – we’ll see when I run the numbers.  Intuition is different than data, but my intuition is “educated intution.” 

There are still homes that are selling very quickly and with multiple offers here in the Riviera AND there are homes that just don’t seem to sell.  Typically, it’s all about price – the consensus in the real estate world is that price is the number one reason a house does or does not sell.  And we all know about location, location, location – that just means a better location garners a better price!  Condition of the home is important – as evidenced by the many “staged” homes these days – but in the end, price is the ultimate consideration making up the minds of buyers!  Most want a deal in this buyer’s market.  Interest rates are at some of theier all time lows right now – so many buyers are out there looking to scoop up a deal this holiday season!