Home sales rise to highest level

in 2.5 years

10.1 percent increase beat analyst expectations by more than sevenfold  

updated 1 hour, 41 minutes ago

WASHINGTON – Home sales far exceeded expectations last month, surging to the highest level in two and a half years as first-time buyers rushed to take advantage of an expiring tax credit.

The National Association of Realtors said Monday that home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September.

Good news for buyers (and sellers) – 30 year mortgage rates are still low – they have been hovering around the 5% mark pretty much all year.  Currently, the rate is just below 5% – which means you can buy a 30-year fixed mortgage of $600,000 for approximately $3,200 per month – that’s not bad.  Basically, for every $100,000 worth of mortgage you pay a bit more than $500.  Of course, there are fees involved – typically up to 1 point – or 1% which is paid to the mortgage broker for their services.  Other fees include those for escrow and title services and those can add up to another 1% sometimes in fees.  These mortgage fees are a write off on your taxable income (check with your accountant for specific scenarios.)

Last year at this time mortgages were averaging 6%.  The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit.  Rates on 30-year mortgages usually track yields on  long-term government debt. 

So, if you wanted to buy a house here in the Hollywood Riviera that cost $850,000 – and you had $250,000 to put down – you would need a $600,000 mortgage to consumate the deal.  If you could get that 30-year fixed mortgage at 5% (see above example – your payment would be approximately $3,200 per month (+ taxes and insurance, of course)  VS. that same mortgage at 6% or $3600 per month – as you can see there is a $400 difference every month or $4800 per year.  That can make the difference between buying a house or not for some people.  So this year vs. last year is all good for you if you’re a buyer – lower prices for the home you are buying along with a lower price for the mortgage as well!

Almost Thanksgiving – wow!  Time is moving along as usual and so is the South Bay real estate market!  Not many homes that are under $1 million with good bones, move-in condition and nice views stay on the market too long any more.  Here are three such homes that are currently available.    Click here to be directed to the listings.

The first one has been on the market for about 58 days now and they have reduced the price 3 times – so clearly they are motivated at this point.  The current price is $998K (reduced from $1.199K originally.)  It’s a nice Hollywood Riviera home located on a cul-de-sac with a panoramic city lights view.  The home has been nicely updated and has an amazing garage! 

The next one is a brand new listing here in the Hollywood Riviera – it’s close to Rocketship Park and Riviera Elementary (but not too close!)  This home has amazing panoramic views and gorgeous hardwood floors to boot!  It’s very well priced at $949K.  I doubt this one will last long!

The 3rd good deal in the South Bay for under $1 million right now is in Rolling Hills Estates.  It’s right off of Silver Spur, so it’s got great access on and off the “hill” as well as being close to Peninsula Center shopping and Peninsula High School – an award winning high school in Palos Verdes.  It’s been recently updated throughout with a nice open kitchen.  Hardwood floors, a fireplace and sliding glass doors to the back patio and yard make the living room extra special.  For $899K it’s the most well priced of the three homes listed here today.  I bet this one won’t last long either.

If you want to see any of these homes, call me right away….doubt they will be around for long. 

If you want a good pay-off, STAGE the property!  It’s so worth the extra time and money spent upfront.  Basically, sellers that sell without staging – which includes everything from finishing little jobs that have gone undone (think handyman), painting (can mean adding color or subtracting color), bringing in furniture and accessories that are appropriate for the style of the house, and de-cluttering of personal items.  Staging can cost some money and note that it’s money well spent.  Money that often brings in double what was spent if not more.  Either the seller can do the work up front and reap the financial rewards or the buyer can buy the house in “as is” condition and do the work – thus reaping the rewards themselves. 

Why would a seller leave money on the table? 

A good realtor who is doing his/her job should be able to advise a seller of what is the best use of money spent on staging.  It’s a lot of work that also costs time, but remember the old adage, “Time is Money.” 

We have two good examples of recent listings that were Staged prior to listing.  Both homes sold in less than a week with multiple offers – a seller’s dream!  Why not position yourself in the driver’s seat vs. the “buyer’s market – seat.” 

House #1 – Brand new construction, contemporary styling, yet was “unfinished.”  And many people find contemporary homes a bit cold.  We advised the seller to finish all the small jobs – jobs that are hard to finish when you’ve just spent a year in charge of all the other new construction jobs.  Paint played a big role in the staging of this contemporary.   Adding paint to certain “feature walls” brought drama, warmth and style to what could have been a very cold atmosphere.  Bringing in just the right stylish furniture and accessories creates a “lifestyle” that is to be envied and a need for emulating.  When it’s done right, we’re talking “Architectural Digest” and who doesn’t want that?  This house was listed for $1,795,000 and received multiple offers selling over it’s list price in 4 days!  “Staged Right” was the staging company that we worked with on this job.

Via Corona – Staged Living Room

House #2 – 1950’s original – Stager gets a hold of it – mind you this is not just any “stager” it’s Laura Kistemaker of “Staged Right” who is the best in the South Bay – she  takes control of the minor remodel which included refinishing the hardwood floors (adding some in a few places), re-tiling the kitchen floor, painting throughout (exterior, interior walls, cabinetry, etc.), remodeling the 1 1/2 bathrooms completely, and some landscaping.  On top of that, she completely staged the house – bringing in furniture for all rooms and all accessories to create the lifestyle that one wants.  Again, time spent upfront, but the outcome was huge!  8 offers in less than a week and sold over its asking price of $724,900.

Greenmeadows Living Room Staging

Wow, here is a photo of a bathroom that is literally covered in personal products.  What a shame, it even looks like an upgraded, granite counter top.  However, you can’t even see it because of all the clutter.  As a realtor who knows the importance of photos in selling the home before the buyer even gets there, this is an example of an agent not doing his or her job.  I would never take this photo!!! I would have asked the homeowner to clear off the counter, or just done it myself!  People out there, if your agent takes this kind of photo and loads it onto the MLS, get rid of them, they are not doing their job!

The U.S. Congress passed a congressional resolution extending through 2010 the current conforming loan limits of $729,750 for high-cost areas, many of which are in California.  This is huge for the South Bay - a very high-cost area of the United States.   $417,000 is the average conforming loan limit in most of the country.  $625,000 is the normal high-cost area loan limit, which is still not enough for most home buyers to purchase the type of mortgage they will need for high -cost areas such as the Hollywood Riviera, Palos Verdes, Redondo Beach, Hermosa Beach or Manhattan Beach for example.  With the average home costing in the million dollar range – even if the buyer has 25% down – they are left with a mortgage of $750,000 (still above the higher conforming loan limit.)  In this scenario, a buyer would need closer to 30% down to make the transaction work with the conforming loan amount of $729,750.  This is important because the rates on conforming loans are much lower than those of “jumbo” loans – loans above the $729,750 limit.

Here is a copy of the press release on October 30, 2009 by C.A.R. (California Association of Realtors)

For release:
Friday, Oct. 30, 2009

Extension of conforming loan limits through 2010 earns praise from C.A.R.

LOS ANGELES (Oct. 30) €“The U.S. Congress late yesterday passed a congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including many in California. President Obama is expected to sign the resolution today or tomorrow as part of a broader piece of budgetary legislation that will prevent a government shutdown.

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® (NAR) have long advocated making permanent higher conforming loan limits. As a result of C.A.R.€™s and NAR€™s efforts, a provision of the Housing and Economic Recovery Act of 2008 included temporarily raising the conforming loan limits from $625,500 in high-cost areas to $729,750 and extending the limits through 2009. Yesterday€™s actions effectively extend the higher conforming loan limits for Fannie, Freddie, and FHA loans through 2010.

€œThere is no doubt that higher loan limits and the federal tax credit for first-time home buyers have helped stabilize California€™s housing market over the last year,€ said C.A.R. President James Liptak. €œC.A.R. applauds our congressional representatives for their actions to extend the higher loan limits through 2010. They now should focus on making higher loan limits permanent.€

The conforming loan limit determines the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or €œguarantee.€ Non-conforming or €œjumbo loans€ typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 163,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.