Yesterday, the Fed lowered interest rates one-half a percent.   The Fed Fund Rate now stands at 1.5% and the Discount Rate is 1.75%.  What do you think happened with home mortgage rates?  No, they did not go down but went up instead one-half a percent.   A 30-year fixed loan at zero points for Palos Verdes real estate (and elsewhere) is 6 .375% conforming, 6.5% jumbo conforming and 7.5% for jumbo loans.

“Why the increase?” you might ask.  The word on the street is that this 1/2% increase in mortgage rates may be an aberration but is probably because the Federal Government has to sell tens of billions of dollars of Treasury Bills this week to cover debt.  The Government had to sell them at a discount which makes the yield higher.  Some of the rate increase may also be profit taking by the lenders.

Of course, 6.5% interest fixed for 30 years is still a good rate.  Only in the last five out of 35 years has the rate been lower.  And today’s 6.5% rate is with zero loan points!

I have had several clients ask questions regarding foreclosure properties.  There have not been too many on the Palos Verdes Peninsula.  Foreclosures are not your normal purchase and a buyer is usually on his own (unless he hires a Realtor to act as his Buyer’s Agent to help him navigate through the process).  Here is the time-line for the process.  A NOD property is one that has a Notice of Default filed against it; the owner has 3 months to reinstate before the bank can foreclose.  A NOT property is when the bank files a Notice of Trustee’s Sale which is the actual sale/auction on the courthouse steps.  A REO property (is bank owned) has been taken back by the bank as it did not sell for the bank approved price at the foreclosure auction; usually a REO property will eventually be listed with a Realtor.

There is a new twist to the Foreclosure Sale/Auction - Duval County in Florida will be the first in the country to hold and Internet foreclosure auction next month.  The LA Times Business section had an informative article regarding the pros and cons (mostly cons) of allowing these auctions to be held on the Internet.  Currently, Florida is the only state that is not required to hold a public sale after notice has been given.

Buying foreclosure properties are not for the feint of heart.  Currently in California on the courthouse steps, “the auctioneer announces a property and bidders shout out their bids, raising them in $100 increments.  If they win, they have to pay the entire sales price, often within the next few minutes.  That usually means signing over that cashier’s check and collecting any change.”  Prior to the auction, “bidders have to research the properties’ histories, understand the local market and actually visit the homes” (usually just a drive by as the homes are still occupied).  Allowing foreclosure auctions on the Internet could open up potential problems for buyers who are lulled into a false sense of security by the property information  that is available on the Internet not realizing how much information they may be missing.

What are the names of the Bays and Coves in Palos Verdes?  That questions was asked of me a couple of weeks ago.  And as a 30 plus year resident, I could not name them all.  How lucky are we here on the Palos Verdes Peninsula that we have so many that we can’t count or name them all!  Our coastline is truly magnificent!

Matt Waters at Rancho Palos Verdes Parks and Recreation Department did some research for me and came up with the map below taken from Don Gales book, “Wildflowers, weeds…”   I realize it may be challenging to read so I am listing the Coves and Bays starting from RAT (Right At Torrance) beach which is the northern border of the Palos Verdes coastline (and the Points are in parenthesis).

In Palos Verdes Estates there is Malaga Cove, Bluff Cove, (Rocky Point) Lunada Bay (Resort Point) and Christmas Tree Cove (which is shared with Rancho Palos Verdes).  The shoreline begins in Rancho Palos Verdes with Christmas Tree Cove and continues with Golden Cove, (Point Vicente) Fisherman’s Cove (Long Point), Abalone Cove - photo above, (Portuguese Point) Smuggler’s Cove/Sacred Cove (Inspiration Point) and Portuguese Bend Cove (Halfway Point).

Kitty and Rick Edler’s 209 Rocky Point Road, Palos Verdes Estates, (above left) is a 3 bedroom, 2 1/2 bath, 2,720 square foot home for $3,750,000.  This Lunada Bay bluff home sits at the ocean’s edge overlooking Lunada Bay, has a pool, circular driveway and is on a 14,588 square foot lot.  Dana Graham’s 1616 Via Margarita, Palos Verdes Estates, (above right) is a 5 bedroom, 6 bath, 4,000 square foot home for $2,950,000.  This one-level Monte Malaga Spanish Colonial home has vaulted open beam ceilings, pool/spa/waterfall and is on a 14,630 square foot lot.

Robin DeBraal and Cheryl Rau’s 2568 Via Sanchez, Palos Verdes Estates, (above left) is a 5 bedroom, 4 bath, 3,988 square foot home for $1,825,000.  This Upper Lunada Bay home has panoramic ocean views, a small sound studio and two hillside viewing decks.  Kathy and Rachel Tyndall’s 27811 Hawthorne Boulevard, Rancho Palos Verdes, (above right) is a 4 bedroom, 2 bath, 1,816 square foot home for $888,000.  This Silver Spur home has been upgraded, has a well landscaped yard with mature fruit trees and is on an access road (not directly on Hawthorne).

Lucia Fan’s 26563 Hawkhurst Drive, Rancho Palos Verdes, (above left) is a 4 bedroom, 2 3/4 bath, 2,784 square foot home for $1,450,000.  This Peninsula Center home may have seller financing, could be a 5 bedroom, has central air and Anderson windows.

 Some photos courtesy of MRMLS

30-year fixed interest rates are down today compared to the beginning of the month.    Jumbo loans actually went down 1/2% today (30-year fixed).   The remainder of the loan products quoted above are up one-eighth of a percent since the beginning of the month.

There are many changes in the wind for mortgages.  The word is that by December jumbo conforming loans will be gone.  No income verification loans are forecasted to be obsolete any day making it harder for self-employed borrowers to get loans.  There will also be less choices in loan programs as the current financial chaos settles.  For example, negative amortization loans and interest only loans are currently illegal in some states.

It is more important now than ever to get the counsel of a knowledgable, well-connected loan officer who can get you the loan.

Above loan information is provided by Jim Kurata, Peninsula Mortgage/Chase.

Lenders have been cautioning us for months to make sure our clients pull out cash from their home-equity line of credit if they are going to use it to purchase a home (without selling their existing home and avoid a bridge loan).  Many buyers are also using their home-equity line of credit to purchase second homes or income property.   The caution has been to have buyers immediately get that cash and put it in a separate account before they actually need it because many buyers have written checks to escrow to complete a purchase and found that their bank had closed or reduced their credit line.

Lew Sichelman in yesterday’s LA Times states that “Lenders need a valid reason to reduce, suspend or terminate such borrowing.”   His article goes on to explain that under Regulation Z there are 3 reasons a bank can pull your line of credit: (1) misrepresentation when applying for the loan (2) not making loan payments or (3) “when actions adversely affect the property pledged as collateral or the creditor’s security interest in the property”.

The Federal Reserve Board has interpreted Regulation Z’s definition of Item (3) above to mean that equity in said property has been reduced by 50% since opening the line of credit.  Sichelman states, “The 50% rule is not as wide as it seems, however.  Values don’t have to plunge 50% for your equity line to be shut down.  Rather, it’s only the amount of unencumbered equity that needs to fall by half.” Let’s assume your house was appraised at $100,000, with a first mortgage of $50,000 and the bank gave you a $30,000 equity line.  According to the Federal Reserve Board, the difference between your credit limit and available equity is $20,000 (50% of that is $10,000) and if your house decreases in value from $100,000 to $90,000, the bank can close your home-equity line.  Ouch!

If you have a home-equity line of credit,  the entire article linked above is worth a read. 

Recently, I answered a question on Trulia Voices regarding property taxes for Palos Verdes real estate and thought it was worth a mention here also.  When a property is purchased, it is reassessed by the Los Angels County Tax Assessor using the sales price as the base.  The new property tax will be 1% of the purchase price plus any local bonds and assessments (usually averages another .0025 of the sales price).

On the Palos Verdes Peninsula (which includes Rancho Palos Verdes, Palos Verdes Estates, Rolling Hills and Rolling Hills Estates), we have an additional Palos Verdes Unified School District assessment of approximately $209 per year. 

Homeowners in the city of Palos Verdes Estates pay an additional Fire/Police assessment of approximately $261 per parcel plus $.15 per square foot of structure (a total of $648 for a 2,600 square foot house).

The city of Rancho Palos Verdes has a new storm drain user fee until 2016.  Homeowners in Rancho Palos Verdes pay an additional fee based on a “unique calculation” - size of lot, impervious coverage (hard-scape), etc. which averages $105 (but can be a little as $25 for a condo to several hundred dollars for larger parcels).

The city of Rolling Hills has an additional Community Association assessment which is $.20 per $100 of assessed value and is billed twice a year directly from the Rolling Hills Community Association (as opposed to appearing on your LA County Property Tax bill).

Gary Myer’s 505 Via Almar, Palos Verdes Estates, (above left) is a 4 bedroom, 2 3/4 bath, 2,538 square foot home for $1,795,000.  This Malaga Cove home has fantastic coastline/ocean views, a remodeled kitchen and is within walking distance to the bluffs/beach.  Gary Fortune and Larry Herman’s 27610 Eastvale, Rancho Palos Verdes, (above right) is a 5 bedroom, 4 bath, 4,049 square foot home for $2,199,000.  This unique Westfield home has a gourmet entertainer’s kitchen and a 850 square foot guest house on a 28,890 square foot equestrian lot.

Steve & Ceci Watts’ 9 Pinto Lane, Rolling Hills Estates, (above left) is a 4 bedroom, 3 bath, 2,795 square foot home for $1,649,000.  This beautiful Rolling Ranchos Cape Cod style home has a sunroom, pool, and barn and paddock area.

Photos courtesy of MRMLS

Statistics for the month of August for Palos Verdes Real Estate are now available.  There were 29 closed escrows, 26 pending sales in August and 51 closed escrows and 26 pending sales in July.  The number of closed escrows are down compared to the last 5 months.

Average price for homes that closed escrow in August was nearly the same at $1,480,000 compared to July at $1,496,000.  Average days on market for properties that closed escrow in August rose to 89 days from 52 days in July.  Sold prices compared to list prices was 96% which was slightly increased from 95% in July.  The most significant increase was 9.3 Months of Inventory (how many months it would take to sell existing inventory at the current rate of sale) for August; July had dipped down to 5.4 months.  Entire charts can be accessed by clicking here or on the “Statistics” tab above.

Currently, there are 285 single family homes for sale on the Palos Verdes Peninsula.  Additionally, 28 homes have pending sales, 24 homes are in escrow accepting backup offers and 11 homes have sold/closed escrow in the first 12 days of September.

The Los Angeles Business Journal article, ”Median Home Prices Persist in Steady Decline” on September 8, 2008, indicates that Palos Verdes Estates (zip code 90274) showed a 9%  increase in median price for August 2008 compared to August 2007.  Rancho Palos Verdes (zip code 90275) showed a 2%  increase in median price for August 2008 compared to August 2007. 

Palos Verdes Peninsula School District students had an average API (Academic Performance Index) score of 904 which is 5 points higher than last year.   Scores range from 200 to 1000.  Cornerstone Elementary School scored 977 which was the highest mark of any school in Los Angeles County (and 12 points higher than last year). 

Peninsula High School scored an 879 (8 points higher than last year).   Palos Verdes High School scored 853 (3 points higher).  Intermediate Schools scores were 947 for Palos Verdes, 899 for Miraleste and 936 for Ridgecrest (gains of 19, 15 and 7 points respectively).   Scores for the elementary schools are currently reported in the PV News (click here for link).