2013 Q1 Homeowner Report for Manhattan Beach

Introduction

The city of Manhattan Beach is made up of the following areas:  Sand section, Tree section, Hill Section, Manhattan Village, Mira Costa, and the Village/Liberty Heights area.  This report encompasses all real estate activity in these areas.

All of these neighborhoods are extremely desirable right now.  The Manhattan Beach Unified School District continues to have excellent ratings (check it out on www.GreatSchools.com) and many families want to get their kids into this school system.  Homes are very well maintained and the construction of new family homes has picked up in the area.

Market Trends

RealStat Reports – a set of graphs detailing local real estate statistics – have been included in this package for all of Manhattan Beach.  In general, the trends we see in the RealStat Reports correlates to the performance we see in the entire Greater South Bay, where Manhattan Beach resides.

For nearly a year the Greater South Bay real estate market has been experiencing a steady recovery.  We are seeing all of the changes we have been waiting for – an improved, steady pace of sales and increased home values.

Active Listings vs Sold Listings

Across the US, the majority of markets have been experiencing a lack of inventory.  The same is certainly true for Manhattan Beach, with current inventory levels being about 50% of what they were approximately a year ago.  The pace at which homes are selling is quite brisk, with a seasonal slowdown in the winter months.

Days on Market

Over the past year, the number of days a listing remains on the market (DOM) has been quite low compared to the entire Greater South Bay.  But also in the past few months, the trend for the number of DOM, appears to be on a downward trend.  Homes are selling faster, and that is in large part due to the lack of inventory, as noted above.

Original Price vs Sold Price

This RealStat report actually indicates a declining price trend in early 2012, followed by a gradual increase in home values beginning in October 2012.  The sudden dip in February 2013 is not concerning, as February typically has a small amount of activity, and fewer, lower priced sales in that month could have skewed the price down.

Months of Inventory

The final chart in the RealStat reports is the Months of Inventory chart, which illustrates the rate at which properties are selling, and how soon the inventory could be sold out at the current rate.

The Months of Inventory for Manhattan Beach are in low ranges, indicating that this is a Seller’s market in the Manhattan Beach!

Market Trends Summary

Based on the data and the experiences of myself and my colleagues in today’s market, my expectation is that the trends we are seeing will continue, but at a steady, reasonable pace.  I don’t anticipate seeing any drastic spikes (10+%) in home values for the remainder of the year – just a slow and steady increase.  As for inventory, we anticipate seeing a gradual, minimal increase as we enter the summer season, but it will be followed with decreasing inventory entering the fall/winter season.  Also, with the high Buyer demand, we expect sales to be quite brisk.  The bottom line is that this is a Seller’s market where fairly-priced homes in fair-to-good condition will sell quickly, and likely above their asking price.

Special Considerations & Observations

Buyers Want Homes!

As shown in the enclosed RealStat graphs, the housing inventory is very low.  What we don’t see in these charts though, is that often the quality of the inventory can be quite poor.  So homes that are in good-to-excellent condition turn over very quickly, and often above the asking price!

What we also don’t see on these charts is how often there are multiple offers on homes.  Whenever a home that is in good-to-excellent condition is listed at a reasonable price, a buyer frenzy occurs!  It is extremely commonplace for there to be multiple offers on homes for sale, and more and more homes have been selling above market value.  Gone too are the days where the Buyers ask for the Seller to cover some/all of their closing costs, and we’ve seen a large portion of Buyers are purchasing with all cash.

Cash Buyers

You may have heard in the media that the number of cash buyers has been on the increase over the past year.  Those cash buyers are still busy buying homes, whether they are as an investment or even as a home for them to live in themselves.  Turnkey homes are often the prime targets of cash buyers, with the exception of those fix-and-flip investors who are looking for the distressed homes to buy at a discount.

Interest Rates Low, Rental Demand High and Values Increasing – A Perfect Storm

If there was ever a more perfect opportunity to purchase a real estate investment, it could be now!  Interest rates are still low, property values have been going up, and the rental demand is still high.  Many properties – single family and multi-family properties – are able to provide a positive cash flow.  If you are interested in a cash-flowing investment, contact me for more information.

Investment Tip: Buying Real Estate Investments Using Self-Directed IRAs

Were you aware that you can purchase a real estate investment using a self-directed IRA, allowing you FULL control of how your IRA funds are invested, without the hassle involved in borrowing the money from another type of IRA?  Self-directed IRAs are a powerful investment tool for the real estate investor, and they are actually easier to use than you may think.  They provide a great tool for helping individuals grow their retirement nest egg through real estate investing.  I personally have purchased real estate investments with my self directed IRA – feel free to contact me for more information on this unique investment tool!

Manhattan Beach's real estate market is doing a lot better now than it was 2 years ago.

CNN’s Money.com website recently published an article, “5 Best Markets to Sell a Home.”  As it turns out, 4 out of the 5 cities listed were California cities.  None of them however were in Los Angeles county.

When you look through this list, one thing I notice is that all of these cities had had significantly high levels of foreclosures over the past few years.  In fact, Stockton, California – which is in the list – at one point had the highest number of foreclosures in California.  Now, Stockton is rebounding with increased home values and swiftly selling homes (average days on market: 23).

Manhattan Beach, and other South Bay cities, had their share of foreclosures but they weren’t nearly as devastated by the foreclosure bust as many other cities.  So how has Manhattan Beach’s real estate market improved of late.

Days on Market

Let’s start with the Days on Market measure, which shows us how long a home listing remains on the market before it is sold.

According to the CRMLS, in March 2011, that median days on market was 58 days.  In March 2013 – 2 years later – the median days on market is 23 days.  That means that March 2013′s DOM is 39% of what it was 2 years prior.

Home Value

Home values in most markets are improving, but at different rates (which is normal).  So how does the Manhattan Beach market fare in this arena?

According to the CRMLS, in March 2011 the median sales price in Manhattan Beach was $1,257,500.  In March 2013, the median sales price is $1,552,500.  That is a 23% increase in median home value over the past 2 years!

Inventory

Ask any Realtor how the market is, and they will all tell you that there is a significant lack of inventory on the market.  I will tell you the same, but I’ll even prove it with the numbers.

According to the CRMLS, In March 2011 there were 158 homes for sale in Manhattan Beach, whereas we see 82 homes for sale in March 2013.  That means that March 2013 inventory is only 52% of what it was 2 years ago!  That is a significant decline!

So the Manhattan Beach real estate market is certainly in a much better situation now than it was a couple of years ago, and the expected trend for the remainder of the year is for the improvements to continue.

If you have any questions about Manhattan Beach real estate, contact the real estate experts at TW Real Estate Group.

]]> http://twrealestategroup.com/blog/top-5-cities-to-sell-vs-manhattan-beach-real-estate/feed/ 0 http://twrealestategroup.com/blog/whats-todays-rate/ http://twrealestategroup.com/blog/whats-todays-rate/#comments Fri, 05 Apr 2013 22:02:54 +0000 Tiffany Wilson http://twrealestategroup.com/?p=1823 Read More]]>

What's the interest rate?

“What’s today’s rate?”  I hear this question often, and seeing as I am not a lending professional, I always recommend to my clients that they speak with their preferred lending professional to find out more information about rates.

But I know that when their lending professional hears the question, “What’s today’s rate?”, they are going to cringe.  I can tell you from working closely everyday with lending professionals that this is THE most common question they get, and it’s not surprising to anyone.  But it still frustrates the lending professionals.

This question frustrates the lending professionals because loan interest rates are not generalized for all borrowers.  Instead, each borrower’s interest rate is different, depending on their financial situation, their credit situation, the type of loan they use, whether the borrower pays any points, and a variety of other variables that are unknown until the borrower sits down with the lender and provides them with all of their financial documents.  Even then, rates change several times a day, so their is no way to know definitively what a borrower’s rate will be until they have submitted their loan application & financial documents and are able to lock in at an interest rate.

So that being said, most prospective borrowers still want a general idea as to what the average rates are for the most common loan products.  And lenders are welcome to share general loan interest rates for common products, as long as those prospective borrowers understand that the lending professional cannot be held accountable to that general quote.

The areas of Wiseburn, Hollyglen, and Del Aire are often lumped together because they are all in the Wiseburn school district.  But each of these communities performs differently when it comes to real estate.  As a Realtor that specializes, lives, and is active in these communities, I know the intricacies of each their real estate “micro-markets”.

These 3 neighborhoods are extremely desirable right now.  The Wiseburn School District continues to have excellent ratings (check it out on www.GreatSchools.com) and many families want to get their kids into this school system.  Also, homes prices in these areas are in the ranges that first time home buyers are looking for, and first time home buyers continue to make up the majority of home buyers these days.  So you can see why these neighborhoods are extremely appealing.

Market Trends

RealStat Reports – a set of graphs detailing local real estate statistics – have been included in this package for Area 107.  Area 107 is made up of the communities of Wiseburn, Hollyglen and Del Aire.  In general, the trends we see in the RealState Reports correlates to the performance we see in the entire Greater South Bay, of which Area 107 resides.

For nearly a year the Greater South Bay real estate market has been experiencing a steady recovery.  We are seeing all of the changes we have been waiting for – an improved, steady pace of sales and increased home values.

For Sale vs Sold

Across the US, the majority of markets have been experiencing a lack of inventory.  The same is certainly true for Area 107.  This lack of inventory is due to an increase in the number of sales, as well as a decrease in the number of financially distressed sales (short sales and REOs).

Days on Market

Over the past few months, the trend for the number of Days on Market (DOM) that a listing takes to get sold, has been continuing on a downward trend.  Homes are selling faster, and that is in large part due to the lack of inventory, as noted above.

Original Price vs Sold Price

The primary principle in economics when it comes to value is “supply & demand”.  The real estate market is demonstrating this basic principle in that the low supply & high demand of housing is causing home values to go up.  The increase in value is occurring gradually – slow and steady.

Months of Inventory

The final chart in the RealStat reports is the Months of Inventory chart, which illustrates the rate at which properties are selling, and how soon the inventory could be sold out at the current rate.

The Months of Inventory for Area 107 are in very low ranges, indicating that this is most certainly a Seller’s market in the areas of Wiseburn, Hollyglen and Del Aire!

Market Trends Summary

Based on the data and the experiences of myself and my colleagues in today’s market, my expectation is that the trends we are seeing will continue, but at a steady, reasonable pace.  I don’t anticipate seeing any drastic spikes in values – just slow and steady.  As for inventory, we anticipate seeing a gradual, minimal increase as we enter the summer season, but it will be followed with decreasing inventory entering the fall/winter season.  The bottom line is that this is a Seller’s market where fairly-priced homes in fair-to-good condition will sell quickly, and likely above their asking price.

Special Considerations & Observations

Buyers Want Homes!

As shown in the enclosed RealStat graphs, the housing inventory is very low.  What we don’t see in these charts though, is that often the quality of the inventory can be quite poor.  So homes that are in good-to-excellent condition turn over very quickly, and often above the asking price!

What we also don’t see on these charts is how often there are multiple offers on homes.  Whenever a home that is in good-to-excellent condition is listed at a reasonable price, a buyer frenzy occurs!  It is extremely commonplace for there to be multiple offers on homes for sale, and more and more homes have been selling above market value.  Gone too are the days where the Buyers ask for the Seller to cover some/all of their closing costs, and we’ve seen a large portion of Buyers are purchasing with all cash.

360 at South Bay

360 at South Bay is a gated community in West Hawthorne, which has condos, townhomes, and soon they will also have single family homes.  In the past year, the demand within this community has picked up significantly, and Lyon Homes (the Builder) has responded with an accelerated construction schedule.

In addition to the wonderful, resort-like amenities that this community has to offer, 360 at South Bay also falls within the Wiseburn School District making it extremely desirable for families.  If you have any questions about 360 at South Bay, feel free to contact me.

Interest Rates Low, Rental Demand High and Values Increasing – A Perfect Storm

If there was ever a more perfect opportunity to purchase a real estate investment, it could be now!  Interest rates are still low, property values have been going up, and the rental demand is still high.  Many properties – single family and multi-family properties – are able to provide a positive cash flow with a minimal down payment.  If you are interested in a cash-flowing investment, contact me for more information.

Investment Tip: Buying Real Estate Investments Using Self-Directed IRAs

Were you aware that you can purchase a real estate investment using a self-directed IRA, allowing you FULL control of how your IRA funds are invested, without the hassle involved in borrowing the money from another type of IRA?  Self-directed IRAs are a powerful investment tool for the real estate investor, and they are actually easier to use than you may think.  They provide a great tool for helping individuals grow their retirement nest egg through real estate investing.  I personally have purchased real estate investments with my self directed IRA – feel free to contact me for more information on this unique investment tool!

Things you should NOT do when you are buying a home

When buying a home, your Realtor and lending professional will provide you with excellent advice and guidance as to all the activities you should be doing in order to purchase a home.  However, there are also some very important things that you should NOT be doing during your home search, and while you are in escrow.  If you do these things, you could be compromising your home purchase, and it could even result in you losing money!

So here is a list of things that you should not do when buying a home:

• You should not quit or change your job, or become self-employed
• You should not use credit cards excessively or be late on a payment
• You should not buy a car, truck, van, boat, timeshare, furniture, or anything else that requires financing
• You should not spend money that you have set aside for closing the transaction
• You should not keep any financial secrets from your mortgage professional
• You should not begin to remodel or demolish your home prior to closing
• You should not initiate any inquiries into your credit, or open any new credit cards
• You should not make any large deposits or withdrawals without first checking with your loan broker
• You should not co-sign a loan for anyone

Fully remodeled kitchen

This turn-key townhome has been carefully and lovingly remodeled within the past couple years – and the results are stunning! The kitchen has fresh-looking white cabinets, glossy granite countertops, and an attractive tile backsplash.  The bathrooms have also been upgraded with the same luxurious granite countertops.  The master bedroom features a walk-in closet with organizers, and the other two bedrooms have mirrored closet doors.  New flooring has been installed throughout.

The back patio is an excellent place to entertain and relax, and it features an attractive pebble floor.  There is plenty of parking available, with an enclosed  private garage and an outdoor parking spot too.  There are many more features – too many to mention!

NOT FHA approved.

Standard sale – NOT a short sale or REO.

Property Details

Property Photos

Map

Fewer homes for Sale and more Buyers - not a Buyer's market any longer!

For many months now, real estate and financial professionals had been closely monitoring how the market has been performing in the Greater South Bay.  Each month, the news looked the same – or better – than the previous month.  This certainly created some positive excitement in our minds, but I think we have all been extremely cautious, unwilling to officially make claims that the housing market had recovered.  Of course, all we needed to see was that these improvements in our local market weren’t a one-month-anomaly, and would instead evolve into a trend.

The good news, is that time has come.  Since January 2012, each month has resulted in improvements in many measures – decreases in inventory, increases in pending sales, and increases in closed sales.  This certainly is enough time to declare this a trend, hopefully one that will continue.

In fact, my colleagues and I can certainly state with confidence that it is no longer a Buyer’s market – more like a neutral market.  This is not only evident on paper, but also in the experiences of myself and my colleagues.  At a staff meeting recently, we were all asked to raise our hands if any of our clients had been in a multiple offer situation over the past couple months.  Out of dozens of Realtors, EVERY ONE of them raised their hand.

So what does this all mean?

Homes are selling faster - fewer Days on Market

Well for Buyers, the South Bay real estate market is much different from a year ago.  12 months ago, a Buyer certainly was in a position of leverage often resulting in negotiating lower prices.  But now, with so many multiple offer situations, Buyers are now in a situation where they are competing against each other, as opposed to negotiating with the Seller.  For Buyers right now looking to buy a home, they need to have the frame of mind that they are going to have to make a competitive, yet comfortable, offer if they are going to have any chance of obtaining a home.

Sellers:  Don’t start getting the idea though that you are 100% in the driver’s seat!  Multiple offer situations are certainly where a Seller wants to be, but the home still has to typically appraise at the sales price – unless the Buyer is using all cash or waives the appraisal contingency.  Cash buyers are still plentiful and more financed Buyers are waiving the appraisal contingency (assuming they can), but this still only makes up a small percentage of the Buyers.  I would say that it is more like a neutral market right now, as opposed to a Buyer’s or a Seller’s market.

So what about Home Values?

Home values have been trending upwards over the past several months.

Locally, home values are also showing improvements.  As a whole, the Greater South Bay is showing a trend of increased home values over the past several months.  This isn’t surprising, as is certainly falls in line with other measures we see (increase in demand, decrease in inventory).  In fact, nationally it is being reported that home values are creeping up.

The increase in home values is quite minimal, and it will certainly take some time for home values to recover to what they were at their highest (many years).  But I think most homeowners are breathing a bit easier knowing that their home values are improving.

So what about foreclosures?  Californians certainly have gotten a crash course in foreclosures over the past several years, mostly through exposure.  Everyone knows someone who has been affected by a foreclosure or short sale.  In fact, the bulk of the real estate inventory has certainly been made up of foreclosure properties – short sales and bank owned homes.  So what’s happening with foreclosures in our local market right now?

According to Foreclosure Radar, many of the measures we are seeing are indicating the types of improvements we want to see with regards to foreclosures – fewer homes are getting to the pre-foreclosure stage (filing of the Notice of Default and Notice of Sale), fewer homes are actually being foreclosed, and the number of short sales and bank owned homes being marketed for sale are also going down.  By the way, the data that I analyzed was through June 2012, and the activity I reported were changes from the prior month AND from the prior year.  That is very good.  If you want to see these statistics yourself, you can click here to view them on Foreclosure Radar’s website.

So what next?  What can we expect from the Greater South Bay’s real estate market in the upcoming months.  Well as usual, my disclaimer is I’m not psychic so it is impossible to definitively know that answer.  But based on my experiences with the current, local market, and the experiences of my colleagues, I would expect to continue to see more of the same – decreases in inventory, increases in demand, and improvements in home values.

One question I have in my head, which I have had for quite some time, is what will happen to our market when we see significant improvements with foreclosure activity?  For example, if there were to be no more new foreclosure filings starting today, what will happen to our local (and national) market?  Without these foreclosure properties entering the inventory, where will the new inventory come from?  So many people are underwater with their mortgages that they cannot sell their home without taking a loss.  So who will make up the inventory?

Well, I’m not sure.  I am making a prediction that our lack of inventory is going to become even more pronounced over the coming months and years.  The inventory will be made up of that small set of people who DO have equity in their home (a small percentage of homeowners), probate and trust sales, and relocations.  This will help to improve home values, although I really can’t say at what rate.  I guess only time will tell!

Bad smells.

These bad smells come in many forms, and unfortunately I’ve smelled them all – pet odor, cigarette or cigar smoke, rotting food, human excrement or urine, and more.

The bad-smelling home is often discovered the moment the front door opens – the Buyer is greeted by a waft of “fragrant” air, having an immediate, negative impact.  In some cases, some people are very sensitive to foul smells, actually resulting in a very unfortunate reaction – nausea or vomiting.

Some homes dealing with a foul odor can easily rectify the situation by removing the cause of the odor (smoking outside, washing the pets more frequently or keeping them outside if possible), and then doing a thorough deep cleaning of the home.  This would entail steam cleaning carpets, rugs and furniture, washing curtains or drapes, and all bedding as well.  In some cases,cleaning professionals specializing in getting rid of foul odors may be required.  And sometimes if the smell has been around for quite some time (like smoking), it may be a good idea to wash the walls and ceilings.

Once the source of the foul odor is gone, and the lingering smell has been washed away, complete the process with some pleasant smelling air fresheners in several rooms of the home – especially near the front door.  Your home should be one that is inviting in as many ways as possible – not something that makes Buyers want to turn around and run out.

37700 Alianthus Ln in Palmdale - a HUD foreclosure home.

This is a HUD owned property and is sold “as-is”.  This property is a KB home in the master planned community of Ana Verde in Crestview. This great home features 4 bedrooms and 2 1/2 baths with almost 1900 square feet of living space. The master suite features a separate master bath with its own shower and roman tub. It has has a giant walk in closet. This home has a formal living room and a separate family room. The kitchen has extensive counter tops and plenty of cupboards. The back yard is enormous.

Property Details

Property Photos

Map

Is that foreclosure or pre foreclosure home really for sale? Ask a Realtor!

Many home buyers LOVE to search through the many real estate websites – like Zillow, Redfin, and ZipRealty, to name a few – and they often come across information on those websites about homes that are either foreclosed (bank owned), or that are in pre-foreclosure.  I’m often asked about some of these homes that my clients come across, as they are not homes that I’ve sent them when I send them a list of homes for sale.  This can obviously lead to some confusion on the part of my client, as they are wondering why I missed sharing this home with them.

Well, what I’ve found with most of these real estate websites that have foreclosure and pre-foreclosure properties on them is that even though they show on these websites, it does NOT mean that they are necessarily for sale.

Let’s look at foreclosed homes.  Oftentimes, after a home is foreclosed, it may not be sold to a third-party buyer, which means that it goes back to the bank and is now bank owned.  Banks have been inundated over the past few years with foreclosure properties and so it can take months for them to get a home ready to put on the market for sale.  Sometimes they may even choose to hold off on marketing a home for sale for a bit of time, so they don’t flood the market.  So even though the home shows as foreclosed on these real estate websites, it does not necessarily mean that this home is currently available for sale.

Now pre foreclosure homes are homes that are still owned by a regular homeowner (not a bank), but they are behind on their mortgage payments.  In fact, they are so far behind that their lender has filed a Notice of Default with the local County Recorder.  This Notice of Default is public information, which is available to not only you, but also to the real estate websites.  So even though a home may show as pre foreclosure, the homeowner does not have to choose to sell.  In fact, they may be working on a loan modification, a bankruptcy, or maybe even just letting it go to foreclosure.  Of course, the homeowner may choose to sell the home, in which case they would probably use a short sale and it should be marketed for sale on the MLS by a local Realtor.

So these real estate websites can often create the illusion of numerous foreclosure and pre foreclosure homes for sale in a particular market.  If you are curious or interested in one of these homes you find on the real estate websites, contact your local TW Real Estate Group Realtor with the property address, and they can research that home for you to find out the real scoop!