Simon says:” What is going on in the local Santa Monica and Brentwood real estate market?”

This week while watching CNN I heard the confident newscaster exclaim, “New home sales prices surged– they SURGED in April and existing home sales PLUNGED!” Being a little gullible and expecting the news to give me in-depth knowledge of a situation I was transfixed and intent on hearing the rest of the story. Well, that was it, that was her whole story. To be truthful, I am not exactly sure what is going on in our local real estate market right now, but it is neither surging nor plunging.

The median sale price for single family homes in Santa Monica from 2007 to date is $1,587,500 while the median sale price to date since 2006 is $1,534,000. What this means is that values are basically holding steady. Real estate values and desirability in our city is pretty varied. If in 2006 a few more people sold their houses in Sunset Park than North of Montana, the median sales price will be lower and vice-versa. The same holds true for days on market. An average condo off the 10 freeway at Pico is going to take longer to sell than your average condo North of Wilshire.

Single family home properties have been selling at an average of 96.43% of their original asking price. The average days on market year to date is 96 days. The dollar volume of sales has picked up a few points since last year, so people are still buying. It’s taking a little longer to sell a home, but sellers are getting more or less what they are asking and the market is holding steady. Nothing exciting, no “surging” or “plunging.”

In Brentwood, an area with predominately higher-end single family homes, the median sales price for 2007 is $2,367,500 and the median sales price since 2006 is $1,990,500. The average days on market year to date is 78 days. It’s too early to tell if median sales prices will be significantly higher than last year, but they certainly aren’t going down.

Condos used to be the segment of the market that were the first to get hammered by a slow-down. The median sales price for condos in Brentwood from 2007 to date is $674,000 and in Santa Monica it is $802,500. The median sales price since 2006 to date in Brentwood for condos is $690,000 and in Santa Monica it is $787,754. The average days on market in Brentwood is 94 and in Santa Monica it is 142. Whenever I see the days on market go past four months it’s not good. However, since the first four months of this year, the average days on market for a condo in Santa Monica is just 62.

I know that none of this information is too exciting, but hopefully it is comforting to know that the sky isn’t falling. If you are a homeowner you don’t need to worry everyday that your equity is taking a nose dive. For buyers, this should help you to feel better about your inclination to find a place to settle into and call “home.”

 

Simon Salloom is a local Santa Monica based REALTOR with Coldwell Banker. For questions and comments on this article go to:  Santa Monica Real Estate and click on the link to the blog. All statistics taken from the BHGLAAR MLS.

 

Simon says: “Here are some things to think about when buying a condo in Santa Monica, Brentwood or another Westside Los Angeles neighborhood:”

Things To Think About When Buying A Condo
Condominiums have made homeownership affordable for many people. This is particularly the case on the Westside of Los Angeles, where theprices of single family residences are prohibitive to even the mostwell heeled professionals. There are however many things to considerwhen buying a condo in these areas:

Earthquake Insurance:

Approximately half of all condominium andtownhouse buildings on the Westside have earthquake insurance included in the homeowner’s dues.
Pros:
This protects the owners from having to come up with funds to payfor repairs, should an earthquake occur. Price of construction per square foot in Santa Monica, Brentwood and other Westside neighborhoods can be anywhere from $150-300. This makes a complete rebuild on a 1000sf condo at the very least $150,000 up to $300,000. Often the insurance provides funds for replacement housing shouldthe homeowners need to move out during reconstruction.
Some, not many, buildings were completely torn down and rebuiltafter the Northridge Earthquake in 1994. So no matter what thedeductible, these buildings were happy to have had earthquakeinsurance.

Cons:
Earthquake insurance can be very costly. Premiums tend to besignificantly higher for buildings that are looking for new coverageas opposed to buildings who signed on for coverage 20 years ago. The deductibles can be upwards of $250 -500,000, much higher thanwhat most buildings in Santa Monica suffered during the NorthridgeEarthquake in 1994. Personal Assessment Insurance can be had for a maximum of $50,000per condominium. You would be covered in an instance where your 10unit condo building had $500,000 worth of damage.
The federal government often supplies subsidized loans at very lowinterest rates for disaster victims.Many buildings in Santa Monica had to go through years of courtaction before their insurance providers would give them the financialassistance that was owed to them

Earthquake Insurance FAQ’s:
All of the units in a condo building need to subscribe to theEarthquake Insurance policy. Coverage cannot be given to units on anindividual basis.

Pet Policy:
Most condominium buildings have a restriction on pet size. Smallerbuilding and townhouse buildings tend to be more liberal while largebuildings are more conservative.
Pet size restrictions tend to be by poundage and number of petlimits. The most common is two dogs or cats under 20lbs each. Otherbuildings have 30 and 40lb limits. The average Labrador is over 40lbs.
If you have a pet or plan on getting one make sure you read theCC&R’s on pet restrictions. The CC&R’s are the rules that govern theHomeowners Association.

Pet Policy FAQ’s:
If a homeowner breaks the rules with regards to pet size or numberthe pet will be mandated to leave the building. If the pet does notleave the HOA can place liens on the property and or force courtaction to have either you or your pet forbidden entry.
Amenities:
Many people enjoy the idea of amenities such as pools, sauna, 24hour guard gated access. For many residents of these buildings theseamenities never become truly valuable. There are thousands ofresidents of local condo buildings who use the building pool aboutonce a year. Additionally, in Santa Monica and Brentwood there aremany local gyms that do a better job of motivating you. So, if you aregoing to buy in a building with amenities, and therefore higherhomeowners dues and purchase prices, make sure you are going to take full advantage of them.
I should also mention that if you are looking to live in a luxurybuilding; say an ocean view condominium on Ocean Avenue, none of the above applies. You are going to have amenities whether you like them or not and enjoy using or not using every minute of them.

Reserves:
After the Homeowners Dues are collected and used to pay debits tothe different vendors the left over money is put into reserves for thebuilding. Funds from the reserves can be used in case the buildingneeds a new roof or upgrades to the hallways and common areas.

Difference between a Condo and a Co-op:
In a condominium, the owner owns the space inside the wallsindividually and the common areas collectively as part of a group. Itis a pure form of homeownership, with the same rights andresponsibilities of a single family home. A co-op is owned by acooperative that issues shares to the building and the right to occupya given unit. As the owner, you own shares in the building not thespace inside the walls. Your right to occupy a particular section ofthe building is usually issued via a lease term that renews everyfifty years or so. About 95% of the multi-unit inventory in LosAngeles (Brentwood) and Santa Monica is condos. In New York City the majority of units are co-ops. The difference between buying a condo or a co-op in Santa Monica and Los Angeles is that buyers of co-ops tend to have less financing options available to them. You also have to be “approved” by the board. Here on the Westside the boards are pretty liberal in contrast to the stories you might have heard about New York City co-op boards.
Difference between a Townhouse and a Condo:
In Santa Monica and the other neighborhoods of the Westside of LosAngeles, people refer to single story residences as condos and double or triple story residences as townhouses. These are both condominiums in the legal sense of the term.

 

Simon Salloom is a Realtor with Coldwell Banker who specializes in Santa Monica Real Estate.Click here to learn more about Santa Monica Real Estate

Simon says: ” Here are some tips on home remodeling and how to deal with contractors:”

 In my last column I went into detail on how to do a quick remodel that would give you a very high return on your dollars spent. This week, I am presenting you with information on how to do a remodel for yourself. One of the wonderful things about owning your own home is that you have the opportunity to express yourself and your unique style.

You will recoup much of your remodel dollars when you sell. Real estate is an investment that will almost always be sold and passed on to someone else at some point in time. You may want to temper your own personal taste at times to make sure your remodel is palatable to other people. In other words, if you are into oak, a wood that is out of fashion right now, don’t over use it. If you are into dramatic mod graphically black and white design, something that is considered chic right now, you may want to mellow out the contrast a bit. If you like architectural lines, try to avoid letting it get too stark by adding warm tones and natural materials. Generally, the most striking designs today will be considered the most dated and hopelessly trendy within the decade.

A common idea is to wait to do the remodel little by little. Sometimes this makes sense. However, I have a lot of clients that buy a property with big plans to redesign the space and then they do the remodel right before they put their home on the market for sale. If they put up the money early in their stay, they would have been able to enjoy the remodel and still recouped their investment during the sale.

If you are going to do a complete remodel you may want to avoid living through it. The dust alone can be unbearable. If your contractor tells you it will take 4-5 weeks expect it to take 7-10 weeks. Although I just completely remodeled a two bedroom condo in six weeks, most remodels take months and I have experience with over a dozen remodels.

The biggest time drain is the lead time for things like custom manufactured cabinets, which can take three to six months depending on the manufacturer. If you are doing a mid-end property you may want to use Ikea cabinets, you can buy them and have them delivered the next day. They are also highly rated by Consumer Reports for quality. If your taste is compatible with hand built cabinets, you may want to consider a cabinetmaker who should have an entire kitchen done and installed within a few weeks.

There are a lot of pitfalls to avoid while working with contractors. You can hire a General Contractor to make things easier on yourself. Make sure you get one you really trust that has excellent references. This will lower your stress level but it will cost you. And you should note that even with a General Contractor remodeling isn’t easy. If you are low on money, you may want to run the remodel yourself and hire sub-contractors. If you take on this position, plan on spending a couple hours a day on the project. When I am working with sub-contractors I feel like I am a high school football coach. Sometimes they won’t show up, they’ll get in fights with each other and so on. I am sure that people have told you that they have an amazing contractor, unfortunately you need more than one guy to run a job. It is possible to do a job with only the best possible workpeople, however this will take months. Sometimes you can’t wait for your favorite electrician. Regardless of who you hire remodeling isn’t easy, so be prepared.
One of the golden rules of hiring a contractor is to hire specialists. They all think they can do everything. Additionally, don’t fall for the photos of work they have done. Oftentimes these photos are of jobs they were a part of but not the main contractor of.  Call their references and ask exactly what they did on the job. You need to respect the work these guys do– it’s not easy to be an excellent tile setter or a plumber– so hire guys who really know what they’re doing.

Never pay workpeople up front. I generally give a 20% deposit at the end of the first day of work unless I’ve had a previously good experience with someone. If your granite counter top guy needs money for materials pay the vendor directly. Don’t give a guy a three thousand dollar check on the first day of work. These contractors generally have other jobs going on at the same time as yours. You need to use your payments to keep them focused on your job. When they are about 80% done you can give them another 50% of the bid. Always make sure that they have done more work than you have paid them for. This may sound a little cheap, but if you’re too nice they’ll walk away with your money and you’ll be chasing them down to finish the job.

This column could be a lot longer, but for now this should get you started. If you are looking for good people who work in Santa Monica, you can visit my web-site santamonicasimon.com and contact me from there– happy remodeling!!!

Simon Salloom is a Realtor with Coldwell Banker who specializes in Santa Monica Real Estate.Click here to learn more about

Simon says: ” How to make your local remodel make you money”.

If you just bought a new home or will be selling your current residence you may be thinking about doing some remodeling. Regardless of whether you bought or are selling you want to keep in mind getting the best return on the dollars you invest in your remodel. A good Realtor with a lot of experience in your area should be pretty good at advising you which remodel will get you the best return on your investment.The Quickie, 3-5 days – Sometimes it only makes sense to do a quick clean up of the surfaces in a home, I call this the quickie. It should take only a few days to complete. Paint everything– if you have old seventies cabinets or anything else that dates the property paint them too. Shampoo the carpets. If you can’t get the stains out replace them. If you own a property with bad pet smells you will want to seal the cement or plywood floors. Floors like this are porous. If you replace the carpet without sealing the floor the odors will return. Not too many homes on the westside of Los Angeles have old oak hardwood floors. If they do, you can refinish them or, depending on the cost, replace them or put some throw rugs down. After painting and cleaning up the carpet situation, replace all the old knobs and hinges (don’t forget to do the hinges) with brushed nickel/stainless steel and or chrome hardware. Try not to keep any old hardware that has paint on it.  It looks cheap and rental-like. And finally, change out all the old wall sockets and switches to new white plastic ones. It will surprise you by just how much better your property will look. About a month ago I listed a condo that was in terrible shape– really bad. We did a “quickie” and the place sold in the first few days for about 10% ($60,000) more than what a half dozen other Realtors thought it was worth. People remarked on how well the seller had kept the place up. Cost $2,000-6,000 (with exterior painting it will be more)

The Moderate, 7-12 days – This includes everything I wrote about in the “quickie” with just a few more touches. You keep your cabinets but replace the kitchen counter tops with granite. There are pre-fabricated granite counters that are manufactured in places like China in 8 x 2′ pieces with bull-nose edges and six inch back splashes that are very inexpensive. You keep the cabinets in the bathrooms but replace the old outdated tile, linoleum or carpet on the floors with travertine tiles.There was a time when travertine was about $10 a square foot. You can now find very good quality travertine tiles for around $3.50 a square foot. Take the old shower/bath combo doors off and replace with a new frameless door available at home depot for under $400. You can also just use a stylish curtain. Anything is better than an old cruddy 1960’s or 70’s shower door. Cost $6,000-15,000

The Complete, 1-24 months – If you are doing a complete remodel, it is best not to skimp on quality. In other words, avoid doing any of the things recommended in the Moderate and Quickie. On the westside of Los Angeles you will get a much better return on a complete remodel if it is done high end. This means quality, exclusive finishes like Caesarstone quartz countertops, exotic woods, expensive tile, high end brand name appliances like Viking and working with a designer or using your own well-developed aesthetic. Everything is of course relative, you probably won’t put a Viking range in a 600sf condo, but you should certainly put one in a 2500sf house. It’s the difference between a polo shirt without the logo and with the logo– people pay more for the logo. $35,000-200,000

As a real estate agent I have seen a lot of remodeled properties. One person will have spent $150,000 for a remodel that doesn’t look as good as another person who spent $60,000. I am not exaggerating. There are ways to do things that will save you a lot of money. In two weeks I will be publishing a column on how to save money, not on how to cut corners, but how to avoid the common mistakes that people make when remodeling.

Simon Salloom is a Realtor with Coldwell Banker specializing in Santa Monica and Westside properties
To contact him and or to find a list of his local contractors and resources go to SantaMonicaSimon.com

Simon says: “Housing Affordability, What Can We Do About It?”

Simon says: “Housing Affordability, What Can We Do About It?”

Almost every weekend of the year I do an open house. Inevitably, during one of these three hour windows of time, someone will come in and we’ll begin discussing the current real estate market. Sometimes this person will be incredibly discouraged by the great expense it takes to own a home on the Westside. And often enough they will make a comment like “well, it’s great for you real estate agents, you’re making more money!” Then I stop and tell them that it’s not great for me. I don’t like seeing more and more people priced out of the market. It’s disappointing when a young family of three, both parents working professionals, can’t afford a two bedroom house or condo in a decent neighborhood. There are many great things about owning your own place, and once you have children it is even more important.

Some California economists are expecting a second wave of an increase in property values along the California coast. This will supposedly happen as the baby boomer generation begins to retire over the next five to ten years. This would further reduce the affordability of housing.  I really have a lot of love for the baby boomers– they brought us civil rights and Bob Dylan. However, vibrant economies don’t happen in geographic locations dominated by retirees where young families can’t afford to be. I live and sell real estate in Los Angeles because it’s vibrant, active and exciting.

The current housing affordability index was released this week by the California Association of Realtors. The current affordability index statewide is at just 25%. This means just one in four households of first-time buyers can afford to own by their own means. Many people in this situation end up receiving outside help from parents or relatives, making this figure probably closer to 35% of first time buyers are able to afford a home. The figure for Los Angeles County is at 19% of households can afford a home at the median price of $500,000. Considering the median price for a house in Santa Monica is $1,500,000 and a condo is $805,000, affordability in our fine little liberal community is closer to 10%.

What can we do? One thing we could do is encourage city hall to relax condo conversion laws and make it easier to build in Santa Monica. The main law of commerce is supply and demand. If we had more supply in relation to demand, properties would be more affordable. If you look around Santa Monica, when a building is taken down, say a ten unit apartment building, the developers end up building four to five townhouses. The city doesn’t allow condo conversions to protect tenants. So, instead of allowing tenants the opportunity to afford the joy of home ownership, the system encourages developers to tear-down the old buildings. They move everyone out and rebuild a less efficient property that caters to a significantly smaller number of households. The city doesn’t allow you to build an eight to ten unit building of single level residences. This sort of design is more efficient. The city should also allow new three to five story properties instead of just two-story ones. Let’s have building restrictions that encourage more for sale housing to be built, not less.

I agree that development needs to have restrictions and the beautiful aesthetic of our neighborhoods needs to be preserved. However, let’s not continue to confuse the true intent of socially liberal values. Let’s make it easier for people to afford to live here, not harder. What do I know, I’m just a real estate agent?

Simon Salloom is a REALTOR at Coldwell Banker

You can comment on this article at www.santamonicasimon.com

Simon says: ” Sub-prime lender meltdown, foreclosures everywhere– what’s really happening here on the Westside?”

Several evenings ago I walked past a group of men near a local coffee shop at 9th Street and Wilshire in Santa Monica, talking excitedly about the sub-prime mortgage industry “meltdown.” One of the gentlemen was sure it meant a significant increase in foreclosures. And another man said that he was looking forward to finding some great deals on houses he was going to purchase. The way they were talking I began to get the impression that Los Angeles was about to be littered with homeowners down on their luck, losing their homes to the bank.

All of the geniuses who had sat out the “ridiculous” rise in property values over the past six years, were about to be finally proven correct. Dozens of presumably well-heeled yuppies were about to find themselves in the bread line with the other homeless in Palisades Park. Disillusioned men and women would be looking out over the sunset, somberly enjoying their meals courtesy of the local food bank. Their eyes gazing out over the glittering Pacific Ocean towards Malibu, dreaming of the day they could get their home back.

Well, that’s not going to happen and here’s why. Currently, only about .5% of sub-prime borrowers are foreclosing on their homes nationwide, while about 13% are late on payments. That is just one in 200 sub-prime homeowners who are actually in foreclosure. The fact that more than one in ten is late on their payments is testimony to the reason why they were sub-prime borrowers in the first place. While many of these people aren’t too good at balancing their checkbooks, there are many things a homeowner can do to resist foreclosing.

The number of homeowners who purchased properties on the Westside of Los Angeles with sub-prime mortgages is estimated to be under 5%. My personal mortgage broker has been in business for the past 15 years. He has only done one loan with New Century, the largest sub-prime lender to close it’s doors.

Our housing inventory in Santa Monica is very low. Only 197 houses and condos are currently for sale. Let’s say there are 15,000 homeowner residences in Santa Monica and 5% of them are owned by sub-prime borrowers. If they were all in default at the national rate of .5%, then we would have about four new homes for sale. If that number tripled, we would have about twelve new homes for sale. We are certainly not entering a time of crisis.

Real estate values like mortgage defaults is a geographic issue.  Los Angeles has a foreclosure rate of only .1% above the nationwide average. This April, Los Angeles had the lowest foreclosure rate of the top five metropolitan areas in the nation, only 1 out of every 997 households is in foreclosure. In Florida this March, the rate was 1 out of every 278 households.

There are things that can kill real estate values:  war, natural disasters, economic calamity and the concurrent closing of law firms, hospitals and biotechnology and entertainment industry companies. However, for now, a couple dozen sub-prime lenders that feed on the financially disenfranchised is not going to have any effect on our local real estate market.

Simon Salloom is a local REALTOR with Coldwell Banker Residential Brokerage
To comment on this article please go to:  http://www.santamonicasimon.com

Simon Says: “Should You Continue Renting or Should You Buy?”

Several times a week someone tells me, “My friends say wait to buy
because the market is going to go down this year.” I am sure these
same people were saying the same thing last year when the median sales
price in Los Angeles went up 7.3%. The not so great news was that the
number of sales went down from 8,269 in 2005 to 6,888 in 2006 in Los
Angeles. In 2006 the average days on market went up from 41 to 57
days. However, 2005 was a record year for real estate sales. The fact
that the pace of sales decreased in 2006 means the market shifted from
going a metaphorical 100 miles per hour, a pace that is impossible to
maintain, to a more sustainable 70 miles per hour. Real estate values
are still going up and the market is still strong.

For an example, let’s focus on Santa Monica Condominium sales. Last
year, when the “bubble” was bursting, median sales prices went up
12.3%. Let’s say for example that you didn’t listen to your friends or
the media and purchased a home last year for $700,000. At the median
increase in value of 7.3%, you would have enjoyed about .6% or $4,200
a month increase in value. If you owned in the right part of Santa
Monica, you would have experienced an even greater gain.

Today, many people have the misconception that it is better to rent
than to own. It may be better to rent if you don’t plan on being in
the same place for more than a year or two.  Additionally, if you just
moved to Los Angeles or Santa Monica and don’t know what neighborhood
will work best for you, renting is a good idea. There are also some
people who can’t come up with the money every month for the mortgage,
taxes and home expenses. For all the rest of you, households making a
combined income of about $90,000 a year or more, it is a good business
decision to buy.

Thanks to the media created “bubble” hype, and an ever increasing
demand for shelter in Los Angeles, rents have increased about 12%
citywide in the past year. Many rental seekers have said they see
closer to a 15-20% gain in Santa Monica. You can buy a very nice 2br
condo in a great Santa Monica neighborhood for around $700,000. This
same condo will now rent for around $2,800-3,200 a month. To own it,
with a 6.25% interest rate, 1.25% taxes on an annual basis and $300 a
month in dues, it will cost you approximately $4,900 a month. However,
after taxes at 30% (many people pay more), your effective cost is
about $3,100 a month.

If you hold onto this same property for the next five years and enjoy
a modest 3% or $21,000 increase in value per year, you will make over
$100,000 in equity. If you sold and paid about 6% in closing costs,
clearing $40,000, your effective cost of homeownership is only about
$2,400, less than renting and a steal of a deal if you consider that
rents will also be going up over the five years that you own the
property. It may also be notable to you that a 3% increase in value is
very conservative. The average increase in property values nationwide
since the 1950’s is about 6% and even higher in California.

So, barring any great economic calamity that no one can predict, it is
less expensive to own than to rent. The sky is not going to fall, and
people will continue to enjoy the pleasure of owning their own home. I
hope that this column has given you some solid numbers on what will
work best for you.

Simon Salloom is a Realtor who specializes in Santa Monica Real Estate
with Coldwell Banker Residential Real Estate Brokerage, Brentwood
Court Office. He is ranked in the top 3% of Coldwell Banker agents
Nationwide for sales volume.

All statistics taken from the Multiple Listing Service of the local,
Beverly Hills Greater Los Angeles Association of Realtors.