The Real Estate Market October 2009

With the first time home buyer's credit still ablaze and interest rates remaining near historic lows, consumer sights have re-focused on Los Angeles real estate.

Investor participation has resumed as well, targeting single family housing in "starter markets," for conversion to rentals, or to flip.

Nearly all the reporting agencies, agents, escrow officers, data tracking firms, report a souffle-like rise in transactions, prices.

Has the market got its groove back?  If so, this star turn has confounded critics and swamis both, even the smartest guys in the room.

Personally I expect an up-and-down market over the next three 

years; but, of what I'm most confident: unpredictability.  Just as no one foretold this torrid late summer rally, anticipated the magnetism of  the $8,000 tax credit, foresaw the foreclosure moratoriums, and the inventory choking 'controlled release' strategies of the lenders; nor, will the next round of market manipulations be so clairvoyantly divined. 

In other words, the bets are off.

The Real Estate Market July 2009

Got Inventory?

The buzzword for the market's second and third quarters, as inventory shrivels and fierce competition returns to upper entry levels ($300 - $600K).

Pick a zip code, any zip code....

The 90007 zip code which encompasses over 100 city blocks, shabby patches and glorious enclaves, dollhouses and manor houses, sports 10 single family listings.  Ten.  Diez. 

Of those ten, one will require an all-cash or hard money purchase, owing to condition issues. Another, a probate, has a previously accepted offer and is awaiting court confirmation.  Four are short sales, of which three have already netted offers, and are correspondingly disinclined to show, as they grapple with obstreperous note holders.  

Ten is the new five.  "The numbers," I tell my stat-tracking crazies, imitating Edward G. Robinson's Johnny Rocco, "ain't the 

numbers."

The Unsold Inventory Index, measured in the number of months it would take to deplete supply, were home sales to continue at the current pace--without refreshment, stood in June at 3.6 months.  A far cry from January 2008's bloated 14.5 months. 

But back to 90007 and the furious five: one is a bank-owned 

property that "shows" as active, despite an accepted offer.  Even though agent/brokers can be fined for not updating the status of 

their listings timely (from 'active' to 'pending' or 'looking for backup'), REO (bank owned) brokers, perhaps in response to a higher level of aborted transactions, are notoriously delinquent.  Some brokers regard a noncompliance fine as the cost of doing business, and only perform status updates when a buyer has removed all contingencies (typically 17 days into a transaction).  

Finally, a listing on 20th ST is subject to interior inspection only.  Which requires a buyer to write an offer interior sight unseen.  A proposition, contingencies notwithstanding, most buyers reject.  

Ten = three.  Got Inventory?

A Little Satisfaction

I don't typically highlight specific compacts; however, I just completed a transaction, over a year in the making.   I'd like to recognize the principals and express my appreciation.  

The buyer, whom I represented, is Beverly Meyer.  The seller was Frederick Johntz, represented by Tom Inatomi of Prudential.  The helpful escrow agent was Patsy Addy of Pickford Escrow.

The deal endured several rounds of negotiation and a lengthy escrow.  A major repair item was included.  The financing took time to arrange, and was far from conventional.  Even personal effects were exchanged.

The property, a one-story Spanish Revival was originally built in the Watts area in 1931, and moved to the Jefferson Park neighborhood in the late 1940's, at which time a second bathroom, the arcade entry, porte-cochere, and third bedroom were added.

Real estate dealings are often contentious and embittering; yet this transfer, despite its numerous challenges, was a triumph of negotiation and absolute collaboration.

Realbonics

Contemporary?  Modern?  Modern with an 'e'?

Label for this post?  Real Estate Rants!  Yep, another opportunity for snarkiness, righteous self-promotion, and a little squawk.

Increasingly, the term 'Architectural' is being used by real estate 

agents as a catch-all for things new, blobitecture, deconstructivist, International style re-hash, anything that isn't neo classical.

How lame. 

"I'm selling architecture too," I chided one of the descriptive language challenged, "you know the result and product of building."

"Cute," she responded cooly, before adopting a more smug tone, "but this is architect designed."

"Very cute," I returned, "is he an architect of architecturals?" 

Check out these marketing comments (see bottom image): Stunning Architectural with fully integrated Craftsman and Asian details.  Integrated details, as opposed to unintegrated details, WTF?!

If you can't accurately describe product, you're an unqualified salesperson.  

The Conflict of Interest Myth

The Los Angeles Times business section featured a story Sunday about the declining ranks of real estate agents, Realtors are Abandoning a Listing Ship.  Amongst other items, the article details conflict of interest concerns, whether agents push more expensive product to secure richer commissions.  I'm sure it happens--all things happen, but I don't believe it's prevalent.  Moral and ethical obligations aside (and those aren't easily hopscotched for living, breathing, licensed, 

regulated professionals), practice of the sort would be a bit uncomprehending.

For starters, commissions are not fixed.  Sometimes a lower priced property compensates more amply.  For example, a three percent sales commission on $500,000 bears a greater sum than 

2.5% of $585,000.  Some listings even offer bonuses to the selling agent, further complicating the assumption.  (As an aside, I showed over 30 properties last weekend and I haven't the 

slightest sense of what was offered by whom.)

But perhaps what derails the conceit altogether: the difference in the numbers is de minimus, because buyers usually court properties in a fairly narrow price range, plus/or minus 5-10%.  Supposing all things equal, commissions of 2.5%, and a 75/25 agent/brokerage split, consider the following scenarios:

Property A: Sales price $330,000.

Property B: Sales price $300,000.

Brokerage commission Property A: $8250.00

Agent take home: $6187.50

Brokerage commission Property B:  $7500.00

Agent take home: $5625.00

The pre-tax difference is $562.50.  Would anyone really 

jeopardize a client relationship, in a highly competitive marketplace, for 500 smackers?  That's just crazy talk.  Sure, as the numbers get higher the spread increases, but so does the payday. 

I always want my buyers to get the best deals and the best properties, regardless of the remuneration.  In part because I want to be affiliated with the best houses and potentially represent them at a later date; but, also because I'm highly competitive, desire to be liked, and have a big ego.  Ahhh, but you readers already knew about the ego part.   

It Ain't V-shaped

Seems like just the other month, my scribblings about the Hover Market (4/9/2009), paralyzed buyers, and a torporific real estate climate.  Things now couldn't be more different.  

The reporting frequently trails the phenomenon, and it isn't long term recovery I herald; but, a buying orgy has commenced around Los Angeles, with transactions hard-packed around the credit-accessible, conforming loan limit figure of $417,000.  The 

pending home sales index (PHSI), a forward looking indicator, noted the transaction swell nationally; while, many in-house tabulations (by area brokerages) claimed an exponential jump in volume.  Additionally, the median home price registered a 2.2% increase from March to April, a significant watermark, and the biggest month-to-month gain, according to a source reported on Bloomberg.com, since June 2005.

More than mere "Spring Bounce," many buyers are emboldened by good ol' fashioned affordability, and the prospect of a mortgage, helped by low interest rates, that shadows their rental payment.  Multiple offer scenarios have returned, while opens are flooded with first-time buyers eager to burst from years of cocooning.   Stay tuned for the April/May numbers.

Close to Mankind

I root through property descriptions daily, in print and online. Many are colossally unimaginative, and more than a smattering resort to the 'tired trinity': close to schools, shopping, and transportation.

Close to Schools. It's Los Angeles, there's schools flippin' everywhere. LAUSD alone operates 658 campuses. One online source lists over 100 private K-12's. Throw in a few hundred pre-schools and few hundred colleges, from Pacific States University to the American Film Institute to Cleveland Chiropractic College, and you get the picture.  Pick a Thomas Guide page, any Thomas Guide page, there's enough flags to fill the U.N. lobby.

Close to transportation, you mean a busline? Wow, welcome to the greater basin, beaches, foothills, and valleys. The Metropolitan Transit Agency web-site lists 200 express, local, limited, shuttle & circulator lines.  Even the seemingly insufficient MTA rail system stretches over 73 miles (soon to be 80 with 2009's Gold Line extension), to say nothing of Metrolink commuter trains.  

Shopping? Commerce, in the city that drove a retailing revolution? A mere place to spend money? Ninety-nine cent stores?  Lazybones corner market?  Tacos de Adam?  

Really, isn't some of the most desirable real estate, deep in the canyons, high in the hills, sequestered at the cul de sac's end, the furthest from schools, transportation, and shopping?

The Hover Market

Nowadays the real estate salesperson gig goes something like this:

First, you show your buyer a property.

A few days later, the listing agent follows up, "did your buyer like the property?"

"As a matter of fact," you respond, "s/t/he/y did and they're considering an offer."

"Well, I haven't anything in writing," the listing agent predictably returns, "but there's a couple hovering."

"Let 'em hover," I growl, "my buyers are throwing down paper and kicking ass!" (Thereafter, I would throw down, er forcibly reseat the receiver; only, I damaged a cell phone making a similarly grandiloquent gesture.)

It's the hover market, everybody's hovering. I get updates from agents every day, e-mails, texts: 'they're hovering, three different buyers are hovering, two ladies are h-h-hovering.'

"Are they in hovercrafts?" I snigger, whilst trying to restrain myself from forcibly reseating the receiver.

In the meantime my buyers are putting pen to paper, taking numbers, and....well....a few are hovering.

"What about your buyers," another agent asked, "aren't they also hovering?"
"Oh no," I gasped, "they're not hovering at all, we're locked in a furious endurance battle, smoking out the enemy, biding our time..."
"They're hovering," he interrupts.
"Bingo," I add.

Tom-School-ery

Buyers often harbor an aversion to schools, especially high schools, and properties adjacent. While learning institutions beget traffic, some daytime noise, and litter, they are not without perks. Many schools roll up the sidewalks after 4 pm, students and faculty dismissed at three-ish, lie silent in the evening, on weekends and for long holiday periods.

I was once involved with the purchase and sale of a property on 40th Place, in West Park, directly behind Manual Arts High School. "Manual Arts is a large institution," I cautioned my client, "be prepared for a teenage chorus line, maybe even loitering, in the morning and afternoon." But it wasn't to be. Manual Arts received and relieved entirely on Vermont Avenue. Moreover, because the school interrupted the East-West grid, those streets that abutted the back side of the campus (see image top), nearly operated as cul-de-sacs, with reduced traffic, and security patrols.

Over the years I've sold many a house in the Kinney Heights neighborhood, home of Joseph Pomeroy Widney High School. Outsiders, prospective home buyers, have often cast a wary glance at the single story Brutalist strip along Gramercy. Yet, Widney harmlessly serves a mere 370 special ed kids, including sightless youngsters who often, and heartwarmingly, navigate the neighborhood whilst learning to use their canes.

In the Heights (Arlington Heights that is), Johnny L. Cochran Jr. Middle School features an expansive green along the school's Southern border. At an open house, opposite the field, I once heard a home-seeker complain, "but it's across the street from a school."
"Tell her it's a park," I kidded with her agent.

Flip-Flop-Flip

"It's the perfect market for you," I told a longtime client and ardent home restorer recently, "lots of beat-up fixers at heavily adjusted prices."

Simultaneously, for those of us operating outside the golden triangles, there's less "finished" product, much less. Financial jitters, a seller's strike, the spiraling costs of some materials and labor, all play a part. But perhaps principally, the absence of investors, or "flippers," has eradicated a significant percentage of move-in condition offerings.

"Flipping" frequently gets a bad name--deserves a bad name, as vulgarian investors white-wash surfaces, concealing compromising conditions beneath carpet, stucco, or new drywall. Such efforts are often derided as "Home Depot specials." Still, some honest handyman types did turn product around with new roofs and plumbing, decent fencing and the beginnings of a nice landscape. Enough to move the acrid to the tolerable, to make properties more immediately palatable for intimidated first-timers, or engrossed families.

The foreclosure storm will only bring so many well maintained properties to market, a change in the weather will be necessary to evince others. The golden lining: "It's the perfect market for you," I told a longtime client and ardent home restorer recently, "lots of beat-up fixers at heavily adjusted prices."

Cash Flow

"So everyone's clients have the same wish list," I puzzled, sitting around a table with a handful of real estate agents, as each ticked off buyer profiles and pursuits, or listing details, between dice rolls of the investment board game Cash Flow.
"Family of four seeking a 3+2 in Culver City for $600K; Single guy looking in Hancock Park up to two mill; a couple with 400 to spend, trying to stay North of Sunset or North of Venice, or West of Centinela, coveting at least 2000 square feet."

"Hey you're the niche guy," they responded, "what've you got, buyer wants old house with septic tank and original sanitary tissue?"
"A mix," I responded dryly, "What I see is a big divide in strategy. Some buyers (mainly yours) are trying to stretch, throwing every last penny at what they consider to be the very best neighborhood, holding out for the collapse of West Los Angeles prices, confused that a lower median doesn't translate to give-a-ways on Lookout Mountain."
"As opposed to what," they challenged.
"Well, I've a few clients who are moving down or downsizing, selling large houses for smaller ones, leaving A neighborhoods for B neighborhoods. Pursuing fail-safe strategies. Let's be honest, if prices in Castellmare or wherever hit $800,000 or whatever, then the larger economy is wrecked, in a post Katrina kind of way.
"So do you think people shouldn't buy then," came the edgy retort.
"No," I responded honestly and reassuringly, "I think for many it's a great time to buy, but nobody's invulnerable, and the myth of recession proof neighborhoods is proving to be just that. Values aren't built from the top down, they're built from the bottom up."
"So what's your point muckraker?"
"I'm not sure it's intellectually prudent to root for chaos, yet assume personal stasis. That's my point. Now pass the dice."

The New Waiting Game

A large number of aspiring home buyers spent 2008 on the sidelines, waiting for a declining market to bottom. Hoping to avoid the sort of boomerang or upswept tail that often marks the end of commodities corrections.

Perhaps unexpectedly, the wait for the pricing nadir has been displaced by a new resolve--the wait for the rate nadir. Despite gobs of government spending and potentially inflationary outlays, rates continue to languish delectably in the low fives, stoked by the Fed's anti-hoarding, er anti-savings tactics. Might a limited time 4.5% purchase rate be in the offing as rumored? The possibility has even pusillanimous purchasers coiled like a ravenous panther.

Me, I'll probably play along, and exchange paper for a hard asset. You know, something with an inglenook, or a sleeping porch, or a whole lot of rosettes.

New Market Touchstones Part 4

While I spent lots of time fielding questions about architecture and details of the Carey/McDonald house during last weekend's West Adams holiday house tour, a few wanted to discuss the local-local real estate market.

"Transaction volume is up, considerably," I reported, "even as prices ease lower".
"But I thought people couldn't get loans," responded a bewildered few.
"Not only are people getting loans," I gushed, "they're getting the best loans I've ever seen, interest rates are in the low fives!"
Clearly flummoxed by Paulson's persuasions, a couple tour takers blinked, nodded dismissively and moved away. Another looked to his feet before adding, "you know, Paulson is a kind of poker chip." Turns out, one of the big poker chip manufacturers is named Paulson.

********************************************
According to an escrow source, in 2008 nearly one residential purchase escrow in five failed. A marked increase over previous campaigns. The reasons? Financing for starters, which is why some bank owned properties accept only pre-approval lenders from designated brokers.

Plenty of properties get tripped up at the inspection stage too. Sellers are often less inclined to make repairs or grant credits, even of a reasonable amount, after accepting a lower than anticipated asking price. Simultaneously, despite supreme discounts, some buyers still feel entitled to a rash of repairs.

So contentious have these negotiations become, I even urged one buyer to conduct investigations outside of escrow. We then made an AS-IS offer, that was accepted despite its deep discounting, by a seller who preferred the AS-IS conceit.

For the Record

My clientele may not encompass the broadest range, dominated by persons with college degrees, oftentimes secondary degrees. I haven't, for example, represented many retirees. I also work with a higher percentage of foreign born buyers than is the norm, though Los Angeles may account for the unusually cosmopolitan mix.

Pleasantly, I've yet to have a client enter foreclosure as a direct consequence of their purchase financing. (One client endured foreclosure, but for reasons unrelated to his purchase loan.)

Many of my home buyers utilized now demonized creative financing instruments: stated income, adjustable rate and interest only products. A few put no money down, and even wrapped closing costs into principal financing. But all planned accordingly, some re-fied in a timely fashion, others were prepared for higher payments. In short, they acted responsibly.

I know predatory lending existed, and probably, misrepresentations were made, particularly to less sophisticated Spanish language speaking immigrant purchasers. Some parties may deserve federal intervention.

But as a guide backpacking through the REO wasteland, I also see the failed flips with grotesque great rooms and porno showers. The high-lifers, who exhausted their generous equity lines, on boom-boom machines, and tables at the Tropicana. Even the shirkers, without the slightest tingling of obligation, unwilling to service--regardless of means, a now desiccated investment.

To these and even noble folk over-matched by the obligation of homeownership, assistance should not be forthcoming. The Robin Hood politic is an insult to that greater number of deft, dutiful homeowners.

Reports of My Demise...

I've received more than a few calls, from clients, industry acquaintances, others, asking about the health of my practice, concerned souls conferring in funereal tones.

Actually I'm doing fine, still fortunate to inherit and convert great opportunities. By no means immune from the most macro of macro economic pressures, but still humming along. "If you don't want the job when times are difficult," I counseled another practitioner recently, "you don't want the job."

Fortunately people are still drawn to the home buying and selling arena, many in response to changing family situations: relocation, in nest/empty nest, un rinconcito for mom, etc.
Another percentage of prospective buyers are attracted by the shoe top interest rates, lower yet again after the Fannie/Freddie conservatorship. "The only real savings long term," one veteran buyer asserted, "is with rates."

Sometimes I wonder if home ownership has simply fallen out of fashion, no longer the thing to do, for squares; then, a smart new listing comes along, with hefty moldings, or colorful tile, a tall Camphor tree, and I get all excited.

New Market Touchstones (Part 3)

While buyers have largely become choosier (see Parts 1 & 2), a few features have declined in importance.

The wood burning fireplace

As wood burning restrictions near*, buyers are increasingly willing to accept the fireplace as mere visual centerpiece or gas conversion candidate. Hand wringing about the usability, structural thews, or limitations of capped, missing, or unreinforced masonry chimneys has generally relaxed.

*The City of Denver has essentially banned the use of wood burning fireplaces. Air regulators in the San Joaquin Valley and Sacramento have implemented "check before you burn" restrictions. Bay area cities continue to debate and approve ever more restrictive guidelines.

The garage

Buyers still favor a garage, but chiefly as auxiliary space, storage, or home office possibility. Angelenos don't put their cars in the garage. At least not on my corner. None of us own cars that are worth a lick (unless you count the new Fortwos). None of us want to. Many are satisfied with a storage shed, and a partial driveway (if street parking is an issue).

Swimming Pools

For a growing number, pools are as much a burden as a delight, a safety concern and an eco downer. Even those interested, prefer shallow lap pools to yard consuming giants and diving pools. The hot tub has similarly lost much of its appeal, considered by some goatish and passe.

To be continued...

New Market Touchstones (Part 2)

Conservatism is the chief characteristic of the new market, and condition isn't the only consideration (see Part 1). Neighborhoods (or more broadly, 'locations') are increasingly vetted too.

Certainly location has always been amongst the chief considerations, but when transaction volume was at its fever pitch, more aspiring home buyers were willing to invest in transition adjacent areas and destinations with less marketplace notoriety. Buyers could see and sense the turnover, the onset of demographic diversity, and the improvement rush fueled by equity line wildcatters. It was easier to project change of an appealing and immediate sort.

Those changes may be ongoing, but a greater number of buyers now are looking for security in numbers, clusters. Dividing lines have become Maginot Lines, with consumers foregoing traditional lures like square footage to stay South of, or East of, or next to.

Intra neighborhood differences are even emerging--or intensifying, with some blocks or tracts gaining additional prestige.

The most fluid market continues to be downtown. For the first time in many decades a value--fueled by cultural offerings and mushrooming amenities--has become attached to being downtown adjacent, an endowment likely to enhance the real estate fortunes of places like Angelino Heights (see images), Elysian Heights, the University Park madhouse, and Adams-Normandie.

Downtown which may have siphoned buyers from other core neighborhoods, promises soon to repay, as first generation lofters, looking for a lifestyle change or a more conventional family model, matriculate to the neighborhoods of Central City West and East.

The Rock of Gibraltar?

Banks portray themselves as unyielding bulwarks, steadfast guardians of the public trust, a pack o' toughs. But nothing could be further from the truth. Lenders are highly impressionable schizo's, one minute squeezing into a layup line of high risk, the next minute sprinting for the showers. Jostling like floor traders to hand out no-down, interest only loans; and then, when they might grab a little market share by assuming a tad more calculated risk, recoiling into a Kafka-esqe labyrinth of underwriting.

Here's a few recent loan processor requests:
1. A nine-month paper trail of gift monies passed from mother to daughter (in addition to the standard gift letter, 'I'm the buyer's mom, I coughed up the dough', and a couple account statements).
2. An appraisal of incidental items included in a property sale (i.e., a clothes washer and lawn chairs).
3. A performance evaluation letter from a buyer's employer. (A tad invasive, eh?)
4. A significantly higher down payment from a multi-millionaire, multi-property owner, because of a vacancy in a six-unit complex. ("I've never missed a payment in 11 years on 11 mortgages," the buyer protested, "and you think I'm going to default over an unrented $600 a month studio?!")

"They're running scared," one mortgage consulted opined, "they'll take Fannie Mae's automated underwriting model, and then add conditions on top." Another mortgage professional concurred, "lenders are trying to shut the barn door, but the horses are already out."

I always thought 'by the book' was a good idea, until the book became Remembrance of Things Past.

New Market Touchstones

Condition has emerged as a chief consideration in the real estate market of summer 2008. Not to say there isn't a consumer for potential-laden fixers, only fewer. (Incidentally, aren't all properties fixers of a sort? I never met one blemish free.)

Initially, I credited this increased emphasis to a growing market conservatism. It's easier, I reasoned, to invest lots of money in needy structures when appreciation outpaces improvement outlays; and, when it doesn't--viola.

But other concerns are contributing to this trend, including a run-up in materials and labor costs. Copper, for example, has nearly doubled in the past five years. Plywood is about five bucks more a sheet than it was pre-occupation, which adds heavily to a roofing bill.

Finally, secondary financing is scarce, home improvement loans, home equity lines defunct. The pay-as-you-go approach, the methodology of yours truly and senior members of the old house crowd, is untenable for many of today's want-it-all-now buyers. Ergo, an increased emphasis on delivery condition.

Condition isn't the only determinative factor in the current market, others I'll cover in Part 2.

High Crimes

Sunday I endured one of the real estate professionals least-liked circumstances, I happened upon so-called "clients" tom-catting around with another agent. Now I've never claimed to be a man of universal appeal, or the agent for all; furthermore, these were not people with whom I had ever consummated a deal. Still, I'd maintained an e-mail dialogue for over a years' time, sprinkled with occasional showings, and very recent contact.

To make matters worse, this violation of the presumptive social contract occurred whilst I was with a potential buyer at an open house--held by my broker. In other words, they schtupped me in front of my boss and an important client.

Afterwards, this important client sympathized, "that probably happens to real estate agents all the time."
"You know," I responded after a moments delay, "it probably does, and I'm probably lucky because it never happens to me. I have very loyal clients. I'm a leader in my market and people recognize my expertise."

Later, I called my agent buddies seeking to extract tales of treason.
One suggested I consult Revengemark stationary, greeting cards with an extended middle finger. Another told of the dagger-in-the-back legend, or Dolchstosslegende, and its damaging impacts. All had been shafted at least once, and all were curious how I'd respond.

"I may not," I began, "real estate agents have to be a little like NFL cornerbacks, the position on the field with the shortest memory. If I'm still frettin' the last play, I might miss the next one."

Protocol

The notebook you see during my opens, worn and loose-leafed, is not a sign-in sheet, it's a poor man's day planner, filled with the ephemera and mad jottings of an obsessive.

I don't require open house visitors to sign in, and I don't collect random phone numbers or e-mails. Might I initiate dialogue, troll for unaffiliated buyers, do I look to form relationships and opportunities for follow up? Absolutely. But do I cull anonymous lists of brunch-ed-up Sunday strollers, tire kickers, and neighborhood lookie-loos, as phone fodder for a momentum-less Wednesday? Nah.

I'm not judging agents that do, everybody's got a different methodology, a different survival diet.
One agent, known to me well, vigorously enforces a sign-in decorum. "You've my home number," I complained once, "do you really need this?"
"It's three-fold," she explained, "in case something is stolen I've a list of all visitors. Secondly, when I campaign for a price reduction, I can show my seller a roll call. Lastly, I add the e-mails to my data base for e-flyers."
"Makes sense," I answered, "only what thief is going to provide accurate contact info?"

I don't choose to cold call or door knock either, though some agents drilled with lead-generation mantras, process numbers like a phone bank regular, and march through neighborhoods with storm trooper-like precision. One of my Westside cronies confessed, "I love to door knock. I pick beautiful neighborhoods, and I meet people. It's my version of playing 18 holes."
Another agent declared, "I cold call every Monday morning for two hours, it's part of my regimen. In order to be successful you have to be disciplined."
"What're you implying," I responded testily.
"Nothing," she continued, "I know you're disciplined, why else would you spent so much flippin' time on your blog?!"

Market Mishegoss

Currently, we've abstention. An unintended consequence of the stimulus package, conforming and FHA loan limit increase, etc, is an extended holding pattern. Buyers, seeking optimistic economic news, the valley floor, and the magic handhold--cheaper money/cheaper jumbos, are staying put, implementations tantalizingly close, Fannie Mae the last domino to fall, further strafing an already distressed market. The hullabaloo, or the potential thereof, may be a double windfall for buyers. The lack of activity is pushing some prices still lower, toppling many sellers, undermining others, while discouraging a healthy few.

How long before the new products hit the streets, and will there be premiums or add-ons? Two to three weeks, according to some, and a few lenders are beckoning already. In the meantime, the car continues to idle, even as the tachometer builds. There's either going to be engine trouble, or a heap of burned rubber.

Dullsville

Thursday's open at Genevieve fell flat, three hours, two agents, a jogger. How to fill the time? A little house cleaning, sudoku, sit-ups. The open house party line.
"Any traffic over there?"
"Tons."
"I'm light."
"What d'ya expect Janeiro, workin' the bush?"
"It ain't the bush, it's L.A.'s historic core."
"Whatever. Whattaya gonna do, sell to Obama supporters?"
"Hey I'm an Obama supporter."
"Figures, any real edge and you'd of voted for Paul. Anyway gotta go, Pau Gasol just walked in."

Tomorrow, I'll be back at Eagle Rock's most affordable offering ($499K), 4943 Genevieve Ave. (90041) 1-4 pm.

Stood Up

That's me, cooling my heels. In the truck, waiting.

No-shows are so prevalent I plan for idle time, notebook in hand, cell phone at the ready. Agents seldom skip scheduled showings, but unattached "signers" or MLS junkies routinely bag appointments.

For this and other reasons, many agents resort to keysafes and lockboxes, or dispatch junior agents. I do not. I'm present for every showing, to augment observation, respond to inquiry, or recite knock-knock jokes.

Knock, knock
Who's there?
Old lady
Old lady who?
I didn't know you could yodel.

Still, I've even been stood up more than once at the same property by the same would-be buyer. Who's the glutton?

Some truants are so uncomfortable canceling showings--and potentially engendering disappointment--one presumes, they'd rather go AWOL. This type of avoidance is popularly referred to as "passive aggressive." Ever hear of it?

Flyer Boxes

One became a repository for chewing gum, another was tagged and stuffed with hamburger wrappers. Flyers are pilfered, folded into paper airplanes, handy message pads for the shopping cart sect.

Amazingly, my box at 2241 1/2 W. 24th St. also serves to exchange love letters. I found the second therein Wednesday, folded neatly and sealed with a blue-green sticker. The notes are hand-written, in Inglanol (not the converse Spanglish, wherein Spanish is affected by English), presumably the stuff of teens.

I can't remember writing love letters as a teen, though mustn't I have? I drew a menu once as part of a home-cooked, romantic dinner. Mostly, I just asked girls to the movies.
Time was, I mistakenly took a young lady to a rough-and-tumble Chuck Bronson cop caper titled Murphy's Law, rather than the Martin Ritt directed, lovey-dovey comedy, Murphy's Romance.

Multiplexes can be so confusing.

Schools Sell

Located in the coveted stopyourthinking school district. More and more, agents herald the promise, or the prestige, the status, of a lauded school district.

Meanwhile the academics disagree on how to evaluate schools and academic performance. Depending on the API scores? Please! College placement? How much is prep, how much is prop? How much is language homogeneity?

Mostly the herd goes on reputation. Repeat after me, in modulated tones: South Pas = good schools, Glendale = good schools, Culver City = good schools. LAUSD = bad schools. Your kid has personalized needs?! The cure all school district is the answer! Gotta move to Manhattan Beach!

Elsewhere the magnet and charter revolution is turning traditional buyer criteria on its ear. Districts what districts? My kid can go anywhere, provided he gets in. This flexibility and opportunity may be the most potent instrument of change in transitional neighborhoods, formerly indentured to iconoclasts and social-lib types.

But for many the price of relocation, despite often exaggerated academic claims, is preferable to the cost of private schools and the toil of negotiating a labyrinthian system. Really it makes you wonder why every small municipality (adjacent to a thriving population center) doesn't pursue the model. Fund your schools like crazy, raise scores, attract dedicated families, intensify real estate demand, prices will follow, raise the socio-economic profile of residents (which often acts to further boost scores), reap the collateral revenue from increased services, transfer taxes, etc.

In the end, most are looking for the proverbial service relationship: can I write a check, to ease my pain?

The Price is......Right?!? (Part 1)

I took these photos last night, in the dense fog that blanketed West Adams. They have no relation to the editorial.

In West Adams, Pico-Union, Westlake, and the like, pricing is all over the map. Some properties are shedding dollars like a ballooners' ballast, while others of dubious merit seek uncharted highs. Actually I like a little more spread in pricing, always have.

The hitch, I often contend, isn't too high highs, but rather too high lows. Which is still the case. The spread amongst similar product, one state of condition and another, superior and lesser features, isn't great enough.



The value of unpainted woodwork in a Craftsman for example might account for a 1% difference in asking price, whereas it should correspond to a 5 - 10% difference (given the cost to perform the work). A well-painted exterior might add only 10 grand, but merit closer to thirty.

Overpricing was less a problem in the past, values rose so quickly. The market might catch an inflated listing, even surpass it, given a long enough marketing period.

When determining an asking price based on comparable sales, I often use a method similar to Olympic judging, discarding the highest and lowest marks. Too often, sellers and the agents latch desperately to a "lightning strike" comp, some unaccountably high, one-time sales figure.

Last year in Harvard Heights an area business owner purchased an adjacent residential property, fusing the two into a quasi compound. The incentivised business owner paid an astronomical sum, perhaps in order to sway a reluctant seller. That fluke sales total continues to permeate sales discussions in the neighborhood a year later.

End Part 1

The Least Trusted (Part Two)

Agents are still highly valued by industry brethren, mortgage and escrow officers, retrofitters, pest control, and other support personnel, if only as ringleaders of the referral circus. Now more than ever.

I've begun receiving cold calls from young, husky voiced, incentive offering, female escrow agents. Little do they know that I already have a young, husky voiced escrow agent. (Before I had an older, husky voiced escrow agent. But she retired.)

At a recent open, marauding packs of mortgage toughs, cased my hand outs, looking for a space to infiltrate rate sheets and cross promotional materials. "Fewer buyers", I explained, cornered and forced to confess my recommendation loyalties, "are coming unattached. Even first-timers, have done more leg work, and are pre-qualified, with a lender of choice. It's not my place, unless I perceive gross abuse, to undermine that relationship." Dissatisfied, they mounted their Bradley fighting vehicle, prepared for another Caravan coldcock, and lunch at Taylors.

**************************************
Clarifying my inventory

I've a modest Adobe Revival coming, in Kinney Heights. Massive systems work: roof, total re-pipe, re-wire, new HVAC, exterior and interior paint, new wood windows, re-finished oak and fir floors. Here's a sneak peek of the living room. The property is two bedrooms, one bath. Price? Low to mid $500's.

I'm currently marketing 2361 W. 20th St., a Craftsman bungalow of superb proportions. Previously we accepted a full price offer, only the deal stalled, and we've returned to market. I will be showing it tomorrow (Sunday, November 11th) from noon - 4 pm. If you haven't seen it, you ought to. All compliment its' size (nearly 2000 square feet on a single level) and flow (long sight lines). The property, featured on a recent house tour, resides in one of West Adams' most prized Historic Preservation Overlay Zones, neatly defined Western Heights (East of Arlington at Washington, North of the 10 freeway). It too can claim electrical, heating and cooling, and plumbing upgrades--and knockout features (see photos left and at top).

The Least Trusted (Part One)

I've a running debate with a contractor, one my closest friends, over who's the least trusted, real estate agents or contractors? "Shoot", my buddy would lament, "you guys are up there with pediatricians and firehouse dalmatians. Whereas contractors are lumped with used car salesmen and big tobacco."

"Probably so," I'd allow, "but we're making up ground."

Sticker shock backlash and the sub-prime pratfall, have acidulated public opinion, as agents enjoy less influence and standing than before.

The (Very Little) Help You Sell-ers, are disappearing, replaced by full service agents with marketing experience and sales tested acumen. The industry is undergoing yet another grand personnel reorganization, last seen when Sotheby's acquired DBL and the Keller Williams recruitment blitz began. Osman Realty goes under, a new brokerage,Telis, is poaching some of Coldwell Banker's top performers, while Prudential evacuates the Larchmont strip.

I'm staying put incidentally, even if my brokerage is an unknown West of LaCienega. I haven't any designs on the Beverly Hills market after all, and I'd probably get lost driving to the Palisades.

***********************************
I received more than one comment on Palm Avenue.
Most wanted to know the price. I hadn't set one.
Another wanted to know in which MLS it was listed--it isn't.
It's all in the past tense because an offer was made and accepted, same day.

Another quick-hitter was our would-be showcase on Virginia in Lafayette Square. A preemptive offer took it out, slicing our prospective inventory yet more. I'll update our inventory in my next post.

I appreciate all the inquiries and interest.

Real Estate Agents and Slogans

Everybody's got a slogan. That's advertising after all, or marketing, or branding, whatever. Or strategic branding, which I guess is like branding only it's strategic.

Thumbing through a recent trade publication, I noted at least seven agent slogans:

1. Got so-and-so? (The agent's first name)
2. So-and-so knows the Westside!
3. Honest. Energetic. Proven.
4. Where do you want to live next?
5. Call so-and-so, and start packing.
6. So-and-so--an LA woman who knows LA real estate.

And my least favorite, the oft-occurring: Your Realtor for Life. I've happened upon a half-dozen industry professionals with materials bearing this motto. I suppose it beats, Your Agent Till the Check Clears, or Your Agent Whilst the High Rollers Summer in the Caymans, or....Drop Dead.

Isn't that every providers goal, duh? Sustained relationships? Simply, I hope you'll like me enough to use me again. Your Agent for Life has about as much separation as Your Agent With Gross Motor Skills.

I'm on my second go-around with some clientele. It's nice--flattering even, but catchphrase(s) aside, if I want there to be a third time, I'd better perform.

Current Events Part 1

My Century Heights listing/escrow has officially closed. The hardship wasn't finding a taker (a buyer was attached instantaneously, ergo the low blog profile), but rather traversing escrow, financing shortfalls, and the cockamamie rest. The escrow lasted nearly four months. Few escrows exceed three months because most appraisals, integral to the loan process, have a 90 day shelf life.

This transaction was only the second I've done, wherein I never clapped eyes on the reciprocal agent. We communicated by phone and e-mail, and fax. The buyer's agent never met the seller either. Personally I prefer meeting everyone, and a little civilizing face time for all.

I assume when one is buying new homes, buyer and builder seldom meet. I've never been involved in a "new-home" sale, only "existing-home" sales. As an aside, the media typically portrays a drop in new home starts as a real estate industry negative, partially as a barometer of consumer confidence. I think it's real estate homeostasis, at times bad for the homebuyer, governing or limiting inventory.

Amongst the quick-moving, our Hillcrest listing is unsurprisingly already in escrow, accepting an early pitch.
Whilst some inventories are growing, the number of quality offerings--like the number of top-notch backstops in baseball--seems fixed, regardless of expansion, er market conditions. As I've opined before, the number of quality offerings seems even to be dipping as some enfranchised, potential sellers (those most likely to own good product), abort (such is the case for my Craftsman duplex on 40th Pl.) or postpone listings.

To Be Continued.....
Reminder, I've an open tomorrow at 2361 W. 20th St. from 2 - 5 pm.

Mitt Readers

With purchase volume in steep decline, in a marketplace laden with challenges, real estate agents and financial services people are doing what they do best--rationalizing.

Many are championing the slowdown, with delusory party chatter such as, "I didn't care for that frenzied market, it was neither grounded nor compassionate"; or, "that time was unsupportable, bad for the industry, I'm better suited to a normalized market". Still others praise the current market conditions as,"clearing the gold rushers, returning quality and service to the marketplace, like a fire that reseeds the forest."

What a bunch of malarchy. "Absolutely," I want to respond dryly, "who needed all those quick-moving transactions and expense-less commissions--I sure didn't. Shoot, I'm not even sure if I cashed all those checks."

Of course, I mostly represented buyers before the last two years, so I didn't get to partake fully in the salad days. Now my representation is split more 60/40, buyers/sellers. Humorously some of the frightfully condescending listing agents (as in, "I handle only listings ahem"), conveniently remember me now, and my varied group of clients . "You always had buyers," their grovel begins, en route to a description of their 59 junker pieces of inventory.

Of course the prophets, sibyls, and gurus are full of hooey too. Some were predicting a market collapse as early as 2002. Now that the storm clouds have finally amassed, the new headline grabbing targets the market nadir. Housing horoscopists, harnessing the shock factor, and pandering to media's extremist impulses, offer absurdly wide-ranging value loss predictions.
Some augurs are trying to redeem their horrid handicapping, with righteous claims of vindication. As if predicting change is any big deal. Things always change, it's about knowing when.

Just ask a bookie.

Inspectors

Property inspectors can perform the most critical service in a transaction. Their findings and reporting can cinch a purchase or derail an escrow. It isn't simply about structural analysis, and honest reporting, it's about providing a context, sometimes demystification, and a standard appropriate perspective.

Some inspectors are deal killers, pure and simple. Afraid of liability, they assail the smallest shortcomings, and while the information they dispense may be credible, even accurate, it often exaggerates risk or lacks a real market perspective that less experienced, or unprepared agents can neither temper nor support. They may even think their role is to provide the buyer's agent with additional negotiation buckshot.

Oh yeah and some inspectors are just plain ol' wrong. One, noting the steep peak of a finished attic ceiling, decried the lack of a specific structural member. Fortunately, the seller was able to produce photos of the space whilst unfinished, its framing, and the plainly visible, structural element (in this case, collar ties).

I've seen all types of inspectors on the old house trail: soft ball artists who wouldn't note dry rot if they stepped through a hole in the floor, suburban goofballs who've never seen a clawfoot tub and run from masonry like a centerfielder after a shallow pop fly, the editorialists who pepper in nasty asides about the neighborhood and its family unworthiness. Some impose a new home standard on 100 year old product, foster an innate hostility towards the old, and a false hierarchy that champions the new. Old systems, for example, are often taken to task, but seldom is dense, old-growth, full dimension framing celebrated--though it should be.

Some brokerages discourage their agents from recommending inspectors, preferring the client pick their own (another liability stopper). Most buyers have neither the tools, nor the experience to differentiate or vet inspectors properly, often asking for random referrals or making blind selections from an on-line database.

Some buyers mistakenly tab contractors, salespeople who shamelessly hawk their product or service, often at usurious rates. A foundation contractor once sought to manipulate a buyer with a haggard Clint Eastwood line, "Do you feel lucky?" Often when cornered, or challenged, they'll offer discountingly, "it's only my opinion." Naturally, but to an besieged buyer it's frequently received as scripture.

Regarding modus operandi, I prefer those who generate a hard copy report on-site, rather than the delayed, everyone on pins and needles, e-mailers who take days to respond. I also prefer inspectors who provide a verbal summation, working through the printed report, fielding questions, even those unrelated. This is especially valuable because many inspectors are not particularly good writers, organize material awkwardly, or distinguish built states without criterion.

There's plenty of capable inspectors of course, to deliver determinations good and bad. I've a few regulars and I often share resources and recommendations with other area specialists. Mostly, I try to help clients identify condition issues before the offer writing phase, so the physical inspection is less about startling revelation and more about helpful direction.

Pitfalls and Potholes

Today took the cake. It's hard enough to get buyers out with the F-word* sprinkled about the business section, loan products vanishing like doppelgangers in a carney, and half of L.A. rigging low-tech swamp coolers, or clinging to the coastline like egg-protecting penguins. But road closures too?

Thanks to the planned, traffic-limiting abutments at the Arlington end of 20th St., the Meyers Residence (2361 W. 20th St.) cannot be reached by car without crossing Cimarron--where today road work took place. Cars were ticketed and towed (isn't towing penalty enough?), barriers and road closure signs were erected, and my brokers open....well it didn't exactly set attendance marks.

A few found their way. One spirited agent/buyer combo vaulted the barriers, "it'll weed out the meek," they offered encouragingly. Another party parked three blocks away, "not only is the street closed," he confirmed, "but there's a movie shooting on the next block and there's no parking there either."
"Great", I muttered, "it was hard enough working against dour sentiment and mother nature, now I've got to take on guys in reflective vests, lots of guys in reflective vests."

*the new F-word: foreclosure!

New and Reduced

Hilariously in a recent real estate e-flyer, a day old listing was touted as "reduced". Reduced, right out of the shute! Canny marketing acumen? Perhaps. Kooky salesperson typo? Possibly. Everybody loves a bargain? Surely. In what has become a comic buyer/seller dance. Listings debut, undergo a three week hazing, reduce, and then sell. Buyers, looking to tear the initial price down, feel triumphant. Sellers, having priced for a subsequent reduction, feel triumphant.

But what a way to get around that, newly listed properties heralded as reduced. I've decided therefore that my next listing will be promoted as "Twice Reduced!" Or "Savagely Reduced!" "Ruthessly Reduced!" Reductio ad absurdum?

Speaking of reduced, the duplex at 1114 W. 40th Pl. in underrated West Park, USC close, has reduced to $549K and is open today from 11: 30 am - 2 pm. My associate Suzie Henderson will be there to meet and greet.


Elsewhere, I'm holding my second brokers open at 2361 W. 20th St. from 11 am - 2:30 pm. If you're cruising, stop in.

Retrofit Items Part 1

Nearly all residential properties sold in the City of Los Angeles must show proof of installation of four "retrofit" items.

Hot water heater tanks must be braced and strapped.

A shut-off valve must be attached to the gas meter which operates during a seismic event.

Smoke detectors must be installed in and outside bedrooms. They needn't be hardwired, the battery powered stick-up kind is permitted.

The toilets must flush with 1.6 gallons or less (though some historical properties/toilets are exempt from this requirement).

The yellow pages are filled with retrofit companies who certify toilets, bolster hot water heaters, and install the "little fireman" valve. Other cities have different/greater/lesser requirements. In the city of Berkeley, hot water heaters must also have a R-12 insulation wrap, and attics must have insulation of R-30 or greater.

Not that I'm a regulation junkie, but here's four other items I might endorse if energy savings and safety were truly the retrofit goals (for Los Angeles and environs).

1. Limitations on lawn size (already adopted by some municipalities) and sprinkler volume. What sense does it make to chuck three-gallon flush toilets and install low-flow showerheads, when boss man keeps his quarter-acre backyard looking like the greens at Augusta? Or when his sprinklers bathe the driveway and sidewalk every night?

2. A damper requirement on chimneys. Insulation and weather-stripping are commendable, but if your chimney is open, you're losing that which you gained.

3. Security bar releases. Currently, only legal bedrooms are required (in case of fire) to have an unlocking mechanism. For real? We've got households with people sleeping in dens, breakfast rooms, and on staircase landings. All window bars need to have releases, and they need to be simple enough for a child to operate.

4. Trees, trees, trees. I know I'm a tree junkie, but here's the mantra: trees and vegetation cool the air by providing shade and through evapotranspiration (the evaporation of water from leaves). According to the U.S. E.P.A., shaded walls may be 9 to 36 degrees fahrenheit cooler than the peak surface temperatures of unshaded walls. Since we seem intent on stuffing the desert Southwest with an ineradicable wave of development, this is sort of a big deal. I won't even go into the powerplant water usage or emissions thing...

Tuesday's Caravan

We're supposedly swimming in inventory, thousands of foreclosure notices and re-setting mortgages have combined to create listings by the bushel. Properties are being hocked on street corners like bean pies, hot house roses, or illegal fireworks.

On Monday I leafed through the MLS open house guide, hoping to set a Tuesday caravan itinerary, maybe split between a couple of clients and numerous new and repeat listings. Nothing. In all of area 16, my epicenter, not a solitary open in the guide, and only one single-family open in area 17 (Mid-Wilshire). In area 19 (Beverly Center, Miracle Mile), nothing was featured under $1,139,000.

I'm not claiming all is good in the real estate world, ignoring the grey financial markets, and the sub-prime submergence, down the rabbit hole, into the looking glass, and off to see the wizard. Still, I have to guffaw when people bleat-on about inventory and scads of sales signs. Despite the media broad-brush there are entire neighborhoods without a single offering of undisputed quality or value, others with strong sales and rising prices. (Insert my usual disclaimer here: I have no idea what's on the bluffs or by the bay.)

"Buyer's strike" or no buyer's strike, there just isn't that much good available, even if that which is good is taking a little longer, in some instances, to sell. Maybe that's just my conservatism. Maybe I'm on strike too.

Out of Town Newspapers

People send me things, sometimes out-of-town newspapers (real estate sections). Most are pretty informative and pleasingly devoid of the latest on Frankie Muniz's remodel, or gossip from the Malibu colony.

This paper features an article on real estate counselling for couples. He wants a farm house, she wants a chic highrise, whatever will they do?

My sister-in-law sends me the Milwaukee Herald-Tribune, obsessed with green building and spiraling assessments. One such article interviewed a woman who had the misfortune of new neighbors from California. (Presumably the fiscally irresponsible Californians were to blame for her adjusted taxes.)

I used to look forward to reading the sports pages when I traveled, now it's either the local section or the real estate supplement, and little else. Sometimes this myopia causes me to lose touch.
"Did you hear the big news about Scooter Libby," I'm asked.
"No", I might respond searchingly, "but the Canal Fulton feed mill collapsed...outside Akron....Ohio."

Inventory Part 2/The Pre-Foreclosure Market

Are foreclosures really driving the market? In the first quarter of 2007, mortgage lenders sent out 46,760 default notices to California homeowners--the highest level in a decade--according to Data-Quick Information Systems. Many default notices however, fail to become actual foreclosures, as homeowners (or borrowers) have up to three months to rectify matters.

More generally, it's the pre-foreclosure market that seems to be driving things, as borrowers scramble, mortgage consultants re-assess, investors ready, and real estate salespeople make like ambulance chasers.

Realty Trac and other pre-foreclosure tracking sites have become the new real estate porn (displacing Zillow). But does foreclosure or pre-foreclosure equal bargain? Not necessarily, as most properties are sold at market rates, even if the unpaid loan amount is less. The public auction circuit seems to offer the best bargains, but they're a high-wire act, and properties are often sold without contingencies or opportunities to research the title and condition.

In the end it doesn't matter, the Chicken Littles proclaim, inventory becomes bloated, the basis for all value is supply and demand, and prices decline. Will prices decline more, perhaps as rates rise? Probably, and if you plan on buying houses for cash, the waiting might be good. But for the rest of us mortals, nervously watching the bond market, sideline time has its own set of costs.

Repping

Recently I was asked if I work with buyers. The short answer is, I do. What I prefer, is a mix of buyers and sellers. Listings are indispensable, because they often lead to buyers, buyers are indispensable because they often lead to listings. I like both.

All the deals are special--really. Because the people are special. I've never disliked a client. If I dislike someone, or vice versa, it doesn't get that far. But the transactions I feel best about, the ones that make me smile in the dead of night, are the improbable negotiations that saved something imperiled. The historic house, stuck in a market niche--or neighborhood, in which continued disintegration or even loss was probable. The houses for whom the next buyer would make the difference, because another ten years of neglect, likely meant the house wasn't recoverable, that the market economics would never incentivize its restoration.

That isn't every transaction, mostly because it doesn't suit every buyer, and also because those opportunities aren't always available.

I get attached to some of the houses. I like coming to them, imagining life within them, picking out their nuances, exhorting their strenghts. When I drive past a house I was involved with, I feel a connection. I usually slow down, examining them like some drivers do their appearances in a vanity mirror, usually with great satisfaction.

I have the clients to thank for that.

Real Estate Agents, Go Figure

In a new twist, some buyers agents are now installing their own post-sale signs. That's right, after the listing agent removes his/her sign, the buyer's agent installs their own, complete with a prominent rider that reads SOLD.


(Remember this beaut, and my dark green signage?)






Self-promotion, I concede, is a necessary evil of the practice, heck I do my own chest-beating now and again, not to mention RecenteringElPueblo; still, this tactic put me a bit off-balance, and it enraged my seller, "the neighbors'll think you lost the listing, and this other person represented me in the sale."
"They might", I answered, considering appearances.
"This other agent has absolutely no presence in this neighborhood", my seller continued, "she's a carpet bagger."
"It is a bit misleading," I agreed, "but most of your neighbors know me."
"All the more reason why", the seller persisted.

Ultimately, my seller called the other agent's office manager, complained, and the sign was removed.

Real Estate Agents: Friends or Foes?

Do I count real estate salespersons among my closest friends? No, not really, though I do enjoy close rapport with my boss/broker David Raposa. I make a concerted effort to maintain amicable relations with other agents however; and, often I've used personal capital to give my clients an edge in negotiations. After all, an agent's fiduciary duty to a client is paramount.

It isn't productive to alienate other real estate professionals, because you never know who'll represent the right deal-making property or clientele. Still, in some of my circles, real estate rivalries do exist and bad relations between agents are common.

Even with my peacenik posture, there are a couple of agents I'd rather not enter into a/nother transaction with. Neither fortunately, are currently active in my sphere. One, in our first go-around, failed to disclose known material, value-affecting facts (though I suspect incompetence, not malice). The other, with whom I came closest to real antagonism, was simply unbalanced.

Some agents can be positively unhelpful too. One long time area broker, remains nearly silent whilst exhibiting or viewing properties, and responds to most questions with a shrug.
Another agent, balked at showing his University Hills listing by appointment. "If I have to drive there," he explained, "it's an hour out of my day."

Some agents skip showings altogether, recruiting junior staff to sit open houses, and deploying lock boxes (or electronic key boxes) to allow others entry.

If I can't service a listing personally, I don't take it, and I never use lock boxes.

Inventory Part One

Sunday, I "previewed" a property in Harvard Heights, a two-story Craftsman North of Venice, not yet included in the multiple listing service, but coming soon.

The listing agent, from Huntington Park, vaguely aware of the idiosyncracies of the West Adams market, courted my opinion.

"It's grossly over-priced", I offered finally without the appropriate restraint.
"But there's comps", she countered.
"Yes", I responded, "I know. I'm responsible for some of the comps. Would you like me to tell you about those other properties?"

After some back-and-forth she concluded, "the sellers want to try it at this price. Anyone can make an offer. I'd love to do a deal with you."

Fat chance, I thought, exiting. How do I convince buyers to look and write offers on a property two hundred thousand dollars over market? Another garbage listing.

Inventory is growing, so says the media, citing the foreclosure rate, the pending home sales index, and whatever Data Quick measure they have at the ready.

I'm not seeing it in "my neighborhoods".

There's a little more inventory perhaps at the southern edge of my beat, along the Slauson rim, where a few foreclosures, and bank short sales have popped up. Mostly just garbage listings. Every neighborhood has two or three garbage listings, astronomically priced, interminably active.

Even the bullest bull market has garbage too, or false inventory. Three years ago however, if an overpriced property stayed active long enough, the market might rise to meet it. Now, the garbage sits and accumulates.

To be continued.....

When the Price Isn't the Price

Home sales data may be like sports statistics: the numbers don't lie, but they don't tell the truth either.

I've written about this before, with regard to Zillow (and recorded sales). Consider, did the seller offer credits or make repairs? Did the seller pay the buyer's escrow costs? What about the allocation of other costs? Termite? Retrofit items?

Escrow length is important to many sellers and buyers. Did the seller take less money in order to procure a longer or shorter escrow length? Did a lower price produce a quicker sale and reduce carrying costs? Was personal property included? Appliances?

Income property has even more variables. Were the units delivered vacant or occupied? If occupied, for how long, how many, and at what rental amount?

Instead, all most of us have access to is a number, a single sales figure. A more interesting number, at least for some, would be: Estimated Seller's Proceeds. Seller's Expenses, might be another useful measure. It still wouldn't tell the whole story, but at least we'd get past the foreword.

When the Fun Starts

I've a loan document signing scheduled this week, one of the final steps in a purchase transaction. Typically, a home buyer signs the loan "docs" in the company of an escrow agent or notary.

I attend these signings, though it isn't customary for real estate agents to do so, to support my buyers. It also helps me assess their lender/mortgage broker. Did the lender provide that which was agreed? Were they available by phone during the process?

Generally, the buyer knows the details of their purchase loan better than I; still, sometimes I can help decipher some unusual loan broker-ese, or make sense of the cost breakdowns.

For a few buyers, it's an unpleasant occasion, unable to scrutinize all there is to sign. Some buyers feel as if they're "signing their lives away", cornered by an inhospitable financial superstructure. Other buyers sign without regard, happy to be nearing the deal's close.

After the signing, the documents are returned to the lender, where they're reviewed for one to two days, before "funding" takes place. After the loan funds, the change in ownership or "title" can be recorded, usually the following day.

Most contracts allow the buyer to take occupancy at 5 pm on the date of "the close". That's when they get the keys. That's when the fun starts.

Artist's Community

Recently I received an e-flyer, heralding a Nature Lover's Home in an Artist's Community. The cost? Nearly 2 million dollars.

Preposterous but shrewd, an agent that recognizes the value of the indefinite catch phrase, artist community. Who knows, maybe Cy Twombley is looking for new digs?

I'm asked often about the next arts community. Of course, LA is teeming with artists and even those that aren't, think they are--and why shouldn't they?! The city has artists everywhere. Everybody's doing something artistic.

Incidentally, I'm in the Real Estate Arts.

The SOHO Mythology

That in some discounted, under-served--though bakery/bookstore rich--part of the city, recent graduates of hoity-toity liberal arts colleges (often without visible means of support) are slumming with other "alternative types" in high-ceiling buildings with steel case windows. Where dainty, pacifist, water-colorists and bearded, Mao-suited ceramicists are communing with formerly delinquent youth anesthetized by the neo-hippie ethos and creative fervor, promising future gentrification and a killer return on the buck!

When asked about such a place I generally mutter something about 7th Street in San Pedro or the Lincoln Heights/Chinatown/Brewery nexus. But the average consumer can't handle the real truth: along the railroad tracks in Wilmington, or the Gage right-of-way, next to the all-night truck wash in Vernon, behind a methodone clinic in Compton. In East St. Louis.

Just once, I'd like a prospective buyer to ask about the next industrialist's community, law enforcement enclave, or accountant's retreat.

Youngstown, Anyone?

According to the U.S. Census Bureau, the U.S. population reached a landmark 300 million sometime around 7:46 am Eastern time on October 18th (2006). Amongst so-called industrialized nations, the U.S. is a bit the anomaly, still recording significant population growth. The U.S. Census Bureau claims that an American is born every 7 seconds, one dies every 13 seconds, and the nation gains an immigrant from abroad every 31 seconds.

How does this seldom-checked growth relate to the housing market? Here's some additional numbers from the U.S. Census Bureau:



In 1915, when the U.S. population hit 100 million, the home-ownership rate was 45.9%, and the average price of a new home was $3,200. In 1967, when the U.S. population reached 200 million, homeownership had increased to 63.6%, whilst the average new house cost $24,600. In 2006, home ownership is higher yet again at 68.9% (though perhaps because of the significant recent appreciation in urban markets, the rate is in slight decline since 2003). The average cost of new-home in 2006? $290,600! That's a percentage change (since 1915) of 8,981! Real inflation, my backside!

(The home ownership rate is computed by dividing the number of owner-occupant housing units by the number of occupied housing units or households.)



Thank goodness consumers aren't limited only to new homes. Still, one wonders why ("affordable") housing advocates hesitate to rope population growth into the dialogue. (Am I "wondering", or am I asking?)

On that note, consider five metro markets that lost value in the 2005 boom year. (Statistics given are from 2005 year-ending.)

Buffalo-Niagara Falls: median home price $99K, percentage change -0.7%

Cleveland-Elyria-Mentor: median home price $138.9K, percentage change -5.2%

Detroit-Warren-Livonia: median home price $134.5K, percentage change -8.0%

Rockford: median home price: $128.7K, percentage change -5.1%

Youngstown-Warren-Boardman: $85.6K, percentage change -5.5%


Guess what all five metro areas have in common? They all lost population.

Zillow

The founders of Expedia.com, an online travel service, have drawn notice with Zillow.com, which offers free real estate valuations. Zillow may have spawned real estate voyeurism, as thousands spy the estimated value(s) of their own home, neighbors, and others. The information is easy to access, gaily presented, and sometimes married with aerial photographs.

Of course, the data is flawed. It incorporates non-market transactions, such as "buddy" sales between family members, and other closings that may not reflect open-market consideration. Real estate's basic measures, like baseball averages, are largely flawed, presumptions that come closest to working in condominium complexes, trailer parks, and planned unit communities.



Still, Zillow's better than a previous model which sought to auction homes online (homeauction-line.com).

Which reminds me, can I interest you in some prime Florida swamp land?

Strike 2

First I booted a listing, now possible clients, buyers as well.

Our initial exchange (they were a couple that came referred) went something like this:

Them: "We're not sure we're willing to live in West Adams."

Me: "That's fine, though technically at your target price range, it's unlikely you could afford West Adams proper, but I know you mean the larger South Los Angeles area."

"Nor are we willing to live East of downtown."

"And how do you view the communities along the Arroyo."

"Those are East of downtown."

"Yes, just checking. What about just West of downtown, in places like Echo Park and Historic Filipinotown?"

"Aren't there gangs there?"



"There likely are, in a lot of neighborhoods wherein young people have real or imagined problems, they form gangs."

"We can't live anywhere that has gangs."

"There are gangs across most of Los Angeles. But I understand, you need to feel comfortable, secure."

"Exactly."

"I hope as we explore these places, we may find some pockets, some sections, in which you think you could feel secure.

"We're concerned about safety."

"Naturally. Returning briefly to geography...."

"We're thinking about Pasadena, though not North of the 134/210 freeways."

"Okay [long pause]. You also said 'you're not sure you're willing to live in West Adams', under what circumstances might you be willing to consider living in West Adams?"



"It's really just a feel thing".

"Could we start by driving around, trying to identify some qualities that are appealing."

"That'd be great, particularly since we've never been there."

Me: "Never been....where?"

Them: "West Adams."

Me: "[Long pause] On second thought, maybe we shouldn't--you know there are gangs there."

I'm leaving money behind at the table. Leaving money behind at the table. Money behind at the table.....

Escrow & Ethics

It seems whenever I deal with big brokerage agents, an Affiliated Business Disclosure is incorporated. What's that? A form which usually indicates the brokerage owns a piece of the escrow and/or title company.

I've never known there to be outright kickbacks, favoritism, or hanky-panky, still I don't like it. It has the appearance of impropriety. Escrow is supposed to be a neutral, third-party. Not an affiliated interest with a spoon-fed referral pipeline.

I mean what if the appraisers worked for the agents, then there'd never be a failed appraisal ever! What if the home inspectors were employed by the listing agents, likely the reports would be softened. I don't mean to suggest an inherent conflict, it's just--they're holding the money!



Fortunately, I have no office mandate. I use an escrow with experienced people, and close to my residence, so I can deliver documents, do things face-to-face, or drop-in on short notice.

I should probably think more about things like vertical integration, maybe I'd be a better American

Look What the Mailman Dragged In

Here's a postcard, so littered with text, the object d'commerce is obscured. Note the realtor degrees: GRI, CRS. Does anyone know what these are?

You'd think a guy with all those diplomas, would've taken a class on mailers.



This letter was issued in the name of a very successful agent. No fooling.

Now, I have a lot of admiration for people who can prosper in this industry without English proficiency. My Spanish, for example, is limited and has been at times insufficient. I recognize this, and still, I have a Spanish language mailer. How so? I hired a proof reader, a native speaker. Because translation is rarely literal.

The Controversial Ad & Tie

There's razzing in every line of work. There's also status games, pretense, smiling faces, and player haters.

Oh, did I mention by the way I'm in real estate.

It wasn't long after Monday's Open House Directory drop-off, that my industry pals started in.



"Mr. Real Estate agent with the big time color ad, what're you Mr. Valerie Fitzgerald, the Adam Janeiro Collection, or the Bizzy Bald?!"

"It's a million plus dollar property", I retorted, "I need broader exposure in response to its price point".

Probably not helping matters, I threw in a little Joseph Abboud for the Thursday Broker's Open. I withheld the neckware, though I brought it along for prop effect.

"Wow, a matching jacket and pants. What's next Janeiro," the uptown slickies resumed, "a washing for your dusty pickup?"

"I'm waiting till October," I responded.

"Why," they asked, "what happens then?"

"Rain," I stated, "rain".

Mail Bag Part One

These come courtesy of my incensed neighbors. You'd be incensed too if your neighborhood was being targeted by slumlords. Yours is as well? Never mind.

Display number one:


Check out the dog! Faintskin's got himself a vaguely ethnic honey and a purebred. Now I love dogs, I'm a shepherd man myself, but I've had rottis and all kinds of mixes come through my yard. Still, I just want to sock that dog in the nose.





Display number two:



Here's a pitch from some vulgarian bunch with a quasi-governmental moniker. Could've fooled me.




"Cash offer on your table within 48 hours."
Cash offer on your table.

I called. Of course I did, my wife was at work.

"Can I have cash on my table," I asked.

"Can I have cash on my dresser," I persisted.


"Can I have cash on my beautiful built-in buffet that you'll likely tear out?"

The call ended. I didn't get the cash but I've still got my people skills.

The Listing That Got Away

People gathered and I felt responsible to entertain. "A story", I promised, "The Listing That Got Away."

Three days after 29th Place closed/sold, I received a call from a nearby resident who wished to interview me for the purposes of possible representation (dude wanted to sell his house). This homeowner had followed recent sales in the area, noted the preponderance of City Living Realty deals, and some of the higher sales figures attached.




We set a time to meet, and I began to pull materials together, including a permit/public records search on his home.

The owner had done a lot of substantial systems work, it's true: a new foundation, driveway, and garage. The house had been re-wired and re-plumbed. The kitchen had been remodeled, acceptably, with granite countertops that might appeal to some, and a slender island.

He figured his house should command top dollar. I saw it a little differently. "It should certainly be priced at the higher end", I opined, "you've done wonderful work, and there's a lot of positives. There aren't though--and this isn't a knock on you or your house--truly special architectural or finished detail features. Twenty-ninth place", I continued, "had an unique decorative fireplace, a bevy of stained glass, and an unusually deep wrap-around porch. Thirty-first street", I offered, describing a City Living sale of earlier this year, "featured a handful of period light fixtures, a uncommonly decorative dining room buffet, and a rich succession of moldings."




It was all about price, I could tell.


"Any agent can shoot off their big mouth", I offered, "promise the moon, and then badger you into a series of price reductions later while your property wilts on the market. I'd rather, whilst remaining ambitious, consider a price that's deliverable and is supported by recent market performance and context."

It was all about price, I could tell.

"I'd also rather discuss how I'm going to market the property, and the different set of services I provide."

It was all about--ah forget it. I didn't get the listing. It's with some "out of area" tool, offering a miserly commission, at an astronomical price. It's better really, 'cause I'm still idealistic enough to think all my listings should offer either strong features or relative value.

Code Words

The cover story of this week's (Aug 25-31) LA Weekly is entitled, Welcome to Gentrification City. Author David Zanhiser considers the "perils and pleasures of gentrification", and recent changes in neighborhoods like Echo Park and Manhattan Beach. South Los Angeles back-ends the article. I was interviewed for the story, and several of my unremarkable mutterings made it to print.

I applaud David's effort, though I differed with his description of my clientele: "...the multi-ethnic, largely well-heeled..." Most of my clients rather, are middle-class, though capable of encumbering themselves with lolloping levels of debt.




Moreover, gentrification's a loaded word (David knows this). It's code for "Whitey-fication".

It's not the only code word or phrase one encounters in real estate dealings.


"It's too far South". Code for: I'm unwilling to live in a neighborhood with so many shvartzes.

"Enough parking for five cars." Translation: This neighborhood'll tolerate inappropriate levels of occupancy.

"Seller will pay closing costs", is nearly the same as: fetch this bone, cash-strapped immigrantes.

"Large enough for your growing family", translates as: suitable for human warehousing.

"But it's the valley" means "but it's the valley". Errr....

The blog is back

I've been away for a while. Got real busy. Bounded through escrow on 29th Place, ate lunch, represented buyers on three different purchase deals, interviewed for a listing, arranged a lease. I'm still chasing "it" with a couple buyers; and, at long last 2042 S. Oxford Avenue is ready for market.

When you're away that long in creeps doubt: "Can I blog the way I used to? Why would anyone read what I have to write? Do I still matter?"



Then the mail is delivered and in it, a "Just Sold" post card.

Now two-thirds of my mail is real estate related: offers to refinance, recruitment letters, escrow missives, vendor promotions, slum lord solicitations (oh, we'll get to those later), etc, etc.

But this just chaps my hide. "Neighbors take notice, newbies are coming in, and they spent ten times what you paid in '72. Mos' def' they own cool electronics, original art, and check out their secret wall safe in the den." Ok, so it's not that bad, but consider again the price line: "Offered at". Offered at? How about, 'sold for'?



Oooops, in this case it sold for thirty-five grand less. Can't let that get in the way of a slick marketing come-on (particularly when it comes at the expense of somebody else's buyer, not your seller).

My friends at the big brokerages think I'm uptight. "That information can be had on public records web-sites", they counter, "furthermore, it generates business."

"You could probably generate as much business", I retort, "if you attached a giant clown head festooned with contact info to the roof of your Lexus sedan. Furthermore, you'll never do business with the buyer your Just Sold Card outed."

"You work your side of the street Janeiro", they snarl.

"Fine", I answer, "just stay out of Pico-Union and Boyle Heights."

Market Update

We may have to wait a little longer for the market to capsize.

Five straight months of declining sales volume (Jan - May), with corresponding gains in inventory, whetted concerns about a market plateau.

Then came June, and sales volume increased. Some credited seasonality, rate stability, the diminishing patience of market doom-and-gloomers.

The early word on July is the same: market activity up, diminishing levels of inventory.



Oh yeah, the alligator has this to say:

"Funny nobody talks about a gasoline bubble, even though petrol prices have undergone sudden, wild price shifts. Is anyone taking public transit just for a few weeks until pump prices 'correct'? Holding off on a RAV4 purchase until gas prices 'plateau'? Most consumers seem resigned to this higher valuation, as justified by demand and scarcity. Demand and scarcity, scarcity and demand, hhhhmmmmmm...."

Bus Bench Ad

Coming soon to Adam Janeiro and City Living Realty: bus bench advertising! Bearing my likeness (with a filled-in hairline), and business-inducing mantras like: "Everything I touch turns to...Sold!" Or, "List with me today. Tomorrow--start packing!"

Yes siree, I'm going big-time. First bus benches. Then bus enclosures!

No matter the average bus rider can scarcely afford a Westside apartment. It's a rite of the profession. It conveys status. Shall I pose with my cell phone flipped open? Or studying my watch? Dressed in business casual, or in a dashiki? Maybe in a poncho. After all I'm Latin and I covet a piece of the "ethnic market".

Coming soon to Adam Janeiro and City Living Realty: bus bench advertising! Bearing my poncho-clad likeness, with English and Kangi script, posed with Armenian flag, Rolex watch, new model Mercedes, and Ethiopian female assistant toting gleaming new PDA.

I'll be choking in cash! Ok, really I'm just hoping to cover my property tax bill.

One Way to Loosen this Market Up

What isn't about supply and demand? In the case of a little thing like shelter, people want to own, only there's very little to buy; ergo, it sets you back a few semolians.

There's no drawbridge to pull up either, "Ok, enough folks in Southern California, would the rest of youse please go repopulate a rust belt city?"

What are we to do, torpedo our local economy? Start ugly online rumors about the Golden State? Taunt the tectonic gods? Nah, we need to create more housing inventory, and I'm not one of these go-go development types, willing to put the Mojave desert under blacktop.

But how else to do it? Here's an idea:

Liberalize commercial lending. Sure we've got these mixed-use ordinances, and there is protocol to convert commercial to residential. Only thing is, you've got to qualify for a commercial loan first--easier said than done. Buyers that would qualify for hefty residential purchase loans are oftentimes ineligible for commercial loans altogether. Most commercial deals require a down payment starting at 30% (which given the cost of things now days, means you're walking around with a lot of jack. Which begs the Q: If you've got that kind of jack why bid on a dumpy nail salon?) Did I mention that commercial closing costs are higher as well? Let's just shed the mid-century underwriting model.

In Los Angeles there are commercial corridors that look like backgrounds in "Fort Apache The Bronx", sometimes laced through otherwise resplendent residential neighborhoods. Would I mind, if disused commercial got swallowed up by single hipsters and artist live/work types? Would I mind if important neighborhood services were eclipsed by surging residential demand? What, you mean a little competition for the 99 cent stores, the storefront churches, and the recycling yards? Puh-leeeze!

If that were to happen maybe we'd get true mixed-use impetus, developers would embrace the model, freed from financial disincentives and fities ideology, crusty grass rooters would recognize its balanced, restorative contribution; moreover, the added density might entice better services to underserved areas.

Every new commercial project in Los Angeles should have a residential component.
We can't exhaust increasingly limited infill possibilities with retail-only projects like, for example, Hollywood & Highland. Consider how desirable condos might've been there? With ground floor retail, sitting atop a red line station, in a flourishing entertainment district, with immediate proximity to the 101 freeway? (This isn't to suggest that developers are wholly responsible for the state of things; in part, that which they do is a reaction to systemic impediments, building requirements, and leadership forces.)

Still, it'd be pretty cool to call mom and say, "I have a view, it's of an elephant."

What's Really Going On

There's a lot of noise out there.


A lot of competing viewpoints, optimists and pessimists, critics of the lending industry, champions of the real estate industry, greedy speculators, the disenchanted.

Would-be buyers are paralyzed. The market they're told, is going down, is going to go down, might already be down. Last year they were told: it's going up, it's still going up. Many buyers have lost a sense of urgency, flummoxed by these rivalrous declarations.

I can't tell you what's going to happen tomorrow, but I can tell you this: the market is still going up, steeply in some places. Ask anyone in the Kinney Heights/Western Heights grapevine, where a million dollar price tag is still the exception but no longer unheard of. In the Jefferson Park neighborhood, where the $600K barrier was shattered and is now ubiquitous. Talk to the diehards in Boyle Heights, where Four-fifty used to deliver something special.

So we're in a slow groove? Perhaps, but does it matter? The numbers are so friggin' huge, like the snowball that becomes an avalanche. Five percent appreciation on a $600,000.00 house is 30 grand! Seven percent is 42 grand!

The idea that you can time a real estate purchase is likely fallacious. Who really knows when they're buying at the bottom, or buying at the top? When rates are at their lowest? Or at their highest? Statistically speaking, nearly everyone buys or sells somewhere in between.

Ultimately, every client has a particular and unique circumstance. My job is to help clients figure out what THEY want, absent from industry jangle, and pop media babble. Does it make more sense to spend $18,000/year on rent, or $22,000/year on a mortgage payment with a tax write off? Is paying $400,000 at 6.25% equivalent to $370,000 at 7.25%? What does it mean to any one of them to own a home? Investment? Short term? Long term? Goal fulfillment? Artistic canvas? Housing payment stabilization? The answers are different for each. If I can't know all the answers, I'll start by trying to know most of the questions.

Waiting for the Crash

Yep, those are my clients--the ones waiting for the crash. They've read the Los Angeles Times, the on-line pundits, ignored the demographics, and noted the ominous financial trends. They've been waiting since 2004 and it's a matter of principle now, of moral superiority. They will be rewarded by waiting, and virtue will be theirs, or so promises their financial faith. In the meantime, the market sprints off, like Greyhounds chasing a mechanical bunny.

It's the biggest question really. Is Los Angeles in a real estate bubble, and will it burst? I've got more to say regarding this than I can fit in a single submission, or write in a single sitting, but let's just keeping pecking away.

To those that are concerned with a loss in value, what're they doing now? About shelter I mean, sleeping along the embankment? In a pup-tent by the river? In a comfy tree house? Presumably they're paying rent. Hopefully it's cheap rent, but even $800 a month is nearly ten grand a year. Isn't that a loss?

Buy a house because you want to. Because it's a step forward. Because it's a way to optimize your environment--whatever. Since when did home buying become mere speculation?

Do I like the housing market? I like being a homeowner. I like working on my bungalow, and I know that I'm going to be in it long enough to ride out any market rough spots.

100% Financing

There's much concern about the possible housing market destabilization of ARMS (adjustible rate mortgages), interest rate hikes, and the equity re-fi cycle heading south. While I don't want to sound pollyanna-ish, it isn't just the belt-tighteners resorting to non-fixed rate and interest-only financing, and isn't the case that the market'll be capsized solely by a few non-traditional loan products.

Mac-daddy flippers and make good home restorers, amongst others, also seek short-term, low re-pay periods. Either to minimize carrying costs, or to keep cash free for incoming repairs and improvements. These aren't always the loan products of last resort, for the financially flaccid. The popularity of these products were in part borne by housing's bear market: the best investments are often defined by the highest return with the least expenditure.

As rates creep up, and borrower's rates re-set, I'm sure they'll be overextended home owners (or 'note payers') bailing out. Foreclosures, a favored gauge, are "up"; and yet, they had nowhere to go but up, having hit historic lows. Their current levels account for scarcely more than a blip on the inventory radar.

Is the worst ahead? It likely is. After all, we've passed through a period in the housing market when there was "no worst", no downside, and no risk. Homeowners, to a man, made a lot of money on paper in very little time. Those gains may now become less: less frequent and less lucrative, and interrupted by periods of loss.

Should our money go instead into baseball cards or Cabbage Patch dolls? Not necessarily, but buyers may need to think about longer carrying periods, not just six-month springboards; and, investors may have to earn their heavy lettuce by doing more than just paint touch-ups and Pergo.

The Third House

Some buyers want their first house to be their third house. Or they want their first house to be their parents' house. Naturally they don't remember their parents first house, a cracker box along the shipping canal, with the stoned-up well, and the flypaper strips in the kitchen. It's the parents third or fourth residence, the one buyers spent their teen-years in, that they remember.

It's hard to get where you want in one step. People don't usually secure their dream job fresh out of college. Their first little league contest isn't their most masterful performance. They don't marry their first date.

This isn't about "settling". There's always a range of choices, some of which will be better than others. The challenge is to marry personal needs with value. A buyer's first purchase needn't be a blood bond, but a start.

The Anxiety Dream

In the dream, the whale's mouth, ringed with dagger-sharp teeth, is closing; and, I must pass my clients through before it seals shut. In one version of the nightmare, I look along the roof of the creatures' mouth, and just above the palatoglossal arch, appear faintly enscribed dollar figures: $800,000....$900,000, and fading to black near the uvula $1,000,000.00.

Maybe the market will go through a downward pricing readjustment, I'll write more about that soon. Regardless, I think a number of eras have come to a close: cheap petrol and cheap money (i.e., low interest rates, ergo, cheap housing). Cheap housing is gone in Los Angeles. The early '90's Southern California real estate crash reached nadir in 1996. That's ten years ago.

Am I happy about making these big commissions? What big commissions? You think I'm cruise controlling through a series of dual-agency deals in Rolling Hills Estates? Hah, most of the time I'm bear-wrestling some free-for-all in City Terrace, cutting up 2% with my broker. And that's alright, provided I can get another buyer past the teeth.

If I blink my eyes, the sign reads NO BUYERS, strangled by an unrelenting evergreen.

Condoland

During the San Fernando Valley's secession bid (from the city of Los Angeles) there were regular re-naming contests. The names "Valley City", "Rancho San Fernando", "Mission San Fernando", and "Camelot" were all ballot choices, while "Twenty-nine Malls" was a memorable, comic submission. Here's my own comic entry: "Condoland", after the miles and miles of low rise condominium buildings which line key arterials like Sherman Way, Nordhoff, and Cahuenga. But why I am writing about or even interested in condominium buildings in Valley Glen or Lake Balboa? Because I think it's where many entry buyers are going next (if not already)--not just to the Valley--but to condos. With the median home price in Los Angeles approaching fifty-six gazillion dollars, buyers are increasingly forced to explore (hopefully facilitated by their, ahem, agents) more "affordable" options (among them, condos with a median cost closer to--fifty-four gazillion dollars).

According to information from the California Builder's Industry Association (CBIA), based on current building permit counts, single family starts are down in the Los Angeles area while multi-family starts are up. The most active area actually isn't in the S.F. Valley--it's in downtown Los Angeles where new condo starts and conversions are sprouting like....they once sprouted in the San Fernando Valley! Will all this activity be enough to quench California's home-ownership thirst? California's ownership rate is the nation's second-lowest at 57%, 13% below the national average. Will all this activity be enough to facilitate homeownership for my embattled clients? Will downtown get a Trader Joes? Will the Clippers win a play-off series? Will the San Fernando Valley cease being the butt of jokes? We'll have to stay tuned.

It's Raining Again--Quick Let's Inspect!

I love to see properties and conduct inspections in the rain. It isn't about romance or peeling out on slick driveways, it's about the opportunity to hunt for water--the destroyer of homes. That's right, when better to look for signs of water infiltration, to check around windows, in basements, attics, and crawl spaces. Grading and drainage can even be noted. Is the decomposed granite walk holding up? Is that a blotch on the dining room ceiling? Is the water pooling next to the South side? I want to know!

The climate here, in many respects, is so forgiving that people overlook the weather hardiness of their homes. Who cares about a void in the siding, or if double-hung sashes rattle a bit in the wind, it ain't exactly artic air spilling in. True enough, but if it's water penetrating a poorly knit-together roof line, or gaining entry through an attic fan, or flowing beneath a masonry foundation--there could be expensive consequences.

I know there's a lot of agents who don't like to get their Prada slip-ons dirty, who spend look-see time chatting about flat-screen placement and dried flower arrangements, who prefer the interior of their dark, new model Mercedes with the light-up visor vanity, to an attic covered in fiberglass batts or a damp cellar with a leaky water heater. That ain't me. I'm out there to look at houses and look at 'em I do.

Don't get me a wrong, I'm not down on "fixers". I bought a heavy fixer; and, I've sold a lot of fixers from "heavy" to "light". If you're a buyer looking to get into the bottom middle of this market, you'll likely acquire a property with condition issues. My motto is: the buyer deserves to know. If there's something wrong with a system, if there's structural compromise, the buyer deserves to know. Hey, nobody's got X-ray vision, nobody can see into walls, and you can't necessarily uncover all that's wrong with a property--but you try to, and the agent's eyes should be part of that effort.

Real Estate Snipers

Frequently I'm asked by clients whether they can bring a friend or family members to see a house they're considering for purchase; often, during the escrow period. To which I always respond in the affirmative. The support and approval of friends and family is an important thing, sometimes a necessary thing--particularly when la suegra's footing the closing costs. Everybody's going to spend time in the new house right?

Still, there are those friends that act as snipers. Mostly they fit into three categories.

A) The DINC's: double income, no clue. They've got ample means of support, a swank hillside pad, and a frayed connection with the real estate realities of common folk. They think themselves well-meaning: they want good for their friends. Only their idea of good comes in a zip code or a price range that just isn't accessible without a bank heist.

B) Retired hound: a recent home buyer, only not too recent, who's idea of the market is frozen in time. They're sure your client can do better, if only they look longer. After all, their Venice casita was only $415K--in year 2001!

C)The BB's: better than their britches. Frequently renters, who cling to some ill-deserved self-worth based on their entrenched presence in a neighborhood in which they could not afford to buy, generally made possible by mama rent control. They resent the intrepidity of their homie, trolling the buyer's beat, and the sorts of latte-less neighborhoods in which they'd never consort. Maybe they're afraid of losing their friends to the home-buying cabal. Maybe they resent their own meager stakeholding being laid so bare. Either way, if you're a block too far south, if a car three blocks away is parked on a lawn, or if a newsstand with European dailies isn't within walking distance, the ruling is thumbs down.