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| Southern California Home Prices May Be Stabilizing |
| By Peter Y. Hong and David Pierson - LA Times |
 Southern California home prices held steady for the third straight month in March, a sign that the housing slump may be near its bottom.
The median sale price remained at $250,000 for the six-county region, which is less than half the median value of homes at the market's peak in 2007. But the fact that home prices have stayed the same since January could be an indicator that the market is beginning to stabilize -- which is considered key to a broader economic recovery.
"In the normal behavior of a recession, the first improvement is in the housing sector, followed by autos," said economist Edward Leamer, director of the UCLA Anderson Forecast. "When somebody buys a home or buys a car, they're predicting economic growth, they're predicting they're going to be employed. It's a statement of optimism."
The housing numbers released by MDA DataQuick on Wednesday came as the Federal Reserve Board reported that the pace of the nation's economic decline was easing in a few regions, including California and New York.
The Fed's report was the latest in a series of indicators that economic conditions may be beginning to improve, which has spurred new confidence in the stock market.
One question mark, for housing and the economy as a whole, is the availability of credit -- whether for home sales, business expansions or other purposes.
For the last year, home sales have become increasingly dominated by the low end of the market as the presence of a large number of foreclosures pushed down prices at the same time that credit became available for smaller loans.
But as the credit crisis eases, banks and other lenders are expected to expand their offerings of so-called jumbo loans of more than $417,000. That could expand sales of the nearly dormant market for more expensive homes.
Conversely, if lenders tighten credit, the housing slump could be prolonged, said David Levine, a UC Berkeley economist. "At a lot of banks, there may be more bad news waiting to happen," he said. "Nobody knows how bad it is."
Levine said there was so much overbuilding during the boom that it could be a long time before home construction -- an important source of job creation in the state -- begins again. "One robin does not make a spring," he said. "One fairly optimistic piece of news does not mean the very big trouble we're in is over."
Higher mortgage rates could also throw cold water on a recovery, noted Lakewood real estate broker David Emerson. "If you drop rates into the 4% range, of course you're going to get a surge," he said. "If rates go back to 6% in two months, we're shafted."
Low prices and attractive mortgage rates drove March home sales up 52% in Southern California compared with the same month a year ago, according to DataQuick. Just over half the sales were of homes that had been foreclosed on.
In San Bernardino County, March sales were up 89% from the previous year while the median price of $150,000, the lowest in the region, was down 43% from a year ago, the company said. The Southern California median sale price is now less than half what it was in 2007, according to DataQuick. "There are a number of indicators that show the housing market is in the process of bottoming out," said Delores Conway, director of USC's Casden Real Estate Economics Forecast. Chief among them, she said, was that home buyers previously priced out of the market are now able to buy.
The steeper price decline in lower-priced homes and falling interest rates prompted Larry Salzman, 37, to buy a town house in El Cajon this week. Salzman had been looking at higher-priced homes but was worried that they would drop in value. Down the scale, however, Salzman said that wasn't so much of an issue. "It was the same to buy as to rent, so it wouldn't matter as much to me if the value were to go down," Salzman said. The three-bedroom town house he bought for $240,000 is comparable to units that sold for $425,000 two years ago, he said.
One point of contention among housing market observers is whether expensive homes aren't selling because of the limited availability of jumbo loans, or because their prices are too high relative to incomes.
But there is no doubt the upper end of the market is frozen. "It's stagnant," said Aliso Viejo real estate broker Steven Thomas. "Demand just doesn't exist above $1 million."
Thomas said that, based on March sales, the supply of Orange County homes priced between $1 million and $1.5 million would take about 13 months to clear. But Orange County homes priced between $250,000 and $500,000 sold in March at a pace that would clear the existing inventory in about two months.
With fewer foreclosures, higher-priced areas have not been flooded by homes owned by banks eager to clear their inventory through cut-rate selling. Instead, individual sellers have reduced their asking prices only modestly, and buyers have kept their distance. Prices will have to come down further for those properties to move, said Christopher Thornberg, principal of the Los Angeles consulting firm Beacon Economics.
Wealthy sellers have taken heavy hits in the stock market and are also suffering job losses, Thornberg said, leaving some unable to afford their homes. In his own Bel-Air neighborhood, "I can't believe the number of 'For Sale' signs coming up," Thornberg said. "Those people bought those houses when they thought their stock portfolios were huge, and that's not true anymore." Thornberg predicts home prices will fall another 20% from their current levels because in real estate cycles prices tend to "overshoot" on the way down, falling even below levels that would be in line with incomes. That's especially true now, with rising unemployment and troubles in the financial sector, he said. "So much pain has to work its way out of the system," he said.
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 The sale of the century is happening all around. Everywhere you look, home prices are dropping like flies. The deals are unprecedented, and the inventory is vast. In short, a number of factors are coming together to present people in a position to buy with some once-in-a-lifetime opportunities.
In addition to declining prices, mortgage rates are at a serious low. Rates on a 30-year fixed-rate mortgage are at a level we won't see again in our lifetime. Finally, if you buy before December 1, you'll get an $8,000 tax credit if you're a first-time buyer.
For all those reasons, there's never really been a better time to go shopping for real estate. Keep in mind, however, that declining prices have hit some areas harder than others, meaning you might find some real bargains, depending on where you live.
The cities that have seen the steepest declines in housing prices are all in California, Florida, Arizona, Nevada, and Michigan. These areas are presenting some incredible home buying opportunities right now. The states you'll want to avoid are Utah, Montana, North Dakota, Wyoming, and Alaska. These states have actually seen small increases in housing prices, but that's not to say they've escaped the housing crisis - it just means it hasn't hit them yet.
If you're in a position to buy, but you're questioning whether you should buy now or wait, there is no guarantee that prices won't continue to drop. You'll have to feel that out for yourself. If now is definitely the time for you, there are some things you'll need to have in place. First, a 20-percent down payment (in your hands, not borrowed) is a must. Next, make sure you go with a fixed-rate mortgage. Also, be aware of what you can afford in terms of mortgage payments; a good rule of thumb is that an affordable payment is no more than 30% of your gross income. Finally, have an emergency fund on hand (for after you buy) that equals six months' worth of living expenses. Irresponsible buyers who don't abide by these guidelines are the reason the housing crisis occurred in the first place. Don't perpetuate that cycle - be a responsible buyer.
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So you've found the perfect home and you're ready to make an offer.
The purchase offer you submit, if accepted as is, will become a binding sales contract -- known in some areas as a deposit receipt, purchase agreement, or earnest money agreement. Therefore, it's important that it contains all the items that will serve as a "blueprint for the final sale."
- Contents of a Home Purchase Offer
- Address and sometimes a legal description of the property
- Sale price
- Terms of sale - for example, all cash or subject to your obtaining a mortgage for a given amount
- Seller's promise to provide clear title (ownership)
- Target date for closing (the actual sale)
- Amount of earnest money deposit accompanying the offer, and whether it's a check, cash, or promissory note, and how it's to be returned to you if the offer is rejected - or kept as damages if you back out without a good reason
- Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (pro-rated) between buyer and seller
- Provisions detailing who will pay for title insurance, survey, termite inspections, etc.
- Type of deed to be given
- Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards, or other state-specific clauses
- A provision that the buyer may make a final walk-through inspection of the property just prior to closing
- A time limit (preferably short) after which the offer will expire
- Contingencies (see below)
Contingencies
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. The following are two common contingencies contained in a purchase order:
* The buyer is obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract.
* A satisfactory report by a home inspector. For example: "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies. If not, the contract would become void. Again, make sure that all the details are in the written contract.
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| Do You Need a Living Trust? |
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Over the last two decades, the popularity of Living Trusts has skyrocketed. No longer a tool just for the rich, Living Trusts are one of the most common estate planning tools in use today.
This legal arrangement, usually drafted by an estate attorney, creates a separate entity called a Living Trust. A Living Trust is called that simply because it is created while you're alive (as opposed to a "testamentary" trust created after death).
The Parties Involved
The Living Trust document itself names three different parties. The individual (or couple) that establishes the Trust is named the Grantor (also referred to as the Trustor).
The Trustee is the person named by the Trust as the controller of the Trust's assets (and in many cases, the Trustees are the same people as the Grantors).
On the receiving end, the Beneficiaries are the heirs that will benefit from the Trust once the Grantor's have passed away.
History of Living Trusts
Living trusts date back to 16th century England, when landowners used trusts to circumvent the King. Constantly concerned with landowners owning too much land, the King made sure he could oversee the distribution of property when a landowner died. This process of overseeing transfers was the very first form of probate.
Trusts with the Church helped landowners skip the process altogether. Landowners would deed their property to their Church, in exchange for the promise that the Church would grant the land back to heirs when the landowner died.
In colonial times, the first settlers in America brought English custom and law with them across the Atlantic. This included the concepts of probate and trusts. Trusts were long considered the domain of the rich, since they were often expensive to create.
It wasn't until the 1960's that revocable living trusts gained popularity. And while the increased acceptance of living trusts ticked off many attorneys (since they stood to lose probate fees), the living trust was here to stay.
Who Needs A Living Trust?
Almost anyone with an estate of $100,000 or more can benefit from having a living trust. Estates of $100,000 or more are often subjected to probate in their state of residence, which can cost anywhere from 2%-4% of the estate's value in court and legal fees.
The living trust also is useful for individuals subject to estate taxes. Through a living trust, a couple is able to maximize their Unified Credit to its fullest. It even accomplishes protection for individuals wanting to avoid conservatorship.
Advanced living trusts can be structured for complicated family situations. Re-married spouses, with children from a previous marriage, can use an advanced revocable trust to ensure kids receive their proper inheritance.
Avoiding Probate
Living Trusts avoid probate, since they are completely private. Because a trust is recognized as a separate legal entity, distributions can be made by a Trustee to named beneficiaries without any involvement from the courts.
The courts maintain no control over the Trust's assets, and do not tie up the assets in a lengthy (and costly) probate process. The Trustee simply distributes assets to named heirs, but only if those assets have actually been placed inside the Trust.
Funding Your Living Trust
Once established, almost anything can be placed in a trust: savings accounts, stocks, bonds, real estate, life insurance, and personal property. In "funding" the trust, you simply change the name or title on your assets to the name of your Trust. Many people worry about losing control of assets; however, that is not the case within a carefully-constructed Living Trust.
Always There For You
Because the Trust is essentially controlled by one individual (the Trustee), that person can carry out your wishes when you're not able to. For instance, if you have children from a previous marriage and wish to leave them an inheritance, specific instructions to the Trustee will ensure that they receive what you had requested.
If you're institutionalized or unable to care for yourself anymore, the Trust can still function and make distributions as needed. The Trustee has a fiduciary responsibility to see that your requests are fulfilled exactly. He or she can even provide care and protection for disabled relatives or handicapped children in accordance with your wishes.
Reducing Estate Taxes
The Living Trust also minimizes estate taxes by fully utilizing every individual's Unified Credit. The Estate Tax Credit, as mandated by Congress, currently shelters up to $2 million from estate taxes. With only a will in place, a married couple will receive a single $2 million exemption.
However, if a Living Trust with "A-B Provisions" is in place and one spouse dies, the Living Trust separates into two separate trusts (commonly referred to as an A-B Trust).
In an A-B Trust, each of the two separate trusts receives its own $2 million exemption, meaning a total of $4 million is sheltered from estate taxes.
Any amounts over that $4 million will be subject to estate taxes, with rates climbing as high as 46%.
Living Trusts are easy to start-up and require little on-going maintenance. They afford an extra measure of protection against loss of control, and ensure that your assets remain out of the public record even after your death. However, they do not provide protection against creditors or divorce, and do not reduce estate taxes for estates over $2 million in value ($4 million if married).
In Summary
Each family's situation is different. Some will benefit from a living trust, while others may not.
If you are married or have assets over $100,000, you owe it to your family to investigate the best means to preserve your hard-earned wealth.
And for estates over $2 million, you may want to combine a living trust with another advanced estate planning technique.
For a FREE Special Report on Living Trusts, or help in finding an attorney to draft one, click here!
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| Market Snapshot - Real Time Online MLS Data |
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 This month we have again included the latest version of Market Snapshot, an award-winning, real-time MLS graphical report. The industry’s most current online real estate report has a new look and layout which offers even more market information on one page. Key comparative MLS data charts, including Asking price VS. Selling Price, Selling Times, and Neighborhood Inventory, are now available on the front page, through convenient collapsible sections. These enable viewers to remain in one web window and not have to toggle back and forth to compare data. You can have up to 100 of the closest active and sold listings displayed on the map for the Seller’s Market Snapshot as well as the Buyer’s.
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NO BONES ABOUT IT!
SUPERIOR SERVICE - SUPERIOR RESULTS!
Keller Williams LA Harbor Realty
Catherine Bennison - Realtor Associate
Direct: (310) 707-2162
Cell: (310) 748-7889
Fax: (310) 519-1882
E-Mail: CBennison@KW.com
Website: www.CatherineBennison.com
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May 2009
In This Issue:
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Catherine Bennison's
South Bay
Real Estate Newsletter
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Catherine & Winston
Direct: (310) 707-2162
Cell: (310) 748-7889
Fax: (310) 519-1882
E-Mail: CBennison@KW.com
Website: www.CatherineBennison.com
This Month in Real Estate
Click to View Video HERE
Get A FREE Analysis of Your Market Area
MLS Market Snapshot
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Catherine's Featured Listing
1360 W Capitol Dr # 141
San Pedro CA 90732
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CLICK HERE FOR DETAILS
Relocation forces owners to sell their spacious condo at a deep discount! This is not a short sale. There is no better deal on a price per square foot basis. Incredible views abound from this 2 master bedroom plus loft condo including: treetop views of the snow covered San Gabriel Mountains and Mt. Baldy, downtown Long Beach, Downtown Los Angeles as well as the Port of Los Angeles. The unit has a terrific floor plan with the first level ideal for entertaining. The first level also features a large balcony, kitchen, formal dining room, living room and fabulous fireplace. The entrance to the unit is direct from the outside; no elevators or long corridors. Also the subterranean parking is very convenient, just a few steps away from the front door; no long walks to distant parking lots. Guest parking is also very close. Stainless steel refrigerator, stove, venthood/microwave combo and dishwasher are only a year and a half old and are included with no warranty.
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Easy Gardens
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Want some simple but eye-catching ideas for your garden? How about two or three varieties of annuals that pack a color punch? Here are some lovely, low maintenance combinations for you to try:
Celosia, Ageratum & Vinca
Golden celosia plumes are stunning when paired with the rich blue of the ageratum (also known as floss flower). When you add a splash of deep pink annual vinca, you have a color and texture combination that can't be matched. These will do well in a hot, dry, sunny spot.
Petunia & Geranium
Try a high-contrast combination of cherry red geraniums and silvery blue petunias. Although blooming will be best in sun, these plants can handle some shade.
Salvia & Celosia
A combination of white and blue mealycup salvia and red-leaved plumed celosia offers a lovely color scheme for your garden. These popular annuals like sunshine, a bit of light shade, and a drink of water during dry spells.
Zinnia, Vinca & Annual Sage
Try a garden featuring white narrow-leaf zinnia, pink annual vinca, and medium blue annual mealycup sage. These tough plants require almost no maintenance and can withstand dry conditions once they've been established.
Marigolds & Begonias
Begonias usually do best in the shade, but the red-leaved varieties can handle a bit more sun. That's the secret behind a pairing of pink-flowered wax begonias and lemon yellow French marigolds, which, by the way, love the sun. These two low-growing annuals will provide a bright carpet of color all season long. Just keep the bed well watered, particularly in hot areas.
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Security Systems: Should You Invest?
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No matter where you live, home security has likely crossed your mind at some point, particularly if you have a family to think about. Even if you don't have children, you'll want to protect yourself from becoming a victim, and you'll probably want to protect the possessions you've worked so hard to earn. Perhaps you've considered securing your own little corner of the world by investing in a home security system. Installing an alarm system will not only give you greater peace of mind, but it will also deter any potential intruders.
Many burglars are opportunity offenders, which means they're not going to go out of their way if you've taken steps to make breaking into your home difficult for them. Most likely, a burglar won't find your home an "easy target" if you have a home security system. Security/alarm systems vary in price from very basic, cheap models to highly sophisticated electronic systems. Even if you choose to install the most expensive system, there's a good chance it will pay for itself quickly in what it will save you in vandalism and theft.
For many people, high end security and alarm systems may not fall within their budget. Don't hesitate to shop around. Find a reputable security company that can put together a security plan that will meet your financial situation, in addition to the needs of your home and its inhabitants.
In the event you opt for a home security system, make sure you're working with trained security professionals who have all of the products you need to implement a fail-proof security strategy in your home. Good security technicians and sales staff will be happy to provide all of the latest information on the best security products available, from a variety of home security kits, security cameras, personal safety products, environmental control devices, wireless security products, and much more.
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Doggie News
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DoggieNews.com is a weblog publishing news about dogs, the pet industry, new products, and other quirky canine stuff.
Our target audience consists of folks who own dogs, and who seek information to help them make purchasing decisions, health and entertainment choices, and to keep abreast of legislative and regulatory changes that might affect their dog ownership.
Got News?
Please share your dog and pet related news concerning your company or organization. To do so, please write up a news article, and submit it to us at the email address below. We will consider it for publication in our monthly newsletter.
cbennison@KW.com
Skateboarding Bulldog
 
REAL ESTATE NEWS
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