Thursday, January 31, 2013
Coldwell Banker This Weekend's VIEW Magazine is Online Now! New Listings & Open Houses in Beverly Hills & Greater Los Angeles
Coldwell Banker This Weekend's VIEW Magazine is Online Now! New Listings & Open Houses in Beverly Hills & Greater Los Angeles
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High-end home sales on a roll in state
The number of homes statewide selling at more than $5 million reached an all-time high last year. Domestic and international buyers are looking for places to stash their cash, real estate experts say.
Topping sales in the Los Angeles area was Oracle Corp. head Larry Ellison's purchase of a three-structure, copper-roofed compound along Malibu's Carbon Beach for $36.944 million. (Nick Springett / January 31, 2013)
Your take?See more »Does it surprise you that luxury home sales are on the rise?Yes NoYesNo
- Graphic: High-end home market heats up
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- Barry Bonds tries to hit one out of Beverly Park
- Ernest Borgnine's home in Beverly Crest area sells for $3 million
- Is Softbank CEO the buyer of $117.5-million Silicon Valley estate?
- Home prices on the rise, but not ownershipBy Lauren Beale, Los Angeles Times
January 30, 2013, 4:38 p.m.
California's luxury housing market is booming.
In activity reminiscent of real estate's bubble years, the number of homes statewide selling at more than $5 million reached an all-time high last year, while those selling at $1 million or more rose to the highest level since 2007, a real estate information service has reported.
Sales are up because well-heeled U.S. and international buyers, confident that the housing recovery is solid, are looking for places to park their cash, real estate experts said. Also playing a role was a rush among the very wealthy to take advantage of lower capital gains taxes by selling before year end.
"Last year was gangbusters," said Dave Fratello, an agent with the Real Group in Manhattan Beach, the busiest Southern California community for $1-million-plus sales in 2012. "We flipped very quickly from a buyer's market to a seller's market."
Across California, 697 homes sold for more than $5 million, beating the previous high of 491 in 2011, according to San Diego-based DataQuick. The 2012 sales mark was the highest since DataQuick began tracking such sales in 1988.
The 26,993 homes sold at $1-million-plus represented a 26.9% jump from 2011, DataQuick said. In comparison, 42,502 home sales exceeded the million-dollar mark in 2007, before the mortgage meltdown dragged down prices across the housing market.
The record was set in 2005, when 54,773 homes sold for $1 million or more. The luxury market outpaced overall sales, which were up 8.2% statewide.
"The very top, it is a record level — well beyond what it was in the bubble period," said John Karevoll, analyst for DataQuick.
Hillsborough, in the San Francisco Bay Area, claimed the top spot with 422 sales at $1 million-plus. Like many neighborhoods in Silicon Valley and environs, Hillsborough's sales growth was driven by a wave of buyers from the technology sector.
Southern California communities with the most $1-million-plus sales included Manhattan Beach, Newport Beach, La Jolla, Brentwood, Beverly Hills and Laguna Beach.
"We're hitting that perfect storm of buyer demand, low inventory and attractive housing prices," said Paul Habibi, who teaches real estate at the UCLA Anderson School of Management.
Gary Painter, director of research and an economist with the USC Lusk Center for Real Estate, said the high-end niche is more likely to be driven by the international economy rather than what is going on in the U.S. — which suffered an unexpected economic contraction during the last three months of the year, the Commerce Department said Wednesday.
As a result, the luxury market is benefiting from a continued influx of wealthy international buyers who are betting on the potential of prime housing to appreciate and view luxury home prices in the U.S. as bargains versus other parts of the world.
Foreign buyers spent 24% more on U.S. real estate last year than in 2011, according to an annual survey by the National Assn. of Realtors. These buyers represented 8.9% of all housing spending. Asian shoppers are particularly interested in California homes, the study said.
Sandra Miller of Engel & Volkers, a broker who specializes in international buyers and luxury properties, said that "the money is really coming from everywhere."
While her office is dealing with an onslaught of Italians, buyers are coming from London and Germany. Chinese buyers are snapping up homes in the $1-million to $5-million range for their children, she said, but not ultra-luxurious estates.
"The very, very large sales last year were done with Russian money," Miller said.
DataQuick's Karevoll cautioned that the boom at the luxury level doesn't automatically translate to continued sales and price improvement for all homes.
"As a bellwether for a market as a whole, however, it is really hard to read what it means," he said. "The broader market and what we call the 'prestige' market — homes from about $2 million to $3 million and up — seem to dance to two different tunes."
In Manhattan Beach, most homes are priced at more than $1 million, said Fratello, who is also a housing market blogger at MB Confidential. "The days of little cottages for under $1 million are mostly behind us."
A low supply of homes for sale kept a lid on sales in the sought-after beach community, Fratello added. Bidding wars returned.
"With another 10% in sales our volume would have matched all the bubble years," he said, referring to 2004 to 2006.
A tear-down in the so-called Tree Section of Manhattan Beach drew 20 offers in March, selling for $1.352 million — $250,000 above the asking price. A 2,600-square-foot Midcentury-style house in need of work in the same block attracted 15 bidders. Listed at $1.6 million, it sold for $1.88 million.
"Everybody is shaking their heads," Fratello said. "This is crazy."
Cash buyers accounted for a record 7,791 of the million-dollar home sales, up from 5,802 in 2011. Many of those presumably are investors looking for better places to put their money than the stock market or other investments.
The most expensive transaction to appear in public records was the $117.5-million sale of an 8,930-square-foot mansion on nine acres in the Northern California community of Woodside.
Among top sales in the Los Angeles area was billionaire Larry Ellison's purchase of a three-structure compound in Malibu for $36.9 million. "American Idol" host Ryan Seacrest paid $36.5 million for talk show host Ellen DeGeneres' three-property spread in Beverly Hills, and the family of the late philanthropist Max Palevsky sold his Malibu mansion for $36.5 million just before the end of last year.
Almost all home sales were in $1-million-plus territory in the communities of Ross in Marin County; San Marino and Santa Monica in Los Angeles County; Los Altos in Santa Clara County; Atherton and Hillsborough in San Mateo County; and Rancho Santa Fe in San Diego County.
High-end home sales on a roll in California - latimes.com
Wednesday, January 30, 2013
Homeowners looking for the most return on their investment when it comes to remodeling should consider exterior replacement projects. According to the 2013 Remodeling Cost vs. Value Report, REALTORS® rated exterior projects among the most valuable home improvement projects.
“REALTORS® know that curb appeal projects offer great bang for your buck, because a home’s exterior is the first thing potential buyers see,” says National Association of REALTORS® President Gary Thomas. “Projects such as siding, window and door replacements can recoup more than 70 percent of their cost at resale. REALTORS® know what home features are important to buyers in your area and can provide helpful insights when considering remodeling projects.”
Results of the report are summarized on NAR’s consumer website HouseLogic.com, which provides information on dozens of remodeling projects, from kitchens and baths to siding replacements, including the recouped value of the project based on a national average. According to the Cost vs. Value Report, REALTORS® judged a steel entry door replacement as the project expected to return the most money, with an estimated 85.6 percent of costs recouped upon resale. The steel entry door replacement is the least expensive project in the report, costing little more than $1,100 on average. A majority of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects; all of these are estimated to recoup more than 71 percent of costs.
Three different siding replacement projects landed in the top 10, including fiber cement siding, expected to return 79.3 percent of costs, vinyl siding, expected to return 72.9 percent of costs, and foam backed vinyl, expected to return 71.8 percent of costs. Two additional door replacements were also among the top exterior replacement projects. The midrange and upscale garage door replacement were both expected to return more than 75 percent of costs.
According to the report, two interior remodeling projects in particular can recoup substantial value at resale. A minor kitchen remodel is ranked fifth and is expected to return 75.4 percent of costs. Nationally, the average cost for the project is just under $19,000.
The second interior remodeling project in the top 10 is the attic bedroom, which landed at number eight and tied with the vinyl siding replacement with 72.9 percent of costs recouped. With an average national cost of just under $48,000, the attic project adds a bedroom and bathroom within a home’s existing footprint. The improvement project projected to return the least is the home office remodel, estimated to recoup less than 44 percent.
The 2013 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 81 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 15th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with NAR.
REALTORS® provided their insights into local markets and buyer home preferences within those markets. The 2013 national average cost-to-value ratio rose to 60.6 percent, ending a six-year decline. The ratio represents nearly a three-point improvement over 2011-2012. Lower construction costs are the principal factor in the upturn, especially when measured against stabilizing house values. In addition, the cost-to-value ratio improved nationally for every project in this year’s report and is higher than it was two years ago for both remodeling and replacement projects.
“A REALTOR® is the best resource for helping homeowners decide what improvement projects will provide the most upon resale in their market,” says Thomas. “Each neighborhood is different, and the desirability and resale value of a particular remodeling project varies depending on where you live. When making a home remodeling decision, resale value is just one factor that homeowners should take into consideration. Consult a Realtor® to make sure you are making the best decision.”
Most regions followed the national trends; however the Pacific region, consisting of Alaska, California, Hawaii, Oregon and Washington, once again led the nation with an average cost-value ratio of 71.2 percent, due mainly to strong resale values. The next best performing regions were West South Central, South Atlantic, and East South Central. These regions attribute their high ranking to construction costs that were lowest in the country. While still remaining below the national average, most remaining regions showed strong improvement over last year. These are Mountain, New England, East North Central, Middle Atlantic, and West North Central.
To read the full project descriptions and access national and regional project data, visit www.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.
For more information, visit www.realtor.org.
Exterior Replacement Projects Provide Biggest Return on Investment for Homeowners.
Tuesday, January 29, 2013
The Ten Commandments of Home BuyingJan 15, 2013 / By Matthew Amster-Burton / Comments4
A friend recently asked me for mortgage advice. I explained how to shop around for a good rate, and then I added my catchphrase: “You didn’t ask, but…”
Like anyone involved in the world of finance, I’ve seen a lot of serious mortgage trouble in the last few years. Even though the days of jumbo loans with no proof of income are long gone, it’s still a homebuyer’s responsibility to make sure that taking on a mortgage doesn’t put them in the financial danger zone.
So, I told my friend, before making the leap, to work through the following checklist and make sure you’re on the good side of each rule.
Now, nobody’s perfect, and if your online dating profile says you’re looking for a financially prudent partner who fulfills every qualification below, you’ll stay lonely. “You obviously can’t do all the things on your list,” says Jane Hodges, author of Rent vs. Own.
But whenever someone has come to me in danger of losing their house, they’ve ignored nearly every single rule, including the most important one: In Mint’s recent money mistakes survey, 20% of you admitted to spending more than 30% of your income on housing.
And since January is all about fixing those pesky Money Boo Boos, and paying too much for housing is definitely a big money mistake, let’s talk about the ten commandments of home buying:
1. Don’t bite off more mortgage than you can chew
The classic lending guideline says your principal, interest, property tax, and insurance (PITI) should amount to no more than 28% of your gross income.
Obviously, that’s an arbitrary number. Your financial world won’t explode if you stretch to 29% or 33%.
But an outsized mortgage payment is going to bite you sooner or later. As we’ve seen again and again over the last four years, lenders aren’t cuddly and understanding. They just want you to make your payments, month after month.
There’s also the duration of the mortgage to consider. “Another metric is your age,” says Hodges. “If you’re 55 and a first-time buyer, you better be getting a 15-year loan, right?”
2. Have at least one steady income in the family
It’s not 2006 anymore, and banks are a lot more scrupulous about checking to see if you have any income before shoveling a houseload of money in your direction.
But it’s still your responsibility to make sure you have a steady paycheck to go with your steady mortgage payment.
3. Carry few or no other debts
A reasonably sized mortgage quickly becomes an unreasonable burden when you mix it with student loans, car loans, and credit card debt.
The traditional lending guideline says that your mortgage payment (yes, including interest, tax, and insurance) and all your other debts should add up to 36% of your income or less.
Again, I’ve had people show me their monthly budget, and 70% of their income was going to debt repayment. That can’t end well.
4. Keep a big buffer
On top of debt repayment, you have other non-negotiable bills every month: utilities, insurance, a basic level of food and clothing, and maybe a tuition payment. Then there are discretionary expenses: saving, dining out, entertainment, travel, etc.
In their book, All Your Worth, Elizabeth Warren and Amelia Warren Tyagi recommend that you keep your non-discretionary expenses to less than 50% of your take-home income.
Like the other percentages we’ve been throwing around, this one isn’t magic, but it’s a nice guideline. When too much of your income gets sucked into required expenses, you lose flexibility.
A brief period of unemployment, a medical emergency, or a car repair can turn into a financial disaster that ultimately costs you your house.
5. Have an emergency fund
If you have a well-stocked emergency fund now, don’t drain it to fund a down payment. If you don’t have one, you’re not ready for a mortgage, no matter how perfect a Cape Cod you just toured.
6. Have good life, disability, and health insurance
If you’re uninsured or underinsured, you’re in no position to buy a house, unless you’re sitting on a giant pile of money. Are you?
7. Bring a 20% down payment
Small down payments lead to big problems. Reuters’ Felix Salmon crunched the numbers last year and found that mortgages with a 15%-20% down payment were more than twice as likely to become delinquent as mortgages with a 20% down payment for most years before the financial crisis.
Lower down payments did much worse. His conclusion: “So, let’s all remember this chart the next time anybody claims that you can have a safe mortgage with a low down payment. Because the fact is that you can’t.”
8. Don’t use home equity as part of your retirement plan
Home equity is great—that’s why you should bring a big down payment. But it’s also undiversified, subject to the ups and downs of the real estate market, and hard to quickly turn into cash.
It’s fine to have your retirement savings plan reflect the fact that your mortgage will be paid off in retirement and your ongoing housing costs will be low (although, you’ll still be on the hook for maintenance, property tax, and insurance).
If you’re assuming your house will appreciate at a lavish rate and you’ll be able to cash out later when you downsize, think again: over the long term, house prices rise at about the rate of inflation, according to the Case-Shiller index.
9. Be prepared to settle down
Unless you’re prepared to stay in your house for seven to ten years, the costs of buying and selling are likely to swamp any price appreciation.
Put more simply: If you move a lot, you’re better off renting. And most people underestimate how soon they’ll want to (or need to) move. Look at your past behavior and be realistic.
10. Check the price-rent ratio for signs of a bubble
A couple of times a year, Trulia.com looks at housing markets nationwide and declares them under-, over-, or well-priced based on the historical price-rent ratio, which is just the price of a house divided by the annual rent for an equivalent house.
During the housing bubble, prices in many markets rose to absurd levels by this standard: People were buying $500,000 houses that would have rented for, say, $20,000/year.
In retrospect, this obviously wasn’t going to work out. Prices in most markets are now sane (ratio of 15 or less), but you should still look at the neighborhood level. My Seattle neighborhood, for example, is still looking a little hot.
Now, if you believe me that prudent home buying means following at least most of these rules most of the time, you’d have to conclude that a lot of people buying houses would be better off renting. My point exactly.
The Ten Commandments of Home Buying
Luxurious Living: The Country’s Hottest Luxury Real Estate Markets
Luxury real estate is making a comeback throughout the country, and some of the hottest markets have a lot more in common than solely an expensive price tag — from thriving and diverse economies to historical significance, a multitude of colleges and hot spots, and great weather (at least for part of the year).
Here’s a glimpse at some of top places to find the finest amenities homes have to offer.
New York City
Entire books could be (and have been) written about luxury real estate in the greater New York area. As the city grew — and grew, and grew — luxury markets sprung up outside the boroughs, as power brokers used their Manhattan paychecks to finance everything from “cottages” in the quintessential summer celebrity hangout of the Hamptons to bedroom communities filled with mini-mansions on former farmland in New Jersey and Connecticut. When it comes to luxury in New York and the surrounding areas, it’s all about where you want to be and what you need in a home, because the options are endless.
For those looking to live right in the middle of the action, One57, under construction in midtown Manhattan, offers it all. Called “the global billionaire’s club” by the New York Times, the soaring, 1,004-foot tower overlooks Central Park and has nine full-floor apartments. On a clear day, residents can see all the way to the Bronx. Amenities include all services of the attached Park Hyatt Hotel as well as a “discreet side entrance,” pet wash area, performance hall, private dining room, billiard room and a 24-foot aquarium.
Pricey Big Apple purchase of 2012: Russian billionaire Dmitry Rybolovlev spent $88 million on a penthouse for his 22-year-old daughter.
Second only in size to New York, Los Angeles is a city built on the California dreams of its many residents who move there in pursuit of fortune and fame. Like its starry-eyed population, the homes that make up L.A.’s luxury market are as different as can be, from tiny bungalows that sit on some of the country’s most expensive land to massive modern glass-covered marvels overlooking the Hollywood hills. Spectacular suburban luxury living can also be found in Los Angeles County in areas such as Pasadena.
In L.A., a valuable feature for its famous luxury residents is the ability to keep the paparazzi at bay with high hedges, fences, security systems and long driveways. An early 2000s ordinance prohibits hedges over 6 feet high, making homes with existing high hedges quite the commodity among celebrities, who now trade these homes like deeds in a Monopoly game.
San Francisco Bay Area
San Francisco is known for real estate prices as steep as its legendary hills, so more or less everyone pays luxury prices. Residents will tell you the pricey real estate is well worth it for the quality of life in this quirky, inclusive and truly charming area of the country. Tony Bennett’s not the only person who left his heart in San Francisco: Almost everyone who has visited or lives there feels the same way.
Famous for its turn-of-the century Painted Ladies, or Victorian-style homes — many of which have been lovingly cared for, restored and modernized over time — San Francisco offers luxury in the old as well as in new condos that have recently popped up in the Financial District and South Beach (yes, in San Francisco) neighborhoods.
In San Francisco, two of the priciest neighborhoods offer location-based luxuries — Presidio Heights and Sea Cliff. Presidio Heights is made up of mainly two-level single family homes with coveted yards at the front, back and sometimes sides of the properties. Sea Cliff, as the name implies, is situated directly on the Pacific Ocean and features stunning views of sunsets so breathtaking, you wouldn’t believe they are real. Sometimes luxury comes solely in the form of an impeccable location.
With waterfront and oceanfront property abounding, every part of Miami has its own distinct flavor of luxury property, from celebrity-owned mega-mansions to soaring condos offering the ultimate in style and amenities. Miami began as an escape from the cold North, and while it remains a haven for snowbirds and a great investment for overseas buyers, it now has its own thriving year-round sense of culture and community. With sunny days and a sizzling nightlife, Miami takes luxurious living to a whole other level.
One example of Miami’s glamour is the home of a name synonymous with luxury: Versace. Gianni Versace’s Casa Casuarina mansion has 10 bedrooms directly on Ocean Drive and a 24-karat gold inlaid pool.
Our nation’s capital is more than just a hub of politics. It’s a cultural powerhouse where independently spirited artists, writers and musicians create alongside government workers and contractors living out the 9-to-5 lifestyle. It’s a true melting pot of cultures, cuisines and viewpoints with history around every corner. Like other luxury hot spots, there is something for everyone, from the old classic residences on Capitol Hill and Georgetown to new luxury construction throughout the district and in the bedroom communities of Northern Virginia and Maryland.
Georgetown is home to many of the most luxurious homes in the District of Columbia, with gorgeous views of the National Cathedral. Many of these beauties, some dating to the 1800s, have other luxe features including staff quarters, private saunas, koi ponds and room to throw little “get-togethers” for up to 150 guests.
Can’t decide which of these luxury markets you love the most? Why not buy in each? If you can afford it, these cities have a lot to do, see, eat and experience, making every day a new adventure.
Luxurious Living: The Country’s Hottest Luxury Real Estate Markets - LA is always on the list.