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

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

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

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

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

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

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

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

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

Simon Says: "Should You Continue Renting or Should You Buy?"

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

For an example, let's focus on Santa Monica Condominium sales. Lastyear, when the "bubble" was bursting, median sales prices went up12.3%. Let's say for example that you didn't listen to your friends orthe media and purchased a home last year for $700,000. At the medianincrease in value of 7.3%, you would have enjoyed about .6% or $4,200a month increase in value. If you owned in the right part of SantaMonica, you would have experienced an even greater gain.

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

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

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

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

Simon Salloom is a Realtor who specializes in Santa Monica Real Estatewith Coldwell Banker Residential Real Estate Brokerage, BrentwoodCourt Office. He is ranked in the top 3% of Coldwell Banker agentsNationwide for sales volume.

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

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

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

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

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

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

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

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

Simon Salloom is a REALTOR at Coldwell Banker
You can comment on this article at www.santamonicasimon.com

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

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

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

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

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

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

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

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

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