Fire Season Facts, or Landscape Lesson 3 for L.A. Homebuyers: Clearing Hillsides Is Not Optional

A hillside area inside your property line could run from $500 to $1500 or higher to clear of brush and weeds, and the L.A. County Fire Department will require you to do it. This is my third landscape lesson learned, posted for buyers trying to add up all the potential costs of owning a home in the L.A. area.

As LAist just noted, fire season is here. Unfortunately, licensed contractors don’t offer fire sale prices for clearing hillsides and overgrown landscape fuel.

My last two posts, The Treetop View, and Tall Palms are a Headache, advised that periodic trimming of large trees and tall palms on a home site can be expensive. The work is optional, however. If you just don’t want to bother with your landscape, you can let tree branches grow toward the sky and palm fronds dangle 30 feet above your head.

If your property is located in a fire hazard zone, however, or if there is a lovely wild hillside behind it, you don’t have a choice. Find out where the property line ends and get an estimate for the annual cost of clearing it and trimming the rest of the landscape to comply with the fire department’s mandate. You will have to undertake this cost every year.

L.A. County inspects each property, assesses compliance, and fines owners if inspectors have to travel to a site more than twice (this Fire Department blog entry explains the rules).

A neighborhood group in Altadena just received a FireSafe grant to trim back overgrown trees and reported on the hazard abatement here. I don’t know what a FireSafe grant is, but homeowners in other fire hazard areas might want to find out.

La Crescenta, nicknamed the Balcony of Southern California, is on the north side of the Verdugos. As this resident writes, it has seen its share of wildfires very close to home. 

Here are three of the newest Redfin listings high in the foothills of north Glendale and La Crescenta:

2837 Pinelawn Drive
$869,000
4 bed/2.5 bath
2,376 sq.ft.
$366 per sq.ft.
On Redfin 6 days

2723 Pinelawn Drive
$899,000
4 bed/2.75 bath
2,292 sq.ft.
$392 per sq.ft.
On Redfin 2 days

3535 Paraiso Way
$679,900
3 bed/2 bath
1,702 sq.ft.
$399 per sq.ft.
On Redfin 5 days

How Do Bank Sales Figure in Home-Sales Data?

Last week, I wrote a post about home sales in SoCal in July being up year over year for the first time in three years.  Shortly after, a blog reader calling himself Workafrolic weighed in with this thoughtful comment.

OK, this one got me so upset that I actually emailed the radio station on which I first heard the story. Sales are up and prices are down so they concluded that more people are buying houses. Simple, right? But, here is the key question: what happens to the numbers when you regularize for foreclosures? As I understand it, when the bank forecloses, the transaction counts as a sale because it’s a change in ownership. But that doesn’t mean that more people (like you or I) are actually buying houses. That could be the case, but until you subtract out the foreclosures, we won’t know. Since the outstanding loan amount on foreclosures is usually less than what the house would have sold for last year, it can look like a drop in price. BUT … that doesn’t mean that listing prices have come down significantly. Anecdotally, a lot of would-be home buyers are seeing a continuing lack of realism in listing prices, and I’ll bet every seller who heard the news story had the desire to put their price back up on that basis.

Can DataQuick back out the foreclosures? I’m told the figure is usually a ragged number (the outstanding loan balance, not a usual negotiated amount) so if someone could run some logic on this, it would be VERY helpful to know.

Workafrolic is correct when he says that homes purchased by lenders show up in the recorder’s office just like homes purchased by individuals.  Workafrolic is also right when he says that consumers can often recognize these lender purchases by their oddball prices. 

Sales to lenders show up in Redfin listings (under Sales History) just like sales to regular people. They’re almost always a random number, like $591,802, say, versus $590,000.  (To verify, you can often punch in the address at propertyshark.com and find out who the buyer was.)  I’ve also posted about the fact that there are thousands of “hidden foreclosures” – properties that have been taken back by lenders but that have not reappeared on the MLS for resale. You can search any Redfin neighborhood for recent sales and see that many oddball-priced lender purchases are included among them.

So, what percentage of the DataQuick monthly sales numbers are purchases by lenders and not by individuals? Or does DQ back out the lender purchases? DataQuick’s news release includes two contact names for media calls, Andrew LePage and John Karevoll.  I called both of them last week but never got a callback.  I guess a blog doesn’t count as “media.”

Like Workafrolic, I have to wonder whether lender purchases are part of the home-sales figures.  If they are, they’re skewing the numbers. If anyone knows for sure (DataQuick, perhaps?) please post your insights here. Workafrolic and I would appreciate it. 

Recent Redfin posts:
Angelino Heights:  Beauty in the Beastly Neighborhood
The Treetop View for L.A. Homebuyers:  Tall Palms Are a Headache
Banking on the Home Dividend

Five Steps To Home Shopping By Schools

If you’ve read most of my previous posts, then you’re probably aware that I’m not a huge fan of the LA Unified School District. However, not all the schools are bad. And in the Valley, there are certainly a good number of educational gems that can be found.

In my conversations with other parents, I’ve found that it’s all too common for folks to move to an area specifically for the school system. That’s just one way to look for a neighborhood and house if you’re not planning on sending your kid/s to private school.

I’m checking out the areas around Woodland Hills for myself, but for today, I thought I’d take a look at Tarzana as an example of how I’d go about searching for a home in a good school district. (If anyone here wants to share his/her own story about home shopping by school district please do!!)

The Redfin search features are a great tool. I used it to sell my home and I’m using it to gather information for great areas for a new home. But I don’t do my entire search there. Here’s how I go about the whole process.

1. I decide what area I want to live in. Let’s look at Tarzana.

2. I head over to GreatSchools.net and input Tarzana in the search function. Whalah! I get a list of schools and immediately see that Wilbur Elementary School (Greatschool score: 9) and Nestle Avenue Elementary School (Greatschool score :8) have high scores and thus, are desirable for me to send my kid to.

3. I click on Wilbur Elementary School first and click on the map this school feature. Now I know where the school is located and where I want to live.

4. I head back over to Redfin.com and do a search for homes in the neighborhood around the school. I decide that I don’t want to spend more than, let’s say $750,000, and I input that in the maximum price criteria. I see a few possibilities.

5400 Crebs Ave./3bd, 1bth/1,037 sq. ft./$579,000

5503 Beckford Ave./4bd, 3bth/2,183 sq. ft./$629,900

5316 Mecca Ave./3bd, 3bth/2,548 sq. ft./$690,000

5. The home on Mecca Ave. is my favorite, but then how do I know it’s really in the Wilbur Elementary School district? I input the address in the LAUSD school finder page. And I find out the house is in Nestle Avenue Elementary’s school zone. So, the search continues!

Happy shopping!

Banking On The Home Dividend

Is it worth it to own a home these days? According to authors Gary and Margaret Smith, the answer is yes. Their book, “Houseonomics: Why Owning A Home Is Still A Great Investment”, dispenses advice for anyone considering the purchase of a home.

According to the LA Times book review, “Houseonomics” authors tell readers that home ownership is a great investment because of the home dividends earned. The Smiths, educated in economics from Yale (Gary) and Harvard (Margaret), explain that house dividends are the amount of money homeowners save by putting money towards their home versus rent.

Here’s a snippet from the review.

In fact, they contend that for most people in most places, now is a good time to own a home. In some areas of the country — such as Indianapolis, Atlanta and New Orleans — homes can even provide double-digit after-tax returns.

How can this be? Gary Smith and Margaret Smith, who hold doctorate degrees in economics from Yale and business economics from Harvard, respectively, said the home dividend was the amount homeowners saved by investing in their own homes instead of renting. This dividend is calculated by determining the market rent for the same type of home, subtracting costs for mortgage payments, property taxes, insurance and maintenance or homeowners association fees, and then adding in any tax savings.

What do you think? Is home ownership worth your while and why or why not?

And now, let’s take a look at some deals south of the Boulevard in Woodland Hills.

4731 Cerrillos Dr./5bd, 4bth/$219 per sq. ft./3,192 sq. ft./699,000

4953 Medina Dr./4bd,3th/$227 per sq. ft./3,406 sq. ft./$774,777

21420 Marchena St./4bd,4bth/$228 per sq. ft./3,130 sq. ft./$715,000

The Treetop View for L.A. Homebuyers: Tall Palms Are a Headache

Five years ago, an unseasonal January windstorm snapped our neighbors’ 20 foot palm tree in half. If its fall hadn’t been broken by the roof of our neighbor’s SUV, the tree probably would have crashed into our front window.

The gently swaying palm tree, like those seen in a sunset photo yesterday on the Your Scene blog, is an icon for Southern California’s ideal climate and relaxed lifestyle. Curbed LA just reported a local protest at the removal of mature palm trees; taking the other side, one of its commenters shot back that palm tree fronds rain down on cars and pedestrians. I’m in that camp: these trees are far from care free.

Palm trees are supposed to sway in the wind, for example, but our neighbors’ did not. I believe the tree snapped because stringed lights tightly wound around it from the base to the top didn’t allow any flex.

If a tall palm graces a property you want to buy, take a close look at how many dried fronds are attached to its crown but lowered against the trunk. Dried up palm fronds are heavy and have sharp ridged edges. Strong winds hardly ever snap palm trees, but they often detach dead fronds and send these sharp, heavy objects plunging to the ground.

Once on the ground, they aren’t easy to get rid of. They are usually too large to fit in regular trash bins, and they are very difficult to cut up. Both Glendale and Los Angeles do not allow palm fronds placed in green waste recycling bins.

At a hillside home we lived in, we got a reasonable landscape estimate for removing dead fronds off a mid-size palm: $250. Since this was just one line item in our over-budget landscape estimate, we decided to just let the fronds fall where they may.

I found an informative blog post yesterday ranting about an expensive palm trimming estimate, but the language used in the post to describe it is, in my opinion (grammarians can correct me), unfit to link to.

I’m always fascinated to witness extra-long cherry pickers sending brave men high into the air to trim the extremely tall palm trees lining some Glendale parkways. This must be a high-cost municipal budget item.

The story of this man’s former palm tree, located right near power lines, reminded me of the fire that started in my parents’ back yard because of a power line that touched the crown of their palm tree. Homes on surrounding streets lost power for several hours.

My conclusion for those first time homebuyers looking at landscapes: Palm trees offer little shade, pose real hazards, and are no picnic to trim.

Here are some Redfin listings in Glendale north of Glenoaks and east of Brand (within sight of those extremely tall palm trees I mentioned):

939 N. Isabel Street
$739,000
3 bed/2.25 bath
1,728 sq.ft.
$428 per sq.ft.
On Redfin 4 days

1230 N. Howard Street
$900,000
4 bed/3 bath
3,280 sq.ft.
$274 per sq.ft.
On Redfin 146 days
This listing says that the home is priced $80,000 below a recent appraisal, is in need of some TLC, but “has great bones and could be spectacular.” It is well below the average price per square foot in the neighborhood.

105 W. Kenneth Road
$990,000
3 bed/1.75 bath
2,344 sq.ft.
$422 per sq.ft.
On Redfin 37 days
This home has views of Glendale and (in the distance) downtown Los Angeles skylines, past its views of the palm trees lining Brand Blvd.

Angelino Heights: Beauty in the Beastly Neighborhood

The LA Times home of the week is an Angelino Heights Victorian that has been completely redone—and has an asking price of $1.576 million. Here’s the Redfin listing for it. It’s been on the market for 71 days, and it really is a fantastic house—complete with a “carriage house” out back that is used as a rental. The LA Times piece talks about the area’s history a bit:

The Heights, a stone’s throw from Dodger Stadium, was the Beverly Hills of the late 19th century, the area for Los Angeles’ upper-middle-class socialites who earned their living in businesses such as dairy farming and warehouse construction.

Of course, not so many socialites in the area today, which is what makes a house like this a hard sell. Without a doubt, it is a really beautiful home, but it is in a marginal area and clearly one of the best homes around. You need a buyer who loves the architecture enough to overlook the location—which is a very particular buyer. But as the current owner says in the Times piece:

“I knew when I first stood on the porch of this house that I was going to buy it,” said (owner Kim) Dane, a photographer and artist who uses the conservatory as her studio. “The high ceilings and tall windows and the design itself are perfect for showcasing my art to clients.”

Here’s another nearby Angelino Heights listing: A 6/2.75 that is on the market for the first time in 78 years. It’s been listed for 326 days at $995,000. And here’s one of the historic homes that looks like it was foreclosed on in March (based on the odd sale price of $1, 211, 500). It’s listed as 11 bedrooms and 7 baths! It had last sold in 2006 for about $1.4 million. But just to highlight that there are buyers for these aging beauties, here’s one that sold in March for $1.1 million. Again, 11 bedrooms.

Will L.A. Become Another Manhattan?

Candy Spelling’s decision to “downsize” from her 56,500-foot Holmby Hills estate to a new, two-story penthouse condo in The Century, the luxury-condo high-rise under construction in Century City, has piqued the interest of The New York Times. Its story, “Downsizing in Los Angeles,” wonders if condo living is becoming a trend among well-off Angelinos seeking a simpler lifestyle.

Los Angeles is becoming a more vertical area at all income levels as land for development becomes less plentiful and traffic congestion, and now high gas prices, steer more people to cluster around mass transit stations and more community-like sections, like downtown and West Los Angeles, said Delores A. Conway, director of the Casden Real Estate Economics Forecast at the University of Southern California. For 2006 and 2007 in Los Angeles County, condos sold better than single family homes, even as the market was dipping, real estate data shows, although sales above $5 million are still few. Last year, 59 percent of new home sales were condos.

The article says that the bad economy has not affected the ultra-luxury real estate market. At Candy Spelling’s soon-to-be home, The Century (pictured; photo is from the L.A. Times), half of the units have already sold, even though the building won’t be ready for more than a year. Prices range from $3.5 million to $29 million. So far, buyers are mostly locals, according to the story.

At least six projects are going up on the west side between Beverly Hills and Santa Monica alone, including hotels with a residential component. The Montage Hotel Beverly Hills, opening later this year, has 20 condos with hotel services, for $9 million to $32 million.

What’s the draw? Here’s what Robert A.M. Stern, architect of The Century, believes:

Mr. Stern…said wealthy Angelenos were ready for apartment living as long as they got “that outdoor-indoor type of living.” He said Californians, unlike New Yorkers, felt entitled to space, light and fresh air, which he translated into spacious rooms and big balconies.

“People are ready to live in a more urban way,” Mr. Stern said. “They’re sick of driving everywhere.”

Believe it or not, Candy Spelling’s $2,848 per square foot for her condo — a record for L.A. — would be a bargain in New York City, where the most sought-after units can go for thousands more, the story said. But the jury is still out as to how many ultra-luxury condos L.A. can handle.

“The premium condo market is unproven in Los Angeles,” said Paul Habibi, a developer who also lectures in real estate at the University of California, Los Angeles. “Amenities are certainly a draw, but are they any better than what they already have?”

The thought of more condos on the Westside brings to mind one word: gridlock. These condo owners won’t be riding the bus, or even walking: They’ll be driving, despite what Mr. Stern says. Maybe they should be required to contribute a few mil to a road-improvement fund.

Affordability: It’s All Relative

Prices are getting lower, so it stands to reason that houses are getting more affordable — or, more accurately, less out of reach — in California. Still, I have a few issues with this California Association of Realtors news release, headlined “C.A.R. Reports Entry-Level Housing Affordability Increases 50 Percent in Second Quarter 2008 Compared with a Year Ago.”

The percentage of households that could afford to buy an entry-level home in California stood at 48 percent in the second quarter of 2008, compared with 24 percent for the same period a year ago, according to a report released today by the CALIFORNIA ASSOCIATION OF REALTORS(R).

C.A.R.’s First Time Buyer Housing Affordability Index (FTB-HAI) measured the percentage of households that can afford to purchase an entry-level home in California.

How does C.A.R. calculate affordability?

The minimum housing income needed to purchase an entry-level home at $329,120 in California in the second quarter of 2008 was $62,870, based on an adjustable interest rate of 5.69 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $2,100 for the second quarter of 2008.

At $62,870, the minimum qualifying income was 38 percent lower than a year earlier when households needed $101,440 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.

The median price of a California single-family resale home is around $370,000, so $329,000 is about 85 percent of that.  But what about the loan — an “adjustable interest rate” of 5.69 percent? Why an adjustable?  Because they’re about a percentage point lower than a fixed-rate loan, which allows more people to “qualify” for a house.  But in the long run, payments are likely to rise — often by quite a bit.

Furthermore, the scenario assumes 10 percent down.  Most loans that take under 20 percent down require private mortgage insurance, or PMI, to the tune of about one-half of one percent of the loan amount. 

Let’s look at the entry-level home more realistically.

Price:  $329,120
Down payment: $32,912 (10%)
Loan amount:  $298,108
Monthly principal and interest payment on a 30-year fixed-rate loan at 6.32% (the overnight rate at bankrate.com): $1,849
Taxes: $308 per month ($3,700/12 months)
Private Mortgage Insurance: $137 per month
Property insurance:  $50 per month
Total Monthly Payment:  $2,344

That’s over 10 percent more than the monthly payment C.A.R. is quoting.  As far as the “minimum qualifying income” of $62,870:  That’s a gross monthly income of around $5,240 per month.  Take-home pay would be about 65 percent of that, or about $3,500 per month. 

Spending 60 percent to 70 percent of one’s take-home pay on a mortgage payment does not sound very affordable to me.  Or wise.

I’ll agree with C.A.R. that home prices are moving in the right direction. But they still have a long way to go before they’re truly affordable.

Recent Redfin posts:
What I Learned About Home Ownership Costs:  The Treetop View
Free Home Designs:  Gimmick or Great Idea?
More on the Neighborhood Pages:  Los Feliz

Free Home Designs: Gimmick or Great Idea?

I’m a big fan of the Inhabitat blog. They’ve got loads of info on all things green and design-related from the latest in solar handbags to prefab architecture.

A recent sneak peek at their site brought me to their post about Freegreen. It’s a company offering free (yes, that’s right) house plans that range from modern to traditional. Well, the standard stock plan is free, but if you want to customize the final product, you’ll pay a fee. It could be anywhere from $100 for changing a few window locations to a few grand for everything from orienting the plan to the site and adding another story.

I really like the concept (and their suburban loft), but I wonder how effective this online design service is when the construction of a home requires so much coordination and is dependent on many site specific factors. Anyone have an opinion?

Woodland Hills might be a prime candidate for the resourceful individual who wants to try building his/her own home from scratch. There are a fair number of lots for sale, starting at $50,000 and going up from there. Though flat lots are much easier and cheaper to build on, they’re also harder to come by at an affordable price.

For those of you who couldn’t possibly deal with the hassle of construction, here are a few homes in Woodland Hills to consider.

Just Listed: 24106 Victory Blvd./2bd, 2bth/1,152 sq. ft./$400,000

Reduced: 22627 Clarendon St./3bd, 2bth/1,302 sq. ft./$539,000

Bang For The Buck: 5216 Sale Ave./4bd, 4bth/3,666 sq. ft./$180 per sq. ft./$659,900

Manhattan Beach and Winnetka are Smokin’

Last night Redfin went to Busby’s in Santa Monica for a home-buying class and Red Carpet Event. It was our biggest ever: 140 people came out to hear what about was going on in West LA real estate prices. Get the slides.

And as it turns out, Manhattan Beach and Winnetka are smokin’. Yes, they both have sale-to-list prices of over 100%, though on only two sales in Winnetka. Otherwise, houses around the area were selling for anywhere from 93.3% of list (Redondo Beach) to 99.4% (Grenada Hills). Buyers got similar discounts on condos somewhere around 5%, give or take. Data in detail is below.

We’re doing events in Huntington Beach on September 10th and Carlsbad on September 24th, so come on out, talk real estate prices and meet the Redfin team. You can RSVP here.

West Los Angeles County Houses, July 17 – August 17, 2008

West Los Angeles County Condos, July 17 – August 17, 2008

Excludes any areas with fewer than three sales over the time period.