The Economic Downturn and You...

As I was listening to NPR yesterday, they aired a short segment where the journalist was trying to figure out a name of our current economic state.

At first it was called "The Subprime Meltdown" or "The Credit Crisis" and after months of denial by the Bush Administration, they formally announced that our country is in a recession in midst of the presidential campaign.

Now many of our politicians and economists agree "we are in the worst economic downturn since the Great Depression," and according to President Obama, "it's likely to get worse before it gets better."

So where does that leave us with our current real estate market?

Well unless you've spent the last 6 months under a rock in South East Asia (wow, that sounds like so much fun), you've probably noticed that prices are coming down...

EXPECT PRICES TO CONTINUE TO FALL!

- NINJA (No Income No Job or Asset) loans, yes they actually called them that, are just beginning to go into default. These loans were mostly prevalent in vacation/2nd home or investment purchases in areas like Miami Beach or Las Vegas and subsequently have destroyed those markets.

- According to another source, 70% of all foreclosed properties in Los Angeles are yet to hit the market.

- Group that with mounting unemployment, the lowest consumer confidence in history and the fact that over 11 million homeowners (roughly 1/7) no longer have equity in their homes. It is safe to say that prices are likely to come down even more.

But wait, there is good news too...

Especially for first time home buyers who are looking to stay at their current residence for at least 3-5 years and can ride out the wave.

- First time home buyers can access a $7,500 credit from the federal government (that must be paid back over 15 years) to be used for a downpayment. Plus, you can withdraw money from your 401k with NO penalty charge, though tax implications still apply (Be sure to consult with a tax professional for all details).

- According to the National Association of Realtors (NAR), existing home sales during the month of December increased 6%.

- Interest rates are at a record low: Conforming Loans (under $417,000) can be found at 4.375%.

So for those still on the fence, who have stable jobs and good credit, save your money for that downpayment and give us a call when you're ready to buy that house! Once the LA real estate market bounces back, you'll most likely never be able to buy a house at these prices again...

New Listing for the New Year!

535 N. Detroit St., Los Angeles, CA 90036

Amazing location in Miracle Mile one block West of La Brea and North of Beverly!

Walking distance to restaurants, shops, schools and places of worship! Exquisite Spanish 3bd + 2ba + family room or 4th bedroom. Nearly 1,900 square feet of living space on a large lot (6,600 sqft). Features: Central hall floor plan, spacious living room with fireplace and hardwood flooring. Formal dining room. Updated kitchen and breakfast area including two dishwashers. Master suite with walk-in closet and private bathroom with double sinks leads to beautiful backyard!

This is a SHORT SALE!!!

Offered at $895,000

Help is on the Way!!!

Good news for former Washington Mutual loan holders:

Today, JP Morgan Chase, who recently bought WAMU in the largest bank failure in United States history, announced they will hault foreclosure proceedings for 90 days for eligible homeowners.

The move comes at a critical point in the housing sector and is a win-win for both struggling homeowners and banks. An estimated 400,000 homeowners could avoid foreclosure and stay in their homes by renegotiating interest rates and loan terms amounting to roughly $70 billion.

The programs will apply to people who live in their homes and have sub-prime mortgages, pay-option mortgages or negative amortization loans. The company said these loans could be changed to 30-year loans, fixed rate loans or even interest only loans, depending on each individual situation.

Look for other banks to follow suit:

With Chase setting the example, look for Bank of America who purchased Countrywide and Wells Fargo who bought Wachovia (both of which held high levels of bad sub-prime debts) to make similar programs available for their clients.

Keeping foreclosure rates low is a key step to stabilize the struggling real estate market and help the banks reduce their bad debts and reestablish good lending practices.

It's a step long overdue by the banks but will soon be certain to many, extremely necessary!

The Citron - 3% Agent Incentive in October!

With only a few select models still available in the luxurious modern condos, our seller is providing a 3% commission incentive to all participating buyers' agents who open escrow in any of the remaining units through the end of October.

Updated open house hours:

Tuesdays: 11-2pm
Sundays: 2-5pm

For any private showings feel free to contact Joseph at 310-985-4746

A Busy Month for The Shamash Team

Despite the strong concerns of our current real estate market and what seems to be constant turmoil in our financial sector, The Shamash Team is forging ahead and has entered into 3 escrows this past month.

Beginning with a 4-unit complex on West Blvd that was one step away from falling into foreclosure, we were able to close escrow a few weeks ago despite the arduous process of dealing with a short sale and bank approval.

The next sale was a probate tear down in the heart of the Beverlywood adjacent area. The sellers were asking only for all cash offers and held only one showing of the house. If you could have only witnessed the scene as over 30 prospective buyers and agents were waiting patiently to view the house one at a time.

And yes, our offer was the one that was accepted!

Lastly, we represented a buyer for a 2 bed/2bath condo in the new Kosher-condo development on Shenandoah, which is scheduled to close this week.

While many prospective buyers are waiting on the sidelines during the down swing of the market, there are still plenty of deals available with sellers who are willing to negotiate.

Hopefully, the next deal will be yours and The Shamash Team will be there to represent you!

Ed McMahon's House

For all of you who are watching the real estate market there is a true gem out there that is enshrined in Hollywood history. Yes, it's Ed McMahon's house in Beverly Hills and it's about to go into foreclosure!

As you might have heard, the McMahon's are in some serious financial trouble and if they don't sell their house within the next 2 weeks, they will lose their home and a lot of their personal property as well.

Here's the catch...it's a short sale at $4.6 million and it needs to be sold quickly!

If anyone knows a buyer in this price range, I am more than happy to split the commission with you!

Some features of the property include:
- 6 bedrooms & 5.5 baths
- 7,013 sq feet of living space situated on a 15,000 sq ft lot
- The Summit - The Prestigious Gated community in Beverly Hills
- Price reduced $1.9 million last week!

Rent Increases - To be or not to be?

As a property owner in Santa Monica, California, this is the time of year when we get our annual notification of the City's maximum allowable rent increases to our tenants.

This year the City has allowed an increase of 2.7% for tenants who have been occupying a unit for at least 1 year and the term of their lease has expired or reached a month-to-month status.

And while these increases, if only at marginal amounts, are welcomed by landlords who seek positive cash flow and further relief from their massive mortgage payments, the dilemma lies in who deserves a rent increase.

Does the good tenant who pays his rent on time, takes great care of the property and calls whenever there is a problem warrant a rent increase if his unit is below market value?

And with soaring gas and food prices, inflation knocking on our doorstep and an economy that is screaming RECESSION, who bears the grunt of the financial responsibility...the Landlord who relies on rents to satisfy his payments or the good Tenant?

Well if you ask the City of Santa Monica, their answer is clear: It's the wealthy, property owning Landlord vs. the unfortunate Tenant.

So what's the solution?

It's hard not to take into account market forces of supply and demand in situations like this. If a unit is being rented out below market value and the terms of the lease have expired, there is no logical reasoning why the rents shouldn't be justifiably increased to reflect the current conditions.

Furthermore, with the current and unforseeable trend in higher gas prices, there is an increasing demand for rental units in the Westside. And if an extra $50 a month is an insurmountable expense for a tenant, then there are others waiting for their departure.

But for the landlord with the great tenants, the answer is simple.

You give all tenants their maximum allowable rent increase in compliance with the City's law but if they truly deserve that money back, give them a refund during the holiday season with a note saying, "Thanks for being such a great tenant."