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Supply Chain Issues and Real Estate

 

Valerie and Tom moved to Texas, fleeing expensive California when they realized they could work remotely indefinitely. They were thrilled with their new dream home, ordering furniture and appliances, only to be told that due to supply chain issues, the furniture wouldn’t arrive for 6-12 months. They ended up camping out. That’s not what they had in mind.

Let’s step back and think about the total cost of buying a home in today’s world. Who would have thought that a Pandemic would result in a Real Estate boom? Bidding wars drive prices hundreds of thousands over asking. Just about every market was a hot market, as buyers embraced the idea of remote working.

Many buyers moved from expensive cities to more rural areas where they could get a big, beautiful home for a fraction of what they would have paid at home. So moving from a 2000 sf split level to a 7000 sf home in Utah or Texas has one issue that many buyers forget: you have to furnish it! And that can really add to the cost.

Homes and condos are often sold furnished in vacation areas like Florida but that trend is now going mainstream. Buyers ask sellers to include some or all of the furnishings. If a seller is downsizing, it’s often a good idea for both parties but how much is it worth? Oftentimes the buyers don’t really like the furnishings but “it’ll do until we get our own”. The Sellers of course think that it’s worth what it was when it was new., 20 years ago….Recently we are seeing “ throw in the furniture or there’s no deal”

What about when the home is staged? Do you remember my recent listing, a mid-century modern? We removed all of the sellers’ furniture and staged it with mid-century. The buyers thought it all belonged to the sellers and wanted the home furnished. But it wasn’t the sellers to sell-it all belonged to the stager. The buyers got the kitchen island and the outdoor furniture…

Big Financial Impact for Sellers: Measure ULA & GS

NEW TAX LAW ALERT

Measure ULA and Measure GS will have substantial financial impacts on sellers’ profits in Los Angeles and Santa Monica after March 1st & April 1st, 2023.

These new laws include significant tax increases for homes sold in Los Angeles and Santa Monica at/or above $5 million, $8 million, and $10 million. 

If you are thinking of selling a property in these areas, it would be important to understand how these upcoming taxes could impact the proceeds. Closing escrow prior to March 1st or April 1st, 2023 would be critical dates to consider. 

Measure GS
City of Santa Monica, which will take effect on March 1st, 2023 states that properties sold at $8 million or above will be taxed 5.6%.

Measure ULA
City of Los Angeles, which will take effect on April 1st, 2023 states that properties sold at $5 million or above will incur an additional 4% tax, and properties sold at $10 million or above will be taxed an additional 5.5%. On a $5 million sale, the transfer tax will increase from $28,000 to $228,000 due at the close of the sale and deducted by escrow regardless if the seller is taking a loss on the property or not. This is for both residential and commercial real estate within the city of LA. This HHS Tax (Homelessness and Housing Solutions Tax) is in addition to the Los Angeles City and County documentary transfer taxes that are already imposed on transfers of real property at a combined rate of $5.60 per $1,000 of value (or fraction thereof). It will be imposed on “each deed, instrument or writing granted, assigned or otherwise conveyed to, or vested in…”. The language is not limited to the amount in excess of $5MM or $10MM but is on the “consideration or value” so starting from zero!

Recipe for Success

Even in this changing market, why is it that some homes get multiple offers and others need a price reduction to attract buyers? It’s a question of perceived value. There are certain attributes that drive demand for buyers: 

Location: near amenities, private setting, a particular neighborhood with homes of equal or higher value

Architectural Appeal: In LA mid-century is the most popular among buyers today

Layout: Single-level homes appeal to the largest segment, young or old

Extra Rooms: ADU or in-home office space have become increasingly in demand since COVID & add much value

Pool: A private pool now adds much more to value than in past years as it can take 2 years to build a new pool 

Upgrades: Kitchen and bathrooms are real drivers, as they are costly and time-consuming for the buyers to do

School District: A highly rated district can be the deciding factor

333 Mesa Lila is an interesting case study.  This home did check all the above boxes, but it needed to be reimagined. All the existing furniture was removed and staged for today’s lifestyle. The detached recreation room was recreated to show its full potential.  This new look was the tipping point that pushed this home’s selling price to $425,000 over asking. 

WOW!!!

Some of My Favorite Thanksgiving Quotes

May your blessings be plentiful on this day and throughout the coming year. I hope you will enjoy reading some of my favorite quotes for this special holiday. 

—-

Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend. Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow. – Melody Beattie

Not what we say about our blessings, but how we use them, is the true measure of our Thanksgiving. 
– W. T. Purkiser

When I started counting my blessings, my whole life turned around. – Willie Nelson

As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them. – John Fitzgerald Kennedy

You say ‘If I had a little more, I should be very satisfied.’ You make a mistake. If you are not content with what you have, you would not be satisfied if it were doubled. – Charles Haddon Spurgeon

Gratitude begins where my sense of entitlement ends. – Steven Furtick

Let us be grateful to people who make us happy, they are the charming gardeners who make our souls blossom. – Marcel Proust

Every day is a day to be thankful. Life’s abundance has no limit, and gratitude is what keeps that abundance flowing. In every circumstance there is something for which to be thankful. Even when there seems to be nothing else, there is hope. – Ralph Marston

Pride slays thanksgiving, but a humble mind is the soil out of which thanks naturally grow. A proud man is seldom a grateful man, for he never thinks he gets as much as he deserves. – Henry Ward Beecher

A basic law: the more you practice the art of thankfulness, the more you have to be thankful for. – Norman Vincent Peale

A thankful heart is not only the greatest virtue, but the parent of all other virtues. – Cicero              

Gratitude is the inward feeling of kindness received.  Thankfulness is the natural impulse to express that feeling.  Thanksgiving is the following of that impulse. – Henry Van Dyke

Thanksgiving, like contentment, is a learned attribute. The person who hasn’t learned to be content will not be thankful, for he lives with the delusion he deserves more or something better. – Robert Flatt

We often take for granted the very things that most deserve our gratitude.- Cynthia Orzick

We would worry less if we praised more.  Thanksgiving is the enemy of discontent and dissatisfaction.
– Henry Allen Ironside

Attitude is the sign of noble souls. – Aesop
 
If the only prayer you said in your whole life was “thank you,” that would suffice. – Meister Eckhart

I would maintain that thanks are the highest form of thought; and that gratitude is happiness doubled by wonder. – Gilbert K. Chesterton
 
I cried because I had no shoes until I saw the man who had no feet… – unknown
 
How wonderful it would be if we could help our children and grandchildren to learn thanksgiving at an early age…Thankful children want to give, they radiate happiness, they draw people. – John Templeton

We can only be said to be alive in those moments when our hearts are conscious of our treasures.
– Thornton Wilder
 
If you are really thankful, what do you do? You share. – W. Clement Stone
 
Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough. – Oprah Winfrey
 
The roots of all goodness lie in the soil of appreciation for goodness. – Dalai Lama

Reflect upon your present blessings of which every man has many – not on your past misfortunes, of which all men have some. – Charles Dickens

Beauty Lies in the Eye of the Beholder

The perception of beauty or value is subjective. What is captivating to some might be ordinary or unappealing to others. When buyers are searching for a property, they naturally ascribe value to certain aspects of the home – and that value can be completely different than someone else’s opinion.

Many times, we run into situations where additional space has been added or converted. Sometimes the space is permitted and on public record. Other times, there is absolutely no record of the work completed. How does a buyer compute the value of this space?

Consider these three examples:

A modest sized single-family home with a sizable detached recreation room added with permit, but the additional square feet are not on the public record. With the new ADU laws, this space today has a much higher value than it would have had just a couple of years ago.

A condo had a large balcony that was converted into additional living space. The work was not done with a permit and the space was not on public record. There was great upside potential to buyers, but they had to factor in the cost of the conversion. Since this was a condo, the HOA was a good place to start. Would they object to legalizing this space? Here the fear of the unknown cost and time needed for the conversion deterred many buyers.

A lovely home had an original covered patio that was converted to an indoor sunroom. The public records included the square footage, but there was no permit for the sunroom. Buyers wanting to do major renovations considered it a negative even though it was an integral part of the home.

What is a seller to do??? Although it may seem counter-intuitive, to a seller, disclosure is your friend. No matter the situation, tell what you know and let the buyers decide. You’ll often be surprised at the different reactions. The beauty is in the eye of the beholder and that means the buyers’ eyes.

What You See Isn’t Always What You Get

What You See is Not Always What You Get

I am thrilled to close on this classic mid-century home in the sought-after Linda Vista area of Pasadena. The location, style, and lot size drew immense interest and multiple offers. But there was one unique feature that needed explaining – the lot lines. The exact location of the lot lines have never been marked. When you look out to the backyard, it appears all the land behind the home belongs to this property. That is not the case. There is another, separate lot behind the home that has never been developed. It was imperative that all interested parties were aware of this and had the option to engage with the appropriate resources to identify the lot line as they saw fit. Developers and investors were knocking down the doors on this property until they understood the lot situation and limitations. It’s a good thing we did a complete title search and disclosed this fact to buyers upfront before they made any offers. Regardless of the lot challenges, the property still sold $290K above asking.

Pasadena Market Snapshot

Market shifts are inevitable. The chart below shows a lower median home price (vs LY) and even 30% of listings reducing their price. On the other hand, you’ll see that the sales -to-list price is 103%. We’re always here to discuss pricing strategy and listing your home during a changing market. Give us a call.

The Vagaries of a Changing Market

Ever heard the expression: “a rising tide lifts all boats; an ebbing tide sinks all boats”? While this applied on the uptick in the market during COVID, applying it to the current real estate market doesn’t work in all areas. The NOW market that we are living in is complicated and very segmented.

The recent shift in the market is undeniable. But generalities don’t matter when talking about YOUR property. What’s important to know and understand is YOUR market and how much (or little) the changing economy is having an effect on your home’s value.

What to look for?? Start with these questions:
– What market segment does your property fall within? Each market has four tiers and they are all reacting differently in each area.
– Which sub-market are you in? Even within one clearly defined market area like Pasadena, there are sub-markets.
– How much does the lot size add to value? It depends on the segment you’re in.
– Do you have a pool? Did you know that people have been paying huge premiums for homes with pools during COVID?
– Is the school district as important as it used to be….in some, not all, price ranges.

This shifting market is not consistent or easy for the homeowner to understand. Let’s talk about your specific situation and how we can help you get the most value.

We’re always here.

The House that Birthed a Baby

I love the story of the buyers on my latest listing in Pasadena.

We all know the market is competitive and buyers need to be flexible and willing to act immediately. These buyers took that concept to the next level. The clock was ticking to find a new home quickly for two important reasons – they had already closed on the sale of their current home and a new baby was coming in 10 days. No pressure, right?

From the moment they saw my listing, they could envision raising their growing family there. They already had a toddler and baby #2 was due. This house was THE ONE. It was time to bring their A-Game. After battling it out in a competitive, multiple offer situation – just before Memorial Day weekend nonetheless – they came out on top. They signed the last round of counter offers and the next day the new baby arrived! Then, two days later, they are back at the property for inspections, appraisal, and to meet their contractor – with the newborn and toddler in tow! A whirlwind to say the least.

With the willingness to be flexible and fight for what you want – no matter the circumstances – you can find your dream home. Congratulations to all involved!

It was the best of times; it was the worst of times

The WORST time to buy a house in California is NOW.

The BEST time to sell a house in California is NOW.

You can be a buyer in today’s market if you have thick skin, patience, and can be emotionally detached from the process. That’s really hard to do when you’re buying a home that you’re going to live in. But, you can do it.

It’s a great time to sell a house now if you’re not overly greedy. Waiting to squeeze out the last dollar in a market with the highest prices we’ve ever seen in California, may lead to regret in the future. Greed is good, but not too much.

No matter where you are as a buyer or seller in the process, there is a way to get what you want. You have to be creative and that’s our specialty.