As we enter the final quarter of 2011, and take a look at the Palisades market so far this year, some noteworthy observations can be made. There have been some recent articles in different publications that report “another dip in home prices due to high foreclosure rates and weak demand.” Another suggested that, “home prices in a majority of the nation’s largest metropolitan areas posted fresh lows” earlier this year, but that in many areas prices appeared to be somewhat more stable.

As of May 31^st, there were 126 single-family Palisades residences listed in the Multiple Listing Service (M.L.S.), which is nine percent lower than this time last year. So far this year 91 Palisades homes have sold (which is four percent lower than this time last year), and there are now 48 homes in escrow in the Palisades.

As we approach the middle of 2011 it may be of interest to review where the Santa Monica local market is in both the condominium and single family marketplaces.

Some real estate agents do not prefer to take the time to do the short sale negotiating themselves and hire a “third party negotiator”. There are several issues arising in this case, namely whether the third party negotiator is a California licensed real estate agent who is authorized to do such work and also whether they have signed an agency disclosure with the seller.

The key to successfully completing the process is to be both prepared and available to furnish whatever next documents or explanation letter the short sale negotiator or investor will require. This would be the time to put your property on the market. In order for you to accomplish your goal of short paying the loan balance, and especially if you are already in default on the loan, the property must be aggressively priced and marketed.

In order to successfully negotiate a short pay, without having a promissory note on the balance of the loan amount, you will have to demonstrate that the probability of a foreclosure in your case is high.  If it is, then the bank may consider you a candidate for a short pay when they consider other factors.

We have recently been asked more and more frequently what alternatives there are for people to try to maintain their homeownership under tremendously stressful situations. Correspondingly, many prospective buyers are “looking for a deal”, and think that it may be found in all situations where a home is being marketed as a short-sale. The short-sale of property occurs when the market value is less than the loan currently owed by the owner. The issues are complex and not simple to explain. The following gives an overall picture of the current market conditions.

A short pay is when an owner pays off a loan by paying less than what is currently owed on it. A short sale is the sale of a property such that it results in a loan being short paid by the owner.  Both occur when the property is sold and the sale price is less than the loan currently owed by the owner.

The lending industry has changed dramatically over the past few years. Standards and practices that had long been widely accepted are now totally transformed. Gone are the days of careless or loose loan underwriting approvals.

The big question is whether the market correction has run its course, or if owners are likely to still experience a continued diminishment of local home values. While there is no crystal ball which can be relied upon in answering this question, a couple of observations may help in establishing some perspective.

Now that we may be seeing the light at the end of this tunnel following a 2-year nightmare in the housing industry, it may be helpful to evaluate both buying and selling strategies. Observing both buyers and sellers, it is evident that this difficult market has presented challenges in the decision making process.

As we enter a new decade, buyers who have hesitated are increasingly discovering that there are some very compelling reasons to make the move now. After an initial shift from a “seller’s market” to a “buyer’s market” at the end of 2007, home sale prices weakened considerably in 2008. Single-family home sale prices in the Palisades have dropped another 17-20% in 2009, although at a much slower rate in the fourth quarter.

Heading into 2010 and putting 2009 behind us, here are nine arguments for investing in real estate in Pacific Palisades and on the Los Angeles Westside.

An encumbrance is a legal right or interest in land that affects or limits ownership and control over property. It may be in various forms, such as mortgages, liens, easement rights, zoning ordinances, restrictive covenants, unpaid taxes, etc. Although many encumbrances may not prevent the transfer of property, it can diminish its value. A preliminary title search will almost certainly reveal any encumbrances.

As of October 1, 2009, the Case/Schiller home price index improved for the third month in a row, and the rate of annual price decline fell for the sixth month in a row. Price increases began in 18 of the 20 nationwide areas they measure, and most experts now feel this indicates the greatest degree of price declines are behind us.

We have frequently been asked how the Palisades market is doing as compared with last year, and some have wondered if there are any noticeable differences between home sales and condominium sales.

The current Palisades housing market is very appealing to buyers fortunate enough to have secure financing, good credit and employment.  There are many homes available in all price ranges and local areas, and often the prices are quite attractive.  For owners who wish to sell local homes, there are a lot of prospective buyers who are now more willing to make offers to purchase, encouraged by more affordable prices and historically low interest rates.  The sales rates have increased noticeably since the Spring and multiple offers are occasionally in evidence once more.

Was the good news we noted in May and June a “blip”, as some had thought, or was it the actual beginning of a new trend? 

People frequently have been asking how long it might take to sell their Palisades property. Others have wondered if condominiums take a lot longer to sell than single-family homes in this area. And many have been curious if the location of their home might make a significant difference in how long it could take to sell. 

Statistics always trail what is actually happening in a marketplace, and thus it is difficult to predict market tops or bottoms.  However, there have been many recent reports of increasing sales in various areas of the country, gradual stabilizing of price levels in the lower-priced sections of many states, and other potentially beneficial responses to the government programs and loan industry actions.