It’s Mine


It’s mine, it’s my house.  It’s a cute little bungalow; it’s a darling condo with a view of the greenbelt; it’s the estate home I deserve, with the pool and outdoor BBQ… oh the steaks I’ll grill!  Heck I’ve worked my tail off to get here.  I’m so excited!   We just closed. I can’t believe it, it’s mine!

Real estate.  I help people buy and sell real estate.  It’s what I do, helping people with that most important decision.  This is what it’s all about.  It’s the feeling you get.  The satisfaction.  To own a home, your home.  This is real estate.  Real estate is homeownership, real estate is life; there’s nothing better, no moment prouder, none more satisfying.  Owning a home means more than a roof over your head, though it is that.  It’s getting somewhere that our parents did – or never did.  It’s about making all the sacrifices of saving.  It’s cleaning gutters and cleaning floors.  It’s calling plumbers and air conditioning guys and telling the landscaper he needs to spend more time weeding and less blowing.  It’s trips to the paint store and Home Depot.  It’s Thanksgiving, prom and birthdays.  It’s bringing home baby; it’s hugs, lunches, it’s saying goodbye.  Goodbye to friends.  Goodbye to kids; goodbye to pets, God we love our pets… is there anything better or anything harder?  And it’s goodbye to the one that spent a lifetime with you; finding a book with a picture as a page marker.  It’s remembering.  It’s forgetting.

Real estate is home.  Home is life.  Your home, my home, our home, this life.  This is real estate and this is home.

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When Should You Consider Doing A Pocket Listing?

I was recently on a listing appointment when the seller asked me, “Do I have to go on the multiple listing?” I was a bit surprised by this and asked my elderly seller, why they wouldn’t want to go on the public market place when that’s where they get the greatest exposure and likely result, the best price? Her answer was very telling. She said she didn’t want to go on the MLS because she didn’t want a bunch of people going through her home. Interesting right? I mean how the heck does one sell one’s home without being “On the market?”

Studies suggest that the 3 most stressful things in life are death, divorce and moving and not necessarily in that order. boxesWhat my client was saying in the example above was that she just wanted her home sold and didn’t want to go through the process of selling. (Ask Tim about your home here) But is that even possible and more importantly, if it is possible, is it realistic and even if realistic, will I be doing right by the seller if I do the listing in this way? The answer is yes.

When a home doesn’t go on the MLS but is an active listing (listing agreement has been signed) it’s called a pocket listing. A pocket listing is where an agent and seller sign listing papers but intentionally agree to not go on the multiple listing service. To keep it, “In the Realtor’s pocket.”  In my MLS rules, a broker must publish a new listing within 48 hours of signing or else have the seller sign an exclude from the MLS document. Pocket listings are frowned upon by the Association of Realtors.  Why?  The reason for the tight timeline and the exclude document is that in years past an unscrupulous agent might tell a client that they are on the market when in fact they are not. The reason this evil agent might do this is obvious: to sell to their own buyer their listing earning both commissions for themselves. Obviously if no one knows about the listing, the listing agent has a much better chance of selling it themselves, right? A quick aside: Dual Agency is allowed in California provided both parties are fully aware of the dual agency relationship. When only one side knows of the relationship, this is called a Divided Agency and it’s illegal and the quickest way for an agent to lose their license.

In our story, my elderly client just wanted her home sold. She’d been in the home nearly 60 years and the whole thing was entirely overwhelming. Being a SRES, a Senior Real Estate Specialist (click here for more on what a SRES is or contact me for more information) I am acutely aware of the difficulty our seniors face when finally making the difficult decision to move. Clearly this was the case with my client. The question then moved from “Yes, I can do a pocket only listing,” to “How am I going to do this?” It’s interesting really. sresPocket listings aren’t the least bit uncommon in the ultra-luxury market. Often times a home is sold in a “Private sale” and only becomes known through public records and from scuttlebutt as people hear about a big sale and word gets out. Let’s face it, there are only so many people in the world that can spend $50M+ on a home therefore being on the MLS is not always required. But in the more moderate price ranges it is quite challenging to sell a pocket listing. So how would I do it?
Faced with this task I told my client that I’d first market to select Realtors that I knew worked in the neighborhood. Since I have a frequently visited website ( I would add the listing as a Featured Home to my website as well as include it some of my mailers and marketing pieces in a way to inform my circle of friends and past clients of this great pocket listing all the while without giving up the address. There would be no sign of course and I explained it was likely to take more time than a normal listing. As someone who lists a lot of homes, I have the advantage that people call me for information on my listings. This allows me to tell people inquiring about one home for sale, that I had this other pocket listing too. All of this pleased my client, but I bet you’re wondering, will it work?
I put my plan into action in late fall. I showed the home a couple of times using word of mouth but to no avail. Then I included it in my bi annual newsletter, The County Line Gazette (Click here to receive your copy of the County Line Gazette). gazz-prt-scLow and behold I got a call from a Realtor. Understand that I don’t send my newsletter to other Realtors but that’s who called. “How’d you hear about it?” I ask. “My client’s parents got something in the mail from you and knew their kids wanted a home like this so they’d called me,” the Realtor said. Cool! Perfect! This is exactly what we wanted. I showed it and guess what? That’s right, they wrote an offer. You can imagine how pleased the seller was. She really didn’t’ think I’d sell it and then when I got her a good price without having to have “People go through her home,” she was thrilled.

Another time a pocket listing is a good idea is when the seller is only somewhat interested in selling.  In this scenario, a seller might engage a Realtor by saying something like, “If you have someone who’d be interested in my home, I’d be willing to sell if the offer made sense and the price was right.”  Often this is the seller whose not terribly motivated and doesn’t want an agent to spend a bunch of time and money marketing their home when they really aren’t sure they want to sell or someone who doesn’t want the task of always keeping their home “Show ready.”  As an agent who does pocket listings, I don’t love this kind because working for a unmotivated seller isn’t what I like to do.  It’s typically a waste of time.  Still, it can work and is especially useful when working with an agent who is very active in a certain neighborhood where the likelihood that they might have interested buyers, is better.
A pocket listing isn’t usually the best way for a seller to sell but it has its place and can be used effectively in the right situation. And sometimes, it’s is just what the doctor ordered.

New Listings This Month



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Top 10 Reasons To Sell In 2017

As homage to David Letterman, here are the top 10 reason you should sell your home in 2017.

  1. Your home has gone up and you want the home of your dreams.
  2. You’re new job is finally paying you what you’re worth and you’re getting killed in taxes so time to sell and buy up.
  3. Your mother in law’s arrival makes your home way too small and the current bedroom count, one fewer than is minimally necessary.
  4. Your neighbor is so close that you hear every argument they have and the temptation to stay out of the conflict has gotten to be too much.
  5. Climate change necessitates a swimming pool and its cheaper to sell and buy a home with a pool than to build one yourself.
  6. Now that your child is school age, you realize your Realtor (Contact Tim Here) was right, you should always consider schools when buying.
  7. The return of the LA Rams means you now have the excuse for a man cave you’ve been looking for.
  8. You bought an Airstream at the latest RV show only to find out your HOA doesn’t allow RV storage.
  9. Your spouse says it’s either move or remodel and has already picked the Beverly Hills designer to help.
  10. And the tenth and final reason to sell in 2017, the outcome of the US election has prompted you to seek permanent residence status in Canada.
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The Significance of Horiike vs. Coldwell Banker on Dual Agency

justiceYesterday the California Supreme Court ruled on dual agency.  Dual agency is when a broker represents both the buyer and the seller in the same transaction.

In Horiike vs. Coldwell Banker, the dispute arose from a discrepancy in the listed square footage and the actual square footage.  The seller had represented that the home in Malibu was 15,000 square feet when permits showed it less than 10,000.  Apparently, the garage and basement were included in the seller’s calculation of the total living area, which as a rule is a no-no.  The listing agent, was apparently aware of the possible discrepancy.  The court ruled that because Coldwell Banker was the broker for both agents, the seller’s agent should have disclosed this possibility to the buyer.  The court reiterated that it’s an agent’s duty to “Disclose any material fact to the buyer that affects the value or desirability of the property that are not known to or within the diligent observation of the parties”.  Hello?  This is a requirement not only in dual agency but in every transaction, even when each party has their own representation.  It’s literally in the first document signed by the seller when a listing is taken and again when a buyer makes an offer.  The document, Disclosure Regarding Real Estate Agency Relationship uses the exact wording the court used.  In fact, one would have to assume the court inserted the language directly from the California Association of Realtors document.

In the case before the court, the Association of Realtors argued that because the buyer had their own agent, the listing agent had a “unique” responsibility to the seller having been the listing agent first.  Why would they do this you ask?   realtor_imageThe Association’s supposition was that even though Coldwell Banker had a dual agency, since the listing agent was not representing the buyer, the listing agent should have loyalty and a fiduciary obligation to the seller first.

What makes the Horiike case unique is not this idea that all material facts need be disclosed in dual agency because that is always the case and the agent really should have disclosed the need to verify square footage regardless of agency since he was aware of a possible discrepancy.  What’s significant is that the decision serves as a reminder that while there may be two different licensees (agents) in a dual agency transaction, the fact they are under the same brokerage as was the case in Horiike, means the listing agent must behave the same as if they were representing the buyer themselves.

Let me explain the distinction.  When I represent a buyer and a seller in a transaction, I always make extra sure anything I know or suspect about the property is brought to the attention of the buyer.  And if a seller tells me something in confidence, if I feel my buyer needs to know this fact because it may affect the way they feel about then property, I tell the seller we need to tell the buyer.  But some disclosures aren’t always clear.  For example, earlier this year I had a dual agency and I noticed that the windows in the living room had a weird orange powder or film in between the panes of glass.  The seller said, it had been that way when they bought the home from the previous owner.  I suspected this was a symptom of a problem with the window seal.  So, I made a point of telling my buyer that the windows may have a problem that wasn’t necessarily just cosmetic.  You would think that of course Tim would want to protect the buyer since he was representing both buyer and seller and you’d be right, I watch out for my clients.  But what if I wasn’t representing the buyer and they had their own broker?  Would I have gone to the lengths of disclosure of suspicions if I were not also representing the buyer?  The C.A.R. contract is quite clear, it’s the buyer’s responsibility to investigate.  The seller has a duty to disclose and an agent to observe.  What would I tell the buyer, I saw something that could be something and maybe you want to investigate?  At what point, does that breach my fiduciary responsibility to the seller to represent their best interests?  I mean I’m no window expert and it’s my duty to protect the seller not cause fear in the buyer on speculation on something I have no real knowledge of which could damage the seller I represent.

When I am representing both buyer and seller however, my role shifts to that of facilitator and I tell my sellers this because they may or may not be willing to allow me to shift into that new role.  They may want me to only represent them (contact Tim here if  you want more information about my services). In the past, if a seller wants this, I get my manager or another agent from my team to assist in representing the buyer.  It keeps things neutral.  This however is the crux of the Horiike ruling:  That even if I get another agent from my office or even another office of my broker, my role changes.  I am a dual agent.

Before I continue it’s worth mentioning that the court’s decision in this case was interpreted very narrowly and to the specifics of this case, so what follows is more of a potential interpretation should this ruling be interpreted differently somewhere down the road.

In Horiike, the court ruled that in this case, that the agency relationship specifically for the listing agent changes when the same brokerage is on both sides of the transaction, even though buyer has their own agent representing them.   Thus it could be inferred that the distinction is that the listing agent’s responsibility shifts to that of dual agent when in any transaction with another agent from the same brokerage.  The listing agent must act as if they are representing both the buyer and the seller even though there’s a buyer’s agent.  It’s as if the buyer’s agent doesn’t exist.  It’s a subtle difference but should a future case interpret Horiike in this way, it is a difference with implications potentially huge for the real estate business.

In a world where there are brokerages comprised of hundreds or even thousands of agents, this potentially creates a real conundrum for sellers.  Again I want to caution that the following is not the  interpretation of the judge in this case, rather a hypothetical “what if” should a future case be interpreted far more broadly than Horiike vs. Coldwell Banker was.  In this example, let’s say a seller listing a property decides it’s not such a good idea to list with a large brokerage.  A large brokerage with lots of agents under a broker could mean there’s a greater likelihood that their agent could be forced into a dual agent role, even though there are two agents in the transaction. While this is still a possibility in a small boutique brokerage, clearly  with the larger brokerage, there’s a greater chance a seller loses their agent’s independence.     Moreover, the seller would have to decline an offer if they are not willing to allow dual agency.  And what does that mean for a buyer?  If my agent is with a large brokerage and I want to see a property listed by the same brokerage and it turns out the seller is unwilling to entertain an offer from that brokerage because they don’t want a dual agency, that buyer can’t exactly go to another broker to write the offer over.  This is because the agent originating an offer for a buyer, is the only one entitled to the commission. procuring_cause This is called “Procuring Cause.”  If I’m a buyer, who’s going to write my offer if they won’t be entitled to a commission?  So, the Horiike ruling is potentially not without consequence and could lead to a move towards smaller independent offices and away from the huge Coldwell Banker, Keller Williams and Century 21’s of the world.  Now personally, I don’t believe that dual agency is ominous and in fact I do it a few times in any given year to the benefit of both my buyers and sellers.  That said, I guess this is another good reason for an agent to be with a boutique brokerage, like I am (Learn more about Tim here).

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The Trouble With Escrow

When it comes to most anything, it’s safe to say California leads the way.  Mario Salvio and the free speech movement at Cal Berkeley in the early 60’s; the environmental movement of the 1970s began following the Santa Barbara oil spill even medical marijuana in the mid 1990’s.  Regarding innovation, it’s hard to argue that California isn’t the world leader given we are the birthplace of the microchip and all that has followed.  When it comes to real estate, California’s no different.  Her licensing is one of the nation’s most respected and stringent.  In fact, a California Brokers license like I have, is honored in more states than any other without relicensing.  (Learn more about Tim here)  So naturally as a leader in so many ways, you would think we are cutting edge with regards to the method or process we us to transact real estate.  This is evident in our use of escrow.

If you’ve ever bought or sold a piece of real estate in California, you know we don’t use mortgages rather, a deed of trust (a cutting edge benefit to the lender) and we don’t use an attorney to close. California is an escrow state.  This means that there is a neutral 3rd party at the center of a real estate transaction (Picture Rich Uncle Pennybags from the Monopoly game with a bag of cash in one hand, keys to the property in the other, crossing his arms and handing the keys or the money to the buyer and seller).  hand-with-money-compressedThis is fundamentally what escrow does.  Unlike many states where closing is done at a table with lawyers, buyers and seller sitting across from one another, California relies on an escrow service to conduct and facilitate the transaction.  Escrow generally runs smoothly so most people don’t give it much thought, but that doesn’t mean it isn’t rife with potential problems.

Let’s start with the question: What is escrow in the first place?  Escrow is at the center of the process, essentially the hub of the real estate transaction wheel.  Once a contract has been negotiated the broker(s) send the paperwork to escrow.  The escrow company, as dictated per the terms of the agreement, receives the contract, assigns an escrow number and “opens escrow.”  Escrow then sends instructions to the parties restating the terms agreed to in the contract: Price, timelines, closing date, earnest money to be deposited, financing terms if any and commissions.

Escrow will order the Natural Hazard Disclosure Report, any homeowners association documents and the preliminary title report.  Eventually they will coordinate the preparation of an estimated closing statement for the lender and at the end arrange the signing of loan documents with a notary public.  Escrow then notifies the title company who sets up and records the deed.  Upon confirmation of the recording of the deed at the county recorder’s office, title sends the money back to escrow where they tally the final figures, payoff any liens and distribute the proceeds to the appropriate parties.  There is no “meet at the closing table” and there are no lawyers involved.  It’s very efficient as compared to the “old way of doing things” as it is done in many Eastern and Midwestern states.  California once again is leading the drive towards a better way of doing things.  Alas however, there are some flaws.

I recently completed a rather persnickety transaction that exemplified some of the problems with the escrow system.  First is the issue of the property condition and possession.  As we neared closing a final verification of property condition or walk through, was performed.  (Search for your dream home here) This is designed to ensure the home is in substantially the same condition at closing as it was when purchased.  But as it turned out, the seller left personal belongings behind so the house really wasn’t fully empty at closing.  Yikes!  Problem 1: How does a buyer know if the seller isn’t required to be out prior to closing, that the seller has everything out or is even out at all?  Answer: They don’t.  Unlike sitting at a closing table where the seller has moved and the home is ready for turnover and keys are exchanged for cash, with the escrow system the buyers have no know way of knowing if the seller is actually out.

The second problem is the property condition.  With the walk through taking place in the days leading up to closing and with the seller still in the home, you can’t really see everything.  I once had a walk through where the home looked fine, but once we closed and the seller moved out we found a large potted tree had leaked water on the wood floor and underneath was ruined.  What then?  Fortunately, the seller was still in town, recognized the issue and agreed to pay the buyer to have the floors refinished.  But what if they would have already left?  How would the buyer collect?

The third issue is regarding possession.  With escrow the buyer’s loan funds, the down payment is in and everyone is ready for the close but the seller doesn’t actually have the money, it’s still with escrow.  It’s not until after the close that escrow sends the money to the seller.  Let’s say it’s the end of the month and the recorder’s office is backed up, not at all uncommon.  The recording eventually happens but not until after the escrow’s wire cutoff through the Federal Reserve Bank.  freserve3Huh?  That’s right, wired funds must pass through the Federal Reserve and they close around 2 pm Pacific.  So the deed is recorded and the buyer is the legal owner and ready to take possession of their new property, but the money hasn’t been deposited into the seller’s account yet.  This just happened to me and making matters worse, it was the last day of the month which also happened to be a Friday.  So not only did the buyer get the property before the seller received their proceeds funds, the seller had to wait until the following Monday to get their money!  And lest you think this rarely happens you’d be mistaken, it happens quite often.  Unlike a closing table where the keys are exchanged for the money, escrow always and by definition has to set up the recording and then record the transfer all before seller gets their money.   In the transaction I just closed, the seller was livid that the buyer was going to have the keys before they had their money and wanted me to hold the keys and not give them to the buyer, even though the property had recorded and the buyer officially owned it!  Thankfully in that example, escrow was able to rush the file through and beat the wire cutoff with just minutes to spare.  That didn’t stop the seller from giving me an earful however.

So it goes that California’s use of escrow may in fact be the most efficient method of exchanging real estate for money, it is not without a certain amount trust that everything will work out right and everyone will do and perform as they should.  Something that traditional closing easily avoids.

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Real Estate In The Conejo Valley August 2016, What’s Happening

Every August my wife reminds me it’s August. Usually by saying something like, “It’s August, don’t freak out.” Or “Don’t freak out, it’s August.” In general, whatever she says usually contains don’t freak out and August. She knows after 26 years in this crazy business, that it’s always slow in August. She has to remind me because it always seems to catch me by surprise. You’d think that I’d have figured it out by now, but truth is, it always freaks me out. 2016 has by every measure, been an outstanding year for real estate. Total unit sales are up. Prices are up. Rates are down and inventory while still tight, is a little better. Employment is up and incomes are even rising a little. If this were the Goldilocks story, you’d say the porridge is piping hot and just right! (Search available homes here).

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Great Family Home in Dos Vientos Ranch

Yet I find myself wondering if this August is different than the rest. Is this seasonal slowdown a signal that the market is ready to shift and should I be bracing myself for a market correction?

So let’s look at the market here this August, in the Conejo Valley.  First let’s talk about August itself and why my wife always reminds me it’s August. See the thing about real estate is that there are seasonal tendencies or patterns that emerge. For example, the Super Bowl is more than just the end of football season, it’s the kick off for the Southern California real estate season too. Most consumers think that summer is the best time to list their home to sell. Fact is, I like to list just before Super Bowl to get a jump on the market. My best months, year in and year out are February through May. Spring is our area’s strongest market. You see by mid May life starts interfering with real estate. Mother’s Day, Memorial Day; Father’s Day and graduation and before you know it it’s 4th of July. It should be noted that there are structural changes impacting the market, at least there are here anyway.

It used to be that school started either immediately before or after Labor Day. But now some districts are staring as early as the first week of August. This kills the month of July because now instead of August being the final vacation month and the school supply buying month, it’s starting in July. This has conspired to make July almost as slow as August.

North Ranch Home Listed at $990,000

Since spring is the best market, sellers usually get their price and spring buyers find some of the best properties come up for sale. As I mentioned, inventory has been creeping up. We started the year right around 500 units for sale. Currently we are around 600. Up, but not more than we should expect for this time of year really. In fact, we have almost exactly the same number of units available as we did last year this month. But does that explain the general malaise I’m seeing in our market?

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Ben Johnson Fairway Home – Perfect for Entertaining Guests

2016 is also an election year and if you haven’t noticed, it’s a bit unusual and it’s the news. If it’s an election year, it’s also a Summer Olympic year. All this conspires to make August 2016 even slower than usual. The question then is, is it a good time or a bad time to buy or sell? The answer is, I’s always a good time to buy or sell real estate. There is never a time when there aren’t excellent opportunities to buy real estate, but you do need the right agent in your corner helping you along the way. (Contact Tim Here).
So what’s the market like? It’s good in some areas, great in others. Remember, real estate is a local and some argue, hyper-local business and it’s also a seasonal business. Home with pools sell best in summer. OK, I know what you’re thinking, “Spoken like a true Realtor,” right? Yes, but seriously, it is always a good time. Let’s start with the buyer part of the equation. If the market is slow, what are sellers going to have to do to move their home? That’s right, be more willing to negotiate. Thus a buyer can get a better buy than just a few months earlier.

For the seller though, yes you might have to be more flexible on price, but what happens after you sell? You likely go and buy something to replace your sold home with. And that means you’re also buying when the seller needs to be more flexible. Plus, when prices are up like they’ve been, you are cashing out and taking some profits off the table. Trying to time the market, any market, is not only impossible, it’s wrong. Trying to time the market almost always leads to missing out on great opportunities.

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New Listing in Rancho Conejo

I currently have a home with owned solar (no electric bill) and don’t think for a minute that isn’t a popular amenity when we’re running the air conditioning every day (for all listings visit So the market is good. It’s August. School just started for our largest local district today. Labor Day is just around the corner and then it’s onto September, which is traditionally a very good month in real estate. So you think you might want to buy before September? Maybe so and have I got the home for you!


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April 2016 Case Shiller And What It Means Looking Forward

April 2016 Case Shiller And What It Means Looking Forward

Yesterday morning Case-Shiller reported an average 5% gain in home prices across the country.  Portland, Seattle and Denver lead the nation with gains year over year in the 10% range.  Many of the 20 Cities used in by Case-Shiller, report at or above bubble peaks. house_bubble_new By any measure this is good news for homeowners and while growing more expensive, hopeful news for home buyers.  The question on everyone’s minds of course is, can it continue?

I hear talk amongst my fellow Realtors that they are concerned that values are too high.  Are we in another bubble they ask?  Obviously all anyone can do is guess, but some have more empirical data to guess than others.  Case-Shiller bases their calculation on data from the 20 largest metropolitan statistical areas or MSA.  This is a large swath of data and why so many watchers of real estate look so closely at it.  Myself, I only have data on my little corner of the world, the Conejo Valley and the real estate along the Ventura/Los Angeles County line (search available inventory here).   Thus my opinion reflects the unique idiosyncrasies therein.

The area I work has prices starting in the mid $200’s (a few condos) and venturing into the occasional 8 figure property.

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5520 Wembly Drive  Oak Park, CA

When I run my numbers which I do monthly, I focus on the supply side.  I look not at the prices but the inventory and the percent change month over month.  Since in a normal year I list about 7 homes of every 10 I sell, supply is very important to me.  Supply also is a great indicator on the direction of any market.   In part because I’ve been tracking so long, I know for example that in fall of 2008 there were just over 1,300 homes on the market in my little valley and that 10.5% of the available homes were under contract.  Last month available inventory stood at mid 500 units for sale and over 40% over the available homes were under contract.  This is a picture of a healthy albeit tight market.  By tight I mean not a lot of homes on the market.  In fact, if we had more homes under $750, the % of homes under contract I predict, would be higher because this is the most popular price range here.

To the question of a bubble, Case-Shiller makes no such suggestion.  Rather, they speak to the low interest rates environment, consumer confidence on the overall economy, low unemployment and of course, the shortage of available housing.  My personal belief is that to have a bubble you have to have some type of artificial demand booster.  Preceding the Great Recession, mortgages were easy to obtain with many buyers, particularly right before the crash, able to obtain a mortgage with little or no income, down or credit.  Not exactly a solid foundation.  In the late 1980’s, prior to that bubble burst, lots of money was coming in from Japan.  Stories of Japanese investors showing up to model home complexes with a brief case filled with a couple hundred thousand dollars, are the stuff of legend.  Some might point to the declining number of Chinese buyers as something to watch.  I would imagine that Chinese money which has had little or no real impact on my market, would be of importance in cities like San Marino and Montebello where the Chinese population is significant.  The strength of the dollar has slowed European and Russian money coming over and buying prize properties in New York, Miami, Beverly Hills and the like.  Most of my colleagues from the Westside of Los Angeles report slowness in the trophy property market; the $10M+ range.  My area has not experienced much of this kind of money so the impact has been minimal.

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Moreover, if I were to hazard a guess, I would suggest that the majority of cities across the country have had little or no impact by foreign investors.

So back to the question of a bubble, the absence of artificial stimulus like easy money or foreign capital suggest the key component of bubble making is missing.  This leaves me to conclude we are not in a bubble.  Moreover, as Case-Shiller suggests, it is the economy and the availability of low interest rates that is driving this market, that and very low inventory.  So what should we be watching for then as an indicator of what is yet to come?  Clearly the strength of the economy is now and always will be the bell weather of the real estate market.  When the economy falls into recession, housing should and will follow.  This is healthy.  What isn’t healthy is when the real estate market is the leader in the declining economy like it was in the two previous housing bubbles.  The thing I can’t stop looking at is the simple demographics of our population.  The population isn’t getting smaller.  Homebuilders are still not building enough housing and certainly not enough apartments and lower price point homes.  Heck, in areas like Coastal California and Ventura County in particular, (contact Tim here) slow growth ballot initiatives look to continue forever a slow-to-no development environment.  The NIMBY (Not In My Back Yard) mentality keeps builders from building only furthering limited supply.  Real Estate Investment Trusts (REIT’s) are holding huge numbers of homes off the potential “for sale” market by permanently or near permanently, converting their massive inventory into rental properties, further constricting supply.  Baby boomers just now 70, are not selling in mass and by and large, are staying put.  Another reason of constrained supply.  And lastly, the Millennials are only now starting household formation and will be looking at buying homes, fueling the demand side of the housing equation for the next 15+ years, all the while in a tight inventory environment.  Will Brexit bring down the US economy?  Unlikely.  If anything, it will only strengthen the dollar and the 10 year US Treasury which is the driving force behind mortgage rates.  Strong US bonds mean low rates of return and this means even lower mortgage rates. So for as long as our economy continues to expand and unemployment remains static or declining, we should be in for a continuing climb upwards on home pricing.  This is good news for would be sellers and encouraging news for would be homeowners in that the future is bright and home price appreciation, far from over.

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