5-Unit Apartment Building

Last week I closed an escrow that had gone on for quite some time. It's actually the third time I've sold the building (it's a 5-unit apartment building) and the fourth 'side' I have represented since 2003. The city bought it for redevelopment purposes, and I thought I'd share some words of advice, in case you are a landlord or aspire to become one.

In this case, my client lives in a different town and had not kept very thorough rental agreements or security deposit receipts. He had kept his agreements a little bit loose, and that worked well for him over the years, but that can cause difficulty at the point of sale, when those agreements become very important. When a rental property is sold, estoppel certificates become part of the escrow. These are certificates that the tenants fill out and sign to verify who is living in the property, the amount of rent they pay, how much they have given for a security deposit, the length and terms of their lease, etc. The purpose is to verify that the rental agreements the landlord is providing through escrow are in alignment with what the tenants are disclosing, and vice versa. In our case, this became a problem. We were given different statements, and we had to sort it all out and get to the bottom of who was living in each unit, dealing with language barriers in the midst of it all, and what to do from there.

If you are a landlord, be sure to keep all your agreements up to date, in writing, and accurate. Record your receipts. It's best not to handle things verbally. And when necessary, utilize a management company. Even I had to learn this the hard way! It's wonderful to own investment properties & it's another to manage them properly. Be sure to do both. It's worth the time and effort.

April 2009 Statistics - Santa Barbara Real Estate Market

January 1 - April 30th, 2009 (Carpinteria, Summerland, Montecito, Hope Ranch, and Goleta)

April 2009 revealed some closings with the many escrows that had piled up in the previous months. The month showed an improvement in the level of closings we had seen so far this year. The median sales price for April went up slightly from the previous month, but was still in the low to mid $800,000 range. The number of homes that went 'pending' in April was approximately 10% higher than what we saw in March, and the median list price for those pended properties was about $50,000 above the previous month’s figure of $849,000. This means that the median sold price should begin to rise. The inventory also continued to grow throughout the month and is about 10% above where it was in March. It looks like we are currently at the bottom of the price swing for the market under $1M, but prices above $1M could still adjust a bit more.

For condos, just like with homes, there have been a lot of escrows piling up for the first few months and now they’re starting to close. The median sales price dropped to the mid $400,000 level for April ’09 compared to $610,450 in April ’08. This decline can be attributed to a near complete lack of activity for higher priced condos and is more of a shift in the type of condo that has been selling ~ not a large drop in the prices of condos. Comparing April ’09 to April ’08, the pending numbers for condos are up about 35%. The inventory for condos declined slightly from March to April & the median list price for the inventory stayed stable at about $600,000. The condo market is starting to rebound because the lower priced single family homes that were available in Goleta and Carpinteria are basically gone at this time, making condos look more appealing. Unless we see a lot of new foreclosures going for sale, the condo market should continue to move forward with prices starting to stabilize.

Caravan on a Vespa? Fun!

Lately I've noticed two agents caravaning (defined below) on vespas & not in their cars .. and that looks like more fun than driving my stick shift up and down and in and out of driveways and winding streets all over Santa Barbara and Montecito. I drive a fun car, so I'm not exactly complaining but just seeing room for adventure. Can you imagine showing up at a house on the Riviera where it's steep and windy - say you have 15 realtors who happen to show up there all at once, all only planning to do a 10-minute run through of a house before they're off to the next architectural gem of the day? Do you know what type of cluster that causes in a driveway?? It's pretty entertaining. Not all realtors are good drivers.

'Caravaning' is a real estate term we agents use for the time agents have our open houses during the week - in the Santa Barbara area, this is Wednesday, Thursday, and Friday from 10am-1pm. This is our chance to see the inventory, while the public open houses are typically Saturday/Sunday 1-4pm. If I get started at 10am, I can usually squeeze in 4-6 properties per hour, so that means I can see an average of 15 properties per day. I'll have to do the math and see how quickly I could recover my cost. If I went two days per week, that would be 30 properties per week and about 40-50 miles per day. I'll have to compare that to the gas mileage I get on my car and see how it turns out .. Right now I have to run to an appointment but TBD later on.

Weekly Snapshot Statistics - Santa Barbara Real Estate Market

Weekly Snapshot for 5/11/09-5/18/09:

New Listings: 54
Price Changes: 56
Pendings: 45 ($0-1 mill 39!!, $1-2 mill 5, $4-8 mill 10)
Closed: 25
Off market: 37 (18 expired, 6 withdrawn, 13 canceled)
Back On Market: 18

William McDonough speaks at Campbell Hall on Cradle to Cradle

Last night at Campbell Hall, William McDonough spoke on Cradle to Cradle / Remaking The Way We Make Things. I'll be honest and say I arrived 30 minutes into his talk. But from the time I arrived and grabbed a seat in the packed hall, I couldn't help but be inspired. McDonough was born in Tokyo and has lived in many parts of the world. Per UCSB's Arts and Lectures, McDonough is an internationally renowned architect and Time magazine “Hero for the Planet." He is recognized as one of the leading proponents of practicing ecologically, socially, and economically intelligent architecture and planning in the U.S. and abroad. He is also a recipient of the Presidential Award for Sustainable Development--the nation's highest environmental honor—for his groundbreaking efforts in designing profitable and environmentally intelligent solutions for client companies around the world.

He asked the questions, "How do we love all the children of all species for all time?" and "What is our intention as a species?" His answer to the questions is truly 'changing the design of the world.'

The projects he has created are so exciting to see. You can view some of what he discussed at www.mcdonoughpartners.com. He went through a slideshow and gave us pieces of information on the projects and the thought/intention behind them. He trashes all patterns of thinking we have seen before and creates buildings that have changed the codes .. buildings that are so cost effective, beautiful, natural, nutrient-filled, and intelligent - it would blow your mind (or that's what happened to me, anyway). New designs for air conditioning, buildings that become energy exporters, rather than energy importers, grass and food growing on rooftops, and building with a mind for the future.

One thought process I found particularly interesting is that through this new design process, we will want to shorten a product's life cycle and this will actually begin to make sense. For example, take a 5-year car. We won't want that car to last for 30 years. A car would be built to last 5-6 years and then be recycled into something else. We will be improving so quickly that we will want the old models to be turned in and created into even better cars. In a whole new way, we will celebrate change and consumption. This stimulates jobs and innovation. It won't be recycling but upcycling. So .. does this mean I will be able to shop with out guilt? Coming soon...

I don't know about you, but I think we need more McDonoughs in the world, and I plan to buy & read his book very soon.

Santa Barbara Oil Derrick

Santa Barbara Oil Derrick
By Emily McBride
Oil on Canvas
36" x 48"

Update on Mortgage Climate

A couple weeks ago, I sat down with two mortgage brokers, Tim Taylor and Maddox Rees, of Prospect Mortgage (formally Metrocities Mortgage). They shared some great information, and I thought I would share it with you, since things are changing at such a rapid pace these days. A lot of the major changes in lending are less than six months old, and they are very different from the last 20 years in finance. Also, these things are not going to be changing anytime soon, so read on ...

Some bullet points on Standard and FHA loans:

• There are three main areas lenders consider when approving consumers for a loan: FICO score(s), Income, and Assets (Down Payment + Reserves).
• The conforming loan limit will go up to $729,000 by May 14th, 2009. This is great news for anyone shopping in this price range. (If you purchased a home at $911,250 and put 20% down, your loan amount would be $729,000.)
• There are still some 'stated income' loans out there, but very few and with tough restrictions.
• Paying points isn't necessarily a bad thing, but you do need to do your numbers and look at your return on income (ROI) to see whether or not paying points is beneficial to you. Loans are priced on a sliding scale these days, and rebate pricing has thinned out dramatically on these loans. A bank has to hold a loan long enough to make it worth the risk it takes on when giving out a loan. They are not as willing to give risks away at reduced prices, because now it is too risky.
• If you have less than 20% to put down, you may want to consider an FHA loan. Per Tim and Maddox, they will lend based on a 620 FICO score with 3.5% down. You would pay PMI (Private Mortgage Insurance) of 0.55% of the loan amount, and you can finance this for a fee. Even if you get to 20% equity, you cannot get rid of PMI for the first five years. FHA rates are 1/8 to 1/4 percent higher on rates but a good option to consider if you do not have a large down payment.
• Another type of FHA loan is called a 203k. This loan is only good on a primary residence - not on an investment property or vacation home. The rates for this loan are higher, because you can finance some construction or completion costs up to $100,000 (i.e. stove, windows, roof, misc. construction costs).
  
• If you are planning to get an FHA loan and you are looking for a condo, you want to (hopefully) find a complex that has FHA approval. It will make your life easier. FHA can do 'spot approvals' but they do not want more than 10% of the units in any given complex to have spot approval. Usually a development gets FHA approved when it's built. If not, it costs about $10,000 to get the FHA approval for the complex.
  

Jumbo Financing:

• There are good sources available for jumbo financing.
• Currently jumbo financing represents about 10-15% of the funding that goes on.
• Tim and Maddox do have programs where you can go stated income and 20% down (if you are approved) up to $3M, and there are portfolio loans up to $5M. The portfolio loans up to $5M have all sorts of great options (ARMS with two sets of 5 years of interest-only on a 40 year term, then 10 years later you'd have a 30-year amortizing loan OR a 40-year loan that has 15 years of fixed interest-only and amortizing over the next 25 years, etc.)

Private Bank Brokerage:

• To be eligible for private bank brokerage, you must have $1-2M liquid post-closing and $5-10M of total net worth. Great options available and very competitive.
  

**I am a Realtor and not a mortgage broker. I am here to share information with you.
*If you want to speak with Tim Taylor or Maddox Rees, they can be reached at 805.898.4222 or 805.683.7350, respectively.

Weekly Snapshot Statistics - Santa Barbara Real Estate Market

Recent Weeks In Review - Market Snapshot

5/4-5/11/09:

New Listings: 60
Price Reductions: 37
Pendings: 27 (20 under $1M, five $1-2M, one $2-4M, one $4-8M)
Closed: 14
Off Market: 30 (16 expired, 10 canceled, 4 withdrawn)
Back on Market: 13

4/27-5/4/09:

New Listings: 73
Price Changes: 51
Pendings: 38 (30 under $1M, four $1-2M, four $2-4M)
Closed: 28
Off Market: 46
Back on Market: 11

4/13-4/20/09:

New Listings: 59
Price Changes: 67
Pendings: 35 (28 under $1M, five $1-2M, one $2-4M, and one over $8M)
Closed: 24
Off Market: 32
Back on Market: 16

3/30-4/6/09:

New Listings: 59
Price Changes: 40
Pendings: 26 (19 under $1M, five $1-2M, one $2-4M, and one over $8M)
Closed: 17
Off Market: 21
Back on Market: 8

Web Resource for Jesusita Fire

http://www.countyofsb.org/ceo/dept0.aspx

This website is an excellent resource for the Jesusita fire.

Stay safe!

Jesusita Fire

It's a shock to see Santa Barbara in flames yet again this year. Yesterday the fire started at 1:45pm. From Montecito, where I first noticed the smoke, it looked like a small fire off in the distance and not a big deal. But as the winds picked up, combined with the heat of the day, the fire has become much worse than expected. As of this morning, the fire seemed under control and contained on three sides. We were expecting 65 mph winds today, and around 2-3 p.m. the situation took a negative turn. This photo was taken from the 154 with my iPhone at about 5:00 p.m. today. Currently the cause of the fire is under investigation.

At the moment, there is 0% containment and over 300 acres have burned. Many areas have a mandatory evacuation. If you know of friends or members of the community who have been removed from their home, please let me know. We have an email system through the real estate community that reaches over 1100 people & I'll do what I can do help and find resources.

Per KEYT News (stay updated at www.keyt.com):

The public can call the Jesusita Call Center at 805-681-5197.

The Santa Barbara Sheriff’s Department has issued the following MANDATORY evacuation order for the following areas due to the changing conditions of the Jesusita Fire:

MANDATORY EVACUATIONS

•The mandatory evacuation order has been expanded to include: San Roque and Foothill Road South to State Street (Western boundary), from State Street to Micheltorena, Micheltorena North to the end of the road extending to Alameda Padre Serra.

•The overall mandatory evacuation order areas now includes: Morada Lane (Western boundary) and Ontare North to Camino Cielo, Foothill Road and Morada to San Roque, San Roque South to State Street (Western boundary), State Street to Micheltorena, Micheltorena North to the end of the road, extending to Alameda Padre Serra, Alameda Padre Serra East to Sycamore Canyon Road (Eastern boundary), North on Sycamore Canyon to HWY 192 West to El Cielito.

EVACUATION WARNINGS

•The evacuation warning area has expanded and now includes: La Cumbre Road (Western boundary) to State Street, State Street to De La Vina, De La Vina to Anapamu, Anapamu to Anacapa, Anacapa South to De La Guerra, De La Guerra to Milpas, Milpas to Montecito Street, Montecito Street to Alameda Padre Serra

ROAD CLOSURES are in effect at:
•Mission Canyon and Tunnel Roads
•Montrose and Tunnel Roads
•Las Encinitas and Mission Canyon Roads
•Alameda Padre Serra and Los Olivos
•Mountain Drive and Mission Canyon Road
•Laguna St. at Los Olivos
•Los Olivos and Garden Street
•Foothill Road (Highway 192) and Mission Canyon Road

What do “Evacuation Warning/Advisory” and “Mandatory Evacuation Order” Mean?

Evacuation Warning/Advisory: Residents are strongly encouraged to make arrangements to leave their homes and seek shelter out of the advisory area. Evacuation Warnings/Advisories can turn into a Mandatory Evacuation at a moment’s notice. There is no set rule as to how long a Warning/Advisory cold take. There is always the possibility that a situation may require an immediate mandatory evacuation without an evacuation warning/advisory. Please make sure that you prepare to evacuate at a moment’s notice having your belongings ready, including pets and/or other animals. Know the routes you wish to take, by pre planning. Information as to how to plan for an evacuation can be obtained by calling the Red Cross at (805) 450-5921. If you leave your home during an Evacuation Warning/Advisory, you may not be allowed back to your home if it turns into a Mandatory Evacuation.

Mandatory Evacutation: Evacuate your home immediately. Once a mandatory evacuation has been ordered please evacuate your home immediately.
•Once you have left your home you will not be allowed back until the danger has passed.
•Emergency vehicles will be entering the area. Obey all directions given by law enforcement and fire personnel.

A huge amount of gratitude to our firefighters...our thoughts will be with them tonight and throughout this fire.

Carina Cellars Pig Roast

On Friday evening, May 1st, Carina Cellars held an annual pig roast. I'm not sure if I would usually drive up to Paso Robles and back just for a few hours and some pork (since I'm not even supposed to be eating pork, per my doctor!), but my friend David Hardee convinced me to come up to his ranch. I've had numerous invitations but have not made the trip (they do have a tasting room in Los Olivos and I've also been lucky enough to tool around with David sampling wines straight out of the barrels in one of their warehouses .. or out of his kitchen), so I decided to go. It was a fun evening and worth the trip .. lots of great food, many bottles of wine and interesting people.

David Hardee started Carina Cellars a few years ago - some background on their beginnings:

Carina Cellars is the result of an avid wine collector with a dream who meets an accomplished winemaker with a vision. When attorney and businessman David Hardee and winemaker Joey Tensley met in 2002, they were quick to recognize the benefits of combining their passion. With Hardee's talent for business, Tensley's talent for wine making, and a shared belief in only the best, Carina Cellars was born.

Our goal at Carina Cellars is a simple one: to produce top-quality Santa Barbara County Rhône wines that showcase and emphasize terroir above all else. We partner with growers who share our philosophies on farming – a dedication to canopy management, low yields and vine balance. Our winemaking approach is traditional and minimalist. The resulting wines are rich in traditional varietal flavors and aromas - Viogniers full of tropical fruit and spring flowers, dark, spicy Syrahs and intense, blackcurranty Cabernet Sauvignons. Carina Cellars produced only 2,000 cases in 2004, but as Colman Andrews of Saveur magazine writes of Tensley, "Tiny quantities, big talent budding here."

David chose the name Carina, since it was the name of his 54 foot Alden sailboat, on which he had sailed all over the East Coast of North America - she had always brought him good fortune and wonderful experiences. It seems that the name is working!

Art Essentials Canvas Sale

Art Essentials is my favorite art supply store in Santa Barbara, and they are having a huge canvas sale this month. Save from 50-70% on specific canvases!

Bjorn and I had breakfast at Crushcafé this morning and then headed over to Art Essentials. Since I have a smaller car these days, Bjorn has become my canvas chauffeur (thank you Bjorn). I bought two 48 x 72 inch canvases and three 36 x 60 canvases - be prepared for some very large paintings coming out of my studio! Please see below for Bjorn's upcoming show May 7th at Bryan Lee. First Thursdays are great nights to go out on a walking tour and see as many inspiring galleries as possible.

By the way, if you have not been to Crushcafé, check it out and show them your support ... they have more than just their signature red velvet cupcakes! 1315 Anacapa Street, Santa Barbara, CA 93101. www.crushcafes.com.

Bryan Lee Art Event

This Thursday:

Art Event at Bryan Lee:

802 State Street, Santa Barbara, CA 93101
(State & De La Guerra)

Featuring Art by Bjorn D. H. Simundson

Bjorn is a dear friend of mine and an incredibly talented artist. Don't miss out on his art show this Thursday at Bryan Lee. Enjoy what we call his 'high brow' thought provoking original works of art, discounts, wine, music, and a fun party. The event begins at 5pm. See you there.

About First Thursday:
(from www.santabarbaradowntown.com)
1st Thursday is an evening of art and culture in downtown Santa Barbara. On the first Thursday of each month, participating galleries and art-related venues offer free access to visual and performing art in a fun and social environment from 5-8 p.m. 1st Thursday venues feature attractions, such as art openings, live music, artists' receptions, lectures, wine tasings, and hands-on activities .. 1st Thursday is for locals and visitors alike. It provides an opportunity for residents to indulge in local culture, mingle with neighbors and participate in the arts community. The program also offers visitors the chance to experience, in one evening, the diversity of downtown Santa Barbara's visual and performing arts scene. 1st Thursday is aimed at developing a lively atmosphere downtown as well as showcasing the cultural variety that Santa Barbara has to offer.