Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.”
The Facebook Inc. founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property.
While almost all lending rates have reached historical lows this year, the borrowing costs available to high-net-worth individuals are even lower if the person is willing to bear the risk of monthly interest rate adjustments, said Greg McBride, senior financial analyst with Bankrate Inc., a North Palm Beach, Florida-based firm that tracks interest rates. Large increases are unlikely anytime soon with the Federal Reserve signaling it will keep interest rates near zero for at least two years.
“When you can borrow at a rate below inflation, you’re borrowing for free,” McBride said in an e-mail. “This is the concept of using other people’s money and it preserves financial flexibility for the borrower.”
Hat tip to Susie for sending this in from our friends atabcnews.com!
It’s the Spruce Goose of homes — American in its super-sized scope and confusion of styles. And the American Versailles differs from its historic namesake in a few key ways: It’s still under construction, it’s located in Florida, and it includes amenities like a bowling alley.
The American Versailles, if completed, will be, at 90,000 square feet, bigger than a 747 airplane hangar and will hold the distinction of being the largest house in the United States. Other features include nine kitchens, 30 bathrooms and two movie theaters. The home’s mahogany doors and windows alone cost $4 million.
The owners, vacation time-share mogul David Siegel, 77, and former beauty queen Jackie Siegel, 46, said they had originally planned for the home to be smaller.
“We didn’t start out having a 90,000 square foot house. It was more like a normal 60,000 square foot house,” David Siegel said with a chuckle.
“…But then I said, ‘I want a bowling alley,'” Jackie Siegel continued. “And then he said, ‘Well, I want a health spa.’ You know, so we just kept going back and forth and adding on things.”
The Siegels offered filmmaker Lauren Greenfield full access to their home, their prickly marriage and some belt-tightening. When the recession hit, construction stopped for four years.
“This is almost like a riches to rags story,” David Siegel said in Greenfield’s documentary, “The Queen of Versailles.”
In an interview with ABC News, Siegel, the billionaire founder of Westgate Resorts, clarified that comment.
Licensee representing Seller acknowledges and agrees that, in his or her professional opinion, Property has been listed on the appropriate local Multiple Listing Service at a listing price intended to generate open market competitive offers to purchase Property and not at an artificially low or high listing price. Licensee representing Seller further acknowledges and agrees that his or her marketing efforts were in fact and “in spirit” aimed toward maximizing the selling price of Property from a ready, willing and able buyer. Licensee has not engaged in any conduct that restricts or limits offers from buyers, including but not limited to requiring cash offers, using disparaging language regarding the property or tenants, or unreasonably restricting access.
Licensee representing Seller acknowledges that he or she has made Seller aware of all offers to purchase Property that Licensee received during the listing period and that he or she has not coerced, harassed or improperly influenced Seller in selecting a buyer for Property or in agreeing to the terms and conditions of the purchase contract.
Licensee acknowledges and agrees that Licensee is not engaging in appraisal fraud, flipping (a predatory lending practice whereby a recently acquired property is resold for a considerable profit with an artificially inflated value within a short period of time, as defined by the Federal Bureau of Investigation), identity theft and/or straw buying. Licensee has disclosed all agreements or understandings relating to the current sale or subsequent sale of Property of which Licensee is aware or should be aware. Licensee is not aware of any other agreements or understandings that call for the subsequent sale of the Property within 30 days of the current sale, the assignment of the property to the Seller or the option for the Seller to purchase.
NAR, CAR and local boards have yet to author anything similar to this.
We know that median prices are a terrible way to gauge pricing, but they can indicate the relative temperature of the higher-end market. If we see the median price rising, then there are more of the higher-end homes selling than in the previous period.
Here are the year-over-year median-price comparisons for detached sales around North San Diego County’s Coastal region for the second quarter, and first half of the year (from our MLS):
Town or Area
2Q11
2Q12
%chg.
1H11
1H12
%chg.
SE Carlsbad, 92009
$706,974
$706,000
-0-
$688,421
$697,000
+1.3%
SW Carlsbad, 92011
$740,000
$700,000
-5.4%
$705,000
$707,450
-0-
Encinitas, 92024
$760,000
$800,000
+5.2%
$739,000
$795,852
+7.7%
RSF, 92067/91
$1,600,000
$1,885,000
+17.8%
$1,900,000
$2,170,000
+14.2%
Del Mar/Solana
$1,250,000
$1,145,000
-8.4%
$1,247,000
$1,100,000
-11.8%
Carmel Vly, 92130
$898,587
$870,000
-3.1%
$917,250
$852,500
-7.1%
NSDCC
$850,000
$837,000
-1.5%
$845,000
$815,000
-3.6%
The TV talking heads will have a field day if the median prices are trending lower after everyone has been calling bottom, but all we really know is that the lower-end has been hotter than the higher-end.
This was an accidental example – these two houses just happened to list a day apart. But it demonstrates a previous point about how an active listing nearby can help sell a neighbor’s house:
The first house has two offers in on it, but I’m guessing they are in the $500,000 to $550,000 range, which will prove to be challenging for an agent working his first listing. But the house down the street should help, because it’s over $100,000 higher yet not much better.
The spring selling season has certainly been lively – there were healthy increases in the number of sales around most areas in 2Q12. But in the end it might just look like another bounce along the bottom for pricing, as measured by the average $/sf.
Here are the second-quarter detached sales, and average cost-per-sf:
Town or Area
2011
2012
Chg in Sales/Chg in $/sf
SE Carlsbad, 92009
146/$259
162/$249
+11%/-4%
SW Carlsbad, 92011
41/$298
93/$278
+127%/-7%
Encinitas, 92024
107/$350
131/$348
+22%/-0-
RSF, 92067/91
60/$422
75/$424
+25%/-0-
Del Mar/Solana
72/$611
74/$614
-0-/-0-
Carmel Vly, 92130
118/$334
148/$321
+25%/-4%
NSDCC
728/$376
894/$371
+23%/-1%
If the 2012 market does the same as last year’s we should see it taper off from now until January.
Recession talk is back in the headlines, which will liven up the debate about when to sell the house.
If you are thinking of selling, consider the items that are closer to home which would not only have a direct impact on your success of getting top dollar, but be more predictable too:
1. Sell When You Have Good Comps – Let a neighbor (or two) be the guinea pig, and sell their house first. Once there are a couple of strong sales nearby, it is much easier to justify your top-dollar price. But don’t expect buyers to pay more than 5% higher than the last guy.
Similarly, if there have been a couple of bad sales recently, wait at least six months after they have closed before selling. Appraisers can’t use them if they are more than six months old, but buyers are known to have longer memories.
2. Sell When There Are Good Active Listings Nearby – Ideally you’d like to have recently-closed sales to help justify your case, but if you don’t have those, the next best thing is to undercut the OPTs nearby. You and I know that the over-priced turkey is living in fantasyland, but buyers always gravitate towards those that look like the better “deals”. You will look like the ‘best buy’ only if you drastically undercut the competition….by at least 5%, and 10% is preferred. Buyers probably know the others are outrageously over-priced, so just under-cutting them by a few bucks isn’t enough.
3. Sell Right After Home Improvements – Retail buyers (the ones who pay top dollar) don’t want the fixers, they prefer the cream puffs. Shiny new improvements lose their luster quickly, so if you know you need to bring your home into the 21st century, spend the money necessary and list your home the next day.
4. Sell When New Tenants Move Nearby – Are you among the unfortunate owner-occupiers who have to endure tenants next door? Did the renters with five kids and 14 yapping dogs just move out? It’s a good time to sell! Or conversely, if a great couple with no noise-makers just moved in, sell before they move out!
5. Sell When You Go On Vacation – With tight inventory, buyers flock to the hot new listings in the first few days on market. If you don’t like to see dozens of strangers pouring through your house with little or no notice, you should go on vacation the day your house goes on the market – especially if you have a lot of kids and pets.
6. Sell Before You Get Old – You might chuckle, but it’s true. For most sellers, moving means: a) having to sift through all the old junk that has been stored away for years and decide what is worth keeping, b) packing and unpacking, c) dealing with a lot of unknowns – strangers, moving, new home, getting settled again, etc., and d) making life-changing decisions. Don’t underestimate how taxing it can be to endure the transition.
7. Sell Once You Know Where You Are Going – You have to be 100% committed to moving. Why? Because once a seller signs the purchase contract, you cannot cancel (only the buyer can). In addition, if you don’t know where you are moving, you will price your home too high, and it won’t sell. Many sellers need to leave town to make it worth it. If you are thinking that you’ll just rent for a year or two and find a smaller place later for half-off, recent history has shown that it is very difficult to score a big discount in the great neighborhoods. If you opt for that program, be prepared for the other option which is perfectly acceptable – you may rent the rest of your life.
8. Sell If There Are Foreclosures Coming – It’s not a price thing, because REOs sell for what they worth. It’s because they are typically run-down due to lack of maintenance for months or years. If you see the dilapidated-look happening nearby as you are getting ready to list, offer to maintain their yard for them. Or if they already moved, just do it. Your listing agent can help you monitor the f-list.
9. Sell in March or July – We are fortunate to enjoy a 12-month selling season in San Diego. Everyone thinks that hitting the market during the Spring Selling Season is the most productive, but there is usually more competition too. Items 1-8 above are more important. If you wanted to time your own move around spring or summer, then focus on March or July. If you list in March, hopefully there were already 1-2 of your neighbors who got started in February and had success that you can ride. If not, consider waiting until the last minute and list in July once all the good buys have been taken (and hopefully several of them sold for astronomical prices) and school is bearing down on the family-types. An alternative strategy is to list the day after the Super Bowl and appeal to those buyers who have been hung out to dry by the holidays.
10. Sell When All The Macro-Economic Issues Are Settled – ummmm, see 1-9 above.
In San Diego-Carlsbad-San Marcos, 28.2 percent, or 165,582 properties, of all residential properties with a mortgage were in negative equity for first quarter of 2012, according to CoreLogic.
This is down slightly from the fourth quarter of 2011 when 29.8 percent, or 175,746 properties, with a mortgage were in negative equity. An additional 4.9 percent, or 28,889 residential properties, were in near negative equity for first quarter of 2012 compared to 4.8 percent, or 28,520, in fourth quarter of 2011. From CoreLogic:
Thanks to SD_Coastal for tippng me to this beauty, a bank-owned unit in the Seahaus condominium in La Jolla’s Bird Rock. Barratt American was the developer who has since gone bankrupt, making homeowners pursue other entities to fix the construction defects.
Kelly covered this in her article from July, 2010:
Homeowners assert that while the complex was being constructed, the beams used to frame the buildings were exposed to the winter rain and got wetter than recommended, but weren’t thoroughly examined before the building’s walls went up.
A smaller group of homeowners now filed another lawsuit last month piggybacking on the homeowners’ association’s claims, saying the developers and construction companies fraudulently concealed interior water damage from homeowners to compel them to pay top dollar for the ocean front units.
It’s not unusual for new condo owners to sue their developers for construction defects like leaky windows and electrical wiring issues. Seahaus owners make those allegations here, too. But what makes this litigation unusual is that these homeowners are talking about the safety and soundness of their homes’ skeleton.
And the questions about that safety and soundness aren’t easily answered. Finding the answers involves opening the walls of the complex.
Instead of sawn wood or steel beams, Seahaus’s skeleton is made of “parallel strand lumber” beams — long strands of wood from small trees glued together to make beams. The homeowners’ lawsuits allege that the developers knew the rainy winter of 2005 was exposing the buildings’ frames to rain, that they knew the beams could become an unglued mushy mess.
“They told me everything was going to be top-of-the-line, it was going to be nice, it was going to be great,” Alkasabi said. “But this place is full of nightmares.”
Alkasabi said he was told before he bought that the structure would be framed with steel beams, not the strand lumber. The condos would be soundproof and top-of-the-line, he said.
Alkasabi said he’s seen mushrooms grow out of stucco because of moisture inside. He refuses to walk under certain corridors. Inspectors found three colors of mold growing in his living room wall, he said.
When he complained about a construction issue in one of his units, he said, the developers quickly planted a palm tree squarely in front of his view.
Foreclosure sales dropped dramatically in three states last month, suggesting some state legislation is stalling the natural cycle of the market, ForeclosureRadar said Thursday.
The new Homeowner Bill of Rights in California is expected to have a huge impact on housing supply in the state, the research firm said. The report said foreclosure sales fell 13.4% in California in June from May and 48.8% from year-ago levels.
Foreclosures riddled these markets after the housing bust, but now ForeclosureRadar is worried about legislation that could stall the overall market recovery. The report covers Arizona, California, Nevada, Oregon and Washington.
“California Gov. Jerry Brown signed into law the Homeowner Bill of Rights, an anti-foreclosure package which naively thinks that slowing foreclosures will benefit homeowners and the economy by leaving those owners stuck in their prison of debt,” said Sean O’Toole, founder and CEO of ForeclosureRadar.
“We’ve long said negative equity, not foreclosures, (is) the problem,” O’Toole said. “Fortunately this bill was watered down significantly from its original form, so we don’t expect it will have the same impact that we’ve seen from more aggressive legislation in Nevada.”
O’Toole said that foreclosures in California “have already plummeted, and that the real housing crisis in now a lack of homes available for sale.”
Home sales in the Western markets remain generally low and stalls in foreclosure sales will further reduce inventory levels, ForeclosureRadar said.
O’Toole said banks in California are now taking 272 days to resell properties at auction. With this in mind, he says real estate agents, investors and homebuyers will discover reduced inventory levels next year.
Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.”
