Manhattan Beach leads rebound of California’s million-dollar housing market

By Gregory J. Wilcox | Daily Breeze

Here are the state’s priciest communities, along with how many $1 million-plus residences sold in 2013.

1. Manhattan Beach, 439

2. Hillsborough, 436

3. La Jolla, 398

4. Newport Beach, 376

5. Laguna Beach, 374

Source: DataQuick

Manhattan Beach led a strong rebound in California’s luxury housing market in 2013, as sales of homes costing $1 million or more soared 45 percent in the Golden State to their highest level in six years, a market tracker said this week.

Last year, wealthy buyers purchased 39,175 homes costing $1 million or more compared to 26,993 in 2012, said La Jolla-based DataQuick. That’s the most since 42,506 in 2007.

A record number of buyers — 10,602 — ponied up cash for their tony digs and, once again, Southern California dominated the luxury market.

Manhattan Beach recorded 439 million-plus sales — the most in the state in 2013 — edging out Hillsborough in Northern California’s San Mateo County by three sales.

Even the dirt in the affluent beach town is expensive (some undeveloped lots sold for $900,000 each last year), and many million-dollar pads don’t even have an ocean view.

One of the nicer neighborhoods is just east of Highland Avenue. It’s family oriented and has sidewalks and big lots, said Adolph Janes of Shorewood Realtors in Manhattan Beach.

“Most lots are 7,500 square feet. Those lots start at $2 million,” he said. “The typical 2,000-square-foot house and below — well, we tear those down, and we build new homes.”

Other Los Angeles-area communities on DataQuick’s compendium of most expensive California cities were Brentwood at sixth, Beverly Hills at seventh and Pacific Palisades at eighth. And seven of the state’s top-10 markets were in Southern California.

The return of big money into expensive real estate reflects an improving economy, stock-market rebound and a 20 percent increase in the state’s median home price.

“There is a lot of wealth out there, and people do need some place to park it. With the increase in California home prices, I think we’ll see more people moving back into residential real estate,” said Kimberly Ritter Martinez, an economist at the Kyser Center for Economic Research in Los Angeles.

Malibu notched the most expensive sale last year — $74.5 million for a 15,355-square-foot, eight-bedroom, 14-bathroom beachfront estate built in 1993, DataQuick said.

The company does not release addresses, but several websites list the estate as 33064 Pacific Coast Highway. It’s on a 4.85-acre lot with a tennis court and infinity pool and sweeping ocean view. Zillow.com estimates the monthly mortgage payment at $289,510.

Forbes.com said in a Dec. 6 posting that Howard Marks, founder of Oaktree Capital Management, sold the estate to an anonymous Russian buyer. It was the most expensive sale in the U.S. at the time and a record for Malibu, the site noted.

In some Southern California communities, including Santa Monica, all the sales last year were $1 million or more deals, DataQuick said.

“The luxury home market is unique, always has been,” John Walsh, DataQuick president, said in a statement. “It responds to its own set of economic factors. Things like job growth, mortgage interest rates and migration patterns do not play the same role as IPOs (and) stock-market performance.”

http://www.dailybreeze.com/business/20140131/manhattan-beach-leads-rebound-of-californias-million-dollar-housing-market

Landmark Torrance apartment building sells for nearly $40 million

By Nick Green | Daily Breeze

Torrance >> A landmark 248-unit apartment building on Anza Avenue that was once the epicenter of the 1960s Southern California “swinging singles” scene that attracted national media attention has sold for $37.8 million.

The Milano Apartments complex, originally built as the South Bay Club, was acquired by M West Holdings, a Sherman Oaks-based company that has significantly expanded its commercial and multifamily residential portfolios in Southern California in recent years. Wells Fargo, which touts itself as the nation’s leading commercial real estate lender, provided a loan for the entire purchase amount, spokesman Darryl Ryan said.

The South Bay Club was built in 1964 during the height of the city’s growth boom, when more than 110,000 people moved to Torrance in a 15-year span ending in 1965, according to a 1960s-era League of Women Voters profile of the city.

Originally restricted to singles only in days before housing discrimination laws, the amenities included three tennis courts with a pro shop and a resident coach, gymnasium, two swimming pools as well as volleyball and basketball courts, according to a post on South Bay Yesterday, the Daily Breeze’s local history blog. Articles about the complex were published in Time and Parade magazines at the time.

The apartment complex was upgraded in 2008 in the wake of its 2007 purchase by San Diego-based Fairfield Residential for $56 million, property records show.

Matthew Ellis, senior vice president with the Acquisition & Capital Markets group at M West Holding, did not return repeated calls seeking comment.

But the company has said its strategy is to acquire multiunit properties in Southern California located in “stable, in-fill markets.”

The company targets “historically underperforming, underappreciated, poorly operated assets,” according to its website.

The Milano Apartments has a mix of studio and one-, two- and three-bedroom units. It is 95 percent occupied.

http://www.dailybreeze.com/business/20140208/landmark-torrance-apartment-building-sells-for-nearly-40-million

Top 3 Cities for Lowest Taxes

Carole VanSickle Ellis 

As tax season kicks into gear, you may be wishing that you owed, well, a little less than you do. Just think: if you’d just picked somewhere different to live, you might. Of course, areas with higher taxes often offer other benefits paid for by those taxes (such as high property taxes resulting – sometimes – in a fine parks system or good schools). However, if you want to know where to move before the end of the year to get a break on 2014’s taxes, take a look at the top three cities for lowest taxes according to the federal Office of Revenue Analysis.

3. Billings, Montana

Billings is the only city in the top 10 list for lowest taxes that is not located in a state without income tax. It breaks the top three because it has the lowest sales and property tax burdens in the country[1]. In fact, the state of Montana did not even have a general sales tax in 2012. Because Montana taxes oil and gas production and the region around Billings is enjoying an oil and gas boom, residents enjoy an extremely light tax burden.

2. Las Vegas, Nevada

If you live in Las Vegas and earn $25,000 a year, you will pay about $3,260 in taxes. If you make $150,000 a year, you will pay about $8,314. These numbers placed Las Vegas at the second-lowest tax-burdened state in the country despite its high unemployment and low median income numbers. Las Vegas not only does not have a state income tax, but it also has relatively low property tax rates.

1. Cheyenne, Wyoming

Wyoming not only does not have a state income tax, it also has a sales tax rate of just six percent in Cheyenne. The state also boasts an extremely low gas tax (14 cents per gallon) and an effective property tax rate of 0.67 percent. The city also has low unemployment (6.1 percent) and families earning $25,000 and $150,000 a year pay about $2,476 and $6,307 in taxes per year, respectively.

Would you make a decision about where to live based on tax burden? If you live in a heavily-taxed area, why did you make the decision to do so?

Your comments and questions are welcomed below.

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[1] http://247wallst.com/special-report/2014/02/14/cities-paying-the-most-and-least-in-taxes/5/

http://investing.bryanellis.com/9919/top-3-cities-for-lowest-taxes/

Southland Housing Sales Slow

By Andrew Khouri | LA TIMES

Southern California home prices in January posted their smallest year-over-year gain in more than a year, as the housing market showed signs of slowing.

The median home price in the six-county Southland rose 18.4% from a year earlier to $380,000, the smallest increase since November 2012, research firm DataQuick said Wednesday. Sales also fell 9.9% compared to last year.

A total of 14,471 new and resale condos and houses changed hands last month -- the lowest level for a January since 2011, indicating tight inventory and declining affordability have handcuffed buyers.

"The economy is growing, but Southland home sales have fallen on a year-over-year basis for four consecutive months now and remain well below average. Why? We’re still putting a lot of the blame on the low inventory,” DataQuick President John Walsh said in a statement. “But mortgage availability, the rise in interest rates and higher home prices matter too.”

Compared to December, the median price fell 3.8%. Because the median price is the point at which half the homes sold for more and half for less, such a drop from December isn't unusual, DataQuick says.

Buyers likely signed a contract around the holidays in order to close a sale in January. Many families back out of the market around the holidays, slowing the market and giving investors a larger role. Since, investors usually target more affordable homes, that can help bring the median price down.

The share of investor purchases inched up last month. Absentee buyers--mostly investors and some second-home purchasers--scooped up 27.5% of all homes sold in January. That's compared to 27.2% in December.

Sales fell from a year earlier in all six counties: Los Angeles, Orange, San Bernardino, Riverside, Ventura and San Diego. Los Angeles County saw the smallest decline, as buyers purchased 7.4% fewer homes last month.

http://www.latimes.com/business/money/la-fi-mo-home-prices-20140212,0,1262515.story#ixzz2tFMbVggv

Rare whale fossil excavated at Palos Verdes school

Juvenile sperm whale skull found by a science teacher at Chadwick School is estimated at 12 to 15 million years old. It has been taken to the Natural History Museum.

By Alicia Banks

Martin Byhower has trekked across Chadwick School's Palos Verdes Peninsula campus for 30 years. Fossils scattered across the hilltop grounds often caught the eye of the seventh-grade life sciences teacher.

Two years ago, he spotted one that particularly interested him. And on Wednesday, staff from the Natural History Museum excavated it and carefully loaded it onto the bed of a truck. Soon, researchers will begin cleaning it to learn more.

This much is known: It appears to be the skull of a rare juvenile sperm whale, and it is 12 to 15 million years old.

Byhower contacted different groups to ask them to identify the fossil; he got a response from the county museum.

"I realized they [fossils] were kind of sitting around, and I didn't know if they would get moved or damaged," Byhower said. "I thought it would be a good idea to see if they were of any scientific interest."

Howell Thomas, a senior paleontological preparator at the Natural History Museum of Los Angeles County, visited the school in October 2012 and immediately was taken with the fossil.

"I said, 'This one is important,'" Thomas recalled, noting that the fossil itself could be a new species or genus for one of Earth's largest predator marine mammals. Within seconds of looking at the fossil, he identified the rear of the skull, blow holes and the location of the snout.

It could take nearly a year before the fossilized sperm whale skull is fully revealed.

Seeing the fossil on campus was proof, particularly to students, that Palos Verdes rested at the bottom of the ocean before shifting tectonic plates created its hilly landscape, Byhower said.

Tenth-grade student Madeleine Kerr-George, 16, watched between classes for the fossil's move. She said thinking of Palos Verdes as the ocean's bottom reminded her about the importance of the past.

"Then, we can understand where we come from," she said. "This has sparked my interest in the [Miocene] time period."

Thomas said the fossil was an especially lucky find because sperm whales spend only a short time of their lives as juveniles. Altamira shale had formed around the fossil, Thomas said, aiding its preservation over the years.

"You have those two things working against you," Thomas said. "The chances of it [a juvenile sperm whale] dying and fossilizing is a small percentage, and their bones are less formed."

Chadwick Headmaster Ted Hill said the discovery should remind students that Palos Verdes hasn't always overlooked the Los Angeles Basin. The school plans to maintain contact with the museum throughout the year to keep tabs on the progress of the fossil.

"The biggest benefit is for us to see science in action and to realize education is about creating new knowledge, taking what we've already learned in the past and applying it in new ways," Hill said.

Once the fossil is cleaned, the museum plans to provide Chadwick with a model of the skull. If it's determined to be a new species or genus, the find could bear the name "chadwickii" in honor of the campus.

The excavation came as Byhower is preparing his next course, coincidentally on animal diversity, including how mammals fit into their environment, evolution and adaptations.

For Thomas, the fossil serves as a reminder that not all animals, past and present, have been discovered. School officials and staff hope students will be more observant of their surroundings even during short walks to and from class.

Thirteen-year-old Sam Peri is an eighth-grade student who has attended Chadwick for three years. He noticed the now-treasured fossil, but never gave it a second glance.

"Honestly, I thought it was just a piece of rock," Sam admitted with a bashful smile.

Thomas drove slowly down the school's main winding road with the fossil secured to a wooden slab. Sam looked on, talking among friends who rushed outside for one last look.

"My perception has changed about the whole world. You could be putting a pool in your backyard and find a fossil," Sam said. "We lost a big part of Chadwick, but for the greater good."

Copyright © 2014, Los Angeles Times

http://www.latimes.com/local/la-me-chadwick-fossil-20140206,0,4489708.story#ixzz2sxjRiC2n

Real Estate is About Relationships, Period

Written by Joe Stampone | 

 http://astudentoftherealestategame.com/real-estate-is-about-relationships-period/

In the past week I’ve gotten multiple emails from aspiring real estate professionals asking me what advice I’d give them as they get started in their careers. The answer is easy – the best thing you can do is network.

I think people often misunderstand the concept of networking; it’s not attending every industry event and collecting as many business cards as possible. It’s about generosity and finding ways to help others.

One of my all-time favorite quotes on networking comes from Peter Linneman. He says that in order to build a great network you must “always do the very best you can to fulfill what you said you would do, help others simply because you can rather than because you believe it would indirectly benefit you, and do this for the next thirty years.” He’s dead on.

Here are some of the things I do on a daily basis to build my network:

• I respond to 100% of the people who shoot me a cold email. It doesn’t matter if it’s a family friend, Tufts undergrad, Schack student, or someone who found me through the blog, I’ll talk with you.  If you want to set up a call or in person meeting to discuss your career, the business, or anything real estate related, I’ll always find 15 minutes in my day. In addition to providing my advice, if you leave a good impression, I’ll connect you with friends in the business.
• I’m always trying to be a connector. I’m constantly introducing people that I like, to other people I think highly of, with the hopes that the introduction benefits both of them. Just today, I introduced a prominent real estate developer to the founder of a premier crowdfunding site. I believe they’ll both benefit greatly from the intro.
• Share information. There’s a lot of interesting articles out there. If you come across something that you know someone would be interested in, pass it along with your insight.
• Be social. Get up from behind your computer and have 3 meetings a week, organize dinner or drinks with a few colleagues, or start an informal group to chat about specific aspects on the business. Real estate professionals are obsessed with the business and love to talk about it.

Keep doing these things for a long time and you’ll build a network that leads to deals, investors, and various business opportunities.

I was out to dinner last night with an MD at a large real estate private equity firm and he made the comment that at the end of the day, the service his firm provides is a commodity. Generally speaking, he’s right. But operators do business with him because they like, respect, and have a long-standing relationship with him.

At the end of day, people want to work with good people who the like. The larger your network of good friends, the more successful you’ll be.

If you want to dig further into this topic, there’s a great book that I highly recommend called Never Eat Alone.

Real Estate can be a Complicated Business

Written by Joe Stampone |http://astudentoftherealestategame.com/

“Real estate is not an overly complicated business” is a common sentiment I hear. Historically, that was true. Real estate was a business made up of small local players who financed properties through local bank relationships and raised equity from the neighborhood doctor or attorney, but as the business became institutionalized, it’s become increasingly complex.

By way of example, my company was just awarded a new deal and I was thinking about all the complexities of the transaction.

Winning the Deal: The property was being sold by a public REIT which valued surety of close over getting the best price possible. In order to get the seller comfortable working with a relatively new group, we did a ton of upfront diligence on the property, market, leasing environment, and financing options, which gave us a leg up on the competition. We retained a best in class mortgage brokerage shop to help with the financing, decided to keep the same leasing and property management team in place, and conservatively underwrote upfront and annual capital reserves to mitigate any surprises we uncover during our due diligence.

Simultaneously, we were working an internal contact we had at the seller’s firm to put in a good word for us. All this upfront effort was critical to winning the deal and beating out two other groups that were willing to pay as much or even a little more than us.

Financing Options: Upon winning the deal we had an internal kick-off call to discuss due diligence, raising equity, and financing options. In our initial conversation we discussed the pros and cons of bank, Life Company, and CMBS debt and the key points of fixed long-term off the bat or going with a flexible bridge with refinance shortly thereafter. Each financing option has its upside and risks, and while there is no right answer, we’ll do a comprehensive review to determine what is right for this deal. This requires a deep understanding if the various financing options.

Value-Add: One of the great things about real estate is the opportunity to add value at the property level. On this deal, the REIT’s in-house management team was located about an hour away and was not in-tuned to the sub-market. Therefore, the property was 70% leased in what has traditionally been a 90% occupied market. We brought in a young, hungry broker who specializes in this market and knows every tenant in the area.

Other: There a countless other things that go into executing a successful deal including pitching investors of the merits of the investment opportunity, negotiating with potential tenants and renewing leases (TI packages and pricing), and improving the physical asset.

The point is that real estate has evolved from a business made up of mom and pop operators to an institutional asset class made up of sophisticated investment professionals. So if you’re looking to compete in today’s real estate business, learn more than the macro story, pick up textbook and learn the intricacies and nuances of the business.