by Roberta Murphy

At San Diego Previews, we deal with a number of people who are relocating to the San Diego area. They may be from from the East Coast, the desert, Bay area, Midwest or Europe, but all have pretty specific ideas about the lifestyle they anticipate in sunny Southern California.

Many of these seekers are seasoned and affluent home buyers–ones who can be pretty specific about the features they want in their next home. Their demands might very well include:

• A formal and separate entry with natural stone or wood flooring.
• An office off that lovely entry
• Formal dining room with outside patio for al fresco meals.
• In Southern California, a great room with fireplace off the spacious and well-equipped kitchen. Great for wine and cheese soirees, family fun and casual entertaining.
• At least one bedroom with full bath on ground level.
• Spacious master suite with balcony for sunset wine sipping–and spa bath with jetted tub. Huge closet also a plus!
• Outdoor kitchen for year-round entertaining is a must.
• Some want pools and some don’t, but most would like a private rear yard large enough to accommodate one.

We have recently listed a newer 5 bedroom, 4.5-bath home at 7289 Calle Conifera in Carlsbad, which offers all these features and more–including a butler’s pantry, large laundry room, 3 fireplaces, Brazilian cherry and polished travertine flooring, granite surfaces, 3-car garage, 4225 square feet, and numerous other custom upgrades. This La Costa Oaks listing is also in the highly desired San Dieguito school district, has reasonable taxes– and a price tag of just $1,150,000.

by Roberta Murphy

We are seeing luxury scaled down on many fronts, and luxury hotels and timeshare resorts are taking it on the chin as well.

For the first five months of this year, according the the Wall Street Journal, U.S. hotel occupancy has declined 53 percent. This is the lowest drop in occupancy since 1987, when Smith Travel Research began tracking these numbers.

While both luxury and budget hotels are ailing with declining revenues, those hotel investors suffering the most (just like homeowners) are the ones who bought their real estate at the top of the market with loads of debt. Defaults on these hotel loans have spiked, and securitized mortgages (where loans are chopped up and sold to different investors as bonds) are also expected to rise from 4.7 percent to over 8 percent by year’s end, according to Morgan Stanley.

Timeshares are faring not much better. The biggest timeshare operator in this country, Wyndham Worldwide Corp has seen timeshare sales plunge 39 percent from a year ago. Another big loser is Marriott International, whose timeshare business reported a $17 million loss in the first quarter of this year.

And then we have luxury hotel operators like Four Seasons, which manages a number of luxury hotels, and is facing pressure from hotel owners to discount room rates in response to economic pressures. Recently, the owners of the Aviara Four Seasons Resort in Carlsbad, CA (north of San Diego) tried to divorce themselves from Four Seasons, who have a 30-year management contract with Broadreach Capital Partners of Palo Alto, CA. The owners are trying to preserve financial viability, while Four Seasons is trying to protect its non-discounting luxury reputation–and its contract.

Four Seasons, incidentally, was the only luxury hotel not to discount room rates after the 9/11 terrorist attacks. This was broadly seen as a brilliant move. Four Seasons, with its 82 hotels around the world, maintained both its profitability and its luxurious reputation.

These harsh economic times, though, are weighing heavily on the luxury hotel market. Their fixed costs are higher with staffing, valet service and maintenance–while corporate travel has shrunk and leisure travelers are bargain hunting. This has caused many hotel operators to discount room rates and offer bargain travel packages.

This is a market that surely has not only the venerable Four Seasons on guarded watch, but also the Ritz Carlton, the St. Regis and other five-star destinations throughout the world.

by Roberta Murphy
According to Forbes.com, now may be the best time to make some of those major purchases wise shoppers have been putting off for so long, particularly if one has the luxury of capital.  The Forbes list:

1. Homes. Low prices fueled by foreclosures and short sales, coupled with low interest rates and possible income tax credits, make this an opportune time to shop real estate.

2. Cars. Automobile dealers are dealing as never before: 0 percent financing, big cash rebates and other incentives make for some historic deals. Even used car prices are down 10 percent from a year ago.

3. Vacations. Las Vegas hotel room rates are down an average of 34 percent from a year ago, cruises are offering some amazing bargains, like $1000 per person for summer week-long Alaska cruises (including airfare).  Airlines are also offering some bargain fares.

4. Toys. Prices for playthings are headed down this summer and are expected to stay down for holiday shopping.

5. High Dividend Stocks. With the S&P down 40 percent (more or less)  from a year ago and the prospect of inflationary times ahead, now may be a great time for the courageous investor to pick up some stock bargains that have a history of divident payments.

6. Laptop Computers. Prices for laptops are falling, thanks in part to recent buying activity in those handy little netbooks. Computer deals abound almost everywhere.

7. Diamonds. The recession has dulled even the diamond market, with prices for polished diamonds down an average of 14 percent from their highs last summer.

8. Clothing. Men’s and women’s clothing are filling the clearance racks. Remember how Saks Fifth Avenue started their 80 percent off sales before Christmas last year?  There are lots of bargains, especially with more expensive lines.

9. Televisions. We recently had to replace a large flat panel television, and were blown away with the replacement price at Costco.  As more manufacturers enter the flat panel TV business, prices are drooping precipitously.

10. Furniture. With fewer people buying homes, furniture sales have drastically fallen off. Many furniture retailers are going out of business and clearance sales are driving much of the home furnishings market.

As a San Diego Realtor, I find it interesting that Forbes put real estate in the number one position–and cannot help but recall Baron Rothschild’s famous saying, Buy when there’s blood in the streets.

How much blood is the question….

by Roberta Murphy

Magic must be in the air.

Even our middle son Eric — who has never, ever cottoned to bagged lunches — packed one the other day and probably saved at least $5. This college student works part time, but last week discovered the agony of having to pay $1,800 or so for a new bumper and rear quarter panel that met a brick wall when he was backing out of a narrow Rancho Santa Fe driveway in the dark recently. This story has little to do with the great money saving tips I am about to pass along, except I’ll insert it first:

1. Pack a healthy lunch, fill a Thermos of coffee, and spare the environment another plastic bottle by carrying water in a reusable container. Eric now saves at least $5 per day out of his pocket. Take away a couple of dollars, max, for ingredients, and you are still dollars ahead

2. Paste a sticker that says, 800-FREE-411 (or 800-373-3411) onto both your cell and home telephone. Instead of paying your telephone service up to $3.50 for a telephone number, why not listen to a 10-second commercial and get the number for free? Makes sense to me.
Click to see the 8 other great money-saving  tips.

by Roberta Murphy

If I could be  President Obama’s Mortgage Czar for just one week, the first thing I would mandate is that all existing mortgages become assumable.

When starting my real estate career in Houston, Texas during the last century, it was not uncommon for buyers to assume or take over  existing  financing. In fact, it was a perfect way for the self-employed or those with dinged credit to buy a home.  And because there were no loan origination fees or points,  buyers were often willing to pay a slight premium for homes with assumable loans.

To implement this today would create an immediately available financing alternative for the real estate market–and might even be a way for banks to deal with some of those famously-toxic assets. As Mortgage Czar, I would create two tiers for Assumable Loans:

1. Non-Distressed Loans. Owners of these home have equity and would likely need concessions from neither the lender nor the government, other than permission for the mortgage(s) to be assumed. For example, Seller Smith has an outstanding mortgage of $200,000 and is selling his home for $250,000. Buyer Jones would pay $50,000 plus minimal closing fees and would assume esisting financing. All future payments would now be made by Buyer Jones.  It is a simple transfer of title and mortgagor with no change in terms.

2. Distressed Sales. Sellers of these homes have no equity; in fact, they generally owe more than the home is worth.  Using a blend of short sale and loan modification procedures, loan balances and interest rates on these homes would be adjusted to current market value and rates.  Because buyers would no longer be “buying equity” and would have no equity stake in the properties, lenders could now require that prospective buyers deposit at least three months’ payments with the lender as insurance against potential future default.The Buyer would also be responsible for applicable closing fees.

Implementation of this mandate would allow both the existing borrower and the lender to avoid the costs and damages of the foreclosure process–and would help protect neighborhoods from further decay and decline.

By allowing mortgages to become assumable, we would also be offering a second chance to many whose credit ratings have been demolished by short sales and foreclosures.

Under this plan, lenders would fare much better vis-à-vis short sales and foreclosures–and more homeowners would be able to save their credit and exit their situations with dignity.  Most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of terms.

It just makes sense to get the mortgage debt seamlessly transferred before it ever goes default.

And with strangled liquidity in financial markets, it makes more sense than ever for this Mortgage Czar to transfer debt rather than forcing buyers to secure new financing–which may or may not be available.

by Roberta Murphy

Not all clients took my conservative mortgage advice over the years, and some ended up with home loans that have turned downright nasty.

In one case, a client and dear friend was persuaded to take out a Negative Amortizing Adjustable Rate Mortgage (Neg Am) along with a HELOC (Home Equity Line of Credit) a few weeks after the purchase of her $1.8 million Carsbad home.

I just heard that in a couple of months, her mortgage will reset to an intolerable level and she is seeking a way to manage payments and keep her dream home.

Late last night, I discovered that fellow real estate blogger Ryan Rockwood had written an ebook on How To Get A Loan Modification that is packed with information for struggling borrowers–and chock full of insider tips.

For example, I know that many borrowers agonize because either they or their mortgage broker overstated income levels when applying for mortgage loans during the real estate bubble years.  At the same time, attorneys have discovered that many lenders may have violated provisions in the Truth in Lending Act and/or the Real Estate Settlement Procedures Act (RESPA). Rockwood states that there is plenty of blame to go around, and lenders as a rule aren’t pursuing earlier income exaggerations.

That information alone might spur some to pursue loan modifications for their mortgages.

If you are having difficulty with your mortgage, I encourage you to visit the 60 Minute Loan Modification site, where you will soon be able (if not already) to purchase one of the best books I have seen about how to get a loan modification.

by Roberta Murphy

Earlier today, a client emailed my husband Mike about a great deal on a red Mercedes 500 SL convertible available on eBay. It was a 2004 model with only 7000 miles and offered a three-year warranty to boot. Located in Florida, this two-seater beckoned with a red price tag of around $28,000.

Ever the bargain hunter, Mike grabbed the San Diego Union Tribune’s Sunday classified section for cars, expecting to search through at least three pages for comparable sales.

It turned out be to a very short search because there was less than a quarter-page for all used cars in San Diego.

I am not particularly interested in red convertibles, but the slim number of classified ads in San Diego’s daily newspaper DID catch my attention.

We have all heard that the Chicago Tribune, the Baltimore Sun, the Los Angeles Times, the New York Times and other august print publications are on the ropes. The cause could only be financial, and financial resources are provided primarily by (1) Advertisers and (2) Subscribers (the number of which determine what advertisers pay for advertising).

I’ve been following these stories because I have a natural interest (because of background and training) in journalistic business–and also have a keen and active interest in how information (and advertising) is transmitted via the internet.

And it seems the latter may have overtaken the former. E-Bay and Craigslist are trampling traditional media.

Yesterday morning, I had a call from a Nevada broker asking if we had an agent fluent in Chinese who could help some Chinese investors seeking property in La Jolla.  Hmmm….we have agents who speak Spanish, Polish, Russian and Farsi, but none who were fluent in Chinese.

The solution was simple.

I clicked to Craigslist, immediately placed and paid for an ad for a Chinese-fluent real estate agent–and serendipity took over. Within hours, we had a perfect response.

This morning Shumei Tao, a very bright and talented real estate agent, joined our company, San Diego Previews Real Estate.  She is fluent in not only Mandarin, but Taiwanese, Cantonese–and the Internet. She too thought it serendipitous to find an internet ad that addressed her specific qualifications.

And it was only this evening as I looked at the sparse classified ads in the newspaper that I realized yesterday morning’s  instinctive reaction to a need: Head over to Craigslist and have the ad online within minutes. And then today, a Florida client sends not a classified ad, but an eBay listing for an automobile.

And then I stop to wonder: When was the last time I scanned the newspaper classified ads for…anything?

by Roberta Murphy

It seems that almost daily we hear about segments of the broad luxury market losing not only their luster, but even their footing. There are reports that luxury retailers are bracing for a crash slowdown, and that even real estate in super-rich Dubai is beginning to show signs of weakness.

In fact, says Tim Blixseth, It’s as if the whole world had a financial heart attack.

Wall Street’s credit crisis has not only invaded Main Street (and vice versa), but is crippling segments of the once-impervious luxury real estate market.

This morning, we hear that Blixseth’s Yellowstone Ski Resort has filed for Chapter 11 bankruptcy protection. This invitation-only ski and residence club for  340 uber-rich ($1.5 million buy in) is located in Montana’s Gallatin Mountains near Bozeman.  The club has 340 members including Bill Gates, former vice president Dan Quayle, Comcast’s Stephen Burke and cycling star Greg LeMond–and all have to be wondering if the resort will even open this season.

If Chapter 11 protection is granted and the club is able to get a $4.5 million loan, Yellowstone Resort will be able to open its powdery slopes this winter.  Looming on the other side of the mountain, though, is around $343 million in debt that is owed to creditors and contractors. Most of that debt, $307 million, is reportedly owed on a loan arranged by Credit Suisse in 2005.

Edra Blixseth took control of the resort last August, after her divorce from Tim Blixseth was finalized and has reportedly  been trying to sell some of the Blixseth’s other luxury properties located around the world. The Yellowstone Club is valued at $778 million, according to court filings–not including unsold memberships, which may be worth as much as $336 million.

Like other property holders and developers around the world, Yellowstone Club members and the Blixseths are hoping that recovery from this financial heart attack will quickly bring credit flowing through the world’s clogged financial arteries.

by Roberta Murphy

A pair of $53.5 million New York Plaza penthouses were sold to Russian hedge-fund manager Andrei Vavilov–which would have made it the second-highest residential sale in New York City history.

Andrei Vavilov, though, is one very upset buyer. He and his wife, Russian actress Maryana Tsaregradskaya, are outraged with low 9 foot ceilings, an unexpected and massive column in the living room, and an exterior drainage grate that blocks the view of Central Park from the middle floor.

He had been promised the epitome of luxury, but was instead, he says, was given an “attic-like space.”

Attorneys for the buyer have reportedly filed a $31 million lawsuit against the developer and its selling agent Stribling.

It is unclear to me whether the transaction has actually closed. The story (see link below) does not make that clear. There is a $10.6 million deposit from the buyer at stake, and real estate attorneys handle closings in New York. Unlike most California real estate transactions, I am told it can be very difficult for New York buyers to reclaim their deposits.

Which leads me to wonder: Is the lawsuit and resultant publicity about the buyer’s recovery of a $10.6 million deposit–or actual defects in the real estate delivered?

MY SUITE AT PLAZA IS SOUR DEAL – New York Post

This is a continuation of last week’s discussion with real estate and luxury home legend Bob Dyson, who has a radical proposal that is being quickly embraced by Realtors, lenders and local Real Estate Boards.

Why resort to radical resolutions?

Because, says Dyson “This is a real estate depression–a serious, serious issue.”

He sees an immediate need to stabilize real estate markets and neighborhood values. He also believes the motgage lending industry needs to get out of the “asset management” business, and instead focus attention on new loan originations.

So what to do with all those defaulted loans and pre-foreclosures?

That’s where Dyson’s proposed “American Incentive Resolution” saves the day.

How would it work?

1. The American Incentive Resolution Corporation (as a government entity) would buy defaulted loans from lenders at 50 percent of face value.

2. Re-market these homes through Realtors at retail market value.

3. Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years. The initial terms would be a 12-month lease-purchase, with all payments accruing to a down payment as long as payments are made on time. Lease payments would equal what loan principle, interest, taxes and insurance would be under normal loan terms at 5 percent interest. Initial move-in would entail first and last months’ payments.

4. At the end of 12 months, the lease would become a purchase with all payments made under terms of the lease being applied to the full down payment.

The first video below details Bob Dyson’s assessment of the real estate market bottom, while the second deals with the American Incentive Resolution:

HT: http://www.SanDiegoPreviews.com