Westside Real Estate Market - WVRC on August 24th
President MIKE called the meeting to order promptly at 12:30. PDG ANDY ANDERSON led the Pledge, followed by "Grand Old Flag" under the direction of LENNY FRIEDMAN, accompanied by PP JIM DOWNIE. Our chair of the day, MARK ROGO, gave the invocation, which he dedicated to his wife's mother who recently passed away.
There were several guests joining us today: PP RUDY ALVAREZ introduced Dave Corral; SEAN McMILLAN presented his special guest, Anna Liau; ELLIOTT TURNER brought Kellen Flanigan; President MIKE brought special guest Peter Gurgess, and PP JIM DOWNIE was accompanied by his lovely wife Margie. MARK ROGO invited several guests, including Troy Campbell, Joan Decker and Wayne Winterstein. And, it was great to have BILL EDWARDS with us again today.
SHANE WAARBROEK announced that WVRC would be participating in the "UCLA Light the Night Walk" on Sunday, September 17, 2006, at 6:00 pm. This event supports the Leukemia and Lymphoma Society. The Club will be making a donation and have a walking team. Volunteer walkers are needed, as are donors. Please contact SHANE if you can help. PP STEVE DAY reminded us about the upcoming Foundation Celebration, to be held at Raleigh Studios on November 4, 2006. Raffle tickets and dinner sign-ups are in the mail. Please respond promptly, as this year's event is likely to be very popular and we may need to request additional tables.
President MIKE thanked SEAN McMILLAN and all those responsible for a successful picnic at ELOISE SISKEL's home. A large number of WVRC members and families enjoyed the afternoon very much. MIKE also explained the new system for ordering a cobb salad, with internal controls worthy of Sarbannes-Oxley developed by GORDON FELL. Please remember to obtain a special ticket from GORDON before the meeting so the kitchen knows how many salads to prepare.
MIKE then admitted he couldn't find any good real estate stories in keeping with our program of the day, but that didn't stop him from trying. It should have. Suffice to say that ELLIOTT TURNER actually requested that we bring back "RUDY's World!" Program Chair MARK ROGO bailed out President MIKE with a snappy joke as he introduced our speaker, Betty Graham.
Betty is President and COO of Coldwell Banker Companies of Greater Los Angeles and Orange County, the dominant brokerage in Westside real estate and throughout Southern California. She managed several major Jon Douglas Company offices for several years before being appointed to her present role two years ago. Betty updated us on trends in our local real estate market, a topic of great interest to WVRC members, based on the lively Q&A that followed.
Betty reported that there is still a lot of capital flowing into the Southern California real estate market, especially the Westside. High disposable income continues to fuel this real estate market, as does a continuing influx of people from other parts of the U.S. and abroad, particularly Asia. The Latino community is also a significant driving force in the Los Angeles market, although their impact is less pronounced on the Westside.
Betty described several of the familiar projects under development along the Wilshire corridor and nearby and pointed out that these projects, as well as major commercial development, continue to drive a construction boom in the area, notwithstanding the decrease in residential activity. There is a "Manhattanization" occurring in Los Angeles as more dense residential real estate is developed and promptly occupied, including the condos and apartments in downtown L.A. The latter phenomenon is most likely driven by the high cost of transportation (both time and money), with people more interested in living closer to their workplaces.
The local market is leveling out, but is still robust. Betty believes it is coming in for a soft landing, since the fundamentals are quite different than those we experienced in the early nineties. This time, the surging housing market has been much less dependent on speculators, but instead represents real wealth creation for homeowners. Nationally, demographics also support an expanding real estate market, as Baby Boomers have substantial money to invest in real estate, and the next two generations are also now becoming prime buyers. Economic activity in other sectors continues strong locally, offsetting any softness in real estate (this was not the case a dozen years ago).
Although the market has clearly slowed, this is probably healthy, and the outlook remains positive through 2007, which is about as far as anyone can reasonably forecast. Buyers now have more choice, and sellers are able to sell desirable, properly priced homes in a timely manner (but no longer overnight, as in the recent "order taking" environment). Home prices are still going up, but there are fewer transactions. The current inventory of homes for sale is about six months vs. 2.5 months a year ago. Prices on the Westside are expected to increase another 6% to 7% in 2006, but the days of double-digit rises are behind us.
Betty closed with several statistics to demonstrate market trends and concluded the American Dream is still alive, before taking numerous questions, including the following examples: CLARK McQUAY - Are teardowns still prevalent? No, they are deceasing, probably because construction costs are so high, although available land in prime areas is certainly very limited. ED GAULD - Any prospect of significant changes in Prop. 13 property taxation? Not likely; the people wouldn't stand for it. How many sellers bypass brokers? This increased during the boom, but has returned to normal levels, with most sellers (including developers) using traditional brokerage arrangements. RAY ZICKFELD - Why are downtown condos so popular? Tremendous political will behind them to revitalize downtown areas, plus the convenience and economics of being close to work areas. PP STEVE DAY - How has creative financing effected the market? Not a significant negative impact; foreclosures are still very low and not likely to increase substantially (so don't wait for them if you plan to buy). Betty also stated that she thinks 100% financing schemes are inappropriate. PP MIKE NEWMAN - What is different today as compared to 1991-94? A better, more stable financing market and no comparable general economic recession today (vs. aerospace industry and related decline in earlier period).
Betty Graham, our members were obviously very interested in your remarks and insights, and we thank you for sharing them at Westwood Village Rotary.
Next week, President MIKE cannot be with us, so President-Elect CHRIS BRADFORD will be presiding. This news was met with a huge cheer from the audience, so we will likely have a great turnout for another outstanding program, including a talk by another one of our Japanese Exchange Program participants, Mallory Zickfeld.