Recent Situation

It’s been more than six years since my last blog post!

A little update about us. My wife Stephanie and I that have been working together in Real Estate created our own real estate agency named Makishima Realty. I am currently in the processing of re-branding everything, including this blog post. It actually took a bit of doing trying to get back into Word Press as I’ve forgotten which e-mail I used to access this site.

In any case, the real estate industry continues to evolve. With the creation of virtual agencies (office-less agency like us) and the expansion on the internet, we were expected to see a revolution in the real estate industry. But big moves like Purple Brick with their super low commission structure has failed and retreated, and it’s more like a minor evolution that has happened. Obviously, Zillow has become a significant force in the industry combined with Redfin and Trulia where we believe most people will begin their real estate search. Power to the people!

The commission structure which held the 3% for listing agent and 3% for the selling agent (total 6%) has crumbled away and now the norm is 5% and for higher cost homes, as low as 4% (2%/2%). When the commission was low, some agents won’t show the property to their customer because the agent won’t benefit, but with all the listings showing up on Zillow, there’s no hiding any more and well “2% is much better than nothing” has become the norm. With the lower commission structure and the marketing power of Zillow, the traditional real estate agencies would be difficult to keep operating in their same high-overhead ways.

The real estate market is HOT now with houses getting multiple offers and selling as soon as it hits the market. COVID-19 hasn’t really dampened the market, but the low interest rate and low inventory is driving the house price up like mad. This would be a good time to sell your home, but there is a bit of a bubble so if you are buying, you may want to hold off a bit–although the prices may just simply continue to rise…

James Makishima

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US High School Ranking

24/7 Wall Street reported the state vs state education rankings. Here is the list of the best and the worst state in terms of school systems:

1. Massachusetts
2. New Jersey
3. Maryland
4. Vermont
5. New Hampshire
6. Connecticut
7. Wyoming
8. Pennsylvania
9. New York
10. Minnesota

41. California
42. South Carolina
43. Louisiana
44. Alabama
45. Idaho
46. Arizona
47. Oklahoma
48. New Mexico
49. Nevada
50. Mississippi

Sadly, my state, California is 41 out of 50 states… Some blame Proposition 13 which limits the increase in Property Tax (which funds public education) as the cause…but I think there are other problems.

But fear not, there are public schools in California that rank fairly high in the nation wide high school ranking of 19,400 schools by US News and here it is:

10. Oxford Academy, Cypress CA
22. Whitney High School, Cerritos CA
55. Hawthorne Math and Science Academy, Hawthorne CA
59. Lennox Mathematics, Science and Technology Academy, Lennox CA
101. California Academy of Mathematics and Science, Carson CA
112. Los Angeles Center for Enriched Studies, Los Angeles, CA
147. Alliance Dr. Olga Mohan High School, Los Angeles CA
149. Harbor Teacher Preparation Academy, Wilmington CA
165. Palos Verdes Peninsula High School, Rolling Hills Estates CA
167. San Marino High School, San Marino CA
187. Palos Verdes High School, Palos Verdes Estates, CA
191. Alliance Marc & Eva Stern Math and Science, Los Angeles CA
222. Corona Del Mar High School, Newport Beach CA
278. University High School, Irvine CA
297. Arnold O. Beckman High School, Irvine CA
300. Cerritos High School, Cerritos CA
310. Northwood High School, Irvine CA
313. Troy High School, Fullerton CA

In the LA/OC areas, the highest ranking schools that you can attend just by living in the school district starts from #165 Palos Verdes Peninsula High (or “Pen Hi”). All the schools ranking above it is a charter/magnet/special criteria school which means your children will have to meet certain academic criteria. The two schools in Palos Verdes ranks 165 and 187. The other good school district around here is the Irvine school districts where they rank from 278 to 310–still a very respectable ranking. Go Panthers!


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Recent Real Estates Situation in Los Angeles/Orange County areas

Hi, It’s been over two years since the last blog. There really hasn’t been much to blog about, but things are a changing again, so here I go.

The real estate price has risen quite a bit with very limited supply exceeding demand–thus “nice properties” coming on market becomes a bidding war right after it hits the market. On the other hand, properties with blemish or having some defects and are not truly move-in-ready seems to sit on the market for a very long time.

The interest rates are still at an all time low. But with the US economy improving (and the stock market constantly hitting new highs) their is the ugly inflation fears entering in the market. If inflation comes in, you can expect the Federal Reserve to be increasing the interest rate and thus leading to the increase in the mortgage interest rate. It is currently deemed safe until about this summer to expect the interest rates to be low, but there is no assurance beyond that. So, if you are thinking about buying a house, now is the time to take action.

Another peculiarity about the market is that the First Time Buyers are usually about 40-50% of all sales–but is currently around 20%. So, the younger generation are either not buying houses or can’t afford to buy houses. This is going to distort the housing market going forward.

Attached below is the mortgage rate trends. You can see that 30-year fixed is at a very low level.


Buy soon to get a good deal!

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California School Ranking

The latest South Bay school ranking can be seen here.

The ranking for other schools can be seen here.

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School Grading

Here is the latest school grading report.

Other schools can be seen here.



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Los Angeles area real estates, finally bottomed out?

I just noticed it’s been over a year since my last blog. It’s been a busy year. On the personal side, my band “The Rooftops” which is a Beatles Tribute Band where I play the part of George Harrison perfomed at the “Japan Recovery Live” to aid in the recovery effort from Japan’s Earthquake Tsunami damage. I also joined a band called “Three of Us” in their live at the Honda Museum (which is a secret museum of Honda cars and bikes) and performed a wide range of music from Elvis, Roy Orbisson, Mama’s and Papa’s, Simon and Garfunkle, to the Beatles. This is my “life” part of my “work-life” balance. What do you do for fun?

On the consulting front, I founded MK North America, Inc., which is a limousine company catering to the needs of the Japanese community in Southern California and is a subsidiary of MK Taxi Group in Japan–one of Japan’s largest taxi company.

On the real estate front, the market is seemed to have bottomed out at the national level as witness by this Wall Street Journal article. But as I have said over and over, real estate is a local market issue, so let’s look at Los Angeles single family residential median value to see where we are at:

As can be seen from the chart above, after bottoming out in the Spring of 2009, the LA market has bounced off the bottom but has been generally going sideways. The market seems to be divided into two segments: nice houses in desirable areas which are priced right and seem to sell within a day of two of being listed (South and West Torrance, parts of Huntington Beach), and those with a bit of blemish that seems to just sit unsold for months after months. We have three of our clients fighting for these desirable houses in good areas, and it ain’t easy. One thing you must do it so go view the house immediately after it lists and put in a decent offer immediately. If you snooze, you lose!

Also, the interest rate keeps going down and it now seems that it has finally hit the bottom. At 30 year fixed rate at 3.66%, and the prime rate holding at 3.50%, how much lower can it go?

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March 2011 Real Estate Situation and Etc.

I would like to extend my sincerest sympathy to those affected by the recent Tohoku/Kanto earthquake in Japan. I hope all of your familes and friend are safe and sound.

It has been a busy few months for me and that along with the fact that the Real Estate marketing in Los Angeles/Orange County has been trodding along sideways with no major change has prevented me from blogging recently.

In October 2010, I went to Washington DC to join the First Annual US-Japan Council Meeting. The US-Japan Council is headed by Irene Hirano-Inoue (wife of Senator Daniel Inoue) and it is an organization with a goal to advance Japanese American cause. Most Japanese Americans can probably be separated into ancestry which migrated to the US/Hawaii in late 1880s to early 1920s with the Issei’s and Nisei’s experiencing encampment. The decendants of this group is probably in the 4th and 5th generation like me and my children. Another group may be the Japanese immigrants that came after around 1970s who are Issei’s and Nisei’s now. The issue with the earlier migrants was that they were badly segragated and thus try to integrate in the American community, they are now in the 4th and 5th generation and can no longer speak Japanese, and has long lost touch with their relatives in Japan. The Issei’s and Nissei’s married outside of the race at a single digit percentage, but the 3rd and 4th generation are marrying outside of the Japanese race at a rate of around 40%. The concern here is that loss of identity for the Japanese Americans as they are more and more assimilated into the U.S.

Is this assimilation bad? No, not really. But a loss of culture and loss of your origin can be a critical issue. US-JC is trying to network all the Japanese Americans and to help connect them back to Japan so we can be reminded who we really are. In any case, attending the meeting was a very enlightening moment for me and my identity.

I did not know much about how my great grand parents, grand parents, and my father lived in the U.S. But I learned a lot about them through my association with the US-JC. Also, there were recently two movies made by Director Junichi Suzuki which are titled “Toyo’s Camera” which is the story of the Japanese-American internment through the lens of famous photographer Toyo Miyatake and “442” which was a WW2 military unit composed exclusively of Japanese-American Nissei’s and fought the war for the US in the European front. Senator Daniel Inoue is a hero from the 442 unit and he is currently the Senate Pro Tempre of the United States which means he is third in line for US Presidential succession after Biden and Boehner. A Japanese-America third in line? That is amazing….

This led me to go to the Japanese American National Museum (JANAM) in Little Tokyo in Los Angeles to learn more about the internment. You must take the docent tour, but it is quite interesting. More than anything, they have an extensive record of Japanese-Americans and I was able to find records of many of my ancestors.

Finally, Japan’s Tokyo Broadcasting Station (TBS) broadcasted a 5-part mini-series (10 hours) in the summer of 2010 title “99 nen no ai–Japanese American” which translates roughly to “99 years of love–Japanese Americans” and follows the history of a Japanese person who migrated to the US. I believe this is the best put together story to get a sense of Japanese American history and hope it will be translated into English one of these days.

When you look back to the late 1800s and the early 1900s Japanese migrant, they look the exactly the same for Mexican migrants coming into the states now. I hope it won’t take the Mexicans a 100 years like the Japanese to truely earn a position in the United States.

But I digress massively… Back to Real Estates.

Looking at Los Angeles County Single Family Homes, prices peaked during May to August 2007 ($550,000), then it tumbled to a bottom during January to May 2009 ($298,000), and then it took off upwards with the Tax Credit, but has stumbled after the expiration of the tax credits and the pricing is now going sideways around $340,000.

The chart below show the median price action for Single Family Homes in Los Angeles County.

I attended the Union Bank/Bank of Tokyo economic forecast seminar hosted by JBA (Japan Business Association of Southern California) and learned that the consensus view amongst the economist is that the real estate pricing has hit a bottom and it will not fall further. They expect prices to climb gradually and reach the 2007 peak again around 2015 to 2020.

US GDP is showing positive growth as we exit the recession. But the problem remains unemployment. Many people lost jobs during this recession, but even if they are re-employed it is expected to be at a lower paying job. So, not everything is rosey looking into the future.

The Federal Government can continue to borrow money and operate even if they are running a deficit (which actually is a strange situation) but State and Local Government must balance their budget and cannot operate at a deficit. A such, with the reduction of tax revenues, State and Local government is still shrinking. US seems to have emerged from a recession, but California unemployment is still at 12.5% which is the second worst in the Union, so it looks like we got a little more to get out of our “local recession” here.

So the first point is “Los Angeles property prices has hit a bottom and there is no further factor for fearing further decline.” The prices are moving sideways as we speak, so you can still buy property for pretty cheap.

You can’t talk real estate without talking about loans. Currently, banks are writing 30-year fixed rate loans at around 4.875% for people with good credit scores. A while back it hit a low of 4.5% and the rate is on the rise, but historically, it is still a very low interest rate today. There was a period where it was very difficult to get a loan, but it seems now that the credit market has eased up a bit and if you have good credit, 20% down payment, and a solid job, it’s not difficult to get a loan anymore. Getting properties appraised at a proper price was also difficult but as the prices are no longer declining, it seems that the appraisers finally got sense and are making appraisal at a rate we consider to be fair so this is not a concern either.

However, not everything is rosey on the loan front. There is an issue with what will happen with Fannie Mae and Freddie Mac. Fannie/Freddie creates the secondary market for loan which takes the mortgage and turns them into investment vehicles. Without Fannie/Freddie, the loan market is feared to freeze up again like it was back in the 1920s when you had to have 100% cash in order to buy a property. Another concern is how Wells Fargo is petitioning the government to increase the minimum down payment amount to 30%. The reason being that the banks won’t get hurt as much if we are hit with another recession like the one we just had.

So, the second point is that it may be more difficult to get a loan down the road, as well as the interest rate rising as economy improves.

There are still so many Short Sales and REOs in the market. REOs are not bad, but Short Sales are just distorting the market. It will probably be a while more when all the Short Sales are flushed out of the market and things return to the way it was where most sales were “Standard Sale.”

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California Crime Statistics

As a Real Estate Agents, it seems that the two most frequent question I receive are about the quality of the school system and the safety of area. This blog is about safety.
Discussing safety is a difficult task. When asked "which area is the safest" it’s easy to list up Irvine, Palos Verdes, Manhattan/Hermosa/Redondo Beach, and Torrance as safe area to live. When asked which are the more dangerous areas the answer is "Compton and South Central LA" and if you want to buy in that area, please go find another agent as I value my life and don’t want it on my conscience that I sold a property in areas where I myself consider dangerous.
When the "safe areas" listed above are too expensive and the buyer cannot get in those area, then it becomes a murky area of which area is safe enough.
As one indicator, the table below is an excerpt of the FBI Uniform Crime Statistics for 2009. It is the collection of data from US cities with over 100,000 population. There are 272 cities listed on this statistics so any city better than 135th can be considered "safer than average?" The table below is only for California cities. Cities in greater Los Angeles and Orange Counties are listed in green. The table shows the Violent Crime Safety Rating (crimes against persons), Property Crimes (crimes against objects), and the Total Crime. Total Crime ranking is skewed with the Property Crimes as there are easily over 10 times Property Crimes than Violent Crimes.
Looking at the City of Berkeley which ranks 242th nationwide, I didn’t feel that the city was dangerous when I attended collage there (yes, that was decades ago…). In comparison, Oakland felt more dangerous but ranks 230th which is better than Berkeley. But you need to look at the Violent Crime column where Oakland is 267th which will qualify it as the 5th most dangerous city in the US versus 152nd for Berkeley which makes a bit worse than average. There are nice areas in Oakland in the hills and it doesn’t mean Oakland is uniformly dangerous. The same goes to City of Los Angeles which also includes areas such as Bel Aire, Westwood, and Brentwood.
So, looking at this table, Irvine is unquestionably safe ranking 1st in Safety for Violent and Property crimes. Then follows Thousand Oaks, City of Orange, Torrance, Garden Grove, Huntington Beach, Anaheim, Burbank, Pasadena, Fullerton, and Costa Mesa. I skipped Santa Ana, Norwalk, and Los Angeles as they ranked pretty low on the Violent Crime ranking.
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California First Time Buyer Tax Credit

In my previous blog, I referenced that the California Association of Realtors (CAR) forecasted that the Franchise Tax Board (FTB) credit of $10,000 will expire in 10 to 20 days. Well, as of the 25th day of May, it has not run out. This is because FTB is calculating that only 57% of the applicants will qualify for the credit. Unlike the Federal Program that’ll give you back $8,000 regardless of the amount of tax you pay to the IRS, the FTB credit is only an off-set against the amount you pay to the FTB. So, unless you pay atleast $3,333 to the FTB annually, you will not fully benefit from the maximum amount of the tax credit. Also, FTB is thinking some people will not qualify for the program for one reason or another.
The total tax credit is $100 million and assuming everybody who applies can get the $10,000 total–that means the first 10,000 applicants will get the credit. But with the reduction to 57%, that means a total of 17,543 should be the cut-off point–with no saying how much each of the 17,543 can get or can’t get. The order of entry is determined by the order the fax was received. I heard rumours about fax number always being busy, but I got through on the fifth try on a Tuesday morning so it doesn’t seem too bad.
At the current rate, the tax credit should be valid until end of June 2010. The application status is updated every Thursday for the status to Tuesday at the FTB website which you can access by clicking here.
This is what you need to look at. It looks like when the number to the right that says $38,357,000 hits $100,000,000 they are going to shut-off the program.

Applications for First-Time Buyer Credit received as of 05/25/10

As of Estimated Total First-Time Buyer Applications Received 57% of Estimated Requested Credit
05/04/10 430 $ 2,351,000
05/11/10 2,470 $ 13,283,000
05/18/10 4,830 $ 25,473,000
05/25/10 7,330 $ 38,357,000
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California Home Buyer Tax Credit

With the Federal $8,000 first time home buyer tax credit coming to an end on April 30, 2010, the new California home buyer $10,000 tax credit comes into play from May 1, 2010. However, based on latest California Association of Realtor forecast, the California tax credit which is capped at $100 million is expected to be exhausted between May 10 and May 20, 2010–just 10 to 20 days from the initiation of the program. Assuming a typical minimum of 30 days for escrow, that means you won’t get the California tax credit unless you are already in escrow before April 30, 2010–which means the lucky 10,000 or so will get both the Federal $8,000 tax credit and the California $10,000 tax credit for a total of $18,000!
So, how is this California tax credit supposed to be a stimulus? It sounds like just a gift to a lucky few who were already rushing to get the Federal tax credit.
There were some discussions that the California Tax Credit can be reserved but that has been clarified to apply only to New Never-Occupied Homes and does not apply to existing homes.
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