Real Estate Q&A: Ramon Crum, Broker, Owner of Crum & Associates Residential Group

10:45am | Editor's note: This is the second installment in a series of question-and-answer sessions with Long Beach real estate experts — Realtors, mortgage brokers, bankers, economists. There’s a lot of information about the national real estate market out there, but it’s tough to find good local information on residential real estate — until now.

Experts in the greater Long Beach real estate scene are invited to submit themselves as a Real Estate Q&Acandidate regardless of whether they have good or bad things to say about the local market. Interested parties should send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. .

Ramon Crum, a broker and owner of Crum & Associates Residential Group headquartered in downtown Long Beach arrived in the "International City" from his home in New York in 2002. He entered the real estate market in 2007, "when everyone was telling me to run in the opposite direction," he says. Instead of running, he focused his efforts on foreclosures.

Q) There’s a lot of uncertainty in the market. How do you deal with that, and how do you get your clients to deal with that?  

A) In short, by being very honest. Remember, I am from New York, so I have to express my opinion. And the fact is, though I graduated with a degree in economics, I am not an economist. I’m a real estate broker. So I tell my buyers that the market may have bottomed or not, but the most important thing is: Does this property have everything you were looking for at a price that you feel comfortable paying? There are a lot of traditional buyers and investors competing for a low amount of available properties. So you can decide to wait for a lower price, but there is no guarantee that you will find a property with all the characteristics and no other competing buyers.I tell my sellers that pricing their property right the first time is very important. Even though there is low inventory on the market, there are also low sale prices. And everyone is looking for a bargain, not granite countertops.

Q) Which sectors are hot, and which are not?

A) I would say [homes valued at] $300,000 and below are the hottest sectors right now. Most first-time home buyers can afford a home in this price range, especially with the interest rate hovering around 5 percent. The $300,000-and-below price range is also attracting many first-time and seasoned investors. Investors can pay cash and not only compete against a traditional homebuyer but also entice the banks to get their toxic asset off their books more quickly. Cash is king. Banks know that a cash investor will remove inspection, termite and repair contingencies. The luxury market is cold since most buyers are now able to move into a great neighborhood without stretching themselves thin trying to make their mortgage payment. In addition, luxury home owners are not willing to accept that today’s homebuyer doesn’t care about their recent remodel. Buyers are not scared to enter [The] Home Depot or Lowe's if it means saving tens of thousands of dollars.

Q) Where in Long Beach, or surrounding areas, can one find any deals?

A) Downtown and the Westside have the most deals since these areas also have the highest volume of properties. Condos that sold for $530,000 are now on the market at $275,000. Loft, rental properties and luxury condos are at 2003 sale prices. Lakewood and Bellflower are experiencing the same drop in home values as Long Beach. Buyers in the Seal Beach and Huntington Beach areas have dropped drastically more since financing has tightened and million-dollar homes are losing up to 15 percent of their value each month. The luxury market homes are on the market an average of 225 days, while more home owners consider doing a strategic default. A strategic default is when a homeowner(s) decides to stop making their mortgage payment (even though they can afford to make the payment). A homeowner might be paying $10,000 a month, but the same size house on their block is renting for $4,500 a month. As a result, more luxury homes eventually enter the market. I think the best deals are in the luxury market because of less competition from buyers, and the bank needs to write these huge assets off their books.

Q) Where in Long Beach, or surrounding areas, should buyers avoid?

A) I really can’t think of any areas that a buyer should avoid that they would normally avoid in any market. With low interest rates coupled with home prices at historic lows, even the high-crime areas of Long Beach, I think, are fair game. You don’t have to live there, but somebody will and you can have your tenants pay your mortgage note while you wait for your property to appreciate in value. The highest cash-flow rental properties are in less desirable areas. You can purchase great rental property in North Long Beach and hire a property management company to maintain it for you. So my answer is, if you are planning to live in the property then move to an area that you feel safe. And if you are looking for the best investment properties with the least amount of competing buyers, all areas are fair game.

Q) Speaking of deals, where are all these foreclosures deals we’ve all been waiting for? Are they happening, or going to happen? If so, where and when?

A) Realty Trac, HUD, and most banking institutions believe there are between 5 - 7 million properties in some stage of foreclosure in the United States. I am starting to see more bank-owned properties enter the market. Due to "robo-signings," moratoriums and government programs, foreclosures have been delayed for more than two years. Washington has put pressure on Fannie, Freddie and the Big Four (Citigroup, Bank of America, Wells Fargo and Chase) to try and keep homeowners in their homes. The problem is that most homeowners are either unemployed or their income has been reduced or they don’t make enough to qualify for a loan modification. Or the home owners make enough to qualify but their loan was sold to another bank or investor that would rather foreclose on the home than approve a loan modification. My office gets many calls from frustrated homeowners that have tried several times to get a loan mod and want me to short sale their home. I don’t know exactly when all the foreclosures will hit the market, but I doubt it will resemble 2009. Why? If the banks flood the market, they will receive less money for their assets. So they will either rent the property out (like Fannie Mae is doing) or trickle several homes into the market until they are depleted. I have attended a private meeting with Fannie, Chase, and Wells Fargo, and they all say that the foreclosures are coming soon. And when they come, they will be in all areas.

Q) When the last spate of foreclosures hit Southern California, it negatively impacted many communities, creating blight in the form of unoccupied homes and uncared for communities. Are you seeing this in Long Beach? If so, which communities?

A) This time when foreclosures hit the market, it will be a very controlled process. One of the reasons why you don’t see a lot of foreclosures is because of training. Banks realized what was happening to communities and it became a public relations nightmare (especially during the creation of the Troubled Asset Relief Program bailout). Now banks are training agents and have established a report card to grade their performance. Before, the banks didn’t know how to handle their assets and would give their properties to agents that had offices more than two hours away. And the asset companies will do random, unannounced property checks to see if the agent is taking care of his or her asset. So I don’t see any uncared for homes, but I do see a lot of unoccupied homes throughout Long Beach.

Q) Is the bottom here, near or in another year (or more)?

A) Again I’m not an economist, but I can’t see the housing market reaching a bottom until we move through all these millions of foreclosures or financing loosens so that more buyers can help buy these foreclosures. My best guess is we are looking at the end of 2012 for either scenario to come to fruition.

Q) Any good deals out there on the market?

A) Yes, condos and lofts built in 2005 are a great deal. They have all necessary amenities and are located near the beach and restaurants. Many offer secure parking and entry, so that when you are ready to sell, your home will appeal to renters. You will have to pay HOA dues each month, but owning an older home comes with a lot of maintenance costs, also.

Bio

Name: Ramon Crum, Broker/Owner
Affiliation: Crum & Associates Residential Group, downtown Long Beach
Residence: Hails from New York; Long Beach resident since 2002

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