Buy or Sell NOW

Buy or Sell NOW

Real Estate and Mortgage market analysts Jeff Brown, writing in The Street (, tells both home buyers and sellers that now is the time to take action for any home buying or selling, and to do so before the market changes.

In truth, any urgency for action will fall directly in the lap of any potential homebuyer, which we will see from Brown’s calculations below, but will not be a pressing issue for sellers under current market conditions. Brown’s reason for action…rising mortgage interest rates.

Indeed rising rates can make the cost of purchasing a home greater for the buyer, thus potentially limiting the quality of the home acquired, or hindering the purchase altogether. However, rising mortgage interest rates may slow the current quantitative pattern of home price increases, but they are not likely to stop the price jumps unless we’ve reached the top of the current market surge, and there’s no indication that has occurred.

At present year-over-year national median existing-home prices have increased by 13.7 percent with some metro markets seeing gains of over 20 percent.

Brown rightly notes that rising mortgage rates can negatively impact potential buyers. He draws his figures from the Maximum Mortgage Calculator and looks at the price/rate relationship. Rates have in fact nudged up again and Brown points out that rates up to 6% are closer to normal market rates. He states:
“With the default inputs, a person with a $4,000 monthly income could afford a monthly payment no higher than $805. That would support a $134,267 mortgage at a 6% rate. Change the rate to 4.5%, about today’s level for the 30-year fixed-rate loan, and the maximum mortgage jumps to $158,876.”
“So, if rates were to rise from today’s 4.5% to 6%, a level that has been common in the past, this buyer would have $24,609 less to spend. Looked at another way, a 1.5 point increase in mortgage rate would reduce this buyer’s buying power by about 18%…note that raising the rate to 6% from 4.5% is a 33% increase, producing a much larger monthly payment for a given loan size.” Rising home prices and mortgage interest rates can most definitely impact potential home buyers.

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Existing Home Sales Rise

Existing Home Sales Rise

The latest data from the National Association of Realtors® (NAR) shows that existing-home sales “rose strongly” in July, while at the same time the median price for homes maintained double-digit year-over-year increases during the same period.

Overall existing-home sales include single-family homes, townhomes, condos and co-ops, with the sales data indicating completed transactions. Total sales for all types of homes went up 6.5 percent in July to a seasonally adjusted annual rate of 5.39 million units; this was up from 5.06 million units in June. July’s figures were up 17.2 percent from the 4.60 million units in July of 2012. Existing-home sales have remained above year-ago levels for 25 straight months, says the NAR.

As a portion of the market, distressed homes, which include, foreclosures and short sales, accounted for 15 percent of July sales, this was the same percentage as in June. Foreclosures accounted for 9.0 percent of sales with short sales making up 6.0 percent. Foreclosures sold for an average discount of 16 percent below market value in July, while short sales were discounted 12 percent.

The NAR says the 15 percent market share for distressed homes matches the lowest share since monthly tracking began in October 2008. One year ago (July 2012) distressed sales accounted for 24 percent of market share.

NAR data shows that all-cash sales comprised 31 percent of all transactions in July, the same as in June. For the same time period one year ago all-cash transactions were 27 percent of all sales. “Individual investors, who account for many cash sales, purchased 16 percent of homes in July, down from 17 percent in June; they reached a cyclical peak of 22 percent in February of this year.”

First-time buyers, which normally account for at least for 40 percent of existing-home purchases monthly/annually, are still under-represented in the purchase market accounting for only 29 percent of purchases in July, this was unchanged from June, but has dropped precipitously from 34 percent in July 2012.

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Existing-Home Prices Up Again

Existing-Home Prices Up Again

According to the National Association of Realtors® (NAR), the national median existing-home price for all housing types, which includes single-family homes, townhomes, condos and co-ops, was $213,500 in July, reflecting a 13.7 percent increase over July 2012. “This marks 17 consecutive months of year-over-year price increases, which last occurred from January 2005 to May 2006,” states the NAR.

The median price has now shown double-digit gains for the past eight months, “and is now 7.3 percent below the all-time record of $230,400 in July 2006. Two years ago, the median price was 25.7 percent below the peak.”

NAR data shows that the national median existing single-family home price was $214,000 in July, up 13.5 percent from the same period a year ago, while the median existing condo price was $209,600 in July, which is 15.5 percent higher than July 2012.

Regionally, the median price in the Northeast was $271,200, up 6.7 percent from a year ago. In the Midwest the median price was $168,300, which is 9.5 percent above July 2012. In the South median prices were up $183,400, rising 13.6 percent from a year ago, while the median price in the West was $287,500, which is 19.2 percent above a year ago. Price gains were driven by strong sales gains.

NAR data reveals that single-family home sales rose 6.3 percent to a seasonally adjusted annual rate of 4.76 million in July up from 4.48 million in June. This figure is 16.4 percent higher than the 4.09 million-unit level in July of 2012. Existing condominium and co-op sales increased 8.6 percent to an annual rate of 630,000 units in July from 580,000 in June, and are 23.5 percent above the 510,000-unit level one year ago.

Existing-home sales in the Northeast surged 12.7 percent to an annual rate of 710,000 in July and are 20.3 percent above July 2012. In the Midwest existing-home sales increased 5.8 percent in July to a seasonally adjusted annual pace of 1.28 million, this is 20.8 percent higher than a year ago.

In the South, existing-home sales increased 5.0 percent to an annual level of 2.11 million in July and are 16.6 percent above July 2012, while in the West rose 6.6 percent to a pace of 1.29 million in July and are 13.2 percent higher than a year ago.

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Home Builder Confidence Increases

Home Builder Confidence Increases

According to data from the National Association of Home Builders (NAHB), confidence for the near-term future of the housing market amongst the nations homebuilders approached an eight-year high for August. The NAHB credits strong buyer demand and a limited supply of new and existing homes as being the reason for the continued positive market outlook. They note that the rise in confidence comes in spite of higher mortgage interest rates.

The NAHB Housing Market index rose to 59 in August, and it is the fourth consecutive monthly gain for the index, as well as being the best showing since November 2005. The August reading was three points above July’s reading of 56. Market analysts polled by Reuters had expected the index to sag to 56 in August. Readings above 50 mean more builders view market conditions as favorable than poor.

The survey evaluates single-family home sales conditions along with sales expectations for the next six months as being “good,” “fair,” or “poor.” Likewise the survey also asks builders to rate traffic of prospective buyers as being “high to very high,” “average,” or “low to very low.” The scores are then calculated in a seasonally adjusted index where any number over 50 indicates that builders have a positive expectation for the market, and view conditions as “good” rather than “poor.”

The survey’s index for homebuilders’ view on current sales conditions rose to 62 from a revised 59, the industry group said. The gauge of expectations for single-family home sales for the next six months edged up slightly by 1 basis point to 68 after increasing by 15 basis points between May and July. The component on prospective buyer traffic held steady at 45.

NAHB Chairman Rick Judson said, “Builders are seeing more motivated buyers walk through their doors than they have in quite some time…What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.”

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Pending Home Sales Slip in June

Pending Home Sales Slip in June

According to the National Association of Realtors® (NAR) pending home sales declined in June, and this after reaching their highest level in over six years during the previous month. The NAR stated that rising mortgage interest rates were “beginning to impact the market,” as the reason for the increase.

The NAR data for pending home sales is drawn from their monthly Pending Home Sales Index (PHSI), which is considered a forward-looking indicator, with the data reflecting contract signings but not closings.

Pending Home Sales Index data shows that contract signings in June declined slightly by 0.4 percent to 110.9. June’s decline followed a six-year high for the index in May reaching 111.3, but was still 10.9 percent higher than June 2012 when it was 100.0.  Pending sales have been above year-over-year levels for the past 26 months, and the pace in May was the highest since December 2006 when it reached 112.8.

The PHSI was first used by the NAR in 2001 and an index of 100 “is equal to the average level of contract activity” during that year, says the NAR. The NAR also notes that the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which they say is “normal” for the current U.S. population.

According to the NAR, “In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.” Also, “a sale is listed as pending when the contract has been signed but the transaction has not closed.”

NAR chief economist, Lawrence Yun, says that, “higher home prices and interest rates are beginning to impact affordability.” He adds that mortgage interest rates began rising in May, which slowed the momentum of contract activity in June.  Additionally he notes that, “the persistent lack of inventory also is contributing to lower contract signings.”

The NAR currently project that existing-home sales will rise more than 8 percent in 2013, while inventory shortages will cause the median price to rise by nearly 11 percent for this year. July’s sales data will be available later this month.

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Would Mortgage Rates Create An Impact On Home Recovery

Would Mortgage Rates Create An Impact On Home Recovery

There has been a great hike in the rates of mortgage, but as far as historical records are concerned, it would not create any impact on the prices of the homes. This is a report stated by Fanni Mae.

Fannie had taken a look into the mortgage rates of 1990 and researched several things on the basis of that. The surprising conclusion of the research was that the rise in rates could have hurt the sales of homes, but they had not any impact on the prices of the homes.

As far as history is concerned, the level in which the interest rates increase will not stop the recovery of the current housing. This is what is stated in the report.

The study conducted by Fannie also compared the rates of mortgage along with the historical price of homes and the data of sale. The report was focused on two different time periods when the rates increased. The first period was from 1993 October to 1994 December. At this time, the rates increased from 6.8% to 9.2%. On the other hand, the second period was from 1998 October to 2000 May. The rates hiked from 6.7% to 8.5%.

In the early 1990s when the rates increased, the home prices leveled. It then fell down suddenly. However, during the climb of the second rate, there was hardly impact on the prices of the homes.

Mark Palim, who was the lead in the study of Fannie Mae said, “What we see through the ups and downs of rate changes is that sellers are reluctant to lower prices.” At the same time, it was also found that the home buyers are interested to find ways of extending the resources. Thus, they switch to loan rates that are adjustable. This in turn, kept the payments affordable in the initial years.

Palim also claimed that economic trends are largely related with home prices and rates. Thus, in a hot economy, there is a rise in rate. This also increases income and buying tendencies.

The entire research might throw some light on the housing market in the coming months.

Rising Interest Rates Preparation

There are some economists who claim that the rates will surely create an impact on the prices of the homes and also the recovery of the housing market.

A chief economist, Mark Zandi examined the mortgage rates and the data of home price for more than 20 years. He found that for a rise in every percentage, the pace of home price rise was lowered by at least half percentage. He also said that, if sustained, the current rate rise will take some of the steam out of the market”.
At the same time, he also noted that the rise in the current rates is low and mortgages are also affordable. This was claimed on the basis of historical average.

Jay Brinkmann, associated with Mortgage Bankers Association claimed that the increase in rates in the recent years will create an impact on the spending powers of the buyers.

There are people who buy homes for personal reasons. They relocate to work or they fall in love with a house. Thus, the hikes in rates do not stop them from buying homes. They are concerned about which house they buy. Thus, instead of a bigger house they can go for smaller ones or in a less expensive neighborhood. Thus, it does not lower the volume of sales.

A chief economist, Lawrence Yun, however says that the rates of mortgage will create an impact on the volume of sales and this will be ultimately followed by the home prices.

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Us Housing Market Comprises Of Mostly Chinese Buyers

Us Housing Market Comprises Of Mostly Chinese Buyers

The Chinese are flooded with cash now and thus the interested homebuyers are a big customer in the US housing market for buying homes and paying top rates.

According to Jonathan Miller, who is an appraiser based in New York, “The Chinese came out really huge in the past year.”

In fact, the buyers from China accounted almost more than 18% of $68.2 billion foreigners that spent money on homes during the last one year. This was claimed by the National Association of Realtors.
It has also been found that the Chinese are buying more homes even at the prices of $425, 000 compared to many other foreign buyers. In addition to that, it has also been stated that more than 70% of the deals were made in cash by the Chinese.

In California, the influx is more felt because half of the homes have been sold to the Chinese buyers from here. An agent, Sally Forster Jones associated with Coldwell Banker International also claimed that the Chinese are getting more properties on the western side of the city. she also states that more than 10 multi dollar homes have been sold by her to the Chinese in the last 1 year.

According to her, “The uptick in sales to Chinese buyers started several years ago but it has increased dramatically lately.” Most of the Chinese clients with which she deals are wealthy industrialists and many of them have spent even less than half the year in US. “Some have children going to school in Los Angeles and use the homes as residences for them and [as a place] to stay at when they visit their kids,” she said.
Lately, it has been found that the gross domestic product of China has grown to a great extent in single digit. This is not the end. It has also sometimes grown double digit in the last 10 years. This in turn, has helped the country to produce more cash, especially for the top business class people. They are investing in the real estate market of US, because they consider it to be safe and stable.

The purchases of the homes are mainly carried out in order to raise the family. Special attention is also given to the local schools.

There are some Chinese who also buy homes for their kids. A family from Shanghai bought a condo for their daughter last year. There are, in fact, several similar instances of this type.

There are Chinese that buy homes through the government of the US immigrant investor program. This program is considered to be fast track by means of which green card can be achieved. In order to qualify for the program, it is important for the foreigners to invest a minimum of $500, 000 in any business providing 10 jobs. It has also been found that 80% of these visas have gone to the Chinese citizens in 2012, as per the government records.

Apart from California, there are other sunbelt states that are also attracting the attention of the foreign home buyers in the recent years. Las Vegas is attracting buyers from Canada. In fact, it has been estimated that there are almost 4 states that accounted for foreign sales. Florida occupied 23% of the sale while California 17%. On the other hand, Texas and Arizona occupied 9% of the foreign sales. New York is an immigration gateway and an international business center. Virginia is close to Washington in terms of powers and both account for 3% of sales.

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Worst Hit For The Mortgage Shoppers

Worst Hit For The Mortgage Shoppers

The mortgage rates are rising at an alarming rate due to which it has started scaring the mortgage shoppers. The hike in the interest have blindsided the homebuyers. In the last 26 years, the biggest increase was witnessed on Thursday. Thus, many shoppers are actually confused about whether they should look for a loan or wait for some time.

An interested home buyer, Mike Brewer and Laura, his wife have shopped for homes for several months before they ultimately gave up the hope. Thus, they decided to build a new place in Warrenton in Va. The new home will not be ready till November, and they will not be able to lock in any mortgage till September.

In the past two months, the rates have been rising with a percentage point. Consequently, this has made them an extra $200 a month.

Brewer also claimed that they had been hopeful about the rates that would go low by 2013. He works as a IT director in a construction Company. He also claimed that if they had known previously about the huge spike in rates, they would have changed the minds before.

On the other hand, Lori Aldrich and Justin wanted to the sell their house in Grand Rapids. This is because the home is small for the family of couple with two young kids. It was in May that they first listed their home for $144, 000. They thought that they could find a new home from $180,000 to $200, 000. However, the rates suddenly started rising. With this budget the type of house that they can buy will be like the one they already have. It is really disappointing for them and they feel that chance is moving by them.
John Brown, a resident of Houston has decided to move close to his job location as a safety officer. His bank approved a mortgage term for 15 years with an approval of $90, 000 with the rate of 3.125%. However, he did not find a home in that rate. However, the loan is gone and they are struggling to get a house in this market.
Brown also claimed that they have some funds to break even on the old house. They did not plan to do things so fast.

A real estate agent in San Diego, Jesse Zagorsky claimed that one of his clients has put an offer for home at a price of$650,000. This is almost about $35,000 more than the listing price of the home. Within a day, the buyer received a new rate. It was more than half a percentage of the point. Thus, they came back and reduced the offer by about $15, 000.

The sellers claimed that they were very disappointed, but they still were ready to take it.

On the other hand, the buyers who are waiting might have to face a costlier situation. It was assumed that the interest rates would be low throughout the year. Thus, many people took time shopping for their homes. They thought that they have time for lower rates of interest, and thus they did not rush out to anything. However, these people are now repenting over it.

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Slow Progress In Cleaning Mortgage Mess

Slow Progress In Cleaning Mortgage Mess

There have been several lawsuits, enforcement actions and dollar settlements by means of which the state and the federal regulators have decided to make a sluggish approach towards the banks. This is an effort to help the borrowers of the mortgage.

However, there is still more work to be done in this context.

There are many homeowners who are in an effort to get monthly payments at lower rates. On receiving a letter from the Bank of America, Tate and his wife were excited. He letter confirmed about the modification of loan approval. This would have saved them $250 a month.

The couple was confused when they saw collection letters claiming that they were behind the payments. When asked, the bank refused and demanded a check of $3100 in order to stop the process of foreclosure.

The couple did everything asked by the bank. They filled the paperwork and other things. However, the cancellation letter kicked them out from the process of modification saying that they have preferred to leave or decline the services. Consequently, the modification process became unappealable.

A representative of the Bank of America claimed that Tate did not sign on the right place. There were delays, as well due to which the process of permanent modification was declined.

A complaint was filed with the Board of Consumer Financial Protection. Tate said that he got a call from the bank about an offer for the restart of the process. This was mainly because of the complaint and the media attention. The entire process takes only few months instead of the time they have taken.

Five years later, the Tates are not alone in this fight when the officials of the state and the federal have set off for home foreclosures. There are many people who are struggling to get loan modification.

Several federal agencies and 49 attorneys signed the National mortgage settlement with the Bank of America last year. The settlement was of the amount of $26 billion, but while signing they were not expecting this. They also signed with other big mortgage lenders like Citibank, Wells Fargo, Ally Bank and JPMorgan Chase.

The main purpose of the settlement was to cure the rogue practices of the lenders. The settlement included foreclosing on different borrowers who were not in default. Some of them also denied the modifications for the borrowers who succeeded in qualifying. They relied on the information of flawed account along with improper executed documents. There were also misapplication of the mortgage payments, shuffling of the borrowers from one representative to another, overcharging of fees and even foreclosing on a loan when the application for modification was underway. This in turn, subjected the homeowners to lots of delays and repeated requests for submitting the paperwork.

In any case, this settlement has helped the borrowers.

When it was signed in the year 2012, April there was five banks that had agreed to the settlement for reversing the damage in the name of fraudulent lending. This process made the housing market of US sink leading to global financial crisis.

Tom Miller, an Attorney General of Iowa is the lead negotiator of the states. He claimed that last month the bankers have given about $50 billion as a source of relief for the homeowners.
Of these five banks, it is only Ally Bank that has completed the commitments that it had specified in the settlement. It has the largest loan portfolio among all the five banks. Bank of America has given the largest relief.

However, the critics claim that the relief is the representation of the credit leading to short sales. In this process, a homeowner is denied to get a new loan sanctioned gets the permission to sell the house for the balance of mortgage. The relief also includes the second mortgage, which also does not necessarily stop the process of foreclosure.

According to Miller, almost about $11 billion of relief has gone for writing the mortgage loan balances. This is twice the level of the expectations of the state a year ago.
He also said that the main concern was to reduce, so that people are in their homes. The critics are saying a huge number.

In fact, an additional amount of $1.5 billion has been given for fund payments to the homeowners who suffered harm financially.

The progress rates has been slow to get the banks cut the mistakes that have harmed the homeowners by means of which they can negotiate with the terms of new loans and save the homes.

The congress, the regulators, the borrowers and their attorneys will get the first report card next week. It will contain information about how lenders are living up to the promises in the settlement.

In a report of February, Smith claimed that his office received more than 5500 complaints from the borrowers. Their loans were serviced by one of these five banks.

In an interview, he also said, Things are better but we aren’t there yet. There are still too many examples of situations that are not acceptable.”

In the last few weeks, the complaints have even become louder. Review was conducted on more than 300 complaints an attorney general of New York said he decided to take the Bank of America and Wells Fargo to court. They were not delivering the promises to end the multiple requests, processing delays and requests for documents.

The attorney said that they were ready to stop the conduct, but they have not stopped yet. This is the reason why the attorneys of the borrowers were taking them to the court.

A spokeswoman of Bank of America claimed that the complaints of the customers would be reviewed by the bank. She claimed that the bank would take the matter seriously and work to resolve the issue.

The bank Wells Fargo claimed that it will complete the compliance with the Mortgage Settlement and the associated standards. Consequently, they will work forward in continuing transparency for the progress of the relief of the consumers.

Many state attorneys general claims that they have been receiving calls from different frustrated borrowers.

An attorney general from Florida claimed that her office is getting more than 300 complaints and reviews are being conducted to know about the possible violations of the agreement. By sending a letter to the Bank of America, she wrote that review of the complaints is showing troubling patterns. This points the possibility of larger problems about the implementation of the settlements by the bank.

In the last month, an attorney general of Illinois claimed that a review of complaints found that 45% of the files said that the banks were asking for repetitive documents.

The new standards of service were expected to reduce the hassles of the homeowners. However, unfortunately people are experiencing more frustrating experiences. They are receiving multiple requests, runarounds and the same information resulting in delays. As a result, they are getting closer to the foreclosure of the homes.

The attorneys and the housing counselors are working with the homeowners and they also have reported about different practices claimed by the banks to correct.

In terms of provision of the settlement, there is lot more violation. This is claimed by a special project director Deborah Goldberg. This was testified before an oversight panel. In addition to that, there are many people who are still experiencing difficulty in working with the lenders and saving their homes.

There are also widespread violations carried out in the entire process of settlement.
here were cases when foreclosures have started when the borrowers were negotiating for modification of loan.
The banks also failed to meet the deadlines due to which they agreed while responding to an application for modification.

Thus, the federal regulators were requested to look into the matter and take some stronger actions of enforcement.

The banks have been greatly relieved of the uncertainty legally. On the other hand, there are homeowners that are continuously struggling to face risk of losing their homes.

In fact, it is found that the settlement that took place in the last year was not for the first time when regulators have sanctioned the companies of mortgage for ill treatment towards the borrowers. In 2011, the four federal bank regulators of the nation ordered the firms related to mortgage to fix the document systems and procedures. These regulators also said that the problems were intense and thus they want to present the risk for the safety of mortgage activities. This in turn, was expected to remedy the situation comprehensively and safely.

A comprehensive review was also called for through the enforcement action with more than 4 million loans from reports of endless delays, lost documents and notices of foreclosure.

However, it was in January, 2012 that the review was cancelled because it was thought to be taking too much time and costing huge money. A report in April claimed that the review did not collect enough data by means of which the harms of the homeowners could be determined. Irrespective of that, the regulators agrees to make the enforcement action when lender agrees to make the payments to the homeowners.

The National Mortgage Settlement along with curbing the mistreatment to the borrowers also aimed to prod lenders to pick up the loan modification process. In several cases, the solution was for cutting down of the rates of interest to reflect the deep cut rates. This was in an effort to save the banks from getting collapsed.

It was on the basis of that goal that the settlement fell short. After 1 year of the settlement, the lenders have modified many mortgages. More than 1.6 million modifications was completed in the previous year.
At the same time, the lenders have started the proceedings of foreclosure against other homeowners during the same period.

There were millions of homeowners that interested the pipeline of foreclosure in the last year, the Tates were successfully able to save their home. They dipped into the savings they had accumulated in their home. This is one of the most important things that prevented them from losing their home. They never missed a payment after that.

The payments had to be continuous in order to prevent them from the procedure of foreclosure. The Tates were lucky that they had the money to prevent the process.

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The Most Expensive Property Listed For $125 Million

The Most Expensive Property Listed For $125 Million

If you check out the most expensive listing of real estate in Los Angeles, California, you would realize that it is not a home. On the contrary, it is just a plot of $125 million and comprises of undeveloped land in the midst of canyons. It is located in one of the most exclusive neighborhoods of the city.

Anyone who has the idea of putting in an offer there are few interesting things to do to get the life of a happy buyer. This is claimed by Camacho in the Huffington Post.

He said that none of the banks would offer a mortgage for 30 years on such an expensive property. In any case, if they did, the owner will have to pay a high amount of $514, 140 every month.
The plot was available in the market on Monday with a simple description. There is a 258+ acre land in prime Bel Air. There is a limitless and ultimate opportunity of development in one of the most prestigious communities in the country.
However, it is not as limitless as it has been described. Development on such a huge scale can be impeded by the wealthy neighbors. A homeowner in Beverley Hills Abdulaziz Al Saud discovered that there are legal battles with the neighbors over his plans. When it comes to real estate in Los Angeles, nothing at all is easy.

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