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.

The post Luxury Hotels and Timeshares Struggling? appeared first on Luxury Home Digest.

In the blogging world, an absence of six weeks is almost unforgivable.

But had I draped a black cloth over it on April 24, 2009 you might have understood. That’s the day my Dad and best friend, Bob Michelson, died in Encinitas, CA after a lengthy illness.

It’s really tough to become an orphan when the last parent exits–especially if the relationship has been a close one. I shared this loss equally with my sister Gayle, in Houston, who also misses the sage advice and counsel of our patriarch.

Our mother, Edith Michelson, died in 2006. Her

husband of 59 years and a heroic pilot of three wars, Retired Lt. Col Robert Michelson, would spend the next three years of his life gently encouraging the dreams of his two daughters and five grandsons. On a personal level, Bob Michelson in his late 80’s also abandoned a lifetime of agnostic views, and to our absolute amazement, developed a wondrous faith in God the last two weeks of his life.

He was also enormously curious about new technologies. Dad was the first person I knew to download Window’s Vista–and wished for stem cell technologies that might one day cure his own illness as well as those of others. He loved our country, watched Wall Street closely, was an Astros and Padres fan, and hated Nancy Pelosi. Dad’s idea of a perfect meal would be a bowl of spicy bean soup and a crusty piece of bread. He was modest, generous to a fault, and promised to be a guardian angel for us all.

We miss him terribly.

And that is probably why my writing gears have been frozen this past month or so. And though our real estate business continued and even flourished, I just couldn’t bring myself to write about San Diego real estate, market conditions or luxury homes–and remain indebted to my husband and partner Mike as well as associates in our company who so kindly aided me and our clients during this personal and unprecedented period of grieving.

I spoke with a Philadelphia food writer a week or so ago and she could not understand how I could abandon writing during this grieving period–because writing would be her salvation.

I didn’t write because I feared alienating you with my sadness and the process of putting a deceased parent’s affairs into final order. At the same time, I didn’t feel able to write about the things I usually favor because of this big life transition. A simple diagnosis might be writer’s block. And that is something that just has to work itself out.

Those writing gears, though, have begun to thaw and life’s rhythms are returning to normal. Laughter is easier, tears have subsided and reconnecting with friends–and you– is now a priority. It feels good to be home. –Roberta Michelson Murphy

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Luxury Real Estate Market: What is Normal?

I often turn to Billy Taylor, financial services guru at San Diego’s Villa Sotheby’s, when I want to hear the latest scoop on the mortgage market. Just last week, for example, Billy shared that Chase had moved out of the jumbo mortgage market entirely. That leaves a mere handful of lenders who will even consider doing jumbo loans, which help fuel much of the mortgaged luxury real estate market.

Below, Billy shares with us his latest assessment of the mortgage market and how it is impacting real estate sales:

As a real estate professional with more than 25 years experience I often get this question:

“When will the real estate market be coming back?”

Well, I don’t think the real estate market ever left us; it was the financing that left us!

There are many people looking to buy or sell real estate. The phones are still ringing and open house traffic is growing. I receive calls everyday inquiring about loans and real estate available.

It is NOT Consumer demand that is missing; it’s the financing programs available to fulfill those sales transactions that is missing.

Overnight after August 10th 2007 the real estate loan liquidity simply dried up. The secondary market on Wall Street stopped buying Jumbo loans,(those over $417,000), and has yet to come back into the market.

Jumbo loans, which had been 60% of the loan market in California prior to last summer of 2007, are now about 10% of the market. Congress’ loan liquidity solution of raising the Fannie Mae and Freddie Mac loan limits to $697,000 in San Diego, for example, has NOT been the solution many had hoped it would have been. This is mostly because the interest rates delivered were NOT conforming rates as suggested they would be. Rather, they more like a half percentage point higher–and with new restrictions that made them nearly impossible to be approved.

This new jumbo loan category is called Agency Conforming and is nothing more than an old Jumbo loan, but with stricter guidelines and higher pricing. Jumbo pricing above $697,000 to $5,000,000 is even higher in pricing and also faces difficulty in getting approved.

The lifeblood to any market is liquidity and a real estate market would die without financing. In Mexico real estate loans are rare and generally require 50% or more as a down payment. Unfortunately that is why most of the population in Mexico doesn’t own real estate. So a lack of liquidity for real estate loans in the United States, and particularly jumbo loans, has restricted home ownership this past year.

We in the U.S. have had liberal financing available for real estate which has allowed millions to own homes. And therefore an abundance of real estate liquidity has allowed millions to own homes and enjoy a higher standard of living for themselves and their families.

But the lenders have all found underwriting religion and their financial gravy train has derailed. Programs that once fueled the 20% annual growth rates in Southern California real estate have been deleted. Stated income loans, which were probably the most abused offering of the market, is quickly disappearing as lawmaker’s line up to kill it completely. Second trust deeds which allowed lower down payments are rarely offered, and if they are, the pricing is prohibitive. In a word the lending guidelines are “TIGHT”

So where does this leave us and where am I going with this editorial?

Although my commentary is a bit dire I want to make the comment that all is NOT lost. There are still many banks willing to make loans. But it must be said the path to closing the deal is narrower!

Everyone would love to know when the bottom of this market will be reached. Which was the original premise for me writing this commentary?

I have the belief that TIME has nothing to do with when a bottom in a real estate market is reached. I believe the bottom will be reached when the INCOMES of buyers support the ASSETS FINANCED. And unfortunately this was not the case for many of the loans funded in the past five years.

That being said, I believe the real estate owner and investor has to be working with the best and most informed bankers, real estate brokers and real estate agents if they are to be successful in this market. The days of every loan being approved and every transaction closing is over. Sellers, Buyer’s and Agents should be partnering with their banker before a transaction goes into escrow–NOT AFTER. Success in real estate takes more planning and upfront work than in previous markets.

The post When Will the Real Estate Market Return to Normal? appeared first on Luxury Home Digest.

Investors are moving back into the San Diego real estate market with impatient wallets. And luxury real estate investors are no exception.

They are seeking well-priced foreclosures, pre-negotiated short sales and most favored of all: Real estate investments with income streams.

So-called bargains in sub-marginal areas may not be the wisest real estate investment move anywhere. Perceived bargains in outlying markets may be nothing of the sort, and we persistently advise our clients to stay with blue chip real estate investments especially in volatile economic times.

We just received a whisper from La Costa Resort and Spa in balmy Carlsbad, California that buyers of their Villas will receive up to $125,000 at closing for leasing their properties back to them for two years. And of course, there is always the option of using their condos too.

This is a very limited offer, as only 10 La Costa Resort Villas whole-ownership, luxury condominiums remain. Each is fully furnished (just pack a toothbrush) with designer decor and high-end amenities throughout, and is located on the grounds of the world-class La Costa Resort and Spa.

Low out-of-pocket expenses enable resort ownership for minimal cost.

One-bedroom luxury condos start at $594,825, while two-bedroom units list for up to $1,033,000. With 75% financing, buyers can claim ownership with considerably low out-of-pocket expenses of up to $125,000. Plus, La Costa management will also waive monthly fees for two years to save La Costa Villa buyers even more.

A bonus of complimentary Villas Signature La Costa Sports Membership, valued at $16,500, is also included.

If you are interested in this exceptional value, please call Mike or Roberta Murphy for additional information at 760-402-9101 or 760-402-9102. We are including some luxury spa treatments for our buyers as well.

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Any verbiage I add to this photo would probably be superfluous, since this chatty picture already exceeds the expected thousand words.

Hats off to someones clever recycling of mobile homes.

Not sure if the intent was green construction, but the designer certainly managed to minimize the footprint of this little mobile home park.

I also wonder about the relation of people who live here. And what about plumbing? Or high winds?

Finally, hope this upwardly mobile community isnt anywhere near the path of tornadoes.

Thank you Ronnie Sellers, fellow ANTS investor and bonsai guru in North Carolina, for the photo. He is especially fond of the red shipping container with the attached solarium.

Embarrassing Note: Just discovered this photo is from a movie set. The onlookers are cropped out of the photo. Still a clever arrangement!

Read also:

Off the Grid and Low-Impact Homes

6 Ways to Shave Your Carbon Footprint

The post A Novel Green Mansion appeared first on Luxury Home Digest.

Discriminating luxury home buyers in the San Diego area are starting to raise sophisticated eyebrows at some of the better real estate buys in luxury neighborhoods such as Rancho Santa Fe.

One of the best buys on the market these days is a magnificent 4-bedroom, 4.5-bath single story estate on two level acres that was recently remodeled. This Rancho Santa Fe Farms home features a lagoon pool, a citrus grove, fine hardwood flooring and a 4-car garage,and is now available for $2,195,000 or the price of a luxury tract home in coastal San Diego.

Rancho Santa Fe Farms is a favorite for golfers who appreciate equity membership in the Rancho Santa Fe Farms Golf Course, or for those who simply want a home sitting on some of the finest acreage in San Diego County.

Located at 15032 Rancho Santa Fe Farms Road, this residence listed by Danny Powers of Villa Sothebys International Realty will be held open this weekend. For additional information, please call Scott Murphy at 760-613-6190 or meet me at the home this afternoon!

The post A Luxury Home Bargain: Rancho Santa Fe Farms appeared first on Luxury Home Digest.

Sometimes you walk into a home, sense both timeless soul and serenity–and can’t help but smile.

We recently listed such an estate in the beautiful hills of Vista, California. Its current and original owners are a spirited and beautiful international opera singer and her dashing husband, a retired professor of art. With loving attention to detail, it seems nothing was missed in the completion of this luxurious 2003 custom home.

When I first walked into the home, I was struck by the use of old and rich colors, antique woods, the graceful wood and iron staircase, and light classical music that filled the rooms.

At first glance, I knew this home would be exceptional.

The gated hilltop setting offers both ocean and mountain views–as well as quiet privacy. The home’s flexible 4000+ sf floorplan has volume ceilings that carry classical music well, a grand foyer, large living and music rooms, multiple dining areas, and a kitchen Alice Waters might envy.

Upstairs, we discover a substantial master suite with an adjoining study, large dressing room and bath, spa tub, and large, organized closets. A romantic trellised balcony overlooks both the mountains and ocean horizon, while the two-way fireplace warms both the bedroom and bath areas. Three other large bedrooms and an open bridge complete the upstairs.

The bones of a home may be magnificent, but inspiring beauty comes from surfaces, windows, doors, lighting, amenities, color and textures. I share clients’ enthusiasm when all of these elements come together.

This timeless home lacks nothing and blends all elements well. It has rich Tuscan colors, art niches and unfluted columns. It beautifully blends the use of stone, iron and woods, and offers contemporary conveniences such as central vacuum and a discreet kitchen vent that captures broom sweepings.

Outdoors is a large covered patio, lawn, gardens and small acreage for hobbies, horses or arborists.

I have often thought that equestrian homeowners in Poway, Rancho Santa Fe and Fallbrook who were displaced by the recent San Diego fires might find this timeless property of interest.

Located on highly-desired Elevado Street in Vista, this estate is reasonably offered at $1.5 million by owners who are anxious to retire in Crete.

We intend to help them accomplish this dream–and look forward to having terrific clients in such a wonderful corner of the world.

The post The Timeless Luxury Home in Vista, CA appeared first on Luxury Home Digest.

Last summer we sold a lovely $1.8 million Carlsbad, CA home to an out of area partnership. One partner lived in Los Angeles, and the other in New York. It was to be their La Costa retreat in paradise, and a place to meet potential clients.

In two short months, this paradise has turned into a real estate nightmare that could rival that 1990 Melanie Griffiths film,
Pacific Heights with the evil tenant who just wouldn’t quit. This true-life story is one that could give any homeowner nightmares.

Around six weeks ago, the Los Angeles partner invited a friend tostay at the Carlsbad home for “a short while.” He reasoned that she could keep an eye on things and meet appliance repair people. It was a casual arrangement.

The New York partner was not involved with the invitation, but decided to go with the flow–at least for “a short while.” A dangerous assumption was made that everything would work out in a timely fashion.

A couple of weeks ago, New York called the guest and advised that she should plan on departing around the first of February because the house would be full of invited business associates.

House Guest hung up on New York mid-sentence. Ever the calm one, NY wrote an email clearly and politely asking HG to be out of the home by Feb 3. The near-immedeiate
response from The Guest prompted New York to call me this morning pleading for help.It seems the partnership was given an ultimatim to provide a œseverance package to the guest before she would even consider making a move.

A call to the California Association of Realtors Legal Hotline confirmed my worst fear: They had a tenancy at will situation and if things were not resolved beforehand, the partnership would likely have to go through full eviction proceedings, which could take up to 90 days.

Meanwhile, New York is still planning to bring friends and associates to the home in early February. And if the House Guestfrom Hell has not departed, it will be a story for the textbooks (or the National Enquirer).

In the meantime, this appears to be a likely entry into the infamous “One that got out of control category.”

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