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In today's turbulent real estate market, it is important for investors to take an objective look at real estate as an investment.  Depending on your individual situation, real estate may be something better off rented than owned!  Of course, timing and other factors can have an influence on whether or not to consider real estate as an attractive investment vehicle.  Historically, real estate has been attractive due to it's ability to be leveraged.  This factor has enhanced real estate's return on inventment.

For example, Rich Arzaga owns a luxury home in San Ramon, California, but he's not betting on it as an investment.

Founder and CEO of Cornerstone Wealth Management, who bought the 5,000 sq. ft. property in 2005 for $1.8 million and has spent $500,000 improving it, considers the abode a wonderful place for his family. But ask him to rate his home -- or any home, for that matter -- as a financial investment, and Arzaga balks.

"It's the American Dream to own a home, but whoever said that didn't do the analysis on it," says Arzaga, knowing he's taking a contrarian stance to conventional wisdom.

In examining 250 properties around the U.S., and going through close to 40 client files to project the financial impact of owning real estate versus liquidating it, Arzaga, an adjunct professor in personal finance at the University of California at Berkeley, found that, "100 percent of the time it was better to rent, rather than own."

That's right: 100 percent.

The reason is simple. While a home is the main repository of wealth for many Americans, it comes with numerous hefty expenses. The carrying costs - what's needed to hold and maintain the asset - range from property taxes and home insurance to emergency repairs and renovations. In a rental situation, the landlord covers those costs, leaving the occupant free to invest revenue in other areas.

"I don't have the emotions a lot of people do surrounding real estate," Arzaga says. "I have steely eyes for how investing in real estate works, and I'd better be a prudent investor for my clients."

Owning a dream home, he says, creates a drain on other financial priorities, causing homeowners "not to meet their financial goals. They were going to fail."

[Also see: America's Top Turnaround Towns]

Some real estate experts thought there was some truth to Arzaga's argument, albeit with several conditions.

"To state that owning a home is or isn't a good investment is too simplistic," says Jeffrey Rogers, president and COO of Integra Realty Resources. "It depends. In times of relatively higher rents, low home values, and low interest rates, it makes sense to own a home. But in a reverse market, it wouldn't be economically feasible. Over time, those who purchase in down or flat markets with low interest rates come out ahead."

"Our lifetimes are a long time, and when we look over the long term, real estate and other investments tend to have a positive return," says Jed Kolko, chief economist at Trulia.com,

a real estate search and research website. "But when it comes to real estate, changing your mind is expensive. There are a lot of costs involved in buying, selling and moving. If you move every two years, it's probably a bad investment for you. It also depends on your job market. If you're in a one-company town and the company goes down, there goes your job and there goes your home value."

Greg McBride, a senior analyst at Bankrate.com, agrees with one point of Arzaga's. "Home ownership is not so much a creator of wealth as a store of wealth," he says. "The promise of home ownership is that over the long haul, it can rebate many or perhaps all of your costs, unlike rent, which doesn't rebate a dime."

The trouble, he says, is that many Americans want a home so badly, they neglect other ways to grow wealth and financial security.

"You have the other financial bases covered: emergency savings, retirement savings, paying off debt, saving for the education of your children," McBride says. "There's no sense in buying a home if it's going to deplete your emergency or retirement savings."

McBride crunched the numbers in a pre-bubble era (2004) for a home purchased at $200,000 by a buyer in the 27 percent marginal tax bracket. Factoring in a 30-year mortgage, $1,200 in annual home insurance, closing costs of $5,500 and maintenance costs of $100 a month, along with property taxes, he calculated that it would take a selling price, 10 years later, of $395,404 just to break even. His conclusion gave Arzaga's view credence: "Homeownership may not be the moneymaker you think it is."

Then there's the emergency fund, a must for when a home requires unexpected repair work.

"As far as emergency savings is concerned, six months of a cushion is adequate," McBride says. "But only 24 percent of people have that kind of cushion, and about 65 percent own homes."

So while home ownership may sound glamorous, you need a lot of money to make it work, without much guarantee of positive returns in a post-bubble era. Indeed, Arzaga cites himself as an example of how home ownership doesn't pay off. His residence is today worth $1.5 million, about 17 percent less than what he paid.

So why not sell? For Arzaga, it's a lifestyle choice, and one that he doesn't regret, since his big money-making investments are elsewhere.

Please call us for any of your real estate needs in Torrance, Manhattan Beach, Palos Verdes or the South Bay. We are experts in Palos Verdes Real Estate and have extensive knowledge of all areas of the South Bay Residential Real Estate Market

PV Brokers Residential Real Estate approaches Torrance Real Estate and sales and marketing beginning with integrity and experience. These principles enable our clients receive ethical, personalized attention from our knowledgeable Best Torrance Realtors and Agents. We,also, strongly believe in long-term relationships with our Palos Verdes Real Estate Real Estate clients resulting in a fair and enjoyable home buying experience. We understand the emotion and importance attached to the purchase of your new home. As such, we carefully listen to the needs of our clients and only then apply our expertise and experience to meet their expectations. At all times, we operate with the utmost integrity and professionalism, remembering that our practice is client-centered and client-driven. We look forward to serving you for all your Torrance, Manhattan Beach Real Estate, Hermosa Beach, and Palos Verdes real estate needs.

Please call us for any of your real estate needs in Manhattan Beach, Palos Verdes or the South Bay. We are experts in Torrance Real Estate and have extensive knowledge of the South Bay Residential Real Estate Market

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PV Brokers Mortgage Update

Are Banks Lending?

Do the banks need to lend more? That is what regulators in Washington have been saying for months, even years now.

Banking institutions claim they might lend more if regulators were not being so tough on them, either by layering on new capital requirements that tie up funds or by in-house examiners taking a hard line with the banks' loan portfolios.

According to regulators and bank executives across the country, CNBC found the weak lending environment can't be blamed entirely on the banks: Government regulators have a hand in it too. There is a difference between what officials in Washington say and what regulations and bank examiners allow.

CEO Jamie Dimon of JP Morgan has been trying to frame these new regulations as part of the issue. "Has anyone bothered to study the cumulative effect of all these things?" a frustrated Dimon asked Federal Reserve Chairman Ben Bernanke at an international monetary conference in Atlanta last June. "Is this holding us back at this point?"

Fed Chief Ben Bernanke has acknowledged that no analysis had been done on how new regulation might by crimping lending. Former FDIC Chair Sheila Bair went a step further in congressional testimony last month, downplaying the impact of higher capital standards.

"It is a fallacy to think thinly capitalized institutions will do a better job at lending," Bair said. "A well-capitalized bank will keep functioning even when the business cycle turns downward."

Keeping banks functioning has been the primary goal of regulators in the wake of the financial crisis, even if it comes at a cost to businesses and consumers who are having more difficulty getting loans.

The balance sheets of the nation's four largest banks-JPMorgan Chase, Wells Fargo (NYSE: WFC - News), Bank of America (NYSE: BAC - News) and Citigroup (NYSE:C - News)-show total loans dropped 5 percent to $3.03 trillion as of the third quarter of last year from the post-crisis peak of $3.19 trillion in the first quarter of 2010. FDIC data show lending for these top banks is down 8 percent from its peak in 2007.

It is a small wonder that the Fed's latest lending officer survey shows a tightening of credit standards.

"You are the one's being examined right now, not on what the agencies are saying in Washington," said one executive of a small northeastern bank who, like others in this article, asked not to be identified. "You are being examined in light of an examiner not wanting to have their name associated with another bank failure."

From 2008 through 2011, 414 banks have failed in the U.S, according to the FDIC and as of the third quarter of last year 844 remain on its "troubled bank" list. Bank executives told CNBC it is no surprise examiners on the ground are being more conservative in assessing a bank's loan portfolio, given the memories of the 2008's financial crisis are still fresh in their heads. Still, three years on, they said, you would expect examiners to lighten up.

"Regulators are not being as reasonable as they used to be," said one CEO of a small midwest bank. He recalls how they were back in the 1980s after the savings and loan crisis. Then regulators would work with his bank to figure out ways a farmer could make good on a bad loan. Today, he says, regulators are not practicing forbearance.

Instead, bank executives told CNBC, examiners are rigidly focused on global cash flow, or knowing what exactly the loan will be used for, and where a client is getting the money to repay the loan. These are factors in good credit analysis, but they don't always outweigh other equally important considerations such as track record, or personal knowledge of a borrower.

The executive at the small northeast bank describes a loan he gave to a longstanding client with a good current relationship with the bank. The three-year loan was to buy equipment needed for a two-year construction. Given the client's history, the bank OK'd the loan. But the bank examiner felt it was risky, given the loan was a year longer than the construction project.

The examiner questioned where specifically the client would get the money to repay the loan after the last year. Because of his relationship with the client, and knowledge of the client's business, the banker felt confident the client would have the money to repay. The examiner felt otherwise. Now the loan is "classified", meaning the examiner thinks it is risky so the bank has to put more capital aside for the loan. That leaves the bank less money to lend elsewhere.

Regulators, who declined to be named, acknowledged given that the economy has gone through some dislocation, there is a tendency to overreact, but they also defend the examiners on the ground. One regulator noted an internal review of more than 300 loan write-ups found little to no evidence of examiners being tougher than the guidelines mandated by regulators in Washington D.C.

Despite this, in the wake of the crisis, regulators said they felt there was room for improvement in how real estate, particularly commercial real estate loans were being assessed.

Bankers consternation with in-house examiners may stem from the added scrutiny and additional capital requirements some of the loans merited, one regulator noted. They emphasized examiners do not say to a bank "You can or cannot make certain loans", rather the examiner provides general guidance on lending.

However, the new way in which these commercial real estate loans are being assessed appears to be impacting overall lending. in a note to clients on January 11, 2001, Wells Fargo economist John Silvia writing, "Retrenchment in real estate lending has been much greater this cycle and appears to be more sustained than most prior cycles.."

Silvia goes on to add, "Perhaps once real estate values recover, lending will return to a rapid pace of growth." This may be quite optimistic. The hard line taken on these loans by regulators, does not appear to be softening, and for banks, there is no way to get around the fact mandated higher capital requirements and lower leverage ratios will ring-fence their lending activities.

PV Brokers Palos Verdes Real Estate provides residential real estate services for the Los Angeles County South Bay communities of Palos Verdes Estates, Palos Verdes Peninsula, Rancho Palos Verdes, Rolling Hills Estates, Rolling Hills, Redondo Beach, Hermosa Beach, Manhattan Beach, Torrance and San Pedro. As a boutique Realty, our agents and brokers are committed to giving our clients specialized service and attention.

History of Manhattan Beach

Original homes in Manhattan Beach were little more than wooden summer cottages. Water was piped from wells on Highland Avenue at 10th Street and 16th Street, but service was poor, and enterprising youngsters earned pocket-money making hand deliveries by bucket. Sewage was disposed through clay pipes that ran to cesspools at the end of each street. The first lighting consisted of four acetylene lamps mounted on 10-foot poles on Center Street at Manhattan Avenue and the Strand. Later, the Pacific Electric supplied electricity, and ornamental electric lights were constructed along the Strand, Center St., Highland Ave., and Marine Ave. Some of these lights functioned for 50 years, and the ornate standards were level the dunes from Center Street south to First Street. For two years, tractors worked long hours to remove the sand and pave the streets in that section. But the project went bankrupt. N. R. Kuhn, a local con­tractor, successfully completed the project by selling sand for construction projects, including the floor of the Los Angeles Memorial Coliseum and Waikiki Beach in Hawaii. The northern dunes, more stable, remained half intact, and were utilized for the filming of desert scenes by Hollywood movie studios in the 1920s and 1930s. Other civic services came into being. A library, started by the Neptunian Womans Club (founded in 1909), became a branch of the County Library system. The first school was erected in 1913 at the corner of Center and Pacific Avenue; Center School opened with 43 pupils. The city's first fire chief was hired and the first fire truck purchased in the mid-1920s. The religious life of the city was enhanced by the establishment of churches: the Community Church (1905), Community Baptist (1911), American Martyrs (1931), and others. Service organizations and clubs chartered before World War II included the Lions (1926), the Sandpipers (1931), the PTA (1932), the Dolphins (1939), the Property Owners' Association (1939), the East Manhattan Women's Club (1940), and branches of the Scouting movement. Liaison between these organizations and the city was provided by establishment in the mid-1930s of a "Coordinating Council," a sounding board for exchange of ideas and activities which functioned effectively 40 years later. During World War II, residents joined all branches of the armed forces, while at home, non-combatants were organized into civil defense units, and served as air raid wardens, aircraft spotters, Red Cross workers, canteen hostesses, volunteer firemen, civil guardsmen, and youth leaders. Residents opened their homes to servicemen manning artillery and infantry stations nearby [located at a coastal artillery battery in the vicinity of the present-day Racket Ball Club]. The original boundaries of Manhattan Beach included 3.31 square miles, and the annexation of an eastern tract in 1916 increased the total territory to 3.81. Population growth reflected the limited area available for expansion, and the city remained largely a family town. In 1920, it had 859 residents, in 1930 it had 1891, in 1940 it had 6398. The 1930s saw the growth of the "tree section” and the “hill section.” But the post ­WWII-war period was the time of the greatest population boom as new sections were developed. The hill west of Sepulveda was quickly followed by building east of the highway: Manhattan Village [the original], Liberty Village, Bermuda Village, Victory Village. By the mid-1950s residents in these areas, led by the Property Owners Association, had worked to establish new schools and storm drains, a new fire station, a new post office, Manhattan Heights Playground and Park, and a branch of the County Library.

PV Brokers Residential Real Estate has an approach to Manhattan Beach Real Estate and sales and marketing beginning with integrity and experience. These principles enable our clients receive ethical, personalized attention from our knowledgeable Best Manhattan Beach Realtors and Agents. We strongly believe in long-term relationships with our Torrance Real Estate clients resulting in a fair and enjoyable home buying experience. We understand the emotion and importance attached to the purchase of your new home. As such, we carefully listen to the needs of our clients and only then apply our expertise and experience to meet their expectations. At all times, we operate with the utmost integrity and professionalism, remembering that our practice is client-centered and client-driven. We look forward to serving you for all your Manhattan Beach and Hermosa real estate needs.

PV Brokers Residential Real Estate has an approach to Manhattan Beach Real Estate and sales and marketing beginning with integrity and experience. These principles enable our clients receive ethical, personalized attention from our knowledgeable Best Manhattan Beach Realtors and Agents. We strongly believe in long-term relationships with our Manhattan Beach Real Estate clients resulting in a fair and enjoyable home buying experience. We understand the emotion and importance attached to the purchase of your new home. As such, we carefully listen to the needs of our clients and only then apply our expertise and experience to meet their expectations. At all times, we operate with the utmost integrity and professionalism, remembering that our practice is client-centered and client-driven. We look forward to serving you for all your Manhattan Beach and Hermosa real estate needs.

. Please call us for any of your real estate needs in Manhattan Beach, Palos Verdes or the South Bay. We are experts in Manhattan Beach Real Estate and have extensive knowledge of the South Bay Residential Real Estate Market