Wednesday, July 1, 2009
Calif. median home price - May 09: $267,570 (Source: C.A.R.) highest median home price by C.A.R. region April 09: Santa Barbara So. Coast $875,000 (Source: C.A.R.). Lowest median home price by C.A.R. region April 09: High Desert $106,210 (Source: C.A.R.). First-time Buyer Affordability Index - First Quarter 2009: 69 percent (Source: C.A.R.) Mortgage rates - week ending 6/25/09 30-yr. fixed: 5.42% Fees/points: 0.7% 15-yr. fixed: 4.87% Fees/points: 0.7% 1-yr. adjustable: 4.93% Fees/points: 0.7% (Source: Freddie Mac)
Friday, June 19, 2009
Newspapers don't work
Pretty interesting stats I like to talk to clients about: buyers are 1,000% more likely to find a home they purchase on the Internet than a newspaper, and 3,200% from one of those fancy property books you see at grocery stores and real estate offices. Source: NAR.
Wednesday, June 17, 2009
What's the most accurace database in the world?
FB. If you don't know what that means, you really need to get with it.
Saturday, June 13, 2009
Friday, June 12, 2009
Realtors are leaving the biz
In 2000 there were 756,748 Realtors. In 2007 there were 1,336,855. In 2009 there were 215,000 less, at 1,212,279 as of April 2009. Source: NAR.
Wednesday, June 3, 2009
News on the $8,000 credit the gov is giving out
In 2008 they thought that the $8,000 credit would boost sales by 300,000. Now 60% of new sales are first time buyers, and the projections are that it's going to boost sales to 1,400,000. As of April 2009 sales have increased by 800,000.
Thursday, May 28, 2009
Gallup Poll
The Gallup Organization released a report this week summarizing the results of a survey they conducted in early April 2009. One of the survey questions asked of the American public was "For people in general, do you think now is a GOOD time or a BAD time to buy a house?" Seventy-one percent (71%) of those surveyed believed that now is a good time to buy a house.Americans were also asked, "Which of the following do you think is the best long term investment- bonds, real estate, stocks, savings accounts, CD's or mutual funds?" The results showed that Americans felt that savings accounts and real estate were the best long term investments, with far fewer choosing stocks, bonds and mutual funds.
Wednesday, May 27, 2009
Looks like the 710 is going underground
A of yesterday the California Senate sent the Assembly a measure by Sen. Gil Cedillo (D-Los Angeles) mandating that any extension of Interstate 710 from its current ending at the Los Angeles city line to connect with Interstate 210 in Pasadena be built by tunnel. "Removing the surface route option will protect homes and keep neighborhoods in tact," said Cedillo, author of SB 545.
Sunday, May 24, 2009
Have we hit bottom?
According to Inman on 5-18-09 practitioners are optimistic that home prices will hit bottom in the next six months, according to surveys from www.HomeGain.com that were just released. At least in my market I've noticed the strongest surge in buyer interest than in the past few years. My phone is ringing off the hook, and I just lost out on a house that had 25 offers and is selling for over $100,000 over the asking price. It's a 3+2 house on Wapello in Altadena. Seems like 2005 all over again.
Friday, May 22, 2009
Home Affordability Hits 18-Year High
Housing affordability is reaching record levels with nearly 73 percent of all homes sold in the first three months of 2009 considered affordable. That’s the highest percentage ever reported by the 18-year-old, quarterly Housing Opportunity Index, compiled by the National Association of Home Builders and Wells Fargo. To be considered affordable, a family making the national median household income of $64,000 must be able to devote no more than 28 percent of their income toward housing costs. Source: Realtor Magazine 5-22-09
Thursday, May 21, 2009
Loss Leader
What's a loss leader? It's something that leads in a loss. I'll give an excellent real estate example. I just sold a condo in a building that had only one sale in the past 18 months. Very desirable building. No one really wants to sell. At the height of the market is was worth %$500,000. It took 7 months to sell and closed escrow a week ago for $301,000. No one really knew how much values fell, and the only way to know was on a closed sale, hence, it's now the loss leader, unfortunately. By the way, don't get mad at your neighbor that sells too low, it's not their fault, unless they have a stupid or lazy agent. Most of the time it's just the market and you can't control the market.
Wednesday, May 20, 2009
Fast Facts for May 2008
Calif. median home price - March 09: $253,040 (Source: C.A.R.)
Mortgage rates - week ending 5/14/09 30-yr. fixed: 4.86% Fees/points: 0.6% 15-yr. fixed: 4.52% Fees/points: 0.6% 1-yr. adjustable: 4.71% Fees/points: 0.6% (Source: Freddie Mac)
Mortgage rates - week ending 5/14/09 30-yr. fixed: 4.86% Fees/points: 0.6% 15-yr. fixed: 4.52% Fees/points: 0.6% 1-yr. adjustable: 4.71% Fees/points: 0.6% (Source: Freddie Mac)
Monday, May 18, 2009
Staging is important.....
In the past few years the big brokerages and their top agents have been promoting another service to their sellers: staging. The good agents will give advice on colors, clutter, decor, furniture placements, etc. to help win the listing, and sell the house faster and at a higher price. Make sure your agent does this.
Friday, May 15, 2009
Yeah, I can see this..
People say it's a bad market, a buyers market, a sellers market. Did you read the LA Times article about the under $500k properties that routinely get 10+ offers if they're priced right, and because of the internet it's practically impossible to steal a property, especially in a good area? "Don't wait for the market to come to you, it's impossible to time the bottom. Go after the market, because there are so many great deals out there and somebody else is going to do it today if you wait for tomorrow." Here's that article: http://www.latimes.com/classified/realestate/news/la-fi-cover3-2009may03,0,7623052.story
Friday, May 8, 2009
Will it be a V, U, L, W, or a D?
As interesting article in the WSJ from David Wessel. Excerpts: The U.S. led the world into the abyss, and it will lead the world economy out of it. But how fast and when? The alphabet can help to imagine the possibilities and the path of the economy. There's the letter V: the kind of quick rebound that usually follows a deep recession. Or U: a longer recession and slow recovery. There is L: years of painfully slow growth (a long slog). And W: a temporary upturn as the economy feels the jolt of fiscal stimulus that quickly wears off. Finally, there's the big D, not the shape but another Great Depression. Here's the last sentence of the article, after he discussed numerous surveys of forecasters: The odds favor a long slog.
Monday, May 4, 2009
When was the peak in Los Angeles?
The housing peak in terms of prices in Los Angeles was August 2007 where the medium house price was $605,300. In March 2009 it was at $295,100, a 51.2% drop.
Affordability has about TRIPLED, check this out...
The Housing Affordability Index (HAI) in LA County went from 11% in the Q4 2005 to 30% in Q4 2008 (and has probably increased when Q1 2009 data is published). HAI measures the percentage of households that can afford to purchase the median priced home, and is regarded as the most fundamental measure of housing well-being. Shoot me an email and I can get you the most recent stats.
Pirate in Pasadena
There are pirates in Pasadena. I was with clients last week, in the backyard where the buyer wanted to open a big old tool shed. He struggled with the handle, and boom, the door flew open and out came a pretty big guy with a sword yelling at us, all the while he was tapping his sword on his shoulder asking if we "want some of this". Everyone froze. We were in a really nice neighborhood, but I knew this was real, knew that freezing wasn't an option, and yelled
we're walking away", and we did. The agent decided not to call the police. Well, I found out later that the guy lives in the toolshed in the back of the yard and dresses as a pirate as a side job. But no one told me, and it was scary as hell. Arrrrr, thare be pirates in Pasadena.
we're walking away", and we did. The agent decided not to call the police. Well, I found out later that the guy lives in the toolshed in the back of the yard and dresses as a pirate as a side job. But no one told me, and it was scary as hell. Arrrrr, thare be pirates in Pasadena.
Thursday, April 2, 2009
Fast Facts
Fast Facts.
Calif. median home price - February 09: $247,590 (Source: C.A.R.).
Calif. highest median home price by C.A.R. region February 09: Santa Barbara So. Coast $715,000 (Source: C.A.R.).
Calif. lowest median home price by C.A.R. region February 09: High Desert $121,970(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Fourth Quarter 08: 59 percent (Source: C.A.R.)Mortgage rates - week ending 3/26/09 30-yr. fixed: 4.85% Fees/points: 0.7% 15-yr. fixed: 4.58% Fees/points: 0.7% 1-yr. adjustable: 4.85% Fees/points: 0.6% (Source: Freddie Mac)
Calif. median home price - February 09: $247,590 (Source: C.A.R.).
Calif. highest median home price by C.A.R. region February 09: Santa Barbara So. Coast $715,000 (Source: C.A.R.).
Calif. lowest median home price by C.A.R. region February 09: High Desert $121,970(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Fourth Quarter 08: 59 percent (Source: C.A.R.)Mortgage rates - week ending 3/26/09 30-yr. fixed: 4.85% Fees/points: 0.7% 15-yr. fixed: 4.58% Fees/points: 0.7% 1-yr. adjustable: 4.85% Fees/points: 0.6% (Source: Freddie Mac)
Tuesday, February 17, 2009
What is the $8,000 Homebuyers Credit? PLUS $10,000
Homebuyers Credit contained in the stimulus bill that President Obama is supposed to sign today:
1. Tax Credit of $8,000 for purchase of home
2. No repayment required
3. Must purchase home between Jan1 2009 and Nov 30 2009
4. Must be “new home buyer” = no home ownership in last 3 years
5. Income restriction: 75k for singles, 150k for married
You can get an additional $10,000 if you buy a new home. The IRS says it's available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.
Plus, California is working on getting this cash into your hands, rather then when you do your taxes.
1. Tax Credit of $8,000 for purchase of home
2. No repayment required
3. Must purchase home between Jan1 2009 and Nov 30 2009
4. Must be “new home buyer” = no home ownership in last 3 years
5. Income restriction: 75k for singles, 150k for married
You can get an additional $10,000 if you buy a new home. The IRS says it's available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.
Plus, California is working on getting this cash into your hands, rather then when you do your taxes.
Friday, January 16, 2009
Wow, some good news
The President of the Federal Reserve Bank of Philadelphia said Wednesday (January 13th, 2009) that they expect the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.
Monday, January 5, 2009
FHA loans are on the rise
It's no surprise that FHA loans are the biggest trend in lending and the trend is growing. In 2003 - 2007 FHA loans averaged 2.9% of all loans done but in the 3rd Quarter of 2008 FHA loans accounted for 26.1% of all loans originated.
Saturday, January 3, 2009
The Anatomy of a Credit Score
Your credit score, often referred to as a FICO score, ranges from 350-850 using information from the 3 major credit reporting agencies: Equifax, Experian, and TransUnion. According to FICO, a credit score is made up of 5 components: 35% reflects credit history, 30% reflects amounts owed, 15% reflects length of credit history, 10% reflects new credit, and 10% reflects types of credit. Median score is 732. You are entitled to a free credit report annually and you can go to AnnualCreditReport.com for this.
Sunday, December 28, 2008
Holidays are a great time to buy
Every mid to late December I'm able to negotiate an incredible deal for a buyer. So many agents give up in December, go on vacation, start thinking about 2009, and sellers certainly see less activity. Doesn't this seem like the best mixture for a great deal? This is what happened this December: my buyers were looking for a 2 bed home in the CalTech area of Pasadena, and we found one that hadn't had an offer in 3 months and was listed with an out-of-area broker. We wrote an offer for $40k below asking price an got it, then it appraised for $20k more than our contract price, and this is practically unheard of. My buyers close escrow in the first week of January.
Thursday, December 11, 2008
Deals can be had
Where are the buyers? Seems like everyone is frozen, waiting for something to happen, and when we hit bottom (and it will happen), no one will know until a few months later. But in the meantime, I have a buyer that got a great deal on a home in an exclusive area of Pasadena. The asking was $450k, no offers in 90 days. Same exact property was in escrow at $475k. My clients decided to offer $410k and got it. Just a day later the $475k home closed escrow, and my buyer's $410k home appraised for a lot more than their contract. The market is great for buyers, and there are sellers that will give big discounts, but you just have to ask (in other words, give an offer).
Thursday, November 20, 2008
My morning with Leslie Appleton-Young
Yesterday morning I had breakfast with the California Association of Realtors Chief Economist, Leslie Appleton Young (you should google her for updated forecasts). She had an interesting presentation, and started by telling us that we were in the "middle of economic history", and what's going on right now will be studied by our children decades from now, it will change monetary policy, international decisions, the political landscape, pretty much change the world as we know it, and we're right in the middle of it all right now. How sobering.
Monday, November 3, 2008
Bank failures and the FDIC
Something I found interesting in the LA Times (I'm about to cancel my subscription, the Sports page is the only worthwhile part of this paper): "Thanks largely to the housing bubble, not a single U.S. bank or thrift failed from June 2004 through February 2007, the longest collapse-free stretch in the FDIC's 75-year history. But three banks went under this year, 15 have folded this year, and the FDIC has warned of more failures in the coming years." Mike's note: at year end 2008 25 total banks wound up failing.
Friday, October 31, 2008
My thought for the day
We’ve been here before…No matter how bad it gets, it will pass. Each time our economy recedes, it comes back stronger
An interesting Zillow survey
49% of U.S. homeowners believe their home's value has increased or stayed the same over the past year, according to Zillow's Q3 Homeowner Confidence Survey. In reality, 74% percent of homes have lost value in the past 12 months, according to preliminary findings in Zillow's Q3 Real Estate Market Reports, which will be released Nov. 12. Other findings from the survey:
Supporters of Republican presidential nominee John McCain have more confidence about their homes' values than supporters of Democratic nominee Barack Obama. Fewer people expect to buy or sell a home in the near future: Three percent plan to sell their home in the next six months, down from 5 percent last quarter. Three percent plan to buy a home, down from 4 percent in the second quarter.
Supporters of Republican presidential nominee John McCain have more confidence about their homes' values than supporters of Democratic nominee Barack Obama. Fewer people expect to buy or sell a home in the near future: Three percent plan to sell their home in the next six months, down from 5 percent last quarter. Three percent plan to buy a home, down from 4 percent in the second quarter.
Wednesday, October 29, 2008
oh, the negativity!
No matter how bad it gets, it will pass. Each time our economy recedes, it comes back stronger. You can't time the market, but we are getting closer to the bottom, but won't know we're at the bottom until the media reports it months later. There are too many buyers out there looking for the "world's best deal of all time", but I think it's definitely possible to settle for getting a great deal now. There is almost too much information out there, causing paralysis, but in Pasadena in the past 2 months the low end is getting multiple offers and is probably hitting bottom.
Wednesday, September 24, 2008
Funny thing happened a few weeks ago
Funny thing happens when you price a property close to the market (and what happens when you chase the market down). My listing at www.840NorthMichigan.com has been on the market for about 7 months. For the first 6 months I had no offers. But I had an open house every single weekend, a ton of marketing, and price reductions here and there. The property is beautiful, I just couldn't get anyone to give us an offer. Funny thing, we dropped it from $775k to $764k and about 2 weeks later I got 4 offers in 3 days, and 3 were at asking price. Anyways, it's set to close in a few days with a cash buyer. Pretty wild.
Friday, July 25, 2008
Total Licensees Decline
Some quick facts: in January 2000 the total licensee population stood at 303,000. In the next seven years it grew every month and peaked in December 2007 at 548,959. In April 2005 they tested a record 22,000 would-be salespeople and brokers. In the first 3 months of 2008 less than 2,500 have sat for their exam. January 2008 was the first time in 84 months that the licensee population declined, and the trend continues today. Be careful who you use to represent you. Experience counts, especially in this market.
Protecting your deposits
Some Options for Protecting Accounts
Money sitting unprotected in the bank doesn't have to stay that way.
The Federal Deposit Insurance Corporation guarantees deposits of less than $100,000 but says that about 37% of domestic bank deposits aren't insured because the FDIC insures checking and savings accounts and CD's, but not other financial products including mutual funds, annuities and life insurance. The National Credit Union Administration provides the same protection to credit-union deposits. About 100 of the nation's approximately 8,500 banks and savings associations are currently on the FDIC's list of problem banks. Have a balance over $100K? One simple move is to open a joint account, which is insured for up to $200,000. Additional accounts could protect even more assets. An IRA held at a bank is insured by the FDIC for up to $250,000 only if the account is invested in bank products and not stocks or mutual funds. Be aware that if the banks merge, their deposits may climb higher than the protected limits. Lots of other options, check out the FDIC website. http://www.fdic.gov/
Money sitting unprotected in the bank doesn't have to stay that way.
The Federal Deposit Insurance Corporation guarantees deposits of less than $100,000 but says that about 37% of domestic bank deposits aren't insured because the FDIC insures checking and savings accounts and CD's, but not other financial products including mutual funds, annuities and life insurance. The National Credit Union Administration provides the same protection to credit-union deposits. About 100 of the nation's approximately 8,500 banks and savings associations are currently on the FDIC's list of problem banks. Have a balance over $100K? One simple move is to open a joint account, which is insured for up to $200,000. Additional accounts could protect even more assets. An IRA held at a bank is insured by the FDIC for up to $250,000 only if the account is invested in bank products and not stocks or mutual funds. Be aware that if the banks merge, their deposits may climb higher than the protected limits. Lots of other options, check out the FDIC website. http://www.fdic.gov/
Wednesday, July 23, 2008
Population stats
Census Data:
US population as of 1-1-8: 303,146,284
Percentage change from 1-1-7: +0.9
Rate of US births: 1 every 8 seconds
Rate of US deaths: 1 every 11 seconds
Rater of international migration to S.S.: 1 every 30 seconds
Total rate of U.S. growth: 1 every 13 seconds
Projected world population in 2012: 7 billion
Think they'll want condos?
US population as of 1-1-8: 303,146,284
Percentage change from 1-1-7: +0.9
Rate of US births: 1 every 8 seconds
Rate of US deaths: 1 every 11 seconds
Rater of international migration to S.S.: 1 every 30 seconds
Total rate of U.S. growth: 1 every 13 seconds
Projected world population in 2012: 7 billion
Think they'll want condos?
Thursday, July 17, 2008
Steps to Speed a Home Sale
taken from the LA Times 6-22-08 by Marni Jameson
BACK WHEN the real estate market was hot, sellers barely had to do anything. Any extra effort often elicited multiple offers for over the asking price. In today's cool market, however, those same extras can mean the difference between getting one offer or none at all. As inventory grows, a few inexpensive moves can make your house stand apart.
1. Get the right mindset. Once you list your home, detach yourself. Treat it as a commodity, which means making changes that will broaden its appeal but that may erase some of your personal style.
2. Start at the curb. Look at what people see when they pull up. Everything outside should look perfect.
3. Paint -- it's money in a can. Outside, if a good power wash isn't enough, a coat of paint is one of the best facelifts you can give a house for a relatively low price. If you don't want to paint the whole house, do the trim. Inside, paint walls a soft neutral such as warm beige.
4. Focus on the entry. Put some energy into the front door, because it makes a strong first impression. Make an ordinary entry look stately and elegant.
5. Catch up on maintenance. Get around to the repairs you should have been doing all along. Fix the little stuff. Easy fixes show potential buyers that you pay attention to detail, which signals that you must care about the big stuff too.
6. Look for alternatives to expensive or messy upgrades.
7. Consider new appliances. When people see new kitchen appliances, they often see a new kitchen.
8. Add some house bling. Make anything metal in your home look new and shiny. People see shiny new metal and say 'Oooh,' and it's not that expensive. Disregard this if you have original or patina'd hardware, in most cases.
9. Start packing. The average home would show much better if it had 50% less stuff. Since you're already going to move, give yourself a head start by packing away all the clothes, books and dishes you won't need for the next few months. Take out extra furniture, especially if it's blocking the flow of foot traffic. If you can get all the stuff off-site in a moving pod or in storage, do so. If not, stack neat, labeled boxes in the garage. Mike Bell's note: during showings there can easily be as many as 6 people (2 agents, husband and wife, with their parents that are helping with finances)
10. Remove the "you" factor. Sorry but home buyers don't care about your trophies, your hobbies, your taste in art or your photos. Pack all that away. Depersonalizing a home lets buyers imagine themselves in the house. You want people looking at your house, not your wedding photos. In kitchens, leave out just one appliance and, on your desk, just a phone and a lamp. Think nice hotel.
11. Clean house. We often don't notice our own dirt. Look hard, starting with the switch plate by the front door. Wipe it down along with all light switches, doors and baseboards. If you're not the best housekeeper, hire a service. . . . Every surface should sparkle.
12. Banish smells. When people first walk in, they should either smell nothing or a nice scent, like cinnamon or citrus. Set out potpourri, fresh-cut flowers or subtle air fresheners. Have carpets -- if not replaced -- professionally cleaned and deodorized.
BACK WHEN the real estate market was hot, sellers barely had to do anything. Any extra effort often elicited multiple offers for over the asking price. In today's cool market, however, those same extras can mean the difference between getting one offer or none at all. As inventory grows, a few inexpensive moves can make your house stand apart.
1. Get the right mindset. Once you list your home, detach yourself. Treat it as a commodity, which means making changes that will broaden its appeal but that may erase some of your personal style.
2. Start at the curb. Look at what people see when they pull up. Everything outside should look perfect.
3. Paint -- it's money in a can. Outside, if a good power wash isn't enough, a coat of paint is one of the best facelifts you can give a house for a relatively low price. If you don't want to paint the whole house, do the trim. Inside, paint walls a soft neutral such as warm beige.
4. Focus on the entry. Put some energy into the front door, because it makes a strong first impression. Make an ordinary entry look stately and elegant.
5. Catch up on maintenance. Get around to the repairs you should have been doing all along. Fix the little stuff. Easy fixes show potential buyers that you pay attention to detail, which signals that you must care about the big stuff too.
6. Look for alternatives to expensive or messy upgrades.
7. Consider new appliances. When people see new kitchen appliances, they often see a new kitchen.
8. Add some house bling. Make anything metal in your home look new and shiny. People see shiny new metal and say 'Oooh,' and it's not that expensive. Disregard this if you have original or patina'd hardware, in most cases.
9. Start packing. The average home would show much better if it had 50% less stuff. Since you're already going to move, give yourself a head start by packing away all the clothes, books and dishes you won't need for the next few months. Take out extra furniture, especially if it's blocking the flow of foot traffic. If you can get all the stuff off-site in a moving pod or in storage, do so. If not, stack neat, labeled boxes in the garage. Mike Bell's note: during showings there can easily be as many as 6 people (2 agents, husband and wife, with their parents that are helping with finances)
10. Remove the "you" factor. Sorry but home buyers don't care about your trophies, your hobbies, your taste in art or your photos. Pack all that away. Depersonalizing a home lets buyers imagine themselves in the house. You want people looking at your house, not your wedding photos. In kitchens, leave out just one appliance and, on your desk, just a phone and a lamp. Think nice hotel.
11. Clean house. We often don't notice our own dirt. Look hard, starting with the switch plate by the front door. Wipe it down along with all light switches, doors and baseboards. If you're not the best housekeeper, hire a service. . . . Every surface should sparkle.
12. Banish smells. When people first walk in, they should either smell nothing or a nice scent, like cinnamon or citrus. Set out potpourri, fresh-cut flowers or subtle air fresheners. Have carpets -- if not replaced -- professionally cleaned and deodorized.
Wednesday, July 2, 2008
Fast Facts from CAR
Calif. median home price - May 08: $384.840(Source: C.A.R.)
Calif. highest median home price by C.A.R. region May 08: Santa Barbara So. Coast $1,199.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region May 08: High Desert $200,740(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 06/26/08 30-yr. fixed: 6.45% Fees/points: 0.6% 15-yr. fixed: 6.04% Fees/points: 0.6% 1-yr. adjustable: 5.27 % Fees/points: 0.6% (Source: Freddie Mac)
Calif. highest median home price by C.A.R. region May 08: Santa Barbara So. Coast $1,199.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region May 08: High Desert $200,740(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 06/26/08 30-yr. fixed: 6.45% Fees/points: 0.6% 15-yr. fixed: 6.04% Fees/points: 0.6% 1-yr. adjustable: 5.27 % Fees/points: 0.6% (Source: Freddie Mac)
Tuesday, July 1, 2008
Best food in Pasadena
In a rush, want to know my favs? You're reading this, so you must be interested. Best is Zankou Chicken near PCC... Armenian chicken with hummus and garlic sauce. The best. Tied for best: In-n-Out...don't be a novice, you need to order OFF of the menu, it's sooo LA. Don't know what I'm talking about, then call me. Best breakfast is Foxes on North Lake just south of Altadena Drive, where everyone knows your name, seriously. Best spaghetti (my Italian momma is gonna kill me) is at Noodle World (Thai) where you have to order the spicy seafood spaghetti. Really is good. Gordon Biersch garlic fries are the best. Now I'm hungry.
Banks are freezing credit lines
If this hasn't already happened to you, then beware. Lenders say they're reducing existing home-equity lines of credit in markets that have been experiencing significant declines in property values. I have 6 clients that have already received notices. One of my clients withdrew the money before the account was frozen, an equityline at 6%, and put it in a CD. Now he has emergency cash (cash to buy the next property maybe?). Many of my clients have received letters from their lenders telling them of the value their bank THINKS their property is worth in explaining why the line is frozen, or substantially reduced. Banks including BofA and WaMu say there's a process in place for customers to appeal these decisions, but I don't know of anyone that tried. Maybe this is a "a blessing in disguise" since a home isn't supposed to be an ATM.
Monday, June 30, 2008
More bank bailouts ahead?
Something from 6-24-08 from Antony Currie at breakingviews.com: The Fed’s decision to take on $29B of Bear Stearns’ assets may soon look like chicken feed. If problems at US banks worsen, the government (taxpayers) is likely to be on the hook for sorting out much of the mess. It’s not that the collapse of any one, or even a few, of the thousands of mostly small and mid-sized retail and commercial banks across America would pose the same kind of threat to the financial system that the now-defunct investment bank did. And anyway, most have access to the Fed for emergency funding. The problem is that the other usual escape routes available to struggling Main Street banks are narrowing. It’s getting harder to tap either new or existing shareholders for new funds to replenish bank capital. (Look what just happened to IndyMac) That’s because virtually all the deals that have been struck in the last few months – whether common stock or convertible bonds – have performed poorly. Those who bought stakes in Citigroup, Merrill Lynch, Wachovia, Washington Mutual and Keycorp, for example, are all underwater. Investors have tired of trying to call a bottom on bank losses. That’s making them much less willing to take on more exposure.
Bankers reckon it would now be tough to complete the deals they squared away as recently as a couple of weeks ago. It’s a similar story across the Atlantic, where British lenders Bradford & Bingley and HBOS are both trying to get big rights issues away with their share prices sagging and investors already loaded up with paper sold by the likes of UBS and the Royal Bank of Scotland. The mere whiff of a capital shortage is now enough to send shareholders scampering for the exits. Citigroup’s stock, for example, fell more than 5% late last week after finance chief Gary Crittenden told investors the firm would probably take more write-downs on mortgage-related assets – hardly a surprise. At least Citigroup and other big banks have size and brand recognition in their favor, making them better placed to attract more cash than their smaller brethren. But access to capital isn’t the only issue for smaller banks. In the past, a troubled lender could always try to sell.
So far only residential mortgages have caused much pain beyond Wall Street. Other consumer loans like car and credit card debt are only beginning to suffer, as are commercial mortgages. Losses here could keep the credit crisis rolling for another year or more. What’s more, unlike investment banks, retail and commercial banks usually book loans and other assets at face value until actual defaults appear likely. But under purchase accounting rules introduced earlier this decade, a takeover target’s portfolio has to be marked to the current market value when it is acquired. That could crystallise substantial losses, a factor that is staying the hands of the few potential acquirers. Bankers say it’s the reason a rumored bid for National City failed to materialize. It’s no wonder bank M&A volume is already 80% down on last year, according to Goldman Sachs. There’s often only one option left for a capital-starved US bank that can’t attract a suitor – receivership under the auspices of the FDIC. While hardly ideal, that works fine as long as only a few banks stumble. But if the pressures of the credit crunch cause too many to fail, FDIC could be overwhelmed. True, the government could prop it up, but that simply passes on the risk to the taxpayer. Mike Bell's note: now you know why I read the WSJ and get news from other sources, the local rags don't report it like this.
Bankers reckon it would now be tough to complete the deals they squared away as recently as a couple of weeks ago. It’s a similar story across the Atlantic, where British lenders Bradford & Bingley and HBOS are both trying to get big rights issues away with their share prices sagging and investors already loaded up with paper sold by the likes of UBS and the Royal Bank of Scotland. The mere whiff of a capital shortage is now enough to send shareholders scampering for the exits. Citigroup’s stock, for example, fell more than 5% late last week after finance chief Gary Crittenden told investors the firm would probably take more write-downs on mortgage-related assets – hardly a surprise. At least Citigroup and other big banks have size and brand recognition in their favor, making them better placed to attract more cash than their smaller brethren. But access to capital isn’t the only issue for smaller banks. In the past, a troubled lender could always try to sell.
So far only residential mortgages have caused much pain beyond Wall Street. Other consumer loans like car and credit card debt are only beginning to suffer, as are commercial mortgages. Losses here could keep the credit crisis rolling for another year or more. What’s more, unlike investment banks, retail and commercial banks usually book loans and other assets at face value until actual defaults appear likely. But under purchase accounting rules introduced earlier this decade, a takeover target’s portfolio has to be marked to the current market value when it is acquired. That could crystallise substantial losses, a factor that is staying the hands of the few potential acquirers. Bankers say it’s the reason a rumored bid for National City failed to materialize. It’s no wonder bank M&A volume is already 80% down on last year, according to Goldman Sachs. There’s often only one option left for a capital-starved US bank that can’t attract a suitor – receivership under the auspices of the FDIC. While hardly ideal, that works fine as long as only a few banks stumble. But if the pressures of the credit crunch cause too many to fail, FDIC could be overwhelmed. True, the government could prop it up, but that simply passes on the risk to the taxpayer. Mike Bell's note: now you know why I read the WSJ and get news from other sources, the local rags don't report it like this.
Value websites miss the mark
from Daily Real Estate News 6-24-08. Home-Value Web Sites Miss the Mark: Online home-value sites are often wrong. The estimates will have huge errors in them. Zillow.com and Cyberhomes.com rely on computer-generated automated models to estimate values, and the models help compensate for the fact that many neighborhoods don’t have enough sales to generate accurate values based on experience. But these models don’t reflect home condition, improvements, and may not even accurately convey property descriptions. The data is best used as a way to form an overall impression of a neighborhood.
Recourse is returning in commercial (read this)
I asked my brother, a commercial specialist, what he thought of my blog. Said he thought it was too detailed, thinking there was too much macro information, didn't think it'd resonate with my residential clients. Hmmm, good point. But I think the macro is really affecting what's happening locally, the big issues trickle down to the day to day activities of selling a house, or a shopping center (coming in a few months). This article is about commercial lending, I think it's important that even a first-time homebuyer understands that today's credit crunch is felt all over. It's from yet another WSJ article published 6-18-08 from Lingling Wei titled: Developers Dread Return of Recourse.
After a decade of easy lending, the dreaded personal guarantee is making a comeback in the real-estate industry, bringing back the kind of tough terms that borrowers hoped not to see again: Recourse loans -- once a staple of commercial lending -- had largely fallen by the wayside during the past decade as banks found ways to minimize their risk. Now, with the securities market for commercial loans still anemic, recourse loans are popping up again. Those who can't wait out the credit crisis may have little choice but take a deep breath and sign a recourse loan.
Take, for example, Judah Hertz, chief executive of Hertz Investment Group in Santa Monica, Calif. About 3½ years ago, Mr. Hertz took out a $50 million mortgage from LaSalle Bank to buy an office building in New Orleans. That loan required no personal guarantee. As the loan is due next month, he is left with little choice but to accept a new $50 million loan from Wells Fargo that requires him to personally guarantee 25% of that amount.
During the recent sales frenzy for commercial properties, nonrecourse loans were the norm. Typically, this meant that the developers put up as collateral only the buildings they were purchasing. If they couldn't pay off the loans, they simply handed the building's keys to the lender and walked away. The borrowers' other holdings -- including personal assets such as homes and boats -- remained intact. The investment banks that originated many of these loans felt comfortable with the arrangement because they typically packaged those loans into commercial-mortgage-backed securities, or CMBS, and sold them as bonds, reducing their own risk if the borrowers couldn't pay. Now, with a 90% drop in CMBS sales, banks have all but stopped originating loans aimed at the bond markets. Instead, they're returning to the traditional model of holding on to -- as opposed to selling -- the loans. Even for banks, recourse lending can cause headaches. Borrowers are more likely to fight the banks if they face losing much of their net worth over one bad gamble. Plus, the banks make less money; the interest rates they can charge on recourse loans are about 1% lower than on nonrecourse loans.
Banks that have already suffered losses related to residential mortgages are increasingly viewing recourse loans as a necessary layer of protection. When prices were rising, the bank could take control of a building and sell it to pay off the loan. Now, with falling valuations, the building could be worth less than the debt on it. In that scenario, banks want a way to make up the difference.
After a decade of easy lending, the dreaded personal guarantee is making a comeback in the real-estate industry, bringing back the kind of tough terms that borrowers hoped not to see again: Recourse loans -- once a staple of commercial lending -- had largely fallen by the wayside during the past decade as banks found ways to minimize their risk. Now, with the securities market for commercial loans still anemic, recourse loans are popping up again. Those who can't wait out the credit crisis may have little choice but take a deep breath and sign a recourse loan.
Take, for example, Judah Hertz, chief executive of Hertz Investment Group in Santa Monica, Calif. About 3½ years ago, Mr. Hertz took out a $50 million mortgage from LaSalle Bank to buy an office building in New Orleans. That loan required no personal guarantee. As the loan is due next month, he is left with little choice but to accept a new $50 million loan from Wells Fargo that requires him to personally guarantee 25% of that amount.
During the recent sales frenzy for commercial properties, nonrecourse loans were the norm. Typically, this meant that the developers put up as collateral only the buildings they were purchasing. If they couldn't pay off the loans, they simply handed the building's keys to the lender and walked away. The borrowers' other holdings -- including personal assets such as homes and boats -- remained intact. The investment banks that originated many of these loans felt comfortable with the arrangement because they typically packaged those loans into commercial-mortgage-backed securities, or CMBS, and sold them as bonds, reducing their own risk if the borrowers couldn't pay. Now, with a 90% drop in CMBS sales, banks have all but stopped originating loans aimed at the bond markets. Instead, they're returning to the traditional model of holding on to -- as opposed to selling -- the loans. Even for banks, recourse lending can cause headaches. Borrowers are more likely to fight the banks if they face losing much of their net worth over one bad gamble. Plus, the banks make less money; the interest rates they can charge on recourse loans are about 1% lower than on nonrecourse loans.
Banks that have already suffered losses related to residential mortgages are increasingly viewing recourse loans as a necessary layer of protection. When prices were rising, the bank could take control of a building and sell it to pay off the loan. Now, with falling valuations, the building could be worth less than the debt on it. In that scenario, banks want a way to make up the difference.
Gauging Value In Real Estate
Gauging Value In Real Estate As Prices Slide. From another WSJ article, written by Jeff Opdyke 3-13-08.
In this battered housing market, choosing the right neighborhood is more important than ever.
Maybe you can't pick which region you move to, but you can pick where you live within it, and that could have a big effect on whether or not your home turns out to be a winning investment. Home-price declines can last for years. There are signs the current decline could be bad. NAR statistics indicate that housing prices in 2007 experienced their first year-over-year decline in at least 40 years. Prices are expected to fall further this year -- and possibly next year, as well -- as the housing crisis broadens.
But even in this brutal landscape, cities such as Seattle; Austin, Texas; and Wichita, Kan., are still seeing price increases. And even in hard-hit cities, certain neighborhoods are holding up better than others. One factor is well-known to home buyers: schools. Houses in high-ranked school districts generally retain their value better.
But don't overlook perhaps the most important variable of all: supply and demand. Prices were hit hardest in places like Phoenix, Miami or Las Vegas, which were smothered in recent years by new construction. If you're moving to one of these cities, be wary of areas where lots of new homes are soon to be built or scheduled to go on sale soon.
During the boom, builders plastered the Phoenix region with houses that were snapped up quickly, many times by speculators who were looking to score a quick profit. Today, the metro area has more than 18 months of supply, compared with a national average of 11 months. Yet it is apparent that some parts of Phoenix are substantially weaker than others.
Buckeye, a suburb west of Phoenix, sprawls across 600 square miles of desert. Town planners have approved roughly 400,000 houses. But already the supply of homes stretches to nearly 20 months, and that means buyers are "more at risk for [further] decreases in property values".
By contrast, Tempe, with no room to expand and a location closer to Phoenix's job centers, has an 11-month supply of houses.
In many cities during the housing boom, developers ventured far afield to buy cheaper land, expecting that if they built it, buyers would come. And buyers did. But now they aren't so eager for two reasons: Gas is topping $3 a gallon, increasing their commuting costs, and the necessary infrastructure such as schools and retail and medical facilities often haven't sprung up yet.
Though buyers generally get more house for their dollar in more-remote communities, many buyers today are forsaking size for the conveniences of being close to the city, often in areas that are redeveloping.
Don't forget that home buying is always a street-by-street exercise, and that is particularly true in a weak market. In a strong market, buyers scarf up homes on busy streets or less-than-desirable locations. But in a down market, things change. Just about anything sold in the hot market of 2004 and 2005, but now it's location, location, location -- more than ever.
In this battered housing market, choosing the right neighborhood is more important than ever.
Maybe you can't pick which region you move to, but you can pick where you live within it, and that could have a big effect on whether or not your home turns out to be a winning investment. Home-price declines can last for years. There are signs the current decline could be bad. NAR statistics indicate that housing prices in 2007 experienced their first year-over-year decline in at least 40 years. Prices are expected to fall further this year -- and possibly next year, as well -- as the housing crisis broadens.
But even in this brutal landscape, cities such as Seattle; Austin, Texas; and Wichita, Kan., are still seeing price increases. And even in hard-hit cities, certain neighborhoods are holding up better than others. One factor is well-known to home buyers: schools. Houses in high-ranked school districts generally retain their value better.
But don't overlook perhaps the most important variable of all: supply and demand. Prices were hit hardest in places like Phoenix, Miami or Las Vegas, which were smothered in recent years by new construction. If you're moving to one of these cities, be wary of areas where lots of new homes are soon to be built or scheduled to go on sale soon.
During the boom, builders plastered the Phoenix region with houses that were snapped up quickly, many times by speculators who were looking to score a quick profit. Today, the metro area has more than 18 months of supply, compared with a national average of 11 months. Yet it is apparent that some parts of Phoenix are substantially weaker than others.
Buckeye, a suburb west of Phoenix, sprawls across 600 square miles of desert. Town planners have approved roughly 400,000 houses. But already the supply of homes stretches to nearly 20 months, and that means buyers are "more at risk for [further] decreases in property values".
By contrast, Tempe, with no room to expand and a location closer to Phoenix's job centers, has an 11-month supply of houses.
In many cities during the housing boom, developers ventured far afield to buy cheaper land, expecting that if they built it, buyers would come. And buyers did. But now they aren't so eager for two reasons: Gas is topping $3 a gallon, increasing their commuting costs, and the necessary infrastructure such as schools and retail and medical facilities often haven't sprung up yet.
Though buyers generally get more house for their dollar in more-remote communities, many buyers today are forsaking size for the conveniences of being close to the city, often in areas that are redeveloping.
Don't forget that home buying is always a street-by-street exercise, and that is particularly true in a weak market. In a strong market, buyers scarf up homes on busy streets or less-than-desirable locations. But in a down market, things change. Just about anything sold in the hot market of 2004 and 2005, but now it's location, location, location -- more than ever.
Fannie and Freddie, what's up these days?
A good article from David Wessel in the 6-12-08 WSJ: Mortgagers' Dual Roles Clash. Freddie and Fannie are ungainly hybrids. They're part shareholder-owned profit-making companies, part government agencies with a mission to make mortgages cheaper and more widely available. And they're huge, much bigger than Bear Stearns, the investment bank whose collapse, we were told, threatened the entire financial system. The housing bust is heightening the tension between the two parts of the hybrid. Falling house prices and rising delinquencies weaken the companies financially, raising concerns about their stability and the risks they pose to taxpayers. Their entire business is housing. But the past year also underscores the societal importance of their mission: making home ownership more affordable and rescuing the economy when housing goes bust.
Fannie and Freddie make big profits for shareholders and pay high salaries. Shareholders benefit because Fannie and Freddie borrow more heavily than other financial companies and more cheaply, because everyone who lends them money assumes -- correctly -- that the U.S. government stands behind their debt, and that they agree to be regulated. (Based on recent public filings, Freddie and Fannie have a debt-to-equity ratio -- a measure of how leveraged they are -- of 27.6 & 19.6, respectively. By contrast, the ratio at B of A and J.P. Morgan Chase is about 3.9, and their stocks are getting hammered.)
Today the government essentially is telling Fannie and Freddie to lend more, tolerate delinquencies, and raise capital at unfavorable prices for the good of the economy, even if you don't believe it's in shareholders best interests.
Fannie and Freddie -- and thus taxpayers -- take the risk that interest rates will turn against them, creating a devastating mismatch between the rates they pay to borrow and the rates they receive on their huge portfolios of mortgages. That was before the previously unimaginable happened: a widespread decline in house prices.
Fannie and Freddie already have absorbed huge losses, not only on the mortgage-linked securities they hold but also on the $4 trillion in guarantees they have made on principal and interest on mortgages turned into securities held by others. They face bigger losses if house prices fall an additional 10% or 15%, as is widely predicted.
Privatization and nationalization are conceptually pure and politically improbable. Today, half of Congress wants Fannie and Freddie to pick up the pieces from the subprime debacle and lend more; the other half wants to block them from exposing taxpayers to additional risks.
Fannie and Freddie make big profits for shareholders and pay high salaries. Shareholders benefit because Fannie and Freddie borrow more heavily than other financial companies and more cheaply, because everyone who lends them money assumes -- correctly -- that the U.S. government stands behind their debt, and that they agree to be regulated. (Based on recent public filings, Freddie and Fannie have a debt-to-equity ratio -- a measure of how leveraged they are -- of 27.6 & 19.6, respectively. By contrast, the ratio at B of A and J.P. Morgan Chase is about 3.9, and their stocks are getting hammered.)
Today the government essentially is telling Fannie and Freddie to lend more, tolerate delinquencies, and raise capital at unfavorable prices for the good of the economy, even if you don't believe it's in shareholders best interests.
Fannie and Freddie -- and thus taxpayers -- take the risk that interest rates will turn against them, creating a devastating mismatch between the rates they pay to borrow and the rates they receive on their huge portfolios of mortgages. That was before the previously unimaginable happened: a widespread decline in house prices.
Fannie and Freddie already have absorbed huge losses, not only on the mortgage-linked securities they hold but also on the $4 trillion in guarantees they have made on principal and interest on mortgages turned into securities held by others. They face bigger losses if house prices fall an additional 10% or 15%, as is widely predicted.
Privatization and nationalization are conceptually pure and politically improbable. Today, half of Congress wants Fannie and Freddie to pick up the pieces from the subprime debacle and lend more; the other half wants to block them from exposing taxpayers to additional risks.
Thursday, June 19, 2008
FAST Facts from C.A.R. 6-19-08
Fast Facts
Calif. median home price - April 08: $403,870(Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 06/12/08 30-yr. fixed: 6.32% Fees/points: 0.7% 15-yr. fixed: 5.93% Fees/points: 0.6% 1-yr. adjustable: 5.09 % Fees/points: 0.6% (Source: Freddie Mac)
Calif. median home price - April 08: $403,870(Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 06/12/08 30-yr. fixed: 6.32% Fees/points: 0.7% 15-yr. fixed: 5.93% Fees/points: 0.6% 1-yr. adjustable: 5.09 % Fees/points: 0.6% (Source: Freddie Mac)
Thursday, June 5, 2008
Tax Assessor Press Release
MAY 27, 2008, DECLINE IN VALUE REVIEW PRODUCES PROPERTY TAX SAVINGS. Los Angeles County Assessor Rick Auerbach today announced completion of a decline in value review of homes in Los Angeles County. "We looked at homes and condominiums that were purchased between July 1, 2004 and June 30, 2007, based on our analysis of market trends in Los Angeles County," Auerbach said. "The review included 318,000 homes and condos. Our analysis will result in lower assessments on 128,000 homes and condos and will be reflected on the tax bills to be issued in October." The average reduction in assessed value is about $73,000, he added, amounting to an average property tax savings of approximately $750. "In addition, this review will eliminate the need for many taxpayers to go through the formal appeal process". The 128,000 homeowners who will be receiving a value reduction will be notified in writing by June 30 of this year. If they disagree with the amount of the reduction they should contact the nearest Assessor’s District Office and discuss the results. The deadline for filing an assessment appeal is November 30. Homeowners who purchased their properties outside of the time period for the review (July 1, 2004 to June 30, 2007) and believe that their property is assessed above its actual value as of January 1, 2008, should file the simple, one-page Decline-in-Value application. The form can be downloaded from the Assessor’s Website at http://assessor.lacounty.go.
Saturday, May 31, 2008
New construction: builders are giving it away
Last week I closed a sale of a new townhome for one of my buyers. The builder needed/wanted to keep the sales price as high as possible. Knowing this I was able to negotiate 2 years of free HOA's, and some interest-free financing, as well as a very low sales price (lowest ever sold p/s/f).
A few days after closing there was a very appropriate article in the WSJ by Dawn Watoapka titled "Builders Get Creative to Sell Homes". Some excerpts: "Highlighting their desperation to sell houses, builders are bringing back the gimmicks -- mortgage rates that start low, help with down payments, zero out-of-pocket expenses -- that helped fuel the housing bubble before it went bust. The larger builders have loan subsidiaries, where they can pay down the rates and eliminate fees. Builders, trying to survive the worst downturn since the Depression, must move inventory quickly to bring in cash. But they promise they're being responsible by scrutinizing income and credit scores and making sure loans don't reset with unbearable payments. Most industry watchers aren't worried. To them, this is simply the latest batch of incentives - this round inspired by the heightened lending restrictions - necessary for business, even if they stress already-razor-thin margins. Builders don't hold their loans -- they are usually resold to larger mortgage companies that pool them for resale to the secondary market -- and what few loan buyers remain have no tolerance for risk."
One last thing about new construction. Be careful about being one of the first buyers, if the builder can't sell the rest of the units, you'll be stuck owning a home with a bunch of renters.
A few days after closing there was a very appropriate article in the WSJ by Dawn Watoapka titled "Builders Get Creative to Sell Homes". Some excerpts: "Highlighting their desperation to sell houses, builders are bringing back the gimmicks -- mortgage rates that start low, help with down payments, zero out-of-pocket expenses -- that helped fuel the housing bubble before it went bust. The larger builders have loan subsidiaries, where they can pay down the rates and eliminate fees. Builders, trying to survive the worst downturn since the Depression, must move inventory quickly to bring in cash. But they promise they're being responsible by scrutinizing income and credit scores and making sure loans don't reset with unbearable payments. Most industry watchers aren't worried. To them, this is simply the latest batch of incentives - this round inspired by the heightened lending restrictions - necessary for business, even if they stress already-razor-thin margins. Builders don't hold their loans -- they are usually resold to larger mortgage companies that pool them for resale to the secondary market -- and what few loan buyers remain have no tolerance for risk."
One last thing about new construction. Be careful about being one of the first buyers, if the builder can't sell the rest of the units, you'll be stuck owning a home with a bunch of renters.
Friday, May 30, 2008
US Home Prices Lure Foreigners (WSJ May 27, 08)
Thanks to falling home prices and the weak dollar, attention is heating up from foreign investors. Almost one in five Realtors surveyed by the NAR last year said they sold homes to international clients between April 2006 and April 2007. More recent data isn't yet available, but according to anecdotal evidence, those numbers continue to rise.
For many foreign buyers, property in the U.S. is downright cheap. Canadians now get an 80% discount on what they would have paid for a piece of the U.S. just three years ago, when one Canadian dollar was worth just 80 U.S. cents and properties in some areas were 50% more expensive. (One Canadian dollar is now worth roughly $1 in U.S. currency.) For European buyers, whose currency carries 25% more buying power in the U.S. than it did just three years ago, today's depressed property prices are no less attractive. While Americans are discouraged by images of neighborhoods blighted by "For Sale" signs and taped-off properties, foreign buyers are much more optimistic, especially about the long-term health of the U.S. market. "The foreign buyer has an unbridled confidence in the U.S. market that is lacking in the domestic purchaser today. They view this as the bargain of a lifetime and are terribly excited about it. They understand the U.S. market is more stable. We may have down cycles, but we go up back again. They've heard there's a fire sale going on down here."
Despite all the hoopla, though, foreign buyers alone will hardly help the U.S. crawl out of the current housing mess. Unsold inventory in some areas is so abundant that it cannot be absorbed, even with increased interest from our neighbors north of the border or overseas. Foreigners can at least bring to the U.S. market what it's been lacking most in the past months: They'll provide a psychological support of confidence.
For many foreign buyers, property in the U.S. is downright cheap. Canadians now get an 80% discount on what they would have paid for a piece of the U.S. just three years ago, when one Canadian dollar was worth just 80 U.S. cents and properties in some areas were 50% more expensive. (One Canadian dollar is now worth roughly $1 in U.S. currency.) For European buyers, whose currency carries 25% more buying power in the U.S. than it did just three years ago, today's depressed property prices are no less attractive. While Americans are discouraged by images of neighborhoods blighted by "For Sale" signs and taped-off properties, foreign buyers are much more optimistic, especially about the long-term health of the U.S. market. "The foreign buyer has an unbridled confidence in the U.S. market that is lacking in the domestic purchaser today. They view this as the bargain of a lifetime and are terribly excited about it. They understand the U.S. market is more stable. We may have down cycles, but we go up back again. They've heard there's a fire sale going on down here."
Despite all the hoopla, though, foreign buyers alone will hardly help the U.S. crawl out of the current housing mess. Unsold inventory in some areas is so abundant that it cannot be absorbed, even with increased interest from our neighbors north of the border or overseas. Foreigners can at least bring to the U.S. market what it's been lacking most in the past months: They'll provide a psychological support of confidence.
Wednesday, May 28, 2008
Commercial Mortage Default Rate
As of May 2008, the national default rate on commercial mortgages is a slim 0.4%. Source: WSJ article: "Discounts? Yes, but a Fire Sale? No" dated May 9, 2008. I thought that was pretty interesting. The article states that billions, yes billions, were raised in 2007 to purchased distressed mortgages, most of it unspent since there isn't much out there to buy to give good enough returns, and since banks aren't needing to sell. The commercial market has probably weathered the worst of the credit crunch. The commercial markets do have an effect on the residential markets.
Fast Facts
Calif. median home price - April 08: $403,870 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 05/22/08 30-yr. fixed: 5.98% Fees/points: 0.5% 15-yr. fixed: 5.55% Fees/points: 0.6% 1-yr. adjustable: 5.24 % Fees/points: 0.6% (Source: Freddie Mac)
Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 05/22/08 30-yr. fixed: 5.98% Fees/points: 0.5% 15-yr. fixed: 5.55% Fees/points: 0.6% 1-yr. adjustable: 5.24 % Fees/points: 0.6% (Source: Freddie Mac)
Zillow, Realtor.com and Inman debate session
At this years California Association of Realtors EXPO the President of Zillow.com, the President of Realtor.com, and publisher of Inman News came together for a debate. Some excerpts:
Zillow.com president Lloyd Frink: "Zillow believes that the nature of the relationship between Realtors and their clients is probably going to change. As opposed to Realtors being the gatekeepers of information, they're much more likely to be giving expert advice on what the information means. Zillow.com is the 4th largest website, and the Zestimate is really just a starting point for figuring out how much a home is worth. The average margin of error is 7.2%. We're very dependent on the support of Realtors and real estate brokers to make our site successful."
Realtor.com president Allan Dalton: "The notion of suggesting to people that they can find out what their home is worth without a Realtor offends me. Zillow.com and the internet has consumers. Realtors have clients. The real estate agent will always be an intregal part of the sales process"
Inman News publisher Bradley Inman: The internet created transparency....with all the information available it's created a rational market, which has created more buyers, which is good for everyone. Every year the percentage of people using the web to search for properties and/or a Realtor has increased, and will continue to do so.
My two cents: Your property's value is determined by how much a capable buyer is willing to pay, period. A good Realtor can use data to help set seller expectation. I use Zillow.com, Realtor.com Showcase, site-specific URL's, as well as a bunch of other means to market and find capable buyers. According to Zillow, 54% of buyers visit Zillow as part of their home-buying process.
Zillow.com president Lloyd Frink: "Zillow believes that the nature of the relationship between Realtors and their clients is probably going to change. As opposed to Realtors being the gatekeepers of information, they're much more likely to be giving expert advice on what the information means. Zillow.com is the 4th largest website, and the Zestimate is really just a starting point for figuring out how much a home is worth. The average margin of error is 7.2%. We're very dependent on the support of Realtors and real estate brokers to make our site successful."
Realtor.com president Allan Dalton: "The notion of suggesting to people that they can find out what their home is worth without a Realtor offends me. Zillow.com and the internet has consumers. Realtors have clients. The real estate agent will always be an intregal part of the sales process"
Inman News publisher Bradley Inman: The internet created transparency....with all the information available it's created a rational market, which has created more buyers, which is good for everyone. Every year the percentage of people using the web to search for properties and/or a Realtor has increased, and will continue to do so.
My two cents: Your property's value is determined by how much a capable buyer is willing to pay, period. A good Realtor can use data to help set seller expectation. I use Zillow.com, Realtor.com Showcase, site-specific URL's, as well as a bunch of other means to market and find capable buyers. According to Zillow, 54% of buyers visit Zillow as part of their home-buying process.
Monday, May 19, 2008
according to Kipplinger (May 2008)....
A little good news to make buyers and sellers feel at ease...according to Kipplinger, the Southern California region will add 1 Million residents in the next seven years, overcoming its current housing-driven slump. Most of the growth will come from people migrating from more costly bordering counties. This will probably shore up values around Los Angeles, giving this immediate marketplace a very strong foundation, especially coupled with the fact that housing starts are down and will take time to get going again (less supply), and the finance markets will eventually strengthen and stabilize.
Upgrading your home, excerpts from the WSJ
A little cut and paste from the May 15, 2008 WSJ article titled "Will Upgrading Your Home Help You Sell It?...................The resale value of improvements in general is sliding, according to experts. In a departure from recent trends, homeowners are getting the best payback from relatively mundane improvements, such as sprucing up the exterior of their house or putting in new windows. Remodeling activity peaked in 2006 before slowing last year. And it is expected to fall 4.8% this year, according to a report by the Harvard Joint Center for Housing Studies released last month. Since many homeowners remodel using borrowed money, tighter credit means it's also harder for many homeowners to afford big projects. Even though housing prices are slumping, construction prices have continued to climb. That means adding that new bath will cost more, even as it contributes less to the resale value. Home improvements that help a property stand out in a glut of newly built houses and foreclosed properties are most likely to pay off now, as are those that make a house lower-maintenance or more energy-efficient. Some elaborate remodels, though, may actually make your home harder to sell. Lenders are nixing higher-than-normal appraisals, and that many buyers are looking for a deal. Even if someone wanted to pay extra, they would have a hard time financing the house unless they have a lot of cash. Inferior remodeling work may be worse than none at all. Cheap cabinets and poor workmanship won't fool buyers as they might have a few years ago, when many had to make snap decisions about buying a house. "Make the outside of the house look really great so that people fall in love between getting out of the car and the front door. That is money that is worth spending."
Thursday, May 8, 2008
My first posting....Some Company Numbers
This is my first posting, thought I'd put some hard numbers I received from our corporate office: "We closed 23% more units companywide in April 2008 than we did in March 2008. San Diego's figure was up 23%, Orange County's up 10%, and LA's up 15%. Backed by Berkshire Hathaway, HomeServices of America and The Rock, we have the strength to take full advantage of the next upswing. "

