2015 Housing Market Forecast (VIDEO)

5 Basic ideas of Modern Home Decor

Simplicity. If you were looking for a word that described what modern home decor was then that would be; it is simplicity. Of course, simple doesn’t mean boring and modern decor with its clean lines, neutral color palette and geometric shapes is anything but boring. Instead, modern home decor can be warm, inviting and completely stylish in just about any home. But how do you achieve modern home decor? Obviously, it isn’t as simple as walking into a store and choosing items that have clean lines. There takes a bit more to that and there are several basic ideas that should be incorporated into a modern decor.

The first idea is to keep it simple. Remember that word that best describes modern design and make sure that you incorporate it into your space. There is no need for the room to simply be four walls and a chair for sitting, we aren’t going to that extreme, but you will want to keep things as uncluttered as it possible. Studies have shown that clutter can lead to stress in your life so keeping your decor simple will help alleviate some of the stresses that you feel.

The second idea of modern home decor is function. Not only should your rooms be simple with those clean lines and minimal artwork and accessories, but it should also be functional. This varies greatly from room to room but when you go into a room, it should be easy to access and use various items in it. So, for instance, a kitchen that is designed with modern decor in mind should have ample workroom and everything should be easy to access.

Technology is the third idea for a modern decor in your home. It is actually a lot more than simply stating “technology” and any electronics that are in your home should work with the space. It is often recommended that all electronics be streamlined, so flat panel televisions, built in DVD players, small flat screen televisions in the kitchen, and computers tied in to a room rather than being a lump in it, are important to keep those lines clean.Open spaces. If you are going with a modern decor, then you will want to utilize our fourth idea by having lots of open space in your home. This may not be possible in some homes that offer closed rooms instead of an open concept but you can create the appearance of open spaces by using color, fabrics and furniture. You can also keep windows coverings that are light in color and airy in feel to create an open feel in to the room, even if it isn’t.

The last idea for creating a modern decor in your home is to add a little bit of character to the space. It can be amazing how one splash of color on an otherwise neutral palette can create such an alarming effect to the room. Don’t hesitate to explore your options with color and make the space one that you will enjoy sharing with every.

Creating a modern decor doesn’t have to be difficult and there is a lot of room to play around with your spaces. All you really need to remember are these five simple rules and before you know it, you will have a modern decor that shines.

THE HOME SELLING PROCESS - A VISUAL GUIDE

 

 

Los Angeles is the Biggest Anti-Sprawl Success Story in the US

Los Angeles is changing its identity. It's moving away from the car and the single-family house and toward transit and denser living. And now it's even getting dramatically less sprawly. According to a study from Smart Growth America that factored in density, land use mix, robustness of "activity centers" like downtowns, and street accessibility (length of blocks, etc.), the LA metro area is now the twenty-first least sprawly place in the US, and the seventh least sprawly among metropolitan areas with more than one million residents. (The study also reminds us that LA is the second densest place in the US overall, after New York.)

Los Angeles's staggering urban density, coupled with denser housing developments and the efforts to improve transit, all helped make LA the "biggest success story," according to one researcher quoted in The Atlantic Cities. "Los Angeles has actually densified very substantially," says that researcher, and the report specifically calls out the area for its anti-sprawl policies, including a push for light rail and transit-oriented development and giving out density bonuses, which let developers build more densely if they include affordable housing.

In the end, says one urban planner, the reduced sprawl is the result of the demands and tastes of the population, especially "young professionals and empty-nesters," as the LA Times puts it, who value walkability and are willing to pay for it. So people like living in less sprawly places, it turs out, and that of course means they're expensive: "the places that fared best on the sprawl index – which is topped by New York and San Francisco – also tend to have high housing costs."

Economic update March 22

This week marked the first meeting of the Fed under new Chair Janet Yellen. The Federal Reserve opted to continue the taper of the mortgage and bond-buying program, dropping participation by another $10 billion per month to a rate of $55 billion per month. The Fed Open Market Committee also changed language that stated the U.S. central bank's key policymaking body would begin to consider raising interest rates once the national unemployment rate hit 6.5%. The new change gives the Fed more room in deciding when to raise rates regardless of the unemployment rate. Rate increases are still off in the future but some economists feel that they could move more quickly once they begin. Yellen indicated that the bond-buying program could end this fall with short term interest rates probably being raised about six months later. 

It would be the first hike since 2006. Yellen’s frank talk was dubbed a mistake by many in the media.

Yellen’s remarks caused ripples in the market early in the week but stocks rose Friday on positive economic data. The Philadelphia Federal Reserve's manufacturing-activity index for March came in higher than expected showing an increase in regional manufacturing. The Dow rose this week to 16,302.70 up 1.48% from last week’s close of 16,065.67. The Nasdaq saw a more modest increase to 4,276.79 up 0.74% from last week’s close of 4,245.40. The S&P 500 ended the week at 1,866.40, up 1.37% from last week’s 1,841.13 close. 

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate fell to 4.32%, the rate was 4.37% last week. The 15-year-fixed fell to 3.32% from last week’s 3.38%.  A year ago the 30-year fixed was at 3.54% and the 15-year was at 2.72%. Unfortunately,  rates rose later in the week after the Fed's announcement.  The 30 year rate is closer to 4.5% for loans under $417, 000 and about 4.75% for higher loan amounts. The 15 year is about 3.5% for loans up to $417, 000 and 3.75% for higher balance loans. 

The 10 year treasury note yield rate rose to 2.75% after closing at 2.65% last week. It was at 1.95% one year ago.

The National Association of Realtors^® reported that February home sales dropped -0.4% to an annual pace of 4.60 million units, the lowest level since July 2012. Sales have declined in six out of the seven last months.  The median existing home price is at $189,000, up 9.1% from February 2013. In the West alone, existing home sales rose 5.9% to a pace of 1.07 million from January but were down -10.1% from a year ago. The median price in the West was $279,400, up from 18% from last year. Total housing inventory was up 6.4% in February to 2.00 million existing homes for sale. This represents a 5.2 month supply and is up from the 4.6 month supply a year ago. Distressed homes were 16% of sales nationwide compared with 25% a year ago. The median time on market for February was 62 days, down from 67 days in January, and 74 days a year ago. A total of 34% of homes sold in February were on the market for less than one month. First-time buyers accounted for 28% of all sales compared to 26% in January and 30% one year ago. All-cash sales were 35% of transactions compared to 33% in January and 32% one year ago.

Data from the California Association of  Realtors^®  shows California home sales fell in February, but housing inventory increased as sellers gear up for the spring home-buying season. Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 361,210units in February, which was down-0.7% from revised 363,930 in January and down -13.7% from a revised 418,520 in February 2013.  The statewide median price of an existing, single-family detached home declined -1.6% from January’s median price of $410,990 to $404,250 in February.  February’s price was 21.3% higher than the revised $333,180 recorded in February 2013, marking two full years of consecutive year-over-year price increases and the 20th straight month of double-digit annual increases. Inventory improved with the available supply of single-family homes for sale now up to 4.7 months from January’s 4.3 months. The index was at 3.6 months in February 2013. A normal supply is generally six or seven months. In Los Angeles County, the median sold price was $389,080 in February 2014, down -8.1% from January’s $423,570 but up 15.2%from February’s $337,630. Sales in Los Angeles were down -8.9% on a month-to-month basis, and down -14.4% year over year. The housing inventory in Los Angeles is currently 4.6 months, up from 4.0 in January 2014, and also up from 3.3 months a year ago.  Median time on market in Los Angeles is currently 43.6 days down from 46.6 days in January and up from 36.5 days in February 2013.

The National Association of Home Builders/Well Fargo builder sentiment index rose to 47 in March, up from February’s reading of 46. Readings below 50 indicate more builders view sales conditions as poor rather than good. The overall index had been over 50 from June through January. The measure of builders' expectations for sales over the next six months fell one point to 53, the lowest level since May, however builders' view of current sales conditions for single-family homes rose one point this month to 52.

The Commerce Department reported that housing starts were down -0.2%to a seasonally adjusted annual rate of 907,000 units, following January’s revised -11.2% drop (it was originally reported at -16%). Groundbreaking was down -5.5% in West and also down in the Northeast but up in the South and Midwest. Permits to build homes were up 7.7% in February to a 1.02 million-unit pace. Permits for single-family homes were down -1.8% but multifamily permits were up 24.5%.

The February numbers from the Southland Regional Association of Realtors^® show that inventory is on the rise. Inventory increased 37% from a year ago. At the end of February there were 1,419 homes on the market in the San Fernando Valley as compared with 1,033 a year earlier. The inventory rate is currently 3.2 months versus a 1.9 month supply a year ago.  The median home price was $475,000, up 13% from $422,000 a year earlier but down $10,000 from January’s median. Sales in February dropped -16% from a year ago and -8% from January.

The National Housing Trend Report from realtor.com^® showed that the nationwide median list price increased 7.6% year over year to$199,000. The media age of inventory also rose 6.5% to 114 days. The Los Angeles-Long Beach MSA was one of the ten markets nationwide with the biggest year-over-year increase in median price. Prices rose 20% to $449,999.

5 Ways to Beat Out the Competition

As the real estate market starts to pick up in many parts of the country, real estate agents from small towns to the big cities are blogging, tweeting, ranting and raving about multiple-offer situations.
A seller’s asking price is just that: an asking price. The seller may choose to price their home above, at or well below what the actual market will bear. Then, with luck, come the offers from buyers. Sometimes, there are multiple offers all under the asking price. Other times, all offers come in right around the asking price.
But in some situations, there are more than six offers coming in over asking price. Depending on where you live, you, as a potential buyer, may be forced to compete with other buyers in a bidding war. Here are five steps you can take to beat the competition in a multiple-offer situation.

Hire a good local agent

In most communities, 80 percent of the business is done by 20 percent of the agents. These agents are experienced in the local market and have relationships with other agents as well as inspectors, contractors, mortgage brokers and appraisers. More than anything, these 20 percent of agents “get” it.
A seller is looking for a sure thing and a smooth, clean escrow. With stakes high, who wouldn’t want a sure thing? In fact, the last thing the seller (or their agent) wants is to enter into escrow with an inexperienced or out-of-the-area agent.
That’s why, when faced with multiple offers, a seller, guided by their agent, may choose to work with a lower-priced offer because that buyer has a good agent. Many times, a lower priced offer will be countered up to match the price of a buyer with an unknown agent.

Get your financial ducks in a row before making an offer

Before you can make a strong and winning offer, you need to have your finances in order. This means being pre-approved for a loan and staying in regular contact with your lender or mortgage broker. Have an auto email alert set up from your real estate agent’s MLS. Know the new listings as they hit the market and be prepared to visit them right away. Be ready to make a move when the right house comes along.
An informed buyer has been in the market for some time. They’ve seen multiple properties, either at open houses or private appointments. They come to the multiple-offer situation fully prepared, knowledgeable of the market and ready to present themselves as a strong, motivated buyer. The seller and their agent will appreciate that.

Don’t wait

Many times, a new listing is sold before the first open house. If a desirable property hits the MLS on a Tuesday, you need to see it Tuesday night or Wednesday morning. As agents tell sellers all the time, your first buyer is likely your best buyer. The buyers who don’t rest on their laurels get the home. They show that they are on it, they’re motivated and they really want the property. This often translates into a successful deal or smooth escrow for the seller and the listing agent.
If you’re serious about buying and have your financial ducks in a row, don’t wait for the open house. As soon as you see the listing, let your agent know you’re interested or have them start doing the research.

Make a ‘clean’ offer

There’s an assumption that the successful bidder simply pays the most money. But this isn’t usually the case. While price is a huge factor, the terms and conditions are as important, if not more so.
To make your bid the most compelling, be as flexible as possible to the seller’s needs. If you know the seller needs a quick escrow because they just bought a place, give it to them. If they just had a baby and need some extra time, go with a longer close or offer to close quickly but give them a “rent-back.” If you’re going to have inspections, check with the inspector and see if you can get an appointment soon after getting your offer accepted. That way you can remove your inspection contingency quicker.
The same holds true with an appraisal. If your lender is able to pre-schedule an appraisal or at least check their schedule, it can only help. The last thing a seller wants is to accept an offer, only to wait 14 or 21 days to discover the buyer can’t get a loan or the leaky roof scared them away. Make your offer clean with swift timeframes for contingencies. There have been times when a seller leaves 2 to 3 percent on the table; just to be sure the deal will close “cleanly.”

Present yourself in the best possible light

Presentation can’t be emphasized enough. Make sure your agent presents your offer to the seller in a professional way. The offer should, when possible, be presented in person. A contract should be typed, not handwritten. Without a doubt, a pre-approval letter from your bank or broker should be attached to the offer. A cover letter from you or your agent presenting you, as buyers, to the sellers should always accompany your offer. If there are disclosures presented to you prior to your making an offer, sign off on them. Make it clear to the seller that you’re serious, motivated and ready to move ahead should they choose to work with you.

Strong and clean is the way to go

It’s the common sense stuff that will help differentiate you from the pack. Be up front, show that you’re motivated and look at the big picture of your offer — not just the dollar amount.
Of course, many times the highest bidder wins. But every day, there are dozens of buyers who kick themselves because they would have paid the price that it took to win the bidding war. Presenting yourself and your offer in the strongest and most clean way will go a long way to assuring you come out on top.

March Newsletter

Owning a home is still a dream

10 tips for homebuyers and sellers in 2014

Goodness, is it 2006 again? At the dawn of 2014, it feels like it. 

Homeowners enjoyed double-digit price growth in the first half of 2013, greatly exceeding experts' predictions of a year ago and even settling into pre-recession values in many markets. Though there was some softening in the second half, sellers remain in their element and are turning the screws on anxious buyers who fear further price spikes and escalating interest rates. New-construction home sales are up, previously underwater properties are in positive equity again and investors are turning their attention to "secondary markets" to find value. Economists expect house prices to rise another 4 percent to 5 percent in 2014, meaning remaining bargains will get even more sparse.
With that in mind, here are 10 tips befitting the up-market of 2014.

Sellers: Jump-start the process.You may be an avowed procrastinator, but if you want to sell a house this year, start planning now. The process, say sellers, always takes longer than expected. So get your home inspected now; there may be unseen major repairs to address. Declutter, clean closets and shelves, store extraneous possessions and furnishings and other stuff that might keep sellers from picturing themselves in your space. Attend an open house or two to get an idea of how to stage yours. And move along: Owners still waiting for the market to peak should beware that this real estate cycle may be shorter-lived than last.
Check mortgage interest rates available in your area.

Buyers: Be credit-ready.

There's a lot of competition out there for homes, so tarry not. Get your credit report and start repairing any blips. If your scores are below 620 or so, a conventional loan will be a challenge. But if they're under 740, you still might not get the best rates. Many buyers get a prequalification letter from the lender, but you can one-up them with a preapproval, which comes after a more thorough evaluation of your finances. A preapproval letter shows the seller that you're good to go and can close quickly.

Sellers: Vet your real estate agent, then follow the agent's advice.

Sellers lose time and money by hiring poorly. Interview several potential agents. You'll want a full-timer who is Web savvy and uses mobile technology, because at least 4 in 5 buyers view their homes first online. Your agent should be a proven performer in your submarket and be willing to walk you through the financial aspects of your deal. The more the agent knows about schools, commutes and other local details, the better. Once vetted, accept your agent's advice on pricing, marketing and negotiation.

Buyers: Adjust your negotiating expectations.

Lowball offers are off the table in this environment and could eliminate you from consideration. Respond to counteroffers quickly to keep other buyers from entering the picture; you don't want to encourage a bidding war. If one breaks out, be prepared to get fewer concessions and pay more money. And have a few other homes in mind so you can be willing to walk away if the price soars.
 Sellers: It's your market (finally) so make the most of it.At long last, it's a seller's market! While you're interviewing agents, be wary of those offering too-good-to-be-true price opinions because they may be trying to "buy" your listing. And don't jump at that first (seemingly) generous offer, especially if sellers are getting multiple offers. If you're getting your price and then some, give something back to the buyer in good faith, such as an early move-in date or some personal property you're not attached to. Never let the buyers' agents know what you're willing to do, though. Make them ask.

Buyers: Find life after foreclosure.

Have a foreclosure in recent years? Join the crowd. Though you might think you have to wait seven years to get another conventional mortgage, Fannie Mae, Freddie Mac and the FHA say they actually require just a three-year waiting period if the foreclosure was caused by extenuating circumstances. There are plenty of nonconforming lenders -- often called "shadow bankers" -- out there if you can endure a big down payment (around 20 percent) and above-market interest rates. Or consider a lease-purchase or lease-option where you pay the homeowner a monthly premium above your rent for the right to buy at a set price later.

Sellers: Hesitate to renovate.

We hear that newly renovated homes are easier sells, and that's true. So is it time to remodel that outmoded kitchen? Not if you plan to sell soon. According to remodeling surveys, the average renovation project returns only about two-thirds on investment. For example, a major bathroom remodel costing $15,000 yields about $10,000 in resale value. The same goes for a major kitchen remodel. In most cases, it would be cheaper to issue credits to buyers or drop your price a few grand. Lighter jobs like new doors are more practical and return about 85 percent. But feel free to spend a bit on paint (basic colors), curb appeal and fence replacement to enhance exteriors.

Buyers: Ask and you won't receive (an unpleasant surprise).

You'd be dismayed at the things sellers aren't obliged to disclose in most states, including on-premises felonies, suicide, murder or a neighboring sex offender. Don't be afraid to thoroughly question the selling party in writing before signing the contract. Some questions: Is there a cell tower, water tower, natural gas well, oil well or other non-residential construction scheduled to be built in this neighborhood (then define "neighborhood")? Is there commercial zoning on nearby vacant land? Is the yard prone to flooding? Are train whistles or other regular loud noises audible there? Did known criminal activity occur in the house? Have there been reported hauntings? Are there loud neighbors, dogs or other noise pollution? Are there registered sex offenders or other known criminals living nearby? If the selling party refuses to answer any of these questions, that's a bright red flag.

Sellers: Tailor your local game.

Folks who base their selling decisions on trends on cable news are often left wondering, "Why can't I sell at this price?" The truth is, all markets are different and all real estate is local, and prices can vary greatly even in adjacent subdivisions. Home prices are dictated largely by demand, land availability, foreclosures and employment. Most local real estate offices will provide market stats and at least a few recent comp sales in hopes of earning your business. Additional trend data can be found online or in local newspapers and business journals. A polite call or email to a local real estate appraiser might net more info or links to local statistics.

Sellers and buyers: Heed changing trends.

Pay attention to trends and react accordingly. Thinking of laying carpet? Agent surveys in the past few years show homes with hardwood floors or faux wood laminate floors are far faster sells. You still want to be in suburbia? Millennials don't. Numerous cities -- such as Austin, Texas; Portland, Oregon; and Minneapolis -- have watched this more environmentally conscious generation flock to "mixed-use" urban districts served by trendy cafes, nightclubs, bike paths, civic events and mass transit. For now, they're not buying condos, which haven't recovered like the single-family market. They're renting -- but watching the condo market ever so carefully.

Why it pays to use a Realtor

Economic update for week ending February 21, 2014

Stocks were mixed this holiday-shortened week responding to a mixed bag of news. Inflation reports show inflation remains low. In January, overall prices rose 1.6%  from a year ago. Prices of most commodities rose modestly while the shelter index was up at 2.6%  compared to a year ago because rents are rising. 

 

The Dow closed out the week at 16,103.30 down -0.32%  from last week’s close of 16,154.39. The Nasdaq was up, ending the week at 4,263.41 up 0.45% from last week’s 4,244.03 close. The S&P 500 was down very slightly, closing the week at 1,838.63, down -0.13% from last week’s 1,838.63 close.

 

The  10-year Treasury note yield rate was down slightly to 2.73% after ending last week at 2.75%. It was 1.99% a year ago. 

 

Mortgage Interest rates rose slightly this week. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate up to 4.33% from 4.28% last week.  The 15-year-fixed inched up to 3.35% from last week’s 3.33%. A year ago the 30-year fixed was at 3.56% and the 15-year was at 2.77% interest rates on loans over $417,000 are around 4.625% for 30 year fixed and 3.625% on 15 year fixed.

Low inventory continues to have a constraining effect on California home sales. The California Association of Realtors^® reported that closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 363,640 units in January, marking the third straight month that sales were below the 400,000 level and the sixth straight decline on a year-over-year basis. Sales in January were up 0.3% from a revised 362,430 in December but were down -13.8%  from a revised 421,780 in January 2013. Inventory at the higher end of the market, priced $1 million and higher did increase 11.1% from last year. The statewide median price of an existing, single-family detached home fell -6.2%  from December’s revised median price of $438,090 to $410,990 in January.  January’s price was 22.1% higher than the revised $336,650 recorded in January 2013, marking 23 consecutive months of year-over-year price increases and the 19th straight month of double-digit annual increases. The available supply of existing, single-family detached homes for sale rose in January to 4.3 months, up from December’s Unsold Inventory Index of 3 months. The index was 3.5 months in January 2013.  The median number of days it took to sell a single-family home also increased to 44.3 days in January, up from 40.2 days in December and from a revised 36.7 days in January 2013.

In Los Angeles County alone, the median sold price of existing homes was down -3.7% in January from December’s $439,830 to $423,570 which is up 21.1% from January 2013’s $349,720 median price. Total sales were down- 21.2% month over month and down -13.3% from January 2013.

Data from the National Association of Realtors^® showed that existing-home sales fell by -5.1%from December to January to a seasonally adjusted annual rate of 4.62 million the lowest level since July 2012. Home sales were also down -5.1% year over year. The cold weather, low inventory, and rising mortgage rates are cited as potential reasons for the lower numbers. Inventory improved modestly, up 2.2% month over month to 1.9 million homes and up 7.3% from January 2013. The current inventory supply rate is now 4.9 months, up from 4.6 months in December and 4.4 months a year ago. The median existing home price for all housing types nationwide in January was $188,900, up 10.7% from January 2013. The median time on market for all homes was 67 days in January, down from 72 days in December and 31%  of homes sold in January were on the market for less than a month. Existing-home sales in the West dropped -7.3%  to a pace of 1.01 million in January, and are -13.7% below a year ago. The median price for the West was $273,500, up 14.6% from January 2013.

The latest foreclosure data from RealtyTrac shows that one in every 1,058 U.S. homes received a foreclosure filing in January. Foreclosure filings are down -18% from January 2013 but up 8% from December 2013. The rise in foreclosure activity was caused by a surge in starts, properties just entering foreclosure, as well as scheduled foreclosure auctions. The report did show that foreclosure starts in California actually rose 57% from a year ago after 17 consecutive months of annual decreases.

 

The extreme weather that has hammered much of the country seems to have also impacted homebuilder confidence. The National Association of Home Builders/Wells Fargo Builder Sentiment Index is now 46, down from January’s 56 reading and the lowest level since May. Economists had been predicting a number similar to the one they saw in January. Generally a reading below 50 indicates that more builders see sales conditions as poor rather than good. Builders’ prediction for sales over the next six months also fell by six points to 54.

 

U.S. housing starts saw their biggest drop in nearly three years last month. The U.S. Census Bureau and the Department of Housing and Urban Development reported that single-housing family starts were down -16% in January to a seasonally-adjusted annual rate of 880,000 units below economists’ predictions of 950,000. This was attributed to the unusually cold weather gripping much of the country and in fact in the hard-hit Midwest, starts were down a record -67.7%.  Groundbreaking for single-family homes, the largest segment of the market, fell 15.9 percent to a 573,000-unit pace in January, the lowest level since August 2012. Permits to build homes were down by -5.4% in January, the largest drop in since June.

The National Housing Trend Report from realtor.com® showed that the median list price for January rose 8.3% compared to last year but only up 0.1% from the previous month. The number of properties for sale was up 3.1% for the year but down -3.3% from the previous month. The median age of inventory was essentially unchanged. For the Los Angeles-Long Beach MSA the median price was $449,000 up 25.1% from a year ago but down -0.20% from the previous month. The amount of total listings was 18,600 up 3.40% from the previous year and up 5.10% from the previous month. The median age of inventory was 74 days, down -5.1% from the previous year and down -1.3% from the previous month.

We are heading into the selling season which will be a welcome relief when it comes to real estate related data. Expect to see the month over month indicators pick up after March! Not only do they pick up at that time every year, we are beginning to see the pick up in the marketplace.  

While inventory levels are still near record lows we are beginning to see many more homes listed in many of our markets. That alone should increase the number of sales as we still see stronger demand than inventory supply which is evident by the high number of multiple offers. Obviously, not all homes are getting multiple offers, there is a limit to how high a home can be priced. Homes that are not well priced are sitting on the market. 

A First Look at the Big Plans for South Park's Metropolis

Friday's record-setting pour at Wilshire Grand wasn't the only big news downtown this weekend. The groundbreaking for the long-awaited Metropolis development was a lot more exciting than shovels in the dirt because it also included a big reveal of never-before seen conceptual renderings and models. So many of downtown's notoriously halted projects have been in the news recently because they're no longer stalled. Big development is moving forward in downtown, often times because of foreign investment, as is the case with Gensler-designed Metropolis, which is backed by the Chinese group Greenland USA. The first phase of development at Metropolis will see two high-rises--a residential tower and 19-story fancy hotel--join the skyline; no word on when you'll be able to move into the residential units (also undecided: whether they'll be condos or apartments), but Brigham Yen over at DTLA Rising says the hotel is planning to open in February 2016. 

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February Newsletter

Renting vs buying. Khan Academy Video

January 10, 2014 economic update

 

The labor market closed out 2013 by adding just 74,000 jobs in December, the lowest number of new jobs since January 2011. However, the unemployment rate fell from 7% to 6.7%, the lowest since October 2008, the Labor Department said, mostly due to a drop of 347,000 in the labor force -- the number of Americans working or looking for work. Most economists feel that the low number was an outlier and not an indicator of the future of the job market. By contrast, ADP’s survey showed that businesses added 238,000 jobs in December, the most in 13 months and economists were predicting a jobs report closer to the 200,000 mark.  The Labor Department's report showed businesses added 87,000 jobs while federal, state and local governments cut 13,000. Job gains for November were revised upward to 241,000 from 203,000. All told the economy gained an average of 182,000 jobs per month in 2013 essentially the same as in 2012 (2.18 million jobs in 2012, 2.19 million in 2012). Congress continues to debate an unemployment insurance bill that would extend emergency unemployment insurance for the 1.4 million Americans.

This disappointing job report caused rates to drop sharply throughout the day. By the end of the day rates dropped by about 1/8% in rate or 1% in loan fee! It was a shockingly low number that took everyone by surprise. The question now is: what does this do to the Federal Reserves announced drawing down of mortgage and bond buying stimulus program? The announced draw down has driven rates up.

 

Stocks were mixed this week as investors processed the jobs numbers as well as disappointing returns from Sears, and news that the Target credit card data breach was larger than expected. TheDow closed out the week at 16,437.05 down -0.2% from last week’s close of 16,469.99. The Nasdaq closed at 4,174.66 up 1.03% from last week’s 4,131.91 close. The S&P 500 finished the week at 1,842.37 up 0.6% from last week’s 1,831.37 close. 

  

The 10-year Treasury note yield rate spent the week diving back under 3% ending at  2.88%, after last week’s 3.01% close, the highest number seen since July 2011.  It was 1.91% a year ago.

 

Interest rates remained relatively flat this week as the Market waits the see how the Federal Reserve will move forward with the bond-buying program. Policy makers at the Fed including the newly-appointed Janet Yellen will meet later this month to set the pace for the bond-buying taper. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped slightly to 4.51% from 4.53% last week.  The 15-year-fixed rose to 3.56% from last week’s 3.55%. A year ago the 30-year fixed was at 3.40% and the 15-year was at 2.66%. Expect these rates to be lower when announced next week due to today's drop. Jumbo and high balance conforming rates are about 3/8% higher than the Freddie Mac rate.

 

The new mortgage rules issued by the Consumer Financial Protection Bureau take effect today. The rules are designed to discourage predatory lending. Most lenders have already adopted these practices so there shouldn’t be too much difference however there will be increasing attention paid to a borrower’s debt-to-income ratio; it may become harder for people with higher debt loads to get approved for a new home if they cannot stay below the 43% debt-to-income ratio.

 

The latest Fannie Mae Monthly National Housing Survey for December shows that 49% of U.S. adults say home prices will rise throughout 2014, up from 43% in December 2012. The survey showed that 33% of homeowners say it’s a good time to sell, up from 21% a year ago. People also believe that home values will rise more this year: 3.2% in December compared to 2.6% in December 2012.

CoreLogic released data showing that U.S. home prices increased 0.1% in November, up 11.8%from a year ago but showing a slowing pace of increase. These figures aren’t adjusted for seasonal patterns.

The Top Ten Real Estate Trends for 2014

Millennials are moving the market, but not as homeowners

Though the so-called Millennial generation has been much-maligned in the media, real estate movers and shakers are increasingly interested in where this generation is headed -- quite literally. A number of the cities have seen increased economic activity in the real estate sector led by this generation, particularly Austin, Seattle, Portland and the Twin Cities in Minneapolis.

Minneapolis' place as number nine on a list of the top 10 cities for developers came as a surprise to Andrew Warren, director of PwC, a research and advising firm that co-authored the report with ULI.

"This is a city that's attractive to younger generations," he said, adding that its diverse economic base is helping to bring in a lot of college grads that don't want to leave the Midwest.

However, this same group isn't forming new households, and they're not buying as many homes as their parents' generation were at their age.

Second-tier cities will lead the recovery next year

Investors, developers and builders are losing some interest in the so-called 24-hour gateway cities -- San Francisco and New York City -- and have developed more interested in cities like Dallas and Portland, where there are more housing deals to be had.

For example, in 2011 only New York City and Washington, D.C. had good prospects for real estate investors and developers, according to the ULI report, but now Austin, Boston, Dallas, Houston, Miami, Orange County, Portland, San Francisco, San Jose and Seattle make that list -- and D.C. actually dropped out.

Real estate recovery still hinges on job growth

The slow pace of job growth as well as income and wage growth is still holding back the real estate recovery and that's not likely to change quickly.

Many cities in the Bay Area and in Texas have seen strong housing recoveries based on the strength of their economy, said Stephen Blank, ULI senior resident fellow for finance, so places with low unemployment can expect better recoveries next year, while places still haunted by economic issues won't.

The "smile investing" philosophy is back

Real estate developers are interested once again in a so-called smile investment philosophy, Warren said. According to the philosophy, developers and investors start looking at cities in the Northeast and moving south to cities along the Sun Belt -- Florida, Texas, Arizona -- and then coming back up to the Northwest -- Northern California, Oregon and Washington state. So expect to see more activity in those areas than in the Midwest.

Multi-family apartment building will wane

With rapidly rising demand for apartments during the recession -- boosted by increased demand from homeowners-turned-renters -- multi-family building surged. But that's likely to quiet down in 2014, as supply and demand have swapped places -- and there may actually have been too much multi-family building in 2013, Blank said.

Condo development is still on the back-burner

The recovery in the condo market hasn't matched that of the single-family market, and developers aren't willing to take the risk on putting up new condo buildings.

Instead, builders and developers are taking a dual-track option: They build a rental apartment building with an eye on switching it to condos in 12 to 16 months, depending on market conditions, Warren said.
High-end apartment buildings are also proving problematic for developers, as the interest from well-heeled potential renters simply hasn't been consistently strong.

Inventory is coming back

The experts at ULI are predicting that 2014 will be the last year that low inventory will aid property prices. Distressed inventory is drying up and sellers are looking at better profits than they have in years.

The buyer's market is long gone

Homes right now are priced to please sellers. "For buyers, they're priced to disappoint," Blank said.

Sellers now know they can squeeze buyers eager to buy before interest rates and home prices shoot up even further.

Shadow banking is emerging

There's optimism among those surveyed by ULI that lending standards will loosen next year, but Blank isn't as sure.

To fill the void, a concept called "shadow banking" has started to emerge and may take on a larger role in the lending market next year. Shadow banking is similar to traditional bank lending, but it's done outside banks and can therefore get around bank regulations.
Borrowers going this route will find a hodge-podge of private funds, wealthy individuals, family offices, and refugees from other lending markets, according to the report.

The suburban is going urban

There's not a lot of interest in developing suburban areas, Warren said. But where there is, it's surrounding more urban-minded projects located in spots where amenities and public transportation are easily accessible.