Still, 0% Is Thought-Provoking as Housing Slump Goes On Despite Low Rates! How much more house would that buy you in Studio City, Sherman Oaks, Westwood, Bel Air and other Westside areas...
Imagine financing a home purchase with a no-interest mortgage. You probably never would want to move again.
Granted, it is doubtful that you will ever have that luxury. But if rates continue to drop, as some in the mortgage industry suggest they may, mortgage rates could inch in the direction of 0%. The Federal Reserve's recent indication that it is willing to take extraordinary steps to keep the economy growing and continued concerns of deflation may also put pressure on mortgage rates.
No-interest mortgages, while a remote dream at best, could stoke a home-buying binge. Here, a home for sale in Springfield, Ill., earlier this year.
"So long as the Fed allows the word 'deflation' to get bandied about, mortgage rates will ease lower," said Dan Green, a loan officer with Waterstone Mortgage in Cincinnati.
How much lower?
"In theory, the only stopping point there is is 0%—that's where all nominal interest rates have to stop," said Mike Larson, real-estate analyst for Weiss Research.
Think about it: 0% financing has long worked as an incentive in the auto industry. And home builders have been known to pay down mortgage rates for their buyers, so these days it wouldn't be unheard-of for them to entice people with a 2% or 3% mortgage rate, at least for a period of time, Mr. Larson said.
But mortgages are different from car loans. "Do I think we will see [0% mortgages] in our lifetimes? No, I don't," he said.
Practically speaking, Jim Sahnger, a mortgage planner with Palm Beach Financial Network, isn't sure how a 0% mortgage would be funded, "keeping in mind that rates on the street come from lower-priced coupons than what borrowers pay," he said. In essence, to fund a 0% mortgage, the investor would get a negative return—"unless there were significant fees on the front to compensate for costs to originate, deliver, default, etc."
That isn't to say mortgage rates couldn't drop from their levels now. After all, two years ago, few people would have thought a 4% mortgage was possible, Mr. Larson said.
Rates on 30-year fixed-rate mortgages have dropped more than a percentage point since the end of the recession in June 2009, averaging 4.37% last week, according to Freddie Mac's weekly survey. This summer, the average rate on the 30-year loan broke record low after record low.
Since 1975, fixed-rate mortgage rates have fallen over the 12 months following every recession, with the exception of the 1980 downturn, Freddie Mac chief economist Frank Nothaft said. The 0.7 percentage-point decline from June 2009 to June 2010 was "the largest decline during the first year of recovery over the last six recessions," he said.
It isn't clear how much lower rates could fall, if they fall at all. But, suspending disbelief, what if mortgage rates hit zero?
Rates at or near 0% could bring more first-time home buyers out of hiding to seek out extremely favorable financing for a house, Mr. Sahnger said. Get more buyers in the mix, he said, and demand for homes could kick up, thereby helping home prices to rise.
If this 0% financing was available for refinancing, "demand would surge to the point where banks, title companies and appraisers would be over capacity and understaffed. In theory, hiring would increase to meet demand," Waterstone's Mr. Green said. "In addition, refi-eligible homeowners would see a marked reduction in monthly payments, spurring consumer spending."
It is important to note, however, that eligibility is no small matter, especially due to the ranks of homeowners who are underwater on their mortgages, meaning the home is worth less than what they owe on it. Without the help of a government program, many of those homeowners can't refinance.
To refinance, a borrower also needs income and a decent credit score. But a recent study by Zillow Mortgage Marketplace found that nearly one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low. And only 47% of Americans qualify for the best rates; these are borrowers with credit scores of 720 or higher.
"We are in an era of historically low mortgage rates, reaching levels not seen in decades. Coupled with four years of home-value declines, homes are more affordable than we've seen for years," said Stan Humphries, Zillow's chief economist. "But the irony here is that so many Americans can't qualify for these low rates, or can't qualify for a mortgage at all."
From the Wall Street Journal September 29,2010.
Thursday, September 30, 2010
Downsizing is booming
Smaller homes trendy again as baby boomers look to shed excess room and recession makes large homes too costly.Goodbye, McMansion. Hello, bungalow, condo or suburban split-level.
The Great Recession may be over, but many people’s lifestyles will never be the same. They are saving more, spending less, simplifying their lives and — increasingly — downsizing their homes.
This trend, which began with the economic downturn but has dovetailed with demographic changes, has given way to a trickle-down effect for local businesses offering services to live gracefully in tight surroundings.
There are benefits to letting go of those supersized showpieces, from the lower upfront cost to smaller electric bills and less yardwork.
Median home size has dropped 6 percent since 2007, in large part because cash-strapped Americans can’t afford to buy, heat or maintain larger homes, according to the National Association of Home Builders.
But people are still investing money in making their homes as comfortable as they can be. The trend means work for organizers, interior designers, home-furnishings stores, carpenters with tricks to maximize shelf space and, of course, self-storage businesses for those who can’t bring themselves to part with their 1980s designer clothes or collection of African masks.
Stephen Melman, director of economic services for the National Association of Home Builders in Washington, D.C., said that home size appeared to peak during the building boom. Since then, the trend toward smaller homes seems to be lasting longer than in previous recessions. The median floor area of new homes dropped from 2,309 square feet in the first quarter of 2007 to 2,169 square feet in the second quarter of 2010, according to the group’s analysis of Census data.
In the organization’s most recent survey, 95 percent of homebuilders said they were building smaller and less-expensive homes than in the past because that’s what consumers want.
Melman said the U.S. consumer consistently cites affordability and operating costs — mainly energy — when asked about concerns in buying a home. Small homes cost less to heat and cool.
Demographic changes play a role. As baby boomers age, they are transitioning to smaller homes that need less upkeep. Other factors in downsizing include the difficulty of qualifying for a large mortgage and the fact that many people have smaller amounts of equity in existing homes to roll into a new home.
Adding to the trend, there is a crop of first-time homebuyer, lured to the market by tax credits, who are seeking affordable small homes, he said.
This article applies perfectly to buyers searching for homes in Studio City, Sherman Oaks, Westwood, Cheviot Hills etc, where an average 3 bedroom home could run you anywhere from $500K in the San Fernando Valley and anywhere from $800k on the Westside.
The Great Recession may be over, but many people’s lifestyles will never be the same. They are saving more, spending less, simplifying their lives and — increasingly — downsizing their homes.
This trend, which began with the economic downturn but has dovetailed with demographic changes, has given way to a trickle-down effect for local businesses offering services to live gracefully in tight surroundings.
There are benefits to letting go of those supersized showpieces, from the lower upfront cost to smaller electric bills and less yardwork.
Median home size has dropped 6 percent since 2007, in large part because cash-strapped Americans can’t afford to buy, heat or maintain larger homes, according to the National Association of Home Builders.
But people are still investing money in making their homes as comfortable as they can be. The trend means work for organizers, interior designers, home-furnishings stores, carpenters with tricks to maximize shelf space and, of course, self-storage businesses for those who can’t bring themselves to part with their 1980s designer clothes or collection of African masks.
Stephen Melman, director of economic services for the National Association of Home Builders in Washington, D.C., said that home size appeared to peak during the building boom. Since then, the trend toward smaller homes seems to be lasting longer than in previous recessions. The median floor area of new homes dropped from 2,309 square feet in the first quarter of 2007 to 2,169 square feet in the second quarter of 2010, according to the group’s analysis of Census data.
In the organization’s most recent survey, 95 percent of homebuilders said they were building smaller and less-expensive homes than in the past because that’s what consumers want.
Melman said the U.S. consumer consistently cites affordability and operating costs — mainly energy — when asked about concerns in buying a home. Small homes cost less to heat and cool.
Demographic changes play a role. As baby boomers age, they are transitioning to smaller homes that need less upkeep. Other factors in downsizing include the difficulty of qualifying for a large mortgage and the fact that many people have smaller amounts of equity in existing homes to roll into a new home.
Adding to the trend, there is a crop of first-time homebuyer, lured to the market by tax credits, who are seeking affordable small homes, he said.
This article applies perfectly to buyers searching for homes in Studio City, Sherman Oaks, Westwood, Cheviot Hills etc, where an average 3 bedroom home could run you anywhere from $500K in the San Fernando Valley and anywhere from $800k on the Westside.
Tuesday, September 21, 2010
10 Reasons To Buy a Home
Enough with the doom and gloom about homeownership.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.
Ofcourse this article applies to Westside Real Estate, Sherman Oaks properties, and Studio City properties.
Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.
After all, at the peak of the bubble five years ago, Time had a different take. "Home Sweet Home," declared its cover then, as it celebrated the boom and asked: "Will your house make you rich?"
But it's not enough just to be contrarian. So here are 10 reasons why it's good to buy a home.
1. You can get a good deal. Especially if you play hardball. This is a buyer's market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We're four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor's Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it's mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You'll never catch the bottom. It doesn't really matter so much in the long haul.
Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.
Brett Arends discusses why he thinks now is a particularly good time to buy a home.
2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What's not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won't see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.
3. You'll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you'll get a tax break on capital gains–if any–when you sell. Sure, you'll need to do your math. You'll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.
4. It'll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You'll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. "You can tell the ones that have been bought," said my local guide. "They've painted the front door. It's the first thing people do when they buy." It was a small sign that said something big.
5. You'll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you're better off buying.
6. It offers some inflation protection. No, it's not perfect. But studies by Professor Karl "Chip" Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That's valuable inflation insurance, especially if you're young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.
7. It's risk capital. No, your home isn't the stock market and you shouldn't view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.
8. It's forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won't. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn't a cost. You're just paying yourself by building equity. As a forced monthly saving, it's a good discipline.
9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That's below last year's peak, but well above typical levels, and enough for about a year's worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.
10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the "glut" simply won't matter: It's concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won't have any long-term impact on housing supply in your town.
Ofcourse this article applies to Westside Real Estate, Sherman Oaks properties, and Studio City properties.
Wednesday, September 15, 2010
California Housing Prices on the rebound
The national housing market is shrouded in uncertainty. But in California, there are glimmers of stability.
Home prices are rising in virtually every corner of the state. They've climbed for nine consecutive months, and in July posted a 10.4% gain year-over-year. That puts the state's median price at $315,000 -- nearly twice the national median of $183,000.
The news is even better in coastal cities.
San Francisco posted the biggest gain of any U.S. metro over the past year, rising 14.3%. The median price there is now more than $607,000. Meanwhile, San Diego has climbed 11.2% (median price: $389,000) and Los Angeles jumped 9.2% (median price: $345,000. In the desirable markets of the Westside and Studio City and Sherman Oaks, ofcourse prices are higher.
Meanwhile, Florida, Arizona and Nevada -- California's erstwhile bubble-state partners -- continue to struggle. So where is the Golden State's strength coming from?
"I think it comes from the fact that prices went down so far and so quick," said Lesley Appleton-Young, California Association of Realtors' chief economist. "That left a lot of people here saying, 'Wow, affordable California housing.'"
However, a quick home price rebound was delayed by the crush of foreclosures that accompanied the subprime mortgage meltdown. California real estate had become so expensive that a basic single-family home required many buyers to overextend themselves with exotic loans.
CALCULATOR: What's the home price forecast in your city?
That is no longer the case. Most of the subprime-related distressed properties have been flushed from the system. And when a foreclosure does hit the market, it's snapped up. The median days it took to sell a home in July was just 44 -- lightening fast.
"It's the dearth of supply for distressed properties that has put pressure on home prices," said Appleton-Young. "More than half the homes on the market last year drew multiple offers."
Plus, the California economy is picking up. Even in a recession, it has remained one of the world's 10 largest economies, mainly because it is driven by every major industry -- aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.
"California is a much larger, stronger and more diversified economy than the other [bubble] states," according to Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA.
Another factor that has helped lift prices is a trend toward more short sales. Fewer of the distressed properties are going all the way through the foreclosure process. "The shift to short sales in itself would increase home prices," said Mark Goldman, who teaches real estate at San Diego State University.
That's because short sellers usually occupy and take care of the homes until they're sold, leaving the properties in better condition and worth more than similar foreclosed homes.
Goldman added that California markets are, generally, more constrained than any of the other bubble states. Florida and Nevada, for example, still have room to develop and grow in most areas. But the lack of developable land is especially acute in California, pushing home prices up.
Condos for less than the price of a Corolla
Finally, the California state government has not sat idle. "California provided markets with more significant price support," he said, "That played a role in elevating prices."
The state support came in the form of tax credits of up to $10,000 for first-time homebuyers and buyers of new homes. Some purchasers were able to combine the state credit with one from the federal government to reduce their costs by $18,000.
For home sellers in other states, what's happening in California is encouraging. Trends often begin on the coast, so they're hoping the recovery will roll eastward.
Source CNNMoney.com
Home prices are rising in virtually every corner of the state. They've climbed for nine consecutive months, and in July posted a 10.4% gain year-over-year. That puts the state's median price at $315,000 -- nearly twice the national median of $183,000.
The news is even better in coastal cities.
San Francisco posted the biggest gain of any U.S. metro over the past year, rising 14.3%. The median price there is now more than $607,000. Meanwhile, San Diego has climbed 11.2% (median price: $389,000) and Los Angeles jumped 9.2% (median price: $345,000. In the desirable markets of the Westside and Studio City and Sherman Oaks, ofcourse prices are higher.
Meanwhile, Florida, Arizona and Nevada -- California's erstwhile bubble-state partners -- continue to struggle. So where is the Golden State's strength coming from?
"I think it comes from the fact that prices went down so far and so quick," said Lesley Appleton-Young, California Association of Realtors' chief economist. "That left a lot of people here saying, 'Wow, affordable California housing.'"
However, a quick home price rebound was delayed by the crush of foreclosures that accompanied the subprime mortgage meltdown. California real estate had become so expensive that a basic single-family home required many buyers to overextend themselves with exotic loans.
CALCULATOR: What's the home price forecast in your city?
That is no longer the case. Most of the subprime-related distressed properties have been flushed from the system. And when a foreclosure does hit the market, it's snapped up. The median days it took to sell a home in July was just 44 -- lightening fast.
"It's the dearth of supply for distressed properties that has put pressure on home prices," said Appleton-Young. "More than half the homes on the market last year drew multiple offers."
Plus, the California economy is picking up. Even in a recession, it has remained one of the world's 10 largest economies, mainly because it is driven by every major industry -- aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.
"California is a much larger, stronger and more diversified economy than the other [bubble] states," according to Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA.
Another factor that has helped lift prices is a trend toward more short sales. Fewer of the distressed properties are going all the way through the foreclosure process. "The shift to short sales in itself would increase home prices," said Mark Goldman, who teaches real estate at San Diego State University.
That's because short sellers usually occupy and take care of the homes until they're sold, leaving the properties in better condition and worth more than similar foreclosed homes.
Goldman added that California markets are, generally, more constrained than any of the other bubble states. Florida and Nevada, for example, still have room to develop and grow in most areas. But the lack of developable land is especially acute in California, pushing home prices up.
Condos for less than the price of a Corolla
Finally, the California state government has not sat idle. "California provided markets with more significant price support," he said, "That played a role in elevating prices."
The state support came in the form of tax credits of up to $10,000 for first-time homebuyers and buyers of new homes. Some purchasers were able to combine the state credit with one from the federal government to reduce their costs by $18,000.
For home sellers in other states, what's happening in California is encouraging. Trends often begin on the coast, so they're hoping the recovery will roll eastward.
Source CNNMoney.com
Thursday, September 9, 2010
Housing Inventories rise for the eighth straight month
Housing inventories rose in many U.S. cities for the eighth straight month in August in a sign of the continued headwinds facing a soft housing market. You may be wondering if this applies to the popular areas of Los Angeles such as Westwood, Hollywood Hills, Sherman Oaks and Studio City. The answer is ofcourse!
The number of available homes for sale in 26 major metropolitan areas at the end of August increased 0.4% from one month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The figures include all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates. (See the full data).
Inventories traditionally rise modestly in August. Zelman & Associates, a research firm, says listings have typically risen by 2% in August over the past 28 years.
The less-than-average gain in inventories is troubling, nonetheless, because demand has fallen sharply since a tax credit to spur sales expired earlier this year. At the current pace, it would take 12.5 months to clear the backlog of unsold homes, according to the National Association of Realtors. A healthy market typically a six-month supply of homes. Inventories nationally remain at their highest levels since November 2008, according to Zelman data.
The August inventory in the 26 markets tracked by ZipRealty showed a 10.6% year-over-year increase in the number of unsold homes listed for sale. A number of cities, including Houston, Philadelphia, and Orange County, Calif., remain at 18 month highs. “It’s across the country where you’re seeing really big inventory levels,” says Pat Lashinsky, chief executive of ZipRealty.
The biggest gains in inventory continue to come from overheated Western markets where bidding wars on foreclosures pushed the housing supply down to very low levels one year ago. Las Vegas saw inventory rise by 9.3% from July, while listings were up by 4.6% in Phoenix and 3.8% in San Diego.
Compared to one year ago, inventories are up by 59% in San Diego, 43% in Orange County, Calif., and 25% in Los Angeles.One big problem facing the market are the number of home sellers who can’t lower their prices any further without selling their home for less than they owe. Those sellers are often unwilling to reduce prices. Buyers, meanwhile, think prices are going to drop and interest rates aren’t going to rise soon, leaving them little incentive to make a deal now. Sellers and buyers “are waiting for the other one to make a move, and neither one is,” says Mr. Lashinsky.
One of the biggest misconceptions about the market right now, he adds, is that there’s no interest in housing. There are plenty of buyers waiting the buy, he says, but not at current prices.
On a monthly basis, inventories fell in half of all markets, led by Austin, Texas, which was down 3.8%, followed by Charlotte, N.C., (down 3%) and Boston (down 2%). For the year, inventories are down in Miami (8.6%), Chicago (2.2%) and Orlando, Fla., (2.2%).
Inventories are falling in more markets in part because sellers are just taking their homes off the market. “Sellers have realized, ‘I just can’t get the price I want. Instead, I’m going to stay here,’” says Mr. Lashinsky. While that may work for buyers who just can’t lower their prices any further, he says, “if you think you can put it back on nine months later for 10% more, that’s not a very wise strategy.”
The number of available homes for sale in 26 major metropolitan areas at the end of August increased 0.4% from one month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The figures include all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates. (See the full data).
Inventories traditionally rise modestly in August. Zelman & Associates, a research firm, says listings have typically risen by 2% in August over the past 28 years.
The less-than-average gain in inventories is troubling, nonetheless, because demand has fallen sharply since a tax credit to spur sales expired earlier this year. At the current pace, it would take 12.5 months to clear the backlog of unsold homes, according to the National Association of Realtors. A healthy market typically a six-month supply of homes. Inventories nationally remain at their highest levels since November 2008, according to Zelman data.
The August inventory in the 26 markets tracked by ZipRealty showed a 10.6% year-over-year increase in the number of unsold homes listed for sale. A number of cities, including Houston, Philadelphia, and Orange County, Calif., remain at 18 month highs. “It’s across the country where you’re seeing really big inventory levels,” says Pat Lashinsky, chief executive of ZipRealty.
The biggest gains in inventory continue to come from overheated Western markets where bidding wars on foreclosures pushed the housing supply down to very low levels one year ago. Las Vegas saw inventory rise by 9.3% from July, while listings were up by 4.6% in Phoenix and 3.8% in San Diego.
Compared to one year ago, inventories are up by 59% in San Diego, 43% in Orange County, Calif., and 25% in Los Angeles.One big problem facing the market are the number of home sellers who can’t lower their prices any further without selling their home for less than they owe. Those sellers are often unwilling to reduce prices. Buyers, meanwhile, think prices are going to drop and interest rates aren’t going to rise soon, leaving them little incentive to make a deal now. Sellers and buyers “are waiting for the other one to make a move, and neither one is,” says Mr. Lashinsky.
One of the biggest misconceptions about the market right now, he adds, is that there’s no interest in housing. There are plenty of buyers waiting the buy, he says, but not at current prices.
On a monthly basis, inventories fell in half of all markets, led by Austin, Texas, which was down 3.8%, followed by Charlotte, N.C., (down 3%) and Boston (down 2%). For the year, inventories are down in Miami (8.6%), Chicago (2.2%) and Orlando, Fla., (2.2%).
Inventories are falling in more markets in part because sellers are just taking their homes off the market. “Sellers have realized, ‘I just can’t get the price I want. Instead, I’m going to stay here,’” says Mr. Lashinsky. While that may work for buyers who just can’t lower their prices any further, he says, “if you think you can put it back on nine months later for 10% more, that’s not a very wise strategy.”
Spelling Manor in Holmby Hills finally on the market
I know this has nothing to do with real estate in Sherman Oaks, Studio City and the Hollywood Hills but true to Candy Spelling's word, the Manor officially hit the open market yesterday with the original asking price of $150,000,000.
The home has 56,500 square feet of living space on a 4.69 acre lot. In addition to the fourteen bedrooms and twenty-seven bathrooms, the manor also boasts a billiards room, bowling alley, arcade room, flower cutting room, pool, tennis courts, and servants quarters.
The home has 56,500 square feet of living space on a 4.69 acre lot. In addition to the fourteen bedrooms and twenty-seven bathrooms, the manor also boasts a billiards room, bowling alley, arcade room, flower cutting room, pool, tennis courts, and servants quarters.
Friday, September 3, 2010
Home Values Rise in second Quarter
While this is not about real estate in Sherman Oaks or home sales in Studio City, it gives a great snapshot of the country as a whole...Home values rose 3.1 percent in the second quarter of 2010 compared with the first quarter, but declined 0.2 percent compared with a year earlier, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI).
Home values rose in all nine Census Divisions, marking the first time since the second quarter of 2009 that all Census Divisions experienced positive changes in home values. In the Pacific Division, which includes California, home values rose 3.1 percent in the second quarter of 2010. Over the last 12 months, home values increased 4.2 percent, and during the last five years, home values have decreased 14.7 percent, according to Freddie Mac.
Home values rose in all nine Census Divisions, marking the first time since the second quarter of 2009 that all Census Divisions experienced positive changes in home values. In the Pacific Division, which includes California, home values rose 3.1 percent in the second quarter of 2010. Over the last 12 months, home values increased 4.2 percent, and during the last five years, home values have decreased 14.7 percent, according to Freddie Mac.
Mortgage rates still heading lower
Mortgage interest rates have fallen for the 10th time in the last 11 weeks, according to Freddie Mac's report on what lenders are offering to borrowers with solid credit and 20% down payments or home equity.
Freddie Mac's weekly survey found that the offering rate for 30-year fixed loans averaged 4.32%, down from 4.36% a week ago. The borrowers would have paid 0.7% in fees and points to the lenders upfront. That's the lowest since Freddie Mac, the giant government-backed buyer of mortgages, began keeping track in 1971.
Fifteen-year fixed loans averaged 3.83% with 0.6% in upfront fees, down from 3.86% a week ago, the lowest rate since Freddie began tracking the 15-year loan in 1991.
The average initial fixed rate for five-year Treasury-indexed hybrid loans, which become variable after five years, was 3.54% with 0.6% in fees, down from 3.56%, the survey showed -- the lowest since tracking began in 2005.
As the Mortgage Bankers Assn. reported Wednesday, nearly 83% of mortgages these days are taken out by borrowers refinancing their existing loans to save money. The volume of purchase-money loans remains extremely low despite the extraordinary rates and home prices that have declined sharply in many areas. Now would be a great time to buy in Sherman Oaks,Studio City,Westwood, Bel Air and the Hollywood Hills, while rates are low,low and property listings are sitting on the market.
Freddie Mac's weekly survey found that the offering rate for 30-year fixed loans averaged 4.32%, down from 4.36% a week ago. The borrowers would have paid 0.7% in fees and points to the lenders upfront. That's the lowest since Freddie Mac, the giant government-backed buyer of mortgages, began keeping track in 1971.
Fifteen-year fixed loans averaged 3.83% with 0.6% in upfront fees, down from 3.86% a week ago, the lowest rate since Freddie began tracking the 15-year loan in 1991.
The average initial fixed rate for five-year Treasury-indexed hybrid loans, which become variable after five years, was 3.54% with 0.6% in fees, down from 3.56%, the survey showed -- the lowest since tracking began in 2005.
As the Mortgage Bankers Assn. reported Wednesday, nearly 83% of mortgages these days are taken out by borrowers refinancing their existing loans to save money. The volume of purchase-money loans remains extremely low despite the extraordinary rates and home prices that have declined sharply in many areas. Now would be a great time to buy in Sherman Oaks,Studio City,Westwood, Bel Air and the Hollywood Hills, while rates are low,low and property listings are sitting on the market.
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