by Roselind Hejl
"Two story brick traditional with 4 bedrooms, 2.5 baths, island kitchen, and large deck!" Sound familiar? We often talk about houses in terms of room count, along with a list of finishes, such as tile floors, granite counters, or faux paint. While this vocabulary conveys certain facts, it does not provide the tools to think about how to re-design a house in a fabulous way.
It is valuable to be able to make the decisions that transform a poor design into a house that is memorable, enduring, and widely appealing. To do this we need to go deeper than simply updating finishes or increasing square footage. We must think about how the structure shapes the feelings and experience of its inhabitants. In the words of Winston Churchill, "We shape our buildings, and afterwards our buildings shape us." When a house has design flaws, we know intuitively that it does not feel right. On the other hand, a well designed house can make us feel inspired, enriched, and touched by a sense of order.
We often see houses that have some elements in the structure and site that appeal to us, but cannot be lived in without remodeling. Often our clients say that they want to find a house with good bones (meaning good basic design), that they can update. The truth is that most houses have some good design and some bad design. Painting walls and updating fixtures will not cover bad design. You will need to think about the house in a deeper way. Use these design processes to help you make the difficult decisions that will result in a house that many people would love to live in.
1. Relate the house to the site.
Think about how the house integrates and interacts with the land around it. This awareness is a basic, but often ignored, beginning. The connection and interplay between interior and exterior spaces enhances both in a powerful way.
Manage the views from each window. Is there an undesirable view into a neighbor's home or yard? Is there a nice view that is blocked by a wall or fireplace?
Notice how the walkway leads to the street, where privacy is needed, where noise buffering is needed, how drainage will work.
A side area could be a private garden, accessible from the main bedroom. A front porch overlooking the street could bring the house into a relationship with the neighborhood.
2. Bring in natural light.
Houses can be transformed by adding windows and other light sources. Generous light feels safe and uplifting, and attracts people toward it.
Natural light raises the level of importance and the beauty of rooms. Light all main rooms from two sides, if possible, to reduce glare and balance the light. Use glass doors, windows, skylights, transoms, or light tunnels.
Keep passive solar techniques in mind as you add windows and shading devices. The control of solar energy for light and heat is fundamental for an efficient and comfortable home.
3. Break down hard barriers between indoor and outdoor spaces.
Glass doors, screens, and walls that slide open can create semi-transparent walls, forming indoor/outdoor spaces that have enormous appeal.
Breezeways, garden rooms, bay windows, and screened porches are spaces that people love. These bring people into contact with the outdoors, yet may be furnished in a comfortable way.
4. Think of outdoor spaces as large rooms.
When all areas of the site are thought of as living spaces, new ideas open up. These outdoor spaces expand the house by creating a sense of semi-enclosure in various ways.
Their edges can be defined by trees, fences, wings of the house or other buildings. For example, an outdoor room may be a shady natural space on the site enclosed by a line of trees and shrubs.
Outdoor living spaces can be courtyards, walled gardens, trellis covered breezeways, stone patios, or outdoor showers. Think about their use and connectedness to the house.
Often, we see an exterior space that is built as an isolated destination place - a second floor deck, for example. If you have to make an effort to go there, the space will not be used. Outdoor spaces are most used when they are on paths used by people coming and going. This is why a front porch is a very appealing design element. People naturally meet here, and the porch connects with neighbors walking by.
A popular outdoor living area is the backyard deck. This is often seems to be an afterthought, tacked onto the house. Can it be covered and screened?
5. Consider widening roof overhangs or adding propped shutters over windows.
This is a green building technique in warm climates, blocking solar penetration.
The view of the outside roof structure seen from inside the house evokes a sense of shelter and protection.
If possible, extend the roof in some areas to create covered porches or breezeways. Rooms that are simultaneously open and protected are very appealing.
Inside the house, exposed rafters, rustic beams, or wood surfaces on the ceiling create feelings of strength and character in the home.
6. Review traffic flow - a crucial, but often ignored, design element.
Walk down the paths that bring you inside the front door, then lead you to various rooms through the house, and again to the outdoors. Do they cut through the middle of living areas? When this happens the living area will never feel complete and comfortable.
Circulation paths should lead along the edges of main rooms, and efficiently to private rooms. A maze like floorplan creates a sense of wasted energy and confusion. Few exterior doors may result in a subtle feeling of being trapped.
Bring multiple uses to hallways and connecting spaces with bookshelves, windows or window seats.
Set apart the main entrance with details such as a covered place to stand, special doors, benches, or potted plants.
7. Compare the sizes of rooms in proportion to each other.
People have an intuitive sense of the correct hierarchy of spaces. Small living spaces will seem wrong when combined with large bedrooms.
Homes with awkward design can often be improved by removing walls to make one large space from several smaller ones.
Consider the use and function of each room. Is the room to be used privately, such as a bedroom, study, or library? Or, will the family gather here to cook and eat informally? Some houses include formal areas, others do not. Some have many rooms, others are very open. There is no right or wrong decision here. Houses that have a true and intuitive appeal have a clarity as to the function of each room.
8. Choose materials as an integral part of the design - not as decorator selections made at the end.
For example, structural materials can be exposed, or flooring can be used to connect and unify spaces.
Bring in the beauty and texture of natural materials. Use materials that offset each other - warm and cool colors, rough and smooth textures, solid and delicate walls.
Use materials to connect the house to the site - for example, a wood clad house surrounded by woods, or a stone house next to outcroppings of stone. Or, connect the house to the neighborhood with historic colors and siding. Repeat materials and colors to unify the interior and exterior.
Wednesday, January 31, 2007
Saturday, January 20, 2007
Are Housing Starts Up... or Down?
John Mauldin writes the following in his newsletter:
When Housing Up 4.5% Is Really Down 4.1%
Sometimes you really just have to look under the hood of some of the headlines. I must admit I was rather surprised to read yesterday that housing starts were up 4.5% in December. With both of new and existing home inventories rising, this just did not make sense. But there it was. The TV pundits and the financial press were full of analysts telling us we have seen the bottom in housing. So much for my thoughts of a housing led recession. Was it the weather? Overly optimistic builders? Or was I just wrong and the bottom in the housing slowdown had been reached quicker than it has in previous housing slowdowns.
It turns out that new home construction did not rise. In fact, if you look at the data, new home construction was down by 4.1%. What was up was multi-family apartment construction which by a very robust 19%. And that makes perfect sense. Look at the CPI data released yesterday. What has been consistently the biggest source of inflation for the past two years? Rent, or rather, homeowner equivalent rent. It was up over 4% over the last 12 months.
The demand for housing is falling and sub-prime mortgages are harder to get. But people have to live somewhere. The population is growing and the demand for a place to live will rise. And the demand will be in rental units. Rising prices? Increased demand? Money is cheap and willing to take lower returns? And there are a lot of construction firms that I bet are willing to put in lower bids as new home construction is down. There is a need to keep your employees working. That sounds like a recipe for a lot of people to decide to start building apartments. But there is one more factor. There is a glut of condominiums almost everywhere.
If you go to Google and type in "housing foreclosures" you find several stories in the past few days of high end condominium developers changing their project to lower priced apartment complexes. They have a great deal invested in land and planning and have to do something. Banks are not lending for condominiums without significant guarantees. Of course, a lot of new apartments means that prices will not rise as much because of more supply. And that means that those looking for housing will have more options, which won't help housing sales.
What triggered my interest in housing foreclosures? Headlines in the business section for the Fort Worth Star-Telegram say that February listings for housing foreclosures are up 15.7% to a new record high. Looking at the plethora of stories on Google, you find that is the case all over the nation. The stories have a similar ring to them. You can substitute place and data, but they all seem to have a quote like this from the Star-Telegram: "...the main factors are job loss, serious illness or divorce. But in recent years, people have run into trouble when the interest rates have risen on their adjustable rate mortgages. Higher energy prices have also been a factor."
There was a different culprit in Las Vegas and a few markets where "investors" came in and bought homes expecting to flip them before they had to actually take out that mortgage. There was 1 home in the foreclosure process for every 277 households in Clark County (Las Vegas). That is significant.
One other item:
Sam Zell sent a Christmas card to his friends with a song called Capital Keeps Falling on My Head to the tune of Raindrops Keeps Falling on My Head. You can listen at http://www.yieldsz.com. It is really worth the time. I mean, you really need to listen. It is quite thought-provoking as well as a lot of fun.
~~~~ by John Mauldin
If you would like to reproduce any of John Mauldin's E-Letters you must include the source of your quote and an email address (John@FrontLineThoughts.com)
When Housing Up 4.5% Is Really Down 4.1%
Sometimes you really just have to look under the hood of some of the headlines. I must admit I was rather surprised to read yesterday that housing starts were up 4.5% in December. With both of new and existing home inventories rising, this just did not make sense. But there it was. The TV pundits and the financial press were full of analysts telling us we have seen the bottom in housing. So much for my thoughts of a housing led recession. Was it the weather? Overly optimistic builders? Or was I just wrong and the bottom in the housing slowdown had been reached quicker than it has in previous housing slowdowns.
It turns out that new home construction did not rise. In fact, if you look at the data, new home construction was down by 4.1%. What was up was multi-family apartment construction which by a very robust 19%. And that makes perfect sense. Look at the CPI data released yesterday. What has been consistently the biggest source of inflation for the past two years? Rent, or rather, homeowner equivalent rent. It was up over 4% over the last 12 months.
The demand for housing is falling and sub-prime mortgages are harder to get. But people have to live somewhere. The population is growing and the demand for a place to live will rise. And the demand will be in rental units. Rising prices? Increased demand? Money is cheap and willing to take lower returns? And there are a lot of construction firms that I bet are willing to put in lower bids as new home construction is down. There is a need to keep your employees working. That sounds like a recipe for a lot of people to decide to start building apartments. But there is one more factor. There is a glut of condominiums almost everywhere.
If you go to Google and type in "housing foreclosures" you find several stories in the past few days of high end condominium developers changing their project to lower priced apartment complexes. They have a great deal invested in land and planning and have to do something. Banks are not lending for condominiums without significant guarantees. Of course, a lot of new apartments means that prices will not rise as much because of more supply. And that means that those looking for housing will have more options, which won't help housing sales.
What triggered my interest in housing foreclosures? Headlines in the business section for the Fort Worth Star-Telegram say that February listings for housing foreclosures are up 15.7% to a new record high. Looking at the plethora of stories on Google, you find that is the case all over the nation. The stories have a similar ring to them. You can substitute place and data, but they all seem to have a quote like this from the Star-Telegram: "...the main factors are job loss, serious illness or divorce. But in recent years, people have run into trouble when the interest rates have risen on their adjustable rate mortgages. Higher energy prices have also been a factor."
There was a different culprit in Las Vegas and a few markets where "investors" came in and bought homes expecting to flip them before they had to actually take out that mortgage. There was 1 home in the foreclosure process for every 277 households in Clark County (Las Vegas). That is significant.
One other item:
Sam Zell sent a Christmas card to his friends with a song called Capital Keeps Falling on My Head to the tune of Raindrops Keeps Falling on My Head. You can listen at http://www.yieldsz.com. It is really worth the time. I mean, you really need to listen. It is quite thought-provoking as well as a lot of fun.
~~~~ by John Mauldin
If you would like to reproduce any of John Mauldin's E-Letters you must include the source of your quote and an email address (John@FrontLineThoughts.com)
Friday, January 05, 2007
Lennar (Newhall Land) Sees Tough Going Ahead
What a difference perspective makes!
Our local paper, The Mighty Signal, had an article a couple of days ago that was the front page leader, announcing that Lennar and its partner LNR Property Corp. had sold a 62% stake in their LandSource joint venture, whose primary investment, Newhall Land and Farming, owns 15,000 acres in the Santa Clarita Valley. The article went on to imply that this was little more than an accounting move, and Lennar and Newhall Land is still firmly committed to developing the Newhall Ranch development west of the I-5.
The Wall Street Journal, in an article dated 1-3-2007, had an entirely different take on the story.
"Lennar Corp. Chief Executive Stuart Miller said he sees no signs the home building market has hit bottom, signaling the industry could continue to face pressure on its financial results," writes Janet Morrissey. "Lennar said it slashed its exposure in California, where market conditions have been deteriorating."
Morrissey goes on, "'It sends a signal that they don't want to have their capital at risk in Southern California for the next few years,' said Raymond James Financial Inc. analyst Rick Murray. He sees the sale as a sign the company doesn't believe a rebound in California will happen in the near future."
While Lennar has experienced a decline in sales that is much less than many of its competitors lately, between price slashing and incentives given for home purchases and the lower level of sales, Lennar has said its gross profit margins will continue a trend to be 'materially lower' according to the WSJ article.
This, combined with Lennar's removal of the Madison properties from sale indicates that NL&F sees a less than rosy picture for SCV housing, at least in the immediate future. The Madison is an apartment to condo conversion development in the Town Center area, across the street from the Westfield Mall area.
The WSJ article stands in stark contrast to the Signal's puff piece on what Lennar's sale of the majority of its holdings in Newhall Land. But what else can you expect from the Signal? It remains the mouthpiece of Santa Clarita's major land developer.
While this author remains generally upbeat about the stability of the housing market, at least locally, the difference in tone between the WSJ and the Signal articles shows that you the reader would be well advised to continue to read The Real Blog, where we are committed to giving you information about what is really happening in the housing market.
Our local paper, The Mighty Signal, had an article a couple of days ago that was the front page leader, announcing that Lennar and its partner LNR Property Corp. had sold a 62% stake in their LandSource joint venture, whose primary investment, Newhall Land and Farming, owns 15,000 acres in the Santa Clarita Valley. The article went on to imply that this was little more than an accounting move, and Lennar and Newhall Land is still firmly committed to developing the Newhall Ranch development west of the I-5.
The Wall Street Journal, in an article dated 1-3-2007, had an entirely different take on the story.
"Lennar Corp. Chief Executive Stuart Miller said he sees no signs the home building market has hit bottom, signaling the industry could continue to face pressure on its financial results," writes Janet Morrissey. "Lennar said it slashed its exposure in California, where market conditions have been deteriorating."
Morrissey goes on, "'It sends a signal that they don't want to have their capital at risk in Southern California for the next few years,' said Raymond James Financial Inc. analyst Rick Murray. He sees the sale as a sign the company doesn't believe a rebound in California will happen in the near future."
While Lennar has experienced a decline in sales that is much less than many of its competitors lately, between price slashing and incentives given for home purchases and the lower level of sales, Lennar has said its gross profit margins will continue a trend to be 'materially lower' according to the WSJ article.
This, combined with Lennar's removal of the Madison properties from sale indicates that NL&F sees a less than rosy picture for SCV housing, at least in the immediate future. The Madison is an apartment to condo conversion development in the Town Center area, across the street from the Westfield Mall area.
The WSJ article stands in stark contrast to the Signal's puff piece on what Lennar's sale of the majority of its holdings in Newhall Land. But what else can you expect from the Signal? It remains the mouthpiece of Santa Clarita's major land developer.
While this author remains generally upbeat about the stability of the housing market, at least locally, the difference in tone between the WSJ and the Signal articles shows that you the reader would be well advised to continue to read The Real Blog, where we are committed to giving you information about what is really happening in the housing market.
'Normal Market' Projected for California for 2007
California builders expect return to 'normal market' in '07
Forecast calls for 'soft to stable' home prices
Friday, January 05, 2007
Inman News
The chief economist for the California Building Industry Association trade group expects housing starts for single-family homes, condominiums and apartments to range from 155,000-170,000 units this year, which could be about the same or slightly lower than in 2006, the group announced this week.
Single-family housing starts in 2007 should range from 110,000-120,000 units, Nevin also stated, compared with about 110,000 single-family housing starts in 2006, and multifamily construction starts are expected to range from 45,000-55,000 units, compared with 58,000 in 2006.
"Keep this year's forecast in perspective -- we are returning to a normal market," Nevin stated. "Producing 155,000 to 170,000 units will be more than any year from 1991 to 2001 and could exceed production levels from 1990 and 2002 as well."
Nevin said he expects production to be especially low in first-quarter 2007 as builders finish selling excess inventory, and he expects construction to pick up later in the year. "We need to be building about 240,000 new homes, condos and apartments a year to meet the need for housing," he stated, adding that fees and constraints on housing make it "all but impossible to meet the need in the entry-level market."
Housing prices will remain soft to stable in most markets, according to Nevin's forecast.
"We are already seeing signs of price stabilization as builders in some markets have sold most of their standing inventory. We expect that trend to accelerate after the first quarter. Because there's still excess inventory, there are still significant concessions, which we expect will drop considerably later in the year," he stated.
The forecast states that job gains have been slower than normal for the past few months on a national basis. "It is highly likely that because of the housing slowdown, employment gains in 2007 will not be as strong as they have been over the past few years. Typically, 200,000 new payroll jobs are seen as a bellwether for the U.S. economy. The past few months, monthly job gains have been closer to 100,000 than 200,000," the forecast report states, with unemployment rates expected to climb from 4.4 percent to 4.8 percent.
Nationally, the forecast calls for total U.S. housing permits in 2007 to reach 1.8 million to 1.9 million, compared with 2.16 million in 2005 and 2.05 million in 2004. Existing-home sales, meanwhile, are expected to reach 6 million in 2007, compared with 6.1 million sales in 2006.
Home prices on a national market "will be flat, at best," the report states. "In some markets, there may be net declines on the order of 5 percent to 10 percent from 2005 highs, but those markets are few," according to the forecast.
In California, the forecast calls for a gain of 180,000 to 210,000 total jobs in 2007, which is on pace to match 2006 and about half that of 2005.
Construction costs "appear to be at a standstill" for wood-frame construction, the forecast report states. Home-building costs and land prices are expected to fall in most metro areas of the state in 2007, with "accelerated opportunities for smaller builders to obtain land at prices that are almost palatable, both in suburban and urban areas."
Forecast calls for 'soft to stable' home prices
Friday, January 05, 2007
Inman News
The chief economist for the California Building Industry Association trade group expects housing starts for single-family homes, condominiums and apartments to range from 155,000-170,000 units this year, which could be about the same or slightly lower than in 2006, the group announced this week.
Single-family housing starts in 2007 should range from 110,000-120,000 units, Nevin also stated, compared with about 110,000 single-family housing starts in 2006, and multifamily construction starts are expected to range from 45,000-55,000 units, compared with 58,000 in 2006.
"Keep this year's forecast in perspective -- we are returning to a normal market," Nevin stated. "Producing 155,000 to 170,000 units will be more than any year from 1991 to 2001 and could exceed production levels from 1990 and 2002 as well."
Nevin said he expects production to be especially low in first-quarter 2007 as builders finish selling excess inventory, and he expects construction to pick up later in the year. "We need to be building about 240,000 new homes, condos and apartments a year to meet the need for housing," he stated, adding that fees and constraints on housing make it "all but impossible to meet the need in the entry-level market."
Housing prices will remain soft to stable in most markets, according to Nevin's forecast.
"We are already seeing signs of price stabilization as builders in some markets have sold most of their standing inventory. We expect that trend to accelerate after the first quarter. Because there's still excess inventory, there are still significant concessions, which we expect will drop considerably later in the year," he stated.
The forecast states that job gains have been slower than normal for the past few months on a national basis. "It is highly likely that because of the housing slowdown, employment gains in 2007 will not be as strong as they have been over the past few years. Typically, 200,000 new payroll jobs are seen as a bellwether for the U.S. economy. The past few months, monthly job gains have been closer to 100,000 than 200,000," the forecast report states, with unemployment rates expected to climb from 4.4 percent to 4.8 percent.
Nationally, the forecast calls for total U.S. housing permits in 2007 to reach 1.8 million to 1.9 million, compared with 2.16 million in 2005 and 2.05 million in 2004. Existing-home sales, meanwhile, are expected to reach 6 million in 2007, compared with 6.1 million sales in 2006.
Home prices on a national market "will be flat, at best," the report states. "In some markets, there may be net declines on the order of 5 percent to 10 percent from 2005 highs, but those markets are few," according to the forecast.
In California, the forecast calls for a gain of 180,000 to 210,000 total jobs in 2007, which is on pace to match 2006 and about half that of 2005.
Construction costs "appear to be at a standstill" for wood-frame construction, the forecast report states. Home-building costs and land prices are expected to fall in most metro areas of the state in 2007, with "accelerated opportunities for smaller builders to obtain land at prices that are almost palatable, both in suburban and urban areas."
Tuesday, January 02, 2007
Is Rental Capital Gain Tax 15 Percent or 40 Percent?
Is Rental Capital Gain Tax 15 Percent or 40 Percent?
by Bob BrussExcerpted from Inman News
If you own your rental property at least 365 days, you qualify for the federal long-term capital gain tax rate, which is a maximum of 15 percent.
However, a portion of your capital gain that is due to the depreciation you have deducted will be "recaptured" (that means taxed) at the special federal depreciation recapture tax rate of 25 percent (instead of 15 percent tax on the balance of your capital gain).
In addition, don't forget the state tax, unless the property is located in one of the lucky states without income tax. For full details, please consult your tax adviser.
by Bob BrussExcerpted from Inman News
If you own your rental property at least 365 days, you qualify for the federal long-term capital gain tax rate, which is a maximum of 15 percent.
However, a portion of your capital gain that is due to the depreciation you have deducted will be "recaptured" (that means taxed) at the special federal depreciation recapture tax rate of 25 percent (instead of 15 percent tax on the balance of your capital gain).
In addition, don't forget the state tax, unless the property is located in one of the lucky states without income tax. For full details, please consult your tax adviser.
Saturday, December 30, 2006
Housing Market Fundamentals
I am taking some time off from writing over the holidays, but good friend Barry Ritholtz offered to write this week's letter. It is a very thought-provoking piece on the importance of what he calls the "real estate industrial complex" to the economy. Loaded with charts and statistics, it is the type of work I have come to expect from Barry over the years. Barry is Chief Market Strategist for Ritholtz Research and Analytics in New York.
I will be doing my annual forecast issue for next week's letter, and this piece by Barry is a good set-up. But before turning you over to Barry's capable hands, let me wish you and yours a very Happy and Prosperous New Year. I want to thank you for letting me come into your life with my weekly musings, and sincere note of appreciation for all the comments and kind words.
~~ John Mauldin
John@FrontLineThoughts.com
This is definitely a worthwhile read. Click to see the article.
~~ Ray the Realtor
http://www.itsourmove.com/Nav.aspx/Page=/PageManager/Default.aspx/PageID=1985780
I will be doing my annual forecast issue for next week's letter, and this piece by Barry is a good set-up. But before turning you over to Barry's capable hands, let me wish you and yours a very Happy and Prosperous New Year. I want to thank you for letting me come into your life with my weekly musings, and sincere note of appreciation for all the comments and kind words.
~~ John Mauldin
John@FrontLineThoughts.com
This is definitely a worthwhile read. Click to see the article.
~~ Ray the Realtor
http://www.itsourmove.com/Nav.aspx/Page=/PageManager/Default.aspx/PageID=1985780
Friday, December 29, 2006
Prices Down 0.8% from 2005 to 2006 in West
Realtors report drop in existing-home sales, prices
Median home price rides 4-month downtrend
David Lereah, National Association of Realtors
Existing-home sales and prices dropped in November compared to the same month last year, the National Association of Realtors reported today.
Nationally, the median price of existing homes dropped for the fourth consecutive month to $218,000, down 3.1 percent compared to November 2005. The average price of existing homes, at $266,000 in November, fell 1.8 percent compared to the same month last year.
The seasonally adjusted annual rate of existing-home sales dropped 10.7 percent in November compared to November 2005, to 6.28 million. However, home sales rose over October, possibly signalling a bottom in the housing market. It was the second month in a row of increases in the sales rate after six consecutive months of decline earlier in the year.
The rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity. The sales statistics include single-family homes, town homes, condominiums and co-ops.
David Lereah, NAR's chief economist, said in a statement, "Existing-home sales should be rising gradually during 2007 -- it looks like we may have reached the low point for the current cycle in September. We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down."
He added, "For every 1 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market."
[Note: I expect that home prices in our area will drop slightly less than 1% per month locally until April, when we will see a flattening of prices for much of the remainder of the year.]
Total housing inventory levels fell 1 percent at the end of November [Also noted in the local market] to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace. The unsold inventory index is somewhat higher locally. A for-sale supply of greater than six months is generally considered to be a buyer's market.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October. The rate was 6.33 percent in November 2005.
NAR President Pat Vredevoogd Combs said in a statement, "Mortgage interest rates are the lowest they've been since January, and it's the first time since August of 2005 that interest rates are lower than a year earlier. Combined with a plentiful supply of homes on the market, there's a window for buyers now with conditions that we haven't seen prior to the beginning of the housing boom in 2001."
[While interest rates remain historically low, you have to love the NAR positive spin on the housing market.]
Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 5.52 million in November from a pace of 5.51 million in October, but were 10.2 percent lower than the 6.15 million-unit level in November 2005. The median existing single-family home price was $217,200 in November, which is 3.6 percent lower than a year ago, the Realtor group reported.
Existing condominium and cooperative housing sales rose 3.1 percent to a seasonally adjusted annual rate of 757,000 units in November from a downwardly revised 734,000 in October, but were 13.6 percent below the 876,000-unit pace in November 2005, according to the report. The median existing condo price was $224,600 in November, which is unchanged from a year ago.
Regionally, existing-home sales in the Northeast increased 6 percent in November and were 4.5 percent below November 2005. The median existing-home price in the Northeast was $269,000, down 2.2 percent from a year earlier.
Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November and were 17.5 percent lower than a year earlier. The median price in the West was $351,000, down 0.8 percent from November 2005.
Existing-home sales in the Midwest were unchanged in November and were 9.6 percent below sales in November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago, according to the report.
Existing-home sales in the South fell 1.6 percent in November and were 10.2 percent below a year ago. The median price in the South was $179,000, down 3.2 percent from November 2005.
Existing-home sales statistics are based on transaction closings, the association noted, and the sales data is based on about 40 percent of multiple listing service data each month.
***
Summary: Not a great housing market... not a horrible housing market. The Notice of Default rate is up, but still below the historic mean for our area.
Advice to buyers: incorporate an aggressive stand on purchase price, and pick off a weak seller, as long as your buying criteria is fairly broad. If only one home on the market meets all of your criteria, you may not get a steal of a deal but you can get the home of your dreams with still-favorable interest rates.
Advice to sellers: get your head out of the [sand]. If you are pricing high compared to the competition, don't expect to sell. You need to be priced at the bottom of the competition, and work with whatever buyer makes an offer. The market is declining... don't follow it down with incremental price cuts yet just uncompetitive enough not to generate offers to purchase. It is a losing strategy. Of course if you really don't have to sell, pull your home off the market. After all, if you think it is worth more than the buyers do today, congratulations, you just bought your house back. While you are at it, add another zero at the end of whatever you think it is worth. Why not? You may be living in it for a while!
Harsh words? No. It's reality-based real estate.
Median home price rides 4-month downtrend
David Lereah, National Association of Realtors
Existing-home sales and prices dropped in November compared to the same month last year, the National Association of Realtors reported today.
Nationally, the median price of existing homes dropped for the fourth consecutive month to $218,000, down 3.1 percent compared to November 2005. The average price of existing homes, at $266,000 in November, fell 1.8 percent compared to the same month last year.
The seasonally adjusted annual rate of existing-home sales dropped 10.7 percent in November compared to November 2005, to 6.28 million. However, home sales rose over October, possibly signalling a bottom in the housing market. It was the second month in a row of increases in the sales rate after six consecutive months of decline earlier in the year.
The rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity. The sales statistics include single-family homes, town homes, condominiums and co-ops.
David Lereah, NAR's chief economist, said in a statement, "Existing-home sales should be rising gradually during 2007 -- it looks like we may have reached the low point for the current cycle in September. We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down."
He added, "For every 1 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market."
[Note: I expect that home prices in our area will drop slightly less than 1% per month locally until April, when we will see a flattening of prices for much of the remainder of the year.]
Total housing inventory levels fell 1 percent at the end of November [Also noted in the local market] to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace. The unsold inventory index is somewhat higher locally. A for-sale supply of greater than six months is generally considered to be a buyer's market.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October. The rate was 6.33 percent in November 2005.
NAR President Pat Vredevoogd Combs said in a statement, "Mortgage interest rates are the lowest they've been since January, and it's the first time since August of 2005 that interest rates are lower than a year earlier. Combined with a plentiful supply of homes on the market, there's a window for buyers now with conditions that we haven't seen prior to the beginning of the housing boom in 2001."
[While interest rates remain historically low, you have to love the NAR positive spin on the housing market.]
Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 5.52 million in November from a pace of 5.51 million in October, but were 10.2 percent lower than the 6.15 million-unit level in November 2005. The median existing single-family home price was $217,200 in November, which is 3.6 percent lower than a year ago, the Realtor group reported.
Existing condominium and cooperative housing sales rose 3.1 percent to a seasonally adjusted annual rate of 757,000 units in November from a downwardly revised 734,000 in October, but were 13.6 percent below the 876,000-unit pace in November 2005, according to the report. The median existing condo price was $224,600 in November, which is unchanged from a year ago.
Regionally, existing-home sales in the Northeast increased 6 percent in November and were 4.5 percent below November 2005. The median existing-home price in the Northeast was $269,000, down 2.2 percent from a year earlier.
Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November and were 17.5 percent lower than a year earlier. The median price in the West was $351,000, down 0.8 percent from November 2005.
Existing-home sales in the Midwest were unchanged in November and were 9.6 percent below sales in November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago, according to the report.
Existing-home sales in the South fell 1.6 percent in November and were 10.2 percent below a year ago. The median price in the South was $179,000, down 3.2 percent from November 2005.
Existing-home sales statistics are based on transaction closings, the association noted, and the sales data is based on about 40 percent of multiple listing service data each month.
***
Summary: Not a great housing market... not a horrible housing market. The Notice of Default rate is up, but still below the historic mean for our area.
Advice to buyers: incorporate an aggressive stand on purchase price, and pick off a weak seller, as long as your buying criteria is fairly broad. If only one home on the market meets all of your criteria, you may not get a steal of a deal but you can get the home of your dreams with still-favorable interest rates.
Advice to sellers: get your head out of the [sand]. If you are pricing high compared to the competition, don't expect to sell. You need to be priced at the bottom of the competition, and work with whatever buyer makes an offer. The market is declining... don't follow it down with incremental price cuts yet just uncompetitive enough not to generate offers to purchase. It is a losing strategy. Of course if you really don't have to sell, pull your home off the market. After all, if you think it is worth more than the buyers do today, congratulations, you just bought your house back. While you are at it, add another zero at the end of whatever you think it is worth. Why not? You may be living in it for a while!
Harsh words? No. It's reality-based real estate.
New Rules for Real Estate: Buy and Hold
Property investors obtained large mortgages during the most recent housing boom in the hopes of capitalizing on rapid home-price appreciation by quickly buying and reselling, or "flipping," single-family homes and condominiums. No more. In the current market downturn, investors are focusing their attention on small rental apartment and commercial buildings, primarily in Texas and other markets where price gains are still anticipated. Rather than flip these properties, investors are concentrating on cash flow and generating profits over the long term.
Developers, especially those in Florida and Philadelphia, are responding to market changes with deals that promise five years' worth of rental income. Investors accounted for only 8.4 percent of home sales from January through September, according to First American LoanPerformance — down from 9.5 percent during the corresponding period in 2005.
In the third quarter, the company reports a 70-percent drop in mortgages to purchase investment homes from the previous July-through-September period.
Jack McCabe, a Deerfield, Fla.-based real estate consultant, says investors have largely fled southern Florida, Phoenix, Las Vegas, San Diego, and the District of Columbia — markets where high home prices and a slowdown in sales have made property investments less feasible.
Experts report that single-family homes and condos will experience minimal appreciation during the next five years. Therefore, investors who bought during the boom either can sell at a discount or take a moderate loss by holding onto their properties while waiting for the market to pick up.
Source: Wall Street Journal, Ruth Simon (12/24/06)
Developers, especially those in Florida and Philadelphia, are responding to market changes with deals that promise five years' worth of rental income. Investors accounted for only 8.4 percent of home sales from January through September, according to First American LoanPerformance — down from 9.5 percent during the corresponding period in 2005.
In the third quarter, the company reports a 70-percent drop in mortgages to purchase investment homes from the previous July-through-September period.
Jack McCabe, a Deerfield, Fla.-based real estate consultant, says investors have largely fled southern Florida, Phoenix, Las Vegas, San Diego, and the District of Columbia — markets where high home prices and a slowdown in sales have made property investments less feasible.
Experts report that single-family homes and condos will experience minimal appreciation during the next five years. Therefore, investors who bought during the boom either can sell at a discount or take a moderate loss by holding onto their properties while waiting for the market to pick up.
Source: Wall Street Journal, Ruth Simon (12/24/06)
Consumer Confidence Soars in December
Consumer confidence rose to an eight-month high in December, which could signal the worst of the housing downturn is over. The Conference Board reported Thursday that consumer confidence was at 109.0 in December. That is only slightly below last April’s 109.8, when confidence hit the highest point in four years. The slumping housing market and gas prices have been blamed for its more recent declines.
This rise reassured some analysts that a slowing housing market won’t cause people to stop spending, which could then possibly contribute to an outright recession — similar to the bursting of the stock market bubble in 2000 that helped trigger the 2001 downturn.
But others remain cautious. "Given the seesaw pattern in recent months, it is too soon to tell if this boost in confidence is a genuine signal that better times are ahead," says Lynn Franco, director of the Conference Board's consumer research center.
Source: The Associated Press, Martin Crutsinger (12/28/06)
This rise reassured some analysts that a slowing housing market won’t cause people to stop spending, which could then possibly contribute to an outright recession — similar to the bursting of the stock market bubble in 2000 that helped trigger the 2001 downturn.
But others remain cautious. "Given the seesaw pattern in recent months, it is too soon to tell if this boost in confidence is a genuine signal that better times are ahead," says Lynn Franco, director of the Conference Board's consumer research center.
Source: The Associated Press, Martin Crutsinger (12/28/06)
Thursday, December 28, 2006
More 2007 and 2008 Housing Projections Across the US
http://money.cnn.com/popups/2006/fortune/invguide_realestate/4.html
CNN Money and Fortune Magazine project a chilly housing market in our market area for the next couple of years. Take a look at the graphics... while the Southwest is getting hit, much of the rest of the nation will escape significant price drops.
CNN Money and Fortune Magazine project a chilly housing market in our market area for the next couple of years. Take a look at the graphics... while the Southwest is getting hit, much of the rest of the nation will escape significant price drops.
Friday, December 22, 2006
Fallout Seen From Subprime Lender Abuses
1 in 5 subprime loans in trouble, report says
2.2 million borrowers seen as likely to lose their homes
By Ron Nixon
NEW YORK TIMES NEWS SERVICE
December 20, 2006
About one in five subprime mortgages made in the past two years is likely to go into foreclosure, according to a report released yesterday, with Southern California among the regions expected to be hard hit.
About 1.1 million homeowners who took out subprime loans in the past two years will lose their homes in the next few years, the report said. The foreclosures will cost those homeowners an estimated $74.6 billion, primarily in equity.
The report, written by the Center for Responsible Lending, a research group in Durham, N.C., was based on data supplied by Moody's Economy.com. Researchers examined more than 6 million mortgages made from 1998 until the third quarter of 2006 in the first nationwide study on the performance of subprime mortgages.
The highest default rates are expected to be in cities in California, Nevada, Michigan and New Jersey as well as Washington, D.C.
The report projected that 22 percent of subprime loans issued in Los Angeles/Long Beach in 2006 will end in foreclosure.
The report offers a somber assessment of loans that had helped millions of Americans with blemished credit attain homeownership. About 2.2 million borrowers who took subprime loans from 1998 to 2006 are likely to lose their homes.
Subprime loans are made to borrowers with unfavorable credit histories. They have interest rates that are higher than the prime rate and carry higher fees and pre-payment penalties than other mortgages.
Foreclosures
Top 10 largest increases in expected subprime foreclosure rates:
Region Projected foreclosure rate Projected percent change
Santa Ana-Anaheim-Irvine 22.8 668%
Santa Barbara-Santa Maria 19.6 596%
San Diego-Carlsbad-San Marcos 21.4 567%
Santa Rosa-Petaluma 21.1 527%
Napa 16.4 527%
San Francisco-San Mateo -16.7 462% Redwood City
Oxnard-Thousand Oaks-Ventura 17.6 453%
San Luis Obispo-Paso Robles 13.6 416%
Salinas 20.4 413%
Vallejo-Fairfield 23.8 405%
SOURCE: Center for Responsible Lending
Mortgage companies, banks and investors began aggressively marketing and trading the loans in the early part of the decade because their higher interest rates make them more profitable.
As a result, subprime loans now make up more than one-quarter of the mortgage market, more than $600 billion in 2005.
“This is no longer a niche part of the market that can be dismissed,” said Keith Ernst, senior housing counsel at the research center and one of the authors of the report. “It's a major component of the mortgage market, and the growing rates of foreclosures should be a cause for alarm.”
Much of the greatest exposure to foreclosure risk was found to be in California and Nevada. Of the 10 cities deemed most at risk, only two were outside the two states. Merced led the list with a projected rate of 25 percent, followed by Bakersfield at 24.2 percent.
With a rate of 21.4 percent, San Diego placed 21st among the cities surveyed. Places with rates expected to be greater included Las Vegas, 23 percent; Washington, D.C., 22.8 percent; Riverside/San Bernardino, 22.6 percent; and Los Angeles/Long Beach, 22 percent.
Ernst said San Diego and other Western cities are catching up to what has happened in housing markets in Ohio and other Midwestern states where subprime lending has become a significant problem.
“In many parts of the country, housing markets have been fairly weak for some time, and the subprime foreclosure rate is 15 to 20 percent,” he said. Even more at risk are those borrowers who took out subprime loans that were based on stated incomes or minimal documentation, he said.
John Karevoll, a real estate market analyst for San Diego-based DataQuick Information Systems, said he had not studied the report, but that its projection for the San Diego area “doesn't sound too far out.”
Karevoll said there is no uniform definition of a subprime loan, which he described as “basically a loan given to people who don't qualify for mainstream loans.”
He said the report's findings “may not be as dramatic as it looks,” and instead might illustrate a market that is normalizing after an unprecedented run-up in prices, during which foreclosures were abnormally low due to continuing equity gains by home owners.
“San Diego saw the (price) surge earlier than others,” Karevoll said. “Foreclosure rates went way down, as low as you can get.”
Gary Wong, senior vice president of residential lending for Union Bank of California in San Diego, agreed that the foreclosure rate in San Diego was rising, but from a small base.
He said subprime loans “frequently have features not beneficial to a customer and are sold to people who should not take these loans.” Union Bank is not a subprime lender, he noted.
But Ed Smith Jr., a Mission Valley mortgage broker and director of the California Association of Mortgage Brokers, said subprime loans are not necessarily a bad product.
“They have put more people into homes who wouldn't qualify for traditional products,” he said.
Report author Ernst agreed that the loans might have opened the door to homeownership to many.
“The problem is the loans in the subprime market are being made on risky terms and very risky circumstances,” he said. “The pendulum may have swung too far.”
Smith said that for subprime borrowers, the goal should be to transition into more conventional lending products.
“Many have not planned ahead,” he said. “Now their (home) values are plateauing and interest rates are rising a bit. That's a bad cocktail.
“The key is that people need to be judicious in the use of these products and make sure and sit down and analyze them and ask, 'Is this the right product for me?' ”
The report cited several factors for the increase in subprime mortgage foreclosures – including adjustable-rate mortgages with steep built-in rate and payment increases, pre-payment penalties, limited income documentation and no escrow for taxes and insurance. The report said the features cause a higher risk of default regardless of the borrower's credit score.
“This means that people are not going into foreclosure just because they have low incomes,” Ernst said. “The foreclosures are higher than they need to be because a number of loan features in the subprime market place borrowers at unnecessary risk.”
San Diego Tribune Home Editor Carl Larsen contributed to this report.
2.2 million borrowers seen as likely to lose their homes
By Ron Nixon
NEW YORK TIMES NEWS SERVICE
December 20, 2006
About one in five subprime mortgages made in the past two years is likely to go into foreclosure, according to a report released yesterday, with Southern California among the regions expected to be hard hit.
About 1.1 million homeowners who took out subprime loans in the past two years will lose their homes in the next few years, the report said. The foreclosures will cost those homeowners an estimated $74.6 billion, primarily in equity.
The report, written by the Center for Responsible Lending, a research group in Durham, N.C., was based on data supplied by Moody's Economy.com. Researchers examined more than 6 million mortgages made from 1998 until the third quarter of 2006 in the first nationwide study on the performance of subprime mortgages.
The highest default rates are expected to be in cities in California, Nevada, Michigan and New Jersey as well as Washington, D.C.
The report projected that 22 percent of subprime loans issued in Los Angeles/Long Beach in 2006 will end in foreclosure.
The report offers a somber assessment of loans that had helped millions of Americans with blemished credit attain homeownership. About 2.2 million borrowers who took subprime loans from 1998 to 2006 are likely to lose their homes.
Subprime loans are made to borrowers with unfavorable credit histories. They have interest rates that are higher than the prime rate and carry higher fees and pre-payment penalties than other mortgages.
Foreclosures
Top 10 largest increases in expected subprime foreclosure rates:
Region Projected foreclosure rate Projected percent change
Santa Ana-Anaheim-Irvine 22.8 668%
Santa Barbara-Santa Maria 19.6 596%
San Diego-Carlsbad-San Marcos 21.4 567%
Santa Rosa-Petaluma 21.1 527%
Napa 16.4 527%
San Francisco-San Mateo -16.7 462% Redwood City
Oxnard-Thousand Oaks-Ventura 17.6 453%
San Luis Obispo-Paso Robles 13.6 416%
Salinas 20.4 413%
Vallejo-Fairfield 23.8 405%
SOURCE: Center for Responsible Lending
Mortgage companies, banks and investors began aggressively marketing and trading the loans in the early part of the decade because their higher interest rates make them more profitable.
As a result, subprime loans now make up more than one-quarter of the mortgage market, more than $600 billion in 2005.
“This is no longer a niche part of the market that can be dismissed,” said Keith Ernst, senior housing counsel at the research center and one of the authors of the report. “It's a major component of the mortgage market, and the growing rates of foreclosures should be a cause for alarm.”
Much of the greatest exposure to foreclosure risk was found to be in California and Nevada. Of the 10 cities deemed most at risk, only two were outside the two states. Merced led the list with a projected rate of 25 percent, followed by Bakersfield at 24.2 percent.
With a rate of 21.4 percent, San Diego placed 21st among the cities surveyed. Places with rates expected to be greater included Las Vegas, 23 percent; Washington, D.C., 22.8 percent; Riverside/San Bernardino, 22.6 percent; and Los Angeles/Long Beach, 22 percent.
Ernst said San Diego and other Western cities are catching up to what has happened in housing markets in Ohio and other Midwestern states where subprime lending has become a significant problem.
“In many parts of the country, housing markets have been fairly weak for some time, and the subprime foreclosure rate is 15 to 20 percent,” he said. Even more at risk are those borrowers who took out subprime loans that were based on stated incomes or minimal documentation, he said.
John Karevoll, a real estate market analyst for San Diego-based DataQuick Information Systems, said he had not studied the report, but that its projection for the San Diego area “doesn't sound too far out.”
Karevoll said there is no uniform definition of a subprime loan, which he described as “basically a loan given to people who don't qualify for mainstream loans.”
He said the report's findings “may not be as dramatic as it looks,” and instead might illustrate a market that is normalizing after an unprecedented run-up in prices, during which foreclosures were abnormally low due to continuing equity gains by home owners.
“San Diego saw the (price) surge earlier than others,” Karevoll said. “Foreclosure rates went way down, as low as you can get.”
Gary Wong, senior vice president of residential lending for Union Bank of California in San Diego, agreed that the foreclosure rate in San Diego was rising, but from a small base.
He said subprime loans “frequently have features not beneficial to a customer and are sold to people who should not take these loans.” Union Bank is not a subprime lender, he noted.
But Ed Smith Jr., a Mission Valley mortgage broker and director of the California Association of Mortgage Brokers, said subprime loans are not necessarily a bad product.
“They have put more people into homes who wouldn't qualify for traditional products,” he said.
Report author Ernst agreed that the loans might have opened the door to homeownership to many.
“The problem is the loans in the subprime market are being made on risky terms and very risky circumstances,” he said. “The pendulum may have swung too far.”
Smith said that for subprime borrowers, the goal should be to transition into more conventional lending products.
“Many have not planned ahead,” he said. “Now their (home) values are plateauing and interest rates are rising a bit. That's a bad cocktail.
“The key is that people need to be judicious in the use of these products and make sure and sit down and analyze them and ask, 'Is this the right product for me?' ”
The report cited several factors for the increase in subprime mortgage foreclosures – including adjustable-rate mortgages with steep built-in rate and payment increases, pre-payment penalties, limited income documentation and no escrow for taxes and insurance. The report said the features cause a higher risk of default regardless of the borrower's credit score.
“This means that people are not going into foreclosure just because they have low incomes,” Ernst said. “The foreclosures are higher than they need to be because a number of loan features in the subprime market place borrowers at unnecessary risk.”
San Diego Tribune Home Editor Carl Larsen contributed to this report.
Thursday, December 21, 2006
Shortest Day of the Year
And it has been very cold out, hasn't it?
As we finish up the old year and bring in the new, I wanted to say that it has been a pleasure to be your source for real estate news in our local area. While every end-of the-year summary of mine has a fond look back at new friends and clients made and general progress and achievement noted, this year has been especially good for me.
And while there are problems with the overall housing market, with prices gently drifting downward and volume overall lower than years past, there is a lot of opportunity in the housing market as well.
Next week I will be taking a good hard look at our housing market, and making some projections based on a close examination of the numbers. While a couple of the readers will be awaiting this analysis with nearly held breath (and you know who you are!), realistically, the condition of the housing market depends on where you are and whether you are on the buying side, the selling side, or both.
In the meantime I have some Christmas shopping to finish up. Yes, once again work demands have pushed back the big shopping excursion, so am I at all close to being ready for friends and family? Nope! I will be among the crowds out there shopping my brains out. Joy to the World!
I hope that you and yours have a wonderful Christmas or whatever holiday that you celebrate this time of year!
And for those couple of buyers who just might be ready to see those homes I have told them about, go ahead and call me. We can fit in showing a couple of homes here and there over the next few days. Besides, wouldn't buying a home be an absolutely outstanding Christmas gift!?
Merry Christmas to one and all!
As we finish up the old year and bring in the new, I wanted to say that it has been a pleasure to be your source for real estate news in our local area. While every end-of the-year summary of mine has a fond look back at new friends and clients made and general progress and achievement noted, this year has been especially good for me.
And while there are problems with the overall housing market, with prices gently drifting downward and volume overall lower than years past, there is a lot of opportunity in the housing market as well.
Next week I will be taking a good hard look at our housing market, and making some projections based on a close examination of the numbers. While a couple of the readers will be awaiting this analysis with nearly held breath (and you know who you are!), realistically, the condition of the housing market depends on where you are and whether you are on the buying side, the selling side, or both.
In the meantime I have some Christmas shopping to finish up. Yes, once again work demands have pushed back the big shopping excursion, so am I at all close to being ready for friends and family? Nope! I will be among the crowds out there shopping my brains out. Joy to the World!
I hope that you and yours have a wonderful Christmas or whatever holiday that you celebrate this time of year!
And for those couple of buyers who just might be ready to see those homes I have told them about, go ahead and call me. We can fit in showing a couple of homes here and there over the next few days. Besides, wouldn't buying a home be an absolutely outstanding Christmas gift!?
Merry Christmas to one and all!
Monday, December 18, 2006
Leading Indicators from CNBC's Diana Olick
Leading Indicators
Posted By:Diana Olick of CNBC.com
Topics:CEOs and CFOs Carl Icahn Bill Gates Henry Paulson Real Estate
Companies:Pulte Homes Lennar Corp Centex Corp KB Home Realogy Corp Apollo Group Inc
Last week the Secretary of the Treasury, Hank Paulson, was asked if the residential real estate market had bottomed. He refused to answer the question. But as we approach the New Year, that is arguably the biggest question in real estate. The spring season is right around the corner, traditionally the busiest for buying and selling, and many believe it will tell the true story of the state of the market.
Until then, however, we look to the indicators: The NAHB/Wells Fargo Housing Market Index (HMI), out today, shows how builders perceive the market to be on an upswing, specifically in gauging future sales expectations.
Click for entire article, and video
“Other recent indicators confirm that buying conditions have improved and that demand is stabilizing - including improvements in measures of housing affordability, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes,” added NAHB Chief Economist Dave Seiders.
Posted By:Diana Olick of CNBC.com
Topics:CEOs and CFOs Carl Icahn Bill Gates Henry Paulson Real Estate
Companies:Pulte Homes Lennar Corp Centex Corp KB Home Realogy Corp Apollo Group Inc
Last week the Secretary of the Treasury, Hank Paulson, was asked if the residential real estate market had bottomed. He refused to answer the question. But as we approach the New Year, that is arguably the biggest question in real estate. The spring season is right around the corner, traditionally the busiest for buying and selling, and many believe it will tell the true story of the state of the market.
Until then, however, we look to the indicators: The NAHB/Wells Fargo Housing Market Index (HMI), out today, shows how builders perceive the market to be on an upswing, specifically in gauging future sales expectations.
Click for entire article, and video
“Other recent indicators confirm that buying conditions have improved and that demand is stabilizing - including improvements in measures of housing affordability, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes,” added NAHB Chief Economist Dave Seiders.
Tax Law Changes for 2007
IRS Tax Law changes:
1. The gift tax annual exclusion is $12,000 for 2006.
2. The capital gains rate of 15% was extended through 2010. For 2006 taxpayers in the 10%-15% tax rate will pay 5% tax on capital gains.
3. Business mileage is $.445 for 2006 and will be $.485 for 2007 (check Pub. 463).
4. Telephone Excise Tax Refund (TETR) is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it. Businesses and tax-exempts can dig through their old bills. Or they can review their bills for 2 months and use a special formula to figure the refund.
For more information on any of these topics go to www.irs.gov .
While you are there, check out Publication 523“ Selling a Home."
New California Laws:
1. Minimum Wage will be $7.50 for 2007 and $8.00 for 2008. Looks like I will get a raise.
2. Assembly Bill 1169 “ This law reestablishes the sixty (60) day notice which is required by landlords to give to residential tenants on periodic leases (e.g., month-to-month lease) when the tenants have been living in the property forat least one year. This law maintains the exception of a thirty (30) day notice for certain qualifying properties for sale."
3. Assembly Bill 2429 “ No more conditional Real Estate Licenses after 10/1/07."
4. Senate Bill 1609 “ This law provides protection to consumers who obtain reverse mortgages."
5. Assembly Bill 2618 “ This new law essentially is clean-up legislation which increases the jurisdictional limit in small claims court to $7,500 on certain issues which were left unchanged when general limits increased from $5,000 to $7,500 last year."
For more information on these bills go to www.leginfo.ca.gov/bilinfo.html.
1. The gift tax annual exclusion is $12,000 for 2006.
2. The capital gains rate of 15% was extended through 2010. For 2006 taxpayers in the 10%-15% tax rate will pay 5% tax on capital gains.
3. Business mileage is $.445 for 2006 and will be $.485 for 2007 (check Pub. 463).
4. Telephone Excise Tax Refund (TETR) is a one-time payment available on your 2006 federal income tax return. It is designed to refund previously collected long distance telephone taxes. Individuals, businesses and tax-exempt organizations are eligible to request it. Businesses and tax-exempts can dig through their old bills. Or they can review their bills for 2 months and use a special formula to figure the refund.
For more information on any of these topics go to www.irs.gov .
While you are there, check out Publication 523“ Selling a Home."
New California Laws:
1. Minimum Wage will be $7.50 for 2007 and $8.00 for 2008. Looks like I will get a raise.
2. Assembly Bill 1169 “ This law reestablishes the sixty (60) day notice which is required by landlords to give to residential tenants on periodic leases (e.g., month-to-month lease) when the tenants have been living in the property forat least one year. This law maintains the exception of a thirty (30) day notice for certain qualifying properties for sale."
3. Assembly Bill 2429 “ No more conditional Real Estate Licenses after 10/1/07."
4. Senate Bill 1609 “ This law provides protection to consumers who obtain reverse mortgages."
5. Assembly Bill 2618 “ This new law essentially is clean-up legislation which increases the jurisdictional limit in small claims court to $7,500 on certain issues which were left unchanged when general limits increased from $5,000 to $7,500 last year."
For more information on these bills go to www.leginfo.ca.gov/bilinfo.html.
Sunday, December 17, 2006
Southland home sales slowest since 1997
Southland home sales slowest since 1997
by Real Estate Analyst John Karevoll
December 13, 2006
La Jolla,CA----Southern California home sales remained at their slowest pace in nine years last month as the market continued to rebalance itself after several years of heated activity. Prices are still leveling off, a real estate information service reported.
A total of 20,388 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.8 percent from 22,117 in October, and down 26.2 percent from 27,637 for November a year ago, according to DataQuick Information Systems.
A decline from October to November is normal for the season. Last month's sales count was the lowest for any November since 1997 when 18,305 homes were sold. Since 1988 November sales have ranged from 13,537 in 1991 to last year's 27,637, the average for the month is 21,200.
"Sales levels are still closer to the middle than to the peak or the bottom. As buyers and sellers, especially sellers, adjust their expectations to the new reality, we're carefully watching what prices are doing. While it appears that they peaked last summer, we need to remember that summer buyers generally pay somewhat more for their homes than winter buyers. Additionally, different markets appear to have peaked at different times," said Marshall Prentice, DataQuick president.
The median price paid for a Southland home was $487,000 last month, up 0.6 percent from $484,000 in October and up 1.7 percent from $479,000 for November a year ago. The year-over-year increase was the lowest since February 1997 when the $160,000 median was up 1.3 percent from $158,000 a year earlier.
The median peaked at $493,000 last June. Historically, summer buyers pay about three percent more for their homes than buyers in the November- to-February period. Homes in lower-cost neighborhoods appear to be appreciating more than five percent, while homes in move-up and prestige neighborhoods have flat or slightly declining prices.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,265 last month, down from $2,287 the previous month and up from $2,238 a year ago. Adjusted for inflation, current payments are 1.5 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 6.6 percent below the current cycle's June peak.
Indicators of market distress are still at a moderate level. Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still below average. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity, DataQuick reported.
Source: DQNews.com
by Real Estate Analyst John Karevoll
December 13, 2006
La Jolla,CA----Southern California home sales remained at their slowest pace in nine years last month as the market continued to rebalance itself after several years of heated activity. Prices are still leveling off, a real estate information service reported.
A total of 20,388 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.8 percent from 22,117 in October, and down 26.2 percent from 27,637 for November a year ago, according to DataQuick Information Systems.
A decline from October to November is normal for the season. Last month's sales count was the lowest for any November since 1997 when 18,305 homes were sold. Since 1988 November sales have ranged from 13,537 in 1991 to last year's 27,637, the average for the month is 21,200.
"Sales levels are still closer to the middle than to the peak or the bottom. As buyers and sellers, especially sellers, adjust their expectations to the new reality, we're carefully watching what prices are doing. While it appears that they peaked last summer, we need to remember that summer buyers generally pay somewhat more for their homes than winter buyers. Additionally, different markets appear to have peaked at different times," said Marshall Prentice, DataQuick president.
The median price paid for a Southland home was $487,000 last month, up 0.6 percent from $484,000 in October and up 1.7 percent from $479,000 for November a year ago. The year-over-year increase was the lowest since February 1997 when the $160,000 median was up 1.3 percent from $158,000 a year earlier.
The median peaked at $493,000 last June. Historically, summer buyers pay about three percent more for their homes than buyers in the November- to-February period. Homes in lower-cost neighborhoods appear to be appreciating more than five percent, while homes in move-up and prestige neighborhoods have flat or slightly declining prices.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,265 last month, down from $2,287 the previous month and up from $2,238 a year ago. Adjusted for inflation, current payments are 1.5 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 6.6 percent below the current cycle's June peak.
Indicators of market distress are still at a moderate level. Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still below average. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity, DataQuick reported.
Source: DQNews.com
Friday, December 15, 2006
Polish It Up and Sell It Fast(er)
10 Ways to Make Your House More Salable
1. Get rid of clutter. Throw out or file stacks of newspapers and magazines. Pack away most of your small decorative items. Store out-of-season clothing to make closets seem roomier. Clean out the garage.
2. Wash your windows and screens to let more light into the interior.
3. Keep everything extra clean. Wash fingerprints from light switch plates. Mop and wax floors. Clean the stove and refrigerator. A clean house makes a better first impression and convinces buyers that the home has been well cared for.
4. Get rid of smells. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Open the windows.
5. Put higher wattage bulbs in light sockets to make rooms seem brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.
6. Make minor repairs that can create a bad impression. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well maintained.
7. Tidy your yard. Cut the grass, rake the leaves, trim the bushes, and edge the walks. Put a pot or two of bright flowers near the entryway.
8. Patch holes in your driveway and reapply sealant, if applicable.
9. Clean your gutters.
10. Polish your front doorknob and door numbers.
5 Ways to Speed Up Your Sale
1. Price it right. Set a price at the lower end of your property’s realistic price range.
2. Get your house market ready for at least two weeks before you begin showing it.
3. Be flexible about showings. It’s often disruptive to have a house ready to show on the spur of the moment, but the more often someone can see your home, the sooner you’ll find a seller.
4. Be ready for the offers. Decide in advance what price and terms you’ll find acceptable.
5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, be prepared to lower your asking price.
1. Get rid of clutter. Throw out or file stacks of newspapers and magazines. Pack away most of your small decorative items. Store out-of-season clothing to make closets seem roomier. Clean out the garage.
2. Wash your windows and screens to let more light into the interior.
3. Keep everything extra clean. Wash fingerprints from light switch plates. Mop and wax floors. Clean the stove and refrigerator. A clean house makes a better first impression and convinces buyers that the home has been well cared for.
4. Get rid of smells. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Open the windows.
5. Put higher wattage bulbs in light sockets to make rooms seem brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.
6. Make minor repairs that can create a bad impression. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well maintained.
7. Tidy your yard. Cut the grass, rake the leaves, trim the bushes, and edge the walks. Put a pot or two of bright flowers near the entryway.
8. Patch holes in your driveway and reapply sealant, if applicable.
9. Clean your gutters.
10. Polish your front doorknob and door numbers.
5 Ways to Speed Up Your Sale
1. Price it right. Set a price at the lower end of your property’s realistic price range.
2. Get your house market ready for at least two weeks before you begin showing it.
3. Be flexible about showings. It’s often disruptive to have a house ready to show on the spur of the moment, but the more often someone can see your home, the sooner you’ll find a seller.
4. Be ready for the offers. Decide in advance what price and terms you’ll find acceptable.
5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, be prepared to lower your asking price.
Who Does The Realtor Work For?
I work for you!
Understanding Agency
It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company. California law and real estate practice is very specific about agency and agency relationships. You won't be surprised to learn that there is a two page disclosure for it that will be the very first form for you to sign when we begin to work together.
1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
2. Buyer's representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
3. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them is legal in most states.
This is the barest of summaries for agency and as with all the the forms, documents, agreements, and disclosures, I urge you to read everything you are given and/or asked to sign by me.
Understanding Agency
It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company. California law and real estate practice is very specific about agency and agency relationships. You won't be surprised to learn that there is a two page disclosure for it that will be the very first form for you to sign when we begin to work together.
1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
2. Buyer's representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
3. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them is legal in most states.
This is the barest of summaries for agency and as with all the the forms, documents, agreements, and disclosures, I urge you to read everything you are given and/or asked to sign by me.
10 Things Your Lender Needs From You
Get ready to buy a home!
1. W-2 forms or business tax return forms if you're self-employed for the last two or three years for every person signing the loan.
2. Copies of at least one pay stub for every person signing the loan.
3. Copies of two to four months of bank or credit union statements for both checking and savings accounts.
4. Copies of personal tax forms for the last two to three years.
5. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
6. Copies of your most recent 401(k) or other retirement account statement.
7. Documentation to verify additional income, such as child support or a pension.
8. Account numbers of all your credit cards and the amounts of any outstanding balances.
9. Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
10. Addresses where you have lived for the last five to seven years, with names of landlords if appropriate.
1. W-2 forms or business tax return forms if you're self-employed for the last two or three years for every person signing the loan.
2. Copies of at least one pay stub for every person signing the loan.
3. Copies of two to four months of bank or credit union statements for both checking and savings accounts.
4. Copies of personal tax forms for the last two to three years.
5. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
6. Copies of your most recent 401(k) or other retirement account statement.
7. Documentation to verify additional income, such as child support or a pension.
8. Account numbers of all your credit cards and the amounts of any outstanding balances.
9. Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
10. Addresses where you have lived for the last five to seven years, with names of landlords if appropriate.
How to Take the Trauma Out of Homebuying
10 Things to Take the Trauma Out of Homebuying
1. Find a real estate agent that’s simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you chose is both skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.
7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.
1. Find a real estate agent that’s simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you chose is both skilled and a good fit with your personality.
2. Remember, there’s no “right” time to buy, any more than there’s a right time to sell. If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price, and a good home won’t stay on the market long.
3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price may lose you the home you love.
6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself—room size, kitchen—that you forget such issues as amenities, noise level, etc., that have a big impact on what it’s like to live in your new home.
7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is as a comfortable, safe place to live.
Exotic Loans Give Buyers More Options
Daily Real Estate News December 12, 20064
Exotic Mortgages Growing in Popularity
While the 30-year, fixed rate mortgage is still the most popular for prime borrowers, many are exploring a host of other possibilities. Some of the slightly more exotic are:
2/28 and 3/27 ARMS. The rate is fixed for two years and then adjusts higher each remaining year based on an underlying interest rate index. Subprime loan rates vary more than prime rates but most are now near 8 percent.
Interest-only loans. Mortgages that allow the home buyer to pay only the interest on a loan, typically for a period of three to 10 years before the principal is amortized. The loan may cut monthly payments on a $200,000 loan by almost $200 a month based on current interest rates.
80/20 loans. Two mortgages in one loan that finances 80 percent of the house and another "piggyback" loan that covers up to 20 percent, depending on the down payment. A new tax law recently passed that gives a deduction for mortgage insurance makes this less attractive.
Payment-option ARM. Mortgages that give the home buyer a variety of payment options each month. They've been a lightning rod for criticism because they allow the home buyer to raise the balance of their loan — called negative amortization — by skipping payments of principal and part of the interest for a limited time.
Source: Reuters, Al Yoon (12/11/2006)
Exotic Mortgages Growing in Popularity
While the 30-year, fixed rate mortgage is still the most popular for prime borrowers, many are exploring a host of other possibilities. Some of the slightly more exotic are:
2/28 and 3/27 ARMS. The rate is fixed for two years and then adjusts higher each remaining year based on an underlying interest rate index. Subprime loan rates vary more than prime rates but most are now near 8 percent.
Interest-only loans. Mortgages that allow the home buyer to pay only the interest on a loan, typically for a period of three to 10 years before the principal is amortized. The loan may cut monthly payments on a $200,000 loan by almost $200 a month based on current interest rates.
80/20 loans. Two mortgages in one loan that finances 80 percent of the house and another "piggyback" loan that covers up to 20 percent, depending on the down payment. A new tax law recently passed that gives a deduction for mortgage insurance makes this less attractive.
Payment-option ARM. Mortgages that give the home buyer a variety of payment options each month. They've been a lightning rod for criticism because they allow the home buyer to raise the balance of their loan — called negative amortization — by skipping payments of principal and part of the interest for a limited time.
Source: Reuters, Al Yoon (12/11/2006)
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