Tuesday, January 28, 2014

A Look at Case-Shiller by Metro Area

My website: www.sandralew.com

Los Angeles area average home prices were up 21.6% in November and was best year for gains since 2005. All cities posted year-over-year gains for 11 straight months. Increases are expected to still be moderate this year. Housing is still a good investment.

A Look at Case-Shiller by Metro Area

Wall Street Journal 10:18 am Jan 28, 2014 By Phil Izzo

Home prices extended a winning streak in November, with 2013 shaping up as the best year for gains since 2005, according to the S&P/Case-Shiller indexes.

The composite 20-city home price index, a key gauge of U.S. home prices, was up 13.7% in November from a year earlier. All 20 cities have posted year-over-year gains for 11 straight months.
Prices in the 20-city index were 0.1% lower than the prior month, but that’s mostly due to the weaker winter selling season. Adjusted for seasonal variations, prices were 0.9% higher month-over-month. Nine of the 20 cities posted a monthly declines, though on a seasonally adjusted basis priced no city saw a drop.

Though home-price gains have been strong, the Case Shiller data are lagged. Many expect increases to moderate this year. “The rapid gains in house prices over the past year are the result of low inventories of homes for sale and strengthening home buying activity. But a slowdown in the pace of house price appreciation is in store for 2014,” said Paul Diggle at Capital Economics. “We are anticipating a meaningful increase in the supply of homes for sale. The survey evidence suggests that rising prices are motivating more owners to list their homes. And judging by the recovery in housing starts, the inventory of new homes for sale is also set to rise strongly.

Las Vegas
Los Angeles
New York
San Diego
San Francisco

Sources: S&P Dow Jones Indices and CoreLogic

 Source: http://blogs.wsj.com/economics/2014/01/28/a-look-at-case-shiller-by-metro-area-28/



Friday, January 24, 2014

All-cash offers crushing first-time homebuyers

My website: www.sandralew.com

Cash is king especially in the housing market. All-cash investors are elbowing out first-time buyers. "All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from 38.1 percent in November, and up from 18.0 percent in December 2012." Figures are astonishing as it does not even include sales outside of the MLS (multiple listing service) which would be homes sold at auctions or by banks. The full cash offers are coming in at significantly above asking prices which make matters even harder for first-time buyers who may continually rent for longer period as they can not yet afford to buy.


Out of reach for first-time buyers? All-cash investors are shouldering first-time buyers out of the housing market.

Out of reach for first-time buyers? All-cash investors are shouldering first-time buyers out of the housing market. 

Insatiable demand from hedge funds, private equity investors and foreign buyers, all armed with ready cash, are elbowing first-time buyers out of the housing market.

First-time buyers tend to purchase lower-priced homes, but all-cash investors have cornered the market on those, leaving little behind. All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from 38.1 percent in November, and up from 18.0 percent in December 2012, according to a new report from RealtyTrac.

The phenomenon is putting up another roadblock for young Americans already assailed by high student loan debt, poor wage growth and less-than-pristine credit.

First-time homebuyers, historically about 40 percent of the market, accounted for just 27 percent of sales nationally in December, the lowest since the National Association of Realtors began tracking this cohort in 2008.

The investors are largely hedge funds and private equity, as well as international buyers, such as upper middle class Chinese buying in California — all part of the new single-family rental trade.
While the Realtors show a smaller share of all-cash buyers, 32 percent, they don't capture sales of homes outside their "multiple listing services," which would include sales of homes at auctions or by banks. In any case, the share is a, "phenomenal, very, very high percentage," according to the Realtors' chief economist, Lawrence Yun.

That leaves out would-be buyers such as Morgan and Tyler Brasfield, who are "dying" to buy a home, especially since the birth of their second child six months ago.

Unfortunately they just don't have the cash to compete in today's San Francisco housing market, so they continue to rent.

"People are coming in with full-cash offers that are significantly higher than asking," said Morgan, as she corralled her 2-year-old on the playground. "So if you find a home for a little over a million, which would be a fixer-upper here, you can expect to pay two to three hundred thousand more than asking."

But even if they were looking in a less pricey, less competitive area, Morgan admits they would still have trouble coming up with the down payment; Tyler, who is now working in finance, just graduated from business school a year ago.

"We need to focus on the student loans right now," said Morgan.

Distressed properties made up just over 16 percent of all U.S. home sales in 2013, up from 14.5 percent in 2012, according to RealtyTrac. These homes tend to be priced under $100,000, a sweet spot for first-time buyers. Sales of homes in that price category fell 11.5 percent in December from a year ago, according to the Realtors, while sales of homes priced above $250,000 jumped over 14 percent.

Tough credit
Tough credit is also hitting younger buyers hardest. Today's mortgage lenders require higher down payments, and while first-time buyers used to get help from their parents, that well has dried up for some, as older Americans lost much of their savings in the recent financial crisis.
First-time buyers often turn to FHA loans, the government mortgage insurer, but premiums and fees there have gone up dramatically in the past year, and FHA's share of the market has dropped accordingly.

On the brighter side, another report from Inside Mortgage Finance shows Fannie Mae and Freddie Mac easing the doors open a bit more to first-time buyers. The share of Fannie Mae/Freddie Mac financing for first-time homebuyers hit 19.5 percent in December. That compared with 14.1 percent a year earlier.

Credit aside, there is still the simple fact that house prices shot up like a rocket in 2013, well into the double digits nationally.

"Below the surface of last year's market, a number of unsettling trends started to emerge as a result of rapid and ultimately unsustainable appreciation, setting up a bit of a mixed bag for 2014," said Zillow's chief economist, Stan Humphries.

"Affordability issues will help put the brakes on many markets that saw huge appreciation rates, like California and the Southwest, creating volatility that could potentially cause whiplash for homebuyers and sellers."

Source: http://www.nbcnews.com/business/all-cash-offers-crushing-first-time-homebuyers-2D11980306?ocid=msnhp&pos=1


Monday, January 20, 2014

Foreclosures hit six-year low in 2013

My website: www.sandralew.com

Good news. Housing market continues to improve as foreclosure filings have decreased and home prices rebound. Foreclosure home price values have gone up an average 10% nationwide in 2013. Also, there are no more cities listed in California for the top ten foreclosure places as it has been in the past.

Foreclosures hit six-year low in 2013

  @CNNMoney January 16, 2014: 1:16 AM ET

miami foreclosed home 

In Miami, one out of every 25 homes had a foreclosure filing last year, according to RealtyTrac.


Last year was a banner year in the fight against foreclosures, with filings hitting their lowest level since 2007.

Total foreclosure filings for 2013, including notices of default, scheduled auctions and bank repossessions, were reported on 1.36 million properties, down 26% from 2012, according to RealtyTrac. 

With one in every 96 homes reporting at least one foreclosure filing in 2013, the national foreclosure rate has dropped to 1.04% -- close to the historic norm of just below 1%. During the 2010 peak of the housing crisis, the national foreclosure rate was 2.23%.

Despite the improving market, the foreclosure threat continues to hang over the heads of many homeowners. In December, 9.3 million properties, or 19% of all homes, were reported to be "deeply underwater," meaning borrowers owed at least 25% more on their mortgage than the homes was worth.

"Millions of homeowners are still living in the shadow of the massive foreclosure crisis" said Daren Blomquist, vice president at RealtyTrac. "But the shadow cast by the foreclosure crisis is shrinking as fewer distressed properties enter foreclosure and properties already in foreclosure are poised to exit in greater numbers in 2014."

About 463,000 people lost their homes to bank repossessions in 2013, down 31% from 2012. In 2010, there were more than a million repossessions and 2.9 million foreclosure filings.

While most of the distressed properties from the bleak years have already been taken back by lenders and resold, the banks are pushing to get the remaining backlog of foreclosures through the system.

And it's coming at a good time as home prices rebound. "There is unprecedented demand from institutional investors willing to pay with cash to buy at the foreclosure auction, helping to raise the value of properties with a foreclosure filing in 2013 by an average of 10% nationwide," said Blomquist.

In so-called judicial foreclosure states, where foreclosures must get approved through the courts, hefty backlogs of foreclosures are just now getting worked through. Maryland, for example, saw a 107% increase in scheduled judicial foreclosure auctions in 2013. Meanwhile, New Jersey and Connecticut saw increases of 64% and 55%, respectively.

Overall, Florida was the foreclosure capital last year with 270,000 properties, or more than 3% of all housing units, with at least one foreclosure filing last year. That's nearly twice as many as second place California.

"Eight of the top foreclosure cities are in Florida," said Blomquist. "We used to say that about California, but now California doesn't have any cities in the top 10."

Miami had 96,710 properties in foreclosure, one in every 25 homes. That was the highest rate of any metro area and was 44% higher than in 2011. Other Florida cities where foreclosure activity was high, included Jacksonville and Orlando.

Beyond Florida, metro areas making the top 10 foreclosure hotspots included Rockford, Ill. and Las Vegas.

Source: http://money.cnn.com/2014/01/16/real_estate/foreclosure-crisis/index.html

Thursday, January 16, 2014

New Rules Could Change Your Jumbo Mortgage Options

My website: www.sandralew.com

Lots of changes in 2014 for the jumbo loan requirements. Qualified mortgages reduce the risk to lenders so majority of borrowers may be subjected to more scrutiny and fewer options.

New Rules Could Change Your Jumbo Mortgage Options

mortgage loan agreement

Monday, January 6, 2014

Housing tear-downs on the rise as real estate rebounds

My website: www.sandralew.com

Rebounding housing market is triggering a residential reconstruction boom. Developers and buyers are buying in beach cities like Manhattan Beach to tear down older homes with hopes of building dream mini mansions. It's changing the demographics as tear-downs are on the rise again in affluent communities. Beach cities are seeing an influx of wealthy residents, chic boutiques and cafes.

With little vacant land left, developers and wealthy buyers are razing small, older houses in sought-after Southern California neighborhoods to build modern mansions.

  January 4, 2014, 6:00 a.m

The front-end loader swung to the right and took a bite out of the shingled roof of the quaint cottage. The roar of the engine and crackle of buckling lumber carried down Elm Avenue in Manhattan Beach.

Within 40 minutes, a demolition crew reduced the 1950s one-story to rubble. The 782-square-foot house would be replaced by a 3,300-square-foot Cape Cod.

"It feels exactly like the good old days," said the property's developer, Mike Leonard.

Those days of booming demolition and construction came during last decade's housing bubble. Now, tear-downs are again on the rise in Southern California's affluent communities, as a rebounding housing market triggers a residential reconstruction boom.

With little vacant land left, developers and wealthier buyers are snapping up small, older houses in sought-after locales, then leveling them to build modern mansions.

The wave of demolition has revived criticism that the new homes tower over those next door and clash with neighborhood character. Residents complain that their once-quiet streets have become perpetual construction zones.

The upscale South Bay town of Manhattan Beach exemplifies the trend. Builders in the city pulled permits to demolish 84 residential units from July 2012 to June 2013, the latest available data. That's nearly double the number pulled for the same period a year earlier. In August, one Manhattan Beach City Council member described the ongoing construction as a "tsunami."

That force has rattled Manhattan Beach homeowner Jane Guthrie. This summer, she said, workers hammered large metal beams into the ground a few houses away from her one-bedroom house, shaking the walls. Workers, she said, were installing a deep basement for a 3,500-square-foot, three-level house that replaced a small 784-square-foot cottage near the beach.

"It was like having an earthquake in your living room — for six hours a day," said Guthrie, a retired art director for ad agencies.

The rebounding housing market has sparked the demolitions. In November, the median price for a home in Southern California was $385,000, up nearly 20% compared with the same month a year earlier, according to research firm DataQuick. Builders such as Leonard are constructing houses "on spec," confident that they'll find buyers.

In other cases, wealthy homeowners are buying cottages, then hiring builders to knock them down and erect dream homes.

"You've got an amazing increase in new construction coming on the market" in Santa Monica, Brentwood and Pacific Palisades, said F. Ron Smith, a founding partner at high-end real estate brokerage Partners Trust.

In the city of Los Angeles last year, builders received approval to raze 1,227 houses and duplexes from January through mid-December, according to Department of Building and Safety records. That's 29% higher than in all of 2012, though still well off the pace of more than 3,000 in 2006, during the housing bubble.

Developer Igal Azran recently built a five-bedroom house near the Beverly Center in Los Angeles. The 5,000-square-foot mansion replaced a modest, one-story Spanish-style home. With glass walls and vaulted ceilings, the modern two-story towers over the adjacent 1920s homes with red-tile roofs. Public records show Azran bought the property — then a 2,180-square-foot duplex — for $856,500 in 2011. The house he built sold in October for $3.5 million.

Construction of new, high-end homes raises property values for neighborhoods, Azran said. Those building their homes shouldn't be confined to the sizes and styles favored by their neighbors, he said.
"People like different things — people like Spanish, modern, French-style," he said.

But many longtime residents resent the scrapping of quaint, older homes, including Clark Carlton, 57, who lives near Azran's project. He says he's growing his hedges higher to regain privacy lost to another newly constructed mansion.

"I am at the point now I have to make sure I am decently clothed to cross my backyard," he said.
Carlton and his neighbors want the city to take action. They are pushing Los Angeles to tighten the so-called anti-mansionization ordinance passed in 2008. Critics say it has failed to stop the construction of outsized homes that rob views, block sunlight and alter the character of established neighborhoods.

In October, the Los Angeles City Council imposed additional size limits on new houses in the Beverly Grove neighborhood. But the changes don't mandate a particular style.
"The new restrictions will support long-term property values," said neighborhood activist Shelley Wagers, who pushed for the measure. "Mansionization has been a matter of profiteering, and has made quick money for a few people at the expense of their neighbors."

Tear-downs have long stirred controversy, especially in beach communities — once-funky towns that have seen property values skyrocket over the years amid an influx of wealthy residents, chic boutiques and cafes. Many who grew up in the area have moved out, unable to afford a house with an ocean breeze. Many who did own homes couldn't resist cashing in.

Death often precedes a tear-down. For example, when an elderly homeowner passes away and children choose to sell rather than live in the property. The competition for what developers call lots — because the land is more valuable than the house — is fierce.

Prominent Manhattan Beach builder Matt Morris recalled a lot he purchased in the spring.
"I overpaid, in my mind, by $250,000," he said.

The day after he went into escrow, Morris said, another developer offered to pay $150,000 more for the property. He declined the offer. There are simply too few lots available. And Morris believes he stands to make more upon selling the newly built house.

Manhattan Beach, which long ago morphed from a quaint beach town to ritzy burb, has recently been debating tightening its anti-mansionization ordinance, which aims to reduce the visual bulk of new homes and preserve older ones.

Leonard, the developer who demolished the Manhattan Beach cottage in October, said he is "ambivalent" about the new restrictions under consideration.

"As long as it satisfies the residents," said Leonard, who has constructed many Cape Cod-style houses throughout the city. "If the city and residents want small, I build small. If they want bigger, I build bigger."

Other local developers, however, have criticized the proposed changes. After the push-back, the City Council voted in November to send the proposals to the Planning Commission for further study.
Richard MacKenzie worries about what will come next on the empty dirt lots across from his 1955 house. He said he believes construction of a planned deep basement on the land will shift the ground and damage his house, as well as those of neighbors.

The project's developer declined to comment. But plans filed with the city describe a 9,000-square-foot, three-story mansion with an elevator, wine cellar, bar and game room. The master bedroom will have an expansive outdoor deck with a spa tub.

MacKenzie said such giant luxury homes, and the Kardashian lifestyle they represent, threaten the community's beach vibe along with the landscape. To him, Manhattan Beach is starting to feel more like Beverly Hills.

"Why move to the beach?" MacKenzie asked. "You used to walk on the beach and say hi to people. Now people have their own worlds they live in."

Source: http://www.latimes.com/business/realestate/la-fi-housing-tear-downs-20140104,0,4227748,full.story#axzz2pem1JHVB

Thursday, January 2, 2014

Why 2014 is a good year to buy a home

My website: www.sandralew.com

Happy New Year! With the arrival of 2014 home prices are still continuing to climb even with a bit of a cool down of prices experienced in the end of 2013. 2014 is predicted to be another year of gains for the real estate market as home prices are expected to continue to rise about 5 percent. Home buying is almost always a good investment for the long run especially since interest paid on the mortgage is fully tax deductible in most cases while rent checks usually are not.

Why 2014 is a good year to buy a home