Friday, June 27, 2014

Housing costs are a greater burden in L.A. than elsewhere

My website: www.sandralew.com

There is a growing affordability crunch in LA. It is common for half the households in metro LA to spend at least 30% of their income on rent or mortgage payments. Renters fall into the same situation spending at least 30% of their income on housing too. These figures are staggering compared to elsewhere in the country. One in four households spend 50% or more of their income on housing. This creates less disposable income for other necessity spending like food, clothing, entertainment, healthcare, etc which creates a financial burden. With rising housing prices and stagnant wages there is no solution in sight for the interim. This continues to hold back a stronger economic recovery.

Housing costs are a greater burden in L.A. than elsewhere

L.A. Mixes Grit With Glitz In $7 Billion Downtown Revamp 

Pedestrians walk past an advertisement for the Apex luxury high rise apartments on Figueroa Boulevard in downtown Los Angeles. (Patrick T. Fallon / Bloomberg)

June 25, 2014 By Tim Logan

Half of households in metro L.A. spend at least 30% of their income on rent or mortgage payments .

L.A. renters are more squeezed than homeowners: 6 in 10 renters spend at least 30% of income on housing.

More Angelenos spend a large portion of their income on housing than people anywhere else in the country, according to a new study out Thursday from Harvard University's Joint Center for Housing Studies.

Fully half of the households in metro Los Angeles spend at least 30% of their income on rent or mortgage payments, the highest rate of 381 metropolitan areas in the U.S. One in four households here spends at least half its income on housing.

The report is the latest evidence of a growing affordability crunch in Southern California's housing market. Costs to both buy and rent homes have grown far faster than incomes in recent years, pushing more families to spend a greater share of their income to live here.

Seven of the 10 metros with the highest share of "cost-burdened" households are in California, including the Inland Empire, San Diego and Ventura County.

Many economists peg 30% of income as a point at which housing costs start to become burdensome, crowding out other spending. At 50%, it becomes a "severe burden." Of low-income households that spend at least that much on housing, 39% reported spending less on food and 65% cut spending on healthcare, the report said.

"Pretty much all other necessity spending is getting crowded out," said Dan McCue, research manager at the Harvard Joint Center for Housing Studies. "Food, clothing, healthcare, you name it. There's just less to go around."

Renters are especially squeezed, with 6 in 10 renting households spending at least 30% on housing. Among homeowners in metro Los Angeles, 4 in 10 spend that much, the sixth-highest rate in the country.

The study's findings echo a report issued in May by the Southern California Assn. of Nonprofit Housing, which found Los Angeles County has a shortfall of nearly 500,000 apartments that are affordable to low-income households. State and local funding for affordable housing has fallen in recent years, even as rents have climbed and demand for low-cost rentals has surged.

In Southern California, the challenge is one both of high housing costs and stagnant wages. Median household income, adjusted for inflation, has fallen 11% here since 2005, while rents have climbed.

And while the typical Southland household still earns more than the national average, incomes here lag behind those of other high-cost housing markets like San Francisco, New York and Washington, D.C. So, despite having less expensive housing than those cities, Los Angeles fares worse on measures of housing affordability.

"The basic cause of these high cost burdens is weak income growth," McCue said.
More broadly, the Harvard study sees the housing market slowly healing nationwide, in step with the broader economy. But tight credit and high levels of student loan debt are keeping many young adults from buying homes, one of several factors holding back a stronger recovery.

tim.Logan@latimes.com

Source: http://www.latimes.com/business/realestate/la-fi-affordable-housing-20140626-story.html


 

 



Wednesday, June 18, 2014

City's 'Walkability' Drives Real Estate Values

My website: www.sandralew.com

Home values have bounced back higher and faster in walkable neighborhoods than in the so-called exurbs. The beach cities along the Southern California coast are recovering quickly as well due in big part to walkability as well. The bike path along the Strand plays a big factor as well.  This new generation is more environmentally and health conscious than any before it. Demand is great as there is a distinct correlation between walkability and real estate values for both residential and commercial properties. Prices are higher in these urban areas than the suburbs.

City's 'Walkability' Drives Real Estate Values

By Diana Olick

Image: People frequent pedestrian plazas in Times Square/Herald Square in New York. 

 Car shares, bike shares, improved rapid transit and teleworking. All are the product of a new generation that is more environmentally conscious than any before it and more willing to use its own energy to get around town, rather than tapping expensive energy sources. 


Millennials prefer urban cores, even ones outside of major metropolitan areas, because they want to be able to walk or bike to work and stores. In turn, areas that offer so-called walkability should see more home buyers and renters than those that don't. 

"Cities that want to thrive in our new economic and demographic realities will need to find ways to create and support more of these dynamic, productive walkable districts that are in high demand," said Geoff Anderson, CEO of Smart Growth America, which, in conjunction with George Washington University School of Business, released a new report ranking the walkability of the nation's 30 largest metropolitan areas. 

There is, in fact, already a distinct correlation between walkability and real estate values, both commercial and residential. 

"Walkable, urban for-sale housing is by far the most expensive housing in the country. The range depends on the market, between 40 percent and 200 percent greater than drivable, suburban housing," said GWU's Chris Leinberger, author of the report. "Twenty-five years ago that relationship didn't exist because walkable (cities back then) was not valued."
Home values have bounced back higher and faster in walkable neighborhoods than in the so-called exurbs.
Washington, D.C., wins as the nation's most walkable city, according to the survey, which looked at the share of office and retail space located in a city's "WalkUPs" — walkable urban places — through the first quarter of 2014. A city can have several different WalkUPs within its limits; metro New York contains 66, while San Antonio has just two. 


WalkUPs still occupy a relatively small portion of the 30 cities' land, just 1 percent on average. Still, these areas offer outsized economic benefit, according to the survey.
 
Commercial office space in walkable areas has an average 74 percent price-per-square-foot premium over suburban business parks, according to Leinberger. For apartments, there is a 70 percent rental premium on walkability. That is likely why, in the current real estate cycle, 85 percent of all rental apartments have been built in walkable urban places. 

In Washington, researchers identified 45 WalkUPs that occupy just 1 percent of the metro's acreage but account for 48 percent of its new office, hotel and rental apartment square footage. D.C. is also the only metropolitan region that has more than half of its WalkUPs in its close-in suburbs (which are classified as part of the metro market). Suburbs like Bethesda, Md., and Crystal City, Va., are seeing huge commercial development and rising real estate values, thanks to their focus on the new urban, walkable core. 

In Crystal City, developers are luring tech start-ups, selling them on the walkability of the area.
"The young millennials are obviously into sharing a lot more, so we've got bike sharing here, we've got Car2Go, and we've got Zipcar and we're also working with the folks from WeWork to create a sort of community-environment for living," said Mitchell Schear, president of D.C. operations for realty trust Vornado 

Walkability also drives recovery. Home values have bounced back higher and faster in walkable neighborhoods than in the so-called exurbs. Cities that focus on walkability will likely see more retail, restaurant and office investment. Researchers compiled a "future ranking" on walkable urbanism and put Boston at the top of the list. The vast majority of Boston's development in this real estate cycle has been walkable urban. 

Tuesday, June 17, 2014

More homeowners becoming landlords

My website: www.sandralew.com

Many homeowners are keeping their prior home rather than selling and that is a major reason for the low supply of homes for sale which also contributes to a limited sales growth. " Redfin reports that 19% of current homeowners either purchased or refinanced homes between 2011 and 2013 -- when rates were historically low falling just below 3.4%. " These days it may make sense to become a landlord and let the property value continue to rise especially if the rent can cover the mortgage and taxes & there may even be a small profit.

It's a good investment over time especially as rents have continued to soar in many metropolitan areas. "Rents have risen by about 20% nationwide since mid-2006, the housing bubble peak, while home prices are still about 21% below what they were at that time. " That makes it an easy decision to hold on.

More homeowners becoming landlords

June 17, 2014: 11:00 AM ET

accidental landlords 
Juliana Ruiz and Mauricio Jimenez bought a bigger home nearby and have been renting out their former home for over a year.  


NEW YORK (CNNMoney)

Low mortgage rates and soaring rents have convinced a growing number of homeowners to hang onto their former homes and become landlords instead.

"Clients tell us all the time, 'We're never going to sell our home, even after we buy a new one,'" said Glenn Kelman, CEO of the brokerage, Redfin.

Susan Young of Lawrence, Kan., refinanced the mortgage on her house in 2013, landing a 3.25% rate on a 30-year fixed loan. She bought another house but has not put her old home on the market.
"If the interest rate was high, I'd sell," she said. "But this is such a perfect loan package, I just can't bring myself to give it up."

She gets $1,100 a month in rent, several hundred dollars more than her expenses, and is using the profits to pay off her mortgage.

Redfin reports that 19% of current homeowners either purchased or refinanced homes between 2011 and 2013 -- when rates were historically low falling just below 3.4%.

Chris Cannon and his wife currently live in Mt. Lebanon, Pa. and plan to move to start a family. But he will a hard time letting go of his home.

"It would be incredibly hard to give up the 3% mortgage we have," he said. "When we bought in November 2012, rates were at the bottom -- about 3.4% for a 30-year -- and we paid a couple of points to get ours down to 3%."

He figures he can rent his home in Mt. Lebanon for $1,400 to $1,500 a month, easily covering his mortgage payment and taxes which total $1,100 a month.

The math works in most landlords' favor these days. Rents have risen by about 20% nationwide since mid-2006, the housing bubble peak, while home prices are still about 21% below what they were at that time.

For people who are still underwater on their mortgages and unable to profit from a sale, renting helps soften the blow.

Juliana Ruiz and her husband Mauricio Jimenez bought their three-bedroom Pembroke Pines, Fla., home for $362,000 in June, 2005 when the market was red hot.

They opted for an adjustable rate mortgage, which turned out to be a great deal: rates have plunged, as have their mortgage payments. Now, they pay a 2.75% rate and owe $250,000 on the home, which is worth about $300,000 thanks to a recent surge in home values.

But since they now have three children and both Juliana and Mauricio work mostly from home, they needed more room.

They bought a six-bedroom home nearby and have been renting their old place out for a year.
"The local real estate market allows me to cover the mortgage and small incidentals with the rent collected," said Ruiz. "At the same time, my property value is increasing."

If the mortgage rate starts to climb, they'll consider selling. By then, they hope they will be able to sell for a profit.

Of course, there are downsides to becoming a landlord. Owners have to make repairs, deal with tenants and cover expenses, even when the property is vacant.

"[Being a landlord is] definitely not for someone who hates spending money on plumbing repairs and new locks," said Young.

And some tenants can be demanding, say if the water isn't hot enough or the air conditioning not cold enough.


"Tenant happiness is important to me and I try to give them whatever they ask for -- within reason," she said.

The surge in landlords is working out well for most owners, but it is taking a toll on the housing market, according to Kelman. Every home converted into a rental property is one less that goes on the market. And in hot real estate markets these days, very few homes are up for sale.

"It's a major reason we have low inventory and limited sales growth," said Kelman.

Source: http://money.cnn.com/2014/06/17/real_estate/homeowner-landlords/index.html



Thursday, June 12, 2014

This town boasts the priciest real estate in U.S.

My website: www.sandralew.com

The small town of Atherton on the peninsula in the San Francisco bay area boosts the most expensive real estate in the states.  It's located between Silicon Valley and San Francisco with easy access to either makes it an ideal location. It's also few minutes away from Stanford University which further makes it more appealing.

This town boasts the priciest real estate in U.S.

Thursday, June 5, 2014

Fewer Southland mortgages are underwater, thanks to rising prices

My website: www.sandralew.com

Less mortgages underwater these days due to surging home prices, stricter down payment requirements and lending practices which help dramatically reduce the likelihood of foreclosures. While many homeowners are above water on their mortgages there are still many with less than 10% equity in their properties. Over time, slowly but surely lets hope this continues to improve.

Fewer Southland mortgages are underwater, thanks to rising prices 

Fewer mortgages are underwater
Nationwide, 12.7% of home mortgages are underwater. In the Los Angeles metro area, the figure is down to 8%. (Bryan Chan, Los Angeles Times)

By Tom Logan   June 5, 2014 5:00 a.m.

Rising home prices pulled more Southland homeowners back above water on their mortgages at the start of the year, according to new data out Thursday.

Just 8% of mortgage holders in the Los Angeles metro area, and 17% of those in the Inland Empire, owed more on their homes than the homes were worth in the first quarter, according to figures from Irvine-based data firm CoreLogic.

Both figures are an improvement from the fourth quarter of 2013 and sit at their lowest levels since CoreLogic started tracking underwater borrowers during the housing crash in 2009. Nationwide, 12.7% of home mortgages are underwater.

The surge in home prices, coupled with stricter lending standards and higher down-payment requirements, contributed to the improvement. That's good news for homeowners and lenders since it dramatically reduces the likelihood of foreclosures.
It may also be good for the housing recovery, some experts say, because homeowners who have equity in their houses have a greater ability to sell and move to something bigger. These so-called "move-up" buyers have been a missing ingredient in the recovery, damping home sales in the middle tiers of the market. And the lack of their houses on the market is making it harder for first-time buyers to find a place.

But Sam Khater, deputy chief economist for CoreLogic, said he doesn't quite see the housing market returning to full speed despite the improving equity picture. While more homeowners may have their heads above water these days, too many are still just barely atop the surface.

"Many borrowers still lack sufficient equity to move and purchase a home," he said. "One in five borrowers have less than 10% equity in their property, which is not enough to cover the down payment and additional costs associated with a conventional mortgage."

Source: http://www.latimes.com/business/realestate/la-fi-underwater-loans-20140605-story.html