Thursday, October 30, 2014

In Real Estate, Your Personality Makes You Predictable

My website:

Personality traits may predict your real estate home buying decisions of buying vs. renting as well as preference for fixed rate mortgages vs. adjustable rate loans.

In Real Estate, Your Personality Makes You Predictable

Are you neurotic or agreeable? The answer matters, since your personality affects your home-buying decisions.

Are you efficient, organized, thorough, diligent and detail oriented? Then you’re a good candidate for a fixed-rate mortgage.

A new study finds that personality traits can help predict our real-estate decisions. Similarly, a second study finds that in states with a relatively predominant personality type, real-estate decisions often reflect that personality.

Researchers in the first study administered a widely used personality-assessment test to a diverse sample of 1,138 respondents. The test asks takers to rate themselves on a scale from 1 to 5 on questions that measure standard personality traits: Openness (think: artistic and imaginative), Conscientiousness (efficient, organized), Extroversion (sociable, energetic), Agreeableness (forgiving, undemanding) and Neuroticism (tense, moody).

Once the researchers established the personality types of the respondents, they then asked five questions about their real-estate preferences, such as the type and duration of a mortgage, whether to rent or buy, and whether to invest in real estate or stocks. (The findings were controlled for variables like level of education, homeownership, age, gender and income.)

The results showed “a very solid correlation” between personality and real-estate choices, said co-author Danny Ben-Shahar, a professor at Tel Aviv University. Neurotic people, for example, prefer homeownership over renting. When they do buy, they opt for a mortgage with a lower loan-to-value ratio, which means the loan amount is low relative to the value of the home. Prof. Ben-Shahar suspects this is because neurotic people are more averse to risk.

In another example, conscientious people preferred investing in real estate over stocks. One explanation: They are more willing to postpone gratification and invest in something that is considered less risky and offers diversification to a portfolio.

The overall findings will be published in the Journal of Behavioral and Experimental Economics.
In a second study by the same team, researchers looked at existing results of the same personality test, but from a much larger sample—about 1.6 million people. Predominant personality types were then matched with housing data from the U.S. Census and the Federal Reserve Bank of New York. Here, too, the personality made a difference on real-estate choices.

States with relatively high marks for Openness—South Carolina, for instance—tend to choose fixed-rate mortgages. The more Agreeable ones, like Tennessee, prefer owning to renting. Neurotic states, like New York, choose lower loan-to-value ratios on the mortgage.

This isn't to say that every state’s real-estate profile lines up exactly with personality traits, Prof. Ben-Shahar said. Still, an individual personality can have real consequences on the way we choose to live, he noted.


Wednesday, October 22, 2014

Hot New Real Estate Trend

My website:

People are getting wiser weighing all their options and taking the time to plan before taking the leap to just buy as it has been engrained traditionally to those generations in the past. The upscale rental market is meeting the needs of the millennials, empty-nesters, and newly single as we are shifting to an accepted rental culture.

Having the flexibility to adjust to the changing needs of a new reality is important to many who don't want the long term commitment home ownership brings. Also when purchasing a home they may not be able to afford all the amenities they want in their price range. Rather than purchase a home far too early in their lives, they are taking their time to plan out their choices and options. Americans are looking at real estate with more rational eyes to meet their current needs.

Hot New Real Estate Trend

Mary Buffet Posted: Updated:

Why more Americans are aggressively entering into upscale rental marketplace.

As people begin to seriously think about where to live, there is a remarkable sea change afoot with millennials, empty-nesters, and the newly single. Instead of plunging in to buy a home, people are weighing other options. We all know how life is supposed to work. Boy meets girl, they graduate from college, get married, and spend an exciting turn in The Big City before they settle down to raise a family in the suburbs.

Developers instilled that home ownership was at the heart of creating a safe place for all families. After the first generation of 30-year mortgagees found their way into the marketplace, home ownership rates soared. Soldiers returning after World War II used the GI Bill to purchase their very first home with a down payment of a dollar.

In good times and bad, home ownership remained a safe bet even when the contours of life changed. Somebody always got the house in a divorce. Even after the children were fully grown and on their own, parents would keep the Big House and it would fill with grandchildren during the holidays.

Then everything went to hell. As the housing refinance industry became a financial behemoth, home values rose beyond the point of sustainability. We all know what happened after that. A sick housing market nearly killed the financial industry and we almost had the Second Great Depression. Only substantial federal intervention kept the nation from revisiting the breadlines of the 1930s. Worse, a generation of young teenagers saw the fear and anxiety on the faces of their parents as they fell behind on their house payments and stumbled into foreclosure.

Nearly a decade later, those same teenagers have graduated from college, entered the job market and are looking for places to live. However, unlike their parents, they are waiting before they purchase their first home. Meanwhile, empty-nesters are downsizing and looking to jettison square footage they no longer need. Those who are newly single or are taking a job in the Midwest, where there is job growth, need a nice place to live. Rather than go through all of the paperwork of purchasing a home, more and more of them are looking at upscale rentals. What's more, they are staying. The rate of home ownership, which crested at nearly 70 percent before the meltdown, fell dramatically to its current rate of 65 percent.

What is driving all of this? First, Americans are looking at real estate with more rational eyes than they did a decade ago. A herd mentality dominated the period between 1995 and 2007, where people bought any parcel to ensure they would not be left behind. The housing appreciation of that period seemed too good to be true. Homeowners soon refinanced their mortgages and many used it to underwrite their own extravagance as they lived beyond their means. Even after the economy has rebounded, millions still remain handcuffed to zombie mortgages that will remain upside-down for the rest of their lives.

Second, qualifying or refinancing a traditional 30-year mortgage is far harder today than it was during those go-go years. The days of "Alt A" loans other subprime tools are long gone. The times when you needed little more than a smile and a signature to purchase a home have been replaced by a stricter regulatory demand for full documentation for all phases of the loan origination process. Even Ben Bernanke, who, while chairman of the Federal Reserve, worked overtime to keep the nation from a complete economic collapse, was recently turned down to refinance his mortgage.

Third, we are shifting from an ownership to a rental culture. This has a greater social implications impact far beyond real estate and we can see it in our everyday lives. Instead of spending thousands of dollars on DVDs for home use, people are paying Netflix $8 per month for access to their entire film library.

"When it comes to choosing a home," remarked Jay Madary CEO of JVM Realty Corporation, a Chicago-area privately held multi-family investment and property management company, "many Americans now consider renting upscale apartments because they can get amenities they may not otherwise find in a home within their price range. They can have granite countertops, high ceilings, walk in closets, as well as access to private fitness centers and resort style pools and gathering areas." If they purchased a pre-owned home, chances are that it will be far older than an upscale apartment and if they wish to upgrade to those modern amenities, it will come out of their own wallet. With an upscale rental, you can get what you want today. Best of all, there is no long-term commitment and no ongoing maintenance obligation.

Homes can become "long in the tooth" after a decade. Appliances need to be replaced and exteriors as well as interiors need to be repainted. Older homes come with older problems. They were designed and built for what families wanted in the 1960s, '70s, and '80s, but you're living in 2014. Who knew what a "smart home" was back in 1973? Also major upgrades can quickly become expensive and these costs will compete alongside college tuition payments for children or extra support needed for aging parents. Besides having to pay back those college loans.

Let's not forget the disruption that comes with life's little surprises like marriages, divorces, blended families, job changes, or even periods of unemployment. Having the flexibility to adjust to your new reality is critical. Should you choose the upscale apartment option, you can simply move out at the end of your lease and resettle into something else that better suits the needs of the moment.

Yes, renters will lose the tax benefits that come with home ownership but if you rent an upscale apartment, you need to see the bigger picture. Before you sign that mortgage paperwork for that "fixer-upper" of your dreams, you need to take into consideration the additional costs of modernizing your new purchase. Those costs alone could quickly eat up any tax benefits. If you don't believe me, check out the cost of a basic kitchen remodel.

In this area, Americans have become wiser. Rather than purchase a home far too early in their lives, they are taking their time to plan out their choices and options. Rather than deal with the headaches that come with modernizing an older house, more and more of them are opting for a turn-key solution that comes within the upscale rental market where they have their cake and eat it too.

With this trend comes the opportunity for investors to balance their portfolio with holdings in a real estate fund.


Friday, October 17, 2014

Lower mortgage rates a silver lining of stock market drops

My website:

For affluent buyers with well established credit there's an upside to the plunging stock market as mortgage rates have fallen again. With investors balling out of the stock market and moving their monies into treasury bonds it's pushing down the government's borrowing costs to the lowest level since June 2013. When treasury yields fall so do mortgage rates as cost of borrowing is lower. This is good news for those looking still to refinance too. Mortgage rates for 30 year loans are predicted to drop to 4%. Construction loan rates should follow and drop as well. Lower rates for home loans boost new construction as well as purchases. Though with lower rates may create demand for home sales again and may drive home prices up again as well.

Lower mortgage rates a silver lining of stock market drops



Tuesday, October 14, 2014

Home sales post gains

My website:

Home sales in mid-September have begun to pick up gains again. It's a sign the housing market is reaching an equilibrium after years of big swings which is better for realistic serious buyers. Home prices have been heading towards a better balance than in the past few years. Median price is up on average about 8.1% compared to a year ago with double digit gains. The market now has something to offer both sellers and buyers. It's prime time to get back in the market and when many do the market may pick up again.

Home sales post gains

home sales 

Higher prices have pushed many investors and cash buyers out of the market, while still-low interest rates and an improving economy are luring more so-called regular buyers. Above, a home for sale in Long Beach. (Cheryl A. Guerrero / Los Angeles Times)

Home sales in the six-county Southland grew for the first time in a year in September as prices moderated from last year's torrid gains, according to figures out Monday.

The data are the latest sign of a housing market that's reaching equilibrium after years of big swings, economists say.

Higher prices have pushed many investors and cash buyers out of the market, while still-low interest rates and an improving economy are luring more so-called regular buyers. And while prices aren't climbing at the 20%-plus pace of last year, they're still rising enough to keep sellers interested in selling.

"It seems like we're heading toward more of a balance," said Mark Gonzales, an agent with Redfin in West Los Angeles. "As long as we can get pricing right in line with people's expectations, we're in balance."
That balance helped drive the number of sales across the region up 1.2% compared with a year ago, according to San Diego-based CoreLogic DataQuick. It's a modest bump, but the first growth of any kind since September 2013, and a big swing from the 18% slide CoreLogic recorded in August.

Sales growth was strongest in Los Angeles and Orange counties, instead of in less-expensive markets farther east. And prices actually fell a bit, with the region's median slipping to $413,000 from its post-crash high of $420,000 in August.

Compared with a year ago, the median price is up 8.1%, and September was the first month in two years that none of the six counties CoreLogic tracks notched a double-digit annual gain.
The market right now has something to offer both buyers and sellers, said CoreLogic analyst Andrew LePage.

"There are still upward forces on home prices: Jobs are being created and families started at a time when the supply of homes for sale … remains relatively low," he said. "Today's home shoppers are more likely to find a less-crowded market with fewer intense multiple-offer situations and more serious, realistic buyers."

It's unclear, though, how long this equilibrium will last.
The California Assn. of Realtors last week forecast that price gains will keep slowing in 2015, and that sales will increase — after falling in 2014 — as buyers have a better chance to catch up to the new higher price points. But in a market in which many buyers struggle to afford a house, the prospect of higher interest rates is a constant threat, said the trade group's chief executive, Joel Singer.

"Any increase is going to have a substantial effect on the number of sales," Singer told a roomful of agents last week at the association's annual convention in Anaheim.

Right now, though, rates are as low as they've been all year. The job market is improving. Even gasoline prices are down, which is putting would-be buyers in a better mood, said Syd Leibovitch, president of Rodeo Realty. His firm, one of the largest brokerages in Southern California, is starting to see both prices and sales pick up again for deals that will close later this fall.

"It was really unexpected," he said. "August was a slower month. It seemed like homes were starting to sit and we were going into a more normalized market. Somewhere around mid-September it picked back up again. We started getting more multiple-offer situations."

Gonzales has been seeing things quicken too. Calls and visits to Redfin's website by prospective buyers were up 50% in September, and those house hunters are now out shopping.

"They were frustrated with the way the market was going. A lot of them took a break," he said. "Now it's a prime time to come back in."

And as they do, the pace of home sales should pick up even more speed, analysts said.


Thursday, October 9, 2014

REAL ESTATE: Slower gains predicted in 2015 for home sales, prices

My website:

Real estate is taking shape of a more traditional market for 2015 as we transition to a slower price appreciation environment. The slow down in price gains should help would be buyers to get into the market. It helps improve market affordability as housing inventory continues to improve and a modest uptrend for 2015 is predicted rather than in past few years of median home prices rising as much as 27.5 percent.

REAL ESTATE: Slower gains predicted in 2015 for home sales, prices

Boost in inventory will lead to modest upward trends, economist says.

 BY DEBRA GRUSZECKI / STAFF WRITER  Published: Oct. 7, 2014 Updated: Oct. 8, 2014 1:17 p.m.

Reset, California.

That could be the theme of a real estate forecast that California Association of Realtors chief economist Leslie Appleton-Young delivered Tuesday for 2015, as the real estate industry takes the shape of a more traditional market.

Next year promises to be far less frothy than it has been when it comes to price.

The association’s forecast is projecting a 5.8 percent increase in existing home sales in 2015 to 402,500 units. Median home price for California is expected to rise 5.2 percent to $478,700 in 2015, less than half the projected 11.8 percent rate in 2014.

Sales in 2014 will be down 8.2 percent from the 414,300 existing single-family homes sold in 2013, the state trade association said.

“We are transitioning into a slower price appreciation environment,” Appleton-Young acknowledged in a conference call.

The real estate scene going forward may seem dull, but is characteristic of a market that hit a tipping point after the rocket ride of 2013, she said. Median home prices rose 27.5 percent. Investors swooped in, scooping up foreclosure stock. Inventory was crimped. Cash was king.

That dynamic has significantly impacted housing affordability in California and forced some buyers to delay their home purchase, association president Kevin Brown said. Any slow-down in price gains will help would-be buyers get into the market.

“I don’t think it’s out of the question that within two years from now we could see some declines or retreats in terms of prices,” Appleton-Young said.

Appleton-Young said it may look ho-hum to some, but it will be a good pause for people who have gotten exhausted by multiple offers and competition in the past couple of years.

The percentage of properties fetching multiple offers has dropped to 53 percent from 70 percent in 2013, she said.

“We believe the change will be driven by the increase in inventory we are already experiencing, as well as improvement in the macro-economy and job creation,” Appleton-Young said.

The association predicts 3 percent growth in 2015 in the nation’s gross domestic product, up from 2.2 in 2014. “With the U.S. economy expected to grow more robustly than it has in the past five years, and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015.”


Thursday, October 2, 2014

State O' the Market : LA's Housing Market is Second Most Bubblicious in the US

My website:

Los Angeles's housing market seems to have stabilized for the time being yet it's still the nation's second most overvalued market.

LA's Housing Market is Second Most Bubblicious in the US

Wednesday, October 1, 2014, by Bianca Barragan

Does Los Angeles's housing market still feel way overpriced? It is, but at least it doesn't seem to be getting any worse (or better) right now. Third quarter results are in from Trulia, and they've found the LA market is holding strong at 15 percent "overvalued" (Meaning that the value of a house now exceeds its "fundamental value," based on "historical prices, incomes and rents." Don't consider the idea of "fundamental value" too long or you'll end up living alone in the desert.). That makes LA the nation's second most overvalued market, after Austin, TX, up from third place in the second quarter. LA is rising in the ranks mostly because the rest of the area is headed back toward reasonableness: Orange County was previously at the top of the list, but has moved down to number three, and the Inland Empire (Riverside and San Bernardino areas), last at number four, has slid down to number five. The slower gains in housing prices have likely helped those two regions tumble down the overvalued list, points out the LA Times.


trulia home prices.jpg