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US home sales hit its highest level in more than six years last month! This offers confirmation that the housing recovery remains on course. In August, the West soared 50% in sales to its highest level since January 2008. Despite the increase in sales, supplies have also increased giving buyers more choices as the market is reaching healthy levels of supply and demand.

U.S. new home sales at six-year high; supply increases

September 24, 2014 10:33 AM ET

By By Lucia Mutikani

WASHINGTON (Reuters) - Sales of new U.S. single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course.

The Commerce Department said on Wednesday sales jumped 18.0 percent to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008 and marked the second straight month of gains.

Economists polled by Reuters had forecast new home sales rising to only a 430,000-unit pace last month.

While the new home sales segment accounts for only 9.1 percent of the housing market, the increase last month should allay fears of renewed housing weakness after a surprise decline in home resales last month.

Existing home sales fell in August for the first-time in four months as investors, who have been supporting the market, stepped away. Some economists, however, think the departure of investors, who have been bidding up prices, is a positive development for housing.

A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September, with builders reporting a sharp pick-up in buyer traffic.

But housing continues to be hobbled by relatively high unemployment and sluggish wage growth.
In a separate report, the Mortgage Bankers Association said mortgage applications fell last week. The decline, however, followed a jump in the week ending Sept. 12.

U.S. financial markets were little moved by the data, but housing shares tumbled after home builder KB Home reported earnings that missed Wall Street's expectations.

KB HOME shares fell 6.89 percent, while Pulte Group slipped 1.74 percent. Toll Brother dropped 1.27 percent.

In August, new home sales soared 50 percent in the West to their highest level since January 2008.
Sales in the populous South increased 7.8 percent to a 10-month high. In the Northeast, sales rose 29.2 percent, but were flat in the Midwest.

Despite the rise in sales, the stock of new houses on the market hit its highest level in four years, giving buyers more choice. At August's sales pace it would take 4.8 months to clear the supply of houses on the market. That compared to 5.6 months in July.

Six months' supply is normally considered a healthy balance between supply and demand. The median new house price increased 8.0 percent in the 12 months to August.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
(c) Copyright Thomson Reuters 2014. Click For Restrictions - http://about.reuters.com/fulllegal.asp

Source: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140924&id=17958898

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A record number of younger Americans have been living with their parents, which has greatly reduced household formations in recent years. But as the economy improves, more are finally venturing out on their own. Growth has been greatest in the rental market. This generation has spent more per person than any other time opting for affordable rents rather than high home price purchases to start off with.  Renting is the first step to leaving the nest. Los Angeles leds the pack as one of the most desirable places for Millennials to live. 

Millennials start leaving Mom and Dad's nest

Diana Olick - Tuesday, 16 Sep 2014 | 12:59 PM ET

 

As the U.S. economy improves and adds jobs, younger Americans—millennials—are slowly starting to move out from their parents' basements, where a record number of them have been living for the past few years. They're not buying homes as much as they are renting them, but how much and where is crucial to know in order to understand where the housing recovery is headed.

 

Over the past year, all the growth in net household formations has been among renters, according to the U.S. Census. For those 35 years old and younger, their home ownership rate has fallen from 44 percent to 36 percent over the past decade, which is why construction of multi-family apartments is at the highest level in a quarter-century this year.

 

But back to that migration from the basement. How big is it? Millennials will spend $1.6 trillion on home purchases and $600 billion on rent over the next five years, more per person than any other generation with more of them opting for more affordable rents versus paying the big price tags to buy homes, according to a new report from The Demand Institute, a non-profit think tank operated by The Conference Board and Nielsen. Millennials will form just over eight million new households, albeit most of them rental households.  

 

One important difference between millennials and young adults in previous decades is the unique financial challenges of home ownership today, resulting from graduating into a weak job market with growing student loan debt," said Jeremy Burbank, a vice president at The Demand Institute and Nielsen. "Many millennials are open to alternative approaches to housing finance, including single-family rentals and rent/own hybrid contracts such as lease-to-own."

 

And where will millennials move? The locales are now trickling in. When it comes to big cities, who better to ask than the moving companies? United Van Lines tallied up the results of the busy summer moving season and found that Chicago, Washington, D.C., Atlanta, Boston and Los Angeles led the pack of the most popular moving destinations. Washington also ranked as the No. 1 city that people are leaving, but such is the transient nature of the top political town.

While those are the major metropolitan markets, some millennials are looking for mid-size cities with great quality of life. Where should they go?

Top 5 livable cities, where millennials might consider moving

Rank	City	Population	Median household income	Median home price
1	Madison, Wis.	234,586	$53,958	$217,500
2	Rochester, Minn.	106,903	$63,490	$165,300
3	Arlington, Va.	209,077	$102,459	$577,300
4	Boulder, Colo.	99,177	$56,206	$489,500
5	Palo Alto, Calif.	64,514	$122,482	$1,000,000

Source: Livability 

 

Madison, Wisconsin; Rochester, Minnesota; Arlington, Virginia; Boulder, Colorado, and Palo Alto, California, are the top five most "livable" small to mid-size cities, according to a new report from Livability.com. Researchers there looked at 2,000 cities and their amenities, demographics, economy, education, health care, housing and transportation.

Millennials will drive the future of the housing market, and while they may have just started to move out of Mom and Dad's house now, investors should know where they're headed.
—By CNBC's Diana Olick.

Where people moved to this summer

Rank	City
1	Chicago, ll.
2	Washington, D.C.
3	Atlanta, Ga.
4	Boston, Mass.
5	Los Angeles, Calif.

Source: United Van Lines

 

The report found the millennials do aspire to home ownership, just as previous generations did, and they will be important drivers of the housing market. The difference between them and other generations, however, is that their time horizon for home ownership will be shorter, and their aspirations have been altered somewhat simply by the fact that they came of age in the Great Recession.

Where people moved from this summer

Rank	City
1	Washington, D.C.
2	Dallas, Texas
3	Atlanta, Ga.
4	Houston, Texas
5	Phoenix,	Ariz.																																						Source:	http://www.cnbc.com/id/102004872

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Millennials are those defined to be under 35.  They are outpacing the number of boomers. They are in no rush to buy their own homes and may be saving up by living in their parents homes longer than previous generations. They still desire to buy in the future but have very clear preferences in their desires which will further shape new home trends. They want to be close to everything and have a high quality of life. Urban life suits them and they want convenience like being close to work, a local starbucks, restaurants & bars,  high technology options in the home, open versatile floor plans and they are willing to pay a premium. Many coastal regions of Southern California foot this desire thus demand for these cities like Santa Monica, Venice, Playa Del Rey, Playa Vista and Marina Del Rey will continue as well.

What millennials want in a home

Published: Sept 15, 2014 6:02 a.m. ET

Not ready to buy, but starting to fantasize

Good cellphone coverage? Check. Easy access to bars and Starbucks? Check.

By AmyHoak  -Personal Finance Editor

Millennials aren’t in a rush to buy their own homes. Heck, many of them aren’t in a rush to move out of their parents’ houses.

That doesn’t mean, however, that they’ll remain renters—or freeloaders in mom and dad’s basement—forever. And the housing and mortgage industries can’t wait.

“The story line has been that millennials are not forming households, they’re living with mom and dad,” said Jonathan Smoke, chief economist for Realtor.com. But this group’s usage of mobile real estate applications and websites is on the rise, Smoke says, up 61% year-over-year as of July based on his analysis of comScore data of people between the ages of 25 and 34. More than one-third of millennials used a mobile device in July to look at real estate data, he said.

That says to Smoke that millennials are at least thinking about buying or renting a home, and researching the market to learn their options.

What’s more, a recent Redfin survey found that 92% of people in this age group who don’t have a home want to buy one in the future, said Nela Richardson, the real-estate company’s chief economist. And there are some clear preferences in what they want in a home.

As millennials reach peak home-buying age, their needs and wants will shape the future of the housing and mortgage industries—much as the boomers did before them—based on the sheer number of millennials out there, Richardson said. Smoke estimates there are 87 million millennials in the U.S., compared with 75 million boomers.

The Redfin analysis delves into census data to determine where most millennials are living today, and there’s a dominant theme: Millennial renters like to be close to everything they need, including transportation, work, coffee shops and bars, Richardson said.

That means millennials are concentrated in neighborhoods such as Dupont Circle and Georgetown in Washington, D.C.; north of the Loop on Lake Michigan in Chicago; and in Capitol Hill, Queen Anne, Magnolia and Ballard in Seattle. Rentals can be pricey in these areas.

Lots of amenities

And this amenity-rich living is likely something they’re going to want when they buy a home, Richardson said. Of course, neighborhood affordability also is a huge factor when it comes to buying a first home, she added. After all, when you’ve been paying high rents for years in trendy neighborhoods, it makes it that much harder to save up for a down payment.

But the places where millennials settle may adapt to become more like the urban areas where they once rented—places where there’s always a coffee shop nearby, Richardson said.

Good schools

For those with kids or planning to start a family, of course, schools are also important. When house hunting, those born after 1980 are less likely than other generations to compromise on school districts, according to a Realtor.com survey. Fifty-two percent of millennials said the quality of a school district could be a deal breaker in their search for the perfect home, compared with 31% of all buyers.

Home technology

Millennials will forgo other home comforts in return for more technology capabilities in a home, said Sherry Chris, chief executive of Better Homes and Gardens Real Estate. They want a home that is connected, one where they can use their iPad to turn the heat up and down, she said.
And in a recent Century 21 survey of single homeowners, 28% of those between the ages of 25 and 35 said good cellphone coverage is a deciding factor in whether they would buy a particular home, said Rick Davidson, chief executive of Century 21 Real Estate.

Smaller, flexible spaces

Both boomers and millennials want smaller spaces these days, said James Roche, chief executive of Houseplans.com, a provider of online home-design and remodeling plans. But millennials aren’t attracted to traditional styles; instead, they’re looking for modern homes that are cost- and energy-efficient, and designs that better reflect how people live comfortably today.

Indeed, part of the reason they’re thinking small: They don’t want to pay for heating and cooling rooms that they don’t often use. They also care whether a home is built sustainably, Roche said.
And while past generations may have wanted a dining room—to pack the whole family into for Thanksgiving dinners—this generation may figure that a multipurpose space is better, considering large holiday gatherings aren’t everyday affairs, he said.

Chris agreed. “They don’t want the old fashioned traditional formal dining room. They want to take the structure and make it their own,” she said. “A dining room can become a media room. There’s not the formality there was with the baby boomers,” she said.

Source: http://www.marketwatch.com/story/what-millennials-want-in-a-home-2014-09-15?page=1

 

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Corporate offices of Google may expand into Playa Vista to the former massive Howard Hughes hanger where the "Spruce Goose" was built. It is a massive space of over 300,000 square feet. That would be exciting news for the area and a great addition for Silicon Beach. There are already many high tech and media firms in Playa Vista including Google-owned YouTube. This move would only attract even more to the area. This will also create an even greater need for housing in the area.

Google Eyes Giant Offices in Historic Los Angeles Airplane Hangar 

 

Google is eyeing an expansion in Los Angeles into a hangar where the “Spruce Goose” was built 

5:29 pm ET  Aug 26, 2014  By Eliot Brown

A massive former airplane hangar just north of Los Angeles International Airport was home to construction of the world’s largest airplane in the 1940s and then hosted filming for movies including “Independence Day” and “Transformers.”

Soon it could launch a new life: corporate offices of Google Inc.

According to multiple people familiar with leasing discussions, Google is eyeing an expansion of its Los Angeles facilities into the sprawling facility, a giant edifice built by Howard Hughes in 1943.

Today, the building is owned real estate developer Ratkovich Co. The company has converted the rest of the former Hughes Aircraft headquarters into modern offices filled with tech and media firms—including Google-owned YouTube—and it wants a big tenant for the hangar and attached buildings as well.

Google is in early discussions with Ratkovich about leasing more than 300,000 square feet to take nearly all the facility, the people familiar with the discussions said. The space would add to Google’s existing offices in the area, they said. Those include a Venice, Calif., outpost in an iconic Frank Gehry-designed office with giant binoculars out front.

The hangar was held for years by Howard Hughes’s Hughes Aircraft and was used to build the giant “Spruce Goose” aircraft. The company eventually sold its airfield and headquarters in the 1980s to make way for development. The hangar, known as Building 15, has since been used for some filming movies on occasion, but Ratkovich has been hoping to find an office tenant ever since the company bought the former Hughes headquarters in 2010.

It hasn’t been easy, in part because of its design. It is rather atypical—to say the least—for office space. The hangar has two bays that are 750-feet long—more than twice the length of a football field—and its ceiling is more than seven stories high.

In an interview, Ratkovich chief executive Wayne Ratkovich declined to comment on Google, but said generally that leasing at the overall property “was faster than we imagined, faster than we expected.”

The property is in the Playa Vista neighborhood of Los Angeles, which long struggled to attract companies. But in the past three years numerous tech, media and advertising companies have flocked to the area. That—in turn—has attracted other similar companies to look at moving there.

Interestingly, the area has far more of a suburban feel than neighborhoods in many cities that attract a similar type of tenant like the Union Square area of New York or South of Market in San Francisco, as Playa Vista lacks neighborhood coffee shops and instead has surface parking and large expanses of open space.

While tech companies with young workers have generally avoided suburban locations, other than Silicon Valley, the landlords in Playa Vista have gone to great efforts to boost the amenities aimed at young workers. For instance, Ratkovich has added surfboard racks and barbeque pits, and food trucks pull up to the area’s offices for lunch.

Source: http://blogs.wsj.com/developments/2014/08/26/google-eyes-giant-offices-in-historic-los-angeles-airplane-hangar/

 

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Smart companies want innovative space so conventional office is going to have a hard time to compete. These new office spaces will be a magnet for creative firms. Modern buildings with contemporary design is in along with modern everyday conveniences like pet friendly work spaces, cafe, local gym with lots of fitness options for good quality of life. Maguire III a prominent developer is banking on the "fun" factor and it's working.

Prominent L.A. developer to build unconventional office at Playa Vista

 

The WE3 office planned for Playa Vista will feature vivid colors, concrete floors, operable windows and 14-foot ceilings. (Zoltan E. Pali)

By Roger Vincent - August 28, 2014 ; 5a.m.

Robert F. Maguire III, a prominent developer who helped shape L.A.'s skyline in the 1980s and '90s, is back.

Maguire led development of several of the city's best-known office buildings including U.S. Bank Tower, the tallest structure in Southern California. Now, at 79, Maguire says he is gearing up to develop again.

He plans to build an unconventional office at Playa Vista, the expansive former headquarters site of aviation titan Howard Hughes that has become a magnet for so-called creative firms such as YouTube.

The monolithic granite and glass towers Maguire built for corporate titans of the late 20th century are not attractive to technology, entertainment and digital media firms now leading the region's economic recovery, he says.

Smart companies want innovative space. Conventional office space is going to have a hard time competing. - Develop Robert F. Maguire III

 

"Smart companies want innovative space," he said. "Conventional office space is going to have a hard time competing."

The Playa Vista office market is roaring, in part because the tech-centric Westside, sometimes known as Silicon Beach, is running out of space.

"Santa Monica is full," Maguire said. "The obvious replacement for major tenants is Playa Vista."

His plan is to build an office called WE3, which would be the third building at an office campus called Water's Edge at the intersection of Lincoln and Jefferson boulevards. Maguire has held part interest in Water's Edge since he built it in 2002.

The complex, about a mile from the Pacific Ocean, was intended from the start to be a campus for creative technology types, but the timing was off. The roaring tech boom of the late 1990s was over by the time Water's Edge hit the market and it sat empty until video-game giant Electronic Arts Inc. moved there in 2004.

EA ran into financial challenges and labored to sublease much of its space, but Water's Edge is now at more than 90% occupancy, Maguire said. He plans to sell the complex to an investor willing to become a partner in the development of WE3.

"We are interested in joint venture so we can start the building on spec," he said, meaning that work on the $67-million building would begin before any agreements with tenants have been reached.

The design, by architect Zoltan Pali of Studio Pali Fekete Architects, calls for a vivid blue and red four-story building.

"There is color everywhere, inside and out," Maguire said. "It's in total contrast to conventional office space."

WE3 would have polished concrete floors, operable windows and 14-foot ceilings — about 60% higher than is typical.

Water's Edge already has an LA Fitness gym, a screening room, a cafe, a soccer field, a basketball court, a sand volleyball court and an Olympic-length lap pool.

"This really reflects the way people want to work and what progressive companies like to buy into in terms of space," Maguire said. "It's changed."

Demand has indeed been strong in Playa Vista lately. A former U.S. Postal Service hub on Jefferson Boulevard now called the Reserve leased 380,000 square feet in less than two years to such tenants as Microsoft, entertainment media company TMZ and content delivery network EdgeCast.

Landlords asked for nearly $3.25 a square foot per month in Playa Vista last quarter, according to brokerage Cushman & Wakefield. In downtown Los Angeles landlords asked for less — about $3.04 a foot.

One of Maguire's former partners, Ned Fox, says he didn't see the shift toward unconventional office buildings coming during the construction heyday that lifted the city's skyline.

"Back when we were building high-rises downtown in the late '80s early '90s we were performing research on how tenants were utilizing space," Fox said. "There was a lot of talk about the Information Age, but none of us knew what that really meant. We didn't appreciate that the way people work was going to radically change."

Technological advances eliminated the need for file cabinets, libraries and even offices and assigned desks. Many organizations became less hierarchical, Fox said, and now desire offices that enable managers and staff to quickly cluster in groups as they work on various projects.

"It's getting to the point where companies have learned how to make open space highly collaborative," Fox said, "where you can bring a lot of talent together."

Fox's firm Vantage Property Investors has converted an old Citibank research-and-development plant in Playa Vista into offices for creative firms. Dogs are permitted and tenants take breaks to play with the foosball and pingpong tables.

People don't need a lot of office space, he said, but "they do need breakout and relief space."
Maguire, who was known for his demanding personality in the past, will probably make WE3 work, Fox said.

"His tenacity and creativity may drive a lot of people nuts," Fox said of Maguire, "but he always ends up with something that is different and typically very good."

Maguire said he intends to build more beyond WE3, following the example of his grandfather, who practiced law until the age of 93, and his father, who flew planes until he was 80.

"We are coming up with something that is totally different than we are used to building, which is fun," Maguire said. "When I stop having fun, I won't do it anymore."

Source: http://www.latimes.com/business/realestate/la-fi-property-report-playa-vista-20140828-story.html

 

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Statistics are just that as may have little meaning when related to what's actually happening in a particular neighborhood. There is always a lag between contract and closing which creates an unavoidable minimum two month delay with reporting data. In a nutshell, just take the stats as a grain of salt.

Beware the shortcomings of data on home prices and mortgage rates

By Lew Sichelman - August 21, 2014 9:08am

It has been said that figures lie and liars figure. But even when the numbers are truthful, they often are nearly meaningless.

Take average home prices. They are widely reported by regional and local media, even though they are generally national in nature. Although it's nice to know that housing values throughout the country are up or down — or holding steady — the figures often have little meaning when it comes to what's happening on your block or in your neighborhood.

David Rathgeber, a northern Virginia real estate broker, says home price data are "recreational" rather than actionable. He also rightly points out that the figures quoted are usually old news, as much as four months after the fact, even though they are often mistakenly reported as this month's or last month's numbers.

Why such a delay? A two-month delay is "unavoidable," he says, "due to data collection limitation — the lag between contract and closing — and another month or two for data assembly, review, comment and publication."

Rathgeber also points out that "taking action" based on information that is two to four months old "can be a disaster."

Prices rise or fall in two ways — appreciation or depreciation — and according to the mix of sold houses.

If the trend has resulted from rising prices, sellers might want to hold firm on their asking price, even if the house is currently overpriced. It may be getting only a few showings, or perhaps none at all. But if prices are, indeed, rising, the seller can hold on until values catch up.

And if prices are falling, sellers will have to cut their inflated asking price by a rate greater than that of the overall market decline if they want to attract a buyer.

Buyers, on the other hand, may be willing to pay something above the asking price when home values are rising because they have a reasonable expectation that, in a few months, they will recoup their "loss." If prices are falling, buyers will have no sense of urgency because they expect greater value for their money in the future.

But beware: The average home price can change even when individual values do not.

That's because of the distribution of the properties covered in the price report. If more lower-cost houses than usual are sold in one particular month, the average price will skew lower. Similarly, if more than the usual number of expensive places change hands, the average will swerve higher.

And one more thing: The true average rarely changes more than 1% from one month to the next. So view reports that show values rising or falling more than that with skepticism. In Rathgeber's words, they are "patently meaningless."

Again, what's happening on a national scale usually has little significance to values in your neck of the woods. But even more important to note is that even though averages can be built for any ZIP Code and any month, the sample size is generally not large enough over a short-enough time to have any significance.

Generally, to calculate a meaningful average price for a particular area would require years of data, much of which would be so old that it would no longer be relevant. The actionable information today's buyers and sellers need must be fresh: what went down last week and last month, not years ago.

Although we are debunking myths about prices, let's take a deeper dive into two popular reports covering mortgage rates: one from Freddie Mac, the other from HSH Associates.

Freddie Mac, the huge secondary mortgage market company, publishes a widely quoted monthly report on the average rates for 30-year and 15-year loans. Its survey is an average of the offerings to "prime" borrowers from 125 primary lenders nationwide, large and small, for purchase loans with 20% down.

Even that much information is often more than gets picked up by news organizations. But how many people these days make that large a down payment? And who is a prime borrower? Freddie Mac doesn't have a definition, but reports that it is "not necessarily" someone who has never missed a payment and is always on time.

HSH, the New Jersey mortgage information firm, says its weekly average results from a survey of 600 "active" lenders who are in the market and able to make loans directly to consumers. Here, the survey asks lenders about their pricing for 80% loan-to-value mortgages to someone with a 740 FICO score or better.

This is the "stuff of normal humans," according to the company's Keith Gumbinger. But again, do you fit that bill? If not, you can expect to pay more than what's reported in the media. At the same time, because Freddie Mac's and HSH's numbers are averages, you might be able to find lower rates.

This is not to damn either Freddie's or HSH's surveys — or any of the pricing surveys, for that matter. Rather, the point is this: Take all that's reported with the proverbial grain of salt. Do your own sleuthing and you just might do better.

Source: http://www.latimes.com/business/realestate/la-fi-lew-20140817-story.html

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Mortgage rates at lowest level in 2014. Fixed mortgage rates have continued to fall.

Mortgage rates at low for year; 30-year averages 4.12%

 

A home for sale in Huntington Beach. (Bryan Chan, Los Angeles Times)

By E. Scott Reckard - August 14, 2014 8:15am

The cost of getting a home loan has slipped back to the lowest level of the year, with Freddie Mac pegging the average rate for a 30-year fixed mortgage early this week at 4.12% compared to last week's 4.14%.

The average rate for a 15-year fixed-rate mortgage was 3.24% compared to 3.27% a week ago, according to Freddie Mac's weekly survey of what lenders are offering to low-risk borrowers.

Freddie Mac's report, released Thursday morning, showed the start rates for adjustable mortgages edging slightly higher.

Freddie Mac, the big government-sponsored buyer and guarantor of home loans, surveys lenders across the country each Monday through Wednesday morning, asking them about the terms they are offering on loans to solid borrowers with 20% down payments.

The borrowers in this week's survey would have paid 0.6% of the loan amount in upfront lender fees and discount points to obtain their loans. Paying higher points can lower the interest rate.

Fixed mortgage rates, which started the year at 4.5% with expectations they would rise, have surprised economists by falling instead.

This week's 4.12% for a 30-year loan equals the low recorded for a week in May and then for a week in July, Freddie Mac said.
Borrowers with unblemished credit often pay less than the rate Freddie publishes.

For the past month, these borrowers who pay 1% of the loan amount in upfront points have been getting 30-year fixed loans at 3.875% and 15-year fixed mortgages at 3.125%, said Jeff Lazerson at the Mortgage Grader brokerage in Laguna Niguel.

Source: http://www.latimes.com/business/money/la-fi-re-freddie-mac-mortgage-rates-20140814-story.html