Showing posts with label The Economy. Show all posts
Showing posts with label The Economy. Show all posts

4/18/2007

Foreclosure Impact


Deep Impact: Foreclosure Surge in California. A surge of foreclosures in California has some economists concerned that the fallout will be long lasting and potentially wound the whole economy. The 11,033 foreclosures in the first three months of the year represent an 800 percent increase over the same period a year earlier. "For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary," says analyst Christopher Thornberg of Beacon Economics. He predicts foreclosures will top out at four or five times the current level — enough, he says, to induce a recession or at least bring the economy to the precipice.Others are less pessimistic. "The housing sector is in trouble for a considerable period," says Edward Leamer, director of the UCLA Anderson Forecast. "But the rest of the economy will muddle through." Source: Los Angeles Times, David Streitfeld (04/17/07) & REALTOR® Magazine - Daily News.

This article is like many others: It simply does not mention the big picture--for instance, what is the percentage of foreclosures of total mortgages in the state of California, or the U.S.?


"The truth is that 99% of all loans in the U.S. are not in foreclosure. The remaining 1% that were foreclosed upon had the following breakdown:

* 80% were classified by federal lenders as Professional Thieves and were turned over to the FBI.
* 20% were classified by lenders as Fraud for Property that resulted in unethical lending practices.
* Ca. Defaults: Historical 32,762 - Low: 12,145- 3Q ’04 High: 59,987 – 1Q ’96 Current: 37,273. [NOTE: February '07 data.]
* For all of ‘06, foreclosures accounted for only 1.81% of all Orange County sales, with lenders reselling those homes at an average discount of only 3.8%!" Gary Watts, http://www.impactre.com.


4/09/2007

Subprimes Are One Part of the Total Picture

This topic appears almost daily:
But what’s often missed in the current uproar is that while a substantial minority of subprime borrowers are struggling, almost ninety per cent are making their monthly payments and living in the houses they bought. New Yorker

While the West Coast is one of the areas seeing a rise in foreclosures, it also has a strong economy with strong employment.

"Foreclosures are increasing inventories in certain local markets. The projected flood of foreclosures are problematic and will add to the already loose housing supply in some local markets, but these local markets are exhibiting healthy economic activity, enabling them to be able to absorb increases in foreclosures," [National Association of Realtors Economist] Lereah said.

"From a broader perspective, today's subprime problems are occurring against a backdrop of cyclically low mortgage rates and a growing, healthy economy. Jobs and liquidity are plentiful in the marketplace, suggesting that the subprime problems may be a manageable problem within our $10 trillion-plus economy," said Lereah in a commentary distributed to NAR members recently.


2/12/2007

California's Median Selling Price in December

The median price of an existing, single-family detached home in California during December 2006 was $567,690, a 3.7 percent increase over the revised $547,400 median for December 2005, C.A.R. reported. The December 2006 median price increased 2.2 percent compared with November’s revised $555,280 median price.


While this is a statewide figure published as of January 25th, and the Los Angeles area's median house price of $584,600 is somewhat less when you look at Dataquick's figures (which combine house and condo prices), nevertheless, California home prices continue to reflect an economic fact despite a much lower sales volume than the last several years.

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2/02/2007

If More Information About Teeth Became Publicly Available, Would You Fire Your Dentist?


Something that a lot of internet users have a misconception about is that property listings that are available for public viewing on the internet are not in the public record, as some people actually have told me they believe, i.e., they won't be found at the court house as a recorded property deed is. Furthermore, they don't seem to realize that sellers have a choice as to whether or not to put their listing into internet sites or just keep it within the local MLS of their agent, as advantageous as wider internet exposure may be for them.

The proliferance of sites that supply listings, i.e., Trulia and Zillow, just to mention two out of what are probably hundreds if not thousands, are not necessarily a complete databsse of REALTOR-listed properties through an MLS system. Again, they can be a viable source of information for everyone, but they depend on property tax records, which ARE public records and therefore available to anyone, and manual entry of listings by owners or agents. MLS's cooperate with various sites to allow their listings to be shown on other internet sites, and brokers may have an opt-out capacity. Why? Because a listing agreement belongs to the listing broker and is a contract between a seller and his/her listing broker/agent, not a public document to be found in the public record. That is what is behind every REALTOR's representation of a property. With the spectacular rise in real estate values and internet use came many others who wished to be a part of the REALTORs' business of representing their clients like never before. This leads into the current debate going on about MLS's and control of them, as housing values and sales are currently a huge factor, if not a driving force, of the economy.

In the United States, but not necessarily in all other countries, we no longer live in a world where showing a property means driving over to a listing broker's office to get their list of properties, and then driving on to another broker's office to get theirs. That's why the multiple listing services came about as far back as the 1930's--before an internet was even conceived of by the average person. The merging of MLS's, even if there is one national MLS, will still not eliminate the need for professional assistance in viewing, buying and selling homes. Or I may as well start drilling my own teeth and fire my dentist.

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1/05/2007

Long Beach Economy: Tourism and Trade

"Although the Long Beach Area Chamber of Commerce is projecting a subdued California economy in terms of job growth due to federal policies, high energy prices and a weakening housing market, it does anticipate a stronger Southern California performance. “I’m optimistic about the Long Beach economy,” said Brandon Kline, vice president of public policy and government affairs for the chamber."We have strong performances in international trade, technology, aerospace and tourism. . . . Even though California may have subdued economic expansion next year, I think our local regional economy here in Southern California will thrive because of those things. So, despite that slowdown, our highly diverse business structure is going to enable us to perform at a high level.

"Indeed, the hospitality and tourism sector is poised to continue to do well in the coming year, although substantial growth will be very limited, according to Kyser. “Tourism will probably hold at a high level, and that’s because, literally, we’re running out of hotel capacity,” he explained.

"One “reliable growth engine” marked by Kyser is the international trade sector . . . “International trade is going to be an interesting sector to keep our eye on,” Magaddino agreed, pointing to the significant impact of the weakening dollar on exports. . . . What we’ve seen is continued decline in the dollar, and that makes our exports much more competitive on a global marketplace."
Now is the time to buy, whether you're investing or looking for a home for yourself. Go to
www.juliahuntsman.com and click on "Property Search", an easy way to get started viewing our MLS listings.

1/04/2007

California: The Sixth Largest Economy in the World

So wouldn't you know the house prices would be higher here as well.

California Housing "Fast Facts" from California Association of Realtors:
Calif. median home price - November 06: $555,290
(Source: C.A.R.)

Calif. highest median home price by C.A.R. region November 06:
Santa Barbara So. Coast $1,083,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region November 06:
High Desert $332,340 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Third Quarter 06:
24 percent (Source: C.A.R.)

Mortgage rates - week ending 12/28:
30-yr. fixed: 6.18%; Fees/points: 0.4%
15-yr. fixed: 5.93%; Fees/points: 0.4%
1-yr. adjustable: 5.47%; Fees/points: 0.6%
(Source: Freddie Mac)

12/04/2006

More Consensus That Worst May Be Over

Investment firm analysts and the Federal Reserve Chairman Ben Bernanke are among those that are ready to think about an improvement in the market. All the bad news in the media may have helped to create a self-fulfilling prophecy about the market, and so now good news in the media may help to get buyers and sellers into a better mode. To be sure, some properties have been overpriced, but a healthy economy does not usually create the setting for a bad housing market. Click on the link for the Los Angeles Times article.

11/18/2006

The Housing Market Slump

Long and short term mortgage rates went down last week on average of .5 point. When buyers understand they're getting more breaks on their rates, they'll decide now is a good time to act. More housing inventory has taken pressure off, but at some point, in the not-too-distant future, buyers will suddenly come alive and if they do it all at once, they may be wondering what happened to a certain property. The answer will be, somebody already bought it. Don't get fooled by the slow times, they won't last forever in a strong economy.

8/24/2006

What Caused This Market Anyway?

If you're looking for a fresh explanation for your buyers who are afraid they're buying at the wrong time and you're looking for solved real estate mysteries late at night, like how did the subprime mortgage market and our technologically driven society affect real estate, this 44 page article by two economists might have some answers: ..."the housing boom has not been driven by unusually loose monetary policy [i.e., not the Federal Reserve's low interest rates for the last several years]. This is not to say the monetary policy has not been unusually loose, but that to the extent it has been loose, this is not what has been driving spending on housing. Second, the current levels of spending on new housing are largely explained by technology-driven wealth creation over the previous decade. Third, changes in the demographic, income, educational, and regional structure of the population account for about one-half of the increase in homeownership. That is, without any other developments, the homeownership rate is likely to have gone up anyway, but not by as much as it has done. The last finding is that substitution away from rental housing made possible by developments in the mortgage market, such as subprime lending, could account for a significant fraction of the increase in residential investment and homeownership." --From "The great turn-of-the-century housing boom" by Jonas D. M. Fisher and Saad Quayyum.

The Return to a Normal Market?

This Los Angeles Times article (July 23, 2006) may not stay available online much longer, but it's a good discussion of the current Southern California market picture. People afraid of a return to the '90's recession may be worrying unnecessarily. As has been stated often, the market fundamentals today are vastly different than those of the '90s, says John Karevoll of Dataquick Information Systems. He, and many other economic sources including California Association of Realtors, still predict an overall appreciation in the median home price of 6% or more, in the Southland and statewide. While one simply cannot know all the future events, Karevoll is willing to be quoted saying in a worst-case scenario, homeowners should not lose more than 7% of their homes' value. So the current standoff between buyers and sellers, with buyers waiting for a huge drop in prices, is not supported, not in this article anyway. Areas with overbuilding in condos have seen a drop, but that does not mean all condo prices in all areas are losing. Some sales figures, or lack thereof, reflect a dropoff in activity after a long held back huge demand has been met, and then overmet. The frenetic activity from selling a home in a week or two has definitely slowed, but many younger buyers see that as a "drop in the market" because they never experienced anything else, or what the historical "norm" has been of 30-90 days on the market.

7/25/2006

The UCLA Anderson Forecast: No Recession

Buyers and sellers seem to be in a kind of standoff this summer--buyers are waiting for real estate home prices to fall and sellers are just waiting for an offer. More than a month ago, UCLA discussed its national and California forecasts, and for both, certain declines in real estate and jobs are present in certain sectors, "but absent job losses in manufacturing or other sectors, there will be no recession," according to economist Ryan Ratcliff. Anderson Forecast director Edward Leamer, "does not expect real estate prices to fall significantly, notes that sales volume is what typically drops, and drops more precipitously than prices, as the price cycle lags behind the volume cycle," which is what we are seeing on the market now, as Southern California sales volumes (although higher in June than April and May) lag behind last year's, the median price remains strong. http://www.juliahuntsman.com

7/08/2006

Cooling Home Market Spurs Interest in Foreclosure Sales

With a slowing in the market, perhaps a stabilizing in the real estate market, foreclosures seem to have a little more allure. But there are things to know: websites listing foreclosures may be out of date, or may list properties that haven't yet met all the legal requirements for sale. In other words, approach foreclosure properties and foreclosure websites with care. Just because it's listed on a website doesn't mean the property will actually sell; and if a buyer does purchase at auction there are significant risks involved. The thought that a foreclosure property can be bought below market doesn't work out that way, because if a bank finally takes it back after completing the foreclosure process, those properties are usually listed at market. Why would the bank sell for less? Read the Wall Street Journal article for their complete story on investigating this sector of real estate sales.

7/30/2004

Highest Home Ownership Rate

We're reading a lot about the unaffordability of housing, but 73.4 million Americans own their own homes, the highest rate recorded. The Midwest has the highest rate and the West has the lowest rate, and rates also differ among groups of people, however all rates by race are higher than a year ago. Click on this California Association of Realtors article to read more.
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