SchifferLine 1 December 2015

Timely Real Estate News……………………………1 December 2015

********************************************************
US home prices rose at fastest pace in 13 months
Home prices in the US rose in September 2015 from a year earlier at the fastest pace in 13 months as a lack of houses for sale has forced buyers to bid up available properties. The Standard & Poor’s/Case-Shiller 20-city home price index increased 5.5 percent in September compared with a year ago, the largest annual gain since August 2014.

Steady job gains and low mortgage rates have propelled a solid rebound in home sales, which are on track to reach the highest level since 2007. The unemployment rate fell to 5 percent in October as employers added the most jobs since December. Borrowing costs have ticked up but remain below 4 percent, a low level historically. San Francisco reported the largest annual gain, at 11.2 percent, followed by Denver at 10.9 percent.

“Home prices on the Westside, as we reported on November 15, remain fairly steady and moving upward at about the same pace as we are seeing nationally,” according to Carole Schiffer. Median sales prices remain near an average of 5% on the Westside through October 31.

The U.S. economy grew at a slightly faster rate in the summer than previously reported, mainly because of a less severe slowdown in businesses stockpiling, which economists are pointing to the reason we are seeing home prices rise — buyers are willing to pay more because there is less inventory. “It’s the old ’supply vs. demand’ law working,” Schiffer said. “It’s especially true in real estate.”

The overall economy, as measured by the gross domestic product, grew at an annual rate of 2.1 percent in the July-September period, the Commerce Department reported Tuesday. That is better than its previous estimate of 1.5 percent growth.

Even with the revision, economic growth slowed sharply from a 3.9 percent gain in the second quarter. The economy then was rebounding from a harsh winter that had sapped first quarter growth to a barely discernible 0.6 percent pace. Economists are forecasting that growth will accelerate to around 2.5 percent in the current quarter as a healthy labor market and falling gas prices fuel stronger consumer spending.

Residential investment grew at a 7.3 percent rate in the third quarter, down slightly from the 9.2 percent second quarter gain. Government spending grew at a 1.7 percent rate as strength in state and local spending offset a big drop in defense spending.

How about contrasting/conflicting stories… read the following article.. It is enough to send one into a dither!

What is unknown at this time is whether the Fed is going to raise interest rates this month, and it doesn’t appear to be the case. We’re not biting on this one — it will happen when it happens.

*************
Home resales fell in October — supply doesn’t meet demand
After strong gains early this year, U.S. home resales fell in October as a persistent shortage of properties limited choice for potential buyers and pushed up prices, suggesting some softening in the pace of the housing market recovery. Still, housing remains on solid footing, with sales for the full year on track to be the best in eight years. That should see housing take up some of the slack from a chronically weak manufacturing sector.

“The housing market is in decent shape but could be a lot better if people decided they were ready to move and listed their homes,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. The National Association of Realtors said last week existing home sales declined 3.4 percent to an annual rate of 5.36 million units. September’s sales pace was unrevised at 5.55 million units and was the second highest since 2007.

The drop in sales was expected after contracts to purchase previously owned homes fell for two straight months. But with a tightening labor market, marked by a 5.0 percent unemployment rate, housing fundamentals are fairly healthy.

“What we are seeing on the Westside, however, is that sales volume is keeping ahead of last year as of this period,” stated Carole Schiffer. “National statistics are an accurate reflection of national trends, but we live in a unique real estate market — the Westside. We are insulated from many of the vagaries of regional markets outside of our strong core residential market,” Carole said, “so I recommend you read the SchifferLine each month to capture the best statistics on our local residential market, which are reported on the mid-month edition.”

The government has taken steps to ease lending standards for young adults. In speaking with Simon Atik from First Capital Mortgage this morning, he reminded me that approximately 40% of the transactions that fall out of escrow are due to financing issues. It is very important that you work with an experienced agent, and have a good mortgage broker in back of you because we are seeing buyers whose pre-approval letters are not what they seem, and then unfortunately mid way through a transaction, the financing falls apart, which makes it a sad day for everyone.

The weak sales come on the heels of reports last week showing a drop in housing starts in October and a dip in confidence among home builders. Economists had forecast sales falling to a rate of 5.40 million units last month. The dollar rose to an eight-month high against a basket of currencies, while prices for U.S. government debt were up marginally. The housing index rose 0.32 percent as the shortage of houses for sale was seen boosting homebuilders such as D.R. Horton Inc and Lennar Corp.

A separate report showed Markit’s Purchasing Managers Index hit a 25-month low in early November, highlighting continued weakness in the factory sector. The decline, however, brought the PMI in line with the Institute for Supply Management survey, which has a longer history of tracking the manufacturing sector.

October home sales were up 3.9 percent from a year ago and held above their average for the year. Sales dropped 8.7 percent in the West from the prior month and fell 3.2 percent in the South. These two regions, which are experiencing strong population growth, have seen large price increases due to tight inventory. The supply squeeze is mostly hurting the lower end of the market, where sales have dropped sharply from a year ago.

Last month, the number of unsold homes on the market fell 2.3 percent from September to 2.14 million units. Supply was down 4.5 percent from a year ago, a worrying sign as housing heads into a quiet season, the NAR said. At October’s sales pace, it would take 4.8 months to clear the stock of houses on the market, up from 4.7 months in September. A six-month supply is viewed as a healthy balance between supply and demand.

Realtors and economists say insufficient equity has contributed to the tight housing inventories. Last month, the share of first-time buyers crept up from September to almost a third. But the share was still the second lowest since 1981 on an annual basis.

“First-time home buyers continue to be crowded out by competition from investor sales. Price pressures from low inventory present another headwind to first-time buyers,” said Derek Lindsey, an economist at BNP Paribas in New York.

****************
Non-bank mortgage lenders are making moves….again
PennyMac, AmeriHome Mortgage and Stearns Lending have several things in common: All are among the nation’s largest mortgage lenders — and none of them is a bank. They’re part of a growing class of alternative lenders that now extend more than 4 in 10 home loans. And that’s a big number.

All are headquartered in Southern California, the epicenter of the last decade’s subprime lending

industry. And all are run by former executives of Countrywide Financial, the once-giant mortgage lender that made tens of billions of dollars in risky loans that contributed to the 2008 financial crisis.

This time, the executives say, will be different. Unlike their subprime forebears, the firms maintain that they adhere to strict new lending standards to protect against mass defaults. Still, some observers worry as housing markets heat up across the country and in Southern California, where prices are up by a third since 2012.

So-called nonbank lenders are again dominating a riskier corner of the housing market — this time, loans insured by the Federal Housing Administration, aimed at first-time and bad-credit buyers. Such lenders now control 64% of the market for FHA and similar Veterans Affairs loans, compared with 18% in 2010.

A Los Angeles Times analysis of federal loan data shows that FHA mortgages from nonbank lenders are seeing more delinquencies than similar loans from banks. Just 0.9% of FHA-insured loans issued by banks from October 2013 to September of this year were seriously delinquent — several months behind — compared with 1.1% of nonbank loans. Put another way, nonbank FHA loans are about 23% more likely to go bad than those issued by banks.

Consumer advocates worry that the new crop of mortgage companies, particularly those with ties to now-defunct subprime lenders, may again take advantage of borrowers. The surge in nonbank lending also has prompted alarm at Ginnie Mae, a government corporation that monitors FHA and VA lenders. Ginnie Mae’s president, Ted Tozer, has requested $5 million in additional federal funding to hire 33 additional regulators.

“We don’t see subprime loans much on the Westside, but they do exist and will probably continue to attract buyers who have lower credit scores but who want to purchase a home,” Carole Schiffer stated. “Sellers and agents need to always be on the alert for buyers who would normally not qualify for non-sub-prime loan. It’s risky…so beware.” Again, an excellent reason to work with an experienced agent such as myself how will only work with experienced and honorable lenders such as Simon Atik from First Capital. Each and every buyer is vetted very carefully before we proceed with a transaction, and if they don’t pass the “smell test”, we either try to correct the issues to make it work, or unfortunately for all concerned send them on their way.

**************
We’re getting a new look on our streets….well, maybe
The Los Angeles City Council approved last month a new transportation plan that will add hundreds of miles of bicycle lanes, bus-only lanes and pedestrian safety features. The city of fast cars and endless freeways is preparing to do what not long ago would have been unthinkable: sacrificing car lanes to make way for bikes and buses.

The Los Angeles City Council approved a far-reaching transportation plan that would reshape the streetscape over the next 20 years, adding hundreds of miles of bicycle lanes, bus-only lanes and pedestrian safety features as part of an effort to nudge drivers out from behind the wheel.

Not surprisingly, in the unofficial traffic congestion capital of the country, the plan has set off fears of apocalyptic gridlock. And one thing you can count on in Los Angeles: Lawsuits are on their way.

The initiative proposed by the Council, called Mobility Plan 2035, would entail building 300 new miles of protected bike lanes, 117 miles of new bus-only lanes, and 120 miles of streets where the bus-only lanes would function during rush hour. Some of the major streets affected would include Martin Luther King Jr. Boulevard, Sherman Way and Van Nuys Boulevard. Lankershim, Sunset and Venice Boulevards would receive bus-only lanes and protected bike lanes.

There remains vociferous opposition to the plan, especially by advocates who want our streets repaired and even while funds have been approved to fix a small percentage of the streets (think: potholes), little has moved forward with that plan’s

implementation. The new concept to build bike paths and bus-only lanes seems to move the ’target’ who are pleading for street repairs.

**************
Carole Schiffer launches new web site….www.caroleschiffer.com
“It’s been a battle for the past six months, but my site is now finished!” Carole Schiffer announced last week, that her new web site is up and running and promises to serve her clients and visitors in a much more complete, interactive way that matches any similar real estate agent site on the Internet. Please go to: www.caroleschiffer.com

“I have worked hard to give visitors the information and content they need when searching for a new home. But more importantly, my new web site is designed to support the many clients and listings I have throughout the year. My web site is the key marketing tool I have in marketing my clients’ properties,” Carole said.

The new site has expanded the communities and cities that Carole serves on the Westside — providing a complete listing and location of all properties available in each. The site contains detailed profiles on each of her communities, and within my new site, you’ll find the most up-to-date information on every listing from Beverly Hills to Malibu to Venice and Bel-Air.

I invite your comments and suggestions…”this is an evolving process — I know that. Seems that web sites are never done, so please contact me directly via phone or email and let me know what you think.”

**************
El Nino — not another story — just a friendly reminder: Make sure you do your maintenance around your home — gutters, roof leaks, drainage, windows, doors, decks, painting, and landscape preparation.

**************
Thanksgiving

I hope you had a wonderful and restful Thanksgiving holiday. I know I sure did! As some of you may know, I have a second home in Coronado in San Diego, and it was beautiful. If you have not been there, I invite you to visit there soon. At the Hotel del Coronado, they have turned their huge middle garden, into a ice skating rink, and it is an awesome experience to be there and ice skate while looking at the ocean and its strong waves.

I also witnessed a sad, but lovely and powerful sight where a very large group of surfers formed a ring and had a memorial service for one of their own while they put their friends’ ashes into the ocean.

***********
Again, if you or any friend or relative has any real estate needs, please do not hesitate to contact me. Looking at homes this time of year when they are “dressed” for the holidays is very heartwarming and the market is still moving in a positive direction.