Timely Real Estate News………………………..1 March 2015
Attempts to curb “mansionization” stirs outcry….
When you read that “big, boxy houses were popping up like fungi on an overwatered lawn” as reported recently in the Los Angeles Times, one wonders where all this newly proposed tightening of existing mansionization ordinances is headed: Approval or the trash heap? According to critics the proposed new “interim control ordinances” apparently contain such confusing variations, bonuses and exemptions that they could easily make the situation worse. The mansionization of so many neighborhoods in the city has created neighborhoods that have been beset with a flood of residents complaints of streets crowded with concrete mixers, lumber trucks, and workers swarming over homes that clearly appear to be oversized for undersized lots. But up they go. With the assumption by neighbors of the passage in 2008 of the mansionization guidelines by the Los Angeles City Council that would be the end of it unfortunately that did not solve the problems. What one finds, as the LA Times article points out, is that there is a “bewildering array of exemptions and bonuses in both the old and proposed new ordinance.” Really? Stay tuned. We’ll cover this again in the March 15 SchifferLine. It’s becoming a serial novel of confusion and mystery that hasn’t made too many happy.
Pending home sales strongest since August 2013
There is good news on the future of residential market: According to the National Association of Realtors (NAR) improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013. All major regions except for the Midwest saw gains in activity in January. The Pending Home Sales Index is a forward-looking indicator based on contract signings, climbed 1.7 percent to 104.2 in January from an upwardly revised 102.5 in December and is now 8.4 percent above January 2014 (96.1). This marks the fifth consecutive month of year-over-year gains with each month accelerating the previous month’s gain.
Lawrence Yun, NAR chief economist, says for the most part buyers in January were able to overcome a tight supply to sign contracts at a pace that highlights the underlying demand that exists in today’s market. “Contract activity is convincingly up compared to a year ago despite comparable inventory levels,” he said. “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”
“All indications point to modest sales gains as we head into the spring buying season,” says Yun. “However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn’t healthy or sustainable in the current economic environment.”
Pending home sales experienced the largest increase in the South, up 3.2 percent to an index of 121.9 in January (highest since April 2010) and are 9.7 percent above last January. The index in the West rose 2.2 percent in January to 96.4 and is 11.4 percent above a year ago.
Total existing-homes sales in 2015 are forecast to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for all of this year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.
Chinese-Americans being courted by LA’s art community
The Los Angeles Philharmonic, the Wallis Annenberg Center for the Performing Arts, and the Los Angeles Chamber Orchestra have added Chinese New Year performances and galas to their calendars for the first time in a bid to engage prospective new donors. Well-to-do Chinese-Americans are being invited to be increasing their participation and contributions to LA’s art community in the coming years, and the region’s cultural institutions are actively courting the community. With a median income above the national average and a cultural tradition of prizing the arts, Chinese-Americans are widely viewed as a promising source of support, but many are immigrants who lack strong connections to area groups and venues. According to a recent article in the Los Angeles Times outreach by arts leaders aims to expand both audience diversity and donor pools.
Yellen to stay flexible on a rate increase. It’s no secret than Federal Reserve Chairwoman Janet Yellen is keeping a watchful eye on economy, and while testifying before the new Congress last week, she pointed to positive signs in the labor market but said that there are “still too many unemployed and not looking for work.” She was positive but cautious and that rate increases, if any, would depend on how the economy is moving within the next few quarters.
….Mortgage lending is loosening up. A closely watched index that tracks mortgage credit availability — lender requirements on credit scores, down payments and other key loan terms — has some good news for potential home buyers: Things are finally loosening up. After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer. The Mortgage Bankers Assn.’s latest credit availability index reported improvements in all four of its loan categories during January. The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers. Among the initiatives: giant investor Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3% down. Freddie Mac, another major investor, is planning to begin similar 3% down loan purchases for mortgages closed on or after.
Bottom line: If you’ve been stuck on the home-buying sidelines, check out what’s going on. Talk to lenders and mortgage brokers. Who knows — maybe the opening of the credit box, even if it’s just a crack, might be enough to help you buy a house at today’s near-historic low rates. And Carole Schiffer makes the point that she can help you with details on getting a mortgage, too….as she works with some of LA’s top mortgage lenders and brokers.
Retiree preferences are going to drive the future housing market….
A Merrill Lynch study indicates that people over 65 will account for the bulk of new home purchases and about a third of retirees are moving into bigger homes. Retirees and those near retirement will have an outsized effect on the U.S. housing market over the next decade, as baby boomers and elders are buying or altering homes to live in them longer or to accommodate family members, a new study said which was conducted by Merrill Lynch.
Almost a third of baby boomers and their elders are choosing to buy larger homes in retirement instead of downsizing, and many retirees are altering their homes as they get older as an alternative to moving to institutionalized settings. A Bank of America unit said its survey of 3,638 respondents across income groups found that respondents were primarily motivated in their housing choices by a desire to house visiting family members, a preference that is expected to have wide effect in the secondary and new-home markets.
Baby boomers, those 50 to 68, and what the survey calls the Silent Generation, those 69 and older, are poised to account for more growth in the housing market than all other generations combined. The survey said people older than 65 are expected to be the fastest-growth demographic from 2015 to 2025, accounting for 10.7 million new households. That would be five times more than the next-largest generation, those 34 to 44 years old, which is expected to create 2.5 million new households.
Most significantly, the older generation has the demographic power and wealth to drive housing trends: Homeownership among those over 55 is about 80% and 72% of those over 65 have no mortgage. People over 65 have an average home equity of $212,800.
In the survey, 64% of respondents said they are likely to move at least once during retirement, with 37% having already done so. About a third of respondents said their last move was to a larger home, while 19% said they moved to a similar-sized home.
This is the second and last installment of my daughter’s (Melanie Fisher) journey in building one of the nation’s top bike touring companies located in Bend, Oregon, called Cog Wild. In the last SchifferLine issue, she talked about how she ended up in the bike touring business and settling in Bend, Oregon. And in this installment, she reveals what differentiates her business from other companies in the US. Indeed, Bend, Oregon turned out to be a fortuitous choice to have a bike tour business, and she and her partner have maximized this opportunity.
How has your Cog Wild survived and grown over the years? What makes your tours different?
When we took over the business in 2005, it was a hobby business and took maybe 100 people riding a summer. We have put in a lot of work to train our guides properly, connect with marketing sources and turn Cog Wild into a culture instead of just a business. Now we take around 2000 people on tour each year and this does not include all our shuttle guests.
We put a lot of importance on being part of the Bend and the local biking community and we have a huge following in our local community as well as in the bike industry. Along with some great marketing in major bike magazines, websites and events and Bend being in the news for mountain biking and drinking beer, we’ve been very lucky to keep on growing every year.
Cog Wild is also the only local mountain bike tour company in Bend. There are a few companies that offer multi-day tours a few times a year, but we are the only company to hold permits to guide 99% of the trails surrounding Bend. We don’t take this lightly; Cog Wild owners and guides do hundreds of miles of trail work each year and are very involved in our local trail group, Central Oregon Trail Association.
Cog Wild is also sponsored by Deschutes Brewery and Humm Kombucha. We might be the only tour company sponsored by a brewery! We bring beer on every tour and have a fridge in our office for guests to choose from when they return from day tours. And now we have kombucha too which is great for everyone!!
Where do you customers come from? What is a typical tour? What’s the terrain like in Bend area?
Our customers come from all over: new-to-Bend folks wanting to learn their trails to visitors from around the US, Canada, Mexico, Europe and beyond. It is always great sharing our trails with folks from all over the world! But we do get a ton of visitors from California, Washington, Idaho and British Columbia too.
Since we offer day tours, shuttles, clinics and multi-day vacations our typical tour varies from a half day Single-track Sampler to a full day Bachelor to Bend, Bend Bike & Brew Weekend Tour, Women’s Weekend Skill Clinic and on to our of town camping or hotel tours like our North Umpqua River Trail 3-day tour, McKenzie River Region tour and Hood River Bike & Brew Tour. Whew, lots going on!
The terrain in Bend is different than most other places in Oregon you can mountain bike. Our trails are not very technical nor steep – they just go for hundreds of miles. And all our trails are built by local mountain bikers specifically for mountain biking. We are very close to wilderness, so hikers and equestrians have other place to go. We are very lucky that we don’t have to share our trails with a ton of other users! Many of the new trails are a little more technical that what was built 20+ years ago before bikes had suspension, so there really is something for everyone here. Now that Mt Bachelor, the ski resort, opened last year with a downhill park, there is a TON to ride. It could take an entire summer to ride everything in the 3 hour area, and that would be riding every day! And then outside of Bend we have steeper, rockier terrain too to make everyone happy.
Thanks, Mel — and our best wishes to your mountain biking business.
Recently I have had a great deal of fun in shopping for a new home for my clients in that I have been working outside of my normal haunts! One of my clients has been looking in the Hollywood Hills, and while I have shown & sold homes there in the past, the fun of revisiting old stomping grounds has been great.. there are some really lovely homes in the “Bird Streets’, Sunset Plaza, Nichols Canyon and Mt. Olympus. We finally settled on a really beautiful home that had been totally redone in Mt Olympus. With another client we have been crawling all over Venice looking at the homes remodeled homes in the Abbott Kinney area.. Also a lot of fun, particularly as I began my real estate career in Marina del Rey.
Please do not forget that for every closed sale transaction, I will be making a donation in your name to the local charity of your choice, and look forward to adding your favorite charity to my growing list. Please visit me on my web site. firstname.lastname@example.org , face book, and linked in!