Timely Real Estate News…………………….,,,,,,,,,1 May 2015
Home prices in metro Los Angeles have climbed 5.8% in the last 12 months
In a recently released, closely watched housing report out this week, prices are up 4.2% nationally. But more importantly, the Case-Shiller Index reports that prices in the Los Angeles area climbed 0.8% in February compared to a month prior, and now sit at their highest level since December 2007. Other local measures suggest those increases have continued in March and April, as more buyers step into the market. Still, housing is a long way from the heady days of two years ago, when double-digit annual price gains were the norm. Many economists say that’s a healthy thing; buyers are better able to keep up. There are concerns that prices are again climbing faster than incomes in many parts of the country.
According to Case-Shiller tracks, the share of equity rich U.S. residential properties with at least 50 percent positive equity at the end of the first quarter was 19.8 percent. This is down slightly from Q4 2014 at 20.3 percent, but up 0.2 percentage points from the first quarter of 2014.
Major metro areas with the highest percentage of equity rich properties were San Jose, California (43.7 percent), San Francisco, California (38.6 percent), Honolulu, Hawaii (36.2 percent), Los Angeles, California (32.2 percent), New York (31.0 percent), Pittsburgh, Pennsylvania (29.7 percent), Poughkeepsie, New York (28.3 percent), Oxnard, California (27.7 percent) and San Diego (27.0 percent). Overall, this is good news for our residential markets across the nation, but especially so in Southern California. The SchifferLine will have a complete report on the five communities I report on (Beverly Hills, BH Post Office, Bel-Air, Brentwood, and Westwood/Century City) in our May 15 edition.
On the flip side, seriously underwater, distressed homes are up for 1st time in 3 years
While home prices were surging across the US and in Los Angeles, RealtyTrac’s U.S. Home Equity & Underwater Report shows that at the end of the first quarter of 2015 there were 7,341,922 U.S. residential properties seriously underwater — where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value — representing 13.2 percent of all properties with a mortgage. This has been the trend during the immediate period following the “great recession” which started in 2007, but we have not seen this uptick in the past three years.
The share of seriously underwater homeowners increased 0.4 percentage points from Q4 2014 — the first quarterly increase since the second quarter of 2012 — but still down more than 4 percentage points from a year ago. Among properties that were owner-occupied, 20.7 percent were seriously underwater, while 11.0 percent of non-owner occupied homes were seriously underwater.
According to the report from RealtyTrac what is happening is that most of the seriously underwater homeowners are literally stuck — short sales are becoming rarer and have lost a lot of their appeal, and other foreclosure alternatives have lost their momentum. This is causing the national home equity balance to be shifted toward a slightly higher share of negative equity.
However, the share of equity rich residential properties with at least 50 percent positive equity at the end of the first quarter was 19.8 percent. This is down slightly from Q4 2014 at 20.3 percent, but up 0.2 percentage points from the first quarter of 2014
Is urban sprawl over? Is suburbia no longer “in”? The ‘gathering’ in the urban core.
Accelerated “metropolitanization” of Los Angeles is attracting people of all ages, and developers throughout the US are seeing a diverse groups of tenants and buyers who want to occupy amenity-rich complexes of varying types—lofts, mid-rises and high-rises—and have worry-free, beautiful urban living in environmentally-conscious, yet luxurious settings. They want to live in comfort, style, and ease — in condos and apartments in the urban core. Hence, we’re seeing an explosion of multi-housing complexes sprouting up throughout the LA basin.
Although price escalation for ultra-high-end multifamily condo housing is showing signs of slowing in New York City, prices in Los Angeles are still on the upswing. The sought-after Southern California lifestyle, however, is no longer only about staking a claim to oceanfront properties. It’s also about the urban environment. From retirees seeking sophisticated arts and entertainment to 20-somethings, many of whom are high-tech and start-up entrepreneurs and employees, more and more Los Angeles residents are choosing to live in the urban core.
As a result, capital is streaming into this market to take advantage of high returns on investment, and multifamily construction is booming in metropolitan Los Angeles. Henry Cisneros, former secretary of the U.S. Department of Housing and Urban Development and executive chairman of City View, a Los Angeles-based institutional investment firm focused on urban real estate, recently wrote in the Urban Land Magazine: “Massive societal and economic changes are converging to create a new urban reality, a transformation of importance to the millions of Americans in the nation’s metropolitan areas. … Many surveys show that residents place a higher value on homes within walking distance of stores, public spaces, and employment. …Greater demand for core urban sites almost always means higher land prices.”
Anyone in this multiple-unit housing development is clearly aware of the competition for well-qualified tenants, whether they be homeowners or apartment dwellers. To be competitive in today’s market, developers are responding to increasing demand by building thousands of new apartments and condos of greater quality, with more unique amenities, which, of course, is accompanied by higher rents and asking prices. The new apartments being built—mostly class-A, high-end rentals in the most desirable parts of our city—require new approaches from the builder’s point of view, as does the latest generation of condos.
For example, one developer recently completed the construction of several projects that offer a rich variety of amenities. These included rooftop pools with upscale entertainment areas, fitness centers with professional equipment, massage spas, rooftop “sundecks” with BBQ areas, game rooms, pocket parks, yoga studios, sky lounges and fountains, among other features.
Bottom-line on the future of this multi-family development is that we have a historical shortage of housing in Los Angeles, and according to UCLA’s Ziman Center for Real Estate, we can see a four to five percent rent growth a year over the next 10 years.
Interest rates to rise in the fall? Depends.
Let’s be honest: No one knows for sure. Speculation abounds in Washington DC and on Wall Street that the Federal Reserve, which has held its key interest rate near zero for the past 6 1/2 years, and for nearly that long the financial world has speculated about when the Fed will start raising the rates. Don’t look for it soon. That’s the view of most economists, who say a still-subpar economy and still-low inflation will keep rates at record lows at least until September.
There are many factors affecting any rise in Federal Reserve rates — but what many assumed was going to be a boost for the economy — sharp drop in oil and gasoline prices — didn’t work out that way. Actually the economic impact of the oil industry has been mainly negative — layoffs by oil-industry states and cutbacks in investments by energy companies. And as a result, economists have been downgrading their growth estimates for the January-March quarter. Many now peg growth last quarter at a sluggish annual rate below 1 percent. That would be the weakest since the economy shrank in last year’s first quarter amid a brutal winter. And let’s not forget the harsh weather that kept shoppers home.
Still, economists are predicting the 2nd quarter results to be stronger and if so, the Fed could grow more confident about starting to raise rates for the first time since 2006 in the fall. We’ll see.
Fire Prevention season already in full swing….check out your home, yard.
Saving water is on everyone’s lips these days….but there’s another critical, important duty you have to do: Implement fire prevention practices now. Don’t wait until summer. We suffer from a severe drought, and it’s not just your lawn and plants that are going to feel the reduction of water….it’s already being severely felt by Mother Nature who has been thirsting for more rain to overcome the dangerous condition of her fire-ready hillsides and canyons. After all, we actually live in a semi-arid desert, so these conditions are not necessarily new to our way of life.
Here are some fire prevention tips from the Los Angeles City Fire Department:
• All grass and weeds within 200 feet of a structure shall be cut and maintained to a maximum height of 3 inches;
• Clean out your cutters and all clutter/brush around your home. Do not have any combustible liquids that are not protected.
• Native brush/shrubs must be trimmed up from the ground 1/3 their height and have a minimum separation of 18 feet from any structure and other native shrubs.
• Native shrubs shall not be planted within 10 feet of a combustible fence or roadway edge.
• Maintain all grass and weeds within 10 feet of a combustible fence or edge of roadway to a maximum height of 3 inches.
• Branches/foliage shall be trimmed up 5 feet from any roof surface.
• Branches/foliage shall be trimmed back 10 feet from outlet of the chimney.
As we have all learned recently from viewing the horrific scenes coming out of Nepal Earthquake, preparedness is priority, too. We have to remember that we live in Earthquake country and need to be prepared for when the “big one hits”. Here are some things you might not think of.. But please don’t forget them.
• Never have less than a half tank of gas in all of your cars. If we lose our power, there will not be a way to obtain gasoline
• Always keep an extra set of any prescription meds in your car, along with some cash, extra clothes and good running shoes.
• Be prepared to take care of you and your family for at least 7 days, which means, food and water. The emergency responders may not be able to get to you for at least a few days.
• Pick safe places in each room….under a piece of furniture…against interior wall but stay away from windows, bookcases and tall furniture.
• Keep a flashlight and sturdy shoes by each person’s bed.
• Bolt and brace water heaters and gas appliances to wall studs. Make sure you have a gas shut off value installed in your home.
• Don’t hang heavy items over beds.
• Install strong latches on cabinets
• Bolt everything you can to the wall – and use Museum glue for your items to hopefully prevent them from crashing to the floor.
• Install a gas shut off value in house/. If your gas is shut off, it cannot be turned back on except by the gas company, and they may take a few days to get to you. .
• Keep a portable radio handy, batteries and emergency supplies (water, food, blankets)
I am seeing a great deal of activity in my personal real estate world. One of my clients & I recently opened escrow on a fabulous condo in the Marina with views of the entire marina out to the ocean!.. It is quite tempting to live there myself! We are in the process of selling their lovely home in Mountaingate, it is a 5/4.5 with views of the Mountaingate golf course and driving range., priced at $2,775,000 it is the type of home you can move right in to. We are also selling the house in The Terrace also in Mountaingate and sometime in the next month or so, I will have a great home in Bel Air Crest. Please let me know if you would like any information about any of these properties or any other real estate needs. Also, I have now made contributions to three charities in honor of my clients and would love to add the charity of your choice to the list. Please check out my web site.. Caroleschiffer.com and my face book page, firstname.lastname@example.org.