October 21, 2014

Until Buyers Like The Price, It’s Going To Sit

The Palm Beach Daily News reports from Florida. “The number of demolition permits and new-home building permits issued by the town has soared over the past couple of years — and most of those are for projects on the North End. The frenzy has left many would-be home buyers and spec developers struggling to find suitable properties. ‘I note that (tear-down houses in) the current spec inventory — few that there are — are priced at or above $1,200 per square foot. Some of the new ones already announced by other brokers are well above $ 1,300 per square foot,’ said the Corcoran Group’s Bill Yahn. ‘To reward the developer for his effort and risk, a finished home on a $3 million site would likely be priced approaching $7 million. New homes priced in the $6 millions may become a thing of the past after 2015.’”

The Pioneer Press in Minnesota. “Home builders, consider yourself warned. A report commissioned by the Metropolitan Council says there are enough single-family homes in the metro area right now to last until 2040. The report says that aging baby boomers, fewer households with children, and changing tastes will flip the housing market around: More people will live in apartments and townhomes in transit-friendly developments. ‘I am giving communities the heads-up,’ said the author of the report, Arthur C. Nelson, professor of urban planning and real estate development at the University of Arizona. ‘I am telling them not to plan for any more of these.’”

“But they certainly are. Developers in Dakota, Washington and suburban Ramsey counties are building — or planning — thousands of the homes that Nelson says will become obsolete. The report is controversial because, if true, it means a glut of these homes will force down their value. John Lockner sells homes in Woodbury for RE/MAX Results — and sales are booming. ‘As long as there is market demand, the single-family home is what builders will be wedded to,’ said Lockner, a former president of the St. Paul Area Association of Realtors.”

The Arizona Republic. “Metro Phoenix’s housing market continues to slow. Sales and prices dipped slightly in September, according to the Arizona Regional Multiple Listing Service’s latest Stat report. What’s particularly interesting is the median price of houses listed for sale during September was $224,800 compared with a median price of $215,000 in August. Could it be that prices will tick up a bit in November?”

“‘There were no surprises in September,’ said real-estate analyst Tom Ruff of the Information Market, a division of ARMLS. ‘Home prices are stable, and anticipated declines in October can be attributed to modest downward pricing pressure as well as seasonal patterns.’”

The Deseret News in Utah. “While the overall Utah economy has bounced back admirably since the depths of the Great Recession, the local housing market has yet to rebound to prerecession levels, a new study published by the University of Utah’s Bureau of Economic and Business Research showed. The report found that the Beehive State experienced the slowest housing recovery of any post-World War II cycle, with residential construction having only recovered 55 percent.”

“‘This was unlike any other cycle,’ said Jim Wood, executive director of the bureau. ‘In no other housing cycle have we had housing prices decline. ‘We’ve had one or two years separated with years of growth, but we haven’t had a declining year since the 1960s. In terms of new residential construction, the prerecession peak was clearly too high, but the subdued demand and slow recovery is worrisome. Thirty-three of 50 states are down in single-family home (construction) this year.’”

Steamboat Pilot in Colorado. “A year ago, the Steamboat Pilot & Today’s classifieds section listed a one-bedroom apartment available for $700 per month, a two-bedroom for $1,150 and a three-bedroom, two-bath home for $1,550. The prices weren’t rare finds but representative of 40 other listings, including those at Mountain Village and large complexes across town. The rental landscape today is far bleaker for the prospective tenant, and last Sunday only six properties were listed for rent in Steamboat — including one-bedrooms for $800 and $1,200 apiece, two-bedrooms for $1,400 and $1,600 and high-end three- and four-bedrooms for $3,000 and $2,150 each.”

“Steamboat Springs City Council member and economist Scott Ford said while he didn’t disagree with the idea that the rental market is tight, the survey results may only represent a small sample of rentals. ‘This could be the tyranny of small numbers,’ Ford said.”

The Centreville Independent in Virginia. “Last month I ended my article stating that inventory is up and it is a great time to buy. I’m going to continue with that theme for October. The number of homes on the market in Centreville, Clifton and west Fairfax (22033) has increased across the board since April of this year. I have a chart on my website that illustrates these data for the number of Active Listings quite well. It is dramatic with the uptick in inventory that began with the entry of the Spring market and continued increase as more people placed their properties for sell and the demand for these properties decreased.”

“With more homes on the market and Sellers waiting longer to have their properties sell, right now is a fantastic time for a Buyer to get into the market. Anecdotally, I had the honor of taking one of my military relocation clients out in the Springfield/Kingstowne area this weekend and we had over 60 properties to choose from in their price range. It is a nice change to not be in a multiple offer situation with a buyer.”

The Greenwich Time in Connecticut. “After a strong showing in 2013, the real estate market in Greenwich’s backcountry has hit a slump this year, as houses linger on the selling block for longer periods of time and the number of sales declines. Backcountry homes on the market at the end of the third quarter were active for an average of 295 days, up 40.5 percent from 2013, when the average time was 210 days, according to a third-quarter report released by Houlihan Lawrence’s Greenwich office.”

“The glut of homes is likely due to the strength of the backcountry market in 2013, said David Haffenreffer, manager of Houlihan Lawrence’s Greenwich brokerage. ‘Any time you have a strong year in sales — and you saw that with the number of units that sold last year — you’ll see new inventory come to market, because sellers think it’s a good market for their home,’ Haffenreffer said.”

“Julianne Ward, a real estate agent with Berkshire Hathaway HomeServices, said she thinks buyers are willing to take their time, waiting for price cuts before diving in. ‘If you really want to sell your house, you can in any market and at any time. You just have to be flexible with your buyers, because the buyers are the ones who are making the market, and if they don’t like it at a particular price, they’re not going to buy it. And until they like it, it’s going to sit there,’ Ward said. ‘It used to be there was an overabundance of buyers and not enough houses, and now it’s the opposite,’ she said.”




Bits Bucket for October 21, 2014

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October 20, 2014

Confidence In The Property Market Is Collapsing

The Globe and Mail reports from Canada. “An analysis of local incomes released last week by and urban planner Andrew Yan, showed that 25- to 55-year-olds with BAs in Vancouver make about $41,000 a year, $10,000 a year less than the median for Canada and $20,000 less than in top-paying Ottawa. The spread was even worse for people with master’s degrees– as though employers realize people are so desperate to be in Vancouver that they can pay them less. ‘The relationship between incomes and prices of homes has totally broken down here,’ said Andrew Ramlo, a director at Urban Futures.”

“Eesmyal Santos-Brault, a green-building consultant, bought his first condo 10 years ago when he was 28 and working at a non-profit for near minimum wage. He didn’t think he’d even qualify for a mortgage, but his mother, a real estate agent, offered to lend him the $7,000 he needed for the minimum down payment. To his surprise, he found the bank would indeed lend him money. ‘I keep telling all my artsy, environmental friends that they should do this,’ says Mr. Santos-Brault, who has since bought a townhouse in Strathcona while renting out the condo. And he worries that people are handicapped by the attitudes they’ve inherited from their families or social circle.”

“‘They don’t know anyone who owns, they don’t understand money, they just don’t think it’s possible. I keep telling them: ‘It’s a conspiracy to keep you as renters. Then you can pay someone else’s mortgage,’ he said.”

Dow Jones Business News. “Hong Kong has one of the world’s biggest wealth gaps and its highest real-estate prices. Years of stagnant wage growth have created deep frustration among students and the middle class. One target of their frustration is the city’s tycoons, a handful of families and colonial era conglomerates that control most of the real estate. Even as thousands of protesters took to the streets, the property arm of Li Ka-shing, who Forbes says is worth about $31.4 billion, was unveiling apartments that totaled 165 square-feet. The apartments, about the size of a one-car garage, haven’t been priced yet, but slightly larger units have recently sold in the city for between HK$1.77 million and HK$3.6 million ($228,000 and $464,000 U.S.).”

“Ka-shing said in a statement that he understood the ‘passion’ of Hong Kong students but urged them to go home. The tycoons’ words don’t resonate with young protesters such as Arnold Chung, 19, who expects to live with his parents for years. Average starting salaries for university graduates have risen 1% annually over the past 17 years, to 198,000 Hong Kong dollars (U.S. $25,522) a year, lagging behind inflation and lagging far behind the rise in housing prices. ‘The young generation doesn’t listen to Li Ka-shing,’ said Mr. Chung, a student. ‘We expect rich people to say this (protest) will disturb the economy.’”

The South China. “The crisis facing Hong Kong-listed Agile Property Holdings after its chairman was put under house arrest has aroused investor concerns about how widespread President Xi Jinping’s anti-graft campaign will be in the struggling property industry. Qi Jingmei, a senior researcher at the State Information Centre, a government think tank in Beijing, told the South China Morning Post that corrupt government officials should be worried, but not competitive developers. ‘It will not harm the development of the whole real estate industry,’ she said. ‘But it’s not bad to wash out some weak developers through such a campaign.’”

“A housing glut continued to plague the industry and developers needed to strengthen their corporate management during the downturn, Qi added.”

“Li Junheng, the head of research at JL Warren Capital, a New York-based independent equity research firm with a China focus, said: ‘Widespread corruption in itself is not new news, but fraud investigations and consequential funding cutoffs are material headwinds for developers.’”

The West Australian. “Confidence in the Perth property market is collapsing, a new national survey has found. It is even worse for landlords, with rents expected to fall over the next two years. Confidence in the Perth property market is now at its lowest level on record with most of the fall taking place over the past six months. NAB chief economist Alan Oster said the survey had found strong activity by foreign buyers in all States. In Victoria they accounted for almost one in every four new property sales.”

“Another issue uncovered by the survey was housing affordability concerns linked to growing concern among homeowners about the state of the jobs market. ‘This was not surprising given recent strong house price growth and rising trend unemployment,’ Mr Oster said.”

The Advisor in Australia. “In recent weeks debate has raged on the best way to cool the market; one school of thought being meddling with lending rules, the other – espoused by building and real estate associations – to simply increase the supply of homes. Aussie Cranbourne franchisee Michael Spalding has warned that new homebuilding may not be music to brokers’ ears. ‘I operate in an area which is rife with new home construction, and I haven’t noticed a boost in business,’ he said. ‘There seems to be a lot of building going on, but I have no idea where people are getting the money from to buy.’”

The Irish Independent. “Three weeks ago, The Sunday Independent conducted a ‘blind shopper’ exercise which revealed that some banks were offering up to five times people’s salaries and asking for deposits of less than 10pc, desperate to start lending again. The Central Bank reacted. In fact it seems to have overreacted, bringing in strict new rules that are more restrictive than almost anywhere else in the world. ‘For someone on an average salary to save 20pc of the cost of the average starter home, especially if in the meantime they are renting, will take three years, five years, longer,’ says Keith Lowe, CEO of one of the country’s biggest estate agents. ‘These proposals mean a deposit of €50,000 on a property that costs just €250,000, which in Dublin will barely buy you a two-bed apartment. That takes years and years to save.’”

“A rake of international private equity houses and investors poured into the Irish residential property market in the wake of the recession. Major investment firms such as Lone Star and Kennedy Wilson own thousands of Irish homes. They now face a vastly-changed market - and they are spooked, according to Lowe. ‘I had one of the biggest on the phone to me yesterday, asking me should he be concerned,’ said Lowe. ‘These guys are worried, particularly by the pace at which this is all happening.’”




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October 19, 2014

A Point We Haven’t Started From Before

It’s Friday desk clearing time for this blogger. “Sure, home prices are rising across Greater Boston, but when it comes to really big gains, some suburbs and city neighborhoods are in a league of their own. To the north of Boston, Middleton is hard to beat, with prices up nearly 50 percent, hovering around $637,000, the Warren Group finds. Still, what goes up will come down at some point. There are signs sellers may be starting to overprice their homes, notes Matt Hanson, a Redfin agent who works with buyers in Woburn and other north of Boston areas. ‘The listing agents are pricing the properties higher,’ Hanson said. ‘It has gotten to the point where it is all the market can bear.’”

“A new forecast predicts that Southwest Florida’s single-family home prices will continue to inflate over the next three years into bubble territory. Local Market Monito’s president Ingo Winzer called the Naples-Marco Island metro area’s sizzling price increases justified because prices had fallen so far from their 2006 peaks, he now characterizes them as ‘worrisome.’ ‘It’s starting to look like a new bubble is building,’ he said. ‘The market is no longer underpriced.’”

“Seeing a growing disconnect between what they want and what they can afford, many buyers are starting to sit on the sidelines, said Naples real estate agent Dona Schrim. ‘I think the market is coming to a point where prices may not be able to be sustained,’ she said.”

“Homeowners across Southern California are getting hit with a fresh wave of foreclosures. KNX 1070’s Ed Mertz reports industry analysts say there’s been a 30 percent jump in foreclosures from August to September in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. Tens of thousands of properties across the Southland that were purchased before 2008 were delayed being foreclosed on due to the California Homeowners Bill of Rights, which was enacted in Jan. 2013, said RealtyTrac VP Darren Bloomquist.

“‘We’re looking at three to four thousand a month,’ he said. ‘That could take close to a year to clear that backlog.’”

“Colorado was one of several states where homes scheduled for foreclosure auction spiked in the third quarter of 2014, with the 2,919 homes set for auction, up 50 percent from 1,941 in the second quarter, and up 48 percent from 1,968 in the third quarter of 2013, RealtyTrac said. Scheduled foreclosure auctions also spiked year-over-year in North Carolina and Oregon, both up 85 percent; New Jersey, up 66 percent; Oklahoma, up 58 percent; New York, up 57 percent; and Connecticut up 51 percent.”

“Blomquist said the increased foreclosure activity ‘is not the result of underlying economic or housing market problems. The bad news is that Colorado’s housing market may have looked better than it actually was over the past 12 months because of these artificially held back foreclosure actions.’”

“One out of every 292 Atlantic County homes was in the foreclosure process in August, making the area’s foreclosure rate second-worst in the nation, according to RealtyTrac. ‘Our data shows the average foreclosure process in New Jersey is over 1,000 days, so I would say it’s probably too early (to reflect casino closings),’ said Daren Blomquist.”

“With a glut of foreclosed properties hitting the market, the trend could have dire ramifications for local real estate values, said Carlo Losco, president of Balsley Losco Real Estate in Northfield. ‘I think people need to pay attention and make some realistic choices,’ Losco said. ‘If they wait, all the figures could line up against them and decrease value. Or are they going to do the best they can now before all these issues come into play?’”

“Iskandar Malaysia (IM) has come under heavy fire in recent weeks from analysts, valuers and the media for the apparent free fall of the property market here. They claim developers who were eager to make their presence felt in IM early this year are now beating a retreat because prices have slumped to an untenable level. This scary prognosis is naturally turning away prospective investors.”

“Even giant China players with enormous capital at their disposal have not been spared, with reports suggesting that they may also be in trouble as they had been ‘over confident’ about prospects in IM and are now reeling with disbelief as they had become ‘over exposed.’”

“China does not have large independent labor unions, yet the world’s second-largest economy has witnessed an increasing number of worker strikes over the past year. According to an Oct. 14 report from the Hong Kong-based watchdog group China Labour Bulletin (CLB), the number of strikes and worker protests in the third quarter of 2014 was double the number of labor actions recorded in the same period last year.”

“Notable is the uptick in strikes led by construction workers, from just four demonstrations last summer to 55 this summer. Amid a slumping housing market, new home prices in August tumbled in 68 of 70 Chinese cities monitored by the government. As the CLB report explains, ‘Developers are saddled with declining sales, weaker credit availability, and continued pressure from local governments to buy land. In these situations, it is the construction workers who are always the last to be paid.’”

“Taiwan’s Ministry of Finance has asked eight state-owned banks to provide details on outstanding loans to Chinese companies as fears grow of defaults involving privately owned firms on the mainland. Taiwan’s banks are among Asia’s largest lenders of syndicated loans and have lent heavily to private and state-owned Chinese companies in recent years. The MoF move comes on the heels of similar action of the Hong Kong Monetary Authority, which stepped up its scrutiny of banks under its jurisdiction this year after their exposure to Chinese onshore companies soared in 2013.”

“The ministry also sought information on the terms and conditions of security and repayments on the loans, bankers said. ‘We are afraid there will be a ripple effect of loan defaults for Chinese companies. We are even cautious of lending to Chinese state-owned companies,’ said a banker at a state-owned Taiwanese bank.”

“Stakeholders in the housing sector opine that it is not wise for estate developers to construct houses and lock them up until buyers offer them the exorbitant amount of money they require for rents or sales of such houses. They argue that if the owners of such houses were a bit flexible with their terms, the high cost of rent would have been reduced in Abuja. Unarguably, many of the private housing estates in the FCT have remained unoccupied years after they have been completed by their owners.”

“‘What private estate developers are doing is to create a class problem in the FCT where only the wealthy can own and live in descent homes. I foresee a crash in the estate market, especially in the FCT, because the income of most Nigerians is not enough to enable them to purchase these houses,’ said Mr Emma Akeem, a resident of the FCT.”

“The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to ‘blow up’ as the first sign of stress.”

“In a speech in Sydney, Mr Debelle said: ‘The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions. The exits tend to get jammed unexpectedly and rapidly.’”

“Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world. ‘That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,’ he said.”




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October 18, 2014

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October 17, 2014

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October 16, 2014

When You Have A Lot Of Flippers, That’s A Bubble

The Toronto Star reports on Canada. “Canada’s housing market is in Goldilocks mode — not too hot and not too cold, except in Toronto and Calgary which are ‘bucking the trend of moderation’ now taking hold in major cities from Halifax to Montreal and Winnipeg, says a quarterly house price survey from Royal LePage. Low interest rates and an improving U.S. and Canadian economy are expected to buoy the housing market, says Royal LePage president Phil Soper. ‘Further, early indicators, such as declines in the number of new listings in some key cities, suggest that as demand slows, so shall supply, further protecting Canadian homeowners’ primary investment.’”

The Leader Post. “Average prices for single-family homes in Regina have fallen seven to eight per cent during the past year, according to the Royal LePage house price survey. The average price for standard two-storey homes decreased 6.9 per cent to $346,450 and detached bungalows decreased by 7.9 per cent to $307,250, the report said. Mike Duggleby, managing partner with Royal LePage Regina Realty said the Regina market is taking a breather after seven years of unprecedented price appreciation.”

“The inventory levels available on the market right now are approximately 40 per cent higher than usual, which has created a supply-demand imbalance and pushed home prices down,’ Duggleby said. ‘Strong unit sales this quarter have not been enough to support previous price levels.’”

The Ottawa Sun. “It’s a smorgasbord of a real-estate market as Ottawa enters its fall housing season, especially when it comes to first-time homebuyers. But one thing’s for certain, the number of units being sold shows a declining trend. In September, 5,139 units were sold, down from 7,172 in August. ‘In Ottawa, the demographics aren’t there to afford them,’ said Marnie Bennett, broker at Bennett Property Shop Reality. ‘So if I was the owner of a large property with a very big lot, I would start selling it now.’”

From Reuters. “While Toronto’s housing boom rolls on, some of the housing itself is falling apart. Glass panels have been falling off newly built Toronto condos. New buildings suffer from water leaks and poor insulation, making them ill-suited to Canadian weather. Real estate brokers are dealing mostly with 10-year investors who want to buy from a blueprint, double their equity during the five years of construction, and enjoy rental income and price appreciation for five more years before selling and investing again elsewhere.”

“‘It’s all about timing. We advise most clients to get out before that five-year mark,’ said Roy Bhandari of Sage Real Estate, which notched nearly C$50 million in Toronto condo sales in 2013, with clients typically from China, Eastern Europe, or the Middle East. ‘It’s the magic number because after five years the warranties are expired.’”

The Globe and Mail. “The CEO of a U.S. luxury home builder says his company considered expanding into Toronto’s condo market but was scared off by the high number of investors buying real estate in the city. Toll Brothers Inc. ’snooped around’ in the city about three years ago, but was concerned that 60 to 70 per cent of condo buyers didn’t plan to live in their homes, said CEO Douglas Yearley. ‘We’re always looking for new places to grow, but the level of investment, and not just foreign investment, is what concerned us,’ Mr. Yearley said. ‘We saw a lot of people buying with no intention of living there – they just planned to flip. When you have a lot of flippers, that’s when a bubble comes.’”

From MoneySense. “Solo-dwellers, as they are called, are top of mind for urban planners, explains Brian Jackson, Vancouver’s general manager of planning and development. That’s because almost 30% of Canadian homes have just one person living in them, according to 2011 census figures — a number that’s more than doubled since 1971. On a recent trip to Vancouver, I had the pleasure of talking to a few solo-dweller condo-owners—all of whom had independently bought into the thriving Vancouver market when interest rates were really low.”

“Unfortunately all three of these condo owners were still in the process of building their careers—a process that was forcing them to sell their units so they could pursue promotions. Despite their low monthly mortgage payments and good, sizeable initial downpayment, each solo-dwellers was faced with the prospect of losing money on the sale of their unit.”

The Financial Post. “It might be hard to convince some Canadians the end of the housing boom is near based on new statistics from the Canadian Real Estate Association which show prices still rising. But the growing consensus, even in the face of record valuations for homes in Canada’s three most expensive cities, is that prices will flatten out — a thesis even supported by one of Canada’s largest real estate companies. David Madani, an economist with Canada Economics who has called for a major correction, wonders whether some consumers are even prepared for a flat market let alone one that is falling.”

“‘What concerns me is some buyers seems to have this view that prices can only go up,’ says Mr. Madani. ‘People feel it’s a one-way bet. A lot of younger people seem to think that if they don’t get in now on the home ownership ladder, they’ll miss out. Some of these people will come to regret this decision. In the more expensive markets, it’s almost like a capitulation where they say ‘If I don’t buy now, I’ll never own a home.’ This is what happens in a housing bubble.’”




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October 15, 2014

A Special, Special Part Of The World

The Marin Independent Journal reports from California. “The median price of a single-family home in Marin soared to $1.1 million in September while sales dropped 13 percent from a year ago, according to CoreLogic DataQuick. Sales were down in most Bay Area counties, dropping 6 percent in the area overall and 7 percent in San Francisco. Sales have been declining in Marin and the Bay Area for many months. Regardless of the differences within the county, Fred Kusin of Bradley Real Estate said, ‘Marin is unique. We live in a special, special part of the world.’”

The Telegraph. “According to figures released this week by Forbes magazine, the quiet suburb of Atherton, in Silicon Valley, is now the most expensive postcode in the United States. Estate agents say many of their Chinese buyers looking for homes here are happy to buy sight-unseen and almost all pay upfront in cash - some 80 percent of the $10million homes they sell. ‘I think we have several more years of growth left,’ said Mr DeLeon. ‘It’s a real property boom and not just a bubble.’”

“‘It’s the curse of Silicon Valley,’ added one long-time resident. ‘I just pray that before long, they’ll move on to the next shiny penny.’”

The Press Democrat. “After lagging for most of the year, Sonoma County home sales jumped last month to the highest level for September in nine years. Prices may continue to rise over the next six months, said Jeff Schween, an agent with Pacific Union International in Santa Rosa, because those sellers coming to market now may do so with the thought that ‘this is the kind of price I want to get.’”

“Lori Sacco, manager of Vanguard Properties office in Sebastopol, said some buyers of upper-end properties may be willing to pay extra to get that home they really want. But she cautioned that recent sellers of more modest homes have failed to sell promptly because they sought more than buyers were willing to pay. Her advice: ‘Price it right or it’s going to sit around.’”

The Orange County Register. “A fall chill crept into the Orange County housing market in September, freezing the median home price below the $600,000 threshold touched briefly earlier this year and keeping a lid on sales. The median price of an Orange County home was $585,000 last month, CoreLogic DataQuick reported. Last month was the first time in more than two years that none of the Southern California’s six counties posted double-digit year-over-year price gains. ‘Price appreciation has dipped into single-digit territory as more would-be buyers get priced out, investors back off and incomes rise modestly at best,’ DataQuick Analyst Andrew LePage said.”

The Los Angeles Daily News. “CoreLogic DataQuick analyst Andrew LePage said that September’s small sales increase by no means signals a market turnaround. ‘We still have some summer activity closings, so I wouldn’t read a whole lot into September,’ LePage said. ‘We’ll see what happens over the next couple of months.’”

“Last month the median price across the six-county region increased from $382,000 to $413,000. It fell 2 percent from $420,000 in August, which was the highest median price since $425,000 in December 2007. Economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, said that prices have been flattening out since the spring, and he expects that trend to continue for the rest of the year. Sales had lagged last year’s lackluster total until September, in part because inventory remains tight. ‘It’s going to be another crappy year,’ he said of the region’s market.”

The Glendale News Press. “For the first time in over three years, the median prices for single-family homes and condominiums declined last month in Glendale compared to September 2013. The median price for homes slid from $825,000 in September of last year to $740,000 last month, according to statistics compiled by Realtor Keith Sorem with Keller Williams Realty in Glendale. At the same time, the number of homes sold declined almost 18%.”

“‘Prices are stabilized,’ said Margi Simpkins, a Realtor with Coldwell Banker in Glendale. ‘There’s no real sense of urgency on the part of the buyer.’”

The Bakersfield Californian. “In theory, people should be approaching retirement debt free. But life is a long way from theory. A new study by the non-profit Employee Benefit Research Institute reported that an increasing number of boomers are retiring with mortgage debt. The EBRI report found housing-related expenses are the largest category of costs for seniors, consuming 40 to 45 percent of an older homeowner’s budget. By comparison, health costs consume 8 percent of the budget for people 50 to 64 years of age and 19 percent for seniors 85 years of age and older.”

“The Consumer Financial Protection Bureau recently painted an even bleaker picture. The federal agency reported that sixty-five percent of retirement-age people have mortgages today. This is up from 52 percent in 1992. And while many are struggling to make their mortgage payments, the bureau estimates about 5 percent of seniors are seriously delinquent on their debts.”

“My clients Bob and Mary illustrate some of the reasons why many retiring boomers are not debt free. In early 2000, when Bob was receiving promotions and pay raises at work, the couple decided to trade in their modest three-bedroom home for a larger one in northwest Bakersfield. Their children were in high school and the family needed room to stretch out. They seemed to buy just at the right time. Shortly after they moved in, home prices spiked in their neighborhood. They refinanced three times, taking equity out to help pay for their children’s college educations and to pay for one daughter’s wedding. Their monthly mortgage payment climbed to about $3,000.”

“Then the housing bubble burst and the Great Recession of 2009 hit. While Bob did not lose his job, as many of his neighbors did, his wages have not increased significantly in recent years. And Mary, who has worked part time for years to be home with her children, has been unable to find a full-time job.”

“I advised them to consider all their current and future expenses and income. Downsize. The ‘empty nesters’ have put their home on the market, with plans to buy a smaller home, or rent. They are hoping to reduce their mortgage payments and shed related homeowners’ costs. They also will cut spending on entertainment, travel and ‘non-essentials,’ while increasing their funding of retirement investments.”

“It took years of decisions and spending for Bob and Mary to get into their financial situation. There is no easy, one-step solution to getting out. It will take time and discipline to secure their retirement.”




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