Housing Market Uptrend Expected Through 2014

From National Association of Realtors

The housing market recovery should continue through the coming years, assuming there are no further limitations on the availability of mortgage credit or a "fiscal cliff,"according to forecast presentations at a residential forum at the 2012 Realtors Conference and Expo.

Lawrence Yun, chief economist of the National Association of realtors, said the housing market clearly turned around in 2012. "Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases," he said.

Yun sees no threatening signs for inflation in 2013, but projects it to be in the range of 4 to 6 percent by 2015. "The huge federal budget deficit is likely to push up borrowing costs and raise inflation well above 2 percent," he said.

Rising rents, quantitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross Domestic Product are all raising inflationary pressures.

Mortgage interest rates are forecast to gradually rise and to average 4.0 percent next year, and 4.6 percent in 2014 from the inflationary pressure.

With rising demand and an ongoing decline in housing inventory, Yun expects meaningfully higher home prices. The national median existing-home price should rise 6.0 percent to $176,100 for all of 2012, and increase another 5.1 percent next year to $185,200; comparable gains are seen in 2014.

"Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over the net three years, also meaning there will be fewer upside-down home owners," Yun said. "Today is a perfect opportunity for moderate-income renters to become successful home owners, but stringent mortgage credit conditions are holding them back."

Existing-home sales this year are forecast to rise 9.0 percent to 4.64 million, followed by an 8.7 percent increase to 5.05 million in 2013. Housing starts are forecast to rise to 776,000 in 2012 from 612,000 last year, and reach 1.13 million next year.

The growth in new construction sounds very impressive, and it does mark a genuine recovery, but it must be kept in mind that the anticipated volume remains below long-term underlying demand," Yun said. "Unless building activity returns to normal levels in the next couple years, housing shortages could cause home prices to accelerate, and the movement of home prices will be closely tied to the level of housing starts."

"Home sales and construction activity depend on steady job growth, which we are seeing, but thus far we've only regained half of the jobs lost during the recession," Yun said.

Yun projects growth in Gross Domestic Product to be 2.1 percent this year and 2.5 percent in 2013. The unemployment rate is showing slow, steady progress and is expected to decline to about 7.6 percent around the end of 2013. "Of course these projections assume Congress will largely avoid the "fiscal cliff" scenario," Yun said. "While we're hopeful that something can be accomplished, the alternative would be a likely recession, so automatic spending cuts and tax increases need to be addressed quickly."

Regardless, Yun said that four years from now there will be an even greater disparity in wealth distribution. "People who purchased homes at low prices in the past couple years, including many investors, can expect healthy growth in home equity over the next four years, while renters who were unable to get into the market will be in a weaker position because they are unable to accumulate wealth." he said. "Not only will renters miss out on the price gains, but they'll also face rents rising at faster rates."

Los Angeles Real Estate Market Update October 2012

Real Estate Market Rebounding

Taken from LA Times 10/18/2012

Foreclosures started in California have dropped to the lowest level since early 2007, the latest sign that the housing market is rebounding faster than analysts expected.

Notices of default fell 10.2% from the previous quarter and were down 31.2% from the same period last year, San Diego-based DataQuick reported Wednesday. A total of 49,026 notices of default – the first stage of foreclosure in California -- were filed on homes here last quarter.
That was the lowest number since the first quarter of 2007, and a 63% decline from the first quarter of 2009, when notice of default filings peaked in the state.

California foreclosure starts fall to 2007 level

The number of Californians entering foreclosure dropped in the third quarter to its lowest level since early 2007.

Foreclosure filings have fallen as banks work toward completing more loan modifications and short sales. An improving economy and rising prices have also helped.

“Prices in most areas today are up significantly from their low point in early 2009,” John Walsh, president of San Diego real estate firm DataQuick, said in a news release. “Additionally, during the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress.”

Notices of default fell 10.2% from the prior quarter and were down 31.2% from the same period last year, DataQuick reported. A total of 49,026 notices of default – the first stage of foreclosure in California -- were filed on homes in the Golden State last quarter.

That was the lowest number since the first quarter of 2007, and a 63% decline from the first quarter of 2009, when notice of default filings peaked in the state.

The number of homes lost to foreclosure was up 5% from the prior quarter and down 41% from the same period a year ago. A total of 22,949 homes were lost to foreclosure last quarter.

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For Renters, buying a home pays off in 3 years on average

Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.

The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the "break-even horizon," comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.

The rent-or-buy calculus varies widely depending on where you live.

In the combined Los Angeles and Orange counties, the magic number is 4.3 years, assuming the buyer has made a 20% down payment. Buying wins out after only 1.6 year in the desert community of Banning. But Newport Beach residents must wait 14 years for buying to make more financial sense than renting.

The analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.

Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.

"For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision," Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers "a sense for 'Am I ready to make this decision?'"

The new take on the classic rent-versus-buy debate comes at a tenuous moment for the housing market. Many analysts believe that a housing bottom has been reached but don't expect a return to the heady days of the real estate bubble. There is already some concern about the strength of the recovery, with home sales slowing in June as inventory remained tight and buyers paid higher prices.

At the same time, rents are rising, housing affordability is at record levels, and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.

Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, noted that the main lesson from the subprime mortgage debacle and the housing bust was that homeownership shouldn't be pushed at all costs. Federal policy has been adjusted to support this new point of view.

"One of the things we have learned in recent years is, obviously, house prices don't always go up, and even over the very long term in certain markets homeownership may only offer a minimal return," Gabriel said.

"What we have all learned is to treat homeownership as a bit of a dangerous animal. You know it's not always good, and it's not good for everyone."

Things to consider when buying, particularly in an slowly appreciating market, include how mobile will you be, your financial situation, marital status, career goals and personality, Gabriel said.

Richard Green, director of the USC Lusk Center for Real Estate, added that in many regions buying has become increasingly attractive compared with renting. There are also non-financial reasons for buying.

"I can enjoy living in this house for the rest of my life, and nobody can throw me out of it," he said. "You are consuming something, and you have control over it, and control has some value."

Zillow's analysis, which covered more than 200 metropolitan areas and 7,500 U.S. cities, found that buying is a better financial decision than renting in the Riverside-San Bernardino area if you live in the home for at least two years. That rises to 3.2 years in the area including Oxnard, Thousand Oaks and Ventura.

The San Francisco metropolitan area's break-even score of 5.9 years encompasses a range from two years to 24.3 years.

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April 2012 Sales Statistics for Miracle Mile/Beverly Center

APRIL 2012 SALES INFO

CONDOS/TOWNHOMES
Number Sold                                 2
Average Price                               $501,400
Average Days on Market              68

SINGLE FAMILY HOMES
Number Sold                                 22
Average Price                                $866,483
Average Days on Market              49

May # Homes on Market

CONDO/TOWNHOMES
Active Listings                              17
Back Up Listings                          11
Pending Listings                             7
SINGLE FAMILY HOMES
Active Listings                              48
Back Up Listings                          18
Pending Listings                           18

Sales Statistics for Miracle Mile/Beverly Center Feb 2012

FEB 2010 SALES INFO

CONDOS/TOWNHOMES
Number Sold                                 6
Average Price                                $412,417
Average Days on Market              25

SINGLE FAMILY HOMES
Number Sold                                  11
Average Price                                  $822,359
Average Days on Market                 23

Homes On The Market in March 2012

CONDO/TOWNHOMES
Active Listings                              25
Back Up Listings                            7
Pending Listings                             9

SINGLE FAMILY HOMES
Active Listings                              57
Back Up Listings                           28
Pending Listings                           14

History of Miracle Mile, Los Angeles

In the early 1920s, Wilshire Boulevard west of Western Avenue was an unpaved farm road, extending through dairy farms and bean fields. Later it was integrated into the Pacific Electric Railroad System, a large network of trolley cars known as Red Cars. This transit system included a Wilshire Boulevard line through the post-WWII era. Parallel lines ran on Santa Monica Boulevard, Olympic Boulevard, and San Vicente Boulevard. They were connected by north-south lines on Fairfax and Highland Avenues.

Developer A. W. Ross saw potential for the area, and developed Wilshire as a commercial district to rival downtown Los Angeles. Ross's insight was that the form and scale of his Wilshire strip should attract and serve automobile traffic rather than pedestrian shoppers. He applied this design both to the street itself and to the buildings lining it. Ross gave Wilshire various "firsts", including dedicated left-turn lanes and the first timed traffic lights in the United States; he also required merchants to provide automobile parking lots, all to aid traffic flow. Major retailers such as Desmonds, Silverwood's, May Co., Coulter's, Mullen & Bluett, Myer Siegel, and Seibu eventually spread across Wilshire Boulevard from Fairfax to La Brea. Ross ordered that all building facades along Wilshire be engineered so as to be best seen through a windshield. This meant larger, bolder, simpler signage; longer buildings in a larger scale, oriented toward the boulevard; and architectural ornament and massing perceptible at 30 MPH (50 km/h) instead of at walking speed. These simplified building forms were driven by practical requirements, but contributed to the stylistic language of Art Deco and Streamline Moderne.

Ross's moves were unprecedented, a huge commercial success, and proved historically influential. Ross had invented the car-oriented urban form—what Reyner Banham called "the linear downtown" model later adopted across the United States. The moves also contributed to Los Angeles' reputation as a city dominated by the car. A sculptural bust of Ross stands at 5800 Wilshire, with the inscription, "A. W. Ross, founder and developer of the Miracle Mile. Vision to see, wisdom to know, courage to do."

As wealth and newcomers poured into the fast-growing city, Ross' parcel became one of Los Angeles's most desirable areas. Acclaimed as "America's Champs-Élysées."this stretch of Wilshire near the La Brea Tar Pits was named "Miracle Mile" for its improbable rise to prominence. Although the preponderance of shopping malls and the development in the 1960s of financial and business districts in downtown and Century City lessened the Miracle Mile's importance as a retail and business center, the area has retained its vitality thanks to the addition of several museums and commercial high-rises. The Petersen Automotive Museum, Los Angeles County Museum of Art (LACMA), A+D Museum, and La Brea Tar Pits museums, among others, positioned "Museum Row" on the Miracle Mile as a rival to Exposition Park.
The Art Deco bank recently joined an elite group of local buildings that are on the National Register of Historic Places. It was designed by the architecture firm of Morgan, Walls & Clements, which did the Wiltern Theatre, the El Capitan, and many other notable Los Angeles buildings; 5209 Wilshire was built in 1929.