Jerry & Rachel Hsieh Real Estate Team - Keller Williams Realty in Los Angeles

Jerry & Rachel Hsieh Real Estate Team - Keller Williams Realty in Los Angeles
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Wednesday, October 31, 2012

Hurricane Sandy disrupts real estate market

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The U.S. real estate recovery that’s gained strength this year faces a setback from flooding and property damage inflicted by Hurricane Sandy, the biggest tropical gale to hit the Atlantic seaboard.
The storm battered homes in Eastern coastal states that account for about one out of every five U.S. real estate sales and threatened inland areas with flooding and blackouts. Lenders put transactions on hold and companies like Coastline Realty in Cape May, New Jersey, pulled in their for-sale signs to prevent the wind from turning them into projectiles.

“We’ll definitely see lower numbers in new sales and new applications,” said David Stevens, president of the Mortgage Bankers Association. “We do expect to see lenders put a freeze on properties across the northeast on the shoreline until they can be inspected and assessed for damages.”

Sandy, about 1,000 miles wide, prompted warnings of life- threatening storm surges from Virginia to Massachusetts, emptied the streets of the nation’s largest cities, paralyzed mass- transit systems and lashed the area with gales, rain and even snow. U.S. airlines grounded 9,500 flights, U.S. stock trading is closed through today in the first back-to-back shutdowns for weather since 1888. Losses may total as much as $20 billion, with $5 billion to $10 billion of that insured, according to Eqecat Inc., an Oakland, California-based provider of catastrophic risk models.

Property Damage

Almost $88 billion of homes in seven states are at risk of damage, according to a report by CoreLogic Inc., a mortgage software and data firm in Irvine, California. New York has $35.1 billion of property in harm’s way, New Jersey has $22.6 billion, Virginia has $11.3 billion, and Massachusetts has $7.8 billion. Maryland, Delaware and Pennsylvania have a combined $11 billion of property at risk, CoreLogic said.

A fire tore through more than 50 homes today in a Queens beach community that suffered heavy flooding, the New York Times reported. On 57th Street in Manhattan, a crane on a 90-story residential building under construction partially collapsed and was dangling over the street. The storm has accounted for 16 deaths, according to the Associated Press.

The storm may also adversely affect commercial properties and securities linked to their debt. New York accounts for 13.2 percent of property loans contained in commercial-mortgage bonds, according to Standard & Poor’s. Loans in Virginia make up 4 percent of deals, while mortgages in Pennsylvania account for 3.4 percent, S&P said yesterday in a note to clients. Debt on New Jersey properties accounts for 3.1 percent of outstanding bonds.

Adequate Insurance’

“Given the magnitude of the storm there will be some impact on performance but more so on smaller properties, to the extent there is structural damage to the property and they require significant capital expenditures,” said Deutsche Bank AG debt analyst Harris Trifon. It won’t lead to any significant increase in delinquencies, he said, because most properties should have adequate insurance.
Still, the storm, which forced cancellations of U.S. stock trading and fixed-income markets, means Wall Street also had to put on hold about $3 billion of commercial mortgage bond sales that included loans to shopping malls, hotels and office buildings.

The U.S. housing market has been recovering this year. Median sales prices rose to $188,800, up 11 percent over a year earlier, according to the National Association of Realtors. Home sales reached an annualized pace of 4.75 million in September, up 11 percent from a year ago. Pending home sales edged up in September for the 17th consecutive month on a year-over-year basis.

Martha’s Vineyard

The storm’s central barometric pressure is lower than that of the 1938 hurricane that devastated homes in New York and New England. Flooding has been reported along the coast from Martha’s Vineyard in Massachusetts through New Jersey. The storm submerged Plymouth Rock, the landmark in Massachusetts traditionally represented as the place where Pilgrims first stepped onshore in the New World in 1620.

“I have never seen a storm this large in regards to wind flow,” said Rob Carolan, a meteorologist at Hometown Forecast Services Inc. in Nashua, New Hampshire. “So many bad things had to come together all at once. It is going to make the Perfect Storm’ look small. It’s remarkable what an impact this is going to have.”

Perfect Storm’

The “Perfect Storm” struck the U.S. East Coast in October 1991. It later became the subject of a book by Sebastian Junger and a movie starring George Clooney.

Fannie Mae, Freddie Mac, Bank of America Corp. and Wells Fargo & Co. told property managers to make sure their foreclosed homes were secured, David Benham, co-owner of Benham Real Estate Group, a property management company based in Charlotte, North Carolina, said in a telephone interview.

“They told us to do what we can in terms of the building but keep ourselves safe,” said Benham, whose company manages 2,000 bank-owned homes nationwide. Their assignments start with boarding up windows and doors, he said. They expect to complete field reports, including photos, within five days showing damage from the weather, he said.

Over the long run, the storm could worsen blight on properties in the foreclosure pipeline where owners don’t have the resources — or the intention — to maintain the property and the loan servicers don’t have full legal responsibility for maintaining the property, Chris Whalen, senior managing director at Tangent Capital Partners LLC, said during a telephone interview from New York.

Floating Inventory’

There’s a “floating inventory” of abandoned or delinquent properties not available for sale that has been growing in states like New York and New Jersey, where the foreclosure process takes longest, Whalen said.

About 20,000 New Jersey properties facing foreclosure or already repossessed by banks are in Sandy’s path, in the counties of Burlington, Camden, Gloucester, Salem, Ocean, Atlantic, Cape May, Cumberland, Daren Blomquist, RealtyTrac vice president, said in a telephone interview.

More than 50,000 New York foreclosures are threatened in New York City’s five boroughs and the counties of Ulster, Dutchess, Westchester, Suffolk, Nassau, Rockland, Putnam, Orange, Greene, Columbia, he said.

In Connecticut 3,055 homes in foreclosure will be affected in New London, New Haven, Middlesex and Fairfield counties, Blomquist said.

Closed Courthouses

The storm closed many courthouses where lenders pursue foreclosures, another wrench in a process that takes an average of 1,072 days to complete in New York, the longest process among U.S. states. Foreclosures take an average of 931 days in New Jersey, second-longest, and 661 days in Connecticut, the sixth longest, according to RealtyTrac.

At the current pace of foreclosures, the pipeline of homes with seriously-delinquent mortgages would take 495 months — more than 41 years — to work through in New York and 425 months in New Jersey, the longest of any states, according to Lender Processing Services Inc.

“The magnitude of the damage is not yet known, but none of this can be good for the prospect of getting the foreclosure crisis behind us,” said David Dunn, an attorney with Hogan Lovells in New York.

The Hamptons, on the eastern tip of New York’s Long Island, had lost electricity yesterday afternoon, according to Judi Desiderio, president of Town and Country Real Estate in East Hampton. Owners and buyers who plan to live there during hurricane season should factor in the approximately $50,000 cost of having a generator as part of the price of owning property, she said.

Another necessity, she said, is “a bunch of friends who live nearby so you can have a hurricane party.”

(Courtesy of Bloomberg.com)

Wednesday, October 24, 2012

Freddie Mac: Mortgage rates edge lower; 30-year average at 3.37%

 
Mortgage rates

Mortgage rates hovered near their all-time lows this week, with the average 30-year fixed loan at 3.37%, down from 3.39% last week, Freddie Mac said in its latest survey of what lenders are offering to solid borrowers.

The record low of 3.36% was set two weeks ago.

Freddie said the average offering rate for a 15-year home loan was 2.66%, a new record low. Borrowers would have paid an average 0.7% of the loan amount in upfront lender fees and points for the 30-year loan and 0.6% for the 15-year mortgage.

The initial rates for adjustable-rate mortgages rose slightly.

Observations on the recovering housing markets from Freddie Mac economist Frank Nothaft:

"Construction on single-family homes jumped to an annualized rate of 11% in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23% higher than the same period last year. Moreover, homebuilder confidence rose for the sixth consecutive month in October to the highest level since June 2006.”

Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering on popular types of loans. Solid borrowers who shop around can often do somewhat better, and many pay additional upfront points to lower the rate. Third-party costs such as appraisals and title insurance are not included in the survey.
(Courtesy of LA Times)

Wednesday, October 10, 2012

Does Your Los Angeles Real Estate Agent Have Your Best Interests in Mind?

When buying or selling Los Angeles real estate with a real estate agent, one of the first forms that California requires to be signed is a “Disclosure Regarding Real Estate Agency Relationship”. This form is basically just an explanation of the different types of agency relationships that a buyer or seller can have with their real estate agent.

Many buyers and sellers do not, however, understand what this important disclosure means or how it affects their real estate transaction. The purpose of this tip sheet is to explain the differences and similarities between the three real estate agency relationships -- Seller’s Agent, Buyer’s Agent, and Dual Agency.

But first, it is necessary to define what an agency relationship even is and how it relates to Los Angeles real estate.

In 1988, California became the first state to pass laws that explicitly defined real estate agency relationships. The concept of “agency” is one of the most important when it comes to real estate. What these laws of agency basically say is that real estate agent has a fiduciary responsibility to their client. This in turn means that the agent must always act in the best financial interest of their client.

Today, all real estate agents licensed by California are governed by these laws of agency. The three types of agency, as outlined by Californian law, are (1) Seller’s Agent, (2) Buyer’s Agent, and (3) Dual Agency.

Seller’s Agent Most of those with Los Angeles homes for sale are represented by a Seller’s Agent. According to California law, the Seller’s Agent is obligated to have “a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.”

The Seller’s Agent must always act in the financial interest of the seller. In general, this means negotiating the highest possible sale price a home. Consequently, the agent must not provide any information to the buyer that might be disadvantageous to the seller’s interest. Likewise, if the buyer provides any pertinent information to the Seller’s Agent, the agent will likely pass it on to the seller. Therefore, the buyer should tread carefully when speaking with a Seller’s Agent.

Buyer’s Agent When searching through the Los Angeles homes for sale, it really helps to be represented by a Buyer’s Agent. Like the Seller’s Agent, the Buyer’s Agent is obligated by California law to have “a fiduciary duty of utmost care, integrity, honesty, and loyalty,” but when “in dealings with the Buyer.”

The Buyer’s Agent must always act in the financial interest of the buyer. Generally speaking, this means negotiating the lowest possible sale price for a home. In the same way that the Seller’s Agent must be careful with their client’s information, the Buyer’s Agent must act in the financial interest of the buyer. Therefore, sellers should not let important information slip when communicating with the Buyer’s Agent.

Dual Agency Of all the Los Angeles real estate agency relationships, Dual Agency is easily the most controversial. Dual Agency is when a real estate agent -- meaning, either a real estate firm or an individual --represents both the buyer and the seller. In this case, the agent is still obligated to have a “fiduciary duty of utmost care, integrity, honesty and loyalty,” but when “in the dealings with either the Seller or the Buyer.”

This is obviously a fine line to walk, because the Dual Agent cannot reveal any information that would give an unfair advantage to either the buyer or seller. Some argue that this balance is essentially impossible to maintain. Others claim that a talented Dual Agent can speed up the process while mediating a fair compromise between the buyer and seller.

While some states have outlawed Dual Agency, it remains to be seen how this controversy will ultimately play out in California.

Wednesday, October 3, 2012

Los Angeles Real Estate Update, September 2012

The Los Angeles real estate market has shifted considerably over the last 12 – 18 months. A major reduction in inventory has turned L.A. into a sellers’ market, where properties sell quickly and often for the full asking price.
Home prices are still in the red when measured annually, but improvements can be seen month to month. The same goes for condo prices.
Here are the latest numbers coming out of the L.A. real estate market.

Condo and Home Prices are Up, Monthly

The latest release of the S&P/Case-Shiller Home Price Index was published on August 28. It included data through the end of June 2012. According to the report, L.A. real estate prices are improving at the monthly level. Prices rose by 2.2% from April to May, and 1.7% from May to June of this year.
While the annual numbers are still negative, they also seem to be improving. This time last year, the year-over-year price change was -3.4%. In May of this year, the annual return was slightly better at -2.0%. In June, the annual return improved again to -0.6%.
The next Case-Shiller report will be released on September 25, and will contain data through July of this year. Based on recent trends within the Los Angeles real estate market, we will likely see a positive annual return in L.A. home prices — for the first time in months.
Bear in mind the Case-Shiller report is limited by a two-month lag. More recent data shows positive price trends, even when measured annually. Trulia’s website, for example, shows a year-over-year improvement in the median sale price for this metro area. Additionally, a recent report by real-estate data provider DataQuick shows a 3.1% increase in the median price, from July 2011 to July 2012.
Condo prices in L.A. have mirrored home-price trends, for the most part. Both indicators are still negative when measured year over year (using the Case-Shiller numbers), with positive gains in the more recent months. Condo prices rose each month from March to June, reaching late-2003 level.
The Los Angeles condo market has fallen 40% from its July 2006 peak. Despite the recent monthly gains, condo prices will probably never reach that peak level again. Nor should we expect them to. What’s noteworthy here are the monthly gains and the increasing stability of the market as a whole.

Fewer Homes for Sale, Year Over Year

The number of homes for sale in the L.A. metro area has declined sharply over the last year or so. According to Realtor.com, the total number of listings dropped by 29% from July 2011 to July of this year. This allows homeowners to set — and justify — higher asking prices when listing their homes. The median list price for this market rose 6.43% during the one-year period mentioned above.
Currently, real estate conditions in Los Angeles appear to favor the seller over the buyer. In fact, this metro area was recently ranked as one of the top ten sellers’ markets in the United States. In July, the real-estate information company Zillow ranked the top buyers’ and sellers’ markets in the U.S. The comparison group included 50 of the largest metro areas in the country. According to that report, Los Angeles was the #8 sellers’ market in the country. This means homes are selling fast, and often for the full list price.
The median age of inventory for the L.A. metro area dropped by nearly 10% over the last year, according to Realtor.com. This comes as no surprise, given the reduction in inventory and other market conditions.

The L.A. Real Estate Market in 2013

The Los Angeles housing market will likely strengthen in 2013, but improvements will be modest. The weak job market will continue to limit demand for housing. The unemployment rate in L.A. neared 12% in July, according to the Labor Department. That’s well above the July national average of 8.3%.
Low mortgage rates will continue to attract buyers. The benchmark 30-year mortgage rate is expected to hover below 4% through at least the first quarter of next year (disclaimer below). This, combined with the prospect of rising home prices, will pull many home buyers off the fence and into the market.
Inventory will be a primary driver of the L.A. real estate market, well into 2013. If the number of homes for sale continues to drop, as it has since last summer, we could see a modest but consistent rise in home prices. Time will tell.

Disclaimers: This story contains forward-looking statements about the Los Angeles housing market, home prices, and other economic factors. These statements were made based on current market conditions, and these conditions may change over time.
This information has been provided for educational use only and does not constitute a guarantee about future economic conditions. Please do not make any financial decisions based solely on this report. We encourage all home buyers to seek the assistance of an experience real estate agent.


Full article: http://www.homebuyinginstitute.com/news/los-angeles-update-264/#ixzz28GvWGGGr