House Theory Real Estate Market News

By Alejandro Lazo – LA Times
March 31, 2010

L.A. leads the S & P/Case-Shiller index of 20 cities with a 1.8% increase from December. The index rises 0.3% overall, its eighth monthly increase in a row. Some see recovery; others, a mixed picture.

In Los Angeles, Chad Wootton looks at listings of homes for sale. Some economists see the overall rise in home prices nationwide as a sign that the recovery is beginning to help consumers gain confidence. (Jae C. Hong / Associated Press / March 16, 2010)

A national index of home prices rose unexpectedly in January, with California cities posting strong gains, but some experts warned that the nation’s struggling housing market could be headed for another fall.

The closely watched Standard & Poor’s/Case-Shiller index of 20 metropolitan areas rose 0.3% from December on a seasonally adjusted basis. That marked eight consecutive months of home values improving.

The index also was down just 0.7% from the same month last year, the nearest that the year-over-year reading has come to positive territory in three years.

But expectations about housing’s direction remain mixed as a series of government initiatives intended to bolster sales and stabilize values begin to expire.

Concern over a potential wave of foreclosures also remains high despite new efforts by the Obama administration to keep struggling borrowers in their homes.

“Forces that will bring home prices back down are mounting,” said Patrick Newport, an economist for IHS Global Insight. “Our view is that despite this report, prices have further to fall — about another 5%.”

The Case-Shiller index, which covers three months of data, was influenced by a sales surge in November, when buyers rushed to take advantage of a federal tax credit for first-time purchases before its initial expiration.

Sales fell in December and January, even though that program was expanded and extended through April.

Though many economists expect the extended tax credit to give sales a further boost, they also expect another fall once the government incentive ends.

“It is way too early for this market to have rebounded the way it has,” said Christopher Thornberg, principal of Beacon Economics.

A breakdown of the index showed mixed results, with 12 cities posting increases and the rest decreases. When left unadjusted for seasonal variations, the 20-city index fell 0.4%.

Economists surveyed by Bloomberg had expected the index to fall in January.

David M. Blitzer, chairman of S&P’s index committee, said he was concerned about the slow construction of new homes, falling sales volumes and foreclosures hitting the market this year.

“We can’t say we’re out of the woods yet,” Blitzer said.

But others saw the improvements as a sign that the economic recovery was beginning to help consumers gain confidence.

“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,” said Karl E. Case, a professor at Wellesley College in Massachusetts and co-creator of the index.

“Now that the economy is starting to come back, I think the psychology has changed,” Case said.

California cities posted solid gains, with the Los Angeles metropolitan area up 1.8% to lead the index. San Diego gained 0.9%, and San Francisco rose 0.6%.

Richard Green, director of the USC Lusk Center for Real Estate, said Southern California was showing strength because it was one of the earliest markets to get hit and is rebounding now before other areas.

“We fell first, we fell deeply and we didn’t overbuild the way other parts of the country did,” he said.

“And if you look at the long-term horizon, the amount of housing built relative to population was less than other places, and it is still really hard to build new houses here,” he said.

That means the chances of recovering sooner are good, Green said.

Thornberg attributed the gains primarily to the federal government’s programs and said most of Southern California’s housing gains were a result of fewer foreclosure properties on the market.

The falling number of available foreclosures is pushing prices up on lower-end housing, though prices continue to fall in more-expensive neighborhoods.

“The bottom has been surging up,” Thornberg said. “It really is about the low end.”

Chicago fell the most — 0.8%. Others losing ground included Seattle, Atlanta and Portland, Ore.

The housing market is likely to be affected soon by the expiration of certain government policies.

The Federal Reserve plans to end its $1.25-trillion mortgage-bond-purchase program Wednesday.

The program, which has kept interest rates at rock-bottom levels, has helped the Fed buy nearly all the mortgage bonds from housing finance giants Fannie Mae and Freddie Mac, replacing most private investors last year.

At the end of April, the federal tax credit program for first-time buyers and for some current homeowners is scheduled to expire. The program provided up to $8,000 to first-time buyers and up to $6,500 to certain current homeowners.

Also, the Federal Housing Administration, which has stepped up its support of low-interest mortgages for first-time buyers, has tightened its lending standards.

Many economists also remained concerned about foreclosures swamping the market in coming years as borrowers go into default, owing more on their mortgages than their homes are worth.

The Obama administration late last week unveiled measures aimed at getting lenders to reduce the principal balances on problem mortgages and refinance underwater homeowners.

Experts remain skeptical about whether the changes to the $75-billion Home Affordable Modification Program will help the program reach its goal of keeping 3 million to 4 million homes out of foreclosure through 2012.

alejandro.lazo @latimes.com

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“NEW YORK (Reuters) – The U.S. commercial real estate market, slammed by the credit squeeze and recession, is likely to hit bottom in 2010, according to a survey of industry investors, developers, lenders and consultants.

Commercial real estate values will fall 40 percent, on average, from their peaks in mid-2007, and up to 50 percent in some sectors, according to the 2010 edition of Emerging Trends in Real Estate, released on Thursday by the Urban Land Institute and PricewaterhouseCoopers LLP.” By Nick Zieminski © Thomson Reuters 2009 All rights reserved

Most hard hit will be retail and offices.  Which is no surprise with the way the economy is going. The one sector of commercial that won’t get hit too hard is apartment buildings and that’s because there is a large population of young people and people who can’t afford homes anymore, renting now.

Basically, commercial is going through the same cycle that residential properties have already been going through. There’s a lot of loans out there that will be reseting in the next few months, thus a lot of property owners will no longer be able to keep up with the payments.  Investors are ready to jump with their cash.  Everyone is just waiting for it to pop and when it does there will be a tremendous amount of good deals out there.  Just watch.

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Looks like it’s a done deal. The $8000 tax credit to first time home buyers will be extended to April 30, 2010.

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Just returned from Tony Robbins Wealth Mastery course.  Always quite an experience.  Good and bad.  The bad first: Some of the seminar was so, so with lots of guest speakers hocking their products like infomercials and a little too basic for my taste.

The Good: There were 3 outstanding speakers; Kieth Cunningham on business, Frank Kern on marketing via web, and Brandon Burchard on speaking and developing seminars.  Brilliant!!!!!!!!!  Made it all worth while.

The gist of the Wealth Mastery course is to gain knowledge about how to deal with ones finances, by implementing psychology, navigation, & strategy.   Then the idea that money is just a tool to get to the goal that you are looking for.  What good is money if you don’t have a goal?

The main facilitator was Scott Harris who is the most amazing man.  He actually advises Tony Robbins and coaches his family personally.  Truly brilliant.  So personable and giving.  4 days of peak state mind set learning, playing, networking is so intense and you never want it to end.  Each day went into another level along with always working on ones psychology throughout, as that is the biggest hurdle anyone has to get over.  On the last day I really got my kick in the pants for the psychology part of it.  I have always been one to be behind the scenes and not wanting to be center stage.  Shy and scared of showing myself off, embarrassed.  Each day a game is played called “The Wheel” where your name is written on a ping pong ball and thrown in a basket and spun around.  One is drawn out each day and the winner has to run up on stage alone and dance like crazy for a couple minutes and then spin the wheel to win a prize. I was picked on the last day.  I had no choice. I had to step up and I did it. I danced in front of 500+ people.  Of course because I knew the production team they had to make it even more embarrassing by putting on really slow thump’n sexy music that I had to really shake my ass too.  Sam! I survived and it was not horrible at all. It was fun and I will never have that scary feeling again when I am picked to do something.  No more standing behind.  That was my big breakthrough.

There is nothing like the group of people that gather at Tony Robbins events.  We are all one together as a giant close knit family, sharing, giving, loving, crying, participating, understanding each other, just being together.  It’s HOME!

Really these courses are about the people you meet there and the life long relationships that begin there.  I met amazing new friends and saw old friends from previous events.  Everyone is so enthusiastic and genuinely excited to be there.  Felt like home.  TR events are truly a place to feel completely at home, safe and comfortable at.  I even met someone that absolutely blew me away, beyond what I have ever thought about.   A deep spiritual connection, magic and understanding.   Personally in the rest of my life, even in my own family, I always feel like an outsider, but when I am at a Tony Robbins event, I am part of this family.

In the end; the true lesson that is learned here is that wealth is so much more than $$$; it really is speaking of how abundant your life is, how full of life, how much meaning, how much contribution & how full of love ones life is. So far I have 3 out of 4. Working on finding the last one. How wealthy are you?

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