Monday, October 13, 2014

The Fading Distinction Between City and Suburb

Source: The Atlantic

Are American communities experiencing “the Great Inversion," i.e. a reversal of fortunes in which cities grow as suburbs decline?  While the traditional suburban lifestyle continues to be widespread, new research shows that key features of suburban life not only remain commonplace in the suburbs but are often continued by high-income people even after they move to cities.
Making sense of the story
  • Using data from Canada's 2006 census on before-tax average income, the researchers grouped the census metropolitan areas into eight "neighborhood types" based on three key variables: homeownership rate, share of population living in a detached single-family house, and share of people who commute by car.
  • The most interesting finding concerns the "consistently positive relationship between suburban ways of living and higher incomes." Richer people, the researchers found, tend to own single-family homes and drive cars even when they live in highly urbanized neighborhoods.
  • The study shows that even though there is a diverse range of suburban and urban neighborhoods, the affluent people who live in them lead relatively similar lifestyles.
  • Consequently, when the rich move back to cities, they take their preferences for and abilities to purchase larger homes or condos and private cars.
  • The rich are more suburbanized regardless of where these suburban ways of living occur—a downtown condo or a suburban detached home.
  • Households making $100,000 per year are more than three times as likely to live in suburban rather than urban neighborhoods, whereas households making $0 to $19,900 per year are almost five times less likely to live in suburban as opposed to urban neighborhoods.
  • As housing costs rise and commuting becomes more arduous, higher income people live closer to the urban core in condos and rentals.

Saturday, August 16, 2014

Home Buyers DOs and DON'Ts

Doing your homework before you buy can make all the difference and avoid mistakes when buying a home:

  •  Identifying all available financing options based on your monetary situation
  •  Understanding the local real estate market to determine pricing and location options
  •  Narrowing your search to what is available in your price range
  •  Familiarizing yourself with local schools, shops and other neighborhood amenities
  •  Obtaining a proper home inspection to identify problem areas that could prove expensive
  •  Don't make any other major purchase (such as, Car, Appliances, Furniture) or otherwise moving  money around that could affect your credit rating
  •  In some financing situation, buying before you sell can affect the down payment and could necessitate  interim purchase financing
  •  Not buying with resale in mind
  •  Don't looking for the "perfect" home rather than the best home for your family's needs
Purchasing a home is one of the single largest and most complex investment you’ll ever make, it’s wise to utilize the help of a Realtor who can guide you through this monumental step in your life.

Thursday, July 17, 2014

Is Property Value Continuing to Rise?

Source: California Association of Realtor
July 2014

Talking Points …
  • REALTORS® generally expect home prices to increase in all states over the next 12 months, with most of the heavy growth in Florida, Texas, and California, according to the REALTORS® Confidence Index from the National Association of REALTORS®.
  • The median expected price increase is 4 percent. Approximately 41 percent of respondents reported that properties were on the market for less than a month when sold, and about 5 percent were on the market for more than six months.
  • REALTORS® reported continued weakness in seller traffic and a decline in buyer traffic. Low supply relative to demand, tougher lending standards, and the lackluster growth in income and savings were reported to be constraining sales.

Friday, July 4, 2014

Five Takeaways: Where is the U.S. Housing Market Headed?

Source: Wall St. Journal
June 2014

Signs point to a housing market that may slowly be gaining some balance and entering more normal territory as a variety of recent housing reports paint an improving picture.
Making sense of the story
  • While there was buzz about a potential bubble, Home prices aren’t going up as fast as they were a year ago.
  • Furthermore, according to the Commerce Department, sales of new homes, which have struggled to increase from relatively low levels of a year ago, posted huge gains in May.
  • A key takeaway is that in May, sales of new homes were at their highest levels in six years with a figure of 504,000 sales at a seasonally adjusted annual rate.
  • Also, new home sales are now running 1 percent ahead of last year’s January-through-May level, as the spring-selling season made up for difficult winter conditions in much of the country.
  • However, sales have also been deterred by the fact that builders have been slow to ramp up production. While inventories are still very low, they are up 16 percent from last year.
  • Overall, home prices aren’t rising as briskly as they were last year. And as for the large yearly increases over the past year, they have reflected continued declines in the share of homes selling out of foreclosure.
  • As more supply comes to market, prices are likely to cool down further. It will be a positive sign for the recovery if builders are able to sell more homes and if more traditional owner-occupant buyers dominate the market rather than investors.

Talking Points …
  • Higher home values continued to fuel more equity home sales, which have made up more than 80 percent of all home sales for the past 11 consecutive months.  Meanwhile, pending home sales fell in May as investors pulled out of the market due to higher home prices, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
  • The share of equity sales – or non-distressed property sales – rose further in May, rising to 89.2 percent, up from 88.4 percent in April.  Equity sales have been rising steadily again since the beginning of this year.  May marks the 11th straight month that equity sales have been more than 80 percent of total sales.
  • Twenty-seven of the 41 reported counties showed a month-to-month decrease in the share of distressed sales, with 11 of the counties recording in the single-digits, including Alameda, Marin, San Diego, San Luis Obispo, San Mateo, and Santa Clara counties — all of which registered a share of five percent or less.

Wednesday, May 7, 2014

Why Home Price Gains Aren’t Lifting the Economy - Source: Wall Street Journal

Why Home Price Gains Aren’t Lifting the Economy
Source: Wall Street Journal
Analysis of whether housing has lived up to its true potential as a catalyst for a stronger recovery has led experts to argue that while housing stopped being a drag on the economy a few years ago, it has failed to propel strong economic growth. Professors Atif Mian of Princeton University and Amir Sufi of the University of Chicago argue that rising home prices haven’t done much to stimulate the economy.
Making sense of the story
  • The professors conclude that the home price gains of the past two years have had fewer knock-on benefits for the economy than in the past because those gains have done little to stimulate either new-home construction or increased spending paid for by home-equity borrowing.
  • They argue current rising home prices won’t greatly stimulate the economy because gains that simply restore lost wealth aren’t as valuable as gains that create new wealth.
  • Consequently, prices may need to rise even higher for the economy to enjoy any “wealth effect” because it is at that point when people will spend more because they feel richer as their home or stock portfolio rises in value.
  • Growth is also deterred by tight lending standards, which have made it tougher for homeowners to take cash out of their homes with either a second mortgage or by refinancing into a larger first mortgage.
  • Also, prices haven’t risen enough to encourage homeowners to sell, which is creating inventory shortages that are being blamed for sluggish sales volumes and higher prices.
  • And while home prices are up, they’re still not up enough to encourage builders to build more homes because they face higher land, labor, and supply costs.