Are California’s Real Estate Troubles Now Crossing State Lines?

With home prices rising and inventory dwindling in California, most families are priced out of the neighborhoods in which they want to live and with many native Californians’ feeling this affordability squeeze, they’re looking to markets completely out of state, which is putting similar pressure on regions across state lines.

Specifically, Oregon is feeling the pressure as Californians seeking an escape from long commutes and cramped San Francisco apartments look to the northwest state for its more laid-back lifestyle and more affordable housing. Chris Hawkins, a 47 year-old from Marin County, CA, sold his San Francisco apartment and moved to Eugene, OR, with his wife and two kids in March. He paid $550,000 cash last October for his 5,000 square-foot home, something that would have cost him three times as much in California. “That would have been our down payment on a Bay Area house,” he said. “And I would have still had to pay a $1 million mortgage.”

Real estate prices in the Portland region are climbing, and some out-of-state cash buyers are putting the squeeze on locals. Some locals are reacting by taking resentment out on Californians who are moving in. Real-estate agents in Portland found many “For Sale” signs on homes slapped with “no Californians” stickers, a silhouette of the Golden State in black with a red circle and slash through it, according to the Oregonian newspaper of Portland. Oregon agent Quinn Irvine said, “A lot of these homes are going into bidding wars.” He went on to say the issue stems in large part from a 10-year low in the number of homes for sale in the region, which has led to many people getting outbid. He thinks upset Oregonians are putting anti-Californian stickers on signs of agents who have properties that have sold over asking price.

As word of the “No Californians” stickers went viral, Oregonians and San Franciscans soon had at it on the Internet. One comment from an Oregon resident: “Californians are going to turn Portland in to San Francisco 2.0” was retorted with “They don’t have to worry about me moving to Oregon. There’s no San Francisco there. Besides, plaid flannel makes me look fat.” by a Bay Area resident.

However, this all just may be another incident in the long tradition of blaming California for gentrification or “Californication” of Oregon. But what is apparent is that Californians are really feeling the pressure of rising home prices in their native state and are looking to more affordable areas outside the Golden State.

The Fed decision: Rates stay zero-bound

Home buyers dodge a bullet for now. Feds do not raise the interest rate this week after much consideration. Great for potential home buyers, But rate hikes are expected very soon! 

If you have been thinking of purchasing a home better do it now!  Contact us if any of the great homes we have been sending you interest you. We will schedule an appointment to view them and start the offer process.

Hurry, Don't Delay Any Longer! Even Just A .25% Increase Calculates Into a $60 Increase In Monthly Payment On A $400,000 Home Purchase Amount.

After months of speculation, the Federal Reserve decided to leave its target borrowing rate unchanged, at 0%—0.25%, at its two-day meeting this week. Earlier in the summer, many investors expected the central bank to raise rates in September for the first time in nearly a decade, as U.S. unemployment continued to fall and GDP continued to grow. But as inflation has come under pressure, the Fed elected to maintain its accommodative position.

Viewpoints checked in with Jurrien Timmer, director of global macro at Fidelity, to discuss the significance of the decision.

Why did the Fed decide to leave rates unchanged, at 0%–0.25%?

Timmer: Essentially, the Fed had to weigh dueling forces, with global economic fears on one side and U.S. economic strength on the other.

The Fed has a dual mandate to promote maximum sustainable employment and stable prices. While the employment side of the Fed’s mandate to raise rates has been met—joblessness fell to 5.1% in August—inflation has been low and remains below its target of 2%. Falling import and commodity prices and a stronger dollar have put more downward pressure on inflation. In the end, the fears about these disinflationary forces won out.

Does the Fed’s decision suggest that the U.S. economy is in trouble?

Timmer: Weakness around the globe doesn’t directly affect U.S. retail sales or employment, but it has taken a toll on market conditions. In recent months credit spreads have moved higher on investment grade corporate bonds and high yield bonds especially, raising the cost of financing; the dollar has moved higher; and inflation expectations have moved down. While everyone is focused on the Fed borrowing rate, these market forces are actually more important—in effect, the market has been tightening for the Fed.

The Fed doesn’t want the market to react too much, especially to the point that it could hinder growth, so it has decided not to raise rates, and I expect it is hoping market volatility calms down.

What does this mean for rates going forward?

Timmer: Nearly everyone wants the Fed to be early and shallow—making small rate hikes before inflation accelerates significantly. But if the Fed waits too long and the inflation genie comes out of the bottle, they may have to hike faster. Rapid rate moves have historically been problematic—in the past, rapid rate hikes have tended to slow economic expansion too much, sometimes turning growth into recession

My guess is that the Fed has concluded that the risk of being behind in fighting inflation is much less than the risk of being too early. Given of the deflationary forces in the world today, the Fed has the leeway to wait longer.

I think the Fed also wants to avoid surprising the market, as it did in the “taper tantrum” in 2013. Typically, the market prices rate hikes correctly—the move is known and discounted by investors before it takes place. Maybe in three months, if the market prices it in, that will help make the Fed more comfortable making a change.

What does this mean for investments?

Timmer: The market was not expecting a rate hike, so this outcome is exactly what was priced in. So while there is often a lot of noise immediately following a Fed announcement, there shouldn’t be a lot of market movement in the short term.

Long-term, conditions haven’t really changed. The United States remains the best house in a bad neighborhood—domestic economic progress is better than in most other developed countries. With slow growth, a low rate environment may persist for longer than many investors were anticipating.

When the Fed does raise rates, history suggests that the first hike traditionally isn't been a big problem for the stock market. Usually, the economy's doing pretty well, and we usually have a benign low inflation environment. That's true today. However, what is different today is that we have a much weaker global environment, inflation is much lower, and we've had a lot of market volatility lately.

If the Fed does move to tighten in the near term, it's going to squeeze dollar liquidity even more. In my view, that could potentially be an even bigger headwind for some areas, like China and emerging markets, which have already been hit the hardest. So, my expectation going forward is that the market volatility we're seeing is going to remain relatively elevated.

We will get a rate hike at some point, but I don't think a big spike in interest rates is on the horizon, so I think it still makes sense to diversify with high-quality bonds. If the U.S. economy holds up well, like I think it will, there might be buying opportunities in U.S. stocks.

Jerry Gusman
The Gusman Group
Realty Executives Experts
(888) 213-4208

​jerry.socalhomesie.com​

Existing Home Prices Hit Record; Sales Soar To 8 Year High

Houses have become stocks... the higher the price, the more demand (especially as the government has your back with low down-payment loans and the re-emergence of IOs). WithExisting Home Sales soaring to a SAAR of 5.49 million, the highest since early 2007, the fact that median home prices are at an all-time high appears to be any problem for the releveraging American (or Chinese) homebuyer.

Lawrence Yun, NAR chief economist, says backed by June's solid gain in closings, this year's spring buying season has been the strongest since the downturn. "Buyers have come back in force, leading to the strongest past two months in sales since early 2007," he said. "This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy."

Adds Yun, "June sales were also likely propelled by the spring's initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher."

The median existing-home price for all housing types in June was $236,400, which is 6.5 percent above June 2014 and surpasses the peak median sales price set in July 2006 ($230,400). June's price increase also marks the 40th consecutive month of year-over-year gains.

Price gains were dominated by the $500 k plus range with low-cost home (under $100k ) seeing prices drop 2.6%

As supply continues to drop...

Regional Breakdown

• June existing-home sales in the Northeast climbed 4.3 percent to an annual rate of 720,000, and are now 12.5 percent above a year ago. The median price in the Northeast was $281,200, which is 3.9 percent higher than June 2014.
• In the Midwest, existing-home sales rose 4.7 percent to an annual rate of 1.33 million in June, and are 12.7 percent above June 2014. The median price in the Midwest was $190,000, up 7.2 percent from a year ago.
• Existing-home sales in the South increased 2.3 percent to an annual rate of 2.20 million in June, and are 7.3 percent above June 2014. The median price in the South was $205,000, up 7.2 percent from a year ago.
• Existing-home sales in the West rose 2.5 percent to an annual rate of 1.24 million in June, and are 8.8 percent above a year ago. The median price in the West was $328,900, which is 9.9 percent above June 2014.

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208

jerryggroup@aol.com

Future Is Prime For Investing In Rental Property!

New Freddie Mac research reveals that despite rising rents, the majority of renters are not motivated to purchase a home and positive perceptions about renting are increasing. Harris Poll was selected by Freddie Mac to conduct the survey of more than 2,000 U.S. adults online in March 2015 to get their renting viewpoints.

"We've found that rising rents do not appear to be playing a significant role in motivating renters to buy a home," said David Brickman, EVP of Freddie Mac Multifamily. "This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing."

According to the U.S. Census Bureau, more than one-third of U.S. households are renting homes, and renters make up all net household growth over the last several years.

This year, rents are expected to rise 3.4 percent above inflation, a slight decrease from last years’ number of 3.6, according to the research. Only six percent of renters who have lived in their home longer than two years have experienced a decrease in their rent amount, while 38 percent of renters experienced an increase in their rent amount in the last two years.

Of the renters who experienced an increase in rent, 70 percent noted that they want to buy a home but cannot afford it right now, the data found. Fifty-one percent said that they would have to put off their plans to buy a home for now. Another 44 percent said that they would like to buy and are looking for a home to purchase.

"Growth in the number of renter households is occurring amid an improving job market and economy,” Brickman said. “The demand for rental housing is increasing and an estimated 440,000 new apartment units are needed each year to keep up with demand."

A third of renters indicated in the survey that they are very satisfied with their rental experience and 30 percent say they are moderately satisfied. The main reasons selected for those that are satisfied with their renting experience are freedom from home maintenance, more flexibility over where you live, and protection against declines in home prices. These choices were the same in the last survey, with the numbers rising slightly. In spite of rent increases, 53 percent say they will not adjust their spending habits and 46 percent say they like where they live and will stay in their current place.

For more information or help getting investment properties contact:

Jerry Gusman, The Gusman Group

888-213-4208

jerryggroup@aol.com

California Is Home to America’s Fastest-Moving Housing Markets

Anyone looking to buy this year has likely already encountered some of the many pitfalls which the California housing market has to offer – tight inventory and high prices to name a few. It would seem that buying in California isn’t about to get any easier this spring, as a new study indicates that homes in California are moving faster than anywhere else in the nation, and the market shows no signs of slowing down – good news if you or your clients are looking to sell.

According to a study released by Trulia earlier in April, California is home to eight of the top ten fastest-moving housing markets in the nation, with all of the top five residing in the Golden State. The list includes San Francisco, San Jose, Oakland, San Diego, Orange County, Sacramento, Los Angeles and Ventura County respectively.

In San Francisco, inventory moved at the fastest pace with only 26% of homes remaining for sale after being listed for two months in April. In Los Angeles and Ventura Country, there was a more modest 43% of homes remaining on the market after two months, which is still significantly faster than the 60% average nationwide. The most significant jump between succeeding markets was San Diego and Orange County – placing #4 and #5 on the list respectively – seeing 33% and 41% of homes remaining unsold after two months.

So what’s causing the high turnaround in the California housing? The answer is simple, supply and demand.

“Inventory and new supply is quite tight. That’s driving, on the supply side, the fast-moving markets,” said Ralph McLaughlin, housing economist at Trulia. “And then California is a leading market for job growth, and, especially in the Bay Area, a lot of those are higher-paying jobs that allow people to get mortgages and buy homes. It’s a double-whammy effect.”

The rate at which homes are selling is only getting faster. According to Trulia, three-fourths of the nation’s top 100 housing markets had fewer homes for sale after two months of being listed than one year ago. This includes all of the top ten fastest-selling markets. San Diego saw the biggest drop among the top ten, which declined 11% from the year before.

If buyers want to close a deal this spring, they’ll have to be prepared to move quickly.

Has your business been impacted by the rate at which homes are selling? Do you think this trend will slow down in upcoming months? We’d love to hear your thoughts!

For more information contact.

Jerry Gusman, The Gusman Group

888-213-4208 or by email at jerryggroup@aol.com

Housing Market Has Made ‘Good Enough’ Progress to Buy Now, Analyst Says

The CEO of the largest single private homeowner in the U.S. said that buying a home now is a "good investment" and that the recent gains the housing market has made are "good enough" for a buyer to invest in a home during a recent interview with CNBC.

Speaking from the Milken Institute Conference in Los Angeles, Blackstone Mortgage Trust CEO Steve Schwarzman told CNBC on Monday that the housing market has been "coming back for quite some time" even though inventory is low and prices have not increased as much. For example, Black Knight Financial Services reported earlier this week a year-over-year median price gain of 4.6 percent for single-family homes in February.

"We're finding that that market continues to go up for the value of houses, although not at the same rate as it did, obviously, off the bottom," Schwarzman said.

Blackstone is the largest single private owner of residential homes in the U.S. with approximately 47,000 homes and about $90 billion in real estate assets. Schwarzman said his company is putting money into the housing market, although not as much as it was during the height of the financial crisis.

"We're only building about half of the houses we did at the top of the last cycle," Schwarzman said. "People need to be in houses as immigration continues in the United States."

Schwarzman's assessment of the housing market was similar to that of Tim Rood, chairman of the Washington, D.C.-based business advisory firm The Collingwood Group, who said in a recent interview on Westwood One Radio Network that now was a good time to invest in a home because of low interest rates and anticipated home value appreciation.

"The leveraged return if you put down 10 percent on a house, the trajectory of appreciation lately is you’re going to get your money back inside of a year and then after that 5 to 10 percent appreciation rates," Rood said. "It's phenomenal."

The topic of the housing market and whether or not now is a good time to buy will be covered more in depth at the 2015 Five Star Conference and Expo, which will be September 16 through 18 at the Hilton Anatole in Dallas, Texas.

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208 or by email at jerryggroup@aol.com

Homeownership Down Below ’90s Levels; Vacancy Rate Little Changed

The nation's homeownership rate dropped to 63.7 percent in Q1, more than a full percentage point below the average rate throughout the 1990s of 64.9 percent, according to data released by the U.S. Census Bureau on Tuesday.

Q1's homeownership rate represented a decline of 1.1 percentage points from the same quarter in 2014 and 0.3 percentage points from Q4 2014. The homeowner housing vacancy rate for Q1 was reported at 1.9 percent, which was a year-over-year decline of only 0.1 percentage points and virtually the same as the rate reported for Q4.

The homeownership rates declined by at least 0.6 percentage points year-over-year in all age categories (under 35; 35 to 44; 45 to 54; 55 to 64; and 65 and older), with the largest decline coming in the 35 to 44 age group (2.3 percentage points, from 60.7 down to 58.4 percent.

The 65 and older group had the highest homeownership rate in Q1 2015 at 79 percent, while the under 35 group had the lowest rate for the quarter at 34.6 percent. The rates increased as the groups got older: age 35 to 44 was at 58.4 percent, age 45 to 54 was at 70.1 percent, and age 55 to 64 was at 75.8 percent.

"[O]ver the last year, the homeownership rate for households headed by an individual younger than 35 declined by 1.6 percentage points," wrote NAHB economist Robert Dietz on the Eye on Housing blog. "While the decline for those aged 35 to 44 was larger (and larger among all age cohorts with a drop of 2.3 percentage points), the percentage decline (4.4 percent from the level of the first quarter of 2014) was largest for this younger than 35 class."

The vacancy rate for owned homes of 1.9 percent, though little changed year-over-year and from the previous quarter, has been slowly but steadily declining since hitting a peak of 2.89 percent in 2008 at the height of the recession, according to the Census Bureau.

The percentage of homes with a mortgage and a family income equal to or greater than the nation's median family income in Q1 was 78.4, while the percentage of households with a mortgage and a family income less than the nation's median income was reported to be 48.9 percent, according to the Census Bureau.

The year-over-year gain in households, which was reported at slightly less than 1.5 million, marks good news as far as housing demand goes, according to Dietz.

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208 or by email at jerryggroup@aol.com

HUD’s Distressed Asset Program Give Borrowers More Protection Against Foreclosure

The U.S. Department of Housing and Urban Development (HUD) on Friday announced significant changes to its Distressed Asset Stabilization (DASP) program meant to offer more protections to borrowers facing foreclosure and increase non-profit participation in purchasing distressed loans.

Under the new rules, loan servicers are required to delay foreclosure on a home for a year and evaluate all borrowers facing foreclosure for participation in the government's Home Affordable Modification Program (HAMP) or a similar loss mitigation program. Loan servicers could previously foreclose on a home six months after they received the loan and were not required to evaluate borrowers for loss mitigation programs, though they were encouraged to do so.

The improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a pool of loans for non-profits only.

"These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales," said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. "The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure."

The changes come with stronger reporting requirements that include tougher penalties for non-compliance of quarterly reporting requirements, along with a new requirement of those who purchase loan pools to report on borrower outcomes even if a note is subsequently sold after the original purchase.

FHA's single-family note sale program resumed in 2010 as a pilot program allowing pools of loans headed for foreclosure to be sold to qualified bidders that will help bring the loans out of default through some type of loss mitigation. An FHA-backed loan can be include in a pool for sale if the loan is at least six months delinquent and if all loss mitigation options have been exhausted. DASP began in 2012 as a way for FHA to greatly increase the number of seriously delinquent loans for sale and at the same time encourage investment in the communities that were hardest hit by the crisis. Many of the loans are offered for sale as part of geographically-targeted "Neighborhood Stabilizing Outcome" pools, requiring that 50 percent of the loans within a pool that is purchased achieve a neighborhood-stabilizing outcome – which may include holding the property for rent for at least three years if the borrower and servicer are not able to avoid foreclosure.

DASP sales are typically broken into two or more sales – a "National Sale" which consists of loans from across the country, and a "Neighborhood Stabilizing Outcome" in which loans from geographically-targeted areas are sold.

In an update on HUD's single-family loan sale program in mid-March, the Department said that about half of the approximately 79,000 loans sold through the program since 2010 had been resolved via paying the loans current, forbearance agreements, paying the loan in full, a short sale, a third-party sale, or a deed-in-lieu of foreclosure.

For more information contact

Jerry Gusman, The Gusman Group

888-213-4208

jerryggroup@aol.com

SHORT SELLERS EXPECTED TO RETURN TO REAL ESTATE MARKET!

If you hada short sale in the last 4 years, you may be able to once again secure a mortgage for a home/. To see if you qualify contact us.

Jerry Gusman
The Gusman Group
888-213-4208

New Generation Of Home Buyers Have Very Different Criteria.

Y Ask Gen-Y? New NAR Report Highlights Emerging Generational Trends With the downtown of the Great Recession more or less behind us, home sales have stabilized. But the profile of the buyer market is quite a bit different than it was six or seven years ago. Millennials - those young adults roughly categorized as ages 24-34 (or so), also known as Gen Y - make up the largest segment of the buyer market, and with that trend comes new realities that Realtors will have to learn to navigate in order to win a portion of this market. One of the handiest resources currently out there is the National Association of Realtors' Home Buyer and Seller Generational Trends Report for 2015. Published in mid-March, it's 115 pages of facts and graphs that illustrate the current market. You can read or download the entire valuable report.  A few highlights: It should hearten Realtors that Gen Y, despite witnessing and largely understanding the economic downturn and carrying record amounts of student debt, still feel buying a home is a worthwhile investment. Long-term low interest rates and the potential for equity play into the decision to buy. Younger buyers are much more likely to find the house they want to purchase online, though they are still more likely to contact a Realtor to facilitate a showing and the negotiation/purchasing process. The lesson: If you don't have a robust online presence for your listings, you should. A younger couple is much more likely to be unmarried, which may or may not complicate the loan application process. If nothing else, be mindful of the fact so you don't have any awkward moments where you ask a couple how long they've been married and they have to say "we're not." Self-evidently, younger buyers are more likely to be first-time buyers, and new to the process. Handle them with patience and be a trusted advisor through the process. A happy first-time customer could be a customer for life, and make years' worth of referrals. At the very least, be familiar with the loan process, and know they are less likely (though not necessarily UN-likely) to have significant cash handy for a down payment. Gen Y buyers are more likely to purchase a previously lived in home. There are several reasons for this, the most obvious of which is affordability. However, younger buyers are more likely than older buyers to value historic properties, fixer-uppers, and architectural quirks. They are also significantly more likely to prefer to live in urban areas, with access to a town or city's main social and transportation hubs, rather than in a newly-constructed suburb. While these trends line up across generations, Millennials are most likely to choose a neighborhood based on quality/reputation, its proximity to their job, and the overall affordability of the homes. Keep an eye on such neighborhoods for when young clients come calling. Compared to other generations, there seem to be two sweet spots in pricing for Millennial buyers: The $125,000 to $150,000 range, and the $200,000 to $225,000 range. Their interest falls of fairly dramatically above $250,000. This isn't part of the report, but Millennials are also far more likely to want a home that is ready for technology; smart thermostats, lots of electrical outlets and other digital features will be a big sell. They're also less likely to want a formal dining room or living area; open space and multi-use rooms are the norm. When walking through a home for a younger buyer, be sure to think in terms of what they may want a room to be used for, not just what the current or former owner may have done. We could go on for pages on this report, but it is available for you to read online at the National Board of Realtors' website. It's pretty invaluable, and features great information on four different age brackets. Link For more information Contact Jerry Gusman, The Gusman Group 888-21304208 jerryggroup@aol.com