From Sunday's L.A. Times: a lot of potential home buyers are sitting on the sidelines

Sunday's L.A. Times had a really interesting article about how some home shoppers are calling it quits, believing that prices have peaked.  Read the entire article here.  Here are some of the more pertinent quotes:

"A belief that the price slowdown will lead to a price drop could become a self-fulfilling prophecy, experts said."

"Many who are struggling to afford a home in California would welcome a significant price drop, if it wasn’t accompanied by an economic collapse. But experts say such a prospect is unlikely, given that homes don’t appear to be in oversupply. The state has a well-documented housing shortage."

"Other factors argue against a crash. The California economy is still posting robust job growth,despite the shadow of a trade war with China, which has become a big market for goods produced in the state. Whereas last decade’s housing boom and bust were driven by questionable lending, loan standards are much tighter today. And as much as prices have risen, the jump hasn’t been as sharp as it was in the early to mid-2000s.

“We don’t have a debt problem. We don’t have an overbuilding problem. We don’t have an economic problem — prices are not going to fall,” said Christopher Thornberg, founding partner of Beacon Economics, who called last decade’s housing crash".

The Fed raised interest rates again, and probably will do so two more times this year.

Today's L.A.Times ran this article about interest rate rises and what they might mean to you.  Interest rates up = home prices down, right? Not so fast.  From another article about how expensive homes are here: The UCLA Anderson Forecast said there is no sign of a correction in home prices around the corner. The report forecasts job growth of 2.2% this year, 1.7% in 2019 and 0.8% in 2020.

LA Times published my letter on affordable housing and density

I am tired of hearing about so-called "affordable housing" and I am tired of the L.A. Times support of  high-density as a way to produce more affordable housing.  (Yes, as a Realtor, I know that I benefit from more stuff to sell, but I also benefit as a human from a more livable city.) I wrote this letter earlier this week and it was published in today's L.A. Times.  First, the link:

http://www.latimes.com/opinion/readersreact/la-ol-le-affordable-housing-density-20171112-story.html

To the editor: I am disappointed by The Times’ support of high-density housing near transit stops as a way to solve the “affordable” housing crisis. Getting people out of their cars plus giving them affordable housing are two separate issues and should be treated as such. (“L.A. obviously needs dense housing along the Expo Line. Why isn't the city planning for it?” editorial, Nov. 9)

Why not build affordable housing in neighborhoods where people actually live now rather than where we want them to live?

Let’s continue allowing granny flats and guest houses in neighborhoods that are not close to transit. Let’s allow spot zoning in residential neighborhoods for duplexes, triplexes and small-lot townhome developments — yes, with parking spaces.

A guest house that can be rented offsets the high cost of a single-family home and may put home purchases within reach for people of modest means. A guest house will surely rent for much less than a fancy new apartment in, say, downtown Los Angeles. Let’s stop trying to cram more people into areas that were never meant for high density in the first place.

Judy Graff Fisher, Studio City

Here's what the L.A. Times edited out.  In the first paragraph, I said that high density = affordable housing plus traffic reduction has been extensively field-tested here in L.A., and it has failed.  Also, in the pluses for more guest homes and small multi-family units, I mentioned that this may actually give local contractors and developers a stake in the neighborhoods where they may already live.  I regret that they didn't publish the entire letter, but I'm happy that LAT put in the gist.

FHA loans will be a little more expensive on Monday than they were on Friday

In case you didn't know, you can get a fixed-rate mortgage with less than 20% down. You can even get a conventional, 30-year loan up to about $636,000 for as little as 5% down.  Most of these loans are guaranteed by the Federal Housing Administration, or FHA, which we also refer to as Fannie Mae.  The catch is, and always has been, that you need mortgage insurance if you are putting down less than 20% -- and that can add a lot of money to your monthly payment.

The good news was that the mortgage insurance rate was reduced recently, which means a significant savings for home buyers.  But that was last week.  The bad news is that the new administration's Housing and Urban Development Department raised the insurance rate back up to where it was yesterday.😭This erases a savings of about $1500 annually for FHA buyers in L.A.  Read about it here from today's L.A. Times.

L.A. City Council votes against mansionization

Today's L.A. Times has an article titled "L.A. backs measures to "roll back" mansionization in single family neighborhoods."  (The title should link.) The city council will be rewriting a couple of codes so huge, boxy homes will be a little less huge and boxy.  Sounds good, but they will be reducing sizes from 50% to 45% of a lot size.  That doesn't sound like much, does it? Apparently, garages don't count.

One quote in the article from a developer startled me. “To cram four or five people into an 1,100-square-foot house, one of these old bungalows, it’s a joke really,” he said.  Wow. Lots of Californians -- and people all over the world --  have been born and raised in homes even smaller than that.  These people turned out okay. And nobody's laughing.

R.E. market has low inventory and fierce competition

The L.A. Times had a substantial feature in today's paper about how many homes aren't for sale, and the resulting strong competition among buyers.  Title should link; if not, click here.  Trends I'm seeing in Sherman Oaks and Studio City: overpriced homes for sale that are not reducing their prices but just waiting for the market to catch up.  Also, some of the higher-priced properties are only having two or three public showings, total. If you miss one, you're out of luck for seeing these select homes.

From today's L.A. Times: L.A.'s hottest zip codes

Today's LAT has published an article called L.A.'s hottest zip codes. It details the areas with the greatest home price appreciation in 2015.  No surprise: both the east side and the beach areas saw the greatest gains.  Also no surprise: a lot of the home sale price appreciation in these areas reflect prices for smaller homes.  Developers are buying these smaller homes at a premium, tearing them down and putting up much larger homes.  Anyway, re the east side, Lincoln Heights and Elysian Valley (which used to be called Frog Town) saw home sale prices rise 14.6% -- and the median price there is still a relatively low $458,500.  (And by the way, if you're looking for a house on the east side, I can help you.)  Of course, Marina Del Rey's and Manhattan Beach's price have much higher median prices.  Toluca Lake/Studio City was listed as well, with a median price appreciation of 3.2%.

L.A. Times' Ted Rall and megamansions

As a Realtor, I know I shouldn't post this.  But Ted Rall is such a genius...

New stats article from the L.A. Times! Lots of good info for home buyers and sellers! Really!

This appeared in the L.A. Times yesterday. The bold text is my own emphasis.

 LOS ANGELES (AP) - Southern California home prices reached a 70-month high in December as sales fell and buyers competed for scant inventories, a research firm said Tuesday. The median price for new and existing houses and condominiums reached $395,000 in the six-county region, up 22.3 percent from $323,000 a year earlier. It was the highest median since it stood at $408,000 February 2008 and the 21st straight month of annual gains.

Sales dropped 9.2 percent from a year earlier to 18,415 homes, the lowest December sales tally in six years. DataQuick said investors are showing less interest, contributing to the sales decline. Absentee buyers - mostly investors and some second-home purchasers - bought 26.2 percent of homes last month, down from 30.4 percent a year earlier and the lowest level since November 2011.

Absentee buying has fallen nearly every month since peaking at 32.4 percent in January 2013. Buyers paying cash followed a similar trend, accounting for 27.7 percent of sales last month, down from 35.8 percent a year earlier and a peak of 36.9 percent in February. "Sales have fallen short of the same period a year earlier for three consecutive months now, and the pitifully low inventory is the main culprit," said John Walsh, president of San Diego-based DataQuick. The jump in prices over the last year suggests that more homeowners will eventually put their properties up for sale, Walsh said.

Home building has remained low, limiting inventories, he said. The Los Angeles metropolitan area had a 3.9-month supply of unsold homes in November, an improvement from a 3.2-month supply a year earlier but still much lower than a normal market of five to seven months, according to the latest figures from the California Association of Realtors.

San Diego had a 4.1-month supply of homes in November. Sales plummeted 17.5 percent in San Diego County from a year earlier, followed by Los Angeles County with a 13.3 percent drop. Declines were more modest in Ventura and Riverside counties, and Orange and San Bernardino counties eked out small gains. San Bernardino, the least expensive of the counties surveyed and an area hard-hit by foreclosures several years ago, posted the sharpest price gains, a 28.9 increase to $232,000. All counties posted annual price gains above 20 percent except San Diego, which rose 14.8 percent to $420,000.

LA Times Article: Many buyers find the home loan process unpleasant. You don't say!

Yesterday's L.A. Times featured an article about the unpleasantness of applying for a mortgage loan.  Click the link here to read.  Among those surveyed by the National Association of Realtors, 1 in 4 said they'd rather gain 10 pounds than go through the process again. Seven percent would prefer having a root canal or spending a night in prison.  And many were more comfortable being around snakes than applying for a loan again.

Most of the distress came from first-time buyers, of course. Craig Martin, director of the financial services practice at J.D. Power says: "First-time buyers often have questions and should not be afraid to ask prospective lenders about the specifics of the mortgage process and how they will be kept informed. Much of the stress with borrowing comes from a lack of information and knowledge during the process. Asking when you will be updated and how that information will be provided are two key questions that may help improve the borrowing experience."

Of course, if you're applying for a loan (or refinancing) and would like to work with a great lender than I've personally vetted for customer service, please check my website at www.JudyGraff.com and click on the "Resources" tab.  Then please click on "Local Partners." You'll find several lenders who are always available, have great rates, and explain the process thoroughly.

Photo courtesy of Chuck Burton/AP via Los Angeles Times.

Tonga Hut in North Hollywood

Remember my blog from a year or two ago re Tonga Hut in North Hollywood? Of course you do.  Los Angeles Times has a great article on it today, but there's no link.  In the meantime, here's an article from 2008.  For you lovers of all things tiki and cocktails, there's also the Tiki Bar on Lankershim in North Hollywood, too.

Prices of homes for sale increased locally, as if you didn't know

In case you did not see the L.A. Times, home prices increased 24.7% year over year.  And not just for homes in Burbank, Toluca Lake or Studio City either -- this is an average of five counties.  L.A. county home prices increased 30.2% to an average of $410,000 per house.  Here's the link to the article.

Sunday morning reading

There are two interesting articles in the newspapers today:  First, from the NY Times, the esteemed Robert Shiller says that we're NOT in another housing bubble, and the future of housing still has many clouds.  He does agree that the market is improving, however.

And Alejandro Lazo of the L.A. Times has a feature on the Calculated Risk blog.  Please note that CR is in this blogroll, and this blog is on CR's blogroll.  Yes, the blog is a little wonky, but for those of you that like stats, you might want to check it out.

But you already know this: LA Times says home sales in Los Angeles are up

In case you didn't read the Los Angeles Times today, here's an article talking about how home sales and home prices have significantly increased in Los Angeles the past year.  Some quotes from the article:

The median home price for the region was $321,000, up from $315,000 the two prior months and a nearly 17% increase over $275,000 in November 2011.

and

All-cash purchases, many by deep-pocketed investors, also remain unusually high.

Sunday reading on the mortgage interest tax deduction and the housing market

Here are two articles from today's Los Angeles Times.  The first details the mortage interest tax deduction and efforts to -- maybe -- eliminate it.  Here's the title and link: A look at proposals to limit the mortgage interest tax deduction.  Of course, if the deduction is eliminated, California homeowners will be hit harder than homeowners in other states.

The second article is Short-sale purchases can easily fall apart.  Here's the link.  Of course, if you've been trying to buy a home in the greater L.A. area for any amount of time, you probably could have written this.

In case you missed the headlines, home prices are up and sales are down

L.A. Times reports today that home prices are up nationwide. In L.A., however, the price rise is 1.3% over last month. Link to the article here.  However, numbers of sales are down.  You knew that -- inventory is ferociously low.  Here's a quote that we all like: "Economists have begun suggesting that the real estate market may have turned the corner for good since tanking in the recession."

The real estate market is back

According to today's L.A. Times, the real estate market is back.  Click here to read the front page story.  How is this different from other reports that the market is on an upswing? This actually quotes housing economist Christopher Thornburg, who has been one of the gloomiest forecasters, saying that things are looking up.  Corollary prediction: by the end of today, you'll be sick of hearing about how the market is back.

News of the week and house of the week in Valley Village

Whew! Coming up for air here, and bringing you news of the week.

First, the house of the week: 5501 Morella, Valley Village, $499,994, 3+1.5, 1334 sf, pictured above.  I showed this last night and it's in a cool little pocket.  The house needs decorating, but it's clean and has been expertly maintained by the sellers.  I wish my carpet looked as good, and I wish my kitchen was as spacious.  If you are looking for a decorating project, this would be a great buy.

What did I tell you about L.A.'s "eastside"? You'll see my take on Highland Park, et al, below -- I toured the area recently and was really impressed.  Now, Alejandro Lazo of the L.A. Times has a front page article entitled Investors flip over Highland Park.  That's just what I saw when I was there a few weeks back.

And now for the really big news: I have two listings coming up in Burbank. One is a (rare) architectural home designed by a noted architect, and the other is close to the Chandler bike path.  More news soon!

Finally, 1585 Knollwood, Pasadena is in escrow, after less than a week on the market.  We're still showing for backups. I'll miss going to this house; the setting is just so serene.

LAT reviews San Fernando Valley retro watering holes!

As you may know, in the interest of public service, this blog occassionally reviews local bars.  Now, the LAT has done so for you, too!  Check out Friday's "The Enabler" feature by Jessica Gelt, entitled Soaking up retro vibe at the Valley's classic bars.  As the Enabler states, "the Valley is home to a number of blissfully unmolested lounges from the 1940s, '50s and '60s." 

Gretchen Morgenson and Michael Hiltzik explain the foreclosure settlement

I was so excited.  I thought the almost-nationwide foreclosure settlement between the five big banks and the states would provide relief for underwater homeowners.  I thought it might be an end to short sales as we've come to know and love them.  But no. 

New York Times business columnist Gretchen Morgenson bursts the bubble here. (BTW, Gretchen is really readable -- she makes even the most arcane, convoluted financial stuff very easy to understand. Really.)  Here are a few quotes:

"There’s no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file."

And "For most homeowners, it will barely move the needle. Forgiving $17 billion in principal “is a drop in the ocean ... given that close to 11 million borrowers are underwater on their loans to the tune of $700 billion in total.”

Michael Hitlzik from the Los Angeles Times is my other favorite financial columnist (along with David Lazarus) and his column from today's LAT is here. Some quotes:

"I believe the technical term for all this is "big whoop." The provisions mostly require mortgage lenders and servicers to comply with what I would have thought was already the law, which prohibits, you know, criminal fraud. The rest is pretty much out of the best-practices manual of customer service, which benefits both the customer and the institution."

And "In the words of business consultant...Yves Smith, "We've now set a price for forgeries and fabricating documents. It's $2,000 per loan." She observes, quite properly, that the payoff is a minuscule fraction of the costs these practices have imposed on borrowers, the court system and the economy."

Whew. So much for thinking that things were going to change -- silly me.  Thanks, Gretchen and Michael.