Real Estate Trends to Watch for Mar Vistans

FROM REAL ESTATE MAGAZINE

Jobs, foreclosures, option-adjustable-rate mortgages, and interest rates are among the top trends that could dictate what will happen in California's housing markets this year. Here's what you need to know to make sense of how these trends could affect the real estate market.

1. Market Fundamentals

Three market fundamentals that turned positive in 2009 could be good indicators this year as well.

First, home prices have fallen lower than replacement costs in many markets. This means a home can be bought for less than the cost to build it. Second, home prices are "a lot more attractive" relative to rents than they have been in many years; and third, inventory of for-sale homes has "dropped very dramatically," says Richard K. Green, director of the USC Lusk School of Real Estate in Los Angeles. That suggests some markets have stabilized, although homes priced at more than $1 million may be an exception. "There is still a lot of pain left to come" in that segment of the market, Green warns.

2. Jobs

"Painful" describes the employment picture and the outlook for wage hikes and job security. Moreover,
housing may now be less sensitive to traditional jobmoving patterns, observes Stefan Swanepoel, a real

estate trends expert, author, and speaker in Aliso Viejo. Home sales that involve corporate relocations or

year-end job changes may be moribund until the employment situation improves.

3. Foreclosures

Jobs are an important factor in foreclosures, though "not everyone who has lost a job has lost their

house yet," Swanepoel says. Homeowners who've lost a job may have had to live on lower wages or one

income, or may have had to tap into their savings or retirement accounts to get by. "If they don't get a

decent job or a good job soon, I can see their houses still coming on the market in foreclosures or

short sales," he says.

Another trend to watch is that some homewners have dodged foreclosure even though they haven't

made their mortgage payments, according to Sean O'Toole, chief executive of ForeclosureRadar.com.

"We don't have the political or societal will to foreclose on [that many] people, but nor do we have the will to bail out those homeowners who can't afford their payments," O'Toole says. That stalemate

has slowed the pace of foreclosures, which may mean fewer opportunities for REALTORS® to list and
sell those homes, he suggests.

4. Lenders and Loans

Home loans are crucial to healthy housing markets, so REALTORS® need to keep an eye on national

lenders that originate loans locally, Swanepoel suggests. "As they digest the companies they've acquired and find out what loans they have, what loans they are servicing, and what their exposure in certain markets is, they might change their rules and terms and conditions," he warns. Tougher requirements for loans insured by the Federal Housing Administration (FHA) could have an effect on housing as well.

5. Interest Rates

Interest rates could turn out to be the ultimate wild card. How long the Federal Reserve will keep interest

rates low is an unanswerable question on which hangs the future of housing. The Fed's ability to maintain low interest rates is "the greatest risk to the real estate industry right now," says O'Toole. "If interest rates go to 8 percent, this market is over."

6. Option-ARM Recasts

Low interest rates have taken the sting out of adjustable-rate mortgages (ARMs), but the paymentoption

variety is still watch-worthy because a recast to make up negative amortization can result in an enormous payment shock, Green notes. "You could set up a fairly simple example where interest rates don't go up at all, but the payment doubles," he says. "If that loan was originated with a 90 percent loan-to-value ratio and you are piling up principal, you could be deeply underwater and unable to make the payment." Aggressive loan modification programs have blunted the expected blow from option-ARM recasts, but many homeowners still owe more than their home is worth and 30-day delinquencies have continued to climb, O'Toole observes.

That suggests more homeowners may throw in the towel. "Strategic walk-aways from negative equity

and/or due to job loss are going to be a bigger issue because modification programs and low interest

rates likely have taken up the slack from the reset/recast issue," he explains.

Just Sold In Mar Vista

3307 Inglewood

Just Sold : $675,000
Original Price : $574,200
Over Asking By : $100,800

$ per sqft : $583
days on market : 3

stats : 3 beds, 1 bath, 1158 sqft, 5760 lot

12431 Wagner

Just Sold : $535,000
Original Price : $535,000

$ per sqft : $708
days on market : 39

stats : 2 beds, 1 bath, 756 sqft, 7500 lot

12177 Stanwood

Just Sold : $1,229,000
Original Price : $1,369,000
$ Difference : - $140,000

$ per sqft : 512
days on market : 215

stats : 4 beds, 3 baths, 2401 sqft, 5860 lot

Great Business Week Article for Mar Vista

Roth on Real Estate


If You Don't Buy a House Now, You're Stupid or Broke

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth

By Marc Roth
Well, you may not be stupid or broke. Maybe you already have a house and you don't want to move. Or maybe you're a Trappist monk and have forsworn all earthly possessions. Or whatever. But if you want to buy a house, now is the time, and if you don't act soon, you will regret it. Here's why: historically low interest rates.
As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com—shows, is the lowest the rate has been in nearly 40 years.
In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.
And it is exactly that, based on what the graph shows us. Let's look at the point on the far left.
In 1970 the rate was approximately 7.25%. After hovering there for a couple of years, it began a trend upward, landing near 10% in late 1973. It settled at 8.5% to 9% from 1974 to the end of 1976. After the rise to 10%, that probably seemed O.K. to most home buyers.
But they weren't happy soon thereafter. From 1977 to 1981, a period of only 60 months, the 30-year fixed rate climbed to 18%. As I mentioned in one of my previous articles, my dad was one of those unluckily stuck needing a loan at that time.
Interest Rate Lessons

And when rates started to decline after that, they took a long time to recede to previous levels. They hit 9% for a brief time in 1986 and bounced around 10% to 11% until 1990. For the next 11 years through 2001, the rates slowly ebbed and flowed downward, ranging from 7% to 9%. We've since spent the last nine years, until very recently, at 6% to 7%. So you can see why 5% is so remarkable.
So, what can we learn from the historical trends and numbers?
First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.
Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.
Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.
Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let's assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.

Loan Costs

Stay with me now. We are at 5%. As you can see by the graph above, as the economy stabilizes, it is reasonable for us to see 30-year fixed rates climb to 6% within the foreseeable future and probably to a range of 7% to 8% when the economy is humming again. If every quarter of a point is worth $12,000 per $200,000 borrowed, then each point is worth almost $50,000.
Let's put that into perspective. You have a good stable job (yes, unemployment is at 10%, but another way of looking at that figure is that most of us have good stable jobs). You would like to own a $240,000 home. However, even though home prices have steadied, you may be thinking you can get another $5,000 or $10,000 discount if you wait (never mind the $8,500 or $6,500 tax credit due to run out next spring). Or you may be waiting for the news to tell you the economy is "more stable" and it's safe to get back in the pool. In exchange for what you may think is prudence, you will risk paying $50,000 more per point in interest rate changes between now and the time you decide you are ready to buy. And you are ignoring the fact that according to the Case-Shiller index, home prices in most regions have been trending back up for the last several months.
If you are someone who is looking to buy or upgrade in the $350,000-to-$800,000 home price range, and many people out there are, then you're borrowing $300,000 to $600,000. At 7%, the $300,000 loan will cost just under $150,000 more over the lifetime, and the $600,000 loan an additional $300,000, if rates move up just 2% before you pull the trigger.
What I'm trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.

News from Mar Vista Green Committee . . .

Please stop by the booth next week to meet the founders of Your Daily Thread! YDT is an online magazine for the eco-curious with a free daily email, up to date events calendar, how to videos, in-depth neighborhood guides, and exclusive deals on eco-fashion and other green products. It's a great tool to help you turn your eco knowledge into action. This is a rare chance to meet Tracy Hepler and Lauren Johanson one on one. Come armed with questions!

http://marvistagreengardenshowcase.blogspot.com/2010/01/looking-for-eco-resources-come-meet.html
Thinking about adding your garden to the Mar Vista Green Garden Showcase? Act fast! The deadline for submitting your garden is March 15th. If your found a cute note hanging from your door knob, it means you have been nominated! Contact us for the questionnaire. Please feel free to reuse the tag to nominate a nearby garden as well! To qualify, the garden must be drought resistant or edible – this is all about the conservation and efficient use of water. If you are not reusing the tag, consider dropping it off at the booth one Sunday so that we might reuse it.

http://marvistagreengardenshowcase.blogspot.com/2010/01/2010-mar-vista-green-garden-showcase.html
Check out the two new gardens that we just added on the tour and watch for new ones that we are adding every week!
 
http://marvistagreengardenshowcase.blogspot.com/search/label/New

Mar Vista Communicty Action Needed Now - Neighborhood Budget Elimination!

Neighborhood Council budgets are in danger of total eliminate today 2/1 !

The City Council Budget and Finance Committee is meeting Monday, February 1st at 1pm. There's very little time left! Please email the Councilman on the Budget Committee and the Mayor NOW and tell them you want this funding kept in place - the Neighborhood Councils support education, green efforts, neighborhood outreach - they are extremely INVALUABLE !!

Bernard Parks - councilmember.parks@lacity.org
Greg Smith - councilmember.smith@lacity.org
Bill Rosendahl - councilmember.rosendahl@lacity.org
Jose Huizar - councilmember.huizaar@lacity.org
Paul Kortez - paul.kortez@lacity.org
Mayor Antonio Villaraigosa - mayor@lacity.org

New Listings in Mar Vista

3769 Greenwood

New Listing : $759,000

$ per sqft : $676

stats : 3 beds, 1 bath, 1122 sqft, 4968 lot












3457 Maplewood

New Listing : $848,800

$ per sqft : $438

stats : 2 beds, 2.5 baths, 1940 sqft, 4920 lot










3271 Malcolm

New Listings : $999,000

$ per sqft : $682

stats : 3 beds, 2 baths, 1464 sqft, 6032 lot

Just Sold Homes in Mar Vista

3244 Greenfield Avenue

Just Sold : $665,000
Original Price : $195,000

$ per sqft : $491
days on market : 82

stats : 2 beds, 1 bath, 1354 sqft, 6450 lot

* This home was a probate auction where the bidding started at $195,000 and was bid up to the selling price of $665,000*




3319 Stewart Avenue

Just Sold : $835,975
Original Price : $859,000
Price Difference : - $23,025

$ per sqft : $485
days on market : 52

stats : 3 beds, 2 baths, 1723 sqft, 6903 lot








12908 Maxella Avenue

Just Sold : $490,000
Original Price : $524,900
$ difference : - $34,900

$ per sqft : $706
days on market : 34

stats : 1 bed, 1 bath, 694 sqft, 2080 lot