Tuesday, October 27, 2009

A shadow inventory in Los Angeles... Where is it?

I know I have suspected that there are/were more foreclosures to come.

There is a really good write up on this topic in the Wall Street Journal.

"So where’s that long-awaited deluge of bank-owned homes that is supposed to flood the U.S. housing market? This “shadow” inventory has..."

It has been keeping a few buyers on the sidelines looking for a deeper bottoming out to the real estate in the local market. Reality Check. Buy if you find the one that works for you long term. Especially if you plan on living in it.

Now in the Residential Property side. We do not have a market about to be swamped.

If you have the funds needed to qualify in this lenders tight qualification period... You are golden and can drive a bargain. We should talk. You need a strong advocate.

Keith L.

Monday, October 26, 2009

Details of the financial market.

THE DEVIL IS IN THE DETAILS... Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it's important to take a look at the details - not just the headlines. Here's what we know...

On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month's number could climb higher again, as oil and natural gas have both been on a tear higher lately.

In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution - particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected - and a whopping 45% of those homes were sold to first time homebuyers - rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren't even aware of it...so please let me know if you or someone you know needs more information - the clock is ticking!

Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.

In other news, 3rd quarter earnings season continues, where companies report their status as of the end of September. While many companies are beating expectations, it's important to realize that many of those companies achieved better earnings by cost cutting and layoffs, not from increased sales. This is a big disconnect between Wall Street and "Main Street". Stocks are rocketing higher based on these "positive" reports, but the cost cutting and job cutting measures can only go so far...you can't simultaneously grow the ranks of unemployment - and then grow your business, hoping for increased sales to those same people who are without jobs.

Last week's Jobless Claims numbers seem to confirm this as Initial Jobless Claims rose more than expected. In addition, the number of individuals continuing to receive unemployment benefits fell to the lowest level since March, but this is likely the result of people's unemployment benefits expiring, without them having been able to find jobs.

Also worth noting is the news that ratings agency Moody's lead analyst, Steven Hess, said that the US needs to cut its deficit or it could lose its "AAA" rating in the next 3 to 4 years, which we have maintained since 1917! Think of all we've been through - two World Wars, the Depression, three Wall Street collapses and major terrorist attacks... yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates. Hess went on to say that if the US doesn't "get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." And just like on a mortgage when the credit rating gets reduced, interest rates move higher. This will definitely be something to keep an eye on in the months ahead.

After all the week's action, Bonds and home loan rates ended the week slightly worse than where they began. How much longer will we have good Interest Rates is a good question.

If you have a Crystal Ball and see the next moves on the market... Hit comment and tell us where you think it is going.

Keith L.

Tuesday, October 20, 2009

Tuesday's RE Broker Caravan - Open Houses

I looked at a lot of the new items on the market. Several were obviously not ones that were made ready for the market. They are the left over after a long life and many years of not being improved. The ones that were the golden opportunity for the Fix and Flip type buyer. (You recall the old way... Actually improve the place to make it more marketable)

In the Westside Village areas were several. One on Military. One on Kingsland. The one on Kingsland has a really big lot on the side of a big hill. But there is nothing to salvage of the old home. Views to the south are nice (If you like sun in your face).

But at $629,000 for the lot value can you build a nice place on it and make it pay off for all that risk??? Maybe at $500 k plus a 400k construction job would you then have a house worth $900,000. Possibly. But where is the profit in that for the risk taking developer?

However over on the Mar Vista Hill there are two new listings both priced at just $799,000 that a few years ago would have been unthinkable. This is prime hill top residences and very desirable elementary school district. Not down wind of Santa Monica Airport. Not with a view (or the price would be much more). But the basic original houses with the standard lot of that area. One of them has offers in on it already. Both with the same old home. Badly in need of the basic renovations to update it from the 70's.

Will they sell. The Mar Vista Hill places will. They are priced aggressively. The ones in Westside Village may not. At least not right away. Don't want to go there for the Palm's homes. Even at those prices.

When you are ready to get serious about getting a home... Work with an agent that is in the market. I will always tell my clients the truth. And I have the ability to get the agreements needed to get the transaction done. The best end result is the successful purchase/sale.

Call me if I can help you with Anything in the West Los Angeles market.

Keith Lambert

Monday, October 19, 2009

Heat is on... financing

"THE HEAT IS ON." Glenn Frey. While cooler temperatures are beginning to descend on many parts of the country, Bonds and home loan rates are feeling the heat and pressure from several fronts. Here are some details...along with why it's important to act soon to take advantage of current home loan rates, as they may never be seen again.

Last week, the Core Consumer Price Index (CPI) was reported higher than expected, indicating that inflationary forces may already be underway. Remember, inflation erodes the value of the fixed return that a Bond provides - therefore, inflation is harmful to Bonds and home loan rates. Just the hint of inflation can cause home loan rates to worsen, which is what we saw last week.

And here's a very interesting and important note - when looking at these CPI numbers, it is important to understand the effect that the "Cash for Clunkers" program had on this index. The Cash for Clunkers program was very "creatively" accounted for as a reduction in the sales price of automobiles, which had to have a dramatic effect on lowering the CPI that was reported. Imagine how much higher CPI would have been had this "creativity" not been used. As even more inflationary fears creep into the economy, home loan rates will continue to rise.

Also adding pressure to Bonds and home loan rates is the Fed's plan to ration out their remaining purchases of Mortgage Backed Securities. The Fed has purchased around $950B year-to-date out of the $1.25T allotted for the program, which is now set to expire March 31, 2010. This means the Fed will be averaging about $14B a week in purchases, a lot less than $25B or so they had been doing up until recently. And anytime demand for an item slows down...including Mortgage Backed Securities...the price goes down. And in this case, it means that home loan rates will move higher.
The bottom line is that the heat is on...and home loan rates are starting to rise already. While home loan rates are still incredibly low, it is clear this won't last much longer - and we may not see rates at these levels again in our lifetimes.

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

If you have the ability to get qualified and a suitable down payment to purchase, you are at the right point in time. The right property to invest in is not that hard for a professional agent to find. Give me a call if you want to discuss your plans. Especially if it relates to West Los Angeles, Santa Monica, Venice and Mar Vista.

Keith Lambert

Tuesday, October 13, 2009

Listening... to Federal Reserve Chairman Ben Bernanke

"LISTEN TO WHAT THE MAN SAID." And those aren't just the words from Paul McCartney's hit song of the same title...they're also words of advice for anyone who's considering buying a home or refinancing.

Last week, Federal Reserve Chairman Ben Bernanke said that as the economy heals, the Fed will be very vigilant to protect against inflation. While inflation is not a problem at present...it will most certainly become a problem down the road. So why does this matter if you are considering purchasing or refinancing? Because inflation is the arch-enemy of Bonds and home loan rates, and just the knowledge of it coming has been causing both Bonds and home loan rates to worsen in recent days. Along with the fear of inflation, the Fed's purchasing program of Mortgage Backed Securities is already slowing down, with the end of their buying in sight - and the reduced demand for these Bonds is also driving home loan rates higher.

Bottom line: home loan rates are already on the rise, and we won't likely see these low historic levels again.

Interest rates are still very near historic lows - George Washington couldn't have gotten a better interest rate - and the opportunity these low rates present is huge for homebuyers. But the Qualification process is harder and Longer.

So get in line with all your paperwork and tax returns and save up a real deposit. No easy qualifiers or no money down loans exist today.

On the topic of inflation - Gold has been on a tear higher of late, reaching a record high of $1048 an ounce. Remember that Gold is seen as a "safe harbor" or hedge against a falling Dollar and inflation - as Gold is not likely to lose much value in periods of rising prices. Again, fears of future inflation are pervasive, particularly in light of the massive economic stimulus that has been injected into the US economy...and inflation will drive home loan rates higher. The latest spike in Gold is more likely attributable to the Dollar's recent decline, but both factors are somewhat at play.

There are deals out in the real estate market. I like Income Real Estate as a Safe Harbor investment. But it is not as liquid as gold or bonds. Investing in Residential Income properties is more long term and inflation resistant than most other investment vehicles. And as it matures and pays down the mortgage it can become a Cash Cow to retire on the cash flow. Not just a Sell it All proposition.

Hit the comment button and tell me the Safe Investments you like in today's market.



Tuesday, October 06, 2009

Tuesday Open houses

$675,000 for a Mar Vista House.

Now this is a realistic seller and the market will find this a buyable home in this area at this price. It is one of the best deals on the Open House list for today's caravan.

It will be a nice one to preview today.


Sunday, October 04, 2009

Robin Williams sums it up.

Recent Robin Williams news: On the subject of the federal bailout of banks, Williams said, "This is economic free-basing. … It's like they want us to pay for rehab and pay the bar tab."

Now that seems very on point for the Wall Street and banking fiascos.

And then current lending problems will choke us longer... Much of what I read today in LA Times is on this.

B ob A not lending to refi. Fannie not being reasonable on the rules. Now that the pendulum has swung back way to far on the overly conservative side.

What else is the Sunday paper full of? Great loan rates! But can you or I get them? Not easily.

Takes work to get them. Worth it, if obtained, I'm sure.


Friday, October 02, 2009

Will Improvement in Housing Index Last?-Minyanville

Near but not necessarily AT the bottom. So says these pundits.

Will Improvement in Housing Index Last?-Minyanville

Shared via AddThis