Are Rising Rents Too Much of a Good Thing?

October 30, 2012 By Leave a Comment

Oct 19, 2012 12:18 PM, By Bendix Anderson, Contributing Writer

It seems like such good news—apartment rents are rising faster than inflation. That means more profits for real estate investors.

 But there’s also a risk. When rents rise faster than the paychecks of your residents, then that puts pressure on their budgets. Eventually they may look for other options. If you’ve carefully marketed your apartment community to a certain set of residents—say retirees or workers at the local hospital—it’s bad news for you if those people can no longer afford to live there.

“Landlords need to be careful,” says Brad Doremus, senior analyst for data firm Reis, Inc., based in New York City. “They can’t raise rents forever or they come up against that budget constraint.” Property managers should worry about competition from new rental housing, cheaper rental housing and even for-sale housing. Eventually it will become clear to everyone that the for-sale housing market has bottomed and prices are rising, and residents paying sky-high rents will start looking seriously at homes or condominiums.

 

INCREASED PRESSURE ON RENTERS

 

How high is the pressure on your renters? The cost of housing rose 52 percent between 2001 and 2010. The cost of transportation rose 33 percent. Taken together, that works out to a 44 percent increase. But over the same period, household incomes rose just 25 percent. Taken together, it adds up to a huge loss of disposable income, according to “Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Cost of Housing and Transportation,” a new report from the Center for Housing Policy and the Center for Neighborhood Technology.

And a loss of disposable income is a big problem for many renters.

The cost of rental housing has risen even more since 2010. Effective rents on average grew 2.9 percent between end of the third quarter 2012 and the same time last year, inching out the consumer price index, according to Reis. CPI rose 2.0 percent over the year that ended in September. The year-over-year rent hikes were much higher in hot markets like San Jose (4.2 percent) and San Francisco (5.8 percent).

Once you add transportation and housing together, the cost can be overwhelming for moderate-income people. The report defines “moderate-income” as people who earn between 50 percent and 100 percent of the area median income. That’s between $30,000 and $60,000 a year in most markets. These families now pay more than three out of every five dollars—59 percent of their income, on average—on housing and transportation costs.

“The landlord might think there is an opportunity to raise rents, but the market might be volatile enough that they back themselves into a corner,” warns Scott Bernstein, president of CNT. Rental residents may be forced to downsize to other, cheaper housing.

 

THE NUMBERS HAVE A BRIGHTER SIDE

 

But Bernstein also sees an opportunity in the numbers. An apartment community that is located in a place where transportation is less expensive may become much more attractive for households looking to reduce their expenses.

If a moderate-income family can live in a place where the need one less car to get around, that works out to a 10 to 15 percent increase to their disposable income. “It’s the equivalent of 10 percent to a 15 percent raise,” says Bernstein. Smart Growth advocates like Bernstein encourage “location efficient” new development, where residents can walk or take the train to amenities like shopping and employment.

Looking at the cost of housing and transportation together also shows real estate investors what not to worry about. Competition from for-sale housing built far away from jobs and services is probably not coming back anytime soon. “This undercuts the whole idea of ‘drive till you qualify,’” says Bernstein. “I don’t see those markets turning around quickly.”

In contrast, apartments in efficient locations are attractive to renters on a budget. “Press your advantage on transportation,” says Bernstein. “Tell people what it costs to get to a from that building typical locations.”

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Pending home sales up for 17th consecutive month

October 26, 2012 By Leave a Comment

NAR: Number of homes under contract in September up 14.5 percent from a year go

BY INMAN NEWS, THURSDAY, OCTOBER 25, 2012.

Inman News®

<a href="http://www.shutterstock.com/pic.mhtml?id=106899653" target="_blank">Housing trend</a> image via Shutterstock.

A pending home sales index maintained by the National Association of Realtors showed an annual gain in September for the 17th month in a row.

NAR’s latest Pending Home Sales Index, released today, showed the number of existing homes under contract in September up 0.3 percent from August and 14.5 percent from a year ago.

The index, which represents contracts signed but not yet closed, has settled at 99.5 in September. An index score of 100 is equal to the average level of sales contract activity in 2001, a year in which sales were in line with historical norms. Signed contracts typically close one or two months after the sign date.

“The level of pending contracts has remained very steady implying that this recovery is holding its momentum,” said Lawrence Yun, NAR’s chief economist. Yun said the steady and strong year-over-year increase in the index “is pointing in the right direction.”

All regions saw double-digit year-over-year PHSI increases, except for the West, where it rose just 0.8 percent to 106.9 for the year (and 4.3 percent for the month) on account of tight inventory.

The Northeast saw the largest yearly jump in September of any region with a 26.1 percent increase to an index level of 79.3, which represented a 1.4 percent bump from August to September in the region.

In the Midwest, the index rose 19.3 percent from September 2011 to reach 89.5, which, however, represents a 5.8 percent dip from August’s level.

And in the South, pending home sales jumped 17.6 percent from September 2011 to settle at an index level of 111.5, a 1 percent jump from the index level in August.

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Over 25 Percent of Home Price Depreciation Due to Proximity of Foreclosures: Study

October 25, 2012 By Leave a Comment

BY JANN SWANSON

The enormous numbers of foreclosures over the last six years have, of course, had immediate impacts on the families who lose their homes. The effects include physical displacement, drained savings and retirement accounts, and ruined credit. They also suffer longer-term financial impacts such as losing the ability to tap home equity for business or education purposes or retirement as well as losing the financial cushion home equity provides and the main vehicle for transferring wealth inter-generationally.

But there are ramifications to foreclosures that extend beyond those families who actually lose their homes. Communities with high concentrations of foreclosures lose tax revenue and incur the financial and non-financial costs of abandoned properties and neighborhood blight, while homeowners living in close proximity to foreclosures suffer loss of wealth through depreciated home values.

Three researchers from the Center for Responsible Lending (CRL) have produced an updated report on this secondary cost of mortgage foreclosures with a particular focus on the damage being done to communities of color. Collateral Damage: The Spillover Costs of Foreclosure released Wednesday was written by Debbie Gruenstein Bocian, Peter Smith and Wei Li and is an update of three earlier reports on the issue produced by the Center. The last report was issued in 2009.

The authors looked at loans that entered foreclosure between 2007 and 2011 using data collected by the federal government under the Home Mortgage Disclosure Act (HMDA) and a second data set from Lender Processing Services (LPS). They calculated the number of foreclosure starts for each census track then calculated the loss of value of neighboring homes within 1/8 mile of the foreclosed property.

The authors found that $1.95 trillion in property value has been or will be lost by residents who live in close proximity to a property that has been foreclosed. This figure includes the spillover impact of homes that have been foreclosed as well as future losses from foreclosures that are in process.

Over one-half of this loss has been experienced in communities of color. Minority neighborhoods have lost or will lose $1 trillion in home equity largely because of a high concentration of foreclosures in these neighborhoods.

In all neighborhoods these losses average out to $21,077 in household wealth or about 7.2 percent of the home’s value. However, in neighborhoods of color the average loss is $37,084 or 13.1 percent of the home’s value.

Despite the magnitude of these losses the authors caution that they represent only the wealth that has been lost or will be lost as a direct result of being in close proximity to homes that have begun the foreclosure process. “We do not include in our estimate the total loss in home equity that has resulted from the crisis (estimated at $7 trillion),” they state, “the negative impact on local governments (from lost tax revenue and increased costs of managing vacant properties) or the non-financial spillover costs, such as increased crime, reduced school performance and neighborhood blight.

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Zillow to show homes in foreclosure, before they are listed

October 25, 2012 By 2 Comments

Company expects some criticism for putting personal data at consumers’ fingertips

ForeclosureA Cook COunty sheriff’s deputy puts a foreclosure notice on the door of a Chicago home. (Nancy Stone/Chicago Tribune photo / October 24, 2012)
By Mary Ellen PodmolikTribune staff reporter8:12 a.m. CDT, October 25, 2012

Zillow will display detailed information on approximately 1.5 million homes that are in foreclosure but are not yet for sale, in a bid to position itself as the go-to web site for homebuyers.All of the data that Zillow is making available is public information but until now, accessing it typically required buying a subscription to a website or a trip to county courthouses, digging through individual case records. By putting such personal data at consumers’ fingertips, the Seattle-based realty website acknowledges it may face criticism regarding privacy concerns.However, the Seattle-based company views its latest site enhancement, which went live late Wednesday night, similarly to when it shook up the real estate market in 2006 by debuting a site that listing individual home values, called ‘Zestimates,’ of for-sale and not-for-sale homes. The site today has information on more than 110 million properties. Back in 2006, the stated goal was to make potential homebuyers more market-savvy shoppers. It doesn’t see the addition of foreclosure data any differently.”It’s all part of the public record and what the buyer chooses to do with information is up to them and their real estate agent,” said Amy Bohutinsky, Zillow’s chief marketing officer. “Ultimately, what we’re trying to do is help buyers get a better picture.”

Anyone who logs in with a free account will have access to the information, which will also include completed foreclosures that have not been listed for sale.

The homes listed in ‘pre-market’ inventory will be properties where a foreclosure has been filed against the borrower but the action is not resolved. Among the details available for each property will be the address, the date and amount of the original mortgage, the unpaid balance and the dollar amount past due. It also will show the party that initiated the foreclosure action, an estimate of what the foreclosure sales price might be, based on the sales prices of nearby foreclosures, and details of where it is in the process. If the home was previously listed on Zillow as a for-sale home, that picture will be used. Otherwise, there will be a satellite view of the neighborhood.

The borrower’s names will not be listed.

When the additional information was added to the site late Wednesday night, it included 11,000 pre-market single-family homes and condominiums just within the city of Chicago.

Home shoppers have a need for the extra information, according to Bohutinsky, because the dearth of available homes listed for sale is constraining the housing market at a time when there are indications that the market has bottomed nationally and mortgage rates remain well under 4 percent for a 30-year, fixed-rate loan.

“What buyers can learn from this is what homes might be listed for sale soon, or they can actually try and buy the home out of the foreclosure process by making an offer to the owner or the bank,” she said. “It opens up a whole new category of inventory to people that they didn’t know existed.”

That so-called shadow inventory has been on the mind of real estate agents for years, as they waited for properties in foreclosure to make their way through the process and return to the market for resale. Foreclosure proceedings first slowed because of the volume of cases and more recently because of various state and federal investigations into how banks handled the cases. With many of those probes behind the mortgage lending industry, lenders are again seeking to push foreclosure cases through the system.

Still, according to RealtyTrac, it takes an average of almost two years to foreclose on a home in the Chicago area, so a property listed in Zillow’s pre-market inventory could be there a while before it’s officially listed for sale. On Thursday, RealtyTrac reported that foreclosure activity in the Chicago area rose 34 percent from 2011′s third quarter. During the past three months, notices of default, the first step in the foreclosure process were filed against 18,923 homes locally.

As information on those properties is entered in court databases, it would be added to Zillow’s site, which will be updated daily.

The company calls the addition of pre-market inventory a step forward in ‘consumer empowerment.”  Housing advocacy groups and counselors aren’t so sure.

“While, generally speaking, we support disclosure of public data, there is a big leap from the general case to a specific one,” said Katie Buitrago, a senior policy associate at Woodstock Institute, a Chicago-based research and public policy group. “It’s important to look at Zillow’s methodology, data coverage, and compliance with privacy laws before coming to any conclusions. Given that it’s not Zillow’s goal to help observers understand foreclosure trends but to facilitate real estate transactions, I would be concerned that they are not providing sufficient context for the general public to put foreclosure trends into perspective

Debra Olson, executive director of the DuPage Homeownership Center, worries that the easy access to personal data on homeowners’ financial problems not only makes them more likely to receive low-ball offers on homes but may also make them a target for mortgage-related scams.

“Many of the families that come in here that are in pre-foreclosure are able to get it turned around, either through the Illinois Hardest Hit program or through mortgage modifications or other means,” Olson said. “I understand that the information is already available through public court records but it takes some real digging. This just seems much too easy for predators.”

mepodmolik@tribune.com
Twitter @mepodmolik

 

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New home sales jump to near 2-1/2 year high in September

October 24, 2012 By Leave a Comment

New housing construction is seen in Poolesville, Maryland, October 23, 2012. New U.S. single-family home sales surged in September to their highest level in nearly 2-1-2 years, further evidence the housing market recovery is gaining steam. REUTERS-Gary Cameron
New housing construction is seen in Darnestown, Maryland, October 23, 2012. New U.S. single-family home sales surged in September to their highest level in nearly 2-1-2 years, further evidence the housing market recovery is gaining steam. REUTERS-Gary Cameron

WASHINGTON | Wed Oct 24, 2012 10:50am EDT

(Reuters) – New single-family home sales surged in September to their highest level in nearly 2-1/2 years, further evidence the housing market recovery is gaining steam.

The Commerce Department said on Wednesday sales increased 5.7 percent to a seasonally adjusted 389,000-unit annual rate – the highest level since April 2010, when sales were boosted by a tax credit for first-time homebuyers.

Though August’s sales pace was revised down to a 368,000-unit pace from the previously reported 373,000 units, the tenor of the report was relatively strong, with the median home price of a new home rising 11.7 percent from a year ago.

Economists polled by Reuters had forecast sales rising to a 385,000-unit rate last month.

While the increase in sales last month added to signs of a broadening housing market recovery, new home sales are just over a quarter of their peak in July 2005. Compared to September last year, new home sales were up 27.1 percent.

The housing market is on the mend after collapsing in 2006 and dragging the economy through its worst recession since the Great Depression. Home sales are increasing, pushing down the stock of unsold properties, giving a modest lift to house prices and builders’ confidence to take on new projects.

However, the housing market recovery lacks the muscle to take the baton from manufacturing as the main driver of the economic recovery.

The recovery in the sector is being supported by record-low mortgage rates, which have been held down by the Federal Reserve’s ultra-accommodative monetary policy stance.

The U.S. central bank has targeted housing as a channel to boost growth, announcing last month that it would buy $40 billion in mortgage-backed securities per month until the outlook for employment improved significantly.

Though the inventory of new homes on the market rose 1.4 percent in September, it remained near record lows.

At September’s sales pace it would take 4.5 months to clear the houses on the market, the lowest since October 2005, down from 4.7 months in August.

Sales last month were up in three of the four regions. They tumbled 37.3 percent in the Midwest.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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Housing Market News: Existing Home Sales Down, Prices Up

October 23, 2012 By Leave a Comment

Learn more about the latest housing market trends for existing home sales, new construction and mortgage interest rates.

ARTICLE |  | BY ADRIANA REYNERI

Sales of existing homes slowed in the month of September, but prices rose for the seventh consecutive month, according to a report released today by the National Association of Realtors, which hails the data as continued signs of a genuine recovery for the housing market.

Total existing home sales fell 1.7 percent from August to September to a seasonally adjusted annual rate of 4.75 million, but the pace of sales was 11 percent higher than the 4.28 million rate for September 2011, according to the realtors group. The national median price for all types of existing homes – including townhomes, condominiums and co-ops – was $183,900 in September, a year-over-year increase of 11.3 percent from September 2011.

“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” Lawrence Yun, the association’s chief economist, said in a statement. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest.”

Distressed sales – homes in foreclosure or sold at deep discounts – made up nearly one-fourth (24 percent) of existing home sales in September, up from 22 percent in August but less than the 30 percent share for September 2011. Foreclosures sold at an average discount of 21 percent below market value in August, while short sales were discounted an average of 13 percent.

Total housing market inventory fell 3.3 percent in September to 2.32 million existing homes, a 5.9-month supply at the current sales rate. A year ago, the housing market had an 8.1-month supply of existing homes for sale.

“The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,” Yun said. Home builders appear to be doing just that, according data released by the Commerce Department on Wednesday. Housing starts rose by 15 percent in the month of September, following a 4 percent increase in August. The spike in activity brings the current pace of home construction to a seasonally adjusted annual rate of 872,000, a 35 percent increase from September 2011. The number of new building permits issued, a forward-looking indicator, rose nearly 12 percent from August to September. Home builders also expressed increasing confidence in the housing market, according to data released by the National Association of Home Builders on Tuesday.

Home mortgage interest rates remain near record lows, according to Freddie Mac, which reported an average rate of 3.37 percent for a 30-year fixed-rate mortgage, just off the record of 3.36 percent, and a new average low for a 15-year fixed rate mortgage of 2.66 percent.  Affordable rates are encouraging some buyers to enter the housing market, but tight credit conditions are continuing to constrain sales, according to anlaysts.

 

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Halloween Trick-or-Treat Special

October 23, 2012 By Leave a Comment
Halloween Trick-or-Treat Special
Date/Time: 10/29/2008  6:30 PM
Location:
Arcadia Public Library
20 W. Duarte Rd.
Arcadia, California  91006
Description:

Halloween Trick-or-Treat Special

Wednesday, October 29 at 4:00 or 6:30 p.m.
Ages 2-6

Come in costume and enjoy some early Halloween fun!  There will be stories, songs, and a snack.  Plus, of course, a chance to trick or treat through the Library! 

You must have a ticket to attend this event. 

Free tickets will be given out beginning Saturday, October 18.  There will be a limit of 75 children for each session.

10:00 a.m.-11:00 a.m: Arcadia residents (must show proof of residency)
11:00 a.m. forward: Open registration. 

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As the sun rises, hundreds gather in Westchester to see Endeavour

October 12, 2012 By Leave a Comment

L.A. NOW

SOUTHERN CALIFORNIA — THIS JUST IN

As sun rises, hundreds gather in Westchester to see Endeavour

October 12, 2012 |  7:45 am

Crowds at shuttle
Early morning light bathed Endeavour’s weathered body in a pink glow Friday morning as more than 500 people, many from the neighborhood, gathered in a Westchester parking lot to catch a glimpse of the space shuttle on the first leg of its final journey.

A chattering crowd of hundreds converged at the intersection of Sepulveda Boulevard and La Tijera Boulevard. As the sun began to rise, some thrust phones into the air to snap a picture. Others stood on stepladders and folding chairs, hunting for any elevation gain that would give them a better view.

Other crowds spilled into local businesses along Sepulveda Boulevard, including a Coffee Co. facing south toward the shuttle’s parking spot. Owner Gus Kazemi, 56, pulled tables off a raised concrete platform at the entrance to the café, where more than two dozen people leaned over the metal railings toward the shuttle.

“I feel like a part of a larger community, not just the United States,” said Matthew Lucy, 34, who gathered with his wife, Katinka, and daughters Sofia, 6, and Madeleine, 4, inside the Coffee Co. café.

In the parking lot, crews were working to widen the computerized transporters carrying Endeavour so they can travel over medians on Manchester Boulevard.The shuttle will continue east down Manchester, passing into Inglewood city limits at Glasgow Avenue, where it will again stop for several hours for more power line work. There, crews will also move the orbiter onto the dolly system that will tow it over the 405 Freeway beginning about 10 p.m. Friday.As the crowd grew, onlookers stayed quiet and orderly behind the police barricades erected to create a boundary for the shuttle. Officials said the crowd had been orderly all night, but are concerned that as more people arrive during the day, the sizes could get unmanageable.

Sidewalks will remain closed for much of the remaining route, said Los Angeles Fire Department Battalion Chief Michael Bowman.

“We just said, ‘Let’s keep it open, let people enjoy it,’ but we may not have that opportunity again,” Bowman said.

Many people wore hoodies and pajamas. Parents held hands with children wearing school uniforms and backpacks, stopping to see the shuttle on the way to school.

“When else do you get to see something like this in your own backyard?” said Jennie DiPaolo, 49, whose two sons, Luke and Matthew, were wearing red St. Anastasia Catholic School sweat shirts. “We can go see it in the museum, but this is our neighborhood. We drive by here every day.”

– Christine Mai-Duc and Andrew Khouri in Westchester

Photo: Folks gathered on the corner of Westchester Parkway and McConnell Avenue on Friday to see the space shuttle Endeavour leaving LAX for the streets of Westchester. Credit: Lawrence K. Ho / Los Angeles Times.

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Debate leaves some taxing questions about housing unresolved

October 10, 2012 By Leave a Comment

Commentary: Obama and Romney need to provide more details on their positions

BY KEN HARNEY, WEDNESDAY, OCTOBER 10, 2012.

Inman News®

Mitt Romney and Barack Obama images via MittRomney.com and WhiteHouse.govMitt Romney and Barack Obama images via MittRomney.com and WhiteHouse.gov

Anybody who watched it knows that Mitt Romney scored a technical knockout of President Obama in last week’s debate. But are there some potential future costs and concerns for housing that have to be looked at in the wake of that victory?

On the one hand, Romney surprised Obama with sharp criticism over an issue that has plagued homebuyers and refinancers: the super-strict underwriting and documentation that banks are requiring for home loans, in part because they’re worried about forthcoming “qualified mortgage” federal rules under the Dodd-Frank financial reform legislation.

“It’s been two years,” Romney said to Obama at the Denver debate, “We (still) don’t know what a ‘qualified mortgage’ is. So banks are reluctant to make mortgages … It’s hurting the housing market.”

There’s no question that regulators have proceeded at a frustratingly glacial pace since the passage of Dodd-Frank in July of 2010, and we don’t know what the Consumer Financial Protection Bureau will come out with on this issue in early 2013.

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Hillsides Volunteer Network’s Ice House All-Star Comedy Show

October 9, 2012 By Leave a Comment
  ICE HOUSE COMEDY SHOW
Ice House Comedy Show

Purchase your tickets for Hillsides Volunteer Network’s Ice House All-Star Comedy Show to Benefit

Hillsides, on Sunday, October 14, 2012.
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