Tuesday, April 29, 2014

Homeownership Hits 20 Year Low! Prices Up! What Next

 

Traditional fear greed equation disrupted by government interference


All Charts thanks to zerohedge.com, which goes more into depth on this issue here.

If you can explain what is going on in asset markets right now, you are among the few. The pundits are all over the place trying to explain how a struggling 6 year recovery can be producing a massive stock market bonanza on the upside, very close to 2007 housing prices, $100 a barrel oil, and out of control junk bond markets.  Slowly, but surely, one at a time, major economic leaders are coming around to one conclusion: Too much money chasing too few goods - NOT, mind you, in the general economy - but in traded assets.

Even the current government is starting to understand that the 1% or even the 5% has taken all the advantages of even the minor improvements in income and wealth since 2010. They did this by borrowing at rates that are artificially reduced to near 0.00% by the Fed.  The money is not going to main street to expand small business.  It is going to wall street to buy assets. 

What does any of this have to do with housing?


The housing market has been driven by cash buyers of distressed properties up until now.  Rents are at all time highs, and not coming down, because folks who were in trouble with their mortgages sold out to corporations, foreign investors, and local landlords who saw a chance to buy low.

Those folks are still scouting good deals, but they have slacked off from the rampant pace of a year ago. Today you are left with some speculators and a few regular buyers and no sellers. Why would someone sell a home that is now owned with a 3.5% or 4% mortgage. You'd rent it out if you needed to move, and get another home with a 4.5% mortgage. Speculators who bought low a year ago were not in for the flip.  They are able to get great rents.  And they can borrow money below the current mortgage rates if needed. 

Here is the coming rub. Family formation. People are already living more tightly than they did in 2007, and as middle class incomes stagnate, and young adults have few high income options available, the number of people per household is climbing. This is not sustainable. The population continues to grow faster than the housing, so there will be a breaking point.

How do you play the breaking point if you are just a regular Joe needing a place to lay his and his family's weary heads? A very good question. But any analysis of the above suggests that prices of homes and mortgage rates have to go up. That means more people thrust into the rental market. It is hard to imagine a scenario where prices come down, unless the system completely collapses.  There are those who believe it will.  But the kind of catastrophic collapse they are talking about will take average guys like you and me down with it no matter what.

More likely is that when the bubble bursts this time, we will get double the pain we should have gotten in 2008.  There will be no way to save the losers this time.  We will all just have to suffer through it, and most of us will come out okay. 

Now What?

So, what is prudent today? 

Make your decisions locally. That means that local conditions in real estate will provide you with a set of possibilities to select from. It also means that your own circumstances are local to you. Income, job stability, family changes, and location preferences are still the main drivers of real estate purchases or decisions to rent. If you are likely to stay in one home for 10 years or longer, this is probably as good a time to buy as any. If you are likely to need to or want to sell in a couple of years, you might be better off renting.  But then, predicting the economic future is harder than predicting the weather, and that is still not even close to possible.

If you are in the market to purchase a home for your own use or as an investment, and you need to secure a mortgage for that purpose, please call Bill Rayman at GuaranteedRate.com.  His experience will be invaluable to you in helping achieve your goals. 

Monday, April 21, 2014

Westside Real Estate Market Still Short on Good Properties

 

Lower cost neighborhoods have unsold homes


In a tale of two cities, the early Spring analysis shows wealthier neighborhoods are short of supply, well priced properties are getting multiple bids, and many deals are still cash.  Go further inland and the speculators have been priced out of the market, and the buyers who are interested in those price points either can't qualify or aren't ready to pay the sky high prices in those neighborhoods. 

What will happen as we get closer to Summer is anyone's guess.  Overall inventories for LA county are still at historic lows with under 18,000 single family dwellings on the market.  This compares with normal levels between 30,000 and 40,000.  But as we noted in a previous post, the equation for renting vs buying has tilted toward neutral.  It would appear that many renters are happy to stay put until the pricing is more stable or the mortgages become easier to get.

The irony, of course, is that mortgage rates are low and dropping.  Getting into a home now is almost certainly going to cost less than in the future.  Prices would have to fall a lot to make up for normalized interest rates of 6% or higher.  Consumers aren't very savvy, being more likely to respond to emotion, trends, and headlines.  Right now the headline is high prices and little choice. 

Saturday, April 12, 2014

Bill Rayman Named to America Top 10 Mortgage Brokers in Los Angeles

mortgage broker los angeles

When you need a mortgage broker, you want the best!

America Top 10 was founded by a family who moves ... a lot! Every time they moved, they needed to find new local companies to help them with their daily needs. Out of this experience came the decision to start a website that would help others who were new to a community by providing a top 10 list of various businesses for cities all over the US.
  
Just released is a list of the top 10 mortgage brokers in Los Angeles.  Sitting at the top of the page is non other than Bill Rayman Home Mortgages.  The site doesn't make it absolutely clear that the placement of Bill at the top makes him the number one mortgage broker in Los Angeles, but there is a number "1" image in the background of the listing that would cause us to at least speculate that America Top Ten has Bill Rayman as the top mortgage broker in Los Angeles.

The site goes on to explain some issues that they felt were critical to the business of how to select a mortgage broker in Los Angeles:
A good mortgage broker can save you endless hours applying and shopping for loans. You give them the information once, and then they have to do all the shopping ... many of us are willing to pay the mortgage brokers fee to save all those hours of comparison shopping.
If you are in the process of buying a home for your family or a residential property for investment, call Bill Rayman to discuss your options at  424-354-5325

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 9002
bill.rayman@guaranteedrate.com

https://GuaranteedRate.com/BillRayman



Thursday, April 3, 2014

Buy vs Rent in Los Angeles Updated for 2014

http://breakthroughbroker.com/free-real-estate-templates/real-estate-postcards

Monthly expense for purchase loses by a hair in 2014

Last year, I created a narrowly focused comparison between the monthly cost of owning vs renting the same home in Los Angeles.  Then I showed some general charts for various cities in the US.  Some places it seems better to rent.  Some places it is better to buy. 

Much has changed in a year.  Home values are up.  Rents are up.  Interest rates are up.  Funny, how come the government says there is no inflation?  We'll save that for another post. 

Where does that same comparison come out today. 

Last year the house was worth $650,000.  Today it is worth $795,000.
Last year the interest was 3.5%.  Today interest would be 4.5%. 
Total monthly mortgage would be estimated at $3129 now vs $2441 a year ago.

All of these estimates are from Zillow.com, and we can't totally rely on their numbers.  In fact, the rent number seems suspect, as it has dropped from $3150 to $3125.  Government statistics for cost of living specifically associated with rental of a primary residence showed a 2.7% increase in the LA area.  Even so, that would only boost the rent by $90.  My gut tells me that rents are up and that the 2.7% number might be more in line with reality. 

Last year, the owner would have had a $450 advantage over the renter for that same unit.  This year that advantage is wiped out, and the renter is going to spend about $100 less than the owner. 

As noted in the previous post, there are many other factors to take into consideration when deciding to buy a home vs rent.  But on a strictly cash basis, the Los Angeles renter wins by a nose this year.

If you are looking to buy and need help securing the best possible rates and costs on your mortgage, call today for a no cost, no obligation consult:

Bill Rayman Home Mortgage

12121 Wilshire Blvd
Suite 350
LA CA 90025

424-354-5325

bill.rayman@guaranteedrate.com
https://GuaranteedRate.com/BillRayman