Zillow's housing predictions for 2013

ForecastChartJuneQ2

Zillow just released its predictions for the housing market in 2013, saying that just under half of the markets it covers will experience an increase in home values over the next 12 months.

The graph below illustrates the Zillow estimate for Los Angeles, showing current housing price averages at $383,200, and increasing 0.5% over the next year.

Los-Angeles_HomeValue2013

Considering all the economic difficulties with a dwindling job market and debt problems in Europe, a stabilized housing market is something to look forward to in the next year.

Green certified homes can turn into a good investment in California

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Is going green in your home a good investment? According to a new study, it could be! California homes sold between 2007 and 2012 saw an average of a 9% increase in its value because of green certification. It's a bonus for areas where consumer sentiment is more supportive of environmentally friendly options (for instance, in those areas where there were a lot of Prius owners!), and if you're beach side, even better. The study sampled 1.6 million homes, of which 4,321 were sold with Energy Star, LEED or GreenPoint Rated labels. The goal was then to determine how much that green labeling factored into the selling price. While the National Assn. of Realtors believes any mandatory labeling could have severely negative effects, the National Assn. of Home Builders sees it as an advantage.

Eco-friendly and green homes are a popular choice for Northeast Los Angeles, especially if you're in the vibrant communities of Echo Park and Highland Park. There are multiple home tours each year, including the popular Dwell on Design and deLab Echo Park house tours, which feature many significant green homes here in Echo Park. My most recent listing that was green certified was in Echo Park, and included 10,000 square feet of certified farm and wildlife habitat, plus other green features. That home sold fast!

If you have a green-certified home you're thinking about selling, or you're looking for one - give me a call. I also have great resources available if you're looking to get certified and improve the long-term value of your home.

California approves Homeowner Bill of Rights

The California Homeowner Bill of Rights (AB 278 and SB 900) provides protection for borrowers and struggling homeowners, including a restriction of dual-track foreclosures (in which a lender forecloses on a borrower despite being in discussions to try and save the home). They bill also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers. In addition, the bills impose civil penalties for the practice of robosigning.

Both bills passed 53-25 in the Assembly and 25-13 in the Senate. Governor Jerry Brown signed them on July 11, 2012.

Los Angeles City Attorney files lawsuit for "bank blight"

foreclosure

Los Angeles City Attorney Carmen Trutanich has filed a lawsuit against US Bank for being behind they city's "bank blight," and calling them "slum lords."

The bank has foreclosed on over 1,500 homes in Los Angeles in the past year. Trutanich says it is responsible for allowing at least 150 of those homes to fall into disrepair, and thus inviting blight, crime, and lowering neighborhood property values.

Neighborhoods that have been hit hardest have the most problems - including stories of foreclosed properties perpetuate gang activity, squatting, dead animals, graffiti and even prostitution because the banks have failed to maintain the properties.

California is leading the nation in foreclosed homes, and many are worried that a back log of foreclosures in the state will perpetuate the problem (as of March 31, there were 362,000 homes in foreclosure or under water).

This isn't the first time the City of Los Angeles has filed a lawsuit like this, and it may not be the last - Trutanich was quoted by Reuters saying "that is one of the arrows in the quiver," but didn't provide additional details or names.

The city recently adopted charging banks fees on foreclosed homes to help pay for inspectors that will monitor the conditions of foreclosed homes in Los Angeles. The city also adopted a Neighborhood Stabilization Program this year to help pay for the rehabilitation of foreclosed properties in communities that have been impacted the hardest.

Loan modifications still the way to go

The recently released national Housing Scorecard for June 2012 pointed to both signs of promise, as well as reasons for concern when considering a loan modification.

Positive indicators:

Home equity rose by 7.4% in the first quarter of 2012; sales for existing homes posted a 9.6% increase in May in a year over year comparison; completed foreclosures were down 18% year over year. The May scorecard provides an overview of the health of the housing market.

Negative indicators:

After months of declines, foreclosure stats increased by 12% month over month in May; completed foreclosures increased by 7% month over month. These numbers indicate the market is still fragile overall.

June National 2012_Scorecard_(cm)1.1.indd

In addition to the foreclosure statistics, the administration also released an update on the Making Home Affordable program, under which nearly 1.2 million homeowners have received assistance. The average savings was $536 a month on their first mortgage and $159 a month on second mortgages.

Also, nearly 51,000 avoided foreclosure by way of a short sale or deed-in-lieu through the HAFA program.

June National 2012_Scorecard_(cm)1.1.indd

Rising Rents - low inventory

Home prices have been stabilizing because of low inventory, and rents are skyrocketing as renters flood the market. While a combination of the foreclosure crises and the poor economic conditions, along with high unemployment in Los Angeles, have created a steady rise in rents for the past few years, rental prices have now increased at an even faster rate. Los Angeles has always had a high transient population, but now with an increased rental pool and continued slow production of new rental stock inventory, it is getting even more constrained. The ultimate effect of this supply and demand curve means higher rents.

There are many in this pool of renters that could become purchasers of homes, but they have suffered negative effects on their credit because of a foreclosure or short sale. In addition to not being able to purchase, this also puts them in a position to pay a higher rent because of the increased risk associated with bad credit.

Production in smaller apartment complexes has picked up over the last 6 to 9 months. Also, investment in units for Northeast Los Angeles is on the rise. The rent increase is a positive sign for the overall housing market and values. Though, many renters are not happy with this trend.

If you are a current homeowner and are in distress, consider a short sale before allowing the property to be foreclosed on. The effect on your credit is significantly reduced, and with today’s guidelines, you can purchase a home again within two years.

Contact me if you would like to discuss your options.

Fixed Mortgage rates: New lows, again

It's hard to believe that this is still a topic... Every time I write about "rates hitting new lows," I think it will be the last time, but here we are again. According to numbers released by Freddie Mac, the 30-year fixed rate mortgage fell to 3.62 percent for week ending July 5, 2012. The 15 year fixed rate mortgage dropped to 2.89 percent.

Recent economic data for manufacturing contracted and lower consumer spending were the catalyst for the decline in the long term Treasury Bond that moved rates down.