Tag: housing
How Much Is Your House Worth?
Margalit over at whatwas_i_think (who was one of my co-founders for soc.culture.jewish.parenting) has pointed me to an interesting site that shows you the purported current value of your house. It also shows the “value” of your neighbor’s houses. I did it for my house, and it shows a value about $10K above our purchase price, and that we’re about right for our neighborhood.
Of course, having just purchased, this isn’t the greatest of news, since property taxes reassess on purchase, which means I have ½ of a large nut to pay at the end of the month (2nd installment with the supplementals) plus a larger mortgage. But it should get easier as time goes on.
So, is the value correct for your house? Does it surprise you?
Houses and Their Problems
Today, I had been hoping to go into the backyard and fix some lighting. You see, we have two outdoor lights that were not working, and a few junction boxes that jut up, but have no lights. Didn’t happen.
I went to the first light, which is an old-style, hard-wired light, using a normal light bulb. The bulb is fused to the socket, which breaks as a try to get it out. Another light like that one has a similar problem. It looks like I’ll have to call an electrician. Opening a junction box reveals a nest of wires, which means my “easy” job of updating lights just became harder. It looks like this will get added to the electrician list, which already includes two external fixtures that don’t have off switches.
Sigh. I always forget that houses are never easy, and that there is always maintenance (especially on ones you just bought). Homeowners selling a house usually defer maintenance in some areas, and never remember all the deferred maintenance areas because they are just used to it. Inspectors never find all the problems. My wife reminds me it was at least 5 years before we resolved all the deferred maintenance issues on our last house.
It’s just really frustrating.
The State of Housing
(One more observation as I quickly finish lunch… yes, I was in a 12pm to 2pm telecon)
The Los Angeles Times is reporting that Southern California home prices rose last month at their lowest rate in nearly four years while the pace of appreciation for all of 2005 slowed for the first time since 1999. Specifically, the median home price in December is 13% higher than a year earlier, at $479,000. Many homes are taking longer to sell, with the average duration on the market about three months compared with one month a year ago. According to the Daily News, next year appreciation could be in the 5% to 7% range.
What do I think, having just bought a really expensive house? As long as they rise, I’m happy. If things are selling slower, that’s less of an issue, as I don’t plan on selling. But please, not another 1990.
Housing Prices, Debt, and Refinancing
In the news the last few days have been numerous articles “sounding the warning” about consumer spending habits. A good example is this article in today’s Daily News about the rising debt level of consumers. These articles all note how the American saving rate is now 0 (that’s zero, folks, not the variable O). Evidently, Americans of the current generation are not saving. This ties into what I’ve been reading in some diaries my father kept in the 1948-1952 time period. He was so proud as he was able to save money and pay things off. I think (I hope) my generation (just post-baby boomer) is a little bit better: I don’t think I’m saving anything, but then again, I’m socking 6% away for retirement in a 403(b), and letting income accumulate in investment accounts instead of taking it as a check. Supposedly, the current adult generation (is it the “me” generation or Generation X… I forget the moniker) isn’t saving anything.
The articles relate this to a desire to want things now: we no longer have the ability (it seems) to save for something. We instead buy it on credit now, and pay the bill later. They relate this to the “obesity epidemic”, which they claim is created by people wanting to eat “now” (never mind that it is more likely created by all the drugs and artificial foods we eat).
Paying the bill later. This isn’t just individual. It’s reflected in the growth of the federal debt. We’ve gone from a surplus to a deficit. And who owns this deficit? Foreign investors. There was a good article in the Atlantic Monthly (alas, subscription only) on this. If these foreign investors (much of it Chinese) refuse to stop investing in the US, our economy could come to a screeching halt. And that’s risky.
And that brings us to the next aspect of this subject: Housing Prices and Refinancing. Another common theme in the media today (especially in Los Angeles) has been the pending “Housing Bubble” (whether or not it actually exists, the media is going to create it) and the risky loans folks are taking. The key example of these risky loans is the type that I have: an Option ARM, when you can pay the fully amorized amount, interest only, or an artificially low amount that creates negative amortization. It is taking advantage of the latter two options that could get folks in trouble. This is made worse by many folks doing 0% or less down (luckily, we don’t have that problem: we were at 20% down, and we just dumped a chunk more to principle). But many folks view their house as an ATM machine (according to the LA Times), keeping up the high housing dept and not paying things down.
At least with us we intend to pay things down. In fact, I would like to refinance away from the Option ARM into a fixed 30-year (yes, even after only 3 months into the new loan–we don’t have a prepayment penalty). But refinancing is in itself a racket. Either they want points (i.e., a percentage of the loan amount as a fee) or they up the rate… and then there are closing costs. In general, it can cost anywhere between $2000 to $15,000 just to refinance; perhaps more if you have a higher rate. I just get lost in those numbers and don’t know how to judge. Does anyone out there? I’m seriously thinking of just contacting the bank that has our current home loan and seeing if they would be willing to convert it in place, since the loan paperwork is relative fresh (May 2005). Any ideas if that would work?
So, those are my musings. Where do you think the economy is headed, especially with housing prices? Are you a saver or a spender?
Figuring Out The Housing Market
Being a recent new home buyer (as well as a home seller), I’ve been following the housing market of late. I’ve been trying to figure out the trends, and where things are going. This is mostly out of self-interest; I need to protect my investments. But how to read the tea leaves.
Observations on the News
I haven’t done a “housing in the news” for a while, so here are some observations for today:
- According to the Daily News, the median price of a typical San Fernando Valley house hit a record $600,000 in July–a whopping $111,000 increase in the past 12 months as sales maintained a strong pace. It’s the fifth consecutive price record this year, and represents an annual rate of appreciation of 22.7%, which is 8.1 percentage points higher than the comparable June number. This means, at least on paper, that I’m still building equity in the new house. Of course, will be be sustained? I hope so.
The article notes that the price increases aren’t deterring buyers. During July consumers bought 1,203 previously owned houses; 0.6% less than a year ago. Folks believe this will cool off, but slowly.
- In a related article, according to the LA Times, Rates on 30-year, fixed-rate mortgages rose to a nationwide average of 5.89% this week, up from 5.82% last week. This concerns me. We currently have one of the Payment Option ARMs. I intend to refinance this to a fixed rate: the question is when. Right now, the ARM rate is below the fixed rate, but I don’t think the difference will last for much longer. Decisions, decisions.
In other news:
- DirecTV has announced that it will stop selling Tivos, in deference to its own DVRs, unless specifically requested. Now, we just bought a DirecTivo, so I wonder what the effect of this will be? Will DirecTV still support the unit? Will they replace it for free?
- For those single folks out there, MIT has developed a Phone Jerk-O-Meter that would analyze speech patterns and voice tones to rate people – on a scale of 0 to 100 percent – on how engaged they are in a conversation. The program uses mathematical algorithms to measure levels of stress and empathy in a person’s voice. It also keeps track of how often someone is speaking. For now, the Jerk-O-Meter is set up to monitor the user’s end of the conversation. If his attention is straying, a message pops up on the phone that warns, “Don’t be a jerk!” or “Be a little nicer now.” A score closer to 100 percent would prompt, “Wow, you’re a smooth talker.” There are more details in the article, but this is very interesting.
- From the Who Do You Remember department. I think this shows the relative importance of things in our society. HP is in the process of renovating the original house of William Hewlett and David Packard, known as the birthplace of Silicon Valley. This involves rebuilding it to current codes, and then making it look like it did in the original timeframe. On the other end of the scale, Beverly Hills has permitted the demolition of the house where George and Ira Gerswin wrote much of their music. Specifically, 1019 N. Roxbury Drive has been reduced to rubble. This is the house where George and Ira Gershwin wrote “They Can’t Take That Away From Me,” “Shall We Dance” and “Our Love Is Here to Stay.” Singer Rosemary Clooney lived there for half a century. Beverly Hills has no historic preservation ordinance.
- Hey, shutterbug93: The Los Angeles Times has an entire article on how the musical Babes in Arms was closed this weekend because of an invasion of stinging bees. They even noted how Julie Dixon Jackson was stung when the bees suddenly appeared at a matinee. This will be a significant financial loss for the college, who had to cancel the production. It turned out to be a large invasion: There were thousands in the lights, in the catwalks on the seats and so forth, requiring extensive vacuuming and cleaning. A private exterminator hired by Saddleback College used a flower-based pesticide to get rid of the bees. The honeycomb still needed to be removed Thursday before the 400-seat theater could reopen today as scheduled. Officials did not know what the cleanup cost would be.
And, on that note, I’ll conclude the buzz for the day. (ducks and runs)
Housing and Los Angeles
Today’s papers bring some interesting articles on the Los Angeles economic market.
First, the Daily News and the Los Angeles Times are reporting that Southern Californians bought houses in record numbers during June despite prices hitting all-time highs in each of the region’s six counties. According to La Jolla-based DataQuick Information Systems, a total of 35,454 new and previously owned houses and condominiums sold from Ventura to San Diego counties, 2.1% more than a year earlier and an increase of 14.8% from May. During June, the region’s median price gained an annual 14.5%, to a record $465,000, but annual increases continued softening. I have to admit that our new house was one of those statistics.
In the sprawling Los Angeles County market, the median price — the point at which half the homes cost more and half less — jumped 14.7%, to $475,000, while sales increased an annual 2.8%, to 11,673 transactions. Ventura County’s median price jumped 16.8%, to $584,000, and sales increased 16.4%, to 1,707 transactions. Orange County became the region’s first county to post a median price topping $600,000. San Bernardino and Riverside counties continued to show the biggest percentage price gains. In June, the median price in San Bernardino rose 30.9% to $322,000, and in Riverside it was up 23.2% to $393,000.
DataQuick said the typical monthly mortgage payment that buyers committed themselves to last month was $2,021, down from $2,028 for the previous month but up from $1,928 for June a year ago. Foreclosure activity has bottomed out, but is still low. Down-payment sizes are stable, as are flipping rates and non-owner-occupied buying activity.
There are signs of slowing. The region’s 14.5% year-over-year rise in the median price was the smallest gain since March 2002. And San Diego County, once among the region’s hottest markets, continued to show signs of slowing dramatically. The prediction appears to be that home price increases over the next six to 12 months would continue to appreciate at a “more normal” pace — and could even slip into negative territory — but won’t crash overnight. Such a scenario could be unfolding in San Diego County, where sales declined 8.8% in June while median prices rose 6.3% to $493,000. That was the second consecutive month of price gains below 10% and the slowest rate of appreciation of all Southland counties.
So why haven’t we seen the “pop”? This is made clear in two other articles from the Times and Daily News. The Los Angeles County Economic Development Corp.’s midyear forecast expects the county as a whole to show annual job growth of 1% this year while all parts of the Valley region — including the Santa Clarita and Antelope valleys — will do better than that. Forecasters expect the Santa Clarita area to see job growth of about 6%. The East Valley, which includes Burbank and Glendale, the West Valley and the Antelope Valley will be among the county’s top performers with a growth rate near the 3% range. The key concerns are (natch’) a lack of affordable housing, limited by overly burdensome regulations and NIMBYism, and traffic congestion.
The report noted that two of the region’s signature sectors — movie/TV production and international trade — face tougher outlooks although they should continue to add jobs. Technology jobs are rebounding, while the region’s bio-medical industry is expected to benefit from increased stem cell research. Within the business and professional services category, accountants and lawyers are expected to gain work from increased corporate financial reporting requirements, while architects probably will see more activity with a pickup in office building development. Riverside-San Bernardino is expected to continue to post the Southland’s strongest job growth rates, with estimated 3% gains for this year and 2006, the business organization predicted. Orange County would follow, with estimated job growth rates of 1.9% in 2005 and 1.8% in 2006. Los Angeles County is expected to post job gains of 1% this year and 1.1% next year, the group said. Of the 41,600 new jobs in the region’s biggest county, an estimated 11,500 would be produced by the construction sector.Three subregions stand out as “overachievers”: East San Fernando Valley, San Gabriel Valley and West Los Angeles. Two subregions, however, stand out as needing more support: the southeast area and South Los Angeles.
Yet again, I think, LA is the place to be.