Real Estate Outlook: Strong Sales Predicted

Will housing outperform the overall economy in 2010 as we pull out of the Great Recession?
By: Kenneth R. Harney: RealtyTimes.com
Nothing is absolute in the predictions business, but there are solid indications that, yes, housing is likely to rebound more energetically than the overall economy.

Here's why: Even the most bearish Wall Street analysts now concede that home sales are up in many areas from year-earlier levels - sometimes by extraordinary percentages.

For example, MDA DataQuick reports that sales in the greater Phoenix market in November were 62 percent higher than the year before.

Prices either have bottomed out in dozens of these markets or are close to it. That's because the distressed sales component of local volume - short sales, REOs and foreclosures - has been declining slowly but steadily.

In his latest forecast, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says both existing and new home sales will be higher in 2010 than in 2009 - and 2009 was better than 2008.

No question that a key part of the energy in housing will be the direct result of stimulus efforts by the federal government - especially the two tax credit programs - that will push sales and even pricing through mid year.

The overall economy, on the other hand, according to Brinkmann, is likely only to grow slowly in the first half of 2010, and not really warm up until the second half.

The heavy anchor dragging on national economic growth - and on housing demand - will continue to be unemployment. Brinkmann says that "the time of job destruction is over" in this cycle - that is, the number of new layoffs and new unemployment insurance claims filings are trending down.

But we haven't yet moved into the next phase nationwide - that of "job creation," which may not begin until later in the year, he says, and may be a long, slow process.

The National Association of Realtors' chief economist, Lawrence Yun, sees a strong sales year ahead - up 20 percent over 2009. In some markets, he also expects to see a return to modest and sustained price increases - anywhere from two to five percent on average.

Will higher interest rates put a big dent in these projections? Many economists are forecasting 30 year rates in the upper 5 percent range later in the year.

Those higher rates won't help - but last week they headed in the opposite direction. Thirty year fixed rates averaged 5.1 percent and 15 year rates were half a point below that - both down slightly from the week before, according to the Mortgage Bankers' national survey.
Read more!

Mortgage Rate Inches Back Toward 5%

Mortgage rates mostly fell in the past week, with 30-year fixed-rate mortgages edging toward 5%, according to a survey by Freddie Mac.
By: NATHAN BECKER: WSJ.com
Chief Economist Frank Nothaft noted home sales, especially for lower-priced homes, have improved as the economy gets better. Also, "with fixed mortgage rates staying near a record low, many homeowners are taking the opportunity to refinance."

The 30-year fixed rate averaged 5.06% for the week ended Thursday, down from last week's 5.09%, according to Freddie's Primary Mortgage Market Survey. A year earlier, the rate was 4.96%. The 15-year fixed-rate mortgage rate fell to 4.45% from 4.5% and 4.65%, respectively.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.32% this week, down from last week's 4.44% and the prior year's 5.25%. One-year Treasury-indexed adjustable-rate mortgages rose to 4.39% from 4.31%; the year-earlier average was 4.89%.

Meanwhile, mortgage applications rose a seasonally adjusted 14.3% during the week ending Jan. 8, compared with the week before, the Mortgage Bankers Association said earlier this week.
Read more!

What Home Sellers Don't Tell Buyers

As buyers ease back into the battered real-estate market, they're often hitting a stumbling block: fibbing by home sellers.
By: M.P. MCQUEEN: WSJ.com
Eager to unload their abodes, some sellers exaggerate the size of their lots or their houses. Others minimize their property-tax or utility bills, conveniently forget about pests, or downplay flooding problems or noise.

Real-estate experts say that while such misrepresentations aren't new, the tough market of the past few years has made buyers more wary, partly because they can't expect rising home prices to bail them out of costly mistakes. As a result, deals are taking longer, and more of them are falling apart as buyers find properties sometimes aren't all they're supposed to be.

More than 30 states have disclosure laws requiring sellers to tell prospective buyers and agents about leaky roofs and other problems, according to the National Association of Realtors. But there's often a gray area involving the disclosure of problems the seller may not know about, such as a long-ago flood or hidden mold.

States are also increasingly passing laws requiring homeowners to disclose environmental issues, such as the presence of radon gas, a contaminant linked to lung cancer, and underground fuel tanks. In California, the checklist of required disclosures is so long that a cottage industry has sprung up of firms that help sellers prepare the forms.

Given the complexity of disclosure laws, it's not surprising that potential buyers don't hear about every problem in a house. Besides the issue of fibbing, sellers may genuinely not know about problems. And even if they do, the laws generally don't apply to bank-owned homes transferred in foreclosures, which now constitute a larger share of sales.

Buyers need to do their own due diligence and not rely exclusively on what sellers and agents say. They should hire an independent home inspector or home-inspection engineer, one not referred by the seller—and be aware that real-estate agents typically represent the seller.

Here are some of the common misrepresentations and white lies that buyers may hear as they shop for a house, according to real-estate experts and state regulators:

• "This house is on two acres." Disputes about property dimensions—how many square feet in a house or condo, or its exact boundaries—are common. Sometimes buyers don't learn the exact dimensions until the lender's appraisal.

Listing agents usually accept a seller's word on property dimensions, says Diane Saatchi, a senior vice president at Saunders & Associates, a real-estate firm in Bridgehampton, N.Y. "We tell everyone to verify," she says. Smaller dimensions also can cause an appraisal to come in lower than the agreed-upon purchase price. Low appraisals are a leading cause of ruined deals in today's market. A properly worded appraisal contingency in the purchase contract would allow you to scuttle the deal or find other financing if the appraisal comes in low, says New York real-estate attorney Michael Xylas.

How to Learn More About a Home
If you want to know more about a home's history of property damage, you can ask the seller to provide you with a copy of his or her C.L.U.E., or Comprehensive Loss Underwriting Exchange report from LexisNexis at www.choicetrust.com. A Home Seller's Disclosure report lists claims for property losses, such as fire damage, from the last 5 years as reported by insurance companies at the stated address, but doesn't disclose personal information such as the homeowner's social security number or date of birth. The seller's disclosure report can tell you about problems that might affect the availability or price of homeowners insurance, including claims for fire or hail damage. It costs $19.50, but homeowners also can obtain a free annual personal property report, which lists a 7-year history of losses associated with both the property and the individual, under the federal fair credit act. No claims in the last 7 years will produce a clean report.

A similar loss report, called A-PLUS, is available from the Insurance Services Office, Inc. or 800-627-3487.

• "We don't have pests." A basic home inspection generally doesn't include a peek inside walls or underground for termites and mold, which are among the top complaints. Inspections for mold and radon gas also generally aren't included; usually buyers must order these inspections separately. Other inside-the-wall problems include faulty wiring and old plumbing, which also may require specialists.

James Holtzman, a financial adviser at Legend Financial Advisors Inc. in Pittsburgh, says sellers of the 1901 house he bought in August 2006 said its electrical wiring was completely upgraded, yet an electrical inspection revealed only one of three floors had been totally upgraded. The seller then knocked $6,000 off the sales price before they went to contract so Mr. Holtzman, 35 years old, could pay for the necessary work.

• "This place never floods." Even arid states such as Arizona and New Mexico have occasional flash floods, and water and drainage problems aren't always obvious. June Walbert, 52, a certified financial planner at USAA, a financial-services company, says her San Antonio house received a clean bill of health from a home inspector before she bought it six years ago. But 10 days after she moved in, the sewer backed up, flooding the house, and she had to fork over $2,800 for repairs. "It was a rude surprise," says Ms. Walbert, who adds she asked her home inspector and the seller for compensation, but didn't get it.

Bill Richardson, outgoing president of the American Society of Home Inspectors, says a general home inspection wouldn't catch that unless the sewer line was visible from the basement or water backed up into sinks and tubs or toilets.

• "Taxes and maintenance costs are low." Home buyers often gripe about tax and utilities bills that are higher than sellers said they were. Homeowner association and condo dues and assessments are also common complaints. Sometimes sellers simply underestimate the bills, or forget to include recent or expected increases, agents and brokers say. Taxes can also be deceptively low because of unrecorded improvements like decks and finished basements. Ask to see recent bills, and check with the tax assessor's office for up-to-date information.

• "This is a quiet neighborhood." Sellers may play down distractions that could drive you crazy, such as barking dogs or idling buses. A charming park by day could be a teen hangout at night. Your best bet is to view a property at different times of the day. "I can't tell you how many times in my career buyers didn't go there in the night time, even though I told them to. You spend more time in the house at night than during the day," says Ms. Saatchi, the New York real-estate agent. Talk to neighbors and peruse the local newspapers and blogs to get a feel for a place, and check with police for crime.

• "There's going to be a golf course, a pool and a party room." Builders of many developments that broke ground during the housing boom ran out of money before the project was completed. Many homeowner and condo associations also are strapped because of delinquencies and defaults. Some states require upfront disclosures about this, but you should also ask neighbors, not just sellers, about any promised facilities. Also, check titles to be sure that specific parking spaces, storage units or other facilities are included in a property sale.
Read more!

December Delivers Higher Home, Condo Prices

Sales volume drops, stoking concern over strength of rebound.
By: DAVID HALDANE: Los Angeles Business Journal Online
Home prices in Los Angeles County bounced back in December, the first month since the housing bust that the median price for both homes and condos was higher than the year before.

The median price of a home was $348,000, up from $339,000 in November and $345,000 the year before, according to data supplied to the Business Journal by HomeData of Hicksville, N.Y. The median price of condos was $315,000, up from $305,000 in November and $310,000 in December 2008.

But there are signs that the road to recovery may be a rocky one.

The number of homes sold dropped by about 7 percent from November, but it was 30 percent higher than November 2008.

Analysts viewed the rising prices as further evidence that the real estate market is rebounding, though some characterized the upswing as a temporary respite before it once again recedes.

Last week, analysts were alarmed when the National Association of Realtors reported that the number of pending home sales across the United States dropped 16 percent from October to November. L.A.’s November sales volume dipped by 1.6 percent.

The market had softened until President Obama extended a tax credit through April 30.

“What we’re seeing today is not due to fundamentals but to government intervention in the economy,” said Christopher Thornberg, principle analyst for Beacon Economics, a West L.A. consulting firm specializing in real estate.

Thornberg said the tax credit and other government policies aimed at encouraging low mortgage rates, including financing from the Federal Housing Administration, were propping up the market. In addition, he added, the rate of foreclosures has been artificially slowed by federal pressure on banks to allow upside-down homeowners to modify their loans.

How it all turns out, Thornburg said, will become more apparent over the next several months.

“We have a big excess supply of units that have to be burned off when foreclosures start going on the market,” he said. “If that wipes out demand, it will push prices down.”

Nonetheless, Thornberg said that the historic lows of mortgage interest rates are an advantage for buyers.

That point of view is shared by many in the real estate business.

“I’m feeling very optimistic,” Betty Graham, president of Coldwell Banker Residential Brokerage in Los Angeles, said of December’s price hike. “I think it shows that we’re moving in the right direction.”
Graham said her company is doing brisk business, especially at the market’s upper end. And while obtaining financing is still difficult, many customers are tapping other sources – such as stock holdings – to pay for homes.

“They’re tired of waiting,” she said. “The buyers out there really want to steal something; but bottom fishers looking for desperate sellers may find disappointment in this market because there isn’t a deep need to sell.”

In other words, she said, when homeowners put their houses on the market they can usually hold out for their price.

One place that is occurring, Graham said, is in Malibu, where – after weak sales for the last two years – an agent recently sold three homes priced at more than $6 million each.

HomeData figures show that seven homes in Malibu were sold in December at a median price of $1.2 million.

Another area where sales were booming was Beverly Hills, Graham said.

“One of my top agents had her best fourth quarter in 30 years,” she said. “And she’s been selling real estate in Beverly Hills the whole time.”

HomeData reported that 15 homes were sold in Beverly Hills’ 90210 ZIP code in December at a median price of $1.9 million.

“This was better than most Decembers,” Graham said. “I go out to these offices and can almost touch the feeling of optimism.”

But she quickly noted that it’s not overly exuberant optimism.

“The recovery is going to be a little anemic,” she acknowledged. “Any hope of it being something else is naïve.”

A case in point, she said, is the San Fernando Valley, where sales have been flat for several months.

“I can’t really say why,” she said, “but I believe that their time will come.”
Twenty-one homes were sold in each of Woodland Hills’ two ZIP codes in December at a median price of $660,000 in 91364 and $559,000 in 91367.
Read more!

New Rules Help Borrowers at Closing

Plenty of home buyers have found themselves at the closing table, ready to sign the myriad documents that will officially make them new homeowners-only to get nasty sticker shock.
By: LISA SCHERZER: WSJ.com
What was originally supposed to cost them, say, $2,500 in closing costs, has turned into $3,000.

The Good Faith Estimate (GFE), a tally of the fees associated with a mortgage loan due at closing, is exactly that – an estimate. Often these costs, which are provided by mortgage brokers and lenders to borrowers within three days of getting a loan application, escalate by closing time.
But on Jan. 1, new federal rules adopted by the Department of Housing and Urban Development took effect, mandating the use of a redesigned, simplified Good Faith Estimate form. The idea behind the revision: to avoid those closing-table surprises.

The main change is how lenders communicate fee information to borrowers. Under the old system, there was no standardized format. "Fees were communicated in multiple ways, which adds to the confusion when comparing costs," says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Under the new rules, lenders will all be required to use the same form for their Good Faith Estimates – a three-page document issued by HUD.

More on the Good Faith Estimate
Developments: Uncle Sam's New Guide to Mortgage Shopping (12.30.09 Post)

There are also new rules capping increases in costs that are disclosed on the Good Faith Estimate and guidelines so that fees listed on the initial GFE reflect the actual cost at settlement. "Those fees on the GFE at the beginning of the process will be the same on HUD-1 form [final settlement statement] at the end of the process," says Mr. Gumbinger.

The new GFE guidelines are certainly better than the old ones and will reduce closing costs modestly – but there are still some kinks in the process, namely opportunistic pricing, says Jack Guttentag, professor of finance emeritus at the Wharton School who also operates a web site that offers free mortgage information.

That means that two different borrowers can go to the same lender but get two different estimates. The lender can size up the first one as a sophisticate, the other as a dupe, and charge the latter more than the former – just because he thinks he can get away with it. "There's no ready way a disclosure statement can prevent that," Mr. Guttentag says.

Prospective buyers should also be aware that while overall costs associated with closing on a home may come down as a result of the new GFE, they might have to pay up down the line in other ways. It will cost lenders to comply with the new regulations: they have to buy new software, print new documents, train loan originators to fill out the new forms properly. "They will be built into fees, so eventually consumers will pay" for these overhead costs, says Mr. Gumbinger.

So will the new good faith estimate make borrowers savvier about shopping around for a loan? Some are doubtful. "The forms are still pretty complicated," says Richard Vetstein, a real estate attorney with Vetstein Law Group in Framingham, Mass. "Even for me – a real estate attorney – it took several hours to go through the forms and all the changes, and figure out what's going on."

Here, a summary of the types of charges you can expect to see on your Good Faith Estimate.

1. Fees that cannot change from the original GFE to final settlement. These include the lender's origination and underwriting charges, and the credit or "points" based on the specific interest rate chosen.

2. Fees that can increase up to 10% at settlement. These include services required and recommended by the lender. If the borrower selects a third-party provider (for title services, title insurance and recording charges) from the lender's approved list, the fees cannot increase by more than 10% from the upfront estimate to the final.

3. Fees that can change without limit. These include charges from service providers (for title insurance) chosen by the borrower, but not recommended by the lender. This category also includes things like daily interest charges, homeowner's insurance, as well as flood and pest insurance, if necessary. It encourages borrowers to do their own shopping. "It prevents the worst abuses of price escalation on third-party charges for service providers selected by the lender," says Mr. Guttentag.
Read more!

Venice condos have juicy past - and views

The boardwalk building once housed a juice bar and apartments but has been converted into two condominiums by a former renter.
By: Dinah Eng: latimes.com
This contemporary condominium on the Venice boardwalk offers up-close ocean views through floor-to-ceiling glass walls and a rooftop deck that overlooks the beach.

The four-level contemporary condominium was designed by Jim Gelfat, an architect with Equinox Architecture Inc. in Culver City. The two units have five bedroom, four bathrooms and three half-baths in 5,000 square feet of living space.

The newly constructed condo, situated between a hotel and a gift shop, is one of the few single-family residences among the boardwalk's retail establishments.

The building's two units can be bought separately or together.

"I love the mix of this beach community," says Frank Murphy, a Venice developer who lived in the building when it was a juice bar with apartments above. "You've got everyone from the wealthy and famous to the homeless, with every demographic you can think of here. I purchased this with the idea of making it into a condo."

Jim Gelfat, an architect with Equinox Architecture Inc. in Culver City, has created a four-level home with exposed concrete walls and floors in most of the rooms, giving the building an urban, minimalist feel. Stenciled siding by artists Randy West and Nancy Monk wraps around the exterior in a blue wave pattern.

The lower Unit B has a living room/dining area with a fireplace, and a half-bath with storage space. The kitchen features white Caesarstone counters, Jenn-Air stainless-steel appliances - including stove, refrigerator and dishwasher -- and an open-frame, steel-beam ceiling.

The bottom floor of the unit is semi-subterranean, with windows that look up to the boardwalk. Each of the two bedrooms on this level has a bathroom. The master bathroom has a double shower with two shower heads and pebbled river rock flooring.

Unit A, on the upper floors, is slightly larger, featuring three bedrooms, a media room, den, two bathrooms and two half-baths. A private rooftop deck - with electrical, gas and water outlets - is designed for outdoor entertaining, with a panoramic view of the ocean from Point Dume to the Palos Verdes Peninsula.

The rooms in the rear are connected by a glass-enclosed walkway to the living room, which features a cantilevered window in the middle of the front glass wall. When the window is open, the sounds of the boardwalk and view create the illusion of being able to walk right out onto the beach.

Read more!

Uncle Sam’s New Guide to Mortgage Shopping

My guess is that the typical American puts more thought into the search for a flat-screen TV than into the choice of a mortgage lender.
By: James R. Hagerty: WSJ.com
Shopping for a TV is fairly straightforward. You read reviews online or in Consumer Reports; you eyeball a few models in the store to see if the image looks sharp; then you buy from whichever merchant has the lowest price. If the TV doesn’t work, the merchant gives you a new one.

Shopping for a mortgage is more complicated, less fun and infinitely more dangerous to your long-term financial interests. At the end of the process, you probably have no idea of whether you got the best deal available. Was the upgrade on those cherry kitchen cabinets really worth the high rate and fees you paid to the lender affiliated with your friendly home builder? Probably not, but that salesman sure was persuasive, and you were glad to be relieved of spending the next three days shopping for mortgages.

Now help is on the way from a most unlikely source: The U.S. Department of Housing and Urban Development, or HUD.

Federal rules that take effect Friday mandate a standard, three-page Good Faith Estimate that urges consumers to shop around for the best loan and helps them compare lenders’ offerings. The rules, announced by HUD in November 2008 but just taking effect this week, are an update of the Real Estate Settlement Procedures Act, a 1974 law known as Respa. (See WSJ story.)

One difficulty of shopping for mortgages is that the lender with the lowest rates often isn’t offering the best deal. High fees can wipe out the benefits of low rates, and little-noticed features such as prepayment penalties might blow up on you later on. Even for members of Mensa, it’s hard to compare different combinations or rates, “points” (paid in exchange for a lower rate), fees and other terms. Lenders often sprinkled in lots of confusing charges, such as processing and messenger fees, to pad their margins. Dickering over theses “junk” fees distracted borrowers from the bigger picture of total costs.

All of these complexities favor lenders, of course. The more confused you get, the less likely you are to realize you just got fleeced.

To address those problems, the new estimate form requires lenders to wrap all the fees they control into one “origination charge.” That lets you compare one lender’s fees with another’s. Jack Guttentag, a finance professor emeritus at the University of Pennsylvania’s Wharton School, recommends that borrowers focus on two items as they shop: the interest rate and the “adjusted origination charge,” which includes any points paid to lower the rate.

Good Faith Estimates have been around for decades, but there was no standard format. Under the new rules, lenders and mortgage brokers are required to give consumers the standard estimate forms within three days of receiving a loan application.

Lenders aren’t allowed to increase the origination fee from the estimate. Some additional charges, including title services and recording charges, can increase by as much as a combined 10%. Estimates for other charges, such as homeowner’s insurance and other services provided by third parties selected by the borrower, aren’t subject to such limits.

Title insurance typically is the largest fee, and the new forms let consumers know they don’t have to accept the insurer suggested by the lender. Mr. Guttentag says title insurance can be “vastly overpriced” and consumers should take the time to shop for it.

Settlement firms, which organize the closings of home sales, will be required to issue a new version of the HUD-1 form used in closings. This new HUD-1 includes a comparison of the estimated and final costs, as well as a summary of the loan terms.

Will all this make a big difference? Mr. Guttentag, who has been exposing the tricks of lenders and brokers for decades, thinks the new rules will help, though they aren’t a cure-all.

Much depends on whether Americans want to put in a bit of effort rather than simply accept the often biased mortgage advice of a real estate agent, home builder, broker or banker. The real estate agent may urge you to use an affiliate of his firm, or recommend the lender most likely to grant a loan quickly rather than the one with the best terms. The builder wants you to use his in-house lender. The brokers and loan officers are working for themselves, not for you.

When you’re trying to pick a new TV, you don’t rely on a TV manufacturer to give you an impartial review of the alternatives.
Read more!

Plan to demolish building on Wilshire Boulevard is opposed by L.A. Conservancy

The conservancy says the 1965 Columbia Savings building at La Brea Avenue is worth saving. Area residents worry that a planned 482-unit apartment and retail complex would add to congestion.
By: Cara Mia DiMassa: latimes.com
The stretch of Wilshire Boulevard between downtown and the Miracle Mile was for decades a center of commerce, with buildings once occupied by such business powerhouses as Union Bank, Texaco, IBM and Getty Oil.

In more recent years, it's been transformed into a residential hub, with a construction boom of mid-rise condo and luxury apartment buildings.

Yet for all of the momentum - more than two dozen residential developments either have been completed or proposed for the corridor - a backlash is now gaining steam, and it's centered on a mid-century former savings and loan building at Wilshire and La Brea Avenue.

The squat building, with a ribboned facade and a stained-glass skylight, is an example of a type of architecture that was prevalent in the years after World War II, when financial institutions pushed for bold buildings to symbolize their own emergence from staid practices and reputations.

Preservationists have joined with some residents in an effort to save the structure, which they consider architecturally significant, a gem of Modernist design that the public has only recently begun to appreciate. They have filed a request with the state of California to give the building landmark status.

Some residents are backing the request, saying the boom in mid-rise apartment complex construction along Wilshire has gone too far.

But the developers say that the building's significance has been overstated and that the neighborhood would be better served with the 482-unit apartment and retail complex they have proposed for the site.

Dale Goldsmith, a land-use attorney representing BRE Properties, the building's owner and developer, said the project "will reflect the demographics of the area."

At a hearing of the Los Angeles City Council's Planning and Land Use Management Committee on Tuesday, Councilman Dennis Zine called the project "well worth it for the community."

The committee approved the developer's plan Tuesday, sending it to the full council for final approval, which is expected as early as later this week.

But that, said Mike Buhler, the Los Angeles Conservancy's director of advocacy, is short-sighted.

He said that the city failed to consider the historical significance of the building and that the developer could put the structure, which is only a portion of the block that BRE wants to develop, to an alternate use such as a restaurant, store or gym rather than demolish it.

"We were surprised that the draft environmental impact report refused to recognize the building's significance in any way," Buhler said.

Should the building be recognized by the state as architecturally significant, the city would have to go back and reconsider that as a part of the environmental impact report. A hearing on the state matter is scheduled for Jan. 29, and the conservancy is asking the city to delay a vote on the Wilshire-La Brea project until after then.

The Columbia Savings building, which opened in 1965, is at the center of the conservancy's "60s turn 50" initiative.

The effort recognizes a class of buildings in Los Angeles from that era whose significance has not been widely acknowledged.

The building, which most recently served as a church, isn't mentioned in the city's definitive architectural guide, and the City Council overturned a recommendation by the city's Cultural Heritage Commission supporting the application for state landmark consideration.

The BRE design for the block, bordered by Wilshire, La Brea, Sycamore Avenue and 8th Street, calls for a public pocket park as well as undulating edges and double rows of trees - all efforts that Goldsmith said were aimed at softening the building's effect on the neighborhood and keeping it from being too monolithic. A previous proposal called for a structure at Wilshire and La Brea to be 17 stories; that was scaled down to seven stories after community objections.

The back-and-forth over the project comes on the heels of a profound change in the Wilshire Corridor, with sleek glass-and-steel towers being added to the cityscape while formerly shuttered office towers have been rehabbed as residences.

Goldsmith said he's worked on five projects in the area, and BRE finished the 5600 Wilshire project, just west of La Brea, earlier this year.

Because Wilshire is considered a transit corridor - with rapid bus lines and Metro stops - and because it's one of the few places in the city where high-rise towers are allowed, many developers see the changes along the boulevard as a symbol of the city's evolution.

The economic slowdown has had little effect on their progress, and longtime residents worry that the growing number of people along the corridor will put added pressure on transportation and infrastructure that is already struggling to keep up.

In a letter to the city planning department, resident Susan Baker objected to what she called "the Manhattanization" of her neighborhood, and she worried that the Wilshire-La Brea project would bring more traffic and noise pollution.

"This entire area is becoming overbuilt with brand-new apartments," Baker wrote. "Who $ay$ we have to have $till more?"

Jim O'Sullivan, president of the Miracle Mile Residents Assn., said he saw residents divided about the Wilshire-La Brea project: Some welcomed the development of the building and the area around it, and others objected to even more construction in their area.

But he said that almost everyone worried what effect the economy would ultimately have on their area. Already, he said, he's noticed that potholes are not fixed as quickly, and streetlights can be out of order for weeks.

"I think at the moment, everybody is just holding their breath with what is going on in the city and elsewhere," O'Sullivan said. "We're trying to figure out what happens next."
Read more!

Mortgage Applications in U.S. Increased 2.1% Last Week, MBA Index Shows

Mortgage applications in the U.S. rose last week, led by a gain in purchase applications as mortgage rates approached historic lows.
By: Bob Willis: Bloomberg.com
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 2.1 percent to 613.7 in the week ended Nov. 27 from 601 the prior week.
The group’s gauge of purchases gained 4.1 percent, a second consecutive advance, while its measure of refinancing climbed 1.7 percent.

Cheaper borrowing costs and a tax credit for first-time homebuyers are giving demand a lift and may pave the way for a self-sustaining housing recovery. An unemployment rate that is forecast to exceed 10 percent through the first half of 2010 is one reason why any improvement is likely to be uneven.

“The combination of falling rates, the tax credit extension and improved affordability point toward a rebound in housing demand,” Michael Larson, a housing analyst at Weiss Research in Jupiter, Florida, said before the report. “Purchase applications should enter 2010 with the wind at their back.”

The purchase index rose to 232.3 from the prior week’s 223.1. The measure reached a 12-year low in mid-November. The mortgage bankers’ refinance gauge increased to 2866.4 last week from 2818.7, today’s report showed.

The share of applicants seeking to refinance loans rose to 72.1 percent of total applications last week.

Rates Fall

The average rate on a 30-year fixed-rate loan declined to 4.79 percent last week, the lowest since May, from 4.83 percent, according to the mortgage bankers group. The rate reached 4.61 percent at the end of March, the lowest level since the group’s records began in 1990.

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $524, or about $43 less than the same week a year earlier, when the rate was 5.48 percent.

The average rate on a 15-year fixed mortgage fell to 4.27 percent from 4.32 percent. The rate on a one-year adjustable mortgage declined to 6.56 percent.

President Barack Obama on Nov. 6 extended the deadline for a tax credit of as much as $8,000 for first-time buyers to April 30, and added buyers who have owned a home for at least five years.

The tax credit, together with foreclosure-driven declines in prices and low rates, has helped boost housing sales from record low levels this year.

Mounting Joblessness

Even so, unemployment at a 26-year high is making most people reluctant to buy a home. Tighter credit standards are making it harder to get mortgages for those who want to buy.

Homebuilders, while seeing signs of improvement, remain cautious. Beazer Homes USA Inc. had a 2.4 percent gain in new orders in its fiscal fourth quarter, helping it post its first quarterly profit in three years, the Atlanta-based builder said Nov. 10.

“Elevated unemployment and rising foreclosure activity make it difficult to predict when and to what extent the housing market will sustainably recover,” Chief Executive Officer Ian McCarthy said in the statement.

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.
Read more!

Obama administration pushes to make mortgage modifications permanent

New guidelines follow complaints involving restructured mortgages meant to keep homeowners from foreclosure. Lenders and servicers could face sanctions if requirements are not met.
By: Jim Puzzanghera: latimes.com
The Obama administration today announced a renewed push to get mortgage companies to convert hundreds of thousands of temporarily restructured home loans into permanent ones by the end of the year to help keep struggling homeowners from falling into foreclosure.

As part of its aggressive action, the administration is summoning executives from the nation's top mortgage servicers to Washington next week to prod them to speed up their efforts.

It also is sending what administration officials described as three-person "SWAT teams" to the offices of those firms to help them obtain the necessary documents from borrowers and trouble-shoot problems.

"In our judgment, servicers to date have not done a good enough job in bringing people a permanent modification solution," Assistant Treasury Secretary Michael Barr said.

The administration is hoping to embarrass mortgage servicing companies into doing more to make trial modifications permanent by highlighting those that are not performing well. But it also could levy penalties or other sanctions against laggards based on the agreements they signed to participate in the program.

"Servicers that don't meet their obligations under the program are going to suffer the consequences," Barr warned.

The moves come amid complaints of bureaucratic nightmares from people who have received the short-term reductions in their payments but have been unable to get their servicer to make the changes permanent. The mortgages have been altered under the administration's $75-billion Home Affordable Modification Program, which uses financial incentives to get banks and other mortgage holders to reduce the payments for homeowners who meet certain qualifications.

The program has temporarily modified more than 650,000 mortgages as of Oct. 30, with an average monthly payment reduction of $576. But few of those three-month trials are estimated to have been made permanent. As of Sept. 1, only 1,711 trial modifications had become permanent, according to the oversight panel monitoring the $700-billion Troubled Asset Relief Program. TARP money is used to fund the program.

The Treasury Department, for the first time, will release its own numbers next week. But Barr said the number was "low."

About 375,000 of the trial modifications are eligible to be made permanent by the end of the year. About a third of the homeowners with those temporary reductions have submitted the needed documents, including current income statements, so servicers can decide on permanent modifications, said Phyllis Caldwell, head of the Treasury Department's Homeownership Preservation Office.

"These homeowners, who took the time and effort to complete documentation, deserve a decision by their servicer," she said.

The administration's new plan focuses on increasing accountability by mortgage servicers. The leading mortgage servicers will be required to submit a schedule of their plans to reach a final decision on each loan for which they have the proper documentation and to send the borrower a permanent modification agreement or denial letter.

Many people in the program have complained of a bureaucratic runaround and inability to get a straight answer on their status from their mortgage holder.

Special account liaisons from the Treasury Department and Fannie Mae will be assigned to the eight largest servicers and monitor the progress as frequently as daily. The administration will require those companies to submit twice-daily updates throughout December on their progress. Mortgage servicers that fail to meet standards they agreed to as part of the program "will be subject to consequences, which could include monetary penalties and sanctions," administration officials said.

The administration also is providing new information for homeowners on its website, www.makinghomeaffordable.gov, including links to lists of documents and a new instructional video, to help them get their trial modification made permanent.
Read more!

Guidelines Aim to Ease Short Sales

The Obama administration laid out final guidelines on Monday that should make it easier for some financially troubled borrowers to sell their homes.
By: RUTH SIMON: WSJ.com
The guidelines are designed to encourage the use of short sales, transactions in which the borrower with lender approval sells the home for less than what is owed on the loan.
The program also makes it easier for borrowers to voluntarily transfer ownership of properties through a "deed in lieu of foreclosure."

Short sales can result in higher prices than foreclosures and can be less damaging to local neighborhoods, in part because homes aren't left vacant and exposed to vandalism. But these transactions are often difficult to complete.

Under the plan, borrowers will receive $1,500 from the government if they sell their homes for less than the amount of their mortgages. Mortgage-servicing companies will also receive $1,000 for each completed short sale. The program is open to borrowers who may be eligible for the government's loan-modification program, but don't end up qualifying, or are delinquent on their modification, or request a short sale or deed-in-lieu transaction.

The short-sale program is the latest addition to the Obama administration's $75 billion foreclosure-prevention plan, which includes incentives for mortgage companies and investors to rework troubled loans. The government first said in May that it would include short sales in the program, but it has taken months to finalize the details.

Under the new guidelines, second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgages, meanwhile, can collect up to $1,000 from the government for allowing such payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.
Read more!

Give a Home for the Holidays

Tired of the offerings at the mall? Consider giving your children something grander, like the gift of a down payment to buy a home—or even a home itself. Uncle Sam encourages such generosity.
By: JUNE FLETCHER: WSJ.com
'Tis the season of giving. But if you're tired of the offerings at the mall, why not consider giving your children something grander, like the gift of a down payment to buy a home—or even a home itself?

Uncle Sam encourages such generosity, at least within limits (the IRS site has details). You and your spouse are each allowed to give gifts of $13,000 of money or property to as many people as you want, without triggering taxes for you or the recipients. If you give more than this amount to any one person, the excess counts, dollar for dollar, against your $1 million lifetime gift-tax exclusion ($2 million for married couples).

So if you and your spouse wanted to give $50,000 to your son for a down payment on a house, together you could gift him $26,000 this year, and $24,000 next year, tax-free.

This gift could help him qualify to buy a home before the federal government's tax credit stimulus expires early next summer. If the gift allows him to make a down payment of 20% or more of the sales price, he'd also avoid having to pay private mortgage insurance.

Or, if you are interested in selling your home to your child, you could gift some of the equity in the home rather than cash. Lenders usually will accept such a gift, but may require two appraisals to make sure that the home is really worth the sales price, and will ask you to sign an affidavit affirming that you are giving a gift and don't expect repayment.

Alternatively, you could finance your deposit-poor child's second mortgage. Then you and your spouse could each give $13,000 to your child, and an equivalent amount to the child's spouse, until the loan is paid off. Or you could transfer a percentage of interest in the property each year, up to $13,000 per person, until the property belongs to your child.

It may make sense to give more than the tax-free limit each year if you think you'll be subject to the estate tax, which kicks in for those worth more than $3.5 million when you die (or $7 million for married couples), according to San Diego certified public accountant Michael Fitzsimmons. That's because if you live more than three years after the date of the gift, any appreciation on the property, plus the original value of the gift, escapes estate taxes.

What if you want to gift a property that has decreased in value since you purchased it? Not so uncommon in these post-bubble times. If you own a rental property that has dropped in value, Mr. Fitzsimmons says that it's better to sell it and take a tax loss than to gift it, since neither a donor nor a recipient can deduct a tax loss on a decrease in value that happened before the date of the gift. Losses on primary and vacation homes are non-deductible.

And what if the mortgage on the property exceeds the home's current value? It's possible to give such a property away, but according to Jenkintown, Pa., certified public accountant Michael Solomon, most lenders wouldn't allow ownership to be transferred unless the recipient was in as good or better financial shape than the donor—and might also require that the donor remain on the mortgage. Meanwhile, if you're asked to take on a home that's underwater, remember that you can't return it if it doesn't fit your lifestyle. "Declining the gift does make sense," says Mr. Solomon.
Read more!

Sales of existing homes surge 10.1% in October

Even as builders pulled back their construction of new homes in October, buyers snapped up previously owned properties at the briskest pace in more than two years, a national organization said this morning.
By: Alejandro Lazo: latimes.com
The National Assn. of Realtors in Washington said sales of previously owned homes increased 10.1% to a seasonally adjusted annual rate of 6.1 million units in October from a downwardly revised pace of 5.54 million in September.
That is up 23.5% from the seasonally adjusted annual rate of 4.94 million units in October 2008. The last time the sales pace was that swift was in February 2007.

The buying - motivated by low interest rates, cheap housing and a credit for first-time buyers - pushed housing inventory at the end of October down 3.7% to 3.57 million existing homes available for sale, which represented a seven-month supply at the current sales pace, according to the Realtors group.

“The supply of homes on the market is now at the lowest level in over 2 1/2 years - we’re getting closer to a general balance between buyers and sellers,” Lawrence Yun, chief economist for the group, said in a statement.

The national median existing-home price for all housing types was $173,100 in October, down 7.1% from October 2008. Distressed properties accounted for 30% of sales in October.

In the West, which includes California, sales of previously owned homes increased 1.6% to an annual rate of 1.31 million in October and are 12% above a year ago. The median price in the West was $220,200, which is 14.7% below October 2008. It was the weakest performance for both sales and housing price improvement among the four national regions.

While a rush of first-time buyers to use the credit ahead of its initial Nov. 30 tax credit helped boost sales in October some economists are predicting a drop-off in sales in the winter months despite the credit’s extension and expansion earlier this month.

In a note to clients this morning Patrick Newport, U.S. economist for IHS Global Insight, predicted that given that the Mortgage Bankers Association's purchase Index - a measure of mortgage loan application volume - dropped to its lowest level in 12 years in its most recent release, a December sales plunge is likely.

“This surge may last one more month,” Newport wrote.
Read more!

New Tax Credits Benefit Both First Time Buyers and Current Homeowners

Closing deadline extended to June 30, repeat buyers offered up to $6,500
By: Annalisa Burgos: FrontDoor.com
First time homebuyers aren't the only ones who can claim a tax credit when they purchase a home. Now current homeowners can take advantage of the tax break too, if they qualify.

President Barack Obama signed into law a $24 billion economic stimulus bill on Friday, which includes an extension and expansion of the popular first time homebuyer tax credit. It was set to expire on Nov. 30. Prospective buyers now have until June 30, 2010, to close on their purchase and will need to submit documentation with their tax returns to claim the credit. The new program is estimated to cost $11 billion. Here are the details:

FIRST TIME BUYERS

Credit: Equal to 10 percent of the home's purchase price, up to $8,000

Who Qualifies:

    •Those who haven't owned property in the last three years

    •Those with income up to $225,000 for couples and $125,000 for individuals
     (credit phases out for people who make more than these amounts)

    •Must be at least 18 years of age to claim credit

    •Purchase price must be $800,000 or less

Deadlines:

    •Have until April 30, 2010, to enter into contract for a home purchase

    •Have until June 30, 2010, to close on the purchase

CURRENT HOMEOWNERS

Credit: Equal to 10 percent of the home's purchase price, up to $6,500

Who Qualifies:

    •Those who have owned and lived in their principal residence for at least five
     consecutive years during the past eight years

    •Those with income up to $225,000 for couples and $125,000 for individuals
     (credit phases out for people who make more than these amounts)

    •Must be at least 18 years of age to claim credit

    •Purchase price must be $800,000 or less

Deadlines:

    •Have until April 30, 2010, to enter into contract for a home purchase

    •Have until June 30, 2010, to close on the purchase

In addition, buyers have another year to take advantage of the higher loan limit for mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac - set at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost housing markets. The limit in normal markets will remain $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac.

What this all means is that many more buyers qualify for a tax credit. So what are you waiting for? If you're even remotely considering buying a home, now's the time to do it. Don't let the first time buyers have all the fun.
Read more!