Tuesday, December 27, 2005

Inverted Yield curve...

The Yield curve has just inverted!
An "Inverted Yield Curve" means the 2-Year Note Yield moves above the 10-Year Note Yield. But more importantly, history has shown this to be a recessionary signal. We don't see an Inverted Yield Curve signaling a recession this time. Why? Our Fed Funds rate has risen 325bp since June 2004. The 2-Year Note Yield moved higher with the Fed hikes since it is short-term paper. But, the 10-year Note Yield actually moved sideways to lower during this timeframe because of the inflation-fighting mechanism behind the hikes. Longer-term paper is more concerned with inflation rather than actual Fed moves. Bottom Line...Things are different this time because the Fed moves have pushed the 2-Year Note Yield higher, while foreign buying and contained inflation have helped reduce the 10-year Note Yield. The economy is and will continue to be strong and a recession is not in the cards.
Stocks may be set for a "Santa Claus Rally" and a run at the 11,000 mark this week. But first the Index has to break through the 10,940 barrier. This pesky level has been a solid ceiling of resistance for stocks many times during 2005. Each failed attempt to break this level has resulted in stocks dropping and bonds improving. It is no coincidence that mortgage bonds are near a ceiling in their range as well at this time. Bond traders will closely watch stocks to see how they react. If stocks bust above the ceiling, bond prices will drop. But if stocks again fail to break through, mortgage bonds should improve nicely. Remember, stocks and bonds often compete for the same investment dollar.

Monday, December 19, 2005

Tax Planning Thoughts...

Many people start seriously thinking about tax season after the start of the New Year…which is actually a bit too late. Ideally, taxes should be planned two years at a time to save the most tax money. So before the year is over, it’s wise to look at the acceleration or postponement of deductions and income between years. For example, many taxpayers want to minimize the current year’s tax bill, so making sure your state income tax is paid in December rather than January can help. Additionally, you can pay Real Estate taxes and even January’s home loan payment in December to beef up your deductions. In fact, you are eligible to take the deduction if the checks are mailed in December…even if they are not cleared until January.
But watch out for AMT, Alternative Minimum Tax, which can erase your deductions. Testing to see if you fall into this trap may cause you to do the opposite – pushing some deductions off until next year, paying them in January rather than December. The same holds true for income. It is sometimes possible to accelerate or delay commissions, bonuses, billings, etc…and that can help you maximize tax savings.
You should always consult your tax pro on the strategy that is best for your own situation, but you can start by visiting www.irs.gov/newsroom. This link contains a list of the new inflation adjusted dollar amounts for many important tax figures for 2006. Comparing the allowable deductions for 2006 versus 2005 will help you choose in which year to take advantage of certain deductions. And remember, the time to consult with a CPA is now, not after the New Year begins…so if you need a referral for a qualified tax planner, please contact me.

Thursday, December 01, 2005


More than 28,590 families in California will be able to benefit from Fannie Mae's and Freddie Mac's recent announcements that each will increase its single-family mortgage loan limit from $359,650 to $417,000 in 2006, according to an analysis by C.A.R.

"While this is good news for many homebuyers, Fannie Mae's and Freddie Mac's new loan limits do not go far enough to benefit most homebuyers in California," said C.A.R. President Vince Malta. "Conforming loan limits need to more accurately reflect the cost of housing in California, where the median price of a home is more than double that of the nation.

"The current median home price in California is $538,770, more than 29 percent higher than the national conforming loan limit of $417,000. In addition, California has 19 counties with a median home price above the national conforming loan limit.

Friday, November 25, 2005

Another view about 'bubbles' from Realty Times

Real Estate Bubble Theorists No More Than Squealers
by M. Anthony Carr
Have you ever squirted a little kid in the back with a stream of cold water on a hot summer day? I've seen this throughout our neighborhood and it's actually sadistically humorous to watch the little tykes squeal and run away from their parental tormentors.
Those who keep whining about the coming "burst" of the "real estate bubble" remind of these squealers. Sometimes I feel like the lone voice of reason crying out in the wilderness.
The real estate bubble naysayers whine about the "bubble" as if the whole national real estate market were nothing more than another over-inflated stock exchange -- like the New York Stock Exchange and Nasdaq. Folks -- it's not. Real estate, like politics, is local and I wish those real estate journalists scaring the buyers with quotes from their stock market experts would just stop what they're doing and consider some real facts.
Fact: The top hot real estate markets in the U.S.A. are also the top hot job markets.
Fact: Houses are where the jobs go at night.
Fact: Without enough houses in a hot job market, your housing inventory will escalate in price.
Fact: There are "pockets" of over inflated real estate
Fact: Unlike the stock market -- you have to live somewhere. Whether renting or buying, there is an automatic necessity for the ownership of real estate -- either by a homeowner or an investor.
There is no built-in necessity for owning stocks, thus all comparisons between the two products is moot.
In the midst of the hot markets across the country (where the squealing is the loudest and most piercing) citizens of those jurisdictions must look to the local economy to determine their risks.
In the Washington, D.C. area, the Northern Virginia Association of Realtors looks at those numbers every single year at its annual Economic Summit held at George Mason University. Unfortunately, most of the press gives it passing coverage -- I think especially this year, because the economists did not fall in line with "the sky is falling" mantra heard by critics of a strong housing market.
The summit was reported on in the trade association's latest monthly publication, The Update. "In a nutshell, you couldn't be in a better market," according to Dr. Stephen Fuller, Director for the Center for Regional Analysis and School of Public Policy at George Mason University. "If you're worried about some bubble, or slow down, or something that's evil, just put yourself in any other market," he said. "They envy us."
To put it bluntly folks, we're going to have a housing problem in the future -- but it's not the bursting kind. It's the "How can I make $60,000 a year and have to live out of the trunk of my car" kind. You see, in the Washington, D.C. area and other hot job market areas, the reason housing is climbing in value is simply because there's not enough of it.
Dr. Fuller reports the regions surrounding Washington, D.C. have done a fantastic job of drawing jobs to the area -- 287,000 in the last five years. However, they have done a sorry job in providing houses for all these people. This year, there's a deficit in housing in this region of 463,300 units. That means that while people can take jobs here, they won't be able to live nearby to work them. They'll have to commute in a couple of hours.
The numbers don't get any better, Fuller says. By 2030, there will be a shortfall of housing units in the Washington, D.C. area of 716,000 units.
Okay, bubble squealers -- where's the bubble?
The vocabulary being used by journalists is leftover from when the stock market inexplicably rose in value when there was no reason but hype driving the market. Companies were raising lots of venture capital and creating products that they couldn't sell, meaning they ate through the borrowed funds and finally burst.
In hot real estate markets, there's no hype. There are real jobs being created by real companies, creating real products and selling them to real consumers. Real money is being made and these real companies need real employees to make it happen -- local governments should wake up and realize that we need real houses to put them into as well. If you want to quell the fear -- build more houses.
Now -- would all the squealers please stop? You're giving me a headache.

Wednesday, November 23, 2005

housing bubble? read on...

Market-by-Market Home Price Analysis Reports October 2005 These downloadable 10-page reports show that the facts simply do not support the possibility of a housing bust -- not for these 130 markets and not for the nation.


These reports were done by the National Association of Realtors... FYI

Tuesday, November 22, 2005

Local Real Estate Thoughts

Welcome to the Holiday time of year!
If you turned to CNBC business news today, all you saw was a local real estate lady talking about how she was selling all her speculative properties. She was built up to be some kind of GURU a couple of years back. Now they interviewed her again and she said she is selling all her speculative "flipping" investments now. That all the money has been made! It was all pretty scary until you realized that her properties were along Century Blvd in Inglewood. I would be selling them too!
If you stayed tuned in, another story that was getting very little press was the Feds indication that they were done raising the 'discount' rate. This was big news and turned the stock market around in a hurry. This could indicate that mortgage rates have topped again, at least for the next 5 weeks or so.
It is true that properties are staying on the market longer now, but I can tell you first hand, there are still buyers all around the South bay. As long as you price your home in line with a comparable sale in your area, it will sell. Remember, it is the holiday time and those buyers that are out there now are real.
Call me, I will help you get the job done.

Monday, November 21, 2005

Real property Assessments / Proposition 13

Real Property Assessments

The California Constitution requires that all property be taxed, unless otherwise exempted under the California Constitution or United States Constitution. Article XIII-A of the California Constitution requires that real property be reappraised only when such property undergoes a change of ownership or has new construction.

The assessment roll, and tax bills, show land values and improvement values. "Improvements" include buildings or anything of a structural nature (such as swimming pools, paving, etc.). When you have an "improvement" value, it doesn't usually mean that you have recently "improved" your property.

Proposition 13

This was passed by the voters in June, 1978 and subsequently changed the taxation of real property in California. As a result :
* The average tax rate is approximately 1.25 %
* Real property is reappraised only when:
1) Change in ownership occurs
2) New Construction is completed.
3) New construction is partially completed on the lien date (Jan. 1); or
4) A decline in value (from Prop 8) *

* Except for these four instances, real property assessments cannot be increased by more than 2% annually, regardless of the rate of inflation.

Change of ownership Reappraisals

When a publicly recorded transfer occurs, the Assessor generally receives a copy of the deed and determines whether a reappraisal is required under state law. If it is required, an appraisal is made to determine the new market value of the property. The property owner is notified of the new assessment. The property owner has the right to appeal the value, if he/she does not agree with it.

The transfer of property between husband and wife does not cause a reappraisal for property tax purposes. This includes Transfers resulting from divorce or death. Also, the addition of joint tenants, whether related or not, does not result in a reappraisal. There are other exclusions.

New Construction Appraisals

Copies of building permits are sent to the Assessor's Office by the cities and County. New buildings, additions, and other structures require an appraisal. Structural repairs, replacement, or maintenance are not approachable in most situations.

We appraise new construction and add it to the existing land or improvement assessed value. Thereafter the new assessed value does not change except for the annual 2% trend.

See the complete brochure in the adobe 'acrobat' format here.

Friday, November 18, 2005

Interesting 'Interest Rate' perspective...

Don't Let Those Rates Scare You - by David Reed
I just did a radio interview with a station out in Los Angeles. The topic was, of course, about interest rates and the mortgage market in general. Another guest on the show was a Financial Planner that was also going to give his two cents. Or one cent, depending upon your perspective. The host of the show asked us both, "So, rates are at some of the highest levels we've seen for a couple of years … what will that do to the housing market?"
Now, me being a Texan, I minded my manners and let the other gentleman speak first. "Well," he began "it doesn't look good at all. Rates are up nearly .5 percent since earlier this year and that means thousands of additional dollars the homebuyer will have to pay." Apparently he did some math beforehand because he continued with, "On a typical $500,000 loan (this is California, remember) an extra .5 percent means another $160 more each month in payments. Over 30 years, that means another $57,000 over the life of the loan. Home prices are high enough without this."
What a nerd. Yeah, rates have gone up, but gone up from what? From record lows, that's what. Let's not get too spoiled here. 30 year fixed rates used to be in the high sevens and low eights way, way back in what -- September 2000? Give me a break here. Just take any historical mortgage rate chart and you'll see that compared to rates going all the way back to the Paleolithic period we're still in pretty good shape. And I think it's irresponsible for so-called "pundits" to tell people how screwed they'll be if they buy a house right now.
The "housing bubble" we've been reading about could also be a self-fulfilling prophecy if we're not careful. An interest rate goes from 6.00 to 6.50 percent and the sky is falling? Yeah, yeah I know. "But David, that knocks a lot of people out of homeownership." Fair enough, but buy a smaller house, I say. Instead of a $300,000 loan, get a $285,000 one. That's the typical qualifying difference between 6.00 and 6.50 percent.
"Well, David, much of the market now is for investment homes … we can't kill that." Okay. But nobody's killing anything, the market's simply adjusting. If people want to buy investment properties they're going to have to buy fewer or smaller ones or negotiate a better deal. Heck, any good Realtor can do that one for you.
It's just that I get steamed when an "expert" predicts disaster and encourages people not to buy something because of an interest rate move. And a small one at that. Will there be fewer homes sold in 2006? Probably. But fewer than what? 2005? 2004? 2003?
I suggest we all kick back a little bit and understand that often when consumers read an article or listen to a radio show that just sometimes they might actually be paying attention. "Gosh honey, may be we shouldn't buy that home after all. That guy just said we'd lose $57,000." Fair debate and honest discussions are one thing. Scaring consumers is quite another. Published: November 18, 2005

Wednesday, November 16, 2005

Prop 60 and 90

Many seniors ask me about Prop 60 and prop 90. I always recommend talking to your CPA but here is a rough explanation:

7 COUNTIES WHICH ACCEPT PROP 90 (Current as of 6/1/2005)Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura. [Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Prop 90 program.]
Props 60 and 90 apply if you "trade down" (i.e. the new home costs less than the sales price of the old home).
> If you buy New Home 1st; then sell the Old Home, you must go down in price.
> If you sell the Old Home1st; then buy the New Home:
In 1st 365 days after the sale of Old Home, you may go up 5% in the purchase price of New Home.
If you buy New Home more than 1 year from the sale of Old Home, but less than 2 years, you may go up 10%.

Sunday, November 13, 2005

Thanks Everyboy!

I had a great OPEN House today at my Border Ave Listing. We has 19 carloads of people looking for a new home. This kind of interest does not make me think the market is slowing. If you have not seen this 'better than new' patio home in the gated community, please call me ASAP.

Friday, November 11, 2005

My current listings

2792 Border Ave, Torrance, CA. 90501
3 BR, 2.5 bath, 2050 sq.ft.
Built in 2004! Fabulous gated community of 28 homes.
See the FLYER here.

25151 Eshelman Ave, Lomita, CA 90717
$700,000 4 BR, 1.75 bath, 2024 sq.ft.
Spanish single family home. Very private and upgraded.
See the FLYER here.

November 2005 housing survey

Here is the latest housing survey by Ron Becker.
SOUTH BAY NOVEMBER 2005 He is a local Appraiser who puts out his survey once a month.
I show it because it gives you another perspective. Real Estate is all about knowledge and facts.

Jack Posted by Picasa

South Bay Area Real Estate Blog

I have been asked by many of my clients to create this Real Estate Blog. Since I have been doing business with most of them for years, they where hoping I would keep them informed via the internet.

I agreed that it is a good idea. I would much prefer this method rather than emailing everyone individually all the time. I will post my new listings here and any other real estate related info that I feel is worth passing on to you.

Thank you for all your support over the years. I look forward to doing business with you all in the future.