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Despite a housing market that appears to be slowing down, construction jobs should continue to help drive job growth in Southern California over the next few years, according to a new report.

In a paper produced as part of the quarterly UCLA Anderson Forecast released Thursday, UCLA economics professor Jerry Nickelsburg said that sliding home sales volume — the number of homes sold in Southern California dropped 15.1% in May compared with last year, according to San Diego-based DataQuick — is masking a housing market that is becoming increasingly, as he put it, “normal.”

And when markets are normal, builders build.

The decline in sales compared with last year largely reflects an end to foreclosures and other so-called distressed properties that were flooding onto the market. Now that deluge is over, and inventory mostly consists of properties that traditional homeowners are trying to sell. That is a much easier environment for home builders to navigate, Nickelsburg said, which will make them more likely to launch new construction.

“This is a market where the transactions are not banks blowing out their supply [of foreclosures], which is very hard to predict,” he said. “You have a much more normal market. Prices are rising. That brings people off the sidelines, which increases supply. And all that gives builders some confidence that they’re going to get the prices they forecast.”

So, Nickelsburg said, they start breaking ground. Building permits in Los Angeles and Orange Counties grew 44% last year, according to data from the Census Bureau, and were up an additional 25% through March.

This is a good thing for the region’s economy, analysts say. One in every eight new jobs created in California since the start of 2013 is in construction, Nickelsburg notes. If the decline in sales reflected a drop in demand, that probably would dampen California’s relatively strong job growth. Instead, he said, building is likely to keep pushing the job market forward, at least to a point.

“We have no expectation of getting back to when we had 1 million people on construction payrolls” in the mid-2000s, he said. “But getting back to something like 700,000, we can do. And those are good jobs, reflective of a healthy economy.”

Overall, the UCLA Anderson Forecast predicts that job growth in California will pick up speed over the next year and a half, with nonfarm payroll employment growth of 1.8% in 2014, 2.3% in 2015 and 2.1% in 2016.

The unemployment rate, the forecast estimates, should drop to 6.8% next year and 5.9% in 2016.

It also predicts that West Coast cities like Los Angeles will continue to draw large amounts of Chinese investment as that country’s real estate bubble continues to deflate and investors seek safer havens for their money.

But nationally, the report states, “something is seriously wrong,” with a variety of long-term factors keeping this economic recovery from taking flight. Still, the forecast predicts gross domestic product growth of 3.6% in the second quarter as the economy bounces back from a tough winter, followed by solid but unspectacular 3% growth into 2015.

Twitter: @bytimlogan

Copyright © 2014, Los Angeles Times



Here’s Why Owning Your Own Home Really is a Good Investment

by The Real Estate Faction on May 6, 2014

By Amanda Alix| More Articles May 3, 2014 | Comments (0)  The Motley Fool

Source: Flickr / American Advisors Group.

According to a recent Gallup poll, more Americans are beginning to view real estate as a viable long-term investment. Thirty percent of those surveyed early last month took this view, up from 25% just a year ago. Gallup credited an improving housing market as being the chief driver of the change in popular opinion on this matter.

But, wait. Some experts, notably Yale economics professor Robert Shiller, disagree heartily with this view. In interviews over the past couple of years, Shiller referred to his research in which he studied home price appreciation from 1890 to 1990. He found that, considering costs of construction and inflation, homes really didn’t appreciate in value at all.

Does that mean that buying a home is a lousy move? Not at all, and here’s why.

How do you define “investment”? According to Investopedia, an investment is the purchase of an asset “with the hope that it will generate income or appreciate in the future“. Therefore, you may purchase a single-family house with the hope that it will appreciate, and it becomes an investment. Whether it is a good investment, of course, remains to be seen. Buying a duplex, by this logic, would qualify as a good investment, due to the ability to rent one side, therefore generating income, while living in the other.

But what if, as Shiller has suggested, you forgo buying altogether, and rent? You could then take the amount of a home’s down payment and invest it in another vehicle, such as stocks. Currently, the S&P 500, for instance, has returned an average of 7.3% over the past 10 years.

Due diligence is key That sounds a whole lot better than the 0% return on housing that Shiller refers to, doesn’t it? But that scenario presupposes that you leave that money alone for the long term. Buying and selling at the wrong time can cost you big time, and, according to recent data, most people hold onto stocks for only around six months. Many buy high and sell low, eroding returns.

The same goes for housing, as those who became caught up in the foreclosure crisis can attest. Even the investment property scenario can sour quickly if you pay too much for the property and cannot secure a high enough rent to cover your expenses.

Buying a home is, like any investment, deserving of thoughtful due diligence. After all, you have to live somewhere, and paying rent is not an investment of any sort. At least those monthly mortgage payments will net you an asset that you will eventually own free and clear. If you plan ahead to pay off your home loan before retirement in order to reduce expenses, your residence becomes an integral part of your long-term retirement plan, as well.

Interestingly, the Gallup poll respondents who were most likely to say that buying real estate was a good long-term investment were those who owned their own homes – proving that home ownership can be – and often is – a great investment.

Owning a home isn’t the only tax “loophole” Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report “The IRS Is Daring You to Make This Investment Now!,” you’ll learn about the simple strategy to take advantage of a little-known IRS rule. Don’t miss out on advice that could help you cut taxes for decades to come. Click here to learn more.







Adjoining Owners Equally Responsible for Shared Fences and Boundaries

by The Real Estate Faction on October 14, 2013

Commencing January 1, 2014, adjoining landowners must share equally the
responsibility for maintaining boundaries and monuments between them. Adjoining
landowners are presumed to share an equal benefit from any fence dividing their
properties, as well as equal costs for construction or maintenance, unless
otherwise agreed in writing. This new law also provides specific procedural
requirements for an owner who intends to incur costs for a division fence to
notify the adjoining owner of the estimated costs and other information.
Existing law enacted in 1872 which requires a homeowner who fully encloses a
property to refund a neighbor a just proportion of the value of a division
fence has been repealed. Assembly
Bill 1404



Existing home sales up 6.5% as housing recovers

by The Real Estate Faction on August 27, 2013

Tim Mullaney, USA TODAY7:15 p.m. EDT August 21, 2013

Existing home sales rose 6.5% in July, reaching their highest level in nearly four years, the National Association of Realtors said Wednesday.

Homes sold at a 5.39 million seasonally adjusted annual rate, the group said, handily beating economists’ forecasts of a 5.15 million sales pace. The sales rate was up 17% from the same month last year, and the highest since November, 2009.

“We haven’t had three straight months of 5 million or greater since the second quarter of 2007,” NAR spokesman Walter Molony said. “To go back and find a month with a higher sales volume, without the benefit of federal tax credits, you have to go back to March 2007.”

The ongoing strength of the housing market was cited in minutes of the Federal Reserve’s Federal Open Markets Committee, released Wednesday, as a primary reason the Fed thinks economic growth will accelerate by later this year.

The key for the economy is whether the stronger market, coupled with a shortage of homes for sale, will prompt home builders to step up construction and add jobs. Moody’s Analytics says a jump from less than 1 million new homes a year to 1.7 million, which it considers the underlying level of demand for newly built housing, could add more than 3 million jobs by 2015.

“More homebuilding is the key to getting back to full employment,” Moody’s chief economist Mark Zandi said in an e-mail. “The day we are back to 1.7 million units annualized is the day the unemployment rate will fall below 6%.”

The Realtors said July’s median home price, where half of all homes are more expensive and half are less expensive, was $213,500, up 14% from last July. That was the biggest year-over-year gain since 2005.

The number of sales in the market may be slowed soon by higher interest rates, but tight inventories of homes for sale should keep prices rising, NAR Chief Economist Lawrence Yun said.

“Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines,” he said. “The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.”

Interest rates on 30-year mortgages have risen by a full percentage point since May, driven by speculation about when the Federal Reserve will slow the pace of its bond-buying program. For the buyer of a median-price house who puts 20% down, that raises the monthly payment by about $100.

“The bottom line is that the housing market remains in a recovery phase, albeit one that could be tempered by higher mortgage rates and worsening affordability,” Barclays economist Michael Gapen said in a note to clients after the NAR released its report. “The recovery in housing will prove resilient to any broader slowing in the economy and the recent rise in mortgage interest rates to date, but we will be watching for any signs of weakness or fragility as a result of the significant rise in real interest rates.”

The risk is that last month’s gains in demand may prove temporary, and driven by buyers who rushed to lock in a home before interest rates went up, economist Joel Naroff said.



Why You Missed the Boat On Record-Low Mortgage Rates

June 14, 2013

  By Les Christie   Say goodbye to ultra-low mortgage rates. In the past month, rates have been on the rise and they are expected to continue to climb. This week, the average rate on a 30-yearfixed-rate mortgage jumped another 10 percentage points to 3.91 percent and are up from 3.3 percent in early May, according to […]

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Reasons to be optimistic

June 4, 2013
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U.S. Home Sale Has $56,464 Impact on Economy

May 13, 2013

The KCM Crew on May 9, 2013 Recently the research team at the National Association of Realtors (NAR) looked at studies done by the Bureau of Economic Analysis, the Census Bureau, Macroeconomic Advisors and the Joint Center for Housing Studies at Harvard. After reviewing the data, they determined the total economic impact of a typical […]

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3 Financial Reasons to Buy a Home NOW!

April 5, 2013

by The KCM Crew on March 25, 2013 Prices Are Rising at an Accelerated Rate The price of a home is the major consideration when deciding whether or not it makes financial sense to purchase a house. Experts are not only projecting that house values will increase in 2013. They are also more optomistic in […]

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Foreclosure filings fall to lowest level since 2007

February 15, 2013

By Les Christie @CNNMoney February 14, 2013: 1:00 AM ET NEW YORK (CNNMoney) Notices of default, scheduled auctions, bank repossessions and other filings fell to 150,864 last month, a 7% decline from the previous month and a 28% drop from January 2012, according to RealtyTrac. New foreclosure filings fell to the lowest level since June 2006. “We’re […]

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Thinking of Buying Your Dream Home? DO IT NOW!

February 12, 2013

by The KCM Crew on February 12, 2013 A recent survey showed that 3 out of 4 future home buyers (who are not first time buyers) plan to move up to some form of a ‘better’ home. The breakdown: Move to a significantly bigger home (49%) Move to a nicer home (17.5%) Move to a […]

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