REAL ESTATE TOPICS... The Multigenerational Household

REAL ESTATE TOPICS...Poll: US House Prices to Rise Almost 5 Percent Next Year

U.S. house prices are set to rise almost 5 percent next year, a bit faster than expected just three months ago despite the real prospect of several interest rate increases, according to the latest Reuters poll of property market analysts.

So far the shock election of Republican Donald Trump as the next U.S. president has done little to change overall views on the housing market, with many saying it was too early to tell but also a significant minority saying their opinion had worsened.

Expectations that Trump's fiscal stimulus plans, through tax cuts, infrastructure spending and reduced regulation, will elevate inflation and lead to swifter rate rises away from the zero bound by the Federal Reserve. That also has pushed mortgage rates higher.

But the relatively fitful economic expansion since the 2008 financial crisis, coupled with poor wage growth despite a historically low unemployment rate of 4.6 percent, still argues strongly against a return to boom times.

"The housing recovery has made steady progress but remains unfinished, based on the economic recovery and the labor market in particular," said Robert Denk, senior economist at National Association of Home Builders. "It's too early to tell what impact Trump's victory will have on the economy."

The poll forecast the S&P/Case Shiller composite index of prices in 20 metropolitan areas would close out this year with a 5.2 percent rise. That followed by 4.8 percent in 2017, recouping nearly all of the roughly 35 percent loss suffered during the financial crisis.

Then it is expected to rise by 4.1 percent rate the following year.

The range of forecasts was broadly unchanged compared to the previous poll. But there was a prediction for house prices to fall outright for the first time since 2012.

When asked about their overall opinion on the future of the U.S. housing market since Trump's victory in the election nearly a month ago, a majority - 14 of 26 - said there was no change, while two said for the better. But 10 analysts said U.S. housing could be worse under the business mogul.

"Our outlook is a lot more volatile now, as very few details exist in terms of future policy. What little does exist tends to skew towards a negative impact," said Svenja Gudell, chief economist at Zillow.

REAL ESTATE TOPICS...How to buy a property without a real estate agent

By Ilyce Glink and Samuel J. Tamkin

I’m planning to buy a property from a friend without using a real estate agent. What is the process to buy a home without an agent? Can I use an attorney to help purchase the property?

Yes, you can buy a home without using a real estate agent. There’s no law that says you have to use an agent to purchase real estate. It’s just that the process is complicated and many people don’t know where to begin.

But if you have a friend who owns a home and that friend is going to sell you the property, you would likely want to hire a real estate attorney to help prepare documents and make sure that those documents not only protect you, but are filed correctly to protect your interest in the property. The good news for you is that many real estate attorneys will charge you a flat fee for preparing the documents and handling the closing.

The first step is to come to a meeting of the mind with your friend about the price you’re willing to pay, the date of the closing, whether you’re going to have any contingencies added to the contract (a home inspection contingency, a mortgage financing contingency and an attorney rider are the most common), and what, if any, furnishing, appliances or fixtures are going to be sold along with the property itself. Depending on where you live, sellers may include appliances like a refrigerator, outdoor patio furniture, light fixtures and built-in-bookcases or Murphy beds. Anything that is going to be left behind will need to be specifically itemized in the contract.

Next, if you are getting a mortgage and don’t have a firm commitment letter from the lender, you’ll want to work with the lender to make sure your financing will go through once the property has appraised out in value. Once your financing is locked in, you’ll be able to satisfy that mortgage contingency.

For the inspection contingency, you’ll need a good professional home inspector who can walk through the property and ascertain that it is in good shape physically. If there is a hidden problem, you or your attorney will need to work with your friend on the purchase. If you’re purchasing the home in “as is” condition, you might still want to have a home inspection so you know what problems you might face in the near future. Or in the case that the home has a serious deficiency, you can still get out of the deal.

Your attorney (or in states that use “closing attorneys”) can conduct or assist you with the closing, but you will still need a title search done to make sure that your friend owns the property, subject to any liens that are discovered and to know the status of the title to the home. The title company can assist in the closing as well. If you are using a lender, the lender will insist that you pay for a lender’s title insurance policy, but we think it’s a good idea to buy an owner’s policy as well. That way, you’ll be protected just in case someone or something unexpected pops up that is a covered item under a title insurance policy.

There are a couple of other things you might want to do: Typically, home buyers do a final walk-through of the property, preferably after the owner has moved out, so that they can make sure the property is in the same condition as when they made the offer to purchase. Since you’re buying from a friend, we don’t imagine that this will be an issue. Lastly, you’ll need to set up utilities in your own name for the new property, to take effect on the closing day.

Depending on the state in which you live, the seller may be obligated to make certain disclosures to you, such as giving you a completed, written seller disclosure form, or if you’re buying a condominium, providing you with a copy of the condo doc, and current rules and regulations. If you are moving into a condo or townhouse development, be sure to check the rules on pets, rentals, and nonfamily members who live with you.

Your attorney can fill in the blanks. Good luck to you and your friend, the seller!

REAL ESTATE NEWS...'Huge drop' in unemployment is giving a clear signal about interest rates

y Patti Domm

November's stunning dip to a 4.6 percent unemployment rate, and the fact the economy is still adding jobs at a healthy clip, should give the Fed the green light to hike interest rates when it meets later this month.

Unemployment was at its lowest since August 2007, and job gains continued to be strong in November , coming in at 178,000, in line with this year's average of 180,000. However, wage growth backtracked, with a surprise 0.1 percent drop in average hourly wages, compared with expectations of a 0.2 percent gain.

"Average hourly earnings is disappointing. The drop in the unemployment rate — this is the best of the cycle. You had a huge drop in the level of unemployment and an increase in employment. They're saying things are improving," said Ward McCarthy, chief financial economist at Jefferies.

Unemployment had been 4.9 percent in October and was expected to stay the same for November. The report also showed that the labor participation rate declined by 0.1 percent to 62.7 percent, signaling fewer Americans in the workforce and a factor behind the fall in the unemployment rate.

Average hourly wages had increased by 0.4 percent in October, a pace that had it continued would signal wage growth heading toward 5 percent annually. Wages had been growing at about 2.5 percent annually. The November 0.1 percent decline was the lowest since December 2014.

After the report, the Dow Jones industrial average was down slightly and bond yields fell. On Thursday, yields rose sharply ahead of the number as speculation swirled that the employment report could be very strong and show wage pressures, which would be a sign the Fed may have to hike more than expected at subsequent meetings next year. The slightly disappointing report brought in buyers for Treasurys, as did concerns about this Sunday's Italian referendum .

"It wasn't a slam dunk number by any means. The wages (number) is the most important, but it's important to know it came off a surge last month," said Diane Swonk, CEO of DS Economics. "It's a hiccup in wages, but not enough to stop the Fed."

There was also a decline in a broader measure of unemployment from 9.5 percent to 9.3 percent, now the lowest since August 2008. The U6 rate captures a wider group , including those who work part time but would like full-time jobs, as well as people who have stopped looking for work.

"The thing that's going to be taken away from this a few days from now is going to be the drop in the unemployment rate to 4.6 percent. Even the U6 number fell. It was a broad-based drop in the unemployment rate," said James Paulsen, chief investment strategist at Wells Capital Management. "At the end of the day, we made another notch down in the unemployment rate and ultimately that's going to be leading to more pressure on wages and costs. With wages down today, that may not be the story today, but it will be in a week. A huge drop in unemployment, … I think that's going to be the part that sticks."

A big focus for markets and economists has been wage growth, which has lagged with stubbornly low inflation. But there are signs that both are picking up, and the November number is going against the trend, said Swonk.

"You've got to take it in context. Last month was an extraordinary jump," she said. "I'm not happy with it, … but at the end of the day the wage number was really strong in October, so you take a moving average and that's what the Fed will do." The Fed rate announcement is expected after its meeting on Dec. 14.

The Commerce Department on Wednesday reported that personal income rose in October by 0.6 percent, the fastest growth rate since April and up from 0.4 percent in September.

REAL ESTATE NEWS...Pending home sales nudged upward in October

By Josh Boak

WASHINGTON (AP) -- The number of Americans who signed contracts to purchase homes edged up slightly in October, a sign that the housing market remains on sure footing after solid price and sales gains this year.

The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index rose 0.1 percent to 110. Pending sales improved in the Northeast, Midwest and West, while falling in the South.

Many of the contracts were signed when 30-year mortgage rates were averaging less than 3.5 percent, close to a historic low. In the weeks since the presidential election, average rates have jumped above 4 percent, making it costlier to buy a home.

The Mortgage Bankers Association reported Wednesday that applications for both new home loans and refinanced loans dropped over the past week.

Pending sales contracts are a barometer of future purchases. A sale is typically completed a month or two after a contract is signed.

Over the past 12 months, sales of existing homes have climbed 5.9 percent to an annual rate of 5.6 million.

The increased demand has done little to bring more sellers into the market. Sales listings have fallen 4.3 percent over the past year to 2.02 million homes. The shortage has pushed up the median sales price of existing homes 6 percent from a year ago to $232,200.

REAL ESTATE TOPICS....Tiny House Living

by MAGGIE WINTERFELDT

The meteoric rise of the tiny-house movement in recent years has been spurred on by contemporary homeowners' desire for a simpler, unfettered life. While these micro dwellings do come with some great perks — they're inexpensive and low-maintenance, freeing up time and money for other things — they also come with a few lesser-known cons. Before you sell off your belongings and take the dive into the tiny-living lifestyle, get all the information. Check out nine surprising truths of tiny-home ownership below.

Basic Life Functions

Everyday things you take for granted in a standard house, like getting mail and doing laundry, require thought when living in a tiny house. If you decide to downsize, you'll likely find yourself going outside the home to pick up letters at a P.O. box or wash clothes at the laundromat.

Legal Trouble

One of the biggest — and least known — complications of living in a tiny home is the legality of it. Many states have minimum home size requirements that tiny houses don't meet, making them illegal dwellings. There are some ways to navigate around this, such as having the house reside on land where it's a secondary accessory dwelling to an approved primary house or trying to have it registered as an RV. But these are complicated issues that require serious research. Ignore them, and you could find your tiny home with an eviction notice on it.

Clutter Reality

The beautiful images of tiny homes that fuel your daydreams have been styled to Pinterest perfection. In reality, tiny homes get messy just as fast, if not faster, than traditional homes. In such a tight space, it begins to feel cluttered the second an item is out of place.

Entertaining Limitations

Say goodbye to big dinner parties. With a good floor plan, you can squeeze one other couple in, but otherwise you'll need some outdoor space to accommodate company. And when it comes to having overnight guests, you'll need a fold-out chair and an adventurous guest (and yes, that was guest singular). There just isn't room for more.

Forced Intimacy

If you plan on moving in with another person, prepare to get up close and personal. There's no private space to escape off to for alone time. You'll be constantly connected and have to compromise on basic things such as what to cook for dinner (no room to prep two meals) to what TV show to watch (only one set).

Plumbing Considerations

Depending on how often you plan on moving your home and where you plan on moving it to, there are several plumbing options. Homes can be built to plug into sanitation and electricity infrastructure in RV parks, have a pressurized water hookup to connect to a hose when parked in a backyard, or even collect rainwater and have compostable toilets for those looking to go off the grid. All require more work than plumbing in traditional homes.

Health Changes

Before taking the plunge, consider how your circumstances might change within the next few years. Changes in health or a growing family can seriously impact your ability to live in a tiny house; for example, it will be nearly impossible to navigate your way up to a loft bed if poor health causes your mobility to be limited or you're heavily pregnant.

Lifestyle Proclivity

If you're a homebody or one who enjoys decorating the house and tending to the yard on the weekend, you may not be suited for microhome living. Those who prefer being in the great outdoors and detest home maintenance — and generally live their lives outside of their home — tend to fare best in the microhome community, as domestic activities and decorating are extremely limited.

Downsized Belongings

One of the biggest perks is also one of the biggest challenges to small-space living: getting rid of things. On one hand it's very liberating to toss most of your belongings, but on the other hand downsizing means you have to get rid of some sentimental and valued pieces. If you're not willing to part with Grandma's treasured dress collection or heirloom antique furniture, then you might not be ready for a microhome.

REAL ESTATE TRENDS...ARE MICRO-APARTMENTS INNOVATIVE SOLUTIONS FOR CITIES OR FUTURE SLUMS?

BY JONATHAN GLANCEY



A resident of the Nakagin Capsule Tower, Masato Abe, sits in his room in Tokyo on September 9, 2014. Around half of the tower's 140 capsules, designed by Japanese architect Kisho Kurokawa in 1972, are currently in use as offices, art studios and second homes. Twenty of the tiny spaces are full-time homes.

Soon enough, short of some last-minute appeal on behalf of protesters, Brill Place Tower will be shooting up from a site in Somers Town, a slightly neglected district just north of St. Pancras station in central London. The 25-story building is actually a pencil-thin pair of what dRMM, its inventive young architects, call micro-towers, built on a footprint of just 3,767 square feet. It was granted planning permission this summer, as part of a £1 billion ($1.22 billion) regeneration plan backed by Sadiq Khan, London’s populist new mayor.

Historic England, a largely government-funded heritage group, is opposed to the tower, perhaps because, like a skinny catwalk model stamping on a wedding cake, it will pierce the neoclassical skyline of white stucco terraces that encircle Regent’s Park. But whatever your architectural taste, Brill Place is very much a sign of the times. It will hold 54 of what planners call “units,” a mixture of cunningly laid out one- and two-bedroom apartments. It’s a wholly commercial development, so you can bet none of them will be cheap, although, according to dRMM, the smallest of its one-bedroom units will cover just 590 square feet. (It’s not clear if the architects include the apartment’s balcony in that calculation.) These micro-towers will hold some microhomes.

Compared with some, though, they’re palatial. In Kips Bay in Manhattan, residents paying at least $2,650 a month recently moved into New York City’s first micro-apartment building—Carmel Place, nine stories of prefabricated steel and concrete studio units, sheathed in a facade of gray bricks. Designed by nArchitects, the project is the first fruit of former Mayor Michael Bloomberg’s New Housing Marketplace Plan—a scheme launched in 2004 and intended to create 165,000 affordable homes for low- and middle-income New Yorkers. Carmel Place features 55 rental units, most of them just 260 square feet in size.

The building’s floor plans are fairly ingenious, managing to squeeze in enough room for a sofa bed, a tiny table and a narrow area of storage above the shower room and kitchen. But, like shrunken versions of the old downtown railroad apartments, they’re more corridor than home. Carmel Place does feature a gym, a shared roof terrace, a lounge and a garden, storage for bicycles and a “butler service” to replenish empty fridges. But this communal, city-center style of living is really suitable only for the young and single: Few families, however close-knit, would attempt to squeeze into such limited space.

Why Carmel Place is important has less to do with its detailed design and prefabricated factory construction than the fact that it has revolutionized planning in Manhattan: Until now, local legislation prevailed against such tiny homes. In Seattle, meanwhile, developers have been building micro-apartments as small as 199 square feet.  

The philosophy, or sales pitch, behind this extreme degree of minimal living is that the city itself, with its bars, cafés and youthful culture, serves as all the other spaces a young person might need or want. It’s an inescapable truth that, as cities across the world grow exponentially, huge numbers of new homes are needed, for the young, for service-industry workers who otherwise would be forced to live ever farther afield, for downsizing retirees and for professionals seeking city-center pieds-à-terre. No wonder, then, that towers of micro-apartments are catching on with planners, developers, architects and the property-hungry public.

Micro-living Failures

We have been here before. Although very much back in vogue, experiments in micro-living have been made several times over the past 90 years, and the results, while fascinating, are not exactly encouraging. In the late 1960s, Tokyo boomed, and as it did, young people and modest “salary men” and their families sought affordable homes in sprawling new suburbs, commuting to the city center in the famously jam-packed Metro trains.

The late Kisho Kurokawa, then a radically minded 30-something architect, had an answer to the problem of this mass exodus of the young from Tokyo. This was his Nakagin Capsule Tower—although it was, like Brill Place, a pair of towers—completed in 1972 in the Shimbashi neighborhood. Prefabricated steel capsules, 140 of them, were bolted onto the two central concrete shafts. Each capsule provided a 94-square-foot space, into which was squeezed a bed, a kitchen surface, an aircraft-sized bathroom and the very latest in Japanese audio technology.

Nurtured in an era of minicars, miniskirts and the widespread belief that technological progress was wholly benevolent, Nakagin Capsule Tower was a much-feted, much-photographed revelation. Today, while the rest of Shimbashi is filled with expensive offices, the tower is in a sorry state. There has been no hot water here for some years. Rather than chic and futuristic micro-apartments, most of the capsules are boarded up or used for storage or as makeshift offices; a few capsules are available to rent through Airbnb. Residents wanted more space than Kurokawa could possibly offer, and although the plan had been for the capsules to be unbolted and replaced every 25 years, it failed: It was always going to be cheaper to demolish the towers and build anew, than go through all the palaver of replacing its intricate nest of high-tech capsules. This Japanese model of mass-produced city housing remains a custom-made novelty loved by architects, but shunned by the residential property market

 laundry, a library, a gym and a roof terrace. This was to be a model of socialist living. Feminist living too. “Petty housework crushes, strangles and degrades,” wrote Vladimir Lenin in his essay “A Great Beginning,” saying it “chains her [the housewife of the capitalist era] to the kitchen. The real emancipation of women, real communism, will begin only where and when an all-out struggle begins…against this petty housekeeping.”

Stalin, however, put a sudden end to what he called such “Trotskyite” aberrations. Almost as soon as the first residents—some of whom installed their own tiny kitchens—moved in, the Narkomfin experiment of communal living was condemned, with rooms becoming individual, disconnected family units. Now a tarnished ragbag of empty apartments, artists’ studios and various oddball enterprises, the Narkomfin Building stands in the shadow of shiny new apartments. When, in 2004, Yuri Luzhkov, the former mayor of Moscow, opened the grotesque, 100,000-square-foot Novinsky Passage Mall, he is reputed to have said, while pointing to Ginzburg and Milinis’s yellowing masterpiece, “What a joy that in our city such wonderful new shopping centers are appearing—not such junk.”

From Junk to Trash

In spite of these failed monuments to capsule living, idealistic urban planners and architects press ahead. There's a distinct echo of the Tokyo project in a new proposal from Jeff Wilson, a former associate professor of environmental studies at Huston-Tillotson University in Austin, Texas. Wilson is perhaps best known for living for parts of 2014 and 2015 in a 33-square-foot dumpster converted into the tiniest and most unlikely home of all, but his latest project is more mobile. Called Kasita—from casita, Spanish for “little house”—it’s a proposal for prefabricated, 322-square-foot steel studios that can be slotted into a steel frame like bottles into a wine rack. The idea is that, should a resident want to move, it will be easy to lift these thoroughly equipped microapartments out from the rack and, with the help of cranes and a flatbed truck, transport them to a new location equipped with an identical steel rack.

This notion of moving home—your physical home—is certainly intriguing, although you might choose, as many American retirees have done, to invest in a motor home instead. It does highlight, however, one of the major criticisms of microliving, whether in Somers Town, Manhattan, Seattle or Texas. While tiny spaces might appeal to the young and single, what happens if a young single person meets another single young person and they produce a family?

Odds are, many will leave their micro-apartments, resulting in ever-shifting urban populations. Transience is one of the enemies of enduring communities. The more micro-apartments and towers there are, the more unsettled our city centers might become.

Will the latest wave of micro-apartments get the Luzhkov treatment and become the city slums of the future? Micro-towers may well be signs of the times, yet times change, and for most people, 260 square feet will never be quite enough.

REAL ESTATE TOPICS...The Fed has its eye on the 'new housing crisis'

BY Bob Bryan

The Federal Reserve doesn't think the US has enough houses.

In the release of the Federal Reserve's minutes from the September meeting, the members of the Federal Open Markets Committee spoke about the various aspects of the US economy and their progression since the July meeting.

Among the items discussed were inflation, the labor market, and notably, the US housing market.

The FOMC said that the housing market looks a bit weak, saying "real residential investment spending continued to be soft in the third quarter." The reason? The Fed said that at least part of the issue is the so-called "new housing crisis."

Here's how the FOMC characterized the problem (emphasis added):

"However, the sluggishness in the housing sector appeared to have continued into the third quarter. A couple of participants pointed to limited availability of lots and a shortage of skilled labor as restraining residential construction activity in their Districts; in one District, constraints on the supply of new homes for sale were expected to boost spending on home improvements and offset some of the drag from the slowing in new construction."

Put another way, the supply of new and existing homes has declined to the point that it is not able to keep up with new demand from younger people looking for a new home. This in turn drives the price of new homes up, pricing out first-time home buyers and resulted in the sluggish recovery for the housing market.

While it is unclear what impact, if any, this had on the Fed's assessment of the US economy, at least we know the troubles facing new home buyers have made it all the way to one of the most powerful economic institutions in the world.

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REAL ESTATE TOPICS...Califorina San Fernando Valley home prices hit highest level in 9 years

By Gregory J. Wilcox

Houses for sale in the San Fernando Valley. Woodland Hills, CA. August 26, 2016. (Photo by John McCoy/So Cal News Group) 

The summer home buying season in the San Fernando Valley is winding down with some price sizzle and sales fizzle.

That’s according to July market reports from the Van Nuys-based Southland Regional Association of Realtors and the San Fernando Valley Economic Research Center at Cal State University, Northridge.

“Sales are dismal,” lamented economist William W. Roberts, the center’s director.

Here is what the reports show:

•The Realtors group said the median price of a previously owned house rose 4 percent from a year earlier to $623,000, the highest level IN nine years. And it gained $23,000 from June.

The association tracks the market from Toluca Lake through Calabasas.

But while prices are up, sales are down.

•CSUN’s research center reported that sales of new and previously owned houses and condominiums fell 10 percent from a year ago to 1,556 properties and they were down from 1,565 in June.

The center tracks a market from Glendale through Calabasas.

Both reports show summer sales are sluggish and that this will likely be a tepid year.

Roberts said his records show sales falling year-over-year for the last five months.

And since the buying season began in March, sales have increased from their year-ago level just once, according the Realtor’s report.

Low inventory remains the anchor weighing down the market.

At the end of July the number of houses and condominiums for sale had dropped 7 percent from a year earlier to 1,720, according the Realtors group. That is just a 2.4 month supply at the current sales pace.

“There is just nothing out there,” said Roberts. “It’s not like the early 2000s when people would sell to buy a bigger house. They are remodeling and they seldom move up. And you don’t have an influx of people into the Valley, either.”

Jim Link, the association’s CEO, said that the soft market is not unexpected.

“Not surprisingly, rising prices combined with limited supply and falling affordability translate into fewer sales,” said Link in a statement.

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REAL ESTATE NEWS...In California Home prices up for 51st straight month in LA, Inland Empire

By Jeff Collins

Mortgage interest rates near all-time lows are a key factor in the housing market upward trajectory climb.

House prices continued rising in July, increasing from year-ago levels for a 51st straight month in Los Angeles County and the Inland Empire and the 50th straight month in Orange County, the CoreLogic Home Price Index showed Tuesday.

Orange County has had the lowest appreciation rate in the region, with July house prices up 4.6 percent. By comparison, prices were up 6.3 percent in the Inland Empire and 6.7 percent in L.A. County, CoreLogic numbers show.

Nationwide, the price of an existing single-family home increased 5.4 percent from July 2015 levels. Prices were up 5.9 percent statewide.

CoreLogic’s monthly price index is based on same-home comparisons, computing the average price change of all homes sold compared to each home’s previous sale price.

Mortgage interest rates hovering within a fourth of a percent of all-time lows are a key factor in the housing market’s four-year-plus upward trajectory. But resistance to Orange County’s higher prices is keeping a lid on the rate of increase.

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For example, O.C.’s price gains averaged just over 5 percent for the past year, compared to 6.1 percent in the Inland Empire and 6.5 percent in L.A. County.

“If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year,” said Frank Nothaft, CoreLogic chief economist. “The increased sales will support further price appreciation, and according to the CoreLogic Home Price Index, home prices are projected to rise about 5 percent over the next year.”