Tag Archives: San Francisco

Haunting Photos of San Francisco’s Desolate Financial District During Morning “Rush Hour”

(Wolf Richter) On Tuesday, August 18, during morning rush hour, I walked through and around the Financial District of San Francisco and took photos to document the spookiness of it all. Pedestrians used to rush to work on crowded sidewalks, balling up at red lights, then stream across the intersection, and disappear into the entries of office towers as they went, and cars used to be stuck in traffic, and thick throngs of people would pour out of the Montgomery BART and Muni Metro station.

I started taking photos at Columbus Street where it ends at Montgomery Street, and then turned south into Montgomery Street and walked through the Financial District to the Montgomery Station at Market Street. Then I zigzagged back through the Financial District.

What you will see are streets and sidewalks and entrances into office towers that were eerily deserted during what used to be “rush hour,” with just a sprinkling of pedestrians, a few cars, the occasional skateboarder, some guys working on construction projects, and curiosities where you might be tempted to think, “only in San Francisco.”

With hindsight, it was the last beautiful sunny morning before the thick acrid smoke from the wildfires moved into San Francisco.

The data of how work-from-home impacts office patterns in a city like San Francisco are grim. According to Kastle Systems – which provides access systems for 3,600 buildings and 41,000 businesses in 47 states, and therefore has a large sample of how many people are entering offices during the Pandemic – office occupancy in San Francisco was still only at 13.6% of where it had been at the beginning of March, meaning it was still down by 86.4%, just above New York City:

What is staring at us now is the haunting shift brought about by work-from-home.

The Financial District is an area of office buildings. There are also shops, cafes, restaurants, and service establishments, such as bank branches and barbers, that workers go to before, during, or after work. There isn’t much else. Other parts of the City are busy, and restaurants that are open (outside seating only) are hard to get into. But this is what office life looks like….

On Columbus Street, looking at the intersection with Montgomery Street, with the Transamerica Pyramid in the background. I’m standing in the middle of the street to take this photo. Why? Because I can:

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Bubble Trouble: Silicon Valley & San Francisco Housing Markets Head South

The underlying dynamics changed in August and have worsened since. And, this is still the tech boom.

It’s high time to unload houses and condos in Silicon Valley and San Francisco, one of the most expensive housing markets in the US. Sellers are now flooding the market with properties. Inventory listed for sale in those three counties that make up the area – San Francisco, San Mateo, and Santa Clara – surged by 102% in November compared to November last year, to 3,931 listings.

In each of the past three months, the number of active listings (new listings plus old listings that have not sold yet but haven’t been pulled from the market) was the highest since August 2014. The chart below shows the year-over-year percentage change in active listings. The red bars in the chart mark the beginning of bubble trouble in this housing market (all data via the National Association of Realtors at realtor.com):

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-active-listings-percent-change-2018-11.png

When inventories are piling up because sales are slowing, sellers have to figure out where the market is, and the market is where the buyers are, but buyers have become listless and refuse to participate in bidding wars. They see the prices and they do the math with higher mortgage rates, and they walk. So, motivated sellers have to do something to move the properties. And they started cutting prices.

In November, the number of properties on the market with price cuts, at 1,038, skyrocketed by over 400% year over year.

The chart of the year-over-year percentage changes in price cuts in Silicon Valley and San Francisco shows that the change of direction in the market occurred around August. By September, price cuts hit the highest level since Housing Bust 1:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-price-reductions-percent-2018-11-.png

The median asking price for the three counties had peaked in May at $1,369,200 and has since fallen by $132,100 or by nearly 10% from the peak, to 1,237,100. Median asking price means half are listed for more and half are listed for less. It differs from the median selling price at which homes are actually sold. Compared to November last year, the median asking price dropped by $71,200 or 5.4%:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-median-asking-price-2018-11.png

The chart below shows the percentage change of median asking prices, which clarifies further the underlying dynamics in the market:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-median-asking-price-yoy-change-2018-11-.png

After years of blaming the surging home prices in the area on a shortage of inventory for sale, the industry is suddenly faced with all kinds of inventory coming out of the woodwork, just as sales are slowing and as mortgage rates are rising, while the affordability crisis bites the market.

Buyers have lost their blind enthusiasm. They’re still buying, but at lower prices, and they’re taking their time.

Yet the hiring slowdowns – or worse, layoffs – at area tech companies and the broad wind-down of countless and hopelessly cash-burning start-ups – both a prominent feature of every tech downturn here – haven’t even started yet. The area is still booming and companies are still hiring, and this housing downturn is starting during the tech boom, and not as a consequence of a tech meltdown. Though share prices of local companies such as Google, Apple, Facebook, and many others have taken a big hit since the summer, we’re still far from a classic tech meltdown. That is yet to come.

The Case-Shiller home price index lags by about three months, but it too is now picking up the changes in the market: Seattle home prices dropped at fastest pace since Housing Bust 1, while the first price declines cropped in San Francisco, Denver, Portland, and other markets. Read…  The Most Splendid Housing Bubbles in America Deflate

Source: by Wolf Richter | Wolf Street

***

New-Home Prices Drop Nearly 7%, Supply Spikes to Highest since Housing Bust 1

Home builders not amused.

***

Update on the Housing Bust in Sydney & Melbourne, Australia

This is not exactly slow motion anymore.

San Francisco Bay Area Expats Are Driving Up Home Prices From Boise To Reno

In the not-too-distant future, it’s not improbable that low-wage laborers in San Francisco will be replaced by ubiquitous machines (the city is already home to the first restaurant run by a robot). And not just fast food workers, either – the jobs of teachers, fire fighters and law enforcement will all be assumed by robots, as NorCal’s prohibitively high cost of living and astronomical home prices spark a mass exodus of families earning less than $250,000 a year.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24cali.JPG?itok=aZQnQjNE

While this scenario might seem like an exaggeration (and it very well might be), we’ve paid close attention to the flight of Californians who are abandoning the Bay Area for all of the reasons mentioned above, as well as what Peter Thiel (himself a Bay Area emigre) once described as a political “monoculture” that has made California inhospitable for conservatives. And as if circumstances weren’t already dire enough for would-be homeowners (even miles away from San Francisco, relatively modest homes still sell for upwards of $2 million), a report published earlier this year by realtor.com illustrated how a lapse in new home construction has led to a serious imbalance between home supply and the increasing demand of the state’s ever-growing population, leading to a cavernous supply gap.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24california.jpg?itok=ltrugbRz

With this in mind, it shouldn’t be surprising that Californians comprise a majority of the residents moving into other states in the American West – even states like Idaho where the culture is very different from the liberal Bay Area. This week, Bloomberg published a story about how Californians constitute an increasing share of out-of-state homebuyers in small cities like Boise, Phoenix and Reno, which are significantly more affordable than California, and offer some semblance of the walkable urban environment that nesting millennials crave.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24maptwo.JPG?itok=fB95lYCO

As Californians sell their homes in the Bay Area in search of roomier, cheaper locales, they’re bringing the curse of surging property prices with them. In fact, the influx of Californians is the primary factor leading to some of the largest YoY price increases in the country, as Bloomberg explains:

About 29 percent of the Idaho capital’s home-listing views are from Californians, according to Realtor.com. Reno and Prescott, Ariz., also were popular. These housing markets are soaring while much of the rest of the country cools. In Nevada, where Californians make up the largest share of arrivals, prices jumped 13 percent in August, the biggest increase for any state, according to CoreLogic Inc. data. It was followed closely by Idaho, with a 12 percent gain.

Even in places like deep-red Idaho, these transplants are beginning to remake the terrain in their own image, as food co-ops and Women’s Marches starting to populate the landscape. Businesses are rushing to Boise to meet every desire of the newly arrived Cali transplants.

D’Agostino, the Bay Area transplant, isn’t ashamed of her progressive views and is finding her place: at the natural foods co-op downtown, the Boise’s Women’s March last year, and with the volunteer group she founded to collect unused food for the needy. But it was also good to get out of her comfort zone, she says. “I can’t remember a time when it’s ever been this divided, so the fact that I can have some interaction with people who might not have exactly the same beliefs as me, that’s fine,” she says. “As long as we can respect each other.”

It’s not new for politics to factor into moving decisions—it’s just that in the age of Trump, tensions get magnified. “What’s different now is how far apart the parties are ideologically,” says Matt Lassiter, a professor of history at the University of Michigan.

Politics aside, businesses are rushing into Boise to fill every West Coast craving. In nearby Eagle, the new Renovare gated community is selling 1,900- to 4,000-square-foot homes with floor-to-ceiling glass and “wine walls” that start at $650,000—a bargain by California standards, says sales agent Nik Buich. About half of buyers are from out of state, he says.

One couple even opened a “boutique taqueria” and another transplant is preparing to start a blog about his experience moving to Idaho.

Julie and John Cuevas left Southern California a year ago to open Madre, a “boutique taqueria” in Boise that would make many of their fellow transplants feel at home. It’s more fusion than typical Mexican fare, with taco fillings including kimchi short rib and the popular “Idaho spud & chorizo.” It would have cost them three times as much to open a restaurant in California, says John, a former chef at a Beverly Hills hotel.

John Del Rio, a real estate agent sporting a beard, baseball cap, and sunglasses, just registered moving2idaho.com, where he’s planning to blog about all the things that make his new home great. He left Northern California two years ago with his wife in search of a place with less crime, lighter regulation, and more open space. Del Rio, a conservative with a libertarian bent, is reassured to see average people walking through Walmart with handguns in their holsters. In Idaho, he says, “nobody even flinches.”

In Boise alone, Californians made up 85% of new arrivals, and have driven home prices up nearly 20% in the span of a year. One realtor described the attitude of transplants as like “they’re playing with monopoly money.”

Nestled against the foothills of the Rocky Mountains, Boise (pop. 227,000) has drawn families for decades to its open spaces and short commutes. It’s been particularly attractive to Californians, who accounted for 85 percent of net domestic immigration to Idaho, according to Realtor.com’s analysis of 2016 Census data. While it has always prided itself on being welcoming, skyrocketing housing costs fueled by the influx is testing residents’ patience. In his state of the city speech last month, Mayor David Bieter outlined steps to keep housing affordable and asked Boise to stay friendly: “Call it Boise kind, our kindness manifesto,” he said.

It’s especially easy for buyers who have sold properties in the Golden State to push up prices in relatively cheap places because they feel like they’re playing with Monopoly money, Kelman says. The median existing-home price in Boise’s home of Ada County was $299,950 last month—up almost 18 percent from a year earlier, but still about half California’s. The influx is great news for people who already own homes in the area, says Danielle Hale, chief economist for Realtor.com. “But if you’re a local aspiring to home ownership, it feels very much that Californians are bringing high prices with them.”

And now that Trump’s tax reform package has been implemented, it’s only a matter of time before a whole new batch of Californian home owners, unwilling to forego their SALT tax write offs, start looking for greener pastures in low-cost red states.

Source: ZeroHedge

San Francisco “Poop Patrollers” Make $185,000

We wish we could say this was a satire piece, but a new story in the San Francisco Chronicle reveals just how lucrative collecting shit actually is

It’s but the latest in a string of shocking revelations to hit headlines throughout the summer exposing how deep San Francisco’s crisis of vast amounts of vagrant-generated feces covering its public streets actually runs (no pun intended). 

We detailed last week how city authorities have finally decided to do something after thousands of feces complaints (during only one week in July, over 16,000 were recorded), the cancellation of a major medical convention and an outraged new Mayor, London Breed, who was absolutely shocked after walking through her city: they established a professional “poop patrol”.

https://www.zerohedge.com/sites/default/files/inline-images/Poop%20patrol%20San%20Fran.jpg?itok=C9m3CJfI

As described when the city initially unveiled the plan, the patrol will consist of a team of five staffers and a supervisor donning protective gear and patrolling the alleys around Polk Street and other “brown zones” in search of everything from hepatitis-laden Hershey squirts to worm-infested-logs. At the Poop Patrol’s disposal will be a special vehicle equipped with a steam cleaner and disinfectant.

The teams will begin their shifts in the afternoon, spotting and cleaning piles of feces before the city receives complaints in order “to be proactive” in the words of the Public Works director Mohammed Nuru, co-creator of the poop patrol initiative. 

While at first glance it doesn’t sound like the type of job people will be knocking down human resources doors to apply for, the SF Chronicle has revealed just how much each member of this apparently elite “poop patrol” team will cost the city: $184,678 in salary and benefits.

https://www.zerohedge.com/sites/default/files/inline-images/SF%20Muni%20Castro%20St%20Station.jpg?itok=8LrvFb6U

The surprisingly high figure is buried in the middle of the SF Chronicle’s story on Mayor London Breed’s morning walks along downtown streets with her staff, unannounced beforehand to her police force and department heads so she can view firsthand what common citizens endure on a daily basis. 

After quoting Mayor Breed, who acknowledges, “We’re spending a lot of money to address this problem,” the following San Francisco Public Works budget items are presented:

  • A $72.5 million-a-year street cleaning budget
  • $12 million a year on what essentially have become housekeeping services for homeless encampments
  • $2.8 million for a Hot Spots crew to wash down the camps and remove any bio-hazards
  • $2.3 million for street steam cleaners
  • $3.1 million for the Pit Stop portable toilets
  • $364,000 for a four-member needle team
  • An additional $700,000 set aside for a 10-member, needle cleanup squad, complete with it’s own minivan

And crucially, there’s now “the new $830,977-a-year Poop Patrol to actively hunt down and clean up human waste.”

The SF Chronicle casually notes in parenthesis, “By the way, the poop patrolers earn $71,760 a year, which swells to $184,678 with mandated benefits.

https://www.zerohedge.com/sites/default/files/inline-images/San_Francisco_s__poop_patrol.jpg?itok=t01wpbhi

Though we’re sure the city’s giant $11.5 billion budget can handle the burgeoning clean-up costs, likely to blow up even further, we’re not sure how property owners paying hefty land and sales taxes which have soared over the past years will react. 

And with limited spots open on the new poop patrol team, and at a salary and benefits package approaching $200K, we can imagine people might give second thought to the prospect of shoveling shit on a professional basis

Perhaps the only question that remains is, what kind of resumé does one have to have to rise to the top of pile? 

Source: ZeroHedge

Seasoned Silicon Valley Techies Struggle On Six-Figure Salaries

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Several Silicon Valley employees, including a software engineer for Twitter who made a $160,000 salary, were mocked online after complaining about their living standards in an article for The Guardian.

In the article, entitled “Scraping by on six figures? Tech workers feel poor in Silicon Valley’s wealth bubble,” the employee complained that his six-figure salary was “pretty bad” for the area.

“I didn’t become a software engineer just to make ends meet,” proclaimed the employee“Families are priced out of the market.”

“The biggest cost is his $3,000 rent – which he said is ‘ultra cheap’ for the area – for a two-bedroom house in San Francisco, where he lives with his wife and two children,” reported The Guardian sympathetically. “He’d like a slightly bigger place, but finds himself competing with groups of twenty somethings happy to share accommodation while paying up to $2,000 for a single room.”

“Prohibitive costs have displaced teachers, city workers, firefighters and other members of the middle class, not to mention low-income residents,” they continued. “Now techies, many of whom are among the highest 1% of earners, are complaining they, too, are being priced out.”

The Guardian also covered other Silicon Valley employees in the piece who were earning “between $100,000 and $700,000 a year” but still allegedly had trouble “making ends meet.”

“One Apple employee was recently living in a Santa Cruz garage, using a compost bucket as a toilet. Another tech worker, enrolled in a coding boot camp, described how he lived with 12 other engineers in a two-bedroom apartment rented via Airbnb,” The Guardian reported.

“It was $1,100 for a fucking bunk bed and five people in the same room. One guy was living in a closet, paying $1,400 for a ‘private room,’” one man complained, while a female employee added, “We make over $1m between us, but we can’t afford a house… This is part of where the American dream is not working out here.”

Other established San Francisco residents mocked tech employees for their complaints.

“Scraping by in the Bay Area on a six-figure salary sure must be difficult!joked San Francisco Chronicle reporter Lizzie Johnson.

Source: By Charlie Nash | Breitbart

Rare Video Footage from 1906 Shows Amazing Bustle of San Francisco’s Market Street

A Trip Down Market Street‘ was shot on April 14, 1906, just four days before the San Francisco earthquake and fire, to which the negative was nearly lost. It was produced by moving picture photographers the Miles brothers (Harry, Herbert, Earle and Joe). Harry J. Miles hand-cranked the Bell & Howell camera which was placed on the front of a streetcar during filming on Market Street from 8th, in front of the Miles Studios, to the Ferry building.

A few days later the Miles brothers were en route to New York when they heard news of the earthquake. They sent the negative to NY, and returned to San Francisco to discover that their studios were destroyed.

Filmed during the era of silent film, Sound Designer and Engineer Mike Upchurch added sound to enhance the incredible video and immerse viewers into the hustle and bustle of San Francisco’s Market Street at the turn of the 20th century. Upchurch adds:

Automobile sounds are all either Ford Model T, or Model A, which came out later, but which have similarly designed engines, and sound quite close to the various cars shown in the film. The horns are slightly inaccurate as mostly bulb horns were used at the time, but were substituted by the far more recognizable electric “oogaa” horns, which came out a couple years later. The streetcar sounds are actual San Francisco streetcars. Doppler effect was used to align the sounds.

Market Street – San Francisco 1906 – After the Earthquake – DashCam View – Silent

Source: Twisted Sifter

Blackstone Deal Hammers San Francisco Commercial Real Estate

Signs of a bust pile up.

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Private-Equity firm Blackstone Group is planning to acquire Market Center in San Francisco, a 720,000 square-foot complex that consists of a 21-story tower and a 40-story tower.

The seller, Manulife Financial in Canada, had bought the property in September 2010, near the bottom of the last bust. In its press release at the time, it said that it “identified San Francisco as one of several potential growth areas for our real estate business and we are optimistic about the possibilities.” It raved that the buildings, dating from 1965 and 1975, had been “extensively renovated and modernized with state-of-the-art systems in the last few years….” It paid $265 million, or $344 per square foot.

After a six-year boom in commercial real-estate in San Francisco, and with near-impeccable timing, Manulife put the property on the market in February with an asking price of $750 per square foot – a hoped-for gain of 118%!

Now the excellent Bay Area real estate publication, The Registry, reported that Blackstone Real Estate Partners had agreed to buy it for $489.6 million, or $680 per square foot, “according to sources familiar with the transaction.” The property has been placed under contract, but the deal hasn’t closed yet.

If the deal closes, Manulife would still have a 6-year gain of nearly 100%. But here is a sign, one more in a series, that the phenomenal commercial real estate bubble is deflating: the selling price is 9.3% below asking price!

The property is 92% leased, according to The Registry. Alas, among the largest tenants is Uber, which recently acquired the Sears building in Oakland and is expected to move into its new 330,000 sq-ft digs in a couple of years, which may leave Market Center scrambling for tenants at perhaps the worst possible time.

It’s already getting tough

Sublease space in San Francisco in the first quarter “has soared to its highest mark since 2010,” according to commercial real estate services firm Savills Studley. Sublease space is the red flag. Companies lease excess office space because they expect to grow and hire and thus eventually fill this space. They warehouse this space for future use because they think there’s an office shortage despite the dizzying construction boom underway. This space sits empty, looming in the shadow inventory. When pressure builds to cut expenses, it hits the market overnight, coming apparently out of nowhere. With other companies doing the same, it creates a glut, and lease rates begin to swoon.

Manulife might have seen the slowdown coming

Tech layoffs in the four-county Bay Area doubled for the first four months this year, compared to the same period last year, according to a report by Wells Fargo senior economist Mark Vitner, cited by The Mercury News, “in yet another sign of a slowdown in the booming Bay Area economy.”

Announced layoffs in the counties of San Francisco, Santa Clara, San Mateo, and Alameda jumped to 3,135, from 1,515 in the same period in 2015, and from 1,330 in 2014 — based on the mandatory filings under California’s WARN Act. But…

The number of layoffs in the tech sector is undoubtedly larger, because WARN notices do not include cuts by many smaller companies and startups. In addition, notices of layoffs of fewer than 50 people at larger companies aren’t required by the act.

The filings also don’t take attrition into account – when jobs disappear without layoffs. “There is a lot of that,” Vitner explained. “When businesses begin to clamp down on costs, one of the first things they do is say, ‘Let’s put in a hiring freeze.’ I feel pretty certain that if you had a pickup in layoffs, then hiring slowed ahead of that.”

And hiring has slowed down. According to Vitner’s analysis of state employment data, Bay Area tech firms added only 800 jobs a month in the first quarter – half of the 1,600 a month they’d added in 2015 and less than half of the 1,700 a month in 2014.

“Employment in the tech sector has clearly decelerated over the past three months,” he said. “As job growth slows and the cost of living remains as high as it is, that’s going to put many people in a difficult position.”

It’s going to put commercial real estate into a difficult position as well. During the boom years, the key rationalization for the insane prices and rents has been the rapid growth of tech jobs. Now, the slowdown in hiring and the growth in layoffs come just when the construction boom is coming into full bloom, and as sublease space gets dumped on the market.

Here’s what a real estate investor — at the time co-founder of a company they later sold — told me about real estate during the dotcom bust. All tenants should write this in nail polish on their smartphone screens:

It was funny in 2000 because the rent market was still moving up. We rejected our extension option, hired a broker, and started looking around. As months went on, we kept finding more and more, better and better space while our existing landlord refused to renegotiate a lower renewal. We went from a “B” building to an “A” building at half the rent with hundreds of thousands of dollars of free furniture.

The point is that tenants are normally the last to find out that rents are dropping.

“All it takes is a couple of big tech companies folding and the floodgates open, causing the sublease market to blow up, rents to drop, and new construction to grind to a halt,” Savills Studley mused in its Q1 report on San Francisco. Read…  “Market is on Edge”: US Commercial Real Estate Bubble Pops, San Francisco Braces for Brutal Dive

by Wolf Richter | Wolf Street

House Prices In ‘Gayborhoods’ Have Soared 20% In Three Years

Commercial Street in Provincetown on Cape Cod.

Gay Americans can take pride in these house prices.

Over the last three years, home prices in neighborhoods popular with cohabiting, married or partnered gay men have grown by an average of 23%, according to research by the real-estate website Trulia. Similarly, prices have risen in neighborhoods that are popular with cohabiting, married or partnered gay women — by an average of 18%. “In honor of Gay Pride this year [the last weekend in June in many U.S. cities], we wanted to revisit these neighborhoods and find out what’s changed,” says Trulia housing economist Ralph McLaughlin.

Among the areas characterized as male “gayborhoods,” prices rocketed 65% to $260 per square foot in the 92262 ZIP Code of Palm Springs, Calif., between 2012 and 2015 and rose 47% to $768 in the 94131 ZIP Code, which comprises the Noe Valley, Glen Park and Diamond Heights neighborhoods of San Francisco. One theory: “If you are not raising children, you have two male incomes and have more money to devote to improve their home environment,” says Gary Gates, a demographer and research director of the Williams Institute for Sexual Orientation Law and Public Policy at the University of California.

Among neighborhoods popular with lesbians, prices rose 64% to $389 per square foot in the Redwood Heights/Skyline area of Oakland, Calif.

Many of these neighborhoods are in metro areas that have also experienced sharp price gains. But housing in almost all of the so-called gayborhoods was more expensive than in nearby sections, Trulia found. Homes in the Castro neighborhood of San Francisco cost $948 per square foot, which is 34% more expensive than the San Francisco metro area as a whole, while West Hollywood, Calif., and Provincetown, Mass., are 123% and 119% more expensive, respectively. Guerneville, Calif., was the only area less expensive than its wider metro-area comparable, but only by 2%.

Where gay men’s neighborhoods are getting more expensive
ZIP Code and city Median price per sq. foot, June 2012 Median price per sq. foot, June 2015 % change in price per sq. foot, June 2012–June 2015
92262: Palm Springs, Calif. $158 $260 65%
94131: Noe Valley/Glen Park/Diamond Heights, San Francisco $522 $768 47%
92264: Palm Springs, Calif. $174 $240 38%
48069: Pleasant Ridge, suburban Detroit $137 $188 37%
94114: Castro, San Francisco $699 $948 36%
90069: West Hollywood, Los Angeles $611 $802 31%
75219: Oak Lawn, Dallas $185 $225 22%
33305: Wilton Manors, Fort Lauderdale, Fla. $249 $292 17%
19971: Rehoboth Beach, Del. $193 $203 5%
02657: Provincetown, Cape Cod, Mass. $604 $616 2%
Average for all gay men’s neighborhoods $188 $238 23%
Note: Only ZIP Codes with at least 1,000 persons are included in the analysis. Average growth rate is weighted by number of gay households, so the listed percentage increase is different than the simple percentage change between average price per foot in 2012 and 2015. Data in this report are different from our report in June 2012 because of new MSA definitions and observed time period of listings (month vs. previous year in the June 2012 report)

Using the 2010 Census, McLaughlin calculated the share of households with same-sex couples in every ZIP Code. Focusing on the top 10 among these ZIP Codes, he then calculated the median price per foot of homes for sale in each ZIP Code on Trulia as of June 1, 2015, and compared it with June 1, 2012. He excluded neighborhoods with populations of less than 1,000. Gayborhoods are defined in the census as those with the highest proportion of same-sex cohabiting couples. (The census doesn’t measure sexual orientation.)

Why the discrepancy in price growth between the two? “The top gay-men neighborhoods are places where prices were already high relative to their metros and were not hit as hard during the housing crash as other less expensive neighborhoods,” McLaughlin says. Gay female couples are more than twice as likely to have children as are gay male couples, he adds, “so it could be that gay women seek up-and-coming neighborhoods with good schools to raise their children.”

Many of the neighborhoods on the list of gayborhoods are also places where people are less likely to have children, Gates says. “This survey is picking up neighborhoods where proportionally, fewer households have children in them,” Gates says. “This survey could be picking up a very practical economic reality.” Wellfleet and Provincetown, both on Cape Cod in Massachusetts; Rehoboth Beach, Del.; and Palm Springs are also popular among retirement communities, he says. “The Castro in San Francisco, while popular with both gay men and lesbians, is not high for child-friendly amenities for families,” he says.

Where gay women’s neighborhoods are getting more expensive
ZIP Code and city Median price per sq. foot, June 2012 Median price per sq. foot, June 2015 % change in price per sq. foot, June 2012–June 2015
94619: Redwood Heights/Skyline, Oakland, Calif. $237 $389 64%
30002: Avondale Estates, suburban Atlanta $114 $173 52%
02130: Jamaica Plain, Boston $303 $414 37%
94114: Castro, San Francisco $699 $948 36%
95446: Guerneville, north of San Francisco $270 $335 24%
01060: Northampton, Mass. $197 $216 10%
19971: Rehoboth Beach, Del. $193 $203 5%
01062: Northampton, Mass. $190 $196 3%
02657: Provincetown, Cape Cod, Mass. $604 $616 2%
02667: Wellfleet, Cape Cod, Mass. $326 $323 -1%
Average for all gay women’s neighborhoods $133 $157 18%
Note: Only ZIP Codes with at least 1,000 persons are included in the analysis. Average growth rate is weighted by number of gay households, so the listed percentage increase is different than the simple percentage change between average price per foot in 2012 and 2015. Data in this report are different from our report in June 2012 because of new MSA definitions and observed time period of listings (month vs. previous year in the June 2012 report)

There are other possible limitations to house-price rises within a gayborhood. A neighborhood may need to be “socially liberal” for an increase in same-sex households to increase house prices, a 2011 study by researchers at Konkuk University in Seoul and Tulane University in New Orleans found. They looked at Columbus, Ohio, and, adjusting for factors such as housing, crime and school quality, analyzed house prices with how residents voted in a 2004 ballot initiative on the Defense of Marriage Act. They found a “positive and significant” impact on prices, but only in more liberal locales.

Diversity is good for the economic development of cities and housing prices, according to Richard Florida, an urban theorist and author of “The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life,” a book that was republished last year a decade after it was first released.

Florida found that high-tech hot spots followed the locational patterns of gay people. Other measures he created, such as the Bohemian Index, which measured the prevalence of artists, writers and performers, had similar results. “Artistic and gay populations,” he wrote, “cluster in communities that value open-mindedness and self-expression.”

By Quentin Fottrell. Read more in Market Watch

Ramshackle San Francisco home sells for $1.2 million

This San Francisco fixer-upper proves the old real estate adage, “Location, location, location.”

by Daniel Goldstein  Click here to see more images of the home.

The tale of this otherwise humble two-story home selling for more than $1.2 million has gone viral and has much of the real-estate chattering class talking.

“This is not a joke,” wrote SFist’s Jay Barmann. “[T]his is the world we live in.” He called the 1907 four-bedroom, two-bath Craftsman home “ramshackle.” A “total disaster,” chimed in Tracy Elsen, a real-estate blogger in San Francisco.

Indeed, it might not look like much from the outside or on the inside, but where it is — 1644 Great Highway, San Francisco, CA, 94122 — is where it is.

The 1,832-square-foot house, listed on Redfin.com as a “contractor’s special” in a “deteriorative state” that “needs everything,” just sold, on March 24, for a whopping $1.21 million in cash (or $660 a square foot) after being listed in February for $799,000 (a premium of $411,000). At that per-square-foot price, this house, on San Francisco’s often-chilly western fringe, was more expensive than the going rates in Boston, Washington and New York.

The home, even though it has been gutted, has an unobstructed view of the Pacific Ocean and sits a short walk across San Francisco’s Great Highway to the beach, and it is just five blocks from San Francisco’s famed Golden Gate Park. Oh, and it’s got off-street parking, not a small thing in the City by the Bay.

The house sold for $340,000 in August of 1997 and was sold for $935,000 in June of 2008, when it looked a lot better.

A minimalist museum and a literary landmark

Since then, the house has taken a pounding. Many of the Craftsman-era fixtures common to Bay Area homes, including stained glass and Tiffany-style lamps, have been ripped out, as have most of the fixtures and carpeting and, evidently, the outdoor hot tub that was listed in 2008 but not mentioned in the 2015 listing. A second-story deck in the front of the house with a view of the ocean remains, but it is badly weathered, as is the forest-green paint, in sharp contrast with the careful upkeep evident in 2008.

But some of what made this home a gem in 2008 remains intact, including its picture windows, its decked garden, the fireplaces with wood mantels, the built-in cabinets common to Craftsman homes, the wainscoting and a gas O’Keefe & Merritt stove that dates back to the late 1940s or early 1950s (collector’s items that are prized by many homeowners in the Bay Area).

And given the fact that San Francisco’s median home price recently hit $1 million, and that it rose 10% between February 2014 and February 2015 and is expected to gain another 4.3% through February 2016, the price for this house, on this lot, might just prove to be a bargain.

Affordable Housing Plan Slaps Fee on California Property Owners

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by Phil Hall

The speaker of California’s State Assembly is seeking to raise new funds for affordable housing development by adding a new $75 fee to the costs of recording real estate documents.

Toni Atkins, a San Diego Democrat, stated that the new fee would be a permanent addition to the state’s line-up of fees and taxes and would apply to all real estate documents except those related to home sales. Atkins conspicuously avoided citing the $75 figure in a press statement issued by her office, only briefly identifying it as a “small fee” while insisting that she had broad support for the plan.

“The permanent funding source, which earned overwhelming support from California’s business community, will generate hundreds of millions annually for affordable housing and leverage billions of dollars more in federal, local, and bank investment,” Atkins said. “This plan will reap benefits for education, healthcare and public safety as well. The outcomes sought in other sectors improve when housing instability is addressed.”

Atkins added that her plan should add between $300 million to $720 million a year for the state’s affordable housing endeavors. But Atkins isn’t completely focused on collecting revenue: She is simultaneously proposing that developers offering low-income housing should receive $370 million in tax credits, up from the current level of $70 million.

This is the third time that a $75 real estate transaction fee has been proposed in the state legislature. Earlier efforts were put forward in 2012 and 2013, but failed to gained traction. Previously, opponents to the proposal argued that transactions involving multiple documents would be burdened with excess costs because the fee applies on a per-document basis and not a per-transaction basis.

One of the main opponents of Atkins’ proposal, Jon Coupal, president of the Howard Jarvis Taxpayers Association, told the San Francisco Chronicle that the speaker was playing word games by insisting this was merely a fee and that she was penalizing property owners to finance a problem that they did not create.

“It’s clearly a tax, not a fee,” said Coupal. “There is not a nexus between the fee payer and the public need being addressed. It’s not like charging a polluter a fee for the pollution they caused. It’s a revenue that is totally divorced from the so-called need for affordable housing.”

OCWEN Fakes foreclosure Notices To Steal Homes – Downgrade Putting RMBS at Risk

foreclosure for sale

by Carole VanSickle Ellis

If you really would rather own the property than the note, take a few lessons in fraud from Owen Financial Corp. According to allegations from New York’s financial regulator, Benjamin Lawsky, the lender sent “thousands” of foreclosure “warnings” to borrowers months after the window of time had lapsed during which they could have saved their homes[1]. Lawskey alleges that many of the letters were even back-dated to give the impression that they had been sent in a timely fashion. “In many cases, borrowers received a letter denying a mortgage loan modification, and the letter was dated more than 30 days prior to the date that Ocwen mailed the letter.”

The correspondence gave borrowers 30 days from the date of the denial letter to appeal, but the borrowers received the letters after more than 30 days had passed. The issue is not a small one, either. Lawskey says that a mortgage servicing review at Ocwen revealed “more than 7,000” back-dated letters.”

In addition to the letters, Ocwen only sent correspondence concerning default cures after the cure date for delinquent borrowers had passed and ignored employee concerns that “letter-dating processes were inaccurate and misrepresented the severity of the problem.” While Lawskey accused Ocwen of cultivating a “culture that disregards the needs of struggling borrowers,” Ocwen itself blamed “software errors” for the improperly-dated letters[2]. This is just the latest in a series of troubles for the Atlanta-based mortgage servicer; The company was also part the foreclosure fraud settlement with 49 of 50 state attorneys general and recently agreed to reduce many borrowers’ loan balances by $2 billion total.

Most people do not realize that Ocwen, although the fourth-largest mortgage servicer in the country, is not actually a bank. The company specializes specifically in servicing high-risk mortgages, such as subprime mortgages. At the start of 2014, it managed $106 billion in subprime loans. Ocwen has only acknowledged that 283 New York borrowers actually received improperly dated letters, but did announce publicly in response to Lawskey’s letter that it is “investigating two other cases” and cooperating with the New York financial regulator.

WHAT WE THINK: While it’s tempting to think that this is part of an overarching conspiracy to steal homes in a state (and, when possible, a certain enormous city) where real estate is scarce, in reality the truth of the matter could be even more disturbing: Ocwen and its employees just plain didn’t care. There was a huge, problematic error that could have prevented homeowners from keeping their homes, but the loan servicer had already written off the homeowners as losers in the mortgage game. A company that services high-risk loans likely has a jaded view of borrowers, but that does not mean that the entire culture of the company should be based on ignoring borrowers’ rights and the vast majority of borrowers who want to keep their homes and pay their loans. Sure, if you took out a mortgage then you have the obligation to pay even if you don’t like the terms anymore. On the other side of the coin, however, your mortgage servicer has the obligation to treat you like someone who will fulfill their obligations rather than rigging the process so that you are doomed to fail.

Do you think Lawskey is right about Ocwen’s “culture?” What should be done to remedy this situation so that note investors and homeowners come out of it okay?

Thank you for reading the Bryan Ellis Investing Letter!

Your comments and questions are welcomed below.


[1] http://dsnews.com/news/10-23-2014/new-york-regulator-accuses-lender-sending-backdated-foreclosure-notices

[2] http://realestate.aol.com/blog/2014/10/22/ocwen-mortgage-alleged-foreclosure-abuse/

http://investing.bryanellis.com/11703/lender-fakes-foreclosure-notices-to-steal-homes/


Ocwen posts open letter and apology to borrowers
Pledges independent investigation and rectification
October 27, 2014 10:37AM

Ocwen Financial (OCN) has taken a beating after the New York Department of Financial Services sent a letter to the company on Oct. 21 alleging that the company had been backdating letters to borrowers, and now Ocwen is posting an open letter to homeowners.

Ocwen CEO Ron Faris writes to its clients explaining what happened and what steps the company is taking to investigate the issue, identify any problems, and rectify the situation.

Click here to read the full text of the letter.

“At Ocwen, we take our mission of helping struggling borrowers very seriously, and if you received one of these incorrectly-dated letters, we apologize. I am writing to clarify what happened, to explain the actions we have taken to address it, and to commit to ensuring that no borrower suffers as a result of our mistakes,” he writes.

“Historically letters were dated when the decision was made to create the letter versus when the letter was actually created. In most instances, the gap between these dates was three days or less,” Faris writes. “In certain instances, however, there was a significant gap between the date on the face of the letter and the date it was actually generated.”

Faris says that Ocwen is investigating all correspondence to determine whether any of it has been inadvertently misdated; how this happened in the first place; and why it took so long to fix it. He notes that Ocwen is hiring an independent firm to conduct the investigation, and that it will use its advisory council comprised of 15 nationally recognized community advocates and housing counselors.

“We apologize to all borrowers who received misdated letters. We believe that our backup checks and controls have prevented any borrowers from experiencing a foreclosure as a result of letter-dating errors. We will confirm this with rigorous testing and the verification of the independent firm,” Faris writes. “It is worth noting that under our current process, no borrower goes through a foreclosure without a thorough review of his or her loan file by a second set of eyes. We accept appeals for modification denials whenever we receive them and will not begin foreclosure proceedings or complete a foreclosure that is underway without first addressing the appeal.”

Faris ends by saying that Ocwen is committed to keeping borrowers in their homes.

“Having potentially caused inadvertent harm to struggling borrowers is particularly painful to us because we work so hard to help them keep their homes and improve their financial situations. We recognize our mistake. We are doing everything in our power to make things right for any borrowers who were harmed as a result of misdated letters and to ensure that this does not happen again,” he writes.

Last week the fallout from the “Lawsky event” – so called because of NYDFS Superintendent Benjamin Lawsky – came hard and fast.

Compass Point downgraded Ocwen affiliate Home Loan Servicing Solutions (HLSS) from Buy to Neutral with a price target of $18.

Meanwhile, Moody’s Investors Service downgraded Ocwen Loan Servicing LLC’s servicer quality assessments as a primary servicer of subprime residential mortgage loans to SQ3 from SQ3+ and as a special servicer of residential mortgage loans to SQ3 from SQ3+.

Standard & Poor’s Ratings Services lowered its long-term issuer credit rating to ‘B’ from ‘B+’ on Ocwen on Wednesday and the outlook is negative.

http://www.housingwire.com/articles/31846-ocwen-posts-open-letter-and-apology-to-borrowers

—-
Ocwen Writes Open Letter to Homeowners Concerning Letter Dating Issues
October 24, 2014

Dear Homeowners,

In recent days you may have heard about an investigation by the New York Department of Financial Services’ (DFS) into letters Ocwen sent to borrowers which were inadvertently misdated. At Ocwen, we take our mission of helping struggling borrowers very seriously, and if you received one of these incorrectly-dated letters, we apologize. I am writing to clarify what happened, to explain the actions we have taken to address it, and to commit to ensuring that no borrower suffers as a result of our mistakes.

What Happened
Historically letters were dated when the decision was made to create the letter versus when the letter was actually created. In most instances, the gap between these dates was three days or less. In certain instances, however, there was a significant gap between the date on the face of the letter and the date it was actually generated.

What We Are Doing
We are continuing to investigate all correspondence to determine whether any of it has been inadvertently misdated; how this happened in the first place; and why it took us so long to fix it. At the end of this exhaustive investigation, we want to be absolutely certain that we have fixed every problem with our letters. We are hiring an independent firm to investigate and to help us ensure that all necessary fixes have been made.

Ocwen has an advisory council made up of fifteen nationally recognized community advocates and housing counsellors. The council was created to improve our borrower outreach to keep more people in their homes. We will engage with council members to get additional guidance on making things right for any borrowers who may have been affected in any way by this error.

We apologize to all borrowers who received misdated letters. We believe that our backup checks and controls have prevented any borrowers from experiencing a foreclosure as a result of letter-dating errors. We will confirm this with rigorous testing and the verification of the independent firm. It is worth noting that under our current process, no borrower goes through a foreclosure without a thorough review of his or her loan file by a second set of eyes. We accept appeals for modification denials whenever we receive them and will not begin foreclosure proceedings or complete a foreclosure that is underway without first addressing the appeal.

In addition to these efforts we are committed to cooperating with DFS and all regulatory agencies.

We Are Committed to Keeping Borrowers in Their Homes
Having potentially caused inadvertent harm to struggling borrowers is particularly painful to us because we work so hard to help them keep their homes and improve their financial situations. We recognize our mistake. We are doing everything in our power to make things right for any borrowers who were harmed as a result of misdated letters and to ensure that this does not happen again. We remain deeply committed to keeping borrowers in their homes because we believe it is the right thing to do and a win/win for all of our stakeholders.

We will be in further communication with you on this matter.

Sincerely,
Ron Faris
CEO

YOU DECIDE

Ocwen Downgrade Puts RMBS at Risk

Moody’s and S&P downgraded Ocwen’s servicer quality rating last week after the New York Department of Financial Services made “backdating” allegations. Barclays says the downgrades could put some RMBS at risk of a servicer-driven default.

http://findsenlaw.wordpress.com/2014/10/29/ocwen-downgraded-in-response-to-ny-dept-of-financial-services-backdating-allegations-against-ocwen/

Home Ownership Rate Since 2005

https://i1.wp.com/lifeinbeta.com/wp-content/uploads/2011/07/CuteHouse-473x580.jpg

by Wolf Richter

The quintessential ingredient in the stew that makes up a thriving housing market has been evaporating in America. And a recent phenomenon has taken over: private equity firms, REITs, and other Wall-Street funded institutional investors have plowed the nearly free money the Fed has graciously made available to them since 2008 into tens of thousands of vacant single-family homes to rent them out. And an apartment building boom has offered alternatives too.

Since the Fed has done its handiwork, institutional investors have driven up home prices and pushed them out of reach for many first-time buyers, and these potential first-time buyers are now renting homes from investors instead. Given the high home prices, in many cases it may be a better deal. And apartments are often centrally located, rather than in some distant suburb, cutting transportation time and expenses, and allowing people to live where the urban excitement is. Millennials have figured it out too, as America is gradually converting to a country of renters.

So in its inexorable manner, home ownership has continued to slide in the third quarter, according to the Commerce Department. Seasonally adjusted, the rate dropped to 64.3% from 64.7 in the prior quarter. It was the lowest rate since Q4 1994 (not seasonally adjusted, the rate dropped to 64.4%, the lowest since Q1 1995).

This is what that relentless slide looks like:

US-quarterly-homeownership-rates-1995-2014

Home ownership since 2008 dropped across all age groups. But the largest drops occurred in the youngest age groups. In the under-35 age group, where first-time buyers are typically concentrated, home ownership has plunged from 41.3% in 2008 to 36.0%; and in the 35-44 age group, from 66.7% to 59.1%, with a drop of over a full percentage point just in the last quarter – by far the steepest.

Home ownership, however, didn’t peak at the end of the last housing bubble just before the financial crisis, but in 2004 when it reached 69.2%. Already during the housing bubble, speculative buying drove prices beyond the reach of many potential buyers who were still clinging by their fingernails to the status of the American middle class … unless lenders pushed them into liar loans, a convenient solution many lenders perfected to an art.

It was during these early stages of the housing bubble that the concept of “home” transitioned from a place where people lived and thrived or fought with each other and dealt with onerous expenses and responsibilities to a highly leveraged asset for speculators inebriated with optimism, an asset to be flipped willy-nilly and laddered ad infinitum with endless amounts of cheaply borrowed money. And for some, including the Fed it seems, that has become the next American dream.

Despite low and skidding home ownership rates, home prices have been skyrocketing in recent years, and new home prices have reached ever more unaffordable all-time highs.

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Assisted-Living Complexes for Young People

https://i1.wp.com/www.cenozoico.com/wp-content/uploads/2013/12/Balcony-Appartment-Outdoor-Living-Room-Ideas-1024x681.jpg

by Dionne Searcey

One of the most surprising developments in the aftermath of the housing crisis is the sharp rise in apartment building construction. Evidently post-recession Americans would rather rent apartments than buy new houses.

When I noticed this trend, I wanted to see what was behind the numbers.

Is it possible Americans are giving up on the idea of home ownership, the very staple of the American dream? Now that would be a good story.

What I found was less extreme but still interesting: The American dream appears merely to be on hold.

Economists told me that many potential home buyers can’t get a down payment together because the recession forced them to chip away at their savings. Others have credit stains from foreclosures that will keep them out of the mortgage market for several years.

More surprisingly, it turns out that the millennial generation is a driving force behind the rental boom. Young adults who would have been prime candidates for first-time home ownership are busy delaying everything that has to do with becoming a grown-up. Many even still live at home, but some data shows they are slowly beginning to branch out and find their own lodgings — in rental apartments.

A quick Internet search for new apartment complexes suggests that developers across the country are seizing on this trend and doing all they can to appeal to millennials. To get a better idea of what was happening, I arranged a tour of a new apartment complex in suburban Washington that is meant to cater to the generation.

What I found made me wish I was 25 again. Scented lobbies crammed with funky antiques that led to roof decks with outdoor theaters and fire pits. The complex I visited offered Zumba classes, wine tastings, virtual golf and celebrity chefs who stop by to offer cooking lessons.

“It’s like an assisted-living facility for young people,” the photographer accompanying me said.

Economists believe that the young people currently filling up high-amenity rental apartments will eventually buy homes, and every young person I spoke with confirmed that this, in fact, was the plan. So what happens to the modern complexes when the 20-somethings start to buy homes? It’s tempting to envision ghost towns of metal and pipe wood structures with tumbleweeds blowing through the lobbies. But I’m sure developers will rehabilitate them for a new demographic looking for a renter’s lifestyle.

Hillary: “Business Does Not Create Jobs”, Washington Does

Hillary_Clinton_2016_president_bid_confirmed by Tyler Durden

We have a very serious problem with Hillary. I was asked years ago to review Hillary’s Commodity Trading to explain what went on. Effectively, they did trades and simply put winners in her account and the losers in her lawyer’s. This way she gets money that is laundered through the markets – something that would get her 25 years today. People forget, but Hillary was really President – not Bill. Just 4 days after taking office, Hillary was given the authority to start a task force for healthcare reform. The problem was, her vision was unbelievable. The costs upon business were oppressive so much so that not even the Democrats could support her. When asked how was a small business mom and pop going to pay for healthcare she said “if they could not afford it they should not be in business.” From that moment on, my respect for her collapsed. She revealed herself as a real Marxist. Now, that she can taste the power of Washington, and I dare say she will not be a yes person as Obama and Bush seem to be, therein lies the real danger. Giving her the power of dictator, which is the power of executive orders, I think I have to leave the USA just to be safe. Hillary has stated when she ran the White House before regarding her idea of healthcare, “We can’t afford to have that money go to the private sector. The money has to go to the federal government because the federal government will spend that money better than the private sector will spend it.” When has that ever happened?

Hillary believes in government at the expense of the people. I do not say this lightly, because here she goes again. She just appeared at a Boston rally for Democrat gubernatorial candidate Martha Coakley on Friday. She was off the hook and amazingly told the crowd gathered at the Park Plaza Hotel not to listen to anybody who says that “businesses create jobs.” “Don’t let anybody tell you it’s corporations and businesses that create jobs,” Clinton said. “You know that old theory, ‘trickle-down economics,’” she continued. “That has been tried, that has failed. It has failed rather spectacularly.” “You know, one of the things my husband says when people say ‘Well, what did you bring to Washington,’ he said, ‘Well, I brought arithmetic,” Hillary said.

I wrote an Op-Ed for the Wall Street Journal on Clinton’s Balanced Budget. It was smoke and mirrors. Long-term interest rates were sharply higher than short-term. Clinton shifted the national debt to save interest expenditures. He also inherited a up-cycle in the economy that always produces more taxes. Yet she sees no problem with the math of perpetually borrowing. Perhaps she would get to the point of being unable to sell debt and just confiscate all wealth since government knows better. 

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Here’s a shocker or is it? Take the quiz and then check your answers at the bottom. Then take action!!!

And, no, the answers to these questions aren’t all “Barack Obama”!

1) “We’re going to take things away from you on behalf
of the common good.”
A. Karl Marx
B. Adolph Hitler
C. Joseph Stalin

D. Barack Obama
E. None of the above

2) “It’s time for a new beginning, for an end to government
of the few, by the few, and for the few…… And to replace it
with shared responsibility, for shared prosperity.”
A. Lenin
B. Mussolini
C. Idi Amin
D. Barack Obama

E. None of the above

3) “(We)…..can’t just let business as usual go on, and that
means something has to be taken away from some people.”
A. Nikita Khrushchev
B. Joseph Goebbels
C. Boris Yeltsin

D. Barack Obama
E. None of the above

4) “We have to build a political consensus and that requires
people to give up a little bit of their own … in order to create
this common ground.”
A. Mao Tse Tung
B. Hugo Chavez
C. Kim Jong II

D. Barack Obama
E. None of the above

5) “I certainly think the free-market has failed.”
A. Karl Marx
B. Lenin
C. Molotov
D. Barack Obama

E. None of the above

6) “I think it’s time to send a clear message to what
has become the most profitable sector in (the) entire
economy that they are being watched.”
A. Pinochet
B. Milosevic
C. Saddam Hussein

D. Barack Obama
E. None of the above

and the answers are ~~~~~~~~~~~~~

(1) E. None of the above. Statement was made by Hillary Clinton 6/29/2004
(2) E. None of the above. Statement was made by Hillary Clinton 5/29/2007
(3) E. None of the above. Statement was made by Hillary Clinton 6/4/2007
(4) E. None of the above. Statement was made by Hillary Clinton 6/4/2007
(5) E. None of the above. Statement was made by Hillary Clinton 6/4/2007
(6) E. None of the above. Statement was made by Hillary Clinton 9/2/2005

Want to know something scary? She may be the next POTUS.

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FHA Is Set To Return To Anti-House-Flipping Restrictions


House flippers buy run-down properties, fix them up and resell them quickly at a higher price. Above, a home under renovation in Amsterdam, N.Y. (Mike Groll / Associated Press)

Can you still do a short-term house flip using federally insured, low-down payment mortgage money? That’s an important question for buyers, sellers, investors and realty agents who’ve taken part in a nationwide wave of renovations and quick resales using Federal Housing Administration-backed loans during the last four years.

The answer is yes: You can still flip and finance short term. But get your rehabs done soon. The federal agency whose policy change in 2010 made tens of thousands of quick flips possible — and helped large numbers of first-time and minority buyers with moderate incomes acquire a home — is about to shut down the program, FHA officials confirmed to me.

In an effort to stimulate repairs and sales in neighborhoods hard hit by the mortgage crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling — flipping it — to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA mortgage — provided that you followed guidelines designed to protect consumers from being ripped off with hyper-inflated prices and shoddy construction.

Since then, according to FHA estimates, about 102,000 homes have been renovated and resold using the waiver. The reason for the upcoming termination: The program has done its job, stimulated billions of dollars of investments, stabilized prices and provided homes for families who were often newcomers to ownership.

However, even though the waiver program has functioned well, officials say, inherent dangers exist when there are no minimum ownership periods for flippers. In the 1990s, the FHA witnessed this firsthand when teams of con artists began buying run-down houses, slapped a little paint on the exterior and resold them within days — using fraudulent appraisals — for hyper-inflated prices and profits. Their buyers, who obtained FHA-backed mortgages, often couldn’t afford the payments and defaulted. Sometimes the buyers were themselves part of the scam and never made any payments on their loans — leaving the FHA, a government-owned insurer, with steep losses.

For these reasons, officials say, it’s time to revert to the more restrictive anti-quick-flip rules that prevailed before the waiver: The 90-day standard will come back into effect after Dec. 31.

But not everybody thinks that’s a great idea. Clem Ziroli Jr., president of First Mortgage Corp., an FHA lender in Ontario, says reversion to the 90-day rule will hurt moderate-income buyers who found the program helpful in opening the door to home ownership.

“The sad part,” Ziroli said in an email, “is the majority of these properties were improved and [located] in underserved areas. Having a rehabilitated house available to these borrowers” helped them acquire houses that had been in poor physical shape but now were repaired, inspected and safe to occupy.

Paul Skeens, president of Colonial Mortgage in Waldorf, Md., and an active rehab investor in the suburbs outside Washington, D.C., said the upcoming policy change will cost him money and inevitably raise the prices of the homes he sells after completing repairs and improvements. Efficient renovators, Skeens told me in an interview, can substantially improve a house within 45 days, at which point the property is ready to list and resell. By extending the mandatory ownership period to 90 days, the FHA will increase Skeens’ holding costs — financing expenses, taxes, maintenance and utilities — all of which will need to be added onto the price to a new buyer.

Paul Wylie, a member of an investor group in the Los Angeles area, says he sees “more harm than good by not extending the waiver. There are protections built into the program that have served [the FHA] well,” he said in an email. If the government reimposes the 90-day requirement, “it will harm those [buyers] that FHA intends to help” with its 3.5% minimum-down-payment loans. “Investors will adapt and sell to non-FHA-financed buyers. Entry-level consumers will be harmed unnecessarily.”

Bottom line: Whether fix-up investors like it or not, the FHA seems dead set on reverting to its pre-bust flipping restrictions. Financing will still be available, but selling prices of the end product — rehabbed houses for moderate-income buyers — are almost certain to be more expensive.

kenharney@earthlink.net. Distributed by Washington Post Writers Group. Copyright © 2014, Los Angeles Times

Home-Flipping Collapses In San Francisco – Losses Spread

https://i1.wp.com/wallpapers.wallpapersdepo.net/free-wallpapers/578/san-francisco.jpg Source: wolfstreet.com

Home flippers are hardy folks who dive head-first into housing markets to buy homes at a discount from estimated market value, rehab them if they have to, trim the trees and cut the weeds out front, and flip the unit in less than a year, hopefully at a premium over estimated market value. If all works out, they’re rewarded with fat returns on investment.

It involves leverage, so some of the risks get shuffled off to the lender. It involves skills, connections, knowledge, and a good dose of luck. Above all, it requires the ability to buy low and sell high. To take home some serious dough, flippers need to purchase at double-digit discounts below “estimated market value” (based on AVM) and add enough value to sell at a premium over estimated market value. In the intervening months, home prices must also jump. So double-digit home price increases over the last two years have made flipping a lot more profitable. And easier.

This is the magic mix. If the conditions are met, the equation works out. If not, it’s a leveraged bet that can go to heck in a hand basket.

But flipping has started to run out of air in much of the country. And in the multi-county metro area of San Francisco, flipping collapsed in the second quarter, and flippers for the first time in years, started wading into red ink.

Home sales in the US have been declining since last fall, with mortgage applications plummeting at double-digit rates year over year. All sorts of excuses were dragged out of the closet, from tight inventories to bad weather, until inventories started to balloon and the weather was gorgeous, and sales were still dropping. Now it’s perfectly clear even to the most recalcitrant economists why: soaring prices have moved homes out of reach for many potential buyers. At first, the swoon in unit sales didn’t seem to have any impact on prices. But now the inevitable is happening: over the last few months, price increases have shriveled before our very eyes, and in some markets, on a monthly basis, outright price declines have started to crop up.

On Friday, in a section ominously titled, “Price Drops: ‘There’s Blood in the Water,’” Redfin reported on the growing prevalence in July of sellers having to lower listing prices as homes, rather than stirring up bidding wars, sit around for weeks or months. Redfin expects this trend to continue, with prices “potentially” declining month over month in September and October. “If that happens, it will be the first three-month price decline since the fall 2012,” it explained.

And our hardy home flippers, who dive head-first into these markets? They’re the first to notice when the water has been drained out of the pool. And flipping as a business model is suddenly no longer so appealing. Home sales overall are dropping, and flipping as a percent of total sales has swooned, and profits have come under pressure, and the time it takes to flip a home has soared, and year over year the volume of flips has plunged 61%. Money no longer grows on trimmed trees, freshly painted walls, and rehabbed bathrooms [read…  The Home-Flipping Bubble Implodes].

But real estate is local, and some flipping markets have been getting hit particularly hard while others still manage to hang in there.

In a new report, RealtyTrac listed the ten best and the ten worst markets for flipping in the second quarter. Across all markets, according to the report, flippers on average were able to buy properties 8% below their “estimate market value” (AVM) and sell them at 6% above their estimated market value. The worst market for flipping?

The multi-county metro area of San Francisco!

Flipping as a percent of total sales plunged by over one-third year over year to 5.6% of total home sales. As home prices soared to levels that made otherwise rational people giddy and incoherent, flippers ran out of an ingredient in the magic mix, namely being able to buy low. Or perhaps the paint wasn’t right, or the granite in the kitchen was the wrong color, and steep losses suddenly ruined the fun.

Last year in Q2, flippers in the San Francisco metro area still earned an ROI of a breathtaking 45%, on homes that were already high-dollar deals by national averages. But this year in Q2, it became apparent that, instead of buying low, they’d been buying high recently: at an average premium of 34% over estimated market value, according to RealtyTrac. But potential home buyers revolted against these prices. And flippers were forced to sell low, that is they could only sell at a 10% premium. And the average ROI dropped into the negative, to -9%.

Red ink also washed over the Las Vegas/Paradise metro area, a former can’t-lose-money-here flipper’s casino, where flipping in Q2 dropped to 8% of total sales, and the average ROI was -4%.

There were still plenty of markets in Q2 where flipping homes produced excellent returns for flippers who knew what they were doing, where buying low was still possible, and where subsequent home-price increases still played along. But Housing Bubble 2 is displaying more and more aspects of having run its course. And that includes trouble in new single-family homes: dropping sales, swooning prices, and ballooning inventories. Read…  Drowning in Unsold New Homes?

Rent or Buy? The Math Is Changing

Billy Gasparino and Jenna Dillon-Gasparino were savvy enough to wait out the housing boom of a decade ago as renters. Not until 2010, well into the bust, did they buy a house in the Venice neighborhood of Los Angeles, less than a mile from the beach, for $810,000.

Only four years later, the couple see new signs of excess in the housing market and have decided to go back to renting. They are close to a deal to sell their house – for $1.35 million, a cool 67 percent gain.

“It just seems like the housing market came back so strongly, so fast, that maybe there’s a little bit of a bubble there,” said Mr. Gasparino, 37, an executive with the San Diego Padres.

Their decision reflects a new reality in many of the nation’s largest metropolitan areas. An analysis by The New York Times finds that in the country’s most expensive places, including New York, the San Francisco Bay Area and Los Angeles, buying a home again looks like a perilous investment, based on the relationship between their prices and rents or incomes. And in a longer list of areas, including Boston, Miami and Washington, prices have risen enough that buying is no longer the bargain it looked to be a few years ago.

The Times also created an online calculator that enables prospective buyers and renters to analyze their own decision. For example, for a typical person considering the purchase of a $500,000 house who expects to live there seven years, it might make more sense to rent if a similar place is available for $1,956 a month or less.

“A lot of these coastal markets look overvalued compared to rents,” said Mark Zandi, the chief economist at Moody’s Analytics. “In these markets, it seems generally more attractive to rent than to buy, even as the national market is broadly well balanced.”

For example, Venice, where the Gasparinos are selling their house, has benefited from an influx of tech industry, including from the opening of Google’s Los Angeles office there in 2011. “You have engineers, visual effects artists, people making 2, 3, 400 thousand dollars a year coming in,” said Tami Pardee, principal of Pardee Properties real estate brokerage in Venice. “The problem I’m having is inventory. There isn’t enough of it.”

Thanks to low interest rates and home prices that remain 13 percent below their 2006 peak nationally, buying continues to look like a good deal in much of the country. In the once-frothy markets of Phoenix, Las Vegas and Orlando, Fla., for example, the typical home price is still 30 to 40 percent below 2006 levels, even more if one accounts for inflation.

But across much of California and the Northeast, prices are now high enough that the costs of owning a home – property taxes, repairs, fees to real-estate agents and mortgage interest – may outweigh the financial benefits, including the tax break.

It is the latest change in a yo-yo pattern over the past decade. From 2004 to 2006, the math overwhelmingly favored renting rather than buying across most of the country, even as many Americans mistakenly decided that home prices could never fall. From 2009 to 2011, buying was an extraordinary deal in most of the country. Even the markets that have experienced huge price increases are far from the clear-cut bubble conditions of the mid-2000s, but they’re inching closer with every bidding war.

Since the start of 2011, prices have risen 33 percent in the San Francisco area, 30 percent in Miami, 24 percent in Los Angeles — and even more in some of the most desirable neighborhoods within those areas.

In the San Francisco Bay Area, home of the sharpest recent price increases, the sale price of a home is about 20 times what it would cost to rent a home of the same size for a year. That ratio, based on an analysis of data from Zillow, is the same as in 2003, when the San Francisco real estate market had yet to become an out-of-control bubble but was well on its way there.

When low mortgage rates are taken into account, buying a home in San Francisco looks somewhat more attractive — but with a 10 percent down payment and prevailing interest rates, buying a home is 6 percent more expensive than renting a place of the same size, the same premium for buying as there was during the dot-com boom in 1999. Just two years ago, buying in the San Francisco area was 24 percent cheaper than renting an equivalent place.

The potentially overvalued markets are the result of three forces. They are taking place in local economies that suffered only minimally during the recession that began in 2008 and have experienced strong job growth since then.

They are fueled further by the low-interest rate policies that are aimed at bolstering the overall national economy but don’t discriminate based on geography. Even as San Francisco’s housing market is at risk of overheating, buyers there get the same ultralow mortgage rates engineered by the Federal Reserve as home buyers in depressed Detroit or Cleveland do.

And the new booms are taking place in markets where restrictions on building hinder developers from responding to rising demand by constructing more housing. That distinguishes the major California markets from the strong local economies in Texas and elsewhere. The Dallas area and the San Francisco area added similar numbers of jobs last year, but local governments in Dallas issued permits for nearly four times as many new housing units.

There are important caveats, of course. The wisdom of buying versus renting depends heavily on each person’s financial situation, plans and preferences. And the cliché about all real estate being local holds; each neighborhood can have its own unique dynamics in the for-sale and for-rent housing sectors that must be considered.

Home buyers in even the highest-price markets can take some solace in the fact that prices aren’t as outlandishly high relative to rents as they were in 2006. But they should also know that homes are also priced richly enough to leave no room for error.

It’s a bit like the current consensus opinion of economists on the value of the stock market: not in a bubble, necessarily, but certainly expensive enough to make a buyer wary. While home prices may stay high for months or years to come, buyers are leaving themselves vulnerable to a decline toward more normal historical valuations. Renters avoid that risk, even if they also don’t get some of the upside if the bull market for houses in places like Santa Monica, Nob Hill and TriBeCa has longer to run.

“If you thought home values in the Bay Area or Southern California were such that we might see another housing correction, that radically starts to advantage rental housing,” said Stan Humphries, Zillow’s chief economist, who argues that current prices are reasonably well justified, while acknowledging that prices are high enough to leave buyers exposed.

The real estate market in Venice, where the Gasparinos are selling their house to lock in the gains, shows the forces shaping the new boom markets. Besides the tech employment there on Silicon Beach, as the local boosters put it, the supply of housing can’t expand to meet that rising demand. The area is filled with block after block of low-slung houses and apartments, and density restrictions stand in the way of constructing tall buildings.

That combination has been enough to send the median price per square foot of homes that are sold up 49 percent since late 2010 in the 90291 ZIP code, according to Zillow, and the median rent per square foot up 23 percent in the same span.

“When we bought four years ago after the crash, the market was dead, and it felt like everybody learned their lesson,” Mr. Gasparino said. “It just went back so fast.”

Source: New York Times

We All Agree: We want to keep people in their homes if possible… sort of.

Re-posted From: Mandelman Matters

I have a long-time reader by the name of Arthur Pritchard.  He’s a really smart guy in his mid-70s, who lives in San Francisco.  He purchased the lot in 1978, and then designed and built his home on Howth Street, right near San Francisco City College, in 1988, with the help of a carpenter and the like.

In 2005, at 66 years young, and getting ready to retire or at least re-tread, he wanted to take some cash out of his home’s equity and the nice people at World Savings were standing by ready willing and able to put him right into an Option ARM mortgage, which I think even the most predatory of the predatory lenders would agree would have been about the most inappropriate choice for him in his stage of life… but, no matter.  We can always come back to that later if it makes sense.

Next, we all know what happened… the world blew up, as the housing market melted down, and the financial crisis ended the rich histories of every single investment bank on Wall Street.  Like millions of others, soon Arthur couldn’t keep up with his mortgage payments and faster than you could say, “don’t worry, you can always refinance,” he found himself headed for foreclosure.

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So far, there’s nothing that’s the least bit surprising or even unusual about Arthur’s story.  I mean, other than the people at World Savings being predatory shitheads that should probably have gone to jail or something close, everything is as it should be, right?  Of course, right.

Well, Arthur vacillated a bit on whether he should fight the loss of his home.  He tried to get a modification, to no avail, which was also not a surprise in the least.  He filed bankruptcy, tried again, and then seeing the writing on the walls he had built himself, he decided to move out and give up the fight.

The problem was that he didn’t have anywhere to go, and with his income a mere shadow of its former self, he ended up in one of the Bay Area’s finest shelters for the poor, the elderly, the people who at one time were abducted by aliens, and several drummers from bands who had hit singles during the 1960s.

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Now, Arthur’s truly a stand up guy, and when I say he’s smarter than your average bear, I’m not just whistling Dixie.  But, living in a shelter in San Francisco and later in San Jose, had to be a lousy way to look at living through his golden years, and after a while, since his home was still sitting there, he moved back in and decided to continue his fight to try to keep his home… or if not, then short sell it.

Either way, at least he wasn’t sleeping in a shelter anymore, so life was better than it would have been otherwise.  And, as is commonly the case, Wells Fargo Bank didn’t seem to be in much of a rush to foreclose and send him packing, so why not keep trying until all avenues had been exhausted?

Besides, since it had been over a year since Wells had filed a Notice of Default, they would have to start the foreclosure process over again from the beginning, so he had some time to stall if nothing else.  He rented the bottom floor of his home to a woman who had lost everything in a bankruptcy and foreclosure, in part because he wanted to help, and also to give him some walking around money and provide some protection against Wells Fargo being able to get him out in a hurry, if that’s what they decided to do.

In fairly short order, he found a lawyer who said that he could probably help him get Wells Fargo to approve a short sale, and sure enough, that’s what happened.  Wells, at least in principal (pun intended) agreed to take $375,000 for the home, the short sale process began in earnest, and being in a desirable area of San Francisco, perhaps the country’s hottest housing market, several buyers appeared on the scene.

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But wait… there’s more.

Quite predictably, another lawyer materialized saying that he could sue Wells Fargo, and get them to settle, which could mean Arthur would get to keep his home.  Having heard similar claims every day for the last six years, I wasn’t totally paying attention… that is, until yesterday.

So, that’s where things stood, at least until last night when Arthur called me to tell me of the latest developments affecting his picture perfect retirement years.

Apparently, the lawyer would not take his case to court unless Arthur could come up with some serious coinage, yet another entirely unsurprising development to my way of thinking, so Arthur was back to the short sale path, and that meant he’d be back in a shelter at some point in his future.  And, I’m sorry, but that just sucks and now my mind was connecting dots.

Okay, so maybe a lawsuit over the predatory use of the now illegal Option Arm loan would have been the best answer… maybe Wells could be pressured to settle with a guy in his mid-70s, who never should have been offered such a volatile solution.  But, regardless… Wells was already approving a short sale at $375,000…

… and having recently done a lot of research into reverse mortgages, it occurred to me that I could help Arthur get a reverse mortgage for right around $375,000 too. 

So, if Wells Fargo was now willing to allow Arthur to sell the home he’d built and lived in since 1988 for $375,000… why not sell the home to Arthur for $375,000, and Arthur would use a reverse mortgage for the purchase.  That way, he’d be able to live in his home as long as he wanted to without having to make a mortgage payment… while Wells Fargo would still be getting the exact same amount for the property they already said they were fine with receiving.

Now, I’ve known for some time that both Fannie Mae and Freddie Mac have strict policies against such transactions.  They approve short sales, but only if the current homeowner moves out… the new buyer or renter has to be a stranger to the property.

The first time I heard about Fannie and Freddie’s policy about post-short sale strangers, I thought it sounded stranger than fiction. Banks approve short sales because doing so makes more financial sense than foreclosing as re-selling the property at auction.  Absent any fraudulent intent on the part of the borrower, why would anyone care who was renting or buying a home after it was short sold?

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But, I remember clearly, the day I called Fannie’s spokesperson to inquire about the thought process behind the policy, and was told… sure enough, the current homeowner had to move out, or the short sale would not be approved.  It seemed to me that the policy was intended to punish the borrower who could no longer afford his or her mortgage payments, and that punishment was to lose the home as either owner or renter.

I do understand, under more normal circumstances, why such a rule would be in place.  I mean, you wouldn’t want borrowers capable of paying their payments to be able to simply decide to pay some lesser amount, while remaining in their homes.  But, come on… these are not “normal” circumstances, by any stretch of the imagination.  And again… Arthur’s is NOT a Fannie or Freddie loan anyway.

So again, the operative question would seem to be: Can we all agree that we want to keep people in their homes if possible… or aren’t we in true agreement about that?

Just consider once more the facts of Arthur’s situation:

  1. He built his home in 1988.
  2. He’s now in his mid-70s, and can’t keep up with the increasing payments on his Option ARM mortgage, courtesy of World Savings.
  3. Wells Fargo has agreed to short sale the property for $375,000 and with an appraisal of roughly $600,000, at his age, Arthur could get a reverse mortgage for, let’s just say, $375,000 and that way, remain in his home for the rest of his life without having to make a mortgage payment.
  4. After his death, the home would be sold and the $375,000 lien (plus interest) would be paid from the proceeds of that sale.
  5. Anything left over after that, would go to Arthur’s heirs.

But, Wells won’t take the $375,000 from Arthur.  They’ll only take the money… even though it’s the same amount… from a stranger.  Wells is not protecting the investor with this policy, the investor would get the same amount either way.

All Wells Fargo’s refusal to accept the money from Arthur would accomplish is to force a 75 year-old man into a homeless shelter.  Everything else would remain the same either way.

So… do we agree that we want to keep people in their homes if possible or don’t we?

Surely, there aren’t people at Wells that would prefer that Arthur have no home to live in for his remaining years.  Surely, there aren’t investors that care where the $375,000 comes from, right?  Doesn’t it seem obvious that there’s some way to make this situation have a much happier ending than it will if everything is left status quo?

Are we trying to keep people in their homes, if it’s possible to do so?  Or are we more concerned with punishing borrowers who fall upon hard times, as in the worst “hard times” in 70 years, as is the situation today?

Surely, we can all see that desperate times call for desperate measures, or at least unusual times call for unusual measures… and no one benefits from putting a 75 year-old on the streets of San Francisco.  Arthur is 75… is someone honestly concerned about “moral hazard,” here?

If so, that’s just stupid.  This is a common sense solution to an obviously undesirable outcome that will occur without it.  Do we want to keep people in their homes if possible?  Or are we punishers first, who are more concerned with leaving a nickel on the table?

I’d like to say that I know the answer to that question.  I used to think I knew… but now, I’m not at all sure.

California Dominates Top 10 Sellers’ Housing Markets

Source: Reverse Mortgage Daily

Five of the nation’s top 10 sellers’ markets are located in California, while all of the top buyers’ markets are located in Midwest and Eastern metros as the housing market increasingly becomes localized.

San Jose, San Francisco, Los Angeles, Riverside, and Sacramento are among the top sellers’ markets according to the February Zillow Real Estate Market Reports, accompanied by San Antonio, Seattle, Denver, D.C., and Dallas-Forth Worth.

It’s more of a buyer’s market on the other side of the country, where there’s less competition and more room for bargaining on prices in metros such as Cleveland, Philadelphia, Tampa, Chicago, and Pittsburgh.

“The real estate data in markets on both coasts are telling markedly different stories. Relatively strong job markets in the West are helping spur robust demand, which is being met with limited supply, causing rapid home value appreciation and giving sellers an edge,” said Zillow Chief Economist Dr. Stan Humphries.  ”In the East, housing markets are appreciating a bit more slowly, and homes are staying on the market longer, which helps give buyers the upper hand.”

Buyers in sellers’ markets can expect tight inventory, more competition, and a greater sense of urgency, he continued.

Home values rose to $169,200 in February, Zillow’s Home Value Index indicates, up 5.6% year-over-year, and are expected to rise another 3% through next February. However, national home values stayed almost flat from January to February, while monthly and annual home value appreciation slowed to their lowest paces in months.

“As we put the housing recession further in the rear-view mirror, the broad-based dynamics that applied during those days, when all markets were reacting similarly to nationwide economic conditions, are fading,” Humphries said. “Real estate has always been local, and as the spring market gains momentum, this old adage will only become more pronounced.”