Asking Prices Flat in May While Rent Increases: Trulia 06/05/2012 BY: ESTHER CHO

Asking Prices Flat in May While Rent Increases: Trulia

06/05/2012BY: ESTHER CHO

  

Asking prices fell flat in May after three consecutive monthly increases while also decreasing from the year before, according to reports from Trulia.

Asking prices on homes for sale were unchanged in May on a seasonally adjusted basis and fell by 0.2 percent year-over-year. However, when excluding foreclosures, asking prices actually rose 1 percent on a yearly basis, while foreclosure prices dropped 5.8 percent over the same time period.

According to Trulia, asking prices lead sales prices by approximately two or more months.

“Asking prices and employment both stagnated in May, yet one more reminder that the housing recovery depends on job growth,” said Jed Kolko, Trulia’s chief economist.

Due to the gains in April and March, asking prices rose 1.6 percent on a quarterly basis.

Out of the 100 largest metros, 41 saw yearly price gains, and more than double, 86, had quarterly price increases.

“Metros where prices rose the most have stronger demand from faster job growth and tighter supply from fewer foreclosed homes on the market,” said
Kolko.

Trulia named Seattle as a turnaround metro since prices rose 4.4 percent quarter-over-quarter (February to May) after seeing a dramatic 12.5 percent yearly drop (February 2011-2012). Cleveland, Las Vegas, Milwaukee, Tacoma, and Toledo were also counted as top turnaround metros for their quarterly increases after their yearly falls.

While asking prices did not show upward movement in May, rent was up 1.6 percent on a quarterly basis and up 6 percent from a year ago. In April, the year-over-year increase in rent was 5.4 percent and 4.8 percent in March.

Out of the 25 largest rental markets in the U.S., only Las Vegas saw a yearly decline in rent.

Ten Places with Greatest Yearly Rental Increases

1. San Francisco (14.4 percent)
2. Oakland, California (11.4 percent)
3. Miami, Florida (11.3 percent)
4. Denver, Colorado (10.5 percent)
5. Boston, Massachusetts (9.8 percent)
6. Seattle, Washington (9.6 percent)
7. Houston, Texas (9.2 percent)
8. Portland, Oregon (6.8 percent)
9. Chicago, Illinois (6.4 percent)
10. New York (5.9 percent)

Real estate as retirement income

By Jill Schlesinger

(iStockphoto)

(MoneyWatch) Is the real estate market a good investment for retirement? I haven't fielded that question in at least five years, but over the past six weeks, I have been pleasantly surprised by the number of people who are reconsidering real estate as a source of steady income.

Let's start with the numbers. After experiencing a massive bubble from 2000-2006 (no, it's not normal for prices to double over the course of seven years), real estate cratered. Prices dropped almost 35 percent from peak levels, and in some areas, like Florida and Las Vegas, the damage was far worse.

Now, a full six years from the peak, recent housing data indicates that a bottoming process is occurring across the country. Existing home sales in April rose 3.4 percent from the previous month to the highest level in almost two years and 10 percent above year-ago levels. Adding to the case that the market is bottoming, inventory is down 20.6 percent from a year ago. In Econ 101, reduced inventory means less downward pressure on prices.

Similar results were seen in new home sales, which rose 3.3 percent from the previous month, almost 10 percent from year-ago levels and 25 percent from the lows. Still, there's still a long way to go before we see a "normal" housing market. The total level of sales is historically weak and 2012 will probably be the third worst year on record after 2011 and 2010. However, historically low mortgage rates are helping the market by making the cost of ownership more affordable, assuming that the buyer can qualify.

Sensing this opportunity, many are wondering whether a jump into the rental market can boost retirement savings and income. The answer is yes, with a few important caveats. Buyers must have realistic expectations, starting with a long-term time horizon and recognition that the days of "flipping" a house to score a big profit are gone. In fact, in the early going, many properties may just break even. The goal is for the owner to be mortgage-free and to collect a steady stream of income.

Additionally, securing a mortgage for rental property has changed dramatically since the bubble years. "No money down" loans are nonexistent; today, lenders generally require a deposit of 30 percent. Even with that chunk of equity, mortgage rates for rental properties are higher than for owner-occupied residences.

One way to defray some of the cost of owning income-producing properties is to use their favorable tax treatment. The Internal Revenue Service allows you to claim depreciation on your property over 27.5 years, which is a way to spread the cost of an asset over a period of time. Here's how it works: You can offset a portion of your rental income by the cost basis of your rental property (what you paid for the property plus improvements, but not the land) divided by 27.5. While this is just one way to defray taxable income, note that depreciation is a way to defer taxation, not escape it.

The IRS imposes taxes on depreciation when you sell the property, which is known as "recapture." You can defer recapture by using proceeds from the property to purchase a new one via a 1031 exchange but you must follow strict rules to comply. Additionally, if you own the property until death, your heirs will not be subject to recapture.

If the ability to create a steady stream of income with favorable tax treatment seems too good to be true, it is. Being a landlord requires hard work. No amount of screening will prevent you from encountering a horrible renter or a midnight call about some problem. If you don't want to be involved at that level, you'll have to hire a management company, which will obviously eat into your cash flow.

Finally, remember that real estate is an illiquid asset. Be sure to have access to sufficient liquid assets before you become a landlord.

Distributed by Tribune Media Services, Inc.

from DS News:

Breaking News: Prices Show Strongest Year-to-Year Gain in 6 Years
The median price of an existing home climbed 10 percent to $177,400 from $161,100 in April 2011, the strongest year-to-year gain since January 2006. Existing-home sales rose to 4.62 million (seasonally adjusted annualized rate) in April from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported Tuesday morning. Economists had forecast the April sales pace would be 4.66 million.

2238 W 25th St, Los Angeles, CA 90018

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Real Estate Outlook: Affordability High

by Carla Hill

Housing affordability is still at a record high, according to the National Association of Realtors (NAR). It is at the highest level since record keeping began in 1970. This is based on the relationship between median home price, median family income and average mortgage interest rate.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said this latest data underscores buyer opportunities in today’s market. "This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home," he said. "For buyers who can qualify for a mortgage, now is a very good time to become a homeowner."

Projections for the remainder of 2012 indicate that this affordability high will continue and rates will remain low. "Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country," Veissi said. "If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth."

Despite these incredible buyer opportunities, builder confidence is down. The National Association of Home Builders (NAHB) reports that builder confidence for newly built, single-family homes declined for the first time in seven months.

"What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September," said NAHB Chief Economist David Crowe. "This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery - particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals."

This has been an ongoing concern for many market activists. While housing affordability is at an all-time high, gaining access to credit is a tough road for many would-be buyers. Additionally, some would-be buyers are still wary of the market and are waiting on the sidelines for the economy to improve or market conditions to stabilize.

Regionally, results varied. The Northeast was the only region to see a gain in builder confidence, posting a 4 point gain on the HMI scale. The West remained unchanged, but both the West and South posted declines. Single-family home production held steady for the month. The multi-family sector saw a double digit decline, according to the U.S. Commerce Department.

Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, FL, reported, "While more consumers appear to be seriously considering a new-home purchase, builders remain very cautious about starting new projects until they see more actual sales materializing.

Published: April 23, 2012

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LA Working on Creating a Citywide Car Sharing Program

Wednesday, April 4, 2012, by James Brasuell

 

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The city of Los Angeles is getting into the car share game. The City Council yesterday approved the Request for Proposals for the City of Los Angeles Public Carshare Program, which sets the Los Angeles Department of Transportation on a search for a five-year contract with a private entity to create and manage a citywide car share program. The new RFP expands on a one-year pilot program with Zipcar that launched with facilities near USC and UCLA and eventually added 40 spaces around the city--the RFP says that "strong utilization figures" for the pilot project imply the need for a citywide system. According to the City Council motion approving the RFP, the city will use existing public parking infrastructure, but only a little: "LADOT proposes a maximum threshold of 300 public parking spaces for the use of the selected provider during the five-year term of the agreement in order to maintain public control over public parking spaces."

300 spaces isn't much, but it's a start, especially because the RFP requests car share facilities near public transit (Transit-Oriented Transit?)--it specifically mentions the Green Line, Exposition Line, Purple Line, Gold Line, Silver Line, Blue Line, Orange Line, Red Line, and the Wilshire corridor as potential sites for a system with a build out of 60 units every five years. As for whether the new contract will go to Zipcar, Hertz (On Demand) or Enterprise Holdings, the LADOT expects to report back on a contract within 150 days.  

Image via AutomotiveIT