Mortgage Rates – “Down go mortgage costs despite latest cut in Fed’s rate-lowering stimulus program. … Mortgage rate freakout a year ago proved unfounded.” …
Loan Rates Down Over Last Year
Last year at this time, market watchers were basically freaking out with predictions of skyrocketing home loan interest rates. In June of 2013 the Federal Reserve announced that it was pulling back on a stimulus program that had been seen as helping to keep rates very low. When the announcement came, many “in the know” were convinced we’d see a jump in rates that could kill the recovering real estate market.
As a result of that announcement … and the near-panic it engendered in some corners … interest rates that week jumped from 3.93% to 4.46%, the biggest one-week jump since the late 1980’s. Many forecasters were certain the real estate market had been prematurely euthanized. What actually occurred has been quite different than what these folks expected.
This last week, average interest rates were reported being offered on 30-year fixed products at 4.14%, down from 4.17% the week before. When you turn that number into actual rates offered to buyers, it means a 30-year fixed rate loan at 4.125%, as opposed to 4.5% last year at this time. That’s nearly $1,000 less in payments on a yearly basis than folks were paying in June of 2013.
Here’s a really comprehensive article by E. Scott Reckard from today’s Los Angeles Times:
The great rate freakout of June 2013 looks awfully panicky in the rearview mirror, with fixed mortgages now far cheaper than they were back then. It’s been a full year since the Federal Reserve unnerved home lenders and buyers by announcing it would choke back a stimulus program that had sent long-term borrowing costs to record lows.” …
Mortage Rates Show Housing Market Strong … Economic Growth Slow
The good news on mortgage rates can teach us a few things and indicate a few financial realities as well:
First off, panic can blind anyone, even those who usually know what they’re doing. In our experience, pronostications of either wildly pessimistic drops or amazingly explosive booms, in any “market”, are usually hot air. The reality is much more likely to be somehwere in the “Great Middle Way“. Market traders who understand the concepts of “contrarian” trading will know what I mean. When a whole lot of folks suddenly predict a great Boom or a great Bust, you can usually expect a very high liklihood of the exact opposite being the true course of things.
Secondly, we know that loan prices are pressured upwards by many factors. One of those can be economic growth in general. When the economy grows quickly we see the danger of inflation and rising prices on everything. The fact that the Fed was able to reduce its stimulus activities in the home mortgage market and rates have actually gone down is a reflection of a generally sluggish economy. The economy is growing, but slowly. The current prices of home loans shows us that there is no great upwards pressure from inflation. Thus, the withdrawal of Fed stimulus had no great upwards effect.
And, thirdly, the rates today are another good indicator that the real estate market is strong. “Supply and Demand” are still the two great arbiters of any market, and home loans are no exception. There is solid “demand” for home loans, which helps to keep rates down, and further assures us the housing market is set on a good course for the near future.
San Gabriel Valley Recreation – “As Southern California suffers through the third year of drought, rattlesnakes are moving farther from their territory searching for food and water, many biologists report. ” …
San Gabriel Valley Recreation:
Precautions For Snakebite Season
Hikers & Mountain Bikers Warned To Be On The Lookout
It’s official. Southern California, and the San Gabriel Valley, are officially in a severe drought. That’s nothing new. The area is a “desert” after all, and residents are used to living in an area that is either entering a drought or recovering from one in a seemingly endless cycle.
One of the things that happens under drought conditions here in certain areas of the San Gabriel Valley can be increased activity and meetings with wild animals who may range farther than normal searching for food and water. This is especially true in the foothill areas of the valley, where encounters with animals such as wild cats, bears, and rattlesnakes can become more numerous as a result of the drought conditions.
According to doctors with the California Poison Control System, the state and our area are on a pace to break records for snake bites this season. There has been one resident in Sierra Madre bitten already this year, and several calls in foothill areas to animal control and the police to remove snakes found in foothill neighborhoods and yards.
Here’s an article just published in the San Gabriel Valley Tribune. It’s by Steve Scauzillo, and it outlines the situation and the different factors causing the increase of snake encounters.
San Gabriel Valley Tribune 06/24/14, 7:04 PM PDT
Too many people wear shorts and flip-flops instead of long, loose-fitting pants and boots or sturdy shoes, said biologists. Also, going off trail and being unable to hear a snake’s rattle because someone’s wearing earbuds with music blaring adds to the possibility of getting bitten, said Lizette Longacre, ecologist with the Puente Hills Habitat Preservation Authority.
Being Prepared & Observant Are The Best Preventatives
The San Gabriel Valley is full of great opportunities for fun and recreation. Hikers and Bikers can choose from the foothills of the San Gabriel mountains, the Puente Hills, and many more areas that are great places to hike and ride. Some of the most beautiful and fun country in the area is right here, and it’s not our intent to discourage people from making use of those opportunities! In fact, we encourage you to get out there and experience the beauty of the wonderful place we live in.
We do need to remember, though, that when we live in areas that border the forest or hills, or when we visit the more remote areas of our valley, we face the possibility of encountering the actual residents of our more rustic areas. Being smart and prepared is the best advice on how to remain safe. There are things you can do!
1) Don’t go into our neighboring forest wearing beach sandals and shorts. If you’re going off hiking wear long pants that are loose fitting and boots or very sturdy shoes.
2) If you’re off in the hills hiking or biking, leave the earbuds off. The music may be enjoyable, but the fact is that many rattlesnake bites happen when people step on or very near a snake that is rattling and attempting to warn them to stay away. The hapless hiker, though, can’t hear the warning because of their earbuds. Leave them off, and be more attuned to your surroundings.
If you take a few precautions and simply remain aware and observant, you’ll have a much better time enjoying the wilderness that is such a benefit of living and visiting our area.
San Gabriel Valley Economy – “The San Gabriel Valley added 12,240 jobs in 2013 – the largest yearly job increase since the recession devastated the local economy” …
San Gabriel Valley Economy:
12,240 Jobs Added In 2013
The San Gabriel Valley economy is showing some solid signs of life with new numbers coming in regarding employment. In 2013 the area added 12,240 jobs. The Healthcare and Tourism industries are leading the way.
The Healthcare sector is showing some real power. There is a basis there, not just of “periphery” employment, but new positions for physicians themselves. This is very good news. Physicians are the basis of the Healthcare industry, and when new positions for doctors themselves are added, it creates the need for support employment such as nurses, office personel, medical technicians, etc., and more jobs follow.
As far as tourism goes, the San Gabriel Valley tourist industry is hopping! Over the last few years the area has taken its place as a true “tourist destination” in its own right. This is supported by visitors from China,of course, but also from areas like Canada and many from Europe as well.
Here’s a great article we found this morning that goes into some really interesting deatils. It was written by Cynthia Kurtz, President and CEO of SGV Economic Partnership. It originally appeared in Crown City News.
http://crowncitynews.com Tue, 17 Jun 2014 19:19:54 GMT
Healthcare is leading the San Gabriel Valley’s recovery adding close to 8,000 jobs in 2013 and between 26,000 and 29,000 jobs over the last decade. Healthcare now accounts for 115,200 of the region’s 645,400 jobs.
San GabrielValley Economy Also Benefits From International Trade
The area also has benefitted from many jobs revolving around International Trade. It might seem surprising, but there are more businesses in the San Gabriel Valley area that focus on international trade than there are in the Los Angeles area proper. With the Port of Long Beach and the Port of San Pedro both increasing capacity, this will be an important support to the San Gabriel Valley economy in the future.
All in all, we still need to add more jobs. We’re not yet caught up to where we were at the meltdown of 2008. But this news today is very good and indicates things are definitely moving in the right direction.
Chinese Tourism – “With Los Angeles being a hub city, it makes sense to put money there,” he said. “Chinese have business there, kids who go to school there, plus it’s a great place for them to vacation.” …
San Gabriel Valley Tourism:
Tourism & Investment From China Surging
San Gabriel Valley Is A Prime Destination For Chinese Tourists
We’ve written about this before, so we won’t spend too much time on it, but the influx of Chinese tourists and investment money is still ongoing into Southern California in general … and in particular the San Gabriel Valley. We’ll treat this as an update.
Southern California tourism from China was recorded at 158,000 visitors in 2009. This last year it was over 570,000. Ten years ago China wasn’t even among the top 10 tourist generating nations for the Southland. Now it is number one.
The San Gabriel Valley is a prime destination for tourists and investors from China. With it’s large Asian population creating a vibrant business infrastructure of great restaurants and entertainment facilities, the San Gabriel Valley provides the kind kind of cross-section of American and Chinese influences that provides the comforts of home while still exploring a new culture.
Here’s an up to date article by Tiffany Hsu in the Los Angeles Times that explains what’s going on:
Los Angeles Times Fri, 06 Jun 2014 5 AM
A few years ago, China wasn’t among the 10 largest sources of overseas travelers into the Southland; now it’s the top generator. Nearly half of all Chinese journeying to the U.S. stop in California; nearly three-quarters of those come to Los Angeles. …
Southland Trade With China Booms As Well
Investors from China are purchasing homes here in the San Gabriel valley. We’ve spoken of that before in these pages. They are also purchasing businesses. The overall effect of this influx of Chinese money and tourism is overwhelmingly positive to the economy ofthe Southland. One thing that hasn’t been talked about much as yet is the fact that exports to China from the Southland area have increased greatly as a result of this new economic and cultural activity. Southland exports to China have risen 54% in just the last four years as businesses in the Southland serve a growing Chinese middle class.
Housing Affordability – “Where can the middle class afford to buy a home today? Affordability has worsened in the past year, as home prices have climbed faster than incomes and mortgage rates have risen.” …
Middle Class Priced Out Of Much Of Southland
Pasadena & San Gabriel Valley Becoming Out Of Reach
We’ve been hearing the question lately, “Can I still afford to buy in your area?”
Actually, it’s an age-old question. Housing affordability is a concern everywhere and all the time. Of course, housing affordability eventually boils down to a question of what people can afford to pay … not necessarily what the price is. For instance, from 2008 through a couple of years ago the prices were uniformly and astonishingly low in almost all areas. BUT … the economy was so bad at the time and lending was so tight that no one but some lucky investors could afford to pay them anyway.
Trulia, the real estate data collection and reporting company has recently done a study of what areas of the nation are affordable and which are not.They’ve called it their “Middle Class Affordability Report”, and the idea is to outline which areas are actually available as housing to the Middle Class and which are now out of reach. The recovery in real estate has been widespread, but it has not been uniform.
HuffingtonPost 05/14/2014 8:17 pm EDT
However, in many markets, especially along the coasts, home ownership is out of reach for the middle class. Even having a college degree is no guarantee that home ownership is within reach in the priciest markets. There’s no easy way to make housing more affordable, though new construction can help.
Is The San Gabriel Valley Affordable?
As you could see in Jed’s article, seven of the ten least affordable markets are in California. The worst of those is San Francisco, with only 14% of homes in the Metro Area avaiable to the Middle Class. Coming in at second place is the Los Angeles area with only 23% of homes actually affordable, and Orange County is third and not much better at about 24% of homes that could actually be purchased by middle class homeowners.
Within the greater L.A. area, there are several areas that rank with San Francisco as unaffordable to the Middle class. Among those are the Pasadena / San Gabriel Valley area where, according to this Trulia study, only about 13% of homes are priced in ranges affordable to the Middle Class. That’s not a really good sign for our local market. According to this study we are simply too expensive here in the San Gabriel Valley for the Middle Class.
However, there are a couple of things to keep in mind here. The first is that markets don’t exist in vacuums. Different forces push them up and down and those forces come and go. In our area we have been seeing prices pushed upwards by the influx of investment money from overseas, mostly from China and Canada. Like all “trends” this one will also subside and wane to be replaced by another. When it does, that upwards pressure on prices will ease.
The other, and more important, thing to keep in mind is that the determination of whether a “Middle Class” buyer can afford a home is determined by several factors. The price of the home is only one. Also important is the amount of the average wage earned by a Middle Class worker. As people earn more they are able to pay more for housing. The economy has been recovering … but slowly. The rate of that recovery has not kept up, at this point, with the rise in real estate prices in our area. As the economy continues to rebound and earnings by the Middle Class increase, we should see the affordability of real estate in our area become more attractive.