Norada Real Estate Investments

Housing Numbers Err on the Bright Side

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Is it time to buy a house or ?

It Depends…

If you need a place to live and want to own a house, why not? Prices in some areas are fairly reasonable. But if you're speculating, our guess is that you'll get a better deal if you wait.

Why?  House prices may be firming in some areas – that's what the Case-Shiller numbers seem to show. But nationwide, they are probably headed down for quite a while longer.

Here are four reasons why:

First, as you know, this is a depression. It will probably be long. And deep. You wouldn't know it from looking at the stock market or reading the news. The Dow went up another 114 points yesterday. Oil rose to $71. And the dollar – anticipating inflation – fell to $1.44 per euro.

But that's what bounces are supposed to look like. They look good enough so that people mistake them for the real thing… and get suckered into more losses.

This is a depression. Depressions drag down asset prices. Typically, prices become much more reasonable. And then they reach UNREASONABLE levels. House prices have become reasonable. Now they will become unreasonably cheap…

[Read more…]

Top 10 Economic Predictions for 2009

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The U.S. and world economies are about to suffer through some of the worst recessions in the postwar period. Most measures of economic and financial activity look like they fell off a cliff in September and October, and have been deteriorating at an alarming rate ever since. The United States is now officially in a recession that started in December 2007. Japan and many European countries are in the same boat. At the same time, growth in most emerging markets is faltering. IHS Global Insight now believes that global growth will be in the 0.0 – 0.5% range during 2009, compared with 2.7% in 2008.

  1. THE U.S. RECESSION WILL BE ONE OF THE DEEPEST — IF NOT THE DEEPEST — IN THE POSTWAR PERIOD.
    The current downturn is well on its way to becoming the longest in the past six decades. Based on the December IHS Global Insight baseline forecast for the U.S. economy, it will be the fourth deepest in the postwar period (the 1957 recession was the deepest, followed by the contractions of 1973 – 75 and 1981– 82). Nevertheless, given the very negative tone of the incoming data (including the 533,000 drop in November payrolls), the recession could well be the worst in the postwar period. At the same time, the large back-to-back declines in real GDP predicted for the fourth quarter of 2008 and the first quarter of 2009 (down 5.0% and 3.8%, respectively) are the worst since the 1982 recession, and may easily be the worst in more than six decades. Overall, we expect the U.S. economy to shrink at least 1.8% in 2009.
  2. THE FEDERAL RESERVE AND OTHER CENTRAL BANKS WILL KEEP CUTTING RATES.
    The race to zero is on! The Fed has already cut the federal funds rate to 1% and is likely to take it all the way to zero by the end of January. Once the overnight rate is at zero, the Fed may have to engage in “quantitative easing” (direct purchases of long-term Treasuries). It is already engaging (massively) in unorthodox measures such as buying commercial paper, mortgage-backed securities, credit card debt, and loans to small businesses, students, and car buyers. On December 4, the European Central bank joined the fray by cutting the overnight rate by 75 basis points (to 2.5%), while the Bank of England cut by 100 basis points (to 2.0%). IHS Global Insight now believes that the ECB and BoE will push rates all the way to 1.0% and 0.5%, respectively—and could cut all the way to zero. Most central banks around the world have followed suit. Notably, on November 26, the People’s Bank of China lowered rates by 108 basis points, the largest cut in 11 years and the fourth cut since mid-September.

    3. [Read more…]

Fed Slashes Key Interest Rate to 1 Percent

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In an effort to revive the economy the Federal Reserve cut the federal funds rate today but a half-point (0.5%). This lowers the rate to 1 percent – the lowest rate since 2003-2004. The last time the federal funds rate was lower than 1 percent was during the Eisenhower administration in 1958.

Today’s interest rate cut was the second half-point cut this month. The last one on October 8, 2008 was in a coordinated move with foreign central banks.

This year’s economic weakness has created huge declines in the price of oil and other commodities. While many economists believe the country is in a recession, they also believe the recent rate cuts and other aggressive actions by the Fed will help prevent a prolonged downturn and help unfreeze the credit markets.

If these aggressive moves by the federal government are successful in thawing the credit markets, it will be great news for real estate investors who are having difficulty financing their real estate investments.

National Real Estate Market Analysis

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eppraisal.com released their National Market Analysis Report for the three months ending August 2008. Of the 188 market areas tracked across the U.S., 43.6 percent show a decline in median home values, which is up from 32.4 percent from the previous three months. This ends the upward trend from the last three reports where the number of markets showing an increase in median home values was on the rise.

Most markets in the report are showing signs of leveling out or increasing values, with California being an exception. California again tops the bottom of the list with 27 of the 28 markets tracked by eppraisal.com showing declining median home values. Chico, CA is the only market that is showing signs of rebounding (see figure below). For this report Chico, CA, saw an increase of 1.70 percent to a median sales price of $245,000.

Six California markets saw double digit declines: Madera down 10 percent, Bakersfield down 10.7 percent, Riverside-San Bernardino down 11.1 percent, Modesto down 11.3 percent, Salinas down 14.3 percent, and Merced down 11.5 percent.

Markets in North Carolina, South Carolina, Ohio, and Oregon continue to gain in value and continue to show signs of a changing market. For example, the Raleigh-Cary, NC, Florence, SC, and the Dayton, OH, markets all saw median home value increases of over five percent. Raleigh-Cary, NC, increased by 8.1 percent to $200,000, Florence, SC, increased by 8.7 percent to $106,000, and Dayton, OH, increased by 10.6 percent to $110,000.

Texas continues to hold on to the postitive trend while Florida starts to dip back into negative waters. In the last report 11 of the 20 areas tracked in Florida by eppraisal.com showed positive increases in median values. This month the number of Florida markets showing increases in home values is down to six: Fort Walton Beach-Destin up 9.7 percent to $203,000, Palm Coast up 8 percent to $175,000, Panama City up 6.7 percent to $176,000, Palm Bay-Melbourne up 5.7 percent to $156,000, West Palm-Boca Raton up 5.6 percent to $285,000 and Jacksonville up 1.7 percent to $183,900. Texas shows the opposite with seven of the 11 areas tracked by eppraisal.com showing increases in median values. At the top of the list sits McAllen-Edinburg with an increase of 7 percent to $115,875, Waco with an increase of 6 percent to 119,621, and Midland with an increase of 4 percent to $172,500.

See the complete list »

Riding Out the Real Estate Market Crash

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Riding Out the Real Estate Market CrashReal estate has been regarded as one of the safest investments for quite some time.  However, despite the relative safety of real estate investments, there is always the possibility that the real estate market can fall just like any other investment.

Over the long term, real estate remains relatively safe simply due to the fact that the population of the world continues to increase while land is a limited resource.  When there is an occasional downturn in the real estate market, it is important to recognize certain strategies which can be used in order to keep a real estate investment from becoming a complete loss.

The first thought many people have when they realize the market has turned down is to attempt to sell the property as quickly as possible before the market gets worse.  In reality, most investors have found that it is often better if they can hold onto the property and ride out the market downturn.  While it is possible the market might dip lower before it rebounds, historically real estate markets always come back.

[Read more…]

The Future of the Housing Market

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The Future of the Housing MarketIn some of the worst housing markets in the country, deflation has reached double-digit proportions.  While housing woes have spread around the country, California appears to be poised to rank among the worse.  One of the primary reasons for this is the fact that in the last few quarters California has experienced the largest rate of deflating home prices.  In fact, home prices in California have fallen to levels that have been unprecedented.

Miami, Florida has also proven to be a difficult market at the moment.  The weak mortgage market and record high rates of foreclosures have led to declining home values as well.  In fact, Miami has been among the worst home markets in the country for two years running. The condo boom in Miami just a few years ago has further fueled the problems that have now spiraled into a massive real estate bust.

[Read more…]

Bailout Voted Down – Money Stays Tight

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The bill designed to rescue the nation's troubled financial system was voted down today in a stunning vote of 228 to 205.

The rejected bailout shocked the capital and worldwide markets even after warnings from President Bush and congressional leaders that the economy could continue to suffer and possibly nosedive if not passed soon.

The stock market plunged even before the vote to reject the bill was officially announced on the House floor.  The decline for the day surpassed the 721-point previous record on the day after the September 11, 2001 terror attacks.  In percentage terms it was well short of the drops on Black Monday in October 1987 and at the start of the Great Depression.

Although we as a country will work our way out of this financial mess, credit will continue to stay tight in the meantime.  Conventional and “A” paper loans are still available to borrowers with good credit, but don’t expect to find many options if you are looking for a sub-prime loan or have poor credit.

Let’s continue to stay glued to our TV’s and radios and watch the drama unfold…

Last Weeks Impact on the Housing Market

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If you stop and think about it, it was the housing market collapse that pulled these large financial institutions down over the last several weeks.

Fannie Mae and Freddie Mac owned or guaranteed one-half of the $12 Trillion mortgage market.  Lehman Brothers had over $60 Billion in mortgage related assets on its books.

This has all led to a credit bubble burst in the shadow of the housing “bubble”.  So what happens if credit tightens even more because money isn’t available to the financial system?  Simply put, we may see house prices fall even further in most parts of the country because those who want to buy won't be able to.

If the housing market doesn’t stabilize, then the financial market won't either.  Are we talking a year or two from now?  There is strong evidence that the worst hasn’t even happened yet – particularly in states like California and Florida.  You can expect to see banks taking back and unloading a lot of inventory over the next twelve months or more.

In the meantime, focus your real estate investing in markets that have strong economic fundamentals to maximize your short and long term appreciation and overall return on investment.

Will We Survive These Tough Economic Times?

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In just the past week the US experienced the largest bankruptcy filing in history, the stock market fell over 500 points, the largest drop since the markets reopened after September 11, 2001, and recovered almost as much with the government’s announcement for a federal bailout.

Lehman Brothers, a company that has been around for over 100 years and survived the Great Depression, is one of the latest in a series of unprecedented implosions in the financial sector.  The magnitude of the Lehman Brothers collapse dwarfs the combined failure of WorldCom and Enron by several times.

Other casualties include IndyMac, Bear Stearns, the Freddie Mac & Fannie Mae bail out by the federal government, CountryWide’s likely buyout by Bank of America, and now Merrill Lynch which may layoff up to half of its 60,000 employees. [Read more…]

2007 Top 20 U.S. Tourism Destinations

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The 2007 annual ranking of the nation's leading tourism destinations compares domestic and international tourism spending, tourism job creation, and the degree to which each city's economic vitality is dependent upon visitors. The results show that a significant gain in international visitors propelled New York City to the top spot in 2007.

Rank City Rank change from 2006
1 New York City +2
2 Orlando -1
3 Las Vegas -1
4 Los Angeles 0
5 Chicago 0
6 San Francisco 0
7 Washington, D.C. +1
8 San Diego -1
9 Miami +3
10 Atlanta -1
11 Phoenix 0
12 Tampa -2
13 Dallas 0
14 Honolulu +1
15 Houston -1
16 Santa Ana +1
17 Boston -1
18 Seattle +2
19 Philadelphia -1
20 Virginia Beach +5

The U.S. City Tourism Impact, recently released by Global Insight, combines domestic and international travel volumes and spending data from D.K. Shifflet & Associates, as well as the U.S. Department of Commerce's Office of Travel and Tourism Industries with metropolitan area economic data and models from Global Insight to rank the most popular tourist destinations in the U.S.

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Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

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