Friday, 13 November 2009

Home Price Forecast to 2014 by Moody's

Moody's has introduced housing price forecast for 1 year (2010), 3 years (2012) and 5 years (2014).

Metropolitan Area 1 Year, 09 3 Year, 09-12 5 Year, 09-14
San Antonio, Texas 0.49% -1.63% -0.57%
Austin, Texas 0.29% -1.54% -1.01%
Dallas, Texas -0.11% 0.50% 2.81%
Indianapolis, Ind. -0.53% 2.25% 8%
Kansas City, Mo. -1.20% 0.41% 5.53%
Pittsburgh, Pa. -1.59% 8.47% 22.10%
Houston, Texas -2.10% 0.47% 2.40%
St. Louis, Mo. -3.27% 0.61% 5.20%
Columbus, Ohio -5.89% 4.62% 16.11%
Virginia Beach, Va. -6.92% -10.75% -6.25%
Nashville, Tenn. -7.38% -1.25% 3.20%
Milwaukee, Wis. -7.56% -1.94% 0.99%
Charlotte, N.C. -8.15% 3.54% 12.20%
Denver, Colo. -8.69% -1.05% 11.20%
Cincinnati, Ohio -9.31% 3.98% 16.10%
Philadelphia, Pa. -9.42% 1.61% 13.73%
Cleveland, Ohio -9.44% 4.73% 18.67%
Boston, Ma. -9.75% 4.48% 20.44%
Providence, R.I. -12.57% 0.43% 11.71%
Portland, Ore. -13% 3.10% 13.69%
New York NY -13.08% -11.86% 4.29%
Baltimore, Md. -13.32% -3.33% 9.22%
Seattle, Wash. -14.86% 15.48% 30.98%
Atlanta, Ga. -14.91% 0.98% 11.35%
Chicago IL -16.31% 1.49% 14%
Washington, D.C. -17.05% -3.77% 9.98%
Jacksonville, Fla. -18.51% -15.24% -1.01%
Detroit, Mich. -19.35% 3.94% 19.96%
San Diego, Calif. -19.37% 12.80% 25.41%
Los Angeles, Calif. -21.22% 2.94% 12.36%
Sacramento, Calif. -21.43% 6.79% 12.87%
Minneapolis, Minn. -23.01% 1.76% 16.05%
San Francisco, Calif. -23.42% 12.12% 26.51%
Tampa, Fla. -24.71% -14.69% 6.66%
San Jose, Calif. -25.14% 8.41% 23.04%
Riverside, Calif. -28.12% -0.45% 11.07%
Orlando, Fla. -29.84% -22.39% -3.58%
Miami, Fla. -30.35% -23% -2.93%
Las Vegas, Nev. -31.61% -19.53% 3.53%
Phoenix, Ariz. -34.72% -17.96% 7.44%

It is interesting to note that forecast 10%+ decline toward 2010. Considering there so many home owners with negative equity and unemployment is still increasing, I tend to agree with their forecast toward 2010.

It is also interesting to note that:

- In former bubble areas such as Phoenix, Las Vegas and Florida cities, 30%+ home owners carry negative equity and economy is quite bad. Therefore home price will continue to decline toward 2012 but it will NOT rebound toward 2014.

- BUT in major job centers such as Seattle, San Francisco, San Jose, San Diego and Boston, there are solid job market and high-income consumers. Therefore, forecast 20-30% home price appreciation toward 2014.

Anyhow, I recommend that you treat this kind of data as "reference only" ince real estate markets depends on locations, school district, etc...

Happy Investing!!!!

Best Performing Cities 2009 by Milken Institute

Milken Institute has announced 2009 Best Performing Cities.

2009 Best Performing Cities - 200 Largest Metros

They analyze metropolitan area in US in the following criteria:

- Job growth (I=2003) 0.143
- Job growth (I=2007) 0.143
- Wage-and-salary growth (I=2002) 0.143
- Wage-and-salary growth (I=2006) 0.143
- Short-term job growth (Mar08-Mar09) 0.143
- Relative high-tech GDP growth (I=2003) 0.071
- Relative high-tech GDP growth (I=2007) 0.071
- High-tech GDP location quotient 0.071
- Number of high-tech industries with GDP LQ>1 0.071

Here is the ranking of Top 50 US metropolitan areas:

- Metros in Texas rules! Starting from Austin, Top 5 are in Texas metros.

- After Texas cities, high tech cities such as Seattle and Portland and government spending boom Washington DC are doing well.

- Worst performing metros are 1) rust belt cities such as Detroit and Cleveland and 2) real estate bust cities such as Miami and Tampa.

Rank Metropolitan area Index
1 Austin-Round Rock, TX MSA 100
2 Houston-Sugar Land-Baytown, TX MSA 363
3 San Antonio, TX MSA 387
4 Fort Worth-Arlington, TX MD 391
5 Dallas-Plano-Irving, TX MD 396
6 Seattle-Bellevue-Everett, WA MD 498
7 Washington-Arlington-Alexandria, DC-VA-MD-WV MD 544
8 Portland-Vancouver-Beaverton, OR-WA MSA 647
9 New York-White Plains-Wayne, NY-NJ MD 653
10 Cambridge-Newton-Framingham, MA MD 685
11 Charlotte-Gastonia-Concord, NC-SC MSA 709
12 San Jose-Sunnyvale-Santa Clara, CA MSA 733
13 Kansas City, MO-KS MSA 758
14 Denver-Aurora, CO MSA 770
15 Boston-Quincy, MA MD 790
16 Baltimore-Towson, MD MSA 803
17 Nassau-Suffolk, NY MD 824
18 San Diego-Carlsbad-San Marcos, CA MSA 896
19 San Francisco-San Mateo-Redwood City, CA MD 898
20 Virginia Beach-Norfolk-Newport News, VA-NC MSA 914
21 Phoenix-Mesa-Scottsdale, AZ MSA 953
22 Philadelphia, PA MD 963
23 Nashville-Davidson--Murfreesboro--Franklin, TN MSA 973
24 Orlando-Kissimmee, FL MSA 981
25 Riverside-San Bernardino-Ontario, CA MSA 992
26 Atlanta-Sandy Springs-Marietta, GA MSA 1001
27 Las Vegas-Paradise, NV MSA 1004
28 Columbus, OH MSA 1010
29 Pittsburgh, PA MSA 1016
30 Sacramento--Arden-Arcade--Roseville, CA MSA 1065
31 Santa Ana-Anaheim-Irvine, CA MD 1085
32 Minneapolis-St. Paul-Bloomington, MN-WI MSA 1086
33 Indianapolis-Carmel, IN MSA 1091
34 St. Louis, MO-IL MSA 1116
35 Fort Lauderdale-Pompano Beach-Deerfield Beach, FL MD 1150
36 Cincinnati-Middletown, OH-KY-IN MSA 1164
37 Los Angeles-Long Beach-Glendale, CA MD 1165
38 Jacksonville, FL MSA 1179
39 Newark-Union, NJ-PA MD 1181
40 Oakland-Fremont-Hayward, CA MD 1193
41 Edison-New Brunswick, NJ MD 1195
42 Chicago-Naperville-Joliet, IL MD 1195
43 Milwaukee-Waukesha-West Allis, WI MSA 1211
44 Tampa-St. Petersburg-Clearwater, FL MSA 1296
45 Memphis, TN-MS-AR MSA 1342
46 Miami-Miami Beach-Kendall, FL MD 1348
47 Cleveland-Elyria-Mentor, OH MSA 1442
48 Providence-New Bedford-Fall River, RI-MA MSA 1491
49 Warren-Troy-Farmington Hills, MI MD 1671
50 Detroit-Livonia-Dearborn, MI MD 1703

* It is important to note that this ranking emphasize past 5 year track record and high-tech strength. Therefore, high-tech cities (like Austin, Seattle and Portland) and real estate bubble cities (like Las Vegas, Phoenix and Riverside) are doing relatively well.

Where is your city located?

Happy Investing!!!

Thursday, 1 October 2009

The Next Youth-Magnet Cities

Wall Street Journal has issued interesting survey results about "The Next Youth-Magnet Cities."

The Wall Street Journal sought out six of the nation's leading experts to rank the 10 U.S. cities they see as most likely to emerge as "youth magnet" cities after the recession—popular target destinations among young, college-educated, often single people setting out to start a career, find a mate or both.

Here is Top 10 Cities

1. Washington DC (Thanks for Obama administration's free-spending and his hip boss image!)
2. Seattle WA (High Tech & Hip life style)
3. New York City (If you can make it here, you still can make it anywhere)
4. Portland OR (Very hip and eco image --- if you have a job)
5. Austin Tx (Live music capital, high tech, etc..)
6. San Jose (Silicon Valley, Entrepreneurship, Get rich quick)
7. Denver (Great outdoor life style)
8. Raleigh-Durham NC (Research Triangle, Great universities)
9. Dallas Tx (Good economy)
10. Chicago IL (Hub of Midwest)
10. Boston MA (Mecca for highly educated college graduates)

While this ranking is nothing new, it is good indicator on where highly educated bachelor and master graduates will settle to start his/her real life. As I pointed out in previous posting, education and real estate price has strong correlations. If a city attract highly-educated young workforce, their economy will evolve and real estate price will go up.

Happy Investing!!!

Wednesday, 30 September 2009

The 100 Best (and Worst) Places to Raise a Family

Ranking from Children's Health Magazine : Parents : The 100 Best (and Worst) Places to Raise a Family.

Methodology is:

we embarked on a comprehensive statistical analysis to rank 100 noteworthy American cities scattered across the country. We considered more than 30 factors that parents deem vitally important, including crime and safety, education, economics, housing, cultural attractions, and health.

Here is ranking. I am surprised to see that San Francisco, the lowest Kids : Adults ratio, in 14th.

1. Burlington VT
2. Madison, WI

3. Fargo, ND
4. Lincoln, NE
5. Fremont, CA
6. Lexington, KY
7. Honolulu, HI
8. Cheyenne, WY
9. Omaha, NE
10. Yonkers, NY
11. Austin, TX
12. St. Paul, MN
13. Jersey City, NJ
14. San Francisco, CA
15. New York, NY
16. Little Rock, AR
17. Washington, DC
18. Minneapolis, MN
19. Colorado Springs, CO
20. Billings, MT
21. Boston, MA
22. Seattle, WA
23. Sioux Falls, SD
24. Pittsburgh, PA
25. Bangor, ME
26. San Diego, CA
27. Albuquerque, NM
28. Raleigh, NC
29. Portland, OR
30. Providence, RI
31. Louisville, KY
32. Manchester, NH
33. Wichita, KS
34. Anchorage, AK
35. Lubbock, TX
36. Boise City, ID
37. Durham, NC
38. Des Moines, IA
39. San Jose, CA
40. Nashville, TN
41. Montgomery, AL
42. Atlanta, GA
43. Spokane, WA
44. Denver, CO
45. Fort Wayne, IN
46. Newark, NJ
47. Aurora, CO
48. El Paso, TX
49. Indianapolis, IN
50. Kansas City, MO
51. Charlotte, NC
52. Charleston, WV
53. Buffalo, NY
54. Oklahoma City, OK
55. Richmond, VA
56. Rochester, NY
57. San Antonio, TX
58. Arlington, TX
59. Columbia, SC
60. Tulsa, OK
61. Greensboro, NC
62. Baton Rouge, LA
63. Norfolk, VA
64. Columbus, OH
65. Anaheim, CA
66. Corpus Christi, TX
67. Jacksonville, FL
68. Los Angeles, CA
69. Fort Worth, TX
70. Chicago, IL
71. Oakland, CA
72. St. Louis, MO
73. Tucson, AZ
74. Cincinnati, OH
75. Riverside, CA
76. Philadelphia, PA
77. Wilmington, DE
78. St. Petersburg, FL
79. Salt Lake City, UT
80. Dallas, TX
81. Houston, TX
82. Jackson, MS
83. Baltimore, MD
84. Bakersfield, CA
85. Hartford, CT
86. Birmingham, AL
87. Milwaukee, WI
88. Sacramento, CA
89. Grand Rapids, MI
90. Modesto, CA
91. Toledo, OH
92. Las Vegas, NV
93. Phoenix, AZ
94. Tampa, FL
95. Cleveland, OH
96. Fresno, CA
97. Memphis, TN
98. Orlando, FL
99. Miami, FL
100. Detroit, MI
It is interesting to note that worst ranked markets are metros in Sunbelt and Rustbelt that are facing horrible economic slowdown......

Happy investing!!!!

Sunday, 27 September 2009

America's Most Expensive ZIP Codes - Top 500 has announced 2009 Top 500 Most Expensive Zip Code.

I did some number crunching on their data as follows:

I. Most Expensive Median Sales Price and Price Change
- Top 10 are dominated by the zip code in California dn New York metro area.
- Most of Top 10 zip code has shown declined median price.
* With regard to Brookside and Duarte, since inventory is very small, their price might not be statistically relevant.

ZIP Code City/State Median Price Change
1 7620 Alpine, N.J. $4,139,041 -23%
2 94027 Atherton, Calif. $3,849,133 -26%
3 10014 New York, N.Y. $3,521,514 -24%
4 91008 Duarte, Calif. $3,444,773 +18%
5 90210 Beverly Hills, Calif. $3,367,167 -5%
6 92067 Rancho Santa Fe, Calif. $3,362,493 -12%
7 93108 Santa Barbara, Calif. $3,284,652 -9%
8 94024 Los Altos Hills, Calif. $3,277,500 4%
9 10065 New York, N.Y. $3,176,534 -10%
10 7926 Brookside, N.J. $3,121,115 +17%

II. Worst 10 Zip Code with Price Decline

- Clarksburg near Sacramento CA has shown the largest decline since Sacrament is one of worst hit metropolitan area.

- Somehow, 4 out of Worst 10 zip code is in New York suburb. I guess significant slump in financial industry affects well-to-do Wall Street executives.

ZIP Code City/State Median Home Price
1. 95612 Clarksburg, Calif. $547,077 -44% (Sacramento CA)
2. 7976 New Vernon, N.J. $2,099,629 -34% (NYC Metro)
3. 11965 Shelter Island Heights, N.Y. $1,856,154 -31% (NYC Metro)
4. 81657 Vail, Colo. $1,724,429 -30%
5. 7931 Far Hills, N.J. $1,733,601 -29% (NYC Metro)
6. 94104 San Francisco, Calif. $1,321,038 -29% (Financial District)
7. 96712 Haleiwa, Hawaii $990,468 -28% (Honolulu Metro)
8. 94960 San Anselmo, Calif. $868,106 -28% (San Francisco Metro)
9. 11559 Lawrence, N.Y. $866,046 -28% (NYC Metro)
10. 91302 Calabasas, Calif. $1,503,358 -27% (LA Metro)

III. Average Days on the Market

- Second home markets such as Olympic Valley, Calistoga, Miami Beach and Tahoe City shows 300+ days to sell.

- It is interesting to note that there are four VA/MD zip code in Washington DC metro.

ZIP Code City/State # Median Price Change Average Days on Market
1. 20129 Paeonian Springs, Va. $734,988 10% 403
2. 96146 Olympic Valley, Calif. $646,600 -19% 381
3. 94515 Calistoga, Calif. $1,335,577 -26% 365
4. 33109 Miami Beach, Fla. $2,484,958 -15% 358
5. 21056 Gibson Island, Md. $3,031,923 3% 354
6. 10069 New York, N.Y. $1,440,500 -4% 317
7. 20143 Catharpin, Va. $740,754 -17% 316
8. 20861 Ashton, Md. $795,358 -5% 313
9. 96145 Tahoe City, Calif. $704,065 -13% 308
10. 94104 San Francisco, Calif. $1,321,038 -29% 307

IV. Zip Code with Highest Median Household Income

- For those who own luxury property, majority of household have significant passive income such as investment, dividend and rental income. However, it seems that there are strong correlation with salaried income as well.

- Having said that, with $200,000 household income, maximum amount you can borrow is only $1 million due to tighter lending. This means, you need to have significant passive income or massive down payment.

ZIP Code City Median Home Price Change Median Household Income
1 33109 Miami Beach, Fla. $2,484,958 -15% $200,001
2 60043 Kenilworth, Ill. $1,948,586 9% $200,001
3 94027 Atherton, Calif. $3,849,133 -26% $200,001
4 92067 Rancho Santa Fe, Calif. $3,362,493 -12% $196,298
5 7078 Short Hills, N.J. $1,549,129 -6% $185,466
6 10577 Purchase, N.Y. $2,709,154 -20% $183,686
7 10514 Chappaqua, N.Y. $1,061,020 -6% $173,368
8 60022 Glencoe, Ill.  $1,092,330 -16% $171,063
9 94028 Portola Valley, Calif. $2,391,997 3% $164,479
10 11568 Old Westbury, N.Y. $2,219,483 -10% $163,046

V. Ranking of States that has Most Top 500 Zip Code

- California rules (still)! 270 out of Top 500 most expensive zip code is located in California, followed by NY, NJ, MD, CT, MA, etc....

1. California 270
2. New York 85
3. New Jersey 33
4. Maryland 16
5. Connecticut 15
6. Massachusetts 14
7. Virginia 10
8. Florida 10
9. Illinois 8
10. Colorado/Hawaii/Washington 5

VI. Ranking of Metropolitan Area that has Most Top 500 Zip Code

- San Francisco Bay Area lead with 141 zip codes. This is quite notable as SF Bay Area's population is 1/3 of New York Metro.

- It is also notable that how expensive California's Central Coast (Santa Barbara, Monterrey and San Loius Obispo Metro) real estate properties are, considering there is no significant industry. How can regular people make living in Central Coast????

1. San Francisco Metro 141
2. New York Metro 131
3. Los Angeles Metropo 86
4. Washington DC Meto 29
5. Boston Metro 14
6. San Diego Metro 13
7. Santa Barbara 9
8. Chicago 8
9. San Louis Obispo 7
10. Monterey 7

VII. Ranking of City that has Most Top 500 Zip Code

- New York City (Manhattan) is definitive leader in this category, followed by San Francisco CA.

1. New York, N.Y. 28 (Manhattanのみ)
2. San Francisco, Calif. 18
3.; Los Angeles, Calif. 17
4. San Jose, Calif. 9
5. Santa Barbara, Calif. 7
6. Great Neck, N.Y. 4
6. Newport Beach, Calif. 4
6. Oakland, Calif. 4
6. Santa Monica, Calif. 4

US real estate market decline started with low-end of properties and spreading upward toward luxury housing. Since conforming mortgage limit is $720,000 in the market like SF or Manhattan, I see continuous decline in higher end real estate. We'll see how it goes in 2010!

Happy Investing!!!!

Saturday, 26 September 2009

Making Suburbia More Livable by WSJ

Related to my previous posting about mass transit usage and the relationship between housing value and walkability, WSJ has done very interesting article about "Making Suburbia More Livable" by building walkable neighborhood.

Below is the project Mableton, Ga:

Local officials are working on plans to fashion a community where people can live more easily throughout their lifetimes. To that end, the plans call for developing several "nodes":
  • 1) New housing and retail space and services would enable residents to age in place.
  • 2) An arts center would expand an existing amphitheater and add galleries and live-work units for local artists
  • 3) A new town center, coupled with greenways, would make Mableton more pedestrian-friendly.
  • 4) A civic center would include wellness and fitness centers.
  • 5) A historic area would feature restored homes and a commuter rail stop.
  • Details of proposed changes in Mableton (.pdf)

I believe you will see more and more of this type of projects in coming years!

Happy Investing!!!

New Study Shows More Walkable Homes Are Worth More

CEOs For Cities has issued new report about "How Walkability Raises Home Values in U.S. Cities".

This data is compares house value in the neighborhood with "median walkablity" Vs. "75% percentile walkability" using walkability score from For example, in Austin Tx, the house with 75% percentile walkability (74) is $23,871 more valuable Vs. the one in median walkability (62) neighborhood.

Interestingly, in 13 out of 15 metropolitan area, more walkable homes are proven to be worth more (car dependent Las Vegas NV and Bakersfield CA was only exception).

Contribution of Walk Score to Housing Values

Metro Median 75% Percentile Walk Score Estimated Housing Gain from Moving to 75% Percentile
Arlington 71 82 19,028
Austin 62 74 24,871
Bakersfield 31 51 -2,242
Charlotte 54 71 33,763
Chicago 86 92 31,562
Dallas 46 51 4,278
Fresno 49 60 7,427
Jacksonville 35 51 12,951
Las Vegas 43 55 -7,157
Phoenix 46 58 18,689
Sacramento 49 62 34,345
San Francisco 57 68 32,837
Seattle 68 82 19,789
Stockton 51 10 10,338
Tucson 51 66 10,841

As I pointed out in previous blog posting about mass transit usage, I think US is slowly moving away from car-dependent suburbia to mass transit oriented walkable neighborhood.

So make sure that you check the walkscore when you purchase your new house!

Happy Investing!!!

Friday, 25 September 2009

Homeowners who 'strategically default' on loans a growing problem

This is article from LA Time about rising number of "strategic defaulters". This is rising trend and I have posted it while back.

Here is the summary of finding!

* The number of strategic defaults is far beyond most industry estimates -- 588,000 nationwide during 2008, more than double the total in 2007. They represented 18% of all serious delinquencies that extended for more than 60 days in last year's fourth quarter.

* Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they've fallen behind on other accounts.

* Strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and have cratered since 2006. In California last year, the number of strategic defaults was 68 times higher than it was in 2005. In Florida it was 46 times higher. In most other parts of the country, defaults were about nine times higher in 2008 than in 2005.

* Two-thirds of strategic defaulters have only one mortgage -- the one they're walking away from on their primary homes. Individuals who have mortgages on multiple houses also have a higher likelihood of strategic default, but researchers believe that many of these walkaways are from investment properties or second homes.

* Homeowners with large mortgage balances generally are more likely to pull the plug than those with lower balances. Similarly, people with credit ratings in the two highest categories measured by VantageScore -- a joint scoring venture created by Experian and the two other national credit bureaus, Equifax and TransUnion -- are far more likely to default strategically than people in lower score categories.

* People who default strategically and lose their houses appear to understand the consequences of what they're doing. Piyush Tantia, an Oliver Wyman partner and a principal researcher on the study, said strategic defaulters "are clearly sophisticated," based on the patterns of selective payments observable in their credit files. For example, they tend not to default on home equity lines of credit until after they bail out on their main mortgages, sometimes to draw down more cash on the equity line.

Well, as writer points out at the end of article, it is possible that lender may figure out the way to sniff out "strategic defaulters" from "desperate defaulters". So, if you are doing short sales or apply for loan modifications, you may want to move fast!

Happy Investing!!!

Wednesday, 23 September 2009

Mass Transit Share by Metropolitan Area come has posted interesting ranking about "America's Cleanest Commutes", based on American Community Study 2008. And they ranked San Francisco as No.1. While I don't necessarily agree with their methodology, I thought it is interesting to share the "share of commuting method" --- Mass Transit, Car Pool or Drive Alone as follows:

MSA Mass Transit Car Pool Drive Alone
New York City MSA 30% 7% 50%
San Francisco MSA 14% 11% 64%
Washington DC MSA 13% 11% 66%
Trenton-Ewing, N.J.MSA 12% 8% 69%
Chicago MSA 11% 9% 71%
Seattle MSA 8% 12% 69%
Honolulu MSA 8% 16% 64%
Boston MSA 7% 11% 71%
Portland MSA 6% 11% 71%
Los Angeles MSA 6% 12% 73%

The report says that, due to recession, share of mass transit and car pool has increased slightly. But it has LONG way for US to "transit" to energy efficient non-car-dependent society (Yes -- I was raised in Tokyo).

Anyhow, as for the real estate appreciations, I believe those cities with strong mass transit and high walkability will win as 1) more and more people are craving for "walkable" neighborhood and 2) gas price continue to go up and 3) Americans are aging rapidly.

Happy Investing!!!

Tuesday, 22 September 2009

Food Related Articles

This is for memo purpose.

Great Eating in San Francisco - Carry On - Travel + Leisure

The 50 best foods in the world and where to eat them | Life and style | The Observer

Mad Men Manhattan - Articles - Travel + Leisure

Happy Eating!!!

Sunday, 20 September 2009

Strongest Metro. Weakest Metro - Metromonitor Q2 2009

Brooking Institute has issued MetroMonitor Q2 2009. They classified Top 100 US metropolitan area by Strongest 20, Second Strongest 20, Middle 20, Second Weakest 20 and Weakest 20 by the following criteria:

- Percent change in employment, from peak employment to 2009Q2
- Percentage point change in unemployment rate, June 2008 to June 2009
- Percent change in gross metropolitan product, from peak GMP to 2009Q2
- Real percent change in housing prices, 2008Q2 to 2009Q2

Austin-Round Rock, TX
Baton Rouge, LA
Columbia, SC
Dallas-Fort Worth-Arlington, TX
Des Moines-West Des Moines, IA
El Paso, TX
Harrisburg-Carlisle, PA
Honolulu, HI
Houston-Sugar Land-Baytown, TX me
Jackson, MS 20
Little Rock-North Little Rock-Conway, AR
McAllen-Edinburg-Mission, TX Strongest
Oklahoma City, OK
Omaha-Council Bluffs, NE-IA
Pittsburgh, PA
Rochester, NY
San Antonio, TX
Tulsa, OK
Virginia Beach-Norfolk-Newport News, VA-NC
Washington-Arlington-Alexandria, DC-VA-MD-WV

Albany-Schenectady-Troy, NY
Albuquerque, NM
Augusta-Richmond County, GA-SC
Baltimore-Towson, MD
Boston-Cambridge-Quincy, MA-NH
Bridgeport-Stamford-Norwalk, CT s
Buffalo-Niagara Falls, NY etro
Colorado Springs, CO m
Denver-Aurora-Broomfield, CO
Hartford-West Hartford-East Hartford, CT Second-strongest 20
Indianapolis-Carmel, IN
Kansas City, MO-KS
Madison, WI
Memphis, TN-MS-AR
New Haven-Milford, CT
Ogden-Clearfield, UT
Poughkeepsie-Newburgh-Middletown, NY
Raleigh-Cary, NC
Scranton--Wilkes-Barre, PA
Syracuse, NY

Allentown-Bethlehem-Easton, PA-NJ
Birmingham-Hoover, AL
Charleston-North Charleston-Summerville, SC
Chattanooga, TN-GA
Columbus, OH
Greenville-Mauldin-Easley, SC
Knoxville, TN
Minneapolis-St. Paul-Bloomington, MN-WI os
Nashville-Davidson--Murfreesboro--Franklin, TN etr
New York-Northern New Jersey-Long Island, NY-NJ-PA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Middle 20 m
Portland-South Portland-Biddeford, ME
Provo-Orem, UT
Richmond, VA
Salt Lake City, UT
Seattle-Tacoma-Bellevue, WA
Springfield, MA
St. Louis, MO-IL
Wichita, KS
Worcester, MA

Akron, OH
Atlanta-Sandy Springs-Marietta, GA
Bakersfield, CA
Charlotte-Gastonia-Concord, NC-SC
Chicago-Naperville-Joliet, IL-IN-WI
Cincinnati-Middletown, OH-KY-IN
Cleveland-Elyria-Mentor, OH
Fresno, CA
Greensboro-High Point, NC
Los Angeles-Long Beach-Santa Ana, CA
Louisville-Jefferson County, KY-IN
Milwaukee-Waukesha-West Allis, WI
New Orleans-Metairie-Kenner, LA
Oxnard-Thousand Oaks-Ventura, CA
Phoenix-Mesa-Scottsdale, AZ
Sacramento--Arden-Arcade--Roseville, CA
San Diego-Carlsbad-San Marcos, CA
San Francisco-Oakland-Fremont, CA
San Jose-Sunnyvale-Santa Clara, CA
Tucson, AZ

Boise City-Nampa, ID
Bradenton-Sarasota-Venice, FL
Cape Coral-Fort Myers, FL
Dayton, OH
Detroit-Warren-Livonia, MI
Grand Rapids-Wyoming, MI
Jacksonville, FL
Lakeland-Winter Haven, FL
Las Vegas-Paradise, NV
Miami-Fort Lauderdale-Pompano Beach, FL
Modesto, CA
Orlando-Kissimmee, FL
Palm Bay-Melbourne-Titusville, FL
Portland-Vancouver-Beaverton, OR-WA
Providence-New Bedford-Fall River, RI-MA
Riverside-San Bernardino-Ontario, CA
Stockton, CA
Tampa-St. Petersburg-Clearwater, FL
Toledo, OH
Youngstown-Warren-Boardman, OH-PA

Some of the key findings are:

- Differences in economic performance among metropolitan areas remained stark.

- The South is overrepresented among both the 20 metro areas that suffered the most in the recession and the 20 that suffered least.

- Only a handful of metropolitan areas showed early signs of full recovery from the recession.

- Several metro areas showed signs of beginning to recover from the recession, and the rate of economic decline slowed in many more.

- Centers of auto and auto parts production continued to post sharp overall employment and output declines.

- Metro areas that specialize in banking had less severe job losses than the nation as a whole since the end of 2007.

- Signs that the housing market is stabilizing were apparent in many metro areas, though rising foreclosures continued to weaken some metropolitan markets.

- Pittsburgh, the site of the G-20 meetings on September 24 and 25, 2009, ranks among the U.S. metropolitan areas least affected by the recession.

Happy Investing!!!!

Friday, 18 September 2009

FHA Will Tighten Credit Standards

As expected, FHA will tighten lending guideline for FHA mortgage.

Under planned rules, the agency said lenders making FHA-insured loans would need to show net worth of at least $1 million, up from $250,000, and further increases might be sought later. The agency is seeking to ensure that lenders have funds available to compensate the FHA if their loans fail to meet quality standards.

For refinancings of FHA loans, the agency plans new rules for verifying income and other quality-control checks. It also will impose a maximum loan value of 125% of the current estimated home value on refinanced loans, in line with government-backed mortgage investors Fannie Mae and Freddie Mac.

Appraisals will be valid for no more than four months, down from six to 12 months previously. The FHA also plans to change rules aimed at averting pressure on appraisers, making them more consistent with those adopted earlier this year by Fannie and Freddie. Mortgage brokers or bank employees paid on commission won't be allowed to order appraisals.

In addition, the FHA plans to hire a chief risk officer for the first time.

In short, FHA is saying "if something goes long, FHA will not insure loan loss and will go after you".

While "There will be no taxpayer bailout," FHA Commissioner David Stevens said, I think approx. 30% of FHA mortgage that was issued in 2008 are under water. So soon, I expect tax payer bail out of FHA mortgage.

Anyway -- this will certainly slow down First Home Buyer driven US residential real estate market and it will cause "second dip" in real estate price, especially in former bubble area such as California and Nevada. It will be interesting to see how it goes in early 2010.

Happy Investing!!!

Thursday, 17 September 2009

Sign of 2nd Dip? So CA Aug 2009 Real Estate Sales Data

Data Quick, real estate information service company, has announced August 2009 sales data in Southern California.

"Southland home sales fall; median price edges up again"

Key points are:

- Total transaction is 21,502, down 10% from July 2009 (usually transactions in August are higher than that of July.

- 21,502 transactions are smaller than average transactions of last 20 years (27,458).

- Key reasons are 1) inventory of distressed properties has gone down, 2) uncertain economic condition & 3) median sales price has been increasing since April.

- Share of REO (bank owned property) is 38.8%, down from 40.7% in July and 56.7% in February 2009.

- Median sales price was $275,000, up 2.6% from $268,000 in July and from $247,000 in April 2009 (the peak median price was $505,000 in mid 2007).

- Share of FHA mortgage is 37.4% (24% nationwide), up 10 points from August 2009.

I believe real estate markets in former bubble area like CA/NV/AZ/FL is facing "mini-bubble" from first time home buyers. However, as I pointed out in previous posting, real estate markets in former bubble area might face "second dip" in near future.

Below is possible problems:

- Due to lack of reserve fund and mounting defaults, qualification of FHA loan is getting tighter.
- $8000 First Time Home Buyer Tax Credit expires on November 30th 2009.
- 23% of mortgage holders nationwide have negative equity (approx. 40% in California).
- Banks are accelerating foreclosure.
- Possible "shadow inventory" of distressed/REO homes in millions.

While this analysis is about Southern California, August 2009 Bay Area real estate transaction has gone down by 14.8% Vs. July 2009. I think you can see same transaction trend in other former bubble markets such as Las Vegas and Phenix. Let's see if "second dip" will happen or not!

Happy Investing!!!

Tuesday, 15 September 2009

America's Coolest College Towns

Article/Slide show from Travel + Leisure.

America's Coolest College Towns

- Oxford, MS (University of Mississippi)
- Olympia, WA (Evergreen State College)
- Charlottesville, VA (University of Virginia)
- Austin, TX (University of Texas)
- Burlington, VT (University of Vermont)
- Boulder, CO (University of Colorado)
- Berkeley, CA (University of California)
- Ann Arbor, MI (University of Michigan)
- Madison, WI (University of Wisconsin)
- Chapel Hill, NC (University of North Carolina)

I have been posting about benefit of investing college towns. This article point out college towns' attractiveness as tourist destinations. As college enrollment in US is expected to grow over next 10 years, college towns are proven to be good place to invest as well as visits!

Why College Towns Are Looking Smart?

WSJ - How to Earn Money Off Campus As Rest of Housing Market Cools

WSJ - Seven Tips for Managing College-Town Rentals

WSJ - The Pros and Cons Of Living Off Campus

WSJ - Recommended Reading: Investing In College Town Real Estate

Business 2.0 - Own Where Kids Are

Kiplinger - Attraction of College Town

Forbes - Exploiting College Boom

Happy Investing!!!!

Monday, 14 September 2009

A Talking Head Dreams of a Perfect City

Very interesting article from WSJ, written by David Byrne, formerly headed Talking Heads.

Commemorating publishing of his new book Bicycle Diaries, David talks about his criteria for Perfect City.

I like his comments about Size of the City --- NYC Vs. SF. I agree that SF is "provincial" but not "small village".....

A city can't be too small. Size guarantees anonymity—if you make an embarrassing mistake in a large city, and it's not on the cover of the Post, you can probably try again. The generous attitude towards failure that big cities afford is invaluable—it's how things get created. In a small town everyone knows about your failures, so you are more careful about what you might attempt. Every time I visit San Francisco I ask out loud "Why don't I live here? Why do I choose to live in a place that is harder, tougher and, well, not as beautiful?" The locals often reply, "You don't want to live here. It looks like a city, but it's really a small village. Everyone knows what you're doing" Oh, OK. If you say so. It's still beautiful.
Happy investing!!!

Monday, 7 September 2009

World's Most Photographed Cities and Landmarks

Very interesting finding by mining 35 million photos, uploaded in

New Report Reveals World's Most Photographed Cities and Landmarks by Travel + Leisure

Top 10 Cities Most Photographed Cities:

1. New York City
2. London
3. San Francisco
4. Paris
5. Los Angeles
6. Chicago
7. Washington, D.C.
8. Seattle
9. Rome
10. Amsterdam

Top 7 Most Photographed Landmarks:

1. Eiffel Tower
2. Trafalgar Square
3. Tate Modern
4. Big Ben
5. Notre Dame
6. London Eye
7. Empire State Building

I was surprised that Golden Gate Bridge is not listed in Landmark ranking!

Happy Investing!!!!

Can We still Count on First Time Home Buyer?

As I posted previously, nowadays, First Time Home Buyers represent 50%+ transactions of residential real estate in US. In regular market, move-up-buyers represents 60-70% of transactions, this shows US residential real estate relies too much on First Time Home Buyers.

There are 3 things that drive First Time Home Buyers:

1. Rapidly declined value of US real estate market.
2. $8000 tax credit
3. FHA loan with 3.5% down payment.

Firstly, $8000 tax credit expires on November 30th 2009. I am pretty sure that Government will extend the this credit in order to continuously incentivize real estate market. But it is not yet determined yet.

Secondly, as for FHA loan, here is the summary of the problems:

- The share of FHA mortgage among residential real estate has gone up from 5% in 2005 to 23% in 2009.

- You can get FHA loan with 600 credit score (conforming loan requirement is around 700) and with 3.5% down payment.

- FHA has to have 2% of total mortgage outstanding amount as cash reserve but there is not enough cash to continue lending.

- Delinquency rate of FHA loan has gone up to 7%, much higher than prime loan.

- Therefore FHA either 1) tighten the lending guideline and reduce the lending amount or 2) need cash infusion from US government.

It is totally true that FHA is driving US residential real estate market. However, government has intentionally created source of bad debt for future.

I think most important thing for US residential real estate market is to revive the transactions amount move up buyers. "Moving Up" buyers are bread and butter of residential real estate. Move up buyers often create double transactions. Without reviving "Move Up" business, US real estate may face second dip......

Happy Investing!!!!

Sunday, 6 September 2009

Would you default on your mortgage, even if you could afford to make the monthly payments?

26% of says YES, found research by Northwestern University.

I like the finding about:

When negative equity rose to $50,000, 7 percent of those who consider strategic defaults to be immoral said they'd walk away. At $100,000 negative equity, 22 percent would do so. At negative $200,000, 37 percent of those with moral objections would nonetheless default, and at $300,000, 38 percent said they would.
As negative equity is rising rapidly and, in many metro it has exceeded 50% of all home owners, it looks like we will see more and more foreclosed or short sale houses!

Happy Investing!!!!