The most unaffordable city in the world in which to rent a home is not New York or Tokyo or Hong Kong. The title belongs to San Francisco, where a single person who wants to live on their own needs to earn more than $85,000 a year to pay the rent and a family more than $163,000.
Not far behind is Los Angeles, ranking 10th in the world, according to the 2017 Rental Affordability Index compiled by Nested, an international real estate service.
CIM Group of Los Angeles appears set to build the tallest residential tower west of the Mississippi River. CIM has closed on a $14.5 million purchase of nearly 2 acres in downtown Austin, Texas, the Austin American-Statesman reports.
Along with Constructive Ventures and Aspen Heights, the Mid-Wilshire L.A. real estate company plans to build a 58-story tower. It not only would be Austin’s tallest building, according to the newspaper, the $300 million tower would be the tallest residential building in the West.
The tower, with 370 planned condos, could break ground early next year, the Statesman reports. The site was acquired from the City of Austin.
We all know how expensive nursing homes can be, often running into five figures each month.
And it’s not just cost, most of us would be happier close to our families when we become too old to cope alone or we require nursing care. Well check this out, this nifty idea combines a nursing home environment with a ‘Granny Pod.’
The MedCottage supports the idea of family-managed healthcare. The MEDCottage is a mobile, modular medical home designed to be temporarily placed on a caregiver’s property for rehabilitation and extended care. Simply stated, it’s a state-of-the-art hospital room with remote monitoring available so caregivers and family members have peace of mind knowing they are providing the best possible care.
These pre-fabricated and pre-equipped medical cottages can be installed in a backyard behind a caregiver’s home (zoning laws permitting), and hooked up to the existing sewer, water and power lines.
The inside maintains a comfortable home, using the space efficiently to create sleeping, living and bathing areas. Equipped with the latest technical advances in the industry, MEDCottage was made to assist with many care-giving duties. Using smart robotic features, it can monitor vital signs, filter the air for contaminants, and communicate with the outside world very easily. Sensors alert caregivers to problems, and medication reminders are provided via computers.
3 models: 288 sq ft – 299 sq ft – 605 sq ft
Electricity and water connected directly to homeowner’s utilities
A kitchen with a small refrigerator, microwave, and medication dispenser.
Bedroom and additional accommodation for a caregiver’s visit.
The bathroom is handicapped accessible.
The units are equipped with interactive video an devices that monitor vital signs like blood pressure and blood glucose, and transmit real-time readings to caregivers and physicians. The basic MEDCottage is about 12 by 24 feet, or the size of a master bedroom, has vinyl siding, double French doors (to accommodate a wheelchair and hospital equipment) and looks like a small bungalow.
The Fed surprised markets on Wednesday with their taper head fake. Was it because the economy is booming? No. Was it because household incomes were growing? Not exactly. Was it because inflation is non-existent? Not if we look at rents or medical care. In fact, going through the Fed’s statement it is largely holding back on the taper because of fear of budget negotiations in Congress. That is, we are hitting our debt ceiling yet again and the Fed wants some leverage here. Yet the larger signs all pointed to a taper if we consider that rents are rising at nearly twice the rate of the overall CPI. Also, the Census figures for 2012 were released and household income adjusting for inflation is now back to levels last seen in 1989. Lost decade? Try a lost generation. Also, recent data highlighted that the wealthiest in our country are capturing most of the income gains and given this trend and the Fed’s taper-less September, the feudalism trade is fully on.
The Fed is the housing market. Investors are dominating the market and this is their number one client. It is no surprise that a moderate rise in rates has essentially clobbered the “normal” home buyers out in the market. Regular buyers need every piece of help buying a home because household incomes have done this:
The above chart shows a full lost decade (24 years of weak income growth). Even in real terms, household income has plunged since the recovery started in 2009:
The Fed is largely playing the market and ironically, these moves are likely to continue the wealth disparity in the US further as investors once again plow into the real estate market to chase yields. For regular households, more income is going to go to housing on the rental front:
Keep in mind that rising rents with falling incomes is not exactly a good combination. Rents are rising at nearly twice the pace of the overall inflation rate. This divergence has accelerated since 2012. The Fed has made a one way bet here. The Fed is operating under a QE forever scenario. Take a look at the Fed balance sheet and tell me if you think a taper is in serious consideration:
The Fed is largely playing one big confidence game. The too big to fail are even larger today. Real estate investors are virtually half the market in 2013. Even in expensive California nearly one-third of all home sales are going to investors (in Las Vegas it is closer to 60 percent).
Reconcile all the facts coming out this month:
-Household incomes adjusting for inflation are back to levels last seen in 1989 (24 years ago – a lost generation)
-50 percent of income generated in 2012 is going to the top 10 percent of earners (highest ever since the early 1900s)
-Rents are rising much faster than overall CPI
-Investors are gobbling up an incredibly large share of all real estate purchases
There has been a serious disconnect going on since the recovery hit and these kind of divergent data points suggest we are in a mania like mode. Investors are largely chasing yield even on many deals that simply do make sense (i.e., cap rates are simply not panning out in many markets). The Fed taper is merely a magician’s trick. The Fed can’t taper to any large degree. It is an end-game in the mortgage market. The Fed is the housing market. The Fed is largely focused on helping member banks so it is no surprise that banks are doing exceptionally well and many financial institutions are the largest real estate buyers in the current market. For now, the investor trade will continue to play out even if people with common sense realize this is simply one giant shell game and the Fed is on its way to a $4 trillion balance sheet. Doesn’t seen so farfetched that we are entering a modern age of feudalism.
The housing market continues to face a few trends in 2013. Low inventory, higher leverage because of low interest rates, and high demand from investors. Take for example the share of foreclosure re-sale properties that are being sold. In Southern California, the peak was reached in 2009 at 58.3 percent of all sales. Today foreclosure re-sales make up only 15 percent of all sales. This of course is one reason why the median home price has soared in the last year. With such high demand and low inventory, investors are able to poach high quality properties since coming in with an all cash position is much better than relying on a mortgage which most typical buyers will use. Also, the shadow inventory is being slowly leaked out since there is little reason to flood the market and depress prices. Banks have figured out that frenzied buying and record breaking low inventory is a good recipe for causing prices to jump up. Does distressed inventory even matter in Los Angeles anymore?
Los Angeles Distressed Inventory
One interesting point in all of this is that people now somehow think that there are no foreclosures or that somehow the housing market is back to the days of 2005 and 2006. Let us look at foreclosures in Los Angeles County:
Over 17,000 properties are in some stage of foreclosure in the county. Is this high? Well let us take a look at the non-distressed inventory that is listed in the MLS:
Asking prices are expected to strengthen this year, according to Trulia.
In stark contrast to this time last year, the housing market is chugging into 2013 with a head of steam.
Home-listing prices were up 5.1% nationally in December on a year-over-year basis, according to data released Thursday by real-estate listings and data company Trulia. Out of the 100 major metro markets covered by the report, 82 of them saw year-over-year gains. At the end of 2011, asking prices had fallen 4.3%, and only 12 markets had posted positive price changes.
“Prices are going into 2013 with strong tailwinds,” said Jed Kolko, chief economist for Trulia. He cites a general strengthening of the job market, which in turn means more families able to cover a sizeable down payment. An increase in household formation, which is also the product of improving job prospects, and home construction could further bolster demand.
Mr. Kolko notes that the sharpest tightening of inventory is taking place in Western states. Four of the top 10 cities to see the largest asking price recovery were in California, including Oakland, San Jose, Sacramento and Fresno.
Las Vegas, which was hit hard after the bubble burst, came in at the top of the list with a 16.3% year-over-year listing price increase. In the same period in 2011, prices dropped 11.2%.
To be sure, even among the markets with major gains, some are better positioned for a sustained housing recovery than others.
While Las Vegas may have seen the largest asking price turnaround, it remains far below pre-bust levels. The problem, Mr. Kolko says, is that the market remains unstable, with high vacancy rates, lingering foreclosures and subpar job growth.
On the other hand, metros like Seattle, which came in second on the list of cities with the highest asking-price recovery, are on a smoother path to growth because of their strong economic fundamentals, he said.
Meanwhile, rents rose nationally 5.2% in the same period. In 17 of the 25 biggest rental markets, home prices are rising faster than rents, according to Trulia. Whereas ownership was typically more affordable than renting in most markets in recent years, as sales demand rises, that edge is becoming less apparent, Mr. Kolko said.
ENCINO, CA- On a recent apartment webcast, 57% of participants predict that renter demand will get stronger in 2012, while 2% says it will be weaker, with 40% saying it will stay the same. The 2012 Apartment Market Outlook Video Webcast was put on by Marcus & Millichap Real Estate Investment Services, and was generally optimistic in the sector’s “continuation of modest growth in 2012.”
According to William Hughes, managing director of Marcus & Millichap Capital Corp., from a lenders standpoint, the improving apartment fundamentals have supported their level of confidence in the marketplace. “It has been easy to finance core assets all the way down to C assets across the board,” he said. “It becomes a little choppy as you move into tertiary and smaller assets, but even those are being financed by local and regional banks.” Continue reading “Moderate growth in Apartment sector will continue”→