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Economic Update

Bullet points from September 13, 2016 BNY MELLON Economic Update:

* USA is in long economic expansion: 7 years while average recovery has been 58 months.

* No current recession signs.

* Post-war recession causes: angry Federal Reserve often caused by oil price spikes (July 2008 - $143/barrel & September 2016 - $46/barrel) or high real estate prices with high borrowing costs. Credit has tightened however, no credit crunch and low oil prices. 

* Currently, 2%+ economic expansion with inventory deceleration. Next year 2%-2.5% expansion with government regulations dragging expansion.

* Federal Reserve has dual mandate with focus on USA unless international events impact USA: 1) unemployment - now 4% (close to Fed target) and 2) inflation - 2% CPI (consumer price index) target core consumption (excludes energy and food) and 3% CPI target consumption (including energy and food).

* Federal Reserve: probably will raise rates in December after Presidential Election - tentative upward trend. Fed does not want to buy trouble such as causing asset markets to react violently - Fed was responsible for previous explosion and bust.

* Bonds: slow upward trend. Internationally, downward trend due to quantitative easing (”QE” - monetary policy to stimulate economy when standard monetary policy ineffective). USA stock market has tripled because alternative investments have had poor returns. Low future returns with gradual rise of core inflation.

* National Debt: paid over long term and currently not unmanageable however, will be problematic for future generations. Currently, 2.5% of GDP (gross domestic product) going to 3%.

* China: economy is declining with reduced metal demand. USA and China relations may be difficult. 

* Small business growth: fuels national employment growth and has been slowed because of Federal regulations. 

* Core inflation likely to gradually increase with relatively stable global monetary policies which should support continued global economic expansion.

#usa economy

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Orange County Housing Market Hot or Cold?

Bullet points from Steven Thomas (reportsonhousing.com) in September/October 2016 OC REALTOR

* Orange County is huge (34 cities and 14 unincorporated areas) - prices and market activity vary widely

* Prices determine market activity (hot or cold): detached homes priced below $750,000 are hot, condominiums priced below $500,000 are hot 

* As prices rise, buyer pool diminishes

* Hottest markets are in areas with most homes priced in hottest price ranges and have shorter expected market time 

* 1/3 of Orange County is considered “hot”and 1/3 of Orange County is considered “slow”

* Three price ranges: 1) detached houses price below $750,000 and condominiums priced below $500,000 are “hot”, 2) detached homes priced from $750,000 to $1 million and condominiums priced from $500,000 to $1 million are slow, but when properly priced will sell fairly fast, 3) homes priced above $1 million luxury price take a lot longer to sell - supply is high and demand is low and careful pricing based upon recent comparable sales is essential for success

* Know the market is different depending upon price - adjust expectations accordingly

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Middle-class has become 30 percent more expensive in the past 20 years, according to analysis of prices from the Bureau of Labor and Statistics. * 73% of those who are currently not planning to become homeowners say they don't have disposable income * 35% of those earning $35-75,000 say they're financially comfortable * 56% of those earning $74-149,000 say they cannot possibly save as much money each year as the retirement planning tools say is necessary to have a comfortable retirement * 61% of those earning $150,000+ feel overwhelmed by the number of ways they can invest their money *63% of those who agree that they do not have as much discipline as they would like when it comes to spending money are worried about paying their mortgage * 37% are very worried about having enough money to retire * 42% of those who identify as middle class are very to fairly worried about feeling financially secure

Understanding Consumer Attitudes - September 2016 “The California Association Of Realtors”

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Another beautiful Fall day at Corona del Mar State Beach!  Entrance to Newport Harbor and The Wedge in the background! 

#coronadelmar #beach #californiabeach #coastalcalifornia #NewportBeach #NewportHarbor #thewedge #socalbeaches #california #beachshore #fallday

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PROPOSITIONS 60/90 - TRANSFER TAX BASE

Homeowners over the age of 55 can get relief from Proposition 13 by moving from their home to a replacement home without undergoing a change in their basic property taxes. In November 1988, the state’s voters approved Proposition 90, which is designed to induce greater turnover of homes owned by senior citizens. The transfer of the base year value is only permitted once. The replacement property must be of equal or lesser “current market value” than the original property, must be a principal residence and must be purchased or built with two years of original property sale. Proposition 90 is a “local-option” law; each county has the option of participating. Effective November 20, 2014  the Californian counties which have an ordinance enabling Proposition 90 are Orange, San Mateo, El Dorado, Riverside, Ventura, Los Angeles, San Diego, Santa Clara and San Bernardino. Proposition 60 relates to transfers within the same county (intra-county) and Proposition 90 relates to transfers of base value from one county to another county in California (inter-county). Please contact me for additional information.

#CaliforniaPropositions60&90 #SeniorCitizenHomeowners #CaliforniaPropertyTaxes #PropertyRelocationandPropertyTaxes #PropertyTax #HomeOwners #ResidentialRealEstate

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Economic & Financial Outlook

BNYMELLON March 24, 2015 Discussion:

INTEREST RATES: Federal Reserve will patiently increase interest rates later this year however, not materially. Year over year, CPI has 0% inflation (without food and energy, 1.7% CPI increase).

OIL: prices will remain low for next 2 to 3 years because of low global demand  and lower production costs (typically, prices are twice production costs). Bad news priced in “energy patch” equity markets.

MUNICIPAL MARKET: not much yield in California bonds, demand outpaces supply. Consider corporate and emerging market debt. 

ALTERNATIVE INVESTMENTS (HEDGE FUNDS): good to have as portion of portfolio and can provide portfolio downside protection.

MARKET VOLATILITY: equity friendly, but time to diversify as harder to get equity yields. Consider small caps and global farmland over time outside of USA. 

DOLLARS: strength will continue. Foreign buyers want assets in USA. 

HOUSING: new construction strong and existing homes neutral (4% to 5% year over year price gains), but nationwide still down 16% (was 35% down at worst) from highs. Low inventory, 70% home ownership (lax loan underwriting) during recession with 63% normal home ownership. Some loan securitization beginning again.

EMERGING MARKETS: need to analyze each country. India will do well, China’s annual growth declining from 14% to 6% (not bad), USA is 50% of the “global investment pond”.

#2015 Economic & Financial Outlook

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VETERANS DAY 2014

Thank you for your service!

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Spectacular "dual rainbows" Saturday morning November 1, 2014, at Corona del Mar State Beach!  Wind and rain then beautiful rainbows!

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C.A.R.'S 2014 Home Buyer Survey

California median listing price of $355,000 in 2013 increased to $380,000 in 2014 with a minuscule difference of 1.3% between listing and sale price.  In 2013, the real estate market reached a turning point resulting in fewer bargains for would-be buyers. 

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Orange County's Top Ten Property Taxpayers for Fiscal Year 2013-14

Per Orange County Treasurer-Tax Collector Shari L. Freidenrich

Top Ten Secured (assessed against real property) Taxpayers

1. Irvine Company.....................................................$114,098,318

2. Walt Disney Parks & Resorts US............................$51,566,414

3. So Cal Edison Company.........................................$33,027,763

4. Heritage Fields El Toro............................................$10,107,327

5. Pacific Bell Telephone Company (AT&T)...................$8,223,491

6. United Laguna Hills Mutual.......................................$7,071,749

7. Oxy USA Inc..............................................................$6,174,899

8. Linn Western Operating Inc.......................................$4,690,090

9. OC/SD Holdings LLC.................................................$4,652,758

10. Southern California Gas Company...........................$4,356,499

SOURCE:  April 2014 OC REALTOR

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Newscan - California Real Estate - October 2014

Home Ownership Rate Drops

   "The number of Americans who own homes dropped to the lowest level in nearly two decades in the year's second quarter, according to the U.S. Department of Commerce.  While the national average of owner-occupied home came in at 64.8 percent, Los Angeles and Orange counties had the lowest metro area home ownership rate in the country, with just 49.1 percent of homes owner occupied.  

   The home ownership rate for occupants under 35 remains an an historical low or a mere 35.9 percent.  Lawrence Yun, the NATIONAL ASSOCIATION OF REALTORS chief economist, blames these numbers on lower wages and larger student debts that make it difficult for first-time buyers to enter the market."

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NEWSBITES by Sherri Butterfield - OC REALTOR September 2014

BY THE NUMBERS

$805,000 - Median new-home selling price in Orange County in July 2014

4,314 - Number of new homes sold in Orange County in the past twelve months

71% - Percentage by which Orange County new-home builders' sales are up this year over last year.

2007 - Year in which Orange County last experienced a similar new-home selling pace

25% - Percentage of Southern California new home sales that took place in Orange County from July 2013 to July 2014

1997 - Year in which Orange County last logged this percentage of Southern California new-homes

1,347 - Total number of acres in the Orange County Great Park

843 - Total number of acres in New York's Central Park

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"Home is the nicest word there is." - Laura Ingalls Wilder (1867-1957), American author who wrote the "Little House" series of children's books based on her childhood in a pioneer family "Home ownership is the cornerstone of a strong community". - Richard George "Rick" Renzi (1958- ), former Republican member of the U.S. House of Representatives from Arizona "There's no place like home". - John Howard Payne (1781-1852), used as the refrain for his five-stanza poem titled "Home, Sweet Home"

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Spectacular view of Little Corona del Mar Beach from a deck of the stunning cliff side home located at 3729 Ocean Blvd, Corona del Mar, CA (listed for sale by Georgina Jacobson of Coldwell Banker Previews International) - $34,999,000!  

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BY THE NUMBERS 2.67% Average annual property tax rate increase before passage of Proposition 13 in 1978 2% Limit set by Proposition 13 on the amount by which property tax can be increased each year 80,373,485 Number of tolls paid on Orange County's toll roads during 2013 $260,223,000 Revenue collected by the Transportation Corridor Agencies (TCA), operators of the toll roads, in Fiscal Year 2013 13.7% Rise in U.S. home prices during 2013 5.5% Rise in U.S. home prices during 2012 $645,000 Record high median price of an Orange County home set in June 2007 $570,000 Median price of an Orange County home in mid-December 2013, the highest since December 2007 (Source: DataQuick)

March 2014 OC REALTOR

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BY THE NUMBERS 38,000,000 Population in California in 2012 $102,000,000 Selling price reported in early April for Holmby Hills mansion, the highest Southland home price ever $580,000 Median price of an Orange County home in March 2014, highest point in seven years (source: DataQuick) Percentage of Home Sellers Asking $1 Million or More - San Francisco, 43.5% -Fairfield County, Conn., 29.7% -San Jose, 25.7% -Orange County, 24.4% -Ventura, 21.5% -New York, N.Y., 20.8% -Long Island, N.Y., 20.5% -Honolulu, Hawaii, 19.8% -Los Angeles, 18.4% -San Diego, 18.0% (National average, 4.6%) (Source: Trulia)

May 2014 OC Realtor

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Economic Snapshot - October 2013

Selected Economic Bullet Points:

Government shutdown/slimdown – not good to sell into short downturns & GDP negatively affected

Bumpy road rest of year without much upside – difficult news

Bad news is priced in the market

Good value from bottom up with…

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