All about Life & Real Estate in Silicon Valley – Broker Michael Koo's Blog.

There’s a paradox in Monday’s existing-home-sales data.

Sales slid 7.1% to the lowest pace since November, the National Association of Realtors said. NAR has warned for many months that low levels of supply, which are pushing prices ever higher, will eventually cripple the market.

February’s decline may be a sign that the Realtors’ fears are coming true, although it may still turn out to be a temporary blip caused by weather, new closing regulations, and the difficulties of adjusting data to account for all those anomalies.

Still, as NAR Chief Economist Lawrence Yun said in a statement, “the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

That may sound obvious: if you can’t afford the few limited options available on the market, you’d probably give up too. It also tracks with a survey NAR published last week, which found that the share of current renters who say now is a good time to buy fell in the most recent quarter.

But it’s worth remembering, as Yun pointed out in a press conference Monday morning, that it wasn’t too long ago that higher prices drew more buyers in, rather than shutting them out.

By Andrea Riquier at Marketwatch.com

It will become more expensive to buy your little piece of heaven this year, as lower-than-ever inventory in the City of the Angels continues to be the big story at the beginning of 2016. And with the lack of inventory in Los Angeles comes the inevitable rise in prices. All-cash offers and bidding wars are still the rule in every sought-after neighborhood and price range, especially if properties are correctly priced.

“L.A.’s housing market, despite becoming more expensive and unaffordable, is not in a bubble,” UCLA economist William Yu wrote. “The current rise in home prices seems to be driven by rising effective demand and limited supply, not by speculation. Therefore, the housing bubble burst we experienced several years ago is unlikely to haunt us this year or next, and the smart money will continue to invest here.”

Check out more Location Scouts reports on housing-market conditions across the U.S.
Moreover, the forecast states that Los Angeles is in the middle of its rebound and can be expected to experience price increases for at least another four years, with values increasing 35%. Obviously the global economy and the current uncertainty about the U.S. elections could play havoc with the predictions, but on the whole, relative to other parts of the country and world, L.A. looks like a pretty darn good investment.

Ed Fitz Market Watch,com

A report from Harvard University recommends the college admissions process should place more emphasis on factors such as good citizenship and contribution to family and deemphasize things like the SAT exam and academic overachievement. Harvard’s Richard Weissbourd explains.

WSJ.com Jan 29 2016

A gauge of pending home sales rose 0.2% in October, following two months of declines. Buyers are struggling with lean inventory that’s driving prices higher, said the National Association of Realtors. Its index of contract signings edged up to 107.7 and stood 3.9% higher compared to a year ago. The index has notched yearly gains for 14 straight months. NAR’s chief economist, Lawrence Yun, said supply isn’t keeping up with strong demand. “Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home,” he said. The pending home sales index tracks real estate transactions in which a contract has been signed but the transaction has not yet closed.

After seven years of being under intensive care, Fed chief Janet Yellen doesn’t believe the U.S. economy is ready to leave the hospital just yet.
That’s why Yellen and her colleagues at the Federal Reserve decided last week to keep its benchmark rates at near 0%.
They might be right. The economy is hardly going gangbusters and there are real threats from China’s slowdown.
But some feel the Fed is coddling the economy by giving it more care than it needs. They argue emergency-level rates and Fed indecision are actually hurting confidence among consumers, investors and CEOs.
That’s why they believe a rate hike could actually boost the American recovery by reassuring the public, encouraging borrowing at cheap levels and generating some income for struggling savers.
“One particularly sad irony in all of this is that the Fed’s inaction may run entirely contrary to its own goals,” David Kelly, chief global strategist at JPMorgan Funds, wrote in a note to clients.
“By holding rates low, I believe the Fed is continuing to suppress economic growth and demand,” he said.

CNNMoney

Most single people own assets in their names individually and may also own some assets as a joint tenant with right of survivorship. Other assets, such as life insurance or retirement assets, will be distributed at death according to the terms of their beneficiary designations.

How these varying assets are titled and how the beneficiary designations are prepared will directly impact who will get control of the assets and how they’ll be distributed at the individual’s death.

If an individual dies without a will (known as intestate), possessions are distributed according to the default laws of his or her state. Under these state laws, a married individual’s assets typically go to their spouse or children. For a single person, however, the default under state law usually provides that assets are passed on to their closest relatives (e.g. children, parents, siblings). If there are no relatives alive, assets may go to the state.

To avoid having the state decide the fate of your assets, it is imperative that you put an estate plan to ensure your wishes are carried out:

NextAvenue.org

Economists have been declaring for years that mortgage rates were going to rise. Now those predictions seem to be coming true.

As the Federal Reserve contemplates raising its benchmark federal funds rate, home loans are becoming more expensive. Indications are that the days of the 30-year fixed-rate home loan at a rate below 4 percent are gone, if not for good, certainly for a long time.

For the third week in a row, the 30-year fixed-rate average remained above the 4 percent mark, according to the latest data released Thursday by Freddie Mac. It rose to 4.02 percent with an average 0.7 point this week. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The 30-year fixed rate was 4 percent a week ago and 4.14 percent a year ago.

Although rates are rising, they remain near their all-time lows. The 30-year fixed-rate average hasn’t been above 5 percent since February 2011, and it hasn’t topped 6 percent since November 2008.

The 15-year fixed-rate average dropped to 3.21 percent with an average 0.6 point. It was 3.23 percent a week ago and 3.22 percent a year ago.

Hybrid adjustable rate mortgages also fell. The five-year ARM average edged down to 2.98 percent with an average 0.4 point. It was 3 percent a week ago and 2.98 percent a year ago.

The one-year ARM average slipped to 2.5 percent with an average 0.3 point. It was 2.53 percent a week ago.

“Economic releases confirmed increasing strength in housing,” Len Kiefer, Freddie Mac deputy chief economist, said in a statement.

By Kathy Orton at www.washingtonpost.com

WASHINGTON—A forward-looking gauge of U.S. home purchases rose for the third straight month in March, a sign of firming demand in the housing market.

The National Association of Realtors said Wednesday its pending home sales index, which is based on contract signings for purchases of previously owned homes, increased 1.1% to a seasonally adjusted level of 108.6 in March from an upwardly revised reading of 107.4 in February.

Economists surveyed by The Wall Street Journal had expected pending home sales would rise 1% in March. Home sales typically close within a couple months after signing.

The index rose 11.1% in March from a year earlier.

Lawrence Yun, NAR’s chief economist, said the jump in sales from a year earlier is good news, but “the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news.”

By Kate Davidson at www.WSJ.com

The U.S. economy is looking a little tired. It’s losing momentum in puzzling ways. Hiring is still strong, but experts are starting to scale back their growth forecasts.
Federal Reserve chair Janet Yellen summed it up well in a speech Friday: “If underlying conditions had truly returned to normal, the economy should be booming.”
Economists say there are two main problems: Workers’ wages aren’t growing much, if at all. As a result, Americans aren’t going out and spending much. On top of that, many foreign economies are slowing down, which puts pressure on the U.S.
The question going forward is whether we’re just in a blip or a bigger shift is taking place.
“The consumer really hasn’t kicked in at full speed ahead,” says Peter Cardillo, chief market economist at Rockwell Global Capital. “We’re going through a soft patch.”
With March’s jobs report out on Friday, this economic head-scratcher will be in full focus this week.
Related: Good news: Unemployment at lowest in 7 years
Still strong on jobs: The U.S. added over half a millions jobs in the first two months of this year alone. That’s a 50% increase from the same two-month stretch a year ago when the Polar Vortex had much of America in a funk.
Job gains have come across the board: health care, construction, the service sector and retail businesses have all seen strong pick up. The unemployment rate is down to 5.5%, its lowest mark in seven years.
It would be a full-steam story on jobs except for one thing: wage growth.
Hourly wages only grew 2% in February. That’s a marginal bump up, but it’s too little for most Americans to notice the recovery’s progress. It’s also well below the Federal Reserve’s roughly 3.5% goal.

SAN JOSE — The Silicon Valley economy may be booming, but its self-professed capital, the city of San Jose, is hardly paving the streets with gold. The home of eBay, Cisco and Adobe can’t keep libraries open full time, plug most potholes or staff a police force that can investigate many burglaries.

While much of the focus of San Jose’s dreary budget picture has centered on rising pension costs, a deeper problem remains: San Jose pulls in less money in taxes per resident than other big U.S. cities and even its suburban neighbors because it simply doesn’t have enough shops and businesses to support its sprawling population.

By Nike Rosenberg at Mercury News