Google could hire 30,000 in bay area

November 10th, 2014

ssjm06xxmvgoogleMOUNTAIN VIEW — Google has been on an astonishing real estate spree in the last several years, buying or leasing dozens of buildings across a wide swath of the South Bay.

What’s even more astonishing: It’s been adding new space even though it has not yet filled buildings it already has, giving the company the flexibility to expand its already large Bay Area workforce by nearly 30,000 more workers.

“I’ve never seen anything like this sort of expansion from any one company,” said Phil Mahoney, a broker with commercial realty firm Cornish & Carey.

George Avalos at (408) 859-5167

New Home Sales remain an upward track

October 24th, 2014

MW-CX263_econ_h_20141023122554_ZHWASHINGTON (MarketWatch) — Sales of new homes in September rose slightly and hit a six-year high even though purchases earlier in the summer were not nearly as strong as initially reported.

The pace of new home sales edged up 0.2% last month to an annual rate of 467,000, compared to a revised 466,000 in August, the government said Friday.

New-home purchases for August were revised down sharply from an initial estimate of 504,000 and the Commerce Department also trimmed the sales figures for July and June. The report is notoriously volatile and often subject to sharp monthly revisions.

Still, new home sales in September were the highest since July 2008. And sales of new homes are 17% higher now compared to the same month in 2013, a sign that the housing market continues to get healthier. Home prices are rising at a slower pace and 30-year mortgage rates have fallen back below 4%, making houses somewhat more affordable.

“Despite the negative revisions, the new data doesn’t change the overall picture of a gradually improving housing market,” said Andrew Grantham, senior economist at CIBC World Markets.

By Jeffry Bartash @ MarketWatch

Inn at Los Gatos makes a rebound

August 15th, 2014

inn at Los GatosA decade ago, the Inn of Los Gatos — then known as the Los Gatos Motor Inn — was not a place you’d want to be seen checking in. Prostitution, drugs and general seediness were hallmarks of the motel on Los Gatos-Saratoga Road, right off Highway 17.

“The occupancy rate was 5 percent, maybe two rooms a night, and those weren’t the customers you wanted,” said Gavin McClements, general manager of the refurbished inn that now advertises itself with the catchphrase, “Affordable Luxury.” In 2006, McClements and his wife, Lilia, were hired by new owners who wanted the couple to help clean up the place. (Among the changes immediately made was requiring a credit card deposit, which quickly chased out the cash-only commerce.)

It’s been quite a turnaround for the former rundown motel, which originally opened in 1963 and underwent a nearly two-year renovation that was first approved by the town in 2008. It boasts 48 redecorated rooms that include touches like flat-screen TVs and ceiling fans. Enlarged reproductions of vintage postcards featuring Los Gatos line the lobby and its adjacent business conference room, something the old Motor Inn had no need for. A restaurant to be operated by Andrew Welch, owner of the Basin in Saratoga, is expected to open on the property next summer.

“It’s been a long process to get us to the point where we have something we’re really proud of,” McClements said.

By Sal Pizarro at Mercury News.


Fed, GDP, Jobs Report Oh My

July 27th, 2014

Economy Oh MyIt’s the economy, stupid: Investors will have to wait until Friday for the main event of the week: the all-important July jobs report.
The key thing to watch is whether robust jobs growth is continuing into the second half of the year. In June, the government said 288,000 jobs were added, bringing the total number of jobs added in the first six months of 2014 to 1.4 million. That was the strongest six months for job growth since 2006.
Meanwhile, the unemployment rates stands at 6.1%, which isn’t far off from what many economists consider full employment.

But before the jobs report, Wall Street will get a first read on second quarter gross domestic product (GDP) Wednesday morning. GDP is the most comprehensive gauge of how the economy is doing, and a majority of GDP comes from consumer spending.

Analysts mostly believe that the first quarter’s 2.9% contraction was a blip due primarily to unusually harsh weather, but this week’s GDP report should provide more clarity on how the economy is faring.

Then there’s the Federal Reserve. The central bank will release a statement outlining its latest monetary policies on Wednesday afternoon.

It’s widely believed that the Fed will announce another $10 billion pullback in monthly bond purchases, but investors will be scrutinizing every word of the statement for clues as to when the Fed plans to raise interest rates.

Consumers still hesitant to spend extra cash.

June 26th, 2014

140626111031-piggy-bank-620xaAfter accounting for mildly higher prices, consumer spending has actually fallen for two months in a row. In May, Americans cut back on eating out, going to the movies, and buying clothes. They spent less on necessities like groceries and utilities. Meanwhile, health care spending has fallen considerably since the beginning of the year, and has now been flat for two months in a row.
The few exceptions to these trends include spending on housing, gasoline and cars, which are rising.
“Consumers bought more homes and cars, saved a little more for a rainy day, and …that was about it. Not much left for anything else,” said Jennifer Lee, senior U.S. economist with BMO Capital Markets.

Messy Winter is over and strong job report lead to positive growth.

May 3rd, 2014

John Soung, Gabriel Fitzgerald, Todd ZedicherThe Labor Department reported Friday morning that the U.S. added 288,000 jobs in April, sending the unemployment rate to its lowest point since September 2008, 6.3 percent. While some of the drop from March’s 6.7 percent unemployment rate was due to 300,000 long-term unemployed workers — those searching for a job for more than six months — giving up the hunt for a job, economists still cheered the labor market’s ability to bounce back after weak growth late in 2013.

Friday’s jobs report “lends significant legitimacy to the positive tone in the wide array of post-February economic reports, which have all been consistently pointing to a significant pickup in economic growth momentum this quarter,” Millan Mulraine, deputy chief economist at TD Securities, told Reuters.

The dire slowdown during the cold winter months was displayed by the federal government’s reading of gross domestic product in the first quarter, which came in at 0.1 percent in a report released earlier this week, much lower than the expected 1.1 percent and down sharply from 2.6 percent growth in the final quarter of 2013. With the first month of the second quarter showing such strong growth, the growth that disappeared in the first quarter could be roaring across the United States with more to come.

By Jeremy Owens at

Spring Buying Season is off flat.

April 23rd, 2014

NewHomeSales-copyThe pent-up housing demand apparently saw its shadow and is still in hiding – existing home sales declined in March, the first real month of the spring buying season, even as prices continue to rise.

Sales of existing homes declined 0.2% in March to a seasonally adjusted annual rate of 4.59 million, the slowest it’s been since July 2012, according to the National Association of Realtors.

Affordability challenges and a declining inventory hampered sales, NAR says.

The median sales price of used homes hit $198,500 in March, up 7.9% from the year-earlier period. March’s inventory was 1.99 million existing homes for sale, a 5.2-month supply at the current sales pace.

The Federal Housing Finance Administration separately reported that U.S. house prices rose in February, with an increase of 0.6% on a seasonally adjusted basis from the previous month.

The FHFA’s measure is for February and considers different metrics and data sets than the NAR’s, which is for March. The FHFA HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac. From February 2013 to February 2014, house prices were up 6.9%.

The 0.1% decrease in November 2013 ended a 21-month trend of price increases that had begun in February 2012. The previously reported 0.5% increase in January was revised downward to 0.4%.

“From a regional standpoint, sales were weak in the South and West, down 3.0% and 3.7%, respectively. Sales in the Midwest and North, on the other hand, were up 4.7% and 9.1%, respectively,” noted Sterne Agee chief economist Lindsey Piegza. “Bottom line, demand for housing remains uneven after months of heightened sales activity earlier in 2013. Now against the backdrop of minimal income growth and a still-tepid labor market, demand continues to wane.

“For potential homebuyers, rising prices are eroding affordability, putting further downward pressure on consumer’s ability and willingness to finance a home purchase. From the owner’s perspective however, rising prices are helping to create and maintain a wealth effect, fueling (or at least helping to support) consumer spending,” she said.

NAR chief economist Lawrence Yun said that current sales activity is underperforming by historical standards.

“There really should be stronger levels of home sales given our population growth,” he said. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”

Trey Garrison at Housing Wire.

Institutional Investors cool on Housing Market

March 28th, 2014

Institutional investorIn February, 5.9% of all U.S. property sales were purchased by institutional investors (defined as an individuals or groups that have purchased at least 10 properties in a calendar year) down from 7.2% of sales the year before, according to data from real-estate data firm RealtyTrac. February was the third consecutive month the share of institutional investor purchases declined, after 19 consecutive months of year-over-year increases. Investors are cooling on markets like San Jose and Sacramento, Calif., Las Vegas and Phoenix, where prices have accelerated. “Supply and demand have reached a bit of a standoff in this uneven real estate recovery,” says Daren Blomquist, vice president at RealtyTrac.

So if institutional investors are backing out, should individuals as well? “Regular homebuyers are not likely to step in,” says Susan M. Wachter, professor of real estate and finance at The Wharton School at the University of Pennsylvania. The national median sales price of U.S. residential properties — including both distressed and non-distressed sales — was $164,667 in February, down 1% from the previous month, but still up 4% from February 2013.

By Q Fottrell at Marketwatch

Feel Bad Tourism in Hong Kong

February 23rd, 2014

HKThe source of frustration is the sheer number of mainland visitors, which is expected to reach 45 million this year, and 70 million by 2017. Any city might struggle to accommodate these numbers, never mind a congested territory of 7 million.

Furthermore, it’s pretty clear the majority of these visitors are not here to see Hong Kong’s undersized Disneyland but are really traders seeking bargains, courtesy of an outdated exchange-rate regime.

To get a sense of the situation Hong Kong finds itself in, imagine if New York were to have a separate currency and tax regime from the rest of the United States. To replicate the Hong Kong situation, New York would have both significantly lower taxes and a currency pegged at a discount of 25% to the U.S. dollar.

In these circumstances, you might expect half of America to descend on the Big Apple for a shopping bonanza. New York residents would likely be none-too-pleased if they felt they were subsidizing those bargains to non-tax-paying day-trippers.

This is effectively what has happened in Hong Kong as it has accelerated the integration of people and infrastructure with its giant neighbor, while retaining a three decades-old currency peg to the greenback.

While China has re-pegged the yuan higher against the U.S. dollar as its economy has grown, Hong Kong has kept its peg unchanged. In the past six years or so, the rate has gone from 110 yuan for 100 Hong Kong dollars, down to about 78 yuan currently.

This situation means every day seems like a fire sale to mainland visitors who can arbitrage the currency divergence. Now, they are not just buying duty-free luxury goods, but also everyday essentials such as toiletries, which are also cheaper.

The gripe from Hong Kong is that this outsized demand creates shortages, pushes up prices and leads to transport congestion. Among the mainland visitors, about 60% are believed to be same-day visitors, according to Tourism Board estimates.

Craig Stephens @ Market Watch

Interest Rate drop to 4.39%

January 23rd, 2014

int rateU.S. mortgage rates fell, decreasing borrowing costs for homebuyers as investors weighed whether the economy is strong enough for the Federal Reserve to make more cuts to its stimulus.

The average rate for a 30-year fixed mortgage was 4.39 percent this week, down from 4.41 percent and the lowest since November, Freddie Mac (FMCC) said today. The average 15-year rate slipped to 3.44 percent from 3.45 percent, the McLean, Virginia-based mortgage-finance company said.

The Fed’s bond purchases have kept borrowing costs at historic lows, bolstering a housing recovery that has also benefited from job growth and a tight supply of properties for sale. While the unemployment rate fell to 6.7 percent in December, the U.S. gained the fewest jobs in two years, Labor Department figures showed on Jan. 10.

“The recent bits of economic news suggest that the economy is not accelerating,” Keith Gumbinger, vice president of, a Riverdale, New Jersey-based mortgage-data firm, said in a telephone interview yesterday. “That does add doubt as to whether the Fed will be removing stimulus as quickly as expected just a few weeks ago.”

Fed policy makers have said they will gradually reduce the pace of bond buying as the economy strengthens. The committee meets next week after deciding in December to cut purchases by $10 billion a month.

Demand for home loans rose for a third week as the drop in rates spurred a pickup in refinancing. The Mortgage Bankers Association’s index of applications to reduce monthly payments advanced 9.9 percent last week, the Washington-based group said yesterday. The purchase gauge declined 3.6 percent from a seven-week high.

To contact the reporter on this story: Prashant Gopal in Boston at

To contact the editor responsible for this story: Kara Wetzel at