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Be Thankful You Don’t Have to Pay Mom and Dad’s Interest Rate


Interest rates have hovered around 4% for the majority of 2017, which has given many buyers relief from rising home prices and has helped with affordability. Experts predict that rates will increase by the end of 2017 and will be about three-quarters of a percentage point higher, at 4.5%, by the end of 2018.

Last week’s Freddie Mac Primary Mortgage Market Survey revealed that interest rates for a 30-year fixed rate mortgage have fallen to their lowest mark this year, at 3.88%. This is great news for homebuyers looking to purchase and homeowners looking to refinance.

The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home.

Let’s take a look at a historical view of interest rates over the last 45 years.

Be Thankful You Don’t Have to Pay Mom and Dad’s Interest Rate | Simplifying The Market

Bottom Line

Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.


Source: KCM

See more: Finance, Market Updates, News

The 5 Greatest Benefits of Homeownership

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Recently, Freddie Mac reported on the benefits of homeownership. According to their report, here are the five benefits that “should be at the top of everyone’s list.”

  1. Homeownership can help you build equity over time.
  2. Your monthly payments will remain stable.
  3. You may have some tax benefits.
  4. You can take pride in ownership.
  5. Homeownership improves your community.

Let’s expand on each of Freddie Mac’s points:

Homeownership can help you build equity over time.

Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun reported that now the net worth gap is 45 times greater.

Your monthly payments will remain stable.

When you purchase a home with a fixed rate mortgage, the majority of the payment (principle and interest) remain constant. On the other hand, rents continue to skyrocket. Your housing expense is much more stable if you own instead of rent.

You may have some tax benefits.

According to the Tax Policy Center’s Briefing Book -“A citizen’s guide to the fascinating (though often complex) elements of the federal Tax System” – there are several tax advantages to homeownership.

Here are four items from the Briefing Book:

  • Mortgage Interest Deduction
  • Property Tax Deduction
  • Imputed Rent
  • Profits from Home Sale

You can take pride in ownership.

Most surveys show that a major factor in purchasing a home is the freedom you have to design the home the way you want. From paint colors to yard accessories, you don’t need a landlord’s permission to make the house feel like a home.

Homeownership improves your community.

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study explained:

“Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors…Owning a home means owning part of a neighborhood, and a homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, in turn, can produce interactions with neighbors.”

Bottom Line

There are many benefits to homeownership. That is why it is still a critical piece of the American Dream.


Source: KCM

See more: Finance, Market Updates, News

Harvard: 5 Reasons Why Owning A Home Makes Sense Financially

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We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own a home differ for each buyer, but there are many basic similarities.

Eric Belsky is the Managing Director of the Joint Center of Housing Studies (JCHS) at Harvard University.He authored a paper on homeownership titled – The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons why people should consider buying a home.

Here are the five reasons, each followed by an excerpt from the study: 

1) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2) You’re paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.” 

3) Owning is usually a form of “forced savings.”

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition. 

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, contact a local professional who can help evaluate your ability to do so.


Source: KCM

See more: Buyer 101, Market Updates, News

Billionaire: Buy A Home… And If You Can, Buy A Second Home!

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Three years ago, John Paulson gave a keynote address at the CNBC/Institutional Investor Conference. In his speech, he told those in attendance that he believes housing will continue its strong recovery for the next 4 to 7 years, saying that:

“The housing market has bottomed. It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high.”

When asked how the average person could take advantage of the current real estate market at the time, Paulson said:

“Buy a home and, if you can, buy a second home.”

Two years ago, Paulson reiterated his statement, saying:

“I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.”

Who is John Paulson and why should you listen to him?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell.

What do others think of Paulson?

According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.” 

So… Is what he said still true?

The core reasons behind Paulson’s statements still ring true today, but why does he believe homeownership is such a great investment?

Paulson broke down the math of homeownership as an investment:

1. “Today financing costs are extraordinarily low.”

The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage at historically low rates of under 4%.

2. “And if you put down, let’s say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment.”

How many are seeing a 50% return on a cash investment right now?

Paulson goes on to compare the long term financial benefits of owning versus renting:

3. “And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.


Source: KCM

See more: Buyer 101, Market Updates, News

Real Estate Hot Links: June 2017

Screen Shot 2017-05-25 at 2.35.08 PMInterest rates last week were the lowest this year… Interest rate hike probably coming in June


What is all this talk about avocado toast?
Why rich people spend more time with their friends
Prepare for a new supercycle of innovation
70’s beach house for sale
Magical rug color that works in any house
Hippies are the new Hipsters
10 kitchens with the Grundtal rail system
Vogue has officially found Highland Park… and Montecito Heights
It’s not just trees that we need in cities… we need hedges
Vintage IKEA selling for a ton of money
Condo prices in DTLA way up
Tile backsplashes are kind of boring… think metallic
Chinese millennial buying homes sight unseen on apps on their phones
More big news on the LA River corridor
Forget L shaped sections… U is the new shape
Boogie Nights house in sale.. if these walls could talk omg
Air conditioning’s impact on modern architecture
Gray is the new white for walls
How to Jungalow like a minamalist
People in East LA marching for rent control
LA population reaches 4 million and climbing
Private car ownership may be down 80 percent by 2030
I’m excited terrazzo is making a big come back
Starbucks is fueling property value
Palm Springs is on fire


Thinking about buying a house? Not sure if you are ready? Or how to get ready?
Let’s get coffee and I’ll help you make a roadmap.

See more: Link Love, Market Updates, News

Real Estate Link Love: May 2017

JUST SOLD! Large, three story Hi-Fi  (Historic Filipinotown) condo in walking distance to Echo Park and really close to the bars and restaurants on Temple and Beverly. This place has tons of space to spread out. It’s fully renovated and ready to move in. It’s in a great location on a quiet street. Hi – Fi is really well situated neighborhood close to public transit, DTLA, Hollywood and Silver Lake / Echo Park. Tons of new apartments being built nearby on Temple Street.


1st Quarter Heat Map – see what neighborhoods are the hottest right now
Echo Park & Silver Lake condos are in high demand
1/2 the most popular cities for second home in CA are in the desert
Silver Lake in process of being refilled but not everyone agrees it’s a good idea
Sorry grandma… no one wants the family heirlooms
Meet the flipsters… millennial hipsters who flip houses
I dig this kinetic Iranian house
Living with a lot of plants may help you live to be crazy old
LA making it harder to take rent controlled units off the marketExpert tips on picking paint colors
The differences between how rich and poor people spend their money
You could put your stuff in storage and start living the  #vanlife
Nation wide we are in the 2nd biggest housing boom of all time
Small lots homes in Echo Park now starting over 1m
Leimart Park photo essay
My sister-in-law Jody & her husband Tim just opened an Airbnb in Joshua Tree
Fascinating article on how TGI Fridays is losing it’s flair and the trend toward clutter free interiors
The 4 types of gentrifiers… are you one of them?
Jon Hamm just bought a very thoughtful minimalist house in Los Feliz
Building permits in LA dropped 6 percent last year
Emily Henderson’s round of 126 dining room tables
Is everyone focused too much on gentrification?
They way we are living & spending money is changing and it’s killing retail stores
Pasadena closing loopholes on relocation fees for tenants
Median priced home near Dodger Stadium $640, 4th highest for a MLB ballpark


Thinking about buying or selling property on the east side of LA…
or Joshua Tree?

Let’s get coffee and talk.

 

See more: Diary, Link Love, Market Updates, News

Real Estate Link Love: March 2017

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Boom! In escrow. This renovated homesteader cabin is in Twenty Nine Palms, near the border with Joshua Tree on 2.5 acres of land. It’s completely renovated and it has a number skylights and a million outlets because previous owner planned to use it exclusively as an art studio. It is totally open on the interior, with just a walled off bathroom. It has a brand new IKEA kitchen and bathroom and is ready to move in. Now it just needs a swanky patio, shade structure and some hammocks!

LA real estate up 7% in last year, median home price $525k
More than 1/2 of all LA homes sold for more than 1m in February
Airbnbs in Los Angeles are the most profitable in California
The asian supermarket in Echo Park is being converted to lofts and retails
On my bucket list… I want to build a house with a conversation pit
Silver Lake reservoir is being filled early due to our wet winter
8 mid range furniture companies to check out when you get sick of IKEA
Boyle Heights multi-family for sale for 1.6m… I remember when it was for sale a couple of years ago for a lot less
Guess who made the list of sexiest places to stay in Joshua Tree?!!
I have been thinking a lot about silence lately
High desert emerging as an arts destination, go see Desert X
Artist replaces billboards with images of landscapes they are blocking
Midcentury desert house for $250k
Mindset you will need to thrive in the future of work
Budget kitchen remodels – what can you do for 10-15k?
How to make your kitchen look more expensive – my tip, add a beverage/wine fridge
Caesarstone and Silestone counters are now more popular than granite
East coast Eichler for $490k
Altadena post and beam time capsule house
Why millennials are really into plants


Sick and tired of your landlord? Worried about rising interest rates?
Want to own a little piece of LA?
Let’s get 
coffee and talk about your life

See more: Case Studies, Link Love, News

Real Estate Link Love: February 2017

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In escrow! Duplex in Boyle Heights. This property has two one-story houses on a corner lot, with each house facing a different street. The houses each have their own driveway and fenced yard, so it really doesn’t look like a duplex. They just look like any other two neighboring houses on a street. One house is vacant and my clients plan to renovate it and owner occupy it. The second slightly smaller house (shown in the photo) is tenant occupied. The houses need some TLC, but they have great craftsman bones and details. There is an extra wide parkway and lots of trees. I can’t wait to see how they fix it up!


My next 1st Time Home Buyer Q + A is March 5th – invite your friends!

How the Trump administration may impact home buying in 2017

Emily Henderson’s Glendale house on the market

More 2017 real estate predictions: Forbes, Washington Post, USA Today

White House suspends Obama administrations reduction in mortgage Insurance – FHA

2017 rents still rising in LA

Interest rates going up slowly

Why westsiders moving to NELA? Median home price in Venice 2m

CA renters now allowed to install electric car charging stations

LA to acquire G2 land to build park – great news for Cypress Park and Glassell Park

A desert pre-fab for sale in Yucca Valley

Why hasn’t MacArthur Park gentrified?


Thinking about buying a place in LA?
Not sure if better to buy or rent? Worried about interest rates?

Let’s get coffee and talk about it.

See more: Case Studies, Just Sold, Link Love, Market Updates, News

Real Estate Hot Links: December 2016

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Yay! Very excited for my client who just closed on this mid century fixer in Silver Lake. It has a butterfly roof and was designed by the Jo Paul Rognstad, who was a student of Whitney Smith and influenced by the case study homes. It has sweeping view of the Silver Lake reservoir, the observatory and the Hollywood sign. It’s a real gem and I’m excited to see what my client (who is a designer) does with the renovation.

Real estate predictions for 2017  & more predictions –  rising interest rates, easier credit

Interest rates have risen sharply in the last 8 weeks, if you are on the fence now would be a good time to buy

Hot hot hot neighborhoods 2016 – Atwater, Boyle Hts, Silverlake-Echo Park, Venice, etc.

Renovating? Apps you need on your phone

More single women buying houses

LA artists moving to Antelope Valley

Where are people going if they leave LA? The desert

Home prices in Joshua Tree jump 30% in 1 year

Palm Springs market updates

Stunning LA midcentury homes sold in 2016

Zsa-Zsa’s Palms Springs house on the market for under 1m


Thinking of buying or selling in Los Angeles? Or just getting the hell out of dodge?

Let’s get coffee and discuss your dreams


See more: Link Love, Market Updates, News

Real Estate Hot Links: August 2016

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IN ESCROW —  super cute 2 bedroom, 1 bath condo in El Sereno with a great view, balcony and high walkability score! If you are still renting it may be possible to buy for the same monthly price as renting.


How to finance 2nd home as Airbnb

Indoor Lighting Roundup (it’s got everything…)

Malibu house Brady Bunch star bought at age 11 sells for 3.9m

The fight for second homes on single family lots in LA

Free things your Los Angeles library card gets you

Submit your home to Apartment Therapy (you know you want to…)

Tips on prepping your house for sale

IKEA has a new fancy harringbone butcher block counter

Renovation advice from AT

This Eichler in the Balboa Highlands makes me swoon

Beautiful George Nelson homes with original furnishings

Crazy double reverse spiral staircase in pre-civil war era house


Thinking about buying or selling property on the east side of LA… (or Joshua Tree)?
Let’s get coffee.

See more: Link Love, News