Could you live in a house the size of perhaps a garden shed or a 1-car garage? Well, tiny houses seem to be a growing trend in America. From college grads to retirees, Americans are downsizing and trading space for simplicity. Tiny houses are often paid in full at the time of sale and have the flexibility of being moved from one site to another. No mortgage payments, no permanent address, fewer house chores--it's lifestyle change that can work well for just right type of individuals.
The government sponsored enterprise Freddie Mac has predicted in 2015 that U.S. home sales will be at the highest level since 2007. Freddie looked at five key factors in 2014 - home sales, mortgage originations, home values, rental market and mortgage rates, then predicted how it would affect housing and the economy next year.
The recent drop in oil prices, current economic growth was also factored into their prediction. Here is the link to the full article.
...according to this article posted on the MSN Real Estate webpage. Originally asking $8.599 million, the price was recently dropped to $7,999,999. The mansion is located in a guard-gated community in the ritzy Newport Coast area of Orange County. It is situated on a half acre lot, built in 1997 and has 8,500 square feet of living area. Some of the amenities include an 850 square foot gym, in-house hair salon, extra deep custom pool, but most interesting of all...a personal shark tank. While Kobe's 8,500 square foot house is huge by all means, it is dwarfed in comparison to his former teammate Shaquille O'Neal's 70,000 square foot mansion in Florida. I recall seeing the house when it was first featured on MTV Cribs some years ago and it was just GARGANTUAN. I understand Shaq has many kids, but 70,000 square feet? Isn't that a little over the top? Living in Newport Coast, Kobe has somewhat of a commute to his office at Staples Center Los Angeles, but that's not a problem. He makes the 49 mile trip in minimal time, and a scenic one to boot with this ride, a custom chopper helicopter. Of course when you are an NBA legend, 5-time world champion and future hall-of-famer, the sky is the limit (no pun intended).
I was surfing around and stumbled across this Freddie Mac chart. It dates back to 1971 and documents the average monthly interest rate for a 30-year conventional mortgage. It reminded me of a conversation I had with my late father back in the day.
It was about 1984-1985 and I was just starting out in the appraisal field. I was sitting at the dining room table writing a report when my father walked in. He looked over my shoulder to see what I was doing. Then he sat down and we started talking just about real estate in general. I'll never forget when he said, "When your mother and I bought this house, our interest rate was 5%." WHOA!!! 5%?!?! I flipped. I couldn't believe it. At the time, mortgage rates were in the 13-14% range. I recall telling my dad that when he bought the house (mid-1960's), it was back in the "old days" and 5% rates were maybe the norm then, but not anymore. I assured him they would NEVER get that low again. Well, I was wrong. Rates today are right around 4.5% for a 30-year fixed and they even got as low as 3.35% in late 2012. My father bless his soul, passed away in 1997. So he wasn't around to see me eat my own words.
According to this article here, home values in the U.S. are within 14% of the of the all time highs when the real estate market peaked in 2006. However, it says California remains 24.7% away from the 2006 price peak. Since keeping up with neighborhood trends and values are part of what an appraiser does, I concur with the article to an extent andbelieve there is some validity to it. The real estate market began crashing in 2006, and the downturn lasted about 3-4 years. After all was said and done, property values declined anywhere from 25-65%, depending upon the area. The hardest hit areas were the inner cities and outlying desert communities where sub-prime lending ran rampant. What followed was a tremendous wave of bank foreclosures and homeowners with upside down mortgages. Consequently, the market became saturated with REOs and short sales after a few years into the crash. These distressed sales became the predominant influence in the market. Declining property values of about 50-65% below the 2006 peak were common in these areas. There has been some recovery in the past couple of years, but values are still anywhere from 30-50% off from the market highs. The majority of the southern California real estate market are suburban middle-class neighborhoods. These areas also took somewhat of a beating, but have made a decent recovery in the past few years. In general from what I have seen, prices are still about 25% off the peak highs. This is where I agree with the article. It seems to be relative to suburban middle-class neighborhoods in southern California. By contrast, I noticed that housing values in some of the local beach city communities where I work were hit only modestly by the market downturn. In some cases (such as Manhattan Beach), the housing market has not only caught up, but even surpassed the peak levels from eight years ago. Based on my experience and observations, that old adage seems to once again ring true: The three most important factors in real estate......location, location and location.