Monday Morning Quarterback

Written by Lloyd Segal Posted On Monday, 14 August 2023 00:00

State: Alabama
SOLD: 2

Monday Morning Quarterback
(Monday, August 14, 2023)

The devastation in Maui is heartbreaking! Over 100 people, and still counting, have died (many trapped in their cars attempting to escape), another 1,000 missing, thousands more displaced and homeless, and over 11,000 travelers evacuated. Lahaina is Gone! Destroyed within minutes. Which is sad because Lahaina was recently selected by Architectural Digest magazine as one of the most beautiful villages in the world. Yes, in the world! Lahaina lost over 300 buildings, many historical. Lahaina was once the capital of the Hawaiian Kingdom dating back to the 18^th Century. There were buildings in Lahaina with letters carved above the doors “In the same location since 1795.” (There are buildings in L.A. with “In the same location since May”). Even sadder, residents had only minutes to evacuate. No prior warnings! Many desperately jumped into the harbor to escape the approaching wildfire, forced to tread water until rescued. Yet many of those people did not survive the pounding surf and waves of flames. What causes such a catastrophic wildfire? A unique combination of weather, terrain, dry vegetation, severe drought, and the remnants of Hurricane Dora created a tinderbox primed to explode. I have a condo in Oahu. Along with other Oahu residents, we have donated our properties to temporarily house displaced Maui residents. That’s the “Aloha Spirit.” If you want to donate money or supplies, go to “Maui Strong Fund” at HawaiiCommunityFoundation.org. In other real estate investment news, let’s dig into the details…

Mortgage Demand Drops For Fourth Straight Week. The Mortgage Bankers Association reports the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased last week to 7.09% from 6.93%, with points rising to 0.70 from 0.68 (including the origination fee) for loans with a 20% down payment. The rate was 5.43% the same week one year ago. Rates have held above 6.5% since the end of May. Higher rates are hitting already affordability hard, and buyers are clearly struggling. Mortgage applications to purchase a home fell 3% last week compared with the previous week, according to the MBA’s seasonally adjusted index. Applications were 27% lower than the same week one year ago. “The purchase index decreased for the third straight week to its lowest level since the beginning of June,” said Joel Kan, an MBA economist. “The decline in purchase activity was driven mainly by weaker conventional purchase application volume, as limited housing inventory and rates still close to 7% are crimping affordability for many potential homebuyers.” Applications to refinance a home loan also dropped 3% for the week and were 32% lower than the same week one year ago. “The bond market is clearly bracing for economically bullish data. If those fears are realized, rates could be at 20-year highs by the end of this week,” said Matthew Graham, chief operating officer at Mortgage News Daily.

Foreclosure Activity Dips In July. ATTOM Data released its July 2023 “Foreclosure Market Report,” which shows there were a total of 31,877 U.S. properties with foreclosure filings (i.e. default notices, scheduled auctions and bank repossessions) up 5 percent from a year ago. Nationwide one in every 4,380 housing units had a foreclosure filing in July 2023. States with the highest foreclosure rates were Maryland (one in every 2,071 housing units with a foreclosure filing); New Jersey (one in every 2,335 housing units); Delaware (one in every 2,343 housing units); Illinois (one in every 2,430 housing units); and South Carolina (one in every 2,511 housing units). Among the 223 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in July 2023 were Fayetteville, NC (one in every 1,367 housing units with a foreclosure filing); Atlantic City, NJ (one in every 1,708 housing units); Columbia, SC (one in every 1,747 housing units); Trenton, NJ (one in every 1,870 housing units); and Cleveland, OH (one in every 1,957 housing units). Those metropolitan areas with a population greater than 1 million with the worst foreclosure rates in July 2023, including Cleveland, OH, were: Baltimore, MD (one in every 1,991 housing units); Las Vegas, NV (one in every 2,098 housing units); Jacksonville, FL (one in every 2,243 housing units); and Philadelphia, PA (one in every 2,273 housing units). Lenders started the foreclosure process on 21,020 U.S. properties in July 2023, down 12 percent from last month and down 2 percent from a year ago.

L.A. County Property Values Hit Record $2 Trillion. The total value of all Los Angeles County property reaches a record $1.997 trillion (with $20 billion in taxes funding public services, including schools and medical care). Property values for most Los Angeles County owners increased for a 13th straight year with a 5.91% bump to the 2023 assessment roll, bringing the total value to nearly $2 trillion, the county assessor announced last Thursday. From that valuation, the county assessor’s office estimates $20 billion in property taxes (which will fund public services, including schools and medical care). Property owners will see only a standard 2% tax increase, due to Proposition 13, unless their properties were reassessed because of new construction or other reasons. Some cities saw jumps significantly higher than the county’s 5.91% rate. For example, industrial hamlet Irwindale led all cities in gains with a 10% increase in property values, which beat out Burbank and Cudahy, which both finished with a 9.7% boost. Conversely, La Verne saw the smallest hike, increasing by 2.3%, which was a little less than Whittier (3.5%) and Bell Gardens (3.6%). As you know, most local governments rely on property taxes as a source of revenue to support local government services. When property values increase, the same tax rate can yield more revenues for those purposes. In terms of property assessment, no city was close to the $819.7 billion valued for Los Angeles parcels. Long Beach was the next highest at $74.8 billion, followed by Santa Monica ($49 billion) and Beverly Hills ($45 billion). Bradbury is the lone city in the county valued at less than $1 billion. The town of less than 1,000 nestled at the doorstep of the San Gabriel Mountains is valued at a mere $879,383 million. Cudahy and Avalon follow in valuations, finishing at $1.08 billion and $1.1 billion, respectively. In total, there were 2,391,198 taxable property parcels in our county, 200,969 business properties, 33,871 boats, and 2,952 aircraft assessed.

Equity Improves For U.S Homeowners. ATTOM database released its second-quarter 2023 “U.S. Home Equity & Underwater” Report, which shows that 49 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter (meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values). The portion of mortgaged homes that were equity-rich in the second quarter of 2023 increased from 47 percent in the first quarter of 2023, to the highest point in at least four years. With home prices rebounding across the U.S., the report found that the level of equity-rich mortgage-payers went up from the first quarter of 2023 to the second quarter of 2023 in 45 of the nation’s 50 states. The gains followed two straight quarterly drop-offs caused by a temporary slowdown in the housing market that had threatened to end a decade-long run of price and equity growth. The second-quarter upturn marked another sign of how the market shift has helped homeowners, as home-seller profits also spiked. While equity-rich levels rose in the second quarter, the report also shows that less than 3 percent of mortgaged homes in the U.S., or one in 36, were considered seriously underwater in the second quarter of 2023. That meant they had a combined estimated balance of loans secured by the property of at least 25 percent more than the property’s estimated market value. Just to demonstrate how far we’ve come, only 2.8 percent of mortgaged-homes were seriously underwater in the second quarter of this year, also the lowest point since at least 2019. The latest figure was down from 3 percent in the prior quarter and 2.9 in the second quarter of 2022.

Eight US Cities That Will Pay You to Move There. In the early months of the pandemic, some newly remote workers took the out-of-office opportunity to relocate. According to data from the United States Census Bureau, population growth slowed in bigger cities from 2020 to 2021, and migration trends show that many more people chose to enjoy their Zoom calls in the country’s southern and western regions. Some of these savvy work-from-homers, and others looking for a change of urban scenery, tapped into the various city-government-sponsored programs that offered incentives like grants, tax breaks, and discounts to cultural attractions for new residents when making their moves. It turns out that many of these deals are here to stay. So, if you’re looking to put down new roots, these American cities will pay you approximately $10,000 to relocate. (Please send me a postcard once you’ve relocated.)

1. Tulsa, Oklahoma

Median Home Rent (per month): $1,233

Median Home Value: $183,557

2. The Shoals, Alabama

Median Home Rent (per month): $1,056

Median Home Value: $59,787

3. Topeka, Kansas

Median Home Rent (per month): $850

Median Home Value: $163,506

4. Rochester, New York

Median Home Rent (per month): $1,200

Median Home Value: $182,940

5. West Lafayette, Indiana

Median Home Rent (per month): $1,669

Median Home Value: $302,605

6. Morgantown, West Virginia

Median Home Rent (per month): $1,300

Median Home Value: $251,067

7. Newton, Iowa

Median Home Rent (per month): $700

Median Home Value: $152,067

8. South Burlington, Vermont

Median Home Rent (per month): $2,400

Median Home Value: $424,777

Ban Begins Of Incandescent Light Bulbs In Favor Of LEDs. Have you heard? August 1 meant lights out for traditional incandescent bulbs, making way for greater LED adoption. A Department of Energy rule set last year and effective August 1 bans the manufacture and sale of what the department has deemed inefficient “general service lamps.” That’s the official way of saying standard light bulbs screwed into lamps and ceiling fixtures, mostly in homes. You might picture a slightly updated version of Thomas Edison’s 1870s patent, although still with a thin coil of wire called a filament. And you’d be correct. Most incandescent and halogen bulbs, an incandescent option that includes halogen gas to boost brightness and longevity, fail to meet new energy-efficiency standards and are banned by the rule. Manufacturers and retailers face a fine if they violate the ban, but consumers can’t be penalized for using up old inventory. Combined, the elimination of this trio of light bulbs makes LEDs (which stands for “light-emitting diodes”), the bulb most households will have to opt for (with some exceptions, such as heat lamps). It’s a bulb type that consumer groups and environmental advocates say saves money and energy, largely because traditional bulb styles, unlike LEDs, don’t turn the electrical energy they use directly into light, but first into heat. That’s why a reason a toy Easy-Bake Oven, powered by a bulb, turns out a small cake. Instead, with LEDs, an electrical current passes through a microchip, which illuminates the tiny light sources to create visible light. LEDs can cost more up front than the older styles, in fact, more than double the price of incandescent bulbs, but then save in energy bills over their lifespan.

Longtime Owner of Pee-Wee Herman’s Pasadena Playhouse Tells All. With the sad passing last week of Paul Reuben (aka “Pee Wee Herman”), I am reminded of his film-famous house known for its bright red facade. It was the 1985 film “Pee-wee’s Big Adventure,” directed by Tim Burton, that catapulted him (and this particular home) into stardom. Little did the real owners of the three-bedroom, two-bathroom property (at 1846 Oxley St. in South Pasadena, Calif.) know that the home’s association with Pee-wee would bring fans far and wide to pay homage to the quirky character for decades. “The house has been in our family since 1974,” William (Billy) Young told the Pasadena Post. “Since our parents’ passing, we renovated it and put it up for [rent].” But he has no plans to sell it. The home last rented for $4,600 per month last summer. Young says that he remembers in his younger years having the film set outside of their house. He had graduated from college and was trying to break into the industry himself at the time. “It seemed such a long time ago when they filmed outside our house. It was an unknown director Tim Burton [at the time] who worked with Pee-wee for the exterior set,” Young said. Young says he had no idea what the film would be about as they were filming. And once the film finally aired, he thought it was “hilarious.” “I couldn’t believe how fun it was to watch the movie. After they wrapped our location, the crew painted the house back to its original color and now Google Maps labels the house as the Pee-wee Herman house. How hilarious is that.” The exterior of the home, which was built in 1922, now remains a pastel yellow color with a white fence wrapping around. It has been labeled a historical landmark in South Pasadena. Last Monday, Reubens died from cancer at Cedars-Sinai Medical Center in Los Angeles. He had been diagnosed six years prior, but kept it hidden. He was 70 years old.

Virginia Woman Was Flooded With 100 Amazon Packages She Didn't Order. What does a Virginia woman have to do with real estate investors in California? Absolutely nothing. Which is why I’m writing about a Virginia woman who received more than 100 Amazon packages that she didn't order, including about 1,000 headlamps and 800 glue guns, according to CBS affiliate station WUSA. Cindy Smith said she became confused after boxes kept piling up outside her home in Prince William County, per the local media outlet. The boxes contained 1,000 headlamps for running and biking, 800 glue guns, and several boxes of children's binoculars. Though the packages had Smith's address, they were addressed to a name she didn't recognize — Lixiao Zhang. Given that she didn't know Zhang, Smith suspected that she might have been the victim of a ”brushing scam.” (A “brushing scam” is a fraudulent scheme where e-commerce sellers send unsolicited packages to people and then post fake positive reviews on their behalf as a way to boost their ratings on Amazon, eBay, or another online marketplace.) But Smith's incident is more likely linked to a different kind of vendor scheme, one that involves sellers trying to remove unsold merchandise from Amazon fulfillment centers. WUSA traced the returns packaging labels to 15 fulfillment centers in nine different states. Sellers in China who need to get their products out of Amazon warehouses pick random addresses and send their unwanted products there, adding: "It's just cheaper for them to do so." Amazon confirmed in a statement to Insider that the seller account violated the company's policy by engaging in "abusive activity," adding that the account has since been closed. Smith, who is an environmental science professor, told WUSA that she didn't want the items to end up in a landfill so she drove around town handing them out to anyone who would take them. "All my neighbors got glue guns or headlamps," she told WUSA. "I gave them to dog shelters, to veterinary clinics. I went to Burger King one day, and I was like, 'I have a gift for you'" for everyone that stopped by.

New Hire at Driving School Crashes Car into ‘Learn to Drive’ Facility. LAC-REIA’s first annual “Safe Driving Award” goes to a Colorado driving school instructor (who will go nameless for obvious reasons. Let’s just call him Dangerous Dan.) Last week, Dangerous Dan was hired by Community Driving School in Lakewood, Colorado. Let’s just say that his first day at work didn’t go very well. Our boy tried parking his SUV in front of the building. But somehow, Dangerous Dan lost control and plowed his SUV into the brick wall. Thankfully, no major injuries were reported at the Colorado driving school. As you can see in the photo, Dan’s Hyundai Tucson burrowed into the front of the establishment, ironically under a sign that says: “Learn to Drive.” CBS reporters spoke with the owner of the driving school, who refuted the claims that the person was a current instructor and said the employee was a new hire and claimed the individual was not yet certified to teach any driving courses. Being that Dangerous Dan was driving their own vehicle, no student was in the car at the time. In other words, students at the driving school received a free “crash course” in parking. “Thankfully there was only one minor injury. Several people were able to dive out of harms way. The driver was cited for a traffic violation,” the Lakewood Police Department shared on X.

Vendors Expo Returns! Our carbon-neutral, bio-degradable, gluten-free, super-duper "Vendors Expo" returns on Thursday night, August 10, 2023. The Vendor Expo opens at 6:30 pm. We'll have 40+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034 (Culver City adjacent). FREE Admission. Please RSVP at www.LARealEstateInvestors.com.

4th Annual Los Angeles Real Estate Grand Expo. Our 4rd Annual Los Angeles Real Estate Grand Expo returns on Saturday, October 21, 2022, 9:00 am to 6:00 pm. This year we’re taking over the entire Iman Cultural Center – it’s all ours for the day! The north hall, the south hall, and the parking lot in the middle (with tents and food trucks). One entire day celebrating real estate investing. The theme of this year’s Grand Expo is “Hedge Inflation - Buy Real Estate.” There will be 14 national speakers in breakout sessions, and 70+ vendors in the North Exhibition Hall. The Grand Expo is a joint presentation of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Ventura County Real Estate Investors Association, and Realty 411. Best of all, the Grand Expo is FREE to attend. Street parking is free or metered, and valet parking will also be available. But please RSVP at www.LAGrandExpo.com

“LARealEstateInvestors.com” Podcast. Are you enjoying our weekly podcast, "LARealEstateInvestors.com" (named after our domain) hosted by our very own Bill Gross? Bill has been a Realtor, broker and real estate investor forever! No one is more experienced in local Southern California real estate than Bill Gross. Each week, Bill interviews real estate professionals sharing their insights and advice for real estate investors. Every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google.

This Week. Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic data, Retail Sales will come out tomorrow from the U.S. Census Bureau. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key measure of the health of our economy. Housing Starts will come out on Wednesday from the Commerce Department. On Thursday, the Conference Board will release its Leading Economic Index for July. The Index has fallen for 15 straight months and the Board still expects our economy to slip into a recession later this year.

Weekly Changes:

10-Year Treasuries: Rose 010 bps

Dow Jones Average: Rose 100 points

NASDAQ: Fell 300 points

Calendar:

Tuesday (8/15): Retail Sales

Tuesday (8/15): Import Prices

Wednesday (8/16): Housing Starts

For further information, comments, and questions

Lloyd Segal

President

Los Angeles County Real Estate Investors Association, LLC