Emmanuel Fonte | Music | Art | Leadership
If music be the food of love, play on. Emmanuel Fonte website is about music, art, real estate, architecture, design and decor. Occasionally, I talk about my other passion, hockey.
Today’s existing home sales number was a little weaker than expected.
But have no fear, the housing comeback train continues.
Calculated Risk shows the number of months worth of existing home supply (red line). And that number continues to drop.
Which means: The price of your home is going to go up, as inventory gets tighter.
Being a member of NHL royalty obviously has its perks, and for “The Great One” Wayne Gretzky, it involves being the owner of a sprawling estate located in Thousand Oaks, Calif.
Situated in the gated community surrounding Sherwood Country Club, Gretzky’s mansion and lavish grounds recently were put on the market. Asking price? $14.9 million.
Built in 2002 by Gretzky in partnership with “architect to the stars” Richard Landry, the main home by itself measures a whopping 10,815 square feet, but the many buildings and associated amenities that surround it on the 6.5-acre plot, including two guest houses, is where the high asking price is truly legitimized.
As described in its listing, via Zillow.com:
A timeless estate, offering the utmost in luxury, with a chic Metropolitan vibe. Designed by famed architect Richard Landry, this newly remodeled spectacular home offers privacy and security, set on a 6.5 acre promontory within the prestigious gates of Sherwood Country Club. The residence includes 6BD, 8BA, over 13,000 SF with 2 guest houses. A gated entry leads you to a circular driveway with a scenic backdrop of the majestic mountains and breathtaking panoramic views of Lake Sherwood. Exquisite attention to detail and artisan craftsmanship is found in each and every room. Amenities include a master suite with sitting room and dual baths, screening room, fitness facility, office, championship tennis court, outdoor entertainment area wood burning pizza oven, wood and gas BBQ, promenade terraces and gardens. Located within the 24 hour guard gated Sherwood Country Club Estates, home to the world famous signature golf course and country club often called the ultimate living experience.
Ultimate living experience, indeed, although the descriptive listing does not quite encompass the exquisite and luxurious nature of the home and the lavish environs that comprise the surrounding grounds:
(For more photos of Gretzky’s estate, click here)
Debbie Glassberg, an industrial designer, takes home design using recycled metal to another level. Her 2,600 square-foot residence in the Brookside neighborhood of Kansas City, Missouri, is comprised of 5 shipping containers. This is unlike any other shipping container home you’ve seen. Glassberg’s is exceptional, demonstrating her inspiration to “create better, more simple, and less expensive ways for people to live their lives and have a little less maintenance.”
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At this point, most people agree that the U.S. housing market is recovering.
However, there continues to be one less-than-stellar metric of the housing market: new home sales.
The explanation for this is pretty intuitive. The economy is still anemic, and steep discounts are driving buyers to older existing homes.
Meanwhile, the homebuilders are increasingly optimistic and housing starts have been on the rise. This has some economists worried that a supply glut is building in the market for new homes.
Next Friday, we’ll get the latest reading of new home sales. Economists expect a healthy jump, which should help with this disconnect in the market.
Here’s TD Securities with some commentary:
The new homes market has been a laggard in the overall housing market recovery, and while new homebuilding and existing home sales activity have risen significantly from their lows, new home sales have yet to enjoy a similar turnaround in fortune. In December, we expect sales activity to improve only modestly, with the pace of sales boasting a respectable 6.1% m/m gain to 400K. The increase in sales will add to the positive momentum in November, when sales rose an equally impressive 4.4% m/m, justifying the surge in optimism among homebuilders (as seen in the NAHB homebuilders’ sentiment report) about sales prospects in recent months. In the coming months, we expect the positive momentum in new home sales activity to be sustained, though it is likely to continue to lag the buoyancy in the existing homes market.
Here’s TD’s chart. Hopefully, the increasing homebuyer traffic will eventually lead to a pick up in sales.
Read more: http://www.businessinsider.com/chart-new-homes-sales-lagging-2013-1#ixzz2INIRuDxQ
Builders broke ground on new homes in December at the fastest pace in more than four years offering a “solid ending to 2012 and a promising start to 2013,” according to the National Association of Home Builders.
Housing starts soared 12.1 percent in December, reaching a 954,000 annual rate and the fastest pace since June 2008, the Commerce Department reported Thursday. Most of the jump was attributed to a 20.3 percent increase in multifamily construction last month, helping the sector return to a nearly normal production pace by historical standards. Housing starts for single-family homes rose 8.1 percent in December.
“With inventories of new homes at razor thin levels, builders are moving prudently to break ground on new construction ahead of the spring buying season to meet increasing demand,” says Barry Rutenberg, chairman of the National Association of Home Builders.
Permits for future home building — an indicator of future building — also rose slightly in December to its quickest pace since July 2008. Permits rose by the greatest amount in the Northeast by 19 percent and 6.6 percent in the West. The Midwest saw a 5.7 percent decline in housing permits, while the South saw a 3.4 percent decline in December.
Source: National Association of Home Builders and “Housing Starts Climb to Highest Rate Since June 2008,” Reuters
Some extreme curves and cavernous spaces make this home in Warsaw, Poland a truly unique sight to behold. The Swing House was designed by architect
In keeping with her professional mission, Obluska designed this home in a way that would allow for maximum space and minimal harsh corners. Rather, the home is filled to the rafters (and beyond them) with swooping curves, wide open spaces and whimsical but stylish details.
Nearly the entire ground floor of the home is dedicated to a large sitting area. The extremely high ceiling makes the rooms appear enormous while allowing a full view of the sweeping staircase.
The volume of the main ground floor room is amplified by its abundance of natural and artificial light. The massive front window reaches from the floor of the first level to the ceiling of the second level, letting in plenty of sunlight.
The home’s interior is rich with shiny materials such as mirrors and polished marble, reflecting the natural light from the window as well as the artificial lights which are distributed generously throughout the interior.
Although the Swing House is utterly unconventional, it has a very comfortable quality about it. The repeating soft curves provide a kind of womb-like aesthetic, making it seem that coming home to this house would definitely be the best part of the day.
A friend recently asked me for mortgage advice. I explained how to shop around for a good rate, and then I added my catchphrase: “You didn’t ask, but…”
Like anyone involved in the world of finance, I’ve seen a lot of serious mortgage trouble in the last few years. Even though the days of jumbo loans with no proof of income are long gone, it’s still a homebuyer’s responsibility to make sure that taking on a mortgage doesn’t put them in the financial danger zone.
So, I told my friend, before making the leap, to work through the following checklist and make sure you’re on the good side of each rule.
Now, nobody’s perfect, and if your online dating profile says you’re looking for a financially prudent partner who fulfills every qualification below, you’ll stay lonely. “You obviously can’t do all the things on your list,” says Jane Hodges, author of Rent vs. Own.
But whenever someone has come to me in danger of losing their house, they’ve ignored nearly every single rule, including the most important one: In Mint’s recent money mistakes survey, 20% of you admitted to spending more than 30% of your income on housing.
And since January is all about fixing those pesky Money Boo Boos, and paying too much for housing is definitely a big money mistake, let’s talk about the ten commandments of home buying:
The classic lending guideline says your principal, interest, property tax, and insurance (PITI) should amount to no more than 28% of your gross income.
Obviously, that’s an arbitrary number. Your financial world won’t explode if you stretch to 29% or 33%.
But an outsized mortgage payment is going to bite you sooner or later. As we’ve seen again and again over the last four years, lenders aren’t cuddly and understanding. They just want you to make your payments, month after month.
There’s also the duration of the mortgage to consider. “Another metric is your age,” says Hodges. “If you’re 55 and a first-time buyer, you better be getting a 15-year loan, right?”
It’s not 2006 anymore, and banks are a lot more scrupulous about checking to see if you have any income before shoveling a houseload of money in your direction.
But it’s still your responsibility to make sure you have a steady paycheck to go with your steady mortgage payment.
A reasonably sized mortgage quickly becomes an unreasonable burden when you mix it with student loans, car loans, and credit card debt.
The traditional lending guideline says that your mortgage payment (yes, including interest, tax, and insurance) and all your other debts should add up to 36% of your income or less.
Again, I’ve had people show me their monthly budget, and 70% of their income was going to debt repayment. That can’t end well.
On top of debt repayment, you have other non-negotiable bills every month: utilities, insurance, a basic level of food and clothing, and maybe a tuition payment. Then there are discretionary expenses: saving, dining out, entertainment, travel, etc.
In their book, All Your Worth, Elizabeth Warren and Amelia Warren Tyagi recommend that you keep your non-discretionary expenses to less than 50% of your take-home income.
Like the other percentages we’ve been throwing around, this one isn’t magic, but it’s a nice guideline. When too much of your income gets sucked into required expenses, you lose flexibility.
A brief period of unemployment, a medical emergency, or a car repair can turn into a financial disaster that ultimately costs you your house.
If you have a well-stocked emergency fund now, don’t drain it to fund a down payment. If you don’t have one, you’re not ready for a mortgage, no matter how perfect a Cape Cod you just toured.
If you’re uninsured or underinsured, you’re in no position to buy a house, unless you’re sitting on a giant pile of money. Are you?
Small down payments lead to big problems. Reuters’ Felix Salmon crunched the numbers last year and found that mortgages with a 15%-20% down payment were more than twice as likely to become delinquent as mortgages with a 20% down payment for most years before the financial crisis.
Lower down payments did much worse. His conclusion: “So, let’s all remember this chart the next time anybody claims that you can have a safe mortgage with a low down payment. Because the fact is that you can’t.”
Home equity is great—that’s why you should bring a big down payment. But it’s also undiversified, subject to the ups and downs of the real estate market, and hard to quickly turn into cash.
It’s fine to have your retirement savings plan reflect the fact that your mortgage will be paid off in retirement and your ongoing housing costs will be low (although, you’ll still be on the hook for maintenance, property tax, and insurance).
If you’re assuming your house will appreciate at a lavish rate and you’ll be able to cash out later when you downsize, think again: over the long term, house prices rise at about the rate of inflation, according to the Case-Shiller index.
Unless you’re prepared to stay in your house for seven to ten years, the costs of buying and selling are likely to swamp any price appreciation.
Put more simply: If you move a lot, you’re better off renting. And most people underestimate how soon they’ll want to (or need to) move. Look at your past behavior and be realistic.
A couple of times a year, Trulia.com looks at housing markets nationwide and declares them under-, over-, or well-priced based on the historical price-rent ratio, which is just the price of a house divided by the annual rent for an equivalent house.
During the housing bubble, prices in many markets rose to absurd levels by this standard: People were buying $500,000 houses that would have rented for, say, $20,000/year.
In retrospect, this obviously wasn’t going to work out. Prices in most markets are now sane (ratio of 15 or less), but you should still look at the neighborhood level. My Seattle neighborhood, for example, is still looking a little hot.
Source: Matthew Amster-Burton via: Mint.com
