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by Neil Dutta

Housing was the epicenter of the last recession. From the peak in 2005 to the end of the contraction in mid-2009, U.S. residential investment declined at an unprecedented rate of about 20 percent a year. In normal business cycles, sectors that overshoot to the downside tend to rebound sharply. Given the significant oversupply of homes and tightening of credit, housing enjoyed no such recovery. Residential investment was essentially flat for almost two years after the recession ended. Since then, a slow recovery has been underway and we suspect the housing market will pick up in the year ahead.

Although residential investment has been expanding since 2011, recent growth has been sluggish, rising just 1.1 percent over the last year, compared with about 7 percent in the two previous years. Some of this weakness can be attributed to a housing market in transition: Owner-occupied real estate is recovering as renter-occupied real estate is declining. Also, multi-family construction is ebbing as single-family building picks up. With inventories tight, home resales appear to have flattened out as new home sales take a greater share. In other words, conditions in the U.S. housing market are normalizing. That’s a good thing.

There are good reasons to expect residential investment to pick up after sluggish growth this year.

Consumer attitudes are strong, supporting housing demand. It helps that general economic conditions have improved. According to the latest University of Michigan Survey, more people say now is a good time to buy a home because of “prosperous times.” This is a notable difference from the bubble period of 2005-06 and suggests a recovery built on firmer ground.

More respondents say now is a good time to buy a home because “prices won’t come down” and because it’s a “good investment.” Price expectations matter. The improvement in household buying attitudes, helps keep user costs low. In a standard user cost of housing model, the expected value of the home offsets maintenance costs such as mortgage interest and property taxes and depreciation. No one wants to finance an asset class they believe will go down in value. Thus, it is welcome that consumers see housing as a solid investment once again.

Even as mortgage rates have picked up, lending standards have been easing fairly consistently in recent years. According to the Federal Reserve’s Senior Loan Officer Survey, a net percent of banks has been easing lending standards on residential mortgage loans for 14 consecutive quarters. Despite the ongoing easing of standards, we’d hardly describe conditions in the mortgage market as loose. After all, almost 60 percent of newly originated mortgages have gone to those with a credit score above 760; during the housing mania of the last decade, this figure ran less than 30 percent. Mortgage credit is still tight. The good news is that, at the margin, credit is expanding.

Finally, there is ample room left in the housing recovery. After all, during the 1980s and 90s -- that is, excluding the bubble period -- residential investment totaled 4.4 percent of gross domestic product. As of the third quarter, this figure stands at just 3.8 percent. The economy has been operating below this benchmark for about seven years. So, even by the most conservative of standards, there is likely upside from housing’s contribution to overall GDP growth in the quarters ahead. We’re just not building enough houses.

A popular retort to this positive outlook is that supply conditions in the housing market are constrained. There aren’t enough workers to build these homes, or so the thinking goes. Proponents of this view have a point. For example, the jobless rate in the construction industry has never been as low. Although worker shortage in the construction industry might be a problem, we think productivity is a much bigger one. Historically, we saw about four construction workers for every home start. Today, this number stands close to six. With wage growth in the construction industry finally beginning to pick up, perhaps construction workers are on the verge of repaying the favor with stronger productivity.

Article in Money Magazine- click here

From Corona Del Mar Today

Editor’s note: The lot merger agenda item will not be heard until after 6:30 p.m.

Robin and Joan Campbell have lived in their Ocean Lane home for more than 30 years, with its wall of windows that overlooks Lookout Point and the Pacific Ocean. But another couple with plans to merge two homes and build a taller, bigger residence could leave the Campbells with a view of nothing.

“It’s absolutely the worst thing that’s happened to us, other than losing a dog,” Joan Campbell said. “I can’t think about anything else. It’s destroying my life. I want to be able to see the water.”

The Campbell’s home, along with another house owned by John and Alberta Silva, are part of a 1951 agreement with three homeowners in the 2800 block of Ocean Boulevard. The agreement stated that the three Ocean Boulevard homes would never build above one story, and the two homes in back on Ocean Lane would share an easement that allowed for garage access.

But a couple, John and Julia Guida, has bought two of the Ocean Boulevard properties and plan to build a single home on both lots, with a basement and a roof deck. Neighbors say the home will be the maximum height allowed by the city — more than 20 feet — and will obliterate views.

“This isn’t right,” said Cliff Jones, who lives in a nearby home and who also will lose views. “Everyone is very upset in the whole neighborhood.”

Attempts to interview the Guidas were not successful, and Corona del Mar Today will update this story when they have had a chance to respond to questions. But in an email, Julie Guida offered the following statement:

“Regarding our new home in Corona Del Mar, we are excited about our relocation to the Newport Beach area. We chose the Village in CDM to build our home because of its natural beauty and openness to a variety of architectural styles. We have engaged a team of professionals who have worked diligently to design and build a home that respects the area, adheres to all ordinances and will enhance our property as well as others in the area. With change comes uneasiness and we have heard there is some misinformation about our project among our future neighbors. We regret this may be the case and hope they will get to know us before passing judgment.”

Neighbors attended a Zoning Administration hearing in September, where the city approved the merger of the two lots. The neighbors have appealed, so the issue will now go before the Planning Commission on Thursday. Neighbors also said they will attend Thursday’s meeting of the Corona del Mar Residents Association to see if that group can help. But city officials say they can’t enforce private property agreements, even those that protect views, so it isn’t clear what recourse neighbors have to try to limit construction.

John Silva said he plans to fight.

“If they merge the lots, the covenant is broken,” he said. “At that time, we get legal opinions.”

“He says he wants to be a good neighbor, which makes us all throw up,” Jones said. He also said the new home would block public views from the alley off Goldenrod Avenue, a popular path to the beach from those walking from the Goldenrod Footbridge.

Robin and Joan Campbell bought their home in the mid-1970s, said their daughter, Lucy Campbell. Robin Campbell had been visiting Corona del Mar since the 1930s, when he would ride his three-speed bicycle from San Marino to the beach because he loved the ocean views.

“It’s a funny little house,” she said of her parent’s Ocean Lane home. “It’s all about the view. This whole issue is a catastrophe. This house and the view is it to them. I don’t know what’s going to happen, but I worry about them. It’s just not right.”

The Planning Commission could overturn the zoning administrator’s approval of a lot merger at the Thursday meeting. That meeting will be held at 4:30 p.m. in Council Chambers at City Hall at 3300 Newport Blvd. The public may attend and make comments; click here to read the staff report. The Ocean Boulevard item may not be heard until after 6 p.m. because of the full agenda that includes plans for the Newport Beach Country Club and a liquor license upgrade for Pizzeria Mozza.

Is your home making you ill?

Most of us assume that when we walk into our homes, we slam the door on exhaust, secondhand smoke, and other air-pollution ugliness. In your own house, everything is safe and clean. Oh, if only.

Sancerre Newport Coast

By Carter Weir

Introduction to the Enclave: Surrounded by some of the most prestigious communities of Southern California, and within the stunning residential resort of Newport Coast, Newport Ridge creates an unprecedented opportunity to achieve a lifestyle of distinction. The 371-acre Newport Ridge community includes a rare selection of outstanding homes and a generous 38 acres of parks and open space.

Sancerre is a community within the master development of Newport Ridge. Residents pay two separate association dues: one to Sancerre and the other per quarter to the master association of Newport Ridge. Sancerre was built as the least expensive detached homes in Newport Ridge. Although they are not attached, they are considered condos because of the land ownership rights. There are no walls that touch.

Sancerre at Newport Ridge is a gated community of 144 single family homes in the master community of Newport Ridge in Newport Coast. This exclusive community offers a private recreation plaza with a pool, spa and barbecue areas. Surrounded by affluent neighborhoods, sweeping views of the canyons and coast, preserved open space, nature trails, beaches, golf courses, distinguished public and private schools, and world-class shopping and dining, Sancerre is an exceptional community to call home.

Bordered By: Sancerre is bordered by The Summit (condos on the south), open park space on the east, Saint Michelle on the north, and The Pointe on the west

Views: The end unit homes on the east have the privilege of seeing the canyon and parks. There is also a walkway that people use to get from community to community.

History of the Area: Conceived and developed as an exclusive residential enclave, Sancerre shares in the spectrum of advantages offered by Newport Coast. Sancerre, like many of the other communities in Newport Ridge, was built in 1996-1997 by California Pacific Homes. 

Homes: Sancerre was built by California Pacific Homes in 1996-97 when the rest of Newport Ridge was being developed. Sancerre was developed as a single family detached condo. The inspiration for the architecture of Newport Ridge comes from the French villages of Provence, Brittany and Normandy and from the French eclectic tradition in the U.S. This type of architecture dates from the period between World War I and II.

How the Community Has Evolved: Sancerre is currently in the process of changing the color scheme within the community from Mediterranean colors that the homes were initially painted in the 1990s to deeper tones, more consistent with the French theme. The purpose of this is to maintain the community and keep it evolving with the bigger custom multi-million dollar homes that are a stone’s throw away. Most of the early buyers were young professionals buying a starter home for themselves. Over the years. these professionals had families and the community has evolved into a very nice family neighborhood. Parents have the comfort of letting their kids run free without the worry of them escaping the gated entrance.

Community Features/Amenities/Special Events: Within the gates of Sancerre, residents have access to a private recreation plaza with a pool, spa and barbecue area. Sancerre also participates in an annual Spring Clean Up to help maintain the community as a clean kid-friendly neighborhood. The master association of Newport Ridge has two baseball fields, two tennis courts, two basketball courts, a sand volleyball court, two playgrounds, and open space for barbecuing. There is also a community center within walking distance for Newport Beach residents that has an indoor basketball court, yoga and conference rooms. Newport Ridge has several events a year including Movie Night in the Park and Camping in the Park – mostly kid-friendly activities.

Why You Also Love Living Here: One of the main reasons I love living in Sancerre is because my family lives around me. Being on the top of the hill gives me easy access to my parents down in Laguna, and my brothers in Newport and Irvine Terrace. I also have the ability to shoot down to my office to meet clients in Corona del Mar, while taking in breathtaking views of Catalina on a clear day. Sancerre is also close to one of the best shopping centers around. Just inside the Pavilions there is a Jamba Juice, Starbucks, Sushi Bar, Wine tasting with a cellar, and my favorite – a peanut butter bar. I find myself relaxing at the pool reading a book with 50-foot tall pine trees around me and I feel like I am in heaven. I was born down the hill from Newport Coast in the community of Harbor View Homes where my parents lived for 20+ years. I grew up riding my bike, hiking and playing on the dirt that I now call my home. Although at first I despised the Irvine Company for taking away my playground above Spyglass, I have since appreciated the job that they did in maintaining the open space and the natural beauty of the area. My goal was always to own a piece of land in Newport Beach. I was able to do that several years ago when I bought my home in Sancerre. Over the years I joined the community association to bring my thoughts and values based on living in Newport my entire life. I have sold several homes in this community to friends, because I truly feel it is an incredible opportunity to live where we live.

Current Market Activity:

Right now there are no homes listed for sale in Sancerre. There are 3 homes currently in escrow that were listed from $700,000 to $950,000. Homes in this community tend to sell quickly due to the fact that they are the least expensive detached homes (condos) in Newport Beach. This is why Sancerre wasn’t hit as hard as most during the recession. Investors also see the potential in not only the appreciation of the neighborhood, but also in the rents. Rentals range from the Plan 1 (1,350 sq.ft.) at $3,200 to a plan 4 (2,000 sq.ft.) at $4,300. Average price per square foot is $475.

Information provided by Carter Weir. Reach him at Prudential California Realty by calling 949.795.2222 or by email at mailto://carter@weirproperties.com.

Analyst: Rents to rise 4.5% for years

Gross to sell his empty land

Pimco founder Bill Gross bought a $23 million house on Newport Beach's Harbor Island in 2009, and tore it down (via CNBC).

Now, Gross is selling the empty lot for $26.5 million. The lot has 112 feet of Newport Harborfront property and was formerly owned by philathropist Elizabeth Colyear Vincent.

Before he tore it down, the gorgeous Georgian estate had 11,000 square feet, nine bedrooms, and 12 bathrooms.

Read more: http://www.businessinsider.com/bill-gross-newport-house-photos-2011-6##ixzz1PMIHU2S0

Why It's Time To Buy

The Clouds Haven't Quite Parted, But the Long-Term Case for Home Ownership Is Looking Stronger

By RUTH SIMON and JESSICA SILVER-GREENBERG

Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor's Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody's Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer's market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

Such conditions might not last long. Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as 'household formation'—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

The upshot: 'While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound,' says Anthony Sanders, a real-estate finance professor at George Mason University.

The short-term outlook isn't encouraging. Job growth remains weak, foreclosure sales are making up more of the market, and economists are predicting that home prices will fall more in the coming months.

But the long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn't battered by foreclosures, you may be close to a bottom already.

'The regular marketplace is hanging tough,' says CoreLogic chief economist Mark Fleming.

Here is a look at five key factors that will govern local markets over the next several years:

Demographics

Household formation fell during the economic downturn as a weak economy led some people to stay in school, double up with roommates or move in with family members. According to Moody's Analytics, the number of new households renting or owning a home dropped to 578,000 in 2008 from nearly 2 million in 2005, just before the peak of the housing boom.

But household formation increased to nearly 950,000 last year, says Moody's, and should average 1.2 million over the next decade. 

That, combined with increased obsolescence and higher demand for second homes, should begin sopping up excess inventory in much of the country over the next two years, Moody's says.

'Whatever the excess supply of housing is, it is shrinking pretty fast,' says Thomas Lawler, an independent housing economist.

Some of the uptick in household formation is likely to come from the leading edge of the echo baby boomers, who have been waiting for the economy to recover before striking out on their own, says William Frey, a demographer with the Brookings Institution. That is likely to fuel an increase in demand for both rental apartments and starter homes.

The portion of people moving across the country has fallen to the lowest level since World War II, he adds. That is a sign that many people have put their lives on hold because of the weak economy.

'When things do pick up, there will be this pent-up demand for everything involved with starting a household,' Mr. Frey says.

Of course, when prices in healthier regions begin to rise, many would-be sellers who have sat on the sidelines could begin putting homes on the market, muting the price gains at first, says Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School. Even so, she expects home prices to stabilize and begin to strengthen over the next two or three years.

There also are some powerful demographic cross-currents worth considering. The first baby boomers turned 65 in January, an age when demand for new homes falls and many begin to think about downsizing. 'The baby-boom generation pushed prices up as they got older,' says Dowell Myers, a professor of urban planning and demography at the University of Southern California. But in the coming years, 'boomers will start flooding the market on the supply side' with larger homes, while fueling new demand for smaller properties with more services and amenities.

Affordability

Rising home prices made renting cheaper than buying in many parts of the country. But that dynamic has begun to change: Housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody's Analytics.

Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody's Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Cailf., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says.

In Ann Arbor, Mich., where home prices fell 11.2% between 2007 and 2010, according to Fiserv Case-Shiller, housing affordability has risen well above historical levels, according to Moody's Analytics.

That is good news for home buyers such as Steven Upton, a 42-year-old photographer, who in June will...

A boat's in a name, at Irvine Terrace

Courtesy of John Blaich Daily Pilot

When the subdivision Irvine Terrace was created at Corona Del Mar, the developers decided to name the new streets after famous yachts based at Newport Harbor.

We have prepared the following list of street names with the names and and descriptions of the yachts and their owners. Thus, the present residents of Irvine Terrace can learn whether they are living on a 'Sailboat' or a 'Power Boat' street.

Street Owner

Altura Drive - 48-foot Schooner North Baker

Angelita Drive - 50-foot Sloop John Earle Wells

Bayadere Terrace - 51-foot Yawl James. H. Nicholsen

Bonnie Doone Terrace - 66-foot Schooner Dr. Irving E. Laby

Chubasco Drive - 67-foot Yawl Don Haskel

Dolphin Terrace - 81-foot Cruiser Arthur Letts, Jr.

Evita Drive - 43-foot Ketch L. Courter

Galatea Terrace - 68-foot Yawl Jascha Heifetz

K-Thanga Drive - 92-foot Cruiser Donald K. Washburn

Kewamee Drive - 63-foot Steel Ketch William W. Valentine

Malabar Drive - 41-foot Schooner A.G. Maddock

Marapata Drive - 98-foot Schooner Col. Max Wyman

Patolita Drive - 81-foot Cutter Charles D. Winan

Ramona Drive - 109-foot Steel Schooner Margaret Fleming

Sabrina Terrace - 58-foot Yawl William R. Cabeen

Santana Drive - 55-foot Yawl Humphrey Bogart

Santanella Terrace - (not available)

Sea Drift Drive - 84-foot Steel Schooner Lyman H. Farwell

Serenade Terrace - 62-foot Cutter Jascha Heifetz

Tahuna Terrace - 48-foot Ketch H.J. Bryan

Zahma Drive - 94-foot Ketch A.H. Andrews

GALATEA

This traditional yawl was based in Newport Harbor from 1935 to 1938. She was owned by the famous violinist Jascha Heifetz, who moored the yacht fore and aft off his leased home near the Harbor entrance at 212 E. Balboa Blvd. Galatea was also kept in the mooring area off the Newport Harbor Yacht Club. Heifetz was a member of the Newport Harbor Yacht Club and the Catalina Island Yacht Club at Avalon.

Galatea was designed by A. Nyrgen and built in Stockholm, Sweden in 1899. Her dimensions are 68 feet overall, 44 feet length on the waterline, 12 feet, 5 inches in beam with a draft of 9 feet. She was steered with a long, beautifully-carved tiller. There was also extensive wood carving on the teak bulkheads below. Heifetz enjoyed the rhythm and quiet of sailing. He frequently sailed to Avalon, Catalina. There was a very large insurance policy on his fingers that did not allow him to pull on lines of make them fast. However, he frequently and enthusiastically helped with the rigging in a limited way.

In 1955, when Irvine Terrace in Corona Del Mar was subdivided, one of the streets was named after Heifetz's yacht. In 1998, an oil painting of Galatea was presented to the Newport Harbor Nautical Museum and is shown periodically. The oil painting was created by muralist Richard W. DeRosset of San Diego. He is a very versatile marine artist and has done many commissions for private collectors, museums, and commercial clients. DeRosset has done three revious paintings of famous yachts for the Newport Harbor Nautical Museum.

EDITOR'S NOTE: John Blaich is a Corona del Mar resident who, about once a month, will write histories of interesting boats that graced Newport Harbor.