The Top 10 Most Affordable Cities

As I’m sure everyone knows, over the last few years home prices around the country have drastically fallen. In some cities, prices are still going down. According to Realtor Magazine the median price of a home in the U.S. is roughly $199,500— down from about $400,000 before the crash. However, certain markets have been hurt much more. Realtor Magazine recently posted a list of the top 10 cheapest cities in the United States. Coming from someone who lives in California— where homes tend to cost a lot— the amount by which properties in some parts of the country have lost value was shocking.

The cheapest city— Detroit— really stood out. The median price of a home here is just $99,000— “down 13.84 year-after-year”! Since there are so many foreclosures in Detroit, I always knew homes here were cheap. But, $99,000 is hard to believe. I also think that this drastic depreciation rate can be attributed to a lack of demand because of the region’s high unemployment. To say the least, this really shows the housing crisis’ detrimental effects.

The remainder of the list— which shows the median home prices and depreciation rates— can be seen below.

1. Detroit

Median list price: $99,000

*Down 13.84 percent year-over-year

Median days on the market: 101

2. Fort Wayne, Indiana

Median list price: $109,900

*Up 0.92 percent year-over-year

Median days on the market: 126

3. Dayton-Springfield, Ohio

Median list price: $109,900

*Down 2.66 percent year-over-year

Median days on the market: 150

4. Toledo, Ohio

Median list price: $114,900

*No change in year-over-year

Median days on the market: 164

5. South Bend, Ind.

Median list price: $115,000

*Down 0.78 percent year-over-year

Median days on the market: 170

6. Springfield, Ill.

Median list price: $124,900

*Up 0.73 percent year-over-year

Median days on the market: 113

7. Akron, Ohio

Median list price: $130,440

*Down 6.82 percent year-over-year

Median days on the market: 162

8. Cleveland-Lorain-Elyria, Ohio

Median list price: $134,900

*Down 2.95 percent year-over-year

Median days on the market: 162

9. Las Vegas, Nevada

Median list price: $134,900

*Down 9.46 percent year-over-year

Median days on the market: 120

10. Wichita, Kans.

Median list price: $135,000

*Down 1.24 percent year-over-year

Median days on the market: 107

The Top 11 Cities Where You Can Sell Your Home the Fastest

I came across an article on Realtor Magazine’s website which lists eleven cities where homes sell the fastest. This entry may make a few of you who live in these areas and plan on selling you home particular happy.

Interestingly, many of these cities— Oakland, San Francisco, Los Angeles, Bakersfield, San Jose, and Fresno—are located in California. Since most real estate market analysts expected for this state’s housing market to recover faster, I wasn’t surprised. As a matter a fact, I predicted that affluent cities such as San Francisco and Los Angeles would have a speedy recovery. I guess I was right. After all, rich people with money to spend tend to prefer homes in these areas over less glamorous cities such as Bakersfield.

What surprised me the most about this article was that Oakland, California placed first— homes are on the market for just 50 days. Now that I think about it, this is probably due to the fact that people working in the “Silicone Valley” create a demand for affordable homes. Keep in mind, the median list price here is about $319,00—compare this to San Francisco where the median price is an astounding $639,000. Buyers looking for homes in northern California can get a great deal in Oakland.

Prince Avoids Foreclosure

Seven-time Grammy winner Prince almost made it to the growing list of celebrities who have been foreclosed on. However, according to foreclsoure.com, he avoided losing his home by paying his bank a lump sum payment of $368,000. This equates to all of the delinquent payments he “forgot” to pay on his 20- acre Minnesota home.

What surprised me the most when I read this article wasn’t that the Pop- Music- Icon was able to simply cut a check for more than $350,000. After all, he has the money— he’s Prince. I’m most curious about what prevented him from paying his mortgage in the first place. Last time I checked, a home loan is a pretty hard thing to forget about. Keep in mind, he probably has several assistants working for him; and they even forgot!   

USC is Going Green

You heard me right! According to the April 25^th issue of The Daily Trojan, USC is officially on track to become an environmentally friendly campus. The administration’s end goal is for certain buildings on campus— for example, Pardee Tower (a residence hall)— to be certified by LEED. I have already spoken about the LEED (Leadership in Energy and Environmental Design) rating system several times; so, there’s no need for a refresher. Measures have already been taken to lower USC’s carbon footprint. For example, most dorms have low energy power strips. Efficient laundry machines and low output showerheads have also been implemented— all in an effort to reduce water consumption. Nonetheless, the key to a “greener” campus is a flexible and environmentally conscious student body.

I think making the USC campus more environmentally friendly is a great idea. Global warming, climate change, and the depletion of non-renewable resources are big problems that must be dealt with. Luckily, many college student are well aware of the environmental problems we are facing and will probably be willing to make a few changes their lifestyle. However, as mentioned in The Daily Trojan article, costs cannot be transferred to students for this plan to succeed. USC already costs too much money! 

A Home Made from Bottles?

Several of the homes I’ve spoken about on this blog have been pretty unique. Some were built using paper and others using railroad ties. I recently read about a home in Quilmes, Argentina on the website greenlaunches.com— it was built using six million bottles! Made by Tito Ingenieri, this home is a cross between a junkyard and modern art. The owner’s main goal was to build a low cost home that was sustainable and environmentally friendly. In this case, all six million bottles were donated and the home helped recycle millions of bottles. So. It’s safe to say both of his goals were achieved.

This house can be considered a “sustainable dwelling” for a few reasons. To start off, most of the materials that were used to build it were recycled junk— old bottles, scrap metal, and second-hand furnishings. This home also uses less energy because the bottles help keep it cool in the summer and relatively warm in the winter. As if that’s not enough, this home still kept six million bottles from entering a landfill.

There’s no doubt in my mind that this house is unique. How often do you see a home built using bottles? Even though I’m not an environmentalist, I can’t help but be impressed by the fact that such a large house was built using recyclables. Even though this home may be unsanitary, it’s still pretty cool.

The Trend of Los Angeles Home Prices

As I’m sure many of you know, home prices in many major U.S. cities are still falling. One of these cities is Los Angeles. Bubblemeter.com recently posted a graph showing the trend of Los Angeles home prices. According to the graph, the “city of angels” is still in trouble; but that not what mainly grabbed my attention.

What instantly caught my eye was the sudden jump in prices around 2006. The market’s rapid grown can easily be seen by the provided chart. Sudden increases like this are a clear sign of trouble. This is especially true for real estate since the market is cyclical. What’s just as interesting is how suddenly the market began to nosedive. By 2007, prices began to tank— this was the start of the market crash. This graph also shows the expansion and explosion of the housing bubble—the sudden rise indicates the expansion and rapid drop signifies the explosion.          

The Future of Coastal Living

Many people around the world dream about living by the ocean. I guess this explains why some people are willing to pay a small fortune for a beachfront home. Take for example Cher’s $45 million dollar Malibu mansion. However, over the last few years, designers and architects have become more daring. Companies such as “Sub Find” offer what they call a “semi-submerged dwelling environment”— the Trilobis 65. These homes are a cross between a submarine and a houseboat and are the closest thing to living underwater that I’ve ever seen. Half of the dwelling is submerged while the other half reaches a height of about 3.5 meters above sea level. The Trilobis 65 is divided into four separate levels and accommodates six people comfortably. The top floor houses common areas such as a kitchen, while the lowest level (3 meters below water) is an observation bubble. As if all of this isn’t impressive enough, these “homes” can still move under their own power.  

        The Trilobis 65 is also designed to be environmentally friendly. For starters it uses hydrogen to power its AC motors. To be as sustainable as possible, the semisubmersibles also implement solar power. Sustainable materials are also used. To avoid using too much energy for air conditioning, a system that automatically tints the windows is in place.    

I think this is one of the coolers things I have ever seen. Just imagine having an all- glass basement that’s completely underwater. I could spend hours just staring into the ocean around me. The views residents experience must be nothing short of amazing. However, I can’t imagine living in a home like this full time. Nonetheless, if I had the money, I would love to have a home like this as a vacation home! Who wouldn’t?

A Sign of Hope for South Florida Residents

The economic downturn left Florida residents, particularly those of the southern tip of the state, in financial turmoil. Foreclosure rates here are sky-high. The only region worse than here is Las Vegas. Luckily, the state government enacted the “Hardest Hit Program”. This program literally hands out cash—up to 12,000— to prevent foreclosures. I think the government’s strategy is great. People in certain parts of the country have really been suffering. Measures like this will help ease the pain. Fortunately, the “Hardest Hit Program is actually working”—foreclosures are slowly dropping. I think this program’s success shows government action and planning at its best.

Nonetheless, one thing still concerns me: how does the government plan to finance programs like this long term. After all, for those who qualify, money is pretty much being handed out. This will almost surely create a future tax burden. The current deficit is already big enough!

Regardless of this major downside, more programs like this should be created. The foreclosure crisis we’re facing can't be ignored.  I’m usually not an advocate of government intervention, but action must be taken now.        

   

Finally, Some Good News!

Commercial real estate (this mainly refers to offices) is actually improving! This is some of the best news anyone has heard in a long time. According to Realtor Magazine, “troubled loans are dropping, occupancy is soaring, and office building sales are rising”. The number of defaults is also falling. After three long years of vacancies, low sales figures, and lousy rents the worst may be over. Could this be the boost the market has been waiting for?

Regardless of this good news, I think the market for real estate as a whole will take much longer to recover. I don’t think this small improvement will make much of a difference in the grand scheme of things. After all— in the U.S— the vast majority of properties (in terms of value) are homes. Vacancies and foreclosures in the residential segment are still sky high. Nonetheless, at least for one market segment (commercial), it’s a start. Don't get me wrong, this is still good news!  

The Top 10 Worst Sates to Earn a Living

I came across a very interesting article on moneyrates.com by Richard Barrington titled “The Ten Worst States for Making a Living”; one that I think is particularly important for soon-to-graduate college students entering the job market like myself. This study considers a state’s average wage, cost of living, tax rate, and unemployment rate to determine the worst places to earn a living. I think it’s worth mentioning the top four states.

One is Hawaii— this state ranked first. I wasn’t too surprised about this since it is an island and needs to have most of its goods flown in, increasing living costs. However, the amount by which it leads the group was a different story— the adjusted average income is about 7000 less than its closest competitor! This, in addition to a high tax rate and low adjusted- income, make living in Hawaii more about enjoyment and pleasure than making money.

At first, I was pretty surprised to learn that Maine and Montana were ranked second and third (even before California). However, things became clear when I found out how low the adjusted income in these states is— $29,159.19 and $29,495.73. These rankings can mainly be attributed to low wages.

California’s ranking (4^th) didn’t surprise me. After all, it’s a know fact that it’s expensive to live here— everything from homes to everyday necessities cost more. For example, California has some of the highest gas prices in the country.

Job hunters (and anyone planning on moving) must consider how affordable certain areas are before making major decisions. Richard Barrington’s study makes the importance of conducting research clear. A lack of information can potentially cause a new family or employee financial hardship.  

Here’s the full list compiled by “the real estate bloggers”:

   

Interesting Architecture— An Understatement

I’ve written about many unique homes on my blog—everything from oversized mansions to a home built using railroad ties. I recently read about a housing project in Joshua Tree that will be constructed using shipping containers. I’ve seen an art exhibit built using these huge 40- foot containers before and surprisingly the building looked pretty cool. Everything about this home’s design is unique.

The majority of the structure will be built using five shipping containers (each of which weighs about 5000 pounds and two large water tanks. Aside from being visually appealing, these tanks will also store water since this home will be completely off the grid.  The home’s modern interior is simplistic and hides any sign of the shipping containers it’s surrounded by. This hybrid project will be built by ecotechdesign, an environmentally- friendly design firm known for combining unusual materials with sustainable building practices. The “container house at Joshua Tree’s” small carbon footprint also make it that much more unique.

 The home’s frame will be built using recycled steel and will also have a living roof with draught- resistant plants, radiant heating and cooling, and a grey-water irrigation system to consume as little water as possible. As stated earlier, the two large water tanks are also functional. Floors and countertops will also be made of recycled bottles and other similar materials. Although this home has not been LEED certified, it definitely qualifies.

A Not-So-Typical Building Material

I’ve shown several over- the- top homes on my blog—usually extravagant ones with huge price tags. However, I found a home on the blog Curbed LA that I think is worth mentioning. This house is by no means the size of a small hotel, nor does it cost that much. It doesn’t have 5 kitchens like the home I spoke about it Miami or gold- plated door handles. But, it was built using believe- it- or- not: railroad ties! This rustic style home is located on Catalon Ave in Woodland Hills and has two bedrooms. It’s currently on the market for $409,950.

Surprisingly, this home looks like many other rustic homes built in the same time period. Most people probably wont even be able to tell that the homes exterior is covered in railroad ties since they resemble the wood panels many homes in the city are covered in— just bigger. I personally think the home’s builder pulled it off. The interior— which resembles the inside of a cabin— has the same homey rustic feel as the exterior.    

Southern California Home Sales Show Little Improvement in March

Home sales in March remained flat according to a recent Los Angeles Times article. The median price of a home hovered around $280,500— a 2% increase compared to February. However, this price is still 1.6% les than that of March 2010. Sales were also down 5.2%. Not surprisingly, about 36% of these sales were for foreclosed homes.      

Several real estate professionals, such as DataQuick president John Walsh, think that these dismal figures foreshadow the market’s direction for the rest of 2011. This prediction makes a lot of sense. I agree that the market isn’t going to recover anytime soon. Foreclosures will continue to go up. Fueled by an excessive supply of homes for sale, I also think homes prices will keep falling. The market for real estate is still on a very dangerous and unpredictable path.  

   

Las Vegas Home Prices Still Falling

Bubblemeter.com recently posted a chart showing that Las Vegas home prices are still dropping. The explosion of the housing bubble in 2007 can clearly be seen on the graph—prices reached their peak in 2006 and plummeted a year later. At its peak, the average price of a home here was roughly $350,000 (adjusted for inflation); that number has nose-dived to roughly just $130,000. Foreclosures in this city are at an all time high and in some cases property values have fallen as much as 60%!

This drop in prices explains why investors have flocked to Sin City. Investors looking to make a profit when the market rebounds purchase the majority of homes here— using cash of course. Although the short- term outlook seems grim, renting out foreclosed properties and reselling in a few years can be a major money- maker.

Who Would Have Ever Thought Selling Homes Could be Dangerous?

Ashley Okland 

According to an April 11^th Realtor Magazine Article, a real estate broker named Ashley Okland was murdered while conducting an open house. What’s even more chilling is that this isn’t the first attack on a real estate professional in the state of Iowa—another broker was assaulted while showing a home in Ottumwa, Iowa this past February.

To say the least, these two attacks have shaken up the real estate community. Many real estate professional in the area have been scared to go to work since the shooting. Some have even cancelled open houses.    

Turning a Home Into a Billboard… You’ve Got to be Kidding Me!

You heard me right! Some people are actually turning their homes into giant billboards as a way of earning some extra money during these tough economic times. Sometimes, the monthly check for providing this service is enough to cover an entire mortgage payment!

Adzookie is the company responsible for this creative idea. The entire transformation takes between three to five days. Each home is completely covered in eye-catching colors and emblems that match the company the home is supposed to represent. For example, a home advertising Facebook was painted bright blue— the social networking site’s signature color.  

Although this idea is creative, I don’t think it will be too successful. Most people probably aren’t willing to turn their home into an attention- grabbing billboard, and for good reason. For starters, the homeowner’s will lose their privacy. As if that’s not bad enough, coming home to an ugly house painted many bright colors isn’t something most people would like to experience on a daily basis.  

Shigeru Ban: Architectural Genius

I spoke about Shigeru Ban, the world-renowned Japanese architect known for designing eye- catching structures using paper, in an earlier blog entry. To say the least, this man and his amazing gift amazed me. So, I’ve decided to give you some more information on this architectural genius. 

Before I begin, I’d like to give you some background information on Shigeru Ban. He was born in Tokyo, Japan in 1957, but now lives in Paris where he has his own architecture school and studio. He himself attended the Southern California Institute of Architecture. Ban’s claim to fame is using paper to design and build some of the most amazing buildings I’ve ever seen— everything from shelters for disaster victims to massive cathedrals. Here are just of few of the projects he was involved with. His style is both futuristic and “open to the elements”.

The Centre Pompidou-Metz is probably one of his most famous projects. Modeled after a Chinese bamboo hat, this structure houses the new Pomidou Museum in Metz, France. The buildings oddly- shaped roof was made using sixteen kilometers of laminated wood fiber.

Shigeru Ban is also the driving force behind The Aspen Art Museum located in Aspen, Colorado. The majority of this 30,000-square-foot environmentally- friendly building will be constructed using its architect’s favorite material— paper. The project will end up costing almost 30 million dollars and will capture the beauty of the surrounding area.

Click the following link for a slideshow of some of Shigeru Ban projects: slideshow

Centre Pompidou- Metz

The Aspen Art Museum

$68,500,000 for a Home?

About a month ago, I presented one of my previous entries in class— I reported on a mansion in Miami on a private island. Since I’m a real estate- finance major, it should be no surprise that I’m interested in over the-top residential and commercial developments. Believe it or not I found a home in Beverly Hills that even more over-the-top than the one I spoke about earlier.  

Priced at a shocking $68,500,000, the sunset mega- mansion located just east of Rexford Boulevard in Beverly Hills is, to say the least, unbelievable. Modeled after the Palace of Versailles, this castle cost its owner— real estate developer C. Frederick Wehba— $60,000,000 to build. According to an online article, this home covers over 2 acres of land and has over 36,000 square feet of living space. There are 9 bedrooms, 13 bathrooms, a pool, movie theater, and that’s just the start. Keep in mind, the US economy is in the middle of one of its worst real estate disasters in history. The whole house covered from top to bottom in hand carved French marble. According to The Los Angeles Business Journal the door handles are gold plated and weight 15 pounds each! Why would someone ever have a golden door handle on his or her home?

Ironically, Mr. Wehba did not build this oversized castle to live in. He built it as an “investment” and location for his church’s benefits. Well. At least he’s putting the house to good use since it will by no means make a profit in the current market. This “investment” was a failure.  

Residential Developers Still Hurting

As I’m sure many of you know, home sales are at some of their lowest levels in decades. About 18.3 million houses are vacant, a number that is only expected to rise by the end of this year. Many companies have practically stopped building new homes. Those that haven’t are facing unbelievable losses.

 

KB Home, one of the largest residential developers in the country, is a great example of one of the daring firms. According to an April 6^th Los Angeles Times article, this company reported a net loss of 114.5 million dollars this last quarter. Let me clarify: this huge loss occurred during just a single quarter, not over an entire year! Revenues are also down substantially: 25% from last year. Keep it mind, KB Home was a huge moneymaker a few years ago when real estate was booming. I think the troubles this company is facing make it clear how chaotic and fragile today’s market for real estate really is.        

Downtown L.A. Mall Re-model Begins

The Los Angeles Mall, which is located at the corner of Figueroa and 7^th street, has been rotting away for several years. It has been showing its age for some time and has lost many of its tenants. However, an article in today’s L.A. Times announced that a 40 million dollar makeover has gone underway. Gensler Company, the same architecture firm that designed Nokia Live, will head the project.

Construction is expected to take just under two years— I think this is unlikely. Developers plan to make the retail center more accessible to people flooding the busy sidewalks surrounding the site. The outcome will be similar to that of the Americana, where there are several openings into the surrounding area outside the mall. One of the main anchor tenants will be a Target Super Store located in the center of the mall. Many young and trendy retail stores are also expected to move in. The planned mall will also offer visitors a 500-seat indoor-outdoor dining center with 15 restaurants. This mall’s approach to controlling the flow of customers is also radical. Unlike other malls that force visitors to walk by as many stores as possible to reach their destination, the new- and- improved L.A. Mall will be easy to navigate and wont force people to walk a lot just to shop at a single store. In my mind the overall plan for this project seems quite good.

An artist's rendering of the site

Construction Begins on South L.A. Park

The MTA rail yard located at Avalon and 54th streets stood vacant for many years. It was an eye- sore just waiting to be developed. Members of the city counsel have been trying to replace this lifeless- concrete plot with a public space for some time now. Finally, construction on a city park began this week.   

After years of negotiations, the nine- acre piece of land was purchased for 19 million dollars. This park is expected to open in December 2011 (I don’t think workers will meet this deadline). This public space will provide a place for people to enjoy themselves, while beautifying the surrounding neighborhood. A spillover effect, where property values rise because of this development, is expected to occur. There are also plans to build a rail museum to pay homage to the site’s past. The benefits of this project don’t stop there.

It will also be environmentally friendly. In addition to planting many trees— which removes carbon dioxide from the atmosphere (reducing the greenhouse effect)— a system that captures, cleans, and recycles storm water will also be built.      

This development will also create many jobs for constructions workers who have been hurt by the economic turndown. More information about this project can be found in an article on KCET’s website.  

The site before construction

The ribbon- cutting ceremony

Witchcraft Helps Real Estate Brokers “Cleanse” Homes

Believe it or not, real estate brokers in Salem, Massachusetts have been asking self-proclaimed witches to bless the homes they’re desperately trying to sell (this is the only city where such a thing might seem somewhat normal). These blessings are being carried out to rid homes of their negative energy. Some superstitious agents really think this will help sell their homes. I found a video on CNNMoney.com that follows a witch during one of her blessings. To say the least, it was pretty entertaining— it shows how hopeless some people really are.

I knew real estate agents were getting desperate— they’re considered to be the modern day used- car- dealer. But, I’ve never seen something like this; it makes me question how sane some brokers are. These homes aren’t selling because of their “negative energy”. They can’t sell because we’re in the midst of one of the worst housing crises in American History! This video clip kept saying how important positive attitudes are and even quoted a “satisfied customer”. The market needs much more than positive energy to recover anytime soon. Job creation and looser lending standards are what’s needed.    

A witch blessing a home

Mortgage Rates on the Rise!

For over a year, interest rates were kept low to endorse home buying; however, rates have been rising steadily over the past few months. According to a Realty Times article, the interest rate for a 30- year fixed rate mortgage is currently 4.86%, up 5 basis point from last week (1 basis point equates to 1/100^th of a percent). The hybrid 5-year Treasury-indexed adjustable-rate mortgage (ARM) also jumped from 3.62% to 3.7% over the past week.

So, what does all- of- this mean for the average American homebuyer? For starters, this jump in interest rates makes financing a home less affordable since borrowers will be forced to pay more interest. To make matter worse, most banks still require huge down payments and a very good credit score to even qualify. As a matter a fact, my father and I just purchased an investment property in Las Vegas where we were forced to pay a 25% down payment! Keep in mind: my dad has an almost perfect credit score and great relationships with several banks. However, there is some good news (just for buyers, but not for the market as a whole): home prices are still falling. This means that buying a home can still be affordable.

Overall, I think it’s clear that the market for real estate is in extremely bad shape. Home prices are still falling. As if that’s not bad enough, interest rates are increasing, reducing the demand for homes. This decrease in demand will prevent property values from increasing anytime soon.            

The Case Shiller Index: Still Going South

I’ve spoken about the Case Shiller Index many times on this blog; so, I’m not going to bore you with the usual introduction. Standard & Poor’s announced yesterday that this home- price index is still falling. However, it’s more serious than that. The Case Shiller Index is plummeting at an astounding rate not seen for decades! This means that home prices around the country are still going down and are expected to drop even more as the year goes on. An entry on bubblemeter.com also touched on this issue. This blog expects a  “further deceleration in the annual growth rates in 13 of the 20 MSA’s and the 10- and 20-City Composites compared to the December 2010 report.”

The statistics make it clear that the housing market is still in shambles. The numbers don’t lie. Overall, the index is down 7.5% compared to January 2010. The index even set a record: the condominium index is down 13.9% from January 2011—the largest year- to- year drop since the index was established.  Even with all the efforts, a sustained recovery seems like just a dream for now.