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The U.S. construction industry saw an increase in spending for the first time in four months — the biggest improvement since April 2010.

In March, construction spending grew 1.4 percent to $768.9 billion.

With an increase in home remodeling activity outpacing declines in apartments and single-family homes, residential construction expenditures rose 2.6 percent. Outlays for nonresidential projects, meanwhile, climbed 1.6 percent due to robust spending for hotel, office, and industrial construction.

Source: “U.S. Construction Spending Up,” Investor’s Business Daily (05/03/11) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Federal Reserve Chairman Ben Bernanke will take the rare step of ending next week’s policy meeting with a Q&A session about the central bank’s decisions. Despite opposition from within his own ranks, he is expected to affect no changes to the -rate strFed’s ultralow interestategy.

In facing the media on April 27, Bernanke hopes to assert his voice over the central bank’s internal debates before any of his colleagues do and also reassure the American public that he is on top of keeping inflation in check.

Source: “Bernanke to Open Up as Fed Embarks on Era of Glasnost,” The Wall Street Journal, Jon Hilsenrath (04/21/11)

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.

“We’re clearly on a recovery path,” says Lawrence Yun, NAR chief economist.

Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).

“At this point, we’re likely to see a steady improvement in sales,” says economist Joel Naroff of Naroff Economic Advisors. 

View what economists have to say about who’s buying and currently driving the market at: http://www.realtor.org/RMODaily.nsf/pages/News2011042101?OpenDocument

Based on these sources: “Rising home sales point to a recovery; Prices expected to keep falling 5% to 7% this year,” USA Today (April 21, 2011), “U.S. Home Sales Top Forecasts in March,” The New York Times (April 21, 2011), and “Rich People Buying Homes Again–Should You?” AOL Real Estate News (April 20, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

A sluggish real estate market hasn’t shaken the confidence of the public in how it views home ownership, according to a new study by the Pew Research Center. Eight in 10 adults (or 81 percent) say owning a home is the best long-term investment a person can make, according to the Pew study of about 2,000 adults conducted in March.

“Home owners are not blind to what has happened to home prices, nor are they expecting a speedy recovery,” according to the Pew study. In fact, of the home owners surveyed, about half said their home is worth less now than before the recession, while 31 percent said their home’s value has stayed the same.

Nevertheless, 82 percent of home owners who say their home is worth less now than before the recession either strongly or somewhat agree that home ownership is the best long-term investment a person can make, according to the survey.

The value of home ownership even continues to emerge on top when home owners were surveyed and asked to rate the importance of four long-term financial goals. Home ownership and “being able to live comfortably in retirement” rated the highest–viewed as either extremely or very important by 80 percent of respondents.

More details at source: “Home Sweet Home. Still.” Pew Research Center (4/12/11) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Sweeping regulation introduced by the United States to prevent future financial crises could create major “market distortions,” former Federal Reserve Chairman Alan Greenspan wrote in Wednesday’s  U.S. living standards the Financial Times reported.

The former bank chief slammed the Dodd-Frank Act, which imposes wide-ranging and strict new checks on financial institutions, for failing to “capture the degree of global interconnectedness.”

Greenspan says the reforms, passed by Congress last year, would be impossible to implement, distortive to markets and a possible threat to U.S. living standards, the FT reported.

“The act may create the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971,” warned Greenspan, who was Fed boss from 1987 to 2006.

Read more: Greenspan: US Financial Regulations to Cause ‘Market Distortions’ 

These ‘Market Distortions’ have already occured in the Sacramento and Placerville, California regions, in my opinion.

California has its share of sunshine and retirement communities but we pride ourselves on our advanced technology. We all know that California is the technology center of the universe. In particular, “green technology.”

Most traditional factories and their manufacturing jobs have disappeared in California. Over regulation, taxation and costly litigation has cost the state 2 million jobs over the past five years.  But don’t worry. State officials tell us that traditional manufacturing is too expensive in California anyway.  The state should not provide incentives to attract and retain old manufacturing jobs. More clean technology jobs will be created in the near future. Our new clean environmentally sensitive technology sector is strong and new technology will lead us out of the recession. Really? 

So why does Intel plan to build their new factory in Arizona and not in California? That’s right. Despite all the hype about our prized technology sector, Intel Corporation announced last week that they would build a new chip factory in where? Chandler Arizona. The new factory would cost $5 billion and employ 4,000 new workers.   

Congratulations to Intel with their expansion plans. Shame on California lawmakers for their failure to keep and attract business to the state!

Portion of article by: Ken Calhoon; Real Estate Broker; Placerville, California

It is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities, according to Trulia.com’s latest Rent vs. Buy Index.  Meanwhile, a nation of renters has emerged as more Americans rent by choice or due to unforeseen financial difficulties.  In contrast to this nationwide trend, renting is only less expensive than buying in four of the cities included in this study – namely New York, Seattle, Kansas City, and San Francisco.  The remaining 10 cities are locations where buying still may be a financially sound long-term decision, despite the relative affordability of renting.

Cities overwhelmed by foreclosure filings and unemployment, including many cities in Florida, Arizona, Nevada and central California, typically correspond to more affordable markets for prospective buyers; however, there are exceptions. Oakland and Los Angeles, which are experiencing similar rates of unemployment or foreclosure filings as Phoenix, Miami, and Sacramento, still are more affordable to renters.  Moreover, close proximity to economic centers with promising job growth projections has propped up both the demand for homes and costs of homeownership in Oakland and Los Angeles. 

More information at: http://info.trulia.com/index.php?s=43&item=113 

Other articles at: www.sierraproperties.com

A weaker-than-expected economic recovery will result in a projected decline in California home sales for 2010, although home sales are expected to edge up slightly in 2011, according to C.A.R.’s “2011 California Housing Market Forecast” released last week. 

California home sales for 2011 are projected to increase 2 percent to 502,000 units compared with 492,000 units (projected) in 2010.  After two consecutive years of record-setting price declines, the median home price in California will increase 2 percent in 2011 to $312,500, according to the forecast.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end,” said Appleton-Young.  “There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” she said.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of the economic recovery,” said Appleton-Young.  “What is certain is that favorable home prices and historically low interest rates will continue to make owning a home in California attractive for those who are in a position to buy,” she said.

The presence of real estate owned (REO) properties held by lenders and not yet on the market, known as the shadow inventory, is a constant reminder to those in the real estate business that the real estate market still has a way to go before it normalizes. To build a market and get out of this real estate limbo, REOs must first be resold to owner-occupants or income property investors, not speculators, even though the possible REO deluge will likely have an observable but temporary adverse effect on home prices.

However, with so many banks, speculators, trusts and government-controlled entities holding REOs using different methods to report their foreclosed home holdings, it’s difficult to ferret out the exact number of REOs that remain to be placed on the market. This wildcard creates a quandary for brokers and agents looking forward to the day real estate prices finally stabilize and then begin their annual upward rise — probably limited to the rate of inflation for the next few years into 2015.

What reports do exist indicate that REO inventory is rising as banks are beginning to initiate more foreclosures on those homebuyers who are not eligible for loan modifications or who re-default after modification. So where are the REOs taken in by lenders on foreclosure, and how long will it take them to show up to the party?

The “missing REO” phenomenon is a symptom of a bigger problem, and it’s not the destabilization of prices by putting the REOs on the market immediately after foreclosure. Here’s what the banks aren’t talking about when explaining the slow trickle of REOs onto the market: when they sell an REO, they must then for the first time report the loss (as all REOs currently are supporting an unreported loss) on the lender’s books. It doesn’t take a mathematician to figure out that these massive losses could topple the solvency of any bank that may be on shaky ground — and many of them, even the largest ones, are.

Thus, we probably won’t see a flood of REOs any time soon. Banks are biding their time, holding onto the REO losses and waiting for the economic recovery to see them out of their difficulty. 

By Giang Hoang-Burdette • Apr 29th, 2010,  first tuesday Realty Publications, Inc.

Mega-investor Warren Buffett and a group of top corporate leaders are weighing in on a key issue that’s crucial to a sustained real estate recovery: How long will the good economic news we’ve been getting lately continue? Are we going to be let down later in the second half of the year, or is the current, slow-moving national economic growth pattern a long term trend?  Buffet told his annual stockholders gathering in Omaha that, the economy is showing “significant” and persistent improvement for the first time since the financial crisis broke in 2008.

Other top business leaders polled by the Conference Board — and quoted last week by the Wall Street Journal – said they are now “confident that the U.S. will see sustained growth through 2010″ – with moderate gains in employment, consumer spending and consumer confidence.

That’s hugely important for housing of course – and offers a strong answer to economic doomsayers who predict a sharp drop in home sales and real estate activity following the expiration of the tax credits. The latest housing and mortgage numbers certainly look encouraging:

Pending home sales jumped by more than five percent in March and another 10 percent in April, according to the National Association of Realtors. That’s 21 percent higher than the previous year for the same months.

New applications for loans to purchase houses took another big jump — up 13 percent over the previous week, according to the Mortgage Bankers Association. MBA vice president for research, Michael Fratantoni, said that last week’s FHA and VA share of home purchase applications soared above 50 percent — the highest it’s been in more than two decades.