2014 Economy and Housing: From Deep Hole to Whimper

Referring to its “roller-coaster pattern of economic growth,” Fannie Mae summarized the economy and housing in 2014 as a year that started with a deep hole and ended with a whimper. A brutally cold first quarter put economic growth in that deep hole at the beginning but it came back “with a vengeance” making the second quarter the strongest for growth in more than two years. The third quarter saw growth flag again and it “is poised to weaken further, as some unsustainable forces that drove activity in the third quarter reverse in the final quarter.”

Fannie Mae’s Macroeconomic Forecasting Team headed by Senior Vice President and Chief Economist Doug Duncan reprise 2014 in the December edition of its Economic and Strategic Research report. They see the year overall as one in which economic growth comes in at what they call an unspectacular pace of 2.1 percent, 1 percentage point below the 2013 pace. Next year however will be better, driven by improving private domestic demand, a better outlook for consumer income, rising consumer and business confidence, a broadening housing recovery and they expect full year 2015 growth of 2.7 percent.

The rising trend of the “quits rate,” a key indicator of labor market confidence from the Job Openings and Labor Turnover Survey (JOLTS) supports, the Team says, its view that wage gains are poised to accelerate. Private wages in the Employment Cost Index tend to lag the quits rate. Such improving income prospects they say are key to increasing the sub-par rate of housing formation but the full recovery of the housing sector will require truly meaningful gains in that income.

This year has been a disappointing one for housing recovery. Improvement was tentative, especially for the single-family sector which was held back first by the aforementioned severe winter weather and then by a spike in mortgage rates. While rates have stabilized, demand remains low as homebuyers have not yet moved aggressively into the void left by exiting investors.

Recent indicators, the economists say, have been generally positive; existing home sales were up in both September and October, increasing to the highest levels since the previous fall, and inventories reached their lowest levels since March. New home sales, however, improved little in the last half of the year.

Nonetheless the National Association of Home Builders’ measure of builder confidence rebounded sharply in November although building itself has been mixed all year. Multifamily building starts have been the strongest since 2006 and are expected to post double-digit gains for the fourth straight year while single family permits and starts have been much more modest with starts up only 10 percent from last year. All residential construction starts are expected to come in below one million units which the economists called “anemic” by historical standards.

Most of the major indexes continue to show price growth moderating. Still tight inventories continue to support healthy price gains even in the face of soft homebuyer demand.

The Team says it expects 2015 will bring “a broad-based but measured housing recovery amid improving consumer sentiment and income growth, slowly easing lending standards, and continued historically low mortgage rates.” Long term Treasury yield will remain depressed because of soft spots in several of the globe’s economies and they expect that, as the Federal Reserve begins to raise short-term interest rates in the third quarter of 2015, the yield curve will flatten further. Fixed mortgage interest rates are expected to stay below 4.5 percent through 2015, continuing to support the housing market.

Fannie Mae projects housing starts will increase about 22 percent and total home sales will grow about by about 5 percent after finishing 2014 down 3 percent. Applications for refinancing, according to the Mortgage Bankers Association, have plummeted, “setting the stage for a purchase market in 2015.”

Total mortgage applications are expected to edge up next year, after falling almost 40 percent this year. Fannie Mae projects originations to total $1.13 trillion reflecting an increase in purchasing that will slightly more than offset an expected decline in refinancing of 37 percent. This drop will be in addition to an expected decrease of 40 percent in refinancing in 2014 and 60 percent in 2013. Total single-family (1- to 4-unit properties) mortgage debt outstanding should post a slight decline in 2014 before picking up modestly in coming years.

Former Countrywide Employee Awarded $57 Million in BofA Whistleblower Case

The person who perhaps made it possible for state and federal governments to collect billions from the Bank of America will apparently be amply compensated for his actions. The New York Times is reporting that Edward O’Donnell, a former employee at Countrywide Mortgage which was purchased by the bank in 2008, will receive a whistle-blower reward of more than $57 MILLION for his role in an August civil settlement.

Bank of America agreed to pay $16.65 billion in penalties to settle claims from federal prosecutors and several state attorneys general. The bank was sued as successor in interest to Countrywide, one of the largest mortgage lenders in the country at the beginning of the century, has been repeated accused, along with its founder and CEO Angelo Mozilo of writing and selling shoddy mortgages.

O’Donnell is receiving the award because of a federal civil lawsuit he filed under the False Claims Act and which the federal government joined and used as the basis for pushing Bank of America into a settlement. His reward comes from a $350 million portion of the larger penalty amount resulting from a settlement between the bank and federal prosecutors along with the states of California, Delaware, Illinois, Kentucky, Maryland, and New York. It was ruled that O’Donnell was entitled to a 16 percent share of that portion. He will also collect an additional and separate $1.6 million from the Bank of America.

The Times said O’Donnell may not be the only whistleblower to profit from the settlement. Court papers mention three other similar false-claims lawsuits against the bank. Those litigants were not named in the suit but O’Donnell had not been previously identified either.

O’Donnell was also instrumental in the October 2013 settlement of government claims against Bank of America for the so-called “hustle” program in which Countrywide loan officers were rewarded for the number of loans they produced regardless of their quality. Bank of America was ordered to pay $1.27 billion in that case. O’Donnell’s attorney was quoted by the Times as saying his client had not yet reached a financial agreement with the federal government regarding his role in that case.

It’s Holiday Season at the EVO Lofts! ~ Downtown LA condos

Evo Lofts
1155 S. Grand Ave. LA, CA 90015
The holiday season is here at Evo!
Please call for our listings here at Evo (310) 430-1949! Live in style and luxury at Evo!
Maple Navarro Calbre#01924221 Greenstone Properties – LACondoSearch.com

BARKER BLOCK TOUR! DOWNTOWN LA CONDOS FOR SALE AND LEASE!

This is a tour of the the Barker Block Lofts in Downtown LA hosted by Realtor® Maple Navarro.

Please contact Maple for a tour to buy or lease! Please call me at (310) 430-1949 to see the lofts. Greenstone Properties, Maple Navarro Calbre#01924421

Downtown LA Condos Real Estate Video Tour – Concerto Lofts!

This is a tour of the Concerto Lofts in Downtown LA by Realtor® Maple Navarro. Please contact Maple for a tour to buy or lease! Currently, there are leases in this building for $2,600. Please call me at (310) 430-1949 to see the lofts. Greenstone Properties, Maple Navarro Calbre#01924421

The Rowan Lofts Tour ~ 460 S. Spring St. Los Angeles, CA 90013 ~ Downtown Los Angeles Real Estate Videos

Please see the tour here:

This is a tour of the the Rowan Lofts in Downtown LA by Realtor® Maple Navarro. Please contact Maple for a tour to buy or lease! Please call me at (310) 430-1949 to see the lofts. Greenstone Properties, Maple Navarro Calbre#01924421

ROWAN LOFTS ROOFTOP AT NIGHT!

AMAZING ROWAN LOFTS ROOFTOP PHOTOS IN DTLA! For leases and sales at the Rowan, please contact Maple Navarro, Realtor (R) CalBre#01924421,  (310) 430-1949 Greenstone Properties www.LACondoSearch.com, Photos by Maple Navarro

 

JUST SOLD! LISTED BY GREENSTONE PROPERTIES AGENT MAPLE NAVARRO

1100 WILSHIRE UNIT 2906! $855,000,  $638.06 per sq. ft!  2bd, 2ba 1,340 sq. ft.

Previous sale was $730,000 for 1,340 sq. ft. at 1100 Wilshire

LISTED BY MAPLE NAVARRO

New Listing By Greenstone Properties Listing Agent Maple Navarro! 1100 Wilshire 2bd 2ba loft for sale!

Offered at $895,000  ~

1100 Wilshire Blvd. Unit 2906 LA, CA 90017 

2bd, 2ba DTLA Luxury Condo  1,340 sq. ft.

Just Listed by Greenstone Properties Listing Agent Maple Navarro CalBre#01924421 LACondoSearch.com
cell: (310) 430-1949