Wednesday, February 13, 2013

Bay Area real estate market bolstered by investments from China

Bay Area real estate market bolstered by investments from China Feb. 15th, 2013 By Pete Carey The Bay Area's housing market is playing host to a growing numbers of foreigners -- many from China -- who are looking for a future home, a good investment or a safe place to park their money. Wei Luo, an electrical engineer-turned-contractor and real estate investor, said he has helped at least 10 friends from China buy about 15 homes and condominiums in the Bay Area starting in 2009, and they're clamoring for more. "All my friends, they say this price is so low," said Luo, who operates a construction company in Fremont. "Some of my college classmates went back to China, started a business and now they come back and invest. Some buy and just leave it. They don't even want to rent them out." Their appetite for Bay Area real estate rises from a mixture of politics and a growing global market in real estate, according to professionals. China's housing prices appear to have peaked, encouraging some people to sell and look for other investments. Chinese buying power has never been stronger, thanks to the country's booming economy, but there's widespread political unease as a new government is formed. Also, land is leased from the government in China, not owned like it is in the United States. All of that, plus the fact that U.S. real estate prices are just climbing off the bottom after a historic crash, makes the Bay Area property market attractive to Chinese investors. "I tell all my friends, 'You got money? Buy, buy, buy,'" While it's difficult to track the exact number of foreign buyers of Bay Area real estate, investors accounted for around a quarter of all Bay Area sales in November, about double the average going back to 1988, according to the real estate information company And real estate agents say that in some areas, one in five people making offers is either in China or buying for relatives or investors in other countries. With its large Asian-American population, good schools and good weather, the Bay Area is a prime shopping area for Chinese eager to buy property abroad. And that's helping to push up prices here. "The foreign investors are bringing the competition to another level," said Amy Sung of DeLeon Realty in Palo Alto, which offers a Chinese translation on the home page of its website. "We have people who are already here who have come here to study and then they stay," Sung said. "And then we have people in the new rich, who come here with a visitor's visa or investor's visa. And there are the really high-end buyers who come here for a weekend, identify properties and then go home." Thirty to 40 percent of all the offers are cash, Sung said. "They're buying investment properties, pretty much everything that comes to the market." All that investor buying is helping push prices up. Absentee buyers -- mostly investors -- paid a median price of $309,000, up 22 percent from a year ago, according to The median price for cash deals, which typically are done by investors, was $320,000, up 27 percent from a year earlier. David Lo, a Bay Area real estate agent, is helping friends and family in Asia buy property in Mountain House and other towns in the Central Valley. "I've always stayed connected with friends and families in Asia. So when they heard about my real estate investment portfolio they became interested in pooling in with me," he said in an email from Taipei, where he was on business. "Location-wise, the Bay Area is ideal for Chinese nationals." The appetite for a piece of the Bay Area is "definitely increasing," Lo said, "especially among wealthy Chinese families with young children seeking a better way of life and education in the U.S. In their eyes, America is still the promised land of opportunity, political freedom, and securer financial future." The San Jose metro area is the top seller's market in the country, according to a ranking by Zillow of such factors as days on the market and prices near or above asking price. "But much of that strength is driven by investor interest," Zillow chief economist Stan Humphries said in a recent report. The increased demand helps drive up prices, "particularly for less-expensive homes in these markets," he said. Even high-cost places such as Cupertino are seeing prices rise. "China is a growing economy and one of few countries that is still not busted by the bubble," said Gilbert Wong, vice mayor of Cupertino, which is the first choice for many Chinese buyers. "They see places like the United States and Canada as good, safe places to put their money in. It's good for us because we're coming out of a recession and we need the influx of money coming in." Kevin Kieffer of Keller Williams in Danville said investors are targeting homes priced at $300,000 and less in Concord, Pleasant Hill and Martinez -- all good areas for rental housing. "About 30 percent of offers coming in are from Chinese buyers, and for cash," Kieffer said. "Rarely is there a Chinese-financed offer that's not cash." He said one client is looking for a home armed with $425,000 in cash wired to him by his mother in India. "That's happening quite a bit, that money for a deal will come from many sources -- parents or relatives abroad, or whatever it happens to be," said Barbara Lymberis, president of the Santa Clara County Association of Realtors. "The seller and buyer could be domestic, but the money is global. Funds can be banked anywhere in the world and utilized anywhere in the world." Jennifer Tasto, a broker at Property Services in Burlingame, said she has done $5 million in cash transactions in the past 12 months with Chinese buyers, becoming an expert in global money transfers along the way. One client is buying a home for her children even though they're still in elementary school. Tasto said she lost one bidding war for a Palo Alto home even though her client offered $390,000 over asking price. She said one of her clients explained that his aim is to hold a piece of real property in a country where there is solid law and protection for property rights. "I'm finding that in a lot of Asian countries, not just China, people cannot own land," Tasto said. "They are buying a land lease. Here, when you buy real estate, you buy the dirt." With fewer homes on the market than normal, the competition from investors paying cash continues to squeeze out first-time buyers. But it helps boost prices, which in the long run should persuade more would-be sellers to list their homes. Machinist Jason Poling said it took him and his wife from June to November, and 16 failed bids, before he finally got lucky on his 17th offer and snagged a $325,000 home in San Ramon. The competition was fierce with as many as 14 offers on some houses, he said. About half the bidders were investors, he said. ">

Sunday, July 01, 2012

Dolby to Purchase San Francisco Tower for $109.8 Million Jun 26, 2012 Dolby Laboratories Inc. (DLB), the audio- technology company whose products are used in cinemas, recording studios and video games, agreed to buy a 16-story tower in the San Francisco area that’s home to Twitter Inc., and will make the building its new headquarters. The price was about $109.8 million, Dolby said in a regulatory filing. The company plans to fully occupy the tower at 1275 Market St., according to a statement today from Dolby and San Francisco Mayor Edwin Lee. The building in the Mid- Market neighborhood, where Twitter relocated this month, can accommodate almost 1,000 employees. “For more than 36 years, San Francisco has been a great place for developing our innovations in cinema, home theater and portable entertainment,” Dolby Chief Executive Officer Kevin Yeaman said in the statement. “Our new headquarters will allow us to grow and advance the entertainment experience.” A non-refundable deposit of about $5.5 million has been placed in escrow, and the sale is expected to be completed on July 10, Dolby said yesterday in the filing. The building is being sold by TMG Partners and DivcoWest Inc., both based in San Francisco, according to Mike Covarrubias, TMG’s CEO. The property, formerly home of the California State Compensation Insurance Fund, isn’t within San Francisco’s payroll-tax exclusion zone, according to the statement. Twitter was lured to Mid-Market in part by the city’s offer to suspend the business levy for six years. Dolby’s current base is in San Francisco’s Potrero Hill neighborhood. The company was chosen last month by Microsoft Corp. to provide audio for its Windows 8 software when the package is released later this year.

Thursday, February 09, 2012

SF Gate - States, banks reach foreclosure-abuse settlement

States, banks reach foreclosure-abuse settlement

By DEREK KRAVITZ, AP Real Estate Writer

Thursday, February 9, 2012

U.S. Attorney General Eric Holder (5th from left) speaks while Housing and Urban Development Secretary Shaun Donovan (5th from right), Colorado Attorney General John W. Suthers (3rd from left) Iowa Attorney General Tom Miller (4th from left), and other officials listen during a news conference February 9, 2012 at the Department of Justice in Washington, DC. Holder announced that the federal government and 49 state attorneys general have reached a $26 billion agreement with the nation's five largest mortgage servicers to address mortgage loan serving and foreclosure abuses.
U.S. Attorney General Eric Holder (5th from left) speaks ...Housing and Urban Development (HUD) Secretary Shaun Donov...Bank of America will pay the most to borrowers as part of... View All Images (10)
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U.S. states reached a landmark $25 billion deal Thursday with the nation's biggest mortgage lenders over foreclosure abuses that occurred after the housing bubble burst.

The deal requires five of the largest banks to reduce loans for about 1 million households at risk of foreclosure. The lenders will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

It's the biggest settlement involving a single industry since a 1998 multistate tobacco deal.

Federal and state officials announced at a news conference that 49 states had joined the settlement. Oklahoma announced a separate deal with the five banks.

The settlement ends a painful chapter that emerged from the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures — an action known as robo-signing.

Under the deal, the states said they won't pursue civil charges related to these types of abuses. Homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges.

"There were many small wrongs that were done here," said U.S. Housing and Urban Development Secretary Shaun Donovan. "This does not resolve everything. We will be aggressive about going after claims elsewhere."

Reducing loan principal will help some homeowners who are current on their payments but are "underwater," meaning they owe more than their homes are worth.

But consumer advocates and housing activists said the deal is flawed because it covers only a fraction of at-risk homeowners. Critics note that the settlement will apply only to privately held mortgages issued from 2008 through 2011.

Banks own about half of all U.S. mortgages — roughly 30 million loans. Those owned by mortgage giants Fannie Mae and Freddie Mac are not covered by the deal.

"The deal announced today is too small," said Pico National Network, a faith-based group that is active on housing issues. "It falls far short of providing real justice for homeowners and American families."

Economists also cited the size of the deal: Some said it was hardly enough to have much impact on the troubled housing market.

The settlement will be overseen by Joseph A. Smith Jr., North Carolina's banking commissioner. Lenders that violate the deal could face $1 million penalties per violation and up to $5 million for repeat violators.

About $10 billion of the settlement total will be used to reduce mortgage payments for underwater homeowners. Paul Diggle, an economist at Capital Economics, said that's a "drop in the ocean," considering that 11 million borrowers are underwater "to the tune of $700 billion."

Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.

"We've got a lot of issues to work our way through in the housing market," Vitner said. "What this settlement does is allow that process to get started."

Bank of America will pay the most to borrowers as part of the deal — nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion. Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. Those totals do not include $5.5 billion that the banks will reimburse federal and state governments for money spent on improper foreclosures.

The deal also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America acquired Countrywide in 2008.

"The settlement includes far reaching relief that will help many of our customers and complement our already extensive efforts to improve our borrower assistance efforts and servicing processes," JPMorgan Chase said in a statement.

Under the deal, banks must make foreclosure their last resort. They are also barred from foreclosing on a homeowner who is being considered for a loan modification.

The banks and U.S. state attorneys general agreed to the deal late Wednesday after 16 months of contentious negotiations.

New York and California came on board late Wednesday. California has more than 2 million "underwater" borrowers, whose homes are worth less than their mortgages. New York has some 118,000 homeowners who are underwater.

In addition to the payments and mortgage reductions, the deal promises to reshape long-standing mortgage lending guidelines. It will make it easier for those at risk of foreclosure to make their payments and keep their homes.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement.

Some critics say the proposed deal doesn't go far enough. They have argued for a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.

Under the deal:

_ Roughly $1.5 billion for direct payouts, in the form of $2,000 checks, for about 750,000 Americans who were unfairly or improperly foreclosed upon; another $3.5 billion will go directly to states.

_ At least $10 billion for reducing mortgage amounts.

_ Up to $7 billion for other state homeowner programs.

_ At least $3 billion for refinancing loans for homeowners who are current on their mortgage payments but who are underwater.

The deal is subject to final approval by a federal judge.

Tuesday, November 29, 2011

Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress

Nov. 28 (Bloomberg) -- Bloomberg Markets magazine's January issue examines how the Federal Reserve and big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. And how bankers failed to mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. (Source: Bloomberg)
Fed Gave Banks $13 Billion in Secret Loans

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. No one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Betty Liu reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Enlarge image Kenneth D. Lewis Former CEO of Bank of America Corp.

On Nov. 26, 2008, then-Bank of America Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his firm owed the central bank $86 billion that day. Photo: Joshua Roberts/Bloomberg

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Friday, August 19, 2011

The Dow rallied from its 1929 low of 198 to 294 in April, 1930. Thousands of Americans joined in that fabulous rally in the hopes of recouping some of their 1929-crash losses. But car sales topped out in 1928 as did manufacturing, and all during the giant 1929-30 rally the US economy crept lower, but few realized or recognized it.

When the Dow topped out April, 1930, the Great Depression started, as business began to crumble. From its high of 294 in April, 1930, the Dow fell to 157 by December, 1930.

I've had an eerie feeling all along that the whole market rise from the 2002 low to the 2010 peak was a repeat of 1929-1930. Even as the market roared higher following the 2002 low, the US economy acted like an invalid.

Remember, the crash of 2008 was "cut short" by the Fed. That bear market was never allowed to fully express itself. I thought that the 2008 crash should have been allowed to express itself. That would have resulted in the collapse of many of the "too big to fail" banks, and it would have cleansed the economy of half a century of ills, including Fed-created inflation and over-leveraging. But the Bernanke Fed said "No, we have learned our lessons from the Great Depression, and now we know how to avoid another Depression." So the Fed decided to pour trillions of newly-made dollars into the US economy. And the 2008 bear market was halted -- for a while.

But the bear has his ways. Bruin is going to have his way and finish the bear market one way or another. Suddenly, last night all hell broke loose as stock markets the world over plunged. The calamity was joined by the US markets on Thursday.

So what do I think is happening? I've said this before. The crashing stock market is terrifying US consumers, who immediately cut back on their buying and their orders. As consumers cut back, this impacts on the stock market, and we have a case of two wild hyenas eating each other. It's a case of the stock market "eating" consumers, and consumers frightening the stock market.

But can't the Bernanke Fed intervene and save the day again? Well, yes, they can create more money, on the theory -- that "give them the money and they will buy." But it hasn't worked this time. US consumers have already been hit too hard by confusion and the action of an erratic and puzzled stock market.

Gold -- I've been receiving many calls to the effect, "Should I sell my gold now?" My answer is that I don't have the ultimate answer to that question.

My thinking is that gold has been in a decade-long market. Most extended bull markets end with a third-phase period of torrid speculation and a mass entrance by the retail public. So far, we have seen neither.

My inclination is to ride the gold bull market until it provides a classic ending. That means sitting through many a coming correction and perhaps extended periods where gold does little or nothing. In other words, I may be doing something stupid but I'm sitting.

We don't have a lot of hints as to what the stock market will do next. But we'll work with what we have. Below is a daily chart of the S&P 500. Over the last week or so it has formed an exotic little formation. I would say that if the S&P gathers the strength to break out top-side of this formation, we're seeing some bullish action. But after all the negative action, if the S&P still chooses the bearish path and breaks to new lows, then we're in for another spate of down-markets.

In other words, after all the negative action, the market should be rally -- we need at least a "dead-cat" bounce to above 1208. If the market can't rally from here, then we know that something is really wrong!

GOLD -- Lord bless moving averages "that work." One MA that has worked beautifully for two years is the 150-day MA of gold. Note below that gold has "tested" or touched the 150-day MA of gold on five separate occasions over the last two years, and each time gold has held -- and then rallied to new highs.

Gold's latest run has taken it rather far ABOVE its 150-day MA, and now gold has me a bit nervous. Has gold run up too far? Does gold need a rest? Will gold sit on its butt, until the 150-day MA rises to touch it (nah, that would take too long)? Or is gold rising on a new and steeper angle?

Conclusion -- We've seen some extreme downside action. But Jim Stack of InvesTech Research reports that on the August 8th panic the ratio of declining stocks to advancing stocks was 77 to 1, a ratio never seen before in the past 80 years. The closest incidents were the May 1940 ratio when France fell to Germany; that ratio was 60 to 1. The second incident was on Black Monday during October 1987 when the ratio was 49 to 1. In both cases, those hugely high ratios marked a near-bottom, and within one month of those ratios the market was 10% higher.

A few days ago we saw down volume equal to 98% of up + down volume, an incredible extreme.

(1) My feeling now is that this bear market will probably not be a monster, but I believe that there is a fair chance that most of it is behind us.

(2) This will be a long and arduous recovery, and stocks bought here (even blue chips) will not prove to be winners over the next five years. I would not buy stocks for income.
The Dow today closed down 172 points, which is disappointing but not surprising. It's normal that traders want to go through this weekend with as few stocks as possible.

My PTI closed down 6 to 6269, leaving it bearish by 10 points. As for NYSE internals, 732 issues closed higher, 2320 closed lower. There were 7 new highs and 279 new lows. Down volume was 82% of up + down volume. I call it a mildly bearish day.

Dollar Index was down 0.23 to 73.97. December gold closed up 30.20 to 1852.20 another all time high. September silver closed up 1.74 to 42.43. Almost all precious metal items closed higher including GDX, GDXJ and GDM.

Sausalito Valhalla


Wednesday, June 15, 2011

Silver in solar panels

Silver -- I want to talk about silver. Almost all informed scientists state that as the population of the world grows, we're going to need a lot more energy. Nuclear will be a big help, but because of the disastrous recent experience in Japan many people distrust and will vote against nuclear. Windmill power will help, but to manufacture windmills requires a good deal of rare earths. Here again manufacturers are stymied, that is, unless they buy their windmills in China (China has a virtual monopoly on rare earths).

One of the areas of electricity generation which is very practical and real is the solar panel. Solar panels require silver. Thin film silver requires materials that are more scarce than silver, tellurium and iridium. And so-called organic thin films which have many advantages over solar require a LOT of silver as well.

Thus, in future years as the demand for production of sustainable energy becomes increasingly insistent, there will be a huge demand for silver. So for now, solar and silver are linked together like brothers and sisters. The rising demand for solar energy will put silver in the spotlight as a much-wanted material. Unlike gold, silver will enjoy a huge industrial demand.

Granville -- My old buddy, Joe Granville, invented on-balance volume. Joe's thesis is that volume precedes price. For months, Joe's O-B-V studies have shown deterioration in the internal structure of the NYSE. Joe refers to the internal structure of the NYSE as the true market, and he considers the widely-watched Dow as the cover-up average, the one that often "hides" what the main body of the market is doing.

Writes Joe in his latest mailing, "The average market participant hasn't the vaguest notion of what deep trouble this market is in." Joe's conclusion -- "Now in free fall, the market will determine where support is. Right now there is no support."

Below we see more evidence of deterioration. This is our old friend, the percentage of NYSE stocks that are trading ABOVE their 200-day moving averages. As you can see the percentage has now plunged to 57.58% and it's nearing the halfway level at which time 50% of all the stocks on the NYSE will be trading below their 200-day MAs.

Note that the (blue) 50-day MA of this study is about to drop below the (red) 200-day MA. A cross-over would obviously be bearish.

Ben Bernanke is predicting an up-turn in business later this year. He's certainly not looking at my work.

If the Dow is down this week it will be the seventh week in a row. This is worse than anything that occurred in 1929! This sick market should be ready to rally. But can it?

Tuesday, May 31, 2011

7 characterisics of money

Good money must have seven characteristics.

(1) It must be durable, which is why we don't use wheat or corn or rice.

(2) It must be divisible, which is why we don't use art work.

(3) It must be convenient, which is why we don't use lead or copper.

(4) It must be consistent, which is why we don't use real estate.

(5) It must possess value in itself, which is why we don't use paper.

(6) It must be limited in the quantity that is available, which is why we don't use aluminum or iron.

(7) It should have a long history of acceptance, which is why we don't use molybdenum or rhodium.

Only gold fits all seven characteristics.

Federal Reserve notes (now erroneously called "dollars") are issued by the Federal Reserve. They are created without sweat, ingenuity or risk by the Federal Reserve. The Fed is a creature of Congress and therefore, it can be pressured by the will of Congress. Congressional men and women are elected by the voters. The voters desire constant prosperity and tend to "vote their pocketbooks." Thus, the quantity of Federal Reserve notes can be a result of the desires of an impatient and often greedy electorate.

The quantity of Federal Reserve notes tends to be influenced by the wishes of impatient voters -- plus obedient politicians who value their jobs.

Unlike Federal Reserve notes, gold is fixed as to quantity. Gold is a currency that is not beholden to politicians or to any government. Politicians cannot increase or decrease the quantity of gold at will. When a currency is backed by gold, the quantity of that currency is out of the hands of politicians. This is the reason why politicians detest the gold standard. The gold standard leaves politicians helpless at a time when they wish to inflate or over-spend.