UCLA Real Estate Wire

GlobeSt.com: "How Will the Drop in Interest Rate Impact CRE Pricing?"

"For the last three years, commercial real estate pricing had stalled, increasing at about 2.1% per year through April 2019, according to a new letter from UCLA Anderson Forecast and the UCLA Ziman Center for Real Estate. However, a recent reverse in interest rates could actually fuel commercial real estate pricing in the near term. The Fed is expected to reverse its quantitative tightening policy and decrease rates in July, and the 10-Year Treasury rate has dropped in response to fear of a recession. The event could shift cap rate and pricing expectations through the end of the year.

"'Prices plateaued because interest rates were going up, but because of the recent drop in the 10-Year Treasury, prices might pick up in the near term. I am not as pessimistic as I was before,' David Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast and the author of the recent letter The Good, The Bad and The Ugly, tells GlobeSt.com."

[GS:6/12/2019]

Forbes: "Latest News On Flipping Homes For Quick Profits"

"In areas where home prices increased combined with higher mortgage rates, the pool of buyers decreases making flipping inherently riskier and ultimately not so attractive. Continuing Lecturer of Finance and Real Estate at UCLA Anderson School of Management Paul Habibi explains the fundamentals. “The big decline you see is from the amateurs who want to invest in a market where they see an upward trajectory. That’s what people look to take advantage of,” Habibi explains. “You can do a lot of things wrong in an up-trending market which can save you from your mistakes. That changes when the market changes and it filters out upstarts who don’t really know what they are doing,” Habibi said not mincing words. Financing has gotten trickier on those deals, weeding more players out of the game."

[F: 1/30/19]

GlobeSt.com: "Corporate Debt Could Trigger the Next Recession"

"David Shulman, the author of the forecast, is not surprised that a problem in the financial market is the likely culprit for the next downturn. “If you go back to the last three recessions, they were all financial induced recessions, or if not induced, they were exacerbated by problems in the financial market,” says Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast"

[GS: 12/17/2018]

Mansion Global: "Disparities Between Listing and Sales Prices Signal a Need to Adjust to Cooling Market "

"We often see houses listed with the expectation of sellers that pricing has been continuing upward, and a lot of times, they price their homes by extrapolating continued upward market movement," said Paul Habibi, professor at the UCLA Ziman Center for Real Estate. "But once the market stalls out, those houses sit on the market for longer, there’s a scarcity of buyers, and lower bids. Sellers start to lower their asking prices or else accept offers below list."

[MG: 11/23/2018]

Los Angeles Times: "Another Southern California home-price boom is cooling. Is a crash looming?"

“I don’t think we need to worry this time around about a bursting of a credit bubble,” said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. “We can cross that factor off the list.”

[LAT: 11/4/18]

Mansion Global: "Los Angeles Market Levels Off, But It’s Still a Good Time to Buy"

"Paul Habibi, a professor at the UCLA Ziman Center for Real Estate, agreed. "We have had a dramatic run-up in pricing in L.A. since the recession," he said, noting that in many in-demand areas, there were double-digit price increases for several years. "But it’s hard to continue that frenetic pace for an extended period of time."
The changes L.A. is experiencing today mean a return to a more sustainable and measured growth, he said. And because other economic factors, like the job market and stock market, remain strong, "there is no reason for purchasers to suspend their home-buying activity," he continued.

[MG:10/5/18]

Curbed LA: "Inglewood home values are soaring— blame the NFL stadium?"

"In less than seven years, the median price of a home in Inglewood has more than doubled. It’s not just the stadium that’s enticing buyers, says Stuart Gabriel, director of the UCLA Ziman Center for Real Estate. The arrival of the Crenshaw/LAX rail line, which is set to open next year, along with a proposed arena for the Los Angeles Clippers and new development in and around nearby LAX, could further inflate home values in the area."

[CLA: 9/19/18]

Curbed LA: "Are Los Angeles home prices finally about to dip?"

"Eric Sussman, adjunct professor of accounting and real estate at UCLA, agrees. “I don’t think there’s any question that the housing market is slowing,” he says, adding that he “wouldn’t be surprised” if prices in LA start dropping “in the next few months.” If the market cools off in coming months, says Sussman, rising mortgage interest rates will likely be to blame. Since September 2017, interest rates on conventional home loans have shot up nearly a full percentage point."

[CLA: 8/17/18]

Mansion Global: "Los Angeles Property Asks $1 Billion—But Can it Sell?"

"Even in the most optimistic and hypothetical situation, the development would result in a community of homes that would have to sell at prices the city has yet to record in order to provide a decent return on investment, said Paul Habibi, a real estate entrepreneur and professor at the University of California, Los Angeles. "One could potentially do a zone change, there are various ways to change the planning ordinances," Mr. Habibi said, adding that with 17 lots, a developer would still need to fill them with the largest possible homes that he could sell in order to make back the land cost."

[MG: 8/5/18]

Los Angeles Times: "Hate haughty houses? This blog's for you"

"McMansions often cram in the greatest amount of features for the lowest possible cost. A pastiche of overblown shapes and styles borrowed from different architectural periods are usually at play. “There are diminishing returns” for McMansions, said Paul Habibi, real estate professor at the UCLA Anderson School of Management. Additional size generally decreases the price per square foot a home can command, he said. Other trade-offs include sacrificing open space that buyers value."

[LAT: 7/20/18]