SoCal's new bond king, Jeff Gundlach, is missing one of the these: a 2010 Porsche Carrera 4S. Along with $10 million in art and a few bottles of wine.
There are three big names in bonds these days, and they're all in Southern California. Together, Bill Gross and Mohamed El-Erian run Newport Beach-based PIMCO, the world's largest bond fund, overseeing a jaw-dropping $1.8 trillion in assets. Meanwhile, former '80s rocker Jeff Gundlach has been coming on strong in the past year.
His L.A. firm, DoubleLine Captial, has grown significantly, with now more than $40 billion under management. Gundlach's old firm, TCW (which he left in a cloud of controversy in 2009), is also in the news: It's being bought by the Carlyle Group, one of the world's biggest private equity firms.
PIMCO is in the midst of much speculation about whether El-Erian will be able to run the find as effectively as Gross once Gross decides to call it quits. This has created plenty of opportunity for Gundlach, who was already well known for his ability to make piles of money, to position DoubleLine as a better, faster PIMCO and a smarter, punkier TCW. Back in May, Businessweek's Roben Farzad captured the meteoric ascent of DoubleLine, which has gone from zero to $40-ish billion since 2010, and Gundlach, the new "bond king."
The housing boom was good to Southern California — while it lasted. But when the bubble popped, our unemployment rate skyrocketed. In a state with a jobless rate near 11 percent, a number of our cities are above that. And as most everyone knows, the downturn hit the building trades hard.
What do you do when you’ve been exposed to real estate’s ups and downs for much of a career? What you hear all the time when talking to economists who follow the job market in Southern California is: If only we could take all those unemployed construction workers and turn them into healthcare workers.
But of course you can’t turn carpenters into nurses overnight. I decided to try to find someone who'd transitioned out of the building trades toward "the helping professions," however, using our Public Insight Network. While I didn’t find a guy who had been hammering houses together before the financial crisis, I did find someone who was connected to the real estate market when the bottom fell out. And who decided to explore explore a new career in healing.
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A construction worker on the top of a home under construction at a new housing development on in Petaluma, California. If we have hit bottom, we may start seeing more of this kind of activity.
Zillow, the online real estate service, has called a bottom for the U.S. housing market. Literally. This is from today's release:
Home values in the United States have reached a bottom. The Zillow Home Value Index (ZHVI) rose on an annual basis for the first time since 2007, increasing 0.2 percent year-over-year to $149,300, according to Zillow's second quarter Real Estate Market Reports. Values have risen for four consecutive months.
A rise of 0.2 percent may not be terribly significant, so take this all with a healthy grain of salt — and an awareness that Zillow, as Chicago Now's Gary Lucido points out, indexes home values based on its own metrics, rather than on actual sales, as does the important Case-Shiller index.
Case-Shiller for May comes out next week, so you can look at Zillow's pronouncement and say, "Hmmm...interesting timing!" And you'd be on to something, because Case-Shiller has been signalling at least the formation of a bottom in U.S. housing prices for a few months now.
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Pedestrians are reflected in a window as they walk by a sign displaying mortgage rates inside a Bank of America office on June 7, 2012 in San Francisco. Mortgage rates are at record lows and home prices are rising in Southern California.
In April, Southern California saw a 3.6 percent year-over-year increase in the median house price, to $290,000, according to DataQuick, a company that tracks housing data. In May, that trend — if you can call two consecutive months and trend — improved: the median price moved up 5.4 percent, to $295,000.
The good news here is that we're no longer seeing price deflation. In March, were weren't seeing very much of a year-over-year price decline — it was a barely perceptible 0.2 percent. But it was there. It was worse in February. In fact, the median price didn't increase in Southern California for two years: the April uptick was the first sign of life.
But before we get to excited, it's worth noting that prices are still dauntingly off their 2007 highs. That was a bubble, of course. But what we need to see now is a sustainable trend of year-over-year price increases. This will remove the risk of a return to deflating home prices, which can be reinforcing: buyers expect prices to fall in the future, so they don't buy today, and that creates a disastrous spiral. It doesn't matter how far interest rates fall. Savvy buyers avoid investing in a declining asset. Smart buyers invest in a rising asset while it's still cheap and they can borrow cheaply to buy it.
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A for sale sign is posted in front of house on September 15, 2011 in Glendale, California. Sales in California are on the upswing, but prices are unstable.
DataQuick has crunched the numbers on March housing sales and prices in Southern California. There's good news and bad news. From my perspective, the bad news is much more bad than the good news good.
March sales of newly built homes rose almost 9 percent from a year earlier, marking the second consecutive month with a year-over-year gain. But March’s new-home tally was still the second-lowest for that month in DataQuick’s records back to 1988. Last month’s sales of existing (not new) single-family detached houses were the highest for a March since 2010, while resale condo sales were the lowest for that month since 2009.
The median price paid for a Southland home last month was $280,000, up 5.8 percent from $264,750 in February but down 0.2 percent from $280,500 in March 2011. The March median was the highest since the median was also $280,000 last September. The year-over-year decline in the March median was the smallest since February 2011, when the $275,000 median was unchanged compared with a year earlier.
Last month’s median was 13.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 44.6 percent below the $505,000 peak in mid 2007.