Orange County Realtist Magazine April/May 2015

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CONTENTS: Mission and Vision of the Orange County Realtist Magazine................(page 5)

BUSINESS Current Trends in the Commercial Real Estate Market......................(page 12)

THE POWER IS NOW INC. Vol. 01 | Issue 1 Eric Lawrence Frazier, MBA President and CEO Office: (800) 401-8994 Ext. 703 Direct: (714) 361-2105 Eric.Frazier@ThePowerIsNow.com www.thepowerisnow.com www.blogtalkradio.com/thepowerisnow

EDITORIAL TEAM Eric Lawrence Frazier MBA Editor in Chief (800) 401-8994 Ext. 703 Ross Dickens Managing Editor (800) 401-8994 ext. 701 ross.dickens@thepowerisnow.com Goldy Ponce Arratia Graphic Artist and Design Manager (800) 401-8994 ext. 711 goldy.ponce@thepowerisnow.com

REAL ESTATE REO and Short Sales................................................................................(page 16)

COMMUNITY Current News on Orange County Real Estate.......................................(page 18) Feature Cities in Orange County............................................................(page 20)

FEATURE Women in Diversified Services. 2015 Member of the Year Julie Baldino.............................................................................................(page 22) Normalizing Monetary Policy: Prospects and Perspectives.................(page 24)

OUR COVER Q & A with NAREB President, Donnell Spivey ....................................(page 38)

LEADERSHIP SPOTLIGHT Teresa Smith. Mayor, the City of Orange...............................................(page 44)

OC REALTIST SPOTLIGHT Steve Frankel............................................................................................(page 46)

POLITICS

CONTRIBUTORS Orange County Realtist Research Team

Pending Legislations Affecting Fannie Mae, Freddie Mac and the Real Estate Market.....................................................................(page 50)

FINANCE Interest Rates. Are Interest Rates Going Up or Staying Low?.............(page 52) Investment Strategies...............................................................................(page 56)

TECHNOLOGY Top Five Apps to Make Tax Time Less Stressful ..................................(page 60)

The Orange County Realtist Magazine is an Online and eZine publication of the Orange County Realtist a Chapter of The National Association of Real Estate BrokersÂŽ (NAREB).

The magazine is published and distributed by The Publishing division of The Power Is Now Inc. and has ten sections focused on the real estate market, economics in Orange County and the Realtist members that serve the community. The mission of the OC Realtist Magazine is to educate consumers and real estate professionals about the opportunities to buy or sell real estate in Orange County and to spotlight professional real estate agents who are Realtist.

to non-profit organizations, and community organization who are supporting the welfare of the citizens of Orange County and are affiliates of the OC Realtist.

The Digital Online subscription will launch in April and will provide the best of the Orange County Realtist Magazine in an all-digital format.

With the Orange County Realtist Magazine, readers can have access to archived back issues as well as brand new content online. Videos, online radio, webinars and other events provided by the OC Realtist will be available to empower its readers with information to achieve the American Dream. We go go digital with the Orange County The magazine is free and is distributed by email Realtist Magazine in April and online to members of our local chapter and NAREB chapters nationwide, over 30 The OC REALTIST MAGAZINE - The thousands real estate professionals in Orange American Dream County, our state, federal and local city political representatives in each of the 34 cities in Orange The Orange County Realtist Magazine features County, non-profit housing organizations, church articles about real estate in Orange County and leaders in Orange County, and many affiliates of informational interviews with local and national our chapter: OC NAACP, OC Black Chamber, community leaders, real estate agents, banking OC 100 BMOC and others will receive the and investment professionals, and community. magazine.

The Orange County Realtist Magazine also provides consumer focus content about buying In addition, our own email list of consumers is and or investing in real estate, financing real growing every day because of our community estate and maintaining and protecting real estate outreach. The list will continue to grow because as an assets for years to come. The magazines of the importance of home ownership and the focus is on all aspect of buying or selling real strong support we have in the community to help estate from a consumer’s perspective because it others achieve it. We want the magazine to be a is still the American Dream. tremendous value to our members, a great resource for our community, and tremendous value to our advertisers as an affordable advertising strategy to a target market interested in real estate as a home or investment. The Orange County Realtist magazine will also provide free advertising

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Mission The mission of the Orange County Realtist is to provide support and education for its members to grow and expand their businesses while assisting the community to achieve the American dream of homeownership

Vision The vision of the OC Realtist is to become the largest Chapter of NAREB in the United States of successful Realtist速 whose businesses are thriving from the support they receive from the chapter and the networking opportunities that exist by their affiliation with National Association of Real Estate Brokers

Departments 1. OC Real Estate Market 2. OC Real Estate Resources 3. OC Real Estate Investing 4. OC Realtist Spotlight 5. OC Real Estate Financing 6. National Association of Real Estate Brokers News 7. California Association of Real Estate Brokers News 8. OC Realtist President message 9. OC Real Estate Business and Economic 10. OC Real estate laws and legislation

Cover and Feature story profiles: The OC Realtist Cover will never be sale as it will be our way of recognizing Realtist in Orange County and all over the United States who exemplify the Realtist spirit. The Online magazine and eZine will have 10 sections for various articles under the OC Realtist theme: OC Real Estate Market, OC Real Estate Resources, OC Real Estate Investing, OC Realtist Spotlight, OC Real Estate Financing, National Association of Real Estate Brokers News, California Association of Real Estate Brokers News, OC Realtist President message, OC Business and Economic, OC Real estate laws and legislation. The writers for each department will be industry professionals who are practitioners in their field of expertise. We are bringing the best practitioners in the industry to share their knowledge and experience in their field of expertise. They are industry professionals who can provide advice, and information to make decisions that will enable consumers to achieve the American Dream.

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CEO & Publisher Eric Lawrence Frazier, MBA 3739 6th Street, Riverside, CA 921506 Ph: (800) 401-8994 ext. 703 EDITORIAL Editor in Chief: Eric Lawrence Frazier MBA Managing Editor: Ross Dickens ONLINE Web Designer: Nicholas Clarkson DESIGN Art Director & Design Manager: Goldy Ponce Graphic Artist: Mario Lujan ADMINISTRATIVE Administrative Assistant: Rachel Bacol

SALES National Sales Manager: Christina Kimble National Relationship Manager: Success Money HEADQUATERS The Power Is Now Inc. 3739 6th Street Riverside, CA 92506 Ph: (800) 401-8994 Fax: (800) 401-8994 Email: info@thepowerisnow.com www.thepowerisnow.com www.thepowerisnow.com/onlinemagazine www.thepowerisnow.com/ezine PUBLICATION AND SERVICES The Orange County Realtist Magazine The PIN Magazine The Power Is Now Radio The Power Is Now Publications The Power Is Now Radio Guide The Power Is Now VIP Agent Program The Power IS Now Power Consulting/Coaching The Power Is Now Association Management The Power Is Now Event Management

STATEMENT OF COPYRIGHT: The OC Realtist Magazine TM is owned and published electronically by The Power Is Now Inc. The Power Is Now Inc. has entered into joint venture with the OC Realtist for the design, publication and distribution of the Magazine.

Copyright 2013-2015 The Power Is Now Inc. All rights reserved. The name Orange County Realtist is a trademark of the Orange County Realtist Inc. A chapter of the National Association of Real Estate Brokers.

“The PIN Magazine and distinctive logo are trademarks owned by The Power Is Now Inc. “ThePINMagazine.com” is a trademark of The Power Is Now Inc. “Magazine.thepowerisnow.com “ is a trademark of The Power Is Now Inc. “Thepowerisnow.com” is a trademark of The Power Is Now Inc. “The Power Is Now Event Management” is a trademark of The Power Is Now Inc. “The Power Is Now Radio” is a trademark of The Power Is Now Inc. “The Power Is Now Publications” is a trademark of The Power Is Now Inc. “The Power Is Now Radio Guide” is a trademark of The Power Is Now Inc. “The Power Is Now VIP Agent Program” is a trademark of The Power Is Now Inc. “The Power IS Now Power Consulting/Coaching” is a trademark of The Power Is Now Inc. “The Power Is Now Association Management” is a trademark of The Power Is Now Inc. No part of this electronic magazine or website may be reproduced without the written consent of The Power Is Now Inc. Requests for permission should be directed to: info@thepowerisnow.com

EDITORIAL

Message From the President

Dear OC Realtist card, add it to your websites and to declare it members and equally along with your other designations as a community partners, real estate professional. We are Realtist, and our slogan and mission, “Democracy in Housing” Thank you for your is as important today as it was in 1947 when the support of the Orange organization began.

County Realtist Association. I would like you to know that I truly The first quarter is coming to an end and I’m very appreciate your support and that I serve the Office proud of what we have accomplished so far. First, of the Presidency with a great deal of respect and we have formed a strategic alliance with our honor for you, as well as the organization. I have longtime partner and affiliate, the Orange County from time to time joked with my peers and close NAACP. Donald Craig, President, has served friends that I want to be rescued from presidency, on our honorary board since the inception of however, deep in my heart I know that there is our chapter and this year we have been working no place I would rather be. I take great pride in very closely together to cross-promote each other serving this office and working with Realtist to and to support our mutual events. The NAACP help our community achieve the American dream co-sponsored our Black History luncheon of homeownership. I have served as President and celebration. Hari Jones, world-renowned since our Charter on August 04, 2010. I am very historian and Assistant Director of the Civil War proud to be the President of the Orange County Museum in Washington, D.C., was our keynote Realtist, Director of the California Association speaker. His presentation was outstanding. The of Real Estate Brokers, and a member of the OC NAACP has likewise participated in our National Association of Real Estate Brokers, the real estate seminars and we are planning in the oldest minority real estate trade association in the planning stage for a joint bus trip to celebrate United States.

Juneteenth in Allenworth, in June. I serve as Chairman of the Membership Committee for We want all of our members to promote our the Orange County NAACP and I’m very proud Realtist designation. Please put it on your business to be working with the President Donald Craig

EDITORIAL

and the NAACP board of directors NAACP in a more significant way this year. It can only get better from here, and I’m excited about our future partnership. Please visit www.naacp.org and join the Orange County Branch. Our branch number is 1052.

changer for our chapter. Our first forum speakers included the national president Donnell Spivey who spoke about the mid-winter conference and about the value proposition of being a realtist.

Mr. Spivey is always on point when he speaks as our leader. He is the pacesetter and flag bearer, the most passionate about NAREB’s history The OC Realtist Church initiative to promote and its continued contributions to Democracy in homeownership with churches is off to a great Housing. start. So far, we have had over 100 people participate in two first-time homebuyer seminar The online real estate marketing session was during the first quarter. I would like to express absolutely wonderful and educational. We had my gratitude to Pastor Anthony Sagel of the 10 realtists from all over the country pitching New Covenant Church in Santa Ana and Elder property for sale and it was exciting, informative Delaney and Larry Harper of Word of Faith and inspirational. It was refreshing listening Pentecostal Church in Santa Ana for opening to realtists successfully selling real estate and their doors to the OC Realtist. I appreciate all of pitching the great deals they have for sale on you for allowing our members to come in and the market and off-market. I want to encourage to educate their members on the importance of you to join us every 2nd and 4th Saturday from homeownership. We are very excited about the 9:30 a.m. to 10:30 a.m. Listen and participate in future of this program. I am collaborating with selling any listings you have as a listing agent or the pastor of the Orange County Pastoral Alliance share the need you may have as a buyer’s agent and our goal is to have a homebuyer’s workshop on this national online marketing session. You in every African American church in Orange can register at www.anymeeting.com/realtist.

County this year. Our challenge lies in our need for more members to handle all requests from the The second quarter is going to be exciting and attendees of the workshops. It is my hope that our packed with great events. Please go the website membership will grow exponentially over the next and renew your membership today, if you haven’t few months so that we may get the help we need. done so. Please do not hesitate to participate! Get Pray for this great work. The homeownership involved and become a member today. rate for African Americans is the lowest it has been in decades, at 41.9%. Financial literacy is Be Great because He Is Great and can do anything the solution to this problem and our mission is but fail. to solve it through programs like our homebuyer workshop that combines real estate and financial literacy education. The latter is quickly filling up with classes. Please check the website for the Sincerely, upcoming workshops and I continue to encourage you to become a Realtist and assist us.

Eric Lawrence Frazier M.B.A

The OC Realtist forum speakers delivered an online marketing session which has been a game President

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BUSINESS

Current Trends in the Commercial Real Estate Market

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he U.S. real estate market is known for its dynamism. It is constantly changing and the factors that determine the state of this market keeps on shifting.

It is important for every investor to keep track of these changes to always have an upper hand and remain in a strong business position. What worked many years ago may not work today.

Failure to do proper research on these trends may mean poor business and you may end up with losses that could have been avoided with proper research.

According to recent surveys, the number of properties facing foreclosure in January has increased by 1%, but this was 8% lower than figures sourced from the same time in 2014. Another statistic points to the fact that

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925,193 properties are facing foreclosure. A surprising fact is that the number of home sales in December 2014 increased by 5% while compared to November 2014.

The commercial properties market is shaping up and before the year ends, a lot will have changed, too.

in this volatile sector. To attain higher returns, one trend that has come into being is increased risk appetite. This willingness to take more risk by investors has opened new markets that were thought of as secondary.

These markets include but not limited to Denver, Charlotte, Philadelphia and Austin. The A worrying trend in the real estate secondary markets have seen market is the low supply against emergence in class A properties existing the demand. Compared that boast of great pricing. to 1989 when the market opened up, investors and experts alike An interesting trend is that agree that constraints in home properties in different markets financing have led to lower have emerged as quite distinct. completions. The rents have A class B property in Austin escalated and this has caused maybe different from a class a major strain in trying to B property in Seattle. This push rents and occupancies. current trend means that Despite this statistic, something finding the best properties interesting is that investors are in areas that are considered now willing to take more risk unfamiliar is quite hard. This

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BUSINESS

development resonates across all markets, estate business is often looked as offering the especially tertiary and secondary markets. best returns, albeit with higher risks, has led to increased allocations. There are markets, such There is no denial that the real estate market as Seattle and San Francisco that have been has continued growing steadily regardless of home to both population growth and increase in the economy. The warehouse market has been population. A noteworthy trend is that investors affected by the Amazon model of distribution. have kept following both people and jobs. There The increased demand for industrial properties, are areas that real estate growth is specifically especially in the markets referred to as U.S. driven by the types of jobs. For example, gateway, has been steadily increasing. The Portland and Seattle have a concentration of market recovery has gained momentum, technology jobs, which has led to opening up however, it is very hard to recognize any of these areas for real estate investment. This changes because the pace has been a bit slower. trend is more common in 2015 than was in 2014.

A worrying trend that continues to baffle property buyers is the rise in mortgage rates. Many real estate analysts had predicted a rise in mortgage rates due to the improvement in the economy and the closure of the Federal Reserve’s bond-buying plan. The year 2014 never started as many expected and the shrink in the economy meant the real estate market was affected, too. However, recent changes have seen better mortgage rates with a mortgage spanning 30 years being cheaper this year than 2014. However, despite recent trends, economists are of the view that the mortgage rates will seriously increase due to improvements in the domestic economy. The failure by the Federal Reserve to inject any stimulus is being cited as another reason why the rates will rise.

With the current trends, investors can only hope the market remains favorable for longer.

According to report co-published by the urban Land Institute in conjunction with PwC US, Houston, Austin, San Francisco, Denver and Dallas ranked as the best five property markets. Houston has emerged as top in terms of both development and investment expectations. In Dallas, singlefamily housing is the top ranking sector.

The commercial real estate market continues to change day by day and with property prices expected to decelerate, there will be a decline in affordability. In a recent panel discussion, chairman of Standard and Poor’s Index Committee, David Blitzer, said that the 2015 real estate market will be mysterious. This means that not even the real estate experts really understand the real estate market especially with recent changes. The baseline remains that more trends will be detected as the year carries along and this will even be more There is increased capital flow within the real confounding for those interested in real estate. estate market. Another notable change is the growth in allocations. The fact that the real

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Sh RE o O rt a n Sa d le s

REAL ESTATE

the value of the property or what property experts refer to as “the amount for which a property can be sold for�.

During a short sale, the lender usually agrees a pay-off which is much less discounted, and is lesser than the total amount owed. Upon receipt of the payoff, the lender agrees to release h e the notice on the property, r e a l referred to as lien in the property market. estate market, like any other sector, Real Estate Owned, REO, has its own lingo that refers to properties that have everyone involved in it needs been put through unsuccessful to understand. For someone foreclosure and are owned who wishes to invest in the by the Mortgage Company real estate market but does not or bank. In an effort to sell understand the terms familiar off the property as quickly as with it, then they may end up possible, the bank or mortgage faced with different legal and company will usually remove economic implications that any attached notices and avoid could have been avoided with anything else that can delay a prior knowledge. Two terms that successful sale. Realtors usually are likely to come up for anyone list REO properties to help in involved in the U.S. real estate marketing and quick sale. Most market are REO and short sales. mortgage companies or banks They may sound like the same try selling REO listed properties thing to the amateur real estate through real estate agents. investor, but it is important to learn the difference.

Interestingly, Orange County in California is known for its A short sale scenario in the real steady supply of both REO and estate market happens when short sale properties. The major the outstanding loans against reason for these high numbers a particular property exceed is the clamor by prospective

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buyers to buy luxurious beach homes along the coastline. This is one area that anyone interested in the property market should take keen interest.

One question that baffles those not well-versed in the real estate market is why a lender would agree to the short sale agreement. To start with, it is important to understand that the main interest of lenders is selling mortgage loans, but not reclaiming property and trying to resell it. The reason why any lender would accept a short sale is to avoid adding REO and bad loans on their well-guarded portfolio. REO properties need extra repairs and maintenance, attract taxes and require insurance which exhibit more financial responsibilities.

Another reason why a lender would agree to a short sale is to avoid any burglary or vandalism by the borrower before they leave the property. Sometimes, it comes out as waste of time evicting the borrower and trying to resell the property.

There is a reason why anyone having issues with mortgage repayment would agree to a short sale. Inability to repay one’s obligations is usually unforeseen. It may be due to economic struggles or an increase in the mortgage rate.

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REAL ESTATE

Whatever the reason, a seller will try to avoid any foreclosure in the best means possible. Failure to do a short sale may lead one to be declared bankrupt and this is a situation no one wants to go through. There is also the issue with credit ratings. The credit score is not overly affected by a short sale compared to a foreclosure or REO, and one can still buy property in future if they have a turnaround in their finances.

Many people try to take advantage and buy property marketed as REO. However, there are several things to be considered before buying. There is little room for negotiations as banks or mortgage companies try to get the best offers. One must also do proper background check to ensure the property is in a decent condition, since most are sold on “As-Is� basis. A sound suggestion would be to talk to a professional realtor for proper review before committing to buy the house. The realtor should be in a position to review information related to the title and insurance. Before budgeting for an SEO-listed property, it is always important to consider the financial implications of renovations.

There is no guaranteed bargain when it comes to either short sales or REO. There is always a risk in that the condition of the property maybe questionable. However, short sales have the benefit of allowing one to do prior inspection.

There is also no guarantee on getting the best price as both can be overpriced in a bid to recover as much as possible.

It is important to understand both REO and short sales. These are weighty terms in the real estate market. Before being involved in either, proper

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research is always important.

No one would want to face a foreclosure; but whether you are an agent, an investor or a homebuyer, you have to know how these would two affect you.

According to RealtyTracÂŽ, the number of properties with foreclosure stood at 119,888 in January 2015, which represented a 5% increase compared to December. However, this was 4 percent lesser than the number of foreclosures a year ago. According to the same report, this 5% increased resulted from a 55% monthly increase in REOs. Various lenders repossessed 37,292 properties in January. The states with the highest increase in foreclosures included Massachusetts, New Jersey and North Carolina with each registering 268%, 125% and 111% increase respectively. On the other hand, Florida, Nevada and Maryland had the top foreclosure rates.

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COMMUNITY

CURRENT NEWS ON ORANGE COUNTY REAL ESTATE

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range County, California is well known for its vibrant real estate market. Experts, through application of market data, have rated Orange County as one of 2nd most undervalued market in U.S. after Austin, Texas.

There has been a rise in the number of people putting up their houses for sale. The number of homes in the market has increased and with continuity in this trend, we may realize doubling of the number of houses. This trend has enabled sellers to gain a stronger financial position and they have a better buying power to buy better housing, which increases the demand for real estate, thus opening up the market. The same applies to commercial properties, although inventory has remained a big worry.

Recent figures indicate that the December sales for medium homes rose. Compared to last year, the sales volumes have been lower and homes have been sitting longer in the market since turn of the year. The real estate market in the U.S. is experiencing the bubble-and-bust and Orange County has not been spared. To be successful in In other news, an educational event was held this unpredictable market, one needs to pay keen March 14, 2015 targeting those interested in the attention to any news as discussed in this article. real estate at the Marriott in Cypress. There were valuable lessons on carrying out evictions, sales According to CoreLogic Home Price Index, and marketing in the real estate market, reverse which monitors and evaluates price changes in mortgages, bankruptcy and credit repair and housing across 900 metro areas, the price gain in estate planning. Attendees had an opportunity to December was the lowest in any month since the learn the best tips for attracting new tenants and same trend in September. There was a 3.7 percent the different ways to retain them. Property owners growth towards the end 2014 and this year, the were also taught how to handle tenant issues, signs are out there that there might be more protect real estate assets, and create a strong growth. An increasingly worrying statistic is the financial plan, among other topics. All these were length of time houses are sitting in the market in taught with focus on the Orange County in a bid Orange County. This sometimes leads to sellers to help property owners manage this market in a to lower their asking price in a bid to push the much better way. houses, which has had an overall effect on the real estate market.

COMMUNITY

An interesting piece of news is that many Chinese mothers have preferred the Orange County as the ideal location for birth tourism. The cinematic sunshine has been an important attraction for expectant women.

This has led to a rise in estates such as Irvine, which holds a planned community, and it is well known for its safety which boosts the real estate market.

The attraction to Irvine and other areas within Orange County has led to many homebuyers targeting the area therefore signaling an increase in real estate performance. Irvine has been ranked by the Federal Bureau of Investigations (FBI) for ten years as the safest city within the U.S., and the Money Magazine has referred to it as

the safest city in California, which has been a blessing in disguise for real estate owners.

Hanley Investment Group, a real estate advisory and brokerage company based in Irvine has fully sold a 23,000-square-foot retail building in Buena Park.

The transaction, valued at $6.5 million, was made within 24 hours of its listing. The Beverly Hills buyer was represented

by Hanley’s Executive Vice President. This was a great opportunity for Orange County’s real estate market and has increased interest for properties based around the area. Many private investors have taken note of this development and we can foresee more high value property tradeoffs.

The 2015 Superior Performance in Real Estate recognition, women’s category, went to Holly Cindell, Project Director at McCarthy Building Companies.

Such awards are aimed at rewarding those who have been successful in Orange County’s competitive real estate market.

This has improved the overall standing of the area and we will experience better changes led by individuals seeking individual and corporate recognition.

There is so much happening in Orange-County’s real estate market. With the market opening up every day, there is an open opportunity for more growth and those interested in real estate will draw better yields from their investments.

Dive deeper and discover a complete list of solutions at PEMCO-Limited.com

Sample Services Premarket Services Compliance Oversight Due Diligence Vendor Management Closing Facilitation and Management Program and Inventory Marketing Services Sales and Homebuyer Education Property Preservation Property Management Real Estate Sales Facilities Maintenance

COMMUNITY

Feature Cities in Orange County Anyone residing in Orange County, California cannot help but nod in agreement that it is one of the best spots to live in the United States, or even in the world. With a large diversity in culture and amenities, Orange County prides itself on having some of the most beautiful beaches in America and also great surfing opportunities.

The lucky inhabitants of this wonderful place are advantaged with five-star shopping, excellent dining experience and great educational facilities. Along with the four seasons - Lively, Lovely, Vacation and Beautiful, Orange County is ever ready to take your breath away.

So, which are the top cities located in Orange County that would suit your requirements and lifestyle the best? Here are the top five places recommended if you are thinking of relocating:

1. Irvine

violence and crime rates. The neighborhood is safe and an ideal place to settle with your family.

Located in the center of Orange County, Irvine is a master-planned perfection. The Irvine Company had established this city in the 1960s and is now considered as one the most desirable places in America.

The population toll reaches nearly 230,000.

According to CNNMoney.com, Irvine is the fourth best residential option within the United States. It has been stated to have the least

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Along with a great housing market, Irvine boasts of the best educational history in Orange County.

With the schools holding positions on the Top 1300 Public Schools and top four percent of U.S., there are institutes of the University of California, Irvine and Irvine Valley College. Many schools are under the Irvine Unified School and the Tustin Unified School Districts. In addition, most of the universities are located in close proximity, there is also a satellite campus of the California

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State University, Fullerton.

To match a great school structure, Irvine is a powerhouse for gaming companies, IT companies and many more. The major companies headquartered in Orange County include Taco Bell, Broadcom and BAX Global.

Apart from being one of the safest cities in America, Irvine offers a wide array of neighborhood and community spots with open grounds, vast recreational options, different classes and activities for its inhabitants, visitors and tourists. The most famous parks are the Bill Barber Park and the Northwood Community Park.

Irvine Global Village Festival is hosted annually and celebrates the rich culture and diversity with great zeal, exhibits, entertainments and food items.

All in all, Irvine is the best place for families, professionals, tourists and retired persons to live visit and enjoy.

2. Laguna Beach Nine square miles in size and a population of 25,000, the Laguna Beach witnesses immense population growth annually. Tourists by a few hundred thousand flock to this city in the summer season, bringing along with them traffic and parking issues.

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The city has gained popularity because of an MTV reality show, though the real beauty was not recorded in the show.

With houses climbing upward on the hills and located along the coast, the Laguna Beach is often referred to as a Mediterranean resort. The seven miles of coastline is in the city limits and the beaches are low on the cliffs.

Scuba diving is famous here due to the various rock inlets, tide pools and rock formations.

Small beach cottages and various mansions are anchored to side of the cliffs above the city. The peak of the Laguna Beach is known as the “Top of the World�. Summer brings art festivals and unique theatrical performances.

Laguna Beach is highly recommended to professionals, families with kids and singles because of the great education and job options.

3. Huntington Beach With a mild climate, various recreational activities and a population of 200,000, it is the largest beach in Orange County.

Due to favorable conditions, it is famous for professional surfing.

There is also the Surf Museum and a 350-acre park that houses the Central Library, the Beach Playhouse, sports complexes, a lake, golf course, amphitheater, restaurants and bike trails.

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Along with great housing, a safe and quiet neighborhood, the city boasts of Huntington Beach Pier and Main Street Area. With good schooling, shopping options and high job availability, it is for professionals, singles, families with kids and retirees.

4. San Joaquin Hills This elite city boasts of expensive houses, great surroundings and high income inhabitants.

An affluent population of over 5,000, the median household income is $125,000. Proportionate to the high cost of living, the average house value is $1 million, and average monthly rent is $3,000 for a medium-sized rental. The citizens are highly literate due to great education with close proximity to many universities. Recommended for professionals and small (1-2 children) families.

5. Costa Mesa Home to the middle and working classes, Costa Mesa is north of Newport Beach and has a warm climate. With great recreational spots, quality schools and universities, Costa Mesa offers an ample supply of employment, education and entertainment.

The city is recommended to young professionals, singles, families and retirees.

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FEATURE

Women in Diversified Services 2015 Member of the Year

Julie Baldino

By Lilyvette Rodriguez

W

hat do you think of when you think of the word exceptional? According to the dictionary the meaning of exceptional is “unusually excellent; superior”. For Women in Diversified Services (WinDS), Julie Baldino personifies that meaning.

Julie has been a member of WinDS since 2010.

She is an active contributor in several WinDS committees, such as education, conference, social media, and also volunteers during the annual national conference. I asked Shelley Kaye, Executive Director to provide a description of qualities the Member of the Year awardee would demonstrate. Her response was, “I read a great [anonymous] quote that would be an appropriate way to describe Julie,

“A person’s most useful asset is not the head full of knowledge, but a heart full of love, an ear ready to listen, and a hand willing to help.”

Her dedication and support of WinDS has been unwavering. When something needs to be done, Julie is always the first person to step up to the plate.

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When you meet Julie, she greets you with a smile that makes you feel like she has been waiting for you all along and not just another appointment.

That warmth and sense of caring for others is one of the building blocks to her success. I asked Julie what attracted her to enter the field of real estate and her answer was she followed in her mom’s footsteps. When her business grew to the point she could no longer manage on her own, she started a team and opened her own company in 2011. Her approach to expanding that team was done in very unconventional ways. When she saw that her housekeeper possessed the qualities she wanted in an agent representing clients, she suggested she take real estate classes and become an agent. Julie’s personal assistant who has been with her since 2011 is another such example. After only just a week on the job, Julie felt confident that she could manage her transactions in the same manner she would.

So she went on vacation to Hawaii, knowing her business was in good hands. Her assistant had previously worked at a major investment firm where stress was a major component of daily activities.

Julie’s staff is comprised of former clients, friends of family and, yes, even her ex-housekeeper. She describes the approach as hiring the person, not the job which is a unique cultural experience not only for the team that works together, but for the

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clients she serves. She looks for personality traits that show real care about wanting to help the consumer.

How does a busy broker who manages and operates businesses in two States (Washington & Oregon) balance work and life?

She laughs and admits that she is working on that and says she couldn’t do all she does without the support of her spouse. Julie is quick to point out that he fully understands that she runs and is in control of her business. A true entrepreneur, she knows how to leverage a bad situation and turn it into a thriving opportunity.

Julie invested in people and employed them during the most difficult time of a bad economy.

On a personal level, due to a recent injury experienced by her husband, they decided that he would play a greater supporting role in the home. This has allowed her to continue business expansion of her real estate business in the State of Oregon.

It is understandable how a seasoned veteran of the Pacific Northwest has consistently been in the top 10% in sales for over a decade. Julie has

grown her team to twelve full time agents and support staff.

Julie’s specialties include listing bank owned homes, corporate relocation services, and progressive internet/social media marketing. She attributes her REO business growth to her affiliation with WinDS and realized the importance of pursuing certification with WBE and WOSB as a tool to business expansion.

So how does Julie unwind and relax? She enjoys spending time with her husband and daughters - hiking, cooking, boating, going to the movies, traveling, and exploring the beautiful scenery the Pacific Northwest offers. Julie is passionate about animals and related charities and loves her two dogs and two cats.

Definitely, a full life.

Congratulations to Julie Baldino, 2015 WinDS Member of the Year awardee. 3

This article also appears on our sister magazine, TPIN Magazine, at www.thepowerisnow.com

Lilyvette Rodriguez is a real estate broker servicing the Inland Empire of Southern California for over 24 years. She specializes in equity sale, short sale, foreclosure, probate and corporate relocation. She is an NAR instructor of the Employee Assisted Housing Program.

Lilyvette serves on a number of boards, holds multiple certifications/designations and is a consumer advocate. She believes that an informed community is an enlightened community.

Lilyvette Rodriguez CEO/Broker BRE License #01061272 Excel Realty (909) 333-6008 www.ExcelRealty-IE.com www.Facebook.com/ExcelRealtyIE

Please follow this link to honor the achievements of Women in Diversified Services

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Normalizing Monetary Policy: Prospects and Perspectives Chair Janet L. Yellen At the “The New Normal Monetary Policy,” a research conference sponsored by the Federal Reserve Bank of San Francisco, San Francisco, California March 27, 2015 Chair Yellen’s March 27, 2015 Speech appears herein and is reproduced with permission from the Federal Reserve Board. Released by the Board of Governors of the Federal Reserve System.

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would like to thank President Williams for his kind introduction and the Federal Reserve Bank of San Francisco for inviting me to what promises to be a very stimulating and important conference.

As you know, last week the Federal Open Market Committee (FOMC) changed its forward guidance pertaining to the federal funds rate. With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year. Of course, the timing of the first increase in the federal funds rate and its subsequent path will be determined by the Committee in light of

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incoming data on labor market conditions, inflation, and other aspects of the current expansion.

monetary policy over the next several years? And, finally, are there special risks and other considerations that policymakers should take In my remarks today I will into account in the current discuss some factors that will environment? likely guide our decisions as we adjust the stance of Current Economic monetary policy over time. I Conditions and the Outlook will also discuss why most of my colleagues and I believe Before turning to these the return of the federal funds questions, however, let rate to a more normal level me first review where the is likely to be gradual. In economy is now and where doing so, I will address three it’s likely headed--a necessary questions. First, why does backdrop for understanding the Committee judge that an why, after more than six increase in the federal funds years of maintaining a nearrate target is likely to become zero federal funds rate and appropriate later this year? accumulating a large portfolio Second, how are economic of longer-term securities, and financial considerations the Committee is now likely to shape the course of giving serious consideration

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to beginning to reduce later this year some of the extraordinary monetary policy accommodation currently in place.

Although the recovery of the labor market from the deep recession following the financial crisis was frustratingly slow for quite a long time, progress has been more rapid of late.

The unemployment rate has fallen markedly over the past few years and now stands at 5.5 percent, down from 10 percent at its peak. Payroll gains have averaged 275,000 per month over the past year, well above the pace needed to sustain further declines in the unemployment rate.

Of course, we still have some way to go to reach our maximum employment goal.

The unemployment rate has not yet declined to the 5.0 to 5.2 percent range that most FOMC participants now consider to be normal in the longer run. Involuntary parttime employment remains high by historical standards.

Labor force participation is still somewhat lower than I would expect after accounting for demographic trends.1 And wage growth continues to be quite subdued. But I think we can all agree that the recovery in the labor market has been substantial.

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I am cautiously optimistic that, in the context of moderate growth in aggregate output and spending, labor market conditions are likely to improve further in coming months. In particular, and despite the somewhat disappointing tone of the recent retail sales data, I think consumer spending is likely to expand at a good clip this year given such robust fundamentals as strong employment gains, boosts to real incomes from lower energy prices, continued increases in household wealth, and a relatively high level of consumer confidence. Of course, not all sectors of the economy are doing as well: dollar appreciation appears to be restraining net exports, low oil prices are prompting a cutback in drilling activity, and the recovery in residential construction remains subdued.

But overall, I anticipate that real gross domestic product is likely to expand somewhat faster than its potential in coming quarters, thereby promoting further gains in employment and declines in the unemployment rate.

In assessing the actual strength of the labor market and the broader economy, we must bear in mind that these very welcome improvements have been achieved in the context of extraordinary

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monetary accommodation.

While the overall level of real activity now appears to be much closer to its potential than it was a year or two ago, the economy in an “underlying� sense remains quite weak by historical standards, for the simple reason that the increases in hiring and output that have been achieved thus far have required exceptionally low levels of short- and longerterm interest rates, reflecting a highly accommodative stance of monetary policy.

Interest rates have been, and remain, very low, and if underlying conditions had truly returned to normal, the economy should be booming.

As I will discuss shortly, this assessment concerning the underlying strength of real activity has important policy implications.

While there has been considerable progress on the maximum employment leg of our dual mandate, progress on the price stability leg has been notably absent.

Inflation as measured by the price index for personal consumption expenditures has been running below the FOMC’s longer-run goal of 2 percent for a number of years, and on a 12 month basis is currently 1/4 percent. Some of the weakness in inflation likely reflects continuing

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slack in labor and product markets. However, much of this weakness stems from the sharp decline in the price of oil and other one-time factors that, in the FOMC’s judgment, are likely to have only a transitory negative effect on inflation, provided that inflation expectations remain well anchored.

conditions actually evolve over time. Like most of my FOMC colleagues, I believe that the appropriate time has not yet arrived, but I expect that conditions may warrant an increase in the federal funds rate target sometime this year. So let me spell out the reasoning that underpins this view.

In this regard, I take comfort from the continued stability of survey measures of longerrun inflation expectations.

And although marketbased measures of inflation compensation have declined appreciably since last summer and bear close watching, I suspect that these declines are primarily driven by changes in risk premiums and market factors that I expect to prove transitory. On balance, I therefore think it is appropriate for monetary policy to remain accommodative for some time, fostering an environment of tightening labor and product markets that, together with stable inflation expectations, will help move inflation up to 2 percent over the medium term.

I would first note that the current stance of monetary policy is clearly providing considerable economic stimulus. The near-zero setting for the federal funds rate has facilitated a sizable reduction in labor market slack over the past two years and appears to be consistent with further substantial gains. A modest increase in the federal funds rate would be highly unlikely to halt this progress, although such an increase might slow its pace somewhat.

Why Might an Increase in the Federal Funds Rate Be Warranted Later This Year?

The Committee’s decision about when to begin reducing accommodation will depend importantly on how economic

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Second, we need to keep in mind the well-established fact that the full effects of monetary policy are felt only after long lags. This means that policymakers cannot wait until they have achieved their objectives to begin adjusting policy. I would not consider it prudent to postpone the onset of normalization until we have reached, or are on the verge of reaching, our inflation objective.

Doing so would create too great a risk of significantly

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overshooting both our objectives of maximum sustainable employment and 2 percent inflation, potentially undermining economic growth and employment if the FOMC is subsequently forced to tighten policy markedly or abruptly. In addition, holding rates too low for too long could encourage inappropriate risk-taking by investors, potentially undermining the stability of financial markets. That said, we must be reasonably confident at the time of the first rate increase that inflation will move up over time to our 2 percent objective, and that such an action will not impede continued solid growth in employment and output.

An important factor working to increase my confidence in the inflation outlook will be continued improvement in the labor market. A substantial body of theory, informed by considerable historical evidence, suggests that inflation will eventually begin to rise as resource utilization continues to tighten.2 It is largely for this reason that a significant pickup in incoming readings on core inflation will not be a precondition for me to judge that an initial increase in the federal funds rate would be warranted. With respect to wages, I anticipate that real wage gains for American workers are likely to pick up

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to a rate more in line with trend labor productivity growth as employment settles in at its maximum sustainable level. We could see nominal wage growth eventually running notably higher than the current roughly 2 percent pace. But the outlook for wages is highly uncertain even if price inflation does move back to 2 percent and labor market conditions continue to improve as projected. For example, we cannot be sure about the future pace of productivity growth; nor can we be sure about other factors, such as global competition, the nature of technological change, and trends in unionization, that may also influence the pace of real wage growth over time. These factors, which are outside of the Federal Reserve’s control, likely explain why real wages have failed to keep pace with productivity growth for at least the past 15 years. For such reasons, we can never be sure what growth rate of nominal wages is consistent with stable consumer price inflation, and this uncertainty limits the usefulness of wage trends as an indicator of the Fed’s progress in achieving its inflation objective.

I have argued that a pickup in neither wage nor price inflation is indispensable for me to achieve reasonable

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confidence that inflation will move back to 2 percent over time. That said, I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices, and other indicators of underlying inflation pressures were to weaken, if marketbased measures of inflation compensation were to fall appreciably further, or if survey-based measures were to begin to decline noticeably.

Under normal circumstances, simple monetary policy rules, such as the one proposed

by John Taylor, could help us decide when to raise the federal funds rate.3 Even with core inflation running below the Committee’s 2 percent objective, Taylor’s rule now calls for the federal funds rate to be well above zero if the unemployment rate is currently judged to be close to its normal longer-run level and the “normal” level of the real federal funds rate is currently close to its historical average. But the prescription offered by the Taylor rule changes significantly if one instead assumes, as I do, that appreciable slack still remains in the labor market, and that the economy’s equilibrium real federal funds rate--that is, the real rate consistent with the economy achieving maximum employment and price stability over the medium

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term--is currently quite low by historical standards.4 Under assumptions that I consider more realistic under present circumstances, the same rules call for the federal funds rate to be close to zero. 5 Moreover, I would assert that simple rules are, well, too simple, and ignore important complexities of the current situation, about which I will have more to say shortly.

The FOMC will, of course, carefully deliberate about when to begin the process of removing policy accommodation. But the significance of this decision should not be overemphasized, because what matters for financial conditions and the broader economy is the entire expected path of short-term interest rates and not the precise timing of the first rate increase. The spending and investment decisions the FOMC seeks to influence depend primarily on expectations of policy well into the future, as embedded in longer-term interest rates and other asset prices. More important than the timing of the Committee’s initial policy move will be the strategy the Committee deploys in adjusting the federal funds rate over time, in response to economic developments, to achieve its dual mandate.

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Market participants’ perceptions of that reaction function and the implications for the likely longer-run trajectory of short-term interest rates will influence the borrowing costs faced by households and businesses, including the rates on corporate bonds, auto loans, and home mortgages.

How Are Economic and Financial Considerations Likely to Shape the Course of Monetary Policy over the Next Several Years?

considerations that I will discuss shortly, the average pace of tightening observed during previous recoveries could well provide a highly misleading guide to the actual course of monetary policy over the next few years. Our goal in adjusting the federal funds rate over time will be to achieve and sustain economic conditions close to maximum employment with inflation averaging around 2 percent, responding, as best we can, to the inevitable twists and turns of the economy.

Let me therefore turn to the second question I posed earlier: How are economic and financial considerations likely to shape the course of monetary policy over the next few years? Let me first be clear that the FOMC does not intend to embark on any predetermined course of tightening following an initial decision to raise the funds rate target range--one that, for example, would involve similarly sized rate increases at every meeting or on some other schedule. Rather, the actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation.

Reflecting such data dependence, as well as some historically unusual policy

Keeping in mind the allimportant proviso that policy is never predetermined but is always data dependent, what can we say about the appropriate path of policy, assuming the most likely outcomes for real activity, inflation, and related factors?

The answer is that it depends, of course, on one’s outlook for the economy. Today I will focus on the modal outlook presented by FOMC participants’ submissions to the March Summary of Economic Projections (SEP), which assumes that no further unanticipated disturbances buffet the economy. As I noted at my press conference after last week’s FOMC meeting, participants generally project that the unemployment rate will continue to fall through late 2017 to levels at or somewhat below estimates of its longer-run sustainable

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level, accompanied by growth in real gross domestic product that runs somewhat above its estimated longer-run trend with inflation moving up to around 2 percent. This solid economic performance is projected to be consistent with a gradual normalization of monetary policy: The median funds rate projection in the March SEP increases apercentage point per year on average through the end of 2017.

The projected combination of a gradual rise in the nominal federal funds rate coupled with further progress on both legs of the dual mandate is consistent with an implicit assessment by the Committee that the equilibrium real federal funds rate--one measure of the economy’s underlying strength--is rising only slowly over time. In the wake of the financial crisis, the equilibrium real rate apparently fell well below zero because of numerous persistent headwinds. These headwinds include tighter underwriting standards and restricted access to some forms of credit; the need for households to reduce their debt burdens; contractionary fiscal policy at all levels of government after the initial effects of the fiscal stimulus package had passed; and elevated uncertainty about the economic outlook that made firms hesitant to invest and 30

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hire, and households reluctant to buy houses, cars, and other discretionary goods.

Fortunately, the overall force of these headwinds appears to have diminished considerably over the past year or so, allowing employment to accelerate appreciably even as the level of the federal funds rate and the volume of our asset holdings remained nearly unchanged.6 Stated differently, the economy’s underlying strength has been gradually improving, and the equilibrium real federal funds rate has been gradually rising.

Although the recent appreciation of the dollar is likely to weigh on U.S. exports over time, I nonetheless anticipate further diminution of the headwinds just noted over the next couple of years, and as the equilibrium real funds rate continues to rise, it will accordingly be appropriate to raise the actual level of the real federal funds rate in tandem, all else being equal.7 At present, the equilibrium real federal funds rate, which by some estimates is currently close to zero, appears to be well below the longer-run normal levels assessed by the FOMC. The median SEP estimate of this longer-run normal rate--that is, the long-run projection of the nominal funds rate less 2 percent inflation--stood at 31

1-3/4 percent in the FOMC’s recent projections.8 Provided that inflation shows clear signs over time of moving up toward 2 percent in the context of continuing progress toward maximum employment, I therefore expect that a further tightening in monetary policy after the first increase in the federal funds rate will be warranted. Should incoming data, however, fail to support this forecast, then the actual path of policy will need to be adjusted appropriately.

Are There Special Risks and Other Considerations That Policymakers Should Take into Account in the Current Environment?

As I noted, my FOMC colleagues and I generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years, conditional on our baseline forecasts for real activity, inflation, and other aspects of the economy’s performance. So far in my remarks, I have emphasized one key rationale for such a judgment--namely, that the equilibrium real federal funds rate is at present well below its historical average and is anticipated to rise only gradually over time as the various headwinds that have restrained the economic recovery continue to abate. If incoming data support such a forecast, the federal funds The ORANGE COUNTY Realtist Magazine

rate should be normalized, but at a gradual pace.

Several additional factors reinforce this conclusion, and that brings me to my third question: Are there special risks and other considerations that policymakers should take into account in the current environment? Keeping in mind that the actual course of monetary policy in the future will primarily depend on events as they unfold, I see three additional considerations that are 9 relevant.

The first, which is closely related to my expectation that the headwinds holding back growth are likely to continue to abate gradually, pertains to the risk that the equilibrium real federal funds rate may not, in fact, recover as much or as quickly as I anticipate. Substantial uncertainty surrounds all estimates of the equilibrium real interest rate, and, as I will discuss momentarily, market participants appear to be fairly pessimistic about the odds that it will rise significantly over time. Moreover, some recent studies have raised the prospect that the economies of the United States and other countries will grow more slowly in the future as a result of both demographic factors and a slower pace of productivity gains from technological advances. www.OCREALTIST.org

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At an extreme, such developments could even amount to a type of “secular stagnation,” in which monetary policy would need to keep real interest rates persistently quite low relative to historical norms to promote full employment and price stability, absent a highly expansive fiscal policy.10 Such a risk has important implications for monetary policy in the near term, when the ability of the economy to adjust to significant rate increases will be especially uncertain. The experience of Japan over the past 20 years, and Sweden more recently, demonstrates that a tightening of policy when the equilibrium real rate remains low can result in appreciable economic costs, delaying the attainment of a central bank’s price stability objective.

International experience therefore counsels caution in removing accommodation until the Committee is more confident that aggregate demand will continue to expand in line with its expectations--a view that is also supported by the research literature.11 A second reason for the Committee to proceed cautiously in removing policy accommodation relates to asymmetries in the effectiveness of monetary policy in the vicinity of the april 2015 issue

zero lower bound. In the event that growth in employment and overall activity proves unexpectedly robust and inflation moves significantly above our 2 percent objective, the FOMC can and will raise interest rates as needed to rein in inflation. But if growth was to falter and inflation was to fall yet further, the effective lower bound on nominal interest rates could limit the Committee’s ability to provide the needed degree of accommodation. With an already large balance sheet, for example, the FOMC might be concerned about potential costs and risks associated with further asset purchases.

Research suggests that, the higher the probability of monetary policy becoming constrained by the zero lower bound in the near future because of adverse shocks, and the more severe the attendant consequences for real activity and inflation, the more current policy should lean in accommodative direction.12 In effect, such a strategy represents insurance against the zero lower bound by aiming for somewhat stronger real activity and a faster rise in inflation under the modal outlook. Given the modal outlook envisioned in FOMC participants’ recent forecasts, with headwinds continuing to diminish, the equilibrium real rate rising, and inflation moving back up to 2 percent over the next few The ORANGE COUNTY Realtist Magazine

years, the risk that the funds rate would need to return to near zero should be declining appreciably. Consistent with this assessment, almost all FOMC participants now view the risks to the outlook for real activity as largely balanced, although some also see inflation risks as weighted to the downside.

That said, it is sobering to note that many market participants appear to assess the risks to the outlook quite differently.

For example, respondents to the Survey of Primary Dealers in late January thought there was a 20 percent probability that, after liftoff, the funds rate would fall back to zero sometime at or before late 2017. 13 In addition, both the remarkably low level of long-term government bond yields in advanced economies and the low prevailing level of inflation compensation suggest that financial market participants may hold more pessimistic views than FOMC participants concerning the risks to the global outlook.

Since long-term yields reflect the market’s probabilityweighted average of all possible short-term interest rate paths, along with compensating term and risk premiums, the generally low level of yields in advanced economies suggests that investors place considerable odds on adverse scenarios that would necessitate a lower and flatter trajectory of the 32

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federal funds than envisioned in participants’ modal SEP projections.14 A final argument for gradually adjusting policy relates to the desirability of achieving a prompt return of inflation to the FOMC’s 2 percent goal, an objective that would be advanced by allowing the unemployment rate to decline for a time somewhat below estimates of its longer-run sustainable level. To a limited degree, such an outcome is envisioned in many participants’ most recent SEP projections. A tight labor market may also work to reverse some of the adverse supply-side developments resulting from the financial crisis. The deep recession and slow recovery likely have held back investment in physical and human capital, restrained the rate of new business formation, prompted discouraged workers to leave the labor force, and eroded the skills of the long-term unemployed.15 Some of these effects might be reversed in a tight labor market, yielding long-term benefits associated with a more productive economy. That said, the quantitative importance of these supply-side mechanisms are difficult to establish, and the relevant research on this point is quite limited.

Of course, taking a gradualist approach is not without april 2015 issue

risks. Proceeding too slowly to tighten policy could have adverse consequences for the attainment of the Committee’s inflation objective over time, especially if it were to undermine the FOMC’s inflation credibility. Inflation could, for example, exhibit nonlinear dynamics in which high levels of unemployment place relatively little downward pressure on inflation, but tight labor markets generate marked upward pressure. If so, a decline in unemployment below its natural rate could cause inflation to quickly rise to an undesirably high level.

Rapid increases in short-term interest rates to arrest such an unwelcome development could, in turn, have adverse effects on financial markets and the broader economy.

Proceeding too cautiously could also have undesirable effects on financial stability.

An environment of prolonged low short-term rates could prompt an excessive buildup in leverage or cause underwriting standards to erode as investors take on risks they cannot measure or manage appropriately in a reach for yield.16 At this point the evidence indicates that such vulnerabilities do not pose a significant threat, but the Committee is carefully monitoring developments 17 in this area. Moreover, in my view, macroprudential regulatory and supervisory tools should serve as our first The ORANGE COUNTY Realtist Magazine

line of defense in addressing these risks.18 Conclusion To conclude, let me emphasize that in determining when to initially increase its target range for the federal funds rate and how to adjust it thereafter, the Committee’s decisions will be data dependent, reflecting evolving judgments concerning the implications of incoming information for the economic outlook. We cannot be certain about the underlying strength of the expansion, the maximum level of employment consistent with price stability, or the longerrun level of interest rates consistent with maximum employment. Policy must adjust as our understanding of these factors changes.

However, if conditions do evolve in the manner that most of my FOMC colleagues and I anticipate, I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis and the balance of risks I have enumerated of moving either too slowly or too quickly.

Nothing about the course of the Committee’s actions is predetermined except the Committee’s commitment to promote our dual mandate of maximum employment and price stability.

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1. For a discussion of the influence of demographics and other factors on the labor force participation rate in recent years, see Stephanie Aaronson, Tomaz Cajner, Bruce Fallick, Felix Galbis-Reig, Christopher Smith, and William Wascher (2014), “Labor Force Participation: Recent Developments and Future Prospects,” Brookings Papers on Economic Activity (Washington: Brookings Institution, Fall). In addition, for evidence that the labor force participation rate is currently unusually low from a cyclical perspective, see Robert E. Hall (2014), “Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis,” in Jonathan Parker and Michael Woodford, eds., NBER Macroeconomics Annual 2014, vol. 29 (Chicago: University of Chicago Press); and Council of Economic Advisers (2014), “The Labor Force Participation Rate since 2007: Causes and Policy Implications (PDF)” (Washington: CEA, July).

2. For recent evidence on the relationship between labor market slack and wages, see Anil Kumar and Pia Orrenius (2014), “A Closer Look at the Phillips Curve Using State Level Data (PDF),” Working Papers 1409 (Dallas: Federal Reserve Bank of Dallas); and Daniel Aaronson and Andrew Jordan (2014), “Understanding the Relationship between Real Wage Growth and Labor Market Conditions,” Chicago Fed Letter No. 327 (Chicago: Federal Reserve Bank of Chicago, October). The price Phillips curve is discussed extensively in the literature; for instance, see Robert J. Gordon (2013), “The Phillips Curve Is Alive and Well: Inflation and the NAIRU during the Slow Recovery,” NBER Working Paper Series 19390 (Cambridge, Mass.: National Bureau of Economic Research, August). In addition, the apparent lack of disinflationary pressure seen during the recent recession is not necessarily a puzzle for the New Keynesian Phillips curve, as shown in Marco Del Negro, Marc P. Giannoni, and Frank Schorfheide (2015), “Inflation in the Great Recession and New Keynesian Models,” American Economic Journal: Macroeconomics, vol. 7 (January), pp. 168-96.

3. For the original exposition of the Taylor rule, see John B. Taylor (1993), “Discretion Versus Policy Rules in Practice,” Carnegie-Rochester Conference Series on Public Policy, vol. 39, pp. 195-214. For a discussion of policy rules in general, see John B. Taylor and John C. Williams (2010), “Simple and Robust Rules for Monetary Policy,” in Benjamin M. Friedman and Michael Woodford, eds., Handbook of Monetary Economics, vol. 3B (San Diego: Elsevier), pp. 829-59.

4. The equilibrium real rate is typically viewed as the level

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of the short-term interest rate, less inflation, estimated to be consistent with maximum employment and stable inflation in the long run, assuming no future disturbances to the economy. Accordingly, the equilibrium real rate is usually thought of as independent of the cyclical disturbances that routinely buffet the economy, on the assumption that the influences of such disturbances on real activity and inflation fade away after a few years. In the aftermath of the financial crisis, however, the U.S. economy has been subject to various adjustment processes that are unusually drawn out by historical standards, such as the ongoing repair of household balance sheets and other persistent headwinds. These atypical processes imply that, in determining the appropriate stance of monetary policy over time, policymakers in the current environment need to take account of slow-moving influences on both aggregate demand and supply that were not important factors during previous tightening episodes. For this reason, it is useful to think of the equilibrium real rate in present circumstances as not only time-varying but also having a predictable element that evolves over the medium term.

5. For example, the Taylor rule is Rt = RR* + πt + 0.5(πt -2) + 0.5Yt, where R denotes the federal funds rate, RR* is the estimated value of the equilibrium real rate, π is the current inflation rate (usually measured using a core consumer price index), and Y is the output gap. The latter can be approximated using Okun’s law, Yt = -2 (Ut - U*) , where U is the unemployment rate and U* is the natural rate of unemployment. If RR* is assumed to equal 2 percent (roughly the average historical value of the real federal funds rate) and U* is assumed to equal 5-1/2 percent, then the Taylor rule would call for the nominal funds rate to be set a bit below 3 percent currently, given that core PCE inflation is now running close to 1-1/4 percent and the unemployment rate is 5.5 percent. But if RR* is instead assumed to equal 0 percent currently (as some statistical models suggest) and U* is assumed to equal 5 percent (an estimate in line with many FOMC participants’ SEP projections), then the rule’s current prescription is less than 1/2 percent.

6. Although the FOMC suspended its asset purchase program last October, the stimulus provided by this type of unconventional monetary policy action depends primarily on the stock of longer-term assets held by the Federal Reserve, not the flow of securities bought. Because the FOMC has held the size of the Federal Reserve’s balance sheet constant since October while continuing to keep the federal funds rate near zero, the overall stance of monetary policy is thus little changed over this period.

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However, the downward pressure on long-term interest rates from the Federal Reserve’s asset holdings should decline over time, particularly after the FOMC suspends its current reinvestment policy, because the average duration of the assets held in the portfolio will be steadily falling and because the relative size of the portfolio to the stock of publicly held debt will be shrinking.

7. If resource utilization was at a normal level and inflation was equal to 2 percent, policymakers would presumably opt to set the real federal funds rate equal to the equilibrium real rate in order to maintain those conditions. Accordingly, if the equilibrium rate is rising over time, the “neutral” setting of monetary policy should be rising in tandem.

8. For example, the estimate of the equilibrium real rate from the Laubach-Williams model for 2014:Q4 is negative 0.16. For information on the model, see Thomas Laubach and John C. Williams (2003), “Measuring the Natural Rate of Interest,” Review of Economics and Statistics, vol. 85 (November), pp.1063-70; updated estimates of the baseline model are available on the Federal Reserve Bank of San Francisco website at www.frbsf.org/economicresearch/economists/john-williams/Laubach_Williams_ updated_estimates.xlsx. Another recent study, however, concludes that the equilibrium real rate is probably in the range of 1 to 2 percent while also emphasizing that estimates in this area are quite imprecise; see James D. Hamilton, Ethan S. Harris, Jan Hatzius, and Kenneth D. West (2015), “The Equilibrium Real Funds Rate: Past, Present, and Future (PDF),” working paper (San Diego: University of California at San Diego, March).

Note that the concept of the equilibrium real rate used in the latter study is explicitly long-run in nature and so excludes the effects of forces that have persistently restrained the pace of the current expansion but are expected to eventually fade away, such as household balance sheet repair; for this reason, the paper’s estimate is higher than the medium-run concept of the equilibrium real rate discussed in the speech.

9. In principle, the three considerations--uncertainty about the value of the equilibrium real federal funds rate, the asymmetric risks associated with the zero lower bound on nominal interest rates, and the potential benefits of allowing the unemployment rate to temporarily undershoot its sustainable longer-run rate--should influence both the timing of the onset of policy normalization and the

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subsequent pace at which that normalization proceeds.

And in fact, I view all three considerations as helping to explain why the FOMC has held the federal funds rate near zero for so long. I also view such considerations as consistent with a likely increase in the target federal funds rate later this year, because such an increase would be part of a broader strategy for only gradually reducing accommodation over time (subject, of course, to adjustments in response to incoming information on real activity, inflation, and other factors).

10. The concept of “secular stagnation” was first coined back in the late 1930s; see Alvin H. Hansen (1938), “The Consequences of Reducing Expenditures,” Proceedings of the Academy of Political Science, vol. 17 (January), pp. 60-72; and Alvin H. Hansen (1939), “Economic Progress and Declining Population Growth,” American Economic Review, vol. 29 (March), pp. 1-15. This possibility, and its applicability to the United States and other developed economies in coming years, has received considerable attention of late; see Robert J. Gordon (2014), “The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections,” NBER Working Paper Series 19895 (Cambridge, Mass.: National Bureau of Economic Research, February); Robert E. Hall (2014), “Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis,” in Jonathan Parker and Michael Woodford, eds., NBER Macroeconomics Annual, vol. 29 (Chicago: University of Chicago Press); and Lawrence H. Summers (2014), “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound,” Business Economics, vol. 49 (April), pp. 65 73. For a more skeptical assessment of the secular stagnation hypothesis, see Hamilton and others, “The Equilibrium Real Funds Rate,” in note 8.

11. A number of studies have shown, using model simulations, that policymakers can improve macroeconomic performance by adjusting the stance of monetary policy more cautiously in response to changes in economic conditions when the economy’s equilibrium real interest rate is uncertain. For a survey of the literature on this issue, see John B. Taylor and John C. Williams (2010), “Simple and Robust Rules for Monetary Policy,” in Benjamin M. Friedman and Michael Woodford, eds., Handbook of Monetary Economics, vol. 3B (San Diego: Elsevier), pp. 829-59.

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NEWS

12. For example, see Klaus Adam and Roberto M. Billi (2007), “Discretionary Monetary Policy and the Zero Lower Bound on Nominal Interest Rates,” Journal of Monetary Economics, vol. 54 (3), 728-52; Taisuke Nakata (2013), “Optimal Fiscal and Monetary Policy with Occasionally Binding Zero Bound Constraints (PDF),” Finance and Economics Discussion Series 2013-40 (Washington: Board of Governors of the Federal Reserve System, April); Taisuke Nakata (2013), “Uncertainty at the Zero Lower Bound (PDF),” Finance and Economics Discussion Series 2013-09 (Washington: Board of Governors of the Federal Reserve System, December 2012); and Charles Evans, Jonas Fisher, Francois Gourio, and Spencer Krane (forthcoming), “Risk Management for Monetary Policy Near the Zero Lower Bound,” Brookings Papers on Economic Activity (Washington: Brookings Institution).

Matter,” a research symposium sponsored by the Federal Reserve Bank of St. Louis, St. Louis, February 7.

17. See Janet L. Yellen (2014), “Semiannual Monetary Policy Report to the Congress,” testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, July 15.

18. See Janet L. Yellen, (2014) “Monetary Policy and Financial Stability,” speech delivered at the 2014 Michel Camdessus Central Banking Lecture, International Monetary Fund, Washington, July 2.

13. See Federal Reserve Bank of New York, Markets Group (2015), Responses to Survey of Primary Dealers (PDF) (New York: FRBNY, January).

14. Of course, low long-term yields in the United States may not reflect investor pessimism about U.S. economic prospects but instead an expectation that weak economic performance abroad may result in persistent upward pressure on the dollar, thereby putting downward pressure on U.S. net exports, employment, inflation, and thus shortterm interest rates. On a closely related issue concerning evidence that investors’ perceptions of the likelihood of high inflation versus low inflation have shifted noticeably in recent months, see Justin Wolfers (2015), “A Prediction Market for Inflation, or Deflation,” The Upshot, New York Times, March 6. This piece relies heavily on work by Yuriy Kitsul and Jonathan H. Wright (2013), “The Economics of Options-Implied Inflation Probability Density Functions,” Journal of Financial Economics, vol. 110 (December), 696-711.

15. For a discussion of these effects, see Dave Reifschneider, William Wascher, and David Wilcox (2015), “Aggregate Supply in the United States: Recent Developments and Implications for the Conduct of Monetary Policy,” IMF Economic Review advance online publication, March 17, doi: 10.1057/imfer.2015.1.

16. Jeremy C. Stein (2013), “Overheating in Credit Markets: Origins, Measurement, and Policy Responses,” speech delivered at “Restoring Household Financial Stability after the Great Recession: Why Household Balance Sheets

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OUR COVER

OUR COVER

Exclusive Q & A with NAREB President

Donnell Spivey On July 19, 1947, twelve African - American real estate professionals formed an organization in Tampa, Florida, out of need to promote and secure the right to equal housing options for all -- irrespective of race, creed or color. Today, the advocacy is known as National Association of Real Estate Brokers, NAREB, with Donnell Spivey as the President.

of NAREB fighting for what we take for granted and enjoy today.

Eric Lawrence Frazier: Can you share your views on your recent publication in the NAREB Newsletter about Selma, the 50th Anniversary of the Bloody Sunday, the Selma to Montgomery march and the Voting Rights Act of 1965?

For 68 years, NAREB has acknowledged successful legal challenges. It has encouraged legislative Donnell Spivey: Yes, we thought we’d mention them initiatives that ensure just, meaningful and affordable and keep it on the forefront for our members. With housing opportunities for all Americans. the celebration of Selma, I was in Atlanta for Martin Luther King’s birthday and I went to Memphis, his In an exclusive interview, The PIN Magazine President death city. I attended numerous events that whole and CEO Eric Lawrence Frazier and Donnell Spivey, week which made me realize the importance of NAREB’s President, discussed the organization, NAREB’s existence back in 1947, as well as today. its growth over the years and his experience as the President of the oldest minority real estate association Eric Lawrence Frazier: NAREB’S slogan is in the country.

“Democracy in Housing”. Is the slogan still as relevant today as it was back in 1964?

Eric Lawrence Frazier: Welcome, Donnell Spivey to our magazine. We appreciate you giving us time for Donnell Spivey: Yes! Even more so today. We this interview. You serve the office of the President need to have access of homeownership to everyone with a great deal of passion and appreciation. Can regardless of color or creed. Minorities are the fastest you reflect on the organization, its long-standing growing segment entering the housing market today. history and fulfillment of the needs of African- We need to have access to credit and people who can American people as related to homeownership? educate on this subject. We need more realtists who can educate the consumer on both these important Donnell Spivey: Thank you for your continued subjects. For NAREB, it means providing education support. As you said, NAREB advocacy is really an to the real estate professionals, realtists, who serve our organization for the African-American community community. “Democracy in Housing” is our primary since 1947. Unfortunately, the sad part is that the real focus to ensure there is equality in homeownership estate industry today do not recognize the history around the country and to all people. and the value of NAREB. They should understand that many of their present opportunities are results

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Eric Lawrence Frazier: Concerning the midwinter conference, please share with us how it went, what your expectations were, and were you able to meet or exceed your expectations for the conference?

Eric Lawrence Frazier: The homeownership rate for Latin Americans is higher than African Americans. What can African Americans do to keep up?

Donnell Spivey: Along with their constantly growing population, Hispanics in some instances surpass the homeownership rate greater than African Americans in the United States. We share some of the same issues and will certainly work together to close that homeownership gap among the Hispanics and African American homeowners. Education and financial literacy is the key to African Americans increasing their homeownership rate.

Eric Lawrence Frazier: Tell us about NAREB’s policy conference.

Donnell Spivey: This past year we put on the SHIBA - State of Housing in Black America and this year we worked closely with the Black Caucus. In September 2014, we focused on solutions, and the solution, as we see it, is education. We need to stress the importance of education and financial literacy. Pamela Jolly, presented at the SHIBA about homeownership, and how to build wealth through homeownership. For all people, especially minorities, wealth is used in many ways, such as to help send their kids to college, and/or to start their own businesses. The policy conference will continue to focus on the rate of homeownership, and African American participation in real estate recovery. april 2015 issue

Donnell Spivey: It was a great inspirational conference, offering a lot of educational classes that our members need, and it was well-attended. We started off with a welcome reception, and the next day, the first event was the prayer practice, which was phenomenal. We also had a presentation from Sandra Thompson, Deputy Director for the Federal Housing Finance Agency. The third day, we had an exciting panel for women only. Teresa Bazemore, Ursula, Janaye Ingram, Executive Director for the National Action Network, served on the panel. The panel was also moderated by our own third Vice President, Lydia Pope. We had a representative from Bank of America talk about business opportunities as well as a representative from Freddie Mac talk about contracts. We gave each industry leader 15 minutes at a table for interactive discussion. Everyone was able to discuss and create networks with the industry leaders. We concluded the event with Willie Jolly and a presentation about professional speaking. Overall, it was a great event.

Eric Lawrence Frazier: On a final note, what are your reflections as NAREB’s President?

Donnell Spivey: It’s my passion to help change the homeownership rate of African Americans. This urged me to get on this ladder and seven years to get to this position. I am blessed with a great team in my real estate office to help manage the office in my absence, and it has been a tremendous blessing serving the organization.

Eric Lawrence Frazier, President and CEO of The Power Is Now, Inc. and the editorial staff of The Power Is Now, Inc. would like to thank NAREB President Spivey for his time and commitment to the organization and for granting this exclusive interview.

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LEADERSHIP SPOTLIGHT

Teresa Smith

Mayor, the City of Orange

T

eresa “Tita” Smith is currently the mayor of the City of Orange. The lifelong resident of the City of Orange has also served as a city council member, won awards and has a proven track record of continuous and active community services.

Early Life and Education Born at St. Joseph Hospital, her family has called the City of Orange as their home for the past 5 generations. She has been married to her husband, Rick, for more than four decades and they have cherished four children: Angela, Luke, Nathan and Patrick; and dote on five grandchildren.

Tita completed her schooling from Holy Family School in Orange. In 1965, she graduated with honors from Mater Dei High School. In 1970, she earned her bachelor’s degree of Arts in Social Science and a Master’s Degree in 1992 from USC.

Career and Social Life About thirty years ago, Tita became an active member in city government and founded the

april 2015 issue

Old Town Preservation Association or OTPA. The association was founded to protect and stop demolition practices of the history and neighborhood.

The Orange Centennial Committee appointed her in 1988 and the East Orange Advisory Committee elected her in 1990. In 1992, she was nominated to serve as the Chairperson on the Planning Commission where she held the post for two years. In 2004, Tita Smith was elected to the Orange City Council. From January 2009 to February 14, 2012, she served as the Mayor proterm.

Tita Smith’s career boasts of a vast experience in diverse community services. She served as the Founding President at the Pitcher Park Community Foundation. She volunteered for 33 years at the Orange International Street Fair, YWCA Advisory Board, All American Street President and Orange Public Library Community Liaison.

Other associations that witnessed her as an active member are the Holiday Hope Committee, the Orange Senior Center Board and a rich array of non-profit fundraising endeavors that were held throughout the City of Orange.

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Neighborhoods of Orange’s aim to preserve open space in the City of Orange and to protect their property rights.

In simple words, the UNO said that Teresa ‘Tita’ Smith was the best candidate for the betterment of the future of Orange.

According to Tita Smith, the victory was not only for her but for the entire wonderful City of Orange. Though a wide number of organizations support her, she values the thousands of voters of Orange the most.

In addition to this, Tita Smith was also the Director of Youth and Young Adult Ministry at the Holy A fiscal conservative, over the years Smith Family Cathedral from 1978 to 1992. has committed strongly towards improving public safety. Her mission is to create high job Awards, Achievements and Re-Election employment availabilities by bringing in job fairs to Orange and supporting all the businesses in the Over these years, she has been recognized twice city to add at least one or two jobs.

by OTPA for her involvement. In 2000, she was awarded the Spirit of Old Towne Award and in Smith has served her two-year term as Mayor 2006, she won the Volunteer of the Year Award. from November 2012 to November 2014 by capturing 58% of the total votes. In November In 2009, she was declared as the winner of the 2014, she was re-elected as Mayor with a clear Commerce Award from the Orange Chamber majority once again. Her term ends in November of Commerce. Also, in 2011, Tita was awarded 2016. the William T. Glassell Award by the Orange Community Historical Society. The OCHS recognized her outstanding work and contribution in protecting and preserving the neighborhoods and history of Orange County.

In October 2014, the United Neighborhoods of Orange declared that after much consideration, the UNO had chosen Tita Smith as the Mayor for the Orange City Council. After a few weeks of careful decision making based on candidate forums, interviews and voting records reviews, Tita Smith once again emerged as a powerful candidate who would strongly support the United 45

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OC REALTIST SPOTLIGHT

OC REALTIST SPOTLIGHT

Steve Frankel S

teve Frankel’s contribution to the real estate world is one of the greatest achievements in marketing history. Realtor with Coldwell Banker in Beverly Hills, Frankel holds the appraisable positions of Number 1 agent in Coldwell Banker Beverly Hills, North Office and Number 7 agent in Southern California. He is the ‘soul’ of real estate marketing.

A resident of the Beverly Hills area, Frankel has proved his mettle as a consummate professional with outstanding marketing talents that have benefitted both sellers and buyers. With decades of experience by his side, the entrepreneur has been termed as one of the “brightest” stars and most successful realtors in the nation.

With a proven track of over $1 billion, Frankel continues in his relentless quest to break records with the highest prices for properties in Beverly Hills, Santa Monica, Beverly Park, Bel Air, the Hollywood Hills, Lower Canyon and the Cheviot Hills. Due to his expertise, accomplishments, dedication and unique perspective, Frankel is consistently sought out by the Wall Street Journal, the Los Angeles Times and other media outlets.

In addition to this, for nearly two decades now, from 1998 to 2014, the realtor has been voted in the elite Top 25 of all Southern California Banker agents. Within the company, he is ranked in the Top 1% of all agents throughout the company.

A maximum number of his past clients return to him for their further real estate transactions.

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Frankel values their trust and appreciates these long term associations with his clients the most.

During the interview, he stated that in his college days, he was once told by a dear friend, “Steve, you shine! But to be successful in business, you need to be like a laser and be focused.” Apparently this phrase became his mantra for success in life.

According to him, being focused in whatever you do will allow you to be the best you can be as that is the way he became the Number One agent in office in 2014.

Despite his escalating fame and celebrity status, Steve Frankel remains down to earth. The most impressive fact about him is that if you contact him, he would himself answer the call. Along with all the marketing and happenings in real estate business, he manages to always answer his phone irrespective to the caller name or identity. And this is what sets Steve Frankel apart - simplicity blended with class.

Steve Frankel believes that the key to be successful is not merely hard work. It means treating your agent community with great respect, always being punctual, provide the other members with benefits and favors and let them give you advantages and favors. Your success within the community largely depends on your outlook and how you create a standard level of camaraderie and mutual trust with your colleagues and in the community.

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POWER AGENT SPOTLIGHT

Steve loves to work with Coldwell Banker.

Currently a Director at the exclusive Coldwell Banker Previews Estate Divisions in Beverly Hills, the realtor states that he values his association throughout the world with his fellow Coldwell Banker agents.

According to him, their real estate companies in New York, under the Coldwell Banker umbrella, provide him with an important link to all the ongoing events in the real estate market. This is why Coldwell Banker International in Beverly Hills is very vital to him. The company reflects his aspirations and personality. Coldwell Banker International, as a whole, has emerged as a strong and stable family. From information, assistance, listings to their pockets, this great group believes in sharing.

Steve Frankel is a proven realtor due to his top performance in the market area. However, the Number One agent said that this was actually his second choice in career. He earned his degree from the New York University. Following this, Steve worked on Wall Street. Though he enjoyed his job, it soon came to his realization that it was not the perfect fit for him. At this point in time, he decided to move out of New York City. Nearly 25 years ago, the NYU graduate relocated to Los Angeles and so his ascent into the world of real estate began.

Steve Frankel considers himself lucky to have achieved stable success in a short span of time.

A career as a real estate agent demands a wide background. Frankel graduated from the New York University, lived in New York City during his college days, worked on Wall Street and then moved to Los Angeles. All these aspects have provided him an in-depth knowledge and considerable experience competent enough to work along highly intelligent and hugely successful people in the luxury markets of Beverly Hills, Bel Air and Santa Monica. This is why he

april 2015 issue

considers his second choice as a blessing and an important asset in his outstanding success.

To Steve Frankel, the phrase “the power is now� is significant of everything he is about. It relates to seizing the right moment and making certain whatever task you may do, it is profound.

You hold intelligence, honor and integrity in you. Every morning you sit and start your job with the power is now within you. To become a successful, Frankel advises that it is essential to recognize your opportunities and know what you are projecting. No matter how influential or powerful a company you may work with, we all stand alone as an individual and represent our own business. As a realtor you must understand what you work for, what you project, who you are attracting, how you could be of assistance to a client and most important, what you are best. It matters the least which is a career option. The real deal is to master your skills and services to the best of your abilities. Others would benefit, you would be applauded and your talents would come to the forefront.

Steve Frankel, a realtor, a futurist, a successful businessman and a great person has proven himself as an exemplary figure not only to realtors but to anyone who is willing to succeed. With his expertise, great personality and powerful aura, the enthusiasm and intelligence he portrays is infectious. 3

This article also appears on our sister magazine, TPIN Magazine, at www.thepowerisnow.com

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POLITICS

PENDING LEGISLATIONS AFFECTING FANNIE MAE, FREDDIE MAC AND THE REAL ESTATE MARKET

R

ecently, a total of six federal agencies took up new rules which stated that the mortgage bankers were to retain a specific percent on each loan they give. It was said to be a fresh and more relaxed approach to the past loan-providing methods.

According to the new stance, if a holder is not able to pay 5% of the total securities on mortgage, then 20% payment would be eliminated. Debtors would be carrying a higher rate of debt on their respective incomes as compared to earlier loans. However, prospective homebuyers may consider this as a piece of good fortune.

The new rules and relaxed mortgages are working in favor of those looking forward to obtaining a loan. This is good news for employees who may be thinking of relocating to newer localities closer to their job locations. This offer provides high talent mobility. It was reported by the Wall Street Journal that according to Mel Watts, Director of the Federal Housing Finance Agency, the companies Fannie Mae and Freddie Mac plan to offer a few loans with payments as low as 3%.

A mutual understanding was also achieved with the creditors on specifying which kinds of errors would consequently lead to penalties after they have been

april 2015 issue

issued. This would, in turn, bring down the restraints and relax the procedure of acquiring a loan for debtors who have a relatively weak or poor credit.

Mortgage bankers and real estate leaders are tensed and have consistently raised their voice against the new 20% lowering, by bringing into notice the deficiency it would lead to obtaining of mortgage finance options for the debtors of low and middle income section. The new rules have been brought in just after the real estate markets highlighted the numerous fissures and weak points.

Though Fannie Mae’s shares had neared to a two times level in the beginning of 2014, it later fell by almost half. By the end of 2014, the Obama administration said that Fannie Mae and Freddie Mac would be released from the status they held as wards of the state. The Federal Housing Finance Agency is Fannie and Freddie’s conservator. The FHFA was welcomed to discuss the end of its conservatorship.

Moving on to 2015, in February 13th, Fannie Mae reportedly made remarkable progress. The level went up to almost 15% with the trading volumes rocketing to 30 million. The next trading day was on February 17, which witnessed an even higher price rise of 20%, summing up to the previous 15%. Also, the trading volumes shot up to 52 million.

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POLITICS

Some speculation arose that the Greenberg Trade or the Fannie Mae market activity was because of some unknown hedge fund managers intending to purchase Fannie Mae. According to them, it would be beneficial to the AIG trial that would have unknown legal consequences of the Fannie Mae litigation which is pending. However, according to facts and investing evidence, there would be zero impact on the pending Fannie Mae litigation. Due to the Treasury bail, the Federal Housing Agency caused to issue warrants to Treasury. The warrants had equaled 79.9% of the outstanding common shares of Fannie Mae. The current scenario with Fannie and Freddie: the two companies’ holders are aggravated that their profit distributions have been changed by the Treasury.

It means that they would never be paid back as their money would be going as dividends to the Treasury. For the real estate holders, there is some news they could certainly look forward to this year. In the latest March 2015 issue of Economic Housing Market Outlook, released by Freddie Mae, approximately 40% of the full year’s home sales would be taking place in the approaching four months.

Len Keifer, Deputy Chief Economic with Freddie Mac was quoted as saying that March would initiate the season of spring home buying. He also stated that the next few months would assist economists in determining whether the current year, would be an advantage or disadvantage to the increasing housing business and markets.

However, there is an overall good feeling. This year would most probably prove as the best and most beneficial for initializing a number of new constructions of home and increase in home sales.

The last great outcome was seen in the 2007, when the total home sales of approximately 5.8 million was calculated.

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Here are the reasons why Freddie Mac is optimistic: 1. The Rate of Affordability: A comparatively higher rate of affordability is the major reason. This rate has increased in more than 80% of the U.S. metro markets. The data was estimated on house interest pricings, interest ratings and incomes.

2. Improvement in Labor Markets: A great number of jobs have been created during the last year. Almost 3.4 million unemployed people were provided jobs. Due to this factor, a tightening might be experienced in the job market, thus, indirectly leading to higher wages and incomes.

3. Increasing Rental Rates: Since the rents are continuously on the rise, many are finding it more logical to purchase a house with the current rating.

Fannie Mae would be providing fresher and greener benefits to the real estate sector: • The company would be reducing the interest rates on acquisition, refinance and supplement loans. Basis points - 10 would be given to multi-family builders if their estates pass the programs of LEED, Enterprise Green Communities or Energy Star.

• If a multi-family building meets the requirements of green certificates, they would be given low interest rates.

• All in all, an estate owner would be able to save a total of $95,000 for $10 million and a time frame of 30 years.

• In accordance to a study by a U.S. Department of Energy, life is easier, healthier more comfortable and budget friendly if built with green standards. They are reported to take in 11% lesser water, 25% lesser energy and the maintenance costs would be 19% lower.

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Are Interest Rates

Goi ng

INTEREST RATES

Up

FINANCE

or staying low ?

I

n late 2014, it was estimated that interest rates would eventually rise.

But, like each year, the forecast was once again wrong.

Interest rates can typically be referred to as the periodical amount charged by a creditor to a debtor in exchange for the use of assets or money. Mainly, interest rates are scheduled as per annum, thus termed as annual percentage rate or APR. For instance, consider the following example: • If a loan is held worth $2000, • The interest on it is 5%, • The time period which specifies the payable interest is every 1 year, • Then, the interest received would be $100 on an annual basis.

Though the interest percent usually remains the same, the charges that are paid or received would alter as the total balance or debt changes.

If the payment of a portion of principal is made monthly, then the interest to be paid would fall, though the rate would not change. Interest rates are easy to calculate.

april 2015 issue

The steps required in the estimation are explained below: The important terms are TRIP :

T Time period that has been specified; the time may be either in years, months or days or any two or all three.

R Rate

I Annual Interest Rate

P Principal, the total amount provided by the creditor to the borrower

According to the formula of Simple Interest (SI):

Simple Interest = P x I x T. If $3,000 have been borrowed on a yearly interest of 7% and for a time period of 9 months, then calculating, the interest owed by the debtor would be approximately $158, (3000 x 6% x 8/12), where 12 is the total months in one year.

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FINANCE

The current scenario depicts that the interest rates would be staying low for some time. The time has been predicted to be in years, that is, until 2020. One cannot help but wonder as to why the interest rates would stay so low. Here are a few justifications that can assist you in understanding the logic behind the extended time period:

cash in case of accidents or emergencies. While these requirements assist in keeping the financial system strong, the banks are likely to maintain low interest rates in the approaching years in order to stimulate the financial economy.

It is logical and wise to consider that these exceptionally low rates also have a time frame.

What to do when this time eventually lapses and 1. A Continued Weak Economy brings us higher interest rates? Fortunately, there are ways to be ready to face those years by making With a sluggish progress, the economy has been strong and safe decisions: disappointing from many angles. With zero scope for any improvement, according to market • Prefer shorter schedules rather than high forecast, the ongoing interest rates would continue yields. It is better to select CDs that have their historical trend for many years to come. lower yields and small terms.

The Great Recession left back a huge negative • What you may lose in a yield, you gain impact on business relations and households, in liquidity. Therefore, stay liquid for thus affecting the common man’s freedom in convenience and flexibility. spending and investments. Moreover, mortgages • Choose CDs that provide you the freedom are tough to come by for the potential buyers. to adjust the rates. New CDs have been Students are burdened by heavy debts which introduced and the rates can be adjusted once indirectly hinders them from further purchasing or twice by the customers themselves to keep their own homes. In addition to all these factors, up with the increasing rate environments. The there are also housing shortages which has main aspect of this feature is that the maturity led to a tight and limited supply of residents. of the CD remains the same. The disadvantage of adjustable rate CDs is that the return rate is 2. Low Potential: below that of a usual CD. The economy has a deficient potential as compared to the previous years. This means the interest rates would remain low because of the weaker economic potential.

3. Bank Requirements: Post the huge 2008 crash, nowadays banks are expected to secure a larger portion of amount in

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FINANCE

Investment Strategies F

inancial wisdom dictates that one should start investing early and do so on a regular basis. With an uncertain future, it is always recommendable to stay ahead of the work and make some wise decisions with regards to securing your future. With so many “too sweet to believe investment stories”, it is usually recommendable to be keen while deciding on the kind of portfolios to invest in. There are fake investments advisers who can ruin your fortune in the blink of an eye, so be on the lookout. With the current stability and instability of the U.S. economy, securing your future with solid investments will separate you from a crowd of many people who live by the paycheck and their generations who have had to contend with the same fate. The baseline is to take responsibility, learn and keep track of your portfolio to make sure it is yielding expected results.

There are different investment strategies that would work towards securing your future. While many Americans try to invest in short-term strategies, the fact remains that such plans have no continuity and could cost an arm and a leg. Since the 2008-2009 economic crisis, which emanated from large debt and striking expenditure, the U.S. economy has been struggling to stabilize.

Investment experts have taken note of this scenario and have shared strategies for weathering this economic storm.

A great strategy while investing is to invest in only what you fully understand. President of Lawson Kroeker Investment Management in Omaha, Thomas Sudyka, Jr., states that failure to understand your investment portfolio will lead to poor decision-making. The poor decisionmaking results from inability to understand any information regarding the business you invest Balance is crucial when it comes to investing. which increasing chances of failure.

According to Colton Dillion, Chief Innovation Officer of Acorns, an online investment company, early investment is important. He says, “Investors who start early, practice patience and stick to a long term investing strategy often see the best returns and financial success.” One important strategy to factor in

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FINANCE

is that the length of investment determines the potential of your finances to grow. Many youths ignore investing thinking it is for the aged, but the fact remains that the earlier one starts investing, the better the potential of having a secured future.

monitor your spending and try reducing on it and diverting the income spent on such expenses to investment. This strategy works great in the case of wants. While needs may not be easily avoided, the income you spend on wants can be converted into investments with the right discipline. If Diversification is crucial when it comes to something is not a necessity, then focus on using investments. The old proverbial saying states it as an investment cash source. that one should not avoid putting all eggs in one basket. This means an investor should not risk Investments do not yield returns in a fortnight. everything on one endeavor. With a diversified Some may take years before you see the results. If investment portfolio, you will always have a your investment is not working, focus on making fallback position in case one fails. critical adjustments rather that full overhaul. You cannot time the market for an opportune moment, Many people struggle to separate their emotional but focus on making small changes day in and day involvement from their investment objectives. out to achieve the expected results. Investment These two do not work together and you may be is done with the future in mind. You must have set up for failure if you allow your emotions to an open mind, be aggressive and monitor your take center stage while making your investment investments to achieve favorable results and decisions. New York City’s HSW Advisors avoid economic shocks. managing director, Kenneth Hoffman, says that separating emotions from the business objectives betters the overall business results. Experts advise that to succeed in investing in the U.S., one needs an open mind that is receptive to objective investments.

A unique strategy that many acknowledge works when it comes to investing is separating cash reserves from investments. It is important to make sure that you have ready cash set aside which protects you from siphoning from your investment. If you need liquid cash and end up selling your investments, then you may incur losses, which you would otherwise have saved with a cash reserve. Investment should be viewed in the long term and any temptation to cash on it must be avoided for better returns. Additionally,

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FINANCE

QUICK STEPS TO CREATING AN INVESTMENT PORTFOLIO

periodically because factors such as market movement, risk tolerance and your financial situation can change.

1. Identification of personal asset allocation 4. Strategic rebalancing This is determining one’s financial condition and ascertaining investment objectives.

Consider amount of capital you have to invest, your age, future capital needs and time available for growing investments. At this step, risk tolerance and personality are important considerations because they determine the kind of investment you settle on.

2. Achievement of Set portfolio

Once you have identified the portfolio you want to invest in, even if you have several options, subdivide your capital with the different portfolios. You need to consider both long-term and short-term goals.

3. Portfolio assessment

You need to rebalance your portfolio weightings. You need to keep reassessing it

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After reassessment, you need to adjust various securities to make sure that they match with the new portfolio state. Consider tax effects while adjusting your portfolio.

While creating your portfolio, you need to avoid unnecessary costs. If you are investing in a mutual fund, you may realize that a fund manager is an unnecessary expense. Diversification is important while creating a portfolio. You are able to lower the risk through this move. Examples of investment portfolios include, but not limited to, stocks, bonds, sovereign funds, and mutual funds, among many others. Before venturing out and starting any investments, you need to do background study and determine the risk factors, possible yields and effort required to put it into action. With the right investment strategies, you will have a secured future.

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As you Venture out into the World of Real Estate

We can help you put the pieces together and Navigate you into Home Ownership

Making Clients for Life 3739 6th Street, Riverside, CA 92501 Office: (951) 686-5261 Fax: (951) 686-5264 www.fraziergroup realty.com

Frazier Group Realty is the right place. Our Navigators are available to give you personalized service and answer any questions you may have. You can call, email or visit us and we will be there ready to help you every step of the way. Whether you are a first time home buyer or an experienced real estate investor, here at Frazier Group Realty you gain useful information about how to choose the "right" property, and everything involved in making an informed decision in today's real estate market.

TECHNOLOGY

Top Five Apps

to Make Tax Time Less Stressful

T

ax time is upon us and so is the stress. This finances to either plan a vacation or be is an entire year in the making. You may more of a Scrooge with your budget. This have a portfolio of receipts, organized by app is downloadable from the App Store, month. You may have all your receipts scanned Google Play Store and Android for Amazon. and classified by expense category. Or like most of the population, you may either have a 2. Shoeboxed – This is an online receipt shoebox filled with receipts or several manila management system that also features document-sized envelopes bursting with receipts. expense reports generation, mileage tracking, Whichever category your receipt-filing skills fall tax preparation and even a virtual Rolodex. under, tax time is never fun.

Shoeboxed requires a membership, which is free-for-life, and it provides 5 document Thankfully, technology has advanced so that we scans per month, unlimited online storage can simply download apps to create a modicum of and a mobile app that lets you track your organization in our finances. These top five apps mileage and receipts. For its tax preparation are readily downloaded onto your smartphone forte, it boasts of scanned receipt images or tablet, and they are usually free to install. that are accepted by the IRS. This app is available for iPhone, iPad and Android.

1. TaxCaster – This is presented by Intuit TurboTax as an app that can help you estimate 3. IDonatedIt – IDonatedIt declares itself how much, if any, refund you could receive. It the first app that tracks non-cash charitable can give you an estimate of any probable figure donations. Non-cash donations refer to those you might have to pay the IRS. Once you bags of used clothing you donated to charity, have received its estimated (not guaranteed) those boxes of used toys your children outgrew amount, you may have to reorganize your that you dropped off a donation facility.

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TECHNOLOGY

While these were given out of the goodness of our hearts, they are worth a certain value during tax season. This app tracks what you donated, when it was donated, to whom it was donated and the fair market value of all the items donated. Their recording system meets the IRS compliance requirements. IDonatedIt is only available through the App Store.

simply snap a photo of your W-2 using your smartphone and it will automatically file the correct taxes for you. How simple is that?

You do not need to comprehend taxes, the app claims to keep your data secure and generate your maximum guaranteed refund. TurboTax Mobile App is available for Android and iOS. One of these five apps should make tax time a little less stressful for us. These apps are typically free to install and use, however, some of them require payment for membership or payment upon having your taxes filed on your behalf.

4. Expensify – This app is a genius with expense reports creation.

It simplifies expense reporting for companies by factoring in trips, mileage, time logged, receipt management and direct invoice billing to customers. Expensify is available for iOS, Blackberry, Android and With some organization and a few swipes, you Windows Phone. have just filed your taxes. Life could not be less stressful.

5. TurboTax Mobile App – Technology has broken through financial barriers. Using TurboTax Mobile App enables you to

The Power Is Now, Inc. is in search of talented, professional WRITERS and GRAPHIC ARTISTS. Please get in touch with our Managing Editor, Ross Dickens, at:

ross.dickens@thepowerisnow.com Be a part of our wonderful team!

Our board of directors

Successs Money

SECOND VICE PRESIDENT success.money@ocrealtist.org 800-790-0941 ext. 737

Eric Lawrence Frazier PRESIDENT

Kym Thompson

DIRECTOR AND ASSISTANT TO THE PRESIDENT kym.thompson@ocrealtist.org 714-293-2098

Christina Kimble

Ivery Summers

R. Ann Ellis Hall

FIRST VICE PRESIDENT ivery.sells@verizon.net 310-920-3455

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THIRD VICE PRESIDENT christina.kimble@ocrealtist.org 800-790-0941 ext. 705

SECRETARY ann.annellis@gmail.com 626-864-4127

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Edilma Friesen

EXECUTIVE VICE PRESIDENT Edilman.Friesen@ocrealtist.org 949-209-7708 657-900-2066

La Toya James

VICE PRESIDENT OF AFFILIATE latoyajamesrealestate@gmail.com 323-767-6933

Mary Ann Epstein

VICE PRESIDENT OF TECHNOLOGY maryann@realpro.la 909-539-7196

Felsia Dailey

DIRECTOR OF MARKETING fdailey@ocregister.com 714-856-1743

For information about membership and upcoming events please go to www.ocrealtist.org

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