Monthly Archives: February 2014

San Diego home sales at three-year low

The slowdown in San Diego County’s housing market continued in January, as sales dropped to their lowest levels in three years.

Prices also dipped last month, with the median falling $15,000 from December to $405,000, real estate tracker DataQuick reported Wednesday. Despite the drop, the January median is still up 15.7 percent from January 2012’s median $350,000.

“Two of the bigger questions hanging over the housing market right now are, ‘How much pent-up demand is left out there?’ and, ‘Will inventory skyrocket this year as more owners take advantage of the price run-up?’” DataQuick president John Walsh said in a statement. “Unfortunately, we’ll probably have to wait until spring for the answers. When it comes to statistical trends, January and February are atypical months that haven’t proven to be predictive over the years.”

Last month, there were 2,338 transactions in the county, down from 2,717 in January 2013, and the lowest amount since 2,248 properties changed hands in January 2011. The first month of each year is generally unremarkable when it comes to the housing market because it reflects deals struck during the holiday season, those in the industry say.

“January is typically a slower month,” said Denny Oh, a Realtor with Pacific Sotheby’s International Realty, who specializes in downtown properties. “I think there’s a number of factors with the holidays, the new year, traveling and then starting to look at taxes, and on top of that, you’ve got the uncertainties to where rates are going.”

January’s 15.7 percent year-over-year appreciation is a slight uptick from the 14.8 percent gains seen from December 2013 to December 2012. But Mark Goldman, a loan officer and real estate lecturer at San Diego State University, said the market is generally slowing down to a 3 percent to 4 percent annual appreciation. In June 2013, prices reached a peak 24.1 percent in year-over-year gains.

Walsh said seasonality aside, low supply, a lack of mortgage availability, rising interest rates and home prices are contributing to the slowdown.

In early January, the average 30-year-fixed rate rose to 4.53 percent, more than a percentage point above the 3.34 percent available in January 2012, Freddie Mac reports.

The San Diego region also continues to see low supply. In January, there were 5,844 active listings, a 1,702 gain on January 2013, but still down from the 11,915 seen in January 2011, the San Diego Association of Realtors reports.

The median price for a new home fell to $622,000 in January, when 120 were sold. It reached a record $699,000 in December as large projects across the county closed by the year end. In December, there were 3,099 total transactions in San Diego County, including 284 new homes.

The lack of home sales in January wasn’t limited to San Diego, but spread across Southern California, with slowing in six counties, DataQuick says. Los Angeles home values are seeing 20.6 percent year-over-year gains to $410,000, while those in Orange County rose 19.6 percent to a median $550,000 in January.

Jonathan Horn / UT San Diego / February 12, 2014
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Home Prices Rose in Fewer U.S. Markets in Fourth Quarter

Prices for single-family homes rose in 73 percent of U.S. cities in the fourth quarter, fewer than in the previous three months, as surging values in the past two years started to reduce affordability.

The median transaction price for an existing home climbed from a year earlier in 119 of 164 metropolitan areas measured, the National Association of Realtors said in a report today. In the third quarter, 88 percent of markets had increases.

While tight inventories and improving employment are bolstering the housing recovery, home-price gains are poised to decelerate as an increase in mortgage rates from record lows cuts into affordability. Values have been rising faster than incomes, particularly in the West, the Realtors group said.

“The housing market is still on a recovery path and that recovery is not done,” Michael Hanson, a senior U.S. economist at Bank of America Corp. in New York, said in an interview before today’s release. “At the same time, the pace of those increases should slow.”

The nationwide median price for an existing single-family home rose 10.1 percent in the fourth quarter from a year earlier to $196,900, the Realtors group said. The gain was 12.5 percent in the third quarter.

Biggest Jumps

The best-performing areas were Atlanta and Sacramento, California, where prices jumped 33 percent and 30 percent, respectively. They were followed by Las Vegas and Riverside, California, with more than 26 percent gains.

The areas with the biggest declines included Elmira, New York, where prices fell 12 percent from a year earlier. Following was the Champaign-Urbana area of Illinois, with an 11 percent drop.

About 26 percent of areas had double-digit gains in prices, down from 33 percent in the third quarter. Areas that had price declines after increases in the previous three months include Cleveland; Spokane, Washington; Newark, New Jersey; and El Paso, Texas.

The Realtors group’s affordability index — a gauge of median prices, family incomes and mortgage rates — fell to 175.8 in 2013 from a record high 196.6 in 2012. A measure of 100 means that the median-income household has enough income to qualify for a median-priced existing home. The higher the index, the stronger the household purchasing power.

Equity Gains

“The vast majority of homeowners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending,” Lawrence Yun, chief economist of the Realtors group, said in the report. “At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago. This is beginning to hamper housing affordability.”

The most expensive housing market in the fourth quarter was San Jose, California, where the median single-family price was $775,000. It was followed by San Francisco; Honolulu; Anaheim-Santa Ana in California; and San Diego. The lowest-cost metropolitan area was Toledo, Ohio, with a median single-family price of $80,500, followed by Rockford, Illinois; Cumberland, Maryland; and Elmira, New York.

Prashant Gopal / Bloomberg.com / February 11, 2014
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U.S. becoming a ‘renter nation’ says Olefson

To many, the American dream always included the requisite house, white picket fence and 2.5 kids. While that goal is all still attainable, you may soon have to live in someone else’s house with someone else’s fence. According to real estate attorney and author Shari Olefson we may soon become a nation of renters with Wall Street playing landlord.

The culprit, at least in part, is the expiration of the Mortgage Debt Forgiveness Relief Act. This piece of legislation, one that expired at the end of 2013, made it easier for owners with underwater mortgages to short sell their homes without having to pay income tax on the chunk of cash the bank forgave. In short, its expiration might make it worth your while to go into foreclosure instead of short selling.

Olefson says this potential surge in foreclosures would be most common in places that are still recovering from the housing bubble. “These also happen to be the states where you’ve got the big companies, the Blackstones and the big funds, investing in rentals. So a lot of these properties will end up as rentals,” she says.

And there lies the rub. As Olefson points out, investing in “scattered residential rentals” is very different than buying a high rise. “It’s not like having an apartment building,” she notes, “where all the kitchens are exactly the same, and they’re the same age and you have an onsite manager…You’re gonna see hundreds of complaints from renters in those homes finding hidden problems they weren’t aware of, or multiple calls to management and not having a response.”

From there she worries these big companies will dump investments they aren’t pleased with, flooding the market in areas where the home recovery is tenuous at best.

Adding insult to injury, these investors are driving prices higher. Olefson argues, “prices of homes in an area should be based on the area’s income but investors are bidding based on the rent they think they can generate and we know rents are going up much faster than incomes. So the homes are becoming less affordable for folks who want to buy making renting just a much more viable option.”

So where does it go from here? Olefson worries that Washington could get involved. Specifically, that lobbying efforts for renter benefits will succeed, making rentals an even better option than ownership, or in other words, making the U.S. a Renter Nation.

Kevin Chupka / Yahoo Finance / February 6, 2014
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$1M home sales at 6-year high

San Diego County homebuyers last year purchased the most $1 million-plus properties since 2007.

In 2013, 3,519 properties worth $1 million or more sold in the county, a 48.7 percent jump from 2012, real estate tracker DataQuick reported Thursday. It was the highest number of seven-figure homes sold since 3,888 changed hands in 2007. In the summer, San Diego median home values saw 24 percent year-over-year appreciation. That and higher demand pushed many recovering home values back into the $1 million range, DataQuick reports.

The county’s biggest sale last year was a Del Mar home at 1936 Ocean Front, which went for $18.75 million, public records show. La Jolla’s 92037 ZIP code recorded the county’s most $1 million-plus sales in 2013 with 398, ranking it third in the state.

“La Jolla naturally keeps its appreciation stronger than North County,” said Michelle Silverman, a La Jolla-based Realtor with Berkshire Hathaway Home Services. “When you live in La Jolla, you get a view of the water. That’s not going to go away. They are not going to be building new homes in La Jolla.”

La Jolla’s biggest sale last year was an estate at 9736 La Jolla Farms Rd. that went for $18.5 million. That property was originally listed in 2012 for $27.3 million.

Silverman said nine out of the top 10 sold in La Jolla last year were all-cash buys. Those types of deals fueled the market’s jump, she said.

“Everybody was holding onto their cash until they decided it was time to move,” Silverman said.

Most expensive properties sold

Rank Sale Price Address City/Neighborhood Zip code
1 $18,750,000 1936 Ocean Front Del Mar 92014
2 $18,500,000 9736 La Jolla Farms Rd. La Jolla 92037
3 $13,800,000 308 Vista de la Playa La Jolla 92037
4 $11,000,000 8562 El Paseo Grande La Jolla 92037
5 $8,825,000 2337 Calle Chiquita La Jolla 92037
6 $8,550,000 1175 Muirlands Dr. La Jolla 92037
7 $8,300,000 919 Ocean Blvd. Coronado 92118
8 $8,200,000 464 Prospect St. #301 La Jolla 92037
9 $7,500,000 6221 Mimulus Rancho Santa Fe 92091
10 $7,000,000 4 Buccaneer Way Coronado 92118

 

The county’s record number of $1 million-plus homes sold in a year came in 2005, with 5,671 transactions.

Statewide, the number of $1 million-plus home sales hit their highest level in six years with 39,175. The biggest sale came in Malibu, with an estate that sold for $74.5 million in January 2013. The 1993 home has 15,355 square feet, eight bedrooms and 14 bathrooms. The largest property sold had 25,447 square feet and was purchased for $2.25 million in Indian Wells, near Palm Springs.

DataQuick president John Walsh said in a statement that the luxury market reacts to unique economic factors.

“Things like job growth, mortgage interest rates and migration patterns do not play the same role as IPOs, stock market performance or how well one type of investment does compared to another, and where one wants to park one’s excess money,” Walsh said.

Del Mar was the only other county ZIP code to rank in the top 25, with 310 sales above $1 million. Manhattan Beach had the most last year, with 439 sales above $1 million.

In California, there are 8.8 million homes and condos, 270,590 of which are assessed at more than $1 million, DataQuick reports. The real-estate tracker said last year there were 6,440 sales where the price was unavailable, but it could be determined that the deal exceeded more than $1 million because of the size of the mortgage.

Bloomberg News contributed to this report.

Jonathan Horn / UT San Diego / January 30, 2014
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Dec. 2013 pending and distressed home sales

Pending home sales continued to decline in December, indicating a slow start for 2014 California housing market, C.A.R. reports

LOS ANGELES (Jan. 24) – A perfect storm of a shortage of available homes for sale, rising interest rates, and higher home prices kept prospective home buyers on the sidelines in December, pushing California pending home sales lower for the second straight month. Meanwhile, equity sales continue to make up more than four of every five home sales, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales data:

• California pending home sales fell in December, with the Pending Home Sales Index (PHSI)* dropping 25.2 percent in December to reach 68.8, down from a revised index of 92 in November, based on signed contracts.  The monthly decline was the second straight double-digit drop in the PHSI.  Pending sales were down 16.8 percent from the revised 82.8 index recorded in December 2012.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

• After reaching a recent high in November, the share of equity sales – or non-distressed property sales – shrank slightly in December, but still marked the sixth straight month that equity sales have been more than 80 percent of total sales. The share of equity sales in December dipped to 84.3 percent, down from 86.4 percent in November.  Equity sales made up 63.4 percent of sales in December 2012.

• Conversely, the combined share of all distressed property sales rose in December, when lenders tend to push through more distressed properties to get them off their books by year’s end.  The share of distressed property sales increased from 13.6 percent in November to 15.7 percent in December.  Distressed sales were down by nearly two-thirds from a year ago, when the share was 35.4 percent.  Twenty-six of the 38 reported counties showed a month-to-month increase in the share of distressed sales, with San Diego County having the smallest share at 5 percent.

• Of the distressed properties, the share of short sales was 10.1 percent in December, up from 8.8 percent in November.  December’s figure was nearly half of the 24.8 percent recorded in December 2012 and remains at the lowest levels since January 2009.

• The share of REO sales inched up in December to 5 percent from 4.4 percent in November.  It was the fifth straight month that REOs made up 5 percent or less of total sales.  REOs made up only 11.4 percent of all sales in December 2012.

• With extremely low levels of active listings, housing inventory tightened in December and remains extremely constrained.  The Unsold Inventory Index for equity sales fell from 3.6 months in November to 3 months in December.  The supply of REOs dropped from 3.4 months in November to 2.8 months in December, and the supply of short sales fell from 4.2 months in November to 3.2 months in December.

Charts:

• Pending sales compared with closed sales.  • Historical trend in the share of equity sales compared with distressed sales. • Closed housing sales in December by sales type (equity, distressed). • Housing supply of REOs, short sales, and equity sales in December. • A historical trend of REO, short sale, and equity sales housing supply. • Year-to-year change in sales by property type.

Share of Distressed Sales to Total Sales (Single-family)

Type of Sale Dec. 2013 Nov. 2013 Dec. 2012
Equity Sales 84.3% 86.4% 63.4%
Total Distressed Sales 15.7% 13.6% 36.6%
     REOs 5.0% 4.4% 11.4%
     Short Sales 10.1% 8.8% 24.8%
     Other Distressed Sales (Not Specified) 0.5% 0.5% 0.4%
All Sales 100.0% 100.0% 100.0%

Single-family Distressed Home Sales by Select Counties (Percent of total sales)

County Dec-13 Nov-13 Dec-12
Alameda 9% 6% 26%
Amador 35% 20% 37%
Butte 15% 9% 28%
Contra Costa 7% 6% 29%
El Dorado 19% 13% 37%
Fresno 24% 26% 52%
Humboldt 14% 18% 29%
Kern 19% 18% 39%
Kings 28% 31% 49%
Lake 34% 25% 45%
Los Angeles 18% 14% 35%
Madera 15% 10% 74%
Marin 8% 6% 20%
Mendocino 27% 26% 39%
Merced 22% 21% 51%
Monterey 20% 14% 45%
Napa 10% 10% 39%
Orange 10% 7% 30%
Placer 13% 13% 47%
Riverside 17% 17% 48%
Sacramento 19% 16% 51%
San Benito 15% 16% 50%
San Bernardino 22% 20% 44%
San Diego 5% 5% 13%
San Joaquin 23% 21% 53%
San Luis Obispo 7% 6% 26%
San Mateo 6% 5% 20%
Santa Clara 7% 4% 19%
Santa Cruz 15% 9% 34%
Siskiyou 24% 22% 44%
Solano 22% 29% 58%
Sonoma 15% 10% 37%
Stanislaus 22% 23% 53%
Sutter 28% 28% NA
Tehama NA NA 50%
Tulare 26% 20% 39%
Yolo 18% 14% 44%
Yuba 33% 25% NA
California 16% 14% 37%

NA = not available

*Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS ® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008.

Leading the way… ® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

California Association of Realtors® / January 24, 2014
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Remember The Housing Market ‘Shadow Inventory’ That Had Everyone Completely Freaked Out?

After the U.S. housing market crashed and the economy spiraled into financial crisis, there were a lot of economists and analysts who warned that the massive “shadow inventory” of homes would keep prices depressed for an extended period of time.

 

The “shadow inventory” consists of homes that were seriously delinquent or foreclosed on, which banks would keep off of the market for fear that the additional supply would cause prices to crumble further. Housing market skeptics argued that banks would return these homes to the market at a pace that would prevent prices from going anywhere.

Well, just a few years after the bottom, U.S. home prices are up around 23% since the trough.

And this has come as the shadow inventory has tumbled (see chart).

“As of December 2013, we estimate that there were about 2.3mn housing units in shadow inventory, down from 2.9mn units in December 2012,” wrote Barclays Michael Gapen in his 2014-15 US Housing Market Outlook.

The direction of these numbers can only be interpreted as good news.

“Falling shadow inventory, along with lean inventories of existing and new homes, supports a better pricing and building environment,” continued Gapen. “In other words, despite remaining elevated relative to any previous historical episode, excess housing inventory now casts a smaller shadow over the housing market and our forecast calls for that shadow to diminish further.”

As for the bad news, the shadow inventory is still around four times bigger than normal levels.

“Shadow inventory fluctuated a bit below 500,000 units in the years immediately prior to the recession, suggesting that about 1.9mn units need to be processed to normalize the housing market,” added Gapen. “However, we do not see this as happening over the forecast horizon and, instead, we look for the pace of decline in shadow inventory to slow somewhat in the years ahead. A reduced pace of decline in shadow inventory is, in part, tied to our view that many of the higher-quality properties have likely already been transacted and we see demand from institutional investors as slowing in the years ahead.”

Gapen’s shadow inventory estimate consists of foreclosed homes and mortgages delinquent for 90 days or more.

Based on CoreLogic’s estimate, the shadow inventory is closer to 1.7 million properties, which according to them is the lowest level since August 2008.

CoreLogic’s Mark Fleming believes “Healthy market levels of shadow inventory are around 650,000 units, so there is more to be done.”

The upshot to all of this is that while the shadow inventory remains bloated, it hasn’t been some uber price-depressing force in the housing market.

shadow inventory

Source: Sam Ro / BusinessInsider.com / February 1, 2014
Link to article.

Million-Dollar Home Sales Jump in the Golden State

La Jolla, CA.—-The number of California homes that sold for a million dollars or more rose last year to the highest level in six years, the result of rising home prices and an improving economy, among other factors. The strongest sales gains were at the luxury market’s high end, with record sales above the $2 million mark, a real estate information service reported.

A total of 39,175 homes sold for a million dollars or more in 2013, up 45.1 percent from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, according to San Diego-based DataQuick.

The all-time high was in 2005, when 54,773 homes sold for $1 million or more. Last year’s 45.1 percent year-over-year increase in $1 million-plus sales easily eclipsed the state’s housing market as a whole: Overall home sales totaled 446,319 last year, down 0.6 percent from 449,059 in 2012. Last year’s increase in luxury home sales reflects the combination of rising demand and sharp price appreciation that pushed many homes up over the million-dollar threshold.

“The luxury home market is unique, always has been. It responds to its own set of economic factors. Things like job growth, mortgage interest rates and migration patterns do not play the same role as IPOs, stock market performance or how well one type of investment does compared to another, and where one wants to park one’s excess money. The $2 million threshold seems to be a more interesting cutoff point. Homes selling below that level do seem more responsive to the more traditional market factors,” said John Walsh, DataQuick president.

Price appreciation tugged many more homes up over the $1 million mark last year, but it was the multi-million-dollar home sales that set records. Statewide, 840 homes sold for more than $5 million last year, an all-time high and up 20.3 percent from the previous high of 698 in 2012. In the $4-$5 million range a record 596 homes sold, up 29.3 percent from 461 in 2012. In the $3-$4 million range, a record 1,455 homes sold, up 31.3 percent from 1,108 in 2012.

In the $2-$3 million range sales totaled 4,492, a record and up 37.4 percent from 3,269 in 2012. In the $1-$2 million range, 25,352 sold last year, up 42.5 percent from 17,791 in 2012 but still 26.1 percent behind the all-time high of 34,313 in 2005.

There were 6,440 sales where the price was unavailable, but where it could be determined that the price exceeded $1 million because of the size of the mortgage.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The million-dollar transactions include home sales where it could be determined from public records that there was a buyer, a seller, that money changed hands, and that there was a legal transfer of property ownership. Not included were property swaps, sales of multiple lots, sales where no price or loan amount was available, teardowns, and large farm or ranch properties. Sales to companies and trusts were included.

Last year 10,602 of the homes that sold for $1 million or more were bought with cash, a record number, up from 7,791 in 2012. Cash was used more frequently the higher up the price scale. Of those who did finance their purchase last year, the median down payment was 30.0 percent of the purchase price.

The lending institutions most willing to provide mortgage financing for $1 million-plus homes were Wells Fargo, Bank of America and Union Bank.

The most expensive confirmed purchase last year was a 15,355-square-foot, 8-bedroom, 14-bathroom beachfront Malibu mansion built in 1993 which sold for $74,500,000 in January. The largest was a 25,447-square-foot, 16-bedroom, 18-bathroom mansion in Indian Wells that sold for $2,250,000.

In some communities virtually all of the home sales were in the million-dollar category. Among them: Santa Monica, Rancho Santa Fe, Atherton and Los Altos.

Newly-built homes accounted for 6.9 percent of last year’s $1 million-plus sales, up from 4.9 percent in 2012. Condo sales made up 10.1 percent of the million-dollar category, up slightly from 9.2 percent the year before. Last year most $1 million-plus condos were sold in Los Angeles, San Francisco and San Diego counties.

The median-sized million-dollar home sold in California last year was 2,504 square feet, with 4 bedrooms and 3 bathrooms. The median price paid per square foot for all $1 million-plus homes in 2013 was $682, up 6.9 percent from $637 in 2012. For the overall California market, the square-foot median was $208 last year, up 28.1 percent from $162 in 2012, DataQuick reported.

There are 8.8 million houses and condos in California. Of those, 270,591 are assessed for more than a million dollars by county assessor offices, DataQuick reported.

Million Dollar Home Sales, ranked by 2013 sales #s

 2012 2013 2013’s Most
Zip Community Sales# Sales# Expensive
90266      Manhattan Beach       372      439         $9.5 mill.
94010      Hillsborough       422      436        $13.3 mill.
92037      La Jolla       345      398        $18.5 mill.
92660      Newport Beach       362      376        $16.5 mill.
92651      Laguna Beach       307      374        $33.0 mill.
90049      Brentwood       344      371        $16.0 mill.
90210      Beverly Hills       330      360        $29.6 mill.
90272      Pacific Palisades       303      352        $17.5 mill.
95070      Saratoga       364      332        $12.3 mill.
94025      Menlo Park       370      321         $5.5 mill.
95014      Cupertino       297      317         $3.8 mill.
92130      Del Mar       225      310         $5.8 mill.
90274      Rolling Hills Estates       262      297         $8.8 mill.
95120      San Jose       167      275         $5.0 mill.
94062      Woodside       208      273        $12.0 mill.
90265      Malibu       219      269        $74.5 mill.
94022      Los Altos       255      267        $14.3 mill.
90275      Rancho Palos Verdes       205      265         $4.5 mill.
94539      Fremont       240      258         $3.6 mill.
94941      Mill Valley       215      258         $4.9 mill.
94024      Los Altos       311      257        $14.2 mill.
94070      San Carlos       189      256         $4.0 mill.
92625      Corona Del Mar       256      252         $8.0 mill.
92657      Newport Beach       228      252        $15.8 mill.
95032      Los Gatos       213      243         $4.8 mill.

Source: DataQuick; DQNews.com / January 31, 2014
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