An estimated 37,988 new and resale houses and condos sold statewide in April. That was up 15.4 percent from 32,923 in March, and down 2.7 percent from 39,051 sales in April 2013, according to San Diego-based DataQuick.
The month-to-month sales gain was higher than usual. On average, sales have increased 2.9 percent between March and April since 1988, when DataQuick’s statistics begin. Sales have fallen on a year-over-year basis for seven consecutive months, but last month’s 2.7 percent dip from a year earlier was the smallest decline in that series.
April sales have varied from a low of 27,625 in 1995 to a high of 71,638 in 2004. Last month’s sales were 13.1 percent below the average of 43,700 sales for all the months of April since 1988. California sales haven’t been above average for any particular month in more than eight years.
The median price paid for a home in California last month was $383,000, up 1.9 percent from $376,000 in March and up 18.2 percent from $324,000 in April 2013. It was the highest since January 2008, when the median was also $383,000. Last month was the 26th consecutive month in which the state’s median sale price rose year-over-year. It was the first time in nearly a year-and-a-half that the median’s year-over-year gain was below 20 percent.
In March/April/May 2007 the median peaked at $484,000. The post-peak trough was $221,000 in April 2009.
Of the existing homes sold last month, 6.7 percent were properties that had been foreclosed on during the past year. That was down from a revised 7.2 percent in March and down from 13.5 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 5.5 percent of the homes that resold last month. That was down from an estimated 7.0 percent the month before and down from 16.1 percent a year earlier.
The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,523, up from $1,496 the month before and up from $1,157 a year earlier. Adjusted for inflation, last month’s payment was 34.8 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 47.1 percent below the current cycle’s peak in June 2006. It was 63.6 percent above the January 2012 bottom of the current cycle.
DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. DataQuick was acquired in March by Irvine-based property information company CoreLogic.
Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.
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Sales of previously owned homes rose nationwide in April as the housing market picked up some steam amid the spring selling season.
Home resales climbed 1.3% from March to a seasonally adjusted annual rate of 4.65 million, the National Assn. of Realtors reported Thursday. That was the first gain this year, though it missed expectations slightly.
The uptick from March, driven by strong gains in the West, came as the housing market has cooled recently. Would-be buyers have struggled to afford houses after prices surged last year. And severe weather in much of the country further depressed sales to kick off 2014.
“Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices, and sales should generally trend upward from this point,” Lawrence Yun, the trade group’s chief economist, said in a statement.
But compared with April 2013, sales were down 6.8%. Yun said there would probably be fewer sales this year than in 2013, citing the poor first quarter.
In a sign that affordability remains a problem, the national gain from March came largely from condominium and co-op sales. Sales of those attached units climbed 7.3% from March. Single-family home sales, generally more expensive than multifamily units, rose just 0.5%.
Jay Feldman, an economist with Credit Suisse, said in a research note that “sales seem to be finding a bottom” but are held back by weak demand from first-time home buyers. Many of those would-be buyers are weighed down with student debt. As investors have pulled back this year, first-time buyers have struggled to fill that void, depressing sales as a result.
There could be help on the horizon. After shooting up last year, mortgage rates have stabilized and are still low historically. Lenders, on average, offered a 30-year fixed loan at 4.14% this week, the lowest rate since October, mortgage finance giant Freddie Mac said Thursday.
Inventory is also on the rise. There was a 5.9-month supply of existing homes for sale last month — meaning that if homes sold at their current pace, all properties on the market would be sold in that time period — compared with a 5.1-month supply in March.
More inventory should boost sales in the near future and temper the price increases that have locked some buyers out of the market, economists said.
The national median price rose 5.2% from April 2013 to $201,700. That was the slowest pace since March 2012.
Source: Andrew Khouri / LA Times / May 22, 2014
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Hilltop home views outrank water-front views four to one, C.A.R. luxury client survey finds
Vast majority of luxury home buyers purchased home as primary residence
LOS ANGELES (May 8) – Even in a state with hundreds of miles of beautiful, sandy beaches, luxury home buyers in California preferred hilltop homes over ocean-front properties by a margin of four to one, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2013 Luxury Real Estate Consumer Survey.”
Forty-one percent of buyers who bought luxury homes (homes priced above $1 million) last year, purchased a home with a hilltop view, compared to 10 percent who bought an ocean-front home. Hilltop homes even outranked ocean-front homes and ocean-view homes combined (38 percent). Buyers also purchased luxury homes located near a golf course (16 percent), mountain area (12 percent), resort area (9 percent), lake-front (4 percent), and ski resort (1 percent).
The vast majority (79 percent) of luxury home buyers said they purchased the home as a primary residence. Ten percent purchased the home as a vacation or second home. Nine percent purchased the home as an investment or rental property, and two percent cited “other” reasons.
Additional findings from C.A.R.’s 2013 Luxury Real Estate Consumer Survey include:
• One-fourth of luxury home buyers said the main reason they purchased a home was because they wanted a larger home, compared to traditional buyers (23 percent) who said they were tired of renting as the primary reason for purchasing a home.
• With luxury home buyers usually being higher income earners, more than a third of all luxury buyers (35 percent) were able to pay all cash for their property, compared to 27 percent of traditional buyers, and 11 percent of first-time buyers.
• Luxury home buyers also made higher down payments (30 percent of the sale price) than traditional buyers (25 percent), and as a result had less difficulty in obtaining financing than traditional buyers. On a scale of 1 to 10, with 1 being “very easy” and 10 being “very difficult,” luxury home buyers rated acquiring financing difficulty at 3.7, compared to 8.6 for traditional buyers.
• While luxury home buyers spent less time looking for properties (five weeks) compared to traditional buyers (10 weeks), luxury buyers looked at more properties (10 properties) than traditional buyers (eight properties) before purchasing the home.
• Buyers of luxury properties tend to be more optimistic than traditional buyers, with more than seven in 10 (71 percent) luxury buyers saying they expected home prices to increase in one year, compared to 36 percent of traditional buyers.
• Luxury home buyers intended to keep the property for a median of 10 years, compared to six years for traditional buyers.
• Fifty-seven percent of luxury buyers were single, compared to 37 percent of traditional buyers who were single.
Luxury Real Estate Consumer Survey slides (click to open):
The Luxury Real Estate Consumer Survey was conducted via email to a random sample of REALTORS® statewide who worked with luxury home buyers. All eligible respondents closed escrow on their homes within the 12 months prior to November 2013. The survey asked REALTORS® a series of questions regarding their last closed transaction with a luxury client. Access the full report on the survey findings here: http://www.car.org/marketdata/surveys/other/ and view the webinar presentation here: http://www.car.org/marketdata/videos.
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.
Selma Hepp (213) 739-8305
WASHINGTON, DC, May 08, 2014 (Marketwired via COMTEX) — Analysis of data collected for the Realtors(R) Confidence Index shows the market share of all-cash purchases is on the rise, despite declines in distressed sales and investor activity, according to the National Association of Realtors(R).
Lawrence Yun, NAR chief economist, said the findings are counterintuitive. “Distressed home sales, most popular with investors who pay cash, have declined notably in the past two years, yet the share of all-cash purchases has risen,” he said. “At the same time, investors have declined as a market share, indicating other changes have been underway in the marketplace.”
Distressed home sales declined from 26 percent of the national market in 2012 to 17 percent in 2013 and 15 percent in the first quarter of this year; NAR projects distressed homes to drop to a single-digit market share by the fourth quarter. All-cash purchases rose from 29 percent in 2012 to 31 percent in 2013 and 33 percent in the first quarter of 2014.
In Florida more than half of all homes were purchased with cash. High levels of all-cash sales also were recorded in Nevada, Arizona and West Virginia, accounting for close to four out of 10 transactions.
The findings, derived from a survey of about 3,000 responses each month for NAR’s Realtors(R) Confidence Index, also show investors edged down from 20 percent of buyers in 2012 to 19 percent in both 2013 and the first quarter of this year.
A separate annual study of consumers, NAR’s 2014 Investment and Vacation Home Buyers Survey, shows investors at a somewhat higher market share, but declining more sharply from 24 percent in 2012 to 20 percent in 2013.
“These findings beg the question as to why we’re seeing higher shares of cash purchases,” Yun said. “The restrictive mortgage lending standards are a factor, but the higher levels of cash sales may also come from the aging of the baby boom generation, with more trade-down and retirement buyers paying cash with decades of equity accumulation.”
Another study, the 2013 National Association of Realtors(R) Profile of Home Buyers and Sellers, shows trade-down buyers rose to 29 percent of buyers last year from 25 percent in the 2012 study and 23 percent in 2011, suggesting a contribution to the trend in cash sales.
“A majority of foreign buyers pay cash as well, and the five-year bull run of the stock market has also provided financial wherewithal among higher wealth households,” Yun said.
In Florida, where more than half of buyers paid cash in 2012 and 2013, distressed home sales declined from nearly four in 10 purchases in 2012 to three in 10 during 2013, and investors edged down.
“Florida is the most popular state for international buyers, who generally pay cash, as well as vacation-home buyers who frequently pay cash. In addition, downsizing retirees are known to pay cash from the proceeds of their homes in the north. This helps to explain the disparity there, but that isn’t the case in most other states,” Yun said.
For example, in West Virginia cash sales rose from about one-third of buyers in 2012 to nearly four out of 10 buyers in 2013, but distressed sales declined from a quarter of the market to less than one in five, and investors were half of what they had been in 2012.
The National Association of Realtors(R), “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
NOTE: While the survey was not designed to break out geographically, sufficient data is available to provide annual market shares for 29 states on all-cash sales, investors and distressed sales for 2012, 2013 and the first quarter of 2014. There were insufficient data for 21 states and the District of Columbia, but breakouts are available for nine sub-regions with responses from every state.
Source: MarketWatch.com / May 8, 2014
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The share of all-cash sales reached a new high in the first quarter of 2014, even as the total share of institutional investor purchases dropped to near-record lows. All-cash sales made up 42.7 percent of all U.S. residential property sales for Q1, up from 37.8 percent from the previous quarter, according to RealtyTrac’s U.S. Institutional Investor and Cash Sales Report.
All-cash sales increased yearly as well, up from 19.1 percent of all sales in Q1 2013. All-cash sales are the highest they have been since RealtyTrac began tracking this data in 2011.
“Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, VP at RealtyTrac. “The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers—including individual investors, second-home buyers and even owner-occupant buyers—to fill the vacuum of demand left by institutional investors.”
15 percent of all-cash purchases were for foreclosures, with 10 percent for REO properties. The average sales price of an all-cash purchase, $207,668, was 13 percent below the average estimated full market value of $237,900.
While all-cash purchases were soaring to new heights to start the year, total investor purchases dropped to the lowest level seen since Q1 2012.
5.6 percent of all U.S. residential sales in Q1 2014 were from institutional investors, which RealtyTrac notates as a non-lending entity that purchases at least 10 properties in the past 12 months.
Q1’s figure was a step down from the 6.8 percent rate in Q4 2013, and down from 7.0 percent in Q1 2013.
“While the institutional investor purchase share declined in the first quarter in 18 of the top 20 markets for institutional investor share a year ago, home prices continued to appreciate in most of those markets, albeit at a slower pace in many cases,” Blomquist added.
In total, 84 percent of investor purchases were all-cash in the first quarter, and slightly older homes fared better than newer homes in the eyes of investors. 35 percent of homes purchased by investors were built in the year 2000 or later and 50 percent built from 1990 or later.
30 percent of investor purchases were foreclosures, and 15 percent were REO. The average sales price was $128,747, which represents 18 percent below the average “after repairs” market value of homes.
Among metropolitan statistical areas with a population of at least 500,000, those with the top five highest percentages of cash sales were all in Florida: Cape Coral-Fort Myers (73.6 percent), Miami (67.1 percent), Sarasota (65.1 percent), Palm Bay (64.1 percent), and Lakeland, (61.8 percent).
Among metropolitan statistical areas with a population of at least 500,000, those with the biggest annual increase in share of institutional investor purchases were Baton Rouge, Louisiana (up 131 percent); San Francisco, California (up 92 percent); McAllen, Texas (up 62 percent); Allentown, Pennsylvania (up 49 percent); and Omaha, Nebraska (up 49 percent).
Source: Colin Robins / DSNews.com / May 8, 2014
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Federal Reserve Chairwoman Janet L. Yellen painted a mostly upbeat picture of the economy emerging from a weather-induced winter slowdown but gave no hints of when the central bank might start raising rock-bottom interest rates.
In Capitol Hill testimony Wednesday, Yellen confirmed that the Fed is on target to end its controversial bond-buying stimulus program this fall and defended the Fed’s easy money policies against criticism that they’ve helped Wall Street at the expense of average Americans.
Still, Yellen warned that the jobs situation was “far from satisfactory” and that a recent slowdown in the housing market was worrisome.
“While we have seen substantial improvements in labor market conditions and the overall economy since the financial crisis and severe recession, we recognize that more must be accomplished,” Yellen told the congressional Joint Economic Committee.
But she sounded no alarms about the anemic economic growth in the initial three months of the year. She attributed the weakness largely to temporary factors, such as the extreme weather that hit much of the country, and said the recovery should pick up through the rest of 2014.
“With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter,” Yellen said.
The Labor Department said Friday that payrolls grew by a surprisingly strong 288,000 jobs in April and the unemployment rate dropped to 6.3%, the lowest level since September 2008.
The job growth was encouraging after the government reported last week that the economy barely grew in the first quarter, expanding at a 0.1% annual pace.
Last week, Fed policymakers continued to reduce the central bank’s bond-buying program, which was designed to push down mortgage and other long-term interest rates.
The reduction, to $45 billion a month, puts the Fed on pace to end the purchases by year’s end.
Attention has shifted to when the Fed might start to raise short-term interest rates, which it has held near zero since late 2008.
Rep. Kevin Brady (R-Texas), the committee’s chairman, said he was pleased that the Fed was ending its bond-buying effort. But he expressed concern that Fed policymakers have indicated they plan to keep short-term rates low long after the bond purchases end.
Yellen would not be pinned down on exactly when the Fed might start raising its benchmark short-term rate.
She was careful not to repeat her March comments that rate hikes could begin as soon as six months after the end of the bond-buying program. That estimate, at her first news conference after taking over as Fed chief, roiled financial markets.
Yellen told Brady on Wednesday that “there is no mechanical formula or timetable.”
Brady was frustrated, noting that when the latest round of bond-buying began in September 2012, Fed officials were targeting a reduction in the unemployment rate to 6.5%.
He complained the Fed continually has moved the goal posts on when it would start returning to more normal monetary policies. Low rates have hurt savers and pushed up stock prices as investors look for decent returns.
“It just strikes me, over time, this ‘Don’t worry, be happy’ monetary message isn’t working,” Brady said. “I believe we need more specifics and a timetable on the comprehensive exit strategy.”
Yellen said the Fed never indicated that a drop below 6.5% would trigger an interest rate rise. Also, she said the unemployment rate is not a perfect indicator of the jobs market, noting the high percentage of long-term jobless and people who are working part time because they can’t find full-time jobs.
“We need to develop a more nuanced approach to what’s going on in the labor market,” she said.
Some Republicans questioned her about an opinion column in Wednesday’s Wall Street Journal by Fed expert Allan H. Meltzer in which he asserted the central bank’s low-interest rate policies have been a factor in “goosing the stock market” to record highs at the risk of inflation.
Yellen did not agree.
“I would hardly endorse the term ‘goosing the stock market,'” she said.
Responding to criticism that the Fed’s policies have exacerbated income inequality by helping Wall Street, Yellen said she and her colleagues have been trying to stimulate economic growth. A growing economy helps all Americans, she said.
“There have been benefits … in the policies we’ve pursued for Main Street as well as for those who hold equities in their portfolios,” Yellen said.
She cited improvements in the housing market. The bond-buying efforts helped push mortgage rates to record lows, although the reduction in the stimulus program has led those rates to start rising.
Yellen said mortgage rates remained “quite low by historical standards,” making housing affordable.
But she said a recent slowdown in the housing market was a potential risk to the recovery, along with “heightened geopolitical tensions” — an apparent reference to the Ukraine crisis.
“One cautionary note … is that readings on housing activity — a sector that has been recovering since 2011 — have remained disappointing so far this year and will bear watching,” Yellen said.
Source: Jim Puzzanghera / LA Times / May 7, 2014
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