California’s recovery? The truth behind the facade

san fran houses
 

 

Although it’s been five years since the financial crisis, a full on recovery has yet to be seen in California, according to a recent report from PropertyRadar.

California single-family and condominium sales grew 3.5% in May 2014; however, this is still down 11.1% from May 2013. Year-to-date sales are the lowest level since 2007.

For May, non-distressed property sales increased 5% while sales of distressed properties dropped .7%.

“What continues to surprise us month after month is that in the fifth year of a so-called recovery, year-to-date real estate sales are on track to be the lowest since 2007,” said Madeline Schnapp, director of economic research for PropertyRadar.

“Government policies that have constrained supply coupled with high demand from all cash buyers pushed up real estate prices so quickly that in many parts of California the median income home buyer can no longer afford the median priced home,” Schnapp said.

The median price of a California home reached its highest level since December 2007 in May, up $10,000, or 2.7%, to $385,000 from $375,000 in April.

The uptick in sales is primarily due to a 4.5% increase in the sales volume of higher priced non-distressed properties, which accounted from nearly 81% of total sales.

Year-over-Year, median home prices jumped 10%.

“The significant jump in median home prices this past month is being driven by the change in mix between the sales of distressed properties versus sales of non-distressed properties, rather than a big jump in actual home values,” Schnapp explained.

“Just a few years ago, distressed properties accounted for 60 to 70 percent of sales as opposed to 19 percent today. Higher priced non-distressed property sales now dominate monthly sales numbers, so it should come as no surprise that median prices are up,” she added.

At local levels, median home prices in four Bay Area California counties – San Francisco, Marin, Santa Clara and San Mateo – are close to or exceed their pre-housing bubble peaks.

Meanwhile, in only 8 of the state’s 26 largest counties – Kern, Merced, Riverside, San Bernardino, Solano, Stanislaus and Tulare – can the median income homeowner in that county afford to purchase the median priced home.  

“Real estate prices continue to march higher on declining sales volume which is an unhealthy combination,” said Schnapp. “At some point you run out of buyers willing to pay these prices setting the stage for a decline in sales volume, which we are already seeing, and later for the possibility of a price correction.”

California home sales decline as rates increase

 
california
 

California home sales dipped for the second straight month in September. The California Association of Realtors blames this drop on a slight rise in interest rates and economic uncertainty, which is stalling housing demand. 

Furthermore, housing supply conditions continued to loosen as the housing market entered its off season.

The available supply of existing, single-family detached homes for sale rose in September to 3.6 months, up from August’s unsold Inventory Index of 3.1 months. The index was 3.7 months in September 2012.

“It’s encouraging that housing inventory has been steadily improving since May, when housing supply hit its recent bottom,” said C.A.R. President Don Faught. “While inventory remains constrained in the lower-priced home segment and primary home buyers continue to compete with investors, the number of properties for sale overall has been rising since March 2013 and is at its highest level since mid-2012.”

The home bidding wars are back!

multiple bids real estate market

The competition has been most intense in California, where 9 out of 10 homes sold in San Francisco, Sacramento and cities in Southern California have been drawing competing bids.

NEW YORK (CNNMoney)

The bidding wars are back. Seemingly overnight, many of the nation’s major housing markets have gone from stagnant to sizzling, with for-sale listings drawing offers from a large number of house hunters.

In March, 75% of agents with broker Redfin said their clients’ offers were countered by rival bids, up from 56% who said so in late 2011.

 

The competition has been most intense in California, where 9 out of 10 homes sold in San Francisco, Sacramento and cities in Southern California drew competing bids during the month. And at least two-third of listings in Boston, Washington D.C., Seattle and New York generated bidding wars.

“The only question is not whether a new listing will get multiple bids but how many it will get,” said Kris Vogt, who manages 14 Coldwell Banker offices in the Sacramento area. One home in an Elk Grove, Calif., subdivision recently received 62 separate bids. The final sale price was for more than $150,000, well above its $129,000 asking price.

In Cambridge, Mass., two condos that could be combined into one large home hit the market two weeks ago for $800,000 each, according to Pat Villani, president of Coldwell Banker Residential Brokerage in New England.

“The brokers stopped taking names after the number of bidders reached 250,” she said. The winning bidder offered $2 million for both units.

Related: Five best markets to buy a home

Homebuyers eager to purchase before home prices and mortgage rates rise are finding few homes for sale as sellers hold out for better deals, said Glenn Kelman, Redfin’s CEO.

Many homeowners are still underwater, owing more on their mortgages than their homes are worth, and they want to wait until selling becomes profitable again. By doing so, they can avoid short sales, which carry big hits on credit scores, 85 to 160 points, according to FICO.

 

“Many people have been holding on for a profit and they’re just now getting their heads above water,” said Kelman.

Those who want to sell and buy a new home are encountering a market where it’s difficult to find a new place of their own, said Vogt.

Related: Five best markets to sell a home

Over the past few months, Jackie and Cliff Kaufman have bid on four different homes in St. Petersburg, Fla., including one short sale and a foreclosure.

The pair, who have two adult children and run an online jewelry business, said they bid $5,000 more than the $495,000 asking price on the first home they had their eye on and never heard back from the seller’s agent. They were later told the house sold for nearly $550,000.

Next, they bid on a short sale listed for $600,000. This time, they came in $10,000 above the asking price and again, they were beaten out. The house was only on the market for two days.

The third attempt to make an offer on a bank-owned property was also met with silence.

Related: Buy or rent? 10 major cities

“It was very frustrating,” said Jackie Kaufman. “We felt we were always on the outside of the loop and that people who won the homes had the inside track.”

By the fourth try, the couple successfully bid through a listing agent, who they believe pushed their bid harder in order to earn a double commission since she was representing both the buyer and seller in the deal. And they managed to get the place for $30,000 less than the asking price.

They were lucky. Inventories of homes for sale continue to shrink. In February, the National Association of Realtors reported a 19.2% decline in inventory year-over-year. While the number of homes for sale should rise with the onset of the spring selling season, housing inventory is expected to remain low, pushing prices higher.

Related: Fastest growing boomtowns

And new home construction, especially in markets hit hard by the housing bust, is still moving forward at a snail’s pace, since the cost to build the homes is often more than what the property ends up selling for, said Jeff Culbertson, president of Coldwell Banker’s Southern California operations.

Even though home prices are on the rise, the balance between buyers and sellers has been thrown off balance, said Kelman.

“With buyers out in force and sellers cautious, the market is in an awkward ‘tweener’ phase,” he said. 

CoreLogic: Home prices rise the most in seven years

By Kerri Ann Panchuk

 • April 3, 2013 • 7:00am

February home prices rose 10.2% from year ago levels, the largest annual gain in nearly seven years and the 12th consecutive month of national home price growth, CoreLogicsaid Wednesday.

The real estate analytics firm attributes the steep rise to rapid price appreciation in several West Coast states—namely California, Phoenix and Las Vegas.

CoreLogic’s [stock CLGX] [stock] Home Price Index report for February includes the impact of distressed sales. However, when subtracting distressed properties from the equation, prices still rose 10.1% from year ago levels. And from January to February, home prices edged up 0.5% nationally with distressed sales included.

Without distressed properties, prices rose 1.5% month-to-month.

Looking forward, the CoreLogic Pending Home Price Index suggests March prices will rise 10.2% over year ago levels and 1.2% from February.

The states with the steepest price appreciation rates with distressed sales accounted for include Nevada, where prices rose 19.3% annually, followed by Arizona (up 18.6%), California (15.3%), Hawaii (14.6%) and Idaho (13.5%).

On the flip side, the states where prices dropped the most include Delaware, with a 4.4% drop, Alabama (1.5% decline) and Illinois where values fell 1%.

Still, for all transactions, the home price index remains 26.3% below levels reached during the market’s peak in April 2006.

 

California Cities Post Highest Single-Family Rent Increases

California cities claimed seven spots on a top 10 list of cities experiencing the highest rental price increases for three-bedroom, single-family homes.

RentRange, LLC, a Westminster, Colorado-based data and analytics provider for the single-family rental market observed changes in rent prices for three-bedroom, single-family homes located in cities with at least 25,000 residents.

The data firm found the greatest growth in La Quinta, California, where rents increased 35.75 percent from December 2011 to December 2012.

The city’s single-family rents rose $932 over the year to a median rent price of $2,607.

Fullerton, California, ranked second with a rent increase of 26.1 percent, $605; and Palm Springs, California, ranked third with an increase of 20.55 percent, $391.

Not only, did California cities dominate the top 10 list, but three of the top 10 cities were located in the same county—Riverside County, California.

Riverside cities claimed the No. 1, No. 3, and No. 7 spots on the list.

The anomalous non-California cities on RentRange’s list were Harker Heights, Texas, ranking No. 4 with a 20.52 percent increase; Sarasota, Florida, ranking No. 7 with a 16.57 percent increase; and Mableton, Georgia, ranking No. 9 with a 15.93 percent increase.

“Rental price movement over time is one of many important metrics that investors utilize when evaluating suitable marketplaces,” said Walter Charnoff, founder and CEO of RentRange.

“As popular markets become saturated with investment activity it is important for purchasers to leverage specialized rental market intelligence to identify attractive markets that competitors have yet to notice,” Charnoff added.

California reports thriving November home sales

Posted by mhopkins on 12/12/12 at 2:14pm

California continues to be the talk of the housing recovery, logging its highest November sales in six years.

The Golden State’s median sale price jumped nearly 17% year-over-year to $321,000. This appreciation indicates a shift away from distressed sales and toward traditional sales

Last month, 19,285 new and resale houses and condos sold in Los Angeles, San Diego, Ventura, San Bernardino and Orange counties. This was up 14.2% from November 2011, real estate analytics firm DataQuick reported.

Last month’s numbers were the highest for the month of November since 2006.

High buyer demand and record low mortgage rates are playing a large role in the California price appreciation. Additionally, more expensive homes are replacing discounted foreclosures, creating upward pressure on the median sales price.

“The government’s offered people an amazing gift in the form of extraordinarily low mortgage rates. But that’s not the only thing fueling these sales gains. Investor activity and cash purchases remain unusually high, and more buyers feel confident about their jobs, the economy and the likelihood housing prices have bottomed and are likely to rise. We’re also seeing more nondistressed sales, where people sell at a profit and buy another house, triggering more move-up activity,” said John Walsh, DataQuick president.

Home sales between $300,000 and $800,000 rose 34.6% since November 2011. Even more, sales of homes priced at more than $800,000 jumped 46.8% year-over-year.

Conversely, homes that sold below $200,000 decreased 18.7% from a year earlier.

Indicators of market distress continue to move in different directions. Foreclosure activity, while above long-term averages, continues to drop and is far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

See the chart below for the housing market changes in several California counties.

mhopkins@housingwire.com

Mortgage Faud Runs Rampant In California

Mortgage fraud activity slowed overall in the third quarter, but California ranks first in home loan fraud, with the state seeing as much as $204.2 million in losses on deceptive mortgage activity.

That’s according to a new report from MortgageDaily, which found that lenders victimized by fraud faced inflated appraisals and fraudulent documentation. California was followed by New York, which experienced $199.6 million in losses from nefarious activities in mortgage finance. Read more of this post

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