Incredible Pent-Up Demand Is Still Sitting On The Fence
The Santa Cruz Sentinel reports from California. “The median price for a single-family home in Santa Cruz County dropped to $599,000 in January, down 18 percent since December and a level not seen since 2004. Only 63 sales closed escrow, a new low, the previous was 107 in 2006. More than 170 local homeowners have received default notices for not making mortgage payments, up 60 percent from a year ago, and 63 homes have sold at foreclosure auctions compared to 11 at this time last year.”
“Patricia Beckwith, an Aptos accountant who has been tracking sales in the Santa Cruz Record gave up house-hunting last October. She’s not convinced this is the right time to buy. ‘Although I am seeing some sellers reducing their prices, I am also noticing sellers taking their homes off the market rather than further reduce the selling price,’ she said. ‘Sellers are stubbornly refusing to see the writing on the wall - that their asking prices are unrealistic.’”
“The current Unsold Inventory Index indicates price stability in Capitola and Santa Cruz, and price declines everywhere else, including Aptos, Scotts Valley, Soquel. The index remains the highest in Watsonville, which means more pressure for prices to fall.”
“‘I’ve got new listings coming in on the high end,’ said Gary Swanson, a broker with SCF Realty in Capitola. ‘There probably has not been a better time to buy.’”
“‘I think homes are still 20 to 30 percent overvalued,’ said Beckwith. ‘There is no way an average family will be able to buy here in Santa Cruz without the ‘teaser financing.’ And now that that kind of financing has gone away, and I seriously doubt it will be coming back in the next decade, average middle-class homes are not going to sell.’”
The Modesto Bee. “Home prices took a dramatic downward turn in January across the Northern San Joaquin Valley, with the median sales price declining by more than 25 percent from a year earlier in most categories.”
“The valley’s sales price drops were among the steepest in California, rivaled only by Sacramento, where they fell 26.8 percent last month from the previous year. The data also showed that sales volume declined in Stanislaus County by 23.9 percent last month compared with January 2007, with escrow closing on 372 homes last month.”
“Craig Lewis, CEO at Prudential Realty in Modesto, said he sees reason for optimism in valley real estate. The drop in prices and interest rates means a buyer could more easily afford a median priced house, based on a 30-year fixed mortgage with a 10 percent down payment, Lewis said.”
“‘Local people can now qualify to buy that same home,’ he said.”
The Merced Sun Star. “The median home price in Merced County clocked in at $215,000, down 33.8 percent from a year earlier, according to DataQuick Information Systems. Sales volume was down 20 percent in Merced County and 23.9 percent in Stanislaus County, compared with a year earlier.”
“Local Realtor Andy Krotik said agents in his real estate office are seeing encouraging signs of life, including multiple offers on homes and houses selling for above the asking price. The sales activity is driven mostly by banks looking to unload foreclosed properties, a phenomenon that’s pushed prices back down to the $200,000 range, said Krotik.”
“At the height of Merced’s real estate boom in August of 2005, 76 percent of houses on the market were listed at prices above $300,000, said Krotik. Today, it’s the opposite, with 76 percent of houses listed at below $300,000.”
“Many analysts believe Valley prices are now at the same level they were in 2003 and 2004, when the regional housing market was still rising.”
The Fresno Bee. “In December…sales in Fresno County were off 8.3% compared with the year previous when median prices fell 10.6% to $295,500. In addition, home builders in the Valley offered sharp discounts and other incentives on inventory houses to get them off their books.”
“Mike Miller, division president of Lennar Homes said the rising number of foreclosures in the Valley does not bode well for builders. Those houses compete with new homes for a limited supply of customers.”
“‘Two years ago, we only had seven foreclosures a month, and now we’re up to almost 200,’ he said. ‘If we continue to run at that pace … that could be 2,400 buyers. That could be 25% of the market.’”
“First-time home buyers, shut out of the market when prices skyrocketed in the first half of this decade, are becoming the dominant force in an otherwise battered market. Experts say falling prices and interest rates and an abundant supply are enticing would-be first-time home buyers off the sidelines.”
“Real estate agents — whose deserted offices provide stark contrast to the go-go atmosphere of just two years ago — are delighted. ‘I’m waiting for [a first-timer] right now,’ Fresno real estate agent Joan Jolly said while sitting in her car in front of a house listed for sale.”
“The house was owned by a bank — an unfortunate consequence of a sinking real estate market where property values have tumbled so much that thousands of homeowners owe more on their houses than they are worth.”
“About 3,900 houses are available for sale in Fresno and Clovis, and, thanks to falling prices, the percentage of families in Fresno County that can afford an entry-priced house has climbed to 44% from 19% at the peak of the housing boom in 2006, according to the California Association of Realtors.”
“Don Scordino, president of the Fresno Association of Realtors, said 10% of all the houses sold through Fresno’s MLS in 2007 were foreclosures.”
“Real estate agents say investors also are back in the market, looking for houses to rent and, in some cases, flip. ‘I just sold a beautiful fixer-upper in University Portals for $160,000. They will put in $20,000 and rent it at $1,600 per month to four roommates from Fresno State,’ he said.”
“Michael Gilmore believes many others are waiting for prices to fall even more. ‘I’m still of the opinion that incredible pent-up demand is still sitting on the fence waiting for things to bottom out,’ said Gilmore, who operates The Mortgage Professionals in Fresno.”
“‘Prices have fallen, interest rates have fallen and there is blood in the water,’ he said. ‘It could be worse before it gets better, but we’re getting near the end of this cycle.’”
The Orange County Register. “Faced with plummeting home sales and reluctant buyers, some homebuilders are offering a plan designed to take the worry out of buying when prices are falling.”
“One plan promises to lower the amount a buyer pays for a new home if prices drop after they buy, but before they get their keys. Another lets buyers back out of deals and get their deposits back if their home is appraised for less than they paid.”
“So far, none of these plans is available in Orange County, although Los Angeles-based KB Homeswill begin offering oneat an O.C. project later this month.”
“The issue of price became more apparent last week when DataQuick released figures showing that the median price of a new home in Orange County fell 6.2 percent in January from the year before – and 26 percent from December. New home sales last month fell 62.8 percent.”
“‘It’s a way to get people comfortable,’ said Ric Hernandez, sales and marketing VP for Newport Beach-based Capital Pacific Homes, which is offering price guarantees through Feb. 28 at eight Inland Empire developments.”
“‘Everybody wants to buy at the bottom or when it’s going back up. We’re trying to find ways to overcome this challenge of buyers just waiting (the market slump) out,’ he said.”
“Irvine real estate consultant John Burns said the program actually is nothing new. Builders traditionally give buyers a break when prices fall before their escrow closes, but didn’t advertise those policies.”
“‘They’re trying to get some fence sitters to the table by advertising a policy they were already implementing,’ he said.”
“Some residents who bought condos in Tustin’s Columbus Square last spring complained in October after homebuilder Lennardropped the price by at least $100,000, lowering the value of their homes.”
“And some residents in a small development in Garden Grove sued their builder, Brandywine Homes, a year ago after prices fell by $140,000 after they had closed escrow. The homeowners accused the builder of manipulating appraisals to make it look like homes were more valuable than they were, which the builder denied.”
“One Brandywine official complained at the time that homebuyers get upset when prices drop after they buy, but never offer to share their profits with the builder when prices go up.”
The County Sun. “They don’t call this community Chapman Heights for nothin’. Yucaipa’s upscale neighborhood is surrounded by the Yucaipa Valley Golf Club and sits in full few of the majestic Crafton Hills. But like other communities that sprouted up during the housing boom in recent years, foreclosures are more commonplace these days.”
“Every couple dozen homes, you’ll find dead grass and a real-estate sign. In fact, more than 80 properties in Chapman Heights were listed as mortgage defaults, foreclosures or up for auction on Friday, according to RealtyTrac.”
“Robert Reintschler moved to the Chapman Heights neighborhood in July 2006 after living in Redlands for 30 years. ‘It ain’t Redlands, but it’s close,’ he said. ‘We downsized. We’re retired.’”
“With its two-story stucco houses and meager front yards, the housing tract has a ways to go before looking like an established community.”
“Reintschler and his wife bought their $525,000, amenity-filled home at the height of the housing market, but they’re not bothered by that. ‘We probably bought close to the peak, but we sold close to the peak,’ he said about his prior home in Redlands. ‘I was trying to capture some of that equity for retirement.’”
“There’s plenty of ‘common space’ where residents can walk or ride bikes around Crafton Hills. But resident Frank Awad isn’t concerned with that. ‘I’m not finding it interesting living here,’ the Jerusalem native said.”
“Over the years he moved from Los Angeles to Fontana, to San Bernardino, to Highland, and eventually Chapman Heights. ‘I just didn’t want to raise my kids in L.A.,’ Awad said. ‘It’s more quiet out here.’”
“Now that quietness is turning into boredom. And the $59 he pays every month in homeowners association fees isn’t cutting the mustard. ‘I’m not seeing anything worth being part of the homeowners association,’ Awad said. ‘I’m still wondering what I’m paying for.’”