June 19, 2012

Buyers Either Drastically Overpay, Or Wait

The Record.net reports from California. “Single-family home inventories in San Joaquin County have dwindled from about 2,600 in September 2010 to just over 1,000 in May, the lowest level since the peak of the housing boom in 2005. Area real estate brokers report strong activity, receiving multiple offers on homes within the first week of a new listing. ‘If people are looking for the bottom of the market, the place they have to look from now on … is in the rearview mirror,’ said Larry Underhill of Statesman Realty in Lodi.”

“But there are barriers to price gains, even as would-be buyers try to outbid each other for attractive properties. Brokers reported the primary snag is the home appraisal, which is largely based on recent sale prices on comparable homes. And there are a good number of all-cash sales as investors take advantage of low home prices, said Jerry Abbott, president of Grupe Real Estate in Stockton.”

“‘If you really look at the smart money, … the investors aren’t looking to (buy and resell homes quickly); they are buying to hold, because they’re looking at prices going up over the next five years,’ he said. ‘Investors are really ruling the market right now.’”

The Desert Sun. “There is a relatively low inventory of affordable homes in some valley communities, as well as a dearth of new construction, so buyers must respond quickly when a new listing pops up. One of Patrick Jordan’s home-buying clients recently offered $100,000 more than the asking price for a house in Rancho Mirage. ‘There were 10 offers — 10. We wound up being in the top four, but we lost; we didn’t get it,’ said Jordan, broker associate in Palm Springs.”

The Mercury News. “A surfeit of buyers has sparked bidding wars around the bay. ‘This particular summer is white hot. Sellers are more comfortable about getting their homes on the market, and buyers are just dying to get in,’ said Barbara Lymberis, president of the Santa Clara County Association of Realtors.”

“At current levels, there’s only a month or less supply of homes for sale in many Bay Area counties, according to Redfin. ‘There’s not enough homes to go around,’ said Miawand Bayan, an agent with Redfin in Fremont. ‘I have buyers getting to the point where they are so frustrated they will either drastically overpay, or wait another year and hope it gets better.’”

“Although Bay Area sales were the highest for a May since 2006, they are still about 8 percent below the average number of sales in May since 1998. Many people are stuck with negative equity — homes worth less than their mortgages — and ‘it could be years before they’re able to make a move,’ said John Walsh, DataQuick’s president.”

The Ventura County Star. “Ventura County’s luxury home market is still in flux, although hints of an uptick are emerging. Forty-year real estate veteran Larry Stern said homes in his market sell for $3 million to $6 million these days, while in 2008, the same homes sold for $6 million to $8 million. The average time on market now is two years, Stern said, indicating sharp price declines are still needed.”

“For the luxury homes that dot the hills and valley of the Moorpark area, Realtor Gwyn Goodman said she’s seen ‘only a downward spiral’ in upscale home values that in her area range from $2.5 million to $4 million. A builder’s home in Moorpark was on the market for 2½ years, with an original listing price of $3.85 million before the bank reclaimed it and it sold for $1.85 million, she said. ‘What they (buyers) want is value, and if they’ve got cash, they don’t mind sitting and waiting till that property goes to the bank,’ Goodman said.”

“In the beach colonies near the city of Ventura, Realtor Janet Caminite said, eight homes sold between $2 million and $6.9 million between 2008 and 2010. From March 2011 to the present, 28 homes sold between $1 million and about $3.4 million at 8 to 18 percent off the list price, she said. ‘We’re not even in that $4 million to $6 million range,’ Caminite said. ‘I think buyers are not paying close attention to fair market value. They just want the deal of the century.’”

The Glendale News Press. “The number of houses and condominiums for sale in Glendale and Burbank stayed in the basement last month, according to the latest real estate reports, a likely result of homeowners waiting for the market to rebound to get more out of their investments, Realtors say. The dwindling number of homes on the market is the result of people waiting in hopes of getting more money for them or more equity out of them, said Gerri Cragnotti, owner/broker of G & C Properties in Glendale.”

“There are basically only three types of sellers right now, she added: ‘It’s primarily a divorce, death or relocation for a job.’”

“The median price for homes sold in Glendale rose from $455,000 in May 2011 to $572,000 last month. The median price for condos was $278,000 last month, a slight increase from $255,000 in May of last year. In Burbank, the median price for single family homes sold dropped from $540,000 in May 2011 to $477,500 last month. The median price for condos was $253,000 last month, down from $335,000 in May of last year.”

“The ratio of bank-owned homes sold in Burbank compared to total sales jumped to 50%, a 17% jump from a year ago. The ratio of distressed homes sold in Glendale declined by about 9% to 41.8%. Realtor Julian Munoz said banks are starting to put more of the homes they own on the market. ‘They’re doing it very strategically and slowly,’ he said.”

The Clovis Independent. “Mosquito control officials in the central San Joaquin Valley say there are more green pools than ever in backyards, serving as perfect breeding grounds for mosquitoes carrying West Nile virus. Algae-laden pools have been ground zero for mosquitoes since default notices and foreclosures skyrocketed during the recession, but mosquito fighters had hoped that the spate of unkempt pools would ease. Not so, they say.”

“‘It’s continuing and it seems like it just increases year after year,’ said Steve Mulligan, manager of the Consolidated Mosquito Abatement District, which covers most of Clovis. ‘It’s an ever-changing number, but the number is always increasing.’”

The Manteca Bulletin. “In the past, two-story homes were viewed as gravy trains since you were essentially adding less expensive space between the set expenses represented by foundation and basic house infrastructure and the roof. The profit per square foot is significantly higher for a two-story home than a one-story for that reason. The appetite for the old McMansions is not expected to return anytime soon - if at all.”

“One of the 4,400-square-foot homes in the Heritage Ranch neighborhood sold for over $400,000 less than the purchase price - for $225,000 back in 2009 when the McMansions crashed harder than any other housing in Manteca except the Cherry Lane condo conversions.”

The Lodi News Sentinel. “The housing market was the driver of the economy for a couple of decades and now is moribund. Economists and pundits all talk about the housing rebound and when the market will come back. As if the housing market was normal and will go back to what it was. It won’t.”

“First, there are plenty of homes already built. With population growing slowly (and only by immigration), there is only a small increase in natural demand for homes. Second, a lot of the built homes are in foreclosure. These are coming on the market at a fairly steady rate. The banks are bleeding them into the market to avoid knocking home prices further. Third, the nature of the housing that will be built will be dictated by what is needed, which is smaller homes and multi-unit buildings. McMansions were an aberration. Homes will be smaller, as they are cheaper. Fourth, housing should cease to be a Ponzi scheme where developers build homes before need exists and finance the next development through the payments on the current development.”

“In short, the housing market will be a reduced portion of the economy. Our politicos need to realize that housing will not drive a recovery and is not an easy source of tax revenue. The politicos must devise sensible policies so a sound economy can reassert itself. The politician who says Stockton will be all right as soon as the housing market returns so tax revenues will be up and the city won’t have to go bankrupt — that politician is blowing smoke.”

“The housing market is just one of the restructurings that are going on. But things will get better; indeed, are getting better.”




Bits Bucket for June 19, 2012

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