Flashbacks To 2006
The Desert Sun reports from California. “California’s poverty rate of 23.5 percent is the highest of any state in the country, according to new information from the U.S. Census Bureau which factors in government programs to assist low-income people and families that aren’t included in official, income-based poverty measures that were developed in the early 1960s. Some experts believe California’s higher cost of living is responsible for the increase in its poverty rate under the new means of evaluation, compared to 16.3 percent under the old measurement criteria. Nationally, the new-measure poverty rate increased by a full percentage point, to 16.1 percent, or nearly 50 million people in poverty.”
The Signal. “All conditions are good for buying a home — except for the severe shortage of houses listed for sale, according to a 2012 Annual Housing Market report. And that shortage is only heating up the bidding wars on the homes that are available for sale. Some 57 percent of home sales received multiple offers in 2012 — the highest in the past 12 years, the California Association of Realtors reported.”
“‘We are also watching sellers push for the removal of the appraisal contingencies for every offer submitted,’ said Connor MacIvor with RE/MAX. ‘This is creating havoc on the ‘trust’ part of the real estate equation.’ Another headache for buyers, he said, is that sellers are starting to price their homes far beyond comparable value in the area. The problem with this scenario is that appraisers, slapped for overinflating home values during the subprime mortgage market mess, won’t match the selling price if they can’t justify it. And that leaves desperate homebuyers between a rock and a hard place.”
“The market conditions are ‘flashbacks back to 2006,’ MacIvor said.”
The Orange County Register. “Real estate agents note that the low inventory of homes for sale – in Orange County and across the nation – has created bidding wars for many homes, pushing prices higher than recent comparable sales. Mortgage Broker Dennis Smith cited an appraisal on a small apartment property in Long Beach. The seller and buyer agreed on a sales price of $730,000. The appraisal came in at $620,000.”
“Smith said some comparable sales the appraiser used were more than three miles away, and a few were sales dating back more than a year. The appraisal may have been a challenge, Smith said, ‘But over $100,000 (lower than) what the seller, listing agent, selling agent and buyer felt the property was worth?’”
“He found some fresher sales for comps with fewer units, but his appeal was rejected. ‘So we canceled with that lender and went to another lender and ordered a new appraisal,’ said Smith, co-owner of Stratis Financial in Huntington Beach. The second appraisal came in at $720,000 – with some of the comps he cited in the appeal. The initial appraiser could not be reached for comment.”
The Union Tribune. “Roughly 5,300 homes are on the market in San Diego County at this moment, half of what we saw just a year ago. But is this the type of dynamic the county needs to finally see a fully recovered real estate market? ‘It’s not a situation where the demand is overwhelmingly strong,’ said Michael Lea, professor at SDSU’s Corky McMillin Center for Real Estate. ‘We still have a housing market that is not well. There are few houses on the market. That’s what’s unusual. It’s stemming from the fact that housing prices are up but are still way off their peaks and there’s negative equity.’”
“Roughly one in four local homeowners with a mortgage are underwater on their home loans, he said. Some of those folks may want to sell their current homes for bigger, better places but can’t because they’d lose money in those deals. In essence, many potential sellers are still on the sidelines, waiting for price appreciation. ‘We need a continued rise in prices,’ said Lea. ‘It’s the most healthy thing that can happen. It will move more and more people out of negative equity and then it will start to revitalize the trade-up market, which has been moribund.’”
“Derick Sparhawk and his fiancee, Rachael Weathers just started the homebuying process. Sparhawk and Weathers are looking for something less expensive, in the $300,000 range. ‘I anticipate there will be a lot of putting in offers and being rejected,’ said Sparhawk, who is a server at Benihana.”
The Glendale News Press. “The number of homes and condominiums for sale in Glendale continues to lag compared with last year, according to the latest real estate figures. Even as the pool of available homes shrank, the number sold jumped by 57.5% — from 40 in October last year to 63 this year. Some banks are still jittery about going with foreclosures because of investigations by the federal government about whether past foreclosures were handled properly. Foreclosures can also involve a lot of complicated paperwork, said Harout Keuroghlian, chief executive of JohnHart Real Estate in Glendale. ‘There’s so much red tape that it could be years before [a home] even hits the market,’ he said.”
The Mercury News. “With a tough Homeowner Bill of Rights set to take effect in California New Year’s Day, cancellations of foreclosure auctions have spiked in the Bay Area and throughout the state, according to a report. ‘Fewer homes are in trouble,’ said Joe Reichert of Keller Williams Realty in Danville. ‘There’s a mentality of, ‘I’m almost over the hump, and if I hold on a bit longer values will come up,’ he said.”
“There are still plenty of people in trouble with their mortgages, although the numbers are declining, said Martin Eichner of Project Sentinel in Sunnyvale, an authorized nonprofit that helps struggling homeowners. ‘We had a foreclosure fair in San Mateo in October,’ he said, ‘and there was a line around the block before we opened the door.’”
The Press Enterprise. “Terra Verde Group, a real estate investment firm that recapitalizes distressed real estate assets, announced the acquisition of Rancho Las Flores, a 9,850-acre master-planned community in Hesperia. The property was acquired from R.E. Loans, a private mortgage lender that lent more than $80 million to the project and emerged from bankruptcy in the third quarter of 2012, said Craig Martin, founding partner of Texas-based Terra Verde.”
“Currently in an unimproved condition, Martin said the rolling terrain with valley plains and mountain views will be designed to support up to 15,500 residential units. What prompted the Rancho Las Flores acquisition? ‘We’re seeing the market tighten up across Southern California,’ Martin said. ‘Developers have been less active in the last few years than homebuilders, so lot supplies have been absorbed. Lot prices are climbing back to previous high water market price levels. We think that trend will continue, and accelerate.’”
