May 29, 2013

Skittishness Seems So Last Year

The Glendale News Press reports from California. “The real estate market in Glendale ticked upward again last month after a brief stall in March, reflecting an ongoing limited number of homes for sale and a multitude of potential buyers, according to the latest real estate report. Realtor Anne McDonald said that Realtors aren’t sure why more sellers aren’t taking advantage of the tight market. ‘We’re speculating that sellers are kind of waiting for prices to go up for a little bit before putting their house on the market,’ she said.”

“Despite the fact that sellers are getting multiple offers on their listings and the continued increase in prices, McDonald said she didn’t think any trouble is brewing in the market. ‘I don’t think we’re really heading for a bubble right now. Right now, it’s just kind of correcting itself,’ she said, adding the market is not where it was in 2003 and 2004.”

The Wall Street Journal. “In California, the number of homes sold in recent months that had been flipped—or bought and resold within six months—has reached the highest levels since late 2005, according to PropertyRadar. The growing competition from investors is unwelcome news for ordinary buyers. After waiting years for prices to hit bottom, ‘buyers are jumping in before prices bounce so high they can’t afford it,’ said Christine Donovan, a real-estate agent in Costa Mesa, Calif.”

The Santa Ynez Valley News. “On April 19, after renting in Los Alamos for two years, Cliff and Rowena Chapman closed escrow on their Orcutt home. ‘We feel that the interest rates are still low and, we’ve been watching the news, we feel the housing market is starting to turn. We think housing prices are going to march up,’ said Cliff Chapman.”

The Santa Cruz Sentinel. “Buyers are snapping at new offerings like hungry fish. Of the 143 sales, 23 were on the market for seven days or less. That includes seven for zero days, indicating the house sold within 24 hours or was a ‘pocket listing,’ where the agent did not post the listing on the MLS. ‘This is becoming more common as the market becomes increasingly competitive,’ said Jim Harrison, MLS Listings chief executive officer, noting 12 percent of last year’s sales in Santa Cruz County were pocket listings.”

“In some neighborhoods, home values are spiking up so fast appraisals have yet to catch up. The owners of 5 Cabernet Court in in Scotts Valley listed their four-bedroom home for $899,000 and got five offers, most of them local. The buyers paid $953,000. ‘They paid $64,000 over the appraised value,’ said Gayle O’Neal of American Dream Realty who represented the sellers. ‘Buyers are coming in with no loan contingencies, no appraisal contingency and no inspection contingency. If it doesn’t appraise (at their offer), they’re going to have to pay the cash. It’s mind-boggling how quickly it’s changed,’ she said. ‘You have to educate buyers and have them ready to go. You have to write the offer that day. It won’t be there tomorrow’”

“A two-bedroom home in Capitola was on the market for 277 days before it sold for $850,000. Judy Brose, the seller’s agent, said the house went into escrow twice without closing when buyers had second thoughts. That skittishness seems so last year.”

The Mercury News. “Despite increasing prices, many homeowners still have low levels of equity and aren’t willing to sell, Zillow said. A homeowner would need about 20 percent equity to put a house on the market and cover a down payment on the next home, real estate fees and other expenses, said Zillow’s chief economist, Stan Humphries. Many homes have moved back ‘above water’ — a home is underwater when it is worth less than the amount of its mortgage — but that isn’t enough. ‘A bunch of people don’t have the down payment for their next house,’ he said.”

“‘I have a lot of conversations with some of my clients who are wanting to break even,’ said Noreleen de Mesa, a broker in San Bruno. ‘A lot of them are still dabbling with the idea, but the majority are probably hanging on to their property, hoping the market continues the route that it’s on.’”

The Union Tribune. “The share of San Diego County borrowers who are underwater on their mortgages continues to fall due to home-price gains, says a recent analysis from real estate website Zillow. So why aren’t more homeowners freed from negative equity listing their homes in this supply-constrained market? Negative equity in the county stood at nearly 25 percent in the first quarter, down from 28 percent during the last quarter of 2012, Zillow figures show. The first quarter’s percentage translates to more than 114,000 homes with underwater mortgages, equalling $13.7 billion.”

“When crunching the share of San Diego borrowers who have less than 20 percent equity, what Zillow calls the ‘effective’ negative rate hits nearly 44 percent. ‘There two big factors distorting the market. … The first is negative equity … and the second big distortion is incredibly low interest rates,’ said Stan Humphries, Zillow’s chief economist.”

From 10 News. “The scarcity of homes for sale has led to a seller’s market in San Diego County, but is there a so-called shadow inventory of homes that could soon flood the market? Realtor Arnie Levine says many homeowners that survived the down market are reluctant to sell. ‘They figure if they wait it out, they’ll have positive equity and then they’ll sell,’ said Levine.”

“Nationwide numbers show a so-called shadow inventory lurking — some 2 million foreclosures, short sales and mortgage delinquencies that could lead to foreclosures. In San Diego County, that shadow inventory includes some 13,000 mortgages currently delinquent, according to Fitch Ratings. So if the banks don’t release the properties, what happens to them? Mark Goldman, an SDSU Real Estate lecturer, points to speculation. Banks could make more money by selling to pools of investors who would then rent out the homes. ‘I don’t think we’re going to see a sudden deluge of properties,’ said Goldman.”

The Contra Costa Times. “Millions of Americans have lost their homes, and millions more could meet the same fate. Now, a San Francisco investment firm thinks it has found a remedy and a willing partner in a Bay Area city that is no stranger to pursuing radical ideas. The idea is to use the tool of eminent domain. Under a plan now taking shape, Richmond would seize underwater mortgages and work to refinance them under terms the homeowners could afford. A report released last month by the alliance revealed that 900 Richmond families lost their homes last year and that 4,600 local homeowners were underwater on their mortgages by about $700 million.”

“Robert and Patricia Castillo bought their three-bedroom home in the North and East neighborhood in 2005 for $420,000. Today, its value recently climbed back over $200,000, but the Castillos still struggle with an $1,800-per-month mortgage payment, which is set to increase to $2,500 in 2015. Their mortgage has been passed between several servicers and lenders, and they hope they would quality for the plan.”

“‘It’s a struggle daily,’ said Robert Castillo, a diesel mechanic for the Berkeley school district. ‘Many of our neighbors have lost their homes.’”

Bits Bucket for May 29, 2013

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