An Indicator Of What’s To Come In California
The Press Democrat reports from California. “October ended with fewer than 850 homes available for sale in Sonoma County, less than a two-month supply at the current sales pace. Agents and brokers don’t expect a big upswing in inventory in the coming months, partly because so little new home construction has occurred in the last six years. Peg King, an agent with Coldwell Banker in Petaluma, said some sellers have told her they won’t list their homes until next spring specifically because they have heard that prices will rise next year. ‘They have their ear to the ground,’ King said of sellers.”
The Mercury News. “After years of post-bubble turbulence, the Bay Area housing market appears headed for a period of stability as rapid price increases hit a wall and sales plateau. Santa Clara County’s median of $713,000 was up 15 percent from a year ago, but down 5 percent since June. San Mateo County’s median price of $782,000 was up almost 15 percent from a year ago, but down almost 10 percent from a high in August.”
“Alameda County’s median sale price was $568,000, up 35 percent from last year but down nearly 4 percent since a summer peak. Contra Costa County’s median sale price of $395,000 was up 31.7 percent from October 2012 but down 12 percent from July. ‘Until a few months ago, price reductions were almost unheard of,’ said Steve Pierce of Keller Williams Benchmark Properties in Fremont. ‘Now it’s becoming more commonplace, particularly if properties were not priced reasonably to begin with.’”
The Santa Cruz Sentinel. “‘I’m seeing a cool-down,’ said Heidi Robinson, an agent with Thunderbird Real Estate in Soquel who represented sellers in Scotts Valley and Ben Lomond who closed deals to investors in October. ‘We don’t have the buyers we had before … They got a little tired of that multiple-offer scenario and decided to take a break.’”
“Robinson, who has specialized in distressed properties, said a lot of investors were ‘fixing and flipping’ during the summer in San Lorenzo Valley, where an investment of $20,000 could ready a home for a buyer using an Federal Home Administration loan. That activity has slowed, whether an aftereffect of the federal government shutdown in October or a result of the slowdown in the Silicon Valley housing market. One example: A newly remodeled three-bedroom house in Capitola was listed for $635,000 on Oct. 28 by owners who are relocating. A week ago, the price was dropped to $599,000.”
The Union Tribune. “Foreclosures in San Diego County ticked up from September to October. Last month, lenders foreclosed on 173 properties in the county, up 18.5 percent from the 146 in September, DataQuick reported. Percentage wise, it was the biggest month-to-month jump in foreclosures since they rose from 715 in December 2010 to 959 in January 2011, a 34.1 percent gain. A bank can file a default notice 90 days after a missed payment, starting the foreclosure process. Filed notices rose from 466 in September to 541 in October.”
“‘I just attribute that to noise,’ said. ‘It’s such a small number. In general, I would expect foreclosures to be going down as property values increase more and more.’”
The East Bay Express. “Earlier this fall, glossy mailers blanketed Richmond as part of a smear campaign against the city’s proposal. ‘Wall Street is back to take another bite’ out of your home, the mailers warned. ‘The Council’s heart is in the right place — they are trying to help Richmond homeowners struggling to save their homes, but they’ve bought a risky plan that could seriously harm the value of your home.’”
“The mailers were financed, in part, by a $70,000 donation from the California Association of Realtors.”
“Currently, about half of Richmond’s homeowners are still underwater on their mortgages — that is, they owe more than their home is worth. Vicky Conway is one such homeowner. The lifelong Richmond resident bought a house with her husband in the North & East neighborhood of the city in 2004 for $325,000. She estimates it’s now worth less than half what they paid for it. ‘We’re not going to be able to retire and continue with the same mortgage payments,’ she said.”
From New Times SLO. “Even once they hit the multiple listing service of the retail real estate market, many of the flipped houses in SLO County weren’t bought by people who wanted to live in them. The number of claims for homeowner’s exemptions has fallen each year since 2008, decreasing by more than 1,650 in the last five years, according to Kirk Kidwell, the assistant county assessor. Investors may be holding on to houses until prices rise higher, or fixing them up for resale.”
“‘We just don’t know how many houses are being held off the market,’ Dana Lilley, a county supervising planner who specializes in housing, pointed out.”
From CNBC. “They say all real estate is local, but the West has more recently been an indicator of what is to come for the rest of the nation. It was the first region to crash in the mid-2000’s and the first to show signs of recovery toward the end of the last decade. Now the tides have turned again. Sales of existing home sales nationally fell 3.2 percent in October from the previous month, but in the West they were down 7 percent. The West was also the only region to see a year-over-year decline in home sales.”
“Investors may be putting some properties back on the market again in Phoenix, eager to take advantage of higher prices, but those same higher prices are crimping demand. If this is an indicator of what is to come in California, that is a clear red flag.”
“While home prices in California, and across the nation, are still well below their peaks of the housing boom, there is a major difference for home buyers today: credit. Mortgage rates may be lower on the 30-year fixed, but that wasn’t the product used during the boom. Adjustable rate loans with no down-payment requirement and 1-percent ‘teaser’ rates were popular. Those are gone today. Now, most loans are fixed-rate products that require larger down-payments and higher credit scores.”
“‘Bottom line, on a monthly-payment basis and relative to income needed to qualify for a loan, a house in California is far more ‘expensive’ than from 2004 to 2008, even though house prices are not back to peak levels,’ said Mark Hanson, a California-based housing analyst. ‘Put another way, it costs a lot more today to pay for a house using a mortgage than it did from 2004 to 2008. Thus, if 2004 to 2008 was a ‘bubble,’ then this must be, too.’”
