January 16, 2014

A Sense Of Urgency That Drove Them To Overpay

The Press Enterprise reports from California. “Home sale prices across Southern California were poker-hot in December, the latest report from DataQuick suggests. But even as Southern California recorded its highest median sale price since 2007, the 22 percent gain took the spark out of sales. The biggest December home sale declines were measured along the coast. Sales dropped 17.5 percent in San Diego County and fell 13.3 percent in Los Angeles County. Ventura County had a time of it, too, with sales plunging 11.7 percent.”

“As prices rose, inventory became constrained in unique ways. Homeowners with equity stood back to watch the price gains play out. Investors backed away when the buy-prices stopped penciling out. Banks began to delay closing escrow on short sales, as appraisal reports touted monthly gains. First-time homebuyers continued to feel the squeeze. Mike Novak-Smith, a broker with Re/Max Results, Moreno Valley, said market prices have been pushed up so high the investors are pulling back. ‘They were part of the price run-up,’ he said. ‘Now, a lot of the investors have pulled out.’”

The Ventura County Star. “Amid scarce listings, and surging prices and demand, 2013 was a boon time for sellers in the Ventura County residential real estate market. Buyers snapped up homes last year with a sense of urgency that sometimes drove them to overpay, said Renee Rector, a Realtor with Troop Real Estate in Simi Valley. On average, she was getting about 15 offers per home. She’s now seeing three or four. The competition from investors has lessened as the inventory levels have dried up. Prices are still rising but not as fast, and buyers are settling down, she said.”

“‘It was extremely aggressive,’ Rector said, describing the environment in 2013. ‘It was like a game. You kind of had to teach your buyers and sellers how to play that game. More importantly, not to get caught up in it.’”

The Mercury News. “Before the dot-com bubble, Bay Area homeowners spent 38 percent of their income on home payments, said Zillow’s chief economist Stan Humphries. They’re now spending just over 40 percent. ‘Our concern is when rates go back to even 5 percent, people will be spending 46 percent of their income. That’s substantially above the historical rate. And if (rates) go to 6 percent, they will be spending more than half their incomes on house payments,’ he said.”

“Sun Ming, who lives in Hangzhou, China, was here last week shopping for a house. She said she’s looking in Cupertino to be near a friend who recently bought a home there, and plans to tell several other friends to think about buying a home in Silicon Valley. She said she’s looking for homes under $2 million.”

The Times Herald. “Solano County saw growth in home sale prices last year, Solano Association of Realtors President Toni Foster said. The latest numbers show that compared to a year ago, November prices rose throughout the county, with Suisun City’s increasing an ‘impressive 59.75 percent’, she said. Vacaville saw about a 32 percent rise, while Rio Vista’s rose nearly 30 percent. Vallejo saw a 25 increase, Benicia’s rose nearly 23 percent and Fairfield’s went up 21 percent, Foster said.”

“The area also saw ‘a considerable drop in inventory’ last month, with properties ‘just now popping back up,’ Foster said. ‘For example, just ten days ago, Benicia had seven single family homes for sale and today that number is double,’ she said. ‘Still low, but growing and countywide inventory numbers are increasing daily.’”

The Bakersfield Californian. “According to appraiser Gary Crabtree, last year was a ‘watershed’ year with the median price jumping from $162,000 to $208,000 by the end of the year. Said the Crabtree Report: ‘Based upon a 12 month running average, the citywide appreciation rate is 30 percent or 2.4 percent per month. Housing supply is increasing with the total current listings on the market at 930 or 81 percent above the same period last year.’ In addition, the volume of sales decreased by 8.5 percent year over year. ‘Overall, the market is defined as in recovery with a trend towards declining price increases due to increasing inventory, interest rates and housing affordability.’”

The Sacramento Bee. “After months of trying, members of the Richmond City Council have been unable to muster the supermajority of votes they need to enact a controversial plan to use eminent domain to seize underwater mortgages and slash the amounts that borrowers owe. Now Richmond Mayor Gayle McLaughlin and other council members who support the plan are looking to partner with other communities in a joint powers authority, or JPA. The move would require only a simple majority of council votes and could broaden Richmond’s initiative to other cities in California or even in other states.”

“The housing recovery has bolstered many areas of California, including Silicon Valley, San Francisco and Sacramento. But many other cities have been left behind, and millions of Americans still owe far more than their homes are worth after last decade’s housing bubble, said Steven Gluckstern, chairman of Mortgage Resolution Partners. Richmond’s median home price sank from a high of $454,000 in 2006 to $95,000 in 2009 – a 79 percent drop, DataQuick reported. As of September, the city’s median home price remained more than 49 percent below its 2006 peak, the firm said. Other Bay Area cities, such as Palo Alto and San Francisco, exceeded their bubble-era peaks last year.”

“On Thursday, RealtyTrac reported that 9.3 million U.S. residential properties – about one-fifth of homes with a mortgage – remained deeply underwater in December, meaning they were worth at least 25 percent less than homeowners owed. ‘The problem is the problem’s not going away,’ Gluckstern said.”

Bits Bucket for January 16, 2014

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