January 21, 2014

Homeowners Gamble The Increases Will Continue

The Union Tribune reports from California. “The stakes are high for San Diego’s housing market as the Federal Reserve tapers the national economy off super-low interest rates. Already, skyrocketing mortgage payments may have chased away enough demand to halt price growth. A typical new mortgage in San Diego County hit a modern low of $1,150 a month in February 2012, but by last month it had jumped nearly 47 percent to $1,695. Most of the increase came from home prices, which surged 38 percent in less than two years.

“Christopher Thornberg, founding partner of Beacon Economics in Los Angeles, predicts rising prices, even as he warns that the shortage poses a serious threat. ‘If you think about the California economy, and what is holding back growth right now, it has to do with a high number of people leaving the state because housing is unaffordable,’ he said.”

The Glendale News Press. “More homes went up for sale throughout the Glendale area last month compared to a year ago, according to the latest real estate report. However, fewer residences sold last month. More homes on the market didn’t drive prices down, though. The median price for a single-family home climbed to $727,000 last month, from $620,000 the year prior. Realtor Keith Sorem with Keller Williams Realty in Glendale, said it’s too early to tell if December’s stats are the beginning of a trend, pointing out that, like economics, directions in real estate are often about hindsight. ‘You only know what’s happening after it happens,’ he said.”

“He added, though, that what surprised him the most during the past several months is that as home prices increased throughout most of last year, inventory didn’t pick up as potential home sellers saw that they could get more money for their property.”

The Marin Independent Journal. “While the multiple-offer situation has eased in recent months, Josh Morgan is all too familiar with multiple bidding from other buyers competing for the same place. ‘A house went on the market in San Rafael for $1,300,000. We offered $1,425,000, but there were 10 other offers, and it went for $1,650,000,’ said Morgan, who is a banker.”

“One of the reasons for the low supply could be that ‘homeowners may simply be hoping that house prices will continue to rise, allowing them to recover lost equity,’ said John Krainer, a senior economist in the economic research department of the Federal Reserve Bank of San Francisco. ‘It is well-documented that house price changes are persistent,’ meaning that price rises are likely to be followed by more rises, Krainer said. Those homeowners who don’t have to sell right away ‘can potentially take advantage of this. They may want to wait and gamble that the increases will continue, allowing them to sell later at a higher price.’”

“A local agent echoed Krainer’s analysis. ‘I think people are just hoping if they wait a little bit longer that their home will be worth a little more,’ said Alva Falla, an agent with Coldwell Banker.”

The Mercury News. “Rents in large Bay Area apartment complexes flattened out in the last quarter of 2013, according to a report Wednesday from RealFacts, continuing a slowing trend from the previous quarter. Veronica Ramos, who directs a migrant worker project for the Santa Clara County School District, was shocked at the rents when she relocated to the South Bay from Stockton. She moved in with her parents in Campbell. This week, she finally landed a studio apartment in Campbell for $1,800 a month, with a hefty deposit. ‘How do you afford a studio apartment and save money for a house?’ she asked.”

The Press Democrat. “While sales slowed markedly in December, Sonoma County’s housing market in 2013 still posted its best year since 2006. For trends, some pointed to the lack of inventory as a force that will push prices higher this year. Others suggested the market doesn’t seem as frantic since mortgage rates started to rise last summer. ‘We didn’t see as many multiple offers in the last few months of the year,’ said Glenn Gephart, an owner of Century 21 Alliance in Santa Rosa.”

“Joanne Lumsden, an agent with Keller Williams in Santa Rosa, said she has a client who is getting ready to list a 2.5-acre property in southwest Santa Rosa. When she asked him when to put it on the market, he answered, ‘The day after the Super Bowl.’”

The Desert Sun. “After a slight uptick in the fall, Coachella Valley foreclosures ended 2013 with an 8.2 percent month-over-month decline in December, a new housing report shows. Michael Ricks, an REO director for Windermere, said more private investors are letting go of distressed properties, especially those that are completely gutted. The homes are typically vacant when he visits them, he said. ‘It’s the investors who are going to foreclosures,’ said Ricks, a Palm Springs agent who says he’s closed more than 250 foreclosures since the recession. ‘It’s typically not a homeowner anymore, and if it’s a homeowner, it’s a second home.’”

“Brandy Nelson, a broker for Red Top Realty in Palm Desert, said she recently listed properties in La Quinta and Palm Desert that are going through foreclosure. ‘Homeowners get overwhelmed,’ Nelson said. ‘They’re not sure what to do, so they walk away.’”

Bits Bucket for January 21, 2014

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