Affordability Is Becoming More Of A Problem Again
The Los Angeles Times reports from California. “The number of homes on the market jumped in February, according to new figures from the California Assn. of Realtors, and is well above figures from a year ago. C.A.R. reported five months’ worth of unsold inventory on the market in the Los Angeles metropolitan area. That’s up from 4.5 months in January, and 3.8 months in February 2013. In some parts of the region, especially Riverside County at 5.6 months, the inventory was even higher. C.A.R.’s chief economist, Leslie Appleton-Young pointed to a 27% growth in homes for sale between $300,000 and $750,000 – a range that accounts nearly half of all home sales in California – as a sign that the market is becoming more fluid.”
“‘You’ve got sellers responding to price appreciation and thinking maybe now’s the time to make a move,’ she said. But that price appreciation is making it harder for buyers to take advantage. Sales volume in the Los Angeles area is down 12.6% year-over-year, which is also contributing to higher inventory, as homes stay on the market longer. Affordability is becoming more of a problem again. ‘That’s one of the things we’re getting increasingly concerned about,’ she said. ‘The share of first-time home buyers is really low.’”
The Daily News. “Tight inventory and the continuing decline in distressed properties combined to stagnate homebuying activity across Southern California in February as sales dropped to their lowest level for the month in six years, said DataQuick. ‘I think we are in an extended adjustment period. We had a fairly extended good period that lasted about nine years, probably longer than it should have,’ said said Roger Hance, president of the Van Nuys-based Southland Regional Association of Realtors, of the time period leading up to the crash in the middle of the last decade.”
“DataQuick analyst Andrew LePage expects inventory to follow a normal seasonal pattern and increase this spring but a glut of homes coming on the market is not likely. ‘On the buyer side (of the market) some people have been nudged out and a number of people have taken a step back after prices spiked last year and want to see if they hold,’ LePage said.”
The Friday Flyer. “The Southwest California housing market is hoping for a little spring in the market over the next few months. Sales have been declining steadily and prices slid again last month after rising slightly in January. Since peaking in September at $445,514, Temecula has dropped 9% to $406,918 this month. Murrieta topped out at $399,908 in November, dropping 13% to $347,206 last month. Region-wide, our median fell 4% while the rest of the state was off 6%.”
“Single family resales are down 7% from a year ago but if you look at the sales chart you’ll see we experienced a four-month rally starting in March in each of the past two years. Pending sales don’t indicate that kind of increase starting soon but the traditional spring buying season is upon us so we’ll see how sustainable this recovery has been. The drop-off in investor purchases and first time buyers is evident in the market but the biggest problem continues to be buyer qualifications.”
The Press Democrat. “Amid tight inventory, Sonoma County’s housing market has gotten off to its slowest start in six years. Buyers purchased 260 single-family homes in February, according to The Press Democrat’s monthly housing report compiled by Pacific Union International VP Rick Laws. Last month, sales fell 11 percent from a year earlier. For the first two months of 2014, buyers have purchased 535 houses. That is the lowest number since 347 homes were purchased for the same period in 2008, a time when prices were tumbling sharply. ‘Without a doubt we’re off to a slow start,’ Laws said.”
“To date this year, sales of Sonoma County homes priced under $300,000 have declined 73 percent from a year earlier. Meanwhile, sales have increased 79 percent for homes priced at or above $700,000.”
“Agents expect more homes on the market as the traditional spring sales season gets under way. Even so, many potential sellers have two reasons for taking their time, said Maria Lounibos, a broker with Sotheby’s International Realty in Sonoma. Some sellers, she said, are betting on rising prices and thinking, ‘If I can get 600 today, six months from now I can get 650.’”
The Burbank Leader. “The median home price for a Burbank home in February was more than $100,000 above what it was during the same time last year. The median cost for a single family residence last month was $638,000, a nearly 21% uptick from $527,750 in February 2013, according to Realtor Eric Benz with Dilbeck Real Estate. Linda Barnes, a Realtor with Keller Williams Realty in Burbank, said she doubts the market will see a rapid growth in prices as in the start of 2012, a scenario that has the makings for the bursting of another housing bubble.”
“‘I don’t expect to see that kind of surge in prices,’ she said. ‘Whenever you have prices go up too rapidly, then you have that kind of situation where people see so much value in their homes that they start taking out a lot of money because their houses would appraise for that much money.’”
The Press Enterprise. “A federal court’s approval of the $2.1 billion settlement that California and 48 states reached with Ocwen Financial Corporation and its servicing company in December 2013 over mortgage servicing violations has opened old wounds in the Inland region. Charles Gregg, now living in a homeless shelter in San Bernardino, said he’d be happy if he could get some of his losses back. Gregg said his problems began after he refinanced the house, missed a few payments and had his loan get repackaged and resold. Later, he said he discovered the foreclosure filings were robo-signed.”
“‘I took them to state court and federal court and, both times, was told I had no standing to sue,’ he said. ‘Now, reading this, I believe I’ve been victimized, too.’”
The Southland Times. “Is buying a family home really a good investment? NZ Wealth head of advisor services Ben Brinkerhoff had his fingers singed in the US housing collapse, so he knows this better than most. Back in 2003 he bought a cheap condo in San Diego, not too far from the sea. With fees, rates, utilities and insurance to pay, he was forking out a significant premium to own over renting. ‘I was essentially losing money every month, but the property values continued to appreciate,’ he says.”
“Until 2007, that is, when everything tanked. Brinkerhoff got out relatively early, selling up for a US$30,000 loss. ‘If it’d continued to go up, it looked like it was the smartest thing ever,’ he says. ‘If it went down, you can see how stupid it became pretty quick.’”
“One of his friends took the fall harder. All the warning signs were there: The house was cheaper to rent than to own, his dad paid the deposit, and he could only afford interest-only payments. ‘I said, ‘I wouldn’t touch it’,’ says Brinkerhoff. But try telling that to someone who had watched property appreciate for something like 14 straight years. ‘In these people’s entire investing lifetimes, they’d only seen this thing go one direction,’ says Brinkerhoff. ‘And he didn’t listen to me, and he got creamed - he got totally, totally creamed.’”