April 23, 2014

A Feeding Frenzy, Then Everything Sort Of Stopped

The Orange County Register reports from California. “OK, now I’m a bit worried. The local homebuying slump extended itself into the start of the traditional house-shopping season – and Southern Californians certainly can’t blame ‘bad winter weather’ for the sluggishness. DataQuick reported that it was the slowest-selling March in six years, but there’s also more to be nervous about: While March’s sales count is up 26 percent from February, that’s limited oomph for the unofficial opening of the prime house-hunting period. February-to-March sales have averaged a 36 percent increase since 1988.”

“March sales were off 14 percent in a year, the sixth consecutive year-over-year drop. The five previous six-month dips were tied to the two most recent housing debacles. March 2006: The longest sales drop in 11 years was an early red flag that bad stuff was about to happen. Southern California homebuying would fall on a year-over-year basis for 15 more months – including an annualized drop of 32 percent by March 2007. Intriguingly, prices would rise 5 percent in the year after March 2006, only to tumble by 24 percent in the following 12 months.”

The Associated Press. “DataQuick said Sales in a six-county region of Southern California tumbled 14.3 percent from a year earlier, while sales in the nine-county San Francisco Bay Area slid 12.9 percent. Selma Hepp, senior economist at the California Association of Realtors, pinned weaker sales on declining interest from investors and lack of affordability after huge price increases during the first half of last year sidelined potential buyers.”

“‘There’s sort of a waiting game,’ she said. ‘Prices were going up so fast, there was such a feeding frenzy until June or July. Then everything sort of stopped.’”

The Daily News. “The number of homes for sale soared 50 percent in the San Fernando Valley during March, but sales remained soft as prices crested the half-million-dollar mark. At the end of March, there were 1,520 previously owned houses and condos listed for sale, up from 1,015 a year earlier, said Southland Regional Association of Realtors.”

“‘It stands to reason that the market would slow down now that the bargains and deeply discounted prices are gone,’ association CEO Jim Link said. ‘I’m optimistic, but I truly believe we’re in a holding pattern, waiting for buyers to accept that they cannot get bargain-basement prices and for sellers to understand there is a clear limit on their asking prices.’”

The Desert Sun. “Housing affordability in California is a major concern, said economist Leslie Appleton-Young , who analyzes housing data for the California Association of Realtors. She pointed to a chart showing that 28 percent of the state market was first-time buyers. ‘This is the chart that’s the biggest issue going forward,’ Appleton-Young said. ‘We still need to have first-time home-buyers be 50 percent of the market. You need to get people on that ownership ladder.’”

“In January, the FHA loan limit in Riverside County dropped 29 percent from $500,000 to $355,350. The drop shuts out buyers who had wanted to purchase a more expensive primary home. For many first-time buyers, FHA loans are their only option.”

“But sellers and their agents who were too optimistic over the winter have had to chop their asking prices. It’s a trend across the major metro areas of California, the economist said. During a recent visit to Manhattan Beach, Appleton-Young noticed six listings with new price reductions. ‘Price adjustments have helped a lot’ to sell luxury homes sitting on the market, said Sherry Owens, an Indian Wells real estate agent.”

The Los Angeles Times. “New California foreclosure starts rose in the first quarter, although they remain at pre-bust levels. Default notices — the first step in the state’s foreclosure process — jumped 6% from the previous quarter to 19,215, research firm DataQuick said Tuesday. New foreclosure filings rose 3.5% from the first quarter of 2013.”

“DataQuick analyst John Karevoll said the rise from the fourth quarter, the lowest level since 2005, probably came from lenders working through their delinquent loan pipelines and not from more financial distress. ‘They may well be just working their way through a backlog, stacks of paper piled high on desks,’ he said.”

“The year-over-year increase was the first such rise since the last three months of 2009. However, the increase came solely from a significant surge in January, as notices of default jumped 64% from a year earlier.”

Bits Bucket for April 23, 2014

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