June 2, 2014

Buyers Are Balking At Paying What Sellers Are Asking

The Mercury News reports from California. “Prices of single-family homes were up 17.1 percent in April from the previous year across the Bay Area, according to DataQuick. Although inventory is still low, it is increasing with the summer home buying season, and that may ease some of the pressure. But some of that recent inventory growth may be because owners are overpricing their homes and those homes are not selling. Some are behaving like investors with a hot stock, trying to ‘time the market’ by holding onto their properties in the hope of selling at the peak, said Don Cruz Datanagan, East Bay manager for ZipRealty.”

“Sales of single-family homes dropped 5.5 percent in April from the previous year across the nine-county Bay Area, according to DataQuick. Kabir Chahal, and his wife, Labina Patel, who work at Silicon Valley tech companies, want to move but are reluctant to part with a mortgage with a low interest rate. They bought their Almaden Valley home three years ago for $800,000, refinanced at 3.875 percent.”

“They could sell for about $1 million, Chahal said, but the houses they might consider buying are priced at $1.1 million to $1.2 million, and there aren’t many available that they really like. ‘We are going to keep looking, but both me and my wife realize we are not going to get so lucky this time around,’ said Chahal. ‘If things don’t work out, we’re not going to overpay.’”

CBS San Francisco. “More and more, home buyers are bringing a once-rare tactic to the negotiation — all-cash offers. And, in the San Francisco Bay Area, a lot of those buyers are coming from China. Phil Matier spoke with Mark McLaughlin, CEO of prominent San Francisco real estate firm Pacific Union International Inc. Matier: ‘What is driving the capital here … what’s [causing] people from China to invest this kind of money in San Francisco?’”

“McLaughlin: ‘I think we’re seeing three different phenomena. One is asset diversification, people trying to move money out of China. Two would be education for their families. And three would be lifestyle, this is a beautiful place to live.’ Matier: ‘Are they actually living here or are they just buying houses here the way we might be puttting money in a safety deposit box — it would be safe here, it’s free from any government moves in China and the value would be appreciating?’”

“McLaughlin: ‘It’s difficult to generalize on that but I’d say that probably fifty percent of them are living here.’”

The Santa Cruz Sentinel. “The median price for a single-family home in Santa Cruz County was $625,750 in April on 154 sales, a shift from March with a median price of $662,750 on 114 sales, according to Gary Gangnes of Real Options Realty, who tracks the numbers. The median, the midpoint of what sold, spiked a year ago in April to $640,000, peaked in November at $674,444, fell in December to $618,500, and began rising again.”

“One trend is for smaller condo units getting built in walkable locations. The newest is 224 Laurel St. in downtown Santa Cruz. Investors from Los Altos took over an empty lot that went to foreclosure and put up the 16-condo project that got city approval before the market tanked. The initial investors had hoped the condos would fetch $600,000 each. Asking prices currently are $279,000 for a 400-square-foot studio and $359,000 for a 480-square-foot one-bedroom unit.”

“Home buyers are balking at paying what sellers are asking. That’s the explanation Dave Dawson, an agent with Bailey Properties, offered for the current market. ‘What’s happening, prices ticked up, sellers want more, and buyers are not ready to give it to them,’ he said.”

The Union Tribune. “Q: What advice do you have for San Diegans who are still underwater on their homes? Bill Davidson, president of Davidson Communities: ‘My advice is to ‘hold on.’ Time will heal the problem. The market is stabilizing, people are living longer, babies are born every day and there is modest job growth. Inflation in our industry is running high. Based on all the above, we expect housing prices in San Diego to continue to increase. So hang on.”

“Michael Lea, real estate professor at the Corky McMillin Center for Real Estate at San Diego State University: ‘The time to wait is over. After nearly two years of double-digit house price gains the housing market has started to cool. House price increases will slow to the mid single digits in 2014 and 2015. If you need to move for job or family reasons you should bite the bullet, take the loss and sell the house. Otherwise sit tight and your equity position will slowly improve.’”

The Desert Dispatch. “Motorists driving past the Lenwood Road overpass project toward Barstow see firsthand the results of decades of economic decay: Run-down buildings, businesses barely hanging on, others long closed. There are two major projects on the horizon that put that Lenwood neighborhood at ground zero for a possible economic explosion. Affordability, jobs and housing are all on the minds of city officials, politicians and real estate experts like Carol Randall, VP with Lee & Associates.”

“‘Some people moved out there to be able to see the stars,’ Randall said. ‘If they decide to sell, I hope they get the price they want. The value of their home is very important to them. Lifestyle is threatened. They made these choices (to live in Lenwood) years ago. They may be mourning the loss of the value of their homes and their lifestyle. And I can understand that.’”

The Tahoe Daily Tribune. “Robert and Monique Acosta borrowed $700, 000 from San Diego Metropolitan Credit Union in May 2007 — essentially at the top of the market when life was good and lenders couldn’t give money away fast enough. Case in point: The home appraised for $705,000. Three years later in June 2010, the Acostas’ home had dropped in value and they were facing foreclosure. I’m assuming the Acostas attempted to modify their loan or sell through a short sale without success. In any event, they were upset with their lender.”

“The Acostas moved out of their home after the foreclosure sale but not before taking out their rage by making a few ‘home modifications’ including the following: Cutting down a tree in the back yard and pushing it into the swimming pool; pulling up all plants and the cypress trees; spray painting the interior walls; putting black dye on all the tile; removing a speaker system, shutters, stove hood and three chandeliers; pulling out the wrought iron posts from the staircase; smashing the banister; demolishing the hot tub; pulling out the kitchen cabinets, countertops, appliances and even wooden beams attached to the ceiling; removing the carpet; tearing out the rock facing on the house exterior; removing the garage door and entry gate; removing all light fixtures; smashing all plumbing; removing 12 interior doors; destroying the pool and pool equipment; pulling out the air conditioning units; and throwing almost everything in the pool — after chipping the pool steps.”

“Other than that they left the house intact just as they had found it. The credit union sold the house ‘as is’ for $178,500 after going on title following the foreclosure. Most of that sum was covered by insurance, but overall the credit union took a big loss. It was probably reimbursed by another lender or the federal government, but I’m only guessing.”

“The Acostas were charged with a violation of Section 502.5 of the Penal Code which forbids a borrower from intentionally harming a secured lender by removing or disposing of property that is ‘attached or affixed’ to the premises. By the way, the police found some of the missing items in a storage unit maintained by the Acostas and located a Craig’s List advertisement for ‘cypress trees’ with Robert Acostas’ telephone number. I can see the ad now: ‘One cypress tree and just about everything else you need for your home, some items available for pickup and some to be retrieved from the bottom of a certain swimming pool.’”

“The Acostas were put on probation for five years on condition they serve jail time of 270 days. While it probably felt good at the time, their misguided attempt to get back at the lender cannot have been worth it.”

Bits Bucket for June 2, 2014

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