The Housing Bubble

The Mercury News reports from California. “Sales of all types of homes in the Bay Area in March were up 35 percent, to 7,694 homes from February and up 9 percent since March 2011. The median price was virtually unchanged. Agents are reporting multiple offers on both sides of the bay. One home in Cupertino received 50 offers before the seller accepted a bid of slightly more than $1 million. ‘Inventory’s low,’ said Don Orason of Intero Almaden. He said that’s because not only are fewer homes being offered for sale, but they are snapped up almost the minute they go on the market.”

“‘People are finally waking up to the fact that we probably hit bottom and they better get in while the rates are low,’ said Paul Ward of Keller Williams in Danville.”

“Cheryl and Ken Mensing bought their first house this month after 28 years in a mobile home. There were nine bids on the 4-bedroom, 2-bath foreclosure in the Santa Teresa area of San Jose listed at $429,000. The couple won with a bid of $442,000. Mensing said she and her husband saw prices edging up and decided that the stars were aligned for ‘a leap of faith’ into the housing market. ‘The prices finally came into where we could actually afford them and get into the market,’ she said. ‘The interest rates were so low, so we thought this is the time — now or never. We just closed our eyes and jumped.’”

The Signal. “The dwindling inventory is leading to bidding wars over homes, local Realtors said. ‘It’s crazy right now,’ said Tom Delgado, Realtor with Keller Williams VIP Properties in Valencia. ‘Here you are in these tough economic times, yet at same time, in the range from the $200,000 mark all the way up to the $650,000 range, you’re fighting competition,’ he said.”

“But sellers won’t see the rapid price accelerations they saw during the real estate bubble. Many buyers may be limited by the amount of money they were prequalified to spend, and if they offer more on a home, they will have to come up with the difference out of their own pocket, Delgado said. Another hurdle is that property appraisals often will no longer support the higher sales price. ‘We are now in a trough where it will take four to six years before the market will elevate up,’ Delgado said.”

The Burbank Leader. “Christopher Rizzotti, president of the Burbank Assn. of Realtors, said that among the declining number of homes on the market, most are selling in the $400,000 to $500,000 range. ‘Because of the low inventory, it’s created a frenzy for buyers who are trying to lock in at great interest rates,’ said Rizzotti. ‘Everything we’re involved with right now is multiple offers.’ Once the hiring picture improves, ‘we’re going to see our real estate market really take off,’ he said.”

KFSN TV Fresno. “The first four months of 2012 is proving to be a bounce back year for local home builders. There are new communities springing up everywhere. Granville Homes is in the midst of building four new communities in Fresno County. In the first quarter alone, the company is seeing a 70-percent spike in home sales compared to this time last year. Granville Homes President, Darius Assemi told Action News, ‘Most of our communities are almost sold out. So much that we’re concerned that we’re going to have a shortage of lots in the Fresno area.’”

Bakersfield Californian. “Home shopper Dian Schneider was four houses in on a whirlwind tour of local homes for sale Friday when her real estate agent issued her a warning. ‘Now if you like this one you’ll need to move today because there are already two offers on it, and they’re both above list price,’ said Anna Hernandez of McKinzie Nielsen Real Estate. ‘They’re not crazy high, but you’ll have to go in high, too, if you’re serious about it.’”

“There are plenty of existing homes, but many of them are in the hands of banks that are reluctant to dump their massive shadow inventory all at once. That would drive down the prices not only of those assets, but of other homes with outstanding mortgages banks hold that could be driven into default in another market collapse. ‘It’s in their best interest to let these houses out in drips and drabs to maintain their value,’ said Stuart Gabriel, a professor of finance at UCLA and director of the university’s Ziman Center for Real Estate.”

The Record.net. “Five years after the housing bubble burst and San Joaquin County became a poster child for the mortgage meltdown, the region continues to struggle economically with some of the highest default rates in the nation and nearly no new construction. Douglass Eberhardt, CEO of Bank of Stockton, agreed that the real estate sector continues to struggle. And that situation is likely to continue as major mortgage holders - major banks and Freddie Mac and Fannie Mae - slowly process their troubled loans.”

“‘They’re dribbling out their foreclosures; it just prolongs the length of the recession,’ Eberhardt said.”

The Press Enterprise. “Real estate analysts and people who work in the field say that banks and other lenders that have taken over foreclosed properties are reluctant to sell them, which is slowing up sales. Jane Blesch, owner of Blesch & Associates Trademark Properties, a Redlands-based brokerage, called the market ’slow as molasses’ right now, and said the banks, by holding onto properties, are not helping.”

“Rich Simonin, co-owner of Westcoe Realtors in Riverside, said agrees that there is not enough inventory. ‘The banks have still not put many of their foreclosures on the market. We don’t even know where they are,’ Simonin said. ‘I’ve stopped trying to figure the banks out.’”

“Steve Johnson, Riverside director of MetroStudy, said banks and other lenders are being cautious. There are government programs in the works to allow homeowners to reset loan terms under certain conditions, and the banks are also developing pools of properties for investors. ‘They’re waiting to see if these programs will have an effect,’ Johnson said.”

“A Riverside family who moved back into their home in December after being evicted by lenders has five days to vacate the property, according to a ruling in Riverside County Superior Court. ‘We’re not asking for anything special,’ Arturo de los Santos said after the hearing. ‘We just want the bank to give us a new contract.’”

“Brad German, a spokesman for Freddie Mac, said the foreclosure and previous eviction processes were lawfully completed and the mortgage has been extinguished. Obtaining a new Freddie Mac mortgage after a foreclosure would require seven years of re-established credit history. ‘This is the only way to reduce further losses on a mortgage that hasn’t been paid in more than two-and-a-half years,’ German said after Friday’s hearing.”

The Contra Costa Times. “When William Quintana tried to take advantage of a federal program that helps homeowners lower their mortgage payments, he never imagined it would land him in bankruptcy and on the verge of losing his house to foreclosure. But that’s exactly what happened after the Antioch resident and his wife applied for a loan modification through the federal Home Assistance Modification Program, or HAMP.”

“‘They say owning a home is the American dream, but it’s become the American nightmare,’ said Quintana, a plumber. ‘I’m not a failure or a loser. I’m a complete victim.’”

The Sacramento Bee. “‘At the low end of the market, there is a feeding frenzy going on in Sacramento,’ said Robert Machado, president of HomePointe, a local company that manages rental properties. Rick Lunsford bought several rental properties for the first time in 2009. A home Lunsford bought in Natomas for $235,000 in 2009 is likely worth $190,000 today, he said. ‘I thought we were at the bottom then, but we weren’t.’”

The Glendale News Press. “The dwindling number of houses up for sale is still impacting the local real estate market as the number of condominiums on the market plummeted by 70% last month compared to March 2011, according to the latest figures. The low housing inventory is creating a frenzy among buyers who are trying to snatch up houses because interest rates are low and median prices have been declining, which results in greater housing affordability, said Shannon Cistulli, president of the Glendale Assn. of Realtors.”

“Some homeowners who must move are opting to vacate their homes and rent them until the real estate market picks up again, said Cistulli, who is also branch manager of Dilbeck Real Estate in Glendale. Meanwhile, median sale prices for homes and condos continued to tumble in March. The median price for a single-family home dropped from $670,000 in March 2011 to $572,000 last month. Condos saw their median price edge down from $283,000 in March of last year to $253,000 last month.”

“In La Cañada, the median price of a home dropped to $900,000 last month, compared to almost $1.2 million in March 2011. The number of homes for sale decreased by about 35.5%, from 104 in March 2011 to 67 last month. The ratio of distressed sales compared to total sales continued to be more than one-third, coming in at around 40% last month compared to almost 42% during March 2011. ‘The big question is, ‘What happens next?’ said Realtor Keith Sorem with Keller Williams of Glendale.”

The North County Times. “After watching the value of their homes slide through most of 2011, many homeowners pulled their properties off the market this year. At the same time, local foreclosure rates dropped, reducing the number of bank-owned properties on the market. The resulting drop in inventory has left buyers competing for the few remaining properties, steadying prices, Realtors and other observers said.”

“The median house price in North San Diego County hit $415,000 in February, down 3.8 percent from February 2011. In Riverside County, the median home price in February hit $193,000, down 1 percent from the year before, according to DataQuick. ‘The biggest problem I see now is inventory,’ said Bob Nielsen, a Carlsbad real estate agent. ‘A lot of people that are underwater are waiting to sell.’”