The Urgency To Buy Has Evaporated
The Los Angeles Times reports from California. “Southern California home buyers continue to turn their backs on an expensive market with few houses for sale. Home prices fell 3.8% in January compared with December, though the median price remained up sharply compared with January of last year, DataQuick reported. The price decline, coupled with falling sales, revealed a market that has lost momentum after an explosive price run-up in the first half of 2013. ‘Buyers are not overpaying,’ said Broker Derek Oie, owner of Century 21 the Oie Group in the Inland Empire. ‘They know the market has changed.’”
“January’s median home price, $380,000, is the lowest since May. ‘The pause is related to a deterioration in affordability,’ said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. ‘The urgency to buy has essentially evaporated.’”
The Press Enterprise. “DataQuick reported that San Bernardino County lost even more ground in January with its 1,910 home sales falling 10.9 percent from the 2,137 sales in January 2013. Riverside County saw a 9.9 percent loss with 2,576 home sales in January, down from 2,858 the year earlier. Faring the worst in January on home sales was San Diego County, which had been pepper-hot while Inland regions sputtered toward recovery. There, sales fell 13.9 percent.”
“Inland economist John Husing said sales are down, and not only because of tight inventory. That’s been the case for some time. Sales are down because the pool of buyers and sellers shrank, Husing said. ‘On the buyers’ side one year ago, the market was being driven by investors,’ he explained. ‘If price is up, they don’t see the capital gains possibilities they did before. They’re backing off. And, the gap is not being filled by families looking for homes.’”
“On the supply side, Husing said homeowners have been recovering value in their homes, but equity has not appreciated enough to give them a lot of incentive to sell. ‘Another reason homes are not selling is the caution that people are taking.’ They are unwilling to move around, he said, commenting: ‘The economy still has them generally spooked.’”
From Globest. “Despite the recent slowdown in housing prices and sales volume, as well as the looming specter of higher mortgages, panelists at Arixa Capital Advisors’ recent first investment roundtable in Orange County were surprisingly sanguine about the future prospects for the single-family market. John McMonigle, principal and founder of the McMonigle Team, added that the Pacific Rim buyer, often from China, has been a positive factor in supporting home prices. He added that these buyers are interested in a particular product with new construction in master-planned communities, rather than eclectic older homes.”
“Emile Haddad, CEO of FivePoint Communities supported McMonigle’s statement by saying said that 70% of the 280 homes he has sold in the Great Park Neighborhoods master-planned community since October 2013 have been to Pacific Rim buyers. He added that concerned regime members and business owners in China will continue to move their money out of the country in anticipation of a slowing Chinese economy, which may lead to political instability in the future.”
Capital Public Radio. “Daren Blomquist with research firm RealtyTrac says January foreclosure starts in California were up 12% from December and nearly 60% from a year ago. ‘That was following 17 consecutive months where the California foreclosure start numbers had been decreasing on an annual basis,’ he said. Blomquist points out those annual decreases were triggered by California’s ‘Homeowner Bill of Rights’ which took effect last year, requiring more paperwork from lenders.”
“‘And now we’re seeing the lenders finally adjust to that legislation and start to push through foreclosures that may have been delayed because they were trying to figure out what they need to do to make sure that they’re foreclosing properly,’ Blomquist said.”
The Sacramento Business Journal. “Housing sales picked up slightly but continued to show a moderating trend in January, according to figures from Lyon Real Estate and the Sacramento Association of Realtors. The Sacramento Association of Realtors figures showed 1,940 active listings in January in Sacramento County and West Sacramento, up from 1,836 last month. Though the January number was nearly twice as many as in January 2012, when there were only 984, the median sales prices was only $8,000 less than a year earlier, at $242,000.”
From Reuters. “The view of the Pacific Ocean from the San Joaquin Hills in Newport Coast, California is extraordinary. So, when Mohammad Taghavian started looking for a new home four years ago, he knew exactly where he wanted to be. The housing market, however, wasn’t so cooperative. Taghavian, a 47-year-old engineer, jumped at any property that came on the market, only to find that whatever he bid, he was ‘edged out by a cash offer,’ he says.”
“He did what a keen home buyer would do. Taghavian kept raising his offer, from $600,000 to over a million. That placed him in jumbo mortgage territory. His real estate agent, Michael Salas of Coldwell Banker, honed in on one development and went on a letter-writing spree to about 60 homeowners with ocean views. When a $1.4 million townhouse finally came on the market last year, Taghavian snagged it. He moved into his dream home just before the new year.”
“Another clause that aided Taghavian was a ‘departing residence’ exclusion, which meant he was able to rent his existing home and count 70 percent of that income toward his bottom line. Otherwise, he would have had to sell the property, bought at the peak of the housing market, a time-consuming effort that wouldn’t have netted him the profit he was after.”
“‘I really wanted that particular area, and it pushed me to get a jumbo loan,’ Taghavian says. ‘But you have to calculate the risk, because everything is not just about what you desire. At the end of the day, you have to make the payments.’”
‘A total of 57,259 U.S. properties started the foreclosure process for the first time in January, up 10 percent from the previous month but still down 12 percent from January 2013 — the 18th consecutive month where foreclosure starts have decreased annually.’
‘Counter to the national trend, January foreclosure starts increased from a year ago in 22 states, including Maryland (up 126 percent), Connecticut (up 82 percent), New Jersey (up 79 percent), California (up 57 percent), and Pennsylvania (up 39 percent).’
‘Counter to the national trend, scheduled foreclosure auctions increased from a year ago in 27 states, including Oregon (up 326 percent), Connecticut (up 223 percent), Maryland (up 113 percent), New York (up 73 percent), and Nevada (up 73 percent).’
‘Scheduled foreclosure auctions in New York were at the highest monthly level since October 2010 — a 39-month high — and scheduled foreclosure auctions in Nevada were at the highest level since February 2012 — a 23-month high.’
“The monthly increase in January foreclosure activity was somewhat expected after a holiday lull, but the sharp annual increases in some states shows that many states are not completely out of the woods when it comes to cleaning up the wreckage of the housing bust,” said Daren Blomquist, vice president at RealtyTrac. “The foreclosure rebound pattern is not only showing up in judicial states like New Jersey, where foreclosure activity reached a 40-month high in January, but also some non-judicial states like California, where foreclosure starts jumped 57 percent from a year ago, following 17 consecutive months of annual decreases.”
Oh dear.
http://www.realtytrac.com/images/reportimages/california_foreclosure_starts.jpg
Perhaps the zombie foreclosure that’s up the street will finally enter the process. Place has been empty since the summer of 2011.
Double post from Ben Jones — score!!!
+2
P.S. A family member is selling an OC condo. Will keep you posted on how that goes.
‘Orange County home sales continued to swoon last month in the face of elevated prices and higher interest rates.’
‘Housing market tracker DataQuick Information Systems reported Wednesday that sales closed on 2,205 houses, condos and newly built homes in January, down 9.3 percent year-over-year to the lowest number in almost two years.’
Cool thing in this case is the seller in question is way above water, so +/- 20% in the sale price won’t stand in the way of offloading the property. The other thing is that thanks to Zillow, etc, I won’t even have to impolitely pry in order to obtain info on the sale price, as it will soon be publicly available online.
P.S. A family member is selling an OC condo. Will keep you posted on how that goes.
Yikes.
It’s all good. I think the condo is fully paid off, and will sell for nearly $1m. Even if the market is tanking and they have to sell by Dutch auction, it will prove to have been one of the best investments anyone could have made in the mid-1990s.
Secret recipe for paying off a condo in 17 years:
1) Buy low, at a market trough.
2) Hold on through the most ginormous real estate bubble in history.
3) Hang in their through the housing stimulus phase of QE3.
4) DINKism doesn’t hurt (Dual Income, No Kids).
5) Sell high at onset of the taper.
Business
O.C. home sales decelerate in January
BY JEFF COLLINS / STAFF WRITER
Published: Feb. 12, 2014 Updated: Feb. 13, 2014 7:08 a.m.
MINDY SCHAUER, STAFF PHOTOGRAPHER
Orange County home sales continued to swoon last month in the face of elevated prices and higher interest rates.
Housing market tracker DataQuick Information Systems reported Wednesday that sales closed on 2,205 houses, condos and newly built homes in January, down 9.3 percent year-over-year to the lowest number in almost two years.
…
No bubble here:
Most engineers can afford a $1.4 million townhouse.
——————–
Taghavian, a 47-year-old engineer, jumped at any property that came on the market, only to find that whatever he bid, he was ‘edged out by a cash offer,’ he says.”
When a $1.4 million townhouse finally came on the market last year, Taghavian snagged it. He moved into his dream home just before the new year.”
And even worse:
‘Another clause that aided Taghavian was a ‘departing residence’ exclusion, which meant he was able to rent his existing home and count 70 percent of that income toward his bottom line. Otherwise, he would have had to sell the property, bought at the peak of the housing market, a time-consuming effort that wouldn’t have netted him the profit he was after.’
Oh wait. I forgot about the 30 year mortgage. I’m sure he’ll have a bunch of equity in his late 70’s.
I hope he is better in engineering than he is in finance.
+101
I wonder if he was a software engineer for Obamacare. JK.
Most Californians are short on pragmatism. Must be the “Disney” effect.
That kind of debt is REALLY dumb! An over leveraged mule.
You are not taking into consideration that this “debt donkey” can go down to Tijuana and make a few extra bucks to help pay the mortgage.
the donkey’s job ain’t too bad…
Can somebody estimate what this guy’s monthly mortgage payment would be, assuming for the sake of argument that he put 20% down?
I’d be curious to know what the letter in the “letter-writing spree” said. “Fool seeks to overpay for views” would make sense.
$1.4 million with 20% down = $1,120,000 at 4.5% for 30 years = $5,675/mon, plus $1350/mon taxes, plus $200/mon insurance.
PITI = $7,200/month
Plus $500/month depreciation for eternity.
$1.4 million with 20% down = $1,120,000 at 4.5% for 30 years = $5,675/mon, plus $1350/mon taxes, plus $200/mon insurance.
PITI = $7,200/month
The funniest part is that he started out with a budget of $600,000! LOLZ he’s a suckah
Most engineers can afford a $1.4 million townhouse.
I know you are being facetious here.
But WTF. I’m an engineer. I’m 8 years older than that dude and I have done well. But $1.4 million for a townhouse is $900,000 too much, IMO, in the Irvine/Costa Mesa/ Newport area. He better get the most beautiful woman for a wife if spending that much is his way of attracting “wimmin”
I wonder if this article was plant by the developers that created San Joaquin hills. I was not familiar with the term so I looked it up on Wikipedia - this is a gated community of 790 houses/townhouses. It’s not a general term for an area
“Daren Blomquist with research firm RealtyTrac says January foreclosure starts in California were up 12% from December and nearly 60% from a year ago.
POP!!!! Ouch! Where are they going to find all these suck….er uh I mean buyers to soak up these “eclectic” homes??
‘Buyers are not overpaying,’ said Broker Derek Oie, owner of Century 21 the Oie Group in the Inland Empire. ‘They know the market has changed.’”
“January’s median home price, $380,000, is the lowest since May. ‘The pause is related to a deterioration in affordability,
If you’re paying $380k for a resale house, you’re overpaying.
Remember…. If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.
Bill in L.A.’s point of view: if you have to borrow for a house at all, it’s not affordable nor can you afford it.
The “Do you have these symptoms” ads that pop up here are for the Californian who just recently bought a 1,234 sqft shack with a 389K note of 30 years.
‘A total of 4,696 new and resale houses and condos sold in the nine-county Bay Area last month. That was the lowest sales tally for any January since 2008, when 3,586 homes sold. Last month’s sales fell 30.1 percent from 6,714 in December, and declined 14.6 percent from 5,501 in January 2013, according to DataQuick.’
‘Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 23.5 percent of the Bay Area’s home purchase loans in January. That was up from a revised 22.2 percent in December, and up from 10.9 percent in January last year. It was the highest since 25.4 percent in July 2008. ARMs hit a low of 3.0 percent of loans in January 2009.’
‘The median price paid for a home in the Bay Area last month was $525,000. That’s down 4.3 percent from $548,500 in December, and up 26.5 percent from $415,000 in January 2013. For seasonal reasons the median almost always declines from December to January. The median has increased on a year-over-year basis for the last 22 months.’
On this:
‘the median almost always declines from December to January. The median has increased on a year-over-year basis for the last 22 months’
Almost always. Just not lately.
‘Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 23.5 percent of the Bay Area’s home purchase loans in January. That was up from a revised 22.2 percent in December, and up from 10.9 percent in January last year. It was the highest since 25.4 percent in July 2008. ARMs hit a low of 3.0 percent of loans in January 2009.’
A landmine with a timer on it.
‘On a month-to-month basis, the foreclosure rate rose about 7 percent since December. In Los Angeles County, one of every 1,005 homes was in foreclosure during January. In the greater Valley, Palmdale was the worst performing city, with foreclosures in one of every 302 homes. Its neighbor Lancaster continued to perform poorly as well, with foreclosures in one of every 383 homes.’
‘Other Valley communities with high foreclosure rates include West Hills, with one of every 432 homes; North Hills, with one of every 539 homes; and Sylmar, with one of every 541 homes.’
A question for Rental Watch. Do you suppose all these foreclosures came from people that stopped paying their mortgage during this 22 month run up? Or were these loans that have been in default all along and just held up by the CA homeowner bill of rights? Just thinking out loud here.
Oh oh…
—————–
“Foreclosure Rebound Pattern”: Foreclosure Starts SUDDENLY Jump 57% in California (And Soar In Much Of The Country)
02/13/2014 - ZeroHedge
From Federal-Reserve-fueled bubble to debilitating return to reality – reality being a financial calamity – to Federal-Reserve-hyper-fueled bubble: that’s the US housing market over the last ten years. There are many places around the country, including some cities in Silicon Valley, where home values are now higher than they were at the peak of the last bubble. Of course, no one at the Fed or in government calls it “bubble.” They’re talking about the housing “recovery.”
But the excesses and speculators are back, and private equity funds and highly leveraged REITs are all over it, buying up every single-family home in sight, and now Wall-Street-engineering firms have come up with a new and improved contraption, a synthetic structured security that on its polished surface looks like that triple-A rated mortgage-backed toxic waste that helped blow up the banks. But this time, it’s different. The securities are backed by sliced and diced rental payments from single-family homes that are, hopefully, rented out
Rinse, repeat, DIE.
Oh my Buddha! Taghavian started out wanting to spend only $600,000 but ended up suckering himself into $1.4 million.
Found: MGF - Much Greater Fool
‘the median almost always declines from December to January. ”
Let’s look at last years Dec.2012 and January 2013 declines.
Dec.2012 prices JAN-2013 prices
Los Angeles $352,000 $340,000 -3.40% drop
Ortange County $470,000 $460,000 -2.13% drop
Riverside $231,000 $226,000 -2.16% drop
San Bernardino $180,000 $177,500 -1.39% drop
San Diego $366,000 $350,000 -2.73% drop
Ventura $370,000 $365,000 1.35 drop
Link for DEC.2012 prices
http://dqnews.com/Articles/2013/News/California/Southern-CA/RRSCA130115.aspx
link for Jan.2013 prices
http://dqnews.com/Articles/2013/News/California/Southern-CA/RRSCA130213.aspx
lets look Riverside county’s gain
$228,000 Feb.2013
$245,000 March,2013
$248,000 April 2013
$252,000 MAY 2013
$269,250 July 2013. Summer time people start to look for housing to buy
$265,000 July 2013
$265,000 Aug.2013
$269,000 Sept.2013
$270,000 OCT.2013
$275,000 NOV.2013
$280,000 DEC.2013
$277,000 JAN, 2014 barely a decline of 1.07% from DEC,2013-JAN.2014
Compare it to Riverside DEC-2012-JAN-2013 $231,000 $226,000 -2.16% drop
It jumped up big in price from FEB-2013 TO MARCH 2013
$228,000 TO $245,000 A gain of $17,000 in one month 7.45% per jump in one month. So lets see what we get for March 2014.To see were housing is going in 2014.
Im the real housing anylist. :}:} prices will gain 15-18% in 2014 In Riverside-San Bernardino counties ‘I.E’.
It’s a great investment still. 50,000 keep moving to I.E. Every year.
‘Im the real housing anylist’
Really? I thought maybe you were an English teacher. We’ll feast on your financial carcase before it’s all done.
Don’t think so Ben, this winter has convinced many to move to warmer pastures, when the spring thaw hits these folks are moving to Sun Belts.
Nothing like looking out your window for months and seeing white, then turn on TV,watch golf in the Sun Belt climate in Jan. Feb and say, “darn, don’t care about the kids inheritance, I moving pronto out West and live the good life”
Yes Liar…… everyone wishes for 75degrees 365 days a year.
Hows that working out for you?
“Im the real housing anylist.”
Did Gary Watt relocate from The OC to The IE?
3.0% increase for Riverside,CA from January 13th 2014-FEB 10th. 2014
Median asking price went from $330,000 to $339,000 in one month. Just as i predicted it’s comparable to last years rise from FED-2013-March. 2014 .
2 weeks to go see how it looks.
http://www.deptofnumbers.com/asking-prices/california/riverside/
LOS ANGELES +2.1% RISE IN ONE MONTH
http://www.deptofnumbers.com/asking-prices/california/los-angeles/
San Diego +1.3% rise in the last month
http://www.deptofnumbers.com/asking-prices/california/san-diego/
It’s looking good.Another great year of housing prices going up.
‘Just as i predicted’
Put in some new appliances so I don’t have to there king. I’ll take your junk to the dump and get paid for it - by the cubic yard.
That is why I always say negative news can always be counter by positive news.
Graphs and stats remind me of the 300 hitter, it is when he got the hits in key at bats rather then getting singles in the first two at bats with 2 outs nobody on.
Housing will always be about local markets and can come down to a street in a neighborhood. If a national stat says housing is down so what, if I can buy a house with a view in a great zip code and neighboorhood, then who cares if Topeka Kan. is hurting, nothing to do with the San Diego County house, I can steal today?
Don’t be silly…..
And pick yourself up off the floor and cheer up….. falling housing prices to dramatically lower and more affordable levels is positively bullish and good for the economy.