Real Estate Report for 8/18/13
Bryan & Allison's Real Estate Report - 8/18/13
We are back from our vacation and are getting caught up. While we were gone there was a lot of data released about the housing market. Following is a lot of that data as well as some other pieces of news we thought you would enjoy:
Home Prices & Sales
NSDCAR August 2013 HomeDex Report
NSDCAR's HomeDex Report provides July 2013 housing statistics in two separate reports, featuring North San Diego County and full San Diego County statistics. Below is a snapshot of the July housing report:
County home sales, prices, and inventory up in July
Resale home sales in San Diego County picked up in July, as did the number of listings on the market, according to the latest housing statistics from the Greater San Diego Association of Realtors (SDAR).
Compared to June, resale home sales were up 5% in July. Sales of condos and townhomes increased more than 8% compared to June and 23% from a year ago.
The median price of single-family homes sold in July was $485,000, virtually unchanged from June, but up 23% from a year ago. Condos and townhomes saw a median price of $320,000 in July, an increase of 6% over the previous month, and 36% from a year ago.
By the end of July, the inventory of previously owned homes throughout the county surpassed 6,000 for the first time in a year.
Southern California home sales soar in July, prices steady
Southern California's recovering housing market remains red-hot with sales hitting an eight-year high for July and prices remaining firm, a real estate research firm said Tuesday.
There were 25,419 new and used homes and condominiums sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, DataQuick said. That's up 17.6% from June and 23.5% compared to a year earlier. In fact, sales were only a half-percent below the historically normal level for July.
The median sales price - meaning half of the homes sold for more and half for less - was $385,000. That was the same as in June but up nearly 26% since July 2012. The median price has now risen year-over-year for 16 months in a row.
Significantly higher home prices, particularly in the San Francisco Bay Area and coastal regions, shut out more homebuyers in the state during the second quarter of 2013, the California Association of Realtors (C.A.R.) reported.
In San Diego County, 32% of homebuyers had the minimum qualifying income of $90,150 needed to afford the $2,250 monthly payment including taxes and insurance (PITI) for the $469,040 median-priced home. The qualifying index was down from 38% in the first quarter and 44% a year ago.
The percentage of California homebuyers who could afford to purchase a median-priced, existing single-family home in California dropped to 36% in the second quarter of 2013, down from 44% in first-quarter 2013 and from 51% in second-quarter 2012, according to C.A.R.ís Traditional Housing Affordability Index (HAI). The second quarter 2013 figure fell below 40% for the first time since the third quarter of 2008.
Homebuyers needed to earn a minimum annual income of $79,910 to qualify for the purchase of a $415,770 statewide median-priced, existing single-family home in the second quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,000, assuming a 20% down payment and an effective composite interest rate of 3.64 percent.
The effective composite interest rate in first-quarter 2013 was 3.55% and 2.82% in the second quarter of 2012. The median home price was $316,490 in second-quarter 2012, and an annual income of $62,440 was needed to purchase a home at that price.
Increase in home prices a result of real estate appreciation and a change in sales
Forecasts typically are smooth and trending, but when looking back, it’s evident that things can change on a dime, especially in the real estate industry, said the California Association of Realtors vice president and chief economist.
Median prices in San Diego County and the state are increasing, which is attributed to real price appreciation and a change in what’s selling, said Leslie Appleton-Young at a presentation to the Pacific Southwest Association of Realtors this week.
There have been more standard, traditional equity transactions as the distressed market goes away. Statewide, median home prices were up more than 30% in June from the previous year. Appleton-Young said about one-fourth of that is due to a change in the mix of what’s selling, and three-fourths is a change in true price appreciation.
Over the last year, home sales of $500,000 and above went from 26% of total sales to 37%, she said. Sales of $200,000 and less shrank from 31% of total sales to 19%.
In January 2009, 60% of properties that closed were real estate owned (REO), 10% were short sales and 30% were traditional, standard equity sales, Appleton-Young said. In 2013, less than 10% of properties closed were REO, less than 15% were short sales and almost 80% were equity sales.
“That is so exciting to see what a recovery looks like,” Appleton-Young said.
Realtor.com released the Realtor.com® National Housing Trend Report for the month of July 2013. July's real estate market data shows the nation experienced a 5.24% decline in housing inventory, which is the second month in a row with year-over-year inventory declines in the single digits. National median list prices increased 5.27% year-over-year, while median age of inventory is down 16.67%.
Asking prices fall amid rising interest rates
Trulia recently released its latest findings from the Trulia Price Monitor and the Trulia Rent Monitor. Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through July 31, 2013.
Asking prices on homes for sale are now starting to lose steam as mortgage rates rise, inventory expands, and investor demand declines. Nationally, asking prices dropped 0.3% in July – the first month-over-month decline since November 2012. Seasonally adjusted, prices rose 3.3% quarter-over quarter, down from a peak of 4.2% in April. Year-over-year, prices are up 11% nationally; however, this change is an average over the past 12 months and is therefore slower to show changes than monthly and quarterly numbers.
In 64 out of 100 U.S. metros, the quarterly asking home price gain was lower than in the previous quarter. This slowdown was most apparent in the West Coast where prices already have rebounded strongly. Among housing markets where asking prices rose sharply year-over-year, price gains dipped the most quarter-over-quarter in Las Vegas, Oakland, and San Francisco. Other California metros, including Sacramento, Ventura County, San Jose, and Fresno, saw quarter-over-quarter gains drop by at least two percentage points between April and July.
SD County foreclosure activity stabilizes
Foreclosures in San Diego County are just about back to pre-recession levels and have reached a level of insignificance.
“We’re dealing with 200 month, say 2,500 a year,” said Alan Nevin, director of economic and market research at Xpera Group. “We’re talking about 800,000 residences in the county — and that includes homes, condominiums and mobile homes — so to have only 2,500 foreclosures a year out of 800,000 is basically insignificant.”
Trustee deeds, the final step in the foreclosure process, transferring ownership from the delinquent borrower back to the lender or to a third party — were filed on 203 properties in July, 33.2% less than in June and 62.7% less than July 2012, according to the San Diego County Assessor's Office.
“We’re just about back to normalcy. If you can assume that it will continue at the rate of 200 foreclosures a month, that’s pretty much what we do in good times,” Nevin said.
Notices of default (NOD), which initiate the foreclosure process by registering that a borrower is behind in payments, decreased 9.1% from June to July, and fell 61.3% from July 2012 to July 2013.
Lenders issued NODs to 650 borrowers in July, down from 715 in June and down from 1,679 in July 2012. Most of the foreclosed loans were originated between 2005 and 2007, and it took two to three years for the foreclosure process to be completed, Nevin said. Those that originated after 2008 bought their homes at “sensible” prices, Nevin said, and had much lower interest rates.
“The foreclosure rate for that group of people, everyone who bought since, say 2009, ... is negligible,” Nevin said.
US foreclosures headed for 6 year low
The United States is on track to end the year with the fewest homes repossessed by lenders in six years, a trend that should help limit the negative impact foreclosures have on home values.
Lenders repossessed 36,964 U.S. homes last month, down 31% from July last year, foreclosure listing firm RealtyTrac Inc. said. In July, San Diego had 859 properties with foreclosure filings, down 21.26% from June and 71.82% below a year ago. In Riverside/San Bernardino, there were 2,585 filings in July, down 5.82% from June and 67.7 percent below July 2012. For California, properties with foreclosure filings in July dropped 11.63% from Jume and were 68.52% below a year ago.
In California, foreclosures starts in July were down 22.16% from June and 67.21% below July 2012. Foreclosures completed in July were up 0.89% from June, but 74.42% below a year ago, according to Realty Trac. At the monthly average pace through July, completed foreclosures are projected to total nearly 490,000 this year, down roughly 27% from last year, the firm said. That's also the lowest since 2007, when 404,849 homes were taken back by banks.
The share of U.S. mortgages that are seriously delinquent plunged to the lowest level in almost five years as improving employment and rising home prices move the foreclosure crisis closer to an end.
The percentage of home loans that were more than 90 days behind or in the foreclosure process fell to 5.88% in the second quarter from 7.31% a year earlier, the Mortgage Bankers Association (MBA) said in a report Thursday.
That was the lowest since the third quarter of 2008, when it was 5.17%.
“It’s a dramatic improvement over last year,” said Jay Brinkmann, the MBA's chief economist, said. “It’s not back to where we should be. It’s not back to where we were. But it’s a major decline.”
Other News & Information
Prudential Real Estate Q2 Outlook Survey: Millennials are increasingly positive about real estate
“Home buyers are more informed than ever with their Internet searches and ongoing research; however, there’s a critical need to transform that information into analysis and advice that helps consumers make the best home-buying and selling decisions.”
Among all respondents, the national survey also found that confidence in real estate and home values jumped sharply, reaching 83% vs. 77% in Q1 study and 73% at year-end. Confidence is highest in both South and West regions at 84%.
“Young Americans, like the majority of survey participants, are feeling much better about homeownership,” said Earl Lee, chief executive officer of HSF Affiliates LLC and president of Prudential Real Estate. “People are looking optimistically at housing for all right reasons – a place to feel secure, build a future and raise a family.”
Among all respondents, 70% said that finding the right home and community is crucial to family happiness. Millennials were even more emphatic about the emotional side of homeownership: 93% favor a home for “more space for my family,” while only 75% view it as “financial security to borrow against.”
“Consumers are mindful of the challenges faced during the real estate downturn,” added Lee. “Though homeownership makes a solid, long-term investment, a home should never be considered a siding-clad ATM.”
Closing Fannie, Freddie could boost mortgage rates
Homebuyers could feel the pinch if Congress follows through on plans to shut down Fannie Mae and Freddie Mac, the government-controlled mortgage guarantee giants that were rescued by a $187 billion taxpayer bailout during the financial crisis.
Borrowers would probably end up paying slightly higher mortgage rates under House and Senate bills that would phase out Fannie and Freddie over five years and shrink the government's huge role in guaranteeing mortgage securities. Fannie and Freddie teetered under a crush of massive losses on risky mortgages before being bailed out.
The House Republican bill would virtually privatize the mortgage market. The Senate's bipartisan plan envisions a continued but more limited government role in insuring mortgage securities. Supporters say that would keep mortgages available and affordable.
Congressional efforts to overhaul the nation's mortgage finance system got a boost from President Barack Obama's call for changes that are generally in line with the Senate's bipartisan plan.
'For too long these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was 'heads we win, tails you lose,' and it was wrong,' Obama said. 'The good news is right now there's a bipartisan group of senators working to end Fannie and Freddie as we know them. And I support these kinds of reform efforts.'
San Diego ranked 8th fastest real estate market
San Diego and Sacramento saw the largest decreases in the rate of homes going under contract in 14 days, with drops of 6 and 7 percentage points, respectively, according to Redfin’s Fastest Markets report for June 2013.
The rate of homes going under contract in 14 days in Sacramento dropped from 50% to 43% in June again, while San Diego fell from 50% in May to 44% in June.
San Diego was ranked the eighth fastest market, with 43.6% of homes pending within two weeks of being listed, 26.8% pending in one week, 60 flash sales and 1.6 months of supply.
The report found while homes are still selling near their fastest recorded rates, the housing market continues the gradual slowing pattern that began in April as inventory started to rebound.
Tyl Pattisall’s timing couldn’t have been better. She and her husband bought a condominium in San Francisco three years ago when the market was depressed and sold it for a profit in June. Now she’s looking to buy again.
“We were very lucky to have bought when we did and to sell when we did,” said Pattisall, 38. “We’re lucky that we got out of our San Francisco place having done moderately well.”
Pattisall is an example of a growing share of repeat purchasers driving the U.S. housing recovery, as appreciating property values and low mortgage rates give many the wherewithal to relocate.
The same forces are also benefitting longer-term homeowners who had wanted to move and didn’t want to sell until prices improved. Homeowners returning to the market accounted for 54% of sales of existing properties in June, up from 49% a year earlier, according to data from the National Association of Realtors (NAR).
First-time buyers were 29%, a decline of 3 percentage points in the past year and compared with a typical share of 40% amid strict lending conditions and a lack of lower-priced properties.
Repeat buyers will remain a crucial element of the real-estate rebound until a better-heeled economy also opens the way for more first-timers to rejoin the market.
Homeownership: where single women prevail
The number of single people buying homes has dipped in the last few years, but single women remain better represented among buyers than single men. Today they are buying at roughly twice the rate.
According to the National Association of Realtors, single women accounted for 16% of home buyers last year, lower than their long-term average of 20%. Yet they were still well ahead of single men, who accounted for only 9%.
Women began to outpace men in home-buying in the late 1990s, and although no one is really sure why men haven’t caught up, “it may be as simple as most guys don’t get serious about housing until they meet the right woman,” said Walter Molony, a spokesman for the association.
Bryan & Allison Devore
Prudential California Realty
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