Bryan & Allison's Real Estate Report - 12/3/13
Home Prices & Sales
November HomeDex Report
NSDCAR November 2013 HomeDex Reports provide October 2013 housing statistics in two separate reports, featuring North San Diego County and full San Diego County statistics. Below is a snapshot of the October housing report. Click on the links below to read the full reports.
US home prices rise just 0.2% in October
A measure of U.S. home prices rose only modestly in October, adding to signs that prices have stabilized after big gains earlier this year. Real estate data provider CoreLogic said Tuesday that prices increased 0.2 percent in October from September. That's up from a 0.1 percent gain in September. But it is down sharply from a 0.9 percent increase in August.
One reason for the slowdown is that the figures aren't adjusted for seasonal patterns. Prices usually decline in the fall and winter, when sales slow. Still, big gains in previous months, along with higher mortgage rates, may be pricing some buyers out of the market.
Home prices have risen 12.5 percent from a year ago. The increase could encourage more sellers to put their homes on the market, easing a shortage of homes for sale.
Only 1.88 million homes were for sale at the end of October, down 2.1 percent from the previous month and the fewest since March. The shortage of inventory has slowed sales. Home re-sales fell in October for a second straight month to a seasonally adjusted annual pace of 5.12 million, the lowest since June, according to the National Association of Realtors. That pace is still 6 percent higher than it was a year earlier. But it's below the roughly 5.5 million sold each year in healthier markets.
Some sales were delayed in October due to the 16-day partial government shutdown, the Realtors' group said. The shutdown prevented the IRS from verifying incomes, a critical part of the mortgage-approval process. Those sales may have been pushed into November or December.
But a measure of signed contracts to buy homes fell for a fifth straight month in October. That points to weaker final sales in the coming months. Final sales typically occur one to two months after contracts are signed.
According to CoreLogic, prices rose in October from the previous year in all states except New Mexico. The biggest gains were in Nevada (25.9 percent), California (22.4 percent), Georgia (14.2 percent), Michigan (14.1 percent) and Arizona (14 percent).
Ninety-six of the 100 largest metro areas reported price gains from the previous year. That's down from September, when all 100 cities reported gains.
The biggest increase was in Riverside, Calif., with 24.1 percent, followed by Los Angeles (22.1 percent), Atlanta (16.4 percent), Phoenix (15.9 percent) and Chicago (12.3 percent).
Home prices are still about 17 percent below the peak reached in April 2006, according to CoreLogic.
SD home sales increase in October
California home sales declined for the third straight month in October, while San Diego’s home sales increased by 9.7 percent from September, according to the California Association of Realtors (CAR).
San Diego home sales were down 8.1 percent in October from October 2012. In that same time period, the median price of an existing, single-family detached home fell 2.7 percent from $490,130 in September to $477,130 in October -- which was still up 20.6 percent from October 2012 when the median price was $395,470.
The available supply of existing, single-family detached homes for sale fell in October to 3.7 months, down from 4.2 months in September and unchanged from October 2012. The median number of days it took to sell a single-family home in San Diego increased to 28.1 days in October from 25.5 days in September, but still down from 40 days in October 2012.
SD distressed home resales up and down
San Diego County’s share of distressed resales increased slightly in October from September, but was still down from October of last year, according to the California Association of Realtors (CAR).
The combined share of all distressed property sales in San Diego increased to 5 percent in October from 4 percent in September, and down from 14 percent in October 2012.
California’s share of all distressed property sales also edged up slightly in October, inching up to 14.5 percent, up from 14.3 percent in September but down sharply from 36.8 percent in October 2012.
Of the distressed properties, California’s share of short sales was essentially unchanged at 9.4 percent in October, compared to a revised 9.3 percent in September.
October’s figure was down from 24.4 percent in October 2012 and remained at the lowest levels since January 2009.
The share of REO (lender-owned) sales edged up in October, but was in the single digits for the seventh straight month.
REOs made up 4.7 percent of all sales in October, up from 4.4 percent in September but down from 12 percent in October 2012.
SD home-price strength better than most areas
October marked the second straight month that U.S. resold home values declined while San Diego County's were a bit stronger, according to the Zillow Real Estate Market Report.
The $162,800 median price was the first consecutive monthly decline nationally, but it was just a 0.1 percent drop from September and was still 5.2 percent higher than the October 2012 figure.
San Diego County's $437,500 median figure in October was 0.9 percent higher than September, and 20.4 percent higher than October 2012.
San Diego's 20.4 percent year-over-year increase was outpaced by such markets as Riverside -- which saw a 30.4 percent year-over-year increase following a lengthy downturn, and Sacramento with an identical 30.4 percent increase year-over-year.
The Zillow report also looked at average rents in the major metropolitan areas and arrived at a $1,300-per-month U.S average. San Diego checked in with an average of $2,166 in October -- about 2.7 percent higher than October of last year.
SD area residential property sales down; prices up from 2012
Residential property sales and median prices in the San Diego metro area were mostly unchanged in October from September, but sales were down and prices were up significantly from 2012, according to RealtyTrac’s October 2013 U.S. Residential & Foreclosure Sales Report.
Residential properties in the San Diego-Carlsbad-San Marcos metro area, including single-family homes, condominiums and townhomes, sold at an estimated annualized pace of 49,494, a 1 percent decrease from the previous month and down 17 percent from October 2012.
The median sales price of all residential properties in the San Diego metro area properties — including both distressed and non-distressed sales — in October was $408,000, unchanged from September and up 20 percent from October 2012. The median price of a distressed residential property -- in foreclosure or bank owned -- was 25 percent below the median price for a non-distressed property.
Short sales represented 4.1 percent of all sales and REOs represented 10.8 percent of all sales in the San Diego metro area. Foreclosure auction sales to third parties represented 0.9 percent of all sales.
Cash sales represented 30.6 percent of all residential sales in October. Institutional investor purchases represented 3.5 percent of all sales.
Fewer San Diego, California, and US homes repossessed by lenders in October
Fewer U.S. homes are completing the foreclosure process and ending up repossessed by banks because investors are increasingly buying up properties when they go on sale at public auction.
The trend reflects a growing appetite among investors for buying homes before they exit the foreclosure process and end up on the market.
San Diego-area foreclosure filings dropped 57.4 percent in a year from October 2012, according to RealtyTrac’s U.S. Foreclosure Market Report for October 2013.
Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,095 San Diego-Carlsbad-San Marcos metro area properties in October, up 0.55 percent from September.
The report shows one in every 1,060 San Diego area housing units with a foreclosure filing during the month.
For California, there were 15,098 foreclosure filings reported in October, down 4.47 percent from September and down 58.1 percent from October 2012.
One in every 903 housing units had a foreclosure filing during the month.
There were a total of 6,801 California properties that started the foreclosure process for the first time in October, down 0.95 percent from the month before and down 48.6 percent from a year ago.
There were 3,164 foreclosure completions (REO), down 59.50 percent from October 2012.
Foreclosure inventory plunges nearly 30%
The nation’s foreclosure inventory has contracted for 18 consecutive months and is now at its lowest point since the end of 2008, totaling 1.28 million loans, or just 2.54 percent of today’s active mortgages, according to Lender Processing Services (LPS).
The company’s latest report assessing loan-level data on the performance of mortgage assets through the end of October shows the industry’s foreclosure inventory rate is down 29.61 percent from last year. Through the first 10 months of 2013, the foreclosure inventory rate has plummeted 26 percent.
Delinquencies dropped 2.8 percent month-over-month in October to come in at a rate of 6.28 percent. LPS says while that’s not as low as the delinquency rates recorded
earlier this year—in August the rate was 6.20 percent and in May it settled in at 6.08 percent—it’s still headed in the right direction. Compared to last year, the rate of mortgages 30-plus days delinquent is down 10.69 percent.
Nationwide, there are 3,152,000 properties with mortgages 30 or more days past due; 1,283,000 of those are 90 or more days delinquent but not in foreclosure. Add to that the 1,276,000 loans that are part of the pre-sale foreclosure inventory, and there are 4,427,000 non-current home mortgages in the United States, by LPS’ assessment.
Quick foreclosures help speed housing recovery
Why have many of the local housing markets that were hit hardest during the bust — especially in California — bounced back so vigorously and quickly, with prices close to or exceeding what they were in 2005 and 2006?
And why have many others along the East Coast and in the Midwest had a slower move toward recovery, with sluggish sales and gradual increases in values?
Though multiple economic factors are at work, appraisal industry experts believe they have isolated a crucial and perhaps surprising answer: Real estate markets rebound much faster in areas where state law permits foreclosures to proceed quickly, moving homes with defaulted loans into new owners’ hands expeditiously, rather than allowing them to sit and deteriorate, tied up in court procedures for years.
Prices of foreclosed homes in such areas typically are depressed and negatively affect values of neighboring properties, but they don’t remain so for lengthy periods because investors and other buyers swoop in and return them to residential use rapidly.
By contrast, in states where laws allow large numbers of homes in the process of foreclosure to remain in legal limbo, often empty and unsold, home-price recoveries are hindered because lenders are prevented from recovering and reselling the units to buyers who’ll fix them up and add value.
Pro Teck Valuation Services, a national appraisal firm based in Waltham, Mass., recently completed research in 30 major metropolitan areas that dramatically illustrates the point.
All the fastest-rebounding markets in October — those with strong sales, price increases and low inventories of unsold houses — were located in so-called nonjudicial states, where foreclosures can proceed without the intervention of courts.
All the worst-performing markets — where prices and sales have been less robust and there are excessive numbers of houses available but unsold — were located in judicial states, where post-default proceedings can stall foreclosure completions for two to three years or even more in some cases.
Other News & Information
CAR: Most renters want to be homeowners
Despite the financial toll the recent financial crisis has had on Americans, homeownership remains a goal for the majority of renters, according to the '2013 Renter Survey' by the California Association of Realtors (CAR).
Nearly three-quarters of renters rated homeownership as “important,” and 52 percent of renters said they plan to buy a home in the future.
“It’s encouraging that the majority of renters still believe buying a home is a good investment, even after the adverse effects of the Great Recession,” said CAR President Kevin Brown. “Renters clearly see the benefits of owning a home, citing building equity, freedom to do what they want with their home, pride of ownership, stability, and tax deductions as the top advantages of homeownership.”
While almost half of all respondents believed that gaining equity and investing for their future and their children’s future was an advantage of homeownership, online respondents were twice as likely to carry that belief.
Online respondents were also three times as likely to believe in freedom gained from homeownership and were twice as likely to take pride and feel satisfaction from owning something.
Among online respondents, 33 percent indicated having outstanding student loans, with 84 percent averaging less than $10,000 of student loan debt.
Young American adults aren't moving as much as they once did
The rate of Americans moving to a new home fell back in the last year mostly because young adults were stuck in place.
The report from the Census Bureau reflects the Great Recession's lingering effects, particularly on young people, many of whom continue to struggle to obtain credit and secure income gains to move to a new home or apartment.
Analysts were surprised by the latest findings as the overall domestic migration rate -- the share of the nation's population that moved -- had risen to 12% in 2012 after dropping to a record low of 11.6% in 2011. Experts had thought the gain in 2012 marked the beginning of what might be a gradual recovery, but that increase turned out to be short-lived as the share of moves fell back to 11.7% this year.
The main factor behind the decline was short-distance moves, or relocating within the same county. These moves account for the bulk of all moves that Americans make, and unlike long-distance moves, which are generally made for job reasons, these are largely because people want to go out on their own or desire new or better housing.
Homeownership rate rises slightly in 3rd quarter
National vacancy rates in the third quarter 2013 were 8.3 percent for rental housing and 1.9 percent for homeowner housing, the Department of Commerce’s Census Bureau announced today. The rental vacancy rate of 8.3 percent was 0.3 percentage points (+/-0.4)* lower than the rate in the third quarter 2012 and 0.1 percentage point (+/-0.3)* higher than the rate last quarter. The homeowner vacancy rate of 1.9 percent was virtually unchanged from the third quarter 2012 rate (+/-0.2)* and the rate last quarter (+/-0.1)*.
The homeownership rate of 65.3 percent was 0.2 percentage points (+/-0.4)* lower than the third quarter 2012 rate (65.5 percent) and 0.3 percentage points (+/-0.4)* higher than the rate last quarter (65.0 percent).
Obama Administration releases October Housing Scorecard
The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the October edition of the Obama Administration's Housing Scorecard – a comprehensive report on the nation’s housing market. The latest data show important progress across many key indicators—as home prices, purchases of new homes, and sales of existing homes continue to show strong annual gains—although officials caution that the overall recovery remains fragile.The full Housing Scorecard is available online at www.hud.gov/scorecard.
Housing's 'perfect storm' puts homeownership out of reach for some
Steady gains in home prices and rising mortgage rates across the United States contributed to weakening housing affordability in the year’s third quarter.
According to the Housing Opportunity Index (HOI) published by the National Association of Home Builders (NAHB) and Wells Fargo, 64.5 percent of new and existing homes from the start of July through the end of September were considered affordable to families earning the national median income of $64,400. That share is down from 69.3 percent in the second quarter, marking the biggest HOI decline since Q2 2004.
NAHB chairman Rick Judson said the third quarter’s drop was the result of a “‘perfect storm’ scenario.”
“With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor,” Judson said.
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