SAN DIEGO REAL ESTATE AGENT BLOG » Housing prices

Existing-home sales fall for third straight month

Michael Carter - San Diego Real Estate Agent — Tue, 23 Mar 2010 15:04:04 +0000

Sales of existing homes have thus fallen three consecutive months, a reversal after having risen steadily through the fall in response to a federal subsidy for first-time home buyers. The tax credit has been restored and expanded to repeat buyers, but there has been no increase in sales yet.

Sales are up 7% compared with a year ago, the NAR’s data showed.

Economists surveyed by MarketWatch had been expecting a larger decline in February, to about 4.93 million on an annualized basis. See our complete economic calendar and consensus forecast.

“We need to have a second surge,” said Lawrence Yun, chief economist for the real estate lobbying group. However, the jury’s still out, he said.

“Has everything in the gas tank been used up?” Yun asked. “Or is this just a pause before the next step up?”

A double-dip recession is a “possibility” if a second surge of buying doesn’t occur, he said.

The original tax break was set to expire on Nov. 30, a deadline that likely pulled forward many sales that would have taken place this year. Just before it expired, Congress extended and expanded the subsidy.

To qualify, sales must be signed by April 30, and the sale must be closed by June 30. Sales of existing homes are reported when the sale closes, not when a contract’s signed.

Inventories of sales on the market jumped during February, rising 312,000 to 3.59 million, the highest since September. Yun said the January-to-February increase in inventory was much larger than usual in February.

Inventories thus represented an 8.2-month supply at the current sales pace, the most since August. See the complete release on the NAR’s Web site.

The median sales price was $165,100, down 1.8% compared with a year earlier.

Sales were up in two of four regions. Sales rose at a seasonally adjusted annual pace of 2.8% in the Midwest and 2.4% in the Northeast, while sales dropped by 4.7% in the West and by 1.1% in the South.

Sales of single-family homes decreased 1.4% to a seasonally adjusted annual rate of 4.37 million, the lowest since June. Sales of condos rose 4.8%, reaching a seasonally adjusted annual rate of 650,000.

Rex Nutting is Washington bureau chief of MarketWatch.

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

San Diego County housing prices rebound in February

Michael Carter - San Diego Real Estate Agent — Tue, 16 Mar 2010 00:08:28 +0000

San Diego County housing prices bounced back in February to reach a median $322,000 that was in the range of prices for much of last year, MDA DataQuick reported Monday.

The median, the midpoint of all prices, was up 5.6 percent from January’s $305,000 and up 13 percent from February 2009. The January median price had fallen 7.5 percent from December’s $330,000, reflecting an active market in low-cost homes and little activity in moveup properties.

February’s numbers represented the highest year-over-year increase since March 2005, a few months before the median peaked at $517,500 and then fell to a low of $280,000 in January 2009.

But housing experts caution that January and February do not usually set the pace for sales and price trends for the year because of their traditionally low volume of activity.

Single-family resale homes had a median price of $358,500, up 3.9 percent from January’s $345,000 and just about the same as the December median; the figure was 12 percent ahead of year-ago levels. Condo resales stood at $219,500, up 8.9 percent from January’s $201,500 and nearly equal to the median price in December; it was 12.6 percent ahead of February 2009’s $195,000. The new-home median, including condo conversions, was $460,000, up 13.3 percent from January’s $406,000 and the highest since last May; it was 1.8 percent higher than in February 2009.

Sales in February stood at 2,465, up 6.2 percent from January but 8 sales lower than in February 2009. Single-family resales were below year-ago levels, down 4.2 percent, a reflection of the low inventory of homes for sale, especially low-cost distressed properties, as lenders try to modify loans rather than initiate foreclosure proceedings. Many analysts expect foreclosures to increase this year and thus lead to more sales but perhaps lower prices overall.

By Roger Showley

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Affordability of housing dips in county

Michael Carter - San Diego Real Estate Agent — Thu, 18 Feb 2010 18:26:56 +0000

San Diego County’s housing affordability has again dipped below the 50 percent level, the National Association of Home Builders said yesterday.

The 48.1 score in the Housing Opportunity Index represents the percentage of homes sold in the fourth quarter that a median-income household could afford using standard underwriting guidelines.

The new level positions San Diego as the 13th-most unaffordable market among 227 areas surveyed.

San Diego’s affordability peaked at a record 58.8 percent in the first quarter of last year. The region ranked 31st among least-affordable areas in the third quarter of 2008, its best showing in the 19 years of the survey.

The latest figures were based on a fourth-quarter median price of $319,000 for a single-family resale home, a 30-year, fixed-rate mortgage interest rate of 5.1 percent and a down payment of 10 percent. The median household income in the quarter was $74,900, and the survey assumes that a household will spend no more than 28 percent of income on housing.

Nationally, the index stood at 70.8 percent. Eleven of the 20 least-affordable markets were in California. New York ranked first at 19.7 percent and San Francisco was second at 22.3 percent.

By Roger Showley, UNION-TRIBUNE STAFF WRITER

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Property Values Fall Again

Michael Carter - San Diego Real Estate Agent — Thu, 11 Feb 2010 02:35:27 +0000

U.S. home values declined another 5 percent in the fourth quarter, compared to the previous year. This was the 12th straight quarter of year-over-year declines, reported Zillow.com.

More than 29 percent of homes sold in 2009 in the U.S. went for less than sellers originally paid for them, Zillow said, estimating that more than 20 percent of U.S. home owners owe more on their mortgages than their properties are worth.

“While the next few months are likely to bring further home value declines in most markets, we do expect to see a national bottom in home prices by the middle of this year,” Zillow Chief Economist Stan Humphries said in a statement. “Thereafter, home values are likely to bounce along the bottom with real appreciation remaining negligible for some time.”

Source: Bloomberg, Daniel Taub (02/10/2010)

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Pending Home Sales Stabilize

Michael Carter - San Diego Real Estate Agent — Tue, 02 Feb 2010 21:40:26 +0000

Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1.

In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.

Lawrence Yun, NAR chief economist, says it’s important to recognize how the tax credit is skewing market data.

“There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he says. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”

December activity was the fifth highest monthly tally in two years.

The Tax Credit Impact

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010.

“While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun says. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices.

“For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun says. “As a result, the housing wealth for many middle class families has begun to stabilize.”

Regional Data

Here’s a breakdown by region for the PHSI:

Northeast: rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
Midwest: increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
South: rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008.
West: fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.

NAR

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

December home sales down nearly 17 percent

Michael Carter - San Diego Real Estate Agent — Mon, 25 Jan 2010 15:51:12 +0000

WASHINGTON — Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

“It’s ‘exit stage left’ for first-time homebuyers,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The median sales price was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. However, some of that increase could be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago, but down 25 percent from the peak more than four years ago.

The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March – a month before the newly extended tax credit runs out.

Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That’s a 7.2 month supply at the current sales pace, close to a healthy level of about 6 months.

Total sales for 2009 closed out the year at 5.16 million, up about 5 percent from a year earlier. That was the first annual sales gain since 2005. But prices fell dramatically last year, declining 12.5 percent to a median of $173,500, the largest decline since the Great Depression.

Though the results missed Wall Street’s expectations, the Realtors’ group says there are signs the market is finally stabilizing.

“There is some sustainable momentum building in the housing market right now,” said Lawrence Yun, the group’s chief economist. However, he cautioned that the recovery will depend on whether the economy starts adding jobs in the second half of the year.

Many experts project home prices, which started to rise last summer, will fall again over the winter. That’s because foreclosures make up a larger proportion of sales during the winter months, when fewer sellers choose to put their homes on the market.

Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.

“We do not believe it is fair to consider this a double dip in the housing market,” Michelle Meyer, an economist with Barclays Capital, wrote last week. “The recovery is still under way, but hitting some bumps in the road.”

By Alan Zibel, Associated Press

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Nine Consecutive Gains for Pending Home Sales

Michael Carter - San Diego Real Estate Agent — Wed, 02 Dec 2009 16:46:25 +0000

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.”

By Region

Pending sales in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago.
In the Midwest, the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008.
Sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago.
In the West, the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.

Not Out of the Woods Yet
Yun cautioned that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.

“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.

Source: NAR

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Home prices climb for 2nd straight quarter

Michael Carter - San Diego Real Estate Agent — Tue, 24 Nov 2009 15:48:17 +0000

NEW YORK (CNNMoney.com) — Home prices rose for the second consecutive quarter but remained nearly 9% lower than a year earlier, according to a housing market report issued Tuesday.

Prices nationwide rose 3.1% in the three months ended Sept. 30, according to the S&P/Case-Shiller Home Price Index, a closely watched gauge of housing market direction. That followed a similar 3.1% rise during the second quarter of the year.

Prices were still below a year ago, however, down 8.9% compared with the third quarter of 2008. Nevertheless, that’s an improvement from the double-digit price decreases the index had been reporting; the second quarter year-over-year decline was 14.7%. Prices had dropped 19% year-over-year during the first quarter of 2009.

“We have seen broad improvement in home prices for most of the past six months,” says David Blitzer, Chairman of the Index Committee at Standard & Poor’s.

The Case-Shiller 20-City Composite index posted its fifth monthly increase in a row in September, rising 0.3% from August levels.

The worst performing market continued to be Las Vegas, where prices have dropped for 37 consecutive months. They’re now 55.4% off their highs.

Midwestern cities staged a comeback in September, with Minneapolis and Detroit prices each gaining 1.8%, the most of any of the 20-cities covered. Chicago prices jumped 1.2%; San Francisco climbed 1.3%; and Los Angeles and Phoenix both rose 0.8%.

Stopping the home price slide is an important factor in any economic recovery. Falling prices increase the number of “underwater” homeowners, those who owe more on their mortgage balances than their homes are worth.

Underwater mortgage borrowers are much more likely to lose their homes to foreclosure. Indeed, it’s a crucial factor in whether people lose their homes or not, as Mark Goldman, a San Diego State University real estate professor pointed out.

“If they have a home worth $300,000 and they owe $250,000 and can’t pay their mortgage, they’ll just sell the house,” he said.

It’s when they have a house worth $200,000 and they owe $250,000 that these people default, because the sale of the house would not pay their whole debt.

A report from First American CoreLogic released Tuesday, revealed that nearly a quarter of all mortgage borrowers are underwater. That, as well as the ongoing foreclosure problem, has contributed to doubt about the staying power of the recent price trend.

“I think it’s temporary,” said Pat Newport, a real estate analyst with IHS Global Insight. “I can’t see home prices stabilizing as long as we have that problem.”

According to Newport, foreclosures could worsen over the next several months as many toxic loans go through resets, making them much less affordable for their borrowers.

A significant contributor to the improvements in the housing markets have been programs such as the tax credit for first-time homebuyers, according to Bob Walters, the chief economist for Quicken Loans.

“[But] the real driver in all of this — from home sales to home pricing appreciation — has been the protracted run of favorable mortgage rates,” he said. “It will be interesting to see how home prices react when we see rates begin to increase, as they are sure to do over time.”

By Les Christie, CNNMoney.com staff writer

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Mortgage Delinquencies Are Still Rising, More Foreclosures to Come in 2010

Michael Carter - San Diego Real Estate Agent — Thu, 19 Nov 2009 01:30:54 +0000

Mortgage delinquencies rose for the 11th straight month, reaching 6.25 percent in the third quarter from 3.96 percent a year earlier and 5.81 percent in the second quarter, according to the credit management company TransUnion.

“Until the housing market can consistently demonstrate several months of home value appreciation and the unemployment rate improves, mortgage delinquency will likely continue to rise,” said F.J. Guarrera, vice president of TransUnion’s financial services division.

Mortgage delinquency rates were highest in Nevada and Florida, reaching 14.5 percent and 13.3 percent, respectively. They were lowest in North Dakota and South Dakota at 1.7 percent and 2.3 percent respectively.

The District of Columbia had the highest debt per borrower at $359,788, while West Virginia had the lowest at $97,265.

Source: The Wall Street Journal, Joan E. Solsman (11/17/2009)

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Home sales contracts rise for 8th straight month

Michael Carter - San Diego Real Estate Agent — Mon, 02 Nov 2009 15:59:09 +0000

Real estate rally attributed to first-time homebuyer tax credit that expires at the end of November.

NEW YORK (CNNMoney.com) — The number of signed sales contracts to buy homes rose in September for the eighth straight month, according to a real estate industry report released Monday.

The September Pending Home Sales Index from the National Association of Realtors (NAR) spiked 6.1% to 110.1, consolidating a 6.4% gain in August. It was the index’s highest level since December 2006, when it stood at 112.8.

The leap was far better than expected. A panel of analysts surveyed by Briefing.com had forecast a 1.2% rise.

Analysts, including Lawrence Yun, NAR’s chief economist, have traced much of the improvement to the government’s first-time homebuyer tax credit program, which gives an up to $8,000 tax break to new homebuyers. It’s estimated that between 200,000 and 400,000 additional sales will have been made because of the credit.

“What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” said Yun.

The credit lapses after Nov. 30, and the housing industry is bracing for a major turndown in sales if Congress fails to pass some kind of extension.

“Clearly, buyers were eager to get business done before the credit’s November expiration,” said Mike Larson, a real estate analyst for Weiss Research. “So I wouldn’t be surprised to see some give back in pending sales over the next month or two.”

Favorable long-term prospects

Any fall-off should only be temporary, however, according to Yun. Market conditions are just so favorable for buyers right now that sales should rebound quickly should they suffer through a hangover following the tax credit demise.

With home prices well off their highs and mortgage rates still extremely low, the cost of homeownership is well within the range for many Americans who are not homeowners today. There are, Yun estimates, about 3 million renters who are now financially well-qualified to buy a median-priced home.

“As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” he said.

That will not translate into a new boom, however, according to Larson. “No explosion of pent-up demand will send markets to new heights,” he said. “The economy is still not in fantastic shape.”

Housing markets certainly do not seem to be out of the woods, but this latest release added to a modest winning streak of positive recent reports. Prices appear to have stabilized, with the S&P/Case-Shiller Home Price index up four months in a row and completed sales of existing homes at their highest level in two years.

Foreclosures, however, continue to plague many markets, adding to supplies on homes for sale, according to Yun.

“An excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline.”

Increased pending sales are a forward-looking indicator since contract signings precede actual closings; they typically take place two to three months later. Although some contract signings fall through, a jump in signings in September usually means NAR statistics on December existing home sales will improve.

By Les Christie, CNNMoney.com staff writer

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774