SAN DIEGO REAL ESTATE AGENT BLOG » San Diego Market

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

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

Apartment Dwellers on the Move This Year

Michael Carter - San Diego Real Estate Agent — Fri, 22 Jan 2010 16:10:42 +0000

With apartments increasingly available, renters are more demanding than they used to be.

Here are some key issues that landlords should consider, according to Apartments.com, whose recent survey of renters showed that 60 percent of apartment dwellers intend to move in 2010.

Flexible leasing terms. Flexible terms ranging from month to month to two to 10 months to two years can satisfy residents willing to pay for the convenience.

Lifestyle-friendly services. Accepting dogs and even offering a dog-walking service, a fitness center and Internet availability are simple things that can keep tenants from moving.

Utilities included. Having electricity, phone, cable and Internet part of their rent appeals to many tenants.

Source: Apartments.com

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

Government Announces Short Sales Guidelines

Michael Carter - San Diego Real Estate Agent — Thu, 03 Dec 2009 02:47:23 +0000

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:

The property must be the home owner’s principal residence.
The home owner must be delinquent on the mortgage or close to defaulting.
The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines.

Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)

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

Home Sales Drive the Recovery

Michael Carter - San Diego Real Estate Agent — Mon, 16 Nov 2009 21:47:41 +0000

It’s been a long time coming, but thanks largely to strengthening housing markets, the country is pulling out of the recession. Existing-home sales rose 7.2 percent from June to July to post a seasonally adjusted annual rate of 5.24 million units. That is the highest monthly increase in at least 10 years. Perhaps even more telling is the fact that resales were 5 percent higher in July 2009 than they were a year earlier—making July the first month in nearly four years that we’ve seen a year-over-year increase.

To a certain extent, the housing picture is benefiting from other gains in the economy. Driven in part by improved economies around the world, U.S. exports are recovering, creating an increasing demand for U.S. businesses to replenish depleted inventories. The result is a virtuous cycle of growth.

But the star of housing sales has been the first-time home buyer tax credit. More than 1 million households have used the credit since it was enacted a year and a half ago. Given its widely recognized importance to housing, and thus to the entire U.S. economy, it’s not surprising that the credit’s reauthorization this year is so strongly supported in Congress and by the Obama administration.

But reauthorization alone isn’t enough. It will take years for our economy to replace the 7 million jobs we’ve lost in this recession. To rebuild hiring, attention must turn to still hard-hit commercial real estate, which continues to face a debilitating credit crunch. It’s good that the Federal Reserve has started focusing on the issue and we’re hoping credit will flow increasingly into the market. But commercial real estate remains a wild card.

Yes, we’re pulling out of the recession and better economic conditions lie ahead. Continuing the home buyer tax credit and relieving the commercial real estate credit crunch are what we need to bring those lost jobs back and keep the economy growing.

By Lawrence Yun | November 2009

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

Both Houses OK Tax Credit Extension, Expansion

Michael Carter - San Diego Real Estate Agent — Fri, 06 Nov 2009 04:46:49 +0000

The House today and the Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they’ve lived in their home for five of the past eight years. Home prices are capped at $800,000.

The legislation in both houses was included in a bill to extend unemployment benefits and is expected to be signed by President Obama shortly.

“REALTORS® appreciate the swift action by Congress to extend the home buyer tax credit and expand it to some current homeowners,” says NAR President Charles McMillan. “As the leading advocate of housing and real estate issues, we urge President Obama to sign this legislation into law quickly to keep the momentum going in the fragile recovery of the nation’s housing market.”

Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.

Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2010.

Source: The Associated Press

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

Big Rebound in Existing-Home Sales

Michael Carter - San Diego Real Estate Agent — Tue, 27 Oct 2009 03:11:36 +0000

Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.

Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said.

Conditions for First-Time Buyers
Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers,shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.

NAR President Charles McMillan said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average.”

Inventory Falls
Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Home Sales Breakdown
The national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7 percent above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1 percent below a year ago.

Existing condominium and co-op sales jumped 9.7 percent to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7 percent above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7 percent from September 2008.

Here’s the region-by-region picture:

Northeast: Existing-home sales increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price was $234,700, down 7.0 percent from a year ago.
Midwest: Existing-home sales jumped 9.6 percent in September to a pace of 1.25 million and are 7.8 percent above a year ago. The median price was $147,600, which is 1.0 percent below September 2008.
South: Existing-home sales rose 9.0 percent to an annual level of 2.06 million in September and are 10.8 percent higher than September 2008. The median price was $153,500, down 7.6 percent from a year ago.
West: Existing-home sales surged 13.0 percent to an annual rate of 1.30 million in September and are 5.7 percent above a year ago. The median price in the West was $219,000, which is 15.0 percent below September 2008.

Source: NAR

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

Home prices across area ending decline, data show

Michael Carter - San Diego Real Estate Agent — Tue, 20 Oct 2009 03:38:50 +0000

San Diego County’s three-year slide in home prices is ending, neighborhood by neighborhood, according to a quarterly breakdown from MDA DataQuick.

Eight out of 56 neighborhoods saw higher prices than a year ago, compared with only one or none in the recent quarters, DataQuick said. The findings are based on ZIP codes with at least 50 single-family-house resales in the latest three-month period.

Overall, the resale median price of $360,000 was down only 5 percent from $379,000 in the same quarter last year, a big improvement from the 24.2 percent slump from 2007, when it stood at $500,000.

Robert Brown, a Cal State San Marcos economics professor, said he has been watching price declines lessen since April.

“There certainly has been an uptick in North County in the last three or four months,” Brown said.

Escondido West (ZIP 92029) saw the biggest increase, 15.1 percent, from a median of $467,000 in the third quarter of 2008 to $537,000 this year, and Brown said relatively few distressed properties may be the reason.

Sue Scott, a longtime real estate agent in the area, said the semirural setting near Lake Hodges and low turnover in ownership have sustained values.

“I think we do better than elsewhere, comparatively,” Scott said.

DataQuick numbers back her up. The median for the Escondido West area is down 21 percent from the 2007 peak of $680,250. That compares with a countywide median decline of 35 percent from the 2006 high of $554,000 to $360,000 in the third quarter this year.

By contrast, many more areas continue to post lower year-over-year prices, with three central San Diego city neighborhoods among the five worst performers.

Golden Hill (92102), east of downtown, was off 32.3 percent to $152,250 and down 65.4 percent from its 2006 peak of $440,000.

Peter Dennehy, senior vice president at Sullivan Group Real Estate Advisors, said these fast-sinking neighborhoods were among the last to see an upsurge during the early-2000s bubble market. As prices elsewhere soared, desperate buyers with shaky financing bought there, where prices were lowest.

“They came late to the appreciation curve and really boomed in what I’d call the ‘unfortunate’ years, when subprime mortgages were quite prevalent,” Dennehy said of the worst-performing ZIPs.

Scott Holder of Aloha San Diego Properties in Golden Hill called the inner-city markets “schizophrenic” because investors outbid first-time buyers now.

“We have people that want to buy and can’t buy,” Holder said.

Many agents report that the inventory of homes for sale is shrinking because the supply of distressed properties is down — a situation that may change if an expected new wave of foreclosures materializes. The San Diego Association of Realtors said the number of active listings for detached homes this week stood at 5,670, down from 8,562 in mid-July.

Meanwhile, owners of nondistressed homes do not want to sell because they hope prices last seen in 2006 will return soon. That may not happen for 10 more years, agents say.

Analysts caution not to read too much into price trends, because they vary greatly in market mix. During one quarter there may be many small, low-priced houses that change hands, and in another, more higher-priced listings.

Mark Lau of WKL Financial, a real estate office in central San Diego’s City Heights neighborhood, said he was surprised that his area dropped 17.8 percent in the third quarter to a median of $183,000. That compared with $222,500 in the same period in 2008 and a record $411,000 for all of 2006.

“My feeling was it was going up,” based on multiple offers and overbids on foreclosure properties, Lau said.

In one recent case, a client made an all-cash bid of $190,000 on a home listed at $150,000. There were 38 offers, and it went to someone else.

“We got beat up so many times, we learned our lesson to go higher,” Lau said.

In Chula Vista, where prices continue to fall, Ramon Zamora of Executive Brokers Real Estate said frustrated first-time buyers will probably have to wait their turn.

Investors, although often offering less money, are making winning bids by paying all cash. They spend $5,000 to $20,000 on repairs and upgrades, then sell the homes to first-timers for thousands more than they invested.

“It’s not that it’s a better deal; it’s just the way the first-time buyer can get it,” Zamora said.

Ray Metcalf, a 30-year-veteran real estate broker in Oceanside, said he has backed out of the realty business for the time being because it is dominated by what he called “a bunch of barracudas” — bottom-fishing investors and banks eager to rapidly unload foreclosures.

“The industry is no fun anymore,” Metcalf said.

Linda Bell at Panda Realty in Poway characterized the market as being in a “frenzy.”

“Everybody just goes bananas over the cheap ones,” Bell said.

But she and other agents predicted continued problems in San Diego real estate if the economy continues in its weakened state with little growth and high unemployment.

“People who are not making money can’t buy a house,” Bell said.

By Roger Showley

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

SoCal home sales up, prices hold steady

Michael Carter - San Diego Real Estate Agent — Wed, 14 Oct 2009 14:29:46 +0000

Southern California home sales rose unexpectedly last month as price declines moderated, MDA DataQuick reported Tuesday.

There were 21,539 sales in the six-county region, including San Diego, up slightly from August’s 21,502, as low rates, federal tax credits and delayed closings reversed usual 9.5 percent August-September downturn. The total was 11 percent higher than in September 2008, the 14th straight year-over-year increase.

As reported Monday, San Diego’s sales rose from 3,306 in August to 3,454 last month.

The overall median for the region stood at $275,000, unchanged from August and 10.9 percent below year-ago levels, the smallest year-over-year decline since November 2007.

San Diego’s September median also was unchanged at $325,000 and just 0.9 percent below September 2008′s $328,000 – the smallest decline since June 2006, when there was a 1 percent annualized increase.

Orange and Ventura counties joined San Diego in seeing the first annual increase in existing-house prices in years.

Orange County’s median price for resale single-family homes rose 4.2 percent, from $480,000 in September 2008 to $500,000 last month, the first year-over-year increase since August 2007. Orange also was the first Southern California county to post an overall increase in median prices, up 0.9 percent to $429,000.

Ventura’s resale house median was up 2.2 percent, from $410,000 to $419,000, the first such year-over-year increase since October 2006.

San Diego, as reported Monday, saw its median house price increase 1.5 percent, from $360,000 in September 2008 to $365,500 last month, the first such gain since August 2007.

However, DataQuick said the increases were not due to increases in values as much as a change in market mix, with fewer low-cost distressed properties selling and more higher-priced homes closing escrow.

Regionwide foreclosure sales – houses and condos that had been foreclosed on at some point in the previous 12 months – represented 40.4 percent of all resales, down slightly from a revised 41.7 percent in August.

San Diego’s foreclosure count was 35.3 percent, up slightly from the revised 34.5 percent in August. It was the first month-to-month increase for San Diego since January, when the all-time high of 55 percent was reached.

The September boost was attributed to a possible delay in closings due to a slowdown in appraisals and the continued flow of short-sale transactions. These involve homes sold for less than the outstanding mortgage balance and usually take much longer to go through escrow because lenders must approve such sales.

Analysts also said buyers were eager to take advantage of the $8,000 federal first-time-homebuyer tax credit, scheduled to expire next month but now being considered for extension in Congress.

Low interest rates also are thought to be drawing in buyers.

Roger Showley

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

Home Buyer Tax Credit Extension Likely

Michael Carter - San Diego Real Estate Agent — Fri, 09 Oct 2009 14:54:45 +0000

Extending the First-Time Home Buyer Tax Credit, due to expire at the end of November, is high on the Democratic Congressional to-do list, legislative aides said.

After Wednesday’s meeting with President Obama and House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.) released a statement that the government should “continue efforts to strengthen the housing market by extending the home buyer tax credit.”

Mark Zandi, chief economist at Moody’s Economy.com, who is a consultant to Democrats in the administration and Congress, is advocating extending the credit through August and making it available to all home buyers. He said failure to extend the credit just as more foreclosures enter the market will push housing prices down.

Also, on Thursday, the House is expected pass legislation to extend the credit through 2010 for people who have been out of the country in the military, intelligence, or foreign services.

The New York Times, Jackie Calmes (10/07/2009)

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