Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.
Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.
Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.
Although the median price in the state has risen for four consecutivemonths, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.
Monday, June 29, 2009
Friday, May 22, 2009
Shadow Inventory - Heckle or Haunt?
It is about as scary as the Alien, and it is very much alive. Our real estate market is enveloped by “Shadow Inventory” which is ready to pounce on us at the first indication of a market rebound.
Most market news talks about the glut of foreclosures and short sales. They represent roughly 55% of the available homes for sale today. That number is miniscule compared to the pent up supply of equity sales which are poised to come on the market at the first sign of rising prices. For nearly the last three years, homeowners have been postponing the sale of their property because prices were falling on a daily basis. Many of them simply could not afford to sell. Families were in need of more space, empty nesters wanted to move to smaller homes, many wanted to rent instead of own, plenty of retirees were weighing their options, second homes were desired by some, and investment properties were still on the wish list. All these people delayed taking any action. Now, the shadow inventory is beginning to haunt!
The shadow inventory will continue to grow as homeowners bide their time. So, what’s going happen if it breaks free? I predict a flood of new, unexpected inventory as prices move upward. What will happen then? The new inventory will stall price increases and buyers will seize the opportunity at hand. Then, prices will begin rising again because of demand. We are about to find ourselves in new real estate territory. Stay tuned, have your checkbook ready, and keep an eye on the best deals. At some point, nearly one third of the Nation’s homeowners will be ready to sell and buy something else.
Most market news talks about the glut of foreclosures and short sales. They represent roughly 55% of the available homes for sale today. That number is miniscule compared to the pent up supply of equity sales which are poised to come on the market at the first sign of rising prices. For nearly the last three years, homeowners have been postponing the sale of their property because prices were falling on a daily basis. Many of them simply could not afford to sell. Families were in need of more space, empty nesters wanted to move to smaller homes, many wanted to rent instead of own, plenty of retirees were weighing their options, second homes were desired by some, and investment properties were still on the wish list. All these people delayed taking any action. Now, the shadow inventory is beginning to haunt!
The shadow inventory will continue to grow as homeowners bide their time. So, what’s going happen if it breaks free? I predict a flood of new, unexpected inventory as prices move upward. What will happen then? The new inventory will stall price increases and buyers will seize the opportunity at hand. Then, prices will begin rising again because of demand. We are about to find ourselves in new real estate territory. Stay tuned, have your checkbook ready, and keep an eye on the best deals. At some point, nearly one third of the Nation’s homeowners will be ready to sell and buy something else.
Saturday, May 9, 2009
On the cusp of a Seller's Market
The O.C. market may have sagged as much as it is going to. Many would be buyers are under the false impression that the CA home sales statistics and trends are representative of what is going on in Southern CA. Just because a single family home has dropped to $200k in the Central Valley does not mean that similar bargains exist in Irvine. Actually, OC inventory of homes is falling rapidly and in many locales there are multiple offers. During the first four months of 2008, 1132 homes were sold under $350k. So far this year sales have reached 3638, which is an increase of 220%. Amazingly, there is only about 3 months of inventory under $350k, which makes it the beginning of a sellers market! It appears prices have stabilized in many of the popular neighborhoods. Record low interest rates are adding to the reasons for so many sales, and investors are jumping back into the market. If you are waiting for prices to drop further you may have a long, long wait! The challenge for some buyers now is not whether they will get a bargain, but whether they will get a house!
Monday, April 27, 2009
Demand for O.C. Homes back at 2005 levels
The latest O.C. home inventory report says demand, as measured by the number of new pending O.C. sales over the prior month, is up 33% in a year to 3,553 — high for the year. The last time demand exceeded 3,500? August 2005.
Demand has literally taken off over the past four weeks. It is almost as if somebody turned the demand switch to its “on” position. Can this be the stimulus package at work? Are the lower interest rates working? Could the recent uptick be attributed to pent up demand? Is the public at large feeling a little bit at ease given the recent improvement on Wall Street? It is most likely a little bit of everything at work.
It would take 2.97 months for buyers to gobble up all homes for sale at the current pace vs. 3.40 months two weeks vs. 6.55 months a year ago vs. 7.75 two years ago. Homes listed for under a million bucks have a market time of 2.34 months vs. 14.51 months for homes listed for more than $1 million.
Just 19 days worth of O.C. foreclosures for sale!
Chart data, as of last Thursday, for listings; deals pending; market time in months; last Thursday vs. 2 weeks ago, a year ago and 2 years ago …
Wednesday, April 1, 2009
Sales in O.C. Leap 45%
Inventory of available homes has been steadily declining, but still consists largely of short sales and foreclosures. First Quarter saw sales rise by 45% compared to the same period last year. The average sale price, however dropped 30% to $454,572 for a 3 bedroom, 2.5 bath, 1641 square foot home. Total sales in Orange County reached 5,458 homes. It is still a buyer's market, but for all intents and purposes the majority of short sale listings are really not available for sale. Overall, the trends suggest that we are beginning to climb out of the housing abyss. Low mortgage rates and low prices are a boon to buyers and investors.
Wednesday, March 18, 2009
Home Sales Are Inching Up
Orange County’s median home price inched up $5000 in February, which saw the first month over month increase in prices since June of last year. The median price in O.C. was $375,000, a nearly 1.4% rise from January, according to DataQuick Information Systems. Median prices overall are down 28% from a year earlier, and are off nearly 42% from their all time high in June 2007.
Sales continue to increase, driven mainly by discounted sales of foreclosed homes and short sales. O.C. sales rose 28% from last year, and 4% from January’s performance. County wide there were 1,879 sales in February.
The median price in Southern California was $250,000 in February, which was unchanged from January, and a 39% decrease from a year ago. Southland sales in February were up 41% from a year ago. The market could be signaling the beginning of a recovery, but it is too early to say with any certainty.
Foreclosure resales, where a foreclosure had occurred at some point in the prior year, made up about 56% of all Southland sales in February. Jumbo loans of more than $417,000 made up just 10% of sales in February.
Sales continue to increase, driven mainly by discounted sales of foreclosed homes and short sales. O.C. sales rose 28% from last year, and 4% from January’s performance. County wide there were 1,879 sales in February.
The median price in Southern California was $250,000 in February, which was unchanged from January, and a 39% decrease from a year ago. Southland sales in February were up 41% from a year ago. The market could be signaling the beginning of a recovery, but it is too early to say with any certainty.
Foreclosure resales, where a foreclosure had occurred at some point in the prior year, made up about 56% of all Southland sales in February. Jumbo loans of more than $417,000 made up just 10% of sales in February.
Friday, February 20, 2009
Residential Income Market
OC rents are expected to rise 2.3% in 2009, to an average of $1574 per unit. The Southern California cost of living in rental housing rose 4.5% last year, which was the smallest increase in about eight years according to the CPI. Vacancies are also expected to rise slightly by about 1% to a total of 5.9% on average. Apartment construction will exceed last year's levels. Irvine and south Anaheim are expected to see the most new construction with 1600 units in Irvine and 1000 in south Anaheim. A greater number of unsold condos have hit the residential market which will likely compete with multi-unit rentals. The strongest demand for rentals will be near the large business districts such as Newport Beach, and Tustin. Vacancies in these cities are projected to be 3.5 to 4.5%.
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