Just wanted to say thanks to everyone that read the blog over the years. Obviously I have totally lost interest in the market. The IE market is completely stupid now, no inventory, inside deals, and a multitude of other silliness has made looking for even rental property a complete waste of time. I have pretty well disabled the comments due to the useless spam that was being posted. I will leave the blog up as a record of the bursting of the bubble and the stupidity that followed.
If you really want some giggles go back and read the posts from 2007 and 2008. Some of that stuff is priceless.
Regards
X
asking prices up, inventory down
Here we go again. The drop in inventory is causing a surge in asking prices.
From Housing Tracker.
From Housing Tracker.
Asking Prices and Inventory for Homes in Riverside California
As of July 09 2012 there were about 20,724 single family and condo homes listed for sale in Riverside California. The median asking price of these homes was approximately $255,000. Since this time last year, the inventory of homes for sale has decreased by 32.3% and the median price has increased by 10.9%.| July 09, 2012 | Month/Month | Year/Year | |
|---|---|---|---|
| Median Asking Price | $255,000 | +2.0% | +10.9% |
| Home Listings/Inventory | 20,724 | -5.2% | -32.3% |
Recent Asking Price and Inventory History for Riverside
| Date | Single Family & Condo Inventory | 25th Percentile Asking Price | Median Asking Price | 75th Percentile Asking Price |
|---|---|---|---|---|
| 07/09/2012 | 20,724 | $159,000 | $255,000 | $444,900 |
| 07/02/2012 | 21,216 | $159,000 | $250,000 | $439,000 |
| 06/25/2012 | 21,498 | $158,100 | $250,000 | $439,000 |
| 06/18/2012 | 21,738 | $155,000 | $249,900 | $434,000 |
| 06/11/2012 | 21,859 | $155,000 | $249,900 | $429,000 |
Listing data, been a while
It's been a long time since I posted any listing data from housingtracker.com. You can see the lack of inventory is having an effect on median listing prices. Not surprising, but what is surprising is the drop in inventory. The inventory levels are very low which is causing the "pearls" to go quick. Nice homes are selling like it was 2005 again (well except for the price). Who knows what will happen to these numbers but right now it's not a good time to be a buyer!
Asking Prices and Inventory for Homes in Riverside California
As of June 18 2012 there were about 21,738 single family and condo homes listed for sale in Riverside California. The median asking price of these homes was approximately $249,900. Since this time last year, the inventory of homes for sale has decreased by 30.6% and the median price has increased by 8.7%.| June 18, 2012 | Month/Month | Year/Year | |
|---|---|---|---|
| Median Asking Price | $249,900 | +2.0% | +8.7% |
| Home Listings/Inventory | 21,738 | -3.6% | -30.6% |
Recent Asking Price and Inventory History for Riverside
| Date | Single Family & Condo Inventory | 25th Percentile Asking Price | Median Asking Price | 75th Percentile Asking Price |
|---|---|---|---|---|
| 06/18/2012 | 21,738 | $155,000 | $249,900 | $434,000 |
| 06/11/2012 | 21,859 | $155,000 | $249,900 | $429,000 |
| 06/04/2012 | 22,014 | $154,900 | $249,000 | $425,000 |
| 05/28/2012 | 22,342 | $152,000 | $245,900 | $419,000 |
| 05/21/2012 | 22,541 | $152,000 | $245,000 | $419,000 |
More bounce, May numbers
Sales are up and so are prices. Median prices crept up a few thou in the IE and sales numbers were up quite a bit. With the low inventory numbers it's hard to imagine sales going too much higher but it could certainly affect prices. I know around here I am seeing listing prices creep up. Good homes are selling very fast and the dogs are being left to rot. The inventory is around 22K for riverside making for about a 6 month supply. However about a third of those have no hope of selling (priced too high, next to the railroad tracks, total dumps etc). So the actual sell-able inventory is probably about a 4 month supply. That's pretty low and under normal circumstances would tend do drive up prices. Not holding my breath for that to happen. Certainly not in a big way. Hopefully we are seeing a return to a more normal, stable market.
The DQnews report.
The Southland housing market continued its long, step-by-tiny-step trek back toward normalcy in May, when the median sale price rose year-over-year for the second consecutive month, reaching a 20-month high. Home sales increased across the region but the gains were highest in coastal areas, where move-up markets have picked up steam, a real estate information service reported.
The median price paid for a home in the six-county Southland rose last month to $295,000, up 1.7 percent from $290,000 in April and up 5.4 percent from $280,000 in May 2011, according to San Diego-based DataQuick.
Last month’s median was the highest since the median was $295,500 in September 2010. The year-over-year gain in the May median followed a 3.6 percent annual increase in April. Before then, the median had fallen year-over-year for 13 straight months.
The rise in the median price is the result of higher demand and two other trends. First, there’s been a significant drop in the share of transactions that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas. Second, a greater portion of sales are occurring in the higher-cost coastal markets. Last month, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented about 70 percent of all activity, up from 67.6 percent a year ago.
Last month’s total Southland sales rose nearly 21 percent compared with a year ago, and activity increased across the home-price spectrum. But the gains were strongest above $300,000. The volume of transactions in lower-cost markets has been restrained by, among other things, the dwindling inventories of homes for sale, especially foreclosures.
The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,100, compared with $1,096 the month before and $1,154 a year earlier. Adjusted for inflation, last month’s typical payment was 53.6 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 62.0 percent below the current cycle’s peak in July 2007.
The DQnews report.
The Southland housing market continued its long, step-by-tiny-step trek back toward normalcy in May, when the median sale price rose year-over-year for the second consecutive month, reaching a 20-month high. Home sales increased across the region but the gains were highest in coastal areas, where move-up markets have picked up steam, a real estate information service reported.
The median price paid for a home in the six-county Southland rose last month to $295,000, up 1.7 percent from $290,000 in April and up 5.4 percent from $280,000 in May 2011, according to San Diego-based DataQuick.
Last month’s median was the highest since the median was $295,500 in September 2010. The year-over-year gain in the May median followed a 3.6 percent annual increase in April. Before then, the median had fallen year-over-year for 13 straight months.
The rise in the median price is the result of higher demand and two other trends. First, there’s been a significant drop in the share of transactions that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas. Second, a greater portion of sales are occurring in the higher-cost coastal markets. Last month, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented about 70 percent of all activity, up from 67.6 percent a year ago.
Last month’s total Southland sales rose nearly 21 percent compared with a year ago, and activity increased across the home-price spectrum. But the gains were strongest above $300,000. The volume of transactions in lower-cost markets has been restrained by, among other things, the dwindling inventories of homes for sale, especially foreclosures.
The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,100, compared with $1,096 the month before and $1,154 a year earlier. Adjusted for inflation, last month’s typical payment was 53.6 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 62.0 percent below the current cycle’s peak in July 2007.
| Sales Volume | Median Price | |||||
| All homes | May-11 | May-12 | %Chng | May-11 | May-12 | %Chng |
| Los Angeles | 5,983 | 7,496 | 25.30% | $320k | $315k | -1.60% |
| Orange | 2,664 | 3,279 | 23.10% | $425k | $435k | 2.40% |
| Riverside | 3,644 | 3,972 | 9.00% | $197k | $205k | 4.10% |
| San Bernardino | 2,323 | 2,702 | 16.30% | $150k | $158k | 5.70% |
| San Diego | 3,087 | 3,750 | 21.50% | $324k | $335k | 3.20% |
| Ventura | 693 | 993 | 43.30% | $360k | $360k | -0.10% |
| SoCal | 18,394 | 22,192 | 20.60% | $280k | $295k | 5.40% |
Here comes the Spring Bounce
It's a bit late but the spring bounce in prices seems to finally be upon us. Riverside median price stayed the same as last month and was up slightly from last year. San Berdu had a decent month to month rise..
Here's what DQnews has to say...
Southern California’s median sale price rose year-over-year in April for the first time in 16 months, reflecting stronger, affordability-driven demand and a slimmer inventory of homes for sale – especially low-cost foreclosures. Last month’s sales were modestly higher than a year ago, thanks to significant gains in the coastal counties, but remained well below average, a real estate information service reported.
The median price paid for a Southland home last month was $290,000, up 3.6 percent from $280,000 in both March this year as well as April 2011, according to San Diego-based DataQuick.
Last month’s median was the highest since the median was also $290,000 in December 2010. The year-over-year gain in the April median was also the first since December 2010, when the median rose a scant 0.3 percent.
Although price pressures have no doubt formed in some areas, the year-over-year increase in the April median price also reflects two other trends: the decline in the share of sales that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas, and a shift toward a greater portion of sales this April in the higher-cost coastal markets. In April last year, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented 68.0 percent of the region’s sales, compared with 71.5 percent last month.
April’s $290,000 Southland median was 17.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 42.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
The number of homes that sold for less than $200,000 in April fell 4.7 percent from a year earlier, while the number that sold for between $200,000 and $400,000 rose 5.5 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 3.5 percent year-over-year. The number of sales above $800,000 fell 3.0 percent from a year ago.
Distressed sales – the combination of foreclosure resales and “short” sales – made up about 47 percent of last month’s resale market. That was the lowest level since the figure was 45.1 percent in April 2008.
Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 28.6 percent of the resale market last month, down from 31.5 percent in March and down from 33.8 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were also 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.4 percent of Southland resales last month. That compares with 18.9 percent the month before and 17.3 percent a year earlier.
Here's what DQnews has to say...
Southern California’s median sale price rose year-over-year in April for the first time in 16 months, reflecting stronger, affordability-driven demand and a slimmer inventory of homes for sale – especially low-cost foreclosures. Last month’s sales were modestly higher than a year ago, thanks to significant gains in the coastal counties, but remained well below average, a real estate information service reported.
The median price paid for a Southland home last month was $290,000, up 3.6 percent from $280,000 in both March this year as well as April 2011, according to San Diego-based DataQuick.
Last month’s median was the highest since the median was also $290,000 in December 2010. The year-over-year gain in the April median was also the first since December 2010, when the median rose a scant 0.3 percent.
Although price pressures have no doubt formed in some areas, the year-over-year increase in the April median price also reflects two other trends: the decline in the share of sales that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas, and a shift toward a greater portion of sales this April in the higher-cost coastal markets. In April last year, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented 68.0 percent of the region’s sales, compared with 71.5 percent last month.
April’s $290,000 Southland median was 17.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 42.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
The number of homes that sold for less than $200,000 in April fell 4.7 percent from a year earlier, while the number that sold for between $200,000 and $400,000 rose 5.5 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 3.5 percent year-over-year. The number of sales above $800,000 fell 3.0 percent from a year ago.
Distressed sales – the combination of foreclosure resales and “short” sales – made up about 47 percent of last month’s resale market. That was the lowest level since the figure was 45.1 percent in April 2008.
Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 28.6 percent of the resale market last month, down from 31.5 percent in March and down from 33.8 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were also 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.4 percent of Southland resales last month. That compares with 18.9 percent the month before and 17.3 percent a year earlier.
| Sales Volume | Median Price | |||||
| All homes | Apr-11 | Apr-12 | %Chng | Apr-11 | Apr-12 | %Chng |
| Los Angeles | 6,025 | 6,510 | 8.00% | $320,000 | $310,000 | -3.10% |
| Orange | 2,485 | 2,920 | 17.50% | $430,000 | $420,000 | -2.30% |
| Riverside | 3,470 | 3,199 | -7.80% | $190,000 | $200,000 | 5.30% |
| San Bernardino | 2,403 | 2,292 | -4.60% | $147,500 | $156,250 | 5.90% |
| San Diego | 3,277 | 3,559 | 8.60% | $321,750 | $329,500 | 2.40% |
| Ventura | 684 | 804 | 17.50% | $357,500 | $360,000 | 0.70% |
| SoCal | 18,344 | 19,284 | 5.10% | $280,000 | $290,000 | 3.60% |
Better off letting it go
Cruising the web I ran accross this article that mirrors what I have been telling people for the last 5 years. GET OUT! All the mod programs are not designed to help the home owner. Put your emotions aside and look at the numbers. The people that have let the homes go are the ones that will come out ahead in the long run.
Here's the article (sorry it's a bit long)
I am trying to get your attention. I hope my headline is successful.
Struggling Homeowners, Professionals & HUD Counselors PLEASE READ THIS;
I’VE BEEN BEGGING YOU TO STOP MODIFYING PEOPLE WHO CAN’T AFFORD THEIR HOMES SINCE 09. WHY? BECAUSE YOUR HELP IS BURYING THEM IN DEBT & THEY’RE LOSING THEIR HOMES REGARDLESS.
The Board of the Housing Opportunity Collaboration of the Inland Empire (HOCIE) and many others around the country, including the infamous NACA (Neighborhood Assistance Corporation of America) have a heart of gold, but are seemingly unwilling to listen to sound underwriting advice. Instead, it was full steam ahead with a; “save the dream” and “save homeownership at all cost” agenda that the banks LOVED and so they continued to fund their activities while lobbying lawmakers to make private sector professional assistance illegal. It’s worked beautifully.
LPS (Lender Processing Services) REPORTS 47% OF NEW FORECLOSURES WERE PREVIOUS FORECLOSURES. *See page 13 of the most recent Mortgage Monitor report*
The Make Home Affordable Program reports monthly what the average over all debt percentage is for a borrower AFTER they receive a modification. Currentlyit’s 60%! It has been around 63% over the last year. *See page 5 of the most recent Make Home Affordable report* Historically, banks/underwriters knew a back end ratio greater than the low 40’s was simply not sustainable. And yet, under the guise of helping to retain homeownership, banks, with the help of HUD counselors are putting people into modifications that based on statistical data, ARE HIGHLY LIKELY TO FAIL. Why would they do that? Read on…
The banks analysts are in my opinion, smart. They know many will not be able to sustain their payments unless there is a dramatic increase in household income. For most, this is not likely. Most HAMP modifications, as well as the look-a-likes, have an interest rate that will rise beginning on year 5, if the borrowers income does not go up commensurate with the payment increases, they only postponed the inevitable.
On a $250,000 loan, with a 2% interest rate fixed for five years with a 30 year amortization, a typical modification will see this rate rise to 3% on year 6, 4% on year 7 and 4.75% on year 8 today. Once it reaches the 4.75% it will remain fixed for the remainder of the term. The principle and interest payment in this example would go from $924 to $1,304, THAT’S A 141% PAYMENT INCREASE FROM YEARS 5 TO 8. IF THE AVERAGE BACK END IS ALREADY AT 60% JUST HOW IN THE WORLD DO YOU BELIEVE THEY’LL BE ABLE TO HANDLE THE PAYMENT INCREASE? In many cases they won’t and are not and the banks know this in my humble opinion. So why are the banks doing this?
If the banks can stagger the losses and keep the cash flows going, the investors continue to keep a favorable rate of return, the banks don’t have to foreclose and have more unsold inventory, or more homes to care for. They can take the properties back, or encourage a short sale later when the market is better. This is nothing more than managing a large portfolio of high risk loan pools.
I don’t blame the banks. It’s just good business to do this. I blame those who are taking money from them and have the public trust and burying people in debt that they’ll eventually have to get out from under anyway. Worse, the longer they wait, the less chance they’ll be able to participate in homeownership at these favorable rates and prices.
The National Home Builders reported that for every 1% increase in future interest rates, we’ll lose approximately 4-5 million American buyers, the majority of which are minorities. As they make less, on average, they’ll be the first ones cut out of the housing market as rates rise. Again, under the guise of helping, we are putting minorities in a position that will financially set them back for decades and in many cases permanently harm them to a degree that they’ll never recover from.
Homeownership for most Americans is the greatest chance at financial independence, but not when the home has gone down by 50% and must go up 100% just to break even, especially when the borrower, based on proven metrics, can’t afford the debt.
I teach HELP Professionals WE MUST NOT stand idly by and do nothing. Realtors, Realtist, agents & others must knock on doors and somehow reach more homeowners and get people to listen. Sitting in a home you can’t afford and are going to lose eventually is only hurting YOU, no one else. A loan mod that puts a Band-Aid on a gunshot wound is silly.
The National Home Builders reported that Whites score 20 points above Blacks & Hispanics on the affordability index due to making more on average. Further, the Bipartisan Policy Center reports that homeownership rates among African Americans & Hispanics fell more sharply in 2010 than among white non-Hispanics, with a 44.3% homeownership rate among black households in 2010 compared to 45.2% in 1990. The center’s latest report found that there is now a 28% point gap in homeownership between white & black households, wider than the divide in 1990. A separate study from the Pew Center found that between 2005 & 2009, Latinos lost two-thirds of their median household wealth while blacks lost more than 50%.
The greatest opportunity to reverse the trend is to get some of these folks who are not making a payment to short sell, short sell and then lease back and begin the healing process so they may buy while the prices and rates are artificially low. Otherwise, many will NEVER be a homeowner in their lifetime as rising interest rates will lock them out.
This is an opportunity to make a difference. If you’re a HUD counselor, or other professional who cares deeply, please call me. Have me come to your office and go over the numbers with you. Unwittingly for years, you’ve been only helping the banks and the investors. The banks, with the help of the Feds in a; “throw the baby out with the bath water “ action, made it virtually illegal for anyone in the private sector who is honest to help homeowners with sound advice.
I applaud the love and kindness shown to those in need. However, the lack of understanding of the manipulation that is occurring is hurting those you wish to help the most.
*Chris Sorensen’s opinion only. I am not speaking on behalf of HELP’s Board of Directors* I offer my strong opinion here due to my concern that the disparity between the haves and the have nots cannot and must not continue to grow at is current trajectory.
Here's the article (sorry it's a bit long)
I am trying to get your attention. I hope my headline is successful.
Struggling Homeowners, Professionals & HUD Counselors PLEASE READ THIS;
I’VE BEEN BEGGING YOU TO STOP MODIFYING PEOPLE WHO CAN’T AFFORD THEIR HOMES SINCE 09. WHY? BECAUSE YOUR HELP IS BURYING THEM IN DEBT & THEY’RE LOSING THEIR HOMES REGARDLESS.
The Board of the Housing Opportunity Collaboration of the Inland Empire (HOCIE) and many others around the country, including the infamous NACA (Neighborhood Assistance Corporation of America) have a heart of gold, but are seemingly unwilling to listen to sound underwriting advice. Instead, it was full steam ahead with a; “save the dream” and “save homeownership at all cost” agenda that the banks LOVED and so they continued to fund their activities while lobbying lawmakers to make private sector professional assistance illegal. It’s worked beautifully.
LPS (Lender Processing Services) REPORTS 47% OF NEW FORECLOSURES WERE PREVIOUS FORECLOSURES. *See page 13 of the most recent Mortgage Monitor report*
The Make Home Affordable Program reports monthly what the average over all debt percentage is for a borrower AFTER they receive a modification. Currentlyit’s 60%! It has been around 63% over the last year. *See page 5 of the most recent Make Home Affordable report* Historically, banks/underwriters knew a back end ratio greater than the low 40’s was simply not sustainable. And yet, under the guise of helping to retain homeownership, banks, with the help of HUD counselors are putting people into modifications that based on statistical data, ARE HIGHLY LIKELY TO FAIL. Why would they do that? Read on…
The banks analysts are in my opinion, smart. They know many will not be able to sustain their payments unless there is a dramatic increase in household income. For most, this is not likely. Most HAMP modifications, as well as the look-a-likes, have an interest rate that will rise beginning on year 5, if the borrowers income does not go up commensurate with the payment increases, they only postponed the inevitable.
On a $250,000 loan, with a 2% interest rate fixed for five years with a 30 year amortization, a typical modification will see this rate rise to 3% on year 6, 4% on year 7 and 4.75% on year 8 today. Once it reaches the 4.75% it will remain fixed for the remainder of the term. The principle and interest payment in this example would go from $924 to $1,304, THAT’S A 141% PAYMENT INCREASE FROM YEARS 5 TO 8. IF THE AVERAGE BACK END IS ALREADY AT 60% JUST HOW IN THE WORLD DO YOU BELIEVE THEY’LL BE ABLE TO HANDLE THE PAYMENT INCREASE? In many cases they won’t and are not and the banks know this in my humble opinion. So why are the banks doing this?
If the banks can stagger the losses and keep the cash flows going, the investors continue to keep a favorable rate of return, the banks don’t have to foreclose and have more unsold inventory, or more homes to care for. They can take the properties back, or encourage a short sale later when the market is better. This is nothing more than managing a large portfolio of high risk loan pools.
I don’t blame the banks. It’s just good business to do this. I blame those who are taking money from them and have the public trust and burying people in debt that they’ll eventually have to get out from under anyway. Worse, the longer they wait, the less chance they’ll be able to participate in homeownership at these favorable rates and prices.
The National Home Builders reported that for every 1% increase in future interest rates, we’ll lose approximately 4-5 million American buyers, the majority of which are minorities. As they make less, on average, they’ll be the first ones cut out of the housing market as rates rise. Again, under the guise of helping, we are putting minorities in a position that will financially set them back for decades and in many cases permanently harm them to a degree that they’ll never recover from.
Homeownership for most Americans is the greatest chance at financial independence, but not when the home has gone down by 50% and must go up 100% just to break even, especially when the borrower, based on proven metrics, can’t afford the debt.
I teach HELP Professionals WE MUST NOT stand idly by and do nothing. Realtors, Realtist, agents & others must knock on doors and somehow reach more homeowners and get people to listen. Sitting in a home you can’t afford and are going to lose eventually is only hurting YOU, no one else. A loan mod that puts a Band-Aid on a gunshot wound is silly.
The National Home Builders reported that Whites score 20 points above Blacks & Hispanics on the affordability index due to making more on average. Further, the Bipartisan Policy Center reports that homeownership rates among African Americans & Hispanics fell more sharply in 2010 than among white non-Hispanics, with a 44.3% homeownership rate among black households in 2010 compared to 45.2% in 1990. The center’s latest report found that there is now a 28% point gap in homeownership between white & black households, wider than the divide in 1990. A separate study from the Pew Center found that between 2005 & 2009, Latinos lost two-thirds of their median household wealth while blacks lost more than 50%.
The greatest opportunity to reverse the trend is to get some of these folks who are not making a payment to short sell, short sell and then lease back and begin the healing process so they may buy while the prices and rates are artificially low. Otherwise, many will NEVER be a homeowner in their lifetime as rising interest rates will lock them out.
This is an opportunity to make a difference. If you’re a HUD counselor, or other professional who cares deeply, please call me. Have me come to your office and go over the numbers with you. Unwittingly for years, you’ve been only helping the banks and the investors. The banks, with the help of the Feds in a; “throw the baby out with the bath water “ action, made it virtually illegal for anyone in the private sector who is honest to help homeowners with sound advice.
I applaud the love and kindness shown to those in need. However, the lack of understanding of the manipulation that is occurring is hurting those you wish to help the most.
*Chris Sorensen’s opinion only. I am not speaking on behalf of HELP’s Board of Directors* I offer my strong opinion here due to my concern that the disparity between the haves and the have nots cannot and must not continue to grow at is current trajectory.
March report from DQ
The report looks decent. Prices are up slightly in the IE (normal spring bounce). Sales are slightly down from last year. Don't know why, with the low rates sales should be up. The only factor holding them back might be the lack of inventory. Especially inventory that can be sold quickly. Most of it still seems to be short sale inventory which just clogs up the pipline.
Dqnews
Southern California home sales shot up last month from February amid the usual surge in late-winter shopping, but the gain over a year earlier was modest. Sales of $500,000-plus homes, though a bit lower than last year, jumped 36 percent from February, helping to lift the region’s overall median sale price to a six-month high – and to about where it was in March 2011, a real estate information service reported.
Dqnews
Southern California home sales shot up last month from February amid the usual surge in late-winter shopping, but the gain over a year earlier was modest. Sales of $500,000-plus homes, though a bit lower than last year, jumped 36 percent from February, helping to lift the region’s overall median sale price to a six-month high – and to about where it was in March 2011, a real estate information service reported.
A total of 19,953 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 28.1 percent from 15,573 in February, and up 2.8 percent from 19,412 in March 2011, according to San Diego-based DataQuick.
It’s normal for sales to jump between February and March. On average, they've risen 37.0 percent between those two months since 1988, when DataQuick’s statistics begin. On a year-over-year basis, Southland sales have increased for three consecutive months, and for seven out of the last eight months. However, last month’s Southland sales total was still 18.6 percent below the average for all the months of March since 1988.
As in recent months, March’s year-over-year gain in sales wasn't seen across the price spectrum. Last month the number of transactions below $300,000 rose 2.3 percent from a year earlier, while the number sold between $200,000 and $400,000 rose 4.2 percent. Sales between $300,000 and $800,000 fell 0.6 percent year-over-year, and sales above $800,000 dipped 5.6 percent.
March sales of newly built homes rose almost 9 percent from a year earlier, marking the second consecutive month with a year-over-year gain. But March’s new-home tally was still the second-lowest for that month in DataQuick’s records back to 1988. Last month’s sales of existing (not new) single-family detached houses were the highest for a March since 2010, while resale condo sales were the lowest for that month since 2009.
“The year is young and lots could still change, but the results from the first big sales month of 2012 suggest the market is stuck in low gear. This remains a very gradual – not to mention fragile – recovery. Last month's big gain in sales from February was seasonal. A lot more people get out and shop after the holidays and as spring approaches. More telling was the relatively small gain in sales activity compared with a year ago. It's a reminder that, for many potential buyers, lower prices and amazingly low mortgage rates still aren’t enough to get them over their hurdles: tight credit, home values below what they owe on their mortgages, and uncertainties over the economy and home prices,” said John Walsh, DataQuick president.
The median price paid for a Southland home last month was $280,000, up 5.8 percent from $264,750 in February but down 0.2 percent from $280,500 in March 2011. The March median was the highest since the median was also $280,000 last September. The year-over-year decline in the March median was the smallest since February 2011, when the $275,000 median was unchanged compared with a year earlier.
Last month’s median was 13.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 44.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,063 last month, compared with $998 in February. Last month’s figure was down from $1,185 for the same month last year. Adjusted for inflation, current payments were 54.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 63.0 percent below the current cycle’s peak in July 2007.
| | Sales Volume | Median Price | ||||
| All homes | 11-Mar | 12-Mar | %Chng | 11-Mar | 12-Mar | %Chng |
| Los Angeles | 6,590 | 6,772 | 2.80% | $320,000 | $306,000 | -4.40% |
| Orange | 2,615 | 2,856 | 9.20% | $430,000 | $400,000 | -7.00% |
| Riverside | 3,843 | 3,756 | -2.30% | $198,000 | $200,000 | 1.00% |
| San Bernardino | 2,544 | 2,512 | -1.30% | $150,000 | $150,000 | 0.00% |
| San Diego | 3,063 | 3,237 | 5.70% | $325,000 | $320,500 | -1.40% |
| Ventura | 757 | 820 | 8.30% | $349,000 | $350,000 | 0.30% |
| SoCal | 19,412 | 19,953 | 2.80% | $280,500 | $280,000 | -0.20% |
Another bank gets screwed?
Without knowing the details this transaction looks suspiciously like a case of an inside deal. The bank gets screwed and the investor makes $100k (maybe).
17789 Scottsdale rd in Riverside was a foreclosure. It went back to the bank in August 2011 when they found no takers at the asking price of $391k. It does not seem to list until Dec 28th and then there is a record of the sale posted on Dec 30th? Even all cash deals don't happen in 2 days. So this property may have never been listed, listed out of area or who knows. But regardless it sells for $326k, which is well below comps for this area. Now looking at the pics I don't see any indication the property was thrashed. It's obviously the original kitchen because no flipper would put in that kitchen. The floor tile is horrific too. The only thing that might have been done is new carpet and paint. It's now listed for $420k after a couple of price reductions. That's a tidy profit of $95K if they can find a buyer. It's probably still $30k too high given the lack of landscaping and the low quality finished inside. I've seen much nicer homes nearby sell for $400k so he may still need to come down a bit. The only thing that might help him is the lack of inventory.
17789 Scottsdale rd in Riverside was a foreclosure. It went back to the bank in August 2011 when they found no takers at the asking price of $391k. It does not seem to list until Dec 28th and then there is a record of the sale posted on Dec 30th? Even all cash deals don't happen in 2 days. So this property may have never been listed, listed out of area or who knows. But regardless it sells for $326k, which is well below comps for this area. Now looking at the pics I don't see any indication the property was thrashed. It's obviously the original kitchen because no flipper would put in that kitchen. The floor tile is horrific too. The only thing that might have been done is new carpet and paint. It's now listed for $420k after a couple of price reductions. That's a tidy profit of $95K if they can find a buyer. It's probably still $30k too high given the lack of landscaping and the low quality finished inside. I've seen much nicer homes nearby sell for $400k so he may still need to come down a bit. The only thing that might help him is the lack of inventory.
Flat line
I thought I would throw up a few charts to show the price trends in the IE. Basically the prices have been flat since late 08. There are of course minor fluctuations due to the season. Sale prices fall in the winter and rise in the summer. There was a small bump in mid 2010 when the homebuyer tax credit caused the prices (and sales numbers) climb a bit. But overall the prices seem to be bouncing along "the bottom". Price to income ratios are back in line where they should be. Price to rental ratios are far, far in favor of buying. It's WAY cheaper to buy versus renting similar properties. The only "gotcha" is that you need to be sure you are going to stay put. You cannot rely on appreciation to cover selling costs if there is a need to sell. So if you need to sell within say 5 years of buying you may not come out ahead versus renting.
Looking at inflation adjusted prices, the IE is about the same level it was in the late 80's. However, the crazy low interest rates make payments actually less, even when not adjusted for inflation. For example I own a rental that sold new in 1988 for $110k. Payments on that home back in 1988 were $1200/mo (PITI). Today that home is worth approx $150k. Buying that home today would result in a payment (PITI) of approx $900/mo. Adjusted for inflation today's payment is MUCH lower than the 1988 payment for the same home.
Obviously there are still loads of distressed properties. This will hold prices low for until those are worked through the system. But can prices go lower? It's hard to imagine that will happen. With the rental values and the home prices at these levels, investors can make more money buying and renting properties than they can in the markets or the banks. This alone should keep the prices from falling. I now have two rentals and would pick up a few more if I had the cash. I'm under no illusion of making money on appreciation of these properties but the rental income is a welcome addition to the monthly bottom line.
Here's a few of those charts
This one is the median sales price for Riverside. As you can see it's been relatively flat for a few years now.
The price per square ft char is also pretty flat since late 08
And finally the long term chart with the inflation adjusted prices.
Looking at inflation adjusted prices, the IE is about the same level it was in the late 80's. However, the crazy low interest rates make payments actually less, even when not adjusted for inflation. For example I own a rental that sold new in 1988 for $110k. Payments on that home back in 1988 were $1200/mo (PITI). Today that home is worth approx $150k. Buying that home today would result in a payment (PITI) of approx $900/mo. Adjusted for inflation today's payment is MUCH lower than the 1988 payment for the same home.
Obviously there are still loads of distressed properties. This will hold prices low for until those are worked through the system. But can prices go lower? It's hard to imagine that will happen. With the rental values and the home prices at these levels, investors can make more money buying and renting properties than they can in the markets or the banks. This alone should keep the prices from falling. I now have two rentals and would pick up a few more if I had the cash. I'm under no illusion of making money on appreciation of these properties but the rental income is a welcome addition to the monthly bottom line.
Here's a few of those charts
This one is the median sales price for Riverside. As you can see it's been relatively flat for a few years now.
The price per square ft char is also pretty flat since late 08
And finally the long term chart with the inflation adjusted prices.
Mortage mod madness
Mortgage mods are touted by both the government and the so called "help" organizations. But are these mods really helping anyone. I think if you've read this blog for any length of time you know how I feel about this mod business. Mods are helping banks and that's it! All mods do is keep people paying for a an asset that is worth less than they owe on it. They become trapped by this debt.
Here is a perfect example of why loan mods suck for most people. I have one friend that did a short sale in 2008 to get out from under his upside down house. He is now free, happy and his credit score has fully recovered. He could easily buy any house he wanted (and could afford). I have another one that did a mod in 2009. He did the loan mod for a couple of reasons. He liked his house and had spend a fair amount of money upgrading (although he did use a heloc to do these upgrades). He also foolishly believed that prices would rebound enough to where he could sell if he needed to. Over 2 years later he still owes way more than his house is worth. Although he can afford the payments he now needs to sell and move due to an impending divorce. Unfortunately for him this means either a short sale or just letting the house go. The loan mod probably added a year or two to his marriage but it also trapped him in that house. So who is better off? Had he let the house go two years ago he would probably be single and free of debt, possibly able to buy another home already.
To anyone considering a loan mod I would encourage them to consider the possibility that they may want or need to move in a few years. If there is even a remote chance of that then don't do a loan mod. No matter how much you love the house, get the hell out of it. You can rent for a couple of years and then if you desire you can purchase another home that you will not be a thousand feet under water on.
The whole mortgage mod thing is absurd when you stand back and look objectively at it. Someone has sold you something at an inflated price, but because they are willing to change the loan terms slightly you agree to keep paying on that inflated price. That might be reasonable if you bought a TV (although even on TVs most retailers will give you a refund if you find that TV cheaper) but I digress we are talking houses here. We are talking about tens or hundreds of thousands of dollars depending on how long you pay the note for. It's not an insignificant amount of money, yet most people only look at that monthly payment and that's about as far ahead as they look too. No thought is given to next year or 5 years from now.
Mortage mods will only serve to extend this fiasco of a market!
Here is a perfect example of why loan mods suck for most people. I have one friend that did a short sale in 2008 to get out from under his upside down house. He is now free, happy and his credit score has fully recovered. He could easily buy any house he wanted (and could afford). I have another one that did a mod in 2009. He did the loan mod for a couple of reasons. He liked his house and had spend a fair amount of money upgrading (although he did use a heloc to do these upgrades). He also foolishly believed that prices would rebound enough to where he could sell if he needed to. Over 2 years later he still owes way more than his house is worth. Although he can afford the payments he now needs to sell and move due to an impending divorce. Unfortunately for him this means either a short sale or just letting the house go. The loan mod probably added a year or two to his marriage but it also trapped him in that house. So who is better off? Had he let the house go two years ago he would probably be single and free of debt, possibly able to buy another home already.
To anyone considering a loan mod I would encourage them to consider the possibility that they may want or need to move in a few years. If there is even a remote chance of that then don't do a loan mod. No matter how much you love the house, get the hell out of it. You can rent for a couple of years and then if you desire you can purchase another home that you will not be a thousand feet under water on.
The whole mortgage mod thing is absurd when you stand back and look objectively at it. Someone has sold you something at an inflated price, but because they are willing to change the loan terms slightly you agree to keep paying on that inflated price. That might be reasonable if you bought a TV (although even on TVs most retailers will give you a refund if you find that TV cheaper) but I digress we are talking houses here. We are talking about tens or hundreds of thousands of dollars depending on how long you pay the note for. It's not an insignificant amount of money, yet most people only look at that monthly payment and that's about as far ahead as they look too. No thought is given to next year or 5 years from now.
Mortage mods will only serve to extend this fiasco of a market!
Will 2012 be the "real" year of the short sale?
If you have an underwater house you are thinking about dumping you might want to get off your duff and list the thing. You see normally when you sell a house for less than you owe on it you get a nasty little surprise from Uncle Sam, a tax bill for the difference. During the bust legislation was passed to put this tax on hold to make it easier for people to short sell. However that legislation expires at the end of 2012. Both the Federal government and the California State gov passed these acts so currently there are no tax consequences from a short sale.
Of course the debt forgivness act could be extended. But what if it isn't? This would probably mean fewer short sales and a lot more foreclosures. There are no tax consequences from foreclosure because in Cali most of those loans are non-recourse (but I'm no tax expert so don't listen to me).
The unfortunate thing is that most people have no idea about this tax thing and may not feel the need to hurry up and get out while the gettin's good.
Oz is in denial
Just got back from my vacation to NZ and OZ, and of course I couldn't help but check out the prices of real estate over there. In fact during many of the tours the guides would continually point out how "well" there market was doing. It was incredible, it was like being here in 2006. Nearly all the people I spoke with, if the topic of home prices came up just seemed to say all the stuff we heard 5 years ago. "it's different here", "price might level off, but I doubt they will fall" etc. NZ was by far the worst. The prices of everything over there is unbelievable. I dunno how they live. But the prices of housing was off the charts as compared to incomes.
Median incomes are comparable to the US, yet the cost of nearly everything was higher. Australia was not nearly as bad as NZ in that respect but in the two cities we visited things were quite a bit higher than here. Of course the cost of living in most large cities is higher than living in the burbs but I was not able to really check the costs out in the burbs. We did manage to get out into the burbs in Melbourne and the tour guide would point out housing tracts give us approximate costs. If those were correct they their prices are comparable to ours at the peak of our bubble. We saw shacks in the city that he indicated were well north of a million (and I do mean shacks!), in the burbs we saw small average looking tract homes that were $500k to $800k.
NZ and OZ are beautiful places and well worth a visit. But save your pennies cuz int aint a cheap vacation. Oh, and driving on the opposite side of the road is interesting too!
Happy Holidays
Happy Holiday's ya'll
I'm taking the rest of the year off and heading to New Zealand and Australia.
Ah the good old days
While looking at Zillow I ran across this. I found it rather humorous and reminder of the heady days of bubble mania. This guys puts a "make me move" price into Zillow in 2007 of $1.4M for a house that now has a zestimate of $505k. And lemme tell ya, there's no way this place would sell for $505k, that's probably at least $50k too high considering there is not a lick of landscaping. I was actually looking at 18825 Ravenhurst which is listed at $1.2M and has a zestimate of nearly $900k. Which I thought was WAY high. It's a spectacular place on 2 acres but there's no way it will get 1.2M and I seriously doubt it would even get Zillows $900k estimate. Based on comps this place is worth closer to $750k.
Ah, the good-ole days. I bet this guy is wishing someone had taken him up on his "make me move" price.
Scam Alert!
Check out this BS
16475 Lake Knoll Pkwy lists as a short sale, it says poor condition but in the pic it looks ok. It lists cheap and goes pending pretty much immediately. It sells pretty cheap and the listing agent and buyers agent and the same guy (who'da thunk it). Now this is where it gets shady. 30 days later, it lists again for $160k more than it sold for, and the agent........ You guessed it, the same guy. But it gets better, the listing states the owner/seller is a realtard! Anyone wanna bet the owner is the listing agent? This looks like a perfect example of short sale fraud. He lists the property indicating it's a dog, gets it cheap and then turns if for a quick profit. And of course the lender takes a bigger loss than they otherwise would have. His asking price is pretty darn high and I doubt that it will sell for anything near that but even if it sells for $350k that's still a very healthy profit assuming he didn't actually need to do a major rehab.
16475 Lake Knoll Pkwy lists as a short sale, it says poor condition but in the pic it looks ok. It lists cheap and goes pending pretty much immediately. It sells pretty cheap and the listing agent and buyers agent and the same guy (who'da thunk it). Now this is where it gets shady. 30 days later, it lists again for $160k more than it sold for, and the agent........ You guessed it, the same guy. But it gets better, the listing states the owner/seller is a realtard! Anyone wanna bet the owner is the listing agent? This looks like a perfect example of short sale fraud. He lists the property indicating it's a dog, gets it cheap and then turns if for a quick profit. And of course the lender takes a bigger loss than they otherwise would have. His asking price is pretty darn high and I doubt that it will sell for anything near that but even if it sells for $350k that's still a very healthy profit assuming he didn't actually need to do a major rehab.
Octobers numbers
Here's the October report from DataQuick. Not a lot of movement in the IE. San Berdu is stuck at $150k median and Riverside fell a little. Sale numbers were down slightly from last year which is a little surprising considering how low interest rates have been. I suppose some of that slowdown could be the lack of inventory at the low end. If you've been looking you know there aint' much decent in the starter home/rental end of the market. From what I am seeing the more expensive stuff is just sitting unless the house is spectacular.
Here's the meat of the report.
Southland home sales rose slightly in October compared with a year earlier but were still nearly 30 percent below the long-term average. The region’s median sale price dipped to its lowest level since January as activity above $500,000 fell sharply, distressed property sales rose slightly and mortgage availability worsened, a real estate information service reported.
Here's the meat of the report.
Southland home sales rose slightly in October compared with a year earlier but were still nearly 30 percent below the long-term average. The region’s median sale price dipped to its lowest level since January as activity above $500,000 fell sharply, distressed property sales rose slightly and mortgage availability worsened, a real estate information service reported.
A total of 16,829 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in October. That was down 7.3 percent from 18,149 in September and up 0.5 percent from 16,744 in October 2010, according to San Diego-based DataQuick.
A drop in sales between September and October is not unusual, but last month’s decline was larger than the average change – a decline of 0.7 percent – between those months since 1988, when DataQuick's statistics begin.
October sales have varied from a low of 12,913 in 2007 to a high of 37,642 in 2003. Last month’s sales were 29.3 percent below the October average of 23,819 transactions since 1988“For a few months now, lower prices and amazingly low mortgage rates have kept resale activity slightly ahead of last year. Of course, that’s not saying a lot when you consider sales were 25 to 30 percent below average. The market continues to struggle with a difficult lending environment, uncertainty among potential buyers, underwater homeowners who can’t move up, and a weak job market. The lower conforming loan limits implemented last month help explain the relatively sharp drop in mid- to high-end sales during October. Now we’ll have to see if the private loan market can fill the void,” said John Walsh, DataQuick president.
The conforming loan limits, which were reduced Oct. 1, vary by county. In Los Angeles and Orange counties, for example, the limit for FHA loans and mortgages guaranteed by Fannie Mae and Freddie Mac was lowered from $729,750 to $625,500. Home sales in those two counties that had purchase loans between $625,501 and $729,750 – the band eliminated by the lower limit – dropped to 102, down 71 percent from 350 sales in September and down 71.5 percent from 358 sales a year earlier.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,040 last month, down from $1,084 in September and $1,111 in October 2010. Adjusted for inflation, current payments are 55.4 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.4 percent below the current cycle’s peak in July 2007.
| | Sales Volume | Median Price | ||||
| All homes | Oct-10 | Oct-11 | %Chng | Oct-10 | Oct-11 | %Chng |
| Los Angeles | 5,470 | 5,830 | 6.60% | $325,000 | $300,000 | -7.70% |
| Orange | 2,298 | 2,241 | -2.50% | $438,000 | $405,000 | -7.50% |
| Riverside | 3,264 | 3,026 | -7.30% | $198,000 | $187,000 | -5.60% |
| San Bernardino | 2,343 | 2,300 | -1.80% | $150,000 | $150,000 | 0.00% |
| San Diego | 2,750 | 2,759 | 0.30% | $334,500 | $315,000 | -5.80% |
| Ventura | 619 | 673 | 8.70% | $355,000 | $335,000 | -5.60% |
| SoCal | 16,744 | 16,829 | 0.50% | $283,000 | $270,000 | -4.60% |
Nandina back on the market
A couple of years back I wrote about a small development that went belly up after building most of the homes. They came on the market in Late 2007 right when it was coming apart at the seams. They were trying to get right around a million for these homes back then. I laughed out loud at the sales lady when I saw the price sheet. They stuck it out for about a year after finding only one sucker to buy a house. The whole tract went into foreclosure and sat empty for a few years. Well recently they have started selling again. The prices now are about 1/2 the original price. Not a bargain but these are pretty nice homes with high end kitchens and lots of nice built-ins. I really liked the floor plan on a couple of the models. The good thing about this little tract is there is no Mello Roos nor any HOA to deal with. On the bad side you are paying top dollar since it's a new home and you still have to spend a healthy chunk of cash putting in some landscaping and fencing.
Here is one of the homes they have listed.
http://www.redfin.com/CA/Riverside/17624-Fairbreeze-Ct-92504/home/17330776
Here is one of the homes they have listed.
http://www.redfin.com/CA/Riverside/17624-Fairbreeze-Ct-92504/home/17330776
Geez, where have I been?
With the market basically flat for the last two years there's just not that much to write about. Sure there are a few stupid listings out there and there is still a fair share of fraud and funny biz going on (inside deals selling for way less than they should etc) but it's a lot harder to find and I just don't have the energy to search through every listing to find that stuff. And as you may have guessed I did finally buy a place early last year. I didn't get a "smokin" deal in fact I probably overpaid slightly based on comps but we wanted the house and were willing to pay a little more than we wanted to get it.
Since I did actually purchase a house in this market I will offer my insights into the buying process. First off the market it TOTALLY rigged right now. Good deals are all inside deals where the realtor already has a buyer, a friend or investor they are working with. You and me have no chance of getting one of those. Trust me I tried! If you are thinking you are gonna lowball, forget it.
You need to do your research and offer a fair price based on current comps. It's not hard to find comps and if you have been looking you can check and see what the homes you have looked at are closing for. This will give you a good feel for the actual market value of properties.
If you are using a buyers agent you are at a disadvantage in this market. For total noobies it might make you feel better to use your own buyers agent but the reality is you have a MUCH better chance of getting your offer accepted if you go it on your own and just go directly through the selling agent. The prospect of collecting both ends of the commission seems to really "help" out your offer! (surprise, surprise).
I submitted approximately a dozen offers. 5 of those were submitted by a realtor for me and NONE were accepted even though they were fair offers. That's when I decided to go right to the selling agent myself. My first offer was $70k under list price (which was way high based on comps). I really though we had that one but the seller took another offer and we were the first back up. The home was a short sale and took 9 months to close. It closed for exactly what we offered. I spoke with the listing agent and the reason they went with the other offer was that they thought we did not have enough cash reserves. Offers 2 and 3 were accepted but we backed out after inspection problems. We then offered on a new home in the Stellan ridge developement. The home was listed at nearly $600k, we offered $550k but the builder would not go lower than $570k. Than home sat for another 4 or 5 months before finally selling for ..... $550k! I'm SO glad I did not buy that property. Our next offer on a short sale was accepted and we went under contract to purchase. The bank screwed this one up and ended up foreclosing on the home. We could have bought it at the trustee sale for $50k less than our short sale offer. When it hit the market as an REO 6 months later we put in another offer with the listing agent and moved in 30 days later. And yes, we still paid $50k more than we could have got it at the trustee sale.
So as you can see nearly every offer we made going through the selling agent was accepted. All the offers we made with a buyers agent were ignored or rejected. You do need to be comfortable enough to do this but you can always pay someone to look over your documents.
Our deal was pretty smooth but the appraisal was still a joke. The comps the guy used were ridiculous and the appraisal came in probably $30k higher than it should have in my opinion. I was hoping for a lower appraisal so I could negotiate the price down a little but that didn't happen. The appraisal came in $1k over our offer price (hmm quite the coincidence eh?) So did I over pay? Maybe a little but after we purchased 2 more identical model homes sold for prices very close to ours so it seems our number was actually pretty good.
What's our place like? We got nearly everything we wanted in our home. It's just under 4000 s/f and it's a single story home in Woodcrest, (like we wanted). It sits on just over an acre of land. It does have the dual 2-car garages that I wanted so bad. The wife and kids got the pool they wanted and it has a gorgeous view overlooking Riverside. It did not have everything we wanted. It has carpet and tile, we really wanted hardwood flooring. The kitchen cabinets are lighter than we really wanted and the appliances were not the high end stuff we were after. But those things can be changed. The location and the view cannot. Being an REO it did need painted and a few minor repairs but overall the home was in great shape (probably a cash for keys deal).
Overall for us the buying experience was not too bad. Of course we did have to wait a few years for the market to correct. And to be honest we could have probably bought at least a year or more earlier than we did. We started making offers in late 09 but could have started in late 08 and probably got about the same price (better selection back then too). We also lost a few months using an agent. Once I realized that going through the selling agent was the way to go our offers seemed to get "top billing". Agents are scrambling to make a buck and the easiest way to pad that pay check is to work both ends of the deal. Which is why offers submitted directly to the selling agent look so much better to them. We had a few hiccups but once we were in escrow everything went fairly well.
Unlike many areas I really do feel the IE is at the bottom or so close to it that it's a good time to buy. Especially with the interest rates right now. You actually can buy a home for less than the cost of renting a similar place. BUT, you better be ready to stay because I think that prices are gonna be flat for quite a few years. So if you need to sell after only a few years, the selling costs make it likely that you will lose money. So buy, but buy for the long term.
New conforming Loan Limits
What will the new Conforming Loan Limits that go into affect do to the IE market? Many are predicting another wave of price declines when the lower limits go into affect. The current loan limit is $500k. However once you get over $417k getting a loan is a lot harder and usually requires a better credit score, DTI and a higher down payment (15% at least). So for much of the buyers $417k is still the loan limit. The new conforming limit will drop to $335,350. Which is still far higher than what most homes in the IE cost. In effect, the loan limit reduction will only affect those homes priced over that amount (or a little higher based on the down payment). That is only 12% of the home sales in the IE, the other 88% are not going to be affected. So, if you are looking at homes over $350k you might want to relax a few months, there is a good chance that segment of the market might see some price drops. But if you are looking in the under $350k range I doubt there will be much change. Of course this is assuming the government doesn't pull some rabbit out of a hat and extend the limits.....
June numbers from DataQuick
The sales report for June is out and it's not a very good one (no surprise there). The IE did ok compared to most of the other areas. Riverside saw it's median tick up again versus May, but san berdu saw it fall slightly. Our sales numbers also went up slightly over May but fell drastically versus last June.
Here's the reports,
Here's the reports,
A total of 20,532 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in June. That was up 11.6 percent from 18,394 in May but down 14.0 percent from 23,871 in June 2010, according to San Diego-based DataQuick.
On average, sales between May and June have risen 6.2 percent since 1988, when DataQuick's statistics begin. June sales have varied from a low of 18,032 in 2008 to a high of 40,156 in 2005. Last month’s sales count was 26.1 percent below the June average of 27,772. Among all months, June has had the highest number of sales most often – in eight of the past 23 years.
In June last year, which logged the most transactions in 2010, sales were bolstered by state and federal efforts to stimulate the housing market via homebuyer tax credits. Those credits had expired or been largely depleted by July 2010, when sales plunged about 21 percent from both the month before and a year earlier. Southland sales have fallen short of the year-ago level every month since then.
“The housing market remains dysfunctional and lopsided, just somewhat less so than it was a few months or a year ago. The market mix indicates that a lot of potential buyers are either stuck, for lack of equity, or spooked and are waiting things out. Another large, lingering problem is the fussy mortgage market. Qualifying for a mortgage remains difficult for many, and the use of adjustable-rate and “jumbo” home purchase loans remains far below the historical norm,” said John Walsh, DataQuick president.
The median price paid for all new and resale Southland houses and condos purchased last month was $285,000. That was up 1.8 percent from $280,000 in May and the highest since $290,000 last December, but still down 5.0 percent from $300,000 in June 2010.
The median has declined year-over-year for the past four months. It has been unchanged or lower than a year earlier each month since last December, when it posted a 0.3 percent annual increase.
On a year-over-year basis, home sales fell across virtually all price categories last month. But declines were greatest in the $300,000 to $800,000 range, which saw sales drop 25.5 percent from June 2010. Activity in that price band benefitted a year ago from homebuyer tax credits that spurred more move-up activity. Last month’s sales of homes priced below $200,000 fell 11.4 percent from a year earlier, while $800,000-plus sales dropped 17.6 percent.
Distressed property sales accounted for just over half of the Southland resale market last month. Roughly one out of three homes resold was a foreclosure, while almost one in five was a “short sale.”
Foreclosure resales – properties foreclosed on in the prior 12 months – made up 33.0 percent of the Southland resale market in June, down from 33.2 percent in May but up from 32.8 percent a year earlier. Foreclosure resales peaked at 56.7 percent in February 2009.
Short sales, where the sale price fell short of what was owed on the property, made up an estimated 17.7 percent of Southland resales last month. That was the same as in May but down from 20.5 percent a year ago. Two years ago the estimate was 13.5 percent.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,169 last month, up 1.3 percent from $1,154 in May but down 5.9 percent from $1,251 in June 2010. Adjusted for inflation, current payments are 49.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 58.7 percent below the current cycle’s peak in July 2007.
| | Sales Volume | Median Price | ||||
| All homes | Jun-10 | Jun-11 | %Chng | Jun-10 | Jun-11 | %Chng |
| Los Angeles | 7,849 | 6,809 | -13.30% | $335,000 | $318,000 | -5.10% |
| Orange | 3,423 | 2,947 | -13.90% | $445,000 | $445,000 | 0.00% |
| Riverside | 4,645 | 3,960 | -14.70% | $210,000 | $200,000 | -4.80% |
| San Bernardino | 3,179 | 2,598 | -18.30% | $160,000 | $148,000 | -7.50% |
| San Diego | 3,885 | 3,444 | -11.40% | $335,500 | $330,000 | -1.60% |
| Ventura | 890 | 774 | -13.00% | $384,000 | $355,000 | -7.60% |
| SoCal | 23,871 | 20,532 | -14.00% | $300,000 | $285,000 | -5.00% |
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