Archive for the ‘Real Estate news’ Category
Tuesday, January 31st, 2017
The new housing report was released yesterday by Case-Shiller, indicating that U.S. home prices are still rising. Of course this is really area dependent, but if you are a potential buyer or seller you might feel worried, and justifiably so. Keep reading for important information and advice.
The report covers major metropolitan cities and states that prices in these areas rose by 5.27% in November – above expectations of economists, and also up from the previous month of 5.1%. What does this mean for buyers and sellers? Let’s take a look at some important considerations.
Local markets: Of course these studies are general and tend to focus on big cities, so it is important that you contact an experienced real estate agent in your local market to see what is going on in the area. But, the thing to take away from this data is that prices are not easing up. Combine that with the next factor…
Inventory is still very low: Again, your local market must be studied to get an accurate glimpse and set expectations (your real estate agent can help with this), but using my local North San Diego market as an example I know that this is painfully true. I have buyers who simply cannot find homes, and multiple offer situations in some categories – like properties under $600,000 – are still the norm. With low inventory and prices staying put or rising, a buyer does not benefit from waiting to purchase, especially considering the next factor…
Springtime is coming: Traditionally the “hot” season for housing, spring and summer are just around the corner. But in my view we are already in the heat of things. Hopefully more inventory will pop up as we head into that “busy” season, but honestly I think the entire last year and especially this Fall and Winter, can be considered busy in housing – at least here in San Diego. Waiting until Spring could put buyers in even more of a quandry, bringing an increase in the buyer pool: more competition can drive prices up again.
The National Home Price Index also rose by 5.6% annually – up from 5.5% the previous month. High demand is causing these prices to continue on an upward trend. It is important to note, as some doubters or “bubble-talkers” as I call them, may believe, that these trends are NOT similar to those that occurred prior to the last housing crisis in the early 2000s.
How is this market different than that prior to the last crash?
1. Factors driving prices are not the same. Prior to the crash people were driven by speculation and anticipation of growth. Instead, healthy market factors like a strong job market and low mortgage rates are driving this market.
2. Lending is stricter. Lending requirements are not as loose as they were during the time prior to the last housing crash, so not everyone can qualify for a loan.
3. Demand is high but supply is not. Prior to the last market crash, there is a much lower supply of inventory in most areas. It is not so easy to find property to purchase. Many would-be sellers are afraid to sell, as they don’t know where they will move if there is such low supply and so much demand – so it’s a great time to be a seller if you have the time to wait it out on a subsequent purchase.
The moral of all this information is that if you are a potential seller you are in a great position. But if you have to buy after selling you need to have a “plan B” in place – e.g. stay in a furnished month to month apartment or temporarily move in with a relative or friend will put these people in ideal situations to sell and wait for the right home. But buyers have it a bit tougher – the best advice I can give is to BE PREPARED. Get preapproved, start looking at everything in your price range and desired area – even those homes that may not be as upgraded as you like or in the exact neighborhood you wanted. Do your homework and be ready to pounce once you find that “right” home.
Friday, October 7th, 2016
It has been an interesting time lately in the real estate market, and it is difficult to figure out exactly what is going on – is it slowing down, is it still hot…many people are confused. It really depends on your specific area, but there are some interesting things going on in my local markets…let’s take a look.
Multiple offers – still?! Yes! There are still some of those crazy multiple offer situations going on out there, and believe it or not they make it look like a seller’s market in the heat of summer. But this is not happening everywhere. It seems – at least in my neck of the woods in North San Diego – to be happening with condos and towhhomes that are very nicely upgraded, in good areas, and priced up to $550,000. Just last week I wrote an offer on a townhome for clients. The offer was super clean, priced over asking price, which was already stretching the appraisal potential, and a quick close in 30 days. We received a multiple counter offer asking us in essence to come up higher, remove the appraisal contingency at the outset, reduce all other contingency periods, and specifying that the sellers would make no repairs. We lost that one (I would never allow a buyer to remove an appraisal contingency unless they insisted, after being fully aware of the consequences).
Buyers are not jumping as high: Yes, this may sound like it contradicts the above paragraph, but it is true in most cases that buyers are not giving into inflated prices any longer. Most buyers (with the exception being the above scenario) are taking longer to find the right home, and then trying to negotiate the price. Much of the real estate news I read follows this position – after a crazy summer with prices inflating many buyers who missed the boat (or even those who intentionally waited out the crazy buyer storm) are finding that they can negotiate prices down and for that matter do not mind waiting until homes have some market time to make offers. This to me indicates the slow approach of a buyers market.
Fewer listings, fewer escrows opened: As is normal after the end of the summer season, listings are not as plentiful. But even after a fewer-than-usual-listings summer the Fall numbers continue to drop. Fewer escrows were opened in the last month compared to summer months. If this continues – fewer active properties, steady demand – it could spur the seller’s market to stick around for a bit…which means we could see prices rise. Interest rates will play a big part in this equation, as of course will jobs – people have to be able to afford homes.
In a nutshell the market is a bit hard to predict right now and doing so requires focusing on the specific community in which you are searching. For those buyers out there who are ready, willing and able to purchase my advice is to not rush into anything (unless you find your absolute “must-have it” dream home – but even then you need to be careful), consult with an experienced real estate agent to make a plan, stick to your budget and stick to your guns when negotiating price, repairs and other items.
Thursday, September 8th, 2016
Many blogs and articles have alluded to the idea of a pending housing bubble, and some people even seem to be nervous. This kind of talk is always prevalent after a strong sales season, but how do we know how much credibility to give these claims, and could we be facing a housing bubble any time in the near future?
The answer in my opinion is a loud NO. In the July pending home sales index the National Association of Realtors (NAR) revealed that pending home sales are now at the highest level since 2006 (the highest month was April 2016). But wait, you may say, it was not long last time between the strong sales season to when the market actually crashed. However, there are some differences between the last housing bubble and our current economic situation.
Here are some reasons why the housing market won’t likely crash, nor any bubbles form in the near future:
1. Mortgage applications are up. While purchase activity dipped in August, there has been an increase in the last few weeks and the MBA reports a 1% rise in the last week alone. With rates still low many homebuyers are jumping off the fence.
2. Consumer credit is strong. Credit servicing continues to strengthen and Fannie Mae reports that the single family home delinquency rate continues to decline. Those home borrowers who are either 3 months or more behind in payments, or who are actively in foreclosure, has dropped, with a total fall of close to 25% in the last year – resulting in the lowest level since 2008.
3. Mortgage availability has increased, according to the MBA. But credit is not as loose as before the last crash, when many people were given loans without being able to afford them.
4. Inventory is down/little or no new building – many active homes are now in escrow and with scarce inventory the chance of a bubble forming is slim to none. Unlike in 2007/2008, there is very little or no new home construction in most areas. As prices have risen many buyers have been priced out of markets. Eventually buyers will give up in many areas and prices will then be driven down. Population is growing in many areas, like here in San Diego County, faster than housing supply – this means that there is not likely a chance of a bubble.
Tuesday, April 19th, 2016
A study just released by CoreLogic states that homes sold in San Diego this March had the highest prices in 9 years, with a median home price of $478,000. How is this possible with such low inventory, you may ask? Well, it is likely because of that low inventory that prices have skyrocketed. When levels are low affordability tends to increase as homes sell for higher prices, making it a seller’s market.
Another factor contributing to the current market status is that interest rates have remained exceptionally low, creating a surplus of buyers (some rates are reportedly under 4% for 30 year fixed loans). Spring and Summer – the traditional “big” selling seasons – are in full swing with qualified buyers abound who have few choices. We are seeing multiple offer situations all over the place (I just wrote an offer the other day and there were 6 offers, all at or over asking price). Buyers are ready to buy and when a home in a desirable area is listed it likely will sell quickly – a strong reason to make sure you are preapproved if you are planning to purchase a home soon.
According to the report, home sales increased 5.1% year over year, with new home sales leaping 28.1% last month. All of this makes it a great time to sell, but many sellers do not do so because they are afraid they won’t find replacement property, putting many in a Catch-22 situation. On the other hand, home improvement stores have been doing very well since the start of the year, as many homeowners may be deciding to make improvements rather than chance selling with no where to move – we seem to be stuck in a rut of sorts.
Here in North San Diego I have seen a lot more off-market homes being marketed to real estate agents. In other words, agents list properties and market them without putting them on the MLS (a VERY good reason why all buyers need to have agents!). Many of these homes do not make it to the MLS until they are in escrow, giving buyers no opportunity to view them or make offers. This is frustrating but the early bird gets the worm I suppose. I have received emails and recorded phone calls about property that are not on the market yet but are being marketed to brokers or agents.
The bottom line is that prices have definitely risen and inventory is tight, but if you do your homework and prepare before buying or selling, you should be able to do well. If you are merely selling and have an appealing home in a desirable neighborhood you will be in the driver’s seat. If you are buying make sure to get preapproved, work with a real estate agent, get educated on the market in which you focus your search, and be ready to write the strongest offer you can.
Wednesday, April 15th, 2015
Tax day is over…time to turn our focus back to the real estate market. I have to take a moment to say that I truly admire my accountants, because I could never do what they do – and so competently! Kudos to all you accountants out there for making peoples’ lives easier, and I am glad we all survived another tax day!
How is the real estate market doing? I get asked that question several times daily. My answer: it is HOT! Demand still has not met supply, and properties are selling quickly and oftentimes with multiple offers. It is great for sellers, but not so wonderful for buyers because there is little to choose from and they have to make quick decisions. For those buyers who are well-educated and know where they really want to live and what they can afford, they have to be ready to see new listings right away and ready to draft offers if they like what they see.
The Catch-22 in the real estate market today is that there are many sellers out there who would like to sell, but have nowhere to move to due to the lack of inventory, so they stay where they are and wait. Unfortunately this keeps the inventory tight in a market where demand is great.
Interest rates jumped a little this week, and many buyers are worried about the rumors that they will rise significantly in July. This is yet another reason for them to start searching for homes, which circles back to the low inventory levels.
Coming Soon! houses seem to be on the rise. I mean homes that have signed listing agreements but are not yet on the MLS. Agents put “Coming Soon!” signs in front to alert neighbors and those who drive by, creating excitement. Since I just had clients sign a listing and the tenants won’t be be out for about a week (and then another week for new flooring and paint)…I thought “what a great way to let the neighbors know this home will soon hit the market!” so I tried it. We’ll see what happens.
The bottom line is that the real estate market is strong in most areas, from what I have heard and read lately. Of course, as always I advise you to consult with a local area real estate agent before buying or selling a home. It seems that we have definitely climbed out of the doldrums and that the market has sprung back, so if you are thinking of purchasing or selling a home you should be in a good position to make that decision.
Tuesday, June 24th, 2014
The latest home price data was released this morning, and there were a plethora of articles today about the “housing bubble” and whether we have or are facing one. Personally I do not think we are in a “bubble,” nor do I see one coming any time soon, but there are some who share the opposite view. The news today sheds some light on what is going on in the market, and whether or not to take the perspective that we are heading toward a bubble.
One post I read stated that the way to mention whether a bubble market exists is to compare housing prices to rental prices. In doing so the study found that home prices are not a big bargain compared to prices in March of 2012 (when the home price to rent ratio was roughly 50%), but on the same token the ratio is not as high now as the roughly 87% peak in May of 2006.
With so many mixed housing numbers it is hard to take a perspective. Zillow, taking the view that housing is getting back to “normal,” stated that “The reality is that the market is moving from one defined by distortions including high negative equity and constricted inventory, to one defined by fundamentals like household formation rates, jobs and income growth.” This view is true in the raw sense, but it also holds some implications for future buyers. For example, home sales will surge in areas where there is job growth. But in many of those areas housing is very expensive (think technology in Northern California or biotech industries in Southern California), so buyers may have to purchase outside of these immediate markets and commute.
The truth of the matter is that housing will grow or fail depending on several factors. Let’s start with economic and job factors. A big percentage of home sales in 2013 (about 1/3 according to data) and so far in 2014 have been cash sales, indicating that loans are still hard to come by and/or that those with money can and will purchase homes, and may not want to deal with the nuisance of obtaining a loan.
Obtaining a loan will also of course continue to play a role in home sales. Loan rates continue to remain low, and many lenders appear to be loosening the standards for lending, with some controversial products like adjustable rate mortgages (and I have heard rumors of stated income and personal loans) gaining in popularity once again.
Add to the future home sales growth predictions the fact that many young Americans are buried in student debt and will not likely have the ability to purchase a home for a long time. This affects household composition ratios as well, since many 20-somethings are now living or are moving back into homes with their parents in order to save money to pay off debt.
It will be interesting to see where housing goes from here. Here in North San Diego there are buyers waiting to purchase, but low inventory. It is a frustrating process, but it seems better than having homes sitting on the market with no buyers. So, like all housing periods I think we need to look on the positive side. Real estate has always been seen by many as a sound investment over time, and there will always be buyers and sellers. Right now is a great time to be a seller, and as long as there are willing and able buyers out there the market will continue to stay afloat.
Saturday, May 3rd, 2014
There is a lot of news out there in the real estate world, so let’s cover some important items you should know.
Property tax reassessment deadline extended in San Diego County: If you are trying to get your property taxes reassessed you are in luck. The county assessor has extended the deadline for filing reassessment paperwork to May 16. If you are interested you can apply by clicking here.
Price appreciation in San Diego County led nation in February: San Diego officially led the nation with the highest price appreciation in February. and fall behind only San Francisco and Las Vegas in annual appreciation. Prices of resale single family homes increased almost 20% from February of 2013 to February of 2014 here in San Diego. The reason for the increase? Increased demand for housing and low inventory levels. Most industry experts predict that prices will slow and we will see normal growth patterns in appreciation, circa 3-3.5% annually. Signs of slowing are already apparent.
Luxury home sales hit all time high in U.S.: Home valued at a million dollars and over are selling at two times their historical average right now, having risen 7.8% in March since the same time last year. Compare that to a 12% plunge during the same period for homes valued at $250,000 and below…or 2/3 of the homes that sold across the country. An improving economy and strong stock market are building confidence in wealthy home buyers, while at the same time putting homeownership out of reach for a large majority of Americans; tighter credit standards, escalating prices and slow wage growth effect the decision to buy for a large majority of would-be homeowners.
FHA makes it easier for some people to buy homes: Those who have a recent foreclosure, short sale or economic hardship may now be able to qualify for home loans sooner, according to the FHA. The newly created category “economic event” will now be acceptable to allow borrowers to obtain loans in as little as 12 months after the event. Economic event is defined as an uncontrollable event (such as job loss or pay cuts) that led to loss of employment or income for at least 6 months, creating a total household income decrease of at least 20%. Of course, there are requirements and documentation, and each case is individually evaluated. If you have more questions you can contact your mortgage professional for more information.
Monday, December 9th, 2013
Franchise Tax Board Will Not Tax California Short Sellers on Non-Recourse Loans: The FTB has announced that short sellers will not be taxed on non-recourse loans, following the lead of the IRS. This decision seems obvious, given that a short sale does not have debt forgiveness. Good news for those who need to sell their homes short.
FHA Lowers Loan Limits for 2014: The FHA recently announced that maximum loan limits for 1-4 unit dwellings will be reduced in the coming year, from $725,750 to $625,500 for a single unit. (Check the limits for 2-4 units, as they vary). This could limit borrowers’ pool of available properties, so if you are looking for properties with an FHA loan, it is imperative to speak with your mortgage professional and make a plan. The revised limits also vary by county, so make sure you get all the facts. If you can find something and get an FHA case number before the end of the month you will be fine, if not, find out whether you need to revise your maximum searching limits after the first of the year so you can make adjustments.
Investors are Expected to Remain Most Active Buyers Heading into 2014: Despite all the hoopla that investors are out of the real estate market, a new study says that they will still comprise a large part of the buyer pool in the new year. The study by Data Quick points out investor staying power will be a result of tightening credit standards and a lack of affordable properties, which will shrink the buyer pool and possibly keep many first time buyers out of the market.
Foreclosure Inventory Has Decreased, but is Not Going Away: Despite the decrease in foreclosure inventory this year, they still play a role in most housing markets and are expected to do so moving into the new year. CoreLogic reports that foreclosures completed in October dropped 30% year over year from 2o12, but that foreclosure inventory is still four times higher than normal. I think “normal” is no longer a word we should embrace in real estate, at least until our economy stabilizes and people feel less worried. To read the report click here.
Monday, July 29th, 2013
Wednesday, February 13th, 2013
Is Fannie Mae hurting the real estate market? Those following the practices of this government lending giant know that as of late, Fannie has been accused by many in the industry of price fixing and falsely inflating the real estate market. What is going on, and how can this happen at this time, after the housing market is finally on the road to recovery?
The majority of lenders and those who guaranty loans seem to be cooperating recently with foreclosure avoidance, opting for the less painful option of short sales. They claim that not only do they want to ease the homeowners’ pain, but that they do not have a desire to own property, and would rather take a loss sooner than have to go through the foreclosure process – one which has a hefty price tag.
There is one exception to this rule, and real estate agents are baffled. Fannie Mae – a government agency, who along with it’s cousin Freddie Mac guarantees and purchases loans, and owns or controls about 31 million U.S. mortgages – has been implementing some strategies lately that go against this notion, despite statements of intentions to help:
1. Price Fixing? One of the claims expressed most frequently as of late by real estate professionals is that Fannie is engaging in price fixing. Here’s how it works: instead of opting for short sales, it is choosing to proceed with foreclosures. Then, once the home is ready to list, it’s selected agents list the property for over comparative market value, under Fannie’s Homepath program. No appraisals are needed, as Fannie is the largest provider of mortgage credit. Buyers are jumping in and paying over market value for these properties, and are closing escrows.
Initially this looks like a win-win, as the buyers get their home and do not have to go through the appraisal process, and the area comps are raised with the closing of the property at a value higher than any other recent sales, thus increasing comps for the next seller. Sounds good, right? Not so fast.
The downside of this tactic is that the buyers are literally moving into their new homes as UNDERWATER homeowners. Their homes have no equity – they own the most expensive property in the neighborhood because Fannie has falsely inflated the home values. Appraisers will not look solely to the most expensive home that sold, but will include it with the other comps…thus leading to the next problem:
As a result, future sellers will not likely benefit from the most expensive neighborhood sales (for more on this click here.). Appraisers will include the most expensive sale in their analysis, but they will not focus solely on that one sale; thus the next home to sell, even in better condition and with more to offer, will be evaluated by appraisers based on the combination of recent sales. What seller in their right mind, who did not have to sell, would choose to do so in such a situation? This will keep homes off the market, sustaining low inventory levels.
2. Countering short sale offers at prices higher than comparable sold properties. Another tactic that is being used by Fannie when they DO agree to short sales, is to counter offers received higher than comparable sold properties. Again, this is crazy! These homes will not appraise, but still there are buyers willing – and doing it! – to pay cash over and above appraisal value in order to close escrow. Again, these new homeowners move into their homes in negative equity positions. This tactic also prices many homebuyers out of the market.
I’m not sure how to explain what is going on, but it scares me. Our market is healing right now, and if prices are falsely inflated and comparable sold properties ignored, we will see large market increases in short time periods. If you remember, this is what led to the last market crash. Please share your thoughts.