Existing-home sales and prices rise, point toward recovery: NAR
May 22, 2012 • www.housingwire.com
Existing-home sales rose in April, and home prices continued to rise, according to the National Association of Realtors.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4% to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March. This is 10% higher than the 4.2 million-unit level from April of last year.
Lawrence Yun, NAR’s chief economist, said the numbers point to a housing recovery under way.
“It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said.
Total housing inventory at the end of April rose 9.5% to 2.54 million existing homes, a seasonal increase that represents a 6.6-month supply at the current sales pace, up from a 6.2-month supply in March. Listed inventory is 20.6% below a year ago when there was a 9.1-month supply.
“A diminishing share of foreclosed property sales is helping home values. Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun said.
Yun said those areas include the Washington, D.C.; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle, in the majority of which he says “stronger price increases” can be expected.
He said the general downtrend in listed and shadow inventory has caused a shift from the buyers’ market to one that is more balanced, and in some areas is even pushing into a seller’s market.
The national median existing-home price for all housing types jumped 10.1% to $177,400 in April from April of last year, and the March price showed an upwardly revised 3.1% annual improvement.
Yun said this is the first time there has been back-to-back, year-over-year increases since June and July of 2010, and even then gains were less than 1%. For this year, he said the country can can expect a “modest overall price gain of 1 to 2%, with stronger improvement in 2013.”
Distressed homes accounted for 28% of April sales. Of those, 17% were foreclosures and 11% were short sales. This is down slightly from 29% in March and down 9% from April of last year’s 37%. Foreclosures sold for an average discount of 21% below market value in April and short sales were discounted at an average of 14%.
Just last week, the 30-year fixed rate dropped to a record weekly lowof 3.91% since records began in 1971, according to Freddie Mac. It was the third week in a row where the record was broken.
First-time buyers rose to 35% of purchasers in April, up 2% from March’s numbers and 1% year-over-year.
All-cash sales dropped to 29% of transactions in April, down from March’s 32% and year-over-year from April 2011′s 31%. Investors account for the majority of cash sales, and their buying slowed in April to 20% of homes down 1% from March and unchanged from April 2011′s 21%.
Single-family home sales rose 3% to a seasonally adjusted annual rate of 4.09 million in April, up from 3.97 million in March. The numbers are 9.9% higher than the 3.72 million-unit rate one year ago.
Existing condo and co-op sales were up 6% to a seasonally adjusted annual rate of 530,000 in April — beating March’s numbers by 30,000 sales. April’s numbers are 10.4% above April of last year’s numbers.
Regionally, existing-home sales in the Northeast gained 5.1% to an annual level of 620,000 in April and are 19.2% higher than a year ago. The median price in the Northeast was $256,600, up 8.8% from April 2011.
In the Midwest, existing-home sales increased 1% in April to 1.03 million. That is 14.4% higher than April 2011. The median price in the Midwest was $141,400, up 7.4% from a year ago.
Existing-home sales in the South rose 3.5% to an annual level of 1.79 million in April and are 6.5% higher year-over-year. The median price in the South was $153,400, up 8% from last year.
Existing-home sales in the West increased 4.4% to an annual pace of 1.18 million in April and are 7.3% above April 2011. The median price in the West was $221,700, an impressive increase of 15.9 percent from a year ago.
FHA may loosen limits on condo mortgages
The revisions could remove at least some of the obstacles that have dissuaded condo homeowner association boards from seeking approval or recertification of their buildings for FHA loans.
WASHINGTON — Thousands of condominium owners and buyers around the country could soon be in line for some welcome news on mortgage financing: Though officials are mum on specifics, the Federal Housing Administration is readying changes to its controversial condominium rules that have rendered large numbers of units ineligible for the agency’s low-down-payment insured mortgages.
The revisions could remove at least some of the obstacles that have dissuaded condominium homeowner association boards from seeking FHA approval or recertification of their buildings for FHA loans in the last 18 months. Under the agency’s regulations, individual condo units in a building cannot be sold to buyers using FHA-insured mortgages unless the property as a whole has been approved for financing.
According to condominium experts, realty agents, lenders and builders, the FHA’s rules have become overly strict and have cut buyers from their best source of low-cost mortgage money, thereby frustrating the real estate recovery that the Obama administration says it advocates.
Christopher L. Gardner, managing member of FHA Pros, a national consulting firm based in Northridge that assists condo boards in obtaining FHA approvals, said barely 25% of all condo projects that are potentially eligible for FHA financing are now approved. That is despite the fact, Gardner said, that FHA financing is the No. 1 mortgage choice for half of all condo buyers and is crucial to many first-time and minority purchasers.
Moe Veissi, president of the National Assn. of Realtors and a broker in Miami, said the FHA’s strict rules “have had an enormous impact on individuals” across the country, especially residents of condo projects who find they are unable to sell their units because their condo board has not sought or obtained approval from the FHA as a result of objections to the agency’s strict criteria. This in turn depresses the prices that unit owners can obtain and ultimately harms their equity holdings and financial futures, Veissi said.
FHA officials defend their requirements as prudent and necessary to avoid insurance fund losses but have expressed a willingness to reconsider some of the issues that have upset condo owners and the real estate industry. Among the biggest areas of criticism of the FHA’s rules are its limitations on:
•Non-owner occupancy. The agency requires that no more than 50% of the units in a project or building be non-owner-occupied. This rule alone has made large numbers of condominiums in hard-hit markets ineligible for FHA financing, where investors have purchased units for cash to turn into rentals.
•Delinquent condo association fee payments. The FHA refuses to approve a project where more than 15% of the units are 30 days or more behind on payments of condo fees to the association. Given the state of the economy, this has been a problem for thousands of associations, even in relatively prosperous markets. Steve Stamets, a loan officer with Apex Home Loans in Rockville, Md., said some sellers and buyers have been so frustrated by the rule that they have offered to pay the amount of delinquent fees needed to bring the overall project into compliance “just to get the deal done. This is a ridiculous situation,” Stamets said. “When somebody calls up now and says they want to buy a condo with an FHA loan, I cringe.”
•Nonresidential space usage. The FHA has set a cap of 25% of the total floor space in a project for commercial use. Critics say this is too low and unrealistic for condo projects in urban areas, where retail and office revenues can be important to overall financial feasibility.
The agency has imposed a long list of other requirements on insurance and reserves, plus a highly controversial rule that associations interpret as creating harsh legal liabilities for condo board officers if applications for FHA approvals contain inaccuracies. Andrew Fortin, vice president for government and public affairs at Dallas-based Associa, one of the country’s largest homeowner association management firms, said many boards, facing the prospect of severe penalties, have refused to apply solely because of this personal liability burden.
The FHA is expected to clarify the personal liability language and make other modifications in its forthcoming rules. Whether the changes will be enough to persuade homeowner boards to apply for approvals in large numbers is uncertain, but industry experts say they — and residential unit owners — are likely to welcome whatever loosening of the current restrictions FHA can offer.
Bank of America offering up to $30,000 for short sales
By Les Christie @CNNMoney May 15, 2012
NEW YORK (CNNMoney) — Bank of America is offering some struggling homeowners payments of up to $30,000 if they sell their homes in a short sale and avoid ending up in foreclosure.
Under the plan, Bank of America (BAC, Fortune 500) will offer homeowners so-called relocation payments of between $2,500 and $30,000 if they sell their home in a short sale. In short sale deals, the sale price of the home is less than what the seller owes the bank.
The bank first tested the payments in a pilot program in Florida last fall. Under that initiative, Bank of America paid up to $20,000 to borrowers who sold their homes in short sales.
“This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home,” said Bob Hora, an executive for the bank.
Chase (JPM, Fortune 500) started a similar initiative in late 2010 that pays as much as $35,000 to short sellers. Wells Fargo (WFC,Fortune 500) has also paid five-figure incentives to short sellers or to owners who turned over their deeds to the bank.
BofA said it has completed 200,000 short sales over the past two years. These sales are generally more cost effective for banks than foreclosures. By avoiding foreclosure, the lenders get distressed properties back from delinquent borrowers more quickly, which helps them to avoid property tax payments, maintenance expenses and legal fees that can build up for months, even years, as foreclosures work through the system.
In addition, the incentives help guarantee the homes will return to the lenders in better condition. Foreclosed properties are often poorly maintained, even sometimes sabotaged, by angry former owners, making them worth far less to the banks.
During the last three months of 2011, foreclosures sold for an average of about $150,000, according to RealtyTrac. Meanwhile, short sales sold for an average of about $185,000.
To qualify for Bank of America’s relocation payments, borrowers must obtain pre-approval on sale prices for their homes. The sale must begin by the end of 2012 and close by September 26, 2013.
The exact compensation is determined case-by-case based on a calculation that involves the home’s value, mortgage balance and other factors.
Borrowers can call 877-459-2852 to find out if they may be eligible for the program.
Analyst: Foreclosure’s shrinking shadow over housing
BY G.U. KRUEGER / FOR THE REGISTER
Published: May 18, 2012
Veteran Southern California real estate analyst G.U. Krueger adds his commentary on the housing market to this blog in a spot we call “Thursday Morning Quarterback.” Here’s his latest installment. …
There was a time, when the “shadow” of the “shadow supply” was rising and rising – between 2006 and the first quarter 2010.
Since then, the shadow supply of distressed properties has been shrinking. So-called “non-judicial states” — where foreclosures are handled by trustees, an often efficient recycling of distressed properties — lead with shrinking shadows. In judicial states — where courts are involved in the foreclosure process — shadows still loom large.
Mortgage delinquencies tracked by the Mortgage Bankers Association show most shadow supply indicators went in the right direction during 2012′s first quarter:
At the end of the first quarter 2012, 11.8 percent of mortgage loans were either late or in the foreclosure process on a seasonally adjusted basis. That’s down from 11.96 percent in 2011 Q4 and 12.8 percent a year ago. Two years ago the number stood at 14.7 percent, a steady improvement.
This decline in homeowners being late on their payment was almost entirely due to declining delinquencies in various stages of delinquencies. This is important because delinquencies are the leading indicator for future foreclosures. The percentage of loans in which foreclosure actions started was 0.96 percent, down from 0.99 percent the quarter before and 0.12 percentage points lower than a year ago. That’s almost back to “normal”.
Loans that were 30 days delinquent declined to 3.13 percent from 3.22 percent in 2011′s final quarter. The first quarter number was around the long-term average, indicating the positive effects of job growth — and the tighter underwriting of recent loans.
60-day delinquent loans dropped to 1.21 percent from 1.25 percent the quarter before — lowest since the end of 2007.
The 90-day delinquent mortgage bucket stood at 3.06 percent last quarter, down from 3.11 percent in 2011 Q4. This was the lowest since 2008 but still significantly above normal, which would be 0.8 percent. This would be the immediate feeder bucket that would unleash foreclosures following the foreclosure settlement from April 5th this year. It’s significant that this is coming down.
The in-foreclosure bucket is important to watch also to see if banks unleash a new wave of foreclosures. The in-foreclosure bucket remained stubbornly high in 2012 Q1 at 4.39 percent, which is down slightly from 4.48 percent in 2011 Q4, and down only slightly from 4.5 percent a year ago.
Any big impact of bankers’ foreclosure-mishandling settlement will be seen in the judicial states. Ten of the top 11 states with highest foreclosure rates are judicial. California and Arizona, which used to have high foreclosure rates have now fallen below the national average of 4.4 percent — California at 3.29 percent; Arizona at 3.57 percent. It is no coincidence that these sates are seeing first signs of price stabilization.
Adding up all the mortgage distress, we see there are still 5.7 million loans delinquent, but that’s a misleading number. Not all of will end in foreclosure — and even this number has dropped from 7 million-plus two years ago. The shadows of the shadow supply are becoming smaller, especially the delinquencies in the early foreclosure process.
O.C. homes draw multiple-offer ‘avalanche’
May 14th, 2012, Jon Lansner
Orange County’s housing market is back at 2005 intensity, according to one report, with multiple offers for homes commonplace.
Click to see what $35 million would buy you in Newport!
Below $500,000 range is NUTS. Homes priced at or near their market value are generating an avalanche of multiple offers. A home in this range is placed on the market and, within moments, cars filled with buyers are touring the home. Realtors leave their business card behind so that the listing agent and seller know that the home has been shown. In the first couple of days of hitting the market, there are already stacks of business cards on the counter, a leading indicator that this home is not going to last. Upon writing an offer, buyers quickly find that they are one of many, sometimes over ten, offers on the home. Suddenly it becomes a battle of wills. In the end, the seller factors the highest price with the largest down payment. I know, you are thinking, “What about the appraisal?” In many instances, shrewd sellers and Realtors are leveraging the competition to drop the appraisal contingency and require the buyer to make up the difference between the appraisal price and the purchase price, IF there is an appraisal problem. This is precisely what a buyer is experiencing. Now, let’s take a look at the economic principles at play by zeroing in on the irrefutable data. Supply has dropped to levels not seen since June 2005. Demand is at levels not seen since June 2005. The expected market time for all of Orange County is 1.5 months, or six weeks. It is four weeks for homes priced below $500,000, 22 days for short sales, and 19 days for foreclosures.
Thomas’ signature housing measurement is his “market time” benchmark. It tracks how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic, as of May 10 — we see …
- Market time of 1.53 months for Orange County buyers to gobble up all homes for sale at the current pace vs. 1.51 months two weeks ago vs. 3.68 months a year ago vs. 2.53 months two years ago.
- Of the 8 Orange County pricing slices Thomas tracks, 5 had faster market time vs. 2 weeks ago; and 8 improved over a year ago.
- Orange County homes listed for under a million bucks have a market time of 1.23 months vs. 5.17 months for homes listed for more than $1 million.
- So, basically, it is 4.2 times harder to sell a million-dollar-plus residence!
- And just so you know, the million-dollar market represents 26% of all homes listed and 8% of all homes that entered into escrow in the past 30 days.
Here’s the recent data for listings; deals pending; market time in months; latest vs. 2 weeks earllier, a year ago and 2 years ago. Color coding for market time is red (slowed by 5%-plus in year); green (sped up by 5%-plus in year); and yellow (in between!) Note: k=thousand; m=million …
| Slice | Listings | Deals | Market Time (months) | 2 week ago | 1 yr. ago | 2 yr. ago |
|---|---|---|---|---|---|---|
| $0-$250k | 858 | 751 | 1.14 | 1.11 | 2.95 | 1.75 |
| $250k-$500k | 1,607 | 1,689 | 0.95 | 0.94 | 3.03 | 1.79 |
| $500k-$750k | 1,253 | 834 | 1.50 | 1.53 | 3.72 | 2.55 |
| $750k-$1m | 678 | 294 | 2.31 | 2.49 | 4.81 | 3.55 |
| $1m-$1.5m | 521 | 168 | 3.10 | 3.02 | 5.50 | 4.99 |
| $1.5m-$2m | 309 | 71 | 4.35 | 5.29 | 8.41 | 7.17 |
| $2m-4m | 442 | 47 | 9.40 | 10.64 | 10.82 | 10.89 |
| $4m+ | 259 | 10 | 25.90 | 35.43 | 33.89 | 20.94 |
| All O.C. | 5,883 | 3,848 | 1.53 | 1.51 | 3.68 | 2.53 |
Fannie, Freddie are set to reduce mortgage balances in California
The mortgage giants sign on to Keep Your Home California, a $2-billion foreclosure prevention program, after state drops a requirement that lenders match taxpayer funds used for principal reductions.
As California pushes to get more homeowners into a $2-billion foreclosure prevention program, some Fannie Mae and Freddie Mac borrowers may see their mortgages shrunk through principal reduction.
State officials are making a significant change to the Keep Your Home California program. They are dropping a requirement that banks match taxpayers funds when homeowners receive mortgage reductions through the program.
The initiative, which uses federal funds from the 2008 Wall Street bailout to help borrowers at risk of foreclosure, has faced lackluster participation and lender resistance since it was rolled out last year. By eliminating the requirement that banks provide matching funds, state officials hope to make it easier for homeowners to get principal reductions.
The participation by Fannie Mae and Freddie Mac, confirmed Monday, could provide a major boost to Keep Your Home California.
Fannie Mae and Freddie Mac own about 62% of outstanding mortgages in the Golden State, according to the state attorney general’s office. But since the program was unveiled last year, neither has elected to participate in principal reduction because of concerns about additional costs to taxpayers.
Only a small number of California homeowners — 8,500 to 9,000 — would be able to get mortgage write-downs with the current level of funds available. But given the previous opposition to these types of modifications by the two mortgage giants, housing advocates who want to make principal reduction more widespread hailed their involvement.
“Having Fannie and Freddie participate in the state Keep Your Home principal reduction program would be a really important step forward,” said Paul Leonard, California director of the Center for Responsible Lending. “Fannie and Freddie are at some level the market leaders; they represent a large share of all existing mortgages.”
The two mortgage giants were seized by the federal government in 2008 as they bordered on bankruptcy, and taxpayers have provided $188 billion to keep them afloat.
Edward J. DeMarco, head of the federal agency that oversees Fannie and Freddie, has argued that principal reduction would not be in the best interest of taxpayers and that other types of loan modifications are more effective.
But pressure has mounted on DeMarco to alter his position. In a recent letter to DeMarco, congressional Democrats cited Fannie Mae documents that they say showed a 2009 pilot program by Fannie would have cost only $1.7 million to implement but could have provided more than $410 million worth of benefits. They decried the scuttling of that program as ideological in nature.
Fannie and Freddie last year made it their policy to participate in state-run principal reduction programs such as Keep Your Home California as long as they or the mortgage companies that work for them don’t have to contribute funds.
Banks and other financial institutions have been reluctant to participate in widespread principal reductions. Lenders argue that such reductions aren’t worth the cost and would create a “moral hazard” by rewarding delinquent borrowers.
As part of a historic $25-billion mortgage settlement reached this year, the nation’s five largest banks agreed to reduce the principal on some of the loans they own.
Since then Fannie and Freddie have been a major focus of housing advocates who argue that shrinking the mortgages of underwater borrowers would boost the housing market by giving homeowners a clear incentive to keep paying off their loans. They also say that principal reduction would reduce foreclosures by lowering the monthly payments for underwater homeowners and giving them hope they would one day have more equity in their homes.
“In places that are deeply underwater, ultimately those loans where you are not reducing principal, they are going to fail anyway,” said Richard Green of USC’s Lusk Center for Real Estate. “So you are putting off the day of reckoning.”
The state will allocate the federal money, resulting in help for fewer California borrowers than the 25,135 that was originally proposed. The $2-billion program is run by the California Housing Finance Agency, with $790 million available for principal reductions.
Financial institutions will be required to make other modifications to loans such as reducing the interest rate or changing the terms of the loans.
The changes to the program will roll out in early June, officials with the California agency said. The agency will increase to $100,000 from $50,000 the amount of aid borrowers can receive.
Spokespeople for the nation’s three largest banks — Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. — said they were evaluating the changes. BofA has been the only major servicer participating in the principal reduction component of the program.
Consumers now tracking their escrow online
May 13th, 2012, Jeff Collins
Advantage Title, a title insurance and escrow firm headquartered in Newport Beach, recently launched its Title365 product, which allows real estate professionals and their clients to monitor progress of their escrow online. (Escrow is the period between the signing of a real estate purchase contract and the closing when the property actually changes hands.) We asked American Advantage President Peter Derbonne to tell us about his new product and about what he’s seeing in the real estate market …
Us: What’s the new vibe in title and escrow services?
Title and escrow are still the same process, so that hasn’t changed. What has changed is that there are technology-driven companies offering new ways of delivering the product that open the curtain so everyone can see what is going on during the process. Consumers have the power to choose the winners and losers on the Internet which we believe will ultimately improve efficiency and communication during a real estate sale or refinance.
Peter: The new vibe starting to take hold in title services centers on transparency and full disclosure to the consumer.
Us: Tell us about your new title insurance and escrow tracking service.
Peter: As a homebuyer, borrower or seller, you can go onto Title365.com and view the status and detail of your title insurance and escrow order on our OrderTrac system from start-to-finish.
It’s the first system of its kind where consumers are notified, along with their Realtor or lender, about relevant events as an order progresses. Everyone can secure, share and print documents as they become available. Even after the order closes, recorded documents are available indefinitely which makes it easy, for example, when you need closing documents as you prepare your tax return.
Us: How is this new and why is there a need for it?
Peter: Traditionally, buyers and sellers have been unsure as to exactly what title insurance is and why they need it, not to mention the steps involved in securing real estate. The professionals involved in the process work behind the scenes so the cost and process details are often a mystery to many buyers and sellers.
We created Title365.com so consumers can see for the first time what’s happening as it happens. This supports the idea of “transparency” and knowledge for the consumer’s benefit. Right now, it’s a perfect storm thanks to mass adoption of technology, social media, and mobile devices. This on-the-go access means homebuyer and seller education and access is more important than ever for us to best meet their needs.
Us: Can consumers go online and use these services too?
Peter: Yes, absolutely. A professional working on behalf of a consumer instantly opens escrow or orders title insurance on Title365.com, and from that point on, the process is event-driven so everyone has access to a personalized portal within the system to get real-time updates and documents outlining every step as it happens, 24/7.
Traditionally, a buyer, seller or their agent has to place a call to escrow for status or to get a document and then wait for an email or messenger. Communication and social media tools are also built-in so all parties can interact before, during and after an order closes.
Us: Are you seeing any signs of a housing recovery?
Peter: From a title insurance and escrow viewpoint, we’re seeing Notice of Defaults (NODs) and foreclosures on the decline and an uptick in title and escrow orders overall. Once people see that buying can be cheaper than leasing, it’s always a good sign for housing recovery.
Us: How does the volume and type of business you’re seeing today compare to, say, a year ago?
Peter: We’re seeing the type of business change. Today, there is a reduction in the amount of foreclosures and an increase in short sales and traditional sales from a year ago.
Us: Does the amount and type of activity you’re seeing in Orange County stand out from other areas you service?
Peter: Orange County stands out from other areas because the activity has been healthy up and down the coast whereas in the Inland Empire, for example, our sales reps have pockets that are busy while others are slow.
In Ohio, Florida and Michigan, for example, we’re still seeing a good number of foreclosures in relation to short sales and traditional transactions.
Us: How much longer until the housing market has “recovered?”
Peter: If you look at all the market indicators — housing affordability, days on market and listing inventory — how quickly the market recovers depends on many factors. If all things are equal, we are on our way to a nice recovery.
Analyst: Local hiring spree to boost housing
BY G.U. KRUEGER / FOR THE OC REGISTER
May 4th 2012
Veteran Southern California real estate analyst G.U. Krueger adds his commentary on the housing market to this blog in a spot we call “Thursday Morning Quarterback.” Here’s his latest installment. …
Decent job growth numbers are good news for the Orange County housing industry, which is desperately seeking better economic fundamentals.
At first, it looked as if California’s labor markets had a slow beginning in 2012. However, revisions of official payroll numbers in January and February — plus nice job growth during March — changed that picture. Job growth in Orange County in March outpaced the nation and California on a monthly and annual basis.
Here are some factoids:
• On a seasonally adjusted basis Orange County nonfarm jobs grew 0.6 percent from February to March this year. That was faster monthly growth than the 0.1 percent in California and the 0.09 percent in the Nation during the same time period.
• Between in the year ended in March, Orange County nonfarm jobs grew 1.9 percent (and 2.3 percent in the private sector). In California jobs grew 1.6 percent, while the U.S. added 1.5 percent.
• Compared with major California metropolitan areas, Orange County outgrew the so-called northern growth stars in California on a monthly basis — the Silicon Valley (0.2 percent), San Francisco (0.4 percent), and Oakland (0.2 percent). Orange County also enjoyed the biggest monthly gain in absolute numbers with 7,800 new jobs on a seasonally adjusted basis.
• While year-over-year, Orange County job growth was outpaced in percentage terms by San Francisco and the Silicon Valley, it added over 25,000 workers. Only Los Angeles had bigger numbers, adding almost 38,000 jobs over the year.
Orange County also outdid many of the nation’s 32 so-called “metropolitan divisions” — essentially separate employment centers within larger metropolitan area. Note:
In terms of annual job growth, Orange County ranked 11 out of the 32 metro divisions. While it was outpaced by the Texas metropolitan divisions of Fort Worth-Arlington (2.7 percent) and Dallas-Plano-Irving (2.3 percent), Orange County outgrew such prominent areas as Washington-Arlington-Alexandria (1.4 percent) and Boston-Cambridge-Quincy (0.9 percent).
In absolute terms, Orange County annual job growth ranked No. 9 – just outpacing Fort Worth-Arlington (23,500), and exceeding annual job increases in Nassau-Suffolk (19,900).
Finally, Orange County job growth is gaining some momentum – and prominence. To be true, Orange County is ways off from recapturing previous peak levels. But job recuperation will benefit the local housing industry as we move through this year.
Multiple offers to buy homes are back
May 6th, 2012, Jeff Collins
Cameron Merage is the founder and CEO of First Team Real Estate, an Orange County-based chain with more than 1,800 agents in 40 offices across Southern California. We thought we’d check in with him for his take on the current state of the Orange County real estate market …
Us: How’s business?
We are seeing sellers happier about the prices they are getting, and our agents are the busiest they have been in years, with more buyers in all price ranges.Cam: The Orange County housing market is starting to rebound nicely. While median prices continue to be down, and most of the transactions are taking place in the first home price range, we are seeing houses under $2 million in all areas of Orange County moving faster than they have in the past couple of years.
Us: In 2006, home sales stalled. We ended up with almost 18,000 homes on the market. Now, there are fewer than 7,000, lowest in seven years. Do we have a housing shortage?
Cam: I don’t know if I would call it a shortage, but it is definitely moving back toward being a seller’s market, especially in the affordable price range under $500,000.
Last month, in one of our offices, over 80% of the offers made were in a multiple offer situation. That is something that we have not seen in many years. There are not enough homes in the first-home price range, where we are seeing pent up demand absorbing the homes as soon as they come on the market.
The question is; will the distressed properties that still need to come on the market have an effect on the level of inventory in Orange County? I doubt it, especially in the affordable range, but that remains to be seen.
Us: What’s the outlook for home buying and selling this spring?
Cam: Real estate and real estate values are very localized business and therefore the supply and demand, as well as price trends across different markets and sub-markets (even in Orange County) vary.
Well, this is going to be a good spring for sellers who are selling homes compared to a year ago spring time (across all Orange County price ranges). However, the demand for homes and condominiums under $500,000 (where the greatest concentration of all sales activity is) is far greater than supply. In fact, we are seeing upward pressure on prices in this price range.
While the activity and pending sales in higher priced homes (from $1 million to $5 million) is improving, these sellers are going to have to continue to be patient and work with their agents to insure that their home is priced right and as importantly, that the home is marketed and staged properly.
As to home price trends and demand for homes between $500,000 to $1 million, the demand is not as great compared to the lower priced range homes in the affordable price range, but still stronger than homes priced over $1 million.
Of course, this is also a function of the geographical market location of the property within the county. Clearly homes closer to the coastal markets (under $1 million), remain in more demand than Inland Markets and in some high-end coastal markets is non-existent. Accordingly, for buyers, the additional demand we are seeing may create opportunities or challenges depending on the price segment being pursued.
Buyers need to work with their Realtor in evaluating the price trend in each segment and local market and decide how fast to make a move in order to avoid multiple offer situations where the property is priced well and marketed properly so that the best offer is made on a house upfront. At First Team, we have tested and proven proprietary software that is designed to graphically do price trajectory for each neighborhood and community across the entire county to help guide buyers and sellers.
Us: Prices are still – not just down, but WAY down. How long until we see home prices rising again?
Cam: Well when you look at prices below $750,000, you will see a stabilization taking place. Home prices are not dropping in this range, and in fact we are seeing homes in this range selling for more than the asking price right now. The keys to housing prices move up include a stronger economy in general – which we are seeing in O.C. earlier than the rest of the country; available credit – which we are just starting to see; more jobs – which is a positive trend in O.C.; and stronger consumer confidence – which appears to just be starting.
The other key point is that we have to clear out the distressed properties that the banks were sitting on which keeps putting pressure on prices and other sellers. While we are not completely through the distressed selling yet, we are making good strides and 2013 looks like a good time frame for those homes to have a reduced influence on the market.
Us: We’ve heard it before. The market is coming back. Heard it in 2009, 2010. Why should we believe it now when people say that?
Cam: Well right now the key is that we are seeing homes staying on the market for a much shorter period of time, the overall inventory is lower than it has been in more than eight years, we are seeing multiple offers, and the economy is rebounding. This is the first time in many, many years that all of those macro conditions and signals are lining up favorably at the same time. We believe that this says we should have a stabilized 2012 and a stronger and improving 2013.
Us: CoreLogic reported that 11,000 O.C. homes were in some stage of foreclosure. More than 100,000 O.C. homes were under water. How long until the foreclosure crisis is behind us?
Cam: The foreclosure situation is only a crisis if it is driving down the whole market, having a disproportionate effect, or overwhelming the system. I think that we have already passed that point.
While the foreclosure situation will continue to damper the whole housing market, we have already weathered the worst of it in O.C. While it is very hard on the families going through it, the market is doing a better job of getting those homes sold and owned by either other families or investors who are renting those homes to families who would like to live in them.
It is going to be a while until the situation is totally cleared up, but the market is showing signs of being able to handle the distressed homes that are coming on the market.
Us: So who is buying right now?
Cam: It is an interesting mix of people who currently make up the buyers pool. First are first-time home buyers who have been sitting on the sidelines waiting for the market to stabilize who are coming into the market in large numbers to buy a home, adding to the pent-up demand.
Second, in all price ranges above the affordable and into multi-million-dollar price ranges in the coastal markets, buyers are coming in, picking up the best locations and well-marketed homes, and getting a discount on the price, but paying all cash for the property.
Third are investors who believe they are buying low, they can rent out the properties and be cash flow positive, and they will get the upside in equity as the market continues to rebound. And fourth, we are continuing to see a strong international interest in living in O.C., and those buyers continue to play a significant role in the current housing market, especially in the over $1 million price range.
Homebuying spree hits all corners of O.C.
May 7th, 2012, Jon Lansner
Orange County springtime homebuying spree is a widespread trend with all four geographic slices of the county enjoying double-digit sales growth.
That’s what we found our studying how housing trends hit various corners of Orange County. For the 22 business days ending April 17 — freshest numbers from DataQuick — our region-by-region analysis of local real estate trends finds Orange County homebuying slicing up by geography this way …
- North Inland: 668 homes sold in these Orange County ZIP codes in this most recent period, +15.0% from a year ago. Median selling price? $435,000 in these 22 ZIPs. This most recent median price change was -6.4% in a year. North Inland accounted for 28% of recent home sales vs. 27% a year ago.
- Mid-County: These ZIPs — median selling price $336,750 — had 792 sales, +17.0% from a year ago. In these 25 ZIPs, the median price change was -5.1% in a year. Mid-County accounted for 23% of recent home sales vs. 23% a year ago.
- Beach Towns: 578 homes sold in these ZIP codes in the most recent period, +20.2% from a year ago. This was largest year-to-year gain among the four regions. Median selling price? $710,000 in these 17 ZIPs. Median price change was +1.7% in a year. Beach Towns accounted for 20% of recent home sales vs. 19% a year ago.
- South Inland: These ZIPs — median selling price $458,500 — had 831 sales, +10.7% from a year ago. This was smallest year-to-year gain among the four regions. In these 19 ZIPs, median price change was -4.8% in a year. South Inland accounted for 29% of recent home sales vs. 30% a year ago.
