Month: June 2012

Home sales and prices jump

May closings in the Southland were up 21%, with signs of revival seen in the key move-up market.

June 14, 2012|Alejandro Lazo and Laura Hautala LA times
  • The number of homes sold in Southern California soared 21% in May compared with a year ago, while the median price jumped 5.4%. Above, Realtors look at a home in Eagle Rock.
The number of homes sold in Southern California soared 21% in May compared… (Allen J. Schaben, Los Angeles…)

Southern California home sales accelerated sharply in May and prices improved for the second consecutive month, mirroring a national trend and providing fresh evidence that housing is recovering from its five-year slump.

The number of homes sold soared 21% compared with a year ago, while the median price jumped 5.4%. Activity was particularly robust for homes priced above $300,000, a sign that the long-dormant move-up market could be coming out of its slumber, according to real estate research firm DataQuick.

Several factors are driving the rebound, including bargain-basement mortgage rates, a slowly improving economy and a growing consensus that housing prices are at or near bottom.

“Housing has lagged the recovery overall, but we are finally seeing broad-based evidence of a recovery that is kicking into gear,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. “My sense is that there is a broad perception among the potential home buyers that we are close to the low point in the interest-rate cycle and the home-price cycle, and housing affordability is about as good as it is going to get.”

Declining foreclosures are another factor. The glut of repossessed houses being sold at fire-sale prices served as a drag on home values overall, but banks are taking back fewer homes compared with a year ago. A report by RealtyTrac being released Thursday shows that statewide foreclosure filings last month were down 19% from a year ago, and national foreclosure filings dropped 4%.

Foreclosures made up 26.7% of the region’s resale market last month, the lowest level since December 2007. In all, more than 22,000 properties sold in the region, helped by an extra business day in May.

While the housing market is improving, it’s still far from the boom times. Last month’s home sales pace was 15% below the average sales tally for May since 1988, according to San Diego-based DataQuick. And despite the improvement in prices, values remain depressed from their peak, with last month’s median 42% off the high in July 2007.

Still, an uptick in home sales will help the economy overall — especially as people find work in the real estate and lending industries.

Jeff Zumbo, founder of Major Appraisals in Culver City, said the Westside of Los Angeles has seen a sharp uptick in business.

“We’re very, very, very busy right now because interest rates are low,” Zumbo said. “We have not hired more appraisers, but we may be hiring a staff person to help run the office.”

Laguna Niguel mortgage broker Jeff Lazerson is also experiencing the crush. He has written 50 loans in June, well above his usual pace. This year he has hired two full-time employees and plans on hiring another. He is looking for new office space.

“I have never had the deluge I am having now in 25 years,” Lazerson said. “I am bulging at the seams.”

Lazerson said he was particularly encouraged by the rise in clients with equity in their houses. Many experts have seen the return of the move-up market as crucial to getting real estate back on firmer footing.

Indeed, DataQuick said one reason prices rose was increased sales activity in higher-priced coastal markets. Last month’s median home price, the point at which half the properties sold for more and half for less, was the highest since September 2010.

As home sales pick up, it could even breathe new life into the moribund home-construction business. Home builders have struggled to compete with foreclosed homes in outlying areas like the Inland Empire and Antelope Valley — where much of the building occurred during the boom years.

JoAnne Williams, chief executive of JWilliams Staffing in Irvine, said home builders this year have added many more temporary workers than last — an early indicator of more permanent job creation.

“Southern California has really picked up: We are experiencing temp-to-hire levels not seen since 2008,” Williams said. “It’s everyone, the public builders, the smaller guys.”

Economists, however, caution that the job gains seen by some employers have not yet translated into a broader trend.

“With Realtors, I don’t see much hiring or people entering the business,” said Esmael Adibi, director of Chapman University’s A. Gary Anderson Center for Economic Research. “But when you look at the escrow companies and the mortgage brokers — loan processing — that has been increasing, mainly because of refinancing.”

DataQuick President John Walsh, however, said the gains in the “move-up” market were significant, because it suggests more buyers will be entering the market.

Before the collapse in prices, many people would trade their starter homes after a few years for bigger ones. Moving up was so common that chains of buyers and sellers would develop, with each deal dependent on another. The breaking of that cycle has significantly held back growth in the housing market, but DataQuick statistics for May show that move-up buyers may be returning.

Sales between $300,000 and $800,000, a range of prices that would include many buyers who are looking to trade up, surged 23.1% year-over-year in May. Sales of homes under $200,000 rose 7% and sales of homes costing more than $800,000 were up 11.8%.

Sandi Pfister, a real estate agent with South Bay Brokers, said the competition for homes in the cities of Redondo Beach, Hermosa Beach and Manhattan Beach has intensified this year.

“Holy crow,” she said, “one property got 30 offers, a property on Monday got 10 or 12 offers.”

Sellers of pricier O.C. homes up the price


With a tight supply of homes for sale – and shoppers actually buying – we were bound to see hints that prices could be rebounding, too.

Curiously, we’re seeing this strength most at the upper end of the market.

Article Tab: Sellers of pricier Orange County homes are raising prices - is that a sign of a heating up market?
Sellers of pricier Orange County homes are raising prices – is that a sign of a heating up market?

Orange County sellers of higher-end homes are raising price to levels not seen in 20 months, as discounts still are the norm at the more affordable end of the spectrum.

A slightly different view of the Orange County housing market from, formerly, tracks trends in asking prices from brokers’ MLS system of homes for sale. In addition, DeptofNumbers breaks down its data into a pair of neat markers — the 25th and 7th percentiles. This lets us see how the market’s upper crust and more modest abodes are faring. From the May report we see …

At the 75th percentile — the median of the upper half of the price spectrum of local homes for sale …

• Selling price was $683,250 — that is up 4.4 percent vs. the previous month and up 3.2 percent vs. a year ago.

• This is the 4th straight monthly gain and the 2nd straight year-over-year increase since declines started after March 2010.

•This is the highest asking price since October 2010.

• Over two years, we’ve seen 5.4 percent increases in prices set by sellers of these upper-crust local homes. Cuts are 24.2 percent over five years.

At the 25th percentile — the median of the lower half of the price spectrum of local homes for sale…

•Selling price was $293,250 — that is up 1.39 percent vs. the previous month. This is the 4th consecutive month-to-month gain in pricing at the lower end.

•The latest 25th percentile price is down 2.0 percent vs. a year ago.

•This is the 18th consecutive year-over-year cut in asking prices for these more “affordable” homes.

•Still, this is the highest asking price since August.

•Over two years, we’ve seen 7.0 percent decreases in prices set by sellers of these more affordable local homes. Cuts are 41.2 percent over five years.

The gap between these two price points is widening: It was 133 percent vs. 126 percent the previous month and 121 percent a year earlier. The gap peaked at 167 percent in June and July 2009. The overall Orange County median listing price, by this math, was $431,975 — that is up 3.5 percent vs. the previous month and 0.7 percent vs. a year ago.

Another measure also shows Orange County real estate’s upper crust enjoying a rebound.

As the theoretical time needed to sell the entire Orange County listed housing supply was cut in half in two years, pricier markets were atop the list of Orange County’s most-improved home market.

One key factor tracked in the O.C. home inventory report from Steve Thomas of is market time — a comparison of the supply of homes for sale vs. new purchase deals inked in past month.

Countywide, market time saw a two-year drop of 1.64 months to 1.53 months in the time to theoretically sell all for-sale homes at the current buying pace. Basically, the market is twice as fast today as it was two years ago.

When we looked at the latest report at the town level — looking at the two-year trend, as of June 7 – the most improved O.C. town, in terms of change in market time in months in the past two years is Villa Park.

It enjoyed a drop in of 5.13 months to 3.33 months in the time to theoretically sell all for-sale homes at the current buying pace. Next was Newport Beach with a drop of 4.91 months to 3.43 months. Third? Laguna Beach with a drop of 4.91 months to 5.59 months.

Other high-end markets among these rapidly improving towns was Corona Del Mar (fifth, with a drop of 2.72 months to 3.73 months); Huntington Beach (seventh with a drop of 2.33 months to 1.68 months.) and at No. 8, Yorba Linda — a drop of 2.27 months to 1.71 months.

Housing’s shadow continues to shrink


Where did the shadow go — and why does that bother hedge fund managers?

Shadow inventory is thought to be the pending supply of distressed homes, which can create uncertainty in U.S. housing markets. CoreLogic reports that by its math the nation’s shadow inventory tumbled 15% year-over-year in April to a four-month supply. Since peaking in January 2010 at 2.1 million units, the shadow inventory has fallen by 28 percent to 1.5 million units.

The trend and the size of these shadow supply numbers must be greeted with some trepidation by Wall Street hedge funds. They found it easy to raise over $6 billion for plans to buy and rent foreclosures. But these money managers may have difficulty spending it as the supply of troubled properties shrinks.

The Calculated Risk blog pointed out that there are numerous measures of shadow inventory. Some estimates are larger — and more soothing to hedge funds — than CoreLogic’s data. CoreLogic counts seriously delinquent properties; properties in the bureaucratic foreclosure process (notices of default); and properties that are already owned by lenders. But CoreLogic adds a twist to their estimate by trying to eliminate distressed homes already listed for sale or already sold in the short sale process. Obviously, those properties have already come out of the shadows into the light of day.

Many people, myself included, appreciate CoreLogic’s approach. It separates “better visible” from “invisible” supply than other estimates. It also avoids making the idiotic assumption that anything that looks distressed — such as 30-day delinquencies — inevitably will become visible foreclosure supply at some future date.

But even if one adds up everything that crawls and breathes in the distressed mortgage space, one cannot but notice that these shadow supply estimates are a moving target – a downwardly mobile target actually. This might mean that the foreclosure-happy hedge funds may be coming a little late to a party that already has been well-tilled successfully by smaller investors.

Take California as an example. If you add up all the housing distress data for California by the Mortgage Bankers Association (MBA), such as 30-day, 60-day, and 90-day delinquencies, and homes in foreclosure, you get 542,252 properties. Furthermore, if you make an adjustment to reflect that not all mortgages are captured by the MBA you end up with 637,944 distressed properties, a big and some might say bogus shadow supply number.

Still, this number is down 43% from its peak of 1.12 million homes. Father time apparently may not be able to help much with the “under-accumulating” problems mentioned above.

Shrinking supply is good news for all but hedge funds, who have other challenegs to profiting from foreclsoures.

Gaining access to bulk sales from government mortgage handlers or banks may be stymied by political oposition from Realtors, for whom distressed sales are a life blood.

Furthermore, home prices are recovering in distressed geographies like Phoenix. That makes bulk sales less necessary.

Why auction off bulk to Wall Street for a discount, when you can take advantage of the auctioning process for the masses?

The $6 billion that hedge funds want to be on foreclosures smacks like a questionable business model, at best. And at its worst, it’s a potentially unproductive market distortion.

Shortage of homes for sale creates fierce competition

With housing inventory at a low, would-be buyers are scrambling to bid on homes before they’re even listed, and real estate agents are vying to represent the few sellers that do exist.

June 10, 2012|By Alejandro Lazo, Los Angeles Times
During an open house event, a steady stream of real estate brokers flows through a three-bedroom bungalow for sale in Los Angeles’ Highland Park area.
During an open house event, a steady stream of real estate brokers flows… (Allen J. Schaben, Los Angeles…)

The newest problem for the slowly improving housing market isn’t a shortage of serious buyers, it’s a shortage of good homes.

Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting. And real estate agents are vying fiercely to represent the few sellers that do exist.

Housing inventory has sunk to levels not seen since the bubble years. The number of American homes with a “for sale” sign hit 2.5 million in April, the lowest number for an April since 2006, according to the National Assn. of Realtors.

David Dennick, who lives in Echo Park and works as a television editor, has been searching for a home with his wife, Denise, for about two months. The couple have already bid on three properties. They are hoping to find a home for less than $525,000, which is $25,000 more than they originally had hoped to spend.

“It is much more competitive than we thought,” said Dennick, standing in the entrance of an Eagle Rock open house on a recent Sunday. “It is just frustrating because we thought we would really be able to buy a house; we are a middle-class family.”

The sharp drop in inventory along with rock-bottom interest rates have helped stabilize even some of the hardest-hit markets, including the Southland, Las Vegas, Phoenix and Miami. Some real estate professionals are concerned that the lack of inventory might turn off potential buyers, stifling the recent recovery in home sales.

The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books.

In addition, professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals.

A dearth of new construction also is constraining supply. In April — the most recent month for which figures are available — the number of completed new single-family homes available for sale stood at 46,000, the lowest level since the Census Bureau began keeping track in 1973. Some 70,000 were under construction, also near historic lows.

The inventory problem has been exacerbated by the plunge in home prices since the go-go years. Many people who bought at the top of the cycle are so deeply underwater, they can’t get the price they need to sell and are therefore not bothering to put their homes on the market.

“We know negative equity holds back home sales, but it also holds back the listing of sales,” said Sam Khater, an economist with CoreLogic, a company that tracks the mortgage market. “Today it is holding the market back.”

The lack of available homes is maddening for those consumers who thought 2012 would be the year to buy.

In Southern California, inventories have plunged over the last year. The number of homes listed for sale in April fell 35% in Los Angeles County and was down 42% in Orange, 39% in San Bernardino, 42% in Riverside, 53% in Ventura and 43% in San Diego counties, according to online brokerage Redfin.

The number of days a home sits on the market has also decreased, meaning properties are selling faster. For the entire six-county Southern California region, the median number of days a home sat on the market fell to 33 last April from 43 the same month a year earlier.

Eddie David and his wife, Tiana Rezac, have felt the unexpected shortage firsthand. The two were sure they would buy a house this year until they tripped into the perplexing new housing reality. After being outbid on three different properties in neighborhoods from the Westside to Atwater Village, they shelved the search.

“With the downturn, it seems like there are a lot of people who have been waiting in the wings to pounce, and because the rates are low, there is just a lot more competition,” David said. “There were multiple offers. We tried to get in on a couple other homes, and even though it had been just a week or two weeks, it was just too late.”

Alex Gruenberg and his wife, Kristina, both 27, lost out on a home that ended up going for $30,000 more than they offered. The recently married couple have new jobs in the area and are looking for a pedestrian-friendly neighborhood with decent dining options.

They are now trying to find homes before they are listed.

“We are really learning that there is sort of an inside element to that,” Gruenberg said. “Things are going in days.”

Glenn Kelman, chief executive of Redfin, said the recovery remains tentative but the market has grown competitive because sellers feel they have time on their side, while buyers feel a sense of urgency given low interest rates and relatively cheap prices compared with the bubble years.

“It is a precarious situation, but the real issue is that nobody wants to sell a house right now,” Kelman said. “So now we have classes for our real estate agents on how to win a bidding war.”

Distressed homes: 67% fewer to buy in O.C.

June 11th, 2012, by  OC Register

Distressed properties are hard to find as Orange County inventory of foreclosures and short sales have dropped by two-thirds this year.

Steve Thomas of publishes every two weeks a report on the supply of local homes for sale and the share of that inventory that’s distressed properties. His latest report — as of June 7 — says …

The distressed inventory represents only 18% of the current active inventory. In Orange County, the active distressed inventory, both short sales and foreclosures combined, continued to drop, shedding an additional 68 homes, or 6%. This segment of the housing market is by far the hottest, representing only 18% of the active inventory but 42% of all pending activity. Thus far in 2012, the distressed inventory has shed 2,121 homes, an amazing 67% drop. In the past two weeks, the foreclosure inventory increased by only 2 homes and has an expected market time of 19 days. The short sale inventory decreased by 70 homes in the past two weeks and now totals 842. The expected market time is 21 days

Some of the details …

  • 1,050 distressed Orange County properties were listed for sale — 18% of the 5,731 listed overall.
  • 1,551 new escrows were opened to buy distressed Orange County properties in the past 30 days. That is 42% of the 3,687 new pending sales countywide.
  • Thomas calculated “market time” — cross of supply and new escrows showing how long, theoretically, it would take to sell inventory. Using that “market time” math, there’s 0.68 months worth of distressed properties on the market vs. 2.19 months worth of non-distressed homes. So, distressed homes currently sell 3.2 times faster than non-distressed homes.
  • 32% of the distressed listings were foreclosures being sold by banks; 68% were short sales.
  • 42% of the distressed listings were attached homes; 58% were detached homes.
  • 34% of distressed Orange County listings were in ocean-close communities.
  • Pricey? 56 of the listed distressed homes were price above $1 million — 5% of all distressed listings.
  • Cheap? 724 of the listed distressed homes were priced $500,000 or less — 69% of all distressed listings.
  • Chart summarizes trends in Thomas’ report, distressed counts and share of all listings (plus, pending sales and market time — demand divided by inventory.)

Highlights …

All O.C. Distressed All Pct. Distress
Total 1,050 5,731 18.3%
By type of distress Pendings Listed Time (months)
O.C. foreclosures 337 208 0.62
O.C. short sales 1,214 842 0.69
By home type Distressed All Pct. Distress
Attached homes 441 1,843 23.9%
Detached 602 3,868 15.6%
By price slice Distressed All Pct. Distress
O.C. $0-$250k 230 765 30.1%
O.C. $250-$500k 494 1,488 33.2%
O.C. $500k-$750k 201 1,255 16.0%
O.C. $750k-$1m 69 707 9.8%
O.C. $1m-$1.5m 29 533 5.4%
O.C. $1.5m-$2m 15 311 4.8%
O.C. $2m-4m 9 461 2.0%
O.C. $4m+ 3 266 1.1%
By city/High share Distressed All Pct. Distress
Buena Park 34 78 43.6%
Anaheim 112 257 43.6%
Stanton 11 26 42.3%
By city/Low share Distressed All Pct. Distress
Seal Beach 250 1 0.4%
Corona Del Mar 103 3 2.9%
Villa Park 23 1 4.3%

North County leads O.C. homebuying spree

June 4th, 2012,  by  OC Register

Orange County housing hot spots are north and inland — and at the beach as countywide sales pace jumps 16%.

That’s a key highlight of our study of how recent housing trends hit various corners of Orange County. For the 22 business days ending May 16 — freshest numbers from DataQuick — our region-by-region analysis of local real estate sales patterns saw Orange County homebuying slicing up by geography this way …

  • North Inland: 771 homes sold in these Orange County ZIP codes in this most recent period, +26.6% from a year ago. This was largest year-to-year gain among the four regions. Median selling price? $434,000 in these 22 ZIPs. This most recent median price change was -9.3% in a year. North Inland accounted for 25% of recent home sales vs. 27% a year ago.
  • Beach Towns: 623 homes sold in these ZIP codes in the most recent period, +26.4% from a year ago. Median selling price? $630,000 in these 17 ZIPs. Median price change was -3.1% in a year. Beach Towns accounted for 20% of recent home sales vs. 18% a year ago.
  • South Inland: These ZIPs — median selling price $464,000 — had 933 sales, +12.0% from a year ago. In these 19 ZIPs, median price change was -1.4% in a year. South Inland accounted for 30% of recent home sales vs. 31% a year ago.
  • Mid-County: These ZIPs — median selling price $347,500 — had 784 sales, +7.0% from a year ago. This was smallest year-to-year gain among the four regions. In these 25 ZIPs, the median price change was +1.5% in a year. Mid-County accounted for 25% of recent home sales vs. 23% a year ago.

Broken down another way, total homes sales in ZIPs in the north and mid-section of Orange County were +15.9% vs. a year ago as homebuying the rest of the county ran +17.3% vs. 12 months earlier. Note:

  • All told, countywide sales were +14.9% vs. a year ago. The median selling price was $418,500 for all residences sold in this period. That’s -2.7% in the past year. Note: 408 sales — 13% of all sales — were not included in the regional analysis because ZIP location could not be determined.
  • How did your neighborhood fare? Check our ZIP-by-ZIP data HERE!
  • Vote in our latest real estate poll HERE!

Foreclosures made up 26% of U.S. home sales in first quarter

By Jessica Dickler @CNNMoney May 31, 2012 CNN Money

Homes in some stage of foreclosure accounted for more than one in four homes sales during the first three months of the year, according to RealtyTrac.

NEW YORK (CNNMoney) — Homes in some stage of foreclosure accounted for more than one in four home sales during the first three months of the year, according to a report released Thursday.

Distressed properties that were either in default, scheduled for auction or bank-owned accounted for 26% of all residential sales during the first quarter, up from 22% in the previous quarter and 25% a year earlier, RealtyTrac said.

Altogether, 233,299 distressed properties were purchased during the quarter, an 8% increase from the previous quarter. Those homes sold for an average of $161,214, 27% below the average price of a home not in foreclosure.

“Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure  typically via a short sale,” Brandon Moore, chief executive of RealtyTrac said in a statement.

Pre-foreclosure sales, which are often sold as short sales, hit a three-year high during the quarter “even as the average pre-foreclosure sales price dropped to a record low,” Moore said.

There were nearly 110,000 short sales in the quarter, up 25% from a year earlier and comprising 12% of all homes sold during the first quarter, according to RealtyTrac.

In short sales, borrowers who owe more on their mortgages than their homes are worth, agree with their bank to sell their homes at the lower market value. In return, the bank agrees to absorb the loss.

During the quarter, homes sold in short sales went for an average price of $175,461, the lowest level since RealtyTrac began tracking foreclosures in 2005.

Short sales are becoming the preferred method for banks to unload properties in default.

Banks typically get about 20% more for a short sale than they would for a foreclosed home. In addition, short sale deals get done much more quickly than foreclosures, which can take years to unload, during which expenses, like property taxes and insurance, mount up.

During the first quarter, it took an average of 306 days to complete a short sale, compared to 370 days for a foreclosure.

“Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions,” Moore said.

Meanwhile, sales of properties repossessed by the banks, called REOs, fell 15% year-over-year to 123,778, comprising 14% of all sales during the quarter.

Nevada, where housing bubbled during the boom and sank during the bust, had more distressed property sales than any other state, followed by California and Georgia, RealtyTrac said.