Month: January 2013

$1 million home sales hit highest level in five years

January 30th, 2013,  by 

 OC Register

DataQuick reported Wednesday that 3,631 Orange County homes sold for $1 million or more in 2012, the highest number since 2007.

That’s up 34 percent from 2011′s tally of $1 million-plus sales, compared with an increase of 17 percent for sales of all homes in the county.

Statewide, $1 million-plus sales increased 27 percent to 26,993, vs. an 8.2 percent increase for sales in all price ranges. A record number of California buyers — 7,791 or 29 percent — paid all cash for their mansions, DataQuick reported.

In addition, four Orange County ZIP codes ranked among 25 in the state with the most million-plus sales: Newport Beach’s Back Bay area (92660) had 362 $1 million-plus home sales, the report said. Laguna Beach (92651) had 307, Corona del Mar (92625) had 256 and Newport Coast (92657) had 228.

DataQuick attributed the increase in luxury sales to a recovering economy, rising home prices and a record number of cash purchases. And one local agent has said that confidence in the market has returned to high-end buyers.

“Buyers and sellers in the prestige market tend to respond to different motivations and incentives than the rest of the market,” said DataQuick President John Walsh. “Job security, down payment sizes and mortgage interest rates don’t play the same role. Returns on investments in a low interest-rate financial environment and safe-haven investing do play a role.”

Top O.C. home sales of 2012
Rank Address City Sale Date Sale Price
1 2692 Bayshore Dr. Newport Beach 9/13/2012 $22 million
2 3 Montage Way Laguna Beach 9/13/2012 $20 million
3 1 Pelican Hill Road N. Newport Coast 6/29/2012 $19.4 million
4 819 Via Lido Soud Newport Beach 8/1/2012 $18 million
5 3 Camel Point Dr. Laguna Beach 12/31/2012 $17.5 million
6 168 Emerald Bay Laguna Beach 7/5/2012 $16 million
7 103 Shorecliff Rd. Corona Del Mar 4/23/2012 $15 million
8 107 Shorecliff Rd. Corona Del Mar 2/9/2012 $14.5 million
9 40 Deep Sea Newport Coast 11/7/2012 $14.3 million
10 2529 South Coast Hwy. Laguna Beach 12/26/2012 $14 million
10 887 Cliff Dr. Laguna Beach 6/14/2012 $14 million
12 44 Blue Heron Irvine 3/5/2012 $12.8 million
13 2495 Ocean Blvd. Corona Del Mar 6/12/2012 $11.8 million
14 1604 South Bay Front Newport Beach 10/22/2012 $11 million
14 9 Avalon Vis. Newport Coast 3/8/2012 $11 million
16 1 Shell Newport Coast 2/25/2012 $10.9 million
17 1220 West Bay Ave. Newport Beach 9/29/2012 $10.5 million
18 2137 Bayside Dr. Corona Del Mar 3/30/2012 $10.2 million
19 7 Troon Dr. Newport Beach 11/13/2012 $10 million

Last year’s pace of luxury buying in Orange County was the fifth-highest of the past 12 years. The record was set in 2005 when 8,169 million-plus sales occurred.

Orange County accounted for one-fourth of all million-plus sales in Southern California’s seven counties and was second only to Los Angeles County — which has three times Orange County’s population — in million-plus sales in the region.

Orange County had at least 20 homes that sold for $10 million or more last year, the priciest of which was the waterfront home on the north edge of Newport Harbor that sold for $22 million, according to the real estate site Redfin.com. The Bayshore Drive home, which had 8,355 square feet, once belonged to actor Nicolas Cage, who sold it for a record $35 million in 2008.

The second-priciest home, located on the front row of the beachfront Montage Laguna Beach resort, sold for $20 million. The third-priciest was the 17,000-square-foot Villa del Lago mansion. The unfinished home was sold as-is during a bankruptcy court-approved auction for $19.4 million.

The most expensive confirmed purchase last year was an 8,930-square-foot, four-bedroom, 4 1/2-bathroom home in Woodside. Built in 2005, the nine-acre property sold in November for $117.5 million.

The state’s largest million-plus home  sold last year was a 20,248 square-foot, seven-bedroom, 13-bathroom mansion in Bel Air.

At least seven California communities had minimum home prices of $1 million or more: They are Santa Monica, San Marino, Rancho Santa Fe, the Marin County town of Ross, Los Altos, Atherton and Hillsborough.

Newly-built homes accounted for 4.9 percent of last year’s $1 million-plus sales, down from 5.9 percent in 2011. Condo sales made up 9.2 percent.

The median-sized home that sold for $1 million or more was 2,641 square feet, with four bedrooms and three bathrooms. The median price paid per square foot for all million-dollar homes in 2012 was $641, up 5.5 percent from $607 in 2011.

For the overall California market, the square-foot median was $162 last year.

Lansner: By many counts, home prices rising

By JONATHAN LANSNER
Business Columnist
ORANGE COUNTY REGISTER

Jan 30th 2013

Our periodic review of economic trends ponders the growing body of evidence of a serious home-price rebound.

NEWS: The widely watched S&P/Case-Shiller home price index came out Tuesday. The benchmarks – derived from tracking gains and losses on home sales on a 90-day moving average – showed that home prices in 20 key cities for November were collectively up at a 5.5 percent annual rate. S&P said 19 of the 20 cities – minus New York – had price gains in the year.

Article Tab: CoreLogic's Mark Fleming says his index's upswing suggests prices will remain strong. The gains made in 2012 will likely be sustained into 2013.
CoreLogic’s Mark Fleming says his index’s upswing “suggests prices will remain strong. The gains made in 2012 will likely be sustained into 2013.”

MORE EVIDENCE: If you need convincing that appreciation is back, please consider:

•DataQuick tracks a median selling price of results in 98 major U.S. markets on a weekly basis. This index showed selling prices up 13 percent, year-over-year, in its last December reading. I’ll note – for the skeptics – that the latest reading, as of Jan. 24, showed prices gaining at just a 9.2 percent annual rate, the slowest appreciation since June.

•The final national price index for 2012 from Truckee-based Clear Capital showed prices up 4.9 percent last year. Prices in Western states led the pack, up 11.9 percent, by this math.

•CoreLogic, data trackers from Irvine, put nationwide price gains, year-over-year, at 7.4 percent in November. By this math, that’s the fastest rate of appreciation since May 2006 and the ninth consecutive year-over-year gain.

•Number crunchers at FNC – a spinoff of the old Fidelity Title from Orange County – look at both sales transactions and appraisals to build their index. FNC finds: For the 12 months ending in November, U.S. home prices rose 4.2 percent – the largest year-over-year increase since October 2006

•The Federal Housing Finance Agency’s price index shows U.S. homes up 5.6 percent in the year ended in November. This index tracks data from loans bought by large government agencies and is seen as a gauge of what’s up with more modestly priced homes.

VERDICT: What they’re saying …

•S&P’s David Blitzer: “Housing is clearly recovering. Prices are rising as are both new and existing home sales. Existing home sales in November were the highest since November 2009. New home sales were the highest since June 2010. These figures confirm that housing is contributing to economic growth.”

•CoreLogic’s Mark Fleming says his index’s upswing, “suggests prices will remain strong. The gains made in 2012 will likely be sustained into 2013.”

•Clear Capital’s Alex Villacorta: “Whether by perception or actual decrease in buying power for the average consumer, residual effects of the fiscal cliff deal could cause housing to change course. … 2013 should be interesting for the housing market, where national gains should continue to see upward growth but likely at a more modest rate.”

FHA raises mortgage insurance, for life of loan

By Christina Mlynski housing wire.com

• January 30, 2013 • 1:11pm

Federal Housing Administration Commissioner Carol Galante announced a series of changes to be issued this week that will allow the agency to better manage risk and further strengthen the health of the Mutual Mortgage Insurance Fund.

FHA will increase its annual mortgage insurance premium for most new mortgages by 10 basis points, or 0.10%. Premiums on jumbo mortgages — $625,000 or larger — will also increase by 5 basis points, or 0.5%, to maximum authorized annual mortgage insurance premium. These increases exclude certain streamline refinance transactions.

The FHA will also require most borrowers to continue paying annual premiums for the life of their mortgage loan.

In 2001, the FHA cancelled required MIP on loans when the outstanding principal balance reached 78% of the original principal balance. However, FHA will remain responsible for insuring 100% of the outstanding loan balance throughout the entire life of the loan, a term which often extends beyond the cessation of these MIP payments.

The MMI Fund has foregone billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012 because of this automatic cancellation policy, the FHA’s Office of Risk Management and Regulatory Affairs said.

Thus, the FHA will collect premiums based upon the unpaid principal balance for the entire period for which FHA is entitled, permitting FHA to retain significant revenue that is currently being forfeited prematurely.

“These are essential and appropriate measures to manage and protect FHA’s single-family insurance programs” said Galante.

She added, “In addition to protecting the MMI Fund, these changes will encourage the return of private capital to the housing market, and make sure FHA remains a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers.”

The series of changes will also include home equity conversion mortgage consolidation, requiring manual underwriting on loans with decision credit scores below 620 and DTI ratios over 43%, raising down payments on loans above $625,000, access to FHA after foreclosure and continuing efforts to improve risk management.

The FHA will also step up its efforts for approved lenders with regard to aggressive marketing to borrowers with previous foreclosures, while also reminding lenders of their duty to fully underwrite loan applications. All new loans must meet FHA guidelines.

Through a Federal Register Notice, the FHA will announce a proposal to increase down payment requirements for mortgages that have original principal balances above $625,000. The minimum down payment requirement for these mortgages will increase from 3.5% to 5%.

Additionally, the FHA will require lenders to manually underwrite loans of which borrowers have a credit score below 620 as well as a total debt-to-income ratio greater than 43%. Thus, lenders will be required to document compensating factors supporting underwriting decisions to approve loans where parameters are exceeded.

All of these changes will further contribute to the efforts made throughout the Obama Administration’s tenure to improve risk management at the FHA as well as protect the MMI Fund, Galante suggested.

As a result of these commitments, the changes made during the past four years have added more than $20 billion in value to the MMI Fund, the FHA said Wednesday.

Home selling season isn’t waiting until spring this year

There are indications of an unusually early start to the 2013 season as buyers rush to get off the sidelines before home prices and mortgage rates go higher.

January 20, 2013|By Kenneth R. Harney
LA Times
WASHINGTON — Could we be looking at an early spring this year — not in meteorological terms but real estate? Could the chilly December-to-February months, which traditionally see fewer buyers out shopping for houses compared with the warmer months that follow, be more active than usual? And if so, what does this mean to you as a potential home seller or buyer?
There is growing evidence, anecdotal and statistical, that there are more shoppers on the prowl in many parts of the country than is customary for this time of year, more people requesting “preapproval” letters from mortgage companies, more people visiting websites offering homes for sale and more people telling pollsters that they expect home prices to continue rising and that the worst of the housing downturn is long past. There is even data showing that during holiday-distracted December, there was a jump in visits to homes listed for sale.

Coldwell Banker, one of the largest brokerages in the country, says traffic to its listings website was up 38% during the last month, compared with year-earlier levels. ZipRealty, an online brokerage based in Emeryville, Calif., reports that its website has seen an unusual 33% increase in home shoppers in the first half of January compared with December.

Redfin, a Seattle brokerage, found that during the week of Dec. 30, shoppers requesting home tours by agents jumped 26% over the four-week average, and 9% compared with the same week the year before.

Economists at the National Assn. of Realtors report that foot traffic at houses listed for sale in well over half of all markets around the country was higher in December than the year before. Given the strong December reading, says Paul C. Bishop, vice president for research at the association, sales in the coming weeks should be “robust.”

Even in markets that typically hibernate until the snow melts, there are indications of an unusually early start to the 2013 season. Joe Petrowsky, president of Right Trac Financing Group, a mortgage company near Hartford, Conn., says he has received a much higher volume of requests for “preapproval” letters — which tell sellers that a purchaser is qualified for a mortgage loan — compared with what’s typical at this time of year.

“I’m seeing twice as many buyers this January as last January,” Petrowsky said. “People have finally figured out that prices are moving up, interest rates are really low, and they don’t want to miss out on the opportunity.”

In the Washington, D.C., area, Long & Foster Real Estate, the country’s largest independent broker, reports strong “signs that we are going to have an early spring” in terms of home sales. In an unusual occurrence for January, according to Steve Wydler, a Long & Foster agent in Northern Virginia, “multiple offer situations are becoming increasingly common, with prices being escalated above asking price.”

Gretchen Castorina, an agent with brokerage firm Allen Tate in Chapel Hill, N.C., says “spring started last month” in terms of new clients and multiple-bid competitions. Even in the dark final days of December, Castorina says she was busy. “I was showing houses on Dec. 31,” she said, and had written a contract for buyers just before Christmas.

Jo Ann Poole, an agent with Simi Valley Real Estate, says that for a variety of reasons, “in the last 10 days people have figured it out” and are making real estate moves that might have normally been pushed back into the spring months.

Polling by Fannie Mae, the government-backed mortgage investor, may shed some light on what’s motivating buyers. In a survey of 1,002 adults in December, Fannie found the highest share of consumers in the survey’s 21/2-year history who expect home prices to rise during the coming 12 months. Forty-three percent expect mortgage rates to jump, and 49% believe that the cost of renting will increase.

Roll all this together, says Doug Duncan, Fannie’s chief economist, and you can see why consumer sentiment “could incentivize those waiting on the sidelines … to buy a home sooner rather than later” — pushing spring behavior into midwinter.

What’s missing from this equation? More owners listing their homes for sale. Inventories of available homes are down in most markets, mainly because many sellers are under the impression that it’s still a buyer’s market filled with low-ballers who won’t pay them a fair price. In many parts of the country, that is last year’s news. In 2013, it’s simply no longer the case.

Home sales dipped in December, but hit 5-year high in 2012

NBC News staff and wire reports

Jan 22nd 2013

Sales of existing homes slipped in December, but still closed out 2012 with the highest level since 2007 thanks to lower mortgage rates and steady hiring.

Sales of previously-owned homes declined 1.0 percent last month, The National Association of Realtors said Tuesday, to a seasonally adjusted annual rate of 4.94 million units. While that rate was below expectations, it was still the second highest rate of sales since November 2009, when a federal tax credit for home buyers was due to expire.

The NAR said that sales reached 4.65 million last year. That’s up 9.2 percent from 2011 and the most since 2007. Sales are still below the roughly 5.5 million that are consistent with a healthy market.

The supply of available homes is shrinking as sales rise. That’s pushing up prices. The inventory of homes for sale dropped to 1.82 million in December, the lowest in 12 years.

Still, the housing market is recovering and most analysts expect that should continue this year.

Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped boost sales and prices in most markets.

“Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” said NAR chief economist Lawrence Yun.  “The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices.  Likely job creation and household formation will continue to fuel that growth.”

A measure of U.S. home prices rose 7.4 percent annually in November, real estate data provider CoreLogic said last week. That’s the biggest annual increase since 2006, when the housing bubble began to burst. CoreLogic forecasts that home prices will rise 6 percent nationally this year.

Rising demand for homes has persuaded builders to step up construction, which adds to economic growth and hiring.

U.S. builders started work on homes in December at the fastest pace in 4 ½ years, the government said last week. And builders finished 2012 as their best year for residential construction since the early stages of the housing crisis.

The gains in home building helped boost construction hiring in December by 30,000 jobs — the most in 15 months.

The Associated Press and Reuters contributed to this report.

Interest rates: The big freeze

By Zain Asher, Lauren Gensler @Money January 22, 2013

CNN Money

(Money Magazine)

Anxious for interest rates to rise in 2013? Take a chill pill.

The low rates of the past few years — which have warmed the hearts of mortgage applicants but been cold comfort to savers — are unlikely to budge soon. For that, thank (or blame) the Federal Reserve.

To spark growth, the Fed is aiming to keep the influential rate at which banks lend one another money between 0% and 0.25%, and it expects that number to be “exceptionally low” until at least mid-2015.

“This is unprecedented,” says Baltimore financial planner Tim Maurer. “We’ve never had such low interest rates for such a long period of time.”

Here are savings and credit strategies suited to the current climate:

MORTGAGES

Freeze your rate. Buying a home? Rates are at 40-year lows, so lock yours in with a fixed-rate mortgage; interest on a 30-year fixed was 3.57% in January.

“It’s a sure thing,” says Keith Gumbinger of mortgage data provider HSH.com.

Lower your term. Refinancing? If you’re certain to move within a few years, consider an adjustable-rate mortgage; initial rates on five-year ARMs were 2.68% in January.

Otherwise, use low rates to shorten your mortgage’s term and cut interest costs. Should going from a 30-year mortgage to a 15-year be too big a payment hike, get a 20-year version. (About 15% of refinancers opt for a 20-year, says the Mortgage Bankers Association, up from 12% in 2011.)

You’d pay $905 a month on a 30-year $200,000 mortgage, $1,370 on a 15-year, but only $1,165 on a 20 (though 20-year loan rates are only slightly lower than 30-year rates). Run the math with the mortgage calculator at bankrate.com.

SAVINGS

Go long on CDs. Amid weak rates, park cash in a long-term CD with low withdrawal penalties, says Colorado Springs financial planner Allan Roth.

Put $50,000 in an Ally Bank (ally.com) five-year CD, lately yielding 1.58%; if rates rise, walk away in two years with $1,469 in interest (after a charge that cuts your rate to 1.45%). The same money in an average two-year CD yielding 0.45% would net only $451.

Beware rising-rate come-ons. Banks’ new lure for savers: CDs with an option for a higher yield if rates rise. The catch is that you usually get a low initial rate.

“Shop around. Compare the rising rates with the fixed equivalent,” says Larry Swedroe, research director at Buckingham Asset Management in St. Louis.

The best of the bunch: a one-year rising-rate CD from CIT Bank (bankoncit.com), yielding 1.05% in January.

Go with the locals. For cash you need regular access to, you’ll get the best rates at online banks. Union Federal Savings (unionfsb.com), for one, paid 1.05% in January.

If you want a nearby brick-and-mortar bank, though, think small. Michigan’s Alden State Bank offers 0.30% on savings, vs. 0.01% from giant Bank of America.

“Community banks are somewhat less affected by the Fed and more by local demand,” says Casey Bond, managing editor of GoBanking Rates.com. Go to findbankrates.com for the best rates in your area.

CREDIT CARDS

Rates are high, but you can still find good deals.

Transfer a balance. With card issuers in no hurry to lower rates — the average is nearing 15% after more than two years in the 14% range — a good way to land a rock-bottom rate is with a balance-transfer offer.

The best deal now: The Chase Slate Card, which has 15 months of 0% APR on purchases and transfers, plus no fee to transfer balances within the first 60 days.

As with other credit card come-ons, issuers reserve their most enticing transfer offers for top-tier prospective customers. To join that club, says Ben Woolsey of CreditCards.com, you’ll need a credit score above 750, up from 725 in 2008.

Get your reward. If you’re not the type to carry a balance, go for a rewards card. Cash back is a hot deal, with initial rewards 20% more lucrative than last year, reports Cardhub.com.

The Capital One Cash Rewards Card offers a $100 reward for spending $500 in the first three months, 1% cash back on all purchases, plus an extra 0.5% bonus at each year’s end.

15,000 OC homeowners no longer under water

January 18th, 2013, by 

 OC Register

Rising home prices have pushed more than 15,000 Orange County homeowners above water during the first nine months of 2012, housing data firm CoreLogic reported.

Last summer 96,706 Orange County homeowners were under water — that is, they owed more on mortgages than their properties are worth. That’s 17.5 percent of all homeowners with a mortgage, CoreLogic said.

 

Click to enlarge

That’s down 15,574 from the number of underwater homes at the end of 2011.

An additional 21,501 homeowners may still be “locked out” of the market because their homes are worth no more than 5 percent above what they owe on their mortgages.

All 112,280 under water or nearly under water homeowners likely would face a loss if they sell their home because closing costs and real estate commissions would eat up any potential profits.

Still, rising home prices will free up more homeowners in the year ahead, said Esmael Adibi, director of Chapman University’s Anderson Center for Economic Research. Chapman forecast that Orange County home prices will rise 6.8 percent in 2013.

“Clearly, that’s going to help people who are underwater, and they’ll be able to sell,” Adibi said. “As long as home prices are shoring up and showing improvement, that’s going to bring people more in line with their mortgages or (allow them) to sell.”

One fifth of owner-occupied Orange County homes still have so little equity in their homes that options for selling their homes without a loss are limited.

Adibi said underwater homeowners have four options: Continue paying the current mortgage; negotiate a loan modification that decreases their mortgage debt and monthly payments; sell at a loss; or go through a foreclosure or “short sale” for less than the amount owed on the loan.

Lenders have built up their bad-loan reserves in recent years and are more likely to negotiate loan modifications, further reducing the number of underwater borrowers, Adibi said.

Nationwide, CoreLogic reported that 10.7 million U.S. homeowners were under water last summer, representing 22 percent of all residences with a mortgage. Since the start of the year, 1.4 million borrowers nationwide have been pushed above water, the data firm reported.

“The number of underwater borrowers declined significantly,” said CoreLogic Chief Economist Mark Fleming. “The substantive gain in house prices made in 2012, partly due to tight inventory caused by negative equity’s lock-out effect, has paradoxically alleviated some of the pain.”