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Featured Real Estate Social

Higher prices, fewer distressed sales in August

Fast-rising home prices are helping financially strapped homeowners, as fewer mortgages are underwater, pushing equity sales to the highest level in August since late 2007.

Equity sales – basically deals where homeowners walk away with money in their pocket – increased to 84.7% in August, compared to 82.9% in July and only 62% in August 2012, according to the California Association of Realtors. Equity sales have declined in 18 of the past 19 months.

Equity sales are now at the highest level since November 2007, and short sales were only 10.2% of the market in August, the lowest percentage since February 2009.

About one of every four homes with mortgages is underwater.
About one of every four homes with mortgages is underwater.

Twenty-five of the 38 counties tracked – some counties have too few sales to report – had a monthly decrease of distressed sales in August compared to July, with several counties in the single digits.

Siskiyou and Lake counties had the largest percentage of distressed sales at 37% and 34%, respectively. San Mateo County had the lowest at 3%.

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Featured Real Estate Social

CAR: Double-digit price gains will give way to smaller increases as more homes listed in 2014

California home prices will increase at a more modest pace in 2014, as primary homebuyers rather than investors become more prevalent in the market.

The state’s median home price – meaning half the homes sell for more, the other half for less – will increase 6% in 2014, compared to the projected 28% rise this year, according to the California Association of Realtors. California has enjoyed double-digit gains for the past several months, as foreclosed homes and investors flock into the market.

Annual home sales will improve 3.2% to 444,000 units, a slight gain from projected sales in 2013. Home sales are expected to be down a modest 2.1% this year compared to 2012.

A home for sale in East Sacramento.
A home for sale in East Sacramento.

“The housing market has improved over the past year, and we expect the trend to continue into 2014,” says CAR president Don Faught. “As the economy enters the fourth year of a modest recovery, we expect to see a strong demand for homeownership, as buyers who may have been competing with investors and facing an extreme shortage of available housing return from the sidelines.”

Many communities are reporting faster-than-average home sales in recent months, especially in the Bay Area where almost half of the homes listed are sold within two weeks, according to a recent Redfin report.

“We’ve seen a marked improvement in housing market conditions in a year with the distressed market shrinking from one in three sales a year ago to less than one in five in recent months, thanks primarily to sharp gains in home prices,” says CAR vice president and chief economist Leslie Appleton-Young. “As the market continues to improve, more previously underwater homeowners will look toward selling, making housing inventory less scarce in 2014. As a result of these factors, we’ll see home prices moderately from the double-digit increases we saw for much of this year to mid-single digits in most of the state.”

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Real Estate

Corelogic: Only 1% of homes enter foreclosure in July

A booming housing market has closed the door on many foreclosures in the Golden State, with less than 1% of mortgages in trouble in July.

A better economy and fast-rising home prices have allowed more financially strapped homeowners to remain rather than walk away from their properties, according to industry tracker Corelogic.

In fact, California, which often battled Arizona and Nevada for the foreclosure title a few years ago, has become one of the best-performing states.

California’s 0.9% foreclosure rate is among the lowest, rivaling Colorado, Nebraska and North Dakota. Wyoming has the lowest rate at 0.4%, followed by Alaska, according to Corelogic.

In comparison, Florida has the highest foreclosure rate at 8.1%, followed by New Jersey and New York at 5.9% and 4.7%, respectively. The national rate was 2.4% in July.

However, California has the second-most foreclosures in the nation during the past year, with about 65,000 homes returning to lenders. But the figure is largely because of the sheer number of homes – and mortgages – in the state.

The Inland Empire – Riverside and San Bernardino counties – accounted for about one of every five foreclosures in the state (13,314) during the past year. The Inland Empire had the fifth-most foreclosures in the country, but only half as many as front-runner Atlanta with 26,000.

Los Angeles ranked No. 8, with 10,725 foreclosures, while Sacramento 6,058 since July 2012, placing the capital region at No. 15.

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Employment

Unemployment rate unexpectedly rises to 8.7% in July

California’s jobless rate inched higher in July, ending five months of falling rates, according to the state Employment Development Department.

The jobless rate increased to 8.7% in July, compared to 8.5% in June and 10.6% in July 2012. However, the state added 38,100 jobs in July, and gained 807,700 positions since the recovery started in February 2010.

Seven categories – including manufacturing, transportation, information, professional services, and education and health services – combined to add almost 50,000 jobs last month. Professional services added the most, with 15,000 positions.

Construction and government cut about 11,400 jobs in July, with construction – a bright area in recent months – eliminating 7,300 positions.

The Bay Area continues to enjoy the lowest jobless rates, with Marin at 5.3% in July. San Mateo and San Francisco followed at 5.7% and 5.9%, respectively.

Despite a better economy and job creation, more than half of the state’s 58 counties reported double-digit jobless rates in July. Agriculture-dependent Imperial County had the highest rate at 26.1%. The county has 19,800 job-seekers, more than double the number in larger Marin County.

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Real Estate

CAR: Home prices increase 29.8% in July, sales end six-month slide

Higher interest rates failed to halt homeowners in July, as sales increased at the best pace in more than a year and double-digit price gains continued for the 13th-consecutive month.

Closed escrow sales climbed to an annual rate of 443,520 homes in July, a 7% increase from July 2012, according to the California Association of Realtors. The year-to-year sales increase was the first since December, and ended six consecutive months of declines.

Thirty-year, fixed-interest mortgage rates inched up to 4.37% in July, compared to 4.07% in June and 3.55% in July 2012.

“The spike in interest rates in June prompted homebuyers to delay escrow closings in hopes that rates would fall back,” says California Association of Realtors President Don Faught. “As buyers recognized rates had stabilized, they moved forward to close escrow, which lifted July’s sales from both the previous month and year.”

July’s median-home price – meaning half the homes sold for more, the other half for less – reached $433,760, a 29.8% increase from a year ago. Home prices have increased 17 straight months.

newport beach 1Marin County is the priciest market at $1 million – the only county above the million-dollar threshold – followed by San Mateo County at $919,000. Glenn and Siskiyou counties had the lowest median price at $140,000 in July.

“A constrained supply of homes over the past year has fueled robust home price increases, particularly in the coastal regions,” says Leslie Appleton-Young, vice president and chief economist for CAR.

“Looking ahead, we should continue to see strong price growth but at a less accelerated pace than what we’ve experienced over the past year,” she says. “Inventory areas are starting to build in some areas as price gains free up previously underwater homes and encourage homeowners reluctant to list because of the scarcity of homes to purchase.”

Some closely watched figures remained steady last month – the available supply of homes for sale was 2.9 months and the average days on the market was 29 days, according to CAR.

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Featured Real Estate Social

Foreign, mom-and-pop investors help fuel investment market

More than one of every three home investors plans to sell their properties within a year, according to a recent report from the California Association of Realtors.

Fast-rising home prices – double-digit year-over-year gains for 13 consecutive months – historically low interest rates and a recently struggling stock market have encouraged more investors to look at real estate during the past four years.

Three of every four investors are considered mom-and-pop buyers, owning less than 10 investment properties – with about half of those owning two to five homes.

About one of every four investors was a foreign buyer, with many from China, India and Mexico.

A house for rent in southwest Sacramento.
A house for rent in southwest Sacramento.

The median-home price for an investment property was $272,500, allowing two-thirds of investors to pay cash. And 80% of those investors spent at least $10,000 in repairs for those properties. Homes under $250,000 required a larger percentage of repairs than those above $500,000, 4.2% vs. 3.4% of the purchase price.

Finally, two-thirds of investors manage their own properties.

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Real Estate

Foreclosures at second-lowest level since 2005

More homeowners are making their monthly mortgage payments and avoiding foreclosure, as fast-rising home prices are easing the number of underwater loans.

Mortgage lenders filed 25,747 notices of default during the second quarter, a 38.7% increase from the first quarter – but also the second-lowest filings in seven years, according to DataQuick. The just-completed quarter is off 53% from second-quarter 2012.

First-quarter filings were the lowest since fourth-quarter 2005, according to the San Diego-based industry tracker.

“At this point in the cycle, it’s fairly straightforward to see what’s going on,” says John Walsh, president of DataQuick. “Just do the math, it’s not calculus, it’s fourth-grade arithmetic. A foreclosure only makes sense when the home is worth less than what is owed on it. As home values rise, fewer homeowners owe more on their homes than the homes are worth.”

California’s median-home price climbed 14.7% to $344,000 during the second quarter, compared to $300,000 in the first quarter, according to DataQuick (the California Association of Realtors has a much higher median price for the quarter). And current home prices are up 27.4% from the $270,000 a year ago.

The state’s median price peaked at $485,000 in second-quarter 2007, and bottomed at $235,000 in second-quarter 2009, according to DataQuick.

San Francisco, Santa Clara and San Mateo counties boasted the lowest percentage of homes falling into foreclosure, while Fresno, Riverside and Solano counties were the highest.

Counties with the most-affordable homes – below $200,000 – were the most likely to endure foreclosures, according to DataQuick.

About 2.2 homes per 1,000 homes entered foreclosure in the most-affordable ZIP codes. Only 1 per 1,000 homes entered foreclosure in homes priced from $200,000 to $800,000, and a paltry 0.3 per 1,000 homes in neighborhoods of $800,000-plus properties.

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Featured Real Estate Social

Fewer home shoppers able to buy with fast-rising prices, higher interest rates

California homeowners are cheering double-digit price gains, but home-shoppers are jeering, as more are unable to purchase their piece of the American Dream.

Fast-rising home prices coupled with higher interest rates – 3.64% today vs. 2.82% a year ago — have greatly curbed the number of families able to buy homes in recent months.

Only 36% of homebuyers could afford the median-priced home during the second quarter, the first time affordability dropped below 40% since third-quarter 2008, according to the California Association of Realtors.

Affordability was at 44% in the first quarter, and 51% in second-quarter 2012, according to the industry association.

The Bay Area is the most expensive market in California.
The Bay Area is the most expensive market in California.

How much does fast-rising home prices affect affordability? The average homebuyer needed to earn at least $80,000 to qualify for the median-priced home of $415,770 during the just-completed quarter.

Homebuyers who earned $62,400 per year could afford the median-priced home — $316,490 – a year ago.

The Bay Area, as always, remains the most difficult market for homebuyers. Only 17% of homebuyers could afford homes during the second quarter in San Francisco and San Mateo. A year ago, about one of every four homeowners could afford a home in those counties.

Santa Barbara was the second-least affordable market at 18%.

Madera County – just north of Fresno – remains the most affordable market, at 71%. But even that county’s affordability has dropped from 77% a year ago.

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Economy

Cash collection disappoints, but deficit borrowing will be lowest in four years

California’s cash balance was 6% lower than estimates, largely with a drop in personal income taxes.

The state collected $4.8 billion in July, compared to projections of $5.1 billion, according to the State Controller’s Office.

“Reflective of the state’s improving fiscal health, California’s upcoming cash flow for borrowing is shaping up to be the smallest in four years,” says State Controller John Chiang. “While this month’s numbers disappoint, reaction must be tempered by the fast that July is often the state’s least significant revenue collection month.”

California State Controller John Chiang.
California State Controller John Chiang.

Personal income taxes were $273 million – or 7% — lower than projections in the state budget. Corporate taxes and sales-tax revenue were up 4.9% and 0.9% from projections.

The state ended the month with a cash deficit of $10.9 billion, covered with internal borrowing from other funds.

California will only need about $5.5 billion in short-term borrowing this fiscal year, the lowest in four years – and about half the amount in 2012-13, Chiang says.

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Economy Featured Social

CalPERS enjoys 12.5% annual gains, thanks to real estate, stocks

Real estate and stocks generated a nifty performance during the just-completed fiscal year for California Public Employees’ Retirement Service (CalPERS).

The massive pension fund enjoyed a 12.5% gain during the fiscal year, outperforming its benchmark by 1.5 percentage points, officials say. The annual increase easily outpaces 20- and 25-year returns, and allows CalPERS to meet its current and future obligations for retirees.

Stocks led the way, with a 19.0% increase, followed by private equity at 13.6% and real estate at 11.2%. Income-generating properties — such as office, industrial and retail – accounted for much of the gains in real estate.

“When things got rough, we didn’t panic,” says Joe Dear, chief investment officer for CalPERS. “We stuck with our exposure to growth assets and applied the lessons we learned from the past. The numbers show is that our approach is working.”

CalPERS assets topped $257.8 billion at the end of June.

“CalPERS is a long-term investor and we try to not focus too much on one year of performance,” says Henry Jones, chairman of the CalPERS Investment Committee. “But, obviously, 12% is a great number and we’re pleased with the performance.”

CalPERS is the nation’s largest pension fund, administering benefits for 1.6 million current and retired public workers.