Bidding wars and double-digit price gains are greatly increasing the number of equity sales – and reducing bank-owned transactions.
Almost four of every five home sales (78.2%) were equity transactions in May, meaning the homeowner leaves with some money in her pocket. The current rate compares to 75.6% in April and only 55.8% in May 2012, according to the California Association of Realtors.
It’s a dramatic about-face for the housing market, where more than half of all home deals were distressed sales just a few years ago.
In fact, short sales dropped to 14.0% of transactions in May, compared to 21% a year ago – and the lowest level since July 2009. And bank-owned sales, also known as REOs, fell to 7.3% in May vs. 22.8% a year ago.
Five counties – Contra Costa, Mendocino, San Diego, San Mateo and Santa Clara – reported single-digit percentages of distressed sales.
But just as coastal counties are thriving, several inland areas continue to struggle. More than half of Madera County’s deals were distressed sales (52%) in May, followed by nearby Stanislaus County at 40%. And distressed sales were at least one of every three deals last month in six other counties, according to CAR.
Foreclosures fell to the lowest level in more than seven years during the fourth quarter in California, the latest evidence of a better housing market and an improving economy.
Notices of default declined to 18,567 notices of default from January through March, a 51.4% percent drop from fourth-quarter 2012 – and off 67% compared to a year ago, according to DataQuick. Notices of default – the first step in the foreclosure process – peaked at 135,431 in first-quarter 2009.
The just-completed quarter’s default notices were the lowest since fourth-quarter 2005, the final months of the housing boom and just before the housing market slide. However, foreclosure activity remains higher than the historic average.
“Foreclosure starts were already trending much lower last year because of rising home prices, a stronger labor market and the settlement agreement between the government and some lenders,” says John Walsh, president of DataQuick. “But it appears last quarter’s drop was especially sharp because of a package of new state foreclosure laws – the Homeowner Bill of Rights – that took effect January 1. Default notices fell off a cliff in January, then edged up.”
Fast-rising home prices definitely helped curb foreclosures. California’s median-home price – meaning half the homes sell for more, the other half for less – increased to $297,000, a 22.7% gain from a year ago, according to DataQuick.
Default notices were higher in the state’s most affordable neighborhoods, with the average homeowner almost nine months and $14,300 behind on their payments.
Most of the loans entering default are from the 2005-2007 period, when weak underwriting was at its peak.
As expected, coastal communities – where home prices are higher and have rebounded faster – report fewer foreclosures than inland areas, such as the Inland Empire and central San Joaquin Valley, at least based on the percentage of filings
Despite the dramatic drop, Walsh adds foreclosures could increase, especially with home prices and refinancing critical to the turnaround.
“It’s certainly possible foreclosure starts will pick up at some point this year if lenders need to play a lot of catch-up,” he says. “Rising home prices will be key to the final mop-up of the foreclosure mess. As values rise, fewer people owe more than their homes are worth and more people can refinance into a more favorable loan. It also means more who fall on hard times can sell their homes for enough to pay off the loan.”
California’s economy will continue to improve during the next three years, benefiting from the much-improved housing market, according to a new report.
But job growth and personal income gains will be modest, at best, especially compared to the historic rate, according to the UCLA Anderson Forecast.
UCLA Anderson senior economist Jerry Nickelsburg says the jobless rate will dip to an average of 9.6% this year, before dropping to 8.4% and 7.2% during the next two years. Real personal income growth – a closely watched figure that greatly affects consumer spending – will improve 1.4% this year, and peak at 3.6% in 2014 before sliding to 3.3% in 2015.
California’s economic growth, which has been buoyed by exports, will likely mirror the national estimates of 1.9% this year before climbing to 2.8% and 3.1% in 2014 and 2015, respectively, according to UCLA Anderson Forecast senior economist David Shulman.
A better economy, easier-to-find credit and higher trade-in values helped new-car sales increase for the 15th-consecutive quarter, the latest evidence of improving consumer confidence in California.
Fourth-quarter accelerated 22% compared to a year ago, and annual registrations reached 1.6 million vehicles, a 25.3% increase vs. 2011, according to the California New Car Dealers Association in Sacramento. Basically, registrations and sales are the same, since buyers must register their vehicles.
New-car sales are critical to the California economy, especially since cash-strapped state and local government depend heavily on sales-tax revenue. However, industry analysts warn the double-digit gains of the past few years are likely over, predicting a more modest 8.2% increase to 1.75 million vehicles in 2013.
But automakers should celebrate a rather impressive 2012.
Korean automaker Kia enjoyed the biggest gain last year, selling 59,557 vehicles – up 53.3%, the best performance among the 15 top-selling brands. Subaru followed with a 44.2% increase, while Toyota/Scion at 39.1% and Volkswagen at 37.9% finished in third and fourth place, respectively.
American, European, Japanese and Korean manufacturers reported at least 17% increases in 2012, according to the state trade association. Korean automakers – think Hyundai and Kia – led the race at 35%, followed by Japanese manufacturers at 30.3%. American automakers enjoyed a 17.6% boost in sales from a year ago.
Toyota remained the state’s best-selling brand last year with 296,141 vehicles compared to the 212,888 in 2011. Honda finished at No. 2, with 181,382 vehicles, a 30.2% gain, while Ford finished in third place with 176,408 vehicles, a 13.2% increase. Chevrolet was a distant fourth with 133,445 cars and trucks sold, but a still solid 12.5% improvement from 2011.
Chrysler (78.8%), Lexus (31.0%) and Acura (29.2%) also reported good sales volume in 2012. But the three brands are not listed among the 15 best-selling brands in the state.
Only four automakers went in reverse last year, paced by Mitsubishi and Lincoln with declines of 18.6% and 13.7%, respectively. Volvo and Jaguar also slid in 2012.
Higher gas prices and thinner pocketbooks played a major role in the best-selling model race, with 60,688 hybrid Toyota Priuses selling in 2012, followed close behind by second-place finisher Honda Civic with 57,124 vehicles. Toyota sold 50,250 Camrys, a previous top-seller, followed by the Honda Accord at 49,420 for third and fourth place, respectively.
The Ford F-150 remains the best-selling full-size pickup – and one of the best-performing models overall – in the state, with 25,434 hitting the street, about 7,400 more than the Chevrolet Silverado. The Dodge Ram finished in third with 11,299 units.
Car-crazy California easily outpaced new-car sales in the rest of the nation, which had a 13.4% increase in 2012.
California has the nation’s fourth-highest state and local tax burden as a percentage of personal incomes in 2010, and that was before voters favored Proposition 30 that increases sales and income taxes last fall, according to the latest national survey by the Tax Foundation.
Californians’ tax burden was 11.2% in 2010, the latest information available from the nonprofit group. The Golden State was only better than first-place New York at 12.8%, New Jersey (12.4%) and Connecticut (12.3%). And on a per-capita basis, California’s state-local tax burden was the sixth highest at $4,934.
Arizona and Nevada – bordering states that aggressively advertise and recruit companies from California – were among the lowest in the nation, at 8.4% and 8.2%, respectively. Arizona finished at No. 40, while Nevada ranked No. 42, or two of the states with the lowest rates.
And Californians agreed to boost the state’s sales tax rate by a half-cent and increase additional income taxes on the highest-income residents in the state. Prop. 30 is expected to raise about $6 billion per year, though the state would still remain lower than third-place Connecticut, according to the Tax Foundation.
California’s high tax burden is largely based on high sales, income, gas and corporate taxes, while property taxes are relatively low, thanks to Proposition 13.
Nevada has the nation’s lowest corporate and personal income tax rates, while Arizona finished at No. 24 and No. 17, respectively.
Alaska had the lowest overall state and local tax burden at 7.0%.
Check the complete report at http://taxfoundation.org/article/facts-figures-handbook-how-does-your-state-compare-0