A continued shortage of available homes for sale lowered California home sales in September, while the median price reached the highest level in more than four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported this week.
“Sales in the inland and coastal markets continue to move in different directions. Low inventory – especially in distressed areas – is dampening sales activity,” said C.A.R. President LeFrancis Arnold. “In many of these areas, there is a one- to two-month supply of REO homes on the market. “The Inland Empire and the Central Valley have experienced double-digit sales declines compared with last year. Meanwhile, sales were higher in San Diego and most Bay Area counties, where the economies appear to be growing faster than the rest of the state.”
Sales in September were down 5.2 percent compared with August and down 1.2 percent from September 2011.
The statewide median price of an existing, single-family detached home inched up 0.3 percent from August’s $343,820 median price to $345,000 in September.
California’s housing inventory eased slightly in September, with the Unsold Inventory Index for existing, single-family detached homes edging up to 3.7 months, up from a revised 3.2 months in August and 5.3 months in September 2011. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered normal.
Homes sold faster in September, with the median number of days it took to sell a single-family home falling to 39.3 days in September 2012 from 41.1 days in August and down from a revised 54.2 days for the same period a year ago.
John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
Email <a href=”mailto:jodell@nevadacounty.com”>jodell@nevadacounty.com</a>
Low inventories of homes for-sale are becoming troubling to home buyers, Inman News reports. Almost every major market in the U.S. has posted double-digit decreases in for-sale listings.
“The buyers tend to become a little frustrated as they are seeing homes that they want to ‘think about’ and before they can even get home to discuss it there are already multiple offers on the property,” Sheri Moritz, a real estate broker with Keller Williams’ Wake Home Team in Raleigh, N.C., told Inman News. In Raleigh, inventories have fallen 21 percent in the past year, according to Realtor.com data.
“I counsel buyers to be patient, and not get discouraged, that it may take extra time to find the suitable property,” adds Tom Avent, broker-owner at Tom Avent Real Estate in Fresno, Calif., which has posted a 43.1 percent drop in inventories in the past year. “I have also seen some buyers give up looking, frustrated with low inventory and losing out in multiple-offer bidding.”
Multiple bid situations are a common occurrence in many markets. But surveys show that home buyers lose their enthusiasm when faced with competition for a property, according to a recent survey by Redfin. Seven in 10 of home buyers surveyed reported that they’ve faced competition on at least one of their offers recently, but 31 percent say they would back off when faced with a multiple offer situation for a home, according to the Redfin survey.
Charles Roberts, a director at the Denver Board of REALTORS® and co-owner of Your Castle Real Estate, says that “urgency” is the new landscape greeting home buyers.
“Gone are the days of looking at 50 homes and taking months to make a decision,” Roberts told Inman News. “If there’s a good property on the market, buyers need to act quickly, and yes, sometimes bid above asking price. The educated, thoughtful clients are getting great deals with astoundingly low interest rates. The clients that are still insisting on putting offers at 80 cents on the dollar are getting shut out of the market. They either learn that that strategy doesn’t work anymore or they keep on renting. Our job as real estate agents is to teach them what the market looks like and guide them in their decision-making.”
The biggest source of funding for low-down-payment condo mortgages, the Federal Housing Administration, has revamped controversial rules that caused thousands of building across the country to lose their eligibility for FHA financing.
The revised guidelines, which were issued Sept. 13 and took effect immediately, should make it easier for a large number of homeowner associations to seek certification by the FHA. Without approval of an entire development, no individual unit can be financed or refinanced with an FHA mortgage.
The previous rules prohibited FHA insurance of units in buildings where more than 25 percent of the total floor space was used for commercial or nonresidential purposes. Yet many condominiums in urban areas have lower floors devoted to retail stores and offices that generate revenues that help support the entire project. The revised rules allow exceptions of up to 35 percent commercial use, and provide for additional case-by-case exceptions to 50 percent or higher.
The Community Associations Institute, the condo industry’s largest trade group, is predicting that the relaxed FHA rules will spark home sales and helps tens of thousands of condominium communities begin to recover from the housing slump.
The new rules also offer greater flexibility on investor ownership. In existing developments, one or more investors are now allowed to own up to 50 percent of the total units provided that at least half of the units are owner-occupied. The previous rule required that no more than 10 percent of units could be owned by a single investor.
The median price of a new home rose a record-breaking 11.2 percent in August, reaching $256,000. That marks the highest level since March 2007, the U.S. Census Bureau reported Wednesday.
The price of new homes in August soared 17 percent compared to last year at this time.
The number of new-homes that sold in higher price ranges — $400,000 or more — rose significantly in August.
“This reflects the fact that people who are able to buy homes right now are those in higher-income ranges who have cash and equity on hand, while first-time buyers are having a tougher time getting qualified for a mortgage,” says David Crowe, the National Association of Home Builders’ chief economist.
As prices rose, inventories of new homes in August remained at record lows. It would take 4.5 months to clear the houses on the market at August’s sales pace, the Census Bureau reported.
Single-family home sales mostly held steady in August, remaining at two-year highs. Sales slipped 0.3 percent to a seasonally adjusted annual rate of 373,000.
On a regional basis, new-home sales in August soared 20 percent in the Northeast, 1.8 percent in the Midwest, and 0.9 percent in the West. New-home sales declined 4.9 percent in the South in August.
“New-home sales in August effectively tied the pace they set in the previous month, when they were the strongest we’ve seen in more than two years — so this is really a continuation of the good news we’ve been getting on the housing front,” says Barry Rutenberg, NAHB chairman. “Looking at the big picture, sales have been trending gradually upward since the middle of last year as favorable interest rates and prices have driven more consumers to get back in the market for a newly built home.”
More housing reports released on Tuesday showed home prices on the rise. The Federal Housing Finance Agency reported that U.S. home prices increased 3.7 percent from a year ago in the 12-month period ending in July.
FHFA’s home price index is now at about the same level it was in June 2004. However, it’s 16.4 percent below the peak reached in April 2007. To calculate its housing index, the FHFA uses purchase price data on mortgages owned or guaranteed by Freddie Mac and Fannie Mae.
Also on Tuesday, S&P/Case-Shiller released a report also showing home prices on the rise for the fourth consecutive month and at their highest level in nearly two years. S&P/Case-Shiller report measures home prices in 10-city and 20-city composite indices. In its 20-city index, S&P/Case-Shiller reported home prices up 1.2 percent compared to a year earlier.
“The news on home prices in this report confirm recent good news about housing,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, told The Wall Street Journal. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing.”
Last week, NAR reported that the median price on existing-homes rose 9.5 percent over year ago levels. The median home price in August is $187,400.
The increase to the sales price in August was the strongest since January 2006 when median home prices had risen 10.2 percent higher than what they were a year ago.
The National Association of REALTORS® will release its pending home sales report on Thursday.
SACRAMENTO — Attorney General Kamala D. Harris announced the arrest Thursday of four suspects who have been charged with securities fraud, conspiracy and elder abuse for operating a Ponzi scheme that bilked dozens of investors of over $2.3 million.
The arrest declaration alleges that Gold Country Lenders, a real estate company in Grass Valley, engaged in a pattern of theft and fraud-related crimes for more than eight years. Investor funds were used to make interest payments to earlier investors or for projects in which the company’s owner had a financial interest.
“These defendants exploited their personal relationships with these victims and emptied their bank accounts,” Attorney General Harris said. “Schemes that target the elderly are especially heinous, which is why prosecuting fraud and elder abuse needs to remain priorities for law enforcement.”
Philip Lester, 65, and Ellen Lester, 65, who are married, surrendered to custody, and Susan Laferte, 58, and Jonathan Blinder, 58, were arrested on Thursday in Nevada County.
Philip Lester, CEO of Gold Country Lenders, and Laferte, the firm’s CFO, are being charged with 66 felony counts of elder abuse, securities fraud and conspiracy. Laferte is Philip Lester’s sister. They were booked at the the Nevada County Jail, with bail set at $600,000 each.
Ellen Lester is being charged with two felony counts of conspiracy and securities fraud and was booked at the Nevada County Jail with bail set at $50,000. Blinder is charged with four felony counts of securities fraud and was booked at the Nevada County Jail and released on bail.
From January 2003 to June 2011, Gold Country Lenders sold securities on specific real estate development projects, promising investors annual returns of 8 to 12 percent. These investments were supposedly secured by a first or second deed of trust on the property. In fact, some of the promised deeds of trust were never recorded, while others were recorded but subordinate to other loans, or were diluted by the repackaging and overselling of shares.
In October 2010, the Attorney General’s Office launched an investigation in response to complaints filed by numerous investors.
The arrest affidavit alleges that investors were not told that Philip Lester had a partnership interest in some of the development projects he sold to investors, or that some of the land targeted for development had significant toxic waste issues. Many of the victims are elderly and had known and trusted the defendants for many years.
Unbeknownst to investors, their investment funds were used to make interest payments to earlier investors or for purposes other than the development project they had invested in. For example, victims’ funds were diverted to purchase and operate the Auburn Valley Country Club, a prestigious golf course and clubhouse where the Lesters resided.
Agencies that assisted in serving today’s arrest warrants include the Grass Valley Police Department, the Nevada County Sheriff’s Office, the Riverside County Sheriff’s Office and the Department of Corporations.
“Protecting consumers and investors is at the forefront of the Department of Corporation’s mission,” said California Corporations Commissioner Jan Lynn Owen. “The Department of Corporations works diligently to strongly enforce and uphold California’s financial laws to the fullest extent.”
The Attorney General Office’s Special Crimes Unit conducted the investigation. The case will be prosecuted by the Attorney General’s Mortgage Fraud Strike Force, which was formed in May 2011 to investigate and prosecute crimes related to mortgage, foreclosure and real estate fraud.
Copies of the complaint and arrest declaration are attached to the electronic version of this release atwww.oag.ca.gov
After years of having too many homes and not enough buyers, real estate agents in California now have the opposite problem – too many buyers and not enough homes for sale.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported Monday that its statewide inventory of unsold homes index for existing, single-family detached homes fell to 3.2 months in August from 3.5 months in July and 5.2 months in August 2011.
The index reflects the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered normal. When the number goes higher, inventory is plentiful and it’s considered a buyer’s market. When the number goes lower, the advantage goes to the seller.
Declining inventory helps explain why the statewide median price of an existing, single-family detached home rose to $343,820 in August, up 3 percent from July and up 15.5 percent from August 2011, according to C.A.R.
Nationwide, the inventory of homes for sale also has declined. In July, there was a 6.4-month supply of homes compared with 9.3 months in July 2011. The current number is in line with the long-term average, according to the NATIONAL ASSOCIATION OF REALTORS®. However, NAR also acknowledges there are “acute shortages” in places such as California, Arizona, Nevada, and parts of Florida.
Also constraining supply is the fact that so many homeowners are underwater – or owe more than their homes are worth – and unable to sell without taking a loss. As prices rise, more homes will increase in value, but it’s going to take time. Meanwhile, there are still a lot of homes that are not likely to come onto the market.
At some point, the balance will tip, but it’s hard to predict when. When banks decide prices are high enough, they will start unloading houses they have been sitting on, according to the chief economist for Trulia.
The number of homes for sale in the last year is falling the most in California, with eight of the top 10 biggest drops in inventories in the last year from metro areas in the Golden State. Many California metros are also seeing asking prices on the rise in the last year, too.
Nationwide, inventories of for-sale homes continues to remain at historic lows with 1.84 million units for sale in August, which is down from 18.68 percent compared to a year ago, Realtor.com reports in its August housing data report.
“Low inventories, combined with stable list prices, suggest that the overall market may be poised for additional growth,” according to a Realtor.com release of the August housing data on 146 markets.
The following markets have seen the largest decreases to their inventories in the last year:
1. Oakland, Calif.: -58.35%
2. Stockton-Lodi, Calif.: -45.03%
3. Fresno, Calif.: -43.13%
4. Sacramento, Calif.: -42.24%
5. Riverside-San Bernardino, Calif.: -41.75%
6. Bakersfield, Calif.: -41.36%
7. San Jose, Calif.: -41.10%
8. Seattle-Bellevue-Everett, Wash.: -41.07%
9. San Francisco: -40.15%
10. Atlanta: -37.02%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)
President Barack Obama in his speech last night to accept the Democratic nomination for president said he will protect the mortgage interest deduction for middle-class families.
“I refuse to ask middle-class families to give up their deductions for owning a home … just to pay for another millionaire’s tax cut,” he said.
The president’s speech focused heavily on preserving the financial health of middle-class households, and he said that any deficit reduction and tax increases that he would seek in a second term would not affect households earning up to $250,000.
“I want to reform the tax code so that it’s simple, fair, and asks the wealthiest households to pay higher taxes on incomes over $250,000 — the same rate we had when Bill Clinton was president,” he said, “the same rate we had when our economy created nearly 23 million new jobs, the biggest surplus in history, and a lot of millionaires to boot.”
Alluding to the excesses in mortgage originations during the housing boom and the subsequent mortgage crisis, the president touted the rules that are now in place to protect households from taking out loans for which they don’t have the ability to repay. “We believe that when a family can no longer be tricked into signing a mortgage they can’t afford, that family is protected, but so is the value of other people’s homes, and so is the entire economy,” he said.
The president says in a Q&A for the September/October issue of REALTOR® Magazine, which comes out in mid-September, that he’s open to ensuring the rules don’t cut off the flow of mortgage credit to otherwise creditworthy borrowers.
“We will work with regulators to strike the appropriate balance for a healthy market that is open, fair and sustainable over the long term,” he said in the Q&A.
When the housing market began declining, many people claimed that adjustable-rate mortgages (ARMs) were the cause. However, recently they’ve been making a comeback, especially among affluent borrowers
An ARM offers an introductory period in which the borrower pays a lower interest rate than with a fixed loan; after that, the rate can fluctuate up or down.
With rates near historic lows, the safety of locking in a fixed-rate appeals to many borrowers. But these borrowers are paying a premium for that security. The spread between rates on 30-year fixed-rate mortgages and the most-popular ARMs now stand at about one percentage point, more than double the difference just five years ago.
That means that homeowners who are planning to either move or pay off their mortgage over the next few years can save big with an ARM.
Borrowers can determine if an ARM is the right loan option for them by looking at their financial situation and the terms of the ARM. ARMs carry risks in periods of rising interest rates, but can be cheaper over a longer term if interest rates decline. An ARM may be a good option to consider for borrowers who plan to own the home for only a few years, expect an increase in future earnings, or the prevailing interest rate for a fixed-rate mortgage is too high.
Before deciding to apply for an ARM, borrowers should consider if their income is likely to rise enough to cover higher mortgage payments if interest rates increase; whether they will be taking on other sizable debts such as car loans or school tuition in the near future; how long they plan to own the home; and whether their mortgage payments can increase even if interest rates generally do not increase.
