Wednesday, October 23, 2013

Property Radar: Real Property Report September 2013

Market Activity

California single-family home and condominium sales fell 16.8 percent in September from August, but were nearly unchanged from a year ago. An 18.7 percent monthly drop in distressed property sales drove the decline in September sales.
Bear in mind that September’s double-digit drop in sales is not unusual for this time of year because sales volume typically declines in fall and winter.

To get a clearer picture of current real estate sales trends and to eliminate seasonal factors, we compare September 2013 property sales to September sales in prior years. Last month’s sales were slightly lower than sales in September 2012 and the lowest since September 2007. Dividing sales into their distressed and non-distressed components, distressed property sales fell 47.7 percent in the past 12 months while non-distressed sales jumped 40.2 percent. Though distressed property sales declined in September, they still accounted for 24.2 percent of total sales, which is historically very high.  In six of California’s largest counties — Stanislaus, Solano, San Joaquin, San Bernardino, Kern and Fresno — distressed property sales represented 32 to 35 percent of total sales.


Dividing distressed property sales into short sales and bank REO resales can provide a better understanding of underlying trends.  Short sales fell 18.3 percent in September and are down 46.3 from a year ago.  Also, bank REO resales are down 19.5 percent for the month and down 50.2 percent year-over-year.


Homeowner Equity

The steady rise in home prices since January 2012 has allowed thousands of California homeowners to shift from being underwater to having positive equity so they can refinance or sell their homes. Since July, the number of homeowners with more than 10 percent equity in their homes has increased by 10.4 percent, or 465,000.  The number of homeowners who are moderately to severely underwater has fallen by 37.1 percent or 682,000.
Despite the improvement, large numbers of underwater homeowners remain a drag on the California real estate market. In September, nearly one in four, or 1.5 million (22 percent) of California’s 6.8 million homeowners were underwater while more than 420,000 (6 percent) were barely above water (less than 10 percent equity in their homes).  Since closing costs are 6 to 10 percent of a home’s sale price, these homeowners are effectively underwater. Added together, 28 percent of homeowners (nearly 2.0 million) are underwater or barely above water, which effectively shuts them out of the California real estate market.
Several of the largest counties in California continue to struggle with much higher levels of negative equity. In Fresno, Merced, Solano, San Joaquin, and San Bernardino counties, 27 to 34 percent of homeowners, or one in three, are moderately to severely underwater.


Median Prices

The median sale price of a California home fell $5,000, or 1.4 percent, to $355,000 in September from $360,000 in August, the second consecutive monthly decline.  Year-over-year median prices increased 24.6 percent from $285,000 to $355,000.
Rapid monthly home price increases that typified the California real estate market earlier this year appear to have slowed ore reversed course in direct response to a 100-basis-point increase in mortgage interest rates in June. Despite the slowdown in price appreciation statewide, homes in Orange, Placer and Riverside counties still experienced solid price appreciation in distressed and non-distressed properties.
Rapid changes in the mix of distressed and non-distressed property sales from 2012 to 2013 continue to influence the year-over-year change in median prices. In September 2012, distressed property sales accounted for 46.1 percent of sales. By September 2013, distressed property sales had fallen to 24.2 percent of sales.
The following graph highlights median sales price trends from January 2002 to September 2013.   Aggregate single-family home median sales prices are shown in blue, and distressed and non-distressed median prices are shown in red and green, respectively.


Cash Sales

In September 2013, cash sales represented 24.5 percent of total sales, up 0.1 percentage points from 24.4 percent in August. Taking a longer-term view, cash sales as a percent of sales oscillated between 28 percent and 31 percent from January 2012 through January 2013.  They peaked at 33.0 percent in February 2013 and have been below 25 percent since August 2013. From a historic perspective, cash sales remain high and are an important part of the real estate marketplace even though they are now trending lower.

 

Flipping

Mirroring the normal seasonal slowdown, September 2013 flipping (reselling a property within six months) fell 10.3 percent from August but was up 4.8 percent from a year ago.  Flips represented 4.7 percent of total sales in September, up from 4.3 percent in August.
Taking a longer-term view, in 2011, as housing prices trended sideways, flipping was basically flat, ranging from 2.5 percent of sales in January to 2.7 percent of sales in December 2011. In 2012, flipping as a percent of sales began to increase, rising from 2.9 percent of sales in January 2012 and peaking in February 2013 at 5.5 percent.  Flipping retreated from February 2013 to June 2013, reaching an interim bottom of 4.1 percent of sales. In the past three months, flipping has edged higher because investment returns remain attractive.
In September, flipping as a percent of sales was highest in San Diego, Sacramento, Fresno and San Joaquin counties.


Investor (LLC and LP) Purchases

September 2013 investor purchases fell 18.0 percent from August. Investor purchases are defined as a market or third party purchase at a trustee sale by a limited liability corporation (LLC) or a limited partnership (LP). In general, investor purchases have been trending lower since peaking in October 2012 and are now 54.9 percent below that peak.  This is being driven primarily by the increase in purchase prices.  As prices increase, the potential return on investment (ROI) for holding properties as rentals decrease, making it less attractive to investors.


Foreclosures

September foreclosure sales fell to their lowest level in seven years.  California Notices of Default fell 21.6 percent in September, the largest one-month decline since March, and are down 56.1 percent for the year. Meanwhile, Notices of Trustee Sale dropped 20.3 percent for the month and fell 61.5 percent for the year. Foreclosure sales gained 1.8 percent for the month but remain near their lowest levels since January 2007.



Madeline’s Take – Director of Economic Research, PropertyRadaR

For the second consecutive month, September sales and median prices fell simultaneously as the California real estate market responded to the increase in mortgage interest rates, the decline in cash sales and investor purchases, and an increase in unsold inventory.
As we predicted last month, Fed Chairman Ben Bernanke chose to keep QE3 bond purchases at current levels to support the housing market.  The violent mid-June bond market reaction to Bernanke’s mere mention of slowing QE3 bond purchases caught the Federal Reserve by surprise.  The 100-basis-point jump in 30-year mortgage interest rates was enough to send the Federal Reserve scampering for cover and postpone any further talk of tapering to 2014.   As a result, mortgage interest rate volatility declined and fear-based real estate buying and selling retreated into the background.  While sales have retreated slightly in response to higher borrowing costs, lower prices and increased inventory is welcome news for homebuyers who have been shut out of the market.

Sean’s Take – Founder/CEO, PropertyRadar

I recently testified at a State Senate hearing on the Home Owner Bill of Rights. Many are excited about the large reduction in foreclosures, and point to it as a sign that the housing market has recovered.  As I reviewed foreclosure and housing trends in preparation for my testimony one thing stood out to me above all others. Despite all of the foreclosures to date (over 1 million in CA alone), short sales, loan mods, and refinances, we still have 1.5 Million homeowners who remain underwater. That’s only a bit more than 50 percent lower than where we started over five years ago. I’m glad the market feels better, but real recovery should be far farther along, and still has a long way to go.

Real Property Report Methodology

California real estate data presented by PropertyRadar, including analysis, charts and graphs, is based upon public county records and daily trustee sale (foreclosure auction) results. Items are reported as of the date the event occurred or was recorded with the California county. If a county has not reported complete data by the publication date, we may estimate the missing data, though only if the missing data is believed to be 10 percent or less of all reported data.

Source – Property Radar

Thursday, October 17, 2013

Five things home buyers should know, but don't... Or may be kind of fuzzy on..

Recently read this article and thought it was worth reprinting.

Questions about buying a home in the East Bay? 
Give me a call or send me an email and I can give you clear direct answers.


A house is the biggest asset that the majority of Americans will ever own. But while most of us delude ourselves into thinking that we actually know something about real estate, the truth is that few of us know less than we actually think. 

1. When you buy a home, you're making two purchases
Of all the advice that I came across, this was probably the most insightful: "When you buy a home, you actually are making two purchases," Dave Ness of Denver's Thrive Real Estate Group told me. "You are buying the home, and you are buying the money to buy the home." It's tempting for homeowners to think of a mortgage as an incidental expense. But the reality is that the loan itself may be the most significant piece of the transaction. "For every 1% rise in interest rates, home prices must fall by 10% in order for you to maintain the same monthly mortgage payment," Ness says. "And at the end of the day, that's what matters, the monthly payment. So take advantage of low rates; they add much more buying power to your purchase than low prices."

2. Homes are like people -- they all have problems
This was a point multiple real estate professionals that I spoke with made. "All houses have issues," Hilary Bourassa of Portland's Oregon First Real Estate told me. "Some just have more than others."
The shock generally comes when prospective buyers get their inspection reports back. "Inspectors are professional pessimists, which is why we love them," Bourassa said. "But many issues only require simple and/or inexpensive fixes."
Along the same lines, Ness analogized the experience to "when someone knocks over the DJ table at a wedding and the music stops." All of a sudden, the bliss from going under contract goes away.
"Most inspection reports will be 40 to 50 pages long, and most inspectors will take close-up, HD photos of problems," Ness went on to note. "So while the actual listing shows gorgeous pictures of granite countertops, the inspection report will show awful pictures of a cracked driveway. By the end of the report you'll be thinking, 'This house is a total and complete lemon.'"

3. Your real estate agent is a partner, not a salesman
My industry sources were obviously biased on this point, but there's a lot of truth to what they said.
"Your Realtor should be focused on helping you find a great property, not selling you something," Bourassa advises. Before settling on one, she urges homebuyers to "interview at least a few in order to find the fight match." The flipside of the coin is that you, too, are a partner in the relationship. And that means knowing and respecting the boundaries. "Sometimes clients forget (particularly first-time buyers) that Realtors have other clients and lives outside of work," Ness says. The key is to make sure that both parties have a clear understanding of communication expectations.
"What is their normal response time? How much lead time do they need to arrange showings? What medium of communication is best -- text, call, email, or something else?" These are the types of questions that Ness encourages homebuyers and real estate agents to settle at the outset.

4. HGTV does not resemble reality
My wife and I love to watch cooking shows. We've watched so many, in fact, that we've deceived ourselves into believing that we could actually compete on them. Of course, given the opportunity, we would most certainly -- and I do mean "most certainly" -- crash and burn in the most humiliating fashion. And the same can be said about the proliferation of "realty" television shows on real estate -- think HouseHunters, Flip That House, Holmes on Homes, Property Virgins, and Property Brothers, among others. "The reality is, hundreds of hours or footage is shot and edited down to a 16-minute show (when you take out the Lowe's commercials)," Ness pointed out. "Yes, they're real buyers, but you don't see the half of it. So don't think you're going to waltz into your market and find the perfect house right away, beat out all the other offers, and then walk into the sunset with your significant other. Finding a home can be tough, and take time."
Ness' advice? "Gear up for the homebuying process. It's worth it, but it ain't Hollywood!"

5. Always think about resale
This final piece is something that all people buying assets should always keep in mind: At some point you're going to resell it and will want to maximize what you eventually get.
"When you're buying your home, you're probably not thinking of the day that you will have to sell it," Bourassa said, "but you will be thanking yourself one day if you remember three little things ... location, location, location!" The bottom line Most if not all of us will buy at least one house in our lives. With that in mind, you should save yourself the trouble of making the same mistakes that most of your peers will. Take these five pieces of information into consideration. You'll be doing yourself a favor if you do.


This article originally appeared on Fool.com.

Realestate, alamedarealestate, alameda, berkeleyrealestate, berkeley, oaklandrealestate, oakland, eastbayrealestate, east bay, homebuying, home, alameda real estate agent

Wednesday, October 16, 2013

Homebuyers: To get the house, get there first

Housing inventory is stiflingly tight in many locations, making it a challenge to find, much less land, your dream home.
The number of available houses in the hottest markets has dropped dramatically over the past year, says the National Association of Realtors: In the Boston area, for one, inventory levels are down 29% vs. 2012. And Denver, Seattle, and San Francisco aren't far behind.
Currently in Alameda there are 61 active listings.
8 Condos
38 Detached homes
1 Duet
14 Townhomes

Alameda "Haunt Your House" contest

Hey Alameda it's that scary time of year again and the "Alameda Haunt Your House" contest deadline is Tuesday October 29th. If your dressing your house up consider entering this contest and help the Alameda Food Bank. CLICK HERE TO GO TO THE WEBSITE