LA Times: So Cal home prices rise 10% in February
In a post last week about Westside/South Bay sales activity, I stated market activity was significantly stronger compared to February 2009. Today, The Los Angeles Times took it one step further proclaiming a 10% rise in the median sale price compared to February 2009. Below is a cliff notes guide to the full article.
In February 2009, foreclosure sales as a percentage of the Southland’s resale market hit a record of 56.7%, dragging down prices. Though foreclosure sales have ticked up slightly, they accounted for 42.3% of the market last month, well below the high.
“Because of that change in mix we are going to get median prices that would be year-over-year positive in double digits,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.
Adibi said the key point to get across to sellers, mainly, is that the increase in sales of higher-end homes may be skewing the median numbers and distorting what other homes may really be worth. He expects prices for more expensive homes to fall again.
Though more higher-end homes were sold, much of the buying activity still remains in the low end.
Southern California’s housing recovery last year was spurred by a very active low-end market as investors with cash snapped up cheap foreclosure properties and first-time buyers with government-insured financing also stepped in.
Southern California’s market is not likely to return to full health until jumbo loans make up a larger share of the market, experts said.
With sales of cheap foreclosure properties becoming increasingly competitive, real estate agents said inventory on the low end has now grown tight — even though many homeowners in California continue to fall behind on their house payments.
Glenn Kelman, chief executive of online brokerage RedFin, said he was “bullish” on California’s prospects.
“California, right now, is its own market,” he said. “It started improving ahead of everyone else last winter . . . and I am not sure there is going to be another dip because there is so much demand.”
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By styleagentSignificant Rise In Westside/South Bay Sales Compared to Feb 09
I am not a big fan of comparing months from a year to year basis in terms of median price since a few sales can skew the numbers dramatically. However, comparing February 09 and February 10 sales activity provides clear evidence that activity is much stronger than it was last year and that price points are either stabilizing or trending up for the time being.
The median price information is providd but DO NOT read into median price points dramatic rise in certain area like the Palisades (up 43%) or Hermosa Beach (up 40%) because the sample of homes sold is small. One high-end sale can skew the numbers. Median price information should be looked at over a 6 month or yearly period.
Norris Group Weary of Optimistic Cali Real Estate Forecasts
Real estate investment advisor Bruce Norris of the Norris Group advised real estate investors at a recent seminar in Costa Mesa to be weary of optimistic reports forecasting an immediate bottom in the housing market.
According to Norris, numerous foreclosures must still be processed before the market approaches anything resembling equilibrium, much less growth. He attributes current lowered foreclosure numbers to Government loan modification programs, but notes that most modified loans tend to redefault, especially in an economy in which unemployment remains at unprecedented highs.
Government and lender efforts have forestalled defaults and foreclosures by the hundreds of thousands, but their main accomplishment has merely been the creation of a shadow inventory of over 350,000 to 500,000 likely future foreclosures in California alone.
Real estate investors with readily available cash can find good prices in the market right now, but shouldn’t expect to become profitable overnight. Opportunities exist at auctions to make a profit on a flip in this market, but you need to have experience and be a real pro to pull that off.
Breaking News: LAUSD No Longer Allowing Inter-District Permits
Most Southland school districts are scrambling to find ways to close this year’s enormous and unprecedented budget gaps. Los Angeles Unified School District, the state’s largest school district, recently announced a highly contentious way of recouping some of those funds: LAUSD plans to eliminate some 12,000 interdistrict permits for the coming academic year, 2010-2011.
What this means in practical terms for the parents of those 12,000+ students is that, while schools in other districts may still welcome them with open arms, LAUSD will not issue the required exit permits releasing them from the “home” schools. A student who lives in Mar Vista but attends school in Santa Monica is expected to withdraw from the Santa Monica school and attend the neighborhood schools as of September 2010. According to some sources, 400 students will be impacted that are currently attending the city of Santa Monica.
For years, these interdistrict permits have been a mere formality; any student receiving a place in another school district – whether it be for reasons of curriculum, convenience, sibling connections, or continuity – has been granted an exit permit from LAUSD. This year, the families of students who “permit out” of their neighborhood schools in favor of another district have an unpleasant surprise awaiting them when they apply for renewal.
Superintendent Ramon Cortines has announced that exceptions will be made only for pupils entering the last year of a school (i.e. fifth, eighth, or twelfth grade) or for parents who work in the city of the desired school district (as mandated by law).
The new application for interdistrict permits will be available starting April 15. Information about the new process and requirements is available by contacting Melissa Schoonmaker at LAUSD’s Office of Permits and Student Transfers.
Although this policy has been implemented by the superintendent, many parents are hoping that the LAUSD Board of Education will get involved and mitigate some of the fallout for families and students.
Westside/Manhattan Beach Foreclosure Data Analysis
Though the amount of notices of defaults seems to be slowing, the “extend and pretend” mentality of property owners and the banks is in full effect. The gap between properties that are in trouble or owned by the banks compared to what is available on the market is enormous.
If you combine homes with a notice of default filed and bank owned properties you get 861. Of those 861, only 51 are on the market! Furthermore, if you want to throw in properties that are waiting to be auctioned (most of these are delayed over a 6 month period), the number of properties jumps to 1,431 with only 78 on the market!
The gap in quite a few zip codes is about 25 properties for every 1 on the market with Westchester, Mar Vista, Culver City and Santa Monica leading the way.
Not all of these properties will come on the market due to loan modifications and people working to becoming current on their payments but it is safe to say that at least 60% of these properties will eventually change hands.
Unfortunately for buyers who are dealing with low inventory levels on the Westside, the current environment does not incentivize the banks to put these properties on the market. The banks are deliberately slowing the foreclosure process down to keep inventory levels low and prices stable.
The banks are not being penalized on Wall Street for non-performing loans and are better off keeping property A on the books at its $800,000 loan level than selling it for $650,000 and having to report the loss.
Since the foreclosure process is being dealt with in a slow and deliberate manner, expect foreclosures and short sales to be above normal levels through 2013.
My office is continually tracking all of this information and is well versed on the short-sale and foreclosure process. Please feel free to contact us for any advice or consultation. As you know from reading this blog, the market has been strong lately due to government incentives and low interest rates making this not a bad time to put your home on the market if you are in a tough scenario.
*The information below was pulled from Realty Trac, one of the leaders in providing real time foreclosure data.
*Please note that these numbers are only based on notices of defaults filed and properties taken back by the bank (bank owned) since November 1st, 2009. These numbers DO NOT include properties where the bank became the owner or notices of defaults were filed prior to November 1st. E-mail us if you would like data that dates further back or specific information on potential investment opportunities.
*The data is a compilation of Single Family Homes (SFR), Condo/Townhouses and multi-family properties. Commercial properties are NOT included.
Notice of Defaults Filed Since November Westside/Manhattan Beach
– Cllick image to enlarge
*Please read analysis above
Amount Of Homes On The Auction Block Westside/Manhattan Beach
-Click image to enlarge
*please read analysis on this information above.
Bank Owned Westside/Manhattan Beach Properties Since 11/1/09
-Click image to enlarge
*Read analysis above
Mortgage Rates Below 5% This Week…
The typical rate that lenders were offering for 30-year home loans slipped below 5% again this week, the mortgage company Freddie Mac said Thursday.
For 30-year fixed-rate home loans, the combination this week was an average 4.97% in interest with an average of 0.7% of the loan balance in points, according to the survey, conducted Monday through Wednesday.
The low rates have been engineered by the federal government in response to the deep recession. Not since the 1950s have rates remained so low for so long.
The 15-year fixed-rate mortgage this week averaged 4.33% with an average of 0.7% in points, down from 4.40% a week ago.
The five-year Treasury-indexed hybrid adjustable-rate loan, which has a fixed rate for the initial five years, averaged 4.11% with 0.6% of the loan balance in points. It averaged 4.16% a week earlier.
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