Buying

The California Association of Realtors released their report on California existing home sales and median prices in July. The statewide median price rose over the 12 months ending in July by 7.1% to $464,750. Although June marked the end of the 23 months of double-digit prices increases, the median single-family home price in California has now risen on a year-over-year basis for 29 months.

“Home prices continued to march higher across much of the U.S. in July. Most states are reaching price levels not seen since the boom year of 2006,” said Anand Nallathambi, president and CEO of CoreLogic. “Our data indicates that this trend will continue, with more states hitting new all-time peaks this year and into 2015 as the recovery continues.”

Please enjoy. Should your plans include real estate purchase and sales, please call or email with questions – and as always, thanks for your referrals!

Sources:

*LAEDC / Volume 18 N. 34

** HousingWire / Trey Garrison CoreLogic 9-2-14

For full source information, click >HERE<

According to the latest TrendGraphix reports for the beach cities for the period May 13th – July 13th compared to the same period last year you will see the number of properties for sale increased in Hermosa, Redondo and El Segundo however decreased slightly in Manhattan Beach. Although months of inventory have increased since the same time last year, we’re looking at approximately 1.9 months of available inventory for most of the beach cities including El Segundo.

Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential. “Activity is notably higher than earlier this year as proces have moderated and inventory levels have improved,” he said. “However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.”

Pending home sales in the West inched 0.2 percent in June to 95.7, but remains 16.7 percent below June 2013.

Please enjoy. Should your plans include real estate purchase and sales, please call or email with questions – and as always, thanks for your referrals!

* Sources: TrendGraphics, C.A.R.

One of the oddest things about this current housing market is the dwindling amount of supply.  For areas like Los Angeles and nationwide, total housing supply has been on a downward trajectory since 2010.  While an environment of rising home prices, less supply, and hungry buyers would lead you to believe that more home building would be occurring, not much of that has actually happened.Though the housing market is recovering nicely, it is not doing quite as well as some analysts had predicted. There has been no shortage of excuses offered as to why this is: the rise in interest rates, more stringent lending standards, the weather. However, we feel that there is one factor that is most responsible for curtailing the number of houses sold – the number of houses available for sale!

Inventory Levels are BELOW Historic Norms

In a recent economic forecast, Freddie Mac addressed this exact issue: “Including newly built homes in the inventory count, the total number of homes offered for sale relative to the number of households in the U.S. has been running at the lowest level in more than 30 years, as shown in the second exhibit. The relatively low for-sale inventory reflects several features of today’s market.” “A supply-constrained market (holding other factors constant) will result in a decline in the volume of sales and an increase in real transaction prices.”

NAR Report Confirms Inventory Constriction

History shows us that a balanced real estate market requires a six month supply of available housing inventory. The National Association of Realtors released their Existing Homes Sales Report last month. The report revealed that we are still only at a 5.5 month supply of homes for sale. We have not reached the 6 month mark in over two years. The recent increase in buyers now looking will again put a strain on this number. .

Bottom Line

While inventory levels remain below historic norms, it will remain a seller’s market. This being the case, if you are considering selling your home, now may be the time to list it for sale.

Banks are handing out mortgages of as much as $10 million to the wealthy in record numbers while first-time home buyers struggle to get loans. Wealthy borrowers are having an easier time getting a mortgage, with banks issuing a record number of mortgages in excess of $1 million while continuing to keep lending tight for first-time home buyers, Bloomberg News reports.

These high-net-worth borrowers do act differently than first-time buyers, who borrow because they have to. High-net-worth borrowers don’t have to borrow. They choose to, so they’re very strategic about what, why, and when they borrow. The wealthy are choosing to borrow while mortgage rates are still low, with some fetching mortgage rates as low as 3.15 percent for a seven-year adjustable-rate mortgage. By choosing to finance, the wealthy borrowers are avoiding having to liquidate other investments to purchase the home.

In Southern California, millionaires are boosting demand for the largest loans because of an improving economy and brisk sales of luxury homes gives them confidence in the market, said Mark Cohen, a mortgage broker at lender Cohen Financial Group in Beverly Hills. Cohen, whose average loan has increased to $1 million from $800,000 this year, said he gave a $9.9 million mortgage recently to an executive at a publicly traded company in Brentwood

For wealthy home buyers of single-family homes, the number of loans from $1 million to $10 million in the 100 largest metro areas soared by more than 15,000 in the second quarter, the highest point ever, according to CoreLogic, a housing data provider.

The luxury market has been heating up in recent months. During the first half of this year, sales of homes costing at least $2 million in 30 of the biggest metro areas increased to the highest since at least 2006, CoreLogic reports. What’s more, sales of existing homes of $1 million and more rose 8.5 percent in June compared with a year ago, which was the biggest jump among all price ranges, according to the National Association of REALTORS®.

There’s been a dramatic change in the housing market lately, and it’s almost all good news for homebuyers. Home shoppers may find there’s good reason to breathe a sigh of relief this summer.. They pointed to higher inventories, fewer bidding wars, and slowing home prices as welcoming signs for home buyers this year.What we are seeing is homebuyers who have become more disciplined than before, still pouncing on the A+ homes in the best school districts, but being more careful with the up-and-comers. As we head into summer, here are a few thoughts to consider:

In particular, home buyers this summer are finding:

1. More options: Inventories of existing-homes are 6 percent higher than year-ago levels—currently representing a 5.6-month supply at the current sales pace, according to May housing data from the National Association of REALTORS®. The higher inventory levels of homes for-sale means that buyers have more choices this summer.
2. Less competition: As inventories rise, buyers also are facing fewer bidding wars. Bidding wars are down by double-digit margins in many markets this year, according to Redfin, which conducts an annual bidding war report. In March, 63.4 percent of offers written by Redfin agents across 19 markets faced competition from other buyers, down from a bidding war peak of 73.4 percent a year prior, according to Redfin’s report.
3. Price rises are slowing: The median existing-home price for all housing types in May was $213,400—a 5.1 percent rise above May 2013, NAR reports. Home prices rose by double-digits last year. In 2013, home prices rose 11.5 percent over 2012, according to NAR. “Home buyers are benefiting from slower price growth due to the much-needed, rising inventory levels seen since the beginning of the year,” Lawrence Yun, NAR’s chief economist.
4. Low borrowing costs: Mortgage rates are averaging about 4.1 percent, less than half the historical average of a 30-year fixed-rate mortgage, which is 8.7 percent, Redfin reports. “For a $500,000 house, this is worth more than $500 a month in mortgage payments,” savings, Redfin notes on its blog.

The majority of housing markets are entering the 2014 home buying season in significantly better shape than they were one year ago. The outlook for a more abundant, more affordable selection of homes for sale this spring improved considerably in February. This is signaling growing seller optimism and a strong, early start to the spring home-buying season. Sellers in most markets are responding to the price increases of the past year, suggesting they are increasingly optimistic about the housing recovery and the underlying strength of market demand through 2014, according to the latest February data from realor.com.

While February inventories remain low by historic standards, following seasonal patterns, they will probably continue grow over the next two months with the coming of spring. With the spring buying season around the corner, inventories of new listings are growing. Despite the increase in inventory, the median list price jumped by more than 2 percent in February. These list price increases are another sign of seller confidence going into the selling season as sellers price their homes in anticipation of market conditions in the coming months.

There are positive signs that the market is more balanced and that we will not see a repeat of last year’s overheated markets, soaring prices and multiple bid situations. On a year-over-year basis, the median list price and the size of the for-sale inventory were up by 7.57% and 10.14 percent, respectively. Record low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season.

Here is some advice I have been consulting clients with since the end of 2nd quarter: Year end is the best time sell, and 2013 year end maybe the best window of opportunity for some time to come. With serious buyers in the market, home sellers need to seize the opportunities. Here are 5 reasons:

1. THERE IS FAR LESS COMPETITION:  Supplies are seasonally low. Sellers who wait for the spring are guaranteed to have far greater competition. Consider if you have the best house in the neighborhood, it may not matter when you put your house on the market. For the 99.9% rest of us, sellers must consider buyers have many more choices in the Spring.

2. SERIOUS BUYERS ARE IN THE MARKET.  Fall and Winter are not typically inviting times to visit homes as a Sunday past time. As good as Spring and Summer are with shear numbers of buyers, winter (year-end) offers a greater percentage of ready to purchase buyers. Sellers now is the time get your home ready to meet action takers.

3. THERE WILL NEVER BE A BETTER TIME. In most markets, home values have spiked. Through the first half of 2013, prices have recovered, the declines suffered since 2007. Additionally, interest rates have remained at historical lows and all indications are there is only one way to go from here… up.

4. FINANCING WILL BE QUICKER. There is money to lend and the industry is “healthy” and competitive. Lenders have embraced technology and have streamlined the process. Most qualified lending institutions can get a loan approved within 21 days. Spring and Summer and especially the first half of 2013, lenders were inundated with both purchase and refinancing loan requests. Both of these have now slowed in the winter facilitating the shorter timelines.

5. IT’S TIME TO MOVE ON WITH YOUR LIFE. Examine the reasons you are considering selling and decide whether it is worth waiting. You have the power to take back control of the selling process. Competitive financing and year-end closings are potent buyer triggers.

Home price increases will end up at 6.7 percent year-over-year before slowing to roughly 4.3 percent next year, on average, and eventually falling to 3.4 percent by 2018, a panel of more than 100 forecasters concluded. The Home Price Expectations Survey was conducted from Oct. 21, 2013 through Oct. 31, 2013 by Pulsenomics LLC on behalf of Zillow, Inc.The survey of 108 economists, real estate experts and investment and market strategists said appreciation is expected to remain strong through the remainder of this year, but the pace of home value growth is predicted to slow considerably. Based on current expectations for home value appreciation over the next five years, panelists predicted that overall U.S. home values could exceed their May 2007 peak by the first quarter of 2018. “Rising mortgage rates, diminished investor demand and slowly rising inventory are all contributing to a modest cooling off of the housing market, which is both expected and welcome after months of unsustainable, breakneck appreciation,” said Zillow Chief Economist Dr. Stan Humphries. By comparison, the CoreLogic Case-Shiller Indexes, though they reached 10.1 percent year-over-year in the second quarter over 2012, are expected slow to an average of 5.4 percent across all U.S. markets by the end of this year. CoreLogic Case-Shiller projected that price appreciation will decelerate through the second half of 2013 and into the beginning of 2014.

Many people shopping for real estate today are younger than previous generations of home buyers, and they’re extremely tech savvy. They grew up with smartphones, apps, and Google searches. And they want to use technology not only in their search for a home but throughout the home itself. The following list includes in no particular order things that are important to buyers today, especially Millennials who represent a significant buyer niche in today’s market. These aren’t your standard-issue young home buyers from 30 or 40 years ago, who were often married couples looking for a starter home in the suburbs to raise a family. Today, single women make up a large percentage of first-time buyers, as do gay couples and the always-connected mobile professional. As the home buyer evolves, so does the home. Here are five major shifts in homes you can expect to see today and in the coming years.

1. Energy efficiency – The National Association of Homebuilders surveyed buyers to see what was most important to them in new home construction and energy efficiency topped the list. Four of the top most wanted features involve saving energy: 94 percent of home buyers want energy-star rated appliances, 91 percent want an energy-star rating for the whole home, 89 percent want energy-star rated windows, and 88 percent want ceiling fans.
2. Home Offices – Even though a few companies are instituting a ban on working from home, most encourage it. And so, in our always-on culture, many people entering the real estate market are tethered to email well into the evening hours and on weekends. Many prefer to have one place dedicated to their laptops, printers and work-related stuff.
3. Man Caves – The media room or man cave emerged in real estate marketing a few years back. Many buyers now prefer high-tech rooms with surround sound, large-screen TV’s, and the most up-to-date A/V equipment to the coveted formal dining room of a generation’s past.
4. Hardwood Floors – Hardwood floors make a space feel less confined and give it a new, clean feeling. No matter how many times the carpet has been cleaned, there’s something about stepping on someone else’s carpet with your bare feet that turns off today’s buyers.
5. High Ceilings – Taller ceilings are not only aesthetically pleasing in that they impart a grandness to the home, they also promote greater air circulation and more natural light than lower ceilings.
6. Open Floor Plans – Spaces that are great for entertaining mean quality time with friends and family, something especially important to Gen Y.
7. Quality of Schools – A recent survey by realtor.com revealed that nearly 45 percent of today’s buyers are willing to pay a premium for quality schools
8. Convenience to Job – Commuting is a necessary evil, but homes that are close to work enhance work-life balance, a growing priority for many Americans, especially Millennials.

A very encouraging trend in the real estate market is the rising participation of trade-up buyers. Housing demand by trade-up buyers is rising as the home equity available to these prospective buyers is improving. On the demand side, steadily rising home prices and an expectation of continued recovery have stimulated housing turnover by prospective buyers who are in a position to take advantage of low home prices. In the meantime, higher home prices are bringing out trade-up demand from existing homeowners who are experiencing rising home equity, which supports a down payment on their next bigger house. An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending. According to FNC’s Foreclosure Market Report, the foreclosure market has rapidly improved in recent months with foreclosure rates approaching pre-crisis levels – an indication of strengthening supply-side conditions. The report shows that foreclosure price discounts, which compare a foreclosed home’s estimated market value to the price paid by investors or home buyers, have dropped to a 10-year low.