Tuesday, January 19, 2010

December's numbers. Median down.

We snapped the streak. Median for Rivy and San Berdu fell in December. Riverside's median sales price slipped 2% down to $196k from $200k in Nov. San Berdu slipped about 6% from $160k down to $154k. Sales numbers were decent though. Falling median is quite normal for this time of year so don't read to much into it.

Sales Volume Median Price
All homes Dec-08 Dec-09 %Chng Dec-08 Dec-09 %Chng
Los Angeles 5,848 7,679 31.3% $320,000 $339,000 5.9%
Orange 2,580 2,885 11.8% $397,000 $435,000 9.6%
Riverside 4,435 4,282 -3.4% $209,000 $196,000 -6.2%
San Bernardino 2,862 2,934 2.5% $180,000 $154,000 -14.4%
San Diego 3,325 3,652 9.8% $300,000 $330,000 10.0%
Ventura 876 896 2.3% $338,000 $360,000 6.5%
SoCal 19,926 22,328 12.1% $278,000 $289,000 4.0%

Here's the DQ report.

Southern California home sales in December remained above year-ago levels for the 18th consecutive month, bolstered by gains in many mid- to high-end communities. The median sale price rose year-over-year for the first time since summer 2007, reflecting a more normal distribution of sales across all price categories, a real estate information service reported.

A total of 22,328 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.4 percent from November’s 19,181, and up 12.1 percent from 19,926 in December 2008, according to MDA DataQuick of San Diego.

Sales almost always rise from November to December. Last month’s gain was a bit higher than the average increase of 13 percent since 1988, when DataQuick’s statistics begin.

The December sales tally was the highest for that month since 24,209 homes sold in December 2006, but it was still 11.2 percent below the average for a December – 25,143 sales – over the past 22 years.

The sales pattern has changed a lot over the past year, with many mid-to high-end communities now contributing more transactions.

For example, relatively large annual sales gains were recorded last month in many well-known, higher-end markets including Beverly Hills, Santa Monica and Newport Beach – areas that saw very low sales a year ago. Meanwhile, some of the more affordable inland areas that saw robust 2008 sales recorded year-over-year declines last month. Those markets included Moreno Valley, Lake Elsinore and Palmdale.

The percentage of Southland homes sold above $500,000 last month rose to 20.2 percent of all sales, up from 16.5 percent a year earlier and the highest since it was 23.6 percent in August 2008. On average since 2000, $500,000-plus sales have made up 36.5 percent of total sales. Right before the credit crunch hit in August 2007, making larger “jumbo” mortgages more expensive and harder to obtain, $500,000-plus sales made up about 52 percent of Southland transactions.

More sales in once-dormant high-end communities helps explain last month’s year-over-year gain in the median sale price – the point where half of the homes sold for more, half for less.

The median paid for all Southland houses and condos sold in December was $289,000, up 1.4 percent from $285,000 in November and up 4 percent from $278,000 a year earlier. The last time the median increased year-over-year was in August 2007, when it rose 2.7 percent to $500,000, near its peak.

The median has increased or held steady for eight consecutive months, but in December it was still 42.8 percent lower than the peak Southland median of $505,000 reached during several months in early and mid 2007. In late 2008 and early 2009, the monthly declines in the median from a year earlier ranged from 30 to 40 percent.

December’s foreclosure resales remained well below peak levels but were still a large force in the market, edging higher than the prior month for the first time since last February. Foreclosure resales – houses and condos sold in December that had been foreclosed on in the prior 12 months – were 39.6 percent of resales, up from 39.0 percent in November but down from 53.5 percent in December 2008. They hit a high of 56.7 percent last February, then tapered or leveled off month-to-month until last month’s uptick.

Monday, January 18, 2010

I just want the garage

The house is amazing but it's way too amazing for the area it's in. It never ceases to amaze me how people will build million dollars homes in hundred dollar areas. Check out this listing ar 5301 Lochmoor Dr in an unincorporated area of Riverside (near Raceway Ford). The house is incredible but in it's current location I don't see them getting $1.25M or $1.anything for that matter. But the garage......... And I wouldn't mind the cars either!

Wednesday, January 13, 2010

Banks suck and Bill Maher knows it

Good deals?

I get quite a few emails asking "are we at the bottom", "is it a good time to buy" and so forth. Those are impossible questions to answer with any certainty. We can make educated guesses but my estimation may be no better than the NAR's forecasts (although I think it is). Heck anything could happen in this market. Nothing surprises me anymore. But overall I think we are close to the bottom in the nicer areas and probably there at most of the other areas in the IE. The OC and LA have miles to go.

Personally I feel there are some pretty good deals out there. I'm even seeing great deals in some of the better areas. There have been some closed sales that I look at and kick myself for not making an offer on them. I'm seeing some houses close for $50k under listing price. So the deals are there. Not everyone is getting them. I also still see houses close for prices that make me go HUH??? what the hell were those idiots thinking.

It looks to me like most of Riverside is now very close to the bottom. There are a few tracts that are holding up but for the most part I think Riverside is a buy. Corona on the other hand still seems a little high with the exception of a few areas like Sycamore Creek which is probably close to as low as it will go. But there are still some good deals in Corona as you will see bleow.

The problem for most buyers right now is lack of inventory. The prices are decent but there's not much to buy.

Here's a few of examples of homes that I would probably have bought at the closing prices.

How about this house in Norco Hills. 1456 Morab Way. This monster closed for $97 s/f. Let me tell you that is a SMOKIN" deal. Yes it needed some appliances but for a 4600+ s/f house on a 1/2 acre lot on a hill with a drop dead gorgeous view, $450k is a steal.

290 Wild Horse Ln, also in Norco Hills. I actually almost put an offer in on this one. The only reason I didn't is it's a littls smaller than I'm looking for. But this 2800 s/f one story with nice landscaping on a 1/2 acre and a great looking pool closed for $428k. The price per sq/ft is a little high at $149 but that's primarily because it's a smaller home.

How about this monster up in Woodcrest. 17564 Seven Springs. This 4000+ s/f house on over an acre and a half has a back yard like a resort. It has a totally bitchin pool and some pretty nice landscaping and hardscaping. This thing sold as a short sale for $450k. I would have bought this house in a heart beat. There is no Mello Roos in this tract either!

People are getting some good deals out there.

Monday, January 11, 2010

Median listing price

I have not been paying too much attention to median listing prices lately. But here's last years data from Housingtracker. Much of the increase late in the year can be attributed to the loss in quantity at the low and middle ends of the market. Since the high end isn't really moving but the low end is blistering it is skewing the median upwards.

Jan 2010 24,594 $147,000 $228,950 $397,500
Dec 2009 25,435 $149,225 $232,125 $403,737
Nov 2009 26,575 $149,920 $238,400 $420,010
Oct 2009 27,569 $149,175 $236,250 $423,450
Sep 2009 27,493 $149,925 $239,500 $435,988
Aug 2009 28,410 $148,882 $237,880 $431,400
Jul 2009 29,257 $147,313 $235,225 $429,250
Jun 2009 30,584 $144,980 $229,760 $414,790
May 2009 32,614 $143,725 $225,000 $401,973
Apr 2009 35,365 $140,000 $219,850 $387,500
Mar 2009 38,625 $139,960 $217,080 $369,580
Feb 2009 40,003 $143,125 $219,148 $364,750
Jan 2009 41,594 $148,976 $222,615 $364,140

Friday, January 8, 2010

A surge in foreclosures

Apparently there was a surge in foreclosures last month! I musta missed it......

This was in the Press Enterprise,

Real estate brokers who sell bank-owned houses reported an unexpected surge of homes to sell last month.

They are waiting to see if it is a glitch or instead a move by banks to reduce the backlog of pending foreclosures and replenish Inland Southern California's nearly barren real estate market.

"It appears that we are going to start seeing the inventory break loose. But maybe it is an illusion," said Lance Martin, broker-owner of Coldwell Banker Pioneer Realty in Moreno Valley.

Pete Nyiri, owner of Top Producers Realty in Corona, and another major broker of bank-repossessed houses, said the number of new listings he received from banks increased 40 percent last month and surprised him because he was instead expecting a decline in new properties due to various holiday foreclosure moratoriums.

However, the brokers emphasized that the increase in bank-owned properties they have received will not be nearly enough to restore the market for first-time buyers who have been fiercely competing with one another and with cash rich investors for a shrunken inventory of entry-level houses.

The largest foreclosure brokers in Inland Southern California said they believe the banks have been holding back foreclosures, despite growing mortgage delinquencies, because they have been under political pressure to qualify financially troubled homeowners for loan modifications. All of them predicted that homes which banks are unable to save from foreclosure will start coming on the market in the first quarter of this year.

Whether newly foreclosed properties will appear in a deluge or in a steady stream is unknown, although most experts now are anticipating the banks will try to retain control to prevent home prices from plummeting.

"Nobody knows for sure," said Steve McKee, a broker specializing in bank-owned properties at Coldwell Banker Armstrong Properties in Riverside. McKee said he expects a large increase in foreclosed houses. He said he has noticed that banks gearing up by shifting staff from loan modification departments to foreclosure processing.

Foreclosure brokers also anticipate that in 2010 many more foreclosure threatened houses will become available to prospective buyers as short sales, where lenders allow the owner to sell a home for less than the mortgage.

The Obama Administration has adopted new short sale guidelines for banks that will become effective in April and the foreclosure brokers said their bank clients have told them they are preparing to do more short sales.

"Some are ramping up their short sales mitigation departments," said Michael Novak-Smith of ReMax Results in Moreno Valley. Novak-Smith said he believes banks have figured out it is cheaper selling a house when it is occupied, even at a loss, rather than absorbing the expense of maintaining and selling a house they have repossessed.

Tuesday, January 5, 2010

Winds of change

Anyone else starting to notice a change in the tone of the media regarding the health of the market. For the last few months it's been all about recovery. But the last few weeks there have been more and more reports focusing on more pain ahead, double dips, the failure of HAMP, what happens when... etc. etc.

Today we say headlines of 16% decline in pending sales in Nov (oh my god the sky is falling). Heck it was even down in the West which has been the strongest area for months. Is this really news. I don't think so. It just shows that earlier strong sales were pumped up by the looming end of the tax credit.

Another headline today talks about a 30% to 40% chance of us entering into another recession this year. Does anyone really believe we are out of the recession? Maybe somewhere is but California certainly isn't.

I'm also seeing a lot more articles talking about the impending interest rate increases. These same predictions were made last year too and rates fell to the lowest levels in a 100 years. Personally I do think they will go up once the Fed stops buying the MBSs but if that has a cataclysmic effect on the market I suspect they will start that program back up again before the year is out.

The market this year could very well go something like this. Jan through March is busy as buyers rush to close prior to the end of the MBS program and the impending rate hike. April is busy too as buyers rush to get a deal prior to the end of the tax credit. May hits, the interest rates are up, the tax credit is gone and the market slows. Inventory starts to build as sales slow and foreclosures mount due to the HAMP trial period mods ending. The market starts to sieze up again in a repeat of 2007/2008

Once the prices start to fall again this is where the government will come up with another hail mary plan. Something along the lines of 2% or 3% rate mortgage mods through Fannie and Freddie. Now that the government has removed the debt cap Fannie and Freddie can write as much bad paper as they want. There's really only one reason I can think of for removing the debt cap, and that is to prepare those entities to take on gargantuan amounts of debt.

Sunday, January 3, 2010

2010 what next?

Well what do you think 2010 will bring?

Will the government leave the market alone this year? That's probably the biggest question mark looking ahead. We had something of a stabilization last year but nearly all of that was due to massive government intervention in the market. This year much of that intervention is due to end. The MBS purchases by the fed that are keeping the interest rates low is due to end in late March. The tax credit ends in late April. The Tarp program will have run its course for the most part (and a dismal failure it has been so far). So what will happen when all these programs end and the market is left to fend for itself?

I don't want to even throw out a guess after last year. It's just too hard to figure what the government will do next. Personally I think the poo will hit the fan without more intervention. But what they will come up with next is beyond me. Once all the government life support ends the market could do just about anything. My personal feeling is, at this point they have all but assured a Japan style decade of price declines or stagnation at best. We may see some blips of recovery but I feel the overall trend will be negative for many years ahead. The only way around it is to let the free market fix it. Foreclose on the bad loans, book the loss and sell them in a free market. There's more than enough money out there to fix this market quickly if they would only let it happen.