There are concerns about the long-term recovery of the housing market due to the high share of buyers paying with all cash. Overall, all-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, according to a new report from RealtyTrac, a company that collects and analyzes housing data. Institutional investors have bought up many homes with cash, and average buyers remain constrained by unusually tight lending standards. Continue reading
In my never ending quest to predict the real estate market like most news people, economists, and real estate agent bloggers, it is obvious that there really are no long-term accurate predictions. A short term prediction up to 6 months is palatable, given there are no environmental disaster, economic meltdowns among financial strapped countries, terrorist attacks, or oil refinery breakdowns that have a direct impact on Worldwide Economic Markets, who also influence in the end, interest rates in the real estate sector of the United States. Faith that ALL is well does continue to prosper, while the doom and gloom attitudes or I might say the glass isn’t even half full attitude will always have an opinion, but somehow never does prevail in the big picture.
With inventory lower now than ever before, the current trend in San Diego, CA real estate in particular is a continued strong upward swing in home values for the next 6 months. Last Tuesday, June 11, 2013, DQNews and the San Diego Union Tribune Zip Code Chart lists the changes in values. In the East County, this example shows Santee, the old cowboy bustling town of years past showing a new image and strong values with desirability coming in 4th place to Alpine, Jamul, and La Mesa, beating out the rest of the East County Towns. Santee’s resurgence of the past 5-10 years of rebuilding: restaurants, shopping, recreation and new construction is the reason why it has leap frogged its neighbors Lakeside, El Cajon, Lemon Grove and not too distant Rancho San Diego (at one time the most desirable East County area) & Spring Valley in overall Medium Price average of all home sales combined Condominium and Single Family Homes.
In an article from the same source in DQ News: Southland May Home Sales Highest in 7 Years; Median Price Hits 5-Year High, available here: www.dqnews.com
30% of all sales are cash! That’s huge, no loan! Also the inventory is about 4800 units in San Diego County and that’s an uptick of 7% from last month, but 22% less than a year ago. So inventory continues to be extremely tight. Now is the time for you sellers to explore your 5-10 year life goals of where you want to be or where you will actually be in that time NOW! The market could change after the next 6 months wishing you had.
I am always available for any one-on-one questions, feel free to call. Thanks for reading and cheers to you all for a fabulous kickoff to summer 2013!!
Foreclosure sales on the West Coast started strong for the beginning of 2012, with Washington as the exception, according to ForeclosureRadar.
Arizona, California, Nevada, and Oregon are the other states included in the report – all of which saw increases in foreclosure sales to investors. Trustee sale investors pay the full amount in cash without inspections or title insurance prior to purchase.
This is the fourth largest month on record in California, and the busiest since March of 2011, stated ForeclosureRadar…
California also saw a substantial increase (+14.6 percent), and the state underwent the most activity, with investors purchasing 3,964 properties for $766.2 million, according to ForeclosureRadar…
Read the rest of this article from DSNews.com here: “Foreclosure Sales Up for West Coast States Except Washington.”
In these financially uncertain times in the housing market, all-cash sales are attractive offers to homesellers, but come with a condition–they usually must settle for less. In a typical housing market, if your home receives multiple offers (from prospective cash-carrying and/or those pre-approved for a loan), you will accept the highest bid. But in this current market, mortgages can be hard to come by, and sellers often will take less in order to have the deal go through.
The outcome: lowering prices despite fewer listings and rising demand. According to the Star Tribune’s article below, the increased amount of cash offers is offsetting other postive trends that, if there weren’t these cash offers, should lead to higher prices.
This all-cash trend is especially prevalent in distressed sales, where investors are the main buyers, and who typically deal with cash as it is. Short sales and foreclosures accounted for 42% of active listings last month, on average in metro areas. Read more about what the Star Tribune has to say on this topic in their article below:
In today’s topsy-turvy housing market, cash rules
Financing uncertainties make those cash offers alluring, but sellers often must settle for less money to guarantee a deal.
When Chris and Diane Finney decided to buy a bank-owned condo in St. Paul, they knew there would be competition.
Their strategy? Offer less — but offer cash.
While others said they would pay more, they needed to finance the deal. The bank took less and took the cash.
“We were in the driver’s seat,” Chris Finney said.
In a normal housing market, multiple bids usually lead to higher home prices, and the highest bid wins. But when credit markets are tighter and appraisals are often lower, many sellers will take less to be sure that the deal will get done.
“If I get five offers on a property and the cash offer is darned close to being one of those top offers, I’d take the cash offer any day,” said Marshall Saunders, owner/broker at Re/Max Results.
In December, 33 percent of all U.S. home sales were cash deals — a record since the downturn started in 2006, according to Campbell Survey and Inside Mortgage Finance. As a result, home prices can’t gain much traction because many sellers won’t necessarily accept the highest offer.
For most home buyers, it’s confounding to be rejected because they are financing the deal. For the housing market, it means more downward pressure on prices despite tight supplies and rising demand.
“It’s a real sign of what’s going on,” said Guy Cecala, publisher of Inside Mortgage Finance. “All things being equal, cash wins.”
The volume of cash deals is offsetting other positive trends in the market that should be leading to higher prices. The number of houses on the market has fallen to an eight-year low, and sales are up double digits. At the same time, home prices continue to fall.
At least a third of all homes sales last year involved an investor, Cecala said, and they often pay cash…
Read more of this article from the Star Tribune: “In today’s topsy-turvy housing market, cash rules.”
Sales of previously owned homes got an unexpected boost last month while the number of homes on the market continued to decline, according to data released Monday by the National Association of Realtors (NAR).
The trade group recorded a 1.4 percent month-over-month increase in existing-home sales in October, pushing the annual rate of sales to 4.97 million. NAR’s latest reading is 13.5 percent above the 4.38 million-unit sales pace in October 2010.
That’s down from an 8.3-month supply in September. NAR says the housing supply has been trending gradually down since setting a record of 4.58 million in July 2008.
Distressed homes – foreclosed REOs and short sales – slipped to 28 percent of October’s transactions, down from 30 percent in September. They were 34 percent in October 2010.
NAR says 17 percent of last month’s existing-home sales were foreclosures and 11 percent were short sales.
Market analysts were expecting up to a 3 percent drop in overall existing-home sales between September and October. Forecasts ranged between an annual rate of 4.76 million and 4.80 million.
According to NAR, October home sales should have risen higher than the 1.4 percent the trade group recorded.
According to Lawrence Yun, NAR’s chief economist, contract failures reported by Realtors jumped to 33 percent in October from 18 percent in September. Only 8 percent of contracts fell through in October of last year.
“A higher rate of contract failures has held back a sales recovery,” Yun said. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents, and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process.”
NAR’s report shows the national median existing-home price was $162,500 in October, which is 4.7 percent below October 2010.
“In some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” Yun said. “Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers.”
Yun adds that extending credit to responsible investors would help to absorb distressed inventory at an even faster pace, which he says “would go a long way toward restoring market balance.”
NAR’s data indicates investors purchased 18 percent of homes in October, while first-time buyers accounted for 34 percent of transactions. All-cash sales made up 29 percent of last month’s purchases.
This article is by DSNews.com.