Tag Archives: demand

Home prices rise across county

Double-digit annual increases in many markets

While foreclosures continue to fall, the sales pace for the real estate market as a whole continues to heat up, and with it come rising prices.

Total sales in December were up 9 percent as compared to a year ago, and up 9.5 percent from even a month before, according to figures released this week by the California Association of Realtors, a real estate industry trade group. The Association’s chief economist, Leslie Appleton-Young, attributes the volume spike to sellers of high-priced homes trying to close transactions before becoming subject to higher capital gains taxes in the new year (profits of more than $250,000 for individuals and $500,000 for couples on the sale of personal residences are taxed as capital gains).

The median-priced home selling in San Diego County last month was $418,290, up from $403,990 in November and $359,930 in December 2011, marking a full 16.2% spike in prices over the last year.

Market tracking firm DataQuick points to several markets that have done even better. Though they’ve only released numbers through November 2012 at present, areas with a significant number of sales that have experienced even stronger appreciation include Encinitas (18.1%), La Jolla (30.8%), Lemon Grove (23.3%), and Vista (20.7%).

An inventory shortage present in the market for some time has become more pronounced, as underwater homeowners (those owing more than their homes are worth) are able to negotiate loan modifications with their lenders, decide to hold off selling in the hope that rising prices will eventually allow them to avoid the credit hit of a foreclosure, or simply elect not to pay or sell (it takes over 300 days on average for a lender to foreclose)…

Read the rest of this article by the San Diego Reader here: “Home prices rise across county”.

Local pending home sales up 12.3%

Local pending home sales up 12.3%

San Diego nearly same as April,state up for 12th straight month

pending sales“San Diego County pending home sales rose 12.3 percent in April from year-ago levels as completed sales nationally increased nearly as much.

The chief economist for the National Association of Realtors, Lawrence Yun, interpreted the results as indicative of demand extending beyond the investor community looking for bargains in the still-depressed housing market.

“A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” Yun said.

The San Diego Association of Realtors said there were 5,697 pending sales as of Tuesday, up slightly from 5,654 a month ago and up 12.3 percent from 5,075 a year ago…”

Read the rest of this article by the Union Tribune, San Diego here: “Local pending home sales up 12.3%“.

Cash is king in today’s housing market

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.

All-cash offers in today's real estate marketThis 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.”

Rise in Home Sales Signifies Strengthening Market

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”

Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month.
Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.

Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.

Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.