Malibu Real Estate

U.S. home prices post decline

2012-03-02T12:01:00.000-08:00

By Alejandro Lazo, Los Angeles Times

February 29, 2012

Home values in big U.S. cities have fallen to their lowest levels since the start of the housing bust, but cheap prices could draw in new buyers and bolster the chances of recovery, economists say.
A key gauge of home values in the nation's largest cities fell in December to its lowest level since the start of the housing crisis in mid-2006 — the latest evidence that real estate prices remain in a funk.
The Standard & Poor's/Case-Shiller index of 20 American cities, released Tuesday, fell 1.1% in December from November and 4% from December 2010. Eighteen out of the 20 cities tracked by the index posted declines while Atlanta, Las Vegas, Seattle and Tampa, Fla., saw average home prices hit new lows.
Although a bottom in prices doesn't appear imminent, several economists pointed to small improvements in the housing market — including upticks in sales and new construction — that could support a recovery.
In addition, they say, values aren't in a free fall similar to the one that emerged after the subprime mortgage crisis and credit crunch of 2007. The drop in prices is largely because of foreclosures, economists said, which continue to ravage certain hard-hit neighborhoods while places with fewer distressed sales improve.
"If you are not in a neighborhood where foreclosures are a big problem, it's very likely that home prices are not dropping," said Patrick Newport, U.S. economist for IHS Global Insight. "They are stabilizing or rising."
Celia Chen, a housing economist at Moody's Analytics, drew the distinction between a recovery in home sales and new construction, which appears to have begun, and an improvement in prices, which remains elusive and will probably continue to remain so through much of the year.
"Enough homes are in the foreclosure pipeline to keep house prices falling through much of this year," Chen said.
There are other indicators that may support a housing recovery, including increased household growth, record-high affordability, a tighter supply of homes on the market, low interest rates, a pickup in sales of previously owned homes and an increase in the number new units started by builders.
Housing remains road-blocked by persistent unemployment, the sheer number of foreclosures, the difficulties buyers are having securing mortgages and the large share of homes underwater, in which the owners owe more than the homes are worth.
"In terms of prices, the housing market ended 2011 on a very disappointing note," said David M. Blitzer, chairman of the index committee at S&P Indices. "While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended."
All the California cities in the index posted declines from the previous month. Los Angeles, San Diego and San Francisco fell 1.1%, 0.7% and 0.8%, respectively. Only two metro areas posted monthly gains: Miami, up 0.2%, and Phoenix, up 0.8%.
A separate, national index published quarterly by S&P Case Shiller fell 3.8% during the fourth quarter of 2011 and was down 4% compared with the fourth quarter of 2010.
Investors shrugged off the news of a new housing-price low and pushed U.S. stocks higher. The Dow Jones industrial average extended its recent gains to close past the 13,000 mark for the first time in four years.
"Although the rate at which house prices are falling accelerated at the end of last year, it may only be a few more months before the decline seen over the last five years comes to an end," said Paul Dales, senior U.S. economist at Capital Economics. "We expect prices will be broadly unchanged this year and next."
The severity and length of the housing depression — now more than five years in the offing — has surprised forecasters. Warren Buffett, the billionaire investor, said over the weekend that he had been "dead wrong" predicting that a recovery in housing would have begun by now.
But even the biggest pessimists have softened their outlooks. Robert Shiller, a professor at Yale University and co-creator of the index who raised eyebrows last year with comments that home prices could experience severe declines, said Tuesday that his outlook had grown slightly more optimistic.
alejandro.lazo@latimes.com

2012 Home Sales: Positives on Many Fronts

2012-01-05T10:21:00.000-08:00

NAR released its latest pending home sales index figure last week and for the second month in a row the index is up. But more than that, the index has broken 100. This is significant because the only time since the housing boom collapsed that the index has broken 100 is when the home owner tax credit was in effect. The fact that the index has returned to that level a year since the credit has been in effect means the housing market is strengthening completely on its own, without any stimulus.

NAR Chief Economist Lawrence Yun is upbeat about 2012 because in a number of areas indicators are pointing upward. Not only are home sales up but housing starts are up and home prices are stabilizing in many markets and heading up in some. In areas where they’re still down, the declines aren’t that great. More fundamentally, broader U.S. economic signs are looking positive, including the all-important jobs picture. About 100,000 job are being created a month, and that could rise to 150,000—still not a quick enough pace to get us back to where we were before the downturn but the headwinds are in the right direction.

Home Prices Decline 5.9% in Second Quarter

2011-08-24T09:05:00.000-07:00

Kathleen M. Howley, On Wednesday August 24, 2011, 10:21 am EDT

U.S. home prices fell 5.9 percent in the second quarter from a year earlier, the biggest drop since 2009, as foreclosures added to the inventory of properties for sale, according to the Federal Housing Finance Agency.
Prices declined 0.6 percent from the prior three months, the Washington-based agency said today in a report. In June, prices retreated 4.3 percent from a year earlier, while increasing 0.9 percent from the previous month.
Foreclosures are boosting the supply of properties on the market and undercutting the confidence of homebuyers, sapping demand even as mortgage rates tumble to near-record lows. The U.S. inventory of homes for sale averaged 3.7 million during the second quarter, the highest since the third quarter of 2010, data from the National Association of Realtors show. The mortgages on 6.5 million U.S. homes had late payments or were in foreclosure in June, according to Lender Processing Services Inc. in Jacksonville, Florida.
“Foreclosures water down home prices because banks want to get rid of properties as fast as they can,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “The key number driving foreclosures is the unemployment rate, and we saw that worsen in the second quarter.”
Today’s FHFA report measures changes in real estate values using repeat data on individual properties with mortgages backed by Fannie Mae or Freddie Mac. It doesn’t include a dollar value for homes. The U.S. median home price was $171,900 in the second quarter, according to NAR.
To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.

Geithner Urges U.S. Housing-Finance Law Within Two Years to Avoid Bailouts

2011-03-01T17:10:00.001-08:00

U.S. Treasury Secretary Timothy F. Geithner said Congress must pass housing-finance legislation within two years to avoid more taxpayer-funded bailouts.
Without action, the housing market could remain vulnerable to flaws that led to the 2008 credit crisis, Geithner said today at a House Financial Services Committee hearing in Washington.
“We are faced with difficult choices that will involve real trade-offs,” Geithner said. “The challenge before us is to strike the right balance between providing access to mortgages for American families and communities, managing the risk to taxpayers and maintaining a stable and healthy mortgage market.”
Fannie Mae and Freddie Mac, the mortgage-finance companies operating under federal conservatorship, have been sustained by $154 billion in Treasury funds since they were seized in September 2008. The two government-sponsored enterprises own or guarantee more than half of U.S. mortgages.
“It is very important that we wind down Fannie Mae and Freddie Mac at a careful and deliberate pace,” Geithner said. Moving too quickly “could shock an already fragile housing market, severely constrain mortgage credit for American families and expose taxpayers to unnecessary losses.”
U.S. Representative Spencer Bachus, the Alabama Republican who leads the Financial Services Committee, said it is a good sign that Republicans and Democrats seem to agree that the government-sponsored enterprise should be wound down.

‘Very Encouraging’

“It is very encouraging to me that there is now a bipartisan recognition that we must move toward a private market rather than one where the government backstops 90 percent of all mortgages,” Bachus said in his opening remarks.
Geithner and Housing and Urban Development Secretary Shaun Donovan on Feb. 11 released a list of recommendations for reducing government’s role in housing finance. Under the plan, retained portfolios at Fannie Mae and Freddie Mac would shrink by at least 10 percent a year from their current levels of about $1.5 trillion.
Representative Scott Garrett, the New Jersey Republican who leads a Financial Services subcommittee, said the administration plan was “somewhat light on specifics and without a concrete position on a way forward.”
The Treasury’s plans for immediate action include increasing guarantee fees, raising capital standards and requiring bigger down payments from borrowers. Geithner said administration officials will work with lawmakers on ways to fund mortgage loans, perhaps by “developing a legislative framework for a covered bond market.”

‘Fully Committed’

The Treasury secretary today reiterated that the Obama administration is “fully committed” to ensuring Washington- based Fannie Mae and Freddie Mac of McLean, Virginia, can meet debts, retain staff and fulfill guarantee obligations.
The companies’ cost to taxpayers is declining, Geithner said. “The loss estimates are coming down,” and are projected to decline to about $73 billion by 2021, according to budget estimates. That projection doesn’t take into account higher guarantee fees the Treasury is seeking.
President Barack Obama’s 2012 budget estimates predicted that taxpayer aid to Fannie Mae and Freddie Mac could total $224 billion by the end of 2012, of which $55 billion will be returned in dividends.
Fannie Mae and Freddie Mac requested another $3.1 billion in government aid when they reported quarterly earnings last week.

Luxury home sales jump 21% in California

2011-02-15T11:16:00.000-08:00

Even the rich love a deal.

California homes priced at $1 million or more experienced a sales boom in 2010, the first increase in five years, even as overall home sales in the state declined, a real estate information service reported. The reason: High-end home shoppers went bargain hunting as certain parts of the economy improved but luxury home prices remained depressed.

Last year, 22,529 homes sold statewide for $1 million-plus, a 21% increase from 2009, according to DataQuick Information Systems in San Diego. In contrast, the total number of California homes sold last year dropped 9%.
"Prestige home buyers respond to a different set of motivations than the rest of us. Their decisions are less dependent on jobs, prices and interest rates, and more on how their portfolio is doing," DataQuick President John Walsh said.

"When the financial world was full of uncertainty a couple of years back, and the jumbo-loan market dried up, luxury sales plummeted. As the economy started its top-down recovery, some wealthy buyers went looking for a bargain," he said.

Savvy shoppers trying to time the market swooped in before discounted prices could turn the corner.

"Certainly, we're pretty sure we're at the bottom" for home prices, said economist Christopher Thornberg, principal with Beacon Economics in Los Angeles.

Even if prices fall further, he said, "if you are borrowing, buying today makes a lot of sense because interest rates are just incredibly low."

Two other reasons for the $1-million-and-up market increase are the return of the jumbo mortgage market in 2010 and a comeback in the stock market, which saw huge losses in 2009, Thornberg said. "A lot of folks who were reeling from equity losses bounced back."

Cash purchases also inched upward among $1-million buyers last year to 29.4% of sales, up from 28.9% in 2009 and the highest for any year since 1994. But even cash purchases can be motivated by low interest rates.

"A lot of cash offers are done on the basis of the person trying to get a leg up and then they turn around and refi," Thornburg said.

Million-dollar-plus sales hit a high of 54,773 in 2005 and then dropped through 2009. Last year's sales increase came despite a winnowing in the category; 3,380 of the homes that sold statewide for less than $1 million had previously sold for $1 million or more, DataQuick analysis shows.

"There are not as many million-dollar homes kicking around as there were during the boom years," Thornberg said.

L.A.-area real estate offices also noticed the uptick in $1-million-plus sales.

"I think last year there were a lot of buyers who said now is the best time to buy," said Jeffrey Hyland, president of Hilton & Hyland, whose Beverly Hills office doubled its dollar volume from 2009. "We noticed it on the high end."

His office, for example, sold seven houses for more than $20 million last year.

"That's a good sign to the market of where we are" that high net-worth buyers are making purchases, Hyland said.

"It's like those people don't read the doom and gloom" news reports, he said.

Plus, the rich do often get richer. "Some people are more wealthy now than they were before," Hyland said.

Most of the high-end sales, 79%, fell between $1 million and $2 million. The median-size home in the million-dollar-plus category was 2,840 square feet, with 4 bedrooms and 3 bathrooms, and the median price paid per square foot was $601, down 0.6% from $605 in 2009. For the overall California housing market, the median price per square foot was $164 in 2010, up 10.1% from $149 in 2009, DataQuick said.

The most expensive confirmed purchase statewide last year, based on public records, was a 35,000-square-foot-plus mansion on 2.2 acres in Bel-Air that sold for $50 million.

But not all mega-deals are subject to the bright light of public curiosity, if buyer and seller employ legal sleight of hand.

"A lot of the sales … may not appear on public records," Hyland said of the most expensive transactions.

So the number of $1-million-plus sales, he said, could be even greater than reported.

December 2010 Existing-Home Sales Jump 12.3 Percent

2011-01-23T14:54:00.000-08:00

RISMEDIA, January 21, 2011—Existing-home sales rose sharply in December 2010, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3% to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9% below the 5.44 million pace in December 2009.
Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
The national median existing-home price for all housing types was $168,800 in December, which is 1.0% below December 2009. Distressed homes rose to a 36% market share in December from 33% in November, and 32% in December 2009.
“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.
Total housing inventory at the end of December fell 4.2% to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71% in December from 4.30% in November; the rate was 4.93% in December 2009.
A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in December, up from 32% in November, but are below a 43% share in December 2009.
Investors accounted for 20% of transactions in December, up from 19% in November and 15% in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29% in December, compared with 31% in November, but up from 22% a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.
Single-family home sales jumped 11.8% to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5% below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2% from a year ago.
Existing condominium and co-op sales surged 16.4% to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2% below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4% below December 2009.
Regionally, existing-home sales in the Northeast jumped 13.0% to an annual pace of 870,000 in December, but are 5.4% below December 2009. The median price in the Northeast was $237,300, which is 1.4% below a year ago.
Existing-home sales in the Midwest rose 11.0% in December to a level of 1.11 million, but are 4.3% below a year ago. The median price in the Midwest was $139,700, up 3.3% from December 2009.
In the South, existing-home sales increased 10.1% to an annual pace of 1.97 million in December, but are 2.5% below December 2009. The median price in the South was $148,400, unchanged from a year ago.
Existing-home sales in the West surged 16.7% to an annual level of 1.33 million in December, but remain 1.5% below December 2009. The median price in the West was $204,000, down 5.6% from a year ago.
For more information, visit http://www.realtor.org/.

C.A.R. reports California home sales rise in November; share of short sales increasing

2010-12-31T09:09:00.000-08:00

LOS ANGELES (Dec. 22) – California home sales rose in November, but were down from the previous year, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The statewide median price declined from both the previous month and previous year.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 490,950 in November, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. November’s sales were up 9.2 percent from October’s revised pace of 449,480 but were down 8.6 percent from the revised 536,940 sales pace recorded in November 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
“We are encouraged by November’s sales increase, but realize a more sustained recovery is being hampered by the distressed market,” said C.A.R. President Beth L. Peerce. “While we are experiencing a greater share of short sales, these transactions are notoriously difficult to navigate with no guarantee of closure. A recent C.A.R. survey indicated that it takes many lenders 90 days or more simply to communicate whether a short sale has been accepted, causing tremendous frustration for buyers and sellers,” she said. “Moreover, the survey found that more than two out of five short sale transactions never close. The housing market can’t fully recover until lenders streamline and improve the short sales process, which would help expedite transactions,” said Peerce.
The median price of an existing, single-family detached home sold in California fell below the $300,000 mark for the first time since February. The November 2010 median price was $296,820, down 2.4 percent from October’s $304,220 median price and down 2.5 percent from the revised $304,550 median price recorded for the same period a year ago. It was the first year-over-year price decline in a year.
“Unsold inventory declined slightly in November, as the number of active listings fell from October, particularly for homes priced above $500,000,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “The decline in listings was reflective of seasonal factors and the foreclosure moratorium that took place in October,” she said.
Here are other highlights of C.A.R.’s resale housing report for November 2010:

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes was 6.2 months in November, down from 6.5 months in October. The index was 4.5 months in November 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Thirty-year fixed-mortgage interest rates averaged 4.3 percent during November 2010, compared with 4.88 percent in November 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 3.25 percent in November 2010, compared with 4.41 percent in November 2009.
The median number of days it took to sell a single-family home was 54.7 days in November 2010, compared with 33.1 days for the same period a year ago.

Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 106 of the 328 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for November may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. online at
http://www.car.org/marketdata/historicalprices/2010medianprices/nov2010/.

Statewide, the 10 cities with the highest median home prices in California during November 2010 were: Saratoga, $1,235,000; Newport Beach, $1,110,000; Laguna Beach, $1,107,500; La Jolla, $1,037,500; Los Gatos, $850,000; Cupertino, $850,000; Santa Monica, $849,000; Santa Barbara, $839,000; Danville, $720,000; San Francisco, $680,000; and Arcadia, $670,000.
Statewide, the cities with the greatest median home price increases in November 2010 compared with the same period a year ago were: San Juan Capistrano, 57 percent; San Bernardino, 24.3 percent; Thousand Oaks, 22.6 percent; Encinitas, 21 percent; Lake Forest, 16.8 percent; San Marcos, 14 percent; Montclair, 12.9 percent; Newport Beach, 12.6 percent; Compton, 12.5 percent; and Yucca Valley, 12.4 percent.

Multimedia:

Video of C.A.R. Chief Economist Leslie Appleton-Young discussing highlights of the November sales and price report.
Unsold Inventory by price point.
Data table comparing current prices with trough prices in areas throughout the state.

Home prices decline for three months in a row

2010-12-18T10:10:00.001-08:00

October home prices fell for the third straight month, according to an index maintained by mortgage data aggregator CoreLogic.
The 3.93 percent year-over-year decline in the CoreLogic Home Price Index was significantly greater than the 2.43 percent slip registered in September, and left home prices down 30.2 percent from their April 2006 peak.
Excluding distressed sales, national home prices were down 1.5 percent in October 2010 compared to a year ago, with a 20.9 percent decline from peak.
Continued home-price weakness reflects the lingering impact of the artificial support provided by homebuyer tax credits in the spring, and their subsequent withdrawal, said CoreLogic Chief Economist Mark Fleming. Stubbornly high unemployment and seasonal factors are also coming into play, he said.
Combine those factors with high shadow and visible inventories, and "the prospect for a housing recovery in early 2011 is fading," Fleming said.
The five states with the greatest year-over-year depreciation in October were Idaho (-15.06 percent), Alabama (-9.3 percent), Oregon (-8.5 percent), Arizona (-8.25 percent) and Florida (-8 percent).

The five states with the highest appreciation were Wyoming (5.67 percent), North Dakota (5.35 percent), Hawaii (2.97 percent), New York (2.93 percent) and Vermont (2.84 percent).
The CoreLogic index covers 572 Core Based Statistical Areas (CBSAs) where 85 percent of total U.S. population lives. The index showed prices falling in six out of 10 the nation's largest CBSAs -- five if distressed property sales were excluded.