Sunday morning reading

There are two interesting articles in the newspapers today:  First, from the NY Times, the esteemed Robert Shiller says that we're NOT in another housing bubble, and the future of housing still has many clouds.  He does agree that the market is improving, however.

And Alejandro Lazo of the L.A. Times has a feature on the Calculated Risk blog.  Please note that CR is in this blogroll, and this blog is on CR's blogroll.  Yes, the blog is a little wonky, but for those of you that like stats, you might want to check it out.

LA home prices up 19.6% last year -- but wait, there's more

Alejandro Lazo at L.A. Times has a great article today about year-over-year housing trends in the L.A. area.  Yes, prices were up in December 19.6% compared to December 2011.  Click here for the article, but read past the headlines -- there's some pretty significant info here (the emphasis throughout is mine):

The strong performance last month indicates that 2013 will also continue to bring home price gains, analysts said.

 

The gains came as foreclosures declined, housing inventory plummeted, mortgage interest rates hit record lows and demand from investors spiked.

In California, buyers can anticipate little new inventory on the market. A supply of only about 2 1/2 months' worth of single-family homes for sale was available statewide at the end of December, the California Assn. of Realtors reported Tuesday. A supply of six or seven months is considered healthy by most economists. Cash buyers and investors are also playing a big part in snapping up home inventory. Cash buyers bought up 33.8% of all resale homes last month, while absentee buyers purchased 29.1% of Southland homes in December.

Oh, those pesky cash buyers! But here's my take-away.  Prices aren't coming down any time soon.  The house you want for $700k will cost you $725k by the summer.  So you may want to think about getting in the game now...

 

 

Shortage of homes creates fierce competition, says L.A. Times

Just as I've been saying and buyers have been experiencing, today's L.A. Times has a front page story about our current market, its low inventory and how wildly competitive it is.  Click here for link.  The entire article is fascinating; here are some of the more succinct quotes:

"Housing inventory has sunk to levels not seen since the bubble years. The number of American homes with a "for sale" sign hit 2.5 million in April, the lowest number for an April since 2006."

"The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books."

"Also important is having enough cash to make up the difference between the negotiated price and whatever the appraised value of the home turns out to be, he said. (Lenders won't provide a mortgage for more than a home's appraised value.) Many deals these days are falling apart because appraisals are coming in low, given how many recent comparable sales have been foreclosures or other distressed properties."

The real estate market is back

According to today's L.A. Times, the real estate market is back.  Click here to read the front page story.  How is this different from other reports that the market is on an upswing? This actually quotes housing economist Christopher Thornburg, who has been one of the gloomiest forecasters, saying that things are looking up.  Corollary prediction: by the end of today, you'll be sick of hearing about how the market is back.

Home prices going up?

LATimes posted an article about rising home prices today.  Click here for the link.  Of course, the increases are miniscule and concentrated in the north of California.  But still... Prediction: we are going to see more headlines like this, at least through the rest of the quarter.  Inventory is short and a lot of buyers want to take advantage of the still-low interest rates.

News of the week and house of the week in Valley Village

Whew! Coming up for air here, and bringing you news of the week.

First, the house of the week: 5501 Morella, Valley Village, $499,994, 3+1.5, 1334 sf, pictured above.  I showed this last night and it's in a cool little pocket.  The house needs decorating, but it's clean and has been expertly maintained by the sellers.  I wish my carpet looked as good, and I wish my kitchen was as spacious.  If you are looking for a decorating project, this would be a great buy.

What did I tell you about L.A.'s "eastside"? You'll see my take on Highland Park, et al, below -- I toured the area recently and was really impressed.  Now, Alejandro Lazo of the L.A. Times has a front page article entitled Investors flip over Highland Park.  That's just what I saw when I was there a few weeks back.

And now for the really big news: I have two listings coming up in Burbank. One is a (rare) architectural home designed by a noted architect, and the other is close to the Chandler bike path.  More news soon!

Finally, 1585 Knollwood, Pasadena is in escrow, after less than a week on the market.  We're still showing for backups. I'll miss going to this house; the setting is just so serene.

Yet more info on Southland property flippers

I've been posting about flipped properties lately, and here's more info and statistics about that very thing from today's L.A. Times.  The short of it: investors, most of whom are likely property flippers, are crowding the low end of the market.  The title should link; if not, click here.  Some salient quotes:

"The one thing that is certainly true at the moment — because rents are rising and house prices are flat or falling — is yields on houses are pretty good right now," said Richard Green, director of the USC Lusk Center for Real Estate. "It creates a problem for ordinary people, because a lot of investors are buying with cash, and so cash buyers can buy for less money." So if it seems like there are no inexpensive homes on the market, that's why.

And "...buyers who paid all cash purchased 29% of all Southland homes in December." Statistically, many of those cash sales were in the middle- and high-price catagories, too.  I am constantly amazed by how much cash is out there.

And, perhaps the most important stat of all: "Nearly 1 in 3 homes sold last month on the resale market was a foreclosure and about 1 in 5 was a short sale."

The article also discusses price declines in December, but that usually happens at the end of the year.  My take-away is good and bad.  Obviously, even though there should be great deals on properties out there, the competition for true bargains in all price catagories is fierce and cash is king.  The good news for regular buyers is that many/most of these investors are doing some very nice rehabbing of properties.  They are spending their cash on the fixes needed so you can spend yours on your mortgage -- and tax deduction.

I think I need to start going to foreclosure auctions.

Foreclosure info AND loan modification info for So. Cal.

The Los Angeles Times had two interesting articles about our local real estate market yesterday.  The first is titled Foreclosure activity soars in third quarter, ending lengthy lull.  No, this isn't the much discussed "shadow inventory" hitting the market.  It's just that the lending banks have stopped suspending foreclosures due to the robo-signing scandal.  Other salient facts from the article, as if you didn't know: "Defaults hit lower-cost neighborhoods harder. Areas with a median home sale price below $200,000 saw 11 default notices filed for each 1,000 homes, compared with 8.1 per 1,000 homes statewide and 2.8 per 1,000 homes in areas with a median sale price above $800,000." And people wonder about the 99% protestors.

The second article is titled Plan would allow refinancing of some underwater mortgages.  Don't get excited yet.  The article states: "The new proposal would apply to people who are underwater on their homes but making mortgage payments on time. Only mortgages owned by banks — about 20% of all mortgages — would be eligible. Most mortgages are owned by investors as part of mortgage-backed securities."  How and who is this going to help? I think the amount of mortgages owned by banks are much less than 20%.  Why not just write down the interest rates if people aren't behind (yet) on their mortgage payments? 

U.S. to lower the size of mortgage it will guarantee - but I don't think that's going to have too much of a negative impact

Here's an article from today's L.A. Times about lower loan limits that will go into effect at the end of September.  While many of my colleagues are wringing their hands over this change, I'd like to point out three things. 1) The limit is reducing from $729,750 to $625,500.  So any loan amount over $625k will now need to have jumbo financing. Therefore this will really only impact home buyers, and home prices, between those two loan amounts only -- that's only a price spread of $104,000+.  2) Jumbo rates are at an all-time low. 3) Yes, many of the areas I serve have high home prices; but a greater amount of neighborhoods have home prices that don't exceed $600,000 in the first place.  So will there be wide-spread harm? It remains to be seen, but I doubt it.

All your real estate good news/bad news reading in one convenient post!

If you regularly read the L.A. Times or any other major news source, you know that there's conflicting news out there about the economy and real estate.  Here are the latest links from the last week:

First, from Fortune Magazine: It's time to buy a house again.

http://finance.fortune.cnn.com/2011/03/28/real-estate-its-time-to-buy-again/  

I'd love for this to be correct.  One thing though: we never had a lot of new homes here in the center metro area of L.A., unless you count condos.  And a lot of those new condos still haven't sold.

Next, from Rob Hahn via AOL, a rebuttal to the above article: Is it really time?

http://realestate.aol.com/blog/2011/03/29/its-a-great-time-to-buy-a-house-really/

Rob slices and dices the stats used in the Fortune Article and comes up with a different take.

Then, from yesterday's L.A. Times: Banks may be forced into agreeing to short sales.

http://www.latimes.com/business/realestate/la-fi-foreclosure-short-sales-20110330,0,732448.story

I read this with delight, until I got about half-way through the article.  Then, it said that banks can still refuse the short sale if they don't like the sales price.  So, what's the point?

And finally, from A. Lazo in today's L.A. Times: There really is a shadow inventory, and it's depressing prices.http://latimesblogs.latimes.com/money_co/2011/03/unlisted-shadow-supply-of-18-million-homes-looms-over-housing-market.html

I don't want to argue with the statistics experts -- Core Logic in this case -- but it bears repeating that no one set of statistics can be applied to hyper-local real estate markets.

What's your take on our market, dear reader?

LATimes: Housing prices edge towards double dip

I know I'm not supposed to report news like this, but today's L.A. Times has an article entitled Housing Prices Edge Towards Double Dip (the title above should link to the article).  I don't dispute the stats, nor do I want to gloss them over, but here are some things to consider:

• These are national stats.  All real estate is local, and some of our neighborhoods are seeing price rises.
• Studio City, Burbank, Toluca Lake and Sherman Oaks, et al do not have the same amount of foreclosures that other neighborhoods have, and foreclosures skew the stats lower as they make their way through the trustee sale process. Even short sales and foreclosures, when they eventually sell on the retail market, sell at market prices.
• This is good news for buyers as long as interest rates stay relatively low.
• If they purchased a home before 2003 (and didn't pull money out in HELOCs), most local sellers still have a lot of equity over their purchase price.
• Sellers with nice homes in nice neighborhoods at market prices are still seeing quick sales.

LA Times: Housing recovery: are we there yet?

Here's some Sunday reading from today's L.A. Times: Alejandro Lazo's survey of five housing experts on what we can expect from the real estate market this year.  Not to be critical, but remember the old saying: ultimately, nobody knows anything.