Category Archives: Real Estate Information

California home prices hit five-year high

Sales Increase As Well

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By Andrew Khouri

June 13, 2013, 1:57 p.m.

California home prices climbed to a five-year high last month and sales increased as well, placing increased momentum behind the state’s housing recovery.

The median sales price for a home rose 25.9% from last year to hit $340,000 in May, real estate firm DataQuick said Thursday. Sales of new and existing homes jumped 1.2% to 42,293, the most for a May since 2006 when 54,099 homes sold.

But while sales increased last month to a multi-year high, they remained 9% below average as tight inventory continued to define the market, DataQuick reported.

The lack of homes for sale, low interest rates, investor demand and an improving economy have caused sharp price increases recently. The median price paid for a home in Southern California rose 24.7% in May from last year, while the Bay Area jumped 29.8%.

The median sale price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general rise or fall in values.

Helping the median rise is the declining percentage of distressed sales. Notices of default — the first formal step in the state’s foreclosure process — fell 10.2% last month from April, according to PropertyRadar.com

Homes that had been foreclosed upon within the last year accounted for 11.4% of homes resold in California — the lowest point since August 2007, DataQuick said. Short sales also dropped last month compared to May 2012.

Statewide, the median has increased year-over-year for 15 straight months, but is still below a peak of $484,000 reached in spring 2007.

Some homes are slow to sell even in hottest markets

Great advice for Sellers in today’s Los Angeles Times Business Section.
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By Kenneth R. Harney

May 4, 2013

WASHINGTON — With full-fledged sellers’ markets underway in dozens of metropolitan areas around the country, new research has found curious statistical patterns emerging: Even in cities where listings get multiple offers within days or hours, significant numbers of homes are sitting on the market for six months, 12 months or more with no takers.

Call them turnoff listings. Despite roaring sales paces all around them, for one reason or another these houses send shoppers scurrying away, often because of mispricing, excessive restrictions on access to buyers and agents, failure to clean or make repairs and a variety of other marketing bungles.

Researchers at Trulia, a real estate listings site, say the existence of large numbers of unsold houses in the midst of high-activity markets is more common than generally assumed. Jed Kolko, chief economist for Trulia, suggested that “even in the tightest markets, there is a ‘long tail’ of homes languishing” unsold for extended periods.

For example, in one of the fastest-paced sales areas in the country, San Jose — where the median time from listing to sale is just 20 days — one out of 10 houses has been on the market for 161 days or more. In metropolitan Boston, where houses go from listing to sale in a median 42 days, 10% go unsold for 257 days or more.

Data provided for this column by MRIS, the multiple listing service covering metropolitan Washington, D.C., indicate that in the hottest neighborhoods, houses sell in a median five to 12 days. Yet from 10% to 12.5% of listings in some areas sit without buyers for six months or more.

Nationally, according to new data from the National Assn. of Realtors, 44% of all new listings take 90 days or more to sell, 22% take six to 12 months and 9% take more than a year.

Why the glacial pace for certain homes in even the fastest-moving sellers’ markets? Realty agents who visit houses with potential buyers in tow aren’t shy about sharing the major reasons. One agent, Jeff Dowler of Solutions Real Estate in Carlsbad, Calif., says more often than not, the root problem is the owners of the property. As he guides shoppers from one listing to another, “I see homes being sabotaged by owners all the time.”

Sabotaged? Not intentionally, says Dowler, but by “doing things or not doing things that would make the house easier to sell.” Demanding an unrealistically high asking price — and refusing to negotiate on lower but qualified offers — is the top turnoff for Dowler and many other agents showing homes.

Imposing severe restrictions on when and by whom the house can be shown is another. For example, sellers who will only allow showings between 10 a.m. and noon on Saturdays, or who require a 24-hour advance notice before appointments to show during the week, or who won’t let anyone in unless they or the listing agent are present, inevitably delay offers and sales.

Patricia Kennedy, an agent with Evers & Co. in Washington, D.C., recently blogged on ActiveRain, a real estate site, about “annoyingly inflexible” restrictions: “What? You want to show my house in a half-hour? Sorry, but I’m covering my gray. Go away!” But, wrote Kennedy, “if I can’t show it, I can’t sell it. Sorry. If you’re a pill about showings, you are sending the buyer’s agent a message that you’ll probably be a pill throughout the transaction!”

Other big turnoffs:

•Poorly cleaned, messy houses with obvious deferred maintenance.

•Sellers who insist on being present — or hover nearby — when shoppers visit so they can point out every feature they improved or like. Better for sellers to be out of the house or out of sight.

•Smells inside the house that are either bad — especially from dogs, cats and other pets — or come across as contrived, such as scented candles, potpourri plug-ins, etc. When buyers encounter obviously artificial smells they wonder: What are the owners covering up?

Just because houses are selling fast in your area doesn’t mean yours will. You’ve got to think of it as a product you’re marketing, not just as your home. Get it in shape to sell. Price it realistically. Be flexible and cooperative on showings and negotiations. Unless it has grossly off-putting features — costly physical defects, ugly design, bad location, bad schools — your property should sell.

kenharney@earthlink.net.

Distributed by Washington Post Writers Group

L.A., other hot housing markets are getting frothy

LATime_REA shortage of for-sale homes is driving the Los Angeles area — a report calls it one of the ‘bubbliest’ U.S markets — from recovery to frenzy, experts say.

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By Andrew Khouri and Alejandro Lazo, Los Angeles Times

Kelly Hamon recently beat out several other home shoppers for a cream-colored North Hollywood home. But the victory came at a steep cost.

Frustrated after getting outbid five times by all-cash buyers, Hamon ultimately bid $47,000 more than the asking price. She pursued the home so aggressively, she said, out of fear that the days of low interest rates and affordable prices would soon vanish.

“I got really scared,” Hamon said. “I got scared that everything was going up.”

The once-in-a-lifetime mentality, fueled by a shortage of for-sale homes, is driving the Los Angeles area from recovery to frenzy, according to real estate agents and experts. A report released Friday by the real estate data and brokerage firm Redfin.com called Los Angeles one of the “bubbliest” housing markets in the U.S., second only to Washington, D.C.

“Smart investors are starting to bail out,” said Redfin Chief Executive Glenn Kelman. “It feels crazy.”

Out of all homes sold in March, 91% of the company’s deals involved a bidding war. And about 10% were investors flipping a property at a profit after buying it just a short time before. Some agents representing buyers have called Redfin agents offering to double their commissions to ensure clients win bidding wars, Kelman said. And, increasingly, deals are being financed with smaller down payments — meaning buyers are able to take on more debt.

While cash offers may have proliferated in 2012, this year has ushered in stronger competition in the mortgage market, said Guy Cecala, publisher of Inside Mortgage Finance Publications. Banks had been relying on a wave of refinancing business. But as that slows, they are setting their sights on new home buyers by loosening their underwriting standards and accepting lower down payments.

Some lenders have even begun offering piggyback loans — which enable buyers to take multiple mortgages to avoid putting any money down, Cecala said.

“It is mostly something that started in the last month or two,” he said. “The good news for borrowers is that they are starting to see looser underwriting, but it is not looser underwriting across the board.”

Since 2000, home prices have risen twice as fast as incomes in the Los Angeles area, according to Redfin’s data. In January 2000, per capita income in Los Angeles was $31,002, and the median home price was $234,000. Since then, income has risen only moderately, to $44,423, while the median home price has soared to $421,000, according to a Redfin analysis.

The Redfin report comes as others have begun to raise concerns that housing might be approaching speculative territory. Professors Karl Case and Robert Shiller — creators of a widely followed home price index — have cautioned about fast-rising home prices in recent months.

Tom Barrack, founder and chairman of private equity firm Colony Capital, which is making big investments in single-family homes, recently told Bloomberg News that he was concerned housing was in danger of approaching bubble territory again.

Leo Nordine, a real estate agent in Manhattan Beach, said he recently listed a one-bedroom home in South Los Angeles and got 49 offers. People looking to make money from real estate are out in force, he said. And there’s little chance of a new wave of foreclosures, because banks have become much more flexible in working with delinquent borrowers.

More investors are buying homes to quickly sell again at a profit.

“Everybody I know is trying to do flips right now. It’s like the day trading of the 1990s,” Nordine said. “We went straight from Armageddon to speculation; there was nothing in between this time.”

Still, Nordine is advising clients to buy now if they can, citing low interest rates and low risk of another foreclosure crisis.

“That is how the American economy works now,” he said. “It seems as if we just go from one bubble to the next.”

There is a distinct difference between the home price run-up of the last decade and the current upswing. During the previous boom, listings abounded and sales soared. Now, rising prices are driven by a shortage of supply. And although underwriting standards may be relaxing, they remain tight when compared to the days when lenders issued enough subprime loans to crash the U.S. economy.

Christopher Thornberg, founding partner at Beacon Economics, said today’s market remains rational, despite a rise in prices.

“It’s not a bubble by any stretch of the imagination,” he said of the recent price gains. “If you can’t borrow, you can’t speculate — that is the primary thing that will prevent this from happening.”

Syd Leibovitch, president and broker of Rodeo Realty, echoed those comments, saying that even though prices may be approaching their previous peaks in certain markets, he is not concerned people will overextend themselves.

“I have no concern about that. I think this was a unique real estate drop tied to a loss of loan funding,” he said. “Now the loans are back and much more prevalent, and there is a lot of money to loan.”

Nevertheless, for Hamon, the accepted offer for the North Hollywood home represented the end of a long home-shopping ordeal. At the open house for the three-bedroom home, near the North Hollywood Arts District, a bustling scene full of families, neighbors, investors and real estate agents crowded the place. They inspected the home’s dark brown patio and backyard orange tree.

Hamon initially offered $15,000 over the $455,000 asking price. A day later, she said, she upped her offer to $502,000 after the sellers picked the top five bidders to battle against one another.

The family celebrated the victory over Brazilian food, but also prepared to tighten up household finances.

“I am going to have to tighten the budget,” Hamon said. “Maybe not get TV right away — just Netflix. Little things; don’t go out to restaurants. But I think it’s worth the sacrifice.”

How do I love thee? Let me count the days.

How to count “days” in a Real Estate contract.

So, it’s the Friday before President’s Day Weekend and you’ve signed your agreement and now you have 3 days until your first deadline. But how do you count the days? Is President’s Day a Holiday? Do you start counting on Friday or Saturday?

counting days calendar

Here are some helpful tips on counting days in a real estate contract.

Definition of “Day”: All calendar days are considered “days.” If the contract specifies “business days,” this would not include weekends or legal holidays.

How to count: Once the final agreement is signed by the last party and delivered to the other party, the counting begins! The next day is the first day of the countdown. In the example above, the counting starts Saturday (Day 1) and the deadline is Monday. Unless, of course, you are talking about the California Association of Realtors (CAR) Purchase Agreement.

EXCEPTIONS!

California Association of Realtors (CAR) Purchase Agreement.

The CAR agreement specifies that if the last day of performance of any act (including close of escrow) falls on a Saturday, Sunday or Legal Holiday, it will be postponed to the next day. (see Paragraph 22.E)
counting days calendar
So, in our example, above, the three days, which ends on a President’s Day (which is a Legal Holiday), would be postponed to the next day, Tuesday.

But there is more!

The CAR Purchase Agreement also says that the rules about weekends and holidays only applies after the agreement is accepted by all parties. So, during the period where the parties are signing offers and counter offers, the expiration of these agreements can fall on a weekend or holiday. In addition, the clock starts ticking on these form offer/counteroffer agreements when the offer is signed by the buyer, not when it is delivered to the seller! (see Paragraph 29)

So, what are the Federal Legal Holidays, anyway?

New Year’s Day
Martin Luther King Jr.’s Birthday
President’s Day
Memorial Day
Independence Day
Labor Day
Columbus Day
Veteran’s Day
Thanksgiving Day
Christmas Day

Thank you to Broker Risk Management for giving us the idea to write about this topic!