Wednesday, February 26, 2014
Please don't misunderstand, buyers that took action, still bought 20% below the high of2007, but due to tight inventory, sellers enjoyed many multiple offer opportunities and bids were sometimes over list price. As a result, the 2013 housing market had its biggest gains since 2004. Increase demand coupled with limited supply resulted in a 19.7% jump in home prices. Having reported that, December was still a very slow month for sales for the resale home in Sothern California. In fact, they were at a 6 year low in volume, according to Data Quick, even as prices jumped, for precisely that reason, low inventory, more demand on the housing that was available. (More on the exact numbers later). What is the outlook after one month of 2014? Decidedly, it is a mixed bag: 1) Inventory remains tight, although listings are already starting to hit the post-Super Bowl market pick up. Sellers who list early without waiting until the official spring season will be rewarded with a brisk and busy market. The O.C. jobless rate dropped to 5.2% reportedly at the end of January. The Fed has trimmed back another 10 billion a month in its commitment to buy bonds. The response overall has been favorable which means expect interest rates to continue to inch upwards. If you are a buyer looking to keep as much purchasing power as possible, pay more attention to interest rates than housing prices, because therein lies your true north. You qualify for a loan based on what you can pay, so be cost sensitive more than price sensitive. There has been some solid economic news reported, such our 4th quarter 3.2% annual rate of growth, based largely on consumer spending which is usually a signal that people are feeling better about their own personal economic outlook. Consumer confidence is a key to any serious turnaround coupled with hiring trends and housing. But the strength of the report also came from the type of spending; durable goods such as cars, technology, and appliances. Spending on services also rose significantly meaning traveling, dining out, and other non-essentials are also coming back. There is a ways to go yet, hiring being the key and still lagging behind the high of 2006. Expect as those numbers increase, so will the housing market continue to heat up.
The total number of houses sold in Orange County for December, (the last full month available), was 3,089. That number shows a .6% increase in sales volume, but is very deceptive. The number of single-family resale homes was 1,730 which was a 13.9% decrease from December of 2012. Condos came in at 777 which was down 2.4%. It was not hit nearly as hard because entry level buyers often find themselves in a condo, and that market segment has been very steady. Million dollar plus homes have also seen record numbers, as reported here last month. The missing segment has been the move up buyer or move down buyer. As more and more homeowners get their equity position back, and new construction ramps up, giving those specific buyers a new place to go to, expect to see the middle price range come into its own in 2014. Speaking of new homes, the number of sales for December was 582, a 120% increase year over year. Distressed sales accounted for 24% of the December 2012 market, while in 2013, distressed sales numbered only 14%. The median price for all house rose 21.3% to $570,000. Separating out the condos, the median price was $372,000 a 22% rise and single-family resale was $639,000, rising 21%. All figures are comparing December 2012 to December 2013. More information is available at www.dqnews.com.
It's always tempting to do something yourself. Get rid of the middle man, save yourself some dough. Most people would never fill their own cavity, paint their own house, or fix their fender after an accident. Yet with their greatest investment, people can be downright cavalier. There are many problems to selling your own home, which are detrimental to your peace of mind and certainly to your pocketbook. You may save the twenty or thirty thousand on commission, but you may lose two or three times that by mispricing your home or tying it up with a buyer who can never close, but that gets you under contract and keeps you from selling to someone who could buy. Here are the top 5 reasons: 1) There are too many people you have to communicate within a real estate transaction, whose job description you know nothing about and therefore cannot properly represent yourself, i.e. , Home Protection services, termite, appraiser, lawyers for the buyer, the lender, the loan underwriter, the escrow agent, a home stager (properly staged homes can get up to $50,000 or more for your home.), to name a few . 2) Qualifying a buyer - as already stated, once under a signed contract, you are obligated for an escrow period, even if the buyer can't buy. A preapproved letter means nothing, you're looking for a prequalified buyer. If you don't know all the differences, it's trouble waiting to happen. 3) Negotiating on your own home. This is a dangerous area; overprice it and sit forever, under price it and you'll be sorry forever. Knowing not only comparable sales, but all the attributes that add to your homes price is paramount. 4) Pricing your home. As already stated, price is a sensitive topic. Ask too much, and the perception is already out there that your home is overpriced. How do you know when an offer is legitimate or a lowball offer, looking to capitalize on your lack of knowledge. 5) Most importantly, keeping your family, your home, and its valuables safe from real predators, and cyber predators. Where will you advertise? Craig's List, Angie's List? The Penny Saver, somewhere else online? How will you hold open houses? What will you do when 10 or 15 people come at once? And what if all those people are not actual buyers? How do you qualify them, how to you control them once they step into your home? These are not scare questions. These are very real scenarios that Realtors deal with every day and have professional procedures to protect you, your home, and to sell your home for the highest price, with the least amount of inconvenience. Truly, this is something to think about.
Monday, January 27, 2014
Most key analysts expect a slightly better market in 2014 than we had in 2013. There are several reasons for this; improved employment, better and easier financing, a stabilizing economy with growth in the right direction and finally, a larger and improved inventory. There is a certain unknown quotient in a changing Fed Chairman, but by all accounts, Janet Yellen's direction of the Fed aims to keep monetary policy, "highly accommodative." In fact, it appears that Yellen gets the fact that real estate drives the economy, and most experts expect her, "to continue on Beranke's path," so stated Karl Case, co-founder of the S&P/Case-Shiller home price index. Any projections of doom, are very tempered, the only one found at press from economist Essie Adibi from Chapman University, who said the probability for housing doom was "low." It would have to come, according to him, from high inflation and low productivity, both of which are very long shots. In fact, inflation has not even been a blip on the economic screen and is not projected to occur in 2014. John Karevoll of DataQuick foresees, "the welcome decline into deserved obscurity of real estate naysayers and their canned think-tank narratives...the naysayers will become irrelevant as they doubt the housing's continued march to more normal, positive conditions. Good riddance to them." Rather strongly worded, but isn't it about time we stop doubting a shred of positive news and rather, embrace our economy for what it is and settle our lives around it, which includes buying homes for our families and our lives.
The housing numbers were off in November, the last full month available, but there are several good reasons. First and foremost, inventory slipped as demand outbid sellers entering the market. Secondly, investor transactions slowed down, and that is actually is a good thing, for the owner occupied integrity of neighborhoods and for the bidding wars to stop both run ups in pricing and frustration for bona fide purchasers. Finally, distressed properties really dropped off the radar, dropping what had been a huge segment of the purchase market. The frosting on the cake was the usual housing slow down at the holidays. Expect a big engine to start humming early, as many sellers waited for 2014 to put homes on the markets. Financing may become easier, and even though we've had some slight rises to interest rates, expect them to stay under 5% for at least the first 2 quarters of 2014. But buyers will come to the market place early to avoid higher rates. So Cal, comprised of L.A., Ventura, O.C., Riverside, San Bernardino, and San Diego had a total of 17,283 new and resale houses and condos. That was down 14.2% from October. The typical seasonal decline between the 2 months is 7.6%. The median price for all So Cal was up 19.9% from November 2012 and has risen for 20 straight months. To keep things in perspective, this rise is still 23.8% below the highest high of spring/summer 2007.
The total number of homes sold in Orange County for November, (the last full month available), was 2,632. This was down 8.6% from November of 2012. The overall median price was $560,000, which is up 24.4% from November 2012. There were 1,591 single-family resale, and 668 condo sales. New homes came in at 373, up 78% and clearly illustrates a rebounding new home market.
The following figures are from data gathered 12/19/2013 with prior year comparisons and are national. Sales were down 1.2% from a year ago and prices were up 9.4%, indicating a rebounding and stabilizing market. Perhaps the most important stat is that inventory has risen 5% and experts expect more in 2014. Distressed sales are currently 14% of sales as compared with 22% previously. The million dollar home market rose drastically nationwide, with the smallest rise here in the west at 25.4%. A paltry increase when compared with the northeast market which rose 45.3%.