Timely Real Estate News………………………………………………….1 August 2014 ****************************************************************************************************
Housing recovery slowing down….and that’s a good thing.
If you’re reading news reports — online or offline — you’ve seen a bunch of stories during the past week that the housing/ real estate market is losing some of its steam. During the post-recession years (remember, the Great Recession ended in June 2009), we have seen dramatic upturns in prices in many areas, much to the relief of homeowners whose homes were “under water”, meaning their equity disappeared. So…price increases were a welcome sign. But it didn’t always help our real estate
market, especially when credit tightened up so much that few could qualify for a mortgage, and prices were skyrocketing, forcing many out of the market, especially first-time buyers. According to Data Quick, the San Diego-based real estate research firm, in the latest sign of a market that’s plateauing well below its past highs, home prices in Southern California grew at their slowest pace in two years in June, capping a spring selling season that never quite took off. The median price of a home sold in the six-county Southland hit $415,000, according to Data Quick’s latest report. That number is the biggest in four years, but 18% below the market’s high point in mid-2007. The furious gains seen this time last year are a thing of the past. In the last 12 months, home prices climbed 7.8%, barely one-fourth their pace in the prior year. If the market’s highflying days are over, housing in Southern California appears to be entering a healthier phase of growth, real estate agents and economists say. “I think that being ‘back to normal’ in our market is a good thing,” Carole Schiffer said. “The negatives of a fast-moving, upward market came with a high price to pay, which far outweighed the positives.” According to Data Quick, tight credit standards and a still-soft economy are keeping a lid on prices, and we expect to see this remaining to be t
he trend for the rest of 2014. A report last week stated that asking prices in Orange County — a leading indicator of the sales figures Data Quick measures — grew just four-tenths of a percent in the second quarter. But sellers, at least those with proper expectations, are still drawing multiple offers from buyers who are able to get historically lower interest loans. “And we’re seeing the same thing on the Westside in the communities I report on,” Schiffer said. But the good news is that buyers have a lot more to choose from. With prices higher than they were a year ago, investors and all-cash buyers have backed away, constituting their smallest share of home sales in four years, according to Data Quick. Banks appear to be loosening the tap on loans just a bit; Data Quick’s tallies of jumbo loans and overall mortgage lending are at their highest level since 2007. That means more of the market consists of “regular” buyers purchasing houses from “regular” sellers, said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. They are buying houses that they plan to live in, not investment vehicles that they plan to flip for profit. That will insulate them from ups and downs in the future. “That would be a good outcome all around,” he said. “Housing’s not just an investment good. It’s a consumption good. You buy a house you like and enjoy living in, and plan to live in for a while.” ************************************************************************************************************* US home price index continues to rise slowly in May
Another piece to the real estate puzzle…U.S. homes continued to rise more slowly in May, turning in the smallest annual gains in more than a year, according to the Standard & Poor’s/Case-Shiller Index. Prices rose 9.3% in May from a year earlier, S&P reported. That’s down from a 10.8% annual increase for April and the 12%-13% gains shown over many of the past 12 months. The last time the index showed an annual gain that small was in February 2013 — also 9.3%. This story, released July 29, reflects what is happening in country. And it is appropriate to give you some perspective on the national housing/home price trends because you read the papers, too, and you see this “stuff” just like I do.
All cities in the index saw smaller annual gains except for Charlotte, NC, which was up 4.7% in May compared with 4.5% in April. Tampa price increases, already near the top of the list, remained steady at 10.2% increase. What this report is saying is, at first glance, it might appear to be yet another indicator of a flagging housing recovery, as mentioned earlier. Coming amid other data showing existing and new home sales trailing a year ago, a decline in pending home sales re-enforces this view. “We are seeing this on the Westside as median sales prices have been rising slower since the start of the year, and certainly from a year ago when prices were spiraling upward,” said Carole Schiffer. Analysts say that after last year’s rapid gains, slower-rising home prices is actually good for the market, helping keep homes affordable as more sellers put homes on the market and an improving economy pulls in more buyers. Among the 20 cities in the Case-Shiller index, Las Vegas led the way with a 16.9% annual increase and San Francisco was second at 15.4%. Nine cities posted double-digit annual increases. Seven of the top eight performing cities were in the Sun Belt. Average home prices have returned to summer 2004 levels, S&P said. The 20-city index is about 18% below its mid-2006 peak but is roughly 27% above its March 2012 low. Compared with April, the 20-city index was up 1.1%. All cities showed higher prices and nine had higher monthly increases than in April. After seasonal adjustments, however, the gains in 14 of the 20 were lower than in April. “When you step back and see this cooling trend across the nation, we take some comfort in the fact that the market had to cool off,” Schiffer said. ************************************************************************************************************* Pending home sales index falls for June….what does it all mean?
Yes, another story that seems to put a damper on the housing market recovery that appeared this week. The National Assn. 
of Realtors announced July 28, 2014, that buyers signed fewer contracts for previously owned homes in June, a sign the housing market was struggling to pick up steam. The NAR reported that its pending sales index fell 1.1% from May while other economists had expected sales to increase slightly. Pending homes sales are homes that have entered escrow — not transactions that have actually closed. The report comes after pending sales had risen for three straight months prior to this report by the NAR. Those increases raised hopes that the housing market was heating up after starting to cool last summer amid higher prices and mortgage rates. But Monday’s report, along with other recent data, has dimmed that optimism. Last week, the Commerce Department said new-home sales fell 8.1% in June. Tight lending standards and meager income growth are discouraging many potential buyers, said Lawrence Yun, the Realtor group’s chief economist. Still, the trade group said June’s index level shows contract signings were slightly above average, despite the decline from May. So, it’s not all bad news. We just have to have patience. If you’re curious about your home’s valuation, why don’t you give me a call and I will be glad to give you an up-to-date appraisal on your property. Please give me a call — 310-442-1384. ****************************************************************************************************
Water, water everywhere……
No, this is not Venice Italy, sadly it was in our own back yard the other day with the break of two aging water mains on Sunset Boulevard right in front of UCLA! The images of all of the water rushing down the street and into the campus and its buildings was mesmerizing! At its height, the geyser was almost as high as the Hollywood Sign! They are telling us that the loss of water is equilivant to 200,000 bath tubs of water which on the average use 50 gallons of water every time. It took them over 3 hours to turn the water off and in doing so have discovered a number of pipes that are leaking and need repair. That is heart breaking particularly at this time when we are all dealing with a very dangerous drought.
************************************************************************************************************ Sumer Daze
As I sit at my desk and look out the windows at the wonderful city and ocean views I have, it amazes me that we are already at the first of August and the “Dog Days of Summer” are upon us. It is proving to be an interesting summer with the push/pull of the market. It is definitely slower than it has been, and yet when I look at the daily hot sheets of real estate activity that I run on the entire West LA area, it is very easy to see that we are still experiencing multiple offers in both single family homes and condos with properties selling within days, over asking price. That tells me that we still have a lot of buyers who know the market and value and when they see it, they are ready to do what it takes to make that purchase. If I can assist you with any real estate need, please do not hesitate to contact.
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