6 Home Repairs Owners Shouldn’t Delay

Some home repairs that owners linger on could turn into financial catastrophe. BobVila.com recently highlighted several things home owners should repair in their home before it’s too late, including:

1. Gutters: If not cleared, gutters – crucial for proper drainage — could be the root of problems for home owners. During the winter, clogged gutters could lead to ice or water damage. Also, gutters and downspouts that are overflowing with leaves or that appear to not be draining properly or draining toward the house can also cause water issues.

2. Decks: Loose railings along your porch, deck, or steps should not be ignored. The fix may be as simple as a few screws that need to be tightened in a few places. But if ignored, a loose rail could give in and risk injury and more costly repairs.

Read more: Home Improvement Spending Is Booming

3. Water spots: A spot on the ceiling should be handled immediately. The cause, however, of the water damage may not be obvious. A roofing contractor may be the first source of contact to determine if it’s from a loose shingle.

4. Asphalt cracks: Water that seeps in and then freezes can cause cracks to get wider. The water may also saturate the soil underneath the driveway and cause a shift overtime. Home owners should seal their driveway as soon as they notice any signs of wear to prevent damage from rain, snow, ice, or sunlight.

5. Leaky faucets: A slight drip or a running toilet is not an issue that should be overlooked either. These may be signs of a bigger problem and the fix will likely save you money on your water bills. Small leaks can get bigger if left ignored and become more costly to repair.

6. Blocked chimneys: Proper maintenance of chimneys is important or home owners could risk suffering from a fire or smoke inhalation. Soot and creosote build up in in the interior of chimneys and need to be removed. Also, owners would be wise to inspect the chimney cap to make sure it’s not rusty or damaged to prevent debris or pests from coming into the home.

Source: “Time’s Up: 9 Things to Repair in Your Home Before it’s Too Late,” BobVila.com (November 2015)

California pending home sales bounce back in October 2015

Southern California and Bay Area regions rise, Central Valley posts lower

LOS ANGELES (Nov. 24) – Pending home sales bounced back from the previous month at the statewide level in October, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. Pending sales were also significantly higher on an annual basis, portending higher closed escrows in the next couple of months.

In a separate report, California REALTORS® responding to C.A.R.’s October Market Pulse Survey saw a nominal increase in sales with multiple offers compared with September and an increase in the number of offers received. The number of floor calls and open house traffic declined, however, primarily reflecting seasonal factors as the market enters the end of the home-buying season. The Market Pulse Survey is a monthly online survey of more than 300 California REALTORS®, which measures data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.

Pending home sales data:

• Statewide pending home sales increased in October, with the Pending Home Sales Index (PHSI)* rising 2.5 percent from a revised 110.7 in September to 113.4 in October, based on signed contracts. The month-to-month gain was better than the average increase of 0.9 percent from September to October observed in the last seven years.

• On an annual basis, statewide pending home sales were up 13.9 percent from the revised 99.5 index recorded in October 2014. Pending sales have been increasing on a year-over-year basis since November 2014 and have seen double-digit increases for nine straight months.

• At the regional level, pending sales were higher on a year-over-year basis in all areas, with Southern California and Central Valley both increasing at a double-digit rate compared to last October.

• San Francisco Bay Area pending sales rose 16.3 percent to reach an index of 145.6 in October, up from September’s 125.2 and up 16.1 percent from October 2014’s 125.4 index.

• Pending home sales in Southern California increased to 94.3 in October, up 9.8 percent from 85.9 in September and up 9 percent from an index of 86.5 a year ago.

• Central Valley pending sales dropped in October to reach an index of 89.5, down 13.9 percent from September’s 103.9 index but up 18.6 percent from October 2014’s 75.5 index.

Equity and distressed housing market data:

• The share of equity sales – or non-distressed property sales – dipped in October but remained at the highest levels since the fall of 2007. Equity sales now make up 93.7 percent of all sales, up from 91.5 percent a year ago.

• The combined share of all distressed property sales (REOs and short sales) edged up in October to 6.3 percent of total sales, but was down from 8.5 percent a year ago.

• Fifteen of the 44 counties that C.A.R. reports showed month-to-month decreases in their share of distressed sales, with Mariposa having the smallest share of distressed sales at 0 percent, followed by San Francisco (0.4 percent), San Mateo (0.8 percent), and Santa Cruz (1.3 percent). Madera had the highest share of distressed sales at 19 percent, followed by Siskiyou (16.4 percent), Yuba (12.1 percent), and Tulare (11.9 percent).

October REALTOR® Market Pulse Survey**:

• More than one in four homes (27 percent) closed above asking price in October, and nearly half (47 percent) closed below asking price. One-fourth (25 percent) closed at asking price.

• For the one in four homes that sold above asking price, the premium paid over asking price fell to an average of 8.9 percent, down from 11 percent in September and up from 8.4 percent in October 2014.

• The 46 percent of homes that sold below asking price sold for an average of 12 percent below asking price in October, up from 10 percent in September and up from 6.3 percent in October 2014.

• About two-thirds (64 percent) of properties received multiple offers in October, indicating the market remains competitive. Fifty-one percent of properties received multiple offers in October 2014.

• The average number of offers per property increased to 3.2 in October, up from 2.4 in September and up from 2.3 in October 2014.

• With home prices leveling off in recent months, more sellers are adjusting their listing price to become more in line with buyers’ expectations. One-third (32 percent) of properties had price reductions in October, the highest level reached in the last 12 months.

• REALTOR® respondents reported that floor calls, listing appointments, and open house traffic all declined in October, mostly due to seasonal factors.

• When asked what REALTORS®’ biggest concerns are, more than one in five (22 percent) said low housing affordability, 21 percent indicated a lack of housing inventory, 16 percent cited overinflated home prices, and 12 percent said a slowdown in economic growth.

• On a positive note, four of five REALTORS® believe market conditions will either improve or remain the same next year.

Graphics (click links to open):

• Pending home sales by region.
• More transactions closing above asking price.
• Premium paid over asking price declines.
• REALTORS®’ expectations of market conditions.

*Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008.

**C.A.R.’s Market Pulse Survey is a monthly online survey of more than 300 California REALTORS® to measure data about their last closed transaction and sentiment about business activity in their market area for the previous month and the last year.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Four of Five REALTORS Believe Market Conditions Either Improve or Remain the Same in 2016

For of Five REALTORS Believe Market Conditions Either Improve or Remain the Same in 2016

Four of Five REALTORS Believe Market Conditions Either Improve or Remain the Same in 2016

5 Key Housing Stats From NAR’s Latest Report

Mortgage rates are still below 4 percent but the low financing rates aren’t luring more buyers this fall. All four major regions of the U.S. saw a decrease in existing-home sales in October, according to the National Association of REALTORS®’ latest housing report.

Regional Snapshot

Here are existing-home sales fared in October across the country:

  • Northeast: home sales were at an annual rate of 760,000 – 8.6 percent above a year ago. Median home price: $248,900, which is 1.3 percent higher than October 2014.
  • Midwest: sales fell 0.8 percent to an annual rate of 1.30 million but are 8.3 percent above year ago levels. Median home price: $172,300, up 5.7 percent from a year ago.
  • South: sales dropped 3.2 percent last month to an annual rate of 2.14 million but are 0.5 percent above a year ago. Median home price: $188,800, up 6.2 percent from a year ago.
  • West: sales dropped 8.7 percent to an annual rate of 1.16 million in October but are 2.7 percent above October 2014. Median home price: $319,000, which is 8 percent above a year ago.

Source: National Association of REALTORS®

Existing-home sales – which are completed transactions for single-family homes, townhomes, condos, and co-ops – dropped 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October. Despite the drop, sales are still nearly 4 percent above a year ago, when sales were at 5.16 million.

“New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” says Lawrence Yun, NAR’s chief economist. “Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales. As long as solid job creation continues, a gradual easing of credit standards even with moderately higher mortgage rates should support steady demand and sales continuing to rise above a year ago.”

Here’s a closer look at the numbers behind NAR’s latest housing report for October sales:

1. Home prices: The median existing-home price for all housing types last month was $219,600, which is 5.8 percent above a year ago. Last month marks the 44th consecutive month of year-over-year price gains.

2. Housing inventory: Total housing inventory at the end of last month fell 2.3 percent to 2.14 million existing homes for-sale. Inventories are now 4.5 percent lower than a year ago. Unsold inventory is at a 4.8-month supply at the current sales pace.

3. Distressed sales: Foreclosures and short sales dropped to 6 percent in October, the lowest since NAR began tracking such data in 2008. Last year, distressed sales comprised 9 percent of the market share. In October, 5 percent of sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value while short sales were discounted on average 8 percent.

4. Days on the market: Properties typically stayed on the market for an average of 57 days in October, a drop from the 63 days in October 2014. One-third of homes sold in October were on the market for less than a month. Short sales were on the market the longest mount of time at a median of 90 days, while foreclosures sold in an average of 67 days and non-distressed homes took 57 days.

5. All-cash transactions: All-cash sales comprised 24 percent of transactions last month, down from 27 percent a year ago. Individual investors, who account for the bulk of cash sales, purchased 13 percent of homes last month, down from 15 percent a year ago. “All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties,” Yun says. “With supply already meager at the lower-end of the price range, competition from these buyers only adds to the list of obstacles in the path for first-time buyers trying to reach the market.”

Source: National Association of Realtors

October 2015 Home Sales and Price Report

California home sales and price decrease in October as affordability crunch impacts housing market

– Existing, single-family home sales totaled 403,510 in October on a seasonally adjusted annualized rate, down 5.1 percent from September and up 1.3 percent from October 2014.

– Statewide sales were above the 400,000 mark for the seventh straight month.

– October’s statewide median home price was $475,990, down 1.3 percent from September and up 5.7 percent from October 2014.

LOS ANGELES (Nov. 17) – California’s housing market softened in October as both statewide sales and median price contracted from the previous month and is still on target to meet forecast projections, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Home sales exceeded the 400,000 level in October for the seventh consecutive month and posted higher on a year-to-year basis for the ninth straight month. Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 403,510 units in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2015 if sales maintained the October pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The October figure was down 5.1 percent from the revised 425,120 level in September and up 1.3 percent compared with home sales in October 2014 of a revised 398,510. The year-to-year increase was the lowest since January 2015 and was significantly below the six-month average of 9.7 percent observed between April 2015 and September 2015.

“The slowdown in October’s home sales could be attributed to the financial turmoil and global economic uncertainty that took place in August and September, as some prospective buyers took a wait-and-see approach,” said 2016 C.A.R. President Ziggy Zicarelli. “With job growth increasing the most since late 2014 and interest rates remaining below 4 percent, the demand for housing should continue to grow at a modest pace. Statewide sales are on track to finish the year with a mid-single-digit increase from last year.”

The median price of an existing, single-family detached California home slipped 1.3 percent in October to $475,990 from a revised $482,150 in September.  October’s median price was 5.7 percent higher than the revised $450,460 recorded in October 2014. The median sales 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 change in values.

“Housing affordability is an issue in many parts of California, and the impact it has on sales varies from region to region. In the Bay Area, a persistent shortage of homes for sale put upward pressure on housing prices and is now presenting significant affordability challenges to home buyers in the region,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “With home prices in the Bay Area averaging more than 7 percent higher than a year ago, we’re now seeing the negative effect on sales due to low housing affordability as higher prices have put homebuying out of reach for many potential buyers.”

Other key points from C.A.R.’s October 2015 resale housing report include:

• While sales continued to improve from last year at the state level, the number of active listings continued to drop from the previous year. Active listings for California dropped 5.6 percent from September and decreased 7.6 percent from October 2014.

• While sales were slightly higher from a year ago at the state level, the number of active listings continued to drop from the previous year. The October Unsold Inventory Index remained at 3.7 months for the third straight month, unchanged from September and down from 3.8 months in October 2014. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered typical in a normal market.

• The median number of days it took to sell a single-family home increased in October to 35.5 days, compared with 32.6 days in September and 38.7 days in October 2014.

• According to C.A.R.’s newest housing market indicator which measures the sales-to-list price ratio*, properties are generally selling below the list price, except in the San Francisco Bay Area, where a lack of homes for sale is pushing sales prices higher than original asking prices.  The statewide measure suggests that homes sold at a median of 98.2 percent of the list price in October, up from 97.7 percent at the same time last year. The Bay Area is the only region where homes are selling above original list prices due to constrained supply with a ratio of 102.2 percent in October, up from 101.2 percent a year ago.

• The average price per square foot** for an existing single-family home was $237 in October 2015, up from $231 in October 2014.  Price per square foot at the state level has been stabilizing in the last few months as the statewide median price began leveling off and slowing to an average increase of 1.4 percent in the past three months.

• San Francisco had the highest price per square foot in October at $778/sq. ft., followed by San Mateo ($745/sq. ft.), and Santa Clara ($572/sq. ft.).  The three counties with the lowest price per square foot in October were Siskiyou ($115/sq. ft.), Madera ($120/sq. ft.), and Kings and Tulare both at $121/sq. ft.

• Mortgage rates were unchanged in October, with the 30-year, fixed-mortgage interest rate averaging 3.80 percent, down from 3.89 percent in September and from 4.04 percent in October 2014, according to Freddie Mac.  Adjustable-mortgage interest rates also were essentially the same, averaging 2.56 percent in October, down incrementally from 2.59 percent in September but up from 2.41 percent in October 2014.

Graphics (click links to open):

• October sales at-a-glance infographic.
• Change in sales by price range.
• Share of sales by price range.
• Sales to active listings ratio.
• Sales to list ratio.
• Price per square foot.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only.  County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions.  The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 38 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #

October 2015 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

October-15 Median Sold Price of Existing Single-Family Homes Sales
State/Region/County Oct-15 Sep-15   Oct-14   MTM% Chg YTY% Chg MTM% Chg YTY% Chg
CA SFH (SAAR) $475,990 $482,150 $450,460 r -1.3% 5.7% -5.1% 1.3%
CA Condo/Townhomes $391,340 $389,970 $376,900 r 0.4% 3.8% -7.7% -2.7%
Los Angeles Metropolitan Area $441,360 $438,120 $412,190 0.7% 7.1% -1.4% 1.2%
Inland Empire $293,090 $288,680 $274,630 1.5% 6.7% -3.3% 2.4%
S.F. Bay Area $790,580 $796,470 $737,000 r -0.7% 7.3% -1.6% -8.9%
S.F. Bay Area                  
Alameda $711,990 $739,580 $659,660 r -3.7% 7.9% -0.1% -11.9%
Contra-Costa $726,400 $784,000 $695,690 r -7.3% 4.4% -1.7% -9.5%
Marin $1,207,140 $1,043,270 $969,700 15.7% 24.5% 12.0% -11.7%
Napa $664,470 $659,480 $599,140 0.8% 10.9% -43.4% -33.0%
San Francisco $1,294,120 $1,189,520 $1,200,760 r 8.8% 7.8% 50.3% -15.4%
San Mateo $1,188,940 $1,200,000 $1,071,000 -0.9% 11.0% -10.4% -20.4%
Santa Clara $951,000 $955,000 $870,000 -0.4% 9.3% -8.1% -8.7%
Solano $355,420 $362,500 $327,460 -2.0% 8.5% -2.2% 8.8%
Sonoma $548,840 $562,070 $487,930 -2.4% 12.5% 6.1% 8.6%
Southern California
Los Angeles $509,570 $517,750 $477,600 -1.6% 6.7% 5.3% -1.4%
Orange $704,370 $707,700 $692,390 -0.5% 1.7% -10.9% 1.9%
Riverside $334,660 $329,200 $321,750 1.7% 4.0% -3.6% 4.5%
San Bernardino $231,330 $229,890 $208,080 0.6% 11.2% -2.9% -0.7%
San Diego $539,000 $539,340 $493,030 -0.1% 9.3% -3.3% -0.5%
Ventura $604,610 $599,710 $583,810 0.8% 3.6% -6.4% 11.6%
Central Coast
Monterey $486,000 $480,000 $460,000 1.3% 5.7% 7.1% -1.6%
San Luis Obispo $540,480 $536,250 $455,660 0.8% 18.6% -1.8% 3.4%
Santa Barbara $636,360 $724,140 $570,000 -12.1% 11.6% -9.0% -4.2%
Santa Cruz $743,750 $755,000 $715,000 -1.5% 4.0% -23.5% -6.6%
Central Valley
Fresno $214,620 $215,970 $200,600 -0.6% 7.0% -2.5% 4.3%
Glenn $206,250 $225,000 $167,500 -8.3% 23.1% 28.6% 5.9%
Kern (Bakersfield) $208,500 $215,000 r $215,000 -3.0% -3.0% -8.3% -0.8%
Kings $183,330 $197,500 $168,670 -7.2% 8.7% -12.6% 13.7%
Madera $207,500 $216,670 $210,420 r -4.2% -1.4% 9.3% 15.7%
Merced $196,250 $210,710 $190,710 -6.9% 2.9% -9.3% -7.0%
Placer $394,720 $392,820 $380,170 0.5% 3.8% -4.9% 3.3%
Sacramento $292,150 $289,760 $270,150 0.8% 8.1% -6.3% 7.7%
San Benito $487,500 $466,000 $435,000 4.6% 12.1% 19.5% 8.9%
San Joaquin $278,210 $294,060 $263,270 -5.4% 5.7% -2.2% 6.0%
Stanislaus $259,620 $253,500 $228,630 2.4% 13.6% -2.9% 11.7%
Tulare $190,000 $190,370 $179,060 -0.2% 6.1% -1.6% -2.8%
Other Counties in California
Amador $255,000 $233,330 $265,000 9.3% -3.8% -12.5% -14.6%
Butte $265,240 $247,320 $233,780 r 7.2% 13.5% 17.2% 3.8%
Calaveras $243,480 $260,290 $247,370 r -6.5% -1.6% 17.9% 36.6%
Del Norte $246,870 $216,670 $157,500 r 13.9% 56.7% 68.8% 28.6%
El Dorado $378,070 $399,270 $355,800 -5.3% 6.3% -13.8% -10.2%
Humboldt $258,090 $268,480 $260,340 -3.9% -0.9% 30.3% 17.3%
Lake $211,360 $216,180 $190,000 -2.2% 11.2% 3.0% 13.1%
Mariposa $250,000 $237,500 $225,000 5.3% 11.1% -16.7% 42.9%
Mendocino $325,000 $341,180 $337,500 -4.7% -3.7% 9.1% 0.0%
Nevada $336,960 $350,000 $315,520 r -3.7% 6.8% 10.7% 3.9%
Plumas $260,000 $258,330 $255,000 r 0.6% 2.0% -29.2% -27.7%
Shasta $236,540 $235,940 $220,920 0.3% 7.1% -1.8% -0.9%
Siskiyou $186,000 $178,330 $161,670 4.3% 15.0% 12.2% 77.4%
Sutter $252,500 $230,000 $213,240 9.8% 18.4% 11.8% 10.1%
Tehama $190,000 $188,890 $160,000 0.6% 18.8% 0.0% -20.8%
Tuolumne $252,500 $248,440 $219,640 1.6% 15.0% -6.0% -13.7%
Yolo $378,380 $413,410 $344,740 -8.5% 9.8% -0.7% 24.6%
Yuba $219,050 $225,000 $210,940 -2.6% 3.8% -18.5% -14.3%

October 2015 County Unsold Inventory and Time on Market

(Regional and condo sales data not seasonally adjusted)

October-15 Unsold Inventory Index Median Time on Market
State/Region/County Oct-15 Sep-15   Oct-14   Oct-15 Sep-15   Oct-14  
CA SFH (SAAR) 3.7 3.7 3.8 35.5 32.6 38.7 r
CA Condo/Townhomes 3.0 2.8 3.2 r 31.7 29.6 37.3 r
Los Angeles Metropolitan Area 4.0 3.9 4.3 50.7 47.1 52.2
Inland Empire 4.5 4.4 4.7 52.0 48.9 55.3
S.F. Bay Area 2.5 2.5 2.1 r 23.4 22.3 24.4 r
S.F. Bay Area
Alameda 2.2 2.3 1.8 r 19.5 18.0 20.4 r
Contra-Costa 2.3 2.4 2.0 r 20.9 20.3 23.2 r
Marin 1.7 3.2 2.5 32.3 36.4 38.9
Napa 7.4 4.1 4.7 57.7 58.1 64.8
San Francisco 1.9 3.0 1.4 r 21.2 21.5 22.3 r
San Mateo 2.1 1.9 1.6 18.6 18.7 19.5
Santa Clara 2.2 2.1 1.8 20.6 19.1 20.9
Solano 3.1 2.8 2.4 41.1 41.2 45.0
Sonoma 3.2 3.6 3.2 48.2 45.9 50.2
Southern California
Los Angeles 3.7 3.7 3.9 45.6 42.1 45.5
Orange 3.9 3.7 4.1 56.7 53.0 62.3
Riverside 4.7 4.4 4.9 53.6 50.2 58.7
San Bernardino 4.3 4.3 4.5 49.2 46.5 49.6
San Diego 3.7 3.7 4.3 25.0 24.3 28.3
Ventura 3.7 3.7 4.4 58.8 52.4 63.0
Central Coast
Monterey 3.9 4.2 3.8 34.7 26.2 26.2
San Luis Obispo 4.1 4.3 4.3 40.3 42.4 50.2
Santa Barbara 4.8 4.6 4.4 39.5 33.9 41.5
Santa Cruz 3.2 2.8 3.1 25.9 25.2 33.7
Central Valley
Fresno 5.0 4.8 4.9 29.5 27.1 29.4
Glenn 4.6 5.8 5.5 45.5 31.0 47.9
Kern (Bakersfield) 4.1 3.7 r 3.8 r 29.0 26.0 27.0
Kings 3.6 3.2 3.6 24.1 33.3 44.5
Madera 7.5 8.0 4.9 54.9 75.5 47.3 r
Merced 4.3 4.1 3.9 34.0 38.3 46.3
Placer 3.2 3.2 3.5 27.4 25.5 29.6
Sacramento 2.7 2.7 3.3 23.5 22.4 25.8
San Benito 2.9 3.3 3.7 25.5 26.2 40.2
San Joaquin 3.1 3.1 3.4 23.9 23.1 25.5
Stanislaus 3.1 3.2 3.5 24.8 23.7 25.2
Tulare 4.5 4.6 4.4 31.0 32.6 42.8
Other Counties in California
Amador 6.7 5.9 5.9 93.1 63.9 65.8
Butte 3.4 4.2 3.6 r 36.2 39.1 40.3 r
Calaveras 5.3 6.3 7.1 r 67.2 69.5 57.8 r
Del Norte 5.8 10.1 8.6 r 123.1 84.2 122.3 r
El Dorado 4.6 4.4 4.3 51.3 46.8 55.1
Humboldt 3.5 4.9 5.4 49.7 46.5 52.4
Lake 6.7 6.8 7.2 76.4 94.6 80.0
Mariposa 11.8 9.8 12.3 91.0 31.0 124.6
Mendocino 7.7 8.8 7.4 72.6 76.8 91.0
Nevada 3.9 4.8 5.4 47.1 40.4 52.5 r
Plumas 10.2 8.8 8.1 124.1 126.8 126.5 r
Shasta 5.6 5.7 5.5 33.9 46.0 56.1
Siskiyou 5.5 6.8 12.4 87.1 78.4 45.5
Sutter 3.0 3.5 4.1 25.0 33.2 24.8
Tehama 6.0 6.6 4.5 r 55.9 41.9 45.5 r
Tuolumne 6.7 6.7 6.0 51.1 71.9 73.3
Yolo 2.8 3.0 3.4 24.9 24.0 23.3
Yuba 4.1 3.3 2.9 26.2 23.2 40.0

r = revised


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California’s Hot Real Estate Market

C.A.R. releases its 2016 housing market forecast

For release:
October 8, 2015

C.A.R. releases its 2016 California Housing Market Forecast

California home sales to increase slightly, while prices post slowest gain in five years

LOS ANGELES (Oct. 8) – California’s housing market will continue to improve into 2016, but a shortage of homes on the market and a crimp in housing affordability also will persist, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2016 California Housing Market Forecast,” released today.

The C.A.R. forecast sees an increase in existing home sales of 6.3 percent next year to reach 433,000 units, up from the projected 2015 sales figure of 407,500 homes sold.  Sales in 2015 also will be up 6.3 percent from the 383,300 existing, single-family homes sold in 2014.

“Solid job growth and favorable interest rates will drive a strong demand for housing next year,” said C.A.R. President Chris Kutzkey.  “However, in regions where inventory is tight, such as the San Francisco Bay Area, sales growth could be limited by stiff market competition and diminishing housing affordability. On the other hand, demand in less expensive areas such as Solano County, the Central Valley, and Riverside/San Bernardino areas will remain strong thanks to solid job growth in warehousing, transportation, logistics, and manufacturing in these areas.”

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 2.7 percent in 2016, after a projected gain of 2.4 percent in 2015.  With nonfarm job growth of 2.3 percent in California, the state’s unemployment rate should decrease to 5.5 percent in 2016 from 6.3 percent in 2015 and 7.5 percent in 2014.

The average for 30-year, fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels.

The California median home price is forecast to increase 3.2 percent to $491,300 in 2016, following a projected 6.5 percent increase in 2015 to $476,300.  This is the slowest rate of price appreciation in five years.

“The foundation for California’s housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market’s momentum next year. Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the statewide median price tempered.”

2016 California Housing Market Forecast

  2010 2011 2012 2013 2014 2015p 2016f
SFH Resales (000s) 416.5 422.6 439.8 414.9 383.3 407.5 433.0
% Change -12.30% 1.40% 4.10% -5.90% -7.60% 6.30% 6.30%
Median Price ($000s) $305.0 $286.0 $319.3 $407.2 $447.0 $476.3 $491.3
% Change 10.9% -6.2% 11.6% 27.5% 9.8% 6.5% 3.2%
Housing Affordability Index 48% 53% 51% 36% 30% 31% 27%
30-Yr FRM 4.70% 4.50% 3.70% 4.00% 4.20% 3.90% 4.50%

p = projected
f = forecast

Leading the way …® in real estate news and information for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Existing-Home Sales Regain Momentum in September

WASHINGTON (October 22, 2015) — Existing–home sales rebounded strongly in September following August’s decline and have now increased year–over–year for 12 consecutive months, according to the National Association of Realtors®. All four major regions experienced sales gains in September.

Total existing–home sales1, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, increased 4.7 percent to a seasonally adjusted annual rate of 5.55 million in September from a slightly downwardly revised 5.30 million in August, and are now 8.8 percent above a year ago (5.10 million).

Lawrence Yun, NAR chief economist, says a slight moderation in home prices in some markets and mortgage rates remaining below 4 percent gave more households the confidence to close on a home last month. “September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007 (5.79 million),” he said. “While current price growth around 6 percent is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace.”

The median existing–home price2 for all housing types in September was $221,900, which is 6.1 percent above September 2014 ($209,100). September’s price increase marks the 43rd consecutive month of year–over–year gains.

Total housing inventory3 at the end of September decreased 2.6 percent to 2.21 million existing homes available for sale, and is now 3.1 percent lower than a year ago (2.28 million). Unsold inventory is at a 4.8–month supply at the current sales pace, down from 5.1 months in August.

“Despite persistent inventory shortages, the housing market has made great strides this year, backed by an increasing share of pent–up sellers realizing the increased equity they’ve gained from rising home prices and using it towards trading up or moving into a smaller home,” says Yun. “Unfortunately, first–time buyers are still failing to generate any meaningful traction this year.”

First–time buyers fell to 29 percent of sales in September after climbing to their highest share of the year in August (32 percent). A year ago, first–time buyers represented 29 percent of all buyers.

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says Realtors® strongly back the passing of H.R. 3700, the “Housing Opportunity Through Modernization Act of 2015.” Polychron testified in support of the bill yesterday before the U.S. House Financial Services Subcommittee on Housing and Insurance.

“This bill helps expand homeownership and rental housing opportunities at all levels and specifically includes changes to Federal Housing Administration policies that limit the flexible and affordable financing needed by many potential condo buyers — especially first–time buyers.”

All–cash sales rose to 24 percent of transactions in September (22 percent in August) and are unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in September, up from 12 percent in August but down from 14 percent a year ago. Sixty–seven percent of investors paid cash in September.

According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage remained below 4 percent for the second consecutive month, declining slightly in September to 3.89 from 3.91 percent in August. A year ago, the average commitment rate was 4.16 percent.

Properties typically stayed on the market for 49 days in September, an increase from 47 days in August but below the 56 days in September 2014. Short sales were on the market the longest at a median of 135 days in September, while foreclosures sold in 57 days and non–distressed homes took 48 days. Thirty–eight percent of homes sold in September were on the market for less than a month.

Distressed sales4 — foreclosures and short sales — remained at 7 percent in September for the third consecutive month; they were 10 percent a year ago. Six percent of September sales were foreclosures and 1 percent (lowest since NAR began tracking in October 2008) were short sales. Foreclosures sold for an average discount of 17 percent below market value in September (18 percent in August), while short sales were discounted 19 percent (12 percent in August).

Single–family and Condo/Co–op Sales
Single–family home sales rose 5.3 percent to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and are now 9.6 percent above the 4.50 million pace a year ago. The median existing single–family home price was $223,500 in September, up 6.6 percent from September 2014.

Existing condominium and co–op sales were at a seasonally adjusted annual rate of 620,000 units in September (unchanged from August), and are up 3.3 percent from September 2014 (600,000 units). The median existing condo price was $209,200 in September, which is 1.9 percent above a year ago.

Regional Breakdown
September existing–home sales in the Northeast jumped 8.6 percent to an annual rate of 760,000, and are 11.8 percent above a year ago. The median price in the Northeast was $256,500, which is 4.0 percent above September 2014.

In the Midwest, existing–home sales climbed 2.3 percent to an annual rate of 1.31 million in September, and are 12.0 percent above September 2014. The median price in the Midwest was $174,400, up 5.4 percent from a year ago.

Existing–home sales in the South rose 3.8 percent to an annual rate of 2.21 million in September, and are 5.7 percent above September 2014. The median price in the South was $191,500, up 6.2 percent from a year ago.

Existing–home sales in the West increased 6.7 percent to an annual rate of 1.27 million in September, and are 9.5 percent above a year ago. The median price in the West was $318,100, which is 8.0 percent above September 2014.

# # #

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing–home sales, which include single–family, townhomes, condominiums and co–ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing–home sales, based on closings, differ from the U.S. Census Bureau’s series on new single–family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing–home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior–month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single–family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single–family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single–family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper–end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month–to–month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year–ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co–op price often is higher than the median single–family home price because condos are concentrated in higher–cost housing markets. However, in a given area, single–family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3Total inventory and month’s supply data are available back through 1999, while single–family inventory and month’s supply are available back to 1982 (prior to 1999, single–family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Distressed sales (foreclosures and short sales), days on market, first–time buyers, all–cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: The Pending Home Sales Index for September will be released October 29, and Existing–Home Sales for October will be released November 23; release times are 10:00 a.m. ET.

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Fast-Moving Markets’ Demographic Secret?

Though we’re heading into what is traditionally a slowdown in real estate as cooler temperatures and the holiday season looms, some markets are still seeing rapidly-moving sales. According to the realtor.com® September National Housing Trend Report released today, these markets have an interesting demographic similarity: large populations of engineers and Baby Boomers.

“When we see homes moving quickly in a particular market, we expect the trend to be supported by signs of local health like growth in economic production and employment,” said Jonathan Smoke, chief economist for realtor.com®. “This month, we also observed more out of the ordinary trends including high proportions of math and science professionals, as well as Baby Boomers in each of the fast moving markets. As the technology industry grows and aging Baby Boomers decide to make housing moves to support their retirement, we’ll continue to see strong housing demand associated with these factors.”

Here are the 12 markets that realtor.com® listed as the fastest-moving, with average properties spending less than two months on the market:

Oakland, Calif.
San Jose, Calif.
San Francisco, Calif.
Denver, Col.
Washington, DC
Seattle-Bellevue-Everett, Wash.
Houston, Texas
Los Angeles-Long Beach, Calif.
Austin-San Marcos, Texas
Omaha, Neb.
San Diego, Calif.
Melbourne-Titusville-Palm Bay, Fla.

Source: “Realtor.com® Data: Fastest Moving Markets Are Home to High Populations of Engineers and Baby Boomers,” Move, Inc. (Oct. 20, 2014)

Housing Starts Solidly Above Million Mark

The breaking of ground on new homes and apartments increased 6.3 percent in September to reach an annual 1.02 million-unit-pace. That’s the third time this year the rate has reached the one-million mark, which is considered a vital milestone in the homebuilding industry.

Most of the gains, however, were attributed to a surge in multifamily production, which rose 16.7 percent month-over-month, while single-family housing starts had a more modest 1.1 percent increase, according to new figures from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Economists say the gain in housing starts and permits in September signals the new-home sector is making a modest recovery and is showing signs of strengthening.

“These numbers show starts returning to levels we saw earlier this summer, where they hovered around one million units,” says Kevin Kelly, chairman of the National Association of Home Builders. “We are hopeful this pattern of modest growth will continue as we close out the year.”

Last month, the Commerce Department reported housing starts tumbled in August by 14 percent. However, “September’s uptick reveals that last month’s dip in production was more of an anomaly than a market reversal,” says NAHB Chief Economist David Crowe. “I expect we will see a continued recovery as job creation grows and consumers gain more confidence in the housing market.”

Combined housing starts rose across the country, with the largest gains posted in the West (up 13.9 percent month-over-month), followed by the Northeast (up 5.3 percent), South (up 4.2 percent), Midwest (up 3.5 percent).

The sector will likely hold onto these gains. Permits, a measurement of future building activity, rose 1.5 percent in September to an annual rate of about 1 million units, led by a 4.8 percent gain in multifamily permits. However, single-family permits fell 0.5 percent to 624,000 units. The Northeast posted a 12.3 percent gain in permits, followed by an 8.2 percent rise in the Midwest and 5.9 percent in the West. The South reported a 4.7 percent decrease in permits in September.

Source: National Association of Home Builders and “U.S. Housing Recovery Rolls On as Groundbreaking Rises,” Reuters (Oct. 17, 2014)

Fannie, Freddie to Loosen Up on Lending

The regulator of mortgage giants Fannie Mae and Freddie Mac is reportedly working on a deal with the financing entities that will loosen up lending standards and make mortgages more affordable for those with less-than-perfect credit. The move is expected to expand home buyers’ access to financing, as tight credit the last few years has kept many sidelined.

The new rules reportedly will include a lower minimum down payment requirement (from 5 percent to 3 percent), in order for lenders to qualify to sell a loan to Fannie Mae and Freddie Mac. That would bring down payment in sync with the Federal Housing Administration, which insures loans made to lower-income borrowers and first-time buyers. Fannie Mae and Freddie Mac guarantee about 59 percent of all mortgages written.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, reportedly will include more safety measures to help lenders protect themselves from making bad loans. Lenders have faced numerous high-dollar settlements after issuing loans that later defaulted. The new agreement would give greater confidence to lenders so they won’t be penalized years after a loan is made, The Wall Street Journal reports.

The potential agreement “would allow credit to flow more freely to lower- and middle-income households,” Mark Zandi, chief economist at Moody’s Analytics, told The Wall Street Journal. “That’s vital to getting the housing recovery moving forward.”

During the financial crisis, the financing giants faced steep losses as home loans defaulted. The spike was blamed on poor underwriting by lenders in ensuring that borrowers could afford their mortgages. In response, the companies, which were seized by the government in 2008, have had banks tighten their credit standards, which some critics say has gone too far and prevented many home buyers from qualifying for a home loan.

The Urban Institute has estimated that 1.2 million more mortgages would have been issued in 2012 alone if lending standards that were commonly used in 2001 were still in place.

“Understandably, after the [financial] crisis the pendulum of mortgage credit standards swung to a far extreme” Paul Leonard, California director of the Center for Responsible Lending, told the Los Angeles Times. “It’s now working its way back to a more moderate position.”

The FHFA is expected to formally announce the plans later this week.

Source: “Fannie Mae, Freddie Mac Reach Deal to Ease Mortgage Lending,” Los Angeles Times (Oct. 17, 2014) and “Mortgage Giants Set to Loosen Lending,” The Wall Street Journal (Oct. 17, 2014)

Outlook on Housing and Finances May Spur Potential Homebuyers to Act

Potential homebuyers may enter the purchase market sooner rather than later  as more Americans expect mortgage rates and home prices to climb, according to  results from Fannie Mae’s June 2013 National Housing Survey. The share of  respondents who say mortgage rates will go up during the next 12 months jumped  11 percentage points to 57 percent, the highest level in the survey’s three-year  history.

Meanwhile, consumers’ home price expectations have stayed strong in the face  of rising mortgage rates. The share of respondents who believe home prices will  go up in the next year also hit a survey high of 57 percent, while those who say  prices will go down stayed steady at 7 percent. Although sentiment toward both  the current home buying and selling environments retreated slightly, it remains  near the survey highs of last month, with 72 percent saying it is a good time to  buy and 36 percent saying it is a good time to sell.

“The spike in mortgage rate expectations this month seems to have had an  impact on a number of the survey’s indicators and may increase housing activity  in the near term by driving urgency to buy,” said Doug Duncan, senior vice  president and chief economist at Fannie Mae. “Consumers may recognize that  today’s still favorable mortgage rates and homeownership affordability levels  will recede over time. Given rising home and rental price expectations and  improving personal financial attitudes, more prospective homebuyers may be  deciding that now is the time to get off the fence.”

Among those surveyed, 56 percent say rental prices will go up during the next  year – an 8 percentage point increase and the highest level since the survey’s  inception – and the average 12-month rental price change expectation jumped 1.2  percent to 4.6 percent. Americans’ outlook on their personal finances also  increased significantly in June. The share who expect their personal financial  situation to improve during the next year climbed to 46 percent, the highest  level since June 2010. The share who say their household income is significantly  higher than it was 12 months ago jumped 6 percentage points to a survey high 26  percent.

Other survey highlights include:

  • At 3.8 percent, the average 12-month home price change expectation fell  slightly from last month’s survey high.
  • The share of people who say home prices will go up in the next 12 months hit  a survey high 57 percent, while those who say home prices will go down held  steady at the survey low 7 percent.
  • The share of respondents who say mortgage rates will go up increased 11  percentage points to 57 percent, the highest level since the survey’s  inception.
  • Forty-seven percent of respondents think it would be easy for them to get a  home mortgage today, a slight increase over last month.The percentage of people  who expect their personal financial situation to get better over the next 12  months jumped to 46 percent, the highest level since June 2010.
  • The share of respondents who say their household income is significantly  higher than it was 12 months ago rose 6 percentage points to a survey high 26  percent.
  • The percentage of respondents who say their household expenses are  significantly higher than they were 12 months ago rose to 36 percent.

850,000 Properties Bounce Back to Positive Equity

Residential property analytic provider CoreLogic® recently released new analysis  showing the market is making big moves, with 850,000 additional residential  properties turning to positive equity during the first quarter of  2013.

In addition, the analysis shows good news for mortgages: the total  number of mortgaged residential properties standing in negative equity is down  by nearly 1 million from the previous quarter, moving from 10.5 million (21.7  percent) at the end of the fourth quarter of 2012, to 9.7 million (19.8 percent)  in the first quarter of 2013.

The national aggregate value of negative  equity decreased more than $50 billion to $580 billion at the end of the first  quarter from $631 billion at the end of the fourth quarter of 2012. This  decrease was driven in large part by an improvement in home prices.

Of  the 39 million residential properties with positive equity, 11.2 million have  less than 20 percent equity. At the end of the first quarter of 2013, 2.1  million residential properties had less than 5 percent equity, referred to as  near-negative equity. Under-equitied mortgages accounted for 23 percent of all  residential properties with a mortgage nationwide in the first quarter of 2013.  The average amount of equity for all properties with a mortgage is 32.8  percent.

“The impressive home price gains of 2012 and the beginning of  2013 have had a big impact on the distribution of residential home equity,” says  Dr. Mark Fleming, chief economist for CoreLogic. “During the past year, 1.7  million borrowers have regained positive equity. We expect the pent-up supply  that falling negative equity releases will moderate price gains in many of the  fast-appreciating markets this spring.”

“The negative equity burden  continues to recede across the country thanks largely to rising home prices,” says Anand Nallathambi, president and CEO of CoreLogic. “We are still far below  peak home price levels, but tight supplies in many areas coupled with continued  demand for single family homes should help us close the gap.”

Highlights  as of Q1 2013:

– Nevada had the highest percentage of mortgaged  properties in negative equity at 45.4 percent, followed by Florida (38.1  percent), Michigan (32 percent), Arizona (31.3 percent) and Georgia (30.5  percent). These top five states combined account for 32.8 percent of negative  equity in the U.S.
– Of the largest 25 metropolitan areas, Tampa-St.  Petersburg-Clearwater, Fla. had the highest percentage of mortgaged properties  in negative equity at 44.1 percent, followed by Miami-Miami Beach-Kendall, Fla.  (40.7 percent), Atlanta-Sandy Springs-Marietta, Ga. (34.5 percent),  Chicago-Joliet-Naperville, Ill. (34.2 percent) and Warren-Troy-Farmington Hills,  Mich. (33.6 percent).
– Of the total $580 billion in negative equity, first  liens without home equity loans accounted for one-half, or $290 billion  aggregate negative equity, while first liens with home equity loans accounted  for the remaining half at $290 billion.
– 6.0 million upside-down borrowers  hold first liens without home equity loans. The average mortgage balance for  this group of borrowers is $211,000. The average underwater amount is  $48,000.
– 3.7 million upside-down borrowers hold both first and second  liens. The average mortgage balance for this group of borrowers is $294,000.The  average underwater amount is $79,000.
– The bulk of home equity for mortgaged  properties is concentrated at the high end of the housing market. For example,  88 percent of homes valued at greater than $200,000 have equity compared with 73  percent of homes valued at less than $200,000.

“As leaders and agents, it  is up to us to get the word out,” said Gary Scott, President of Long &  Foster Real Estate, during RISMedia’s recent Power Broker Forum at NAR Midyear. “There is a huge opportunity for people who had negative equity to come back  into the market. We have to help those sellers. It’s about a grass roots  effort—about taking your sphere of influence and walking them through the  reality of the market.”

For more information, visit www.corelogic.com.

All About Short-Sales

Thinking of Making an Offer on a Short Sale?  What You Need to Know…

Are you looking to buy a new home? Are you thinking that now’s a great time to find bargains? That’s true, but it pays to know a little about the seller’s situation before you make an offer.

If a home is being sold for below what the current seller owes on the property-and the seller does not have other funds to make up the difference at closing-the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You’re a good candidate for a short-sale purchase if:

• You’re very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

• Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you’re preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

• You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property-or you need to be in your new home by a certain time-a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you’re serious about purchasing a short-sale property, it’s important for you to have expert assistance. Here are some people you want to work with:

• Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who’s knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

• A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they’ve represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)

• Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it’s much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

Some of the other risks faced by buyers of short-sale properties include:

• Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

• Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.

• No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

For more information regarding Truckee real estate short-sale properties and north Lake Tahoe real estate short-sale properties, please contact me.

* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.