Friday, December 27, 2013

California Short Sales Get Extended Relief

Distressed California homeowners can breathe a sigh of relief.
Those who decide to short sale their home — or sell it for less than is owed to the lender — don’t have to pay state tax on the mortgage debt.

In January, Congress extended the federal Mortgage Forgiveness Debt Relief Act of 2007 giving thousands of homeowners a break on having to pay taxes on the forgiven debt for a year. But California chose not to continue its state tax relief program.

Real estate organizations and state leaders have tried for months to get the program reinstated.
This week, the state Franchise Tax Board followed the Internal Revenue Service’s footsteps in declaring that homeowners are not responsible for paying the state tax.

“We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California,” said Kevin Brown, president of the California Association of Realtors.

“Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability.”  Short sale questions can be answered at (831) 454-6846 or visiting

Read more here:

Tuesday, December 17, 2013

Southern California November Real Estate Sales: "Underwhelming"

Southern California home sales plunged in November, falling with a 10.4 percent thud across Riverside County and by the same percentage in the entire six-county region, the latest report from San Diego-based DataQuick said.
DataQuick president John Walsh called the performance “underwhelming.”
The month was far from flamboyant by DataQuick president John Walsh’s standards because of two likely culprits: Low inventory and a pullback in home-buying and consumer confidence during the early-October fiasco on Capitol Hill over ways to resolve the debt ceiling.
Consumer confidence waned. FHA-backed mortgages that were not well into the escrow pipeline hit a few snags during the federal government shutdown. Investor and cash buys dissipated, too.
“There’s demand out there, but for a variety of reasons, Southern California did not see home selling that was commensurate with the level of demand,’’ said DataQuick analyst Andrew LePage.
Collectively, sales in Southern California fell below the seasonal average. Southland sales have shown a decline of 7.6 percent, on average, every October and November since 1988 when DataQuick statistics begin.
Every county in Southern California had a year-to-year drop in sales in November:
Faring the worst was Ventura County, with new and existing home sales plummeting 16.5 percent from November 2012. The smallest decline was reported in San Bernardino County with 2,130 sales in November, a 7.6 percent drop from the 2,304 sales in November 2012.
Riverside County, with a 10.4 percent drop in home sales in November, closed the books on 2,934 sales. That’s down from 3,274 sales in November 2012.
Gene Wunderlich, government affairs director with the Southwest Riverside County Association of Realtors, said he thinks the drop in sales is based on consumer skittishness.
There are still a lot of unresolved variables out there, he said, citing the unknown variables of the Affordable Care Act, rising mortgage rates and consternation over the new maximum Federal Housing Administration loan limits for Riverside and San Bernardino counties homebuyers that take effect on Jan. 1.
The FHA-loan limit will fall 29 percent from $500,000 to $355,350 on Jan. 1, a reduction of $144,650.
“The combination of all that has consumers still a bit rattled,’’ Wunderlich said. “The two entities that drove our market the hardest — investors and first-time buyers — are backing out of the market right now.”
Rich Simonin, owner of Westcoe Realtors in Riverside, sees a market that is clearly in transition.
“The market has transitioned from one in which the listing side — the ownership side of the equation — was once dominated by banks,’’ Simonin said. “This year, we’ve transitioned from repos and short sales back to regular home owners with equity. They’re now a big part of the equation.”
The dip is not unlike the lag between tides, he said.
“Naturally, you will have some slack as you see the banks get out of the market,’’ Simonin said. “The sellers are starting to return. But sellers don’t all jump in at once.”
The statistics from Riverside alone show how far the market has shifted, Simonin said. Out of 595 homes for sale, 502, or 84 percent of all listings, are standard sales. Only 26 properties have been taken back by a bank. Fifty-six units in the pool of 595 homes were listed as short sales.
“Banks are pretty much out of the equation,’’ he said.
While sales dropped noticeably in November, the blockbuster gains that Southern California has seen on median price did not wane.
Every county saw median sale prices rise by more than 15 percent year over year.
Riverside County’s November median on all existing, new and condo sales rose 20.1 percent to $275,000 from $229,000 in November 2012. The median price on all home sales in San Bernardino rose 19.4 percent to $218,500, up from $183,000 one year earlier.
Tight inventory continues to be the trump card on price. More keys are also being turned on sales of the newly built house.
“Price has come a long way, and it’s put a crimp in affordability for some people,’’ LePage said, prompting some buyers to take a pause and to push them into condo purchases. First-time homebuyers are down to the lowest level in eight years, Wunderlich said.
Out of Riverside County’s 2,934 total sales in November, 2,143 transactions involved existing homes -- some 16 percent fewer than November 2012. The 343 condo sales and 448 new home sales that closed escrow in November were up 11.7 percent and 7.4 percent, respectively from November 2012.
San Bernardino County’s 1,797 existing home sales were down 12 percent from November 2012, but the 144 condo sales and 189 new home sales reflected gains of 6.7 percent and 54.9 percent from the year earlier.
Foreclosure re-sales in Riverside County fell to 7.5 percent of the transactions, the lowest since April 2007. One year ago, roughly 18.3 percent of all sales involved bank-related properties. In San Bernardino County, 11.2 percent of all transactions involved distressed property. That was the lowest ratio the county has seen since the housing bubble burst.
Absentee buyer interest fell in November as well, LePage said.
The percentage of absentee and vacation home buyers in Riverside County was 27.8 percent, down from 33.3 percent of all buyers in November 2012. In San Bernardino County, the percentage of investor-type of purchases was 35.1 percent, down from the April peak of 40.2 percent.
The median price on condos rose 31 percent in November to $206,000 in Riverside County and 19 percent to $196,500 in San Bernardino County. The November new home median, at $337,000 in Riverside, is up 13.3 percent from the year earlier. In San Bernardino, the $387,500 median sale price on a new home reflects a 21.8 percent jump from November 2012.
Even with the improving market conditions on price, Wunderlich said many in the industry will pay close attention to what happens in January.
“The first quarter will tell the tale,’’ he said

Wednesday, December 11, 2013

5 Positive Trends for Bay Area Real Estate in 2014

The good feelings generated by many swollen bank accounts in Silicon Valley's real estate industry should spread to more markets next year, while the Bay Area continues to reap the benefits of a strong local economy.
That was one takeaway from this year's presentation of Emerging Trends in Real Estate 2014, the closely watched survey of real estate sentiment from PricewaterhouseCoopers and the Urban Land Institute. (You can download a copy of the report here.)
"All the markets are getting better — that's the general theme," said Andrew Warren, PwC's director of real estate research. Warren spoke to a gathering of industry professionals Dec. 4 at the Four Seasons hotel in East Palo Alto. The survey gathers responses from more than 1,000 professionals and includes rankings of markets by various industry sectors.
Some other key points:
1. The San Jose area remains in the top five markets nationally for investment, development and homebuilding. (It's No. 3 this year, where it also placed last year on the ranking of the survey's top 20 markets.) You've heard this before, but it's all about job growth. San Jose is now above its peak employment level before the recession, driving demand. Cities on the "most improved" list were Las Vegas, Sacramento, Atlanta, the Inland Empire, and Phoenix. Washington, D.C. dropped the most, and you can blame federal shutdowns for that.
2. Industrial booms: This year's survey found industrial property topping investment prospects for 2014, followed by hotels, apartments, office and retail. One sticking point: The vast majority of investors said they wanted to buy industrial properties this coming year, but less than 10 percent of industrial owners said they wanted to sell. "So the question is, will there be a stalemate, or will that entice people to sell?" Warren said.
3. Capital will continue to flow: Pension funds and regional banks are increasing their real estate exposure. Warren said pension funds that haven't invested in real estate are looking to dip their toes into the water. Meanwhile, regional banks — which all but stopped lending in commercial real estate during the downturn — have mostly worked through their bad portfolio and are looking to start lending again. "The mood is they want to start doing more. The dialogue has opened up. It's just not completely there yet."
4. Demographic trends are raising questions: Warren noted the jury is still out on how the younger generation will change demand for office space and residential. Fewer Americans are getting drivers licenses and cars, he noted, and young people are opting to live in urban locations. "The question is, are they going to stay there as they get older," he said. "The other question is with the higher rate of student debt, will they be able to buy a house? There's a lot of questions with this group, and it's going to be something that real estate is dealing with for years to come."
5. Locally, the business trends that have driven strong real estate activity in the past couple of years should continue, industry executives said in a response panel following the presentation. Deke Hunter of Hunter Properties said he is keeping a close eye on the supply of new office product coming onto the market, as well as other "bubble" signs. "But that said, I don't think we'll have outrageous growth," he said. "I think we'll have better-than-national-average growth, and we should do quite well."
Lisa Gillmor, a city of Santa Clara council member and real estate veteran, noted that the Levi's Stadium alone is driving tremendous investment activity in the area, with more than $4.5 billion from two major proposed mixed-use projects on city-owned land.
"We're looking at creating a population of thousands to stay in Santa Clara — to spend their money, to live and rent," she said. "We're trying to create this new city environment that our workforce is demanding of us now."

Tuesday, December 3, 2013

Home Prices Gained Less Than 1% in October

CoreLogic a leading residential property information, analytics and services provider, today released its October CoreLogic Home Price Index (HPI(®)) report. On a month-over-month basis, including distressed sales, home prices increased by only 0.2 percent in October 2013 compared to September 2013*. Year over year, home prices nationwide, including distressed sales, increased 12.5 percent in October 2013 compared to October 2012. This change represents the 20(th) consecutive monthly year-over-year increase in home prices nationally.

Excluding distressed sales, home prices increased 0.4 percent month over month in October 2013 compared to September 2013. On a year-over-year basis, excluding distressed sales, home prices increased by 11 percent in October 2013 compared to October 2012. Distressed sales include short sales and real-estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that November 2013 home prices, including distressed sales, are expected to remain at the same level month over month as October 2013, with a projected increase of 12.2 percent on a year-over-year basis from November 2012. Excluding distressed sales, November 2013 home prices are poised to rise just 0.4 percent month over month from October 2013 and 11.3 percent year over year from November 2012. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.

"In October, the year-over-year appreciation rate remained strong, but the month-over-month appreciation rate was barely positive, indicating that house price appreciation has slowed as expected for the winter," said Dr. Mark Fleming, chief economist for CoreLogic. "Based on our pending HPI, the monthly growth rate is expected to moderate even further in November and December. The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks."

"In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013," said Anand Nallathambi, president and CEO of CoreLogic. "The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates."

Highlights as of October 2013:
    --  Including distressed sales, the five states with the highest home price
        appreciation were:  Nevada (+25.9 percent), California (+22.4 percent),
        Georgia (+14.2 percent), Michigan (+14.1 percent) and Arizona (+14
    --  Including distressed sales, the only state to show depreciation was New
        Mexico (-0.5 percent).
    --  Excluding distressed sales, the five states with the highest home price
        appreciation were: Nevada (+22.5 percent), California (+18.5 percent),
        Utah (+13.3 percent), Florida (+13 percent) and New York (+12.4
    --  Excluding distressed sales, no states posted home price depreciation in
    --  Including distressed transactions, the peak-to-current change in the
        national HPI (from April 2006 to October 2013) was -17.3 percent.
        Excluding distressed transactions, the peak-to-current change in the HPI
        for the same period was -13.1 percent.
    --  The five states with the largest peak-to-current declines, including
        distressed transactions, were Nevada (-40.7 percent), Florida (-37.4
        percent), Arizona (-31.5 percent), Rhode Island (-29.3 percent) and West
        Virginia (-28 percent).
    --  96 of the top 100 Core Based Statistical Areas (CBSAs)** measured by
        population showed year-over-year increases in October 2013.