California Short Sales Hit Highest Level in 3 Years

Short sales continued to soar in January, reaching their highest level in California in three years. The California Association of Realtors reported in its Pending Homes Sales Index that the number of short sales increased from January last year and also from the previous month.

A short sale is a real estate transaction in which a homeowner sells a property for less than is owed on it and the lender agrees to discount the payoff. Statewide, short sales accounted for 23.8 percent of all homes in escrow, up from 22.2 percent a year earlier, CAR reported. But short sales dominated the pending home sales in Riverside and San Bernardino counties, making up more than two-thirds of the sales.

The CAR index also reported:
• Equity sales dropped in January to 49.9 percent. Standard sales hit 52.7 percent in December 2011 and 46.5 percent in January 2011.

• Distressed properties, including short sales and bank-owned homes, increased to 50.1 percent in January, from 47.3 percent in December. They reached 53.5 percent a year earlier.

• Bank-owned REOs increased in January to 25.9 percent, up from 24.6 percent in December. REOs reached 30.8 percent in January 2011.

Attitudes Shift:A survey of homeowners last month showed that 83 percent of those who bought short sales were satisfied with their purchase, according to online real estate resource HomeGain. Short sale buyers were the most satisfied of any other sale type, the study indicated.

As short sales continue to flood the market, the survey shows attitudes are changing among home buyers and real estate agents, who once avoided short sales because of the stigma associated with longer escrows and high fallout rates.

But the fact is, short sales are the best values around for home buyers. And buyers are coming around. Here’s why:

Better Prices:
In the hierarchy of pricing for a neighborhood, new homes and standard equity sales trend to the top of the price range. Short sales and REOs sell near the bottom.

Banks are willing to accept a lower price on a short sale because it’s their favorite method to avoid having to foreclose on the property. And foreclosures mean the bank will lose 8 percent to 12 percent more than from a short sale.

Better Condition:
Short sales tend to be owner-occupied homes in better condition than vacant bank-owned properties. They are less likely to be vandalized, squatted on or stripped of appliances and fixtures. Homeowners tend to maintain their homes during the short sale process, as well.

Less Competition:
Because many buyers and agent avoid short sales, there is less competition among buyers. Many buyers aren’t willing to wait for a short sale, which can add a couple months to the purchase timeline. But for those who are willing to wait, the payoff is handsome.

California Real Estate Prices down, Sales up in January

Median home prices went down and home sales enjoyed a slight rise for the whole of California, according to recently reported figures from DataQuick, a research company based in San Diego. This was attributed to the increase of distressed home sales around the San Francisco area and real estate investors in Southern California.

According to DataQuick’s report, California’s median home price was at $236,000 for January 2012, marking a 1.1 percent decrease on a year-on-year basis. This is the sixteenth consecutive month the year-on-year median home price went down. Southern California’s median price went down to $260,000, a 3.7 percent decrease, while Bay Area median prices were at $326,000 with a nearly identical drop of 3.6 percent.

On the other hand, sales went up for the sixth straight month on a year-on-year basis for the whole of California. January 2012’s 1.5 percent increase over January 2011 figures was marred, however, by a huge 25.5 percent drop from December 2011 sales. Sales in Southern California barely increased, going up 0.4 percent from January 2011, while the Bay Area enjoyed a huge leap of 10.3 percent from the previous January.

To see current Bay Area home inventory visit: http://www.authenticre.com/

US Home Sales Forecast Further Declines in 2012

Residential property prices the US decreased again in the fourth quarter of 2011 and few areas are likely to see increases in 2012, according to the latest data from Zillow.


It's latest Home Value Index fell 1.1% but there were less significant declines in the previous two quarters and overall the drop in 2011 was 4.7%.

Zillow predicts that home values will continue falling in 2012, but with smaller declines than 2011, probably ending the year 3.7% down. While home values in some individual markets are likely to reach a bottom this year, Zillow does not forecast a definitive national bottom until 2013.

The Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and the 25 largest markets.

Metropolitan statistical areas (MSAs) like Los Angeles, Riverside, California, and Phoenix, which were among the hardest hit in the housing downturn, will likely reach bottom soon and will experience home value increases or stability in 2012, according to the forecast.

Other markets that are likely to reach a bottom and see home values increase or remain flat in 2012 are Baltimore and Washington DC. Markets which may end 2012 without significant increases in home values, but which are likely candidates to see a bottom late in the year are Dallas, Denver, Miami-Fort Lauderdale, New York, Pittsburgh, San Diego, San Francisco and Tampa.

‘While it may be disconcerting for home owners to see values nationally fell at a fairly rapid clip at the end of last year, that trend won't last through 2012,’ said Zillow chief economist Stan Humphries.

‘The fourth quarter's weak performance proves that pronouncements of a bottom in home values have been premature, but the good news is that 2012 will prove to be a better year than 2011. In fact, many markets show signs of a bottom this year, although a bottom may continue to elude the nation as a whole in 2012,’ he explained.

‘Fortunately, against a backdrop of modest further declines in home values, we expect that home sales will pick up briskly this year as affordable prices bring more buyers to the table, especially investors and second home buyers,’ he added.

In the fourth quarter, the rate of homes foreclosed edged upward from eight out of every 10,000 homes in November to 8.2 out of every 10,000 in December. However, the rate was lower than at the end of the third quarter, when 8.6 out of every 10,000 homes were lost to foreclosure.

Additionally, foreclosure re-sales made up 19.1% of all sales in December. Foreclosure re-sales have steadily risen since August, when 17.1% of all sales were foreclosure re-sales.

South Bay Commercial Real Estate Market Heats Up

Silicon Valley developers are racing to erect office and R&D buildings to meet a fresh surge of expansions by tech companies that's turning the region into a commercial real estate boomtown. Last year, the South Bay added about 26,000 employees, enough to reduce vacancy rates for R&D properties to 16.4 percent, the lowest level since 2007. And as hiring continues and popular Peninsula locations like Mountain View and Palo Alto fill up, real estate brokers say about 16 companies are currently scouring the South Bay for big chunks of space.

"Development. We haven't used that word in a while," said Chad Leiker, a vice president with Kidder Matthews, a commercial realty brokerage. "But we are starting to see that. The pressure is there to build more space." If all the known projects are completed, they would total 2.3 million square feet of space, which typically could accommodate 9,200 employees.. Buildings already under construction, mostly in Sunnyvale and Santa Clara, total 788,000 square feet, enough for about 3,100 workers.

"In the time I've worked in Silicon Valley, I've never seen a market this strong," said Jeff Houston, a senior vice president with commercial real estate firm CB Richard Ellis who has more than two decades of experience in the South Bay market. At the end of last year, the South Bay's vacancy rate for research and development space was 16.4 percent, compared with 18.3 percent at the end of 2010. "It's not just Google (GOOG) and Apple (AAPL)," said Phil Mahoney, an executive vice president with commercial realty firm Cornish & Carey Newmark Knight Frank. "Several big tech companies are actively looking for space."

Brokers say about 16 companies are each hunting for at least 100,000 square feet in the South Bay.
One of the first big projects to begin construction is the Sobrato development at Central and San Tomas expressways. Each of the two buildings is 153,000 square feet, and together they could accommodate about 1,200 employees.

"Demand is good," said Michael Field, director of commercial real estate with The Sobrato Organization. "We have a couple of tenants that are looking at the full campus and some tenants that have inquired about a single building."

In Sunnyvale, development firm Jay Paul landed the biggest lease of 2011 at its Technology Corners office complex when Google leased 715,500 square feet. The four buildings that Google took have room for about 2,900 employees. That success encouraged Jay Paul to construct two more Sunnyvale buildings. One is a office building totaling 357,000 square feet at the Moffett Towers complex. The other is a fifth building at Technology Corners that would be 225,000 square feet in size.

More construction is on the horizon.
Menlo Equities aims to break ground by early April on a multi-building project on 33 acres in Santa Clara that Menlo bought from Applied Materials. It will likely construct five buildings that total 760,000 square feet, said Henry Bullock, chairman and founder of Menlo Equities. The Irvine Company, the Southern California development firm, is planning a 400,000-square-feet project in Santa Clara on Great America Parkway near Highway 237. And South Bay Development is eyeing construction of 285,000 square feet in Santa Clara.

San Jose could be the next hot spot for new construction as demand pushes south and east. City officials have slashed taxes on new construction and tenant improvements to attract development.
And some big building that were empty only last summer will soon be full. In May, Polycom will move its headquarters, 375 workers and other operations to a north San Jose building that could contain 600 to 700 employees. By September, Flextronics will move 500 workers and its U.S. headquarters to a building next to Polycom's future offices.

Last year, demand was strong enough to reduce vacant commercial space in the South Bay by 4.1 million square feet -- roughly enough space to fill three malls the size of Stanford Shopping Center.
"We are running out of space," said Jim Beeger, a senior vice president with Colliers International, a commercial realty brokerage. "In six months, it will be very possible to run out of space."
Some of the hottest markets in the South Bay are essentially out of space now.

"Google is taking everything in Mountain View, Apple is leasing everything in sight in Cupertino -- and they both are moving into Sunnyvale," said Mark Schmidt, managing director of the San Jose office of CB Richard Ellis, a realty brokerage. Cupertino's office market has a 5.6 percent vacancy rate, while its research- and-development space has zero-percent vacancy, Cornish & Carey reported. Mountain View has an office vacancy of 5.1 percent and a research space vacancy of 6.4 percent. Sunnyvale's vacancy for both office and research space is slightly above 12 percent.

The current construction boom is very different from the one more than a decade ago that was driven by the dot-com craze."You had a lot of buildings for companies that wound up being vaporware," Bullock said.
This time around, it's Apple, Google, Facebook and other sturdy players that are expanding. The new tech stalwarts command mountains of cash. They seek to connect people with social networks, mobile devices and new consumer products, as well as to make corporate America more efficient.

No Bottoming Out for Real Estate Market as Home Values Keep Falling

If you’re watching the real estate markets, the good news is that the Federal Reserve has pledged to keep interest rates low through 2014. The bad news is that the market is going to need it. The November Case-Shiller housing numbers, released this morning, indicate that prices tumbled 3.7% from the year before. That’s below expectations of a 3.2% drop.

Even worse, it contradicts a trend in which the rate of price drops had been slowing. For several months, prices had been falling, but by a slightly smaller percentage each month — indicating a bottoming out. This latest data may be an outlier, or it may (horrors!) presage another leg down. (Housing prices are currently 32.9% off their peak).

Current speculation among housing observers is that after a lull in the processing of foreclosures due to the robo-signing scandal, we may be seeing a new flow of distressed homes coming onto the market. If that’s the case, then the newly marketed foreclosures could hold prices down for the next few months.

However, there’s a lot of optimism building in the real estate community, too, so when prices turn, they may turn suddenly. Unemployment claims, for instance, hit nearly a four-year low, while the national jobless rate is at 8.5% — not spectacular by any means but certainly better than the 9% to 10% range we’ve seen in recent years.

Sentiment among homebuilders, meanwhile, hit its highest level in four years, while the National Association of Home Builders Remodeling Index rose last week to a five-year high. For housing prices, the regional picture did not change, with Washington, D.C., a bright spot for some time, posting year-over-year increases.

Phoenix, meanwhile, is a city to watch. The metro area posted an increase in prices of 0.6% from the previous month. While the market there is still down 3.6% year-over-year, the monthly pop might indicate that sun-seekers are finally biting at bargains of more than 50% off peak prices.

Pessimism in California commercial real estate giving way to cautious optimism

A mood of optimism is evident in the California commercial real estate industry, despite the mixed economic signals of the past sixth months, according to the latest Allen Matkins/UCLA Anderson Forecast commercial real estate survey. The survey polled a panel of industry professionals on their views of how the market will change over the coming three years.

In an essay titled "California Office and Industrial Markets: A Recovery Begins," Jerry Nickelsburg, a senior economist with the UCLA Anderson Forecast, writes that despite recent events, including the U.S. economy nearly stalling, with GDP growth below 2 percent, and shaky confidence in the various stock markets, the industry's cautious optimism is driven by steady employment gains in coastal California.

Those gains, Nickelsburg says, have been seen primarily among users of office space, particularly in health care and professional, technical and scientific services, as well as among users of industrial space, including the export-related sectors and manufacturing.

The survey looked at the state of commercial real estate in seven California regions: Los Angeles, Orange County, San Diego, San Francisco, the East Bay, Silicon Valley and the Inland Empire.

The economists found that in the Los Angeles and San Diego office markets, vacancy rates are dropping, albeit by an insignificant amoung, but those surveyed remained highly optimistic. In the Bay Area, San Francisco developer sentiment was unaffected by slower economic growth during the last two quarters of 2011, and in the East Bay, sentiment remained optimistic, though slightly less so, with respect to rental rates. With regard to industrial space, the Bay Area professionals surveye were most optimistic about Silicon Valley and least optimistic about San Francisco.

For any real estate question answered with no obligation: http://www.authenticre.com/Contact-Us

Santa Cruz County median home price comes in at $475,000 in December

Home sales in Santa Cruz County in December were brisk as median price, the midpoint of what sold, was $475,000, remaining less than $500,000 for 11 of the past 12 months. The figures come from Gary Gangnes of Real Options Realty, who noted the December volume was up 24 percent from a year ago. It was the highest since 2004, when the boom was on and the median was on its way to $775,000.

About 40 percent of the December sales involved distressed property, a little less than November, when the median was $410,000. Agents have been pressing banks to speed up approval of "short sales," accepting a price that is less than what is owed, but there were more sales of bank-owned homes than short sales. The median price for condos was $249,000 on 33 sales; 64 percent were distress sales.

Tom Brezsny of Monterey Bay Properties, closed five sales in December, more than any other agent in the county but he doesn't expect that pace to continue. "We're back to 2001 prices on single-family homes," he said. "Condo prices are back to 1999. They will be the last to go up." Brezsny said he considers the spurt of sales to be the result of tension that built up, like the shock of an earthquake releasing tension underground.

"If things were busy in December, you would see a lot in January, and I don't think you'll see that," he said.
Last month listings were down 9 percent from the previous year.That's keeping traditional buyers, what Brezsny calls organic buyers, on the sidelines."Organic buyers are not willing to buy anything that's comes on, they want more, better houses," he said. "Organic sellers are not willing to put their house on the market until they are more buyers." So who's buying? "Investors are jumping in because rents are skyrocketing," Brezsny said.

'Serious buyers were out in December," said Debra Frey of Intero, who's been working in real estate for 35 years and received the lifetime achievement award from the Santa Cruz County Association of Realtors.
Paul Bailey of Bailey Properties said investors are going after homes less than $500,000 and about 35 percent are paying cash. He had a cash buyer for apartments who expects a return of 5 percent to 6 percent. "It's a values market, not an ego market," Bailey said. "Above $800,000, buyers are not sure the values are there."

Investors are coming from over the hill and beyond. Pacifica Cos., based in San Diego and doing business as REO Seastone, bought five foreclosures, four homes and vacant land, from Bank of America at year's end. The five transactions totaling nearly $1.3 million were recorded on the same date. An affordable condo behind Target at 146 Rio Del Pajaro Court, Watsonville, which fetched $334,000 in 2006 sold for $142,500; a townhouse at 1200 Capitola Road in Santa Cruz that fetched $410,000 in 2004 sold for $210,000, and a home at 1100 White Road, Los Gatos, where the owner owed more than $900,000 sold for $199,000. Pacifica, run by the Israni family, did not return a call for comment, but according to a 2008 announcement on the company website, the family sees investments in distressed residential real estate as a good opportunity.

Other out-of-town buyers are trying their luck at the foreclosure auctions that take place Monday through Friday at 1:30 p.m. on the steps of the county government building. A bidding war broke out Friday over 194 Calabria St. in Aptos, a 2,900-square-foot house with four bedrooms and 3 1/2 baths. Listed for $799,000 and described as "stunning newer construction," there had been no takers. The lender set the opening bid at a little more than $658,000, which covered the entire debt.
About two dozen people watched in fascination as the two bidders sent the price higher, and higher, and higher - up to $711,100.

"The property's very good. It's an ideal location," said the winning bidder, a man who described himself only as a San Jose investor. He was represented by Peter Tiemann, of Santa Cruz Capital, which has bought up other distressed homes this year. The losing bidder upped the price by $100 more than three dozen times on behalf of the investor at his side."Things are slow here (compared to over the hill)," said the investor, who declined to give his name. Brezsny found the bidding war surprising. "It's indicative of how poor the choices are," he said, suggesting that discretionary sellers could improve the market by putting their homes up for sale. "The more distress sales, the more property will go down in value."

Appraiser Glenn Fuller said, "The high end is coming down faster than anyone realized." A Sunny Cove home overlooking the ocean sold for $5 million, then $3.6 million and most recently $1.8 million, he said.
"There'a huge inventory of people thinking their house is worth more than it is," he said, noting 299 homes are listed for more than $1 million but only six to seven sell at that price range in a month.

December 2011 Statistics

Single-Family Homes
Median price: $475,000 ($503,250 a year ago, $549,500 in 2009 and $450,000 in 2008)
Listings: 705 (773 a year ago, 690 in 2009 and 944 in 2008)
Sales volume: 159 (128 a year ago, 146 in 2009 and 114 in 2008)
Unsold Inventory Index: 4.4 months (6 months a year ago)
Average price: $548,333 ($578,052 a year ago)

Condos
Median price: $249,000 ($275,000 a year ago, $338,250 in 2009)
Listings: 239 (251 a year ago, 209 in 2009)
Sales volume: 33 (33 a year ago, 36 in 2009)
Unsold Inventory Index: 7.2 months (7.6 months a year ago)
Average price: $276,639 ($316,629 a year ago)