Western Cities Lead the Pack In Home Price Recovery

If you’re looking for the source of this year’s home price recovery, look West.

Western cities are recovering strongly after being hit hardest during the real estate bust. The trend was confirmed Tuesday with the release of the Standard & Poor's/Case-Shiller index of 20 large cities. The index was down 0.1% in October from September but up 4.3% compared with October 2011.

San Francisco and Phoenix have both rebounded from their most recent lows. The two cities are up 22.5% and 22.1%, respectively. The improvement in those two cities illustrates distinct real estate trends on the West Coast.

The San Francisco example shows how coastal markets in California are rising sharply even as inland areas lag behind. The San Francisco metro area is one of the most desirable housing markets in the nation.

The Bay Area’s economy, and the housing market there, have also been boosted by the strength of the technology industry.

Phoenix, on the other hand, has recovered sharply as investors have poured into that market looking for homes to buy on the cheap, renovate and then either rent out or sell.

Investors in the Phoenix area made about 37.2% of all home purchases last month, according to research firm DataQuick, that number has declined as buyers intending to find a place to live have been lured back to the market. The peak for absentee-buyer purchases in the Phoenix area was March of last year, with investors snapping up 47.1% of all homes that month.

According to the Case-Shiller data released Wednesday, prices in the Los Angeles metro area are up 10.5% from their bottom and up 12.2% in San Diego.

In terms of month-over-month gains, Las Vegas posted the strongest increase up 2.8% in October over September. That city also hit an important benchmark in October, rising above its January 2000 index level for the first time in 22 months.

Of all the cities, Chicago was the weakest with prices dropping 1.5% month over month, while Boston was a close second, falling 1.4%.

Bay Area Median Home Price Hits $550,000

Citing increased demand, strained inventory, record-low mortgage rates and robust investor interest, a real estate information service reported this month that Santa Clara County continued its rise in this fall.

DataQuick reported that the median home price in Santa Clara County rose to $550,000 in November, up 21.7 percent from $452,000 a year earlier. A total of 1,478 homes were sold in November, up 15.5 percent from 1,707 in November 2011.

The rise of the median home price in Santa Clara County had some individual cities showing remarkable spikes, according to DataQuick's city data for October. In Palo Alto, for instance, the median home price jumped from $1,058,000 in October 2011 to $1,605,000 in October 2012, a more than 51 percent increase.

Los Gatos, Gilroy, Milpitas, Saratoga and Mountain View all had double-digit, year-over-year percentage increases in their median home price.

The month of strong sales and rising sale prices in Santa Clara County was on part with most of the Bay Area housing market, which "continued its march toward normalcy in November," DataQuick reported.

A total of 7,296 new and resale homes were sold in the nine-county Bay Area last month. That was up 15.5 percent from 6,317 for November 2011, according to DataQuick.

“Current trends are likely to stay with us well into spring, at least,” John Walsh, DataQuick president, said in a statement. "One of the variables that could really impact the market would be supply—how many homes are put up for sale. There are still mortgage finance issues. Some loan categories are not active. But right now, low mortgage interest rates make up for that."

The median price paid for a home in the Bay Area was $438,000 in November. That was up 5.3 percent from $416,000 in October and up 20.5 percent from $363,500 in November a year ago. Last month’s median was the highest since August 2008, when it was $447,000.

Here's a Bay Area breakdown of home sales and median price: 

All Homes	#Sold	#Sold	% Change	Median	Median	% Change
	Nov. 2011	Nov. 2012		Nov. 2011	Nov. 2012
Marin	239	272	13.8%	$629,000	$682,000	8.4%
Alameda	1,334	1,525	23.7%	$340,000	$415,000	22.1%
Contra Costa	1,225	1,394	13.8%	$255,000	$322,000	26.3%
Napa	99	133	34.3%	$297,000	$360,000	21.2%
Santa Clara	1,478	1,707	15.5%	$452,000	$550,000	13%
San Francisco	422	524	24.2%	$644,500	$728,000	25.1%
San Mateo	513	612	19.3%	$542,500	$618,000	13.9%
Solano	522	584	11.9%	$190,000	$221,500	16.6%
Sonoma	485	545	12.4%	$285,000	$349,000	22.5%
Bay Area	6,317	7,296	15.5%	$363,500	$438,000	20.5%

Last month distressed property sales—the combination of foreclosure resales and “short sales”—made up 35.0 percent of the resale market. Foreclosure resales—homes that had been foreclosed on in the prior 12 months—accounted for 11.5 percent of resales in November.

Absentee buyers, mostly investors, purchased 24.4 percent of all Bay Area homes in November, up from 23.7 percent in October, and up from 21.7 percent a year ago.

Here's a breakdown of Los Gatos home sales and median price:

Palo Alto Zip Code	Homes sold Oct.  2012	% Change from Oct. 2011	Median Price Oct. 2012
94301	15	168.3%	$2,415,000
94303	36	205.3%	$870,000
94306	26	41.2%	$1,624,000

Home Prices Predicted to Rise Through 2013

U.S. home prices will likely continue rising in 2013, according to the latest round of predictions from Freddie Mac. The government-controlled mortgage giant expects the U.S. house price index to rise by 2% to 3% in 2013.

On December 11, 2012, Freddie Mac published the latest installment of their U.S. Economic and Housing Market Outlook. The monthly report compiles economic data from a variety of sources and makes forecasts based on that information. According to the latest report, all major house price indexes (HPIs) are now showing year-over-year price gains. They cited 4.5% appreciation reported by the Federal Housing Finance Agency as one example.

But it was their housing market predictions for 2013 that made headlines. The economists at Freddie Mac expect U.S. home prices to climb by up to 3% next year.

Price Trends Vary Widely at Local Level

It should be noted, this was a national prediction that averages home prices across the country. We have seen a significant amount of price variation at the local level in recent years, and this will likely continue through 2013. Some cities (like many in California) will appreciate steadily over the coming months. In fact, some may see double-digit gains in home prices. Others will remain stagnant or experience only modest gains.

Inventory was a key factor for the cities that fared well in 2012. For instance, the number of homes for sale in Sacramento, California dropped by 60% over the last year or so. That was the largest reduction of any of the 146 metro areas tracked by Realtor.com. As a result, the median list price in Sacramento shot up by 31% over the last year (another national record).

But here again, there is much variation in local housing markets. While the median list price was skyrocketing in Sacramento, it was plummeting in Peoria, Illinois. This is why it’s so hard to define ‘the’ housing market in national terms.

Since the housing crisis began, we have seen increased regionalization of home prices. Local housing markets move to the pulse of their own economies, with less influence from national trends. As an example, home prices in Phoenix rose by 20% over the last year or so, while dropping by -2.3% in New York City. Different markets, different pricing trends.

How to Research Home Values in Your Area

Home buyers should research housing conditions at the local level, before plunging into the market. National news is interesting, but it’s not very useful for someone concerned with home prices in, say, Boise or Tallahassee. So where does one turn for local market information? Here are some tips.

If you happen to live in or near one of the cities tracked by the S&P/Case-Shiller Home Price Index, you’ll find it useful. The Case-Shiller 20-city composite monitors home values in the following metropolitan cities: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, D.C. It shows month-to-month changes in home prices, with a two-month lag time.

But what if you don’t live in one of those 20 cities? There are other ways to research local real estate trends.

The National Association of Realtors (NAR) publishes median home price information for 149 metropolitan areas in the U.S. It takes the form of an interactive Google map with clickable icons. Just Google “NAR median area prices” to find it, or use the URL below.


The full URL for the map:
http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data

http://www.santacruzlocalrealestate.com

The California Real Estate Landscape for 2013

Up-trending home prices are seen as a great sign by most people involved in real estate, because they instill a sense of comfort that, financially speaking, the market can return to the glory days prior to its collapse. But the sad truth is, there are more factors than home prices that affect real estate’s health, no matter how encouraging the rise may be.

 Still, the trend doesn’t keep sellers and property owners from wishfully believing that they’ve regained some form of control as if the balance has shifted back toward their favor.
Unfortunately for them, the main reason for price increases has nothing to do with buyers eagerly purchasing new properties; rather, it hinges upon a more balanced proportion of supply and demand as fewer houses were built this year. Although predictions for 2013 include an increase in overall supply, the amount of new houses estimated for the upcoming year will still be way under the 2.5 million output of 2005.

This slow growth is good for the market’s recovery long-term, though. As more Americans secure employment – and those who are employed see increases in income – the time will soon be rife for increased home buying. Until then, those potential buyers are doing exactly what they should: establishing a firm financial foundation that will facilitate a home purchase. And that’s exactly what the market needs: serious buyers who have the financial means to avoid upside down mortgages.

Is real estate back in the hands of sellers? Absolutely not, but markets will see trends that seem to reflect otherwise. As vacancies fall for commercial properties into 2013, owners look to pad their profits by increasing rents. As such potential occupants should protect their bottom lines now by locking in lower rates with long-term occupancy plans. Private property owners and landlords, too, may try to capitalize off of increased property values, so renters beware.

Increasing monthly rent payments might just be enough to turn some renters into buyers as they look to invest in their own property. “There comes a point when you have to evaluate how much you’re wasting on rent and how much you could be putting into equity,” says Erika Snider, credit consultant for rent to own website, HomeStarSearch.com. He suggests that low interest rates, an abundance of available properties, and a wealth of leasing options make for a real estate atmosphere that is still largely in favor of consumers.

Take, for example, California, which is experiencing a gain in sales as homebuyers jump on historically low interest rates and reasonable prices. This is good for new homeowners, but for how long? Statistics show that 30% of current California homeowners are underwater on their mortgages and will affect the market as they decide whether to stick it out or to list their properties. And California is but a portion of the national picture; Zillow reports that 31.4% of U.S. homeowners are currently upside-down on their mortgages as the fed frantically scrambles for a way to help them out and boost the economy.

So while increasing home prices seems, on the surface, like a positive step, the real estate market is far from a full recovery. The upcoming year will see more increases in property values and low interest rates, but it will be far from a housing boom. It will be interesting to see if government-backed refinancing options – which aim to free up income for underwater mortgage holders – are the cure for a sluggish economy. Will homeowners take their excess funds straight into the marketplace or will they stash it away for the next financial doomsday? Stay tuned…

Bay Area Remains Most Expensive Real Estate Market in US

The success of the technology industry and desirable location are continuing to influence home listing prices in the San Francisco Bay Area, elevating it to one of the priciest real estate markets in the country. Today, the Home Listing Report (HLR) revealing several of the country's most expensive real estate markets are in Northern California. Google, Apple, Facebook and Stanford University are all located within 15 minutes of this year's most expensive market, Los Altos, Calif.,where the average listing price of a four-bedroom, two-bathroom home is 1,706,688.

"The success of many of our native tech companies has shined aspotlight on Silicon Valley and our real estate market in the SanFrancisco Bay Area," said Rick Turley, president of Coldwell Banker Residential Brokerage in the San Francisco Bay Area. "Listing pricesin our market are a product of ongoing high demand, projectedpopulation growth and the low inventory levels of homes in what is one of the most desirable locations to live."

In contrast, the most affordable market this year is Redford, Mich.,where a similar home, four-bedrooms, two-bathrooms, is listed at $60,490 -- a listing price difference of more than 1.6 million. Infact, 28 homes can be purchased in Redford for the price of a similarhome in Los Altos.

Overall, the report found the average listing price of afour-bedroom, two-bathroom home in the U.S. to be 292,152. Affordability remains strong in many markets across the country as 36 percent of the markets analyzed by the report had an average homelisting price of less than 200,000 for four-bedroom, two-bathroom homes.

About America's Most Expensive Markets:

The five most expensive markets are all in California, with four inthe San Francisco Bay Area. Los Altos, Calif. tops the list, followedby Newport Beach (1,658,000), Saratoga (1,582,434), Menlo Park(1,506,909) and Palo Alto (1,495,364). But even with these highpriced markets, California was not the most expensive state. Theaverage listing price of a four-bedroom, two-bathroom home inCalifornia (431,625) is less than both Hawaii (742,551) and Massachusetts (489,063).

Positive Real Estate Trend Continues: Sales, Prices, Confidence Up

The latest real estate market trends show continued improvement with an increase in existing home sales and prices, and rising confidence among home builders, according to industry data released today.

Existing home sales rose 2.1 percent in October, while median home prices posted a year-over-year gain of 11.1 percent, according to a report released today by the National Association of Realtors (NAR). Builder confidence rose for the seventh straight month to a high last seen in May 2006, according to the Housing Market Index released today by the National Association of Home Builders or NAHB.

Total existing home sales sold at a seasonally adjusted annual rate of 4.79 million in October, up from 4.69 million in September, despite the regional impact from Hurricane Sandy on real estate market trends, according to the NAR. October sales are 10.9 percent higher than the 4.32 million pace for October 2011.
“We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions,” Lawrence Yun, NAR chief economist, said in a statement.

The national median existing home price for all housing types, including single-family homes, townhomes, condominiums and co-ops, was $178,600 in October, the eighth consecutive month of annual increases.
“Rising home prices have already resulted in a $760 billion growth in home equity during the past year,” Yun said. “Given that each percentage point of prices appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year.”

Confidence among home builders rose 5 points to 46 on the NAHB Housing Market Index. “While our confidence gauge has yet to breach the 50 mark – at which point an equal number of builders view sales conditions as good versus poor – we have certainly made substantial progress since this time last year, when the HMI stood at 19,” the association’s chief economist, David Crowe, said in a statement.

The index tracks home builders’ perception of sale, sales expectations and traffic of prospective buyers. Builders’ reported an 8-point improvement to 49 in their view of current sales conditions, while the outlook for sales over the next six months rose 2 points to 53. Perceptions of traffic remained at 35 from the previous month.

California Home Sales Hits 3 Year High

California's real estate market bucked the typical fall slowdown last month, with buyers snapping up pricier homes and sales roaring up 18% over the prior month. Sales hit a three-year high for an October, rising 25% from the same month last year. The median sale price for a Southern California  home last month was $315,000, equal to September and up 17% from October 2011, according to real estate research firm DataQuick.

A decline in the number of foreclosed homes has caused a shortage of inventory in entry-level neighborhoods, pushing up home prices. Demand from investors also remains strong, with these buyers snapping up a near-record level of homes last month.

The rebound stems from more people chasing fewer homes. Interest rates remain near record-low levels, luring buyers. Investors with cash have poured into the market looking for cheap properties to flip or rent. And foreclosure resales have sunk to a five-year low, tightening the supply of cheap homes.

An estimated 21,075 newly built and previously owned houses and condominiums sold throughout the region last month. Coastal markets saw the biggest increases in sales — though every county posted double-digit gains compared with October last year. Orange County saw the biggest surge, with sales up 41%. Ventura rose 35%, San Diego, 31%, Los Angeles, 25%, San Bernardino, 18% and Riverside 13%.

Absentee buyers — investors and some second-home buyers — snapped up a near-record 28% of homes throughout the Southland last month. These investors paid a median $245,000, a 23% increase from October last year.

A recent report by real estate website Zillow showed that many investors and others are paying market value for foreclosed homes in the region, erasing the discount between foreclosed homes and regular properties. Discounts were marginal on bank-owned homes in September, with the discount in the Inland Empire just 2% and in the Los Angeles area 4% in September, Zillow said.

Bruce Norris, president of Norris Group, an investment company in Riverside that buys foreclosed homes, said he expects prices to increase in coming years as the Obama administration has encouraged banks to curtail foreclosures. That will push up prices, he said.

"It is policy driven," Norris said. "Since the policy is going to continue … you are about to see a pretty substantial price increase within the next two years." Indeed, the high level of affordability ushered in by the housing crash could erode quickly in California. This week the California Assn. of Realtors reported that homes in the state are getting less affordable as property values rise. The group estimated that 49% of home buyers in the third quarter could afford a median-priced house in California, a decline from 51% last quarter. The rise in prices is offsetting the benefit to home shoppers from low mortgage interest rates.

Christopher Thornberg, a principal at Beacon Economics and one of the first to call attention to the housing bubble, said home shoppers should expect expensive housing in the Golden State for the foreseeable future. The reason: Construction of new homes remains highly expensive for builders.
"Why would it stop?" he said. "The economy is growing. Short of a fiscally led second recession, there is no reason in the world that it's going to do anything but to continue."

The region's lowest-cost areas — often those the most starved for inventory these days — posted the weakest sales numbers last month, according to DataQuick. The number of homes that sold below $200,000 in the region dropped 11% from October last year. Sales in these markets have slowed because of the drop in foreclosures, while increased demand has pushed up prices.

Sales of previously foreclosed-upon homes made up just 16% of the resale market last month, a drop from 17% last month and 33% in October 2011. Foreclosure resales peaked at 57% in February 2009.
In the meantime, sales surged in several mid- and higher-cost neighborhoods throughout Southern California in October, DataQuick said. Sales of homes between $300,000 and $800,000 increased 42% year over year. Sales of homes costing more than $500,000 were up 55% and sales of homes more than $800,000 rose 52%.

Bill McBride, lead writer for the housing blog Calculated Risk, said that with the upswing in prices homeowners are encouraged to keep their homes off the market. "Why is there no inventory? I ask every real estate agent that, just to hear what they tell me. And they say people don't have enough equity in their homes and so they aren't listing them," McBride said. "That is a solid argument. But I also think the people are sensing that prices are going up and there is no urgency to sell."