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.