Salinas Real Estate Heats Up

For the Monterey County real-estate industry, it’s game on. Key indicators across the board are showing a vibrancy not seen since the financial market crash of 2008.

More homeowners are seeing equity return as fewer mortgages are underwater. Home sale prices are back to within a whisker’s width of where they were in 2008 at the start of the real-estate crash. And homes going on the market are attracting multiple offers and are staying on the market only half as long as they were five years ago.

“Right now a listing can almost mean an assured sale,” said Sandy Haney, chief executive officer of the Monterey County Association of Realtors.

Indeed, MCAR data from a three-month rolling average of March, April and May show a strength in the market not seen in years. The median countywide home price stood at $375,000, up nearly 23 percent from the same three months a year ago and within 0.5 percent of matching the same three months in 2008 — a mere $1,700 difference.

The median is the price where half the homes sold for more and half for less. Economists consider it a more accurate yardstick because using averages can be dramatically affected by an extremely expensive sale or anomalously cheap sale.

Another key indicator is the number of days a home stays on the market after it is listed. For the current March-May timeframe, the median number of days stood at 65, far fewer than the 91 days homes were on the market last year at this time, and nearly half the 118 days homes languished in 2008.

The drivers behind this growth are a relatively low inventory of homes — supply is limited and demand is strong — and the increasing number of homeowners seeing their equity move into the positive side for the first time in several years.

“In the fourth quarter we again saw an improvement in the equity position of households,” said Mark Fleming, chief economist for CoreLogic, an Irvine-based analytics company. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”

California Real Estate Forcast-Summer 2013

 

 

Are you finally off the fence and doing a little home shopping? As the market heats up and sellers regain control, here are a couple of trends to consider.

Low mortgage rates

The 30-year fixed mortgage rate onZillow Mortgage Marketplace is currently hovering near historic lows, at 3.78 percent. And while rates have crept up this past week, they’re not going to skyrocket suddenly, says Erin Lantz, director of mortgages at Zillow. “Even if the Federal Reserve starts to scale back its stimulus program, the Fed will still help keep rates low for the remainder of the year in order to accelerate the housing market recovery. As the Fed withdraws support and the economy recovers, we expect rates will rise gradually over the next 18 months.”

Slim pickings

As of February, slightly less than 2 million homes were for sale nationwide. This represents a supply of less than five months (six months’ supply is considered “normal”). During the same period last year, the supply was 6.4 months. In a dozen markets, there is less than a three-month supply of homes on the market! Granted, rising home prices should lead to more inventory (and ultimately more sales because it encourages new construction and encourages homeowners to sell), but one key question is whether prices will rise enough so that for-sale inventory will hit bottom and start expanding again.

Home stalking

As demand from home buyers grows faster than the supply of homes for sale, many buyers are taking less conventional routes to find their dream home: They’re knocking on the doors of homes they like, writing handwritten notes, and tracking down the owners in hopes they may be willing to sell even though their home is not technically on the market. Zillow’s Make Me Move® section, where homeowners list their properties with a “dream” price, is seeing a flurry of activity: There are now 148,000 listings, and contacts to owners are up 132 percent over last year.

Bidding wars

As many of the nation’s markets heat up, bidding wars are quickly becoming the norm — especially in places such as California (San Francisco, Sacramento and cities in Southern California), Boston, Washington, Seattle and New York. This poses a challenge, in particular, for first-time buyers seeking entry-level properties in Las Vegas, Tampa and other markets where investor demand is particularly strong. Who do you think wins the bidding competition — investors with all-cash offers or buyers who need to obtain financing and have the home appraised at their offered price?