Archive for June, 2013

New contracts for homes rose to their highest level in more than six years last month, a positive sign as the resurgent housing market faces higher interest rates.

The National Assn. of Realtors said Thursday its Pending Home Sales Index jumped 6.7% in May from a month earlier and is 12.1% higher over the year. The index represents contracts signed, but not closed.

Home buyers looking to scoop up a home before interest rates rise could account for the significant increase in pending sales, Lawrence Yun, the association’s chief economist, said.

Low interest rates and tight inventory have kick-started a housing recovery, helping home buyers escape negative equity positions and spurring builders into action.

Southern California’s housing recovery: An interactive map

As interest rates rise, more prospective home shoppers could be motivated  in the short term to cash in before mortgage rates go higher, although in the long run higher rates makes housing more expensive.

Freddie Mac said Thursday that the average rate for a 30-year fixed mortgage this week hit 4.46%, a rise from 3.93% last week, although still low by historic standards.

The Realtor group said its pending home sale index reached 112.3 in May, the highest since December 2006. A reading of 100 is equal to average contract activity in 2001, which is considered a year with a normal level of homes sales.

And……I am Back……

Posted: June 28, 2013 in Uncategorized

Sorry for going silent the last two days with no new posts. The family and I went camping but we are back in civilization and back to work. 

San Diego home prices have hit a nearly 5-year high, ushering in more evidence to “confirm the housing recovery’s strength,” the S&P/Case Shiller home price index reported on Tuesday.

Residential real estate prices rose nearly 15 percent from a year ago and almost 4 percent from the previous month, based on April figures from the national real estate indicator. Those gains bring back home values to June 2008 levels.

The index, which has two a month lag, calls the housing bounce-back “broad based.”

When looking at all of the 20 major metro areas in the index, prices are up 12 percent year-over-year, the highest return in seven years. Those same areas have all shown annual increases for at least four straight months. In San Diego, April’s returns mark the 10th consecutive month of positive year-over-year returns.

Taken together, the 20 cities in the index posted a nearly 3 percent price increase, marking the biggest positive return in the history of that composite index, which goes back 13 years.

“The recovery is definitely broad based,” said David M. Blitzer, chairman of the S&P’s index committee. “Recent economic data on home sales and inventories confirm the housing recovery’s strength.”

Such news continues to be a positive sign for homeowners who have been waiting for their home values to bounce back from recession levels.

Limited inventory and pent-up demand have mainly contributed to soaring real estate prices, potentially pricing out potential buyers.

 

By: Lily Leung

May sales of real estate-owned properties in California fell into the single digits for the second straight month, descending to the lowest level since October 2007, analysts claim.

The share of REO sales in the state hit 7.2% in May, down from 9.2% in April and also down 22.8% from a year ago, according to the California Association of Realtors.

Meanwhile, the share of equity home sales continued to grow in May, making up nearly four of every five home sales.

The combined share of distressed property sales was 21.8% in May, down from 24.4% in April and also down 44.2% from last year.

The share of all distressed sales in 31 of the 36 reported California counties also declined significantly from the previous year, with Contra Costa, Marin, San Diego, San Mateo and Santa Clara recording single-digits in May, CAR explained.

The share of non-distressed property sales increased further in May and now makes up more than 75% of total sales, the highest share since January 2008.

For instance, the share of equity sales increased to 78.2% in May, up from 75.6% in April and also up more than 55.8% from last year.

Of the distressed properties, the share of short sales dropped to 14% in May, down from 14.8% in April and also down from 21% a year ago.

The continuing decline in short sales indicates more previously underwater homes are moving into positive equity, indicating the lowest figure since July 2009.

The available supply of homes remained tight in May, but was relatively unchanged from April.

For instance, inventory for REOs was unchanged at a 1.7-month supply.

Additionally, the supply of short sales dripped from 2.7 months in April to 2.3 months in May.

Meanwhile, the supply for equity sales was 2.8 months in May, down from 2.9 in April.

Pending home sales edged up 0.3% in May to 122.1, rising from 121.7 in April, but was down 3.1% from the 125.9 index recorded a year ago.

Listings as of 06/24/13 at 9:20am
Property Type  Residential    Include Property Subtypes  Condo, PUD, SFR Stick Built   Cities  Arroyo Grande, Avila Beach, Grover Beach, Nipomo, Oceano, Pismo Beach, San Luis Obispo Status  Pending (6/1/2013 to 6/24/2013)

Pending
Listing Price Range Quantity Average DOM
$180,000 thru $199,999 1 11
$200,000 thru $249,999 4 16
$250,000 thru $299,999 13 68
$300,000 thru $349,999 8 17
$350,000 thru $399,999 15 54
$400,000 thru $449,999 5 28
$450,000 thru $499,999 17 36
$500,000 thru $549,999 3 9
$550,000 thru $599,999 5 25
$600,000 thru $649,999 4 25
$650,000 thru $699,999 7 25
$700,000 thru $749,999 5 92
$750,000 thru $799,999 11 54
$800,000 thru $849,999 2 24
$850,000 thru $899,999 3 44
$950,000 thru $999,999 3 10
$1,000,000 thru $1,249,999 3 97
$1,250,000 thru $1,499,999 1 108
$1,500,000 thru $1,749,999 2 116
$2,000,000 thru $2,249,999 1 80
113 45
Summary Price Information
Minimum $199,000 Maximum $2,175,000
Average $575,306 Median $499,000

The Nipomo Community Services District Board of Directors has voted unanimously 5-0 to approve $14 million in construction costs to build a water pipeline that will tie into the water system of the City of Santa Maria. At a special meeting held specifically to vote on the issue, the Board also approved $2 million in construction contracts as well. In addition, the District awarded a $1.7 million construction management contract to MNS Engineers, who are headquartered in Santa Barbara with offices in San Luis Obispo, bringing the total expenditure to more than $17 million.

When completed, the project will complete the District’s 20-year quest to supplement the community’s water supply. The District has long sought a solution to the issue with the hope the pipeline would bring more reliability and dependability to it’s water needs for many years to come.

Nipomo Community Services District General Manager Michael LeBrun, who has worked on the pipeline for several years said, “In many ways, this contract award represents a recycling of customer money back into our local and state economy.  This project, along with the $13M wastewater treatment plant upgrade the District is currently under construction on provide our local economy with an extra ‘shot in the arm’ as we recover from the state and nation wide recession.”

To pay for the project, which has long generated controversy in the South County, staff expects to issue Bond sales on June 21.  The project is scheduled to take 18 months to construct, with the completion targeted for late 2014.

The U.S. economy isn’t expanding fast enough for the Federal Reserve to reduce its stimulus efforts at this time, the Federal Open Market Committee announced Wednesday.

The decision means that the central bank will continue buying $40 billion of mortgage-backed securities and $45 billion of longer-term treasury securities each month. The Fed will also keep a key interest rate at or near 0 percent. The moves work to pump money into the economy while also keeping mortgage and other rates at historic lows.

Fed Chairman Ben Bernanke said in a news conference after the announcement that there was no set plan to end the programs, meaning that if the economy picks up or loses steam, the Fed would adjust. However, Bernanke said a consensus exists among the committee members that the bond-buying likely would become scaled back by the end of this year and end in mid-2014, when the U.S. unemployment rate is around 7 percent. In May, the jobless rate was at 7.6 percent.

A statement released by the FOMC says the central bank won’t raise interest rates as long as unemployment remains above 6.5 percent. Bernanke said 14 of its 19 members believe that won’t happen until 2015, while another says it won’t come until 2016.

Bernanke said the economy was continuing to expand, despite its biggest headwind: 1.5 percent federal budget cuts that he said have yet to make their full impact.

Some analysts had expected the Fed would begin scaling back the stimulus this month.

Economists in San Diego had mixed reactions to the news.

Alan Gin, economist at the University of San Diego, said he thinks the economy still needs a boost. He noted the modest 175,000 payroll jobs added across the country in May. He said job gains should be in the 200,000s each month to indicate a growing economy.

“The economy is not completely out of the woods,” he said. “There are some improvements, but it’s still not where we want to go, so I think continued stimulus on the monetary front is necessary.”

But Kelly Cunningham, economist at the National University System Institute for Policy Research, said the Fed should have started to scale back the stimulus because it is making the country vulnerable to inflation.

“When they start to pull back I think that’s going to cause a huge disruption in the economy,” he said. “We need to go through that as a country, as an economy, and I think it’d be better to take our medicine now rather than postponing it. We just need to get off this artificial stimulus.”

Lynn Reaser, chief economist at Point Loma Nazarene University, said she wasn’t surprised by the move.

“I did not think that they had enough evidence of a ‘substantial improvement’ in the labor markets,” she said in an email. “Today’s announcement, however, does indicate that the Fed thinks that there will be enough evidence to reduce asset purchases by year-end.”

The FOMC holds its next two-day meeting beginning July 30.