Home Sales – “The National Association of Realtors said on Thursday existing home sales increased 1.3 percent to an annual rate of 4.65 million units, marking the second increase in sales in nine months.” …
Nationwide Numbers For April
Summer “Selling Season” Is On The Way
We focus in these pages almost exclusively on the Southern California real estate market, and most specifically the San Gabriel Valley. However, once in a while it can be constructive to take a step back and look at the bigger picture.
Nationally, the real estate market is looking solid. US Home Sales were up in April for the 2nd time in 9 months. The gains have not been as much as some economists were predicting, but it’s still positive movement. That’s important when you consider that the market was actually exhibiting some fairly shakey behavior during the second half of last year.
Sales are still down when compared to this time last year, and it appears that most “First Time Buyers” are sitting out the dance because of high home loan prices and the rising price of homes themselves.
Here’s a Reuters report with the detailed numbers that just appeared at NBC News:
NBC News May 22nd 2014, 7:42 am
Though an usually cold winter depressed activity, a dearth of homes for sale also stymied demand. Sales are expected to gradually trend higher for the rest of 2014 as job growth and the overall economy accelerate. … And there is reason to be optimistic. The inventory of unsold homes on the market increased 6.5 percent from a year-ago and the median home price increased at its slowest pace since March 2012.
2014 Home Sales Forecasts Are Optimistic
Nationwide, the supply of homes has grown, which will probably serve to free up demand somewhat. A larger inventory will create pressure that could keep rising prices in check and lead to a more balanced market. All in all, the national numbers are encouraging. If unemployment continues downwards and the general economy continues to improve, we could see some good home sales numbers posted by year’s end.
Southern California Home Sales – “Southern California home prices increased at a slower pace in April as inventories improved and investor purchases waned, a research firm said Tuesday. ” …
Southern California Home Sales:
Price Rise Slows As Inventory Grows
The “Investor Frenzy” Calms A Bit
In looking at the most recent reports of last month’s market activity here in the Southern California Home Sales market, we find that the ongoing rise in prices slowed a bit as inventories grew. We can also see that the “frenzy” of investor purchases seems to be slowing a bit as well.
The Southern California area is showing a marked increase in the number of properties available when compared with last year. This is a reflection of the rising values, which have made it possible for some who wanted to sell but couldn’t … because they were still “upside down” in their property values … to actually enter the market this year. If the inventory continues to increase as we move into summer, that would make it a lot easier for the market to reach “average” activity levels … which we haven’t really seen in several years now.
Here’s an article from the Associated Press, as it appears on the KPCC – Southern California Public Radio website:
http://www.scpr.org Tue, 13 May 2014 18:54:15 GMT
The median sales price for new and existing single-family homes and condominiums was $404,000, up 1 percent from $400,000 in March and up 13.2 percent from $357,000 in April 2013, DataQuick said. It was the 25th straight month that the median sales price rose from a year earlier but the lowest annual percentage increase since September 2012. …
Market Prepares For A More “Stable” Summer
A “calm” market is a more stable market. We’ve been watching activity for a long time now that is more common to a “volitile” market than a stable one. However, market activity always fluctuates in “waves”. Periods of volatility are usually generated as markets search for a position of stability. If we can see a continuation of the increase in the size of the market inventory, and a bit of a pull-back in investor activity, this would encourage a slow-down of rising prices, a bit more welcome competition, and a more attractive market for the “average” resident home buyer. With that type of situation in place, we could be looking at a summer that just might return the Southern California real estate market to a more “traditional” footing.
Southern California Real Estate – “RealtyTrac estimated that in California, the majority of all-cash buyers are investors, second-time homeowners, and buyers from overseas” …
Southern California Real Estate:
“All Cash” Transactions Widespread
In recent reports we’re finding that “All Cash” sales of homes in Southern California are a much more significant part of the market than we’ve normally seen before.
Statewide we’re seeing one out of three homes being sold with no loan involved. In some areas … mostly more “high-end” areas and those preferred by foreign investors … we’re seeing up to 60%of all transactions being done on an “all cash” basis.
Here’s an explaining the details article by Bianca Barragan in Curbed L.A.:.
http://la.curbed.com/ Fri, 09 May 2014 19:41:02 GMT
One in three residences sold in California in the first quarter of 2014 was paid for all in cash, with some of the highest percentages of completely-cash sales in the wealthy communities of Beverly Hills, San Marino, and Arcadia. (In Arcadia, nearly 60 percent of sales last quarter were all-cash.) …
Investors Squeeze “Normal” Home Buyers Out Of The Market
It’s an interesting market we have lately here in the San Gabriel Valley. The most recent news shows that prices may have begun to level off a bit in our area. But, that’s at the end of what’s been a steep rise. Our prices in areas like Arcadia, for instance, are now higher than they were at the last peak of the “bubble” market … before the economic meltdown of the last decade. Additionally, the influx of “investor buyers” and “foreign money” into the market has brought with it this onslaught of “all cash” transactions. Most “normal”, individual buyers can’t compete with “all cash” offers, and many simply won’t complete with the current prices, preferring to wait for a “pullback”, if there is one.
What this means is simple, and it’s been reported here in other posts: our current market has basically pushed the “normal”, individual home buyer out of the market, and the market is now being driven by “investor” buyers and a glut of “foreign money” brought to the table by folks who simply have more faith in our Southern California real estate market than they do in the market in their native country.
San Gabriel Valley Recreation – A federal judge has ruled that the U.S. Forest Service can no longer charge fees to visitors who hike, walk and bike in the undeveloped regions of the Cleveland, Los Padres, Angeles and San Bernardino national forests.” …
San Gabriel Valley Recreation:
Say Goodbye To The “Adventure Pass”
Controversial Fee Program Appears On Way Out
Oneof the great recreational opportunities here in the San Gabriel Valley is afforded to us by the proximity of the San Gabriel Mountains and the Angeles National Forest. Many of us who grew up here … some for multiple generations … can site a long list of favorite sites for camping, hiking, and biking. Many of us have created some of our best memories with family and friends in our nearby Angeles and San Bernardino National Forests.
One of the nicest things about the forest was …it was free. It didn’t cost anything to take a drive up Angeles Crest Highway or to the end of Santa Anita Ave and up to Chantry Flats where you could simply park anywhere … and then hike on some great trails right off into the woods. Well, that all changed about 17 years ago when the National Forest Service instituted the “Adventure Pass” program in National Forests across the nation.
The AP program levied fees on “users” of the National forest areas. Now those “users” were not restricted to people who “used” camp sites, rest room facilities, or amenities like that. Different areas applied the rules in different ways, but in many areas “Users” were considered to be anyone in the forest. In those areas that meant you could no longer hike or bike into an area for an excursion and then leave … without paying the AP fee.
For many years now, the Adventure Pass program has been challenged in various courts all over the nation. Now a federal judge has ruled that in our local National Forests … the Cleveland, Los Padres, Angeles, and San Bernardino forests … the US Forest Service can no longer charge the AP fees unless someone is actually using provided facilities. People who are merely hiking, biking, or driving through the National Forest areas cannot be charged.
Here’s a comprehensive article by Steve Scauzillo in the San Gabriel Valley Tribune:.
Adventure Pass Nixed For Visitors Who Hike, Bike Into Southern California Forests … – San Gabriel Valley Tribune
http://www.sgvtribune.com Fri, 09 May 2014 17:38:34 GMT
“The Forest Service is prohibited from charging a fee solely for parking,” Hatter wrote. … The Forest Service is reviewing last week’s ruling. In the meantime, visitors can park for free unless they use amenities like toilets or picnic tables. … “They can’t charge a person who doesn’t use the facilities,” said Matt Kenna, attorney for the hikers. “Just because there is a picnic table next to a trail head, they still can’t charge that person.” …
Enjoy Our Local Forest – Support The Work Of The US Forest Service
Our local National Forest is one of the “jewels” of the area’s recreational opportunities. Over the last 17 years the funding from the Adventure Pass program has provided for much of the maintenance and development of facilities we’ve seen in the forest areas. This loss of AP funding could potentailly be a “hard knock” for the forest service to absorb.
While we appreciate the idea of not having to pay the Adventure Pass fee every year, let’s keep in mind that our forest recreational areas do need maintenance. Trails, parking areas, rest room facilities, campgrounds … all of these things cost money to build and to maintain. If we’re going to eliminate the Adventure Pass funding, let’s keep in mind the needs of the Forest Service when it comes to allocating tax funding in the future.
Mortgage Rates – “For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates … Now, even that perk is fading away …
Middle Class Suffers In Loan Market
Current Mortgage Rates & Lending Conditions Favor Wealthy Over Middle Class
When we look at today’s real estate market we see some very clear indications that the market is very good for some, but not so wonderful for most. The Middle Class is getting “priced out” of the market in many areas by high prices and high interest rates.
For many years the Middle Class was being encouraged by lenders to become home owners. They could count on paying a lower interest rate on a “normal” loan than someone financing using a “Jumbo” loan. Now that’s no longer possible. A conventional loan and a “Jumbo” are demanding interest rates that are basically the same.
Additionally, the price of housing these days, in many areas, has made the use of “Jumbo” loans a requirement. In many areas there are no homes available below the “Jumbo” loan range. This has simply knocked many potential homeowners right out of the market completely, or at least forced them to look elsewhere if that’s possible for them.
For a detailed explanation of the numbers, the facts on the ground, and how they all work together to create a situation that … like so much else these days … is favorable for the wealthy, but puts most everyone else at a disadvantage, let’s look at an article by Josh Boak, the Economic Writer for the Associated Press, as it appeared just the other day in The Pasadena Star-News.
http://www.pasadenastarnews.com Friday, April 25, 2014 9:56:09 AM
WASHINGTON — For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates … Now, even that perk is fading away … This trend reflects the widening wealth gap between the richest Americans and everyone else. Bankers now view jumbo borrowers as safer and shrewder bets even though conventional borrowers put less capital at risk.
Lending Conditions Reflect Greater Economic Realities
When reading Mr. Boak’s article, it doesn’t take much perception to see that the mortgage market and the real estate market are both reflecting realities that exist in the economy on a wider scale. From employment to wages and all manner of measurements, the economic recovery we’re experiencing as a nation, though undeniable, has been quick to accrue to the benefit of the wealthy, while it tends to leave behind the middle class behind and anyone not in the top percentages of earners.
The real estate market is generally considered “good” right now. Good for whom is an interesting question, and one we’ll need to discuss more in the coming days.