Thank you to Brad Fikes at the North County Times forthis article – an excerpt:
San Diego County home prices fell in September for the second month after 15 consecutive monthly increases, according to a widely watched index. Numbers were also weak nationally, with most cities surveyed showing declines.
The resale value of a typical house in San Diego County fell 1 percent in September from August, according to the Standard & Poor’s Case-Shiller Home Price Index. The value had dropped 0.6 percent in August from July. However, September’s home price was still 5 percent above that of a year ago, according to the index, which tracks home prices for 20 cities and the nation as a whole.
San Diego County houses priced under $314,451 slipped 0.9 percent from August. Houses priced from $314,451 to $474,176 dropped 2 percent in value, while those priced above $474,176 rose 0.5 percent in value.
People are eager to buy, said Jim Klinge, a Carlsbad-based real estate agent, but sellers are asking unrealistically high prices.
“Buyers are extremely frustrated,” Klinge said. “They (sellers) are greedy and are asking way more than what they should be, based on what recent sales have been. This is a new market. You’ve got to be sharp on price if you want to have any chance to sell. It’s a buyers’ market. The buyers call the shots.”
Sellers are making a mistake by basing their prices on active listings, “because those are the prices that aren’t working,” Klinge said. “The inventory’s growing, but it’s growing because the price is wrong, not because there’s no demand.”
Kelly Cunningham, an economist who has studied the San Diego region for more than 25 years, said local home prices are still relatively expensive, despite a substantial drop in prices since their peak about five years ago. That means there’s room for prices to fall further, he said.
“We’re still one of the least affordable housing markets, when you compare our median household income against the price of homes,” said Cunningham, a senior fellow at the National University System Institute for Policy Research.
“With incomes stagnant right now and high unemployment right now, that also suggests there’s a lot of weakness in the housing market,” Cunningham said.
Nationwide, the report also painted a rather gloomy picture, at least from a seller’s perspective.
“While housing prices are still above their spring 2009 lows, the end of the tax incentives and still active foreclosures appear to be weighing down the market,” the monthly report stated.
“Another weak report; weaker than last month,” David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, said in a statement issued with the report. Blitzer said many analysts think a “double-dip” back into recession will be evidence before spring.
“New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off,” Blitzer said. “Overall, there are few, if any, good numbers in this month’s data.”
Besides the end of tax incentives for first-time homebuyers, Blitzer attributed the weakness to ample supply of houses on the market, and more supply waiting with delinquent mortgages, pending foreclosures, and vacant homes.
You know by now that the banking lobbyists must be working overtime trying to convince Congress to sweep the MERS debacle under the rug. This video doesn’t have the answers, but at least it brings the issues to the forefront. The best is a quote by Thomas Jefferson at the 4:50 mark:
(Hat tip to the Coto Housing Blog where I saw this)
In April, the Obama administration formally rolled out a new program, called Home Affordable Foreclosure Alternatives, that was designed to spur more short sales, where banks allow homeowners to sell their homes for less than the mortgage debt outstanding.
Like other foreclosure-prevention initiatives, this one appears to be off to a slow start — just 342 sales have been completed through September.
HAFA was designed as a cousin to the Obama administration’s Home Affordable Modification Program, HAMP, whose woes have been well documented. HAFA works like this: Servicers are supposed to consider short sales for borrowers who aren’t able to receive a HAMP modification. Because some 700,000 HAMP applicants have been ejected from that program, there’s a potentially large pool of borrowers who might be evaluated for HAFA.
Initially announced in May 2009, HAFA was also designed to help reduce wait times by streamlining the short sale process through standardized documents and approaches for short sales. Under the program, the government offers incentive payments to mortgage-servicing companies, investors and even the borrowers that accept a short sale under prescribed guidelines.
For example, second-lien mortgages receive 6% of the unpaid loan balance in a short sale, up to a maximum of $6,000, but they must agree to relinquish all claims against a borrower. (Our story on Saturday illustrated why seconds pose problems in short sales.) The program also provides $3,000 in “move-out assistance” to borrowers.
Industry officials say that HAFA has been hindered by extensive documentation requirements and restrictive qualification guidelines. A homeowner that’s already relocated isn’t HAFA eligible, for example, and neither are borrowers that apply within 60 days of a foreclosure date.
The program is also voluntary, which may limit participation from second-lien holders and mortgage insurance companies that see a financial reason to avoid a short sale that requires them to forgo the opportunity to seek deficiencies against borrowers. “It looks good on paper, but you can’t make anyone participate,” says Kevin Kauffman, a Phoenix real-estate agent who says he’s closed 150 short sales but has yet to complete one through HAFA.
Still, the Treasury and other supporters say they’re optimistic that results will pick up. Because short sales take several months to close, it’s perhaps unrealistic to expect huge numbers of deals that would close within five months. Moreover, Fannie Mae and Freddie Mac didn’t issue their own participation rules until August.
“It does take a little bit of time to see results on these,” says Dave Sunlin, Bank of America’s senior vice president for short sales and bank-owned property sales. “The concept on paper is there.”
In San Diego it dropped 1% from August, the second consecutive monthly decline.
What will it mean?
It’ll mean homebuyers will want to wait some more.
San Diego C-S Index gain/loss since:
1 year ago: +4.96%
2 years ago: -1.03%
3 years ago: -27.10%
Will the wait be worth it?
The county’s general pricing trend is too vague to help those who are trying to buy in a specific neighborhood. Monitor the smaller samples, and occasionally you’ll see a deal drop from the current group of overly-exuberant sellers.
Welcome back from the long holiday weekend everybody – hope it was great!
I took off the last five days to help my mother with moving, so I’m just getting back in the swing. After checking the November sales yesterday (repeated below), the pendings for this month were expected to be gloomy. But as you’ll see, the ultra-low mortgage rates are helping motivate buyers and sellers to get together:
# of Pendings
2,233 (so far)
Yes, we’ll see how many close, but let’s also tack on at least 10% more sales to the 2010 number below to account for the late reporters – here are the closed counts, as of today:
# of Solds
The vacant properties are a curiousity, here is how today’s active listings compare with previous:
# of Vacants/Total Active Listings
Even the sellers of vacant properties are reluctant to sharpen their price. The avg. days-on-market is 88 days, and only 25% of the listings are REOs!
Hat tip to Kingside for sending this along, after seeing the video on the 6-day construction of a Chinese office building – from the WSJ, dated June, 2009:
A nearly finished, newly constructed building in Shanghai toppled over, killing one worker. As can be seen in the photo below, the 13-story apartment building collapsed with just enough room to escape what would have been a far more destructive domino effect involving other structures in the 11-building complex:
The development, known as “Lotus Riverside,” has a total of 629 units, 489 of which have already been sold. Now buyers are clamoring to get their money back, and authorities are making efforts to reassure them. Some owners are concerned even if they are able to return the purchase and get the original price they paid for the housing market has gone up so much since the day of purchase. They are worried they will not be able to get another house for the same price.
The disaster could reveal some uncomfortable facts about lax construction practices in China, where buildings are put up in a hurry by largely unskilled migrant workers, and developers may be tempted to take shortcuts.
According to Shanghai Daily, initial investigations attribute the accident to the excavations for the construction of a garage under the collapsed building. Large quantities of earth were removed and dumped in a landfill next to a nearby creek; the weight of the earth caused the river bank to collapse, which, in turn, allowed water to seep into the ground, creating a muddy foundation for the building that toppled.
The South China Morning Post noted that the pilings used in the Lotus Riverside development, made of prestressed, precast concrete piles, are outlawed in Hong Kong because they aren’t strong enough to support the kind of ultra-high buildings that are common in Hong Kong. But in mainland China, they are often used because buildings there are typically much shorter.
In its bid to gain local control of the state-owned Del Mar Fairgrounds and racetrack, the city of Del Mar is betting big on a trifecta of Arizona businessmen and horse owners —- Michael Pegram, Karl Watson and Paul Weitman.
If they can line up their political ducks in coming months, the three close friends are likely to invite other horse owners to join their bid to back the city of Del Mar’s leveraged buyout of the storied Del Mar Fairgrounds and racetrack along San Diego’s golden coastline.
The trio’s capital contribution to a deal would come from the fortunes they built over decades, the men said in recent interviews. Pegram reaped huge riches as a franchisee of McDonald’s, the world’s No. 1 fast-food chain, while Weitman and Watson earned theirs selling cars —- lots of them.
They are more than kicking the tires in Del Mar. They have indicated plans to spend at least $50 million to help the city of Del Mar purchase the Fairgrounds and racetrack from the state’s 22nd District Agricultural Association.
Pegram and his two partners have strong ties to Del Mar and may invite other deep-pocketed horse owners to invest in the deal if Sacramento lawmakers agree that the San Diego coastal property should be sold for $120 million. A legislative battle to close a growing state budget deficit could prompt the sale of state-owned real estate —– such as the Del Mar property —- as lawmakers grow desperate to raise cash. A special session of the Legislature is planned to start Dec. 6.
If the Legislature approves the sale of the Fairgrounds and racetrack, the horse owner group has committed to help Del Mar on a complicated purchase arrangement that involves the city borrowing money from the state, the city issuing revenue bonds and the horse owners kicking in about $50 million. Del Mar has scheduled a special council meeting Wednesday to discuss details of the purchase, including a partnership defining ways Solana Beach could be possibly compensated for traffic and other problems that spill into its city from the huge venue.
More investors could emerge, but Pegram, Watson and Weitman envision themselves as saviors of a dying horse racing industry in California, and would make Del Mar the linchpin of a newly restructured industry in coming years.
Here’s a rarity: A $39,900 house in Manhattan’s West Village, where townhomes often go for millions.
On Monday afternoon at the corner of Washington and Charles Streets in the West Village, entrepreneur Michael de Jong stood in a winter coat, giving tours of one of his 320-square-foot MEKA Luxury Modular Homes, which took about five days to assemble on-site. Sadly, for NYC bargain hunters, the home’s site is only temporary. The house, made from a shipping container, is on display there until the end of the month.
The West Village open house, which is set up in a vacant lot next to a bike shop owned by one of Mr. Jong’s friends, is an American coming-out party of sorts for MEKA homes. The company, formed a year ago, is based in Toronto. The homes are built for $24,000 apiece in a factory in the eastern Chinese seaport of Ningbo. Meka’s only sold 10 units so far–mostly in Canada–and are looking for a foothold in the city.
Mr. Jong says he wants American consumers to think of his homes not as houses so much as well-designed luxury products. To that end, they have modern-looking finishes, smooth surfaces, clean, no-nonsense bamboo wood flooring and a deck made out of the cut-out side of the shipping container. The walls are mostly glass picture windows.
“It’s modern-looking, sexy, sleek,” he says. “It’s a product design, not a housing design.”
“American tourists said, ‘I don’t have million dollars to buy a condo on the beach. But I do have $200,000,” he said. For that, you can buy a piece of cheap land and put a 3-bedroom (made of four shipping containers) MEKA house up on it in a few weeks, instead of spending months or years building a “stick-built” house from the ground up.