The Bay Area is seeing more improvement than other markets nationwide, but its lack of inventory is a problem, according to Rick Turley, president of Coldwell Banker Residential Brokerage for the San Francisco Bay Area. Turley recently told Silicon Valley agents they need to educate their clients about the real story behind their local markets.
“We have a dearth of listings everywhere. Inventory is the lowest it’s been in four to five years in every county,” Turley told members of the Silicon Valley Association of Realtors.
Turley said the market is heating up but hampered by very low inventory, which have resulted in numerous multiple offers. Places like San Francisco have a mere three months supply of inventory. A healthy market has at least four to six months supply of inventory, said Turley.
“Inventory is what is going to put a cap on what we do this year,” said Turley.
How about the detached inventory San Diego? These are the number of active and sold listings – according to this graph, San Diego has less than a month’s supply of houses for sale:
Put the median prices aside, the real story is how the inventory has dried up. The next phase of psycho-babble in the media will be how sales are dropping, but it will be because buyers are sidelined due to the lack of houses to purchase. This year’s data will be more perplexing than ever for the media types desperate for a quick sound-bite!
Here are the 90-day moving averages of the median list and sold prices for detached homes in SD:
The 90-day median list-price-per-sf on this graph has blown through the roof – why?
It is purely from sellers’ greed, or is the data skewed?
The 90-day moving average of list prices could be influenced by a surge of higher-priced homes coming to market, or a combination of more homes listing at higher prices. The local MLS doesn’t allow median prices to be computed on samples of more than 500 listings, so let’s just check the last three months’ in NSDCC.
Here are the number of homes listed each month in NSDCC, and their median cost-per-sf:
Listed <$800K
JAN
FEB
MAR
# listed
136
149
156
Median $/sf
$270
$282
$284
Listed >$800K
JAN
FEB
MAR
# listed
242
237
320
Median $/sf
$446
$404
$399
The rapid increase in the median list prices was caused primarily by a surge of more-expensive homes coming to market (a 35% month-over-month increase of $800,000+ listings in NSDCC), which would cause the median to rise quickly. But how many people will look at the graph above and think sellers have gone crazy – I know I did!
Hat tip to Stormin for sending this along from thenytimes.com:
SAN BERNARDINO, Calif. — For decades, California has been seen nationally and by its own residents as a state divided into north and south, urbane tree-huggers versus car-obsessed beach hoppers. But the more meaningful division, it turns out, may be between east and west.
Communities all along the state’s coastline have largely bounced back from the recession, some even prospering with high-tech and export businesses growing and tourism coming back. At the same time, communities from just an hour’s drive inland and stretching all the way to the Nevada and Arizona borders struggle with stubbornly high unemployment and a persistent housing crisis. And the same pattern holds the length of the state, from Oregon to the Mexican frontier.
“This is really a tale of two economies,” said Stephen Levy, the director of the Center for Continuing Study of the California Economy. “The coastal areas are either booming or at least doing well, and the areas that were devastated still have a long way to go. The places that existed just for housing are not going to come back anytime soon.”
The Valley Restart Shelter in Hemet, a small city in eastern Riverside County, used to draw the chronically homeless. Now, many residents are laid-off teachers, former loan officers and construction workers who have been jobless for two years or more.
Hat tip to profhoff for sending this in, from thesfgate.com:
On the eve of tax-filing deadline, the Franchise Tax Board abandoned its campaign to get California property owners not to deduct a portion of their real estate taxes.
“We have removed material from our website that limits the deductibility of real property taxes to taxes imposed on an ad valorem basis,” the tax board said in a notice posted Friday on its website:
The news comes at a vexing time for taxpayers. Since the personal income tax filing deadline is Tuesday, taxpayers do not have much time to correct their returns if they followed the FTB’s advice and did not deduct school parcel taxes and eligible Mello-Roos assessments. “Amended returns should be filed if the originals already have been filed or cannot be corrected in time,” the California Taxpayers Association says in a report at www.caltax.org.
In December, the tax board wrote to the IRS asking it to clarify its position.
In a letter dated Feb. 6, an IRS associate chief counsel said the Internal Revenue code does not explicitly say real estate taxes must be ad valorem to be deductible. It says taxes that are not ad valorem could be deductible “if they are levied for the general public welfare by a proper taxing authority at a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the assessments are not for local benefits (unless for maintenance or interest charges).”
Although the letter was dated Feb. 6 and posted on the IRS website in March, the tax board says it never received it.
“We saw it on April 5,” when a legislative analyst ran across it on Taxanalysts.com, a news service for tax professionals, says Denise Azimi, a spokeswoman for the tax board. Azimi confirms the letter was a response to the tax board, even though its name has been redacted.
Key points to whether the REO-to-rental plan is attractive enough for investors, fromHW:
Any long-term REO-to-rental strategy will need to adopt extensive refurbishment plans in order to resell the assets. Further, much of the foreclosed property that financial institutions would look to bulk-sell is currently in need of repair.
Morgan Stanley analysts say that nearly 95% of distressed homes are in no shape to rent out, in some key markets. Only a tiny fraction of these properties are less than a decade old, they add.
“The importance of getting construction — or specifically, re-construction or rehabilitation — right cannot be overstated,” according to a report from lead author Oliver Chang, sent to Morgan Stanley clients. “The quality and cost of rehabilitation can continue to benefit or haunt the asset far past the initial completion of work. For example, shoddy plumbing or other infrastructure work can result in significantly higher maintenance costs over time, and can also affect eventual exit pricing.”
I’ve been hearing it over the last week or so (really it’s been over the last few years!) – people telling me that they’ve “heard” that more foreclosures are coming. This nonsense is driven every year by RealtyTrac, a company that SELLS FORECLOSURE SUBSCRIPTIONS.
More U.S. homes are entering the foreclosure process, setting the stage for a surge in properties repossessed by lenders this year. The number of homes that received first-time foreclosure notices rose 7 percent in March from the previous month, foreclosure listing firm RealtyTrac said Thursday.
That marks the third consecutive monthly increase this year and reflects stepped-up efforts by banks to take action against homeowners who fail to keep up with mortgage payments. “We’re not out of the woods yet with foreclosures,” said Daren Blomquist, a vice president at RealtyTrac. “There are more batches of foreclosures coming through the pipeline.”
It would be great news for homebuyers to see more well-priced inventory hit the market, but don’t get your hopes up. If there were increasing foreclosure filings around San Diego County, they would only get us back to where they were previously – an era which we handled quite nicely, thank you:
The quote makes it sound like a 7% increase in new filings is troubling, and we know that filings are different than foreclosures (new filings in SD County were down 12% between 4Q11 and 1Q12).
If actual foreclosures rose 75% between 1Q12 and 2Q12, we’d be back to 2Q10 levels.
To paraphrase John Lennon, “Life is what happens while you wait for more foreclosures!”
Hat tip to SM for sending this along, fromBigThink.com:
I am trying to sell my house at the moment in a particularly hot local housing market. The market isn’t the only thing that is hot. So is my agent. It turns out that her attractiveness could be very good news in terms of the price the house is sold for, but bad news in terms of how long it is on the market.
Research published last month finds that the personal characteristics of real estate agents matter to house prices and the length of time a house is on the market, even after controlling for the quality of the house.
In their analysis the researchers control for age of the property, size of the house, number of bedrooms, number of bathrooms, location of the home and, as controls for quality, whether or not the house has hardwood flooring, brick siding and granite countertops.
It turns out having a male agent is bad for the selling price of a house. Both male listing agents (those acting on behalf of the seller) and male selling agents (those acting on behalf of the buyer) are associated with lower house prices than their female counterparts. The gender of the agent, however, has no effect on how long a house is on the market.
Being attractive, for both listing and selling agents, is associated with higher final sale price for a house, with the effect on house prices of having an attractive listing agent is about twice as large as that of an attractive selling agent.
Where homeowners lose out on having an attractive listing agent, however, is in having their house on the market for longer. The attractiveness of the selling agent has no effect on length of time on the market (which makes sense since, presumably, the characteristics of the buyer’s agent only matter when the house is finally sold).
Attractive agents don’t necessarily earn more annually than less attractive agents. The houses they sell go for a higher price, but they sell fewer houses than do less attractive agents (presumably because each house is on the market for longer).
The study also finds that non-white listing agents are associated with lower final prices and both non-white listing agents and selling agents are associated with longer times on the market.
The authors argue that this evidence of higher house prices and longer time on market for attractive agents is suggestive of two theories. Either attractive agents use their physical beauty to compensate for low productivity (i.e., they don’t actually work that hard to sell the house because their attractiveness helps get a higher price). Or they use their beauty to attract better listings that command higher prices but are no better (or worse) at selling them than other agents.
The authors of this paper side with the second explanation – that agents don’t actually use their beauty to sell properties more successfully, but rather are better at attracting listings that they can sell for higher prices.
If my agent read this piece I suspect that she would think to herself: I wonder if anyone has every done a study on the relationship between having an economist as a client and the length of time a house spends on the market? I have to admit to feeling a bit badly about how analytical I have been about the whole thing. The good news is, though, that the combination of being patient (which I am) and being attractive (which she is) appears to be a winner. Here’s hoping!
