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Inventory Watch

Statistically it was a fairly quiet week (data gathered yesterday morning):

North SD County’s Coastal Region (La Jolla-to-Carlsbad)

The UNDER-$800,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
95
$376/sf
47
1,988sf
December 2
79
$371/sf
50
2,047sf
December 9
72
$383/sf
43
1,954sf
December 16
81
$378/sf
42
1,948sf
December 23
77
$374/sf
49
1,937sf
December 30
76
$373/sf
51
1,950sf
January 6
74
$370/sf
49
1,995sf
January 13
71
$381/sf
44
1,921sf
January 20
72
$384/sf
41
1,877sf
January 27
75
$399/sf
40
1,891sf
February 3
78
$409/sf
41
1,876sf
February 10
82
$395/sf
38
1,927sf
February 17
85
$387/sf
35
1,929sf
February 24
90
$383/sf
37
2,008sf
March 3
82
$397/sf
39
1,942sf
March 10
88
$377/sf
37
2,008sf
March 17
89
$366/sf
34
2,038sf
March 24
79
$369/sf
34
2,031sf
March 31
78
$367/sf
39
2,069sf
April 7
87
$373/sf
32
2,054sf
April 14
97
$380/sf
31
2,000sf
April 21
87
$377/sf
32
2,062sf
April 28
107
$379/sf
29
2,044sf
May 5
114
$376/sf
27
2,046sf
May 12
108
$385/sf
31
2,012sf
May 19
107
$385/sf
0
0sf
May 26
105
$375/sf
34
0sf

The $800,000 – $1,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
245
$448/sf
61
2,856sf
December 2
239
$448/sf
64
2,851sf
December 9
226
$461/sf
65
2,812sf
December 16
211
$464/sf
66
2,794sf
December 23
197
$453/sf
73
2,813sf
December 30
173
$450/sf
78
2,821sf
January 6
170
$470/sf
65
2,757sf
January 13
168
$463/sf
59
2,764sf
January 20
174
$444/sf
51
2,882sf
January 27
166
$435/sf
52
2,902sf
February 3
165
$441/sf
53
2,857sf
February 10
175
$443/sf
51
2,852sf
February 17
180
$447/sf
50
2,803sf
February 24
188
$438/sf
44
2,846sf
March 3
202
$421/sf
44
2,936sf
March 10
215
$431/sf
41
2,854sf
March 17
223
$421/sf
42
2,918sf
March 24
217
$419/sf
42
2,941sf
March 31
223
$425/sf
44
2,887sf
April 7
224
$428/sf
44
2,881sf
April 14
233
$429/sf
44
2,892sf
April 21
237
$432/sf
44
2,894sf
April 28
240
$430/sf
45
2,848sf
May 5
272
$434/sf
42
2,838sf
May 12
269
$438/sf
42
2,831sf
May 19
275
$436/sf
0
0sf
May 26
276
$429/sf
49
0sf

(more…)

Only Non-Recourse

From CAR:

barbara_boxer_2After receiving comments from California tax practitioners and its own review of California law, the IRS has issued a clarification to its September 19, 2013 letter to Senator Barbara Boxer concerning short sales and taxes on the forgiven debt. The new IRS letter indicates that forgiven short sale debt is not subject to cancellation of debt (COD) income only if it is non-recourse at its inception and that their prior letter was overly broad.

In their new April 29, 2014 letter, the IRS states that in order for a debt to be non-recourse at the time of the short sale, the original debt must be used to purchase or build a 1-4 principal residence or a refinance of such debt. As in the prior letter the IRS affirms that a lender’s forgiveness of such debt in a short sale will not result in COD income, but instead will be treated as capital gains. And as before, single or joint tax filers selling a principal residence can use the appropriate $250,000 or $500,000 capital gains exclusion.

What changed is that a loan used to substantially improve the taxpayer’s principal residence may now be treated as COD income instead of capital gains. Additionally, the IRS clarified that an investor’s short sale debt will also be characterized by the nature of the debt at inception. If it was recourse debt (non principal residence purchase) originally, it will remain recourse debt at the time of the short sale. This may be somewhat good news for investors who may prefer to have short sale debt treated as COD income rather than capital gains. COD income may be avoided under a claim of insolvency where capital gains cannot.

C.A.R. will continue to seek additional clarification about some issues not addressed, such as a taxpayer’s reliance on the IRS’s prior letter, and whether forgiven home improvement debt should not also be excluded from COD income. As always REALTORS® must advise their clients that they cannot give tax advice and that the client should seek tax advice from a qualified tax professional. A copy of the letter from the IRS is available for reference.

Second Least Affordable

SD salaries

From the UT:

http://www.utsandiego.com/news/2014/may/22/hsh-home-affordability-median-income-mortgage/

An excerpt:

A San Diegan has to earn nearly double the county’s median income to afford a median-priced home here, says a study released this week by mortgage information company HSH.

The findings make San Diego the nation’s second least affordable city for buying a home behind San Francisco. The report says a person in San Diego would need to earn $98,534 a year to buy a $483,000 home, the county’s median price in the first quarter.

“It’s a very expensive part of the world to live in,” said Keith Gumbinger, vice president of HSH. “It’s a matter of compromise and adjusting your expectations and looking for things that fit your budget.”

The median household income in the county for an individual is $50,900, according to the U.S. Department of Housing and Urban Development. For its price calculation, HSH assumed a 20 percent down payment, 28 percent debt-to-income ratio, a 4.56 percent mortgage rate and included insurance costs and property taxes.

Gumbinger noted that the median price is the middle point of all homes sold, meaning that half of the transactions in the first quarter were below $483,000. Still, home prices rose 17 percent over the last year, which priced out the typical middle-class family of four that would want a three-bedroom, two-bathroom house.

“The thing that’s getting scary is you used to be able to buy for between $225,000 and $285,000,” said K.J. Koljonen, associate vice president of the nonprofit Community HousingWorks. “It’s almost not there anymore. The amount of houses that are at or under $250,000 has gone down by a ton.”

In April, the number of homes for sale for $250,000 or less in San Diego County was down 54 percent in the last year, the San Diego Association of Realtors reports.

http://www.utsandiego.com/news/2014/may/22/hsh-home-affordability-median-income-mortgage/

SD Appreciation Predictions

With more homes not selling – otherwise known as growing inventory – buyers can finally exert some influence on pricing (they’ve had virtually none over the last 18 months).  This should cause the pricing trend to stay fairly flat, with sellers being reluctant to lower their price enough, causing only the better deals to sell.  During the frenzy it was different – everything was getting gobbled up, right price or not.

The San Diego ZHVI in April was up 12.6% YoY:

SD snapshot

They predict it will increase 4.1% between February 2014 and February 2015, which is a logical guess in a cooling market – though the statistical comparison to post-frenzy numbers will just confirm that pricing has been flat for a while.

But because the month-over-month San Diego ZHVI makes an unusual correction in their prediction below, rates are unlikely to drop further, and sellers’ pricing reluctance, I’m taking the under on their 4.1% appreciation by February, 2015:

ZHV

The Jam

The Jam were an English punk rock/new wave/mod revival band active during the late 1970s and early 1980s. They were formed in Woking, Surrey. While they shared the “angry young men” outlook and fast tempos of their punk rock contemporaries, The Jam wore smartly tailored suits rather than ripped clothes, and they incorporated a number of mainstream 1960s rock and R&B influences rather than rejecting them, placing The Jam at the forefront of the mod revival movement.

They had 18 consecutive Top 40 singles in the United Kingdom, from their debut in 1977 to their break-up in December 1982, including four number one hits. As of 2007, “That’s Entertainment” and “Just Who Is the 5 O’Clock Hero?” remained the best-selling import singles of all time in the UK. They released one live album and six studio albums, the last of which, The Gift, hit number one on the UK album charts. When the group split up, their first 15 singles were re-released and all placed within the top 100.

http://en.wikipedia.org/wiki/The_Jam

Dealing With A Global Market

The Brooklyn borough of New York, seen with the Manhattan skyline in the distance. (AP Photo/Mark Lennihan, File)

From the WaPo:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/05/20/foreign-home-buyers-are-making-housing-more-expensive-should-cities-tax-them-for-it/?wprss=rss_business&clsrd

The globalization of real estate upends some of our basic assumptions about housing prices. We expect them to reflect local fundamentals — above all, how much people earn.

In a truly global market, that may not be the case. If there are enough rich people in China who want property in Vancouver, prices can float out of reach of the people who actually live and work there.

So just because prices look out of whack doesn’t necessarily mean there’s a bubble. Instead, wealthy foreigners are rationally overpaying, in order to protect themselves against risk at home. And the possibility of losing a little money if prices subside won’t deter them.

In effect, this means that absentee homeowners can price out people who are actually living in the area.

It means that empty housing can drive up the cost of occupied housing (this parallels a concern about investors who would buy up housing to turn it into short-term rentals on platforms like Airbnb).

It means that cities may be short on housing that locals can afford even as a non-trivial share of their housing sits vacant. From there, the economic consequences ripple out: Empty homes are good business for security firms; they’re bad business for nearby retailers who rely on actual people to buy their goods and services.

So, what’s the solution to this new reality, if we want to keep neighborhoods occupied and cities affordable for the people who have jobs there? Writer Kyle Chayka at Pacific Standard has proposed an updated take on rent control: residency requirements. Make people occupy (or rent out) the housing they own.

Urban Planner Andy Yan suggests to Surowiecki a less draconian idea: Make foreigners pay a premium to buy up local housing.

Read more here:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/05/20/foreign-home-buyers-are-making-housing-more-expensive-should-cities-tax-them-for-it/?wprss=rss_business&clsrd

Whale Surfing

surfing whales

An incredible photo snapped Saturday (April 5) at the iconic Pipeline on Oahu’s North Shore is going viral.

A mother humpback whale and her calf were cruising just offshore when a set rolled in.

J.T. Gray of North Shore Surf Photos grabbed his camera and the shot of a lifetime. “I spotted the whales heading towards the lineup,” said Gray. “When the set rolled, a bodyboarder (six-time world champion Guilherme Tamega) caught the first wave, and the whales caught the second.”

From late December to early May, humpback whales call Hawaii home. However, it is rare that the whales come this close to shore.

“I have never seen whales surfing on the north shore and everyone I have spoke to about it says it’s a first as well,” said Gray.

http://wnow.worldnow.com/story/25220334/photo-of-whales-surfing-pipeline-goes-viral-drone-video-released

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