California Real Estate News: Beyond the Headlines

California real estate articles from various publications are summarized weekly in Beyond the Headlines, from the California Association of Realtors. Here's this week's version, covering such topics as:

- Year over year median prices up 21% in April
- Consumer confidence rising

- What kind of homeowners walk away from their homes?

A quick way to stay up to date!

- David

The Risk of Further Declines in Home Prices: Someone Knows the Answer

What's the risk of more wholesale price declines in real estate?  Low, and getting lower. 

So whose prediction is that?  It is the prediction someone who really needs to know the answer: major providers of private mortgage insurance (PMI).  These are the folks who know how to measure mortgage default probabilities much better than AIG knew how to predict MBS (mortgage-backed securities) default probabilities, and here's what they think: Risk wanes for real estate price declines | Inman News - David

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Case-Shiller says: Prices up in Los Angeles

"One of the few spots that seems surprisingly strong is California."  There's a quote you don't see very often regarding the California housing market, so it's nice to see in response to the latest Case-Shiller numbers. - David

More info: Home prices rise in three California cities - latimes.com

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Real estate sales spike 16% in March | Inman News

Broader, confirming signs of the uptick we've been experiencing in real estate price stability and sales in the South Bay since February. - David

Real estate sales spike 16% in March | Inman News

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Southern California home prices rise 10% in February - latimes.com

Here's the regional info we want to see. Southern California home prices rise 10% in February!  Foreclosures are down in the area as well.

What's missing?  Stated income jumbo loan financing, which remains nonexistent in any real sense.  So self-employed purchasers looking to purchase larger, more expensive homes must come up with enormous down payments or work with a mortgage broker with access to nontraditional financing sources (ask me for a referral!). - David

"Home prices rose for the seventh straight month in December..." - Builder Magazine

What does it mean when home prices rise in a single month?  Not much.  But in this article we learn that this is the 7th month in a row, which is very significant:

Home prices rise 0.3 percent in December - Builder Magazine

The S&P/Case-Shiller index tells us that home prices maxed out in May of 2006, nearly four years ago.  So housing declines continued for about three years, then leveled out nationwide in the middle of 2009. 

Does that signal a big runup soon?

Homeowners' equity is again on the rise after three years of unprecedented shrinkage - LATimes.com

We all knew prices couldn't go up forever, right? Well, they couldn't go down forever either, and the South Bay is a good example of a locale where prices are stabilizing. In fact, would you believe U.S. homeowners' equity in their homes is rising?  It's true. - David

Pending Home Sales Predicts A Stronger Spring Market

The Pending Home Sales Index rose slightly in December, climbing 1 percent from November.
A Pending Home Sale is a home that is under contract to sell, but not yet sold. It's a figure compiled by the National Association of Realtors® using sales data from over 100 regional listing services and more than 60 large brokerages around the country.
Because each pending sale is a true measure of
 sales activity, the Pending Home Sales Index is purported to be the most reliable forward-looking indicator for housing.

Home Values Rose In November 2009 By Another 0.7 Percent

Reporting on a two-month lag, the government said home values rose 0.7 percent in November.
National home prices are at their highest point since February 2009.
But before we look too much into the FHFA's Home Price Index, it's important that we're cognizant of its shortcomings; the most important of which is its lack of real-time reporting.

10 Cities For Home Bargains

As the housing market improves across the country, certain cities are emerging as relative bargains.  Some areas, like Miami, were hit hard by the recession, and other areas are buoyed by good school systems and strong labor markets.

In this 5-minute video from The Today Show, 10 cities are highlighted for their home prices.  And they're not "small towns", either. Among the featured cities:

Foreclosure glut deflates all home sales

I'm often asked whether (or why) distressed property listings and sales (foreclosures, short sales) affect the value of normal properties offered for sale under standard terms.  Here's a commentary on that topic from MarketWatch:

Foreclosure glut deflates all home sales Realty Q&A - MarketWatch

The bottom line is that the market prices homes in light of available substitutes, so distressed properties, though usually in much worse condition than other properties, definitely have an impact in the eyes of buyers, appraisers, and lenders.

Looking At The 2010 Predictions For Housing Markets And Mortgage Rates

2010 is just a few days old and already the "experts" are making predictions for the year.

Housing calls and mortgage rate predictions run the gamut:

• Home prices will fall in 2010
• Home prices will rise in 2010
• Mortgage rates will rise in 2010
• Mortgage rates will rise by a lot in 2010

Time to change home appraisal practices?

Counting distressed properties in home appraisal comps has the deleterious effect of dragging down values to those of homes with considerable deferred maintenance.  At minimum, distressed home sales used as comps need to be adjusted upward to account for the typical problems associated with these homes. - David

Is it time to change home appraisal practices? - MarketWatch

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Home Prices On The Rise, Says The October Home Price Index Report

More positive signals from housing -- home values are still on the rise.
According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.
Prices are up in 4 of the last six months.
But before we take the stats to the proverbial bank, it's important that we recognize

Case-Shiller: Good News for Buyers - MarketWatch

The real estate market is always good for somebody - - in this case, it's good for buyers; in fact, it's a great opportunity. - David

Case-Shiller: Good News for Buyers - MarketWatch

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Why many home-price measures may be misleading - MarketWatch

Are home price statistics published nationally, regionally, and locally really reliable?  In many cases, absolutely not. Unfortunately, journalists often make no better statisticians than statisticians make journalists. - David

Why many home-price measures may be misleading - MarketWatch

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Home Pricing Analysis: An Example

[A telling story of home pricing, retold in this blog due to its continuing relevance]

I recently had the opportunity to analyze the pricing of a home in the Manhattan Beach Tree Section that had been offered for sale in the current buyer’s market for over 130 days without an offer. For that purpose, and as an example of the types of analytics we can create for you in the course of assisting you in pricing a home for sale (or evaluating what to offer for one), I present this analysis below. - David