Housing Market Uptrend Expected Through 2014

From National Association of Realtors

The housing market recovery should continue through the coming years, assuming there are no further limitations on the availability of mortgage credit or a "fiscal cliff,"according to forecast presentations at a residential forum at the 2012 Realtors Conference and Expo.

Lawrence Yun, chief economist of the National Association of realtors, said the housing market clearly turned around in 2012. "Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases," he said.

Yun sees no threatening signs for inflation in 2013, but projects it to be in the range of 4 to 6 percent by 2015. "The huge federal budget deficit is likely to push up borrowing costs and raise inflation well above 2 percent," he said.

Rising rents, quantitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross Domestic Product are all raising inflationary pressures.

Mortgage interest rates are forecast to gradually rise and to average 4.0 percent next year, and 4.6 percent in 2014 from the inflationary pressure.

With rising demand and an ongoing decline in housing inventory, Yun expects meaningfully higher home prices. The national median existing-home price should rise 6.0 percent to $176,100 for all of 2012, and increase another 5.1 percent next year to $185,200; comparable gains are seen in 2014.

"Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over the net three years, also meaning there will be fewer upside-down home owners," Yun said. "Today is a perfect opportunity for moderate-income renters to become successful home owners, but stringent mortgage credit conditions are holding them back."

Existing-home sales this year are forecast to rise 9.0 percent to 4.64 million, followed by an 8.7 percent increase to 5.05 million in 2013. Housing starts are forecast to rise to 776,000 in 2012 from 612,000 last year, and reach 1.13 million next year.

The growth in new construction sounds very impressive, and it does mark a genuine recovery, but it must be kept in mind that the anticipated volume remains below long-term underlying demand," Yun said. "Unless building activity returns to normal levels in the next couple years, housing shortages could cause home prices to accelerate, and the movement of home prices will be closely tied to the level of housing starts."

"Home sales and construction activity depend on steady job growth, which we are seeing, but thus far we've only regained half of the jobs lost during the recession," Yun said.

Yun projects growth in Gross Domestic Product to be 2.1 percent this year and 2.5 percent in 2013. The unemployment rate is showing slow, steady progress and is expected to decline to about 7.6 percent around the end of 2013. "Of course these projections assume Congress will largely avoid the "fiscal cliff" scenario," Yun said. "While we're hopeful that something can be accomplished, the alternative would be a likely recession, so automatic spending cuts and tax increases need to be addressed quickly."

Regardless, Yun said that four years from now there will be an even greater disparity in wealth distribution. "People who purchased homes at low prices in the past couple years, including many investors, can expect healthy growth in home equity over the next four years, while renters who were unable to get into the market will be in a weaker position because they are unable to accumulate wealth." he said. "Not only will renters miss out on the price gains, but they'll also face rents rising at faster rates."

Los Angeles County Real Estate Market Update Oct 2012

Real Estate Market Rebounding

Taken from LA Times 10/18/2012

Foreclosures started in California have dropped to the lowest level since early 2007, the latest sign that the housing market is rebounding faster than analysts expected.

Notices of default fell 10.2% from the previous quarter and were down 31.2% from the same period last year, San Diego-based DataQuick reported Wednesday. A total of 49,026 notices of default – the first stage of foreclosure in California -- were filed on homes here last quarter.
That was the lowest number since the first quarter of 2007, and a 63% decline from the first quarter of 2009, when notice of default filings peaked in the state.

California foreclosure starts fall to 2007 level

The number of Californians entering foreclosure dropped in the third quarter to its lowest level since early 2007.

Foreclosure filings have fallen as banks work toward completing more loan modifications and short sales. An improving economy and rising prices have also helped.

“Prices in most areas today are up significantly from their low point in early 2009,” John Walsh, president of San Diego real estate firm DataQuick, said in a news release. “Additionally, during the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress.”

Notices of default fell 10.2% from the prior quarter and were down 31.2% from the same period last year, DataQuick reported. A total of 49,026 notices of default – the first stage of foreclosure in California -- were filed on homes in the Golden State last quarter.

That was the lowest number since the first quarter of 2007, and a 63% decline from the first quarter of 2009, when notice of default filings peaked in the state.

The number of homes lost to foreclosure was up 5% from the prior quarter and down 41% from the same period a year ago. A total of 22,949 homes were lost to foreclosure last quarter.

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For Renters, buying a home pays off in 3 years on average

Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.

The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the "break-even horizon," comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.

The rent-or-buy calculus varies widely depending on where you live.

In the combined Los Angeles and Orange counties, the magic number is 4.3 years, assuming the buyer has made a 20% down payment. Buying wins out after only 1.6 year in the desert community of Banning. But Newport Beach residents must wait 14 years for buying to make more financial sense than renting.

The analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.

Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.

"For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision," Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers "a sense for 'Am I ready to make this decision?'"

The new take on the classic rent-versus-buy debate comes at a tenuous moment for the housing market. Many analysts believe that a housing bottom has been reached but don't expect a return to the heady days of the real estate bubble. There is already some concern about the strength of the recovery, with home sales slowing in June as inventory remained tight and buyers paid higher prices.

At the same time, rents are rising, housing affordability is at record levels, and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.

Stuart Gabriel, director of UCLA's Ziman Center for Real Estate, noted that the main lesson from the subprime mortgage debacle and the housing bust was that homeownership shouldn't be pushed at all costs. Federal policy has been adjusted to support this new point of view.

"One of the things we have learned in recent years is, obviously, house prices don't always go up, and even over the very long term in certain markets homeownership may only offer a minimal return," Gabriel said.

"What we have all learned is to treat homeownership as a bit of a dangerous animal. You know it's not always good, and it's not good for everyone."

Things to consider when buying, particularly in an slowly appreciating market, include how mobile will you be, your financial situation, marital status, career goals and personality, Gabriel said.

Richard Green, director of the USC Lusk Center for Real Estate, added that in many regions buying has become increasingly attractive compared with renting. There are also non-financial reasons for buying.

"I can enjoy living in this house for the rest of my life, and nobody can throw me out of it," he said. "You are consuming something, and you have control over it, and control has some value."

Zillow's analysis, which covered more than 200 metropolitan areas and 7,500 U.S. cities, found that buying is a better financial decision than renting in the Riverside-San Bernardino area if you live in the home for at least two years. That rises to 3.2 years in the area including Oxnard, Thousand Oaks and Ventura.

The San Francisco metropolitan area's break-even score of 5.9 years encompasses a range from two years to 24.3 years.

Valencia CA Real Estate: CMPS Legislative Update - Higher loan limits inching toward reality!

Valencia CA Real Estate: CMPS Legislative Update - Higher loan limits inching toward reality!

CMPS Legislative Update - Higher loan limits inching toward reality!

Yesterday, the US House of Representatives overwhelmingly passed HR 5140 – an economic stimulus package that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,750 in high-cost areas. The temporary increase would last only until the end of 2008. The bill would also restrict Fannie Mae, Freddie Mac and the Federal Housing Administration from guaranteeing or purchasing loans above 125 percent of the median home price for a given area.

That means that the existing $417,000 conforming loan limit for mortgages eligible for purchase by Fannie and Freddie would not increase in areas where the median home price is $333,600 or less. The problem of course, is that as of right now, no one knows what the median home price is in different markets because this data has never been published by HUD!

Therefore, it would be up to the Secretary of Housing and Urban Development to determine the median home price for different housing markets "as soon as practicable," but no later than 30 days after passage of the bill, relying on existing commercial data where needed. In other words, if median home prices in your marketplace are $336,000 or less, this bill won't really affect you; and there's no way to tell if median home prices in your area are higher than $336,000 until HUD publishes this data. Nevertheless, jumbo relief is certainly on the way for places like California where median home prices are certain to be above $336,000.

Currently, the loan limit for FHA loan programs is between $200,160 and $362,790, depending on the county where the property is located. The proposed higher limits for FHA loan guarantees are also set to expire at the end of this year, unless Congress passes other legislation intended to modernize FHA programs by introducing risk-based pricing and lowering down-payment requirements.

While House leaders thought they had reached an agreement with the Bush administration to include FHA modernization as part of the stimulus package, they agreed to continue working on that issue separately at the administration's request, the Associated Press reported.

In order to make higher limits a reality, the next step is for the Senate to pass the bill and for the President to sign it into law. The target date for final passage set by the White House and Congressional leaders is February 15, so let’s hope for the best and we’ll be sure to keep you posted as we have more information.

Fed cuts key interest rate by half-point to 3.0%, signals door open for more

WASHINGTON (MarketWatch) - The Federal Reserve decided to cut interest rates by a half-point and signaled that the door remains open for more cuts.

The central bank lowered the federal funds rate by a half of one percentage point to 3.0%. Financial markets were hoping the Fed would cut decide to cut rates by this amount.
The Fed also announced that it was cutting its discount rate, the interest it charges on direct loans it makes to banks by a half-point to 3.5%.
The move signals that the Fed is concerned about the economic outlook.

In a statement, the Fed said that downside risks to growth remain. The Fed said it would act in a timely manner to address risk.
"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the Fed said.

"Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets," the statement said.
There was one dissent. Dallas Fed president Richard Fisher said he did not think the Fed should have lowered rates at all.
There was only a passing reference to inflation.

The Fed said it expects inflation to moderate in coming quarters but said it would watch the situation carefully.
The Fed has now cut rates five times by a cumulative 2.25 percentage point. Many Wall Street economists now think the Fed will have to lower rates to 2.5% by spring to stave off a possible serious recession.

The next two formal FOMC meetings scheduled for March 18 and April 29-30.
Last fall, the Fed rate cuts were measured and occurred at regular meetings, but last week the Fed changed tactics and engineered an emergency-three-quarter of a point rate cut.

Many analysts said the Fed also reacted to a sharp downturn in global stock markets. There was concern that this would spread to the U.S. and make the outlook worse.
News that some of the sharp fall in European stock markets might have been exacerbated by Societe General unwinding stock positions from a rogue trader was seen as an embarrassment to the Fed and a sign that global central bank cooperation is not what is often advertised.
But Fed watchers said the trouble at the French bank was more of a sideshow.
Dominating the economic landscape is the weak U.S. housing market. Home prices are falling, an exceedingly rare event.

Some analysts see a risk of a vicious circle, where falling home prices leads to a curb in banking lending that would curb consumer spending. Large international banks are reeling from their holdings of complex securities tied to U.S. mortgages.

Banners Promote Enterprise Zones

On Monday, January 14, 2008, the City of Santa Clarita unveiled its newest advertising tool for promoting the Enterprise Zone – 100 street pole banners placed throughout the industrial and commercial areas of the City. The banners will provide an awareness of the newly designated Santa Clarita Enterprise Zone while reminding businesses that they can save money just by being located “in the Zone.”

The Santa Clarita Enterprise Zone covers more than 8,500 acres representing nearly 97% of all commercial and industrial zoned land in the City. A State of California program, Enterprise Zone benefits include tax hiring credits, sales and use tax credits, business expense deductions, and net interest deductions for lenders. Enterprise Zones lead to more jobs, less poverty, and long-term financial stability.

“The Santa Clarita Enterprise Zone is another great benefit to businesses located in our City,” stated Mayor Bob Kellar. “Put this together with the City having no business license or utility user fee, and local businesses should realize significant savings at tax time. The City is dedicated to serving the business community, and bringing an Enterprise Zone to Santa Clarita should make businesses more successful by reducing their tax burdens and increase the number of local jobs available to our residents.”

City staff is available to answer questions regarding the program, set up individual appointments either at City Hall or at individual places of business, and will also pre-screen potential employees for certificates of eligibility that can lead to vouchers for tax credits for businesses.
For more information and/or to receive a Santa Clarita Enterprise Zone brochure, please contact the City of Santa Clarita’s Economic Development Division at (661) 255-4347 or visit the web site at scenterprisezone.com.

Foreclosures soar to state record

Fed rate cut unlikely to have major impact
A desperate slashing of interest rates may ease some of the nation's economic jitters but may not be enough to stave off recession. It also probably won't provide an immediate fix for a deepening foreclosure crisis that has moved into uncharted territory in California.
As the Federal Reserve announced a key interest-rate cut of three-quarters of a point Tuesday, new statistics showed that foreclosures and defaults during the fourth quarter of 2007 were the highest ever recorded in California. One analyst said it's likely that foreclosures will continue to climb.

DataQuick Information Systems Inc. said foreclosures in California jumped to 31,676 in the quarter, the most since DataQuick began tracking those numbers in 1988. For the whole year, foreclosures rose sevenfold, to a total of 84,375.

The increase was nearly as bad in the eight-county Sacramento region, where 10,049 homeowners lost their properties to lenders over the course of the year.

Perhaps more troubling was the continued rise in notices of default, issued by lenders after homeowners miss two or three mortgage payments. Defaults often lead to foreclosures.
Statewide defaults totaled 81,550 in the fourth quarter, the most since DataQuick began compiling those figures in 1992. Defaults more than doubled, to 254,824, for the entire year.

In Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, defaults more than doubled to 24,787 for the year – a likely sign of more foreclosures to come.
"We're still climbing to a peak in foreclosure activity in California," said DataQuick analyst Andrew LePage. "We don't even have a sign of the peak."

The Fed's interest rate cut is likely to help somewhat. It will translate into lower rates on home equity lines of credit, spelling relief for many cash-strapped homeowners, said Fred Arnold, president-elect of the California Association of Mortgage Brokers.

The cut also may improve consumer confidence and bring some potential homebuyers "out of the woodwork," said Arnold, a broker in the Santa Clarita area.
But the move won't by itself revive California's dormant housing market. Arnold said it will do comparatively little for the thousands of subprime borrowers whose adjustable-rate loans are due to reset this year. The monthly payments for those borrowers will still shoot up significantly, he said.

Some may find relief in a plan announced by the White House last fall that calls for rates on adjustable-rate mortgages to be frozen for certain homeowners who are current on their payments.

For potential buyers, rates on 30-year fixed mortgages already have come down as the market anticipated some lowering by the Fed. But they likely won't go much lower, Arnold said.
Rates are averaging 5.42 percent, according to Bankrate.com. Rates on jumbo loans above $417,000, a threshold that covers much of the California market, are about a point higher.
However, Steve Galster, co-owner of Galster Group real estate in Fair Oaks, said he was told by a big lender that mortgage rates were declining Tuesday in response to the Fed's decision.
The decision by the Fed also will translate into lower rates on car loans, credit cards and many business loans.

Nonetheless, it's unlikely the cut will be enough to prevent a recession, said senior economist Scott Anderson of Wells Fargo & Co.
"This is not going to be a panacea," Anderson said. "The credit system, the banking system, is very much frozen up. We're concerned about Main Street – the supply of loans to businesses and consumers." He believes the chance of a recession in the next six months is 50 percent.
"It could get ugly very quickly, and this is what the Fed is responding to," he added, noting that the Fed signaled it may cut rates again.

Even if it doesn't prevent recession, Anderson said the Fed's action – in tandem with a $145 billion economic plan being negotiated by President Bush and Congress – will help the economy recover more quickly.

In California, where the housing slump has pushed unemployment to 6.1 percent, the specter of more foreclosures continues to haunt the economy. Foreclosures add more homes onto an already depressed market as lenders try to dispose of their properties. Nearly half of all sales in Sacramento County in December were homes that had been repossessed.

That trend will continue to drive prices down through 2008, although several agents said they think the decline in prices will ease off. "I think prices might continue to adjust, but I think by far the worst is behind us," said Warren Adams, an area agent who deals in foreclosed properties.
Others see a lot more gloom ahead. Linda Caoili, a Re/Max Gold agent who works with homeowners struggling to prevent foreclosure, said the decline in prices makes some clients feel their home can't be saved.

One Natomas-area client, who bought her home for $420,000, just watched an identical home across the street sell for $315,000 after foreclosure, Caoili said. This client, like others, is nearly ready to give up her home.

"They're living on credit cards now. There's no equity left," she said. "I'm seeing people who have been able to hang on (but) are turning around and saying, 'Hey, why am I hanging on? I'm $150,000 upside down.' "

DataQuick estimates that just 41 percent of those who have received default notices will be able to avoid foreclosure either by refinancing, getting back on track with their payments or selling their homes. A year ago 71 percent were able to avoid foreclosure. The trend reflects, in part, the continued decline in prices, which makes it harder to work out a rescue plan.

The encouraging news is that prices are beginning to fall to a point where buyers are starting to take notice, agents said. Last week DataQuick reported that Sacramento County's median sales prices fell in December to $280,000, a 28 percent decline from the 2005 peak.
Galster said lenders "are pricing them to sell." His firm just listed an Elk Grove home that sold in 2004 for $420,000 and fell into foreclosure. The bank is now asking $299,000.

"I guarantee that'll sell this week," he said. "That is a flat-out bargain." Some houses for sale are beginning to receive multiple offers, he said.
Adams said small investors, the kind who buy a duplex here or there, are starting to drift back into the market.
"That's a big sign to me that things are starting to pencil out," he said.

2 SCV campuses named Distinguished Schools

SANTA CLARITA - Golden Valley High School and Arroyo Seco Junior High were honored Monday as two of the top campuses in the state.

The two were named among 171 California Distinguished Schools, the second time for Arroyo Seco and the first for three-year-old Golden Valley.

"I couldn't be happier," Golden Valley Principal Jacque Snyder said. "It's tough to open a school, and everyone has just worked so hard. These teachers have put in more than 100 percent. The kids are the greatest. ... They're just thrilled."

In applying for the award, a Golden Valley team focused on these features: the campus family center that works with parents and children not familiar with the school system; the block schedule that mimics college scheduling with longer courses meeting fewer times a week; and an instruction program aimed at preparing students for college.

Arroyo Seco Principal Rhondi Durand credited a joint effort by teachers, staffers, parents and students. In their application for the award, school officials focused on teacher collaboration, writing projects and student-led conferences, in which eighth-graders showcase highlights of special projects.

Arroyo Seco was honored in 1999 as a California Distinguished School - when Snyder was principal there. "I followed her," Durand said. "She had a well-oiled machine."
The Distinguished School designations help bolster the Santa Clarita Valley's reputation for good schools.

"I think that one of reasons people move to the Santa Clarita Valley is the schools," Durand said. "They do inquire - `We're moving to the area and want to know about the schools. ...' All the schools here are wonderful; they're all deserving. We're really proud we were chosen."
The state honored 76 middle schools and 95 high schools as exemplary campuses, representing 7 percent of California's 2,400 middle and high schools.

"These middle and high schools have shown they are able to meet the challenge of providing their students with the kind of rigorous education that is essential to their future success in the classroom and the workplace," state Schools Superintendent Jack O'Connell said in a news release.

O'Connell called each school Monday with the news of its award. The schools will be honored May 18 in an awards ceremony at the Disneyland Hotel.

A panel of five visited Arroyo Seco earlier this year and met with parents and a group of students who escorted them about campus.

"My student escorts were so wonderful," Durand said. "They bragged and bragged about their school."

Market Conditions for Santa Clarita as of 3/13/07

By a simple glance at the numbers, the Real Estate Market in Santa Clarita continues to get more and more active.

Since last September, we have a third less listings on the market. While at the same time, the average home price has had modest gains, increasing about $7,000 since that time.

Valencia home price averages increased from $612,000 to $683,000 while Stevenson Ranch had the largest jump from $716,000 to $807,000.

Areas that have decreased in the average sale price include Canyon Country dropping from $613,000 to $540,000, Saugus $638,000 to $609,000 and Castaic $670,000 to $566,000.

Keep in mind, these are just averages, and it may be this month, more lower priced homes sold than higher priced homes. Likewise, the $612,000 mark in Valencia was unusually low.

Most importantly, our opinion is that we now find ourselves in a balanced market, good for the seller and good for the buyer.

3/2/2007 Totals for SCV's Top 6 Cities Below
Active Listings 1465
Pending 134
Sold Homes: Closed Escrow in Prev.Month 168
Avg. Price $647,376
Sold Condos, etc.: Closed Escrow in Prev. Month 100
Avg. Price $346,561

Canyon Country
Active Listings 440
Pending 29
Sold Homes: Closed Escrow in Prev.Month 32
Avg. Price $539,619
Sold Condos, etc.: Closed Escrow in Prev. Month 24
Avg. Price $325,225

Castaic
Active Listings 124
Pending 13
Sold Homes: Closed Escrow in Prev.Month 18
Avg. Price $566,314
Sold Condos, etc.: Closed Escrow in Prev. Month 1
Avg. Price $270,000

Newhall
Active Listings 165
Pending 10
Sold Homes: Closed Escrow in Prev.Month 9
Avg. Price $680,222
Sold Condos, etc.: Closed Escrow in Prev. Month 15
Avg. Price $290,727

Saugus
Active Listings 264
Pending 28
Sold Homes: Closed Escrow in Prev.Month 50
Avg. Price $608,551
Sold Condos, etc.: Closed Escrow in Prev. Month 23
Avg. Price $355,465

Stevenson Ranch
Active Listings 74
Pending 13
Sold Homes: Closed Escrow in Prev.Month 10
Avg. Price $806,800
Sold Condos, etc.: Closed Escrow in Prev. Month 7
Avg. Price $424,389

Valencia
Active Listings 398
Pending 41
Sold Homes: Closed Escrow in Prev.Month 49
Avg. Price $682,748
Sold Condos, etc.: Closed Escrow in Prev. Month 30
Avg. Price $413,560

Stabilizing Home Prices Fuel Hope of Soft Landing

The expected drop in Los Angeles County home prices didn’t happen again in September, leading some observers to wonder if the housing market may experience a soft landing.

According to data released to the Business journal, the number of existing homes sold in Los Angeles County in September dropped 30 percent – about the same as the previous month. But the median price of homes sold was $550,000 – exactly the same as the previous two months. What’s more, the price is up 4.2 percent from the same month last year.

When the number of home sales started dropping almost a year ago, many observers expected prices to head south eventually. However, the median price has been stuck at or near the $550,000 level for six straight months.

The result: the talk of price swoons and the housing “bubble” bursting has gotten quieter – at least for now. “The indicators we are seeing are consistent with a soft landing, “ said Delores Conway, director of the Casden Real Estate Economics Forcast at the USC Lusk Center for Real Estate. “The market is stabilizing to some degree. But we still need more time.”

Indeed, no one has a crystal ball, and prices may well drop, especially if predictions that lenders seeking to cash in on the real estate boom issued no doc loans – requiring minimal verification of income and assets – to overextended buyers are true.

That could lead to a rush of foreclosures as the interest rates on the loans adjust upward after their initial introductory period, when their rock bottom interest rates expire. A recession would certainly push prices well down.

However, several observers pointed out that the regionally strong economy and historically low unemployment don’t appear to set up the Los Angeles area for a steep price plunge.

In fact, so far this year the median home price in the county has risen from $519,000 in January, according to data provided to the Business Journal by HomeData Corp., a Melville, N.Y. company that tracks housing prices nationwide. Still, the soft sales and flattened prices feel like a downturn, compared to the torrid sales of recent years.

“When you come off of an extreme sellers market it looks like doom and gloom,” said Steve White, president of the Southland Regional Association of Realtors. “And the fact that the year-to-year median price has increased moderately would show you we are in a relatively strong market.”

Homes Sitting
To be sure, even though median prices have not gone down yet, sales are definitely slower. Cory Weiss, a broker in Prudential Real Estate’s Beverly Hills office, said homes that are realistically priced are selling, albeit at a slower pace.

“Buyers are being cautious. They are taking their time. Deals are taking longer as far as negotiation,” said Weiss, who has clients in Beverly Hills, Brentwood and the Palisades area.

Weiss’ experience is in line with data released by the California Association of Realtors. The California Association of Realtors estimates that as of August, homes in Los Angeles County were staying on the market a median 51.9 days, compared to 29.2 days a year ago. That translates into a build up of county inventory levels to 6.8 months in August, compared to 2.6 months a year earlier. That means at the current pace of sales, it would take 6.8 months to sell everything that’s on the market now.

“Where homes were moving in a week with multiple offers, it seems to be between 30 and 60 days or perhaps longer now,” said Fran Butler, president-elect of the California Escrow Association. According to Leslie Appleton-Young, chief economist with CAR, a six-month supply of homes creates a balanced market for buyers and sellers.

Appleton-Young said that since 1988, the average unsold inventory level for homes in the county is 6.9 months. White said that the current county home market is balanced, though it is hard to recognize that after the price gains the region experienced from 2003 to 2005.

“Last year was just complete insanity in many ways, so it was difficult to use 2005 as a benchmark or 2004 or 2003 for that matter,” White said. “Those years were so far away from normal.”

Bod Edelstein, professor of business administration at the University of California Berkeley Haas School of Business, said that while it is not clear whether the market has “found its level” he does not anticipate a regional recession, which would severely impact the housing market. “The business sector is fairly healthy,” Conway said. “If that changes we could see more of a bumpy landing.”

Buyers Taking Time
Weiss said that in the high-end market, properties do still sometimes receive multiple offers from prospective buyers, though buyers are no longer consistently making offers at or above asking prices. he said that homes that have sat on the market are “seeing reductions in price as buyers are being more particular.”

In the Santa Monica 90405 ZIP code, September sales dropped 32 percent to 13 homes sold, with the median price down 12 percent to $1.1 million. In the Brentwood 90040 ZIP code, September sales dropped 55 percent to 10 homes sold, with the median price down 14 percent to $1.4 million.

“I still have a ton of active buyers in the upper-end market but they are holding out and want to feel like they are getting a good value,” Weiss said. Edelstein said that countywide slowdown is part of a typical correction before the market turns around. “People don’t give up on their house-price dream, but the idea that there are fewer sales means that less people are getting their dreams,” said Edelstein, co-chair of the Fisher Center for Real Estate and Urban Economics at UC Berkeley.

As the market continues to correct, there are fewer high-end homes selling. In September, 610 $1 million-plus homes were sold, down from 899 $1 million-plus homes sold in August. Also, there were just 31 $1 million-plus ZIP codes in September, down from 38 such ZIP codes in August.

“I feel that a lot of people wanted things to pick up after Labor Day but when we see things close, sale prices aren’t as close to the asking or over the asking prices as they used to be,” Weiss said. The county condo market also experienced a 30 percent decline in sales volume to 1,463 condos sold. The median condo price in the county rose 0.5 percent from a year ago to $410,000.

Conway said that seasonal factors will likely lead to a further decrease in the number of transactions during the late fall and winter months. This sort of seasonal reduction in volume is an annual occurrence fro the housing market. Conway said that in the summer months, families relocate and prepare for the school year, generally making that period a strong time for the market.

“Typically we have a decline from August to December,” Appleton-Young said. “I would expect that pattern to hold.” Despite this expected decline, many real estate professionals said the market appears to be functioning normally. “There is nothing in the Southern California economy that will portend doom,” White said.

Sellers, Buyers Adjust to Market Realities

While down by one-third from the torrid pace of last year's hyperactive housing resale market, sales of existing single-family homes increased slightly during August from the July total as buyers and sellers adjusted to the calm, new realities of methodical sales, two-way negotiations, a wider selection and modest price increases.

A total of 825 single-family homes changed owners last month, down 32.9 percent from a year ago when 1,230 homes closed escrow, but up 2.0 percent from the July tally. Condominium sales of 283 units f ell by 34 percent from a year ago and were off 10.7 percent from July.

Being 33 percent below a white-hot-out-of-control market that was unsustainable is still a very good market. For the last several months we've been right at a balanced market.

The continuation of 67 percent of a crazy market seems like all that was lost was the 33 percent of pure insanity. Today's market is sustainable and can be used as a benchmark not last year's inflated, artificial madness.

Prices continued to rise, although not at the 20 to 25 percent plus pace that was reported virtually every month over the last four years. The median price of the 825 single-family homes sold last month was $610,000, up 2.0 percent from a year ago. The record-high median price of $625,000 was set in June of this year.

Likewise, the condominium median price of $380,000 was up 1.3 percent from a year ago. The condo record high of $415,000 was set in February.

Sellers who are realistic, willing to negotiate and not pining for last year's mad market are selling their homes and finding the biggest selection of replacement properties in years. Buyers who are looking to live in a property for five to seven years have great opprotunities.

The only people who have to worry about what will happen in the next five to ten months are the investors who hoped for a quick flip and a fast profit. Looking back, homes bought five, ten 15 or 20 years ago are worth signficantly more than when they were purchased. Unlike not that long ago, buyers today find the widest selection of properties listed for sale in years.

A total of 6,832 single-family homes and condominiums were listed for sale at the end of Auguest. That figure was up 115.7 percent from 12 months ago when there were only 3,167 active listings.

At the current pace of sales, today's inventory represents a 6.2 month supply, up from the less than 1-month to 2-month supply common over the last two years., but still only slightly above the 5-to 7-month supply that is deemed to represent a balanced market.

An increase of 116 percent in active listings soun ominous, but the inventory was so low, for so long with so many buyers chasing too few listings and driving prices ever higher, that any increase in inventory is welcomed news.

The Valley would require nearly three times as many listings before the tables would be turned enough to suddenly transform today's balacned market into a buyers' market, and nother on the horizon suggests that will happen.

Unlike the economic upheaval of the early 1990's, the Southern California's diversidied ecomony remains solid with more g ood news coming from an array of industires than signs of stress. The housing market is taking a welcome breather, but this is exactly the kind of market needed by buyers wo want to stay in the region and upgrade to a nicer house.

Santa Clarita Valley Resale Home Prices Rise 6%

Resale prices of single-family homes sold during August in the Santa Clarita Valley showed solid gains even as the inventory grew and sales remained solid but fell by a third from the unsustainable levels of last year, the Southland Regional Association of Realtors reported.

A total of 250 single-family homes changed owners last month, down 29.4 percent from a year ago, but up 5.5 percent from the 237 sales of this July. The month-to-month increase reflects typical seasonal patterns while also bolstering arguments that the current market represents a more normal, balanced environment than the hyperactivity of the last four years that favored only sellers.

Sales of 106 condominiums during Auguest were 32.9 percent lower than a year ago and off by 13.1 percent from this July. A larger inventory of single-family homes offers buyers more choices than at any time in the last four years. Families once limited to only condominiums now have an opportunity to buy a single-family home.

Active listings increased to the highest figure on record during August - up 207.1 percent from August 2005 to a total of 2,598 active listings. But the record gain in inventory comes after months of record lows which means the inventory offers a wider selection, but is still not large enough to turn the market in favor of buyers.

At the current pace of sales, the 2,598 active listings posted at the end of August represented a 7.3-month inventory - just outside the 5- to 6-month range regarded by real estate experts as one indicator of a balanced market where neither buyers nor sellers hold undue negotiation advantage.

Some sellers cling to unrealistic price expectations and some buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels. Buyers and sellers who understand the new realities realize that this is the kind of balanced market that will allow buyers who want to stay in the region to upgrade to a nicer house.

Yet some buyers and sellers are frozen in place by the turn in the market and fail to realize that in almost all instances home purchased five, ten, 15 or 20 years ago continue to show incredible price gains. Investors looking for a quick return dislike the uncertainties of today's market. But anyone intending to live in a house for at least five to seven years most likely will realize at least a modest increase in the resale value of their home.

Unlike the early 1990's, the outlook for the Southern California's diversidfied economy remains bright, even as the red-hot housing market cools off and the effects ripple throughout the region. Ther still are not enough homes available to satisfy demand which insulates the market from any dramatic plunge in resale prices.

The median price of the 250 single family homes that changed owners in the Santa Clarita Valley during August was $615,000, up 6.0 percent from a year ago. That is still a considerable price gain, albeit well below the 20 percent and 25 percent hikes that were common over the last four years. The record high of $643,000 was set in April of this year.

For the first time in five years, the condominium median price fell compared to the prior year. The August 2006 condominium median resale price of $370,000 was down 2.4 percent from August 2005 when it was $379,000. It also fell on a month-to-month basis by 1.3 percent. The condominium record high of $397,000 was set in January.

It does not surprise me to see prices vary over a wide range from month-to-month. I think price swings will be common until buyers and sellers get used to the new realities of a calmer, moderate, evenly paced residential housing resale market where neither buyer nor seller have the upper hand.

Current Real Estate Market

Hello. My name is Jason Cook and I'm a Realtor with Realty Executives in Santa Clarita Valley. I work throughout the Santa Clarita Valley and San Fernando Valley, but my main focus is in Valencia.

We currently have over 2,500 homes on the market in the Santa Clarita Valley. A year ago we had around 800 homes on the market. This is quite a change, and the main reason why it is taking much longer for a home to sell. The good news is the inventory has stopped rising as dramatically. By the end of the year we will see close to 25% of the inventory come off the market (most of these will be the homes that are clearly overpriced, those in poor condition and those that are not being marketed correctly.) This should help the truly motivated Sellers to get their homes sold.

Is this too much inventory? Actually, no. The main reason why homes appreciated so dramatically over the past few years was because we had too little inventory. Buyers were practically throwing tens of thousands of dollars on top of Seller’s asking prices to get their offers accepted. From the years 2000 to 2005 we saw an average annual appreciation between 10-25%.

From our market peak of May 2005, the overall market has declined from 4-10%. It is likely we’ll see another 10% decline in the market over the next year. Now that interest rates have risen, prices will naturally fall and the market is now in the process of stabilizing. But remember, long-term growth for the Santa Clarita Valley is still strong and short-term adjustments like we’re now seeing is normal.

It would be my pleasure to represent you in the sale of your home or puchase of your next home. I promise to work diligently for you and to keep you updated on all aspects of the transaction; all I ask is let me be one of the agents you interview to sell your property, or help you buy another home. You can count on my unsurpassed service with exceptional results.

If you have any Real Estate questions, please feel free to send them my way at JasonRCook@sbcglobal.net

Please visit my website at www.ValenciaHomesToday.com


All my best,

Jason Cook