As the nation counts its blessings this
Thanksgiving, homeowners, buyers and sellers
have much to be thankful for. Recent news for
the housing market is positive – from record
low mortgage interest rates to rising sales.
The Federal Reserve held overnight bank
interest rates steady in October. Lower U.S.
Treasury yields followed, hitting lows not seen
since January 2009.
Mortgage interest rates, which mimic bond
yields, fell to all-time lows in mid-October,
according to the weekly Freddie Mac survey.
Benchmark 30-year fixed rate mortgages for
borrowers with good credit have stayed under
5% for 23 consecutive weeks. The last time
these rates reached 4.19% was in April 1951.
Such low interest rates are stimulating sales.
The National Association of REALTORS®
(NAR) and the Commerce Department
reported gains in existing and new home sales
since August 2010.
Existing home sales rose 7.6% in August, with
home prices up 0.8% year-over-year. New
home construction rose 10.5% from July, and
more building permits were issued.
To put that news in perspective, housing starts
bottomed in April 2009, and have improved
nearly 25% since the trough — although they
still remain 74% below the peak set in January
2006. Single-family housing starts are up 11
percent, yet down 78% from the peak.
Pending sales, or contracts signed for purchase
of existing homes, also rose in August by 4.3%,
following a 4.5% rise in July.
In other words, the bottom appears to have
been passed, but significant improvement in
average and median sales prices is likely to be
very slow, largely due to continuing pressure
from distressed homes.
The foreclosure moratorium
Ally Financial (formerly known as GMAC
Mortgage), Bank of America, JP Morgan Chase
and other banks stopped foreclosure seizures in
early October. Distressed homes, those in some
stage of foreclosure or short sale, represented
34 percent of sales transactions in August
2010, up 2% from July 2010.
The moratorium is certain to have three
immediate short term effects: lower housing
inventories for sale, reluctance on the part of
buyers to pursue foreclosures, and quick action
by banks to resolve the problem. But this move
appears only to be a delay of the inevitable.
Foreclosures will be reprocessed, potentially
causing a deluge of properties to enter the
market later on this year.
Home sellers have the most to gain from the
moratorium. Foreclosed homes can sell for as
much as 27% off list price and lower neighboring
home values by 1% or more, according to a
recent study by MIT and Harvard researchers.
With approximately 2.5 million homes in some
stage of foreclosure in 2010, neighbors’ home
prices suffer, each losing about $7,217 in value,
according to 2009 estimates from the Center
for Responsible Lending.
According to RealtyTrac, foreclosures accounted
for 43% of all transactions in California during
Q-2, 2010, but the moratorium could have a
short term effect on prices, says the research
firm’s vice president, Rick Sharga. “Right now,
what we’re talking about are paperwork issues
that are largely procedural in nature, and have
almost no bearing on the ultimate disposition
of a foreclosure,” he said in a recent interview.
Homebuyers may be reluctant to pursue
foreclosed properties due to delays and
potential problems obtaining clear title due to
poor paperwork. That could motivate lenders
even more to work through resolutions as
quickly as possible.
Bank of America is already proceeding with
foreclosures that passed reviews, and we suspect
the other banks will follow shortly.
Economists see greater demand ahead
The National Association of Home Builders
(NAHB) expects both the economy and the
employment picture to improve in 2011 and
2012. Says NAHB Chief Economist David
Crowe, “Consumer uncertainty about the
economy, the poor job market and the large
number of foreclosed properties for sale
continue to be a drag on housing. However,
favorable home buying conditions should help
spur additional demand as the job market
gradually improves later this year. ”
That positive forecast is echoed by Dr. Mark
Dotzour, chief economist for the Real Estate
Center at Texas A & M. “The real economy
— economic activity that is not stimulated
by tax credits — appears to be turning the
corner toward recovery,” he said. “Corporate
profits and new orders for manufacturing have
clearly rebounded.”
Nonetheless, he cautions, “Job growth is the
essential engine of growth in this country.
Until we start producing jobs, it’s premature to
say we are out of the recession.”
California and Southern California
Prices are up 4.4% year-over-year, the tenth
consecutive increase, following 27 months of
pricing declines. Prices peaked at $484,000
in early 2007, and bottomed at $221,000 in
April 2009.
Of the homes that sold in August, 35.9%
were foreclosures, down from 42.8% a year
ago, and well down from the 58.5% peak in
February 2009.
WESTSIDE LOS ANGELES
Market Overview a monthly real estate report | November 2010
Recent news for the housing market is positive - from record low mortgage interest
rates to rising sales.
Despite recent price gains, the affordability
of California housing is astonishing when
viewed through the filter of inflation.
DataQuick reports that the typical mortgage
payment in August was $1,077, down from
$1093 in August 2009, largely thanks to
improved mortgage interest rates. That’s
59.5% below the peak set in June 2006 and
50.1% below the previous peak set in the
spring of 1989.
Indicators of market distress continue to
move in different directions. Foreclosure
is off its recent peaks, but remains
high by historical standards. Financing
with multiple mortgages is low, down
payment sizes are stable, and cash and
non-owner-occupied buying are up, MDA
DataQuick reported.
Southern California sales volume fell in
August. In Los Angeles, Riverside, San
Diego, Ventura, San Bernardino and Orange
counties, sales volume was down 2.1% from
July and 13.8% lower than a year ago. But
the pace of the decline is slower than it was
in July, when the void was felt most from
sales that had been pulled forward due to
federal tax credits ending in April 2010.
Advice for buyers: Record low mortgage
rates become more important the longer
you plan to stay in your home. Choose the
best home possible to meet your household’s
needs for years to come. The rise in housing
inventories may give you negotiating power
with sellers, but don’t risk the home of your
dreams over minor bargaining points.
If you’re interested in a foreclosed home, be
patient for a few weeks while the banks sort
things out, or move on to another property.
Keep in mind that your chances of getting a
loan are much higher if you can qualify for
a conventional or conforming loan.
Advice for sellers: With foreclosures
temporarily off the market, it’s important
to take advantage, before inventories rise
further. When buyers have little to motivate
them besides low interest rates, you must
eliminate any reason they might have to
wait. Stimulate them with lower prices and
better move-in condition than they would
find if they waited for prices to fall further or
foreclosures to come back on the market.
If you suspect neighbors are struggling
to maintain their home, offer to help by
mowing the lawn or assisting with repairs.
Insist that your city and local housing
authority force banks to maintain their
foreclosed homes in your area. Organize a
neighborhood cleanup drive for abandoned
homes in your area. Be proactive, and your
buyers will notice.
WESTSIDE LOS ANGELES
Update – While this report was being prepared, CNN Money reported the outlook for hiring is improving as U.S. businesses
continue to report growing demand and increased profitability, according to a survey of leading economists. In its October
industry survey, the National Association of Business Economics said that employment conditions improved in the third
quarter to the highest level since the start of the 2008-2009 recession.
Westside Los Angeles homes priced under $1 million are in a brisk seller’s market, while homes priced higher
are balanced for both buyers and sellers. Upscale and unique homes aren’t expected to sell at the same
pace as more affordable homes. Only when prices reach $4 million and above do inventories stall into a
buyer’s market.
*A balanced market is widely accepted as having six months of inventory on hand with market conditions favorable to both buyers and sellers. A buyer’s
market is characterized by conditions such as high inventories, falling prices, concessions by sellers, and incentives among other indicators. A seller’s
market has low inventories of homes for sale, escalating prices, and keen competition between buyers, including multiple offers.
Detached homes stand alone and share no common walls with any other neighboring home. Attached homes share at least one common wall with another
home. The type of home ownership is determined by whether it is a condominium, townhome, duplex, co-operative or other.
All Properties - Listings Sold by Calendar Quarter
9 Quarters through September 30, 2010
Based on data supplied by Combined LA-Westside Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are July 1, 2008 through September 30, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
$479 $434 $381 $394 $400 $418 $414 $435 $447
2,951
3,139 3,048
2,247
2,427
2,117
2,619
2,731
2,897
$0
$100
$200
$300
$400
$500
$600
2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1 2010/2 2010/3
0
1,000
2,000
3,000
4,000
Avg Sale Price Listings Sold Units
1-year avg. price trend: Up 11.7 %
2-year avg. price trend: Down 6.8 %
1-year sales trend: Down 22.7 %
2-year sales trend: Down 11.1 %
Average Sale Price (Thousands) Homes Sold
Listings Sold by Calendar Quarter
All residential properties in C.L.A.W.
9 quarters List Price Range (Less than $1 million) through September 30, 2010
With prices up 11.7% in the year between September
2009 and September 2010, sales volume throttled back
22.7%.
Inventory in Months’ Supply – October 8, 2010
Detached properties in C.L.A.W.
8.7
4.6
4.4
3.9
4.7
4.0
3.6
2.7
0.0 2.0 4.0 6.0 8.0 10.0
$900K and over
$800K - $899K
$700K - $799K
$600K - $699K
$500K - $599K
$400K - $499K
$300K - $399K
Under $300K
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
Detached homes are selling nearly as fast as they can
close under $300K. Only homes priced $900K and
above are selling at a more balanced pace.
Detached Properties - Inventory in Months
Attached Properties - Inventory in Months
Attached homes are selling nearly as well as detached
homes under $699K. Sales volume slows down between
$700K and $899K, but is still within normal range.
Inventory in Months’ Supply – October 8, 2010
Attached properties in C.L.A.W.
10.9
7.2
7.4
6.0
5.1
5.0
4.5
4.2
0.0 2.0 4.0 6.0 8.0 10.0 12.0
$900K and over
$800K - $899K
$700K - $799K
$600K - $699K
$500K - $599K
$400K - $499K
$300K - $399K
Under $300K
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
Pricing Reality – October 8, 2010
List prices per square foot by MLS status
Detached properties in C.L.A.W.
$454
$290
$435
$422
$700
$0 $200 $400 $600 $800
SOLD
PENDING
HOLD
BACKUP
ACTIVE
Sellers should carefully consider current buyer
demand when pricing their home for sale.
When list prices per square foot of Backup
and Pending status properties are below that
of Active properties, sellers should ask for
pricing counsel from their Agent.
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
The broad chasm between detached home listings’ price
per square foot and that of solds illustrates the heated
seller’s market in the affordable price ranges.
Detached Properties - Pricing Reality for Sellers, per square foot
The price per square foot of active listings and solds
is closer in attached homes, possibly due to fewer
listings for sale and the greater availability of near-same
comparables.
Attached Properties - Pricing Reality for Sellers, per square foot
Pricing Reality – October 8, 2010
List prices per square foot by MLS status
Attached properties in C.L.A.W.
$385
$373
$370
$359
$498
$0 $100 $200 $300 $400 $500 $600
SOLD
PENDING
HOLD
BACKUP
ACTIVE
Sellers should carefully consider current buyer
demand when pricing their home for sale.
When list prices per square foot of Backup
and Pending status properties are below that
of Active properties, sellers should ask for
pricing counsel from their Agent.
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
Attached Properties - Monthly Listings Taken and Absorbed
12 Months through September 2010
Monthly Listings Taken and Absorbed
Attached properties in C.L.A.W.
12 months through September, 2010
573
605
614
571
530
476
517
403
249
393
325
409
0
100
200
300
400
500
600
700
0
200
400
600
800
1,000
New Listings Listings Absorbed
New Listings 409 325 249 393 403 517 476 530 571 573 605 614
Listings Absorbed 457 333 298 302 391 519 570 559 646 707 786 914
2009/10 2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09
Attached home absorption rates also rose much faster
than new listings on the market.
Based on data supplied by Combined LA-Westside Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are July 1, 2008 through September 30, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
$953 $763 $683 $779 $801 $833 $887 $887 $964
2,395
2,651
2,466
1,935
2,071
1,790
2,137
2,360
2,476
$0
$200
$400
$600
$800
$1,000
$1,200
2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1 2010/2 2010/3
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Avg Sale Price Listings Sold Units
1-year avg. price trend: Up 20.3 %
2-year avg. price trend: Up 1.2 %
1-year sales trend: Down 21.9 %
2-year sales trend: Down 12.2 %
Average Sale Price (Thousands) Homes Sold
Listings Sold by Calendar Quarter
Detached properties in C.L.A.W.
9 quarters through September 30, 2010
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through September 30, 2010
Detached home prices rose 20.3% in the year ending
September 2010, but sales volume pulled back.
Based on data supplied by Combined LA-Westside Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are July 1, 2008 through September 30, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
$585 $510 $470 $498 $466 $495 $500 $536 $514
1,120
1,138
1,241
831
992
661
977
1,125
1,122
$0
$100
$200
$300
$400
$500
$600
$700
2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1 2010/2 2010/3
0
500
1,000
1,500
Avg Sale Price Listings Sold Units
1-year avg. price trend: Up 10.2 %
2-year avg. price trend: Down 12.3 %
1-year sales trend: Down 12.8 %
2-year sales trend: Down 11.8 %
Average Sale Price (Thousands) Homes Sold
Listings Sold by Calendar Quarter
Attached properties in C.L.A.W.
9 quarters through September 30, 2010
Attached Properties - Listings Sold by Calendar Quarter
9 Quarters through September 30, 2010
Attached home prices rose 10.2% in the year ending in
September 2010, while sales volume tapped the brakes.
©2010 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. An independently owned and operated member of the Prudential Real
Estate Affiliates, Inc. This is not intended as a solicitation if your property is currently listed with another broker.
Monthly Listings Taken and Absorbed
Detached properties in C.L.A.W.
12 months through September, 2010
1,169 1,153
1,366
1,135
1,043
1,149
1,066
863
531
854
654
836
0
400
800
1,200
1,600
0
500
1,000
1,500
2,000
2,500
New Listings Listings Absorbed
New Listings 836 654 531 854 863 1066 1149 1043 1135 1169 1153 1366
Listings Absorbed 926 763 648 766 829 1121 1189 1114 1255 1359 1486 1884
2009/10 2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09
Detached Properties - Monthly Listings Taken and Absorbed
12 Months through September 2010
The number of new detached home listings rose in
September. Fortunately for sellers, the absorption rates
rose even higher.
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