Orangecrest Riverside California Real Estate Blog
Orangecrest Riverside California Real Estate Blog

Scott Chappell and Brian Bean
Tuesday, January 31, 2006

Clues point to more Fed rate increases

Here's a column about the future of interest rates ...

Mortgage rates poised to climb further

By Lou Barnes
Inman News

Last week was a big week in U.S. markets, and a painful one for mortgages. This week will be bigger, and the odds favor additional discomfort. Mortgages are decisively out of the 6-6.125 percent range; now 6.25 percent, threatening 6.5 percent as early as Friday.

The recent headlines have been a maximum-volume garble, guaranteed to confuse clients. The bottom line beneath the noise: Rates are rising because the economy is hotter than thought, the market is weary of Treasury borrowing, and the Fed is not as close to being done as hoped.

The garble: Fourth quarter 2005 GDP grew by a meager 1.1 percent, less than half the forecast. In what way is that "hotter than thought?" Sales of existing homes plunged 5.7 percent in December, roughly four times the forecast decline. Hot, huh?

Mark Twain said of Wagner's music: "It's better than it sounds." Thus, the economy. The GDP number was suppressed by a string of statistical curiosities: a vestige of Katrina, a decline in business investment not appearing in any other data (December orders for durable goods soared 1.5 percent), and a bookkeeping "decline" in government spending.

The housing market's overheated regions are slowing, but the link to consumer spending is more theoretical than in evidence; and, last week's report of sales of new homes gained 2.9 percent vs. the 1.5 percent forecast decline.

The soft news was suspect, but all the strong data looked real. The market gave great weight to a positive change in a job-market indicator. Each Thursday brings the count of people who filed new claims for unemployment insurance in the prior week. The series is wildly volatile and subject to calendar quirks: You can't file a claim on a holiday, or during a hurricane, but the line is long afterwards. However, the four-week moving average is reliable, and in January has phase-shifted downward: New claims are running at the lowest level since 2000.

If claims are down, layoffs are lower and hiring is stronger. In the bond market, the most-watched single economic datum is the first-Friday-of-the-month payroll report for the prior month. If these declining claims show up next Friday as a surge in January payrolls, we will have a modest explosion in all long-term interest rates.

Even if the payroll number is tepid, the financing of the budget deficit will exert upward force. The Treasury does its borrowing in clumps during the year, and during the next two weeks will borrow $112 billion in new cash. Many Republicans are fond of repeating the slogan, "deficits don't matter" or advocate "starving the beast" of revenue, or pretend that a deficit-controlling plan is in place. I cannot describe the quiet rage at bond-trading desks (heavily populated with Republicans) when one of these official lines scrolls across screens.

Then there's the Fed. Whee. Inside the GDP report lies the definitive measure of inflation: the "core personal consumption expenditures deflator." The fourth-quarter PCE jumped from 1.4 percent to 2.2 percent, which $65 oil will do to you. Aside from all that eyewash about Ben Bernanke having to prove how tough he is, the Fed must err on the side of fighting inflation. The only thing separating us from a very bad bout of oil flu has been globalized labor keeping wages under control. Hopes that the Fed would stop at 4.5 percent on Tuesday are gone, and 4.75 percent in March and 5 percent in May are better bets.

Now the perverse part. In the traditional slowdown cycle, housing is early to fade and employment is the last to let go. Tradition is shaping up nicely. The more resilient the economy, the tougher the Fed has to be, and the more likely and deep the slowdown ahead -- and a downward reversal in long-term rates. Later... later.

There is a chance that the Treasury's borrowing is the strongest force in play right now, and will abate this week, about Feb. 8.

In the meantime, duck.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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# posted by Scott Chappell and Brian Bean @ 12:26 PM

Monday, January 30, 2006

JUST LISTED!
20124 Aptos St., Orangecrest

This year, have the parties at your house. Tons of counterspace make this kitchen perfect for an army of helpers preparing a feast. The open floor plan will handle the entire family. The family room offers easy access to the huge sunroom, where you can entertain year-around. When the evening wears long, enjoy your master retreat, relax and reflect on the beauty of life in Orangecrest.

Bedrooms: 4. Baths: 3. Home size: 2,938 sf. Lot size: .19 acres Year built: 2001. Swimming Pool/Spa: No/Yes. Garage: Triple. List Price: $599,900

Your home could be next. To get a free market analysis, or for other local real estate information, call Scott Chappell & Brian Bean’s 24-hour hotline at (800) 941-1900. It’s a community service offered by one of Orangecrest’s leading real estate teams.

Ask about Scott & Brian’s 100% Satisfaction Guarantee program. If you aren’t satisfied, they’ll refund their commission.

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# posted by Scott Chappell and Brian Bean @ 12:46 PM

Buyers gain power in today's
real estate negotiations

Here's a column that may interest buyers and sellers thinking about getting into the market ...

A return to more reasonable home-sale practices

Monday, January 30, 2006

By Dian Hymer
Inman News

Last year, multiple offers were common. Consequently, it took no time at all to negotiate a sale. In most cases, buyers had only one shot at getting the price right. The winning contracts were negotiated quickly with little, if any, bickering over price and terms. If you missed the mark, you rationalized that it wasn't meant to be and searched for another opportunity.

Multiple offers have declined. Instead, multiple counteroffers are becoming the norm. Negotiation is back in vogue. Buyers are on more equal footing with sellers than they've been for years.

Some of today's home-sale transactions require several rounds of counteroffers to reach a mutually agreeable purchase contract. Also, there's no guarantee that if you start negotiating that a deal will be made. Buyers are more willing to walk away from the bargaining table than they were a year ago.

When multiple offers were common, negotiations were usually done when the contract was ratified. A ratified contract is one where both buyer and seller accept, in writing, all the terms and conditions. It was common for buyers to lift contingencies without asking the seller to pay to cure any defects. In many cases, buyers simply skipped inspections altogether. This sometimes resulted in unfortunate consequences.

Not only is there more negotiation to put a home-sale transaction together, the negotiating doesn't necessary stop when the contract is ratified. A positive consequence of a more normal market is that buyers are returning to saner home-buying practices. Most home buyers are including an inspection contingency in their purchase contracts. And, they're more likely to follow through with further inspections recommended by the general home inspector. This is good news for buyers and sellers.

Last year, sellers relished the thought of selling contingency-free for a generous price. However, the incidence of after-closing claims made against sellers for property defects was higher than it would have been if buyers had insisted on doing their own due-diligence investigations as a part of the sale agreement.

Even when buyers were given the chance to inspect, they often weren't given enough time to complete recommended further inspections. With a back-up buyer waiting in the wings, buyers were reluctant to ask for more time for fear of losing the home to another buyer. Some who sold in last year's market are still negotiating claims for defects that buyers discovered after closing.

HOUSE-HUNTING TIP: Although the negotiation process may seem tedious, it can result in a more solid transaction with fewer after-sale problems. Although sellers usually want the inspection process to be shorter rather than longer, there's a modicum of protection to be gained by allowing the buyer sufficient time to investigate any property issues -- before they remove the inspection contingency from the contract.

Keep in mind that real estate customs, law and practice vary from one area to the next. If you have any questions about how to resolve a negotiation, consult with your real estate agent or attorney.

Some buyers take advantage of a seller's willingness to grant time for inspections. It's reasonable to grant a buyer an extension to complete a further inspection if it's impossible to get the inspection done within the contingency time frame. However, repeated requests for extensions of contingency deadlines can indicate that the buyers either aren't committed to the sale or they are unable to close.

Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Copyright 2006 Dian Hymer

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# posted by Scott Chappell and Brian Bean @ 12:38 PM

Record sales of newly built homes in California

Here is an article about the strong new-construction sales market ...

Riverside County leads state in new construction sales

DQ News and Inman News

The number of newly built homes sold by builders in California reached their highest level in at least two decades last year, the result of strong demand and relatively low mortgage interest rates, a real estate information service reported.

A total of 136,228 newly built homes were sold statewide in 2005, up 4.4 percent from 130,480 for the year before, according to DataQuick Information Systems.

Sales in the current real estate cycle surpassed the sales levels of the late 1980s in 2003 when 116,803 newly built homes were sold, passing 1989's total of 103,131. Sales fell to 38,454 in 1993 when the state's real estate market was in steep decline. DataQuick's statistics go back to 1988.

"Builders are a bit more careful these days. They used to build tracts and put up "For Sale" signs. This time around, they're building a couple of homes to show potential buyers, getting sales contracts signed with a deposit, and then building the rest of the tract. They don't want to get caught with unsold inventory like they did in the early 1990s," said Marshall Prentice, DataQuick president.

Riverside County led the state with 26,294 new-home sales, followed by San Diego County with 14,497 and Los Angeles County with 10,872.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers include newly built homes sold by builders, as well as condo conversions. Tear-downs and homes built by individuals are not included, nor are apartment complexes.

The median price paid for a new home was $439,000 last year, up 13.7 percent from $386,000 the year before. Newly built homes were most expensive in San Mateo County where last year's median was $900,000. Homes were least expensive Madera County where the median was $288,500, DataQuick reported.

Riverside County also remained No. 1 in the state for single-family construction, according to the California Building Industry Association. According to preliminary year-end data from the Construction Industry Research Board, housing starts - as measured by building permits issued - totaled 207,154 during 2005, a 2.7 percent decrease from 2004, but the second consecutive year with permits surpassing 200,000. The total includes 154,816 single-family homes (up 2.2 percent from 2004) and 52,338 apartments and condominiums (down 15 percent).

Riverside housing starts were followed by San Bernardino, Los Angeles, Kern, and San Diego counties. In multifamily construction, Los Angeles County remained the leader, followed by San Diego, Riverside, Santa Clara, and Orange counties. Riverside remained the leader in total housing starts, followed by Los Angeles, San Bernardino, San Diego, and Sacramento counties.

Among counties with significant amounts of single-family construction, Contra Costa recorded the largest increase in 2005, with starts increasing by 26 percent and boosting the county from 11th to ninth place statewide. Kern County was close behind, with starts increasing by 23.6 percent and rising from sixth to fourth place statewide.

Among the top 10 counties for single-family production, the largest declines were recorded in Sacramento, down 23.3 percent, and San Diego, down 17.4 percent.

During December, single-family starts stabilized, falling just 1.2 percent from November but down 15.6 percent from December 2004. Multifamily starts - traditionally very volatile from month to month - declined by 30.8 percent compared with November and dropped by 57.9 percent from December 2004. Total starts for the month were down 11.2 percent from November and down 33.2 percent from December 2004.

CBIA Chief Economist Alan Nevin projects that in 2006, housing production will drop slightly, to between 185,000 and 205,000 homes, condominiums and apartments statewide. He expects single-family production to decline from 2005 levels but believes multifamily starts are likely to increase slightly this year.

Despite the strongest two-year production numbers in 15 years, however, home builders still did not build enough new homes and apartments to meet the state's unrelenting need for more housing, CBIA's top official said.

"Given California's constant population growth of between 500,000 and 600,000 people a year, the state needs about 240,000 new homes and apartments every year just to keep pace. Unfortunately, we haven't hit that level since the late 1980s, and unless major reforms are enacted at the state level to allow increased production, it does not appear that we will reach it anytime soon," said Layne Marceau, CBIA's chairman and a San Francisco Bay Area home builder.

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# posted by Scott Chappell and Brian Bean @ 9:15 AM

Friday, January 27, 2006

Riverside median home price climbs to $415,000

Here are the latest statistics on median home prices in California ...

Median price of a home in California at $548,430 in December, up 15.6 percent from year ago; Riverside up 23.9 percent

LOS ANGELES – The median price of an existing home in California in December increased 15.6 percent and sales decreased 17.6 percent compared with the same period a year ago, the California Association of Realtors® (CAR) reported this week. In the city of Riverside, the median price climbed 23.9 percent.

“Sales fell last month compared with December 2004’s record-setting pace, prompted by consumers’ concerns about rising interest rates,” said CAR President Vince Malta. “The last few months of 2005 marked the first time since mid-2004 that the fixed-rate mortgage was above 6 percent on a sustained basis and the adjustable-rate mortgage was above 5 percent for three months in a row.

“Consumers also were rattled by both the spike in energy costs and the hurricanes late last year,” he said. “Looking ahead, we expect those concerns to impact transactions completed in January as well.”

Closed escrow sales of existing, single-family detached homes in California totaled 531,910 in December at a seasonally adjusted annualized rate, according to information collected by CAR from more than 90 local Realtor® associations statewide. Statewide home resale activity decreased 17.6 percent from the 645,860 sales pace recorded in December 2004.

The statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during December 2005 was $548,430, a 15.6 percent increase over the $474,270 median for December 2004, CAR reported. The December 2005 median price remained nearly unchanged compared with November’s $548,680 median price. The median price reached $415,000 in the city of Riverside, up from 335,000 a year earlier. In the Riverside/San Bernardino region, the median price climbed to $394,790, up a 20.7 percent increase from the previous year's price of $327,210, and a 1.9 percent increase from November 2005.

“We are experiencing a return to a more balanced market, in line with our expectations, although unsold inventory is still near historical lows, with a 3.6-month supply of homes for sale,” said CAR Vice President and Chief Economist Leslie Appleton-Young. “Time on the market also is nearly unchanged at 44 days in December compared with 40 days for the same period last year.

“Housing affordability in the state remains at record lows, which also is impacting the robust sales trend we experienced throughout much of 2005,” she said.

Highlights of CAR’s resale housing figures for December 2005:


  • CAR’s Unsold Inventory Index for existing, single-family detached homes in December 2005 was 3.6 months, compared with 2 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
  • Thirty-year fixed mortgage interest rates averaged 6.27 percent during December 2005, compared with 5.75 percent in December 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.17 percent in December 2005 compared with 4.18 percent in December 2004.
  • The median number of days it took to sell a single-family home was 44 days in November 2005, compared with 40 days (revised) for the same period a year ago.

Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of Realtors® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by CAR and DataQuick Information Systems, 95.5 percent or 379 of 397 cities and communities showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information.

DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate local home-price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices may be exaggerated because of compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through CAR Online at http://www.car.org/index.php?id=MzU4OTg=.


  • Statewide, the 10 cities and communities with the highest median home prices in California during December 2005 were: Los Altos, $1,427,500; Calabasas, $1,295,000; Newport Beach, $1,080,000; San Clemente, $1,025,000; Rancho Palos Verdes, $1,020,000; Santa Barbara, $1,000,000; Los Gatos, $972,500; Danville, $960,000; Cupertino, $924,000; Mill Valley, $918,000.
  • Statewide, the 10 cities and communities with the greatest median home price increases in December 2005 compared with the same period a year ago were: Twentynine Palms, 81.8 percent; Taft, 79.9 percent; Yucaipa, 56.4 percent; Upland, 56.1 percent; Ridgecrest, 51.9 percent; Ceres, 48.2 percent; San Dimas, 46.9 percent; Atwater, 46.2 percent; Merced, 46.2 percent; Moorpark, 45.7 percent; Barstow, 45 percent.

The California Association of Realtors® (www.car.org) is one of the largest state trade organizations in the United States, with more than 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

For a breakdown by region of median home prices and sales activity, click here.

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# posted by Scott Chappell and Brian Bean @ 9:00 AM

Wednesday, January 25, 2006

Riverside home sales jump in December

Here are the latest statistics for local homes sales last month ...

Southland sales down as appreciation slows

DQNews.com

January 25, 2006

LA JOLLA -- While December home sales in Southern California fell to their lowest level in four years, the market in Riverside County continued its torrid pace, leaping higher than any other county in the Southland, according to a real estate information service.

A total of 6,305 homes sold in December in Riverside County, up from 5,412 the previous year. That was a 16.5 percent increase, led in part by record-breaking sales of newly built homes, according to DataQuick Information Systems. The total was also a 6.8 percent increase from November 2005, when 5904 homes were sold.


San Bernardino County -- at 4,580 sales -- was the only other SoCal county to show growth in homes sales in December, increasing 5.7 percent from December 2004's total of 4,334 and spiking 14.7 percent from the 3,992 homes sold in November 2005, DataQuick reported.

A total of 28,952 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 4.8 percent from 27,637 in November, and down 4.5 percent from 30,317 for December last year, according to DataQuick.

A decline from November to December is normal for the season. Last month's sales count was the lowest for any December since 24,913 homes were sold in December 2001.

"The frenzied part of this real estate cycle is behind us and what we're seeing so far is a normalizing of the market. Mid-market and entry-level homes are selling well; the move-up and prestige markets are leveling off. It'll be interesting to see how this plays out between now and spring, " said Marshall Prentice, DataQuick president.

The median price paid for a Southern California home was $479,000 last month, the same as November's record high. That was up 13 percent from $424,000 for December 2004. The year-over-year increase was the lowest since March 2002 when the $257,000 median was up 12.7 percent. Year-over-year price increases peaked in May 2004 at 26.9 percent.

In Riverside County, the median home price climbed 10.8 percent in December to $411,000, up from $371,000 in December 2004. Prices ballooned during the same period in San Bernardino County, reaching $361,000, a 28.5 percent increase from the previous year's median of $281,000, DataQuick reported.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,255 last month, up from $2,238 for the previous month, and up from $1,869 for December a year ago. Adjusted for inflation, current payments are about 2.6 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle.

Indicators of market distress are still largely absent. Foreclosure activity is edging up from its bottom, but is still low. Down payment sizes are stable, as are flipping rates and non-owner-occupied buying activity, DataQuick reported.


For a breakdown on the Southland median prices, click here.

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# posted by Scott Chappell and Brian Bean @ 9:54 AM

Monday, January 23, 2006

California real estate loan risk levels increase

Here's an article about banks' tightening up on mortgages ...

Consumer Web site reports risk
up 28.6% from first half of 2005

Inman News

Lending institutions in California have increased their scrutiny of home loan applications because of higher default risk, the result of a shift in sales patterns and of a real estate market nearing the end of its boom cycle, a consumer Web site reported.

Risk levels for new mortgages statewide increased 28.6 percent from the first half of 2005 to the second half of the year. Mortgage risk has increased most sharply in the Salinas and Santa Cruz-Watsonville areas, while trending down in rural areas north of Sacramento like Chico and Yuba City, according to San Juan Capistrano- based HomeSmartReports.com.

"The frenzy we saw in more coastal markets last year moved inland at the same time as interest rates were edging up. Some neighborhood sales patterns are showing signs of market stress, and buyers may be stretching their finances. Lenders are evaluating loan applications and appraisals much more carefully," said Mike Ela, HomeSmartReports.com president.

The financial institutions that originate and buy securitized mortgages now have access to much more accurate risk management and trend information than a few years ago. In a "when in doubt, don't" lending business, the result has been to open the doors of home ownership to many new categories of buyers who previously could not qualify for a home loan, the company said.

Consumer-oriented HomeSmartReports.com provides homeowners and potential homeowners with online access to sales trends and property value estimates. The Web site also provides consumers with more technical information, including risk data, that until now has only been available to real estate industry professionals.

"We want to level the playing field for consumers," said Ela, who has been in the real estate data field for 25 years.

Risk and trend information is generated as an index and incorporates changes in default and flipping activity, sales trends, value changes and neighborhood characteristics.

While on the rise statewide, mortgage risk is lowest in coastal Southern California and the Bay Area, according to HomeSmartReports. Risk is highest in rural Central Valley communities.

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# posted by Scott Chappell and Brian Bean @ 10:20 AM

Scott & Brian Deliver Satisfaction Guaranteed

Finally! Real Estate Agents Willing
To Put Their Money Where Their Mouth Is

100% Satisfaction or Our Commission Back

That's right, when you employ Scott Chappell & Brian Bean to sell your home, if, at the end of the transaction, you do not feel they earned their commission, they will gladly give it back. No hassles. Scott & Brian believe their real estate knowledge, outstanding marketing skills and total commitment to service will convince you they have indeed earned their commission.

The problem with selecting a real estate agent today is that you usually don't find out how good or bad an agent is until the transaction is over and you have already paid his or her fee. Scott & Brian take the risk out with their innovative Satisfaction Guaranteed program. Call Scott & Brian today and ask for a copy of their program and their personal brochure that introduces you to Scott & Brian and highlights what they can do for you. Call Scott & Brian today. It's guaranteed.


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# posted by Scott Chappell and Brian Bean @ 10:04 AM

Friday, January 20, 2006

SoCal new-home price gains expected to cool

Here's an article about new construction prices ...

Market report shows sales outpace inventory

Friday, January 20, 2006

Inman News

Demand for new homes in Southern California remains stable and average prices have been flat for the past year, according to a market report by Real Estate Economics, a real estate information company.

The fourth-quarter 2005 market report, which includes data from Ventura, Los Angeles, Orange, San Diego, Riverside and San Bernardino counties, shows that total inventory of new homes for sale is up about 15.9 percent, while monthly sales are up about 29.4 percent since fourth-quarter 2004.

The pace of new-home sales throughout Southern California was 9,226 sales per month in fourth-quarter 2005, with an average sales rate per new-home development of 7.3 sales per month.

While inventory has risen, the months' supply of inventory has dropped 10.4 percent from fourth-quarter 2004 to fourth-quarter 2005 based on the pace of sales and the construction of more new-home communities, Real Estate Economics reported.

The average of minimum lot sizes in new-home developments dropped 9.2 percent from fourth-quarter 2004 to fourth-quarter 2005, falling from 7,148 square feet to 6,490 square feet.

While average new-home prices have been roughly level during the past 12 months, the average price per square foot, at $266.77 in fourth-quarter 2005, increased by 5.5 percent in that time, the company reported. The average base price of new homes in Southern California was $634,836 in fourth-quarter 2004, and increased 0.4 percent in fourth-quarter 2005 to $637,629.

"This trend of only modest to moderate new-home price appreciation is likely to continue in most areas of Southern California. New-home price appreciation will continue at much lower levels during the next few years due to the impact of the already high level of new-home prices, slowly rising mortgage interest rates, increasing competitive supply and only moderate economic growth," the market report states.

"New-home demand remains intense, but prices have finally brought the new-home market into balance, resulting in much more normal market patterns during the next year."

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# posted by Scott Chappell and Brian Bean @ 10:49 AM

Thursday, January 19, 2006

Inland home prices draw closer to coast

This article is from the Riverside Press-Enterprise ...

Median sales figures rise to record highs while
pricier neighboring counties see a slowdown.


January 18, 2006

By Mark Kawar
The Press-Enterprise

Inland Southern California home prices are rising quickly, narrowing the gap with the higher-priced coastal counties, according to a report released Wednesday.

DataQuick Information Systems numbers show that while home sales across Southern California are slowing, Riverside and San Bernardino counties reported sales gains in December compared with a year ago.

The area's fast-growing housing market continues to lure buyers from coastal communities looking for larger homes, according to one economist.

The median home price in Riverside County reached $411,000 in December, while the San Bernardino County median price was $361,000, according to DataQuick. Both averages were records.

San Bernardino County's 28.5 percent price increase over the past year was the highest of the six counties in the study. Riverside home prices increased 10.8 percent.

San Bernardino County's median home price is about 58 percent of Orange County's. Riverside County homes cost 66 percent of what Orange County homes cost.

DataQuick analyst John Karevoll said that Orange County homes sold for more than double the price of homes in the Inland area just a few years ago. He predicted that home prices in Riverside and San Bernardino counties could climb to as much as 80 percent of those in Orange County.

"There will always be that gap" between the Inland and coastal counties, Karevoll said. "There's no way Riverside and San Bernardino (counties) will ever reach the coastal counties. But the gap is narrowing."

John Husing, an economic consultant who studies the Inland area, said that part of the reason that Inland home prices are approaching those of coastal counties is that new houses here tend to be larger even though they are on lower-priced land. And while housing prices are beginning to peak in coastal areas, he said, Inland prices will take longer to top out, just as they took more time to begin rising at the beginning of the housing boom.

"It's the way in which the cycle has typically played out in Southern California," he said. "Sooner or later, the market will reach a point where it's at an equilibrium."

Inland-area home sales also increased, while home sales fell in Los Angeles, Orange, San Diego and Ventura counties.

Last month, 6,305 homes were sold in Riverside County, 16.5 percent more than a year ago. In San Bernardino County, the increase was 5.7 percent, to 4,580 homes.

Of the six counties in the report, Ventura's median home price was the highest, at $630,000, followed by Orange County at $621,000.

The two Inland counties had the lowest prices in Southern California.

There hasn't been a decline in the average price of homes across Southern California since early 1996, according to DataQuick. But Karevoll said prices are beginning to top out. San Diego County home prices will not likely rise much longer, Karevoll said.

Inland prices will increase for at least another year, and probably longer, unless there is a significant economic change, such as a national economic slump, he said.

Karen Nelson, a real estate agent in Temecula and chairwoman of the board of the Southwest Riverside County Association of Realtors, said she has not seen a decrease in San Diegans moving to the Temecula area who want to buy larger houses.

"Folks that have grown up in San Diego can't get the kind of house they want down there, so they're coming up here," she said. "The coast will always be the coast, but Temecula wasn't even on the map a few years ago. Now it is in a big way."

She said that some residents of southwest Riverside County are coping with the hot real estate market by moving to Hemet or Anza to find larger properties.

Last week, the California Association of Realtors released its own housing figures for November, showing similar year-over-year rises in home prices statewide.

The association's housing affordability index showed that 18 percent of families in the cities of Riverside and San Bernardino and surrounding areas could afford to buy a home in November, down from 19 percent a year ago.

Karevoll identified the High Desert as the fastest-growing part of the Inland area, with the Route 210 corridor in Rancho Cucamonga and Rialto, and the Temecula area as also showing strong growth.

The Palm Springs/Low Desert affordability rate was 10 percent, down from 14 percent a year ago, and the High Desert figure was 24 percent, down from 40 percent.

Greg Berkemer, executive vice president of the California Desert Association of Realtors, said that home buyers in the desert, used to lower-priced housing, are finding they are being forced to move to buy homes. Every year, he said, the population center of the desert moves east, away from high-priced Palm Springs and Rancho Mirage.

"There was a time when people wouldn't move to Indio just because it had a bad reputation," he said. "There are million-dollar homes in Indio now."

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# posted by Scott Chappell and Brian Bean @ 8:55 AM

Wednesday, January 18, 2006

Internet real estate searches climb

Here's an article on the importance of the Internet for today's home buyer ...

Survey shows 3% growth in online searches since 2004

Tuesday, January 17, 2006

Inman News

The Internet is an increasingly popular tool for home searches, according to the latest annual survey of home buyers and sellers conducted by the National Association of Realtors trade group.

About 77 percent of home buyers reported that they used the Internet to search for a home - a 3 percent increase since 2004, according to the 2005 Profile of Home Buyers and Sellers. In 1995, about 2 percent of home buyers said they used the Internet to search for a home.

About 24 percent of buyers said they first learned about the home they purchased on the Internet, a sharp jump from 15 percent in 2004 and 2 percent in 1997.

In finding a real estate professional, 44 percent of buyers were referred by a friend, neighbor or relative, 11 percent used an agent from a previous transaction, 7 percent found an agent on the Internet, 7 percent met at an open house and 6 percent saw contact information on a "for sale" sign.

The report is based on 7,813 responses to a survey mailed to about 145,000 home buyers and sellers who purchased homes from August 2004 to July 2005.

While there are many ways to search for homes on the Internet, and most prospective home buyers are looking for homes on the Web, there remains controversy over Realtor policies governing the sharing and display of property listings information on the Web.

The federal government last year filed a lawsuit that challenges online property listings policies that were earlier approved by the National Association of Realtors trade group. The U.S. Department of Justice alleges in the lawsuit that the association's new listing policies, which were withdrawn pending the litigation, are overly restrictive.

And core issues of data ownership and control related to property listings information continue to ignite debate among agents, brokers, multiple listing service executives and real estate technology company officials.

The 2005 Profile of Home Buyers and Sellers report found that 90 percent of home buyers use a real estate agent in the home-search process, and 71 percent of buyers said yard signs were also an important source of information in home searches.

Although most buyers use an agent to complete the transaction, 36 percent first learn about the home they buy from a real estate agent and 15 percent from yard signs, while five other categories were 7 percent or less.
The survey shows 81 percent of buyers who use the Internet to search for a home purchase through a real estate agent, while 63 percent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction.


The typical buyer walked through nine properties, searched eight weeks to buy a home and moved 12 miles from his/her previous residence. The typical seller placed his/her home on the market for four weeks, had lived in it for six years, moved 15 miles to a new residence and previously owned three homes, including the one just sold.

NAR president Thomas M. Stevens, who is senior vice president of NRT Inc., said in a statement, "The real estate industry today bears little resemblance to the way we did business 10 years ago."

The association announced that FSBO sales accounted for 18 percent of transactions in 1997, and about 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005. Of those, about 39 percent of the transactions were "closely held" between parties who knew each other in advance, up from 32 percent in 2004, the association reported.

The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981 - the record was 20 percent in 1987.

The median home price for sellers who use an agent is 16 percent higher than a home sold directly by an owner - $230,000 vs. $198,200, according to the report.

Stevens stated, "The housing market today contrasts sharply with predictions a decade ago that the Internet would 'disintermediate' real estate agents, including speculation that NAR membership would fall in half. In reality, it's grown dramatically - selling real estate is not like selling a book or buying an airline ticket."

Realtor.com, used by 54 percent of buyers, was the most popular Internet resource, according to the survey, followed by MLS Web sites (50 percent), real estate company sites (38 percent), real estate agent Web sites (31 percent), and local newspaper sites (15 percent).

Married couples make up the largest share of the housing market, accounting for 61 percent of transactions. Single women purchase 21 percent of homes while single men account for 9 percent. Unmarried couples were 7 percent of the market, and 2 percent were listed as other, the Realtor group reported. In 2004, single women were 18 percent of buyers and single men were 8 percent.

The most important factor in choosing an agent was reputation, according to 41 percent of home buyers, followed by an agent's knowledge of the neighborhood (24 percent). In terms of desired qualities in an agent, about 90 percent of buyers rated three categories as very important: knowledge of the purchase process, responsiveness, and knowledge of the market. Of buyers who use an agent, 63 percent choose a buyer representative, the Realtor group reported. Satisfaction with real estate agents is very high, with 85 percent of buyers saying they were likely to use the agent again.

Among sellers, 43 percent chose agents based on a referral by a friend, neighbor or relative, and 28 percent used their agent previously. Fifty-seven percent of sellers said reputation was the most important factor in selecting an agent, followed by their knowledge of the neighborhood (17 percent), and 82 percent said they were likely to use the same agent again or recommend to others.

About 40 percent of respondents are first-time buyers, a finding that is consistent for more than a decade, the association noted. The median age of entry-level buyers is 32 and the household income was $57,200. Buyers made a down payment of 2 percent on a home costing $150,000, but 43 percent purchased with no money down, the report states.

Of first-time buyers who made a down payment, about 23 percent received a gift from a friend or relative.
The typical repeat buyer is 46 years old and had a household income of $83,200. They placed a down payment of 21 percent on a home costing $235,000, but 11 percent of repeat buyers paid cash for their home. In all, 94 percent of buyers and sellers believe their home purchase is a good financial investment, the survey found.


The most important factors in choosing a location to purchase a home are neighborhood quality, cited by 68 percent, close to a job or school (43 percent), close to family or friends (36 percent), and the quality of the school district (23 percent).

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# posted by Scott Chappell and Brian Bean @ 9:48 AM

Tuesday, January 17, 2006

Report: Housing price decline risk grows

Here's an article about the risk of lower home prices ...

Riverside among regions with biggest risk of price drops

Tuesday, January 17, 2006

Inman News

The risk of housing price declines in the 50 largest U.S. metropolitan areas is growing, appreciation is slowing and affordability has worsened, said a mortgage insurance group's study released Tuesday.

The study, released by the PMI Mortgage Insurance Co., said 11 metropolitan areas -- including the Riverside/San Bernardino region -- now face a 50 percent or greater risk of price declines, appreciation has slowed in many top markets and yet affordability is still a challenge for many families.

The Winter 2006 PMI Economic and Real Estate Trends report said 19 of the top 20 metropolitan areas saw price increases, but there are now 11 areas with a 50 percent or greater risk of price declines. This is up from five last quarter and three a year ago. The average across the 50 largest metro areas is 26 percent, up from 22 percent last quarter.

Appreciation is slowing, with 32 of the 50 largest metro areas seeing slowing appreciation compared with just seven in the previous quarter, the report said.

Affordability decreased in all of the 50 largest metropolitan areas, the report said. In two areas -- Riverside, Calif. and Fort Lauderdale, Fla. -- affordability dropped below the PMI benchmark affordability threshold of 70, and six more (San Diego, Santa Ana, Oakland, Sacramento, Los Angeles and Miami) are between 70 and 75, the report said.

In some good news, the report said a "soft landing" – a subject of much debate as overheated real estate price appreciation begins to slow – is likely. This is because of the continued strength of national and regional economies, according to the report.

The report also includes a map showing house price risk by state, a look at how dependent on the housing boom major metropolitan areas' economies are, and a comparison of an interest-only mortgage, payment-option adjustable-rate mortgage and fixed-rate mortgage under best- and worst-case interest-rate scenarios.

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# posted by Scott Chappell and Brian Bean @ 12:18 PM

Monday, January 16, 2006

More talk of housing slowdown

Another article that touts a positive slowdown in the real estate market ...

Real estate frenzy to calm this year, experts say

Monday, January 16, 2006

By Jessica Swesey
Inman News

NEW YORK -- The real estate scene may not be quite as hip and exciting to talk about this year, with economists and industry insiders agreeing that markets have hit a slowdown.


But don't count on negative news either; experts predict home sales will continue to boom and prices will continue to rise, though at a much calmer pace. In a nutshell, as long as the overall economy is sailing along, housing will continue to do just fine.

"When the dust settles in 2006, I think the overall growth will be less than in 2005, but will be less volatile," Jonathan Miller, president and CEO of Manhattan-based Miller Samuel, said during a panel discussion at Real Estate Connect in New York last week.

Miller's firm collects real estate data for the Manhattan market, which recently showed a 27.2 percent drop in sales in the fourth quarter 2005 and a 20.3 percent increase in average prices.
The first half of 2005 saw a significant run-up in prices, Miller noted, stimulated by a record low level of inventory at the end of 2004.


While many analysts and economists have used the term "normalizing" to describe the slowing of some markets, Miller said he hesitates to use that word. "I hate the word 'normal' because frankly I don't know what normal means anymore," he said, referring to the robust markets of recent years with double-digit gains in home-price growth.

The drop in sales volume at the end of 2005 was caused by negative economic news associated with the Gulf Coast hurricanes, a spike in oil prices, and the war in Iraq, Miller said.

But there was an uptick in Manhattan real estate activity in December, Miller said, caused in part by the start of Wall Street bonus season, which is closely linked with the Manhattan real estate market and accounting for a large portion of luxury sales each year. In Manhattan, "there's always a direct correlation between Wall Street and real estate," he said.

Miller expects growth in the first half of 2006 as well. "In the first half of the year, we're going to see an uptick in the number of transactions and an uptick in (price) appreciation, but not the double-digit growth we've become acclimated to," he said.

However, that all depends on how the overall economy performs, he said.

Amy Crews Cutts, deputy chief economist for mortgage buyer Freddie Mac, expects the housing market to slow nationally, changing things for industry professionals this year. "Folks with their licenses are going to have to earn their money; it's not just going to fall in their lap," she said.

Crews Cutts pointed to the job market as a barometer to watch. She cautioned that job loss historically has been the trigger in collapsing local housing markets, such as in California in the 1990s.

Two markets she's concerned about today include small towns in Ohio and Michigan where many people have lost jobs, triggering an increase in real estate foreclosures.

Crews Cutts also said she is worried about oversupply in a few hot condo markets such as Las Vegas and Miami. "I'm worried because where are you going to put these condos over next few years? There are million-dollar condo lofts on the (Las Vegas) strip and where are you going to find these buyers? Everyone is not out there trying to buy million-dollar condo second homes," she said.

Panelists last week agreed that the housing bubble analogy used by the media to characterize the incredible activity and price increases throughout the nation in the last few years is a misleading term. "Bubbles" imply busts, and while the experts predict a slower market, they don't anticipate a crash.

"I think there are adjustments -- we'll moderate," said Gary Kenline, senior vice president of Hunt Real Estate ERA. "We need to get that bubble concept out of the way."

Real estate activity was "nuts" in the first half of 2005, he said, which sparked the bubble conversations.

Hugh Kelly, associate professor at New York University and founder of Hugh Kelly Real Estate Economics, cautioned home buyers in looking ahead: "You should buy your house because it's a great place to live," he said, not as a speculative investing vehicle.

In dealing with a slowing market, lenders too should be careful not to take every deal that walks through the door, Kelly said. Lenders need to finance conservatively to protect from getting buried in risk.

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# posted by Scott Chappell and Brian Bean @ 9:29 AM

Sunday, January 15, 2006

Real estate gets less affordable
in California, Realtor group reports

Here's an article from the California Association of Realtors ...

Affordability rating falls 5 percent in November compared with year earlier

Friday, January 13, 2006

California Association of Realtors

The percentage of households in California able to afford a median-priced home stood at 14 percent in November, a drop from 19 percent reported in November 2004, according to a report released this week by the California Association of Realtors trade group. Homes remained more affordable in the Riverside/San Bernardino region, where the index stood at 18 percent.

CAR's monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. CAR also reports housing affordability indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being in the state.

The minimum household income needed to purchase a median-priced home at $548,400 in California in November was $133,390, based on an average effective mortgage interest rate of 6.26 percent and assuming a 20 percent down payment, the trade group reported.

At 24 percent, the High Desert region was the most affordable CAR region in the state, followed by the Sacramento region at 19 percent. The Northern Wine Country, San Luis Obispo and Santa Barbara regions were the least affordable in the state at 7 percent.

In the Riverside/San Bernardino region, the November affordability index stood at 18 percent, down 1 percent from a year ago and equal to the index from the previous month. The numbers were similar for just Riverside County -- 17 percent in November compared with 18 percent in November 2004 and October 2005.

Nationwide, the affordability index in November 2005 was 48 percent, down from 55 percent in November 2004.

Median home prices fell about 2.9 percent in Santa Barbara County area in November 2005 compared with November 2004, CAR reported, from $668,750 in November 2004 to $650,000, but prices increased in all of the other areas covered in the report.

The median home price in Riverside/San Bernardino, reported a few weeks ago, was $388,650 in November 2005, down slightly from the previous month, but up sharply from the $321,950 a year earlier.

CAR's December 2005 sales and median price report for the state and regions within the state will be released on Jan. 25.

The California Association of Realtors is one of the largest state trade organizations in the United States, with about 185,000 members.

For a complete statistical breakdown of all California regions, click here.

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# posted by Scott Chappell and Brian Bean @ 8:54 AM

Friday, January 13, 2006

Freddie Mac predicts 'soft landing'
for housing market

Another article predicting good news for the real estate market ...

Economic outlook basically positive

Friday, January 13, 2006

Inman News

Citing growth in the gross domestic product, low price inflation and low unemployment, mortgage giant Freddie Mac on Thursday predicted a soft landing for the U.S. housing market in 2006.

"Without question, America's joy ride in the housing market is coming to an end," Freddie Mac said in its January 2006 Economic Outlook statement. "However, … conditions are favorable for a soft landing, perhaps with a little turbulence on the approach."

The "turbulence" could be caused by a couple of factors, one of them being an inverted yield curve, the mortgage giant said. This is when short-term interest rates are lower than long-term rates, which became the case in the U.S. in December. Normally, long-term interest rates are higher than short-term rates because it's hard to predict what will happen far out in the future.

Higher short-term rates may lead to a bumpy descent for homeowners who used adjustable rate mortgages to buy their homes, Freddie Mac warned, because the interest rate savings on them are now smaller.

Despite these concerns, overall the government-sponsored enterprise was optimistic for the housing market in 2006.

Factors influencing the optimism included growth in the gross domestic product, which is the total value of goods and services produced by a nation. Third-quarter economic growth came in at 4.1 percent, Freddie Mac said, describing this as a "healthy number." Freddie Mac's chief economist expects "strong" economic growth for 2006.

Freddie also expects inflation to be low, at 2.5 percent, throughout 2006, another good sign. Also, the unemployment rate is expected to stay between 4.9 percent and 5 percent in 2006.

Mortgage rates, a critically important factor for the housing market, will average 6.4 percent during the year, according to Freddie Mac. This could be good news for the market.

"At 6 and 7 percent we still see upward movement or, at worst, sideways-moving price projections," Michael Sklarz, chief valuation officer for Fidelity National Financial, said in an Inman News interview in December 2005. Other experts have seconded this opinion.

Adjustable-rate mortgages will lose some of their appeal in 2006, Freddie Mac predicted, falling from the 31 percent share of applications in 2005 to around 27 percent.

Housing starts will fall as much as 9 percent, Freddie Mac warned, to 1.9 million units. Homes sales are predicted to slow to 7.1 million units, a 5 percent drop, but still the third best level ever.

Freddie Mac believes homes will continue to appreciate, with a growth rate around 7 percent.

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# posted by Scott Chappell and Brian Bean @ 10:10 AM

Thursday, January 12, 2006

Finding the right real estate
agent to sell your home

This article is from Bob Bruss, whose weekly real estate columns appear in newspapers across the country. ...

Why a family member may not be the best choice

Thursday, January 12, 2006

By Robert J. Bruss
Inman News

DEAR BOB: We made a bad mistake last September. My husband's niece just received her real estate sales license so we listed our home for sale with her. Fortunately, we followed your advice and listed for only 90 days. She was a complete dunce. It turned out she is selling real estate in addition to her part-time school teaching job.

When I talked to a full-time realty sales agent, she said our house never appeared on the weekly real estate broker tour (probably because our agent was busy at school). The listing expired with only a half-dozen showings by other agents. No offers. Our listing agent never showed our house once. She only held two weekend open houses because she was "too busy."

We are now ready to list our home for sale with a better agent. How do we find the right agent to sell our home? --Brent W.

DEAR BRENT: Now you know why I constantly recommend home sellers interview at least three successful local agents before listing their home with the best agent for 90 days. If you had done that, your niece probably wouldn't have obtained your listing.

Each full-time agent you interview should provide you with his/her personal brochure of qualifications for your listing consideration.

In addition, each agent should also submit a written CMA (comparative market analysis) of your home. The CMA will show recent sales prices of similar nearby homes, asking prices of comparable neighborhood homes (your competition), asking prices of recently expired competitive listings, and each agent's recommended asking and probable sales price for your home.

Without your asking, the best agents you interview should provide you with their marketing plan and recent seller references. Before listing with any agent, be sure to phone those sellers to ask "Were you in any way unhappy with your listing agent and you would sell you home again with the same agent?"

Of course, don't sign a listing for longer than 90 days unless the listing agent includes a written unconditional cancellation clause after the first 90 days.

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# posted by Scott Chappell and Brian Bean @ 6:37 PM

Sunday, January 08, 2006

Pending real estate sales
drop for third month

This story is from Inman News Service ...

'High plateau' expected for housing in 2006

Thursday, January 05, 2006

Inman News

Pending home sales slowed for the third straight month in November, demonstrating "that a market transition is firmly in place," the National Association of Realtors reported this week.

The Realtor trade group's Pending Home Sales Index, which is based on contracts signed in November, dropped 2.5 percent to a reading of 120.6 from 123.7 in October, and is 2.5 percent lower than November 2004. After climbing to 129.2 in August, the index has dropped every month since.

The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing, the association noted.

David Lereah, NAR's chief economist, said in a statement, "Although pending home sales are trending down from a record in August, the index remains well above a mark that is considered to be historically strong." An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.

"We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales," Lereah said. "Home sales have been peaking for the last five years and we will land on a high plateau in 2006 - a market that will be healthy for both buyers and sellers. Investment fundamentals for housing remain solid, preserving generally favorable affordability conditions while offering solid returns as well as a place to live."

Regionally, the index rose 3.4 percent in the Midwest in November to 116, which was 3.7 percent lower than in November 2004. In the South, the index declined 1.9 percent to 132.8 in November and was 1.8 percent above a year ago. The index in the West fell 5.1 percent to 127.7 in November, and was 4.6 percent lower than a year ago. The index in the Northeast was down 8.3 percent to a level of 93.3, and was 8.0 below November 2004, the association reported.

The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months, according to the association.

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# posted by Scott Chappell and Brian Bean @ 9:19 AM

Saturday, January 07, 2006

Playing the housing boom - Is it time
to sell your investment properties?

Here's another article that talks about a soft landing in real estate ...

By Andrea Coombes
MarketWatch

SAN FRANCISCO -- If you're one of the many Americans who snatched up homes as investment properties in the booming real estate market, now might be the time to sell, according to Jim Keene, co-author of "Retire on the House."

"I'd say sell some of those excess properties, particularly in some of these more volatile up-and-down markets," Keene said in an interview with MarketWatch.

Keene, a chartered financial analyst, is also a regional manager with Wells Fargo's private client services, in Walnut Creek, Calif.

Of course, any real-estate discussion requires a nod to locale: Where you're buying a home makes a difference. But it also matters which part of the market you're looking at, the upper bracket or the low side.

Higher-end homes are likelier to see prices easing while lower-priced homes in less-volatile areas may still enjoy some gains, Keene said.

"I take a look at the market in two segments. The pricing point for the segment depends on where you are in the country," Keene said.

"In the lower-price market, definitely you'll still see some [home-price] increases, 5%, 6%, 7%, 8%, maybe even 10%, 11% in places like Sacramento," he said.

"But in San Diego, Los Angeles, Boston [price gains] might be more like 2%, 3%," he said.

Meanwhile, "the higher-priced market, say above $1 million in a place like Washington, D.C., you'll start to see some drops in some prices."

The more volatile markets include both coasts, Keene said, from Florida to Boston, and San Francisco to Los Angeles and San Diego.

"If you're in those markets and you have multiple homes, sell some of the excess homes. You don't need the risk particularly and the outlook is not as good," he said.

"You have costs to carry the home, and so you're relying on appreciation for your return. That's going to moderate, at best, going forward, if not, in some specific situations, go down a little bit," he said.

Keene's outlook for the housing market mirrors the predictions of other industry experts: The double-digit home price gains enjoyed by homeowners and investors in recent years are likely to ease this year.

Fannie Mae, the mortgage agency, predicts home sales will drop 5% to 10%, while the National Association of Home Builders points to an average 6.5% home-price gain this year, down from a double-digit gain of about 11% in 2005.

Meanwhile, those who are interested in getting into real estate as an investment may want to reconsider, he said.
"If you're going to buy a single-family home as an investment property in which you have mortgage payments, property taxes, insurance and maintenance, in most places in the country your rental income will not overcome the costs," Keene said.


"You're relying on the appreciation and it's not necessarily a good time to invest. Take a look at some other types of investments to invest some of your excess equity," he said.

Plus, don't forget that selling a real estate investment is no free lunch: The cost of selling a home is significant, Keene said.

"I'm closing on a home in Oakland on Friday. Closing costs will be 7.5% to 8% of the actual purchase price for the seller ... that's significant," he said.

Buying investment property is not the same as purchasing a home in which you intend to live long-term. Keene's own impending purchase is driven largely by a desire to live in the home, he said.

"I happen to want a bigger home to live in [and] my dream home ... came up," he said. "I will live there long-term."

As well as staying there long-term, Keene noted that the home's sale price is right. "I don't feel like it's a very high-end home. It's a medium-price-plus-some for my area [and] it's in a part of the market that will still say reasonable in terms of increases over the next few years, so I didn't feel there was a huge downside risk" in buying now.

For those who won't need to sell in the next couple of years, buying investment property may still prove worthwhile, even now.

"If you're looking at a seven-year timeframe, then go buy away," Keene said.

Coombes is a reporter for MarketWatch in San Francisco.

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# posted by Scott Chappell and Brian Bean @ 12:09 PM

Friday, January 06, 2006

California real estate trend could reverse

This article addresses the future of real estate and its impact on the California economy

Slowdown in housing will 'dent'
state economy, economist says


Friday, January 06, 2006

Inman News

The slowing housing market in California won't stand in the way of the state's economic growth, according to an economist for Comerica bank, a subsidiary of Comerica Inc., a Detroit-based financial services company.

Dana Johnson, chief economist for Comerica Bank, said, "The coming home-price adjustments will be relatively orderly – denting, but not crushing the state economy," according to a Comerica announcement.

Johnson spoke Thursday as a featured panelist at the 2006 Economic Trends breakfast at the San Diego Marriott Mission Valley, presented by Comerica Bank and the San Diego Business Journal.

A former economist with the Federal Reserve Board, Johnson also said, "I expect California to grow at a healthy pace in 2006, closely shadowing the national growth rate of about 3 1/4 percent."

As California's economy – which generates more than 13 percent of the national output – has grown, it more closely has come to resemble the national economy's growth rate, with one exception: real estate, he noted.

Over the past five years, housing prices in California have increased at a 16 percent compound annual rate, but "the recent trend can't last," he said. "House-price gains in California are going to slow dramatically or reverse."

He said affordable credit and a scarcity of good building sites will temper the slowdown.

Johnson also will be a featured speaker at two more Comerica-sponsored economic forecast events this month: the "Los Angeles Business Journal 2006 Economic Forecast," on Jan. 18 in Los Angeles; and the "The Economics of Business in 2006," co-sponsored by Comerica Bank and the Stanford Institute for Economic Policy Research, on Jan. 19 in San Mateo.

The Western Market of Comerica Bank includes 60 branch offices in California markets, including San Francisco, San Jose, Los Angeles, Orange County, San Diego, Fresno, Sacramento and Santa Cruz /Monterey, as well as in Phoenix/Scottsdale, Ariz.

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# posted by Scott Chappell and Brian Bean @ 12:17 PM

Wednesday, January 04, 2006

Going … Going … Gone!

Here's a real estate market update for the Orangecrest neighborhood. We have sold the following Orangecrest homes during the past few months:

19517 Tangelo Drive: $399,000
20201 Edmund Road: $409,900
19517 Tangelo Drive: $429,900
802 Troon Court: $445,000
8705 Morninglight Circle: $450,000
19713 Adirondack Lane: $460,000
8584 Alexandria Street: $495,000
20755 Stony Brook Circle: $504,000
8459 New Windsor Street: $509,900
7642 St. Andrews Drive: $519,900

20781 Rosedale Drive: $526,900
8424 Attica Drive: $537,000
20891 Bakal Drive: $565,000
8902 Morning Hills Drive: $572,500
19845 Adirondack Lane: $580,000
8925 Oakridge Court: $600,000
8251 Lavender Lane: $625,000
8974 Oakridge Court: $630,000
7992 Wood Road: $670,000
8459 Sunshine Lane: $680,000


Your home could be next! To get a free market analysis, or for other local real estate information, call Scott Chappell & Brian Bean’s 24-hour hotline at (800) 941-1900, anytime. It’s a community service offered by one of Orangecrest’s leading real estate teams, and there’s absolutely no obligation.

Ask about Scott & Brian’s 100% Satisfaction Guarantee program.

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# posted by Scott Chappell and Brian Bean @ 9:56 AM


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