Home Prices Increase | Riverside Home Sales | Brian Bean and Tim Hardin | Riverside Short Sale Agents | California Home Prices

Low inventory, low interest rates boost Inland Empire home prices

Following the basic laws of economics, high demand and low inventory combined for a vibrant and lively real estate market that reached a six-year high in August.

A lack of available homes, historically low interest rates, and a crowded field of buyers led by hungry cash investors drove prices 10 percent to 12 percent higher in Riverside and San Bernardino counties, according to market tracker DataQuick.

“August was the strongest month for home sales so far this year, and the strongest for an August in six years,” John Walsh, DataQuick president, said in a release. “That’s really saying something given the drop in low-end sales, especially foreclosure resales. Much of the pickup in activity reflects a continuation of trends we’ve seen for months, like the unleashing of pent-up demand in move-up markets and high levels of cash and investor buying.”

Walsh said cash purchases accounted for nearly one-third of all sales. But with the summer real estate season drawing to a close, that ratio could change, assuming there is a drop in sales as the holidays approach.

In Riverside County, the number of sales in August hit 3,520, down 3.4 percent from August 2011, DataQuick reported. The median price in the county reached $210,000, up 10.5 percent from a year earlier.

San Bernardino County sales reached 2,705, up 3.2 percent from 2011, while the median price soared to $168,000 from $150,000 a year earlier, a 12 percent increase.

Across Southern California, the number of sales was up 14.2 percent year over year, and prices reached $309,000, a 10.8% increase from 2011 and a 1 percent hike from last month, according to DataQuick.

A lack of housing inventory is boosting prices in California and across the country, but the effects could be temporary. Online real estate brokerage Redfin reported last week that home prices were up 5 percent in 19 major metropolitan areas across the country, buoyed by low inventory, especially in California.

Seven California communities saw home inventory spiral from half to two-thirds from 2011. The Inland Empire inventory of available homes decreased 57.9 percent from August 2011.

“The main reason there aren’t more sale is that there aren’t more sellers, as most would-be sellers are holding out for more price gains in 2013 before listing their home, and many of today’s move-up buyers just plan to rent out their old place,” Redfin CEO Glenn Kelman said in a release.

Redfin predicted a 20 percent drop coming in September.

Real estate analytics firm CoreLogic reported last week that fewer U.S. homes are now underwater. Nearly 600,000 homes have risen to the surface, leaving just 10.8 million, or 22.3 percent, with no equity. Another 2.3 million homes have near-zero equity, CoreLogic said.

Nearly 85 percent of those underwater homeowners remains current on their mortgage payments.

TAX BREAK EXPIRING

The looming expirations of two income-tax exemptions could provoke distress homeowners to flood the market with new inventory by year’s end.

The federal Mortgage Forgiveness Debt Relief Act of 2007 and California’s Conformity Act of 2010 are set to expire at the end of this year. Both laws exempt some homeowners from paying income taxes on debt cancellation on a primary residence, as long as the money was used to buy, build or improve the residence.

When a home goes to foreclosure or short sale, the loss to the bank (or debt forgiveness) is considered income to the homeowner. The bank will report that income to the Internal Revenue Service on a 1099 form. And a taxpayer without the protection of these two laws could owe $15,000 to $35,000 in taxes on a $100,000 loss to the bank.

Because short sales, loan mods and foreclosure actions can stretch out for months, homeowners who wait too long risk finishing too late.

(Do you qualify for these tax exemptions? Call us today at 951-778-9700 to find out.)

As the expiration nears, homeowners are likely to flood the system, increasing inventory, straining bank negotiators and lengthening the approval process.

And that increase in inventory could put downward pressure on prices.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

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Home Prices Increase | Riverside Home Sales | Brian Bean & Tim Hardin | Riverside Short Sales | California Home Prices

Labels: California Home Sales, Home Prices, Riverside Short Sale Agents, Short Sales

# posted by Scott Chappell and Brian Bean @ 5:36 PM