Property Radar’s June report shows home price gains in California

California single-family home and condominium sales gained 0.6 percent in June 2014 but were down 12.6 percent from June 2013. Year-to-date sales for the first six months of the year are the lowest since 2008. For the month, non-distressed property sales increased 2.8 percent while sales of distressed properties fell 9.1 percent.

“June marks the sixth consecutive month that sales have been lower on a year-over-year basis,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The lack of distressed property inventory and rapid increase in median prices has definitely taken a toll on demand.”

The June 2014 median price of a California home reached its highest level since December 2007, up 5,000 dollars, or 1.3 percent, to 390,000 dollars from 385,000 dollars in May. On a year-ago basis, median home prices gained 10.0 percent. Driving the month-over-month price increase in June was the 2.8 percent increase in the sales volume of higher priced non-distressed properties, which accounted for nearly 83 percent of total sales. The median price of non-distressed homes was up only 0.8 percent over last year. The deceleration in price increases is even more apparent at the county level. In March, double-digit price increases occurred in 16 of the 26 largest California counties but by June that number had fallen to eight.

“The nearly uninterrupted double-digit monthly increases in median home prices from August 2012 through March 2014 has slowed considerably,” said Schnapp. “That’s good news for buyers who were finding themselves rapidly priced out of the market.”

In other California housing news:

  • Cash sales remained elevated in June, accounting for 22.2 percent of total sales. Despite the historically high levels of cash sales, cash sales have been steadily declining, falling 31.6 percent, since reaching an interim peak in May 2013.
  • Flip sales fell 6.6 percent for the month and were down 30.0 percent for the year and are down 40.4 percent from the October 2012 peak.
  • Negative equity remains elevated in California and continues to impart negative headwinds to the real estate market. In June, nearly 1.1 million California homeowners, or 12.9 percent remain underwater.
  • Institutional Investor LLC and LP purchases fell 8.7 percent for the month and are down 31.8 percent from June 2013. Institutional investor demand continues to wane in the face of higher prices and lower return on investments. Institutional Purchases have posted consistent monthly declines and are down 48.0 percent from their December 2012 peak.
  • Foreclosure starts, or Notices of Default (NODs), fell 2.0 percent between May and June, extending a longer-term downward trend. Foreclosure sales fell 5.2 percent for the month and are down 12.6 percent for the year. The June decline decelerated compared to May.

“Affordability and tight credit have slowed or stopped price increases despite lack of inventory,” said Schnapp. “Going forward, we expect low sales volumes and flat prices until increased supply or looser credit forces prices lower.”

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Zombie Homes make up almost 21% of foreclosures today

We see several examples of homes in Nevada County where the owner has moved out before the foreclosure process has started. Theses are called “Zombie” homes because they appear foreclosed but they are still owned by the owner of record. Zombie foreclosures are still haunting the housing market, representing one in every five foreclosures nationally, according to RealtyTrac, a housing data firm. “Zombie foreclosure” is a term coined to describe properties where the foreclosure process has been started and the home owner vacates, but the foreclosure has never been completed. As such, the distressed home owners who vacate eventually find they still own the home, and are often unaware they are still responsible for it.

The vacated properties can become eyesores in neighborhoods and drive down nearby property values. They also take a big chunk out of local government revenue in the form of unpaid property taxes. RealtyTrac estimates that more than $400 million in property tax revenue is likely delinquent due to zombie foreclosures. Still, the zombie foreclosure rate has shown some improvement, falling 7 percent compared to the first quarter of this year and dropping 16 percent from year-ago levels.

Florida has the highest number of zombie foreclosures, accounting for more than one-third of all zombie foreclosures nationwide. New York, New Jersey, Illinois, and Ohio also have some of the highest numbers of zombie foreclosures across the country.

“Most of these states have seen an increase in new foreclosure activity over the past year, creating a more fertile breeding ground for zombie foreclosures,” says Daren Blomquist, vice president at RealtyTrac.

Some states, such as Florida and Illinois, are looking to combat zombie foreclosures by weighing legislation that could help “fast track” foreclosures and move the abandoned properties through the system more quickly, RealtyTrac reports. New York is also considering legislation that would make lenders responsible for the upkeep of zombie foreclosures. Some local governments—such as in Cleveland and Detroit—also are creating land banks that would include zombie foreclosures, allowing city officials to rehab properties or demolish them.

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Realty Trac reports 6% increase in median home prices month over month

In the May 2014 Residential & Foreclosure Sales Report, RealtyTrac reported that U.S. properties sold at an estimated annual pace of 5.1 million in May. The pace of sold homes remained virtually unchanged from April, with a small increase of less than 1 percent from May 2013.

Including distressed and non-distressed properties, median home prices increased month-over-month by 6 percent to $180,000 in May, up 13 percent from the previous year. May’s increase was the second consecutive month with a double-digit annual increase in U.S. home prices, as well as the biggest annual increase since home prices bottomed out in March 2012.

Distressed sales, which the company defines as properties in foreclosure or bank-owned, posted a median price of $120,000, 37 percent below the median price of non-distressed properties. Distressed sales coupled with short sales accounted for 14.3 percent of all U.S. residential sales in May—down from 15.6 percent of sales in April and down from 15.9 percent of all sales in May 2013.

“Distressed sales continue to represent a smaller share of the overall sales pie nationwide, helping to boost median home prices higher given that distressed sales tend to be in lower price ranges,” said Daren Blomquist, VP at RealtyTrac. “When broken down by average price range, U.S. sales are clearly shifting away from the lower end.”

He continued, “Properties selling below $200,000 represented 50 percent of all sales in May, but that was down from a 55 percent share a year ago. Meanwhile, the share of homes selling above $200,000 increased from a 45 percent a year ago to a 50 percent in May 2014.”

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75% of Millennials plan to buy a home in the next 5 years.

Millennials plan to make more of a move in the housing market, particularly within the next five years. Thirty-two percent of 18-34 year olds say they plan to buy a home in the next 12 months. What’s more, three quarters of Millennials plan to buy a home in the next five years, according to a survey of 2,500 adults released by BMO Harris Bank that compared the timelines for likely home purchases among age groups.

For comparison, 62 percent of the 35 to 44 age group says they plan to move within the next five years; 35 percent of 45 to 54 age group; 31 percent of ages 55 to 64; and 19 percent of those older than 65.

“We’re seeing a fair amount of confidence in the housing market, which is encouraging news,” says Kevin Christopher, head of mortgage sales at BMO Harris Bank. “For many in the under 35 age range, this may be their first home.”

But home ownership is still out of reach for some. About one-third of renters surveyed say they would like to buy a home but they’re unable to afford it. High student loan debt continues to be a big obstacle for Millennials in qualifying for a mortgage to purchase a home.

“While the housing market is on the upswing, the record level of student debt carried by young Americans does pose a challenge to many in their 20s and 30s hoping to purchase their first home,” says Michael Gregory, head of U.S. Economics at BMO Capital Markets. “Student debt levels have more than doubled in the last seven years to $1.1 trillion. The financial burden means renters are delaying entering the purchasing market, which has a trickle-down effect on the overall housing recovery.”

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Paint your Wagon…or your house, apt, condo or cave – TIPS FROM THE PROS

Every home suffers a few negatives, but not every solution requires pricey structural changes. Paint is an often-overlooked, low-cost remodeler’s remedy for common complaints with interiors, offering the chameleon-like ability to lighten, warm, enlarge, erase, or attract attention.

“Paint is a powerful tool that can enhance the architectural character and intent of space,” says Minneapolis architect Petra Schwartze of TEA2 Architects. “As you choose your paint, think about what the experience in the room should be.”

More Schwartze advice:

  • Always sample paint colors on a few walls. Don’t be shy about painting a few large swaths on walls and trim to consider the effect of natural and artificial lighting. Add samples to opposite sides of a room to judge the paint color from different angles.
  • Check the space with the samples in place and watch how the paint color changes at different times of the day.
  • Evaluate your reaction to the proposed colors: Does the space feel cozy or is the openness enhanced?

How to enlarge space with color

Painting walls white, cream, pastels, or cool colors (tinged with blue or green) creates the illusion of more space by reflecting light. Paint trim similar to walls (or use white on trim) to ensure a seamless appearance that visually expands space.

White or light colors lift a ceiling; darker shades can have a similar effect if you select a high-gloss paint sheen, which reflects light and enhances space.

Employ a monochromatic scheme to amplify the dimensions of a room. Select furnishings in one color and paint walls and trim to match. Lack of contrast makes a room seem more spacious.

Make walls appear taller by extending wall color onto the ceiling. Create a 6- to 12-inch-wide border of wall color on the entire ceiling perimeter, or wherever walls meet the ceiling.

Vertical and horizontal stripes of alternating color can make a room grand. While vertical stripes enhance room height by drawing the eye upward, horizontal stripes lure your gaze around the perimeter, making walls seem further away. Use similar light colors for low-contrast stripes, and your room will look even larger.

Creating intimacy

When a space feels cavernous, draw walls inward and make it cozy with warm colors (red-tinged) because darker hues absorb light. Similarly, a dark or warm color overhead (in a flat finish) helps make rooms with high or vaulted ceilings less voluminous.

Give peace a chance

The right paint choice can lend tranquility to a bathroom, master suite, or other quiet, personal space. A palette of soft, understated color or muted tones help you instill a calming atmosphere. Some good choices include pale lavenders, light grays or greens, and wispy blues.

Define your assets

Call out notable features in a room with paint. Dress crown mouldings and other trims in white to make them pop against walls with color. Make a fireplace or other feature a focal point by painting it a color that contrasts with walls.

“Using a higher sheen of paint on woodwork, such as baseboards and door or window casings,” says Schwartze, “creates a crisp edge and clear transition from the wall to the trim.”

Hide flaws

Not everything should stand out in a space. Using a low-contrast palette is a good way to hide unappealing elements or flaws. Conduit, radiators, and other components painted the same color as the wall will seem to disappear.

Selecting low-sheen or flat paint colors also helps hide flaws. Unless walls are smooth, avoid using high-gloss paint because it reflects light and calls attention to an uneven surface

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Worried about coming up with a large down payment to purchase a house? Here is some important info you need to know…

You Don’t Need That Much of a Down Payment

Many consumers are overestimating  the down payment they need in order to purchase a home, according to Christina Boyle, vice president and head of single-family sales at Freddie Mac.

Consumers believe they need 11 percent to 15 percent in order for lenders to approve them for a loan, according to a survey of renters and non-home-owners conducted by Zelman & Associates in New York. Thirty-nine percent say they need at least 15 percent of the purchase price in order to qualify for financing. Only 28 percent of respondents say they would even qualify for a mortgage.

But in reality, home buyers often can qualify for a conforming, conventional mortgage with a down payment of as little as 5 percent — and sometimes even 3 percent — Boyle writes. Between 2009 and 2013, Freddie Mac’s purchases of mortgages with down payments of less than 10 percent more than quadrupled. So far in 2014, more than one in five borrowers who took out conforming, conventional mortgages put down 10 percent or less.

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines,” Boyle writes. “Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 percent or 10 percent.” However, Boyle notes that any borrower who puts down less than 20 percent will be required to buy mortgage insurance.

Boyle says that buyers should also be encouraged by the abundant down-payment assistance programs that exist to help break into home ownership. Every state in the U.S., as well as many cities and counties, offer down-payment assistance programs for qualified borrowers, such as the American Dream Downpayment Initiative and HOME Investment Partnerships Program.

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Confused about “Coming Soon” Listings?

WASHINGTON (June 16, 2014) – Here is the latest form NAR regarding “Coming Soon” listings. The National Association of Realtors® today published information for NAR members regarding advertising properties as “coming soon.”

Some “coming soon” advertisements involve unlisted properties which may or will be listed with a broker in the near future, while others relate to properties that are subject to listing agreements where property is available to potential purchasers only through the listing broker and not available, temporarily or indefinitely, for showing or purchase through other MLS participants. In either case, “coming soon” properties are commonly withheld from the MLS.

“The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client,” said National Association of Realtors® General Counsel Katie Johnson. “Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the Realtor® Code of Ethics.”

For most sellers, getting the highest possible price on the best terms is their best interest, and maximizing exposure of their property to potential buyers advances that interest. MLSs compile property information in an orderly manner and distribute that information to MLS participants who have buyer-clients actively seeking to purchase property in the location served by the MLS. Restricting the marketing of a seller’s property to only small networks, private clubs, or even to national websites without also making it available to other area brokers and agents and their buyer-clients through the MLS limits that property’s exposure and consequently the seller’s ability to attract competitive offers.

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Tips on protecting yourself when using free WiFi

Using the Starbucks WiFi or any public WiFi in your hotel room or other place? Be careful. There are hackers out there waiting for your personal information. Here are some tips from

 - Verify the network name. One common attack involves hackers who set up a public Wi-Fi hotspot of their own that resembles the name of the legitimate business’ offering. The hacker’s hotspot allows you to browse the Internet as normal, but all of your emails, site logins, and social media activity are routed through the hacker’s network. Make sure the network you use is the legitimate business one.

  • Check for “https” in the URL bar. If a site address begins with “https,” that is an indication that it has SSL encryption. You will also see a padlock icon in the address bar. When this is present, the data will be encrypted for everything you send and receive. Also, if you get a pop-up window that says “untrusted” security certificate while on public Wi-Fi, experts recommend not visiting the site.
  • Use a VPN. Consider signing up for a VPN – virtual private network – service, which will encrypt all your communications. cites several low-cost options for VPN services like Private Internet Access and TunnelBear, which can be used on both desktop computers and Android and iOS devices.
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Boomerang Buyers are in the market

Boomerang buyers are people who lost their homes during the Real Estate market downturn and have rebuilt their credit and have stable employment and are now re-entering the home buying market. Yes, there are challenges but these buyers are in a unique position to make their dreams come true.

Some boomerang buyers heading back to the housing market may find they have to make down payments of at least 20 percent to qualify for a loan, but others are finding opportunities to put down as little as 3.5 percent or 5 percent.

The wait times for qualifying for a loan can vary depending on the former home owners’ circumstances. Typically, the wait times following a short sale or foreclosure are as follows:
• Seven-year wait for home owners with a previous foreclosure before they can qualify for a new mortgage through mortgage giants Fannie Mae and Freddie Mac. If the foreclosure was  included in a bankruptcy, the borrower has to wait only four years.
• Two-year wait for home owners who underwent a short sale before they’re eligible for another Freddie Mac and Fannie Mae loan.
• Three-year wait for home owners seeking a Federal Housing Administration loan after a foreclosure or short sale. Some home owners who underwent a foreclosure because of at least a 20 percent cut in their pay may be able to qualify for a new mortgage after just a year through FHA’s Back to Work program.

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California Real Estate market snapshot by Property Radar

According to the latest research from Property Radar, the California Real Estate market is still showing the issues of a) slowing sales activity, b) lowering inventories, c) the effects of new lender guidelines and d) increasing regional differences within the state.

Market Activity

California single-family home and condominium sales fell 18.7 percent in January 2014 from December 2013, and were down 11.8 percent from a year ago. Taking a longer-term view, in the past 12 months (February 2013 through January 2014), sales are down 6.5 percent compared with the same 12-month period (February 2012 through January 2013) a year earlier.

To get a clearer picture of current real estate sales trends and to eliminate seasonal factors, we compare January 2014 property sales with January sales in prior years and divide sales into their distressed and non-distressed components. Non-distressed sales fell 18.9 percent in January 2014 from December 2013 but gained 18.2 percent year-over-year. Meanwhile, distressed property sales declined 17.8 percent for the month and were down 49.9 percent for the year.

Despite January’s sizeable falloff in distressed property sales, they still accounted for 25.0 percent of sales, which remains historically high. More importantly, distressed property sales as a percent of total sales remain much higher in counties away from the coastal areas. Of the state’s 26 largest counties, the eight with the highest percentage of distressed property sales — Fresno, Kern, Merced, Sacramento, San Bernardino, San Joaquin, Stanislaus and Tulare — are in non-coastal areas, where distressed property sales represented more than 30 percent of sales; Tulare County was highest at 39.2 percent.

The eight counties with the lowest percentage of distressed property sales — Alameda, Orange, San Diego, San Francisco, San Luis Obispo, Santa Clara, Sonoma, and Ventura — are in coastal areas, where distressed property sales represented less than 23 percent of sales; San Francisco and Orange county were lowest at 9.6 and 16.0 percent, respectively.

Median Prices

In January, the median sale price of a California home fell $17,500, or 4.8%, to $345,000 from $362,500 in December, the largest monthly decline since January 2013. That’s not surprising because seasonal factors often cause large declines in median sale prices in January. Median home prices rose rapidly in 2012 and the first half of 2013 before reaching a plateau in June 2013. From June through December 2013, median prices trended sideways, hovering around $360,000 as the market digested the sudden, 100-basis-point mortgage interest rate increase in May and June 2013. On a year-over-year basis, from January 2013 to January 2014, median prices increased 23.2 percent from $280,000 to $345,000.

Changes in the mix of distressed and non-distressed property sales from 2012 to 2013 continue to influence year-over-year changes in median prices. Distressed property sales decreased from 44.0 percent of total sales in January 2013 to 25.0 percent in January 2014. Meanwhile, non-distressed property sales increased from 56.0 percent to 75.0 percent of total sales. Over that time span, the median price of a distressed California home increased 15.1 percent year-over-year from $225,000 in January 2013 to $259,000 in January 2014. Meanwhile, the median price of a non-distressed home increased 12.1 percent year-over-year, from $339,000 to $380,000.

The following graph highlights median sales prices from January 2005 to January 2014. Aggregate single-family home median sales prices are shown in blue, and distressed and non-distressed median prices are shown in red and green, respectively.

Homeowner Equity

The steady rise in home prices since January 2012 has pushed thousands of previously underwater homeowners in California into positive-equity status so they can refinance or sell their homes. In January 2014, the number of homeowners with more than 10 percent equity in their homes increased 2.0 percent, or 100,000 homeowners; in the past five months that number has increased by 5.1 percent, or approximately 250,000. Since August, the number of moderately to severely underwater homeowners has fallen by 15.9 percent, or approximately 190,000.

Despite the improvement, large numbers of underwater homeowners remain a drag on the California real estate market. In January 2014, nearly 1.3 million (15 percent) of California’s 8.65 million homeowners were underwater while nearly 405,000 (4.7 percent) were barely above water (less than 10 percent equity in their homes). Since home-resale costs represent up to 10 percent of the sale price, these homeowners are effectively underwater. All told, 19.7 percent of homeowners (approximately 1.7 million) are underwater or barely above water — and effectively shut out of the California real estate market.

Several of California’s largest counties continue to struggle with much higher levels of negative equity. In Fresno, Kern, Merced, San Bernardino, San Joaquin, Solano, Stanislaus and Tulare counties, 30 to 36 percent of homeowners are moderately to severely underwater.

Cash Sales

In January 2014, cash sales fell 11.1 percent from December 2013 and are down 21.2 percent in the past 12 months. The decline is cash sales mirrors the decline in total sales due to seasonal factors that typically depress sales this time of year.  Despite the decline in sales volume, cash sales represented 26.1 percent of total sales, up 2.3 percentage points from 23.8 percent in December 2013.

Taking a longer-term view, cash sales as a percent of total sales oscillated between 28 percent and 31 percent from January 2012 through January 2013. They peaked at 33.0 percent in February 2013 and stayed below 25 percent from August through December. Despite recent declines, cash sales remain high from a historic perspective and are an important part of the real estate marketplace.


January 2014 flipping (reselling a property within six months) fell 19.8 percent in part due to seasonal factors that typically depress flipping this time of year. Flipping was down 15.3 percent from a year ago. Flips represented 5.2 percent of total sales in January 2014, up from 5.0 percent in December 2013.

Taking a longer-term view, in 2011, as housing prices trended sideways, flipping was basically flat, ranging from 2.5 percent of sales in January to 2.7 percent in December 2011. In 2012, flipping as a percent of sales began to increase, rising from 2.9 percent in January 2012 and peaking in February 2013 at 5.5 percent. Flipping retreated from February 2013 to June 2013, reaching an interim bottom of 4.1 percent of sales.

In January 2014, within the 26 largest California counties, flipping as a percent of sales was greatest in Contra Costa, Los Angeles, Orange, Sacramento, San Bernardino, San Diego, Santa Cruz and Stanislaus counties; Orange and Stanislaus counties were the highest at 8.2 and 7.6 percent of sales, respectively.

Institutional Investor (LLC and LP) Activity

We approximate institutional investor activity by looking at purchases and sales made by limited liability corporations (LLC) and limited partnerships (LP). From our research all activity by hedge funds, real estate investment trusts and other entities that are pooling large sums of money to invest in residential real estate are doing so in one of these two business structures. While institutional investors represent the bulk of activity, there are some other entities, like relocation companies, that also use these business structures to buy and sell residential real estate. Their activity is included here as well.

Market Purchase Activity

Market purchases by LLCs and LPs posted steady gains from 2008 through 2011, accelerating rapidly in 2012 and reaching a peak in December 2012. Since then, LLC and LP market purchases have been trending lower and are now 52.1 percent below their December 2012 peak. Despite the longer-term decline, January 2014 purchases represented 4.4 percent of total sales up from 4.0 percent in December 2013.

The steady decline in LLC and LP market purchases is being driven primarily by the increase in purchase prices. As prices rise, the potential return on investment (ROI) for holding properties as rentals decreases, making homes less attractive to buy and hold investors.

Trustee Sale Purchase Activity

Purchases by institutional investors (LLCs or LPs) at the trustee sales (foreclosure sales) gained 0.8 percent for the month but are down 73.6 percent from a year ago.

The steady decline in LLC and LP trustee sale purchases is being driven by two factors; 1) the reduced number of trustee sales and 2) the reduction in return on investment (ROI) due to higher prices.

Market Sales Activity

Market sales by LLCs and LPs represented 6.0 percent of total sales in January 2014, up from 5.6 percent in December 2013 and up from 4.8 percent of total sales in July 2013. Despite this increase, total sales by institutional investors has been declining and we see no evidence that the major buyers over the last four years have begun to significantly reduce their accumulated inventory.


California Notices of Default and Notices of Trustee sale gained 12.9 and 6.0 percent, respectively in January 2014 over the prior month. Notices of Default, the first step in the foreclosure process, are up 52.9 percent from a year ago while Notices of Trustee Sale are down 35.7 percent for the year. Foreclosure sales gained 1.9 percent for the month but fell 48.1 percent for the year.

January 2014, foreclosure inventories — Preforeclosure, Scheduled for Trustee Sale, and Bank Owned (REO) — were at or near pre-housing crisis levels. Bank Owned (REO) inventory was nearly unchanged for the month and has trended mostly sideways since August 2013. Meanwhile, Preforeclosure inventory declined 1.5 percent and Scheduled for Trustee Sale inventory fell 5.1 percent. In the past 12 months, Bank Owned (REO) inventory is down 27.2 percent, while Pre-foreclosure and Scheduled for Trustee Sale inventories fell 18.8 and 61.2 percent, respectively.

Madeline’s Take – Director of Economic Research, PropertyRadar

For the sixth-consecutive month, January 2014 California property sales declined year-over-year, suggesting that the May-June 2013 jump in mortgage interest rates isn’t the only factor slowing California real estate sales. I believe two more temporary factors will likely push sales lower through Q2 2014:

  • Lack of for-sale inventory — For-sale inventory has improved since last year but is still not plentiful enough to encourage people to sell. Real estate agents have mentioned that homeowners who want to sell will not put their homes on the market unless there is something for them to buy. The complaint I hear over and over is that it’s slim pickings out there, leaving would-be home sellers on the sidelines waiting for more supply. Builders are responding to pent-up demand by building new homes, but new supply will probably not hit the market until later this year.
  • Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) Rule will likely hamper sales in 2014 — I have been told the CFPB’s QM rule that went into effect in January is limiting the pipeline of available buyers. One agent grumbled to me that the average credit score of qualified buyers is well above 750, which effectively shuts out many would-be buyers. While it is too early to tell how much the QM rule will affect sales because the market needs more time to digest the new requirements, early reports point to lower sales in 2014.

Fortunately for the California real estate market, mortgage interest rates have edged lower since late last year due to emerging markets turmoil and a flight to the safety of the U.S. dollar and U.S. Treasuries. As demand for the 10-year Treasury note goes up, yields go down, which puts downward pressure on mortgage interest rates. Emerging markets turmoil is likely to be around for a while, giving the Federal Reserve cover to continue reducing its QE 3 bond purchases without too much risk of pushing up mortgage interest rates and punishing the housing market.

Sean’s Take – Founder/CEO, PropertyRadar

The recent slowing in market activity demands careful attention. The two prior major slow downs occurred in late 2005 and 2010. The decline in sales at the end of 2005 was our first clue that the housing bubble was about to burst. The decline at the end of 2010 was due to the ending of the first time homebuyer tax credit, which reduced demand. Today we sit in a very different situation from either of those events. In 2005 the market was clearly over-valued, with home prices far exceeding what homebuyers could afford to pay – at least without the help of a teaser-rate pay option ARM mortgage. Conversely in 2010, the market was clearly under-valued, with home affordability at bargain levels that had not been seen for years – which after a brief respite led to increases in both prices and activity. Today, I believe values are more reasonable and that we should expect neither the disaster the followed the 2005 activity decline, or the gains that followed the decline in late 2010.

Real Property Report Methodology

California real estate data presented by PropertyRadar, including analysis, charts and graphs, is based upon public county records and daily trustee sale (foreclosure auction) results. Items are reported as of the date the event occurred or was recorded with the California county. If a county has not reported complete data by the publication date, we may estimate the missing data, though only if the missing data is believed to be 10 percent or less of all reported data.

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