Sep 16 2012

HOUSING: ‘We’re in a seller’s market’ – September 16, 2012

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HOUSING: ‘We’re in a seller’s market’

By ERIC WOLFF ewolff@nctimes.com
Sellers have retaken control of the housing markets in North San Diego and Southwest Riverside counties, according to real estate participants and August housing data.

Capping a relatively strong summer for owners, prices of resale homes jumped in August in both suburban markets, while the number of sales reached a six-year high in North County.

“We’re in a seller’s market right now,” said Mark Goldman, a mortgage broker and an instructor at the Corky McMillin Center for Real Estate at San Diego State University. “It’s a wonderful thing. There’s a lack of inventory; interest rates are low; people are feeling good about their futures.”

It’s been a long time since local sellers have seen such market conditions, which were less apparent in other areas of San Diego and Riverside counties.

Since the market crash began in 2006, an excess of homes on the market kept house prices declining or lingering at low levels, while potential buyers stayed out of the market waiting for prices to bottom out. Those few buyers willing to venture forth were generally able to find discounts.

But those trends have reversed this year: Buyers, sensing that a market floor has formed and longing to grab deals while interest rates stay below 4 percent, are entering the market ready to buy.

Meanwhile, lenders have foreclosed upon or conducted short sales with many of their most distressed homeowners. Many of the remaining owners are hunkered down, waiting for prices to climb enough for them to sell without taking a loss, leaving a shrinking inventory of houses for sale.

For the first time in years, home prices rose on an annual basis in two of the last three months, and sales in North County reached a six-year high.

Buyers picked up 1,076 houses in August in North County, up 17 percent from July and up 39 percent from August 2011, according to the North San Diego County Association of Realtors.

The median price reached $450,000 in August, up 3.8 percent from July and up 5.3 percent from August 2011.

In Southwest Riverside County, buyers closed on 1,115 houses in August, up 1.9 percent from July, but down 6.5 percent from a year earlier, according to online brokerage Redfin. Prices rose in 11 of the 18 ZIP codes that had sales in August.

Throughout the region, prices are rising as homebuyers find themselves bidding on ever-fewer houses.

Inventory, defined as how long it would take homebuyers to acquire all the remaining listings in a region, sank to 2.8 months in North San Diego County and 1.3 months in Southwest Riverside County. An inventory under 3 months usually signals higher prices ahead, economists have said.

Banks have been clearing their backlogs of distressed properties, so fewer foreclosures are coming onto the market. Rates of default and foreclosure were precipitously lower in August than they had been in the previous six years, according to data from ForeclosureRadar.

Many of the remaining homeowners are current on their loans, but still owe more than their homes are worth, so they are reluctant to sell.

“They’re trapped,” Goldman said.

At the same time, real estate agents reported more buyers in the market, even in August, when the buying season typically winds down. With more buyers and fewer houses to sell, at least one real estate brokerage is taking a tougher stance with its listings.

“We are holding firmer on our asking prices,” said Tyson Lund, a Carlsbad Realtor with The Lund Team. “If the property hasn’t sold in 30 to 60 days, we typically aren’t doing reductions like we used to be.”

Indeed, The Lund Team is advising sellers to price their homes slightly above comparable houses.

“In this market, we are getting it —- we’re getting the higher pricing,” Lund said. “I see mis-pricing of properties, where I feel they could have gotten more.”

In Southwest Riverside County, low inventory is making it hard for real estate agents to get deals for their buyers.

“Far and few in between,” said Randy Roth, a Temecula real estate agent, referring to houses for sale. “You find one, you have to be ready to fight for ’em.”

Roth said houses in the lower part of the price range are seeing particularly fierce price wars.

But a strengthening wind behind higher prices should not be mistaken for a gale, agents said.

Roth said appraisers won’t approve prices too far above comparable home sales. Lenders rely on the appraisal in determining the size of mortgages. If the appraisal is lower than the sale price, either the seller has to come down, or the buyer has to find cash to make up the difference.

And Lund said that although his firm is advocating higher prices, the prices aren’t too high.

“It’s not like we can ask a wildly high amount” above recent comparable sales, he said. “Buyers aren’t having that. They’re not desperate. They’re wanting to buy in this market, but it’s not a fever.”

HOUSING: ‘We’re in a seller’s market’

By ERIC WOLFF ewolff@nctimes.com

 

Sellers have retaken control of the housing markets in North San Diego and Southwest Riverside counties, according to real estate participants and August housing data.

Capping a relatively strong summer for owners, prices of resale homes jumped in August in both suburban markets, while the number of sales reached a six-year high in North County.

“We’re in a seller’s market right now,” said Mark Goldman, a mortgage broker and an instructor at the Corky McMillin Center for Real Estate at San Diego State University. “It’s a wonderful thing. There’s a lack of inventory; interest rates are low; people are feeling good about their futures.”

It’s been a long time since local sellers have seen such market conditions, which were less apparent in other areas of San Diego and Riverside counties.

Since the market crash began in 2006, an excess of homes on the market kept house prices declining or lingering at low levels, while potential buyers stayed out of the market waiting for prices to bottom out. Those few buyers willing to venture forth were generally able to find discounts.

But those trends have reversed this year: Buyers, sensing that a market floor has formed and longing to grab deals while interest rates stay below 4 percent, are entering the market ready to buy.

Meanwhile, lenders have foreclosed upon or conducted short sales with many of their most distressed homeowners. Many of the remaining owners are hunkered down, waiting for prices to climb enough for them to sell without taking a loss, leaving a shrinking inventory of houses for sale.

For the first time in years, home prices rose on an annual basis in two of the last three months, and sales in North County reached a six-year high.

Buyers picked up 1,076 houses in August in North County, up 17 percent from July and up 39 percent from August 2011, according to the North San Diego County Association of Realtors.

The median price reached $450,000 in August, up 3.8 percent from July and up 5.3 percent from August 2011.

In Southwest Riverside County, buyers closed on 1,115 houses in August, up 1.9 percent from July, but down 6.5 percent from a year earlier, according to online brokerage Redfin. Prices rose in 11 of the 18 ZIP codes that had sales in August.

Throughout the region, prices are rising as homebuyers find themselves bidding on ever-fewer houses.

Inventory, defined as how long it would take homebuyers to acquire all the remaining listings in a region, sank to 2.8 months in North San Diego County and 1.3 months in Southwest Riverside County. An inventory under 3 months usually signals higher prices ahead, economists have said.

Banks have been clearing their backlogs of distressed properties, so fewer foreclosures are coming onto the market. Rates of default and foreclosure were precipitously lower in August than they had been in the previous six years, according to data from ForeclosureRadar.

Many of the remaining homeowners are current on their loans, but still owe more than their homes are worth, so they are reluctant to sell.

“They’re trapped,” Goldman said.

At the same time, real estate agents reported more buyers in the market, even in August, when the buying season typically winds down. With more buyers and fewer houses to sell, at least one real estate brokerage is taking a tougher stance with its listings.

“We are holding firmer on our asking prices,” said Tyson Lund, a Carlsbad Realtor with The Lund Team. “If the property hasn’t sold in 30 to 60 days, we typically aren’t doing reductions like we used to be.”

Indeed, The Lund Team is advising sellers to price their homes slightly above comparable houses.

“In this market, we are getting it —- we’re getting the higher pricing,” Lund said. “I see mis-pricing of properties, where I feel they could have gotten more.”

In Southwest Riverside County, low inventory is making it hard for real estate agents to get deals for their buyers.

“Far and few in between,” said Randy Roth, a Temecula real estate agent, referring to houses for sale. “You find one, you have to be ready to fight for ’em.”

Roth said houses in the lower part of the price range are seeing particularly fierce price wars.

But a strengthening wind behind higher prices should not be mistaken for a gale, agents said.

Roth said appraisers won’t approve prices too far above comparable home sales. Lenders rely on the appraisal in determining the size of mortgages. If the appraisal is lower than the sale price, either the seller has to come down, or the buyer has to find cash to make up the difference.

And Lund said that although his firm is advocating higher prices, the prices aren’t too high.

“It’s not like we can ask a wildly high amount” above recent comparable sales, he said. “Buyers aren’t having that. They’re not desperate. They’re wanting to buy in this market, but it’s not a fever.”