All you San Diego movers out there should check out the following article about California's Housing market from the LA Times:
Southern
California's housing market ended the year with sharp gains, rounding
out the first solid year of sustained improvement after nearly five
years of real estate malaise - and helping set up further improvement in
2013.
The region's median home price registered a sizable 19.6% pop in
December compared with the same month last year to hit $323,000, real
estate firm DataQuick reported Tuesday. A record level of cash buyers
flooded into the market and more move-up homes sold last month.
While Southland housing is on the mend, the steep increase in the
region's median price last month probably reflects a variety of factors,
such as the mix of what sold in December, and the run-up may not
continue at that brisk pace, experts said. The median is the point at
which half the homes in the region sold for more and half for less.
"There is no possible way that number can be sustained nor should
anybody look at that as a long-term trend," said Stuart Gabriel,
director of the Ziman Center for Real Estate at UCLA. "We haven't
shifted from bust back to bubble, and nobody should think we have, and
nor likely will we."
When compared with the prior month, the median was essentially flat,
up only 0.6%. San Bernardino and Riverside counties posted the strongest
year-over-year increases, up 20.0% and 19.1%, respectively, indicating
that the once hard-hit Inland Empire is now probably in recovery.
The median is heavily influenced by the types of homes selling, and
some of last month's pricier sales may have been driven by fears of
increased tax burdens on the wealthy, as Washington wrangled with the "fiscal cliff" negotiations.
A rise in prices will mean more homeowners who had been underwater —
owing more on their mortgages than their homes are worth, a condition
also known as negative equity — can now put their properties on the
market. That would help ease the region's inventory squeeze, which is
another major factor driving up prices.
Last year was the first year of solid improvement since housing
crashed in 2007. The strong performance last month indicates that 2013
will continue to bring home price gains, analysts said.
"Our forecast over the next 12 months is for equally strong
appreciation," Zillow.com chief economist Stan Humphries said. "Even
though we have got a lot of homes still in negative equity in Southern
California, the tight inventory is definitely creating some price
appreciation."
An estimated total of 20,274 new and previously owned homes and
condominiums sold throughout the six-county region in December. That was
a 5.1% increase from November and up 5.3% from December 2011. Last
month's tally was the highest for a December since 2009.
The 2012 housing rebound came after foreclosures declined, housing
inventory plummeted, mortgage interest rates hit record lows and demand
from investors surged last year.
In addition, the overhang of the last housing bust resulted in some unexpected benefits.
For instance, the high number of underwater borrowers actually served
as a boost to the market rather than being a drag, as people kept their
homes off the market, decreasing inventory.
"The lock-out phenomenon, combined with the rise in investors
converting foreclosures into rentals, led to a lack of for-sale
inventory," CoreLogic economist Sam Khater wrote in a research note.
"With home prices rising in 2012 and 2013, tight for-sale inventory will
begin to ease."
Nationally, CoreLogic reported that home prices were on a sharp
upward trajectory in November, with almost all states posting gains that
month. The firm's home price index report, also released Tuesday,
showed that home prices nationwide increased 7.4% year-over-year.
"Consistent price increases throughout 2012 have started the process
of lifting households out of negative equity, which will support home
sales and refinancing volumes," Paul Diggle, an economist for Capital
Economics, wrote in an emailed analysis. "Lower levels of negative
equity is good news for housing market activity and sets up a virtuous
circle of rising activity leading to rising prices and pushing negative
equity down further."
In California, buyers can anticipate a tight market in the near term.
A supply of only about 2 1/2 months' worth of single-family homes for
sale was available statewide at the end of December, the California
Assn. of Realtors reported Tuesday. A supply of six or seven months is
considered healthy by most economists.
Supply from distressed sales, particularly from foreclosed homes,
will remain limited as those homes are being quickly snapped up by
investors while the number of troubled borrowers entering foreclosure
continues to decline. The number of notices of default — the first step
in the formal foreclosure process — fell 14.5% in December from November
and dropped 39.8% from December 2011, according to foreclosure tracker
ForeclosureRadar.com.
The decline in foreclosures has been aided by an increase in short
sales, as The Times recently reported, as well as other loan aid for
borrowers. The drop in foreclosures should continue to help lift prices.
"For 2013, we largely expect more of the same," Sean O'Toole, chief
executive of ForeclosureRadar, wrote in a blog post this week. "Demand
will remain strong thanks to Federal Reserve-manipulated
low interest rates and affordability. Housing supply will remain
constrained, largely due to government foreclosure intervention. As a
result, prices will rise, though likely at a slower pace."
The increase in the median home price in Southern California reflects
market dynamics as fewer sales are logged in cheaper neighborhoods and
pricier places take off.
Throughout Southern California, sales of mid-to-higher-cost markets
rose in December, DataQuick reported. Sales of homes between $300,000
and $800,000, the typical move-up range, jumped 31.4% year-over-year.
Sales of homes above $500,000 soared 40.0% year-over-year, while sales
of homes of more than $800,000 were up 36.3%.
Meanwhile, cheaper neighborhoods posted weak sales. Most notably, the
number of homes throughout the region that sold below $200,000 dropped
28.1% while those below $300,000 fell 18.2%.
Sales of foreclosed homes made up just 14.8% of the market last
month, down from 15.4% the month before and 32.4% in December 2011. That
compares with a high of 56.7% of the market in February 2009.
Cash buyers and investors are playing a big part in snapping up home
inventory. Cash buyers bought up 33.8% of all resale homes last month,
while absentee buyers purchased 29.1% of Southland homes in December,
DataQuick said.
