Tuesday, June 22, 2010

Homebuyer tax credit going fast

THURSDAY, JUNE 17, 2010 AT 4:39 P.M

Looking to snag that California first-time homebuyer tax credit? Better get cracking.

As of Thursday, 15,220 applicants had applied for $78.1 million in credits — nearly 80 percent of the $100 million available — after just six weeks, the Franchise Tax Board said. Last year, a similar tax-credit program also filled up quickly.

Spokeswoman Brenda Voet said at the current rate of 3,000 applicants per week, the full $100 million might be exhausted by July 1.

But Voet said the agency will accept at least 28,000 applications to account for duplicates and ineligible requests. Once credits are approved, homeowners will be guaranteed the rebates, even if the $100 million ceiling is slightly exceeded.

“Some people have panicked and sent in an application more than once, wanting to ensure it is received,” she said. “other people may have not completed the form as accurately as they wanted to, so we’ve had quite a few duplications.

Last year, she said 11,710 applications were received and 10,633 rebates were issued, including 298 in San Diego County, also for $100 million.

To qualify, a buyer must close escrow between May 1 and Jan. 1 and cannot have owned a principal residence for at least three years. The credits are awarded on a first-come, first-served basis to those who have closed escrow. Under last year’s program, 298 San Diego buyers qualified for the credit, Voet said.

This year, a second $100 million program is available to both first-timers and move-up buyers who purchase a newly built home as a principal residence. Credits may be reserved when buyers sign a purchase contract and then redeemed upon close of escrow before Aug. 1, 2011. The tax board said 3,700 applications for $12.8 million have been received so far.

For both programs the maximum credit is $10,000 or 5 percent of the purchase price, whichever is less. The typical credit applicant has qualified for $5,700 in credits.

Roger Showley: (619) 293-1286; roger.showley@uniontrib.com

Thursday, June 17, 2010

State’s economy growing

Job growth still very slow, forecast shows

TUESDAY, JUNE 15, 2010 AT 12:05 A.M.

The California economy is headed for a two-track recovery, with San Diego and the coastal regions coming out of the recession far ahead of the rest of the state, according to a report released Monday by UCLA’s Anderson Forecast.

Overall, the state’s economy is already on the mend, the report said. The jobless rate — which averaged 12.6 percent during the first quarter — has most likely hit its peak and will decline steadily through at least early 2012, when it finally will drop below the 10 percent mark, the report said. Job growth — while anemic by historic standards — gradually will pick up steam until it finally reaches normalcy in mid-2011.

“We are now in that strange period when the California economy is growing but job growth is extremely slow,” wrote UCLA economist Jerry Nickelsburg.

“At this point, the California economy is sitting just above the trough and well below its previous peak. And there is a long climb ahead. The stalled California economy is simply not producing the jobs required for the new entrants to the labor force over the next couple of years.”

As in other recoveries, some regions in the state will pull out of the recession ahead of others, the report said. Much of the fastest growth will occur along the coast, thanks to four key industries: education, health care, exports and technology.

Nickelsburg noted that in Southern California, there was a noticeable pickup in job growth in a number of major employment sectors between the fourth quarter of 2009 and the first quarter of 2010, led by information technology, tourism, wholesale and retail trade, and health care and education.

In contrast, the Inland Empire and the Central Valley continued to suffer job losses in most of the major categories.

Nickelsburg predicted that over the next few years, inland California will continue to be dogged by declining real estate values — because it had much higher percentages of foreclosures than the coast — as well as expected cutbacks in state and local government.

Government represents a much higher percentage of employment in the Inland Empire and Central Valley, especially Sacramento, than along the coast.

According to the forecast, San Diego County has one of the lowest percentages of government employment in the state — exceeded only by Orange County and Silicon Valley — which will mute the effect of any cutbacks over the next couple of years.

Nickelsburg said the state probably will end 2010 with 1.1 percent fewer employees than the average for 2009. Once the economy gains steam in 2011, he said, employment will begin to grow faster than the labor force and the jobless rate will begin to fall.

Although inflation-adjusted personal income is forecast to grow 1.1 percent this year, he predicts it will grow 2.9 percent in 2011 and 4.1 percent in 2012.

This isn’t the first time the state has experienced a two-track recovery, Nickelsburg said. In the early 1990s, Southern California lagged the rest of the state in emerging from recession because of its ties to the aerospace industry, which was shuttering factories and laying off workers.

In the post-dot-com downturn that started in 2001, high-tech centers of San Francisco and Silicon Valley were the last to recover.

“This time it is inland California, shaking off the housing bubble, that is bringing up the rear,” Nickelsburg wrote.

Alan Gin, an economist at the University of San Diego, said he agrees with much of the forecast’s findings — but he worries that the coastal area, like the inland, might continue to feel the effects of the housing bubble for a bit longer.

“I still think we’ll see foreclosures along the coast, not because of subprime loans, but because of highunemployment levels,” Gin said.

Dean Calbreath: (619) 293-1891; dean.calbreath@uniontrib.com

SoCal home prices rise at fastest pace in 5 years

BY ROGER SHOWLEY, UNION-TRIBUNE STAFF WRITER

ORIGINALLY PUBLISHED JUNE 15, 2010 AT 10:11 A.M., UPDATED JUNE 15, 2010 AT 8:22 P.M.


Related story
Southern California median sale prices

All Homes#Sold
May-09
#Sold
May-10
% Chng$ Median
May-09
$ Median
May-10
% Chng
L.A.6,5217,32012.3%$300,000$345,00015.0%
Orange2,6673,25722.1%$410,000$450,0009.8%
Riverside 4,4144,164-5.7%$180,000$210,00016.7%
San Bern.3,1342,835-9.5%$137,000$160,00016.8%
San Diego3,2423,87919.6%$295,000$340,00015.3%
Ventura7978152.3%$355,000$380,0007.0%
SoCal20,77522,2707.2%$249,000$305,00022.5%
Source: MDADataQuick,DQNews.com

Home prices throughout Southern California rose by 22.5 percent in May, the highest year-over-year jump in five years, MDA DataQuick reported Tuesday.

But some housing economists say that pace will not hold up much longer. In fact, they think it could actually reverse course and result in lower prices by year’s end.

The reason? Prices have risen only because the housing market is returning to a normal mix of low-, medium- and high-cost sales. From now on, it will be the economy, not interest rates or government stimulus programs, that determines supply, demand and price levels. And the economy is not recovering fast enough to stimulate much demand.

The overall median for the six-county region was $305,000, compared with $285,000 in April and $249,000 in May 2009. It was the biggest year-over-year boost since the 23.6 percent jump in January 2005, when the market was on an upward tear. And it was the highest median price in almost two years. DataQuick reported Monday that May’s median price for San Diego County stood at $340,000, up 4.5 percent from April and up 15.3 percent from a year ago.

After an unusual drop from March to April — as buyers in the region delayed purchases to take advantage of the reinstated California home-buyer tax credit — sales picked up in May. The 22,270 regional transactions were 7.2 percent higher than in May 2009.

But with the federal tax credit ending this month and the state credit for first-time buyers virtually exhausted, the housing market is entering an uncertain phase at the peak of the buying season.

The National Association of Home Builders picked up on the same uncertainty in its latest survey of builder sentiment about the future. The HAHB/Wells Fargo Housing Market Index, issued Tuesday, dropped five points to 17, indicating a loss of confidence in new-home-buyer interest. The West fell four points to 15. An index value of 50 or more indicates that most builders view conditions as good.

“In the second half of the year, the market will have to stand on its own again, barring new forms of government involvement,” DataQuick President John Walsh said. “Prices will be tested if there’s any sudden move by lenders to release a flood of distressed properties.”

So far, that flood has not arrived. The proportion of sales involving foreclosures completed in the previous 12 months dropped in May to 33.9 percent regionwide, down from 36.4 percent in April and 49.8 percent in May 2009.

David Stiff , chief economist at Fiserv Inc., the company that generates the widely watched monthly Standard & Poor’s/Case-Shiller Home Price Index, said lenders have spoken of ramping up foreclosure sales sometime this year after trying to work out loan modifications for troubled borrowers.

“If we see banks trying to push through more bank-owned (foreclosure) properties, that will create additional demand,” Stiff said.

He added that there are 21,000 properties in San Diego County that are in various stages of foreclosure, compared with the current inventory of about 11,000 homes listed for sale.

Fiserv estimates that by the fourth quarter of the year, prices countywide will be off 8.3 percent from the same period last year. Based on DataQuick’s figures, that would mean San Diego County’s fourth-quarter 2010 prices would end the year at $298,025, compared with the May figure of $340,000.

Esmael Adibi, an economist at Chapman University in the city of Orange, was not as pessimistic. He predicts that Southern California prices will probably be 5 percent to 7 percent ahead of year-ago levels by December. That would mean a median of about $324,000, $16,000 less than in May. San Diego and Orange counties probably will be on the high side of any price rise, since their economies are in relatively better shape than the region as a whole, Adibi said.

The reason prices might backslide stems from the nature of the median, Adibi said. As the market mix changes and any appreciation or depreciation occurs, the median — the midpoint of all prices — changes as well.

The median rose rapidly this year in the face of fewer low-priced sales. But with the normal mix that set in late last year and continuing now, large year-over-year price boosts are unlikely, Adibi said.

“In all likelihood, the low end, below the median, is probably stabilizing,” he said. “For any home below the median for any region, probably the worst is over in terms of price decline.”

But for homes above the median, the inventory runs increasingly ahead of demand.

“The high end — I’m worried about it,” Adibi said.

The only exception might be highly desired pockets, such along the coast in La Jolla, he said.

For upper-end buyers, purchasing an expensive home is not so easy unless they have great amounts of cash. They first have to sell their present home. Then they have to find affordable financing — not so easy when it comes to jumbo loans above $417,000 and the tougher underwriting standards that banks require.

“The demand relative to supply is still too soft,” Adibi said. “Because of that, I think there would be further declines in the more expensive homes.”

The only way prices will rise broadly, he and Stiff said, is if the economy picks up, jobs improve andunemployment declines significantly — conditions many economists do not expect to see until next year or the year after.

“Job creation is very anemic,” Adibi said. “So demand is not there to sustain, especially, the high-end market for people to come in and buy.”

Stiff said more government tax credits are not the answer to righting the housing market.

“If the government were to contemplate ways to improve the housing market it would be better off trying to boost job growth than create tax credits for housing,” he said.

Tuesday, June 15, 2010

County home prices at highest since August 2008

Median price at $340,000, up 15.3 percent from a year ago

ORIGINALLY PUBLISHED JUNE 14, 2010 AT 11:30 A.M., UPDATED JUNE 15, 2010 AT 12:15 A.M.

This home on Capricorn Way in Mira Mesa is on the market for $375,000.

SEAN M. HAFFEY / UNION-TRIBUNE

This home on Capricorn Way in Mira Mesa is on the market for $375,000.

This home on Capricorn Way in Mira Mesa is on the market for $375,000.

San Diego County housing prices, May 2010

San Diego County home prices, which were falling at double-digit rates a year ago, are now rising rapidly as investors grab the last remaining bargains and upper-end buyers find deals to their liking.

MDA DataQuick reported Monday that the May median price stood at $340,000, up 4.5 percent from April and up 15.3 percent from a year ago. It was the eighth straight month of year-over-year increases.

“Across the board, it looks like almost everything is off the bottom,” said DataQuick analyst Andrew LePage. “A lot of places are up a little from a year ago.”

But LePage said it isn’t that individual homes are appreciating rapidly — it’s just that there’s a broader mix of homes being sold.

For example, he said, North County coastal neighborhoods, excluding low-priced Oceanside, accounted for 10.1 percent of the county’s single-family resales in May, up from 8.1 percent a year earlier and even above the decade average of 9.6 percent. The number of sales in that area rose 41.3 percent from May 2009, far higher than any other submarket in the county.

“The growing shares of sales and relatively large increase in the high-end coast over the last year helps explain your 15.3 percent increase in the median,” LePage said.

But on a cost-per-square-foot basis, LePage said, many other neighborhoods also are doing better than a year ago. He had a one-word explanation: quality.

While 29.5 percent of homes sold last month had gone through foreclosure in the previous year, LePage said, that was the lowest percentage since November 2007. And many of the foreclosed properties are in better shape than previous foreclosures and thus command a higher price from buyers, who increasingly are owner-occupants, not investors.

“Some lenders are beginning to invest a little to attract buyers — new flooring, countertops,” LePage said. “It’s not to say there aren’t a lot of dilapidated foreclosures, but they’re likely better.”

Mark Marquez, president of the San Diego Association of Realtors, echoed LePage’s observation.

“We’re at a different place than we were in 2008 and 2009,” he said. “We don’t have the bank-owned (foreclosure) inventory we had.”

He said short sales — homes sold for less than the outstanding mortgage balance — represent about 50 percent of the market and also are in relatively good condition.

“They’re going to market with the grass cut and fence painted,” he said. “I think you will see people taking care of their neighborhoods. “I don’t think you’re seeing the blight in the neighborhoods you once were.”

The overall median price has now risen $60,000, or 21.4 percent from the bottom reached in January last year. But it is still off 34.3 percent from the peak, $517,500 in November 2005. The current median is comparable to where it was when the market was falling two summers ago.

The median for single-family resales was up even more than the overall market, and condo prices were doing even better. The new-home market was down, but that reflects a shift to smaller, lower-priced designs that builders are rolling out to compete with the discounted distressed market.

Overall sales in May were up 17.8 percent from April to 3,879 transactions, but analysts attributed this unusual boost to the delay in escrow closings from April as buyers sought to take advantage of the state homebuyer tax credit, which began May 1. The March-April sales increase had been only 2 percent, much lower than usual.

New home sales skyrocketed 67.7 percent from April to 332 closings, but that was still the third worst May in DataQuick’s 23 years of record-keeping.

“It certainly is down,” said Joyce Mason, a spokeswoman for Pardee Homes. “But relative to last year or the last six months, we’re starting to see some positive movement.”

Marquez, from the realty group, said resale condos are holding up in price, but only in buildings in which the homeowners association is financially stable. For about a third of condo listings, the associations are facing bankruptcies or huge shortfalls after owners stopped paying their assessments. But Marquez said investors increasingly are buying such units, paying the dues and putting the projects on the road to solvency.

While the first five months of the year have seen a turnaround in San Diego’s housing picture, it is unclear if the trend will continue at the same pace.

Robert Brown, an economist at Cal State San Marcos, said it’s possible many sales took place only because of the state and federal tax credits. If demand slackens in the second half of the year, prices could level off or go back down. But with interest rates at near-record lows — around 4.7 percent for 30-year, fixed-rate loans — buyers stand to gain from buying now, even without the credits, than later, when rates might be up, he said.

“The bottom line, I think, is that low rates may be the biggest positive tacked on” to market conditions, Brown said.

Roger Showley: (619) 293-1286; roger.showley@uniontrib.com