Home prices hit 5-year high

San Diego County home prices have hit the highest level in five years, as distressed sales continue to fall and mortgage rates are still near record lows.

The median price of a home sold in April rose to $400,000, up 21 percent from the same time a year ago, reported San Diego-based real estate monitor DataQuick on Tuesday.

Last month's median price matched the median in April 2008, and the all-time peak was $517,500 in November 2005. Sales, which remain brisk, rose 7 percent from a year ago to 3,792. 

The county has seen double-digit annual increases for the past eight months, prompting some concerns of a lead-up to another housing bubble.

Michael Lea, a real estate economist at San Diego State University, believes those fears are overblown. Continued hikes in home prices are due largely to a shift from a distressed market, which brought consumers heavily discounted deals, to a more traditional market. Short sales -- deals that let borrowers sell their homes for less than what they owe -- are also declining.

Properties that were lost to foreclosure in the past year and resold in April made up 10 percent of total home resales, the lowest share in six years, DataQuick numbers show. They peaked at 55 percent in January 2009. The median price at that time was $280,000.

"The market has seen a significant decline in the number of lower-priced transactions, in part because foreclosures and short sales are petering out," Lea said.

As the supply of lower-priced homes dwindles, more San Diego homebuyers are moving up in price range. That also has caused the countywide median price to shoot up.

About a third of residential transactions sold for $500,000 or more in April, the highest share for any month in five years, according to DataQuick figures. A year ago, that share was 23 percent.

That significant jump is due to overall price appreciation during the past 12 months and "just more activity in the move-up market with the improving economy," said DataQuick analyst Andrew LePage.

"It's a big change in psychology ... in just a year," he added.

Lower-than-normal supply continues to play a role in countywide prices firming up.

The number of homes on the market has steadily risen in the past four months but remains about 31 percent lower than a year ago, based on numbers from the Greater San Diego Association of Realtors. Fewer homes on the market means increased competition among buyers, everyone from first-time buyers to investors. Stories of bidding wars continue to surface.

Low mortgage rates, which have made homeownership more affordable, keep driving housing demand, said Lea, the economist at SDSU's Corky McMillin Center for Real Estate.

Fixed rates rose for the first time in six weeks but remain near historic lows. The 30-year fixed is averaging 3.42 percent, while the 15-year fixed rate is averaging 2.61 percent, based on Freddie Mac numbers.

The Federal Reserve has continued to buy mortgage-backed securities to boost the overall economy. Fed Chairman Ben Bernanke said the stimulus plan should keep both long-term interest rates and mortgage rates down, allowing more people to buy homes and refinance their home loans.

Norm Miller, professor at University of San Diego's Burnham-Moores Center for Real Estate, said the plan has worked so far. But if it goes on for too many years and double-digit price hikes persist, those conditions could be unsustainable and a real estate bubble could form, he said.

For now, another bubble can be avoided if homebuyers continue to buy what they can afford and underwriting standards for mortgages continue to be strict, Miller said. A key difference between the housing climate now and during the lead-up to the real estate crash is that lenders aren't issuing subprime or second mortgages, which got a lot of homeowners into trouble.

"People buying homes today have more equity," Miller added. "That was the whole problem in 2006-2007, people were buying homes without much equity and refinancing. "The next cycle will likely be less severe than this one was."

Written by,
Lily Leung

Southland home prices surge in April as inventory tightens

Homes in Southern California sold at the fastest clip for April in seven years. The median price for the region reached its highest level since June 2008.

A frustrating housing market for Southland buyers swelled in April as prices surged and inventory tightened.

Homes sold at the fastest clip for that month in seven years, as regular buyers and investors snapped up more than 21,000 homes in the six-county region, real estate firm DataQuick reported Tuesday. That was a 4.1% increase from March and a 9.5% jump from a year earlier.

Demand for move-up and high-end homes surged as mortgage interest rates remained near historic lows. Investors remained a significant force, and for-sale inventory remained well below last year's levels, underscoring the competitiveness of the market.

"You are seeing strong demand against very limited supply, and that's putting upward pressure on prices," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research.

The median price for a Southland home last month reached $357,000, up 3.3% from the previous month and 23.1% from April 2012. It was the highest level for the region's median home price since June 2008, when it hit $360,000.

The median price is the point at which half of homes sold for less and half for more. The data represent completed sales, meaning the increases are representative of buyer demand in early April and previous months.

The market has heated up even more since then, real estate agents said.

"If anything, it seems like things have gotten more crazy," Lakewood real estate agent David Emerson said.

The median has increased year over year for 13 consecutive months, with double-digit gains in every month since August. The median nevertheless remains 29.3% off its peak of $505,000, from summer 2007.

"From an affordability perspective, this remains an excellent time to buy," said Stuart Gabriel, director of UCLA's Ziman Center for Real Estate. "The price movements in the middle to upper ranges is consistent with a market that is normalizing."

Median prices are rising in part because higher-end properties are selling faster than entry-level homes. But other price measures that seek to account for the mix of homes sold have also confirmed a fast-rising market. The Standard & Poor's/Case-Shiller index indicated that prices in the Los Angeles metro area, which includes Los Angeles and Orange counties, had risen 14.1% year over year in February.

The eye-popping price gains have unleashed a debate about how long they will last.

Syd Leibovitch, president of Rodeo Realty, predicts home prices will post significant increases into 2015.

"You haven't seen anything yet," Leibovitch said. "We are still just correcting."

Others predict price gains will slow as more inventory comes onto the market. Glenn Kelman, chief executive of online broker Redfin.com, said he's seeing more inquiries from potential sellers.

"People we are talking to about selling their homes are getting more interested in it," Kelman said. "We are starting to see bidding wars ease slightly. They were very intense a month ago, with usually more than 10 offers, and now it's more like three or four."

The number of listed homes increased slightly in April but remained low, according to Realtor.com. In Los Angeles County, listings were up 1% from the previous month but down 45% from the same period a year earlier. In Riverside and San Bernardino counties, inventory was down 1% from the prior month and 36% from the same month a year earlier.

Written by,
Alejandro Lazo, Los Angeles Times

Millennials Get House, Then Hitched

Mortgage: Step toward marriage. 

There's love and marriage and then there's love and a mortgage.

Millennial couples are more likely to buy a house together before they take their wedding vows than their parents and grandparents were, according to a new Coldwell Banker Real Estate survey.

Almost a quarter of married homeowners aged 18 to 34 bought a home together before they were married, compared with 14% of those aged 45 and older.

It's good news for the housing industry that has fretted about a steadily growing trend: Every year, men and women are waiting longer to get married. In 2012, the median age of men who married for the first time was 28.6, up from 26.1 in 1990. Women: 26.6, up from 23.9.

Since buying a home often follows nuptials, delaying marriage could delay homeownership.

"We didn't expect to find that couples committed to each other to buy homes before they were married," says Robi Ludwig, a psychotherapist who works for Coldwell on lifestyle surveys and buyer habits. "It's almost like buying a home is the new engagement ring."

Married homeowners said buying a house did more to strengthen their relationship than any other purchase they made together.

"Increasingly, Americans and especially Millennials see marriage as something that should be entered into only after you've taken several steps toward showing your maturity," says Stephanie Coontz, co-chair of the Council on Contemporary Families. "It's not something you jump into."

Two-thirds of couples getting married these days lived together before they walked the aisle. Buying a home together is a big proof of commitment.

"The purchase of a home is a monumental step in their relationship," Ludwig says.

The online survey of 2,116 adults March 8-12 found that couples who bought homes before marriage were all planning to tie the knot.

Their decision to buy a home first "was based on being financially savvy," Ludwig says. "Opportunities were coming up in the real estate market and with low mortgage rates, and they take advantage of these ideal conditions and didn't feel they had to wait till they got married."

That's why Lauren Farris, 28, and her boyfriend Mark Sieckman, 30, of Chicago are house hunting. They're not living together and not yet engaged. But they're committed to spending their lives together and determined to buy a condo they can move into when her lease runs out June 1.

"The timing is right," says Farris, a senior media buyer at A. Eicoff & Co. ad agency. "Things are moving so quickly that listings that come on today could be gone tomorrow."

Her parents are helping them make an all-cash offer and are no longer concerned that the two haven't set a date.

"We get along really well and want the same things out of life," Farris says. "We know we're going to be married one day. ... We really don't have any concerns. We need to take advantage of the situation and get a head start in life."

By delaying marriage, some couples can afford to buy big — as long as they have good jobs and clean credit, and interest rates are low.

Detroit-area engaged couple Bryan Carter, 28, and Lisa Valesano, 30, are building their starter home: a $300,000, four-bedroom house with granite countertops. Carter's parents "were definitely surprised that we were building a house at such a young age," he says.

Other findings in the survey:

Southerners are more likely to take the traditional route. Almost three-fourths of married Southerners got a marriage license first, a mortgage second, compared with 60% in the Northeast.

Only 16% of married Americans have not bought a house with their current spouse.

Written by, 

Haya El Nasser

USA Today

HOME PRICES SURGE

San Diego County home prices chalk up first double-digit yearly increase for any month in nearly three years.

San Diego County home prices rose 10 percent from a year ago, marking the first double-digit yearly increase for any month since June 2010, the S&P/Case-Shiller home price report said on Tuesday.

The monthly S&P/Case-Shiller analysis, which reviews 20 major U.S. metro areas, also shows a potential rebound in once hard-hit cities such as Las Vegas and Phoenix, which led the nation with an annual gain of 23 percent.

“Home prices continue to show solid increases across all 20 cities,” David M. Blitzer, chairman of S&P’s index committee said in the report. “Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy.”

Annual prices rose in February in all 20 cities for the second month in a row. And the index for all 20 cities was up 9 percent. That’s the highest year-over-year increase for any month in about seven years.

Locally, home prices are gaining steam as a growing number of buyers are bidding on a limited supply of homes at a time when mortgage rates are at near-record lows. But the gains have been gradual. The January Case-Shiller report showed an annual increase of 9.8 percent for San Diego and in December an increase of 9.2 percent.

The index covers about half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The February figures are the latest available.

But more recent housing reports show San Diego County’s market picking up, too. In March, the median price for all residential properties sold rose nearly 19 percent from a year ago to $380,000, according to DataQuick, which tracks real estate data monthly. Sales rose 16 percent from a year ago to 3,762, the best recording for a March since 2006, when about 4,300 properties were sold.

The price uptick in San Diego’s housing market could bring relief to homeowners who have been waiting to sell their home for a profit. As more of those property owners are freed from negative equity, more homes may hit the market to relieve the tight inventory level.

Until that happens, potential buyers have been grappling with a limited housing supply. There are about 4,200 listings, about 50 percent of what was for sale a year ago, based on numbers from the Greater San Diego Association of Realtors. Listings hit a peak of 13,123 in September 2010, according to the organization’s figures, which begin in 2009.

Fewer homes on the market mean increased competition between traditional buyers, and investment and vacation-home buyers, who have maintained a 31 percent share of the resale market, says real estate service DataQuick.

The competing sides have ignited bidding wars in some areas and pushed regular Joe and Jane buyers to resort to gimmicks, from submitting cover letters to going door-to-door to try to snag properties.

Nationally, 11 of the 20 cities in the Case-Shiller index reported price gains in February compared with January. Those monthly numbers are not seasonally adjusted and reflect the slower winter buying period.

Stan Humphries, chief economist at Zillow, a real estate data provider, cautioned that the national figures are being skewed by sharp rebounds in cities hit hard during the housing bust, including Las Vegas and Phoenix. Investors are helping drive up prices in those cities.

“This report needs to start being taken with a grain of salt,” Humphries said. “The appreciation rates we’re currently seeing ... are not broadly reflective of what’s happening in the national housing market right now.”

Although the latest Case-Shiller report could suggest that the housing market is rebounding, Gary Painter, a professor at USC’s Lusk Center for Real Estate, prefers the term stabilizing. Painter points out that prices, while improving, have yet to see drastic increases.

In San Diego, prices are still about 34 percent off from the peak set in November 2005. Nationally, they’re 30 percent below the peak.

“ ‘Hot markets’ are often a result of lack of inventory rather than positive market growth, which may explain the steady prices,” Painter said. “As fundamentals continue to improve, however, you will begin to see more markets gaining momentum.”

The Associated Press contributed to this report.

Written by,
Lily Leung