Memorial Day 2009
Memorial Day May 25, 2009
O n this day, we reflect upon our finest Americans…those members of our Armed Forces who gave their lives for our country. Please join us in gratefully honoring these brave individuals who made the ultimate sacrifice to preserve our freedoms for generations to come.
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San Diego California homes
Three out of Four Homeowners Think It’s A Housing Market Bottom
According to Zillow’s Q1 Homeowner Confidence Survey, 74 percent of homeowners surveyed believe their home will not decline in value in the coming six months, Also, although 60 percent of homeowners believe their own home lost value during the past 12 months, in reality 80 percent of homes across the country lost value during the past 12 months.
Added future housing supply: A significant number of potential sellers are holding back due to the current market, according to the report. When asked about future plans to sell, 31 percent of home owners said they would be at least “somewhat likely” to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround.
“While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward with three out of four homeowners believing that their own homes’ prices will increase or be flat over the next six months,” said Dr. Stan Humphries, Zillow’s vice president of data and analytics. “Unfortunately, there are few markets we expect to perform this well.” San Diego downtown condos
California Housing … Is This A Bottom?
It’s estimated that 75% of mortgage applications are from refinanced loans. Realtytrac reports that banks have another 500,000 homes and are paying for servicing to keep them off the market, thus falsely inflating prices. Unemployment has risen from 8.5 to 11%, which also has an effect on housing delinquencies. Plus, Zillow estimates that nearly a quarter of the mortgages in the entire U.S. are underwater.
Another way to look at declining housing starts is the closer to zero new starts go, the sooner the unsold inventory will go, and then price stabilization should occur. At that point, we’re at restart.
A huge factor is the mortgage and commercial real estate loan sector of the economy which has just begun to heat up as it pertains to defaults. House mortgage defaults are not slated to peak until late 2010 – early 2011, with a corresponding drop in asset value. The commercial real estate sector crises is going to make the sub-prime defaults look like a cake walk! Lots more red ink is on the way.
I apologize but I’m not buying a housing recovery this year at all.
The other side of the coin is the fact that in March, in the hard hit Las Vegas real estate market, sales jumped from 1,954 to 3,626 units in a year. Real estate sales have also picked up in California cities like Sacramento and Stockton. This seems to be the first signs of a real estate housing bottom. Little Italy San Diego real estate
Home Construction Permits Hit Record Lows
The Commerce Department reported today that construction permits on new US homes fell 3.3 percent from March to an annual rate of 494,000. The pace was the lowest since the data began to be tracked in 1960. Housing starts plunged 12.8 percent from March, to an annual rate of 458,000 units, the lowest level since that data began to be tracked in 1959.
The good news for San Diego real estate is that this report also showed that the West was the only region showing strength with a 42.5 percent jump in housing starts. Plus, the National Association of Homebuilders reported Monday that its survey of builder confidence increased for the second straight month in May, reflecting growing optimism on the part of many builders. San Diego for sale by owner
Median Price for a Single-Family Home in Q1 was 13.8% Lower
The National Association of Realtors (NAR) reported that the median price for a single-family home in Q1 was 13.8% lower than in Q1 a year ago. But first-time buyers represented half of all purchases and many went for foreclosures and short sales. These “typically are selling for 20% less than traditional homes,” according to the NAR, and this skews median prices downward. On a hopeful note, 18 of the 152 metro areas in the survey reported PRICE INCREASES.
Equally hopeful was the fact that in many areas, the number of homes for sale continued to drop in April. Some analysts see this as a sign the housing market is nearing a bottom, especially since inventories have historically increased in April.
Finally, at last week’s NAR conference, the CEO of the International Council of Shopping Centers pointed out that demographics are in our favor. The high school graduating class in 2010 will be the biggest in our country’s history. As that huge cohort moves forward, it will generate lots of economic prosperity, beginning in the near future.
>> Review of Last Week
LET’S TAKE OUR GAINS… Well, we had a nice two-month rally in which the Dow headed north eight out of nine weeks, so it wasn’t surprising that a slew of investors finally sold off their holdings and took their gains. This of course drove prices down, so last week the stock market indexes went lower across the board.
It wasn’t just profit taking that sent stocks down. Wednesday, April Retail Sales came in at –0.4%, which investors didn’t much like. But if they had looked more closely, they would have seen the decline was mostly in two categories – gas stations and grocery stores, where experts don’t expect weakness to persist. Take out these sectors and retail was down just 0.1%.
For the rest of the week, the Consumer Price Index (CPI) came in flat, which shows inflation is in check, but the Core CPI number was up a little more than expected. Industrial Production was down for April, though better than expected. The NY Empire State Index, a good measure of manufacturing, shot up for the second month in a row, hitting its highest level since last August. University of Michigan Consumer Sentiment came in higher than anticipated. Finally, the President of the Dallas Federal Reserve averred that “the U.S. economy has pulled back from the edge of the abyss.”
Nonetheless, the Dow slipped 3.6% for the week, to 8268.64; the S&P 500 dropped 5.0%, to 882.88; and the NASDAQ slid 3.4%, to 1680.14.
Even though stocks were falling, things weren’t all that terrific in the bond market, though prices held on well enough. The FNMA 30-Year 4.0% bond, a mortgage backed security closely tied to mortgage rates, closed Friday at $100.12, down only 12bp. Mortgage interest rates were largely unchanged for the week, remaining at historically low levels.
>> This Week’s Forecast
HOUSING PLUS A FEW OTHER ITEMS… They’ll be taking the temperature of our favorite industry once again with April Housing Starts and Building Permits on Tuesday morning. Wednesday we’ll have the minutes from the Fed’s April 29 meeting. Thursday the Philadelphia Fed Index gives a pretty good read on manufacturing.
Corporate earnings reports for Q1 have slowed to a crawl, but Hewlett-Packard, Target, Deere and Home Depot will be interesting to watch.
This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego real estate
Real Estate Market Bottom or Wishful Thinking?
San Diego real estate market bottom? Seems all the media outlets are announcing the bottom, or “about to occur real estate market bottom.” Naturally, being a real estate broker, I hope the media ‘talking heads’ are correct, but I have reservations.
home mortgage interest rate resets
First, look at the cart above, showing the number of adjustable loans due to have their interest rate reset. Currently, with interest rates low,the actual reset may not be the real worrisome point. I think the adjustment process will be an awakening point to many San Diego homeowners that their mortgage balance is now actually greater than the current resale value of their home.
How many may just decide that instead of making mortgage payments that are not building any equity, and may be much higher than renting a similar home, that it would be best to walk away?
Another important question is how can the San Diego real estate market bottom while unemployment is still rising? San Diego real estate listings