Thursday, March 5, 2015


Calif. median home price: January 2015:
     • California: $426,790

     • Calif. highest median home price by region/county January 2015: San Mateo, $1,012,500
     • Calif. lowest median home price by region/county January 2015: Del Norte, $152,260

Calif. Pending Home Sales Index: 

January 2015: Increased 26.7 percent from 70.9 in December to 89.8 in January.

Calif. Traditional Housing Affordability Index: 

Fourth Quarter 2014: 30 percent (Source: C.A.R.)

Mortgage rates: Week ending 2/26/2015 (Source: Freddie Mac)

     • 30-yr. fixed: 3.80% fees/points: 0.6%
     • 15-yr. fixed: 3.07% fees/points: 0.6%
     • 1-yr. adjustable: 2.99% Fees/points: 0.5%

*Info provided by the California Association of Realtors


Sunday, March 1, 2015


Home prices are beginning to grow at a faster pace again, which is not good for the spring market.

Sticker shock was behind weak sales in 2014, but as price gains began to ease, buyers came back. Now prices are heating up again due to severely weak supply.

There were nearly 9 percent fewer homes for sale in January of this year than there were a year ago, according to

"January's inventory data suggest a continuation of the tightening trend we identified last month in the December data, and with a shortage of inventory typically comes increased home prices," said Jonathan Smoke, chief economist at "Half of the 200 markets tracks experienced year-over-year price increases of at least 6 percent in January."

Higher prices, coupled with weak supply, caused an unexpectedly large drop in January home sales, down nearly 5 percent from January of 2014, according to the National Association of Realtors.

"This is a notable speed bump," said NAR's chief economist, Lawrence Yun, who deemed the phenomenon, "puzzling," given a stronger economy and rising rents.

There is strong demand, but it is hitting a roadblock in supply. Listings are down significantly in parts of California and in formerly strong markets like Las Vegas and Denver, according to Texas is also seeing a very tight market as well as Chicago and Boston.

According to running surveys by, potential buyers are saying they can't find a home that meets their needs and/or budget. Usually inventory drags are more localized, but today's market is behaving more nationally than in the past.

"Typically for a home seller in the past, they live in their home for seven years and then make a move," said Yun. "Now we're seeing home sellers are living in their home for 10 years."

Yun blames what he calls a "lock-in" effect—that homeowners today have such good mortgage rates that they don't want to lose that rate by moving. Others disagree.

"I think of the lock-in effect as mattering if rates are rising from low levels, so that the rate someone would get on their next home would be higher than the rate they've had on the home they're selling," said Jed Kolko, chief economist at Trulia. "However, rates didn't start their recent rise until February, and these inventory and sales data are for January."

More likely, people aren't selling because they can't afford a move up, or because they still owe more on their current mortgages than their homes are worth. Somewhere between 7 million and 10 million borrowers are underwater, and millions more don't have enough equity in their homes to afford to sell and move up.

As for first-time buyers, their share dropped in January to just 28 percent of homebuyers; this after a slight improvement in their activity last fall. Rents continue to rise, and ironically keep renters from seeking what is often more affordable homeownership.

"Widespread and rapid growth in rents, combined with stagnant wages, are keeping many would-be buyers stuck in rental housing, writing ever-larger checks to their landlords instead of saving for a down payment. Today's renters are tomorrow's buyers, and the longer these would-be buyers stay on the sidelines, the longer full recovery will take," said Stan Humphries, chief economist at Zillow.

Bethesda, Maryland, real estate agent Jane Fairweather expects to see a strong spring.

"Judging by my desk, we will be putting a boatload of homes on the market in March and April," she said, but admitted: "I think demand will be greater than supply again this year. Low inventory keeps prices propped up."

Now, as home prices begin rising ever more quickly, homeownership lurches further out of reach. New supply would certainly help, but even the builders are still operating at an anemic pace. Newly built homes come at a significant price premium to existing homes, and therefore sales have not been as robust for the builders.



Fewer multiple offers and more homes sold below asking price point to less competitive buyers’ market

LOS ANGELES (Feb. 25) – Pending home sales rose from December’s extreme lows and posted month-to-month and year-to-year increases in January, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 

Additionally, California REALTORS® responding to C.A.R.’s January Market Pulse Survey saw more price reductions and an increase in open house traffic, compared to a year ago.  The Market Pulse Survey is a new monthly online survey of more than 300 California REALTORS® to measure sentiment about their last closed transaction and business activity for the previous month and the last year.



New household formation in the United States has recovered from the widespread job losses that came with the recession, according to a new studyfrom the Lusk Center for Real Estate at the University of Southern California.

The study was conducted authored by Gary Painter, director of the Lusk Center, and doctoral candidate Jung Hyun Choi, to determine how long declines in household formation would last following a major economic shock such as a drop in employment that occurred during the recession.

The study found that household formations consistently return to their previous levels in about three years regardless of whether employment has recovered at the same rate during that time.

"This shows us that even a permanent increase in the unemployment rate will not have a permanent impact on housing formation," Painter said. "As a result, policymakers and industry practitioners have a new level of predictability when it comes to how economic crises impact the rate of new households."

The researchers found in their study that household formations in the U.S. fell to almost zero during the recession's peak years of 2008 to 2010, but then played three years of catch-up and have now recovered to pre-recession levels of about one million per year. Quarterly data from 1975 to 2011 showed that household recoveries typically lasted three years following periods of unemployment.

"The freeze in formations is over and people are again moving out and forming households. This means that real estate professionals and policy makers should not keep waiting for pent-up demand," Painter said. "So while a number of factors will continue to influence the housing recovery, household formation is no longer one of them."


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