A May update from the CALIFORNIA ASSOCIATION OF REALTORS®(CAR) shows that as the economy continued to improve slowly and mortgage rates remained at historically low levels, first quarter home sales activity in California was on par with the first quarter of last year when tax credits prompted housing demand to increase. Sales of existing single-family homes totaled a seasonally adjusted annualized rate of 519,870 in the first quarter of 2011, an increase of 6.7% from the fourth quarter of last year, and virtually unchanged from the first quarter of 2010 after declining consecutively for four quarters on a year-to-year basis. The statewide median price of $278,430 in the first quarter of 2011 was the lowest since the second quarter of 2009, as deeply-discounted distressed sales continued to make up more than half of all sales throughout the state. The median price declined for the third straight quarter, but remained 12.4% higher than the cyclical low of $247,630 reached in the first quarter of 2009.

Sales growth in the Bay Area was slightly stronger than that of the state. Sales of existing detached homes in the Bay Area increased 1.7% year-to-year in the first quarter of 2011, slightly higher than the growth rate of the state.

Lower-priced counties in the Bay Area experienced a larger boost in sales from the tax credits in the first quarter of last year compared to the state as a whole. Moreover, economic conditions have stabilized throughout the state, but recovery in these county economies has lagged with somewhat weaker sales in the first quarter of this year. As a result, the year-to-year declines in the first quarter of 2011 were somewhat larger in these counties than for the state as a whole. By contrast, most Bay Area counties received a smaller boost to sales from the tax credits last year, and were farther along the road to recovery in the first quarter of this year, so the year-to-year comparisons were somewhat better.

While state, regional, and county home sales are generally lower than one or two years ago, they remain on track to hit the levels seen in the pre-peak years of the late 1990s and early 2000s that are equivalent to the sustainable sales in the California housing market over the next few years. As for home prices, most counties will avoid a double-dip to the lows that were experienced in early 2009, but will experience softness over the coming months until improving economic conditions create more jobs and brighten consumer sentiment.

For more information or a copy of the full report, please contact an Alain Pinel Realtors sales professional.

An April update from the CALIFORNIA ASSOCIATION OF REALTORS®(CAR) shows that after dipping slightly below the 500,000 benchmark in February, sales of existing single-family homes in California bounced back to 514,090 units in March, an increase of 3.1% on a month-to-month basis, and a gain of 1.5% from last March. The statewide median home price increased 5.4% to $286,010 from February, after declining for two consecutive months. On a year-to-year basis, however, the median price decreased for the fifth month in a row.

The drop in the statewide median price was primarily due to the price decline in non-distressed home sales as their median price decreased from $409,800 in March 2010 to $386,500 in March 2011. Meanwhile, the median price of bank-owned sales (REO) increased slightly, and the median price of short sales remained virtually unchanged.

The substantial price differentials at the state level, however, are exaggerated in part by the difference in the mix of sales between distressed sales and non-distressed sales. Areas with high concentration of distressed properties in their market contribute a bigger proportion of sales in the REO and the short sales markets than they do in the non-distressed sales market. High-cost areas with fewer distressed properties, on the other hand, make up a larger share in the non-distressed sales market. With different mixes of sales between distressed sales and non-distressed sales, the differentials in median prices across short sales, REOs, and conventional sales reflect not only variances in the condition of the properties, but also their geographic differences as well.

To illustrate how the geographic differences may have affected the price differentials between distressed sales and non-distressed sales, the median prices of non-distressed sales, short sales, and REO sales for three cities are shown in the table below. Results show that there are differences in prices between non-distressed sales and distressed sales at the city level, but the price differentials are generally smaller than those at the state level.

A March update from the CALIFORNIA ASSOCIATION OF REALTORS®(CAR) shows that closed sales of existing, single-family detached homes in California dipped in February, down 9% from January and 4% from February 2010. This weaker than expected performance came on the heels of three consecutive months of gains.

The California statewide median price was $271,320, down 2.8% from January and 2.5% from February 2010. Since 1979, the January-to-February change in the median price has averaged a drop of 0.1%. However, the market has experienced more pronounced median price changes over the last four years, with an average December-to-January decline of 9.6%, followed by an average January-to- February decline of 2.3%.

This three year phenomenon does not seem to be a fluke. Instead it is more likely a result of bank behavior. In looking at CAR’s distressed sales statistics derived from over 70 MLS’s across the state, there is an increased concentration in Bank Owned or REO sales in the final months of each year that has carried over into the first two months of the next year. This spike in distressed property sales in the beginning months of the year drives the price downward during those time periods.

The seasonal spike in distressed property sales coincides with a recurring annual decline in high-end homes sales around the holidays through the first few months of the year. Together with the seasonal spike in distressed properties, the typical drop in the median price has become amplified.

In both 2009 and 2010, the steep month-to month declines in the median price in January and February were offset as the market moved into the peak months beginning in March and running through the summer, so that by mid-year the median had returned to the late-season levels of the previous year. However, the market and median price were boosted in 2009 and the first half of 2010 by Federal Tax Credits which have since expired.

In 2011, the market must move forward on its own as economic conditions improve. Whether the median price will show a seasonal bounce in the coming months remains to be seen.

For more information or a copy of the full report, please contact an Alain Pinel Realtors sales professional.

A February update from the CALIFORNIA ASSOCIATION OF REALTORS® features an examination of renting versus buying. The analysis shows that current California housing market conditions, coupled with lower home prices and attractive mortgage rates for qualified buyers, make a strong and compelling case for homeownership. Check out the following comparisons:

HOMEBUYER - The monthly housing costs associated with buying a median-priced home of $301,430 is $1,590.

RENTER - In comparison, the median rent on a three bedroom, two bath apartment with renter’s insurance in California is $1,810.

CONCLUSION - Buying a home would save the homeowner $220 per month, and over $2,600 a year, when compared to renting.

HOMEBUYER – Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. The tax implications for a household earning $63,430 a year that purchases a home with a 20% down payment and finances the mortgage at the current rate of 4.62% will receive a tax deduction of over $14,000 in the first year of ownership.

RENTER - The renter household earning $63,430 a year will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts.

CONCLUSION - The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.

For more information or a copy of the full report, please contact an Alain Pinel Realtors sales professional.

** This is a general summary of this costs associated with renting versus buying, and does not constitute tax or legal advice for any particular situation. As always, it is important that you consult with your tax or financial advisor.

A December update from the CALIFORNIA ASSOCIATION OF REALTORS® is reporting that three main housing indicators show 2010 was a year of transition toward stability in the housing market:

1.     Median Price. At $296,820 in November, the state median price experienced its first year-over-year decline after 12 consecutive months of gains. With a 21% rise above the February 2009 trough of $245,230, the median price in California could be an indication of the beginning of stability in the market.

2.     Sales. Year-to-date sales dropped 9.8% in November, consistent with CAR’s forecast of a 10% annual decrease. The seasonally adjusted sales in November were up 93% from the trough of 254,650 three years ago, and were 19% above the long run annual average over the past 39 years. Despite the year-to-date drop, sales figures are faring reasonably well when historical data is taken into consideration.

3.     Unsold Inventory. The unsold inventory index is a good indicator of home prices because when the housing supply falls below seven months, it usually leads to price appreciation. The November unsold inventory index was 6.2 months. Because this index has maintained a relatively healthy range in 2010, between 4.6 and 6.6 months, it is another indication of the beginning of stability in the California housing market.

The number of distressed sales compared to overall sales is also important in determining the health of the real estate market. For the past few years, there have been significant numbers of distressed properties on the market. In 2010, the share of distressed sales relative to all sales declined to 41% from 46% in 2009. Although there are still many distressed properties for sale, this reduction is a good sign that the market is heading in the right direction.

An October update from the CALIFORNIA ASSOCIATION OF REALTORS® is reporting that the California housing market showed more signs of adjustment as statewide sales rose in September for the second month in a row to 466,580 homes, a 3.8% month-to-month gain from August.

The months ahead offer a prime opportunity to seek the home buying trifecta: finding the right home at the right price for the right mortgage rate. Here’s why:

1. There is a wider variety of homes on the market now, including a mix of REOs, short sales, and conventional or nondistressed homes for sale.
2. Home prices have stabilized or risen in most California markets for at least a year, but still remain well below the peak levels of the last decade.
3. Mortgage rates are at their lowest levels in over 50 years, pushing the monthly payment down dramatically.

The next few months offer a rare chance to take advantage of this buyer trifecta. If you are in a position to buy, and find a home that will meet your needs for the next several years at a monthly payment you can afford, now is the time to act.

A June update from the CALIFORNIA ASSOCIATION OF REALTORS® is reporting that while sales in both California and the US bottomed out in late 2007, statewide sales had rebounded to pre-peak levels by late 2008 and have sustained those sales levels since then.

C.A.R. reported that existing single-family home sales in California increased 14.1 percent from April to May, the biggest monthly gain since July 2008. This was due in part to buyers who took advantage of both the federal and California state tax credits.

Although US sales have shown little upward momentum after hitting bottom, sales did rise earlier this year from 4.6 million homes in February to 5.06 million in April—the highest level since November 2009. Additionally, the US sales figure in May was 17.5 percent higher than it was a year earlier.

Although the Extended Home Buyer Tax Credit expired on April 30, 2010, home buyers who signed a written, binding contract by that date and close before July 1, 2010 may still be able to claim the credit.

Congress has just passed the Homebuyer Assistance and Improvement Act (H.R. 5623), an extension of the Homebuyer Tax Credit closing deadline. The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed. The new closing deadline for eligible transactions is now September 30, 2010.

Extending the tax credit closing deadline will help provide additional stability to real estate markets across the nation, including here in California, where sales were up 1.2 percent last month from the previous year, due in large part to tax incentives. This heightened market activity has backed up lenders processing loans for these transactions. The extension provides more time for these transaction to be processed, allowing another opportunity for those who qualified for the original tax credit to realize the benefit.

As always, it is important that you consult with a tax expert about your financial and tax situation.

As the U.S. Open gets under way today at Pebble Beach, many are anticipating this year’s event may not be as lucrative as 2000′s (the last time the tournament was played at Pebble Beach) due to current market conditions.

One area that could do better than 2000, though, is home sales. Because prices are down, the efforts agents make this week could lead to more sales than ten years ago.

In an article in the Mercury News, Judith Profeta, owner of our Carmel Office, discussed marketing and advertising during this time, and how this effort has a strong residual effect with interested home buyers coming back to the area weeks or months later.

Read the full article for more information and some more interesting insights from Judith.

A May update from the CALIFORNIA ASSOCIATION OF REALTORS® shows that affordability remained in record high territory in the first quarter of 2010.

According to C.A.R., “…the current affordability environment is very favorable, with prices that remain well below the peak levels of a few years ago and historically low mortgage rates. These home buyer fundamentals should drive continued demand for housing in California, even as the state and federal tax credits begin to unwind.”

Other highlights include:
• The statewide median price increased 1.5% from April 2010 and 21% from 2009
• This trend is mirrored locally as median home prices from 4/09 to 4/10 increased in the following Bay Area counties:

o Contra Costa County up 20.9%
o Santa Clara County up 17.5%
o Marin County up 13.6%
o Alameda County up 12.9%
o San Mateo County up 10.9%
o Sonoma County up 8.6%
o San Francisco County up 8.4%
o Santa Cruz County up 8.3%