Real Estate Investor Education - Be the Smart Investor

Bidding wars in Real Estate again should come as no big surprise to anyone that has been out looking for a home to live in or for an investment.

As Real Estate investors, we have seen this occurring for months now in most markets.

The market is down to less than 2 months of inventory in many markets around the Country and it seems like finding a deal on Real Estate has become near

impossible. This new report just confirms what we already are seeing in the market place.

By creating a shortage of home for sale in the market place and record low interest rates, we now have a bidding war situation in many cases.

According to the report by Pro Teck, the sold-to-list price ratio tends to land somewhere in the range of 92 and 98 percent, but in high demand markets, the ratio can exceed 100 percent. For example, in the San Francisco Bay area, nearly all ZIPcodes showed sold-to-list-price-ratios close to or above 100 percent, confirming stories of bidding wars, according to Pro Teck’s analysis. (From DSNews)

DAILY REAL ESTATE NEWS | FRIDAY, MAY 03, 2013

The U.S. housing markets where homes are selling the fastest are mostly in the West, according to a new survey by ZipRealty. In fact, some western markets have seen a big rise in homes selling in seven days or less.

ZipRealty identified the following five markets as the fastest selling markets:

Orange County, Calif.

Median days on the market (as of March 31): 15 — a 71 percent year-over-year drop from 52 days

Percentage of homes that sell in seven days or less: 29 percent

Median home-price increase year-over-year: 27 percent to $495,000

San Diego, Calif.

Median days on the market: 20 — a 59 percent year-over-year decrease from 49 days

Percentage of homes that sell in seven days or less: 25 percent

Median home-price increase year-over-year: 22 percent to $390,000

Sacramento, Calif.

Median days on the market: 12 — a 57 percent drop year-over-year from 28 days

Percentage of homes that sell in seven days or less: 30 percent

Median home-price increase year-over-year: 31 percent to $210,000

Los Angeles

Median days on the market: 15 — a 56 percent drop year-over-year from 52 days

Percentage of homes that sell in seven days or less: 29 percent

Median home-price increase year-over-year: 26 percent to $307,564

Las Vegas

Median days on the market: 12 — a 53 percent year-over-year drop from 28 days

Percentage of homes that sell in seven days or less: 30 percent

Median home-price increase year-over-year: 35 percent to $148,500

(ZipRealty)

We are seeing the first of the Sub-Prime loans making a come back ! Hopefully they are a bit smarter this time around, asking for more money as a down payment,and doing a full doc. loan.

Looks like 25% to 40% and rates of 8% to 10% at this time. Two of the early lender are : Citadel Loans and Carrington Mortgage, both out of Southern CA.

No really, that was in the headlines today . Arizona State University School of Business experts say that Phoenix is in for a “Significant Housing Shortage”.

The ASU experts claim that the metro area is growing, land prices are rising, and new home construction is lagging, hence the housing shortage coming.

What about all that distress inventory that Arizona is sitting on ? Shadow inventory and all the the other non-performing houses in the area are still present would easily meet the needs or am I missing something here ? Thus the press with their catchy headline (from:Housingwire)

Funny how a constricted supply, coupled with abnormally low interest rates can turn a bad Real Estate market around in a hurry.

Bidding wars are now common in most CA markets. In Sacramento County there are only approx. 1,100 active homes listed for sale on the MLS service.

That is less than a one month supply. A normal market would have 5 or 6 months of homes available for sale on the MLS.

This has brought about the new “Sellers Market” (again). Housing has not been this hot since the last bubble !

The shortage of homes for sale has caused price to rise much more than normal, prices went up as much as 15 % or more in just the past year.

To sum it up : I’ts super frustrating for buyers and their agents , great for sellers.

By the way - this price increase is leaving less homeowners “Underwater” in CA (sure that is what they had in mind in the first place).

This up-swing in Real Estate prices has helped the Real Estate market in many parts of the Country. I have been reading some very optimistic forecasts regarding where home prices will end up this year, anywhere from zero to 20% or more. No one is sure, all good educated guess based on their own interpretation of the data and the level of intervention.

Due to rising home prices : At the end of 2012 – 200,000 more homes moved out from the “Under Water” category (per CoreLogic)

10.5 Million of all homeowners that have a mortgage are still underwater (that is 21.5% of all US home with a mortgage)

Nevada has the highest percentage of homes with negative equity. Florida has 40.2 %

Greater than seven in ten voters (72 percent) currently describe California’s economy as being in bad times. In addition, six in ten (61 percent) describe unemployment as very serious in the state, while just 36 percent expect job opportunities to improve in the coming year, the poll says.

While this represents a slight improvement in the extremely bleak assessments of the state’s economy that voters have offered over the past five years, the views of Californians remain gloomy.

In addition, when asked to describe their own financial situation, nearly half (44 percent) say they are worse off now than they were last year, while fewer (30 percent) are better off. This is the sixth consecutive year in which more voters report being financially worse off than better off.

The latest Field Poll was completed Feb. 5-17 among 834 registered voters in California (from: CVBT)

The risk of default among renters nationwide decreased year over year in the fourth quarter of 2012, according to a quarterly report Wednesday from financial information company CoreLogic Inc. of Irvine.

But on a quarter-over-quarter basis, the risk of default increased in the fourth quarter 2012 compared to the third quarter of 2012, says CoreLogic. The increased risk from the third quarter to the fourth quarter of 2012 reflects a riskier applicant pool that is typical in seasonally slower periods of applicant traffic, it says.

Lower-priced rentals are seeing more significant decreases in rent amounts, the report notes. Average rent amounts for Class A properties, defined as those with monthly rents greater than $1,100, increased 0.3 percent year over year. At the same time, rent amounts for Class B properties, defined as those between $750 and $1,100, remained unchanged from one year ago, while rent amounts for Class C properties, defined as less than $750, decreased 0.9 percent year over year.

The number of homes in California purchased with cash hit a record high last year, undoubtedly a result of high investor interest, a difficult mortgage environment and perceived higher returns on investment, according to real estate data firm DataQuick.

The total number of properties paid for with cash reached 145,797 in 2012, up from the previous record high of 125,812 in 2011.

“It’s clear that a lot of today’s housing market recovery is being fueled by people putting their own money into homes. Some cash buying is part of a normal housing market, but we’re at twice that normal rate,” said John Walsh, DQ president.

Of California’s overall home sales last year, a record 32.4% were cash purchases. This more than doubles the annual average of 15.6% from 1991 to 2012.

“Today, a lot of buyers are chasing what they view as the deal of a lifetime,” said Walsh. (By: HousingWire)

On average, one-third of real-estate agents said the appraisal process resulted in buyers and sellers delaying or canceling contracts or renegotiating to a lower sales price last year, according to a National Association of Realtors’ monthly survey of roughly 3,000 agents. That’s up from less than 10% in 2008.

Experts say this figure could grow going forward as the luxury real-estate market continues to surge. Appraisals can undervalue properties when markets are rising because they look backward at lower valuations, says Mark Fleming, chief economist at CoreLogic, a real-estate analytics company. Some appraisers may not adjust for the discrepancy, he says.

It’s not just home purchases that are at risk. Homeowners trying to refinance can also be burned. With private jumbo mortgages, if the appraisal indicates that the borrower’s loan amount is more than 80% of the value of the home, the borrower will likely have to put more money down if he wants to proceed. In other cases, a lower appraisal could keep borrowers from getting the lowest rate possible. (from : marketwatch.com)