Real Estate: What’s Happening

REAs I was looking for some possible topics to discuss this month, I came across a collection of ideas posted on the website for the California Association of REALTORS® (CAR). Collectively, they provide an overview of what’s happening now in the real estate market:

Lending- One of the biggest bellwethers is what’s happening in the lending industry. Mortgage lending and the availability of money are two of the heaviest determinators of real estate sales. A reason the housing market had such a rough go of it coming out of the downturn was because most lenders’ guidelines retreated faster than a scared turtle into its shell.  Recently, however, the Wall Street Journal reported that lending rules and restrictions have relaxed considerably, allowing more purchase money to flow into the constricted market.

Equity Sales and Distressed Property Sales- Distressed home sales in California have been steadily falling. These are properties that are either “underwater” (the owner owes more on the property than it is worth) or where the mortgage is seriously delinquent. For example, short sales—i.e., the actual sale of underwater properties—have reached their lowest levels since 2008, by many accounts. 2008 is the year in which things were really headed south. On the other side of this coin, “equity sales,” or sales in which the property is the opposite of underwater, have been steadily rising, reaching 87.6% in March, up from 85% in February.

Pending Home Sales- In California, pending home sales rose to their highest level in eight months, climbing 17.8%.

Rental Affordability Crisis- Shaun Donovan, Secretary of the United States Department of Housing and Urban Development, recently commented on the financial issues in today’s national rental market. “This is the worst rental affordability crisis this country has ever known,” he said.  He praised a US Senate initiative on housing finance reform making its way through Congress, which includes support for affordability, and availability for the rental housing market as well.

Moving Back With Mom and Dad- From a quirkier story in the Los Angeles Times, I read that, in recent years, older people aged 50-64 have moved back in with their parents (yes, you read that correctly!) at twice the rate of their younger counterparts. A UCLA researcher says that this is almost exclusively due to financial hardship as opposed to any other reason. I’m not quite sure what to make of that one.

Rising SF Home Prices- For you data hounds, a quick look at recent statistics (February, 2014) provided by CAR reveals a 4.4% drop in year-to-date home sales, but a 14.9% increase over the previous year. San Francisco’s median home price was $964,670, a 28.6% increase over the previous year, but a whopping 238% higher than the statewide median.

March-ing Upward- Nationally, March home sales were only up 0.4% over February, but the median sales price was up 10% over the previous year. It was the 24th consecutive month in which home prices showed an annual increase.

And one final tidbit for this month: New housing starts have long been an indicator of the state of the economy.  Nationally, this stat has been down considerably (14.5%) during the past few months, across the country. New home building permits in California in February numbered 2307. In San Francisco: One.

See you next month.

A Bay Area native, Mark Penn has been a REALTOR® with Coldwell Banker since 2004. He is also active in animal welfare, and is a former educator, facilitator, and air traffic controller. Mark can be reached at mark@MyHomeInSonoma.com.