Orange County Housing Slump Ends After 33 Months

Fueled by falling home prices, home buyers in Orange County, Calif. got moving in July and pushed sales up 17% over last year, ending a 33-month home buying slump, according to information from Data Quick. Home sales in the county jumped to 2,799, up by 408 units from the same month a year earlier. This was the first monthly year-over-year increase in sales since September 2005. The median price of the homes sold was $461,000 — down $184,000 from the all-time high of $645,000 in June 2007. That’s equivalent to a daily price drop of $431 for the past 13 months. “Houses are becoming a little more affordable (because prices) have dropped 20% to 25%,” said Tom Moon of Pacific Moon Real Estate in Huntington Beach, a top agent in the sale of foreclosed homes. “There has been a pent-up demand. (Buyers) have been waiting to buy a house.” According to Mike Hickman, president of Seven Gables Real Estate, “We’ve been on a winning streak since January. Pricing is finally reaching a level where there’s a perceived value by the consumer.” (www.ocregister.com)
Orange County Register (8/18/08); Jon Lansner and Jeff Collins

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Credit Eases for Buyers of More-Affordable Homes

The one somewhat-bright spot in the mortgage market is that people buying more-affordable homes will find it a little easier to get a home loan now, Anthony Sanders, professor of finance and real estate at Arizona State University, told the Arizona Mortgage Lenders Association. “The housing bill has steadied the nerves of lenders in the conforming-loan market,” Sanders said, which is helping to make more mortgage money available in the $400,000-and-under home-local market. “Funding for jumbo mortgages is still shaky but will start to ease as the general housing market stabilizes,” he said. The difference in the availability of loans is apparent in the interest rates. At the end of July, the average interest rate on a jumbo 30-year mortgage was 7.82%, ompared to an average rate of 6.74% on a conforming fixed-rate mortgage. The housing bill will permanently increase the conforming-loan limits for the Federal Housing Administration, Fannie Mae and Freddie Mac to as high as $625,000. (www.azcentral.com)
Arizona Republic (8/24/08)

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Coming Up With the Cash

In the Washington, D.C. region, many home buyers are being asked to come up with a 10% downpayment, real estate agents and local lenders said. All this has left buyers scrambling for cash or reconsidering how much they can afford to pay for a house. Many are opting for Federal Housing Administration loans, which allow for a downpayment of just 3%. But buyers have several options for raising the money for a downpayment. They can simply put off a purchase and save more or borrow from a family member, financial planners said. They could also tap into the network of nonprofit groups and government-run programs offering help. Some can consider withdrawing money from their retirement accounts. “Before you get into this, before you even start shopping for a home, go and investigate potential sources of money. Don’t dismiss grant programs,” said Keith Gumbinger, a vice president at HSH Associates, a real estate research firm. “It’s really worthwhile to dig into that stuff. You might not qualify, but it doesn’t cost anything” to investigate, he said. (www.washingtonpost.com) Washington Post (8/23/08); Renae Merle

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Open House: For Many Luxury Buyers, Privacy Is a Priority

An increasing number of prospective high-end home buyers are seeking a true luxury home — specifically, a multimillion-dollar residence loaded with amenities on a picturesque island. As for location, a recent survey conducted by Coldwell Banker Previews International and the research firm ICR revealed that 27% of home owners with a principal residence valued at over $1 million want to buy a luxury home on an island; 22% want it to be in a rural-county area. The most popular “must-have” luxury items include designer kitchens, formal landscaping, water views, custom-built entertainment centers, swimming pools, indoor gyms and wine cellars. The survey revealed that high-end home owners are particularly optimistic about home values, with a strong majority (85%) of them expecting the price of their homes to rise over the next five years, up sharply from 66% in the same survey a year earlier. Also, four out of five of those expecting higher values believe the increase will be “significant” or “moderate.” (www.palmbeachpost.com)
Palm Beach Post (8/24/08); Jim Woodard

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America’s Bigger-Is-Better Attitude Toward Housing May Be Shifting

Academic experts and observers with home-building, architectural and historic-preservation groups say America’s bigger-is-better attitude toward housing may be shifting. The American Institute of Architects found last year that home sizes are leveling off and that as the population ages, buyers are increasingly prizing affordability features like fewer steps and wider hallways. The National Trust for Historic Preservation recently compiled 25 different approaches that local governments are using to combat the spread of “McMansions” or “teardowns.” According to U.S. Census data, the number of households without children is climbing; projections indicate that nearly three-quarters of all U.S. homes will be without children in 2025. One housing expert projects that migration back toward cities will become so pronounced that millions of oversized homes in the deepest suburbs will be torn down or chopped up into multi-unit dwellings. The average size of new homes built in recent years is still edging upward, says Gopal Ahluwalia, NAHB’s staff vice president for research, but he expects the average to level off soon around its current figure of about 2,500 square feet. “They are not choosing smaller homes,” he says. “People are not choosing mansions because of the capital cost, the running costs, but they’re still choosing bigger homes.” (www.dallasnews.com)
Dallas News (8/22/08); Scott Lindlaw, Associated Press

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Apartment Buildings Lose Their Immunity to Housing’s Chill

Investors in multifamily rental properties have been buoyed by the 1.5 million rental households that have entered the market in the past year, including buyers locked out of the for-sale housing market and those who defaulted on their mortgages. The one downside of the housing crisis for apartment owners has been the “shadow market,” which is made up of unsold homes that owners have put on the rental market. But that competition isn’t nearly as big a problem as job-loss trends. “A lot of folks think it’s the shadow market that’s softening rents. It’s really a jobs issue,” says Richard Campo, chief executive of Camden Property Trust. The Houston-based REIT saw rents fall 1.4% last quarter from a year earlier in Phoenix. Arizona shed some 87,000 jobs in June and July. Meanwhile, rents are up in cities such as Houston, where job growth remains strong and where Camden saw 4% rent growth last quarter. Nationally, the apartment owner expects to see rental growth of 2.5% this year, compared with 4.1% growth in 2007 and 7.4% in 2006. The biggest impact from job losses could be seen in cities such as Charlotte, N.C. and Atlanta, which haven’t seen large shadow markets develop. “That group in the middle is starting to show signs of slowing,” says Haendel St. Juste, an analyst at Green Street Advisors, Inc. “When you look at the markets that are starting to slow, it’s spreading beyond the markets that were burdened by housing.” (www.wsj.com)
Wall Street Journal (8/20/08); Nick Timiraos

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