Are All Housing Markets Local?

Is the California Housing market ahead of the US Market?

Reports on the US housing market do not necessarily reflect what is happening in California. Existing home sales in California rose 57 percent year-over-year in August 2008, compared to an 11 percent decline for the nation. Statewide sales have increased 85 percent since reaching bottom last October, yet national sales have remained virtually unchanged over the same period. Movements in home prices over the past year have played a large role in driving California sales. The statewide median price declined by 40 percent in August compared to a year ago, while the US median price fell 10 percent over the same period. Yet, the supply of homes for sale in California is considerably lower than the corresponding national figure: 7 months versus 10 months. In short, real estate markets tend to be much more local than nationwide statistics or even statewide statistics can illustrate.

In fact, local market patterns frequently differ from state and national trends. Differences in housing markets become more apparent when you compare neighborhoods, communities, and counties. For example, in some markets home prices may have fallen by large margins, even as much as 50 percent from their peak. But other markets have experienced small declines, and a few markets have registered slight increases on occasion in recent months. The same is true of the share of distressed sales in different markets. In some areas, distressed sales (Short Sales, Foreclosures, and REOs or bank-owned properties) account for as much as three-quarters of market activity, while distressed sales in other areas may account for fewer than ten percent of the market.

Many areas reporting a large share of distressed sales of late have had a run up in building and home sales in recent years. It is important to note that for the most part, differences in the mix of homes for sale in the market are driven by local conditions. Even within a city, individual neighborhoods or subdivisions may be behaving quite differently. Because of the barrage of information out there with respect to real estate, it is best to turn to the expert in your local real estate market when considering purchasing or selling a home. In the end, while national and state trends are important, they do not necessarily reflect what is happening in the neighborhood or community where you want to buy or sell a home. Be sure to contact me to get the latest information in YOUR market when thinking about buying or selling a home!

Real Estate Related Laws Affecting You

Emergency Economic Stabilization Act – The $700 billion approved by the Congress will allow the Treasury to purchase troubled assets from financial institutions, help mitigate foreclosures, strengthen FHA insured refinance loans, and extend tax exempt debt forgiveness on home loans until 2012.

Debt Relief Forgiveness from State Income Tax - Beginning September 25, 2008 the debt forgiveness on home loans also applied to state income taxes. Under California law, the maximum qualifying debt is $800,000, not $2 million. The maximum exclusion is $250,000. California law applies only to debt discharged in 2007 or 2008.

Tenant Victimized by Domestic Violence Can Terminate Tenancy - Beginning September 27th, a tenant can terminate a tenancy upon giving a 30 day notice to terminate, if the written notice informs the landlord that domestic violence is the reason. A copy of the restraining order must be included with the tenant’s request.

Home Sales Doubled

Orange County seems to be defying all the market trends found in other parts of the U.S. Since January of this year, homes sales have jumped from 1056 to 2313, which is more than double! Absolutey amazing. In that same time frame, the inventory of homes for sale fell by nearly 7%. With higher demand and lower supply, prices are likely going to stabilize, but they are still declining. The average sale price fell by 13.3% to $526,380 throughout Orange County. The time it took to sell those homes declined as well by a whopping 24%; down from 89 days in January to 68 days in September. If these trends continue for the next six months, the O.C. real estate market will be a lot less scary. CLICK HERE to see trend graph.