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William Yarbro's Blog

By William Yarbro | Agent in Los Angeles, CA

December Real Estate

December 2012


Seasons Greetings,

As we enter the last month of 2012, it’s nice to take a moment to reflect on the year we’ll be leaving behind. Looking back, there’s a lot to be proud in the world of real estate of this year. Activity picked up substantially from last year, interest rates continue to remain low, making it possible for many people to purchase a home and owners looking to refinance.

According to the National Association of Realtors (NAR) there is a continuing strengthening in the housing market recovery as sales of existing homes increased 2.1% in October 2012 from the previous month. And another sign -- the measure of home-builder confidence also jumped in November to its highest level since 2006.

Here are some other most interesting points: 

·        * 39 percent of recent home buyers were first-time buyers, a slight rise from 2011, but closer to the historical norm of 40 percent.

·    * 65 percent of recent home buyers were married couples—the highest share since 2001. Conversely there was the lowest share of single buyers since 2001.

·         * For 52 percent of home buyers, the first step in the home-buying process was taken online.

·         *The typical home buyer searched for 12 weeks and viewed 10 homes—a decline from 12 homes in prior year, which speaks to the tightened inventory in many areas.

·         * 89 percent of buyers purchased their home through a real estate agent or broker, similar to last year’s report—a share that steadily increased from 69 percent in 2001.

·         * 88 percent of sellers were assisted by a real estate agent when selling their home.

·         * Only 9 percent of recent sellers sold via FSBO (For Sale By Owner) sale. Among FSBO sellers who did not know the buyer prior to the sale—20 percent sold via FSBO because the buyer directly contacted them.

·         * Approximately two-thirds of home sellers only contacted one agent before selecting the one to assist with their home sale.

 

Did you buy or sell a home in the last year? As a buyer, how many homes did you visit? As a seller, how long was your home on the market before it sold? The Los Angeles Times recently reported the October 2012 sales hit a three year high for October. Lack of inventory continues to plague areas like the Westside. Many Sellers’ are also waiting to see if they can re-coup more on the sale of their home in the coming year. That is a good strategy if you are leaving the market, but costly if you are re-investing and especially if you are moving up. Why sell high and buy high?

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Fixed mortgage rates fall to record lows…..Good news for buyers and sellers.

Buying and selling a home just got a little easier as the mortgage giant, Freddie Mac announced that the average rate on a 30-year loan was 3.31%, the lowest since 1971, over 40 years ago. This rate is down from last week’s 3.34%. The average for a 15-year loan was 2.63%, down from last week’s 2.65%, which also set a record — a year ago, it averaged 3.30%. Now that’s really low! “Fixed mortgage rates continue to ease somewhat this week,” according to Frank Nothaft, vice president and chief economist at Freddie Mac. “These rates should help the ongoing housing recovery,” he said.

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New construction and home sales are also rising, construction was up 3.6% in October — the strongest showing since July 2008, and sales of existing homes increased 2.1% in October, exceeding forecasts.

So why be concerned about new home construction trends since most of the housing on the Westside is in existing homes? The answer is simple: The housing market is a combination of both new and existing home sales — it is better when both elements of the housing market are trending upward, as they are today, than to have one up, one down. This all affects consumer confidence and hence, spending and purchasing large items, such as a home, new or used. The lower mortgage rates contributes to rising consumer confidence and it also encourages more people to refinance, usually leading to lower monthly payments and more consumer spending, which drives an estimated 70% of economic activity.

So, we are all in this together!! We have already seen an increase in holiday shopping in retail and online, which all goes into our economic recovery mix. Lower mortgage rates for 30- or 15-year loans augur well for a better year ahead. And while you can’t put that “under your tree,” hopefully Santa will keep our rates low for next year.

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There is good news in bad news….negative equity declines with rising prices

Yup, you heard it here. There is good news in the fact that we have less bad news than we had last month! The good news comes from rising home prices helping trim the ranks of ‘underwater’ homeowners in Los Angeles and Orange counties. The bad news is an estimated 438,012 homeowners ‘underwater’ in LA and Orange counties in 2012 third quarter (through September 30). A home ‘underwater’ is defined as when the outstanding debt on the property is more than the current value.

While the total of homes with mortgages underwater is still high — some 25.9% — that is still down from the second quarter of 28.9% of homes underwater. That may not sound like a big deal — unless you’re one of the homeowners whose home is worth less than the balance of your current mortgage. Combined with the lower mortgage rates as noted above, we are seeing a stronger market in terms of volume than a few months ago, but prices are still slowly edging upward -- still a long way from 2007 levels.

All of this good economic news (lower mortgage rates, higher consumer confidence, and higher retail spending) contributes to higher home prices. I’m seeing more and more homes receiving multiple offers — a clear indicator that we just don’t have enough quality inventory on the Westside.  It also demonstrates the importance of properly pricing your property when you put it on the market.  Even with the shortage of inventory that we are experiencing, if your property is overpriced, it will continue to sit there with no offers while other similar properly-priced properties are selling!  

Yes, we have homeowners who are underwater, and well, we just have to wait it out. Prices will eventually return to higher levels of the mid-2000s, and then hopefully, homeowners will be motivated to sell and inventory will increase, prices will rise even more so. Because we live in one of the greatest areas on the planet, there will always be demand for homes in our neighborhoods. At the end of our real estate “day” — it’s all about supply and demand. We have demand. But not enough supply. Something good will come of this!

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Good Reasons Why You Should Sell Your Home During the Holidays!

 1. More serious buyers   2. Less inventory for the serious buyers to choose from.   3. Festive feel to decorated homes. 4. Inventory increases after the holidays which can create a lower demand for your home. 5. Buyers may be more emotional during the holiday season. 6. Buyers potentially have more time to look at your home.  7.  You can possibly extend the close of escrow to accommodate your holiday plans, etc. 8. Many buyers need/want to take advantage of year–end tax benefits. 9.  LESS COMPETITION!!! 

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My personal real estate world? 

This year I had the distinct pleasure of helping several first time homebuyers (couples and individuals) become homeowners. It’s a great feeling to know you helped someone on the road to wealth accumulation through their purchase. I look forward to doing more in 2013. I continue to be firmly committed to making home ownership available to as many people as are ready. I will be holding an open house this Sunday at 571 Paseo Miramar, Pacific Palisades. Stop by if you are looking for a great ocean view property. As always, please let me know how I can assist you with all of your real estate needs. Have a safe and happy holiday season.

 

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