Distressed sales made up about 13 percent of all Ca, sales during May. Properties that had been foreclosed on is only 6.0 percent of sales compared to 11.3 percent a year earlier and much lower than the peak of 58.8 percent in February 2009. Short sales made up 6.9 percent of sales compared to 15.0 percent the previous May.
More and more, the market is regular people buying houses with normal mortgages, and with lending standards still tight and the economy still feeling soft, there’s only so much those people will pay.
“We’re bumping along a ceiling. I really can’t see values going up much more,” said Steven Thomas, of ReportsOnHousing.com, which analyzes Southern California housing markets. “Buyers are homing in on trying to pay a fair value. A year ago, everyone was willing to pay extra. Now that bidding up is not happening,
The median price of a home sold in the six-county Southland was $410,000, according to San Diego-based DataQuick. That’s up just 1.5% above the median price recorded in April. Don’t pay attention to stats that talk about last year. The only thing important is current trends- what has happened in the last few months.
Realtors many times have to play the bad guy with sellers who think their home is worth more than the market will bear. That’s why you should cut out negative articles from the paper to show sellers who are focused on last year’s stats. They still think they’re in that little bubble of 2013, where you’d put it on the market and have 15 offers, That still happens in pockets. But buyers have become a lot more savvy.”
The good news is that even though the housing market looks like it is slowing, construction jobs should continue to help drive job growth in Southern California over the next few years, according to a new report.
In a paper produced as part of the quarterly UCLA Anderson Forecast released Thursday, UCLA economics professor Jerry Nickelsburg said that sliding home sales volume — the number of homes sold in Southern California dropped 15.1% in May compared with last year, according to San Diego-based DataQuick shows that the housing market is being, as he put it, “normal.”
And when markets are normal, builders build.
The decline in sales compared with last year shows an end to foreclosures, hedge funds gobbling up at any price, and other so-called distressed properties that were flooding onto the market. Now that is over, and inventory is mostly properties that traditional homeowners are trying to sell. That is a much easier environment for home builders so they will build more. That will improve the inventory and keep prices more moderate.
“This is a market where the transactions are not banks blowing out their supply [of foreclosures], which is very hard to predict,” he said. “You have a much more normal market. Prices are rising. That brings people off the sidelines, which increases supply. And all that gives builders some confidence that they’re going to get the prices they forecast.”
So, Nickelsburg said, they start breaking ground. Building permits in Los Angeles and Orange Counties grew 44% last year, according to data from the Census Bureau, and were up an additional 25% through March.
This is a good thing for the region’s economy, analysts say. One in every eight new jobs created in California since the start of 2013 is in construction, said Nickelsburg. said, building is likely to keep pushing the job market forward, at least to a point.
The unemployment rate, the forecast estimates, should drop to 6.8% next year and 5.9% in 2016. Rising employment drives the economy and improves income. That in turn allows for people to afford more housing. It’s like a domino effect- both up and down. Luckily we are on the way up this time.
Another good factor is that West Coast cities like Los Angeles will continue to draw large amounts of Chinese investment as that country’s real estate bubble continues to deflate and investors seek safer havens for their money.