1/12/2013

California's Housing Market Projected to Rise in 2013

The good news is that prices are rising in California and the share of underwater mortgages is dropping, but the fact is that 29% of California mortgages are still "underwater" and 15% of them are still more than 125% loan-to-value.

Housing affordability is at records highs with California still over the 50% mark, meaning more than half of California households can afford to buy. Mortgage lending is very tight and "defensive", and appraisals are problematic (example: Many 20% down borrowers are finding their new property doesn't appraise as high as what they agreed to pay for it, but if they can put down another 10% of the purchase price, the lower loan-to-value erases the appraisal issue), and listing inventory is down by more than half compared to one year ago, so opportunity is scarcer.  In fact, in Los Angeles County, we have an average of 2 months of inventory--down from 8 months 2 years ago.  For December, Long Beach had 1.9 months of inventory. 

Why is this?  One reason is that many sellers are stuck where they are due to underwater value, or they are skeptical of moving on, and also because large amounts of foreclosed inventory is being bought up by investors in bulk and rented out.   Distressed sales volume is decreasing gradually, and in California statewide, equity sales are now about 64% of the market.  But expect short sales to stick around, they have been about 23-24% of the market since 2011.

2013 California Market Recovery
There is a pent-up housing demand, and job creation is one thing that can loosen up the housing market--the prediction is that new housing construction will begin again in California with the improvement in jobs. 

Each city and each area has it's own local real estate market, but tight inventory, short sales, and loan issues are very much a universal picture in the local, state and national areas.  Overall, the California market is predicted to increase in 2013.


And, another important fact:  According to a REALTOR survey, buyers are more optimistic than ever before about buying, in spite of all these other factors -- because housing affordability still makes this a great time to buy (something seller need to think about also).  Thanks to Leslie Appleton-Young, California Association of Realtors, and her report of January 11,2013.

For an agent very familiar with the Long Beach/Lakewood/Cerritos areas, please contact me at julia@juliahuntsman.com, or my phone!

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