What’s Causing Home Prices to Drop?

Basically, the answer in this article is that prices increased so much in California that buyers are still sitting on the sidelines, in spite of otherwise good economic indicators. In fact, 2006 was the third best year for sales according to the National Association of Realtors, and 2007 overall will still be strong. Mortgage rates are holding for now, and on the West Coast prices are stabilizing: Don't make the mistake of the buyer in Dallas who, in a market 15% under the national median, still wants to subtract $50,000 from his offer price. In other words, know your local market.

"Buyers who are still waiting on the sidelines must learn a basic economic fact of life: if fundamentals aren't supporting a market decline, then it's not going to decline for very long. If the nation and local communities are adding jobs and population, a market decline is destined to be short-lived.

"Price is a legitimate concern, but with growing inventories, buyers should be taking advantage of an abundant selection. In a seller’s market such a luxury doesn’t exist and slim pickings mean they must take whatever is available."
Blanche Evans, Realty Times.

2007 Median Prices May Remain Flat, But Mortgage Rates May Rise

The hoped-for huge drop in home prices many buyers have been waiting for and expecting is not likely to be the reality. While prices may go up in some areas at a very modest appreciation, or just stay the same, buyer's home payments may increase with the rise in mortgage rates. So why wait? Look for your next investment property, house or condo at www.juliahuntsman.com by clicking on the Property Search. You'll be glad you did as it's updated and current throughout the day directly from the local MLS.

The Mortgage Bankers Association expects the interest rate on a 30-year fixed-rate mortgage to jump from 6.2 percent to 6.5 percent by the end of the third quarter, as investors lose hope that the Federal Reserve will slash short-term rates any time soon.

The MBA Chief Economist

expects existing-home price appreciation to slow "significantly" over the next three years, and that median prices should remain relatively flat for new and existing homes. Price gains for both types of housing are expected to be limited to about 2 percent in 2008 and 2009.

Inman News, Jan. 17,2007

Appreciation Up, Sales Volume Down

Buyers and sellers really have the best of both worlds right now, but buyers are having a difficult time seeing that in the midst of bubble talk reports. Dataquick, in its usual way, combines condo stats with single family stats, but the story is there. Find MLS search at here.

Bubble's pop was akin to a slow leak-K. Harney

There will be much talk about foreclosures this year: Those adjustable rate mortgages are coming out of their initial lower start period, and much to the surprise of some borrowers, are now the source of some bumps in their homeownership road. If you're reading this and think you're one of those people, just e-mail, leave a comment, or call for financing information. In many cases, a worst case scenario can be headed off with a new loan made with full disclosures about how it works. You may be paying a little higher interest rate for a while, but you can usually fix that after you bring up your credit score so that you can get a more competitive loan. This process may save you and keep you in the home you want. Understanding financing is crucial in today's world which offers so many options--it's important to understand their terms before you sign on the dotted line. Read here about more commentary on national markets, including the 7% appreciation overall in the Long Beach/Los Angeles area in spite of decreased sales volume. Bubble's pop was akin to a slow leak - Los Angeles Times.
For more real estate information go to www.juliahuntsman.com.

Long Beach Economy: Tourism and Trade

"Although the Long Beach Area Chamber of Commerce is projecting a subdued California economy in terms of job growth due to federal policies, high energy prices and a weakening housing market, it does anticipate a stronger Southern California performance. “I’m optimistic about the Long Beach economy,” said Brandon Kline, vice president of public policy and government affairs for the chamber."We have strong performances in international trade, technology, aerospace and tourism. . . . Even though California may have subdued economic expansion next year, I think our local regional economy here in Southern California will thrive because of those things. So, despite that slowdown, our highly diverse business structure is going to enable us to perform at a high level.

"Indeed, the hospitality and tourism sector is poised to continue to do well in the coming year, although substantial growth will be very limited, according to Kyser. “Tourism will probably hold at a high level, and that’s because, literally, we’re running out of hotel capacity,” he explained.

"One “reliable growth engine” marked by Kyser is the international trade sector . . . “International trade is going to be an interesting sector to keep our eye on,” Magaddino agreed, pointing to the significant impact of the weakening dollar on exports. . . . What we’ve seen is continued decline in the dollar, and that makes our exports much more competitive on a global marketplace."
Now is the time to buy, whether you're investing or looking for a home for yourself. Go to
www.juliahuntsman.com and click on "Property Search", an easy way to get started viewing our MLS listings.

California: The Sixth Largest Economy in the World

So wouldn't you know the house prices would be higher here as well.

California Housing "Fast Facts" from California Association of Realtors:
Calif. median home price - November 06: $555,290
(Source: C.A.R.)

Calif. highest median home price by C.A.R. region November 06:
Santa Barbara So. Coast $1,083,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region November 06:
High Desert $332,340 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - Third Quarter 06:
24 percent (Source: C.A.R.)

Mortgage rates - week ending 12/28:
30-yr. fixed: 6.18%; Fees/points: 0.4%
15-yr. fixed: 5.93%; Fees/points: 0.4%
1-yr. adjustable: 5.47%; Fees/points: 0.6%
(Source: Freddie Mac)

People Want to Know

The California market has been holding steady at $545,000 to $550,000 median price, which is a 1.4 percent increase over November 2005. This median includes sales of single family detached homes, per report of 12/21/2006 for November, 2006. The sales time has approximately doubled statewide, and although local figures may vary with some properties selling within 30 days, that's often a fairly true picture of the Long Beach area as well. The median L.A. County single family price is about $590,000, an increase from $583,000 last November. Many of you are interested in the Long Beach area condo pricing, which varies greatly according to location, view, and building amenities. Prices may range from $350,000 and up according to proximity to the ocean and size. Please contact me if you want more information on this or go to
www.juliahuntsman.com and search properties in the 90803, 90814, 90802, 90815 zip codes to get an idea.

A Stabilizing Market for 2007

Try to believe it...the market may actually be stabilizing and that is the prediction in more than one quarter as the slowdown in real estate is said to be affecting the national economy. Local market snapshots indicate a pickup in sales in certain areas. For 2007, sellers who are serious sellers should get their properties sold by pricing them right, so that buyers believe it's the right time to buy.

Mortgage Applications Hit ONE-YEAR High

Applications to buy a home rose 8.7 percent as of 12/13/2006 over the prevous week, and were the highest since January of this year. Lower mortgage rates encouraged refinancings, but also encouraged new buyers to think about taking advantage of lower rates, even though they rose recently.

Monthly Dataquick Summary for Southern California

While Los Angeles County area sales volume is down by about 18 percent compared to last year, the monthly mortgage buyers committed to during November was still in the $2200-2300/month range. This picture is still similar to the ones from other quarters: The Southland has continued to hold its own in pricing--Los Angeles County's median price (including single family homes and condos) has increased by 2 percent from November of 2005. For zip code breakdown information, go here and check your favorite area.