Market Report

Click on the image above for the full market report on the 1st quarter!

Home sales were down around Lake Tahoe in the first quarter of 2017, with overall sales volume dipping 7 percent. The drop was mainly affected by a 13 percent decrease in the sale of homes priced under $1 million and was influenced by the severe winter the Lake Tahoe area experienced. The median home price remained steady with a 2 percent increase to $529,000.

The figures are part of a quarterly report released by Tahoe-based real estate agency Chase International. The numbers compare all MLS home sales from Jan. 1 through March 31 to the same time frame in 2016.

Homes sold for more than $1 million was down 5 percent and overall units sold was down 6 percent. Incline Village saw the biggest decreases with a 52 percent fall in volume and 24 percent decline in units sold. Homes sold for more than $1 million was down 23 percent. The median price of a home in Incline Village fell 8 percent to $870,000.

Lawrence Yun, chief economist for the National Association of Realtors, noted that February was the warmest in decades, which played a role in kick starting prospective buyer’ house hunting. The same could not be said for the Tahoe area where the region experienced near-record snowfall.

“I’m sure the series of heavy storms had an affect on people’s ability to do any serious house searching,” said Susan Lowe, corporate vice president for Chase International. “In the long run though, our winter with abundant snow will be a big positive for the region.”

Tahoe City saw a 28 percent jump in volume sold, primarily from a 14 percent rise in the median home price ($611,000). The South Shore experienced a 67 percent increase in homes sold for more than a million and the median home price was up 4 percent to $412,000. The East Shore also saw an uptick in homes sold for more than $1 million (25 percent) while homes selling for less than a million dropped 31 percent. The median price of a home on the East Shore rose 26 percent to $965,000.

Lake Tahoe’s numbers are essentially in line with regional trends. NAR reported that existing home sales in the West decreased 3.1 percent in February. The median price of home was up 9.6 percent from February 2016.

The sale of condos around the lake fared much better with significant increases in volume sold. Units sold for more than $500,000 was up 80 percent and the median price jumped 17 percent to $375,000.

Sales were down across the board in Truckee, with record-breaking snowfall and severe winter storms hampering buyers’ searches. Volume and units sold were both down, 29 and 18 percent, respectively, while median home price rose 7 percent to $709,000.

January is over and February brings thoughts of spring – and romance – so we thought you might enjoy the Market Comment from Nick Churton at Mayfair International Realty.

Homance

heart-29328_960_720

Nick Churton of Chase International’s London office offers some timely real estate matchmaking advice as we head towards Valentine’s Day.

Good real estate brokers can be perfect sweethearts. It is always best to have someone by your side who values you, who will fight for you, who won’t argue (much), who will only hang around your home when you want them to, and always has your best interests at heart. Such a person may not make such a bad partner.

Of course there are good partners and bad partners. Selling real estate well rests heavily on the partnership built up between seller and broker. A good broker will lovingly put you and your property on a pedestal and then expertly and fiercely negotiate to achieve the best deal for you. On the other hand, a lesser agent or broker may only put your property on the internet with all their others and then haggle to find the easiest deal – easiest for them. There’s nothing good about a selfish Valentine.

There is a great difference between the two – often many thousands of dollars/pounds/euros/yen etc in the final price you achieve. You could come to love the former but hate the latter. The trick is finding the right Valentine broker at the outset. It’s a bit like finding the best boyfriend or girlfriend. They may look roughly the same at first but over time they all turnout very differently.

So if you are searching for the type of broker you could come to love this spring go on a few dates – invite a few to visit your home, give you some marketing advice and see how you get on. Then ask yourself which you would prefer, the cheap flashy one who brags a lot or the one with whom you feel most comfortable, the one with a background of stable and successful relationships – the one you would most like to introduce to your parents.

October 2016 Real Estate Sales – California

2016_oct_sales_ig_r

FarmersMarket3
Photo by TMR

In Truckee, there are two farmers markets, taking place Tuesdays and Sundays.

The Truckee Community Farmers Market is launching its second season as a market on Sunday, June 5, in the Tri Counties Bank/Sears/Coffeebar Bakery parking lot at 12047 Donner Pass Road.

The market will be open every Sunday all summer from 10 a.m.-2 p.m.

Truckee Certified Farmers Market will be there, every Tuesday from 8 a.m.-1 p.m., They kicked off the 2016 season on May 24 at Truckee Regional Park, at 10050 Brockway Road.

Tahoe-City-Farmers-market
Photo by Elder Group

The Tahoe City Farmers Market will run every Thursday from 8 a.m.-1 p.m. at Commons Beach.

dt.common.streams.StreamServer
Photo by Tahoe Daily Tribune

In Incline Village, there are two farmers markets: the Tunnel Creek Station Market on Wednesdays and the Incline Village Farmers Market on Thursdays.

Opening June 1, the Tunnel Creek Station Market — next to Tunnel Creek Café, 1115 Tunnel Creek Road — will operate every Wednesday from 4-7 p.m.

The Incline Village Farmers Market, meanwhile, opens its fourth season a day later, June 2, in a new location at Lake Tahoe School, located at 995 Lake Tahoe Blvd.

The market will be open every Thursday from 4-7 p.m. Visit laketahoemarkets.com to learn more.

2015 3rd Quarter Real Estate Market Statistics

2015 3rdQuarter STATS_SLT 2015 3rdQuarter STATS_IV 2015 3rdQuarter STATS_TD 2015 3rdQuarter STATS_TRK 2015 3rdQuarter STATS_ES 2015 3rdQuarter STATS_TC 2015 3rdQ_STATS SQV Resorts_TOTALS 2015 3rdQ_STATS LT_TOTALS 2015 3rdQ STATS RNO_TOTALS

chase logo 2

Media Contact:  Katie Shaffer

East River Public Relations

530-214-8790

[email protected]

For Immediate Release

Tahoe Home Prices Continue to Rise

ZEPHYR COVE, Nev. (July 7, 2015) – The Lake Tahoe real estate market continued to see an uptick in median home prices this quarter, up 14 percent to $525,000. Overall sales around the lake dipped slightly from this time last year, with Incline Village seeing decreases across the board and Tahoe City seeing healthy improvements.

The figures are part of a report released by Lake Tahoe-based real estate company Chase International, and compare the prices and closings from January 1 through June 30, 2015 to the same time period from 2014. Most changes were minor – a four percent and one percent decrease in lake-wide sales volume and units sold, and a one percent and ten percent drop in units sold under and over the $1 million mark (respectively).

“There is only one Lake Tahoe,” said Sue Lowe, senior vice president of Chase. “And people want to experience the amazing lifestyle and buy here. Our continued lack of inventory keeps our prices moving up.”

The median price of a home rose 14 percent on the East Shore ($767,500) and the South Shore ($386,000), and seven percent in Tahoe City ($560,00). Incline Village saw a four percent drop, to $850,000. Incline also experienced a drop in sales volume (23 percent), units sold (15 percent), and homes selling for more than $1 million (24 percent).

Tahoe City saw the biggest improvement with an eight percent increase in sales volume, 14 percent jump in units sold, and 18 percent surge in homes sold for under $1 million.

Nearby Truckee saw a ten percent drop in sales volume and six percent decrease in median home price ($548,000). Homes selling for more than $1 million faltered, falling 36 percent, and homes selling for less than $1 million was up eight percent.

About Chase International:  Headquartered in Lake Tahoe, Nevada since 1986, with nine offices in the region (Zephyr Cove, Glenbrook, Incline Village, Tahoe City, Squaw Valley, Truckee, South Lake Tahoe, Carson Valley and Reno) and one in London, England, Chase International and its exclusive affiliations handle a large share of the country’s property. With 310 professional Realtors® boasting an array of industry certifications, Chase International is the regional leader for three years running as reported by Real Trends, a communications and consulting company considered to be the leading source of analysis and information on the residential brokerage and housing industry.  For more information about Chase International, visit www.chaseinternational.com.

 ###

2015 2ndQ_STATS LT_TOTALS 2015 2ndQ STATS _TC 2015 2ndQ STATS _ES 2015 2ndQ STATS _SLT 2015 2ndQ STATS_IV 2015 2ndQ_STATS SQV Resorts_TOTALS 2015 2ndQ STATS _TRK 2015 2ndQ STATS_TD

BusttoBoom

Price-Since-Peak-KCM

Home Values Compared Statewide….
 

After the housing market bust we experienced across the country in 2008, many experts have been quick to warn that a new bubble may be forming in some areas of the country.

The quickest and easiest way to show how far we’ve come and how far we still need to go in regards to the ‘Peak’ is to share CoreLogic’s Price & Time Since Peak figures, used to create the map above.

Many areas of the country still have a long way to go to be anywhere near the peaks experienced in 2005-2007. Seven states (seen in the darker blue) are currently at their peak.

The biggest challenge facing the housing market’s recovery right now is the lack of inventory available for sale. Prices are determined by supply and demand. Right now buyer demand is out-pacing seller supply, across many price ranges, driving prices up.

Bottom Line

If you are a homeowner debating listing your home for sale this spring/summer, now is the time, let’s get together to discuss your options.

631 California Ave Exteriors (JPEG Web Res) (1 of 2) copy

UNIQUE HOMES / GALLERY / BY ON 6 MAY 2015

A sprawling mansion above the Truckee River in Reno, NV is on the market for $16.4 million after 23 years in disrepair, followed by more than a decade of renovations.

The Nixon Mansion, built in 1907 by a U.S. senator for Nevada who made his fortune in mining, was damaged by a Christmas tree fire in 1979 and sat empty and “degrading to eyesore status” until 2002, when the current owners bought it and began to envision a new life for the nearly 18,000-square-foot home.

“It would’ve been quicker and cheaper to tear it down and rebuild it,” says listing agent Sandi Solomonson of Chase International. “But they took the time to restore as much as possible, including the huge original crystal chandelier in the formal dining room.”

Aerial from river - Best

Situated on more than two acres with views of downtown Reno and the mountains, the 8-bedroom, 11.5-bath home exists on a grand scale.

Its 860-square-foot kitchen boasts multiple refrigerators and dishwashers, a walk-in pantry and a butler’s pantry — a large enough kitchen to serve 80 guests in the dining room with that crystal chandelier and a carved mahogany fireplace.

The 800-square-foot grand ballroom sits adjacent to a bar that opens onto a wide terrace with views across the river. There are also river views from a private office in the master suite, which features a Juliet balcony with garden views and two marble bathrooms, each with a mahogany walk-in closet.

The home includes seven additional bedrooms with en-suite bathrooms, plus nine fireplaces, an 1,800-bottle wine cellar and tasting area, a library, a parlor, a game room with a wet bar, and a sunlit room with a fountain.

The property is zoned for professional as well as residential use, and could be used for offices or a corporate retreat.

Photos by GetYourView.com

About the Author

Melissa Allison writes about real estate transactions and trends for Zillow Blog.

Who doesn’t love Lake Tahoe in the summer? Growing up, my family spent the last two weeks of every August at Dollar Point outside of Tahoe City. I possess so many happy memories of waterskiing, horseback riding, tennis and lakeside barbecues, and I think everyone should spend some time at this beautiful west coast location.

For those of you planning a summer vacation in Tahoe this year, we’re lucky to have a list of some of the area’s must-attend summer events, expertly curated by Trinkie Watson. Considering Trinkie is a preferred Realtor for the Lake Tahoe Luxury Real Estate market, and the top agent for lakefront properties sold, she knows a thing or two about the best places to see and be seen.

Without further ado, here is Trinkie’s Tahoe list.

This tasty event is a benefit for the Gene Upshaw Memorial Tahoe Forest Hospital Cancer Center to raise money for the non-insured programs for cancer patients and caregivers. Held at the Ritz Carlton, this themed event is always a sell out.

Now in its 19th year, the all day showcase of Chase International’s lakefront properties is a very special way to explore the Lake Tahoe area. Don’t forget to try out a Tesla—test drives will be available at one of the estates.

This fashion show and luncheon benefit was first held in 1969, and this year it will be held as a tribute to its late featured designer, Oscar de la Renta. A grand event held at a beautiful estate on the water—don’t miss it.

The 43rd annual show features some of the most beautifully restored wooden boats in the world. In addition to the main event, a host of festivities surround the yacht show, including an Opening Night Dinner and Dance, a barbecue and awards presentation and a Ladies’ Luncheon and Fashion Show.
Held for three consecutive weekends in Incline Village, the concerts feature world renowned musicians in a formal full orchestra playing on the Sierra Nevada College Campus.
A total of five classical music concerts held in different locations, this fun and casual event demands an outdoor picnic, maybe even a bottle of wine.
The Nevada Museum of Art opening night gala and dinner for the TAHOE exhibit, August 21
The TAHOE exhibit will only be at the Nevada Museum of Art through the end of the year before moving to the Oakland museum. You’ll receive a fabulous, art-filled coffee table book when you purchase a ticket to the dinner.

Thank you to Trinkie for keeping us in the loop, and have a happy summer at Lake Tahoe!

Another positive report for spring buying season

California is performing well as it heads into the spring homebuying season, at least in terms of homes under offer.

According to the latest California Association of Realtors report, pending home sales in the state soared in February to record the first doubled-digit annual gain in nearly three-year and the third straight year-to-year increase.

This should hopefully translate into improved market conditions and more closed transactions in the coming months.

As a whole, California pending home sales increased in February, with the Pending Home Sales Index growing 24.8% from a revised 89.9 in January to 112.2, based on signed contracts.

The month-to-month increase easily topped the long-run average increase of 17.9% observed in the last seven years.

Statewide pending home sales were up 15.6 percent on an annual basis from the 97.1 index recorded in February 2014. The yearly increase was the largest since April 2009 and was the first double-digit gain since April 2012.

Click to enlarge

NAR

Source: CAR

This comes as good news for the state since it infamous for having a tough housing market to enter.

Dwight Johnston, chief economist for the California Credit Union League, explainedthat California is not changing anytime soon. There is no movement to loosen the problem in the states, and if anything, there are people who are restricting changes.

His tip for how to afford living in California: save.

In the old days, people didn’t need to put as great of an emphasis on saving, Johnston explained. However, now it really requires incomes to rise and people to save more.

Saving for a down payment, allows for a better loan-to-value ratio, keeping a borrower safer from risks of defaulting.

And if borrowers are struggling to save, Trulia (TRLA) outlined simple, but feasible, ways people can save over $10,000 in as little as three years if they just cut back in various areas.

March2015-5 March2015-17 March2015-18 March2015-19 March2015-20 March2015-21 March2015-25 March2015-27 March2015-36 March2015-37

2014 3rd Quarter Market Statistics for The Lake Tahoe Region

2014 3rdQuarter Stats TC2014 3rdQuarter Stats TD 2014 3rdQuarter Stats ES

California Real Estate Housing Market Outlook

graph

Gentry

Tahoe Real Estate Market
Continuing to Show Appreciation
Tahoe Market Home Sale Prices are Up

ZEPHYR COVE, Nev. (April 14, 2014) –The Lake Tahoe real estate market experienced notable increases in both average and median home prices during the first quarter of 2014, which is good news for sellers.  For Tahoe as a whole, which combines the East Shore, South Shore, Tahoe City and Incline Village/Crystal Bay markets, the volume of sales was down nine percent.  Yet the median home price in Tahoe increased 12 percent and the average price climbed 11 percent to $876,611.  The entire region has had record lows in inventory contributing to the decrease in units sold and volume sold.  The one sector at Tahoe where the volume of sales increased, was at the ski resort communities of Northstar, Squaw Valley and Alpine Meadows, by 39 percent.

The most impressive numbers to come out of the region recently were in Tahoe City where sales volume jumped 48 percent over last year at this time, with $53,884,250 in volume sales recorded in 2014’s first quarter.  Tahoe City’s average price increased a whopping 113 percent to $1,314,250, and the median price climbed 51%, from $417,000 last year to $630,000 during this year’s first quarter.

Incline Village showed an increase in average price of 23 percent, to $1,703,476.  The number of units sold in South Shore over $1 million jumped by 100 percent.  And the average price in South Shore increased by 20 percent, to $436,884. The East Shore market was down, due to several large sales that transpired in 2013 and a continued lack of inventory.

These figures are part of a quarterly report released by Lake Tahoe-based real estate company Chase International.

“There continues to be an uptick of interest and sales in the market’s upper end offerings,” said Sue Lowe, corporate vice president for Chase International. “And in the under $1 million market, prices are continuing to climb.”

Lawrence Yun, chief economist for the National Association of Realtors notes that NAR’s forecast for home sales is to be lower by five percent in the first half of this year versus the same period a year ago.  However, Yun predicts that sales are projected to be two to three percent higher in the second half of the year, and home prices, because of a nationwide inventory shortage, will keep marching higher.

The Truckee market posted some impressive gains with a sharp jump in median price of homes sold—up 29 percent to $635,000 and an average home price increase of 24 percent, to $858,304.  However, Truckee sales volume over this time last year was down six percent.

Headquartered in Lake Tahoe, Nevada since 1986, with ten offices in the region (Zephyr Cove, Glenbrook, Incline Village, Tahoe City, Squaw Valley, Graeagle, Truckee, South Lake Tahoe, Carson Valley and Reno) and one in London, England, Chase International and its exclusive affiliations handle a large share of the country’s property. With 260 professional Realtors® boasting an array of industry certifications and the highest volume per sales agent in the area, Chase International successfully represents homes at all price levels.  For more information about Chase International, visit www.chaseinternational.com.

Tahoe Real Estate Market
Continuing to Show Appreciation
Tahoe Market Home Sale Prices are Up

ZEPHYR COVE, Nev. (April 14, 2014) –The Lake Tahoe real estate market experienced notable increases in both average and median home prices during the first quarter of 2014, which is good news for sellers.  For Tahoe as a whole, which combines the East Shore, South Shore, Tahoe City and Incline Village/Crystal Bay markets, the volume of sales was down nine percent.  Yet the median home price in Tahoe increased 12 percent and the average price climbed 11 percent to $876,611.  The entire region has had record lows in inventory contributing to the decrease in units sold and volume sold.  The one sector at Tahoe where the volume of sales increased, was at the ski resort communities of Northstar, Squaw Valley and Alpine Meadows, by 39 percent.

The most impressive numbers to come out of the region recently were in Tahoe City where sales volume jumped 48 percent over last year at this time, with $53,884,250 in volume sales recorded in 2014’s first quarter.  Tahoe City’s average price increased a whopping 113 percent to $1,314,250, and the median price climbed 51%, from $417,000 last year to $630,000 during this year’s first quarter.

Incline Village showed an increase in average price of 23 percent, to $1,703,476.  The number of units sold in South Shore over $1 million jumped by 100 percent.  And the average price in South Shore increased by 20 percent, to $436,884. The East Shore market was down, due to several large sales that transpired in 2013 and a continued lack of inventory.

These figures are part of a quarterly report released by Lake Tahoe-based real estate company Chase International.

“There continues to be an uptick of interest and sales in the market’s upper end offerings,” said Sue Lowe, corporate vice president for Chase International. “And in the under $1 million market, prices are continuing to climb.”

Lawrence Yun, chief economist for the National Association of Realtors notes that NAR’s forecast for home sales is to be lower by five percent in the first half of this year versus the same period a year ago.  However, Yun predicts that sales are projected to be two to three percent higher in the second half of the year, and home prices, because of a nationwide inventory shortage, will keep marching higher.

The Truckee market posted some impressive gains with a sharp jump in median price of homes sold—up 29 percent to $635,000 and an average home price increase of 24 percent, to $858,304.  However, Truckee sales volume over this time last year was down six percent.

Headquartered in Lake Tahoe, Nevada since 1986, with ten offices in the region (Zephyr Cove, Glenbrook, Incline Village, Tahoe City, Squaw Valley, Graeagle, Truckee, South Lake Tahoe, Carson Valley and Reno) and one in London, England, Chase International and its exclusive affiliations handle a large share of the country’s property. With 260 professional Realtors® boasting an array of industry certifications and the highest volume per sales agent in the area, Chase International successfully represents homes at all price levels.  For more information about Chase International, visit www.chaseinternational.com.

Fueled by limited inventory, Lake Tahoe-region home listing prices swelled in the first quarter, a report this week shows.

For the January-March period, the median listing price rose 17 percent from the last quarter of 2013 to $635,000 for the region encompassing Lake Tahoe, Truckee, Donner Lake, Northstar, Olympic Valley and Alpine Meadows, according to the report by a local brokerage.

Compared with January-March 2013, the median listing price of a single-family home increased 35 percent, the report shows.

At the same time, the number of properties sold fell 44 percent quarter over quarter and by 25 percent year over year, according to the report which cited fewer available homes for sale as well as the past winter’s meager snowfall impacting visitation to the area.

The rising asking prices were particularly notable in the lakefront submarket, which in the report covers California’s North and West Shores and Nevada’s Incline Village and Crystal Bay.

“Keep an eye on the lakefront market, where limited inventory is driving the median home price up drastically with a 97 percent increase quarter over quarter,” president of the brokerage said in a statement accompanying the report.

“As ski communities bounce back from a weather-affected quarter, we will expect market growth in summer months,” he said.

LAKE TAHOE HOUSING TRENDS

Single-family home median listing price by submarket for the first quarter 2014 ( compared with fourth-quarter 2013):

Truckee region: $575,000, up 12 percent

Northstar (excluding condominiums): $890,000, up 9 percent

Squaw Valley/Alpine Meadows: $1.25 million, up 9 percent

Incline Village/Crystal Bay: $1.09 million, up 27 percent

Tahoe lakefront: $6.47 million, up 97 percent

2014 1stQuarter Stats LakeTahoe TOTALS

2014 1stQuarter_BANDING GRAPHS

2014 1stQuarter Stats ES

2014 1stQuarter Stats TRKE

2014 1stQuarter Stats TC

2014 1stQuarter Stats TD

 

For Immediate Release

Tahoe Real Estate Market Continuing to Show Appreciation Tahoe Market Home Sale Prices are Up

ZEPHYR COVE, Nev. (April 14, 2014) –The Lake Tahoe real estate market experienced notable increases in both average and median home prices during the first quarter of 2014, which is good news for sellers.  For Tahoe as a whole, which combines the East Shore, South Shore, Tahoe City and Incline Village/Crystal Bay markets, the volume of sales was down nine percent.  Yet the median home price in Tahoe increased 12 percent and the average price climbed 11 percent to $876,611.  The entire region has had record lows in inventory contributing to the decrease in units sold and volume sold.  The one sector at Tahoe where the volume of sales increased, was at the ski resort communities of Northstar, Squaw Valley and Alpine Meadows, by 39 percent.

The most impressive numbers to come out of the region recently were in Tahoe City where sales volume jumped 48 percent over last year at this time, with $53,884,250 in volume sales recorded in 2014’s first quarter.  Tahoe City’s average price increased a whopping 113 percent to $1,314,250, and the median price climbed 51%, from $417,000 last year to $630,000 during this year’s first quarter.

Incline Village showed an increase in average price of 23 percent, to $1,703,476.  The number of units sold in South Shore over $1 million jumped by 100 percent.  And the average price in South Shore increased by 20 percent, to $436,884. The East Shore market was down, due to several large sales that transpired in 2013 and a continued lack of inventory.

These figures are part of a quarterly report released by Lake Tahoe-based real estate company Chase International.

“There continues to be an uptick of interest and sales in the market’s upper end offerings,” said Sue Lowe, corporate vice president for Chase International. “And in the under $1 million market, prices are continuing to climb.”

Lawrence Yun, chief economist for the National Association of Realtors notes that NAR’s forecast for home sales is to be lower by five percent in the first half of this year versus the same period a year ago.  However, Yun predicts that sales are projected to be two to three percent higher in the second half of the year, and home prices, because of a nationwide inventory shortage, will keep marching higher.

The Truckee market posted some impressive gains with a sharp jump in median price of homes sold—up 29 percent to $635,000 and an average home price increase of 24 percent, to $858,304.  However, Truckee sales volume over this time last year was down six percent.

Headquartered in Lake Tahoe, Nevada since 1986, with ten offices in the region (Zephyr Cove, Glenbrook, Incline Village, Tahoe City, Squaw Valley, Graeagle, Truckee, South Lake Tahoe, Carson Valley and Reno) and one in London, England, Chase International and its exclusive affiliations handle a large share of the country’s property. With 260 professional Realtors® boasting an array of industry certifications and the highest volume per sales agent in the area, Chase International successfully represents homes at all price levels.  For more information about Chase International, visit www.chaseinternational.com.

Ready to Rebound

By JONATHAN R. LAING

After falling 34% over the past six years, U.S. home prices will soon bottom. They could turn back up by spring 2013.

It hit with the ferocity of an Old Testament plague, wiping out large populations of homeowners in the U.S. Five million of the country’s 76 million mortgage holders have lost their homes to foreclosure or lender-ordered short sales since 2006, and an estimated 14 million more owe more on their homes than their properties are currently worth. In all, some $7.4 trillion in homeowners’ equity has been destroyed, according to Mark Zandi, chief economist at Moody’s Analytics, and more than two million jobs in the home-building industry disappeared.

At year end 2011, the S&P/Case-Shiller National U.S. Home Price Index fell to a record low, 33.8% below the boom peak level, recorded in 2006’s second quarter. The descent has been all the more hideous in such once-manic markets as Las Vegas, Phoenix and Miami, which, according to the Case-Shiller 20-City Composite Index, have fallen 61%, 55% and 51%, respectively, from their high-water marks.

Everyone has shared the pain. The negative wealth effect from the price decline both contributed to the virulence of the Great Recession and crimped the subsequent recovery.

At year end 2011, the S&P/Case-Shiller National U.S. Home Price Index fell to a record low, 33.8% below the boom peak level, recorded in 2006’s second quarter. The descent has been all the more hideous in such once-manic markets as Las Vegas, Phoenix and Miami, which, according to the Case-Shiller 20-City Composite Index, have fallen 61%, 55% and 51%, respectively, from their high-water marks.

Everyone has shared the pain. The negative wealth effect from the price decline both contributed to the virulence of the Great Recession and crimped the subsequent recovery.

Everyone has shared the pain. The negative wealth effect from the home-price decline contributed to the virulence of the Great Recession.

Yet as grim as these year-end readings appear to be, there are signs that the long nightmare for American homeowners is in its terminal stage, and that, maybe, just maybe, home prices will bottom and begin to turn by the spring of 2013—if not before. Certainly, the economy is doing better these days—the sine qua non for improved demand for housing. Jobs numbers have been up sharply three months in a row, leading to a jump in consumer confidence of late.

The near-record low in mortgage rates and concomitant slide in home prices has made houses and condos stunningly affordable (although stiff underwriting standards have made getting home loans more difficult). This is captured in the National Association of Realtors Housing Affordability Index, which measures how much purchasing power a median-income family needs in order to buy a median-priced home, using conventional mortgage financing.

This measure stood at 206 in January, which meant that the typical family has more than double the income needed to purchase an average home. That reading is more than twice the 102.7 at the peak of the bubble in July 2006.

MUCH OF THE HOME-PRICE DECLINE in the past six years has been fueled by the distress sales of foreclosed properties, which typically sell at discounts of 30% or more to dwellings in the conventional sales market. Distressed sales, along with vacant houses and condos awaiting a sale, trash property values for all the other homes in the immediate area.

These forced sales have weighed heavily on overall market prices that are typically reported on a metropolitan-area basis that includes cities, surrounding communities and exurbs, which are a good distance from downtown. Within many metropolitan statistical areas, a bifurcated market has developed in which a pricing recovery already is under way in communities and neighborhoods far from the areas still reeling from past excesses of subprime mortgages and predatory lending.

This phenomenon is showing up in the statistical service CoreLogic’s Home Price Index, which nicely separates distressed from nondistressed sales. Indeed, for all of 2011, prices fell 4.7% nationally from the previous year’s level. Excluding distressed sales, however, home prices dropped just 0.9%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Of greater moment, perhaps, CoreLogic data show that nondistressed-sales prices rose 0.2% month over month in December 2011 and 0.7% in January 2012. Could this be an augur of better times to come?

Absolutely, in the opinion of Karl Case, professor emeritus at Wellesley College and one of the progenitors of the Case-Shiller indexes, launched in 2002. “If you drill down in the numbers by zip code in the Boston area, as I have done, you find that more desirable, affluent neighborhoods like Back Bay and Beacon Hill are doing just fine now—while, say, Fall River is still in the dumps and dragging down the entire Boston Metro area,” he asserts.

This bifurcated market is seen all across the country. While the Nob Hill neighborhood in San Francisco never saw values drop drastically and is now recovering nicely, Stockton, Calif., remains in the dumps. It’s a tale of two cities elsewhere, too. The Santa Monica real-estate market is doing fine, while the desert towns to the east are still suffering. And, in the Miami environs, South Beach is strengthening; Hialeah, Fla., isn’t.

Then there are areas that have been so depressed that the only direction now seems to be up.

In fact, woebegone Detroit was the only place in the latest Case-Shiller National Index to show an annual increase for December. True, the price increase was a skimpy 0.5%, but that was lots better than the 12.8% slide notched by the Atlanta area for 2011. And the only two metro areas that showed month-over-month gains in December were Miami, up 0.2%, and Phoenix, up 0.8%.

TO BE SURE, PLENTY OF headwinds remain for home sales. Unlike the stock market, home prices display much long-term momentum and inertia. Prices, all other factors being equal, tend to move in their past direction, and lenders, chastened by recent experience, remain tight with mortgage credit. Going through the home-loan application process these days is like undergoing a financial colonoscopy. In contrast, during the salad years of the housing boom, banks were shoving money at borrowers, with few questions asked.

The biggest impediment to a turn in the home market remains the so-called shadow inventory of some 3.671 million homes, according to estimates by Mark Zandi of Moody’s Analytics: those that remain somewhere in the foreclosure pipeline. Payments on some are 90-plus days delinquent; others are already lender-owned properties, known as REOs (real estate owned), that haven’t yet been listed for sale.

This inventory sits atop a market for existing-home sales that this January reached an annual pace of 4.5 million units. Moody’s Zandi, for one, finds particularly worrisome the recent $26 billion settlement of charges, alleging malpractice in home foreclosures, reached by 49 state attorneys general and the five largest lenders and mortgage servicers in the U.S. If nothing else, as a result of this, the shadow inventory will hit the home market far faster than it would have otherwise.

“While I feel better about U.S. home prices than I have in six years, I do think that a pickup in foreclosure and short sales could push U.S. home prices down another 5% this year, before the market bottoms next spring,” says Zandi. (In a short sale, the lender and homeowner agree to sell the home at a loss with the proceeds going to the lender in lieu of an actual foreclosure.)

Others are more sanguine.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eleven forecasters surveyed this year by the Federal Reserve Bank of Philadelphia predicted, on average, that the Case-Shiller National Index would fall by just 0.2% this year—and that it would rise 1.2% in 2013. Even if the decline were to reach Zandi’s 5% level in 2012, it would be off such a low price base as to be almost imperceptible.

If the market bottoms out early next year, as Barron’s expects, any recovery is liable to be somewhat tepid for a while. Buyer psychology has been shredded by the housing bust: The notion of housing as investment, rather than shelter and a wasting capital good, has been destroyed. Meanwhile, lots of sellers, anxious to downsize or liquidate, remain in the wings, ready to pile into the market at the first sign of a rebound.

A pricing model recently developed by Goldman Sachs predicts a rise in nominal prices of a cumulative 30% over the next 10 years, for a real return of 1% annually, after adjusting for inflation. But if tax changes like the elimination of deductibility of mortgage interest materialize, long-term appreciation in home prices could hew more closely to inflation, with little in the way of real returns.

NONETHELESS, THE POSITIVES these days outweigh the negatives.

Take the daunting 3.7 million homes that Moody’s estimates is in the shadow inventory. Zandi points out that this foreclosure pipeline has been steadily shrinking since its peak of 4.53 million homes in the first quarter of 2010. The decline is primarily a result of a precipitous drop in loans entering the foreclosure channel.

The 30- and 60-day early-stage delinquency rate has been dropping like a stone for several years because of tightened mortgage-underwriting standards.

Likewise, Zandi expects that the shadow inventory could be reduced by at least 700,000, thanks to recent changes in Uncle Sam’s Home Affordable Modification Program to encourage lenders to reduce the principal on loans in early-stage default.

He also expects investment demand from all-cash buyers for homes in hard-hit areas like Nevada, Arizona, California and Florida to take lots of properties out of the shadow inventory. Rising rent rates make the strategy appealing to buyers seeking attractive cash returns while they await a turn in the market.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, is also encouraging them to make bulk sales to investors of their large portfolios of foreclosed properties.

CoreLogic’s chief economist, Mark Fleming, thinks that the size of the true shadow inventory—the number of homes that will reach the market as distressed sales—totals only about 1.6 million. Such transactions, which accounted for 28% of all existing home sales in December, won’t return to the record 33% they hit in February 2011, he adds.

The demand for housing could pick up markedly in the years ahead, just from population growth, or, in census lingo, household formation.

The Great Recession of 2008-09 sparked a collapse in household formation, as adult children postponed striking out on their own or moved back to their parents’ homes after losing, or failing to find, jobs.

The household-formation rate plummeted to 300,000 during 2008, from more than 1.7 million in 2005. But the Canadian economic research outfit BCA sees the U.S. rate surging to its historic annual average of around 1.3 million in the years ahead, boosting the demand for rental apartments first and then spilling into the housing market. BCA reckons that five million new households will have to be formed simply to return the ratio of households to population to normal levels.

Perhaps no one knows more about residential real-estate price trends then Yale economist Robert Shiller, the co-creator of the Case-Shiller indexes. He has studied prices going back many years, including those in one neighborhood in Amsterdam that has been around for literally centuries.

While he’s reluctant to predict definitively when the U.S. housing bust will end, he points to one leading confidence indicator that appears to be signaling a market turn—the National Association of Home Builders/Wells Fargo Housing Market Index.

This monthly survey seeks to capture shifts in builders’ perceptions of current and future market conditions and buyer traffic. The index has been on a tear of late, rising five months in a row and to its highest level since 2007. Home-builder stocks likewise have blasted off since the October 2011 stock-market low, with Beazer Homes (ticker: BZH) up some 167%, Toll Brothers (TOL), 81%, and the SPDR S&P Homebuilders exchange-traded fund (XHB) up 74%.

This confidence index, Shiller notes, topped out almost seven years ago, in the very month that he boldly predicted in a Barron’s article that the U.S. home market was on the verge of a monumental collapse that would see prices fall an inflation-adjusted 50% (“The Bubble’s New Home,” June 20, 2005).

“It’s amazing how on target that prediction was, since nationally the market is already down 40% in real terms,” Shiller said in a recent telephone interview.

The Yale economist isn’t sure why the builder-confidence reading has been such a good leading indicator. After all, the market for new homes even in strong years never accounts for more than 20% or so of all sales; existing houses and condos account for much more. And lately, the figure has sunk to around 6%. Perhaps home builders have a deeper insight into potential buyers’ psychology—although if their grasp of market conditions were that good, many of them wouldn’t have gone belly-up during the bust.

The Obama administration certainly hopes that housing is on the verge of a turn. So do the host of homeowners anxious to unload their properties. One very positive sign: The inventory of new and used homes is around a six-month supply, a decline from the peak in 2008 of more than 10 months.

That bodes well for continued economic recovery and could win President Barack Obama another four years in the White House. But for baby boomers who once hoped to retire on the proceeds of selling a home, the best advice may be: Don’t quit your day job.

 

 

Brian Sly

 

President

Brian Sly and Company, Inc.

Registered Investment Advisor and Consulting Corporation

73 Scenic Drive  |  Orinda, CA  94563

Is the Housing Market Actually Recovering?

Is the Housing Market Actually Recovering?

by The KCM Crew on March 13, 2012

Everyone wants to know if the housing market is truly showing signs of a recovery. There are conflicting headlines every day. One day, we hear sales are up. The next day it is reported that prices are down. Is the real estate market coming back? The answer is ‘yes’ and ‘no’.

There are two aspects that must be evaluated: house sales and house prices. They will not recover at the same time. Sales are already increasing rather nicely while prices will still soften in many markets through 2012.

Home Sales

The National Association of Realtors (NAR) issues a Pending Home Sales Report each month. We can see by the graph below that sales have been increasing nicely over the last twelve months. Real estate professionals across the country are reporting that activity has increased compared to last year. The sales side of the recovery is starting to show great promise.

Home Prices

Many price indices have shown that national home prices are continuing to stumble. Even with demand increasing, we must look at where the supply of housing stock stands. Though ‘visible’ inventory (homes currently on the market) is shrinking, there is still a large overhang of ‘shadow’ inventory (foreclosures about to come to market as a result of the National Mortgage Settlement). This increase in inventory will outpace the increase in demand and thereby cause prices to continue to soften in many parts of the country.

Bottom Line

Housing is coming back. However, sales will come back before prices. We will not see prices appreciate until we work through the oversupply of homes on the market.