A faint light at the end of the real estate tunnel
By: CHRIS BAGLEY - Staff Writer | ∞
Two years after the number of unsold homes began to rise and a year after prices began to slide, the local real estate market is showing the first signs of what could become a rebound, according to agents and others in the industry.
Homeowners who sold their houses this spring were able to do so in an average of just under two months, according to data from the Southwest Riverside County Association of Realtors, which represents most local agents. The time-on-market figure, a key statistic, rose from 17 days in the March-to-June period of 2004 to 53 days in the same four months of 2006, but has stabilized, edging up to just 57 days in the last four months. Longer lags can indicate that the economy isn't bringing in enough new residents to replace the ones leaving or that sellers are asking too much and may have to drop their prices.
"In a normal market, which is not what we had three years ago, about 60 days on the market is very average," said Marsha Swanson, a 30-year agent who runs the Wildomar office of Coldwell Banker Residential Brokerage.
Other local agents have said two months is slightly higher than average, but still within normal range. Swanson said sellers have taken several months to get used to the fact that most houses aren't appreciating at the 20 percent to 30 percent annual rates of 2003 and 2004. Until late last year, many were asking for $20,000 or $30,000 more than most buyers were willing to pay in the slowing market.
As a result, buyers held off, leaving houses to sit on the market for longer. Local sellers who cut their price by $20,000 have often been able to sell their houses in just a couple of weeks, agents and sellers said.
That's one reason prices have fallen from 2 to 20 percent in most Southwest County neighborhoods. The price of a typical existing home in Temecula has fallen about 8 percent in the last year to $435,000, according to June figures from DataQuick Information Systems, a research firm. Prices have fallen 3 percent to $385,000 in Menifee and 16 percent to about $425,000 in Murrieta.
No agents or economists interviewed in recent weeks said they expected a broad rebound in Riverside County home prices within the next year. Even the California Association of Realtors, known for its perpetually cheery take on the state's real estate market, forecast that prices will fall 2 percent this year in the state, and other economists have estimated that declines of 5, 10 or even 18 percent are needed to bring prices back into line with residents' incomes after record appreciation in recent years.
But optimists have pointed to Southern California's generally strong economy as evidence that recent sluggish conditions can't last. Some have said that the problems are concentrated among buyers who used risky, 100 percent financing to get into houses that were simply too large, too luxurious and too expensive for them. Foreclosure-related filings in Riverside County have nearly quadrupled in the last year, to 12,759 in the April-June period, according to Irvine-based RealtyTrac.
Andy McIntosh, a vice president of Temecula-based SDL Real Estate, said most of the lower sales this year represent a relative handful of houses that are in foreclosure after owners fell behind on mortgage payments. And those seem concentrated in just a few neighborhoods, said McIntosh, whose firm manages rental houses. Homeowners who stay current on payments and take care of regular home maintenance have kept prices from falling significantly, McIntosh said.
The health of local real estate could depend greatly on how many more houses are driven onto the market by rising interest rates, mortgage payments that rise after initial low periods and, ultimately, by foreclosures and banks' efforts to sell the houses they seize.
A RealtyTrac executive said he expects to see the final wave of them between now and next summer. That's because the mortgage industry began to seriously tighten its lending standards last summer after watching the first wave of foreclosures in late 2005, said Rick Sharga, vice president for marketing for the company.
While that has sped foreclosure on some borrowers who hoped a refinancing would help them escape the higher payments, it has also limited the number of problem loans that brought on foreclosures in the first place, Sharga said.
"The industry has begun to take notice," he said.
-- Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or cbagley@californian.com.
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john wrote on Jul 17, 2007 5:52 AM:Its a crime what the real estate developers are trying to push off in Escondido for 500 thousand dollars. Watch the bail outs begin.
jack wrote on Jul 17, 2007 7:24 AM:The local real estate hacks have no credibility left. Who cares what Swanson says? I see record inventory today in Riverside County and a wave of foreclosures is just coming to market. No bottom till 2009 at the very earliest, then a flat real estate market for a decade.
Home Owner wrote on Jul 17, 2007 8:07 AM:You want to blame all this on the real estate hacks... What about holding yourself responsible for your own actions? A lot of people were stupid enough to purchase homes knowing they could not afford them in the first place. Seriously who can afford to pay $4,000.00 for a mortgage? Now who is going to pay for it? Now all these idiots are dropping their houses because they woke up one day and decided that the mortgage is too much???? Nobody held a gun to their heads to sign the paper work. HOLD YOURSELF ACCOUNTABLE
jack wrote on Jul 17, 2007 8:58 AM:Sure, nobody held a gun to their heads but the realtors told them "real estate always goes up in value." The big lie that duped some weaker minds. All in the name of real estate commissions. The realtors and dupes deserve each other, but what surprises me is that people like Swanson are still trying to peddle the lie. Yucchhh.
Yeah Right wrote on Jul 17, 2007 10:00 AM:This article makes me want to run out there and buy a house. At least, that's what they want you to do. I'll wait until next year. Maybe. I wouldn't trust any realtors in this region, they're as bad as car salesmen. They just want their commission.
give me a break wrote on Jul 17, 2007 5:58 PM:Never interview real estate brokers or agents.... hello, they want to make everyone think the market is just going to be stronger than ever. Its weak. Its over priced and needs a HUGE correction.
LeftCA wrote on Jul 18, 2007 4:30 AM:Days on market is a poor indicator. Realtors are pulling homes off the market and re-listing them to make an appearance of less days on the market. If you don't believe me, ask any honest realtorŪ, if you can find one!
Jack wrote on Jul 18, 2007 6:20 AM:Well, it's official. The NCT reports today that house sales in Riverside County in June plunged more than 50% from June of last year! It's also the worst sales pace since 1993. So much for Swanson's "light at the end of the tunnel." I think the light is another train, and the inevitable wreck will sink home prices to ten year lows.
Duboiz wrote on Jul 18, 2007 7:32 AM:After reading this misleading article I felt I need to puke, what a bunch of baloney. The housing market in Calownifornia will be dead fro the next decade.
Average Joe wrote on Jul 18, 2007 8:40 AM:... Excuse me but if average time on the market was 2 months, prices wouldn't be falling pal.
tony wrote on Jul 18, 2007 9:21 AM:...and Andy said..."Homeowners who stay current on payments and take care of regular home maintenance have kept prices from falling significantly..." For how long? honestly speaking how many Californians can afford a 3000-5000 mortgage for 5 yrs?. Folks accepted these ballon payments with only one reasoning...they believed they could stretch themselves for 1 or 2 yrs while tiding over with credit cards. After two yrs the house would be worth twice as much. Then they would flip and it would have been worth the sacrifice. they would have to accept that the gamble didn't work walk away.
Chuck wrote on Jul 18, 2007 12:16 PM:Days on market means nothing. Agents just relist property... voila', a brand new listing. Recycle every 90 days. Lather, rinse, repeat. Jeez Chris, when are you going to start doing to real reporting? You're worse that Gary Watts' parrot. Look at ratio of pending to listings. Duh... 9 months inventory and piling on as pendings decrease. It's gonna get a lot worse before it gets better. Until now, there weren't any really motivated sellers. Ever seen what a end-of-year sale on an REO will do? We call 'em comp busters.
Johnny Mac wrote on Jul 18, 2007 2:27 PM:Chris Chris Chris,I know add money is down. This deal is just bad. For everyone. But light,normal market.
Charles S. wrote on Jul 18, 2007 4:12 PM:Light at the end of the tunnel LOL, that's wrong as it get, all the dumb folks already bought and are loosing everything, why would you buy now when you could wait another year and pay half? now for all you dumb folks,quit blaming other people for your foolishness,and bite the bullet,and don't be so stupid next time!!! even though it will take you another 10 years to buy again.
Ann R. wrote on Jul 26, 2007 7:50 PM:I've been watching 100 properties by address cross-referenced with the MLS#, and I have only 5 with DOM of less than 30 days, and 1 was relisted with false information9 I've already done a walk-thru). I dated a realtor who told me I would be an idiot to consider buying before Feb. 2008, and then only if it was for below the appraisal price. What about the insanity of the HOAs. I saw only in Rancho Cucamonga for $370 at the 24/7 & 365 condos near Victoria Gardens. That's a new car!
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