NAR Goiing to Rerelase Home Sales

The National Association of Realtors today announced that their statistics on home sales has been inaccurate and will release revised numbers on December 21.  (see news article here).

The real problem with real estate statistics is that even though real estate is local, people try to combine all these different statistics together and draw conclusions based on statewide or nationwide statistics.

As mentioned in the article, MLSs are expanding.  There used to be MLSs in each local area, but now there are regional MLSs (which are multiple local MLSs under a single umbrella). The benefits for doing this is that instead of all these local MLS databases of homes, there is one database that takes the listings of multiple MLSs, allows real estate agents to sell a bigger inventory of homes.  Here on the Central Coast, we have a Regional MLS, the Central Coast Regional MLS (CCRMLS).  This includes 7 local MLSs (Paso Robles, Atascadero, Scenic Coast (North County), SLO, Pismo Coast (South County), Santa Maria, and Santa Ynez).  While each local MLS runs independently and has their own set of rules, there is one database of Listings that all agents on the Central Coast accesses.

But it doesn’t stop at a Regional MLS.  Very soon, agents that are members of the Scenic Coast MLS will join a California statewide MLS.  The Statewide MLS so far includes MLSs from Southern California, the valley, and some in Northern California.  Now listings from Scenic Coast will reside in both the CCRMLS database AND the statewide California MLS database.  Patterson Realty is a member of the Scenic Coast MLS which means that Patterson listings will get more exposure through the statewide MLS than listings from any of the other 6 local MLSs (SLO, Paso, Atascadero, Pismo Coast, Santa Maria, and Santa Ynez).  Right now, Scenic Coast is the only Central Coast MLS that is becoming a member of the statewide MLS. If I was selling a home in the next year, I’d list with a Brokerage that was a member of the Scenic Coast MLS, as Patterson Realty is, to gain this added exposure for my home.

But for real estate statistics, it only makes sense to look at the local level, down to the city.  What is happening in Santa Maria is different than what is happening in Paso Robles. The city of San Luis Obispo’s stats and trends are also different than what is happening in Arroyo Grande, Cayucos, etc.

This is the reason why I developed the statstics dashboards that not only go down to the city level, but report on property types and foreclosures vs. non-foreclosures.

Local Employment, Income Numbers and Rate Update

According to the Tribune, county employment numbers have gradually improved over the past three months. Since July, about 2,800 jobs have been added, which is an increase of 3 percent off the previous number.  County employment peaked in 2007 at 104,600 nonfarm jobs. After October’s gains, the number of jobs ticked up to 96,700, which is still down 8.2 percent from the peak. Despite the slight increase in jobs, unemployment actually increased to 9.7 percent from 9.6 percent in September.

The recession has hit the California middle class particularly hard. As reported by the Tribune, the Public Policy Institute of California released a study showing the proportion of “middle class” households has dropped to 49.7 percent of the population.  Middle class is defined as a yearly income of between $44,000 and $155,000.  The “upper class” accounts for 13.7 percent of households, and the “lower class” for 36.6 percent. Since peaking at 60 percent of the population in 1980, the California middle class has shrunk to the current 30 year low.

The Central Coast middle class has been hit the hardest in the state. Since 2007, median household income has declined by 17.9 percent.

Nationally, the unemployment rate is 8.6 percent. In a 60 Minutes interview, President Barack Obama indicated he thought it “possible” the rate would continue to decline and reach 8 percent come November election time.  Election prognosticators say that unemployment and job numbers will play an important factor in the campaign, as Obama entered office with an 8 percent unemployment rate that has only gotten worse amidst the global economic crisis.

The Dow dropped today on – what else – concern about European debt. Last Friday, the 17 nations that use the euro currency agreed to a plan detailing more fiscal discipline, debt protection mechanisms, and to donate 200 billion euros to the International Monetary Fund (IMF) to help eurozone members with debt problems. The market responded favorably to the announcement initially, but today (Monday) the Dow fell 162 points in part due to skepticism that the deal created a viable long-term solution. The drop ended a two week rally.

Rates are favorable this week. We have the 30 year fixed at 3.75 percent (3.884 percent APR) and the 15 year fixed at 3.250 percent (3.489 percent APR).  FHA and VA 30-years look extremely favorable as well, at 3.5 percent (4.543 percent APR) and 3.5 percent (3.736 percent APR) respectively.

Condo’s Foreclosures

Condos in SLO County also had lower percentage of foreclosures in November as shown in the chart below. In October, 62% of condos sold were foreclosures (REO or Short Sale). In November, that percentage dropped to 39%.

condo_monthly

 

It’s been a tough year for condo sellers in SLO County. 2011 has had more foreclosure Condos than any previous year this decade as shown by the chart below. This shows the yearly foreclosure percentage, with 2011 being January-November. Thru November, we’re sitting at 48% foreclosures. We’ll see if December puts it at the 50% mark.

yearl_condos

Foreclosure Percentage Drops in November

The percentage of foreclosures (REOs and Short Sales)  dropped in November for Single Family Homes in SLO County, down to 36% of total sales. In October, foreclosures were 44% of sales.

The chart below is from our Statistics Dashboard and shows the foreclosure mix for the first 11 months of this year. The yellow is short sale, the blue is foreclosure, and green is non-foreclosure. The is also Single Family Homes in SLO County.

percnov

Prudential Franchise and Relocation Business Sold to Canadian Company

Yet another indication that the old school real estate franchise business is not what it used to be is the selling of Prudential Real Estate’s franchise business to a Canadian company, Brookfield Residential Services, for $110M.  Brookfield purchased GMAC Real Estate in 2008 and most of those franchises changed their name Real Living.  The press release didn’t say when Prudential franchises will be changing their name.

With franchise real estate, a portion of the commissions paid are sent to the parent company (the franchisor), typically 6-8%, for the use of the name. When something like this happens, it’s unclear what the benefits are if the name is not well known in the community where the homes are being sold.

November 2011 MLS Stats

November 2011

Includes San Luis Obispo County – All Residential
(Last months data is also included – November(October))

New Listings – 286 (383)
Back on Market –160 (185)
Price Drops – 336 (449)
Contingent – 190 (201)
Pendings – 346 (369)
Solds – 252 (288)
Expireds – 144 (176)
Inactives – 138 (101)

Housing Numbers and Rate Update

This week, we begin with a variety of recent housing numbers.

To start, 65.1 percent of U.S. households own a home, which is the lowest mark since 1996 as reported by the Tribune, according to the Census Bureau. The bubble years helped peak home ownership above 70 percent.

Foreclosure inventory sits at a record high of 4.29 percent of all loans. The time it takes for a foreclosure to get through the legal system is 631 days, a record. Foreclosure properties sell at a discount and bring down prices of nearby homes. Depressed pricing depresses investment. The supply of foreclosure properties will need to be worked through as the housing market recovers.

October posted some gains for the housing market. New home sales increased 1.3 percent in the month, up to 307,000. Overall, pending home sales increased by 10.4 percent in October, which is the highest number in a year. While positive, the numbers are still well below healthy market expectations. Economists suggest a strong housing market would have 700,000 new home sales a month. On the negative side, we had a very small number of new homes hit the market in October – just 162,000.  The number suggests builders have stopped new projects due to low demand, difficulty in obtaining financing, and a surplus of existing homes on the market.

Last week, the Dow logged large gains to erase the small mid-November slump. The largest gain occurred after major central banks around the globe took action to ease debt tension and make it cheaper and easier for banks to borrow dollars when needed. In practice, this means that European banks have better access to dollar liquidity – something they haven’t had due to concern about the European debt issue and exposure to potential losses. This action is an attempt to avoid the kind of major credit crunch we saw in 2008, which would restrict lending and investment and shrink the global economy.

The nation’s jobless rate fell to 8.6 percent in November. In some ways, the number is misleading. Employers added 120,000 jobs, true, but the 0.4% drop in the unemployment number is also due to the 315,000 people who stopped looking for work and left the workforce.

Rates have improved over the past week. Nationally, the average for the 30-year fixed is 4 percent and 3.35 percent for the 15-year fixed.  At Central Coast Lending, we offer a 30-year fixed starting at 3.750 percent (3.892 percent APR) and a 15-year fixed at 3.250 percent (3.503 percent APR). Rates are always changing, so make sure you call Central Coast Lending at 805.543.LOAN for an update about any movement.

As always, check in with our Facebook for daily updates about the economy and housing market numbers.