Indian Ridge CC 2010 2nd Quarter Report
Dear Indian Ridge Resident:
While we continue to hear mixed reports about the real estate market, the statistics indicate that we have stabilized in spite of the difficulty in getting loans, the high unemployment rate and the financial condition of the state of California. Whether these positive indictors continue is yet to be determined but for 2010, we have seen in the desert a major shift in the real estate market.
According to the June 28th issue of the Wall Street Journal, 20% of the mortgage defaults were ‘strategic' in that the borrowers had missed six or more house payments without missing any of the other consumer debt payments. A 53% increase in ‘strategic' defaulters occurred in the first half of 2009 and California's strategic defaults were eighty times higher in 2010 compared to the same time in 2005. One would think these were primarily investors with multiple homes defaulting, however, 68% of these defaulters carried only a single mortgage. This has led Fannie Mae to propose borrowers show evidence of at least attempting to re-finance or re-negotiate the terms with their bank before going to foreclosure and failure to do so could leave the borrow responsible for the unpaid balance in some way and unable to obtain a loan for up to 5 years.
In the June issue of "What's Hot, What's Not" by John Seymour, the average 30 year fixed rate was 4.84% down from 5.27% the week of April, 2009 and these lower rates are expected to last the remainder of the year.
Freddie and Fannie have once again returned to the feds for more money. To date they have spent over $227 billion. Through the Obama modification program up to April of this year, 295,348 homeowners were helped with 25% of those who received modification assistance still delinquent on their payments. As of April there were 7.4 million homeowners delinquent on their payments. The WSJ reported in their May 28th issue that 14% of mortgage loans on one to four unit homes are delinquent in their payments by 30 days or more or in the foreclosure process. Foreclosures are expected to peak in August of 2011 but should not affect home prices as much as they did in late 2008 and early 2009.
Existing home sales were up 7.6% in April compared to March and up 22.8% compared to April of 2009. Nationally there is an 8.4 month supply of homes on the market. Historically a 6 to 7 month supply indicates a stable market. According to the National Association of Realtors the housing correction appears to essentially be over as the national median price of existing homes sold was up 4% from April of 2009.
According to the LA Time on June 23rd, May closings reflected a 19.2% gain from May of 2009. Keeping a glut of foreclosed houses off the market is essential for our continued recovery. The sales showed a 4.9% increase in the West while the south and Midwest were flat and the northeast falling 18.3%. It is no wonder we get mixed reviews on the real estate market with each area different in recovery.
The California Real Estate Market experienced an 8.1% drop in home sales in April compared to a year ago. Median home prices in California are up 23.2%, $324,430 compared to $263,440 in May of 2009. Homes over $ 1 million currently have a 10.1 month supply down from 16.1 a year ago. Sales under $1 million show a declining month's supply of 5.5 months or less which would indicate greater demand for those homes. April median home sales were up 21% from April in 2009 and 1.5% from March. This could be the direct result from the reduced supply and AN increase in number of home sales over $500,000.
Until the job market improves, thereby helping homeowners make their house payments, the full real estate recovery is hard to determine. With California's Cap ‘n Trade like policy, Assembly Bill 32, if implemented could cost our state 1.1 million jobs and until the state becomes more business friendly, businesses will leave the state for better conditions, continuing to affect the job and real estate market.
In a 2010 Survey of California home buyers, 75% of the first time home buyers admitted the tax credit had an impact on their decision to buy. First time home buyers represented 46% of the home sales, up from 38% in 2009. While many said the tax credit was the incentive which may have helped some cover down payments or closing costs, the good value in resale homes, distressed sales, bank owned and short sale perhaps provided greater incentives to purchase a home. First time home buyers were putting an average of 23.1% on their down payment while repeat buyers put an average of 37.3%. Home buyers reported an average level of difficulty in getting a loan (on a scale of 1 to 10 with 10 being the most difficult), at 8.5.
There are positive signs of improvement in the real estate market in the Coachella Valley as well. Included with this report are annual sales for various country clubs since 2003 and each quarter for this year. The breakdown of home sales by price show an increase in the percentage of million dollar sales from 2.9% in 2009 to 4.0% in the first quarter and up to 4.7% for the 2nd quarter. Sales over $500,000 have grown from 12.2% in 2009 to 16.9% in the 2nd quarter of this year. Sales under $500,000 which dominated the market in 2009 now have dropped from 87.8% to 83.1%. Couple that with country clubs home sales in the first two quarters of this year being almost equal to the total sales in all of 2009, the real estate market appears to be definitely improving. The fourth quarter of 2009 had a big impact on the total sales in 2009 as it was the strongest quarter for the year which would indicate 2010 being a much bigger year than the numbers show.
In the desert, sales of homes $1 million to $1.5 million show 118 sales to date in 2010 which should outpace the total of 132 homes sold in this category in 2009. Homes that sold from $1.5 to $2 million in 2010 in the first half of the year were 45 with a total of 47 in 2009. Two to three million dollar homes sold were 41 in 2009 and to date for 2010 we are at 31. Homes over $3 million selling this year to date is 14 compared to 17 in the previous year.
In Indian Ridge, 50 homes have sold or are pending to date for this year. Actual closed sales are 39. Last year a total of 33 homes sold so we are well past last year's sales. The price per square foot continues to vary as homes with wonderful locations and very nice upgrades are combined with short sale, bank owned and homes with fewer upgrades and less desirable locations. Four bedroom homes in Indian Ridge with the upgrades and location averaged $366 per square foot with the lowest price per square foot for sold high end properties at $343. While the market continues to be price driven, the increase in comparables help determine asking, selling and appraisal prices are falling more in line due to more sold properties.
Please feel free to contact me if you have any questions or concerns or just to talk about what is happening in the real estate market locally and throughout the Coachella Valley. My knowledge base of all country clubs in the desert gives me the opportunity to help find just the right club and home for those wanting to make this valley their home.
Click "View PDF Document" located under my photograph at the top right of this page to view the entire report and attached charts. Have a wonderful summer.
Associate Broker/Executive Premier Director
Windermere Real Estate
Information is compiled by Diane Williams using multiple resources including the NAR, CAR, LA Times, Desert Sun, Wall Street Journal, John Seymour's "What's Hot What's Not", and the Multiple Listing Service. If your home is currently listed with another Broker, please disregard. It is not our intention to solicit other Broker's listings.