Toscana CC 2011 2nd Quarter Report
Dear Toscana Resident:
Effective July 1st of this year, homes must have Carbon Monoxide detectors within 15 feet of every bedroom in the home. This will be a requirement when a home is sold just as the smoke detectors have been a requirement for a number of years. Battery operated units will meet the requirements however, there are units that will be available that include both the smoke and carbon monoxide detectors.
The unemployment rate in the construction industry is 17.8% with over 1.5 million out of work. With the recent devastation due to the tornados and flooding, this should help the construction industry’s unemployed find jobs and could bring economic improvement in those areas.
Until businesses see more certainty and stability from the federal government, they will continue in their holding pattern. The federal reserve “will more than likely take no further action to stimulate the economy and will focus on their plans to withdraw market support before inflation begins to threaten this fragile economy” according to John Seymour in his June issue of What’s Hot, What’s Not.
Mortgage rates continue to be soft with an average rate of 4.69% for a 30 year fixed. Total loan originations this year will be approximately $1.05 trillion compared to over $3 trillion back in 2006.
Cash sales nationally continue to dominate the home sales market with 31% of the buyers paying cash for the purchase of a home. With tougher lending standards, 15% to 20% of potential sales are possibly being held back as a result of the current stringent lending practices.
Fannie Mae continues to ask the federal government for money. To cover 1st quarter losses, they are asking for $8.7 billion. This is three times greater than their fourth quarter of last year request. Between Freddie and Fannie, the estimates for federal bailouts could cost the taxpayers about $259 billion. While blame points to the mortgage banking industry for loose lending guidelines, had Freddie and Fannie not offered ‘low doc’ and ‘no doc’ and all other loans to unqualified borrowers, there would have been no market in which to sell these loans and the mortgage lenders would not have made them.
According to the Desert Sun’s June 15 issue, distressed sales in May (bank owned and short sales) in the desert were 44% for single-family homes, down from 52% a year ago. Condo distressed sales dropped from 36% to 30%. In Southern California 51.4% were distressed sales: 33.4% were foreclosures and 18% were short sales. In February of 2009 distressed sales accounted for 56.7% of all sales in California. These distressed sales are the primary reason home values continued to sag. In the first quarter of this year, the national average for a foreclosed property was $168,321, about 26.7% less than non-distressed sales. According to the California Desert Association of Realtors, the median price for single family homes in May was $220,0000 down from $234,900 a year ago. Condo’s median price was $190,0000 up from $170,000 a year ago.
The foreclosure process in California is now taking 330 days compared to 262 days in 2010. This slowing down may be due to the recent issues about legality on the handling of the foreclosure process by the bank. This also postpones the recovery process in the real estate industry. While we see signs of recovery, there are factors that continue to drag on the market and keep home values at their lowest since 2002. Just recently took me 15 months to convince the bank to transfer a home from short sale status to foreclose due to the bank’s refusal to accept a bankruptcy discharge where the seller was protected and had abandoned the property. Once we were able to move it to foreclosure, it gave my buyer the opportunity to purchase the home on the steps of the courthouse and at a great price. I am certain the neighbors are happy with my continued efforts to get the home sold in order to make the street more appealing to all. Just recently I was able to get short sale acceptance from the bank in just over 4 weeks. Normally the process takes 3 to 6 months on average. I believe this was the result of the seller communicating to their lender prior to the short sale process.
The biggest mistake a homeowner makes when they are in trouble is that they don’t contact their lender soon enough, fearing it will speed up the foreclosure process. Actually it takes 90 days of delinquency before the foreclosure process begins and the process can take up 330 days. It is recommended that homeowners who have been turned down for loan modification in the past try again to get a modification as the rules in lending are constantly changing.
California has a $426 billion state deficit, unemployment is over 11% and a poor climate for business development. The state legislature is working on a bill on whether hotels in California should be required to use fitted sheets instead of flat sheets. This one requirement if approved, would cost the hotel industry $30 to $50 million. This bill on the table is being sponsored by the California Hospitality Worker’s Union. Until the focus turns more to creating jobs than fighting the businesses who create them, recovery will remain slow.
Recently I read an article in the Public Record on how the housing market impacts retirement. The upward spike in real estate sales we experienced in 2005-2007 isn’t something we will see again in the baby boomer’s lifetime. While it feels like we have lost so much value in our homes, had we not seen such a burst in the real estate market, the normal steady climb of a normal market would have led us to these current values. The next decade in real estate will more than likely show a pre-2006 appreciation of .75% to 1% per year over the rate of inflation. This may well cause a shift in why we purchase a primary or secondary home. Lifestyle over asset appreciation may be the primary focus.
In addition to the regular real estate statistics provided in each of my quarterly reports, I have added demographic statistics for Palm Desert, Indian Wells, Rancho Mirage and La Quinta. While it may make absolutely no difference in where people purchase a home, it is always fun to learn more about the communities and the people who chose to live there.
First quarter sales in the desert were off about 8.3% from 2010. The second quarter of this year shows sales off 6.6%. Homes sales over $1 million are off 23.4%. When reviewing the country club sales on the statistical reports included in each quarterly report, 12 of the 19 country clubs showed more homes sold in the this quarter than the same time last year. Fourteen of the nineteen country clubs showed a drop in the price per square foot. Some increases or decreases may be due to lower sale volume that throws some statistics out of whack.
As I indicated in the first quarterly report for 2011, the real estate market in the desert appeared to be stabilizing. I also indicated the variable that still existed which could affect home values – the possibility of the homeowners having held out so long that they would reduce their price enough to get their home sold could cause another reduction in the home values. The last week in April proved my prediction correct and prices took another drop.
In the 2nd quarter of this year, there were 9 properties sold in Toscana: 7 home sales and two custom lot sales. Of the homes sold, three of the homes were spec homes, two resale homes were traded and two homes were sold to new buyers. Of the true resale homes, three of the four re-sale homes were sold by real estate professional who sell high end properties throughout the entire valley who show homes in other communities besides Toscana. The spec homes were sold entirely by the on-site office. The spec homes sold for $250,000 to $350,000 below asking price (80-84% of asking price) while the re-sales and trades sold for 90 to 93% of asking price. Currently three homes are pending with asking prices between $1,293,000 to $1,795,000. The custom lots sold on Via Siena, one was a bank sale at $492,000 north facing with the other south facing selling for $850,000.
Please feel free to contact me should you have any questions or would like something to be added to the quarterly reports. The purpose of the report is to provide homeowners with valuable information that helps them evaluate the status of their real estate holdings.
If you would like to begin receiving this quarterly report via e-mail, please contact us at (760) 776-7070 or e-mail my associate Laura MacDonald at firstname.lastname@example.org.
We look forward to hearing from you.
Associate Broker/Executive Premier Director
Windermere Real Estate Coachella Valley