629 homes had ownership transfer in May in the San Fernando Valley region of Los Angeles, CA, 26.5 percent less than during the same period a year ago, but up 15.4 percent from the total amount reported for the month of April. Condo sales droped 37.5 percent compared to a year ago. However, Condo sales rose 15.7 percent compared to April. It looks like the San Fernando Valley residential real estate market is gaining momentum. Source: SRAR
Despite the Southern California real estate market weekness, San Fernando Valley real estate market remains strong. “Reflecting ongoing demand for housing and confidence in the local economy, the median price of single-family homes hit a record high during May 2007 even as home sales continued to soften throughout the region,” reported the Southland Regional Association of Realtors.
Realty Counselors Inc., a Los Angeles based real estate and mortgage consulting and brokerage firm announced in its most recent press release that it has launched a new program which helps home buyers obtain wholesale financing when they purchase a home.
Mortgage rates gained considerably this week, virtually eliminating the rate declines of the proceeding three weeks, reported Freddie Mac today.
Freddie Mac said the average rate on a 30-year fixed-rate loan rose to 6.73 percent for the week ending July 12, from 6.63 percent the previous week.
Last year at this time, 30-year mortgage rates averaged 6.74 percent.
The mortgage rate increases this week were caused by a favorable job report for June and robust consumer credit growth for May.
Accordingly, both the National Association of Realtors and the Mortgage Bankers Association were necessitated to re-assess their previous forecasts of home price recovery in mid-2007 and now are looking to early 2008.
A real estate related article featured by Realty Counselors Inc. indicates that even though home prices adjusted to a more logical activity level with a modest decline, home sales activity in the San Fernando Valley came in stronger than expected for the first quarter of 2007. The data was obtained from the Southland Regional Association of Realtors. The article can be found here: Los Angeles Real Estate Market Snopshot.
As I was browing the net, I came across a Press Release entitled “California’s Real Estate Crisis Will Be Worse Than Most Analysts Realize, With Home Prices Falling 15 To 30 Percent During The Next 36 To 42 Months” released by The Norris Group.
I simply could not ignore and had to discuss it.
Here you have a two and a half page press release advancing an argument that is supported by two variables: builders writing off option agreements and the low affordability level in California. While I can neither dispute nor support the so-called forecast, it would be more credible if Mr. Norris would support it by other relevant data. A contention of this magnitude must set a proper strong foundation so that it may be given the deference it claims it deserves.
California is not the only real estate market that has seen enormous gains during the past years. Better yet, the U.S. is not alone in sharing the most recent substantial real estate market growth. The latest real estate boom is, in most part, the end result of a combination of various political and economic changes that the world had not seen before, including globalization, weakening dollar, introduction of euro, speedy growth of other economies of the world, inflationary pressures, population growth, etc.. Not too mention that the pre-boom California real estate market was significantly undervalued.
If the forecast of Mr. Norris holds to be accurate, it will not just be true for California.
While I cannot rule out the possibility of declining home prices in California, it will not be in the double digits, as indicated in the forecast of Mr. Norris.
According to a report issued by the National Association of Realtors , despite a luck of home buyer confidence and continous tighter lending standards, home sales should remain stable in the months ahead. NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator that gauges home sales activity for upcoming months, declined for the third consecutive month in May, down 13.3 percent from a year ago to a reading of 97.9. A PHSI of 100 is equal to the average contract level in the year 2001, which was the first of five consecutive years of record home sales.
The California Building Industry Association (CBIA) also anticipates a stabilizing housing market through the remainder of the year, as indicated in a recent report.
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