October Home Sales Fall as Rise in Mortgage Interest Rates Impact Housing Market

Truckee, Calif.– October 2013 California single-family gained 2.3 percent from September but were down 10.9 percent from a year ago. A 54.0 percent year-over-year drop in distressed property sales drove the annual decline in October sales.

“For the third consecutive month, October sales posted year-over-year declines”, said Madeline Schnapp, Director of Economic Research for PropertyRadar.  “The 100+ basis point increase in borrowing costs since mid-June has definitely impacted market activity.”

In the Real Property Report – California, October 2013, PropertyRadar noted that:

·      Over the past 12 months, there has been a dramatic shift in the mix of distressed property sales relative to non-distressed property sales.  In October 2013, non-distressed property sales jumped 24.7 percent for the year while distressed property sales fell 54.0 percent;

·      The steady rise in home prices since January 2012 has allowed thousands of underwater California homeowners to exit their negative equity positions.  Since August, the number of homeowners with more than 10 percent equity has increased by 3.4 percent, or 165,000.  In addition, the number of homeowners who are moderately to severely underwater has fallen by 10.3 percent or 125,000.

·      Despite the improvement in homeowner equity, the number of underwater homeowners in California remains high. October, more than 1.8 million (21.6 percent) out of a total of 8.4 million homeowners were effectively underwater and shut out of the California real estate market.

·      The median price of a California home gained $5,000, or 1.4 percent, to $360,000 in October from $355,000 in September.  Median prices have hovered near $360,000 since June.

·      Cash sales as a percent of total sales continue to decline.  In October, cash sales represented 23.8 percent of total sales, down from the peak of 33.0 percent in February 2013.  Despite the recent decline, cash sales remain high and are an important part of the real estate marketplace.

·      Flip sales – defined as reselling a property within six months – gained 9.7 percent from September and represented 5.0 percent of total sales, up from 4.7 percent in September.

·      October 2013 investor purchases retraced much of the 17.6 percent September decline, rising 10.8 percent for the month.  In general investor purchases have been trending lower since peaking in October 2012. Rapid increases in purchase prices have reduced investor’s return on investment thus lowering investor demand.

·      California foreclosure activity has been trending sideways since June at or below pre-housing crisis levels.  The decline reflects the ongoing recovery in the California real estate market and the impact of government anti-foreclosure policies.

“It looks like Janet Yellen will likely be our new Federal Reserve Chairman come January,” said Schnapp. “The rumor on the street is that Ms. Yellen will likely keep interest rates low until 2016 or 2017, which is great news for the housing market.”

About PropertyRadar®
PropertyRadar (formerly known as ForeclosureRadar) is a web-based subscription service providing software, data and analytics for Real Estate professionals to solve real-world problems across all California properties. PropertyRadar includes all of the foreclosure data that professionals relied upon with ForeclosureRadar, including daily updates on auction status and outcomes. PropertyRadar has been serving its customers for over six years via ForeclosureRadar and and counts several thousand investors, Realtors®, government agencies and other professionals among its subscribers. Bloomberg, 60 Minutes, Wall Street Journal, Los Angeles Times, San Francisco Chronicle, the Associated Press and many other leading media outlets have cited ForeclosureRadar as an authoritative source. The company was launched in May 2007 by Sean O’Toole, who spent 15 years building and launching software companies before entering the professional real estate market in 2002 where he successfully bought and sold more than 150 residential and commercial foreclosures.

PropertyRadar is privately held and is located at 12242 Business Park Drive, Truckee, CA 96161, 530-550-8801. For more information, visit http://www.PropertyRadar.com * https://www.facebook.com/PropertyRadar * https://twitter.com/PropertyRadar * http://www.linkedin.com/company/propertyradar.

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