The idea behind this article is that higher prices for investors in the distressed housing market will turn off investors from purchasing additional investments. This actually decreases demand and then there are very few sales.
Published: Tuesday, 10 Jul 2012 | 1:04 PM ET By: Diana Olick CNBC Real Estate ReporterGrowing activity in the spring housing market brought new growth in home prices, but those gains are growing ever more precarious because they are dependent on low-priced, distressed properties.
While prices in the past three months rose 1.7 percent on a national average from a year ago, according to a report from Clear Capital, the biggest gains were out West, where foreclosures and short sales are often the majority of a local market’s activity.
In Minneapolis, Minn., for example, 35 percent of home sales are foreclosures; prices there rose just over 13 percent from a year ago. The same in Columbus, Ohio where prices rose 14 percent, given that nearly 34 percent of sales were of foreclosed properties.
While foreclosures brought home prices down initially, they are now driving them up because there is so much demand from investors and first time buyers, looking for bargains. Supplies of these cheap homes are also dwindling, because banks are still working to modify many troubled loans, and states that require a judge in the foreclosure process are still facing a huge backlog.
The poster child for this new dynamic is Phoenix, Ariz. Prices there are up a whopping 20 percent from a year ago because so much of the market was foreclosures. They used to make up more than half of all sales, but now they’re down to about 23 percent because there are just not that many foreclosures left to buy. Investors honed in on the market, buying properties in bulk and putting them up for rent. Some investors are already cashing out and selling them, but not many.
Buena Park Overview
| Median home price is $327,000. Based on a rental parity value of $468,000, this market is under valued. |
| Monthly payment affordability has been improving over the last 10 month(s). Momentum suggests improving affordability. |
| Resale prices on a $/SF basis increased from $233/SF to $233/SF. |
| Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. |
| Median rental rates increased $25 last month from $1,916 to $1,941. |
| Rents have been rising for 8 month(s). Price momentum suggests rising rents over the next three months. |
| Market rating = 7 |
Proprietary OC Housing News home purchase analysis 
8209 Larch Cir Buena Park, CA 90620
$349,000 …….. Asking Price
$349,000 ………. Purchase Price
7/3/2012 ………. Purchase Date
$0 ………. Gross Gain (Loss)
($27,920) ………… Commissions and Costs at 8%
============================================
($27,920) ………. Net Gain (Loss)
============================================
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
#NUM! ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$349,000 …….. Asking Price
$12,215 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$336,785 …….. Mortgage
$89,412 ………. Income Requirement
$1,569 ………… Monthly Mortgage Payment
$302 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$87 ………… Homeowners Insurance at 0.3%
$351 ………… Private Mortgage Insurance
………… Homeowners Association Fees
============================================
$2,310 ………. Monthly Cash Outlays
($240) ………. Tax Savings
($503) ………. Equity Hidden in Payment
$16 ………….. Lost Income to Down Payment
$107 ………….. Maintenance and Replacement Reserves
============================================
$1,690 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,990 ………… Furnishing and Move In at 1% + $1,500
$4,990 ………… Closing Costs at 1% + $1,500
$3,368 ………… Interest Points
$12,215 ………… Down Payment
============================================
$25,563 ………. Total Cash Costs
$25,900 ………. Emergency Cash Reserves
============================================
$51,463 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..
We're sorry, but it seems that we're having some problems loading MLS # 23915907 from our database. Please check back soon.
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$380,000 8247 LINDEN Cir |
0.06 miles 3 bd / 1.75 ba 1,112 Sq. Ft. |
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$308,000 8356 DALE St |
0.32 miles 3 bd / 1.75 ba 1,207 Sq. Ft. |
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$379,000 7933 DELPHINIUM Cir |
0.57 miles 4 bd / 1.5 ba 1,414 Sq. Ft. |
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$370,000 7305 WILSON Cir |
0.94 miles 4 bd / 1.75 ba 1,280 Sq. Ft. |
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$369,500 2936 ACADEMY |
1 miles 3 bd / 1.75 ba 1,136 Sq. Ft. |
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$210,000 1439 North WILDWOOD Ln |
1.03 miles 3 bd / 1.5 ba 1,160 Sq. Ft. |
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$429,900 7107 SANTA RITA Cir |
1.1 miles 3 bd / 1.5 ba 1,300 Sq. Ft. |
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$275,000 7436 EL CENTRO Way |
1.12 miles 2 bd / 1.75 ba 1,134 Sq. Ft. |
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$365,000 1000 North MODENA Pl |
1.17 miles 4 bd / 2 ba 1,291 Sq. Ft. |
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$395,000 3148 West BRIDGEPORT Ave |
1.33 miles 3 bd / 2 ba 1,268 Sq. Ft. |
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Seasonal house price rally widspread
National home prices saw both quarterly and yearly gains in June, and all four regions across the U.S. posted quarterly increases, according to the Home Data Index (HDI) released by Clear Capital Tuesday.
Home prices rose by 1.7 percent in June from the previous quarter and a year ago, and growth is expected to continue into the second half of the year at a rate of 2.5 percent, Clear Capital reported.
Broad-based regional gains and expanding progress are reasons for the current gains and expected future growth.
Out of all four regions, the West saw the greatest quarterly increase at 3.5 percent, followed by the Midwest (1.2 percent), the South (1.5 percent), and the Northeast (0.8 percent).
“June home price trends provided further evidence that housing has turned the corner, with the momentum of the recovery picking up speed,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital.
Villacorta noted that even the Midwest started to catch up with the other regions, shedding the drag of recent declines.
With its 1.2 percent gain in June, the Midwest saw the greatest quarterly improvement after posting a 2 percent quarterly loss in May.
The West was also notable due to the region’s gains across all price levels as demand outpace supply for the region. Clear Capital explained in a report that recovery generally begins in lower priced segments for most markets, but the West is seeing price increases in higher priced homes.
Out of the top 50 metros areas, 7 saw quarterly price declines in June, but only four reported declines greater than 1 percent.
The 43 metros that posted increases averaged gains of 3 percent. Among the metros that saw values pick up, 10 experienced price growth greater than 5 percent.
Phoenix was highlighted as a market with consistent growth over the past 10 months. Quarterly growth for the metro was 8.7 percent and annual gains were 20.4 percent.
For the year, Seattle is expected to surpass all other markets, with prices projected to increase by 14.4 percent by the end of the year, the report stated.
“Looking forward over the rest of 2012, we expect to see national, regional, and most metro markets improve by varying degrees. And while it’s encouraging to see broad-based advancements coupled with positive forecasts, we remain cautiously optimistic. The current strength in housing fundamentals remains vulnerable to domestic and global economic challenges,” said Villacorta