We had one little uptick in home value and Zillow it calling it the end of the housing bubble. Please keep in mind we have:
- Artificially low borrowing costs
- Federally guaranteed loans
- Federally guaranteed and insured low downpayment loans
- Shadow Inventory
- Increasing taxes due to debt costs
- Decreasing incomes compared to 2007
With all these threats is the housing bubble really over?
Home Price Bottom or Bubble?
By: Diana Olick CNBC Real Estate Reporter
Home prices rose, just barely, in the second quarter of this year annually for the first time since 2007, according to online real estate firm Zillow. That prompted the popular site to call a “bottom” to home prices nationally. The increase was a mere 0.2 percent, but in today’s touch and go housing recovery, that was enough.
Nearly one third of the 167 markets Zillow tracks in this survey saw annual price gains from a year ago.
“After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values,” said Zillow Chief Economist Dr. Stan Humphries. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.”
Zillow’s report, which compares prices of homes sold in the same neighborhood, also showed a stronger 2.1 percent gain quarter to quarter, which is the biggest uptick since 2005. The biggest price gains, however, are in the markets that saw the biggest price drops during the latest housing crash. Phoenix, for example, saw a 12 percent annual price gain on the Zillow index.
That has other analysts claiming that the overall surge in national prices is due to price bubbles in certain markets.
“Strong demand, particularly in areas of California, Arizona and Nevada, are pushing up home prices very quickly in the short-term. And because many of the home purchases in these areas are cash transactions, there appears to be less braking of prices by our current appraisal system than seen in other parts of the country,” noted Thomas Popik, research director for Campbell Surveys and chief analyst for HousingPulse. “The trend raises the distinct possibility of housing price bubbles emerging in some of these hot housing markets.”
The supply of foreclosed properties for sale has been dropping steadily, as lenders try to modify more loans or actively pursue foreclosure alternatives, like short sales (where the home is sold for less than the value of the mortgage). Investors, eager to take advantage of the hot rental market, are having to spread out to more markets in order to find the best deals.
Brea Overview
| Median home price is $425,000. Based on a rental parity value of $538,000, this market is under valued. |
| Monthly payment affordability has been worsening over the last 1 month(s). Momentum suggests unchanging affordability. |
| Resale prices on a $/SF basis increased from $246/SF to $247/SF. |
| Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. |
| Median rental rates increased $16 last month from $2,216 to $2,233. |
| Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months. |
| Market rating = 8 |
Proprietary OC Housing News home purchase analysis 
130 HAYDEN Way Brea, CA 92821
$310,000 …….. Asking Price
$506,000 ………. Purchase Price
8/15/2006 ………. Purchase Date
($196,000) ………. Gross Gain (Loss)
($40,480) ………… Commissions and Costs at 8%
============================================
($236,480) ………. Net Gain (Loss)
============================================
-38.7% ………. Gross Percent Change
-46.7% ………. Net Percent Change
-8.1% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$310,000 …….. Asking Price
$10,850 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$299,150 …….. Mortgage
$87,549 ………. Income Requirement
$1,394 ………… Monthly Mortgage Payment
$269 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$78 ………… Homeowners Insurance at 0.3%
$312 ………… Private Mortgage Insurance
$210 ………… Homeowners Association Fees
============================================
$2,262 ………. Monthly Cash Outlays
($213) ………. Tax Savings
($447) ………. Equity Hidden in Payment
$14 ………….. Lost Income to Down Payment
$59 ………….. Maintenance and Replacement Reserves
============================================
$1,675 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,600 ………… Furnishing and Move In at 1% + $1,500
$4,600 ………… Closing Costs at 1% + $1,500
$2,992 ………… Interest Points
$10,850 ………… Down Payment
============================================
$23,042 ………. Total Cash Costs
$25,600 ………. Emergency Cash Reserves
============================================
$48,642 ………. 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 # P828715 from our database. Please check back soon.
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$405,000 763 ASHBY Ln |
0 miles 2 bd / 2.25 ba 1,380 Sq. Ft. |
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$299,900 765 SATHER Ct #50 |
0 miles 3 bd / 2.5 ba 1,285 Sq. Ft. |
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$275,000 324 MEADOW Ct |
0.47 miles 3 bd / 2.5 ba 1,281 Sq. Ft. |
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$299,000 1633 GATEWOOD Ct |
1.56 miles 4 bd / 2.75 ba 1,446 Sq. Ft. |
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Prices Up, but 2nd Half of 2012 Could See Declines: Radar Logic
Radar Logic’s composite to measure home prices may show monthly and yearly gains, but contrary to other reports, the analytics company argues that the increases don’t mean prices have hit bottom.
“Those people looking at current results and calling a bottom are being dangerously short-sighted,” said Michael Feder, Radar Logic’s CEO. “Not only are the immediate signs inconclusive, but the broad dynamics are still quite scary. We think housing is still a short.”
According to Radar Logic’s RPX Composite, which is based on 25 metropolitan statistical areas, prices in May rose 2.6 percent month-over-month and 0.7 percent year-over-year.
Despite these findings, Radar Logic contends the increases are due to temporary forces, such as the warm winter weather, and appreciation may not be consistent for the entire year based on previous trends.
Radar Logic data from 2009 to 2011 revealed a pattern of price appreciation from the beginning of the year through the end of June, followed by price declines for the rest of the year.
For example, from January 1 to June 30, the RPX Composite increased 3 percent in 2009, 3.4 percent in 2010, and 2.2 percent in 2011.
However, from July 1 to December 31, prices moved in the opposite direction and fell by 2.7 percent in 2009, 6 percent in 2010, and then by an even greater 7.7 percent in 2011.
“Even if the mild winter hypothesis turns out to be false, home prices are not likely to appreciate on a sustained and meaningful basis. Rather, short-term appreciation will paradoxically short-circuit long-term appreciation and perhaps trigger further declines,” Radar Logic stated.
The analytics company explained the higher prices seen will lead to more supply as financial institutions start unleashing their foreclosure inventory and homeowners that were unable to sell due to negative equity will at last list their homes. As supply increases, prices will move downward again.
Also, with much of the current demand coming from institutional investors, Radar Logic also argued that the rise in prices may mean fewer purchases from investors, who may not be able to yield the returns they are seeking as prices climb.
While the speculation is based on data from previous years, it’s still hard to be certain about where prices are headed for 2012.
“From one year to the next, price trends tend to vary much more in the second half of the year than in the first,” said Quinn Eddins, director of research at Radar Logic. “We will have to wait to see data for October or later to know whether 2012 will turn out to be a good year or a bad year for home prices.”