There are several reason why this won’t happen. 1) Buyers can’t obtain a large enough mortgage even at some these values 2) Seller either owe more than the market or having a hard time short selling through the bank. 3) When in escrow the property doesn’t appraise.
I took out a piece of this article to document my point.
Homes for Sale Grow Scarce as Sellers Await Higher Prices
By John Gittelsohn and Prashant Gopal | Bloomberg – May 15, 2012
Phyllis McArthur, a Realtor in San Mateo, California, sent letters to 18 homeowners who bought their properties more than four decades ago, asking if they were willing to sell to families who want to put their children in the school system.
“I got a call back from one gentleman who said, They’ll have to carry me out feet first,’” McArthur said. “I said to him, jokingly,When you feel yourself slipping away, will you call me?’”
Why are they contacting long established home owners? They have equity to sell.
Finding a seller takes work. The average person who bought in the last decade would lose money on a sale, because home prices have plunged to October 2002 levels, the S&P/Case-Shiller index of home prices in 20 U.S. cities shows. About 11.1 million homeowners have negative equity, or owe more on their mortgages than their homes are worth, which limits their mobility, according to a March 1 report by real estate data provider CoreLogic Inc. (CLGX)
Paying the Agent
An additional 2.5 million borrowers have less than 5 percent equity, meaning they probably would lose money after paying their real estate agent should they sell, CoreLogic said.
Prices haven’t recovered even as demand rises. Existing home sales this year through March were the highest for a first quarter since 2007, the National Association of Realtors reported on May 9. The median price in 146 metropolitan areas tracked by the group fell 0.4 percent from a year earlier to $158,100.
Garden Grove Overview
| Median home price is $323,000. Based on a rental parity value of $457,000, this market is under valued. |
| Monthly payment affordability has been worsening over the last 2 month(s). Momentum suggests unchanging affordability. |
| Resale prices on a $/SF basis declined from $235/SF to $231/SF. |
| Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months. |
| Median rental rates increased $50 last month from $$1,866 to $$1,916. |
| Rents have been slowly rising for 12 month(s). Price momentum suggests slowly rising rents over the next three months. |
| Market rating = 8 |
Proprietary OC Housing News home purchase analysis 
8622 ORANGEWOOD Ave Garden Grove, CA 92841
$425,000 …….. Asking Price
$400,500 ………. Purchase Price
2/29/2012 ………. Purchase Date
$24,500 ………. Gross Gain (Loss)
($32,040) ………… Commissions and Costs at 8%
============================================
($7,540) ………. Net Gain (Loss)
============================================
6.1% ………. Gross Percent Change
-1.9% ………. Net Percent Change
24.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$425,000 …….. Asking Price
$14,875 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$410,125 …….. Mortgage
$108,883 ………. Income Requirement
$1,911 ………… Monthly Mortgage Payment
$368 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$106 ………… Homeowners Insurance at 0.3%
$427 ………… Private Mortgage Insurance
………… Homeowners Association Fees
============================================
$2,813 ………. Monthly Cash Outlays
($292) ………. Tax Savings
($612) ………. Equity Hidden in Payment
$19 ………….. Lost Income to Down Payment
$126 ………….. Maintenance and Replacement Reserves
============================================
$2,054 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,750 ………… Furnishing and Move In at 1% + $1,500
$5,750 ………… Closing Costs at 1% + $1,500
$4,101 ………… Interest Points
$14,875 ………… Down Payment
============================================
$30,476 ………. Total Cash Costs
$31,400 ………. Emergency Cash Reserves
============================================
$61,876 ………. 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 # P821200 from our database. Please check back soon.
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$394,500 11451 HOMEWAY Dr |
0.46 miles 4 bd / 2 ba 1,507 Sq. Ft. |
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$575,000 8071 CRAGER Rd |
0.61 miles 3 bd / 1.75 ba 1,800 Sq. Ft. |
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$439,900 9372 DEWEY Dr |
0.74 miles 3 bd / 2.5 ba 1,684 Sq. Ft. |
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$400,000 12171 LEAFWOOD St |
0.76 miles 4 bd / 2.5 ba 2,145 Sq. Ft. |
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$338,000 8208 Capistrano Dr |
0.87 miles 4 bd / 3 ba 1,525 Sq. Ft. |
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$319,000 10691 FERN Ave |
0.92 miles 4 bd / 2.75 ba 1,850 Sq. Ft. |
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$419,900 8372 LAMPSON Ave |
1.04 miles 4 bd / 1.5 ba 1,729 Sq. Ft. |
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$360,000 11221 GARDENAIRE Ln |
1.11 miles 4 bd / 2 ba 2,167 Sq. Ft. |
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$498,000 12411 GEORGIAN St |
1.25 miles 5 bd / 3 ba 2,000 Sq. Ft. |
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$499,900 7995 STEPPING STONE Cir |
1.29 miles 4 bd / 2.75 ba 2,250 Sq. Ft. |
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The banks aren’t only withholding product here in Orange County. It’s a nationwide phenomenon. I foresee a substantial decline in sales volumes nationwide this spring and summer due to lack of product. Banks hope people will raise their bids and cause prices to bottom, but since banks won’t make larger loans due to prudent lending standards, that isn’t going to happen.
Pro Teck Valuation: Home Listings Drop 21 Percent Nationwide
Nationwide, the number of homes listed for sale has fallen 21 percent from a year ago, according to Pro Teck Valuation Services’ May Home Value Forecast.
Also, the forecast reported Months of Remaining Inventory (MRI) is at 6.3 months, which is the lowest level since 2006.
A strong market will have 0 to 5 months of inventory, a balanced market 6 to 10 months, and a soft market will have 11 to 15 months.
From 2002 to 2005, when the housing market was booming, the national MRI was at or below 5 months.
As listings and MRI decline, some of the metro areas that fell the hardest may be recovering now.
The report noted that closely watched areas such as Phoenix, Miami, Atlanta, Orlando, and Riverside-San Bernardino are high on the list in terms of seeing the greatest declines in listings. As for areas with low MRI, Phoenix, San Jose, and Seattle topped the list.
Using a broad base of indicators, including MRI, median prices, number of active listings, sales percent change, and other indicators, HomeValueForecast.com ranked the 10 best and worst performing core based statistical areas(CBSAs).
Commenting on top performing CBSAs, Michael Sklarz, principal of collateral analytics and contributing author to HomeValueForecast.com, noted that “Rustic Belt” states such as Michigan and Illinois are seeing positive trends as the number of their active listings decline over the past year.
“This has led to most of these markets having balanced or tight markets based on their Months of Remaining Inventory values,” he said.
When observing trends for the worst performing CBSAs, Sklarz pointed out that a high percentage are located in the Northeast and all locations have double digit months of remaining inventory.
“Also, prices in these metros have held up much better since the market peak in 2005-2006 compared to the current top ranked markets,” said Sklarz. “We believe that the relative rankings in the bottom ranked metros are not offering the same bargains – in terms of compelling prices and high rental yields – as the top ranked ones.”
Top CBSAs
Boise City, Nampa, Idaho
Dallas-Plano-Irving, Texas
Warren-Troy-Farmington Hills, Michigan
West Palm Beach-Boca Rotan-Boynton Beach, Florida
Detroit-Livonia-Dearborn, Michigan
Peoria, Illinois
San Jose-Sunnyvale-Santa Clara, California
Salt Lake City, Utah
Cape Coral-Ft. Myers, Florida
Fayetteville-Springdale-Rogers, Arkansas-Missouri
Bottom CBSAs
Winston-Salem, North Carolina
Virginia Beach-Norfolk-Newport News, Virgina-North Carolina
New York-White Plains-Wayne, New York-New Jersey
Norwich-New London, Connecticut
Hartford-West Hartford-East Hartford, Connecticut
Newark-Union, New Jersey-Pennsylvania
Duluth, Minnesota-Wisconsin
Nassau-Suffolk, New York
Poughkeepsie-Newburgh-Middletown, New York
New Haven-Milford, Connecticut