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REAL ESTATE: Southern California Home Prices Up 15%; ‘A Feeding Frenzy’:

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WRITTEN BY ANDREW KHOURI FOR THE LA TIMES: 

Southern California home prices soared in March, rising by double digits for the eighth straight month as a pandemic-fueled housing boom continues to go strong.

The six-county region’s median home price increased 14.5% from a year earlier to a record $630,000, according to data released Wednesday from real estate firm DQNews. The number of houses, condos and town homes that sold rose 32.2%.
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A mix of factors is driving the boom, which extends nationwide, real estate agents and economists say.

The housing market was heating up before the pandemic. Since then, mortgage rates have tumbled and people are looking for more space. Also, millennials are quickly entering their early 30s, the age when many people become first-time homeowners.

In Southern California, prices are rising in all corners of the region.

  • In Los Angeles County, the median price rose 17.2% to $750,000 in March, while sales climbed 33.9%.
  • In Orange County, the median price rose 10.6% that month to $835,000, while sales climbed 38.5%.
  • In Riverside County, the median price rose 17.9% to $476,750, while sales climbed 37.5%.
  • In San Bernardino County, the median price rose 18.3% to $429,500, while sales climbed 29.3%.
  • In San Diego County, the median price rose 15.3% to $680,000, while sales climbed 22.4%.
  • In Ventura County, the median price rose 12.5% to $658,000, while sales climbed 24.2%.

How much longer such steep gains will continue is a question both buyers and sellers are eagerly asking.

Richard Green, director of the USC Lusk Center for Real Estate, said falling mortgage rates during the pandemic enabled buyers to bid up the prices of homes while keeping monthly payments roughly the same. He doesn’t foresee people’s incomes allowing them to pay much more.

Other analysts believe the wild ride will continue unless the economic recovery reverses course or mortgage rates suddenly spike.

Analysts at John Burns Real Estate Consulting predict that, come December, prices in Southern California will be up by double digits compared with the same month in 2020. By December 2022, prices will probably have notched an additional gain of roughly 6%, the firm projects.

Rick Palacios Jr., the firm’s director of research, said low supply and an influx of investors into the market are among the reasons for those projections.

“It is a feeding frenzy right now,” he said of the market. “It’s incredibly competitive.”

READ THE ORIGINAL STORY HERE: ‘A feeding frenzy’: Southern California home prices up 15% – Los Angeles Times (latimes.com)

THE HOUSING BOOM: “It’s Not a Bubble. It is Simply Lack of Supply.”

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FROM AXIOS: Bidding wars, soaring prices, and fears that homeownership is becoming out of reach for millions of Americans. We’re in a housing frenzy, driven by a massive shortage of inventory — and no one seems to be happy about it.

Why it matters: Not all bubbles burst. Real estate, in particular, tends to rise in value much more easily than it falls. Besides, says National Association of Realtors chief economist Lawrence Yun, this “is not a bubble. It is simply lack of supply.”

By the numbers: America has a record-low number of homes available for sale — just 1.03 million, according to the latest NAR data. That compares to a peak of more than 4 million at the height of the last housing bubble, in July 2007.

  • The total number of active listings this week is down a record 54% from the same week a year ago, per Realtor.com. That in turn has helped to drive national prices up 17.2% over last year.
  • Almost half of homes now sell within one week of being listed, per Redfin.
  • In Austin, Texas, the median listing price has risen 40% in one year to $520,000.

6315LongviewAvenue.0002The big picture: Prices are being driven upwards by a combination of factors, including continued low mortgage rates, a pandemic-era construction slowdown, a desire for more space as people work increasingly from home, and a stock market driven increase in money available for downpayment.

  • rise in financial buyers — large corporations buying up homes to rent them out — is only making the market tighter, and decreasing the number of owner-occupied properties available.
  • What’s missing: Unlike the mid-2000s, this time around there’s no exuberant culture of condo flipping. While interest rates are low, lending standards are still tight, making it hard to buy a house you can’t afford.

The good news is that rents have not been rising nearly as fast as prices. They stayed roughly flat during the pandemic, and are now rising at perhaps a 4% pace, Yun says.

Homebuyers are the biggest losers. In order to win bidding wars, many of them are being forced to make rushed and risky decisions. Successful bids often need to waive any financing contingency or right to inspect the property.

  • That raises the terrifying prospect of putting down a large downpayment and then not being able to get a mortgage — and/or finding that the house requires hundreds of thousands of dollars in repairs.

The worst-case outcome, says Yun, would be if “rates remain low, demand picks up with new jobs, there’s no increase in supply, and the only thing that moves is home prices, until people get priced out. That would mean we are creating a divided society of haves and have-nots.”

  • The best-case outcome, on the other hand, would be a construction boom accelerated by President Biden’s infrastructure plan, which would create more supply and help to stop the rise in prices.

The bottom line: Housing prices are likely to remain high and rising for a while yet.

WRITTEN BY FELIX SALMON FOR AXIOS .COM

Southern California Home Prices Reach All-Time High in February

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FROM YAHOO NEWS & THE LA TIMES:

Southern California home prices reached an all-time high in February as buyers competed amid a shortage of homes for sale, adding to signs that pandemic home-buying trends are extending into 2021

The six-county region’s median sales price jumped nearly 15% from a year earlier to $619,750, according to data from real estate firm DQNews.

Sales surged 17.6% from February 2020.

The numbers, published Tuesday, show how a pandemic housing boom driven by historically low borrowing costs and by demand for more space is extending into 2021. Another factor: Many millennials are entering their early 30s — a time when many people purchase their first home.

The data show that the increase in demand, however, has not been met by a surge in listings, leading to bidding wars and subsequent higher prices.

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According to Redfin, the number of new listings coming onto the market in L.A. County during the four weeks that ended March 7 was just 4% higher than in the same period last year.

And with homes selling quickly in recent months, people had 13% fewer options to choose from over that period, the data show.

Daryl Fairweather, chief economist with real estate brokerage Redfin, said more homes aren’t coming up for sale because some owners don’t want to buy another home in a tough market, and some may have refinanced at record lows and are satisfied with their mortgage.

Some wealthy owners are also choosing to buy another house farther from their jobs, she said, but holding on to their old home, unsure where they want to settle down as the pandemic recedes and the economy starts to recover.

Builders are trying to ramp up to meet demand. But that takes time, and soaring lumber costs have made projects more difficult to get off the ground.

“New construction can’t keep up with demand,” Fairweather said.

Sales and prices are rising throughout the region.

  • In Los Angeles County, the median sales price rose 14.3% to $708,500 in February, while sales climbed 19.1%.

  • In Orange County, the median sales price rose 9.6% to a record $820,000, while sales climbed 13%.

  • In Riverside County, the median sales price rose 16.5% to a record $465,000, while sales climbed 18.3%.

  • In San Bernardino County, the median sales price rose 17.7% to a record $412,000, while sales climbed 21.5%.

  • In San Diego County, the median sales price rose 14.6% to a record $672,750, while sales climbed 13.8%.

  • In Ventura County, the median sales price rose 13% to $650,000, while sales climbed 23.9%.

A major factor in the sales and price boom has been a drop in borrowing costs during the pandemic, with the average rate on a 30-year fixed mortgage falling below 3% for the first time.

Rates have been on the rise in recent weeks and now average slightly above 3%. If the economy improves, rates could keep rising, but many experts expect borrowing costs to remain low by historical standards throughout 2021.

This story originally appeared in Los Angeles Times and written by Andrew Khouri

Homeowners Behind on Their Mortgages Could Get a Reprieve on Any Foreclosures Until 2022

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FROM CNBC REAL ESTATE NEWS:

Millions of Americans took advantage of the payment suspension and mortgage forbearance programs both lenders and the federal government rolled out due to the Covid-19 pandemic last year. But as these emergency programs start to wind down this year, the Consumer Financial Protection Bureau wants to put safeguards in place to ensure millions of families aren’t forced into foreclosure. 

A year into the pandemic, about 2.5 million homeowners are still enrolled in some type of forbearance program, according to the Mortgage Bankers Association’s data for the week of March 21, 2020. Yet even with these programs in place, about 5% of homeowners are currently delinquent on their mortgages, the MBA found in its latest report.

That could increase exponentially as forbearance programs start to wind down this fall. 

“Emergency protections for homeowners will start to expire later this year and by the fall, a flood of borrowers will need assistance from their servicers,” CFPB Acting Director Dave Uejio said Monday. “The CFPB is proposing changes to the mortgage servicing rules that will ensure servicers and borrowers have the tools and time to work together to prevent avoidable foreclosures, which disrupt lives, uproot children and inflict further costs on those least able to bear them.”

To help homeowners who are behind on their mortgages, the CFPB is proposing a new rule that would establish a “temporary Covid-19 emergency pre-foreclosure review period” that would essentially block mortgage servicers from starting the foreclosure process until after December 31, 2021.

This new review period would be in addition to existing rules that bar loan servicers from starting the foreclosure process until a homeowner is more than 120 days delinquent on their home loan. 

Many of the current forbearance programs were set up in the CARES Act last year and apply to federally-backed loans offered through agencies including Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Housing and Urban Development. Private lenders and servicers also set up their own forbearance programs. The CFPB’s proposed rule would cover all homeowners, including those with mortgages through private lenders such as banks.

The CFPB’s plan issued Monday is a proposal at the moment. The agency is seeking public comments through May 11 before issuing a final rule.

In addition to requiring mortgage servicers to undertake a review period, the CFPB is also proposing a streamlined loan modification process, which typically allows homeowners to apply to have their loan interest rate reduced, extend the term of their loan and/or reduce their monthly payments.

The streamlined process would allow servicers to offer some loan modification options based on incomplete applications. Normally, borrowers need to submit a myriad of documents — including proof of income, such as pay stubs, tax returns and recent bank statements — before a servicer can make a decision.

Streamlining the process would allow servicers to get homeowners into less burdensome payments faster, CFPB says. The expedited process would only be available for loan modification options that do not increase homeowners’ monthly payments, extend the mortgage’s term more than 40 years or charge any fees.

In February, President Joe Biden directed federal housing regulators to extend mortgage forbearance programs for an additional six months and prolong foreclosure relief programs in a move that covered an estimated 70% of mortgages for single-family homes in the U.S.

Morgages backed by Fannie Mae or Freddie Mac, as well as by the Department of Veterans Affairs (VA), the Department of Agriculture (USDA) and the FHA announced that they were expanding their forbearance programs for up to 18 months. For homeowners who requested enrollment in March and April 2020, it means that those programs will expire in September and October.

WRITTEN BY MEGAN LEONHARDT FOR CNBC REAL ESTATE | cnbc.com

SPRING HOUSING MARKET: Bidding wars are off the charts

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FROM CNBC REAL ESTATE:

Presidents Day weekend marks the unofficial start of the spring housing market, but if you’re looking to get in this year, hold onto your wallet. Bidding wars are off the charts, even as home prices are rising rapidly.

The primary reason longtime home searchers haven’t bought a house yet is because they keep getting outbid. About 40% of potential buyers cited that in a new survey by the National Association of Home Builders. The reasons are flipped from a year earlier, when 44% said unaffordable prices were the biggest reason they hadn’t bought yet, and 19% cited getting outbid.

Well over half of all buyers, 56%, faced bidding wars on their offers in January, according to a Redfin survey. That is up from 52% in December. More than half of homes are now going under contract in less than two weeks.

“With so few new listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season,” said Daryl Fairweather, chief economist at Redfin. (for more, check out www.Redfin.com). She advises buyers to be ready to go see properties the moment they hit the market and to get preapproved for a mortgage.

“But know when to back away if the price escalates more than you’re willing to pay,” Fairweather added.

Competition is fierce across the nation, but worst in Salt Lake City, where 9 out of 10 offers faced competition, according to Redfin’s survey of 24 major markets. It was followed by San Diego (78.9%), the Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).

The problem is supply, or lack thereof — record low supply. Sudden strong demand, driven by the stay-at-home culture of the Covid pandemic, swiftly smacked into already low inventory, due to lackluster homebuilding. Record-low mortgage rates only fueled demand even more.

Paul Legere is a buyer’s agent with the Joel Nelson Group in Washington, D.C. He says his job is only getting tougher.

“The low cost of money now has buyers able to be more aggressive and willing to overpay for properties. As a buyer’s agent, tasked with trying to help clients find value, that piece of the equation is nearly impossible to do,” said Legere. “It is a constant struggle and scramble to find desirable targets.”

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Sellers have also pulled back, not wanting to go through the ordeal of putting their homes on the market during Covid. The number of newly listed homes in January was down 29% year over year, pushing the total inventory down 47%, according to realtor.com.

Home prices had appreciated at a double-digit rate each week for 26 straight weeks leading into January. The median listing price for a home was up nearly 13% compared with January 2020.

“Lower mortgage rates are making monthly payments for higher priced homes more manageable,” said realtor.com’s chief economist, Danielle Hale. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”

WRITTEN BY DIANA OLICK FOR CNBC .COM

 


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