Sales figures for single family homes in December showed a significant decline over both the previous month of November and December a year ago. Even though one more home was sold as compared to the month before, the total sale volume was down 34.7%. The average selling price for Venice single family home decreased 40.1% as compared to November with 33.3% of the homes selling for over $1,000,000 (during November 72.7% of the homes sold for over $1,000,000). The average dollars per square foot decreased by 20.5% from the previous month and was down 9.0% as compared to a year ago.
According to the Multiple Listing Service, there are 64 active single family listings (as of January 16th), a decrease of 7.2% since our last issue when there were 69. The number of homes in escrow increased by 1 to 16. The average days on market (DOM) for active listings increased by 7.9 days to 95.6 days and the average DOM for listings in escrow increased by 13.3 days to an average of 75.13 days.
The average list price for the active listings is $1,161,493. Of the 64 current listings, 34 (53.1%) are listed below December’s average sale price of $945,917 and 30 (46.9%) are listed above that average sale price. The average list price for the homes in escrow is $1,158,619 … 22.5% higher than December’s average sales price and just slightly lower than the average list price of the active listings.
I looked at another stat this month … the number of bank-owned and short pay single family homes that are actively listed for sale in Venice. Until recently, neither was a big factor in the Venice market. However, my analysis indicates that this is definitely becoming significant. Of the 64 active single family homes, 5 (7.8%) are bank-owned and 12 (18.8%) are short pay. One bank-owned and 3 short pay homes are currently in escrow. I will continue to monitor these stats in the future.
See below for a list of all of the properties sold in Venice during December 2010 and the charts showing these comparisons..
DECEMBER VENICE SALES …
Sales are for all of Venice and do not necessarily represent sales of CJ & Jay Cole. Information is compiled from DataQuick and the MLS/CLAW. Sources are deemed reliable; however, no representation of any kind is made as to its accuracy.
HOW DOES THIS COMPARE ???
For a look of all of the Venice property sales by month since 1999, visit my web site at http://venicebeachliving.com/sa/index.html.
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STUDY ANALYZES RECESSION’S IMPACT ON HOUSING MARKETS …
The Great Recession of 2007 to 2009 created new declining cities, and posed further difficulties for cities already in decline. Some cities may not re-attain home price peaks for many years, and could see some neighborhoods cease to be viable economically, according to a study released from the Mortgage Bankers Association (MBA). The study analyzes the recession’s impact on real estate markets in cities in the midst of a severe and persistent economic decline.
The study includes detailed statistical analysis of trends in U.S. metro areas over the past 40 years, paying particular attention to seven large metro areas since 2000, and a comprehensive review of existing academic research on this topic.
Key findings from the study include:
• Substantial home price deterioration occurs in markets that suffer significant declines in population or employment. Such declines in population and employment trigger reduced demand for housing. Because people are more mobile than houses, it often takes many years for supply and demand to become balanced again and for house prices to return to the levels they achieved prior to the negative economic even.
• The impacts among neighborhoods or smaller cities within metropolitan areas experiencing substantial overall decline are likely to be widely disparate and could well threaten the sustainability or long-term viability of some previously stable neighborhoods.
• Both home buyers and lenders will have a tendency to avoid places plagued by high foreclosures, vacancies, and a deteriorating quality of the housing stock due to deferred maintenance.
A LITTLE-KNOWN STRATEGY FOR CUTTING MORTGAGE PAYMENTS …
Homeowners looking to lower their monthly mortgage payments and reduce their interest rate may be able to do so without refinancing. A little-known strategy called recasting or re-amortization is available through some mortgage lenders and servicers, and eliminates the hefty fees and daunting credit requirements of refinancing.
Re-amortization requires borrowers pay off a lump sum of the principal amount on the mortgage and asking to have the monthly payments reset according to the original interest rate and loan terms. The lump sum reduces the principal, so the new monthly payments decrease slightly and interest paid over the life of the loan is reduced.
Lenders typically charge an administrative fee of $150 or more to re-amortize a mortgage; however, borrowers are not required to pay closing costs or submit to another credit check.
Re-amortizing works well for homeowners unable to qualify for refinancing, especially those who are self employed or have low poor credit.
Homeowners consider re-amortizing their mortgage should be aware that some lenders require a minimum amount to be paid toward the principal in the lump sum. JPMorgan Chase, for example, charges a $150 fee and requires a minimum $5,000 payment toward the principal.
Another challenge is finding a lender, or loan servicer, that offers re-amortizing. JPMorgan Chase and Bank of America exclude loans backed by the Federal Housing Administration and Dept. of Veterans Affairs, and loans that were sold off and securitized may also need investor approval.
REVERSE MORTGAGE GETS A MAKEOVER …
A reverse mortgage has long been considered a loan of last resort because of its high fees. Now, a new type of reverse mortgage is attracting the attention of more-affluent borrowers eager to extract cash from their homes. But older homeowners – and adult children who advise them – need to be aware of the new trade-offs.
RESOLUTIONS FOR HOME SELLERS IN 2011 …
If your New Year’s resolution involves selling a home in 2011, you’ve got some work to do: There’s lots of inventory out there and in a buyer’s market, getting an offer on a home can be challenging.
DO YOUHAVE ENOUGH HOMEOWNER’S INSURANCE ???
Some homeowners wonder if they should lower their homeowner insurance amounts given the decline in home prices.
FIRST-TIME BUYERS NEED TO BE PREPARED WHEN IT COMES TO SEEKING A LOAN …
First-time buyers planning to make the shift from renter to homeowner this year should begin preparations as early as possible. Prior to starting the home-buying process, potential buyers should make sure they are ready to buy a home where they will live for three to five years or longer, since it can take that long to build equity in a home and recoup investment costs.
The first step a home buyer should take in the home-buying process is to check their credit score. Lenders base mortgage qualification on a variety of factors, including income and assets, the borrower’s debt-to-income ratio, pattern of savings, and job stability. However, the most important factor is the credit score. Lenders tie the interest rate the borrower pays to the credit score, so borrowers with a credit score of 720 and sometimes 740 and above are the only ones who will pay the lowest mortgage rates. Borrowers with a credit score below 620 may not qualify for a mortgage at all until they can improve their score.
A lender tells the borrower how much they can borrow, but each potential homeowner should create a simple budget for themselves with income and spending to determine how much they are willing to spend on housing payments. Financial experts recommend that homeowners spend a maximum of about 30 percent of their gross monthly income on principal, interest, homeowners insurance, and taxes. Included in the budget should be approximately 1 percent of the home price for condo or homeowner association fees and maintenance costs.
Fannie Mae is jacking up mortgage fees … Potential home buyers who have high credit scores and hefty down payments may be surprised that even they are being targeted for higher “risk-based” fees.
FAST FACTS …
California median home price – November 2010: $296,820
(Source: CAR)
California highest median home price by CAR region November 2010: Santa Barbara So. Coast $874,500 (Source: CAR)
California lowest median home price by CAR region November 2010: High Desert $124,580 (Source: CAR)
California First-time Buyer Affordability Index – Third quarter 2010: 64 percent (Source: CAR)
Conforming mortgage rates – week ending 1/6/2011:
30-yr. fixed: 4.77% Fees/points: 08%
15-yr. fixed: 4.13% Fees/points: 0.8%
1-yr. adjustable: 3.24% Fees/points: 0.6% (Source: Freddie Mac)