Study Finds 20% of Mortgages Underwater

According to Reuters News nearly 20 percent of home owners owe more on their homes than their properties are worth, finds a new study by First American CoreLogic.

About 8.31 million properties were underwater at the end of 2008, up 9 percent from 7.63 million at the end of September.

Corelogic predicts about 2.16 million properties will be underwater if home prices fall another 5 percent.

The problem is the worst in Arizona, California, Florida, Georgia, Michigan, Nevada, and Ohio.

Nationwide, 68 percent of U.S. adults own their own homes, and about two-thirds have mortgages.

Home sales double in California

Sales of resale single-family homes in California more than doubled in the past year — rising 117 percent in October 2008 compared to the same month last year — the statewide Realtors trade group reported today, while the statewide median price plummeted about 40 percent.

The seasonally adjusted annual rate of statewide sales reached 552,750 in October — up from a pace of 254,650 sales in October 2007. This sales rate is a projection of a monthly sales total over a 12-month period, adjusted to account for typical seasonal fluctuations in sales.

The median price of resale single-family detached homes in the state, meanwhile, dropped from $517,240 in October 2007 to $311,060 in October 2008, the group reported.

The National Association of Realtors on Monday reported that the U.S. median home price plunged 11.3 percent year-over-year in October, which was the largest drop since the association began tracking the statistic in 1968. The group also reported that sales of resale homes dropped 1.6 percent year-over-year in October.

Also, a Standard & Poor’s/Case-Shiller report released today found that resale single-family home prices have fallen an estimated 16.6 percent from third-quarter 2007 to third-quarter 2008 — a separate 20-metro-area index revealed that prices have fallen about 17.4 percent year-over-year in September.

The California Realtor Association’s Unsold Inventory Index, which estimates the number of months it would take to deplete the supply of for-sale homes at the latest monthly sales rate, was 5.9 months in October, compared with 15.2 months in October 2007.

And it took a median 45 days to sell a single-family resale home in October 2008, compared with 58.8 days in October 2007.

Economy Delays Home Buys for 27% of Homeowners

While this poll was conducted in the U.S. I am sure the results would be similar in Canada.

More than one-quarter (27%) of American homeowners say that the current economic environment is causing them to put their plans to buy a new or existing home on hold, according to a new Ipsos Public Affairs poll conducted on behalf of Realogy.

Among those who are most likely to say they are putting off a home purchase because of the financial crisis:

• Non-white homeowners (46%)
• Homeowners under age 35 (38%)
• Parents with children under 18 (33%)
• Those with a household income of less than $50,000 (33%)

Despite current hesitation to buy a new or existing home, nine in ten homeowners (91%) agree that owning a home is still the best long-term investment they can make with their money. Nearly three-quarters (72%) say that aside from shelter, they primarily see their current residence as a long-term investment.

West Vancouver Market Update November 2008

You read a lot in the newspapers about the market and they make gross generalizations, but what is really happening in West Vancouver?

Below is a table comparing detached home listings in West Vancouver from January 2008 to June 2008 to November 2008. What we do know is that the average number of days on market has increased and might even be higher depending on how many homes were taken off the market and re-listed a month or two later.

Here are the facts about the market as of November 7, 2008:
Total Number of Listings – 544
Average Days on Market – 99
Price Reductions – 213
% of current listings that have reduced their price – 39%
Average price reduction – 8%
Median price reduction – 7%
Average days on market for homes with price reductions -137
Average days on market for homes that have not reduced their price – 114

The price range of homes has changed since July 2008 when there were 322 homes for sale under $2 million compared to 303  today. Click on the chart below for a comparison of the number of homes for sale by price range from January 2008 to present.

	Jan-08	Jan-08	Jul-08	Jul-08	Nov-08	Nov-08
Price Range	# of Homes For Sale	Avg Days on Market	# of Homes For Sale	Avg Days on Market	# of Homes For Sale	Avg Days on Market
< $1 million	11	75	30	64	48	94
$1.0 – $ 1.25 million	21	75	63	78	69	99
$1.25 – $ 1.5 million	42	50	111	70	86	99
$1.5 – $ 2.0 million	57	64	118	79	100	79
$2.0 – $ 2.5 million	30	82	61	79	67	89
$2.5 – $ 3.0 million	21	53	37	73	54	104
$3.0 – $ 5.0 million	51	107	79	87	82	117
> $5 million	28	136	36	121	38	129
	261	81	535	79.5	544	99

BC 2008 Housing Forecast

The British Columbia Real Estate Association (BCREA) released its fall 2008 Housing Forecast today.

The BC Multiple Listing Service® (MLS®) residential sales are forecast to decline 28 per cent from 102,805 units in 2007 to 73,700 units this year. A modest 4 per cent increase to 76,500 units is forecast for 2009.

The average MLS® residential price is forecast to increase 3 per cent to $453,000 this year. However, home prices peaked in the first quarter and have been edging lower for several months. For 2009, the average price is forecast to decline 9 per cent to $413,000, with most of the decrease having already occurred by the end this year.

Downward pressure on home prices is expected to ease by the second quarter of 2009, as an increase in affordability and consumer confidence induces a modest growth in sales. The inventory of homes for sale is also expected to decline in the coming months as potential home sellers delay putting their homes on the market until conditions improve.

Some U.S. Housing Markets Still Thriving

Forbes magazine examined the top 100 most expensive ZIP codes in the United States and concluded that most saw strong price appreciation in the last 12 months.

Here are the top-10 most expensive ZIP Codes and the median home sales prices:

1. Fisher Island, Fla., Miami-Dade County, 33109. Median sales price: $3.85 million
2. Alpine, N.J. Bergen County, 07620, $3.59 million
3. Mill Neck, N.Y. Nassau County, 11765, $3 million
4. Newport Coast, Calif., Orange County, 92657, $2.8 million
5. Water Mill, NY, Suffolk County, 11976, $2.72 million
6. Atherton, Calif., San Mateo County, 94027, $2.7 million
7. Santa Barbara, Calif., Santa Barbara County, 93108, $2.7 million
8. Wainscott, N.Y., Suffolk County, 11975, $2.56 million
9. Rancho Sante Fe, Calif., San Diego County, 92067, $2.47 million
10. Beverly Hills, Calif. Los Angeles County, 90210, $2.41 million

Source: Forbes, Matt Woolsey (10/07/08)

Urban Real Estate Values Set To Plunge

A real estate finance expert at UBC’s Sauder School of Business is predicting that home values in most of Canada’s urban centres are about to plunge.

A new study shows homes in most urban centres except Toronto and Edmonton are overvalued, priced up to 25 per cent higher than they should be to balance with rents.

The study’s author, University of British Columbia professor Tsur Somerville, said the decade-long boom in Canadian markets is over, and homeowners should brace for anything from a rapid price drop to a long, flat market.

To analyze whether housing prices are overvalued, the researchers looked at current house prices in nine major Canadian cities. They compared these prices to their own calculation of what a balanced market price should be, derived from the relationship between house prices, rents and the cost of investing in housing in each market.

The study warned that the potential for price declines is greatest in cities that have a large supply of unsold inventory or a mismatch between the number of units and the number of households ready to occupy them.

Somerville concluded that only in Toronto are prices in balance with rents. In Halifax, Montreal, Ottawa, Regina and Winnipeg prices would need to drop by at least 20 per cent to be in balance, while Calgary and Vancouver would require a 7 to 11 per cent drop in prices to reach the study’s equilibrium level. But the study found in Edmonton prices are actually below equilibrium, by 8 per cent.  Metro Vancouver’s house price, of $754,500, was 11 per cent higher than the balance point.  But the study also found Canada’s more conservative lending practices have prevented the speculative excess and severe downturn experienced in U.S. markets.

Recent market figures from the Greater Vancouver Real Estate Board have shown it is already getting cheaper to buy a home in the Greater Vancouver area. While the benchmark price for detached properties rose 1.6 per cent since August 2007, prices declined 4.3 per cent from record highs set in May 2008.

West Vancouver Real Estate – New Listings Week of Sept 1/08

#205-1845 Bellevue    $385,000
#105-533 Water’s Edge    $849,000
4450 Woodcrest    $899,999
2109 Nelson Ave    $1,149,000
#16-5110 Alderfeild Pl    $1,345,000
322 Moyne Dr    $1,495,000
3961 Sharon Pl    $1,495,000
2228 Mathers    $1,548,000
653 Andover Pl    $1,599,000
1410 Sandhurst Pl    $2,395,000
2055 Queens    $2,495,000
2971 Nelson    $2,588,000
4635 Keith Rd    $2,595,000
655 Fairmile    $3,799,000
6171 St. Georges Cres    $9,980,000

Mexico Second-Home Market Still Sunny

Americans’ appetite for second homes in Mexico remains strong, says Carlos Garza, CEO of Texas-based INB Financial Corp., which started offering cross-border mortgages last year.

Evidence of the demand: Mexico’s top bank, BBVA Bancomer has made about $115 million in loans to Americans and Canadians so far this year and has a full-year goal of $200 million. The average loan is about $500,000, says Isidoro Sanchez, a director of business development at BBVA Bancomer.

Most of BBVA’s business has come from professionally active Americans, ages 40 to 55, who are looking for a weekend retreat, and from semi-retired buyers between the ages 55 and 60 who spend several months a year in Mexico, Sanchez says.

“Given the kind of homes that are being purchased – $800,000 to $2 million – this is a segment that is still buying even though there is a crisis in the U.S.,” Sanchez says.

Mexico City-based real estate research firm Softec Consultoria Inmobiliaria predicts vacation-home sales to foreigners are set to reach 35,000 units worth $17 billion in 2012, up from 18,000 units sold for $6.4 billion last year.

Source: Dow Jones International News, Ken Park (09/03/2008)

British Columbia home sales at 10 Year Low

Home sales in British Columbia fell to their lowest level in a decade during July amid a rising number of for-sale inventory and increasingly cautious buyers, according to a report this month in The Vancouver Sun.

Sales through the multiple listing service totaled 6,541 units last month, a drop of 37 percent from a year ago. Although listing inventory jumped 63 percent in the last 12 months to 60,008 units, the average price of a British Columbia home sank just 0.5 percent to $444,358, according to the report.