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Gorgeous. You can visit, but if you want to live with this view, you'll need a million bucks.
This week, real estate tracking firm DataQuick released its annual report on the condition of the million-dollar (and up...waaayyy up) home market in California.
There was the usual drive-by-and-gawk stuff. The Woodside manse that went for $117.5 million in 2012. A 13-bathroom (is that unlucky?) palace in Bel Air. The seemingly impressive 26,993 homes that sold for a million or more in 2012 in California, a 27 percent rise from 2011.
Why seemingly impressive?
Because in 2007, the total was 45,502.
How far we have fallen.
The report also contained this astounding factoid: "Virtually all home sales in some communities were in the $1 million-plus category."
One of those communities was Santa Monica. Specifically, what DataQuick analyst John Karevoll identified as the "enclavish" zip code of 90402, where 91.2 percent of the homes sold in 2012 changed hands for at least a million bucks.
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For sale signs are posted on a foreclosed house on September 15, 2011 in Glendale. Foreclosures are continuing to decline in California, while short sales are edging up.
It looks as if the foreclosure crisis in California is ending. At the same time, the real estate market is developing a definite appetite for short sales.
Foreclosures in California have dropped to levels not seen since 2006, the real-estate tracking firm DataQuick reported on Wednesday.
So homeowners finally have a financial leg to stand on, as rising prices and a gradually improving economy have thinned the ranks of people losing their homes.
That doesn’t mean the market is healthy again. As foreclosures have declined, short sales — in which lenders allows homeowners to sell for less than they owe on the mortgage — have edged up.
They represented more than a quarter of all sales in the state in the final quarter of 2012. And they're getting more popular with one important constituency.
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A construction worker installs a window in San Mateo, California. He needs to build a lot more homes in Southern California in order to get the market back to normal.
DataQuick released data on October Southern California home sales Tuesday, and while the news looks superficially good — sales are up, prices are rising, foreclosures are down — the market remains distorted.
There are three factors that should make prospective homebuyers wary:
- There's a shortage of housing supply in Southern California, creating a bubble, with demand outstripping existing inventory and pushing up prices. Few new houses have been built in the region the past four years.
- Money is cheap. Mortgage interest rates are at historic lows. Combined with prices that were depressed by the bursting of the big housing bubble four years ago, this is drawing buyers into the market and convincing sellers that now is the right time to put homes on the market.
- Investors are major players in the market.
A foreclosure sign in Pasadena. As the backlog of foreclosures has been worked through, borrowers who are less underwater are turning to short sales. But the expiration of a Bush era tax law could upset this market.
Distressed homeowners who are underwater on their mortgages, owing more than the house is worth, have two main options, if they don't try to pursue a government-sponsored modification program: foreclosure or short sale.
Financially, foreclosure makes more sense for borrowers who are way underwater, owing say $400,000 on a house that's now worth $300,000. Struggling to make the monthly payments, maybe because some financial cataclysm has befallen the family, just adds to the pain. Super-distressed homeowners quit making payments and wait for the bank to repossess the home. Unfortunately, this process tends to depress prices and lower overall home values if a region is particularly hard-hit.
If you want to look for places where foreclosures are in crisis mode, the bankrupt California cities of Stockton and San Bernardino are a good place to start (although the pace of foreclosures in those areas has slowed substantially in recent months).
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A "for sale" sign stands outside a home in Pasadena, California. Prices in Southern California are gaining strength as foreclosure activity ebbs. And according to DataQuick, August sales haven't been this good since 2006.
RealtyTrac, a Southern California-based real-estate information service, released a report yesterday on August foreclosures that showed a big 42-percent drop in foreclosure starts in the state.
Now DataQuick, also SoCal-based, has put out an August report in Southland home prices that indicates a decline in foreclosures is helping prices in the region gain some upward momentum. This is from the company's press release:
Home prices have edged higher this year as greater demand, triggered by super-low mortgage rates and a mild economic recovery, has been met by a shrinking supply of homes for sale. But recent gains in the median sale price also reflect two other trends: a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in mid- to high-end transactions.