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Lengthy Time on Market Remains an Issue for Short Sales
By Oscar Wei, senior research analyst
The supply of housing continued to decline at the state level, with an unsold inventory index (UII) of 4.2 months for December 2011, a drop from 5 months in both the previous month and the same month of the previous year. In fact, it was the lowest level since December 2009 when the UII was below 4 months. Inventory levels, however, varied considerably across different segments of the market.
Inventory of short sales remained at a relatively high level primarily because many of these properties continued to stay on the market much longer than equity sales and Real Estate Owned (REO) sales. In December, an equity sale typically stayed on the market for 56 days; an REO remained on the market for 41 days, but a short sale property stayed on the market for 116 days. Short sales were on the market for a much longer time frame due to the additional time needed for lenders to approve a short sale offer. Until the short sale process is streamlined and standardized, the inventory level for short sales will likely remain higher than those of REOs and equity sales in the foreseeable future.
For questions about Real Estate 411, please contact the Research & Economics Department atresearch@car.org or (213) 739-8352
2011 Housing Market Wrap Up and 2012 Outlook
By Robert Kleinhenz, deputy chief economist and Oscar Wei, senior research analyst
California home sales improved both on a monthly and on an annual basis in November, exceeding the 500,000 benchmark for the first time in seven months. With monthly and yearly gains of slightly over 2 percent, there were 503,570 units of existing detached homes sold when measured on a seasonally adjusted and annualized basis. Sales were the strongest in eight months and now stand 1.2 percent higher than last year on a year-to-date basis.
Despite softening slightly from October, California pending home sales improved on a year-to-year basis for the seventh consecutive month. The C.A.R. Pending Home Sales Index was at 109.8 in November, a decrease of 9.1 percent from October but up 11 percent from a year ago. The strong year-over-year growth in pending sales observed in the last few months suggests that closed sales in December will exceed last year’s December sales figure.
As for home prices, California’s median price was $280,960 in November, an increase of 1 percent from a month ago, but down 5.2 percent from a year earlier. The statewide median price had been holding steady at about $290,000 from February of this year through September, so the decline over the past two months may be explained in part by a seasonal slowdown that is typical for the time of year. Part of the decline, however, could also be attributed to the cut in high cost loan limits by Fannie Mae and Freddie Mac as of October, which may have stifled activity in the middle-tier of the California marketplace (see article “Restoration of FHA High Cost Limit to Help Challenged Market Segment” in Market Data section on C.A.R. Web site).
Sales are on track to beat last year’s total annual sales of 491,000 homes, and C.A.R. forecasts a slight one percent increase in sales next year to about 496,000 homes. With normal market activity thought to be 500,000 or so sales annually, sales this year and next will be slightly below normal.
The statewide median price will finish 2011 somewhat below last year’s median price, down by somewhere between 3 and 6 percent year-to-year. However, the median price is expected to edge up by about 2 percent next year over this year’s annual median.
The new year will be a transition year for the housing market, very much like 2011. The market’s performance will hinge heavily on the performance of the U.S. and global economies, so it will be important to follow the economy as well as the housing market. Unexpected events hindered economic growth in 2011 and could do so again in 2012. However, if there is sustained improvement in economy, the housing market could perform better than the C.A.R. forecast.
To learn more about our Trends Newsletter, please contact the Research & Economics Department at research@car.org or (213) 739-8352
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