RTC Mortgage Blog

Where Are The Sellers?

Economists agree that the market hit bottom some time earlier this year and low interest rates have brought out more buyers than we’ve seen in years. But sellers are waiting for better prices leading to the lowest level of housing inventory in at least 12 years. It’s becoming a “Sellers Market” and it has changed rather quickly. The statistics are very interesting. Read on…………..

57% of homes for sale got multiple offers

A dramatic shortage of homes for sale in California has created an especially tough market for first-time buyers, with nearly 6 in 10 homes getting multiple offers in 2012, a California Association of Realtors survey shows. And, each of those homes received an average of 4.2 offers, up from 3.5 offers in 2011.

Lower priced homes – often foreclosed homes and short sales – received more multiple offers than equity sales. Seven of 10 homes foreclosed by lenders or sold through short sales received multiple offers, while half of standard sales attracted more than one offer.
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The fierce market conditions have forced many buyers to compete with all-cash offers and investors, setting off multiple offers and bidding wars, making it even more difficult for first-time buyers to become homeowners.

Competition for homes throughout the state has resulted in more properties sold at or above the asking price, according to the association’s survey. Forty one percent of homes sold without a price cut, the highest since 2005 and up from a longtime average of 32 percent.

Homes also sold faster this year, with equity sales selling in 32 days compared with 67 days in 2011. Bank-owned homes sold in 30 days compared with 50 days last year, and short sales sold in 90 days compared with 141 days in 2011.

Interesting Facts from the California Association survey:

• 31% of all homebuyers paid all cash in 2012
• 16% of sales were to investors
• 7% were to buyers who purchased a second or vacation home
• 77% bought homes as their primary residence.
• 5.8% were International buyers - China: 39.1%, Canada: 13%, India: 8.7%, Mexico: 8.7%
• 34.2% were first-time buyers
• 40% of all first-time buyers bought either a bank-owned home or a short sale in 2012, down from 44.3 in 2011. The decrease likely reflected fewer distressed properties for sale.

The survey, conducted from a random sample of 15,000 Realtors throughout California, drew 932 respondents. The Realtors were asked to provide information from their most recent sales transaction that closed escrow in the second quarter of this year. The margin of error for the survey was 3.2 percent, the association said.

Refinance Facts

According to Freddie Mac, the Government Agency that along with Fannie Mae buys the majority of mortgage loans produced by the nation’s lenders:

• 29% of borrowers who refinanced during the third quarter of 2012 reduced their loan term
• 68% of borrowers kept the same term as the loan that they had paid off
• 3% chose to lengthen their loan term.
• 95% of refinancing borrowers chose a fixed-rate loan

Home Seller Facts:

Fewer homeowners looking to sell their residences cite the economy as a concern in the latest Redfin poll. But more believe they’d get a higher price by waiting a year or two to sell.

In the Freddie Mac survey, conducted in 20 markets across the U.S., the following facts emerged:

• 40% see the economy as a major concern with selling, down from 49%.
• 83% think that they would get a higher price by waiting one to two years, up from 80%.
• 43% are considering renting out their home rather than selling it, down from 46%.
• 31% intend to price their home higher than nearby comparable sales. The percentage is unchanged.
• 37% would choose an all-cash offer over higher offers with conventional or FHA financing, up from 35%.
• 15% believe it is a good time to sell, up from 13%.
• 58% believe it is a good time to buy, down from 61%.

To underscore the magnitude of the shortage, below are some headlines and links to recent articles published in the Orange County Register.

• Homebuying doubles in 17 O.C. ZIPs
• O.C. housing mood: Go for it!
• Homebuying jumps 40% to 7-year high
• O.C. housing market shrinks to 8-year low
• O.C. housing hot in south, at beach
• O.C. home median price jumps 9.7%

The information above underlies the importance for any homebuyer in this market to be pre-approved before making an offer.