Report: Entry-level home buyers make up biggest share of market ever

First-time buyers made up a bigger share of the housing market in 2009 than any other year on record, according to a study released this afternoon.

The number of first-time home buyers rose to 47% of all home sales from 41% of transactions in last year’s study, and was the highest on record dating back to 1981, according to the Washington-based National Assn. of Realtors.

Home sales have been fueled in recent months by cheap foreclosure properties. Both investors and first-time buyers have jumped into the market to snap up these heavily discounted digs.

For first-time buyers, one major incentive fueling the spree has been a tax credit extended last week by the Obama administration and expanded to include move-up buyers. The Realtors group lobbied heavily for the legislation. Paul Bishop, vice president of research for the Realtors group, said in a statement that several factors have been at play, including the tax incentives.

Many independent economists, however, contend that the credits are being given to people who would have bought anyway.

Of those first-time buyers, 55% purchased their home with a loan backed by the Federal Housing Administration.

That news comes on a day on which an independent audit of the FHA’s finances shows that its cash reserves have shrunk to a level below its legal limit, meaning that this pillar of the recent housing market upswing might need a taxpayer-funded bailout.

From the Washington Post:

The audit examined the excess cash the agency must set aside to deal with unexpected losses in its flagship home-buying program, which has played a key role in supporting the housing market.

As of Sept. 30, those reserves had an estimated value of $3.6 billion, a sharp drop from the $12.9 billion available a year earlier, the audit found. The current total represents 0.53 percent of all outstanding single-family-home loans insured by the FHA, well below the 2 percent portion set by law. This is the first time reserves have fallen under that threshold since 1994.

-- Alejandro Lazo

Figuring out the home-buyer tax credit

Is there a home-buying tax credit in your future?

Columnist Kathy M. Kristof details the changes that will allow millions of additional people to take advantage of the $8,000 tax credit for first-time home purchasers, under legislation signed Friday by President Obama. The new law raises the income restrictions for first-timers, creates a $6,500 credit for longtime homeowners and launches more-accommodating rules for members of the military.

The fine print, particularly for current homeowners, can be more than a little confusing.

If you have owned and lived in a home for at least five consecutive years of the last eight years, you could qualify for a $6,500 tax credit, if you buy a new home between now and April 30.

The "five-of-eight" requirement means that this credit could accommodate people who lost their homes in the last year or two to foreclosure or even sold a house and didn't immediately replace it, said John. W. Roth, senior tax analyst with CCH Inc., a Riverwoods, Ill., publisher of tax information.

Would you have to sell your residence for it to qualify for the $6,500 credit, if you wanted to buy a new one? Not necessarily, Roth said. The home you purchase must become your principal residence, so you would have to move there. But nothing in the law says you cannot keep your existing residence as a second home or rental, he said.

If you do choose to sell your existing residence, you need to pay close attention to how much you earn on that sale, Stretch said. That's because taxable profits from the sale of your residence will be added to your other earnings to determine whether your adjusted gross income exceeds the allowable thresholds.

To read more, click here.

-- Nancy Rivera Brooks

 

Open mansions: A sign of the times?

Public open houses being held at Westside properties priced as high as $21.9 million is the subject of my story today at latimes.com. Most of us can never afford a house costing more than a fraction of that price. If you are a diehard lookie-loo, at least now you can step inside one.

The real estate agents I talked to were split on whether this is a good idea or a bad one, but it's something to think about when you have family in town over the holidays and are looking for that only-in-L.A. experience.

--Lauren Beale

Thoughts? Comments?

Photo: Agent Florence Mattar has been holding public open houses at this $21.9-million home in the "bird streets" area of Hollywood Hills. It has six bedrooms and eight bathrooms in 9,691 square feet. This is the living room. Credit: Everett Fenton Gidley

Redfin announces sale prices in real time, uh, maybe

The online brokerage Redfin announced a cool new tool for those interested in SoCal real estate prices. The Seattle-based online brokerage is now posting closed-sale prices and photographs for houses in a variety of big real estate markets as soon as the listing broker marks the property as sold.

The new version of the company’s website integrates data from the local databases that brokers use to take properties on and off the market, according to a release by the company this morning. The upgrade added 9.6 million photos for 1.4 million recent property sales with an average of more than 100 data fields on the property’s features.

Michael Smedberg, chief of of Redfin’s query and statistics team, says the upgrade will allow consumers to do their own comparative analyses of homes that were previously the purview of real estate agents.

“Comparative Market Analyses are one of the real estate industry’s ‘killer applications,’ ” Smedberg said in today's release, “but they're often shrouded in mystery; agents have direct access to data such as prices and photos for just-sold homes, but buyers rarely do. Without that direct access, consumers have had to rely on the expertise and availability of their agent, and this in turn made it hard to figure out on their own what to offer or ask for a listing.”

The company also announced that it has added trackbacks to its site, which will allow bloggers to automatically link to Web pages featuring properties.

Test run: It appears that Redfin’s site is groaning under the load of its new features. All morning the home page has had this message: “We're working hard to bring you a better Redfin. The site is unavailable for a brief time while we update our service. Please check back in a few minutes.”

Redfin Chief Executive Glenn Kelman just confirmed in an e-mail that the site keeps crashing for “the first time in a year or maybe two” and that we should hold off on our posting. Whoops. Too late.

-- Alejandro Lazo

L.A. takes the second spot, but half of the 10 most-searched homes nationwide last week were in Detroit

Although a Los Angeles home made the No. 2 spot, five of the Top 10 most-searched homes nationwide at Realtor.com last week -- among homes priced within 20% of the median list price of $215,000 -- were in Detroit.

Here's the Top 10 in the order they ranked:

1. Canton Twp, MI 48188 is a four-bedroom, 2.5-bathroom, brick Cape Cod with 2,005 square feet listed at $219,900.

2. Los Angeles, CA 90062 is a three-bedroom, two-bathroom, 1,464-square-foot 1922 house in Boyle Heights listed at $248,000.

3. Las Vegas, NV 89141 is a four-bedroom, four-bathroom, 2,152-square-foot 2003 two-story listed at $185,000.  

4. Detroit, MI 48214  is a six-bedroom, 3.5-bathroom, 5,500-square-foot Colonial built in 1900 listed at $220,000.

5. Detroit, MI 48206 is a six-bedroom, 3.5-bathroom 1919 Georgian-style home of 4,200 square feet listed at $225,000.

Rounding out the Top 10 were:
6. Detroit, MI 48206, $249,995
7. Miramar, FL 33027, $199,900
8. Holly Springs, NC 27540, $183,000
9. Detroit, MI 48214, $184,900
10. Detroit, MI 48206, $189,900.

It does provide an interesting comparison of what you can buy in different locations for the same amount of money. As for our No. 2 Los Angeles house, it previously sold for $520,000 in February 2007.

-- Lauren Beale

Thoughts? Comments?

Photo: The second-most searched home last week at Realtor.com, among homes priced within 20% of the national median list price of $215,000, was in Boyle Heights. Credit: L. Ernesto Flores

 

 

Ryland chief says housing market 'on the mend'

Ryland Group’s chief executive told analysts this morning that he sees the housing market as “on the mend.”

The Calabasas home builder posted a narrower loss Wednesday as the company sold fewer homes amid the construction slump. The loss also came as the government released data showing that new orders for U.S. homes fell unexpectedly last month, raising concerns that consumers will slow their home purchasing as a federal tax credit for first-time buyers approaches its expiration at the end of November.

Nevertheless, CEO Larry T. Nicholson told analysts during a conference call that the housing market appeared to be stabilizing and that was a good sign.

“Well, I think when we say on the mend, we don’t ... mean great leaps forward,” Nicholson said. “I mean we just see inventories continue to decrease. We see price stabilization. We see a lot of things we haven’t seen for a period of time. So I don’t want to sound like we’re overly optimistic. We just see some of the things that have been eroding for a long time have ceased to erode.”

-- Alejandro Lazo

$8,000 first-time homebuyer credit targeted by fraudsters

This year’s $8,000 federal tax credit for first-time home buyers was apparently so popular that it even attracted ineligible claimants – potentially more than 90,000 of them, including former homeowners and 4-year-old children.

A report from the Treasury inspector general for tax administration found that more than $600 million worth of tax credit claims were questionable. The $8,000 offer, enacted by the Obama administration in February and expanding a similar credit from 2008, was designed to boost housing demand.

Eligibility extended to those who had not owned a primary residence in the last three years and earned less than $75,000 as an individual or less than $150,000 as a married couple. The credit could be claimed after purchasing a home between Jan.1 and Dec. 1.

But on 19,351 electronically filed tax returns, taxpayers listed the credit for properties that hadn’t been purchased. An additional 73,799, claiming nearly $504 million, seemed to have already owned a home.

And 582 supposed first-time home buyers turned out to be younger than 18 years old, claiming nearly $4 million. Meanwhile, 48,580 taxpayers still working with the less-generous 2008 version of the credit may have claimed less than they were entitled to.

The Internal Revenue Service has so far discovered 167 criminal schemes, opened 115 criminal investigations and temporarily frozen more than 110,000 refunds. The IRS has also agreed to recommendations from the inspector general to take corrective action.

Through late August, more than 1.4 million claims have been made to some version of the home buyer’s credit.

-- Tiffany Hsu

Tips for actually getting a house

Lots of would-be home buyers lately are frustrated by losing out repeatedly on multiple-bid situations. Despite the housing market woes, it's actually tough in many cases to get a house when it is in decent shape and priced well.

San Diego broker Jim Klinge says this will probably abate in November, and buyers should be in better position. He's got some tips on his blog for buyers, in his typical anti-Realtor style. He suggests, for example, keeping an open mind about fixer-uppers. "Those are the ones holiday buyers will shy away from, and you stand a better chance of stealing," he wrote.

-- Peter Y. Hong 

Signs of life in Southern California's housing market

Southern California’s housing market took another small step toward recovery in September as the median sale price for homes in some areas rose above last year’s levels – the first such increase since the market crashed.

The median price paid for all homes in six Southern California counties in September -- $275,000 -- was unchanged from August and 11% below the same month last year, according to San Diego-based MDA DataQuick.

But in Orange County, the median home sale price last month of $429,000 rose modestly from $425,000 the same month a year earlier -- the first year-over-year gain since 2007, DataQuick said. If condominium sales are excluded, last month’s median home sale price in San Diego and Ventura counties also beat their September 2008 levels.

Christopher Thornberg, a Los Angeles economist who was an early predictor of the housing bubble, said several factors converged last month to give home sales a boost. "Tax breaks, low interest rates and pent-up demand added up to create a surge in sales that’s surely gone some way in stabilizing prices,” he said.

But Thornberg cautioned that prices could fall again.

“The question continues to be, how is this going to stand up when the next wave of foreclosures hits the market?” he said.

Even if the housing market takes another hit in the coming months, Thornberg said, the bulk of the market correction is past.

“If prices do fall again, it’ll be another 10% to 15% max,” he said.

The Southern California median price remains at 2002 levels, even without considering inflation, and is 46% below its peak level of $505,000 set in several months of 2007.

Those relatively low prices pushed the number of homes sold in September up 5% over the same month last year, and 0.2% above August. Home sales in the past year picked up first in the lowest-priced inland areas, where massive foreclosures pulled prices down.

Last month’s sales, with a rising median price over last year in some areas, show the mix of homes sold is normalizing. Sales of homes priced at or above $500,000 were 21% of the total, up from 13% in January, DataQuick said.

-- Peter Y. Hong

California Assn. of Realtors' 2010 housing market forecast

Home prices in California will increase slightly next year as buyers snap up foreclosures and other properties at the market’s low end, the California Assn. of Realtors said today.

At the same time, the number of purchases will decline slightly because there will be fewer of these foreclosures available.

In its annual forecast, the association predicted that the median home price in California would rise 3.3% to $280,000 next year. Sales of houses and condominiums, it said, would decrease 2.3% to about 527,500.

"We forecast that sales would be off a little bit next year because we're scheduled to lose first-time home buyers' tax credit at the end of November," said Leslie Appleton-Young, the group's chief economist.

She is calling for an extension of the federal tax credit, which benefited more than 1 million home buyers this year.

"Expanding credit through at least part of 2010 would help an economy that's still trying to get back on its feet," Appleton-Young said.

There are two markets, she said. In the moderate to low-end market, home prices have dropped 50% or more in some places, enabling people to buy homes that they otherwise would not have been able to afford. In the high-end market, however, prices haven't softened, but potential buyers have less money.

The forecast says sales will be driven by distressed properties in the low end of the market, causing a shortage in the number of homes for sale at that level and a moderate home-price appreciation. It will continue to be hard to sell higher-priced houses because values have dropped and financing is hard to get.

-- Melissa Rohlin