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

Most-searched-for L.A. County homes

 

What Los Angeles County houses are people looking at online these days? Realtor.com ranks these as the Top 5 most-searched-for listings in the county last week within 20% of the median list price of $424,500.

1. 11202 Danbury St.,  Arcadia 91006
Listed at $348,000, the 1949 single-story has three bedrooms and two bathrooms in 1,457 square feet.

2. 14917 Roxton Ave., Gardena 90249
Listed at $449,000, the 1951 two-story has four bedrooms and two bathrooms in 1,616 square feet.

3. 1112 Arkley Drive, Walnut 91789
Listed at $395,000, the 1966 traditional has bedrooms and two bathrooms in 1,867 square feet.

4. 1018 N. Buena Vista St., Burbank 91505
Listed at $343,000, the 1926 Spanish-style home has four bedrooms and three bathrooms in 1,920 square feet.

5. 21103 Violeta Ave., Lakewood 90715
Priced in a range from $369,900 to $417,000, the single-story 1962 house has three bedrooms and two bathrooms in 1,415 square feet. 

Interesting to see when and for how much these homes previously sold. Home No. 1, for example, sold on 10/21/2004 for $450,000, according to PropertyShark.com, and before that on 6/28/2002 for $320,000.

-- Lauren Beale

Thoughts? Comments?

Photo: The Gardena home was the second-most-searched-for property last week at Realtor.com among L.A. County homes within 20% of the median list price of $424,500. Credit: Jackie Solorzano

Realtors group says pending home sales climb

Pending home sales rose for the eighth month in a row in September, marking the longest upward streak for the number of monthly contracts signed since 2001, the National Assn. of Realtors reported this morning.

The Washington-based association said that its Pending Home Sales Index rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than in September 2008, when it was 90.9. The annual gain was the largest annual increase since the association began measuring the statistic in 2001.

Lawrence Yun, chief economist for the association, attributed the uptick to a surge in home-buying by first-time shoppers looking to take advantage of a federal $8,000 tax credit scheduled to expire Nov. 30.

"What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” Yun said in a statement.

Experts say the tax credit helped stabilize home prices over the summer, though some have voiced concern that both volume and price will fall if Congress allows the credit to expire. The NAR is pushing for an extension, and  could very well get its  wish. Democrats on Capitol Hill may pass legislation extending the credit as early as Tuesday, according to news reports last week.

Critics of the tax credit contend that the subsidy has pushed up home prices artificially and that the housing market will suffer declines much like the auto industry did following the expiration of the popular Cash For Clunkers program.

“It is propping up the market,” said Roberton Williams, a senior fellow at the Tax Policy Center in Washington.

Investment bank Goldman Sachs estimated in a recent report that all of the government’s policies taken to stabilize the housing market  — reducing foreclosures, slowing the pace of distressed sales and stimulating demand through the tax credit  — may have added 5% to home prices nationally.  Once those policies expire, “The risk of renewed home price declines remains significant,” according to the report.

-- Alejandro Lazo

Social media company takes full floor in Santa Monica sublease

In a sign of the times, a 19,300-square-foot sublease has been signed in one of Santa Monica's best office buildings. Social media distributor Demand Media agreed to pay $2 million to take over the entire fifth floor at Wilshire Palisades for 40 months.

The sublease, which begins Dec. 1, represents an expansion for Demand Media, said real estate broker Mitchell Stokes of Madison Partners. Demand Media creates content and websites for such clients as the Lance Armstrong Foundation's livestrong.com, GolfLink and Cracked magazine.

The sublandlord in the deal is Dimensional Fund Advisors, an investment firm based in Austin, Texas.
The building at 1299 Ocean Ave. is 99% leased, according to real estate data provider CoStar. Other tenants include Anchor Mortgage, law firm Gilchrist & Rutter, and investment advisor Wilshire Associates Inc.

Overall office vacancy in Santa Monica reached 15.4% in the third quarter, according to brokerage Cushman & Wakefield. About one-third of that is sublease space.

-- Roger Vincent

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

96% of U.S. metro areas lost construction jobs this year, research finds

Construction employment dropped this year in more than 96% of the country’s metropolitan areas, according to research released today by the Associated General Contractors of America.

Of the 337 metropolitan areas, construction-related jobs plunged in 324 regions between August 2008 and August 2009, according to an analysis of federal employment data.

The Reno-Sparks area of Nevada was the hardest hit, with a 35% dive, followed by the 33% sag in the Duluth region spread over Minnesota and Wisconsin. Construction employment in Tucson plummeted 31%, and it slumped 30% in Wenatchee, Wash.

Several California areas suffered deep declines. Construction jobs in Redding dipped 28%, while employment in the construction, mining and logging sectors in El Centro dropped 27%. The Riverside, San Bernardino and Ontario region, as well as the Sacramento, Arden-Arcade and Roseville area saw construction jobs slide 23%. Construction, mining and logging work fell 23% in the Santa Cruz and Watsonville zone.

Statewide, California’s construction employment numbers dropped 19%, from 798,400 workers to 650,200. Construction jobs in the Los Angeles, Long Beach and Glendale division fell 12%, from 145,400 workers to 127,300. The best performer in the state was the Hanford-Corcoran metropolitan area in Central California, which was ranked 95% nationwide with an 8% drop in construction, mining and logging jobs....

Average U.S. closing costs fall; San Francisco grabs the No. 4 spot

The average cost of getting a mortgage dropped about 12% nationwide over the last 12 months, according to a new study by Bankrate Inc.

Nationwide, the average closing fees on a $200,000 mortgage, with 20% down and a 30-year fixed-rate loan, totaled $2,732, down from $3,118 in 2008, the study found. Closing costs for home buyers haven't been this low since 2007, the survey said.

San Francisco had the 4th-highest closing costs in the United States, with average expenses of $3,117, a decline of 6% from $3,321 in 2008, the study said. Last year, San Francisco was ranked 11th in the survey, Bankrate said.

New York had been the most expensive state for closing fees for four consecutive years, with Texas holding steady in second place, the study said. But, in the most recent study, the two states switched spots.

On a $200,000 mortgage, closing costs in Texas averaged $3,855, the survey said. Closing fees in New York averaged $3,408, the study said.

Nevada was the cheapest state for closing costs with an average of $2,276.

The decline in closing costs for home buyers is a testament to the downward price shift in the real estate market, Bankrate said.

Researchers chose ZIP Codes in the largest cities of each state, analyzing the closing costs for a $200,000 home mortgage to figure out their averages, the survey said.

California was the only state to be broken in two for the study -- San Francisco and Los Angeles, Bankrate said. Average closing fees in Los Angeles came in at $2,861, which was good for the 14th spot. That's down 12% from $3,250 in 2008.

Bankrate's survey includes lenders' origination fees and title and settlement fees. Taxes, insurance, homeowners association dues or prepaid items weren't included in the study.

-- Nathan Olivarez-Giles

Photo: A recently sold home in San Francisco. Credit: Getty Images

Atherton, Calif., comes in second on Forbes most expensive ZIP Codes list

94027 -- it's the second most expensive ZIP Code in the country, home to the town of Atherton, and it's right here in California.

The median asking price in Atherton, which is in the Bay Area, over the last 12 months was $3.85 million, despite a 23% decline over that time, according to Forbes magazine's 500 Most Expensive ZIP Codes list.

Alpine, N.J.'s, 07620 ZIP Code topped the list with a median asking price of $4.14 million. Like Atherton, prices in Alpine dropped 23% over the Last year, Forbes said.

California is represented well in the list's top 10 priciest ZIP codes: Duarte, Beverly Hills, Rancho Santa Fe, Santa Barbara and Los Altos Hills all make the list, taking the number four through eight spots with prices hovering around $3 million.

Coming in third was New York's West Village neighborhood, 10014, which Forbes said is now fully gentrified and hitting a $3.5 million median asking price. The West Village had a 24% decrease over the last year, the list said.

On average, the 500 ZIP Codes on the Forbes list dropped 7% in asking price. Only one-fifth of the country's most expensive ZIP Codes saw prices rise, and in a few of those ZIP Codes, prices were skewed by a single high-priced listing, Forbes said.

Here are the top 10 most expensive ZIP Codes, by median home price, as reported by Forbes:

1. 07620, Alpine, N.J., $4,139,041
2. 94027, Atherton, Calif., $3,849,133
3. 10014, New York, N.Y., $3,521,514
4. 91008, Duarte, Calif., $3,444,773
5. 90210, Beverly Hills, Calif., $3,367,167
6. 92067, Rancho Santa Fe, Calif., $3,362,493
7. 93108, Santa Barbara, Calif., $3,284,652
8. 94024, Los Altos Hills, Calif., $3,277,500
9. 10065, New York, N.Y., $3,176,534
10. 07926, Brookside, N.J., $3,121,115

Check out Forbes full list, complete with an interactive map comparing ZIP Codes.

-- Nathan Olivarez-Giles

FTC investigates Van Nuys companies

A local company is among the targets of a Federal Trade Commission crackdown on consumer fraud. From The Times' Jim Puzzanghera:

One of the FTC's new cases alleged that five Van Nuys companies had bilked consumers out of about $300 million by selling fraudulent programs related to real estate or online businesses.

The companies -- John Beck Amazing Profits, John Alexander, Jeff Paul, Mentoring of America and Family Products -- and five people who had founded or run those companies were accused of violating federal laws related to telemarketing and consumer fraud.

The FTC accuses the companies of making "false and unsubstantiated claims about potential earnings" that customers could make by following their advice in books, CDs and DVDs titled "John Beck's Free & Clear Real Estate System," "John Alexander's Real Estate Riches in 14 Days" and "Jeff Paul's Shortcuts to Internet Millions," which were sold for $39.95 each.

People who purchased the programs, advertised through infomercials, unknowingly were signed up for additional monthly charges of $39.95 and offered "personal coaching services" that cost several thousand dollars.

Messages left at the companies' offices were not returned Wednesday.

Anyone in L.A. Land have any first-hand experience with any of these outfits? By the way, the FTC is calling this push "Operation Short Change."

-- Lauren Beale

Thoughts? Comments?