California Home Sales Declined in March, Prices Jump
Volume drops with restricted inventory and March’s median home price jumps with fewer low end sales. Strangely, CAR suggests that bulk REO sales would be a possible solution, even though those sales would be as rentals to institutional investors and do nothing to add needed inventory to the market. In the past, both CAR and NAR have come out against the bulk REO program. I wonder why the flip-flop?
CAR reports:
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 505,360 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. Sales in March were down 4.5 percent month-over-month and 2.3 percent year-to-year. The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The statewide median price of an existing, single-family detached home jumped 9.2 percent to $291,080 in March from February’s $266,660 median price and was up 1.6 percent from a revised $286,550 recorded in March 2011. The month-to-month increase was the largest since March 2004.
“Housing inventory remains extremely tight throughout the state and at levels severely under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average. These low inventory levels demonstrate that the pilot program is not necessary in California.”
The pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties to institutional investors.
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Why the flip-flop of CAR towards bulk sales of REO’s to investors? Because the little minds at CAR never see the big picture. They fool themselves into trying to maintain “median price” levels at the expense of homeownership. This is simply a transfer of real estate from homeowners to large private investors, transfer of wealth from middle America to corporations. So, what if prices remain low? Why not let homeowners have them to rebuild their futures? Prices will come up when the normal real estate cycle becomes normal. Let homeowners have the appreciation.
Mike, it is an interesting turnaround. Bulk sales mean larger discounts and a smaller recovery for the investors in MBS, fewer commission dollars for Real Estate Agents, lower tax basis on the properties which means less money for cash strapped cities and counties and as you mentioned, it restricts the supply to individual buyers, helping to prop up prices. Median price is up in my part of Sonoma County, but that reflects a change in the homes being sold rather than price increases for any individual home.Another win for the banks and hedgies.
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