Some of the hottest housing markets are falling the hardest



“Rising prices and mortgage rates have priced out some potential buyers while causing others to conclude that waiting to buy could pay off, especially as listings rise,” said Andrew LePage, a CoreLogic analyst. “For the past three months, sales have fallen year over year in all six counties and, in the last two months, across most major price categories including above $1 million.”

Mortgage rates rose sharply in September, and by October, the average rate on the 30-year fixed was more than a full percentage point higher than a year ago. With home prices already overheated in many major markets, higher rates broke the bank for most buyers.

Rates fell back again in November, but were still higher than a year ago. The drop did little to boost sales. Mortgage applications to buy a newly built home actually fell 11 percent year-over-year in November, according to the Mortgage Bankers Association, despite the rate relief.

And after one of the worst housing shortages in memory, supply is slowly starting to rise. Housing inventory in the large metropolitan markets Redfin tracks was up 5 percent in November annually, the largest supply boost in three years. Of course all real estate is local, and some markets are filling with listings faster than others.

Inventory jumped in formerly hot markets like San Jose (+123 percent), Seattle (+96.5 percent) and Oakland (+60 percent) but other markets are still seeing drops, like Philadelphia (-24 percent and New Orleans (-19 percent).

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California first state to mandate solar power for new homes

California became the first state in the nation to require homes built in 2020 and later be solar powered, following a vote by the Building Standards Commission.

The unanimous action on Wednesday finalizes a previous vote by the Energy Commission and fulfills a decade-old goal to make the state reliant on cleaner energy.

“These provisions really are historic and will be a beacon of light for the rest of the country,” said Kent Sasaki, a structural engineer and one of six building standards commissioners. ”(It’s) the beginning of substantial improvement in how we produce energy and reduce the consumption of fossil fuels.”

While nobody spoke Wednesday in opposition, the commission received about 300 letters opposing the mandate because of the added cost, the Orange County Register reported.

Energy officials estimated the provisions will add $10,000 to the cost of building a single-family home — about $8,400 from adding solar and about $1,500 for making homes more energy-efficient. But those costs would be offset by lower utility bills over the 30-year lifespan of the solar panels, officials said.

One commission member worried the mandate would make it harder for California wildfire victims to rebuild. But supporters assured him that won’t be a problem, according to the newspaper.

Homeowners will have two options that eliminate upfront costs of adding solar: leasing the solar panels or signing a power purchase agreement that pays for the electricity without buying the panels, said Drew Bohan, executive director of the energy commission.

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San Diego home sales down for 5th straight month

Home sales fell for the fifth month in a row in San Diego County in October and prices were also down, real estate tracker CoreLogic reported Thursday.

The latest numbers show continued signs of a slowdown in the real estate market — across the nation, not just locally — but analysts cautioned it was not similar to conditions that caused the 2006 housing crash. Still, there was evidence home prices would continue to decline or, at least, stay at current levels.

In October, the median home price was $558,000, down by $25,000 from the all-time peak reached in August, but still up 5.4 percent for the year. Sales were down 12 percent compared to the same time last year and at their lowest level since 2011. There were 3,162 home sales in October, down from 3,592 in 2017, 3,597 in 2016 and 3,356 in 2015.

“I think the boom is over,” said financial analyst Rich Toscano, who predicted the housing crash in November 2005 on his housing blog Professor Piggington’s Econo-Almanac.

He said price declines in the fall are typical and not that big of a deal, but the concern for the market is how rapidly the number of homes for sale went up while sales also dropped.

There were 7,918 homes for sale in October, up from 5,436 — 46 percent — from the same time last year, said the Greater San Diego Association of Realtors. There were 6,211 homes for sale in October 2016, 6,964 in 2015 and 8,295 in 2014.

Toscano, an analyst with Pacific Capital Associates, said the market has been driven in recent years by an intense supply and demand imbalance that drove up prices.

“Home prices got really high based on this perpetually low inventory, and now that’s gone,” Toscano said. “Can prices be supported at this level? I think you could make the argument with more inventory and less demand that prices will back off a bit.”

He said current market conditions were much different than before the housing crash: The cost of homes compared to rents or incomes is not nearly as out-of-whack as it was in 2006, it’s much tougher now to get home loans and mortgage interest rates aren’t as high.

Sales across all housing types were down:

  • Resale single-family homes — 1,989 sold, down from 2,240 at the same time last year. Median price was $610,000, down from the peak of $630,000 in June and July.
  • Resale condos — 952 sold, down from 1,102 in 2017. Median price was $415,000, down from the peak of $432,000 in July.
  • Newly built homes — 221 sold, down from 250 last year. Median price hit an all-time high of $812,500.

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