Indian Ridge CC 2011 2nd Quarter Report
Dear Indian Ridge Resident:
Effective July 1st of this year, homes must have Carbon Monoxide detectors within 15 feet of every bedroom in the home. This will be a requirement when a home is sold just as the smoke detectors have been a requirement for a number of years. Battery operated units will meet the requirements however, there are units that will be available that include both smoke and carbon monoxide detectors.
The unemployment rate in the construction industry is 17.8% with over 1.5 million out of work. With the recent devastation due to the tornados and flooding, this should help the construction industry’s unemployed find jobs and could bring economic improvement in those areas.
Until businesses see more certainty and stability from the federal government, they will continue in their holding pattern. The federal reserve “will more than likely take no further action to stimulate the economy and will focus on their plans to withdraw market support before inflation begins to threaten this fragile economy” according to John Seymour in his June issue of What’s Hot, What’s Not.
Mortgage rates continue to be soft with an average rate of 4.69% for a 30 year fixed. A year ago the rate was 4.84%. Total loan originations this year will be approximately $1.05 trillion compared to over $3 trillion back in 2006.
Cash sales nationally continue to dominate the home sales market with 31% of the buyers paying cash for the purchase of a home. With tougher lending standards, 15% to 20% of potential sales are possibly being held back as a result of the current stringent lending practices.
Fannie Mae continues to ask the federal government for money. To cover the 1st quarter losses, they are asking for $8.7 Billion. This is three times greater than their request to cover the fourth quarter of last year. Between Freddie and Fannie, the estimates for their federal bailouts could cost the taxpayers about $259 billion. At the end of the 2nd quarter of 2010, they had spent $227 billion. While the blame continues to point at the mortgage banking industry for loose lending guidelines, had Freddie and Fannie not offered ‘low doc’ and ‘no doc’ and all other loans to unqualified borrowers, there would have been no market in which to sell these loans and the mortgage lenders would not have made them.
According to the Desert Sun’s June 15 issue, distressed sales in May (bank owned and short sales) in the desert were 44% for single-family homes, down from 52% a year ago. Condo distressed sales also dropped from 36% to 30%. In Southern California 51.4% were distressed sales: 33.4% were foreclosures and 18% were short sales. In February of 2009 distressed sales accounted for 56.7% of all sales in California. These distressed sales are the primary reason home values continued to sag. In the first quarter of this year, the national average for a foreclosed property was $168,321, about 26.7% less than non-distressed sales. According to the California Desert Association of Realtors, the median price for single family homes in May was $220,0000 down from $234,900 a year ago. Condo’s median price was $190,0000 up from $170,000 a year ago.
The foreclosures in California have slowed with the process now taking 330 days compared to 262 days in 2010. This slowing down may be due to the recent issues about legality on the handling of the foreclosure process by the bank. This also postpones the recovery process in the real estate industry. While we see signs of recovery, there are factors that continue to drag on the process and keep home values at their lowest since 2002. It took me 15 months to convince a bank to transfer a home from short sale status to foreclose providing my buyer the opportunity to purchase the home on the steps of the courthouse since it could never be sold as a short sale. My patient buyer was able to purchase the home he wanted at a great price and the neighbors no longer had to look at the deterioration of the property indefinitely. Just recently I was able to get short sale acceptance from the bank in just over 4 weeks. Normally the process takes 3 to 6 months on average. I believe this because the seller continued to communicate with their lender prior to the short sale process.
The biggest mistake a homeowner makes is that they don’t contact their lender soon enough and fear that it will speed up the foreclosure process. Actually it takes 90 days of delinquency before the foreclosure process begins. It is recommended that homeowners who have been turned down for loan modification in the past should try again as the rules in lending are constantly changing. As I mentioned in my July 2010 report, borrowers should show evidence of an attempt to refinance or renegotiate their loan. This will help in obtaining a release for any unpaid balance once a home is being sold as a short sale or foreclosure.
California continues with a $426 billion state deficit, unemployment over 11% and a poor climate for business development and the state legislature continues to work on issues as whether hotels in California should be required to use fitted sheets instead of flat sheets. This change alone would cost the hotel industry $30 to $50 million. This bill on the table is being sponsored by the California Hospitality Worker’s Union. Until the focus turns more to creating jobs than fighting the businesses who create them, recovery will remain slow.
Recently I read an article in the Public Record on how the housing market impacts your retirement. The upward spike in sales we experienced in 2005-2007 isn’t something we will see again in the baby boomer’s lifetime. While it feels like we have lost so much value in our homes, had we not seen such a burst in the real estate market, the normal steady climb of a normal market would have led us to these current values. The next decade in real estate will more than likely show a pre-2006 appreciation of .75% to 1% per year over the rate of inflation. This may well cause a shift in why we purchase a primary or secondary home. Lifestyle over asset appreciation may be the primary focus.
In addition to the regular real estate statistics provided in each of my quarterly reports, I have added a demographic stat for Palm Desert, Indian Wells, Rancho Mirage and La Quinta. While it may make absolutely no difference in where people purchase a home, it is always fun to learn more about the communities and the people who chose to live there.
First quarter sales in the desert were off about 8.3% from 2010. The second quarter of this year shows sales off 5.9%. Homes sales over $1 million are off 18.75%. When reviewing the country club sales 14 of the 19 country clubs in my quarterly report more homes were sold in the this quarter than the same time last year. Thirteen of the nineteen country clubs showed a drop in the price per square foot. This could be a sign of stabilization. Some increases or decreases may be due to lower sale volume that throws some statistics out of whack.
As I indicated in the first quarterly report for 2011, the real estate market in the desert appeared to be stabilizing. I also indicated the variable that still existed which could affect home values – the possibility of the homeowners having held out so long that they would reduce their price enough to have another reduction in the home values – could take place. The last week in April proved my prediction correct and prices took another drop.
To date 46 homes have sold and 11 are pending in Indian Ridge this year making the community extremely marketable and attractive to buyers. Our sales are ahead of last year perhaps another sign of stabilization for the community. With the competitive membership programs currently being offered, it has become a great buy for the luxury lifestyle this community and club offer. As a result, it has become easier to get buyers to join the club in the past few years.
In review of all the homes I have sold in Indian Ridge since 2004, 22.4% of the buyers were current members of the club and 77.6% were prospective members. Of the potential members who were buyers who either purchased one of my listings or I represented as a buyer, 71.2% purchased a membership at the club with the majority purchasing golf memberships. Of those buyers I represented purchasing another real estate agent’s listing, only 2 of my buyers did not purchase a membership. Buyers who purchased one of my listings, who did not purchase a membership were represented by other real estate professionals. So my record for promoting the Country Club and getting buyers to joining the club has been extremely successful. As the top-selling agent in Indian Ridge for the past four years, my dedication to the community is well exhibited by both my home and membership sales.
Please feel free to contact me should you have any questions or would like something to be added to the quarterly reports. The purpose of the report is to provide homeowners with valuable information that makes it possible for them to evaluate the status of their real estate holdings.
Please click the link "View PDF Document" located under my photo to view a printable version of the entire report.
We look forward to hearing from you.
Diane Williams, GRI
Associate Broker/Executive Premier Director
Windermere Real Estate