( Source: Debra Gruszecki The Press-Enterprise, Riverside, Calif. (MCT) — The Economic Watch, in its monthly newsletter for September, has joined a chorus of voices by economists who are affirming California is in the midst of a housing rebound.
“There is no going back,” Mark Schniepp wrote. “The train has left the station.”
Mortgage rates are at record lows. The labor market is creating jobs. Apartment and single-family home rents are rising. And the credit market is on a slow thaw, said Schniepp, who directs the California Economic Forecast in Santa Barbara, publisher of The Economic Watch.
Investors, now buying 50 percent of all the distressed housing stock out there, are paying 5 to 25 percent above list price, Schniepp observed, and conventional homes on the Multiple Listing Service are fetching multiple bids, as well.
That has helped push home prices rise 4.6 percent in the Inland area to $186,153 as of July, and leap up by 11 to 16 percent in Orange, Los Angeles, San Francisco and Santa Clara counties.
With low inventory, stronger demand and positive price appreciation, Schniepp said the residential market is now participating in a “sustainable” way in the economic recovery. “This alone will accelerate the overall economic expansion in the state and nation for the remainder of the year and in 2013.”
Other Southern California economists have spoken of a housing recovery at various levels, too, from Inland Empire economist John Husing and Chapman University’s Esmael Adibi to Beacon Economics founder Christopher Thornberg.
So why don’t homeowners of mid-range properties feel all warm and fuzzy?
“We’re one of the most impacted housing industries in the country,” Husing said. “If you look at Zillow for both counties, 53 percent of the homes are still underwater.”
Home prices are 30 to 50 percent below their 2006 peak. Folks living in well-established areas since ravaged by foreclosure or short-sale activity fear an influx in rental situations, and potential neighborhood devaluation.
Others see the train chugging uphill, as in, a “U-shaped” recovery.
Property owners who sustained sizable hits in equity, and are not working with banks on loan forgiveness, say they are forced to stay put.
“There’s a real separation between homebuilding versus increasing prices,” Adibi said. “What we’ve seen is some rebound in construction activity, but I would argue the recovery in home price overall is going to be so slow for some, you won’t feel it.”
From 2004 through 2007, Husing noted 359,044 homes had traded hands. By 2008, most were upside down, with prices plunging from $404,611 at the 2007 peak to $250,000 in late 2008.
Even homebuyers who latched onto deals in the downturn have taken their lumps.
Aaron Norris, of The Norris Group, said he just refinanced the family home he bought with 20 percent down in La Rivera of Riverside in 2009. “We love living there, and spent $50,000 on upgrades. Even with all of that, the property came in at $1,000 less than the $235,000 we paid.”
Refinancing cut down the mortgage, but Norris said he couldn’t help but feel the house should have gained equity. “You get the feeling like, ‘Wow, it hasn’t gone anywhere.’”
Residential Real Estate
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