by Gene Wunderlich
2013 started off with a bang for real estate. Two new bills became law that will impact our market for better or worse for at least the next year and longer. In California the Homeowners Bill of Rights, passed last year, kicked in January 1. The HBR promises to protect homeowners from their lenders, simplify and streamline the short sale process and give homeowners the ability to sue their lender for real or perceived wrongdoing during the foreclosure process. It also imparts on local governments additional tools to combat blight caused by vacant homes, it allows homeowners more time to remedy code violations and it provides a means to compel owners of foreclosed properties to pay for upkeep.
The measure also prohibits lenders from utilizing a ‘dual track’ option, meaning if you are negotiating a short sale or loan modification, your lender can’t also be pursuing a foreclosure. This will prevent the somewhat common occurrence of people getting days from a negotiated sale that would benefit everybody and having the bank yank the property away by foreclosure, which benefits almost nobody.
At the federal level the first week of January also saw passage of the fiscal cliff bill, the Job Protection and Recession Prevention Act of 2012 (H.R.8). H.R. 8 has a few elements we were looking for to help keep a housing recovery on track. Chief among the benefits, extension of mortgage cancellation relief will ensure that troubled homeowners can continue to benefit from short sale debt relief rather than revert to the more costly and time consuming avenue of foreclosure. Homeowners who short sell their homes will have that debt forgiven rather than having to declare the relieved debt as income and be taxed on that phantom amount. There was also good news for taxable gains on estates and other capital gains.
According to the most recent Case-Shiller report, 18 of the top 20 metro areas enjoyed price appreciation over a year ago. Phoenix led the pack at 21.7%, San Francisco was up 8.9% and San Diego and LA were up 6%. The Southwest California Region was also up 6% over last year and up 9% from our trough in 2009. It’s a start.
Sales were strong across our region, up 5% over 2011 to close the year with more than 8,000 residential resales in 2012. Sales would arguably have been even higher if not for the lack of inventory – down 70% from the first of the year. Our active inventory of homes for sale is down to under a month in most markets making it increasingly difficult for buyers to find their perfect home without running into multiple bids. For a complete year-end wrap-up with charts & graphs, please visit: http://www.slideshare.net/genewunderlich
2013 could be a resurgent year for our market. The desire for housing has been bottled up for several years now and the lack of supply coupled with escalating prices seems to set more people in motion – they see the market moving, they hear it in the media, they see fewer vacant homes and they decide it’s time to move. Maybe they can make a few more bucks selling their current home, maybe it’s time to get out of other markets to fund a move up, maybe it’s just time to grab that first home before they’re frozen out of the market again. Ultimately, higher prices should persuade more people to list their homes, increasing the inventory back to higher levels and creating a healthier, more balanced housing market over the next couple years.
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org“>GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/.