“O.C. HOME MARKET CATCHING FIRE”

“O.C. HOME MARKET CATCHING FIRE”

Homes are flying off the market. The housing inventory is running on empty. The foreclosure and distressed/short sale inventory is at a low not seen since they started flooding the market back in 2007.

The last time demand was this hot in the month of March, it was the tail end of the housing bubble, 2005.

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Marina Hills Market Update 1/1/12 – 3/2/12

Marina Hills Feb ’12 Market Update

“HOUSING RECOVERY”

Long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December. Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.

Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.

“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

“HOUSING CRISIS TO END?”

Capital Economics expects the housing crisis to end this year…one of the reason is the loosening of credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings.

 This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.