Money and Investing Thoughts

Home sales, median prices rise in valley – Business – ReviewJournal.com.

Median prices started to increase for most of California in late spring 2009. Las Vegas prices have continued to erode in the face of high inventory and a serious jobless problem. In October, the LV real estate market turned positive for both number of sales and prices.

Sales in October were up 5% from September and 30% higher than a year earlier. Of the 21,000 units inventory listed, only 8,000 are available without an existing offer. With 3,500 sales in October, available inventory is less than a 3 months supply. Bring on the phantom inventory!

Median prices increased in both September and October, gaining $4,500 to about $139k. Prices are still 26% below a year earlier.

The great question remains whether current and future foreclosures will short circuit the real estate recovery by flooding the market with bank owned properties. One commentator in to article above thinks so. I am waiting to see if this inventory actually materializes in mass or ends up trickling into a market of rising prices.

(MNR: 9.61 0.00 0.00%) is a nice little REIT that just keeps paying out that 15¢ distribution. Funds from operations were 48¢ for the 1st 9 months, handily covering the payout and a nickel above the results from last year. Nice to see a positive quote from a CEO about the direction of the economy:

“As we previously stated, we are aware that many economists and financial experts are less optimistic about our future economy than we are. There is little point in debating the matter. The direction of the US economy is improving. To the extent that we must make decisions today, we do so based on our optimistic evaluation of future developments.”

via Monmouth Real Estate Investment Corporation Reports Nine-Month Earnings.

http://www.sacbee.com/topstories/story/2080102.html

The Sacramento Bee article highlights some of the upticks that are occuring in the new home construction market. First, and interesting pickup by Lewis Homes in Reno, NV.

A Lewis venture – Lewis Investment Co. of Nevada – paid $6.6 million for lots that fell into bankruptcy court after the original developer, affiliated with CalPERS, invested more than an estimated $20 million readying them for homes. . . . .CalPERS lost nearly $1 billion on its investment in the partnership, which filed for bankruptcy in June 2008.

This seems to be a case of smart money coming in after thing have blown up and picking up good assets for pennies on the dollar. The 800 lot parcel will take 5 years to build out and sell.

Another interesting quote for a California homebuilder:

Multiple offers have spread now to vacant land for new homes, said Mark Rowson, Northern California president for Agoura-based Warmington Homes. He said, “A year ago nobody was talking. Now, there is movement.

An increase in construction activity will go a long way to stabilizing the employment market. There continue to be more signs that housing, both existing and new construction are starting to recover in California. Historically, builders in California build and average of about 150k new homes per year. This year they are on pace to build about 30,000. There is a lot of room for upside growth. If buyers and homeowners start to believe things are turning positive again, prices will start to increase in spite of the overhang of foreclosure properties.

Investors who bought a condo next to Disneyland for $154,100 in June at a foreclosure auction, offered it for sale on Saturday at $229,900 and found a buyer the next day …

The servicer or bank asked for just $123,250 at the June 26 auction even though $358,096 was owed on the first mortgage. Potential buyers bid it up to $154,100.

via Bankstocks.com.

Read the article good stuff. The last paragraph says it all.

Existing June home sales numbers released today by the National Association of Realtors show positive gains over the May figures. You have probably read the articles or at least the headlines. I pulled down the report data and was happy to see especially strong numbers for the western region. Here are the numbers for the western region:

• Home sales (seasonally adjusted) vs. last month: +6.4%, vs. last year: +11.5%
• Home sales, raw numbers vs. last month: +12.8%, vs. last year: +15%

• Median sales price: $214,800, an increase of %7,800 or 3.8% over May.
• Mean sales price: $260,400, up $10,000 or 4.0% since May.

It is not really an accurate analysis, but it is nice to believe my little piece of California happiness gained $10k in value last month. I have been stating for a year and a half the bottom in the market would be when prices stabilized and started to increase. June is the 2nd month in a row of price increases. A few more and we will be able to point back to April 2009 as the bottom of the real estate market in the western U.S.