Real Estate News for Thursday, January 5th, 2006

Golden State real estate loses its luster. Forecast calls for home prices to flatten. California's housing production is expected to drop slightly in 2006, the California Building Industry Association reported today. The 2006 Housing Forecast, authored by the association's chief economist, Alan Nevin, projects that between 185,000 and 205,000 homes, condominiums and apartments will be built in 2006 – down from about 212,000 in each of the previous two years. "The annual demand for new homes in California continues to be in the 240,000 range, but the home-building industry is able to provide only 80 percent of the total need," Nevin said. Land constraints and local government policies are contributors to the high cost of housing, he added. Single-family production statewide should be between 135,000 and 145,000 units, compared to about 156,000 single-family housing starts in 2005 and 151,000 in 2004, according to the forecast. Nevin said most of the decline would be in the high-end segment in coastal areas, while more-affordable areas, such as the San Joaquin Valley, should see construction continue at higher levels. Multifamily construction, particularly condominiums, may actually increase, with starts expected at between 50,000 and 60,000, compared to 55,000 in 2005. Nevin said the increase in condo construction and condo conversions in the major urban areas is the main source of homes for first-time buyers in the expensive coastal markets. He also forecast that housing price increases would flatten out in some markets, and overall would be in the 5 percent to 8 percent range – well below the 25 percent to 30 percent increases seen in the past couple of years. "California cannot continue to sustain skyrocketing housing prices that have ballooned over the last few years," Nevin said. "The industry has been moving at a torrid pace to keep up with demand, but we expect prices will finally level off to a manageable level. Unfortunately, home builders are still not able to meet the needs of many home buyers." The forecast also notes that although the economy is expected to increase by 3 percent to 3.5 percent and the housing industry will continue to play a major role in 2006, there will be a modest pull back in construction employment in the new year. In 2004 and 2005, the construction industry provided one in every seven new jobs and accounted for 13 percent of all new jobs in the state. CBIA Chairman Layne Marceau said the construction entitlement process can take five to 10 years to complete, making it difficult for home builders to keep up with demand, and this "drives up the cost of a new home dramatically." CBIA represents about 6,500 businesses, among them homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. Home-building generates an estimated $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide, the association reported. Click here to read more.

New real estate site slices, dices rental data. RentSlicer lists average rental rate for neighborhood areas. RentSlicer.com, which launched early in 2005, at first featured a single page that listed the average rental price for each neighborhood in Los Angeles. Next, Kleimo added pages for each neighborhood, and he allowed users to examine rental rate differences by the number of bedrooms and bathrooms, and by the type of amenities. Bloggers and real estate professionals began to promote the site, which drew more visitors. The RentSlicer name relates to the site's capabilities -- "there are lots of different ways to slice the data," Kleimo said. The site features a "Slicer Tool" page, for example, that allows users to customize lists of rental properties in a given region and find average rental rates based on amenities they select. On Dec. 21 RentSlicer launched a San Francisco Bay Area version, with near-term plans to expand to San Diego, Seattle and Portland. Kleimo said that while the site now uses Craigslist rental information, he has hopes to bring in new sources of rental listings data from other sources. Click here to read more.

High-rise real estate boom reshapes nation. Guest perspective: Builders respond to shift in culture, planning. There are eight factors driving the real estate high-rise boom. Of these, the primary driver is home equity. Significant high-rise development doesn't make sense in markets where single-family homes cost less than $250 per square foot.
1. Demographics
2. Government Policy
3. Scarcity of Land Near Job Centers
4. Lifestyle Choices
5. Globalization
6. Home Equity
7. Depth of Demand
8. Speculators
In summary, more U.S. residents than ever before will live in high-rises over the next 20 years, but speculative bubbles in certain markets will occur along the way. The key for builders is to have floor plans and amenity packages that are exactly what the buyers want, and to avoid building high-rises in markets where speculators are active. Las Vegas, San Diego and South Florida are reportedly where the speculative activity has been greatest. Click here to read more.

Real Estate Activity Stabilizes in December, Says Kalman. December real estate activity stabilized in the North San Diego County communities of Fallbrook and Bonsall as high inventory levels eased, Jerry Kalman, Prudential California Realty, reported today. "December selling prices were flat versus November," he noted. "The average single family home selling price was $699,488, or $277 per average square foot." Kalman attributed stability to dropping gasoline prices, flattening long-term mortgage rates, and a significant decline in the available homes inventory. "Entering January, 285 homes are on the market carrying an average listing price of $922,447, or $340 per square foot," Kalman said. "This inventory level declined from an October peak of 336. In addition to 44 homes closing escrow in December, another 47 went into escrow and 55 were removed from the market as expired, cancelled, or withdrawn listings. Three condos sold, and their average selling price per square foot was $212. The average price of 22 available condos stands at $361,735." According to Kalman, 45 residential listings came on the market. The average asking price was $733,615, or $316 per square foot. Kalman uses market statistics supplied by Sandicor, the multiple listing service used by Realtors(R) in San Diego County. He said that it took an average of 77 days on the market for those that closed escrow, roughly the same as in December 2004. "Fallbrook and Bonsall lot sizes and homes tend to be larger than in other nearby North County communities," he continued. "Homes that closed escrow here in December cost less per square foot than the $304 in Escondido, $324 in Carlsbad, $311 in Oceanside, $296 in Vista, and $290 in San Marcos." Looking back, he explained that December 2005 selling prices were eight percent higher than December 2004, 33 percent higher than December 2003, and 63 percent higher than December 2002. In December 2001 the average selling price was $378,432, and 46 homes were sold, the only time in the last five years when selling activity was roughly equal to December 2005. In the intervening years, the December average number of homes sold was 70, he said. Click here to read more.

~Tina Jan~
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
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