California home sales rise in November
Sales of existing, single-family homes in California rose 9.2% in November, compared with the previous month, although overall sales were down from November 2009.
These statewide statistics, collected by the California Association of Realtors, also showed a median price decline from both the previous month and the previous year. The median price of an existing, single-family detached home sold in California fell below the $300,000 mark for the first time since February. The November 2010 median price was $296,820, down 2.4% from October’s $304,220 median price and down 2.5% from the $304,550 median price recorded for the same period a year ago. It was the first year-over-year price decline in a year.
The report coincided with the National Association of Realtors’ release of national figures showing a 5.6% increase in existing-home sales for November.
In California, there is a mixed picture. “We are encouraged by November’s sales increase, but realize a more sustained recovery is being hampered by the distressed market,” said Beth Peerce, the association’s president. “While we are experiencing a greater share of short sales, these transactions are notoriously difficult to navigate with no guarantee of closure.” A recent survey conducted by the realtors’ association found that lenders typically take 90 days or more to communicate whether a short has been accepted, causing frustration for buyers and sellers.
“Moreover, the survey found that more than two out of five short sale transactions never close,” Peerce said. “The housing market can’t fully recover until lenders streamline and improve the short sales process, which would help expedite transactions.”
The survey also found that the unsold inventory of existing, single-family detached homes was 6.2 months in November, down from 6.5 months in October. This compares with 4.5 months in November 2009. The unsold inventory index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Existing-home sales show improvement
Data released today from the National Association of Realtors (NAR) show sales of existing homes increased 5.6% to a pace of 4.68 million in November.
The seasonally adjusted annual rate of 4.68 million is the highest since June 2010, which saw a pace of 5.26 million. Compared with November of last year, however, sales are 27.9% down from a 6.49-million pace.
A month ago, officials from the NAR talked about an "uneven recovery" and optimistic projections of sales at the 5-million pace by spring of 2011. That optimistic analysis continued with the release of this morning’s figures. Lawrence Yun, NAR chief economist said: “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable."
The national median existing-home price for all housing types was $170,600 in November, up 0.4% from November 2009. Distressed homes have been a fairly stable market share, accounting for 33% of sales in November; they were 34% in October and 33% in November 2009.
Today’s figures were in line with analyst expectations.
Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”
The NLBMDA breaks down the Tax Relief Act
President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act last week. Below is a brief summary of key provisions in the act, as analyzed by the National Lumber and Building Material Dealers Association (NLBMDA).
Estate Tax: The law institutes a $5 million exemption (indexed beginning in 2012) and 35% rate on estates for 2011 and 2012. While not permanent, this is based on the Lincoln-Kyl compromise previously endorsed by the NLBMDA. The proposal is effective Jan. 1, 2010, but allows an election to choose no estate tax and modified carryover basis for estates arising on or after Jan. 1, 2010 and before Jan. 1, 2011. The proposal sets a $5 million generation-skipping transfer tax exemption and 0% rate for the 2010 year.
Individual Tax Rates: Extends the 35% tax bracket for an additional two years.
Payroll Tax: A temporary 2% reduction in employee-paid Social Security payroll taxes for 2011.
Capital Gains & Dividends: Extends the current capital gains and dividends rates (15% for those in the 25% bracket and above) through 2012.
New Energy-Efficient Home Credit (45L): Extended through 2011 (lapsed after 2009).
Energy Efficiency Home Remodeling Credit (25C): Extended through 2011 at pre-ARRA levels, 10% up to $500, with a $200 cap on window purchases. Changes product criteria to Energy Star for windows, doors and skylights. (This was previously 30% up to $1,500 for 2009-2010).
Bonus Depreciation: The law extends and temporarily increases the bonus depreciation provision for investments in new business equipment. For investments placed in service after Sept. 8, 2010, and through Dec. 31, 2011, the act provides for 100% bonus depreciation. For investments placed in service after Dec. 31, 2011, and through Dec. 31, 2012, the act provides for 50% bonus depreciation.
Section 179 Expensing: In 2007, tax cuts temporarily increased section 179 thresholds to $125,000 and $500,000 respectively, indexed for inflation. These amounts have been further increased and extended several times on a temporary basis, including most recently as part of the Small Business Jobs Act, which increased the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. This proposal extends the 2007 maximum amount and phase-out thresholds for taxable years beginning in 2012, at $125,000 and $500,000 respectively, indexed for inflation. The proposal is effective for taxable years beginning after Dec. 31, 2011.
Alternative fuels credit: The act extends through 2011 the $0.50 per gallon alternative fuel tax credit.
Tax benefits for certain retail improvements: The act extends for two years (through 2011) the special 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.