Daily Business Report — Nov. 18, 2009
County Home Sales Rise
San Diego County home sales in October rose a modest 2 percent from the same period as last year, according to a report by MDA DataQuick of San Diego. Home sales during the month totaled 3,671 compared with 3,598 in October 2008. Median home prices increased by 0.5 percent — from $323,500 in October last year to $325,000 last month.
MDA DataQuick said Southern California home sales increased in October as prices showed more signs of firming. The median sale price fell by the smallest amount in two years, the result of a shrinking inventory of homes for sale and government and industry efforts to stoke demand and curtail foreclosures, a real estate information service reported.
Two counties – Orange and San Diego – posted modest year-over-year increases in their overall median sale price last month. It was the second consecutive gain for Orange County and the first in more than three years for San Diego. Both counties also posted small annual gains the past two months in their median price paid for resale single-family detached houses.
Last month 22,132 new and resale houses and condos closed escrow in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 2.8 percent from 21,539 in September and also up 2.8 percent from 21,532 a year earlier, according to MDA DataQuick of San Diego.
October marked the 16th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. The 2.8 percent uptick in October sales from September wasn’t unusual, given sales have increased between those two months in half of the years – including 2007 and 2008 – since 1988, when DataQuick’s statistics begin. The average change between September and October is a decline of just under 1 percent.
Last month’s sales were the highest for an October since 2006, when 23,745 sold, but were still 9.5 percent lower than the historical October average of 24,458 sales. Since 1988, October sales have ranged from a low of 12,913 in October 2007 to a high of 37,642 in October 2003.
Sales increases over the last two months can be partially attributed to the recent increase in short sales, which take longer to close escrow. The result is that some summer deals that might normally have closed earlier instead closed in September and October.
Other factors driving home sales higher of late: A rush by some to take advantage of the federal tax credit for first-time buyers, which was initially set to expire at the end of this month but was recently extended and expanded. Also, mortgage rates remain extremely attractive and, combined with home price declines, have boosted housing affordability.
A critical financing source for first-time buyers purchasing lower-cost homes, especially foreclosures, has been the federally-insured FHA loan. FHA mortgages accounted for 38.3 percent of all Southland purchase loans last month, compared with 32.5 percent a year ago and just 2 percent two years ago. FHA’s share of purchase loans varied last month from 26.2 percent in Orange County to 49.2 percent in Riverside County. They offer down payments as low as 3.5 percent and relatively lenient qualifying standards.
“The government is playing a huge role in stabilizing and, to some extent, reinvigorating the housing market,” said John Walsh, MDA DataQuick president. “Its actions have triggered ultra-low mortgage rates, plentiful low-down-payment (FHA) financing, an extended and expanded tax credit for home buyers, and programs and political pressure aimed at reducing foreclosures.”
“The real question now is how well can the market perform next year as some of the government stimulus disappears,” he continued. “The more upbeat outlooks suggest a strengthening economy and job market will help pick up the slack, and that demand for lower-cost foreclosures will remain robust. The more negative forecasts assume, among other things, a much slower economic recovery, more foreclosures than the market can readily digest, and more turbulence in the credit markets.”
The latter outlook suggests today’s market stability is contrived and will prove short-lived – nothing more than a temporary price plateau – while the former suggests home prices are currently at or near bottom.
In October, the median price paid for a Southland home was $280,000, up 1.8 percent from $275,000 in September but down 6.7 percent from $300,000 in October 2008. It was the median’s smallest annual decline for any month since September 2007, when the median fell 4 percent from a year earlier. September 2007 – one month after the current credit crunch hit – marked the beginning of a 26-month streak of year-over-year declines in the median price.
The region’s overall median sale price has risen or held steady on a month-to-month basis ever since it dropped to a more-than 7-year low of $247,000 in April. Last month the median was 44.6 percent lower than the peak $505,000 median reached during several months in early and mid 2007.
Another price gauge analysts watch, the median paid per square foot for resale single-family houses, has risen or held steady for the past six months. In October it was $170 for the six-county area, the same as in September but 9.5 percent lower than a year earlier. The figure hit a low this year of $147 in April.
Recent month-to-month and year-over-year gains in the median sale price reflect, in large part, a shift of late toward foreclosures representing a lower percentage of sales. It’s mainly the result of lenders and loan servicers increasingly steering distressed borrowers into either an attempted short sale or loan modification. This reduction in foreclosures is key because over the past two years foreclosed properties were often the most aggressively priced on the market.
Last month, foreclosure resales – houses and condos sold in October that had been foreclosed on in the prior 12 months — made up 40.6 percent of all Southland resales. That was up insignificantly from 40.4 percent in September and down from a high of 56.7 percent in February this year.
As sales of lower-cost foreclosures began to wane earlier this year, sales in higher-cost neighborhoods picked up. High-end homes began to account for a greater share of all sales and helped reverse the steep slide in the median price. Over the past few months, however, the high-end’s share of total sales has flattened out.
In October, sales of homes priced $500,000 and above fell to 18.5 percent of all sales, up from a low this year in April of 13.4 percent but down from 20.2 percent in September and 19.6 percent a year earlier. In October 2007, $500,000-plus sales were 41.1 percent of all sales.
Three leases signed at Chancellor Park in UTC
Chancellor Park, a Class A office and medical center in University Town Center, has signed three tenants in spaces totaling 11,787 square feet and for a combined lease total of $4,184,907. Chancellor Park contains 195,953 square feet in two four-story buildings at 4510 and 4520 Executive Drive.
• Crowell, Weedon & Co., a stock brokerage money management firm, has signed a 10-year, $2,069,020 lease renewal and expansion for 5,691 square feet of office space at 4520 Executive Drive, Suites 220 and 240. The company increased itsspace commitment by 2,393 square feet in the building and will take possession in December. The lessee was represented by Mark Rauch of Travis Realty Corp. The lessor, Arden Realty Limited Partnership, was represented by Eric Vann, Jim Laing, Steve Wolf and Brunson Howard of Cushman & Wakefield.
• Jeffrey P. Bernicker, M.D., signed a 10-year, $1,817,079 lease for 4,675 square feet of medical office space at 4510 Executive Drive, Suite 100. The lessee was represented by Brian Starck of Grubb & Ellis | BRE Commercial. The lessor, Arden Realty Limited Partnership, was represented by Eric Vann, Jim Laing, Steve Wolf and Brunson Howard of Cushman & Wakefield. Bernicker will move into the space in January 2010 and will utilize it for an orthopedic medical practice.
• Ernest Wong, DDS, signed a 78-month, $298,808 lease renewal for 1,421 square feet of medical office space at 4520 Executive Drive, Suite 200. The lessee was represented by Brett Ward of Grubb & Ellis | BRE Commercial. The lessor, Arden Realty Limited Partnership, was represented by Eric Vann, Jim Laing, Steve Wolf and Brunson Howard of Cushman & Wakefield. Wong will continue to use the space for a dentistry practice.
Alpine Creek Town Center Attracts 3 New Tenants
Westcore Properties’ renovated and redesigned Alpine Creek Town Center has attracted three new tenants – Ace Hardware, Yogurt Jubilee and Ahi Sushi. With these transactions — valued at a combined total of $1.8 million — the 73,599-square-foot shopping center is now 83 percent occupied. Aaron Hill of Cushman & Wakefield, the center’s leasing agent, said his firm is in negotiations with several other potential tenants.
Ace Hardware, Ahi Sushi and Yogurt Jubilee join the shopping center’s roster of tenants including Daniel’s Market, Mediterraneo Restaurant, La Carreta Restaurant, CVS, Alpine Cleaners and Postal Annex.
• Ace Hardware signed a 10-year, $1,367,790 lease for 9,032 square feet of retail space. John Jennings and Aaron Hill of Cushman & Wakefield represented the lessor, Westcore Freightways LLC. Ace Hardware was represented by Marty Olejarczyk of De Rito Partners.
• Ahi Sushi signed a 10-year, $315,000 lease for 1,229 square feet of retail space. John Jennings and Aaron Hill of Cushman & Wakefield represented the lessor, Westcore Freightways LLC. Ahi Sushi was represented by Gary Pollington of Trinity Commercial.
• Yogurt Jubilee signed a 63-month, $115,000 lease for 904 square feet of space. Westcore Freightways LLC was represented by John Jennings and Aaron Hill of Cushman & Wakefield. The lessee represented itself.
Heritage at Canyon Pointe Condominiums Sold
Heritage at Canyon Pointe Condominiums in Escondido, a complex of 116 condos, has been sold to an undisclosed buyer for $5.5 million. The seller was H.G. Fenton Co. The property, located at 495-505 San Pasqual Valley Road, consists of 51,471 rentable square feet, including 53 of the 116 total condominium units in the complex. Diane Miramontes, Darcy Miramontes, Kip Malo and Hunter Combs of Grubb & Ellis|BRE Commercial represented the seller and undisclosed buyer.
Nov. 30 Deadline for Property Assessment Protests
Nov. 30 is the last day taxpayers may file protests concerning their 2009-2010 property assessments. Applications must be received by the Clerk of the Board of Supervisors Office no later than 5 p.m. on that date, or be postmarked no later than midnight. The office is in the County Administration Center, 1600 Pacific Highway, in Downtown. Copies of the application may be obtained on the county Website: sdcounty.ca.gov/cob/docs/aab/aabadobeapp.pdf. To file an application, taxpayers must know their parcel number or tax bill number, property address and must state on the application their opinion of the property’s market value. For more information, call (619) 531-5777.
UCSD Unveils Sustainability Resource Center
UCSD on Friday will unveil the Sustainability Resource Center, a one-stop sustainability shop where students can learn about green jobs and courses on sustainability-related topics, how to conserve energy and water or find eco-friendly products. The center officially opens for business on Dec. 1. The opening comes after Greenopia magazine recently ranked UCSD the ninth greenest university and the Sustainable Endowments Institute named the university one of the nation’s 26 greenest campuses in its 2010 College Sustainability Report Card.
Located at the heart of campus in the Price Center, the Sustainability Resource Center will be home to campus sustainability staff and the student-funded Student Sustainability Collective. This collaboration between students and staff will work to achieve common sustainability goals and reach out to students, faculty and staff and the surrounding community. The center will have a public outreach space and a library showcasing sustainability research projects at UCSD. The opening will be celebrated with a ceremony at 3 p.m., Friday in the Price Center Theater.
With the goal to earn the highest possible Leadership in Energy and Environmental Design (LEED) certification, the Sustainability Resource Center features countertops made from recycled paper and glass and eco-friendly paint. Part of the flooring is reclaimed from a demolished building. Other flooring includes bamboo, a rapidly renewable resource, and eco-friendly carpeting. In addition, the center features an innovative energy-saving lighting system where 100 percent of the high-efficiency lighting is energized by solar panels located directly above the center.
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