The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September. That’s an indication that the market is slowing as many potential buyers put their homeownership plans on hold, according to the California Association of Realtors.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 382,550 units in September, according to information collected by the Association from more than 90 local realtor associations and multiple listing services across the state.

The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

September's sales figure was down 4.3 percent from the revised 399,600 level in August and down 12.4 percent compared with home sales in September 2017 of 436,920.

"The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend. More would-be buyers are self-sidelining as they believe home prices will start to come down soon, making housing more affordable despite rising interest rates," said Steve White, president of the California Association of Realtors. "Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County."

The statewide median home price dropped to $578,850 in September. The September statewide median price was down 2.9 percent from $596,410 in August but up 4.2 percent from a revised $555,400 in September 2017.

"Price appreciations have slowed in the last few months and inventory has risen considerably since June when the statewide median price hit a new peak," said Leslie Appleton-Young, senior vice president and chief economist for the Association. "Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months."

Other key points from the Association’s September 2018 resale housing report include:

• On a regionwide, non-seasonally adjusted basis, the Southern California region led the state's sales decline, falling 17.3 percent from a year ago. Los Angeles County experienced the largest drop in the region at 22 percent, while Orange County declined 21.8 percent. Sales in the Inland Empire were down 10.8 percent from a year ago, with Riverside County was down 9.7 percent and San Bernardino county dropped 12.4 percent.
• Sales in the Bay Area declined 16.4 percent, from September 2017, the largest decline since October 2010. Santa Clara posted the largest drop at 22.6 percent, while Marin experienced the lowest decline at 1.1 percent. Alameda (-10.4 percent), Contra Costa (-17.3 percent), Napa (-14.2 percent), San Francisco (-11.5 percent), San Mateo (-14.6 percent), Solano (-19.3 percent), and Sonoma (-19.4 percent) counties all posted double-digit declines.
• Although Glenn and Kings counties posted annual sales gains of 9.1 percent and 11.1 percent, respectively, sales for the Central Valley Region as a whole were down 15.1 percent from a year ago. Every other county of the region posted declines from a year ago.
• While home prices continue to grow in the Bay Area, the rate of appreciation has slowed since the first half of the year. In September, the median price in the Bay Area increased 9.8 percent from last year, lower than the average year-over-year growth rate of 14.9 percent. Three counties continued to show double-digit growth compared with the previous year: San Mateo (14.2 percent), San Francisco (11.7 percent) and Marin (11.6 percent).
• Sales in Los Angeles and Orange counties both dropped 20 percent in September, which is taking a toll on the price appreciation of each county and the Southern California region as a whole. The Los Angeles Metropolitan Area had the lowest year-over-year growth rate of 3.4 percent in September among all major regions. Individually, Los Angeles County and Orange County had the smallest growth rates of 4.7 percent and 3.3 percent, respectively, among all counties within the region. Riverside and San Diego also had modest growth rates of around 5 percent in September, while Ventura and San Bernardino had more robust price appreciation at 10.6 percent and 7.5 percent, respectively.
• Statewide active listings rose for the sixth consecutive month following 33 straight months of declines, increasing 20.4 percent from the previous year. September's listings increase was the biggest in almost four years.
• At the regional level, the San Francisco Bay Area increased the most in active listings, with a surge of 44 percent year over year. The increase was most obvious in Santa Clara, as the county's active listings more than doubled (+113 percent) from last September. The Southern California region increased 23 percent and the Central Valley rose 13 percent in active listings, on a year-over-year basis.
• The Unsold Inventory Index, which is a ratio of inventory over sales, rose again in September from 3.3 months in September 2017 to 4.2 months in September 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• The median number of days it took to sell a California single-family home ticked up from 20 days in September 2017 to 23 days in September 2018, a sign that market competitiveness is not as heated as in 2017.
• The Association's statewide sales price-to-list price ratio hit the lowest level in 20 months but was down from a year ago at 98.5 percent in September 2018 compared with 99.1 percent in September 2017. The decline indicates that buyers may have more negotiation power in the current market than a year ago.
• The average statewide price per square foot for an existing, single-family home statewide was $282 in September, up from $270 in September 2017, but dipped slightly from $283 in August 2018.
• The 30-year, fixed-mortgage interest rates averaged 4.63 percent in September, up from 3.81 percent in September 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in September to an average of 3.94 percent from 3.16 percent from September 2017

The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September. That’s an indication that the market is slowing as many potential buyers put their homeownership plans on hold, according to the California Association of Realtors.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 382,550 units in September, according to information collected by the Association from more than 90 local realtor associations and multiple listing services across the state.

The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

September's sales figure was down 4.3 percent from the revised 399,600 level in August and down 12.4 percent compared with home sales in September 2017 of 436,920.

"The housing market continued to deteriorate and the decline in sales worsened as interest rates remained on an upward trend. More would-be buyers are self-sidelining as they believe home prices will start to come down soon, making housing more affordable despite rising interest rates," said Steve White, president of the California Association of Realtors. "Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County."

The statewide median home price dropped to $578,850 in September. The September statewide median price was down 2.9 percent from $596,410 in August but up 4.2 percent from a revised $555,400 in September 2017.

"Price appreciations have slowed in the last few months and inventory has risen considerably since June when the statewide median price hit a new peak," said Leslie Appleton-Young, senior vice president and chief economist for the Association. "Buyers are becoming increasingly concerned about market developments and are reluctant to purchase at the prevailing market price. As such, the deceleration in price growth will likely continue in coming months."

Other key points from the Association’s September 2018 resale housing report include:

• On a regionwide, non-seasonally adjusted basis, the Southern California region led the state's sales decline, falling 17.3 percent from a year ago. Los Angeles County experienced the largest drop in the region at 22 percent, while Orange County declined 21.8 percent. Sales in the Inland Empire were down 10.8 percent from a year ago, with Riverside County was down 9.7 percent and San Bernardino county dropped 12.4 percent.
• Sales in the Bay Area declined 16.4 percent, from September 2017, the largest decline since October 2010. Santa Clara posted the largest drop at 22.6 percent, while Marin experienced the lowest decline at 1.1 percent. Alameda (-10.4 percent), Contra Costa (-17.3 percent), Napa (-14.2 percent), San Francisco (-11.5 percent), San Mateo (-14.6 percent), Solano (-19.3 percent), and Sonoma (-19.4 percent) counties all posted double-digit declines.
• Although Glenn and Kings counties posted annual sales gains of 9.1 percent and 11.1 percent, respectively, sales for the Central Valley Region as a whole were down 15.1 percent from a year ago. Every other county of the region posted declines from a year ago.
• While home prices continue to grow in the Bay Area, the rate of appreciation has slowed since the first half of the year. In September, the median price in the Bay Area increased 9.8 percent from last year, lower than the average year-over-year growth rate of 14.9 percent. Three counties continued to show double-digit growth compared with the previous year: San Mateo (14.2 percent), San Francisco (11.7 percent) and Marin (11.6 percent).
• Sales in Los Angeles and Orange counties both dropped 20 percent in September, which is taking a toll on the price appreciation of each county and the Southern California region as a whole. The Los Angeles Metropolitan Area had the lowest year-over-year growth rate of 3.4 percent in September among all major regions. Individually, Los Angeles County and Orange County had the smallest growth rates of 4.7 percent and 3.3 percent, respectively, among all counties within the region. Riverside and San Diego also had modest growth rates of around 5 percent in September, while Ventura and San Bernardino had more robust price appreciation at 10.6 percent and 7.5 percent, respectively.
• Statewide active listings rose for the sixth consecutive month following 33 straight months of declines, increasing 20.4 percent from the previous year. September's listings increase was the biggest in almost four years.
• At the regional level, the San Francisco Bay Area increased the most in active listings, with a surge of 44 percent year over year. The increase was most obvious in Santa Clara, as the county's active listings more than doubled (+113 percent) from last September. The Southern California region increased 23 percent and the Central Valley rose 13 percent in active listings, on a year-over-year basis.
• The Unsold Inventory Index, which is a ratio of inventory over sales, rose again in September from 3.3 months in September 2017 to 4.2 months in September 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• The median number of days it took to sell a California single-family home ticked up from 20 days in September 2017 to 23 days in September 2018, a sign that market competitiveness is not as heated as in 2017.
• The Association's statewide sales price-to-list price ratio hit the lowest level in 20 months but was down from a year ago at 98.5 percent in September 2018 compared with 99.1 percent in September 2017. The decline indicates that buyers may have more negotiation power in the current market than a year ago.
• The average statewide price per square foot for an existing, single-family home statewide was $282 in September, up from $270 in September 2017, but dipped slightly from $283 in August 2018.
• The 30-year, fixed-mortgage interest rates averaged 4.63 percent in September, up from 3.81 percent in September 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in September to an average of 3.94 percent from 3.16 percent from September 2017

CIT Was Lead Underwriter  for $24M Multi-Family Loan

The CIT Group Inc.’s real estate division was the lead arranger of a $24 million senior secured loan for the acquisition of a multi-family property in San Pedro, Calif., by MWest Holdings, a private real estate investment and management firm.

MWest Holdings acquired the San Pedro Bank Lofts, an 89-unit loft-style multi-family property located in downtown San Pedro, near the San Pedro Arts District, in August. The property consists of two four-story buildings.

"The convenient location of this property, and its proximity to the arts district and redeveloping Los Angeles waterfront, makes it an attractive investment," said Matthew Ellis, chief investment officer at MWest Holdings. "We appreciated CIT's real estate expertise, which helped enable a smooth and successful transaction."

"CIT is active in financing commercial properties in the Southern California region," said Bryan Cavalier, managing director and West Coast head of CIT's real estate finance division. "We were pleased to leverage our expertise to assist MWest Holdings in completing this purchase."

CIT's real estate division originates and underwrites senior secured real estate transactions. With deep market expertise, underwriting experience and industry relationships, the unit provides financing for single properties, property portfolios and loan portfolios.

Envestnet-Yodlee has developed Envestnet-Yodlee Risk Insight for Pre-Qualification reports designed for lenders and lead generators who want more robust information to pre-qualify a borrower before engaging in full underwriting. Risk Insight infuses data into the lead qualification process, enabling lenders to target the right product to the right customer at the right time.

Lenders looking to generate organic growth must acquire new consumers outside of their existing customer base. Yet, marketing to new leads can be challenging due to the high cost and lack of data. Without knowing something about the individual, lenders often struggle to confirm a consumer's financial condition. Even with a full credit bureau report, it can be impossible to determine if consumers have the ability and intention to pay back a loan Risk Insight was created to fill this gap.

Risk Insight addresses this important early stage in the verification process by providing reports on whether a lead meets the basic criteria for a loan. Lenders can select up to 25 customized attributes, such as income, asset, and expense data, to arrive at a meets, or doesn't meet, decision for leads. By redirecting inappropriate targets early on, lenders save on unnecessary costs for traditional credit reports and authentication products required during the origination process.

"Risk Insight provides a highly cost-effective, simplified report to help lenders make more targeted offers and control risk at the lead level," said Mike Burger, vice president of product management at Envestnet-Yodlee.

The buying and technology preferences of borrowers will change the way mortgage originators conduct business.

Technology will drive the industry and make it more efficient for borrowers and renters, over the next five to 10 years, and place  information at their disposal, in an almost instantaneous manner. The high cost of originations, and changing expectations of borrowers, will bring radical changes in the way originators do their jobs and reduce their compensation levels, sources said.

An originator will have access to automated ordering of verification of employment, income and assets--and more data and analytics with a push of a button than has ever been available to them. That will be a radical shift in the way technology is employed and in how people get a mortgage. Paper will give way to web-based processes, and the process will be more digital and seamless.

“My children will take a picture of the house they are interested in with their cell phone, provide the [global positioning satellite] coordinates, and send that off to someone ready to provide financing,” said Timothy Mayopoulos, former chief executive officer at Fannie Mae, speaking on the “Doing Business with the GSEs” at the MBA’s Annual Conference.

The home purchase will remain the largest purchase many people will make in their life times, and they will want to work with a trusted realtor or originator--but ones that make communication possible through technology. The purchase of a house will change because millennials are looking for a buying experience that’s as identical as possible to the interactions they’ve had with Google and Amazon--and that “won’t be anything different from that experience,” said Mayopoulos.

Millennials are the largest generation in U.S. history, and while they desire to buy homes, they want to do so with more technology than have past generation of homebuyers. That means “housing that will be as nimble and agile as consumers need,” he said.

The change in the origination side of the business could be similar to the experience of the travel industry. For instance, there was a time when travel agents were relied on for vacation information 100 percent, because they were the only ones that had that information. But that is no longer the case.

Now, access to travel information is available through the internet. For specialized needs, high-end travelers, or the difficult ones, travelers will use a travel agent. But for the most part, “they are comfortable making their travel plans without the assistance of a travel agent,” said Ken Bates, branch manager of Military Home Loans, a division of American Pacific Mortgage.

With information available online about realtors, mortgage brokers, even houses in their price ranges--just a keystroke or two away--borrowers will do much of their own research. That includes researching properties through Zillow, shop for a realtor and educate themselves on mortgages and the mortgage process. That information had been the private domain of originators, but no longer, which means they will earn less money.

Although they have the information to make a buying decision, one difference with a travel agent is that they will want some guidance to get them through the process. For large loans, for example, a $600,000 mortgage, borrowers will want someone to look in the eye. They don’t want to make a mistake.”If they make a mistake on a $40,0000 car, that hurts,” said Bates. “But if they make a mistake on a $600,000 mortgage that can be devastating to the borrower.

But there are simply too many originators for too few loans. The industry will go through a massive downsizing; and it’s possible that a quarter of us won’t be in the business a year from now,” said Bates.