Skip to content
Archive of entries posted on January 2010
« Older Entries

Double Dip in Housing?

30 January 2010, 9:55 am

-Robert Larsen

The Governments Effect on Housing

A recent real estate report indicates that consumers may be taking their time house hunting this winter, which some economists believe could lead to a “double dip” in home prices. A recent report from the NATIONAL ASSOCIATION OF REALTORS® (NAR) showed that its pending home sales index declined 16 percent in November to a reading of 96, the first decline after nine consecutive months of gains.
MAKING SENSE OF THE STORY FOR CONSUMERS
• NAR’s Pending Home Sales Index (PHSI) is a barometer of future sales. Typically, there is a one- to two-month lag between the signing of a sales contract and the close of escrow. Although government incentives, low interest rates, and affordable home prices have attracted many buyers, especially first-timer buyers, to the market, historically sales decline during the winter months and begin to rise in the spring, and ultimately peak in the summer.
• Because of the government’s efforts to stimulate the housing market, some economists believe that housing prices will decline once the incentives come to an end. However, the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) closely watched “2010 California Housing Market Forecast,” projected that the median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 in 2009.
• According to C.A.R.’s Vice President and Chief Economist Leslie Appleton-Young, unlike the rest of the nation, home sales in California already bottomed out more than two years ago, and the median home price reached its trough in February 2009.
• Although home buyers should not focus solely on future home price appreciation, according to data collected by C.A.R. over the last 40 years, homeowners who purchase and live in their home for at least five years, have averaged an annual rate of return of nearly 12 percent.

  • Share/Bookmark
Filed under Real Estate Analysis.
Comment

Paperwork Reduced in Loan-Modification Program

29 January 2010, 12:19 pm

- Robert Larsen 1/28/2010

The Obama administration is trying to simplify the paperwork for people seeking lower home-mortgage payments in an effort to avert more foreclosures.

The Treasury outlined new guidelines Thursday aimed at streamlining requirements for mortgage relief under the administration’s Home Affordable Modification Program launched a year ago.

The guidelines specify that borrowers must provide three items to loan servicers, the companies that collect mortgage payments: a form requesting a loan modification, authorization for the servicer to seek tax information from the Internal Revenue Service and evidence of income, such as two recent pay stubs. Previously, some servicers have asked borrowers to fax in copies of their tax returns. Borrowers sometimes couldn’t find the needed tax forms or complained that servicers repeatedly lost material faxed to them.

The previous documentation requirements were “somewhat overwhelming” for some borrowers, says Morgan McCarty, head of mortgage servicing at Regions Financial Corp., a banking company based in Birmingham, Ala.

The Treasury also said that, effective June 1, servicers must collect the information before starting borrowers on three-month “trial” loan modifications, during which borrowers must show they can make the payments before being granted a permanent reduction in their loan costs. Many servicers have been starting trial modifications based on unverified information provided orally by the borrower, only to find later that the borrower wouldn’t or couldn’t provide documentation.

As of Dec. 31, about 900,000 borrowers had been given trial modifications but only 66,465 had been converted to a permanent fix. That largely reflects problems getting documentation. The Treasury acknowledged that some of those 900,000 borrowers won’t end up qualifying for a loan modification through the program.

As of Sept. 30, about 7.5 million households—about 14% of those with home loans—were behind on payments or in the process of foreclosure, according to data from the Mortgage Bankers Association, a trade group.

Many of those struggling borrowers owe far more to their lenders than the current value of their homes—a condition known as being “underwater”—and wonder whether it is worthwhile to keep paying. Micah Green, a partner at the law firm Patton Boggs in Washington who represents some large investors in mortgages, says the administration should revamp the program to put more stress on reducing principal owed by borrowers who can show that they would be able to stay current on a smaller, refinanced loan. In many cases, that would require the holders of both a first- and a second-lien loan to accept a write-down of the amount owed, a complicated process.

Treasury officials said Thursday they were looking at ways of helping underwater borrowers but haven’t found practical means of doing that on a large scale. “There are no simple solutions,” Herb Allison, an assistant Treasury secretary, said in a press briefing.

By JAMES R. HAGERTY at the WSJ

  • Share/Bookmark
Filed under Real Estate Article. Tagged 
1 Comment

Orange County Real Estate Market Update January 25, 2010

29 January 2010, 12:14 pm

- Robert Larsen 1/25/2010

Mortgage Rates Edged Down

Mortgage rates fell slightly this week, with the average rate on 30-year fixed-rate mortgages inching further below 5%, according to Freddie Mac’s weekly survey.

Paperwork Eased in Loan-Modification Program

The Obama administration is trying to simplify the paperwork for people seeking lower home-mortgage payments in an effort to avert more foreclosures.

The Treasury outlined new guidelines Thursday aimed at streamlining requirements for mortgage relief under the administration’s Home Affordable Modification Program launched a year ago.

The guidelines specify that borrowers must provide three items to loan servicers, the companies that collect mortgage payments: a form requesting a loan modification, authorization for the servicer to seek tax information from the Internal Revenue Service and evidence of income, such as two recent pay stubs. Previously, some servicers have asked borrowers to fax in copies of their tax returns. Borrowers sometimes couldn’t find the needed tax forms or complained that servicers repeatedly lost material faxed to them.

Click to the Read Full Story

  • Share/Bookmark
Filed under Market Update. Tagged ,
Comment

California’s Home Inventory Continues to Shrink to 5-Year Low

22 January 2010, 4:16 pm

- Robert Larsen 1/22/2010

California’s inventory of unsold, previously owned homesTract Homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades.

The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008, when inventories were at a peak, according to estimates released Friday by the California Association of Realtors. The inventory levels are now at their lowest level since 2005, resulting in frenzied sales with multiple offers in some cities.

In Northern California’s Santa Clara County, where inventory has dropped to 50 days from 243 a year ago, Amanda Garcia said she and her 62-year-old father Luis Garcia finally gave up a nine-month search for a home last month, after they kept losing out on homes priced in the highly competitive sub-$500,000 market.

“It’s more like an auction nowadays,” said Ms. Garcia, 26, a medical coordinator from Milpitas, Calif. “They shouldn’t call it a house sale.”

California’s housing market is closely watched because it is the nation’s biggest and helps fuel both the state’s economy and the national building industry. With California still weighed down by economic problems, including a 12.4% unemployment rate, higher than the 10% rate nationwide, economists are looking at bellwethers like housing to determine when California will rebound.

Of course, any long-term revival in housing will depend on California’s ability to shake off its high unemployment and the continuing threat of more foreclosures. Some housing experts cautioned that inventories may be artificially low because many would-be sellers are waiting for the economy to improve before putting their homes on the market.

“I’m convinced that once the general public believes prices have bottomed out and are coming up, more people will put their homes on the market,” said Andrew LePage, an analyst at MDA DataQuick, a housing-data provider in La Jolla, Calif. “And that will probably coincide with the economy and job market improving.”

Rising ChartAlthough most home prices remain well below their pre-bust highs of three years ago, California’s overall housing market has shown signs of stabilizing since early last year. The median price of an existing, single-family home rose 8.4% from a year ago to $306,820, marking the second consecutive year-over-year increase and the 10th straight month-over-month jump, according to estimates by the state Realtors’ association.

Sales rose at a slower year-over-year rate of 1.7%, compared with double-digit gains in recent months. Sales have been powered, in part, by a federal tax credit of $8,000 for first-time buyers, which Congress extended until the end of April.

Some brokers attributed the sales slowdown to lean inventories. “Right now, we need more listings,” said Lianne Pinkston, a Coldwell Banker broker in Morgan Hill, Calif., south of San Jose. “I have an all-cash investor, and they’ve wanted to buy a duplex or four-plex, and they’ve been making all-cash offers for over the asking price, and they’re still not getting anything.”

The current inventory rate is running well under California’s historical average since the 1980s of about an eight-month supply of existing homes on the market. That’s partly because a once huge supply of foreclosures in the state has dwindled. In November, foreclosed properties accounted for 40% of all single-family sales, new and used, in California, compared with 58% in January, according to the most recent estimates by Zillow.com, a market tracker.

In general, California’s coastal markets performed better than inland markets. In Orange County, for example, Zillow estimates foreclosures dropped by more than one half to 20.6% of all single-family sales in November from 43.5% in January. In inland Merced County, foreclosures were also down, but to 69.9% of sales from 83.4% in January, according to Zillow.

The return to the kind of bidding wars that marked the state’s boom years in some coastal cities hasn’t been welcomed by home buyers. In Orange County, graphics designer Scott Butler put in one of 37 offers on a three-bedroom, two-bath home listed for $350,000 in early September. Mr. Butler bid full price for the home in Mission Viejo, Calif., and offered to put 20% down, but the winning bid went over $430,000, said his agent, Michael Caruso.

Mr. Butler, 39, who has since given up his search, said he was outbid on more than 20 other homes since early 2009. “It’s very discouraging,” he said.

Written by Jim Carlton at the Wall Street Journal

  • Share/Bookmark
Filed under Real Estate Article. Tagged 
Comment

Mortgage Rates Fall Below 5%

21 January 2010, 8:41 pm

- Robert Larsen 1/21/2010

Mortgage rates fell this week, with the third consecutive decline pushing the average for 30-year fixed-rate loans back below 5%, according to Freddie Mac’s weekly survey.

Treasury yields have declined recently, and mortgage rates tend to follow the yields.

The 30-year fixed-rate mortgage averaged 4.99% for the week ended Thursday, down from last week’s 5.06% average and 5.12% a year ago. Rates for 15-year fixed-rate mortgages were 4.4%, down from 4.45% and 4.8%, respectively.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.27%, down from last week’s 4.32% and 5.24% a year earlier. One-year mortgages stood at 4.32%, down from 4.39% last week and 4.92% a year ago.

Frank Nothaft, Freddie Mac vice president and chief economist, said in a news release: “ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26 and 27.”

According to a separate survey released by the Mortgage Bankers Association on Wednesday, the volume of mortgage applications rose a seasonally adjusted 9.1% last week, compared with the week before.

  • Share/Bookmark
Filed under Mortgage Rates. Tagged 
Comment

Real Estate Wish-List

20 January 2010, 7:39 pm

One of the most common problems between brokers and prospective homescroll buyer’s is a lack of communication, which often leads to frustration. On the broker’s side, he/she feels that the client is too picky and will never find the perfect property; while the home buyer gets annoyed with the properties that the broker is sending and begins to feel that they are incompetent. Believe me, a broker only want to serve his/her clients in the most efficient way possible, conserving time for both himself and his clients. This is why withholding information, such as maximum price or preferences, from your agent will only make delay the process and waste time on both sides. If you feel that your broker is only presenting homes at the top of your price range, then that is not someone you should work with. But, keep in mind, your taste may be expensive and that only the homes that meet those tastes are at the top of your price range. Be sure you to justify your reasoning before you just to such conclusions. Apart from the few unethical brokers, we truly want to serve our clients at our highest level possible.

In order to be efficient with time, I find that a home buyer’s wish-list is an effective way to communicate efficiently. My home buyer’s wish-list, is a two page form containing questions and possible preferences a client may have. With this list, I am not only able to save my time but I am able to serve my clients more efficiently by being on the same page.  Also, it is not uncommon to work with clients for over a year, making it difficult to remember the specifics. I can constantly reference the list when searching the Multiple Listing Service (MLS) for possible homes. It is important to be as honest as possible when filling out the wish-list.  After all, if you can’t trust your broker with matching your preferences, how can you trust him/her to negotiate on your behalf? Purchasing a home is a huge decision, and you must be comfortable with your broker.

Feel free to use the attached wish-list. To find more helpful real estate tools, please visit Helpful Real Estate Tools.

Robert Larsen
Coast Sotheby’s International Realty
Robert.Larsen@CoastSIR.com

  • Share/Bookmark
Filed under Helpful Tools in Real Estate. Tagged 
Comment

2010 and Beyond…

20 January 2010, 1:35 pm

Defaults Down 35 Percent from a Year Ago

Throughout 2009, a common theme was the existence of “shadow inventory” andCartoon the growing presence of mortgage defaults. Now, in  2010, all the talk has stopped and investors betting on a continued down market are looking towards other statistics to support their theory. But, before we begin to analyze new arguments, lets look at why the previous talk about shadow inventory and defaults stopped.

Banks filed 1,535 notices of default in Orange County in December, down 35 percent from a year ago and 18 percent from November ‘09, reports MDA DataQuick. The lowest levels since September of 2008.

Default notices, which start the foreclosure process, have been trending down since reaching a peak of 3,485 in March 2009. They have declined each of the past five months.

Foreclosures totaled 796 houses and condos last month, up 18 percent from November and 11 percent from a year ago. Foreclosures generally increase from November to December, but the total was also the highest in five months. One data point does not signify a trend, but it will be interesting to see if banks work on their foreclosure backlog in coming months while starting the foreclosure process on fewer homes.

Take a look at the default and foreclosure numbers below:

Despite the tragedy of so many people losing their homes to foreclosures, it is an inevitable process. One home lost, is a new home for another; and the foreclosures are being purchased. It wouldn’t be such a bad thing if more bank owned homes were on the market, but unfortunately investors are purchasing the REOs in bundles. Each month more and more homes are being purchased by investors and flipped for a quick profit. Below is a graph illustrating the number of foreclosed homes purchased either through REO or by an investor.

  • Share/Bookmark
Filed under Real Estate Analysis. Tagged ,
Comment

Home Builder’s Constructions Forecast

19 January 2010, 8:44 pm

Home Builders Expect Construction Recovery

Housing construction is expected to rebound this year from the severely depressed 2009 level, but the market remains fragile as foreclosures continue to rise.

Builders are likely to start construction on 610,000 single-family homes this year, up 38% from last year, according to David Crowe, chief economist for the National Association of Home Builders, which is meeting this week for its annual convention. That forecast assumes that the total number of U.S. jobs will start growing again in the second quarter. Housing starts would remain far below the 2005 peak of 1.7 million.

Mr. Crowe cautioned that the housing market remains tenuous, partly because foreclosures are still increasing, job growth this year is likely to be tepid, and builders are having trouble getting credit.

The convention drew more than 50,000 builders, suppliers and other participants, down from more than 60,000 last year and 140,000 in 2007, a spokeswoman for the home builders said. Many suppliers were touting energy-efficient products rather than glitzy décor. “The builders here are the survivors,” Mr. Crowe said.

Less than three miles from the convention, around 60 people perched on folding chairs in a parking lot to bid on foreclosed homes, a daily feature of the Las Vegas market. About 60% of Las Vegas home sales in December were foreclosed properties, according to the Greater Las Vegas Association of Realtors.

Many builders are focusing on low-cost homes to compete with foreclosures. In Las Vegas, the typical new house from KB Home is priced in a range of about $150,000 to $170,000. Four years ago, typical new homes in Las Vegas were in a range of $400,000 to $550,000.

Frank Nothaft, chief economist at the government-backed mortgage investor Freddie Mac, said the percentage of people who are behind on their mortgage payments probably won’t peak until the second half. As of Sept. 30, about 14% of American home-mortgage borrowers were at least 30 days behind on payments or in foreclosure, according to the Mortgage Bankers Association.

John Burns Real Estate Consulting, an Irvine, Calif., firm that advises home builders, said sales of new homes and visits from potential buyers have picked up in recent weeks after a lull in last year’s final quarter.

Many builders are starting the year with low inventories of completed homes, the firm said. That should spur building in the months ahead as builders seek to have houses ready for people who want to make purchases before the April 30 deadline to qualify for a tax credit for home purchases.

  • Share/Bookmark
Filed under Real Estate Article. Tagged 
Comment

Orange County Real Estate Market Update January 18, 2010

18 January 2010, 11:09 pm

- Robert Larsen 1/18/2010

With one of the key measures below the benchmark for the second week in a row, would-be home buyers face the best rates since the spring, and the statistics continue to show it. Last week, reports were released re-affirming the notion that interest rates will remain low through 2010, but how low is low? Well right now, mortgage rates are as low as they have been all year and many buyer’s are trying to take advantage. Anyone selling, showing, or buying a home can tell you that people are out looking to purchase. Even with the current downpour of rain, prospective home-buyer’s are on the search. And, to top it off, I don’t see things slowing down. As we approach March and April, we will see more and more people taking advantage of the tax credit. Combined with the seasonal spring and summer upswing in real estate activity, the Orange County median home price will continue to rise.

As reported in the The 18th annual survey by the Association of Foreign Investors in Real Estate, the United States is voted to be the world’s best real estate investment opportunity.

  • 51% see U.S. as best opportunity for capital appreciation (vs. 37% in 2008, 26% in 2007, and 23% in 2006.)
  • U.K. was 2nd best bet country with 30% of the votes. China was third at 10%.
  • Two-thirds of those polled plan to increase their U.S. investments in 2010 compared to 2009. (62% increase for equity investments; 83% for real estate debt.)
  • Most favored American cities? D.C. then New York, followed by San Francisco, Boston … then LA.
  • 33% are more optimistic about the U.S. real estate market than they were in June 2009; only 6% are more pessimistic.

Also in the headlines…

Lennar Reports Profit as New Orders Increase

Home builder Lennar Corp. swung to a surprise fiscal fourth-quarter profit, breaking a two-year string of losses, as the company benefited from hefty one-time gains.

Chief Executive Stuart Miller also said the company experienced its first year-over-year increase in new orders, 3%, since the start of 2006.

Mr. Miller added that the housing market continued “to move toward stabilization as more confident home buyers took advantage of increased affordability and the $8,000 federal tax credit” that was extended in November.

  • Share/Bookmark
Filed under Market Update. Tagged 
Comment

Home Prices in Orange County

15 January 2010, 1:56 pm

O.C. home prices up $69,000 vs. bottom

For the 22 business days ending Dec. 23 – DataQuick’s latest homebuying report — Orange County saw …

  • $439,000 median selling price that is +9.7% vs. a year ago but -32% below June 2007’s peak of $645,000.
  • The most recent median is 19% ($69,000) above the cyclical low hit in January 2009 at $370,000 — a current bottom that was -43% below the peak.
  • Prices fell on a year-over-year basis from Sept. 2007 through August. (Worst at -31.5% in August 2008.)
  • Single-family homes resell for 32% less than their peak pricing (June ‘07) while condos sell 36% below their peak in March 2006. Builder prices for new homes are 39% below their February ‘05 top.
  • In this most recent period, O.C. shoppers bought 3,041 residences — that is +10.4% vs. year-ago buying activity. (From 1997-2006, monthly sales averaged 4,304 per month.)
    • Share/Bookmark
    Filed under Market Update. Tagged ,
    Comment
    « Older Entries