From Daily Real Estate News, June 24, 2010
At a recent meeting of the Urban Land Institute of Minnesota, Senior Fellow John McIlwain said "a new normal" will be created in the housing market over the next 10 years, and he marked the end of "the suburban century."
He noted that markets offering "a vibrant 24/7 lifestyle" will see the most robust activity, "net-zero-energy" units will become the norm, and the rental market will expand as homeownership rates fall to more historic levels.
Suburban town centers will gain popularity among those wanting an urban lifestyle without living in a big city.
Over the next decade, McIlwain said four demographic groups will fuel the housing market. He said older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.
With 1.5 million housing units per year needed to accommodate the shift to normal levels of household formation, McIlwain said zoning, financing, and regulations need to be rethought to meet housing demand.
Source: minnpost.com, Brad Allen (06/21/2010)
Thursday, June 24, 2010
Friday, June 18, 2010
Area's Median Home Prices Rise 22.5%
The median home price in Southern California last month rose 22.5 percent from a year earlier and topped $300,000 for the first time in 20 months, as sales continued shifting from low-priced inland areas to higher-end coastal regions, a tracking firm reported Tuesday.
San Diego-based MDA DataQuick reported that last month's median of $305,000 in the six-county region was up from $249,000 in May 2009 and up 7 percent from $285,000 in April.
The May median, which marked a sixth consecutive month of year-over-year increases, was at its highest level since October 2008, DataQuick said.
"Last month's jump in the regional median sale price is the flip side of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse," DataQuick President John Walsh said.
Sales last month of homes costing $500,000 or more made up 21.6 percent of all transactions in the region, up from 17.4 percent a year ago, DataQuick said.
Foreclosures, meanwhile, which typically account for the lowest-price homes, comprised 33.9 percent of resales last month, down from 49.8 percent a year ago, the firm said.
May sales surged on the coast over last year's numbers, increasing 22.1 percent in Orange County and 19.6 percent in San Diego County, while they declined inland, dropping 9.5 percent in San Bernardino County and 5.7 percent in Riverside County.
Bob Hamidi, who oversees Prudential California Realty offices in Orange and Riverside counties, said his agents also are witnessing a shift toward the higher priced areas.
By Jacob Adelman The Associated Press
San Diego-based MDA DataQuick reported that last month's median of $305,000 in the six-county region was up from $249,000 in May 2009 and up 7 percent from $285,000 in April.
The May median, which marked a sixth consecutive month of year-over-year increases, was at its highest level since October 2008, DataQuick said.
"Last month's jump in the regional median sale price is the flip side of what we saw a year ago, when low-cost inland foreclosures dominated and sales in the costlier coastal towns struggled for a pulse," DataQuick President John Walsh said.
Sales last month of homes costing $500,000 or more made up 21.6 percent of all transactions in the region, up from 17.4 percent a year ago, DataQuick said.
Foreclosures, meanwhile, which typically account for the lowest-price homes, comprised 33.9 percent of resales last month, down from 49.8 percent a year ago, the firm said.
May sales surged on the coast over last year's numbers, increasing 22.1 percent in Orange County and 19.6 percent in San Diego County, while they declined inland, dropping 9.5 percent in San Bernardino County and 5.7 percent in Riverside County.
Bob Hamidi, who oversees Prudential California Realty offices in Orange and Riverside counties, said his agents also are witnessing a shift toward the higher priced areas.
By Jacob Adelman The Associated Press
Foreclosures Drop Dramatically in San Diego County
From SignOn San Diego, Union-Tribune, June 17, 2010
Foreclosure filings and notices of default fell dramatically last month in San Diego County, but analysts did not see this as evidence of less distress in the housing market.
Default notices totaled 1,623, down 22.9 percent from April and 46.9 percent from a year ago, MDA DataQuick reported Thursday. Foreclosures numbered 1,021, down 15.8 percent from April, but up 3.7 percent year-over-year, because of a moratorium on foreclosures in place at the time.
Analysts said the declines might represent further signs that lenders are shifting from taking legal action against homeowners who can’t pay their mortgages.
“We’ve been talking for a year now how a growing amount of distress will be handled outside the formal foreclosure process,” said DataQuick analyst Andrew LePage, “mainly through short sales (homes sold for less than the mortgage balance) and to some extent loan modifications and other methods.”
He said the short-term trend has been uneven, sometimes up, sometimes down month to month.
“If you look at quarters, the general trend has been less going into the formal foreclosure process,” LePage said. “We know short-sales are up significantly, as are loan modifications, and some would argue there have not been nearly enough loan modifications, but there are more than there were a couple years back.”
Sean O’Toole, founder and CEO of ForeclosureRadar.com in Discovery Bay, said lenders seem to be timing their actions to coincide with changing economic conditions. Earlier this year, he noted, foreclosures and defaults increased as the stock market improved and home sales and prices stabilized. But in recent weeks, as those markets have faltered, distress actions have fallen back.
“I don’t believe in conspiracies, but at some point it becomes a sensible strategy to manage the books,” O’Toole said.
He and other economists doubt that short sales and loan modifications will solve most homeowners’ problems, which are exacerbated by the sluggish economy and lower home values that make refinancing all but impossible.
“We’ve got an awful lot in the pipeline and at this pace, it’s going to take years to work through this,” he said. “It’s a question of do you rip off the Band-Aid fast and have a sharp sting or rip it off really, really slowly.”
The good news is that various reports show delinquencies rising at a slower pace — an indication that distress is easing and various housing submarkets are stabilizing. The Mortgage Bankers Association put California’s first-quarter delinquencies at 10.9 percent of all homes with mortgages last month, down from 11.3 percent in the fourth quarter.
But that still leaves some 1 million homeowners in California who are not making their payments, O’Toole said.
“If you were to foreclose on those folks en masse, it would certainly create panic and fear,” he said.
There are no delinquency estimates at the local or city level.
Did you miss these?
SoCal home prices rise at fastest pace in 5 years
County home prices at highest since August 2008
Foreclosure filings and notices of default fell dramatically last month in San Diego County, but analysts did not see this as evidence of less distress in the housing market.
Default notices totaled 1,623, down 22.9 percent from April and 46.9 percent from a year ago, MDA DataQuick reported Thursday. Foreclosures numbered 1,021, down 15.8 percent from April, but up 3.7 percent year-over-year, because of a moratorium on foreclosures in place at the time.
Analysts said the declines might represent further signs that lenders are shifting from taking legal action against homeowners who can’t pay their mortgages.
“We’ve been talking for a year now how a growing amount of distress will be handled outside the formal foreclosure process,” said DataQuick analyst Andrew LePage, “mainly through short sales (homes sold for less than the mortgage balance) and to some extent loan modifications and other methods.”
He said the short-term trend has been uneven, sometimes up, sometimes down month to month.
“If you look at quarters, the general trend has been less going into the formal foreclosure process,” LePage said. “We know short-sales are up significantly, as are loan modifications, and some would argue there have not been nearly enough loan modifications, but there are more than there were a couple years back.”
Sean O’Toole, founder and CEO of ForeclosureRadar.com in Discovery Bay, said lenders seem to be timing their actions to coincide with changing economic conditions. Earlier this year, he noted, foreclosures and defaults increased as the stock market improved and home sales and prices stabilized. But in recent weeks, as those markets have faltered, distress actions have fallen back.
“I don’t believe in conspiracies, but at some point it becomes a sensible strategy to manage the books,” O’Toole said.
He and other economists doubt that short sales and loan modifications will solve most homeowners’ problems, which are exacerbated by the sluggish economy and lower home values that make refinancing all but impossible.
“We’ve got an awful lot in the pipeline and at this pace, it’s going to take years to work through this,” he said. “It’s a question of do you rip off the Band-Aid fast and have a sharp sting or rip it off really, really slowly.”
The good news is that various reports show delinquencies rising at a slower pace — an indication that distress is easing and various housing submarkets are stabilizing. The Mortgage Bankers Association put California’s first-quarter delinquencies at 10.9 percent of all homes with mortgages last month, down from 11.3 percent in the fourth quarter.
But that still leaves some 1 million homeowners in California who are not making their payments, O’Toole said.
“If you were to foreclose on those folks en masse, it would certainly create panic and fear,” he said.
There are no delinquency estimates at the local or city level.
Did you miss these?
SoCal home prices rise at fastest pace in 5 years
County home prices at highest since August 2008
Rates on 5-Year ARM Hit Record Low
From Daily Real Estate News, June 18, 2010
Interest on five-year adjustable-rate mortgages averaged 3.89 percent for the week ended June 17, the lowest level since Freddie Mac began tracking the statistic in January 2005.
One-year Treasury-indexed ARMs also fell, dipping from 3.91 percent to 3.82 percent, the lowest average in more than 10 years. Also, 30-year fixed loans settled at 4.75 percent, a slight gain from 4.72 percent last week.
Source: The Wall Street Journal, Amy Hoak (06/18/2010)
Interest on five-year adjustable-rate mortgages averaged 3.89 percent for the week ended June 17, the lowest level since Freddie Mac began tracking the statistic in January 2005.
One-year Treasury-indexed ARMs also fell, dipping from 3.91 percent to 3.82 percent, the lowest average in more than 10 years. Also, 30-year fixed loans settled at 4.75 percent, a slight gain from 4.72 percent last week.
Source: The Wall Street Journal, Amy Hoak (06/18/2010)
Home Prices in California Jump in May
From Daily Real Estate News, June 18, 2010
Median home prices in California rose to $278,000 in May, up 20.9 percent from May 2009, according to MDA DataQuick, which tracks real estate data in the state.
Low mortgage rates and the tax credits encouraged the sales of lower- and higher-priced homes, pushing up the median price, says DataQuick President John Walsh.
Walsh cautioned that there are many homes in foreclosure that haven’t been repossessed by lenders. If lenders take control of these properties and put them on the market, those sales will have a very negative effect on prices, he says.
Source: Associated Press, Jacob Adelman (06/17/2010)
Median home prices in California rose to $278,000 in May, up 20.9 percent from May 2009, according to MDA DataQuick, which tracks real estate data in the state.
Low mortgage rates and the tax credits encouraged the sales of lower- and higher-priced homes, pushing up the median price, says DataQuick President John Walsh.
Walsh cautioned that there are many homes in foreclosure that haven’t been repossessed by lenders. If lenders take control of these properties and put them on the market, those sales will have a very negative effect on prices, he says.
Source: Associated Press, Jacob Adelman (06/17/2010)
Thursday, June 17, 2010
Consumer Sentiment Strengthens in June
U.S. consumer sentiment improved in early June to its strongest level in nearly 2-1/2 years, bolstered by hopes of better job and credit conditions, a recently released survey showed.
UCLA Economist: "Sluggish CA Recovery This Year"
California’s unemployment rate, currently at 12.4 percent, will not return to single-digit levels until 2012 and the state’s inland areas will continue to be impaired by excess housing inventory and state budget cuts, according to a forecast released Tuesday by UCLA’s Anderson School of Business.
California’s economic recovery is contingent on consumer shopping behavior nationwide, as retail spending drives traffic at California’s ports and logistics centers, which are both substantial employers throughout the state, the report said. However, consumers are unlikely to increase spending until businesses begin hiring again, which many economists believe will only happen gradually over time.
The coastal areas of the state will benefit from growth in health care, education, and technology, while inland areas will be constrained by excess housing inventory and state budget cuts, impacting rural inland areas where government workers account for a significant percentage of the workforce, according to the forecast.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently issued its mid-year housing market forecast. Based on C.A.R.’s forecast, the median home price in California is expected to rise 9.1 percent this year compared with last year, while sales of existing, single-family homes will decline 4.7 percent. Rates on 30-year, fixed-rate mortgages will rise to 5.3 percent compared with 5.1 percent in 2009 and 15-year mortgages will average 4.2 percent compared with 4.7 percent last year, according to the forecast.
California’s economic recovery is contingent on consumer shopping behavior nationwide, as retail spending drives traffic at California’s ports and logistics centers, which are both substantial employers throughout the state, the report said. However, consumers are unlikely to increase spending until businesses begin hiring again, which many economists believe will only happen gradually over time.
The coastal areas of the state will benefit from growth in health care, education, and technology, while inland areas will be constrained by excess housing inventory and state budget cuts, impacting rural inland areas where government workers account for a significant percentage of the workforce, according to the forecast.
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) recently issued its mid-year housing market forecast. Based on C.A.R.’s forecast, the median home price in California is expected to rise 9.1 percent this year compared with last year, while sales of existing, single-family homes will decline 4.7 percent. Rates on 30-year, fixed-rate mortgages will rise to 5.3 percent compared with 5.1 percent in 2009 and 15-year mortgages will average 4.2 percent compared with 4.7 percent last year, according to the forecast.
Fitch: Mortgage Mods Unlikely to Stick
From Daily Real Estate News, June 17, 2010
Most borrowers whose loans are modified under federal programs will likely default within a year, Fitch Ratings forecasts.
Among those mortgages modified without backing by a federal agency, the foreclosure rate within a year is likely to be 65 percent to 75 percent.
Fitch based its predictions on the performance of loans modified in the first quarter of 2009.
Fitch Managing Director Diane Pendley says the failure rate is likely to be high because borrowers are saddled with credit-card debt, car loans, and other obligations they can’t afford.
Source: The Wall Street Journal, James R. Hagerty (06/16/2010)
Most borrowers whose loans are modified under federal programs will likely default within a year, Fitch Ratings forecasts.
Among those mortgages modified without backing by a federal agency, the foreclosure rate within a year is likely to be 65 percent to 75 percent.
Fitch based its predictions on the performance of loans modified in the first quarter of 2009.
Fitch Managing Director Diane Pendley says the failure rate is likely to be high because borrowers are saddled with credit-card debt, car loans, and other obligations they can’t afford.
Source: The Wall Street Journal, James R. Hagerty (06/16/2010)
Senate Extends Tax Credit Closing Deadline
From Daily Real Estate News, June 17, 2010
The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.
The extension was added to a bill to pay for jobless benefits.
The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.
The measure still must be approved by the House.
Source: Associated Press, Andrew Taylor (06/16/2010)
The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.
The extension was added to a bill to pay for jobless benefits.
The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.
The measure still must be approved by the House.
Source: Associated Press, Andrew Taylor (06/16/2010)
Wednesday, June 16, 2010
Foreclosure Activity Continues to Decline in May
Foreclosure filings – notices of default, scheduled auctions, and bank repossessions – declined 3 percent in May compared with April, but increased less than 1 percent compared with the same period a year ago, RealtyTrac reported. Properties receiving a notice of default declined 7 percent in May compared with April and 22 percent compared with May 2009. Foreclosure auctions decreased 4 percent in May compared with the prior month, while bank repossessions increased 1 percent during the same period, according to the report.
California accounted for more than 22 percent of the total number of properties receiving a foreclosure notice in May, an increase of 3 percent from April, but a decrease of nearly 22 percent compared with a year ago.
The top 10 cities with declining foreclosure activity on a year-over-year basis in May included: Las Vegas, nearly 18 percent; Merced, 7 percent; Modesto, nearly 28 percent; Cape Coral-Fort Myers, Fla., nearly 19 percent; Stockton, 33 percent; Riverside-San Bernardino-Ontario, 29 percent; Bakersfield, 19 percent; Reno-Sparks, Nev., 18 percent; and Phoenix, 9 percent.
California accounted for more than 22 percent of the total number of properties receiving a foreclosure notice in May, an increase of 3 percent from April, but a decrease of nearly 22 percent compared with a year ago.
The top 10 cities with declining foreclosure activity on a year-over-year basis in May included: Las Vegas, nearly 18 percent; Merced, 7 percent; Modesto, nearly 28 percent; Cape Coral-Fort Myers, Fla., nearly 19 percent; Stockton, 33 percent; Riverside-San Bernardino-Ontario, 29 percent; Bakersfield, 19 percent; Reno-Sparks, Nev., 18 percent; and Phoenix, 9 percent.
California Consumer Confidence Rises in May
The California Composite Index of Consumer Confidence increased to 82.7 in May, slightly higher than the February reading of 81.1, according to a survey conducted by the Anderson Center for Economic Research at Chapman University. May marked the third consecutive monthly increase. An index level lower than 100 reflects a higher percentage of pessimistic consumers compared with those who are optimistic. The survey was unchanged in consumer confidence at the national level during the same time period, according to a similar survey conducted by the University of Michigan.
The index measuring consumers’ spending plans declined nearly 18 points from May to February, while the indices measuring current economic conditions and future economic conditions both increased to readings of 66 and 105.1, respectively. The index measuring consumers’ planned spending on big-ticket items decreased to 71.4, the lowest reading since the first quarter of 2009.
The index measuring consumers’ spending plans declined nearly 18 points from May to February, while the indices measuring current economic conditions and future economic conditions both increased to readings of 66 and 105.1, respectively. The index measuring consumers’ planned spending on big-ticket items decreased to 71.4, the lowest reading since the first quarter of 2009.
Mortgage Applications Rise
From Daily Real Estate News, June 16, 2010
For the first time in more than a month, the number of mortgage applications to purchase homes rose last week.
On an adjusted basis, the Mortgage Bankers Association purchase index increased 7.3 percent compared to the previous week. On an unadjusted basis it was up 17.4 percent. Compared to the same week last year, applications declined 31.3 percent.
Michael Fratantoni, MBA’s vice president of research and economics, was reluctant to declare this a trend. “While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now,” he said.
Mortgage rates were up slightly last week:
* 30-year fixed-rate mortgages increased to 4.82 percent from 4.81 percent.
* 15-year fixed-rate mortgages decreased to 4.23 percent from 4.26 percent.
* 1-year ARMs increased to 7.07 percent from 6.94 percent.
Source: Mortgage Bankers Association 06/16/2010)
For the first time in more than a month, the number of mortgage applications to purchase homes rose last week.
On an adjusted basis, the Mortgage Bankers Association purchase index increased 7.3 percent compared to the previous week. On an unadjusted basis it was up 17.4 percent. Compared to the same week last year, applications declined 31.3 percent.
Michael Fratantoni, MBA’s vice president of research and economics, was reluctant to declare this a trend. “While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now,” he said.
Mortgage rates were up slightly last week:
* 30-year fixed-rate mortgages increased to 4.82 percent from 4.81 percent.
* 15-year fixed-rate mortgages decreased to 4.23 percent from 4.26 percent.
* 1-year ARMs increased to 7.07 percent from 6.94 percent.
Source: Mortgage Bankers Association 06/16/2010)
Tuesday, June 15, 2010
O.C. Home Buying in May Fastest Since '06
From Orange County Register, June 15, 2010
DataQuick’s May homebuying report shows Orange County shoppers were at their busiest since August 2006 with 3,257 residences purchases in the month, up 22 percent from a year ago.
May Resale houses, Resale condos. New homes, All homes
Sales 2,015, 942, 300, 3,257
Year’s change +13.1%, +24.3%, +136.2%, +22.1%
Price $515,000, $305,000, $645,000, $450,000
Year’s change +8.4%, +15.7%, +21.1%, +9.8%
Median selling price was $450,000, up 9.8 percent from a year ago.
DataQuick details …
* $450,000 median selling price is 30% below June 2007’s peak of $645,000.
* The most recent median is 22% above the cyclical low hit in January 2009 at $370,000 — a current bottom that was 43% below the peak.
* Single-family homes resell for 30% less than their peak pricing (June ‘07) while condos sell 35% below their peak in March 2006.
* Builder prices for new homes are 25% below their February ‘05 top.
* Single-family homes were 69% more expensive than condos in this period vs. 80% a year ago. From 1990-2008, the average house/condo gap was 57%.
In this most recent period, O.C. shoppers bought 3,257 residences — that is +22.1% vs. year-ago buying activity. (From 1997-2006, monthly sales averaged 4,304 per month.) This was best month for new homes since December 2007. Builder’s new homes sales were 9% of all residences sold in the period vs. 5% a year ago. From 1990-2008, builders did 15% of the selling.
By region …
North O.C. homebuying up 18%
South County homebuying up 46%
Beach town homebuying up 40%
Mid-County homebuying off 1%
PS: Any excitement should be tempered by a report from Altera showing a 20 percent drop in new escrows opened since the April 30 deadline for a federal tax break for buyers. That signals the recent homebuying binge is temporary.
A little context …
MARKET TRENDS
SoCal home price up 22.5% in year
Home sales, prices up in 40 O.C. ZIPs
O.C. homebuying in May fastest since ‘06
Real estate adds 900 jobs, best in 3 years
Portola Hills homes quickest to sell
Home demand off 20% without tax break
INDUSTRY NEWS
China boom lets O.C. architects hire 5
Buy a home in 1 hour
Costa Mesa condos restart sales, again
O.C. buyers grab 56% more new homes
Big builder's best-selling homes in Irvine
O.C. builder home sales up 76%
DataQuick’s May homebuying report shows Orange County shoppers were at their busiest since August 2006 with 3,257 residences purchases in the month, up 22 percent from a year ago.
May Resale houses, Resale condos. New homes, All homes
Sales 2,015, 942, 300, 3,257
Year’s change +13.1%, +24.3%, +136.2%, +22.1%
Price $515,000, $305,000, $645,000, $450,000
Year’s change +8.4%, +15.7%, +21.1%, +9.8%
Median selling price was $450,000, up 9.8 percent from a year ago.
DataQuick details …
* $450,000 median selling price is 30% below June 2007’s peak of $645,000.
* The most recent median is 22% above the cyclical low hit in January 2009 at $370,000 — a current bottom that was 43% below the peak.
* Single-family homes resell for 30% less than their peak pricing (June ‘07) while condos sell 35% below their peak in March 2006.
* Builder prices for new homes are 25% below their February ‘05 top.
* Single-family homes were 69% more expensive than condos in this period vs. 80% a year ago. From 1990-2008, the average house/condo gap was 57%.
In this most recent period, O.C. shoppers bought 3,257 residences — that is +22.1% vs. year-ago buying activity. (From 1997-2006, monthly sales averaged 4,304 per month.) This was best month for new homes since December 2007. Builder’s new homes sales were 9% of all residences sold in the period vs. 5% a year ago. From 1990-2008, builders did 15% of the selling.
By region …
North O.C. homebuying up 18%
South County homebuying up 46%
Beach town homebuying up 40%
Mid-County homebuying off 1%
PS: Any excitement should be tempered by a report from Altera showing a 20 percent drop in new escrows opened since the April 30 deadline for a federal tax break for buyers. That signals the recent homebuying binge is temporary.
A little context …
MARKET TRENDS
SoCal home price up 22.5% in year
Home sales, prices up in 40 O.C. ZIPs
O.C. homebuying in May fastest since ‘06
Real estate adds 900 jobs, best in 3 years
Portola Hills homes quickest to sell
Home demand off 20% without tax break
INDUSTRY NEWS
China boom lets O.C. architects hire 5
Buy a home in 1 hour
Costa Mesa condos restart sales, again
O.C. buyers grab 56% more new homes
Big builder's best-selling homes in Irvine
O.C. builder home sales up 76%
Orange County Beach Town Home Buying Up 40% in May
From Orange County Register, June 15, 2010
For calendar month May – DataQuick’s latest stats — the 17 ZIPs located in beach towns communities showed …568 homes sold, that is +39.9% vs. a year ago.
The median selling price of these ZIPs was $719,000 – that is +2.4% vs. a year ago.
The beach towns ZIPs comprised 18.0% of the recent home sales in Orange county vs. 15.6% a year ago.
Elsewhere, click for details …
North O.C. homebuying up 18%
South County homebuying up 46%
Mid-County homebuying off 1%
A little geographical context …
36 ZIP codes in beach towns and inland South County communities had 1,515 homes sales. That’s up 43.7% vs. a year ago.
47 ZIP codes in mid-county and inland North County communities had 1,648 homes sales. That’s up 6.6% vs. a year ago.
Thus, the share of Orange County homes sold in mid-county and inland North County neighborhoods was 52% vs. 59% a year ago.
The ZIP-by-ZIP results for beach towns communities …
Town ZIP Price Yr. chg. Sales Yr. chg.
Corona del Mar 92625 $1,660,000 +47.6% 18 +100.0%
Dana Point 92624 $542,500 +2.4% 14 +16.7%
Dana Point 92629 $562,500 -18.5% 44 +46.7%
Huntington Beach 92646 $530,000 -1.1% 71 +42.0%
Huntington Beach 92647 $514,500 +9.5% 36 +2.9%
Huntington Beach 92648 $805,000 +15.0% 42 +0.0%
Huntington Beach 92649 $560,000 +9.6% 34 +36.0%
Laguna Beach 92651 $960,000 -8.6% 43 +53.6%
Newport Beach 92660 $1,000,000 +41.8% 41 +20.6%
Newport Beach 92661 $1,610,000 -4.6% 10 +66.7%
Newport Beach 92662 $1,917,500 +0.0% 6 +0.0%
Newport Beach 92663 $775,000 +31.9% 25 +78.6%
Newport Coast 92657 $1,900,000 +38.0% 26 +136.4%
San Clemente 92672 $550,000 +0.0% 38 +18.8%
San Clemente 92673 $622,500 -2.9% 51 +70.0%
San Juan Capistrano 92675 $450,000 +57.9% 50 +66.7%
Seal Beach 90740 $719,000 -2.8% 19 +58.3%
Total O.C.
$450,000 +9.8% 3,257 +22.1%
For calendar month May – DataQuick’s latest stats — the 17 ZIPs located in beach towns communities showed …568 homes sold, that is +39.9% vs. a year ago.
The median selling price of these ZIPs was $719,000 – that is +2.4% vs. a year ago.
The beach towns ZIPs comprised 18.0% of the recent home sales in Orange county vs. 15.6% a year ago.
Elsewhere, click for details …
North O.C. homebuying up 18%
South County homebuying up 46%
Mid-County homebuying off 1%
A little geographical context …
36 ZIP codes in beach towns and inland South County communities had 1,515 homes sales. That’s up 43.7% vs. a year ago.
47 ZIP codes in mid-county and inland North County communities had 1,648 homes sales. That’s up 6.6% vs. a year ago.
Thus, the share of Orange County homes sold in mid-county and inland North County neighborhoods was 52% vs. 59% a year ago.
The ZIP-by-ZIP results for beach towns communities …
Town ZIP Price Yr. chg. Sales Yr. chg.
Corona del Mar 92625 $1,660,000 +47.6% 18 +100.0%
Dana Point 92624 $542,500 +2.4% 14 +16.7%
Dana Point 92629 $562,500 -18.5% 44 +46.7%
Huntington Beach 92646 $530,000 -1.1% 71 +42.0%
Huntington Beach 92647 $514,500 +9.5% 36 +2.9%
Huntington Beach 92648 $805,000 +15.0% 42 +0.0%
Huntington Beach 92649 $560,000 +9.6% 34 +36.0%
Laguna Beach 92651 $960,000 -8.6% 43 +53.6%
Newport Beach 92660 $1,000,000 +41.8% 41 +20.6%
Newport Beach 92661 $1,610,000 -4.6% 10 +66.7%
Newport Beach 92662 $1,917,500 +0.0% 6 +0.0%
Newport Beach 92663 $775,000 +31.9% 25 +78.6%
Newport Coast 92657 $1,900,000 +38.0% 26 +136.4%
San Clemente 92672 $550,000 +0.0% 38 +18.8%
San Clemente 92673 $622,500 -2.9% 51 +70.0%
San Juan Capistrano 92675 $450,000 +57.9% 50 +66.7%
Seal Beach 90740 $719,000 -2.8% 19 +58.3%
Total O.C.
$450,000 +9.8% 3,257 +22.1%
Green Power
Thanks to government incentives and changing public sentiment, clean energy is the most popular kid on the green movement block. The stimulus plan poured billions into renewable energy, automakers are all but predicting electric gridlock within the next few years, and everyone who's anyone in the electric power industry is investing in the "smart grid."
If the money being thrown around is any indication, that's just the tip of the slowly melting iceberg. Cleantech Group, an industry research firm, reports venture capital investment in clean technology--including solar, biofuels, batteries and the smart grid--overtook IT and biotech for the biggest piece of the VC pie. The sector swiped 27 percent of all investment dollars in the third quarter--that's $1.6 billion.
If the money being thrown around is any indication, that's just the tip of the slowly melting iceberg. Cleantech Group, an industry research firm, reports venture capital investment in clean technology--including solar, biofuels, batteries and the smart grid--overtook IT and biotech for the biggest piece of the VC pie. The sector swiped 27 percent of all investment dollars in the third quarter--that's $1.6 billion.
Economic Turmoil = OPPORTUNITY
It's not the $700 billion bank bailout. And no, it's not the $787 billion American Recovery and Reinvestment Act of 2009. The real economic stimulus is ... wait for it ... the recession. That's right, the Great Recession. This upside-down economy is creating entrepreneurial opportunities aplenty, so long as you can deal with a situation about as stable as a lava flow.
Results from Challenger, Gray & Christmas' job market index revealed that 8.7 percent of job seekers gained employment by starting their own businesses in second quarter 2009--way, way up from the record low of 2.7 percent during the last quarter of 2008.
Even in finance, confidence and risk tolerance are on the rise. IbisWorld, an industry market research firm, expects that after a great purge, loan brokerage services will see 40 percent growth in 2010.
Results from Challenger, Gray & Christmas' job market index revealed that 8.7 percent of job seekers gained employment by starting their own businesses in second quarter 2009--way, way up from the record low of 2.7 percent during the last quarter of 2008.
Even in finance, confidence and risk tolerance are on the rise. IbisWorld, an industry market research firm, expects that after a great purge, loan brokerage services will see 40 percent growth in 2010.
Fiserv Study Says Markets Are Improving
From Daily Real Estate News, June 15, 2010
Fiserv on Monday released a report that analyzed housing financial data from fourth quarter 2009, which seemed to suggest real estate could be improving.
“Optimism that a sustainable economic recovery is underway and is driving increases in home prices across many U.S. metro areas. More and more, consumers have confidence that buying a home doesn’t mean catching a falling knife,” says David Stiff, chief economist for global financial technology firm Fiserv.
Among the conclusions of the report were:
California markets collapsed about one year before much of the rest of the U.S., creating increased affordability. Year-over-year prices are up in eight of 28 California metro areas and prices have increased from recent lows in 24 of 28 metro areas. The strongest rebounds were in coastal markets, including the Bay Area, Los Angeles, Orange County, and San Diego, where there are decreasing levels of foreclosed homes. Markets in the interior have also experienced a price bounce, mainly due to strong investor demand.
In Washington, D.C., home prices were up 5.2 percent year-over-year. Since the market bottomed in early 2009, prices in this metro area have risen more than 9 percent. Washington boasts a relatively strong local economy with 6.8 percent unemployment compared to 9.9 percent for the U.S. The earlier rapid decline in prices also substantially improved affordability.
Ohio and Michigan, two states hit hard by the recession and loss of manufacturing jobs, are seeing signs of stabilization. Housing is very affordable across metro areas in these states. There is less uncertainty about the future of the U.S. auto industry and jobs in auto and auto parts manufacturing have been increasing since December 2009.
Other markets where investor purchases of foreclosed homes have dominated housing sales are also coming back into balance. This includes metro areas such as Minneapolis, Detroit, and Memphis, where recent sales have included more regular, non-distressed homes.
Source: Fiserv (06/14/2010)
Fiserv on Monday released a report that analyzed housing financial data from fourth quarter 2009, which seemed to suggest real estate could be improving.
“Optimism that a sustainable economic recovery is underway and is driving increases in home prices across many U.S. metro areas. More and more, consumers have confidence that buying a home doesn’t mean catching a falling knife,” says David Stiff, chief economist for global financial technology firm Fiserv.
Among the conclusions of the report were:
California markets collapsed about one year before much of the rest of the U.S., creating increased affordability. Year-over-year prices are up in eight of 28 California metro areas and prices have increased from recent lows in 24 of 28 metro areas. The strongest rebounds were in coastal markets, including the Bay Area, Los Angeles, Orange County, and San Diego, where there are decreasing levels of foreclosed homes. Markets in the interior have also experienced a price bounce, mainly due to strong investor demand.
In Washington, D.C., home prices were up 5.2 percent year-over-year. Since the market bottomed in early 2009, prices in this metro area have risen more than 9 percent. Washington boasts a relatively strong local economy with 6.8 percent unemployment compared to 9.9 percent for the U.S. The earlier rapid decline in prices also substantially improved affordability.
Ohio and Michigan, two states hit hard by the recession and loss of manufacturing jobs, are seeing signs of stabilization. Housing is very affordable across metro areas in these states. There is less uncertainty about the future of the U.S. auto industry and jobs in auto and auto parts manufacturing have been increasing since December 2009.
Other markets where investor purchases of foreclosed homes have dominated housing sales are also coming back into balance. This includes metro areas such as Minneapolis, Detroit, and Memphis, where recent sales have included more regular, non-distressed homes.
Source: Fiserv (06/14/2010)
Is a Housing Shortage Coming?
From Daily Real Estate News, June 15, 2010
Some experts are saying that the next big real estate problem could be a shortage of homes.
Only 672,000 new homes were started in April. That’s less than half the number needed to meet the country’s average population growth.
In the past, an average of more than 1.3 million households have been built each year, creating demand for 1.5 million new homes. In 2009, only 398,000 new households were formed, according to the Census Bureau.
"The decline in household formation is artificial," says James Gaines, a real estate economist with Texas A&M. "The young are moving in with their parents. There's even doubling up among working-class people. There's a pent-up demand coming if and when the economy recovers."
Some economists believe this analysis fails to take into account the changing economy or the large inventory of vacant properties. But Gaines and others say these factors are unlikely to significantly drive down demand.
Source: CNNMoney.com, Les Christie (06/15/2010)
Some experts are saying that the next big real estate problem could be a shortage of homes.
Only 672,000 new homes were started in April. That’s less than half the number needed to meet the country’s average population growth.
In the past, an average of more than 1.3 million households have been built each year, creating demand for 1.5 million new homes. In 2009, only 398,000 new households were formed, according to the Census Bureau.
"The decline in household formation is artificial," says James Gaines, a real estate economist with Texas A&M. "The young are moving in with their parents. There's even doubling up among working-class people. There's a pent-up demand coming if and when the economy recovers."
Some economists believe this analysis fails to take into account the changing economy or the large inventory of vacant properties. But Gaines and others say these factors are unlikely to significantly drive down demand.
Source: CNNMoney.com, Les Christie (06/15/2010)
Top 10 Cities: Rent vs. Buy & Buy vs. Rent
Top 10 Cities to Buy vs. Rent
Interpretation Key -
Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation. Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.
Definitions: Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.
Total costs of renting include rent and renter’s insurance.
City Price-to-Rent Ratio
1. Minneapolis, Minnesota 8
2. Arlington, Texas 8
3. Miami, Florida 8
4. Fresno, California 8
5. San Antonio, Texas 8
6. Mesa, Arizona 9
7. Jacksonville, Florida 9
8. Phoenix, Arizona 10
9. El Paso, Texas 10
10. Las Vegas, Nevada 11
“At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true,” said Pete Flint, co-founder and CEO of Trulia. “Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result , these unattainable markets are so affordable it makes better financial sense to buy than rent.”
Top 10 Cities to Rent vs. Buy
City Price-to-Rent Ratio
1. New York, New York 33
2. Omaha, Nebraska 26
3. Seattle, Washington 25
4. Portland, Oregon 22
5. San Francisco, California 22
6. Oklahoma City, Oklahoma 21
7. Kansas City, Missouri 20
8. San Diego, California 20
9. Cleveland, Ohio 20
10. Dallas, Texas 19
Interpretation Key -
Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation. Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.
Definitions: Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.
Total costs of renting include rent and renter’s insurance.
City Price-to-Rent Ratio
1. Minneapolis, Minnesota 8
2. Arlington, Texas 8
3. Miami, Florida 8
4. Fresno, California 8
5. San Antonio, Texas 8
6. Mesa, Arizona 9
7. Jacksonville, Florida 9
8. Phoenix, Arizona 10
9. El Paso, Texas 10
10. Las Vegas, Nevada 11
“At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true,” said Pete Flint, co-founder and CEO of Trulia. “Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result , these unattainable markets are so affordable it makes better financial sense to buy than rent.”
Top 10 Cities to Rent vs. Buy
City Price-to-Rent Ratio
1. New York, New York 33
2. Omaha, Nebraska 26
3. Seattle, Washington 25
4. Portland, Oregon 22
5. San Francisco, California 22
6. Oklahoma City, Oklahoma 21
7. Kansas City, Missouri 20
8. San Diego, California 20
9. Cleveland, Ohio 20
10. Dallas, Texas 19
Wednesday, June 9, 2010
Many Small Banks Wary of Lending
From Daily Real Estate News, June 9, 2010
Smaller banks used to be a great source for home buyers and those looking to refinance their loan into a better deal, but with more small and regional banks facing financial problems, this resource is disappearing.
More than 700 banks are on the FDIC’s confidential “troubled bank” list, up from 50 troubled banks a few years ago.
John Dugan, U.S. Treasury’s comptroller of the currency, says that the banks that are in trouble have similar issues -- excessive concentrations in commercial real estate lending, especially construction and development lending. Smaller banks held about half of the defaulting commercial real estate loans.
Source: HousingWatch.com, Bendix Anderson (06/08/2010)
Smaller banks used to be a great source for home buyers and those looking to refinance their loan into a better deal, but with more small and regional banks facing financial problems, this resource is disappearing.
More than 700 banks are on the FDIC’s confidential “troubled bank” list, up from 50 troubled banks a few years ago.
John Dugan, U.S. Treasury’s comptroller of the currency, says that the banks that are in trouble have similar issues -- excessive concentrations in commercial real estate lending, especially construction and development lending. Smaller banks held about half of the defaulting commercial real estate loans.
Source: HousingWatch.com, Bendix Anderson (06/08/2010)
Mortgage Applications Drop, Rates Stay Low
From Daily Real Estate News, June 9, 2010
Applications for mortgages to purchase homes declined 5.7 percent last week compared to the previous week on an adjusted basis that takes into account Memorial Day, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the purchase index decreased 16.3 percent compared with the previous week and was down 30.4 percent from Memorial Day week last year. This is the fifth straight week mortgage applications have declined.
“Purchase applications are now 35 percent below their level of four weeks ago, as home buyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April,” says Michael Fratantoni, MBA’s vice president of research and economics.
Mortgage rates continue to be historically low:
* 30-year fixed-rate mortgages decreased to 4.81 percent from 4.83 percent;
* 15-year fixed-rate mortgages increased to 4.26 percent from 4.24 percent;
* 1-year ARMs decreased to 6.94 percent from 6.96 percent.
Source: Mortgage Bankers Association (06/09/2010)
Applications for mortgages to purchase homes declined 5.7 percent last week compared to the previous week on an adjusted basis that takes into account Memorial Day, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the purchase index decreased 16.3 percent compared with the previous week and was down 30.4 percent from Memorial Day week last year. This is the fifth straight week mortgage applications have declined.
“Purchase applications are now 35 percent below their level of four weeks ago, as home buyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April,” says Michael Fratantoni, MBA’s vice president of research and economics.
Mortgage rates continue to be historically low:
* 30-year fixed-rate mortgages decreased to 4.81 percent from 4.83 percent;
* 15-year fixed-rate mortgages increased to 4.26 percent from 4.24 percent;
* 1-year ARMs decreased to 6.94 percent from 6.96 percent.
Source: Mortgage Bankers Association (06/09/2010)
Lenders Warn Foreclosure May End in Lawsuit
From Daily Real Estate News, June 9, 2010
The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts.
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts.
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
Mortgage Fraud Rises: Who's at Risk?
From Daily Real Estate News, June 9, 2010
A report analyzing national mortgage fraud risk in the first quarter of 2010 says it has increased by 4 percent compared to the fourth quarter of 2009 and is up 11 percent from the first quarter a year ago.
Other findings from risk analytics company Interthinx included:
* Arizona surpassed California as the state with the highest fraud risk. Nevada, California, Florida and Michigan rounded out the top five.
* Property valuation fraud risk was the primary driver of the index.
* Identity fraud risk and employment/income fraud risk both increased 10 percent from the fourth quarter of 2009.
* Occupancy fraud risk is down by 11 percent compared to the fourth quarter of 2009, but analysts believe it may trend upward if shadow foreclosure inventory is released for sale.
Source: Interthinx (06/08/2010)
A report analyzing national mortgage fraud risk in the first quarter of 2010 says it has increased by 4 percent compared to the fourth quarter of 2009 and is up 11 percent from the first quarter a year ago.
Other findings from risk analytics company Interthinx included:
* Arizona surpassed California as the state with the highest fraud risk. Nevada, California, Florida and Michigan rounded out the top five.
* Property valuation fraud risk was the primary driver of the index.
* Identity fraud risk and employment/income fraud risk both increased 10 percent from the fourth quarter of 2009.
* Occupancy fraud risk is down by 11 percent compared to the fourth quarter of 2009, but analysts believe it may trend upward if shadow foreclosure inventory is released for sale.
Source: Interthinx (06/08/2010)
Tuesday, June 8, 2010
Bernanke Forecasts a Fitful Recovery
From Daily Real Estate News, June 8, 2010
In a June 7 question-and-answer session at the Woodrow Wilson International Center for Scholars, Federal Reserve Chairman Ben Bernanke predicted a slow economic recovery, with unemployment rates in the double digits for the near term.
He said interest rate increases likely would resume before the job market fully recovers. "Even though technically we'll be in recovery and the economy will be growing, unemployment will still be high for a while and that means that a lot of people will be under financial stress," Bernanke explained.
Source: The New York Times, Sewell Chan (06/08/10)
In a June 7 question-and-answer session at the Woodrow Wilson International Center for Scholars, Federal Reserve Chairman Ben Bernanke predicted a slow economic recovery, with unemployment rates in the double digits for the near term.
He said interest rate increases likely would resume before the job market fully recovers. "Even though technically we'll be in recovery and the economy will be growing, unemployment will still be high for a while and that means that a lot of people will be under financial stress," Bernanke explained.
Source: The New York Times, Sewell Chan (06/08/10)
How to Buy a Home in Under an Hour
From Daily Real Estate News, June 8, 2010
The next technological trend in the real estate world will be the ability to buy property in little more than an hour, predicts Pat Lashinsky, CEO of ZipRealty.
Lashinsky foresees it working something like this:
1. A home shopper drives by a property and calls a Realtor practitioner on his cell phone.
2. The Realtor practitioner qualifies the buyer through banking contacts, then sends him an electronic key that allows him to tour the home.
3. An electronic tracking system monitors his tour while the Realtor practitioner answers questions via cell phone.
4. Closing will be managed through an electronic meeting.
Lashinsky believes the real estate industry has been slow to embrace change, but customers will demand it. “Those [Realtor practitioners] who don’t make it happen are going to fall by the wayside,” he says.
Source: Orange County Register, Jeff Collins (06/08/2010)
The next technological trend in the real estate world will be the ability to buy property in little more than an hour, predicts Pat Lashinsky, CEO of ZipRealty.
Lashinsky foresees it working something like this:
1. A home shopper drives by a property and calls a Realtor practitioner on his cell phone.
2. The Realtor practitioner qualifies the buyer through banking contacts, then sends him an electronic key that allows him to tour the home.
3. An electronic tracking system monitors his tour while the Realtor practitioner answers questions via cell phone.
4. Closing will be managed through an electronic meeting.
Lashinsky believes the real estate industry has been slow to embrace change, but customers will demand it. “Those [Realtor practitioners] who don’t make it happen are going to fall by the wayside,” he says.
Source: Orange County Register, Jeff Collins (06/08/2010)
Builders Report Improving Spring Sales
From Daily Real Estate News, June 8, 2010
Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
BofA to Settle More Countrywide Charges
From Daily Real Estate News, June 8, 2010
Bank of America has agreed to pay $108 million to settle charges that Countrywide Financial Corp., which it acquired two years ago, charged large and unfair fees to borrowers facing foreclosure.
The settlement, which will refund money to about 200,000 borrowers, was announced Monday by the Federal Trade Commission.
FTC Chair Jon Leibowitz said Countrywide engaged in “callous conduct that took advantage of consumers already at the end of their financial rope.”
Source: Associated Press, Alan Zibel (06/07/2010)
Bank of America has agreed to pay $108 million to settle charges that Countrywide Financial Corp., which it acquired two years ago, charged large and unfair fees to borrowers facing foreclosure.
The settlement, which will refund money to about 200,000 borrowers, was announced Monday by the Federal Trade Commission.
FTC Chair Jon Leibowitz said Countrywide engaged in “callous conduct that took advantage of consumers already at the end of their financial rope.”
Source: Associated Press, Alan Zibel (06/07/2010)
Monday, June 7, 2010
5 U.S. Cities Where It's Cheaper to Buy Than Rent
From Huffington Post, June 8, 2010
If you're looking for a quick and easy calculation about whether you should finally buy your dream home, you'll likely want to first check out your area's price-to-rent ratio.
By comparing the average purchase price of a 2-bedroom home --including mortgage fees and maintenance expenses -- with the average rental price for 2-bedroom apartments, condos, and townhouses, Trulia calculated the price-to-rent ratio to determine whether it is better to rent or buy in a particular city.
Cities with low price-to-rent ratios (under 15) indicate that is cheaper to own a home than rent.
"At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true," said Pete Flint, co-founder and CEO of Trulia. "Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent."
Dallas, TX
Price-to-Rent Ratio: 19
Average list price: $293,767
Average rent: $1,324
San Diego, CA
Price-to-Rent Ratio: 20
Average list price: $396,409
Average rent: $1,670
Cleveland, OH
Price-to-Rent Ratio: 20
Average list price: $246,895
Average rent: $1,046
Kansas City, MO
Price-to-Rent Ratio: 20
Average list price: $240,076
Average rent: $992
Oklahoma City, OK
Price-to-Rent Ratio: 21
Average list price: $195,663
Average rent: $763
To learn more about outstanding opportunities to purchase your home or condo in San Diego or Orange County, call Tim James (909) 702-3220 or email at drtimjames@usa.net. To search the entire Southern California MLS, go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.
If you're looking for a quick and easy calculation about whether you should finally buy your dream home, you'll likely want to first check out your area's price-to-rent ratio.
By comparing the average purchase price of a 2-bedroom home --including mortgage fees and maintenance expenses -- with the average rental price for 2-bedroom apartments, condos, and townhouses, Trulia calculated the price-to-rent ratio to determine whether it is better to rent or buy in a particular city.
Cities with low price-to-rent ratios (under 15) indicate that is cheaper to own a home than rent.
"At the peak of the real estate bubble, cities like Miami, Phoenix and Las Vegas were not affordable for many. Now the opposite is true," said Pete Flint, co-founder and CEO of Trulia. "Home sellers in these hard hit areas are forced to lower their prices to compete with all the foreclosures on the market. As a result, these unattainable markets are so affordable it makes better financial sense to buy than rent."
Dallas, TX
Price-to-Rent Ratio: 19
Average list price: $293,767
Average rent: $1,324
San Diego, CA
Price-to-Rent Ratio: 20
Average list price: $396,409
Average rent: $1,670
Cleveland, OH
Price-to-Rent Ratio: 20
Average list price: $246,895
Average rent: $1,046
Kansas City, MO
Price-to-Rent Ratio: 20
Average list price: $240,076
Average rent: $992
Oklahoma City, OK
Price-to-Rent Ratio: 21
Average list price: $195,663
Average rent: $763
To learn more about outstanding opportunities to purchase your home or condo in San Diego or Orange County, call Tim James (909) 702-3220 or email at drtimjames@usa.net. To search the entire Southern California MLS, go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.
Costs of Owning Surprises Some Buyers
From Daily Real Estate News, June 7, 2010
A small survey of first-time home buyers found that more than half of the families were surprised at how expensive it was to own a home, even though 88 percent believed they had done a good estimate of the costs.
The study for BBVA Compass, a lender based in Alabama, concluded that most lenders don’t warn buyers that there will be costs beyond principal, interest, taxes, and insurance.
Among those costs are utilities. The U.S. Department of Energy reported that the typical family spends $1,900 a year – $158 per month – on things like heat, air conditioning and power.
The National Association of Home Builders calculated that the typical buyer of a new home spends about $8,640 within the first 12 months for furnishings, appliances, and home repairs and fix-ups, while the typical buyer of a resale home spends $6,540.
Source: United Feature Syndicate, Lew Sichelman (06/06/2010)
A small survey of first-time home buyers found that more than half of the families were surprised at how expensive it was to own a home, even though 88 percent believed they had done a good estimate of the costs.
The study for BBVA Compass, a lender based in Alabama, concluded that most lenders don’t warn buyers that there will be costs beyond principal, interest, taxes, and insurance.
Among those costs are utilities. The U.S. Department of Energy reported that the typical family spends $1,900 a year – $158 per month – on things like heat, air conditioning and power.
The National Association of Home Builders calculated that the typical buyer of a new home spends about $8,640 within the first 12 months for furnishings, appliances, and home repairs and fix-ups, while the typical buyer of a resale home spends $6,540.
Source: United Feature Syndicate, Lew Sichelman (06/06/2010)
Home Builder Grows Its Solar Options
From Daily Real Estate News, June 7, 2010
PulteGroup, the nation’s largest home builder, is selling homes in 10 communities that offer solar as a standard or an option, according to Walter Cuculic, the company’s director of sustainability.
“With solar more affordable than ever before, tax credits available for purchasing solar options, and the ability to roll the cost into a home mortgage, solar is a great investment for new home buyers looking to hedge against rising energy costs,” Cuculic says.
So far, all of the Pulte solar communities have been west of the Mississippi, but in June, Pulte will introduce a community in New Jersey.
Typically solar options range in price from $14,000 to $25,000, before local incentives, rebates and tax credits, says Matt Brost, general manager of new homes division for the SunPower Corp.
The typical Pulte solar customer is between the ages of 29 and 45 and committed to doing the environmentally correct thing, the company says.
Source: PulteGroup (06/04/2010)
PulteGroup, the nation’s largest home builder, is selling homes in 10 communities that offer solar as a standard or an option, according to Walter Cuculic, the company’s director of sustainability.
“With solar more affordable than ever before, tax credits available for purchasing solar options, and the ability to roll the cost into a home mortgage, solar is a great investment for new home buyers looking to hedge against rising energy costs,” Cuculic says.
So far, all of the Pulte solar communities have been west of the Mississippi, but in June, Pulte will introduce a community in New Jersey.
Typically solar options range in price from $14,000 to $25,000, before local incentives, rebates and tax credits, says Matt Brost, general manager of new homes division for the SunPower Corp.
The typical Pulte solar customer is between the ages of 29 and 45 and committed to doing the environmentally correct thing, the company says.
Source: PulteGroup (06/04/2010)
FHA Delinquencies Decline for Third Month
From Daily Real Estate News, June 7, 2010
For the third consecutive month, the number of delinquent home mortgages insured by the Federal Housing Administration has declined.
The delinquency rate is still high – 8.5 percent in April – but that is down from 9.4 percent in January.
The FHA was unwilling to applaud this as good news. "We're not declaring victory by any stretch," says David Stevens, the FHA's commissioner. "There's plenty of room for caution."
But outside analysts were more positive. "It's a very important trend to the extent that we're not continuing to get worse," says Thomas Lawler, an independent housing economist in Leesburg, Va.
Source: The Wall Street Journal, Nick Timiraos (06/07/2010)
For the third consecutive month, the number of delinquent home mortgages insured by the Federal Housing Administration has declined.
The delinquency rate is still high – 8.5 percent in April – but that is down from 9.4 percent in January.
The FHA was unwilling to applaud this as good news. "We're not declaring victory by any stretch," says David Stevens, the FHA's commissioner. "There's plenty of room for caution."
But outside analysts were more positive. "It's a very important trend to the extent that we're not continuing to get worse," says Thomas Lawler, an independent housing economist in Leesburg, Va.
Source: The Wall Street Journal, Nick Timiraos (06/07/2010)
Friday, June 4, 2010
How to Help a Family Member Buy a Home
Now we won't find any real estate in Southern California for $50,000, but the example below can be helpful. There are many ways parents or others can help a younger person make their first purchase. Call Tim James if you would like to schedule time for a consultation. Or consult your tax accountant or attorney for the best approach for your specific situation...
From Daily Real Estate News, June 4, 2010
Helping someone close to you buy a low-cost property – $50,000 or less – is a fairly straight-forward transaction, although it may require specific legal advice, says Charles Carter, an attorney and a consultant at Haint Blue Realty in Mount Pleasant, S.C.
Carter suggests that buying a property outright, using the gift exclusion ($13,000 for singles; $26,000 for married couples) to pay for a down payment and closing costs and then giving the recipient a 30-year mortgage on the remaining amount at 5 percent interest is a good way to go.
There won’t be any gift taxes. And the mortgage holder may later cancel the mortgage and gift what remains on the loan as another annual gift-tax exclusion.
Source: McClatchy-Tribune News Service, Charles Carter (06/03/2010)
From Daily Real Estate News, June 4, 2010
Helping someone close to you buy a low-cost property – $50,000 or less – is a fairly straight-forward transaction, although it may require specific legal advice, says Charles Carter, an attorney and a consultant at Haint Blue Realty in Mount Pleasant, S.C.
Carter suggests that buying a property outright, using the gift exclusion ($13,000 for singles; $26,000 for married couples) to pay for a down payment and closing costs and then giving the recipient a 30-year mortgage on the remaining amount at 5 percent interest is a good way to go.
There won’t be any gift taxes. And the mortgage holder may later cancel the mortgage and gift what remains on the loan as another annual gift-tax exclusion.
Source: McClatchy-Tribune News Service, Charles Carter (06/03/2010)
15-Year Mortgage Hits a Record Low
From Daily Real Estate News, June 4, 2010
Interest on 30-year fixed home loans averaged 4.79 percent this week -- up slightly from 4.78 percent a week ago but still near historic lows.
The average rate on 15-year fixed loans hit a record low of 4.2 percent, down from 4.21 percent; while interest on one-year adjustable-rate mortgages was unchanged at 3.95 percent, and the five-year ARM fell to 3.94 percent from 3.97 percent.
Source: Wall Street Journal (06/04/10)
Interest on 30-year fixed home loans averaged 4.79 percent this week -- up slightly from 4.78 percent a week ago but still near historic lows.
The average rate on 15-year fixed loans hit a record low of 4.2 percent, down from 4.21 percent; while interest on one-year adjustable-rate mortgages was unchanged at 3.95 percent, and the five-year ARM fell to 3.94 percent from 3.97 percent.
Source: Wall Street Journal (06/04/10)
FHA: Loan of Choice for Most Buyers
From Daily Real Estate News, June 4, 2010
The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service.
In a survey of 12,000 home shoppers, two-thirds first-time buyers – nearly 54 percent – said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons:
* 19.2 percent thought the qualification process would be easier.
* 13.5 percent said they didn’t think they could qualify for a conventional mortgage loan.
* 7.7 percent said they had bad credit.
* 5.8 percent said their income was too low to qualify for a conventional loan.
Source: Home Buying Institute (06/04/10)
The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service.
In a survey of 12,000 home shoppers, two-thirds first-time buyers – nearly 54 percent – said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons:
* 19.2 percent thought the qualification process would be easier.
* 13.5 percent said they didn’t think they could qualify for a conventional mortgage loan.
* 7.7 percent said they had bad credit.
* 5.8 percent said their income was too low to qualify for a conventional loan.
Source: Home Buying Institute (06/04/10)
Thursday, June 3, 2010
Fannie Mae Introduces HAFA Program
On Tuesday, June 1, Fannie Mae issued Servicing Guide Announcement SVC-2010-07 , introducing Fannie Mae's Home Affordable Foreclosure Alternatives (HAFA) Program. It, like Treasury's Home Affordable Foreclosure Alternatives Program (as described in Supplemental Directive 09-09 Revised ), is designed to mitigate the impact of foreclosures on borrowers who are eligible for a loan modification under the Home Affordable Modification Program (HAMP) but ultimately are unsuccessful in obtaining one.
Program Features
The Fannie Mae Home Affordable Foreclosure Alternatives Program, which becomes effective August 1, 2010, simplifies and streamlines the use of short or "preforeclosure" sale and deed-in-lieu of foreclosure (DIL) options on HAMP-eligible loans by incorporating the following unique features:
* Complements HAMP by providing alternatives for borrowers who are HAMP eligible (including borrowers facing imminent default);
* Allows the borrower to receive pre-approved short sale terms prior to the property listing;
* Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement;
* Releases the successful HAFA borrower from future liability for the debt;
* Uses standard processes, documents, and timeframes;
* Provides financial incentives to borrowers, servicers and subordinate lienholders; and
* Utilizes verified borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
For More Information
For complete program information, read the Announcement . Other related materials are available on the new HAFA page on eFannieMae.com.
Program Features
The Fannie Mae Home Affordable Foreclosure Alternatives Program, which becomes effective August 1, 2010, simplifies and streamlines the use of short or "preforeclosure" sale and deed-in-lieu of foreclosure (DIL) options on HAMP-eligible loans by incorporating the following unique features:
* Complements HAMP by providing alternatives for borrowers who are HAMP eligible (including borrowers facing imminent default);
* Allows the borrower to receive pre-approved short sale terms prior to the property listing;
* Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement;
* Releases the successful HAFA borrower from future liability for the debt;
* Uses standard processes, documents, and timeframes;
* Provides financial incentives to borrowers, servicers and subordinate lienholders; and
* Utilizes verified borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
For More Information
For complete program information, read the Announcement . Other related materials are available on the new HAFA page on eFannieMae.com.
Surge in Pending Home Sales Continues
From Daily Real Estate News, June 3, 2010...
Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.
Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”
NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.
“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.
Pending Home Sales Index by region:
* Northeast: jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
* Midwest: rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
* South: slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
* West: increased 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.
“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues."
He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.
Source: NAR
Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.
Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”
NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.
“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.
Pending Home Sales Index by region:
* Northeast: jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
* Midwest: rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
* South: slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
* West: increased 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.
“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues."
He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.
Source: NAR
BofA Rolls Out Plan to Forgive Principal
From Daily Real Estate News, June 3, 2010...
Bank of America announced Wednesday that it was rolling out a relief program for roughly 45,000 of its most troubled borrowers that would reduce mortgage principal by as much as 30 percent.
To be eligible, homeowners must have missed at least two monthly payments and owe 20 percent or more than their home is worth. Homes must have been originally financed by Countrywide Financial Corp. under specific lending programs.
The offer is a result of an agreement with state attorneys general that settles charges over high-risk loans made by Countrywide. The federal government will pay 18 percent of the forgiven principal.
Source: The Associated Press (06/02/2010)
Bank of America announced Wednesday that it was rolling out a relief program for roughly 45,000 of its most troubled borrowers that would reduce mortgage principal by as much as 30 percent.
To be eligible, homeowners must have missed at least two monthly payments and owe 20 percent or more than their home is worth. Homes must have been originally financed by Countrywide Financial Corp. under specific lending programs.
The offer is a result of an agreement with state attorneys general that settles charges over high-risk loans made by Countrywide. The federal government will pay 18 percent of the forgiven principal.
Source: The Associated Press (06/02/2010)
Salaries or Hourly Wages vs. Commission Income
During the recession, some companies changed staffers from salaries or hourly wages to commission-based. This can make financing a home more difficult as most lenders do not include commission income when evaluating a borrower’s eligibility for a home loan, unless the borrower has been earning commissions for at least two years.
Housing vs. Debt to Income Ratios - Keep LOW AS POSSIBLE
When applying for a home loan, one of the factors lenders consider is the percent of the borrower’s income used for housing expenses, as well as the borrower’s other non-housing related debt. Although this amount can vary by lender, typically lenders consider a housing-and-debt to income ratio of less than 40 percent as ideal.
Back in the 1970s and 1980s, a far more conservative housing-and debt to income ratio of 25% to 29% was considered normal.
These days, I believe we've seen the wisdom in keeping cost of housing as low as possible. Please don't get over-extended. In a falling or stagnant economy, it's not worth the risk!
Back in the 1970s and 1980s, a far more conservative housing-and debt to income ratio of 25% to 29% was considered normal.
These days, I believe we've seen the wisdom in keeping cost of housing as low as possible. Please don't get over-extended. In a falling or stagnant economy, it's not worth the risk!
Should San Diegans Buy, Refinance or Wait?
From San Diego Union-Tribune...
With mortgage rates again nearing their 50-year low, would-be San Diego County buyers and homeowners have to make a choice:
* Buy or refinance now and lock in the rate;
* Wait and hope rates sink even lower, as some economists are predicting;
* Or watch rates rise to as much as 5.5 percent, as other economists predict, and make up the difference by an expected 5 percent dip in home prices.
The issue arose Thursday, as Freddie Mac’s weekly Primary Mortgage Market Survey showed the average rate for a 30-year, fixed-rate loan at 4.78 percent, down from 4.84 percent last week and the lowest since the 50-year low of 4.71 percent in December. Rates and fees vary by region and lender.
“Strike now,” said Gary McBride, Bankrate’s senior analyst. “If they move quickly against you, it just takes money right out of your pocket.”
San Diego mortgage broker Ed Smith, president of the California Mortgage Brokers Association, said refinancing now makes sense for owners whose loan-to-value (LTV) ratio is no more than 80 percent, for example a loan of no more than $250,000 on a home valued at $312,500.
“I will strongly encourage them to move forward if they could, “ he said. If the LTV is between 80 percent and 125 percent, various government and lender programs offer some refinancing options. If the LTV is greater than 125 percent, “they’re definitely in a pickle,” Smith said.
With mortgage rates again nearing their 50-year low, would-be San Diego County buyers and homeowners have to make a choice:
* Buy or refinance now and lock in the rate;
* Wait and hope rates sink even lower, as some economists are predicting;
* Or watch rates rise to as much as 5.5 percent, as other economists predict, and make up the difference by an expected 5 percent dip in home prices.
The issue arose Thursday, as Freddie Mac’s weekly Primary Mortgage Market Survey showed the average rate for a 30-year, fixed-rate loan at 4.78 percent, down from 4.84 percent last week and the lowest since the 50-year low of 4.71 percent in December. Rates and fees vary by region and lender.
“Strike now,” said Gary McBride, Bankrate’s senior analyst. “If they move quickly against you, it just takes money right out of your pocket.”
San Diego mortgage broker Ed Smith, president of the California Mortgage Brokers Association, said refinancing now makes sense for owners whose loan-to-value (LTV) ratio is no more than 80 percent, for example a loan of no more than $250,000 on a home valued at $312,500.
“I will strongly encourage them to move forward if they could, “ he said. If the LTV is between 80 percent and 125 percent, various government and lender programs offer some refinancing options. If the LTV is greater than 125 percent, “they’re definitely in a pickle,” Smith said.
Want a Loan Modification? Get Your Paperwork Ready.
From CNN Money...
Attention delinquent borrowers: If you want to get into the Obama administration's mortgage modification program, you'd better have your paperwork ready.
New Treasury Department guidelines go into effect on June 1 that will require loan servicers to verify applicants' income and financial hardship before placing them into trial modifications.
This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you're more likely to get long-term assistance, providing you send in your check on time.
"This will allow people to have more certainty that the modification they want will materialize," said Suzanne Boas, president of CredAbility, formerly the Consumer Credit Counseling Service of Greater Atlanta.
Of the 1.2 million people who've started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn't send in timely payments, hand in the required documents or meet the eligibility criteria.
Paperwork has caused all sorts of problems for the president's signature foreclosure rescue program. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program.
Attention delinquent borrowers: If you want to get into the Obama administration's mortgage modification program, you'd better have your paperwork ready.
New Treasury Department guidelines go into effect on June 1 that will require loan servicers to verify applicants' income and financial hardship before placing them into trial modifications.
This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you're more likely to get long-term assistance, providing you send in your check on time.
"This will allow people to have more certainty that the modification they want will materialize," said Suzanne Boas, president of CredAbility, formerly the Consumer Credit Counseling Service of Greater Atlanta.
Of the 1.2 million people who've started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn't send in timely payments, hand in the required documents or meet the eligibility criteria.
Paperwork has caused all sorts of problems for the president's signature foreclosure rescue program. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program.
Luxury Sales Bounce Back
From Wall Street Journal...
After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation's most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.
That sales are up from last year shouldn't come as a big surprise. The shock of the financial panic in the fall of 2008 left many potential buyers too nervous to bid, and those who were willing to wade in found it hard to get financing. But a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.
After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation's most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.
That sales are up from last year shouldn't come as a big surprise. The shock of the financial panic in the fall of 2008 left many potential buyers too nervous to bid, and those who were willing to wade in found it hard to get financing. But a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.
Private Mortgage Insurance Easier to Obtain
From New York Times...
WITH private mortgage insurance considerably tougher to get last year than at any point in decades, many borrowers flocked to loans insured by the Federal Housing Administration.
They had little choice. Lenders typically will not offer mortgages to borrowers with down payments below 20 percent, unless the borrowers get insurance to indemnify the lender in the event of a default. And the federal government was the only entity willing to back many of these borrowers during the housing market slump.
Now private mortgage insurance, or P.M.I., could be making a comeback. Some mortgage insurance companies like Genworth Financial and Radian Guaranty have been easing underwriting standards — sometimes eliminating geographic restrictions, in the case of Genworth, for instance, and offering insurance to some borrowers with down payments of as little as 5 percent.
Rohit Gupta, the chief commercial officer for Genworth’s domestic mortgage insurance business, attributed the relaxed standards to a more stable housing market, along with improved financial conditions for the nation’s major mortgage insurance companies.
Yet while availability is improving, industrywide premiums remain at the elevated levels they reached in 2008. For a loan of $417,000, for example, borrowers now pay an average of 0.62 percent of the loan amount, or $215.45 a month, according to Mr. Gupta and other industry executives. Before 2008, the rate would have been 0.52 percent, or $180.70, they said.
Larger loans typically incur even larger premiums, while at the same time some insurers may require higher credit scores from borrowers in areas with declining property values. MGIC, for instance, offers insurance to Long Island borrowers with FICO scores of at least 720 for loans of $417,000 or less.
Oftentimes, monthly payments on loans with private mortgage insurance exceed payment amounts on F.H.A. mortgages, even though the agency charges a one-time fee of 2.25 percent of the loan amount in addition to monthly premiums of about 0.50 percent.
For a $500,000 loan in Manhattan, for instance, a borrower with a 720 credit score would face monthly payments of $2,995 with a 30-year fixed-rate loan insured by the F.H.A., and carrying a 5.5 percent interest rate, said Marc Demetriou, the manager of the Bloomingdale, N.J., branch of Residential Home Funding, a mortgage banker.
With private mortgage insurance instead of F.H.A. insurance, the same borrower would face a total monthly payment of at least $2,968, Mr. Demetriou said.
Yet if you can qualify for both an F.H.A. loan and a loan carrying private mortgage insurance, other factors can help sway your decision against an F.H.A.-insured mortgage.
Mr. Demetriou, who is also licensed to offer F.H.A.-insured loans, says borrowers who opt for private insurance save roughly $11,250 in up-front F.H.A. fees on a $500,000 loan. They can drop their private mortgage insurance coverage when they reach 20 percent equity in their homes, either through paying down the principal or home price appreciation. The F.H.A. requires premium payments for five years, regardless.
Some lenders will also consider paying the mortgage insurance on the borrower’s behalf if the borrower agrees to an interest rate a quarter of a percentage point higher. That arrangement, known as lender-paid mortgage insurance, can halve the monthly premium costs, said Michael Dziuba, the senior vice president for field sales of Radian Guaranty.
The F.H.A., however, may be the only option for borrowers with credit scores below 680, or down payments under 5 percent.
Not all mortgage insurance is the same, meanwhile. Genworth says it will cover the payments of unemployed borrowers for up to six months, at a maximum of $2,000 monthly. So it is worth shopping around.
WITH private mortgage insurance considerably tougher to get last year than at any point in decades, many borrowers flocked to loans insured by the Federal Housing Administration.
They had little choice. Lenders typically will not offer mortgages to borrowers with down payments below 20 percent, unless the borrowers get insurance to indemnify the lender in the event of a default. And the federal government was the only entity willing to back many of these borrowers during the housing market slump.
Now private mortgage insurance, or P.M.I., could be making a comeback. Some mortgage insurance companies like Genworth Financial and Radian Guaranty have been easing underwriting standards — sometimes eliminating geographic restrictions, in the case of Genworth, for instance, and offering insurance to some borrowers with down payments of as little as 5 percent.
Rohit Gupta, the chief commercial officer for Genworth’s domestic mortgage insurance business, attributed the relaxed standards to a more stable housing market, along with improved financial conditions for the nation’s major mortgage insurance companies.
Yet while availability is improving, industrywide premiums remain at the elevated levels they reached in 2008. For a loan of $417,000, for example, borrowers now pay an average of 0.62 percent of the loan amount, or $215.45 a month, according to Mr. Gupta and other industry executives. Before 2008, the rate would have been 0.52 percent, or $180.70, they said.
Larger loans typically incur even larger premiums, while at the same time some insurers may require higher credit scores from borrowers in areas with declining property values. MGIC, for instance, offers insurance to Long Island borrowers with FICO scores of at least 720 for loans of $417,000 or less.
Oftentimes, monthly payments on loans with private mortgage insurance exceed payment amounts on F.H.A. mortgages, even though the agency charges a one-time fee of 2.25 percent of the loan amount in addition to monthly premiums of about 0.50 percent.
For a $500,000 loan in Manhattan, for instance, a borrower with a 720 credit score would face monthly payments of $2,995 with a 30-year fixed-rate loan insured by the F.H.A., and carrying a 5.5 percent interest rate, said Marc Demetriou, the manager of the Bloomingdale, N.J., branch of Residential Home Funding, a mortgage banker.
With private mortgage insurance instead of F.H.A. insurance, the same borrower would face a total monthly payment of at least $2,968, Mr. Demetriou said.
Yet if you can qualify for both an F.H.A. loan and a loan carrying private mortgage insurance, other factors can help sway your decision against an F.H.A.-insured mortgage.
Mr. Demetriou, who is also licensed to offer F.H.A.-insured loans, says borrowers who opt for private insurance save roughly $11,250 in up-front F.H.A. fees on a $500,000 loan. They can drop their private mortgage insurance coverage when they reach 20 percent equity in their homes, either through paying down the principal or home price appreciation. The F.H.A. requires premium payments for five years, regardless.
Some lenders will also consider paying the mortgage insurance on the borrower’s behalf if the borrower agrees to an interest rate a quarter of a percentage point higher. That arrangement, known as lender-paid mortgage insurance, can halve the monthly premium costs, said Michael Dziuba, the senior vice president for field sales of Radian Guaranty.
The F.H.A., however, may be the only option for borrowers with credit scores below 680, or down payments under 5 percent.
Not all mortgage insurance is the same, meanwhile. Genworth says it will cover the payments of unemployed borrowers for up to six months, at a maximum of $2,000 monthly. So it is worth shopping around.
Seller Concession Rules for FHA Mortgages to be Changed Soon
From Los Angeles Times...
Sometime this summer, the Federal Housing Administration plans to slash maximum "seller concessions" from 6% of the home price to 3%. Seller concession rules allow buyers to look to the property seller to pay for a variety of services and taxes connected with the transaction — loan origination and local transfer fees, appraisals, inspections, closing and escrow costs among others — though not the down payment.
Say you're buying a $200,000 house. If you are using FHA financing under current rules, you can structure the contract so that the seller agrees to pay all closing costs and even some repairs the house needs at closing, up to 6% of the price or $12,000. On a $400,000 house, allowable concessions go to $24,000. That's huge, especially if you have to struggle to come up with a 3.5% down payment and you're not sure where you'll find the closing and repair money.
Contrast that with using Fannie Mae or Freddie Mac conventional financing, where seller concessions generally are limited to 3%. For many buyers, the extra negotiating flexibility built into the FHA program makes the choice between programs a no-brainer.
When FHA officials announced the policy change this year, they said the long-standing 6% maximum "exposes the FHA to excess risk by creating incentives to inflate appraised value." That would occur when sellers agree to pay buyers' closing and other expenses but merely tack those costs onto the final sale price of the house. Rather than agreeing to a $200,000 price as in the example above, with $12,000 worth of concessions, the final contract price of the house would instead be $212,000.
If an appraiser did not detect and report the price boost, the FHA would effectively be insuring a mortgage on a house worth less than the sales price. In fact, since the rules allowed a 6% seller concession and the down payment was just 3.5%, the FHA would be insuring an underwater loan from the start.
To limit further possible losses, FHA decided to cut the concessions limit in half.
Sometime this summer, the Federal Housing Administration plans to slash maximum "seller concessions" from 6% of the home price to 3%. Seller concession rules allow buyers to look to the property seller to pay for a variety of services and taxes connected with the transaction — loan origination and local transfer fees, appraisals, inspections, closing and escrow costs among others — though not the down payment.
Say you're buying a $200,000 house. If you are using FHA financing under current rules, you can structure the contract so that the seller agrees to pay all closing costs and even some repairs the house needs at closing, up to 6% of the price or $12,000. On a $400,000 house, allowable concessions go to $24,000. That's huge, especially if you have to struggle to come up with a 3.5% down payment and you're not sure where you'll find the closing and repair money.
Contrast that with using Fannie Mae or Freddie Mac conventional financing, where seller concessions generally are limited to 3%. For many buyers, the extra negotiating flexibility built into the FHA program makes the choice between programs a no-brainer.
When FHA officials announced the policy change this year, they said the long-standing 6% maximum "exposes the FHA to excess risk by creating incentives to inflate appraised value." That would occur when sellers agree to pay buyers' closing and other expenses but merely tack those costs onto the final sale price of the house. Rather than agreeing to a $200,000 price as in the example above, with $12,000 worth of concessions, the final contract price of the house would instead be $212,000.
If an appraiser did not detect and report the price boost, the FHA would effectively be insuring a mortgage on a house worth less than the sales price. In fact, since the rules allowed a 6% seller concession and the down payment was just 3.5%, the FHA would be insuring an underwater loan from the start.
To limit further possible losses, FHA decided to cut the concessions limit in half.
After foreclosure: How long until you can buy again?
From CNN Money, June 3, 2010...
Financing a home after foreclosure is possible for most homeowners. Those who default on their mortgages due to economic hardships, such as job loss, may receive approval for another mortgage in as little as two years, while it may take more than seven years for strategic defaulters to be approved.
KEEP THIS IN MIND
• Lenders utilize several methods in determining whether to grant mortgages, including the amount of money borrowers have saved; employment histories; and payment history.
• According to the chief economist with the Mortgage Bankers Association, lenders may be more willing to finance a mortgage for a borrower who defaulted on their mortgage as a result of factors beyond their control.
• Some homeowners who strategically default—intentionally not meet their mortgage obligations although they have the financial means to do so—assume they can raise their FICO scores by paying their others bills on time. However, most future loan underwriters will scrutinize their records very closely, and if they determine the borrower strategically defaulted on their previous mortgage, the repaired credit score will not overshadow the walkaway.
• Although not impossible for strategic defaulters to finance another home purchase, it likely will be more difficult. Lenders may ask for down payments of 30 percent or more to provide sufficient collateral to enable the bank to recoup most of its money in a foreclosure. These borrowers also may be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.
For further information on this subject, or to learn more about the local markets in San Diego and Orange County, email Tim James - drtimjames@usa.net - or go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.
Financing a home after foreclosure is possible for most homeowners. Those who default on their mortgages due to economic hardships, such as job loss, may receive approval for another mortgage in as little as two years, while it may take more than seven years for strategic defaulters to be approved.
KEEP THIS IN MIND
• Lenders utilize several methods in determining whether to grant mortgages, including the amount of money borrowers have saved; employment histories; and payment history.
• According to the chief economist with the Mortgage Bankers Association, lenders may be more willing to finance a mortgage for a borrower who defaulted on their mortgage as a result of factors beyond their control.
• Some homeowners who strategically default—intentionally not meet their mortgage obligations although they have the financial means to do so—assume they can raise their FICO scores by paying their others bills on time. However, most future loan underwriters will scrutinize their records very closely, and if they determine the borrower strategically defaulted on their previous mortgage, the repaired credit score will not overshadow the walkaway.
• Although not impossible for strategic defaulters to finance another home purchase, it likely will be more difficult. Lenders may ask for down payments of 30 percent or more to provide sufficient collateral to enable the bank to recoup most of its money in a foreclosure. These borrowers also may be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.
For further information on this subject, or to learn more about the local markets in San Diego and Orange County, email Tim James - drtimjames@usa.net - or go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/.
Wednesday, June 2, 2010
C.A.R. Green Tip of the Week: Pool Loss
Install a pool or spa cover and save 30 gallons of water daily instead of losing the water to evaporation and filter backwash.
For more green real-estate-related tips and discussion, visit C.A.R.’s green blog ( http://blogs.car.org/) and C.A.R.’s Green Web site ( http://green.car.org.)
For more green real-estate-related tips and discussion, visit C.A.R.’s green blog ( http://blogs.car.org/) and C.A.R.’s Green Web site ( http://green.car.org.)
Fast Facts: California Median Home Prices & Mortgage Rates
Calif. median home price: April 2010: $306,230 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 2010: Santa Barbara So. Coast $879,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 2010: High Desert $127,300 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First quarter 2010: 66 percent (Source: C.A.R.)
Mortgage rates: Week ending 5/27/2010
* 30-yr. fixed: 4.78 Fees/points: 0.7%
* 15-yr. fixed: 4.21% Fees/points: 0.7%
* 1-yr. adjustable: 3.95% Fees/points: 0.6%
(Source: Freddie Mac)
Calif. highest median home price by C.A.R. region April 2010: Santa Barbara So. Coast $879,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 2010: High Desert $127,300 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First quarter 2010: 66 percent (Source: C.A.R.)
Mortgage rates: Week ending 5/27/2010
* 30-yr. fixed: 4.78 Fees/points: 0.7%
* 15-yr. fixed: 4.21% Fees/points: 0.7%
* 1-yr. adjustable: 3.95% Fees/points: 0.6%
(Source: Freddie Mac)
Home Prices Nationwide Decline 1.1% in First Quarter
From C.A.R....
Home prices nationwide registered a 1.1 percent decline in the first quarter of 2010 compared with the first quarter of 2009, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series. The Index was down 2.1 percent compared with the fourth quarter. The CMHPI Purchase-Only Series includes only property values based on home purchases with a conventional mortgage in its calculation.
Regionally, the Pacific Division, which includes California, decreased 2 percent in the first quarter of 2010. Over the last 12 months, home values increased 4.5 percent, and during the last five years, home values have decreased 13.2 percent, according to the CMHPI.
For additional information on this subject, contact Tim James. And remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
Home prices nationwide registered a 1.1 percent decline in the first quarter of 2010 compared with the first quarter of 2009, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series. The Index was down 2.1 percent compared with the fourth quarter. The CMHPI Purchase-Only Series includes only property values based on home purchases with a conventional mortgage in its calculation.
Regionally, the Pacific Division, which includes California, decreased 2 percent in the first quarter of 2010. Over the last 12 months, home values increased 4.5 percent, and during the last five years, home values have decreased 13.2 percent, according to the CMHPI.
For additional information on this subject, contact Tim James. And remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
C.A.R. Launches Free Foreclosure Prevention Library
From California Association of Realtors...
To address current housing market conditions, C.A.R. is offering its members a new free member benefit—access to C.A.R.’s new Foreclosure Prevention Library. The library consists of 10 short, add-on documents explaining how homeowners can avoid foreclosure and foreclosure scams.
The Foreclosure Prevention Library consists of the following add-on documents: Proposition 8 - Property Tax Relief; Tips for a Short Sale Seller; Tips for a Short Sale Buyer; Foreclosure or Short Sale; Foreclosure Prevention Resources; Short Sale Process; Foreclosure Timeline; Homeowner Liability After Foreclosure; Avoiding Foreclosure Scams; and Alternatives to Foreclosure.
For additional information on this subject, contact Tim James. And remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
To address current housing market conditions, C.A.R. is offering its members a new free member benefit—access to C.A.R.’s new Foreclosure Prevention Library. The library consists of 10 short, add-on documents explaining how homeowners can avoid foreclosure and foreclosure scams.
The Foreclosure Prevention Library consists of the following add-on documents: Proposition 8 - Property Tax Relief; Tips for a Short Sale Seller; Tips for a Short Sale Buyer; Foreclosure or Short Sale; Foreclosure Prevention Resources; Short Sale Process; Foreclosure Timeline; Homeowner Liability After Foreclosure; Avoiding Foreclosure Scams; and Alternatives to Foreclosure.
For additional information on this subject, contact Tim James. And remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
Tuesday, June 1, 2010
Owners in Default Stay in Homes Anyway
From Daily Real Estate News June 1, 2010
An increasing number of home owners in foreclosure continue to live in their homes, mostly ignoring the foreclosure action and refusing to pay anything.
The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.
In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.
Source: The New York Times, David Streitfeld (05/31/2010)
Remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
An increasing number of home owners in foreclosure continue to live in their homes, mostly ignoring the foreclosure action and refusing to pay anything.
The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.
In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.
Source: The New York Times, David Streitfeld (05/31/2010)
Remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com/.
Vacation Rental Market Continues to Improve
From Daily Real Estate News June 1, 2010
The vacation rental market has improved this year compared to 2009."Some companies have reported advanced bookings have increased as much as 60 percent to 80 percent over last season," said Alex Risser, president of the Vacation Rental Managers Association, which manages 150,000 vacation rentals.
Increasing demand doesn’t mean that potential renters are willing to settle for less than ideal properties. “It’s still a tenant market in rentals,” says Theresa Smith, director of vacation rentals for Kinlin Grover GMAC’s Vacation Rentals on Cape Cod.
Source: The Wall Street Journal, Brittany Hutson (05/28/2010)
Remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com.
The vacation rental market has improved this year compared to 2009."Some companies have reported advanced bookings have increased as much as 60 percent to 80 percent over last season," said Alex Risser, president of the Vacation Rental Managers Association, which manages 150,000 vacation rentals.
Increasing demand doesn’t mean that potential renters are willing to settle for less than ideal properties. “It’s still a tenant market in rentals,” says Theresa Smith, director of vacation rentals for Kinlin Grover GMAC’s Vacation Rentals on Cape Cod.
Source: The Wall Street Journal, Brittany Hutson (05/28/2010)
Remember: For information about condos or homes currently for sale in San Diego and Orange County go to http://www.homejames-sandiego.com/ or http://www.homejames-orangecounty.com/. And for additional information, be sure to see http://www.invest-in-california-property.com.
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