Your So.Cal. Real Estate Destination

FHA 90-DAY HOLDING PERIOD WAIVED ...

2010-01-19T11:23:00.000-08:00

Effective February 1, 2010 the Department of Housing and Urban Development (“HUD”) Act under 24 CFR x203.37a(b)(2) is waived for a period of one-year from this date (February 1, 2010). HUD’s change in policy will now allow an owner to resell a property without any ‘holding’ period subsequent to the original purchase (which under 24 CFR x203.37a(b)(2) was 90 days), subject to certain conditions. Prior to this modification, the Act required that a mortgage for a property was not eligible for FHA insurance, if the contract of sale for the purchase of the property was executed within 90-days of the prior acquisition by the seller and the seller does not come under any of the specific exemptions that apply to the rule.

The intent of this temporary waiver for eligible properties is to help address the growing foreclosure crisis by encouraging more investor sales or ‘flips’. Specifically mentioned in the HUD determinations is that waiving the 90-day restriction for buyers will “help facilitate the return of repaired and habitable properties to the market in a timely fashion, additional exemptions to this resale restriction period must be granted for the purchase of properties by investors. This policy change will help to sell properties that may otherwise remain vacant for up to 90 days, while offering affordable housing options to buyers wishing to use FHA-insured financing.”

The waiver of the Act is subject to three primary conditions containing several subparts. Assuming that these conditions are satisfied, an investor may purchase a property and resell it to a new buyer (assuming no collusion and ‘arms-length’ sale) immediately without any holding period. Investors, as well as lenders, need to familiarize themselves with the amended Act and its conditions because they require several steps be followed if certain market conditions exist in the subsequent sale. See the HUD Policy Act for more details.

This policy change has been discussed and encouraged by several real estate industry associations and boards due to its restrictive effect on investment transactions (aka ‘flips’). In effect this policy discouraged investors purchasing SFR for ‘flips’ because the new buyer would not be able to secure federally insured loans for the property until after the 90-day holding period expired. Simply put … this policy seemed to be a knee jerk reaction to a certain market segment. Penalizing investors for purchasing distressed properties, rehabbing the homes, and selling them to new buyers makes little sense; unless the intent was to restrict this segment of the market. Was there abuse in the market … sure … but to severely curtail most ‘flip’ opportunities because of the acts of a few seems to be counter-intuitive in this market. Hopefully when the anniversary date of the waiver approaches policymakers will recognize the flaw in the initial Act, and elect to permanently extend the waiver.

I appreciate any opportunity to serve as your realtor of choice, if you or someone you know is thinking about buying or selling real estate. Let me know how I can be of service to you by either contacting me via email at jim@peys.net or visit us at www.coastalcommunityhomes.com. Thank you!! Jim Peys

The Real Deal ... Long Beach Housing Stats ...

2009-11-22T12:56:00.000-08:00

Who are we to believe these days? Some pundits say the market is in the tank; while the government is trying to convince us that we have seen the bottom and are climbing back. Well maybe the market is neither spiraling out of control nor has it bottomed out. Consider for the moment these housing statistics generated by Altos Research who tracks all California housing activity as well as selected cities throughout the Country.

Long Beach statistics as of November 22, 2009:

Median Single Family Home Price: $387,623
Market Action Index: 20.32 (denotes a buyer's market)
Average Days on Market: 169 days
Median Price Per Sq.Ft.: $279/sq.ft.
Housing Inventory: 986 properties on the market

These numbers would be meaningless unless you plot the trends. Median prices in Long Beach have steadly increased since March, 2009 (from a low of $330,000 median price). Currently the trend lines are flat which suggests that prices are leveling out at this moment (consider inventory levels and selling season being the holidays). The Market Action Index illustrates the balance between supply and demand - the closer the number goes over 30 suggests a seller's market. After rising dramatically in July, 2009 the number is decreasing slightly over the past thirty days. Average days on market is currently trending down - meaning it is taking less time to market and close transactions. Inventory levels are slightly moving upward over the past couple of weeks.

In summary the market seems to be taking a time out after a late summer of increased activity. This is consistent to the time of year. If you are considering buying or selling, consider me as your realtor of choice. Let me know how I can be of service to you by either contacting me via email at jim@peys.net or visit us at www.coastalcommunityhomes.com. Thank you!! Jim Peys

MYSOCALTV MEDIA PLATFORM …

2009-11-22T10:25:00.000-08:00

I have been on the road helping local Long Beach businesses create video content about their business and the markets they serve. The Long Beach Business Professionals Association which consists of approximately seventy (70) local businesses are helping create a media platform that will eventually consist of hundreds of channels. Each channel will serve a micro-market or niche consisting of communities that are formed based upon interests, geographic locations, businesses, community services, etc. Each separate channel (envision a TV channels on your cable box) will consist of videos, written blogs, and audio content that delivers relevant, timely, and quality information, news, entertainment and other material. The goal is to serve the needs of people who participate in our online communities via these channels. The media platform members will be encouraged to add content relevant to their channel (or niche) and ultimately enable conversations within the channel.

This media platform will be an ongoing project over the several few months. A work in process is turning into an interesting project because it affords me the opportunity to interview different residents, businesses and communities in the Long Beach area. So be on the watch for “MySoCalTv” which will be the media platform consisting of hundreds of interesting channels. Our goal is to serve the needs of the Long Beach area by delivering relevant, timely and informative news, entertainment, opportunities and community announcements to our members. This media platform will be FREE to our members.

So if you are interested in providing quality content about a niche community within the Long Beach, California area please contact me at jim@peys.net. We are actively looking for video, written and audio content that will deliver content to your community. I hope to hear from you! Additionally, I am interested in your feedback, insights and comments.

In the meantime, if I can be of service to you (or any of your friends) regarding your real estate needs, please feel free to contact via email (jim@peys.net) or visit us at www.coastalcommunityhomes.com. I would love to be of service to you or someone you know!! Jim Peys

WHERE IS THE REAL ESTATE MARKET HEADED …

2009-11-09T05:15:00.000-08:00

Many people ask where is the real estate market headed, and have we bottomed out? If you bother tracking national news outlets they are divided as to the real estate market’s direction. Some are predicting that real estate is driving a slight national economic recovery; meanwhile other people are blogging about another reality. Who are we to believe? Unfortunately I don’t have a crystal ball, but based upon the insights of a few sources and a look at the local MLS statistics a few trends are noticeable. What we don’t know is if these trends are sustainable, and if so, for how long will these trends or factors impact the direction of the market.

A few factors to watch include the status of foreclosures (why … because a flood of foreclosures on the market tend to pull the market prices downward); Federal stimulus package changes (whether these policies really benefit the broader market is arguable; however the perception of these changes does cause market shifts); unemployment rates (locally and nationally will affect people’s ability to purchase and keep their homes); and longer term mortgage interest rates.

Before you can plot future trends you might want to understand where the market is currently. The following are a few relevant residential market data points on Long Beach (source – So.Cal MLS). The snap-shot (time period) for this information is taken between October 1^st through November 5th:

Number of closed transactions: 220

Number of pending transactions: 143

Number of active listings: 528

Average days on market: 61

Inventory (measured in months): 8.65

Foreclosures (set for auction): 99

What do these numbers suggest? Typically when the inventory turn-over is less than 10 months that evidences a low inventory of product on the market, and a seller’s market. I would hardly call this a seller’s market; however the low inventory has helped stabilize the market and the price free fall that has occurred since 2007. If inventory continues to be tight and if interest rates continue to be low along with the buyer’s incentive through April 30^th ($8,000) then we might see prices level out or even rise in a few micro-markets. This runs contrary to recent reports predicting a ten percent (10%) erosion in prices in 2010.

What are the key indicators to watch over the next six months that will affect the real estate market? A large influx of foreclosures and short sales on the market. This will drag prices downward. The other two major drivers will be national and regional unemployment rates – high unemployment will jeopardize people’s ability to afford mortgages; and thus create more mortgage defaults. The last market driver will be the status of interest rates. There are rumors that the Feds will raise interest rates to prevent inflationary fears in 2010. Although, interest rates probably will stay at historic lows, don’t be surprised if rates go higher after the first of the year.

The best advice I have read lately recommends that investors and buyers pay attention to local market fundamentals AND to continue looking for ‘real value’ not ‘perceived value’ or hype. And as always, real estate is all about location, location, location and price. So if you or someone you know is considering buying or selling real estate in the next 30-60-90 days, please contact me at jim@peys.net or just visit us at http://www.coastalcommunityhomes.com. I would love to be of service to you!! Jim Peys

Another Perspective On Social Media

2009-11-07T16:16:00.000-08:00

Everyone is trying to understand the role of social media. Is it real ... its role ... how do you monetize the media ... how does it add value in your business. Many successful realtors and business people are quick to dismiss it. My gut tells me that social media is more than a noisy platform for the curious but something real, tangible and is where we all will end up at the end of the day. This will be the medium from which businesses engage in a conversation with people ... they listen and glean what it is people want.

I am interested in your feedback. Let me know what you think. How does social media impact your real estate and investment choices? In between thinking about this question, check out this video by Gary Vaynerchuk. Food for thought ...

I tend to agree with Gary's perspective. Social media is the business of doing business by engaging in a conversation with our friends, prospects and clients. It is about being interested AND not just interesting. About listening to what other people want and need. Just a thought!

If you or anyone you know is thinking about buying or selling real estate, let me know. I would love to help you. In the meantime, thank you for your input and consideration. Jim Peys

Real Estate Auctions ... Real Opportunity ...

2009-11-04T16:16:00.000-08:00

Have you ever watched a real estate foreclosure auction? If you have attended a public real estate auction at the County you probably noticed a few (in Los Angeles) buyers with headsets walking between the 'criers' tracking several properties. They seem comfortable with both the process and the people involved - a true 'regular' comfortable in their surroundings.

Yesterday, I visited my second real estate auction company in Los Angeles. I was granted an in-depth look into a highly successful real estate investment company who specializes in ONLY foreclosure auction acquisitions. They have been doing the same 'drill' for over twenty-seven (27) years in Los Angeles County. They spend over a million dollars a day investing in auction properties in just Los Angeles County (tracking over 1,500 residential properties per day). In the current market they typically buy in excess of 80 auction properties (residential and commercial) a month.

I was invited into the 'inner-circle' by an executive of a large nation-wide Title Company. They are encouraging me to establish an investor network in the Long Beach and South Bay areas of Los Angeles County. The goal is to match investors with auction properties that are being purchased between 62-65 cents on the dollar (discounted up to 38% of current market values). After completing my due diligence and considering my background in foreclosures, investor acquisitions and REOs; I am impressed with their experience, systematic approach and detailed due diligence. They have built an incredible machine that involves over 200 employees tracking auction sales in four locations within Ventura and Los Angeles counties.

What is the opportunity for investors? Well we are initially assembling three investor partnerships (LLCs) with the goal to raise an initial million dollars over the next sixty days. This initial fund will invest in three residential properties in the Long Beach area with the goal to 'turn-over' this capital three times during the first year. The estimated proforma projects a net profit between $50,000 - $70,000 per property per investment cycle. We are looking to acquire the properties, resolve the tenant issues, rehab the properties, market and sell the properties within 130 days from recordation of the trustee's deed.

Is it a good deal ... well that depends upon your individual investment criteria and your risk temperament. We believe that partnering with this auction investment company significantly reduces our investment risk. The golden rule is that you lock in your profits on the acquisition; consequently, partnering with the right acquisition model and organization will greatly reduce our initial risk. They have the manpower, expertise, experience and systems in place to eliminate lots of the front-end risk (not all for sure). Next we plan on controlling the tenant negotiations, remodel and sales of the properties in-house. We have the construction crews, management, lending, escrow, transaction coordination, accounting, marketing and sales pieces in-house fully operational. Our brokerage company has over 230 licensed agents who specialize in the local Long Beach area. So can we eliminate all the risk - absolutely not; however, we like our plan! Does this represent a real good opportunity - I think so.

So if you are interested in hearing more about this incredible opportunity ... contact me at jim@peys.net. For additional information and insights into this and other real estate opportunities visit us at: www.coastalcommunityhomes.com. Otherwise, if I can be of service to you or your friends just let me know. Thanks. Jim Peys

How Helping Other Companies Can Make Your Real Estate Business More Money

2009-11-03T07:29:00.001-08:00

How Helping Other Companies Can Make Your Real Estate Business More Money

Posted using ShareThis

The Opening Up Of The MLS ...

2009-11-02T21:14:00.000-08:00

Hold on change is in the air ... Inman news reports that the FTC has ordered a Detroit MLS to open up its policies and allow greater access. The FTC has concluded that the MLS web site policy and related requirements impose a "significant impediment" to consumer access to listings represented by limited-service brokers. The Internet is nipping at the edges of how traditional realtors market their service and create value. An industry that grew up "hording" information and making a living by being "gate-keepers" is changing at neck break speed caused by the evolution of the Internet, social media and the demands of the market place.

The real value of a realtor will be measured by how effectively they interpret the massive amounts of property data; define the needs of their customers; and create an environment whereby sellers can engage with qualified and motivated buyers. This is a dramatic shift for realtors who historically created the market for property owners and manipulated price fluctuations behind the scenes. The next few years will be interesting by how quickly and professionally the industry and individual realtors adapt to these market pressures. Stay tuned!!

If you are looking for a realtor who understands the demands of this market place, or you just have questions and want to explore your options, then email Jim Peys at jim@peys.net. Let me know how I can be of service to you or a friend! For additional information and an array of free real estate tools visit http://www.coastalcommunityhomes.com. Thank you!!

Current Status Of The Feds Efforts To Stem Foreclosures ...

2009-10-14T08:27:00.000-07:00

You want to know the current state of affairs regarding the housing market and the effect of foreclosures and HAMP are having on your home and the economy in general? Then you might want to check out the following attachment:

http://cop.senate.gov/reports/library/report-100909-cop.cfm

This link contains the entire Congressional Oversight Committee's study and YouTube video released by the Congressional Committee regarding the current status of the market, foreclosures and HAMP (loan modifications program). Definitely interesting in light of the volume of gossip currently circulating in the news.

Any questions or if you want to know how this impacts you and your investments, contact me at jim@peys.net or visit us at http://www.coastalcommunityhomes.com.

The Real Story For Fall Sellers ...

2009-10-08T09:51:00.000-07:00

Several reports and blogs today suggest that the summer honeymoon for prices will lose momentum as we roll further into fall. Scott Sambucci at Altos Research states that many pundits believe that the U.S. housing market is likely to reach bottom by early 2010; however, in the meantime he suggests that prices will continue to slide an additional ten percent (10%). In support of his opinion he points to the summer season concluding, rising national unemployment rate, higher level of foreclosure-driven inventory (see L.A. Times front page article regarding FHA loan reserves and pending foreclosure risks).

What facts do we know right now about the housing market locally? Well the 90-day rolling average of median list prices hits an 'inflection' point in early August, then it moves consistently down each week in the fall. As of today, a ten city composite shows asking prices down about 1.25% from early August numbers. In addition, there is a noticeable delta between the overall market median price and new sellers entering the market this Fall, especially compared to the Spring 2009. Experts point to several factors for the current market pessimism:

Lagging effects of the government's HAMP program;
Effects of the foreclosure moratorium programs;
The alleged end of the first-time homebuyer tax credit of $8,000;
National unemployment rates;
FHA concerns and proposed legislative initiatives that may limit these loan programs; and
Interest rate pressures in the spring of 2010

What we will see in published reports (newspapers, etc.) over the short term is that the sales volume, prices and inventory will reflect a slight market rebound. However, note that these published statistics report on 90 day old data (i.e., S&P/Case-Shiller reports). So later in the fall we will begin seeing what is happening in the market in the early part of October.

So Summer Buying Season Is Over ... What Now

2009-10-07T07:24:00.000-07:00

Questions abound as we enter the fall season. Will the Obama Administration continue the $8,000 tax credit past the end of this year for 1st time homebuyers? When will the backlog of bank REO properties be unloaded onto the market? What is the real status of the housing market? Have we witnessed the bottom of the housing market?

What is your opinion ... email me your thoughts?

I just read a few statistics from Scott Sambucci over at Altos Research and he states that the inventory in his ten city composite is tightening, days on market is stabilizing and fewer sellers are relisting their properties. These indicators typically point to price stabilization or price increases in the housing market barring other factors, i.e., broader economic factors such as unemployment, etc. And what is it that we see ... the short term prognostication is that asking prices are clearly falling in the same ten city composite and new sellers entering the market are doing so at lower prices. The other factors that don't bode well for pundits espousing that the housing market is rebounding in several areas, is that over 1.0 million adjustable loans will soon reset into higher interest rates while unemployment rates remain on the rise. These two factors (interest rates resetting and unemployment) will only exacerbate an already messy REO market segment. This may result in a continued drag on existing home prices across the board. In addition, there are rumors of interest rate increases sometime in 2010.

Although we may have experienced the worst of the price adjustments, there remains a few bumps in the road moving forward over the next eighteen months or so. So what does that mean? Well over the next 18 - 24 months there will be significant market opportunities for the brave of heart or those who have good credit and cash. Consequently, the question is can you afford to remain on the sidelines wondering what to do? Yes, there are many doubts and questions to cause most of us to hesitate and doubt the market's resiliency; however, these questions always abound in any market. One truism that remains is that a property in a good location (old adage still applies ... "real estate is all about location, location, location") that is priced below the market is a GREAT deal and you should give it serious consideration!

If you are interested in tracking the local Southern California market and bank REOs then visit us at: http://www.coastalcommunityhomes.com. On our website you can search all the active listings for opportunities in Southern California, as well as get statistic data organized by neighborhoods and so much more! As is always the case, if there is any way I can be of service to you or a friend, please feel free to contact me.

2009-09-15T10:30:00.001-07:00

Check out Hootsuite as a Twitter application - interesting platform of services offered

2009-08-20T11:16:00.001-07:00

Several newspapers reporting increases in foreclosure filings caused by unemployment. Predictable cause of future foreclosure filings.

One in Three Homes in June Suffer Price Cut ...

2009-08-15T16:05:00.001-07:00

One in four homes listed reduced asking price on an average of 10% as of August 1st. This is the third month in a row that the percentage of listings suffered price reductions. Luxury homes, defined as those priced over $2.0 million, took a bigger hit with an average reduction of 14%. Industry pundits recommend that sellers are better off setting the list price under the market to encourage demand and competition rather than to overprice the home.

Although sellers and real estate agents may disagree on the initial listing price, a pre-signed price reduction is advisable to ensure that if a price cut is necessary that it is done quickly. The general rule of thumb in the real estate industry is that a listing may get stale after two weeks on the market without action.

The median home value is down 12.1% during the second quarter compared to the same time a year ago, and 22.3% from the market peak in 2007.

2009-08-13T16:14:00.001-07:00

RealtyTrac reports a 7% growth in foreclosure related filings from June to July. July's figures represent a 32% increase from a year ago (July 2008); this monthly figure is the third record in 5 months. A total of 360,149 foreclosure-related filings were tallied by RealtyTrac in July.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions" RealtyTrac Chief Executive Officer stated in his official press release. Top ten foreclosure states are: Nevada, California (one in 123 homes subject to foreclosure filings), Arizona, Florida, Utah, Idaho, Georgia, Illinois, Colorado and Oregon.

Watch for this trend to continue over the short term due to broader economic factors, i.e., unemployment, negative equity and overall economic conditions in certain States and markets.

Are You Tracking The Other Market Factors …

2009-08-13T12:07:00.000-07:00

Newspapers across the country, as well as micro-bloggers and several industry websites, are reporting mixed economic signals. Articles are reporting market price reductions slowing down or even stabilizing in several areas. Closed sales on existing homes are up in June from May figures, and reductions in inventory are evident across the board. Unemployment figures for July were better than expected; while the Feds attempt to convince the general public that the economy is starting to turn around. Yet other industry insiders are reporting that the real market is still unstable due to the large “shadow” inventory of foreclosure properties held by the nations lenders and service companies. Unemployment in many areas remains in double digits and is unlikely to rebound until early 2011. Furthermore, early results regarding the Feds loan modification efforts (goal of 300,000 loan modifications by the end of December 2009) seem to be generally on target; however, re-foreclosures on these loan modifications are between 25%-60%.

So how does the general public decipher truth from fiction. Well first it would be beneficial to consider who is making the predictions, and determine what might be their motivation in manipulating the facts for their benefit. The Feds and specific industry associations reason for controlling the flow of information, and its interpretation is obvious – they need to sell us on the fact that the economy has bottomed out, is stable and in some market segments actually improving. The agendas of the other prognosticators are not as easily detectable. So what is the current status of the market?

Well, before you draw a conclusion based upon another neophyte economist’s opinions, maybe a pause and consideration of other market forces is in order. Ultimately the economy’s ability to bounce back will be driven by consumers and businesses ability to invest or spend. In order to spend money there must be the ability to make money or continue to borrow (credit line availability). It has been well documented over the past year that credit markets have contracted and/or made more difficult to qualify for new or expansion of credit. So that leaves consumers spending based upon earnings or savings. A watchful eye on unemployment figures thus is critical – for employment and income drives spending and the ability to save. Drilling deeper you might want to look at vertical market fluctuations to determine the present status and future directions. Several vertical markets contain interesting insights for the general California real estate recovery – i.e., the commercial real estate segment, construction activity and new housing permits.

The Wall Street Journal today reports that Southern California’s economy is more reliant on the construction segment than other markets across the Country. In Riverside and San Bernardino counties construction, at its peak four years ago, was the fourth-largest employer. The housing market contributed more than 24 billion dollars in revenue to Southern California in 2008. So construction trends are a significant “pull” in the broader Southern California recovery than what is being reported nationally. The greater Los Angeles area has lost about 90,000 construction jobs recently. The conclusion is that “construction is now literally stopped.” New housing permits in the five-county greater Los Angeles region has dropped 85% from 88,187 in 2005 to a projected 12,990 this year. The drop in housing permits in San Bernardino and Riverside counties is even steeper as it plunged 96% from 45,299 in 2005 to a projected 2,000 this year. The message is that construction is not poised to play its typical role in leading the region of almost 25 million people out of this recession.

So where does that leave Southern California’s economy and housing? There remains a low inventory of existing homes on the market that is keeping home prices relatively stable. The low-end of the market is being supported by first-time homebuyers; while the higher market segments continue to suffer from price reductions and slow turn-over (few qualified buyers buying). The shadow inventory of existing foreclosures, and new foreclosures that will emerge as loan modifications fail and unemployment persists will pose a continued drain over the coming months. When will the market bottom-out will be detectable after the fact, not as it is happening regardless of the countless predictions by market experts (or regardless of our endless desire to know).

How will the market recover, well my guess is that in Southern California broad employment improvements in several market segments will need to occur, along with a viable plan moving forward that encompasses continued lower interest rates; a workable long term plan for loan modifications, short sales and foreclosures; new loan programs that balance the needs of buyers and lenders with reasonable underwriting guidelines that mitigate risk while facilitating market growth; and market equilibrium in supply and demand that allows market prices to increase to a level that pulls more sellers out of a negative equity position without chasing qualified buyers away. As the market shifts there will probably develop several other factors that will impact the market’s recovery, for example Federal, State and local governments investment in the infrastructure, service and technology developments that create new opportunities, foreign investments in local market segments, inflation fears, status of the wars in Afghanistan and Iraq (as well as any other foreign conflicts), large Corporations’ investment in local plants and economies, availability of capital in the higher end real estate market segments, etc. The easy answer is that the market will shift again with a dramatic change in the supply and demand within each micro-market as well as in all the different market segments within each market.

I guess the message is stay tuned … the roller coaster ride of uncertainty continues to be interesting! For more information on the status of the current market and what is available in your market today, please visit www.coastalcommunityhomes.com. In addition if you would like a change of pace from your weekly routine, then enjoy a pause with your morning coffee and visit http://mondaymojo.blogspot.com/. Otherwise, if I can be of service to you or a friend in your real estate pursuits please contact me at jim@peys.net.

2009-08-13T08:11:00.001-07:00

Despite falling prices or maybe because of falling prices, annual rate of SFR resales down only 2.9% compared to 2008 at end of 2nd quarter.

2009-08-12T16:41:00.001-07:00

Treasury announces the Supplemental Directive for its Home Price Decline Protection (HPDP). HPDP provides incentive payments for loan mods.

2009-08-11T17:02:00.001-07:00

Foreclosure stats for July are mixed. Notice of Defaults held consistent at 44,996 filings. Notice of Trustee Sale filings rose to 39,294.

2009-08-10T11:46:00.001-07:00

A few prognosticators writing that housing has reached bottom. June home resales up 9%. How do you reconcile unemployment and foreclosures?

SO HAVE WE BOTTOMED OUT … YET?

2009-08-07T12:53:00.000-07:00

If you listen to various media outlets the housing market nation wide has reached bottom and the market maybe stabilizing in certain areas. Market pundits and realtor organizations comparing existing homes sales in June year over year and from May figures suggest that we may be through the worst of the market downturn. Realtors report from the trenches that prices in the lower end of the market are selling quickly with multiple offers. So what does all this mean? Have we experienced the bottom? Is this information reliable?

Both National Association of Realtors (“NAR”) and California Association of Realtors (“CAR”) report a 3.6 percent annual increase in June comparing to May’s revised figures. Total units sold in June were 4.89 million compared to May’s revised pace of 4.72 million units. Lawrence Yun, NAR chief economist, stated “we expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.” In California, CAR reported on July 27^th that home sales increased 20.1 percent in June compared with the sales period a year ago. Furthermore, CAR President James Liptak stated that “June marked the 10^th consecutive month of positive sales gains, and the fourth month of rising median home prices.” The other piece of news that has created this “false” sense of recovery is that in California it was reported that the number of properties going to Trustee Sale (the second step in the foreclosure process) decreased by 28.9% in June.

Many people interpret these numbers to mean that the market has reached bottom and is starting to move in the other direction. However, if you “peel back the onion” slightly you might see a different story evolving that may impact your assessment. There are several significant trends worth considering as a part of your market assessment. Realize that any discussion on national and state trends may not be reflective of individual “sub-markets” (aka “micro-markets”) within your particular local market, such as the Bixby Knolls area of Long Beach (90807 zip code). So you need to understand the broad national and state trends, but ultimately evaluate your particular sub-market or micro-market to accurately assess how these trends affect you directly.

The first factor to consider is how unemployment figures into the economy and home values. Recent economists are predicting that unemployment will continue to grow and create a “drag” on the economy through 2011. Some have predicted a continuation of double-digit unemployment. In Southern California, specifically Long Beach, the unemployment is hovering around twelve percent (12%). As unemployment rises fewer people will be able to afford paying their mortgage or purchase new homes. If this number continues to increase you will notice property defaults on the rise, which will over time impact local inventory and property values.

The second factor to track closely is the current foreclosures on the market and the number of properties going into default (notice of defaults actually filed with the County). According to ForeclosureRadar, a company that tracks California foreclosure data, the number of Notices of Default (“NOD” – the first step in the foreclosure process) filed in California increased 11.8% in June to 45,691. This number is the second highest monthly total on record, and is a 10% year-over-year increase from June 2008. Additionally California had over 135,000 foreclosures in process as of June 2009 (NODs filed through Trustee Sale). Furthermore, there are bank owned properties that have been taken back in auction (Trustee’s Sale) not currently on the market. It is common knowledge that the Federal government has encouraged all banks to “honor” a moratorium on REO properties as well as foreclosures – moratorium has kept REO properties off the market and banks have “suspended” any foreclosure efforts since the fourth quarter 2008.

How many REO (“real estate owned”) properties are currently held in inventory by the banks and service companies (i.e., Fannie Mae and Freddie Mac) is unknown; however, it is believed the number is significant. This “invisible hand” has controlled the inventory of homes on the market (if you restrict inventory [supply] and you have a steady number of buyers [demand], then the law of supply and demand will move prices up) and affected prices as a result. As these foreclosures come onto the market it will cause a “bloat” of inventory that will cause a further reduction in the median price for housing in high foreclosure areas.

There has been significant commentary in the press media lately regarding loan modification. Although loan modifications are a preferred option with the Feds (because they are committed to reducing the affect these foreclosures will have on the economy), the industry estimates that anywhere from 25%-60% of these loan modifications have or will re-default, and re-enter the foreclosure process in the future. See the Wall Street Journal article in May of 2009 entitled “Mortgage Modifying Fails to Halt Defaults.” If this trend continues than upwards of 60% of the 300,000 loans currently being modified will re-enter the foreclosure process down the road.

The statistics not being emphasized by the Feds or industry associations (CAR or NAR) will dramatically affect both the inventory levels as well as market valuation in the future. The Feds are committing significant capital and resources into the economy, specifically housing which has softened the down turn; however, there could be further erosion in the market in the months to come due to these other factors. The difficulty is that the Feds are in effect “manipulating” the market in order to reduce the drag housing has on the over-all economy. So the real answer is that the market has improved, but it has a ways to go before foreclosures stop flooding the market and placing downward pressure on prices. The key is to watch current trends with an eye to what is coming along in the pipeline.

If you wish additional information and statistic data on your particular micro-market visit: www.coastalcommunityhomes.com. Otherwise if I can be of service to you, please send me an email at jim@peys.net.

2009-08-06T15:08:00.001-07:00

Feds closing in on "bad bank" to place "bad debts" of Fannie Mae & Freddie Mac in: more info see: http://ping.fm/tMUGF

2009-08-01T14:33:00.001-07:00

Current foreclosures being driven by unemployment, not subprime and prime loans. To search foreclosures see www.coastalcommunityhomes.com.

The Green Initiative … Energy Efficiency How Does It Benefit Us …

2009-08-01T14:16:00.000-07:00

The U.S. government launches new energy efficiency efforts for homeowners. As the House of Representatives passes historic legislation paving the way for a clean energy economy, President Obama and the U.S. Energy Secretary promote aggressive energy efficiency plans that will save consumers billions of dollars per year. What does that mean? How will this energy savings actually be realized by homeowners?

The key provisions contained in the American Clean Energy and Security Act, in part, for homeowners includes:

· HUD and the FHA are encouraged to create a new generation of mortgages that offer 5% larger mortgages to people planning on making energy-efficiency improvements.

· The FHA is directed to insure a minimum of 50,000 new energy-efficient mortgages during the next three years.

· Fannie Mae and Freddie Mac are directed to develop mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders.

· Real Estate appraisers are required to take into consideration energy improvements and money saved in the valuation of a home.

· Federal financial regulators are directed to support the establishment of privately run “green banking centers” inside banks and credit unions.

· State governments are required that homeowners who through energy conservation measures take themselves “off the grid” are not denied property hazard coverage by insurance companies.

Is this enough to encourage homeowners to invest in energy conservation technologies that are oftentimes cost prohibitive when compared to traditional technologies? Ultimately people will weigh their cost of retrofit (or replacement material), return on investment (“ROI”), along with their growing “moral” and philosophical desire to live in a way that reduces the environmental burden. Given the limited operating hours in a residential application, the cost (depending upon the retrofit options considered) will outweigh the return on investment (payback for your investment will be longer term); however, that is why the philosophical desire will ultimately be what motivates consumers to consider retrofits that are beyond “the low hanging fruit” such as lighting.

Point in case, according to the U.S. Energy Department lighting in your house makes up between 7-38% of your total electrical bill; and you can reduce your bill upwards of 25% using current energy efficient technologies. For example, if your home electric bill averages $175.00 per month ($2,100 per year) and you reduce it by 25% then lighting savings will total approximately $200.00 per year (as per the broad U.S. Energy Department initiatives). So what is the premium you will pay to install compact fluorescent lamps (verses incandescent lamps) and electronic ballasts and T8 or T5 lamps (verses energy saving fluorescent lamps) in your home? There will be an initial “retrofit” cost, and then as lamps fail the ongoing material maintenance cost or premium. Based upon limited operating hours for lighting in our homes, the actual savings will not be as significant as in many types of commercial buildings. The actual savings will vary on usage (total hours you use your lighting system), when you typically use your lights, and your specific utility rate. The other benefit as it relates to most energy efficient lighting products is that the material has substantially longer life span than inefficient technologies (i.e., incandescent lamps last between 800-1200 hours of operation; however compact fluorescent lamps last 10,000 – 12,000 hours). So over the long term you will spend less in material replacement.

So does pursuing energy efficient technology make sense? For the Federal and local governments – absolutely. For individual consumers – the front end retrofit cost can be substantial in some cases therefore tax incentives and financing options reduce the initial burden. Energy cost savings and replacement material savings makes these strategies even more palatable. But ultimately our social conscious will direct our decision to invest the upfront capital.

2009-07-31T22:15:00.001-07:00

Treasury states total loans held by top 15 banks down 2.8% in 2nd Q. How are we going to get solid growth w/ bankers reducing lending?

2009-07-30T16:14:00.001-07:00

Recent trend: builder/developers buying land; June housing starts rose 4th straight month 14.4%; and existing home sales up 3.6% nationally.

2009-07-29T17:20:00.001-07:00

June, loan servicers modified 96,000 loans; and another 214,000 in repayment plans. Since July 2007 loan workouts initiated total 4.7 mill.

2009-07-22T10:31:00.001-07:00

Bernanke testifies before House Committee the Fed to keep lending rates near zero. Due to unemployment foreclosures will continue to rise.

2009-07-22T09:29:00.001-07:00

Survey states 75% of US Banks tightening underwriting on mortgages for 2nd year in a row. Mortgages will continue being difficult to close.

2009-07-21T16:19:00.001-07:00

House Appropriations Committee voted to extend the $729,750 loan limits for loans in high-cost housing markets thru 09/2010 - S.CA included.

Present Status of California Foreclosure ...

2009-07-20T12:55:00.000-07:00

So with all the media hype on foreclosures, you might be wondering what is the non-judicial foreclosure process in the State of California? Well that depends on several factors. Prior to February 20, 2009 (enactment of the new California Foreclosure Prevention Act) the California Civil Code §2924 outlines the details of the foreclosure process. In summary, upon a default of the promissory note (mortgage) secured by a deed of trust, the trustee, mortgagee, beneficiary, or any of their authorized agents can file and record with the county where the property is located a “Notice of Default” (“NOD”). The mortgagor (borrower) has ninety days (three months) to cure the default. After three months, the mortgagee, trustee or other authorized person can file a “Notice of Sale” that states the time, place, and manner that such sale will be conducted. The trustee sale can’t occur for an additional 21 days from the date of the “Notice of Sale.”

The California Foreclosure Prevention Act was enacted because of the “unprecedented threat to the State and local economies due to skyrocketing residential property foreclosure rates in California. These high foreclosure rates have adversely affected property values in the State.” The Act states that a mortgagee, trustee or other person authorized to take a sale shall not give a Notice of Sale until at least 90 days after the lapse of three months as stated in §2924 of the Civil Code, if all the following conditions exist:

1. “Loan was recorded during the period of January 1, 2003 to January 1, 2008 and is secured by residential real property;

2. The loan is a first mortgage or deed of trust on the property;

3. The borrower occupies the property as their principal residence at the time the loan became delinquent; and

4. The Notice of Default has been recorded on the property.”

This Act does not apply on loans serviced by a mortgage loan servicer who has implemented a comprehensive loan modification program that meets certain modification requirements (as detailed in the Act). The goal of the Act is to provide loan servicers adequate time to evaluate a loan modification on loans in default in order to reduce the foreclosure burden throughout the State.

If you satisfy all the requirements of the Act and the Mortgage Service Company doesn’t have a comprehensive loan modification program in place or has not applied to the Commissioner for an order exempting loans from the Act; then you have an additional 90 days before the property will be sold at a foreclosure auction. However, most if not all, major service companies have comprehensive loan modification programs in place. In addition, the major loan servicers have applied to the Commissioner for exemption.

If, by chance, the loan service company delays the foreclosure (any time prior to the trustee sale), then it is doing so voluntarily. Since the fall of 2008, most major loan service companies have voluntarily enacted a foreclosure “moratorium” thus freezing the foreclosure process prior to auction sale. The rumor within the industry is that this “moratorium” will be in place until September, 2009. At which time a pent up volume of foreclosures will proceed through the process (up wards of approximately 135,000 loans are in default in California as of June, 2009).

Conversely, the Act does not apply to non-owner occupant properties (investment properties), or on junior lienholders (2^nd, 3^rd, etc., trust deeds) or on loans created prior to January 1, 2003 (or after January 1, 2008) which leaves out a majority of the mortgages in place. In reality the Act is creating relief for the alleged “sub-prime mortgages” that allegedly started this wave of foreclosure activity. Unfortunately, the mortgage meltdown (starting in 2007-08) has now expanded to the prime mortgage market segment as well.

If you are behind in your mortgage you should consult with a professional to review your options. There are several options that you might have depending upon your specific situation. If in the meantime, you should need any assistance please contact me at jim@peys.net.

2009-07-14T17:29:00.001-07:00

Foreclosure Radar June figures - 22,291 homes sold at auction in CA with average bids 39.3% below loans; and 46% discounted by 50% or more.

2009-07-11T12:22:00.001-07:00

Developer pioneer, Ray Watt, dies. Over 60 yrs he developed over 100,000 homes in S.CA, 8 million sq.ft. of offices, 50 retail centers, etc.

2009-07-10T15:36:00.001-07:00

Personal savings currently accounting for 8% of income (total $900 Billion this yr). Could be the path way out of the real estate doldrums.

2009-07-09T18:53:00.001-07:00

Are banks repeating past mistakes: spread between conforming and jumbo loans increasing - forcing borrowers into higher rate riskier ARMs.

2009-07-09T18:44:00.001-07:00

Organizing business networking group in N. Orange County. Business development, mastermind, networking. Interested contact me: jim@peys.net

2009-07-09T11:45:00.001-07:00

In attempt to avoid 4 million foreclosures, Feds have approved 240,000 distressed borrowers into "Home Affordable Modification" program.

The Often Overlooked Solution - Short Sales ...

2009-07-08T14:05:00.000-07:00

For months pundits have openly debated whether the stimulus money invested in the various financial companies actually would trickle down to the consumer or property owner. Over the past year approximately 850 billion has been made available by the Federal Government to financial institutions in an attempt to avoid a total collapse of our financial markets. A few stories have seen publishing daylight about the abuses from notable insurance and finance companies (federal funds used for lavish vacations, bonuses, etc.); however, most of the funds have been used to shore up the banks balance sheets, alleviate cash flow hurdles, cover bank losses, and in part to cover mortgage defaults. The question has been raised by many regarding how much of this money will actually trickle down to the consumer who is overwhelmed by a loss of equity, rate adjustments, unemployment and a deepening recession? Only time will tell how effective the Feds stimulus package worked in "softening" this financial meltdown for the Nations homeowners.

Several components of the Feds bank stimulus package are intended to protect homeowners and provide them with some level of protection from losing most people's largest asset - their homes. The "Home Affordable Modification" program is at the epicenter of Obama's stimulus plan for homeowners. This program allows homeowners to modify their existing mortgage (assuming several criteria are meet) to reduce their payment and thus provide financial relief. Banks, in turn, are obligated to provide an aggressive loan modification program. This is intended to prevent the average American homeowner from losing their property via foreclosure.

In a parallel move, the Feds have encouraged lenders to "delay" processing foreclosures (REO moratorium). A huge release of bank REO properties would result in a further reduction in the median price in markets "hit" the hardest - i.e., California, Florida, Nevada, Michigan and Arizona. A further market erosion in the median home prices will have a devastating effect on the Nation's recovery. These "voluntary moratoriums" were originally put in place in the fall of 2008, and have been extended several times since. These moratoriums have allowed the real estate market to catch its breathe; and allowed the lenders to rewrite thousands of loans, etc.

On the other hand these moratoriums have caused bank foreclosures to stock pile for some date in the future. At this time there are over 135,000 delinquent properties going through the foreclosure process in California since the first quarter of 2009. This number continues to climb with each passing day. The number and potential effect on California real estate is mind numbing. So what are the banks doing to solve this mess?

Well they are actually attacking the problem on several fronts. First the loan underwriting guidelines and requirements have changed significantly preventing "questionable borrowers" from getting loans. Next they have implemented an aggressive "loan modification" program to help borrowers in trouble, but who are not entirely wiped out (borrower and property must meet minimum threshold requirements). The moratorium on foreclosures have allowed the market prices to stabilize somewhat by reducing inventory levels - especially in the lower end of the market. In addition, lenders have been encouraged to approve a greater number of short sales (sales where the banks take less than what is owed on the property).

This short sale emphasis is meant as a last ditch solution for homeowners without any other option but foreclosure. Which in this market (i.e., Long Beach being a representative sample of S. CA) short sales and other troubled properties constitute 47% of all closed sales in June; 43% of all pending sales (currently); and 35% of all current active listings. Specifically in June (Long Beach only) there were 236 closed single family home sales, and of this number there were 112 troubled properties closed (defined as REOs and short sales single family homes only NOT including condos). That constitutes a huge percentage! Remember historically REO (bank owned properties - "real estate owned") properties run less than 1% of the market nationwide. This tells me that banks have substantially increased the number of short sale approvals.

Last year at this time only 25% of all short sale applications were being accepted by lenders. That means that 75% of all short sales failed to close escrow! There has been a substantial increase in short sale approvals, while at the same time banks are stream lining their short sale process making it slightly easier to work through their system. A short sale offers homeowners who for whatever reason don't qualify under the "Home Affordable Modification" program (of which there are several "qualifiers") another solution short of foreclosure to resolve their issues. So in an "indirect" way the short sale has become another tool for homeowners to take advantage of the Federal mortgage stimulus package.

Actually the Feds as a part of the stimulus package has strongly encouraged all lenders to approve more short sale transactions. The way that has occurred is by pouring billions of dollars into banks and in the market specifically earmarked for short sales. In addition, the Feds have provided specific goals with broad guidelines for banks to stream line their short sale processes. The money earmarked for short sales bridges, in part, the difference between the outstanding mortgage balance and the amount paid at closing. The entire loss (the actual short fall) will not likely be covered by the stimulus package; however, banks acknowledge that a short sale ultimately is better for the bank than a foreclosure. Lenders stand to lose significantly more money in foreclosure due to holding costs, deferred maintenance, tenant cash-for-keys, marketing costs, and potential market price depreciation (further erosion in market prices), than if they accepted the exit strategy offered by a short sale transaction. Besides we all know from Economics 101 that a dollar today is worth more than a dollar tomorrow.

So in a tangible way short sale transactions may be the unsung hero after loan modification which will be beneficial for all parties - including homeowner, lender, secondary markets, Federal agencies, Fannie Mae, Freddie Mac, and the economy as a whole. Who would ever guess a year ago when agents, buyers and sellers alike struggled with getting a short sale approved that it would come full circle?

2009-07-08T12:31:00.001-07:00

What's the mkt doing in Long Beach? Under $400K (45%) involving troubled assets (43%) is majority of activity. Multiple buyers under $300K.

2009-07-07T21:23:00.001-07:00

Another short sale approved ... an indirect method of getting money to homeowners in need. Maybe an option when loan modification fails.

2009-07-07T10:29:00.001-07:00

REO moratorium has helped stabilized market temporarily - next wave of foreclosures poised to hit soon - 135,431 NODs in process (CA only).

2009-07-06T17:11:00.001-07:00

Aggressively looking for a home for my client in Long Beach. Are you interested in selling your home? Email me at jim@peys.net

2009-07-06T15:15:00.001-07:00

Looking for your Monday morning wake up like a great cup of coffee ... see my weekly Monday Morning MOJO at: http://ping.fm/hgu6V

2009-07-06T15:13:00.001-07:00

See the latest Feds knee jerk reaction to the financial markets at my blog: http://ping.fm/lmjRY

2009-07-06T10:58:00.001-07:00

"What we think or what we know or what we believe is, in the end, of little consequence. The only consequence is what we do." John Ruskin

CONSUMER PROTECTION AGENCY ... ANOTHER KNEE JERK REACTION?

2009-07-03T12:27:00.000-07:00

Is the Consumer Protection Bill Another Knee Jerk Reaction …

On July 1^st President Obama sent to Congress a 152 page draft bill creating the Consumer Financial Protection Agency. According to Obama “this agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want – and actually understand.” Obama has promised that this Agency will ban “those ridiculous contracts with pages of fine print that no one can figure out.” This Agency will have “strong” powers to set rules, supervise institutions and to examine institutions and enforce such rules. This Agency will supervise financial institutions offering such products as mortgages, credit cards, and payday loans.

Is this another knee jerk reaction to a financial system that is reeling in a significant recession that has cost Americans over one-third of its net worth in the past year? The intent of this legislation targets an appealing message – monitor financial practices and products so that all consumers will better understand the “small print” and terms of the offering. I can’t help but react to an Agency whose purpose is to “simplify” financial products offered to consumers, but whose creation took 152-pages in bill form to explain its purpose. Does that strike you as odd?

We are about to embark down another road of creating an oversight agency that will require financial institutions to modify its practices by adding additional documentation in a system already overwhelmed by disclosures, documentation, statements, etc. If you have ever qualified for a home loan and signed loan documents you can attest to the bureaucratic nature of the process. Where there exists a bureaucratic impediment you add cost (i.e., banks taking over the appraisal process in place of the mortgage brokers has added cost to the system, delays and a lack of competition in the process which is raising lending costs in turn), and time into a system already diluted by fees. As far as adding time in the process – historically realtors and mortgage brokers could navigate the sale (securing the loan and closing escrow) of residential real estate in thirty days. Since the mortgage meltdown and the economic stimulus package coming to bear we have seen the best borrowers (800+ FICOs, great income, stable jobs, full doc package) take 90+ days in underwriting. This time delay costs all parties money and creates tremendous disillusionment with the process.

So what is the solution? Well the Feds hold the purse strings, why not put the burden back on the industry to figure out this mess? Throughout history Americans assume that government and its agencies are the “best industry watch-dogs” and inevitably time moves on and the pendulum swings in the other direction. When it does a host of reports begin to surface of how much waste, cost, corruption and bureaucracy has been created by the very watch-dog created to resolve the mess. This is not an efficient and time proven effective use or role for government intervention.

A Few Pundits Quick At The Trigger But ...

2009-06-24T16:29:00.001-07:00

Over the past month, government officials and other industry pundits (C.A.R. and National Association of Realtors) have been trying to spin a positive story from the steady stream of statistics on the housing market. As arm-chair economists it becomes difficult sometimes to sort out the truth from the chafe. I understand that a significant part of our market economy is built upon "public perception" which oftentimes has little factual basis or support. Furthermore, these agencies and groups emphasize a positive strand amongst a steady stream of "bad" news in an attempt to buoy the market. But consumers "in the market" need to avoid the temptation of stopping at the raw data (statistics), and connect the "dots" which consist of the factual plot points when evaluating your buying or selling decisions.

Reported today in the Los Angeles Times Business section is that "home sales fell again in May." The story reported that sales were down 3.6% from the same month last year. However, last week C.A.R. and other pundits reported that May sales figures were up for the month 9.2% as compared to April's sales figures. So what is the real story behind the numbers - increase or decrease? Well not so fast ...

The real story is not in the sales statistics cited above, but the relationship and affect a series of other numbers provided at the end of the article have on the housing market. Inventory levels (number of homes on the market) fell 3.5% in May, and that given the current sales volume it will take 9.6 months to sell this inventory. The historic average inventory level for supply is approximately six months. Higher inventory levels result in lower median home prices; while lower inventory levels usually cause an increase in median home prices.

Other information that affects inventory levels which in turn drives both median prices and sales figures are the developments in the foreclosure markets. Last month Data Quick reported that there were over 100,000 homes in foreclosure in Southern California. In the Times article the Federal Housing Finance Agency reported mortgage delinquencies on the rise - the number of borrowers at least 60 days behind on payments rose to 1.1 million from 926,000 in the 4th quarter of last year. This represents a 3.62% increase on late pays nationwide. This will result in another wave of foreclosures and short sales going to market over the short term - four to twelve months. This pent up supply of homes will be in addition to the homes in foreclosure subject to the "moratorium" in place. The current moratorium prevents banks and REO service companies from marketing existing foreclosure properties. How will the Feds manipulate the market and slow down the tidal wave of foreclosures which may dramatically affect the inventory levels and price points at the lower end of the market? This is a significant plot point as it relates to the lower end of the market - which recently has made up 60% of the total home sales in Southern California.

The best long term medicine may be tough to swallow in the short term ... the Feds need to let the market place resolve the mess. This means that the moratorium should be lifted allowing REO servicing companies to get the existing foreclosures sold. Turning over the existing foreclosure backlog will create pricing pressure in the short term; however, it will ultimately benefit the real estate service industry, construction, retailers supporting home improvement, manufacturers, lenders, and the financial markets (and for that matter all supporting service industries and markets). In addition, new buyers will benefit from a lower affordability index and entry into homeownership. The other tangible benefit will be that by the Feds loosing the reins on the moratorium they will prevent a future whiplash that potentially will create more damage than any short term pain.

Specifically, as the economy continues to soften in 2009 (look at the unemployment figures), more and more homeowners will get behind in payments which may continue to increase the number of short sales and foreclosures on the market (thus affecting inventory levels, etc.). A steady stream over the short term may be easier for the market to handle verses creating, through a series of moratoriums, "pent up" inventory that may get unleashed on the market all at once. Another ripple effect to the moratorium is that REO service companies have allegedly been told that the moratorium will be lifted in Sept - the problem with this plan is that by the time tenants are evicted from the property, the holiday season will be upon us and that is typically when the market activity drops significantly (less buyers in the market); thus causing vacant foreclosure homes sitting idly on the market further creating price erosion. As with many manipulated market plans or government regulations, the solutions oftentimes create situations worse than the problems intended to solve. This may be the case with the proposed plans and actions currently being hatched in the real estate industry these days.

Let me know your take on these developments. Otherwise, if you are looking to buy or sell real estate in Southern California look us up at: www.coastalcommunityhomes.com.

Rent vs. Buy Home Calculator

2009-06-22T15:10:00.001-07:00

Rent vs. Buy Home Calculatorgreat free widgetsWidgetbox

2009-06-19T12:08:00.001-07:00

Real Estate: 30 year fixed-rate mortgages averaged 5.38% this week, down from 5.59% last week and 6.42% last year. Fueling 1st time buyers.

Stop Foreclosure Now - News, Tips, and Resources

2009-06-18T15:00:00.001-07:00

Stop Foreclosure Now - News, Tips, and Resourcesgreat free widgetsWidgetbox

Mortgage Fraud Crack Down On High Gear

2009-06-17T16:22:00.000-07:00

Although the topic of mortgage fraud may not be everyone's dinner table conversation or the hot topic of the day, but the Feds are pouring resources into mortgage fraud crackdowns and oversight. Various federal agencies such as the FBI, Justice Department, Secret Service and the US Post Office have received a combined $500 million in new funding to investigate and convict individuals and companies engaging in mortgage fraud. Could this amount to one of many knee jerk reactions to a meltdown in various financing and real estate markets? What do you think?

With every catastrophic event politicians are motivated to pass either a series of funding initiatives or bills in reaction or over reaction to the event. Taken by itself there always seems to be good arguments supporting such initiatives; however, over time the cycle swings either towards to much government intervention or towards more market control. Striking a healthy balance between government oversight and to much government intervention remains an enigma for our country to manage. In the current recession, we are trending towards significant government intervention that offers significant bailout funds for large corporations and government agencies; however, the homeowner remains left with few options. So when a person is faced with refinancing a problem loan or acquiring a home due to significant underwriting changes adopted over the past 18 months, application fraud becomes a tangible issue. I'm not trying to justify the fraud or any semblance of fraud; however, maybe we should look to the core of the problem and attempt to solve it. So what is the problem?

Well one needs to look at supply and demand forces in the market. Buyers looking for homes or owners looking for new loans look to financial institutions for solutions. The channel of brokers, bankers and financial institutions profit by funding loans. So look at the type of loan programs offered and set achievable underwriting criteria that provides a competitive flow of funds into the market. Then motivate the channel of mortgage brokers, bankers and financing companies to fund loans with borrowers that achieve realistic underwriting goals at rates and terms that will keep the market from imploding in the next real estate cycle. For example providing 100% or 105% loans for purchase or refinances is only inviting fraud and future market busts. At the same time forcing a borrower to have a perfect credit file and still delay funding (so that 30 and 60 day loan locks are expiring) by creating a bureaucratic paper nightmare is not the solution either. Some where in this mess is a solution that must be found balancing the needs of the homeowner by providing real solutions (that actually find their way to the borrower) with the needs of the market, financial institutions and Wall Street. Unfortunately until the core of the problem is addressed this pendulum will continue to sway in the winds of political favor offering nothing but false promises of solutions for troubled homeowners and financial institutions alike.

I would be interested in your feedback. Let me know what you think. For additional information on the status of the market visit us at www.coastalcommunityhomes.com.

2009-06-16T17:01:00.001-07:00

Economist cites median home prices to keep falling. Lower end of market will continue to show life assuming first time homebuyers get $$$.

2009-06-16T10:31:00.001-07:00

Fraud enjoys confusion. Regulators advocating a simplification of the mortgage transaction process.

2009-05-28T10:15:00.001-07:00

Litigation doing away with fees charged by R.E. companies for other services, i.e. "transaction coordination or TC fees." See www.coastalcommunityhomes.com

Housing Market - Do You Recognize The Bottom ...

2009-05-23T08:48:00.000-07:00

Buyers, sellers and many observers on the sidelines are trying to figure out where is the bottom of the housing market. News outlets report new single family home construction starts rose 2.8% to 368,000 in April, after rising slightly in March as well. In addition, micro-markets are seeing a reduction of inventory in certain price points as buyers come out for the summer selling season. Meanwhile, during the same period other new residential construction (apartments, condos, etc.) suffered a decline of almost 46% - the reasons cited were falling rents and tight financing. In the meantime, everyone seems to be tracking foreclosures which is deceiving due to the national moratorium commencing in the 4th quarter through the end of the 1st quarter of 2009.

This stream of information is like watching an intense match point volley in a closely contested tournament. Is the market up, down, false bottom or - well just wait a second and a pundit will serve up a new volley by "spinning" a statistic coupled with a compelling rationalization. One can debate the relevance of the discussion; but we will leave that for another blog.

If you really want to know the status of your market and if a bottom is near you may need to consider other factors. Instead of looking at the national market or even the regional market, buyers and sellers should track their micro-markets looking at the historic and current trending patterns. Find out current prices for comparable properties, trend historic highs and lows over the past five to seven years (real estate typically runs in seven year cycles). In addition, track inventory levels in your markets - determine total number of homes on the market, pending sales and the absorption trends. High inventories (as compared to historic norms) of comparable properties and slow absorption rates signify pricing issues given demand. Market pricing may still trend downward regardless of the national economy. Low inventory levels or high absorption rates suggest higher demand and price stability or price increases on the horizon.

For example in Long Beach you can look at a micro-market, i.e., Bixby Knolls, and see different supply and demand forces at work. Foreclosures at the lower end of the market (ranging from low 200K to mid-400K) typically have several offers each trying to outbid each other. It is not uncommon in this market niche to witness closed sales prices above original list prices. Yet in the same micro-market the 500K and up price point, the market is almost completely dormant. A few would rationalize that financing in this market segment is more difficult to obtain. If you believe the Feds, then this should not be the case because Fannie and Freddie have upper loan limits around the $720K range. But financing (interest rates, terms and underwriting requirements) is significantly more difficult to secure in the upper loan limits. Therefore, you see greater price fluctuation and a general market softness - sellers willing to take less for significantly more.

What is your local marketing doing? I'm interested in hearing from you - be your own economist. Let me know.

2009-05-22T18:47:00.001-07:00

To catch up on the latest developments in S.CA real estate see http://ping.fm/XFpoT

Short Sales Evolution ...

2009-05-21T17:09:00.000-07:00

Historically most realtors shy away from short sale transactions. Although the list price of the home maybe attractive and difficult to pass up, most realtors avoid them if possible because of the uncertainty of success and long time delays. This may be changing as reported by several news agencies recently.

More lenders are willing to approve short sales transactions because they ultimately save the institutions carrying and marketing costs. In addition, they turn the asset over in a declining market that may evidence a greater erosion of value (assuming the lender takes over the property in foreclosure). A few financial institutions are pushing for government intervention in setting forth standards and processing policies. This may pave the way for a greater number of short sale approvals. Bank of America for example will accept 5% of the total sale's transaction value if they are in second position; and conversely they will approve the same consideration in cases they are in first position.

This may bode well in the future for helping dilute the effect of a swell of foreclosures hitting the market. Over time it may reduce the burden that foreclosures have on the local micro markets. But as with everything in real estate today ... hold on time will tell how this current market cycle ends.

Interesting Market Cycle ...

2009-05-03T10:39:00.000-07:00

If you believe the newspapers and the news reels, then we are in a buyer's market. That doesn't necessarily tell the real story behind this market cycle in various micro-markets in Southern California. If you look behind the numbers in L.A. County, the market for homes priced under $300,000 increased by 2,137 sales in March 09 as compared to March 08. This represents a three hundred percent increase in sales for that calendar month from one year to the next. For March 2009, this price range represented 49.4% of all closed transactions. Listing agents are finding that homes in this price range oftentimes will have multiple offers prior to opening of escrow. In cases involving multiple offers listing agents are able to negotiate the prices upwards for these homes.

Homes priced between $300-$400,000 in L.A. County increased during the same period by 278 transactions (representing a 33% increase). This price range represented 19.0 percent of the total sales for March in the County. The price range from under $300-$400,000 by most realtor's definition is a sellers market. Shrinking inventories when adjusted to seasonal trends, and increased demand will yield higher prices for these properties over time. In addition, there are ample financing sources for buyers in this price range (which reduce a buyer's closing costs and/or down payment requirements), i.e., FHA, first-time home buyer programs, down payment assistance programs, conventional loans, etc. These market trends bode well for sellers as well as for buyers.

Over $400,000 the market turns downward. The March numbers show less demand evidenced by prices dropping and totals sales dropping while inventory levels continue to rise due to the pending summer season. In March 09, the number of homes sold in this price range dropped to 1,013 transactions (a 277 transaction drop from March 08). A 21% reduction from one year to the next. Oftentimes these listing stay on the market longer, sell for less and have difficulty closing due to financing issues. So qualified buyers with down payment flexibility and patience have significant clout and leverage in this market.

Investors and home buyers who can qualify for higher priced homes are entering the lower end of the market because of perceived value. Unfortunately these buyers are not prepared for the increased competition for these properties. Buyers who are looking to take advantage of the lower end of the market need to be prepared financially to move quickly because with every hesitation and uncertainty breeds competition for these properties that ultimately drives price and availability.

Other strategic decisions can be made to increase your chances of success if you are interested in bank REO ("real estate owned") or "short-sale" properties. Currently, bank REO properties represent 60% of all sales in Southern California. Although these properties are theoretically the same as non-foreclosure properties, there are strategies that will give you an advantage when negotiating the purchase of these types of properties. Your typical realtor who is unfamiliar with REO transactions or short sales may place you at a serious disadvantage. So beware.

Buyers entering the So. California $300 to $400,000 price range needs to assemble your team so that you can utilize your time efficiently while maximizing your investment (by reducing your financial and legal liability). Get pre-qualified and move strategically into the market segment that fits your investment goals and quality of life style. Select your realtor and your mortgage lender/broker with care and they will guide you through the various legal and financial mazes that arise throughout the process.

For sellers, marketing strategies will vary depending upon your price point, location (micro-market) and your specific situation (the "why" your selling). Locating the right realtor who has the expertise, experience, attitude, commitment to service, and team in place will improve your chances of selling your property within a reasonable period of time and for a price that makes sense for you.

If you are a pending buyer or seller interested in exploring your options; then either visit www.coastalcommunityhomes.com or email Jim Peys at jim@peys.net. For buyers interested in exploring your financing options you should email Adriana Lanting at adriana4loans@gmail.com. You can follow us daily on Twitter under JTPAssociates and Adriana4loans. Regardless of whether you are a buyer or seller in this market, we have the right mix of solutions (products and strategies) and commitment to our clients that will insure your success!