Posts Tagged ‘housing news’
Monday, November 4th, 2013
There has been much conflicting news lately about the real estate market – reports saying it continues to improve, others claim many fear we are heading toward another bubble. Let’s look at some of the latest news in the real estate industry…see for yourself what you think.
Home Sales Increases: We have all read about home sales increasing in the last year, especially since the start of Summer/end of Spring. Realology reported that sales increased 29% in the third quarter, but does not expect a similar number for Q4. This is understandable, as Q4 generally is the slowest part of the year for home sales due to the holidays and resulting lower inventory levels.
Furthermore, indications that home sales are gaining momentum in big cities such as Los Angeles and Las Vegas point to possible dilemmas as we head into what will likely soon become a buyer’s market (the biggest being that many buyers could be forced out of the market if prices are higher).
More Households Have Emerged from Negative Equity: According to the National Association of Realtors, 2.5 million households have emerged from negative equity situations as of the second quarter of this year – the result of rising prices. This has a big effect on the future foreclosure market, and many of these previously underwater borrowers will be able to sell their homes and buy those that are affordable. This could contribute to more inventory in the coming months – Spring may be a busy time in many area markets.
New Construction is Improving: Building continues to be on the rise, and many builders are selling out quickly. Multi-family complexes in some parts of California are selling out before they are even completed, and the Wall Street Journal reported that properties built for rental purposes are even hotter. Many single family new construction homes here in San Diego county similarly have been selling quickly, often months before completion.
Shifting Neighborhood Preferences: A study by the National Association of Realtors found that 60% of Americans surveyed prefer to live in neighborhoods that are “walkable” – those with a mixture of homes and businesses, or mixed-use developments. The survey was comprised of 1500 Americans. 55% of those surveyed said the would prefer to have a smaller home and yard in order to be able to live in a walkable community. Here in North San Diego there are several communities that continue to be very popular mixed-use neighborhoods amongst buyers, like Bressi Ranch in Carlsbad and San Elijo Hills in San Marcos.
Buyers Face Tighter Lending Standards: It is no secret that loans have been harder to obtain for some time. According to the National Association of Realtors, tough lending standards are still making an impact upon would-be buyers. Single home buyers have a more difficult change of obtaining a loan over dual-income borrowers. The overall number of single buyers has declined in the last few years, but if we are to continue down the housing recovery path we will need to provide more opportunities for financing to all kinds of borrowers. Recent studies by NAR show that almost 9 out of 10 purchasers obtain financing.
Thursday, March 29th, 2012
Home prices are rising and have been doing so for the last three months. According to Standard and Poor’s newest Case-Shiller index report, prices have actually showed a decline, but that fact has been disputed by other reports. In North San Diego, I agree that prices seem to be rising and market times, not including short sales, are decreasing.
The discrepancy between the Case-Shiller report and other reports that have studied markets across the country is that the other reports focus on when contracts are signed – it uses the prices agreed upon at that time, even though it could be months until the properties close escrow. Case-Shiller uses the prices reflected at the close of escrow, so there is quite a bit of lag time, up to several months, which skews the results.
Market Trends: The general consensus is that if you focus on what is trending, rather than waiting until close of escrow down the road, you get a clearer picture of price increase. Of course, there is the possibility that some of these sales may not close escrow, or may not appraise at the agreed price, but there is still a valid argument that focusing on what people are WILLING to pay and do get into contract for is a more accurate measure of hyper-local market analyses.
North San Diego: From a personal standpoint, I agree that prices seem to be increasing in the North San Diego market. We are seeing a lot of multiple offer situations, especially in the lower price ranges (under $400,000) across the county. Also apparent is that that the days on market time seems to be decreasing. In Carlsbad alone the average market time (for all four zip codes combined) for detached homes is 76 days, but if you scroll through all the pending listings you will notice many that sold in under a week. For attached homes in all four Carlsbad zip codes the average market time is 84 days, but again, you will notice a handful of properties that went into pending status quickly.
Sales Time Trends and Short Sales: Another trend I am seeing is that short sales contracts are being presented and accepted faster, especially in the under-$400,000 price range, with both attached and detached homes. These sales go into contingent status (meaning an offer has been signed and accepted by the seller pending approval by the short sale lender(s)) much quicker these days, but the market times are longer because the parties await short sale lender approval. The wait time, which can take months, throws off the market time numbers and makes them longer, so that has to be considered when looking at the sale times.
All in all the news is positive that the market here in San Diego is improving,which is great news for homeowners and buyers alike. According to Altos Research, the statistics indicate that the tables have turned slightly in the condo market, making it a seller’s market for the first time in a long time; the detached home market is still a buyer’s market. Hopefully the road ahead will continue to bring us closer to a more “normal” market.
Please feel free to contact me if you would like any detailed market reports and statistics sent to you, and I will be happy to do so. Send your request to Rachel@LaMarRealEstate.org.
Thursday, January 12th, 2012
There is a lot of news out there in the real estate market, and much of it is very positive in pointing toward a market recovery. I am not putting a spin on things – this is what is going on now and the news looks good.
Mortgage Delinquencies Down. The number of mortgage delinquencies is lower than it was back in January of 2010 – 25% lower, according to LPS (Lender Processing Services). What does this mean? Many say this means the market is starting to recover, and they are predicting a decent year for housing. With less delinquencies there will be fewer foreclosures. The states with the highest percentage of non-current loans are Florida, Mississippi, Nevada, New Jersey and Illinois. Those with the lowest percentage of non-current loans are North Dakota, Arkansas, Wyoming, South Dakota and Montana. You can read the entire report here.
Mortgage Applications Rise 4.5%. Continuing on with the premise that the market is recovering, mortgage applications are on the rise, according the the Mortgage Bankers Association. Refinancing also rose, and with low interest rates continuing it could be a boom to the Spring home buying season. Click here to read the entire story posted by Housing Wire.
Lowest Reported Lender Owned Inventory Since 2007. Lender owned inventory, or REO properties, has dropped 34% since 2010, and is at the lowest rate since 2007, according to a year-end report by Realty Trac. 804,423 homes were repossessed by lenders in 2011.
Fannie Mae Extends Mortgage Forbearance Program for Unemployed Borrowers. Fannie Mae just released new guidelines to help unemployed borrowers. The servicer will reduce or suspend mortgage payments to those who qualify, for a specified period of up to 6 months if requirements are met. At the end of the period the servicer will evaluate to see if the borrower is eligible for up to another 6 month extension. No foreclosures will be filed during these forbearance periods. The program is slated to begin March 1, but servicers are being encouraged to begin helping borrowers right away.
And some California real estate news…
Keep Your Home California Program Adds More Lenders. Keep Your Home California, the program dedicated to helping borrowers avoid foreclosure, has added more lenders to the program roster, bringing the total to 55 servicers who have pledged to assist struggling homeowners. According to a Union Tribune article, the servicers are amongst the biggest names in the mortgage industry, holding 90% of all California home loans. For more information on the program you can visit the website.
Mello Roos Taxes No Longer Deductible. A new tax law will create more tax liability for homeowners with mello roos taxes. Until now, a homeowner was able to deduct his entire property tax bill, including mello roos assessments, from his state income tax. Starting with the 2012 tax bill, the Franchise Tax Board will require property tax bills to be divided into deductible and non-deductible portions. Mello roos taxes will be non-deductible. Since the 2012 taxes are not due for over a year there are groups that will be fighting this tax increase, citing a bad move on behalf of the state in difficult financial times. If the law sticks it could create problems in selling homes with mello roos taxes, leading to losses in property values. We will have to wait and see if the FTB reverses this one.
Friday, December 2nd, 2011
Happy December everyone! I can’t believe the year is almost at an end (we won’t mention that I am completely unprepared for the holidays either). Here is what has been happening in the real estate market this week.
Foreclosure Moratorium for the Holidays. Some lenders are finding kindness in their heart to put in place foreclosure moratoria over the holidays, like they have done in the last few years. Fannie and Freddie have already announced a temporary moratorium on all foreclosures of single family homes and 2-4 unit properties for the holiday period, and all evictions will be delayed until after the New Year. California groups like Occupy L.A. and Occupy Santa Cruz are also trying to get lenders in their respective counties to place moratoria on foreclosures for the holidays. If you are facing foreclosure you can call your lender to see if they have instituted such a policy.
Fewer American Homowners are Underwater. A new study just published by CoreLogic concludes that the number of Americans whose homes are “underwater” (they owe more on their mortgage(s) than the current value of their homes) has decreased to 1 in 5. It used to be 1 in 4, so this sounds like good news, although there will be more foreclosures to come due to the large amount of negative equity in the housing market.
Reverse mortgages to have new requirements, may make it harder to qualify. Getting a reverse mortgage may soon be more difficult. Reverse loan originators will soon begin looking at the financial status of applicants, to see if they are able to cover the costs of homeowners insurance and property tax. The goal is to prevent future defaults. Reverse mortgages are obtained by borrowers over 62, and allow them to convert the equity in their homes into cash, which is used to live on. The loan is due, with interest, at the time the owners die, move, sell the home, or fail to pay homeowners’ insurance or property taxes.
Home values have declined in most markets; buying cheaper than renting in many places. According to a study by the Wall Street Journal it is cheaper to buy rather than rent a home in 12 major metropolitan markets. Home values also have declined in all but 5 markets. Low mortgage rates and timing make this a great time to buy for many buyers, and prices are predicted to continue to decline, mostly due to distressed sales. To read more on this study click here.
Monday, October 24th, 2011
There has been plenty of recent housing news that could effect the value of your home, so here are some of the latest updates:
Bill to allow visas to foreign home buyers. Congress is considering a bill that would allow foreign homebuyers to purchase residential property in the U.S., in an effort to stimulate the housing market. Buyers would need to spend at least $500,000 to obtain the visas, and would be allowed to split the money and purchase more than one home, as long as one property was at least $250,000. The buyers resident visa would be in place for as long as the buyer owned the home, and the buyers will have to live in their U.S. home for at least six months out of the year.
Mortgage rates may be lowered. The Federal Reserve is considering lowering the mortgage rates again, as the current low rates do not seem to be stimulating housing and the economy. They plan to purchase more mortgage backed securities, with the goal that banks will be able to help homeowners with refinancing and stimulate purchasing, without causing inflation. Since most of the problems with refinancing involve problems with fees or restrictions, will this really help? This could create more mortgage rate risk for the Fed, and realistically how many people will it help? It certainly won’t do anything for the millions of underwater homeowners. It seems to me this is digging a deeper grave, but I am not a mortgage expert so I will leave this to those who are, but my gut feeling says this is not the best solution.
Next generation of homeowners have little confidence in housing. A new study released by Federal Reserve Bank of Boston has found that the younger generation is less willing to purchase homes. Older respondents seemed to be more confident about homeownership after large declines, while younger participants felt opposite. Older respondents saw the drop in the market as cyclical, with the expectation of recovery, whereas their younger peers view the current situation as more permanent. Could this have an effect on housing in the long term?
Study says bank owned property sales may not peak until 2013. The latest study claims that we will see a lot more foreclosures, and therefore many more bank owned homes, until 2013. Bank of America Merrill Lynch analysts claim that although we will not see price drops as steep as those of 2008, we could see a 10% increase in these REO (bank-owned) properties from 2012 to 2013. For more details of the study click here.
State court voids home sale…could this happen across the country? A Massachusetts state court recently ruled that a home recently sold post-foreclosure was improperly sold, as the lender did not hold the title. The sale was found to be void. So what happens to the new owners? Certainly there will be a big lawsuit against the title companies. But if this becomes the standard who is going to want to purchase a post-foreclosure home? Home buyers rely on title companies to convey clear title…so isn’t this punishing the purchasers and not just the bank? After all, if the title company certifies title is clear and escrow closes, how would a homeowner have any reason to know that there was a problem with the title? I’m not even going to speculate as to how badly this would fare for housing and the economy in general.
HUD homes for only $100 down: In the spirit of stimulating housing purchases, HUD has decided to offer buyers the chance to purchase a HUD REO (lender owned home) for only $100 down…yes, you read that right, one hundred dollars. Of course there are restrictions: the home must be a HUD home (a home that is the result of a foreclosure on a FHA home loan), the sale must be for list price, FHA guidelines apply (you have to qualify for a loan), and the state of your purchase must be one that is listed. To find out more search the internet for HUD’s $100 downpayment program orvisit their site.
Wednesday, October 12th, 2011
Not all short sales get approved; in fact, some statistics claim only half make it to closing. The truth is that both the agent and seller need to do everything in their power to get these sales approved, but sometimes it is simply out of their hands. Here are the reasons short sales fail:
1. Incomplete paperwork. A short sale agent needs to know what paperwork to get to the lender. Oftentimes paperwork is needed before the home is even listed, and this is lender-dependant. Bank of America, for example, has a new program where they evaluate short sales before listing, and TELL the agent where the price needs to be. An agent must be aware of this before placing a listing on the MLS. Different lenders also require different paperwork, and paperwork may vary depending on whether the loan is a first or subsequent lien. Make sure your agent knows what is needed, and complete all the paperwork on time – this is the easiest problem to fix, and the one over which we have the most control.
2. Under-skilled agents. If you are facing a short sale, you’d better make sure you have a competent agent who understands all the steps involved, and can communicate (and knows when to do so) with the lender. Many agents claim they are short sale experts, but taking a one or two day class does not make them experts – much of this comes from experience.
3. Lack of communication. This is where the listing agent, although skilled in working with negotiators, is not on top of the transaction and is not communicating with negotiators properly, or frequently enough. This can happen whether or not the agent is skilled with short sale transactions. If the agent is too busy, there are plenty of highly trained and successful negotiators that can negotiate with the lenders on behalf of the agents, and the agent pays them from his/her commission.
4. Bank negotiators who are under-skilled, uncommunicative, and/or just don’t care. This is the number one reason I personally think short sales fail. Oftentimes an agent will encounter bank representatives who don’t have the skills to do their job (I have had people quote me incorrect law -let’s just say they received a lesson); some of these people either don’t know how to communicate, or simply choose not to (obviously not caring about all the lives their actions effect). Recently, I have been involved with a short sale in which the bank negotiator did not return calls or emails. It was impossible to communicate with her, and then she simply closed the file! The lenders need to hire skilled people, train them, and constantly evaluate them. These people work in CUSTOMER SERVICE! Do these lenders not understand the meaning of this (this is a topic for a blog in itself, and it wouldn’t be a nice one).
According to an article in California Real Estate Magazine, a JD Power and Associates recent study found that 77% of California Realtors found recent short sale transactions to be either “difficult” or “extremely difficult.” This number is up from the last survey, almost a year ago, which was at 70%. Furthermore, the same study reported that 75% of Realtors were not satisfied with lenders they worked with in their most recent short sale transactions. Consumer satisfaction with primary mortgage servicers was ranked at 718 on a 1,000 point scale. This is crazy!
Lenders: I feel like I have been shouting at you for so long…many people have. Why are you not listening? What will it take to make you hear us? You hold the cards to housing market recovery, yet you choose not to care. You have created a country of bank-haters, people no longer trust you. Financial markets teeter on the brink of disaster, and yet you still follow the same practices. Why? Can anyone help me to understand this? Let’s hope these lenders listen before it’s too late.
Monday, October 10th, 2011
Cash for keys programs – where the banks pay money to the homeowners if they walk away from their homes and leave them in good condition – have been common in the foreclosure arena for some time. Now the banks want to apply this principle to the short sale industry. I have been hearing tidbits about this for about a month now, but a weekend article in the San Diego Union Tribune confirms that this is now official.
Major lenders, like Chase, Wells Fargo, Bank of America and others, have apparently begun offering cash to distressed borrowers in order to get them to agree to short sale their homes – up to $35,000 in some cases. Before you get all excited and pick up the phone to call your lender, you need to be aware of how this process works. As with any bank program, the bank controls the process, and you cannot simply call and opt into the program. Apparently the bank reviews distressed situations and contacts the homeowner. The money is paid at the close of escrow of the short sale.
How this system makes sense at all to the banks, who choose the lucky homeowners, is baffling. I find it hard to believe, as I am in the middle of a battle right now with one of these big lenders, just to get them to accept a buyer’s offer on my short sale listing that is perfectly in line with the comparables. But of course, some bank decisions remain and will always remain a big mystery.
My hope is that these lenders are finally realizing that it is up to them to fix the housing crisis, and that they need to get rid of all their distressed inventory to do so. Maybe some angel descended down and landed on the shoulders of the bank CEOs. Ah, but I know better: with the banks, it is all about how much they can make. They must be finally realizing that foreclosure costs them too much money, so giving away a few thousand dollars and blessing more short sales will save them in the long run. Banks don’t do anything because they care about people.
It will be interesting to watch this one, to see how many people actually get “chosen” to be involved with these programs. If you are one, please let me know. I will protect your privacy, but would love to know how the process goes, and whether it is as smooth as the banks say it will be. The proof will be in the pudding, so I am looking forward to seeing how many homeowners are truly helped by this latest lender brainstorm, and truly hope it helps.
Sunday, September 18th, 2011
On Friday the House of Representatives failed to extend the current conforming loan limits, which are set to expire on September 30. This was a big blow to the real estate market and to buyers and sellers. But does this mean the fight for extension is over?
Let’s take a look at the situation so that you can understand the problem. Current conforming loan limits are set at $729,750. They were raised to that number in 2008, to allow buyers to obtain financing for larger mortgages. This was a great help to buyers in ares where housing is higher, like here in San Diego county. If the limits do not get extended they will drop down to $625,500 in some areas, lower in others. Again, this really effects higher priced areas, such as along the west and east coasts.
Some argue that dropping the limits will actually be good for housing, as it will assure that only qualified buyers will get loans. However, in the higher priced areas it will force buyers to have larger down payments, or to buy homes priced lower. This will effect the higher end market, and in pricier areas this will effect the market, period. This is not good news for those who need to sell, and the long-term effect is that it will likely bring down prices substantially, or stagnate markets further…neither of which are positive options in this economy.
The Obama administration says that allowing the limits to expire will cause more private money to flow back into the housing markets. I am not a mortgage expert, but wouldn’t these have much higher interest rates? Allowing these limits to expire is going to effect an already fragile housing market.
The next opportunity to reverse the loan limit reduction will be at the end of the year. Let’s hope we get there, as now is NOT the time to distress the housing market any further.
Friday, June 17th, 2011
Recent studies indicate that foreclosure filings are down across the nation, but what does that really mean?
Several theories have been discussed in the media about what will happen next. One is that things are improving, albeit slowly, and lenders are embracing foreclosure prevention measures (like loan modifications and short sales) more heartily. The other is that we are witnessing the calm before another storm of foreclosures.
Some lenders, such as Wells Fargo, are taking taking steps toward strengthening home ownership and preventing foreclosures. Wells just announced that it will no longer provide reverse mortgages for elderly homeowners. The lender is also working with the U.S. Mayors council to help homeowners stay in their homes. These proactive solutions will have an effect on the future of home ownership, and hopefully more lenders will follow the example.
Judging from published numbers (RealtyTrac reports foreclosures were down in May 20% from the same time last year) it appears the worst is behind us. But there is still a lot of shadow inventory out there – homes owned by lenders post-foreclosure that have not yet been listed on the market for sale. This inventory will keep housing prices down until it is all sold; if home values go down there will likely be more homeowners underwater, which could lead to more foreclosures – a vicious cycle. The job market will also play into the equation.
Focusing on the big picture I do not believe we will see another foreclosure storm the likes of what we have witnessed in the last several years, and I think improvement is ahead but we will have some hurdles first with shadow inventory and the job market. We do need to focus on selling the distressed properties so that we can start climbing back toward a more normal and stable housing market.
Monday, June 13th, 2011
Downpayment increase rule under debate: If you haven’t heard, banking industry regulators have a rule on the table that would require buyers to pay a minimum of 20% down on home purchases. Although many lenders require this already there are some loans that can be obtained with very little money down, such as FHA loans (which require only 3.5% down). This has stirred much debate amongst buyers, sellers, Realtors, economists and politicians, with studies concluding that 30% of the home sales market would be decimated.
Congress’ intention in raising downpayment rates is to provide stronger borrowers, thus preventing fewer loan defaults in the future. But many groups, including the National Association of Realtors (NAR) are vehemently opposed to such legislation and have been lobbying against the proposal. I will keep you updated.
Mortgage Servicers in the Hot Seat Again: At least 14 regulated mortgage servicers have been scolded by banking regulators for negligence and misconduct in servicing, or failing to properly service loans. The U.S. Treasury also recently released a report indicating performance by the 10 largest HAMP (Home Affordable Modification Program) servicers. They found 4 need substantial improvement (including Bank of America, Wells Fargo and JP Morgan Chase), and are withholding future financial incentives under the program to the 3 mentioned above until improvements are made and problems addressed.
Home Sales Expected to Rise This Year: Some economists, like Lawrence Yun – chief economist for the National Association of Realtors – predict sales for the remainder of the year will improve for the following reasons: more jobs, stock market wealth is on the rise, apartment rents are climbing, conditions of high affordability continue, home values are at historically low levels, investors are out in the market nice again looking to hedge against inflation, lenders starting to shorten lengthy short sale processes, and the number of foreign buyers has increased due to market conditions. Of course there are other factors to keep an eye on, like gas prices and the fate of Congress’ attempt to increase down payments on home purchases (see above), but there seem to be strong factors indicating this may in fact be true. Let’s hope so.