This is a great video for a simple explanation on the credit crisis:
Monday, April 20, 2009
Friday, April 17, 2009
Screw the TARP Accepting Banks
Quinn's Daily Dose of Reality
Click here for a list of the TARP Accepting Banks
"This is the list of every bank that has taken $100 million or more TARP funds. There are 8,000 banks that have not taken TARP funds. Let's reward these banks with our deposits. They did not make systematic risk bets. They were prudent in their lending. They should be rewarded for these actions. The list of banks below should be punished for their actions.
If you have money in one of these banks, consider a withdrawal to put in a non-TARP bank."
Source: The Burning Platform
Click here for a list of the TARP Accepting Banks
"This is the list of every bank that has taken $100 million or more TARP funds. There are 8,000 banks that have not taken TARP funds. Let's reward these banks with our deposits. They did not make systematic risk bets. They were prudent in their lending. They should be rewarded for these actions. The list of banks below should be punished for their actions.
If you have money in one of these banks, consider a withdrawal to put in a non-TARP bank."
Source: The Burning Platform
Wednesday, April 15, 2009
Homebuyer Tax Credit Chart
For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law.
Click on the image below to see a quick summary of the two tax credit laws:
Source: C.A.R. Legal Department
Click on the image below to see a quick summary of the two tax credit laws:
Source: C.A.R. Legal Department
Wednesday, April 8, 2009
Banks Aren't Reselling Many Foreclosed Homes
by Carolyn Said
Chronicle Staff Writer
A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."
"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally
In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick
Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.
But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.
Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.
"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."
Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.
"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.
Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.
Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold
A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.
"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.
So why aren't banks selling off their foreclosures?
Observers say several factors are at work.
-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."
-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.
-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.
Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.
"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."
Missing foreclosures
Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.
County: % foreclosures resold - % foreclosures unsold
Alameda: 58.6% - 41.4%
Contra Costa: 69.8% - 30.2%
Marin: 66.9% - 33.1%
Napa: 66.0% - 34.0%
San Francisco: 49.8% - 50.2%
San Mateo: 61.5% - 38.5%
Santa Clara: 62.0% - 38.0%
Solano: 67.5% - 32.5%
Sonoma: 75.3% - 24.7%
Bay Area: 65.5% - 34.5%
Source: MDA DataQuick, SFGate
Chronicle Staff Writer
A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."
"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally
In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick
Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.
But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.
Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.
"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."
Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.
"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.
Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.
Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold
A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.
"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.
So why aren't banks selling off their foreclosures?
Observers say several factors are at work.
-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."
-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.
-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.
Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.
"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."
Missing foreclosures
Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.
County: % foreclosures resold - % foreclosures unsold
Alameda: 58.6% - 41.4%
Contra Costa: 69.8% - 30.2%
Marin: 66.9% - 33.1%
Napa: 66.0% - 34.0%
San Francisco: 49.8% - 50.2%
San Mateo: 61.5% - 38.5%
Santa Clara: 62.0% - 38.0%
Solano: 67.5% - 32.5%
Sonoma: 75.3% - 24.7%
Bay Area: 65.5% - 34.5%
Source: MDA DataQuick, SFGate
S&P Case-Shiller Home Price Indices Show Continued Declines
Nationwide, prices of existing, single-family homes showed continued declines in January, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10 percent compared with January 2008, according to the S&P Case-Shiller Home Price Index.
“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”
As of January 2009, average home prices across the United States are at level similar to those in late 2003.
Source: Standard & Poor's Press Release (PDF)
“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”
As of January 2009, average home prices across the United States are at level similar to those in late 2003.
Source: Standard & Poor's Press Release (PDF)
Sunday, April 5, 2009
Despite downturn, 2008 was record year for sales of high-end homes
by Sue McAllister
Mercury News
Last year was a grim time in the real estate market, wasn't it? Foreclosures, falling values, the credit crunch.
Nonetheless, in Santa Clara County more homes sold for $5 million or more than at any time since the dot-com-nirvana year of 2000. And in San Mateo County — home to luxury-home strongholds like Atherton and Woodside — it was a record-breaking year for sales of super-expensive castles.
Only in the final quarter of 2008 did the recession finally bite into the top end of the market, sending sales plummeting. While the super rich weathered the early days of the credit crisis far better than most, experts say, last fall's stock market crash drastically impaired their ability to snap up multi-million-dollar manses.
At least 31 homes in Santa Clara County and 60 in San Mateo County sold for $5 million or more in 2008, according to MDA DataQuick, which gathered the information from public records. There were probably even more such sales, the company said, because buyers and sellers of very expensive homes often opt to "hide" the price when their deeds are recorded.
"During the first three quarters the affluent were unaffected. In fact, they were feeling pretty good because they were coming off a great year," said Lindy Sherwood-Coombs, senior vice president of Northern Trust N.A., a wealth management and private banking firm.
Corporate bonuses from 2007 and stock wealth helped fuel high-end sales early in 2008, she and other local investment advisers said.
But in the final three months of the year, as the stock market dived, only seven home sales of $5 million or more closed in Santa Clara and San Mateo counties, DataQuick statistics show. The previous three quarters averaged 28 such sales. In the first two months of 2009, there was only one.
Sales of luxury homes "definitely can be tracked to a T with the Nasdaq," said Tracie Southerland of Opes Advisors in Palo Alto.
"The high end has been stressed for a little while. But having said that, there have been some big sales in San Mateo and Santa Clara County" recently, she said.
A few examples:
* Hayfield House, a Saratoga estate on three acres designed by famed architect Julia Morgan and expanded to nearly 12,500 square feet, sold in February for a rumored price of more than $20 million. The home had been listed at $26.5 million, but the sale price does not appear in public documents.
* A 7,600-square-foot, five-bedroom house on Barton Court in Los Altos Hills sold in March for $9.95 million.
* A 6,700-square-foot home on Serrano Drive in Atherton sold last month for just under $6 million.
Agents who work the super-high end of the local real estate market said despite the shaky economy, some affluent buyers are still looking for new chateaux. But they are being cautious. And — just like in the market for your basic three-bedroom suburban ranch home — values have fallen, and there are bargains to be had.
According to estimates from Zillow, the real estate valuation company, home values are down in most of the valley and Peninsula's most expensive communities.
In Saratoga and Monte Sereno, for example, median home values fell about 6 percent from the third to the fourth quarter of 2008. The drop was 5 percent in Hillsborough and 3 percent in Los Altos/Los Altos Hills, the company said.
"There's more of a level playing field, so buyers and sellers are more open to negotiating something," said Jerry Houston, the Coldwell Banker agent who listed the Hayfield House in Saratoga — and signed a contract agreeing to keep the sale price a secret.
He estimates that, from the market peak, values for multimillion-dollar homes have dropped even more steeply than the Zillow figures indicate. Homes that once sold for $1,000 a square foot are selling for more like $850 now, he said, a decline of 15 percent.
Source: MercuryNews.com
Mercury News
Last year was a grim time in the real estate market, wasn't it? Foreclosures, falling values, the credit crunch.
Nonetheless, in Santa Clara County more homes sold for $5 million or more than at any time since the dot-com-nirvana year of 2000. And in San Mateo County — home to luxury-home strongholds like Atherton and Woodside — it was a record-breaking year for sales of super-expensive castles.
Only in the final quarter of 2008 did the recession finally bite into the top end of the market, sending sales plummeting. While the super rich weathered the early days of the credit crisis far better than most, experts say, last fall's stock market crash drastically impaired their ability to snap up multi-million-dollar manses.
At least 31 homes in Santa Clara County and 60 in San Mateo County sold for $5 million or more in 2008, according to MDA DataQuick, which gathered the information from public records. There were probably even more such sales, the company said, because buyers and sellers of very expensive homes often opt to "hide" the price when their deeds are recorded.
"During the first three quarters the affluent were unaffected. In fact, they were feeling pretty good because they were coming off a great year," said Lindy Sherwood-Coombs, senior vice president of Northern Trust N.A., a wealth management and private banking firm.
Corporate bonuses from 2007 and stock wealth helped fuel high-end sales early in 2008, she and other local investment advisers said.
But in the final three months of the year, as the stock market dived, only seven home sales of $5 million or more closed in Santa Clara and San Mateo counties, DataQuick statistics show. The previous three quarters averaged 28 such sales. In the first two months of 2009, there was only one.
Sales of luxury homes "definitely can be tracked to a T with the Nasdaq," said Tracie Southerland of Opes Advisors in Palo Alto.
"The high end has been stressed for a little while. But having said that, there have been some big sales in San Mateo and Santa Clara County" recently, she said.
A few examples:
* Hayfield House, a Saratoga estate on three acres designed by famed architect Julia Morgan and expanded to nearly 12,500 square feet, sold in February for a rumored price of more than $20 million. The home had been listed at $26.5 million, but the sale price does not appear in public documents.
* A 7,600-square-foot, five-bedroom house on Barton Court in Los Altos Hills sold in March for $9.95 million.
* A 6,700-square-foot home on Serrano Drive in Atherton sold last month for just under $6 million.
Agents who work the super-high end of the local real estate market said despite the shaky economy, some affluent buyers are still looking for new chateaux. But they are being cautious. And — just like in the market for your basic three-bedroom suburban ranch home — values have fallen, and there are bargains to be had.
According to estimates from Zillow, the real estate valuation company, home values are down in most of the valley and Peninsula's most expensive communities.
In Saratoga and Monte Sereno, for example, median home values fell about 6 percent from the third to the fourth quarter of 2008. The drop was 5 percent in Hillsborough and 3 percent in Los Altos/Los Altos Hills, the company said.
"There's more of a level playing field, so buyers and sellers are more open to negotiating something," said Jerry Houston, the Coldwell Banker agent who listed the Hayfield House in Saratoga — and signed a contract agreeing to keep the sale price a secret.
He estimates that, from the market peak, values for multimillion-dollar homes have dropped even more steeply than the Zillow figures indicate. Homes that once sold for $1,000 a square foot are selling for more like $850 now, he said, a decline of 15 percent.
Source: MercuryNews.com
Friday, April 3, 2009
Signs of Life in California Real Estate
by Les Christie
CNNMoney.com staff writer
There's is a lot of activity out on the coast that may indicate a reawakening of the housing market there - and across the country.
No state has been harder hit by the housing bust than California.
It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).
And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.
But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.
Bringing back buyers
Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.
In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.
"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.
In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.
Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."
That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.
"Every one of my agents is very busy," Jones said.
Investing 2.0
Another positive sign that markets don't have much further to fall is that investors are returning to some markets.
"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."
John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.
So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.
He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.
"This kind of pricing is something you only think of as Midwestern, not Californian," he said.
Supply dropping
The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.
"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."
California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.
One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."
Could the end be near?
All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.
Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.
If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.
"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."
Source: CNNMoney.com
CNNMoney.com staff writer
There's is a lot of activity out on the coast that may indicate a reawakening of the housing market there - and across the country.
No state has been harder hit by the housing bust than California.
It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).
And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.
But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.
Bringing back buyers
Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.
In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.
"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.
In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.
Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."
That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.
"Every one of my agents is very busy," Jones said.
Investing 2.0
Another positive sign that markets don't have much further to fall is that investors are returning to some markets.
"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."
John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.
So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.
He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.
"This kind of pricing is something you only think of as Midwestern, not Californian," he said.
Supply dropping
The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.
"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."
California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.
One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."
Could the end be near?
All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.
Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.
If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.
"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."
Source: CNNMoney.com
House of Cards (a CNBC Original)
The Definitive Look At The Origins Of Today's Global Economic Crisis
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
Thursday, April 2, 2009
Mortgage Rates at Record Low for 2nd Week
by Alan Zibel
WASHINGTON (AP) -- Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.
It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.
Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.
Source: PE.com
WASHINGTON (AP) -- Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.
It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.
Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.
Source: PE.com
Wednesday, April 1, 2009
Property Tax Reassessment Scams are on the Rise
by Bob Hunt
Recently, California Real Estate Commissioner, Jeff Davi, observed that a down market brings out the scammers. He is right. We have already, in the past months, become familiar with "foreclosure rescue" scams, "short sale facilitation" scams, and "loan modification" scams. Now, a recent memo from the California Association of Realtors® alerts us to "property tax reduction" scams. These are private companies -- often posing as governmental agencies -- who will charge property owners for filing a tax assessment appeal. It is enough of a problem that the Los Angeles County Tax Assessor has posted a warning about it on his web site.
The Tax Assessor’s site reads, in part, as follows: "Various private companies are sending mailings to property owners offering their services to pursue a reduction in their property taxes. These companies may charge hundreds of dollars to file for a reduction in value on behalf of the property owner. Some companies are even imposing late fees if the application is received after an arbitrary deadline. Be aware that solicitations from private companies offering to pursue a reduction in property taxes must clearly indicate that they are NOT a government agency and that their services are NOT approved or endorsed by any government agency."
There is nothing illegal about charging for the service of filing an assessment appeal. But it must be made clear that the company offering the service is not a government agency and that their services are not approved by any government agency. Even if proper disclosure is made, though, it is not clear why anyone would pay for such a service.
The Los Angeles County Tax Assessor notes that his agency, like many of his counterparts, initiates review processes on its own. Last year, the Los Angeles County Assessor’s office "initiated a review of single-family residences and condos purchased between July 1, 2004 and June 30, 2007. About 318,000 homes were reviewed, resulting in substantial savings for 128,000 homeowners." In 2009, the review will be expanded to some 500,000 single family homes and condos purchased between July, 2003 and June,.2008. The office notes, "There is no reason to pay for a review that will be done for free."
"All 500,000 owners whose homes are reviewed will receive a letter by the end of June notifying them of the results. Owners who disagree with the results or were not included in the review, may file an application through December 31." There is no charge for this.
Of course, tax assessments and appeal/review procedures differ from state to state. Nonetheless, we suspect that the fee-for-appeal services bear a similarity throughout the country. Certainly, anyone who wants to challenge their tax assessment should become familiar with the local process before shelling out money to some company that wants to charge for making an appeal.
In California, it can be a little tricky to determine whether your tax assessment is too high. People tend to forget that the assessment is based on a value determined at the first of the year; and then the bill can stretch into the following year. For example, Californians have until April, 2009 to pay the second half of their current property tax bill. That’s the second half of a fiscal year that started July 1, 2008. And the bill was based on an assessment of value as of January 1, 2008. So there is, today, more than a year’s lag between the assessed value and today’s market value. Sure, market values have decreased since last January, but that’s not relevant for the current bill.
When an assessment is challenged, it’s all about the "comps" – sales of comparable properties. And the comps in question may be from a number of months ago. This kind of information is often inaccessible, or difficult to come by for an ordinary citizen. But, do you need to pay a company a substantial fee to do the work? Probably not, if you have a local Realtor® who specializes in your neighborhood or area. He or she would probably be happy to help you put together the information. At no charge.
Source: realtytimes.com
Recently, California Real Estate Commissioner, Jeff Davi, observed that a down market brings out the scammers. He is right. We have already, in the past months, become familiar with "foreclosure rescue" scams, "short sale facilitation" scams, and "loan modification" scams. Now, a recent memo from the California Association of Realtors® alerts us to "property tax reduction" scams. These are private companies -- often posing as governmental agencies -- who will charge property owners for filing a tax assessment appeal. It is enough of a problem that the Los Angeles County Tax Assessor has posted a warning about it on his web site.
The Tax Assessor’s site reads, in part, as follows: "Various private companies are sending mailings to property owners offering their services to pursue a reduction in their property taxes. These companies may charge hundreds of dollars to file for a reduction in value on behalf of the property owner. Some companies are even imposing late fees if the application is received after an arbitrary deadline. Be aware that solicitations from private companies offering to pursue a reduction in property taxes must clearly indicate that they are NOT a government agency and that their services are NOT approved or endorsed by any government agency."
There is nothing illegal about charging for the service of filing an assessment appeal. But it must be made clear that the company offering the service is not a government agency and that their services are not approved by any government agency. Even if proper disclosure is made, though, it is not clear why anyone would pay for such a service.
The Los Angeles County Tax Assessor notes that his agency, like many of his counterparts, initiates review processes on its own. Last year, the Los Angeles County Assessor’s office "initiated a review of single-family residences and condos purchased between July 1, 2004 and June 30, 2007. About 318,000 homes were reviewed, resulting in substantial savings for 128,000 homeowners." In 2009, the review will be expanded to some 500,000 single family homes and condos purchased between July, 2003 and June,.2008. The office notes, "There is no reason to pay for a review that will be done for free."
"All 500,000 owners whose homes are reviewed will receive a letter by the end of June notifying them of the results. Owners who disagree with the results or were not included in the review, may file an application through December 31." There is no charge for this.
Of course, tax assessments and appeal/review procedures differ from state to state. Nonetheless, we suspect that the fee-for-appeal services bear a similarity throughout the country. Certainly, anyone who wants to challenge their tax assessment should become familiar with the local process before shelling out money to some company that wants to charge for making an appeal.
In California, it can be a little tricky to determine whether your tax assessment is too high. People tend to forget that the assessment is based on a value determined at the first of the year; and then the bill can stretch into the following year. For example, Californians have until April, 2009 to pay the second half of their current property tax bill. That’s the second half of a fiscal year that started July 1, 2008. And the bill was based on an assessment of value as of January 1, 2008. So there is, today, more than a year’s lag between the assessed value and today’s market value. Sure, market values have decreased since last January, but that’s not relevant for the current bill.
When an assessment is challenged, it’s all about the "comps" – sales of comparable properties. And the comps in question may be from a number of months ago. This kind of information is often inaccessible, or difficult to come by for an ordinary citizen. But, do you need to pay a company a substantial fee to do the work? Probably not, if you have a local Realtor® who specializes in your neighborhood or area. He or she would probably be happy to help you put together the information. At no charge.
Source: realtytimes.com
C.A.R. Launches Mortgage Protection Program
To help provide first-time home buyers with peace of mind when purchasing a home, the C.A.R. Housing Affordability Fund (C.A.R.H.A.F.) is offering a new mortgage protection program to first-time home buyers.
Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.
To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer (someone who has not owned a home in the last three years)
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
For more information, please visit: car.org
Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.
To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer (someone who has not owned a home in the last three years)
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
For more information, please visit: car.org
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