According to a report released by MDA DataQuick, Southern California home sales volume, particularly in San Diego County, has rebounded while homes prices in almost all counties plunged at a six year-record low.
Based on the firm’s data, median home prices in San Diego County plummeted by $22,000 to $328,000 for the month of August. Comparing it to the $517,000 peak last November 2005, the present figure clearly shows a 34.6 percentage decline.
As for home sale activity, there was a 56.4 percent rise in the number of sales transactions closed for September. Compared to 2,152 transactions last year, record showed 3,366 for the said month. This jump in sales activity was observed in the entire Southern California and only emphasized the really low home sales activity last year, when the foreclosure crisis was holding the market.
One of the things quite noticeable in the report is the increase in foreclosure sales, which basically showed that home buyers are favoring these repossessed properties over other homes. Of course, this is not surprising considering that these foreclosed properties are much more affordable and offer greater return potential.
The report also showed that about 47.3 percent of the sales transaction last September involved homes that were repossessed in the past 12 months. This is a significant rise to August’s 43.2 percent and September 2007’s 45.3 percent.
In a couple more days, the firm is expected to release new reports regarding the number of foreclosures in the state. If the current trend continues, the number of homes entering foreclosure will surely outpace the sales of these repo homes. In addition, DataQuick also expects more foreclosures after the financial market meltdown.
Home prices in Riverside and San Bernardino counties dropped by 36.8 and 36.9 percent respectively. Orange County’s declined by just 25.4 percent while Los Angeles County home prices was down by 31.4 percent.
Thursday, October 30, 2008
Thursday, October 23, 2008
Foreclosures spur jump in SoCal home sales.
Home sales soared a record 65 percent across Southern California during September as foreclosures continue to drive an unprecedented price slide that's luring bargain hunters back into the market, an industry tracker said Monday.
Foreclosures accounted for 50 percent of last month's 20,497 sales, said San Diego-based MDA DataQuick. A year ago they accounted for 13 percent.
September's sales total is the most since December, 2006. And sales made a rare gain - 6 percent - from August, the company said.
However, September's big increase is from a record low 12,455 sales a year ago after a widespread credit freeze curtailed home financing.
That's still impacting the market and last month's sales number is the second lowest since DataQuick began keeping records in 1988.
"The pitifully low September 2007 sales numbers weren't tough to beat. More impressive was that this September's sales volume bucked the seasonal norm and rose above August," said DataQuick president John Walsh.
Credit still remains tight despite wide-ranging federal intervention and many economist believe the country has sank into a recession that will deepen into next year.
During September the median price of new and previously owned houses and condominiums plunged 33 percent to $308,500 from $462,000 in the six-county region. Prices are now back to levels last seen in May, 2003 and the median is 39 percent below the record $505,000 reached in spring and
summer of last year.
More price slashing is likely because foreclosures remain on a record pace, DataQuick said, and less expensive properties are making up the bulk of sales.
Prices are reaching fire sale levels in the Inland Empire. The median in San Bernardino County fell an annual 37 percent to $205,000. It also fell 37 percent in Riverside County to $237,500.
Walsh said September's sales reflect buying decisions made weeks ago before the dramatic worsening of the nation's financial markets.
DataQuick said that problems in the jumbo mortgage market continue impede high-end home sales. Before the credit crunch hit last August, 40 percent of sales were financed with jumbos, then defined as over $417,000. Last month just 13.2 percent of purchase loans were over $417,000.
Foreclosures accounted for 50 percent of last month's 20,497 sales, said San Diego-based MDA DataQuick. A year ago they accounted for 13 percent.
September's sales total is the most since December, 2006. And sales made a rare gain - 6 percent - from August, the company said.
However, September's big increase is from a record low 12,455 sales a year ago after a widespread credit freeze curtailed home financing.
That's still impacting the market and last month's sales number is the second lowest since DataQuick began keeping records in 1988.
"The pitifully low September 2007 sales numbers weren't tough to beat. More impressive was that this September's sales volume bucked the seasonal norm and rose above August," said DataQuick president John Walsh.
Credit still remains tight despite wide-ranging federal intervention and many economist believe the country has sank into a recession that will deepen into next year.
During September the median price of new and previously owned houses and condominiums plunged 33 percent to $308,500 from $462,000 in the six-county region. Prices are now back to levels last seen in May, 2003 and the median is 39 percent below the record $505,000 reached in spring and
summer of last year.
More price slashing is likely because foreclosures remain on a record pace, DataQuick said, and less expensive properties are making up the bulk of sales.
Prices are reaching fire sale levels in the Inland Empire. The median in San Bernardino County fell an annual 37 percent to $205,000. It also fell 37 percent in Riverside County to $237,500.
Walsh said September's sales reflect buying decisions made weeks ago before the dramatic worsening of the nation's financial markets.
DataQuick said that problems in the jumbo mortgage market continue impede high-end home sales. Before the credit crunch hit last August, 40 percent of sales were financed with jumbos, then defined as over $417,000. Last month just 13.2 percent of purchase loans were over $417,000.
Tuesday, October 21, 2008
Home sales jump, prices don't.
Home sales jumped sharply in September across Southern California from record lows of a year ago, as foreclosure sales continue to dominate the market.
More than 20,000 homes and condominiums closed escrow last month, including 7,382 in Riverside and San Bernardino counties, DataQuick Information Systems reported today. More than half the sales in the six-county region were the result of foreclosures.
Median prices fell to $237,500 in Riverside County and $205,000 in San Bernardino County. That's roughly a $10,000 decline in the median price in both counties since August. Prices are down about 40 percent since the peak of the housing price bubble about two years ago.
A DataQuick analyst said in a statement that declining prices in the Inland region has helped the affordability levels and spurred sales.
More than 20,000 homes and condominiums closed escrow last month, including 7,382 in Riverside and San Bernardino counties, DataQuick Information Systems reported today. More than half the sales in the six-county region were the result of foreclosures.
Median prices fell to $237,500 in Riverside County and $205,000 in San Bernardino County. That's roughly a $10,000 decline in the median price in both counties since August. Prices are down about 40 percent since the peak of the housing price bubble about two years ago.
A DataQuick analyst said in a statement that declining prices in the Inland region has helped the affordability levels and spurred sales.
Monday, October 20, 2008
Local leaders explore buying up troubled mortgages.
Banks are sick of the Inland Empire's nonperforming mortgages, and Wall Street can't afford them on its books.
But those toxic loans are looking lucrative to investors willing to accept a huge risk.
Government and business leaders from San Bernardino and Riverside counties decided at a Wednesday meeting to keep pursuing a proposal that would open the door for Los Angeles-area investors and Inland Empire cities to buy up thousands of troubled mortgages behind the region's economic problems.
At stake: every aspect of the Inland Empire's economy.
The region's hammered real-estate market could spiral downward even further if the concept doesn't come together, which could slide the local economy into a deeper recession than expected, proponents say.
"It could devastate our economy for the next decade," said Steve PonTell, president of Upland-based La Jolla Institute, a nonprofit economic research organization.
But the proposal's advocates are also looking out for themselves. If their plan doesn't work, and if home prices fall even more, they might see millions of dollars in losses.
After the federal government takes collapsing mortgage-backed securities off the hands of Wall Street - just like it did during the 1980s savings-and-loan crisis - the Treasury Department is poised to repackage that debt and sell it to investment firms across the nation.
That worries local business owners and politicians who argue
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that nationwide investors with no stake in the Inland Empire's economy are bound to turn local properties into rentals, which would make real-estate values drop further.
They're proposing a public- private partnership between cities and investors, which would buy distressed Inland Empire mortgages and shut out investors from outside the Los Angeles region.
Real-estate developers, auto- dealership owners and some other entrepreneurs across the two-county region are tentatively on board with the concept.
But envisioning the dream and realizing it are two different things.
Right now, lobbyists and congressional representatives are imploring Treasury Secretary Henry Paulson to add specifics into recent bailout legislation that would let an Inland Empire public-private partnership purchase local mortgages.
"Wall Street wants to make this so complicated because they want control over this," said Lance Larson, legislative director for San Bernardino County. "They want to keep (local assets) on the securities side."
San Bernardino and Riverside counties ratified a resolution supporting the concept in early October. Nothing is set in stone, but proponents say they might call it the Inland Empire Asset Value Recovery Corporation.
Larson said the Inland Empire has 100,000 homes in default or foreclosure - a $30 billion problem that doesn't include thousands of previous and future foreclosures.
"We're also trying to increase demand," Larson said about drawing out buyers and propping up the region's devastated real-estate values.
Montclair Councilman Bill Ruh, a strong advocate for affordable housing, questions whether a public-private partnership is a good thing for the region.
He thinks it might usher in an artificial price floor on real-estate values, which would keep local blue-collar workers from finally being able to afford the American dream.
"When homes were running up in price, we never said, `They can only go this high' - so why stop prices from dropping?" Ruh said. "What's wrong if a home's price drops low enough for a janitor to own one? There's nothing wrong with that.
"If a janitor who makes $35,000 a year can finally afford a home at Sierra Lakes (in Fontana), so be it," Ruh added. "If a retail sales clerk who works at Banana Republic can finally afford a home, so be it. It seems that cities are more afraid of rentals than actually dealing with the problem."
Friday, October 17, 2008
San Bernadino County (HAP) has $$$.
San Bernardino County’s First Time Buyer Program (HAP) has received funds!
For any of your buyers that have been pre-qualified with the HAP program, the County just announced they have money for their down payment assistance program. The amount of funds they have is limited and available on a first come first served basis.
The county receives their regular HAP funds every July. This year the HAP funds were depleted by September. Due to overwhelming demand, the county has interim funds available for use. These funds are normally used up very quickly, so any HAP borrowers should plan on taking action very quickly.
As a reminder, HAP funds can be reserved after the borrower has been pre-qualified with an approved loan officer and with an accepted and fully executed purchase contract.
**Borrowers should be encouraged to update their loan pre-qualifications because of the enormous number of changes which continue to occur in the mortgage industry that may affect what type of loan and how much of a sales price they qualify for**
For any of your buyers that have been pre-qualified with the HAP program, the County just announced they have money for their down payment assistance program. The amount of funds they have is limited and available on a first come first served basis.
The county receives their regular HAP funds every July. This year the HAP funds were depleted by September. Due to overwhelming demand, the county has interim funds available for use. These funds are normally used up very quickly, so any HAP borrowers should plan on taking action very quickly.
As a reminder, HAP funds can be reserved after the borrower has been pre-qualified with an approved loan officer and with an accepted and fully executed purchase contract.
**Borrowers should be encouraged to update their loan pre-qualifications because of the enormous number of changes which continue to occur in the mortgage industry that may affect what type of loan and how much of a sales price they qualify for**
Wednesday, October 15, 2008
HomeBuyer Tax Credit
UNCLEAR ON HOW THE HOMEBUYER TAX CREDIT WORKS? HERE’S SOME CLARIFICATION...
The Housing and Economic Recovery Act, which was passed in July, allows for some home buyers to receive a tax credit. There have been a lot of questions as to exactly how that works so here goes;
Who Qualifies for the Tax Credit?
Buyers who have not owned real estate in the last 3 years who are purchasing their primary residence. The credit is good for homes purchased April 9, 2008-July 1, 2009.
Are there Income Limits?
Yes. They are $75,000 for individuals and $150,000 for households. Individuals whose income is between $75,000 and $95,000 can still take the credit but on a reduced basis. The same applies to households earning up to $170,000. Buyers should consult their tax preparer for specifics on whether the income limits are based on their gross, net or adjusted income as well as what their reduced tax credit would be if they are over the base income limits.
How Much Is the Tax Credit?
10% of the home’s purchase price, not to exceed $7,500
When Does the Buyer Receive the Tax Credit?
After the home is purchased, the entire tax credit can be claimed in a single tax year. If the borrower purchases their home in 2008, they would receive their tax credit when they file their 2008 taxes. If they buy their home during the first half of 2009 (up until the July 1, 2009 cut off date), they may claim the credit on their 2009 taxes. The credit essentially reduces a taxpayer’s tax bill or increases their refund, dollar for dollar. The credit will be paid out even if the borrower owes no tax or the credit is more than the tax that they owe.
Does the Tax Credit Have to be Repaid?
Yes. The tax credit has been touted as an “interest free, 15 year loan from the government”. Payments will start beginning with the second tax year after the year the credit is claimed. It’s repaid in equal increments over a 15 year period as an additional tax on the borrower’s tax return. So if the buyer claims the full $7500 tax credit on their 2008 taxes, they would repay $500/year until year 2025.
Are there any Restrictions?
Yes. The buyer will NOT be eligible for the tax credit if:
1. the buyer uses tax exempt bond financing (such as the State of California’s first time buyer program- CalHFA, or the Maricopa County, AZ first time buyer program)
2. the buyer purchases the home from a close relative (including a spouse, parent, grandparent, child or grandchild)
3. the buyer stops using the property as their primary residence
4. the home is sold before the end of the year
5. the buyer is a non-resident alien.
** If any buyers have questions about their particular tax situation, they should consult their tax preparer for the best answer. Following is a link to the IRS with additional information on the tax credit http://www.irs.gov/newsroom/article/0,,id=186831,00.html.
The Housing and Economic Recovery Act, which was passed in July, allows for some home buyers to receive a tax credit. There have been a lot of questions as to exactly how that works so here goes;
Who Qualifies for the Tax Credit?
Buyers who have not owned real estate in the last 3 years who are purchasing their primary residence. The credit is good for homes purchased April 9, 2008-July 1, 2009.
Are there Income Limits?
Yes. They are $75,000 for individuals and $150,000 for households. Individuals whose income is between $75,000 and $95,000 can still take the credit but on a reduced basis. The same applies to households earning up to $170,000. Buyers should consult their tax preparer for specifics on whether the income limits are based on their gross, net or adjusted income as well as what their reduced tax credit would be if they are over the base income limits.
How Much Is the Tax Credit?
10% of the home’s purchase price, not to exceed $7,500
When Does the Buyer Receive the Tax Credit?
After the home is purchased, the entire tax credit can be claimed in a single tax year. If the borrower purchases their home in 2008, they would receive their tax credit when they file their 2008 taxes. If they buy their home during the first half of 2009 (up until the July 1, 2009 cut off date), they may claim the credit on their 2009 taxes. The credit essentially reduces a taxpayer’s tax bill or increases their refund, dollar for dollar. The credit will be paid out even if the borrower owes no tax or the credit is more than the tax that they owe.
Does the Tax Credit Have to be Repaid?
Yes. The tax credit has been touted as an “interest free, 15 year loan from the government”. Payments will start beginning with the second tax year after the year the credit is claimed. It’s repaid in equal increments over a 15 year period as an additional tax on the borrower’s tax return. So if the buyer claims the full $7500 tax credit on their 2008 taxes, they would repay $500/year until year 2025.
Are there any Restrictions?
Yes. The buyer will NOT be eligible for the tax credit if:
1. the buyer uses tax exempt bond financing (such as the State of California’s first time buyer program- CalHFA, or the Maricopa County, AZ first time buyer program)
2. the buyer purchases the home from a close relative (including a spouse, parent, grandparent, child or grandchild)
3. the buyer stops using the property as their primary residence
4. the home is sold before the end of the year
5. the buyer is a non-resident alien.
** If any buyers have questions about their particular tax situation, they should consult their tax preparer for the best answer. Following is a link to the IRS with additional information on the tax credit http://www.irs.gov/newsroom/article/0,,id=186831,00.html.
Tuesday, October 14, 2008
Inland economist, borrowers await effect of rate cut.
Inland Southern California consumers and businesses could see some relief with Wednesday's interest rate cut, but experts say it will take time and an atmosphere of trust to nurse a sick economy back to health.
The Federal Reserve's emergency move to drop its key lending rate from 2 percent to 1.5 percent will help some borrowers, including some homeowners with adjustable-rate mortgages, and credit card holders.
The hope is that by lowering the rate it charges major banks to borrow money, the Federal Reserve will entice banks to lend to businesses with plans to expand.
There is no way to know whether banks that are sitting on billions of dollars in bad loans will respond the way the government wants.
Making it easier for businesses to borrow would allow them to expand and help boost the job market in Riverside and San Bernardino counties. The jobless rate in the Inland area was estimated at 9.2 percent in August, and there were 25,000 fewer jobs than a year ago.
Economists and others say the rate cut was one of many steps needed to improve the bleak outlook for the national and Inland economies. Banks have to feel like there's a comfort zone for their own risk before they start lending money, meaning there won't be instant relief.
"It is a higher dose of medication but the patient is still sick," said Scott Anderson, vice president and senior economist for Wells Fargo.
Lower interest rates will not stave off the flood of foreclosures that are depressing the economy, said Christopher Thornberg, an economist and principal with Los Angeles-based Beacon Economics. Mortgages are not failing because interest rates are too high, he said.
"Real estate is in a free-fall because prices are too high and people borrowed too much," Thornberg said. "People can't afford (their mortgages) if they cut the interest rate to zero."
Leslie Appleton-Young, chief economist for the California Association of Realtors, said the difficulty of getting mortgages -- not the affordability of interest rates -- has been hurting home sales.
"The mortgage rates are very affordable," Appleton-Young said. "It is not a question of interest rates right now. It is about the availability of capital and the willingness of lenders to make loans. We hope the rate cut will calm markets and provide stability to the financial sector and unfreeze credit markets so it is easier for people to get mortgages."
Anderson said the lowering of the rate for banks to borrow money from the Federal Reserve was "a much needed move because the credit markets are frozen solid right now."
Anderson said the financial crisis and the negative reaction to it, including the stock market declines, is likely to delay the recovery of the housing market for as long as six months. He predicted that sales in Inland Southern California could recover by the end of the first quarter of 2009, but home prices could drop into 2010.
He said the rising unemployment rate could lead to more delinquencies and foreclosures, which could flood a market already brimming with unsold inventory and further push down home values.
"I can't see people going out and buying large-ticket items like houses and cars until we get clarity on how long this recession is going to be," Anderson said.
Inland economist John Husing said he spent part of Wednesday meeting with entrepreneurs who had expansion ideas that would lead to new jobs. But, he said, none of them had the capital to accomplish that goal.
"The Fed is doing anything they can to get the banks to start lending again," Husing said.
Stephen Wacknitz, president and chief executive officer of Temecula Valley Bank, said since money the bank borrows is tied to the prime lending rate, the Fed's move could make it easier for the bank to obtain funds it can loan to local customers.
Also, the bank has a portfolio of Small Business Administration loans that reset quarterly, meaning those rates would become more favorable on Jan. 1, Wacknitz said.
He added that the Fed stepping in could help businesses' psyches.
"The psychological benefits of this will have some impact," Wacknitz said.
Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, is less optimistic. He does not expect Wednesday's rate cut to stimulate the economy because he does not think banks will respond by increasing their lending.
"They are more afraid of losing money than of not making money," Green said.
Esmael Adibi, chief economist at Chapman University, said there is enough fear to go around for all parties. The Fed's move is not going to solve the problem unless the banks and other lenders start trusting each other again.
"Ultimately the problem is a lack of confidence, and I think the only solution is time," Adibi said. "Once some time goes by and we see the bailout kick in, the banks will start lending to each other again."
Monday, October 13, 2008
Latest House Sales / Price Trends (Housing Tracker)
Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.
Quote of the Day
“This feels like 1987. It’s not even close to ’73 or ’74, when people used to feel sorry for you if you told them you lived in New York City.” – Luxury real estate broker Barbara Corcoran, on the current stock market turmoil as compared to previous stocks market crises.. (NY Times, Oct. 4)
House Sales/Price Trends
California Officials Try to Avoid Second Housing Hit. “Officials in San Bernardino and Riverside counties are determined to avoid a repeat of what happened 20 years ago, when the savings-and-loan crisis led to a massive selloff of distressed real estate in the area by the federal government's Resolution Trust Corp. Many of those properties… were sold at fire-sale prices to investors who unloaded them quickly and… turned [them] into largely rental communities, further depressing property values and delaying an economic rebound… [Local] government representatives [are] mustering support for a federal bill that would allow local businesses and governments to buy up some of the real estate.” (WSJ, Oct. 7)
Middle-Income Earners Priced Out Of Homes. “NY State Association of Realtors: The search for a modest house at an affordable price in Putnam County has been a challenge in a county where the median single-family home price is $418,000. Even though prices in Putnam have fallen in the past two years, the prices are still too high for some… First-time homebuyers in Rockland and Westchester are experiencing a similar challenge, even as home prices drop in both counties. In Westchester, where the median income for a family of two is $77,200, and in Rockland, where the median income is $67,852, families are struggling to find places they can afford.” (LoHud Journal, Oct. 7)
America's Fastest-Selling ZIP Codes. “[Some] neighborhoods are appreciating and selling well. That is, if you're willing to pay up. The median home sale price in most of these areas is more than $700,000, which puts them in the richest 1% of ZIP codes in the country. They include 10069, a part of New York's Upper West Side, 94111 in San Francisco, Cold Spring Harbor's 11724 and Fisher Island, Fla., ZIP 33109.” (Forbes, Oct. 7)
Survey Finds Expansion of Housing in the U.S. “Census Bureau 2007 American Housing Survey: The number of houses, apartments and mobile homes in the nation rose by almost four million from 2005-2007, to 128.2 million... Renters occupied 32% and owners 68%... The vast majority, 80 million, were detached single-family homes. The data does not account for the full impact of plummeting prices since the subprime and credit crises struck… Median home value over all rose about 16% to $191,471, from $165,344 in 2005... The number of houses and apartments valued at over $300,000 soared more than 20% since 2005. The 2007 survey found more than four million occupied homes valued at $750,000 and up and another 92,000 for sale at those prices.” (NY Times, Oct. 6)
End of an Era on Wall Street: Goodbye to All That Connecticut: “Once a hamlet for the moneyed old guard, Greenwich has found itself in recent years overrun by flashy hedge fund and private equity managers. But with the markets in flux, some high-end homes with price tags as high as $3M-$8 million that sat unsold for six months or longer are now being offered as rentals, said Barbara Wells, a local Realtor… Some of the new homes offered for rent were houses built on spec. Luxury realtor Barbara Corcoran: In all likelihood, the real estate market could be frozen for the next 6-18 months or so as buyers and sellers struggle to reach agreement on prices.” (NY Times, Oct. 4)
Buffett’s Homeservices Plans $200M Expansion. “If cash is king, then you can courier that crown and scepter over to the Minneapolis headquarters of HomeServices of America Inc.The nation’s second-largest real estate brokerage plans to spend $200 million over the next couple of years paying 20 to 25 cents on the dollar for distressed brokerages around the country. That capital, which will triple the company’s market presence, comes from…Warren Buffett’s Berkshire Hathaway Inc. (BRK.A).” (Minneapolis/St. Paul Business Journal, Oct. 3)
Manhattan Apartment Sales Drop as Prices Extend Five-Year Gain. “New York City's residential real estate market is somewhat protected by financing rules set by co-op boards, which often require 20% down payments for even the smallest apartments, plus a cash cushion before they approve would-be buyers… The number of apartments for sale at the end of the quarter rose 35% and was about 23% higher than the average over the last five years, appraiser Miller Samuel said.” (Bloomberg, Oct. 3)
Banking & Finance: Wamu's Buyer Vows To Build On Apartment Unit's Success. “Largely overlooked in coverage of JPMorgan’s colossal takeover of WaMu is a treasure buried inside WaMu’s troubled real estate loan portfolio — apartments. WaMu had grown in recent years to become the national leader in financing small apartment projects: WaMu’s $33 billion small-balance apartment mortgage portfolio was performing exponentially better than its single-family portfolio... “They have a nice multifamily lending unit,” JPMorgan Chase Chairman and CEO Jamie Dimon told reporters right after the Sept. 25 takeover. “We want to build that out.” (Puget Sound Business Journal, Oct. 3)
Quote of the Day
“This feels like 1987. It’s not even close to ’73 or ’74, when people used to feel sorry for you if you told them you lived in New York City.” – Luxury real estate broker Barbara Corcoran, on the current stock market turmoil as compared to previous stocks market crises.. (NY Times, Oct. 4)
House Sales/Price Trends
California Officials Try to Avoid Second Housing Hit. “Officials in San Bernardino and Riverside counties are determined to avoid a repeat of what happened 20 years ago, when the savings-and-loan crisis led to a massive selloff of distressed real estate in the area by the federal government's Resolution Trust Corp. Many of those properties… were sold at fire-sale prices to investors who unloaded them quickly and… turned [them] into largely rental communities, further depressing property values and delaying an economic rebound… [Local] government representatives [are] mustering support for a federal bill that would allow local businesses and governments to buy up some of the real estate.” (WSJ, Oct. 7)
Middle-Income Earners Priced Out Of Homes. “NY State Association of Realtors: The search for a modest house at an affordable price in Putnam County has been a challenge in a county where the median single-family home price is $418,000. Even though prices in Putnam have fallen in the past two years, the prices are still too high for some… First-time homebuyers in Rockland and Westchester are experiencing a similar challenge, even as home prices drop in both counties. In Westchester, where the median income for a family of two is $77,200, and in Rockland, where the median income is $67,852, families are struggling to find places they can afford.” (LoHud Journal, Oct. 7)
America's Fastest-Selling ZIP Codes. “[Some] neighborhoods are appreciating and selling well. That is, if you're willing to pay up. The median home sale price in most of these areas is more than $700,000, which puts them in the richest 1% of ZIP codes in the country. They include 10069, a part of New York's Upper West Side, 94111 in San Francisco, Cold Spring Harbor's 11724 and Fisher Island, Fla., ZIP 33109.” (Forbes, Oct. 7)
Survey Finds Expansion of Housing in the U.S. “Census Bureau 2007 American Housing Survey: The number of houses, apartments and mobile homes in the nation rose by almost four million from 2005-2007, to 128.2 million... Renters occupied 32% and owners 68%... The vast majority, 80 million, were detached single-family homes. The data does not account for the full impact of plummeting prices since the subprime and credit crises struck… Median home value over all rose about 16% to $191,471, from $165,344 in 2005... The number of houses and apartments valued at over $300,000 soared more than 20% since 2005. The 2007 survey found more than four million occupied homes valued at $750,000 and up and another 92,000 for sale at those prices.” (NY Times, Oct. 6)
End of an Era on Wall Street: Goodbye to All That Connecticut: “Once a hamlet for the moneyed old guard, Greenwich has found itself in recent years overrun by flashy hedge fund and private equity managers. But with the markets in flux, some high-end homes with price tags as high as $3M-$8 million that sat unsold for six months or longer are now being offered as rentals, said Barbara Wells, a local Realtor… Some of the new homes offered for rent were houses built on spec. Luxury realtor Barbara Corcoran: In all likelihood, the real estate market could be frozen for the next 6-18 months or so as buyers and sellers struggle to reach agreement on prices.” (NY Times, Oct. 4)
Buffett’s Homeservices Plans $200M Expansion. “If cash is king, then you can courier that crown and scepter over to the Minneapolis headquarters of HomeServices of America Inc.The nation’s second-largest real estate brokerage plans to spend $200 million over the next couple of years paying 20 to 25 cents on the dollar for distressed brokerages around the country. That capital, which will triple the company’s market presence, comes from…Warren Buffett’s Berkshire Hathaway Inc. (BRK.A).” (Minneapolis/St. Paul Business Journal, Oct. 3)
Manhattan Apartment Sales Drop as Prices Extend Five-Year Gain. “New York City's residential real estate market is somewhat protected by financing rules set by co-op boards, which often require 20% down payments for even the smallest apartments, plus a cash cushion before they approve would-be buyers… The number of apartments for sale at the end of the quarter rose 35% and was about 23% higher than the average over the last five years, appraiser Miller Samuel said.” (Bloomberg, Oct. 3)
Banking & Finance: Wamu's Buyer Vows To Build On Apartment Unit's Success. “Largely overlooked in coverage of JPMorgan’s colossal takeover of WaMu is a treasure buried inside WaMu’s troubled real estate loan portfolio — apartments. WaMu had grown in recent years to become the national leader in financing small apartment projects: WaMu’s $33 billion small-balance apartment mortgage portfolio was performing exponentially better than its single-family portfolio... “They have a nice multifamily lending unit,” JPMorgan Chase Chairman and CEO Jamie Dimon told reporters right after the Sept. 25 takeover. “We want to build that out.” (Puget Sound Business Journal, Oct. 3)
Friday, October 10, 2008
HUD: Lenders Now More Willing To Write Down Bad Loans.
HUD Secretary Preston said today lenders are more receptive to writing down the principal of homes on the verge of foreclosure, expressing hope that more will utilize a new $300 billion government program designed to place at-risk borrowers into a fixed-rate loan they can afford. Preston noted lenders are loath to write down the principal of a loan, preferring less costly alternatives such as reducing interest rates or extending the maturity to keep owners in their homes. But Preston said he has sensed a change among lenders due to the severity of the foreclosure crisis and the availability of the new program, which will allow certain subprime borrowers to refinance under a new fixed-rate loan guaranteed by the Federal Housing Administration.
Lenders will take a hit under the program, which started Oct. 1, because the new mortgage can only be up to 90 percent of the home's appraised value. However, "for the first time we are beginning to see more and more lenders take that action because it is necessary to make these loans affordable," said Preston during an interview at HUD's national housing summit. Lenders successfully lobbied against legislation this year that would have authorized bankruptcy judges to reduce a mortgage to its current market value, claiming that would make the cost of home loans more expensive because investors could not be guaranteed a rate of return. Some academics disagree with the claims. The recently enacted $700 billion economic rescue bill also contains two significant provisions that would expand the program, which is slated to help 400,000 borrowers. One would make it easier to buy out lenders who have a second mortgage on the property, the other would allow HUD to increase the 90-percent threshold under certain circumstances. Preston said the latter provision "may encourage more lenders to come into the program." But the recent changes will not have an immediate effect because they will likely have to undergo a comment period before they can be implemented, Preston cautioned.
HUD also is ramping up its efforts to distribute $3.9 billion in funding to 308 states and communities to buy and rehabilitate foreclosed properties, and in some cases offer down-payment and closing assistance. The funding was provided in the housing-stimulus measure enacted this summer. "The communities [and] the states out there right now are in ... a high-activity mode, which is to make sure they understand the program, think through how they would use the funds and to put in place an action plan," Preston said. Plans must be submitted by Dec. 1. HUD recently released its allotments per state, prompting some criticism that the allocations were not just based on foreclosure rates but on how many properties are actually abandoned. For example, Florida topped the list with $541.4 million, while California received $529.6 million. The difference resulted from the fact that Florida had a more severe crisis with abandoned properties across the state, whereas California's foreclosures were more concentrated in certain areas such as Riverside and San Bernardino counties. Florida also had the highest number of grant recipients in the program, with 49.
Lenders will take a hit under the program, which started Oct. 1, because the new mortgage can only be up to 90 percent of the home's appraised value. However, "for the first time we are beginning to see more and more lenders take that action because it is necessary to make these loans affordable," said Preston during an interview at HUD's national housing summit. Lenders successfully lobbied against legislation this year that would have authorized bankruptcy judges to reduce a mortgage to its current market value, claiming that would make the cost of home loans more expensive because investors could not be guaranteed a rate of return. Some academics disagree with the claims. The recently enacted $700 billion economic rescue bill also contains two significant provisions that would expand the program, which is slated to help 400,000 borrowers. One would make it easier to buy out lenders who have a second mortgage on the property, the other would allow HUD to increase the 90-percent threshold under certain circumstances. Preston said the latter provision "may encourage more lenders to come into the program." But the recent changes will not have an immediate effect because they will likely have to undergo a comment period before they can be implemented, Preston cautioned.
HUD also is ramping up its efforts to distribute $3.9 billion in funding to 308 states and communities to buy and rehabilitate foreclosed properties, and in some cases offer down-payment and closing assistance. The funding was provided in the housing-stimulus measure enacted this summer. "The communities [and] the states out there right now are in ... a high-activity mode, which is to make sure they understand the program, think through how they would use the funds and to put in place an action plan," Preston said. Plans must be submitted by Dec. 1. HUD recently released its allotments per state, prompting some criticism that the allocations were not just based on foreclosure rates but on how many properties are actually abandoned. For example, Florida topped the list with $541.4 million, while California received $529.6 million. The difference resulted from the fact that Florida had a more severe crisis with abandoned properties across the state, whereas California's foreclosures were more concentrated in certain areas such as Riverside and San Bernardino counties. Florida also had the highest number of grant recipients in the program, with 49.
Thursday, October 9, 2008
Local control for troubled mortgages.
Now that the multi-billion dollar rescue plan has made it through Congress, the federal government must engage local leaders when determining the future of troubled mortgage assets that are underwriting this unprecedented taxpayer investment.The swift and staggering meltdown of America's mortgage-lending markets has had grave global economic consequences.
But nowhere is the pain felt more acutely than in thousands of neighborhoods across our nation where unsound mortgage-lending practices have foreclosed on the dreams of American families.
In the past 18 months, our fast-growing Inland Empire has suffered some of the highest foreclosure rates in the United States. As a result, we have suffered some of the most severe economic and social losses.
Last week, supervisors in San Bernardino and Riverside counties adopted resolutions calling upon federal lawmakers to recognize the significant role local governments and business leaders should be granted in the restoration and preservation of our communities as the federal government moves forward on the rescue plan.
The supervisors' resolutions call for creation of regional public-private partnerships to manage troubled mortgage assets, rather than turning them over to faraway bureaucrats and distant business interests with no motivation to provide local returns on the assets from which they would profit.
Here are five reasons why a regional public-private partnership plan is undoubtedly in the best interests of taxpayers.
1. Ensure fair pricing: Local marketplaces are unique. During the savings and loan bailout of the early 1990s, the Resolution Trust Company bundled properties across states, which inherently was unfair to Southern California. Regional public-private partnerships would prevent large bureaucracies and corporate interests that don't recognize differences between the Arkansas, Nevada and Southern California marketplaces from bundling and selling properties within those regions. Recognizing unique marketplaces would facilitate fair pricing practices.
2. Keep profits in local economy: During the savings and loan bailout, New York and Wall Street conglomerates bought properties lumped into large portfolios for pennies on the dollar. They would then "dump" the undesirable properties, selling to regional and local buyers for 40 to 50 cents on the dollar. This "spread" resulted in the loss of millions in profits to the East Coast. Regional partnerships would ensure returns on local investment.
3. Prevent a housing glut: Community experts with knowledge of the local economy would systematically release properties into the marketplace to prohibit the dumping of homes for far less than their worth and devaluation of entire neighborhoods. The 1990s taught us that outsiders and faraway bureaucrats are not inclined to pay heed to the negative economic and social effects that property dumping has on communities.
4. Encourage taxpayer returns: All of the securities being issued in the rescue plan are backed by real properties. All real estate markets are local and regional partnerships with local expertise are best-suited to manage local assets. Putting local properties into the hands of remote business interests that fail to recognize the difference between Southern California and Oklahoma marketplaces portends big losses for taxpayers. Ignoring the expertise of community leaders would be a disservice to taxpayers across this country.
5. Ensure safer communities: Properties retained by the government fall off the tax rolls and have potential to become magnets for criminals and squatters. Conveying properties to a public-private partnership would ensure continuing management of the properties and an ongoing tax-revenue stream to local governments. Tax revenues pay for vital public services such as police and fire.
As we move ahead, communities must have a voice in their future and a stake in the enormous investment that taxpayers are making to restore our financial markets.
Congress must do its part to protect Main Street from unsound business practices by entrusting its future to the people who live there.
Wednesday, October 8, 2008
Escrows delayed under Victorville Water Department, agents say.
VICTORVILLE • Three-day weekends and late bills from the Victorville Water Department have stopped a multitude of homes from closing escrow on time, according to local real estate agents.
“I would estimate we’ve had at least 15 homes delayed,” said Lynda Thomasson, a listing agent with Keller Williams Realty of Hesperia. “When you have a situation where you’re trying to rebuild a community and you have people who are ready and willing to fix them up, yet you hold them off at the end of escrow ...”
Thomasson said it most often happens when escrow is due to close on a Friday but can’t because city offices are closed.
Escrow is on hold for one family after it took the new department longer than anticipated to combine water and trash bills, which also left many customers without either bill for up to three months.
Now the department is taking 14 days to produce a delinquent bill that Thomasson said fell through the cracks in the process.
“It jeopardizes the buyers’ loans, and it’s already so hard to qualify,” she said.
Fred and Claudia Valdez are trying to purchase a bank-owned, abandoned home on Thompson Road to fix up as a rental property. They wired their money, and escrow was set to close last week, but just days before they found out there was a lien from the water company.
“I was thinking I was going to be delivering them keys and I had to deliver them bad news,” said Deana King, the Valdezes’ agent with Keller Williams.
Keller Williams pays the bills on properties it lists so that clients can be certain the plumbing works. But Thomasson said they never received notice that there were late fees resulting in a lien from the previous tenant.
“Like everyone else, she didn’t get her bill,” Claudia Valdez said.
City spokeswoman Yvonne Hester said the delay is not related to late bills and that the lien was sent to the San Bernardino County tax assessor on Sept. 3. She said the notice likely went to the property owner — the bank, in this case — and that they’re not required to notify other parties.
Valdez said the delay is holding up plans to start refurbishing the abandoned home.
“Now that we thought it was almost ours, this happens,” she said. “We have roofers waiting to start work.”
The family could face even further delays if they’re forced to redo loan documents after escrow failed to close.
Thomasson said that in the year since the city took over the water district, there have been delays in reimbursements when payments are overestimated to help make sure a lien doesn’t stop escrow.
Hearing on proposed water hike Tuesday
The Victorville Water District is proposing a rate increase of up to 26.9 percent in the coming year, or $12.80 each month for the average customer.
The public hearing for the proposed hike in fees is scheduled during the council meeting starting at 7 p.m. Tuesday in City Hall, at 14343 Civic Drive.
Written or oral protests against the increase can be submitted to the city clerk until Tuesday, or during the council meeting.
Without a majority protest, the increase will show up on all bills sent after Nov. 1.
“I would estimate we’ve had at least 15 homes delayed,” said Lynda Thomasson, a listing agent with Keller Williams Realty of Hesperia. “When you have a situation where you’re trying to rebuild a community and you have people who are ready and willing to fix them up, yet you hold them off at the end of escrow ...”
Thomasson said it most often happens when escrow is due to close on a Friday but can’t because city offices are closed.
Escrow is on hold for one family after it took the new department longer than anticipated to combine water and trash bills, which also left many customers without either bill for up to three months.
Now the department is taking 14 days to produce a delinquent bill that Thomasson said fell through the cracks in the process.
“It jeopardizes the buyers’ loans, and it’s already so hard to qualify,” she said.
Fred and Claudia Valdez are trying to purchase a bank-owned, abandoned home on Thompson Road to fix up as a rental property. They wired their money, and escrow was set to close last week, but just days before they found out there was a lien from the water company.
“I was thinking I was going to be delivering them keys and I had to deliver them bad news,” said Deana King, the Valdezes’ agent with Keller Williams.
Keller Williams pays the bills on properties it lists so that clients can be certain the plumbing works. But Thomasson said they never received notice that there were late fees resulting in a lien from the previous tenant.
“Like everyone else, she didn’t get her bill,” Claudia Valdez said.
City spokeswoman Yvonne Hester said the delay is not related to late bills and that the lien was sent to the San Bernardino County tax assessor on Sept. 3. She said the notice likely went to the property owner — the bank, in this case — and that they’re not required to notify other parties.
Valdez said the delay is holding up plans to start refurbishing the abandoned home.
“Now that we thought it was almost ours, this happens,” she said. “We have roofers waiting to start work.”
The family could face even further delays if they’re forced to redo loan documents after escrow failed to close.
Thomasson said that in the year since the city took over the water district, there have been delays in reimbursements when payments are overestimated to help make sure a lien doesn’t stop escrow.
Hearing on proposed water hike Tuesday
The Victorville Water District is proposing a rate increase of up to 26.9 percent in the coming year, or $12.80 each month for the average customer.
The public hearing for the proposed hike in fees is scheduled during the council meeting starting at 7 p.m. Tuesday in City Hall, at 14343 Civic Drive.
Written or oral protests against the increase can be submitted to the city clerk until Tuesday, or during the council meeting.
Without a majority protest, the increase will show up on all bills sent after Nov. 1.
Local cities will receive $13 million to fight foreclosure blight.
Apple Valley, Hesperia and Victorville to benefit from federal HUD grant
With some of the highest foreclosure rates in the state, three Victor Valley cities will receive a total of nearly $13 million in federal funding to remove the blight that abandoned homes have left behind.
Apple Valley will receive $3 million, Hesperia $4.5 million and Victorville $5.3 million from the U.S. Department of Housing and Urban Development, or HUD.
The funding is part of nearly $4 billion HUD is allotting to local governments across the country, to stabilize neighborhoods hit hard by the foreclosure epidemic.
The cities will be able to use the grant to purchase foreclosed homes at a discount, demolish or redevelop them, or to offer down-payment assistance to low- to moderate-income home buyers.
“What we have to do now is put together a proposal on how we will spend the money,” said Kathie Martin, spokeswoman for the town of Apple Valley.
Martin said the proposal is due back to HUD around December. She said the town hopes to work with neighboring cities to develop a program with similar requirements and eligibility, in order to be consistent and get the most for their money.
Yvonne Hester, spokeswoman for the city of Victorville, said city officials were surprised and thrilled to learn how much they’d be getting under the program. She said the city was granted nearly a third of what many whole states received.
Hester said there are no definite spending plans yet, but that the economic development department is doing an analysis of how the funds can do the greatest good.
The three Victor Valley cities are considered high risks for abandonment of homes, where foreclosed properties are not resold.
Hesperia and Victorville are among the top-10 highest foreclosure rates in the state among cities eligible for the grant. Both exceed 11 percent.
Apple Valley ranked in the top 15, with more than 10 percent of homes in foreclosure.
Though Adelanto was not eligible for funding, because it is not a Community Development Block Grant entitlement community, the city may get a portion of the $22.7 million allotted to San Bernardino County or the $145 million granted to the state, according to HUD spokesman Brian Sullivan.
By the numbers
• 10.3 — Percent of Apple Valley homes in foreclosure.
• $3 million — Amount Apple Valley was allotted to stabilize neighborhoods hit by foreclosures.
• 11.2 — Percent of Hesperia homes in foreclosure.
• $4.5 million — Amount Hesperia was allotted.
• 11.1 — Percent of Victorville homes in foreclosure.
• $5.3 million — Amount Victorville was allotted.
• 9.6 — Percent of San Bernardino County homes in foreclosure.
• $22 million — Amount San Bernardino County was allotted.
• 6.7 — Percent of homes in foreclosure statewide.
• $4 billion — Amount county and local governments across America were allotted.
Source: HUD.
With some of the highest foreclosure rates in the state, three Victor Valley cities will receive a total of nearly $13 million in federal funding to remove the blight that abandoned homes have left behind.
Apple Valley will receive $3 million, Hesperia $4.5 million and Victorville $5.3 million from the U.S. Department of Housing and Urban Development, or HUD.
The funding is part of nearly $4 billion HUD is allotting to local governments across the country, to stabilize neighborhoods hit hard by the foreclosure epidemic.
The cities will be able to use the grant to purchase foreclosed homes at a discount, demolish or redevelop them, or to offer down-payment assistance to low- to moderate-income home buyers.
“What we have to do now is put together a proposal on how we will spend the money,” said Kathie Martin, spokeswoman for the town of Apple Valley.
Martin said the proposal is due back to HUD around December. She said the town hopes to work with neighboring cities to develop a program with similar requirements and eligibility, in order to be consistent and get the most for their money.
Yvonne Hester, spokeswoman for the city of Victorville, said city officials were surprised and thrilled to learn how much they’d be getting under the program. She said the city was granted nearly a third of what many whole states received.
Hester said there are no definite spending plans yet, but that the economic development department is doing an analysis of how the funds can do the greatest good.
The three Victor Valley cities are considered high risks for abandonment of homes, where foreclosed properties are not resold.
Hesperia and Victorville are among the top-10 highest foreclosure rates in the state among cities eligible for the grant. Both exceed 11 percent.
Apple Valley ranked in the top 15, with more than 10 percent of homes in foreclosure.
Though Adelanto was not eligible for funding, because it is not a Community Development Block Grant entitlement community, the city may get a portion of the $22.7 million allotted to San Bernardino County or the $145 million granted to the state, according to HUD spokesman Brian Sullivan.
By the numbers
• 10.3 — Percent of Apple Valley homes in foreclosure.
• $3 million — Amount Apple Valley was allotted to stabilize neighborhoods hit by foreclosures.
• 11.2 — Percent of Hesperia homes in foreclosure.
• $4.5 million — Amount Hesperia was allotted.
• 11.1 — Percent of Victorville homes in foreclosure.
• $5.3 million — Amount Victorville was allotted.
• 9.6 — Percent of San Bernardino County homes in foreclosure.
• $22 million — Amount San Bernardino County was allotted.
• 6.7 — Percent of homes in foreclosure statewide.
• $4 billion — Amount county and local governments across America were allotted.
Source: HUD.
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