Tuesday, April 28, 2009
Monday, April 27, 2009
From the Daily Bulletin
Economists and real-estate agents are counting on homeowner affordability to stabilize California's housing market mess, but Bruce Norris couldn't disagree more.
Owner of The Norris Group, a Riverside-based real-estate investor and financial broker for other real-estate investors, Norris says it's not what a home shopper "can afford to pay" that's key in turning this market around - it's what they're "willing to pay."
He's bucking the popular belief that a 5 percent or 10 percent price drop on Inland Empire home values will usher in the market's bottom.
Think 20 percent or maybe more, he said.
"It's because of the 1004 MC form," Norris said Thursday while sitting in his board room chair, tapping his finger authoritatively on the table. "It's very dangerous."
This "market conditions addendum" for appraisers to use - enforced April 1 by the mostly government-owned mortgage investors Fannie Mae and Freddie Mac and loan insurer Federal Housing Administration - might thrust the economy's fragile mortgage system from its depressed state to something much worse, Norris argues.
Here's the skinny, according to the 28-year street-smart real-estate veteran: An appraiser usually pegs a property's value based on similar values in the neighborhood, and foreclosures have been dragging neighborhood values down. But the new addendum says a house must be appraised at the neighborhood's median home value instead of market value, as long as the home is located in a downward market and as long as the mortgage is a Fannie Mae, Freddie Mac or an FHA-backed loan.
Here's the kicker: Median home values in certain neighborhoods are taking a beating these days because their prices are skewed by dozens of foreclosures - which means nonforeclosed homes are slated to get hit by a double-whammy price-depreciation phenomenon. Norris has already seen values stated on local home appraisals drop 20 percent in the past 3 1/2 weeks. "If this plays out, things will get much worse," Norris said. "We're going to devalue the loan portfolios of almost every lender in the state of California. This could crash the system - it really could."
Here's the kicker: Median home values in certain neighborhoods are taking a beating these days because their prices are skewed by dozens of foreclosures - which means nonforeclosed homes are slated to get hit by a double-whammy price-depreciation phenomenon.
Norris has already seen values stated on local home appraisals drop 20 percent in the past 3 1/2 weeks.
"If this plays out, things will get much worse," Norris said. "We're going to devalue the loan portfolios of almost every lender in the state of California. This could crash the system - it really could."
Sunday, April 26, 2009
Here's the good bits from the article.
Give money away. That was a solution to the housing crisis mortgage giant Fannie Mae hit on last year.
Faced with growing numbers of homeowners unable to make mortgage payments, Fannie decided to fund loans to borrowers that were instant losers.
The point was to buy time. Even though those loans resulted in a $453 million loss, they helped keep troubled homeowners from defaulting. That meant Fannie for now didn’t have to make good on loan guarantees that may have cost it as much as $2.4 billion.
The plan entailed Fannie funding loans to help distressed borrowers get current on their mortgage payments. Fannie said there were about 71,000 advances made in 2008 with an average value of $6,500.
Fannie funded $462 million in such loans during 2008. The company tells investors in notes to its financial statements, though, what it thinks the loans are actually worth.
Based on market prices, Fannie said the loans had a value of just $8 million. That’s right, the loans, which are in many cases just months old, were worth 1.7 cents on the dollar.
Now let me see if I have the logic of this plan straight. The idea is to loan money to people who can't pay thier loans. So that they can pay thier loans with the new loan... Huh??? On what planet is that a good idea?
Thursday, April 23, 2009
Corona lost gound on median price in all zip codes, with 3 of the 5 zip codes falling about 5% in one month. On a price per sq/ft basis the numbers were negative in 4 of the 5 zip codes. The prices in Corona fell in 9 of the 10 data sets last month.
Riverside did not do much better. 5 of the 8 zip codes had price declines averaging nearly 10% in one month. 3 of the 8 zips posted median increases. One zip code posted a 20% increase in median although the price per s/f in that zip was nearly flat. That would indicate larger homes were selling last month in that zip code. The price per s/f in Riverside was also down in 6 of the 8 zip codes with 2 zips just squeaking in with a rise.
Wednesday, April 22, 2009
News from DataQuick
Lenders filed a record number of mortgage default notices against California homeowners during the first three months of this year, the result of the recession and of lenders playing catch-up after a temporary lull in foreclosure activity, a real estate information service reported.
A total of 135,431 default notices were sent out during the January- to-March period. That was up 80.0 percent from 75,230 for the prior quarter and up 19.0 percent from 113,809 in first quarter 2008, according to MDA DataQuick.
Last quarter's total was an all-time high for any quarter in DataQuick's statistics, which for defaults go back to 1992. There were 121,673 default notices filed in second quarter 2008 and 94,240 in third quarter 2008, during which a new state law took effect requiring lenders to take added steps aimed at keeping troubled borrowers in their homes.
"The nastiest batch of California home loans appears to have been made in mid to late 2006 and the foreclosure process is working its way through those. Back then different risk factors were getting piled on top of each other. Adjustable-rate mortgages can be good loans. So can low- down-payment loans, interest-only loans, stated-income loans, etcetera. But if you combine these elements into one loan, it's toxic," said John Walsh, DataQuick president.
The lending institutions with the highest default rates for loans originated in August to November 2006 include ResMAE Mortgage (69.9 percent of loans resulting in a default notice), Master Financial (64.6 percent) and Ownit Mortgage Solutions (63.6 percent). (WTF, how can 70% of thier loans go bad, people should go to jail for this stuff) Of the major lenders, IndyMac has a default rate on those loans of 18.9 percent, World Savings 8.0 percent, Countrywide 7.7 percent, Washington Mutual 6.3 percent and Wells Fargo 3.4 percent. Less than 1 percent of the home loans originated in late 2006 by Citibank and Bank of America have since gone into default.
Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 43,620 during the first quarter. That's down 5.5 percent from 46,183 for the prior quarter, and down 7.6 percent from 47,221 for first-quarter 2008. They reached 79,511 during last year's third quarter before dropping because of lenders' temporary policy changes (e.g. a temporary foreclosure moratorium).
In the last real estate cycle, Trustees Deeds peaked at 15,418 in third-quarter 1996. The state's all-time low was 637 in the second quarter of 2005, MDA DataQuick reported.
Tuesday, April 21, 2009
Where did all those million dollar homes go? (I ask in jest). Last year if you looked up in Amberhill or Crown Ranch areas of Corona nearly everything was a million dollars or more. There were a few listed for under a million but not many. Now it's quite the opposite (as it should be). In the Amberhill/Crown area there is only ONE home listed for over a million. It's a short sale and probably has no hope, especially since the listing has zero pictures of the home.
The other 10 listings in that area are all between $700k and $900k. Still way too high in my opinion. Those homes should all be $600k max and the majority of them should be no higher than $500k. At that price they would still be twice the price what the average Corona tract home will probably be selling for in a couple of years.
It must really tear up those homeowners that thought they were living the "champagne wishes and caviar dreams" lifestyle.....in Corona...
Monday, April 20, 2009
Foreclosure filings were reported on 341,180 properties in March, a 17 percent increase from the previous month and a 46 percent increase from March 2008. The March and Q1 2009 totals were the highest monthly and quarterly totals since RealtyTrac began issuing its report in January 2005 despite a decrease in bank repossessions (REOs), which were down 13 percent from the fourth quarter of 2008 and 3 percent from February totals.
“In the month of March we saw a record level of foreclosure activity — the number of households that received a foreclosure filing was more than 12 percent higher than the next highest month on record. Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays,” said James J. Saccacio, chief executive officer of RealtyTrac. “It’s also likely that the drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place. It’s very likely that we’ll see the number of REOs increase again now that most of the moratoria have been lifted.
Five states account for nearly 60 percent of nation’s first quarter total
California, Florida, Arizona, Nevada and Illinois accounted for nearly 60 percent of the nation’s foreclosure activity in the first quarter, with 479,516 properties receiving foreclosure filings in the five states combined.
With 230,915 properties receiving foreclosure filings during the quarter, California accounted for nearly 29 percent of the nation’s total. The state’s foreclosure activity increased 35 percent from the previous quarter and 36 percent from Q1 2008, and the first-quarter total was state’s highest quarterly total since RealtyTrac began issuing its report in the first quarter of 2005.
And now for the ugly numbers.....
There were 58,858 Notices of Default filed in California (a new record)
There were 34,575 Notice of Trustee sales
There were 14,352 REOs
For a total on 107,785 filings.
That's an increase of 33.4% over February and 66.5% over last March.
Thursday, April 16, 2009
This home was featured in a Delusional seller post a few months ag0. 16909 Ridge Cliff Dr in Lake hills. It's a large 5 bedroom, 4.5 bath 4576 sq/ft home. The delusional seller was asking 1.3 MILLION! He paid 1.043 million right at the peak. I dunno if he pulled cash out or what but he seemed to need 1.3M. As expected it's sat on the market since last June and he never reduced the price even once. What a tool.
Fast forward to today and it's now bank owned. Even the bank was clueless on this house as they tried to get $977k at the trustee sale. The broker listing the home seems to be clued in though and he's listed it for $435k or $95 s/f. Today, that's a pretty good price. I doubt it will be a year from now. But right here, right now this should sell at that price. Plus he can use "Reduced $865k!" in his marketing of the home....
I'm heading out of town for the weekend. You guys behave yourself!
Wednesday, April 15, 2009
A total of 19,486 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 27.9 percent from 15,231 for the prior month, and up 52.1 percent from 12,808 for March 2008, according to MDA DataQuick of San Diego.
An increase from February to March is normal for the season. Last month was the ninth in a row with a year-over-year sales increase. March last year was the slowest March in DataQuick's statistics, which go back to 1988. The March average is 25,138.
Regionwide, foreclosure resales accounted for 55.4 percent of March's resales activity, down from a revised 56.7 percent in February and up from 35.7 percent in March 2008.
The median price paid for a Southland home was $250,000 last month, the same as in January and February. That was down 35.1 percent from $385,000 for March a year ago. The median peaked at $505,000 in mid 2007.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,074 last month, down from $1,090 for February, and down from a revised $1,841 for March a year ago. Adjusted for inflation, current payments were 50.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 59.7 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity is nearing its 2008 peak, while financing with adjustable-rate mortgages is at an all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable, and non-owner occupied buying activity is above-average in some markets, MDA DataQuick reported.
| ||Sales Volume||Median Price|
Tuesday, April 14, 2009
J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums which temporarily halted foreclosures.
Citigroup Inc. says it stopped all foreclosures until March 12, at the Obama administration's request, on loans serviced for Fannie and Freddie. Since then, says a spokesman, it has "reverted to our previous business-as-usual moratorium."
Wells Fargo has also increased foreclosure actions since the expiration of its foreclosure moratorium ...
Both Fannie and Freddie have stepped up sales of foreclosed properties since their moratoriums ended on March 31.
More than 2.1 million homes will be lost this year because borrowers can't meet their loan payments, up from about 1.7 million in 2008, according to Moody's Economy.com.
Saturday, April 11, 2009
Here's a price I haven't seen yet in Corona.....until now. $75 a square foot!
22904 Briarwood Dr. This is a big home at 4666 sq/ft. It has EIGHT bedrooms and 4.5 baths. Great if you are running a boarding house or plan to take on 6 or 7 foster kids. Some of that space is a finished attic. I've seen this floorplan and the finished attic would be kinda cool to use as a kids play area or a home gym.
This home has been listed since late last year off and on. The previous owners bought it in 2003 for $440k. The bank took it back for nearly $600k. Obviously this was used as a home ATM. The money certainly wasn't spent on the house. It's not bad, but it's sure not been updated in any way. Current asking price for this thing is $350K or $75 s/f. That's down right Moreno Valley-esque in price.
Thursday, April 9, 2009
RELAX! This can easily be explained.
Late last year a multitude of foreclosure related legislation was passed. It had the effect of seriously slowing the filings of NODs, the first stage in the foreclosure process. If you look at the NOD numbers, they crashed big time in Sept, Oct and Nov. They shot back up again in Dec once the lenders got the systems in place to deal with the new rules.
It usually takes a home about 6 months to go thru the NOD phase before the NOT is filed. The NOT takes another 1 to 2 months before the home is auctioned (usually back to the lender). So that process usually takes 7 to 8 months from the time the NOD is filed.
So why are there so few REO properties right now. Well, wind the clock back 7 months....... BINGO! Sept of last year. That's when the banks got whammied and the NOD numbers fell thru the floor. And that's why there are far fewer REOs hitting the market right now.
How long before we start seeing REOs hitting the market in numbers again? Looking at the data, the NODs picked back up to near record levels in Dec again. Unfortunately that means the pickings might be slim for another 3 or 4 months. But come August, Sept there should be a big uptick in the REO numbers.
If there are any smart lenders out there they should be trying to expidite the process. After all, interest rates are low, the spring selling season is in full swing and there are buyers out there. If I were a bank manager I would want everything I had on the market NOW. There's a good chance come late summer the inventory will shoot back up putting stronger downward pressure on those prices. Smart banks (oxy-moron) will get the stuff sold now.
If the numbers I saw were correct last month will set a new record for NODs filed at over 50,000. Don't be fooled by the headlines you might read this month. The falling numbers of foreclosures that will likely be reported is a direct result of the 3 months it took the banks to adjust to the new rules. With record numbers of NODs currently being filed it's just a matter of a few months before the false hope wears off.
I do now how some of you feel though. It's frustrating as all heck right now. There ain't squat hitting the market as of late.
Wednesday, April 8, 2009
Lets compare two similar homes.
First in Hemet. 1433 Veronica Trail. This is a 2005 vintage home with 3105 sq/ft having 5 bedrooms and 3.5 baths. The lot is average at 6500 sq/ft. The home is in good shape and the kitchen has all the modern niceties like granite counters. This home is an REO, it's been on the market for 80 days with no sale. So chances are the price is too high. That price is $170K or $55 sq/ft. Payments with 5% down are approx $900/mo plus taxes.
Our comparable home in Corona is 13692 Ruby Ave (in Eastvale). This home built in 2004 also has 5 bedrooms and 3.5 baths. It's slightly larger at 3271 sq/ft. It also looks nice and has new (cheap) carpet. On the negative side, the kitchen does have the old white tile counters and the lot is 1000 s/f smaller at 5600 s/f. It does have better curb appeal because some one is watering the grass. This one is asking $370k. payments with 5% down are $1900/mo plus much higher taxes. You also need double the down payment.
That's a $200k difference for fairly similar properties. Or you can look it another way. You could buy two homes in Hemet for the price of the Corona home. That way when your spouse pisses you off you have somewhere to go.
So, is it worth $200k to live in Corona? The stores are the same, the restaurants are the same, the weathers the same, both have several very nice golf courses but Hemet has a huge lake. I don't think any one will argue that Corona is a better area than Hemet. But is it worth $200k more to live in Corona? Think what you can do with that extra cash you are not spending if you buy the Hemet house. You can pad your 401K or you can pay the house off in 10 or 15 years, then relax knowing you have no mortgage payment to worry about. You can take nice vacations and drive better cars. Or live on one income, something unheard of in Southern California 5 years ago. One parent can stay home and raise the kids, what a concept!
Sure, if you work in LA or the OC this option might not be very attractive. But if you are a nurse or a have an occupation that can go anywhere, why would you sign up for $200k more debt than you have to. And it's not just Hemet that has these prices. They can be found in Winchester, Perris, Moreno Valley, Lake Elsinore, Menifee etc.
Monday, April 6, 2009
Saturday, April 4, 2009
A ban on foreclosure sales and evictions from houses owned by mortgage giants Fannie Mae and Freddie Mac, which began as a high-profile effort just before the holidays to keep people in their homes as the government tried to come up with homeowner rescue plans, is over.
Spokesmen for Fannie Mae and Freddie Mac confirmed the ban ended March 31, in a response to an inquiry from TWI. The agencies made a major announcement in November to roll out the ban, garnering headlines and extensive news coverage. Freddie Mac CEO David Moffett issued a statement at the time, saying the ban “provides a new measure of certainty” to families facing foreclosures during the holidays.
Fannie Mae said in a brief statement from spokesman Brian Faith that “Fannie Mae’s suspension of foreclosure-related evictions concludes as of March 31, 2009. The company has in place special foreclosure sale requirements that take into account the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.”
Maybe now we will start to see some new inventory hit the market.
From the North County Times
Once considered among the safest loans available, government-insured mortgages issued last year have performed worse than the subprime loans that kicked off the collapse of the nation's housing market, according to data from a research firm.
So far, government bailouts have put up to $2.9 trillion of taxpayer money at risk, according to the government official in charge of overseeing all bailouts.
A huge level of defaults on loans insured by the Federal Housing Administration, which analysts called "stunning," raise the specter of further market turmoil and more taxpayer funds sent toward fixing the mortgage crisis."Frankly, I wouldn't be surprised if you called me up in a year from now and asked, 'What do you think about the FHA bailout?' " said Norm Miller, a professor at University of San Diego's Burnham-Moores Center for Real Estate.
First American CoreLogic, a prominent mortgage data firm, reported this week that 20.7 percent of all FHA loans issued in 2008 were at least 60 days late by 10 months after the origination date. By the same metric, 14.1 percent of subprime loans issued in 2007 were 60 days delinquent.
The main problem with the delinquent FHA loans was low down-payment requirements, said Sam Khater, senior economist for First American CoreLogic.
While most mortgages issued by private banks now require at least 10 percent down payments, FHA loans allow borrowers to buy a home who put up just 3.5 percent of the cost.That means within two months of purchasing an FHA-insured home, the borrower probably owed more than the value of the home. And as layoffs mount, a loss of employment typically leaves the borrower in foreclosure or short sale ---- where the borrower resells and the lender settles for less than the amount of the loan.
"When you put out a (low down payment) product in the context of very high depreciation, it's going to happen," Khater said about the high delinquency numbers.By definition, FHA loans carry little equity. But the risk of failure was increased by the implementation of "down payment assistance" programs implemented by home builders, said Ramsey Su, a San Diego housing analyst.
Those programs often covered the rest of the down payment and sometimes even covered the closing costs, meaning a homebuyer could borrow more than the value of the home and pay no money whatsoever up front.
The government has since discontinued the programs. But before they did, FHA became the resource for riskier buyers, Su said. "FHA became the subprime lender after the subprime market died," he said.
Wednesday, April 1, 2009
There are currently 3 listings on Delusion Place. The first and newest is 3945 Mt Shasta. Its a 3176 sq/ft home with 5 beds and 3 baths. It's a decent looking house but other than a gaudy cement wall in front it is devoid of landscaping. There is a partially finished patio but that's probably more of a negative than a positive. Asking price, a suave' $759k or $239 s/f! Yup, he bought near the peak and is still looking to make some money.
Delusional neighbor #2 is a realtor. Some one that should know better but is still living in 2006. 3845 Mt Shasta is the same floorplan as doofus #1 above. This house is quite a bit nicer though. It has a pool, a stable and landscaping. The interior is also nicer. Asking price for this one..... $849K or $267 s/f!
The third stooge lives at 38847 Mt Shasta. His home is 3569 sq/ft with 5 beds and 3 baths. This one looks ok, but it's far from fabulous. This guys is actually hoping to make $200k over peak price! He's asking $940k or $263 s/f
There have been several sales on this street in the last few months so the comps are set. Comp #1 is a home I looked at. It's a model match to the first two homes. It didn't have any landscaping. Dirt int the back and dead grass in the front. The inside was average. It sold on Feb for $415k!. Less than 1/2 of what the realtard is asking.
Comp #2 is actually larger than stooge#3's place at nearly 4000 s/f. It has 5 beds and 4 baths. It sold in Jan for $410k. Way less than 1/2 of what stooge #3 is asking
Is it the methane from the horse poo, that altitude, possibly they're all on prozac?? Who knows why. The only thing we know for sure is that there is no chance any of these will sell at those prices. They are twice what they should be (or more). Even if they did find the worlds most out of touch buyer, he would need to pay cash. No back would fund a loan on those properties. So. here we have this months Ass-Clown award and it goes to a whole street!