Monday, August 31, 2009
From another of Diana's reports
There have been a lot of accusations on the blogs and on the air that banks are holding on to REO (bank-owned) foreclosed properties because they don't want to put them on the market and push home prices ever lower.
In digging into this, I got a few interesting answers:
Bank of America:
* Foreclosure sales have been abnormally low since we learned of the pending implementation of the administration’s Making Home Affordable program. From that point, we delayed the initiation of foreclosure proceedings and sales for customers that may eligible for a loan modification under MHA. As a result of this policy, our foreclosure sales in recent months have been as little as half the normal pace we experienced before.
* Until a foreclosure is completed, Bank of America continues to exhaust every possible option to qualify customers for modification or other solutions.
* Now that Making Home Affordable programs are operational, we do project an increase in foreclosures as we exhaust every available option to qualify customers for modifications and other solutions.
* While we have very strong loan modification programs now available, unfortunately, these foreclosure projections reflect the increasing number of customers who will not qualify for loan modification because they have suffered major life events servicers can’t solve...primarily unemployment and underemployment.
* We do not hold foreclosed properties off the market. The vast majority of mortgages serviced by Bank of America are owned by third-party investors. We have an obligation to them to prepare foreclosed properties for market and sell them as efficiently as possible.
Sunday, August 30, 2009
1) Long time homeowners that are in good shape (although most are unhappy they didn't sell in 2006).
2) Those that have let the house go or have stopped making payments and are awaiting the inevitable.
3) Those that are still making the payments and really do think the values will shoot back up again in a few years. The crazy thing I find about this group is that many of them are going into serious debt just keeping up with their payments. I think this is the group that will be making headlines next year. Many of them are burning through credit cards, savings accounts and in some cases even their 401Ks trying to keep up on the mortgage. So what will happen to these folks if the values don't come back. This groups is trying "to do the right thing" but they will come out far worse than group two in the end. Group two is saving and will be rebuilding their credit once the foreclosure or short sale happens. In a few years they will be able to buy again.
Fortunately I'm in group 1, but I know I'd be in group two had I purchased that house in 2005.
In other news (from Calculated Risk)
15.2% of California mortgages are now delinquent or in foreclosure......
Tuesday, August 25, 2009
market forecast for 2006 to 2010
On the sales front, "what happens when the government handouts stop?" Well, an indication might be what happened to new building permits when the California $10k new home tax credit expired. The credit expired last month. SFR permits dropped nearly 30% from June to July after the credit expired.
Homebuilding permits filed in California in July fell significantly from June as a state tax credit for buyers of new homes expired, a homebuilders group said on Monday. The group also said the number of new homes built in the most populous U.S. state would sink to a record low this year. "Activity stopped as quickly as it started, which is bad news for housing and the broader economy," Rivinius said.
The defaults are like the Energizer bunny......
Mortgage delinquencies will continue to rise and set records the rest of this year in California, according to projections to be released today by TransUnion, one of the three big U.S. credit-reporting companies.
The good news from TransUnion's number-crunching is that, even in the tarnished Golden State, the trend may finally reverse itself by the middle of next year. Before that can happen, lenders must first work through scads of backed-up problem loans clogging their pipelines, F.J. Guarrera, vice president for banking at the Chicago data analyzer, said in an interview Monday.
So in the immediate future the percentage of California home loans that are delinquent at least 60 days or are in foreclosure is projected to skyrocket to more than 14% by year's end from 9.7% as of June 30, TransUnion said. In the region including Los Angeles, Orange, Ventura, Riverside and San Bernardino counties, the delinquency rate also was expected to hit 14% at the end of the year, up from 10.7% as of June 30.
As of June 30, 14.9% of residential mortgages in San Bernardino County were at least 60 days late. And in Riverside County, where boom-era home building reached a frenzied peak, 16.5% of home loans were at least 60 days past due. (OUCH! That even shocks me, 16.5% of Riverside's home loans are at least 60 days late)
By comparison, at the end of the first quarter of 2007, Riverside County's delinquency rate was 2.6% and San Bernardino County's, 2.3%.
The normal national rate for these delinquencies is 1.6% to 2%, Guarrera said.
Monday, August 24, 2009
So here is what BW had to say;
When BusinessWeek set out to determine what housing prices would be in the year 2012, we knew that there was no way to know for sure. But in working with the Brookfield, Wis.-based research firm Fiserv, we weighed historical data against current trends to get a bead on which way the markets might jump at one-year increments. By combining data, we were able to get a pretty good idea of what home prices would be in three years' time. Across the board, real-estate prices will continue to drop before rising slightly by the fourth quarter of 2011. Why is that important? Given the wretched state of the real-estate market today, both homeowners and potential buyers might be better able to make an informed decision about when, and whether, they should move. Obviously, we can't guarantee that our data will hold up — although we think it will.
Personally I think a better question is, "what will your home be worth in 2020 or 2030". Going that far out is really hard to do with volitile markets. But housing really shoudn't be a volitile market. I'de be very surprised to see much change by 2020. I still think we will see negative movment for another few years. It might be only small percentages in the IE but I don't see how it can go up with the current problems. I expect several years of flatline or very minimal increases after than. Bottom line, I think in 2020 prices will be about where they are today. That's why I think if you are going to buy you'de better be in it for the long haul.
Metro: Los Angeles-Long Beach-Glendale
What a home will be worth in 2012*: $253,328
Q4 2008 price: $350,000
Projected price change by MSA**: -27.6%
Projected price change by state: -13.2%
Los Angeles, best known as the home of Hollywood, is home to excellent universities such as the University of Southern California and large corporations such as aerospace contractor Northrop Grumman. Southern California has been particularly damaged by the downturn in the housing market, and home values are expected to remain soft.
Residents of the bankrupt McSweeny Farms development in southeast Hemet say the neighborhood in which they are living is a far cry from the one they were promised when they moved in over the last several years.
Facilities such as a park, an Olympic-size swimming pool, gym, lounge, party room, and landscape maintenance have either not been finished or have been withdrawn, say several residents. Though they are not getting what they were promised, they are being charged what they promised, $177 per month, for the operation of those facilities.
SunCal has filed bankruptcy and a trustee has been appointed to oversee operation of the development, which was only about one-fifth completed when the housing market collapsed and work at McSweeny Farms came almost to a halt.
A phone call and e-mail message seeking comment were not returned.
You can read the rest of the article if you want, but you get the idea. Many of the newer developments especially the unfinished ones have a chance of running into similar problems. HOA dues are based on a specific number of homes. If a development falls short of building out the HOA probably will not have the funds to do everything they are supposed to. That leaves 2 options, raise the fees or cut back on services.
Developers going BK before projects are finished can lead to even worse situations. Promised parks, streets and even utilities can be affected. Buying in a unfinished development is rolling the dice these days. Do you feel lucky? The worst thing about the BK developements is that you don't know what they will build 5 years down the road. Those unfinished lots will be auctioned off for pennies on the dollar. The new developer will more than likely build smaller cheaper homes because that's what will be selling for the next 10 years. You could easily have a 1200 s/f house right next door to a 5000 s/f McMansion. Don't laugh I saw it happen in the early 90's.
There are quite a few unfinished developments spread around the IE. In Corona you have gobs of them over in Eastvale. In South Corona there's The Retreat, Dos Lagos, and Sycamore Creek. None of those developments are built out and two of the three are on golf courses that are not financially healthy.
It's the same throughout the IE. There are unfinished developements everywhere. Factor this in when you think of buying in one of these developments.
Sunday, August 23, 2009
Title records show that Ms. Hernandez and her husband bought their home in 1997 for $123,000, using nearly 100 percent borrowed money. They refinanced first in 2003, at 11.1 percent interest on $129,000. The equity loans kept coming: the balance rose to $230,000 in 2004; $323,00 in 2005; $374,000 in 2006; then, finally, $415,000, at 8.12 percent, in 2007.
But a region that thrived almost solely on development has fallen mightily. Building permits for properties valued at a record $12.5 billion were issued in Riverside and San Bernardino Counties in 2005; in 2008, the figure was $3.8 billion, according to John Husing, an economist whose expertise is Southern California.“You have to think of it like a gold-mining town in a Clint Eastwood movie,” Mr. Husing said. “Money comes to a place where there has never been any, and next there are tool stores, a saloon, a general store and so on. But the saloon doesn’t exist without the gold mine, and the gold mine here was construction.”
Thursday, August 20, 2009
15.2% That's the number of mortgages that are in default in California
12% The unemployment rate in California
THIS JUST IN: The numbers for the IE just came out. Riverside county is now at 14.7%
and the IE is at 14.3%. Holy Smokes Batman.....
26% The number of underwater mortgages in the US (estimated to hit nearly 50% by late 2010)
42% The number of underwater mortgages in California. And yes, it's higher here in the IE!
And the list goes on and on.....
Here's the July sales by city. Really not much change from June. A few went up and a few went down. You can see thought the big sales numbers are in the more desirable areas or the less expensive areas. MoVal, Corona and Riverside make up a large percentage of the sales. In San Berdu the sales are also primarily in the nicer areas of the low cost areas. Hesperia, Victorville, Fontucky, and San Berdu have the most sales. Not surprising by any means.
|DsRT HOT SPRINGS||141||$91,000||$138,000||-34.06%|
|San Bernardino Co||3,486||$140,000||$230,000||-39.13%|
|BIG BEAR CITY||44||$187,500||$193,250||-2.98%|
|BIG BEAR LAKE||30||$348,000||$330,000||5.45%|
|GREEN VLY LAKE||4||$74,750||$110,000||-32.05%|
Tuesday, August 18, 2009
The CAR (California assoc of Realtors) has released it's latest affordability index. This one is as retarded as all the rest of them lately. According to the CAR nearly 80% of IE housholds can afford an entry level house.
According to the chart an income $24,450 can buy the typical entry level home that they say sells for $137,260. That is a price to income ratio of FIVE POINT SIX (5.6). Have they learned nothing from the last few years. They think it's ok to try and put a family in a home that is nearly 6 times their income. Remember the traditional ratio is 2.5.
They somehow figure the monthly payment (including taxes and insurance) will be $820 on that $137k house. That might be true if the buyer has 20% down. But let's face it, how many families making $24k per year have $30k in the bank? eh.... NONE!
Even if they could get a loan they would be spending about 50% of their take home pay on the mortgage. That leaves about $800/mo to live on. $800 for food, utilities, gas, maintenance on the house, car payments etc. It's fairly obvious that they're living in a fantasy world if they think someone making $24k should be buying a $137k home. Someone making $24k is probably living at home with mom and dad.
I was making double that in 1988 when I bought my first house for $110k and I had to watch every penny. There's not way in hell I could have afforded that house on $24k or even $34k. I would have had a hard time of it on $44k. Stupid realtors......
Much of today's market is being driven by first time buyers. They are being lured into the market by the low FHA down payments and the $8000 first time buyers credit. The current credit however is due to expire at the end of November. The way the credit works you have to close by Nov 30th to get the money. With many closings taking up to 90 days, if you are hoping to buy using this credit you will need to get moving.
Will the government extend the credit? The NAR is pushing hard to get the credit extended. There's even been talk of upping the credit to $15k and offering it to move up buyers. They tried that last year and it failed so I'm not optimistic of that happening. But I do feel that they will extend the current credit. It's only another few billion dollars.......
Here's the report from DQ,
A total of 24,104 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 3.6 percent from 23,262 in June and up 18.6 percent from 20,329 a year ago, according to San Diego-based MDA DataQuick.
July’s sales total was 8.7 percent lower than the average number sold in July – 26,410 – since 1988, when DataQuick’s statistics begin. July home sales have ranged from a low of 16,225 in July 1995 to a peak of 38,996 in 2003.
Sales have increased year-over-year for 13 consecutive months. They’ve been driven higher by increased affordability, low mortgage rates, plentiful government-insured FHA financing for first-time buyers, robust investor demand and, more recently, improved access to the “jumbo” financing used to buy more expensive homes.
Across the Southland, resales of single-family houses priced $500,000 and above rose to 20.1 percent of all existing houses sold in July, compared with a low this year of 15.0 percent in March. However, a year ago 27.2 percent of sales were for more than $500,000.
“Have prices hit bottom? While some data continue to hint at that, it remains an especially risky call to make given the uncertainty over the magnitude of future job losses and foreclosures. The recent drop in foreclosure resales, coupled with the rise in high-end sales, has helped stabilize some of the regional home price measures. But there’s still quite a bit of distress out there, and plenty of unknowns with regard to how lenders and borrowers will choose to proceed,” said John Walsh, DataQuick president.
“Even if we are at or near bottom,” he added, “history suggests we could bounce along that bottom for quite a while.”
Wednesday, August 12, 2009
Tuesday, August 11, 2009
Here's the latest California report from ForeclosureRadar
Once again, foreclosure stats were mixed, with Notice of
Default filings flat, Notice of Trustee Sale filings rising by 31.6 percent and foreclosure sales dropping 22.7 percent. The number of properties scheduled for foreclosure sale – new Notices of Trustee Sale minus those sales that have canceled or sold – rose to a record level of 124,874, nearly double the levels reached during the foreclosure peak last year.
High-level findings for July 2009 include:
Filings of new Notices of Default were little changed from June at 44,996 filings, a 1.5 percent decrease. Year-over-year filings rose by 11.9 percent from July 2008.
Notice of Trustee Sale filings bounced back after dropping in June to 39,294; a 31.6 percent increase over the prior month, and a 0.7 percent increase over the prior year. The California Foreclosure Prevention Act, which adds 90 days prior to the filing of the Notice of Trustee Sale for lenders that do not have a comprehensive loan modification plan in place, had only a fleeting impact last month; with Notice of Trustee Sale filings hitting their second highest level on record in July, just two weeks after the law took affect.
After increasing for 3 consecutive months, foreclosure auction sales dropped by 22.7 percent to a total of 17,239, with a combined loan value of $8.08 Billion dollars. Year-over-year sales dropped a substantial 40.1 percent, with July 2008 having the highest level of foreclosure sales on record at 28,795. Opening bids set by lenders were an average of 39.1 percent lower than the loan balance, with 45.0 percent of sales discounted by 50.0 percent or more.
Sales to third party bidders were flat from June, with 2,683 foreclosures sold to investors, or in increasingly rare instances, junior lenders. As a percentage of total sales, sales to third parties continued to increase; though lenders still took back 84.4 percent of foreclosures at auction, representing 14,555 loans, with a total of $6.93 Billion dollars in loan value.
Foreclosures scheduled for sale rose to 124,874, a 10.4 percent increase from the prior month, and a 93.3 percent increase year-over-year from July 2008. The year-over-year increase is significant given that foreclosure sales in July 2008 set a record that has not again been reached. The increase appears to be primarily due to the fact that lenders are willingly postponing foreclosure sales.
The new “Home Affordable” loan modification plans now include a 3-month trial. It is our understanding that foreclosures are not cancelled until the completion of this trial period. As such, we believe monitoring the cancellation of scheduled foreclosures should provide some insight into the effectiveness of this program, as successful trials should result in canceled foreclosures. We had a record number of cancellations in July at 10,789, a 24.8 percent increase over the prior month and an 86.3 percent increase year-over-year. It should be noted, however, that as a percentage of the foreclosures actively scheduled for sale, there was little change from prior months. It appears that the significant increase is primarily due to the high number of foreclosures that are scheduled for sale, but postponing rather than selling.
“Despite the failure of the California Foreclosure Prevention Act to slow Notice of Trustee Sale filings it is clear that lenders and servicers are delaying foreclosure” says Sean O’Toole, founder and CEO of ForeclosureRadar. “More homeowners are now sitting at the brink of foreclosure, just days away from the next scheduled auction date, then ever before, yet we simply aren’t seeing the wave of foreclosures many predicted.” Political pressure, financial incentives and the postponement of sales awaiting the completion of loan modification trial periods are likely reasons for the delays. The vast majority of foreclosures, 72 percent, are postponing either due to lenders request, or mutual agreement between the lender and borrower. Only 10 percent are being postponed due to bankruptcy. With few exceptions the remainder have not yet been postponed and are scheduled for their first sale date. The average California foreclosure has a total loan balance of $425,134 on a home that is now worth $236,739. DOH!
Monday, August 10, 2009
The housing market hasn't bottomed out yet. For the third quarter, the closely-watched S&P Case-Shiller national home-price index fell 16.6%, and experts are predicting further declines. Of the top 100 markets, here are 10 with the worst forecasts.Only 2 of the top 10 are not in California!
1) LA, Ca
2) Stockton, Ca
3) Riverside, Ca. A popular boom earlier this decade fueled runaway prices for single-family homes in this market, which includes San Bernardino and Ontario, outside Los Angeles. Median prices are expected to fall to $197,000 in 2009, down nearly $60,000 from 2008.
Well, we are already way past $197k. Riverside County's median is currently hovering around $185k and the city of Riverside is currently at $180k. I'm not sure what they are using to come up with the numbers. The report does not say if it's just SFR's or SFRs and condos. It doesnt say if it's the city median or the county. Thier forcast is for a drop of 23% this year and another 5% in 2010. So let's take those declines and use the numbers from DataQuick.
According to DataQuick, the Riverside County median was $209k at the end of 2008. If we factor in a 23% fall for 2009 that puts the median right around $160K at the end of the year. Currently prices are stable but that's probably just a factor of the season and the propping up of sales by all the government intervention. It's certainly not unreasonable to think prices will fall to the $160k range by the end of the year. That's only a $25k drop. We've seen the median drop 10K in on month. As recently as April we saw drops of $7k in one month.
Rounding out the top 10,
Sunday, August 9, 2009
I keep hearing from agents how great the market is. But the reasons for this sense of wellness are all not healthy ones. The homes that are selling are primarily REOs and shorts. The only reason there are multiple bids is because most of the buyers are trying to snag one of these (and there's not that many right now). So you have 500 buyers trying to buy 50 homes. And half of those buyeres wouldn't be able to buy a home if it were not for the low FHA requirements and the government tax credits. It's like the market is on life support and the government is keeping it alive with tax dollars.
Kinda makes you wonder, what next?
Saturday, August 8, 2009
Here's one of those listings that just makes you scratch your head and wonder of you read it right.
688 Sun Cup Circle is a 3400 s/f home on a 7000 s/f lot in McSweeney Farms, Hemet. It's way out on the South Eastern side of the city, behind Diamond Valley Lake. It was built as an Equestrian community with many of the lots being 1 acre (this home is on a small 7000 s/f lot). The community is fairly nice with a big clubhouse and horse trails. It was built right as the market started to tank. I haven't been out there in over a year so I don't even know if they built it out or not. If I had to guess I'de guess they didn't.
This particular house was bought new in Feb 07 for $383k. It went on the market in Dec 08 for $350k. Of course by then there was no hope of getting that in Hemet. Months went by and the price went down...down....down, finally getting to $205,777 (777 must be lucky). It stayed there for a while. Then I guess the owner started reading about the "green shoots" and the price started going up. First to $285,777 in March and now to $350, 777. It's now listed higher than it was in Dec 08.
So what's it really worth? Well it's hard to say since there's been so few sales in this tract. There was one on the same street that sold back in Feb for $179k. It was a little smaller though. There are 3 nearby homes listed, one REO model match listed at $174k. It has been on the market since Aug 08! The other 2 are short sales listed for $150k and $179k. So going by the model match comp you have to assume the value is $180k tops. Since that home hasn't sold at that price it's probably less.
Now if you did want to spend $300k to live in this area you might rather look at 650 Newport. It's a large single story on a 1 acre lot. This home is beautiful inside. The kitchen is awesome. It sold new for $630k and is now listed as an REO for $304K. That's probably still a little high. It's been listed since May with no takers. More than 50% off and they still can't sell it. $250K ought to get it done for this house. I don't think they'll get over $300k for it with no landscaping.
Thursday, August 6, 2009
This came from the OC register from a post about "there's no second wave" because the first wave hasn't washed through yet.
You can see the NOD's (blue) are increasing with little change. They've been going up like homesick angel since 07. And this year the trajectory is only getting steeper despite the best (or worst) efforts of the government. NODs will probably continue to skyrocket. I suppose they will level off at some point once most of the upside down homeowners have received one. Most of the increase is due to job losses and those upside down homedebtors giving up. I wonder how much of it is due to people that can afford the payment but want to get a loan mod? So they stop making a few payments. If your credit is already bad and there's a chance of lowering your house payment its probably worth a shot.
The burgandy line is the NOTs, homes that are scheduled for foreclosure. You can see that it's been rising for the last few months after the lull we had around the holidays when the government put all those foreclosure freezes into effect. Most of those have expired now but there are still some games being played like the latest one in California that went into effect in June.
The yellow is the REO's, or the stuff the banks already own. You can see it is decreasing even though the NOTs are increasing. This isn't how it's supposed to work. It's like flooring your car and seeing the gas milage go up. Part of that widening gap is surely due to the fact that the banks are actually selling the REOs now that the prices have come down. But I'm sure an equally large part of the difference is due to the intervention of the govenrment. All the moritoriums, freezes and workout plans are having an effect. It's not going to change the eventual outcome in most of the cases where the NOT has been filed.
Tuesday, August 4, 2009
19126 Hawkhill Ave, in Perris was foreclosed on lat year, August 2008 to be exact. It's just now hitting the market! It took the lender a whole year to get this property on the market.
Now I don't know the particulars of this property. It could be that they were tied up evicting a renter or the previous debtor or some other problem. But regardless of what the problem was, a year seems like a awfully long time between when a foreclosure happens and the property hitting the market.
Now the price on the home isn't too bad. At $96 s/f you get a large single story on a half acre. Yes the address says Perris but it's not "really" Perris. This home is up near Lake Mathews. The problem is that this particular tract is a little too close to Mead Valley. And Mead Valley is the meth capitol of the IE. The home is nearly 3000 s/f it has 4 bedrooms and 2.5 baths. It was purchased new in early 2005 for $414k. Then flipped 4 months later for $555k. That's not a bad deal eh? $140k profit in 4 months.... The bank took it back in Aug 2008, tried to get $290k at the auction but there were no takers. Now they have it listed for $258k.
Saturday, August 1, 2009
The indicated points are the spring/summer increases in median for San Diego.