Saturday, December 25, 2010

Merry Christmas

Merry Christmas everyone!


Tuesday, December 21, 2010

Wells Fargo mod madness

Wells Fargo got busted by the California AG over a bunch of crap mortgages it didn't even sell. Unfortunately for Wells it purchased Wachovia who did sell them. They garbage loans are the pick-a-pay variety which are pretty much the most toxic crap around. Nearly every one that took one paid the absolute minimum the contract allowed. This usually was far less than even an interest only payment. Because they borrowers were paying less than the actual interst amount the balance of what was owed was tacked onto the principal. So there was little chance of anyone paying these things off. Jerrry Brown went after these lenders for false and deceptive advertising.

Wells has agreed to do loan mods for the 27,000 loans in California and to offer "restitution" to homeowners that have already lost homes (they will get a nice Xmas present from Wells, an average of $2650 each). I suspect the loan mods will be nothing more than offering a fixed low interst loan for the original loan balance. I seriously doubt they will write the principal down any farther than that. I suspect this is another story that sounds a lot better than it will actually be.

It will be interesting to see if any other lenders will be affected by this investigation. There were a lot of lenders selling this toxic crap in 2004 to 2007.

Monday, December 20, 2010

Retard investors

So after nearly a year on the market the house across the street finally sells. I'm very pleased since I'm tired of looking at a dirt yard. There were people in there all weekend cleaning and painting. Then I come home today and there is a "For Rent" sign in the yard. WTF, what kind of idiot investor rents a 4200 s/f McMansion???

Wednesday, December 15, 2010

IE sales TANK in November

Sales in the IE fell 20.5% in Riverside and 17.5% in San Berdu versus last Nov. Interest rates are about the same as last year (a little lower actually), median price is the same as last year. So what's different? Well last year sales numbers were pumped up because the tax credit was expiring. Of course it was extended but no one knew for sure that would happen so a lot of people jumped off the fence to get that 8 grand.

So here's the DQ report,

CA---Southern California home sales fell in November to the second-lowest level for that month in 18 years, reflecting the weak economic recovery, a dormant new-home market and tight credit conditions. The median price paid for a home rose above a year earlier for the 12th consecutive month, though November’s gain was the tiniest yet, a real estate information service reported.

A total of 16,208 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 3.2 percent from 16,744 sales in October, and down 15.5 percent from 19,181 in November 2009, according to MDA DataQuick of San Diego.

A drop in sales from October to November is normal for the season, with the decline averaging 8.1 percent since 1988, when DataQuick’s statistics begin. November’s sales were the lowest for that month since 2007, when 13,173 sold, and the second-lowest since 1992, when 15,446 sold. Last month’s sales fell 26.5 percent below the average November sales tally of 22,047.

In the new-home market, sales were the slowest for a November since at least 1988. In many growth areas the math for builders just doesn’t work: The cost to construct is higher than what buyers can afford or are willing to pay. Often builders can’t compete with the pricing of nearby resale homes, especially foreclosures and short sales.



Sales Volume Median Price
All homes Nov-09 Nov-10 %Chng Nov-09 Nov-10 %Chng
Los Angeles 6,257 5,540 -11.50% $329,000 $325,000 -1.20%
Orange 2,528 2,257 -10.70% $432,500 $435,000 0.60%
Riverside 3,745 2,977 -20.50% $200,000 $195,000 -2.50%
San Bernardino 2,751 2,271 -17.40% $160,000 $152,000 -5.00%
San Diego 3,148 2,566 -18.50% $325,000 $335,000 3.10%
Ventura 752 597 -20.60% $365,000 $375,000 2.70%
SoCal 19,181 16,208 -15.50% $285,000 $287,000 0.70%

Tuesday, December 14, 2010

Rent vs Buy calculator


Patrick.net has put up a pretty cool rent vs buy calculator. You can adjust most of the numbers used to calculate the final result. He has some default numbers that I don't totally agree with. However he lives in the Bay area where prices are still very inflated compared to the IE.

I changed a few of the default numbers. I bumped up annual price change (he uses -1%), I used 1% (I figure 0% for a few years then 2% after that, so 1% is conservative I think). Property taxes, DP, income tax rate, interest rate etc will need to be adjusted for your own situation.

I ran the numbers for most of the homes I've looked at lately and all of them were better off for a buyer. The picture is a screen grab of one propery I looked at. The rental amount is based on a current similar home that is for rent (although that rental amount seems low for this particular area). Either way even using a rental amount that seems low, a buyer comes out nearly $400/mo better off.

http://patrick.net/housing/calculator.php#header

Thursday, December 9, 2010

Where's the market going?

First off to answer a few inquiries, Where have I been? Been busy! Work, took a vacation and with the market pretty well settled there's just not that much interesting stuff to write about. The delusional sellers are pretty well gone now and that takes much of the fun out of it. So I will post when I can but feel free to comment about what's ever on your mind.

On to the topic.

There is a lot of talk about the housing double dip and prices falling another 10-20%, but will it? The problem with these reports is they are speaking about prices on a national level. You just cannot read a report like that and assume it will apply to your area. That would be like reading a weather report for Seattle and expecting it to be the same in Atlanta. So, will prices fall? I beleive in many areas there's still a lot of meat left of the bone. Just drive down to South OC or many parts of LA. The prices are still ridiculous and way out of line with incomes. The Northwest has not seen prices fall back to traditional levels. The Bay Area and much of the East Coast is still overpriced based on tradition price ratios. So yes, on a national level prices will probably fall 10 to 20%.

But what about our neck of the woods? THE IE! My gut feeling is that most of the IE is going to just stay flat. The high end and the few pockets where prices didn't fall all the way back may see some declines. There are many unknown factors that could push prices down. If unemployment skyrockets that would obviously hurt. But overall prices in the IE are back close to traditional levels of income to median price and houses can be purchased and rented at a profit once again. That factor alone should keep the prices of the mid to low end homes stable. As long as some investor can buy a property and have it pencil out with a profit those homes will sell. If rents fall then prices could follow. But in the last year rents have stabilized and right now there is no shortage of renters.

What's the market like? Since the end of the tax credit the market has definitely slowed way down. Traffic at open houses is slow and the amount of multiple offers has fallen WAY down. I used to see 6 to 12 offers on anything nice I was looking at in the Spring. Now it's one or two.
The median listing price has fallen considerably in the last few months especially at the high end. I have noticed the listing prices in the areas I watch fall at least $50k. I have noticed homes taking longer to go pending and longer to close. Many of them are falling out of escrow. I can only assume the lenders are getting pickier. Even with the lower interest rates homes are just not selling near as fast. Of course now we have moved into the SLOOOW season. Far fewer people want to mess with moving over the holidays.

Where we heading? I feel the market in the IE is going to stay flat for quite a while. I don't think interest rates are going to move much. The fed is doing everything it can to keep them low because they know if they shoot up it will kill the market and cause another wave of defaults. So if you are waiting for prices to fall any farther I wish you luck. I just don't see that happening. However if you do plan to buy, make sure you plan to stay a while. Because prices are probably gonna be flat for at least 5 years, probably 10. But with rates low and prices closer to reasonable levels you can buy in most areas of the IE for less than you can rent a comparable place (if you have the DP).

Happy Holidays
X

Tuesday, October 19, 2010

Sept DQ report

Not much change this month in prices for the IE but the sales numbers continue to fall.

Southland home sales dropped for the third month in a row amid renewed doubts about a market that is recovering in fits and starts. The median price moved up on a year-over-year basis for the tenth month in a row and has regained about one-fifth of its peak-to-trough loss. The effects on the market of the latest chapter in the foreclosure crisis are unclear, a real estate information service reported.

A total of 18,091 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September. That was down 2.4 percent from 18,541 in August, and down 16.0 percent from 21,539 for September 2009, according to MDA DataQuick of San Diego.

This was the slowest September since 2007, when 12,455 homes were sold. Last month’s sales were 26.3 percent lower than the September average of 24,578. DataQuick’s statistics begin in 1988. An August-to-September drop is normal for the season: On average, sales have dipped 9.2 percent between those two months.

“Today’s market can be characterized as much by activity that’s not happening, as by the activity that is happening. We’re seeing distress-selling, bargain-hunting and entry-level buying, while the rest of the market is still largely on hold,” said John Walsh, MDA DataQuick president.



Sales Volume Median Price
All homes Sep-09 Sep-10 %Chng Sep-09 Sep-10 %Chng
Los Angeles 7,138 6,070 -15.0% $330,000 $340,000 3.00%
Orange 2,828 2,524 -10.7% $429,000 $445,000 3.70%
Riverside 4,312 3,292 -23.7% $185,000 $200,000 8.10%
San Bernardino 3,023 2,454 -18.8% $150,000 $160,000 6.70%
San Diego 3,454 3,069 -11.1% $325,000 $330,500 1.70%
Ventura 784 682 -13.0% $371,750 $370,000 -0.50%
SoCal 21,539 18,091 -16.0% $275,000 $295,500 7.50%

Tuesday, October 12, 2010

Mission Grove (new homes)


I finally stopped into the new Standard Pacific development up in Mission Grove (or is it Woodcrest or Orangecrest). Heck I don't know what area it officially falls into but it's near King high school. It's right next to the old Centex development. I don't know if Standard bought the lots from Centex for pennies on the dollar or if they owned these all along. My guess is they picked them up cheap, they seem to be buying a lot of land if they can get it at the right price. But I digress....onto the homes.

The homes are still big which surprised me a bit, however they are smaller than the bubble monsters. They range from 2500 s/f up to 3500 s/f. Prices are in the mid $300s. At those prices the cost per square foot is between $105 and $120. Remarkably enough that is almost in line with many of the regular resales in the area. The homes themselves are pretty nice and seem bigger than the square footage indicates. The bedrooms in particular are quite large which we found a pleasant surprise. Many other builders make huge homes with tiny bedrooms. In order to pull this off they eliminated the formal living rooms. So if you are a fan of a room no one uses you will be disappointed in these floorplans. The lots are still good sized with most of them around 1/4 acre (although many of them have a slope taking up some of that).

The builder was offering some incentives and I'm sure you could negotiate the broker fee back to yourself if you go in alone. I would imagine you could probably get them to throw in some upgrades since it looks like they have a lot of homes to sell. Of course the drawback to buying new is you get a "lot" of dirt. So you will need to spend some coin on landscaping. Of course many of the REO's and shorties still have dirt yards too. The good part is you still get to pick your flooring, cabinet colors, counters and even the exterior to some extent. So there are some definite advantages of buying new. It's often hard to find everything you like in a resale home and most of them will need carpeting or painting. So those costs often can offset the cost of landscaping a new home (unless you want a pool or some fancy back yard).

All in all, I found them not a bad deal. The prices seemed ok, the floorplans were decent and the area is good. The only drawback is Miller middle school is right across the street and traffic is horrific when school goes in and out. So if you are tired of looking at REO's short sales and such you might want to check these out.

Saturday, October 2, 2010

Well, it's about time


In what could be a first in Riverside County, a former homeowner is charged with a crime in connection with damage to a property in foreclosure.

A San Diego police officer and his wife have been charged with a felony in the trashing of their six-bedroom tract home, which was in foreclosure, in the French Valley area of southwest Riverside County. From stones smashed off the facade to dye poured on carpets, the damage totaled $200,000, according to court records.

The extent of the damage and the "obvious malice" pushed the case into the realm of criminal behavior, Riverside County sheriff's Sgt. Mike Hatfield said.

The damage to the Via Laguna home included missing appliances and fixtures, torn-out wiring and trees tossed in the swimming pool, according to court records.

Robert Conrad Acosta, 39, and Monique Evette Acosta, 35, were charged Monday with destroying and carrying away items from a mortgaged property with the intent to defraud or injure. If convicted, they face up to four years in prison, district attorney's spokesman John Hall said. As of Friday, they had not been arrested.

According to court records, San Diego Metropolitan Credit Union had given the Acostas until July 1 to move out of the home, located in an unincorporated area near Murrieta.

Tina Medrud, a credit union representative, went to inspect the home June 15 and discovered that it had been vandalized inside and out, court records show.

The two-car garage door was gone, along with gates, the flagstone patio and walkway. Some of the decorative facade had been smashed off the house and the outdoor fireplace. Walls throughout the home were sprayed with black paint. Among the items missing: air conditioners, decorative beams, countertops, cabinets, fixtures and woodwork. The stone floor in a hallway was destroyed. Wiring had been pulled from the walls and cut. Trees and bushes had been thrown into the damaged backyard pool.

Medrud reported the damage to the Sheriff's Department, telling investigators that the Acostas had attempted unsuccessfully to modify their home loan and that the credit union had begun the foreclosure process, court records say.

In e-mails provided to investigators by the credit union and quoted in a declaration in support of a search warrant, Monique Acosta wrote that she believed she had been misled by credit union officials. In one message she demanded $10,000 in exchange for moving out and leaving the home in good condition, court records show.

A witness reported seeing the Acostas on June 12 removing items from the home, court records say. Later, many of the missing items were recovered by investigators from the Acostas' storage units in San Diego County.

Tuesday, September 28, 2010

What's wrong with this house?


2114 Westminster is in the best area of Riverside, it's dead cheap and it can't seem to find a buyer. What the heck is wrong with this place. After a boat load of price drops this house is listed for $373k. The cheaper homes in this area are in the $500k to $600k range with most of the nearby homes over a million. From the pics it doesn't look that bad. I thought this place would have sold a year ago when it was listed at $425k.

Tuesday, September 14, 2010

August numbers from DQ

No surprise here. Sales numbers continue to decline and the median is dropping again. However the median in the IE was about the same (Sanberdu ticked up a smidge). Our sales numbers were also about the same as last month (bad). So far price levels are holding (at least the median is) but how long that will last is anyone's guess. With the sales numbers in the toilet and the inventory starting to climb there will be a lot of pressure on prices.

Southland home sales fell last month to the lowest level for an August in three years and the second-lowest in 18, the result of a worrisome job market and a lost sense of urgency among home shoppers. The median price paid remained higher than a year ago but continued to erode on a month-to-month basis, a real estate information service reported.

A total of 18,541 new and resale houses and condos closed escrow last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 2.1 percent from 18,946 sales in July, and down 13.8 percent from 21,502 sales in August 2009, according to MDA DataQuick of San Diego.

Last month’s sales didn’t fall as sharply as in July, when the market lost most of the boost that had been provided by federal home buyer tax credits. July sales fell 20.6 percent from June and fell 21.4 percent from a year earlier. The now-expired credits spurred many buyers to purchase homes sooner than they otherwise would have, creating a market lull in their wake. Last month’s sales were the lowest for the month of August since 2007, when 17,755 homes sold, and the second-lowest since August 1992, when 16,379 sold. Last month’s sales were 31.5 percent lower than the August average of 27,070 sales since 1988, when DataQuick’s statistics begin. The average change in sales between July and August is a gain of 3.9 percent, compared with last month’s 2.1 percent decline from July.

The median price paid for a Southland home fell last month to $288,000, down 2.4 percent from $295,000 in July but up 4.7 percent from $275,000 in August 2009. The median has declined on a month-to-month basis for the past three months, since hitting a high for this year of $305,000 in May.



Sales Volume Median Price
All homes Aug-09 Aug-10 %Chng Aug-09 Aug-10 %Chng
Los Angeles 7,189 6,180 -14.00% $329,500 $330,000 0.20%
Orange 2,790 2,538 -9.00% $427,750 $440,000 2.90%
Riverside 4,145 3,478 -16.10% $190,000 $200,000 5.30%
San Bernardino 3,276 2,513 -23.30% $145,000 $158,000 9.00%
San Diego 3,306 3,113 -5.80% $325,000 $337,000 3.70%
Ventura 796 719 -9.70% $375,500 $370,000 -1.50%
SoCal 21,502 18,541 -13.80% $275,000 $288,000 4.70%

Monday, August 30, 2010

The most delusion developer in California

From the press enterprise,

After two months of marketing his 141 luxury condos with not one sale, Mark Rubin said he has given up wooing buyers to the Raincross Promenade project in downtown Riverside that cost him $40 million to build.

Although late last week the sign fronting Market Street said the homes were for sale, Rubin said the truth is they now are for lease and the sign soon would be changed.

Lots of people admired the tony project with its lush landscaping and fountains and the upscale appointments of the condos, including granite counters and stainless steel appliances, the Beverly Hills developer said.

But he said prospective buyers kept trying to beat down his prices, even after he shaved $30,000 off the initial list prices ranging from $240,000 for a one-bedroom, one-bath condominium to $475,000 for a two bedroom, two-and-a-half-bath townhouse. (By the way, that's $240k for a 680 s/f shoebox!! That's $352 s/f or about 4 times the average price per sq/ft)

"There were no sales," Rubin said. "Everyone wants a bargain. They read about foreclosures and think they can buy for distress prices." (No, but no one wants ass raped on price)

Because he paid cash to develop the property, Rubin said he is under no threat of foreclosure from a bank and under no pressure to drop his prices. (hmm where have we heard this before? "I'm not giving them away")

He said he had promised the city council he would attempt to sell the units but that none of the councilmen had expected the condos would sell in the current economy and nothing legally prevents him from converting the project to apartments.

Also he said he discovered that most of the 500 people who had signed an interest list when the project was under construction had assumed that it would be an apartment complex.

So Rubin said he decided about a week ago to convert Raincross Promenade's sales staff to a leasing staff.

"I didn't want to fight windmills," he said. "If after a year the market changes, I will start selling them. If not, I will keep renting them."

Rubin said he and his wife still intend to move into the development. He said they probably will occupy a one-bedroom unit in the next few weeks.

Some real estate experts familiar with the Riverside market said it is no wonder the condos did not find buyers since condos are the weakest part of what is a very weak housing market.

Leasing out 141 condos also could be a challenge, the experts said, especially at the monthly rents that Rubin says he wants for the one- to three-bedroom units, which range from $1,250 to $1,925.

"He will have to test the market," and lower the rents if necessary, said John Kalmikov, a senior vice president and apartment specialist with Lee & Associates in Riverside. Kalmikov said the $1,850 monthly rent Rubin plans to charge for a two- bedroom unit is $200 to $300 higher than the average rent of newer two-bedroom apartments in Riverside. Also he said the typical one-bedroom apartment in the city rents for under $1,000.

But Kalmikov said there is demand for larger two- and three bedroom apartments with laundry hookups as renters seek to double up to lower their housing costs. Also he said those who work in downtown Riverside and want to avoid the costs of commuting might pay a premium.

In any case, Kalmikov said, Rubin has a history as a savvy developer and he will get a far better return on the money he invested in Raincross Promenade from the rental receipts than from putting the same money in a bank at today's rock bottom interest rates.

"I would do the same if I were in his shoes," Kalmikov said. "I would wait it out."

Thursday, August 26, 2010

Ramping up

From calculated risk,

Servicers are not initiating or processing foreclosures at the pace they could be.

By postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that "the first loss is the best loss" — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data.
...
Banks have filed fewer notices of default so far this year in California ... than they did 2009 or 2008, according to data gathered by [RadarLogic]. Foreclosure default notices are now at their lowest level since the second quarter of 2007, when the percentage of seriously delinquent loans in the state was one-sixth what it is now.

New data from LPS Applied Analytics in Jacksonville, Fla., suggests that the backlog is no longer worsening nationally — but foreclosures are not at the levels needed to clear existing inventory.
...
"The industry as a whole got into a panic mode and was worried about all these loans going into foreclosure and driving prices down, so they got all these programs, started Hamp and internal mods and short sales," said John Marecki, vice president of East Coast foreclosure operations for Prommis Solutions ... "Now they're looking at this, how they held off and they're getting to the point where maybe they made a mistake in that realm."
...
"The math doesn't bode well for what is ultimately going to occur on the real estate market," said Herb Blecher, a vice president at LPS. "You start asking yourself the question when you look at these numbers whether we are fixing the problem or delaying the inevitable."
There is much more in the article.

Note: The LPS delinquency data for July will be released tomorrow. Here are some of the findings (no link):
• July showed an astounding 24.5% month-over-month increase in foreclosure starts, which dovetails with Treasury's latest report on HAMP cancellations (approx. 50% according to Treasury's numbers)
• Abysmal foreclosure rates in NV, FL and CA have led to much higher level equity loss for homeowners in those states as compared to the rest of the country.
• Cure rates remain steady, but seriously delinquent (6 mos.+) cures have declined significantly, by approximately 25%
• Origination remains depressed due to much stricter underwriting guidelines and low purchase activity, but what is being originated is of good quality.
• Until the deterioration ratio improves from its steady two deteriorations for every one improvement, it's hard to see how we're going to get out of the hole.

Wednesday, August 25, 2010

fliptard alert




The fliptards are still at it. Most price the stuff reasonable close to comps. But not all of them.

18771 Oak Park Dr.
Nice big house in Woodcrest picked up on the courthouse steps for $473K back in April. It must have needed some serious work for it to take this long to get back on the market. But the listing price of $749k is about $150k higher than this thing has a hope of selling for. There have been a couple of really nice similar sized homes in this tract sell for under $500k. Those both had nice pools but slightly less "fluff". That leads me to think the market price of this will be in the $550k range and if the inside is really nice maybe up to $600k. $749k however is completely delusional.

Now lets rag on the realtard! Ok, first of all why the price? Getting past that what the hell is up with the all caps? Then we have all the normal misspellings, punctuations or lack there of and a few misplaced words, like the use of "state" instead of Estate. At first I thought it was a spelling error but she used it twice and spelled it the same way both times.

And where the heck are the pics of the inside?

Tuesday, August 24, 2010

Sales worst ever on record

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

Am I the only one not surprised by those headlines. This was the biggest no brainer since car sales tanked after the cash for clunkers program. Really, are we to think they expected sales to stay the same after the government give away ended.

I have started to notice the inventory climbing in the nicer areas. A few months ago there was hardly anything in some of the areas I keep an eye on. Not any more. The inventory is definitely climbing with the slow down in sales.

Monday, August 23, 2010

Ron Paul gets it!

Let the Housing Market Normalize!

Recently there have been some encouraging signs that Congress is finally willing to admit what should have been evident two years ago. Even after a $150 billion bailout, Fannie Mae and Freddie Mac are still bankrupt and should be abolished. Indeed Rep. Barney Frank, a longtime champion of Fannie and Freddie has made a few statements alluding to this and I have signed on to a letter asking him to clarify his remarks and hold hearings on this topic. There seems to be a growing consensus in favor of abolishing Fannie and Freddie. This is the good news.

The bad news is that instead of simply returning to the free market, Fannie and Freddie will probably be replaced with something equally damaging, and at this point we can only guess what that will be. One possibility is that instead of these two giant Government Sponsored Enterprises (GSEs) the government will deputize thousands of smaller banks to do the same thing – that is to securitize mortgages with taxpayer guarantees to encourage lending that otherwise would not happen. In other words, there will be a myriad of smaller Fannies and Freddies, and government involvement will reach even deeper into the financial sector.

Fannie and Freddie, and thus the taxpayer, has an alarming $5 trillion exposure to the mortgage market. To some, spreading out this risk might seem tempting, and a smart thing to do. But the fact remains that if a bank expects to lose money on a loan, so will the taxpayers. Playing around with structures and definitions will still not deal with the root problem – government meddling in the housing market, playing fast and loose with our tax dollars, and central planning by the Federal Reserve.

Banks have complex risk assessment strategies in place that help them forecast if a particular loan will make them any money or not. If they expect to make money, they will approve the loan. If they have doubts, sometimes they will ask for a co-signer to improve their odds. You might do this willingly for a friend or a relative if you didn’t mind losing some money on their behalf, but current government policies essentially force taxpayers to become cosigners for risky borrowers that are complete strangers, who the banks have already determined to be bad risks. Taxpayers have no choice in the matter because politicians decided a few decades ago that dangling homeownership in front of more people seemed like a good way to garner votes.

That was sold to voters as a compassionate gesture to the poor and beneficial to society as a whole. After all, how could giving more Americans an ownership stake in society be bad? The combined policies of loose credit and government backing increased the demand for housing and drove prices sky high. When the housing market heated up to the breaking point everything came crashing down. Those suddenly facing foreclosure saw the reality of government compassion. Truly, when government offers you a gift, you should eye it with great suspicion.

Another tragedy is that many job seekers are now tethered to their locations because of upside down loan obligations. It takes a lot of effort with their bank and damage to their credit scores to figure out how to get out and move to a place where there are jobs. Will the government now be seeking ways to subsidize renters in some way because of this lack of mobility? Some think so.

My hope is that for the long term stability and health of the economy, the government will extricate itself from the market altogether and let it normalize. My fear is that in its usual misguided efforts at solving one crisis, it will create a thousand others.


And in other news, here's an blurb that confirms the governments intentions for HAMP and other plans was indeed to save the financial system and not the screwed homeowners.


"On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those."

Tuesday, August 17, 2010

Holy Smokes Batman!

Here's your first real month of data after the government intervention ended. And it's shockingly bad. Sales from June to July were down 25% in Riverside and 28% on San Berdu. On top of that the median price also fell, with riverside seeing a 5% drop. .


La Jolla, CA---Southland home sales saw their biggest year-over-year drop in more than two years last month as the market lost most of the boost from the federal home buyer tax credits. The median sale price dipped for the second month in a row, the result of a shaky economic recovery, continued uncertainty about jobs, and the expiring tax breaks, a real estate information service reported.
A total of 18,946 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July. That was down 20.6 percent from 23,871 in June, and down 21.4 percent from 24,104 for July 2009, according to MDA DataQuick of San Diego.
This was the slowest July since 2007, when 17,867 homes were sold, and the second-slowest since July 1995, when 16,225 sold. Last month’s sales were 27.4 percent lower than the July average of 26,085 sales since 1988, when DataQuick’s statistics begin. The average change in sales between June and July is a 6.7 percent decline – about one-third the drop seen this year.
Last month’s 21.4 percent sales drop from a year ago marked the steepest year-over-year decline for Southland sales since March 2008, when sales fell 41.4 percent.
“It appears some of the sales that normally would have occurred in July were instead tugged into June or even May as buyers tried to take advantage of the expiring tax credits. Some of last month’s underlying technical numbers were largely flat, indicating that the market is treading water,” said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $295,000 last month. That was down 1.7 percent from $300,000 in June, and up 10.1 percent from $268,000 for July 2009. The low point of the current cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,204 last month, down from $1,251 in June, and up from $1,180 in July 2009. Adjusted for inflation, current payments are 46.4 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 56.1 percent below the current cycle’s peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is lower than peak levels reached over the last two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above-average, MDA DataQuick reported.

Monday, August 16, 2010

delusion isn't dead


It's nice to see that delusional sellers are still out there. Check out this guy that bought a new home from a builder just a few months ago. It looks to me he hasn't done anything and now puts the home on the market for $145k more that he paid in March. The letters WTF come to mind! The freaking builder tried for two years to dump this thing before he found this sucker. Now a few months after buying this dog the guy thinks he can make $145K. Oh my.....

Here's the home, 16773 Ponderosa. It's a big home in Woodcrest but the area is kinda funky. It's surrounded by small older homes and a whole bunch of empty lots that the builder (Gallery Homes) has given up on for now. These houses didn't even come with fences and from the pics the buyer still has not put one in. The house is nice enough, I actually looked at it when it was for sale from the builder, but the area isn't and the fact there are no fences makes it really strange. At his $158 s/f asking price he is about $50 s/f higher than the nearby comps.

I'm actually seeing quite a lot of these recent buys hitting the market again. I don't think these are flip attempts just buyers that are trying to get out without losing any cash (which means selling for about 10% more than they paid). Good luck on that!

Monday, August 9, 2010

Whats up?

Been a few weeks since I posted. Contrary to the wishes of the local realtards I am still alive. I've just been busy golfing and chilling out.

So what did I miss? I see the California home buyers tax credit is basically out of cash for the resale half. There is still a little cash left for the new home buyers. They state says they will fund between 17,000 and 20,000 credits for resale sales and they have over 30,000 applications. So that probably means a lot of people that have requested the credit probably won't be getting it.

On the positive side, interest rates have fallen to record lows. Currently you can get a 30yr fixed for 4.25% with no points. Makes buying very appealing if you plan on staying put for a while.

Inventory is basically holding steady. But there are more delusion-ally priced homes cluttering up the MLS and fewer reasonably priced homes. That means there is still a fair amount of competition for homes. On that note I did a little research on one street in Riverside (92504). I put an offer in on a home on this street about a year ago so I chose it for my un-scientific poll. I looked at all the sold homes and checked who the listing and buying agents were. There were 9 homes sold on this street in the last year. Of those 9 homes, 6 of them were dual agency sales (same agent working for the buyer and seller). That's a pretty good indication of what it takes to buy a home these days!

Monday, July 12, 2010

Slow month


Well after weeks of computer/internet problems I think I have finally gotten most of them resolved. Now it's time to take a vacation! Heading off to play some golf..... Looks like July is gonna be a slow month here on the Kaboom

Sunday, June 27, 2010

Saturday, June 26, 2010

The biggest loser.....


It's been a while since we saw a house here so lets take a look at a home that has fallen in value a whopping 63%. 16622 Catalonia Dr is a 5400 s/f Mcmansion up in Woodcrest. This behemoth sold new in Dec. 2006 for $1.381 million. Today it is listed at $512k. It's an REO now so no short sale BS to deal with. The price is solid based on comps so I don't think it will get bid way up. I'd say this area has "corrected" back to about where it would have been had there been no bubble.

I've looked at quite a lot of this model in this tract. I'd never buy one of them though. They are just way too big. If you have a family of 20 or yearn for the MTV "Cribs" lifestyle then these might be for you. I'd prefer something I can afford to maintain, heat, cool, etc.

Friday, June 25, 2010

Wednesday, June 23, 2010

New home sales down 33%

A day after that shocking 25% drop the news that new home sales were even worse hit the airwaves today. New home sales dropped by 1/3rd. The end of the tax credit seems to have absolutely killed the market in most of the country. Good thing Arnie and the Sacromentacrats think throwing another 200 million at the housing market is a good idea. I think it's fairly obvious that all the credits do is pull future sales back. Then when the tax credits end the crap really hits the fan.

In other news Fannie gets tough....... Ok, so not really. They are coming out with new rules making any strategic walkaways ineligible for a Fannie loan for 7 years. Oh stop it, I can't stand the pain....
They also say they will financially pursue people if they have the option. In Cali they really don't so it doesn't matter here.

And Obama is throwing another 1.5 Billion at the housing market (700 million in Cali). This is more money down the drain to try and get more mortgage mods done. After all the 75 Billion mortgage assistance program has been so successful why not expand it. I mean the redefault rate is only running about 52% after a year. That's good right?

Tuesday, June 22, 2010

Say WHAT

News headlines can leave you scratching your head. Like this one from the Press Enterprise.

"It was yet a different story in Riverside and San Bernardino counties, Kleinhenz noted, where last month sales dropped 25 percent from a year earlier despite the eagerness of buyers to take advantage of dual tax credits."

"Inland area sales down 25% from a year ago". Say what, Dataquick's May report has IE sales down roughly 7%, so how can another report have the sales down 25%. Reading the article it's hard to tell but this is actually just existing homes (no new homes). Still that's a pretty shocking number if it's true. Of course the Tax credit expired so that will have something to do with the drop in sales. But a drop of 25% is a scary number, it means the market is pretty damn BAD. With only a week left to close and still get the tax credit you have to wonder what the sales will be like next month.

Even with sales tapering off (when they should be climbing due to the summer buying season) I don't see the inventory climbing much. There's still a shortage of decent properties at decent prices. There's lots of mediocre or trashy homes priced way too high but few nice homes. REO's are still few and far between. The forecast "flood" of REOs so far has not materialized. Short sales are still the majority of the listings. Even with the Obamanomics plan to speed short sales they are still a royal pain in the butt to deal with.

So far this year nothing has gone as anyone expected. No flood of foreclosures when the moratoriums and workout plans ended. Rates didn't shoot up when the MBS program ended, in fact they've actually gone down (sure much of that was due to the stock market crashing again). And the expected flood of sales from the end of the tax credit also isn't materializing. It seems like we are experiencing "opposite day" (sorry for the sponge bob reference) but our opposite day is lasting a year........

Tuesday, June 15, 2010

May numbers

The May numbers from DQ are out ans they show quite a comeback. But even DQ admits this is primarily due to the higher end homes starting to move along with fewer low end homes selling. The numbers for the IE are a mixed bag. The sales numbers (which are a better gauge of market health) don't look good. Normal increase from April to March is about 6%. This we we barely cracked 1% increase. Prices increase quite a bit, but again this is probably due to the drop out of the low end of the market when the tax credit expired.

Southern California home sales rose last month in all but the lowest price categories as buyers took advantage of tax credits and low mortgage rates. The median price paid topped $300,000 for the first time in 20 months, largely because the ultra bargains have been drying up in the low-cost inland areas while sales have increased in the pricier coastal neighborhoods, a real estate information service reported.

A total of 22,270 new and resale houses and condos closed escrow in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 9.7 percent from 20,299 in April, and up 7.2 percent from 20,775 in May 2009, according to MDA DataQuick of San Diego.

May sales were the highest for that month since May 2006, but they still fell 15.0 percent short of the average number sold in May since 1988, when DataQuick’s statistics begin. The 9.7 percent increase in sales between April and May compares with an average change of 6 percent since 1988.

The combination of tax incentives and low mortgage rates helped stoke sales in mid- to high-end areas, where distress has increased over the last year and sellers have become more motivated and realistic.

Meantime, sales have fallen in many affordable inland communities. In May, zip codes in the bottom one-third of the market, based on their historical prices, saw resales of single-family houses drop 3.9 percent from April and drop 16.2 percent from a year earlier. Part of the decline reflects the dwindling foreclosure inventory, which had been the major draw for first-time buyers and investors. In the upper one-third of the market by price, May resales climbed 10.8 percent from April and rose 21.7 percent from last year.

This shift toward more high-end sales helped the Southland median jump $20,000 between April and May and $56,000 between this May and May 2009.

“The important thing to remember, though, is that what we saw in May was partly driven by government stimulus,” he continued. “In the second half of the year the market will have to stand on its own again, barring new forms of government involvement. Prices will be tested if there’s any sudden move by lenders to release a flood of distressed properties.”

Foreclosure resales accounted for 33.9 percent of the resale market last month, down from 36.4 percent in April and 49.8 percent a year earlier. The all-time high for foreclosure resales – homes that had been foreclosed on in the prior 12 months – was 56.7 percent in February 2009. Foreclosure resales have waned over the last year as lenders have channeled more distress into loan modifications and short sales.



Sales Volume Median Price
All homes May-09 May-10 %Chng May-09 May-10 %Chng
Los Angeles 6,521 7,320 12.3% $300,000 $345,000 15.0%
Orange 2,667 3,257 22.1% $410,000 $450,000 9.8%
Riverside 4,414 4,164 -5.7% $180,000 $210,000 16.7%
San Bernardino 3,134 2,835 -9.5% $137,000 $160,000 16.8%
San Diego 3,242 3,879 19.6% $295,000 $340,000 15.3%
Ventura 797 815 2.3% $355,000 $380,000 7.0%
SoCal 20,775 22,270 7.2% $249,000 $305,000 22.5%

Monday, June 14, 2010

The ups and downs in the IE

I noticed Housingtracker.net was running again after being offline for a while. Looking at the median listing price data it looks to be pretty stable over the last year or so at $240k. It's kinda fun looking at the numbers and seeing the peak in 2006 at over $460k. Then the crash to the low in early 2009 of $217k. It's crept up to the current $240k in the summer and fall of 2009. In the areas I watch the prices seem to have leveled out. There have been a few great deals closed compared to the comps but these all look like inside deals. Most (if not all) of them never hit the open market. Fraud? I'm sure quite a few of them were technically fraudulent. But other than those the sales prices are about the same today as in late 2008.





The inventory numbers are another fun set to look at. We hit a high of nearly 60,000 in late 2007 when the market seized up as prices fell, buyers vanished and lending dried up. The inventory started to fall once the government started all the bailout/workout BS. The low water mark for inventory was around the holidays last year. We have been creeping up ever since. Banks are starting to ramp up the foreclosures (more slowly than anticipated though). Short sales are now being encouraged by banks and that's also helping pump up the numbers. We are getting close to 32,000 but there is still a serious shortage of good properties. I'm seeing lots of overpriced listings and lots of trash. The pearls are few and far between.



For you history buffs, here's the data for the last few years.

MonthSFH+Condo
Inventory
25th
Percentile
Median75th
Percentile
Jun 2010 31,100 $150,750 $242,450 $422,500
May 2010 30,478 $150,600 $240,960 $420,180
Apr 2010 29,844 $149,950 $237,975 $412,450
Mar 2010 27,466 $149,910 $235,000 $399,978
Feb 2010 25,888 $147,675 $230,975 $398,225
Jan 2010 25,155 $147,450 $229,225 $397,500
Dec 2009 25,435 $149,225 $232,125 $403,737
Nov 2009 26,575 $149,920 $238,400 $420,010
Oct 2009 27,569 $149,175 $236,250 $423,450
Sep 2009 27,493 $149,925 $239,500 $435,988
Aug 2009 28,410 $148,882 $237,880 $431,400
Jul 2009 29,257 $147,313 $235,225 $429,250
Jun 2009 30,584 $144,980 $229,760 $414,790
May 2009 32,614 $143,725 $225,000 $401,973
Apr 2009 35,365 $140,000 $219,850 $387,500
Mar 2009 38,625 $139,960 $217,080 $369,580
Feb 2009 40,003 $143,125 $219,148 $364,750
Jan 2009 41,594 $148,976 $222,615 $364,140
Dec 2008 43,995 $155,997 $228,843 $371,270
Nov 2008 45,466 $162,791 $234,869 $378,171
Oct 2008 47,030 $169,812 $241,097 $385,301
Sep 2008 48,794 $179,945 $253,064 $396,132
Aug 2008 48,928 $189,183 $264,707 $410,471
Jul 2008 50,281 $198,565 $274,909 $423,742
Jun 2008 50,874 $209,673 $291,266 $445,107
May 2008 51,306 $220,983 $308,857 $455,220
Apr 2008 52,578 $237,943 $319,005 $475,726
Mar 2008 53,200 $252,057 $336,952 $493,538
Feb 2008 53,347 $265,768 $352,536 $507,636
Jan 2008 53,971 $277,607 $366,177 $518,359
Dec 2007 55,808 $289,994 $374,137 $534,693
Nov 2007 58,257 $301,146 $387,907 $546,581
Oct 2007 57,873 $312,784 $398,326 $561,045
Sep 2007 59,183 $317,841 $407,566 $564,659
Aug 2007 56,879 $328,547 $415,993 $578,136
Jul 2007 56,592 $337,269 $423,300 $592,323
Jun 2007 55,370 $341,823 $426,332 $601,018
May 2007 53,371 $347,533 $434,838 $609,832
Apr 2007 51,233 $350,796 $440,705 $615,759
Mar 2007 46,932 $354,807 $444,272 $620,370
Feb 2007 44,865 $355,285 $444,140 $620,370
Jan 2007 41,962 $355,100 $444,712 $620,370
Dec 2006 44,794 $358,810 $445,173 $620,370
Nov 2006 47,124 $359,605 $445,463 $621,387
Oct 2006 48,067 $360,038 $449,609 $621,387
Sep 2006 47,561 $363,553 $450,500 $621,457
Aug 2006 46,408 $365,700 $453,627 $625,172
Jul 2006 44,460 $369,940 $456,393 $636,981
Jun 2006 41,618 $370,894 $460,939 $643,759
May 2006 38,227 $370,894 $461,100 $649,048
Apr 2006 35,332 $370,576 $461,100 $652,575

Now do you think prices have bottomed? The inflation adjusted price chart from Schiller still puts prices the highest they've been in the last 130 years. Of course that chart does not factor in the size of the homes or any other changes to the home. It just takes the median price (adjusted for inflation). Since homes are probably at least twice the size and have many more features, you could certainly make the argument that they could be less expensive. I'd say the chart is useful for entertainment purposes only or possibly useful if used on a cross section of older homes. But using it across the board when in the last 10 to 20 years the size and extravagance of homes has gone way up isn't practical.


Wednesday, June 9, 2010

Delusional builders





With the shortage of homes and the competition to buy the good ones a few builders are throwing up sticks again. The prices they are asking leave me scratching my head wondering how they will sell any. But remarkably enough people seem to be buying them. How they are getting loans is beyond me.

Pacific Homes has started building again in Moreno Valley. They had folded this tract up for a couple of years but I noticed they were building again when I was over playing golf at The Ranch GC. They were asking nearly $700k for these at the peak. Now they are asking just over $400k. But that is still nearly $100 s/f (in MoVal?). The average price in this area is closer to $80 s/f. So purchasing one of these new homes puts you about 20% underwater the minute you take the keys. It's like buying a new car.

26891 Cimarron Canyon is a new home and it's mini McMansion in this tract. Not done just yet but the builder has it listed for $409k or $97 s/f



Or you can buy 26991 Cimarron Canyon. This home was built in 2007 and sold for $571k, which was a good deal at the time because they were asking a lot more for these just a few months prior to that. But this one has already gone back to the bank and is offered as an REO for $312k or $75 s/f. The house looks nice, it's not thrashed it's just priced in line with most of the other stuff in MoVal.



So how do builders figure they can get 20% more for the same house? How to people get loans on these things? There's no way a legitimate appraisal will come in at those new home prices. And what the hell are they doing building more 4000 s/f homes?

Sunday, June 6, 2010

Tax credits be gone.....

What happened in the rest of the country when the tax credits went away? A big drop in sales is what happened. California managed to buck the trend because of the new $10k state tax credit. But this too will expire and then what. It help keep the market moving for another few months and then what. It's already been proven that all these credits do is bring sales forward. People that might rather buy next year will buy this year to get that free money (I would too).

From the WSJ

How will housing sales fare without the benefit of big tax breaks for home buyers? The early indications are that sales are down very sharply in recent weeks, worse than most brokers and analysts expected.

Of course, economists and real estate analysts expected home sales to slow after the tax credit, of as much as $8,000, expired at the end of April. But early data from real estate brokers indicate that the sales declined as much as 25% to 30 from the year-earlier levels in some markets.

Without the tax bait, “consumers just don’t have that same sense they have to move quickly,” said Patrick Lashinsky, CEO of ZipRealty Inc., a big brokerage firm.

The May slump is ominous, but it’s too early to tell whether it portends another serious downward lurch in a market that has generally been leveling off over the past year.

Despite the recent drop in mortgage rates to less than 5%, applications for home-purchase mortgages have fallen in each of the last four weeks. In late May they were down nearly 40% from a month before, reaching their lowest level in 13 years, according to the Mortgage Bankers Association.

Even the Realtors are acknowledging that things look dicey. Lawrence Yun, chief economist for the National Association of Realtors, estimated that contracts signed for home resales in May were down 20% to 30% from a year earlier. He expects June and July to remain fairly weak and will be watching nervously for signs of a rebound in August or September. “Housing cannot just depend on [government] stimulus forever,” Mr. Yun said.

Home-purchase contracts signed in New Jersey last month were down 25% from a year earlier, estimates Otteau Valuation Group, an appraisal firm in East Brunswick, N.J. New Jersey’s state legislature is considering its own tax credit for home buyers.

In the Minneapolis area, the number of newly signed home-purchase contracts in the week ended May 22 was down 30% from a year earlier, according to the Minneapolis Area Association of Realtors. “Our buyers, if they haven’t purchased, have just decided to wait,” said Brad Fisher, president of the local Realtor group.

In the Phoenix area, contracts signed in May plunged 26% from a year earlier, local Realtor data show. In Denver, the drop was 27%. Northwest Multiple Listing Service, which covers 21 counties in Washington state, including the Seattle area, reported Friday that contracts signed in May also were down 27% in its region.

In another sign of weak sales, the number of homes on the market is growing again. ZipRealty said the number of homes listed for sale in 26 major metro areas across the U.S. in May was up 1.7% from April. In a typical May, the inventory doesn’t increase from April, according to Ivy Zelman, chief executive of Zelman & Associates, a research firm.

California’s state tax credit of as much as $10,000, which ends Dec. 31, has helped sustain sales there. Contracts signed in May in the Los Angeles region were up 16% from a year earlier (but down 9% from April), while San Diego was down 3% from year-ago levels. San Francisco’s East Bay was up 2%, while the Napa Valley region posted a 15% gain from one year ago (but a 14% month-over-month decline).

Wednesday, June 2, 2010

Huge incentive to walk away

Even the guys at BofA know it......

In the conference call this morning, BofA's credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters (those who can pay their loans but opt not to) are "more than we have ever experienced before." He went on to say, "there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers."

Schakett says the foreclosure process is still taking 13 to 14 months (and by my estimates that's an optimistic assessment), and so there's over a year of free rent. While the banks are trying to improve the time, they're just not there yet.

31 percent of foreclosures in March were deemed to be "strategic default" by researchers at University of Chicago and Northwestern University. That's up from 22 percent in March of 2009. We already know that mortgage walkaways are more prevalent among borrowers whose neighbors or friends have done the same thing. We also learn from those same researchers that the likelihood of walking away increases by 23 percent when homeowners learn that a neighbor got some principal forgiveness.

Monday, May 31, 2010

Live Free

The term "live free" doesn't mean what it used to. It used to be a patriotic statement in fact it's the state motto for New Hampshire. Rebels, hippies, and even militia nut jobs use the term. Today however it's a way of live for those people who stopped paying the mortgage. They are literally living free. The New York Times has this article on this new breed of free loaders.

For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of. Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino. “Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.
oreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages. The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

Wednesday, May 26, 2010

Huh, who writes this stuff?


There were some headlines this week that are making my head spin.

1) Sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate of 504,000 ... This is 14.8 percent (±19.5%)* above the revised March rate of 439,000 and is 47.8 percent (±26.0%) above the April 2009 estimate of 341,000.

2) Purchase Mortgage Applications hit 13 year low.
The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier and is the lowest Purchase Index observed in the survey since April 1997.

3)
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009.

Maybe I'm just bad at math, but how do new sales increase 14.8% (I love the +/- 19.5% margin of error), existing sales increased YET applications for a mortgage fell to a 13 year low??? Are we to believe more people are paying cash for homes. I doubt that's the case. Looks to me like another fine example of making up numbers to make the sheep feel better.

Monday, May 24, 2010

Wall street and your street

So the world stock markets seem to be in full retreat again. But on the plus side the 10 year treasury rate is tanking right along with them. This in turn is dropping the interest rates again. Just when everyone expected them to rise (and they did for a month or two), the stock markets throw some fuel on the real estate market. Rates on a 30 yr fixed are down to 4.625% and I've seen a few at 4.5% with no points. That's a mighty fine rate.

Tuesday, May 18, 2010

Bucking the trend (April's numbers)

The April market report from DataQuick came out today. While SoCal as a whole looked ok the IE had some interesting stats. Usually this time of year sales numbers and prices tend to creep upwards. This year should have been busier with buyers trying to get in before the tax credit expired. But the numbers don't show the normal upward movement. Prices were down slightly in both San Berdu and Riverside counties (down 1.5% in both counties from March). And sales numbers were also down from March and way down from last year.

From DQ
Southern California’s housing market leveled off last month as sales activity migrated ever-so-slightly from inland bargain areas toward entry- and mid-market neighborhoods closer to the coast. The overall median price was unchanged from the month before, but it jumped compared with April 2009’s low point, a real estate information service reported.

Sales of new and resale homes totaled 20,299 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 0.9 percent from 20,476 in March, and down 1.0 percent from 20,514 for April 2009, according to MDA DataQuick of San Diego.

April’s year-over-year changes in sales volume ranged from a decline of 12.3 percent in San Bernardino County to an 11.6 percent increase in Orange County. Condo resales rose 16.9 percent. The Southland’s 1.0 percent decline in overall sales was the first year-over-year drop in almost two years.



All homes Apr-09 Apr-10 %Chng Apr-09 Apr-10 %Chng
Los Angeles 6,425 6,688 4.1% $300,000 $329,500 9.8%
Orange 2,391 2,669 11.6% $380,000 $430,000 13.20%
Riverside 4,469 4,117 -7.9% $180,000 $195,000 8.3%
San Bernardino 3,130 2,744 -12.3% $138,500 $150,000 8.3%
San Diego 3,375 3,292 -2.5% $290,000 $325,250 12.20%
Ventura 724 789 9.0% $340,000 $382,000 12.40%
SoCal 20,514 20,299 -1.0% $247,000 $285,000 15.40%

Sunday, May 16, 2010

June 1st, more new rules

Beginning June 1st Fannie will require another credit check just before closing to ensure that people are not going out and applying for additional credit. Which just seems silly because all they have to do is wait until they close......

If you're thinking about applying for a home mortgage this year, here's some important news: Beginning June 1, your lender is likely to order a second full credit screening immediately before closing.

The last-minute credit report will be designed to find out whether you've obtained — or even shopped for — new debt between the date of your loan application and the closing. If you've made applications for credit of any type — for furnishings and appliances for the new house, a car, landscaping, a home equity line, a new credit card — the closing could be put on hold pending additional research by the lender.

If you've taken out new loans that are sizable enough to affect the debt-to-income ratio calculations used in your original mortgage approval, the deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget.

The June 1 changes are part of a new effort by mortgage giant Fannie Mae to cut down on slipshod underwriting by lenders and frauds by borrowers. Fannie's so-called "loan quality initiative" will require lenders not only to pull two credit reports for each mortgage transaction but to perform additional verifications of borrower occupancy plans for the property, Social Security numbers and Individual Taxpayer Identification Numbers, among other changes.

"There's an almost irresistible urge" for many mortgage borrowers to spend, said Don Unger, chief executive of Advantage Credit Inc. of Evergreen, Colo. "The lender says, 'OK, you're approved for the loan,' and you immediately think about shopping for all the things you need for the house."


So I shouldn't go buy that Panerai watch I've had my eye on........