Saturday, December 25, 2010
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.
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.
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
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
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
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