Wednesday, May 16, 2012

Here comes the Spring Bounce

It's a bit late but the spring bounce in prices seems to finally be upon us. Riverside median price stayed the same as last month and was up slightly from last year. San Berdu had a decent month to month rise..

Here's what DQnews has to say...

Southern California’s median sale price rose year-over-year in April for the first time in 16 months, reflecting stronger, affordability-driven demand and a slimmer inventory of homes for sale – especially low-cost foreclosures. Last month’s sales were modestly higher than a year ago, thanks to significant gains in the coastal counties, but remained well below average, a real estate information service reported.
The median price paid for a Southland home last month was $290,000, up 3.6 percent from $280,000 in both March this year as well as April 2011, according to San Diego-based DataQuick.
Last month’s median was the highest since the median was also $290,000 in December 2010. The year-over-year gain in the April median was also the first since December 2010, when the median rose a scant 0.3 percent.
Although price pressures have no doubt formed in some areas, the year-over-year increase in the April median price also reflects two other trends: the decline in the share of sales that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas, and a shift toward a greater portion of sales this April in the higher-cost coastal markets. In April last year, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented 68.0 percent of the region’s sales, compared with 71.5 percent last month.
April’s $290,000 Southland median was 17.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 42.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.
The number of homes that sold for less than $200,000 in April fell 4.7 percent from a year earlier, while the number that sold for between $200,000 and $400,000 rose 5.5 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 3.5 percent year-over-year. The number of sales above $800,000 fell 3.0 percent from a year ago.

Distressed sales – the combination of foreclosure resales and “short” sales – made up about 47 percent of last month’s resale market. That was the lowest level since the figure was 45.1 percent in April 2008.
Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 28.6 percent of the resale market last month, down from 31.5 percent in March and down from 33.8 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were also 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.4 percent of Southland resales last month. That compares with 18.9 percent the month before and 17.3 percent a year earlier.

Sales Volume Median Price
All homes Apr-11 Apr-12 %Chng Apr-11 Apr-12 %Chng
Los Angeles    6,025 6,510 8.00% $320,000 $310,000 -3.10%
Orange         2,485 2,920 17.50% $430,000 $420,000 -2.30%
Riverside      3,470 3,199 -7.80% $190,000 $200,000 5.30%
San Bernardino 2,403 2,292 -4.60% $147,500 $156,250 5.90%
San Diego      3,277 3,559 8.60% $321,750 $329,500 2.40%
Ventura        684 804 17.50% $357,500 $360,000 0.70%
SoCal          18,344 19,284 5.10% $280,000 $290,000 3.60%

Friday, May 4, 2012

Better off letting it go

Cruising the web I ran accross this article that mirrors what I have been telling people for the last 5 years.  GET OUT!  All the mod programs are not designed to help the home owner. Put your emotions aside and look at the numbers. The people that have let the homes go are the ones that will come out ahead in the long run.

Here's the article (sorry it's a bit long)

I am trying to get your attention. I hope my headline is successful.
Struggling Homeowners, Professionals & HUD Counselors PLEASE READ THIS;

The Board of the Housing Opportunity Collaboration of the Inland Empire (HOCIE) and many others around the country, including the infamous NACA (Neighborhood Assistance Corporation of America) have a heart of gold, but are seemingly unwilling to listen to sound underwriting advice. Instead, it was full steam ahead with a; “save the dream” and “save homeownership at all cost” agenda that the banks LOVED and so they continued to fund their activities while lobbying lawmakers to make private sector professional assistance illegal. It’s worked beautifully.
LPS (Lender Processing Services) REPORTS 47% OF NEW FORECLOSURES WERE PREVIOUS FORECLOSURES. *See page 13 of the most recent Mortgage Monitor report*

The Make Home Affordable Program reports monthly what the average over all debt percentage is for a borrower AFTER they receive a modification. Currentlyit’s 60%! It has been around 63% over the last year. *See page 5 of the most recent Make Home Affordable report* Historically, banks/underwriters knew a back end ratio greater than the low 40’s was simply not sustainable. And yet, under the guise of helping to retain homeownership, banks, with the help of HUD counselors are putting people into modifications that based on statistical data, ARE HIGHLY LIKELY TO FAIL. Why would they do that? Read on…
The banks analysts are in my opinion, smart. They know many will not be able to sustain their payments unless there is a dramatic increase in household income. For most, this is not likely. Most HAMP modifications, as well as the look-a-likes, have an interest rate that will rise beginning on year 5, if the borrowers income does not go up commensurate with the payment increases, they only postponed the inevitable.
On a $250,000 loan, with a 2% interest rate fixed for five years with a 30 year amortization, a typical modification will see this rate rise to 3% on year 6, 4% on year 7 and 4.75% on year 8 today. Once it reaches the 4.75% it will remain fixed for the remainder of the term. The principle and interest payment in this example would go from $924 to $1,304, THAT’S A 141% PAYMENT INCREASE FROM YEARS 5 TO 8. IF THE AVERAGE BACK END IS ALREADY AT 60% JUST HOW IN THE WORLD DO YOU BELIEVE THEY’LL BE ABLE TO HANDLE THE PAYMENT INCREASE? In many cases they won’t and are not and the banks know this in my humble opinion. So why are the banks doing this?

If the banks can stagger the losses and keep the cash flows going, the investors continue to keep a favorable rate of return, the banks don’t have to foreclose and have more unsold inventory, or more homes to care for. They can take the properties back, or encourage a short sale later when the market is better. This is nothing more than managing a large portfolio of high risk loan pools.

I don’t blame the banks. It’s just good business to do this. I blame those who are taking money from them and have the public trust and burying people in debt that they’ll eventually have to get out from under anyway. Worse, the longer they wait, the less chance they’ll be able to participate in homeownership at these favorable rates and prices.

The National Home Builders reported that for every 1% increase in future interest rates, we’ll lose approximately 4-5 million American buyers, the majority of which are minorities. As they make less, on average, they’ll be the first ones cut out of the housing market as rates rise. Again, under the guise of helping, we are putting minorities in a position that will financially set them back for decades and in many cases permanently harm them to a degree that they’ll never recover from.

Homeownership for most Americans is the greatest chance at financial independence, but not when the home has gone down by 50% and must go up 100% just to break even, especially when the borrower, based on proven metrics, can’t afford the debt.

I teach HELP Professionals WE MUST NOT stand idly by and do nothing. Realtors, Realtist, agents & others must knock on doors and somehow reach more homeowners and get people to listen. Sitting in a home you can’t afford and are going to lose eventually is only hurting YOU, no one else. A loan mod that puts a Band-Aid on a gunshot wound is silly.

The National Home Builders reported that Whites score 20 points above Blacks & Hispanics on the affordability index due to making more on average. Further, the Bipartisan Policy Center reports that homeownership rates among African Americans & Hispanics fell more sharply in 2010 than among white non-Hispanics, with a 44.3% homeownership rate among black households in 2010 compared to 45.2% in 1990. The center’s latest report found that there is now a 28% point gap in homeownership between white & black households, wider than the divide in 1990. A separate study from the Pew Center found that between 2005 & 2009, Latinos lost two-thirds of their median household wealth while blacks lost more than 50%.

The greatest opportunity to reverse the trend is to get some of these folks who are not making a payment to short sell, short sell and then lease back and begin the healing process so they may buy while the prices and rates are artificially low. Otherwise, many will NEVER be a homeowner in their lifetime as rising interest rates will lock them out.

This is an opportunity to make a difference. If you’re a HUD counselor, or other professional who cares deeply, please call me. Have me come to your office and go over the numbers with you. Unwittingly for years, you’ve been only helping the banks and the investors. The banks, with the help of the Feds in a; “throw the baby out with the bath water “ action, made it virtually illegal for anyone in the private sector who is honest to help homeowners with sound advice.

I applaud the love and kindness shown to those in need. However, the lack of understanding of the manipulation that is occurring is hurting those you wish to help the most.

*Chris Sorensen’s opinion only. I am not speaking on behalf of HELP’s Board of Directors* I offer my strong opinion here due to my concern that the disparity between the haves and the have nots cannot and must not continue to grow at is current trajectory.