Riverside and San Bernardino real estate blog

Mortage mod madness

2012-01-16T19:24:00.000-08:00

Mortgage mods are touted by both the government and the so called "help" organizations. But are these mods really helping anyone. I think if you've read this blog for any length of time you know how I feel about this mod business. Mods are helping banks and that's it! All mods do is keep people paying for a an asset that is worth less than they owe on it. They become trapped by this debt.

Here is a perfect example of why loan mods suck for most people. I have one friend that did a short sale in 2008 to get out from under his upside down house. He is now free, happy and his credit score has fully recovered. He could easily buy any house he wanted (and could afford). I have another one that did a mod in 2009. He did the loan mod for a couple of reasons. He liked his house and had spend a fair amount of money upgrading (although he did use a heloc to do these upgrades). He also foolishly believed that prices would rebound enough to where he could sell if he needed to. Over 2 years later he still owes way more than his house is worth. Although he can afford the payments he now needs to sell and move due to an impending divorce. Unfortunately for him this means either a short sale or just letting the house go. The loan mod probably added a year or two to his marriage but it also trapped him in that house. So who is better off? Had he let the house go two years ago he would probably be single and free of debt, possibly able to buy another home already.

To anyone considering a loan mod I would encourage them to consider the possibility that they may want or need to move in a few years. If there is even a remote chance of that then don't do a loan mod. No matter how much you love the house, get the hell out of it. You can rent for a couple of years and then if you desire you can purchase another home that you will not be a thousand feet under water on.

The whole mortgage mod thing is absurd when you stand back and look objectively at it. Someone has sold you something at an inflated price, but because they are willing to change the loan terms slightly you agree to keep paying on that inflated price. That might be reasonable if you bought a TV (although even on TVs most retailers will give you a refund if you find that TV cheaper) but I digress we are talking houses here. We are talking about tens or hundreds of thousands of dollars depending on how long you pay the note for. It's not an insignificant amount of money, yet most people only look at that monthly payment and that's about as far ahead as they look too. No thought is given to next year or 5 years from now.

Mortage mods will only serve to extend this fiasco of a market!

Will 2012 be the "real" year of the short sale?

2012-01-12T07:02:00.001-08:00

If you have an underwater house you are thinking about dumping you might want to get off your duff and list the thing. You see normally when you sell a house for less than you owe on it you get a nasty little surprise from Uncle Sam, a tax bill for the difference. During the bust legislation was passed to put this tax on hold to make it easier for people to short sell. However that legislation expires at the end of 2012. Both the Federal government and the California State gov passed these acts so currently there are no tax consequences from a short sale.

Of course the debt forgivness act could be extended. But what if it isn't? This would probably mean fewer short sales and a lot more foreclosures. There are no tax consequences from foreclosure because in Cali most of those loans are non-recourse (but I'm no tax expert so don't listen to me).

The unfortunate thing is that most people have no idea about this tax thing and may not feel the need to hurry up and get out while the gettin's good.

Oz is in denial

2011-12-26T18:01:00.000-08:00

Just got back from my vacation to NZ and OZ, and of course I couldn't help but check out the prices of real estate over there. In fact during many of the tours the guides would continually point out how "well" there market was doing. It was incredible, it was like being here in 2006. Nearly all the people I spoke with, if the topic of home prices came up just seemed to say all the stuff we heard 5 years ago. "it's different here", "price might level off, but I doubt they will fall" etc. NZ was by far the worst. The prices of everything over there is unbelievable. I dunno how they live. But the prices of housing was off the charts as compared to incomes.
Median incomes are comparable to the US, yet the cost of nearly everything was higher. Australia was not nearly as bad as NZ in that respect but in the two cities we visited things were quite a bit higher than here. Of course the cost of living in most large cities is higher than living in the burbs but I was not able to really check the costs out in the burbs. We did manage to get out into the burbs in Melbourne and the tour guide would point out housing tracts give us approximate costs. If those were correct they their prices are comparable to ours at the peak of our bubble. We saw shacks in the city that he indicated were well north of a million (and I do mean shacks!), in the burbs we saw small average looking tract homes that were $500k to $800k.

NZ and OZ are beautiful places and well worth a visit. But save your pennies cuz int aint a cheap vacation. Oh, and driving on the opposite side of the road is interesting too!

Happy Holidays

2011-12-08T20:19:00.000-08:00

Happy Holiday's ya'll

I'm taking the rest of the year off and heading to New Zealand and Australia.

Ah the good old days

2011-12-02T20:56:00.001-08:00

While looking at Zillow I ran across this. I found it rather humorous and reminder of the heady days of bubble mania. This guys puts a "make me move" price into Zillow in 2007 of $1.4M for a house that now has a zestimate of $505k. And lemme tell ya, there's no way this place would sell for $505k, that's probably at least $50k too high considering there is not a lick of landscaping. I was actually looking at 18825 Ravenhurst which is listed at $1.2M and has a zestimate of nearly $900k. Which I thought was WAY high. It's a spectacular place on 2 acres but there's no way it will get 1.2M and I seriously doubt it would even get Zillows $900k estimate. Based on comps this place is worth closer to $750k.

Ah, the good-ole days. I bet this guy is wishing someone had taken him up on his "make me move" price.

Scam Alert!

2011-11-22T21:00:00.000-08:00

Check out this BS

16475 Lake Knoll Pkwy lists as a short sale, it says poor condition but in the pic it looks ok. It lists cheap and goes pending pretty much immediately. It sells pretty cheap and the listing agent and buyers agent and the same guy (who'da thunk it). Now this is where it gets shady. 30 days later, it lists again for $160k more than it sold for, and the agent........ You guessed it, the same guy. But it gets better, the listing states the owner/seller is a realtard! Anyone wanna bet the owner is the listing agent? This looks like a perfect example of short sale fraud. He lists the property indicating it's a dog, gets it cheap and then turns if for a quick profit. And of course the lender takes a bigger loss than they otherwise would have. His asking price is pretty darn high and I doubt that it will sell for anything near that but even if it sells for $350k that's still a very healthy profit assuming he didn't actually need to do a major rehab.

Octobers numbers

2011-11-16T20:33:00.000-08:00

Here's the October report from DataQuick. Not a lot of movement in the IE. San Berdu is stuck at $150k median and Riverside fell a little. Sale numbers were down slightly from last year which is a little surprising considering how low interest rates have been. I suppose some of that slowdown could be the lack of inventory at the low end. If you've been looking you know there aint' much decent in the starter home/rental end of the market. From what I am seeing the more expensive stuff is just sitting unless the house is spectacular.

Here's the meat of the report.

Southland home sales rose slightly in October compared with a year earlier but were still nearly 30 percent below the long-term average. The region’s median sale price dipped to its lowest level since January as activity above $500,000 fell sharply, distressed property sales rose slightly and mortgage availability worsened, a real estate information service reported.

A total of 16,829 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in October. That was down 7.3 percent from 18,149 in September and up 0.5 percent from 16,744 in October 2010, according to San Diego-based DataQuick.

A drop in sales between September and October is not unusual, but last month’s decline was larger than the average change – a decline of 0.7 percent – between those months since 1988, when DataQuick's statistics begin.

October sales have varied from a low of 12,913 in 2007 to a high of 37,642 in 2003. Last month’s sales were 29.3 percent below the October average of 23,819 transactions since 1988

“For a few months now, lower prices and amazingly low mortgage rates have kept resale activity slightly ahead of last year. Of course, that’s not saying a lot when you consider sales were 25 to 30 percent below average. The market continues to struggle with a difficult lending environment, uncertainty among potential buyers, underwater homeowners who can’t move up, and a weak job market. The lower conforming loan limits implemented last month help explain the relatively sharp drop in mid- to high-end sales during October. Now we’ll have to see if the private loan market can fill the void,” said John Walsh, DataQuick president.

The conforming loan limits, which were reduced Oct. 1, vary by county. In Los Angeles and Orange counties, for example, the limit for FHA loans and mortgages guaranteed by Fannie Mae and Freddie Mac was lowered from $729,750 to $625,500. Home sales in those two counties that had purchase loans between $625,501 and $729,750 – the band eliminated by the lower limit – dropped to 102, down 71 percent from 350 sales in September and down 71.5 percent from 358 sales a year earlier.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,040 last month, down from $1,084 in September and $1,111 in October 2010. Adjusted for inflation, current payments are 55.4 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.4 percent below the current cycle’s peak in July 2007.

	Sales Volume			Median Price
All homes	Oct-10	Oct-11	%Chng	Oct-10	Oct-11	%Chng
Los Angeles	5,470	5,830	6.60%	$325,000	$300,000	-7.70%
Orange	2,298	2,241	-2.50%	$438,000	$405,000	-7.50%
Riverside	3,264	3,026	-7.30%	$198,000	$187,000	-5.60%
San Bernardino	2,343	2,300	-1.80%	$150,000	$150,000	0.00%
San Diego	2,750	2,759	0.30%	$334,500	$315,000	-5.80%
Ventura	619	673	8.70%	$355,000	$335,000	-5.60%
SoCal	16,744	16,829	0.50%	$283,000	$270,000	-4.60%

Nandina back on the market

2011-11-12T09:18:00.000-08:00

A couple of years back I wrote about a small development that went belly up after building most of the homes. They came on the market in Late 2007 right when it was coming apart at the seams. They were trying to get right around a million for these homes back then. I laughed out loud at the sales lady when I saw the price sheet. They stuck it out for about a year after finding only one sucker to buy a house. The whole tract went into foreclosure and sat empty for a few years. Well recently they have started selling again. The prices now are about 1/2 the original price. Not a bargain but these are pretty nice homes with high end kitchens and lots of nice built-ins. I really liked the floor plan on a couple of the models. The good thing about this little tract is there is no Mello Roos nor any HOA to deal with. On the bad side you are paying top dollar since it's a new home and you still have to spend a healthy chunk of cash putting in some landscaping and fencing.

Here is one of the homes they have listed.
http://www.redfin.com/CA/Riverside/17624-Fairbreeze-Ct-92504/home/17330776

Geez, where have I been?

2011-11-01T21:04:00.000-07:00

With the market basically flat for the last two years there's just not that much to write about. Sure there are a few stupid listings out there and there is still a fair share of fraud and funny biz going on (inside deals selling for way less than they should etc) but it's a lot harder to find and I just don't have the energy to search through every listing to find that stuff. And as you may have guessed I did finally buy a place early last year. I didn't get a "smokin" deal in fact I probably overpaid slightly based on comps but we wanted the house and were willing to pay a little more than we wanted to get it.

Since I did actually purchase a house in this market I will offer my insights into the buying process. First off the market it TOTALLY rigged right now. Good deals are all inside deals where the realtor already has a buyer, a friend or investor they are working with. You and me have no chance of getting one of those. Trust me I tried! If you are thinking you are gonna lowball, forget it.

You need to do your research and offer a fair price based on current comps. It's not hard to find comps and if you have been looking you can check and see what the homes you have looked at are closing for. This will give you a good feel for the actual market value of properties.

If you are using a buyers agent you are at a disadvantage in this market. For total noobies it might make you feel better to use your own buyers agent but the reality is you have a MUCH better chance of getting your offer accepted if you go it on your own and just go directly through the selling agent. The prospect of collecting both ends of the commission seems to really "help" out your offer! (surprise, surprise).

I submitted approximately a dozen offers. 5 of those were submitted by a realtor for me and NONE were accepted even though they were fair offers. That's when I decided to go right to the selling agent myself. My first offer was $70k under list price (which was way high based on comps). I really though we had that one but the seller took another offer and we were the first back up. The home was a short sale and took 9 months to close. It closed for exactly what we offered. I spoke with the listing agent and the reason they went with the other offer was that they thought we did not have enough cash reserves. Offers 2 and 3 were accepted but we backed out after inspection problems. We then offered on a new home in the Stellan ridge developement. The home was listed at nearly $600k, we offered $550k but the builder would not go lower than $570k. Than home sat for another 4 or 5 months before finally selling for ..... $550k! I'm SO glad I did not buy that property. Our next offer on a short sale was accepted and we went under contract to purchase. The bank screwed this one up and ended up foreclosing on the home. We could have bought it at the trustee sale for $50k less than our short sale offer. When it hit the market as an REO 6 months later we put in another offer with the listing agent and moved in 30 days later. And yes, we still paid $50k more than we could have got it at the trustee sale.

So as you can see nearly every offer we made going through the selling agent was accepted. All the offers we made with a buyers agent were ignored or rejected. You do need to be comfortable enough to do this but you can always pay someone to look over your documents.

Our deal was pretty smooth but the appraisal was still a joke. The comps the guy used were ridiculous and the appraisal came in probably $30k higher than it should have in my opinion. I was hoping for a lower appraisal so I could negotiate the price down a little but that didn't happen. The appraisal came in $1k over our offer price (hmm quite the coincidence eh?) So did I over pay? Maybe a little but after we purchased 2 more identical model homes sold for prices very close to ours so it seems our number was actually pretty good.

What's our place like? We got nearly everything we wanted in our home. It's just under 4000 s/f and it's a single story home in Woodcrest, (like we wanted). It sits on just over an acre of land. It does have the dual 2-car garages that I wanted so bad. The wife and kids got the pool they wanted and it has a gorgeous view overlooking Riverside. It did not have everything we wanted. It has carpet and tile, we really wanted hardwood flooring. The kitchen cabinets are lighter than we really wanted and the appliances were not the high end stuff we were after. But those things can be changed. The location and the view cannot. Being an REO it did need painted and a few minor repairs but overall the home was in great shape (probably a cash for keys deal).

Overall for us the buying experience was not too bad. Of course we did have to wait a few years for the market to correct. And to be honest we could have probably bought at least a year or more earlier than we did. We started making offers in late 09 but could have started in late 08 and probably got about the same price (better selection back then too). We also lost a few months using an agent. Once I realized that going through the selling agent was the way to go our offers seemed to get "top billing". Agents are scrambling to make a buck and the easiest way to pad that pay check is to work both ends of the deal. Which is why offers submitted directly to the selling agent look so much better to them. We had a few hiccups but once we were in escrow everything went fairly well.

Unlike many areas I really do feel the IE is at the bottom or so close to it that it's a good time to buy. Especially with the interest rates right now. You actually can buy a home for less than the cost of renting a similar place. BUT, you better be ready to stay because I think that prices are gonna be flat for quite a few years. So if you need to sell after only a few years, the selling costs make it likely that you will lose money. So buy, but buy for the long term.

New conforming Loan Limits

2011-07-19T19:31:00.000-07:00

What will the new Conforming Loan Limits that go into affect do to the IE market? Many are predicting another wave of price declines when the lower limits go into affect. The current loan limit is $500k. However once you get over $417k getting a loan is a lot harder and usually requires a better credit score, DTI and a higher down payment (15% at least). So for much of the buyers $417k is still the loan limit. The new conforming limit will drop to $335,350. Which is still far higher than what most homes in the IE cost. In effect, the loan limit reduction will only affect those homes priced over that amount (or a little higher based on the down payment). That is only 12% of the home sales in the IE, the other 88% are not going to be affected. So, if you are looking at homes over $350k you might want to relax a few months, there is a good chance that segment of the market might see some price drops. But if you are looking in the under $350k range I doubt there will be much change. Of course this is assuming the government doesn't pull some rabbit out of a hat and extend the limits.....

June numbers from DataQuick

2011-07-12T22:15:00.001-07:00

The sales report for June is out and it's not a very good one (no surprise there). The IE did ok compared to most of the other areas. Riverside saw it's median tick up again versus May, but san berdu saw it fall slightly. Our sales numbers also went up slightly over May but fell drastically versus last June.

Here's the reports,

A total of 20,532 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in June. That was up 11.6 percent from 18,394 in May but down 14.0 percent from 23,871 in June 2010, according to San Diego-based DataQuick.

On average, sales between May and June have risen 6.2 percent since 1988, when DataQuick's statistics begin. June sales have varied from a low of 18,032 in 2008 to a high of 40,156 in 2005. Last month’s sales count was 26.1 percent below the June average of 27,772. Among all months, June has had the highest number of sales most often – in eight of the past 23 years.

In June last year, which logged the most transactions in 2010, sales were bolstered by state and federal efforts to stimulate the housing market via homebuyer tax credits. Those credits had expired or been largely depleted by July 2010, when sales plunged about 21 percent from both the month before and a year earlier. Southland sales have fallen short of the year-ago level every month since then.

“The housing market remains dysfunctional and lopsided, just somewhat less so than it was a few months or a year ago. The market mix indicates that a lot of potential buyers are either stuck, for lack of equity, or spooked and are waiting things out. Another large, lingering problem is the fussy mortgage market. Qualifying for a mortgage remains difficult for many, and the use of adjustable-rate and “jumbo” home purchase loans remains far below the historical norm,” said John Walsh, DataQuick president.

The median price paid for all new and resale Southland houses and condos purchased last month was $285,000. That was up 1.8 percent from $280,000 in May and the highest since $290,000 last December, but still down 5.0 percent from $300,000 in June 2010.

The median has declined year-over-year for the past four months. It has been unchanged or lower than a year earlier each month since last December, when it posted a 0.3 percent annual increase.

On a year-over-year basis, home sales fell across virtually all price categories last month. But declines were greatest in the $300,000 to $800,000 range, which saw sales drop 25.5 percent from June 2010. Activity in that price band benefitted a year ago from homebuyer tax credits that spurred more move-up activity. Last month’s sales of homes priced below $200,000 fell 11.4 percent from a year earlier, while $800,000-plus sales dropped 17.6 percent.

Distressed property sales accounted for just over half of the Southland resale market last month. Roughly one out of three homes resold was a foreclosure, while almost one in five was a “short sale.”

Foreclosure resales – properties foreclosed on in the prior 12 months – made up 33.0 percent of the Southland resale market in June, down from 33.2 percent in May but up from 32.8 percent a year earlier. Foreclosure resales peaked at 56.7 percent in February 2009.

Short sales, where the sale price fell short of what was owed on the property, made up an estimated 17.7 percent of Southland resales last month. That was the same as in May but down from 20.5 percent a year ago. Two years ago the estimate was 13.5 percent.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,169 last month, up 1.3 percent from $1,154 in May but down 5.9 percent from $1,251 in June 2010. Adjusted for inflation, current payments are 49.5 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 58.7 percent below the current cycle’s peak in July 2007.

	Sales Volume			Median Price
All homes	Jun-10	Jun-11	%Chng	Jun-10	Jun-11	%Chng
Los Angeles	7,849	6,809	-13.30%	$335,000	$318,000	-5.10%
Orange	3,423	2,947	-13.90%	$445,000	$445,000	0.00%
Riverside	4,645	3,960	-14.70%	$210,000	$200,000	-4.80%
San Bernardino	3,179	2,598	-18.30%	$160,000	$148,000	-7.50%
San Diego	3,885	3,444	-11.40%	$335,500	$330,000	-1.60%
Ventura	890	774	-13.00%	$384,000	$355,000	-7.60%
SoCal	23,871	20,532	-14.00%	$300,000	$285,000	-5.00%

May results from DataQuick

2011-06-13T18:06:00.000-07:00

Sales are down 15% to 20% across SoCal, Prices are pretty well down across the region also. No big surprises here. The IE is doing better but only because we have already fallen farther than the coastal counties. The median in Riverside actually went up $7k from last month. But I suspect that the number from last month was an error or a statistical anomaly.

Southern California home sales held at a three-year low last month amid a sluggish move-up market and record-low sales of newly built homes. The median sale price fell year-over-year by the largest amount in 20 months as buyer uncertainty, tight credit and lackluster hiring continued to restrain housing demand, a real estate information service reported.

A total of 18,394 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in May. That was up insignificantly – 0.3 percent – from 18,344 in April, and down 17.4 percent from 22,270 in May 2010, according to San Diego-based DataQuick. May marked the 11th consecutive month in which sales fell year-over-year.

On average, sales between April and May have increased 5.7 percent since 1988, when DataQuick's statistics begin. May sales have varied from a low of 16,917 in 2008 to a high of 35,557 in 2005. Last month’s sales count was 29.0 percent below the May average of 25,902. May sales were lower than last month in just three of the past 23 years: 2008, 1995 and 1993.

The 1,152 newly built homes that sold across the Southland last month marked the lowest new-home total for the month of May since at least 1988.

“A year ago we were talking about sales reaching a four-year high as buyers rushed to take advantage of expiring federal homebuyer tax credits. Now sales are stuck at a three-year low. The government stimulus is long gone and some of the fundamental drivers of housing demand have yet to strengthen enough to lift sales to even average levels. Some of the key culprits are weak job growth, tight credit and a hesitancy among potential buyers and sellers, who question whether this is the best time to make their move,” said John Walsh, DataQuick president.

“So here we sit in the market doldrums,” he continued. “Two of the more likely sources of fresh wind in the market’s sails would be a pickup in hiring or further home price reductions.”

The median price paid for all new and resale Southland houses and condos purchased last month was $280,000, the same as in April but down 8.2 percent from $305,000 in May 2010. That year-over-year drop was the largest since the median fell 10.9 percent in September 2009. he typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,154 last month, down 2.3 from $1,181 in April and down 10.8 percent from $1,293 in May 2010. Adjusted for inflation, current payments are 50.0 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 59.0 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 very low, and down payment sizes are stable, DataQuick reported.

	Sales Volume			Median Price
All homes	May-10	May-11	%Chng	May-10	May-11	%Chng
Los Angeles	7,320	5,983	-18.30%	$345,000	$320,000	-7.20%
Orange	3,257	2,664	-18.20%	$450,000	$425,000	-5.60%
Riverside	4,164	3,644	-12.50%	$210,000	$197,000	-6.20%
San Bernardino	2,835	2,323	-18.10%	$160,000	$150,000	-6.30%
San Diego	3,879	3,087	-20.40%	$340,000	$324,500	-4.60%
Ventura	815	693	-15.00%	$380,000	$360,500	-5.10%
SoCal	22,270	18,394	-17.40%	$305,000	$280,000	-8.20%

OMG check out the pics

2011-06-08T20:26:00.001-07:00

Here's a "classic" realtard listing. 17551 Dry Run Ct in Woodcrest. This home was purchased for $350k as a shorty in March 2010. I guess the buyer didn't like the country living or maybe it was picked up as a flip (doubtful). But in any case it hit the market last weekend listed for $499k! This guys thinks he can make $150k in a year in this market. I can't tell if this guy put the pool in or if it was in before. The previous listing did not mention a pool. I kinda think he added the pool and is trying to recoup the cost of that AND his other costs.

So what makes this listing "classic"? Well, 10 of the 12 pictures are UPSIDE DOWN! (just like 40% of the homeowners in the IE). Oh and the all caps and spelling errors. In addition the statement that the lot will make a great vineyard or DRIVING RANGE? Really a driving range, have you ever played golf? Most of this lot is pretty unusable. It's basically a gulley with the only flat spot being where the home is.

What are this guys chances? Basically zero at this price. A much nicer, larger home just sold down the street (with a way nicer pool) for $420k. Most of the nicer homes in Bridle Creek are selling for about $125 s/ft. So this guys price should be close to what he paid at $365k. The listing does not quite qualify for the ass clown award but it's pretty damn delusional none the less.

Short Sale Fraud

2011-06-07T10:19:00.000-07:00

If you have been looking for any length of time I'm sure you've seem plenty of suspicious short sales. I know I have. The FBI seriously needs to set up a hotline so people can report this crap.

Anyway here is an article from the PE

In the wake of failed attempts at loan modifications, delinquent homeowners increasingly are taking what many consider the next best step to avoid foreclosure: a short sale.

The trend, while also potentially beneficial for lenders, has increased the risk of abuse and fraud, according to real estate experts.

A national report released last week said the red flag is when houses sold short -- for less than enough to cover the mortgage -- are quickly resold for much more, meaning that the original lender probably received less than fair market price.

The potential threat to lenders is increasing with the popularity of short sales. Short sales enable the homeowner to continue to occupy and maintain the home, preserving its value for the lender. By contrast, homes sold in foreclosure are frequently abandoned and exposed to vandalism.

Nationally, the number of short sales in the market has nearly tripled between the second quarter of 2008 and the second quarter of 2010, CoreLogic reports.

The same mushrooming of short sales has occurred in Inland Southern California.

"Two or three years ago, 90 percent of our sales in southwest Riverside County were bank-owned properties, and today about 55 percent are short sales, while bank owned homes are down to about 25 percent," said Gene Wunderlich, government affairs director for the Southwest Riverside County Association of Realtors.

CoreLogic, which issued a report last week about the risk of short sales to the lending industry, described "suspicious transactions" as when a house sold short is resold less than a month later for a price that's at least 10 percent higher or resold less than three months later at a price that's at least 20 percent higher or resold less than six months later at a price that's at least 40 percent higher.

California, with the largest volume of short sales of any state, also has the largest percentage of suspicious transactions in the nation at 34.5 percent, CoreLogic reports.

Wunderlich said there are investor groups active in Southern California that seem to be organized to milk short sales. "Some are negotiating the resale before they close escrow (on the short sale)," he said.

There is nothing wrong if an investor buys a short sale home, fixes it up and then sells it for a solid gain, the report said.

But in analyzing sales by investors, CoreLogic found that "nearly one in six suspicious short sales is resold on the same day, making legitimate increases in value doubtful."

"Lenders are incurring tremendous unnecessary losses in these situations," said CoreLogic. "Short sales that are resold on the same day have an average of 34 percent ($56,947) gain between sale prices."

John Giardinelli, general counsel to eight real estate boards, including four with members in Riverside and San Bernardino Counties, said the boards are educating brokers about how to avoid becoming an instrument of fraud in these situations.

The key, he said, is to make sure all the appraisals and other documents provided to the bank seller of a house are "absolutely accurate" and that all financial arrangements are disclosed in the closing escrow papers.

In some cases, Giardinelli said, investment companies have offered brokers two commissions on the same house, one when the bank-repossessed house is sold to the investors and another when it is flipped to a pre-arranged buyer.

Price per zip code for Riverside

2011-05-16T13:03:00.000-07:00

Here is the April price data (per zip code) for SFRs. Sorry the data gets compressed. For some reason it does not like my spreadsheet.
It's city, zipcode, sales numbers, price (x 1000), change from last year and price per sq/ft

RIVERSIDE COUNTY SFR Price % chg $/Sq Ft
Countywide 2,790 $189 -3.10% $99
Aguanga 92536 3 $240 4.30% $111
Banning 92220 46 $123 23.00% $78
Beaumont 92223 69 $172 -8.90% $80
Blythe 92225 11 $100 -32.70% $74
Cabazon 92230 5 $64 2.40% $56
Calimesa 92320 4 $169 4.20% $104
Canyon Lake 92587 30 $193 -5.60% $97
Cathedrl Cty 92234 62 $144 -7.10% $91
Coachella 92236 38 $123 -12.10% $67
Corona 92879 39 $252 -4.90% $146
Corona 92880 74 $345 -5.50% $121
Corona 92881 28 $319 -6.30% $152
Corona 92882 50 $286 2.00% $154
Corona 92883 42 $305 -3.20% $120
Desert Ctr 92239 1 $90 50.00% $51
Dsrt Hot Spr 92240 83 $89 -11.50% $56
Dsrt Hot Spr 92241 8 $107 69.00% $68
Hemet 92543 32 $77 -7.20% $56
Hemet 92544 64 $110 -4.10% $65
Hemet 92545 87 $132 -5.70% $68
Idyllwild 92549 16 $235 3.30% $142
Indian Wells 92210 10 $765 -1.30% $199
Indio 92201 83 $153 -4.80% $86
Indio 92203 74 $190 -9.50% $92
La Quinta 92253 115 $320 -16.90% $135
Lake Elsinre 92530 65 $155 -3.10% $89
Lake Elsinre 92532 46 $190 -9.80% $78
Mecca 92254 1 $75 16.70% $54
Menifee 92584 72 $198 -0.10% $91
Mira Loma 91752 28 $269 -5.80% $141
Moreno Vly 92551 50 $142 1.40% $90
Moreno Vly 92553 70 $135 0.00% $91
Moreno Vly 92555 56 $203 1.00% $82
Moreno Vly 92557 60 $150 -6.30% $99
Mountn Ctr 92561 1 $275 107.50% $157
Murrieta 92562 91 $248 -4.40% $110
Murrieta 92563 76 $241 -1.70% $95
Norco 92860 16 $366 20.00% $157
Nuevo 92567 4 $142 -26.20% $71
Palm Desert 92211 45 $270 -15.60% $136
Palm Desert 92260 33 $295 -13.20% $153
Palm Sprngs 92262 49 $260 -25.20% $147
Palm Sprngs 92264 23 $346 -23.30% $181
Perris 92570 35 $150 8.70% $76
Perris 92571 76 $152 -4.70% $73
Rancho Mrg 92270 42 $535 -0.90% $209
Riverside 92501 25 $170 1.50% $111
Riverside 92503 85 $184 -8.30% $123
Riverside 92504 63 $158 -12.20% $118
Riverside 92505 26 $210 15.50% $119
Riverside 92506 49 $270 24.40% $147
Riverside 92507 17 $205 -4.70% $119
Riverside 92508 40 $261 -5.60% $108
Riverside 92509 64 $161 0.00% $119
San Jacinto 92582 41 $153 -4.70% $59
San Jacinto 92583 38 $123 -2.00% $65
Sun City 92585 25 $180 3.20% $85
Sun City 92586 51 $133 6.00% $88
Temecula 92590 5 $600 -4.00% $172
Temecula 92591 52 $261 3.40% $123
Temecula 92592 103 $280 2.20% $119
Thousand P 92276 7 $145 81.30% $80
White Water 92282 2 $76 -12.10% $54
Wildomar 92595 27 $210 0.00% $94
Winchester 92596 53 $236 -7.50% $92

April not a good month

2011-05-13T21:07:00.000-07:00

Data Quicks April report is out and it's a stinker! Sales numbers continue to be pathetic and the median price took a hit last month too. On to the report.....

The prospect of a near-term resurgence in Southern California’s housing market continued to wither last month as home sales fell to the lowest level for an April in three years. Prices trended sideways or down slightly, depending on location, as credit remained tight and distress sales and investor activity continued to dominate the market, a real estate information service reported.

A total of 18,344 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in April. That was down 5.5 percent from 19,412 in March, and down 9.2 percent from 20,205 in April 2010, according to San Diego-based DataQuick. April marked the 10th consecutive month in which Southland sales fell year-over-year.

On average, sales between March and April have increased 0.9 percent since 1988, when DataQuick's statistics begin. April sales have varied from a low of 15,303 in 1995 to a high of 37,905 in 2004. Last month’s sales count was 25.4 percent below the average April sales tally of 24,606. The last time April sales were lower was in April 2008, when 15,615 homes sold.

The 1,024 sales of newly built homes last month marked a 1.9 percent gain from a year earlier, but it was still the Southland’s second-slowest April for new-home sales since at least 1988.

The median price paid for all new and resale Southland houses and condos purchased last month was $280,000, down 0.2 percent from $280,500 in March, and down 1.8 percent from $285,000 in April 2010. The median has declined year-over-year for two consecutive months, and hasn’t posted an annual increase since last December, when it rose 0.3 percent from a year earlier.

The median’s low point for the current real estate cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially inland foreclosures.

“The market's in a rut at a time it would normally be building momentum. Two of the more likely forces that could get it going again are more robust job growth and home price reductions. At the moment, the latter appears to be the more likely short-term catalyst,” said John Walsh, DataQuick president.

	Sales Volume			Median Price
All homes	Apr-10	Apr-11	%Chng	Apr-10	Apr-11	%Chng
Los Angeles	6,688	6,025	-9.9%	$329,500	$320,000	-2.9%
Orange	2,669	2,485	-6.9%	$430,000	$430,000	0.0%
Riverside	4,023	3,470	-13.7%	$200,000	$190,000	-5.0%
San Bernardino	2,744	2,403	-12.4%	$150,000	$147,500	-1.7%
San Diego	3,292	3,277	-0.5%	$325,250	$321,750	-1.1%
Ventura	789	684	-13.3%	$382,000	$357,500	-6.4%
SoCal	20,205	18,344	-9.2%	$285,000	$280,000	-1.8%

March numbers from DataQuick

2011-04-13T20:28:00.000-07:00

The March report is out and the IE is holding steady median price wise. Sales numbers are down quite a bit from last year though. In addition to the low sales numbers over a quarter of all sales are to investors (and that number is probably much higher in the IE). So the "normal" market is really very bad!

Southern California home sales turned in another lackluster month in March, the result of a fussy mortgage market, slow job growth and a continued wait-and-see attitude among potential buyers and sellers. There were signs, however, that the market was a little less dysfunctional than in recent months, a real estate information service reported.

A total of 19,412 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 35.1 percent from 14,369 in February, and down 5.2 percent from 20,476 in March 2010, according to DataQuick of San Diego.

Sales always increase from February to March. Last month’s sales count was 21.4 percent below the 24,706 average for all the months of March since 1988. Sales so far this year are 20 percent below the norm. During the last half of 2010 sales were 25-30 percent below average.

Sales of newly built Southland homes totaled 1,144, the lowest March in DataQuick’s statistics, which go back to 1988. The peak March was in 2006 with 7,205 sales. The March new-home average is 3,661.

The median price paid for a Southland home last month was $280,500, up 2.0 percent from $275,000 in February, and down 1.6 percent from $285,000 for March a year ago.

“As an indicator of upcoming trends, the month of March is actually pretty reliable. We got off to a slow start with sales this year and it doesn’t look like that will change anytime soon. Two of the likely game changers in the short run would be a surge in job creation or another round of price corrections,” said John Walsh, DataQuick president.

“The foreclosure issue is going to be with us for a good while. But mortgage availability, or rather the lack thereof, is key. If a well-crafted home loan program comes down the pike, it’s going to make some lending institution the dominant player, at least for a while,” he said.

Absentee buyers – mostly investors and some second-home purchasers – bought 26.0 percent of the Southland homes sold in March, paying a median $205,000. The absentee share of the market reached a peak in February at 26.4 percent. Over the last decade, absentee buyers purchased a monthly average of 16.3 percent of homes.

Cash purchases accounted for 30.5 percent of March home sales, paying a median $205,250. The cash purchase share was down from 32.3 percent in February, the all-time high, but up from 27.9 percent a year earlier. The 10-year monthly average for Southland homes purchased with cash is 13.3 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.....

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,185 last month, up from $1,174 in February and down from $1,220 in March 2010. Adjusted for inflation, current payments are 48.0 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 57.4 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 very low, and down payment sizes are stable, DataQuick reported.

	Sales Volume			Median Price
All homes	Mar-10	Mar-11	%Chng	Mar-10	Mar-11	%Chng
Los Angeles	6,747	6,590	-2.3%	$329,000	$320,000	-2.7%
Orange	2,652	2,615	-1.4%	$432,000	$430,000	-0.5%
Riverside	4,156	3,843	-7.5%	$198,000	$198,000	-0.0%
San Bernardino	2,955	2,544	-13.9%	$152,000	$150,000	-1.3%
San Diego	3,227	3,063	-5.1%	$330,000	$325,000	-1.5%
Ventura	739	757	2.4%	$375,000	$349,000	-6.9%
SoCal	20,476	19,412	-5.2%	$285,000	$280,500	-1.6%

Got gas?

2011-04-11T21:31:00.001-07:00

Many see the cost of petroleum as the biggest hurdle to our so called economic recovery. I certainly agree that it's a serious problem and one that will certainly hurt any recovery. The high cost of gasoline will benefit a few oil companies and their shareholders. But the rest of us are getting squeezed and any extra disposable income is going into the gas tank rather than the economy. Eating out will certainly take a hit. Restaurants will probably be one of the first to see the effect of less disposable income. We have already cut back from going out two or three times a week to just Friday nights. Both my wife and myself drive huge gas guzzling, ozone destroying SUV's and spending $90 per fill up hurts a little. Our fuel bill is now well north of $500/mo (our cars are paid off so buying a new car is not an option right now).

Anyone that does any grocery shopping knows how much food has gone up, regardless of the phony inflation numbers Washington puts out. As fuel prices go up the cost of everything we buy will continue to go up. Of course our wages will not keep up. I was fortunate this year and got a whopping 2.8% raise which after taxes increased my check about $40. Unfortunately my medical went up, my life insurance went up, the cost of fuel, food and everything else went up. I figured it all out and even with a $80/month raise it hardly offsets the fact that my fixed monthly expenses increased nearly $470. So even with a raise I am $390/mo poorer than I was last year. That's $400 a month less I have to spend on fun stuff. What's the world coming to? Am I gonna have to drink cheaper scotch, smoke cheaper cigars, play crappier golf courses.

What will the high cost of Gas do to the real estate market out here. Most of the people in the IE work a long way from home. So is buying a home in the far flung areas like Hemet or San Jacinto a feasible option with gas at $4 or $5 a gallon. It might force people to carpool but that's not an option for a lot of people. I think it will take high gas prices for a year or more before it starts to affect the prices. Most people expect the price of gas to come back down and it will take a while to change that mindset. But once it changes will there be any buyers for those distant suburbs?

Research show's we've over-corrected!

2011-04-10T11:37:00.001-07:00

An interesting article in the Press about a new investment group buying up homes in the IE. They feel prices have over-corrected and they plan to buy, rent for a few years and sell. Of course they are picking up stuff for cash at the trustee sale. I would agree if you have cash and can purchase at the trustee sale then yes, you are paying less than the actual market value. But has the market value over-corrected? I don't think so. All the numbers I look at are saying the fundamental ratios are very close to long term trend values when looking at income or rental ratios.

TwinRock Partners is headed by two managing partners: Mike Meyer, an Orange County real estate accountant who has advised the likes of Irvine Co. owner Donald Bren, and Alex Philips, a seasoned real estate acquisition and investment analyst.

Meyer and Philips said their research shows that the Inland Empire's home prices have "overcorrected," making this a smart time for investors to buy foreclosed houses and hold them as rentals in anticipation that values will rebound substantially in the next five to seven years.

So far TwinRock has purchased 22 homes in Moreno Valley, Riverside, Corona, Rialto, San Bernardino, Highland, Murrieta, Wildomar and Temecula, and the company has plans to buy several hundred more, said Meyer.

Earlier this year, TwinRock put together a $6 million fund to enable the company to buy about 40 Inland homes and it is getting ready to raise another $15 million, Philips said. The firm's investment model primarily calls for buying houses with cash at trustee auctions conducted each weekday at Inland courthouses, he said.

Money to buy the houses is coming from sophisticated investors with knowledge of real estate including homebuilders, land developers, bankers, lawyers, accountants and wealth managers, he said.

Bruce Norris, who heads The Norris Group, a Riverside-based real estate investment company, said most houses sold at trustee auctions are purchased by investors who intend to quickly sell them at a profit that is greater than the return they could expect from buying houses and holding them as rentals before reselling them.

Still, Norris agreed that currently "it makes sense to buy because the houses are priced below their replacement cost." He said TwinRock "will make money, I'm sure."

how to lose 65% in 4 years

2011-04-04T22:15:00.000-07:00

The most obvious sign of bubble mania for me was stopping in at a new tract in Moreno Valley in Early 2007 and seeing prices of $700k. These were nice big homes on 1/2 acre lots but they were still in MORENO VALLEY. And get this, $700k got you VINYL flooring in the kitchen and bathrooms. You needed to drop another $50k to $100k to make these houses nice. So here we are 4 years later and they are selling for 65% off.

28615 Dracaea This was the smallest home in the tract at 3500 s/f. Some poor schmuck paid $717K for this house. He must have put a few upgrades in because the small model was "only" selling for around $670K when I looked. Well HAMP and HARP and HOPE and whatever else failed to keep this one from going "back to bene". Even at $253,800 they could not find a taker on the courthouse steps. Now it's listed for $249k. That's 65% off of the ridiculously overpriced original sale. Now at $249k this is probably a pretty decent deal if you don't mind living in MoVal.

By the way, they stopped building these for about 2 years and then threw up the final few homes last year. They still managed to find buyers willing to pay over $400k for that new house smell. They were easily upside down $100k the minute they signed the papers...... A sucker born every minute......

Foreclosed 3 times in 5 years!

2011-03-29T21:16:00.001-07:00

Stay the hell away from this house! Seriously, someone put the whammy on this thing. It's triple jinxed. 27684 Fairmont in MoVal has gone through 3 foreclosures in 5 years. If that's not a record it has to at least be tied.

Purchased new

Dec 15, 2004	Sold (Public Records)	$380,000

Dec 15, 2004

Sold (Public Records)

$380,000

Foreclosed
Jan 18, 2006 Sold (Public Records) $351,000

Sold at the peak as REO

May 22, 2006	Sold (Public Records)	$430,000

May 22, 2006

Sold (Public Records)

$430,000

Foreclosed two years later
Apr 15, 2008 Sold (Public Records) $198,817

Sold again as REO

Aug 29, 2008	Sold (Public Records)	$260,000

Aug 29, 2008

Sold (Public Records)

$260,000

Foreclosed AGAIN
Aug 12, 2010 Sold (Public Records) $211,806

And now it's listed for $240k. That's seems about $40k too high to me and Zillow actually agrees with me. But I wouldn't buy this thing, it's freeking hexed!

And this is why you better be buying for the long term

2011-03-19T18:58:00.000-07:00

This is a pretty good read about a guy that bought and a couple of years later wants to sell. Big losses!

Losing BIG

Let me preface this by saying that I never wanted to buy a home. I knew the financial risks, the fact that in most cases you have to stay in a home a long time to even have a chance of making it a profitable investment, and that a home can take a lot of effort and money to maintain. My wife, on the other hand, just couldn't fathom the idea of not purchasing a house once our son was born even though we had lived together happily in various apartments for almost 10 years. While I tried in vein to explain the many downsides to home ownership, I just couldn't break through to her, and therefore gave in as any good husband should. Big mistake!

Three years after purchasing our home in the spring of 2008, my wife now sees the light and finds the idea of home ownership as repugnant as I always have. Due to a multitude of reasons and factors, we decided to put our home on the market. It's now been over a year and we've yet to sell, but when we do, we stand to lose a boatload of money. As hard as it is to believe at times, and while the two often correlate, sometimes happiness really is more important than money.....

Skip ahead again to the present. With continued real estate market issues, we now have our home listed at $249,000, a full $45,000 under our purchase price. Now you might be asking yourself why we don't just take it off the market and wait out this rough patch. It's a good question, one that I have asked myself a multitude of times, and one that's hard to answer without a person being in our situation. Let's just say that being closer to my ailing mother in Washington, our happiness, and the opportunity to be out from under what to us is a heavy burden, is worth the loss, be it a big one. So get ready for the numbers.

Even if we sell our home for the full asking price, which I don't count on happening in this market, it will be well under the price we paid three years ago.

- Loss of $45,000 on price of home
- 5% Realtor's commission on $249,000 is $12,450
- 3% closing costs on $249,000 is $7,470
- Total losses on the sale of the home at its current price would be just under $65,000.

This doesn't even factor in the increased costs of owning a home as compared with the apartment we were renting for $780 a month with free heat, water and trash. Things like annual property taxes, homeowner's insurance, increased utilities, repairs and maintenance, interest on our mortgage, and similar costs add additional tens of thousands of dollars to our losses, unless you want to consider them costs of the opportunity to live in a house.

I'll take it!

2011-03-15T22:15:00.000-07:00

Another notch down or teaser short sale listings? I have to wonder with some of the listings popping up. Up in Norco Hills (Bretton Gate) there are 2 new short sale listings under $400k. One of them is decked out with a pool, putting green and stables. 1457 Foxtrotter is the house I speak of. This 3900 s/f 5 bedroom house is pretty darn nice and I cannot see any lender letting this go for the $400k that it's listed for. Based on recent comps this thing should easily fetch $550k or more. Then there is 230 Haflinger listed at $350k. Again based on comps it's probably worth $450k. These two should get a lot of attention and probably a lot of offers too. It will be interesting to see if they actually sell for anything close to listing price. If they do, they instantly put all the recent buyers a good $100k underwater!

Feb's numbers from DQ

2011-03-15T18:43:00.000-07:00

The DQ report for Feb is out. The sale numbers are terrible however the median in the IE managed to inch up slightly over January (that's fairly normal). YoY median is down slightly though. It's fairly obvious that a very high percentage of the market is investors. 32% of sales were cash! And I would bet it's a higher percentage in the IE..........................

Southern California’s housing market remained sluggish in February despite relatively strong demand from investors and others paying cash for homes. Prices appeared fairly flat as many potential home buyers stayed on the sidelines and waited – whether for a sign values have bottomed, job security has improved or credit has loosened, a real estate information service reported.

Last month 14,369 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 0.6 percent from 14,458 in January, and down 6.4 percent from 15,359 in February 2010, according to DataQuick Information Systems of San Diego.

The total number of homes sold last month was the lowest for a February since 2008, when 10,777 sold, and the second-lowest since 1995, when 12,459 sold. Last month’s sales fell 19.5 percent short of the Southland’s average February sales tally – 17,848 – since 1988.

Last month’s distressed sales – the combination of sales of foreclosed homes and “short sales” – accounted for well over half of the resale market.

Foreclosure resales – properties foreclosed on in the prior 12 months – made up 37.1 percent of resales last month, up from 36.8 percent in January but down from 42.4 percent a year ago. Over the past year foreclosure resales hit a low of 32.8 percent last June but since then they’ve trended higher. Foreclosure resales peaked at 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 19.8 percent of Southland resales last month. That was up from an estimated 19.7 percent in January, 18.4 percent a year earlier, and 12.0 percent two years ago.

The abundance of distressed homes for sale continues to attract unusually high levels of investor and cash-only buyers. Buyers who paid cash accounted for a record 31.7 percent of February home sales, paying a median $200,000. That was up from 30.4 in January and 30.1 percent a year earlier. The February cash level was the highest for any month in DataQuick’s statistics back to 1988. The 10-year monthly average for the percentage of Southland homes purchased with cash is 13.1 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.

At the county level last month, the overall median sale price fell on a year-over-year basis in four counties and was unchanged in two. Declines from a year ago were logged in Orange (-1.7 percent), Riverside (-1.0 percent), San Diego (-4.3 percent), and Ventura (-1.4 percent) counties, while the median was the same as a year ago in Los Angeles and San Bernardino counties.

The median paid for the largest home-type category – resale single-family detached houses – fell year-over-year last month in Orange (-3.1 percent), San Diego (-3.1 percent) and Ventura (-9.6 percent) counties. The other three counties recorded annual gains ranging from 2.6 percent in Los Angeles and Riverside counties to 3.6 percent in San Bernardino County.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,174 last month, up from $1,128 in January and down from $1,180 in February 2010. Adjusted for inflation, current payments are 48.1 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 57.4 percent below the current cycle’s peak in July 2007.

	Sales Volume			Median Price
All homes	Feb-10	Feb-11	%Chng	Feb-10	Feb-11	%Chng
Los Angeles	5,034	4,736	-5.90%	$315,000	$315,000	0.00%
Orange	1,986	1,903	-4.20%	$417,000	$410,000	-1.70%
Riverside	3,199	2,842	-11.20%	$197,000	$195,000	-1.00%
San Bernardino	2,095	1,974	-5.80%	$150,000	$150,000	0.00%
San Diego	2,465	2,330	-5.50%	$322,000	$308,000	-4.30%
Ventura	580	584	0.70%	$350,000	$345,000	-1.40%
SoCal	15,359	14,369	-6.40%	$275,000	$275,000	0.00%

More Mortgage Mod news

2011-03-05T21:16:00.000-08:00

State attorneys general have presented the nation’s five biggest banks with a list of demands that could drastically alter the foreclosure process and give the government sweeping authority over how mortgage servicers deal with millions of Americans in danger of losing their homes.

Under the blueprint, banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

Any borrower who successfully made three payments in a trial modification would be given a permanent modification. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

The proposed changes, which will be discussed by the attorneys general when they meet in Washington early next week, would compel the banks to treat each borrower in default individually.

.................

I don't see how they can force the lenders to do this but who knows anymore. It will certainly get a lot of borrowers excited about the prospect of finally getting a loan mod.

Are prices really falling?

2011-02-16T22:21:00.000-08:00

The median prices for January are out and all over California the median is falling. But are prices in the IE falling? If they are it's certainly not in the areas I track. Prices are pretty much the same as they've been for a couple of years now. I see a few homes sell for less than I thought and then a few sell for more but overall the average has been remarkably stable for quite a long time. The reported median price is, and has always been a poor indicator of actual prices. In 2007 when the market was falling apart at the seams the median was climbing to record highs. But that was because all the low end sales went away, not because values were going up. I think we are seeing a similar thing right now. With the end of the tax credits and tight financing the high end is getting pummeled while the low end is still busy with investors and first time buyers. The mix is moving towards the low end.

This is gonna be an interesting year. The government seems to have had enough and seems to be losing interest in saving the underwater homeowners. They seem to want out of the mortgage business based on their latest reports on fannie and freddy. Who know what the banks will do next. Will they fire up the foreclosure engine, or continue to let people live rent free for years on end. Will inflation take off? What are interest rates gonna do? Either way I think the IE is pretty well scraping the bottom. We are back to rental equilibrium, and nearly back to income equilibrium. So by most tradition measures home prices are back to where they should be in the IE. If the employment numbers ever get back to a reasonable level we might come out of this mess sooner than most areas.

January sales report

2011-02-15T17:08:00.000-08:00

The January dataquick report is out. Sale numbers fell off a cliff, that's fairly normal though this time of year. Median price fell nearly everywhere. The IE was only down a small amount since we are much closer to the bottom than the OC or LA. I suspect that the OC and LA will start to see some large declines now. This mirrors the pattern of the early 90's where the IE fell hard and fast while the coastal areas thought they were "immune" because everyone wanted to live there. Not so much as it turned out. They fell just as far as the IE, it just took them a couple of extra years.
.....................

Southland homes sold at the slowest pace for a January in three years – and the second-slowest in 15 – amid record-low new-home sales, tight credit, and a persistent reluctance among would-be buyers. The median sale price dipped slightly from a year ago but fell more than usual from December as investors and others targeting lower-cost properties accounted for a larger share of sales, a real estate information service reported.

The total number of homes sold last month was the lowest for a January since 2008, when 9,983 sold, and the second-lowest since 1996. Last month’s sales fell 18.8 percent below the average January sales tally of 17,802.

January new-home sales were the lowest for any month in DataQuick’s records back to 1988. Builders have struggled to compete with prices on resale homes, especially distressed properties.

But what’s proven the bane of the building industry has fueled a boom among investors, who appeared to be as active as ever last month.

Absentee buyers – mostly investors and some second-home purchasers – bought a record 24.8 percent of the homes sold in January, paying a median $198,500. Over the last decade, absentee buyers purchased a monthly average of about 16 percent of all Southland homes.

Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for a near-record 29.5 percent of January sales, paying a median $190,000. So far, the peak for cash sales was 30.1 percent last February. The 10-year monthly average for Southland homes purchased with cash is about 13 percent.

“Last month was sort of a flashback to January last year: Sales were lousy, but many investors and others looking for bargains stayed active. They kept working the distress-heavy, lower-cost markets through the holidays, which translated into a relatively high level of investor and cash deals closing last month. It helps explain the larger-than-usual, month-to-month dip in the median sale price,” said John Walsh, DataQuick president.

Last month 14,458 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 26.0 percent from 19,528 in December, and down 5.9 percent from 15,361 in January 2010, according to DataQuick Information Systems of San Diego.

The median price paid for a Southland home last month was $270,000, down 6.9 percent from $290,000 in December, and down 0.6 percent from $271,500 in January 2010. It was the median’s lowest level since it was $268,000 in July 2009. Last month’s year-over-year decline in the median was the first since October 2009, when the median fell 6.7 percent, to $280,000.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,128 last month, down from $1,205 in December and down from $1,170 in January 2010. Adjusted for inflation, current payments are 49.8 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 58.9 percent below the current cycle’s peak in July 2007.

All homes	Jan-10	Jan-11	%Chng	Jan-10	Jan-11	%Chng
L A	5,228	4,908	-6.10%	$325,000	$300,000	-7.70%
Orange	1,867	1,929	3.30%	$425,000	$415,000	-2.40%
Riverside	3,162	2,738	-13.40%	$195,000	$190,000	-2.60%
San Berdu	2,252	2,085	-7.40%	$150,000	$151,500	1.00%
San Diego	2,322	2,248	-3.20%	$305,000	$304,000	-0.30%
Ventura	530	550	3.80%	$360,000	$350,000	-2.80%
SoCal	15,361	14,458	-5.90%	$271,500	$270,000	-0.60%

Another Ass Clown award

2011-02-12T16:30:00.000-08:00

Seriously, I thought I was done with the ass-clown award. But there are STILL people who think homes are going up $200k a year. I give you 350 Oldenburg in Corona. This place was foreclose on and picked up by the current owner for $435k in April 2009. Now 2 years later they somehow figure it has gone up in value nearly $300k! They just listed it for $725k. No pics yet but it doesn't matter, the toilets could be plated in gold leaf and it's still not gonna fetch $725k.

OMG they still don't get it!

2011-02-11T17:54:00.000-08:00

The California association of realtards STILL thinks it's ok to buy a home that costs 6 time your annual income!

Historically low interest rates and a slight decline in home prices in the fourth quarter of 2010 meant that the percentage of first-time buyers who could afford to purchase an entry level home in California rose to 69 percent, up from 66 percent in the third quarter and 64 percent a year earlier.

The report from the California Association of Realtors showed that in the last three months of 2010, 82 percent of first time buyers in San Bernardino County were able to purchase an entry-level priced home of $138,050. They needed a minimum household income of $21,300 to qualify. (that's 6.5 times income)

In the fourth quarter in Riverside County 79 percent of first time buyers could afford a home. They needed a minimum income of $25,200 to buy an entry-level house of $163,010.(also 6.5 times income)

The most affordable region in the state was the High Desert, where 85 percent of first -time buyers could afford an entry level home of $106,320, for which they could qualify with an annual income of $16,500. (also 6.5 times income)

Seriously, the realtards are still trying to convince people to spend double the traditional levels on housing. How the hell is anyone making 25K a year gonna afford a $163k house? These people are bringing home about $1500/mo. Subtract utilities, food, transportation and what is left to pay a mortgage? I'd love to see just what they used to come up with these numbers.

Austin Powers or RuPaul?

2011-02-10T21:16:00.000-08:00

OMG, this is the best listing I've seen in a long time. It's actually pending, but check out the pics of this place. I can't tell if this is the home of Austin Powers or some flaming drag queen.

The sex palace!

I just noticed the neon sign and have an pretty good idea it's drag queen and not Austin Powers. My wife looked at the pics and said "uber-gay".....

check the comps, PLEASE

2011-01-22T08:08:00.000-08:00

With the large rush of homes hitting the market lately I'm seeing a lot of sellers smoking the dream pipe again. Here's one in Norco Hills. 209 Friesian is a big 5 bed/3.5 bath home overlooking the golf course. It's a funky flooorplan but I kinda like it and actually did put an offer in on a home like this in late 2009. The bad thing about this plan is the layout of the garages. They are on the side of the house and while it's nice that they are hidden from view it's VERY difficult to get cars in and out of them as you have to turn 90 degrees to get into the main garage. There are two other small single garages too. This fella bought this home early on in the crash. He jumped off the fence WAY too soon and paid $625k for this as an REO in Mid 08. He thought he was getting a deal. It originally sold for $1.2M in late 06, got foreclosed on in late 07 (buyer probably never made a payment). They listed in at $780k in late 07. So the buyer pays $625 and thinks he's getting a steal. Fast forward 2 years and these are selling from the mid $400s to the mid $500's. The one I offered on sold for $465k and it had a pretty nice pool.

This guys house sit's WAY up above the 17th fairway. I don't think you could consider it "on the course" There's at least 100 yards of scrub brush hillside between the house and the course. The landscaping looks ok but the freeking realtard only has 2 pis of the outside. The listing price is $699k! That's at least $150k more than this house has any hope of selling for. Personally I think it's at least $200k more than it will sell for. And I'm not basing this on my magic 8-ball. All the seller needs do is look at a recent comp. And it happens to be across the street and 4 houses up. 190 Friesian is the same floorplan but with a spectacular back yard and a horse corral. This home just closed for $525k! I'd take this home over Mr. Delusional's any day of the week.

The bubble must be back

2011-01-20T12:44:00.000-08:00

The bubble days are back. This seller thinks so anyway. 8024 Sanctuary in the Retreat just listed for $748k. That's $223k more than the owner paid less than 2 years ago. Other than some landscaping and paint I don't see that he's done much to the house. I looked at this home in 2009 when it was for sale and although it was nice it was actually priced about $50k higher than some of the identical floorplan homes were selling for. This one does back up to the course but the yard is small and it's right next to the clubhouse. I'm not sure what makes a person think in this economy that they can get $223K profit on this house. The realtor should have smacked the seller for even suggesting such a price. On the plus side, the pictures are great. I'll give Tiffanie some brownie points for the listing. Well written and good pics, that's nice to see once in a while. But the price.......

The tide's coming in.

2011-01-17T08:42:00.001-08:00

If you are looking for a property you might have noticed a LOT of new listings hitting the market. It seems like the banks are getting serious about turing over their non-performing assets. There was a lot of talk about this late last year and for the most part it was expected. But after a few years of never knowing what's going to happen next it's hard to beleive anything you read these days. But looking at the latest numbers from housing tracker it's pretty obvious that the wave is coming in. The only thing that is in question is how big this wave will be and is there enough demand to absorb this additional inventory. You might also notice that the average listing price has tanked this week. The high end has fallen nearly $100k since it's post crash high of $435k in August 2009. The median has fallen $30k from it's post crash high of $240k in Sept 2009. You can see the high end is VERY weak and I have been saying that for years now. There's just not that many people that can afford $500K plus homes in the IE.

Time to break out the Ass-Clown award

2011-01-11T18:47:00.000-08:00

There's a new bread of Ass-Clowns popping up. These are the delusional flippers or the people that recently purchased a home and for whatever reason want to sell it now. Today's home is the latter. The buyer picked up 4507 Birdie Dr in June of 09 for $570k. The house is a 4 bed, 3.5 bath home and nearly 3900 sq/ft. He paid top dollar for it but it is a pretty nice house. However the kitchen cabinets and appliances are low end as is the bathroom. The primary upgrades are outside where it has a nice pool. This home has no view to speak of either. Now, a little over a year later in a market that has dropped off considerably from mid 09 he thinks he can make $100k on this house! Good luck with that fella. If he's lucky he can get out for what he paid.

Just to drive the point home there is 4545 Edgewater Cir. just around the corner from his place. This one is an REO but it's in great shape and has a great view of the Eagle Glen golf course. Even if that view starts with the parking lot. This home is quite a bit larger than ass-clowns place. It's a 5 bedroom, 4.5 bath home of 4136 sq/ft. The kitchen looks nicer, the bathrooms look comparable but this house has a much better view. The listing agent for this one had high hopes for it too. Initially it listed for $580k but it's down to a more reasonable $499k. At this price there's a good chance this home will sell fairly quickly.

Golf foreclosure

2011-01-09T08:36:00.000-08:00

A few years ago I posted that anyone purchasing in a new golf community should think twice because you never know what's going to happen to a golf course, especially in an economic crash. The first victim was Mountain View golf course in Corona. All those homes that previously had a beautiful golf course view are now looking at acres of weeds. We all know what that did to the property values.

The latest course to fall was Dos Lagos in South Corona. I figured that this place would go belly up because of the fact they could not afford to even build a club house. B of A finally foreclosed on the golf course. So far they are keeping it a golf course. They have brought in a management team to run it for them. I suspect they will try to sell it, after all Banks are not in the biz of running golf courses. Especially once they find out how much money they will lose on this thing. The big question for the homeowners around it has to be what's going to happen to it. Golf courses cost a fortune to maintain. With a lot of competition for players, courses have been lowering their green fees for several years now. Making it harder and harder to stay in the "green". If the course cannot make any money, no one will buy it as a golf course. They might if they can bulldoze it and throw homes on it though.

So I will repeat my warning about golf course communities. Be careful, just because it's a golf course today, does not mean it will be a golf course next year!

Wanking bankers!

2011-01-06T19:18:00.001-08:00

Ran across this and found it rather amusing. (you might want to skip this if you are easily offended)

Any predictions for 2011

2011-01-05T21:37:00.000-08:00

The crystal ball has been a little foggy lately. I was pretty much bang on the money for 2007 and 2008 but my predictions for 2009 were a little off. Primarily due to the massive government intervention in the market. I did not anticipate that level of interference in a free market. I really didn't know what to think about 2010 because of the uncertainty about what the government would do next. It seems like every time one program failed they would start another in 2009. In 2010 they pretty well just let everything expire and crossed their fingers and hoped for the best. Unfortunately without the government programs the market is slowing. The last quarters numbers are pretty convincing evidence that it is going to continue it's downward march. A slow and orderly decline would probably be tolerated but if things start to worsen we will probably see the government step in again. Heck, they already have stepped in again with the announcement that the fed is gonna buy more toxic crap. Other than another tax credit I'm not sure what they could do. Government sponsored low interest loans would probably be the best bet rather than another tax credit we can't afford.

My feeling for the IE is that our market will stay fairly stable. Currently prices have fallen to the point of affordability for most buyers. In many areas it's now cheaper to buy than it is to rent. Investors are busy purchasing rentals and the flippers are hard at work trying to pick them up cheap at the trustee sales. Unless the employment situation gets worse I think the market in the IE will be stable. One possible exception is the market over $500k. Tightening of the mortgage market makes getting loans over $417k harder and there's just not a lot of people that can qualify for homes in that price range out here. So I suspect the high end may fall a little bit. But I think the low to mid priced homes (up to $400k) will be stable.

There are some other factors that might effect out market. The new governor will undoubtedly raise our taxes one way or another. More taxes means less available income to purchase or pay for a home. The foreclosure crisis is not over. Many of the pick a pay loans are set to recast in the next year. The recasts will add another wave to the foreclosure crisis. The resets should not be affected since rates are still very low. And there is still a lot of uncertainty about how fast the banks are going to throw these homes onto the market. So far they have controlled the inventory levels of REO's very tightly. But it's anyone's guess what they will do if the market continues to decline. Personally I think the will continue to trickle them out.

I guess to summarize, I just see more of the same. We may see a slight dip in the median but if it happens it will be because of the high end of the market. I don't thin the low end or the middle of the price ranges will change. So lets here what you guys think.

The big drop and some MLS hanky panky

2011-01-02T10:07:00.000-08:00

Here's a perfect bubble poster child and possibly some MLS hanky panky. It's nothing criminal but it looks like this guy as no intention of selling this house.

17939 Timberview up in Bridle Creek was purchased right at the peak and actually closed just as the crash was starting. The home was built in 2006 but didn't close until Jan 2007. This poor fella dropped a cool $1,000,000 on this house. That's right a million dollars. Alright technically he probably dropped nothing other than his signature on some loan docs. Some idiot lender dropped $1M on this thing. He must have upgraded everything as this floorplan was "only" selling for around $800k. There's no landscaping to speak of but he poured enough concrete to build a runway.

Fast forward 3 years and he lists it in May as a short sale for $392k. So a 60% drop in value in 3 years. The price might seem like a good deal for a home in this tract, but for this floor plan with no landscaping that's actually pretty close. If it's highly upgraded inside he probably has it listed a little on the low side. The comps for that floor plan range from $375k to $450k. I actually put an offer in on the $45ok house. That one was spectacular though. All upgraded inside and out with a pool and Viking appliances.

But here's were this listing is questionable. It lists for a day and then goes on hold for a month. I'm not sure what's going on here but it seems like someone is playing games with a bank.

Jan 02, 2011	Relisted (Active)	--	--	CARETS #P738448
Dec 20, 2010	Delisted (Hold)	--	--	CARETS #P738448
Dec 20, 2010	Relisted (Active)	--	--	CARETS #P738448
Dec 07, 2010	Delisted (Hold)	--	--	CARETS #P738448
Dec 06, 2010	Relisted (Active)	--	--	CARETS #P738448
Nov 11, 2010	Delisted (Hold)	--	--	CARETS #P738448
Nov 10, 2010	Relisted (Active)	--	--	CARETS #P738448
Oct 05, 2010	Delisted (Hold)	--	--	CARETS #P738448
Oct 05, 2010	Relisted (Active)	--	--	CARETS #P738448
Sep 25, 2010	Delisted (Hold)	--	--	CARETS #P738448
Sep 25, 2010	Relisted (Active)	--	--	CARETS #P738448
Sep 01, 2010	Delisted (Hold)	--	--	CARETS #P738448
Sep 01, 2010	Relisted (Active)	--	--	CARETS #P738448
Aug 17, 2010	Delisted (Hold)	--	--	CARETS #P738448
Aug 15, 2010	Relisted (Active)	--	--	CARETS #P738448
Jul 26, 2010	Delisted (Hold)	--	--	CARETS #P738448
Jul 21, 2010	Relisted (Active)	--	--	CARETS #P738448
Jun 09, 2010	Delisted (Hold)	--	--	CARETS #P738448
Jun 08, 2010	Listed (Active)	$392,000	--	CARETS #P738448

And one more to start off the new year.

Here's a tale of two foreclosures. Unfortunately it's on the same house. As the crow flies this house is probably about a mile from the Bridle Creek house. That mile and a different zip code makes this house worth about $100k less though. 19159 Eldorado is over in "the boulders" off Cajalco and Wood streets. This is technically Perris although it's actually no where near Perris. It's Perris in zip code only. Like most of the homes in this area this tract has large homes on large lots. Horsey properties or folks with lotsa toys buy these. This house was built in 2005 and sold for $523k. In July of 2008 the bank too the home back and it was sold a few months later for $310k. These people probably didn't put much money into this deal as it was foreclosed on again in May 2010. They could not have made very many payments to end up foreclosed on only 20 months after purchasing. The amount the lender was seeking at the trustee sale was actually $25k more than the purchase price. I guess they were actually trying to recoup those late fees and back payments. Now it's for sale again. You can pick this baby up for the bargain price of $280k. That's not too shabby for a newer 3000 s/f, 5 bedroom home on a 1/2 acre lot.

Happy New Year
X

Merry Christmas

2010-12-25T13:39:00.000-08:00

Merry Christmas everyone!

Wells Fargo mod madness

2010-12-21T06:51:00.000-08:00

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.

Retard investors

2010-12-20T17:20:00.000-08:00

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???

IE sales TANK in November

2010-12-15T22:06:00.000-08:00

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%

Rent vs Buy calculator

2010-12-14T07:14:00.000-08:00

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

Where's the market going?

2010-12-09T17:40:00.000-08:00

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

Sept DQ report

2010-10-19T19:01:00.000-07:00

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%

Mission Grove (new homes)

2010-10-12T10:18:00.000-07:00

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.

Well, it's about time

2010-10-02T09:52:00.000-07:00

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.

What's wrong with this house?

2010-09-28T20:34:00.000-07:00

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.

August numbers from DQ

2010-09-14T17:28:00.001-07:00

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%

The most delusion developer in California

2010-08-30T17:09:00.000-07:00

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."

Ramping up

2010-08-26T20:52:00.000-07:00

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.

fliptard alert

2010-08-25T18:15:00.001-07:00

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?

Sales worst ever on record

2010-08-24T21:17:00.000-07:00

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.

Ron Paul gets it!

2010-08-23T21:32:00.000-07:00

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."

Holy Smokes Batman!

2010-08-17T14:24:00.000-07:00

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.

delusion isn't dead

2010-08-16T21:47:00.000-07:00

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!

Whats up?

2010-08-09T21:54:00.000-07:00

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!

Slow month

2010-07-12T06:56:00.001-07:00

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

OT...but funny

2010-06-27T19:38:00.001-07:00

The biggest loser.....

2010-06-26T08:39:00.000-07:00

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.

Let it go.....

2010-06-25T22:39:00.000-07:00

New home sales down 33%

2010-06-23T19:33:00.000-07:00

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?

Say WHAT

2010-06-22T21:07:00.001-07:00

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........

May numbers

2010-06-15T21:08:00.000-07:00

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%

The ups and downs in the IE

2010-06-14T20:00:00.000-07:00

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.

Month	SFH+Condo Inventory	25th Percentile	Median	75th 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.

Delusional builders

2010-06-09T22:42:00.000-07:00

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?

Tax credits be gone.....

2010-06-06T21:21:00.001-07:00

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).

Huge incentive to walk away

2010-06-02T21:44:00.000-07:00

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.

Live Free

2010-05-31T21:00:00.000-07:00

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.

Huh, who writes this stuff?

2010-05-26T21:32:00.000-07:00

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.

Wall street and your street

2010-05-24T21:47:00.000-07:00

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.

Bucking the trend (April's numbers)

2010-05-18T17:02:00.000-07:00

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%

June 1st, more new rules

2010-05-16T10:13:00.000-07:00

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........

It's been a while

2010-05-12T22:18:00.000-07:00

It's been a while since I gave out the Ass-Clown award, then I ran across this listing and I just couldn't help but break it back out.

1505 Vanigraff in Corona was purchased in late 08 for $615k. The previous owner paid $1.062m for it. The current owner has only been in the home 18 months but somehow thinks it has increased in value some $370k in that time! He has listed it for $985K. I don't even have words for how silly that asking price is.

The home right behind this one (identical floor plan, nice house with awesome pool) sold two months ago for $600k. So this guy will be very lucky if he can get out for what he paid. After costs he's still looking at a healthy loss though (based on that comp next door).

Gov REO's up 22% in the first quarter

2010-05-10T19:54:00.000-07:00

The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA increased by 22% in Q1 2010 from Q4 2009. The REO inventory (foreclosed homes) increased 59% compared to Q1 2009 (year-over-year comparison).

Even with all the delays in foreclosure, the REO inventory has increased sharply over the last three quarters, from 135,868 at the end of Q2 2009, to 153,007 in Q3 2009, 172,357 at the end of Q4 2009 and now 209,500 at the end of Q4 2010.

These are new records for all three agencies.................................

This does not count REO inventory from private lenders. I'm still not seeing much of an increase around here. The total inventory has been climbing slowly but it's sure not as high as I would have thought. Of course it does take a few weeks to a few months for the lenders to get those REO properties on the market. I was looking at one home that got foreclose on in early Feb and it just hit the market last week. That's nearly a 3 month gap from the foreclosure to the home hitting the market.

Now here's a bit from 60 minutes on mortgage walk aways.

Watch CBS News Videos Online

Watch CBS News Videos Online

Bubble street

2010-05-09T16:28:00.000-07:00

A few weeks ago I went to look at a house and noticed nearly every single home on this particular cul-de-sac had a sign in the lawn. I forgot about it until this weekend when I was in the area again. I checked redfin to see how many of the homes were for sale and how many had sold since the bubble popped. There are twenty homes on this street 12 of them are for sale or have sold recently.

This tract is the Bridle Creek development by Lyon Homes in Woodcrest. Here's the details of the 12 homes that are for sale or have sold. I wonder if the remaining 8 homes will stick it out. Some could have been cash buyers so they may stick it out.

17892 Glen Hollow, Bought new for $773k, sold for $410K
17864 Glen Hollow, Bought new for $699k, sold for $480k
17808 Glen Hollow, Bought new for $1.1M, sold for $422k
17780 Glen Hollow, Bought new for $720k, pending at $415k
17724, bought for $787k, sold for $446k and is now pending again
17696, bought for $750k, pending at $429k
17619, bought for $698k, sold for $398k
17647, bought for $866k, sold for $430k
17675, bought for $647k, sold for $325k (this was probably another pocket listing)
17703, Bought for $734, pending at $415k
17815, Bought for $791, sold for $430k
17843, bought for $813, sold for $415k

Now for the "mathy" bit.... The average sales price for the new homes was $781K, total for the 12 was $9,378M. The homes are now averaging $417k with the 12 adding up to $5,015M. That is a loss of $4.363M on just these 12 homes (the average loss is 47%).

The better deals were the more recent ones, the higher sales prices are from at least a year ago. These are big homes on big lots so don't think these sales prices are high for Riverside. These are not you average tract homes. But none the less you can see what the effect of the bubble is on the newer tracts. Tracts built near the peak are going to see most of the homes turn over. The good news is that once they homes turn over they should turn into nice communities again.

Oh yea, this is a bubble poster child

2010-05-06T19:49:00.000-07:00

Some of the biggest losers in this bust are coming out of The Retreat in So Corona. It looks to me that there were quite a few scam sales in this tract at the end of the bubble. 22197 Silerpointe looks to be one of these. I don't know if the current occupant were in on the scam but the last seller and probably the agent and appraiser were. The house sold for $780k new from the builder in Dec 2005. 14 months later is sells for $920k. Now here's the scam part. ONLY 5 months later the house sells for $1.345 Million! This house still has a dirt back yard so they didn't drop a dime on upgrades in those 5 months. Yea, this one just screams FRAUD.

Now it's listed as a short sale for $525k. And that's probably $40k too high based on the comps of this floorplan.

More on interest rates

2010-05-03T22:10:00.000-07:00

Reading the blogosphere tonight I ran across this very good article on interest rates (and other stuff). It's a good read, check it out.

3 to 5 years.....

2010-04-29T21:12:00.000-07:00

April 28 (Bloomberg) -- The U.S. housing market won’t recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri.

“There’s another big leg down and the question is how long does it stay,” Ranieri, chairman of Ranieri Partners LLC, said during a panel discussion today at the Milken Institute Global Conference in Beverly Hills, California. “You can’t have much of a rally when you’ve got this big overhang.”

Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc. Unemployment was 9.7 percent in March, unchanged for a third month, according to the Labor Department, and a fifth of mortgaged U.S. homes were worth less than their loans in the fourth quarter, Zillow.com reported.

‘Leave Them Alone’

Larry Mizel, chief executive officer of Denver-based homebuilder MDC Holdings Inc., said the federal government should allow homes to be foreclosed on and sold at reduced prices to new buyers.

“The best thing they can do is leave them alone,” Mizel said during the panel discussion. “We now have affordable housing. The best thing, in my view, is just let the process take care of itself.”

Buyers have no Moral Duty to lenders

As a result of the housing collapse, many Arizonans have seen their homes lose half of their value. Many owe several hundred thousand dollars more than their homes are worth and are unlikely to dig out of their negative equity hole for decades. To compound the stress and anxiety, when they've called their lender to work out a solution, they've discovered that their lender won't even talk to them about a loan modification or a short sale as long as they are current on their mortgage.

With no help in sight, some of these underwater homeowners have decided that they would be better off letting go of their homes and have stopped making their mortgage payments. Many have done so with the hope that defaulting will finally bring their lender to the table, but they are also resigned to the fact that they will likely lose their homes.

It has been suggested that such homeowners are immoral or, at least, irresponsible. I disagree. The arguments against homeowners intentionally defaulting on their mortgages generally center on the same three basic points.

First, underwater homeowners "promised" to pay their mortgages when they signed the mortgage contract. Second, foreclosures lead to depreciation of neighborhoods, so underwater homeowners should hang on in order to help preserve their neighbors' property values. And, third, if all underwater homeowners defaulted, the housing market might crash. Homeowners thus have a social obligation to pay their underwater mortgage in order to save the economy.

While all three of these arguments might hold some initial appeal, none holds water.

First, a mortgage contract, like all other contracts, is purely a legal document - not a sacred promise. Think of it this way: when you got your cellphone, you likely signed a contract with your carrier in which you "promised" to pay a set monthly payment for two years. Would it be immoral for you to break your contractual "promise" to pay for two years if you decided that you no longer needed the cellphone and elect instead to pay the early termination fee? Of course not. The option to breach your "promise" to pay is part of the contract.

Though involving more money and something of great sentimental value to most people, a mortgage contract is simply a contract. Like a cellphone contract, a mortgage contract explicitly sets out the consequences of a breach of contract.

In other words, the lender has contemplated in advance that the mortgagor might be unable or unwilling to continue making payments on his mortgage at some point and has decided in advance what fair compensation to the lender would be. Specifically, the lender included clauses in the contract providing that the lender can foreclose on the property and keep any payments that have been made. By writing this penalty into the contract, the lender has agreed to accept the property and any payments already made in lieu of the remaining payments.

hat's the agreement. No one forced the lender to make the loan or sign the contract. Indeed, the lender wrote it. And, to be sure, the lender wouldn't hesitate to exercise his right to take a person's house if it was in his financial interest to do so. Concerns of morality or socially responsibility wouldn't be part of the equation.

In short, as far as the law is concerned, choosing to exercise the default option in a mortgage contract is no more immoral than choosing to cancel a cellphone contract. Indeed, exercising the default option in your mortgage contract is similar to cashing in on an insurance policy. You paid for it - and have you a right to exercise it.

But what about the argument that mortgage default hurts neighborhoods and the economy?

Well, first, in a capitalist society, we don't generally expect individuals to make personal economic decisions for the collective good. Aside from this fact, however, it's unfair, in my opinion, to ask underwater homeowners to prop up neighborhood property values, or the housing market, on their backs - especially if means sacrificing their ability to send their children to college or save adequately for their own retirement.

So what's next

2010-04-26T21:37:00.000-07:00

This is the last week for the federal tax credit. You have to sign a contract by the 30th to be eligible. I can't wait to see what silliness they roll out next. I've been seeing overpriced homes that have sat on the market for ages going pending in the last week or two. Are there that many people willing to overpay in order to get a $8k credit? I'm not sure how many of those will appraise though, so the sales may not actually close.

We should start a pool on what the next bailout will be.

Gawd, I heard it again

2010-04-25T21:11:00.000-07:00

I stopped an an open house today, I couldn't help myself. I saw the sign and it pointed to an area I am interested in so I followed the signs to a house WAY larger than anything I would ever consider. But I stopped just for the hell of it. I was greeted by a typical realtor who proceeded to tell me about the house (which was fine). Then he asked if I had an agent, and on and on. Then he let fly with the "there's never been a better time to buy". Ok, fight's on. I ask "how so?". Well the interest rates are at historic lows making payments more affordable than ever. I wasn't feeling much like arguing so I said "thank, but it was too big for me and left".

How do you feel about these low rates. The low rates are making homes more affordable than they have been in a long time. However the low rates are also helping to prop up home prices. People buy homes based on monthly payment, not total price. Most buyers will figure out what monthly payment they can afford and the current interest rate will allow them to calculate how much they can spend. Rates are currently very low compared to long term average rates. So, what happens if rates go up? People can't afford as much house. This puts pressure on prices. In a normal market demand dictates prices. If people cannot afford the payments at a higher interest rate, demand drops and prices will follow.

Assuming the monthly payment is the same, what's better, a low price with a high interest rate or a high price with a low interest rate? It should seem obvious but a lower price with a high rate is better for several reasons.

1) If rates drop you can refi. With the rates as low as they are now you can forget about a future refi to take advantage of rate drop.
2) A lower purchase price means lower property taxes. And who doesn't like lower taxes.
3) If you do buy when rates are low you face the possibility of a drop in value if rates spike. You could easily find yourself underwater, trapped in the house.

There are some other advantages of a high interest rate. A lower purchase price and a high interest rate it makes paying off the home early much more attractive. If you can pay extra towards the principal you can really cut down on the total cost of the home and pay it off early. Because much more of the monthly payment is interest the mortgage write off might be higher.

Are interest rates going to shoot up. I'm sure they are..... eventually. Personally I don't think they are going anywhere for a few years. The government will need to keep the rates low in order to keep the economy from totally tanking. Also inflation is still relatively low so there isn't much pressure to raise the rates. But 5 years from now things could be very different. So if you buy, buy something you will want to stay in for a while.

Inside deals

2010-04-21T20:56:00.000-07:00

When you watch the market as closely as I do it does not take very long to see that there is probably more monkey business going on now than there was at the height of the bubble years.
Everything from short sale shenanigans to pocket listings to outright insider fraud. If you just look at the active listings you might not notice these deals. However, if you look at the pendings and the sales histories you will start to notice many of the sales just don't pass the smell test.

Take this one for instance, 3162 Vandermolen in Norco. It hit the market just this morning at what looks like a reasonable price. I saw it pop onto Redfin this morning and figured I would go look at it this weekend. But when I got home from work it's already pending. More than likely a pocket listing. The agent already has a buyer but has to show the bank it was actually listed. Maybe I should contact the bank???

How about this one at 1440 Valley. This was another house that hit the market for about 30 seconds and then went pending. The listing price is probably about $75k-$100k less than this house would sell for on the open market. It's a short sale so maybe the bank will get wise to the deal.

Between deals like these, flippers and clueless agents it's no wonder most buyers are finding this market a frustrating thing to deal with.

Weekend bits and pieces.

2010-04-16T07:25:00.000-07:00

I'm out of here for the weekend feel free to post about whatever.

California sets a new record! Unfortunately its a new high in unemployment, 12.6%

You have only 2 weeks to left before the federal tax credit expires. To qualify you must sign a contract by April 30th.

Here They Come.

2010-04-14T11:29:00.000-07:00

It looks like BofA is ramping up the foreclosure engine as reported a few posts ago. That post from IHB said that BofA expected to increase foreclosures by 600% by years end. This report from The San Diego North County Times indicates the increase has begun. Riverside saw a 67% increase from Feb to March. Most of those homes will not hit the market for a few months though.

Bank of America, the nation's largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
The bank said the increased activity was a natural consequence of borrowers running out of options. Analysts and real estate agents said the moves by the Charlotte, N.C., banking giant, which controls a large share of the Southern California mortgage market, could signal a final reckoning for homeowners who have been protected by government programs for months or even years.

Last month, a Bank of America division called ReconTrust N.A. sent out a flurry of "notices of auction," which alert owners of the date their homes could be sold in foreclosure proceedings.The notices went to 230 homeowners in North San Diego County, a 69 percent increase from February, and to 391 owners in Southwest Riverside County, up 67 percent from February. By comparison, in March 2009, ReconTrust sent a total of 31 such letters to both regions combined.
ReconTrust was formed as the foreclosure division of Countrywide Financial Services Inc., the company that helped drive the real estate boom of the 2000s with its no-documentation "liar loans" and enormous subprime portfolio.

More foreclosures expected
When Bank of America agreed to take over Countrywide in January 2008, Countrywide said it managed 9 million loans valued at $1.5 trillion. Richard Simon, a Bank of America spokesman, wrote in an e-mail that he couldn't speak to the sharp increase of notices in San Diego and Riverside counties, but that the bank has expected more foreclosure activity.
"We have reported recently that we anticipate a rise in foreclosure activity through the coming months as homeowners are unable to qualify for loan modifications, fall out of modification programs or go into delinquency due to the ongoing stress in the economy," he said.
Bank of America has permanently lowered monthly payments for 12,700 borrowers through the Treasury Department's Home Affordable Modification Program, more than any other lender. But the program as a whole is widely deemed a failure, because just 17 percent of applicants nationally have managed to qualify and keep up their payments, according to the latest Treasury report.

Data showing that Bank of America borrowers were falling out of HAMP and into foreclosure in rising numbers didn't surprise analysts. "That makes sense," said Jamie Peters, a financial analyst who covers Bank of America for the investment research firm Morningstar Inc. "'We've given them the chance, it hasn't worked, we need to move ahead' type of idea," Peters said.
Another analyst who tracks Bank of America, Shannon Stemm of investment bank Edward Jones, said the loans now being foreclosed are "older," meaning borrowers had plenty of time to try a modification, and the bank had to get the delinquent loans off their books. "A lot of the bad loans we're seeing from a couple of quarters ago are getting to a place where (Bank of America) need to make a decision for what to do with that bad loan," she said. Morningstar's Peters thought the bank might be taking advantage of a strengthening California housing market.
"My Bank of America asset manager told me we'd really start to get hit with inventory in mid-May to June," said Teri Garcia, a real estate agent based in Escondido who sells Bank of America foreclosures.

"If they're sending notices of auction in March, that about fits," she said. Garcia said the local supply of foreclosed homes has been low all through the winter. She was thrilled to hear that more homes might be coming onto the market this summer. "Let's get them on the market, get them sold, and get through all this," she said.

March numbers

2010-04-13T20:42:00.000-07:00

Dataquick posted the March numbers today. SoCal overall is looking ok but the IE is still struggling. The number of sales in Riverside county took a pretty good dive from last year. That's a little surprising although could be attributed to the lack of sale-able inventory. The price remained about the same as last month, no surprise there. The percentage of foreclosure sales are really dropping off but the slack is being taken up by short sales which they don't track. So most of the sales are still distressed properties. Another surprising number was the FHA sales. Nearly 40% of the sales were FHA. That's not a healthy sign since most FHA buyers are marginal buyers at best. There's a much higher chance of a default with an FHA buyer (another wave of future foreclosures?) Another 27% of the purchases were all cash. Those are primarily investors and flippers. That's also not a good sign for those looking for a normal market.

So while the number look good on the surface the other data is telling a different story. FHA buyers, flippers and distress sales are most of the market. And that market is not a healthy market.

A total of 20,476 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 33.3 percent from 15,359 in February, and up 5.0 percent from 19,506 in March 2009, according to MDA DataQuick of San Diego.

Sales always go up from February to March. Last month was the 21st in a row with a year-over-year sales increase. The March sales average is 24,936 going back to 1988, when DataQuick’s statistics begin.

“It’s a reflection of just how grim things got, that we’ve now had almost two years of sales gains and we’re still 18 percent below the sales average. The market won’t rebalance until mortgage lending patterns normalize, and that’s just not happening yet. Some of the best deals out there right now are happening when the buyer comes in with cash,” said John Walsh, MDA DataQuick president.

The median price paid for a Southland home was $285,000 last month, up 3.6 percent from $275,000 in February, and up 14.0 percent from $250,000 for March 2009.

The median peaked at $505,000 in mid 2007 and appears, so far, to have bottomed out at $247,000 in April last year. The peak-to-trough drop in the median was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

Foreclosure resales accounted for 38.4 percent of the resale market last month, down from 42.3 percent in February, and down from 54.8 percent a year ago. The all-time high was in February 2009 at 56.7 percent.

Meanwhile, Uncle Sam continues to prop up lending for many low-to mid-priced homes. Government-insured FHA loans, a popular choice among first-time buyers, accounted for 38.6 percent of all mortgages used to purchase Southland homes in March.

Absentee buyers – mostly investors and some second-home purchasers – bought 21.3 percent of the homes sold in March.

Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 27.1 percent of March sales. In February it was a revised 30.0 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

The “flipping” of homes has also trended higher the past year, though it eased a bit in March. Last month the percentage of Southland homes flipped – bought and re-sold – within a three-week to six-month period was 3.2 percent of total sales, down from 3.5 percent in February but up from 1.6 percent a year ago. Last month flipping varied from as little as 2.6 percent of total sales in Riverside County to as much as 3.9 percent in Los Angeles County.

All homes	Mar-09	Mar-10	%Chng	Mar-09	Mar-10	%Chng
Los Angeles	5,971	6,747	13.0%	$300,000	$329,000	9.7%
Orange	2,433	2,652	9.0%	$385,000	$432,000	12.2%
Riverside	4,409	4,156	-5.7%	$187,000	$198,000	5.9%
San Bernardino	2,897	2,955	2.0%	$150,000	$152,000	1.3%
San Diego	3,020	3,227	6.9%	$285,000	$330,000	15.8%
Ventura	776	739	-4.8%	$326,000	$375,000	15.0%
SoCal	19,506	20,476	5.0%	$250,000	$285,000	14.0%

The short sale plan kicks in

2010-04-05T22:39:00.000-07:00

The newest Obama plan to save us from the housing apocalypse has kicked in. This is HAFA, the home affordability forclosure "alternative" plan. In other words, "Ok, so you really can't afford that house you bought, now what". This is another voluntary plan for the banks to speed up short sales. It gives them a few buck, it gives the home debtors a few bucks and it gives any second lien holders a few bucks in return for letting the short sale go through.

There's already a bunch of articles in the news this week talking about the upcoming short sale tusnami.

Today the Administration's Home Affordable Foreclosure Alternative Plan takes effect, offering incentives to borrowers, servicers, investors and second lien holders to push short sales through the system. Yep, everyone gets a cut of government funds to get these troubled borrowers out of their homes and get them sold, even if the sale price is less than the value of the loan.

I find it interesting that before the plan even went into effect today, the Administration upped the incentives a week ago, doubling the amount of cash to $3000 offered as borrower "relocation expenses" and juicing the payoffs to the others as well. Of course they want to push short sales because of course they know that their modification program isn't working as planned.

But the biggest impediment to the plan is the lenders themselves, who have to weigh what's going to save them the most money and cause them the least bleeding on their books.

I'm also starting to hear rumblings among the number crunchers that the wave of foreclosures we keep hearing about is about to hit with a thunderous roar.

Servicers are ramping up the mod process and pushing those who don't qualify out the door more quickly than ever. A big jump in inventories, which we already saw last month, right in the midst of the Spring market will turn home prices on their heels.

Time for another bailout

2010-04-04T11:53:00.000-07:00

I came across this gem on bubbleinfo.com

Timothy Geithner is a Sniveling Scamster
Whew. That was fast. It didn’t take long for Wall Street to figure out how to game Obama’s new mortgage modification program, did it? The plan was hyped as help for “struggling homeowners”, but it turns out, it’s just another stealth bailout for pudgy bank-execs. It’s funny, the program hasn’t even kicked in yet and, already, bigtime speculators are riffling through their filing cabinets looking any garbage paper they can find to dump on Uncle Sam. Take a look at this on today’s Bloomberg report:

“Subprime-mortgage securities are rising at an accelerating pace as the U.S. begins to encourage reductions to homeowners’ balances, which may lead to fewer foreclosures and a quicker end to the housing slump….Senior-ranked bonds tied to borrowers with poor credit will mostly benefit after the Treasury Department said for the first time it would seek to cut the size of mortgages, reducing the likelihood that loan modifications will fail, according to JPMorgan Chase & Co., Morgan Stanley and Barclays Plc. (Bloomberg)

What does it mean? It means that Obama’s mortgage modification extravaganza has touched-off a gold rush in toxic paper. Subprime securitizations, which had been worth next to nothing, are now the hottest trade on Wall Street. It’s a subprime bonanza! The investment sharpies are scarfing up all the crummy MBS they can get their hands on, because they know they can trade it in for Triple A FHA-backed loans when the program get’s going. It’s another swindle cooked up by Treasury Secretary Timothy Geithner to keep the brokerage clan in the clover. Here’s how a Wall Street veteran explained it to me:

“It looks like the investors in securitizations will be swapping underwater real estate for govt-insured paper… I think the scam here is just to provide some cover so the hedge funds and other high net worth individuals can trade their low grade paper for Triple AAA mortgages insured by the FHA at the taxpayer expense.”

That’s it, in a nutshell. The faux-foreclosure prevention program has nothing to do with helping homeowners. That’s just diversionary gibberish to confuse the public. The real objective is to create a government landfill (aka–FHA) where the banks and other financial institutions can dump their toxic MBS-sludge and walk away with gov-backed loans. Get a load of this:

(Bloomberg) — The Federal Reserve’s completion this week of its program to buy $1.25 trillion in mortgage bonds probably won’t mean significantly higher U.S. home loan rates as investors return to the market, replacing the Fed…

What we are seeing is an effective handoff occurring between the Fed and industry buyers such as banks and pension funds,” said Christopher Sebald, chief investment officer for Advantus Capital Management in St. Paul, Minnesota…

Advantus is purchasing mortgage bonds after the Fed’s program drained supply in the $5.4 trillion market.” (Bloomberg)

Of course, they’re “purchasing mortgage bonds”, because the government is going to insure them. It’s a “no brainer”. And don’t you love that expression, “a handoff”, because that’s exactly what it is. The government hasn’t stopped pumping liquidity into the system; they’ve just found another entry-point where they can push it in. Here’s how it works: The new program offers incentives to banks and other deep-pocketed investors (in mortgage-backed securities) to slash the principal on underwater mortgages which keeps people from strategic default or foreclosure. Sounds good, right? But here’s the catch: When the mortgage is refinanced, it’s converted into a FHA-backed loan which provides an explicit gov-guarantee. So, for a slight loss on the face-value of the MBS, the investors (ie–investment banks, hedgies, etc) are able to resuscitate their moribund securitizations (MBS) and reap hefty gains. It’s like taking Fido’s steaming pile on the front lawn and turning it into the Hope Diamond. Abracadabra!

Geithner has figured out how to put together a bailout that will cost taxpayers hundreds of billions of dollars without any money actually exchanging hands. The value of the putrid mortgage-paper will soar because of the gov-underwriting, and the ginormous losses won’t be realized until the mortgages start blowing up sometime in the future. That’s when FHA will be put-to-pasture along with fellow-homicide victims, Fannie and Freddie. Pretty clever, eh?

So, the cutthroat speculators and bunko artists who fleeced us all with their dogshit subprimes, have returned for another dip at the public trough. That means taxpayers will get scalped on the same investments a second time. Hey, it’s a double-whammy!

This really takes the cake. You gotta hand it to that sniveling scamster Geithner. He had his back to the wall and, presto, he extracts another rabbit from his hat. What a guy. He knew he couldn’t go begging to congress for more money, or they’d kick him to the curb. So he worked out a scam that picks up where the Fed’s $1.25 trillion quantitative easing bailout leaves off. It’s a seamless transition from one massive corporate giveaway to the next. Now the Fed has nearly $2 trillion worth of structured garbage on its balance sheet, (which it will undoubtedly dump on Fannie or Freddie) the banks are loaded with fresh reserves, and another trillion or so is earmarked for the shadow bankers who provide funding to the regulated banking system. AND IT’S ALL 100% FREE. Such a deal.

This bank/credit cabal is robbing us blind in broad daylight and no one seems to give a hoot. Maybe Barack Obama will save us from all ruin?

Fat chance!
By Mike Whitney

Riverwalk Vista

2010-04-02T21:26:00.000-07:00

Riverwalk Vista, this development could not have had worse timing. Opening right when the market was in free fall. They opened the models with laughable prices and not surprisingly they closed them after a few months and boarded up the few homes they had built. You can drive by it today and see the plywood on the windows of the homes. There must be 30 or 40 homes just sitting there rotting. They are still maintaining the clubhouse, pool and exterior landscaping though. So at least it's not a total eyesore.

I have been wondering what the heck was going on with this development. The Press Enterprise had an article on it today.

More than half of the 402 residential lots in Riverwalk Vista, a master-planned community in Riverside, sold at public auction to a joint venture for $9.5 million.

The winning cash bidder for 217 roughly graded lots was Forestar Land Partners, a joint venture between Foremost Communities, an Irvine-based land developer, and Starwood Capital Group Global, LLC., a $1 billion private equity fund in Greenwich, Conn., that is investing in distressed properties.

As part of the transaction, Forestar Land Partners also acquired the rights to serve as master developer of the entire 100-acre project located south of Interstate 91 at La Sierra Avenue. The project was formerly under development by Griffin Industries, which acquired the land from Riverside Community College.

Steve Cameron, president of Foremost Communities, said development of Riverwalk Vista stalled when the real estate market tanked in 2007 but the completed facilities, including a swim club, fountains, entry gates and a large park, continued to be well maintained.

Competition for the controlling half of the property was expected to be fierce, Cameron said. He said for a time the sale was put on hold while the foreclosing banks Bank of the West, Wells Fargo and City National Bank worked out a business plan.

But when the property went to went to auction March 17 on the steps of the Corona Civic Center, Forestar Land Partners was the only bidder other than the foreclosing banks. The banks raised the opening price by $600,000 before Forestar made the winning bid, said Cameron. ( x One Bidder, not exactly FIERCE bidding)

Forestar Land Partners would like to buy the remaining 185 lots in the project when they become available for sale, Cameron said. Included, according to the city, are six furnished models and 30 houses that are almost completely built. No houses in the community are as yet occupied.

Cameron said he expects the banks will select a buyer for the rest of the lots within a few months and that Forestar Land Partners will have an edge over the competition because of its master developer status.

Clara Miramontes, principal planner for the city of Riverside, said city officials are pleased to learn than the Riverwalk Vista project is going forward. "We are very glad the banks were able to find a developer that has the financial resources to jumpstart the project again," she said.

>>>>>>>>>>>>>>>>>>

9.5 Million for 217 finished lots. I'm fairly sure all the streets and services are in already so that's a smoking deal. $44k per lot should give the developer a lot of room to build reasonably priced homes. I think it will still be a couple of years before this development gets opened back up.

Beleive it or not, a Realtor wrote this

2010-03-30T21:40:00.000-07:00

In 1996, unemployment was low, the economy was booming, stocks were rising, and the future looked bright. Email and the internet were just starting to make their ways into homes around the country. Optimism was high as an economic revolution was brewing.

Is there any reason why homes today should be worth twice as much as in 1996?

Graphically, prices were heading right back to 1996 until the government decided to spend trillions of dollars to prop them up.

Consider what’s been done to halt the collapse of home prices. Our demand for homes has been artificially boosted with low mortgage rates and tax credits, and our supply of homes for sale has been cut drastically by all of the foreclosure prevention efforts.

For some perspective, check out the original Case-Shiller graph that shows home prices, adjusted for inflation, for the last 100 years or so. Note that the numbers are slightly different because this chart includes all national data, not just large cities.

Looking at long-term trends, we each must fall into one of two camps. Either you believe that, eventually, home prices will revert back to their relative historical norm because people can only pay so much of their monthly income for housing. OR, you believe that this time really is different; that people going forward will be willing to pay relatively more each month for shelter than for the last 120 years.

I don’t see how this time is different. I don’t know why, socioeconomically, people will pay more of their monthly paychecks for housing over the next 120 years than they did for the last 120. Sure, you can make a case that a particular neighborhood or town has become more desirable, but that is irrelevant on a national scale.

In short, if you believe that the economic growth since 1996 was robust enough to justify the doubling of home prices during that time, then perhaps home prices are now at the “correct” levels. But if you believe that most of the economic growth since 1996 was built on bubbles and debt, then it’s hard to find a reason why homes should be twice as expensive.

....................................

Whoddathunkit??? A Realtor that's not full of it. Although in 1996 prices were pretty depressed in Southern California. That was at the bottom of our last crash and many including me think prices were probably a bit undervalued in that time frame. But two or 3 years later prices had recovered to what I would consider normal levels. So what should the median be today based on a "normal" market. In the year 2000 the median price in Riverside was $150k. If we add a decade of normal appreciation the median today would be approx $200k. And remarkably enough that's right about where we are today. However taking into consideration the terrible economy, the high unemployment and the government intervention propping up prices it's probably safe to say we are currently overvalued given the economic conditions. Maybe we should go back to the bottom of the last bust (1996). If we do that we find the median was around $120k and with normal appreciation that would give us a median of $181k today. Not a great deal of difference between the two, primarily because of the additional 4 years of appreciation. So, are we at the bottom? by all indications in most areas of the IE we are, or damn close to it. The only question is how long will prices remain low. Personally I don't think they are going anywhere but sideways for a while. Small normal gains are possible but with the current economy I don't see it happening (assuming the government stays out of the mix). So if you are gonna buy, you better plan on staying a while.

I got the median numbers from the California Association of Realtors and the "normal" appreciation I used was 3%.

How to fix this mess

2010-03-29T17:20:00.000-07:00

Foreclosure IS the cure, not the problem!

I read this over at the Irvine Housing Blog,

A 600% increase in foreclosures

I attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.

After his surprising statement, two questioners from the audience asked questions to verify the numbers.

Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.

Living in the past

2010-03-29T17:00:00.001-07:00

A few years ago you could buy a house, live in it for a year and make $100k. Here's a owner that thinks those days have returned.

3140 Crestview Dr. Norco. The homes sold one year ago to the current owners for $515k. After one year of ownership for what ever the reason the new owners need to bail. I doubt these are flippers since they have horses. Flippers don't bring horses to a flip, they bring paint, carpet and sod. Apparently it's upgraded beyond belief! Although the pics show basic white tile and builder grade cabinets in the bathroom. I have no idea if they poured any money into this or not, but after a year in the home these folks think they are entitled to $115K. Any think these guys have a hope in hell? There's been a few flips sell in the mid $500s recently but those were much larger homes. I'm thinking if they can get out for what they paid they are doing great.

Old story, new twist

2010-03-26T22:12:00.000-07:00

My buddy sent me this little gem. It's an old proverb with a new twist.

OLD VERSION

The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away..

Come winter, the ant is warm and well fed.

The grasshopper has no food or shelter, so he dies out in the cold

Moral, Work hard and be responsible for yourself.

MODERN VERSION

The ant works hard in the withering heat and the rain all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

CBS, NBC , PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.

America is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, 'It's Not Easy Being Green...'

ACORN stages a demonstration in front of the ant's house where the news stations film the group singing, “We shall overcome.” Then Rev. Jeremiah Wright has the group kneel down to pray to God for the grasshopper's sake.

President Obama condemns the ant and blames President Bush, President Reagan, Christopher Columbus, and the Pope for the grasshopper's plight.

Nancy Pelosi & Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar and given to the grasshopper.

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant’s food while the government house he is in, which, as you recall, just happens to be the ant's old house, crumbles around them because the grasshopper doesn't maintain it.

The ant has disappeared in the snow, never to be seen again.

The grasshopper is found dead in a drug related incident, and the house, now abandoned, is taken over by a gang of spiders who terrorize the ramshackle, once prosperous and once peaceful, neighborhood.

The entire Nation collapses bringing the rest of the free world with it.

Moral, What's that.....

Stand by, Here comes the next round of bailouts!

2010-03-25T21:53:00.000-07:00

And now for the next round of meddling by the Oompa loompas in Washington

The Obama administration on Friday will announce broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

Another element of the new program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which is straining the economy and putting millions of Americans at risk of losing their homes. But the new initiatives could well spur protests among those who have kept up their payments and are not in trouble.

The administration’s earlier efforts to stem foreclosures have largely been directed at borrowers who were experiencing financial hardship. But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.

One administration official cautioned that the investors might not be willing to volunteer any loans from borrowers that seemed solvent. That could set up a battle between borrowers and investors.

This much was clear, however: the plan, if successful, could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a renewed downturn in the housing market could send that government agency into the red.

The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened. It now insures more than six million borrowers, many of whom made minimal down payments and are now underwater.

Sources said the agency would use $14 billion in funds from the Troubled Asset Relief Program, some of which it could dangle in front of financial institutions as incentives to participate.

Another major element of the program, according to several people who described it, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, the government’s modification efforts have focused on lowering interest rates.

A person briefed on the new plan said the number of underwater borrowers who qualified for the plan could be in the millions. The government is not planning to solicit loans for the program, stressing that it is voluntary.

The administration recognizes that some people’s finances have deteriorated so far that they are beyond help, the person said. People in that situation simply cannot afford the houses they are living in, the person said, even if the mortgages were reduced.

“All these programs are geared toward people for whom it makes sense, for whom it’s workable when all is said and done,” the person said. “Some people are too far gone.”

Principal write downs??

2010-03-24T22:34:00.000-07:00

Can this week get any worse. First health care, then California throws away 200 million and now news of principal write down plans...... I thought it was just a few homes with old Countrywide loans but now CR indicates more are in the works. I never thought I would see this.

BofA announced a principal reduction plan for certain Countrywide borrowers.

CNBC's Diana Olick reports that Treasury might announce a principal reduction program in the next few days: Bank Of America's Mortgage Write Down—Just the Start?

The reason this program is so important though is because we know something is in the works over at Treasury to do something like it. We may even get news of that later this week, according to some of my sources.

The Special Inspector General for TARP criticized HAMP today. The report was critical of the changing goals (no way 3 to 4 million will avoid foreclosure), the performance metrics, the marketing of the program, the low conversion rate to permanent status, and the high risk of re-default. The report notes that Treasury expects between 50% and 66% of temporary modifications will become permanent, and 40% of borrowers in the program will re-default (either while temporary or permanent). Those are horrible numbers.

First time home buyer? Wait till May to buy

2010-03-23T18:08:00.000-07:00

I can't believe my eyes but California has passed another $10k buyers credit for new homes and first time buyers of resale homes. This makes perfect sense since California is just flush with cash.... $200 million dollars down the drain.

This trumps the federal tax credit by $2k so buyers might as well wait till May to buy when the state credit kicks in. Better to get $10k than $8k (although it is over 3 years). That should slow the market down a bit in the coming months.

And now some unfortunate truths about loan mods from Calculated Risk. This is actually kinda funny in a pathetic kind of way.

One aspect of the Making Home Affordable loan modification program known as ‘HAMP’ is almost always taken for granted in its wide reporting – that the borrowers in fact need ‘help’. Moreover, it is generally taken for granted that those seeking modification under HAMP simply cannot afford their monthly mortgage payment. It is assumed that they have made great sacrifices, assumed they have already cut back drastically on discretionary expenses, assumed that they have already gone over their monthly budgets with a fine-toothed comb to eliminate all but the most necessary expenditures in an effort to keep their home. So prepare to be shocked – shocked! – as I share with you that I have seen first-hand that this assumption is oftentimes greatly, seriously flawed.

Let me begin with a word to the wise for HAMP applicants: unless you believe Snooki is now in charge of approving HAMP applications, it might be a good idea to cut back a bit on some of the creature comforts to which you have become accustomed at least a month before submitting your HAMP modification application.

Allow me to explain. The guidelines for servicers participating in HAMP stipulate that the borrower must submit a “hardship affidavit”. This, ostensibly, is to serve as their sworn testimony that they have been driven into default due to some particular hardship they encountered, and despite making every possible sacrifice, they can no longer “maintain payment on the mortgage and cover basic living expenses at the same time"

To demonstrate this, applicants are required to submit recent paystubs and bank statements. The statements are to help further corroborate the income they report (lest they forget to include all of their paystubs) and also to demonstrate that their monthly expenses are as described on their application. Which is to say that they have already ‘cut back to the bone’ and STILL are unable to make ends meet.

So how do these look in practice? The very first ‘HAMPlication’ that your correspondent pulled up recently showed a wanton disregard for minimizing spending. On the contrary, it looked like “cutting back” for this applicant does not involve such Draconian cuts as eliminating:

• visits to the tanning salon
• the nail spa
• some kind of gourmet produce market (have you seen the price of arugula?)
• various liquor stores
• A DirecTV bill that must involve some serious premium programming or pay-per-view events (or both?).
• And over $1,700 in retail purchases, including: Best Buy, Baby Gap, Brookstone, Old Navy, Bed, Bath & Beyond, Home Depot, Macy’s, Pac Sun, Urban Behavior, Sears, Staples, and Footlocker.

And that was just in one month! They were seeking to reduce a $1,880 mortgage payment that had just gotten to be a real cramp to their ability to keep a roof over their heads.

I’d like to say this is the exception, but it’s much closer to the norm. Many people who request HAMP modifications submit bank statements that demonstrate little if any “belt-tightening” going on.

Flipping article

2010-03-22T21:52:00.000-07:00

Here's a pretty good article from the Press Enterprise on flipping.

The number of houses purchased by investors at these auctions, the last step in the foreclosure process, has more than tripled in California in 12 months, from 900 in January 2009, to 3,688 in January this year.

"We have on average of three to four times as many properties sold at trustee auctions now as at the peak reached in the 1990s," O'Toole said.

Bruce Norris, a longtime Riverside real estate investor and consultant who warned other investors early on that the real estate market was about to tank, said the deluge of houses hitting the foreclosure auctions and the numbers of buyers chasing them are far beyond what he had expected. He recalled that a year ago it was common for just a handful of investors to turn out to hear the trustee's auctioneer reel off the addresses of houses for sale and sometimes the auctioneer would speak to an empty courtyard, he said.

Norris said risk is inherent in buying houses that are sold at auction "as is" with no title insurance or warranties and, often, with occupants who must be evicted. Buyers have no protection. They don't even have a right to inspect the houses for which they must pay cash. And after they make a winning bid, they cannot back out or demand a refund.

Success at the auctions depends on homework. In choosing among scores of houses scheduled for sale, it's up to bidders to review comparable sales, do a title search to find out if there are unpaid taxes and other liens and visit the properties. Getting inside a house to determine if it has been stripped of appliances or requires other major repairs can be impossible.

"Every month someone walks away thinking they have a deal -- and they have lost a quarter of a million dollars," Norris said.

Jenny Wang, part of a family business in Murrieta that has bought houses at foreclosure auctions for 20 years, said she feels sorry for beginners like the one she recently saw at auction who paid more than $140,000 for a house in Menifee that Wang knew had burned to the ground.

Newcomers cannot expect a helping hand from the veterans, who are fiercely competitive with one another and irritated by novices who tend to bid up prices beyond what makes financial sense, said Norris.

Feb numbers from DataQuick

2010-03-16T17:16:00.000-07:00

The Feb numbers from DQ are out. The sales numbers for the IE took a pretty good dive and the median price was nearly unchanged from last year. San Berdu was down 10% and Riverside was down 6.5%. That's not good considering the tax credit and low rates right now. DQ also mentions the uptick in flipping. Some of those sales can probably be backed out as those flips count as two sales. Take the flips away and the market is probably worse than the numbers indicate. In any case a that's a fairly big dive in sales numbers versus last year. The sales numbers were about the same as Jan for Riverside but San Berdu saw a 7% drop. Median price was the same in San Berdu and Rivy managed a $2K gain. Median price seems to have stabilized some what on a county wide basis for both counties.

A total of 15,359 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was virtually unchanged from 15,361 in January, and up 0.8 percent from 15,231 in February 2009, according to MDA DataQuick of San Diego.

The February sales average is 17,983 going back to 1988, when DataQuick’s statistics begin. The sales distribution remains tilted toward lower-cost distressed homes, although not as steeply as most of last year.

“It’s possible the stars won’t line up this way again for many years. With prices and mortgage interest rates this low, the cost of ownership is about as low as we’ve seen it in decades,” said John Walsh, MDA DataQuick president.

The median price paid for a Southland home was $275,000 last month, up 1.3 percent from $271,500 in January, and up 10.0 percent from $250,000 for February 2009.

Foreclosure resales accounted for 42.3 percent of the resale market last month, up from 42.1 percent in January, and down from 56.7 percent a year ago, which was the all-time high.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 38.5 percent of all home purchase loans in February.

Absentee buyers – mostly investors and some second-home purchasers – bought 18.9 percent of the homes sold in February. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 29.3 percent of February sales. In January it was a revised 29.7 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

The “flipping” of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a three-week to six-month period was 3.4 percent, up from 1.6 percent a year ago. Last month the flipping rate varied from as little as 2.8 percent in Riverside and Ventura counties to as much as 4.1 percent in Los Angeles County.

	Sales Volume			Median Price
All homes	Feb-09	Feb-10	%Chng	Feb-09	Feb-10	%Chng
Los Angeles	4,590	5,034	9.7%	$299,000	$315,000	5.4%
Orange	1,879	1,986	5.7%	$375,000	$417,000	11.2%
Riverside	3,420	3,199	-6.5%	$190,000	$197,000	3.7%
San Bernardino	2,324	2,095	-9.9%	$153,000	$150,000	-2.0%
San Diego	2,473	2,465	-0.3%	$285,000	$322,000	13.0%
Ventura	545	580	6.4%	$327,000	$350,000	7.0%
SoCal	15,231	15,359	0.8%	$250,000	$275,000	10.0%

1099 releif

2010-03-15T21:38:00.000-07:00

The Ca assembly passed the short sale tax relief and have sent it off to Arnold to sign. I read he may veto is as there is some additional provisions he does not like regarding tax fraud. I'm sure this will eventually get passed and the short sellers will get off the hook. However not everyone will get off. Both the state and federal tax relief only applies to purchase and refi loans. Home ATM loans (HELOCs) are still taxable. This is why the short sellers really need to get some good tax advice before selling. Vacation and rental properties are also not eligible for tax relief.

Here's some scary data for Housing Wire.

Using LPS data, for all loans more than 90 days in arrears, the average days delinquent is now at 272 days—up from 204 days in early 2008. For loans in foreclosure, the aging numbers are even more staggering: loans in this bucket average 410 days delinquent, up from 260 days delinquent in early 2008.

Ponder those numbers for just a second. On average, severely delinquent borrowers have gone more than 9 months without making a mortgage payment—and yet foreclosure has not yet started for them. For those borrowers who are in the foreclosure process, it’s been an average of 13.6 months—more than one full year—since they last made any payment on their mortgage.

So, can short sales ride in to save the day for these 7.4m troubled borrowers? What about for the many millions more who are current on their loans, but are underwater on property value and unable to sell? For some, short sales will be an important solution—but don’t kid yourself: the hype currently surrounding short sales and the HAFA program will prove to be short-lived, and REO expertise will be prove to be the key to recovery, as it has been in prior cycles.

Here's some government propaganda regarding the HAMP program (Loan Mods). Check out the chart on page 6. Before mods the average back end DTI was 76.4%! Damn Batman after you pay taxes what's left to buy food and pay utilities. It really does make you wonder what in the hell banks were thinking making these loans. 76 freaking pecent DTI...amazing. And the scary part is the back end DTI after mod is averaging nearly 60%. These people are still one paycheck away from the street, eating Ramen noodles and Hamburger Helper for dinner.

There are some other shocking numbers in the report. All the perment mods got an interest rate reduction, 40% of them got the loan extended, and 27% got a principal forebearance. (not a principal reduction!). You can see that a lot of these loan mods are time bombs unless by some miracle prices bubble up again. The average savings is a little over $500/mo.

Welcome to the Bail Out Generation! (We are the BOGs)

Friday humor

2010-03-11T22:31:00.001-08:00