Moving to Prime Time

The loan type with the biggest jump in defaults are the prime loans. As a percentage of total loans the default rate is still lower but since most loans are prime that translates into a lot of defaults.

The best line from this article: "Freddie Mac estimates that 40% of the loans they have in foreclosure are on vacant homes. The borrowers don’t want a modification. Home prices have fallen so far that they will not see any equity for decades. So why pay?

Will the higher rates kill the party?

Interest rates took a big jump this week. They are currently sitting at about 5.5% for those with perfect credit and a DP. The scuttlebutt in the blogosphere is that this is going to kill the market. Refi's especially would seem to be hurt by this rise. I think most folks with reasonable credit and half a brain already have a fairly low rate. So a 5.5% refi may not help those families on the verge of affordability if they already have a 5% or 6% loan. Where as a refi at 4.5% might have made a difference.

One things for sure the higher the rates go the more pressure there will be on the prices. It also does not help those loan resets if the rates start to rise. That will lead to more foreclosures as payments adjust upwards. It's also likey to increase drop outs on sales that are curently pending. Since the loan process is taking so long these days loan locks will expire, potential payments will rise and people will back out.

It seems the Fed is losing control (what little they had). They Fed rate is already at zero, they were buying up treasuries yet the interest rates are still going up. It seems poor Ben may have run out of magic bullets. I wonder what he will try next....

Next news item, Mortgage delinquencies hit record levels

The Mortgage Bankers Assn. reported Thursday that foreclosures were at record levels, with 1.37% of all home loans nationally starting the foreclosure process during the first quarter of the year.

However, in California, Florida, Nevada and Arizona -- states where housing boomed the most and now has crashed hardest -- the rate of homes entering foreclosure was 2.45%, the trade association said.

"Those states account for about 46% of the foreclosure starts in the country and represented 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts," the association's chief economist, Jay Brinkmann, said in a statement. "It is difficult to overstate the severe impact home price declines have had on mortgage performance in those four states."

Perhaps there is some consolation for California: It's not the worst state in terms of foreclosures.

In Florida, 10.6% of the mortgages "are somewhere in the process of foreclosure," Brinkmann said. "In Nevada it is 7.8%, Arizona 5.6% and California 5.2%."

In addition to the news above, over 12% of all residencial loans are delinquent at least one payment. 12%!

Economists aren't very good at predicting the future

Economists aren't very good at predicting the future, and I'm only slightly better it seems. I was trolling through the blog looking at how the homes in some older posts had done when they sold, when I ran across this post. The post talks about a report by Esmael Adibi, director of Chapman's Anderson Center for Economic Research on the overall economy. You know, jobs, housing etc.

His predictions were woefully wrong. He predicted real estate would drop 21% in 2008 and bottom out at $258k in late 09. He did not see much happening in unemployment as he expected added healthcare jobs to offset losses in construction. Man was he wrong.....

Then I made my predictions. Mine were better, but even Mr. Pessimistic was to optimistic. I predicted we would drop closer to 30% in 2008 and another 10 to 15% on 2009 and that the median would bottom around $175K in late 09. I predicted unemployment would increase to levels higher than that of the early 90s.

How far off were we? Prices dropped north of 40%. So I missed by about 10% but the expert missed by 20%. For the median we will have to wait and see. But we are both obviously off. He is WAY off. The median for the entire IE is currently sitting at $158k I believe. It's still dropping and how much farther is anyone's guess. I don't think it will go much lower but then again I didn't think it would go this low.

On employment, the expert wasn't even in the ball park. How he could forecast no additional job losses in mid 2008 is beyond me. I think the village idiot could see them coming in mid 2008. I was much closer here, predicting losses higher than the early 90's. Unemployment peaked at around 12% back then. I think we are close to 13% currently.

Funny stuff to look back and see what we though last year.....

Prices by city

Here's DataQuicks price by city. Interestingly enough I see they have adjusted the Riverside county median down $1k from their earlier report. It was $180k and on this later report it's listed as $179k (dropping by the week......)

City......................Sales...Median...2008median...% drop

Riverside County	4,390	$179,000	$295,000	-39.32%
AGUANGA	2	$125,000	$277,000	-54.87%
BANNING	38	$105,500	$217,500	-51.49%
BEAUMONT	96	$199,250	$287,500	-30.70%
BLYTHE	4	$187,500	$190,500	-1.57%
CABAZON	8	$42,500	n/a	n/a
CALIMESA	7	$194,000	$275,000	-29.45%
CATHEDRAL CITY	83	$150,000	$245,000	-38.78%
COACHELLA	62	$140,000	$235,000	-40.43%
CORONA	447	$300,000	$395,000	-24.05%
DESERT HOT SP	154	$90,000	$174,500	-48.42%
HEMET	271	$115,000	$193,000	-40.41%
HOMELAND	3	$60,000	n/a	n/a
IDYLLWILD	7	$220,000	$233,500	-5.78%
INDIAN WELLS	23	$500,000	$830,000	-39.76%
INDIO	172	$170,000	$290,000	-41.38%
LA QUINTA	99	$340,000	$566,000	-39.93%
LAKE ELSINORE	215	$170,000	$285,000	-40.35%
MENIFEE	133	$195,000	$275,000	-29.09%
MIRA LOMA	41	$276,000	$416,500	-33.73%
MORENO VALLEY	458	$135,250	$235,000	-42.45%
MURRIETA	296	$225,750	$310,000	-27.18%
NORCO	30	$394,500	$450,000	-12.33%
NUEVO	9	$140,500	$241,000	-41.70%
PALM DESERT	145	$278,000	$354,000	-21.47%
PALM SPRINGS	125	$210,000	$238,250	-11.86%
PERRIS	237	$136,000	$226,250	-39.89%
RANCHO MIRAGE	52	$355,000	$537,500	-33.95%
RIVERSIDE	505	$175,000	$300,000	-41.67%
SAN JACINTO	159	$130,000	$220,000	-40.91%
SUN CITY	154	$140,000	$246,500	-43.20%
TEMECULA	223	$257,000	$333,000	-22.82%
THERMAL	3	$171,000	$85,000	101.18%
THOUSAND PALMS	14	$110,500	$187,500	-41.07%
WHITE WATER	2	$111,000	$173,000	-35.84%
WILDOMAR	64	$224,000	$327,000	-31.50%
WINCHESTER	45	$244,000	$329,000	-25.84%
San Berdu Co	3,060	$138,750	$265,000	-47.64%
ADELANTO	91	$84,500	$179,000	-52.79%
APPLE VALLEY	169	$115,000	$207,250	-44.51%
BARSTOW	38	$55,750	$157,500	-64.60%
BIG BEAR CITY	24	$132,000	$257,500	-48.74%
BIG BEAR LAKE	34	$262,000	$329,500	-20.49%
BLOOMINGTON	50	$136,250	$220,000	-38.07%
CEDAR GLEN	2	$63,000	n/a	n/a
CHINO	72	$316,500	$431,000	-26.57%
CHINO HILLS	76	$395,000	$455,000	-13.19%
COLTON	72	$115,000	$227,500	-49.45%
CRESTLINE	14	$115,000	$184,000	-37.50%
FONTANA	430	$188,136	$315,000	-40.27%
GRAND TERRACE	11	$237,500	$263,000	-9.70%
GREEN VALLEY	2	$146,250	$172,750	-15.34%
HELENDALE	21	$140,000	$260,000	-46.15%
HESPERIA	232	$106,000	$215,000	-50.70%
HIGHLAND	65	$120,000	$325,000	-63.08%
JOSHUA TREE	22	$90,000	$123,000	-26.83%
LAKE ARROWHEAD	33	$260,000	$437,500	-40.57%
LANDERS	4	$67,500	$65,000	3.85%
LOMA LINDA	12	$299,500	$349,500	-14.31%
LUCERNE VALLEY	6	$66,500	$174,500	-61.89%
LYTLE CREEK	2	$79,250	n/a	n/a
MENTONE	17	$165,000	$315,000	-47.62%
MONTCLAIR	31	$215,000	$350,000	-38.57%
MORONGO VALLEY	3	$70,000	$155,000	-54.84%
NEEDLES	6	$46,500	$53,000	-12.26%
ONTARIO	150	$180,000	$305,250	-41.03%
PHELAN	15	$130,500	$230,000	-43.26%
PINON HILLS	8	$202,500	$230,000	-11.96%
RANCHO CUCA	172	$315,000	$400,000	-21.25%
REDLANDS	44	$200,000	$322,500	-37.98%
RIALTO	158	$133,000	$240,000	-44.58%
RUNNING SPRINGS	2	$111,500	$180,250	-38.14%
SAN BERNARDINO	370	$73,000	$190,000	-61.58%
SUGARLOAF	13	$140,000	$142,000	-1.41%
TRONA	2	$44,750	$45,000	-0.56%
29 PALMS	23	$82,000	$110,000	-25.45%
TWIN PEAKS	4	$102,500	$215,000	-52.33%
UPLAND	67	$379,000	$450,000	-15.78%
VICTORVILLE	376	$111,500	$222,000	-49.77%
WRIGHTWOOD	5	$290,000	$137,000	111.68%
YUCAIPA	51	$222,000	$287,000	-22.65%
YUCCA VALLEY	49	$95,500	$154,500	-38.19%

Is this the eye of the storm?

From Barron's (this was written by a real estate broker)

A lot of people think that we've seen the worst of the housing crisis. They're talking about green shoots and glimmers of hope, when they should be back in the storm shelter, preparing for a flood of inventory that will overwhelm the markets and produce another round of falling prices

For the past few months there has been a semi-moratorium on foreclosures. Most institutions with delinquent mortgages didn't foreclose. The signs that blanket many neighborhoods have been posted by a fraction of the lenders. Now the rest of the banks are rushing to get their properties on the market.

As a Florida real-estate broker who works with bank asset managers to dispose of foreclosed properties, I get a good view of this market. From December 2008 through mid-March 2009, the number of asset managers calling to discuss REO (real estate owned) properties on their client banks' books dropped by more than 80% from the level at which it previously had been running. In the past two months, however, asset managers have been busy, with most interested in how many properties we could handle at once.

Law firms for banks are once again lining up to file foreclosures and to process evictions. The asset managers we work with have warned us to expect a flood of properties, beginning in early June. This will hit as the number of potential buyers continues to dwindle. Builders, traditional sellers and investors who entered too early are already loaded with REO properties...

There's no light at the end of the tunnel yet. We're still supporting builders through misguided programs that are only adding to the inventory woes. California decided to offer a $10,000 credit to buyers of new homes, on top of the $8,000 federal credit. But California made the $10,000 available only for new homes purchased directly from builders. That shows the power of the builders' lobby, but it only adds to California's housing-industry problem. It encourages builders to construct dwellings we don't need, and it penalizes anyone else trying to sell a home.

Housing inventory soon will flood a market in which more than 500,000 homes are being built each year, even though the annual sales pace for new homes is closer to 300,000. We must also deal with a system clogged with impossible short sales, a surge of second and vacation homes being dumped, and third-wave flippers realizing that they entered the market too soon.

Unemployment presents a two-pronged problem. If homeowners lose their jobs, they have difficulty meeting mortgage payments. And a high jobless rate forces more people to put their homes on the market.

During the housing bubble, many second homes were purchased with the mythical equity from primary residences. These second homes are coming onto the market at an alarming rate, as many middle- and upper-class sellers need to raise cash. In some very exclusive private communities in Florida, where home prices are in the seven figures, more than 50% of the homes are on the market.

Unfortunately, there are no signs of recovery, despite the hype and the twisting of numbers in many media reports. The end of the unofficial moratorium on foreclosures, combined with rising unemployment, signals that the back half of this housing hurricane is only just beginning.

One for Buttermonkey

Here's one in Victoria Woods that's listed for 1999 prices. 2627 Dorchester is a 4 bedroom 2.5 bath home that is nearly 3000 s/f. That's a good size for an older area. This looks like a home equity withdrawal gone wrong. They ex-owners look to have purchased this in 1999 for $325k. They lost it to the bank back in Jan. The bank tried to get $418k at the trustee sale but obviously no one took the bait. It's now listed for $332k. That's just about what it sold for in 1999.

Riverside county by Zip

Before I take off here is the April data for price by zip code.

RIVERSIDE SFR Price % chg $/Sq Ft Countywide 3,757 $171 -34.70% $90 Aguanga 92536 1 $190 n/a $78 Anza 92539 n/a n/a n/a n/a Banning 92220 36 $97 -27.20% $75 Beaumont 92223 66 $182 n/a $87 Blythe 92225 4 $188 n/a $112 Cabazon 92230 8 $43 n/a $41 Calimesa 92320 6 $195 n/a $117 Canyon Lake 92587 43 $160 n/a $95 Cathedral City 92234 71 $150 -41.20% $93 Coachella 92236 54 $138 n/a $75 Corona 92879 62 $205 -21.70% $128 Corona 92880 81 $335 n/a $120 Corona 92881 48 $300 -4.10% $141 Corona 92882 73 $258 -31.40% $141 Corona 92883 78 $303 n/a $122 Dsrt Hot Springs 92240 139 $86 7.80% $54 Dsrt Hot Springs 92241 8 $109 n/a $67 Hemet 92543 52 $71 -49.00% $64 Hemet 92544 91 $107 -42.00% $68 Hemet 92545 112 $132 n/a $67 Homeland 92548 3 $60 n/a $56 Idyllwild 92549 7 $220 n/a $149 Indian Wells 92210 12 $673 -16.90% $256 Indio 92201 91 $146 -40.50% $81 Indio 92203 66 $195 -52.30% $91 La Quinta 92253 83 $310 -37.80% $161 Lake Elsinore 92530 128 $145 -52.20% $81 Lake Elsinore 92532 60 $206 n/a $81 Menifee 92584 115 $190 n/a $87 Mira Loma 91752 37 $276 n/a $122 Moreno Valley 92551 92 $129 n/a $77 Moreno Valley 92553 136 $103 n/a $75 Moreno Valley 92555 95 $195 n/a $81 Moreno Valley 92557 109 $145 n/a $88 Mountain Center 92561 1 $267 n/a $175 Murrieta 92562 107 $250 -28.40% $103 Murrieta 92563 143 $228 -34.20% $91 Norco 92860 31 $395 n/a $145 N Palm Springs 92258 1 $73 n/a $94 Nuevo 92567 8 $140 n/a $74 Palm Desert 92211 49 $309 -30.70% $167 Palm Desert 92260 39 $252 -3.90% $146 Palm Springs 92262 37 $250 79.70% $142 Palm Springs 92264 21 $528 -37.40% $219 Perris 92570 71 $135 n/a $70 Perris 92571 146 $135 -42.30% $70 Rancho Mirage 92270 25 $380 -29.00% $187 Riverside 92501 25 $150 n/a $102 Riverside 92503 111 $158 n/a $108 Riverside 92504 59 $145 n/a $105 Riverside 92505 49 $170 -20.70% $113 Riverside 92506 56 $258 n/a $141 Riverside 92507 32 $155 -39.70% $102 Riverside 92508 51 $300 n/a $108 Riverside 92509 95 $165 n/a $113 San Jacinto 92582 67 $138 n/a $58 San Jacinto 92583 80 $116 -29.80% $61 Sun City 92585 51 $159 n/a $87 Sun City 92586 49 $122 -43.60% $88 Temecula 92590 3 $350 n/a $103 Temecula 92591 59 $242 -33.30% $114 Temecula 92592 119 $260 -37.50% $113 Thermal 92274 4 $171 n/a $75 Thousand Palms 92276 14 $111 n/a $78 White Water 92282 2 $111 n/a $65 Wildomar 92595 46 $202 n/a $96 Winchester 92596 35 $240 n/a $89

Taking a few days off

I've been a little bit of a slacker lately because I've bee getting ready for a model sailplane contest. The contest is this weekend so I will be taking a few days off from blogging to have some real fun. I'll be back on Monday.

X out

April numbers are out, no sign of bottom!

Contrary to the media hype the median price is still dropping in the IE according to the latest sales figures from DataQuick.

Sales Volume			Median Price
All homes	Apr-08	Apr-09	%Chng	Apr-08	Apr-09	%Chng
Los Angeles	5,016	6,425	28.1%	$435,000	$300,000	-31.0%
Orange	2,166	2,391	10.4%	$500,000	$380,000	-24.0%
Riverside	3,186	4,469	40.3%	$295,000	$180,000	-39.0%
San Bernardino	1,667	3,130	87.8%	$265,000	$138,500	-47.7%
San Diego	2,809	3,375	20.1%	$400,000	$290,000	-27.5%
Ventura	771	724	-6.1%	$445,000	$340,000	-23.6%
SoCal	15,615	20,514	31.4%	$385,000	$247,000	-35.8%

April's median was $180k and last months median for Riverside was $187k. That makes another 4% fall in one month. The sales numbers were up slightly from last month which is normal for this time of year. In fact they should probably be a little higher than they were.

San Berdu fell from $150k in March to $137k. That's an 8% drop in one month. How much lower can it go? It also saw a increase in the number of homes sold over last month.

Here's the juicy bits from the DQ report.

A total of 20,514 new and resale houses and condos closed escrow in the six-county Southland last month. That was up 5.2 percent from 19,506 in March and up 31.4 percent from 15,615 a year ago, according to San Diego-based MDA DataQuick, a real estate information service.

Last month’s sales were the highest for that month since April 2006, when 27,114 homes sold, but were 18.2 percent below the average April sales total since 1988, when DataQuick’s statistics begin.

Foreclosure resales – homes sold in April that had been foreclosed on in the prior 12 months – accounted for 53.6 percent of all Southland resales last month. It was the seventh consecutive month in which post-foreclosure properties made up more than half of all resales.

A total of 20,514 new and resale houses and condos closed escrow in the six-county Southland last month. That was up 5.2 percent from 19,506 in March and up 31.4 percent from 15,615 a year ago, according to San Diego-based MDA DataQuick, a real estate information service.

Last month’s sales were the highest for that month since April 2006, when 27,114 homes sold, but were 18.2 percent below the average April sales total since 1988, when DataQuick’s statistics begin.

Foreclosure resales – homes sold in April that had been foreclosed on in the prior 12 months – accounted for 53.6 percent of all Southland resales last month. It was the seventh consecutive month in which post-foreclosure properties made up more than half of all resales.

The deep discounts associated with foreclosures have created stiff competition for builders, who last month sold the lowest number of newly constructed homes for an April since at least 1988.

At the same time, the number of single-family houses that resold last month was at record or near-record-high levels for an April in many of the more affordable, foreclosure-heavy inland markets. They included Palmdale, Lancaster, Moreno Valley, Perris, Indio, San Jacinto, Lake Elsinore and Victorville.

The sales picture was dramatically different in many older, high-end communities closer to the coast, where foreclosures and deep discounts are less common. Sales of existing houses remained at or near record lows for an April in markets such as Beverly Hills, Malibu, Palos Verdes Peninsula, Manhattan Beach and Pacific Palisades.

“The problem,” he continued, “is that we still face two big threats to price stability: layoffs, which can cause foreclosures across the home price spectrum, and possibly a new round of foreclosures triggered by defaults on ‘option ARM’ and ‘stated income’loans used in mid-to high-end markets. Also of concern are reports of lenders holding back for many months before making a public foreclosure filing, which we track. If job cuts remain deep and foreclosures spike, then the past few months might later be viewed as nothing more than a brief calm before the next foreclosure storm.”

One in six!

Delinquency rates in the Riverside-San Bernardino metro area hit a staggering 15.7 percent ---- meaning borrowers on roughly one out of every six mortgages were at least 90 days late on their payments, according to the report by First American CoreLogic, a Santa Ana research firm.

Oh yea, things are looking up........not!


And this about the $8k tax credit being used as a DP, Not so much! I found this at Boston.net.
Remember that promise that Shaun Donovan, HUD Secretary made at the Realtor mid-year meeting on Monday? The one about that the $8000 tax credit being made available for down payments? Well, the promise is broken.

This notice came from NAEBA headquarters this afternoon:

According to contacts with both FHA and HUD, Mortgagee Letter 2009-15, which stated that first-time homebuyers would be allowed to use the tax credit for their downpayment, has been rescinded. On a phone call with FHA, Kim Kahl was told, "The mortgagee letter has been rescinded for the time being.” NAEBA President John Sullivan was told something similar when contacting HUD. Neither FHA nor HUD gave further details.

I am not surprised. I think when HUD officials look at it, they see a buyer who needs that $8000 for a down payment as a buyer without enough reserve to be a homeowner.

This may be a good sign for Federal lending policy, IMHO.

Another interesting article I ran across involves those REDC auctions. Ever wonder how many of those houses actually sell. A reporter in Florida did, so he checked to see.

I thought I'd check up on REDC this week to see how many of those foreclosure homes actually closed. After studying the results, I feel duped. And you should, too.

Leave aside the fact that REDC admitted later that only 75 homes actually sold on Feb. 7. When I plowed through the first part of the "sold" list and compared addresses against property appraiser records, I didn't find a single home that closed as of Thursday. Not one.

Mr Mortgage's latest pearl

I was over on the new Mr. Mortgage site reading his latest post. It in line with everything else I've posted lately about the rising amounts of foreclosures, the increasing defaults and reasons for it. He has compiled tons of data showing the amount of REO's, NOTs, and NODs by lender. He also has a chart I found particularly interesting. It shows the re-defaults by lender. The loan modifications that are going bad. Some of the numbers are shocking even for me. Countrywide loan mods gone bad (for loans were the initial loan was delinquent) are running 80%. Go read the entire post, it's another good one.

New foreclosure wave predicted in Inland area

Really, are you sure,A realtor just told me there's never been a better time to buy....

From the PE.

A near record number of homes entered the first stage of the foreclosure process last month in Riverside and San Bernardino counties after mortgage industry foreclosure moratoriums were lifted.

The supply of bank-owned houses has shrunk from a year ago, sparking intense competition from investors and first-time buyers, who often find they must make offers on multiple houses to get one accepted.

But economists expect the number of bank repossessions to burgeon in coming months as a new influx of defaulted mortgages proceeds to foreclosure.

Christopher Thornberg, an economist with Beacon Economics in Los Angeles, said the slowdown in foreclosures while mortgage delinquencies increased "was a mirage. It wasn't real. At some point you have to foreclose."

According to a report released late Tuesday by RealtyTrac, an Irvine-based foreclosure monitoring company, notices of default, the first step in the foreclosure process, were issued for 6,019 homes in Riverside County last month. That was fewer than the 6,642 record in March but more than the 4,706 default notices recorded in April, 2008.

San Bernardino County recorded 4,661 notices of default last month, down from 5,336 a month earlier but sharply up from 3,759 a year earlier.

Meanwhile real estate agents complain about a shortage of foreclosed houses for sale because banks have stopped taking over homes and seem to be slow putting the ones they have on the market.

Riverside County last month had 1,519 bank repossessions, the final stage of foreclosure, down from 1,934 in March, and down from 2,598 homes repossessed in April 2008. There were 1,580 homes repossessed in San Bernardino County last month, up from 1,179 in March but fewer than the 1,845 homes repossessed the same month a year earlier.

"There is now a dip in (bank repossessed houses) similar to the dip in the notices of default in the third and fourth quarters of 2008. We expect a corresponding spike (in bank repossessions) probably in the third or fourth quarter of this year," said Daren Blomquist, a spokesman for RealtyTrac.

Pete Nyiri, owner of Corona-based Top Producers Realty, a high-volume broker of bank-owned Inland houses, said late last week he started getting more repossessed houses to sell. He said lenders and loan servicers "are telling us it is going to be back to where it was as far as numbers are concerned."