California Home Market Update!

California median home price: January 2012: $268,280 (Source: California Association of Realtors, C.A.R.)

Highest median home price by region/county January 2012: Marin, $694,440 (Source: C.A.R.)

Lowest median home price by region/county January 2012: Tehama, $110,000 (Source: C.A.R.)

Pending Home Sales Index: January 2012: 102.4, an increase from the revised 93.1 recorded in January 2011

Traditional Housing Affordability Index: Fourth quarter 2011: 55 percent (Source: C.A.R.)

Mortgage rates: Week ending 3/1/2012 30-yr. fixed: 3.90% fees/points: 0.8% 15-yr. fixed: 3.17 fees/points: 0.8% 1-yr. adjustable: 2.72% Fees/points: 0.6% (Source: Freddie Mac)

Short Sales Rise, Banks “View it as Better Option”

Banks are more willing to agree to a sale at a lower cost than a home owner’s mortgage balance in order to avoid having the property fall into foreclosure, which can be more costly for a lender. We think the new California law regarding short sales will encourage home owners to consider this option.

Hopefully this trend will likely “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” said RealtyTrac CEO Brandon Moore. Please provide your comments.

Meanwhile, during the fourth quarter, 24 percent of homes sold — nearly one in four — were in some stage of foreclosure, either already bank-owned or already winding through the process, RealtyTrac reports. The number is slightly down compared to a year prior when foreclosures accounted for 26 percent of all home sales, RealtyTrac reports. 

However, Moore says he expects foreclosure sales to rise this year, “particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months.”

Source: “Foreclosures Made Up One in Four Home Sales,” CNNMoney (March 1, 2012)

California’s AG asks for a “Halt in Foreclosure Sales”

Here’s some interesting news to share with you! California’s attorney general has requested that the Federal Housing Finance Agency suspend foreclosure sales in the state for home owners with government-backed mortgages. 

Attorney General Kamala D. Harris has requested that home owners with loans backed by Fannie Mae and Freddie Mac get a temporary reprieve from foreclosures while housing regulators conduct reviews of whether at-risk home owners are eligible to have the amount they owe on their mortgage reduced. 

Fannie Mae and Freddie Mac have stated in the past that they’re opposed to mortgage principal reductions. The FHFA, which regulates Fannie and Freddie, has said that any such program would cost taxpayers $100 billion. 

More than half a million Californians have lost their home to foreclosure since 2008. What’s more, another half a million are in foreclosure or at “imminent” risk this year. Fannie and Freddie guarantee or own more than 60 percent of mortgages in California. 

Source: “California Seeks Suspension of Foreclosures,” Associated Press (Feb. 27, 2012) and “California AG Seeks Foreclosure Suspension,” MarketWatch (Feb. 27, 2012)

Underwater Sellers, what are your Options? Cash to Short Sell? Cash for Keys? Foreclosure?

We get these questions and would like to share our thoughts about this dilemma.  Some home owners who are underwater may not know their alternatives.

The “Cash for Keys” is a program that banks do for some home owners. The “new twist” you’ll be hearing more about is “Cash to Short Sale”. Lenders are figuring out that if there is anything they can do to make a deal happen, they need to do it. This apparently is what is starting to take place with people that are trying to “short sale” their homes. Instead of “Cash for Keys” to homeowners that lose their homes to foreclosure. This was not offered to home owners who were trying to short sale their home. Often the banks would basically give them a certain time to complete the short sale until they foreclosed.

Now because of tight lending practices, new buyers would take so long to qualify, it is often “too little, too late” to close escrow before foreclosure.  When that happens it seems everybody loses. The lenders lost a willing & able buyer and the seller because, now, not only did they lose their home to a foreclosure, but also because a foreclosure was now on their credit report instead of a short sale. (It may be better to have a short sale than a foreclosure on a credit report?) Plus, the buyer may or may not wait until the home came back on the market at a later date.

Other information at: www.dougandbudzeller.com or zteam4u@gmail.com

“Low-income Renters Struggle” to Find Affordable Housing!

A study by the National Low Income Housing Coalition has found that for every 100 families considered “extremely low income,” there are only 30 affordable units available to rent nationwide. “Extremely low income” renters are considered those who earn less than 30 percent of the median income in the metro area which they live. 

The NLIHC has called for more affordable rentals to meet the growing demands of low-income families. It will be interesting to see what happens! Please provide comments?  

The number of extremely low income renters has grown in recent years. In 2010, the number swelled to 9.8 million — nearly a quarter of all renters nationwide.  

“What we’ve seen is a decline in the home ownership rate since 2008, and we’ve seen rent being pushed up,” pushing rent out of each for more low income people, says Sheila Crowley, NHLIHC chief executive. (For nearly a quarter of all renters nationwide)  

The problem appears to be the most evident where the largest gaps exist between the rich and poor, such as in states like Arizona, California, Florida, Michigan, Nevada and Oregon according to the study. Our “Northern California” region is near the top!

“There’s no doubt that there’s a gap, and it’s significant, and it’s getting worse,” said Becky Koepnick, an adviser to HUD Secretary Shaun Donovan. (As many of us know)

Source: “Lowest-Income Renters Left Behind in Housing Crisis,” The Wall Street Journal (Feb. 15, 2012)

Fewer Home Owners Behind on Payments

“Good News” to share with you! The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association. 

“Mortgage performance is also improving faster than the overall economy,” says Jay Brinkmann, MBA’s chief economist. (We’re finding this is not true with some lenders.)

According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets. Let’s hope this trend continues.

Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still cautions that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.

Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (2/16/12)

A “New Breed of Investors” Steps Forward!

“Mom and pop investors” are trying to capitalize on a depressed real estate market in the hopes of one day being able to cash in. An article in USA Today highlights this new breed of small-scale investors who like to buy and hold properties, opposed to the high-dollar large investment firms that once dominated the real estate market who preferred to buy and flip their property investments. 

For “mom and pop investors,” the strategy is to buy homes at rock-bottom prices, rent the properties out to cover costs of home ownership for several years, and then one day sell the homes when prices recover. “An unprecedented number of investors are looking into this,” John Burns, CEO OF John Burns Real Estate Consulting, told USA Today. We find some buy for eventual relocation to another area for retirement.

For investors in the rental market, an 8 percent annual return is fairly normal, according to Burns. “That means that someone who buys a $100,000 property — and pays cash for it — makes $8,000 a year after expenses, including maintenance and taxes,” the USA Today article notes. 

The threats of tenant or maintenance issues may be the potential to derail that potential profit, so investors need to be careful. Many of the investors we work with are cautious and seek advice from their real estate agent, property managers or other experts. 

Source: “Mom and Pop Investors Propping Up Home-Buying Market,” USA Today (Feb. 14, 2012)

Here are at least 3 ways to “Spice up an Open House”

Thought these points would be of interest to home sellers and their real estate agent to coordinate? We believe, marketing a home is a mutual effort of todays home selling! 

Do you want to increase buyer traffic at an open house? Instead of just a flyer or e-mail blast announcing the event, try to give buyers more reason to come out and tour?

A recent article at RISMedia offers some of the following ideas: 

  1. Host a speaker:A guest speaker, such as a general contractor or home stager, may draw more of a crowd. Potential buyers may also be looking to sell their own homes, so a stager can offer tips to spruce up a home for sale. 
  2. Offer a gift: Hold a raffle, such as by raffling off a gift certificate. Plus, with a raffle, buyers will have to share their contact information with you, which you can then use to follow up. If there’s ever a price change on the house, be sure to notify them. 
  3. Involve the community:Invite the neighbors to come to the open house and share their thoughts about the school system or current events in the community, the RISMedia article suggests. You’ll not only be raising awareness about your listing but also helping “to unite the community on important issues,” the article notes. Just be sure to avoid political issues, which can polarize a crowd.

 Source: “5 Ways to Increase Open House Traffic,” RISMedia (Feb. 14, 2012)

HUD Grants another $1.8 Billion to enhance “Affordable Housing”

The U.S. Department of Housing and Urban Development announced that it will offer nearly $1.8 billion to public housing authorities nationwide, allowing agencies to make large-scale improvements to public housing units. 

The funds also can be used to make energy-efficient upgrades to replace old plumbing and electrical systems, according to HUD. 

 “This funding will help housing authorities address long-standing capital improvements, but it only scratches the surface in addressing the deep backlog we’re seeing across the country,” said Hud’s Shaun Donovan. “Today, we are closer to helping housing authorities and our private sector partners undertake their capital needs over the long haul.”

Source: HUD 

Have you followed this program since it started as a solution to the housing problems? In 2007, 70% of the nations jobs were related to the housing related.  Have the Fed’s programs/ideas since then,  provided economic recovery? Is this just another “Smoke Screen”? Please provide your comments on how or if this may help your region?

Could the “New Mortgage Deal” lead to a Jump in Foreclosures?

A $25 billion mortgage settlement announced between major banks and state and government officials is supposed to bring aid to troubled home owners, but it could also bring a wave of new foreclosures, CNNMoney reports. 

During the year long negotiations, some banks slowed down repossessing homes, and now they may have a backlog of troubled loans on the books — loans that can’t be saved by the deal’s aid on refinancing or mortgage principal reduction. 

“The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn’t,” Rick Sharga, executive vice president for Carrington Holdings, told CNNMoney.

Last year, foreclosure filings dropped 34 percent. This year, Daren Blomquist, vice president of RealtyTrac, estimates that new foreclosure filings will increase to between 2.2 million and 2.5 million compared to last year’s 1.9 million filings in 2011. 

The mortgage deal is aimed at helping home owners avoid foreclosure. One million struggling home owners may see their mortgage principal reduced as part of the deal. But the home owners must be able to afford new, lower payments. The banks will have no choice but to foreclose on home owners who stop making payments altogether or cannot afford a new payment structure on their loan.  

The backlog of foreclosures may not be all bad for the housing market, some experts say. We believe the “Short Sale” trend may come to the rescue? What do you think?

 Source: “Mortgage Deal Means More Foreclosures,” CNNMoney (Feb. 10, 2012)