SoCal Sales and Median Price Fall in July

July sales traditionally fall from June however a nearly perfect storm of elements combined last month to produce one of the worst Julys on record. I say “nearly” because interest rates are still fantastic and we can only imagine how ugly it may have been if the cost of money had gone up as well. 

  Sales Volume Median Price
All homes Jul-09 Jul-10 %Chng Jul-09 Jul-10 %Chng
Los Angeles    8,082 6,515 -19.4% $321,000 $339,000 5.6%
Orange         3,128 2,527 -19.2% $420,000 $450,000 7.1%
Riverside      4,699 3,529 -24.9% $185,000 $200,000 8.1%
San Bernardino 3,549 2,556 -28.0% $140,000 $155,000 10.7%
San Diego      3,809 3,070 -19.4% $320,000 $338,000 5.6%
Ventura        837 749 -10.5% $375,000 $370,000 -1.3%
SoCal          24,104 18,946 -21.4% $268,000 $295,000 10.1%

With record low interest, falling prices and an increase in inventory there is great opportunity for well qualified buyers. Even with a potential double-dip in property value, the amount saved in interest should more than balance out.  As the saying goes, you make money when you purchase real estate and with the abundance of distressed properties out there and buyers’ market environment, there is plenty of opportunity.

Cash buyers are definitely is the best position to take advantage, whether changing a primary residence or considering income properties. There’s a lot of single, multi-family and vacation homes currently on the market that have the potential to cover some or all of the cost of ownership. In the best case scenarios owners will see positive cash flow. There some situations where financed income properties can produce a profit, however these are generally larger and much more complex investment s than say 3 to 10 unit properties.

Whether buying and especially if selling, know you market. Be patient and understand what constitutes the best value in your chosen area. The most important thing for a seller now is to be realistic and understand that their home may be worth much more to them than the market will bear.

My job as is to educated my clients so that they know the right deal when it comes along.

For more information regarding this post or other real estate information visit LARealEstateINFO.net or contact Robert Dixon at RE/MAX Palos Verdes Realty, Telephone (310) 703-1848 or email info@robertdixon.net. Content of this or any other post is presumed to be accurate but not guaranteed. DRE License #01828273

Serving the Palos Verdes Peninsula & South Bay Beach Cities, Hollywood and the Hollywood Hills, Silver Lake, Echo Park – Angelino Heights, Los Feliz, the Greater Los Angeles area and Palm Springs.

Southern California Home Sales and Median Price Dip in July

August 17, 2010

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.

“We do expect some sideways buying and selling to kick in, especially among homeowners who have owned for more than seven years and didn’t take out equity during the frenzy. You may have to ‘discount’ your self-perceived home value, but if the person you’re buying from has to do the same thing, it doesn’t matter. And you may get a spectacularly low mortgage rate.”

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 median’s peak-to-trough drop 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 34.2 percent of the resale market last month, up from 32.8 percent in June but down from 43.4 percent a year ago. The all-time high was February 2009 at 56.7 percent, DataQuick reported.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 36.0 percent of all mortgages used to purchase homes in July, down from 38.8 percent in June and 39.2 percent in July 2009.

Last month 21.9 percent of all sales were for $500,000 or more, compared with 21.6 percent in June and 19.2 percent a year ago. The low point for $500,000-plus sales was in February 2009, when 13.6 percent of sales crossed that threshold. Over the past decade, a monthly average of 25.4 percent of homes sold for $500,000 or more.

Viewed a different way, Southland zip codes in the top one-third of the housing market, based on historical prices, accounted for 30.8 percent of existing single-family house sales last month, up from 30.4 percent in June and 27.7 percent a year ago. Over the last decade those higher-end areas have contributed a monthly average of 33.3 percent of regional sales. Their contribution to overall sales hit a low of 21.0 percent in January 2009.

High-end sales would be stronger if adjustable-rate mortgages (ARMs) and “jumbo” loans were easier to obtain. Both have become much more difficult to get since the credit crunch hit three years ago.

Last month ARMs represented 6.1 percent of all purchase loans, down from 6.7 percent in June but up from 3.4 percent in July 2009. Over the past decade, a monthly average of nearly 40 percent of all home purchase loans have been ARMs.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.4 percent of last month’s purchase lending, up from 17.6 percent in June and from 15.2 percent in July 2009. Last month’s figure was the highest since January 2008, when it was 18.7 percent. Before the August 2007 credit crisis, jumbos accounted for 40 percent of the market.

Absentee buyers – mostly investors and some second-home purchasers – bought 21.9 percent of the homes sold in July, paying a median of $220,000. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 26.7 percent of July sales, paying a median $218,250. In February this year cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.2 percent.

The “flipping” of homes has trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a six-month period was 3.7 percent, while in June it was 3.4 percent and a year ago it was 2.0 percent. Last month flipping varied from as little as 2.8 percent in Orange County to as much as 4.4 percent in Los Angeles County.

MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

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.

Source: DQNews.com

Silver Lake Home Sales, July 2010

Inventory, in general continues to climb; sales are down or flat June to July depending on the area.  Continued drops in interest rates are fueling some sales but not as much as some “experts” assume they should. The arguement: There are some fantastic buys out there right now and the historically low interest rates should out weigh the spector of  a double dip in property value as the savings (over 15 to 30 years) are significant.

Sold in Silver Lake/Echo Park 7/2010 –  22 units. Pending and Listed during the month 14/25

If you’re looking for more specific information on Silver Lake or other areas please contact me with the details. Also be sure to become a fan of Silver Lake Real Estate and Echo Park Real Estate on Facebook!

Source: MRMLS

For more information regarding this post or other real estate information contact Robert Dixon at RE/MAX Palos Verdes Realty (310) 703-1848 or email info@robertdixon.net. Content of this or any other post is presumed to be accurate but not guaranteed.

Citi Reports Profit of $4.4 Billion

“After 2 Years of Losses, Citi Reports Profit of $4.4 Billion. Losses in Citigroup’s domestic mortgages and credit units however continued to mount — Citigroup Holding, which contains the bulk of most-troubled mortgage and credit card assets along with businesses marked for sale, lost $876 million.”

The piece goes on to say that the government may soon be selling it’s ownership in the company, some 7.7 billion shares…

After 2 Years of Losses, Citi Reports Profit of $4.4 Billion
New York Times by ERIC DASH
April 19, 2010

After nearly two years of being drenched in red ink, Citigroup provided the strongest signs yet that the troubled bank is beginning to recover as it reported a $4.4 billion profit in the first quarter.

The earnings, which handily beat analyst expectations and were the bank’s best since the financial crisis began, were the result of the resurgence in the bond market and improvements in the economy, particularly overseas. Both play to Citigroup’s strengths as a major player in fixed income and emerging markets, and come as some of its rivals benefited from similar trends. JPMorgan Chase and Bank of America both reported big first-quarter earnings from hefty trading profits and from adding less money to their loan loss reserves.

Full article at NYTimes.com

CALIFORNIA’S TAX CREDIT MONIES MAY GO FAST

The $100 million allocated for California’s first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.’s Economics team. California’s Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.’s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.

Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become availablee.
REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.

For more information, please refer to C.A.R.’s Homebuyer Tax Credit Chart 2010.

Mortgage Market Review, April 2, 2010

Market Comment

Mortgage bond prices fell again last week pushing mortgage interest rates higher. The Fed ended the mortgage backed securities purchase program last Wednesday. There was no coincidence that rates spiked higher Thursday morning with the Fed no longer there to buffer negative movements and keep rates in check. Stock strength also pressured bonds as the Dow approached the 11,000 mark. Escalating oil prices also caused rates to spike higher as inflation fears begin to increase. Fortunately the PCE Price Index data came in as expected. Rates rose about 3/4 of a discount point for the week.

The Treasury auctions will once again take center stage this week. If foreign demand is lackluster like the last few auctions we could see that carry over to the mortgage bond market causing rates to spike. The Fed minutes and weekly jobless claims may also move the market this week.

April 6

3-year Treasury Note Auction: (important) $40 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

Fed Minutes: (important) Details of last Fed meeting. Volatility may surround the release.

April 7

Consumer Credit: consensus estimate up $1.6 billion (low importance) A significantly larger than expected increase may lead to lower mortgage interest rates.

10-year Treasury Note Auction: (important) $21 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.

April 8

Weekly Jobless Claims: consensus estimate at 430k (moderately important) An indication unemployment. Higher claims may lead to lower rates.

30-year Treasury Bond Auction: (important) $13 billion of bonds will be auctioned. Strong demand may lead to lower mortgage rates.

Treasuries

The 10 and 30-year Treasury bond yields are often viewed as “benchmarks”, reflecting the overall state of interest rates in the US economy. Many people concerned about mortgage interest rates track these bonds as a barometer for mortgage interest rates. However, in reality the Treasury and mortgage markets trade independently.

The supply and demand characteristics of Treasury bonds and mortgage-backed securities (MBSs) differ. Treasury securities represent money needed to fund the operations of the US government. MBSs, on the other hand, represent borrowing by homeowners. Demand for mortgage credit is seasonal and is also affected by the state of the overall economy. In terms of demand, Treasury securities are regarded as “risk free” investments, and often benefit from a “flight to quality” in times of financial crisis. Treasury bill, note, and bond prices are dictated by yield requirements and inflationary concerns. Because homeowners can sell or refinance their homes, investors in 30-year mortgage-backed securities usually see principal repayment in significantly shorter periods of time.

In the absence of information directly related to the mortgage interest rate markets, Treasury information can be useful. However, mortgage interest rates can vary significantly. In fact, many times the Treasuries will trade wildly while MBSs only see minor price changes and vice versa.

Source:

Andrew Martz
Mortgage Loan Consultant
The Shintani Group
27 Malaga Cove Plaza, Ste A
Palos Verdes Estates, CA 90274
License # 01418195
andrew@shintanigroup.com
http://www.shintanigroup.com/
(310) 378-8212

Copyright 2010. All Rights Reserved. Mortgage Market Information Services, Inc. http://www.ratelink.com/ The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

A HUD required good faith loan estimate will protect you

Beginning Jan. 1, the Dept. of Housing and Urban Development (HUD) required lenders to issue Good Faith Estimates to protect consumers applying for mortgage loans. Some loan officers, however, sidestep the new requirement by giving their initial quotes on informal worksheets that carry no federal consumer protections. It is important that consumers understand the differences between the federally mandated good faith estimate form and a lender’s informal worksheet.

Last month, HUD told lenders and loan officers that under no circumstances can worksheet quotes be issued to a mortgage applicant in lieu of a good-faith-estimate form.

Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.

Loan officers cannot refuse to provide a good faith estimate to an applicant who requests one, nor can they tell applicants that they must commit to moving forward with their mortgage company to obtain a mortgage prior to receiving a good faith estimate.

Once an applicant has received a good faith estimate, they can take the form with them to comparison shop. The new form includes itemized boxes allowing mortgage applicants to compare quotes from up to four lenders, such as interest rates, loan fees, prepayment penalties, and total settlement expenses.

The good faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing—generally the lender’s own fees and local transfer taxes—and which fees allow a 10 percent fluctuation for changes higher than the estimate, such as certain title and closing-related services.

Some worksheets resemble good-faith estimates, but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the worksheet is not a good faith estimate, so consumers should carefully review documents before making any decisions.


Shopping for a loan? A good-faith estimate will protect you

LA Times.com
February 28, 2010
by Kenneth R. Harney

If you plan to take out a mortgage or refinance any time soon, you might want to hear this blunt message from federal officials: Don’t fly blind. When you’re shopping among competing lenders for the best loan terms and fees, make sure you know which quotes come with a guarantee and which do not.

Depending upon how loan officers provide their quotes upfront — on an informal “work sheet” that carries no federal consumer protections or on a new, three-page “good-faith estimate” mortgage shopping tool that comes with rock-hard guarantees — there could be a world of difference.

A loan officer might quote you fees that are low-balled by hundreds of dollars on an informal work sheet to get your business. But if the quotes are made on a good-faith estimate, they’ve got to be accurate because, under federal rules that took effect Jan. 1, any significant excesses must come out of the lender’s own wallet at closing.

This month the Department of Housing and Urban Development brought together representatives of the highest-volume mortgage lenders in the country — who originate a combined 80%-plus of all new home loans — to review the agency’s reformed good-faith-estimate and closing documents.

Among the issues discussed: the widespread use of informal work-sheet estimates to quote loan shoppers mortgage rates and closing fees. HUD does not object to lenders using work sheets to give casual shoppers a rough idea of what they’ll pay. But the agency says it wants lenders and loan officers to make clear to customers that work sheets are not good-faith estimates, and they are not guaranteed.

At the meeting with major lenders, HUD Deputy Assistant Secretary Vicki Bott warned that under no circumstances can work-sheet quotes be issued to a mortgage applicant “in lieu of a GFE.” Once a consumer supplies the essential application information — Social Security number, property address and estimated value, among other data — lenders must issue a binding-cost good-faith estimate.

Also, loan officers cannot refuse to provide a good-faith estimate to an applicant who requests one, nor can they tell applicants that they can receive a GFE only if they commit to moving forward with their company to obtain the mortgage.

“By no means can they say you are bound to me as your lender” following issuance of a cost-guaranteed good-faith estimate, Bott said. Why? Because the whole concept of the revised GFE is to enable home buyers and refinancers to shop intelligently, with confidence in lenders’ estimates.

You can now get cost-guaranteed quotes on a good-faith estimate from one lender, then take them and compare them with GFE quotes from competitors. The new form contains itemized boxes allowing comparison of up to four lenders’ quotes — including interest rates, loan fees, prepayment penalties and total settlement expenses.

The good-faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing — generally the lender’s own loan fees and local transfer taxes — and which fees allow a 10% tolerance for changes higher than the estimate, such as certain title and closing-related services.

Here is how to be a smart mortgage shopper using the new federal rules to your advantage. If you are seriously looking for the best deal and are prepared to supply basic application information, ask for a good-faith estimate by name. If you’re merely shopping for generic rate quotes, work sheets are fine as long as you understand their limitations.

Beware of look-alike ploys and substitutes. Bott told lenders to make sure their work sheets do not “look like a GFE” and that they “be clear [to the consumer] that they are not GFEs.”

Some work sheets that have been used by lenders since Jan. 1 resemble good-faith estimates but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the work sheet “is not a GFE,” but the typeface is so small it’s barely legible.

Finally, be aware that federal law requires that a good-faith estimate be issued within three days of any application.

Short-Sale standards could help troubled homeowners

Bravo! Standardizing the short sale process is a fantastic move…

What’s missing from this proposal is requiring that agents be qualified to work in the Short Sale arena. These transactions are much more problematic and time consuming then a standard sale and require an entirely new skill set.

There are agents, with short sale listing who probably shouldn’t have a real estate license and yet they are representing owners in dire straits, where time is of the essence and they (the agent) are all that stands between a successful short sale and foreclosure.

When one or the other is the only option, there’s a big difference. The credit score hit alone is at least a couple hundred points higher, foreclosure verses short sale and a foreclosure stays on your record for a minimum of 7 years verses just a couple with a short sale. There are other issues as well.

If you’ve followed the content I’ve posted recently, you’ll probably agree that we need to assure that more of this “pre-foreclosure” property is successfully marketed. Perhaps the holders of these second liens will need to decide between $3,000 guarantee and the prospect of pursuing more money, over time by legal means. We all know who end up with the lion share in that scenario.

In the end, if we can cut the number of foreclosures then it’s a win. The banks do not need more property and the short sale process needs to be less of a hassle with a higher rate of success. As someone focusing more and more on short sales, parameters and timeline are welcomed.

Obama’s standardized short-sale plan could help troubled homeowners

The Los Angeles Times
By Kenneth R. Harney
December 13, 2009

Reporting from Washington – If you’re in trouble on your mortgage and can’t get a loan modification, check out the Obama administration’s standardized short-sale plan that’s scheduled to roll out in the next several months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has traditionally been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property. Often a short sale is the last alternative to foreclosure available to distressed homeowners and banks. Say you’ve lost your job and fallen behind on mortgage payments. With little or no income, you can’t qualify for a modification program.

In this situation — grim as it is — your best move may be to see whether your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not. First, the bank needs to be convinced that a short sale would yield it more money at the bottom line than a foreclosure would.

This usually means you need to bring in a real estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

You’ll also need a buyer for the house — one who’ll pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home equity credit line on the property, you’ll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real estate markets, the second-lien lender may be holding a note that’s worthless in a foreclosure because plummeting property values have wiped out the collateral. Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome in short sales is the fact that banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration’s new streamlining plan. Besides requiring lenders and servicers to use uniform documentation, pre-approved short-sale terms and accelerated turnaround times, the plan provides financial incentives for key players:

* Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs.

* Mortgage servicers can receive $1,000 per case.

* Investors get $1,000.

* Second-lien holders receive up to $3,000 from the sale proceeds.

Even real estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America Corp., said: “We’re very pleased. We welcome any effort to reach standardization for all parties” involved in short sales.

Faith Schwartz, executive director of Hope Now — a Washington-based group representing the country’s largest banks, mortgage servicers, bond investors and consumer counseling organizations — said the plan should bring “uniformity and standards” to a process usually characterized by “mayhem” among the negotiating parties.

Scott Brinkley, a senior vice president for First American Corp., a firm that provides market data for banks, said, “You’re going to see a lot of cooperation” by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., consulting firm, says the $3,000 payment won’t be enough for many second-mortgage lenders. Today they frequently obtain additional short-sale compensation from sellers as the price of their participation — in cash or through promissory notes — far beyond $3,000.

“I’m concerned that that could limit participation” by second-lien holders, Olsen said.

Bottom line for homeowners who might benefit: Don’t have wild expectations, but definitely ask your servicer whether it plans to participate and whether the forthcoming standardized plan for short sales might work for you.

Source: Los Angeles Times