Reasons to Buy Real Estate Now

The “Three Reasons” below is a repost from the pages of REALTOR Magazine online, but essentially is what I’ve been saying for weeks, nay months!

The tax credits expired and everyone climbed under a rock! For a measly $8 to $18K in conditional tax credits buyers were jumping through hoops like they were handing out bars of gold. Do the math on 4% interest over 30 years on a distressed property that you bought for 10% below market. . .

So STOP listening to all the fearmongers and their media puppets screaming that the sky is falling. They’ve all got agendas. Be smart, do your homework and if it makes sense buy a home.

As a point of reference, interest rates on 30-year fixed conventional mortgages went to double digits in late 1978 and peaked at nearly 19% in late 1981. It wasn’t until early 1986 that rates dipped (briefly) below 10% again and were not permanently in single numbers until late 1990. In November of last year (2009) they were right at or just below 5%.

Three Reasons to Buy a Home Now

Stocks are up 50 percent from the March 2009 bottom. Some commodities have risen dramatically. The only asset class left in the cellar is real estate, says Michael Murphy, editor of the New World Investor stock newsletter.

As a result, Murphy is advising investors to buy now for these three reasons:

Desperate sellers: Both home owners and lenders are eager to unload a flood of foreclosed and underwater properties. Buyers with the patience to push through these complex deals can save a bundle.

Little competition: Because most people don’t have what it takes to negotiate their way through short sales and REOs, patient investors are winners.

Low rates: Mortgage rates are at their lowest level in 40 years. If you believe inflation is inevitable, lock in now.

Source: MarketWatch, Michael Murphy (08/19/2010)

Posted at REALTOR Magazine online

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.

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

SOCAL Sales Up 08 to 09, while Prices Level or Fall Off

With the Federal Tax Credit deadline passing, April 30th there has been a very noticeable slow down. For example combined South Bay properties pending (reported start of Escrow April vs. May) were down to 799 in May compared to 1009 in April. Inventory, however has continued to climb from 2674 listed in April, 2845 in May and 3084 reported listed in June. Average price per square foot for South Bay, as a whole is at the lowest level since February however that covers a wide range of prices and demographics. As I continue to say, interest rates (whether buying or refinancing) are the highlight. Falling or level pricing and increased inventory is another.

Please contact me for numbers and prices on specific areas, if you’re considering buying, selling or leasing and especially if you believe you’re upside-down on your loan and fear you may lose your home as there are alternatives to foreclosure.

Southland home sales edge up, prices level off

July 13, 2010

Southern California’s housing market continued its slow crawl toward normalcy in June as sales volume rose and the median price slipped back a notch from May, but remained 13 percent higher than a year ago. Red-hot, fire-sale deals continued to give way to mere bargains in the lower- cost inland markets where first-time buyers and investors have competed fiercely, a real estate information service reported.

A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for June 2009, according to MDA DataQuick of San Diego.

The sales count was the highest since July last year when 24,104 homes were sold. It was the strongest month of June since 2006 when 31,602 homes sold. The average June since 1988 has had 28,086 sales.

“The market was wildly out of kilter a year ago, now it’s just somewhat out of kilter. We’re still seeing lots of bargain hunting, and we’re not seeing much discretionary buying. The single-biggest issue is still mortgage financing. Rates may be at record lows, but that doesn’t mean much if the lender won’t qualify you,” said John Walsh, MDA DataQuick president.

“Still, more money was spent last month buying homes in Southern California than in the past two years, and more money was loaned. The tax credits had something to do with that, though it’s not clear exactly how much. With the impact of the credits fading fast, the next few months will tell us a lot.”

The median price paid for a Southland home was $300,000 last month. That was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000 for June 2009. The low point of the current cycle was $247,000 in April 2009, 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 33.0 percent of the resale market last month, down from 33.9 percent in May, and down from 45.3 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 39.0 percent of all mortgages used to purchase homes in June.

Last month 20.8 percent of all sales were for $500,000 or more, compared with 22.2 percent in May and 19.3 percent a year ago. Zip codes in the top one-third of the Southland housing market, based on historical prices, accounted for 29.6 percent of existing single-family house sales last month, down from 31.0 percent in May but up from 27.8 percent a year ago. Over the last decade those high-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, and the overall market recovery more robust, if adjustable-rate mortgages (ARMs) and “jumbo” loans were more available. Both have become much more difficult to obtain since the August 2007 credit crisis.

While 43.9 percent of all Southland purchase mortgages since 2000 have been ARMs, it was 6.6 percent last month, up from 6.5 percent in May and up from 2.7 percent in June last year.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 17.3 percent of last month’s purchase lending, up from 17.2 percent in May and from 14.9 percent in June 2009. Before the credit crisis, jumbos accounted for 40 percent of the market.

Absentee buyers – mostly investors and some second-home purchasers – bought 19.7 percent of the homes sold in June, 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 23.5 percent of June sales, paying a median $213,000. In February this year cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.1 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 six-month period was 3.4 percent, while a year ago it was 1.9 percent. Last month it varied from as little as 3.0 percent in Orange and San Diego counties to as much as 3.8 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 $1,251 last month, down from $1,293 for May, and up from $1,193 for June a year ago. Adjusted for inflation, current payments are 44.3 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 54.4 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 low, down payment sizes are stable, and non-owner occupied buying is above- average, MDA DataQuick reported.

Source: DataQuick

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.

Good Schools equal Property Value and Stability

Palos Verdes Peninsula Unified and our excellent South Bay Beach Cities school districts failed to get a shout-out in this article, but we all know the significance of good schools and their correlation to property value and stability…

Good Schools, Bad Real Estate
Despite the housing slump, house hunting in good school districts frustrates parents who often have to settle for less house.

The Wall Street Journal
June 25, 2010 by Sarah Max

Oh, the sacrifices parents make.

Kiely and John Adams began their house hunt this spring with grand plans to upgrade from their small home in Cary, N.C., to a larger, four-bedroom house—preferably with an office and a bonus room—about 25 miles away in Chapel Hill, where Kiely plans on starting a Ph.D. program next fall.

They could have gotten all that and more for their $415,000 budget if they kept their search on the outskirts of Chapel Hill. But, determined to stay within the boundaries of Chapel Hill’s highly-regarded school district, the parents of 5-year-old twins, Megan and Bevin, and 4-year-old Sean trudged ahead in what they dubbed “an exercise in compromise.” Even when they did find a house that showed promise, it was usually snapped up before they could take a closer look. “Most houses seemed to come and go, come and go,” Mr. Adams says.

It’s supposed to be a buyer’s market. Yet, for parents determined to buy in areas associated with top schools, those bargains may be harder to come by. When housing markets go south, “areas with exceptional schools tend to hold their value better than the market overall,” says Michael Sklarz, president of Collateral Analytics, a Honolulu-based firm that specializes in real estate data analysis.

In Chapel Hill, where the Adams family was looking, the average single-family home price, based on price per square foot, has declined about 4.8% since the market peaked in 2007, according to Collateral Analytics, but houses there still command about a 48% premium, per square foot, to homes in the Raleigh-Cary metro area.

In other parts the country, home prices have dropped in areas with good schools, but the declines are typically nowhere near the levels in their surrounding metro areas. In Irvine, Calif., a city that regularly gets national attention for its quality schools, average price per square foot has fallen 18% since its 2006 peak, but prices in the greater metro area surrounding Irvine fell 33%. The same goes for Edina, Minn., where prices per square foot are down about 14% since their peak, versus 27% for the greater Minneapolis area. And in the brainy town of Andover, Mass., prices are down just 4%, versus more than 16% for the Boston metro division.

There are several factors at play, says Mr. Sklarz. Areas with good schools tend to be more affluent and were less susceptible to the sub-prime mortgage debacle so saw fewer foreclosures. What’s more, homes associated with great schools generally sell faster, in good markets and bad.

All of this comes as no surprise to the real estate agents who work with education-obsessed parents. “Schools have a huge impact on home values,” says Kathy Beacham, a real estate broker in Raleigh. When schools in her own well-to-do neighborhood were redistricted three years ago, the value of her million-dollar home dropped more than $150,000. “A good education has always been important but I don’t remember looking at the numbers like parents do today,” she says.

Then again, the numbers have never been so widely available. State assessments, independent ratings from websites like GreatSchools and Education.com and annual magazine rankings of America’s top high schools have not only made it easy for parents to factor school test scores and parent-teacher ratios into their buying decisions, they’ve cemented the relationship between home prices and school quality.

When Florida rolled out its statewide grading system in 1999, the real estate market took note. According to research by David Figlio, who is now a professor of education, social policy and economics at Northwestern University, an A-rated school in Gainesville added about $10,000 to the value of a home there versus a B school.

Once a school is graded, the gap often grows. Strong ratings lead to better community support, which in turn leads to better schools. Today, the difference between an A school and B school might easily be $50,000 on a $300,000 house, he says.

That phenomenon isn’t lost on residents of Bellevue, Wash., a Seattle suburb that is home to some of the best schools in the state. “I don’t think there’s ever been a school levy on the ballot here that’s been turned down,” says broker Michael Orbino. Even residents who don’t have school-age children tend to stand behind the schools. It’s not altruism; it’s economics. All things being equal, homes in the Bellevue school district fetch as much as a 15% premium to those just outside of it, he says.

“But there’s more to it than that,” says Mr. Orbino. “Because the land is worth so much more in Bellevue, builders tend to build more expensive homes here,” making the school district that much more expensive to begin with. By Mr. Orbino’s estimate, the prices for single-family homes are down about 10% since the market peak. “But it isn’t a catch-all,” he says. Prices for ultra-luxury homes and condos, which generally aren’t influenced by schools, are down 30% to 40%, he says. So while prices per square foot in Bellevue have fallen slightly more than the Seattle market overall, prices for more family-friendly abodes haven’t necessarily seen the same declines.

The stabilizing effect of good schools is welcome news for those who already own property in school boundaries, but it makes it tough for parents to trade up to better homes. John and Kiely Adams considered themselves lucky to have found a three-bedroom home in a Chapel Hill neighborhood they liked and at a price in their budget. But, alas, they were forced to back out of the deal when their current home came up short in the appraisal. With their daughters’ first day of kindergarten fast approaching, the couple will stay put for now and start the process over again next spring. “We don’t want them to start kindergarten only to yank them out two months later,” says Mr. Adams.

Left with few other options, some parents get creative. Bellevue school administrators have seen all kinds of tactics for skirting the district’s policy that students spend at least four nights a week within boundary lines. Common ploys include using a family member’s address or taking over a resident’s utility bill, one of the documents used as proof of residency. The school district has uncovered 35 cases of enrollment fraud this year alone. Other families jump school boundaries by spending four nights a week in a small apartment and going home to a bigger house in another town for the weekends.

Two years ago, Daniel and Dee Shin used an inheritance from Mr. Shin’s father to pay $410,000 for the “cheapest house they could afford” in Bellevue for the sole purpose of securing a spot in the school district for their then 11-year-old daughter, Kayla. The 900-square-foot circa-1955 rambler is “beat up and not insulated very well,” says Mr. Shin, adding that he assumed that paying property taxes on the house would be enough to satisfy the school district’s residency requirements even if the family actually resided in a 2,326-square-foot, four-bedroom home in the nearby town of Renton. Their new neighbors in Bellevue, evidently, didn’t see it that way. They reported the Shins to the school district, and the district gave them an ultimatum: move into the Bellevue district by the time Kayla registers for high school in February, or start the following school year in another district.

The decision was clear for the Shins. They plan to spend the summer insulating the Bellevue home and doing their best to make it livable. Come January, they’ll move into that house, and their extended family will move into the house in Renton.

The Shins considered just sending Kayla to a private school, but Mr. Shins says that suggestion triggered “on demand tears” from Kayla, who doesn’t relish the idea of going to a different high school than her middle-school pals. After all the trouble the couple went through to get Kayla into Bellevue schools, they’re determined to see her graduate from Newport High School, which, Mr. Shin is quick to point out, is consistently ranked among the best in the country.

As the father of three children ages 11, 14 and 16, Northwestern’s Mr. Figlio understands the dilemma parents face. When he and his family relocated from Gainesville, Fla., to Evanston, Ill., in 2008, Mr. Figlio vetted the middle schools before making a decision about where exactly he and his family would live. For parents struggling with how to get their kids into the “best” schools at a price they can afford, he recommends considering test scores, state ratings and the like—but not getting too hung up on enrolling your child in an A+ school at all costs when a B+ school might actually be a better fit, academically and financially.

Source: The Wall Street Journal, view online at Good Schools, Bad Real Estate

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.

South Bay Home Sales/Prices April 2009 to 2010

No doubt it is difficult to be too serious about the percentage of loss/gain when looking at such a limited number of sales (per city), as one high or low number can dramatically influence the overall. The devil, as they say is in the details…

Below are numbers (from DataQuick) on April 2010 home sales as compared to April 2009. Data includes homes sold and the percentage of change based on median price 2009 vs 2010. Unfortunately there were no numbers in the report for Palos Verdes Estates, Rolling Hills or Rolling Hills Estates.

Entire report at DQNews – California Home Sale Price Medians by County and City, Home Sales Recorded in April 2010

Los Angeles County  6,334  +9.00%

El Segundo  15  +12.46%
Gardena  31  +10.29%
Harbor City  18  +21.20%
Hawthorne  37  +15.24%
Hermosa Bch  18  -26.54%
Lomita  11  -3.87%
Manhattan Bch  40  +11.72%
Rancho PV  39  +4.38%
Redondo Bch  77  +1.98%
Torrance  106  +18.41%

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.

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

Los Angeles-area foreclosure rate up in October

Along the lines of what I’ve been posting, we’re all just passengers on this one… see LA Times piece “Los Angeles-area foreclosure rate increases in October” below.

The bright side in South Bay, Palos Verdes Peninsula and the beach cities is that more-than-likely, as with the last round we will not experience the same degree of depreciation (if any) as areas inland or across the country.

Inventory: Active/Sold

On the Palos Verdes Peninsula 90274 and 90275, inventory is currently low with 253 properties (SFRs, condos and town houses) available for sale. Per the MLS, there have been 74 closed sales November 1st through today (16 since December 1).

In the beach cities (Manhattan Beach 90266, Hermosa Beach 90254, South Redondo Beach 90277 and the Hollywood Riviera) there are 364 active listings and 126 sales since the 1st of November (39 so far in December).

Torrance (not including the Hollywood Riviera) 91 listed currently, 76 sold November 1 to present (19 of those since December 1st).

If you’d like numbers on additional areas, please send a request via email.

The slow-down in December is expected, interest rates (see below) are still outstanding and although prices in general may drop further during 2010 (most likely during Q1/Q2) the best properties are still selling.

Rates as of Friday, December 11, 2009

Conforming 30 Year Fixed
Rate Disc. Points APR
4.625% 0.750% 4.813% Details

Conforming Jumbo 30 Yr Fixed
Rate Disc. Points APR
4.875% 0.750% 5.049% Details

FHA 30 Yr Fixed
Rate Disc. Points APR
4.750% 0.608% 5.077% Details

FHA Jumbo 30 Yr Fixed
Rate Disc. Points APR
4.875% 0.950% 5.216% Details

Rates complements of: Andre Hemmersbach
American/California Financial (310) 713-3100

Los Angeles-area foreclosure rate increases in October
December 10, 2009 2:40 pm

While home prices in the Los Angeles area have steadily increased in recent months, indicating strengthening in the housing market, more and more people are finding themselves falling behind on their mortgage payments, according to a report out today.

In the Los Angeles metro area, the rate of foreclosure among outstanding mortgage loans was 3.69% in October, compared with 1.75% for the same month a year earlier. That compares with a 3% national foreclosure rate, according to data released by First American CoreLogic, which tracks the mortgage market.

Delinquent loans 90 days or more past due constituted 10.9% of all mortgage loans in the Los Angeles area, up from 5.86% during the same month the year before.

Whether a new wave of foreclosures will hit the market next year remains a matter of debate among experts. Some believe a glut of properties could flood in, pushing down prices, while others argue that lenders and the federal government are both determined to keep such a situation from occurring.

Source: L.A. Times by Alejandro Lazo
Photo: Associated Press