WHAT WERE THE ACTUAL NUMBERS?

The total number of sales for July was 2,527. That number includes 1,628 single-family resale, 769 condo resale, and 130 new home sales. The total number is down 26.2% from June. (Remember the tax credit lapsed.) And it was also down 19.2% from July of ’09. Of course July was when the investors really started cranking last year, and has been busy ever since. In fact, the distribution of sales over price ranges would indicate that the housing market does, in fact, have some legs, somewhere. All price ranges were off in volume, but mostly on the lower end. The higher end was barely off, less than 5%. This means that move up buyers, buyers with cash and ability are staying in the market and they are buying homes.

The actual breakdown is as follows: a) under $400,000 – 1,026 sales b) $400,000 to $500,000 – 404 c) $500,000 to $600,000 – 305 d) $600,000 to $700,000 – 243 e) over $700,000 – 514. Adding up the properties that would qualify for “Jumbo Conforming” loans and you have nearly half the total sales at over 1,000 properties. This would seem to indicate a more robust market than economists would have you believe. Well, its food for thought anyway.

Read more...

TROUBLE SPOTS AND OTHER INTERESTING TIDBITS

Notices of Default grew slightly in July compared with June to 1,462. However to keep things in perspective, let’s remember that it is 50% lower than a year ago. And that speaks as loudly for the positive side of housing, as the slow down in sales may spark negative rumor. The adjustable rate percentage is appropriately low at 8.3% meaning nearly 93 of every 100 loans closed is a fixed rate mortgage. Why not? With rates at below historic rates, and still going down, we find ourselves in a refinance boom, considering how many people have been left out of it due to equity issues. Maybe one of the most telling statistics for the month that validates the money is out there, is that even with FHA supposedly funding way more loans than they want to, the average down payment in Orange County is 19.2% or if you forget stats, 20% conventional loans are happening.

California Association of Realtors has reported that in Orange County a minimum income of $70,670 is needed to afford a starter home at $428,810, slightly below the median price. That means the county has a 54% affordability index right now, a little below the statewide 64%. A reminder of where we came from… the affordability index was 11% in 2006. So, back to the question of half empty or half full… optimist or pessimist? This author believes in the strength of housing, the diversity of an albeit wounded economy, and resilience of all of us together working it out.

Read more...

PRESIDENT SIGNS FEDERAL TAX CREDIT EXTENSION

President Obama signed a bill extending and expanding the Federal Tax Credit for Home
Buyers. The bill now includes current homeowners.

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Read more...

EXPECT SHORT SALES TO COMMAND MORE OF THE SALES IN 2010

Some banks have finally figured out that they can save approximately $40,000 in holding and maintence costs if they allow a property to sell “short” (the sales price is less than the loan or loans owed against it), than if they let it go to foreclosure. There have been many obstacles that have hindered lenders from doing this sooner, namely the various moratoriums against foreclosures, investors that have been unwilling or unable to accept discounted amounts, loan packages with scattered beneficiaries, and the biggest culprit, the borrower attempting to get a loan modification. Expect some of these hindrances to be cleared away in 2010. Many properties have languished for months and months, as homeowners live payment free while negotiating a modification. See the next article for more information on that. Suffice it to say that this process will be streamlined and more short sales will begin to happen. This is good news for the inventory, but will be more of a challenge to close escrow because all the liens, judgments and taxes must be paid or negotiated for a release on this specific property.
(Property taxes are never negotiated; they must be brought current by someone.) These can be very complicated transactions and require skill and knowledge.

Read more...

DON’T BELIEVE EVERYTHING YOU READ ABOUT THE REAL ESTATE MARKET

Since last month’s issue, a lot has been said and written about the real estate market we’re in currently. “Sales are up,” “Sales are down,” “The market is jittery again,” etc. So what is the truth? Dataquick published an article on their website September 15th reporting that, “Home sales dipped in Southern California last month, the result of a thinning of properties (available) and financial uncertainty among potential home buyers.” This column begs to differ. The two problems with the sales numbers they cite are sort of mutually exclusive. It’s difficult to have a thinning inventory, because properties are flying off the shelves, and have buyer hesitancy. Actually, talk to those of us in the business and we will tell you that it is not unusual for a property at or below the median price (more on that in another article), to have 25 to 50 offers on it. No, there is no joke or punch line here. The truth is we are in an inverted or, if you prefer, a counter intuitive market. We are in a buyers market because of price, but definitely with a decidedly “seller’s flair” in that we are short of inventory.
Expect that to change by first or second quarter of 2010. The prediction here is that we will see inventory of real estate owned properties, bank owned properties in other words, to climb 300% to 400%. There is no need to panic. There is little doubt that these properties will be absorbed by the demand, no problem. There is also an industry sentiment that the banks learned their lesson in regards to flooding the market with too much inventory, so expect these problem properties to be released in waves.
There have been two differing attitudes discussed by the media in past weeks. The first is by economists who study all factors in a recession and in the general economy. Their belief, at least for the Chapman Report and the Fed, is that the recession has bottomed and we can expect a faltering and shaky recovery, barely noticeable next year.
But there are naysayers, who adamantly exclaim that we are no where near recovery. It is true that jobs came out weaker than expected, consumer confidence took a dip and unemployment hit a high for California since 1967. We have to face the facts. But it is also true that many people did not climb on the loan frenzy bandwagon, and they did not buy a home at sky high prices and would like to do so now. It is also true that some businesses are beginning to hire and some companies are thriving. Perhaps we see what we want to see, but real estate activity seems to be a bright spot, at least right now, without falsifying itself to spur that activity. These are real prices and real loans transpiring right now, no smoke and mirrors.

Read more...