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California Home Prices Finally Rise, According to California Association of Realtors

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California home prices in March recorded their first year-over-year price increase for 16 months, the California Association of Realtors reported Monday.

March’s median price for a resale home reached $286,550 , which signified a 1.6 percent increase from March 2011′s pricing.

Even the Inland Empire, where analysts often say the economy is straggling behind its coastal neighbors, saw prices strengthen.

Inland Empire median prices climbed 3.9 percent over March of last year levels to $179,500, with most of the increase being generated by higher prices in Riverside County.

The question, of course, is whether the March data is the beginning of a trend in rebounding prices, or just a one-month break from falling

prices.

“I’d like to see what happens in the next three or four months,” said Ontario-based agent Victor Quiroz, noting that he sees markets in the western end of San Bernardino County “crawling back.”

Quiroz works for The Mulhearn Group’s office of Prudential California Realty and said he is cautiously optimistic the past month’s jump in California housing prices may signal a stronger market through the summer.

But one month’s worth of numbers is not enough to say any development is a trend, and the threat of a “shadow inventory” of soon-to-be foreclosed homes continues to haunt housing markets.

RealtyTrac, an Irvine-based foreclosure listing firm has reported U.S. foreclosures during the first three months of this year hit their lowest point since the end of 2007.

The Irvine-based firm cautioned, however, that their analysts expect another wave offoreclosures as banks finish reforms of faulty foreclosure proceedings and attempt to relieve themselves of non-paying mortgages.

The prospect of additional foreclosures or short sales is a concern to people like Darrell Gomez, a real estate agent at Rancho Cucamonga-based G5 Realty Group, who expects that many people who are struggling to stay in their homes will not be successful.

“(Loan) modifications aren’t really helping anybody. It’s a temporary Band-Aid,” Gomez said.

But even as the many area homeowners continue to struggle, houses are selling in the region.

Inland Empire sales volumes for March rose 1.7 percent on a year-over-year basis, even as statewide sales volumes fell 2.3 percent.

The Realtors’ numbers, which do not include newly-built homes, also show the San Bernardino and Riverside counties have a little less than four months’ worth of resale homes on the market.

In March 2011, Realtors reported about five months’ worth of inventory.

Less inventory generally means higher prices, and Gomez said buyers snapping up inland homes tend to be investors stockpiling properties at the low end of the market as well as traditional buyers seeking bargains.

“A lot of these people are trying to piggyback on these lowrates,” he said.

As of Thursday, the national average rate for a 30-year fixed mortgage was only 3.88 percent, according to Freddie Mac.

Darryl Spellacy, owner of San Bernardino-based Spellacy and Associates Realtors, said the idea of a “shadow inventory” is still something to be concerned about, but also doubts banks will unleash a torrent of foreclosures.

“I think the banks have realized it’s crazy to do a foreclosure. It’s better to do a short sale,” Spellacy said.

A short sale takes place when a home is sold for less than the amount of money a homeowner owes on his or her mortgage.

Banks would be wiserto pursue short sales since the process allows someone to live in the house, rather than leave an abandoned house to the mercy of thieves and transients, Spellacy said.

On the whole, Spellacy said he thinks the San Bernardino market has reached bottom and is ready to rebound, given that it’s possible to spend less on a mortgage payment than rent.

One of Spellacy’s listings, a three-bedroom home on Dogwood Street in northeastern San Bernardino, is on the market for $115,000 and a buyer could end up with monthly payments around $800.

An average three-bedroom apartment in the San Bernardino area would rent for nearly $1,200 per month, according to the USC Casden Forecast.

 

 

 

Source:  Andrew Edwards San Bernardino County Sun, Calif.

Will Short Sales Save the Housing Market

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Foreclosures are down and short sales are up, but what does this mean for the real estate market as a whole?

The answer depends on who you ask.

But first, some background: Short sales occur when a lender agrees to sell a home for less than what is owed on the mortgage. The lender forgives the difference, and the borrower unloads a home they can’t afford.

In an effort to avoid adding to their already large portfolios of bank-owned homes (REOs), lenders are beginning to seriously consider short sales as an alternative to foreclosure. According to a Bloomberg report released Tuesday, banks including Wells Fargo and JPMorgan Chase last year started giving away cash to select homeowners who agreed to do a short sale instead of allowing the house to fall into foreclosure.

Experts at the National Association of Realtors (NAR) hear the short sale process is becoming more streamlined, which is good news for buyers and lenders. This more organized process means short sales can be unloaded quickly — relative to foreclosures — instead of sitting on the market for a long period of time.

(Typically homes spend more than a year from the date of the first missed payment until the gavel falls on the foreclosure sale, but in places like New York, a bank can take nearly 3 years before foreclosing on a property.)

Like foreclosures, short sales can hurt home prices in the neighborhood. According to NAR, short sales typically sold for 17 percent below market value in February. That’s a steep price cut, but less than the average 22 percent discount for foreclosure sales.

Given that short sales typically recover more money for lenders, you’d think that short sales would be the preferred way of unloading distressed property. They don’t add to banks’ REO inventory, they don’t sit on the market as long as foreclosures and the impact on home prices is not as substantial as that of a foreclosure.

If foreclosures don’t sell at auction they become bank-owned property, or REOs

But you’d be wrong. Since the housing bubble burst, the sale of foreclosed homes has far outpaced short sales. But that is beginning to change. On Tuesday, Bloomberg reported data from Lender Processing Services (LPS) which indicated short sales had surpassed foreclosure sales for the first time, by 4.2 percent in January — the most recent data available.

Jonathon Weiner, a vice president in the applied analytics division of LPS, told Bloomberg “It’s a fairly recent phenomenon that short sales have been increasing.” Short sales should be the dominant way of disposing of distressed property, Weiner said, because they can be processed quicker than foreclosures.

What does this mean for the real estate market?

An increase in short sales could mean that home values will fall further, faster. Weiner tells Bloomberg LPS’ “baseline scenario is home prices will hit bottom by the end of this year,” based on the fact that short sales now outpace foreclosures.

But not all analysts agree we’ve hit that threshold.

Walter Molony, a spokesman for NAR, said in an email that although NAR data does show an uptick in short sales for February, foreclosure sales still dominate the distressed market. Short sales rose to 14 percent market share month-over-month in February, but foreclosure/REO sales still lead at 20 percent. Moreover, the recently approved $26 billion foreclosure settlement means more than a million additional foreclosures are about to be pushed through the pipeline.

Why the disparity of data? Molony attributes the difference in findings to methodology and the measurement period. Home price, foreclosure and short sale data for March is set to be released this week. These data sets may shed more light on whether short sales are indeed picking up and if they are surpassing the number of foreclosures sold, even if it turns out to be temporary.

Regardless of whether or not they’re outpacing the sale of foreclosures, the uptick in short sales could signal a positive turn in housing crisis.

Short term, more short sales mean home values will remain low, or fall further. But over time, plowing through short sales could mean we’ll see fewer homes wind up in foreclosure or as REOs, which would push down home prices even more dramatically. At best, we avoid another big wave of foreclosures that would send home prices spiraling down even further, something no one wants to see, least of all homeowners who pay their mortgage on time each month.

Audit faults execution of program to aid homeowners

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A $7.6-billion federal program to help homeowners avert foreclosure set too few goals for the 18 participating states and didn’t do enough to make sure the nation’s biggest banks were on board, according to a government audit.

The audit criticized the Treasury Department for rolling out the Hardest Hit Fund with no advance notice in February 2010, then leaving the states to implement it on their own. The report by a special inspector general pointed out that it took seven months before the government met with the states, banks and mortgage giants Freddie Mac and Fannie Mae to make sure everyone was participating in the program.

 

 

Source: www.latimes.com

Buying a Foreclosed Property: What Homeowners Need to Know

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*Note: with so many distressed and bank owned homes out there you need an expert agent to help guide you through the maze.  360 Realty has the speciality agents you need when it comes to buying these homes.  Call us today! 800-399-9659

The housing market may still be struggling to gain solid footing—low interest rates and significantly-discounted prices make it a great time to purchase a home in most regions.

Housing prices are still below their peak in 2006, and another wave of foreclosed properties is expected to hit the housing market this year as banks unload their backlog—offering homes at low prices.

“Home prices will continue to be very fragile,” says Daren Blomquist, vice president at RealtyTrac. “We don’t expect prices to fall another 20% to 30%, but there won’t be a recovery until the distressed inventory has cleared.”

RealtyTrac estimates that home prices will start to increase once banks clear their 17-month inventory of foreclosed properties. The national average of prices for foreclosed (real estate owned or bank-owned) properties at $152,465 continues to be lower than the sales price for all properties (including foreclosure and non-foreclosure) at $203,779, according to RealtyTrac.

Areas experiencing the most discounts on housing include Philadelphia, St. Louis, Chicago, San Francisco and Atlanta, according to RealtyTrac. Washington, D.C. and New York have shown relative strength and have home prices at least 50% above 2000 price levels, but still below their peak.

While some housing markets started to recover, home prices started to fall again in all markets last quarter, according to Maureen Maitland, vice president at Standard & Poor’s Indices. “On a nominal basis, housing prices are the same as those in 2002 and 2003, having declined from their peak in 2006 due to the high number of foreclosures.”

According to the National Association of Realtors, all cash sales accounted for 33% of real estate sales in February.

“In February, 20% of closed sales were of foreclosures– they’ve been at comparable levels for some time,” says Walter Molony, senior public affairs specialist at the National Association of Realtors. “There’s competition in most market areas between cash investors and first-time buyers, with reports of multiple bidding on discounted foreclosures becoming more common.”

Nevada, California, and Arizona experienced the highest number of foreclosure filings at the end of February, according to RealtyTrac. They had between two and three times more than the nation, as one in every 637 homes in the nation, or 0.16% of homes, received a foreclosure filing, a notice that the foreclosure process will begin.

The number of foreclosure filings in a state can translate to that state having the highest percentage of foreclosure sales, as Nevada had 56%, California had 43%, and Georgia had 39% of all sales being foreclosed homes during the fourth quarter of 2011, according to RealtyTrac.

How to Finance a Foreclosed PropertyBuyers of foreclosed homes can take advantage of special programs offered by the Department of Housing and Urban Development when borrowing money. Private lenders fund Federal Housing Administration Section 203(k) loans that have mortgage insurance provided by HUD. Borrowers can take advantage of a 3.5% down payment and use a portion of loan proceeds to rehabilitate an owner-occupied house. When the buyer plans to rehabilitate a property, they can borrow up to an additional 10% of the house value as determined by appraisals and construction estimates.

Buyers planning to finance purchase with a conventional loan can take advantage of low interest rates. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was most recently at 4.08%, up from 3.89% in February, according to Freddie Mac.

When buying in these markets, experts recommend doing your homework. “Each individual area has many of its own individual markets,” says Erin O’Connor, real estate agent with RE/MAX Excalibur. “It’s crucial for homebuyers to become educated on their real estate market because it can be wildly different from the real estate market a few miles away and national averages. In areas where foreclosure inventories are low, the price gaps between a distressed sale, whether an REO or short sale, and a regular sale are rapidly closing.”

There are still pockets of the country that are slower to rebound. “This is an opportunity to buy low,” says Blomquist. “You won’t see your property value skyrocket overnight, but, in the long-term, you’re setting yourself up for a great investment. The property has a built-in discount because it’s a distressed sale.” When looking at a foreclosed property, he advises potential buyers to remember that the basic real estate mantra still applies—location, location, location!

Source: http://www.foxbusiness.com Written by Andrea Murad

Important HAFA Program Changes

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The federal government’s flagship HAFA short sale program continues to evolve in hopes of more effectively addressing the needs of distressed homeowners for whom continued ownership is not longer a realistic option.  The most recent Supplemental Directive 12-02 was released on March 9, 2012; loan servicers are instructed to implement program changes effective immediately.  They include:

  •  There are no longer any occupancy requirements for HAFA eligibility.
    Previously, HAFA required that the property be occupied as the borrower’s primary residence at some point within the prior 12 months.
  • The amount a servicer may authorize the settlement agent to pay from gross proceeds to subordinate mortgage holder(s) in exchange for a lien release and full release of borrower liability is increased from $6,000 to $8,500.
  • Borrower relocation incentives will be limited to HAFA short sales or Deed-in-Lieu transactions where the property is occupied by a borrower or a tenant at the time of the Short Sale Agreement or DIL Agreement and who will be required to vacate the property as a condition of the sale or DIL.
  • Borrowers may now elect to remain current on the loan during the term of the Short Sale Agreement or DIL Agreement.
  • Credit bureau reporting of HAFA transactions are amended as follows:
    • If the real estate is sold for less than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:  Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.
  • The deadline for HAFA has been extended. A borrower now has until December 31, 2013 to submit a Short Sale Agreement or a written request for a consideration for a Short Sale Agreement to be eligible for HAFA.

The stated intention of the program updates is to expand the availability of HAFA’s benefits to more struggling homeowners.  Certainly, the increase in the amount of gross proceeds available to settle junior liens should help.  This has been an area of particular concern, most especially in California where the implementation in 2011 of SB 457 barred
lien holders from reserving collection rights following short sales or, alternatively, from conditioning short sale approval from additional seller contributions.  Of course, as with all previous program changes, the proof will be in the pudding.  Stay tuned….

 

 

 

 

Source: http://www.brianaripley.com/2012/03/26/important-hafa-program-changes-announced/

 

What is a Deed in Lieu?

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A Deed in Lieu of foreclosure (DIL) is an option in which a mortgagor (or a home owner) voluntarily deeds the subject property to the lender in exchange for a release from all obligations under the mortgage. A DIL of foreclosure might not be accepted from mortgagors who can financially make their mortgage payments. Often times, this can be as damaging to your credit as a foreclosure and should be considered a last resort (in most cases)

“there are several disadvantages to a deed in lieu, most importantly, it is almost as bad on your credit as a foreclosure or bankruptcy, a short sale can be viewed as a much better option in terms of your credit

“it is considerably more difficult to qualify for a deed in lieu if you have a 2nd, 3rd..mortgage

What are the benefits of a deed in lieu?

Many believe that a deed in lieu of foreclosure looks better on your credit report than does a foreclosure or bankruptcy. In addition, unlike in the short sale situation, you do not necessarily have to take responsibility for selling your house (you may end up simply handing over title and then letting the lender sell the house).

Are there disadvantages to a deed in lieu?

There are several disadvantages to a deed in lieu. If you have second or third mortgages, home equity loans, or tax liens against your property, you probably cannot qualify for a deed in lieu.

In addition, getting a lender to accept a deed in lieu of foreclosure is difficult in the current market. Banks are not in the real estate business, most lenders want cash, not real estate — especially if they own hundreds of other foreclosed properties which is a likely scenario these days. On the other hand, the bank might think it better to accept a deed in lieu rather than drag out the lengthy foreclosure process and incur more expenses. Beware of tax consequences; a deed in lieu may generate unwelcome taxable income based on the amount of your “forgiven debt.”

 

 

 

Source: http://www.sandiegohopenow.com

Home Prices Hit New Lows

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A key gauge of home prices in the nation’s largest cities fell in December to its lowest level since the start of the housing crisis in mid-2006.

The Standard & Poor’s/Case-Shiller index of 20 American cities fell 1.1% from November to December and 4% from December 2010. Eighteen out of the 20 cities tracked by the index posted declines and Atlanta, Las Vegas, Seattle and Tampa,Fla., each saw average home prices hit new lows.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” said David M. Blitzer, chairman of the index committee at S&P Indices. “While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.”

All of the California cities in the index posted declines from the prior month. Los Angeles, San Diego and San Francisco fell 1.1%, 0.7% and 0.8%, respectively. The drop continues a slide that began last year as sales weakened and the jobs picture remained bleak.

In December, Miami and Phoenix were the only two metro areas that posted monthly gains, up 0.2% and 0.8%, respectively.

A separate, national index published quarterly by S&P Case Shiller, also released Tuesday, showed deterioration in home values. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010.

The steep drops indicate that the housing market likely began 2012 in decline, as the broader economic recovery was not enough to lift home values. Home prices are now below their low hit in April 2009 — reached during the depths of the financial crisis.

[Updated 7:53 a.m., Feb. 28: Robert Shiller, a professor at Yale University and co-creator of the index, said in a conference call Tuesday he was slightly more optimistic about housing’s future than he was a year ago, “but not that optimistic.”

“We are in a situation where a lot of people think, long-term, this is great, home prices are low,” Shiller said. “But somehow they think in the short-run … we are still in a holding pattern.”

Karl E. Case, the other co-creator of the index and a professor at Wellesley College, said he was more optimistic that the housing market would begin to improve given that, according to Census data, more U.S. households are being created, meaning there will be more demand for housing. If demand remains high — and supply relatively low — the housing market should begin to improve, he said.

“There are some bright spots,” he said.

 

 

Source: www.latimes.com By Alejandro Lazo

Housing’s Dilemma: There’s Not Enough To Buy

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Last week I wrote about how fewer foreclosures up for sale in the housing market could actually mean lower overall home prices.

My reasoning is that foreclosures are in high demand right now, and organic, non-distressed sellers are still not coming back to the market. Without the foreclosures, there really is no competitive market.That may sound counter-intuitive, given that we always talk about how distressed sales deflate comparable home prices.

I hate to say, “I told you so,” but … today the National Association of Realtors reported that inventories of homes for sale in January fell to 2.31 million,the lowest supply since March, 2005. Rather than pushing home prices higher, they are still down, 2 percent, from a year ago.

The Realtors noted that 35 percent of all home sales were distressed (either foreclosures or short sales). Investor demand is high, they say, even claiming that a recent program initiated to sell the foreclosures of  Fannie Mae and Freddie Mac in bulk to investors is unnecessary.

“Based on the swiftness of how REO (bank-owned) properties are moving in the market, it may not be needed,” said NAR chief economist Lawrence Yun. He did admit that such a program would also take away thousands of potential listings from Realtors.

Banks are ramping up the repossessions, as the so-called “Robo-signing” foreclosure paperwork scandal is fading and a settlement with federal and state governments has been reached. But they are not going to flood the market with these properties, for fear of losing pricing power. That’s why we are now starting to see bidding wars in some of the hottest distressed markets.

Sales of existing homes in the West, which comprise the hardest hit states of Arizona, Nevada and California, jumped 8 percent in January month to month. More than half of sales out West are foreclosures and short sales. Demand is definitely rising, but only on the lower end.

If you look at sales distribution by price, 69.9 percent of homes sold in November were under $250,000. That moved up to 72.2 percent in January. Given that there is just a two month difference, seasonality, i.e, higher priced homes selling at different times of year, doesn’t apply.

As I wrote last week, organic, non-distressed sellers are making up less and less of the overall housing market. That does not a healthy housing market make. Without good, move-up homes available, the market cannot see real price appreciation.

“The main limit on sales volume now is willing sellers, not willing buyers,” says Glenn Kelman, CEO of Redfin, a real-estate brokerage.

 

 

 

Source: By: Diana Olick-CNBC Real Estate Reporter; http://www.cnbc.com/id/46482311

Foreclosed Homes Finally “Spreading Out” Across All 50 States

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Annual change in foreclosure volume, all 50 states. January 2012.

Want to buy a foreclosed home? Spring 2012 may be your best chance yet. A combination of legislation and low mortgage rates have left today’s foreclosure market ripe for value.

Bank REO Rising; Faster Foreclosures Coming

According to RealtyTrac, an Irvine, California-based foreclosure tracking firm, the number of foreclosure filings dropped 19 percent last month as compared to one year ago.”Foreclosure filing” is a blanket term comprising (1) Default notices on a home; (2) Scheduled auctions for a home; and, (3) Bank repossessions of a home.

All three foreclosure filing types showed dramatic improvement year-over-year. Default notices and scheduled auctions were down roughly twenty percent and bank repossessions — sometimes called Bank REO — fell 15 percent.

At first look, January’s foreclosure figures look great for housing. Fewer foreclosures means fewer homes sold “on the cheap” which, in turn, supports higher home prices from Marin County, California to Dade County, Florida.

When we look at the monthly foreclosure data, however, a different story emerges.

As compared to December 2011, January 2012′s foreclosure figures shows a market getting ready for more bank-owned homes.

  • Default Notices : Unchanged from December 2011
  • Scheduled Auctions : +1 percent from December 2011
  • Bank Repossessions : +8 percent from December 2011

This trend toward more bank REO should continue — especially because of the recent $25 billion mortgage servicer settlement. The settlement provides clear rules to banks and states on how the foreclosure process should work, and gives banks reason to “un-freeze” their respective foreclosure pipelines.

Expect more bank-owned homes for sale in 2012.

 

Nevada, California Still Dominate Foreclosures

Since 2007, when the foreclosure market became a “hot topic”, foreclosures have been geographically concentrated. Just a few states have accounted for the majority of the nation’s overall foreclosure activity.

That is still true today.

Nevada, California and Florida continue to dominate the foreclosure scene. Their dominance, however, is not as strong as it once was.

In looking at Foreclosures Per Capita last month, 13 states fared worse than the U.S. national average. This is a marked improvement over 2009 when just 6 states beat the national average. The data point suggests that foreclosures are “spreading out” nationwide; that they’re less concentrated by state.

Home buyers in every state, and in many towns, may witness more foreclosures for sale nearby this year. Foreclosures are a national occurrence.

 

Buying A Foreclosed Home? Don’t Buy A Defect.

Expect more foreclosures for sale in 2012. You may want to buy one, too. If you do, though, don’t confuse “cheap” for “value”. Although foreclosed homes can be deeply discounted, they’re often sold “as-is”. This means that the home may be sold with defects and damage that make it uninhabitable for humans.

Mold and absent plumbing are just two problems you may encounter. There are countless more.

When you buy a foreclosed home, make sure to work with an experienced real estate agent. You’ll want a professional to review your contracts and help with negotiations. If you go at it alone, you put yourself — and your household — risk.

CALL US TODAY!  360 Realty 800-399-9659

 

 

 

Source: Dan Green http://themortgagereports.com/7866/foreclosure-reo-50-states