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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.

Los Angeles rents set to rise sharply in 2012

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Note:  ALL the more reason to purchase a home now while it’s a buyer’s market!

The Southland’s economic recovery may be halting and tepid, but the cost of apartment living is rising sharply with rents in Los Angeles County predicted to soar 7.9% over the next year, according to a USC report.

The annual Casden Multifamily Forecast by the university’s Lusk Center for Real Estate showed rents last year rose in 39 of the submarkets the report tracks in the counties of Los Angeles, Orange, San Diego, Riverside and San Bernardino.

That across-the-board increase is a change from 2010 when 26 markets showed flat or increasing rents and a big turnaround from 2009 when only three submarkets saw rents rising. Rents are expected to rise throughout the region over the next two years.

Tracy Seslen, a USC professor and author of the report, said in a statement that the lack of new apartment construction, fewer homes for rent on the market and employment gains have squeezed the rental market.

“This is boosting asking rents, reducing or eliminating concessions, and filling units,” she said.

Los Angeles County was the strongest performer out of all the counties analyzed, with a 6.2% increase in the average rent from 2010 to 2011 to hit $1,596. The average rent was up 3.2% to $1,523 in Orange County; 3.4% to $1,069 in the Inland Empire; and 4.3% to $1,377 in San Diego County.

 

 

Source:  www.LATimes.com

Bidding Wars Erupt as U.S. Homes for Sale Drops

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Matthew and Carina Hensley offered $10,000 more than the asking price for a three-bedroom house in suburban Seattle, then lost out to one of seven other bidders.

Their $270,000 proposal last month came with a family portrait and a letter introducing the couple, their eight-month- old daughter, Harper, and their desire to build a family in the Renton, Washington, house with a yard backing onto a woody hillside.

Bidding wars, absent from most parts of the U.S. residential market since its peak in 2006, are erupting from Seattle and Silicon Valley to Miami and Washington, D.C. The inventory of homes hovers close to a six-year low, while an increase in jobs and record affordability are tempting more buyers. The number of contracts to buy previously owned homes jumped 14 percent in February from a year earlier, the National Association of Realtors reported yesterday.

“We understand there is going to be fierce competition in the offers made for your house but Carina and I both felt very strong about letting you know what it would mean to us if we were given the opportunity to live in your gorgeous and charming house,” wrote Matthew Hensley, 33, a credit union branch manager whose wife is a dental hygienist. Such letters from eager buyers were common during the housing boom.

While listings will probably rise as banks accelerate foreclosures and sellers gain confidence in the market, the U.S. metropolitan areas with the strongest economies may be ready to absorb the additional inventory, said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania. Low values and interest rates have made buying a better deal than renting in 98 of the largest 100 metropolitan areas, according to Trulia Inc.

‘Better Times Ahead’

“The housing crash is finally giving way to recovery in an increasing number of markets across the country,” Zandi said in an e-mail. “The decline in unsold listings and vacant homes and the increase in rents presage better times ahead for single- family housing.”

The bidding wars seen in such places as Seattle aren’t found everywhere. In metropolitan areas including Atlanta and California’s Riverside and San Bernardino counties, housing remains weak as high unemployment and falling prices deter first-time and move-up homebuyers.

A contraction in supply hasn’t helped increase property values, which are down by a third from their July 2006 peak. Prices, hurt by discounted foreclosures and other distressed sales, will fall 2 percent more this year before rising 1.4 percent in 2013, according to a Moody’s Analytics projection.

Case-Shiller Index

Home prices dropped 3.8 percent in January from a year earlier, the S&P/Case-Shiller index of property values in 20 U.S. cities showed today. The measure is based on a three-month average, which means the January data were influenced by transactions in November and December.

A residential comeback would provide a boost to the U.S. economy. Housing will “contribute modestly” to the economy this year for the first time since 2005, according to Peter de Bruin, an economist at ABN Amro Group Economics in Amsterdam.

Rising demand for homes has cut into the supply, which is already low because many sellers — especially those with negative equity — are waiting for prices to increase before putting properties on the market.

Supply of Homes

About 2.43 million existing homes were listed for sale in February, the fewest for the month since 2005, the year U.S. home sales reached a record 7.08 million, the National Association of Realtors reported March 21. The number of listings rose by 100,000 from January, a seasonal bump that occurred every February since 2000 except for 2008, according to data collected by the Realtors.

The February supply of unsold homes listed for sale was down almost 50 percent from a year earlier in markets such as Miami, Phoenix and Oakland, California, according to Realtor.com, the National Association of Realtors’ official website.

The U.S. inventory of new homes stood at 150,000, a 5.8- month supply, in February, when new houses sold at an annual pace of 313,000, slower than analysts expected, the Census Bureau reported March 23.

The supply of new houses rose from 5.7 months in January “as builders put inventory in place for the spring selling season,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, wrote in a note to investors. “This is the fourth consecutive month inventory has remained below six months’ supply, which is broadly considered supply/demand equilibrium.”

The new-home supply peaked at 12.1 months in January 2009, forcing builders to book losses as the economy fell into recession. While the inventory has declined from that high, the housing market still has hurdles to overcome.

 

 

 

 

Source:  www.businessweek.com, By Prashant Gopal and John Gittelsohn

Should I Rent a Home Or Should I Buy? General Market Factors

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1. To Buy or Not to Buy?

Unless you’ve spent the past year or so living under a rock with spotty Wi-Fi service, it’s safe to say you’ve been bombarded with the message that “right now is a great time to buy a house!” It’s certainly an appealing notion for these recession-fatigued times, but alas, the truth is not so cut-and-dried. Let’s take a closer look at the pros and cons, shall we?

BUY!
*Historically Low Interest Rates

The strongest argument in favor of buying would have to be the current extremely favorable mortgage rates. Hovering at around 4% for 30-year loans, they’re the lowest they’ve been in six decades, but are expected to creep back up before the end of the year.

According to Lary Cowart, PhD, assistant professor of Real Estate and Finance at the University of Alabama, one of the biggest mistakes rookie homebuyers make is not grasping the importance of locking in a favorable interest rate. “If rates go up 1 percent, say from 4 to 5 percent, that is a 25 percent increase in the interest rate; so the mortgage payment goes up by more than 10 percent and the amount of house that can be purchased goes down by more than 10 percent,” Coward explains. “People fail to realize that and it is another little thing that will cost them big over the 30-year life of their loan.”

BUY!
*Home Prices Aren’t Likely to Get Much Lower
In its most recent newsletter, Redfin predicted that “home prices won’t fall or rise much in 2012. Prices can’t rise far before banks and regular home-owners put more properties on the market. And they can’t fall far because of increasing rents and — for now — declining foreclosures.” Find more on the affordability of buying over renting here.

 

 

Source: www.la.curbed.com

 

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/

 

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

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

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

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

 

 

Source:  http://realtyworld-sierraproperties.com

What You Should Know Before Buying a Home

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Before you start looking for a home, get pre-qualified for a loan. Banks, credit unions and mortgage bankers make home loans; mortgage brokers process them. The lenders will take an application, process the loan documents, and see the loan through to the funding stage.

If you have marginal or bad credit, consult your lender. You may be able to qualify for a loan depending on how long ago and what reason(s) caused the bad credit. A lender should be able to advise you on whether your credit history will prevent you from qualifying for a home loan.

You will need a down payment. Down payment requirements vary depending on the type of loan. Many down payment assistance programs exist. These programs may loan or grant you the funds necessary for the down payment. Consult with a lender about programs available in your area.

You will need funds for closing costs Closing costs are charges for services related to the closing of your real estate transaction. They include, but are not limited to: Escrow fees charged by the company handling the transaction

  • Title policy issuance fees charged by the title insurance company
  • Mortgage insurance fees
  • Fire and homeowners insurance
  • County Recorder fees for recording your deed
  • Loan origination fees

Consult your lender for an actual estimate of these costs, as well as information about loan programs which can assist in financing your closing costs
Some loans have “points” and some do not. A point is a loan origination fee equivalent to 1% of the loan amount. Together with the interest rate they constitute the yield on your loan for the lender. Some lenders charge a higher interest rate to compensate for charging no points. It is important to comparison shop lenders to make sure your loan is at a competitive yield.

Should you select a mortgage with a fixed rate or an adjustable rate? The answer to this question depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home. If rates are high, an adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments. Additionally, lenders may offer a low rate during the first few years of an adjustable mortgage to make it appealing to you. If interest rates are low you might want to take a fixed rate to protect yourself against the possibility of rising interest rates.

Be aware of the two main types of loan categories.

  • Conventional Loans. Conventional mortgage loans are available with fixed or adjustable interest rates. Some loans may require mortgage insurance.
  • Government Loans. These include Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans, and Veterans Administration (VA) fixed rate mortgage loan

If you are a low or moderate income homebuyer, there are special programs designed to help you. These loans are available through private lenders, as well as local and state housing agencies, like the California Housing Finance Agency (CalHFA). Most lenders specializing in real estate mortgage loans are aware of these types of loan programs.

Why might I have to pay mortgage insurance? Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. Generally, conventional loans that require larger down payments do not require mortgage insurance. Mortgage insurance is always required on FHA mortgage loans.

Many organizations offer home loan counseling to prospective homebuyers. These organizations provide classes for homebuyers to cover the steps to homeownership. They will cover home selection, realtor services, lenders, loan programs, homeownership responsibilities, saving for a down payment, and other important pieces of information. Many first-time homebuyer programs require homebuyers to attend this type of class to be eligible for selected programs.

 

 

 

SOURCE: http://www.calhfa.ca.gov

Money Woes Forced Half of O.C. Home Sales

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Half of all Orange County homes sold through a broker-run database in January were either bank-owned, a “short” sale or some other type of financially “distressed” home, figures from the California Regional Multiple Listing Service show.

The numbers show that even though there are fewer foreclosures and underwater homes changing hands, the housing market still struggles with high rates of financially troubled properties that remain a drag on home prices.

Distressed homes made up the biggest proportion of all residential sales in nearly a year.

Sales of financially troubled homes have spiked around the start of each year for the past three years, figures from the broker-run multiple listing service database show.

The California Regional MLS maintains an online network for homes for sale throughout much of Southern California, including all of Orange County. MLS deals made up 92% of all of January’s residential transactions in the county.

The MLS’s latest housing report shows:

”Distressed” properties made up 49.8% of the 1,727 homes sold through the MLS in January. Since builders tend to sell homes directly to the public, the bulk of homes in the MLS are resales.

That’s the highest proportion of distressed homes sold since February, when nearly 52% of the sales were troubled.

Of the 860 distressed properties sold in January, 490 – or 28.4% — were “short” sales, or sales of homes for less than is owed on the mortgage.

Another 303 homes sold in January – or 17.5% — were bank-owned properties that had been seized earlier through foreclosure.

Sixty-seven homes sold in January – or 3.9% — were classified as “other distressed.”

In 2009, the year following the global economic meltdown, high rates of distressed properties were more common. About half of all sales were distressed homes on average that year. In January 2009, nearly 64% of all sales were distressed homes.

But during the past two years, distressed properties made up just under 44% of all sales on average, MLS figures show.

 

 

 

 

 

Source: By JEFF COLLINS / THE ORANGE COUNTY REGISTER http://www.ocregister.com