Monday, June 29, 2009
Saturday, June 27, 2009
Despite programs meant to help,many homeowners still frustrated
Home Front: Despite programs meant to help, many homeowners still frustrated
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1978579.html
Day in and day out since 2007, callers who struggle with mortgages throughout the Sacramento region, those who can't sleep for worrying, who want to stay with houses that have lost $150,000 in value, have phoned Home Front to fret and express a common sentiment.
"My lender," they say, is "difficult." Callers complain about long waits, bureaucratic snafus and a sense of not being helped. These calls have kept coming through every government program unveiled to help borrowers, despite every statistical release saying more loans are being modified.
Now, as the state has unveiled a law making lenders prove they have comprehensive loan-modification programs, a new round of callers have weighed in with their problems. Two told of modifications that raised their monthly payments instead of lowering them. One, regretfully, paid $3,800 up front to a loan modification company for that outcome. Another, sheepishly, told how a new-home sales agent told him – in 2007, no less – that his house would appreciate enough to refinance the adjustable-rate loan now taking him under.
Most callers feel lost, confused by a system that holds their lives in its hands, yet often provides no one point of contact, where e-mails and phone calls go unanswered. Frustrated, callers now are asking why state government is certifying this level of response as a comprehensive loan-modification program that exempts lenders from 90-day delays in foreclosing.
Home Front isn't calling this a scientific poll of consumer sentiment about the state's new foreclosure law. People who get modifications they need don't call a newspaper to complain. And public relations staffs of big banks stress they're adding staffers, improving efforts to keep people in their homes.
Yet the people call as always, one, two or three a day in the wake of the newest foreclosure prevention story, wondering how plans and programs launched to provide them help and hope, are still so hard.
All too often, all that can be done is to listen.
Pets pay the price
As foreclosures grind on, the tales of abandoned pets do, too. Coldwell Banker real estate agent Donald Stitt of Sacramento recently checked in with some stories about pets he's finding in foreclosure properties. Here's what he's seen personally, he says:
• "Out on Hazel Avenue in the backyard of a foreclosed home was a caged, extra-furry black bunny. The metal cage was sitting directly on the ground in the middle of a large weed-infested backyard, out in the direct sunlight with no food and no water. I was so perplexed at this situation I did not know what to do first.
• "On Cottage Way, close to Cottage Park, on the side patio of a vacant home, I came across a poor 5-inch box turtle in a 2-foot-long aquarium with about 3 inches of the dirtiest water you've ever seen … No food, no toys, just trapped in this dirty aquarium, lonely, hungry and obviously abandoned.
• "In a vacant 'short sale' home in Greenhaven, where supposedly the seller was still coming over every day to take care of the property he was about to abandon, he had also left his dog in a small crate in the hot garage. No water, no food, all day. Despite my pleas, the owner did not take the dog to be with him, but persisted in leaving him in this garage where he barked incessantly when someone was viewing the house. It broke my heart.
• "And I can't tell you how many koi ponds and backyard 'water features' that have lovely fish living in them appear to be abandoned with little or no care.
"I'm not sure what the answer is, but getting the word out can't hurt," Stitt said. "A Realtor can do very little about these sad situations except for making frantic phone calls because we do not own the property. I want people to think about it. It's heartbreaking."
Air let out of balloon biz
Alas, for a sweet memory of the housing boom. Once in the 21st century a person could make amazing money selling balloons – to home builders.
Carolyn Hadin of Balloons Creations by Carolyn still remembers being "swamped." Balloons by the dozens every day, said the Sacramento dealer. Balloons floating from rooftops, rising above any place that said, "Homes for sale."
What's a housing boom balloon dealer do for an encore while builders slog through their slowest years in two decades or more? Hadin said she's selling balloon bouquets and building up a corporate and wedding business.
"So far, knock on wood," she said, "everything is OK."
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1978579.html
Day in and day out since 2007, callers who struggle with mortgages throughout the Sacramento region, those who can't sleep for worrying, who want to stay with houses that have lost $150,000 in value, have phoned Home Front to fret and express a common sentiment.
"My lender," they say, is "difficult." Callers complain about long waits, bureaucratic snafus and a sense of not being helped. These calls have kept coming through every government program unveiled to help borrowers, despite every statistical release saying more loans are being modified.
Now, as the state has unveiled a law making lenders prove they have comprehensive loan-modification programs, a new round of callers have weighed in with their problems. Two told of modifications that raised their monthly payments instead of lowering them. One, regretfully, paid $3,800 up front to a loan modification company for that outcome. Another, sheepishly, told how a new-home sales agent told him – in 2007, no less – that his house would appreciate enough to refinance the adjustable-rate loan now taking him under.
Most callers feel lost, confused by a system that holds their lives in its hands, yet often provides no one point of contact, where e-mails and phone calls go unanswered. Frustrated, callers now are asking why state government is certifying this level of response as a comprehensive loan-modification program that exempts lenders from 90-day delays in foreclosing.
Home Front isn't calling this a scientific poll of consumer sentiment about the state's new foreclosure law. People who get modifications they need don't call a newspaper to complain. And public relations staffs of big banks stress they're adding staffers, improving efforts to keep people in their homes.
Yet the people call as always, one, two or three a day in the wake of the newest foreclosure prevention story, wondering how plans and programs launched to provide them help and hope, are still so hard.
All too often, all that can be done is to listen.
Pets pay the price
As foreclosures grind on, the tales of abandoned pets do, too. Coldwell Banker real estate agent Donald Stitt of Sacramento recently checked in with some stories about pets he's finding in foreclosure properties. Here's what he's seen personally, he says:
• "Out on Hazel Avenue in the backyard of a foreclosed home was a caged, extra-furry black bunny. The metal cage was sitting directly on the ground in the middle of a large weed-infested backyard, out in the direct sunlight with no food and no water. I was so perplexed at this situation I did not know what to do first.
• "On Cottage Way, close to Cottage Park, on the side patio of a vacant home, I came across a poor 5-inch box turtle in a 2-foot-long aquarium with about 3 inches of the dirtiest water you've ever seen … No food, no toys, just trapped in this dirty aquarium, lonely, hungry and obviously abandoned.
• "In a vacant 'short sale' home in Greenhaven, where supposedly the seller was still coming over every day to take care of the property he was about to abandon, he had also left his dog in a small crate in the hot garage. No water, no food, all day. Despite my pleas, the owner did not take the dog to be with him, but persisted in leaving him in this garage where he barked incessantly when someone was viewing the house. It broke my heart.
• "And I can't tell you how many koi ponds and backyard 'water features' that have lovely fish living in them appear to be abandoned with little or no care.
"I'm not sure what the answer is, but getting the word out can't hurt," Stitt said. "A Realtor can do very little about these sad situations except for making frantic phone calls because we do not own the property. I want people to think about it. It's heartbreaking."
Air let out of balloon biz
Alas, for a sweet memory of the housing boom. Once in the 21st century a person could make amazing money selling balloons – to home builders.
Carolyn Hadin of Balloons Creations by Carolyn still remembers being "swamped." Balloons by the dozens every day, said the Sacramento dealer. Balloons floating from rooftops, rising above any place that said, "Homes for sale."
What's a housing boom balloon dealer do for an encore while builders slog through their slowest years in two decades or more? Hadin said she's selling balloon bouquets and building up a corporate and wedding business.
"So far, knock on wood," she said, "everything is OK."
Wednesday, June 24, 2009
We're in a slow, but definite recovery mode
"We're in a slow, but definite recovery mode"
http://www.sacbee.com/static/weblogs/real_estate/archives/2009/06/were-in-a-slow.html?mi_atom=Home%20Front
So says Alexis McGee, president of Fair Oaks-based Foreclosures.com, which tracks the nation's foreclosure markets for real estate investors. Here's McGee's new national roundup:
SACRAMENTO, Calif. -While President Obama, Congress, and the American people debate financial regulatory reform, foreclosures continue to mount as embattled housing markets bump along the bottom.
But amid much talk about problems, many areas of the country are now experiencing rebounds, with declining foreclosures, increasing home sales and even increased average sale prices, according to ForeclosureS.com, a leading real estate information provider.
"We're in a slow, but definite recovery mode," says Alexis McGee, foreclosure expert, educator, author, and president of ForeclosureS.com. "While foreclosures persist and unemployment still worsens, there are positives in the market that give a strong indication that housing markets have bottomed. Even some interest rate increases have failed to put a damper on prospective home buyers and investors who wisely recognize that buying a home today is more affordable than it has been in decades."
In Southern California, for example, home sales rose for the 11th consecutive month in May, powered in part by a market shift as sales of mid- to high-end home sales (those $500,000 and over homes) actually rose. The median home price ($249,000) also increased for the first time since July 2007, according to San Diego-based MDA DataQuick. The data aggregator showed a total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside, and San Bernardino counties last month. That was the most since May 2006, up 1.3 % from April, and up 22.8 % from a year ago.
"Affordability is the prime driver," adds McGee. May's median home price in Southern California was the second-lowest for any month since it was $242,000 in February 2002, and it stood 50.7 % below the peak $505,000 median reached in spring and summer of 2007, according to DataQuick numbers.
"In the nation's mid-section, housing markets are heating up, too, as buyers get off the fence and take advantage of today's affordability," adds McGee. "Despite ongoing foreclosures, especially in the Chicago area, for the third consecutive month home sales climbed in Illinois--up 9% in April over March. The median home price of $150,000 was little changed from March, too, according to Illinois Association of Realtors."
Among other telling positive economic indicators:
Housing starts nationwide climbed 17.2% in May, with building permits up 4%, according to Commerce Department numbers.
Pending home sales shot up, too. The National Association of Realtors' forward-looking Pending Home Sales Index based on contracts signed in April was up 6.7% in April, and is up 3.2% from a year ago.
Existing home sales - including single-family, townhomes, condominiums and co-ops - increased 2.9 % to 4.68 million units in April from 4.55 million units in March.
Housing affordability is at record levels. The National Association of Realtor's Housing Affordability Index for April was the second highest on record. A median-income family with a $60,900 income could afford a $296,800 home in April, assuming a 20% down payment and that 25% of gross income is devoted to mortgage principal and interest. That buying power far exceeds the $169,800 April median single-family home price.
Around the Nation ... What's Really Happening?
Looking beyond the national numbers to what's happening in some of the nation's hardest-hit real estate markets across the country:
California: Existing single-family home sales soared 49.2% statewide in April compared with a year ago. The median home price was up 1.4% compared with March, but down 36.5% from a year ago, according to the California Association of Realtors. Markets tightened, too, with an unsold inventory of just 4.6 months compared with more than double that a year ago.
Florida: Like California, home sales are up, and so are foreclosures and defaults. For the eighth month in a row, existing home sales rose--18%--in April, with existing condo sales up to--21%, according to Florida Association of Realtors numbers. The state, along with California, Arizona, and Nevada, powers the nation's foreclosure abyss--10.6% of the mortgages in Florida are "somewhere in the process of foreclosure," according to the Mortgage Bankers' newest Delinquency Survey.
Georgia: As of June 1, the state of Georgia began offering a $1,800 tax credit to homebuyers through November 30 of this year. The credit, available to buyers of eligible single-family residences, is not limited to first-time homebuyers and has no income limits, according to the Georgia Association of Realtors.
North Carolina: Despite brighter national numbers, this manufacturing state has seen existing home sales decline nearly 32% over the past year, with the average home price off 9% April 2008 to April 2009, according to the North Carolina Association of Realtors.
Michigan: As the auto industry has unraveled, foreclosures in the motor state have soared. Yet the Michigan Association of Realtors reports residential home sales as reported by 41 of its local associations are up more than 8.5% YTD as of April over year-ago numbers. The Detroit Board of Realtors reports sales up a whopping more than 23%. Affordability is the name of the game. At least 15 Michigan local Realtor associations report average home prices statewide off more than 30% over year ago numbers in April.
Massachusetts: Home sales and home prices climbed here in the Northeast. Detached single-family home sales were up 9.6% in April over March, with median home prices up nearly 8%, according to data from the Massachusetts Association of Realtors.
http://www.sacbee.com/static/weblogs/real_estate/archives/2009/06/were-in-a-slow.html?mi_atom=Home%20Front
So says Alexis McGee, president of Fair Oaks-based Foreclosures.com, which tracks the nation's foreclosure markets for real estate investors. Here's McGee's new national roundup:
SACRAMENTO, Calif. -While President Obama, Congress, and the American people debate financial regulatory reform, foreclosures continue to mount as embattled housing markets bump along the bottom.
But amid much talk about problems, many areas of the country are now experiencing rebounds, with declining foreclosures, increasing home sales and even increased average sale prices, according to ForeclosureS.com, a leading real estate information provider.
"We're in a slow, but definite recovery mode," says Alexis McGee, foreclosure expert, educator, author, and president of ForeclosureS.com. "While foreclosures persist and unemployment still worsens, there are positives in the market that give a strong indication that housing markets have bottomed. Even some interest rate increases have failed to put a damper on prospective home buyers and investors who wisely recognize that buying a home today is more affordable than it has been in decades."
In Southern California, for example, home sales rose for the 11th consecutive month in May, powered in part by a market shift as sales of mid- to high-end home sales (those $500,000 and over homes) actually rose. The median home price ($249,000) also increased for the first time since July 2007, according to San Diego-based MDA DataQuick. The data aggregator showed a total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside, and San Bernardino counties last month. That was the most since May 2006, up 1.3 % from April, and up 22.8 % from a year ago.
"Affordability is the prime driver," adds McGee. May's median home price in Southern California was the second-lowest for any month since it was $242,000 in February 2002, and it stood 50.7 % below the peak $505,000 median reached in spring and summer of 2007, according to DataQuick numbers.
"In the nation's mid-section, housing markets are heating up, too, as buyers get off the fence and take advantage of today's affordability," adds McGee. "Despite ongoing foreclosures, especially in the Chicago area, for the third consecutive month home sales climbed in Illinois--up 9% in April over March. The median home price of $150,000 was little changed from March, too, according to Illinois Association of Realtors."
Among other telling positive economic indicators:
Housing starts nationwide climbed 17.2% in May, with building permits up 4%, according to Commerce Department numbers.
Pending home sales shot up, too. The National Association of Realtors' forward-looking Pending Home Sales Index based on contracts signed in April was up 6.7% in April, and is up 3.2% from a year ago.
Existing home sales - including single-family, townhomes, condominiums and co-ops - increased 2.9 % to 4.68 million units in April from 4.55 million units in March.
Housing affordability is at record levels. The National Association of Realtor's Housing Affordability Index for April was the second highest on record. A median-income family with a $60,900 income could afford a $296,800 home in April, assuming a 20% down payment and that 25% of gross income is devoted to mortgage principal and interest. That buying power far exceeds the $169,800 April median single-family home price.
Around the Nation ... What's Really Happening?
Looking beyond the national numbers to what's happening in some of the nation's hardest-hit real estate markets across the country:
California: Existing single-family home sales soared 49.2% statewide in April compared with a year ago. The median home price was up 1.4% compared with March, but down 36.5% from a year ago, according to the California Association of Realtors. Markets tightened, too, with an unsold inventory of just 4.6 months compared with more than double that a year ago.
Florida: Like California, home sales are up, and so are foreclosures and defaults. For the eighth month in a row, existing home sales rose--18%--in April, with existing condo sales up to--21%, according to Florida Association of Realtors numbers. The state, along with California, Arizona, and Nevada, powers the nation's foreclosure abyss--10.6% of the mortgages in Florida are "somewhere in the process of foreclosure," according to the Mortgage Bankers' newest Delinquency Survey.
Georgia: As of June 1, the state of Georgia began offering a $1,800 tax credit to homebuyers through November 30 of this year. The credit, available to buyers of eligible single-family residences, is not limited to first-time homebuyers and has no income limits, according to the Georgia Association of Realtors.
North Carolina: Despite brighter national numbers, this manufacturing state has seen existing home sales decline nearly 32% over the past year, with the average home price off 9% April 2008 to April 2009, according to the North Carolina Association of Realtors.
Michigan: As the auto industry has unraveled, foreclosures in the motor state have soared. Yet the Michigan Association of Realtors reports residential home sales as reported by 41 of its local associations are up more than 8.5% YTD as of April over year-ago numbers. The Detroit Board of Realtors reports sales up a whopping more than 23%. Affordability is the name of the game. At least 15 Michigan local Realtor associations report average home prices statewide off more than 30% over year ago numbers in April.
Massachusetts: Home sales and home prices climbed here in the Northeast. Detached single-family home sales were up 9.6% in April over March, with median home prices up nearly 8%, according to data from the Massachusetts Association of Realtors.
Monday, June 22, 2009
7 Lenders get immunity from state foreclosure prevention act
7 lenders get immunity from state foreclosure prevention act
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1962447.html
Bank of America Home Loans, CitiMortgage and Carrington Mortgage Services are among the first seven lenders and loan servicers granted immunity from the state's foreclosure prevention act launched this week in California.
The new law makes lenders prove to the state that they have a comprehensive loan-modification program that helps borrowers stay in their homes. Those that can't prove it to the state's satisfaction must wait an extra 90 days before foreclosing on borrowers.
More institutions that received quick exemptions from 90-day delays: EMC Mortgage, Select Portfolio Servicing and Kondaur Capital Corp., the state Department of Corporations reported on its Web site. The law, which took effect Monday, prompted 41 applications this week from lenders and loan servicers aiming to prove their modification programs meet the state's test. Many more are expected next week.
"There are potentially hundreds of companies that should or would be involved in this," said Corporations spokesman Mark Leyes.
State agencies reported Friday that 38 institutions received temporary 30-day immunity while the state reviews their applications. Among them were some of the Sacramento region's leading lenders, including Wells Fargo, GMAC and JPMorgan Chase.
The state Department of Financial Institutions temporarily approved seven applicants, including several credit unions. The state Department of Real Estate also temporarily approved two.
The law aims to slow and prevent foreclosures in a state that has endured more than 365,000 foreclosures in the past two years. More than 37,000 have occurred in the capital region.
Gov. Arnold Schwarzenegger suggested the lender-reporting concept late last year and signed legislation implementing it in February. Friday, Schwarzenegger spokeswoman Camille Anderson said the administration is "very encouraged by the progress made this week."
Bank of America Home Loans spokesman Rick Simon said Friday the Charlotte bank's adherence to federal Making Home Affordable guidelines provided it the exemption from 90-day delays in foreclosing in California.
"From the start the state has indicated that the major lenders participating in Making Home Affordable go beyond the requirements of state law for an exemption," he said.
Leyes agreed. "If they are in full compliance with Making Home Affordable there isn't really any reason they wouldn't comply with us."
Making Home Affordable is the Obama administration plan begun in March. It offers lenders incentives to cut interest rates or turn loans into 40-year terms to get payments in a range from 31 percent to 38 percent of a borrower's gross monthly income.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1962447.html
Bank of America Home Loans, CitiMortgage and Carrington Mortgage Services are among the first seven lenders and loan servicers granted immunity from the state's foreclosure prevention act launched this week in California.
The new law makes lenders prove to the state that they have a comprehensive loan-modification program that helps borrowers stay in their homes. Those that can't prove it to the state's satisfaction must wait an extra 90 days before foreclosing on borrowers.
More institutions that received quick exemptions from 90-day delays: EMC Mortgage, Select Portfolio Servicing and Kondaur Capital Corp., the state Department of Corporations reported on its Web site. The law, which took effect Monday, prompted 41 applications this week from lenders and loan servicers aiming to prove their modification programs meet the state's test. Many more are expected next week.
"There are potentially hundreds of companies that should or would be involved in this," said Corporations spokesman Mark Leyes.
State agencies reported Friday that 38 institutions received temporary 30-day immunity while the state reviews their applications. Among them were some of the Sacramento region's leading lenders, including Wells Fargo, GMAC and JPMorgan Chase.
The state Department of Financial Institutions temporarily approved seven applicants, including several credit unions. The state Department of Real Estate also temporarily approved two.
The law aims to slow and prevent foreclosures in a state that has endured more than 365,000 foreclosures in the past two years. More than 37,000 have occurred in the capital region.
Gov. Arnold Schwarzenegger suggested the lender-reporting concept late last year and signed legislation implementing it in February. Friday, Schwarzenegger spokeswoman Camille Anderson said the administration is "very encouraged by the progress made this week."
Bank of America Home Loans spokesman Rick Simon said Friday the Charlotte bank's adherence to federal Making Home Affordable guidelines provided it the exemption from 90-day delays in foreclosing in California.
"From the start the state has indicated that the major lenders participating in Making Home Affordable go beyond the requirements of state law for an exemption," he said.
Leyes agreed. "If they are in full compliance with Making Home Affordable there isn't really any reason they wouldn't comply with us."
Making Home Affordable is the Obama administration plan begun in March. It offers lenders incentives to cut interest rates or turn loans into 40-year terms to get payments in a range from 31 percent to 38 percent of a borrower's gross monthly income.
Friday, June 19, 2009
Sacramento area misses move-up homebuyers -- they're staying put
Sacramento area misses move-up homebuyers -- they're staying put
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/topstories/story/1959684.html
Almost four years into the real estate crash, a once-thriving sector of the Sacramento-area housing market – the move-up buyer – has become a virtual dead zone that must revive itself for a true recovery to take hold, analysts say.
Even as real estate rocks with enthusiastic first-time buyers and investors – accounting for up to two-thirds of area sales – one expert warns against being fooled by "the common belief that real estate is flying off the shelves."
Momentum needed for a true recovery rests on the shoulders of those who traditionally dominate real estate markets: people who sell one house and buy another.
And they aren't doing it.
They can't.
"Half to two-thirds of sales in the Sacramento region have not triggered a move-up," said Andrew LePage, an analyst for property researcher MDA DataQuick. "It was just some lender got its money back and then it ends. When that's been two-thirds of your market for months and months, ouch."
Until the move-up sector of the market recovers, housing can't recover, analysts say. (Everything above $400,000 is almost at a standstill. DataQuick says sales in move-up neighborhoods such as Land Park, east Sacramento and Arden Park are half their 10-year average since early 2008.)
And until housing recovers, many believe the economy will lag, and the state with it. The downturn prolongs the pain of layoffs, fuels the plunge in property taxes and deepens the local and state budget morass.
What are the problems confronting move-up buyers? Charlene Singley, president of the Sacramento Association of Realtors, counts three strikes against them:
• "First are the vast numbers" of distress sales and bank repos, she said. "Those people aren't moving up. They're not even moving down. They're just going into rentals."
The National Association of Realtors says two-thirds of sales in California this year have been distress sales that don't trigger a move-up.
• "Equally big are homeowners out there who aren't in a foreclosure, not in a short sale," said Singley. "They don't have the equity to pull out to put down on another house. They used to pull it out, move up, make money, do it again. You'd see it three or four times."
Many consider that real estate stairway the promise of California. The theory is you have to "get in" the market and then ride it up. But now about one-third of borrowers in El Dorado, Placer, Sacramento and Yolo counties are trapped where they are – perhaps for years – owing more than their homes are worth.
• "Finally, if they're lucky enough to have equity, maybe their income is decreased or they're worried about their job security," Singley said. "They could move, but they don't have to. Why would they put their homes on the market? Not when they could wait a few years."
This large collective impact of distress sales, negative equity and job fears translates into "an outright collapse in organic sales that measure the true health of the housing market," according to Mark Hanson, managing director of Field Check Group, a Bay Area financial industry consultant. Hanson said California resales that trigger a second move – whether up, down or across – were down 60 percent in April from three years earlier.
That explains why Cynthia Hearden's $459,000 house in Sacramento's Land Park neighborhood has been slow to sell since its March listing. It tells why Kathy McKnight in the city's Pocket neighborhood decided not to offer her house for sale after an agent suggested an asking price of $525,000, less than she had hoped.
Hearden, nearing retirement and aiming to downsize, showed one of the more creative responses to lack of move-ups. When she got an offer based on the potential buyer first selling her own house, Hearden waited as neither house moved. Then she looked at her potential buyer's $289,000 house in South Land Park, and proposed a trade accounting for price differences.
The other homeowner was interested, but even that deal fell through last week.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/topstories/story/1959684.html
Almost four years into the real estate crash, a once-thriving sector of the Sacramento-area housing market – the move-up buyer – has become a virtual dead zone that must revive itself for a true recovery to take hold, analysts say.
Even as real estate rocks with enthusiastic first-time buyers and investors – accounting for up to two-thirds of area sales – one expert warns against being fooled by "the common belief that real estate is flying off the shelves."
Momentum needed for a true recovery rests on the shoulders of those who traditionally dominate real estate markets: people who sell one house and buy another.
And they aren't doing it.
They can't.
"Half to two-thirds of sales in the Sacramento region have not triggered a move-up," said Andrew LePage, an analyst for property researcher MDA DataQuick. "It was just some lender got its money back and then it ends. When that's been two-thirds of your market for months and months, ouch."
Until the move-up sector of the market recovers, housing can't recover, analysts say. (Everything above $400,000 is almost at a standstill. DataQuick says sales in move-up neighborhoods such as Land Park, east Sacramento and Arden Park are half their 10-year average since early 2008.)
And until housing recovers, many believe the economy will lag, and the state with it. The downturn prolongs the pain of layoffs, fuels the plunge in property taxes and deepens the local and state budget morass.
What are the problems confronting move-up buyers? Charlene Singley, president of the Sacramento Association of Realtors, counts three strikes against them:
• "First are the vast numbers" of distress sales and bank repos, she said. "Those people aren't moving up. They're not even moving down. They're just going into rentals."
The National Association of Realtors says two-thirds of sales in California this year have been distress sales that don't trigger a move-up.
• "Equally big are homeowners out there who aren't in a foreclosure, not in a short sale," said Singley. "They don't have the equity to pull out to put down on another house. They used to pull it out, move up, make money, do it again. You'd see it three or four times."
Many consider that real estate stairway the promise of California. The theory is you have to "get in" the market and then ride it up. But now about one-third of borrowers in El Dorado, Placer, Sacramento and Yolo counties are trapped where they are – perhaps for years – owing more than their homes are worth.
• "Finally, if they're lucky enough to have equity, maybe their income is decreased or they're worried about their job security," Singley said. "They could move, but they don't have to. Why would they put their homes on the market? Not when they could wait a few years."
This large collective impact of distress sales, negative equity and job fears translates into "an outright collapse in organic sales that measure the true health of the housing market," according to Mark Hanson, managing director of Field Check Group, a Bay Area financial industry consultant. Hanson said California resales that trigger a second move – whether up, down or across – were down 60 percent in April from three years earlier.
That explains why Cynthia Hearden's $459,000 house in Sacramento's Land Park neighborhood has been slow to sell since its March listing. It tells why Kathy McKnight in the city's Pocket neighborhood decided not to offer her house for sale after an agent suggested an asking price of $525,000, less than she had hoped.
Hearden, nearing retirement and aiming to downsize, showed one of the more creative responses to lack of move-ups. When she got an offer based on the potential buyer first selling her own house, Hearden waited as neither house moved. Then she looked at her potential buyer's $289,000 house in South Land Park, and proposed a trade accounting for price differences.
The other homeowner was interested, but even that deal fell through last week.
Wednesday, June 17, 2009
El Dorado County rejects some federal stimulus money
El Dorado County rejects some federal stimulus money
By Cathy Locke clocke@sacbee.com
http://www.sacbee.com/ourregion/story/1945169.html
El Dorado County officials turned down $1.6 million in federal stimulus funds, leaving an ideologically diverse group, including affordable-housing advocates and local contractors, angry and perplexed.
The Board of Supervisors last week twice rejected what staff members described as no-strings-attached funding.
"It's as close to a no-brainer as I've ever seen come before this board," Richard Meagher of the Affordable Housing Coalition of El Dorado said of a grant application that could have put local contractors to work rehabilitating foreclosed houses and made the dwellings available to moderate and low-income homebuyers.
But Supervisor Jack Sweeney characterized himself as a "free-market person" and argued that many current economic ills are a result of government's intrusion into society.
"When people earn something, they appreciate it better," he said.
During their regular meeting Tuesday, the supervisors voted 4-1, without a staff presentation or discussion, not to join with the city of South Lake Tahoe in applying for Neighborhood Stabilization Funds.
But after receiving a stream of e-mail protests from constituents, some accusing the board majority of putting personal ideology above the good of the county, the supervisors convened a special meeting Thursday to reconsider.
Community leaders, affordable housing advocates, and representatives of the real estate and construction industries urged the board to accept the money.
The grant funds would be used to purchase and rehabilitate foreclosed homes, which would be resold to moderate and low-income homebuyers – those with household incomes that are 120 percent or less of the area's median income.
On the county's west slope, the funds would be directed to five areas identified by the Federal Housing Administration as the most affected by foreclosures: Cameron Park-Shingle Springs, Diamond Springs, El Dorado Hills, Georgetown and Pollock Pines.
County staff member Shawna Purvines said 246 homes are in foreclosure in the target areas, and 189 potential homebuyers have been prescreened for eligibility and are on the county's waiting list.
All funds would have to be spent by Sept. 30, 2011. But until then, money from the sale of each home would be returned to the local program to buy, rehabilitate and restore additional houses.
Purvines estimated between eight and 18 houses could be rehabilitated and sold during that period.
Homes sold under the program would remain income-restricted for 20 years, she said, providing the county with long-term affordable housing stock.
"You don't often get the federal government to say that you don't have to compete for (grant funds), we're allocating it to you," said Nancy Kerry, housing manager for South Lake Tahoe. The city can't apply for the money without the county's participation.
Nonprofit housing firms and local contractors would take charge of the projects, and the county would be reimbursed for monitoring their activities.
But Sweeney noted that under the federal program contractors would have to pay prevailing wages for the Sacramento area, which typically are higher than those in El Dorado County. He, along with Supervisors John Knight and Ron Briggs, argued that such projects were better left to private investors.
The El Dorado Builders Exchange, which represents local contractors, urged support for the program, arguing that it would create jobs and rehabilitate vacant homes that might otherwise be vandalized.
Real estate agent Judy Mathat said that in addition to helping meet the demand for moderate and low-income housing, the program would provide work for contractors, real estate agents and people in related businesses, and possibly help them keep their homes out of foreclosure.
The public arguments swayed Supervisor Ray Nutting, who described his vote Tuesday as a "wobbler."
"If we don't collect our fair share (of tax money from Washington), our fair share goes someplace else," he said.
He joined South Lake Tahoe-area Supervisor Norma Santiago in urging support for the grant application. But the proposal was defeated on 3-2 vote, with Sweeney, Ron Briggs and John Knight voting against.
By Cathy Locke clocke@sacbee.com
http://www.sacbee.com/ourregion/story/1945169.html
El Dorado County officials turned down $1.6 million in federal stimulus funds, leaving an ideologically diverse group, including affordable-housing advocates and local contractors, angry and perplexed.
The Board of Supervisors last week twice rejected what staff members described as no-strings-attached funding.
"It's as close to a no-brainer as I've ever seen come before this board," Richard Meagher of the Affordable Housing Coalition of El Dorado said of a grant application that could have put local contractors to work rehabilitating foreclosed houses and made the dwellings available to moderate and low-income homebuyers.
But Supervisor Jack Sweeney characterized himself as a "free-market person" and argued that many current economic ills are a result of government's intrusion into society.
"When people earn something, they appreciate it better," he said.
During their regular meeting Tuesday, the supervisors voted 4-1, without a staff presentation or discussion, not to join with the city of South Lake Tahoe in applying for Neighborhood Stabilization Funds.
But after receiving a stream of e-mail protests from constituents, some accusing the board majority of putting personal ideology above the good of the county, the supervisors convened a special meeting Thursday to reconsider.
Community leaders, affordable housing advocates, and representatives of the real estate and construction industries urged the board to accept the money.
The grant funds would be used to purchase and rehabilitate foreclosed homes, which would be resold to moderate and low-income homebuyers – those with household incomes that are 120 percent or less of the area's median income.
On the county's west slope, the funds would be directed to five areas identified by the Federal Housing Administration as the most affected by foreclosures: Cameron Park-Shingle Springs, Diamond Springs, El Dorado Hills, Georgetown and Pollock Pines.
County staff member Shawna Purvines said 246 homes are in foreclosure in the target areas, and 189 potential homebuyers have been prescreened for eligibility and are on the county's waiting list.
All funds would have to be spent by Sept. 30, 2011. But until then, money from the sale of each home would be returned to the local program to buy, rehabilitate and restore additional houses.
Purvines estimated between eight and 18 houses could be rehabilitated and sold during that period.
Homes sold under the program would remain income-restricted for 20 years, she said, providing the county with long-term affordable housing stock.
"You don't often get the federal government to say that you don't have to compete for (grant funds), we're allocating it to you," said Nancy Kerry, housing manager for South Lake Tahoe. The city can't apply for the money without the county's participation.
Nonprofit housing firms and local contractors would take charge of the projects, and the county would be reimbursed for monitoring their activities.
But Sweeney noted that under the federal program contractors would have to pay prevailing wages for the Sacramento area, which typically are higher than those in El Dorado County. He, along with Supervisors John Knight and Ron Briggs, argued that such projects were better left to private investors.
The El Dorado Builders Exchange, which represents local contractors, urged support for the program, arguing that it would create jobs and rehabilitate vacant homes that might otherwise be vandalized.
Real estate agent Judy Mathat said that in addition to helping meet the demand for moderate and low-income housing, the program would provide work for contractors, real estate agents and people in related businesses, and possibly help them keep their homes out of foreclosure.
The public arguments swayed Supervisor Ray Nutting, who described his vote Tuesday as a "wobbler."
"If we don't collect our fair share (of tax money from Washington), our fair share goes someplace else," he said.
He joined South Lake Tahoe-area Supervisor Norma Santiago in urging support for the grant application. But the proposal was defeated on 3-2 vote, with Sweeney, Ron Briggs and John Knight voting against.
Monday, June 15, 2009
Foreclosure filings up sharply over last year
Foreclosure filings up sharply over last year
http://www.sacbee.com/business/story/1933547.html
Lenders made a daily average of 203 foreclosure filings against struggling borrowers in El Dorado, Placer, Sacramento and Yolo counties in the past year, according to Santa Ana-based real estate tracker First American CoreLogic.
Borrowers in the region received 74,348 notices, ranging from first warnings to repossessions, from May 2008 to April 2009, the firm said.
That was sharply higher than the 51,307 filings during the same period a year earlier when lenders filed an average of 140 notices daily.
The increase reflects the growing struggles of homeowners to make their mortgage payments amid rising unemployment and falling home values. First American said 6.78 percent of the region's home loans were 90 days or more delinquent in April, compared with 6.48 percent a year ago. The Sacramento region's delinquency rate is worse than the U.S. average of 5.1 percent but better than California's statewide average of 7.08 percent.
http://www.sacbee.com/business/story/1933547.html
Lenders made a daily average of 203 foreclosure filings against struggling borrowers in El Dorado, Placer, Sacramento and Yolo counties in the past year, according to Santa Ana-based real estate tracker First American CoreLogic.
Borrowers in the region received 74,348 notices, ranging from first warnings to repossessions, from May 2008 to April 2009, the firm said.
That was sharply higher than the 51,307 filings during the same period a year earlier when lenders filed an average of 140 notices daily.
The increase reflects the growing struggles of homeowners to make their mortgage payments amid rising unemployment and falling home values. First American said 6.78 percent of the region's home loans were 90 days or more delinquent in April, compared with 6.48 percent a year ago. The Sacramento region's delinquency rate is worse than the U.S. average of 5.1 percent but better than California's statewide average of 7.08 percent.
Friday, June 12, 2009
Home Front: Lender's phones silent as rates rise
Home Front: Lenders' phones silent as rates rise
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1940229.html
Mortgage rates, rising quickly from near-historic lows earlier this year, are already having negative consequences in the capital region.
"All of a sudden the phones just stopped ringing," said Michael McGee, president of Rancho Cordova's Winchester McGee Real Estate & Loans.
"At least right now, the refinance window has somewhat shut," added Brent Wilson, senior loan consultant at Sacramento's Comstock Mortgage.
It's also spooking buyers who haven't locked in a rate.
"I called my agent and said, 'We have to cancel,' " said Toby McBride of Citrus Heights on Thursday. He and his wife put in an offer on a house June 1 when rates were 5.12 percent. When the deal wasn't agreed to by Tuesday, with rates at 5.87 percent, they pulled the plug. (The new rate would add $175 a month to payments, said McBride, a federal worker).
"Definitely, the sudden change in interest rates has caused us to rethink our condition and lower our search price," he said.
As investors stew about inflation in the long run, rates are pushing back toward 6 percent and have reached a seven-month high, according to mortgage giant Freddie Mac.
The firm's Thursday survey revealed a national average of 5.59 percent (plus points) earlier this week for a 30-year fixed-rate loan. That's up from 5.29 percent last week.
Thursday, financial Web site Bankrate.com showed an overnight average of 5.74 percent.
"It just pretty much happened so quickly," said Charlene Singley, an agent with Lyon Real Estate and president of the Sacramento Association of Realtors. "I think it will take a while for people to realize that this is where the rates are now."
"I think we'll get some improvement from where we are today," said McGee. "But back to the high fours? It's possible, yes. Likely? I question that."
New home sales suffer
Thousands of distressed existing homes are making life harder and harder for Sacramento-area home builders. Their April sales numbers revealed the capital-area market as one of the state's weakest, according to the California Building Industry Association.
Builders in El Dorado, Placer, Sacramento and Yolo counties sold 290 houses in April. That was seven fewer than in March, and 48 percent below the same month last year, CBIA said this week. Builders in Yuba and Sutter counties sold 33 – better than March – but down 25 percent from the same time last year.
The numbers put area builders on track for a worse year than 2008, when they sold just 4,847 homes, according to Hanley Wood Market Intelligence.
In 2004 they sold 17,491.
The declines come amid fierce competition with discounted bank repos and short sales. In April, builders closed just 9.6 percent of the escrows in the capital area, compared with 24.5 percent in April 2005.
Statewide trends were a little better. Builders said sales were almost 7 percent better in April than March. But they were still down 31 percent from April 2008.
The CBIA said the median April sales price for a new house in El Dorado, Placer, Sacramento and Yolo counties was $292,900. It was $237,000 in Yuba and Sutter counties.
More time for renters
Oh, no. Home Front muffed a figure last week in an item about the Obama administration adding new protections for renters. In mistakenly noting that California renters get 30 days' notice to move after banks repossess houses, we overlooked last year's state Senate Bill 1137.
The bill gave tenants affected by foreclosure an extra 30 days' notice – to 60 days – through Jan. 1, 2013.
President Barack Obama, however, just signed a bill that gives renters with month-to-month arrangements 90 days' notice in foreclosure situations. Renters with leases in foreclosed homes stay until leases expire.
Profiting from feng shui
These days everyone is worried about money. But how do you get more? Here are a few feng shui ideas to increase your flow of wealth at home. For these, thank New York real estate broker Debra Duneier:
• The burners on your stove represent wealth. Keep them clean and alternate your use of the burners when cooking … The refrigerator should be filled with healthy food. A full refrigerator brings in abundance.
• The indoor plants that are wealth enhancers are bamboo and jade plants.
• Take three lucky Chinese coins and tape them to the back of a rug. Every time someone walks in (your home's entry point) they symbolically are bringing money into your property and into your life.
• Keep toilet seats down when not in use. Keep them up and money will disappear.
More tax credits sought
Finally, an update on tax credits: The California Franchise Tax Board reports that buyers of new, unoccupied homes have requested $82.5 million of the $100 million allocated for $10,000 tax credits.
The building industry is working the state Legislature to add more millions. In Washington, D.C., real estate and business executives are lobbying Congress for a new $15,000 tax credit for all buyers. A current $8,000 tax credit is just for first-time buyers.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1940229.html
Mortgage rates, rising quickly from near-historic lows earlier this year, are already having negative consequences in the capital region.
"All of a sudden the phones just stopped ringing," said Michael McGee, president of Rancho Cordova's Winchester McGee Real Estate & Loans.
"At least right now, the refinance window has somewhat shut," added Brent Wilson, senior loan consultant at Sacramento's Comstock Mortgage.
It's also spooking buyers who haven't locked in a rate.
"I called my agent and said, 'We have to cancel,' " said Toby McBride of Citrus Heights on Thursday. He and his wife put in an offer on a house June 1 when rates were 5.12 percent. When the deal wasn't agreed to by Tuesday, with rates at 5.87 percent, they pulled the plug. (The new rate would add $175 a month to payments, said McBride, a federal worker).
"Definitely, the sudden change in interest rates has caused us to rethink our condition and lower our search price," he said.
As investors stew about inflation in the long run, rates are pushing back toward 6 percent and have reached a seven-month high, according to mortgage giant Freddie Mac.
The firm's Thursday survey revealed a national average of 5.59 percent (plus points) earlier this week for a 30-year fixed-rate loan. That's up from 5.29 percent last week.
Thursday, financial Web site Bankrate.com showed an overnight average of 5.74 percent.
"It just pretty much happened so quickly," said Charlene Singley, an agent with Lyon Real Estate and president of the Sacramento Association of Realtors. "I think it will take a while for people to realize that this is where the rates are now."
"I think we'll get some improvement from where we are today," said McGee. "But back to the high fours? It's possible, yes. Likely? I question that."
New home sales suffer
Thousands of distressed existing homes are making life harder and harder for Sacramento-area home builders. Their April sales numbers revealed the capital-area market as one of the state's weakest, according to the California Building Industry Association.
Builders in El Dorado, Placer, Sacramento and Yolo counties sold 290 houses in April. That was seven fewer than in March, and 48 percent below the same month last year, CBIA said this week. Builders in Yuba and Sutter counties sold 33 – better than March – but down 25 percent from the same time last year.
The numbers put area builders on track for a worse year than 2008, when they sold just 4,847 homes, according to Hanley Wood Market Intelligence.
In 2004 they sold 17,491.
The declines come amid fierce competition with discounted bank repos and short sales. In April, builders closed just 9.6 percent of the escrows in the capital area, compared with 24.5 percent in April 2005.
Statewide trends were a little better. Builders said sales were almost 7 percent better in April than March. But they were still down 31 percent from April 2008.
The CBIA said the median April sales price for a new house in El Dorado, Placer, Sacramento and Yolo counties was $292,900. It was $237,000 in Yuba and Sutter counties.
More time for renters
Oh, no. Home Front muffed a figure last week in an item about the Obama administration adding new protections for renters. In mistakenly noting that California renters get 30 days' notice to move after banks repossess houses, we overlooked last year's state Senate Bill 1137.
The bill gave tenants affected by foreclosure an extra 30 days' notice – to 60 days – through Jan. 1, 2013.
President Barack Obama, however, just signed a bill that gives renters with month-to-month arrangements 90 days' notice in foreclosure situations. Renters with leases in foreclosed homes stay until leases expire.
Profiting from feng shui
These days everyone is worried about money. But how do you get more? Here are a few feng shui ideas to increase your flow of wealth at home. For these, thank New York real estate broker Debra Duneier:
• The burners on your stove represent wealth. Keep them clean and alternate your use of the burners when cooking … The refrigerator should be filled with healthy food. A full refrigerator brings in abundance.
• The indoor plants that are wealth enhancers are bamboo and jade plants.
• Take three lucky Chinese coins and tape them to the back of a rug. Every time someone walks in (your home's entry point) they symbolically are bringing money into your property and into your life.
• Keep toilet seats down when not in use. Keep them up and money will disappear.
More tax credits sought
Finally, an update on tax credits: The California Franchise Tax Board reports that buyers of new, unoccupied homes have requested $82.5 million of the $100 million allocated for $10,000 tax credits.
The building industry is working the state Legislature to add more millions. In Washington, D.C., real estate and business executives are lobbying Congress for a new $15,000 tax credit for all buyers. A current $8,000 tax credit is just for first-time buyers.
Wednesday, June 10, 2009
Use of short sales on rise in Sacramento housing market
Use of short sales on rise in Sacramento housing market
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1933643.html
For years real estate agents have steered buyers away from "short sales," labeling them a mind-numbing, difficult experience that could exhaust the patience of the biblical Job.
Now buyers can hardly avoid them.
"When it's 50 percent of the inventory you don't have a choice," said Scott Williams, a Roseville-based ReMax broker. Williams specializes in a complex transaction that may be the next evolution of the real estate market in Sacramento.
Banks, with their balance sheets battered after 40,000 capital-area foreclosures since early 2007, are finally warming up to short sales, a traditional marker of soured real estate markets. Increasingly, so are buyers. Some analysts believe short sales – those transactions in which banks accept offers below what they're owed to avoid the higher costs of foreclosing – may help avert a few thousand new foreclosures in the capital region.
"I still see a ton of defaults coming down the line … but a large percentage, 50 percent or more of these, will get done as short sales and keep the flow of repos to a manageable level," said Williams. "I don't see us getting flooded."
Industry analysts say half the for-sale signs in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties that aren't bank repos are short sales. They're especially prevalent in newer suburbs built during the housing boom. According to Sacramento-based Metrolist Services Inc.:
• 56 percent of Lincoln homes priced between $200,000 and $250,000 are short sales.
• 55 percent of Rancho Cordova homes priced between $200,000 and $300,000 are short sales. In Folsom, 46 percent of homes in that price range are short sales.
• 44 percent of Elk Grove houses priced from $300,000 to $325,000 are short sales.
All their owners owe more than their homes are worth. (Online evaluator Zillow.com says 68 percent of Sacramento-area households that bought in the past five years are in that boat). And most are believed to be in some stage of the foreclosure process.
Currently, nearly one in four sales pending – those expected to close escrow within weeks – are bank-approved short sales, according to Williams' analysis of Metrolist data. That's a rise from a January-through-June average of one in seven.
Bank repos, by comparison, are about 60 percent of area sales this year. But their share is falling now as the region's short-sale market share rises.
"It's a more cooperative solution," said David Sunlin, senior vice president with Charlotte-based Bank of America Home Loans. He said the firm is adding staff and streamlining procedures to do more short sales more quickly as an alternative to foreclosing.
"It allows the borrower to leave on their own terms. It's a more dignified exit strategy and the credit reporting is less negative afterward," he said. "It's a win for the lender as well. It's going to shorten the recovery cycle, which is important to all of us."
The firm, which bought Countrywide Financial last year, services one in five U.S. mortgages and is a top lender in the capital region.
Agents such as Williams hope the new BofA approach brings results. They complain that Countrywide has been among the industry's most difficult servicers for short sales.
Buyers say short sales make great deals – if you're patient.
"It probably saved us $50,000" said Helen Martinez, who, with her husband, Robert, closed escrow two months ago on a short-sale property in Davis. It took almost four months, she said.
"If you need something right away it's not going to work out," she said. "You'll sit around and wait forever and find something else."
Jamie Trussell also expects to go into escrow soon on a short-sale property in Elk Grove. He and his wife, Tricia, made an offer on the house in February, then sweetened it by $10,000 when others bid on it.
"We fell in love with the house so we remain dedicated to it," he said. The two checked out other houses while waiting, including bank repos, but Trussell said, "It's been tough to beat the house we have with everything we want."
Their long wait has had consequences, however. Higher interest rates are adding to their expected borrowing costs.
"The last few weeks I've been watching the interest rate climb," said Trussell. "It was 4.8 percent in May, and now, it's at 5.2 percent.
"Our greatest concern when we started was 'how long is this going to take?' It's really pushing to the wire for us."
Williams said many short sales fall apart between the offer and acceptance because people find other properties.
Short sales take so long because lenders must negotiate permission from other parties, such as investors and private mortgage insurers. Most recent home loans also have so-called "seconds," an extra loan that financed the down payment. Other short sales involve home equity loans or homeowner associations seeking restitution for unpaid dues.
"That can make the process more complex," said BofA's Sunlin. He said BofA also asks some borrowers to contribute funds to ease the lenders' losses "or sign a promissory note for a later date."
"We see this every week," said Scott Thompson, principal at Carmichael-based Mortgage Resolution Services, a short-sale specialty firm. He said such lender requests scuttle many short sales, prompting homeowners to instead "walk away" from the house.
Thompson said homeowners often prefer to walk away than request a short sale.
"Now, banks are ready to do them," he said. "But many homeowners are so far under water on their mortgages that they're disinclined to participate at all."
Sunlin concedes the difficulties on both ends in a still-unraveling housing market.
"These are tough times," he said. "But we are committed to make the process work better … By doing this we should see more private sales instead of bank-owned sales."
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1933643.html
For years real estate agents have steered buyers away from "short sales," labeling them a mind-numbing, difficult experience that could exhaust the patience of the biblical Job.
Now buyers can hardly avoid them.
"When it's 50 percent of the inventory you don't have a choice," said Scott Williams, a Roseville-based ReMax broker. Williams specializes in a complex transaction that may be the next evolution of the real estate market in Sacramento.
Banks, with their balance sheets battered after 40,000 capital-area foreclosures since early 2007, are finally warming up to short sales, a traditional marker of soured real estate markets. Increasingly, so are buyers. Some analysts believe short sales – those transactions in which banks accept offers below what they're owed to avoid the higher costs of foreclosing – may help avert a few thousand new foreclosures in the capital region.
"I still see a ton of defaults coming down the line … but a large percentage, 50 percent or more of these, will get done as short sales and keep the flow of repos to a manageable level," said Williams. "I don't see us getting flooded."
Industry analysts say half the for-sale signs in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties that aren't bank repos are short sales. They're especially prevalent in newer suburbs built during the housing boom. According to Sacramento-based Metrolist Services Inc.:
• 56 percent of Lincoln homes priced between $200,000 and $250,000 are short sales.
• 55 percent of Rancho Cordova homes priced between $200,000 and $300,000 are short sales. In Folsom, 46 percent of homes in that price range are short sales.
• 44 percent of Elk Grove houses priced from $300,000 to $325,000 are short sales.
All their owners owe more than their homes are worth. (Online evaluator Zillow.com says 68 percent of Sacramento-area households that bought in the past five years are in that boat). And most are believed to be in some stage of the foreclosure process.
Currently, nearly one in four sales pending – those expected to close escrow within weeks – are bank-approved short sales, according to Williams' analysis of Metrolist data. That's a rise from a January-through-June average of one in seven.
Bank repos, by comparison, are about 60 percent of area sales this year. But their share is falling now as the region's short-sale market share rises.
"It's a more cooperative solution," said David Sunlin, senior vice president with Charlotte-based Bank of America Home Loans. He said the firm is adding staff and streamlining procedures to do more short sales more quickly as an alternative to foreclosing.
"It allows the borrower to leave on their own terms. It's a more dignified exit strategy and the credit reporting is less negative afterward," he said. "It's a win for the lender as well. It's going to shorten the recovery cycle, which is important to all of us."
The firm, which bought Countrywide Financial last year, services one in five U.S. mortgages and is a top lender in the capital region.
Agents such as Williams hope the new BofA approach brings results. They complain that Countrywide has been among the industry's most difficult servicers for short sales.
Buyers say short sales make great deals – if you're patient.
"It probably saved us $50,000" said Helen Martinez, who, with her husband, Robert, closed escrow two months ago on a short-sale property in Davis. It took almost four months, she said.
"If you need something right away it's not going to work out," she said. "You'll sit around and wait forever and find something else."
Jamie Trussell also expects to go into escrow soon on a short-sale property in Elk Grove. He and his wife, Tricia, made an offer on the house in February, then sweetened it by $10,000 when others bid on it.
"We fell in love with the house so we remain dedicated to it," he said. The two checked out other houses while waiting, including bank repos, but Trussell said, "It's been tough to beat the house we have with everything we want."
Their long wait has had consequences, however. Higher interest rates are adding to their expected borrowing costs.
"The last few weeks I've been watching the interest rate climb," said Trussell. "It was 4.8 percent in May, and now, it's at 5.2 percent.
"Our greatest concern when we started was 'how long is this going to take?' It's really pushing to the wire for us."
Williams said many short sales fall apart between the offer and acceptance because people find other properties.
Short sales take so long because lenders must negotiate permission from other parties, such as investors and private mortgage insurers. Most recent home loans also have so-called "seconds," an extra loan that financed the down payment. Other short sales involve home equity loans or homeowner associations seeking restitution for unpaid dues.
"That can make the process more complex," said BofA's Sunlin. He said BofA also asks some borrowers to contribute funds to ease the lenders' losses "or sign a promissory note for a later date."
"We see this every week," said Scott Thompson, principal at Carmichael-based Mortgage Resolution Services, a short-sale specialty firm. He said such lender requests scuttle many short sales, prompting homeowners to instead "walk away" from the house.
Thompson said homeowners often prefer to walk away than request a short sale.
"Now, banks are ready to do them," he said. "But many homeowners are so far under water on their mortgages that they're disinclined to participate at all."
Sunlin concedes the difficulties on both ends in a still-unraveling housing market.
"These are tough times," he said. "But we are committed to make the process work better … By doing this we should see more private sales instead of bank-owned sales."
Monday, June 8, 2009
Evidence that the housing market is recovering.
Here’s more evidence that the housing market is recovering.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.Other encouraging news came from IHS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas."While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan. "We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Sellers have dropped their asking prices on 25 percent of homes listed for sale on Trulia.com, according to a report the online real estate company released last week.The average price-reduced home has seen a listing price cut of 10.6 percent.Not only are cities with lots of foreclosures hard hit, but traditionally strong markets also are among those with large-percentage price reductions.Among the 50 largest U.S. cities, the 12 locales with the largest percentage of price reductions are:
1. Jacksonville, Fla. – 36 percent2. Tucson – 32 percent3. Boston – 32 percent4. Los Angeles – 32 percent5. Columbus, Ohio – 31 percent6. Dallas – 31 percent7. Honolulu – 31 percent8. Minneapolis – 31 percent9. Austin – 30 percent10. Washington, D.C. – 30 percent11. Baltimore – 30 percent12. Las Vegas – 30 percent
Reinforces what we know, the market will continue to be value driven for buyers and price driven for sellers.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.Other encouraging news came from IHS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas."While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan. "We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Sellers have dropped their asking prices on 25 percent of homes listed for sale on Trulia.com, according to a report the online real estate company released last week.The average price-reduced home has seen a listing price cut of 10.6 percent.Not only are cities with lots of foreclosures hard hit, but traditionally strong markets also are among those with large-percentage price reductions.Among the 50 largest U.S. cities, the 12 locales with the largest percentage of price reductions are:
1. Jacksonville, Fla. – 36 percent2. Tucson – 32 percent3. Boston – 32 percent4. Los Angeles – 32 percent5. Columbus, Ohio – 31 percent6. Dallas – 31 percent7. Honolulu – 31 percent8. Minneapolis – 31 percent9. Austin – 30 percent10. Washington, D.C. – 30 percent11. Baltimore – 30 percent12. Las Vegas – 30 percent
Reinforces what we know, the market will continue to be value driven for buyers and price driven for sellers.
Friday, June 5, 2009
Rate-rise threatens economic relapse
Rate-rise threatens economic relapse
http://www.inman.com/buyers-sellers/columnists/loubarnes/rate-rise-threatens-economic-relapse
The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.
Markets first, then new economic data.
The 10-year T-note has jumped to 3.85 percent this morning, the highest since last fall, and even two-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. Mortgages have gone right along to 5.625 percent with lowest fees -- the highest since the Fed announced its intentions to buy at Thanksgiving. A 1 percent rate-rise in two weeks has stopped refinance activity altogether, and purchase markets also suffer.
Stocks have now recovered all 2009 losses, and the Dow's press up on 9,000 has retraced one-third of its overall collapse. A mechanical pattern typical of all major moves either up or down, these retracements also typically have little predictive value. Worriers are convinced that this move is an all-time "dead-cat bounce."
Optimists think oil touching $70 a barrel confirms their position, but that market carries a sulfuric whiff of speculative fiddling. There is no increase in global demand, and the world is awash in supply overshoot -- it won't last for more than a few years, but is deep and broad. Not even speculation can move natural gas, trading under $4 today. Industrial commodities have retraced like the stock market, but the whole agricultural sector is flat-on-bottom -- one old friend says that Memorial Day retail sales of beef were the worst ever measured. National health kick, or budget beans?
The first week of each month brings the most important data. Today's rise in rates and stocks immediately followed news that payrolls contracted by "only" 345,000 jobs in May, down a quarter-million from the first-quarter monthly average. However, unemployment jumped another 0.5 percent to 9.4 percent, new claims for unemployment insurance are steady at 625,000 weekly, and only continuing claims flattened. Possibly some people are going back to work, but only at lesser pay. The overall job picture is awful.
The twin Institute for Supply Management reports by inventory managers excited the optimists. Manufacturing rose from 40.1 to 42.8, technically close to recession-end level (actual growth lies at 50), but the juice was in the components: new orders to 51.1, and "prices paid" from 32 to 43.5 produced a delighted "Eek!" from inflationists. Wednesday's service-sector survey (70 percent-plus of the economy) was tepid, to 44 from 43.7, and optimists ignored employment components in both surveys, which are still mired in the 30s.
The optimists, centered in the stock market and joined by the inflation-fearful, see a normal, cyclical recovery building, in which jobs are the last to recover and inflation follows. It may be on the weak side, but there will be no more Bears, Lehmans, AIGs, Chryslers or GMs. With all the big dominoes down, there is no reason to buy Treasurys for safety at no-earn yields.
http://www.inman.com/buyers-sellers/columnists/loubarnes/rate-rise-threatens-economic-relapse
The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.
Markets first, then new economic data.
The 10-year T-note has jumped to 3.85 percent this morning, the highest since last fall, and even two-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. Mortgages have gone right along to 5.625 percent with lowest fees -- the highest since the Fed announced its intentions to buy at Thanksgiving. A 1 percent rate-rise in two weeks has stopped refinance activity altogether, and purchase markets also suffer.
Stocks have now recovered all 2009 losses, and the Dow's press up on 9,000 has retraced one-third of its overall collapse. A mechanical pattern typical of all major moves either up or down, these retracements also typically have little predictive value. Worriers are convinced that this move is an all-time "dead-cat bounce."
Optimists think oil touching $70 a barrel confirms their position, but that market carries a sulfuric whiff of speculative fiddling. There is no increase in global demand, and the world is awash in supply overshoot -- it won't last for more than a few years, but is deep and broad. Not even speculation can move natural gas, trading under $4 today. Industrial commodities have retraced like the stock market, but the whole agricultural sector is flat-on-bottom -- one old friend says that Memorial Day retail sales of beef were the worst ever measured. National health kick, or budget beans?
The first week of each month brings the most important data. Today's rise in rates and stocks immediately followed news that payrolls contracted by "only" 345,000 jobs in May, down a quarter-million from the first-quarter monthly average. However, unemployment jumped another 0.5 percent to 9.4 percent, new claims for unemployment insurance are steady at 625,000 weekly, and only continuing claims flattened. Possibly some people are going back to work, but only at lesser pay. The overall job picture is awful.
The twin Institute for Supply Management reports by inventory managers excited the optimists. Manufacturing rose from 40.1 to 42.8, technically close to recession-end level (actual growth lies at 50), but the juice was in the components: new orders to 51.1, and "prices paid" from 32 to 43.5 produced a delighted "Eek!" from inflationists. Wednesday's service-sector survey (70 percent-plus of the economy) was tepid, to 44 from 43.7, and optimists ignored employment components in both surveys, which are still mired in the 30s.
The optimists, centered in the stock market and joined by the inflation-fearful, see a normal, cyclical recovery building, in which jobs are the last to recover and inflation follows. It may be on the weak side, but there will be no more Bears, Lehmans, AIGs, Chryslers or GMs. With all the big dominoes down, there is no reason to buy Treasurys for safety at no-earn yields.
Wednesday, June 3, 2009
Waiting game on low mortgage rates backfires
Waiting game on low mortgage rates backfires
By Mark Glover mglover@sacbee.com
http://www.sacbee.com/business/story/1903523.html
Sacramento-area homeowners and prospective first-time homebuyers might be wondering: Did we miss the boat on mortgage rates?
The short answer from experts is: Probably, but rates are still very attractive.
For 10 weeks, mortgage rates were riding well below 5 percent on 30-year loans, but housing and industry analysts speculated that many first-time homebuyers and homeowners looking to refinance existing mortgages were waiting for rates to drop even lower.
Then on Wednesday, rates went the other way.
Mortgage rates at some lenders spiked anywhere from 0.5 percent to 1 percent, and industry analysts pointed to economic indicators favorable to even higher rates in the coming weeks.
Rates on 30-year, fixed-rate mortgages averaged 4.91 percent this week, according to the Sacramento Association of Realtors. Some lenders' rates spilled into the 5-percent-plus ballpark.
For those who were waiting for rates to go lower and others who had yet to lock in rates, the window of opportunity may have closed, experts said. They added the market is still relatively good.
"Did they miss it? Well, I think they did in the short term," said Mike Lyon, head of Sacramento-based Lyon Real Estate. "The good news is it's still cheap. For most people, I would say, 'Let's not get greedy.'
"Rates are still good. For decades, we were in the 10-percent-plus range. Prices are still soft. This is not the time to lose hope, but to be a little more vigilant. Maybe this was a wake-up call for people who were waiting."
Still, Lyon said the rate spike will have its effect – probably on 5 percent to 10 percent of escrows in the local market.
"I think the initial problem is for those who did not lock in, and thinking (rates) would go lower was really extremely optimistic," he said. "A lot of people who are first-time homebuyers are now going to think about the price. It reduces their buying power."
Andrew LePage, an analyst with researcher MDA DataQuick, speculated that this week's rise in mortgage rates might have a more limited effect on the local market.
"Anything under 5 percent is really good, period," he said. "I'd guess that (borrowers) who might affected by this are at the margins.
"There are other factors. Lenders are being very picky, home prices are still in flux. Prices are temporarily firm in some areas. (Rates aren't) the only factor, and nobody can predict mortgage rates, because there are so many factors."
Lyon agreed that predicting the long-range course of mortgage rates requires a crystal ball, but he said demand for refinancing remains high. He said mortgage rates will continue to be affected by numerous economic factors, including overseas bond buying and the finite number of bonds that can be purchased in the market.
Keith Springer, president of Capital Financial Advisory Services in Sacramento, agreed, noting that the recent rally in the U.S. stock market also has applied pressure for increased rates.
"(Borrowers) probably have missed the boat on the lower rates," Springer said. "If they skipped 4.5 (percent) or 4.75 (percent), we're probably not going to see that again for maybe a couple years.
"The good news is that they're probably not going to raise the prime rate soon, and that's tied to the adjustable (rates). … People shouldn't be scared, because even 5.5 percent is a good rate."
Springer added that heavy borrowing by the U.S. government will be critical in determining rates over the months ahead. That was echoed this week by Federal Reserve Chairman Ben Bernanke, who said mortgage-rate increases are linked to concerns that enormous federal borrowing will decrease the value of government-backed assets.
The 30-year fixed mortgage rate was at a record low of 4.78 percent in April, which analysts linked to the Fed buying more than $1 trillion in mortgage securities and $300 billion in Treasury notes. Some analysts hope the Fed will continue to take aggressive steps, saying that U.S. economic recovery depends heavily on free-flowing credit and a stabilized housing market.
The same analysts point out that homeowners who refinance their mortgages tend to spend their extra cash more freely on goods and services, providing an overall lift to the economy.
The downside of more Fed action is that increased yields on Treasury notes tend to drive mortgage rates higher. Another potential downside of buying more Treasury notes is that it creates inflation.
By Mark Glover mglover@sacbee.com
http://www.sacbee.com/business/story/1903523.html
Sacramento-area homeowners and prospective first-time homebuyers might be wondering: Did we miss the boat on mortgage rates?
The short answer from experts is: Probably, but rates are still very attractive.
For 10 weeks, mortgage rates were riding well below 5 percent on 30-year loans, but housing and industry analysts speculated that many first-time homebuyers and homeowners looking to refinance existing mortgages were waiting for rates to drop even lower.
Then on Wednesday, rates went the other way.
Mortgage rates at some lenders spiked anywhere from 0.5 percent to 1 percent, and industry analysts pointed to economic indicators favorable to even higher rates in the coming weeks.
Rates on 30-year, fixed-rate mortgages averaged 4.91 percent this week, according to the Sacramento Association of Realtors. Some lenders' rates spilled into the 5-percent-plus ballpark.
For those who were waiting for rates to go lower and others who had yet to lock in rates, the window of opportunity may have closed, experts said. They added the market is still relatively good.
"Did they miss it? Well, I think they did in the short term," said Mike Lyon, head of Sacramento-based Lyon Real Estate. "The good news is it's still cheap. For most people, I would say, 'Let's not get greedy.'
"Rates are still good. For decades, we were in the 10-percent-plus range. Prices are still soft. This is not the time to lose hope, but to be a little more vigilant. Maybe this was a wake-up call for people who were waiting."
Still, Lyon said the rate spike will have its effect – probably on 5 percent to 10 percent of escrows in the local market.
"I think the initial problem is for those who did not lock in, and thinking (rates) would go lower was really extremely optimistic," he said. "A lot of people who are first-time homebuyers are now going to think about the price. It reduces their buying power."
Andrew LePage, an analyst with researcher MDA DataQuick, speculated that this week's rise in mortgage rates might have a more limited effect on the local market.
"Anything under 5 percent is really good, period," he said. "I'd guess that (borrowers) who might affected by this are at the margins.
"There are other factors. Lenders are being very picky, home prices are still in flux. Prices are temporarily firm in some areas. (Rates aren't) the only factor, and nobody can predict mortgage rates, because there are so many factors."
Lyon agreed that predicting the long-range course of mortgage rates requires a crystal ball, but he said demand for refinancing remains high. He said mortgage rates will continue to be affected by numerous economic factors, including overseas bond buying and the finite number of bonds that can be purchased in the market.
Keith Springer, president of Capital Financial Advisory Services in Sacramento, agreed, noting that the recent rally in the U.S. stock market also has applied pressure for increased rates.
"(Borrowers) probably have missed the boat on the lower rates," Springer said. "If they skipped 4.5 (percent) or 4.75 (percent), we're probably not going to see that again for maybe a couple years.
"The good news is that they're probably not going to raise the prime rate soon, and that's tied to the adjustable (rates). … People shouldn't be scared, because even 5.5 percent is a good rate."
Springer added that heavy borrowing by the U.S. government will be critical in determining rates over the months ahead. That was echoed this week by Federal Reserve Chairman Ben Bernanke, who said mortgage-rate increases are linked to concerns that enormous federal borrowing will decrease the value of government-backed assets.
The 30-year fixed mortgage rate was at a record low of 4.78 percent in April, which analysts linked to the Fed buying more than $1 trillion in mortgage securities and $300 billion in Treasury notes. Some analysts hope the Fed will continue to take aggressive steps, saying that U.S. economic recovery depends heavily on free-flowing credit and a stabilized housing market.
The same analysts point out that homeowners who refinance their mortgages tend to spend their extra cash more freely on goods and services, providing an overall lift to the economy.
The downside of more Fed action is that increased yields on Treasury notes tend to drive mortgage rates higher. Another potential downside of buying more Treasury notes is that it creates inflation.
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