Real Estate Talking Points by Richard

Bye Bye Foreclosures

2010-04-21T13:57:00.000-07:00

With more than a 40 percent drop in the number of mortgage default notices in the first three months of this year as compared to the first three months of last year, it sure looks like the housing market won't be flooded by a fresh wave of foreclosures.

Unexpect Rise in Home Prices

2010-03-31T13:12:00.000-07:00

LA is leading the way, with a 1.8% increase in January over December. This makes the eight consecutive month that prices have risen.

$10,000 State Tax Credit for Home Buyers

2010-03-24T10:54:00.000-07:00

The governor and legislature have agreed to offer a $10,000 state tax credit to first-time home buyers at a cost of $200 million. It is set to take effect on May 1.

A similar program that passed last year was wildly popular. Buyers snatched up all $100 million in available credits within months.

By the way, a "first-time Home buyer" is defined as anyone who has not owned a home in the previous three years.

Southland Homes Prices Jump 10%

2010-03-18T17:35:00.000-07:00

Home prices in the southland jumped 10% from February 2009 through February 2010. Orange County led the way with a 11.2% jump. The price gains are mostly at the entry level, where inventory has become significantly reduced.

The news is probably not welcome to potential buyers who are hoping that prices would have fallen even further, but homeowners are loving it.

Rates Unchanged, Defaults in CA Drop

2010-01-28T13:31:00.000-08:00

Although most analysts say the Fed will probably raise rates by the end of the year, the central bank for the moment at least decided to keep rates at record lows ... with one opposing vote pointing to an improving economy.
Meanwhile, the number of homes in California entering the first stage of foreclosure fell 24.3 percent in the fourth quarter compared with the previous quarter.

Prices Up, Sales Up

2010-01-20T16:30:00.000-08:00

The median sales price in SoCal climbed 4% from December 2008 to December 2009, while the number of sales jumped 12.1%, according to DataQuick. This improvement in the housing market was no doubt spurred by very low interest rates, relatively low prices, and the federal tax break.

While some experts say that 2010 is going to see continued improvement, we still have hurdles in market fundamentals: high levels of unemployment, more foreclosures on the horizon, and the end of the tax credit on April 30.

Home Buying Tax Credit Set to Expire

2009-12-29T16:02:00.000-08:00

First-time home buyers and current home owners who want to move up have until April 30, 2010, to get an accepted offer if they want to take advantage of the federal tax credit. That's the date the program will expire, and both the housing industry and Congress are saying that the deadline will not be extended again: Los Angeles Times

Review a quick summary on how the tax credit works.

Foreclosures? Price & Sales Are Up

2009-12-16T17:01:00.000-08:00

Home prices in Southern California have gone up seven straight months in a row, including November ... which is usually a slow month. On top of that, the number of sales is up almost 15% over the same month last year: LA Times

What's driving all this? Simple: really low interest rates, relatively cheap prices, and the federal tax credit. It sure isn't foreclosures: there are only 94 on the market at the moment throughout the entire city of Long Beach, and people usually swarm them with offers to bid the price up.

Mortgage Interest Rate Hits Record Low

2009-12-05T13:57:00.000-08:00

The average interest rate for a 30-year fixed-rate mortgage dropped to a record low of 4.71% the week of November 30, pushed down by an aggressive government campaign to reduce borrowing costs.

Buyer's Market or Seller's Market? Depends ...

2009-12-01T16:15:00.000-08:00

Something that every buyer AND seller should know is the "months of inventory" (definition) in the current market niche. This information tells us whether it is a buyer's market or a seller's market. Important, because the info prevents buyers from paying more than they should, and it guides sellers into pricing their home so that they will sell ... and for not less than they should.

Here's how the buyer's market/seller's market scenario stacks up in Long Beach for the previous 12 months ending in November:

Single family residences, all of Long Beach, no lower or upper price limit: Inventory decreased from 946 homes for sale to 495. We have just barely a seller's market
Single family residences, all of Long Beach, under $450,000: Inventory decreased from 621 homes for sale to 235. We have a fairly solid seller's market
Single family residences, all of Long Beach, from $650,000-$1M: Inventory decreased from a total of 250 homes for sale to 180. We have a very strong buyer's market
Condos, all of Long Beach, no lower or upper price limit: Inventory decreased from a total of 544 homes for sale to 318. We have a solidly neutral market
Condos, all of Long Beach, under $400,000: Inventory decreased from 403 homes for sale to 199.This is just barely a seller's market
Condos, all of Long Beach, from $450,000-$600,000: Inventory decreased from 62 homes for sale to 31.This is almost a buyer's market

This information is available for all communities, not just Long Beach, it can be applied to any price range, and it can be geographically narrowed down to zip codes. This is must-know information.

More Foreclosures Coming? Prices Up!

2009-11-21T12:25:00.000-08:00

Signals from the housing market are all over the map. On the bright side, the median sales price of homes is on the rise. But, at the same time, the Mortgage Bankers Assn. tells us that one out of every seven homes is now either delinquent or in foreclosure and will add to the housing inventory in 2010. The only explanation I can think of for rising prices amid cheap foreclosures is that the jobless rate is causing more expensive homes to come on the market.

The new wave of foreclosures isn't caused so much by tricky loans as it is by the high jobless rate. Since unemployment seems to be leveling off and is therefore poised to improve as the recession becomes a memory, I can only conclude that the increase in median sales price will pick up steam in 2010.

Homebuyer's Tax Credit & Interest Rates for November 16

2009-11-16T15:10:00.000-08:00

We begin the week of November 16 with:

* Conforming, 30-year fixed up to $417,000 at 4.75%
* Conforming, 30-year fixed up to 729,750 at 4.875%
* FHA 30-year fixed up to $417,000 at 5.0%
* FHA Conforming, 30-year fixed up to $729,750 at 5.125%
* 30-year fixed jumbo up to $5M at 5.625%.

The new home buyer's tax credit at a glance.

Freezing Credit Prevents Identifty Theft

2009-11-12T11:12:00.000-08:00

Most people never think of identity theft until it happens to them, but when it does the victim is in a world of pain and frustration that can take years to resolve. One of the best ways to thwart a would-be thief is to "freeze" credit reporting with the three credit bureaus. Everyone should probably do this.

Tax Credit Extended and Expanded

2009-11-05T14:40:00.000-08:00

The federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years.

The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

As if that isn't enough incentive to would-be home buyers, taxpayers can even claim the credit on purchases completed in 2010 on their 2009 income tax returns.

This is sure to fuel the market for another five months.

Months of Inventory -- October 2009

2009-11-01T11:25:00.000-08:00

Something that every buyer AND seller should know is the "months of inventory" in the current market. This information prevents a buyer from paying more than he needs to, and it guides a seller into pricing his home so that it will sell ... and for not less than it should.

We are talking about whether a geographical area is in a seller's market, a neutral market, or a buyer's market. As an example, here's how Long Beach stacked up this past October:

Single family residences, all of Long Beach, no price limit: just barely a seller's market
Single family residences, all of Long Beach, under $450,000: a stronger seller's market
Condos, all of Long Beach, no price limit: just barely a neutral market
Condos, all of Long Beach, under $400,000: just barely a seller's market

This information is available for all communities, not just Long Beach, it can be applied to any price range, and it can be geographically narrowed down to zip codes.

Reducing Property Taxes for Free

2009-10-29T10:20:00.000-07:00

Some homeowners have received official-looking letters offering to reduce property taxes ... for a fee. Don't respond! Property tax reassessment is a free service you can do yourself by contacting your local tax assessor's office.

Homeowners in LA County can get started by learning about the process and downloading a Decline-in-Value Reassessment application at the tax assessor's website.

Another Wave of Foreclosures Coming?

2009-10-23T16:14:00.001-07:00

One of the things I hear often these days is that there is a another big wave of foreclosures on the horizon, and the wave will drag property values down even further. I DON'T THINK SO!

Banks have gotten a bit smarter. With experience, they now know its much less costly to avoid foreclosing by finding a way to keep people in their homes (read "loan modifications") or allowing them to short sell. This is causing the pace of foreclosures to slow considerably. When foreclosures are absolutely necessary, banks are releasing them gradually to prevent pulling down values in an entire neighborhood.

We still have foreclosures in Long Beach and surrounding communities (more in some areas, much less in others), they are still bargains, and they will be with us for another year or so, but a new big wave? Probably not.

Home Price Trends: Supply and Demand (Part II)

2009-10-21T10:49:00.000-07:00

Long Beach and surrounding communities will see a significant increase in housing demand, due to local job growth, in the next few years. The Douglas Park, located near the airport off Lakewood Blvd, is already partially filled. When completed, it will create up to 13,200 new jobs.

Further increasing job growth is the facility, directly across from Douglas Park, formerly used to build the Boeing MD-17. Either a world-class sound studio or a car manufacturer will probably fill the space. Regardless of which business stations itself, it is expected to create some 3,500 jobs.

Last, but certainly not least, is the expansion of the Long Beach port. This $750M project, set to begin in December of 2009, will create some 14,000 local jobs.

That's a total of nearly 31,000 new jobs in Long Beach! Does anyone doubt that a remarkable increase in the demand for housing is on the horizon? Investors will make a killing, current owners will feel much better, and fence-sitting buyers would do well to take stock.

Home Price Trends: Supply and Demand (Part I)

2009-10-16T12:59:00.000-07:00

The other day I posted an article explaining price trends since WWII and also predicting the trend for coming decades. It's a good article, but it has a fundamental flaw:

The article never mentions echo boomers, the children of baby boomers. This generation, born between 1982 and 1995, makes up nearly 25% of the country's population and is far bigger than the baby boomer generation. These people are going to start buying homes in 15-20 years. That's a ways off, but it is also a lot of new demand. And price trends (as well as market cycles) is based on supply and demand.

Of course, Long Beach and surrounding communities, like the rest of the country, will see price appreciation from the increased demand. But we are also poised to experience increased demand from local forces far sooner than 20 years. More on these local forces later.

No More Negative Amortization

2009-10-14T16:19:00.000-07:00

Negative amortization home loans were crazy to begin with, but we won't see them any more because they have been outlawed. (Negative amortization loans have payments so low that the principle can actually increase over time.)

Another really good idea is the new law that allows buyers of foreclosed homes to choose the escrow company and escrow officer instead of being forced by the seller to use theirs. Nothing like being held hostage.

Last but not least, another new law requires that mortgage documents be written in the same language that was used in oral negotiations. Duh!

These things just make good sense!

Historical Look at Real Estate Prices

2009-10-12T12:08:00.000-07:00

There are reasons why prices rise and fall, and this article is one of the best at explaining the forces behind price fluctuations since WWII. But I think the article missed a couple of very important points, especially as they affect outlook regarding Long Beach and surrounding communities. It all boils down to supply and demand. I'll explain my thinking in a subsequent post.

We begin the week of October 12 with the conforming 30-year fixed rate at 4.875%.

Continuing to Pick Up Steam

2009-10-09T17:06:00.001-07:00

The local housing market continues to pick up steam with open houses being quite busy and multiple offers being made on the best properties. An obstacle once again (read 2000-2005) facing buyers’ agents is getting their offer accepted in the face of competition for the home.

Next time I blog, we will have ended the month of June so, at that time, I’ll be able to post “months of inventory” through the complete month. This data is critical because it tell us if we are in a buyer’s market, a neutral market, or a seller’s market.

Much of the rise in interest rates in late May and early June was due to concerns about the government’s enormous accumulation of stimulous debt. Didn’t seem to be a problem with both domestic and foreign investors who showed a strong demand for Treasury purchases last week … which reversed some of the recent rate increases.

Click Here to see all rates as we begin the week of June 29.

You are reading my blog on real estate market trends. Go to my Main Page to search for properties.

Prices Edge Up, Rates Turn Downward

2009-10-09T17:05:00.002-07:00

Home prices edged up for the first time in nearly two years in May, but it’s not because the mainstream market is improving: it’s because higher-end home have begun to sell and are edging up the median price. The higher end has been nearly frozen for two years.

California’s economic recovery is now expected to begin in the second half of 2009, but we will continue to shed jobs through 2010. Even so, after 21 weeks of increasing job losses, the biggest decrease in job losses in more than seven years took place the week ending June 6.

Mortgage rates decreased sharply last week. The week ended at 5.38% for 30-year-fixed mortgages, down from 5.59% the previous week. Seven weeks earlier the 30-year-fixed was 4.78%, a record low since it has been tracked starting in 1971. Click here to see all rates as we begin the week of June 22.

You are reading my blog on real estate market trends. Go to my Main Page.

Move-Up Buyers Entering Market

2009-10-09T17:04:00.001-07:00

It’s almost official: the $8,000 first-time buyer tax credit can soon be used to increase an FHA loan down payment beyond the required 3.5%, and the credit may be applied towards closing costs as well. HUD has approved it, and lenders are working on how to implement it.
Home sales are up 2.9% in April from March 2009. First-time buyers accounted for 40% of sales in April, down from 53% in March. This tells us that there is rising interest in buying among current home owners.

Click here to see all rates as we begin the week of June 1.

Housing Affordability Best in 18 Years

2009-10-09T17:03:00.002-07:00

Mortgage rates have had a very slight increase in the past week, as we begin to enter the “moving season.” The reasons for the slight increase are signs of the economy turning a corner and the stock market at higher levels. While there is pressure for interest rates to edge up, 5% is still incredibly low and it may be decades before we see anything like it again.

Last week, the Wells Fargo Housing Opportunity Index (HOI) reported that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009. This movement placed housing affordability at the highest level since the HOI was created 18 years ago. Of course, the Los Angeles area remains one of the most expensive in the country.

Click here to see all rates as we began the week of May 26.

$8,000 Tax Credit Used toward Down Payment

2009-10-09T17:03:00.001-07:00

Here is some great news for buyers, and few of them know about it: the $8,000 tax credit may, in the near future, be used toward a down payment! The way it will work is that the money is given to the buyer by the lender up front, before the transaction is even complete. Can the market do ANYTHING else to encourage buyers to take advantage of depressed home values and amazingly low interest rates?!?

Last week, more evidence showed that the economy is slowing its downward descent. The biggest risk to send mortgage rates upward is a Fed perception that a near-term economic recovery could begin. The brighter the outlook, the greater the potential for rates to start moving upward.

Click here to see all rates as they began the week of May 16.

Good News for Home Owners

2009-10-09T17:02:00.002-07:00

When Stimulus Bill details are released a $8,000 tax credit to first time buyers will probably be included. Opinion about the effect of the tax credit among real estate professionals is pretty much unanimous: it should push a big wave of buyers off the fence to take advantage of not only the tax credit, but low prices and low interest rates as well.

The housing market led us into the recession, and the government is doing what it can to have housing lead us back out.

Click here to see all mortgage rates as they began the week of February 9.

$8,000 Tax Credit to Home Buyers

2009-10-09T17:02:00.001-07:00

The housing market led us into the recession, and the government is doing what it can to have housing lead us back out.

Click here to see all mortgage rates as they began the week of February 9.

Low Prices, Low Rates

2009-10-09T14:28:00.000-07:00

The really big news this week is interest rates: 30-year fixed conforming mortgage rates fell to their lowest level in 37 years. With the Fed dropping its short-term rate to between 0% and .25%, and its purchasing of mortgage-backed securites, long-term rates will very likely fall further in the first quarter of 2009.

For home owners, these rates should compel you to refinance. For potential buyers, it’s time to pick a mortgage program and find your new home: you’ll probably come out ahead, even if the median home price continues to slide.

If you know of someone who is ready to take advantage of low prices (see a December 21 LA Times article entitled “Can You Afford It Now?) and low interest rates, please call me with their name and contact information. I’ll take great care of your family and friends.

Click here to see all rates as they began the week of December 22.