Real Estate Related News Blog

Southern California’s Inland Empire, a suburban sprawl to the east of Los Angeles, has been among the hardest hit by the real estate crisis.   All the while, the largest bank based in the region, CVB Financial Corp., has survived even as rivals perished. But CVB’s exposure to commercial real estate in the area could still cause problems for the lender. California loan modifications and California Short Sales continue to play a dominant role in state real estate transactions, but now they are affecting the commercial market place.

During a December presentation for CVB’s investors, Chief Executive Christopher Myers described a bleak commercial property market in Ontario, a city in the heart of the Inland Empire and the site of CVB’s headquarters.  “You go up our street — there are 10 buildings of 50,000 to 150,000 square feet with 75% vacancy,” Myers said of the town’s main artery, Haven Avenue, according to a transcript of the presentation. “We have zero loans against those 10 buildings.”   However, an office building at 800 N. Haven Ave. in Ontario was part of collateral for a $16.575 million revolving line of credit that Citizens Business Bank, the banking unit of CVB, extended in March 2008, according to the deed of trust. In August of that year, the property partly secured a $16 million promissory note issued by the bank, another deed of trust shows.  > Read the entire California Real Estate Article.

For California short sales we are anticpating at another two or three years of strong activity,” said Jim Satterwhite, chief operating officer of National Quick Sale, a Jacksonville, Florida-based company that negotiates short sales on homes that are valued less than what they are mortgaged for.  Loan modification agreements, foreclosure prevention and bad credit refinancing continue to drive up the traffic for loan applications.  “Some mortgage refinance markets have seen better price stability, but they are not going up yet. But it will still be two or three more years before housing even starts to appreciate in some other markets,” he said.

Mortgage rates are at all time low levels and people in California are buying houses again…So what is the problem?  To start, home foreclosure rates continue to break records and California loan modification filings are rising each month.  Yale University economist Robert Shiller, co-author of the now closely monitored S&P/Case-Shiller Home Price Index, and, to be sure, no friend of realtors, says the data suggests the housing market is on the mend.  “The sense that something is changing is definitely in the air,” Shiller told Bloomberg News after the release of June’s housing data. “After three years of decline, we might be seeing a turnaround.” Shiller, along with economist Karl Case, developed the index, which tracks housing data in 20 U.S. metropolitan areas. In June, only two cities, Detroit, hard hit by auto lay-offs, and Las Vegas, slumping as consumers nix trips to the gambling capital, registered May-to-June price declines.

L.A., Miami, Phoenix Start to Rebound?

Meanwhile 18 cities registered May-to-June price increases. Just as telling: the hard hit metro-areas registered price gains: Los Angeles, up 1.1 %; Miami, up 0.5 %; Tampa, up 0.4 %; and Phoenix, up 1.1 %. Economists says that because the California, Florida, Arizona/Nevada regions sustained the largest and most extensive home price declines, they’ll probably snap-back first and telegraph the start of the broader U.S. housing sector recovery.

Also, nationally, U.S. home prices increased 2.9 % in Q2 compared to Q1 — the first quarterly gain in two years, according to Case-Shiller data. On a seasonally adjusted basis, prices rose 1.4 % in Q2 compared to Q1.

Another data point to support the housing recovery thesis? U.S. new home sales increased in three U.S. regions in July, according to U.S. Commerce Department data. Sales surged 32 % in the Northeast, jumped 16 % in the South, and rose 1 % in the West; they fell 7.6 % in the Midwest, a region that, again, is still coping with large structural changes stemming from the U.S. auto sector’s downsizing and restructuring. 

A third metric supporting a housing rebound? Inventories of new homes fell to 271,000 in July, the Commerce Department said — a 35.4 % decline since July 2008. That’s a 7.5-month supply at the current sales rate, down from an 8.8-month supply in June. The 7.5-month supply is still above the normal three-to-five month supply, but economists and housing statisticians say the rate of inventory decline is just as important as inventory levels now. If inventories continue to drop by a 1-month supply each month, it won’t be long before home construction firms say ‘It’s time to start building some homes before our inventory gets too low and we lose sales because of lack of choice for customers.’

What’s driving the turnaround in home prices? Most economists say the federal government’s $8,000 income tax credit for first-time home buyers and comparatively low interest rates have played a role, but the large factor remains the market pricing mechanism. Home prices have dropped so much that, those home buyers with decent job security and good credit are calculating, given the slim chance of picking an absolute bottom for home prices, that now represents a decent time to purchase that home.

Housing Analysis: The $64,000 question – make that the $210,000 question, given the median price of a new U.S. home – is: should prospective home buyers purchase now?

Unless you’ve found your dream house or are otherwise forced to buy, I’d wait until late fall. Summer data typically distorts home sales to the upside, as many families move then, when school is out. The $8,000 tax credit, which applies to homes bought before November 1, also is aiding sales. In other words, prices could retrench. However, if home prices and sales continue to rise into the autumn season in your region of the U.S., that’s a sign that a housing bottom is forming, and a home purchase then would make sense, from a price standpoint.

Real Estate Related News recommends finding a foreclosure prevention company that provides a refund policy and can document a succesful track record negotiating with your specific lender.  Federal and state agencies took 189 actions today against modification and foreclosure-rescue firms, the Federal Trade Commission announced.

Realtytrac: Foreclosures Up 11% in Last Qtr.

The coordinated actions were part of a national law-enforcement effort by 2 federal and 23 state agencies to crack down on loan modification scams.  “Operation Loan Lies,” has targeted loan modification companies that allegedly promised to obtain modifications or stop foreclosures, but the companies actually did nothing. Advance fees charged by the loss mitigation firms were equal to one or more mortgage payments, but no loan negotiations ever took place.  See the original article at FTC Shuts Down Loan Modification Scams.

Greg Rand of Better Homes & Gardens’ Rand Realty discuss foreclosures and the latest real estate news. They consider the housing crisis and why homeowners are making it difficult to realize foreclosure prevention. 

Homeowners, Loan Modifications and Foreclosure Prevention?

Loan modification plans are disputed as nearly 50% of homeowners re-default on their mortgage after their lender reduces the interest rate and lowers the home loan payment.  Where do we go from here?

According to Lawrence Yun, chief economist of the Chicago-based Realtors’ group “The rising home foreclosures that sell at discounted prices are flooding the real estate market and depressing property values.  Kelly Media Group, Founder Jason Cardiff weighed in, “Home sales will rebound strongly if we can keep the interest rates low for the next 12 months, but the trend of rates seems to be increasing.”  Many realtors and mortgage brokers seem to agree that industry needs to keep conventional mortgage rates low until the local and national c can recover.

Existing U.S. home sales in May rose 2.4 % to an annual rate of 4.77 million, lower than forecast, and the median price was down 16.8 % from the same month in 2008, according to the Realtors. It would take about 9.6 months to sell the nation’s 3.8 million unsold homes at the current sales pace, according to the Realtors.   “The worst is behind us but we’re a long ways off from a recovery in housing,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Inventories are still elevated. We’re not expecting any strength in housing until the second half of 2010.”   About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31, according to Seattle-based real estate data service Zillow.com.

Home Builders Continue to Struggle

Builders including Los Angeles-based KB Home are slashing prices and reducing the size of houses to compete with foreclosures. KB Home’s revenue fell 40 % last quarter to $384.5 million and net orders dropped 31 % to 2,910 homes, the company said June 26. The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

In a recent LA Times article written by Peter Y. Hong, Southern California home prices continued their decline at the end of 2008, closing the year at 2003 price levels, a real estate research firm reported today.  The December median sales price for all Southern California homes fell to $278,000, a 35% drop from the same month a year prior, according to San Diego-based MDA DataQuick.

Recent foreclosure news suggests that short sales and re-defaults from unsuccessful loan modification plans, may be misleading the severity of the foreclosure crisis in Southern California.

Los Angeles County’s median sales price of $320,000 was down 32% from December 2007, while Orange County’s median price fell 30% to $397,000. San Diego’s median price dropped 30% from December 2007, to $300,000. Ventura County’s $338,000 median December sales price was down 36% from the prior year.  Reduced sales prices drove the number of Southern California homes sold in December up by 51% over the previous year.  “It does look like the spigot is being opened a little bit, at least for low-cost home purchases,” said John Walsh, MDA DataQuick president.  The typical monthly mortgage loan payment that California homebuyers committed themselves to paying was $1,239 last month, down from a revised $1,380 for the previous month, and down from a revised $2,060 for December year ago. Read the complete LA Times article.

Foreclosures are closely tied to home prices – they tend to rise as prices fall. And nationally, home prices have fallen more than 21% from their peak, according to the S&P/Case-Shiller Home Price index. In many areas, the decline has been much worse.  In Los Angeles, San Francisco and Miami prices are down 30% or more. They’ve fallen more than 40% in Phoenix and nearly that much in Las Vegas.  Loan modifications are helping thousands of borrowers avoid foreclosure, but the home that are lost to foreclosure are sold at such a discount the effects in the housing markets are astounding.

Declining prices put many homeowners “underwater” on their mortgage loans, owing more than their homes are worth, which makes them more likely to default.  And adding a flood of bank-owned homes to already slow markets further outstrips demand and dampens prices, creating a spiral of lower prices and higher foreclosures.  As a result, more homeowners who fall behind on their mortgage payments end up losing their homes, according to Jay Brinkman, the chief economist for the Mortgage Bankers Association.  Foreclosure news seems to arise daily as foreclosure rates rose 81% in 2008.

In California and Florida 80% of the homeowners who miss a loan payment end up in foreclosure, according to the MBA. That’s a much, higher percentage than in the past.  “The number of mortgages 30 days past due are still below what they were during the 2001 recession,” said Brinkman. But the proportion of those loans that went into foreclosure was much lower, he added – about 10%.  “Delinquency itself has become a much clearer predictor of foreclosure,” said Sharga.  If home prices keep plunging, the foreclosure scourge will likely continue.  And S&P’s chief economist, David Wyss, expects home prices to continue to decline, bottoming in early 2010 roughly 33% below their 2006 peak.

Suze Orman discuss on when do you know if the Real Estate has reached the bottom.  When has the housing market reached the bottom?  In most cases, when the prices begin to go back up, then you have reached the bottom.

Watch this video to learn more about the real estate market reaching the low point. 

According to KMG president Jason Cardiff, “Timing the real estate market is very difficult.”  Cardiff continued, “Like the stock market, predicting the bottom can be a great way to make money quickly, but even most experts are unable to call the bottom.”  Sign up now and have the latest real estate news delivered to you as it is reported.

Real estate news continues to dominate main stream media because of the housing sales slumps, foreclosure crisis and historic mortgage rate cuts.  The Existing Home Sales release will be released soon from the National Association of Realtors and the Department of Housing and Urban Development. The Commerce Department will also release a reportwit new home sales data.  These three reports should help the experts measure the strength of the housing sector and home loan credit demand, however, neither consider to be of high importance. Both of the reports are expected to show a decline in sales. 

In a recent article, Kelly Media Group President, Jason Cardiff said, “2009 may see the housing sectors and mortgage refinance markets rebound after all.”  Cardiff continued, “The Federal Reserve showed their commitment with record low rate cuts to fight deflation and many believe the President Elect, Barrack Obama will be aggressive in an effort to stem the foreclosure mess.”  HUD continues to release new FHA loan products that offer solutions for mortgage refinancing with Hope for Homeowners and FHA Secure.  FHA continues promoting rehabilitation and home remodeling to foreclosed homebuyers with the 203k rehab loans.  FHA actually insures rehabilitation mortgages for owner-occupants and non-profit housing providers who finance the rehabilitation of an existing property or the purchase and rehabilitation of a property.