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.
Whether it’s live transfer leads or lead generation derived from the voice broadcasting campaign, sales agents are excited to get a live voice on the phone. Now you can quit cold calling leads from the yellow pages. For real estate investors and entrepreneurs who loathe the age-old practice of cold-calling and risky advertising, there is good news at last. A new cost saving business plan: pay-per-month lead generation by Wehavehomeleads.com. It takes the frustration out of trying to find new business by delivering a stream of interested, ready-to-sell prospects to its clients.
For real estate investors and entrepreneurs who can’t stand the practice of cold calling and risky advertising, there is good news at last. A new cost saving business plan: pay-per-month lead generation by Wehavehomeleads.com. It takes the frustration out of trying to find new business by delivering a stream of interested, ready-to-sell prospects to its clients.�
�
Wehavehomeleads.com is a welcome solution for entrepreneurs, real estate investors, realtors, and others who are tired of wasting time and money on unproven marketing strategies,� says Art Smith, CEO of Wehavehomeleads.com. Now, rather than gambling with high risk advertising campaigns or unproductive cold calls, our clients can focus on closing sales and building their business.” Upon signing up with Wehavehomeleads.com, clients receive a custom-built website which organizes and stores their leads.
The real estate marketing company then utilizes a variety of marketing strategies to get in contact with motivated sellers. Home selling prospects are pre-qualified by a detailed questionnaire and customer service representative, and only leads fitting the client’s target customer profile are delivered. Sign up for related real estate news. 2010 is forecasted to see a significant market switch for selling and home-buying across the country.
After doing what she was told last year placing ads, cold-calling potential clients, asking friends and relatives for real estate leads Thomas-Garcia wound up $3,000 in the red with not a sale to her name. So instead of shelling out more money to renew her license, she put her career on hold and took a job at Payless ShoeSource. Thomas-Garcia has learned firsthand why the number of people entering the real estate business in New Jersey last year plummeted faster than sales themselves. In the bonanza years, when newly licensed agents could stir up a bidding war simply by listing a house, people flocked to the industry to make easy money. Now, real estate classes are half-empty and agents are looking for other work until the cycle begins again.
Get alerted with home sales and foreclosure reports. Sign up for related real estate news. 2009 and 2010 are forecasted to see sparks of a market rebound.
The number of people getting real estate licenses in 2008 fell by a third, according to state statistics, following a 17% drop in each of the two previous years. “Last year it really dropped off,” said Jeff Snyder of Moorestown, co-owner of RE/MAX of New Jersey. “I think you’re going to see that trend continue.” The number of single-family homes sold in New Jersey dipped 18% in 2008, while the median sales price fell 7.5%, according to the New Jersey Association of Realtors. “People are saying, ‘Wow, I’ve got to get a real job,’” said Richard Leonard, who owns Arcadia Realtors in Roseland. As far as careers go, real estate has a low entry bar.
To get a license in New Jersey, you need to be 18, have a high school diploma, pay a $60 fee and take a 75-hour course that usually runs about $400. A real estate agent then pays additional fees to maintain the license and to get insurance and database access. The Association of Realtors reported a spike in interest with a recent direct mail marketing campaign that helped perform a home-buying survey. Read the remaining article >
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.
The Federal Reserve continued with their rate cutting campaign that promotes home financing and lending directly to damaged financial markets and companies. Its statement Tuesday came with a promise to extend those efforts. “The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level,” the Fed said.
Two large Federal lending programs are still being ramped up. In one, the central bank will buy up to $600 billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses. So far, the Fed has only committed $8 billion to purchasing bad credit home loans. Officials have been relieved that mortgage rates have come down since announcing the program.
According to HSH Associate, mortgage rates for conforming thirty year home loans dropped from 6.64% to 5.28% since the Fed’s last meeting, a financial publishing firm. It has been one of the few areas in financial markets where credit costs have shown substantial improvement in the past few weeks. “Over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant,” the Fed said.
Fed officials have high expectations for a separate program through which they will lend up to $200 billion against high-rated securities backed by car loans, student loans, credit-card debt and small-business loans. U.S. officials have said the program, which is called the Term Asset-Backed Securities Loan Facility and is expected to be operational in February, can be expanded to other asset classes — such as commercial real estate loans or mortgages not backed by Fannie Mae and Freddie Mac. FHA loans also got a boost from the Fed’s rate reduction, as FHA mortgage executive, Jeff Moran said, “FHA mortgage applications have surged since last week.” Moran continued, “Our lending office alone saw a 35% increase new loan application volumes, compared to the previous week.”
The latest housing data underscored the grim economic setting. The housing downturn is now more than three years old. “November’s report for new home production and permit issuance indicates not only that conditions aren’t improving in the housing market, but that the situation is getting worse,” said David Crowe, chief economist with the National Association of Home Builders. Real estate news in 2008 has been mostly negative amid the foreclosure crisis and stock market slide. Kelly Media Group President, Jason Cardiff spoke to reporters in Toronto today as the rate cut news hit the wires. Cardiff said, “The Federal Reserve has made their move to lower mortgage rates to these historic levels. Now struggling American homeowner who have been waiting on the sidelines to refinance can now jump into the game.” Cardiff continued, “Let’s take a moment for have a round of applause…Fixed rates at 5% is good news for American homeowners.”
The Federal Open Market Committee had downgraded its unemployment and economic growth projections at its last meeting on October 29th and things have only gotten worse since then. The unemployment rate, at 6.7% in November, was already above the Fed’s October forecast for the fourth quarter and looks sure to go higher still.
Economists at Macroeconomic Advisers LLC, a forecasting firm, say the nation’s gross domestic product is on track to contract by 6.5% in the current quarter. If they’re right, it will be the worst quarter since 1980. “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight,” the Fed said.
The recent decline in mortgage rates could help revive housing markets. Federal Reserve officials also are focused on reducing other interest rates relative to Treasury benchmarks, a difference that is known on Wall Street as a ’spread.’ Across a wide-range of consumer lending, spreads have remained painfully high since September, a sign of tight credit conditions.
