A home in Atlanta, one of the metropolitan areas where prices fell to new lows in this economic cycle.

A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.
Multimedia

Prices in 20 major metropolitan areas slid 1 percent in November from October, according to the Standard & Poor’s Case-Shiller Home Price Index released Tuesday. The index has fallen 1.6 percent from a year ago.

Nine of the 20 cities in the index sank in November to new lows for this economic cycle: Chicago; Las Vegas; Detroit; Atlanta; Seattle; Charlotte, N.C.; Miami; Tampa; Fla.; and Portland, Ore. Only a handful of places — essentially, California and the District of Columbia — went counter to the trend and had rising prices over the last year.

Whether the long-predicted double dip is looming or has already arrived is a quibble of semantics.

David M. Blitzer, chairman of S.& P.’s Index Committee, does not count a downturn as a double dip until it exceeds the previous low. The index is still 3.3 percent above the low it reached in April 2009. Mr. Blitzer thinks a double dip could be confirmed before spring.

“We shouldn’t kid ourselves,” he said. “The last few months have been weak.”

Cities that were never mainstays of the boom are suffering unduly in this latest bust. Atlanta, Chicago and Portland have dropped more than 7 percent over the last year, with much of the tumble in October and November.

By this point, the problems in the housing market are well known. Builders built too much, lenders lent too much, and people bought too much. The binge was epic and so is the hangover.

Click here for the full article.

California home sales rose in December to their highest level since May, according to a report Friday from the California Association of Realtors, as the inventory of unsold homes dwindled.

December’s sales were up 5.9 percent from November’s revised figure of 491,590 but were down 6.8 percent from the revised 558,840 of December 2009.

The unsold inventory index for existing, single-family detached homes was 5 months in December, down from 6.2 months in November but up from 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Read more: California home sales hit 7-month high in December | Los Angeles Business from bizjournals – Full Story – Click Here…

While foreclosures climbed 2% nationally, California saw a 14% drop. But California’s high unemployment rate and resetting loans mean the fall in foreclosure activity could be brief.

Fewer Californians grappled with foreclosure last year, bucking a national trend and giving homeowners fresh hope that the state’s housing market could be on the mend.

Trash litters the front yard of a bank-owned home in Phoenix. Arizona was among the states hardest hit by the housing meltdown. (Joshua Lott, Reuters / January 13, 2011)

Fewer Californians grappled with foreclosure last year, bucking a national trend and giving homeowners fresh hope that the state’s housing market could be on the mend.

The 14% drop in foreclosure activity contrasted with a 2% rise nationally, according to data tracking firm RealtyTrac. Analysts noted that California’s housing market was among the first to falter and may now be among the first to recover. Home prices here hit bottom in April 2009, and have gradually risen since then.

Read the full story

If you follow my blog at all… I have a few questions for you. How can anyone know what media forum is correct? Did you see my post yesterday about 1 million homes foreclosed in 2011? While this article is more geographically specific, I would question how accurate is this data, and is it really an issue or a concern to me?

Rather than have uncertainty in the future market, ask yourself, how long am I going to live in my next home? How comfortable am I with my current job, with my current mortgage or rent payment? We have no control over the market; however we as consumers have full control over our individual plans, thoughts and actions.

Real Estate: Finally a good investment?
The housing market still looks pretty bleak: There were a record 1 million foreclosures last year, home prices are still falling in many regions, and the number of “underwater” properties is at a record high.

And things don’t look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months.

Basically, the real estate market remains a mess.

Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, let’s focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Everyone hates homes – When the housing market is in the doldrums, people tend to avoid thinking about the value of their home. Sellers complain they’re not getting offers and buyers bemoan the strict lending requirements. However, prospective buyers should be contrarian and take advantage of a down housing market.

• Smart people are buying real estate – A prominent hedge-fund manager said in a speech last fall: “If you don’t own a home, buy one. If you own a home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” He believes that interest rates and home prices will rise this year, so real estate bargains won’t last much longer.

• Real estate performs well during inflation – Convention says Treasury Inflation Protected Securities, commodities, and real estate do well in an inflationary environment. Real estate performed well during the period in the 1970s, when persistent inflation and high unemployment occurred.

• Demand may be coming back – Job creation and getting people employed are the two major factors in the housing rebound. There’s much debate about when the job market will recovery. Optimists say the recovery will happen this year, while pessimists say it won’t happen for several years.

Read the full story… click here.

Another top notch article from NEW YORK (CNNMoney.com) — Attention delinquent borrowers: If you want to get into the Obama administration’s mortgage modification program, you’d better have your paperwork ready.

New Treasury Department guidelines go into effect on June 1 that will require loan servicers to verify applicants’ income and financial hardship before placing them into trial modifications.
This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you’re more likely to get long-term assistance, providing you send in your check on time.

“This will allow people to have more certainty that the modification they want will materialize,” said Suzanne Boas, president of CredAbility, formerly the Consumer Credit Counseling Service of Greater Atlanta.

Of the 1.2 million people who’ve started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn’t send in timely payments, hand in the required documents or meet the eligibility criteria.

Paperwork has caused all sorts of problems for the president’s signature foreclosure rescue program. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program.

Originally intended to last three months, the trial period was meant to give troubled borrowers a chance to prove they could make the modified payments and qualify for a so-called permanent modification, which lasts five years.

Instead, many homeowners have been stuck in trial modifications for months and months while they wrestle with servicers over the documentation requirements. The financial institutions say that borrowers aren’t sending in the needed forms; homeowners contend the servicers are losing them.

At Saxon Mortgage Services and JPMorgan Chase (JPM, Fortune 500), for instance, about three of four borrowers in the trial phase have lingered there for at least six months.

A few servicers, however, have been requiring documentation up front all along. And the impact of this practice is evident in the government’s monthly modification report. Firms such as Ocwen Financial (OCN) and HomeEq Servicing have converted 83% of eligible borrowers to permanent modifications. Others that rely on stated income to place people in trials have yet to shift half their participants to long-term adjustments.

Many loans didn’t require much documentation when they were originated, which makes gathering the paperwork during the modification process that much more difficult, said Paul Koches, executive vice president at Ocwen. But doing so helps servicers craft sustainable payment plans.

“It puts us in a better position to determine the specific terms and conditions of the modified loans that will make it more likely that they will stick,” he said.

The pace of people entering trial modifications has already slowed as servicers have started requiring the paperwork in advance. Only 47,160 trials were started in April, down from more than 72,000 in February.

“You have pinging back and forth between borrowers and servicers,” said David Sisko, who heads Deloitte & Touche’s default management practice. “Requiring upfront documentation to really start the clock is a good thing.”

Though the application process takes longer, borrowers understand that they will now have a better ideas of whether they’ll get long-term assistance, said a Chase spokesperson.

Among the documents Chase and other servicers require are hardship affidavits, two recent pay stubs, a bank statement, a tax return, proof of occupancy and a 4506T-EZ form.

“If they make the trial payments, it’s almost certain they’ll get a permanent modification because all the paperwork has been done upfront,” she said.

By JULIET CHUNG and JAMES R. HAGERTY at the WSJ

For years, Jennifer Metz and her husband John yearned for a bigger home in San Francisco. Three months ago, the couple started looking, figuring that in this shaky economy, their $3 million budget should provide them a pick of attractive homes and accommodating sellers.
Luxury Going Fast

Kimberly Hallen/Boston Virtual Imaging – A Cambridge, Massachusetts home

They were wrong. Hours after seeing a 5,000-square-foot fixer-upper in Presidio Heights with an asking price around $2.7 million, the Metzes put in a bid—and lost. Soon after, they made another offer on a four-bedroom in Russian Hill. Their bid was rejected.

Last week, the Metzes rushed over to a large, dilapidated home in Pacific Heights that needed a lot of work but was asking the (relatively) low price of $2.25 million. The Metzes put in their over-ask bid the next day, but lost that one too: There were nine offers; the winning bid was $2.56 million.

“It’s frustrating,” says Ms. Metz, a 44-year-old stay-at-home mom whose husband works in finance. “You think you put in a good offer but, no.”

After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.

Sotheby’s

$2,146-per-square-foot is what a buyer paid for this elaborately redone San Francisco home that has a vanishing wall.

That sales are up from last year shouldn’t come as a big surprise. The shock of the financial panic in the fall of 2008 left many potential buyers too nervous to bid, and those who were willing to wade in found it hard to get financing. But a study for The Wall Street Journal by MDA DataQuick, a real-estate data provider, found that in some areas of the country, sales of homes over $2 million in the first quarter were actually on par with the levels of 2005, the peak year for existing-home sales volume nationwide.

In San Francisco, 49 homes sold for $2 million or more in this year’s first quarter, according to the study, compared to 47 in 2005. In Manhattan, there were 402 sales of $2 million or more in the latest quarter, compared with 311 in the first quarter of 2005, according to the appraisal firm Miller Samuel Inc. Other areas with strong rebounds included New York’s Hamptons, Menlo Park, Calif., and Beverly Hills.

Even a couple of troubled housing markets experienced a strong uptick. In Las Vegas, there were 21 such sales in the first quarter, up from 15 in the first quarter of 2005, according to DataQuick. In Miami, 21 such sales of $2 million or more were recorded in the first quarter, up from 15 last year and close to the 23 that sold in that time five years earlier.

Of course, many markets including Greenwich, Conn. and parts of New Jersey are still ailing. Brokers say pricey homes in outlying suburbs are more likely to sit than sell. Miami-Dade County still has enough homes priced at $2 million or more to last 41 months at the current sales pace, though down from 116 months a year earlier, says Ron Shuffield, president of EWM Realtors, a large local brokerage.

The rear of the San Francisco home.

The recent stock market tumble could unravel the turnaround. Unlike the rest of the housing market, which is driven largely by employment trends, housing analysts say high-end buyers are much more sensitive to changes in the stock market, which for the first quarter was helping them feel even wealthier. “If the markets don’t recover soon, it will scare people” and hurt demand for high-end homes, says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

In the meantime, some high-end renovators are making quick sales. Koby Kempel bought a colonial in Brookline, a posh suburb of Boston, last year for $1.45 million. He raised the ceilings, rebuilt the interior, expanded the home by about 50% and added a heated garage. The six-bedroom home was listed by Mona Wiener of Hammond Residential on a Friday in early May and was under contract the next day for the asking price of nearly $3.5 million.

Back in San Francisco’s Pacific Heights neighborhood, a four-bedroom home on Broadway, with a spa and views of the Golden Gate Bridge, was renovated by Gregory Malin. It went on the market in late January and sold two weeks later for $13.5 million, compared with the $14 million asking price. The listing agent, Val Steele of Sotheby’s International Realty, says the sale, at $2,146 per square foot, marked the first time a home in San Francisco topped $2,000 a square foot since early September 2008.

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth

Well, you may not be stupid or broke. Maybe you already have a house and you don’t want to move. Or maybe you’re a Trappist monk and have forsworn all earthly possessions. Or whatever. But if you want to buy a house, now is the time, and if you don’t act soon, you will regret it. Here’s why: historically low interest rates.

As of today, the average 30-year fixed-rate loan with no points or fees is around 5%. That, as the graph above—which you can find on Mortgage-X.com—shows, is the lowest the rate has been in nearly 40 years.

In fact, rates are so well below historic averages that it should make all current and prospective homeowners take notice of this once-in-a-lifetime opportunity.

And it is exactly that, based on what the graph shows us. Let’s look at the point on the far left.

In 1970 the rate was approximately 7.25%. After hovering there for a couple of years, it began a trend upward, landing near 10% in late 1973. It settled at 8.5% to 9% from 1974 to the end of 1976. After the rise to 10%, that probably seemed O.K. to most home buyers.

But they weren’t happy soon thereafter. From 1977 to 1981, a period of only 60 months, the 30-year fixed rate climbed to 18%. As I mentioned in one of my previous articles, my dad was one of those unluckily stuck needing a loan at that time.
Interest Rate Lessons

And when rates started to decline after that, they took a long time to recede to previous levels. They hit 9% for a brief time in 1986 and bounced around 10% to 11% until 1990. For the next 11 years through 2001, the rates slowly ebbed and flowed downward, ranging from 7% to 9%. We’ve since spent the last nine years, until very recently, at 6% to 7%. So you can see why 5% is so remarkable.

So, what can we learn from the historical trends and numbers?

First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.

Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.

Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.

Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let’s assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.
Loan Costs

Stay with me now. We are at 5%. As you can see by the graph above, as the economy stabilizes, it is reasonable for us to see 30-year fixed rates climb to 6% within the foreseeable future and probably to a range of 7% to 8% when the economy is humming again. If every quarter of a point is worth $12,000 per $200,000 borrowed, then each point is worth almost $50,000.

Let’s put that into perspective. You have a good stable job (yes, unemployment is at 10%, but another way of looking at that figure is that most of us have good stable jobs). You would like to own a $240,000 home. However, even though home prices have steadied, you may be thinking you can get another $5,000 or $10,000 discount if you wait (never mind the $8,500 or $6,500 tax credit due to run out next spring). Or you may be waiting for the news to tell you the economy is “more stable” and it’s safe to get back in the pool. In exchange for what you may think is prudence, you will risk paying $50,000 more per point in interest rate changes between now and the time you decide you are ready to buy. And you are ignoring the fact that according to the Case-Shiller index, home prices in most regions have been trending back up for the last several months.

If you are someone who is looking to buy or upgrade in the $350,000-to-$800,000 home price range, and many people out there are, then you’re borrowing $300,000 to $600,000. At 7%, the $300,000 loan will cost just under $150,000 more over the lifetime, and the $600,000 loan an additional $300,000, if rates move up just 2% before you pull the trigger.

What I’m trying to impress upon everyone is that if you are planning on being a homeowner now and/or in the foreseeable future, or if you are looking to move your family into a bigger home, then pay more attention to the interest rates than the price of the home. If you have a steady job, good credit, and the down payment, then you really are being offered the gift of a lifetime.

So… are you convinced?   What has to happen in order for you to take action right now?   Let me know what you think.

Los Angeles, CA – Attractive Affordability Continues
to Lure Buyers
(4,559 single-family permits in 2008, 21st largest market in the country)

Buyers still in the market following the tax credit extension. Buyer traffic remained
above agents’ expectations in November, as our buyer traffic index inched up to 59 from
57 in October (readings above 50 indicate traffic above expectations). Agents said there
was little change in traffic levels this month after the tax credit was extended early on, as
buyers continued to focus on the affordability created by low prices, low rates and the
credit. One agent noted, “The tax credit extension has put some people back in the market
who thought they couldn’t find what they wanted before. Most of the first-time buyers think
they should get a foreclosure or short sale for less than the asking price, but banks are
being firmer on prices.” Other agents said the extension of the credit also gave buyers
more confidence that they are getting in at or near the bottom of the market, especially as
inventory levels come down, although they do note buyers remain very value focused.
Lower inventories and solid demand lead to sequentially higher prices. Home prices
increased sequentially in November, as our home price index improved to 61 from 52 in
October (readings above 50 indicate higher prices over the past 30 days). Agents said
prices were helped by the strong demand trends, which led to a further drawdown in
inventories. Our home listings index improved to 84 in November from 71 in October, with
readings above 50 indicating lower inventory levels. We’re hopeful that these positive
trends can continue, but remain worried about the growing backlog of foreclosures that
have yet to hit the market.

Comments from real estate agents:
■ “There are too many cash buyers (investors) and real buyers are getting
frustrated.”
■ “Buyers are looking for bargains and trying to take advantage of the tax credit.”
KB Home, Standard Pacific and MDC have the most exposure. Approximately 3% of
sales for Hovnanian, KB Home and Standard Pacific come from L.A., the most among the
large builders.

SEARCHING

1) Homes may be listed as Active, but they may have many offers or they may already be Sold.

2) Homes may be a Short Sale, even if it is not clearly identified.

3) Most home features may not be listed, or may not be correct.

4) The home may be in an Association, even if it is not disclosed; there may be Mello-Roos Tax, even if it is not disclosed; the home may be on leased land, even if not disclosed.

MAKING OFFERS

1) There may already be many other offers and the property may sell above the list price.

2) The listing Agent may have dozens of distressed listings in many areas, and they may know little about any particular home or area.

3) A Bank Owned Home may have an Asset Manager handling hundreds of homes, so a response could take from 1 day to 1 week or more.

4) A Short Sale Could take 2 to 5 months to get an approval, and up to 80% will never get approved. Any updates or responses could take weeks to months. After waiting months, the approved price returned by the bank could be much higher than the list price.

ACCEPTED OFFERS

1) Until it closes escrow, even with a signed, accepted offer, the bank or owner can decide not to sell and any money spent by the buyer for inspections, appraisals, etc will not be refunded.

2) The condition of the property is unknown to the owner and the agents. The buyer takes complete responsibility to pay for and conduct as many inspections that they desire, including but not limited to the physical condition, the association, permits, taxes, etc.

3) Most banks will put in their contracts that the home is sold ‘AS IS’, and they will refuse most repair requests that you make after inspection. Many will NOT even do Termite Repairs.

4) Most banks will put into their contracts that if the buyer closes late, the buyer will pay a daily fee for each day late; this could be from $50 to $250 a day or more.

5) The bank will insist on choosing the Title and Escrow Company, these may be slow, overworked and sometimes inexperienced people working on too many files at the same time.

THE ESCROW

1) The escrow experience for most buyers, agents & lenders may be the most frustrating part.

2) Things that normally take hours may take days.

3) Things that normally take days may take weeks.

4) The buyer, agent and lender can call escrow repeatedly, and things may not speed up.

5) The buyer, agent and lender can visit the escrow office, and things may not speed up.

6) The same information may often need to be given to escrow multiple times.

7) We may deal with many people at the escrow company, and they may not be sure of anything.

DO NOT plan on a specific closing date, no matter how efficient the lender and agent are, the escrow company may slow things down at every stage and the seller may have a final review.

9) At the end of this slow, frustrating escrow, they will still charge you the full regular escrow fee.

10) Upon Close you may only get 1 key, possibly not a Garage Door Opener, or mail box key & No association key for the pool, etc. You may need to buy keys and change locks.

Most of the escrows will eventually close, so try not to let the system that some banks have put into place to sell their properties dampen your excitement for your new home!

Jeffrey Simons ~ Broker Associate – Prudential California Realty 714.746.8103 Jeff@Jeffreysimons.com

More good news for consumers, our members, and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers. As you may know, C.A.R. and our partners at NAR have worked for months urging Congress and the Senate to extend and expand this crucial piece of legislation. We expect President Obama to sign the legislation in short order.

As it now stands, 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.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. We expect that number to increase dramatically in the months ahead with this new legislation in place. Thank you to our members who called, wrote, and e-mailed their congressional representatives and voiced their support for the home buyer tax credit. Your voices were heard – today’s vote is a direct result of OUR actions and involvement.

CALIFORNIA ASSOCIATION OF REALTORS®