Elaine King's Real Estate Blog

You have a mortgage worth $400K on a home now worth $225K, would you continue to pay this mortgage?  Many Californians are in this situation, especially in the East Contra Costa.  Here is a link to an article and a survey for you to take.  After you vote, you will see how others view this action.  I was surprised at the result, were you?

Several interesting articles came out recently on foreclosure/bank-owned properties, so I have attached the links for you to review.   The first article was on Yahoo and mentions how the typical bank-owned home sells for 35% less than a “normal sale”.  It will take 24 months to sell all bank-owned homes in the system.  (Here is the link for this article.)

The second link discusses consumer confidence, and although it is higher; it is also 33 points below a 44-yr historical average. Although they believe that the road to recovery will be long, they note that the fundamentals for recovery are moving in the right direction.  (Here is the link for this article.)

The 3^rd article is from money magazine.  Money states that currently there is a 36 month inventory of bank-owned homes for sale, and that they represent 45% of sales in California. (Here is the link for this article.)

You can make your own analysis of these articles.  However, if a home is perceived to be of value to a buyer, it is being SOLD and not lingering on the MLS.

Per Foreclosure Radar, foreclosure activity slowed in April, with California Foreclosures down.  In Contra Costa county NOD’s were down 27% vs YAG *(year ago), notice of sale -31% vs YAG, Bank Cancellations +17% vs YAG, Back to Bank -18% va YAG and Sold to 3rd party (typically investors) -27% vs YAG.  For a link to the complete Foreclosure Radar report, click below:

http://www.foreclosureradar.com/california/contra-costa-county-foreclosures

CoreLogic has questioned the sales numbers being put out by the National Association of Realtors (NAR), saying they can be off by as much as 20%!  The Mortgage Bankers have also questioned NAR’s sales numbers.  (Click here to view article.)  Regardless of sales increasing or not, one thing is certain; home prices are not going up; as shown in the recent CCAR sales statistics.  It is a great time to be a buyer and if you are a seller, price it competitively because the number of days on market is going up.

UCLA’s Anderson report just came out stating that althought the US economy is growing, housing s expected to lag due to glut of houses created during the bubble years of 2004-2007, as well as the stricter lending standards.  Also, lender increased down-payments and fear of prices going down further are also contributing to housing’s “modest” recovery.  The glut of homes in the outer areas (Antioch, Brentwood, Oakley, Vacaville, Tracy, Lathrup, Manteca) are also causing the stall on building.  California’s unemployment rate is also an issue and it is not expected to fall until early 2013.   Click here to view the article

Foreclosures in the state are still high. Sales of new homes are at historic lows. Millions of homeowners are underwater on their mortgages. So what’s the outlook for 2011 and beyond?  Click this link to hear what five California experts have to say.

I attended “The BIG EVENT”, hosted by California Association of Realtors’ (CAR) at the Lesher Theatre in Walnut Creek.  Two main speakers were there speaking: Robert Kleinhenz PHD, Deputy Chief Economist for CAR and a CAR Legal Rep to advise of new laws, forms and cases affecting realtors. The goal was to talk trends/forecasts to the Contra Costa realtors who were in their audience.  Below are some highlights of the talk:

• Unemployment for the Bay Area is at 12%.  Huge issues in this state are unemployment rates and jobs.  Unemployment rates have stabilized, and nationally there was a 151,000 job gain in October.  In California, from 2005 to 2010, we lost 1,034,900 jobs!
• The economy is recovering, but moving slower than needed. GDP is 2.7% nationally for 2010, and predicted to be 2.7% in 2011.
• Interest rates are historically LOW, and this makes it a great time to buy.
• The California housing market is ahead of the national market.  California sale tanked in January 2008, but just tanked nationally in August of 2010.  Homes in California have gone up 25% since January 2009.  The new median price is $310K. (The average price for a home in Contra Costa is $605,811; down -13%)
• Prices are going up because of inventory.  When inventory is less than 7 months, prices go up.  Our current inventory is 7 months, and Contra Costa is 5.4 months.
• Distress sales were down in 2010, and now the number of short sales to REO’s is 50/50.  According to CAR, defaults are DOWN 22% and REO’s are DOWN 24%.
• Non-distressed homes sell for 1/3 more than distressed homes. 
• CAR still believes that the banks are NOT stock-piling homes and that the number of homes going into foreclosure and coming out has remained constant.
• Sales in Contra Costa are up 24.7% over 2009, but Solano County is down -18.5%.
• CAR predicts a 2% rise in home prices for 2011.
• New SB 931 prohibits the lender of the 1^st mortgage (residential 1-4) from going after the homeowner in a foreclosure.  (Does NOT cover the 2^nd.)
• SB1149 has new rules on tenancy and terminations.
• In July 2011, each home MUST HAVE a carbon monoxide detector.
• For a lot of great information, check out www.car.org

Less-households are being created, says Rismedia in their recent article on the dwindling number of new home buyers.   In the previous 12 months, the number of new households increased only 398,000; this is the third-smallest increase on record since World War II.  Households are created by marriage and immigration (job transfers), both those numbers were significantly reduced.  Divorces, another household creator, also have lower numbers.  (People are staying together because they cannot afford to divorce.)

In this article it mentions that “a common misconception is that foreclosures account for the oversupply of houses. A foreclosure or a bank taking possession of a home, does not by itself add to the housing glut. If a household vacates a home and moves into a rental unit, the housing supply is unchanged. What is happening in many cases is that the people moving out of the foreclosed home are moving in with another, thus the housing supply increases. “

Here is a link to the Rismedia article

October sales in Brentwood averaged two per day, with 61 total sales for the month, with the average days on market at 31 days.  (One month to sell a home in this market is not a bad ratio.)  The LOWEST price selling home was $85,000 for a 2/1, where the value was in the 9100 sq foot property & NOT the home.  This home was bank owned and the MLS stated that it needed work.   The HIGHEST price sale in Brentwood was a 4800 sq ft Deer Ridge bank-owned beauty that sold for $20K over asking price, or $595,000.   This home had many upgrades, including being located on the golf course.   Here is a link to ALL homes SOLD in Brentwood in October.

HOME FOR SALE IN BRENTWOOD:  Currently, there are 216 homes for sale in Brentwood (3 1/2 months of inventory). The lowest price home and highest price homes were both built over 50 years ago!   The lowest price is 2/1 built in 1947 and the highest price home at $5,000,000 has quite a bit of land associated with it.   Here is a link to the the high-low homes!

Of the 216 homes ACTIVE on the MLS, 60 homes are “Regular Sales” and NOT Short Sales or Bank Owned homes.  Here is a link to these homes.

Please contact me for additional information.  Wishing you a great month of November!

On September 17, 2010, I again attended a fundraising event for the Susan G. Komen foundation at the Nixon Library.  This year the food was again incredible; prepared by White House catering!  A panel of  well- respected real estate professionals gathered to discuss the current real estate market and possible solutions to the perceived issues of the industry.  The panel consisted of  Bruce Norris (President of The Norris Group),  Christopher Thornberg ( Beacon Economics), Daniel Phelan (Mortgage Bankers Assoc.), Joseph Magdziarz (Appraisal Institute), Peter Wayman ( Freddie Mac), Sarah Letts (Fannie Mae), Sean O’ Toole ( Foreclosure Radar) and Tommy Williams (Williams & Williams Auctions)

This is my third year attending this breast cancer benefit.  I enjoyed the honest opinions of the panel on how they are dealing with this challenging market.  This is the first year that speakers from Fannie & Freddie attended talking about bulk REO purchases.

Please click on this link to hear this worthwhile program.  It is in five (5) segments which will allow you to digest all the meat of the discussions.  (Allow 4 hours to hear the total event.)  IT IS WELL WORTH IT!!!!