Your So.Cal. Real Estate Destination

FHA 90-DAY HOLDING PERIOD WAIVED ...

2010-01-19T11:23:00.000-08:00

Effective February 1, 2010 the Department of Housing and Urban Development (“HUD”) Act under 24 CFR x203.37a(b)(2) is waived for a period of one-year from this date (February 1, 2010). HUD’s change in policy will now allow an owner to resell a property without any ‘holding’ period subsequent to the original purchase (which under 24 CFR x203.37a(b)(2) was 90 days), subject to certain conditions. Prior to this modification, the Act required that a mortgage for a property was not eligible for FHA insurance, if the contract of sale for the purchase of the property was executed within 90-days of the prior acquisition by the seller and the seller does not come under any of the specific exemptions that apply to the rule.

The intent of this temporary waiver for eligible properties is to help address the growing foreclosure crisis by encouraging more investor sales or ‘flips’. Specifically mentioned in the HUD determinations is that waiving the 90-day restriction for buyers will “help facilitate the return of repaired and habitable properties to the market in a timely fashion, additional exemptions to this resale restriction period must be granted for the purchase of properties by investors. This policy change will help to sell properties that may otherwise remain vacant for up to 90 days, while offering affordable housing options to buyers wishing to use FHA-insured financing.”

The waiver of the Act is subject to three primary conditions containing several subparts. Assuming that these conditions are satisfied, an investor may purchase a property and resell it to a new buyer (assuming no collusion and ‘arms-length’ sale) immediately without any holding period. Investors, as well as lenders, need to familiarize themselves with the amended Act and its conditions because they require several steps be followed if certain market conditions exist in the subsequent sale. See the HUD Policy Act for more details.

This policy change has been discussed and encouraged by several real estate industry associations and boards due to its restrictive effect on investment transactions (aka ‘flips’). In effect this policy discouraged investors purchasing SFR for ‘flips’ because the new buyer would not be able to secure federally insured loans for the property until after the 90-day holding period expired. Simply put … this policy seemed to be a knee jerk reaction to a certain market segment. Penalizing investors for purchasing distressed properties, rehabbing the homes, and selling them to new buyers makes little sense; unless the intent was to restrict this segment of the market. Was there abuse in the market … sure … but to severely curtail most ‘flip’ opportunities because of the acts of a few seems to be counter-intuitive in this market. Hopefully when the anniversary date of the waiver approaches policymakers will recognize the flaw in the initial Act, and elect to permanently extend the waiver.

I appreciate any opportunity to serve as your realtor of choice, if you or someone you know is thinking about buying or selling real estate. Let me know how I can be of service to you by either contacting me via email at jim@peys.net or visit us at www.coastalcommunityhomes.com. Thank you!! Jim Peys

The Real Deal ... Long Beach Housing Stats ...

2009-11-22T12:56:00.000-08:00

Who are we to believe these days? Some pundits say the market is in the tank; while the government is trying to convince us that we have seen the bottom and are climbing back. Well maybe the market is neither spiraling out of control nor has it bottomed out. Consider for the moment these housing statistics generated by Altos Research who tracks all California housing activity as well as selected cities throughout the Country.

Long Beach statistics as of November 22, 2009:

Median Single Family Home Price: $387,623
Market Action Index: 20.32 (denotes a buyer's market)
Average Days on Market: 169 days
Median Price Per Sq.Ft.: $279/sq.ft.
Housing Inventory: 986 properties on the market

These numbers would be meaningless unless you plot the trends. Median prices in Long Beach have steadly increased since March, 2009 (from a low of $330,000 median price). Currently the trend lines are flat which suggests that prices are leveling out at this moment (consider inventory levels and selling season being the holidays). The Market Action Index illustrates the balance between supply and demand - the closer the number goes over 30 suggests a seller's market. After rising dramatically in July, 2009 the number is decreasing slightly over the past thirty days. Average days on market is currently trending down - meaning it is taking less time to market and close transactions. Inventory levels are slightly moving upward over the past couple of weeks.

In summary the market seems to be taking a time out after a late summer of increased activity. This is consistent to the time of year. If you are considering buying or selling, consider me as your realtor of choice. Let me know how I can be of service to you by either contacting me via email at jim@peys.net or visit us at www.coastalcommunityhomes.com. Thank you!! Jim Peys

MYSOCALTV MEDIA PLATFORM …

2009-11-22T10:25:00.000-08:00

I have been on the road helping local Long Beach businesses create video content about their business and the markets they serve. The Long Beach Business Professionals Association which consists of approximately seventy (70) local businesses are helping create a media platform that will eventually consist of hundreds of channels. Each channel will serve a micro-market or niche consisting of communities that are formed based upon interests, geographic locations, businesses, community services, etc. Each separate channel (envision a TV channels on your cable box) will consist of videos, written blogs, and audio content that delivers relevant, timely, and quality information, news, entertainment and other material. The goal is to serve the needs of people who participate in our online communities via these channels. The media platform members will be encouraged to add content relevant to their channel (or niche) and ultimately enable conversations within the channel.

This media platform will be an ongoing project over the several few months. A work in process is turning into an interesting project because it affords me the opportunity to interview different residents, businesses and communities in the Long Beach area. So be on the watch for “MySoCalTv” which will be the media platform consisting of hundreds of interesting channels. Our goal is to serve the needs of the Long Beach area by delivering relevant, timely and informative news, entertainment, opportunities and community announcements to our members. This media platform will be FREE to our members.

So if you are interested in providing quality content about a niche community within the Long Beach, California area please contact me at jim@peys.net. We are actively looking for video, written and audio content that will deliver content to your community. I hope to hear from you! Additionally, I am interested in your feedback, insights and comments.

In the meantime, if I can be of service to you (or any of your friends) regarding your real estate needs, please feel free to contact via email (jim@peys.net) or visit us at www.coastalcommunityhomes.com. I would love to be of service to you or someone you know!! Jim Peys

WHERE IS THE REAL ESTATE MARKET HEADED …

2009-11-09T05:15:00.000-08:00

Many people ask where is the real estate market headed, and have we bottomed out? If you bother tracking national news outlets they are divided as to the real estate market’s direction. Some are predicting that real estate is driving a slight national economic recovery; meanwhile other people are blogging about another reality. Who are we to believe? Unfortunately I don’t have a crystal ball, but based upon the insights of a few sources and a look at the local MLS statistics a few trends are noticeable. What we don’t know is if these trends are sustainable, and if so, for how long will these trends or factors impact the direction of the market.

A few factors to watch include the status of foreclosures (why … because a flood of foreclosures on the market tend to pull the market prices downward); Federal stimulus package changes (whether these policies really benefit the broader market is arguable; however the perception of these changes does cause market shifts); unemployment rates (locally and nationally will affect people’s ability to purchase and keep their homes); and longer term mortgage interest rates.

Before you can plot future trends you might want to understand where the market is currently. The following are a few relevant residential market data points on Long Beach (source – So.Cal MLS). The snap-shot (time period) for this information is taken between October 1^st through November 5th:

Number of closed transactions: 220

Number of pending transactions: 143

Number of active listings: 528

Average days on market: 61

Inventory (measured in months): 8.65

Foreclosures (set for auction): 99

What do these numbers suggest? Typically when the inventory turn-over is less than 10 months that evidences a low inventory of product on the market, and a seller’s market. I would hardly call this a seller’s market; however the low inventory has helped stabilize the market and the price free fall that has occurred since 2007. If inventory continues to be tight and if interest rates continue to be low along with the buyer’s incentive through April 30^th ($8,000) then we might see prices level out or even rise in a few micro-markets. This runs contrary to recent reports predicting a ten percent (10%) erosion in prices in 2010.

What are the key indicators to watch over the next six months that will affect the real estate market? A large influx of foreclosures and short sales on the market. This will drag prices downward. The other two major drivers will be national and regional unemployment rates – high unemployment will jeopardize people’s ability to afford mortgages; and thus create more mortgage defaults. The last market driver will be the status of interest rates. There are rumors that the Feds will raise interest rates to prevent inflationary fears in 2010. Although, interest rates probably will stay at historic lows, don’t be surprised if rates go higher after the first of the year.

The best advice I have read lately recommends that investors and buyers pay attention to local market fundamentals AND to continue looking for ‘real value’ not ‘perceived value’ or hype. And as always, real estate is all about location, location, location and price. So if you or someone you know is considering buying or selling real estate in the next 30-60-90 days, please contact me at jim@peys.net or just visit us at http://www.coastalcommunityhomes.com. I would love to be of service to you!! Jim Peys

Another Perspective On Social Media

2009-11-07T16:16:00.000-08:00

Everyone is trying to understand the role of social media. Is it real ... its role ... how do you monetize the media ... how does it add value in your business. Many successful realtors and business people are quick to dismiss it. My gut tells me that social media is more than a noisy platform for the curious but something real, tangible and is where we all will end up at the end of the day. This will be the medium from which businesses engage in a conversation with people ... they listen and glean what it is people want.

I am interested in your feedback. Let me know what you think. How does social media impact your real estate and investment choices? In between thinking about this question, check out this video by Gary Vaynerchuk. Food for thought ...

I tend to agree with Gary's perspective. Social media is the business of doing business by engaging in a conversation with our friends, prospects and clients. It is about being interested AND not just interesting. About listening to what other people want and need. Just a thought!

If you or anyone you know is thinking about buying or selling real estate, let me know. I would love to help you. In the meantime, thank you for your input and consideration. Jim Peys

Real Estate Auctions ... Real Opportunity ...

2009-11-04T16:16:00.000-08:00

Have you ever watched a real estate foreclosure auction? If you have attended a public real estate auction at the County you probably noticed a few (in Los Angeles) buyers with headsets walking between the 'criers' tracking several properties. They seem comfortable with both the process and the people involved - a true 'regular' comfortable in their surroundings.

Yesterday, I visited my second real estate auction company in Los Angeles. I was granted an in-depth look into a highly successful real estate investment company who specializes in ONLY foreclosure auction acquisitions. They have been doing the same 'drill' for over twenty-seven (27) years in Los Angeles County. They spend over a million dollars a day investing in auction properties in just Los Angeles County (tracking over 1,500 residential properties per day). In the current market they typically buy in excess of 80 auction properties (residential and commercial) a month.

I was invited into the 'inner-circle' by an executive of a large nation-wide Title Company. They are encouraging me to establish an investor network in the Long Beach and South Bay areas of Los Angeles County. The goal is to match investors with auction properties that are being purchased between 62-65 cents on the dollar (discounted up to 38% of current market values). After completing my due diligence and considering my background in foreclosures, investor acquisitions and REOs; I am impressed with their experience, systematic approach and detailed due diligence. They have built an incredible machine that involves over 200 employees tracking auction sales in four locations within Ventura and Los Angeles counties.

What is the opportunity for investors? Well we are initially assembling three investor partnerships (LLCs) with the goal to raise an initial million dollars over the next sixty days. This initial fund will invest in three residential properties in the Long Beach area with the goal to 'turn-over' this capital three times during the first year. The estimated proforma projects a net profit between $50,000 - $70,000 per property per investment cycle. We are looking to acquire the properties, resolve the tenant issues, rehab the properties, market and sell the properties within 130 days from recordation of the trustee's deed.

Is it a good deal ... well that depends upon your individual investment criteria and your risk temperament. We believe that partnering with this auction investment company significantly reduces our investment risk. The golden rule is that you lock in your profits on the acquisition; consequently, partnering with the right acquisition model and organization will greatly reduce our initial risk. They have the manpower, expertise, experience and systems in place to eliminate lots of the front-end risk (not all for sure). Next we plan on controlling the tenant negotiations, remodel and sales of the properties in-house. We have the construction crews, management, lending, escrow, transaction coordination, accounting, marketing and sales pieces in-house fully operational. Our brokerage company has over 230 licensed agents who specialize in the local Long Beach area. So can we eliminate all the risk - absolutely not; however, we like our plan! Does this represent a real good opportunity - I think so.

So if you are interested in hearing more about this incredible opportunity ... contact me at jim@peys.net. For additional information and insights into this and other real estate opportunities visit us at: www.coastalcommunityhomes.com. Otherwise, if I can be of service to you or your friends just let me know. Thanks. Jim Peys

How Helping Other Companies Can Make Your Real Estate Business More Money

2009-11-03T07:29:00.001-08:00

How Helping Other Companies Can Make Your Real Estate Business More Money

Posted using ShareThis

The Opening Up Of The MLS ...

2009-11-02T21:14:00.000-08:00

Hold on change is in the air ... Inman news reports that the FTC has ordered a Detroit MLS to open up its policies and allow greater access. The FTC has concluded that the MLS web site policy and related requirements impose a "significant impediment" to consumer access to listings represented by limited-service brokers. The Internet is nipping at the edges of how traditional realtors market their service and create value. An industry that grew up "hording" information and making a living by being "gate-keepers" is changing at neck break speed caused by the evolution of the Internet, social media and the demands of the market place.

The real value of a realtor will be measured by how effectively they interpret the massive amounts of property data; define the needs of their customers; and create an environment whereby sellers can engage with qualified and motivated buyers. This is a dramatic shift for realtors who historically created the market for property owners and manipulated price fluctuations behind the scenes. The next few years will be interesting by how quickly and professionally the industry and individual realtors adapt to these market pressures. Stay tuned!!

If you are looking for a realtor who understands the demands of this market place, or you just have questions and want to explore your options, then email Jim Peys at jim@peys.net. Let me know how I can be of service to you or a friend! For additional information and an array of free real estate tools visit http://www.coastalcommunityhomes.com. Thank you!!

Current Status Of The Feds Efforts To Stem Foreclosures ...

2009-10-14T08:27:00.000-07:00

You want to know the current state of affairs regarding the housing market and the effect of foreclosures and HAMP are having on your home and the economy in general? Then you might want to check out the following attachment:

http://cop.senate.gov/reports/library/report-100909-cop.cfm

This link contains the entire Congressional Oversight Committee's study and YouTube video released by the Congressional Committee regarding the current status of the market, foreclosures and HAMP (loan modifications program). Definitely interesting in light of the volume of gossip currently circulating in the news.

Any questions or if you want to know how this impacts you and your investments, contact me at jim@peys.net or visit us at http://www.coastalcommunityhomes.com.

The Real Story For Fall Sellers ...

2009-10-08T09:51:00.000-07:00

Several reports and blogs today suggest that the summer honeymoon for prices will lose momentum as we roll further into fall. Scott Sambucci at Altos Research states that many pundits believe that the U.S. housing market is likely to reach bottom by early 2010; however, in the meantime he suggests that prices will continue to slide an additional ten percent (10%). In support of his opinion he points to the summer season concluding, rising national unemployment rate, higher level of foreclosure-driven inventory (see L.A. Times front page article regarding FHA loan reserves and pending foreclosure risks).

What facts do we know right now about the housing market locally? Well the 90-day rolling average of median list prices hits an 'inflection' point in early August, then it moves consistently down each week in the fall. As of today, a ten city composite shows asking prices down about 1.25% from early August numbers. In addition, there is a noticeable delta between the overall market median price and new sellers entering the market this Fall, especially compared to the Spring 2009. Experts point to several factors for the current market pessimism:

Lagging effects of the government's HAMP program;
Effects of the foreclosure moratorium programs;
The alleged end of the first-time homebuyer tax credit of $8,000;
National unemployment rates;
FHA concerns and proposed legislative initiatives that may limit these loan programs; and
Interest rate pressures in the spring of 2010

What we will see in published reports (newspapers, etc.) over the short term is that the sales volume, prices and inventory will reflect a slight market rebound. However, note that these published statistics report on 90 day old data (i.e., S&P/Case-Shiller reports). So later in the fall we will begin seeing what is happening in the market in the early part of October.

So Summer Buying Season Is Over ... What Now

2009-10-07T07:24:00.000-07:00

Questions abound as we enter the fall season. Will the Obama Administration continue the $8,000 tax credit past the end of this year for 1st time homebuyers? When will the backlog of bank REO properties be unloaded onto the market? What is the real status of the housing market? Have we witnessed the bottom of the housing market?

What is your opinion ... email me your thoughts?

I just read a few statistics from Scott Sambucci over at Altos Research and he states that the inventory in his ten city composite is tightening, days on market is stabilizing and fewer sellers are relisting their properties. These indicators typically point to price stabilization or price increases in the housing market barring other factors, i.e., broader economic factors such as unemployment, etc. And what is it that we see ... the short term prognostication is that asking prices are clearly falling in the same ten city composite and new sellers entering the market are doing so at lower prices. The other factors that don't bode well for pundits espousing that the housing market is rebounding in several areas, is that over 1.0 million adjustable loans will soon reset into higher interest rates while unemployment rates remain on the rise. These two factors (interest rates resetting and unemployment) will only exacerbate an already messy REO market segment. This may result in a continued drag on existing home prices across the board. In addition, there are rumors of interest rate increases sometime in 2010.

Although we may have experienced the worst of the price adjustments, there remains a few bumps in the road moving forward over the next eighteen months or so. So what does that mean? Well over the next 18 - 24 months there will be significant market opportunities for the brave of heart or those who have good credit and cash. Consequently, the question is can you afford to remain on the sidelines wondering what to do? Yes, there are many doubts and questions to cause most of us to hesitate and doubt the market's resiliency; however, these questions always abound in any market. One truism that remains is that a property in a good location (old adage still applies ... "real estate is all about location, location, location") that is priced below the market is a GREAT deal and you should give it serious consideration!

If you are interested in tracking the local Southern California market and bank REOs then visit us at: http://www.coastalcommunityhomes.com. On our website you can search all the active listings for opportunities in Southern California, as well as get statistic data organized by neighborhoods and so much more! As is always the case, if there is any way I can be of service to you or a friend, please feel free to contact me.

2009-09-15T10:30:00.001-07:00

Check out Hootsuite as a Twitter application - interesting platform of services offered

2009-08-20T11:16:00.001-07:00

Several newspapers reporting increases in foreclosure filings caused by unemployment. Predictable cause of future foreclosure filings.

One in Three Homes in June Suffer Price Cut ...

2009-08-15T16:05:00.001-07:00

One in four homes listed reduced asking price on an average of 10% as of August 1st. This is the third month in a row that the percentage of listings suffered price reductions. Luxury homes, defined as those priced over $2.0 million, took a bigger hit with an average reduction of 14%. Industry pundits recommend that sellers are better off setting the list price under the market to encourage demand and competition rather than to overprice the home.

Although sellers and real estate agents may disagree on the initial listing price, a pre-signed price reduction is advisable to ensure that if a price cut is necessary that it is done quickly. The general rule of thumb in the real estate industry is that a listing may get stale after two weeks on the market without action.

The median home value is down 12.1% during the second quarter compared to the same time a year ago, and 22.3% from the market peak in 2007.

2009-08-13T16:14:00.001-07:00

RealtyTrac reports a 7% growth in foreclosure related filings from June to July. July's figures represent a 32% increase from a year ago (July 2008); this monthly figure is the third record in 5 months. A total of 360,149 foreclosure-related filings were tallied by RealtyTrac in July.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions" RealtyTrac Chief Executive Officer stated in his official press release. Top ten foreclosure states are: Nevada, California (one in 123 homes subject to foreclosure filings), Arizona, Florida, Utah, Idaho, Georgia, Illinois, Colorado and Oregon.

Watch for this trend to continue over the short term due to broader economic factors, i.e., unemployment, negative equity and overall economic conditions in certain States and markets.

Are You Tracking The Other Market Factors …

2009-08-13T12:07:00.000-07:00

Newspapers across the country, as well as micro-bloggers and several industry websites, are reporting mixed economic signals. Articles are reporting market price reductions slowing down or even stabilizing in several areas. Closed sales on existing homes are up in June from May figures, and reductions in inventory are evident across the board. Unemployment figures for July were better than expected; while the Feds attempt to convince the general public that the economy is starting to turn around. Yet other industry insiders are reporting that the real market is still unstable due to the large “shadow” inventory of foreclosure properties held by the nations lenders and service companies. Unemployment in many areas remains in double digits and is unlikely to rebound until early 2011. Furthermore, early results regarding the Feds loan modification efforts (goal of 300,000 loan modifications by the end of December 2009) seem to be generally on target; however, re-foreclosures on these loan modifications are between 25%-60%.

So how does the general public decipher truth from fiction. Well first it would be beneficial to consider who is making the predictions, and determine what might be their motivation in manipulating the facts for their benefit. The Feds and specific industry associations reason for controlling the flow of information, and its interpretation is obvious – they need to sell us on the fact that the economy has bottomed out, is stable and in some market segments actually improving. The agendas of the other prognosticators are not as easily detectable. So what is the current status of the market?

Well, before you draw a conclusion based upon another neophyte economist’s opinions, maybe a pause and consideration of other market forces is in order. Ultimately the economy’s ability to bounce back will be driven by consumers and businesses ability to invest or spend. In order to spend money there must be the ability to make money or continue to borrow (credit line availability). It has been well documented over the past year that credit markets have contracted and/or made more difficult to qualify for new or expansion of credit. So that leaves consumers spending based upon earnings or savings. A watchful eye on unemployment figures thus is critical – for employment and income drives spending and the ability to save. Drilling deeper you might want to look at vertical market fluctuations to determine the present status and future directions. Several vertical markets contain interesting insights for the general California real estate recovery – i.e., the commercial real estate segment, construction activity and new housing permits.

The Wall Street Journal today reports that Southern California’s economy is more reliant on the construction segment than other markets across the Country. In Riverside and San Bernardino counties construction, at its peak four years ago, was the fourth-largest employer. The housing market contributed more than 24 billion dollars in revenue to Southern California in 2008. So construction trends are a significant “pull” in the broader Southern California recovery than what is being reported nationally. The greater Los Angeles area has lost about 90,000 construction jobs recently. The conclusion is that “construction is now literally stopped.” New housing permits in the five-county greater Los Angeles region has dropped 85% from 88,187 in 2005 to a projected 12,990 this year. The drop in housing permits in San Bernardino and Riverside counties is even steeper as it plunged 96% from 45,299 in 2005 to a projected 2,000 this year. The message is that construction is not poised to play its typical role in leading the region of almost 25 million people out of this recession.

So where does that leave Southern California’s economy and housing? There remains a low inventory of existing homes on the market that is keeping home prices relatively stable. The low-end of the market is being supported by first-time homebuyers; while the higher market segments continue to suffer from price reductions and slow turn-over (few qualified buyers buying). The shadow inventory of existing foreclosures, and new foreclosures that will emerge as loan modifications fail and unemployment persists will pose a continued drain over the coming months. When will the market bottom-out will be detectable after the fact, not as it is happening regardless of the countless predictions by market experts (or regardless of our endless desire to know).

How will the market recover, well my guess is that in Southern California broad employment improvements in several market segments will need to occur, along with a viable plan moving forward that encompasses continued lower interest rates; a workable long term plan for loan modifications, short sales and foreclosures; new loan programs that balance the needs of buyers and lenders with reasonable underwriting guidelines that mitigate risk while facilitating market growth; and market equilibrium in supply and demand that allows market prices to increase to a level that pulls more sellers out of a negative equity position without chasing qualified buyers away. As the market shifts there will probably develop several other factors that will impact the market’s recovery, for example Federal, State and local governments investment in the infrastructure, service and technology developments that create new opportunities, foreign investments in local market segments, inflation fears, status of the wars in Afghanistan and Iraq (as well as any other foreign conflicts), large Corporations’ investment in local plants and economies, availability of capital in the higher end real estate market segments, etc. The easy answer is that the market will shift again with a dramatic change in the supply and demand within each micro-market as well as in all the different market segments within each market.

I guess the message is stay tuned … the roller coaster ride of uncertainty continues to be interesting! For more information on the status of the current market and what is available in your market today, please visit www.coastalcommunityhomes.com. In addition if you would like a change of pace from your weekly routine, then enjoy a pause with your morning coffee and visit http://mondaymojo.blogspot.com/. Otherwise, if I can be of service to you or a friend in your real estate pursuits please contact me at jim@peys.net.

2009-08-13T08:11:00.001-07:00

Despite falling prices or maybe because of falling prices, annual rate of SFR resales down only 2.9% compared to 2008 at end of 2nd quarter.

2009-08-12T16:41:00.001-07:00

Treasury announces the Supplemental Directive for its Home Price Decline Protection (HPDP). HPDP provides incentive payments for loan mods.

2009-08-11T17:02:00.001-07:00

Foreclosure stats for July are mixed. Notice of Defaults held consistent at 44,996 filings. Notice of Trustee Sale filings rose to 39,294.

2009-08-10T11:46:00.001-07:00

A few prognosticators writing that housing has reached bottom. June home resales up 9%. How do you reconcile unemployment and foreclosures?

SO HAVE WE BOTTOMED OUT … YET?

2009-08-07T12:53:00.000-07:00

If you listen to various media outlets the housing market nation wide has reached bottom and the market maybe stabilizing in certain areas. Market pundits and realtor organizations comparing existing homes sales in June year over year and from May figures suggest that we may be through the worst of the market downturn. Realtors report from the trenches that prices in the lower end of the market are selling quickly with multiple offers. So what does all this mean? Have we experienced the bottom? Is this information reliable?

Both National Association of Realtors (“NAR”) and California Association of Realtors (“CAR”) report a 3.6 percent annual increase in June comparing to May’s revised figures. Total units sold in June were 4.89 million compared to May’s revised pace of 4.72 million units. Lawrence Yun, NAR chief economist, stated “we expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.” In California, CAR reported on July 27^th that home sales increased 20.1 percent in June compared with the sales period a year ago. Furthermore, CAR President James Liptak stated that “June marked the 10^th consecutive month of positive sales gains, and the fourth month of rising median home prices.” The other piece of news that has created this “false” sense of recovery is that in California it was reported that the number of properties going to Trustee Sale (the second step in the foreclosure process) decreased by 28.9% in June.

Many people interpret these numbers to mean that the market has reached bottom and is starting to move in the other direction. However, if you “peel back the onion” slightly you might see a different story evolving that may impact your assessment. There are several significant trends worth considering as a part of your market assessment. Realize that any discussion on national and state trends may not be reflective of individual “sub-markets” (aka “micro-markets”) within your particular local market, such as the Bixby Knolls area of Long Beach (90807 zip code). So you need to understand the broad national and state trends, but ultimately evaluate your particular sub-market or micro-market to accurately assess how these trends affect you directly.

The first factor to consider is how unemployment figures into the economy and home values. Recent economists are predicting that unemployment will continue to grow and create a “drag” on the economy through 2011. Some have predicted a continuation of double-digit unemployment. In Southern California, specifically Long Beach, the unemployment is hovering around twelve percent (12%). As unemployment rises fewer people will be able to afford paying their mortgage or purchase new homes. If this number continues to increase you will notice property defaults on the rise, which will over time impact local inventory and property values.

The second factor to track closely is the current foreclosures on the market and the number of properties going into default (notice of defaults actually filed with the County). According to ForeclosureRadar, a company that tracks California foreclosure data, the number of Notices of Default (“NOD” – the first step in the foreclosure process) filed in California increased 11.8% in June to 45,691. This number is the second highest monthly total on record, and is a 10% year-over-year increase from June 2008. Additionally California had over 135,000 foreclosures in process as of June 2009 (NODs filed through Trustee Sale). Furthermore, there are bank owned properties that have been taken back in auction (Trustee’s Sale) not currently on the market. It is common knowledge that the Federal government has encouraged all banks to “honor” a moratorium on REO properties as well as foreclosures – moratorium has kept REO properties off the market and banks have “suspended” any foreclosure efforts since the fourth quarter 2008.

How many REO (“real estate owned”) properties are currently held in inventory by the banks and service companies (i.e., Fannie Mae and Freddie Mac) is unknown; however, it is believed the number is significant. This “invisible hand” has controlled the inventory of homes on the market (if you restrict inventory [supply] and you have a steady number of buyers [demand], then the law of supply and demand will move prices up) and affected prices as a result. As these foreclosures come onto the market it will cause a “bloat” of inventory that will cause a further reduction in the median price for housing in high foreclosure areas.

There has been significant commentary in the press media lately regarding loan modification. Although loan modifications are a preferred option with the Feds (because they are committed to reducing the affect these foreclosures will have on the economy), the industry estimates that anywhere from 25%-60% of these loan modifications have or will re-default, and re-enter the foreclosure process in the future. See the Wall Street Journal article in May of 2009 entitled “Mortgage Modifying Fails to Halt Defaults.” If this trend continues than upwards of 60% of the 300,000 loans currently being modified will re-enter the foreclosure process down the road.

The statistics not being emphasized by the Feds or industry associations (CAR or NAR) will dramatically affect both the inventory levels as well as market valuation in the future. The Feds are committing significant capital and resources into the economy, specifically housing which has softened the down turn; however, there could be further erosion in the market in the months to come due to these other factors. The difficulty is that the Feds are in effect “manipulating” the market in order to reduce the drag housing has on the over-all economy. So the real answer is that the market has improved, but it has a ways to go before foreclosures stop flooding the market and placing downward pressure on prices. The key is to watch current trends with an eye to what is coming along in the pipeline.

If you wish additional information and statistic data on your particular micro-market visit: www.coastalcommunityhomes.com. Otherwise if I can be of service to you, please send me an email at jim@peys.net.

2009-08-06T15:08:00.001-07:00

Feds closing in on "bad bank" to place "bad debts" of Fannie Mae & Freddie Mac in: more info see: http://ping.fm/tMUGF

2009-08-01T14:33:00.001-07:00

Current foreclosures being driven by unemployment, not subprime and prime loans. To search foreclosures see www.coastalcommunityhomes.com.

The Green Initiative … Energy Efficiency How Does It Benefit Us …

2009-08-01T14:16:00.000-07:00

The U.S. government launches new energy efficiency efforts for homeowners. As the House of Representatives passes historic legislation paving the way for a clean energy economy, President Obama and the U.S. Energy Secretary promote aggressive energy efficiency plans that will save consumers billions of dollars per year. What does that mean? How will this energy savings actually be realized by homeowners?

The key provisions contained in the American Clean Energy and Security Act, in part, for homeowners includes:

· HUD and the FHA are encouraged to create a new generation of mortgages that offer 5% larger mortgages to people planning on making energy-efficiency improvements.

· The FHA is directed to insure a minimum of 50,000 new energy-efficient mortgages during the next three years.

· Fannie Mae and Freddie Mac are directed to develop mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders.

· Real Estate appraisers are required to take into consideration energy improvements and money saved in the valuation of a home.

· Federal financial regulators are directed to support the establishment of privately run “green banking centers” inside banks and credit unions.

· State governments are required that homeowners who through energy conservation measures take themselves “off the grid” are not denied property hazard coverage by insurance companies.

Is this enough to encourage homeowners to invest in energy conservation technologies that are oftentimes cost prohibitive when compared to traditional technologies? Ultimately people will weigh their cost of retrofit (or replacement material), return on investment (“ROI”), along with their growing “moral” and philosophical desire to live in a way that reduces the environmental burden. Given the limited operating hours in a residential application, the cost (depending upon the retrofit options considered) will outweigh the return on investment (payback for your investment will be longer term); however, that is why the philosophical desire will ultimately be what motivates consumers to consider retrofits that are beyond “the low hanging fruit” such as lighting.

Point in case, according to the U.S. Energy Department lighting in your house makes up between 7-38% of your total electrical bill; and you can reduce your bill upwards of 25% using current energy efficient technologies. For example, if your home electric bill averages $175.00 per month ($2,100 per year) and you reduce it by 25% then lighting savings will total approximately $200.00 per year (as per the broad U.S. Energy Department initiatives). So what is the premium you will pay to install compact fluorescent lamps (verses incandescent lamps) and electronic ballasts and T8 or T5 lamps (verses energy saving fluorescent lamps) in your home? There will be an initial “retrofit” cost, and then as lamps fail the ongoing material maintenance cost or premium. Based upon limited operating hours for lighting in our homes, the actual savings will not be as significant as in many types of commercial buildings. The actual savings will vary on usage (total hours you use your lighting system), when you typically use your lights, and your specific utility rate. The other benefit as it relates to most energy efficient lighting products is that the material has substantially longer life span than inefficient technologies (i.e., incandescent lamps last between 800-1200 hours of operation; however compact fluorescent lamps last 10,000 – 12,000 hours). So over the long term you will spend less in material replacement.

So does pursuing energy efficient technology make sense? For the Federal and local governments – absolutely. For individual consumers – the front end retrofit cost can be substantial in some cases therefore tax incentives and financing options reduce the initial burden. Energy cost savings and replacement material savings makes these strategies even more palatable. But ultimately our social conscious will direct our decision to invest the upfront capital.

2009-07-31T22:15:00.001-07:00

Treasury states total loans held by top 15 banks down 2.8% in 2nd Q. How are we going to get solid growth w/ bankers reducing lending?