Foreclosures – many more are on the way. At least for the next year.
Short sales(when a seller owes more than the property is worth and the lender must accept a sale) - are going to be processed faster and better.The reasons are: the moratoriums that have been put in place will force the banks to find another way to unload the property or take an even larger loss because of the delays.
Inventory– is low because of the moratoriums that are in place.The moratoriums are in place so banks will do workouts.The low inventory is creating false optimism in the market conditions.
FHA loans - are again the primary source of loans.They are typically 3% down but have a large amount of additional closing costs…so buyers should ask for closing costs with offers to cover this.
Interest rates - hover at the lows of the last 40 years.Upward pressure is from banks and investors and downward pressure is from the federal government.Rates must stay low to stabilize housing.If mortgage rates rise in this environment it will put downward pressure on prices.
Great values - Deals are foreclosures and some short sales – particularly out of area agents.Incredible deals for those who can pay all cash.
Credit crunch - is real because the banks are hoarding money.BofA just reduced its dept to income ratio for a new loan to 28% (most others are not this low).It used to be 55%.The guidelines for down payments on multi-units are now 25% to 30% unless you do FHA.
State of the economy – will only improve when real estate stabilizes.
Affordability– Is currently at a stable point.Decent homes are available in this market in the mid $200,000 to low $300,000 range.This means individuals or couples can buy a home with good credit, about $20,000+ in the bank and a combined salary in the range of $65,000 to $70,000.
The bottom is not here yet.What does that mean?I estimate prices will still come down a little more but there are some homes that sell well below the expected bottom pricing right now.There is still too many Notices of Defaults out there for this to be the bottom.If banks work harder on workouts and loan modifications then many of these potential foreclosures will not hit the market for sale.If they do, then they will increase inventory and apply downward pressure on pricing.
Conclusion– It is a good time to buy with low rates and great values available.Educate yourself on the market, talk with a good realtor and be patient.
Tyler Durden There is a massive wave of actual foreclosures that will hit beginning in April that cant be stopped without a national moratorium this wave is so big I would not put it past them trying it.
CA foreclosure background - in mid-2008 the foreclosure wave was artificially held back as a result of the CA law SB1137 enacted in Sept 2008. This also kept NODs and NTSs at much lower levels than the actual defaults that were occurring. Other bubble states and several banks/servicers also went on random moratoria and the foreclosure wave was held back for the past six months. But just like so many other intervention and moratoria in the past, the problem just comes out the other side even more violent than if they would have done nothing. Adding insult to injury, the GSEs announced this week that they were coming off moratorium( April), which could increase foreclosures by 20-25% alone.
In effect May 22 2009
California's New Foreclosure Prevention Act
California recently passed a new foreclosure prevention plan that includes a moratorium on foreclosures, but there are some serious concerns being raised about whether or not it will be effective. Attorney Lauren Spiegel goes over the new plan, and alerts us to some concerns, in the following article from JD Supra.
As an add-on to the California budget package, Governor Arnold Schwarzenegger signed into law a 90-day moratorium on home foreclosures. This new law, which will become effective on May 22, 2009, requires that lenders wait an additional 90 days from the date of filing of a notice of default before the trustee can give notice of sale in a non-judicial foreclosure. Currently, lenders have to wait three months from the filing of a notice of default before providing the notice of sale, so this law, in effect, creates a six-month waiting period. This extended waiting period is intended to encourage lenders to work with their borrowers and enter into loan modifications. However, whether this aim will be achieved and even whether this moratorium will apply in a significant number of foreclosures remains to be seen since there are a number of requirements in the bill that must be satisfied for the moratorium to apply.
I recently heard someone describe their search for a house as, "looking for an oasis in an industrial wasteland".Somehow the wasteland came across as desirable.What is it about the urban grunge that attracts people?The grunge is not necessarily the desirable state but simply a bi-product of the diversity and density within the city streets.I believe that for now, it has become an acceptable bi-product because it is rooted in a psychosocial comfort zone. Much of the decayed man-made urban artifices tend to evoke the feeling of stripping our everyday environment down into its essential elements, and thus allowing for a freedom to feel artistic inspiration, as well as being unencumbered by all of the modern fluffy barriers that isolate people from each other in suburbia.It somehow translates to a focus on what is inside rather than on the surface.If things around us are real then we can be ourselves.
The suburban ideal of living where the air is fresh and the schools are better doesnt dominate buyer patterns anymore.Two main reasons are that, Americans are marrying later and delaying parenthood.Now, even when children arrive many are settling in for the long term and raising their small families in the urban areas.And even though people are not commonly leaving for the better schools in the suburbs, local urban school enrollment is still down over 50% in our neighborhood.
Statistics show that the people moving into urban life are educated, sophisticated young professionals typically between the ages of 25 to 45.This is evident in the recent downturn in the LA real estate market.Historically the areas most affected are near city centers but this time around the fringes are taking a harder beating.The desire to live in urban LA is still strongly prevalent.
Urbanites care most about the lifestyle and the neighborhood vibe.They desire neighborhoods with "ethnic diversity; flexible indoor space; communal outdoor living areas; close retail; nearby bars, clubs, restaurants and culture".
Please browse through my site to explore the Urban Hillside communities of Echo Park, Silverlake, Atwater, Eagle Rock, Highland Park, GlassellPark, Mt.Washington, and Los Feliz, . I offer direct access to the latest properties for sale in your area (at the top of the page).
If you currently own property and are thinking of placing it on the market, this site contains information about preparing your home for sale, selecting the right agent, pricing your home appropriately, marketing it effectively, going through the inspection processes, and receiving a timely market evaluation. Simply click on my Market Analysis link to get an online evaluation sent to you by email.
