June 20, 2013

Investors Are Waiting To Receive A Higher Price

KUSI News reports from California. “The median price of a home in San Diego County rose 23.6 percent in May, compared to the same month a year ago, reflecting a statewide jump that gave California the biggest year-over-year price increase in 33 years, according to figures released Monday by the California Association of Realtors. Statewide, the median price of a single-family home was $417,350 in May, up 31.9 percent from $316,460 in May 2012, according to CAR. It was the 15th consecutive month of year-over-year increases, and 11th straight month of double-digit jumps.”

“According to CAR, the 31.9 percent increase was the largest annual jump since at least 1980, when the association began tracking the statistic. ‘More home buyers are putting down larger down payments, and many of them are opting for more stable loan products,’ CAR Chief Economist Leslie Appleton-Young said. ‘Additionally, historically low mortgage rates have reduced monthly mortgage payments substantially, making owning a house more affordable, even with rising home prices.’”

The Sacramento Bee. “The May housing report from DataQuick said the median price of a resale house in Sacramento County rose a stunning 42 percent over the past year. A factor contributing to the rise in the median, said Andrew LePage, analyst for the service, was the number of houses being fixed up and resold by house flippers. The big gains in home values in the past year occurred because the market was ‘bouncing off bottom’ and are unlikely to continue for another year, LePage said. ‘This could be kind of a one-time wonder in terms of how fast and how far it went up,’ he said.”

The Daily Democrat. “In Yolo County, the media price paid for existing homes was $290,000, which was 32.4 percent higher than a year earlier. For newly built homes, the change was equally dramatic. In Yolo County, there were 29 new homes sold, a 107.1 percent increase over the previous year. The median price paid for those new homes was $380,000, which was 28.6 percent higher than a year earlier. Michael Lea, director of San Diego State University’s Corky McMillin Center for Real Estate, said prices will stabilize as fewer people owe more than their homes are worth, positioning them to put their homes up for sale.”

“‘I don’t think we’re in a bubble by any means because it’s mostly the lack of inventory,’ Lea said. At the end of March, 21.3 percent of California homes were in ‘negative equity’ down from 25.2 percent three months earlier, according to CoreLogic. ‘We do not have a healthy market, we have an unusual market,’ Lea said. ‘The high percentage of people with negative equity means people can’t sell.’”

From Around Dublin. “Just how hot is the real estate market in Dublin, CA? According to some prospective homebuyers at Fallon Ridge in Positano, KB Home had originally set the prices from the mid-$700,000s to the mid-$800,000. ‘This was communicated by KB home representative while people signed up for the interest list,’ said prospective homebuyer P. Shastri. ‘On May 27th I was provided with a price list over email where the smallest home was priced at $790,000 and the largest at $869,000.’”

“On June 8th, the day of the release, KB Home reportedly raised the prices on all the homes. ‘The released prices (rose to) now between $824,000 to $895,000,’ said Shastri. ‘It seems to me that KB is simply following the market forces that have spiked all home prices,’ said one prominent local Realtor. ‘Some buyers have not seen the multiple offers, well over asking price, and often all cash.’”

“Still, that explanation is cold comfort for homebuyers who are desperate to get into their first home or to upgrade to a better neighborhood in a scorching hot housing market. ‘To put KB Home’s price increases in perspective, the smallest home that they offer at $824,000 is very similar to a model sold by Braddock & Logan, which was the original builder from whom KB Home purchased the land,’ said Shastri. ‘That model sold by Braddock & Logan a year ago was priced at $620,000 to $640,000.’”

The Reporter. “Solano County continued to offer the most affordable median price in the Bay Area in May. The median for homes sold last month was $245,000, up 29.2 percent from May 2012, when the median was just $190,000. Sales dipped nonetheless in Solano in May, a decline of 11.8 percent from May 2012. The same scenario played out in much of the rest of the region.”

“‘The housing market here is very hot,’ said Remy Weinstein, a real estate agent with Highland Partners in Montclair. ‘I’m just constantly amazed with the amount of overbidding going on.’”

“Nick Bird, a 31-year-old catering company owner, is closing in on his first home, for $297,000 in West Oakland. ‘We got on it so quick we didn’t have to compete with any other offers,’ he said. ‘We just paid asking price. Everything’s going way over asking, and you’re not competing with the small guy, you’re competing with investment groups that can afford to pay a little more.’”

The Victorville Daily Press. “Home sales have risen 9.7 percent over the past 12 months, evidence that the housing market is improving. But the supply of available homes remains tight and many potential buyers are unable to get loans. Steve Kim, an agent for Newstar Realty in Victorville, said though more homes are being sold in the area, inventory is still below demand, making it a seller’s market.”

“‘Right now we have more buyers and less sellers,’ said Kim. ‘When you look at it, about 10 to 20 percent of homeowners up here live outside San Bernardino County — they have bought houses to rent out as an investment.’”

“Though Kim cites a 10-percent to 20-percent increase in the buying of houses in the High Desert from last year, he said most homeowners are holding out. ‘In this area a lot of investors come up here (from outside the High Desert) to buy houses,’ he said. ‘Most of these investors are waiting to receive a higher price for their homes, rather than sell now.’”

The Desert Sun. “Foreclosure activity fell 63.2 percent year-over-year in May across the Coachella Valley, but several dozen home auctions created an unexpected increase compared to April, a new report shows. The 284 foreclosure filings were up 16 percent from 237 in April —largely due to 36 more scheduled home auctions, RealtyTrac reported. There were 112 scheduled auctions in May compared to 74 in April, and there were seven more bank repossessions compared to the previous month. Bret A. Cohn, senior loan officer with Stearns Lending Inc. in Palm Desert believes the increase in foreclosure activity may correlate with the recent increase in home values.”

“‘Banks realize that values are appreciating and are taking action to move these homeowners who are not taking advantage of short sales towards a final resolution — foreclosure,’ Cohn said.”

McClatchy News Service. “Credit bureaus that provide consumers’ data to prospective lenders have no specific code for short sales. Instead, they tend to be flagged as pre-foreclosures, charge-offs or ’settled for less than full amount’ – designations that are just as devastating to credit as the stigma of foreclosure. As a result, underwater borrowers who managed to get bank approval for short sales suffer the same long-term consequences as those who simply walked away from their homes after defaulting for years.”

“The coding error ‘hangs over me all the time,’ said Wendy Bana, a private school principal in Orange County, Calif. Bana short-sold her underwater home three years ago because she had to relocate from Oregon for a job. Last year, she discovered that her short sale had been miscoded as a foreclosure, dashing her dream of buying a cabin at Lake Arrowhead, Calif. Months of calls and letters to her bank and the credit bureaus failed to set the record straight, even though Bana had paperwork proving the short sale.”

“‘It’s not at all logical,’ she said. ‘The bank’s still making fair money and it’s better for the economy, And I don’t not pay my bills. I had always had perfect credit. To me that was a far lesser evil than just walking away.’”

“Now, short sellers who waited the requisite two years are starting to re-enter the housing market only to find that the coding error means they’ll have to wait five more years to secure another loan. ‘It’s extremely stressful,” said former short seller Lisa Chambers of Chico, Calif., who has been unable refinance her mortgage. ‘It’s hard on our whole family. We feel like we’re stuck in this holding pattern and we can’t get ahead.’”

From Pasadena Weekly. “In spring 2003, Harolyn Rhue was ready to sell her condo in Altadena. A rambling three-bedroom ranch-style home near the foothills was offered in a probate sale so Rhue made a $100,000 down payment and, though troubled by its terms, took a World Savings mortgage arranged by her broker for the balance. But last week, around her tenth anniversary there and after several years of seeking loan modifications from Wells Fargo Home Mortgage — which absorbed World Savings’ assets when it acquired Wachovia Bank in 2008 — Rhue was kicked out of her home.”

“Wells Fargo spokesman Gary Kishner said by email that Rhue’s property is no longer of any concern to the bank. ‘We worked with Ms. Rhue for nearly three years in an effort to find an option that would allow her to remain in the home, but we were unable to find any way to keep her in her home,’ Kishner said. He pointed out that it is not the bank throwing her out. ‘Title was transferred to a third-party purchaser in September. The buyer, not Wells Fargo, is responsible for any activity related to the property.’”

“Wachovia agreed to establish a $50 million settlement fund to resolve the case affecting pick-a-payment loans from World Savings Bank or Wachovia Mortgage, between August 2003 and December 2008. However, Rhue, though caught in the downward spiral of negative amortization, was not helped with any settlement money. In Rhue’s case, the loan was more than inappropriate. It was never manageable, based on income figures twice her actual earnings. Rhue says she neither claimed the numbers listed nor did she actually sign the document, alleging her signature was forged. To make the payments she took a second job, but soon found the extra shift too exhausting.”

“Shortly after 7 a.m. last Thursday, Rhue, who still suffers the effects of a brain injury incurred in a car accident in 1983, was awakened by loud knocking. Steadying herself on her cane, she was confronted at the front door by as many as six Los Angeles County sheriff’s deputies, who were there to effect an eviction ordered by the Orange County investors to whom Wells Fargo had sold the property last August. ‘I never thought this could happen,’ Rhue told the Pasadena Weekly later that day.”

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