June 16, 2014

Back To A Reality Check

The Marin Independent Journal reports from California. “Home equity loans were up across the Bay Area in the first six months of 2014. In Marin, 451 such loans were made in that period, a 5 percent increase over the same period in 2013, according to DataQuick. This was the highest number of these loans in Marin for any first quarter since 2008. ‘What’s causing the uptick (in loans) is that values have gone up so much in the area, people who couldn’t refinance years ago can now refinance and take advantage of the historically low interest rates,’ said Jeff Grady of San Rafael-based California Mortgage Advisors. ‘Now they can pull equity out of their house to do home improvement projects, pay for college, any one of a number of things,’ Grady said.”

The Union Tribune. “Between 2004 and 2007, more than 325,000 San Diegans took out home equity lines of credit, totaling around $40 billion,DataQuick reports. Now the bills from that first wave of HELOCs, taken out in 2004, are coming due. Homeowners must start paying on both interest and principal on the outstanding balance, and often at higher interest rates of 5 or 6 percent.”

“‘It’s one of those ticking time bombs that’s eventually going to happen,’ said Bruno Lizarraga, a loan originator at San Diego-based Community Housing Works.”

The LA Times. “After fast appreciation last spring, Southland home prices have largely leveled out since interest rates rose last summer and more houses trickled out for sale. But with investors backing out and the stocks of foreclosures and short sales drying up, the market now hinges on regular buyers. The number of absentee and cash buyers continued to drop, as did the share of distressed sales. Meanwhile adjustable-rate and jumbo loans continued to grow. ‘We’re kind of bumping along a ceiling,’ said Steven Thomas, who analyzes Southland real estate. ‘I really can’t see values going up much more. Buyers are really honing in on trying to pay a fair market value.’”

The Orange County Register. “Real estate broker Richard Daskam compiles a monthly report on listings in Los Angeles and Orange counties using data from the MLS. His report shows that there were 17,677 listings in April. In May, the area had 26,746 listings on the market. Although Daskam chalked up some of the increase to ‘the typical summer influx of new listings,’ he said the month-to-month jump is bigger than usual.”

“Although he’s hoping that more homes on the market spur buyer interest, Daskam credited some of the listing influx to homes sitting and not selling. He has only a couple of pending sales. ‘We really should have eight or nine in escrow,’ he said, adding, ‘We’re just not getting the showings and the offers right now.’”

The Mercury News. “The Bay Area’s housing market stumbled in May — prime home-buying season — as high prices and low inventory held real estate sales well below normal levels, according to DataQuick. The price gains are leveling off as they near their previous peaks and as buyers drop out. The year-over-year gains between May 2012 and May 2013 were much larger in all but Alameda County, according to DataQuick. ‘Buyers for whatever reason are not willing to line up for a mortgage to buy a house,’ said Richard Calhoun of Creekside Realty in San Jose.”

“‘I believe we are probably hitting affordability limits,’ said Brett Jennings of Keller Williams in Los Gatos. His said his typical buyers are a husband and wife in tech, making a combined $240,000 a year, who still can’t afford a basic home in some parts of the valley. ‘When the median home price is no longer supported by the median income, we’re near top,’ he said.”

The Press Democrat. “Petaluma broker associate Timo Rivetti said he feels like there is a bit of a lull now in the Petaluma market. About 10 properties have had price reductions in the past few weeks. ‘We’ve all been spoiled. I think we’re back to a reality check,’ he said.”

“Rivetti said one of his biggest challenges today is sellers with an inflated sense of their home’s value, often fueled by online sites like Zillow or Trulia that may not take into account truly comparable properties. ‘They still think their house is worth X, when in reality it’s worth Y,’ he said. ‘We’ve all been spoiled by a fantastic marketplace in the last 18 months.’”

From Bakersfield Now. “Housing prices continue to rise, and 2014 is seeing the return of a ‘normal’ housing market, according to Bakersfield appraiser Gary Crabtree’s annual report. The number of houses available on the market has nearly doubled at 1,015, up from 515 one year ago. ‘Many of those homes were being purchased by investors,’ Crabtree said. ‘And we’re seeing investors now leave the market, which now opens the market up for the home buyer. Interest rates are continuing to help out, because they are continuing to stay low. But, again, without a median family income increase, it’s hard for families to be able to afford these homes.’”

The San Gabriel Valley Tribune. “The years-long battle over a modest working-class home continues, as the Coronel family protested at the Fannie Mae office in Pasadena. The Coronel family was one of millions affected by the recession, with the 63-year-old patriarch losing his job as a landscaper in 2009. When they tried to get a loan modification, though, they were denied.”

“Public documents show the Coronels had purchased the home in 1990 for $143,000. Beginning in 2000, the family began taking out multiple loans ranging from $12,000 to $26,000, ultimately signing a $371,000 loan on the home in August 2007. A notice of default was recorded on June 7, 2010, and the deed was transferred to Fannie Mae at $411,701 on Oct. 19, 2010, public documents show. After the foreclosure, however, the Coronels were allowed to stay as renters in the home.”

“In a statement released Tuesday, Jaime Coronel explained that the couple refinanced three times at the encouragement of lenders and brokers. However, the refinancing provided the family less than $100,000 for the repair of the house and payment of two auto loans, with the rest going to broker fees. ‘The house was in very bad condition,’ Juana Coronel said, explaining that the smaller loans, which included $70,000 borrowed in a 15-month span, were used for remodeling and home improvements like roofing, electrical and landscaping.”

Bits Bucket for June 16, 2014

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