October 2, 2014

An Attitude That Prices Have Recovered Too Quickly

The Napa Valley Register reports from California. “The average sold price of a Napa County home declined 9 percent from $522,500 in July to $475,000 in August, according to Bay Area Real Estate Information Services. During the same time period, the number of homes sold decreased 31.5 percent, from 146 to 100. ‘The months of July and August were much slower than the previous months,’ said Nadia Valenzuela, a Realtor and current president of the Napa chapter of the North Bay Association of Realtors. She attributed that slowdown to reasons that include families going on vacation during the summer, a shortened summer school vacation period, ‘and buyers watching the interest rates and viewing the inventory to see if prices would reduce to get a better deal,’ she said.”

The Union Tribune. “The pace of home price appreciation continued to slow in San Diego County in July, a time of year usually thought of as summer peak buying season. The S&P/Case-Shiller Home Price Index showed Tuesday that from July 2013 to July 2014, home prices in San Diego rose 8.3 percent, down from the 10.2 percent annual gain in June. The pace has been slowing since August 2013, when foreclosure resales pushed annual appreciation to 21.5 percent. ‘It was kind of an outlier in terms of typical summer activity,’ said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. ‘We had very low inventory and yet prices were still very soft.’”

The Los Angeles Daily News. “The summer homebuying season slipped into the deep freeze across the San Fernando Valley in August, as sales for that month dipped 15 percent to a record low, a trade association said. Sales of previously owned homes fell from 561 a year ago to 487, the lowest for an August since record keeping began 30 years ago, said the Van Nuys-based Southland Regional Association of Realtors.”

“‘It’s not that people don’t want to buy, or that they don’t have the money or a job, or fail to recognize that interest rates remain low,’ Roger Hance, president of the association, said in a statement. ‘Instead, there is a hesitancy, an overall attitude that perhaps prices have recovered too quickly. Buyers want some assurance that they’re not purchasing at the top of the current market, and sellers have to be realistic on where they set their price.’”

The Pacific Standard. “According to Nielsen, HGTV has one of the most affluent viewerships in extended cable. 75 percent of the total viewers are already homeowners. So HGTV’s is a uniquely well-off viewership, but it’s also a uniquely committed, or, perhaps, compelled viewership. The relatively recent addition Flip or Flop show is as follows: Tarek and Christina El Moussa were high-living—extremely attractive—Orange County realtors with a baby on the way, and then the housing bubble burst. After their jobs went down the toilet, the El Moussas decided to start flipping houses.”

“Each half-hour episode works the same way. First, Tarek and Christina are shown doing research on a property they can buy at auction. The plan is to buy low, renovate, and sell high enough to both recoup expenses and make a profit. But—and this is something of an anomaly on HGTV—it doesn’t always work out. Not that infrequently, the episode ends with a voiceover saying that, after three or four weeks on the market, the house is still unsold. Tarek and Christina, in other words, look like they might be f***ed.”

“And as much as we viewers may have an impulse to know whether the El Moussas make it out alive, each new episode erases the past, starts the couple off anew, and any accumulated capital, debt, or even expertise stays neatly contained within the previous episode. The ungenerous way of characterizing this would be to say that HGTV is selling a capitalist fantasia that would be severely complicated, even frequently unspooled, if it were to be extended past the space of the episode.”

The Imperial Valley News. “United States District Judge Lawrence J. O’Neill sentenced Julie Dianne Farmer, 46, of Bakersfield, today to three years in prison, to be followed by five years of supervised release, for her involvement in an extensive mortgage fraud scheme that ran from January 2004 to September 2007, United States Attorney Benjamin B. Wagner announced. Judge O’Neill ordered her to pay $2,914,331 in restitution and to forfeit $15 million.”

“Together with co-defendants David Crisp and Carl Cole, Farmer oversaw and managed a conspiracy to defraud residential lenders. They used straw purchasers to acquire properties at inflated prices with funds borrowed from lenders, often using 100 percent financing and based on false and fraudulent loan applications.”

“The conspirators frequently resold the properties from one straw buyer to another, each time at an inflated, higher price in order to extract the purported increased ‘equity’ from the property for their benefit. Ultimately, most of the properties were foreclosed upon after the defendants failed to make the mortgage payments when due.”

“‘Today’s sentencing is the result of a culture of greed and opportunism that saturated a Bakersfield real estate company,’ said U.S. Attorney Wagner. ‘The owners of the company have been held accountable with lengthy prison sentences, but they could not have accomplished their crimes without the knowing and willing help of many within their organization.’”

Bits Bucket for October 2, 2014

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