Flippers Are Selling To Other Flippers
The Marin Independent Journal reports from California. “It’s up, up and away once again, with home prices in Marin increasing 24 percent from last year to $942,000 in August 2013, according to the Marin County Assessor’s office. While the median price dipped from $990,500 in July, Marin real estate agents characterized the drop as normal for August. While agents agreed that the market is strong and prices are going up, they characterized some of the price increases as artificial. ‘Sellers should not be tempted to add 24 percent to whatever they would have gotten for their houses last year and expect their homes to sell for that amount,’ said Julie Leitzell, an agent with Alain Pinel in Mill Valley. ‘The median has to do with fewer foreclosures and more high-end houses selling.’”
The Mercury News. “The sizzling Bay Area housing market cooled in August following one of the most dramatic run-ups in recent years. Single-family home sales dropped 3.2 percent from a year ago, and were down 8.8 percent from July, according to DataQuick. While the median single-family price of $588,000 extended several months of double-digit annual gains, it was 3.9 percent lower than it was in July, the first such drop in six months. Nearly 10 percent of the homes listed last week in central Contra Costa County had price reductions, said Kevin Kieffer, a Danville real estate agent. He said some sellers overshot the market and had to pull back. ‘There’s more of a selection for buyers, and more of an opportunity to come in at the asking price or even below it,’ he said.”
The Press Democrat. “Sonoma County’s median home price dipped 8 percent in August as agents reported fewer buyers bidding on the same homes, possibly linked to higher interest rates. The median sales price for a single-family home declined to $440,000 from $478,375 in July, according to The Press Democrat’s monthly housing report compiled by Pacific Union International VP Rick Laws. Mike Kelly of Keller Williams in Santa Rosa said he is seeing fewer multiple offers. ‘There’s no sense of urgency seen in the marketplace any longer,’ Kelly said.”
“As rates rose this summer, ’sellers finally got a little bit of a reality check,’ said Trish McCall, a longtime agent in Santa Rosa.”
The Sacramento Bee. “Investors and distressed sales now make up a much smaller part of Sacramento’s real estate market than at anytime in recent years, DataQuick reported. The share of resale homes in Sacramento County sold to cash buyers dropped to about 28 percent in August after peaking in February at 43 percent. August’s cash figure was the lowest since June 2010. Absentee buyers made up about 30 percent of the Sacramento market in August, after topping out in January at 45 percent. Almost all absentee buyers are investors, said DataQuick analyst Andrew LePage.”
“The factors that led to a big run-up in prices over the past year are abating, LePage said. The Sacramento region’s historic housing rebound from the depths of the crash was driven by ultra-low mortgage rates, a scant supply of homes for sale and high levels of investor activity. ‘Now each is in reverse,’ he said. ‘Rates are higher. Supply is greater. And investor levels are coming down.’”
The Union Tribune. “San Diego County home prices and sales slipped from July to August as the market took a breather from recent increases, DataQuick reported. Sales also were lower, down 9.5 percent from July to 4,099 transactions, a common seasonal dip. Michael Lea, a real estate professor at San Diego State University, said he was not surprised by the price dip but was ‘a little puzzled’ that sales are not rising as fast as they should at this point in the economic cycle. After all, Lea noted, many homeowners have left the underwater-mortgage years, when their homes were worth less than their mortgages. They also are aging and want to move to a smaller home or are growing their families and need bigger homes.”
“The explanation may be that would-be sellers are sitting on their homes, expecting prices, which rose 20.2 percent over the last year, to repeat that feat in the next year. If they did, the median price for all homes in August 2014 would stand at $499,000, not too far from the all time peak of $517,500 in November 2005. Another roadblock may have to do with mortgage financing. Lea said the tighter lending rules mean buyers must accumulate 10 percent to 20 percent in a down payment and carry a FICO score of 720 — both factors that are much higher than a decade ago.”
“Separately, the Greater San Diego Association of Realtors reported that as of Thursday, the number of active listings in the county stood at 6,838, up from 6,251 in August and 5,935 in August 2012.”
The Los Angeles Daily News. “The region’s housing market is starting to exhibit a familiar sheen. Just like prices, adjustable rate and jumbo mortgages are popping up again, according to DataQuick. Adjustable loans accounted for an 11.6 percent share of August’s 23,057 sales of new and previously lived-in houses and condominiums across Southern California. That was up from a 10.9 percent share in July. August was up a whopping 96.6 percent from its 5.9 percent share a year earlier. Last month’s ARM activity was the highest for any month since this loan product accounted for a 12.6 percent share in July 2008, DataQuick said.”
“Jumbo loans — mortgages above the conforming limit of $417,000 — accounted for 27.2 percent share of August’s lending activity, up from 20.3 percent a year earlier.”
The Los Angeles Times. “The number of so-called absentee buyers, usually cash investors, has dropped slightly in Southern California since hitting a record in January. But they still account for more than 1 in 4 home purchases in the region. And just 8% of those deals were on foreclosed homes in June, compared with 25% a year earlier. ‘Everybody and their dog is an investor,’ said Dick Caley, a Long Beach real estate agent. ‘It has gotten to the point where I do not even return the call.’”
“The mix of investors and their strategies are shifting, with large financial firms starting to pull back and smaller players moving in, looking to buy, fix and flip homes for a quick profit. The short-term mentality worries some economists. ‘Flippers are selling to other flippers, who are selling to other flippers, until there is nobody to flip the home to,’ said John Burns, a housing industry consultant in Irvine. ‘And that is when you have a big downturn.’”
“Experienced flippers say the increased competition is forcing them to change tactics. Brian Coomans, owner of investment company GGB Properties Inc. in Long Beach, sees a short window of time left to make money. ‘I know I am not going to be doing this forever,’ he said. ‘I have maybe a one-year window, a two-year window to be flipping homes like this.’”
Quick.
Anyone.
How will this end?
Just take a guess.
———
“The mix of investors and their strategies are shifting, with large financial firms starting to pull back and smaller players moving in, looking to buy, fix and flip homes for a quick profit. The short-term mentality worries some economists. ‘Flippers are selling to other flippers, who are selling to other flippers, until there is nobody to flip the home to,’ said John Burns, a housing industry consultant in Irvine. ‘And that is when you have a big downturn.’”
I predict it will end by 2ban blaming Obama.
Obama touched me in a personal area.
Housing Bubble 2.0
If anyone cannot see that this is yet another massive bubble that has re-flated then they are BLIND!
‘In Phoenix, one of the nation’s hottest markets for investors, the share of sales to out-of-state buyers fell to 17% in August, down from 21% last year and 25% in 2011, according to data tracked by Mike Orr, a housing analyst at Arizona State University in Tempe, Ariz. Several investors “appear to have lost interest,” he said.’
‘Some agents say the biggest problem in the market is “seller greed”—that is, sellers pricing their homes too high, said Jim Klinge, a real-estate agent in Carlsbad, Calif. Faced with rising rates, buyers aren’t going for higher prices. “They don’t realize our 12- to 18-month full-tilt boogie is over,” he said.’
http://finance.yahoo.com/news/home-sales-frenzy-eases-234100502.html
‘A new housing report shows subtle changes in the Bakersfield real estate market in August. Home prices have shown a dramatic improvement over a year ago, but the rate of increase is starting to cool. The Crabtree report for August shows 838 listings of homes for sale. That’s up 33% since August of 2012.’
http://www.kget.com/news/local/story/August-housing-report/cJN1pQnpcEWAquz8SUp9zA.cspx
“They don’t realize our 12- to 18-month full-tilt boogie is over,”
It was just a blip on the radar. A dead cat bounce to draw in the last round of suckers who thought they knew what they were doing.
Now that everyone is saying, “we hit bottom 12 months ago”, you intuitively know that price discovery and the housing price bottom is in front of us…. we’re looking right down the barrel of it.
normalizing” is the correct term
not in 22151
The correct term for what?
Taxpayer,
Can you expound on that statement? I’m not sure what you’re reffering to. Are you saying that prices will not return to normal in the zip code of 22151? Are you saying that there will not be a recrash to match the rebubble because the rebubble prices are actually normal? Your statement could be interpreted in opposite ways.
The Bakerspatch situation mirrors your lead. The realtor flippers have run out of other realtor flippers to flip to and their rental market is saturated. Everyone else is broke.
There is a graph in today’s dead tree edition of the Wall Street Journal, produced by John Burns Real Estate Consulting, which accompanies the “home-sale-frenzy-ends” article. It follows the approach I have been advocating in my posts here for some time:
- Don’t worry about how much a higher interest rate would increase a mortgage payment on a given principal amount loaned, as the question is irrelevant.
- Rather consider how much principal a given monthly payment would support at the current interest rate level.
The graph shows the amount of principal that could be financed off a $1000 monthly payment peaked out around $225,000 in late-2012 through early-2013, but has subsequently dropped to just north of $195,000 — a $30,000 decrease and a 13.3% drop. This gauges the impact of the rate increase over the past 4 1/2 months on mortgage-financed housing demand.
Small wonder the home sales frenzy is easing!
bankers need to eat too.
“The share of resale homes in Sacramento County sold to cash buyers dropped to about 28 percent in August after peaking in February at 43 percent. August’s cash figure was the lowest since June 2010. Absentee buyers made up about 30 percent of the Sacramento market in August, after topping out in January at 45 percent. Almost all absentee buyers are investors, said DataQuick analyst Andrew LePage.”
Have any of these figures, of 28 percent on up, for the share of cash or absentee buyers ever been reached before the current episode (meaning the peak bubble years since 2000)?
I seriously doubt it.
At the height of the prior bubble, it was 25% investors. This will not end well.
Anectote from my neck of the (Sacramento) woods: SFH rents appear to be trending down, even in desirable locations. For example, there are more rentals coming online in my immediate vicinity( 2-3 block radius from where I rent) and the prices are 100-150 dollars less than what I’m paying now.
I can’t speak to how much of a profit these landlords are making, if any, since that depends on the circumstances surrounding the purchase of the property. However, it does show that in terms of dollars, prices are dropping. The best part? Some of these have been sitting for months, and this is in a desirable ‘hood.
Look out below, falling rents/prices!
Same thing I am seeing when I browse Craigslist in areas I am familiar with. Too many rentals, not enough renters.
Same thing happening here in Tucson.
Saw craigslist rentals go from 100 to 150 over the weekend in Gig Harbor, WA. The rent they’re asking is more expensive than mortgages.
The zillow map is awash in houses for sale… 1/4 to 1/3 appear to be foreclosures.
Are you in Gig Harbor, AmazingRuss?? Didn’t realize that…
Where’s the cash coming from?
That $40B the Fed conjures every month has to go somewhere, and it sure isn’t going into our pocketbooks.
It travels around the world. America is so “yesterday” for dollars.
maybe my $3000 paydown on a credit card was not such a wacky idea…..
Maybe if Yelln the new fed boss would look out for the American public first, the money would be recycled very quickly in deferred maintenance.
everything from new tires, to fixed teeth….the money would go very quickly, then time for AE2 American Easing 2, 3 4 5…..at least we would see a lot of benefits real fast.
On one of those HGTV flipper shows that are back again, the “star” flipper was a “cash buyer” for a foreclosure. His “cash” was from a mortgage on a rental and credit cards.
“San Diego County home prices and sales slipped from July to August as the market took a breather from recent increases, DataQuick reported. Sales also were lower, down 9.5 percent from July to 4,099 transactions, a common seasonal dip.”
Have San Diego home sales EVER BEFORE dropped by 9.5 percent from July to August?
I seriously doubt it. But if you have corroborating evidence, please post. Otherwise I have to suspect they made up this ‘fact.’
“Otherwise I have to suspect they made up this ‘fact.’
As we all know, Housing Hucksters play fast and loose with the facts. Just like when they falsified sales volume every single month for 5 years straight.
We understand this intuitively, thus they cause us no harm. Those who disregard it get what they deserve. Those who don’t understand it get bamboozled.
According to Zillow, sales fell from July to August in 5 of 17 years going back to 1996. Of those 5 decreases, 2 were more than 9.5% (2009–no surprise, and 1998). Another of the decreases was 8.5% (1997).
Has that dip EVER occurred? Yes.
Is it common? No.
Is there a common seasonal decline after summer? Yes.
Is it common to occur from July to August? Less than 50%, but more than 25%. It much more commonly happens later.
The AVERAGE of those 17 years is an increase of about 2.7%.
Liar….
What a way to misrepresent.
Let’s look at it truthfully….(I know I know… not your favorite method)
For the last 14 years:
2000- July/Aug sales UP
2001- July/Aug sales UP
2002- July/Aug sales UP
2003- July/Aug sales UP
2004- July/Aug sales UP
2005- July/Aug sales UP
2006- July/Aug sales UP
2007- July/Aug sales UP
2008- July/Aug sales down, Housing Collapse
2009- July/Aug sales down, Expiration of 1st debtor tax credit
2010- July/Aug sales UP
2011- July/Aug sales UP
2012- July/Aug sales UP
2013- July/Aug sales down, Beginning of Current Collapse
So you see Liar…… sales ALWAYS increase in San Diego county in the presence of phoney financing, liar loans, bought down interest rates, trap-door/slam shut incentivization for suckers, etc.
You’re always looking for some cherry picked data and then you eat it up like the fool you are.
Are these “sales” number closings or going pending? If they are closings, then the drop occurred a month or two before, just when the Realtor folks were telling us the market was exploding.
Wait…you aren’t suggesting…
If you are able, note PB’s original question/statement:
“Have San Diego home sales EVER BEFORE dropped by 9.5 percent from July to August? I seriously doubt it. But if you have corroborating evidence, please post.”
So RW obliges, and not only do you call him a liar, the list you provided merely corroborates what RW posted, and only covers the “last 14 years”. PB’s original question emphasized the word “ever”, not “since 2000″. And even knowing that, you accuse others of cherry-picking. Hats off to you.
Fool,liar, there you go again? You will always be a classless, uneducated person not capable of expressing yourself in a intelligent and meaningful manner?
Awww…. poor liars can’t dominate anymore?
Boo hoo.
Rental Watch, there’s only one way an ‘investor fueled frenzy in houses’, lead by ultra low interest rates can end. Unless you think it’s different this time. So are you using this soft patch to snap up some sweet deals? You don’t have to tip us as to where, because we all know there are gold nuggets lying on the surface of all California real estate.
He’s not going to buy anything. He’s trying desperately to talk up the market so he can unload some anchors.
He doesn’t have to”talk up the market”, just park your car outside housing devlopments and watch the action.
Many framed houses and plenty of people moving in, pent up demand for the folks who now see a opportunity before 6-7% rates return.
Always going to be a real estate market in America with up and downs. Most want a roof over their head and a backyard for the youngsters. Nothing more exciting then a young family moving into their first house or a retire couple living the good life in a warm climate.
let people live you have only one life, if you don’t go for the gold someone else close to you will, I guarantee it.
Liar,
Housing demand is at 14 year lows and falling. There’s your “action”.
Doom: let people live you have only one life, if you don’t go for the gold someone else close to you will, I guarantee it.
I think it’s great people “go for the gold” (even if that means “fools rush in where angels fear to tread”).
HOWEVER… I’m just a little tired of having politicians and central bankers stick me with the bill when things go south for a small percentage of people who made fantastically ill-informed decisions. All to benefit their paymasters in the FIRE sector.
NOTE: It’s not the physical asset owner who becomes wealthy, he only gets the right to take on another debt payment sooner than prudence would suggest.
‘let people live’
I encourage house buying when attitudes like yours show up. Please, buy as many as you can. In California, right now.
‘Nothing more exciting then a young family moving into their first house or a retire couple living the good life in a warm climate.’
I can think of a million things more exciting. Like pulling duct tape off the inside of my things.
‘if you don’t go for the gold someone else close to you will, I guarantee it.’
All together now, ‘or you’ll be priced out forever’.
All I asked was if RW was going to snap up some sweet deals.
“Comment by Doom
2013-09-16 16:20:16
He doesn’t have to”talk up the market”, just park your car outside housing devlopments and watch the action.
Many framed houses and plenty of people moving in, pent up demand for the folks who now see a opportunity before 6-7% rates return.
Always going to be a real estate market in America with up and downs. Most want a roof over their head and a backyard for the youngsters. Nothing more exciting then a young family moving into their first house or a retire couple living the good life in a warm climate.
let people live you have only one life, if you don’t go for the gold someone else close to you will, I guarantee it.”
Ahhhhhaahaaahaaa! You REALLY have been huffing your own ether, haven’t you!?! That is so AWESOME- “pent up demand” and “go for the gold”! Classic! You are just going to be so crushed as this thing augers into the ground.
I note a shift underway on the HBB: We are returning to the old days of 2005-2006, when the housing trolls became increasingly strident in their efforts to keep alive the illusion of endless boom times.
Given the rising undertone of desperation among real estate investors who post here, we must be getting dangerously close to the next wave of price collapse.
Doom’s being ironic, right?
If the ‘investor fueled frenzy in houses” continues to drive prices up to the levels of 2005-2007 EVERYWHERE, then I completely agree with you. Crash 2.0 is coming. However, we are NOT there yet. And, even before getting there, we are seeing interest from investors decrease, NOT increase.
This is a marked difference from the frenzy that led up to 2007, where more and more people jumped in, fueled by abysmal lending standards.
And to answer your question, our residential activity over the next 24 months will consist of probably buying a handful of additional rental homes (making a lot of offers to find one), but we will be primarily selling our residential holdings. Things bounced off the bottom faster and more extreme than we expected, so we expect to sell sooner than we expected.
Nuggets lying around? I can’t say that I think there are any around for simply picking up. The biggest nuggets were residential land from late 2008-2011, when everyone was selling (banks and builder’s alike), but few were buying.
What do I expect from here? One of two paths:
1. Full rebubble and recrash. This requires lending to loosen up considerably from here.
2. Slowdown in home price growth, leading to a more elongated cycle as we saw in the 80’s and 90’s (ie. the PRIOR 2 housing cycles), and not the massive hump like we saw in 2005-2007.
Frankly, I expect #2. Despite all the rhetoric out of DC to increase lending, you need to have buyers on the other side of all that debt, and the wounds are still too fresh for people to get too excited about buying mounds of debt without really understanding the underwriting that went into making the loans in the first place.
One thing I learned during the worst of the credit crisis is that low interest rates mean nothing if no one is willing to lend to you, or if you are unwilling to borrow. That said, given the low interest rate environment, we may end up somewhere in between #1 and #2, a housing cycle that is more elongated and extreme than the 80’s and 90’s, but less pronounced/rapid than 2005-2007.
Should be:
“That said, given the low interest rate environment, we may end up somewhere in between #1 and #2, a housing cycle that is LESS elongated and MORE extreme than the 80’s and 90’s, but less pronounced/rapid than 2005-2007.”
You’re a fraud and a crook.
‘our residential activity over the next 24 months will consist of probably buying a handful of additional rental homes…but we will be primarily selling our residential holdings. Things bounced off the bottom faster and more extreme than we expected, so we expect to sell sooner than we expected.’
Oh God this is going to be precious! Please don’t disappear as your losses mount because we need a good laugh to go with the schadenfreude.
And to answer your question, our residential activity over the next 24 months will consist of probably buying a handful of additional rental homes (making a lot of offers to find one), but we will be primarily selling our residential holdings.
RW, if you are primarily intent on selling, why would you be buy at all at the same time?
I would point out, though, that before we laugh too loudly at RW, let’s recall that he/she does appear to have been correct about the prices of finished lots a few years back…
“RW, if you are primarily intent on selling, why would you be buy at all at the same time?”
Simply looking to pick off a few short sales at discounts to today’s market value while there are still opportunities to use quick-close cash purchases as a way to get good pricing. To be clear, I don’t expect that there will be much of an opportunity after the end of 2013…we’re in the 9th inning for that part of the game.
‘we’re in the 9th inning for that part of the game’
Or the first inning, depending on what game you are talking about. Jeebus this is going to be fun.
PIC, just so you can quantify, new purchases in homes to rent from this point forward might represent a few percent of the total we have invested in residential post crash. The vast majority of our investment dollars went into land, and the opportunity to buy land cheaply went away some time ago. Since land values in many places have risen quite a bit–it’s the land that we plan to sell first.
What can I say, I aim to entertain.
If buyers can’t qualify for loans, the prices need to come down. Period. The lending standards are still much lower than they were in the early 1990s and earlier.
Thank goodness you all are still here. If it wasn’t for the community here, I would go freaking crazy looking at house prices in the context of median incomes/history/flipping/realtor garbage data.
As far as I can tell, Zillow data only go back 10 years. Have you been downloading Zillow data for the past seven years? Besides, the dips you refer to were not seasonal, nor were they dips. They were datapoints along a downward-sloping curve.
Go to the graph and click on “download”. Choose “Chart Data”, and you will download a spreadsheet that provides data going back to approximately 1996.
Here’s the sale numbers for San Diego County for July of each year from Zillow if you actually want to see where sales have been over the past 17 years (July 2013 data is the last month they have):
1996: 3.0k
1997: 4.1k
1998: 5.1k
1999: 4.8k
2000: 4.0k
2001: 4.3k
2002: 4.7k
2003: 5.7k
2004: 5.7k
2005: 5.1k
2006: 3.6k
2007: 3.5k
2008: 5.3k
2009: 5.0k
2010: 3.8k
2011: 3.7k
2012: 3.8k
2013: 4.2k
No need to track sales. Only prices and inventory tell you anything. Zillow doesn’t report inventory.
Redfin tracks inventory and sales in the markets where they are active. Here is SD County:
http://www.redfin.com/county/339/CA/San-Diego-County
We track inventory(defaulted, excess and empty) in CA. There are 4 million of them in CA.
I suspect 70% of the mortgages in CA have some measure of fraud associated with them.. either doctoring the income or financial statements, inspections, appraisals or any number of other factors.. but hey, that’s an improvement from 2005-2006 when there was fraud in about 90% of CA mortgages and house sales.. it’s all going to end spectacularly for all concerned.. the sky is the limit..
“The mix of investors and their strategies are shifting, with large financial firms starting to pull back and smaller players moving in, looking to buy, fix and flip homes for a quick profit. The short-term mentality worries some economists.”
Bagholder identification process is underway.
‘Over the past few weeks I have introduced several programs exclusive to California homeowners. The Keep Your Home California program is up and running. A nationwide real estate recovery starts in our Golden State. Legislators know that, with California real estate, so goes the rest of the nation. We are seeing low interest rates coupled with low inventory making it once again a sellers market. What are you to do if you are not in the strongest financial position to purchase? Well, help is here in the form of down payment assistance.’
‘The California Housing Finance Agency (CalHFA) announced a new fixed-rate mortgage program for low- and moderate-income first-time homebuyers, providing thousands of dollars in down-payment assistance.’
http://www.sgvtribune.com/business/20130905/new-loan-program-for-first-time-buyers
‘Legislators know that, with California real estate, so goes the rest of the nation.’
These real estate people in California are just plain nuts.
they want to keep property taxes high as possible to keep paying out 100k salaries to workers.
keepyourhomecalifornia.org/
It’s called Foreclosure Moratorium. And it’s why there are 4 million excess, empty and defaulted houses in California alone. They exist in all 50 states and it’s all an effort to manage(manipulate) the massive excess housing inventory.
‘If August foreclosure results from RealtyTrac are an indication, it’s possible the hiatus California had from the grind while the repercussions of the Homeowner’s Bill of Rights was sorted out may be over. Daren Blomquist, vice president of the Irvine-based foreclosure and real estate tracking company, said August foreclosure filings rose 14 percent to 15,136 across California from July. It’s the second time filings rose month-to-month since March.’
‘“We have an expectation that at some point, another shoe will drop in California in terms of foreclosures,” Blomquist said. “We believe the Homeowner’s Bill of Rights has kept the numbers artificially low here.” In Inland Southern California, foreclosure filings in August rose 7 percent from July. Bank repossessions had the biggest gain: Those numbers were up 22 percent.’
“It’s an early sign lenders have gotten in position to clear out properties that have been in the foreclosure process for some time,” Blomquist said.’
http://www.pe.com/business/business-headlines/20130912-foreclosure-august-churned-reos-up-22-from-july.ece
Foreclosure filings are up, from a prior level that was greater than 0.
In other words, there is no moratorium.
Was there monkeying around with the process? Absolutely.
Did that monkeying around decrease the pace of resolution of distressed situations? That all depends if you believe the increase in short sales more than offset the decrease in foreclosure activity. Tracking the non-current loan rate over time from LPS would indicate that the pace post Homeowner Bill of Rights was at least very similar to that prior to the Homeowner Bill of Rights.
Liar,
That’s called a moratorium.
From Merriam Webster online:
Moratorium: a time when a particular activity is not allowed.
A moratorium on foreclosures means that they are not allowed. Clearly they have continued…meaning that they are still allowed, ie. THERE IS NO MORATORIUM ON FORECLOSURES.
Liar,
From someone willing to be truthful because you can’t seem to muster that ability….
keepyourhomecalifornia.org is just another failed means to deal with the 4 million defaulted, empty properties in California.
You struggle I know. Stop struggling and seek the truth.
There is still a moratorium on accounting standards, as far as I know.
Rental Watch:
If the normal foreclosure process was disallowed due to a new set of “rights” for debtors, then it was a moratorium on that process. A new softer, slower process had to be enacted.
Uncle Fed…that’s my point. The normal foreclosure process has not been disallowed.
Have you read the main points of the “Homeowner’s Bill of Rights”? The main points mirror the national settlement, which includes things like, single point of contact with the lender that is working out a bad loan (modification), no dual tracking a foreclosure or modification, you need to have your paperwork in order, etc.
If a lender wants to foreclose on a defaulted loan, they can, with the same legal process as before (the same notice provisions, timeline, etc.). What they CAN’T do, is go through that same legal process while simultaneously evaluating a loan modification, and having multiple people working on the same loan.
So, this has delayed some foreclosures, as banks have opted to pursue short sales initially (ie. a type of modification that gets the bank $ pretty quickly). However, it did not stop the bank’s ability to take the foreclosure path if they so chose. There is no moratorium on the very same legal process as before.
HA has stated over and over again, that no one is foreclosing because there is a moratorium on that process. That is simply not true. You can look at any number of places (including the courthouse steps) to see that trustee auctions are still taking place, and properties are going back to the lenders.
Here is the text from the CA Office of the AG website on the matter:
“The laws are designed to guarantee basic fairness and transparency for homeowners in the foreclosure process. Key provisions include:
Restriction on dual track foreclosure: Mortgage servicers are restricted from advancing the foreclosure process if the homeowner is working on securing a loan modification. When a homeowner completes an application for a loan modification, the foreclosure process is essentially paused until the complete application has been fully reviewed.
Guaranteed single point of contact: Homeowners are guaranteed a single point of contact as they navigate the system and try to keep their homes – a person or team at the bank who knows the facts of their case, has their paperwork and can get them a decision about their application for a loan modification.
Verification of documents: Lenders that record and file multiple unverified documents will be subject to a civil penalty of up to $7,500 per loan in an action brought by a civil prosecutor. Lenders who are in violation are also subject to enforcement by licensing agencies, including the Department of Business Oversight, the Bureau of Real Estate.
Enforceability: Borrowers will have authority to seek redress of “material” violations of the new foreclosure process protections. Injunctive relief will be available prior to a foreclosure sale and recovery of damages will be available following a sale. (AB 278, SB 900)
Tenant rights: Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease entered into before transfer of title at the foreclosure sale, the owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. (AB 2610)
Tools to prosecute mortgage fraud: The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes. In addition, the Attorney General’s office can use a statewide grand jury to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.
(AB 1950, SB 1474)
Tools to curb blight: Local governments and receivers have additional tools to fight blight caused by multiple vacant homes in their neighborhoods, from more time to allow homeowners to remedy code violations to a means to compel the owners of foreclosed property to pay for upkeep.
(AB 2314)”
To say that the above is stopping the normal foreclosure process (ie. a moratorium) is akin to saying that the reduction in speed limit from 65 mph to 50 mph on the freeway is stopping traffic. You still get to the same place, but it takes a more time.
‘“We have an expectation that at some point, another shoe will drop in California in terms of foreclosures,”
If I were a prospective California home buyer, I would definitely wait for that other shoe to drop before getting serious about buying.
Non-current loan rates in CA are at 6.1%.
NV is at 12%, FL at 16%, NY at 12.7%, NJ at 14.9%.
The other shoe is much more likely to drop in places with higher non-current loan rates.
“The other shoe is much more likely to drop in places with higher non-current loan rates.”
7%+ unemployment among potential end-user buyers coupled with epically-high levels of investor purchases driving appreciation rates back above 20% are among the factors which will eventually lead to the next shoe to drop on California housing.
“7%+ unemployment…”
Don’t you mean 7% eligible for UI benefits?
‘Legislators know that, with California real estate, so goes the rest of the nation.’
I just threw up in my mouth a little bit.
This stuff is important IMO. It reflects a state of mind with clues to mania. The absurd arrogance to think that people in, say Arizona, will be lifted up out of poverty by California house prices. Rejoice people of Flagstaff, because down payment assistance has been granted to low income buyers in California!
“What’s good for
General MotorsCalifornia real estate is good for the country.”How is it conceivably in the interest of Joe6Pack in Flyover Country to have to share the burden of federally guaranteeing California mortgages in amounts exceeding $600,000?
‘with California real estate, so goes the rest of the nation’
only 18 properties for sale in zip 22151- easy commute to DC for perm ante fed jobs-bama still hiring
even here incomes are flat, so prices are going up because?
I love the Mercury News:
‘Earlier in the season it was much busier with multiple offers, and people were bidding higher than what I was offering,” Kabel said. “Now it’s calmed down quite a bit. Places are staying on the market longer, prices are dropping and there’s much less competition.”
‘That means shopping for a home is likely to be less of a challenge in the coming months, said DataQuick’s Andrew LePage. “Compared to the last four to five months, the evidence is that it will be a pleasurable experience for home shoppers,” he said. “There is more to choose from and prices aren’t leaping any more.”
‘That’s what Louis and Keelin Marcoux found after months of getting beaten out by higher bidders for homes in Pleasanton. Louis Marcoux, an executive with a Pleasanton medical electronics firm, said they lost out on three houses, only to win the fourth time around in August.’
“It was a blessing in disguise” to be beaten out on the other homes, he said. “It is a better house, a better location, and everything we were looking for. Prices started to cool down just a tiny bit by the time we came to it. It’s definitely a little less competitive.”
First prize Louis! Now just don’t take the dishwasher when you get thrown out on your ass!
Well, and look at the language in this article:
“getting beaten out”
“lost out”
“only to win the fourth time”
Echo bubble deluxe.
How many letters did they write to the sellers?
I’m sure they had to promise to feed the squirrels and birds too.
What kind of diseased mind considers signing up for hundreds of thousands of dollars in debt “winning?”
And the coded “There is more to choose from and prices aren’t leaping any more.” Nice!
astute observation.. agree completely…
FIRST PRIZE!!!
Flippers selling to flippers:
1) Keeps Wall Street happy, as the things they value, the commissions and the debt, increasing.
2) Keeps politicians happy, as the property taxes on local homeowners increases.
3) The patsies are the folks who think the money is in the physical asset when the real money is in the financial products. The physical asset holder is the one actually paying currency to the debt holders.
“As rates rose this summer, ’sellers finally got a little bit of a reality check,’ said Trish McCall, a longtime agent in Santa Rosa.”
Sellers getting a reality check? I would hope recent buyers are getting a reality check as well, those folks who “won” multiple offer bidding and got a 3.5% interest rate on their house. Good luck, as those rates are bye-bye if they need to sell.
‘The region’s housing market is starting to exhibit a familiar sheen. Just like prices, adjustable rate and jumbo mortgages are popping up again, according to DataQuick. Adjustable loans accounted for an 11.6 percent share of August’s 23,057 sales of new and previously lived-in houses and condominiums across Southern California. That was up from a 10.9 percent share in July. August was up a whopping 96.6 percent from its 5.9 percent share a year earlier.’
A familiar sheen indeed.
A mortgage broker recently told me that you can save about 2% on the interest of the loan if you put 5% down and go conventional. It’s because the FHA is charging a secondary insurance fee that basically amounts to an additional 2.5% interest rate. He could have been BSing me, but that’s what he said anyway.
Just for the record, Lisa, if it comes to that, the higher interest rate issue for new buyers is generally circumvented with assumable mortgages from the low interest rate mortgagee
the higher interest rate issue for new buyers is generally circumvented with assumable mortgages from the low interest rate mortgagee
It _used_to be circumvented that way… But assumable mortgages went out the window a long time ago, at least AFAIK.
“The region’s housing market is starting to exhibit a familiar sheen. Just like prices, adjustable rate and jumbo mortgages are popping up again.”
I remember visting family in LA around 2003 and this stuff was just ramping up. I’ll never forget being told about a 20/80 loan. Never heard of such a thing and those had been around since ‘99. Stupid me had been paying PMI for the last 3 years all along Joe Lucky got around it with a 20/80 loan.
“Stupid me had been paying PMI for the last 3 years all along Joe Lucky got around it with a 20/80 loan.”
Seems more like insurance fraud than luck.
In northern NV, where prices cratered the most, there are 1200sf WWII era houses in decent neighborhoods selling for $300,000. That is nearly as high as the last bubble. It is another mania.
“Joe Lucky got around it with a 20/80 loan…”
They may have thought they were Joe Lucky at the time, but given all the belly-up FB’s we’ve seen, and folks “trapped” because their zero equity at time of purchase turned into a big underwater hole, not sure how many would still call themselves Joe Lucky.
I have a friend who bought an $800K house with her husband in Sonoma County, 80/20, just as those loans were evaporating a few years ago, they considered themselves so fortunate to have squeaked in with that financing. Well, now they are divorcing, the house is worth around $550K and it’s a big noose around both their necks.
They would still be underwater if they had put 20% down.
But they could not have bought the house because they probably didn’t have 20% of $800k. Who has $160k just lying around for a down payment? How many years does it take to spend $160k on rent?
“But they could not have bought the house because they probably didn’t have 20% of $800k.”
Bingo. They would have continued to rent as I know they had no money set aside for a down payment.
I’ve been renting in LA, in the Hollywood/Beachwood Canyon (90068) area for six years now. My husband and I were considering moving and were absolutely shocked that the current minimum rent for a 3-bedroom home is $4500/mo and often much, much more. Reading this blog (thank you all- you’ve kept us out of the insanity for the past 10 yrs) has shed some light on the issue. A Trulia search has yielded a ton of grossly over-priced homes for rent which makes me think that most of these homes are indeed owned by investors.
Question- what will happen to these homes as they’re not rented out? Will the investors dump them or lower the rent? With interests rates increasing, I see prices falling…. Projections, anyone?
I guess it is the same business model as the one which has them buy up defunct strip malls with out of business anchor stores, to hold indefinitely with seemingly no intention of leasing. Probably pass the “sweet profits” onto some unsuspecting institutional investor’s portfolio while using the commissions to go yachting off the coast of Hyannis Port.
More foreclosures on the way as construction loans come due on the latest crop of upper-mid-range spec houses and no one wants to pay $6-10,000 a month to rent them “until the market returns”.
The realtoRs are characterizing the August price drop as normal, even though there hasn’t been a seasonal real-estate cycle in California since the bubble started. Prices in the greater San Franciso metropolitan area have only gone up and down with the bubble, not the seasons. There is absolutely nothing “normal” about an August price drop.
That explanation would only make sense if there wasn’t a decrease in prices to attend that decrease in sales. The decreased prices are explained by the increased inventory. I mean duh. If inventory is up, then sellers are not “holding on” to their houses. They’re putting them on the market, thereby driving up the inventory. That’s pretty much the definition of it all.
“That explanation would only make sense if there wasn’t a decrease in prices to attend that decrease in sales.”
Nobody could have seen the price decrease coming!
Actually, the smaller, long-term investors came in BEFORE the institutional investors. The large institutions are already losing money, and they always had a short-term mentality. They were the ones who drove the long-term people out of the market. Today’s flippers are just random people who got adjustable-rate loans from banks that figure they will be bailed out anyway.
“The large institutions are already losing money, and they always had a short-term mentality.”
The large institutional investors are also the ones who typically exhibit the prescience to set up investment funds, whereby they play the middle man and put other people’s money at risk of loss when the investment scheme turns to bust. Middle-man fee income has remained the path to wealth going at least all the way back to the California Gold Rush era.
Good lord, I don’t even need to read the 2013 Bubble Blog anymore (except to catch Ben’s bon mots). I can just go back and re-read it from 2006-2007 to see where this is all going.
“Adjustable loans accounted for an 11.6 percent share of August’s 23,057 sales of new and previously lived-in houses and condominiums across Southern California. That was up from a 10.9 percent share in July. August was up a whopping 96.6 percent from its 5.9 percent share a year earlier. Last month’s ARM activity was the highest for any month since this loan product accounted for a 12.6 percent share in July 2008, DataQuick said.”
I guess all these ARM buyers missed the memo that interest rates are rapidly rising off historically low levels?
I’d love to see historical data on the percentage of ARMs as a percentage of all loans. I’m sure the MBA has the data, but will try to charge for it…