SACRAMENTO, CA – New home starts in California are down 42 percent when measured by building permits issued in April of 2008.  This announcement from the California Building Industry Association (www.CBIA.org) came on Tuesday.

This news indicates that the real estate market woes that have been plaguing California and the nation are not over yet.  Compared to last April housing starts are down 55 percent.

According to Ben Bartolotto, the Research Director for the Construction Industry Research Board (www.cirbdata.com), “CIRB’s outlook for 2008 as a whole is 79,000 total new units, down 30.1 percent from 2007 and the lowest annual total on record, with records going back to 1954.”

Bartolotto added, “It’s a matter of time before the housing sector shows clear signs of the beginnings of a recovery as credit markets stabilize and unsold inventories decline.”

Another real estate and foreclosure expert Patrick McGilvray, J.D., president of www.TheHomeBuyingCenter.com commented, “There are still a lot of toxic adjustable rate mortgages that will become unaffordable for strapped homeowners.  People who want to get a deal on buying a foreclosure home will have more opportunities in the months to come, but people looking to sell a house will have to be patient and, most importantly, realistic about the price they are asking.”

President and CEO of the CBIA, Robert Rivinius urged state lawmakers to pass reform legislation that would help re-start the key housing industry.  His organization is trying to get lawmakers to approve legislation that would allow builders more time to build their subdivision projects and defer impact fees until such time as the homes that are built are actually sold.

RIVERSIDE, CA – Existing home sales have fallen almost without exception during the last nine months in the United States, in part due to the effects of subprime mortgage meltdowns that have led to record forecloures.For homeowners trying to sell a house the challenge appears to be a large number of unsold homes on the real estate market.  The numbers of unsold homes, according to the National Association of Realtors (NAR), are higher than at any time in the last twenty years.

The NAR reported that existing homes sales in April when converted to an annualized number matched the dismal January figure of 4.89 million homes.  These twin months of housing misery are the most painful for the housing sector, and presumably realtors, since 1999.

The median home price in the same report for a home in the United States was almost 8 percent from twelve months earlier and was $202,300.  Further declines are predicted in house values because of the large unsold inventory.

Real estate and foreclosure expert Patrick McGilvray commented, “There is no doubt that our current housing challenges will continue at least for several more months.  Home buyers are not as able to get mortgage loans that they want to buy houses because of the ongoing credit crunch.  Sellers are also facing challenges if they’re hoping to sell their house fast.”

McGilvray is the president of Sacramento, CA-based www.TheHomeBuyingCenter.com.  His company helps put home sellers and buyers in touch with real estate investors and other real estate professionals such as agents and mortgage officers across the United States.

Other real estate watchers and economists are hopeful that the current government rescue legislation that Congress is attempting to pass will have a positive effect on the housing market and that the economic stimulus rebates will inject some needed cash into the American economy.

 

All data point to escalating foreclosure numbers through the year

By ZACH FOX

Foreclosures have flooded North County’s housing market, and indicators show that the waters will be rising, not receding through the rest of the year.

Just as April’s sales data was the best in months and provided some encouragement for real estate agents, the month’s huge foreclosure numbers offered more ammunition to housing market bears who see San Diego County’s housing recession dragging on for two or three years.

All indications are that North County will see more foreclosures, not fewer, come up for sale over the next six months:

– Fewer than half of San Diego County variable-rate subprime loans —- where interest rates jump after a set period and typically carry high payments because of a borrower’s poor credit score or low down payment —- have already seen payments escalate, according to a report by the New York Federal Reserve Bank.

– Of all North County foreclosed homes that went back to the bank within the last 120 days, 60 percent have not been listed on the market, according to a North County Times analysis of foreclosure, listing, sales and pending sales data. And there have been more finalized foreclosures —- 1,800 homes —- over the last four months than the previous seven months.

– Notices of default, the first step in the foreclosure process, have shot up in North County, reaching a peak for this recession of 1,100 in April, according to data from ForeclosureRadar, a California foreclosure tracking service. Notices of default preceed bank-owned foreclosures (widely viewed as the chief culprit of San Diego County’s home price decline) by six months to a year.

The data put foreclosure analysts at odds with real estate agents, who say that a flurry of buyer activity foretell a housing market recovery locally.

“I am more wondering when is this thing going to blow up, and you’re already talking about the light at the end of the tunnel,” said Ramsey Su, an investor and former real estate broker in San Diego. “It’s going to get worse before it gets better.”

Small-time investor could lose big

Many housing analysts said they think option-adjustable rate mortgages will further exacerbate the foreclosure problem. The loans allow homeowners to pay less than the interest accrued, meaning the amount owed on the mortgage increases, rather than decreases, with each payment.

Eventually, the mortgage balance becomes so large the lender forces the homeowner to pay all interest and some of the principal each month to start drawing down the balance.

For Diane Goodwin of Oceanside, that move would force her to lose two of her investment properties. And if the market does not improve, she said she could lose her other three homes, including her primary residence, over the next year and a half.

All five properties she owns carry the option mortgages, also known as negative amortization loans.

“Yup, big mistake,” she said. “However, we wouldn’t have any of them except the original house if we didn’t use neg-am, so it was a gamble. And at the time, it seemed like a good one. Obviously, we didn’t know what was going to happen to the market.”

There are 19,200 homes with neg-am, non-suprime loans in San Diego County, according to the Federal Reserve report. All of those loans are known as Alt-A, which indicates a more qualified buyer than subprime loans but less qualified than prime loans. In total, there are about 95,000 non-prime loans in the county, according to the data.

That prevalence has raised concerns among foreclosure analysts that neg-am loans will cause a new tidal wave of bank-owned foreclosures.

“I still haven’t seen a real wumph,” said Ward Hanigan, founder of Innovest, a San Diego-based company that tracks foreclosure statistics and buys bank-owned properties.

Hanigan said he thinks San Diego County’s housing market will decline for two more years before any sort of recovery and that an increase in foreclosures will lead the decline.

Based on that prediction, his company has not invested in foreclosures yet, he said.

A few unknowns will play a significant role over the next year.

For example, Goodwin is desperately trying to get her banks to freeze her mortgage payments to avoid foreclosure. But because she has not missed a payment, she said, they will not talk about such a freeze, known as a loan modification.

If more banks engage in loan modifications, more homeowners and investors like Goodwin might dodge foreclosure.

To help even more families facing foreclosure, the state and federal governments have moved aggressively to pass foreclosure-prevention legislation and have organized networks where homeowners can seek free help in securing loan modifications.

However, much of that legislation will not help Goodwin because she is an investor and politicians have repeatedly said they want to avoid bailing out speculators.

But Goodwin said she does not fit the speculator-investor prototype.

“I just wanted to make sure I wasn’t a burden to my family when I get old. It was not to be rich, but to have something so that my kids wouldn’t have to worry about me when I’m 90,” Goodwin said. “So now, instead of being able to retire when I’m 65 or 62-and-a-half, now, realistically, I’ll have to work until I’m 75.”

The negative intangibles

Some unknown factors could increase, instead of reduce, foreclosure numbers. For some housing analysts, the trajectory of the nation’s economy will play the biggest role in foreclosure numbers over the next year.

Housing analysts have said that the primary cause of foreclosures so far has been creative loan products, such as neg-am or subprime loans, that put people into homes they could not really afford.

In contrast, job loss, divorce and death have been the largest foreclosure factors historically. If significant layoffs come —- as some analysts, such as Su, expect —- foreclosure numbers will multiply as traditional home losses combine with evictions brought about by exotic financial instruments and a housing rush from 2000 to 2005.

“I don’t think it would be a linear growth of foreclosures. It would be exponential. It would be catastrophic,” said Su, the San Diego investor. “It would be a situation we have never seen before.”

Some real estate agents, such as Kurt Kinsey of Oceanside, disagree with analysts such as Hanigan. Though Kinsey said he acknowledges there will be more foreclosures through 2008, that does not necessarily mean they will depress home prices.

“It will definitely add pressure to non-distressed sellers, no doubt about it. But most of them (foreclosures) are coming back at price points that are affordable,” Kinsey said. “And from where they started at, they’re starting to come up in price. So if anything, they’re starting to heal some neighborhoods.”

Shadow inventory

Even if foreclosure numbers leveled off next month, it would take a long time to work through the homes already in the foreclosure process.

Notices of default, the first step of the foreclosure process sent out after homeowners start missing payments, are considered a leading indicator of foreclosures.

Hanigan said his statistics show about 50 percent of notices of default are turning into bank-owned foreclosures in San Diego County.

North County has seen notices of default escalate recently, accumulating 4,100 notices in the first four months of the year, according to ForeclosureRadar.

With Hanigan’s 50 percent conversion rate, the notices of default during the first four months of this year will translate into 525 foreclosures per month. During those four months, North County posted an average of 460 foreclosures over the same time period.

And even many of the homes that have completed the foreclosure process have yet to hit the market.

Of the 1,300 North County homes to be seized by banks over the last 120 days, 750 are still not on the market, according to an analysis of ForeclosureRadar data and listing, sales and pending data from Sandicor, a service real estate agents use to post homes for sale.

“I think that the banks are in an analysis paralysis,” said Norm Miller, a real estate professor with University of San Diego’s Burnham-Moores Center for Real Estate. “They’re trying to figure out whether to put it on now and bite the bullet or wait because they think we’re at the bottom. But everyone else is thinking the same way and there’s no way to avoid the rash of foreclosures.”

Some housing analysts disagree with Miller, saying that banks are moving the foreclosures as quickly as possible, but that the process of evicting families and readying homes for sale is time-consuming.

Either way, there are plenty of homes to be sold not listed on the market, called by some as “shadow” or “phantom” inventory.

Many analysts look at inventory, the number of homes for sale divided by the number of sales, to determine the relative health of the housing market.

Some analysts, like Miller, think that current inventory numbers —- though high —- are artificially low because of foreclosure properties not on the market and regular homeowners who do not want to sell in a struggling market.

Still, some neighborhoods, especially those along the coast, have exhibited strength in pricing and few foreclosures.

Further, some areas, such as parts of Oceanside and Escondido, have been so wracked by foreclosures that prices have dipped to $160,000 and most analysts do not expect further declines.

“You look at 10 homes for sale, one is aggressively priced and another is priced at the same price as a year-and-a-half ago. … They’re going to be on the market for a long, long, long time,” Miller said. “So this home is close to bottoming out, and the other one is in la-la land with the assumption that real estate never goes down.”

 

By Joanne Morrison

WASHINGTON  - Sales of previously owned U.S. homes slipped last month and the backlog of unsold properties hit a record high, according to data on Friday that suggested the market’s downturn still has a long way to run.

Home resales fell 1 percent in April to a 4.89 million-unit annual rate, the National Association of Realtors said.

The sales pace was a bit better than expected on Wall Street, but the stock of unsold homes surged 10.5 percent to 4.55 million units, leading economists to warn of further housing market woes ahead.

At April’s sales pace, the supply of homes was 11.2 months’ worth, the highest since the trade group began tracking single-family and condo properties together in 1999. For single units, the supply was 10.7 months’ worth, the most in 23 years.

“The increase in unsold inventory suggests that the housing downturn will continue on through this year and well into next,” said Moody’s Economy.com Chief Economist Mark Zandi.

Stocks initially got a slight lift from the data, but later turned lower as the market digested the news and warily eyed a resumption in the steep run-up in oil prices. The blue chip Dow Jones industrial average .DJI closed down nearly 146 points, or 1.1 percent.

Prices of U.S. government bonds rose as investors shifted out of stocks, while the dollar fell and oil climbed above $131 a barrel.

The report showed the median home price in April was down 8 percent from a year ago, at $202,300. It was the second-largest price decline on record, following the biggest drop in February.

“The big surprise was the inventory of unsold homes rising to a record level,’ said Rudy Narvas, a senior analyst at 4Cast Ltd. in New York. “This would suggest to us that further price declines are going to be necessary for the inventory to clear.”

A report on Thursday showed home price declines accelerated in the first quarter. The federal Office of Housing Enterprise Oversight said its price index fell 1.7 percent in the first quarter, the steepest drop in the index’s 17-year history.

Other price measures have shown even steeper drops. The Standard & Poor’s/Case Shiller home price index of 20 metropolitan areas showed a drop of 12.7 percent in the 12 months through February, with prices down 15.8 percent from their June 2006 peak. The March index will be released on Tuesday.

“With prices collapsing, the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement, prices will keep falling,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Moody’s Zandi said about one-fourth of the sales likely were due to foreclosure, which he said was another negative sign.

NAR Chief Economist Lawrence Yun said that foreclosed homes, which sell at substantially lower prices, were increasingly showing up in the existing home sales data.

“Several markets are seeing a significant rise in home sales,” Yun said. “These markets are also the markets that have witnessed a substantial decline in prices.”

Sales declined in the Northeast, Midwest and South but rose in the West, by 6.4 percent. But prices in the region were off 16.7 percent from a year ago, the sharpest regional price decline.

“Anecdotal reports and local data indicate that prices have taken a beating in California, Las Vegas and Phoenix, and foreclosures and sales of foreclosed properties seem to be much heavier in California than anywhere else,” economist Stephen Stanley of RBS Greenwich Capital wrote in a research note.

“This would suggest that perhaps the intense downdraft in prices in troubled markets, some of which is being dictated by foreclosure activity, is beginning to draw in buyers,” he said.

The trade association said last month’s existing home sales pace was 17.5 percent below the rate of April 2007, with single-family home sales off 16.1 percent and sales of multiple family units down 27.9 percent.

 

By Dan Levy

 

May 23 (Bloomberg) — California home prices tumbled 32 percent in April from a year earlier as “distressed'’ properties and a lack of financing cut demand, the state realtors group said.

The median existing home price fell to $403,870, the California Association of Realtors said in a statement today. Sales increased 2.5 percent, ending 30 months of consecutive year-on-year declines. Homes priced under $500,000 accounted for 64 percent of sales compared with 40 percent a year earlier.

California had the second-highest U.S. foreclosure rate in April, one for every 204 households, and the most foreclosure filings for the 16th consecutive month, RealtyTrac Inc., a seller of default data, reported on May 14. Sales increased in northern and southern California last month as buyers purchased discounted properties that had been in some stage of default, DataQuick Information Systems said this week.

“Both tighter underwriting standards and the ongoing effects of the credit/liquidity crunch continue to constrain sales,'’ William Brown, president of the association, said in the statement.

 

By Mike Freeman
SAN DIEGO – It was promoted to struggling, mostly Hispanic homeowners as a way to beat foreclosure. But prosecutors say it turned out to be a gigantic scam that tricked 400 property owners into paying fees and rents to a San Diego-based group that did nothing to prevent lenders from taking back their homes.
Police recently arrested four San Diegans and have issued an arrest warrant for a fifth suspect in connection with the foreclosure rescue scheme, prosecutors said Thursday. The suspects face more than 100 felony charges of conspiracy, grand theft and deceitful practices as foreclosure consultants.

Prosecutors estimate that combined losses for victims total hundreds of thousands of dollars.
Mortgage fraud has been a rising concern for law enforcement as the current foreclosure crisis grows. Many schemes prevalent during the easy money lending environment of the housing boom – such as under-the-table cash back at closing or identity theft to buy property – are now coming to light as the homes wind up in foreclosure.

Other schemes are emerging. They target struggling, desperate homeowners who are facing foreclosure but have yet to lose their homes.

“To see this happen is truly, truly reprehensible,” said FBI Special Agent Keith Slotter. “This should be seen as a warning. When individuals who are already facing an extreme financial crisis are preyed upon by the very people from whom they are seeking help, the FBI will aggressively investigate and pursue prosecution.”

Police have arrested William Hutchings, 62, the alleged ringleader, and Xiaoke Li, 43. Two other suspects, Edgar Martinez, 30, and Diego Gil, 38, were arrested on Tuesday while giving a seminar in Carlsbad on the program to more than 50, mostly Hispanic homeowners. Authorities are looking for Shawna Landis, 29, of Oceanside.

According to prosecutors, the scheme worked like this: Homeowners facing foreclosure were told that, for a fee of up to $10,000, they could prevent foreclosure by signing the title of their property over to companies controlled by Hutchins and the group. The companies included Federal Land Grant Co., Land Grant Services and KBS Resources.

Hutchins then allegedly told homeowners he would file a “land grant” or a “land patent” with the U.S. Bureau of Land Management, which gives the land back to the federal government and prevents the bank from taking back the property.

After four years, he allegedly told homeowners, the “statute of limitations” would run out and the lender could no longer collect the debt. Then, the homeowners allegedly were told, they could get the property back debt-free.

In a variation, homeowners allegedly were told that, instead of the $10,000 fee, they would be charged $500. They could remain in the home and rent it back from the Hutchins group-controlled companies that had placed it in the land grant.

The scheme is completely bogus, according to prosecutors, who say there hasn’t been a legitimate land grant in the United States since the end of the Mexican-American War in 1848.

“It’s a scam,” San Diego District Attorney Bonnie Dumanis said. “It’s not going to stop the foreclosure or help (homeowners) in any way.”

The Hutchins group went to elaborate lengths to reassure homeowners who lost homes to foreclosure after paying their fee, including showing up in court at eviction hearings, said Deputy District Attorney Steve Robinson, who is prosecuting the case.

Many of the victims were from San Diego and Riverside counties. The group targeted Hispanics, in part because land leases involving the government are used in Mexico, said Angela Rosenau, deputy state attorney general.

Rosenau said the scam had been going on since 2006, but it began to expand rapidly starting last September.

“With the volume, we knew if we didn’t stop it there was going to be a lot more victims,” said Michael Groch, head of the district attorney’s economic crimes unit.

Investigators hope to contact more victims, many of whom are difficult to find because they have been evicted. Anyone who signed property over to the suspects or their companies is asked to call a District Attorney’s Office hotline: (619) 531-4475.
 

 

By Nancy Waitz

 

WASHINGTON - U.S. home prices fell a record 1.7 percent in the first quarter and the number of workers on jobless benefit rolls held at a four-year high, underscoring the economy’s woes, data on Thursday showed.

The continued slump in housing prices in the first quarter pushed them 3.1 percent below their year-ago level, the Office of Federal Housing Enterprise Oversight said. Like the quarter-to-quarter drop, the decline was the biggest in the 17 years the housing regulator has tracked the data.

OFHEO said prices fell 0.4 percent in March from February and are now down 3.7 percent from their April 2007 peak. Other home price measures have shown even steeper declines.

A separate report from the Labor Department showed first-time claims for state unemployment benefits unexpectedly fell 9,000 last week to 365,000.

However, the number of workers still on the benefit rolls after drawing an initial week of aid held at 3.073 million in the week ended May 10, the latest for which figures were available. The last time so-called continued claims were higher was in March 2004.

“The data tends to support our call of a move in the unemployment rate to 5.5 percent,” said Joseph Brusuelas, chief economist for Merk Investments in New York. The jobless rate stood at 5 percent in April.

Prices for U.S. government bonds fell, however, as traders saw the surprise drop in initial claims as a sign of labor market resilience and as oil prices surged to a fresh record above $135 per barrel.

Stock prices also rose, helped by the data and news of a proposed major acquisition in the utilities sector.

The plunging housing sector and tighter credit conditions have pushed the economy to the edge of, if not into, recession.

On Wednesday, the Federal Reserve released updated economic forecasts that showed policy-makers expect the economy to grow just 0.3 percent to 1.2 percent this year. That marked a sharp downward revision from the 1.3 percent to 2 percent forecast issued three months ago

Fed officials now expect the unemployment rate to average 5.5 percent to 5.7 percent in the fourth quarter.

Continued claims for jobless benefits have held above the 3 million mark for four straight weeks, a sign of the difficulties workers face getting back on the payrolls.

While initial filings dipped last week, a four-week average of new claims, a more reliable guide to underlying labor trends because it irons out weekly volatility, rose to 372,250 from 367,250 in the previous week

“Over the next few months claims should climb toward the 400,000 mark, as companies seek to control costs in the face of persistent very soft demand,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, New York.

“Expect volatility over the next couple of weeks as a result of Memorial Day seasonals, and then look for claims to spike in early July,” Shepherdson said.

The Senate on Thursday approved a Democratic initiative to extend the duration of jobless benefits to the long-term unemployed. Last week, the House of Representatives approved similar legislation, which faces opposition from President George W. Bush.

(Additional reporting by Al Yoon, Steven C. Johnson, Richard Leong and John Parry in New York; Editing by Andrea Ricci)

SACRAMENTO, CA – As the real estate market in the US attempts to recover from falling home prices and foreclosure activity that has created a large overhang of houses for sale the internet is still a place where consumers look for options.

While sites like Zillow and Trulia provide a lot of information to people looking to buy or sell a home, but they don’t offer the kind of immediate response that is promised by real estate investor websites and businesses. One such business, www.TheHomeBuyingCenter.com, reported that its employees counsel hundreds of people every week who want to sell their house fast about their options in today’s difficult market.

TheHomeBuyingCenter.com team also helps people looking to buy a home locate below market and bank owned houses, many of which have been taken back after foreclosure proceedings.

According to the company president, Patrick McGilvray, J.D., there is still a challenge for the everyday home seller who is looking for a quick transaction. “The solution is to list properties at a price below the competition or sell it to a real estate investor at a well below market price. Real estate investors just can’t afford to buy houses at retail prices, and we explain exactly investors look for in a deal to our customers.”

Education is a big part of his company’s mission. Without having an educated customer, McGilvray added, the whole business of buying and selling real estate is a lot more difficult.

For people who want to buy a foreclosure house the opportunities are excellent and more deals are coming on the market every week. The challenge for the prospective home buyer is to make sure that they are qualified for the house they want because deals that are really good are being sought after by investors and cash-rich buyers alike.

 

by Julie Jalone

The real estate market in the Sacramento area, sometimes referred to as the Capital Region, is showing signs of improvement.  But everything is not rosy and you have to look closer to see where the improvements are coming from.

A Jim Wasserman story in the Sacramento Bee yesterday, proclaimed “Area home sales bounce back.”  The story also had a secondary headline letting the readers know that 25 percent more escrows were closed region wide in April than a year ago.  I think the market can use all the help it can get and when the big media players start saying things positive you won’t hear me complaining. 

Yes there are good things happening but, in my opinion, we still have a long and bumpy road to travel before we can say we have weathered through this long storm and have a balanced and healthy real estate market in the Sacramento area.  The overall region is comprised of eight counties, Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba.  The bulk of the activity is concentrated in Sacramento, Placer and El Dorado. 

When you breakdown the April sales by counties you find most sales were resale’s of detached homes.  In other words, these are existing homes and do not include condo sales.  Sacramento County experienced more sales in April than March and a 40.8 percent growth from April 2007 which is very good news.  The median price for the homes sold in April was $226,250, down a staggering 34.4 percent from a year ago and down almost 6 percent from last month.  So sales up but prices still falling in Sacramento County.

Moving over to Placer County we find 383 existing homes were sold in April, up from 319 in March and 7.9 percent more than last April.  The median price was up 5,000 from March to $350,000 but off 22 percent a year ago when the median sales price was $448,500.  Considering how hard Placer has been hit this is pretty positive news, especially the median price increase over the past month.

El Dorado had 149 sales of existing homes in April, down 21.2 percent from a year ago but up from the 134 sold in March.  The median sales price in April was $365,000 which has grown from the previous month but down 11.6 percent from a year ago. 

In the existing home sales arena year-over-year growth in sales was experienced in five of the eight counties with Amador, El Dorado and Nevada counties selling less this April than April 2007.  All counties reported median sales price declines from last year with Sacramento and Yolo counties experiencing the largest drop at 34.4 and 33.3 percent respectively.  The best performing county in was Nevada with only a decline of 7.9 percent in the median sales price. 

The condo market across the region only amounted to sales of 105 units in April compared to 81 a year ago and all counties where there were sales reported significant drops in the median price.

Based on April sales, new home sales were nothing for builders to celebrate.  With the exception of El Dorado County, where 29 new homes were sold in April compared to 26 last year, every county reported double digit sales declines.  The median price declined in Sacramento on new home sales by 15.1 percent year-over-year and 25.6 percent in El Dorado.  Placer County, where only 124 new homes were sold had a median price decline of 22.1 percent.

The overriding issue remains the level of inventory of homes for sale combined with the continuing flow of foreclosures and tightened credit standards. 

According to TrendGraphix there were 12,606 homes for sale in El Dorado, Placer, Sacramento and Yolo counties at the end of April.  Although down from the peak of 16,262 in August 2007 this is still a good deal of excess inventory and will continue to place downward pressure on sellers to lower their asking price.  Even with more buyers it is going to take time to work through this inventory. 

Over at HousingTracker they are showing 14,793 homes for sale in the Sacramento area.  The good news about this number is that it is down 3.2 percent in the past three months and 1.5 percent in the past month during a period we would normally expect to see inventory increasing.  The same trend in pricing is noted here.  HousingTracker shows the median asking price for the homes on the market to be $300,000.  This is down 24.8 percent from a year ago and 1.6 percent in the past month.

During the first quarter we experienced a record number of foreclosures in the Sacramento area.  There is no reason to believe that it won’t be even higher in the second and third quarters.  There are so many homeowners who bought toward the end of the boom and now live in homes that are worth less than they owe on their mortgages.  With reduced financial flexibility to refinance or borrow against the equity, if there is any, it doesn’t take much of a financial shock to end up losing their home to a foreclosure.

As mentioned above the mortgage crisis has reduced the borrowing flexibility of existing homeowners as well as reduced the number of people who can qualify for a mortgage.  Clearly a more conservative mortgage lending industry is good for the market and economy but right now we are seeing and experiencing a pendulum swing that is less conservative and more ridged.  Loans requests are taking much longer to get approved, it is not uncommon to have the request go through several passes in underwriting with new and sometimes strange requirements being imposed and getting an approval these days is like a pre-qualification letter.  Until it is funded it is not approved.

Sales of existing homes are up, we have buyers anxious to find homes, there are investors who think this is the time and inventory, although high, is not growing.  These are all good signs for our struggling Sacramento real estate market. 

Consumer confidence is low, inventory of available homes is still way too high, foreclosures are not anywhere near being behind us and the mortgage industry remains in flux.  These are among the issues facing our real estate market over the balance of the year.  With bank owned property making up a good deal of the market we can expect to see continued price declines until inventory is significantly reduced.

 

 

By Allison Schaefers

 

HONOLULU: Andrew Lambden of Ontario fell in love with Hawaii 20 years ago, but it took a favorable exchange rate to entice him to buy four acres in Kealanani, a luxury development on the northeastern shore of Kauai.

Canadian snowbirds are known to travel long distances in search of warmer climes, but in the past the expense of getting to Hawaii and the high cost of its real estate had deterred both tourism and property purchases.

Now, Canada’s strong oil economy and robust real estate appreciation has increased its citizens’s discretionary income. And, while Canadians still view Hawaii as a faraway locale, the buying power of their dollar has brought second-home and investment purchases within reach. Japanese buyers are still the top luxury purchasers in Hawaii’s high-end market, but prosperous Canadians are not far behind and real estate experts say that, in some parts of Maui, Kauai and the Big Island, they now dominate the international sales sector.

“One big factor for my purchase was certainly the Canadian dollar; it appreciated a tremendous amount over the last year,” Lambden said, adding that favorable exchange rates could save him 10 to 15 percent on his Kauai purchase.

The Canadian dollar now is worth about $1.02, compared with a low of about 62 cents in 2002. Last autumn, the loonie, as Canadians call the currency because of the dollar coin bears a loon’s image, surpassed the American greenback for the first time since the mid 1970s.

“The impact of these currency changes has been marked,” said Putman Clark, president and chief executive officer for Clark Realty on Hawaii’s Big Island.

In the 1970s Canadians purchased two-thirds of all new development in Waikiki; this time, more are interested in the resort properties on the Neighbor Islands, said Stephany Sofos, a real estate analyst in Honolulu.

“They think that they are buying on the cheap,” Sofos said. “They are banking on strong returns when these markets turn around.”

While sales have slumped in some parts of the Hawaiian real estate market, the shortage of properties and the diversity of potential buyers have kept prices more stable than those on much of the U.S. mainland, said Scott Higashi, executive vice president of sales for Prudential Locations.

“In terms of sales, Oahu is tracking lower than the U.S. mainland,” Higashi said. “However, through March, prices were only off three-tenths of a percent as compared with an 8.3 percent drop nationally. Many people from outside of Hawaii think of the islands as a great place to live and that diversity has pushed average sales prices up.”

International buyers from Japan, Korea, China, Canada, Europe, Oceania and Russia are still interested in Hawaii real estate, especially on the luxury end - and “the higher end of the market is continuing to perform really well,” Higashi said.

Lambden, who bought a lush ocean-view tract in a development where land prices range from $500,000 to $3 million, is like many of his fellow Canadians, who see Hawaii real estate, particularly on the Neighbor Islands, as a value-based investment with growth potential. “We believe that the U.S. economy will strengthen over time,” he said.

In addition, buyers like Lambden, who are used to Canada’s strong residential real estate values, are not experiencing sticker shock when it comes to home prices.

“The west coast of Canada is a very expensive place so it’s not much of a stretch to buy in Hawaii,” Lambden said. “I looked at real estate in other locations, but I choose Kauai, mainly because I think it’s the prettiest place on the planet.”

Hawaii stacks up well both in price and quality to other top resort and second-home destinations favored by Canadians, said Alexander Gray, president of Skylight Global Investments, who also owns luxury real estate in New York; Daytona, Florida; and Las Vegas. “I’m very choosy,” said Gray, who works in Toronto. “I only buy properties in the best vacation spots in the world.”

“Hawaii is a strong market. It has sustainability like New York,” said Gray, who just purchased one of The Residential Suites at The Ritz-Carlton, Kapalua in Maui. “The Hawaii market is softening now, but the Ritz-Carlton project is unique and I believe that it will have strong resale value down the road.”

The softening in some parts of the state’s property market has not deterred Canadians from diving into what, for them, has become solidly a buyer’s market, said Roberta Charles, a Canadian by birth who moved to Kauai in 1972 and is now broker/owner of Makai Properties.

“They are experiencing a robust economy there and they are looking for opportunities elsewhere,” Charles said, adding that Canadian buyers, who represent Kauai’s biggest international market, now comprise 10 percent to 15 percent of her business.

Many of Charles’s Canadian clients are looking for Kauai properties that are selling for more than $1 million, she said. They seem to favor Poipu, on the southern tip of Kauai, where most resort condominiums are priced from $600,000 to $1 million and single-family homes are in the $1.5 million to $2.5 million range, Charles said.

Japanese buyers, who have long been active in Maui and the Big Island, are still buying and selling real estate. But now Canadians are keeping pace, said Howard Dinits, a Remax agent with Island Surf Realty, who specializes in selling Big Island and Maui properties.

“My Japanese buyers are looking for condos with amenities, but the Canadian buyers are actually looking for second homes, preferably near the golf course,” Dinits said. “While the Japanese aren’t really into haggling, the Canadians view the downturn in our market as an absolutely great opportunity and they are out there looking for a deal.”

Canadian buyers also have become quite active in Maui, even at the high end of the market, said Jerry Landeck, a senior partner with Gencom Group, the Miami-based developer of The Residential Suites at The Ritz-Carlton, Kapalua.

Canadian buyers were the surprise element during a recent release by the West Maui project, where suites retail from $1 million to $3.5 million, Landeck said. “We got a few thousand leads in response to a teaser ad that we ran in western Canada,” Landeck said. “It’s a market that hardly existed a year ago so we were pleasantly surprised.”

Canadians also have been particularly drawn to the Big Island, where single-family oceanfront condominiums can still be found for $500,000, Clark said.

Kona and Keauhou, on the Big Island’s west side, have long been favored destinations for Canadian second-home and resort investment buyers. But in the 1960s and 1970s, when those resorts were being developed, most of the Canadian buyers had blue-collar backgrounds, Clark said.

“During this Canadian buying cycle, far more of them are arriving with wealth,” he said.

by California Political Desk

   
SACRAMENTO – Assemblymember Pedro Nava, Chair of the Assembly Banking and Finance Committee and Assemblymember Ted Lieu, Chair of the Assembly Rules Committee today announced the release of the California Research Bureau´s Report titled, “Foreclosures in California-The current housing crisis is more severe than previous corrections.” (Report Attached)

The Assembly Banking and Finance Committee asked the California Research Bureau (CRB) in February to conduct research into the number of housing foreclosures in California and to publish periodic updates during the year in order to assist the Committee and the legislature in addressing the housing foreclosure crisis.

“This report provides important information regarding the breadth and depth of the housing crisis in California,” said Assemblymember Nava, Chair of the Assembly Banking and Finance Committee. “Families throughout the state are clearly in crisis and having trouble staying in their homes. We need to make sure that the legislature takes appropriate action to help those in need.”

“California is bearing the largest brunt of the housing crisis and families are losing their homes in record numbers,” said Assemblymember Ted Lieu, Chair of the Assembly Rules Committee. “This report shows that federal regulators are failing us and that is why it is necessary that states like California take the lead in addressing this issue.”

The California Research Bureau (CRB) foreclosure report highlights the following:

The estimate of housing foreclosures in California, spanning the three years 2006 – 09, varies from 170,000 to 434,000. Therefore, foreclosures will affect between 3.0 and 7.8 percent of all home owners with mortgages in the state by 2009.

Since this housing crisis is much more extreme than previous corrections, the recovery may not follow the same path as previous recoveries. In fact, some observers are comparing this cycle to the one experienced during the Great Depression, since this is the first cycle since then in which home prices have fallen throughout the nation.

The current evidence suggests the buyers who bought at the peak in 2006 – 07, paid the most inflated prices, were more likely to avail themselves of subprime adjustable rate mortgages (ARMs), and may now be at risk of being in negative equity positions (upside down on their mortgages). A 20 percent drop in prices from their peaks could leave as many as 14 million households with negative equity 9 - 2.8 million households in California.

The percentage of foreclosures of all mortgages outstanding is higher for California than for the nation as a whole.

The Pew Center on the States study presents California´s policy responses to the housing foreclosure crisis and the responses of other states and suggests that the states and the nation could be doing more to address the problem. Commendably, California has taken action to modify loans, but the study suggests that California could be doing more to help those at risk of losing their homes by, for example, helping them avoid falling victim to fraudulent rescue schemes and providing them with more counseling.

The Moody´s Economy.com forecast is for 411,000 defaults in California in 2008, compared with 212,000 defaults in 2007. Defaults do not always lead to foreclosure, but many do. California had 15 percent of the defaults nationwide last year and is expected to have 20 percent this year.

By Mathew Padilla

 

Tara Poulsen bought a four-bedroom house in Mission Viejo for $469,000, after waiting out the housing market for more than three years. To do it, she and her husband went with a federal loan program that waned in popularity in some areas during the housing boom.

They got a loan insured by the Federal Housing Administration, which accepts borrowers with spotty credit. Poulsen’s husband has a midrange credit score and filed for bankruptcy about 10 years ago, she said.

Some lenders and brokers say consumers who have dinged credit or are short of cash should consider FHA, which is filling the void left by the implosion of subprime lenders. FHA backing protects lenders from loss, so they are more willing to make riskier loans.

Poulsen, who manages a medical office, said she recommends FHA to other buyers, but warns that the process can be long, involves extra costs, and requires a lot of paperwork, including tax returns, paycheck stubs and bank statements. Her expected 30-day escrow turned into 45 days, she said.

“It was superstressful,” Poulsen said. “I didn’t sleep for two weeks. Every night I was wondering, ‘Is our loan going to close?’”

But she said she is glad to finally have a house and to have gotten a loan amid the credit crunch. She and her husband have waited out the market since their marriage in 2004.

Some FHA employees envision a comeback.
Burns likens the current market to a recession in the 1980s that hurt housing markets in Texas and other oil-producing states. Lenders tightened standards in those markets, and private mortgage insurers pulled back, leaving the FHA to step in and stabilize markets, she said.

The FHA has a history of helping consumers and stabilizing markets. Congress created the agency in 1934 to boost homeownership amid the Great Depression. In the 1940s, the FHA financed military housing as well as home loans for World War II veterans.

Today, consumers who might not have ever considered an FHA loan might find it their best option. The FHA accepts low credit scores and targets any home buyer with little in savings.

Al Hensling, head of United American Mortgage in Irvine, which brokered the Poulsens’ loan, said larger FHA-insured loans compare favorably to larger loans sold to government-sponsored enterprises such as Fannie Mae, the largest U.S. funder of loans.

The FHA allows lower credit scores and lower down payments — as little as 3 percent — than Fannie Mae and Freddie Mac do, Hensling said. He said GSEs require at least 10 percent down on larger loans.

One downside: The FHA requires an insurance premium on all loans, usually 1.5 percent of the loan amount. The premium can be “financed” — added into the loan amount. GSEs require insurance on loans more than 80 percent of the value of a home.

Hensling said the recent collapse of investment banking giant Bear Stearns, a big player in mortgage-backed securities, illustrates the breakdown of a private market for loans.

“There is no secondary market right now,” he said. He described the FHA as just about the “salvation for the market.”

And the FHA is seen as a tool to stem foreclosures on subprime loans. President Bush has twice expanded the types of subprime loans the FHA can back. Last month, the FHA said it can insure an adjustable-rate loan after a lender slashes the principal balance to make it more affordable, even if the borrower missed two or three payments.

Still, some academic experts expressed concern over the FHA’s backing larger loans. Kerry Vandell, professor of finance and director of the Center for Real Estate at UC Irvine’s Paul Merage School of Business, said FHA loans tend to default more often than loans sold to Fannie and Freddie. The trend correlates with the FHA’s historical push into inner cities, as well as generally to borrowers with marginal credit, he said.

President Bush has said the FHA expansion will be funded by insurance premiums paid by borrowers and not with taxpayer funds. Vandell isn’t so sure.

“Whether this movement is going to maintain the viability of the insurance reserve pool is another question,” Vandell said. “It’s not clear to me exactly what they are going to do or which part of that market they are going to take.”

 

By DAVID M. HERSZENHORN

WASHINGTON — The Senate Banking Committee on Tuesday approved compromise legislation aimed at helping hundreds of thousands of homeowners in danger of foreclosure by expanding the availability of government-insured mortgages.
Senators on Housing Bill Compromise The committee, by a vote of 19 to 2, approved a deal reached between Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, and Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee.

The Bush administration, which previously said it would oppose legislation to rescue troubled homeowners, has suggested that it was willing to consider the Senate deal because lawmakers had found a way to eliminate any direct cost to taxpayers.

The Senate bill would create an affordable-housing fund, financed by the government-sponsored mortgage buyers, Fannie Mae and Freddie Mac, and that fund would be used in its first year to provide about $500 million for the foreclosure rescue effort.

Mr. Dodd said on Monday that his goal was to create a solid foundation underneath the nation’s depressed housing market.

“The primary goal here is to keep people in their homes, but also to establish a floor, a bottom to all this,” Mr. Dodd said Monday in announcing the compromise. The foreclosure aid is tied to legislation creating a new regulatory agency to tighten oversight of the government-sponsored companies.

The House this month approved a similar foreclosure rescue bill by a vote of 266 to 154, which was cast mostly along party lines. Only 39 Republicans joined Democrats in supporting the bill, many of them from states hit hard by foreclosures.

Under both the House and Senate plans, lenders could limit their losses from potential foreclosures by agreeing to reduce the principal balances of loans at risk of default. The borrowers, many with expensive adjustable-rate loans, could then apply to refinance with a more stable, 30-year, fixed-rate mortgage insured by the government through the Federal Housing Administration.

In addition to paying interest and principal, the lender would pay a monthly insurance fee, which would go into a fund to protect taxpayers from losses.

The Congressional Budget Office has estimated that under the House bill, up to 500,000 mortgages would be refinanced over the next five years, at a cost to taxpayers of about $2.7 billion.

Mr. Dodd said that his bill included several changes, including shortening the life of the foreclosure assistance plan to three years, which would reduce the cost to about $500 million. He said that roughly the same number of mortgages could be refinanced.

That $500 million would be taken from a new affordable-housing fund, which would collect slightly less than half a cent on every dollar of mortgages purchased by Fannie Mae or Freddie Mac.

That fund, proposed by Senator Jack Reed, Democrat of Rhode Island, would continue to exist after the foreclosure assistance plan ended, with the money directed to creating affordable housing, including low-income rental housing.

Rhode Island has one of the highest foreclosure rates on subprime mortgages in the country.

A day before the House approved its foreclosure rescue plan, President Bush had flatly threatened to veto the bill, saying it would put taxpayer money at risk and “reward speculators and lenders.”

Many lawmakers interpreted the president’s remarks as a signal to Senate Republicans to kill the housing legislation before it could reach Mr. Bush’s desk.

But the White House reacted with a more agreeable tone to news of the deal between Mr. Dodd and Mr. Shelby.

Tony Fratto, a spokesman for the White House, said the administration still needed to review the specific language in the bill. But, he said: “We appreciate and encourage the efforts to create a strong, independent regulator” for the government-sponsored mortgage finance companies. “We’ll look forward to seeing the details of the bill,” he added, “especially provisions to expand programs of the Federal Housing Administration.”

A spokesman for Mr. Shelby said the senator was “optimistic that the White House will support what we’re doing.”

In a statement, Mr. Shelby said: “My primary consideration during negotiations on this package has been to protect the American taxpayer, and I believe we’ve made significant progress toward that goal on each component.”

Mr. Shelby had been particularly intent on tightening regulation of Fannie Mae and Freddie Mac; the deal with Mr. Dodd would create a new Federal Housing Finance Agency. The agency would oversee the companies, which are private but are virtually assured of government assistance should they experience financial difficulty.

The regulator would be empowered to order an increase in capital in the event that the “safety and soundness” of the institutions were somehow at risk. In addition, the bill would set a new limit on so-called conforming loans, up to about $550,000 in the most expensive markets. The current conforming loan limit is $417,000, but was raised temporarily to $729,250 in the most expensive housing markets under the economic stimulus plan approved by Congress and signed by the president in February

 

By HOLMAN W. JENKINS, JR.

 

“We are working with borrowers to keep them in their homes, but a lot of them really don’t want to stay.”

So spoke the chairwoman of a Southern California home lender to the Los Angeles Times, inadvertently putting her finger on why trying to bail out the mortgages behind today’s uptick in the foreclosure rate may be self-defeating, and why many in Congress rightly have gotten cold feet.
Corbis 
Look at a very instructive map found on the Web site of RealtyTrac.com. Not only are the big foreclosure hotspots concentrated in just three or four parts of the country – but a disproportionate share of foreclosures are concentrated in a single, nearly contiguous blob reaching from Sacramento to the environs of Las Vegas and Phoenix.

Another hotspot is southern Florida, and along Interstates 25 and 70 in Colorado.

Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.

These were bets on location, location, location – premised on the idea that people would be willing to live hours from anywhere for a chance to own a single-family home they could actually afford. No federally sponsored haircut can put these housing bets back in the money, or stop these houses from coming back on the market at distress prices.

Lo, the economy has not descended into a depression, the credit markets are healing, banks are raising new capital and putting their mistakes behind them. No wonder many in Congress – maps in hand – have lately begun to ask why taxpayers back home should pay for housing disasters elsewhere.

Then why do so many Wall Street types, including legendary (and shrill) bond investor Bill Gross, insist the economy is doomed without a concerted federal rescue of underwater homeowners? Good question.

Proponents say a bailout would benefit all homeowners, halting foreclosures and propping up prices. But it wouldn’t. Even by the generous reckoning of the Congressional Budget Office, only a small fraction of the soon-to-be-foreclosed would voluntarily take up the House plan or Monday’s proposed Senate version on its offer.

Of course that overlooks the possibility of a concerted effort by mortgage investors to get their worst customers into the government plan, which would pay 85 cents on the dollar for mortgages now selling for 50 cents or less. True, the House bill gamely seeks to exclude speculators and homeowners who lied about their incomes. But an ill-equipped FHA would be a sitting duck for lenders who tacitly permit nonpayers to remain in homes just long enough to pass the bag to government.

Remember, the estimated $400 billion in subprime mortgage losses are widely distributed among funds that are capable of swallowing them without folding. The bust once did seem to threaten the financial system, but only because uncertainty over who owned the losses poisoned investor confidence in asset markets and financial institutions generally.

The Fed seems to have fixed that problem. But the Fed can’t fix the housing correction, though the housing correction was never the end of the world.

Data may show the first national home-price decline since the 1940s, but housing markets are local, and virtually every local market has experienced housing booms and busts at some point. Plenty of homeowners have had the experience of being underwater on their mortgages (show of hands here) without walking away – because they didn’t take out more loan than they could afford to plant themselves in communities that now appear to have little future.

A real quandary for policy makers may soon be how to handle the subprime debris – the physical waste – of housing complexes far from town, unwanted by anybody with the wherewithal to maintain them. Here, a word on bubbles. Dropping a bundle to build a new fiber network as the Internet is taking off is not necessarily a bad idea. The decision by other people to do the same is what makes it a bad idea. That’s what happened in housing too – helped by cheap money from the Fed and a credit-manufacturing process that gave too many homebuyers a one-way bet on home prices.

One sure way to guarantee bubbles without end is to institutionalize that one-way bet. That’s what a bailout would end up doing for those ultimately responsible for directing a large chunk of the nation’s savings into unwanted, uneconomic housing.

 

By Patrick Rucker

WASHINGTON - Leaders of the U.S. Senate Banking Committee said on Monday they had reached a deal on legislation to create a multibillion-dollar mortgage rescue fund and a new regulator for housing finance companies Fannie Mae and Freddie Mac.

The plan would enable the Federal Housing Administration to guarantee billions of dollars in refinanced mortgages for homeowners whose properties have fallen in value since they took out their loans.

“The bill addresses the root of our current economic problems — the foreclosure crisis — by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes,” Democratic Sen. Christopher Dodd, the committee’s chairman, said in a statement.

The rescue plan would give a federal guarantee to failing mortgages once the lender erased at least 15 percent of the original loan amount — an offer that might appeal to mortgage investors who have seen foreclosures spike and home values sink over the past 12 months.

In the last week, Dodd and Sen. Richard Shelby, the panel’s top Republican, have haggled over how to pay for the rescue plan. The bill that they agreed to, which is expected to clear the Senate Banking Committee on Tuesday, would have Fannie Mae and Freddie Mac cover the expected $500 million in failed loans under the program.

“This is a victory for the taxpayers, ” Shelby, of Alabama, said on CNBC. “We’re not funding this.”

The U.S. House of Representatives approved a similar bill earlier this month that the nonpartisan Congressional Budget Office predicts would leave the government holding $1.7 billion in bad loans and help 500,000 struggling borrowers.

Dodd told reporters that his plan is more modest than the House bill but puts “a floor” under some sinking home loans. Once Fannie Mae and Freddie Mac help cover the costs of the rescue effort, Dodd said, they will help build a long-lasting fund to promote affordable housing nationwide.

If the bill clears the Banking Committee, Dodd said he hopes it will be reconciled with the House version and be signed by President George W. Bush by July 4.

While Bush has threatened to veto the House plan on the grounds it is too sweeping, a White House spokesman said that the president will consider the Senate plan.

“We look forward to seeing the details of the bill,” spokesman Tony Fratto said.

NEW OVERSEER FOR FANNIE, FREDDIE

The legislation also takes on a thorny issue that has bedeviled policymakers and lawmakers for years: creating a stronger regulator for Fannie Mae and Freddie Mac.

The two government-sponsored enterprises are publicly traded but have federal mandates to nurture the national housing market. To critics, the companies’ combined investment portfolios of nearly $1.4 trillion are dangerously bloated but Fannie Mae and Freddie Mac defenders say that the companies help keep mortgage costs low.

A draft of the bill, obtained by Reuters, appears to give the new regulator only limited powers to control the two companies’ businesses, falling short of broader powers urged by critics of Fannie Mae and Freddie Mac that would enable the regulator to slash their investment holdings.

The companies’ regulator should make sure their investments “are backed by sufficient capital and consistent with the mission and the safe and sound operations of the enterprises,” the draft bill says.

Dodd said the new regulator would not have the authority to indefinitely control the mortgage finance companies’ investments or their capital under the bill

“It does not give this regulator the power to engage in systemic risk issues. … Secondly, you cannot force (Fannie Mae and Freddie Mac) to raise capital for any reason whatsoever,” the Connecticut Democrat told reporters.

By Jim Wasserman
The Mortgage Bankers Association says nearly one in five California homeowners who descend into foreclosure is an investor who typically doubles the trouble by displacing renters.

Exhibit A for the shock and disruption are Kyla Salazar-Thompson and Mike Kennedy of Elk Grove. They are renters who already have their hands full with work, school and December wedding plans. Now, they have to move for the second time in six months.

And let’s not forget to mention what this does to their wedding RSVP envelopes. They’re all addressed now to the house the two must leave. Add $100 for new ones to the chaos.
The couple seem to have a unfortunate knack for finding homes where a Bay Area owner stops paying the mortgage. Booted unexpectedly from one foreclosed rental in February, the two moved March 1 into another where the owner now is in financial trouble.

Speaking for an entire group of renters being blown about in the foreclosure storm, Salazar-Thompson says simply: “There are other victims of the housing crisis than homeowners who are losing their houses. It’s happening to us, it’s happening to others.”

There is Daniel Carter of Sacramento, who needs a place immediately for himself, a girlfriend and two dogs after his landlord stopped paying the mortgage on the house they were renting. Carter can’t even get his $1,600 deposit back after signing a year’s lease last December.

He says the landlord apparently spent it and had already defaulted in August, months before he signed a lease.

“The bank is giving me $1,000 if I move in two weeks, by the 23rd,” he says. “The pet deposit alone is $500 in most places.”

State law gives most renters 30 days to move. But banks often dangle “cash for keys” to move them along sooner.

It’s become enough to make renters wonder who should undergo a tougher screening process, them or landlords. Salazar-Thompson, a center support coordinator at DeVry University’s Elk Grove campus, says renters have to undergo credit checks and prove their worthiness to society before they’re accepted as tenants. Landlords, meanwhile, just have to sign up with a property management firm.

There are no laws that require property managers to dig deep into the finances of someone who owns a rental. There is no requirement for owners to tell a property manager that they’re stumbling toward foreclosure. There’s good reason not to.

“If we recognize it, we don’t take on the account,” says Bruce Mills, owner of Sacramento-based M&M Properties.

More and more, property managers say they are getting calls from surprised tenants asking about the for-sale sign out front or the visit from a real estate agent representing a bank.

“We’re always the last to find out,” says Debbie Reimche, co-owner of Elk Grove’s Realty Roundup Inc. Her firm manages the house rented by Salazar- Thompson and Kennedy, a firefighter and emergency medical technician.

She says the firm persuaded the owner to cancel its lease with the couple and says it withheld $400 from this month’s rent to help the two with moving expenses. But imagine asking friends and co-workers to volunteer again.

“People go, ‘You’re moving again?’ ” Salazar-Thompson says.

Yes, they are, because their neighborhood is part of the classic Elk Grove housing boom. Atlanta-based Beazer Homes sold the house in June 2005 for $393,500. Now it’s worth $281,000, according to the real estate Web site Zillow.com.

On the street you don’t have to look far to see several overgrown lawns that indicate vacant properties likely headed back to banks.

Salazar-Thompson and Kennedy aren’t wild about moving into an apartment complex this time. But they probably will.

“You know you will be there for a year at least,” Kennedy says.
Maybe, just maybe …

There’s one word for March sales of new homes in California compared with the same time last year: lousy.

But there is a bright side, the California Building Industry Association says. Its analysts believe the numbers point to a bottom for the market.

For three straight months the pace of decline in year-over- year sales has slowed, they say. Sales also rose again as they are supposed to from February to March, unlike last year when they declined.

This suggests the “market may be bottoming out,” said Jonathan Dienhart, research director at Costa Mesa-based Hanley Wood Market Intelligence. The firm compiles statistics for the CBIA, a statewide home builder trade group.

Dienhart, while saying the market may see bottom this year, cautioned against expecting an “immediate” path to recovery.

“With challenges in the broader economy, the housing market will likely take longer than expected to start recovery,” he said in a statement. “A return to more traditional housing- demand drivers means we’ll need job growth and positive economic trends to see substantial improvements in the building industry.”
Honoring a helping hand

Hats off to retired Carmichael attorney Ralph Livingstone, recognized nationally last week for some of the hardest volunteer work there is. He helps older people facing foreclosure, often after being scammed by predatory lenders.

Livingstone, who volunteers with the Sacramento Senior Legal Hotline run by Sacramento Senior Legal Services, was one of 25 U.S. residents to receive Metlife Foundation Older Volunteers Enrich America Awards.

Livingstone practiced law for the California Department of Transportation and privately for 45 years before volunteering at the senior legal hotline in 2000. Since the beginning of 2007, he has put in 1,000 hours volunteering as the housing crisis has grown, said David Mandel, supervising attorney for Sacramento Senior Legal Services

 

 By Carolyn Said

A flood of foreclosure sales dampened the housing market in March, the traditional start of the spring selling season, and Bay Area home sales clocked another record low, according to a real estate report released Thursday.

One-quarter of all homes sold in the nine-county area last month were foreclosures. Banks typically sell such homes at a discount, which further depresses prices, particularly in the immediate neighborhoods.

“It’s the weakest kickoff to the spring home-buying season that we’ve seen in 20 years,” said Andrew LePage, an analyst with DataQuick Information Systems, a real estate information service in La Jolla (San Diego County).

A total of 3,226 existing homes changed hands in the region in March, down 40.6 percent from 5,429 in the same month last year, DataQuick said. The median price for resale homes tumbled 20.4 percent to $549,000 from $690,000 a year ago.

DataQuick said this was the slowest March in the Bay Area since it began tracking statistics in 1988, and the seventh consecutive month of record lows.

The more foreclosures that sold in a county, the faster its prices plummeted. For instance, 44.7 percent of the March sales in Contra Costa County were foreclosures and the median price there fell by about a third to $409,000 from $614,500 a year ago, according to DataQuick.

“Typically, foreclosure resales tend to sell for about 15 percent less than everything else,” LePage said. “Houses in areas dominated by foreclosure resales seemed to suffer a penalty of 5 to 10 percent on price.”

Bargains for buyers
Richard Lee, a Realtor with Windermere Select Properties in Dublin, told the story of one listing that exemplifies how home values are spiraling down.

On Aug. 15, he placed a San Leandro two-bedroom, one-bathroom home on the market. Initially he listed it at $499,950, which he said was exactly in line with what comparable homes in the neighborhood had sold for in midsummer. But the house did not draw any offers. As the weeks and months have gone by, he has continued to drop the price. The home received some offers around $300,000 but because it was a short sale (selling for less than is owed on the mortgage), the bank had the final say and it did not accept those offers. As of Tuesday, the price was down to $229,950, more than a 50 percent reduction.

But there is a silver lining to the tumbling values: More people can afford a home in the Bay Area.

Gabrielle and Brad Bussey, who work in band booking and landscape maintenance, respectively, never thought they could afford the area’s steep prices. But last month the couple bought a bank-owned foreclosed home in Oakland’s Melrose Heights neighborhood for 39 percent less than its previous sale price.

The former owners paid $557,000 for the three-bedroom in June 2005, according to Dave Lawrence, a real estate broker in Fremont who represented the Busseys. After foreclosure, the bank put it on the market in September for $456,000 and then dropped the price several times, finally hitting $339,000 - which is what the couple paid.

“We got married in 2005, and it was time to buy a house,” Gabrielle Bussey said. “At that point the median price was around $500,000 and definitely above what we could afford. A few months later it went to $600,000 and then (soon) I read that it was $700,000. I thought, this is grotesque, I resent it, I wouldn’t pay that much money even if I could afford it.”

As has consistently been the case, several counties - notably those close to job centers and in affluent areas - were in better shape than hard-hit places such as Contra Costa and Solano counties. In San Francisco, the median resale price inched up 0.4 percent to $826,000 - the only county where the median grew. Not coincidentally, San Francisco also had the lowest percentage of foreclosed homes sold, with only 2.4 percent of homes sold in March having gone through foreclosure.

Despite the increase of foreclosure sales, plenty more are waiting in the wings. LePage said three-quarters of the homes that went through a foreclosure in Contra Costa and Solano counties in 2007 have not yet been sold. “That keeps your inventory pretty heavy, and those are very motivated sellers,” he said.

Most experts predict that even more homes will go through foreclosure in 2008.

Priced to move
Dori Anderson, a Realtor with Cypress Lakes Realty in the Contra Costa County community of Bethel Island, specializes in foreclosures. She has 76 such properties now on the market and another 190 that will be listed soon. Anderson said lenders have begun discounting even more heavily in recent months.

“Banks are getting more realistic and … pricing to move,” she said.

Getting a mortgage remains a big stumbling block to the market recovering.

Although Congress raised the limits for jumbo loans this year, those changes are not reflected in the March results. Mortgages for more than the $417,000 jumbo limit accounted for only 29.8 percent of sales in March, compared with 62.2 percent a year ago. If jumbos had been more widely available, the median home price would have been closer to $597,000, DataQuick said.

Mortgage brokers and borrowers have reported that the higher limits - up to $729,750 in high-cost regions such as the Bay Area - have not resulted in lower interest rates. Lenders have significantly tightened their underwriting criteria, so prospective borrowers must have stellar incomes, credit scores and down payments.

“The spigot has to open up significantly on the loan side” for the market to recover, LePage said.

Mona Koussa, a Realtor with Windermere Welcome Home in San Ramon, agreed that foreclosure sales hurt values.

“It’s tremendous downward pressure” on price, she said. “It’s very frustrating if a seller is trying to do a regular sale that’s not in this subprime mess to have to compete with a property that did get caught in the subprime mess (and foreclosed upon). I tell folks (in high-foreclosure areas), if you don’t have to sell, take it off the market, rent it out and wait a couple of years until the market swings back up again.”

The American dream is becoming a nightmare for millions of Americans who are losing their homes to foreclosure. 161 Bay Contains lost their homes last month, an all time high. The Walton County numbers are even more staggering.Many families feel the pressure every month when the bills start rolling in. For millions of Americans the financial struggles start because they can’t afford their homes and it’s causing many families to have to face foreclose.

William Howell is a lawyer in Santa Rosa Beach. Recently he’s seen an increase in foreclosure cases and says almost 75 percent of his work load proves it.

William S. Howell, Jr., attorney at law, said, “Most of the people that own property now owned it for three or four years. My guess is quite of few of them were buying with the intention of holding for a year and flipping the condo or the lots. They’ve been holding for almost three years now and they’re running out of money.”

Newschannel 7 called officials in Walton County to see how the numbers had changed over the years. Here’s what we found out. From 2005 to 2007 the number of foreclosed homes had increased more than four times the original number; 171 one foreclosed homes in 2005 compared to 721 foreclosures in 2007.

Through April, Walton County has already seen 509 foreclosures and if everything stays the way it is by the end of this year you could see over 1,500 foreclosed homes just in Walton County.

“I’ve talked with people from time to time that have drawn all their IRA accounts down, they’ve borrowed money, run up credit cards and many are just throwing up their hands and giving up and realizing they’ve done all they can do. ”

Howell says if you find yourself in this situation there are things you should consider before you face foreclosure.

“I would suggest for people who are totally out of funds and still holding these types of properties need to talk to an attorney that handles bankruptcy. Bankruptcy attorneys can give you some good advice and help you plan a little bit.”