We have often advised buyers to look at the COST of purchasing a house more than the PRICE of the home. Obviously, price is part of the cost equation. The other piece, assuming you are not an all cash buyer, is the mortgage rate. The mortgage rate to finance a purchase can have a dramatic impact on the overall cost. Recently, there are more people talking about the possibility that mortgage rates could begin to increase. (Read full article here)
http://ping.fm/prOkC
Foreclosure starts rose 28 percent while foreclosure sales soared 29 percent in January compared to the previous month, according to the latest Lender Processing Services’ January Mortgage Monitor report.
The rise in foreclosures in January is a sign that foreclosure backlogs are beginning to clear, which is considered a positive, necessary step in the real estate market’s recovery, housing experts say. Lenders slowed processing foreclosures in 2010 when a robo-signing scandal surfaced, resulting in a backlog of foreclosures that prevented home prices from making a full recovery, experts say.
“It is a definite shift in that direction,” an LPS spokeswoman said about the spike in foreclosures sales and starts in January. “We could be seeing the beginning of something, and we should most certainly be keeping our eyes on this over the next few months.”
RealtyTrac, another company that tracks foreclosure data, reported that foreclosure filings in January rose 3 percent.
“We continue to see signs on a local and regional level that the frozen-up foreclosure process is beginning to thaw,” Brandon Moore, CEO of RealtyTrac, had said about his company’s report.
According to LPS, the states with the highest number of seriously delinquent mortgages in January are: Nevada, Florida, Mississippi, Arizona, and Georgia.
Source: “Foreclosure Starts and Sales Spiked in January, Report Says,†AOL Real Estate (March 6, 2012) and “Repeat Foreclosures Hit an All-time High in January,†HousingWire (March 6, 2012)
Daily Real Estate News | Wednesday, March 07, 2012
Home owners who have mortgages backed by the government may be able to refinance their mortgages at a lower interest rate as well as not have to bear the high refinance fees to do so, President Obama announced at a news conference Tuesday.
The Federal Housing Administration will cut its upfront fees for refinancing loans. The plan is expected to reduce mortgage payments for the average FHA borrower by about $1,000 a year for up to 3 million borrowers, the administration announced.
Eligible borrowers must have FHA loans that were issued before June 1, 2009.
“It’s like another tax cut in people’s pockets,” President Obama said at the news conference.
Lowering refinancing fees “should be broadly positive for housing and the economy by reducing foreclosures and freeing up income for consumers to spend on other goods and services,” analyst Jaret Seiberg with the Washington Research Group told CNNMoney about the administration’s move.
Also on Tuesday, President Obama announced aid to service members who are found to have been wrongfully foreclosed upon. He said that lenders and mortgage servicers will be required to review the case of all service members who were foreclosed upon since 2006. Any service member found to have been wrongfully foreclosed upon will be compensated — repaid the lost equity in the home plus interest, as well as a flat fee of $116,785.
Source: “Obama Cuts Refinance Costs for Some Mortgage,†CNNMoney (March 6, 2012)
Hello, friends and clients (hopefully one and the same, lol). Well, it’s been a couple of weeks now since I told you that all hell had broken loose in the Orange County housing market. And guess what? Now we are getting the numbers to prove it. January Pending Home Sales were UP 9.9% over a year ago. And, taking a look back a few months, haven’t been in the negative since April of 2011. That’s almost a year ago.
What is our life like right now? Insane. As unpleasant as it was when you couldn’t find a willing buyer, or if you had one they couldn’t get a loan, it is just as uncomfortable when you have lots of wonderful clients ready and willing to buy and no inventory to sell them–or if there is, competition and low appraisals are locking them out of the market. Batten down the hatches, I predict heavy seas ahead!
Last week, a buyer we were working with made a very acceptable offer of $390,000 on a nice little single family home in a good neighborhood in Orange. That house had comped out at $399,000, so it was a good starting place. That very same home just opened escrow at $459,000. The home had multiple offers and sold for $59,000 over the most recent comparative sales.
Which means, when this home closes escrow, it will be the new comp in the neighborhood. That’s a nearly $60,000 increase in the value of a single family home in that neighborhood in 30 days. If my math is right (and for those who know me well, it’s questionable), that’s a nearly 13% increase in value in 30 days.
It also means that someone who could afford a $399,000 single family home last month, won’t be able to afford it next month.
Prices are going up–and fast. Low inventory in general, and especially low “Good” inventory, means having to compete for properties. Competition means multiple offers, and that drives the price up.
And now there’s an additional wrinkle in the mix which is making it even harder for young and first time buyers. If they are using programs with low down payments (such as 3.5% FHA or 5 or 10% conventional financing), even if they are lucky enough to be the high bid and open escrow, these properties WILL NOT APPRAISE and the loan will fall out.
Why? Think of it this way. Appraisals are based on what happened over the last three months. They use “old” data. So, let’s use our recent offer as an example. The buyer we are working with is putting 3.5% down using an FHA-backed loan. Let’s pretend that he did really want the property and was willing to pay the $459,000 for it.
The next step in the process would be to open escrow and have his lender order an appraisal on the property to make sure that it was really worth the $459,000. (You see, banks don’t like lending you more money that a house is worth.) So the appraiser goes out, uses the same comparative sales over the last three months that we did, and appraises the property at $399,000. Which means that the bank will only lend you 96.5% of $399,000.
Now if you had 20% down, that probably wouldn’t be a problem. 80% of $459,000 is only $367,200. If the property appraised at $399,000, everything would be fine. The amount you would be borrowing from the bank would be less than the appraised value. All good with the world.
HOWEVER, if you are a low down payment buyer, as in our FHA example, you would need to come up with the difference between what the bank is willing to lend (based on their appraisal) and what you have agreed to pay. So in this example, the FHA buyer would need to bring in an additional $ 60,000 CASH to close.
Now, I don’t know about you guys out there, but I’m going to hazard a guess that most buyers’ who as using a low down payment type of loan are doing so because they DO NOT HAVE THE CASH TO PUT DOWN MORE. So not only is this scenario heartbreaking to the buyer who “thought” they had just bought a house–but they now realize they will most likely not be able to compete on the next one, either. As the prices start to move up, appraisals will always be a couple of months behind–and sellers will start to favor higher down payments in order to ensure that the offer they accept really goes through.
As the housing market continues to improve, there’re rocky waters ahead for entry level and low-down-payment buyers. All hands on deck!
WASHINGTON—Sales of previously owned homes in the U.S. rose last month to the highest level in nearly two years, and the inventory of unsold homes contracted to a level considered healthy by economists, positive signs for the housing market.
Existing-home sales increased 4.3% in January from a month earlier to a seasonally adjusted annual rate of 4.57 million, the National Association… (Read full story here…)
http://online.wsj.com/article/SB10001424052970203960804577239102739123214.html?mod=djemRealEstate_h
And if you’ve been waiting to buy, you’re in for a big surprise.
“The Orange County home inventory report from Thomas as of January 19 estimates that the local market’s speed quickened 12.6 percent in two weeks and quickened 32.7 percent in a year. He writes that Orange County’s homebuying year got off to a “staggering” quick start.”
Real Estate in OC is HOT! (Just ask anyone trying to buy a house right now.) The biggest frustration for our clients, whether buying a multi-million dollar equestrian estate in Orange Park Acres or purchasing their very first home?–Lack of inventory. In the last two weeks, we have put in offers on homes on the very first day on the market–at full asking price–and been outbid. That’s right–outbid.
Never in the history of real estate have we ever, EVER seen this combination of historically low interest rates and low prices. So, what will you be telling your kids, friends and family in 10 years when they ask you why you didn’t buy?
And if you’re considering selling, NOW IS THE TIME TO SELL!! Six months ago inventory in OC was over 8,000 homes. Today it’s just over 5,000. Inventory has dropped NEARLY IN HALF. And–this month saw increases in the average sales price per square foot in ALL prices ranges–million-plus are moving as well.
I understand that the national news still continues to publish the dire national numbers–but maybe now is the time to remember the golden rule of real estate–ALL REAL ESTATE IS LOCAL.
See the attached article from the OC Register… (you’ll have to read down a bit in the article to get the good news…)
http://ping.fm/Gro3u
There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say… (Read full article here)
http://ping.fm/yIpn5
