NEWPORT BEACH

The only increase in housing demand is coming from investors

 NEWPORT BEACH, NEWS
Apr 102013
 
The only increase in housing demand is coming from investors

When most people think about a bull market in any asset class, it begins with an increase in demand for the product. In housing, this demand has historically been from owner occupants taking jobs and competing for the available housing stock with their new income. All sustainable housing market rallies in the past have been built on strong job growth and increasing wages. Not so with our current housing recovery. This has many questioning whether or not this recovery is real. The engineers of this house price rally at the federal reserve hope to drive up prices to create momentum [Read More...]

Mistaken beliefs about sustainable appreciation drove housing bubble demand

 NEWPORT BEACH, NEWS
Mar 282013
 
Mistaken beliefs about sustainable appreciation drove housing bubble demand

This won’t come as any surprise to regular readers of this blog, but a new paper confirms the erroneous beliefs about sustainable home price appreciation drove much of the demand from the housing bubble. Many people who believe in the wisdom of the markets subscribe to the efficient markets theory. It postulates that market participants have equal access to good information and they make rational judgements based on the available data. The theory has an appeal to vanity as everyone likes to believe they have above average financial acumen and that they make rational decisions. Unfortunately, that isn’t the world [Read More...]

With a rate dependent housing market, risks still linger

 NEWPORT BEACH, NEWS
Feb 282013
 
With a rate dependent housing market, risks still linger

Earlier this week I detailed why I believe future housing markets will be very interest rate sensitive. The current market environment is completely controlled by interest rate policy at the federal reserve and distressed loan processing policy at the major banks. The combination of demand stimulus and supply control caused the housing market to bottom in 2012. Of course, since these are market manipulations, the future direction of home prices is uncertain. The market has many more headwinds than tailwinds. Shiller’s Bottom Line: Risk Lingers in Housing February 26, 2013, 7:00 AM — By Nick Timiraos It’s possible that home [Read More...]

Sappy letters to sellers return in tight supply market

 NEWPORT BEACH, NEWS
Jan 182013
 
Sappy letters to sellers return in tight supply market

One of the most ridiculous features of the housing bubble rally was when buyers would write emotional letters to sellers to try to make their offers stand out in the crowd. In 2004 in particular as the Option ARM permitted buyers to raise their bids to ridiculous levels, competing bids well over asking price prompted sappy letters to appeal to a seller’s emotions to get the deal. Now, with the federal reserve lowering interest rates below 3.5%, we face a similar infusion of affordability allowing buyers to raise their bids. The tight supply engineered by the banking cartel is causing [Read More...]

Will MLS for-sale inventory return in 2013?

 NEWPORT BEACH, NEWS
Jan 022013
 
Will MLS for-sale inventory return in 2013?

1816 is known as the year without a summer. Due to an unusual combination of events, temperatures didn’t rise that summer causing widespread crop failures and starvation. 2012 is known as the year without a seller. Due to a dramatic change in foreclosure policy, festering delinquencies at the major banks, more than a quarter of all mortgage holders underwater, and hedge funds intercepting MLS inventory at the auction sites and renting them out instead, sellers did not bring properties to the market in 2012. This wasn’t a small phenomenon. Across most of the US, there were a third as many [Read More...]

The federal reserve’s printing money may save housing but at a very high cost

 NEWPORT BEACH, NEWS
Dec 212012
 
The federal reserve's printing money may save housing but at a very high cost

Back in the early 1970s, Richard Nixon took America off the gold standard. It was a watershed moment in monetary policy the implications of which were not recognized at the time. As long as we were tied to a gold standard, theoretically, we could run out of money. We couldn’t spend any more money as a country than what we had in gold to back it up. Once we were off the gold standard we ceased to be a currency user, and the United States became a currency issuer. Unlike a household or an individual that can run out of [Read More...]

97% of strategic defaulters would recommend others do the same

 NEWPORT BEACH, NEWS
Sep 122012
 
97% of strategic defaulters would recommend others do the same

Most people are cautious by nature waiting for others to pioneer new places, new ideas, and new patterns of behavior. People will observe the results of pioneering behavior, and if the pioneers are rewarded and recommend what they did to others, the herd will follow. If the pioneers are handsomely rewarded and strongly recommend a course of action to others, the herd can turn into a stampede. The rewards of strategic default has bankers worried. With 11 million underwater loan owners, the last thing bankers want is a wave of strategic default as overextended borrowers realize they can eliminate their [Read More...]

More government policy changes to impact the housing market

 NEWPORT BEACH, NEWS
Aug 232012
 
More government policy changes to impact the housing market

The housing market is anything but stable. Decisions by banks, government regulators, the federal reserve, congress, and Treasury department officials have tremendous impact on house prices. For example, decisions at the federal reserve regarding interest rates have imbued the market with such high payment affordability that buyers can finance the still-inflated prices of the previous bubble. Banks decided early this year to slow the rate they took back properties at foreclose auctions thus reducing MLS inventory of REO significantly. Government regulators changed accounting rules in 2009 to allow banks to keep delinquent mortgage squatters in place with delayed millions of [Read More...]

Conventional wisdom wrong, foreclosures don’t reduce neighborhood values

 NEWPORT BEACH, NEWS
Aug 132012
 
Conventional wisdom wrong, foreclosures don't reduce neighborhood values

Conventional wisdom is that foreclosures reduce neighborhood values. It turns out, that isn’t the case. It’s easy to see why people come to this erroneous conclusion. Properties that go through foreclosure often sell for less than recent comparable sales, particularly after the peak of the housing bubble when values were grossly inflated and ripe for a serious correction. However, it wasn’t the foreclosure that caused the discount, it was a motivated seller dealing with a property in poor condition that ultimately caused prices to fall. You wouldn’t know it by the huge inventories they currently manage, but lenders are not [Read More...]

Foreclosure reviews are a gambit few former owners sign up for

 NEWPORT BEACH, NEWS
Jul 092012
 
Foreclosure reviews are a gambit few former owners sign up for

With millions of delinquent borrowers facing foreclosure, the death cries of so many desperate people was bound to have political ramifications. The unprecedented need to process tens of thousands of foreclosures spawned foreclosure mills like David Sterns law office and other who robo-signed documents. Such a process was bound to have a few errors. Although nobody who was making their payments faced foreclosure, the so-called robo-signer scandal prompted the major banks and services to negotiate a settlement agreement with the government to settle all claims and shield themselves from future litigation. Related to this same scandal, the federal reserve also [Read More...]

Short sales damage house prices just like REO

 NEWPORT BEACH, NEWS
May 242012
 
Short sales damage house prices just like REO

Many market pundits claim lenders should focus on short sales rather than foreclosures. They contend short sales offer better capital recovery than foreclosures and they are less harmful to market pricing. This is not an accurate assessment. First, not all foreclosures become REO. About a third of all foreclosures are purchased by third parties who either flip them or hold them as cashflow investments. Flippers generally improve the property and sell for full market value, so their activities don’t push prices lower. And obviously, cashflow investors don’t push prices lower because they don’t sell their properties. Both short sales and [Read More...]

McMonigle’s McMansion auctioned for $18.5 million

 NEWPORT BEACH, NEWS
May 152012
 
McMonigle's McMansion auctioned for $18.5 million

John McMonigle fully embraced the California housing Ponzi scheme. He claims to have represented $2.1 billion in real estate transactions during the housing bubble. If he made 3% of that figure, that’s $63,000,000 in real estate commissions. In a game of financial football, that is a powerful offense. Unfortunately, his defense wasn’t quite as good. Falling from housing peak: John McMonigle’s ride According to bankruptcy court papers, McMonigle, 46, has amassed some $50 million in debts. His assets – even after selling his Newport Beach condo, his cars and personal effects – total $2.4 million – plus the value of [Read More...]

Despite optimism, signs point to ongoing market weakness

 NEWPORT BEACH, NEWS
Apr 052012
 
Despite optimism, signs point to ongoing market weakness

Everyone seems to believe the market bottom is in. Investors are buying up cheap homes in beaten down markets, Calculated Risk called the bottom, sentiment among realtors has turned positive, and the mainstream media is flooded with optimistic spin about housing. But have we really hit the bottom? Grim Housing Data Shows We Have Not Hit Bottom By MICHELLE HIRSCH, The Fiscal Times — March 29, 2012 A new string of grim housing data confirms what economists and analysts have long predicted: the housing market has yet to hit bottom, and once it does, it will be a long slog [Read More...]

Bank of America to lease homes to loan owners

 NEWPORT BEACH, NEWS
Mar 262012
 
Bank of America to lease homes to loan owners

It’s always better to get something from a house rather than nothing. Lenders finally figured this out. For the first five years of the housing bust, lenders preferred to allow delinquent borrowers to squat in the bank’s house without making any payments. Someone at BofA finally realized they could foreclose on owners or allow them to turn over the deed and stay in the property as a renter. The bank can collect rent, and if the occupant fails to pay, it’s much easier to get them out if the former owners are no longer on title. Besides the cashflow benefits [Read More...]

Current trends in the OC housing market: 3-24-2012

 FULLERTON, GARDEN GROVE, HUNTINGTON BEACH, IRVINE, NEWPORT BEACH, ORANGE
Mar 242012
 
Current trends in the OC housing market: 3-24-2012

The OC Housing News profiles properties for sale each day and presents current market data on each city in Orange County. If you really want to know what’s happening in the OC Housing market, you need to read the OC Housing news and subscribe to the our monthly newsletter. Redfin is the most popular real estate search site in Southern California. They track the most popular listings based on the number of views each receives. Below are some of the most viewed property listings in Orange County. Check them out. 1015 North MONTECITO Pl Orange, CA 92869 — $599,000 $529,000 [Read More...]

B of A giving away free money to loan owners

 NEWPORT BEACH, NEWS
Mar 172012
 
B of A giving away free money to loan owners

B of A is working to obtain maximum public relations value from the settlement agreement. Based on articles like this one, it looks like B of A is the most generous (and stupidest) bank on the planet. BofA to slash mortgage balances by $100,000 or more By Les Christie @CNNMoney March 9, 2012: 3:09 PM ET NEW YORK (CNNMoney) — Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers. As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District [Read More...]

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