ALISO VIEJO

Expect years of low sales volumes in residential real estate

 ALISO VIEJO, NEWS
May 012013
 
Expect years of low sales volumes in residential real estate

At this point we can be certain that banks are going to avoid or delay foreclosure or short sale until prices rise so they don’t have to lose money on the sale. They have no choice. With banks still exposed to $1 trillion in unsecured mortgage debt, they simply can’t take the losses that are coming. No matter what else happens in the market, unless the banks are forced to change their policies by the government regulators or the federal reserve (a very unlikely event), lenders will continue to kick the can with loan modifications and suspend homes in cloud [Read More...]

Faith in home price appreciation is religion in California

 ALISO VIEJO, NEWS
Apr 232013
 
Faith in home price appreciation is religion in California

Kool aid is flowing again. Last week, I read the following comment that encapsulates the religious faith of most Californians, Besides, OC real estate has been and will continue to be desirable. It’s also very cyclical and I knew there would be another cycle coming much sooner than the bears predicted. This place has never had “flat” home prices… ever. Apparently this commenter had faith in the successful efforts of market manipulators and the herd behavior of California buyers. The last year has done much to reaffirm the faith that was sternly tested by a 40% decline. The problem with [Read More...]

With low supply and limited equity, many sellers are escewing listing agents

 ALISO VIEJO, NEWS
Mar 132013
 
With low supply and limited equity, many sellers are escewing listing agents

With inventory being in such short supply, anything put on the market is likely to sell easily. Two years ago when there were far more properties for sale than buyers who wanted them, professional marketing and broad exposure was necessary to attract a buyer’s attention. Not so today. This fact is prompting many to try to eliminate at least half the real estate commission and list the properties themselves. Going for-sale-by-owner or FSBO is not without its drawbacks. First, the presentation of FSBO properties on Craigslist or the MLS is often dismal. Go to Redfin and see for yourself. Second, [Read More...]

Low housing inventory is an indicator of residual mortgage distress

 ALISO VIEJO, NEWS
Mar 052013
 
Low housing inventory is an indicator of residual mortgage distress

The cost of ownership numbers proclaim now is a good time to buy. However, the available inventory is so low that actually purchasing a home is nearly impossible. As I’ve written many times, the banks have engineered much of this shortage by endless can-kicking through loan modifications and refusing to foreclose on delinquent mortgage squatters. Lenders benefit from rising prices because they recover more capital when they do foreclose, and loanowners benefit because rising prices also makes it possible for them to sell without the lingering debt issues of a short sale. It’s only future buyers that get screwed, and [Read More...]

Kicking widows to the curb, the sad fallout of excessive senior debt

 ALISO VIEJO, NEWS
Dec 032012
 
Kicking widows to the curb, the sad fallout of excessive senior debt

My point of view on home ownership and debt is very different than most financial reporters, and apparently it’s different than most Americans. In my view traditional views of home ownership, like those extolled in Mike’s weekend piece Why our less educated parents and grandparents were more intelligent on homeownership, have been replaced by a twisted concept of money rentership as a proxy for home ownership. I described the slow deterioration of our concepts of home ownership in the post Money rentership: housing and the new American dream: One of the most common encumbrances on property is the mortgage lien, [Read More...]

A durable recovery would be demand driven, not supported by restricted supply

 ALISO VIEJO, NEWS
Sep 242012
 
A durable recovery would be demand driven, not supported by restricted supply

A durable recovery begins with increasing demand. More and more people have both stronger desire and more money to spend on housing when a sustained market rally takes hold. Both sales prices and sales volumes rise when demand increases. If you don’t have both, the rally is suspect. Right now, overall demand is slightly higher, but this is almost entirely due to an increase in investor activity. Despite record low interest rates, demand from owner-occupants is moribund. The truth is the recent increase in prices is almost entirely due to restricted supply, and durable recoveries are not built on weak [Read More...]

Reverse mortgages are a really, really bad idea

 ALISO VIEJO, NEWS
Jul 062012
 
Reverse mortgages are a really, really bad idea

I have made mistakes in my life that made me want to go back in time and undo them. Sometimes you can, but sometimes you can’t go back and reverse the damage. Taking on a reverse mortgage is one mistake that is very difficult to undo. I don’t like reverse mortgages. I don’t like many forms of debt, but reverse mortgages are one of the worst forms out there. According to the Department of Housing and Urban Development: A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home [Read More...]

Banks cut standing REO inventories by reducing new acquisitions by 50%

 ALISO VIEJO, NEWS
Jun 142012
 
Banks cut standing REO inventories by reducing new acquisitions by 50%

Foreclosure Radar just released its report on May foreclosures. The change in bank’s behavior since the beginning of the year is becoming apparent. Lenders are determined to steadily reduce their standing REO inventory. At current liquidation rates, they will have cleared out the backlog of standing inventory by the middle of next year. Of course, this comes at a price. Lenders are not making headway on shadow inventory, and those who have been delinquent on their mortgages for a long time are going to get to squat even longer. Lenders are hoping these people will opt to short sell their [Read More...]

The case against another catastrophic housing market crash

 ALISO VIEJO, NEWS
Apr 192012
 
The case against another catastrophic housing market crash

In my view, the housing market here in Orange County is entering a three to five year period of spring rallies and fall declines with prices likely to flatten. The low end may appreciate while the high end will likely come down. That makes me somewhat bearish, certainly not bullish, but neither do I believe we will see another 20% to 30% leg down in the market to match the one we already witnessed. The first drop in the market was necessary to adjust prices back to their historic relationship to rental parity. That decline was destined to be steep [Read More...]

Mortgage Fraud Has Moved From Subprime To FHA

 ALISO VIEJO, NEWS
Apr 072012
 
Mortgage Fraud Has Moved From Subprime To FHA

I want to introduce you to the Strategic Deals Law Blog. In their own words, “Strategic Deals Law Blog offers insights into the complicated world of business transactions, bringing clarity and the tools needed to make your business a success.” The blog is written by clear-thinking practicing attorneys who really know what’s going on. Mortgage Fraud Has Moved From Subprime To FHA By Jim Petros on March 16th, 2012 Posted in Real Estate In a November 2011 Special Report by the Community Development Studies and Education Department, sponsored by the Federal Reserve Bank of Philadelphia — authors John Wackes and Harriet [Read More...]

Bernanke erroneously claims Federal Reserve didn’t cause the housing bubble

 ALISO VIEJO, NEWS
Mar 292012
 
Bernanke erroneously claims Federal Reserve didn't cause the housing bubble

The Federal Reserve did not directly cause the housing bubble. The lowering of interest rates in 2002 did help boost prices and may have served as a precipitating factor contributing to the housing bubble, but monetary policy of the Federal Reserve itself was not the cause. That doesn’t mean the Federal Reserve doesn’t have significant responsibility for the housing bubble. The primary cause of the housing bubble was the influx of private capital into the mortgage market through mortgage-backed securities. So why did this happen? First, when the Federal Reserve lowered interest rates to 1% under Alan Greenspan, investors sought [Read More...]

Over 4,000 REO in OC, over 230 in Irvine

 ALISO VIEJO, NEWS
Jan 252012
 
Over 4,000 REO in OC, over 230 in Irvine

Many have speculated as to when the housing market will bottom. The short answer is, nobody knows, but there are some guideposts to watch out for. First, in order for house prices to bottom, they must be affordable. Sub-4% interest rates combined with falling prices have made houses affordable on a monthly payment basis. Second, supply and demand must rebalance and demand must outstrip supply for prices to go up. That criteria is more elusive. When the housing bubble popped in 2006, people began defaulting on their mortgages. A credit crunch ensued in 2007, and foreclosures began to mount. By [Read More...]