With the acute shortage of resale inventory across the Southwest, it’s hard to imagine prices going down, and in the short term, they won’t. Of course, circumstances could change quickly as they did this spring, so anything is possible. However, if the federal reserve can keep interest rates at record lows, and if the lending cartel can process the backlog of distressed loans without causing resale inventories to spike, then prices will not go down in the future. But is it realistic to think both of these circumstances will come to pass?
Mortgage interest rates hit all-time lows because the federal reserve took short-term treasury rates to zero and began buying 10-year treasuries and mortgage-backed securities to drive mortgage interest rates down to levels a free and unmanipulated market would never see. Over the last few weeks, a major selloff in government bonds has caused interest rates to rise, but we saw a similar correction in November of 2011 followed by a resumption of the downward trend. Is this latest correction the beginning of a new uptrend in rates? If so affordability will decline, bid competition will be far less intense, and prices may be under pressure again.
The federal reserve faces few limitations on its ability to manipulate mortgage interest rates, but the market is very large, and unless they want to buy trillions of dollars worth of overpriced mortgage-backed securities, they can’t keep rates low forever. But they don’t have to. They only have to keep rates low enough long enough for their member banks to process their bad loans. Unfortunately, there are so many of these loans, it may take a very long time; therefore, low mortgage rates may be with us a very long time as well.
So far, the lending cartel has proven adept at slowly processing their foreclosures to prevent inventory from flooding the MLS. Some markets like Las Vegas or Phoenix got out of control and crashed very hard, but many other markets like Orange County or the Bay Area have held up well despite high levels of mortgage distress. When government regulators removed any pressure to process non-performing loans with mark-to-fantasy accounting, they enabled lenders to embark on the amend-extend-pretend policy they still follow today. Until government policy changes, lenders will continue to slowly process their bad loans to keep prices high to maximize their capital recovery.
Based on the above two facts, and the acute shortage of homes caused by the policies of lenders and our government, prices across the Southwest are spiking higher, kool aid is returning to the market, and many people believe house prices will bounce back to the peak before resuming a “normal” level of appreciation thereafter. The road forward might be rockier than most imagine.
Analysis: Long road to US housing recovery despite tighter supply
By Lucia Mutikani — WASHINGTON | Wed Aug 8, 2012 12:29pm EDT
(Reuters) – U.S. home prices are inching up as an ebbing tide of foreclosures creates a shortage of properties at a time of pent-up demand, but do not expect the housing market recovery to shift into higher gear.
Tightening house supplies have turned some parts of the country into sellers’ markets, marked by intense bidding wars among buyers eager to take advantage of rock-bottom mortgage rates and still-low home prices.
“It is encouraging that demand is flowing back into the market and buyers are getting off the fence at last,” Stan Humphries, chief economist at real estate group Zillow told Reuters.
Everyone is jumping on the bandwagon about pent-up demand and other such nonsense. The data shows buyers are not getting off the fence, and demand is not flowing back into the market. Purchase applications are down 60% from the peak in 2005, and the currently hover around 1997 levels. There has been no significant increase in demand over the last two years.
But it’s not off to the races for the housing market, the main trigger of the 2007-09 recession. Many homeowners remain saddled with properties worth less than the amount they owe banks and other financial institutions.
This means they cannot afford to sell their houses, even if they wanted to. As such, the supply of houses on the market will remain tight and weigh on sales.
Unless lenders increase their incentives for loan owners to sell short, or unless lenders increase their foreclosure rates, supply will be very tight because so few can complete the transaction.
Last month we saw a 10% uptick in foreclosures, but one month is not a trend.
Ultimately, the continuing decline in sales volumes, probably to record lows over the next few months, will bring political pressure for lenders to bring more product to the market. The NAr might actually do some good if they lobby for more inventory.
Home resales declined 5.4 percent in June, with realtors blaming the drop on lack of inventory.
Contracts to buy homes, a forward-looking indicator of sales, also fell during the month for the same reason, casting a shadow on the budding housing market recovery.
“There is plenty of demand out there, but not much supply. What we need is increased sales volumes, not just stable prices. That’s what the economy needs,” said Glenn Kelman, chief executive officer at real estate group Redfin.
With low interest rates, we could increase sales volumes and keep prices steady. If prices go up too much, affordability will become an issue again, and if sales volumes keep falling, it will take that much longer for banks to process their bad loans.
“Right now I don’t think there is going to be a massive increase in sales volumes.”
Right now, we risk seeing record low sales volumes.
Part of the increase in demand reflects a modestly improving economy, especially the jobs market, which is encouraging some adult children to move out of their parents’ basements. High rental rates also are making homeownership attractive.
In June there were about 2.39 million previously owned homes on the market, down from a peak of 4.04 million in July 2007, according to the National Association of Realtors. The figure does not include new homes, where inventory is near record lows.
Locally, inventory levels have fallen 50% or more to levels not seen in decades.
SUPPLY AND DEMAND IMBALANCE
In a short space of time, foreclosed properties have gone from a deluge to a trickle, creating an imbalance between supply and demand in the market that is squeezing prices up.
That’s exactly what happened, and there are few signs of the trend reversing.
Analysts partly attribute the ebb in foreclosures to tough regulations in some states in the wake of the “robo-signing” scandal in 2011, when it emerged that some bank employees were signing reams of foreclosure documents without properly reviewing individual cases.
Lenders are also aggressively pursuing alternatives to foreclosures, such as loan modifications. The steepest declines in housing inventories have been in Phoenix, San Francisco, Los Angeles, Minneapolis, and Miami.
Riverside in California has also seen a decline in supply.
Compliance with the settlement agreement is prompting lenders to seek other alternatives.
“These markets have seen demand pick up, pulling inventory off the market. Normally that would bring sellers off the fence and into the market. In some of these markets, negative equity is playing a big role in constraining supply,” said Humphries.
Actually, kool aid intoxication is actually keeping sellers out of the market: Expectation for Prices to Rise Deters Would-Be Sellers.
“Even though there is demand out there and the seller wants to sell, if the value of their home is less than the mortgage, then they are unable to put their home on the market.”According to the Commerce Department there were 1.6 million vacant housing units for sale in the second quarter, down from 2 million units in the same period last year. That constituted 1.2 percent of the nation’s total 132.72 million housing units.
The number of units held off the market rose to 7.61 million from 7.35 million in the second quarter of 2011. That accounted for 5.7 percent of the total housing stock.
I don’t know how they calculate that number, but it seems large and ominous.
With foreclosures waning, house prices across the country are stabilizing and rising in some cities, causing some prospective sellers to hold onto their properties.
Greed springs eternal. If prices head south again, I suspect some of those loan owners still struggling to make payments will capitulate. The squatters will simply hang out for the free ride. If prices rise high enough, even they might be able to sell for a profit. Wouldn’t that be a fitting punishment them? Not.
Average home prices rose 2.2 percent in May from April in the 20 cities tracked by Standard & Poor’s/Case-Shiller. They were down only 0.7 percent from a year ago.
“If you think we are at the bottom of the market, you wouldn’t want to sell, you would want to wait until prices recover a little bit,” said Redfin’s Kelman.
“The only folks who are selling right now are the folks who have to, you don’t see many opportunistic sellers. They believe time is on their side and if they wait, things will only get better for them.”
And if banks don’t bring more product to the market, and if interest rates remain low, they are wise to wait.
Tight supplies are fueling bidding wars among buyers, mostly prevalent in cities like Washington DC and Seattle. Bidding wars are also intense in California’s Silicon Valley.
INTENSE BIDDING WARS
“We have just listed a property in South Pasadena. We put it on the market at 10 a.m. and by 2 p.m. we had 20 people calling us trying to buy it. The closer it is to the urban core, the more likely it is to have multiple offers,” said Kelman.
“It was more intense in the spring. Usually you see this big run-up in listings in May and June. This year you didn’t because the banks weren’t putting up properties for sale and homeowners did not take the bait either.”
The shortage of houses is most acute in the low end of the market, which has experienced a surge in demand from first-time buyers. The luxury market has also seen an increase in demand, but not of the same magnitude as the first-time buyers segment.
The market above the conforming limit isn’t doing well, and it isn’t going to. This is the only market not subsidized by the government (yet), and far too many homes are precariously perched there. The high end will be the weakest market segment for years to come.
“The demand is greater than most people imagine because we have about a four-year build-up on the demand side,” said Diane Saatchi, senior vice president at realtor Saunders & Associates. “Buyers have been waiting for the market to go down and the perception now is we have hit a bottom.”
Another realtor who’s full of shit.
On the other end of the spectrum are cities like Chicago, Philadelphia, Cincinnati, Cleveland and Milwaukee where homes are staying longer on the market and price discounting is still the norm.
Gains in house prices are unlikely to follow a straight line as some homeowners, currently underwater, will probably want to sell their properties on the slight appreciation in value.
“We will see a staircase recovery, where you will see price spikes followed by cooling because once prices have spiked, they will free some people from negative equity or these people who didn’t want to sell at the bottom will feel better about selling,” said Humphries.
“In a few markets, like Miami and Phoenix, are seeing a V-shaped recovery,” he added – good news for two of the cities that took a particularly hard hit when the housing bubble burst.
I would be very happy to see a dramatic V-shaped recovery in Las Vegas. I don’t think it’s going to work out that way there or anywhere else.
The market staircase
The next plateau on the housing market staircase will be caused by lenders shifting from short sales back to foreclosures. They have already laid the groundwork for the shift. As they get closer to fulfilling their obligations under the settlement agreement, they will crank up the foreclosure machinery to force out the squatters committed to free housing until foreclosure. The processing of this shadow inventory should provide enough supply to flatten prices out. Lenders hope this happens at near-peak pricing to get their capital back, but in the most beaten down markets, that isn’t very likely.
At some point, interest rates will go up, and if this is not accompanied by rising wages, that will create another stair-step plateau or perhaps a decline depending on how far and how fast interest rates rise. It isn’t a matter of if interest rates are going to go up, it’s only a matter of when. This must be accompanied by wage increases to keep affordability high. If not, prices will fall.
If the government wants to exit the housing market subsidy business, we could see another stair-step plateau based on changes in policy. If the home mortgage interest deduction is curtailed or eliminated, that will negatively impact values. If the GSEs are dismantled or if conforming limits drop, that will negatively impact values. If the FHA raises down payment requirements, that will negatively impact values. Policy makers may phase these changes in to spread the impact out and prevent a price drop, but these phase-ins are the stuff stagnant market plateaus are made of. In short, unless we want to sustain a nationalized housing market — which is what we have now — then government policy changes are inevitable. It’s only a matter of when and in what form they take.
All the people who took free money must be recycled
Each day we see another imploded Ponzi. These people should be sitting on mountains of equity ready to reignite a move-up market. Instead, they are part of the recycling effort, and their demand his removed from the housing market for at least three years, and when they return, they will be a first-time homebuyer with a minimum down payment.
- The former owner’s of today’s featured property paid $187,000 on 10/23/1998. They used a $168,000 first mortgage and a $9,000 down payment.
- On 10/14/1999 they obtained a $43,000 stand-alone second. In their first year of ownership, they got their down payment back plus $30,000 in HELOC booty. They already quadrupled their investment, and things were about to get much, much better for them.
- On 7/16/2001 they refinanced with a $209,000 first mortgage.
- On 1/14/2002 they refinanced with a $215,000 first mortgage.
- On 10/28/2002 they obtained a $86,800 HELOC.
- On 4/29/2003 they refinanced with a $300,000 first mortgage.
- On 6/21/2007 they refinanced with a $512,000 first mortgage and a $64,000 stand-alone second.
- Total property debt was $576,000.
- Total mortgage equity withdrawal was $408,000. Not bad for a $9,000 investment.
People like this are what’s holding back the housing market. Until their debts are wiped out, these properties will continue to hit the market — assuming lenders don’t allow them to squat forever.
Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborhood values. Don't be a fool. Don't suffer the pain of an underwater mortgage. The surest way to lose your house is to overpay for it. Our reports identify overvalued and undervalued neighborhoods. Use it to broaden or narrow your search area. Savvy buyers work with us to find bargains. We've saved thousands from financial ruin. Let us save you too. If you want peace of mind while shopping for your next home, sign up for our monthly market newsletter.
We're sorry, but we couldn't find MLS # P831902 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
Proprietary OC Housing News home purchase analysis
12292 OERTLY Dr Garden Grove, CA 92840
$339,900 …….. Asking Price
$187,000 ………. Purchase Price
10/23/1998 ………. Purchase Date
$152,900 ………. Gross Gain (Loss)
($14,960) ………… Commissions and Costs at 8%
============================================
$137,940 ………. Net Gain (Loss)
============================================
81.8% ………. Gross Percent Change
73.8% ………. Net Percent Change
4.3% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$339,900 …….. Asking Price
$11,897 ………… 3.5% Down FHA Financing
3.66% …………. Mortgage Interest Rate
30 ……………… Number of Years
$328,004 …….. Mortgage
$86,073 ………. Income Requirement
$1,502 ………… Monthly Mortgage Payment
$295 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$85 ………… Homeowners Insurance at 0.3%
$342 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,224 ………. Monthly Cash Outlays
($227) ………. Tax Savings
($502) ………. Equity Hidden in Payment
$14 ………….. Lost Income to Down Payment
$105 ………….. Maintenance and Replacement Reserves
============================================
$1,614 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,899 ………… Furnishing and Move In at 1% + $1,500
$4,899 ………… Closing Costs at 1% + $1,500
$3,280 ………… Interest Points
$11,897 ………… Down Payment
============================================
$24,975 ………. Total Cash Costs
$24,700 ………. Emergency Cash Reserves
============================================
$49,675 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
 |
$439,000 12422 BUARO St |
0.55 miles 4 bd / 2.25 ba 2,200 Sq. Ft. |
|
 |
$480,000 13102 Dunklee Ave |
0.65 miles 4 bd / 2 ba 1,810 Sq. Ft. |
|
 |
$430,000 12172 COLLEGE Ave |
0.72 miles 4 bd / 2.5 ba 1,860 Sq. Ft. |
|
 |
$384,900 12191 HOMESTEAD Pl |
0.85 miles 3 bd / 2 ba 1,640 Sq. Ft. |
|
 |
$435,000 12001 CANDY Ln |
0.89 miles 4 bd / 2.5 ba 2,117 Sq. Ft. |
|
 |
$464,900 12902 GLENDON Pl |
0.9 miles 4 bd / 2.5 ba 2,000 Sq. Ft. |
|
 |
$494,900 11522 WEST St |
1.1 miles 4 bd / 3 ba 1,950 Sq. Ft. |
|
 |
$380,000 12082 NORMA Ln |
1.19 miles 3 bd / 2.5 ba 1,688 Sq. Ft. |
|
 |
$425,000 11581 JERRY Ln |
1.21 miles 4 bd / 2.75 ba 1,632 Sq. Ft. |
|
 |
$399,999 2305 LEWIS St |
1.36 miles 3 bd / 1.5 ba 1,885 Sq. Ft. |
35 Responses to “The housing market’s staircase recovery”
Sorry, the comment form is closed at this time.
Indeed, ”greed springs eternal” but since fear of loss ultimately trumps greeds lust for gains, capitulation is coming.
I’ve lost faith. With nothing forcing banks to capitulate, I think they will amend-extend-pretend until prices come back. Having already documented a case of squatting that went on for five years, there seems to be no limit to how long the banks are willing to wait for prices to come back and make them whole.
If something cannot continue infinitas, it will end.
‘Extend and pretend’ alone is an implicit admission that underlying assets are not worth their stated values. Thus, a solid case can be made that the fed has been merely attempting to delay capitulation in order to provide acceptable exits along the way for its chosen survivors.
That’s exactly what they are doing, but they also have the ability to delay capitulation indefinitely.
Past results do not guarantee, nor are they indicative of future results.
The Fed has been able to delay capitulation, but it is not indefinite just because we do not know the hour and day of the end.
Extend and pretend has been around, in one form or another since 1933. Read the writings of Senator Frederick Stewier in the arguing the massive US debt and subsidy policies only “kicked the can down the road” and the US will “soon come crashing down”…
That was 80 years ago…those waiting for the moment of capitulation died a long time ago…
They are adept at printing money and debasing the dollar. Nominal prices can bottom, but prices in real terms will continue to fall for several years.
Essentially, they are sacrificing the dollar to ‘save’ the housing market. That’ll end well:)
That is the only way forward. Real house prices won’t go up for many years.
Yup, I think any rational person agrees that real (I might even say nominal also) housing prices aren’t going up anytime soon…many years. Rent prices are going up, I was stuck with a $100/month rent increase a few months ago. The note said “economy is improving, no vacancies and if you read in between the lines it said what are you going to do, buy a place?”
This is another reason people are getting off the fence. The Fed and PTB could care less if renters get royally screwed. If there is no inventory, you can’t buy even if you wan to. Greedy landlords will take this to the bank!
“capitulation is coming”
Which form will it take? How about when the central banks capitulate and print enough money to drive prices up to peak and bailout the banks, loan owners and govs. And put the savers out their misery…
I am done cash. Trying to find a way to get it into hard assets before the CBs hit the reset button.
Best to exit cash now and be early to the reset party, even if by a few years or more.
To all the treasury holders (“return OF capital, man”): it’s your party and you can cry if you want to.
The saying ‘cash is king’ is BS if they can print away its purchasing power. Gold is king. And real estate will continue to plummet when priced in real money, gold.
The GSEs are getting serious about liquidating their portfolios and downsizing their operations. If loan owners want to sell, the GSEs are getting out of their way.
New Short Sale Guidelines for GSEs Will Make Process Easier
Starting November 1, 2012, Fannie Mae and Freddie Mac will implement new short sale guidelines to make the approval process easier for eligible borrowers.
“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said
FHFA Acting Director Edward J. DeMarco in a statement. “The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job.”
The changes are part of the FHFA’s Servicing Alignment Initiative and will require a streamlined approach with documents, leading to a reduction in documentation requirements. For example, borrowers who are 90 days or more delinquent and have a credit score lower than 620 will no longer be required to provide documentation for their hardship.
The GSEs will also waive their right to pursue deficiency judgments. Borrowers with sufficient income or assets can make cash contributions or sign promissory notes instead.
One major barrier that is also being addressed is the issue with second lien holders. To prevent second lien holders from stalling the short sale process, the GSEs will offer up to $6,000.
The new guidelines will also enable servicers to approve a short sale for borrowers who are not in default but face certain hardships including the death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer.
In addition, all servicers will have the authority to approve and complete short sales that follow the requirements without first going to the GSEs for approval.
Provisions were also created for military personnel with Permanent Change of Station (PCS) orders. Servicemembers who are required to relocate will automatically be eligible for for short sales even if they are current. They also won’t be obligated to contribute funds to pay for the remaining deficiency.
“Short sales have become an increasingly important tool in preventing foreclosures and stabilizing communities,” said Leslie Peeler, SVP, National Servicing Organization, Fannie Mae. “We want to help as many homeowners avoid foreclosure as possible. It is vital that servicers, junior lien holders and mortgage insurers step up to the plate with us.”
Tracy Mooney, SVP of Single-Family Servicing and REO at Freddie Mac, said, “These changes will make it clear that Freddie Mac servicers have the authority to approve short sales for more borrowers facing the most frequently seen hardships. These changes will further empower the industry to minimize foreclosures and help Freddie Mac in its mission to minimize credit losses and fortify a national housing recovery.”
Fannie Mae will send the announcement for the new changes to servicers Wednesday. Freddie Mac sent their announcement Tuesday.
In April, the GSEs also announced they were setting requirements to have a decision on a short sale offer made within 30-60 days.
Zillow: July Sees More Home Value Gains, Market to Cool in Fall
Zillow released on Tuesday its Real Estate Market Reports for July, revealing that the company’s Home Value Index hit $151,600 for the month, a 0.5 percent gain from June and a 1.2 percent increase year-over-year.
Of the metro areas covered in the reports, 62 percent saw home values climb during July, with only 49 of the 167 areas posting declines. Of the 30 largest areas covered, the Phoenix metro experienced the largest monthly increase (2.2 percent), followed by San Francisco (1.2 percent) and Denver (1.0 percent).
While rising home values may be taken as a sign of a healing market, Zillow chief economist Dr. Stan Humphries said these increases should simmer down in the coming months.
“This summer, the housing market continued to heal, as home values experienced their eighth consecutive month of increases,” Humphries said. “Tight inventory levels are leading to bidding wars and multiple offers across the country. Looking ahead, we expect to see less aggressive increases in the fall as rising values lift some would-be sellers out of negative equity, allowing them to place their homes on the market.”
Rents also continued to rise, inching up 0.2 percent from June for a 5.4 percent year-over-year gain. According to Zillow’s Rent Index, the average rent hit $1,278.
Nationally, rents have increased in 6 out of the last 12 months, with 70 percent of metro areas reporting rent increases from June to July.
Several metros where home values continue to decline showed large annual increases in rent, including Chicago (12.6 percent rent price gain), Providence, Rhode Island (12.1 percent), and Baltimore (11.9 percent).
Larger rent values in these areas were attributed to continued high foreclosure levels in those markets. While foreclosure continued to decline in July, historically high levels have driven up rental demand in some markets.
Is that so?
http://listings.foreclosure.com/state/al.html?rsp=21966
Fitch: Repurchase Risk Increasing for Banks
While some signs suggest the housing recovery may finally be under way, others signal that banks will likely continue to see repurchase claims from Fannie Mae and Freddie Mac.
Analysts with Fitch Ratings found in a report on Monday that repurchase risk remains high for several financial institutions, including Bank of America, JPMorgan Chase, and Ally Financial.
According to Fitch, repurchase risk climbed to 41 percent for Bank of America. Roughly 60 percent of the claims stemmed from private-label requests.
For Citigroup, outstanding claims from the first quarter rose to 12 percent from the previous year.
Wells Fargo saw some improvement. Buyback claims fell 10 percent for the company on a linked-quarter basis. The report held that JPMorgan Chase’s outstanding claims still hover at 94 percent.
Fitch analysts wrote that the ratings agency “continues to believe that repurchase claims represent a moderate pressure to earnings at these financial institutions, and that the GSEs will increasingly focus on smaller originators as they continue to work their way” through claims from just before the financial crisis.
Analysts nonetheless noted “a great degree of volatility” occurring as a result of buyback claims, with Bank of America’s repurchases up 40 percent to $395 million over the second quarter this year but down year-over-year, even with $8.6 billion in Countrywide settlement charges.
What will more repurchase risk mean for big banks? As Fannie and Freddie devote more resources to buybacks, according to Fitch, originators will find themselves with more “burden of proof.”
The Republicans prove to be spineless too.
GOP in Compromise on Mortgage-Interest Deduction
Allies of the real-estate industry on Tuesday succeeded in adding compromise language to the GOP platform supporting the mortgage-interest tax deduction, a day after they lost a fight on the issue.
The overnight turnaround on the issue reflects the real-estate industry’s continued lobbying clout – and the mortgage deduction’s ongoing curb appeal for voters – as Congress begins the process of streamlining the U.S. tax code.
The vote also underscores Republicans’ interest in the mortgage deduction, at a time when Democrats charge that Mitt Romney’s tax-overhaul plans will raise taxes on middle-class families by scaling back lots of deductions such as the mortgage break – a charge the Romney camp rejects. The Romney campaign says his tax breaks could be offset through spending cuts or other means.
The new compromise language says the Republican Party strongly supports a tax-code rewrite, but in the event that Congress fails to accomplish it, “we must preserve the mortgage interest deduction.”
Any comprehensive rewrite of the tax system is expected to involve significant changes in the dozens of tax deductions and credits that now litter the code. The mortgage-interest deduction is among the biggest of all tax breaks. It’s expected to cost the government $84 billion in 2012.
Conservatives who favor a tax overhaul want everything on the table in the quest for agreement on a big rate reduction.
But allies of home builders and Realtors saw an opening in the party’s platform to add language protecting the mortgage interest deduction. They lost narrowly on the issue on Monday, before winning a vote Tuesday on the compromise language.
“This issue speaks volumes about how the Republican Party feels about home ownership,” said April Newland, a Realtor from the Virgin Islands. “If we do not include this in our platform and it is included in the other side’s platforms, I think that will be sending a message loud and clear to the home-ownership community that we don’t care enough about this issue to include it in our platform.”
The voters need to realize that It should not matter one whit how either the Republicans or the Democrats “feel” about home ownership. The government has no good business promoting home ownership or being involved with home ownership. The government needs to get the ____ out of the way!
Au contraire, the govt has good business promoting housing because it’s a fixed target and is taxed accordingly/as needed. And, at some point down the road, if you’re not able to pay the tax they say you owe, your home is simply taken away. Not much the voters can do about that.
“…Compliance with the settlement agreement is prompting lenders to seek other alternatives…”
I had both a first and second mortgage eligible under the terms outlined in the settlement for either a refi or rate reduction. I sent detailed letters outlining everything doing all of the qualification work for both servicers (GMAC & BoA), and I got nowhere. The standard response was, “We continue to evaluate eligible loans for relief under the National Mortgage Settlement.”
http://nationalmortgagesettlement.com/
With comps in my neighborhood selling for rising prices, now our first mortgage isn’t eligible because I couldn’t plausibly argue that it’s underwater (one of the requirements for the refi/rate reduction is that the homes FMV be < the mortgage).
I guess my point is, I'd like to hear from someone who's received relief under the Settlement. i.e. Is any bank "complying"?
I’m sorta buying the realtard rhetoric that there’s “pent-up demand” now. How else can we explain homes in the $650K to low-$1Ms selling so briskly in the Irvine area? They’re not buying these homes with mortgages that don’t verify their income. They’re not buying these homes with mortgages qualifying them based on an initial monthly payment that’s less than the interest owed on a 1% rate that lasts < 12 months.
People are buying these homes with real income and/or savings. Will they developments that are currently selling out (Columbus Square, Woodbury, Stonegate, Altura, Portola Springs) exhaust most of the households with capacity to purchase $750K+ homes? Does this mean that in a couple years when Orchard Hills or the Great Park area is selling, we won't have to compete with all of the current buyers who've locked their income streams into homes/mortgages today?
This is crazy…
It isn’t pent-up demand, it’s normal demand responding to pent-up supply. Houses in the $600K to $800K price range are selling well because 3.5% interest rates make those prices payment affordable. Previously, people couldn’t borrow enough to buy those houses. Now they can.
It will take several years of rising prices to create a viable move-up market, but eventually, you will be competing with today’s buyers for move-up properties. You will have some advantage because you paid down your mortgage, but you will be somewhat of a victim of your bad luck buying in 2006. The six years you have owned the property gave you no equity advantage over today’s buyers.
Dont buy the BS. These people have no idea what they are talking about, both then and now. Nothing has changed except they increased borrowing and printing to subsidize the market.
Dumb buyers hear prices may be bottoming (again) and they want in on the appreciation. It is short term, artificial demand.
What demand there is … is simply being pulled forward due to ultra-low rates (about 100bsp lower YoY-July) Problem is, lower rates = higher cost basis.
Right, that’s my hope – that the limited number of households with the income and/or assets to afford $750K+ Irvine homes, are buying furiously right now. They’ll be out of the “demand” game going forward, and when other Irvine developments start building in 2013-2014, the number of households capable of buying these homes will be limited. Add in a little mortgage rate inflation, and we have a prime buying opportunity in a couple years.
The rate of sales in Irvine is only up fractionally over last year, and it’s still 20% below historic norms. That is not “buying furiously.” You just seeing new homes selling well because very few competing resales are available.
http://ochousingnews.com/wp-content/uploads/2012/08/Irvine_inventory.png
Gotcha – I’m stepping into realtard rhetoric without considering facts.
You’re not alone. Many people confuse the frenzy caused by a lack of supply with an increase in demand. Of course, realtors play this up as well.
But shouldn’t we view sales of new homes differently than sales of existing homes? If an existing Irvine home sells, the existing homeowner can take whatever profit and move-up in Irvine.
There’s no similar opportunity in a new sale. Today’s buyer is not displacing an existing Irvine family that needs/wants to move-up in Irvine. That new home is withdrawing $750K of purchasing power from families that want to buy Irvine homes.
e.g. If Irvine sales in 2012 were exclusively 1,000 existing homes, then that’s 1,000 families that were had to move and could presumably move-up in Irvine.
If Irvine sales in 2012 were exclusively 1,000 new homes, then that’s 1,000 families coming into the area while not creating a single move-up Irvine buyer.
The move-up buyers are all created in the future when they have equity. Basically, everyone who got in over the last decade either has little or no equity, and all those cohorts will obtain equity at the same time and at the same rate. The move-up market won’t come back until prices have appreciated about 20%, then it will sort out based on who put down more and paid down their mortgages the most.
I too am baffled by the current situation.
Case in point:
MLS# S12093815 Single Family priced at $1,630,000*
133 Starcrest, Irvine, CA 92603
Bedrooms: 4
Bathrooms: 2 1/2
Square Footage: 2,987
Lot Size: 7,426 Sq. Ft.
Year Built: 1986
**
07/26/12 New Listing $1,620,000 CARETS
This property status changed to “IN ESCROW” (per lawn sign) only maybe a week later after listing. As of last night when I drove by status was still the same, but garage was opened and it looked like someone was actually moving in.
I don’t know the contract sales price.
While home is certainly nice, (I did go to Sunday open house) I just don’t think it is worth anywhere near asking.
Yet it sold within days. Go figure.
If prices go up too much, too fast, I swear I will think about selling; again.
Not because we want a different house or because we want to rent again, but just on principle of taking money from the sheeple.
“According to a study released late today by Pew Research Center, 85% of the American middle class say that it is harder to maintain their standard of living now than it was 10 years ago. For purposes of the study, Pew defined middle class household income as the tier of adults whose income in 2010 fell in the range of 39,000 to $118,000 annually for a family of three. By this definition, 51% of US adults qualify as middle class. In 1971, some 61% of US adults qualified as middle class.”
http://247wallst.com/2012/08/22/shrinking-income-for-americas-middle-class-pew-research/
There’s your real estate trend.
“Perhaps most interesting are the survey’s results on the Presidential election: 52% of the middle class say Obama’s policies will help them, while only 42% of the middle class say Romney’s policies will help them. People who identify themselves as middle class are more likely to be Democrats than Republicans, by a margin of 50% to 39%.”
Definition of a sheeple. The one is more probable right are the 6% in the middle class.
The middle class is evaporating. I suspect much of that deterioration is the decline of labor unions and the manufacturing sector. Those jobs used to be abundant, and they could support a middle-class life. Not anymore.
How can we teach people that the purpose of their vote is not to vote for the policy that will “help them” the most, but rather which policy follows the correct principles?