Orange County Inland Empire Real Estate Update

Judicial Foreclosures vs. Non-Judicial Foreclosures

2011-10-05T09:21:00.001-07:00

The key difference between Judicial Foreclosures and Non-Judicial Foreclosures is involvement of the court.

In Judicial Foreclosures, the process is initiated when the lender (the bank) will file a complaint and then record a Lis Pendens against the property. Typically, the complain will state the debt and the reasons why the lender should be allowed to foreclose and take the property. At this time, the homeowner will be notified of this complaint. Next, the homeowner will have the opportunity to be heard before the court. If the court finds that the debt is valid, a judgment will be issued for the total amount owed, including the costs of the foreclosure. Typically, a sheriff's sale will be held after the judgment has been finalized. A sheriff's sale is an auction that is held in a public place where anyone can bid. Bidders must have cash or a substantial deposit that can be paid off within the same day or up to 30 days after the sale. The highest bidder will ultimately become the owner of the property, subject to the court's confirmation of the sale and when the deed has been recorded.

In Non-judicial foreclosures, there is no court involvement. Instead, when the deed of trust is signed, there is usually a provision called the power of sale clause. The Power of Sale Clause allows a trustee to sell the property in order to satisfy the underlying defaulted loan. A trustee serves as a representative of the lender to carry out the sale of the home (usually in the form of an auction). In many states, trustees are appointed by lenders, but in California, trustee companies play a huge role in managing foreclosure sales.

This isn't to say that judicial foreclosures do not occur in California. In fact, they are permitted and do occur when the loan documents do not mention any power of sale.

In terms of which process is more appealing to lenders, the absence of the court involvement make non-judicial foreclosures preferable. Since the courts are not involved, there are no court fees and lenders can take care of the foreclosure right away instead of waiting for the courts to process the complaints.

Lowering Property Taxes

2011-09-19T10:36:00.000-07:00

Do you ever feel like you're paying more than your fair share of property taxes? You're not the only one. Many people believe that their homes are over-assessed, and guess what? According to the National Taxpayers Union, a good amount of homes are over-assessed between 30 percent to 60 percent. This applies to commercial property as well.

The sad news is that only about 2-3 percent of homeowners make an appeal for it. This statistic is quite surprising because the process of appeal is quite simple and has a 20-40 percent success rate.

Below are some steps that any homeowner may take to appeal his/her property tax assessment - provided by AOL Real Estate

----

Get your property card. First, get the information in the assessor's file about your home from the property card, which will include the method and data used to determine its value, its lot size, square footage, any known upgrades, and of course the number of bedrooms and baths. Do not take no for an answer. Some assessors may try to tell you that you can't see this information, but it is a public record and you have a legal right to see it.
Check the accuracy of information. If you turned a closet into another bathroom, or converted an attic into a fourth bedroom, or knocked down a wall to change two small bedrooms into one large master suite, these improvements should be reflected on the property card. If the card is inaccurate, a new property assessment could bring it's value up rather than down. The same is true if the assessor thought you had an aluminum siding and brick exterior like your neighbors, when in reality you have vinyl and stucco, and that bathroom addition was done by the previous owners 10 years ago.
Understand the math. Property tax assessors' offices vary in how they determine a home's value. Some base it on recent sales data from similar homes, others may estimate the cost to rebuild or use a combination of methods. Some incorporate tax breaks for homesteaders or farmers. The assessor may use the full determined value, or a percentage, such as 90 percent of the actual assessed value. (This is why sometimes assessed values of your home can be less than what they sell for -- if this happened in your case, don't worry, you can still qualify for a reduction.)
Get comps. You can get sales data from Zillow.com and ListingBook, or a Realtor. Just be careful not to use estimates based on current listings. Instead use actual "sold prices" for the time period you're evaluating. The assessor's office also might have this data available. You will need a minimum of 3 to 5 homes, but there should be no need for more than 10 homes in your comparison.
Use the correct assessment date. Make sure your property tax assessment is for the same date the assessor used. If the county assessment was for, say, January but you used data from April, your estimate may be considered inaccurate and your case could be dismissed.
Consider using a professional report. Now, granted, the cost of any savings you make would be offset by what you pay to a professional, but depending upon how much you're looking to save, this could be worth it. Appraisers can charge anywhere from $200 to $500, and property tax consultants typically work on a contingency for 25 percent of the savings. If you recently refinanced your mortgage or had a home equity loan, you might already have access to a professional appraisal.
Prepare your document. After reviewing the data you gathered, determine if you can prove that your property was assessed at a higher level than the legal standard or at a higher value than the level of nearby comparables. If so, prepare your argument on paper. When you can do so honestly, agree with much of what the assessor did and stress that you do not question the assessor's sincerity. Just point out the differences in valuations you found. Avoid calling for the assessor's head on a stake, or pointing out that your taxes pay the assessor's salary, or just calling the assessor incompetent.
File the appeal on time. Make sure you appeal during the right time-frame. Typically you will have 60 days from the time your annual tax assessment was mailed to you, which is usually during the first three or four months of the year. Hand deliver the packet so you can get a stamped receipt, or use certified mail. Both will give you an office date of delivery. You don't want to lose your case because you didn't file on time.
Wait for a response. Property tax appeals can take place through hearings in which the homeowner personally makes a case before a local board of officials. Your officials will notify you by mail of a hearing date. However, some governments handle the entire appeal by mail, and you simply receive a decision on your appeal in the mail a few weeks later.
Attend hearings. If your area handles such appeals with public hearings, attend a handful of hearings from other property owners before your date arrives. This gives you a chance to see if the board members raise any issues that you may not otherwise have been prepared to answer. Should your first appeal fail, or should another appeal become necessary, most states allow three levels of appeal in property tax cases. Typically, a state agency is the second level, with the courts reserved for the third level of appeal. Very few homeowners find it necessary to go to court for relief.

If you need more information, the NTU has a consumer brochure, "How to Fight Property Taxes," which is available for download from its site for a small fee. It covers everything, including what to say at a hearing.

To view the original article, click here: http://realestate.aol.com/blog/2010/06/25/how-to-lower-your-property-taxes/

The Time to Invest!

2011-09-12T10:03:00.000-07:00

CNN Money recently published an article that talks about why property investment is hot right now. Read the article below:

THE CASE FOR BUYING NOW

Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010, to $1,320 a month.

You’ll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.

If you can hang on that long, you’ve got a good shot at solid gains, especially if you’re financing the home purchase. “Whereas leverage is dangerous when buying stocks, it can be a good long-term strategy with real estate,” notes real estate investor and Columbia University adjunct finance professor Marshall Sonenshine.

The big catch: “Can you afford to hold the property that long and not need the equity for your kid’s college fund?” says Sonenshine. Or whatever other pressing need might crop up.

You’ll also face some tough financing rules. Most banks now require a down payment of at least 20% to 25% and evidence you have enough cash to cover six months’ worth of mortgage, tax, and insurance payments.

HOW TO FIND A GOOD DEAL

Investment real estate is like produce: It’s best bought locally. “Buy something you can get to in 10 minutes,” says Seattle real estate investor Bill Snyder.

Familiarity with the neighborhood also limits nasty surprises like a noisy bar or a nearby development competing for renters.

Work with a local realtor who has experience with rentals and can help you assess how attractive a given home will be to tenants.

And while prices on multifamily dwellings haven’t dropped as much as they have on single-family homes, don’t ignore plexes: Intake from a few rents instead of just one will boost your cash flow; a single vacancy won’t hurt as much; and you could benefit from economies of scale for things like appliances and painting. But stick to buildings with four units or fewer to avoid stricter financing requirements, such as a bigger down payment and higher mortgage rates.

Once you’ve identified candidates, crunch the numbers. The goal: to make sure your rental income will at least cover your loan payments, plus a 20% cushion to handle repairs, vacancies, and property management.

To figure out what you’ll garner in rent, ask sellers for recent leases, says Snyder, and double-check their numbers by perusing sites like Rentometer and Craigslist for similar rentals in the neighborhood.

Assume your mortgage rate will be at least a half-point higher than rates on owner-occupied properties. Factor in insurance and property taxes, and bank on a 5% vacancy rate. Otherwise, “one empty month can kill you,” says Ellie Berlin, a broker with Houlihan Lawrence in Larchmont, N.Y.

KNOW WHAT YOU’RE IN FOR

Brush up on your people skills: Owning rentals also means responding to tenant complaints, like the 2 a.m. phone call about a broken toilet. Want to palm off the grunt work? You can hire a handyman (around $45 an hour) or a management company (8% to 10% of monthly income plus a half-month’s rent for filling vacancies), but the luxury will eat into cash flow.

To find your own tenants, creative ads on Craigslist are your best bet. Run credit and reference checks (National Tenant Network, at ntnonline.com, can help). And invest in small touches to make your place stand out, such as cool lighting fixtures or antique door hardware. Those will pay off when it’s time to sell too.

View the original article here:

http://money.cnn.com/2011/08/30/real_estate/rental_property_investing.moneymag/index.htm?iid=SF_M_Lead

Buying Vs. Renting in California

2011-09-01T12:01:00.000-07:00

With economic times like these, it's important to think about what actions will give you more bang for your buck. We're featuring an article provided by the California Association of Realtors to help you determine what's worthwhile for you.

This year, California real estate market conditions make a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California). This assumes the buyer is making a 20 percent downpayment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year.

In addition, existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. For example, compare the tax implications for two households both earning $63,430 a year, the minimum income required to purchase the statewide median-priced home of $301,430.* The household that purchases the home with a 20 percent downpayment and finances the mortgage at the current rate of 4.62 percent will receive a tax deduction of over $14,000 in the first year of ownership. The renter household will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts. The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.

The mortgage rate is a significant factor in determining just how much a homebuyer can afford. Today’s low mortgage rate environment tips the scale—for some—in favor of buying versus renting. For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.

Of course, there are many other socioeconomic benefits that homeownership brings to communities. And there are other costs associated with homeownership above and beyond the downpayment and monthly PITI. So as long as one has considered all of the costs and benefits of owning a home and is in the financial position to do so, there are some pretty compelling reasons to strive for the “American Dream.”

Real Estate Investment Part 2

2011-08-31T10:47:00.000-07:00

If you want to own a rental property, but do not want to be a landlord, a real estate investment group may be the solution for you. A company will buy or build a set of apartment blocks or condos and then allow investors to buy them through the company. A single investor can own one or multiple units, but the company operating the investment group collectively manages all the units – taking care of the maintenance, advertising vacant units, and interviewing tenants. In exchange for this management, the company will take a percentage of the monthly rent.

Typically the lease is in the investor’s name and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty. The quality of an investment group depends on the company offering it. It is usually a safe way to get into real estate investment, but some groups CAN be vulnerable to fees that affect the mutual fund industry. It is important that you look into these potential fees beforehand.

Real Estate Trading

Real estate trading is very different from buying-and-renting. Real estate traders buy properties with the purpose of holding them for a short period of time (three to four months). Afterwards, they hope to sell them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or are in a very hot market.

Property flippers usually do not put any money into a house for improvements – the investment ha to have the intrinsic value to turn a profit without alteration or they won’t consider it. Flipping in this manner is a short-term cash investment. If a property flipper gets caught in a situation where he or she can’t unload a property, it can be devastating because these investors generally don’t keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

Other property flippers may also buy reasonably priced properties and add value by renovating them. This is a longer-term investment (depending on the types of improvements). This form of investment is time intensive and may only allow investors to take on one property at a time.

Real Estate Investment Trust

A real estate investment trust or REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges just like any other stock. A corporation must pay out 90% of its taxable profits in the form of dividends to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed its profits and then have to decide whether or not to distribute its after-tax profits as dividends.

Leverage

Investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate. Most “conventional” mortgages require a 25% down. However, depending on where you live, there are many types of mortgages that require as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, buy you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets despite having only paid for a small part of the total value.

Real Estate Investment Part 1

2011-08-31T10:40:00.000-07:00

Investing in real estate has become exponentially popular over the last five decades and is now one of the most common forms of investment. Although the real estate market has plenty of opportunities for making big bucks, there is a lot more to investing in real estate compared to investing in stocks in bonds.

Rental 101

This form of investment has been around for.. a very long time. Typically, a person will purchase a property and rent it out to a tenant. The owner (aka, landlord) is responsible for paying the mortgage, taxes, and maintenance costs. Ideally, the landlord charges enough rent to cover all of the costs mentioned above. If the landlord wants to go above and beyond, he/she may also charge more to gain monthly profit. However, the common strategy is to be patient and charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

In addition, the property may also appreciate in value over the course of the mortgage, leaving the landlord with a more valuable asset.

Potential Risks of Real Estate Investment

The landlord may end up with a bad tenant who damages the property.

The landlord may have no tenant. (This would leave the landlord with a negative monthly cash flow).

Finding the right property – it is important to pick an area where vacancy rates are low and to choose a place where people will want to rent.

The biggest difference between a rental property and other investments is the amount of time and work that you will have to devote to the maintenance of the investment. When you buy a stock, it sits in your brokerage account and (hopefully) increases in value. If you invest in a rental property, there are many responsibilities that come along with being a landlord. For instance, when the AC stops working, you’re the one that gets the call.

For those who mind the work, you may hire a professional property manager who will take the problem off your hands.

What to Consider Before Buying

2011-08-25T14:37:00.001-07:00

Interest rates are crazy low, tons of houses are on the market (meaning that there are plenty of options for buyers), and the cost of renting is going up. With all of these things in mind, the housing market is great for buyers right now.

Unfortunately, this does not mean that buying a home is right for everyone right now. Which is why there are a few things that you ned to consider before buying a home.

Finances

It's important to consider whether or not your job and your finances are stable. How is your industry doing right now? Do you have a financial buffer? Financial buffers are important because if the worst case scenario happens (knock on wood), you want to be able to sustain yourself as you get yourself out of the worst case scenario.

If you're in good financial condition, now you may consider whether or not you have enough money for a down payment. Depending on where you want to live and the house, you may need $8,000 to $40,000 dollars for the down payment. And you'll have to remember the closing costs, which may be 3 to 4 percent of the total purchase price.

Cons of Homeownership

Some of the difficulties that come with owning your own home include self maintenance of the home. If you're not willing to deal with home maintenance on your own, then purchasing a home may not be right for you at this time. There will also be additional bills that you will have to pay because you are the homeowner (e.g. cost of maintenance appliances, property taxes, hazard insurance, etc.).

Duration

More bang for your buck. Financially, it makes sense to stay in your home for 5-7 years (at least) before selling it. So if you think there's a good chance that you may leave the area, you might want to hold off on the home buying.

Your Reasons for Buying

Buying a home is a long-term commitment that will have massive impacts on your lifestyle, your family and your finances. In other words, don’t do it unless you’re really sure you want to and are ready for the lifestyle change - don’t let someone else talk you into it. Worthy reasons renters with homeowning readiness give for their decision to buy include some or all of the following:

You want to build equity instead of paying a landlord. Fact is, if you get a fixed rate mortgage and make the payments for the full term of the loan, you'll eventually pay it off. That's not possible when you're renting.

You want a place to call your own, where you can paint a wall purple, add a pottery spinning studio or build your dogs an obstacle course (oops - that's my reason for homeownership!), because it's your prerogative.

You want the tax advantages of homeownership.

You want a stable place you and your family can live for as long as you'd like.

Ask yourself these questions, and be honest with your answers. If you really want to buy, but your answers to these questions today don’t weigh in that direction, it doesn’t mean you’ll never own a home. It’s usually just a matter of strategically timing your purchase out a year or two when your savings, your career and your lifestyle are in alignment with the implications of ownership - consider working closely with a real estate broker and a mortgage professional to get an action plan in place and start working that plan.

Helpful articles:

http://www.trulia.com/blog/taranelson/2011/08/5_questions_to_ask_yourself_before_buying_a_home

http://www.irvinehousingblog.com/blog/comments/64-of-americans-lack-1000-for-emergencies-or-3.5-for-a-down-payment/#more

Buying beats Renting.. In Most Cities

2011-08-22T11:11:00.000-07:00

NEW YORK (CNNMoney) -- Home prices have taken such a beating and demand for rental units has increased so much that it's now cheaper to buy a two-bedroom home than to rent one in most major U.S. cities.

According to real estate web site Trulia, buying was cheaper than renting in 74% of the country's 50 largest cities in July. In just 12% of the cities, including New York, Seattle and San Francisco, renting was cheaper. In the remaining 14% of cities, renting was less expensive but close to the cost of buying.

In addition to a continuing decline in home prices, rock-bottom interest rates have added a lot of weight to the buy side of the scale. The overnight average rate for a 30-year fixed was just 4.19% on Monday, according to Bankrate.com. A 15-year fixed averaged just 3.43%.

Add in the tax perks of home ownership and for those who can afford it (and who can actually qualify for a loan), it certainly is a buyer's market.

"It's a personal decision, of course. But if you have a steady job and you are planning to stay for seven years or more and have enough cash to put 20% down and enough left over for seven or eight months of expenses, you're better off buying in most places," said Daisy Kong, a spokeswoman for Trulia.

Top buyer's markets
Las Vegas offered the most compelling buy-side math, Trulia's survey found.

Prices there have plunged more than 59% from their August 2006 peak, according to the S&P/Case-Shiller home price index.

The median price of a two-bedroom, two-bath condo or townhouse is about $60,000, according to Trulia, a ratio of only six times the median annual rent of a similar rental apartment, which is $9,700.

Monthly mortgage payments on a median-priced Vegas condo would come to only $256 on a 30-year, 5% interest loan. Even factoring in property taxes and common charges of roughly $300 a month, the monthly amount is still much lower than the $810 in monthly rent they would pay on a similar place.

Detroit, according to Trulia, is another metro area where buying is better. The median price for a condo or townhouse is about seven times annual rent. Home prices in Mesa, Ariz. and Fresno, Calif. also clock in at seven times rent.

Arlington, Texas, Sacramento, Calif., Phoenix and Jacksonville, Fla. all had buy-rent ratios of eight, Trulia said.

Top renter's markets
Even though rents average $2,980 a month in New York (the highest of any of the 50 markets), it's still the best city for renters, according to Trulia's survey.

Paying for the same kind of two-bedroom Manhattan apartment would cost 36 times as much, nearly $1.3 million.

Big money towns

One surprising place where renting is cheaper is Ft. Worth, Texas; buying exceeds renting costs by 32 times. Part of the reason is there are relatively few condos in the city and they tend to be upscale and costly. That, combined with low rents of about $9,500 a year, make renting cheaper.

Omaha, Neb., where buying is 27 times annual rents, Seattle and San Francisco, which both clock in with purchase prices that are 24 times rents, and Kansas City, at 22 times rents, are other places where renting makes financial sense.

Should you rent or buy?
The buy-rent calculation is just one part of the decision-making process. Other factors include:

How long you plan to stay. If you're not keeping the home for several years, transactional costs of buying and selling (e.g; commissions, closing costs) can wipe out any buying edge.
Whether you have cash for closing. It's not easy to find banks willing to lend more than 80% of the cost of a home. That means buyers have to come up with 20% down, plus closing costs. On a $200,000 home, that's $40,000.
Whether you can cover all the homeownership costs. It's not just the mortgage: There are property taxes, insurance, heat, utilities and regular maintenance.
Whether you can claim the tax advantages of homeownership. Mortgage interest is deductible and can shave a lot off tax bills but this benefit accrues mostly to high income earners with substantial mortgage payments. Many borrowers claim the standard deduction on their taxes and so derive no savings from the deduction.

Even where it's cheaper to rent, it doesn't necessarily mean renters will come out ahead, according to Ken Johnson, a real estate professor at Florida International University and co-author of a new study on whether it's better to buy or rent.

"Paying off a mortgage is a kind of forced savings," he said. Each check homeowners write lowers the balance they owe and increases the value of their property holdings. That, unlike cash in a bank account, is not easy to tap.

Where the jobs are

Homeowners have to go through a lengthy and costly process to access it by taking out a home equity loan or a cash-out refinance -- actions they tend not to take unless there's a specific need.

Depending on where they live, renters may save on monthly expenses but, unlike the forced savings of mortgage payments, they won't have anything to show for their monthly payments in the way of savings.

Ultimately, however, the decision whether to buy or rent depends on each person's situation and their plans for the future.

While buying a home may be an attractively cheap option these days, many mortgage holders have found out the hard way that the joys of homeownership can turn sour should the unexpected strike.

By Les Christie August 16, 2011: 6:07 AM ET

Article here: http://money.cnn.com/2011/08/16/real_estate/buy_rent/index.htm

NEW CALIFORNIA HOME PAYMENT PROTECTION PROGRAM FROM C.A.R.

2010-11-29T11:40:00.000-08:00

The C.A.R.H.A.F. Mortgage Protection Program, which ran from April 2009 through June 2010, was offered by C.A.R.’s Housing Affordability Fund at no cost to the consumer, and provided up to $1,500 per month, for up to six months, to eligible first-time home buyers who lose their job due to layoffs.

Following on the success of the C.A.R.H.A.F. Mortgage Protection Program, C.A.R. is launching Home Payment Protection Program (HPPP), a similar program that pays a home buyer’s mortgage if he or she is laid off.

The program covers both first-time and repeat buyers for 12 months from escrow closing and provides up to six mortgage payments up to $1,000 or $1,500, depending on the coverage level the seller chooses. A seller can choose to pay $200 for six mortgage payments up to $1,000 or $275 for six mortgage payments up to $1,500.

The Home Payment Protection Program is offered by REALTORS® to sellers at the time of listing as an added incentive to prospective buyers. The program is paid for by the seller and is completely optional.

October 2010 stats for O.C. home sales

2010-11-18T13:19:00.001-08:00

It's been a while since I have posted. Figured it was time to get serious!!!
As you can see on the chart to the right, 50% of the home sales in October 2010 are $499K and below. What does this mean to you? If you can qualify for a FHA product, or think about listing, this is a perfect time to get into escrow. If you are thinking about listing or shopping for a home, be aware of the price ranges that are selling. Feel free to subscribe to my blog to keep up with the current trends in the Orange County housing market.

Housing's a drag, not a killer

2007-05-04T18:23:00.000-07:00

Mortgage market commentary Friday, May 04, 2007

March payrolls posted the weakest monthly gain in two years, net of prior-month revision only 62,000 jobs, and the unemployment rate rose to 4.5 percent. However, slowing in the economy has been so widely expected and so thoroughly built into long-term rates that the 10-year Treasury is still 4.65 percent, and mortgages about 6.25 percent.
The economy is now mushing along at stall speed, but for the bond market there's all the difference in the world between flying -- no matter how slowly -- and not.
In news of latent strength, the twin surveys of purchasing managers ("ISM") bounced up in March from the no-fly zone at "50," manufacturing from 51 to 54.7, and service sector from a four-year low at 52.4 to 56. These surveys were confirmed by a surprising pop in factory orders, up 3.1 percent, but the bond market dismissed the gains as short-term improvements in a poor trend. New claims for unemployment insurance have fallen hard for two weeks in a row; new hires may be slipping, but layoffs are not yet a factor.
In the everybody-knows weak news ... auto sales in March ran 3 percent below last year, falling; and pending home sales fell 10.5 percent from March last year. However, purchase mortgage applications are steady, right where they have been since early 2006.
The definitive report, the one that gave the bond market reason to put more weight on weak news than strong: the Commerce Dept's measure of "personal consumption expenditure" (PCE) arrived flat for March, and after inflation consumption declined by 0.2 percent. If sustained, incompatible with flight. The PCE data had a good-news side: arguably the best measure of inflation, the PCE deflator in March was 2.1 percent year-over-year, almost inside the Fed's presumed 2 percent bound. "Presumed" because Fed Chair Ben Bernanke, whether from policy choice or ineptitude in public during his first year, no longer has anything at all to say.
If inflation subsides neatly to the top of a comfort range, is it safe for the Fed to ease? Probably not. Paul Volcker was the first to use the "F" word in public description of Fed policy, in 1979, and Alan Greenspan did also in his next-to-last year. Bernanke doesn't use any words, but Moody's Effed out loud this week.
"Froth," it said, had so overtaken underwriting for commercial mortgages that Moody's began to downgrade billions in mortgage-backed bonds and set the bar higher for new ones. Froth is the head on a beer, the floating result of an exuberant stream, an aggregation of small bubbles. Froth in markets makes central banks nervous, for it is the cardinal symptom of too-easy credit. The world is in a time of asset inflation, not consumer price or wage-price spiral -- has been since the late 1990s -- and every financial market, commodity and property market around the world carries hefty prices (see: Dow). However, nobody knows for sure if this froth is the devilish work of nouveau finance, or an artifact of growing and perfectly healthy global wealth.
In the housing/mortgage meltdown, another week's news supports the centerline position held here: housing will not resolve for years, but is a drag, not a killer.
Lewie Ranieri, 1983 co-inventor of the modern, derivatized mortgage world, has two interesting observations. First, of the awful subprime originations late 2005 through 2006, 50 percent of borrowers could have qualified for "A" paper. Contemptible behavior by desperate salesmen has concealed borrowers in better shape than feared, and withdrawal of trash credit is unlikely to collapse housing.
Second, the wizard indicated his own uncertainty at the risks embedded in multilayer synthetic finance, including its impediment to restructuring loans in default. Embarrassing days lie ahead for Wall Street's mortgage machine -- downgrades, defaults, spitbacks and lawyer moshpits. Bankers Life filed against Credit Suisse, saying mortgage bonds sold were not as offered (old, 2004 loans ... just wait till the '06 honey pot), and the credit insurer (Triad Guaranty) ain't payin'. Still, more likely to be embarrassing than fatal.

By Lou BarnesInman News

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

April Market Snapshot for Southern California

2007-05-01T17:08:00.000-07:00

I hope you find the following snapshot of local California Real Estate inventory interesting. The table represents aggregated values based on MLS data for Los Angeles County, Orange County and Riverside County for the specified date.

With so much misleading information being presented to us by the mass media (TV, radio, newspapers, and yes,, the Internet) it's hard for our clients to separate fact from fiction. In my opinion, presenting factual information to my clients (past, present and future) and keeping them informed in a timely manner, is right there at the top of the list of my responsibilities. If I can succeed at this, and remove that fear of the unknown, I stand a much better chance to truely become my clients "Real Estate Consultant for life".

The Best Home that Turtle Ridge Irvine Has To Offer

2007-03-21T15:29:00.000-07:00

236 LONE TREE, IRVINE, CA 92603
$900,000
3 Bedrooms
2 Bathrooms

1,800 Est. Sq. Ft. Listing # S470049
Turtle Ridge Custom Beauty: VERY PRIVATE & SECLUDED. 3 bdrm 2 ba upstairs unit. 2 car attached garage w/PRIVATE FULL 2 CAR DRIVEWAY, NOT SHARED/CARRIAGE STYLE like 98% of Whispering Glen. Too many upgrades to list; Spanish trowled plaster walls & ceilings thruout, custom crown molding, custom 6' hickory wood flooring & highend carpet, custom wood shutters, woven wood blinds, designer paint, r.o. drinking water system. Included in sale; 42' plasma/surround sound sys, s.s. frige, washer/dryer.

View this Listing: 236 LONE TREE, IRVINE, CA 92603

Welcome to Jeff Oldham's Orange County Inland Empire Real Estate Blog

2006-04-24T15:00:00.000-07:00

Watch this space for the new real estate information blog for Orange County and the Inland Empire from Jeff Oldham. Look to us for timely news, market updates, hot new listings and more!