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Thursday, August 5th, 2010California Foreclosure Crisis Subsides
Wednesday, May 26th, 2010For once California’s economy looks good compared to that of some other states.
A foreclosure crisis that has dimmed the state’s golden glow with images of financial ruin and broken government is beginning to wane, says a leading trade group for the U.S. mortgage industry.
The Mortgage Bankers Association said Wednesday that California foreclosure starts have fallen from a year ago – even as problems grow in Midwestern Rust Belt states such as Ohio, Michigan, Indiana and Illinois.
“California is showing signs of improvement. We are seeing it on a quarter-to-quarter basis and year-over-year basis,” MBA Chief Economist Jay Brinkmann said.
Consider:
• In the past year California moved from fourth place among U.S. states for foreclosure starts to seventh.
• Mortgage delinquencies, while up from early 2009, fell slightly in early 2010.
• The percentage of California mortgages in the foreclosure process fell, too, during the past year.
California’s fragile improvements come as the national picture is less clear. Collectively, the longtime mortgage disaster areas – Florida, California, Arizona and Nevada – are becoming less of a problem nationally, MBA data showed.
“A year ago they had 45.3 percent of the problem loans,” said Brinkmann. “That’s down to 37.9 percent.
“We’re looking now at Illinois, Ohio, Michigan and Indiana. They’re climbing back into the list of problems,” he said. Those states have longer-term structural problems as their manufacturing economies continue to decline.
The new data confirmed improvements in California and the Sacramento area recently cited by researcher MDA DataQuick. Last month the firm said mortgage defaults have fallen for a year straight in the state and region, with foreclosures dropping now as well.
In hard-hit Sacramento suburbs such as Natomas, Lincoln and Elk Grove, residents see dwindling evidence of the crisis.
“All those houses that were vacant before were sold in the last year or two,” said Tyler Smith, a Keller Williams agent in Sacramento “A year ago it seemed every other house on some of those streets were vacant.”
Homeowners in distress are increasingly using short sales to unload their properties rather than losing them to foreclosure.
That’s helping preserve neighborhoods, because these owners stay in the homes until they’re sold rather being evicted and leaving an empty house behind.
Make no mistake: California’s long journey into a financial meltdown is nowhere near its conclusion, economists say.
They foresee prolonged trouble for the state economy and government revenues. At best, said Los Angeles economist Chris Thornberg, “The worst is behind us.” He added, “We have years yet of dealing with this.”
Like everything about the foreclosure crisis, even explaining a sense of improvement is open to interpretation. Thornberg said a fall in California foreclosure starts shows only that banks are taking longer to deal with late mortgage payments.
Jeff Michael, director of the Business Forecasting Center at the University of the Pacific, said simply, “This suggests we’ve reached the point where the number moving into delinquency equals the number moving out.”
Even that might be declared victory. More people are moving out of delinquency through short sales – selling their homes for less than they owe. And despite criticism of government loan modification efforts, the U.S. Treasury Department reported this week that 5,400 homeowners in the eight-county Sacramento region received permanent loan modifications since December 2009. Regionally, banks foreclosed on 4,300 more in the first quarter of 2010.
Any slowdown of last year’s frightful rise in delinquencies, said Michael, “indicates we’re close to a peak.”
The state still has a long way to go before it regains a healthy economy, 6 percent unemployment and a budget in the black, Thornberg and Michael agreed Wednesday. But for once, California is falling off lists of the worst performers.
Eventually, the supply of distressed properties will simply be exhausted, Michael said, adding, “The fire will burn itself out for lack of fuel.”
TOP 50 PRODUCING TEAMS IN THE NATION…. WE MADE THE LIST!!!
Tuesday, May 25th, 2010For the first quarter we were ranked in the top 50 nationwide. We came in at #28 and are very excited. We went down a couple of spots from Jan-Feb, so we are pushing to keep that ranking. We have one of the hardest working teams out in the market place!!! Thank you to all of our Buyers, Sellers, and Asset Managers who trusted us!! We are here to serve!!!
TOP 50 PRODUCING TEAMS IN THE NATION
Sacramento April home sales prices increase from year earlier
Tuesday, May 25th, 2010More people bought pricier houses in April, signaling the end of Sacramento’s bargain basement-only sales scene.
Buyers picked up the pace from last year in Granite Bay, El Dorado Hills and older neighborhoods near downtown Sacramento, researcher MDA DataQuick reported Thursday. Simultaneously, buyers dwindled in Oak Park, North Highlands and other repo zones of the past two years.
What gives?
There are fewer available repos after a long blowout sale, market trackers say. There’s also a sense at the higher end that this market is as good as it’s going to get for a while.
He said he sold three houses this week valued between $350,000 and $800,000.
The shifting sales mix tugged Sacramento County’s median sales price for resale houses nearly 10 percent higher than the same time last year, DataQuick reported. The median, where half cost more and half less, was $175,000.
Resale home prices also beat April 2009 levels in Placer, Sutter, Yolo and Yuba counties.
Less than half of Sacramento County’s April sales were cheap bank repos – compared with two-thirds a year earlier. With fewer repos this year, sales in the $200,000 to $400,000 range grabbed a larger market share.
“We’ve had 70 people coming through open houses in the $300,000 to $400,000 range,” said Bob Bronswick, president of Coldwell Banker Residential Brokerage in Sacramento and Lake Tahoe.
“That’s the trend across the state,” said DataQuick analyst Andrew LePage. He said sellers are cutting prices and buyers are still getting low interest rates to make deals work.
Sellers are not thinking about 2005. They’re thinking: ‘We might have to take it back to 2003 or 2002 prices and sell it at that.’
This doesn’t mean expensive is back. LePage said homes priced above $400,000 are only a tiny percentage of Sacramento-area sales.
But the shift is part of restoring balance to a market where repos accounted for a majority of sales for much of 2008 and 2009. Banks have cut repossessed homes on the market.
“The way banks are managing it now will probably keep prices from falling much further,” said Rick Sharga of Orange County foreclosure analyst RealtyTrac.
Overall, 3,255 homes changed hands during April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported. That was down slightly from March – and fewer than April 2009.
Analysts attributed the slight drop to fewer repo listings for first-time buyers and people delaying escrow closings until May. The state began offering homebuyer tax credits of up to $10,000 May 1.
New homes accounted for 5 percent of sales in the region.
Tyler Smith & Team ranked #24 in the Nation
Wednesday, April 14th, 2010For the months of January and February we were ranked in the top 50 nationwide. We came in at #24 and are very excited. We have one of the hardest working teams out in the market place!!! Thank you to all of our Buyers, Sellers, and Asset Managers who trusted us!! We are here to serve!!!
Foreclosures’ collateral damage widespread
Friday, February 12th, 2010If you’re among the thousands of Sacramento-area homeowners who played it conservative during the housing boom, who didn’t refinance or flip to a bigger house, everyone else’s foreclosures reached out and smacked you anyway.
Sales prices are lower. There’s less home equity to tap into. Local services have been shredded by falling property tax revenue.
Such repo collateral damage is why so many owners who pay their mortgages on time are so grouchy.
Rob Wassmer hasn’t been affected so much. Fourteen years ago he bought an east Sacramento house – in the Fab 40s – cheaply at the very bottom of the last housing bust. His older neighborhood has largely escaped the brunt of 52,000 foreclosures across the Sacramento region since 2007.
But Wassmer knows the financial whipping people have taken in Lincoln, Elk Grove, North Highlands and Yuba City. Being an academic, he knew there had to be a number for the carnage.
“I knew this kind of research had been done. I wanted to do a study of Sacramento,” said Wassmer, chairman of California State University, Sacramento’s department of public policy and administration.
Wassmer analyzed $9 billion in sales prices from 36,822 home sales in Sacramento, Yolo, Yuba, Sutter, Placer and El Dorado counties between January 2008 and June 2009. Almost half were homes sold by banks. The other half were sold by regular folks.
He concluded that the foreclosed homes cost this one region of America $2.7 billion in price cuts and lost equity over just 18 months.
• The repos sold for $659 million less simply because they were bank-owned and differed from normal sales. They took $1 billion more in price cuts because they were near other repos.
• Both reductions then stripped $1 billion from sale prices of nearby homes never in foreclosure danger.
Collectively, these foreclosures cost local governments $27.1 million in property taxes. Reassessments will likely take more.
Said Wassmer, “This is a call for regulation.” He suggests a federal law to make lenders and borrowers meet in “structured mediation” at least once before foreclosure.
Few ideas have proved so far to be the solution. See the research directly at: >www.csus.edu/indiv/w/wassmerr/ResForeclosure.pdf
Lucky folks with no mortgages…wow can it be true?
Sunday, November 8th, 2009
Day in and out we hear about the profound number of capital-area residents struggling with mortgages and the thousands who owe more on their home loan than their houses are worth.
There’s another crowd without such worries. They have paid off their loans.
The
Nationally, where owning a house is cheaper, 31.6 percent of owner- occupiers have paid off their mortgages, the bureau reports.
The six-county capital area, incidentally, is home now to almost 1 million single-family houses, condos, apartments and townhouses. The newest 2008 American FactFinder puts the region’s residential tally at 990,187.
U.S. Census Bureau estimates 23.5 percent of homes occupied by their owners in El Dorado,Placer, Sacramento, Sutter, Yolo and Yuba counties are free and clear of mortgages. That’s about the state average. No more counting down years, and no sleepless nights.
Lennar falls deeper into red
Monday, September 21st, 2009Signs that the housing market is gaining traction have yet to pull Lennar Corp., one of the nation’s largest homebuilders, out of the red.
The Miami-based homebuilder (NYSE: LEN and NYSE: LEN-B) said it lost $171.6 million, or 97 cents a share, on revenue of $720.7 million for the third quarter ended Aug. 31. A year ago, it reported a net loss of $89 million, or 56 cents a share, on revenue of $1.11 billion.
The third quarter results included write-downs totaling 76 cents a share.
Analysts polled by Thomson Reuters expected a 46-cent loss on revenue of $774 million.
Lennar was the area’s fifth-largest homebuilder in 2008, selling 277 homes in the six-county Sacramento region with a 5.7 percent market share, according to analyst Hanley Wood Market Intelligence.
Lennar president and chief executive officer Stuart Miller said the overall housing market is on the “road to recovery.”
“While high unemployment and foreclosures will continue to present challenges, consumer sentiment has significantly improved as homebuyers have recognized that the residential housing market is stabilizing,” he said.
Miller said the company’s strategy is to target first-time buyers and bargain-hunters, which are helping new home orders rise each month. New orders were still down 8 percent in the third quarter, but that decline was the smallest percentage year-over-year decline since November 2006.
“In order to capitalize on the improvement in our sales pace, we increased our home starts during the quarter, which will lead to higher deliveries in the fourth quarter,” Miller said. “We are also encouraged by the continued improvement in our cancellation rate.”
The cancellation rate dropped to 19 percent from 27 percent, gross margin on home sales shrunk to 15.6 percent ($98.9 million) from 18 percent ($179.4 million).
Third-quarter home sales revenue in the third quarter decreased 36 percent, to $635.3 million from nearly $1 billion in 2008. The drop was mostly due to a 28 percent decrease in home deliveries and a 12 percent decrease in the average sales price of homes delivered.
Year-over-year, the average sales price was down by $30,000 – to $239,000.
Slow recovery ahead: buck stops in the pocket
Wednesday, September 16th, 2009
Star-spangled camper … a homeless man in a temporary tent city in Sacramento, California Photo: Getty
The continuing fear of job losses in the US means consumers are saving rather than spending – denying fuel to the retail engine of the economy.
EVEN in the affluent US capital, a city that has been relatively insulated from the worst recession since Great Depression, the beggars are visible. They sleep on the street just a block from the White House and at major intersections they wait for fellow Americans to come to a standstill and spare a dollar.
Many carry signs telling their personal story: laid off, returned Iraq vet, lost the house and the job, got sick and no health care.
A year after the US financial markets went into a tailspin, its economy is showing tentative signs of a weak recovery but unemployment continues to rise, though not at the terrifying rate of six months ago, when 600,000 people a month were joining the jobless lines.
Something else has happened in America as well. The era of easy credit that fuelled two decades of mostly spectacular growth is over, not just on Wall Street. The American consumer has started saving. Mortgages, personal loans and even credit cards are harder to get. Consumer credit was down 5.2 per cent annualised between April and June. Revolving credit, which includes credit cards, was down 9 per cent.
The turbocharged consumer market that powered the American economy since the 1980s has run out of puff. These combined, related factors – people don’t spend if they fear for their jobs – are likely to define the US recovery. It will be slow and painful.
The jobless rate rose to 9.7 per cent in August and is expected to peak above 10 per cent in the months ahead. It is already there in at least 15 states and some economists predict it could be five years before the US economy generates enough jobs to overcome those lost and to employ the new workers entering the labour force.
This fear of job losses is likely to keep consumers’ wallets in their pockets. Without a return to spending – retail sales make up 70 per cent of the US economy – it seems inevitable the recovery will be slower than in the past.
So what are the positives? Retail sales have shown signs of improvement and the federal stimulus package is working its way into the economy.
The retail figures for August were up 2.7 per cent, the biggest jump since January 2006, and vehicle sales up 11.9 per cent.
Excluding vehicles, retail sales were up 1.1 per cent – the comparable figure in July was a 0.6 per cent decrease – but the boost was due in part to higher petrol prices at convenience stores. Most analysts are cautious about popping the champagne corks too early and will wait for a stronger spending trend to emerge.
In the housing market – which helped spark the crisis – there are tentative signs of stabilisation. Home foreclosures dipped slightly in August from July but are still 18 per cent above a year ago. The highest foreclosure rate is in Nevada, with one house in 62.
On home prices, the Case-Shiller Index has shown increases for May and June after 37 months of decline. The number of home sales has risen too.
”The only doubts about it are the market is rather abnormal now with all these foreclosure sales,” said Robert Shiller, who helped develop the index.
Falls in house prices have been huge – in some markets as much as 50 per cent. Many Americans, perhaps a quarter of those with mortgages, owe more than their homes are worth.
The Obama Administration’s ability to stimulate the economy further is severely curtailed by its huge budget deficits – and Congress has run out of patience with financial bail-outs.
“I don’t think we are out of the woods yet,” President Barack Obama said this week. “We need to be careful about taking the crutches away from the patient too early.”
Hanley Wood’s 209 Housing Forecast: seeing a little light now
Tuesday, September 15th, 2009Costa Mesa-based Hanley Wood Market Intelligence held its annual Sacramento housing forecast this morning at the Doubletree – telling about 75-80 members of the region’s struggling home building industry that the signals are still mixed – and projections call for 3,400 home sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties this year. (Comparing that to a different category – housing permits issued by local governments over the year to start homes – that has to be the fewest since the late 1960s in this region).
It’s little wonder the ball room is full of shell-shocked building industry types looking for any kind of good news at all. I took notes of both speakers and will offer somewhat of a transcript here of what was said about the national home building scene first, and then the regional scene. The forum was sponsored by the Propane Education and Research Council.
(Check back a little later, we are expecting to be able to upload a PowerPoint here to go along with this)
Boyce Thompson, editorial director of Hanley Wood’s fleet of builder magazines, and editor of Big Builder Magazine, in particular, offered this national overview. (He, by the way, visited with principals of Sacramento’s Township 9 infill project and toured downtown’s successful Sutter Brownstones infill project).
8:06 a.m. Thompson: This is like the third or fourth time I’ve been here. My forecast is going to be decidedly optimistic here today. People are talking about W-shaped recovery..We’ve fallen so far there’s nowhere to go but up. We’ve already started up. I just feel like things are going to get better.
Sacramento has received a lot of national press. Your land market is coming back, with lots of bids on land and that’s one of the tell-tale signs of beginning recovery. I have a way more positive presentation this year..The last three years I have been negative about the housing market. Nationally, our fortunes are all tied to the national financial markets. We’re going to see an uneven market..Some are beginning to recover. Others are still getting worse. Chicago, of all places, still seems to be getting worse.
The recovery is going to be slow. Housing starts usually bounce back in the first two quarters after recession, don’t think it will be so much this time. We are kind of dragging along the bottom, and it looks like we’re having a little bit of a W-shaped recovery, where it bounces down and up and down.
Headwinds: We still have all that unsold inventory. We’ve got 2.2 million extra (new and built) homes that we need to burn through. And the existing home inventory remains too high. A lot of people believe this is the single biggest problem in the market. There are too many existing homes for sale. Nationally, we have a nine months supply, compared to a usual average of 6.4 months.
We expect to get double-digit unemployment by end of year nationally. But the housing market always comes back while job losses are increasing….You still have 80 percent of households in decent shape. It’s not going to take a lot of people to move that metric forward.. It’s the reason the market rebounds before the economy in general does.
The foreclosure problems: The problem is the foreclosure problem is spreading from subprime to prime. There is the danger of anther flood of foreclosures from Alt-A and Option ARM loans. But there are so many government programs now to help people with these loans. It’s hard to tell what will happen. I’m going to punt on that one.
Consumer confidence has improved.Mortgage rates are still incredibly low. We expect mortgage rates to stay in the low “fives” for the next two years as the Fed continues its policies…The other good news is the banks have loosened up somewhat. Over 70 percent in 2008 had seriously tightened credit; now they’re starting to loosen somewhat and builders have found other sources of liquidity, too, somewhat.
Some market are going to recover before others..Texas, the Carolinas haven’t had rampant price inflation so they haven’t had corresponding deflation.Texas and Washington, D.C., have had strong job growth. The healthiest top 10 new home markets nationally are Austin, San Antonio, Washington, D.C., Houston, Oklahoma City, Baton Rouge, Tulsa, Salt Lake City, Dallas Fort Worth and Olympia, WA..
There are four Texas markets in top 10. Baltimore, too, is a place where sales are actually up year over year. It’s an affordable market. New home sales are up 8.4 percent from January through July this year compared to last year.
Compare that to the Central Valley of California. Sales are down 48 percent from the same time last year. But at least that rate of decline is slowing now.
New home sales in Sacramento’s six-county region are down 43.7 percent this year so far from the same time last year. Riverside-San Bernardino is down just 28 percent from last year. That’s amazing.
There;s nobody who doesn’t see the market coming back next year. Even Economist Mark Zandi of Moodys, who is usually a bear, thinks the market will come back in second half of 2010 and be strong in 2011. On the single-family home side, the National Association of Home Builders predicts 2010 will be better than 2008 again.
And for all the trauma there are still successful projects out there that sell eight to 10 homes a month.Most are aimed at at first-time buyers.They target tax credits. The old rules of real estate still apply: a great project in a place where people really want to live. That still works.
Transit-oriented development through this downturn has always done better than the rest.
All these projects were green. Well, it’s not so much green, but energy efficiency. There’s a lot of marketing going around green. You may think people don’t really care about it, but what’s the harm, it seems to be working for people.
Here’s some big winners nationally:
- Mueller row and yard Homes, It’s by Catellus in east Austin. Prices start at 269K. It’s a five-minute drive from downtown.
- TLofts in West LA. CityView is the developer. These are lofts near Santa Monica Boulevard, starting at $415K. They sold 13 in first month in July. These are condos and lofts. There are 18 parking spots where you can charge an electric car and that’s gotten a lot of media attention.
- Paradise at Ironwood Crossing, outside of Phoenix. It’s in Pinal County and the San Tan Valley. The builder is Fulton Homes. It’s selling 21.5 per month. It starts at $115,900 to $148,900. Single family homes.
- Ivy at Woodbury East. This is in Irvine; The developer is The Irvine Co. and the builder is William Lyon Homes..sold 21 homes a month in July to mid August. Starting in the mid 300s. Townhomes. A lot of these places have done price cuts to boost sales.
- Stafford Lakes: Fredericksburg, VA. Builder Centex is selling nine per month, with prices from $255K to $325. They’re single-family homes. That’s neat success story.
8:33 a.m. Thompson: We’ve done a survey of 660 people shopping for new homes in May and June in California, Nevada, Arizona, Texas, Florida and North Carolina.
Shoppers were pessimistic about the shape of the economy, but they were way more optimistic about the shape of their own personal finances. Only 31 percent saw their personal income situation as not so good or poor. A lot were in the market because they could get a lot for their money.
74 percent said they were not concerned about hitting the bottom of the market, but they were still very concerned about losing their job or their spouse losing a job. Sixty-six percent were up to somewhat concerned about job losses. So they don’t want to stretch their finances too much to buy a home. That’s a standard feature of downturns. When it starts rebounding people are really careful about their money. The starter market always comes back first because people feel that’s where they can really get their value.
8:41 a.m: The capital regional market with Hanley Wood’s Sacramento regional sales manager and analyst Kathryn Boyce:
Foreclosures: We’re finally down to 11th nationally. We are at least out of the top 10 now. But notices of default are climbing again. Job growth continues to be negative. We’re expecting 41,000 lost jobs in the region in 2009. We rank 58th of 75 job markets nationally for jobs. Our unemployment is projected to go to 12.9 percent by year’s end.
We’re in the middle nationally for population growth. But 27 percent of people coming to the Sacramento area are from the Bay Area. Proximity to the Bay Area is a really good thing for Sacramento. They’re still relatively holding on for equity of their houses. It hasn’t dropped as much as Sacramento so they’re still able to bring some of the equity into Sacramento.
Our housing permit history is way off from 2008 even. We’re down 50 percent. Overall, based on year to date we’re projecting 3,400 sales for 2009. Sacramento can support about 8,500 sales a year. We stole from the future quite a bit from the hey day when we had our special financing. If they had a pulse we gave them a loan. But now Generation Y is coming in. It’s bigger than the Boom generation.
They want to buy a house, but they’re not looking for big 4 BR and 4BA homes. And they’re holding back on marriage and having children.
Most sales here are in the $200-$300K range followed by $300-$400K. There’s an under-abundance of new houses in the $200K and below range. We need to have some houses brought in there. Our median sales price for existing single-family detached homes is $218K. It’s $330 for new single-family houses. We have to stay with that median income. There are no more rebates for California and no special financing. We need rebates or to lower prices.
Our sales rate: we’re at a dismal 1.5 houses per month. But we’re seeing it increase.
We have 1.9 months overall of standing inventory. There’s just not that much standing inventory out there anymore. That’s a great thing…You have 10 months inventory out there total. We’re seeing builders picking up land, we’re seeing Tim Lewis, Meritage, Homes by Towne and K. Hovnanian picking up lots. We’re hearing now again about paper lots having some value.
Cancellations: We’ve had a downward trend. There isn’t a renters mentality any more. Buyers cant come in without a percentage down. The people walking into these subdivisions are committed buyers. They are actually looking for a house.
Our top 10 builders represent half the sales market and only one is a privately-owned builder, JMC.
8:52 a.m.: The existing home market: Boyce: We now have 34.4 percent affordability for new homes and 78 percent affordability for existing homes. It’s a big range there. We’re going to be soft until we lower prices.
The notices of default are coming back and we’re seeing here what might be another huge wave, depending on who you talk to, that there might be another wave of foreclosures coming.
The gap between the median is huge. It’s $189k for single family median for existing.
There are 94,000 lots out there and 18% are finished lots. The bulk of the lots are in Placer, Sacramento and Yuba Counties.
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Land values: We are having issues with land values. If you add in impact fees from our municipalities it them just right out of whack.. I know the North State Building Industry Association is working with municipalities to lower fees.
Our outlook and conclusion: We have a potential light in the economy. Demand is still weak, but it is turning. We’ve seen unemployment drop in July, but it’s still up, and its still up higher than other places around the country. The stock market is rebounding. The Fed will continue to buy mortgage-backed securities. But there is still a large overhang of foreclosures and we expect Sacramento’s mortgage delinquency rate to be 12.2 percent by the year’s end. California’s could be 14.2 percent by the end of the year.
Finally, it’s a wild card if the municipalities will lower fees or not. We’ve seen a couple of them doing it, but we’ve seen a couple of them say no. In terms of consumer demand, the first-time home buyer stimulus was a plus. The impact was good for first half of 2009. We’re hearing talk of the National Association of Home Builders going to Congress asking for a $15,000 tax credit for all buyers. That would replace what we have in California because I don’t believe (the state of) California is going to be able to pick up that demand again.
