Wednesday, August 29, 2012

First Time Investors Beware

Prices are going up, that's it. I could just stop this post with that one line.

But, I won't....Reading an article today confirms what I already know. Investors are backing off in the purchase of properties. They have seen, as I have (and every other Realtor that is working) seen in the last few months, that prices are on the rise.

As always, when making the decision to invest in a property, other than the one you will live in, you absolutely must do the math. Make sure that you work the numbers to see if there is enough profit and/or ROI in the deal to make it worthwhile. With prices inching up, it has become less desirable for investors. 

Now, I'm not saying there aren't still deals to be had, there are, but they are harder to come by. Anyone that is regularly reading my blog knows this. To re-cap, inventory is at ridiculously low levels, as are interest rates. And, interest rates this low are one of the main drivers in this purchase market.

We are also seeing more Traditional sellers come on the market. Due to the desirability of an 'easy' sale, they are generally getting more than the Short-Sales and REO's. 

With the market flipping from where it was just a few months ago, it's going to be even more important not to leap without doing your arithmetic. We have less distressed properties on the market, and less coming down the pipe-line. And, with a couple of the groups I network with I am seeing more 'Hey, I've got a rental available' than I did a few months ago. But, I hope you who have already made the leap of Real Estate faith, used a vacancy factor and a reduced rent factor in your original calculations.

Be careful out there. Look before you leap.

For any questions about Real Estate in the Santa Clarita Valley and it's surrounding communities:

Sunday, August 26, 2012

Average Days On Market

From start to finish sellers want to know how long it's going to take to sell their home. Any good Realtor knows that there are many factors in determining the likely answer to that question.

What type of market are we in ~ buyers market or sellers market?
Is the seller going to prep the house for sale?
Will the seller price it appropriately?
What price range is the property in?
How many buyers are buying in that range every month?
How many listings are on the market, now and 3 months ago?
What selling season are we in?
What's your competition?
I could keep going, but you get the picture.

With that in mind I thought I'd share with you a different type of stat than I've shared before. Let me know if you find it interesting, let alone worth reading.

In the last 90 days of home that have closed escrow according to our local MLS; below is information about the Average Days On Market ~ i.e. how long did it take to sell a home.

Under 250k ~ 324 homes sold ~ ADM = 102
250-500k ~ 568 homes sold ~ ADM = 87
500-750k ~ 98 homes sold ~ ADM = 95
750k-1M ~ 25 homes sold ~ ADM = 130
And, 1M + ~ 14 homes sold ~ ADM = 86

Looking at those same categories, but just Traditional (Standard) Sellers:


Any way you look at it, the average time to sell a home, anticipating a 35 day escrow period, is between a month or two. I can pick them apart further for you, but I could bet you that the ones that moved quicker were the ones that were priced right. And, the ones that took longer experienced a price reduction or two.

Now, you're thinking, "but dang, I've seen properties going out with multiple offers in just a couple of days". And, you would be right. But, you would be wrong if you thought the ones priced well over current market value were part of that 'but, dang'.

I can sell a gorgeous home, a mansion, a sweet little pink house, a condo, a anybody. There is a buyer for every type of property, everywhere. Price is what makes the ultimate reason for a home selling. And, price is what makes the average days on market be long or be short.

How long do you want to be on the market?

Wednesday, August 22, 2012

FICO or Veritas?

So, we've heard some buzz about FICO re-working their scoring to help accommodate the Short-Sale and Foreclosure dings, if those are the only dings.

A newer evaluation system called Veritas (Latin for Truth) developed by a company called Digital Risk is suggesting their way of determining a borrowers credit-worthiness is much better than the old faithful FICO.

They've been doing a lot of studying due to the housing bust, focusing on strategic defaults it would appear. Why someone would be a risk of strategic default and another not, with the exact same FICO scoring.

From my article reading activity this morning, LA Times writes: In early August it introduced a multidimensional risk evaluation system it calls "Veritas," which it says integrates borrower credit characteristics with property and local real estate market data along with proprietary behavioral prediction models. The behavioral component includes what the firm calls statistical "clusters" of borrower, property and market situations — 123 in all — that give lenders a better idea of how an applicant will react to financial problems, such as the next recession or housing downturn. 

You can read the entire article here: Reading Article of The Day

I think an updated version of FICO scoring is great, I am concerned that lenders may have to rely on psychoanalysis of their clients now. That's a pretty subjective arena. What do you think?

Sunday, August 19, 2012

Construction Slowed, But Building Permits Rose

One of the indicators of a turning market is the amount of new construction. It fuels movement in the Real Estate arena. And, if there isn't anything to feed the fire, it just shoots up puffs of smoke. Of course.

So, while the actual construction dropped a tad this past month, the increase in PERMITS is the highest it's been in 4 years. Compared with July 2011, overall permits saw a 29.5% rise. What's that say to you?

If the big dogs, the builders, the contractors, the people with a boat-load of money to invest in housing, feel that it's time to push for more permits, to prep for more home building, then it's just another indicator that we are moving out of the slump.

Interest rates have been creeping up the last few weeks, inventory took a teeny spike (one day this week we actually had 30 more units on our MLS than less), builders are calling out for more permits, and many housing reports are showing optimism.

Although I still believe we have a long way to go before we hit a 'normal' market, there have been several good indicators. I'm going with those. But, really, I don't know if I remember a 'normal' market, do you?

Wednesday, August 15, 2012

The Debt Relief Act ~ Latest News

I had read a while ago that Obama put an extension in the budget for 2013, but that was anyone's guess if it was really going to make it.

Right now, the Mortgage Forgiveness Debt Relief Act is still set to expire at the end of this year, 2012. That's the bill that allows people who have had housing debt forgiven via Short-Sales, Foreclosure, and Loan Modifications not have to pay taxes on the amount forgiven.

L. A. Times, one of my daily Real Estate reads, notes:

The Senate Finance Committee has approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013.

and points out:

It was after heavy lobbying by the National Assn. of Realtors and the National Assn. of Home Builders. The bill, which now moves to the full Senate for possible action next month, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013 and continue some energy-efficiency tax credits for remodelings and home construction.

Read the Full Article Here:  Senate Panel Wants To Extend DRA

Now, we can only hope that this settled BEFORE the election. If not, then we are struggling to see who is in and what their decision is. To continue the help, or cut it off?

Saturday, August 11, 2012

Is This A Temporary Bubble?

I asked my fish-guy husband today for a blog post topic. I read the news, everyone knows the market is going up. So, I thought, "I'll ask a normal person what they want to read about" And, my normal person said, 'How's the market, is this a smart time to buy?" I almost peed myself laughing out loud. Don't all people ask Realtors that?

He did probe a bit more with..."Is this appreciation we are seeing going to last?"

So, again without my crystal ball, what do I think about this little bubble we are seeing? Hmmm.....

Well, if the inventory stays low, the appreciation is definitely going to last. Most definitely, the infamous supply and demand theory, we all know that. If interest rates stay low, yes, people can still buy. Tough for some to qualify, but enough can still buy to eat up the inventory.

Once we start getting more homes on the market, the demand will ease up. Right now we are seeing multiple offers on most median priced homes. More standard sellers coming on the market too and some are getting premium prices.

Right now, we are about 1/3 of our Santa Clarita Valley healthy market number of active homes in the MLS. I think we can handle twice what we have and still see significant appreciation, most definitely. I believe once we get to the 1200-1400 range, we will be setting down and go back to the 2-3% appreciation that is more of what we consider normal.

Do I think we may see a bubble burst again? Me? No, not really. I think we may see a staleness, a flat line, but not a near death again. I think we will be floating along nice and easy. Maybe not perfect, but a little less of the near death experience for certain.

Wednesday, August 8, 2012

It's Been FOUR Years...

I'm reading all the Real Estate news this morning. Most important that keeps coming on my computer screen ~ in every different format ~ is that Fannie Mae earned enough of a profit that they could pay the Treasury back 2.9 million which leaves them just about 96 million more to cough up ~ Truth!

But, this week marked the first time in FOUR years that I've had an appraisal problem. This one is an escrow for a buyer. Appraisal came in below purchase price 5%. It's a small purchase to some, but it's a good chunk of change to the buyer.

Short-Sale that took over 3 months to get approved. And, now we have to ask them to reduce the purchase price.

I spoke with the appraiser....there really aren't strong enough comps to support the purchase price. Keep reading.....

Backwards now.....multiple offers on the property when we wrote. Buyer is doing 95% financing and we were competing against an all cash offer....from within the listing agents company! But, she stood true to her word and because ours came in first, the seller took my clients offer.

3 months ago we were still in a bit of a declining market, wouldn't you say? Fast forward to now and we are in a market that is appreciating. The inventory has reduced to horribly low levels, every property (short-sale or not) seems to have multiple offers on them. A buyer doing 95% financing has an uphill battle on acceptance with these conditions.

But, I don't just bend over. Nope. We have one comp for a lesser unit that closed closer to our purchase price....but that's not enough. So I contact escrow and ask is there any extra money floating around ~ they are checking. And, the listing agent is submitting the appraisal to the SS lender and asking for a reduction in purchase price.

Back on the sidelines is that all cash buyer just waiting to pounce!

So, 4 years later I'm working on it for my client. Last time it worked out AOK....we shall see how this works out.

Saturday, August 4, 2012

Santa Clarita Valley MLS Stats August 4, 2012

Interesting stats of today....the numbers are a changin'......

ACTIVE inventory ~
432 total
121 are Short-Sales
41 are Bank-Owned
264 are Standard-Sales (61%)
and there, of course, is an odd-ball Probate, or HUD, etc. listing.

PENDING/BACK-UP (under contract) ~
1163 is the total number
829 are the Short-Sales
92 are REO's
234 are Standard-Sales
and, the remaining are as above....

and SOLD in the last 30 days ~
319 total units closed escrow...that's up from the last few reports I shared with you.
122 Short-Sales ~ what's that about 38 %?
68 were the REO's ~ 21%
Standard Sales numbered 125

So, while we still are seeing about 60% in closings were the distressed properties....look at the active....way more Standard Sellers coming on the market. Welcome Back I say!

Wednesday, August 1, 2012

DiMarco Says NO ! Fannie & Freddie No Principal Reductions

Yes, he's getting crap from both sides for sure. But, acting director of the FHFA will not allow Fannie/Freddie loans to do principal reductions.

His reasoning makes some sense, but for the people that have a Freddie or Fannie backed loan? They just have to keep paying until their home appreciates again. Until that time, DiMarco just didn't feel it was appropriate to burden tax-payers anymore.

Hard news to swallow after one of my peeps just got a 217k principal reduction.....