WOODBRIDGE

Timing the housing market is critical, and now is a good time

Nov 162012
 
Timing the housing market is critical, and now is a good time

When I developed the OC Housing News Report, one of the biggest challenges was to develop a rating system that would time the housing market to maximum advantage. As we’ve all seen over the last few years of constant government manipulation, its very hard to pick the exact bottom, and although it looks like the bottom was earlier this year, that is not yet certain. Changes in government or banking policy could easily result in more foreclosures finding their way to the MLS causing prices to fall again. Despite these challenges, there are certain key indicators one can look for to evaluate market timing. I discuss these at length on the market report sign up page. In short, the best [Read More...]

Tighter mortgage standards for GSEs will encourage private lending

Nov 122012
 
Tighter mortgage standards for GSEs will encourage private lending

After the collapse of lending caused by skyrocketing delinquency rates which ultimately brought down the housing market, lending was taken over by the US government. The FHA, which was an existing government program, saw its share of mortgage origination balloon from 4% to 25%. The government sponsored entities of Fannie Mae and Freddie Mac were taken into conservatorship by the Department of Treasury and injected with about $150 billion to keep them solvent. With takeover of the GSEs and the increase in FHA lending, the government insured the loans on as much as 98% of the housing market. The current footprint is still well over 90%. Most of the parties involved with supervision of the GSEs and FHA agree that [Read More...]

House prices will go up despite the fact the housing bears are right

Oct 292012
 
House prices will go up despite the fact the housing bears are right

Spring of 2012 saw a chorus of housing bulls loudly proclaim the arrival of the recovery. All dissent was squelched as the conversation of housing evolved from debating whether or not the market had bottomed to what form the recovery would take. I’ve never seen such a coordinated effort among journalists to influence public opinion and bolster consumer confidence. Perhaps they think they have a duty to the market. I feel I have a duty to the truth. The bears have not completely gone away. Zero Hedge, Barry Ritholtz, Keith Jurow, and Mark Hansen have remained bearish, and they provide some of the most compelling bearish arguments in the national conversation today. Some of the bulls (like the NAr) dismiss [Read More...]

Can low interest rates make up for high resale prices?

Oct 232012
 
Can low interest rates make up for high resale prices?

For the last several years I have written in favor of low prices as the best option for putting the country back of firm economic footing. The argument is simple: Low prices make for a lower cost of ownership which translates to more disposable income for homeowners to use to purchase goods and services to drive the broader economy. Disposable monthly income is a superior economic stimulus because it’s sustainable. The savings each month are consistent and reliable. Contrast that to HELOC money that comes in a lump sum and once spent requires larger payments which reduces disposable income. Lower monthly cost of ownership is a sustainable source of disposable income to stimulate an economy. HELOC money is not. So [Read More...]

Is California a judicial foreclosure state due to the Homeowner Bill of Rights?

Oct 172012
 
Is California a judicial foreclosure state due to the Homeowner Bill of Rights?

The law concerning foreclosures in California is set to change on January 1, 2012. Many are concerned this will complicate the foreclosure process and grind the foreclosure machinery to a halt. So far the banks have taken little notice. Some speculated there would be a last-minute push to get foreclosures done before the change took effect. That isn’t happening. The banks are in no hurry to process their backlog of foreclosures, and if the changes in the law complicate the process for them, they will grin and bear it. Calif. hands trial lawyers ‘nuclear weapon’ to use against mortgage industry: legal expert By Kerri Ann Panchuk — October 5, 2012 • 8:42am The Homeowner Bill of Rights launched in California [Read More...]

Lenders created a culture of Ponzis and delinquents

Sep 132012
 
Lenders created a culture of Ponzis and delinquents

When I grew up, I watched my parents work hard and pay their bills. Their house payment was the largest of of their bills, but they sacrificed to pay down their mortgage to eventually become payment free. This was the experience of most Americans, a collective lesson we learned about responsibility and deferred gratification. Lenders destroyed that and replaced it with a culture of Ponzi borrowing and a series of poisonous beliefs that turned responsible homeowners into reckless and irresponsible loanowners. How sweet it is… It wasn’t enough to merely give millions of Ponzis billions in free-money loans. That alone would have irreparably harmed out culture. No, lenders didn’t stop there. When the ATM benefits ran out, they allowed the [Read More...]

California lawmakers lack ethics when their real estate deals go bad

Aug 242012
 
California lawmakers lack ethics when their real estate deals go bad

The people we elect to public office should set a higher standard for conduct than ordinary citizens. If we are to trust them to make laws governing the rest of us, we should be able to rely on them to follow the rules rather than gaming the system to their advantage. Unfortunately, that’s not the world we live in. Many California lawmakers got caught up in the mania of the housing bubble, and when their faith in ever-increasing house prices was shaken, their ethics went on sabbatical. Real estate bubble bursts for California lawmakers too In the boom years, several California legislators bought homes but are now having trouble keeping up with mortgages or avoiding big losses. By Patrick McGreevy, [Read More...]

An FHA bailout can still be avoided, if only…

Aug 072012
 
An FHA bailout can still be avoided, if only...

In a recent post, I noted that FHA mortgage delinquencies skyrocketed more than 25%. Since most FHA borrowers only put 3.5% down, when factoring in a 6% commission, 2% closing costs, and a declining market, nearly all FHA borrowers over the last five years are effectively underwater. When these borrowers sell or quit paying, the losses will be huge because the capital recovery will be far less than the original loan balance. With a 9.4% serious delinquency rate, the FHA is facing 713,104 future foreclosures. This rate has been rising steadily, and many more delinquencies are coming because many borrowers will want to move before prices regain peak values. Many borrowers may opt for a strategic short sale or strategic default, [Read More...]

Lending standards will keep getting tighter

Aug 022012
 
Lending standards will keep getting tighter

Despite realtor pleas, mortgage lending standards will continue to tighten realtors never want to see a deal die because the buyer can’t get financing. Lawrence Yun, chief economist for the NAr, recently lamented about “unnecessarily tight credit standards” and “frictions related to obtaining mortgages.” In a realtor’s world view, there are no unqualified buyers. Back during the height of the housing bubble, the lending community agreed with them, and billions of dollars worth of loans were underwritten to people who had no hope of paying back the money absent continuing rapid appreciation. realtors should be careful what they ask for because getting their way with the lending community is what caused the devastation we are dealing with now. The reason [Read More...]

Woodbridge 30% undervalued and bottoming out

Jul 122012
 
Woodbridge 30% undervalued and bottoming out

Irvine: Woodbridge Overview Median home price is $416,000. Based on a rental parity value of $598,000, this market is under valued. Monthly payment affordability has been improving over the last 7 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $299/SF to $303/SF. Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. Median rental rates increased $58 last month from $2,383 to $2,441. Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months. Market rating = 8 Proprietary Irvine Housing News home purchase analysis 28 ROCKWOOD Irvine, CA 92614 $489,500 …….. Asking Price $170,000 ………. Purchase Price 1/20/1988 ………. Purchase [Read More...]

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