CAR reported today that a company that tracks "Phantom Inventory" places the number at 1.7 million up alomst 30% over the prior year's 1.1 million homes. Corelogic counts the amount of "Phantom Inventory" is the number of homes that banks currently hold in inventory but not yet placed on the market including homeowners that are 90 days delinquent on their mortgages. This number represents the a 3.3 month supply at the current rate of sales.
Visible inventory in September of 2009 stood at 3.8 million units. This represents a 7 month supply down from 10 months a year ago. The total unsold inventory which, (I assume) includes short sales and normal sales is estimated to be 5.5 million units relatively flat from last years 5.7 million units. This number represents 11 months supply down a month from the prior year.
According to Corelogic while the numbers appear to be normal and stabilizing, the market inventory will get worse before it will get better.
Showing posts with label real estate market. Show all posts
Showing posts with label real estate market. Show all posts
Wednesday, December 30, 2009
Wednesday, October 28, 2009
Schizophrenic Sales Data
Don't believe what you read! Just kidding. This is a great lesson about what is going on in our market today and why it is great that we live in such a special state. In today's CAR newsletter the following short stories were in the same article.
C.A.R. releases Sept. sales and price report
Home sales increased 2.1 percent in September in California compared with the same period a year ago, while the median price of an existing home declined 7.3 percent, C.A.R. reported yesterday.
The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3 percent decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1 percent compared with August’s $292,960 median price.
“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”
Home prices decline 0.3 percent nationwide
Home prices decreased 0.3 percent nationwide on a seasonally adjusted basis from July to August, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. The FHFA’s index is calculated using purchase prices of houses owned or guaranteed by Fannie Mae or Freddie Mac. For the 12 months ending in August, U.S. home prices decreased 3.6 percent. The U.S. index is 10.7 percent below its April 2007 peak.
Makes you wonder how both can be true. The answer is simple. Real estate is a local phenomenon subject to many more factors beyond being a home and a price. Jobs, income bracket, community, age demographic, price point, financing, interest rates all play a part in the value of real estate.
The median price is up due to liquidity that was in the process ot tightening up last year. A year ago a loan over $700k simply didn't exist so selling a home in that price point was an extreme challenge. Now the laon market has stabilized and more buyers have the capaility to purchase a home. More recently inventory has dried up and banks have slowed the rate in foreclosures into the market. These two factors have created a mini boom in the lower price points and as more homes have sold in the 500k-800k range, the median goes up and prices overall fall. I won't even the high end freefall of prices but this is simply icing on the cake.
C.A.R. releases Sept. sales and price report
Home sales increased 2.1 percent in September in California compared with the same period a year ago, while the median price of an existing home declined 7.3 percent, C.A.R. reported yesterday.
The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3 percent decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1 percent compared with August’s $292,960 median price.
“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases.”
Home prices decline 0.3 percent nationwide
Home prices decreased 0.3 percent nationwide on a seasonally adjusted basis from July to August, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. The FHFA’s index is calculated using purchase prices of houses owned or guaranteed by Fannie Mae or Freddie Mac. For the 12 months ending in August, U.S. home prices decreased 3.6 percent. The U.S. index is 10.7 percent below its April 2007 peak.
Makes you wonder how both can be true. The answer is simple. Real estate is a local phenomenon subject to many more factors beyond being a home and a price. Jobs, income bracket, community, age demographic, price point, financing, interest rates all play a part in the value of real estate.
The median price is up due to liquidity that was in the process ot tightening up last year. A year ago a loan over $700k simply didn't exist so selling a home in that price point was an extreme challenge. Now the laon market has stabilized and more buyers have the capaility to purchase a home. More recently inventory has dried up and banks have slowed the rate in foreclosures into the market. These two factors have created a mini boom in the lower price points and as more homes have sold in the 500k-800k range, the median goes up and prices overall fall. I won't even the high end freefall of prices but this is simply icing on the cake.
Wednesday, October 21, 2009
Yahoo News Link
Here is a quick news link from Yahoo on the state of the market.
http://finance.yahoo.com/news/Homes-About-to-get-much-cnnm-699910894.html?x=0
http://finance.yahoo.com/news/Homes-About-to-get-much-cnnm-699910894.html?x=0
Tuesday, August 11, 2009
Maybe it’s time to let Bankruptcy Courts deal with Neg-Am Mortgages.
This blog should fall into the arena of gossip for some more educated source to follow up and provide better and more firm facts.
Someone I trust was talking to a banker and they started to discuss the problems with the banking system. After covering all the numerous talking points about who was to blame and pointing the usual fingers; the Community Investment Act, Fannie and Freddie Mac acting as irresponsible investor on bad loans, and the removal of the restriction preventing Investment Banks from engaging in real estate (Glass-Stegal). In other words the usual complaints. They then started to discuss possible solutions to the debacle, this is where I became interested.
Most real estate agents, and others who have attempted a loan modification, know what kind of a byzantine nightmare the process can be. Many calls, lost paperwork, and low level staff manning the phones that have no authority other than the right to tell you 'NO' and 'declined'.
They talked about the system. Once a bank receives the modification or short sale request, it has to go to its files and pull the loan documents, submit all the paperwork to an underwriter who was given a set of policies drafted by the banks attorney's who may also eventually research the loan. At the same time, if there is a second loan, a concurrent negotiation occurs with an institution that has their own phalanx of underwriters, attorneys, and guidelines.
Part of the bank's research is to determine if there was mortgage insurance and if there was an investor on the loan. Once it is discovered that these entities exist, there are yet another set of guidelines to deal with from corporations who have yet another series of underwriters, guidelines, and attorneys.
So lets review, under the ideal situation in any short sale or loan modification with one loan there
could be as few one and many as three institutions involved; the bank then additionally one insurer and/or one investor. If there are two mortgages, then there are two to six institutions.
Now let's complicate the matter, like the reality for most. No bank has one investor, nor do they use one insurer. So as the pool of loans grows and the number of vendors grows, and the process gets more and more complicated. Other complications arise when you consider the myriad of state laws and the fact that many of the investors are overseas. but then it gets really tricky.
Somewhere along the line, investment banks created these "so-called" risk hedges called the collateralized mortgage obligation or collateralized debt obligation (CMO's or CDO's). This was a new form of investment designed to reduce losses on bad mortgages. So the banks take their pool of assets backed by debt and people's incomes and they divide these obligations into investment vehicles, using another set of contracts (drafted by attorneys) and start trading them on Wall Street to institutional investors (who have their own attorneys).
So at the peak of the bubble we had we had little or no oversight from the Republicans, We had Democrats pushing banks to underwrite bad loans that were purchased by Fannie Mae and Freddie Mac. The Investment Banks poured money into the mortgage market. Banks wrote loans, sold some to investors, and insured others, all while packaging bundles of investments and selling them to insurance companies, other banks, foreign governments and hedge funds.
So now the banker gets to the end of his discussion. "Event's didn't work out so well." he says. "Real Estate agents are working the short sales and individuals are trying to perform loan modifications." He continued, "The reason most loan mod's and short sales do not get approved is because it is just cheaper to foreclose than to deal with all the various companies and their attorneys. Every bank can't come up with one set of guidleines to deal with all the different situations all these contracts and attorneys have created." Once the foreclosure occurs then it wipes the slate clean for the bank holding the loan at the core of this complex system of contracts. The homeowner is treated like one of the investors and gets wiped out with the foreclosure.
This is why it's so hard to do a short sale or loan mod.
Someone I trust was talking to a banker and they started to discuss the problems with the banking system. After covering all the numerous talking points about who was to blame and pointing the usual fingers; the Community Investment Act, Fannie and Freddie Mac acting as irresponsible investor on bad loans, and the removal of the restriction preventing Investment Banks from engaging in real estate (Glass-Stegal). In other words the usual complaints. They then started to discuss possible solutions to the debacle, this is where I became interested.
Most real estate agents, and others who have attempted a loan modification, know what kind of a byzantine nightmare the process can be. Many calls, lost paperwork, and low level staff manning the phones that have no authority other than the right to tell you 'NO' and 'declined'.
They talked about the system. Once a bank receives the modification or short sale request, it has to go to its files and pull the loan documents, submit all the paperwork to an underwriter who was given a set of policies drafted by the banks attorney's who may also eventually research the loan. At the same time, if there is a second loan, a concurrent negotiation occurs with an institution that has their own phalanx of underwriters, attorneys, and guidelines.
Part of the bank's research is to determine if there was mortgage insurance and if there was an investor on the loan. Once it is discovered that these entities exist, there are yet another set of guidelines to deal with from corporations who have yet another series of underwriters, guidelines, and attorneys.
So lets review, under the ideal situation in any short sale or loan modification with one loan there
could be as few one and many as three institutions involved; the bank then additionally one insurer and/or one investor. If there are two mortgages, then there are two to six institutions.
Now let's complicate the matter, like the reality for most. No bank has one investor, nor do they use one insurer. So as the pool of loans grows and the number of vendors grows, and the process gets more and more complicated. Other complications arise when you consider the myriad of state laws and the fact that many of the investors are overseas. but then it gets really tricky.
Somewhere along the line, investment banks created these "so-called" risk hedges called the collateralized mortgage obligation or collateralized debt obligation (CMO's or CDO's). This was a new form of investment designed to reduce losses on bad mortgages. So the banks take their pool of assets backed by debt and people's incomes and they divide these obligations into investment vehicles, using another set of contracts (drafted by attorneys) and start trading them on Wall Street to institutional investors (who have their own attorneys).
So at the peak of the bubble we had we had little or no oversight from the Republicans, We had Democrats pushing banks to underwrite bad loans that were purchased by Fannie Mae and Freddie Mac. The Investment Banks poured money into the mortgage market. Banks wrote loans, sold some to investors, and insured others, all while packaging bundles of investments and selling them to insurance companies, other banks, foreign governments and hedge funds.
So now the banker gets to the end of his discussion. "Event's didn't work out so well." he says. "Real Estate agents are working the short sales and individuals are trying to perform loan modifications." He continued, "The reason most loan mod's and short sales do not get approved is because it is just cheaper to foreclose than to deal with all the various companies and their attorneys. Every bank can't come up with one set of guidleines to deal with all the different situations all these contracts and attorneys have created." Once the foreclosure occurs then it wipes the slate clean for the bank holding the loan at the core of this complex system of contracts. The homeowner is treated like one of the investors and gets wiped out with the foreclosure.
This is why it's so hard to do a short sale or loan mod.
Monday, June 15, 2009
The ABC's of the Real Estate Market
I recently went to a seminar and the presenter had a great way to describe areas in an investment standpoint.
A residential housing market can be broken into 3 parts the "lower end", homes priced under the conforming loan maximum, and the "high end." The high end has two parts. One is the the market that requires leverage to purchase from the conforming lona limit to somehwere in the lo millions.
The lower end can again be broken into 3 parts. Grade A: The areas that had value 3 years ago and will have value again 3 years form now. Grade B : The areas that will improve in the next recovery. Grade C: The bottom and most challenging areas that are currently flooded with foreclosures.
Each area offers a unique opprotunity for different types of buyers. For example, first time home buyers who are interested in appreciation may be advised to purchase in category B areas if they are not financially able to purchase in category A areas since the B areas should improve in the next up cycle.
With regards to investments, this description should hold true as well. The most money would be expected in the category B areas. Category A markets will be tighter and from an investment standpoint will be characterized as good places to park money. Basically a place to preserve capital. The market may go down, but these category A area have historically been the first to recover in prior upswings, currently these markets are under pressure.
Category B areas have for the most part bottomed and should will hold, all other things being equal, being a good place for capital growth in the long term. The lower the price the more this characterization is true. Over the last few years, these homes have fallen further from their highs as a percentage of price and will recover quicker due to the homes being more affordable and in lower price points.
Category C areas are for cash buyers only and only make sense for LONG term holds (like a bond) the appreciation will be slow but the prices on a per square foot basis are generous making rental streams good only when unlevered and price is a factor.
Category A areas are closer to the top of the conforming loan range (629k). Category B and C areas are in the mid and lower price ranges.
In centreal and east Contra Costa County, places like San Ramon, Danville, Walnut Creek, are solid category A properties. Pleasant Hill starts in the lower end A range and moves into the upper end homes. Concord, Martinez and Livermore are solid B categories with category A components. Antioch, Pittsburg, Brentwood and outlying areas are in the solid C category.
A residential housing market can be broken into 3 parts the "lower end", homes priced under the conforming loan maximum, and the "high end." The high end has two parts. One is the the market that requires leverage to purchase from the conforming lona limit to somehwere in the lo millions.
The lower end can again be broken into 3 parts. Grade A: The areas that had value 3 years ago and will have value again 3 years form now. Grade B : The areas that will improve in the next recovery. Grade C: The bottom and most challenging areas that are currently flooded with foreclosures.
Each area offers a unique opprotunity for different types of buyers. For example, first time home buyers who are interested in appreciation may be advised to purchase in category B areas if they are not financially able to purchase in category A areas since the B areas should improve in the next up cycle.
With regards to investments, this description should hold true as well. The most money would be expected in the category B areas. Category A markets will be tighter and from an investment standpoint will be characterized as good places to park money. Basically a place to preserve capital. The market may go down, but these category A area have historically been the first to recover in prior upswings, currently these markets are under pressure.
Category B areas have for the most part bottomed and should will hold, all other things being equal, being a good place for capital growth in the long term. The lower the price the more this characterization is true. Over the last few years, these homes have fallen further from their highs as a percentage of price and will recover quicker due to the homes being more affordable and in lower price points.
Category C areas are for cash buyers only and only make sense for LONG term holds (like a bond) the appreciation will be slow but the prices on a per square foot basis are generous making rental streams good only when unlevered and price is a factor.
Category A areas are closer to the top of the conforming loan range (629k). Category B and C areas are in the mid and lower price ranges.
In centreal and east Contra Costa County, places like San Ramon, Danville, Walnut Creek, are solid category A properties. Pleasant Hill starts in the lower end A range and moves into the upper end homes. Concord, Martinez and Livermore are solid B categories with category A components. Antioch, Pittsburg, Brentwood and outlying areas are in the solid C category.
Wednesday, June 10, 2009
Home Modification Trial Period
http://www.contracostatimes.com/business/ci_12520979?nclick_check=1
This newpaper article was printed on June 8th, 2009 Contra Costa Times. It is a detailed explanation, in Q and A form, about the governments Home Affordable Mortgage Modification program.
This newpaper article was printed on June 8th, 2009 Contra Costa Times. It is a detailed explanation, in Q and A form, about the governments Home Affordable Mortgage Modification program.
Monday, June 8, 2009
Stuck between a Mortgage Rock and a Hard Place?
You are not alone.
http://www.marketwatch.com/story/one-owners-tale-of-mortgage-modification-hell?pagenumber=1
Another Short Post.
http://www.marketwatch.com/story/one-owners-tale-of-mortgage-modification-hell?pagenumber=1
Another Short Post.
Friday, June 5, 2009
Quick Post on Bay Area Real Estate Market
Here is a online news story form CBS Marketwatch on Bay Area housing.
http://www.marketwatch.com/story/were-overlooking-signs-of-housing-comeback?siteid=nwhpf&sguid=vmtIvi8U2kmwaufqPiI3RQ
For more information e-mail me direct under the heading "Trough Bottom"
http://www.marketwatch.com/story/were-overlooking-signs-of-housing-comeback?siteid=nwhpf&sguid=vmtIvi8U2kmwaufqPiI3RQ
For more information e-mail me direct under the heading "Trough Bottom"
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