Foreclosure Option In Sacramento
August 6th, 2010 Categories: Uncategorized
Struggling Homeowners are Searching For Foreclosure Options
Sacramento Homeowners now include a huge number of homeowners that have lost jobs, thair salaries cut, had hours reduced and overtime stopped.
With the housing market here in Sacramento, El Dorado and Placer counties and the loss of housing values, many homeowners are looking for ways to stop foreclosure, keep up on their payments and stay in their home
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El Dorado Hills and El Dorado County Approved Short Sales Continue To Surge
July 25th, 2010 Categories: Foreclosure News, Sacramento Foreclosure News, Sacramento RE Stats, Sacramento Real Estate, Sacramento Real Estate Trends, Short Sales, Shortsales
El Dorado County Approved And Pended Along With Closed Short Sales
Looking For Short Sale Information in El Dorado County?
Need Short Sale Market Stats or Short Sale Market Information For El Dorado Hills? Sacramento Area Multi-Certified Short Sale Specialist Forth Hoyt Shares Short Sale Market Facts for El Dorado County and El Dorado Hills
The Short Sale is becoming a more viable foreclosure option in El Dorado Hills and El Dorado County. Short Sales are going pending and approved in El Dorado County much much more successfully than in the past. See the graph above and the chart below that illustrate that short sales are going pending and approved much more that in the past.
| 1 month | 1 year | |||||
| May 10 | June 10 | % Change | June 09 | June 10 | % Change | |
| For Sale | 187 | 203 | 8.6%  |
227 | 203 | -10.6%  |
| Sold | 40 | 46 | 15% |
21 | 46 | 119% |
| Pended | 59 | 98 | 66.1% |
48 | 98 | 104.2% |
With the short sale being approved, going pending, and actually closing escrow in El Dorado County so much more frequently and consistently, I wondered how they were doing as a foreclosure option in El Dorado Hills? So lets take a look at El Dorado hills short sale information
But first:
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Short Sale VS. Foreclosure …Tough Decisions Facing El Dorado Hills and El Dorado County Homeowners Today.
The Chart Below shows that El Dorado Hills has an inventory of Active Short Sales that is barely more than 1/4 of the active short sales in El Dorado County, yet Pended and Approved Short Sales and Closed Short Sales that is nearly half of the entire El Dorado County Short Sale Inventory for these categories!
El Dorado Hills Short Sale Market Stats for 6/09 to 6/10
With so much talk about short sales as an option to foreclosure, and with many new Government short sale Programs it’s nice to see they are actually closing and getting short sale approval on more and more short sales.
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New Government Foreclosure Prevention Program Eligibility- Which Programs Do You Qualify For? CHECK YOUR ELIGIBILITY NOW
When you look at the year over year numbers, you can really see that short sales in El Dorado Hills are definitely trending upward and being successfully used as an anti-foreclosure tool in El Dorado Hills
The Chart above and graph below show that, not surprisingly,nearly half of the pended short sales in El Dorado County were short sales that were approved and went pending in El Dorado Hills.
| 1 month | 1 year | |||||
| May 10 | June 10 | % Change | June 09 | June 10 | % Change | |
| For Sale | 55 | 68 | 23.6% |
79 | 68 | -13.9% |
| Sold | 12 | 20 | 66.7% |
5 | 20 | 300% |
| Pended | 19 | 46 | 142.1% |
18 | 46 | 155.6% |
With so much talk about giving homeowners foreclosure options, stopping foreclosure and working homeowners to avoid losing their homes, (except for a principle reduction loan modification that makes sense!) you might think that the foreclosure filings such as notice of default and notice of trustee sales in El Dorado Hills And El Dorado County would both be down. NOT THE CASE! Foreclosure filings for both El Dorado Hills and El Dorado County are both way up, yet the postponement of the El Dorado County Trustee Sale (at the courthouse steps) have just continued…
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Mortgage Rates Drop To New Record Lows!
July 12th, 2010 Categories: Mortgage and Loans
Mortgage Rates Drop To Record Lows
From DSNEWS.COM
The weekly mortgage rate reports released Thursday by Freddie Mac and Bankrate were mixed. But one thing was certain: the average rate for 30-year fixed-rate mortgages hit a new record low.
According to Freddie Mac’s Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 4.57 percent with an average 0.7 point for the week ending July 8, 2010, inching down from last week’s average of 4.58 percent. Freddie Mac said this rate marked yet another all-time low in its 39-year survey.
Bankrate also reported a decline in 30-year fixed-rate mortgages. According to its weekly mortgage survey, rates averaged 4.74 percent with an average 0.39 point
this week, falling from last week when 30-year fixed-rate mortgages averaged 4.75 percent.
The story was different for 15-year fixed-rate mortgages, though.
Freddie Mac said 15-year fixed-rate mortgages averaged 4.07 percent with an average 0.7 point this week, edging up from 4.04 percent one week earlier. And Bankrate said 15-year fixed-rate mortgages came in at 4.22 percent with an average 0.36 point, a minor uptick from last week’s average of 4.2 percent.
Despite the slight increase in 15-year fixed-rate mortgages, both Fannie Mae and Bankrate noted that on an overall basis, mortgage rates continued to linger near ultra-low levels, a benefit to homebuyers and refinancers alike.
“With mortgage rates falling to historic lows, refinance activity has been strong over the past three months,” said Frank Nothaft, Freddie Mac VP and chief economist.
“The Bureau of Economic Analysis reported that the effective mortgage rate of all loans outstanding was just below 6 percent in the first quarter of 2010, the lowest since the series began in 1977,” Nothaft said. “Since the start of the second quarter, two out of three mortgage applications on average were for refinancing, according the Mortgage Bankers Association.”
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New Anti-Deficiency Law Would Help Homeowners Up To The Value Of Their Original Purchase Loan
July 12th, 2010 Categories: Default News
New Anti Deficiency Law Would Help Thousands Of California Homeowners
New California Anti Deficiency Law Would Help Thousands Of Caifornians: SB1178 Would Stop Deficency Judgements For Refinanced Homes
Courtesy Los Angeles Times:
With thousands of Californians facing foreclosure on their underwater mortgages each month, state lawmakers are rushing in with measures to help them cope with their loans and possibly stay in their homes.
Three bills moving through the state Assembly after passing the Senate would delay the start of the foreclosure process and limit lenders’ ability to force borrowers to cover the difference when their home is sold for less than the amount they owe on their loan.
On Tuesday, the Assembly Judiciary Committee approved the most controversial of the measures. The bill would ban creditors from seeking so-called deficiency judgments from borrowers who can afford to make monthly payments yet walk away from a refinanced home that is underwater, meaning that the house is worth less than the loan on it.
Such strategic defaults recently emerged as a growing problem for the banking industry. They accounted for 31% of all foreclosures nationwide in March, according to researchers at the University of Chicago and Northwestern University. That’s up significantly from 22% the previous March.
“We’ve had bank bailouts,” state Sen. Ellen Corbett (D-San Leandro) said. “It should only be fair in this economy that we try to figure out ways to help homeowners as well.”
Learn More About Your Particular Situation:
Contact us Today at Forth Hoyts Sacramento Short Sale Center.
Corbett authored the bill to protect borrowers from being hit with an order to pay whatever portion of the loan amount that isn’t covered by a bank’s sale of the foreclosed property.
Helping homeowners is a matter of balance, Corbett said. Her bill, SB 1178, would insulate refinancers from deficiencies up to the value of their original purchase loan. But borrowers would remain vulnerable for any refinanced loans exceeding that level.
The battle over Corbett’s bill pits bankers and the mortgage industry against the California Assn. of Realtors.
Lenders oppose provisions that would make the ban retroactive to cover existing home refinancing contracts that go into foreclosure after July 1, 2011. They would like the bill to cover only refinancings done after that date.
“It sets a bad precedent to change the rules in the middle of the game,” said Dustin Hobbs, a spokesman for the California Mortgage Bankers Assn.
Realtors, however, are hoping to keep people from being doubly punished by losing their homes and burdened with more debt. They want to bolster a still weak housing market by giving homeowners a chance to get back in the market soon.
“They’d be in a better position if they’re not confronted with signing away their lives,” said Alex Creel, senior vice president for governmental affairs of the California Assn. of Realtors.
A second foreclosure-related bill passed by the Assembly committee Tuesday would prohibit bankers from attempting to collect deficiency payments after a homeowner gives up the property in a short sale. In such sales, banks and homeowners agree to allow sales of houses at less than the loan amounts and avoid foreclosures and black marks on the borrowers’ credit histories.
New Government Foreclosure Prevention Program Eligibility- Which Programs Do You Qualify For?
The third measure would delay the start of a foreclosure process by giving owners more time to work with lenders on a plan to modify loans to lower monthly payments, allowing borrowers to stay in their homes.
Although foreclosure activity is down substantially from a year ago, the numbers remain high, and some experts see another wave soon of foreclosures, short sales and signings of deeds to banks to avoid foreclosures.
In May, 23,911 Californians received notices of default — the first step in the foreclosure process — and 27,841 got notices of trustee sale, according to online tracking service ForeclosureRadar.com. Default notices dropped 43% in May compared with May 2009, while trustee sale notices fell 36%.
Learn More About Your Particular Situation:
Contact us Today at Forth Hoyts Sacramento Short Sale Center.
RealtyTrac, another data analyst, reported that California in May was home to six of the top 10 U.S. metropolitan areas with the most foreclosure filings. Those areas were Riverside-San Bernardino, Bakersfield, Merced, Modesto, Stockton and Vallejo-Fairfield.
Corbett said her measure was particularly needed because few borrowers know that when they refinance their homes for more than the original loan amount, they lose their protection against being hit with deficiency bills, a state law that went on the books in 1933 during the Great Depression.
In recent decades, the deficiency threat was minimal because home values invariably rose, leaving owners with plenty of equity to cover the payoff cost of their refinanced mortgages in the event of a foreclosure. But that changed when the California housing bubble burst in the last three years, sending the statewide median home price plummeting 42%.
Bankers, who have been negotiating with Corbett and the Realtors group, say they sympathize with the call to aid borrowers who refinanced their homes to take advantage of better terms or interest rates.
They persuaded Corbett to not extend protections to borrowers that took cash out of their refinancing, even if the extra money was used to improve properties.
The two deficiency protection bills “place the right balance of risk between the homeowner and the lender,” said Sean O’Toole, ForeclosureRadar’s founder and chief executive.
However, O’Toole said the third bill to push more loan modifications beyond what federal authorities and lenders themselves were doing was “misguided.” That legislation won’t work if government agencies and lenders don’t come up with billions of dollars to reduce monthly principal payments sharply, he said.
“Homeowners that are saddled with uncertainty are less likely to be productive consumers,” O’Toole said. “That’s part of the reason why our economy is still struggling.”
Copyright © 2010, The Los Angeles Times
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Senate approves SB 1178 extending anti-deficiency protection
June 9th, 2010 Categories: Uncategorized
Victory for consumers as California Senate approves SB 1178 extending anti-deficiency protection
Measure protecting consumers from overreaching lenders now goes to Assembly
LOS ANGELES (June 3) – The California Senate this morning approved SB 1178 (D-Corbett) by a 30 to 4 vote, extending anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is the sponsor of the consumer protection legislation.
“Currently, if a homeowner defaults on a mortgage used to purchase his or her home — known as a ‘purchase money mortgage‘ — the homeowner’s liability on the mortgage is limited to the property itself,” said C.A.R. President Steve Goddard. “Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate. SB 1178 corrects this inequity and extends the same protections to consumers who refinance their home loans.
“Today’s vote was a victory for homeowners in California,” he said. “SB 1178 now moves to the Assembly for approval. C.A.R. is calling on our elected representatives to swiftly pass this much-needed legislation and send it to Gov. Schwarzenegger for signature.”
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with nearly 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
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Some 14% of mortgages delinquent or in foreclosure
May 28th, 2010 Categories: Uncategorized
Behind Homeowners Have Decisions to Make
CHICAGO (MarketWatch) — The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, the Mortgage Bankers Association said Wednesday. CHICAGO (MarketWatch) — The percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, the Mortgage Bankers Association said Wednesday. But mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. The percentage of loans in the foreclosure process was 3.85% in the first quarter of 2009. Homeowner delinquency rates muddied the housing-market picture: While the seasonally adjusted delinquency rate rose, the figure on a non-adjusted basis dropped in the first quarterBut mortgages in the foreclosure process hit a record high at a non-seasonally-adjusted 4.63%, up from 4.58% in the fourth quarter. The percentage of loans in the foreclosure process was 3.85% in the first quarter of 2009. Homeowner delinquency rates muddied the housing-market picture: While the seasonally adjusted delinquency rate rose, the figure on a non-adjusted basis dropped in the first quarter.
The seasonally adjusted delinquency rate for mortgages on one- to four-unit residential properties, which includes mortgages at least one payment past due but doesn’t include those in foreclosure, rose to 10%, from 9.5%. The delinquency rate was 9.1% in the first quarter of 2009.
The non-seasonally-adjusted delinquency rate dropped to 9.4%, from 10% in the fourth quarter of 2009.
The MBA’s quarterly national delinquency survey covers 44.3 million loans on one- to four-unit residential properties, representing 85% of all first-lien residential mortgage loans outstanding in the United States.
“The issue this quarter is that the seasonally adjusted delinquency rates went up while unadjusted rates went down,” said Jay Brinkmann, MBA’s chief economist, in a news release. “Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement.”
Typically, more homeowners fall behind on their mortgage payments in the fourth quarter, the time of year when the first heating bill comes and holiday expenses add up, he said. Sometimes, tax refunds help borrowers become current in the first quarter.
“Most importantly, the normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which,” he said.
Roughly 4.2 million mortgages were “seriously delinquent” in the first quarter, meaning that that they were 90 days or more past due or in foreclosure, he said in a phone interview.
The percentage of mortgages that entered the foreclosure process was a non-seasonally-adjusted 1.23% in the first quarter, up from 1.20% in the fourth quarter; the foreclosure starts rate was down from 1.37% in the first quarter of 2009.
“Compared to last year, delinquencies are worse, but compared to last quarter the news is more encouraging,” said Greg McBride, senior financial analyst for Bankrate.com. “But the jury is still out as to whether we’re going to see a sustained decline in delinquencies.
“The news is not as encouraging on the foreclosure front where a backlog of seriously delinquent borrowers, plus the added impact of strategic defaulters and borrowers falling out of the modification program all represent future foreclosure inventory waiting for a time to happen,” he said.
The road ahead
Brinkmann said there still is a case for gradual improvement in the delinquency numbers this year, but the magnitude of the improvement will depend on economic growth and the country’s employment picture. And with the slowdown in the European economy, U.S. economic growth expectations have been revised downward.
First-time unemployment claims, which had been falling since March 2009, stopped decreasing during the first quarter, Brinkmann said. That likely halted the decline in the 30-day delinquency rate.
“If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad,” Brinkmann said in the news release.
Recent research, mainly from the credit bureaus, has also documented the increased incidence of “strategic defaults,” where borrowers who could make their mortgage payments decide to pay other bills ahead of their mortgage loan, said Michael Fratantoni, MBA’s vice president of research and economics. Typically, these are borrowers who owe more on their mortgage than the current market value of their home. See story on more homeowners opt to quit paying their mortgage.
“If you look back three, four years ago, it was always the case where a borrower would pay the mortgage first before the second mortgage or credit card debt,” Fratantoni said during a conference call with reporters. Today, for some groups of borrowers, that’s no longer true. “It runs counter to what anyone would typically expect and the historical experience,” he said.
Given that many strategic defaulters also have high credit scores, Brinkmann said that in the future, credit scores might not be as good a predictor of mortgage borrower risk. For people who take this route, even if their credit score improves, the fact they defaulted on their mortgage will have a negative impact for years to come, he said.
“Some of these people are underestimating the long-term costs,” including the ability to buy a house in the future, he said.
While Florida, Arizona, Nevada and California have played heavily into the national delinquency and foreclosure numbers for several years, that’s changing somewhat: Florida is still worsening, but California is showing signs of improvement, Brinkmann said.
“However, Washington, Maryland, Oregon and Georgia showed the greatest overall increases in foreclosures started compared to last quarter,” Brinkmann said.
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** CONSUMER ALERT ** WARNING REGARDING RESIDENTIAL “SHORT” SALES
May 7th, 2010 Categories: Uncategorized
Short Sales Fraud is On the Rise In California
California Real Estate Commissioner Issues Short Sale Consumer Alert
Information Includes the Potential Perils of Short Sales
Forth Hoyt’s Sacramento Short Sale Center
Mortgage troubles? I can help … 916-316-3810
SACRAMENTO, Calif.–(BUSINESS WIRE)–The California Real Estate Commissioner, Jeff Davi, announced the issuance of a Consumer Alert by the California Department of Real Estate (DRE) warning consumers and real estate agents about the perils and potential pitfalls of short sales. The alert has been posted on DRE’s Web site at: http://www.dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSales.pdf
“Moreover, the Consumer Alert educates consumers and real estate agents to recognize the elements of a fraudulent or questionable deal.”
“The number of short sales is on the rise and many consumers do not understand the consequences of such a transaction,” DRE Commissioner Jeff Davi said. “Moreover, the Consumer Alert educates consumers and real estate agents to recognize the elements of a fraudulent or questionable deal.”
To put it simply, a short sale transaction involves the sale of a property wherein a seller receives an offer from a buyer that is less than the amount of the mortgage loan(s) on the property. In order to complete the sale, the seller requests the lender to accept less than what is owed in order to allow the transaction to close. While short sales are a popular alternative to foreclosure, like all real estate transactions, they are complicated and sellers need to lookout for the pitfalls.
For example, in some instances a seller may be required to pay taxes on the forgiven debt. In addition, a seller may be an unwitting participant in a fraudulent short sale transaction wherein an unscrupulous agent or a short sale negotiator working with a straw buyer will make a lowball offer to the seller and in turn misrepresent the true market value of the property to the lender. If the lender accepts the offer, the straw buyer immediately re-sells it at the true market value, with the profits split among the conspirators. Had the property been sold for the most amount of money that the market will bear, the potential tax consequence to the seller is diminished and the lender would have received fair market value.
There are a number of government anti foreclosure programs available to provide you with solutions. Are you a homeowner looking for Government guidelines? Check Your Eligibility Now
To stay safe; a few of the key elements a homeowner should look out for are the following:
- Short sale negotiators must be licensed real estate brokers (or a licensed real estate salesperson where that person is working under the supervision of his or her broker).
- Any and all payments must be fully disclosed and made part of the escrow documents. If there are any fees to be paid “outside” of escrow, this may be the red flag that the payment is illegal.
- If your agent explains that the buyer is a fictitious person or entity, or your buyer is purchasing the property under a power-of-attorney or is a limited liability company (LLC), this may be a red flag that fraud is involved in your transaction.
- If you are told that an unlicensed processor, negotiator or facilitator is handling your short sale, this is a red flag that unlicensed activity is taking place. Only real estate licensees, California lawyers acting as lawyers and investors acting on their own behalf can engage in short sale negotiations.
For more information about DRE and its programs visit www.dre.ca.gov.
Courtesy Business Wire
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Shadow Inventory Finally Starting To Hit the Market
April 27th, 2010 Categories: Uncategorized
Doctor Housing Bubble reports Moving from the Shadows – More Distress Inventory Selling and Making it to Market in Southern California. Notice of Defaults Still High. 3 Cities in the Spotlight: Cerritos, Culver City, and Paramount.
…It was estimated that HAMP would help 3 to 4 million homeowners but currently only 228,000 loans are now in “permanent modification” although many re-default within a year. Many banks have now shifted and inventory is now moving its way to the public MLS. This trend is now showing up with many more homes coming to market. It may be the case that banks realize that with the federal $8,000 tax credit ending, and the California $10,000 credit starting in May, they have a short window to move inventory at higher prices because of these juicy incentives…
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Foreclosure Numbers Surge – Five Year Record
April 15th, 2010 Categories: Foreclosure News, National Real Estate Trends, Sacramento Foreclosure News
Foreclosures surge- more bank owned properties coming!
NATIONAL FORECLOSURES SURGE
Well, I wonder what this will mean to our home prices that seem to have stabilized? Now, these are national statistics on foreclosures, but foreclosureradar.com has expressed exactly the same trends here in California and the Sacramento area too…
LOS ANGELES – A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.
RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.
More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.
“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
“We’re finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing,” Sharga said. “We expect the pace to accelerate as the year goes on.”
In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.
Homeowners continue to fall behind on payments because they’ve lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.
The Obama administration’s $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.
About 231,000 homeowners have completed loan modifications as part of the Obama administration’s flagship foreclosure prevention program through March. That’s about 21 percent of the 1.2 million borrowers who began the program over the past year.
But another 158,000 homeowners who signed up have dropped out — either because they didn’t make payments or failed to return the necessary documents. That’s up from about 90,000 just a month earlier.
Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.
The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.
Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.
Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.
All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.
Foreclosure filings rose on an annual and quarterly basis in Arizona, however.
One in every 49 homes there received a foreclosure-related notice during the quarter.
Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.
California accounted for the biggest slice overall of homes facing foreclosure — roughly 23 percent of the nation’s total. One in every 62 properties received a foreclosure filing in the first quarter.
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The Sacramento Housing Market: Is There Another Bubble?
April 11th, 2010 Categories: Graphs and Charts, National Real Estate Trends, Sacramento Real Estate Trends
Sacramento housing market outlook; The double dip?
A lot of people have been saying lately that there may be another crash coming nationally. More Foreclosures than last year, more short sales, higher interest rates and worse economic times coming… What will the effects be on the Sacramento Real Estate Market? What more will the Sacramento housing market need to endure still?
Many sources say that the housing recovery in hard hit states like California, Nevada, Florida and Arizona are ten years off, here’s why:
United States Longest Running Housing Graph- can you say bubble?
The New York Times: Don’t Bet the Farm on the Housing Recovery
MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?
Alas, the evidence is equivocal at best.
The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.
So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?
If only it were that simple.
Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.
Consider some leading indicators. The National Association of Home Builders index of traffic of prospective home buyers measures the number of people who are just starting to think about buying. In the past, it has predicted market turning points: the index peaked in June 2005, 10 months before the 2006 peak in home prices, and bottomed in November 2008, six months before the 2009 bottom in prices.
The index’s current signals are negative. After peaking again in September 2009, it has been falling steadily, suggesting that home prices may have reached another downward turning point.
But why? Unfortunately, it is hard to pinpoint causes for a change in demand for housing. The factors clearly include government economic policy, like interest-rate changes and tax credits. But these moves don’t line up neatly with major turning points in the market.
Sociological processes may be driving these changes. Trends in news media coverage, for example, generate conversations in barbershops and hotel lobbies, which in turn alter the conventional wisdom about investing.
Consider how that process might have worked during the run-up to the 2006 turning point in home prices. In May 2005, two months before the peak in the N.A.H.B. traffic index, Consumer Reports magazine had a cover article, “Your Home: How to Protect Your Biggest Investment,” that conveyed a very bullish sentiment.
“Despite years of dire warnings from some economists that the housing boom is about to end, it hasn’t,” the magazine said. “Indeed, last year prices rose even more — about 11 percent nationally.”
The article went on to give advice: “You can no more time the real estate market than you can the stock market,” it said. “If you need a house, and can afford one, go ahead and buy.”
The article extended to the housing market the conventional wisdom that then prevailed about the stock market — namely, that it was quite efficient, without identifiable bubbles and bursts. According to this theory, there was an identifiable profit opportunity: buy and hold stocks, and by extension, housing, and watch your wealth grow.
But as 2005 continued, the conventional wisdom began to change. Some people in the United States were by then aware of the 2004-5 home price decline in Britain. Some were learning a new lexicon: “housing bubble,” “housing crash” and “subprime mortgage.” Newspapers and magazines began to include some derisive reviews of a March 2005 book by David Lereah, “Are You Missing the Real Estate Boom?” And accounts began to appear of the risky behavior of an army of real estate flippers.
In May 2005, I included in the second edition of my book, “Irrational Exuberance,” a new data series of real United States home prices that I constructed, going back to 1890. I was amazed to discover that no one had published such a long-term series before.
This data revealed that the home price boom was anomalous, by historical standards. It looked very much like a bubble, and a big one. The chart was reproduced many times in newspapers and magazines, starting with an article by David Leonhardt in The New York Times in August 2005.
In short, a public case began to be built that we really were experiencing a housing bubble. By 2006 a variety of narratives, taken together, appear to have produced a different mind-set for many people — creating a tipping point that stopped the growth in demand for homes in its tracks.
THE question now is whether a strong case has been built for a new bull market since the home-price turning point in May 2009. Though there is no way to be precise, I don’t believe it has.
Since that turning point, most public discourse on housing has not been about a new long-term view of the market. Instead, it focused initially on whether the recession was over and on the extraordinary measures the government was taking to support the housing market.
Now we’re shifting into a new phase. The recession is generally viewed as being over, and those extraordinary measures are being lifted.
On March 31, the Federal Reserve ended its program of buying more than $1 trillion of mortgage-backed securities, and the homebuyer tax credit expires on April 30.
Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast.
Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue.
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