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The third quarter of 2008 is wrapping up, and it turns out that it was the best quarter for closed sales since 2Q06, and the best 3rd quarter since 2005.

So far the MLS is showing 5,227 detached closings for 3Q08 – we’ll take the final number on November 1st to determine the winner of the two tickets to a Chargers’ game. 

Here is the list of the contenders – once the late-reporters log their closings, it looks like it’ll come down to either moneymarket or mojo:

SD County Detached-Home Sales by Quarter

The North County Times is sponsoring a free public forum on real estate this Monday!

Escondido Public Library, 239 S. Kalmia 

Monday, October 6th at 6pm

Panelists will include:

Lori Staehling, 2008 President of the SD Association of Realtors

Kelly Cunningham, Senior Fellow and Economist, San Diego Institute

Dave Hopkins, Mortgage Broker, Rancho Financial

Jim Klinge, humble servant

There will be a slide show of housing data, remarks on the current housing market by each of the panelists, and Q & A with the audience.

Zach Fox, business reporter, will be the moderator.  To reserve a seat, call his office at (760) 740-5412.

If you can make it, make sure to say hello - I’ll be handing out T-shirts!

Three different people sent me this link to the pro-McCain video about the mortgage crisis:

http://www.youtube.com/watch?v=H5tZc8oH–o

It describes the timeline of the Community Reinvestment Act, and how Fannie/Freddie’s involvement with CRA helped cause the mortgage meltdown.  It also mentions the relationship between Obama and Jim Johnson & Franklin Raines, and how Obama has received 49 times the amount of money from Fannie/Freddie than McCain.

The video says the meltdown is a result of the government mandating that lenders give loans to buyers who couldn’t afford it.

It deserves a rebuttal – and not because of politics.

For starters, do what the video suggests and look up the CRA at this link, and scroll down to ‘Criticism’ for more depth on the discussion:

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

I think the subprime lenders were driven more by the profits from Wall Street, than the CRA.

Secondly, the video mentions that over 90% of the loans that Fannie/Freddie were buying were adjustable-rate mortgages in 2004 and 2005. 

The borrowers can usually afford the initial payment – it’s the reset that gets them. 

Hardly anyone reads the loan documents!

The borrowers didn’t read them when they signed them, and neither did the investors when they bought them.  Or, if they did read them, they didn’t understand that dramatic resetting of the interest rate and payments within 2-3 years would cause massive defaults.

Refinancing was pushed as the answer, but that’s a temporary fix, not a solution.

Let’s help people understand what they are getting. 

Income verification isn’t enough.  In the future, if banks want to help solve the problem, they should only fund FIXED-RATE loans.

While the taxpayers are walking the plank today over the Wall Street bailout, we’re not done yet.  Rob Dawg has pointed out that we have yet to hear of any of the major homebuilders going bankrupt, and we’ve highlighted the plight of local builder Barratt American.

The U-T featured Mick and the boys on the front page of their Home section today, describing the coalition they have formed, and what they are doing:

“We aim to help builders understand what is being done to them and put them in touch with qualified professional advisers, such as lawyers and work-out specialists,” Pattinson said of the coalition.  “We are taking the stories of bad bank behavior to regulatory bodies and legislators in Washington, D.C., and individual states.  We are focusing on ways to help builders address acute problems such as personal guarantees.”

Here’s a link to the story:

http://www.signonsandiego.com/uniontrib/20080928/news_1h28group.html

Don’t think that the bailout stops this week.  The whiners are lining up at the trough now, either looking for their share of the $700 Billion, or going for more.

In the meantime, here’s a note sent in yesterday by a reader named ‘pissed off sub’:

There are over 100 mechanic liens filed against Barratt amounting to millions of dollars. This is public record. Yet Barratt holds land for a 1380 home development and it won’t be affected? These guys suck alright. Go to Barratt’s website it says they are a respected name. In what world? Barratt, you want respect, sell that Fanita Ranch land to an organization that can do something with it and pay your subs. That would be respectable.

We’ve highlighted this Jenae fiasco in La Costa Valley.  The latest was that 14 people were coming and going at all hours while the owner tried every trick in the book to keep it afloat, even though the trustee sale was upon her. 

Today it popped up on the MLS as a new listing for $799,000.

Why does she keep holding on??

Neighbors left these comments after the last post:

We live on this street and while I laughed hysterically while seeing the picture of the car because last week, it eventually did get towed, the reality is that these grifters/squatters may be here 6 more months. It’s lots worse than the description. You didn’t mention the dogs constantly barking, the various cars coming in and out at all hours of the day and night and the various men going in and out to do God knows what, the overgrown dying grass and the sleeping bags that they air out over the balcony every day! They also shower at the pool at the ClubHouse in order to save the water bill. That’s great for La Costa Valley, isn’t it?! These people have scared all of us so much that we don’t allow our kids to play outside anymore without a parent being right there to watch. No one knows if they are child molesters, murderers or anything It’s very sad and Jan and Janae need to be put in jail for a very long time!

What you really need is a picture of the “Chester the Molester” van that’s usually parked out in front of 2872 Vista Acedera on the weekends. None of the windows roll up, it’s rusted out and the seats are torn to bits. It’s probably one of Jan’s boyfriends. Very scary!

Hi Jim – you are a hero for posting this.  But there is soooo much more as I’m sure you know.  Today Jan Terry was to face Bankruptcy court to try to get an extension, but her Trustee told me the bank wants to proceed with taking the house back.  Let’s hope that happens real soon. 

Hopefully the trustee sale will prevail soon!

It’s early Saturday morning – what is JtR up to today?

Sleeping in?  Come on.

Sharing a birthday treat with his daughter while discussing Cathedral’s 30-13 drubbing of Carlsbad HS last night?  Nope.

You see, I have REO listings.

We’ve been having some visitors who have broken in over at one of the listings, but no one has been successful in catching them.  Until now.  The police make their move on big busts early in the morning, so I figured if there are intruders staying at the house, they’ll be sleeping at 6am, right?

Sure enough, caught these two snoring away this morning.  I used a couple of cable ties to detain them, like they do in ‘Cops’, and called Oceanside’s finest, who arrived within five minutes.

You might think they were here illegally, fresh in town and needing a temporary place to call home while they get acclimated. 

But they weren’t.  These are two school-age kids who spoke fluent English – and whose parents live in the area.  One said he was in community college, the other in high school.

The police asked me if I wanted to press charges of tresspassing against them, or just scare the beegeebers out of them.  I told them to take ‘em home, but make sure the parents knew what they were doing.

It was September, 2006 that the famous coffee bet took place. 

I had put forth my hypothesis on how the downturn would end up, adding that with my prediction and about $4 you could get a cup of coffee.

Here’s a link for those who’d like to review the hypothesis:

http://www.bubbleinfo.com/2006/09/grand-poobah-of-predictions/

I said that ’superior homes’ might only lose 5-10% of their value, but inferior homes were likely to get clobbered, losing 40% to 50%, resulting in a combined blended loss of 33% in median home price.

Here was the justification:

Three general reasons the high-quality properties will do better:

1.  They’re older houses, owned by older people, with less debt.

2.  They have it so good, there’s no better place to go.

3.  Buyers are holding out for the good stuff.

Because of these three reasons, the supply-and-demand curve is much more healthy in the high-quality-home market.

I was vilified by most of the commenters, one in particular, the infamous powayseller.  It might have been the impetus for her to finally start her own blog?

Rob Dawg calmly offered, “I’ll buy you that $4 cup of coffee if you can find anything that isn’t off at least 10% from the peak this time next year.”

So I took the challenge, and mentioned three neighborhoods (Terramar, Olde Carlsbad, and La Costa Oaks - Davidson tract) that I thought could beat the odds.  When we reviewed them a year later and put it to a vote, I came out slightly ahead.

Where do we stand now?

Let’s start in Olde Carlsbad – 92008

For those who know Olde Carlsbad, I think you’ll agree that it’s a mixed bag – many older, smaller SFRs interspersed with new or remodeled houses and estates, many with ocean views.  Determining values is always a challenge around 92008, but you decide. 

Here are the same-house sales that have closed in 92008 since June, 2008:

1295 Cynthia  3 br/2 ba, 1,400sf YB:1960 short sale

$615,000  10/05    $411,000   9/08    Difference = -33%

2728 Forest Park  4 br/3 ba,  2,248sf  YB:1985  REO

$647,000   6/04     $435,000   8/08   Difference = -33%

1726 Forest Ave  3 br/2 ba, 1,900sf  YB:1962  REO

$545,000   8/04     $535,000   7/08   Difference = -2%

(former owner pulled a $720K loan and did full remodel, then had medical prob)

3255 Monroe  4 br/2 ba, 2,124sf  YB:1964  REO

$700,000    7/05    $575,000   6/08    Difference = -18%

2051 Laurie  4 br/2 ba  1,937sf  YB:1960  flipper

$460,000   2/08    $616,500   7/08    Difference = +34%

(seller/agent did full remodel, probably made $20-40K after costs)

450 Anchor  3 br/2 ba 1,877sf  YB:1982

$655,000   7/06    $650,000    6/08   Difference = -1%

(buyer exchanged into this year’s purchase, paid all-cash)

5111 Delaney  4 br/3 ba,  2,856sf  YB: 2004

$885,000   8/06     $875,000    6/08  Difference = -1%

3912 Garfield   2 br/1 ba, 832sf   YB:1940

$850,000    8/05    $853,000   6/08    Difference = 0

(remodeled)

2168 Dickinson  5 br/4.5 ba,  3,043sf  YB:2004

$758,000   5/04      $915,000   9/08  Difference = +21%

(new in 2004)

2178 Twain  5 br/4.5 ba  3,737sf  YB:2004

$727,000  1/04     $1,030,000   6/08   Difference = +42%

(new in 2004)

155 Chinquapin   4 br/4 ba, 2,292 sf   YB:1990

$1,200,000   2/04   $1,225,000  9/08   Difference = +2%

There were 79 sales closed since June 1st, and these eleven purchased since 2004.  The remaining 68 who purchased in 2003 or earlier all sold for more than they paid.

Can I call the results a mixed bag too?

More later on the other two areas in question!

It was in April that the REOs started coming my way, one of which was this 4 br/3 ba, 2,963sf house on Serene in Oceanside.

It had been purchased in March, 2007 for $700,000, and financed 100%.  But the buyers were in the flooring business, and well, you, can guess what happened.  Business dropped, payments were heavy, and a year later it was unbearable.

On May 22nd I submitted my broker price opinion (BPO) at $529,000.  The same model across the street with a pool was in escrow, listed at $660,000, and ours is the former model home so it looks decent inside.  There were two other REOs listed nearby around $500,000 that were 10% smaller but had lots that were more rectangular in shape, resulting in bigger backyards.

The bank listed for $549,900 on June 12th.

Because there were no showings and no calls, when they asked during the first week for a BPO update, I told them $499,000.  Every other REO listing I had was getting multiple offers, so it’s easy to figure out – the price is too high.  But they didn’t listen.

This is the pricing history:

$549,900  6/12

$541,900  7/9

$533,900  8/8

$524,900  9/8

Three months later and now we’re about where I wanted to start, price-wise.  Though methodical in reducing the price the same time every month, dropping it only 1-2% at a time isn’t making a difference.  If you’re going to lower the price, you have to get down to the next level.  These days a price reduction should be a minimum of 5%, and if you are serious about selling and want to get it done, drop 10% after 2-3 weeks to help create some urgency.

They aren’t taking my advice due to a private mortgage insurance company calling the shots behind the scenes.  As a result, I’m sitting on an OPT (over-priced turkey).

We’ve had three offers, two at $450,000 and one at $502,000, which was submitted when we were listed for $533,900 and the bank countered at $530,000 which ran the guy off.

Three months later, now what?

They are going to send it to auction instead. 

I didn’t take it personal, I had been telling them $499,000 since mid-June, and backing it up with compelling evidence every time.

The funniest part is the message that came over:

Please be advised that Countrywide has selected to place the above property in an upcoming Real Estate Disposition Corporation (REDC) REO auction (www.USHomeAuction.com).  Due to REDC’s extensive marketing and advertising campaign on television, radio, and print, they are able to draw large crowds of interested bidders to our auctions translating to the sale of an overwhelming majority of the properties that are taken to auction.

Do you think that the “extensive marketing and advertising campaign” will be enough to cause this to sell for $500,000 or higher? 

We’ll follow up in a few months to see how they did.  I do get a 2% commission out of the deal, but they wanted me to attend an on-line seminar that was conducted before I received the email, and hold three open houses on October 18, 25 and 26, before the auction in November.

*************************************************************

Speaking of how banks did on their own…..

Remember this short sale I had listed in Escondido in August of last year?  I had it listed for $419,000 and had a buyer willing to pay it - but WFB wouldn’t move fast enough, and the buyer gave up.  A scenario which repeated itself each time we reduced the price.

Instead of finding a way to handle short sales efficiently, they foreclosed in April, 2008, and sold it last month for $359,000.

Let’s hope that the folks running the government’s ‘Hanky’ make better decisions when selling your assets.

Today is the 3rd birthday of this blog!

Thank you for participating! You keep me on my toes, and make me strive to be a better realtor every day – I appreciate you, and your involvement in real estate!

We used to do Wednesday Night Rock Blogging, but ran out of decent music videos. So to commemorate our birthday, here’s a music video I shot myself a couple of weeks ago at Pechanga of some old rockers: