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The latest contest concludes today:

Guess the number of closed sales for November and December combined.

The prizes are:

A. Four tickets to a Padres game. (OK, OK, not much of a prize)

B. Six tickets to the Buick Invitational, Feb 3-8 (good for any day)

C. Invitations to the “Birthday Bowl” party - the Super Bowl is on my 50th birthday (2/1/09), so plans are in the works for a combo event. 

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Today’s count of the November and December closed sales is 5,059.

Congratulations to our winner ROB DAWG!

Rob, We know you live up north, and it would be a long haul to come to San Diego just for a Super Bowl party without the Chargers. So I’ll add another invite:

Come down for the party, and we’ll squeeze in time to do a tour of a couple of REOs so you can see them in person.  We’ll shoot a video!

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The reason given for examining year-end sales was to see if we’d have a 10% price decline in 4Q08.

Here is a comparison of the SD County sales in the 3rd and 4th quarters of 2008:

The average decline in SALES between 3Q and 4Q has been -15% over the last eight years, so the 2008 number is pretty strong – the best of the decade!

But check out the change in pricing between 3Q and 4Q:

2001 = +1%
2002 = +3%
2003 = +5%
2004 = +14%
2005 = -6%
2006 = -2%
2007 = -6%
2008 = -11%

The +23% of the first four years has been erased by the -25% since. But these are county stats, the local markets vary wildly. There are houses in Oceanside that have sold for 1999 prices, and Carmel Valley homes that have barely budged.

Here are the contestants, and their guesses:

3,011 Coconuts
3,707 Downturn
3,776 Neil Stone
3,840 Skeptical Buyer
3,871 JamesDean
3,900 AC
3,911 Wes
4,000 Doughboy
4,050 Smithers
4,100 FreedomCM
4,129 Chris
4,200 CA renter
4,242 Neil Diamond
4,321 Kwaping
4,350 mybleachhouse
4,409 Kingside
4,538 JbirdFunk
4,550 OCVulture
4,609 Just a Broker
4,737 Lisa in OC
4,872 Stephen Waits
4,874 FirstTimeRenter
4,949 Erica Douglass
5,000 CVman
5,021 Rob Dawg
5,150 Angela
5,259 Turnack
5,271 Westparker
5,555 Mojo
5,683 Keith rettig
5,684 sdduuuude
5,777 FSD
5,800 Jakob
5,950 Dwalla
6,138 Mozart
6,500 Simone
6,666 Damian

Here are the last few Nov & Dec combos:

2008 = 5,059
2007 = 3,254
2006 = 4,726
2005 = 5,603
2004 = 6,464
2003 = 6,988
2002 = 6,202 – (EZ-financing kicked in)
2001 = 5,096 – (should have kept declining in a natural 10-year cycle )
2000 = 5,661

Looking for a cozy, quaint beach house near the village of Carlsbad for under $400,000?

No offers in yet – this could be yours!

Over the last few days we’ve been hearing about a new 2% fee being imposed on Fannie/Freddie mortgages.  It looks like it’ll depend on the lender - this came from a wholesale mortgage banker describing the situation:

I understand that Freddie/Fannie will only allow 10% of portfolios to include high balance loans.  If they exceed more than 10% then Freddie/Fannie will impose this fee.  Thus, GMAC was really aggressive for a while with the high balance and now more aggressive with regular conforming.
 
Each lender is different and depends what they have going on with the portfolios they are currently trying to sell to Fannie and Freddie.  This fee may be around for a while as many high balance loans have been registered and/or locked.
 
Thus, you can explain to your borrowers that it is a function of the secondary market and at this time the marketplace is saturated with high balance loans at this time.  So much fun.

“High-balance” loans are the super-conforming mortgages – those between $417,000 and $546,250 in San Diego County.  

The lenders that have more than 10% of the super-conforming loans in their portfolio being sold to Fannie/Freddie have to charge an extra 2 points on any additional super-conforming mortgages.  This will cause lenders to very carefully monitor how many super-conforming loans they generate.

Not only will this temper the availability of super-conforming loans, it’s going to drive borrowers away from banks and to mortgage brokers who can shop around to find the lenders who have openings.

Hat tip to Chuck for noting this house for sale, which proudly displays the listing office’s sign (against the rules) and yet not much else. 

Is there anything here that makes you want to jump in your car and go for a look?

Zach Fox of the North County Times researched which realtors have had the worst records of foreclosures among their clients.  He exposes the hispanic agents that were taking advantage of hispanic homebuyers - selling them houses with financing they couldn’t afford. 

Today’s NCT front-page story:

http://www.nctimes.com/articles/2009/01/17/business/zd6ec264889f5ef44882575270011e969.txt

 Here is an excerpt:

“But the NCT analysis found that 21 brokers have accumulated foreclosure rates of 25 to 60 percent, a figure that could go much higher because many buyers are late on mortgage payments but are not yet in foreclosure.”

“All of the agents in these offices had similar sales records: They appear to have specialized in finding Latino buyers, and most of the attached mortgages were from “subprime” lenders that specialized in lending to borrowers with weak credit scores.”

Zach’s story mentions that most of the hispanic realtors were also mortgage brokers – most who were making $20,000 to $30,000 per sale, of houses selling in the $400,000s.  You can guess that many of the sales were closed with the promise of being able to refinance later – but Zach couldn’t track if the sales agent may or may not have assisted with any subsequent refinancing.  I get mentioned for having one foreclosed client, but unbeknownst to me he had refinanced twice, cashing out $100,000 on top of his purchase price. 

Sandicor, our local MLS provider, was reluctant to co-operate with Zach, and never did give him full access to the records.  It’s embarassing that our realtor associations and vendors won’t do any policing of fraud being perpetrated by its members, and impede others doing the same.

A reader asked about detecting soil problems, which I see more around the coastal region – once you get out to Vista and beyond, the dirt is more reliable.

But you could do a thesis on the subject in Old La Costa, off La Costa Avenue – much of the lower-lying parts of the neighborhood has water coming up through cracks in the streets and sidewalks. I’m not a soils expert, but I’ve owned two houses in this neighborhood and can attest to the sticky clay-like conditions:

The HOA of the condo shown in the beginning of the video, Marbella, sued the city over a 2005 landslide. The City of Carlsbad settled the lawsuit for $12.5 million. Not mentioned in the lawsuit was how soil conditions played a role in the landslide, but I guarantee you that it was a contributing factor.

Here’s a link to the July, 2007 NCT story:

Marbella Condo lawsuit

An excerpt:

CARLSBAD —- City officials announced Friday that they had reached a $12.5 million settlement with homeowners in La Costa de Marbella, a condominium complex in south Carlsbad where eight units where destroyed in a landslide in March 2005.

Settlement papers obtained from the city of Carlsbad indicate that the eight condo owners will have their remaining mortgages paid off and will receive an additional $600,000 in damages.

Fifty other homeowners who are still able to live in their units will receive $20,000 each, according to the settlement.

In addition, more than $2 million will go toward repairing damage to the hillside where the condominiums are perched overlooking the La Costa Resort and Spa golf course.

WASHINGTON (Dow Jones)–A U.S. House lawmaker introduced legislation to restore last year’s higher limits on the size of mortgage loans Fannie Mae (FNM) and Freddie Mac (FRE) can buy in certain costly markets.  

Economic stimulus legislation passed into law last year temporarily lifted the loan limits to nearly $730,000 from $417,000 through the end of 2008. The limits dropped to $625,500 from $729,750 on January 1.  

Rep. Gary Miller, Republican of California, introduced legislation Thursday to reinstate the higher limits, arguing the move was crucial for restoring the affordability of mortgages in some regions of the country and stabilizing the housing market.   “As the crisis in housing markets continues, the availability of affordable mortgage loans remains essential to alleviating the credit crunch and stabilizing the U.S
(Dow Jones Newswires 07:36 AM ET 01/16/2009)

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Higher loan limits would make a difference around here, because mortgages are already getting more expensive. 

Check this announcement which came out today from wholesale mortgage banker metlifehomeloans, increasing the cost by two points for loans between $417,000 and $546,250 – will other lenders follow?

“Effective Tuesday January 20th, 2009 we will have a 2.00 add to price for ALL Conforming Plus products.  FHA loans with loan amount >$417,000 will also see a 2.00 add to price.  If you have a Conforming Plus loan and need to lock it you must do it by 5:00PM tonight or be subject to market pricing on Tuesday the 20th.”

The market has been heating up quickly, in spite of the continued negative news on the economy.  It’ll be interesting to track how the recent pendings hold up – will they stick, or will more being falling out due to the recession?

Here are the detached homes that went pending between January 1 and January 15th:

2006 = 594

2007 = 580

2008 = 436

2009 = 980

The counts from previous years are houses that have closed escrow, so we’ll be able to look back in a couple of months to determine the fall-out ratio.  But so far, a bunch of action early this year.

The short-sale tracking is terrible on the MLS, due to agents leaving their short-sale listings in the active category, even though they have already accepted an offer, pending lender approval.  True, by the time the bank gets around to approving the file the buyer may be gone, but in the meantime it looks like there are more properties available than there really are.  Buyers are welcome to throw more offers in on top of the pending ones, but usually when a buyer hears that other offers are already accepted, they are quick to move on.

Today’s Count of Detached Listings in SD County

Actives = 9,350

Pendings = 3,486

A/P ratio = 2.68

That’s a pretty good ratio there, but it gets better when you add the waiting short sales:

Actives = 9,350

Pendings = 3,486

Subject to SS Approval = 949

A/P ratio = 2.11

The California Association of Realtors issued a mandate for MLS systems in California to mark as pending the listings that have an accepted offer, but it was ignored in San Diego.

Of course, all the action is on the low end.

Today’s Count of Detached Listings in SD County, over $900,000

Actives = 1,968

Pendings = 160

Subject to SS Approval = 25

The A/P ratio, including both pending categories, is 10.64, which means trouble is still brewing.

From C.A.R.:

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS
The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim.

The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

Thanks to Dwip, here is the Carlsbad December sales charted based on the length of time on the market, and the amount of discount from the original list price.. There is some variance, but the message is clear – the longer a home is on the market, the bigger the discount from the original list price.

Price it right, and get it done!