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Lucky me!

This week I’ll be with our daughter Natalie on her 6th grade trip to Astro Camp in Idyllwild.  I’ll be back Friday, and in the interim Donna, Richard, and crew will be handling the business as usual.

The last time we went on a real vacation was August, 2007, and during that week the mortgage industry meltdown began – what will happen this week? 

And most importantly, who’ll be minding the blog?

I’ll leave you with this short youtube from Encinitas.  The first house is an REO listed for $479,900 that has several offers on it, and was marked pending on Friday.  The second house is the closed comp, and the third house just listed for $551,000.  The video ends abruptly when the memory card runs out, but you’ll get the idea – will house #3 be able to benefit from the other two, price-wise?

The builder of the 14 homes called Emerald Pointe is just hanging on – hoping that some retail buyers might surface that could put a couple of bucks in his pocket.

In 2007 they sold the two prime locations at the end of the culdesac for $1,870,000 and $1,934,500.

In 2008 they sold five others from $1,370,000 to $1,600,000.  Half way home!

But we’ve had further deterioration in the market of ’high-end homes that are close to the busiest one-runway airport in the country’.  Sales have stalled on the other five they are trying to unload for $1,200,000 to $1,300,000.   

You’ll see in the beginning a couple of old builder tricks:

1. Putting sky-high prices on homes not yet built, to make current inventory look like a deal.

2. Putting sold signs on those not sold, in an attempt to create some urgency.

From the North County Times:

For the first time since home prices started diving three years ago, the median price for a house in North County showed a meaningful uptick in April, a sign the region’s housing market might be transitioning toward stability.

To be sure, there remain substantial pressures on the market that could push prices down further.

Nonetheless, the increase in the median price – the middle point of all sales – is significant.

In April the median price for a detached house was $390,000, an increase from $364,000 in March but still down 24 percent from $510,000 a year earlier, according to a report released Friday by the North San Diego County Association of Realtors.

At the same time, the report showed two distinctly different markets: the high-end, with few foreclosures and no sales; and the low-end, with lots of foreclosures and booming sales.

For example, the market in Del Mar has 30 months of inventory, a measure of how long it would take to sell all active listings based on last month’s sales rate. That is five times higher than the six months of inventory that is widely considered to describe a normal Southern California market.

On the other hand, western Vista showed two months of inventory.

Further, that same ZIP code in Vista – 92083 – has more homes that are “pending,” meaning the sales are in escrow and could close in May, than active listings for sale, according to numbers provided by Jim Klinge, a real estate agent in Carlsbad.

“That is smoking,” Klinge said. “You could be 10 percent too high on price and sell right now because of this frenzy on the low end.”

Indeed, several real estate agents have reported that there are so many buyers interested in low-priced foreclosures that bidding wars have erupted, with 10 to 20 offers per listing.

At the same time, the median price is a crude metric that does not necessarily translate to overall price increases. It is simply the middle point of all homes that sold in April.

Robert Brown, an economics professor at Cal State San Marcos who compiles the HomeDex report for the Realtors association, said the market is split into three segments: red-hot sales on the low-end; a slight resurgence in homes priced from $400,000 to $600,000; and very few sales in the high end.

Indeed, the median price increase could be the result of more “normal” sellers getting into the market – homeowners who have taken care of their properties commanding a premium over a glut of beat-up foreclosures, said Kurt Kinsey, a real estate agent in Oceanside.

And buyers are looking to stay in the home for longer, meaning they might be willing to pay more, Kinsey said.

“A home is becoming a home again,” he said, speculating that the average homeowner during the last few years moved after two years and that time in a home is going to increase to five years.

HomeDex reported relatively mild sales for North County, increasing 6 percent from a year ago to 723 sales in April – well below the 1,117 houses sold in April 2005.

And even the increasing median price left plenty of room for uncertainty, with some analysts hesitant to declare recovery for the housing market.

“It’s hard to say,” said Brown, the economics professor. “We did have this little bump up, but I don’t expect any major price movement barring something happening.”

For Brown and other analysts, the largest area of concern is a glut of “pre-foreclosures,” representing mortgages in default but not yet seized by the bank.

In March, North County set a new high for this recession in such default notices. April numbers, due out early next week, are expected to be just as large.

And even though areas such as western Vista have just as many homes in the sales process as homes up for sale, those pre-foreclosures loom.

Indeed, despite booming sales in western Vista, for every home sold, two others were in default, according to ForeclosureRadar, a tracking firm in Northern California.

Analysts say banks have slowed the foreclosure process, meaning thousands of homes in foreclosure have not hit the market.

For even more skepticism, Klinge, the Carlsbad real estate agent, said the buying frenzy on low-end properties could be purely seasonal – sales traditionally pick up during the summer.

“My guess is it will settle down again,” Klinge said regarding the emerging bidding wars and 10 to 15 offers per listing. “You’ve got a bunch more foreclosures coming on, so when you get to the last three to four months of this year, you’ll get one to two offers – if you’re lucky.”

ZACH MENTIONED THE GLUT OF PRE-FORECLOSURES

(I’d guess that 25% are in MLS active or pending already)

Carlsbad to Carmel Valley, attached and detached:

Active listings in MLS = 1,666

Pending Listing in MLS = 431

NOD, NOTS, REOs = 1,977  (x 75% = 1,482)

Total solds Jan 1- April 30:

1997 =  904

1998 = 1,051

1999 = 1,131

2000 = 1,248

2001 = 1,015

2002 = 1,347

2003 = 1,227

2004 = 1,297

2005 = 1,155

2006 = 907

2007 = 912

2008 = 646

2009 = 562 

There’s another website for searching for foreclosures, First American CoreLogic’s site:

www.realquest.com

It’s free too!

For those who have sent in requests for more information from this blog’s ’foreclosures’ button (above right), I apologize for being a little behind – I’ll catch up this weekend!

The Senate voted 91-5 in favor of the Helping Families Save Their Homes Act of 2009 (S896), which includes legal protection for servicers that modify residential mortgages. Five Senate Republicans voted against the housing bill.

The safe harbor protects mortgage servicers from lawsuits by investors holding relevant modified mortgage bonds.

The provision is intended to encourage more servicers to modify more mortgages, but critics say it will hurt private investors whose funds help maintain banks’ liquidity and stimulate lending.

Modifications often involve altering original mortgage terms and forbearing a portion of the principal for lump repayment at the end of the loan life. The reduced principal lowers monthly payments, increasing affordability for borrowers and consequentially reducing the monthly return for investors.

If the mortgage is securitized, then the principal payment coupons, or pass-throughs, will also take a hit. For the long investor, change to term is a bad thing and likely to shake-up an already nervous financial market.

However, the aim of the bill essentially provides legal protection for servicers to alter mortgage contracts and, as the argument goes, investor contracts where mortgages have been securitized.

The bill also changes the borrower certifications under Hope for Homeowners, a program that encourages refinancing into Federal Housing Administration-guaranteed mortgages. The bill’s changes mean borrowers going forward must provide proof they didn’t intentionally default on their mortgage in order to qualify.

The bill provides the Federal Deposit Insurance Corp. with increased borrowing authority, extends the time period for restoration of the insurance fund from five to eight years, provides a temporary extension of the FDIC’s $250,000 deposit insurance limit. Supporters of the bill say these changes will bolster confidence in the FDIC and meet banks’ lending needs.

“During this time of economic uncertainty, bankers recognize the importance of maintaining public confidence in the FDIC,” American Banker Association executive director Floyd Stoner. “We also believe that it is important to strike the right balance between maintaining a strong deposit insurance fund without unnecessarily taking money out of the system.

Written by Diana Golobay, from Housingwire.com

The last sentence here should be a deterent, hopefully, but the standards are a bit vague:

WASHINGTON (Dow Jones)–Legislation to overhaul U.S. mortgage lending passed the House Thursday as lawmakers sought to rein in practices blamed for the foreclosure crisis.   The legislation is a tougher version of a bill that passed the House in 2007 but later stalled. The current bill would establish national minimum underwriting standards for home mortgages and require originators to retain a portion of the credit risk of mortgages they sell to third parties.   The legislation passed the House on a 300-114 vote.  

Under the measure, mortgage lenders would be required to offer home purchase mortgages that a borrower has a “reasonable ability to repay.” For refinancings, the lender has to believe the transaction provides a “net tangible benefit” to the borrower.   A lender violating these rules would be required within 90 days to modify or refinance the loan at no cost to make sure it meets the standards.
(Dow Jones Newswires 04:25 PM ET 05/07/2009)

This 4,985sf single level was on the market for $1,840,000 until October, 2008, but you’d have to include a truckload of Laker memorabilia to get that much now: