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Category Archive: ‘Market Buzz’

Credit Loosening?

The politicians, talking heads, and NAR pitchmen think that tight credit is to blame for a lackluster housing recovery, but those of us on the street know the local market has been red hot with demand.  The strict underwriting is more of an annoyance that anything, with underwriters requesting every document they can imagine in order to minimize the threat of buybacks.

Has it loosened up?  Will low rates and looser credit spearhead another big year in 2015?  I think so.

Here is an excerpt from this article to demonstrate the loosening:

http://www.mortgagenewsdaily.com/channels/pipelinepress/12122014-super-liens-respa-tila.aspx

Let’s see what some random companies, small and big, have been up to lately to gauge lending trends.

Banc Home Loans has expanded its Jumbo guidelines. Its “Program 55″ highlights include  up to 85% LTV no MI (to $2M), Loan amounts to $5 million, Minimum 660  FICO to $1.5M, 1st time home buyer- loan amounts to $2M, and Primary  Residence: Cash Out Refinance now to 75% LTV (Cash-out up to $1  million).

Caliber’s enhanced Fresh Start Program was rolled out. The two biggest features are bank statement option for self-employed  borrowers, and no seasoning or mortgage payment history required for  Short Sale, DIL, Foreclosure or Bankruptcy.

BluePoint Mortgage has Jumbo IO products with 89% LTV up to $1,500,000 with NO MI Loans up to $3,000,000 and 80% IO to $2,000,000, Up to $500,000 Cash Out, Second Home and NOO options, Cash out for second homes and NOO.

Carrington Mortgage Services, LLC announced the national availability of “The Carrington Loan,” offering  borrowers a more transparent, simplified home loan process with no  closing costs or upfront financing fees. The Carrington Loan can  facilitate home purchases for borrowers in the sub-640 FICO score range.

Wells Fargo Funding improved its refinance adjusters for all non-conforming products as of  November 10th, adjuster improvements are listed on the daily rate  sheets. In addition, its minimum down payment requirement has been  removed from its conventional conforming loans.

Stearns Wholesale is now offering new FHA FICO options 600-619 FICO score program.

Next year should bring in more demand from those who have been shut out previously from getting a mortgage, and those types aren’t known for patient decision-making.  It might feel more like 2006 all over again?

Posted by on Dec 12, 2014 in Market Buzz, Market Conditions, Mortgage Qualifying | 7 comments

Chinese Influx Winding Down?

Alisha Chen

Hat tip to daytrip for sending this in:

http://www.latimes.com/business/realestate/la-fi-chinese-agents-20141101-story.html

Excerpts:

“At first, they were a little leery,” she recalled. “They’d say, ‘OK. I’ll buy one property as an investment.’ Six months later they were amazed at how much they were getting back. They call and say, ‘I want to buy more.’”

Today, the transpacific trade in Southern California real estate is big business. Chinese citizens bought $22 billion worth of homes in the United States in the 12 months that ended in March, according to estimates by the National Assn. of Realtors. And with its direct flights to China and large Asian communities, the Southland is their favorite destination.

They’re buying homes for themselves to emigrate, for their children to attend college, or for rental income. Neighborhoods from Irvine to Arcadia are being transformed.

Chen now employs eight people — who, combined, speak eight languages — to buy and manage properties. She has offices in Irvine, Chino and Taiwan. When she hears grumbling about Chinese money pricing out American home buyers, she notes that it helped revive the housing market, and that all those transactions keep people working at banks and title companies and contractors.

“This has created a lot of jobs,” she said.

But even she’s starting to wonder how much longer this influx of cash from across the Pacific will last. The Chinese government keeps making noise about clamping down on currency leaving the country. The U.S. government is talking about taxes on foreign investors, which could make buying here a little less attractive. Buyers are starting to get a bit spooked. And there’s only so many of these deals she can do.

All that has Chen wondering what trend might come next.

“I think I’m not going to be putting as much energy into this,” she said. “I think the next few years are going to be a good time for first-time buyers.”

Posted by on Nov 4, 2014 in Market Buzz, Market Conditions | 0 comments

McTeardowns

teardowns

From our friend Karen at BloombergBusinessweek:

http://www.businessweek.com/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia

“Oh, hey! How ya’ doin’?” Raleigh Ornelas hollers, leaning out the window of his spotless white pickup truck. He’s recognized the man across the street, a developer standing in front of a Tuscan-style mansion under construction. “Where have you been hiding at? I call you, you don’t call me.”

Ornelas is an informal broker in Arcadia, Calif., a Los Angeles suburb at the foot of the San Gabriel mountains. He’s been keeping an eye out for the builder, an Asian man with a slight comb-over who goes by Mark. Ornelas has found two older homeowners who’ve finally agreed to sell their properties, and he knows that Mark, like all developers here, needs land on which to build mansions for an influx of rich clients from mainland China.

Ornelas rattles off addresses on a nearby street. “Three-eleven, that guy, he’s wack,” he says, shaking his head. “He wants 2.8.” He means million dollars. “And then 354, they want $2 million.”

The lot is 17,000 square feet. “Seventeen for 2 mil?” Mark asks, incredulous.

“I know,” Ornelas says. “They’re going crazy.”

A year ago the property would have gone for $1.3 million, but Arcadia is booming. Residents have become used to postcards offering immediate, all-cash deals for their property and watching as 8,000-square-foot homes go up next door to their modest split levels. For buyers from mainland China, Arcadia offers excellent schools, large lots with lenient building codes, and a place to park their money beyond the reach of the Chinese government.

The city, population 57,600, projects that about 150 older homes—53 percent more than normal—will be torn down this year and replaced with mansions. The deals happen fast and are rarely listed publicly. Often, the first indication that a megahouse is coming next door is when the lawn turns brown. That means the neighbor has stopped watering and green construction netting is about to go up.

This flood of money, arriving from China despite strict currency controls, has helped the city build a $20 million high school performing arts center and the local Mercedes dealership expand. “Thank God for them coming over here,” says Peggy Fong Chen, a broker in Arcadia for many years. “They saved our recession.” The new residents are from China’s rising millionaire class—entrepreneurs who’ve made fortunes building railroads in Tibet, converting bioenergy in Beijing, and developing real estate in Chongqing. One co-owner of a $6.5 million house is a 19-year-old college student, the daughter of the chief executive of a company the state controls.

Read full story here:

http://www.businessweek.com/articles/2014-10-15/chinese-home-buying-binge-transforms-california-suburb-arcadia

Posted by on Oct 19, 2014 in Market Buzz, Market Conditions, The Future, This Is America | 4 comments

‘Best Rates Since June 2013′

Oct 14th rates

We should see a resurgence in buyer interest now that rates are under 4%.  They probably won’t pay a lot more, but if sellers can live with the same price as the last comp, they should be able to sell.

From MND:

http://www.mortgagenewsdaily.com/consumer_rates/398692.aspx

Mortgage rates continued living the dream today, falling decisively past last week’s lows to claim another instance of “best rates since June 2013.”  Today’s move was exceptional compared to last week’s (or just about any other move lower of 2014 for that matter).  After heading into the weekend in relatively conservative territory, the bond markets that underlie mortgages were greeted with massive movement in broader financial markets over the 3-day weekend.

Some of that movement took place late on Friday–too late for rate sheets to experience much benefit–but most of it occurred in global bond markets during Asian and European trading overnight.

Motivation varies depending who you ask, but the concept of “global growth concerns” is the common thread running through most of the reasons offered for the drop in rates.

Last week’s best moments saw the most prevalently-quoted conforming 30yr fixed rates hover between 4.0 and 4.125% for top tier borrowers.  Today’s rates all but eliminated 4.125% from that list.  In fact, 3.875% would now be more common than 4.125% (assuming a flawless loan file, 75% or lower Loan-to-Value, and a competitive lender).  Rates haven’t been any lower since the first half of June 2013.

Posted by on Oct 14, 2014 in Interest Rates/Loan Limits, Market Buzz, Market Conditions | 0 comments

The Market is Great

SD Case Shiller graph

We’ve seen the local San Diego Case-Shiller Index rise from 144.43 in April, 2009 to the most recent reading of 201.85 in May, 2014.

A whopping 40% increase in just five years.  What a ride!

Yet all we hear from the media is that the housing market is faltering, sales are down, and soon the sky will be falling.  Here are the reasons why it won’t:

1. Even though prices are much higher, there hasn’t been a flood of inventory.  Consider how many sources of inventory that you’d expect to be flooding the market; bank-owned properties, flippers, previously-underwater homeowners, the elderly, etc.

Not only has there not been a flood, but around NSDCC there have been 3% FEWER houses listed in the first seven months of this year than in 2013.

2.  Rates are Holding.  Though sales and prices would probably be affected if mortgage rates did go up, so far they are steady – in spite of wars, improved employment, ebola, etc.  Buyers will live with rates in the fours, and I just had a 30-year jumbo rate quote in the high-3s.

3.  There is lots of activity. The house in yesterday’s article whose broker said she is having no showings must be ridiculously over-priced, because the attractive buys are getting action.  Any seller who could live with 5% to 10% less than the list prices of active (unsold) listings nearby won’t have any trouble selling today.  If prices in general did pull back, it would stimulate a new round of sales – the buyers who feel priced out would love another chance.

4.  No Frenzy Means More Caution.  After prices go up 40%, it’s a lot easier to make a mistake, and buyers are being more selective. A smart market is a healthy market.

The next few months are going to be terrible for sellers who insist on tacking on another 10% or so on top of what we’ve already gained.  But reasonable sellers will have no trouble selling – the market is fine.

Posted by on Aug 6, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions, North County Coastal | 5 comments

San Diego in June

Rich does a great job every month documenting our local market trends:

http://piggington.com/june_2014_housing_data_rodeo

Here is one of his 16 graphs for June, showing how the San Diego active inventory is 55% above last year’s pace:

jun_2014_housing_data-10

He also noted that pricing increased but sales dropped, which is natural when every seller is asking more, but fewer get/deserve it.

Another interesting point is how the active inventory didn’t drop off the second half of last year, when normally it does. Will more sellers hang around longer this year hoping for the lucky sale?  Probably.

It will look and feel like a stagnant or waning market, unless sellers and their agents reduce expectations.  You may not be far off!  Just keep lowering the price until showings and offers start happening!

See all of Rich’s great analysis here:

http://piggington.com/june_2014_housing_data_rodeo

Posted by on Jul 17, 2014 in Market Buzz, Market Conditions | 12 comments

Student Loans vs. Homeownership

A more-detailed investigation into comparing student debt and homeownership among young people.  If you don’t have a lot of extra debt, the student-loan payment – which would be like having an extra car payment – wouldn’t prevent you from qualifying.

http://www.nytimes.com/2014/07/06/realestate/college-debt-and-home-buying.html?_r=0

An excerpt:

But Beth Akers, a fellow at the Brookings Institution’s Brown Center on Education Policy, says these findings do not prove a causal relationship. In fact, they could be misleading.

She said she has looked at young-adult homeownership rates over a longer period, and found that the reversal cited by the Fed is “a return to a longstanding trend that existed prior to 2004.” For most of the last 20 years, homeownership rates among young households with student loan debt have been lower, not higher, than rates among households with no debt, she said.

Her research, co-authored with Matthew M. Chingos, a senior fellow at the Brown Center, also disputes the notion that the payment burden is higher on today’s young adults. While the level of education debt has risen over all among young households (ages 20 to 40), the monthly burden of student loan repayment has not increased greatly over the last two decades. From 1988 to 2010, the typical household spent 3 to 4 percent of its monthly income on student loan payments. The monthly burden has remained fairly flat because of offsetting increases in income and longer repayment terms.

Extremely high burdens are still rare. In 2010, about 75 percent of households with people ages 20 to 40 who have education debt owed $20,000 or less, Ms. Akers said. Only 2 percent were carrying more than $100,000.

Perhaps the declining number of young homeowners has more to do with the weak economy and tight lending conditions. Mr. Dyer predicts that mortgage lenders will gradually ease credit standards over the next five years to open up the “buy box” to more young adults.

But what and when they will buy will likely be different from the choices of generations past. “This generation has what some would label a fear of debt,” he said. “They try to be very conscious and pragmatic about what they buy and how much they agree to borrow.”

studentdebt

Posted by on Jul 5, 2014 in Market Buzz, Market Conditions | 7 comments

Zillow Is Everywhere

zillow

Last week I thought that Zillow will probably have preferred agents by the end of the year. Yesterday they rolled out a partnership with Douglas Elliman, which could be a prototype of things to come:

http://www.bloomberg.com/video/u-s-home-sales-growth-is-sustainable-herman-says-HWfqFzrkTOCihNmt9NFIwQ.html

http://zillow.mediaroom.com/2014-06-24-Zillow-and-Douglas-Elliman-Real-Estate-Company-Launch-Strategic-Marketing-Partnership

P.S. Realtors are done fighting it, and instead are jumping on the Zillow train. With direct uploads from realtors to Zillow, who needs the MLS?

P.S.S. Did she say ‘substaining’?

Posted by on Jun 25, 2014 in Jim's Take on the Market, Market Buzz, Market Conditions | 0 comments