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Category Archive: ‘Market Conditions’

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:

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

Lots of Showings, But…


The demand is strong enough that every seller is getting a few looks, especially in the beginning.  Hopefully your agent has your listing on Zillow, but even if they don’t, buyers are going there to evaluate.  You’ll see their viewer count of your home is rising, and you’ve had plenty of visitors – but no offers.

What’s wrong?

It could be one, some, or all of the items below, but no matter what the problem is, you can fix it.

    • Photos are lying.  Once inside the house, buyers discover the truth about floor plan, condition, small rooms, etc., and are disappointed.

    • Something is wrong that buyers can’t see in the photos or Google Maps.  Bad smell, barking dog, surly neighbors, noise, etc.

    • Agents are using your house to sell the one down the street.  If there are competing listings nearby, the best buy will be the next to sell, and then buyers will expect that yours should be worth less.

    • Your furniture is ugly.  Buyers aren’t known for having great vision, and the anti-staged look is hard to ignore.

    • Your listing agent has a bad reputation.  There are agents who have burned every bridge they ever crossed.  Other agents might show the house just to satisfy their buyer, but won’t go too far to sell them on it.

    • Price is wrong by 5% to 10%. It doesn’t matter if you have ‘comps’; those are guideposts, not guarantees.

Why are buyers being so fussy?  Because you are asking them to pay a lot more for your house than you did.  If you want to entice them, then fix what’s wrong, or just lower the price to compensate.

If you don’t care if you ever sell, then just wait.  It’ll happen someday.

Posted by on Dec 10, 2014 in Jim's Take on the Market, Listing Agent Practices, Market Conditions | 0 comments

Did She Say Lower Prices?


From PropertyRadar (ForeclosureRadar):

“Earlier this year we accurately predicted that 2014 would be a year of lower sales volume and flat prices because home prices rose too far too fast,” said Madeline Schnapp, Director of Economic Research for PropertyRadar.

“That’s exactly what’s happened and hopefully by next spring, prices will be more in line with what prospective homebuyers can afford.”

Read full report here:

Posted by on Nov 19, 2014 in Market Conditions, Thinking of Buying?, Thinking of Selling? | 3 comments

Zestimate Accuracy


Hat tip to swm for sending in this article about sellers blaming zestimates for why they can’t fetch their higher price:

The owner of one New York home writes that a low zestimate is “hindering the marketability” of her home.

Zillow said its zestimates are just that, estimates, “not an appraisal” and are within 5% of the sale price just over a third of the time.

Zestimates are calculated using a formula that considers attributes like a home’s size, tax records and recent nearby sales.

Zillow argues a zestimate is also as likely to be high as it is to be low.

“So, that has become a problem because I understand that Zillow has a price, but in reality it’s not that. It’s what the market will bear,” Sievers said. “We will have to bring them back into reality and say, ‘hey, you know, there is a lot of different variations to a house and why a house would be higher or lower.’”

Posted by on Nov 16, 2014 in Jim's Take on the Market, Market Conditions | 3 comments

Housing Costs and the Future

In the last video, the presenter speculated that prices could go up 700% by year 2027, which would make homeownership all but impossible for regular folks.

Prices seem likely to rise over the long-term – what could keep a throttle on their gains?  Building more homes could slow down prices, and this week L.A. Mayor Eric Garcetti suggested a host of ideas and changes in order to achieve 100,000 new housing units by 2021:

The two best ideas?

1. The permitting of more granny flats is a viable solution for homeowners with larger lots.  An excerpt:

Dana Cuff, director of cityLAB at UCLA’s School of the Arts and Architecture, has spent years studying so-called backyard homes — or “granny flats” — that can house a renter, an in-law or a still-at-home 20-something. They exist all over town, often illegally, and regulations make them hard to build in many neighborhoods. Permitting more could go a long way toward helping L.A.’s housing shortage, Cuff said.

“There’s a half-million single family-houses in the city of Los Angeles,” she said. “If 10% of those added a granny flat, we’d be halfway [to Garcetti's goal]. And it’s free land.”

2. The lack of available land located within driving range of San Diego is a real problem.  If there was a concerted effort by governments to make it easier to change zoning from commercial/industrial to residential, they could unlock additional parcels for development – like this one:

It’s likely that any new developments would be higher density, which would provide an interesting choice for future homebuyers. Are you willing to live like sardines to get a new or newer home, or will older homes on bigger lots be preferred – and retain their value better?

Rob Dawg said in the beginning, “Forget all previous assumptions about real estate”.  With the cost of living on the rise, will the newer, smaller, and less expensive homes topple the traditional SFR as the preferred choice of tomorrow’s homebuyer?

Posted by on Nov 9, 2014 in Market Conditions, The Future, Thesis, Thinking of Buying?, Thinking of Selling? | 2 comments

The Real Story on SD Inventory


Yesterday we saw Diana rolling out the new ‘Recovery Watch Map’:

She mentioned that the supply of San Diego homes for sale has risen a “whopping 31%” year-over-year, and in an instant judgment, says, “You can bet those prices will ease more – the question is, will they go negative?”

(their map now says that our inventory is up 44% Y-o-Y)

With no other explanation, it’s easy to conclude that the sky is falling. Is it?

They are using the Zillow seasonally-adjusted numbers for September:

Active Inventory
% change

Yep, the inventory was 44% higher than it was than last year – when summer’s interest-rate rise caused buyers to gobble up anything resembling a decent buy, leaving the cupboard bare in September. To ignore that fact is short-sighted, especially when you compare to recent history.

When you compare the total number of listings for the first 10 months of the year, you don’t see much of a flood either – only a 3% increase Y-o-Y, and all of those could be re-lists:

2013: 42,746

2014: 44,234

Don’t make decisions just based on the soundbites – look deeper to separate the facts from the hysteria. Get good help!

Posted by on Nov 7, 2014 in Inventory, Market Conditions | 3 comments

SD Case-Shiller Tiered

We saw this week that the local seasonally-adjusted Case-Shiller Index has been trending negative since April.  Here we see how the recent gains have been driven by the lower-end properties:

CSI tiered

The difference could simply be a percentage thing – a home’s value that goes from $300,000 to $400,000 has risen 33%, while a $700,000 home that goes up to $800,000 has only increased 14%.

But the underlying story is that the upper-end home values haven’t done much over the last 18 months.

Read more here:

An excerpt:

As in 2010, today’s price movement is the tail end of a mini-bubble, set into motion some 18 months earlier. This price rise was produced by short-lived speculator interference in 2013 (not a tax stimulus, as in 2009). This pricing activity is under pressure from insufficient personal incomes, rising fixed-rate mortgage (FRM) rates and new construction.

Prices are expected to continue to fall in the coming months, bottoming in 2015 and retreating toward the mean price trendline. The cooling of speculative fever and continually rising mortgage rates will prolong the falling trend in sales volume, pulling prices down in turn. Remember, real estate prices track and run with bond prices due to interest rate movement. A lag time of a couple of months exists due to remaining perceptions of past real estate price movement — the sticky price phenomenon.

Posted by on Nov 6, 2014 in Jim's Take on the Market, Market Conditions, North County Coastal, Same-House Sales | 4 comments