In the not-so-distant past, both buyers and agents avoided short sales. They took too long, and the outcome was very uncertain.
But closings of detached-home short sales are increasing around the county:
We saw that the banks’ approval rate of recently closed NSDCC short sales was less than 60 days – helping to keep buyers interested in sticking around. With banks typically pricing REOs at retail, short sales might be the only place where you can find a deal.
We have wondered if 2012 will be the Year of the Short Sale.
Reader TH asked, “What is the problem with short sales?”
The gripe about short sales is that they take so long to complete. Over the last few years, it would be 6-12 months before you’d hear anything, let alone close – and buyers wouldn’t wait.
But now with HAFA throwing a little money at the sellers ($3,000), and relaxing the qualifying guidelines, the process has been streamlined.
A review of 23 short sales closed since November 1, 2011 around NSDCC revealed the following:
1. The average time to approve these short sales was 66 days.
2. Removing three that took 100+ days, and the average was 55 days for short-sale approval.
At first we thought that HAFA’s rule requiring that the lenders waive their right to collect any deficiency, combined with California’s SB 458, could cause the lenders to slow down or stop short sales altogether. But instead, it appears that the system has improved greatly.
There were 59 sales marked as short sales, but due to the lousy reporting by listing agents, I only considered the 23 that marked their listing from ACT to CONT, and then from CONT to PEND and measured the difference in time.
The MLS remarks allow for the listing agent to report any concessions. Only two of the 59 mentioned any money brought in to make the deal, another sticking point from past short sales.
If the lenders are willing to process these promptly (less than two months), and not demand money be brought in, we should see smoother sailing with short-sale approvals this year.
It looks like 2012 could be the Year of the Short Sale!
From Lawrence Yun, NAR economist – I just want to have this on record:
I participate in the Blue Chip Consensus forecast with around 50 other economists representing organizations such as FedEx, Dupont, Ford Motors, the U.S. Chamber of Commerce, Wells Fargo, Bank of Tokyo, Swiss Re, and UCLA. This forecast is often mentioned by the Congressional Budget Office, Administrations, and various politicians to say that their outlook is (or was) not too much different from the private sector forecasts.
Forecasting can be a hazardous sport at times. Interestingly though, this Blue Chip average consensus forecast value generally tends to be more accurate than any individual economist’s forecast over the long run. That is to say, it is better trust the consensus forecast more so than an individual economist’s forecast.
So, what is the Blue Chip consensus saying about the bottoming of home values? In the latest January issue, a solid majority of economists said the Case-Shiller home price index will finally bottom in 2012.
The exact phrasing of the question and the response tally are below:
Technically, if counting the small decimal point, the price may in fact bottom out in 2012. But as the graph below shows, for all practical purposes it looks as if home prices started to stabilize from 2009 onward. Of course, there will be local market differences (with markets like Washington, D.C. showing price gains while Las Vegas is showing price declines). It is therefore not surprising that mortgage loans originating from 2009 on show exceptionally low default rates.
Buyers are drawn to the $$/sf comparison, but when you see a house that looks too good to be true, it usually is….or there are some shenanigans involved.
Would you consider compromising on something else, to get the price you want?
If you say “no dice, I want it all”, then you better bring everything you got, and be working with a great agent who can make your case a convincing one - because the good deals will be competitive.
Has an agent offered you a piece of the shenanigans?
I’m not an attorney, I just copied this off the internet:
The Federal Bank Fraud Statute, 18 U.S.C. §1344, provides as follows:
Whoever knowingly executes, or attempts to execute, a scheme or artifice-
(1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
This could be just the beginning. If President Barack Obama’s legally dodgy appointment of Richard Cordray to head the consumer finance agency should stick, it may open the door to more such actions. Here’s Jaret Seiberg of the Washington Research Group:
To us, the most important takeaway from a recess appointment of Cordray is that the President could use this same maneuver to put a housing advocate in charge of FHFA.
And why is that important? The Federal Housing Finance Agency is the regulator and conservator of Fannie Mae and Freddie Mac. And the FHFA currently has an acting director, Edward DeMarco. If Obama replaces him with a “housing advocate” via the same recess appointment process, here’s what might happen next, according to Seiberg:
That could lead to a mass refinancing program for agency-backed mortgages that would go well beyond the existing HARP program. That could hurt agency MBS pricing and result in higher financing costs going forward. Yet it also could be a big boost for the economy and housing going into the election.
Indeed, my sources tell me the Obama administration has been eager to implement just such a plan, but needs to have its own man heading the FHFA to make it happen. The plan would be modeled after one originally devised by Columbia University economists Glenn Hubbard (a campaign adviser to Mitt Romney and AEI visiting scholar) and Christopher Mayer. In recent congressional testimony, Mayer described how the mass refinancing plan would work:
Under our plan, every homeowner with a GSE mortgage can refinance his or her mortgage with a new mortgage at a current fixed of 4.20 percent or less. … To qualify, the homeowner must be current on his or her mortgage or become so for at least three months. … Other than being current, we would impose no other qualification or application, except for the intention to accept the new rate (that is, no appraisal, no income verification, no tax returns, etc.).
Mayer estimates that some $3.7 trillion of mortgages would be refinanced. That’s right, this would be the Mother of All Mortgage Refinancing Plans. It would help roughly 30 million borrowers save $75 billion to $80 billion a year. As Mayer puts it: “This plan would function like a long-lasting tax cut for these 25 or 30 million American families.”
Today I was on the first broker preview of the year (filming “Ride Along with JtR”), when I came across this REO in Del Mar Heights. The assistant was running open house, and said it had just been inputted onto the MLS – but it’s not on the open market as of this printing.
I think she said that the price will be $1,749,000 – it was listed for $3,295,000 in summer of 2010.
It has its quirks, and could sit for weeks or months without selling. But we saw how hot the 92014 has been lately (2011 sales were +62% higher than in 2010, and pricing was +4%) so it could go flying off the market, because everyone wants a bank deal in Del Mar Heights!
It sold for $2,200,000 in 2005, and financed 90%, but the opening bid at November’s trustee sale was only $1,464,750.
Leave your price in the comment section, and the closest guesser will receive four tickets to the swanky Del Mar Turf Club for one day during the season (July 18th – Sept. 5th). You’ll have your own table with TV to watch the races and replays, plus waitress service! Or, if you prefer a more casual day, (guys have to wear coats in the Club), the winner can select Choice 1A; four box seats near the finish line, also with waitress service.
The mortgage market told a sad story throughout 2011: record low rates, but few people taking advantage of them to buy homes.
The likely scenario in the new year, according to many analysts, is more of the same. Although the Federal Reserve has pledged to keep rates low through 2013, the experts say high unemployment and home prices that are still falling in many areas provide little incentive for stressed-out consumers to surge back into the housing market.
“I think there may be a little bit of an uptick in units sold,” said Doug Duncan, vice president and chief economist at mortgage finance giant Fannie Mae. “But home prices will probably be down again, so the total dollars spent on purchases is likely to be pretty close” to 2011.
Freddie Mac, the other big government-backed mortgage company, had predicted two years ago that lenders would write $1.8 trillion in home loans in 2011. They later revised that estimate to just over $1 trillion.
In the end, home lending last year totaled $1.3 trillion, down from $1.7 trillion in 2010 and an all-time high of nearly $3.3 trillion in 2005.
Last year’s better-than-expected finish had nothing to do with home purchases. Instead, a decline in 30-year fixed mortgage rates to historic lows of less than 4% triggered a massive wave of refinancings.
It might just be that cnbc.com took their foot off the neck of real estate for the holiday….but did you see this?
(The video transcript) As we close out 2011, some investors have started putting money back in real estate, second home real estate, and specifically in California. Jane Wells has the story.
Reporter: The second home market in California may be ending its downhill run. Buyers: Every time we come up here, we look at each other, and we’re like, oh — we’re so happy we bought this place. we’re so happy we’re here. Reporter: David and Kate bought a ski in-ski out house near Lake Tahoe. Real estate is making a comeback thanks to the tech boom. Sales guy: We’ve sold over 70 properties here including two at home run since we started construction.
Reporter: Meanwhile down south in L.A., the development sales office at its oceanfront Terranea resort in Palos Verdes is finally busy. Sales guy: Closing million-dollar villas and casitas at the bottom of the market is a challenge. Reporter: After a rocky restructuring, Matt Walker says of the 85 units for sale here, 50 are under contract, and ten have closed. Sales guy: We see a pent-up demand for second homes. Reporter: Many of the buyers are locals like former investment banker Monica Masuda who bought a casita here for $1.7 million — 25% below its original asking price. Her primary residence is only five miles away. Buyer: It’s easy to get away for a day or two or after school.
Reporter: Like the Kaufmans up north, buying a second home has been both an investment decision, and a personal one. Buyers: Let’s take our money out and invest in something that we can use — and enjoy. and enjoy, and not just look on a monthly statement. it’s been great. Reporter: a potential sign this in a place where real estate fell so hard, it may be starting to get back up again. Jane Wells, cnbc business news, Palos Verdes.
If you started seeing more positive signs, would it change anything about your real estate plans?
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