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From theenterpriseblog:

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.”

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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?

I made this statement at the end of 2010:

The average cost-per-sf for detached sales in SD County rose 9% in 2010. I think it’ll increase another 9% in 2011, fueled by the red-hot lower price ranges. But sales will struggle, possibly 20% fewer sales overall, because buyers will want to hold out for the best. The bar is rising on what buyers are willing to tolerate, but they’ll spend the money on a top-quality house.

I’m not sure where I got the 9% YOY increase in 2010, because looking at the detached MLS stats below, the average cost-per-sf change between 2009 and 2010 was only +7.4%.

The year-over-year change in the average cost-per-sf between 2010 and 2011 went DOWN 4.5%, not up. Maybe that had something to do with the 2011 sales actually increasing slightly over 2010.

Our focus is on selling detached homes between La Jolla and Carlsbad.

How did North San Diego County Coastal do?

Changes of 1% or 2% can be considered noise, and they reflect that the NSDCC market has been flat for the last two years. Sales are holding their own, thanks to the low rates and just enough decent listings.

What is JtR’s prediction for 2012 around NSDCC?

There were 188 REO listings and 275 short-sales closed in 2011, or about 18% of the overall sales. Short-sellers should abound, due to the expiration of the tax exemption on debt relief at the end of the year, because if it is extended it probably won’t happen until the last minute. There will probably be commotion around the election and politics, but it won’t stop buyers from grabbing the deals.

My 2012 guess: NSDCC detached sales +10%, and their avg. cost-per-sf drops 5% from 2011.

What is your prediction?

Excerpts and graph from the Economist:

MANY of the world’s financial and economic woes since 2008 began with the bursting of the biggest bubble in history. Never before had house prices risen so fast, for so long, in so many countries. Yet the bust has been much less widespread than the boom.

Home prices tumbled by 34% in America from 2006 to their low point earlier this year; in Ireland they plunged by an even more painful 45% from their peak in 2007; and prices have fallen by around 15% in Spain and Denmark. But in most other countries they have dipped by less than 10%, as in Britain and Italy. In some countries, such as Australia, Canada and Sweden, prices wobbled but then surged to new highs. As a result, many property markets are still looking uncomfortably overvalued.

Since American homes now look cheap, are prices set to rebound? Average house prices are 8% undervalued relative to rents, and 22% undervalued relative to income (see chart). Prices may have reached a floor, but this is no guarantee of an imminent bounce. In Britain and Sweden in the mid-1990s, prices undershot fair value by around 35%. Prices in Britain did not really start to rise for almost four years after they bottomed. Some 4m foreclosed homes could come onto America’s market, which may hold down prices.

The second question is whether home prices in markets that are still overvalued are likely to fall. Some economists reject our measures of overvaluation, arguing that lower interest rates justify higher prices because buyers can take out bigger mortgages. There is some truth in this, but interest rates will not always be so low. The recent jump in bond yields in some euro-area countries has raised mortgage rates for new borrowers.  And low rates need to be balanced against the fact that tighter credit conditions make it harder for homebuyers to get mortgages.

Another popular argument used to justify sky-high prices in countries such as Australia and Canada is that a rising population pushes up demand. But this should raise both prices and rents, leaving their ratios unchanged.

Prices do not necessarily need to drop sharply to return to fair value. Adjustment could come through higher rents and wages. With low inflation, however, it could take a decade or more before price ratios return to their long-run average in some countries.

American prices fell sharply, even though homes were less overvalued than they were in many other countries, because high-risk mortgages and a surge in unemployment caused distressed sales. In most other countries, lenders avoided the worst excesses of subprime lending, and unemployment rose by less, so there were fewer forced sales dragging prices down. America is also unusual in having non-recourse mortgages that let borrowers walk away with no liability.

An optimist could therefore argue that our gauges overstate the extent to which house prices are overvalued, and that if markets are only a bit too expensive they can adjust gradually without a sharp fall. It is important to remember, however, that lower interest rates and rising populations were used to justify higher prices in America and Ireland before their bubbles burst so spectacularly.

Another concern is that Australia, Britain, Canada, the Netherlands, New Zealand, Spain and Sweden all have even higher household-debt burdens in relation to income than America did at the peak of its bubble. Overvalued prices and large debts leave households vulnerable to a rise in unemployment or higher mortgage rates. A credit crunch or recession could cause house prices to tumble in many more countries.

Mish’s take on this article (he likes it, but thinks that it has some holes):

http://globaleconomicanalysis.blogspot.com/2011/11/house-of-horrors-prices-falling-in-8-of.html

Thoughts regarding San Diego’s detached and attached sales + pricing mix:

1.  Elective sellers plan around the seasons.

2.  Bank-involved sales aren’t as seasonal, and appear to be well-managed.

3.  This wasn’t the year of the short sale. 

There were only 5% more short sales completed during the first 10 months of 2011, than in the same period of 2010.  Next year might get a boost from the threat of the debt-relief tax exemption expiring at the end of 2012, but sellers sure are nonchalant about selling/giving up the free-rent program.

 4.  Generally, the county-wide pricing is on a very slow descent, and mostly flat this year. 

From www.sddt.com:

Sales of San Diego condominiums have emerged as perhaps the market’s lone bright spot.

Driven by a confluence of factors, investors and traditional buyers alike have identified value in the submarket, pushing activity beyond its year-ago level while virtually all else has lagged on an annual basis.

“It’s been a remarkable year downtown,” said Alan Nevin, principal at London Real Estate Advisors.

Read the rest of this entry »

Hat tip to Mr. T for sending in this article from money.cnn.com:

Last year the economic forecasting firm Fiserv predicted that home values would sink around 5% in 2011, and that prices in three-quarters of the nation’s major metro areas would fall. The bad news is, the firm wasn’t that far off the mark.

The good news: In the coming year, Fiserv thinks 95% of the 384 metro areas it tracks will see prices rise.

Don’t expect the market to move much beyond first gear, though. The median expectation among more than 100 economists and real estate pros surveyed by MacroMarkets is that home values will inch ahead by a mere 0.25%, compared to their 2011 median forecast decline of 2.8%. They also foresee annualized gains through 2015 of just 1.1%, as the real estate market slowly works its way through a mountain of foreclosures.

Those foreclosures will continue to weigh on the market. According to Core- Logic, there are 5.4 million homes that are for sale or part of the market’s “shadow inventory” — which includes bank-owned properties, homes in the foreclosure pipeline that haven’t hit the market yet, or properties where owners are seriously behind on payments.

To put that in perspective, Freddie Mac forecasts that only 4.8 million homes will be purchased in all of 2012. A market with six months of inventory is considered healthy. That there’s more than a year’s worth of housing stock now tells you what a tough slog this will still be. “It’s analogous to a flood,” says Mark Fleming, CoreLogic’s chief economist. “The water is very deep in the living room, but it’s no longer getting deeper and is starting to recede.

Helping that process along will be low-interest-rate mortgages that are expected to remain cheap. Jay Brinkmann, chief economist at the Mortgage Bankers Association, says the 4.2% rate on a 30-year fixed rate in late October might not last long. Still, he expects the 30-year fixed mortgage rate to stay below 5% throughout 2012.

Buyers: Downsize the dream.  For those gearing up to make a purchase, 2012 could be a great opportunity, what with cheap prices, low borrowing rates, and little competition among prospective bidders.

Before you take the plunge, remember that the price you pay matters, as does your ability to easily resell that home down the road.

This means it’s best to focus on smaller properties in your area near restaurants and retail. McMansions of at least 2,600 square feet, which were the ideal in the boom years, are coveted by a mere 18% of households today, according to a recent survey by Trulia. And that figure could fall even more.

A separate survey by the National Association of Home Builders found that home-construction firms expect U.S. houses to average 2,152 square feet in 2015 — down 10% from last year.

Some of this is attributable to the lingering effects of the past recession, which has eaten into housing budgets. But there’s also a permanent change at play. “Baby boomers are trading down. They don’t need the McMansion, and they don’t want to drive as much,” says Trulia chief economist Jed Kolko.

Sellers: Price it right. The longer you can wait for prices to stabilize in your area and for demand to pick up, the less likely you’ll need to entertain low-ball offers. If you have to make a move in 2012, though, the trick will be to price your home correctly out of the gate.

According to a recent national survey of real estate agents, 75% of homeowners believe their house is worth more than what agents put the fair market value at, and nearly one in two homeowners still overestimate their home’s value by more than 10%.

Meanwhile, Trulia reports that about one in four homes in its database has gone through at least one price reduction, and the average price cut for those homes is 8%.

Joe Magdziarz, president of the Appraisal Institute, says you and your agent should stick with comparable sales data just within the past 90 days, as that’s what lenders expect appraisers to use.

If you don’t trust your agent’s recommendation, shell out $300 to $400 for an outside appraisal. That will be money well spent if it pushes you to list your home in sync with current market valuations and you sell faster.

Owners: Shorten your loan. Refinancing your old mortgage to a new fixed-rate loan could have you smiling for years to come. If there’s any chance you can refinance into a 15-year loan, go for it; the 3.45% rate in late October was near an all-time low. On a $250,000 mortgage, going from a 30-year mortgage at 4.2% to a 15-year loan charging 3.45% would save you $120,000 in interest over the life of the loan.

What if the added $560 monthly payment is too steep to handle? Shop for a 20-year loan. The rate is likely to be only slightly less than on a 30-year loan, but the faster payback will save you in the long run.

Towards the end of this youtube tour, I mention the price ranges around the North SD County Coastal region, and note that there probably won’t be much change in 2012.

Reasons:

1. The inventory is so thin that there aren’t enough comps in either direction to change the trend, up or down.  There might be a flurry here and there, but overall there won’t be conclusive evidence.

2. The banks/servicers might increase the foreclosure production, but not enough to impact the market in a big way.  I wish they would flood the market with quality bank-owned properties at attractive prices, and create some real market clearing. 

It would ignite the market, and buyers would rush in to get a bank deal while financing is cheap.  We know what happens when buyers rush in – it creates frenzy-like conditions, and the appearance of pricing going up.  I hope it happens because the market needs it, but it would be a nightmare for me – all my buyers want deals!

3. Sellers with equity will still think it’s a bad time to sell, keeping inventories low – especially of quality homes.

4. Any catastrophic events – Europe implosion, double-dip recession/unemployment, earthquake, Chargers winning the Super Bowl, etc. would cause the market to freeze up until the Fed can print enough money to solve it. 

5. Next year, politics and the election will be more distracting, which causes indecision/inaction.

Every for-sale-by-owner hopes that a magical buyer will come along who appreciates the uniqueness of their special home – and be ready, willing, and able to pay for it.  Not sure why the U-T considers this news, and not advertising:

The family of the late Nobel Prize winner Francis Crick is offering a $10,000 finder’s fee to the person who helps them locate the ideal buyer for the scientist’s home near the Muirlands West section of La Jolla.

The four-bedroom, four-bath house at 1792 Colgate Circle has been put on the market for $1.95 million. Crick lived in the ranch-style house from 1978 until his death in 2004.

“We would like to sell the house to someone who appreciates its historic value so we are trying a dual approach,” Crick’s son, Michael Crick, said by email. “First we are offering a $10,000 finder’s fee (through Feb. 28) aimed at people, such as Rosalia (Mariz, a long-time family friend), who knew my parents and also knew scientists all over the world.

“If we don’t get a good offer in that time, we will try the conventional approach through local Realtor Greg Noonan — who will focus on the local market.”

Francis Crick achieved worldwide fame in 1962 when he shared the Nobel Prize in physiology or medicine with James Watkins and Maurice Wilkins. Watson and Crick discovered the fundamental structure of DNA, a discovery that would revolutionize genetics and molecular biology, eventually leading to the Human Genome Project and widespread advances in pharmacology.

Crick’s most groundbreaking work occurred at Cambridge University. But he later transferred to the Salk Institute of Biological Studies, where he played a key role in the growth of the La Jolla research center. He died of colon cancer in La Jolla in July 2004.  http://francis.crick.com/lajolla.html

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From Dataquick – they show that San Diego sales were higher last month, Y-O-Y:

Hat tip to JS for sending this in, from nbcsandiego.com:

The slow housing market has inspired one San Diego restaurant owner to market her Mission Hills property the best way she knows how – with free food.

Terryl Gavre’s Mission Hills estate has been on the market for 5 weeks and in an effort to sell it quick, she’s tossing in a delicious deal.

Buy the estate and get free breakfast at her restaurant, Café 222 not once or even twice but for the next 15 years.

“I thought, you know, ‘I need to think outside the box. How do I get more people to come look at my house?’ The housing market is slow in general so why not offer something they can’t get when they buy any other house,” Gavre said.

“People will come in and say ‘Oh, I love that restaurant; omigod, that kitchen looks just like the one at Café 222′.”

Gavre’s restaurant, located in downtown San Diego has been profiled by Food Network and is known for hand-made specialties like pumpkin waffles and her peanut butter-and-banana-stuffed French toast.

One happy buyer will walk away with two homes on the lot separated by a courtyard and a free breakfast once a week.  The price tag on the property may be $1.4 million but the incentive will save you approximately $8,000 in free food.  Now, what foodie can pass up that offer?