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San Diego County Sales – January

Thanks to the people who sent in the articles on U.S. existing-home sales in January being the best in ten years.  How did we do locally?

We saw that detached-home sales between La Jolla and Carlsbad were about the same as recent Januarys:

NSDCC January Sales

Year
Number of Sales
Cost-per-SF
Median SP
Avg DOM
2013
185
$379/sf
$845,000
69
2014
182
$501/sf
$1,045,500
60
2015
165
$507/sf
$1,218,000
73
2016
168
$557/sf
$1,093,500
53
2017
165
$524/sf
$1,180,000
57

Here are the detached-home sales for the entire county – best since 2013!

San Diego County January Sales

Year
Number of Sales
Median SP
Avg DOM
2013
1,695
$390,000
69
2014
1,308
$475,000
52
2015
1,302
$495,000
55
2016
1,323
$530,000
44
2017
1,372
$559,500
44

Rates are higher, prices are sky-high, and uncertainty is everywhere. How can the housing market be so vibrant?

I think both supply and demand are affected by the Hunker-Down effect.

Current baby-boomer households have already moved up a couple of times and are satisfied with what they have – and don’t want to rock the boat.

Buyers want to hurry up and buy before anything else goes wrong!

Save

Posted by on Feb 24, 2017 in Jim's Take on the Market, Local Flavor, Market Buzz, North County Coastal | 0 comments

120% Mortgages

In the last downturn, there were a surprising amount of people who were underwater but hung on – and today with record-high prices, they are glad they did.  We learned that whether you had equity or not, the chance of default was influenced by other factors.  If that’s the case, lenders might as well finance the whole enchilada, and price in the same or similar percentage of defaults as last time.

http://www.housingwire.com/articles/39288-burkeyloan-to-offer-120-ltv-mortgage-that-also-pays-student-loans

BurkeyLoan launched its BurkeyLoan Mortgage division Tuesday which included its 120% loan-to-value mortgage product that funds both a home purchase and the borrower’s student loans.

BurkeyLoan, a portfolio mortgage lender, will issue, hold and service BurkeyLoan mortgages. The company’s 120% LTV product will allow Millennials to pay off or reduce their student loan debt in order to buy a home.

“After considerable research, review and analysis, we needed to build an access to capital product for the millennial generation,” BurkeyLoan Chairman and CEO John Burkey said. “Many millennials feel they are on a financial treadmill, making every effort to pay off student loans and save for a home while interest rates and home prices escalate.”

“Our mortgage product offers features and benefits that support the needs of the millennial generation,” Burkey said. “The company will utilize sound conservative underwriting that incorporates borrower credit, character, skin-in-the-game and risk mitigation.”

The program is available to community, regional and other banks as well as credit unions that broker residential mortgages.

But BurkeyLoan isn’t the first company to reach out to first time homebuyers struggling with student loans. Back in November, SoFi and the government-sponsored enterprise Fannie Mae announced a new loan option allowing homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.

The average student graduates with just over $30,000 in student loan debt, according to the Institute for College Access and Success. The median home price increased to $228,900 in January, according to the National Association of Realtors. The new LTV 120% program may enable homebuyers to pay off the average student loan amount, while offering a change to invest in their housing.

Posted by on Feb 23, 2017 in Ideas/Solutions, Jim's Take on the Market, Mortgage News | 5 comments

Wire Fraud by Hackers

It happened to us – hackers got into somebody’s account.

They posed as the escrow officer and tried to divert my buyers’ down payment to the wrong bank account.  Their timing was impeccable too.

Six days before closing, an email was sent to the buyers that looked like a normal email from the escrow officer:

Good morning (buyers’ names),

We are getting close to closing. It is important that we get the Cash to Close to avoid delays in closing.

Please tell me when you would wire the Cash to Close.

Regards, (escrow officer’s name)

The buyer asked for the amount and for wire instructions by email – and the hacker responded three times by email and even sounded like the escrow officer.  This was the tip-off though:

Please find attached the wiring instructions. It is an account of one of our subsidiary company as our main account is currently undergoing compliance audit. As such, any funds entering the account would be held for review which would grossly affect the scheduled closing date.  The total closing cost is X.

The hacker asked for an amount that was within $2,000 of being accurate, and if the buyers had been in a big hurry, they might have just sent it.

Thankfully, Mr. Buyer called the escrow officer direct to verify. The escrow officer was stunned – she hadn’t sent any emails to the buyers that day!

Because no crime was actually committed, the escrow, title, and mortgage companies just shrugged it off.  We won’t ever know who the hackers were, or how they got in, but to call it unsettling is an under-statement.

From my buyer:

We felt very unnerved yet relieved. I couldn’t sleep that night, knowing how close we came to losing a substantial amount of money, by nearly anyone’s standards. I personally felt helpless, because I’m not sure what I could have done to recognize this fraud. We consider ourselves pretty plugged in and so we didn’t think twice about getting a wire request from escrow.

The bottom line is, escrow and bank request a lot of items and need responses ASAP so that escrow proceeds to a timely close. Therefore buyers are, in many cases, reading highly technical documents ‘on the fly’, often from smart phone screens. In my case, this meant that I was usually just skimming documents and electronically signing without really studying the material.

The escrow company did say in their instructions that buyers should call before wiring any funds. I didn’t notice this until after the attempted theft of our money. In the future, I would like to see escrow go back to speaking with buyers more often, instead of just emailing documents for signature. It sets a more personal tone and makes buyers more comfortable in picking up the phone to talk to the escrow agent with questions, rather than always relying on electronic communication.

Some escrow companies are now encrypting their wire instructions, but they are missing the point.  The hackers are way ahead of us!  All they need is a copy of the purchase contract (which agents, buyers, sellers, escrow and lenders email around unsecured), and the hackers can figure out the rest.

They just pose as the escrow officer a day early, and ask the buyers to wire the down payment and closing costs to them!

Posted by on Feb 23, 2017 in Fraud, Jim's Take on the Market, Mortgage News, Scams | 7 comments