Smoother Sailing Ahead?

As 2011 is wrapping up, here’s how the NSDCC detached sales and average cost-per-sf compares with previous years (I added a zero to the $/sf numbers):

We have seen that the size of the inventory has some sort of impact on the market.  When the market is loaded with over-priced turkeys (OPTs), buyers gain confidence about staying on the fence.  When it grows thin, the buyers get antsy and jump sooner…and some at prices a little higher than they want.

The size of inventory is fluid, and day-to-day.  But for our purposes, we can see an overall effect below by comparing annual sales to total listings taken each year:

NSDCC Det. Annual Sales Total Listings AS/TL

By dividing sales by listings, we have the efficiency ratio, and when it’s around 60% the market seems to be somewhat balanced. You can see that in 2001 that we lost about a month’s worth of sales due to 9/11, and that in 2003 the market was in full-tilt-frenzy mode.

Today’s low rates and below-peak pricing, combined with the tight inventories, are helping to improve the efficiency rate.

The average days-on-market hasn’t been this high around NSDCC in a decade, which generally means that the sellers’ motivation is dreadfully low.  The banks aren’t pushing people to short-sell or foreclose unless their delinquency is extremely high, and elective sellers are willing to wait for the lucky sale.

These market conditions do help put a brighter spotlight on the few well-priced listings, and as a result, we have vicious bidding wars and shenanigans to contend with, in the fight to win one.

The thin inventory and lower seller motivation is a tough combination for buyers – get good help! 

Mortgages Are Readily Available

From the

Could gloomy popular assumptions about how tough it is to get approved for a mortgage be scaring away large numbers of qualified people?

You bet. Lenders and economists will tell you flat out: The lack of accurate information about the availability of loan programs designed to address special needs is discouraging far too many consumers from even considering an application, much less shopping around.

For example, what’s needed for an acceptable down payment? Is it 20%, 10%, less?

Yes, it’s less – and potentially a lot less if you qualify for the right program. The widespread erroneous assumption that banks require a minimum 20% for conventional loans may have arisen from heavy media coverage of a controversial proposal by federal agencies calling for borrowers to put down that much if they want to get the best interest rates and lowest fees.

If you have little or no cash to put down, there are multiple options: The Federal Housing Administration requires just 3.5% down on its insured mortgages. Other programs let you go to zero — even finance more than the price on the house when fees are rolled into the mortgage — provided you fit into an eligibility niche. If you qualify as a veteran or active member of the military, you can get a zero-down Veterans Affairs-guaranteed mortgage. Plus the VA allows your seller to pay your loan fees and closing costs provided that they don’t exceed 6% of the house price.

What about credit? Haven’t lenders been pushing up minimum FICO scores into the mid-700s and rejecting applications with lower scores outright? Not everywhere. Though most lenders doing FHA loans require 620 to 640 scores to get you in the door, a few of the biggest FHA originators, such as Quicken Loans, will accept scores down to 580. Bob Walters, Quicken’s chief economist, says underwriters scrutinize low FICO applications extra carefully but are seeing good to excellent performance from them: Not one has gone seriously delinquent this year.

And how about debt-to-income ratios? Aren’t they tighter than ever? Not really. Lenders say that when loan applications go through the “automated underwriting” systems used by Fannie, Freddie and FHA, borrowers with high total monthly debt levels of 45% to 55% of household income — well beyond the posted limits — frequently get approved if they have positive compensating information elsewhere in the application.

Bottom line: Don’t assume you can’t qualify for a mortgage in 2012. Talk to lenders and seek out loan products that offer flexibility where you need it. You just might be surprised.

Free-Rent Program Extends

From (seen at CR):

NEW YORK (CNNMoney) — Delinquent borrowers facing foreclosure are learning that they can stay in their homes for years, as long as they’re willing to put up a fight.

Among the tactics: Challenging the bank’s actions, waiting to file paperwork right up until the deadline, requesting the lender dig up original paperwork or, in some extreme cases, declaring bankruptcy.

Nationwide, the average time it takes to process a foreclosure — from the first missed payment to the final foreclosure auction — has climbed to 674 days from 253 days just four years ago, according to LPS Applied Analytics.

It takes much longer than that in Florida, where the process averages 1,027 days, nearly 3 years. In D.C., foreclosure averages 1,053 days and delinquent borrowers in New York often stay in their homes for an average of 906 days.

Because California is a trustee-sale state, the delays are shorter – only 11 months on average:

Days to Foreclose/Sell - California

And while some borrowers are looking for ways to make good with lenders and get their homes back, many aren’t paying a dime. Nearly 40% of homeowners in default have not made a payment in at least two years, according to LPS.

Many of these homeowners are staying in their homes based on a technicality. There is rarely any dispute over whether or not they have stopped paying their mortgage, said David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks and other financial institutions in foreclosure cases.

“In my experience, they never say, ‘I’m not delinquent’ or ‘I want to pay my bill but I’m confused over who to send it to,’ or ‘Oh my God, you mean I didn’t pay my mortgage?’ They’re not in technical default. They’re in default because they’re not paying,” he said.


Foreign Investors


Investors from Asia are taking advantage of housing prices that have plummeted in recent years, buying foreclosures and short sales at below what it would cost to build them.

Kevin Chu’s Hong-Kong investment firm owns property in Las Vegas, but he’s never seen any of it. So his first visit to the U.S. is to inspect the houses in Las Vegas.

In the past 18 months, the firm he works for, The Creations Group, bought up distressed homes all over the U.S. — including 13 Las Vegas houses at fire sale prices.

Tracy Bennett, the local property manager, is driving Chu to see one of his firm’s houses that has just been renovated.

She points to a disaster of a house that’s clearly vacant. Blue graffiti cover the garage. Trash is piled in the yard. Before anyone can say anything, Bennett laughs.

“I’m kidding,” she says.

But it is a reminder of the bleak housing reality here, where foreclosure rates are more than three times the national average. Thousands of bank-owned properties that sit empty. Thankfully, for Chu, his real house down the block is in much better shape.

It’s a modest one-story house. The firm bought it for $55,000. At the height of the market, it could have sold for more than $200,000. Inside it’s clean, with fresh paint. It’s ready for a tenant.

“It looks very good, much better than I expected,” he says.  In fact, the U.S. housing market as a whole looks much better than expected to Chu’s boss, Danny Lim.

“In some places the types of prices that we are getting, I think it’s you know, once in a generation, perhaps once in a lifetime kind of opportunity,” says Lim, who was in Miami looking for more property.

Andy Chu, a local real estate agent, says he is advertising in the Asian newspapers. He points out the strong rental market in Las Vegas means houses here can quickly become income-producing properties.

“We let them know, hey look, U.S. is a good place to invest,” he says.

Andy Chu’s clients from Asia are now a quarter of his business, and he wants more.  They’re good customers. They often will buy several properties and pay in cash, which means he doesn’t have to spend months waiting for financing to be approved.

“From a business perspective, you can get paid in four days or get paid in six months,” he says.


Short Sale Fraud

There will be realtors who see this video and think, “Jim, you have it all wrong.”

“The listing agent’s duty is to the seller only, not the bank.”

But that is the short-sighted, greedy viewpoint.  For agents to hide behind that simple thought, and ignore the big picture so they can pad their wallets is how we got here in the first place.

The big-picture viewpoint:

1. It’s wrong because it’s wrong.

2. To purposely cause banks to accept less than full value increases the eventual taxpayer bailout, which our children and grandchildren will inherit.  If you are OK with that, you are a dirtbag.

3.  To perpetuate the fraudulent activity increases the chances that banks will shut down the realtor program, and find a way to liquidate these properties without us.

4.  I encourage you to sell my listings, you should allow me to sell yours.  It is how the co-op realtor business was designed in the early 1960s, and should be respected – or disbanded once and for all for the kill-or-be-killed program.

If you are a realtor and still have a problem with this, then submit your name and license number with your comment so I can turn you in too:

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