88.6% Not Underwater in SD

clIn the San Diego-Carlsbad area, 11.4 percent, or 66,899, of all residential properties with a mortgage were in negative equity as of the third quarter 2013, according to CoreLogic.  It was a slight improvement from 2Q13, when 13.6% of all mortgaged properties were in negative equity.

San Diego-Carlsbad

More than 20% equity:  73.3%

0 – 20% equity:  15.3%

Negative Equity:  11.4%

Near Negative Equity (95%-100%): 2.4%

Near Positive Equity: (100%-105%): 2.0%

Mortgaged Properties: 585,000

Average Loan-to-Value ratio: 56.9%

http://www.corelogic.com/about-us/researchtrends/equity-report.aspx

Click on image:

underwaterreport

Blaming It On ‘Market Conditions’

Ditch the reserve price and send buyers into a tizzy!

mjMichael Jordan’s 56,000-square foot home in suburban Chicago has failed to sell at auction after the bidding fell short.

Jordan spokeswoman Estee Portnoy says nobody offered the reserve price of $13 million for the seven-acre estate in Highland Park, north of Chicago.

Portnoy says Concierge Auctions publicized Monday’s auction well, but that market conditions aren’t ideal. She says options for the property will be evaluated next year.

The former Chicago Bulls superstar’s home originally was listed at $29 million in early 2012.

http://msn.foxsports.com/nba/story/michael-jordan-chicago-illinois-estate-up-for-auction-but-does-not-sell-121613

Inventory Watch – Still Selling

There have only been 94 listings expire, withdraw, or cancel in the first half of December. With 794 active listings, you’d think that there might be more cancelling for the holidays, and coming back fresh next year. But after a home has been on the market for 30-60 days, the showing activity drops off so much that it probably isn’t a bother to keep them active. P.S. It’s not a typo, both of the middle categories have 211 active listings this morning.

North SD County’s Coastal Region (La Jolla-to-Carlsbad)

The UNDER-$800,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
95
$376/sf
47
1,988sf
December 2
79
$371/sf
50
2,047sf
December 9
72
$383/sf
43
1,954sf
December 16
81
$378/sf
42
1,948sf

The $800,000 – $1,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
245
$448/sf
61
2,856sf
December 2
239
$448/sf
64
2,851sf
December 9
226
$461/sf
65
2,812sf
December 16
211
$464/sf
66
2,794sf

The $1,400,000 – $2,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
227
$580/sf
81
3,692sf
December 2
222
$588/sf
85
3,653sf
December 9
219
$586/sf
87
3,636sf
December 16
211
$593/sf
88
3,627sf

The OVER-$2,400,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
340
$1,040/sf
159
6,347sf
December 2
330
$1,049/sf
160
6,342sf
December 9
318
$1,057/sf
163
6,392sf
December 16
317
$1,049/sf
163
6,420sf

Another good week for pendings! For those who didn’t see it on the video, of the 201 NSDCC detached-homes listed in the last 30 days, only 35 have gone pending (17%). With the pending counts holding steady, it appears that pricing of new listings is getting wronger each week.

Weekly NSDCC New Listings and New Pendings

Week
New Listings
New Pendings
May 30
70
84
June 5
87
64
June 11
77
69
June 17
73
66
June 24
100
69
July 1
86
64
July 8
81
53
July 15
106
54
July 22
105
89
July 29
71
74
Aug 5
105
64
Aug 12
77
61
Aug 19
88
73
Aug 26
87
77
Sep 2
76
55
Sep 9
85
58
Sep 16
102
61
Sep 23
84
54
Sep 30
73
80
Oct 7
80
61
Oct 14
78
53
Oct 21
70
63
Oct 28
54
40
Nov 4
63
53
Nov 11
49
64
Nov 18
52
44
Nov 25
48
40
Dec 2
25
34
Dec 9
45
47
Dec 16
56
46

How Jim Handles Bidding Wars

Here is the wrap-up report on the 5-offer bidding war we had on Ivy Rd.

Most bidding wars lack transparency – the listing agents just want you to send in your best deal and they decide which is best.

I handle the bidding wars personally, and pit all contenders against one another to ensure top dollar. It takes more work – but it’s worth it:

Mozilo’s Errant Email = Free Rent Forever?

Remember Dan Bailey?  Here is a follow-up from latimes.com:

angeloDaniel A. Bailey Jr. isn’t your average homeowner. He hasn’t paid his  mortgage in more than five years, and has no plans to start now.

His stance stems from a bizarre incident that thrust Bailey into the news in  2008, when he suddenly became a public relations liability for embattled home  lender Countrywide  Financial of Calabasas.

Bailey had blanketed Countrywide with emails begging for a mortgage  modification. The reply came from none other than Angelo Mozilo, Countrywide’s  chief executive, who accidentally hit “reply” instead of “forward” on a note  meant for colleagues. In the misfired missive, Mozilo called Bailey’s letter a  “disgusting” and “unbelievable” example of the form letters then inundating the  lender from borrowers saying they couldn’t pay.

The email:

“This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.”–Countrywide Financial founder, chairman and chief executive Angelo Mozilo

Bailey insists that Bank of America is obligated to honor an agreement that  Countrywide’s damage-control squad struck to silence him — a verbal deal he says  entitles him to live for free in the two-bedroom, 938-square-foot bungalow he’s  called home for 21 years.

Bailey, a struggling photographer, said he struck his deal with a Countrywide  executive he knew as Ms. Morgan. She told him he could stop paying his mortgage,  but only if he signed off on a loan modification within 24 hours and kept quiet  about Mozilo and his errant email.

Read the full article here:

http://www.latimes.com/business/realestate/la-fi-live-for-free-20131214,0,4150658.story#ixzz2nTDr1qf6

The whole story from 2008, including the form letter Bailey used from loansafe.org, an internet coaching service for troubled  borrowers:

http://www.foxbusiness.com/markets/2008/05/22/countrywides-mozilo-calls-borrowers-plea-disgusting/

Investor Activity in 2014

investors2014The Trulia predictions earlier this week included several references to less investor activity in 2014, due to higher prices.  In particular was his #2 point:

2) The Home-Buying Process Gets Less Frenzied. Home buyers who can afford to buy won’t be as frantic as buyers in 2013. That’s because there will be more inventory to choose from, less competition from investors, and somewhat looser mortgage credit in 2014.

Investor activity is less than what the media will have you believe – at least in San Diego. According to this article by the Fed, investors made up less than 4% of total sales in San Diego in 2012.  Flippers came on strong this year, so the 2013 investor count is likely to be higher than last year’s, but probably still under 10% of the overall market.

I don’t think investors are done.

They will only quit when they’ve been burned – and it will probably take a few big losses to run them out of the business.

Instead, I think we will see increased competition for the deals – the standard listings that are priced at the comps or under.  There should be a solid floor to the market.

But investors/flippers will be under increased pressure to pay more than they are comfortable paying – everyone is!

They will try to pass it on to the retail buyer, and bump their list prices even higher.  Because of their confidence from recent successes, they will main contributors to the OPT pool (over-priced turkeys).

It’s already happening – there are flippers sitting on OPTs everywhere, confident that once the holidays are done, the buyers will be back.

However, the market has been extremely active the last couple of months – there hasn’t been much of a holiday dip in buyer interest, there just aren’t many quality homes for sale at decent prices.

Coming off a boisterious 4Q12 and fueled by mortgage rates in the low-to-mid 3% range, the spring selling season went gangbusters this year.

But now that the hyper-frenzy is done, buyers aren’t jumping at everything any more.

The current environment is much more cautious, which is ideal for a standoff.  With (over) confident flippers continuing to push their list prices, and regular sellers tacking on an extra 5% to 10% just to make sure they get all their money, we are ripe for the Big Stall in spring.

P.S. Trulia’s other comment about ‘somewhat looser mortgage credit in 2014’ is suspect too.  We haven’t covered the QM yet, but back-end ratios will be limited to 43% starting January 1st – and they have been as high as 50% this year.

fed investor share

AgentMatch Surrenders Already

wimped outThe people from realtor.com who were experimenting with an agent-rating site dubbed, ‘AgentMatch’ gave up the fight today – before it even started.

From the realtor.org website:

http://www.realtor.org/articles/realtorcom-concludes-agentmatch-pilot

We learned a few things in this experiment. We learned that using an algorithm to “match” consumers with REALTORS® is misguided. A computer cannot find the best Realtor for someone, just like a computer cannot place an accurate value on a home.

There will likely be more finger-pointing and blame to go all around, but the bottom-line is this: they wimped out.

They assembled a 16-realtor advisory panel to fine-tune the package, but only had one conference call.  Sure, one of the 16 quit already after KW and others started with the usual complaints about agent-ratings, but you don’t quit – not when you are already behind.

The president says it in his surrender letter:

As you are aware, our competitors are moving ahead with their solutions regardless of industry involvement. In an age of reviews, ratings, big expectations and small attention spans, we wanted to create a service that would place facts, and the REALTORS® behind them, front and center.

Zillow and others are stomping on the gas pedal, and the only chance realtors have to maintain some control is to create our own website that is better than the rest.

Zillow already has 4x or 5x the visitors as realtor.com.  Placing “the facts, and the realtors behind them, front and center” is a great idea – please do it realtor.com!  What else do you got?  You better have something, and quick, because Zillow is eating you alive.

Here is the article from IN on the same topic, with more comments from brainless agents at the bottom:

http://www.inman.com/2013/12/12/realtor-com-concludes-agentmatch-testing-says-larger-project-remains/

Let Rates Be Your Guide

The 2014 Spring Selling Season will be impacted mostly by mortgage rates and the number (and quality) of homes coming to market.

rateswilldictateThe mortgage rates will likely dictate everything, and though thankfully the jumbos are still tracking the conforming rates, it won’t take much for both to get back around 5%.

From the Mortgage Bankers Association:

Rates for jumbo mortgages remain two basis points lower than for the 30-year conforming loan as both increased 10 bps for the week ended Dec. 6, according to the Mortgage Bankers Association.

The average contract rate for the 30-year conforming is at 4.61% and for the 30-year-fixed jumbo it is at 4.59%, the MBA says.

A rate of 5% won’t be the end of the world.  But buyers have a natural expectation of higher rates being reflected in the pricing – and yet sellers will have a hard time resisting the urge to tack on a little extra.

The super-premium properties won’t have much trouble selling.  The impact will be felt in the ‘tweeners’ – the homes that aren’t fixers, but are in between.  Their locations are so-so, condition is average to dated, and in general just not anything too special about them.

The tweeners got picked up in the frenzy, as buyers were is such a rush that they overlooked things they shouldn’t have.  Without frenzy conditions, that won’t happen again – will it?

The housing stats in news have been fairly negative, and the foreclosure crisis is apparently over.  Without a frenzy-push to ignite the market, there should be plenty of hesitation on both sides in early-Spring.

Rates will probably be a deciding factor for many buyers on whether to pay more, or wait.  Where will they be in a couple of months – especially when dancing around the Fed-taper question?

Susan said this morning, “Rates are following the 10 year treasury yield.  This morning as I type it’s up to 2.89.  As soon as we are over 3.0, I’m afraid there’s no looking back!”

http://www.marketwatch.com/investing/bond/10_year/charts?symb=1

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