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2014-01-24 07:07:08
Bryan & Allison's Real Estate Report - 1/24/14

As heard on today's Mr. Credit Radio Show

Today's post includes information and thoughts from today's Mr. Credit Radio Show in addition to our normal news and data.  For those who are new to our blog, thank you for taking the time to visit.  We hope you become a regular!

First up, the information from today's show:


SD area foreclosure rates decline in November (from SD Daily Transcript)

Foreclosure rates in the San Diego-Carlsbad area decreased for the month of November over the same period last year, according to CoreLogic.

The rate of San Diego-Carlsbad area foreclosures among outstanding mortgage loans was 0.63 percent for the month of November 2013, a decrease of 0.63 percentage points compared to November of 2012 when the rate was 1.26 percent. Foreclosure activity in San Diego-Carlsbad was lower than the national foreclosure rate, which was 2.18 percent for November 2013.

Also in San Diego-Carlsbad, the mortgage delinquency rate decreased. According to CoreLogic data for November 2013, 2.43 percent of mortgage loans were 90 days or more delinquent compared to 4.40 percent for the same period last year, representing a decrease of 1.97 percentage points.

RealtyTrac's foreclosure numbers for 2013 (from DS News)

Year-end numbers tallying distressed home sales in 2013 were released by RealtyTrac this morning. The data indicates short sales and foreclosure-related sales—which includes sales to third-party buyers at foreclosure auction and sales of REOs—accounted for a combined 16.2% of all U.S. residential sales last year. It may surprise some to know that's up slightly from both the previous two years.

More than 256,000 short sales were completed in 2013 and while the short sale percentage was up from 2012, it slipped slightly compared to 2011. REO sales totaled more than 436,000 last year, with that share up from both the previous two years. Properties sold to third parties at foreclosure auction also rose, as did all-cash purchases, which ended the year at 29.1% of all U.S. residential sales after trending higher in the second half of the year.

Foreclosures fell to 8 year low in 2013 (from UTSanDiego.com) 

Foreclosures and default notices in San Diego County in 2013 dropped to their lowest total since 2006, the year before the official start of the Great Recession.

Last year, lenders filed 6,300 default notices, which officially begin the 90-day foreclosure process. Of those, 2,407 properties were repossessed, real estate tracker DataQuick reported Tuesday. In 2006, there were 8,816 default notices filed and 1,621 foreclosures.

“Home values continue to increase, which makes it easier for defaulted borrowers to resolve their defaulted loan,” said Mark Goldman, a loan officer and real estate lecturer at San Diego State University. “They can sell their house because they have equity in it.”

In 2013, the median home price in the county was $402,500, an 18.3 percent jump from 2012, when there were 14,666 default notices filed and 5,994 foreclosures. Default notices peaked in the county in 2008, the middle of the Great Recession, with 35,215 filed. Foreclosures hit their high the next year, with 17,712 trust deeds filed.

Statewide, foreclosures hit a seven-year low of 8,205, while default notices dropped to an eight-year low of 82,749.

“Some of this decline in foreclosure starts stems from the use of various foreclosure prevention efforts – short sales, loan modifications and the ability of some underwater homeowners to refinance,” said John Walsh, DataQuick president, in a statement. “Most of the drop is because of the improving economy and the increase in home values. Fewer people are behind on their mortgage payments.”

In December, when San Diego’s median price was $415,000, there were 136 foreclosures, down from 355 a year ago and the lowest since the 134 properties repossessed in August 2006. There were 387 default notices filed in December, a slight uptick from November, but down from the 878 filed in December 2012.

Shadow inventory lowest since August 2008 (from DSNews)

The industry's shadow inventory of homes with mortgages 90 or more days delinquent, in foreclosure, or held as REO by mortgage servicers but not currently listed on multiple listing services (MLSs)--also known as pending supply--stood at 1.7 million as of October 2013, according to CoreLogic

The supply of homes hidden in the shadows carries a value of $256 billion and is at its lowest level since August 2008, the company reports.

Turn back the calendar 12 months, and those numbers were significantly higher. In October 2012, there were 2.1 million homes in shadow inventory with a value of $348 billion. The asset count of shadow inventory homes declined 24 percent, while the dollar amount attached to the industry's hidden inventory dropped 26.4 percent in one year's time.

''The shadow inventory continues to decline,'' said Dr. Mark Fleming, chief economist for CoreLogic, ''decreasing at an average monthly rate of 46,000 units over the last year.''

According to Fleming, a healthy market hides around 650,000 housing units in its shadows. ''[T]here is more to be done, but the trend is in the right direction,'' he said.

Freddie Mac: Short sales more attainable than homeowners think 

When a homeowner is unable to make their mortgage payments or owes more on the home than it's worth, a short sale can be a viable option that avoids the negative implications of a foreclosure for both the homeowner and the mortgage-holder. 

However, common perceptions of short sales as difficult, lengthy, restricted to specific circumstances, and harmful to personal credit cause many to shy away from the option. 

In a blog post Monday, Freddie Mac SVP Tracy Mooney aimed to set the record straight regarding Freddie Mac short sales. 

While short sales have been known to drag on in the past, Freddie Mac's Standard Short Sale requires servicers to approve or deny a homeowner's application within 30 days. After approval, the short sale should close within 60 days, according to Mooney. 

Misperceptions regarding eligibility requirements are also a barrier, Mooney says. She clarified that short sales can be an option for owners of investment properties or second homes, those with second mortgages, and homeowners who are current on their loans. 

Those who are current on their loans must meet the property must also be your primary residence and your debt-to-income ratio must be greater than 55 percent,Mooney said. 

For those who have second mortgages, Mooney said Freddie Mac is offering up to $6,000 to subordinate lien holders--who are like second mortgage companies--in exchange for releasing the subordinate lien, extinguishing the underlying indebtedness, and waiving the right to pursue deficiency. 

Another major source of concern for homeowners is the impact a short sale will have on their credit scores and their ability to obtain another mortgage in the future. 

While only the credit reporting agencies that calculate your credit score will know for sure, it's possible that a short sale might be better for your score than a foreclosure, Mooney said. 

Even if it isn't, a short sale gives you time to find a more affordable place to live and exit gracefully from your obligation, she added. 

Mooney also assured homeowners that in most cases, they will not be on the hook for the full mortgage loan amount, though they may be required to pay a portion of the unpaid balance after the short sale closes. 

When a borrower enters into a short sale, the impact on his or her ability to obtain a new mortgage depends on the circumstances, according to Mooney. 

Those who enter into a short sale after a financial hardship such as a medical emergency or loss of income must wait 24 months to re-establish credit and apply for a new mortgage loan, while those who opt for a short sale due to personal financial mismanagement must wait at least 48 months before applying for another mortgage, according to Mooney. 

Mooney recommends homeowners consider a short sale if they do not qualify for other loss mitigation options, need to move to obtain or maintain their jobs, or are underwater. 

 Fed taper could hit housing market (from UTSanDiego.com) 

The stakes are high for San Diego’s housing market as the Federal Reserve tapers the national economy off super-low interest rates. 

Some experts think interest rates have been held back more by sluggish global growth than by Fed stimulus, so the “taper” that began this month won’t matter much. Then again, nobody can reliably forecast short-term rate movements. 

And there’s little question that higher rates would hurt potential homebuyers. Already, skyrocketing mortgage payments may have chased away enough demand to halt price growth. 

Further increases would pile a new problem onto the region’s housing market, which is distorted by a chronic supply shortage and soaring costs caused by local and federal government polices. 

Waiting has certainly punished potential buyers lately. A typical new mortgage in San Diego County hit a modern low of $1,150 a month in February 2012, but by last month it had jumped nearly 47 percent to $1,695. 

Most of the increase came from home prices, which surged 38 percent in less than two years. 

Last summer the action shifted to interest rates, which have climbed from 3.5 percent to nearly 4.5 percent for the average fixed-rate, 30-year mortgage. That run-up started in May, when Fed Chairman Ben Bernanke outlined his plan to gradually reduce bond purchases the central bank began in September 2012 to keep rates low. 

Maybe it’s a coincidence, but San Diego’s soaring housing market leveled off at almost precisely the same time. 

The median price has inched up less than 1 percent since June, when it was $416,500, to $420,000 in December, according to DataQuick, a San Diego-based reasearch firm. 

In contrast, the median had shot up 36 percent before the announcement from $305,000 in February 2012, when the typical payment reached its low. 

Now that the Fed has begun its “taper,” what comes next is anybody’s guess. There are lots of moving parts in San Diego’s housing economy. 

On the bright side, many experts see little risk that interest rates will skyrocket as they did in the early 1980s, when the Fed cranked up rates to tame high inflation. Indeed, Bernanke has warned that inflation is too low. 

“I would tell people not to panic on interest rates; they aren’t going to be going up very much,” said Christopher Thornberg, founding partner of Beacon Economics in Los Angeles. “We have a world that is awash with capital, and not much demand for it for a variety of reasons.” 

Bernanke has said the Fed will effectively be stimulating the economy until it stops buying bonds completely and begins to raise short-term interest rates, probably not before 2015 or beyond. 

His successor, Janet Yellen, shares that view. Both are worried about inflation, which slumped to 0.7 percent in October, well below a 2.5 percent target. 

Meanwhile, academics are debating whether the bond purchases have influenced interest rates all that much. A recent paper by Fed economists found a modest effect. Others say the policy has driven market psychology, pointing to this summer’s jump in rates.

Now, the rest of our posts for the day: 


County existing home prices up 20% in 2013 (from SD Daily Transcript) 

San Diego County existing homes saw a 20 percent gain in the median price in 2013, with single-family homes selling for a median of $457,000, according to the Greater San Diego Association of Realtors (SDAR).

“We can breathe a sigh of relief as we look back at the 2013 housing market,” said 2014 SDAR President Leslie Kilpatrick. “Strength and stability are what we can hope for in 2014.”

Single-family home prices rose 19 percent in 2013 -- a median price of $457,000. Condo and townhome prices increased by nearly 29 percent, reflected by a 2013 median price of $295,000. The total number of home sales last year was 36,240, virtually the same as 2012.

The December median price of single-family homes in San Diego County was $478,500, an increase of 2 percent from the previous month, and nearly 14 percent from December 2012. The median price of condos and townhomes in December ($300,000) was down slightly from November, but is 19 percent higher than the same time last year.

The number of single-family home sales in December was down only slightly from November, but condo and townhomes saw a healthy 6 percent increase in December sales over the previous month. Sales were down, however, from one year ago.

In December, the ZIP codes with the most sales of single-family homes include: 92028/Fallbrook – 53; 92057/Oceanside – 42; 92128/Rancho Bernardo – 41; and four ZIPcodes posted 37 sales: 92021/El Cajon, 92056/Oceanside, 92114/Encanto, and 92127/Rancho Bernardo.

The most expensive San Diego County listing sold last month was a 5-bedroom, 5-bath, 8,500-square-foot home in La Jolla that sold for $16.25 million.

SDAR’s housing statistics are compiled monthly from the Multiple Listing Service (MLS). 

NSDCAR's HomeDex Report (NSDCAR)

The North San Diego County Association of Realtors' (NSDCAR) January 2014 HomeDex Reports provide December 2013 housing statistics in two separate reports, featuring North San Diego County and full San Diego County statistics. Here is a snapshot of the January housing report. 

  • The median price for all North County home sales - attached and  detached - increased to $478,500 in December 2013 compared to $475,000 in November 2013. 
  • Detached homes in North County increased 0.19 percent to $540,000 in December 2013 compared to $539,000 in November 2013.   
  • Year-over median SFD price in North San Diego County increased 10.32 percent, compared to $489,500 in December 2012 - a 17-month trend of year-over median price increases. 
  • The median SFD price in non-North County ZIP codes increased 2.86 percent in December 2013 to $441,250 compared to $429,000 reported in November 2013.
  • Year-over non-North County median price increased 15.21 percent compared to $383,000 in December 2012, continuing a 21-month trend of year-over median price increases.
  • The number of North San Diego SFD listings (active and contingent) decreased 13.42 percent in December 2013 compared to November 2013.
  • The number of sold North San Diego County SFD units decreased 3.16 percent in December 2013 compared to November 2013. Year-over sold SFD units decreased 15.97 percent compared to December 2012.
  • Median days-on-market for single-family detached homes sold in North County increased to 33 days in December 2013 compared to 32 days in November 2013.
  • The HomeDex affordability percentage for all homes in North San Diego County remained at 33 percent in December 2013. 

C.A.R. Seller Survey: Home sellers excited about the market (C.A.R.) 

Home sellers are more optimistic about repurchasing a home than in the past few years, thanks to strong growth in home prices, record-low interest rates, and better personal financial situations, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2013 California Home Sellers Survey.” 

More than two-thirds (69 percent) of home sellers purchased a home after selling their previous residence, up from nearly half (47 percent) in 2012, and from only 12 percent in 2011. 

“Much-improved housing market conditions in the last year have given sellers more confidence to own a home rather than to rent one,” said C.A.R. President Kevin Brown.  “With sellers being more positive about the future of home prices, the vast majority of sellers who are currently renting plan to buy again in the future.  In fact, 70 percent of sellers who are currently renting said they would purchase another home, up from 22 percent in 2012.” 

Nearly half of sellers (43 percent) believe that home prices will rise in one year, compared to just 9 percent in 2012, and nearly three of five sellers (58 percent) believe home prices will increase in five years, up from 12 percent in 2012. 

Additional findings from C.A.R.’s 2013 California Home Sellers Survey include: 

• The reasons for selling changed significantly in just one year.  In 2012, the majority of sellers sold primarily because of financial difficulties, but as home prices surged, a desire to trade up became the top reason for selling in 2013.  Others wanted to take advantage of low interest rates to finance their next home, and some sellers believed the price of their home had peaked and wanted to cash out. 

• Heightened market competition in the first half of 2013 led to an increase of multiple offers, nearly all home sellers (98 percent) said they received multiple offers, up from 83 percent in 2012.  On average, each home sale received 5.9 offers in 2013 compared to 3.1 offers in 2012. 

• Fierce market conditions also led to bidding wars, with nearly half (45 percent) of all sellers receiving offers higher than the asking price.  In fact, more than one-third (37 percent) received three or more offers above asking price.  Sellers, on average, received 2.2 offers above asking price. 

• The Internet continued to be the most common resource for sellers to find an agent, with 51 percent of sellers finding their agent online.  One-fourth of sellers used the agent with whom they had previously worked, up significantly from just 3 percent in 2012. 

• Website listings were an integral part of the selling process, with more than two-thirds of sellers finding Realtor.com as the most important website in the selling process. 

• Social media is playing a larger role in the home-selling process.  Nearly three-fourths (74 percent) of sellers incorporated social media into the selling process, up from only one-fourth (24 percent) in 2010.  Sellers used social media sites such as Facebook (83 percent); Twitter (52 percent); YouTube (39 percent); LinkedIn (24 percent); and Yelp (19 percent) to learn more about their agents or to communicate with them. 

Housing gains ground in minds of consumers (from DSNews) 

Consumer attitudes about housing ended 2013 on solid footing following a slip in autumn, according to results from 'Fannie Mae's' December National Housing Survey. 

The 'Fannie Mae's' show less than half (49 percent) of those polled expect home prices to increase over the next year, up from 45 percent in November and 43 percent last year. Nine percent say prices will fall, a fairly flat statistic compared to both the month and the year prior. 

The average price change expectation was 3.2 percent, returning to pre-government shutdown levels. 

''The marked improvement in housing market sentiment over the course of 2013 bore out our view going into the year that the housing recovery was on a firm footing,'' said Doug Duncan, SVP and chief economist at Fannie Mae. ''Year-over-year gains in home price expectations and attitudes about the current selling environment were particularly notable.'' 

Bucking the consensus forecast, the number of consumers predicting mortgage rates will increase over the next 12 months fell to 57 percent, while the number of those saying rates will fall increased slightly to 4 percent. 

Notably, despite industry concerns about a higher interest rate environment and tighter loan access as a result of impending regulations, consumers are more optimistic about their chances of getting a loan, with 50 percent saying they think it would be easy to get a mortgage today (compared to 45 percent last year). 

''Consumer attitudes about the ease of getting a mortgage today are at their highest level in the survey's three-and-a-half-year history, which should help offset the current higher interest rate environment and support a continued but measured housing recovery as we move through 2014,'' Duncan said. 

Bryan & Allison Devore

Berkshire Hathaway HomeServices|California Properties

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