––For Every Two Homes Available for Sale, There Is One “In The Shadows”––

 

CoreLogic® (NYSE: CLGX), a leading provider of information, analytics and business services, reported today that the current residential shadow inventory as of October 2011 remained at 1.6 million units, representing a supply of 5 months. This was down from October 2010, when shadow inventory stood at 1.9 million units, or 7-months’ supply, but approximately the same level as reported in July 2011. Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders. Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.
Data Highlights:

• As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.
• Of the 1.6 million properties currently in the shadow inventory (Figures 1 and 2), 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006. A healthy housing market should have less than one-month’s supply of shadow inventory, which would be an easily absorbed stock of distressed assets with little or no discernable impact on house prices, unless the inventory was geographically concentrated.
• Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.
• Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.
• Based on current estimates of the visible inventory (both distressed and non-distressed), the shadow inventory is approximately half of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows”

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.
The full report can be found at http://www.corelogic.com/ShadowInventoryOct2011.

I do follow CoreLogic reporting every month…however, there are other credible estimates of the shadow inventory 3-4 times what CoreLogic reports. That's very scary and is what is going to keep our values from increasing any time soon.

Thanks for reading…Steve Jackson
Call me directly at 561-602-1258

What if the Federal deficit was your household debt?

Pre market. Awesome lot in The Greens

Not yet on the market...but coming soon.

At the end of a cul-de-sac
Fully fenced yard
Accordion shutters up and down
Screened patio
Over 1800 sq feet under air
3 bedrooms plus a loft
Huge master closet
New A/C (2010)
Well pump for sprinkler
Original owner...lived in 1 month a year

Call me today to set up your private viewing.
561-602-1258

Thanks for reading...Steve

Winston Trails bank owned-new to the market

A Gold Coast home has just been put on the market, it is owned by Fannie Mae. This bank owned home is a Monaco model: 1 story, 3 bedrooms, 2 baths, 2 car garage, patio, 2043 sq ft under air.

This bank foreclosure is priced at $214,900...about $105/sq ft

Thanks for reading...Steve
561-602-1258

Are you “choosing” foreclosure?

It frustrates me to see homeowners continue to stick their head in the sand and choose foreclosure.  Yes, I said CHOOSE! 

Foreclosure is a choice made by uninformed homeowners who have simply given up.  No matter how frustrated you are or how grim the situation has become, foreclosure is almost never the right choice.

Below I’ll explore a number of ways to avoid foreclosure:

1)  Loan Modification

A loan modification is an adjustment to the original loan terms agreed upon by the lender and the borrower. There are three areas that can be adjusted:

1   Interest rate (lowered either temporarily or for the life of the loan)
2.  Length of the loan (extended to 40 years!)
3.  Principal owed/Principal reduction (this is the least likely to occur)

Loan Mod Requirements

You will need to provide extensive documentation to prove why you need a modification.  Your bank will go through a credit check, run an income vs.. expenses analysis, and then will do an appraisal on your home.

By most accounts, the loan modification programs, the most popular one was HAMP (Home Affordable Modification Program), many called it the “Obama plan,” have been an absolute failure.  The criteria to qualify for one of these programs continues to change and most borrowers who have attempted them have been denied.

And those who were approved many times did not get approved for terms that would allow them to keep their home long term.  That is why the re-default rate is over 50% within 12 months after a loan modification.

Our position on Loan Modifications has never changed: If your financial hardship is temporary and the savings from the loan modification will enable you to keep your home, then this is a viable option.

What to Watch Out For: Trial modifications that entice you into paying 3 straight payments and then once you do, they deny you for a permanent modification. But a crucial thing to watch for is when you are in a month over month holding pattern and keep getting told that your file is being reviewed the bank is moving forward with a foreclosure action!

2) Refinancing

If you are upside down, where you owe more than your home is worth, then the only chance to refinance will most likely be through the Home Affordable Modification Program (HARP).  The Obama administration recently loosened the requirements to get into HARP in an effort to assist more underwater homeowners.

HARP Requirements:

• Your loan must be guaranteed (owned) by Fannie Mae or Freddie Mac and have been since prior to May 31^st 2009.
• You must be current on your existing mortgage and current for the prior 6 straight months
• You can only have 1 late payment on your mortgage in the last 12 months

Contact your existing lender to see if they are participating in HARP.

HARP can be a long term solution if a homeowner can get into a lower payment they can afford.  However distressed homeowners need to remember that this does not solve the fact that the home is underwater.  In addition, it pushes your loan out 30 years again. 

What to Watch Out for: Be on the look out for loan modification and refinance scams.  Any time the media shines the light on some of these programs, scam artists try to take advantage of distressed home owners.  Never pay any up front fees of any kind or any fees throughout the refinance process!

3)  Forbearance

Forbearance is a special agreement between the lender and the borrower to delay a foreclosure and come to an agreement as to how missed payments (and associated fees) are to be paid back.

Is Forbearance Right for You?

Forbearance should only be used for a temporary financial hardship.  If someone has a more long term hardship such as unemployment or underemployment then this is not a good option.  The lender will not agree to forbearance unless the terms are favorable to them which may include a lump sum payment or tacking on any missed payment to the back end of your loan. Remember all of those payments that you don’t make get ADDED onto the end of your loan.

What to Watch Out for:  Trying to obtain forbearance because you can no longer afford your home and you are upside down is a bad idea and only makes you further upside down.

 

4) Bankruptcy

Bankruptcy is the legal status of an insolvent person or business that cannot repay debts owed to creditors.

Is Bankruptcy Right for You?

Bankruptcy does not stop a foreclosure forever. But it will delay it and it may eliminate the responsibility for the deficiency balance on your mortgage.

Bankruptcy Requirements

Income and assets guidelines dictate if an individual or a household would qualify for it.  If a foreclosure date does not allow for enough time to find another place to live, there are additional liens on the property that would prevent the home to be sold on the open market, or you are concerned that the bank will come after you for the difference, than a bankruptcy may make sense.

What to Watch Out For:  Bankruptcy has the worst possible effect on your credit and should only be used when absolutely needed.

5)  Deed in Lieu of Foreclosure

A deed in lieu of foreclosure occurs when a borrower conveys all interest in their property over to the lender to satisfy the loan that is in default and avoid foreclosure proceedings.

Is Deed in Lieu of Foreclosure Right for You?

A deed in lieu of foreclosure, is basically a “voluntary foreclosure,” since you are essentially handing over the property to the bank without them having to go through the actual foreclosure process. While a deed in lieu is easier than foreclosure, the only party who will reap the benefits of this program is the bank. The credit implications and impact on your ability to borrow money in the future are identical to a foreclosure. It is not looked upon favorably.

What Are The Deed in Lieu of Foreclosure Requirements?

Like many foreclosure alternatives, there is a long list of requirements that prevents many people from qualifying for a deed in lieu of foreclosure.

For example, other liens and mortgages may limit this option, and a true hardship must exist.   Since the bank is not in the business of owning properties they will only consider this option if the loan is in default and they truly believe they will have to foreclose if they do not agree to it.

Lenders prefer short sales over a deed in lieu because with a short sale they don’t have to take over the property. Even under the Treasury’s HAFA program you are required to first attempt a short sale and if that fails after 120 days then you can apply for a deed in lieu of foreclosure.

What to Watch Out for: A deed in lieu does not automatically forgive the deficiency balance on the loan. Just like with a short sale you need to be sure the language in your Deed-in-lieu agreement waives any deficiency balance.

6) Short Sale

A short sale is the process of selling a home through which the lien holder(s) agrees to settle for less than they are owed.

Any unpaid balance owed to the creditors is known as the deficiency which, if negotiated effectively, is forgiven.

The main reasons our clients opt for a short sale over the other options are: debt forgiveness, credit impact, ability to purchase another home more quickly, the likelihood of a continued depressed housing market, selling with dignity, and moving in a more predictable and controllable timeframe.

We have found that many distressed homeowners will attempt some of the above methods such as loan modification, forbearance, and then leave a short sale for last. Then once the short sale is complete almost all of them wish they had done the short sale from the beginning!

Please…don’t wait until you get the “notice of foreclosure sale” served to you…give me a call now, we’ll discuss what your best option is and how to accomplish it. My direct line is 561-602-1258.

Thanks for reading, Steve Jackson

Freddie Mac offers help for the unemployed

Just this afternoon I received an email bulletin from Freddie Mac that may give some relief to unemployed individuals having difficulty making payments on a Freddie Mac loan.

 

Here is a brief overview with a link to the actual Freddie Mac document I received:

Freddie Mac, (Bulletin 2010-17), is introducing new forbearance requirements to provide a “short-term unemployment forbearance” relief option to assist Borrowers who are unable to make their Mortgage payment due to unemployment.

In addition, Freddie Mac is introducing an “extended unemployment forbearance” relief option to provide an extension of the forbearance period if such Borrowers have not regained employment after the short-term forbearance period has ended. Including these additional relief options in our loss mitigation tool kit gives unemployed Borrowers an opportunity to retain homeownership by providing Mortgage payment relief while they seek re-employment.

Servicers will have delegated authority to approve eligible Borrowers for a short-term unemployment forbearance period of six months during which time the monthly Mortgage payment is either suspended or reduced.

If the Borrower remains unemployed at the end of the short-term unemployment forbearance period, the Servicer must consider the Borrower for extended unemployment forbearance in accordance with the Guide.

If the Borrower meets the eligibility criteria for extended unemployment forbearance, the Servicer must obtain Freddie Mac’s written approval before entering into an extended unemployment forbearance plan with the Borrower.

EFFECTIVE DATE: Changes announced in this Bulletin are effective February 1, 2012 for all new Borrower evaluations for an alternative to foreclosure. However, Servicers may begin implementing the unemployment forbearance relief options earlier for all new requests for assistance in which an eligible Borrower’s hardship is unemployment.

If you have any question about Freddie Macs new plan, above, or any other questions regarding foreclosure alternatives, please pick up the phone and call me directly at 561-602-1258...or send me an email

Thanks for reading my blog…Steve Jackson

Steal this bank foreclousre in Winston Trails

But you better be on my mailing list or see this as soon as it's posted!

Paris: 5 bedrooms, aprox 2750 sq ft under air, 3 baths, 1 bedrooms and full/cabana bath on 1st floor
Lakefront: Great northern rear exposure
Pool

ONLY $225,000!

To get on my HOT BUYS list...send me an email (click 'hot buys')

If you'd like to put in an offer on this home, give me a call at 561-602-1258

Thanks for reading...Steve

2 month payroll tax reduction=30 years of increased mortgage payments!

 

The temporary extension of the payroll tax (and extended unemployment benefits) is being funded with fees from new Fannie and Freddie mortgages. BUT…these fees are not 1 time fees…these fees are not just for 2 months…these fees are not for 10 years (as mistakenly understood by the media)…these fees are for THE LIFE OF THE LOAN! 30 years if one keeps the mortgage!.

How in the world does this make sense? Add costs to an integral part of the WEAKEST part of our economy…add costs to the segment of our economy that almost all agree will have to spearhead any real recovery! And, with all of the political grandstanding about “getting the govt. out of mortgages”,..they have now tied the financing of this bill to ongoing underwriting of mortgages by Fannie and Freddie.

And now that the politicians have dipped into the Fannie/Freddie new loan pocketbook, I shudder to think of what they’ll try to fund through new loan fees to home buyers going forward.

Voice your opinion of this tactic when you exercise your right to vote!

 

Thanks for letting me vent…Steve Jackson

2012

To help you celebrate and reflect here is a collection of quotes to start the new year.

Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us. -Hal Borland

In the New Year, may your right hand always be stretched out in friendship, but never in want. -Irish toast

Your Merry Christmas may depend on what others do for you … but your Happy New Year depends on what you do for others. -Author unknown

Your success and happiness lies in you. Resolve to keep happy, and your joy and you shall form an invincible host against difficulties. Helen Keller

We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year’s Day. Edith Lovejoy Pierce

One resolution I have made, and try always to keep, is this: To rise above the little things. John Burroughs

We spend January 1 walking through our lives, room by room, drawing up a list of work to be done, cracks to be patched. Maybe this year, to balance the list, we ought to walk through the rooms of our lives…not looking for flaws, but for potential. Ellen Goodman

Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man. Benjamin Franklin

May the best of this year be the worst of next. Unknown

Resolve to make at least one person happy every day, and then in ten years you may have made three thousand, six hundred and fifty persons happy, or brightened a small town by your contribution to the fund of general enjoyment. Sydney Smith

Lets talk about loan modification...

Over the past 3 years, banks have been given trillions of dollars from Congress (otherwise known as the US taxpayers) to motivate them to modify their home loans as the housing bubble collapsed. However, very few people have actually had their loans permanently adjusted, and instead, banks have been pursuing foreclosures at enormous rates.

Our opinion is that when it comes to loan mods, the homeowner who needs to be wary. On the surface, having the ability to lower ones payments an underwater mortgage certainly looks like a great deal, but we also know that the banks are on the edge of collapse due to the fact that the states and the courts are showing many of these entities do not have the proper documentation and ownership to actually foreclose on property.

The issue at hand is ownership of title, and rightful ownership of the actual note. When banks made their original loans to home buyers, they had the simple contract of title and note. However, when they sold the note to investments banks, who then separated the note from the title, and bundled these obligations with hundreds of others to create the RMBS, they simply put the title into a dummy holding company called MERS, and there was no longer a true and legal chain of ownership of the lien.

As time went on, some courts began to realize that the original banks, or the servicing agents who were simply collecting monthly mortgage payments, did not have the legal right or proper paperwork to foreclose on someones property.

So now, as a last ditch effort to compile the proper paperwork to satisfy the courts, banks are now suddenly offering loan modifications so that homeowners will by default, re-affirm the loan and justify a chain of ownership to the banks they did not have at the time of the foreclosure proceedings. Another important back-door trick of the banks is that they offer these "trial" loam mods, requesting all manner of financial documentation. And to get a loan modification, the homeowner needs to show income and assets enough to sustain payment on the lower payment. So most homeowner will go to great lengths to find and disclose and affirm assets and income that the bank may not have known about otherwise. Now, the banks know what assets to go after when they terminate the "trial" modification and foreclose instead.

In an article by Bruce Krasting on one of my favorite blogs, Zerohedge, he makes this assessment of the modification offers to homeowners:

One possible response would be to get all troubled borrowers to reaffirm their debt, the second is to get the trouble borrowers back to paying something on the mortgage, even if it were a fraction of what was formerly owed on a monthly basis. A loan modification would achieve both results. When a borrower signs up for a loan mod they sign new papers. A portion of this process will re-establish any loan balance that is due. The language in the mod could have new foreclosure terms that eliminate the banker’s problem with past tainted documentation. Once a borrower makes a few months of new lowered payments they are, in effect, confirming their acceptance of the new terms.

Most Mods go bust in six months or are cancelled for any number of reasons by the lender. So on the surface it would seem little is accomplished from the lenders perspective. But we think the lenders motivation for doing a loan mod is not to get a borrower to a monthly payment that they could realistically pay, but rather the motivation is to circumvent the foreclosure trap the lenders are in. A mod could legally resolve the problems.

To us, it appears to be a strong possibility that the banks and institutions that desire to foreclose on property are offering these modifications NOT as a means to help homeowners, but rather as a way to create new paperwork that will stand up in court, as well as uncovering assets and income that the banks may not have known existed, allowing the banks to foreclose and move on.

That being said, we have heard of homeowners that have received advantageous, permanent, modifications and are happy, keeping up with their payments, and keeping their home.

As we always recommend, any time your bank want documents from you or wants you to sign anything, contact a well educated and experienced real estate attorney.

You can also call us to discuss your options and the relative benefits/drawback to each...

or call me on my direct line at 561-602-1258

Thanks for reading...Steve

Drawn by me...for you

      
        


                 














Merry Christmas…Happy Holidays!

Sold today in Winston Trails...Paris/pool

A Paris (5 bedroom, 3 bath, aprox 2800 sq ft under air) was just reported as sold today. It was a short sale...corner lot...pool...screened enclosure:. Sale price: $220,000

NAR..."oops"!

I think it's time to tell everyone what I have known for a long time now...What the acronym NAR actually stands for. I know that they would like you to believe that it is 'National Association of Realtors', but the real truth, revealed to all recently is that NAR stands for: 'Numbers Aren't Real'!

The NAR US Housing Home Sales Figures were artificially inflated by at least 11% per year for the period of 2007-2010. Nice work NAR! They said there were a few "errors' in data collection and interpretation". And I think that it goes back to BEFORE 2007...why did they only go back and revise to that year?

“Sales were weaker than people thought (or were lead to believe by NAR reports),” said chagrined NAR spokesman Walter Malony. Data firm CoreLogic accused the NAR of over-counting home sales back in May of this year. At the time, the organization insisted that any issues with their numbers would be “relatively minor.” Unfortunately, NAR economist Lawrence Yun has revised that prediction to say that the changes in reporting will be “meaningful,” adding that “this means the housing market’s downturn was deeper than what was initially thought”.

 Being in the business every day for a long time now, I began to see a slowdown in the 1st half of 2006 and an 'accelleration' in price and volume declines right at the beginning of 2007. My analysis shows that the air started to come out of the bubble, at least in Palm Beach County, right at the end of 2005.

I could go in to their methodology and poke a thousand holes in it...but I'd bore everyone but myself.

The readers who regularly read my blog posts will know that I don't "toe the line" when it comes to the NAR/FAR, etc. Coincidentally, a blog post I wrote just about 5 weeks ago, http://winstontrails.blogspot.com/2011/11/if-they-keep-predicting-market.html skewers the NAR for their inept (intentionally misleading) comments.

Below are the charts that reflect the adjustments.

 
 
 
 
 
 
 
 
 
 

So...what does this all mean? And why now? What is the effect of this revision?

Well, I think the "why now" question can be answered by NAR being called out on their numbers by CoreLogic a few months ago.

But the "what does this all mean" question has many possible answers depending upon the angle it is being viewed from. My obvious, but cynical, view is that the NAR and administration can now more easily report "improvments" in home sales. The new sales figures will be compared to the re-benchmarked historical sales and will paint a rosy housing and economic picture going forward. And if the reporters (TV and print) continue to just repeat data rather than dig in to the meaning of the data, the re-benchmarked (lower) figures will fade into distant memory...and the 'improving home sales numbers' will be evidence of our 'robust and recovering' economy.

Lastly, what does this effect? This question is better answered by a formally trained economist, but I have to believe that these numbers somehow impact GDP in a negative sense, retroactively.

If you've read this far, I commend you! Seriously though, if you are considering your options, whether it be selling or purchasing real estate, call me. You don't want to take the chance of ending up getting advice and consulting with an NAR drone who is taught to memorize "objection handling dialogs' and sales tactics.

My direct line is 561-602-1258 or

Bank owned homes in Winston Trails

These homes have already been through the entire foreclosure process and have been taken back by the bank at a courthouse foreclosure sale:

Homes sold in Winston Trails

There have been 5 closed sales since November 26th as buyers push to close before the end of the year:

Click on the image to see a larger, more clear rendering

Merry Christmas From Aunt Fannie and Uncle Freddie

  Fannie Mae and Freddie Mac are suspending evictions of foreclosed properties from Dec. 19 through Jan. 2, 2012.

The government-sponsored enterprises are the first institutions this holiday season to announce their annual moratoriums, which is a common practice in the housing sector to provide families a greater measure of certainty during the holidays.

During this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be permitted to remain in the home.

The suspensions apply only to eviction lockouts related to REO properties owned by Fannie Mae and Freddie Mac and will not affect other pre- or post-foreclosure processes.

  “The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” said Terry Edwards, executive vice president of credit portfolio management at Fannie Mae, in a statement.

“No family should have to give up their home during this holiday season," he said.

Report: We Live in One of the Best Markets to Invest in Rental Property

DALLAS, Sept. 13, 2011 /PRNewswire/ -- THIRD QUARTER 2011 UPDATE -- HomeVestors of America, Inc., known as the "We Buy Ugly Houses®" company, and Local Market Monitor, Inc., a leading forecaster of real estate markets, today released the Third Quarter 2011 update of the "HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property" ranking...The ranking is intended to help inform real estate investors of current rental property investment opportunities based on their potential future relative returns.  The ranking is updated quarterly.
 The ranking forecasts the expected performance of rental  properties, specifically single-family homes maintained as rental properties.   The ranking is calculated based on three-year forecasts of home prices (reflecting underlying home-price appreciation potential) and gross rents (as a proxy for potential investor cash flow).
Ingo Winzer, president and founder of Local Market Monitor, Inc., said: "A sharper than expected fall in recent home prices, which are down almost 5% in the last year, has led us to lower expectations for future prices.  At the same time, however, higher inflation and slow but steady job growth should boost future rents.  The desirability of investing in rental properties is therefore positive.
"The Future Relative Returns for large markets suggest that Las Vegas and Detroit are still very risky, highly speculative markets that could have a big payoff only if the local economy rebounds faster than we expect.  The most interesting markets are in Florida and Arizona, where home prices have still not bottomed out but rents will eventually be supported by renewed population growth; investors in these markets must take a long-term view but will be rewarded if they can tolerate high vacancies for a few years."
David Hicks, co-president of HomeVestors of America, Inc., added: "What we're seeing in the marketplace reinforces the results of the latest ranking.  Our franchises in West Palm Beach, Atlanta, Phoenix, Dallas, Fort Worth and Tucson all report a marked increase in investor interest in rental property opportunities.  Investors are recognizing the potential for homes in these markets to produce above-average financial returns." 
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We have been consulting with potential investors quite a bit lately. At certain price-points we have been finding many properties returning 10%+ cash-on-cash returns…that’s without accounting for tax benefits and the potential (albeit long-term) for appreciation.
If you’d like to discuss how to diversify some investments out of low-paying CD’s or volatile equities…call me on my direct line at 561 602 1258 or send an email.

Thanks for reading…Steve Jackson

Winston Trails SOLD property...last 60 days

What is selling in Winston Trails? What is it selling for? How long is it taking to sell?

Below is a recap of the last 2 months of sales in Winston Trails using information from Palm Beach County tax records and Regional MLS info.

• Total # of homes SOLD: 10
• Lowest sales price: $140,000
• Highest sales price: $335,000
• Shortest # of days on the market: 38
• Longest days on the market: 1106

Here in more detail, are the 12 sales:

1. The Greens, Montreal, aprox. 1600 sq ft, 3 br/2.5 ba/1 gar:  $140,000
2. Oakmont, Antilles, pool, aprox. 2000 sq ft, 3 br/2 ba/2 gar:  $190,000
3. Las Colinas, Sapporo, aprox. 1700 sq ft, 3 br/2 ba/2 gar:  $205,000
4. Turnbury, Antilles, aprox. 2000 sq ft, 4 br/2 ba/2 gar:  $210,000
5. Golfview, Nairobi, lake, aprox. 2000 sq ft, 4 br/2.5 ba/2 gar:  $247,500
6. La Gorce, Casablanca, pool/golf, aprox 2075 sq ft, 3 br/2.5/ba/2 gar:  $249,000
7. Shadow Creek, Paris, pool, aprox. 2750 sq ft, 5 br/3 ba/ 2 gar:  $297,000
8. Sand Hills, Paris, lake, aprox 2750 sq ft, 5 br/3 ba/2 car:  $300,000
9. Shadow Creek, Willow, pool, aprox. 3000 sq ft, 5 br/3 ba/3 gar: $330,000
10. Catalina, Silverado, pool/lake, aprox 2325 sq ft, 4 br/2.5 ba/2 gar: $335,000

Currently there are 30 homes for sale in Winston Trails. Based upon my experience selling Winston Trails, historically the time from mid November until about January 10th is the lowest inventory time of the year. Most sellers do not want to be bothered during the run up to the holidays and during the holidays. However, I have found that this is an excellent time for serious sellers to be on the market.

Typically, the buyers out this time of year are serious buyers and, as stated above, the inventory is usually at its lowest point. A serious seller, priced properly, marketed properly, and represented properly, should be able to get their home under contract during the holidays.

On the buyer side of the coin...there are also fewer buyers out there this time of year...making it a good time to make offers to serious sellers. It's a win-win over the holidays.

Thanks for reading...Steve Jackson

Contact me on my direct line at 561-602-1258

or email me

Preview of the Tuesday release of Case-Shiller

The Case-Shiller Home Price Indices for September will be released next Tuesday, November 29th. Zillow chief economist Stan Humphries put out a forecast for the Case-Shiller HPI yesterday: Zillow Forecast: September Case-Shiller Composite-20 Expected to Show 3.2% Decline from One Year Ago.

Zillow predicts that the 20-City Composite Home Price Index (non-seasonally adjusted, NSA) will decline by 3.2% on a year-over-year basis, while the 10-City Composite Home Price Index (NSA) will show a year-over-year decline of 2.8%. The seasonally adjusted (SA) month-over-month change from August to September will be -0.2% and 0.0% for the 20 and 10-City Composite Home Price Index (SA), respectively.
...
"We expect to see continued home value depreciation as unemployment and negative equity remain high and as the pace of foreclosures, kept artificially low since the robo-signing controversy, increases again."

A Thanksgiving message to our readers

FHA going the way of Lehman?

I heard this morning that the Federal Housing Authority (FHA), the government agency that insures residential real estate loans, has lost nearly all its cash reserves to cover losses. Since last year, these reserves have fallen from $4.7 billion to $2.6 billion.

Federal law requires it to maintain a reserve of 2% of the $1.2 trillion of loans it currently has outstanding. Reserves will fall from 0.5% to 0.24% by 2012. Independent analysts say that the agency is underestimating loan losses by at least $50 billion.

That means the FHA will need a bail out next year, and therein lies the problem. In its current gridlocked mode, it is highly unlikely that congress will approve the multibillion dollar refunding of a controversial federal agency. The “let the chips fall where they may” crowd seem to have the upper hand. The FHA currently insures one third of US mortgages, up 560% since 2006, largely through the demise of its private competitors. No insurance means no loans. For you and I that means lower home prices.

The FHA specializes in loans with less than 5% down. With home prices in a six year nosedive, more than half of these are now underwater. With $30 billion in liquid capital and $1.2 trillion in outstanding guarantees, it now has a 43:1 leverage ratio. Sound familiar? The shorthand for this is that the FHA is basically a government version of Lehman Brothers just waiting to happen.

This is a big concern here, locally, as a large percentage of the first-time buyers are FHA buyers. the under $200k market market is currently very healthy, but these under $200k homes are being purchased either all cash by investors or FHA by 1st time buyers…even some of the higher price buyers are using FHA loans as they are happy to have to have only a 3.5% down payment coupled with historically low rates…take away FHA? That would have a tremendously negative effect here in Palm Beach County.

If they keep predicting a market bottom…eventually they’ll all be right!

 

Just to say it at the outset of this post…why don’t any of the reporters, be it newspaper, online outlets or television, ever do any research and ask any tough questions when they continue to interview and quote the “experts” regarding housing?

Case in point: Here is a headline of an article/interview of Zillow chief economist, Stan Humphries, 18 months ago:

As Housing Market Nears Bottom, Pent-Up Supply Waits…And here is the prediction directly from the article: We forecast that the nation will hit a bottom in home values in the third quarter of this year, (which would have beenJuly-Sept 2010) but that there will be negligible appreciation in home values for three to five years after we’ve reached bottom…

Case-Shiller, an oft quoted research firm has this on-the-money prediction from an interview from November 30th 2009:

U.S. home prices are unlikely to fall much further in the next year even after a “discouraging” report on values in September, said Karl Case, the co-creator of the S&P/Case-Shiller Index.

“If I were betting even odds, I’d bet that we don’t have much further decline, but that we bounce along the bottom,” Case, a retired professor of economics at Wellesley College, said today in a Bloomberg Television interview…

And then here is a quote from an interview Shiller did less than 60 days ago: SHILLER: “House Prices Probably Won’t Hit Bottom For Years”

And the icing on the cake has been our own chief economist(s) of the National Association of Realtors:

04/2006: We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales with some month-to-month fluctuations.”, NAR

07/2006: “Right now we are on course for a soft-landing in housing.”, NAR

10/2006: “The worst is behind us, as far as a market correction. This is likely the trough for sales. When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market.”, NAR.

12/2006: “At least the bottom appears to have already occurred. It looks like figures will be improving.”, NAR.

01/2007: “It appears we have established a bottom” David Lereah, NAR Chief Economist.

07/2007: “Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year.”, NAR

11/2007: “I don’t anticipate any further major sales declines,” Yun said. However, the NAR didn’t anticipate the sales declines of the past two years, and it’s been predicting a bottom nearly every month since early 2006. (from Marketwatch)

02/2008: Reuters reports that “The NAR’s chief economist, Lawrence Yun, said the market is ‘scratching the bottom,’ with sales holding at a deflated rate of around 5 million units for the past several months.”

02/2008, There is no chance of a large price decline in Rockford, Lawrence Yun told a crowd of more than 400 at Cliffbreakers, 700 W. Riverside Blvd. There is not a price bubble in Rockford., BusinessRockford.com (see July, 2009 news report below)

07/2008: There are signs of pent up demand . I think we are very near to the end of the housing downturn, Yun said.

12/2008: I would not have done anything different. But I was a public spokesman writing about housing having a good future. Ex-NAR Chief Economist Lareah.

04/2009: “We are close to the bottom, says Lawrence Yun, chief economist for the National Association of Realtors. Once home sales begin to rise that could boost home buying confidence and get others off the sidelines.”

04/2009: The “worst may be over” in parts of the West, said Lawrence Yun, NAR Chief Economist.

07/2009: Follow up from 2/08 quote above: BusinessRockford.com – The local housing market showed few signs of rebounding in the first half of 2009, with sales of single-family homes and condominiums falling nearly 20 percent and median sale prices falling in all but two of the Rock River Valley’s largest municipalities... In Rockford, the median prices of the 61104 ZIP code are down 52.3 percent from the first six months of 2008, dropping from $64,950 to just $31,000.

Now, more than ever, it is so important to work with an agent that will consult, diagnose and recommend solutions based upon a multitude of factors…with the MOST important one being; what is in YOUR best interest.

In the past several years, I have ‘converted’ many buyers into renters, but also, some renters into buyers, because that's what we decided, together was the best option for them. I have also dissuaded many sellers from becoming ‘landlords by default’ and putting tenants in their homes while waiting for “prices to go up’ because they didn’t want to “give their house away”. On the flip side of that coin, I just had a conversation with a prospective client yesterday and we decided AGAINST selling, as the cash-flow the home would generate, along with the tax benefits of renting outweighed the prospect of home value declines…their time horizon was sufficiently long to mitigate the risk when compared to the monthly cash flow.

If you would like to discuss all of the factors that you should be considering, whether it be on the selling or buying side, please call me at 561-602-1258…or email me at Steve@TheJacksonTeam.com

Thanks for reading,

Steve Jackson

Home values, Negative Equity and Foreclosures...Zillow research

Nationally, on a year-over-year basis home values were down 4.4 percent with the Zillow Home Value Index at $171,500. Overall, this quarter could have looked a lot worse considering all of the economic headwinds and turbulence that materialized over the summer. In terms of strict fundamentals, housing affordability looks compelling with big resets in home value levels and historically low mortgage rates. At this point, however, it’s clearly an issue of confidence, and high unemployment and economic uncertainty are not helping on this front. While we still have a ways to go in terms of home value depreciation, the pace at which home values are falling has declined considerably during the course of this year. 

Nationally, foreclosure re-sales made up 18.9 percent of all sales in September, up slightly from the Q2 level of 18.8 percent. Foreclosure re-sales have, however, significantly increased from their Q3 2010 levels of 15.1 percent. This long-tailed foreclosure pipeline will continue to depress home prices moving forward...the large shadow inventory will keep pressure on pushing home prices lower. That is why year over year home prices are still falling:

Negative Equity

National negative equity edged up slightly to 28.6 percent , (the local negative equity figure is close to 50% when you count all of the homes that are within 5% of being in a negative equity position) of all single-family homes with mortgages, compared to 26.8 percent in the second quarter. Negative equity fell in the second quarter on the basis of sharp improvements in depreciation rates and flat foreclosure rates. This quarter, however, home values remained relatively flat while foreclosure rates slowed further, and these two factors combined to increase negative equity. (Because Zillow and other firms that calculate negative equity use valuations, each which has some margin of error, and because the number of homeowners just barely in positive equity is somewhat greater than the number who are just barely in negative equity, the estimation error will tend to incorrectly place more people in negative equity (who are, in fact, in positive equity) than is offset by incorrectly placing people in positive equity (when, in fact, they are in negative equity). This subtle point has the possibility of producing an upward bias in the negative equity statistic.)

People selling their homes in Palm Beach County lost money nearly 46 percent of the time during the third quarter of this year, according to Zillow. The percentage of Palm Beach County properties that sold for a loss between July and the end of September, was a 3.4 percent increase from the previous quarter and at an elevated rate predicted to continue through at least next year.

Any homeowner who is in negative equity and who experiences a financial setback, like a job loss, income reduction or divorce, will find their options limited. To sell a home while underwater means the seller must pony up the difference between the mortgage and the current value, or negotiate a short sale with their bank. Therefore, negative equity does open homeowners up to risk they would not otherwise encounter, and it’s important to understand the total universe of homeowners who have this increased risk.

If you happen to fall in to the 50% at or near being upside down and you need to sell or just want to know what your options may be, visit our blog http://www.shortsales123.com/, read some of the posts, then give me a call at 561-602-1258.

Thanks for reading,

Steve Jackson

The two main economic theories