Nineteen months after the catastrophic failure of one of Sacramento's top lenders, Pasadena-based IndyMac Bank, a flurry of local lawsuits alleges that the bank's successor – OneWest Bank – is systematically working to push home loan borrowers into foreclosure.
The allegations filed in the Eastern District of U.S. Bankruptcy Court claim that OneWest can make more money by foreclosing than by keeping borrowers in their homes. That's due to its so-called "shared-loss" agreement with the Federal Deposit Insurance Corp., at least 10 local lawsuits allege.
A video made in Fairfield and circulating widely on the Internet also alleges that OneWest stands to earn millions from taxpayers by foreclosing on borrowers as a result of its shared-loss agreement with the FDIC.
The FDIC declined to comment on the Sacramento lawsuits, but it recently denounced the video's "blatantly false claims." The agency told The Bee that its agreement with OneWest contains provisions to make sure the lender is taking adequate steps to modify loans.
OneWest declined to comment on either the lawsuits or the video.
The FDIC, which seized IndyMac in July 2008, sold the failed institution to Pasadena-based OneWest in March 2009.
As part of the deal, the FDIC agreed to absorb some losses from the troubled loan portfolio. That's after OneWest absorbs the first $2.5 billion in losses, the FDIC said.
But Sacramento bankruptcy lawyer Peter Macaluso claims the shared-loss agreement will reward OneWest for foreclosing on homes. Here's how, he said: The company bought IndyMac's troubled portfolio at a 30 percent discount. It can count on the FDIC eventually reimbursing 80 percent or more of its losses – and also can keep proceeds from the foreclosure sales.
"They're deliberately blowing people out in a systematic pattern," said Macaluso.
He has filed eight lawsuits in U.S. Bankruptcy Court on behalf of area IndyMac borrowers who have filed for Chapter 13 bankruptcy protection.
Macaluso alleges that OneWest improperly boosted his clients' monthly loan payments – sometimes by more than $1,000 – by doing a new escrow analysis after they had filed for bankruptcy protection. He said his clients can't afford the increases and are in danger of losing their homes.
On Friday, he said OneWest has since rescinded the extra payments in three cases.
Elk Grove bankruptcy attorney Mark Wolff makes similar allegations in two lawsuits in U.S. Bankruptcy Court.
"We made the allegations that it's a systematic approach they've employed, and it's a violation of bankruptcy code," said Wolff. He said he previously filed similar actions against Bank of America and JPMorgan Chase. His clients also are still in their homes.
A third attorney, Sean Gjerde of Elk Grove, recently filed a civil suit against OneWest in Sacramento Superior Court. It alleges violations of the Truth In Lending Act, claiming that OneWest is unresponsive to attempts to modify an Elk Grove client's IndyMac mortgage.
"As soon as OneWest took over, the communication stopped," Gjerde said. "My client has been in default for a long time and it's been like heck to even get them to talk to me."
The local lawsuits represent another messy aftermath of IndyMac's implosion in July 2008, a development that added to fears of an imminent U.S. financial collapse.
IndyMac was a leading Sacramento lender, ranking 10th in loan volume during the riskiest part of the housing market: mid-2005 to mid-2007. Statistics from researcher MDA DataQuick show IndyMac made 5,312 home loans worth $1.4 billion during this period in Sacramento, Placer, El Dorado, Yolo, Sutter and Yuba counties.
A Treasury Department performance report last week showed that OneWest has temporarily or permanently modified 25 percent of its loans that are 60 days or more late. Twelve lenders reported higher modification rates and nine reported worse rates. The report said OneWest had permanently modified 3,087 of its 112,000 delinquent loans by the end of January.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Monday, February 22, 2010
Friday, February 19, 2010
Sacramento-area home sales were terrible in January
The new year in home sales opened with a thud.
January sales fell to their lowest point in almost two years across the capital region, San Diego researcher MDA DataQuick reported Thursday. The firm counted just 2,428 closed January escrows on new and existing houses in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.
The tally was well below 2,806 sales in January 2009 – and the lowest since March 2008.
"I think people are just scared," said Larry Henderson, a real estate agent with Prudential Norcal Realty in Carmichael. "I think they're still afraid houses are going to go down." He said his bigger fear, however, is that interest rates will climb to 6 percent this year and freeze out his clients who are first-time buyers.
January's weak sales numbers imitated a pattern seen statewide, where the month is always one of the year's slowest for sales. DataQuick analysts said January is a poor month to chart emerging trends, and cautioned against seeing weak numbers as "substantial lasting changes in the market."
Despite fewer sales, year-over-year prices for new and existing homes combined continued to hold steady. They ranged from flat in Sacramento County to 4 percent and 5 percent annual declines elsewhere.
But median prices for existing homes in Sacramento County, the largest sector of the real estate market, fell from $178,000 in December to $166,000 as lower-end homes gained more market share.
"January closings really skewed toward foreclosure resales," said DataQuick analyst Andrew LePage. He said bank repos were 52.7 percent of the county's sales, the highest since September.
Many of these repos were scooped up by investors who shopped aggressively during the holidays and accounted for 28 percent of January sales in Sacramento County. That is the highest monthly investor share since 2000. DataQuick said 31.8 percent of buyers in Sacramento paid cash, continuing a yearlong pattern that has frozen out scores of first-time buyers.
Henderson called the climate "brutal" for buyers trying to purchase their first home.
Home sales registered the sharpest drops from January 2009 in Sacramento, Yolo, Sutter and Yuba counties. A year ago in those counties, cheap bank repos accounted for as many as seven in 10 sales. That buying frenzy has since slowed.
Sales rose from January 2009 in the more affluent suburban, rural and resort counties: Placer, El Dorado, Nevada and Amador. They had few bank repo sales early last year, making their low 2009 tallies easy to beat, LePage said.
Regionally, January marked a seventh straight month of sales numbers that failed to beat those of the same time a year earlier. That pattern follows 14 months of year-over-year sales gains that ran from April 2008 to June 2009. Many of those gains overlapped with a buying frenzy ignited by banks dumping thousands of discounted repo properties onto the market.
LePage said January's higher percentage of foreclosure resales "is more cleanup of a mess we already know about." He said there are still no indicators of another massive wave of repo listings.
"If there's going to be a new wave of foreclosures we're going to see those first in notices of default (the first step of the foreclosure process), and we haven't seen that. They're elevated but it hasn't taken off."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
January sales fell to their lowest point in almost two years across the capital region, San Diego researcher MDA DataQuick reported Thursday. The firm counted just 2,428 closed January escrows on new and existing houses in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties.
The tally was well below 2,806 sales in January 2009 – and the lowest since March 2008.
"I think people are just scared," said Larry Henderson, a real estate agent with Prudential Norcal Realty in Carmichael. "I think they're still afraid houses are going to go down." He said his bigger fear, however, is that interest rates will climb to 6 percent this year and freeze out his clients who are first-time buyers.
January's weak sales numbers imitated a pattern seen statewide, where the month is always one of the year's slowest for sales. DataQuick analysts said January is a poor month to chart emerging trends, and cautioned against seeing weak numbers as "substantial lasting changes in the market."
Despite fewer sales, year-over-year prices for new and existing homes combined continued to hold steady. They ranged from flat in Sacramento County to 4 percent and 5 percent annual declines elsewhere.
But median prices for existing homes in Sacramento County, the largest sector of the real estate market, fell from $178,000 in December to $166,000 as lower-end homes gained more market share.
"January closings really skewed toward foreclosure resales," said DataQuick analyst Andrew LePage. He said bank repos were 52.7 percent of the county's sales, the highest since September.
Many of these repos were scooped up by investors who shopped aggressively during the holidays and accounted for 28 percent of January sales in Sacramento County. That is the highest monthly investor share since 2000. DataQuick said 31.8 percent of buyers in Sacramento paid cash, continuing a yearlong pattern that has frozen out scores of first-time buyers.
Henderson called the climate "brutal" for buyers trying to purchase their first home.
Home sales registered the sharpest drops from January 2009 in Sacramento, Yolo, Sutter and Yuba counties. A year ago in those counties, cheap bank repos accounted for as many as seven in 10 sales. That buying frenzy has since slowed.
Sales rose from January 2009 in the more affluent suburban, rural and resort counties: Placer, El Dorado, Nevada and Amador. They had few bank repo sales early last year, making their low 2009 tallies easy to beat, LePage said.
Regionally, January marked a seventh straight month of sales numbers that failed to beat those of the same time a year earlier. That pattern follows 14 months of year-over-year sales gains that ran from April 2008 to June 2009. Many of those gains overlapped with a buying frenzy ignited by banks dumping thousands of discounted repo properties onto the market.
LePage said January's higher percentage of foreclosure resales "is more cleanup of a mess we already know about." He said there are still no indicators of another massive wave of repo listings.
"If there's going to be a new wave of foreclosures we're going to see those first in notices of default (the first step of the foreclosure process), and we haven't seen that. They're elevated but it hasn't taken off."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Wednesday, February 17, 2010
Foreclosure's collateral damage widespread
If you're among the thousands of Sacramento-area homeowners who played it conservative during the housing boom, who didn't refinance or flip to a bigger house, everyone else's foreclosures reached out and smacked you anyway.
Sales prices are lower. There's less home equity to tap into. Local services have been shredded by falling property tax revenue.
Such repo collateral damage is why so many owners who pay their mortgages on time are so grouchy.
Rob Wassmer hasn't been affected so much. Fourteen years ago he bought an east Sacramento house – in the Fab 40s – cheaply at the very bottom of the last housing bust. His older neighborhood has largely escaped the brunt of 52,000 foreclosures across the Sacramento region since 2007.
But Wassmer knows the financial whipping people have taken in Lincoln, Elk Grove, North Highlands and Yuba City. Being an academic, he knew there had to be a number for the carnage.
"I knew this kind of research had been done. I wanted to do a study of Sacramento," said Wassmer, chairman of California State University, Sacramento's department of public policy and administration.
Wassmer analyzed $9 billion in sales prices from 36,822 home sales in Sacramento, Yolo, Yuba, Sutter, Placer and El Dorado counties between January 2008 and June 2009. Almost half were homes sold by banks. The other half were sold by regular folks.
He concluded that the foreclosed homes cost this one region of America $2.7 billion in price cuts and lost equity over just 18 months.
• The repos sold for $659 million less simply because they were bank-owned and differed from normal sales. They took $1 billion more in price cuts because they were near other repos.
• Both reductions then stripped $1 billion from sale prices of nearby homes never in foreclosure danger.
Collectively, these foreclosures cost local governments $27.1 million in property taxes. Reassessments will likely take more.
Said Wassmer, "This is a call for regulation." He suggests a federal law to make lenders and borrowers meet in "structured mediation" at least once before foreclosure.
Few ideas have proved so far to be the solution. See the research directly at: >www.csus.edu/indiv/w/wassmerr/ResForeclosure.pdf
State tax credit confusion
Tax preparation season is already disappointing some 2009 California home buyers who aren't getting a full three-year, $10,000 tax credit for buying a new home.
A Lincoln buyer called Home Front saying his 2009 credit will be about $300 – well short of the $3,333 he'd expected to get for each of the next three years.
Spokeswoman Brenda Voet of the California Franchise Tax Board told Home Front that the size of the credit depends on the buyer's specific tax situation. "It's a dollar for dollar credit for taxes owed," she said.
That means if you owe $300 in state taxes you get a credit for the $300 and don't owe it. If you owe $4,000 in state taxes you get a credit for $3,333 and pay $667.
No one gets money from the state above what they owe, Voet said.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Sales prices are lower. There's less home equity to tap into. Local services have been shredded by falling property tax revenue.
Such repo collateral damage is why so many owners who pay their mortgages on time are so grouchy.
Rob Wassmer hasn't been affected so much. Fourteen years ago he bought an east Sacramento house – in the Fab 40s – cheaply at the very bottom of the last housing bust. His older neighborhood has largely escaped the brunt of 52,000 foreclosures across the Sacramento region since 2007.
But Wassmer knows the financial whipping people have taken in Lincoln, Elk Grove, North Highlands and Yuba City. Being an academic, he knew there had to be a number for the carnage.
"I knew this kind of research had been done. I wanted to do a study of Sacramento," said Wassmer, chairman of California State University, Sacramento's department of public policy and administration.
Wassmer analyzed $9 billion in sales prices from 36,822 home sales in Sacramento, Yolo, Yuba, Sutter, Placer and El Dorado counties between January 2008 and June 2009. Almost half were homes sold by banks. The other half were sold by regular folks.
He concluded that the foreclosed homes cost this one region of America $2.7 billion in price cuts and lost equity over just 18 months.
• The repos sold for $659 million less simply because they were bank-owned and differed from normal sales. They took $1 billion more in price cuts because they were near other repos.
• Both reductions then stripped $1 billion from sale prices of nearby homes never in foreclosure danger.
Collectively, these foreclosures cost local governments $27.1 million in property taxes. Reassessments will likely take more.
Said Wassmer, "This is a call for regulation." He suggests a federal law to make lenders and borrowers meet in "structured mediation" at least once before foreclosure.
Few ideas have proved so far to be the solution. See the research directly at: >www.csus.edu/indiv/w/wassmerr/ResForeclosure.pdf
State tax credit confusion
Tax preparation season is already disappointing some 2009 California home buyers who aren't getting a full three-year, $10,000 tax credit for buying a new home.
A Lincoln buyer called Home Front saying his 2009 credit will be about $300 – well short of the $3,333 he'd expected to get for each of the next three years.
Spokeswoman Brenda Voet of the California Franchise Tax Board told Home Front that the size of the credit depends on the buyer's specific tax situation. "It's a dollar for dollar credit for taxes owed," she said.
That means if you owe $300 in state taxes you get a credit for the $300 and don't owe it. If you owe $4,000 in state taxes you get a credit for $3,333 and pay $667.
No one gets money from the state above what they owe, Voet said.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Monday, February 15, 2010
Investors plunking down cash for homes
Investors paying cash for houses accounted for one in four home sales during the past year in Sacramento County and West Sacramento, becoming dominating players in a distressed market and squeezing out scores of first-time buyers, 2009 statistics now show.
Many of these cash buyers are from the Bay Area. They've re-established that region's traditional link to Sacramento real estate and are scoring houses at up to 10 percent off listing prices, local market participants say.
Buying with cash, says local broker associate Jim Swanson, is another Sacramento "gold rush."
Carey Covey, a Cook Realty agent in Sacramento, said he recently sold a bank repo to a Sunnyvale investor by phone.
"I never met him. He never saw the property," Covey said.
He paid $55,000 – in cash.
Cash buys suggest there's still plenty of money out there despite the bad economy. And it's flowing into a market where repo prices in 2009 often remained well below $100,000 or even $70,000.
"There are some people who have money in a 401(k) and want to find better use for it," said Swanson of Prudential California Realty. "I have clients taking cash out of properties they already own and using that money to buy real estate. I have one cash buyer who planned to use loans, but he had plenty of savings."
Cash buyers can obtain discounts not available to others, and their purchases seldom fall out of escrow. They have pushed aside first-time buyers who can't compete.
"I have lists and lists and lists of houses I have looked at and put offers on. Everything has been investors, investors, investors," said Kimii Carter, a city employee in West Sacramento. Carter said she made offers on 30 houses south of downtown Sacramento, including a $145,000 bid on a $114,000 listing she wanted for herself and two daughters.
"They said, 'We already have a cash offer,' " Carter said.
"All the buyers will agree. This is what I'm hearing every day," said Barbara Rohwer Harsch, president of the Sacramento Association of Realtors.
For months, first-time buyers have complained of losing bidding wars to investors often paying with cash. But now a year of data prove the pattern. Cash buyers were 26.7 percent of January sales in Sacramento County and West Sacramento, according to SAR.
In every month of 2009, cash buyers ranged from 23.7 percent to 27.7 percent of closed escrows, SAR reported. Researchers at La Jolla-based MDA DataQuick, which counts more sales than SAR, says the Sacramento County cash-buy percentage is even higher.
"It's been in the 27 percent to 32 percent range for the past year," company analyst Andrew LePage said.
Swanson, researching data from Sacramento's MetroList Services, said cash buyers accounted for 60 percent of January sales under $100,000 in Sacramento County.
"One of my clients bought five or six last year. Another bought two," he said. Many are in areas devastated by risky adjustable-rate loans: North and south Sacramento, Del Paso Heights, North Highlands and Rancho Cordova.
Swanson, too, made a cash buy in 2008, paying $38,000 for a two-bedroom, one-bath home in Del Paso Heights. He spent $14,000 on repairs and then rented it out.
Sacramento general contractor Bruce Morse said he bought four houses and a duplex with cash the past two years. Prices ranged from $50,000 to $120,000. Morse repairs, rents and holds, saying, "This is my retirement plan.
"I had cash from a home equity loan and my aunt lent me some money. My dad lent me a little money," he said.
Morse said paying cash makes it "a little easier dealing with banks. "They just know it's cash and they don't have to worry about too much else."
Analysts have long said banks prefer cash as a quick and easy way to shore up their bottom lines, eroded by defaults across the United States, and particularly in California. Twelve percent of mortgages in Sacramento, Placer, Yolo and El Dorado counties are 90 days behind on payments, somewhere in the foreclosure process or related to a bank repo with a for-sale sign out front, says Orange County analyst First American Core- Logic.
But those not suffering such privations still have plenty of cash, especially in the Bay Area, said Matthew Anderson, partner at Oakland-based Foresight Analytics, a real estate consulting firm.
"In California, 12 percent unemployment means there's still 88 percent of the work force that have jobs and incomes, and a lot of people still have quite decent incomes," he said.
A DataQuick survey of second-home purchases by Bay Area investors last July, August and September ranked Sacramento as their top target. Elk Grove ranked 10th behind Las Vegas, Stockton and other Central Valley markets.
Mike Lyon, head of Sacramento's Lyon Real Estate, estimates that two-thirds of the Sacramento region's cash buyers are Bay Area investors.
Anderson said investors see this as an "attractive time to be buying, especially if you're going to turn around and leverage (borrow against) the investment. It's a cheap time to be borrowing money."
But that kind of finance is little comfort to buyers like Carter. She's in escrow on her first house, but it's smaller than she hoped and not exactly what she wanted.
"I felt I had to take it. It's my only option," she said, recounting her many losing bids since November. "It's really discouraging for somebody trying to buy their first house. It shouldn't be like this, but it is."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Many of these cash buyers are from the Bay Area. They've re-established that region's traditional link to Sacramento real estate and are scoring houses at up to 10 percent off listing prices, local market participants say.
Buying with cash, says local broker associate Jim Swanson, is another Sacramento "gold rush."
Carey Covey, a Cook Realty agent in Sacramento, said he recently sold a bank repo to a Sunnyvale investor by phone.
"I never met him. He never saw the property," Covey said.
He paid $55,000 – in cash.
Cash buys suggest there's still plenty of money out there despite the bad economy. And it's flowing into a market where repo prices in 2009 often remained well below $100,000 or even $70,000.
"There are some people who have money in a 401(k) and want to find better use for it," said Swanson of Prudential California Realty. "I have clients taking cash out of properties they already own and using that money to buy real estate. I have one cash buyer who planned to use loans, but he had plenty of savings."
Cash buyers can obtain discounts not available to others, and their purchases seldom fall out of escrow. They have pushed aside first-time buyers who can't compete.
"I have lists and lists and lists of houses I have looked at and put offers on. Everything has been investors, investors, investors," said Kimii Carter, a city employee in West Sacramento. Carter said she made offers on 30 houses south of downtown Sacramento, including a $145,000 bid on a $114,000 listing she wanted for herself and two daughters.
"They said, 'We already have a cash offer,' " Carter said.
"All the buyers will agree. This is what I'm hearing every day," said Barbara Rohwer Harsch, president of the Sacramento Association of Realtors.
For months, first-time buyers have complained of losing bidding wars to investors often paying with cash. But now a year of data prove the pattern. Cash buyers were 26.7 percent of January sales in Sacramento County and West Sacramento, according to SAR.
In every month of 2009, cash buyers ranged from 23.7 percent to 27.7 percent of closed escrows, SAR reported. Researchers at La Jolla-based MDA DataQuick, which counts more sales than SAR, says the Sacramento County cash-buy percentage is even higher.
"It's been in the 27 percent to 32 percent range for the past year," company analyst Andrew LePage said.
Swanson, researching data from Sacramento's MetroList Services, said cash buyers accounted for 60 percent of January sales under $100,000 in Sacramento County.
"One of my clients bought five or six last year. Another bought two," he said. Many are in areas devastated by risky adjustable-rate loans: North and south Sacramento, Del Paso Heights, North Highlands and Rancho Cordova.
Swanson, too, made a cash buy in 2008, paying $38,000 for a two-bedroom, one-bath home in Del Paso Heights. He spent $14,000 on repairs and then rented it out.
Sacramento general contractor Bruce Morse said he bought four houses and a duplex with cash the past two years. Prices ranged from $50,000 to $120,000. Morse repairs, rents and holds, saying, "This is my retirement plan.
"I had cash from a home equity loan and my aunt lent me some money. My dad lent me a little money," he said.
Morse said paying cash makes it "a little easier dealing with banks. "They just know it's cash and they don't have to worry about too much else."
Analysts have long said banks prefer cash as a quick and easy way to shore up their bottom lines, eroded by defaults across the United States, and particularly in California. Twelve percent of mortgages in Sacramento, Placer, Yolo and El Dorado counties are 90 days behind on payments, somewhere in the foreclosure process or related to a bank repo with a for-sale sign out front, says Orange County analyst First American Core- Logic.
But those not suffering such privations still have plenty of cash, especially in the Bay Area, said Matthew Anderson, partner at Oakland-based Foresight Analytics, a real estate consulting firm.
"In California, 12 percent unemployment means there's still 88 percent of the work force that have jobs and incomes, and a lot of people still have quite decent incomes," he said.
A DataQuick survey of second-home purchases by Bay Area investors last July, August and September ranked Sacramento as their top target. Elk Grove ranked 10th behind Las Vegas, Stockton and other Central Valley markets.
Mike Lyon, head of Sacramento's Lyon Real Estate, estimates that two-thirds of the Sacramento region's cash buyers are Bay Area investors.
Anderson said investors see this as an "attractive time to be buying, especially if you're going to turn around and leverage (borrow against) the investment. It's a cheap time to be borrowing money."
But that kind of finance is little comfort to buyers like Carter. She's in escrow on her first house, but it's smaller than she hoped and not exactly what she wanted.
"I felt I had to take it. It's my only option," she said, recounting her many losing bids since November. "It's really discouraging for somebody trying to buy their first house. It shouldn't be like this, but it is."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Friday, February 12, 2010
Watch Out For Negative Equity
Do you own a home which has negative equity and are wondering how this occurred? The answer is simple. Negative equity occurs when you purchase a home using a home loan and the home prices begin to decline due to economic slowdown. The home value now decreases below the value principally on mortgage. This condition is called negative equity. It can be calculated by taking the value of the home, less the balance on the remaining loan.
An important aspect in the performance of home loans in the third quarter of 2009 was the high resale of foreclosures. This came up to one fifth of the total home sales in the real estate market. Also 26.5% of homes were sold for prices lower than what the original owner had paid.
Year after year, the prices of homes are declining. The recent fall was recorded at 6.9% reaching $194,000. The percentage of homes in negative equity was read to 21% in the third quarter, unlike 23% in the second quarter. It was when home values stabilized that many homes were also foreclosed in the same period. The third quarter readings show a dramatic decline in the negative equity conditions. This decrease in the percentage of home owners with negative equity is a positive sign to the economy. This is directly related to the stabilization of home prices in the next two quarters. This also indicates the percentage of home owners who have lost their homes to foreclosures in the second and first quarters.
The following months are expected to be crucial for the real estate industry. The winter analysis had predicted a rise in the percentage of foreclosed homes in the slow market, leading to a decline in the prices. But now with the extension of the tax credit period and sanction of $8000 tax credit for first time home buyers and $6,500 tax credit for repeat buyers, there could be an increase in the demand for homes that would lower the percentage of foreclosed homes. This is likely to bring stability in the prices of homes all through the state. But the major question is how long this stability will last after the tax credit period expires? This is likely to create a demand that would be weaker than the normal demand.
The recent survey on negative equity had the following statements to make:
As on September 30th 2009, negative equity indicated that present home prices are lower than the original credit.
Foreclosed homes that were resold were mostly homes foreclosed by banks in the previous year.
When facing negative equity, you can approach realtors and mortgage professionals, who will help you to recover from negative equity.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
An important aspect in the performance of home loans in the third quarter of 2009 was the high resale of foreclosures. This came up to one fifth of the total home sales in the real estate market. Also 26.5% of homes were sold for prices lower than what the original owner had paid.
Year after year, the prices of homes are declining. The recent fall was recorded at 6.9% reaching $194,000. The percentage of homes in negative equity was read to 21% in the third quarter, unlike 23% in the second quarter. It was when home values stabilized that many homes were also foreclosed in the same period. The third quarter readings show a dramatic decline in the negative equity conditions. This decrease in the percentage of home owners with negative equity is a positive sign to the economy. This is directly related to the stabilization of home prices in the next two quarters. This also indicates the percentage of home owners who have lost their homes to foreclosures in the second and first quarters.
The following months are expected to be crucial for the real estate industry. The winter analysis had predicted a rise in the percentage of foreclosed homes in the slow market, leading to a decline in the prices. But now with the extension of the tax credit period and sanction of $8000 tax credit for first time home buyers and $6,500 tax credit for repeat buyers, there could be an increase in the demand for homes that would lower the percentage of foreclosed homes. This is likely to bring stability in the prices of homes all through the state. But the major question is how long this stability will last after the tax credit period expires? This is likely to create a demand that would be weaker than the normal demand.
The recent survey on negative equity had the following statements to make:
As on September 30th 2009, negative equity indicated that present home prices are lower than the original credit.
Foreclosed homes that were resold were mostly homes foreclosed by banks in the previous year.
When facing negative equity, you can approach realtors and mortgage professionals, who will help you to recover from negative equity.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Wednesday, February 10, 2010
Trends in Real Estate
Trends in Real Estate
Recession has had its impact on real estate too. The real estate market is now struggling in many areas of the country. The real estate agents and brokers have realized the importance of being a financial planner in accord to being a sales person. Traditional approaches to the current market do not have its stand in the global real estate market. With real estate transactions going online, agents are seeing themselves in new levels with professionalism and customer service. In such a situation, real estate agents are to be high on heels with technology.
The easy access to information on the internet with increasing computer usage from clients and agents is now the pushing force affecting the changing real estate market trends. 80% of the country’s population now shops for homes on the internet. All potential buyers have the real estate knowledge at their fingertips. This has decreased the tolerance of buyers as they want their agents to give them all the information now!
Also, the current real estate market has seen a lot of foreign buyers investing in the American real estate market. These foreign investors look at investments in America for either vocation homes or good investments. The vocation homes that are purchased by these foreign buyers are mainly the condominiums. With such extensive real estate activity, some real estate agents fear facing the foreign investors due to the raising nationalism and the United State’s approach to fight terrorism.
The mortgage market is yet to recover from recession. However, the property market has made a small improvement in making good investments. But still many are concerned about the scarcity of debt and good properties to invest on. This calls for a need to foresee the future trends in real estate.
The redundancies in financial services, property and investment lead to creating redundant office spaces. Real estate companies tied up to long term leases are now subletting their office space to be more entrepreneurial during recession and create income opportunities. They are adopting to operate from smaller office places that can accommodate a real estate team.
The property market is expected to go quiet with the business going on the internet. Technology and construction techniques are being used in clean, eco friendly and energy efficient green homes. The global environment consciousness will see filtering through financiers to decide upon sustainable development, investment, management and occupation practices in real estate.
For additional resources and information please visit the following sites. Resource Links:
http://www.gmacrealestate.com
Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com
T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com Brodie Stephens (Executive Vice President) One Stop Blog: http://www.brodiestephensblog.com GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com GreatWest Videos: http://www.youtube.com/brodiestephens Facebook Brodie Stephens Profile Page: http://www.facebook.com/brodiestephens Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale MySpace Brodie Stephens Blog: http://www.myspace.com/brodiestephens MySpace GreatWest Blog: http://www.myspace.com/greatwest Picasa Web Album: http://picasaweb.google.com/brodiestephens
GreatWest Real Estate Careers- GMAC is looking for Professional Realtors to Join Us: http://www.CareersWithUs.com Global Employee Relocation: http://www.employeerelocation.blogspot.com Apply for a Loan: http://www.choice1funding.com
ActiveRain Blog Brodie: http://activerain.com/blogs/brodiestephens
ActiveRain Blog Company:http://activerain.com/blogs/greatwestgmac
Sacbee:http://www.sacbee.com
Company WordPress Site:http://www.thehomeholders.com
Real Living:http://www.realliving.com
Recession has had its impact on real estate too. The real estate market is now struggling in many areas of the country. The real estate agents and brokers have realized the importance of being a financial planner in accord to being a sales person. Traditional approaches to the current market do not have its stand in the global real estate market. With real estate transactions going online, agents are seeing themselves in new levels with professionalism and customer service. In such a situation, real estate agents are to be high on heels with technology.
The easy access to information on the internet with increasing computer usage from clients and agents is now the pushing force affecting the changing real estate market trends. 80% of the country’s population now shops for homes on the internet. All potential buyers have the real estate knowledge at their fingertips. This has decreased the tolerance of buyers as they want their agents to give them all the information now!
Also, the current real estate market has seen a lot of foreign buyers investing in the American real estate market. These foreign investors look at investments in America for either vocation homes or good investments. The vocation homes that are purchased by these foreign buyers are mainly the condominiums. With such extensive real estate activity, some real estate agents fear facing the foreign investors due to the raising nationalism and the United State’s approach to fight terrorism.
The mortgage market is yet to recover from recession. However, the property market has made a small improvement in making good investments. But still many are concerned about the scarcity of debt and good properties to invest on. This calls for a need to foresee the future trends in real estate.
The redundancies in financial services, property and investment lead to creating redundant office spaces. Real estate companies tied up to long term leases are now subletting their office space to be more entrepreneurial during recession and create income opportunities. They are adopting to operate from smaller office places that can accommodate a real estate team.
The property market is expected to go quiet with the business going on the internet. Technology and construction techniques are being used in clean, eco friendly and energy efficient green homes. The global environment consciousness will see filtering through financiers to decide upon sustainable development, investment, management and occupation practices in real estate.
For additional resources and information please visit the following sites. Resource Links:
http://www.gmacrealestate.com
Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com
T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com Brodie Stephens (Executive Vice President) One Stop Blog: http://www.brodiestephensblog.com GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com GreatWest Videos: http://www.youtube.com/brodiestephens Facebook Brodie Stephens Profile Page: http://www.facebook.com/brodiestephens Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale MySpace Brodie Stephens Blog: http://www.myspace.com/brodiestephens MySpace GreatWest Blog: http://www.myspace.com/greatwest Picasa Web Album: http://picasaweb.google.com/brodiestephens
GreatWest Real Estate Careers- GMAC is looking for Professional Realtors to Join Us: http://www.CareersWithUs.com Global Employee Relocation: http://www.employeerelocation.blogspot.com Apply for a Loan: http://www.choice1funding.com
ActiveRain Blog Brodie: http://activerain.com/blogs/brodiestephens
ActiveRain Blog Company:http://activerain.com/blogs/greatwestgmac
Sacbee:http://www.sacbee.com
Company WordPress Site:http://www.thehomeholders.com
Real Living:http://www.realliving.com
Monday, February 8, 2010
Existing Homes For Sale - A New Record Set
Are you a first time buyer with a tax credit? Then you will want to know the sales, existing homes recorded this year. In 2009, all first time buyers where driven by their tax credit to buy homes at affordable prices. The sale of existing homes showed a bigger gain in October with a steady increase over the previous months. But the performance of inventories for new constructions continued to minimize. The sales of existing homes included single homes, condominiums and townhomes. These sales were recorded at 10.1% showing 6.1 million units in October as against 5.54 million units in September. This new score in October 2009 is said to be 23.5 percent above the 4.94 million units recorded in October 2008. Many buyers were seen rushing to get hold of good homes before the first time buyer’s tax credit deadline would terminate. When the tax credit expired by the end of October, robust sales was also seen in November. But the dawn of December saw a decline in the sales. But now, the tax credit has been extended till April 30th 2010. A large demand for existing homes prevails among the first time buyers. This can be easily tapped before the tax credit period ends. The extension of tax credit limit for first time buyers has created unusual conditions like getting multiple bids on lower price ranges and quickened sale of foreclosed property. This is also a busy time for realtors to negotiate satisfactory deals. First time buyers are feeling the need for good realtors to get them the best home affordable by them. The thirst for existing homes among first time buyers has recorded a steady decline in the sale of housing inventory. The median price for all home types in October 2009 was $173,100. This was 7.1% less than the median prices of October 2008. It is expected that the prices of existing homes for sale should stabilize by the second half of 2010. If that happens, the home sales will remain at healthy levels, normal to the economy and there will be no more price overcorrection worries among the buyers. This decrease of the home prices are going to create extremely favorable conditions for affording homes. These factors are applicable to all types of homes including single homes, condominium and all other existing homes. The NAR chief was found saying that home loan interest rates were lowest in the month of October. But the fixed rate loans fell to 4.95 percent in October from 5.06 percent in September. With tax credit extended to 2010 and affordable homes for sale, there is no reason to wait longer to buy your dream home. This is the right time to invest in property and make the most of the current economic conditions. To help you make wise decision, hiring an experienced realtor will get the best negotiable deals in your hand. Visit www.greatwestgmac.com to get in touch with some of the best real estate professionals in the Sacramento region.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Saturday, February 6, 2010
Million-dollar home sales fall in Sacramento region, state
Sales of homes costing $1 million or more fell sharply across the capital region and throughout California last year as buyers remained wary, large mortgages were hard to get and more homes slipped below the benchmark value, researcher MDA Dataquick reported Thursday.
The La Jolla firm counted 291 sales of homes priced above $1 million in 2009 in Sacramento, Placer, El Dorado, Yolo and Nevada counties. A year earlier, the tally was 502 in the eight-county region. The capital region accounted for 1.6 percent of high-end sales in a state where coastal regions rule the luxury market sector.
DataQuick counted 18,621 California sales with price tags of $1 million or more. It was a fourth straight year of decline in the state after luxury sales crested at 54,773 in 2005.
Nearly 80 percent of last year's million-dollar and higher sales in the capital area were in Placer, El Dorado and Nevada counties, according to DataQuick statistics. All are home to high-end resort markets in and near Lake Tahoe.
Sales fell from 2008 in all three counties. Lake Tahoe real estate firm Chase International reported 104 sales of lake-area homes valued at $1 million or higher in 2009. The previous year's count was 134.
Don't count out the wealthy, though, said the firm's owner, Shari Chase.
"If you look at high-ticket purchases, those people are not going to be affected by any of the economic conditions. It's about whether they want to go for their lifestyle," she said.
DataQuick President John Walsh said traditional million-dollar markets like Hillsborough, Manhattan Beach, Newport Beach and Santa Barbara "are holding up relatively well." Expensive newer markets that "emerged four or years ago are not," he said.
Mike Lyon, head of Sacramento's Lyon Real Estate, attributed part of the capital-area sales decline to significant "discounting" at the harder-to-sell high end.
DataQuick said 29 percent of California's luxury home buyers paid cash. Lending institutions most likely to help the others were Bank of America, Wells Fargo and Union Bank, the researcher reported.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
The La Jolla firm counted 291 sales of homes priced above $1 million in 2009 in Sacramento, Placer, El Dorado, Yolo and Nevada counties. A year earlier, the tally was 502 in the eight-county region. The capital region accounted for 1.6 percent of high-end sales in a state where coastal regions rule the luxury market sector.
DataQuick counted 18,621 California sales with price tags of $1 million or more. It was a fourth straight year of decline in the state after luxury sales crested at 54,773 in 2005.
Nearly 80 percent of last year's million-dollar and higher sales in the capital area were in Placer, El Dorado and Nevada counties, according to DataQuick statistics. All are home to high-end resort markets in and near Lake Tahoe.
Sales fell from 2008 in all three counties. Lake Tahoe real estate firm Chase International reported 104 sales of lake-area homes valued at $1 million or higher in 2009. The previous year's count was 134.
Don't count out the wealthy, though, said the firm's owner, Shari Chase.
"If you look at high-ticket purchases, those people are not going to be affected by any of the economic conditions. It's about whether they want to go for their lifestyle," she said.
DataQuick President John Walsh said traditional million-dollar markets like Hillsborough, Manhattan Beach, Newport Beach and Santa Barbara "are holding up relatively well." Expensive newer markets that "emerged four or years ago are not," he said.
Mike Lyon, head of Sacramento's Lyon Real Estate, attributed part of the capital-area sales decline to significant "discounting" at the harder-to-sell high end.
DataQuick said 29 percent of California's luxury home buyers paid cash. Lending institutions most likely to help the others were Bank of America, Wells Fargo and Union Bank, the researcher reported.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Wednesday, February 3, 2010
Housing has hope amidst the hurt
Foreclosures inched up slightly across the capital region in the last three months of 2009, but loan defaults fell for a third straight quarter as lenders focused more on finding alternatives to taking the keys, La Jolla-based MDA DataQuick reported Wednesday.
The newest statistics revealed a still-painfully fragile housing market beset by widespread distress but also beginning to emerge from the subprime meltdown.
"We're moving from a lender-created mess to an economy-created mess," said Stuart Feldstein, president of lending industry tracker SMR Research in New Jersey. "The nature of the beast has changed. That doesn't mean it's better, but it's more curable."
• DataQuick counted 5,081 fourth quarter 2009 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. The third-quarter count was 5,004 foreclosures.
• Fourth-quarter capital-area defaults numbered 7,522. That was down from 9,751 in the third quarter. Regionally, foreclosures peaked at 7,769 in the third quarter of 2008. Area defaults crested at 11,049 the first quarter of 2009.
The trend was repeated on a larger scale statewide. The sustained decline in defaults led DataQuick to suggest the worst may be over in hard-hit entry-level markets that dominate inland areas of California. Feldstein concurred, saying, "The good news, often overlooked, is (that) the truly horrible risks of people who shouldn't have gotten loans in the first place are running off at a fairly rapid rate."
But DataQuick analysts also noted that the recession is spreading the mortgage crisis to more expensive neighborhoods. Owners there, many with prime fixed-rate loans, are struggling with wage cuts, state employee furloughs and a 12.4 percent unemployment rate that may keep rising.
Wednesday, DataQuick reported that most of the loans experiencing trouble at the end of 2009 were originated in early 2007. Many also date back to mid-2006, "the worst of the 'loans gone wild' period," the company said.
Lenders with the highest numbers of problem loans statewide included Countrywide (now an affiliate of Bank of America), Wells Fargo and Washington Mutual (now an affiliate of JPMorgan Chase). Along with Bank of America and World Savings, all were the most active lenders in the second half of 2006, DataQuick said.
Today, many of those lenders have become slower to proceed with foreclosures.
"Our take is that lenders are increasingly willing to work with borrowers before a notice of default is filed," DataQuick Analyst Andrew LePage said.
Other options include loan modifications or the short sales that are becoming more common, according to the Sacramento Association of Realtors. Short sales – in which lenders accept sale prices below what they're owed – accounted for one in four December sales in Sacramento County and West Sacramento, said SAR.
Elk Grove-based Century 21 real estate agent Derek Kirk said more than half the for-sale signs in the suburban city are tied to short-sale listings.
"I believe lenders are getting pressure to make it easier," he said. "They are doing more of them, and I think some of the banks are now trying to streamline and implement better procedures so they can make quicker decisions. "Waiting 90 to 120 days is not realistic for buyers."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
The newest statistics revealed a still-painfully fragile housing market beset by widespread distress but also beginning to emerge from the subprime meltdown.
"We're moving from a lender-created mess to an economy-created mess," said Stuart Feldstein, president of lending industry tracker SMR Research in New Jersey. "The nature of the beast has changed. That doesn't mean it's better, but it's more curable."
• DataQuick counted 5,081 fourth quarter 2009 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. The third-quarter count was 5,004 foreclosures.
• Fourth-quarter capital-area defaults numbered 7,522. That was down from 9,751 in the third quarter. Regionally, foreclosures peaked at 7,769 in the third quarter of 2008. Area defaults crested at 11,049 the first quarter of 2009.
The trend was repeated on a larger scale statewide. The sustained decline in defaults led DataQuick to suggest the worst may be over in hard-hit entry-level markets that dominate inland areas of California. Feldstein concurred, saying, "The good news, often overlooked, is (that) the truly horrible risks of people who shouldn't have gotten loans in the first place are running off at a fairly rapid rate."
But DataQuick analysts also noted that the recession is spreading the mortgage crisis to more expensive neighborhoods. Owners there, many with prime fixed-rate loans, are struggling with wage cuts, state employee furloughs and a 12.4 percent unemployment rate that may keep rising.
Wednesday, DataQuick reported that most of the loans experiencing trouble at the end of 2009 were originated in early 2007. Many also date back to mid-2006, "the worst of the 'loans gone wild' period," the company said.
Lenders with the highest numbers of problem loans statewide included Countrywide (now an affiliate of Bank of America), Wells Fargo and Washington Mutual (now an affiliate of JPMorgan Chase). Along with Bank of America and World Savings, all were the most active lenders in the second half of 2006, DataQuick said.
Today, many of those lenders have become slower to proceed with foreclosures.
"Our take is that lenders are increasingly willing to work with borrowers before a notice of default is filed," DataQuick Analyst Andrew LePage said.
Other options include loan modifications or the short sales that are becoming more common, according to the Sacramento Association of Realtors. Short sales – in which lenders accept sale prices below what they're owed – accounted for one in four December sales in Sacramento County and West Sacramento, said SAR.
Elk Grove-based Century 21 real estate agent Derek Kirk said more than half the for-sale signs in the suburban city are tied to short-sale listings.
"I believe lenders are getting pressure to make it easier," he said. "They are doing more of them, and I think some of the banks are now trying to streamline and implement better procedures so they can make quicker decisions. "Waiting 90 to 120 days is not realistic for buyers."
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Monday, February 1, 2010
Flippers back in vogue in Sacramento housing market
House flipping, the timeless buy-low, sell-high strategy, is back.
Thousands engaged in it during the real estate boom. Hundreds are trying it in the bust.
Property researcher MDA DataQuick tells Home Front it is seeing more houses sold within three weeks to six months of being purchased. Almost 5 percent of Sacramento County's December home sales fell into the "flipping" category.
Today's numbers rank right up there with the flipping rates of early 2005, just before the housing price bubble burst. At that time, 5.3 percent of Sacramento County sales were considered flips, says DataQuick analyst Andrew LePage. Often-amateur buyers simply bought houses and re-sold them as values rose 25 percent per year. Flipping is one of the factors that eventually spoiled the party and ruined those last arrivals.
By December 2007, with the market collapsing, only 1.7 percent of Sacramento County sales were flips.
But now at the bottom, investors have picked up the game with cheap bank repos. They add carpet, paint and countertops and resell for more, said LePage.
DataQuick statistics say investors accounted for 25 percent of Sacramento County sales in December.
"You've been in the 22 to 25.5 percent range for the past year," LePage said.
It's one of the reasons first-time buyers say they're still losing out in bidding wars.
More bank repos coming
Capital-area buyers can expect the repo market share to rise 15 percent in 2010 as banks bring more to market, says Mike Lyon, head of Sacramento's Lyon Real Estate.
Lyon says the number of repo listings began to swell in December after a year of "numerous government moratoriums."
Lyon's research division, TrendGraphix, says strong demand by investors and first-time buyers seeking federal $8,000 tax credits has driven average sale prices for foreclosed homes from $198,000 to $206,000. Lyon says he believes prices for homes under $300,000 will rise until midyear, when interest rates are expected to go up. By then the federal tax credit – scheduled to expire April 30 – will also likely be gone.
Extra spending money
Here's a welcome flip side to endless reports about people with mortgages they can't afford: A record percentage of Americans refinanced into smaller, cheaper home loans in the last three months of 2009.
It's a trend – thanks to lower interest rates – that is freeing up billions of dollars in extra household income.
Federal home loan giant Freddie Mac reported Thursday that 33 percent of borrowers who refinanced in the fourth quarter actually lowered their principal balances. In other words, they got smaller mortgages after having paid off part of their original loans.
Freddie Mac said it's the greatest quarterly percentage of loan downsizing since it started analyzing refinance activity in 1985.
The fourth-quarter refinancers also knocked about 1 percent off their collective interest rate. That translates into $2 billion in total savings the first year, said Freddie Mac. Alongside savings from smaller mortgages, this is new income to pay down bills, spend in restaurants, buy new cars or otherwise fuel the larger economy.
On the other side of the ledger, a record low 27 percent of those who refinanced in the fourth quarter cashed out some home equity. During the boom era from late 2003 to late 2005 – as house prices rose – it was routine for more than 80 percent of borrowers who refinanced to cash out home equity, Freddie Mac statistics indicate.
In 2009, American homeowners cashed out just $70 billion from their houses, the lowest amount since 2000, according to Freddie Mac. (In 2005: $301 billion). It's not hard to guess why. Falling home values have eliminated all the equity people otherwise might have extracted.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
Thousands engaged in it during the real estate boom. Hundreds are trying it in the bust.
Property researcher MDA DataQuick tells Home Front it is seeing more houses sold within three weeks to six months of being purchased. Almost 5 percent of Sacramento County's December home sales fell into the "flipping" category.
Today's numbers rank right up there with the flipping rates of early 2005, just before the housing price bubble burst. At that time, 5.3 percent of Sacramento County sales were considered flips, says DataQuick analyst Andrew LePage. Often-amateur buyers simply bought houses and re-sold them as values rose 25 percent per year. Flipping is one of the factors that eventually spoiled the party and ruined those last arrivals.
By December 2007, with the market collapsing, only 1.7 percent of Sacramento County sales were flips.
But now at the bottom, investors have picked up the game with cheap bank repos. They add carpet, paint and countertops and resell for more, said LePage.
DataQuick statistics say investors accounted for 25 percent of Sacramento County sales in December.
"You've been in the 22 to 25.5 percent range for the past year," LePage said.
It's one of the reasons first-time buyers say they're still losing out in bidding wars.
More bank repos coming
Capital-area buyers can expect the repo market share to rise 15 percent in 2010 as banks bring more to market, says Mike Lyon, head of Sacramento's Lyon Real Estate.
Lyon says the number of repo listings began to swell in December after a year of "numerous government moratoriums."
Lyon's research division, TrendGraphix, says strong demand by investors and first-time buyers seeking federal $8,000 tax credits has driven average sale prices for foreclosed homes from $198,000 to $206,000. Lyon says he believes prices for homes under $300,000 will rise until midyear, when interest rates are expected to go up. By then the federal tax credit – scheduled to expire April 30 – will also likely be gone.
Extra spending money
Here's a welcome flip side to endless reports about people with mortgages they can't afford: A record percentage of Americans refinanced into smaller, cheaper home loans in the last three months of 2009.
It's a trend – thanks to lower interest rates – that is freeing up billions of dollars in extra household income.
Federal home loan giant Freddie Mac reported Thursday that 33 percent of borrowers who refinanced in the fourth quarter actually lowered their principal balances. In other words, they got smaller mortgages after having paid off part of their original loans.
Freddie Mac said it's the greatest quarterly percentage of loan downsizing since it started analyzing refinance activity in 1985.
The fourth-quarter refinancers also knocked about 1 percent off their collective interest rate. That translates into $2 billion in total savings the first year, said Freddie Mac. Alongside savings from smaller mortgages, this is new income to pay down bills, spend in restaurants, buy new cars or otherwise fuel the larger economy.
On the other side of the ledger, a record low 27 percent of those who refinanced in the fourth quarter cashed out some home equity. During the boom era from late 2003 to late 2005 – as house prices rose – it was routine for more than 80 percent of borrowers who refinanced to cash out home equity, Freddie Mac statistics indicate.
In 2009, American homeowners cashed out just $70 billion from their houses, the lowest amount since 2000, according to Freddie Mac. (In 2005: $301 billion). It's not hard to guess why. Falling home values have eliminated all the equity people otherwise might have extracted.
For more information contact Mike at 916-425-6066, michaeloday@greatwestgmac.com or Pat at 916-956-8928, patrickryan@greatwestgmac.com
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