Here is the latest market dynamic measurement – a snapshot if you will – of the 94507 ZIP Code (Alamo). This simply tells us that market “tide” is moving back in after ebbing out for the past four years. This is very positive news to current home owners, not so good for those looking to find property in the location.
Truth is, this same picture can be found in most metro locations throughout the bay area at the moment. If you’re a buyer, don’t wait, it’s time to get into the market. If your a seller, things are looking good and they likely will only get better. But beware, there are forces at play which can slow this growth down significantly, which some believe wouldn’t be a bad thing. Are we looking at another bubble? You tell me.
Here’s complimentary view of this same market. This speaks to the amount of inventory available to buyers. Again, this reflects the 94507 area code, (where I live), but this same story is playing out across the region. If you’d like to see this same data for where you live, email me: firstname.lastname@example.org (must be in CA!)
Until next time, Steve Maloney, The Maloney Team
I supposed one could do a ton of statistical analysis and come up with such a claim as this but honestly, there are tons of factors that come to bear on what a house sells for once on the market. The day it’s listed could be just one of them. I say take this “study” by CNNMoney with a grain of salt! – Steve Maloney
T.G.I.F. One day of the week can mean an extra $5,000 in a home-seller’s pocket.
One day of the week can mean an extra $5,000 in a home-seller’s pocket.
Nailing the day that a home listing debuts is crucial, says Glenn Kelman, president and CEO of Redfin, which covers 19 markets in the U.S. “You get four times the traffic on the day of debut than any other time of the week, and you only get one chance,” he says. “Soon, you’re yesterday’s news.”
Listing a home on a Friday rather than a Sunday—the worst day to debut—could mean a difference of nearly $5,000 on a $500,000 house, Mr. Kelman adds. Homes listed on Sundays end up selling for 98.4% of their initial asking price.
Properties listed on Fridays also sell the fastest—81 days, on average, according to the Redfin analysis.
What makes Fridays so special (other than a six-pack and takeout pizza)? Adults who have a Monday-to-Friday workweek tend to be more positive and happier on Fridays, an effect that lasts through the weekend, says Richard Ryan, professor of psychology at the University of Rochester. They also tend to report more vitality and energy on the weekends, which may prompt them to be more proactive in searching for homes, says Prof. Ryan, who has studied how the day of the week affects mood.
Conversely, Sunday listings have to sit around for a few days before people start lining up home tours for the following weekend. By that time, newer listings may make Sunday listings seem stale, says Redfin’s Mr. Kelman.
One other day seems to dominate the real-estate world: Tuesday. Homes that are listed on a Tuesday garner the most interest for home tours, seeing 2.41 home-tour requests, on average, the Redfin numbers show.
Tuesdays are big planning days for many people, says Francesca Gino, associate professor of business administration at Harvard Business School. Productivity peaks at the beginning and end of the workweek, and so some may use Tuesday to nail down weekend plans for home viewings.
Of course, not all real-estate agents focus on Fridays and Tuesdays. Takk Yamaguchi, an agent at Town Residential in New York, lists about 70% of properties on Wednesdays or Thursdays. “That’s the sweet spot,” he says. He finds that many buyers seem to book their weekend home tours by Thursday afternoon.
Foreclosure filings in January plunged to their lowest level since April 2007.
Notices of default, scheduled auctions, bank repossessions and other filings fell to 150,864 last month, a 7% decline from the previous month and a 28% drop from January 2012, according to RealtyTrac. New foreclosure filings fell to the lowest level since June 2006.
“We’re now well past the peak of the foreclosure crisis,” said Daren Blomquist, spokesman for RealtyTrac.
Regulations that took effect in California contributed to the dramatic decline. The state had long been recording the highest number of foreclosure filings of any state. But on January 1, a Homeowner Bill of Rights became law, offering more protections for California borrowers in default. As a result, new foreclosure filings in California fell 62% in January.
Under the new rules, mortgage servicers must halt all foreclosure proceedings once a borrower applies for a mortgage modification. Servicers will also face fines of up to $7,500 per loan if they record and file multiple unverified documents in foreclosure proceedings.
“There’s was a bum’s rush to get people out of their homes before this law came into effect,” said Bill Purdy, a real estate attorney in Soquel, Calif. Once 2013 began, filings in California dropped abruptly, down 40% from December and 65% from January 2012.
Last month marked the first time since January, 2007 that California did not lead the country in foreclosure filings. Instead, Florida took the top spot, with 29,800 filings — or one out of every 300 homes — followed by Nevada and Illinois.
The nation’s foreclosure problem isn’t fixed — but we’re getting closer, according to Blomquist. Filings are still running at about twice the pace of 2005, before the subprime mortgage crisis derailed the housing market. And foreclosure auctions rose in 26 states, including four big ones: Florida, Illinois, Pennsylvania and New Jersey.
But bank repossessions, the end game for borrowers when they actually lose their homes, fell to less than half the record 102,134
set in September, 2010. Blomquist is forecasting steady improvement through 2013.
Until next time, Steve Maloney, The Maloney Team
After years in the doldrums, Bay Area home equity borrowing jumped last year, reaching its highest level in four years as the housing market rebounded.
The increase is a welcome boost for the region’s economy, as new home equity lines of credit — known as “HELOCs” — are tapped to pay for remodeling projects and other big ticket items, helping spur job growth.
“This is good news,” said Mustafa Akcay, economist with Moody’s Analytics. “The housing market has been in recovery now for about a year, and homeowners are accumulating equity on their dwellings, so more and more people are benefiting.”
Last year, banks approved 17,844 home equity lines of credit in the counties of Contra Costa, Alameda, San Mateo
and Santa Clara, a gain of 20 percent from 2011 when that type of lending appears to have hit bottom, according to DataQuick, a real estate information service.
The trend reflects renewed consumer confidence in the housing market and economy, said Kermit Baker, director of the Remodeling Futures Program at the Joint Center for Housing Studies at Harvard University. Housing prices in the Bay Area increased at their fastest pace in 25 years in December, according to DataQuick.
“Consumers were hesitant to borrow against their homes” after the housing crash, Baker said. “We’re sort of turning the corner on that.”
The center estimates that spending on home improvements increased 9 percent nationally last year. About 20 to 30
percent of home equity borrowing is spent on remodeling, according to the Harvard center.
Elizabeth Angell is tapping an equity line to improve the drainage of her Palo Alto home’s backyard, fix a few fences and install a patio.
She said she decided to use the equity line “because interest rates are low, and I recently refinanced my mortgage at a really low rate, which opens up some additional cash to spend. The third thing is now that the election is over, there’s more certainty about an economic rebound, so I had more confidence in my earning potential.”
Angell is working with Rick Evans, who operates Bauman Builders and Aesthetic Gardens in San Jose. “The process is all very proper now, like the ’70s,” Evans said. “It’s nothing like the days of the late ’90s and early 2000s when they were passing out HELOCs like candy canes at Christmas.”
Evans said Angell is one of two clients who are using their home equity to pay for remodeling jobs, in contrast to a year ago when his customers were using savings and stock to pay for work on their homes.
While more lines of credit were approved last year, the increase is a mere fraction of the borrowing that occurred during the housing boom, when prices and equity
Richard Rood, a landscaper from Aesthetic Gardens, works in the backyard of a home in Palo Alto, where the homeowners are using a HELOC (home equity line of credit) to finance the improvements, on Jan. 30, 2013. (Karl Mondon/Staff)
skyrocketed. At the height of the boom in 2005, lenders approved 163,567 home equity loans in the four Bay Area counties, according to DataQuick.
Equity lines of credit can be tapped and repaid like a credit card, but with interest rates that are much lower. Banks are much stricter than they were in the boom, requiring excellent credit scores and solid proof of ability to pay.
About 95 percent of home equity lending is going to homeowners with credit scores above 700 nationally, Moody’s Akcay said. “I see some gradual easing, and this 95 percent will decline,” he said. “Still, the process will be very slow.”
The top five HELOC lenders approved 60 percent of the new equity lines in the Bay Area last year. They include Wells Fargo, up 13 percent from 2011; Bank of America, up 8.5 percent; US Bank, up 5.9 percent and Citibank, up 31 percent. The biggest increase was a 72 percent jump in equity lines approved by JPMorgan Chase.
“The question is whether this is likely the beginning of a meaningful trend,” said Andrew LePage of DataQuick. “If so, it becomes a boost — however modest in the beginning — to the economy.”
Some experts think the answer to LePage’s question is yes.
“It’s going to continue to rise,” said Guy Cecala of Inside Mortgage Finance “It’s poised for growth going forward.”
Greg McBride of the website bankrate.com is predicting “a good year for home equity borrowers because rates will remain low, and with home prices stabilizing and beginning to rebound, more lenders will be competing for home equity business.”
We all have heard what a nightmare this real estate market is for home buyers. With the lack of inventory, buyers have been facing stiff competition when submitting offers on homes. The fact is the market has changed over the past 12 months from being relatively neutral to now being a very strong sellers’ market. So what can an astute buyer do in order to get his offer accepted over the others? Here are some tactics you can use to make sure you get the property you want.
- Offer over asking: Yes, seems obvious doesn’t it? Yet I can’t tell you how hard it is for many buyers to pay more than what the seller has listed the property for. It’s just painful, but in order to prevail in this market, this is the very first thing you must do. How much over asking you wonder? A good rule of thumb is $2,000 for every bidder on the property. Your agent will know how to determine how many bids a listing agent has received on a property. Then the both of you can figure out what a good offer will be based on that.
- Make your bid unique; Say a home is being advertised for sale at $300,000. If you determine your bid will be $325,000 in an attempt to outbid the competition, why not make it $325,750. Seems simple and it is. That extra $750 can make all the difference. It’s not much but it will beat out another buyer who came in at an even $325,000.
- Pay all the costs: Section 4 of the Residential Purchase Agreement in California is where all the costs of the transaction are allocated between the buyer and seller. Tradition and local customs determine who pays for what. For example, the escrow fee and title insurance is usually paid for by the buyer. The HOA transfer fee and documentation (if there’s an HOA) is usually paid for by the seller. Why not pay for everything. This is unique and it puts your bid in a very positive light. It signals to the seller that you’re serious.
- Shorten the inspection period: In California, unless otherwise agreed to, the buyer has 17 days after the acceptance of the offer to perform his inspections and release his inspection contingencies. If you would like to send a positive message to your seller, shorten this time to 10 days and then stick to it.
- Estimated Close of Escrow: this is usually a grey area for all concerned. No one really knows how long a lender will take to get loan documents into escrow and fund the loan. Nonetheless, right there on page 1 of the purchase agreement is an area where you’re asked to say when you expect to close escrow. I recommend that you take a leap of faith and state you can close in no less than 30 days. A quick close is what all sellers are looking for. By saying you will close in 30 days you’re conveying the message that you also want a fast, smooth transaction. What happens if you can’t close in that time frame? No issue, have your agent get an extension. If the rest of the transaction is moving along well, the seller shouldn’t have a problem granting it.
- Tell your story: Everyone like a good story, so tell yours! Bring life to you and your family by providing a little background as to why you want this particular home. Tell the seller about your family and your travails in trying to get into a home. Include a picture. It makes a difference.
Financing Matters: Unfortunately the structure of your financing makes a big difference to sellers. The order of preference goes like this:
- All cash
- Conventional with 20% down payment
- Conventional with 10% down payment
- Anything else
Buyers who are trying to compete in this market with FHA or VA financing are at a real disadvantage. The reason for this goes beyond the scope of this article but, all things being equal, a seller is likely to pass over a buyer with this financing in favor of a buyer pre-approve for a conventional loan.
- All cash
- Pre-Approval: Let’s not forget, no one, I mean no one, should be out shopping for a home that hasn’t been pre-approved for a loan, has the ability to make an adequate down payment and can show a seller that they have the funds to actually close the deal. No real estate agent in their right mind should be showing property to people who don’t meet this requirement – but they do!
Yes, it is true. Home prices are on the rise. Buyers are out there waiting anxiously to buy, but there are fewer homes than ever on the market available for purchase. This article explains why.
- Until next time, Steve Maloney, The Maloney Team
By Nick Timiraos
For 2012 as a whole, sales were up 9% to 4.65 million units, the highest annual total since 2007.
Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell to 1.82 million at the end of 2012, an 8.5% drop from November and a 21.6% decline from one year earlier, the Realtors’ group said on Tuesday.
Here’s a breakdown of why inventory has continued to drop this year:
Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth, according to CoreLogic Inc. CLGX -1.06% That pencils out to around 22% of homeowners with a mortgage, or 15% of all homeowners (since not every homeowner has a mortgage). Underwater owners aren’t likely to sell unless they need to move due to changing life (marriage, divorce) or financial circumstances, and they’ll take a hit on their credit for pursuing a short sale, where the bank allows the home to sell for less than the amount owed. Data from CoreLogic show that inventory has been the most constrained in housing markets where there’s the largest concentration of underwater borrowers.
Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence, meaning they can’t easily “trade up” to their next house. Traditionally, homeowners have relied on home equity to make the down payment on their next home, and to pay their real-estate agent to sell their current home and buy their next one. These “under-equitied” homeowners—meaning they don’t have enough equity to make a move to a more expensive home—have added to the drag on inventory.
Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow. Would you sell your largest asset today if you thought it might be worth 5% more next year? This helps explain why markets such as Denver and Dallas, which didn’t have huge housing bubbles and thus had smaller shares of underwater borrowers, have also seen double-digit inventory declines.
More purchases from investors of all stripes: From the big institutional investors that have been grabbing all the headlines, to the mom-and-pop landlords that have traditionally played a much larger role renting out homes, investors have increasingly bought homes that can be rented out rather than flipped and resold for quick profits. This is further keeping inventory off the market in two ways: homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.
Banks have been slower at foreclosing: Banks and other companies that process delinquent mortgages have had trouble proving that they’ve followed state law in taking title to homes ever since the “robo-signing” scandal surfaced in late 2010, and they’ve also had to meet a host of new state and federal rules governing loan modifications and foreclosures from settlements spawned by the robo-scandal. Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.
Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels. Consequently, there’s been much less new home inventory being added to the market at a time when demand (boosted by increases in household formation) is picking up. If more homes are held off the market—for any of the five reasons above—you can bet that builders will move in to fill the void.
Many of these factors that have been dragging down inventory aren’t signs of “normal” or “healthy” housing markets—but then, we probably haven’t had a normal market for around a decade now. If anything, declining inventory shows that normal supply-and-demand dynamics are returning, which is an important step towards putting a floor under home prices and giving markets time to get back to health.
I’ve been writing about this subject for a long time now. I’m still surprised by the number of homeowners who are taken in by shady operators claiming they can help them solve their mortgage nightmare. Hope springs eternal I guess. The fact of the matter is the state of California has strong laws in place to assist homeowners take on their lenders. As of 2013 the state enacted a new set of laws which taken together comprise the new Home Owners Bill of Rights. Google it. You will find a comprehensive outline of what these rights are elsewhere on my blog. The bottom line is this; just because someone claims to a lawyer or have some special powers or programs to help you settle a loan modification with your lender, verify it. Get independent testimonials, fact check their claims, get a second opinion. In almost 100% of the cases I’ve seen, the homeowner is better served by interacting with their lender themselves rather than hand it over to some third party that is really only looking to make a buck off them.
The only time that a homeowner should trust a third party in dealing with their bank would in the instance that they’ve made up their mind to sell their home for less than what they owe the back, the so – called short sale. In this case enlisting the help of an accredited real estate agent, experienced in handling short sales is a wise idea. But don’t make the mistake that many do. Check to make sure the agent is in fact going to be handling the short sale themselves and that they have done it before. All too often real estate agents will be happy to take a listing from a distressed homeowner and then turn it over to a third party negotiator to handle the actual paperwork necessary to make the deal happen, usually for a significant fee, (normally paid for by the agent). These third part negotiators have no real connection to you or your situation. You’re just another file on their desk and the urgency which you have for getting resolution to your problem is lost on them.
Anyway, that’s how I see it – until next time, Steve Maloney, The Maloney Team
Avoiding loan-modification hoaxes
Homeowners wary of being taken in by bogus “loan modification specialists” should not assume that a law office is the most reliable way to work with their lender. Consumer advocates say a growing number of fraudulent modification services involve lawyers, or people who say they are lawyers.
Making sense of the story
- Increasingly, lawyers are lending “their names, their offices, their credentials” to fraudulent operations that vaunt superior skills in obtaining loan modifications, according to a senior counselor at the Lawyers’ Committee for Civil Rights Under Law in Washington.
- While Federal Trade Commission rules generally prohibit demanding upfront fees for mortgage relief services, there is a narrow exception for lawyers.
- Under the rules, a lawyer may charge clients in advance for assistance if the service is part of their general practice of law, and not outside of that practice.
- Certainly, many lawyers provide legitimate foreclosure-avoidance services, but borrowers should know that when going to a lawyer whose sole business is loan modifications, that is a red flag.
- As more homeowners become aware of these tactics, some operations are changing their practices. Instead of selling loan modification services, they are advertising so-called loan workouts and forensic loan audits. Some are even posing as nonprofit groups.
- The Homeownership Preservation Foundation and the Lawyers’ Committee both belong to a coalition of public and private agencies that maintain a national database of loan-modification complaints. Since March 2010, some 28,000 homeowners have reported potential fraud. Their reported monetary losses total around $66 million.
- Counseling services offered by the Dept. of Housing and Urban Development are free of charge. Visit http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm to find a HUD-approved counselor.