Nearly 20% of home owners are upside down. 27.4% of Californians

Almost 10 million homeowners are 'underwater' or just above - Oct. 31, 2008

7.5 million homeowners 'underwater'
Nearly a fifth of U.S. borrowers owe more on their mortgages than their homes are currently worth - and that number is growing.


Top 10 states with underwater loans
State # of mortgages % underwater
Nevada 609,577 47.8%
Michigan 1,145,572 38.6%
Arizona 1,287,076 29.2%
Florida 4,248,470 29.2%
California 6,461,981 27.4%
Georgia 1,456,327 23.2%
Ohio 1,905,000 22%
Colorado 1,045,773 18.3%
New Hampshire 144,479 17.2%
Texas 2,721,638 16.5%
Source:First American CoreLogic
Top 10 states with the fewest underwater loans
State # of mortgages % underwater
New York 1,554,607 4.4%
Hawaii 201,188 5.6%
Pennsylvania 1,413,181 5.7%
Montana 87,181 6.9%
Connecticut 678,766 7.4%
Alabama 238,978 7.4%
Oregon 641,820 7.5%%
Washington 1,273,659 7.6%
New Mexico 186,844 8.2%
New Jersey 1,748,179 9.3%
Source:First American CoreLogic
Special Report
Mortgage Meltdown

* September pending home sales fall
* Mounting job losses fueling foreclosures
* Mortgage rates fall
* JPMorgan Chase expands housing rescue plan

Bankrate.com
Current Mortgage Rates

Type Overnight avgs
30 yr fixed mtg 6.03%
15 yr fixed mtg 5.72%
30 yr fixed jumbo mtg 7.49%
5/1 ARM 5.93%
5/1 jumbo ARM 6.18%
Find personalized rates:


NEW YORK (CNNMoney.com) -- At least 7.5 million Americans owe more on their mortgages than their homes are currently worth, according to a real estate research firm's report released Friday.

In other words: If they sold their homes today, they'd have to bring a check to the closing. Ouch.

Another 2.1 million people stand right on the brink, according to the report by First American CoreLogic. Their homes are worth less than 5% more than the mortgages they're paying on them.

The technical term for this phenomenon is negative equity; more colloquially, these borrowers are often referred to as being "underwater."

"Being underwater leaves homeowners vulnerable to foreclosure," said Mark Fleming, CoreLogic's chief economist.

Sell your San Diego Home fast -

Sell your home fast in any market - Selling Your House - MSN Real Estate

Home sellers now face market conditions that resemble a beach in a nor'easter: As they struggle against the gale-force winds of record-high inventory, a tide of declining home prices — made worse by rising foreclosures — continues to undercut their position.

Sales perked up temporarily last spring. That may be because buyers were responding to lower prices, especially in the entry-level range. But it could also have been the usual seasonal upswing. And forecasters aren't optimistic about a true turnaround any time soon, given the chill of the credit crunch and declining confidence in the economy.

Setoff Against Unsecured Deficiency of Debt Owed by Creditor Contravenes Policy Underlying Antideficiency Laws

Setoff Against Unsecured Deficiency of Debt Owed by Creditor Contravenes Policy Underlying Antideficiency Laws: "Section 726 of the California Code of Civil Procedure embodies the 'one form of action' rule. In pertinent part, section 726(a) provides:

There can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein, which action shall be in accordance with the provisions of this chapter.

Section 22 of the Code of Civil Procedure defines 'action' as follows: 'An action is an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.'

The court recognized that a nonjudicial foreclosure is not an 'action' within the meaning of sections 22 or 726; hence, a nonjudicial foreclosure does not violate the one form of action rule embodied in section 726. Nevertheless, the court found that the setoff contravened the 'economic policy considerations' underlying the antideficiency statutes.

The court looked to the policy considerations underlying section 580b of the Code of Civil Procedure. Section 580b precludes a deficiency judgment after foreclosure, judicial or nonjudicial, under a purchase money deed of trust given to the sell"

Mortgage rates, price of real estate and the fannie and freddie bailout

This is a excellent explanation or what may happen with mortgage rates going forward.
Remember is from the National Association of Realtors - so it could be biased.  But, the author's logic is solid.




Economist's Commentary: September 8, 2008

Mortgage rates will trend down over the short run. But how much of a decline will depend on how actively the government - more specifically the Treasury Department and the FHFA - loosens their mortgage liquidity spigot. For over the next 12 months at least, the FHFA has the authority to purchase more than the normal amount of mortgages from lenders to put into their portfolio holdings. That means all conforming loans, including the newly conforming jumbo loans up to $625,000, will qualify for purchase by the FHFA. That will help drive down mortgage rates. In about two year time, when the housing recovery is assumed to be well underway, the government will trim its mortgage portfolio. Then Fannie and Freddie will be completely restructured. It will be up to the next administration and Congress to determine that structure in for which NAR will make our 1.3 million voices heard.

Inflation up - Gross Domestic Product is really negative

This would explain why it is much easier to get a steak at our favorite family steak house in San Diego and it may explain why real estate agents who deal with higher end properties report a belief that prices are falling. The good times are not rolling like that did a few years ago in San Diego.

However, the are a heck of a lot better then parts of florida.


The Big Picture | GDP fails ‘commonsense sniff test’

To strip inflation out of the data, the government devises a "deflator" that subtracts inflation from nominal GDP. In the second quarter, that deflator was 1.3, a figure that was half what it was in the first quarter and tied with a 10-year low. Starting with nominal GDP of 4.6 and subtracting that 1.3 deflator, we get real GDP of 3.3.

If the government had used the same deflator as it did for the first quarter, 2.6, GDP would have only been 2.0.

Consumer inflation for July was the fastest it had been in a generation, moving up at a rate of 5 percent for the previous 12 months. Had the deflator been that large, we would have seen negative growth for the second quarter." (emphasis added)

San Diego Real Estate prices

In this blog read that the inflation rate is much higher than the 4 percent we are being told.

If we use the pre 1998 calculation we are running at a 7 percent inflation rate and if we use the pree 1983 inflation rate we are running at over 11% inflation.

Which is what it fells like.

So how will this effect real estate prices....

Well if inflation really kicks in salary will begin to inflate, the dollar will devalue and then eventually assets will probably increase in price.


The Big Picture | Inflation Abounds

Inflation Abounds
Tuesday, April 29, 2008 | 01:00 PM
in Federal Reserve | Inflation

The Federal Reserve is now in day 1 of their two day meeting. The statement we get tomorrow, and the minutes we will read next month are likely to be intriguing.

Bizinflate430

CAR explains what fannie and freddie mean to California real estate prices and sales

My response to this kind of support for a government bailout of California real estate is mixed. I believe that fannie and freddie have been subsidizing loans in a stupid manner for a long time. Making borrowing much to easy. Consequently prices were too high and now the tax payer is going to to get crushed.

The problem is - if we do not bail them out now -- we would probably see a depression.

This is why governments do not need to be involved in private businesses. Sure the should prevent monopolies but did we really need them subsidizing loans. I would be prices would have been lower - interest rates would have been higher and monthly payments would have stayed at more realistic levels if fannie and freddie did not lend on risky deals.

Sure they help home ownership for a few years - but at what cost. Look at how much this is going to cost. Plus I will bet half the people who bought a home in San Diego wish they had not paid so much.

Gmail - C.A.R. Newsline - jmcconnin@gmail.com

Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend's action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.

In light of the U.S. Dept. of the Treasury's action, C.A.R. this week reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles. While the short-term impact of the Treasury's actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.

.....

In light of the U.S. Dept. of the Treasury's action, C.A.R. this week
reaffirmed its support for Fannie Mae and Freddie Mac and their
countercyclical roles. While the short-term impact of the Treasury's
actions over the weekend served to calm the markets and restore
confidence, in the longer term these entities need to be able to
fulfill their historic mission. A privatized Fannie and Freddie will
short-circuit the countercyclical role the GSEs have played during
precarious times in real estate markets.

Where is the price of San Diego Real Estate heading

These graphs are interesting - but remember these arguments were around on the way up as well.
As with other markets - it is all about sentiment of borrowers and the supply of cheap and easy money.




Calculated Risk

Our economy and our markets will not recover until the bulk of this housing correction is behind us."
Treasury Secretary Hank Paulson, Sept 7, 2008

So when will the "bulk of this housing correction" be behind us? Right now prices are still too high.

Here are a few ways to look at house prices: real prices (inflation adjusted), price-to-rent ratio, and price-to-income ratio.

The first graph compares real and nominal Case-Shiller Home Prices through Q2 2008 (real is current index adjusted using CPI less Shelter).

A look at home prices around the country

Housing market shows a hint of hope - USATODAY.com

New housing reports out Tuesday show some of the first glimmers of stabilization in the troubled housing market, but economists say there are still significant risks that could undermine a recovery.

Home prices fell at a slow pace for the fourth-consecutive month in June, with prices in 20 major metro areas down 0.5% for the month. The decline is far less than the 2% monthly drops seen earlier in 2008, according to the S&P/Case-Shiller home price index. And, in June, prices in nine of the 20 metro areas measured showed a gain from the preceding month, up from seven metros in May.

HOUSING HELP: Down payment aid program nears end

"The bottom of the national housing market is in view," says Mark Zandi, chief economist at Moody's Economy.com. "The rate of (price) decline is slowing, and there are signs of stabilization in some markets." But troubles persist. The decline in home prices year-over-year remained in the double digits, with prices a record 15.4% lower in the second quarter of 2008 than in the second quarter of 2007. From the housing market peak two years ago, the index report said, housing prices are off 1

Homebuilders sentiment is still low

Home builders stay grim in August | Reuters

WASHINGTON (Reuters) - Home builder sentiment was stuck at a record low in August, as stringent lending and a flood of foreclosed homes dragged on the real estate market, according to data from the National Association of Home Builders released on Monday.

The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.

The August figure matched the median forecast among analysts surveyed by Reuters. Readings below 50 mean more builders view market conditions as poor than favorable.

Despite the weak reading, the Washington trade group said its members hope a recently enacted home buyer tax credit will bolster housing appetite.

What will happen to San Diego Home prices and Real Estate if fannie and freedie go under --

The California Association of Realtors sent the following to my email.

GSES HAVE MORE OPTIONS THAN NATIONALIZATION
Contrary to recent news reports, nationalizing Fannie Mae and Freddie Mac is not the only option available to the two mortgage giants, according to a Citigroup analyst quoted in a recent "Reuters" story.

Adding that the GSEs are most effective in their current form and that nationalizing them is unnecessary, the analyst detailed other available options, including: policymakers emphasizing the benefits of the recently adopted backstop plan; the GSEs selling mortgage-backed securities to the Treasury; the regulator lessening capital surplus requirements; and/or all parties waiting until market conditions improve.

C.A.R. supports Fannie Mae and Freddie Mac in their current structure. Created to ensure that an affordable and stable flow of capital is available to lenders for home loans regardless of market conditions, the nationalization or elimination of the GSEs would have severe repercussions for homeowners and the economy, including:

- An instant shortage of capital to the mortgage market, leaving only FHA and VA as a stable source of capital for homebuyers.
- A rapid increase in interest rates on all non-government mortgage products, sinking the nation's housing market and quickly raising the costs of homeownership.
- Homebuyers being forced into exotic loans because of their inability to afford the initial high costs of non-conforming, fixed-rate mortgages.
- Many low- and moderate-income households unable to purchase homes because of the high costs of mortgage-financing.

Ca Home sales - media price falls 40 percent.

Just thought some day keeping this information in a blog would be interesting. San Diego seems to be experience the same type of split market.

C.A.R. July 2008 Sales and Price Report

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2008 was $350,760, a 40.3 percent decrease from the revised $587,560 median for July 2007, C.A.R. reported. The July 2008 median price fell 4.5 percent compared with June’s revised $367,130 median price.

"Once again, the 40.3 percent year-to-year decrease in the median price of a home was an all-time record, surpassing the previous record set in June with a 37.9 percent decrease," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.

"Since the statewide median remained in the $585,000-$595,000 range through August of last year, the market will continue to experience significant year-to-year adjustments through August even if the median price holds steady over the next few months," she said. "The statewide median was last in the $350,000 range in early 2003."

It have been reported that Fannie and Freddie have serious financial trouble and loans. It had been hoped by many here in San Diego that lending standards were going to get a little easier to meet. It was reported on CNNmoney that standards are going get tougher.




The Big Picture | Uh-Oh! Bad Sign on Fannie & Freddie

Marketwatch reports that the government discussed a contingency plan in case the unthinkable happens, and Fannie Mae (FNM) and Freddie Mac (FRE) were to fail.

But don't worry -- the Bush administration DOES NOT expect the entities to fail. And, they note no rescue plan is imminent.

Rex Nutting says Uh-Oh! This is a major contrary indicator, and it suggests Freddie and Fannie are toast!

Why?

"Is there any surer sign of an impending disaster than a reassurance from the White House that it doesn't expect it to happen?"

Rex adds this short list of other things that the Bush administration didn't expect:

Terrorists to fly airplanes into buildings.

Saddam Hussein to have been telling the truth about not having any weapons of mass destruction.

Iraqis to object to a long-term occupation by a foreign power.

Hurricane Katrina.

People in New Orleans to object to the government's response to Hurricane Katrina.

The Democrats to take control of Congress.

The Democrats to cave in so easily on important issues after they took control of Congress.

California Home prices dropping

Bloomberg.com: News

Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.

``Half off in a decent neighborhood is close to the bottom,'' said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund. Property markdowns of 30 percent to 40 percent give the market ``price illumination if not sunshine,'' he said.

`Beginning to Happen'

California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to ``discounted distressed sales,'' with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.

Is it time to buy or time to sell - Home prices down

Should you buy a home now? - Los Angeles Times

he drop in prices may mean it's time to jump in. Or is it too soon? Experts offer pros and cons.
By Peter Y. Hong, Los Angeles Times Staff Writer
August 3, 2008
Southern California median home sale prices are down about 30% from their peak. That's about as far as they fell in the 1990s real estate downturn, and enough of a decline to have many asking: Is it time to buy? ¶ Some are already answering with their checkbooks. In the inland areas where prices have crashed hardest, buyers are slowly returning. ¶ But many of those who study housing markets say the worst is yet to come for real estate. Buy now, they warn, and you'll regret it as prices continue falling. ¶ Others contend that prices are low enough that renters who aspire to own should buy now so they can start building their equity. ¶ Predicting price trends is a dodgy business, and there's no one right answer for everyone. But if you are thinking about buying now, here are some pros and cons to consider.

Home builders losing money as sales are weak in San Diego and inland empire

Home builders battle to survive - Los Angeles Times

he Ryland loss followed a report earlier this week that June housing starts were down 44% in California from a year earlier. "It's very bad, the worst I've seen," said Mick Pattinson, a 32-year industry veteran and chief executive of Barratt American, a private builder based in Carlsbad. "It's impossible to build anything today at a profit, so builders are either taking losses or have pretty much stopped building," he said.

Pattinson said his company, which builds in San Diego County and the Inland Empire, is down to 40 employees, from a high of 140.

"We're trying to stay alive," said Pattinson, whose company is scraping by with reconstruction work in fire-damaged parts of San Diego and a few custom home orders.

In addition to the 44% decline in housing starts last month, the California Building Industry Assn. said its latest figures on new-home sales showed a 51% drop-off in May from a year earlier.

Hopes for a recovery "have fallen apart" and that is "going to make the rest of 2008 a rocky ride for home builders," said Jonathan Dienhart, research director of Hanley Wood Market Intelligence, which prepared the builders group's report.

Home prices fall in San Diego - again

Home prices continue sharp descent - May. 13, 2008

San Diego-Carlsbad-San Marcos, CA $459,000 -22.9%

California Real Estate prices drop - sales increase

The following stats are consistent with what we are seeing in the San Diego Market. Lots of offers on the lower priced property. Higher end properties moving more slowly and prices starting to come down due to all the foreclosures.

C.A.R. June 2008 Sales and Price Report

LOS ANGELES (July 25) – Home sales increased 17.5 percent in June in California compared with the same period a year ago, while the median price of an existing home fell 37.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“Statewide home sales remained above the 400,000 level for the second month in a row, and up nearly 18 percent from a year ago,” said C.A.R. President William E. Brown. “Following a 30-month string of year-to-year percentage decreases that began in October 2005, sales last month also posted their third consecutive year-to-year gain.

“Sales were driven in part by large shares of deeply discounted distressed sales in many parts of the state,” he said. “With lower prices and favorable interest rates, affordability also has improved significantly in recent months, paving the way for many buyers to purchase their first home.”

June 2008 Sales and Price Report

C.A.R. reports sales increased 17.5 percent; median home price fell 37.7 percent in June

LOS ANGELES (July 25) – Home sales increased 17.5 percent in June in California compared with the same period a year ago, while the median price of an existing home fell 37.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“Statewide home sales remained above the 400,000 level for the second month in a row, and up nearly 18 percent from a year ago,” said C.A.R. President William E. Brown. “Following a 30-month string of year-to-year percentage decreases that began in October 2005, sales last month also posted their third consecutive year-to-year gain.

“Sales were driven in part by large shares of deeply discounted distressed sales in many parts of the state,” he said. “With lower prices and favorable interest rates, affordability also has improved significantly in recent months, paving the way for many buyers to purchase their first home.”

San Diego Real Estate for sale

Pacific Beach San Diego Property for sale. This is a short sale in San Diego California. For more information please go to our website at www.favoriterealestate.com


 
 
 
 

Carlsbad Home for Sale

This a great home in Carlsbad, North County San Diego California 92009. Depending on the offer made by the potential buyer it may turn out to be a short sale, which could take a few months or it could be standard sale and therefore close rather quickly. It is listed at 1,150,000. For more information about this property visit the our listings link on the side of this blog or got to www.favoriterealestate.com


 
 
 
 

photos short sale, Diamond Street condo - Pacific Beach San Diego

More information about this Condo for Sale in San Diego California is avaliable on the our listings page at www.FavoriteRealEstate.com


 
 
 
 

Walk Away Plans San Diego Real Estate

Walking Away from Your Home Loan or Mortgage? Why? Is it right?

One position holds that a contract is a promise and a promise is a bond. (if you are in default on your loans you have probably heard this argument from bill collectors. But, is it correct?
a. Is a Contract soley a promise or is it are complicated arrangement.
b. If you default on our duty, you are probably in breach of contract
c. The lender will have remedies provided by the contract and provided by State Law
d. Within legal circles there is an argument that a breach of a contract is not a moral decision but a business decision… A seller chooses to allocate his or her resources in a new manner. (presumably a more efficient manner) The lender is now entitled to contractual remedies (or the ones proscribed by law). This has been referred to an efficient breach. In other words the breaching party chooses to allocate resources elsewhere and the party who deal has been breached can elect to pursue its remedies. Remarkably many sellers see that it is pointless to keep paying big money for a home which may be upside down for years. They therefore choose to allow the lender to pursue its remedies. Some sellers are even buying a short sale for foreclosure down the block and then going into default on their upside down property.
e. California has designed laws to protect consumers from the consequences of purchasing overpriced property. California’s legislature decided decades ago to protect buyers of real estate from sellers and lenders who facilitate the purchase of the property. See California Code of Civil Procedure 580.
f. Finally, and this is why I enjoy helping sellers, the lenders gave out loans without properly qualifying borrowers. This caused price to rise to heights it could not normally have reached. It resulted in a “tax” on Californians. Real estate loans went form 30% of our income to 70%. Those lenders gave 100% loans to people and paid 1-6% to mortgage brokers for an opportunity to package those loans and blow up pension funds and school teacher retirements. I have no reason to believe anyone who is stuck in over priced house should feel beholden to the lenders. The lenders made a business decision to bet on increasing prices and gorge on short term bonuses. Some real estate purchasers were greedy as well but anyway you slice prices were artificially high. Lenders provided the punch bowl for the real estate party and then took it away.