LAR Real Estate Forum

Banks Tighten Lending Standards

2009-08-25T09:24:00.001-07:00

According to a Federal Reserve report, banks tightened standards for all types of loans in the second quarter. About 35 percent of senior loan officials said they tightened standards somewhat and none of the 51 responding banks said they loosened standards for prime mortgages. The rest said their standards for mortgages remained the same or were substantially stronger. Banks also told the Fed that they expected to maintain strict lending standards until at least the second half of 2010. “Most banks have woken up to the fact that there is a lot more risk in their loan books than they ever thought possible,” says Joel Conn, president of Lakeshore Capital LLC in Birmingham, Ala. That has caused many banks to reconsider their requirements for future lending, Conn says.
I am not pushing for the ‘free and easy’ lending from four or five years ago, what is really needed is a more pragmatic, level headed approach. The pendulum has swung to the other extreme and has now created some of its own problems. We work with a lot of local lenders that do phenomenal job and are bending over backwards to help their Realtor counterparts keep deals together

Problems in the higher end market

2009-07-06T12:13:00.001-07:00

A few other points. (Very telling of where our problems are regarding lending/underwriting)

For all of San Joaquin Co. Jan 09 to date only 63 Homes sold between $500,000 and $999,999 for same period last year 120 Sold. 48% Decrease

For all of San Joaquin Co. Jan 09 to date only 5 Homes sold from $1,000,000 and Above for same period last year 12 Sold. 60% Decrease

Foreclosures represent approximately 75% of ALL Pending and Sold properties in San Joaquin County. Our REO listing inventory currently only comprises approximately 25% of listed properties (we know the ‘shadow inventory’ is out there), Short Sales now comprise approximately 50% of listings.

What will the Fed do??

2009-06-16T10:14:00.000-07:00

The government has infused Trillions of dollars into the system - which in a vacuum for right now, was the right thing to do. HOWEVER, forget about predicting inflation or speculating on inflation. A direct result, if the government's attempts are successful, WILL be inflation. No doubt. The only real tool the Fed has is to print new monies and infuse into the system to jump start things or to raise rates and try to cool things down. As mentioned before - eventually, near term, buying power will errod.

Some positive news...

2009-04-10T08:34:00.001-07:00

April 10 (Bloomberg) -- U.S. stocks rose for a fifth week, capping the steepest rally since 1933, as Wells Fargo & Co.’s higher-than-estimated earnings and speculation banks will pass government stress tests spurred optimism that the industry’s slump is ending.

March Update

2009-03-25T09:35:00.000-07:00

March 25, 2009
Quick Facts:
· Existing, single-family home sales increased 83 percent in February to a seasonally adjusted rate of 620,410 on an annualized basis
· The statewide median price of an existing single-family home decreased 40.8 percent
in February to $247,590
· C.A.R.’s Unsold Inventory Index fell to 6.5 months in February, compared with 15.3 months in February 2008
· The median number of days it took to sell a single-family home declined to 51.5 days in February 2009, compared with 69.3 days in February 2008

Late Updates

2009-03-11T18:09:00.000-07:00

I've been somewhat remiss in keeping up with the blog - sorry.

As of March 08, 2009 per MetroList MLS data there are 231 ACTIVE listings in Lodi and 1642 in Stockton. For Lodi, 137 or (59%) are REO (Foreclosure) and Short Sale properties and in Stockton, REO and Short Sale properties add up to 1376 or (84%). Most everyone, including anxious Buyers and Realtors have noticed inventories dropping and choices of decent REO and other type properties have gone from a pool to a puddle.
Currently, Lodi has 93 homes PENDING Sale and on average is closing 49 Homes a month with only an inventory of 231 of homes. Simply stated we have about a 4-month inventory of homes. Stockton is chewing through their inventory at an even faster pace with 1236 PENDING Sales and on average 519 Sold homes a month. Based on Stockton’s inventory and average number of Sold homes they have about a 3-month inventory of homes available

Homeowner Affordability and Stability Plan

2009-02-22T12:27:00.000-08:00

See for yourself: Homeowner Affordability and Stability Plan just this past week by President Obama. Take a look at the Executive Summary posted on the White House website, http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ExecutiveSummary.pdf

Interest Rates Update

2009-02-16T11:54:00.000-08:00

Interest rates on fixed-rate home mortgages dropped this past week, according to Freddie Mac's weekly survey of conforming mortgages, released on Thursday, February 12. The benchmark 30-year fixed-rate mortgage averaged 5.16% for the week ending Feb. 12, down from 5.25% last week and 5.72% a year ago. The 15-year fixed-rate mortgage also fell, averaging 4.81%, down from 4.92% last week and 5.25% a year ago.
"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance (or purchase)," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage."
"If you have a down payment or home equity, a good credit score, full-doc underwriting and a conforming loan balance [meaning it is under the Fannie Mae and Freddie Mac limit of $417,000 or $615,000 in high-cost areas] — if you meet those four criteria, then you have no problem getting mortgage credit," he said.

Great News! Thanks for Listening.

2009-02-04T07:13:00.000-08:00

It is always nice to know people are reading and paying attention to what you are writing. Over the last several weeks I have had a number of personal conversations, emails and even a few phone calls regarding the last two topics discussed here in this column.
First, regarding Loan Modifications, a few agents and even some Loan Modification companies have inquired about an article I wrote that sort of served as a ‘buyer beware’ for anyone contemplating a ‘Loan Mod’. There are a number of companies out there that are doing them under the structure of the Department of Real Estate and these companies must have an ‘Advance Fee Agreement’ on file and approved by D.R.E. However, there are some companies doing Loan Mod’s through an Attorney based program. According to these companies there is not a need to go through the D.R.E. for an Advance Fee agreement. Any one of the companies mentioned above charge $1500 to $3500 depending on what they are doing for you and some even offer a money back guarantee if they are not successful in negotiating your Loan Mod.
My only concern for you, your family members or your clients are that they are fully aware of what the company is actually doing on your behalf. The devil is in the details. The statistics show that a large majority of Loan Mods eventually default and foreclose regardless of the terms of the Loan Modification. My only take on this whole process is that you should consult with a number of professionals i.e. Accountants, Attorneys and a Realtor before you make any decisions or hand over any money to any company or individual.
Regarding AB 885, a number of emails were traded back and forth over this last week. The response was tremendous and I was copied on a number of emails that people felt compelled to write to the State Water Resources Control Board, Division of Water Quality regarding their opposition to the proposed regulations.
Great news! As of Friday, January 30, I was sent a copy of letter put out by Assemblyman Dan Logue announcing, ‘A decision has been made by the State Water Resources Control Board, Division of Water Quality to place planned septic regulations on hold; a decision that could significantly affect more than a million California homes.’ So great news for now, stay tuned, these things have a tendency to resurface at a later date and time.
One last comment here as I wrap up, I am sure that the great weather we have been having has not gone unnoticed. Open Houses have seen a good number of people coming through with the immediate intentions on buying a home. Interest rates have been remarkable and Affordabiltiy is at an all time best.
I have talked with a number of Realtors® and activity on the higher priced homes $400,000 and above have picked up as well. Inventory levels remain low and demand for homes has increased. Within the next few months Banks and Asset Managers will start releasing homes from their inventory and there should be a better selection of homes to chose from as we move into Spring. Please contact a Realtor® and find out how to get started.
Thanks, Ryan Sherman

New Regulations will limit your Private Property Rights

2009-01-26T10:24:00.000-08:00

If you own property anywhere within the State of California that currently has or will possibly have a Septic System in the future, please read on.

I know Septic Systems are not an overly attractive point of discussion, however, the passage of AB 885 and impending regulations could cost you thousands of dollars and potentially lead to you owning a piece of property that is NOT buildable or a Home that would need thousands of dollars in Point of Sale retrofits.

This is a potential and very real problem for EVERY private property owner within San Joaquin County.

The state of California has released the proposed regulations for onsite wastewater treatment systems (OWTS) and the accompanying Draft Environmental Impact Report (DEIR) evaluating the impacts of the implementation of the regulations on the people and environment of California. You should be concerned that, if enacted, these regulations will make it too burdensome to own a property with a septic system. There is even a new point-of-sale requirement to transfer technical documents.

The cost of achieving compliance is too burdensome and costly and hurts housing affordability.

Groundwater testing and routine inspections will be required whether there is evidence of septic-related problems or not, adding an unnecessary cost burden to property owners - many of whom are either low income and are dealing with declining property values due to the market.

The separation to groundwater standard and loss of sidewall infiltration will require new and existing homebuyers to install tremendously expensive “alternative systems”- if they are even locally allowed. This will make homeownership unachievable for many people throughout the state. And will certainly make it much more challenging in the sale of your existing property.

The regulations need to allow for an effective, pragmatic variance process, where local government regulators can make site-specific exceptions to the regulations and determinations of "functional equivalency" for local conditions.

· The owners of existing septic systems with supplemental treatment systems will now be required to maintain and transfer technical documents at point of sale. This is a problem because:
Thousands of systems would already be out of compliance due to lost or misplaced documents.
Home Owners, Land Owners and Realtors® will be exposed to increased liability in the sale or transfer of property.

The requirement to install groundwater-monitoring wells for new systems is too costly and will prevent building on otherwise usable lots.

These proposed regulations and draft Environmental Impact Report (DEIR) have been released to the public for review and can be found at: http://www.waterboards.ca.gov/water_issues/programs/septic_tanks/

The state is in the process of holding several local workshops and hearings where members of the public may give written and/or oral input regarding the State Water Board’s proposed regulatory actions. These meetings are a forum designed to gain public input about the proposed regulations and content of the DEIR. This is your chance to let the SWRCB know that the proposed regulations are too costly and burdensome and that the DEIR falls short of adequately evaluating the true financial impact of the proposed regulations on California homeowners.

You can attend a Public Hearing in Sacramento February 9, 1:30pm at the Cal EPA Building, Byron Sher Auditorium, 1001 I Street, Sacto.

Or provide written comment to:

State Water Resources Control Board Division of Water Quality
Attn: Todd Thompson, P.E.
1001 I Street, 15th Floor, P.O. Box 2231
email: AB885@waterboards.ca.gov
Sacramento, CA 95812

Thank you for your attention to this important issue regarding private property rights.
Ryan

Who Calls 'The Bottom'

2009-01-17T19:22:00.001-08:00

Only through blind luck will anyone buy a home at the absolute bottom of the market. More importantly, who will tell you when we have hit the bottom. Do not wait for someone to give you permission to buy or wait for some talking head on TV to define the ‘bottom of the market’ for you.

Rent vs. Buy

2009-01-17T19:20:00.001-08:00

Let’s consider a couple of scenarios based on the following known facts and assuming top tier credit scores. In Lodi between $160,000 and $180,000 there are 12 Active Listings (Short Sales not included) as of me sitting down to write this article. The Median of these homes are 3 Bed, 2 Bath and 1369 sq/ft for $167,900. Consider what you would pay in rents for this home, more than likely $1200-$1300 a month.

Scenario A:

Purchase price $167,900, 20% Down, Conventional Loan, Loan Amount $134,320, Interest rate 4.75%. Principal, Taxes, Insurance etc, puts your monthly payment at approximately $900.00.

Scenario B:

Purchase price $167,900, 3.5% Down, FHA Loan, Loan Amount $162,023, Interest rate 4.75%. Principal, Mortgage Insurance, Taxes, Insurance etc, puts your monthly payment at approximately $1200.00.

Warnings on Loan Modification Services

2009-01-11T16:49:00.000-08:00

A word of caution; if you or someone you know are currently involved in or contemplating a Loan Modification, please read this and/or pass this information along to them.

Go to www.dre.ca.gov once at DRE’s site you will see a tab at the top of the page entitled ‘Home Buying & Mortgages’ click on this tab, scroll down to ‘Home Buying Resources’ click on this link, you then will find very important information on ‘Advance Fees & Loan Modification Services’ and ‘How to Avoid Foreclosure’ if you have trouble finding the page, here is the direct link http://www.dre.ca.gov/mlb_adv_fees.html
Department of Real Estate (DRE) Commissioner, Jeff Davi, just this Friday went over some very scary scenarios and some frightening statistics on fraudulent Loan Modification Services. He believes there are over 1000 of these type companies selling their services within California; as of this date approximately only 50 are approved to do so by DRE. These companies must have an approved ‘Advance Fee Agreement’ on file with DRE in order to conduct business. Another point of note, if you have a Notice of Default (NOD) on your home these companies are not allowed to modify your loan. In 2008 they had 253 new fraudulent Loan Modification cases brought to DRE up from zero in 2007. Approximately 30 of 53 Counties within California have Real Estate Fraud Divisions; please check with your County for any updates regarding Loan Modification services and fraud alerts.

2009-01-08T20:34:00.000-08:00

Sat in on a Social Networking discussion group today for our Regional MLS provider. Very interesting stuff. I thought I was tech savy - there are some very smart Agents out there providing some very good information with alot of great insights into the market. For more business contact type networking, have you heard of www.linkedin.com or www.dwellicious.com? Or for micro-blogging try www.Twitter.com. Of course there's www.Facebook.com or www.MySpace.com. I'm really impressed with the new site www.dwellicious.com they just launched and have taken bookmarking and networking to a whole new level. Check it out.

Upswing in Housing Starts for 2009?

2009-01-05T16:13:00.000-08:00

On 12/22/08 UOP posted their Economic Forecast for 2009 - check out the data for housing starts comparing 4Q 2008 to 4Q 2009. They are forecasting housing starts by this time next year to be doubled. See for yourself http://www.sacbee.com/1232/rich_media/1422637.html.

This may seem odd, however, if you take into consideration the fact that we are now entering our fourth year of a housing downturn and home construction has all but come to a screeching halt. Our current inventory of existing homes in Sacramento and San Joaquin county peeked in December of 2007 and current levels are below the 7 year average of housing inventory. As of Dec 2008 we maybe had a 3.5 month supply of homes in our market.

The inventory of homes out there right now are somewhat bleak. For most buyers looking to buy in an area they feel comfortable in, with minimal amount of work to be done, taking into account floor plan and amenities - the facts are that there is just not much to choose from. Absent of pursuing dilapidated REO properties, Short Sales (really Long Sales) or Sellers who will not or who cannot price their home appropriately to entice a Buyer.

There are without a doubt more foreclosures around the corner in 2009 and now with interest rates at 37 year lows some sellers may feel compelled to put their home on the market at a realistic price in the realization that there are active buyers out there. Buyers are very aware of what lower interest rates mean in affordability.

Introductions and Changes in 2009

2009-01-05T07:40:00.000-08:00

Lodi News Sentinel PRESIDNETS MESSAGE Article 1/3/08

As I sit down to write my first article for the President’s Message column, the kids are playing with their newly unwrapped Christmas presents and my wife is frantically running around to clean up the post-Christmas presents and Santa stocking mayhem. Not an unfamiliar scene for this time of year. I hope you and your families had a wonderful Christmas and great start to the New Year.

My name is Ryan Sherman; I am the 2009 President for the Lodi Association of Realtors. I look forward to serving my term for our Association this year, as well as, working with my fellow Realtors. I have served our Association over the past years as a Regional Representative for Rural Forums, as well as, Land Use & Environmental for the California Association of Realtors (C.A.R), a State Director representing our Association at C.A.R., Committee member for our Regional Multiple Listing service provider and finally as a member of the Board of Directors for the Lodi Association of Realtors. I also bring with me over 7 years of Marketing, Sales, Operations and Management experience from the Pharmaceutical industry.

I am married (Jalynn, 10 years) and have two beautiful girls (Julia & Sarah). I work with my parents and nine other agents in our family Real Estate company, Sherman & Associates. I am carrying on in a long tradition of serving the Lodi Association of Realtors, Jan Sherman, my Mom, was President in 1996 and 2004.

I am making some additions this year in how we as the Association as well as me, the President, communicates with our Members and also the Communities we serve.

The first addition is that I am asking for YOU to contact me if you have any questions, comments or concerns regarding Real Estate in the areas where you live. Historically, this column has been a unilateral way of covering general topics or relevant goings on in Real Estate. I want to change things up a bit and make things more interactive and responsive to what is happening in Real Estate. Please feel free to email me at any time larprez2009@gmail.com, I will personally respond to your emailed questions. This is not an avenue for anonymous comments; if your questions are general in nature then I will also address them here in my weekly column.

The second change, and a new one for me as well, I have created a Blog. I am not a big fan of the word ‘Blog’, however, they do serve a great purpose in fostering an interactive Q & A discussion on relevant topics. Again, I will monitor the Blog, http://www.asklarprez.blogspot.com/ and moderate discussions, Q & A or any other timely issues in the Real Estate world.

There is a huge amount of information that can be shared and a great many people that can benefit from that information. My goal is to get you the information you need or answers to the questions you may have in the quickest and most personal way possible. I do not have all of the answers, however, I work with some of the best Realtor professionals in the business. Through these venues and with advice from great Realtors from our Association we will provide you with all the relevant Real Estate information you need.
Remember, please email your questions along with your contact info to larprez2009@gmail.com

December 2008 Final Details for 2009

2008-12-13T15:03:00.000-08:00

Finished the final details for 2009 Committee Selections, Installation Dinner and arrival plans for 2008 NAR President, Dick Gaylord. Working on some format changes for next year in how LAR communicates with its members, as well as, the communities we serve.

This blog is one addition I am curious to try out. I am also altering the format for the 'Presidents Message' article in the Lodi News Sentinel - http://www.lodinews.com/ Historically this has been a unilateral way of relaying information to people regarding the goings on in the Real Estate world. My goal is to make this a more user friendly format and provide a Q & A dialogue for anyone who wishes to ask Real Estate or Local Market questions.

I welcome any feedback, comments, questions or concerns regarding real estate or any specific local market conditions. I can promise you prompt responses or feedback posted to this blog or any email communications. Please email me at any time LARPrez@gmail.com. I don't proclaim to know all the answers, however, I am surrounded by excellent Realtor Professionals who are always happy to assist.

Merry Christmas, Ryan