5 reasons Real Estate hasn't recovered |
5 reasons Real Estate hasn't recoveredWhat's happening with jobs, shadow inventory?The housing bubble of 2006 burst in large part due to lax lending practices that led up to the housing recession. The collateral damage from these practices hammered personal fortunes through foreclosures and investment losses. The devaluation of mortgage-backed securities tied to nonperforming mortgages kick-started the falling dominoes in this global financial crisis. Now the mortgage lending industry is making up for their slipshod business practices by tightening credit standards to an extreme level. This has partly to do with regulations recently put in place that make one wonder if anyone consulted real estate professionals and economists before they were enacted. It's commonly agreed that the easy-money lending practices that were in vogue before the downturn in 2006-07 should be left behind. Then, buyers didn't need to qualify to get a stated-income mortgage. Unrealistic teaser-rate mortgages were popular, and 100 percent and 110 percent financing was available. http://www.youtube.com/watch?v=Ivp4YqGCI-s Buyers had little at risk except their good credit, which for many went up in smoke when home prices stopped rising and they were left upside down in their house because the price they could sell for had dropped lower than the balance owed on their mortgage. Not only were they precluded from borrowing more, but many who lost jobs fell behind on their mortgage payments and lost their homes in foreclosure. It's a good practice for lenders to actually qualify buyers before giving them a mortgage. Buyers should make a cash down payment. However, many lenders want down payments equal to 20 percent or 25 percent of the purchase price. Proposed risk-retention rules that would require lenders have more "skin in the game" when offering loans with less than a 20 percent down payment has met opposition from real estate industry and consumer groups. Regulations should be implemented that protect lenders, buyers and investors while fueling a sustainable recovery in the housing market. Lenders also need to streamline their underwriting procedures. Underwriting criteria have tightened in the last six months. Buyers are told their loan has been formally approved; based on that, they remove their financing contingency. Then, it's not uncommon for the lender to ask the buyers for more documentation. This leads to delays in closings. Some deals fall apart and put the buyers' deposit at risk. HOUSE HUNTING TIP: Slow job growth is holding the housing market back in many areas. On the national level, only 25 percent of the jobs lost in the great recession have been replaced. The recovery has been plagued with joblessness and underemployment. The national unemployment rate currently hovers around 9 percent. Because the home-sale market is a localized business, the housing recovery will be uneven. Some areas, such as Texas; Washington, D.C.; and the Silicon Valley in the San Francisco Bay Area, have strong local economies and are generating sufficient jobs to actually produce a pickup in local housing markets. To illustrate how important the local factor is, Silicon Valley has strong job growth even though the unemployment rate in California is about 11 percent. The additional major factor that's keeping housing down is the backlog of foreclosures. Lenders are in some cases holding houses they've foreclosed on off of the market. This is sometimes referred to as the "shadow inventory." Lenders have tried to keep from flooding an already challenged real estate market with more inventory, which could cause prices to decline further. THE CLOSING: However, for a sustainable recovery, these properties need to be sold. Call Tami Winbury Keller Williams Realty 805-798-3412 today! Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist |
Tami Winbury
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Wednesday, August 31, 2011
5 Reasons Real Estate Hasn't Recovered
Monday, August 29, 2011
REO, Preforeclosure Properties Selling at a Larger Discount
Monday, August 29th, 2011REO, preforeclosure properties selling at a larger discount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REO, preforeclosure properties selling at a larger discountRealtyTrac: Share of distressed real estate sales dips in Q2The share of bank-owned homes and homes in some stage of foreclosure dropped 5 percent from the first quarter to the second quarter, falling from 36 percent to 31 percent, but was up from 24 percent in second-quarter 2010, according to a report released today by foreclosure data provider RealtyTrac. For a Free List of Bank Owned Home contact Tami Winbury Keller Williams Realty 805-798-3412 http://www.shortssale.org And distressed properties are selling at a larger discount these days, RealtyTrac reported:
There were 102,407 sales of preforeclosure homes to third parties in the second quarter of this year, up 19 percent from the first quarter but down 12 percent compared to second-quarter 2010. These sales accounted for 12 percent of sales in the second quarter of this year, flat with the first quarter and up 10 percent compared to second-quarter 2010. "The jump in preforeclosure sales volume, coupled with bigger discounts on preforeclosures and a shorter average time to sell preforeclosures, all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales -- at least in some areas," said James Saccacio, RealtyTrac CEO, in a statement. "This gives distressed homeowners who do not qualify for loan modification or refinancing -- or who are not interested in those options and want to sell -- a better chance of completing a short sale to avoid foreclosure." Expedited short sales, he added, "also give lenders the opportunity to more pre-emptively purge nonperforming loans from their portfolios," and avoid a lengthy foreclosure and REO process. Among those metro areas with at least 100 foreclosure-related sales in the second quarter, Louisville, Ky., had the largest average foreclosure discount -- 54 percent below the average sales price of nonforeclosure homes. Florida's Sebastian-Vero Beach metro area was second on the list with an average foreclosure discount of 53 percent, followed by Milwaukee (51 percent), Pittsburgh (51 percent), and Kalamazoo, Mich. (50 percent), RealtyTrac reported. Top 10 States with Largest Volume of Foreclosure Sales in Q2 2011
Top 10 States with Largest Share of Foreclosure Sales in Q2 2011 (as a percentage of total sales)
Top 10 States with Highest Average REO Discount
Top 10 States with Highest Average Preforeclosure Discount
9 States with Rise in Share of Foreclosure Sales (Q2 2010-Q2 2011)
Top 10 States with Largest Decline in Share of Foreclosure Sales (Q2 2010-Q2 2011)
For a Free List of Bank Owned Homes, PreForeclosures, Short Sales, REO's contact Tami Winbury Keller Williams Realty 805-798-3412 http://www.shortssale.org |
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