05.05.08
Posted in Uncategorized at 5:38 pm by admin
As we continue to read the depressing news on the housing market in parts of California and across the country, I think it’s important to keep a perspective on our local market – the Conejo Valley. For several years at the end of every month I have tracked the number of active residential listings, the number of PENDING sales and the number of closed sales. Pending sales, that is the tally of opened escrows during the past month, are important because they reflect what is happening right now. Most sources report closed sales, which reflect activity, that is, contracts accepted, 30 to 90 days ago. Because a picture tells a thousand works, I have scanned my chart as a jpg. See above. By the way, out of the current inventory of homes for sale, fewer than 50 are bank-owned.
What does this picture say?
This pleasant story, along with the temporary nature of expanded FHA and conforming loan limits, is not being told. The higher loan limits are set to expire by the end of this year, and at the moment there is no plan on Capitol Hill to keep them at the higher level – a tragedy for those with small down payments, for example, and for those buyers hoping to get lower interest rates for loan amounts up to $729,750. If you would like details on any of the above, just respond to this posting. I would love to tell these encouraging stories!
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04.01.08
Posted in Uncategorized at 8:59 pm by admin
Conejo Valley Pending Sales Double since 4th Quarter 2007!
This is the column I promised to send you a couple weeks ago, following my musings on the mortgage market. The new increased “jumbo conforming” loan limits, combined with the increase in the FHA mortgage amount (both at $729,750 for LA and Ventura Counties), seems to be having a salubrious effect on our local housing market. However, before producing the “ponies” that are emerging in the barnyard of real estate, here are some statistics that have eluded the media in their reporting of the “mortgage mess”:
1. Since 1996 California has added 2.2 million homes and condos to the supply of housing. The media have reported that the number of tallied notices of default in California in the 4th quarter hit a new record, surpassing the previous record of 1996, 1st quarter. But as a percentage of homes, the default rate is still lower than it was in 1996. Remember, too, that since one home can have more than one loan, it can also have more than one notice of default. Therefore the number of defaults is higher than the actual number of homeowners in serious trouble.
2. In LA County 29% of the bank-owned homes were previously owned by investor/speculators. In many cases these speculators have “flown the coop,” leaving no one for the lender to negotiate a repayment plan with. This means that almost of third of bank-owned properties were lost by speculators, not families put out on the streets.
3. The usually bearish UCLA Anderson Forecast is actually predicting that while “the real estate weakness will remain a significant drag on the economy, leaving us treading water in 2008 [it will not slip] under the waves into recession” [emphasis mine].
Now let’s take a look at the local numbers. For the past three years I have been tracking the Conejo Valley supply-and-demand curve – that is, listing supply, pending sales and closed sales - on a monthly basis. What I have are raw data, but nonetheless, interesting data. And the good news is that pending home sales are going up, while inventory remains static. Pending sales, unlike closed sales, provide a snapshot of what is happening right now.
The good news here: Pending sales in the Conejo Valley have almost doubled since the end of last year. As of March 31, monthly pending sales stood at187, up from 155 from last month and from 95 for the last two months of last year. Supply stands today at 1110, compared with 1176 on 11/30/07 – indicating that inventory has not gone up. This tightening of the supply-demand curve is definitely encouraging.
As for prices, using year-over-year data for February, the median price of a four-bedroom home in the Conejo Valley is down a little over 10% ($778,846 in February 2007 vs. $ 867,424 for February 2008) – not as dramatic as the media make it seem.
What does all this mean for home buyers? Well, somewhere in my education I learned about the bell curve and how most people can never time a purchase at the bottom of the bell. I don’t know if we’ve reached the bottom of the bell curve but we’ve certainly hit a bump upward. With the expanded conforming loan limits (and the lower interest rates that go with them) set to expire at the end of this year – now seems like a good time to buy. There is still adequate inventory, mortgage programs have opened up, and buyers are stepping back into the market.
If you’re contemplating the sale of your home in the near term, now is also a good time for all the same reasons: a year-end sunset on expanded conforming and FHA loan limits, plus steady inventory at a time when more buyers are entering the market.
Whether you’re buying or selling, now seems a good time to lead the ponies out of the barnyard of media muck, saddle up, and take a ride about town.
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03.17.08
Posted in Uncategorized at 9:59 pm by admin
I vacillated on what to call this column. My first choice was Mr. Toad’s Wild Ride, after the
Disneyland ride that is full of twists turns and frights. My other choice was, There’s a Pony in Here Somewhere.
So I’m going to break the piece up into two columns, this one being the one on the mortgage market – Mr. Toad’s Wild Ride. In a couple days, look for There’s a Pony in Here Somewhere, which will comment on the local housing market.
The mortgage market has been a wild ride indeed, with the Fed’s dramatic lowering of both the discount rate and the federal funds rate, the intervention of Congress in raising conforming loan limits (from $417,000 to $729,750), and the increase in long-term rates. Translation: while adjustable rates have come down a bit in response to the Fed’s action, long-term rates have stubbornly gone up. In fact, since the beginning of the year 30-year fixed mortgages have increased about 1/2%. The spread between jumbo and conforming rates is about 1.2 percentage points.
What can we expect on the mortgage front? More of the same. Every time you see the word “inflation” in the newspaper, know that 30-year mortgages are trending upward. The reason has to do with the relationship between longer-term bonds and interest rates, which is a phenomenon that has always confounded me but whose implications are all too real.
The good news is that FHA and conforming loan limits have been raised through the end of the year to $729,750,000 in Ventura, Los Angeles and
Santa Barbara
Counties. But this news is tempered with bad news, at least for non-FHA loans: Our area has been pegged as an
area of declining value, so down payments for the so called jumbo-light loans (those between $417,000, the old limit, and $729,750) will need to be at least 15%.
In addition, the jumbo-lights will carry a slightly higher rate than the “true conforming” rates.
For home buyers with less than 20% down, FHA will be the way to go, but this will limit the purchase price for a buyer with only 5% or less down, to the $750,000 range.
There are also serious restrictions on refinancing with the jumbo-light loans ($417,000-$729,750). If you are a happy homeowner who wants to refinance, understand that the new conforming limits will probably not work for you if you have a first and second trust deed. Nor will they work for you if your equity position has dipped too far.
If you are a home buyer waiting in the sidelines for fixed-rate home loans to come down, you have missed the national anthem and a couple innings. They are going up. Second, if you believe that home prices are still falling in our area (more in this in the next column), your windfall on prices may be wiped out by the increase in your mortgage rate. In fact, a 1% increase in rate negates a 10% fall in pricing on a monthly payment basis.
Nonetheless, the selection of homes is better than it’s been in several years, and buyers can use the weakness of the market to negotiate a deal that makes sense to them. Also, market timing – waiting for the bottom – is always tricky, and if history is any guide, the market will change quickly and competition for homes will increase. The smarter move is to buy on the down-curve, while interest rates are still relatively low and choices are open, rather than putting your life on hold and gambling with market timing.
Mr. Toad’s Wild Ride winds on, and unlike the
Disneyland experience, we don’t know exactly where it’s going to end up.
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02.10.08
Posted in Uncategorized at 7:22 pm by admin
As most of you have read, the Senate has approved a stimulus package that includes an increase in the conforming loan limit (the current loan limit of $417,000 is the national average price of a single family residence). Conforming loans carry a significantly lower interest rate because mortgage lenders are able to sell the loans to Fannie Mae and Freddie Mac, while larger loans currently have a very limited secondary market.
The stimulus package gives HUD 30 days to determine new conforming loan limits for each state. As California is one of the states with the highest average sales price, we are anticipating that the new conforming limit will be between $650,000 and $729,750.
This development will qualify more first-time homebuyers and enable existing buyers to qualify for bigger loans. With more first-time homebuyers, current sellers will be able to “move-up” in property.
What an opportunity! As conforming interest rates are at their lowest level in over four years, and with the possibility of obtaining these low rates on a $729,750 loan amount, why would you wait? There could not be a more exciting time to review your options.
So what about home prices and overall inflation? We anticipate that prices will stabilize in the second quarter and that summer will bring an aggressive housing market. Inflation, the enemy of low interest rates, is always a concern. When inflation creeps into the economic outlook, interest rates will rise. As interest rates rise, buying power declines.
Are you waiting for home prices to drop further? Do you believe they will drop more than 10%? The answer lies in the math: a 1% rise in interest rates reduces your buying power by over 10%. Is the risk worth the wait?
So if you are thinking of purchasing a home or refinancing your current home, contact me now, and I will make sure your are on my priority “Watch List.”
My thanks to Brownie Stanisch of Metrocities Mortgage for her input on this. She can be reached at bstanisch@metrociti.com or phone (818) 742-3137, cell (818) 681-2401.
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Posted in Uncategorized at 7:20 pm by admin
According to Mark Schniepp, Director of the California Economic Forecast, quoted in the “LA Times” on 2/08/08, “There is a limit to how far a home can go down. It’s time for buyers to realize they are about as low as they’ll go,” he said, speaking of Ventura County specifically. Schniepp said he expected that the provision in the stimulus package to raise conforming loan limits in California (see previous post) would help home prices here remain steady. “If you don’t have to sell, then hold on until 2010. If you do have to sell, sell right now, immediately. And if you’re a buyer, buy new [if you have new product to choose from] - these are the best deals you’re going to get.”
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Posted in Uncategorized at 7:07 pm by admin
This month’s issue of “ e-Home News” discusses the provision in the economic stimulus package to raise the conforming loan limit to somewhere between $629,000 and $729,000 - a boost to California real estate sales.
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01.08.08
Posted in Uncategorized at 8:18 pm by admin
This month’s issue of e-Home News contains advice on credit issues, my thoughts on the meaning of home, and other tidbits.
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01.01.08
Posted in Uncategorized at 1:50 pm by admin
Thanks to all of you who participated in stuffing stockings for our overseas troops.
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Posted in Uncategorized at 1:49 pm by admin
2007. That was the year that was, we can now say. Milestones included: Caroline Kennedy turned 50! Two people from my past, whom I consider contemporaries, announced they were moving into an assisted living facility downtown so they could enjoy the theater and fine dining without the worries of home maintenance. My son went away to college in the big city (no more white-bread Westlake Village, he said). On the housing front, the prediction by Southern California economist Christopher Thornberg finally came bearing down.
What will 2008 hold? I’ve been reading the economic tea leaves, which run the gamut from: not so bad to the sky is falling. Ben Stein recently said, amid the protests of his radio interviewer, that, except for a subset of people who are facing the lpossible loss of their homes, the economy is not in such bad shape. “It’s not a disaster, Frank,” he insisted. (Frank, on the other hand, like many of his fellow journalists, was sure no light would dawn on the horizon).
I won’t take a stab at forecasting and sharing milestones that make me feel old, but I will go out on Thornberg’s limb and forecast an upturn in the housing market. Using his timetable, I have several years for this forecast to come true! As a past client once said, “My father was an economist, and if economists were always right, we’d be rich!”
Happy New Year to all of you!
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11.27.07
Posted in Uncategorized at 12:57 pm by admin
If you would like to contribute items to Project Holiday Stocking, which will send stuffed stockings to overseas military personnel, please contact me. I will be happy to pick up your items and stuff stockings that I will purchase, or you may stuff your own stocking (no more than 20 inches long), and I can pick that up. It takes roughly six to eight items to fill a stocking. BE SURE TO INCLUDE A PERSONAL HOLIDAY GREETING and a CHECK for the postage in the amount of $8.95, made out to project coordinator Denise Snavely. Several local businesses are also supporting this effort.In the past five years Denise has shipped more than 20,000 stockings, running the not-for-profit service out of her garage. She has one point of contact in Afghanistan (Navy) and two in Iraq (Army.The stockings are shipped to the contacts and they hand them out to the troops.Please choose your items from the following list, as requested by the troops:
Toiletries - Chapstick, body lotion, body powder, foot powder, liquid body wash, wet wipes, deodorant toothpaste, toothbrush, shaving cream, razors, shampoo
OTC Meds - Neosporin, Advil, Band-aids, multi-vitamins, aspirin, disinfecting hand gel, cough drops, eye drops
Supplies - fingernail brush, nail clippers, duct tape, extra-large Ziplocks, AA and AAA batteries, paperback books (used are OK), DVDs and CDs, writing paper and pens, AT&T phone cards, small notebook
Snack Foods – M&Ms, Tootsie Rolls, Pringles, beef jerky, Slim Jims, tuna (easy open), Twizzlers, pretzels, peanut butter crackers, cheese crackers, cookies, gum, Lifesavers, canned fruit (easy open), sunflower seeds, nuts, dry soup mix
Drink Mixes - Crystal Lite, instant coffee, tea bags, ground coffee
DEADLINE FOR PICK-UP: DECEMBER 8
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