galla99 – Page 16 – Gallaudet Properties

July 6, 2009

Market Update For July 6, 2009

The big story last week was the poor jobs report. The Labor Department reported 467,000 jobs lost in the month of June, far worse than expectations of 365,000. The Unemployment rate rose to 9.5%, its highest level since August of 1983 and up from last month’s 9.4% reading. And unlike Job creations, the Unemployment Rate is an actual telephone survey of approximately 60,000 households, which makes this number more reliable. But something to consider, is the growing number of individuals who are employed by temporary or part-time means. The US has lost about 6.5 million jobs since the recession began in December 2007, which is the biggest drop seen in any post-World War II economic slump.

Consumer Confidence also came in worse than expected. The Conference Board Consumer Confidence Index, which improved considerably in May and was up for the third straight month, retreated in June. The Index now stands at 49.3, down from 54.8 in May. Although the poor jobs and consumer sentiment numbers pushed the stock market down, mortgage rates remained unchanged for the week. We have certainly make back a good portion of the losses we had in mortgage rates several weeks ago, but the sentiment continues to be that the best in mortgage rates may be behind us. Nonetheless, rates are very low and the next six months may present excellent refinancing opportunities if you have not done so already.

This report is provided by one of our mortgage partners, Austin Andruss, who can be reached at 415-869-6135.

June 30, 2009

After short-selling a home, how long before you can purchase?

How long must a buyer wait before buying a new home if they have:

•         Chapter 7
•         Chapter 13
•         Foreclosure
•         Deed-in-Lieu of Foreclosure
•         Short Sale

Below are the underwriting guidelines for both Conforming and FHA Loans.

CONFORMING:

Time Elapsed After a Chapter 7 Bankruptcy: Time elapsed must be 48 months or greater from either the discharge or dismissal date.

Time Elapsed After a Chapter 13 bankruptcy: Time elapsed must be 24 – 48 months or greater from either the discharge or dismissal date depending on Cause of bankruptcy

Time Elapsed After Multiple Bankruptcy Filings Within the Last Seven Years: Time elapsed must be 36 or 60 months or greater from the most recent discharge or dismissal date depending on Cause of bankruptcy

Time Elapsed After Completion of Foreclosure: Time elapsed must be 36 months or greater.

Additionally, the following is required:

The property must be owner-occupied, and the loan must be a purchase transaction, and the borrower must contribute the greater of 10% minimum down payment or the minimum required for the loan program.

Time elapsed must be 84 months or greater if:

The property is a second home or investment property; or

If the loan is a rate and term or cash-out transaction.

Time Elapsed After Short Sale or Completion of Deed-in-Lieu of Foreclosure:

Time elapsed must be 24 months or greater.

FHA:

Time Elapsed After a Chapter 7 Bankruptcy: 24 months since the discharge date and good credit has been reestablished. Bankruptcies less than 24 months (but not less than 12 months) may be allowed provided the reason for the bankruptcy was due to extenuating circumstances, theborrower has exhibited an ability to manage financial affairs, and the reason for the bankruptcy is not likely to recur.

Time Elapsed After a Chapter 13 bankruptcy: Bankruptcies are allowed after 12 months of the payout period provided performance has been satisfactory and borrower receives court approval to enter into the mortgage transaction.

Time Elapsed After Completion Foreclosure / Deed-in-Lieu / Short Sale: A borrower whose previous residence or other real property was foreclosed, “Short sold” on or has given a deed-in-lieu of foreclosure within the previous 36 months is generally not eligible.

All of the above information is typically the minimum time frame and each case is treated independently. This information is provided by Bret Cohn who is mortgage broker at Franklin Loan Center. For more information, please contact him at 760-779-8136.

June 5, 2009

May 2009 Price Report

Here are the latest sales numbers for all homes sold within the city of La Quinta as well as all Golf Course homes in La Quinta through May 2009. The blue lines represent 2008 data and the orange lines represent 2009 data.

The chart above shows Monthly sales of homes within the city of La Quinta. When looking at “sold” data, you have to remember that the numbers are generated on the date that the sale is recorded with the county but that the decision to buy was made about 45 – 60 days earlier.

Although the sales in May are still lagging behind the same period in 2008, there has been a fair jump compared to the previous month of April. We continue to notice an improvement in consumer confidence and an increase in activity in the higher priced homes brought on by two factors. The improving markets on Wall Street and the falling prices of homes. An interesting statistic is that as the number of sales increase, the average price per square foot has declined drastically. This is directly related to the popularity and abundance of distressed properties – foreclosures and “short sales” – that tend to bring down the market value of the homes being sold. Earlier this spring, the government sponsored a moratorium on banks releasing foreclosures to moderate their downward affect on the housing market. That moratorium has been lifted but we haven’t seen the expected flood (or even a wave) of distressed property hit the local market yet and, in fact, the “distressed” inventory is currently very low.

The number of homes sold in golf course communities in La Quinta has decreased since this time last year. While the lower end of the market has been extremely active ($400,000 and below), the upper-end (which contains many of the golf properties in the chart above) has been sluggish. This can be attributed to many things, such as the higher interest rates and tougher qualifications in the “jumbo” loan market, although these restrictions are slowing being lifted.

Because of the sluggishness of this higher end market many sellers are reducing prices and offering incentives to lure buyers. If buying a golf property is something on your list, why not take advantage of the incredible prices and seller incentives now, when sellers will work with you, instead of in the future, when the demand starts to catch up with the supply? Especially if you’re buying and planning to hold for 5+ years.

The bottom line…

Unit sales in 2009 are lagging behind the same period last year reflecting the downward trend of the general housing market. Please remember that the decline of the real estate market greatly accelerated in September 2008 when our economy went into crisis and consumer confidence disappeared. We are now, 8 months later, beginning to see increased activity; a trend that many economists believe will continue to grow in the next several months. With home prices as low as they are now (pre 2004), and capital starting to flow back into the banking system, tremendous opportunity exists right now for buyers in all spectrums of the market.

Also, we all hear about “the Bottom”, where is it, when will we hit it etc. We think that it may be closer than you may guess. See my entry: Click here to read “In Search of the Bottom…”

Here are some yearly sales figures (units) for the City of La Quinta from 2002:

Year        All LQ      Golf Course
2002        1,354          259
2003        1,565          652
2004        1,931          813
2005        1,553          657
2006        1,098          491
2007           935          447
2008        1,063          416
2009 YTD    425          152 (May)

June 3, 2009

In Search of the Bottom…

In search of the bottom…

Most seasoned Realtors would agree that we won’t really be sure that real estate prices have bottomed out until about 3 months after the much anticipated event actually occurs – when prices stop declining and, in fact, may even appreciate slightly.

Having said that, there are two forward looking indicators that suggest that we are getting very close and that we will reach the lowest plateau this summer.

First, according to the National Association of Realtors (NAR), historically, real estate has appreciated at a rate of about 4.5% annually and if you go back into the 1980’s and plot a straight line indicating that 4.5% increase and then plot the actual sales figures it is quite apparent that that figure is credible. Of course there are a few peaks and dips but overall the actual sales seem to cover that 4.5% line – until 2002.

Below is a graph using numbers from south La Quinta, California, one of the areas where Gallaudet Properties does business but the graph mirrors the national average.

Data from the Desert Area MLS

The graph above represents the price per square foot of sold homes in south La Quinta, California from 1998 through May 2009.

The straight blue line represents the annual 4.5% appreciation factor and the red line is the actual average price per square foot of those homes that sold from 1998 through May 2009.

You will notice that the “Bubble” started in 2002, peaked in 2006 ($343.66) and started to really crash in 2007. At the peak in 2006, the homes were selling 186% of what is considered normal (the 4.5% line) according to the Southwest Florida realtor data. During the month of May 2009 ($235.43), the difference is down to 112% or a 31% decrease from the high. Keep in mind that while the actual sales line may continue downward below the “normal” line, it also may not actually get there but we are statistically very close.

The May 2009 price per square foot ($235.43) is slightly below the average price for the year of 2004 ($239.72).

According to the NAR, we should not expect the price to go much below the “Normal” line and with today’s record low mortgage rates, the feeling that this is a great time to buy is getting stronger!

Secondly, the NAR reported yesterday that “Pending” home sales are up for the third month in a row. “Pending” sales are those that are under contract but have not yet closed. Since the average escrow is between 45 and 60 days, the decision to buy a home that appears as “sold” (closed escrow) today was likely made 1.5 to 3 months ago. “Pending” homes is a much more current number. Read the article

One last ingredient, mortgage rates are at record lows and mortgages are becoming easier to get as lenders are getting more comfortable with the latest regulations.

May 20, 2009

The New La Quinta Resort Master Plan

The La Quinta Resort has been working on a new Master Plan which they hope will set a path for the resort’s growth over the next 25-30 years. The changes will happen in phases and not instantly. The resort believes there’s a lot of value in a long term plan for its future, something they haven’t had in the past (from a development standpoint). The Resort is still in the planning stages — they’ve been very active with the community in sharing, listening and incorporating feedback in their endeavor. They’ve just launched a new website which describes the work in progress, which can be found here:

LaQuintaResortPlan.com

May 7, 2009

Where home prices crashed early, signs of a rebound

The New York Times

Where home prices crashed early, signs of a rebound
Hard-hit areas, such as Sacramento, Las Vegas, parts of Florida and California’s Inland Empire, appear to be among the first cities in the nation to reach the early stages of recovery, as investors and first-time buyers compete for bargain-priced foreclosures.

MAKING SENSE OF THE STORY FOR CONSUMERS

By some indications, the market could be close to a bottom. Pending home sales – homes that are under contract, but have not yet closed – and construction spending rose in March.
When a market reaches bottom, foreclosures usually stop piling up and banks become more willing to issue loans, confident that the collateral backing them will not continue to decrease in value.

The first-time home buyer tax credits from the federal and state governments, coupled with favorable home prices and near record-low interest rates, led to an increase in home sales in March. Sales of existing, single-family homes rose 63.8 percent in March compared with the prior year. Monterey County reported a sales increase of 248.7 percent and the High Desert region saw sales increase 172.7 percent compared with last year, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

The median price for the state also increased in March, rising 2.2 percent in month-to-month comparisons. March marked the first monthly increase since August 2007, while the statewide median price has remained in the $250,000 range for the past three months.

To read the full story, please click here

May 7, 2009

A short sale may not mean you’re home free

The Wall Street Journal

A short sale may not mean you’re home free
Some homeowners who sell their homes through short sales are finding their mortgage companies still try to collect some or all of the difference between the bank-approved short-sale price and the outstanding mortgage balance. Some mortgage companies also are taking legal action to recover unpaid amounts after a foreclosure is completed.

MAKING SENSE OF THE STORY FOR CONSUMERS

A lender tactic gaining popularity is for the holders of mortgages or home-equity loans to require borrowers in short sales to sign a promissory note — a written promise to pay back a loan or debt.

HSBC Finance has implemented a one-year moratorium on the collection of deficiency balances for short sales and foreclosures that occur after April 1, due to the “current economic environment,” according to an official with the company.
Not all borrowers who sell their homes through a short sale or lose their homes to foreclosure will receive a deficiency claim. Often, mortgage companies don’t try to collect unpaid amounts either because state laws prohibit or limit such actions or the cost outweighs the potential return. California has anti-deficiency rules that prohibit lenders from pursuing borrowers after foreclosure, but California does not have anti-deficiency rules for a short sale.

The borrower’s situation often is the determining factor in whether the lender tries to collect the unpaid debt or not. The borrower’s employment status, assets, whether the home was purchased as an investment, and the amount of debt owed are taken into consideration.

It is important that sellers are informed of the lenders requirements, read the fine print, and ask questions when selling their home via a short sale. According to one real estate attorney who represents financially troubled homeowners, every short sale she has worked with has had a promissory note or terms giving the lender the right to collect a deficiency. Often, the terms are buried in the sale contract, according to the attorney.

To read the full story, please click here

May 6, 2009

April 2009 Price Report

Here are the latest sales numbers for all homes sold within the city
of La Quinta as well as all Golf Course homes in La Quinta. The blue
lines represent 2008 data and the orange lines represent 2009 data.

The chart
above shows Monthly sales of homes within the city of La Quinta. When
looking at “sold” data, you have to remember that the numbers are
generated on the date that the sale is recorded with the county but
that the decision to buy was made about 45 – 60 days earlier.

Although the sales in April are still lagging behind the same period in 2008, we have noticed an improvement in consumer confidence and a slight increase in activity in the higher priced homes brought on by the improving markets on Wall Street. Economists have predicted a slow but steady improvement in the housing market as the year goes on.

We’ll all see if the economists are correct as we proceed into and through the hot months ahead.

The
number of homes sold in golf course communities in La Quinta has
decreased since this time last year. While the lower end of the market
has been extremely active ($400,000 and below), the upper-end (which
contains many of the golf properties in the chart above) has been
sluggish. This can be attributed to many things, such as the higher
interest rates and tougher qualifications in the jumbo-loan market, and
many 2nd home buyers have been waiting on the sidelines to re-enter the
marketplace once they feel more confident in the economy.

We have sensed
pent-up-demand building and seen increasing activity in the upper-end markets – we’ll all have to see where this summer takes us.

If buying a golf
property is something on your list, why not take advantage of the
incredible prices and seller incentives now, when sellers will work
with you, instead of in the future, when the demand starts to catch up
with the supply? Especially if you’re buying and planning to hold for 5+ years.

The bottom line…

Unit
sales in 2009 are lagging behind the same period last year as
far as the numbers and the price/value of the homes reflecting the
downward trend of the general housing market. Please remember that the
decline of the real estate market greatly accelerated in September,
2008 when our economy went into crisis and consumer confidence
disappeared. We are now, 7 months later, beginning to see increased
activity, a trend that many economists believe will continue to grow in
the next several months. With home prices as low as they are now, and
capital starting to flow back into the banking system, tremendous
opportunity exists right now for buyers in all spectrum’s of the market.

Here are some yearly sales figures for the City of La Quinta from 2002:

Year    All LQ    Golf Course
2002        1,354          259
2003        1,565          652
2004        1,931          813
2005        1,553          657
2006        1,098          491
2007           935          447
2008        1,063          416
2009 YTD    320          113

April 27, 2009

Market Update – Housing Is The Key

We’ve been very busy over the last couple weeks. Many of our clients are taking advantage of the incredible prices and low interest rates. Here’s a great market update provided by Austin Andruss, a mortgage broker partner of ours.

Market Recap:

Good earnings reports from financial companies continued last week as Bank of America reported earnings that were much better than expectations. The company also said it earned more in the first quarter of 2009 than through all of 2008, largely a result of enormous refinancing activity. In addition, Treasury Secretary Tim Geithner said that most banks are well capitalized, and there are signs that credit market conditions are improving, which is definitely something to be optimistic about. However, as earnings season marched on, there were also some weak reports, including clinkers from The Bank of New York, Caterpillar, Dupont, Coca-Cola, Merck and United Technologies.
On the housing front, New Home Sales came out slightly better than expected, and it was especially good to see that the inventory number continues to fall – now at a 10.7 month supply, compared with February’s 11.2 months. Existing Home Sales came in slightly below market estimates – and while the report showed that Existing Home inventory in March fell by a modest 1.6%, at the current sales pace it would take an estimated 9.8 months to sell that inventory of properties, slightly longer than February’s 9.7 month reading. The path back to economic recovery will go through housing, and these reports will be important to watch in the months ahead.

In other news, Initial Jobless Claims were reported in-line with expectations. Initial Jobless Claims are a leading indicator and last week’s number does not yet suggest that the employment market is starting to improve. And March’s Durable Goods Orders marked the 7th negative reading in the last 8 months, as tighter credit and lack of business investment is continuing to fuel these negative numbers. However, it will be interesting to see how these numbers change with lending abilities now freed up following the recent relaxation of mark-to-market accounting rules, which will in turn make it easier for businesses and consumers to buy and spend.

There are several important reports and events to look for this week, and whether they will lean towards optimism or pessimism remains to be seen. On Tuesday the Consumer Confidence Report will show us if consumers are feeling their own glass is half full or half empty, while on Wednesday we will get a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. Also this week, we have the Fed’s next regularly scheduled Federal Open Market Committee meeting, followed by their Policy Statement and Interest Rate Decision coming on Wednesday afternoon. It will be important to see if the Fed has a positive or negative read on the economy, and if they comment on any of the recent whispers of inflation. And speaking of the Fed and inflation, the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) index found within the Personal Income Report, will be released on Thursday.