The volume of notices of default to San Diego homeowners was down 39% in the first quarter of 2010 compared to the same period last year.
If the trend continues, this potentially bodes well for local home prices. We’ll have to wait and see. We still want to see a large decrease in the numbers of foreclosed-on homes.
A comparison of foreclosed-on properties for the two periods shows relatively no change.
Many friends and clients have asked me what they can do to lower their monthly mortgage payments. In the past, I usually told them they needed to be behind in their payments to get their banks to even consider loan modifications. Now there are several programs that may help some who are either current or behind on their payments. Some of the programs apply to homeowners who are “upside-down” on their mortgage balances.
Below is a summary of three important federal programs.
HOME AFFORDABLE MODIFICATIONS
If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.
HOME AFFORDABLE REFINANCE
If you are a homeowner who is current on your mortgage payments but unable to refinance to a lower interest rate because your home value has decreased, you may be able to refinance.
HOME AFFORDABLE FORECLOSURE ALTERNATIVES (HAFA) PROGRAM
Under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe.
Check out the MAKING HOME AFFORDABLE WEBSITE for more info on each of these programs and a really good FAQ.
Which is your best option?
The number one step whether you are current or behind in your mortgage payments and you want to modify your loan is to contact a HUD mortgage counselor.
Find a HUD Counselor here.
If you are delinquent on your loan payments and need immediate assistance call 1-888-995-HOPE (4673)
Note that approved counselors are always free.
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EXTRA HELP FOR CALIFORNIANS - coming up.
California has been approved to receive $700 million in new federal funding through the U.S. Treasury’s Housing Finance Agency Innovation Fund. This money will fund CalHFA’s programs - scheduled to kick in on November 1, 2010.
More info on CalHFA Mortgage Assistance.
Lately we’ve seen fewer bank-owned properties hit the market while there has been in increase of listed short sales.
We’ve all been hearing about a “shadow inventory” of foreclosures - a supposed chunk of bank-owned homes, waiting to be released in one big barrage. At this point, no sign of it. Some think it’s still coming. Some don’t believe it exists. We will see.
So for now with the onslaught of short sales, what does this mean to you?
If you are upside-down on your mortgage and you have been unable to get a loan modification, chances are higher now than last year that your bank(s) will approve a short sale that will let you sell and help you to avoid foreclosure.
If you are a conventional seller, selling with equity in your home, you will still need to prepare to compete with lower priced homes as short sales are tending to sell very low.
If you are a buyer, looking for a great deal, you may find one in a short sale. Just be sure to bring loads of patience with you as look for a home. Some short sales are starting to be processed faster, but many (including properties with B of A/Countrywide loans) are taking up to five or six months to process.
I’ve said that I believe 2010 will be the year of the short sale. More short sales are being approved and making it to actually close, but it is still taking most banks far too long. Buyers, sellers and the entire real estate market need Bank of America to follow Well Fargo/Wachovia’s lead and gets moving on their short sales!
Look for next year in real estate to be the year of the short sale.
Banks are being encouraged by the government to do short sales rather than foreclose. This is good. Short sales are better for neighborhoods than foreclosures.
Even though banks are leaning towards short sales now, they are still very overloaded with short sale files and are taking way too long to process them. The end result is the market is loaded with short sale listings that can take four, five or six months to process and that may or may not close. This leaves sellers in the stressful position of not knowing what is going to happen with their financial situation and buyers wondering whether they are actually going to close escrow or should they continue shopping for a suitable property.
Some banks are working to pre-approve short sales before they actually hit the market and these banks say they can close approved short sales in about the same amount of time as a conventional sale. This is good news and I’m looking forward to actually coming across one of these transactions.
So in 2010, the year of the short sale, lets hope that banks devote even more resources to making the short sale process faster and easier on sellers, buyers and everyone involved in the transactions.
Looks like the homebuyer tax credit will be extended and expanded. Good news on the housing recovery front.
Currently there is a federal $8,000 tax credit available to qualifying first-time home buyers. That credit is set to expire on Nov 30, 2009. Due to the popularity of the program and the belief that it has helped with a housing recovery, the House and the Senate have voted to extend the credit expiration date and to include existing homeowners.
The bill is headed to President Obama for his signature. If the legislation is passed in its current form, the credit will be extended to April 2010. Qualifying first-time home buyers will continue to be eligible for a credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. (I will get more info on the existing homeowner credit thing.) Also the qualifying income limits have been increased.
This credit helps homebuyers afford to make the move and helps sellers or anyone who is waiting for the market to recover. So far more than 1.4 million homebuyers have taken advantage of this federal credit. Once passed, this bill will help many more across our nation.
Excellent!
If you want to buy now and take advantage of this credit, give me a call. I’ll be happy to help you find your San Diego home.
Thanks,
Margot
619-825-5086
Are home prices improving in your neighborhood? Check out these charts for median prices per square foot by zip code.
Central San Diego
North County Inland/Coast
East County/South Bay
Charts are compliments of Mary Ann Pearson from Chicago Title.
Whether you want to buy, sell or are just wondering about the value of your home, call or email me for a more specific analysis of your property or your area of interest.
619-825-5086
So the President of the California Association of Realtors is predicting an increase in home values next year. You may think to yourself that this Association is biased and might lean towards a positive prediction - right? Whether or not that is true, doesn’t really matter. What matters is that the predictions are being made and that the media is putting this message out to the world.
If tv and newspapers tell us to feel afraid, we do. If the media tells us that things are going to be ok, we can feel confident again. Since real estate price trends are caused by supply and demand, a confident bunch of buyers, means an upward trend in prices.
That’s my opinion. Here’s the article regarding the house price prediction from Bloomberg.com.
California House Prices Forecast to Rise in 2010, Realtors Say
For buyers who have the time and the patience, short sales can be a good way to scoop up lower-priced properties.
I’ve said in the past that short sales are not for all buyers and I still say that, but things have changed some in the right direction. Banks are figuring out how to process the loads of short sale requests, the government is encouraging them and many short sale agents and teams have their systems in place. This means that more short sales are actually getting approved and making it to close.
I still recommend that not all buyers should make offers on short sales. If you have a strict time-line to buy, if you need to close relatively fast (within 30 to 45 days) or if for any reason you don’t have the flexibility to wait for a bank response, then stay away from short sales. But if you are perhaps an investor who is are willing to wait an undetermined amount of time and you won’t be discouraged if you get rejected, then include short sales in your search for San Diego real estate.
The first-time homebuyer $8,000 tax credit is set to expire on Dec 1, 2009. If you want to get in before it’s gone, check out the National Association of Home Builder’s tax credit Frequently Asked Questions:
http://www.federalhousingtaxcredit.com/2009/faq.php#9
-Margot
Many agents agree that San Diego property prices on the lower end of the range have started to stabilize. The word on “the street” is that now we may see a price dip in the mid-range or the $550,000 - $800,000 price range properties.
Investors and home buyers are out in force, looking for the great deal, in a lower price range. Fortunately for the market, this means that buyers are snapping up many well-priced, distressed properties as quickly as they become available.
Now we are hearing from lenders that we should expect a new wave of foreclosed properties, in a little higher price range to be released on the market very soon. Some say August 31. Some say Oct 15. The word is that the banks will be releasing an additional 35,000 foreclosures nationwide. We are not certain how many of these will be in San Diego, but we all know that we are one of the harder hit areas, so I am expecting a big chunk of the foreclosures to be here.
This is good news if you are shopping for a property in that price range. If you are thinking of selling in that price range, be prepared to price your property to compete.
What about the moratorium? It was announced in my office meeting yesterday that there may be another statewide foreclosure moratorium bill, delaying banks from filing for foreclosures on primary residences. Note that this moratorium (and the previous bills) will probably have little affect on slowing the tide of foreclosures, as banks can easily get exemptions by showing that they have specific loan modification programs in place. Many banks have already filed for the exemption from the next bill.
The facts in this article are believed to be accurate, but are not verified. Some of this info comes from personal experience. Some of the information is “word on the street.” Things are changing quickly now and I want to keep you “in the know.”
As always, to buy or sell in San Diego, contact Margot.
619-825-5086
