Jerry & Rachel Hsieh Real Estate Team - Keller Williams Realty in Los Angeles

Jerry & Rachel Hsieh Real Estate Team - Keller Williams Realty in Los Angeles
IF YOU WANT THE LATEST INFORMATION ON THE LOCAL LOS ANGELES REAL ESTATE MARKET, FOLLOW THIS BLOG! FEEL FREE TO SEND OUR TEAM A REQUEST FOR ANY PROPERTY ON THE MARKET YOU'D LIKE TO VIEW BY CALLING US AT 310.623.1359. Our Cell: 424.242.8856 Email: jerryandrachel@newhomesLA.com DRE #: 01701809

Thursday, February 26, 2009

"End of Home Price Slide in Sight?" - from Mark Trumbull, CSMonitor.com

January prices slipped more, but may help clear the glut of homes, stabilizing the market.

By Mark Trumbull | Staff writer/ February 25, 2009 edition

SOURCE: Moody's Economy.com, with data from the National Association of Realtors - Rich Clabaugh/Staff

The bright side of falling home prices is this: Most of the decline is probably over, and it should help to correct the nation’s serious imbalance between housing supply and demand.

That’s the view that many housing experts take, after a year of historically sharp home-price declines. The median sales price of existing homes fell in January to $170,000, down from $176,000 a month earlier and $200,000 a year ago, according to numbers released Wednesday by the National Association of Realtors.

Of course, the negative side of this trend also is real and weighs on the economy. As home prices fall, so does the net worth of homeowning families. The prospect of more foreclosures grows. That won’t do anything to help the nation’s troubled banking sector, which would be stuck with many of those losses.

But somehow the economy needs to work through a glut of homes on the market, an imbalance so large that falling prices are seen by many as the way to get there.

The big question is where prices will settle. The answer could vary a lot by region and will depend on where the broader economy heads.

“I think house prices will be done declining within the year,” says Morris Davis, a University of Wisconsin economist who studies real estate. But, given today’s uncertainties, he cautions that “anyone that tells you that they know, doesn’t know.”

January saw not only a price decline but also a reduction in sales volume for previously owned homes. Sales ran at an annualized pace of 4.5 million units, down from 4.7 million in December and 4.9 million for much of last year.

That pushed up the inventory of homes for sale. A 9.6-month supply of homes is now on the market, well above typical rates of six months or so. Some analysts say the inventory could rise still higher during the busier spring season, as more sellers put homes on the market.

“We’re going to learn more [about activity and prices] in the spring market,” Karl Case, a housing expert who helped create the Standard & Poor’s Case-Shiller index of home prices, told reporters Tuesday.

By the Case-Shiller index, home prices are now down 26.7 percent from their peak in 2006.

While the real estate downturn is nationwide, it varies greatly by location.

Mr. Case, a professor at Wellesley College near Boston, says that 1 million of all homes sales in the past year were distressed auction sales. But more than half of those have come from just four hard-hit states: California, Arizona, Nevada, and Florida.

In many cities, prices are down by a more modest 5 or 10 percent.

One reason for the slower sales volume in the past few months may be that market participants are in a holding pattern, waiting to see what a new administration in the White House will do.

That was clarified recently when President Obama unveiled a plan to reduce foreclosures. It includes:

•Incentives for lenders to reduce payments for at-risk borrowers to 31 percent of income.

•Refinancing for many borrowers whose loans have turned modestly “upside down,” with balances larger than the current home value.

•A proposal to allow bankruptcy judges to adjust loan terms, such as forcing banks to write down the principal balance.

If the plan succeeds in its goal of preventing several million foreclosures, it could help stabilize the housing market, some experts say.

“[Steps] to try to reduce preventable foreclosures … will reduce the supply of homes in the market,” Federal Reserve Chairman Ben Bernanke said Tuesday in testimony to Congress.

He said the Fed is also having some success in efforts to bring down mortgage interest rates, which could help entice buyers into the market. With affordability now high, a key factor for home buyers is uncertainty about jobs. Access to mortgage loans is also constrained by the current credit crunch, Mr. Bernanke said.

Some experts say the Obama plan will have only a limited effect on foreclosures. For one thing, Mr. Davis notes, a key cause of foreclosures is a sudden loss of income, a problem the president’s plan doesn’t address. One approach might be to offer a government loan to help unemployed homeowners pay their mortgages while they find new jobs, he says.

Over time, he says, home prices tend to be correlated with rental prices – since people have a choice of whether to buy or rent. The price-to-rent ratio remains above its long-term trend.

There are some signs that, even amid the current real estate upheaval, market-participants are working toward a new equilibrium. In California, home prices have fallen 41 percent in the past year, but the discounts have lured more buyers into the market. Sales volume in December was up 85 percent from the same month in 2008.

“The faster prices reach levels that clear the market … the quicker this recession will be over,” argues Scott Grannis, a California-based economist, on his website.

Thursday, February 19, 2009

"Help for Homeowners" - from Barack Obama/White House Blog

Hi Folks-
The following is from the www.whitehouse.gov (aka The U.S. President's Website). Article is called "HELP FOR HOMEOWNERS" and outlines some options that the government is providing for homes in distress.

-Jerry


HELP FOR HOMEOWNERS
Wednesday, February 18th, 2009 at 9:36 am

The President’s strategy for economic recovery is a stool with several legs, as he’s said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," he said yesterday as he signed the American Recovery and Reinvestment Act into law.

Though communities across the country have been affected by the crisis, Arizona has been hit particularly hard -- in 2008, only two states had more foreclosures.

And President Obama is there today, in Phoenix, to unveil his "Homeowner Affordability and Stability Plan," which will help bring relief to homeowners and bring some order to the housing market.

The President will talk more about his plan a little later today. In the meantime, we’re sure you have a lot of questions, like, Am I eligible for assistance? Might I be able to modify my loan? When do I apply? We've put together an example sheet that will show you what options might be available to you, depending on the circumstances of your mortgage, as well as answers to some common questions (below).

Questions and Answers for Borrowers about the Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

* What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

* I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

* How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

* I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

* Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

* What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

* Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

* How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

* When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

* What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

o information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
o your most recent income tax return
o information about any second mortgage on the house
o payments on each of your credit cards if you are carrying balances from month to month, and
o payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

* What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

* Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

* How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

* I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

* I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

* I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

* I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

* I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

* How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

* Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

* I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

* How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

* What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

o information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
o your most recent income tax return
o information about any second mortgage on the house
o payments on each of your credit cards if you are carrying balances from month to month, and
o payments on other loans such as student loans and car loans.

* My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.

Tuesday, February 17, 2009

Probate Sales - What are the risks?

Hi everyone!

Hope all is well. Today, a new client of mine emailed me asking me about probate sales. Probate sales, specifically "court confirmation required" sales, have many differences compared to normal real estate sales, and different risks that you, as a buyer, should be aware of. Here was my response to her question about probates:

Probates

Probate sale is when the owner of property passes away and there are executors of the will who, with the help of an agent and lawyers, are selling the property.

There are 2 kinds of probate sales, “court confirmation required” and “no court confirmation required”. “No court confirmation required” is much less risky and much more like a normal sale. If it is no court confirmation required, I would not be against a first time buyer pursuing the property.

Court confirmation is exactly what it sounds like. It means, before the sale can be completed it must be approved by a court to make sure the estate has been appropriately satisfied. The court date is not set until the offer is recieved and usually, until, after the buyer has committed to the property by removing contingencies.

If it is “court confirmation required”, I would not advise a first time buyer pursue the property. A couple of reasons why I say this:

1) Court confirmation probates are best suited for all cash buyers, experienced investors. This is because the loan contingency will not affect them. There is no risk of them not being able to secure financing.

2) Court confirmation often require that many if not all contingencies (including loan) be removed prior to court date. Keep in mind, the court date may be scheduled at any time and can be months down the road. In that time, if something happens with your financing, or rates go up, etc, you cannot back out of the deal without losing your deposit.

3) Court confirmation probates often require your deposit to be 10% of purchase price. In standard contracts, good faith deposit is 3% max.

4) Court overbids: On the day of the court approval, people can come and overbid you. So if you have a really good deal, you may get overbid. If no one shows up to overbid you, then you may not have gotten that good of a deal.

With all that said, I have still had first time buyers who have done “court conf” probates, and we have been successful. However, if you are a first time buyer who is not big on RISK, I would advise you to make sure you understand the level of risk you are taking on prior to proceeding.

How do you find out if any property is “court confirmation” or “not court confirmation”? Easy, email me the property, and I’ll find out for you.


Wednesday, February 4, 2009

LA Median Price Change Chart (2008 v. 2007) - Neighborhood by Neighborhood

Hi everyone-
MLS just released this on Feb 1, 2009 to brokers and on the LA Times. Take a look at your neighborhood of interest and see what the median price is and the pattern change has been year over year.

LINK: LA Times/MLS Median Sales Chart - 2009

-Jerry