Rebecca Discusses the “ Current San Diego Real Estate Market ” January 2012
Radio Show: Home Help Radio with Rebecca Austin
Date: 12-3-2011
Rebecca Discusses some of the ” Smartest Real Estate Decisions for 2012 “
Radio Show: Home Help Radio with Rebecca Austin
Date: 12-24-2011
The Fed Identifies Key Markets That Could Benefit From A Large Scale REO-To-Rental Program
“The decline in house prices and the rise in rents suggest that it might be appropriate in some cases to redeploy foreclosed homes as rental properties,” according to the Federal Reserve.
The housing crisis has created an increased demand in rentals, as many Americans faced with foreclosure have lost their homes. In the past few years, we have seen the market for rental housing significantly strengthen, as opposed to the market for Owner-Occupied homes. In order to address this ongoing trend, the Fed is supporting the idea of a large-scale REO-to-Rental for the over-supply of inventory of Fannie Mae, Freddie Mac and FHA foreclosed homes to help prevent property values from falling further.
With Fannie, Freddie and FHA holding close to half of the outstanding inventory of foreclosed homes currently for sale, it has also identified key city markets that have high concentrations of foreclosures owned by the agencies. 60 Metropolitan cities have been identified as having more than 250 REO’s for sale by the GSE’s and FHA. In addition, the numbers are bound to increase, as it is being reported that the number of homes currently going through the foreclosure process are 4 times the amount that are currently for sale. San Diego has been listed as one of the 60 markets with a significant amount of Government-owned REO’s currently listed for sale.
For San Diego Investors, this could be a great opportunity for purchasing bulk REO’s that will employ a hold-cash flow strategy, if the program is implemented.
Could This Double Dip Turn Into A Triple?
Barclays Expects a 7% Drop In Home Prices
Research firms Barclays Capital and Clear Capital say a “triple dip” in home prices is eminent. They are estimating a 6-7% drop in prices over the coming months followed by a gradual rise.
How much fact is behind this prediction and is an accurate one for San Diego? To figure this out we need to look at REO and Distressed Inventory. The banks will need to be removed from the Real Estate Market before we see normalization. In San Diego, there are approximately 73,000 homes and condos that are either in shadow inventory or in a state of eminent foreclosure. These homes will need to cycle through the market as Bank Owned sales or as Short Sales. At our current sales pace (about 12,000 distressed sales closed in 2011) we are looking at a 5-6 year cycle before we are through this bank mess.
The biggest factors involving our prices within the market itself will be the pace at which this inventory is introduced into our market. The government/banks have been somewhat strategic in their release of their inventory and it’s nice to think that they are doing this to control the inventory. (We won’t go into how it affects their books and their ability to appear more or less profitable to suit their needs). Peripheral factors are of course lending rates and the ability for buyers to qualify, employment and the overall health and confidence of our economy.
Home Owners considering selling to “test the waters”now is the time to prepare to list. However, listing in June may net you a higher windfall. Current inventory is up and you’d be jumping in the cage with some serious competition.
Home Owners who are stretched financially and underwater,there is no better time than right now to consult and plan for the next 10 years. This is not going to fix itself and, to add to the urgency, The Mortgage Debt Forgiveness Act that allows you to cancel the debt, is up at the end of the year.
Buyers/InvestorsIf you can buy, these are the times when the new money emerges. If you can buy, you are amongst the minority who can take advantage of what will most likely be the greatest Real Estate opportunity of our lifetime. We will all look back at this Depression and say, “I wish I bought 10 houses in 2012”.
2011 Mortgage Rates
Freddie Mac’s recent survey has some great news for buyers looking to get a great deal in today’s market. It has found that the average 30-year fixed-rate mortgage fell to 3.91% this week — this sets a new record for being the lowest in over 4 decades. Interest rates on adjustable-rate mortgages (ARMs) also set a new record: The 5-year ARM fell to a record-low 2.85% and the 1-year ARM fell to a record-low 2.77%. The 15-year fixed was the remained the same from last week’s record low of 3.21%.
Rates on 30-year fixed mortgages been at or below 4% for the past two months, Freddie Mac reported. This equates to payments on a $200,000 loan now being at least $100 a month lower than at the start of the year.
With declining housing prices , combined with interest rates being at an all-time low, this is a great time for those looking to buy– whether it be first-time buyers, investment property, or those looking to upgrade to a better home.
Step 1 For Home Buying – Build Your Financial Blueprint
The first step in Home Buying is determining how much home you can comfortably afford. This step was overlooked by many during the Real Estate boom and we are experiencing the effects.
Step 2 Find Your Dream Home
Looking for a New Home can be an exciting time, but you need to do your homework to make the right choice…
Speak with an expert about various lending programs, rates and terms in the marketplace.
Prequalify for a maximum mortgage amount before you go looking for a home. Don’t be afraid to ask questions during the Prequalification Process
Determine which home details are truly needed–4 bedrooms vs 3 bedrooms, parking facilities, fireplace, multiple bathrooms, etc.–and list them in order of importance.
Location, location, location. This is a critical step in today’s Real Estate Market. Determine how far you would like your daily commute to and from work to be. How close are the schools, and how are they ranked within the state guidelines? Which zip codes and communities show the greatest growth potential and which are seeing future declines?
Learn the makeup of the neighborhood. Are there other families similar to yours, (possibly with children about the same ages of your children), or are the neighbors “empty nesters?”
How many years are you expecting to remain in the home, and how many years do you expect to remain in the work force? Is there room to grow? Are you anticipating enlarging your family? What resale values do you want to achieve?
What ever house you select, always obtain a home inspection from a reputable company. Appraisals are not home inspections. This should reveal necessary repairs which may otherwise not be noticeable, (new roof, water damage, etc.)
Our investors are working in two arenas within a selective zip code range:
- Flips in coastal and inland areas 150-200 range, avg rehab 40K, selling in high 200’s-low 300’s. Patience is important and ability to take on higher risk in return for potential higher returns.
- Cash flow – We LOVE our Condo Conversions! $90-120K range, Renting for $1000-1200. Awesome ROI
Getting the investing itch? Join our group of fellow investors and gain access to the deals, the JV partners, the rehabbers, and the lending sources.
WARNING – THIS INVESTING STRATEGY IS ADDICTIVE AND COULD LEAD TO PROSPERITY!
You are seeing the news…whispers of a Real Estate recovery. Although this Broker still has a large grain of salt in hand, I will say this. Logic says this, homes half price of what they were 4 years ago, yet to meet anyone who wouldn’t love to live in San Diego, a tourist destination with million things to do, the best climate on the continent, amazing quality of life, and rates that everyone agrees will be increasing soon…if I were going to buy a house I’d call San Diego a solid long term bet. As an investor, there are flips to be reno’d and there is cash flow like never before.
With that, the world is now looking at San Diego as one of the first indictors of a Real Estate recovery. When will we see the bottom? Oh, about 6 months after is happened… While we’re waiting, why don’t we get our arms around how to find our next San Diego home, 2011 style.
“The loudest person in the rooms is many times the one who knows the least” If you there are people in your world who talk a big Real Estate game (you know, the guy who talks just a little louder than necessary at the Starbucks about the market) most likely he’s not doing anything. Our clients don’t sit around and talk about the market. They just go buy a house that they love and they get the best deal along the way.
The Steps To Buying a San Diego Deal In 2011
Choosing to enlist the help of a Real Estate Agent to find a home is your choice. Just like buying a car, doing your taxes, going to small claims court, you have the choice to represent yourself. Take the car buying example. I will research online for the type of car I want, but when it is time to buy I have always gone to a dealership and bought. This is just my style; I know that I don’t know everything about cars so I want the professionalism of the dealership experience and the education they provide along the way. I also want to know where they live in case I have an issue later.
Why would someone spend hundreds of hours trying to become a Real Estate expert when they could simply work with an Agent (who by the way doesn’t charge you a penny for their services?). Simple. Trust. On behalf of the Real Estate Industry, I’d like to apologize for that. As Realtors, we have to admit (and I do every day) that the bar is low for several reasons. Multiple choice tests, (just check c, right?), next to no Broker support and education, a much more complex career than most realize, and a once booming market that could make a monkey a millionaire has resulted in a ton of embarrassing stories for Realtors. Thanks to these experiences, some people see Agents like commodities that they would only use as a last resort.
Others see the value in enlisting the help of really good Buyer Representation.
The obvious benefits:
- It’s what we do. There is so much going on in the local markets you can’t expect you’ll learn it all. Active, experienced agents will educate you on the local market and help you sift through all the lies and garbage. (online especially)
- Time Saver. Most people research way too much before asking for help. If we are looking for the bottom on the market, we could completely wipe ourselves out by just getting stuck in analysis paralysis.
- The DEAL is in the negotiations!! This is the most overlooked aspect. If you think you are going to find a home 20% off market on Realtor.com or Zillow, think again!! The deal is in the negotiations of the price, terms, repairs etc. This is where solid Buyer Representation comes in.
Here are the steps we have found have worked the best for our recent success stories:
- Know what you can afford.
- Polish Up Your Credit for the Best Rate and Payment.
- Know what you want in a home.
- Know where your options are.
- Look at SOLDS not ACTIVES.
- Narrow it down to communities.
- Get accurate data
- Take a tour and get in some homes.
- Reassess Or Commit
- Find the Deals
- Offering Aggressively
- Negotiating Terms, Repairs, and Extra Goodies
- Avoid the Potholes along the way.
For More Information on how to access the data that is critical to finding your ideal San Diego home at the best price possible, click here.
As Promised:
List of This Weekend’s Open Houses – Click Here
We are hosting several Open Houses this weekend throughout the County.
Remember, we price our homes to sell so this is a great way to gain perspective of the current market.
List includes not only our Open Houses but Open Houses from all Real Estate Companies plus Bank Owned Homes and other Deals.
You’ll get Addresses, Pictures, Asking Prices, and Driving Directions so you can tour at your leisure without sales pressure.
Bank Owned Bonanza. Fannie Mae’s Brand Spanking New Buyer Assistance Program.
This just in….Monday, Fannie released a new Buyer Down Payment Assistance Program to help Home Buyers buy Bank Owned Homes. Add that to their First Look Program and you get the opportunity to crush those Cash Investors who have been beating you out on all those other properties.
Get the List of Homes that Qualify for This Program – County wide.
Home Owners with a Nasty Loan or just Plain Old Bad Timing – Analyze Your Real Estate Situation.
Online Home Evaluation
Derrick and I talked about the awesome benefits of this tool for our Upside Down Friends. It’s the result of years of helping people in your situation and produces a solid, visual, and predictable plan.
Here’s our talking point from the show and the highlights of what the Evaluation provides:
- Analyze the Value of Your Home
- Analyze Your Loan
- Analyze the stability of your Community
- Analyze your Options – Living Wise
- Eg – Loan Balance – $500K, Home Worth $350K, Option Arm Loan – No Mod option, Live in a Community with a lot of PreForeclosure Activity, homes aren’t as well maintained. Payment $3500. Average rent in area $2500. Perhaps average rent closer to work in a better neighborhood is $2900.
- Graphs visually predict the next 10 years – if you stayed or sold and repurchased.
- BOA loans especially have it good. You can actually get full approval for the short sale including the price PRIOR to listing it for sale. That means, much more predictable outcome.
- The best time to list is now or sooner – buyer activity is way up, banks are ready to work with you, move in the summer when the kids are off school.
I frequently hear the stories as I meet with Homeowners, especially upside down Homeowners. The scam artist who target them, lie to them, and try to prey on their fears to take advantage of them when they are down. They are skilled at playing with your emotions. They are experts and know exactly what you want to hear. We all know that when we are desparate and want the pain to stop we may do things that our rational mind would not. We suddenly stop noticing the alarms going off and choose to dump all of it onto the person who is offering to help, even when the offer is too good to be true. Remember what Mom told us, “If its too good to be true, it probably isn’t true”? Mom is right again!
Here are a couple of this week’s reports in hopes that it amps up that alarm if you are exposed.
The “Class Action Law Suit” invitation.
Yes, we used to get the House Warming Wine Party Invitations. Now it’s the Lets All Sue Our Lender Invitations. Scam Artists are approaching people who are upside down and telling them about this Class Action Suit they are filing on behalf of Home Owners against (insert your lender here). They are going to really go after them for being soooo mean to you….big bad lender. They get you all fired up, “Yeh, lets go get em” And, they say, you can join our revolt, just write us a check for (insert whatever number they decide, dependant upon your level of pissed offness). “Don’t you worry, we’re really gonna hand them their tails, we promise! Our goal is to get them to write off your mortgage. That’s right, we are going to demand they forgive your mortgage completely for lending you that money. Those horrible greedy people..” This is not real, folks. Please don’t fall for this. Yes, there are thousands who have and are and to those of you, I’m sorry if I’m making light of the conversation. I know how good these sales people are.
Your response if you are approached:
Its easy. First, make sure you ask them for their full name, company name, phone number and as much information from them as you can gather. Send this information to me so I can help expose them. Then, let them dig a nice big hole, kinda like their own grave. Then ask them this, “Isn’t it illegal to charge up front fees to join a Mass Joiner?” This is the legal term for this type of action. When you use this term, Larry the Sales Guy will know he’s on the ropes and will most likely hang up.
Honey, The White House is Calling…
I love this one. This week phones all over have been ringing with this hilarious auto recording. It starts with the ominous deep male voice, “President Obama has allocated billions of dollars to help troubled home owners across America, some of which is specifically for Loan Modifications for people who are struggling.” Then the chipper, pleasant female voice, (just like my Grade 4 teacher, Miss Payne..ahhh…) “If you are struggling to make your mortgage payments, press 1 now to modify”
I could listen to this message over and over. It cracks me up every time. Just press 1 and we’ll slash your payments and principal balance in half. Its just that easy! Dang!! WHY DIDN”T WE THINK OF THAT ALREADY??!!! Thank you President Obama!! All we have to do is wait for your call, Press 1, and PRESTO!! We are saved!!
Again, people are pressing one. Now, listen. This is not a Loan Modification Company. This is not a Debt Settlement Company. This is not an Attorney. This, friends, is the next wave of LEAD GENERATION COMPANIES. Be very aware of what you are signing up for on your phone, online, through mailers, on the TV. Start watching these advertisements closely. What you will start to realize is that these companies are simply spending a large amount of money to reach a broad base of people to capture your information so they can sell if to companies as prospective clients.
There is nothing illegal here. But just know, if you press one, you will not be helped. You will be asked a series of questions. Your answers will be recorded. And this private information will be sent to several companies who will pay for this information. You don’t have any knowledge of who is getting this confidential information. But you will notice that your inbox and voicemail will be full with more messages from Larry the Sales Guy.
An exceptional Lender, Realtor, Credit Expert, or Attorney does not pay Lead Generation Companies to find you. Exceptional Professionals are too busy helping people who found them independently and through referrals. Exceptional Professionals are in the Public’s Eye not afraid of their practices and confident in their purpose. Remember, there is a big difference between “it feels to good to be true” and “it feels right”. You know the difference in your gut and I encourage you to take a moment to connect with that part of you before you take action on your most important asset.
ALERT!!
Have a Question? We have Real Answers and They Are On The House!
There are thousands of you in the midst of Loan Modification confusion:
- Do I qualify for one?
- I’ve been talking to my bank for over a year and I’m stuck
- Can you do something with my second>
- Can get out of my trial modification
Attorney Michael Groves is offering up FREE LEGAL ADVICE!! Yes, we have now added our “Ask a Loan Modification Attorney” button on our site. Simply type your question and you will get FREE LEGAL COUNCEL on the Loan Modification topic. Michael has been doing these for decades and is a wealth of knowledge. We are so lucky to have access to him. Fire away folks, we haven’t stumped him yet! BTW, if you want him to speak to his “ins” at your bank to see what you could get in the way of a modification, he does that as well with no up front fees….why not try that instead of trying yourself. He has direct access to the decision makers!
FREE LEGAL ADVICE
