Giving New Meaning to "Shadow Inventory"

 

May 5 2014, 2:33PM

by Jann Swanson

                

Since the beginning of the housing crisis in 2008 housing experts have cited concern over the "Shadow Inventory" and the pitfalls it could present to any recovery of the housing market.  Back then, as every month brought news of mounting delinquencies, rising unemployment, and pending adjustments to adjustable and teaser rate mortgages the shadow inventory had a particular definition; the number of homes with mortgages that are 90 or more days delinquent and that have a reasonable likelihood of ultimately being foreclosed and becoming bank-owned real estate even though they are not yet publicly listed for sale.
While lenders and servicers are still trying to rid themselves of backlogs of REO and there are still concerns over homes which may be held off the market for various reasons, the cry for months has been that there are not enough homes for sale.  Sales, appeared to have been hampered by a lack of inventory as new home builders cut back on construction and current homeowners have deferred moving, each awaiting a better market. 
The number of homes thought to be in the shadow inventory has dropped from 3 million at the peak in January 2010 to about 1.7 million in January of this year.  Mark Fleming, CoreLogic's chief economist, said recently that the traditional view of the shadow inventory doesn't tell the whole story anymore and he puts forth two new ways of looking at how a different version of shadow inventory may still be holding back recovery.

Read more:
Giving New Meaning to Shadow Inventory

Matt Davis Broker- MJDavisProperties.com

Matt@MJDavisProperties.com http://www.mjdavisproperties.com/

Mortgage Rates Sideways Ahead of Fed Announcement

Posted to: MND NewsWire  Mortgage News Daily
Mar 18 2014, 4:39PM

by Matthew Graham

Mortgage rates were effectively unchanged today, putting an end to 2 days spent moving higher as the threat of violence diminished in Ukraine.  Indeed it was violence in Ukraine (or rather, a Ukrainian Military Installation in Crimea) that enabled bond markets to improve today, thus preventing rates from rising further.  Some lenders increased costs just slightly while an equal amount went the other direction.  In both cases, today's latest rate sheets aren't that far off from yesterday's, though that wouldn't have been the case with this morning's rate sheets as many lenders improved mid-day to reach the 'unchanged' levels.  The most prevalently quoted conforming 30yr Fixed for the best-qualified borrowers remains at 4.5% for some lenders, though at least as many are still offering 4.375%.

The balancing act between Ukraine and more normal sources of market movement continues to cause volatility for markets in general.  The effects on mortgage rates have been better-enabled by the relative absence of significant domestic economic data.  Complicating matters further, the only time that geopolitical risk wasn't having an obvious effect on rates, just happened to coincide with the only recent significant data earlier this month with the Employment report on March 7th.
That employment data made for a convincing head-fake toward higher rates and renewed geopolitical risk brought rates back down in the following week.  The point is that significant domestic data hasn't really had to compete with geopolitical risk for the same stage.  They've been taking turns, as it were. 
The first good chance for this to change arrives tomorrow.  There's no way to be sure it WILL change, but tomorrow's Fed policy announcement always has the potential to move markets, and it comes one day after news of gunfire and wounded Ukrainian military at an army base in Crimea.  It's hard to imagine Ukraine-related headlines will simply take the day off tomorrow.  The Fed certainly won't.

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Mortgage Rates Sideways Ahead of Fed Announcement

Matt Davis Broker- MJDavisProperties.com

Matt@MJDavisProperties.com http://www.mjdavisproperties.com/

Seventh Straight Month of Lower Home Sales in California

Posted to: MND NewsWire
Monday, March 17, 2014 3:24 PM

Closed sales of existing single-family homes slipped again in February, marking the seventh straight month of declining activity. The California Association of Realtors® (C.A.R.) said that sales of existing homes during the month were at a seasonally adjusted annual rate of 361,210 units.  This was a 0.7 percent dip from the January rate of 363,930 units.  It was the fourth month that existing home sales were under 400,000 and the rate was 13.7 percent below the rate of 418,520 homes in February 2013.
"The slower sales in February reflects diminished housing affordability after three years of solid price increases and interest rates that are nearly a full percentage point higher than a year ago," said C.A.R. President Kevin Brown.  "With the interest rate difference alone, home buyers this year would have to pay $150 more per month on their mortgage payment than last year, a substantial amount for many would-be home buyers trying to get into the market."
Virtually every country reporting to C.A.R. posted year-over-year declines in sales.  Increases were noted in Contra Costa Country (+22 percent) and San Francisco Country (+14.9 percent) and sales in the small counties of Madera and Amador were also up.
Inventories improved in February with a 4.7 month supply of existing single-family homes available for sale compared to 4.3 months in January and 3.6 months in February 2013.  C.A.R.'s Unsold Inventory Index reflects both the number of homes on the market and the current sales rate. A six- to seven-month supply is considered typical in a normal market.
With declining sales and increasing inventories the statewide median price of an existing, single-family detached home retreated 1.6 percent from January's median price of $410,990 to $404,250.  February's price was 21.3 percent higher than a year earlier marking two full years of consecutive year-over-year price increases and the 20th straight month of double-digit annual gains, as higher priced homes made up a larger share of the market compared to a year ago. 



"Supply conditions in the housing market have shown some improvement since the end of last year, except for the lowest price range where the inventory for distressed properties is depleted.  In the mid-priced range of $300,000-$750,000, which covers nearly half of all home sales, inventory is up 27 percent, while the supply of high-end homes - properties priced at or above $1 million, also is up 13 percent from a year ago," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "The improvement in these prime price ranges will benefit trade-up buyers who are expected to dominate the market in 2014, as many of them will be searching for homes in these price categories."
The median number of marketing days for a single-family home fell to 40 days from 44.3 days in January but remained higher than the 34.3 days it took to sell a home in February 2013.
Sales and price data are generated by C.A.R. from a survey of more than 90 Realtor associations throughout the state. 

View Article: http://www.mortgagenewsdaily.com/03172014_california_real_estate.asp

What Next?

Summer is almost over, or is it really?  With the coastal marine layer extending its "June Gloom" run well into what should now be the dogs days of summer, it leaves many wondering, will it finally make that long awaited appearance?  We all hope so, in fact, normally the best summer coastal weather and beach days appear in September.  The kids are back in school, the vacation crowd has receded from our shores, leaving wide-open beaches, short traffic free commutes (unless you are on the 5 freeway these days) and much shorter waits at all the local restaurants.  Finally!

As we reorient our focus to winding it all down and resuming our "normal" schedules, there are those who have been in the trenches trying to capture that elusive "Steal of a deal" short sale, foreclosure, bank owned home or the ever-increasing equity sale.  The challenges have been many as of late, the prices, as predicted, have not only turned the corner,  but we have realized substantial, actual gains in the local real estate markets.  Talks of bubbles, unheard of just a year ago, are now back in the discussion. Now that interest rates have also changed direction and are well on their way off historical lows, it has many either reaching deeper into their pockets and having to settle for that home that only last year, was $75,000 less.  OUCH!
A quick look at some data shows us this to be true.  A quick look at Scott Grannis' Calafia Beach Pundit and his July blog post, it shows a nice shot of where we were and where we may be headed

http://scottgrannis.blogspot.com/2013/07/housing-prices-firm.html

 

Scott's article mentions that home prices seem to be slowing, and not necessarily because of the traditional easing at the end of the summer, but that factors such as the perceived large run up in home prices and talk of bubbles have buyers rethinking the timing.  That and of course the largest run up in interest rates in as many years.  See the chart below.

Even with this latest run up in rates, there are still great deals to be had.  The big picture tells us it is still a great time to refinance that old 5% plus rate or purchase that first time home.  Whether you are trading up or down, now just might be the perfect time while the prices take a brief pause.  If you have been thinking of selling to take advantage of the market, it is time.  Get your home listed and exposed out into the market to get it sold well before the end of the year.

 

You can check market activity and search for homes for sale at www.MJDavisProperties.com or check out recent sales and stats using this interactive link  Coastal OC Sales Market Report

Real Estate's Bumpy Ride

A lot has happened in this ever-shifting real estate market since my last post back in July.  This latest update, while long overdue, offers support to the insight offered in the previous posts.  In many aspects it has been a quick close to what turned out to be a great summer and an even quicker start to our finally cooler fall season.  While the local temps have yielded to some cooler and wetter weather, home sales and prices have gone the other way for the most part.

Interest rates continue to drive further recovery to our local real estate market here in south Orange County. While they had been up slightly for a short time over the last few weeks, they are still touching historical record lows and that is keeping the steady stream of buyers lining up to make offers for the relatively few properties available here in South County.  If your home is priced right for this current market, sellers are seeing prices driven up by multiple offers and being able to pick from a nice pool of buyers that range from first time buyers, investors (many of which are all cash), those looking to trade up and those trading down.

From offers I have written that stretch from LA to San Diego, there have been very few that hit the owners tables all alone.  In some cases there have been eight, fifteen, twenty and one where there was thirty plus!  A very unique aspect that comes from this newly reinvigorated sellers market is that you need to have your buyers positioned to make an offer that stands tall among all the others.  For our sellers, it is a welcome change and one reminiscent of the middle part of the last decade.

In looking at an updated chart from our last July post, you can see that the sales numbers bear out evidence of this continued recovery, while the numbers are not even close to the crazy run up that prompted this twisted real estate and economic malaise, that is actually a good thing.

While the southernmost coastal cities (Laguna Beach, Dana Point & San Clemente) have posted higher total sold numbers, the average sold price figures, YTD 2012 compared to all of 2011 tell a mixed story.  Laguna Beach and San Clemente have both posted solid gains, Laguna Beach sits at 6.8% when compared to prices last year and San Clemente has solid gains showing a healthy 5%+.  Dana Point, while posting in increase in total sales overall has continued to drop, sitting around  a 7.8% drop in prices.

As expected, this "Recovery" has been all over the news, both local and national, over the past few months.  Many wonder what the future holds, can this run continue, through a presidential election, the economic and political instability in Europe and points further east?  Only time will tell but if I had to throw down some money, my bet is on slow and steady.  One of the most positive aspects of our current real estate market is that there is some benefit for both sides, sellers and buyers.  On the sell side, you have your choice of buyers, they are lining up, offers on hand, most of them are even reasonable.  For buyers, the deals are still out there and the rates, well, these are as good as they have ever been.

Jump in, its time, no matter what side you are on, its win-win (for now).  The Fed can only hold rates down for so long (right, wrong, artificially too low, whatever, there is no wrong answer) and when the rates turn, it will have a much bigger impact on the market than any other of the metrics.

For additional info relating to MLS statistics, data and real time MLS home searches, visit http://BuySouthOChomes.com

Train Keeps on Rolling

Now that we are all comfortably rolling along in the summertime groove, it appears that the current real estate environment is also traveling the same tracks that have carried us through spring.  Interest rates continue to touch and hold new record lows, purchase business is steady and the expected boost of new inventory has yet to show.  What gives?  Wasn't there supposed to be a wave of new inventory that would crush any hopes of a rebound?   A flood that many on the sidelines had predicted and banked on, one that would have so much inventory hitting the market that we would see another 10% to 15% drop in prices across the board.  What happened? Many have stood by and watched as rates plunge and inventory continues to thin, hoping that now is finally the time.

Well, it has not quite worked out that way to the surprise of many.  A quick look at the chart shows that we have indeed started to see a measurable recovery. Huh..?  Recovery..?  Where is the double dip crash?    Now I use the term "Measurable Recovery" very carefully.  It does not mean we will see home values start racing skyward as we did back when Alan Greenspan famously coined the term "Irrational Exuberance", but what we have seen is a shift towards a seller's market.  In fact, if you are currently in the market and seriously looking for a home, I would be willing to bet that many of you have made an offer on a home where you were one of several, if not many offers, on a home that you missed out on.  It is a fact of this "New Market", that after looking long and hard for the perfect home for you and your family,  you will have some competition. 

The year over year chart measures sold real estate activity in the cities of San Clemente, Dana Point and Laguna Beach.  Each year, going back to 2002, measuring the total number of closed sales up to the mid-point of July.  You can see that in all three cities we are well off our lows of 2008. Sales continue to improve from one year to the next but without that feeding frenzy driving prices soaring towards unsustainable growth.  You can see in this next link, exactly what they are selling for and at what percentage in relation to the list price.  This chart covers Laguna Niguel, Dana Point, Corona Del Mar, Newport Beach, San Clemente and Laguna Beach. Market Report - San Clemente, Dana Point, Laguna Beach, Corona Del Mar, Newport Beach & Laguna Niguel   To get an idea of what interest rates are and what payments would be using mortgage calculators, check out this link. Interest Rate and Mortgage Calculators .

We first saw some indicators of the increase in sales volume in the industry trade magazines, web sites and industry blogs over the last six months.  Now it is much more mainstream, many of those in the national press and regional media are claiming that we are finally and measurably, on the road to recovery. The San Francisco Chronicle claims "After several years of false starts, the evidence is finally starting to point to signs of a real recovery". Housing Wire magazine states that JP Morgan Chase economists are calling for real estate prices "to rise 12% by 2016".  Soon we will be seeing it consistently on all the major news channels, monthly, weekly, then daily, with all the talk of real estate being back. Finally.

Well, the truth is that it is back, and it has been for a little while now.  The key is do you want your piece of the pie, now or later.  Wait much more and there will be more offers to compete with and possibly, even higher prices. Smaller pieces of pie and more expensive...  Don't wait,  NOW is the time.

To view any property listed on the Orange County MLS, check out Buy South OC Homes

The Local Patch News sites

Make sure to check us out as we occasionally post to this fabulous local news source!  Patch is growing quickly and is a great alternative to the larger, less in depth news sites.  You can find them in many of our local Orange County communities and surrounding areas.

Here is just a partial list:

• Aliso Viejo
• MCB Camp Pendleton
• Carlsbad
• Laguna Beach
• Laguna Niguel
• Lake Forest
• Mission Viejo
• Newport Beach - Corona Del Mar
• San Clemente 
• San Juan Capistrano

If you don't see your city, just contact any of the other Patch editors and voice your opinion.  The more interest they get the better the chances your local city with be featured.

As always, keep checking back here for the latest in local deals on real estate, interest rates and anything affecting our local real estate landscape!  You can also find us and the hottest real estate deals around at:

 www.MJDavisProperties.com