Surprise! Bank-Owned Properties Actually Sell For More!

Just when you thought you had the market all figured out....

In an article posted by Jann Swanson for Mortgage News Daily, it seemingly dispels the myth of bank owned REO properties being the default standard for the biggest bargains in the market place.

Surprise! Bank-Owned Properties Actually Sell For More!

Posted to: MND NewsWire
Thursday, June 26, 2014 10:03 AM

RealtyTrac recently analyzed residential sales over the year that ended in March to determine what drives discounts in the market value or premiums in the sales price for distressed properties.  They looked at four factors, foreclosure status, occupancy, equity, and property age, using them to construct 24 different distressed property profiles. Each profile was compared to a control group of properties not in foreclosure that sold in the same time frame. 
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990.   What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group.  The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed.  Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).





Two profiles tied for the second largest discount, 26 percent.  One profile was properties that were in default with positive equity; the other was properties in default with negative equity, vacant, and built before 1950.  Discounts of 25 percent were the average for two other profiles; vacant properties with negative equity that were scheduled for foreclosure auction and vacant properties scheduled for foreclosure auction.

Read More:
Bank Owned Bargains?

Mortgage Rates Push Further Into 6-Month Lows

May 7 2014, 3:15PM

by: Matthew Graham

Mortgage rates continued pushing into the lowest levels in more than 6 months after a docile congressional testimony from Fed Chair Yellen this morning. Financial markets and mortgage lenders were cautious ahead of the 10am speech, but improved afterward. A majority of lenders issued mid-day reprices, bringing rate sheets to levels not seen since November 1st. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already straddling 4.25% and 4.125%. Today's improvement equates to an effective drop of 0.04%.

Read More:
Mortgage Rates Push Further Into 6-Month Lows

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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.

Click to view full article:
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