California unemployment rate falls

California Unemployment Stats 2013

The state’s unemployment rate fell to 8.5% in June, according to figures released Thursday by the state’s Employment Development Department. That’s down from 10.6% in June 2012, the steepest decline by any state during that time period.

It’s not even. Some parts of the state have double-digit unemployment rates. Among the top five worst cities for unemployment, Mendota in Fresno County and Westmorland in Imperial County tied for the highest rates, at 33.9%.

Also, the sectors are uneven. Many of the jobs created are in lower paying jobs- many part time. Companies are still reluctant to hire full time.

 Still it bodes for more good news for housing. We need increases in our average income rates to sustain recovery. When the hedge funds leave, we need people earning more money so they can qualify for higher rates.

Los Angeles actually saw their unemployment rate rise from 9.6 to 9.7. So did Orange, San Diego and the Inland /empire see their rates rise.

Where the market has not hit bottom

The Foreclosures Facts

 RealtyTrac found. while the number of overall foreclosures fell by 35% in June from a year ago – to the lowest level since December 2006 – the number of so-called judicial foreclosures surged 34%.

In California, we have a trust deed state. That means that foreclosure is a set process that just goes through the steps with no judge involved. It takes a lot less time here. If you need a judge, it’s a lengthy process especially with the fact that most states are broke and have laid off employees.

There are 23 “judicial states,” where the courts oversee the foreclosure process. “If it is a judicial foreclosure, then it goes through the court system and the bank has to sue the homeowners,” Foreclosure signexplains Carey Frankel, a Realtor based in Ponte Vedra Beach, Fla. “This is a lengthy process that delays the time from default to actual possession of the property by the bank,” Frankel says. In a non-judicial state, the lender might only notify the owners that they are in default before putting the home up for auction. (Each non-judicial foreclosure state has its own requirements.)

Foreclosures in New Jersey rose 103%, Florida surged 100%, Maryland 94%, New York 66% and Illinois 65%. What’s more, many of these properties are likely to come to market in the next six to 12 months, says Daren Blomquist, vice president at RealtyTrac. “If you missed the bottom of the housing market, this might be the last chance to get a bargain on one of these foreclosure “, he said.

Shadow inventory down

CoreLogic said today that completed foreclosures ticked up slightly in May compared to April, but the number of homes in process of foreclosure, the foreclosure inventory, was down to about the same degree. Both completed foreclosures and the inventory are lower by double digits than they were one year earlier.

The National Foreclosure Report from CoreLogic said 52,000 homes were foreclosed in May compared to 71,000 in May 2012, a year-over-year decrease of 27 percent. However in May there were 2000 more foreclosures completed than in April, an increase of 3.5 percent. By way of comparison completed foreclosures averaged 21,000 per month in the 2000-2006 period, prior to the financial and housing crisis. Since September 2008 there have been approximately 4.4 million completed foreclosures nationwide.

As of May there were about 1.0 million homes in some stage of foreclosure, down from 1.4 million a year earlier, a 29 percent decrease. The May inventory represented 2.6 percent of all mortgaged homes in the U.S. While the May 2012 inventory represented a 3.5 percent rate.

CoreLogic tracks a third measure, the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as real estate owned (REO) by mortgage servicers, but not currently listed on multiple listing services (MLSs). The April shadow inventory was under 2 million homes, representing a supply of 5.3 months. At its peak in 2010 the shadow inventory contained 3 million homes.

Of the less than 2 million shadow inventory properties 890,000 are seriously delinquent (2.4 months’ supply), 761,000 are in some stage of foreclosure (2 months’ supply) and 336,000 are already in REO (0.9 months’ supply). In May the shadow inventory represented 85 percent of the 2.3 million properties currently seriously delinquent, in foreclosure or REO.

The value of shadow inventory was $314 billion as of April 2013, down from $386 billion in April 2012 and down from $320 billion six months prior, in October 2012. April’s number was down 18 percent compared to April 2012 when it was at 2.4 million units.

Total delinquencies at the end of May including those 90 or more days past due, in foreclosure or owned real estate (REO) was fewer than 2.3 million mortgages or 5.6 percent of all mortgaged properties. This is the lowest delinquency rate since December 2008.

Noting the nearly five year low in the delinquency rate, Mark Fleming, chief economist for CoreLogic said, “Over the last year it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013.”

“We continue to see a sharp drop in foreclosures around the country and with it a decrease in the size of the shadow inventory. Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends,” said Anand Nallathambi, president and CEO of CoreLogic. “We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013.”

The five states with the highest number of completed foreclosures for the 12 months ending in May 2013 were: Florida (103,000),California (76,000), Michigan (64,000), Texas (51,000) and Georgia (47,000).These five states account for almost half of all completed foreclosures nationally.

The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (8.8 percent), New Jersey (6.0 percent), New York (4.8 percent), Maine (4.1 percent) and Connecticut (4.1 percent).

Hooray- hedge funds are stepping down from buying real estate

Hedge fund real estate

For the past three years they have been swarming over the hardest-hit housing markets, buying distressed properties in bulk and pushing prices higher by double digits. The idea for these investors was not to buy and flip, but to hold and rent. Now some investors say that they have priced themselves out of the market.

“Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,” said Chris Clothier, a partner in and
Premier Property Management Group, which commissioned a national survey of investors conducted by ORC International. “Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.”

Nearly half the investors surveyed said that they planned to cut back on purchases of homes in the coming year; in a survey last August, just 30 percent said they planned to cut back. Only 20 percent of investors said they plan to increase purchases, compared with 39 percent who said they would last August. All this could have a significant impact on the housing recovery.

Bargains are drying up when it comes to buying foreclosed properties. The number of foreclosure sales in the first quarter of this year fell 22 percent from a year ago, according to RealtyTrac, a real estate website. The number of
short sales, when the home is sold for less than the value of the mortgage, also fell, as rising prices provided less incentive for banks to agree to such deals. Some claim banks are actually holding onto repossessed homes, waiting for prices to rise higher.

Investors accounted for 19 percent of home sales in April, according to the National Association of Realtors, down from 24 percent in all of 2012. Investors include individual buyers as well as large hedge funds, but the hedge funds have been getting much of the attention, credited with juicing prices in the hardest hit housing markets like Phoenix and Las Vegas. Their so-called REO-to-Rent strategy (Real Estate Owned-to-Rent) has evolved into a new asset class, with two of the companies that engage in the practice going public this year as real estate investment trusts (REITs).

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Don’t be a foreclosure consultant

California has strict laws about what you can and can not do if someone is in foreclosure. They have a special agreement called an equity purchase agreement and a five day right of rescission. There is a law that will get you in trouble if you violate it. Make sure you read every word of this and understand it.
Don’t tell anyone that you can stop the foreclosure. All you can do is educate or buy their house. Remember you probably know more than they do so try to help- be a friend but don’t make promises about their situation.

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