Real estate market update
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Notice of Default

[highlight bg=”#fff199″ color=”#000000″]What’s the real estate market doing now?[/highlight]

Lots of contrasting trends. On one hand,Notices of default are up 39% .

But houses actually getting foreclosed on fell 28% from the prior quarter as short sales are becoming more common. Actual foreclosures fell 55% from last year. Default notices are more common in the lower areas= under 200k.

The median price in Southern California rose 28% in June from a year ago-most since statistics have been gathered. That puts it at $385,000 up from $300 last June. At the peak it was $505 so we have room to go.

The LA Times gives a monthly chart of prices by zip code and change from 2012.

[note color=”#fff199″][label style=”important”]YOU MUST SEE THIS[/label] Some areas are up over 75%. Remember averages are averages. There are many far above. You can view this chart by logging on to dqnews.com and check out the LA Times chart. text[/note]

All this is giving cash investors 2nd thoughts about buying at any price. The higher prices reduce their return on investment . That is good for us because they are the elephant in the room distorting everything.

If  you willing to work hard, your return is amazing. If you are not willing to work at it, you won’t find anything. You can’ at simply go to the MLS anymore. You have to learn how to find your own deals.

What’s the real estate market doing now?

Lots of contrasting trends. On one hand,Notices of default are up 39% .

But houses actually getting foreclosed on fell 28% from the prior quarter as short sales are becoming more common. Actual foreclosures fell 55% from last year. Default notices are more common in the lower areas= under 200k.

The median price in Southern California rose 28% in June from a year ago-most since statistics have been gathered. That puts it at $385,000 up from $300 last June. At the peak it was $505 so we have room to go.

The LA Times gives a monthly chart of prices by zipcode and change from 2012.YOU MUST SEE THIS. Some areas are up over 75%. Remember averages are averages. There are many far above. You can view this chart by logging on to dqnews.com and check out the LA Times chart.

All this is giving cash investors 2nd thoughts about buying at any price. The higher prices reduce their return on investment . That is good for us because they are the elephant in the room distorting everything.
[quote style=”3″]If you willing to work hard, your return is amazing. If you are not willing to work at it, you won’t find anything. You can’ at simply go to the MLS anymore. You have to find your own deals.[/quote]


Some cities are almost back to their highest home prices
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Highest home prices

This is interesting stuff. Certain cities in Texas, and Co hit  highs in their home price index. They are almost back up to the highs hit in 2007. Of course, we in Southern California are still way off the peak.

Hard to believe we went down so much. I remember having a conversation with Bruce Norris in 2005 and we talked about the possibility of the real estate market dropping by 50 %. Gulp!!!

Read This Article. It contains state by state stats.


Latest home sales numbers
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construction

When you look at home sales the important thing to look for is not just sales but inventory.  It is mostly inventory that impacts prices. When we look at sales for existing homes you should look at the ratio  between conventional and distressed, not total sales. So, for those who follow housing closely, the existing home sales report on Monday was solid even though sales were down.However, for the new home sales report, the key number IS sales! An increase in sales adds to both GDP and employment The housing recovery is healthy and not in a bubble.

The Census Bureau reported that there were 244 new homes sold in the first half of 2013, up 28.4% from the 190 thousand sold during the same period in 2012. This was the highest sales for the first half of the year since 2008.

We are still low. This suggests significant upside over the next few years. As the economy improves, more people are leaving parents and doubling up situations to form new households Based on that , sales should increase to 750 to 800 thousand over the next several years – substantially higher than the current sales rate.

And an important point worth repeating : Housing is historically the best leading indicator for the economy

Another way to look at this is a ratio of existing to new home sales.

This ratio was fairly stable from 1994 through 2006, and then the flood of distressed sales kept the number of existing home sales elevated and depressed new home sales.

In general the ratio has been trending down – and is currently at the lowest level since November 2008. This ratio should continue to trend down over the next several years as the number of distressed sales declines and new home sales increase.

 We are slowly working our way through to a normal situation. As i reported before, hedge funds are slowing down so we have less competition. Any time demands eases and supply gains, prices will cool or maybe even drop a little.

SO STOP LISTENING TO THE BUBBLE NONSENSE. The market for investing is improving all the tme.


Hedge funds leaving
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Thank god that trend is going away . It’s been impossible to find deals when those big boys are in there buying without regard to comps. They don’t have to worry about appraisals  since they are paying cash. We as investors have to be concerned about what the house will appraise for when we sell it. So, it’s been a problem.

Current homeowners are playing a bigger role as housing market participants amid a sharp slowdown in investor activity, according to data from theCampbell/Inside Mortgage Finance HousingPulse Trackingsurvey.

Among three buyer types-current homeowner, first-time homebuyer, and investor-the survey showed current homeowners were the only group to see activity rise in June.

Last month, current homeowners represented 44.6 percent of the purchase market, up from 43.8  p eent in May based on a three-month moving average.

At the same time, the share for first-time homebuyers fell to 35.7 percent from 36 percent month-over-month.

Even more notable was the decrease in investor purchases. As rising home prices discourage investors,  home purchases from investors slipped to 19.7 percent, down significantly from 23.1 percent from February. The percentage also represents the lowest level since September 2012.

Falling in line with the decrease in investor activity was a drop in the supply of distressed properties.

According to HousingPulse, the share of foreclosure or short sales transactions plummeted year-over-year, falling to 28.2 percent from 40.3 percent in June 2012. The percentage represents the lowest level in at least three and half years.

The HousingPulse survey also revealed investor traffic decreased for the fourth straight month in June.

Agents across the United States also offered insight into investor activity, with one Arizona agent stating, “Investors have left our market with rising house prices,”

In California, one agent reported, “Values have increased by 20% since January and investors are backing away.”

The survey includes about 2,000 real estate agents nationwide.

Current homeowners are playing a bigger role as housing market participants amid a sharp slowdown in investor activity, according to data from theCampbell/Inside Mortgage Finance HousingPulse Trackingsurvey.

The survey includes about 2,000 real estate agents nationwide.


203 k loans are back
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203 k Loans

This is a loan that allow the borrower to role the purchase price and the rehab costs into the the loan.

With all of the shadow inventory, foreclosure inventory (bank, tax, municipal etc…) and refi volume going away, many lenders typically have and will gravitate towards the FHA 203(k) product as it has always been countercyclical and is not as interest rate sensitive as other loan types.

The programs can also be used to get people out of slightly underwater and minimal equity positions when they desire some home improvements.   If rising rates slow down values again this will continue to be a viable source of loans (customers doing home improvements ‘fix up, instead of moving up’.)

But so many times people forget about selling the 203k and the HomeStyle renovation products which allow a convenient way for borrowers to make renovations, repairs or improvements to existing residential properties or  a purchase loan  before they move into the home.

Banks have started to offer “construction to perm” loans again .Lenders are turning to Standard and Streamlined 203(k) as refinance volume dries up due to higher rates.

Wells Fargo offers a loan like this also. We had someone come down in the past to talk to us about it. Will try to get him back.