After December, The Avalanche?

Louis XIV of France, styled the Sun King, famously opined, “Apres moi, le deluge.”  After me, the flood. He was right, of course, for his excesses so infuriated the people that his successor was guillotined and his monarchy overthrown in the French Revolution.

SoCal Plunge In Foreclosure Filings

Something similar seems to be brewing in Southern California and maybe even nationwide as lenders ratchet up their foreclosure filings after the “robo-signing” lull. Though foreclosures dropped dramatically in SoCal this fall, so, too, did all home sales. The reasons seem to be many: the end of the home buyer tax credit, stubbornly high unemployment and the generally still-moribund economy. In fact, sales are down a full 16% from November of 2009. This at the same time foreclosure filings fell 14% from the previous November after a 22% decline in October for a two-month total 36% decline. Nationwide, the filings fell 21%.

December is traditionally a slow month in real estate as consumers focus on retail buying, parties and holiday travel plans. Typically, though, also in December  smart investors are out there snapping up last-minute bargains of the now-extremely motivated sellers still on the market. Competition is almost always much less, to put it mildly, and sellers are determined to close out their books for year’s end.  This year seems to be different as even investors are holding back.

That may be because the huge drop in  foreclosure filings this fall has ominous repercussions for home prices in the new year. With the foreclosure freeze over, informed observers now expect to see the banks ratchet up their foreclosures with a vengeance, restarting filings begun in October and November and barreling ahead with new ones in January. Executives from RealtyTrac, a real estate data collection firm, speculate that the housing recovery could be set back three months, if not more, as the foreclosures pile up. In fact, we can expect ” an avalanche” of foreclosures shortly.

SoCal Home Prices

The most immediate effect of an avalanche of foreclosed properties on the market will be to further depress prices in Southern California which had started a slight upward movement. Los Angeles County home prices had dropped 1.2% over November 2009 to a median of $325,000. Riverside and San Bernardino Counties, the hardest hit by the bursting of the real estate bubble, lost 2.5% and 5.0% respectively to medians of $195,000 and $152,000. But, that is a huge improvement over the 30% and 40% drops of previous years. Other SoCal counties actually gained in value. Orange County eked out a .6% improvement for a $435,000 median home price. San Diego topped the charts with a 3.1% improvement over last year to a median of  $335,000 with Ventura County just behind at 2.7% uptick to a median of $375,000.

Future: More Underwater Homes

These hard-earned gains will soon be lost as the promised avalanche of foreclosures hits the market. Perhaps sales will pick up as buyers and investors are lured back into the game. But, bargain-hunting fun aside,  another price drop for already distressed homeowners will plunge yet more homeowners underwater.  That, in turn, spirals down into more foreclosures and more equity loss in future.

Like Louis XIV, banks see this as well as anyone, yet still refuse to modify loans in any serious way. Like Louis, they see, but, obviously, don’t give a damn as long as they get their bonuses. Short-term is the only term.

2009 End-of-Year Roundup: L.A. County Home Values

Image via Wikipedia

Say it ain’t so!! Sorry, but all those  rumors that home values are finally rising again are just silly rumors. Values are slipping less than before, but, countrywide, values continue to decline by about 1/2% per month.  As always, location is terrifically important. It matters greatly where your home is located or where you want to buy. Some areas are tanking while others are increasing slightly.

So, which is which? Do we want the good news or the bad news first? Let’s mix it up a bit. S0me local areas that continue to sink in value include Pomona down around 10% in all ZIPs to around a median of $200,000. El Monte took a pretty big hit dropping about 18% to a median of around $250,000 in all ZIPs. Remember the Station fire? Buyers apparently do as La Canada Flintridge values are down 27% to a median of $876,000. La Puente which has already lost huge value has sunk to a median of about $250,000 across all ZIPs. Trendy during the boom, both Highland Park, Eagle Rock are down substantially [18% and 32% respectively, to medians of $286,000 and $365,000].

So, is there any good news? Well, yes, some local areas are doing quite well, thank you very much. Glendora has slipped less than the county average to a median of $378,000 in 91740 down 2% while 91741 is down almost 7% to $470,000. LaVerne is down 4%, less than the county average to a median of  $420,000, though San Dimas has sunk 25% to a median of $378,000. Covina dropped by about the county average across its ZIPs to about $330,000.

But, there are a few standouts. Altadena has posted a healthy 23% gain over last year to a median of $517,000. Alhambra in 91801 and Monrovia are  up by about 1% to a median of $549,000 and $490,000 respectively. Alhambra’s other  ZIP is down about 1% to $426,000. But, buyers are also flocking to Arcadia, up 8.5% to $807,000 and up 17% to $970000 in 91007.

 

Then, there’s Pasadena also a winner overall. This is where buyers seem to want to live and they are driving up the prices. 91103 is up 5% to $405000, 91104 and 91107 are  up by whopping 23% and 26% to  medians of  $550,000 and $670,000, 91106 is up 1% to a median of about $1.1 mil–not bad! 91105 is the only Pasadena loser, down by a substantial 28% to $675,000.

What about trends? Any new trends across the county? It’s a bit early to say, but it looks as though more pricey areas, especially at the beach are starting to lose value. Palos Verdes is down 44% to a median $1.17 mil along with Rancho Palos Verde down 20% to $850,000. Manhattan Beach is down slightly to a median $1.139 mil. Malibu is down 36% to a median of $1.363 mil. 

Why might this be happening? Rich folks may be different from you and me, but they can count pretty well. Being underwater by $200,000, $300,000 orn $400,000 just doesn’t make economic sense even if you can afford the payments. Better to just walk on by, and that’s what many wealthy home owners are now doing. My big prediction? More will do the same in 2010 as prices continue to decline.  Buyers today, rich or moderate income, are all interested in only one thing: value for their money. Pasadena appears to offer that–at least for the time being–while Malibu does not.

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Great New Mapping Tool: Los Angeles

Wow! The L.A. Times has produced a really great new mapping tool of all the neighborhoods in L. A. It’s interactive, so all you do is run your cursor over a neighborhood and then up pops a landscape view along with all sorts of information about demographics of the area. Way to go L.A. Times! I predict this map is going to get hits from all around the world. People are crazy to know more about our fair city and this is a great introduction.

Plus, the paper intends to keep adding to the mapping tool so that points of interest, restaurants and who knows what else will appear interactively as well..What a great idea! As a faithful reader of the N.Y. Times, I can attest to the many interactive maps produced by that paper and they are awesome, such as the interactive electoral districts during the 2008 presidential elections.

We have really needed such an ability to get around our neighborhoods as well. I’ve always wondered exactly where among other unfamiliar areas is  Lake View Terrace ? Now I know. Somehow I thought it was near CalState L.A., but it’s certainly not. And where’s the lake? Anyway, this tool is way cool.  Thank you, L.A. Times…

Here’s a screen shot:

LA Times Neighborhoods

Now, how about the rest of L.A. County? We’ve got some great stuff to share as well…

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First-Time Home Buyers: Help from City of Pasadena

beautiful-building-of-city-hall-in-pasadena-ca-s

In previous posts, I’ve discussed federal help for first-time home buyers. First-time buyer means anyone who has not purchased a home in the past 3 years.

All financial aid programs have financial limits, but  a variety of  LOCAL programs are available for low-income first-time home buyers.These programs are offered in many Los Angeles, San Bernardino and Orange County cities. These counties also all have programs to aid first-time home buyers.

In this area, the City of Pasadena has a program for buyers under certain income limits. And, buyers who meet these limits can receive up to $200,000 on a home price of up  to $425,000! That’s terrific! Here’s the chart:

Family size 1

$50,300

Family size 2

$57,400

Family size 3

$64,600

Family size 4

$71,800

Family size 5

$77,500

Family size 6

$83,300

At the moment, the City of Pasadena’s program, like most of the other ones offered, is OUT OF MONEY. Beginning in the new fiscal year, July 1, City of Pasadena program and several others in our area will be funded again.

Right now, I am gathering a list of buyers so we can prepare and be ready with a property set to go as soon as the program funds again. Working closely with a local lender who specializes in these programs, I plan to help my clients be among those who benefit from these plans BEFORE THE MONEY RUNS OUT.  The money does run on fairly quickly, so, if you think you might qualify, call now!!

Call me to get on the list of buyers. Call me for info about programs in other cities and other counties.

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Aid for “Responsible” Homeowners: Higher Loan Limits

Federal Home Loan Mortgage Corporation (Freddi...
Image via Wikipedia

Ever feel like your good habits are cutting you out of the action? Watching your profligate neighbors who can’t afford their homes and never could get loan mods can do that to you. Watching AIG shovel money out the door while you’re watching every dime has a tendency to prickle as well.

Well, now responsible homeowners even in Southern California which normally seems left to fend for itself are getting a piece of the pie. If your loan was purchased by Fannie Mae or Freddie Mac, the cap for refis expired at the end of December, reducing eligible loans to $625,500. Yes, that’s pricey, but still shuts out far too many homeowners in SoCal. The Obama plan reinstates the higher loan limit of $729,750 for loan modifications and refis.

This amount was selected specifically to target higher-priced areas such as Los Angeles and Orange Counties. No doubt others areas of the country will benefit as well, but by far the greatest impact will be here.  Of course, just having a higher-priced loan does not automatically qualify the homeowner for the new structure under the Obama’s refinance  plan, called Home Affordable Refinance.  Homeowners will be able to refinance up to this amount providing the that loan is not more than 105% of  the current value.  That is, the current market value of the home must be at least $766,237.

If this criterion cannot be met, the homeowner may be eligible for a loan modification under another program in Obama’s plan, Home Affordable Modification. This program will help the homeowner suffering distress lower the monthly payment to 31% of income. In most cases, the lender would reduce the rates to as low as 2% for up to 5 years, or temporarily lower the loan balance or extend the loan to as long as 40 years.

Of course, either program requires the homeowner to have the capacity to pay the refinance or the modified loan. Seeking such aid, the homeowner must provide financial information as well as supporting documents. Finally, something that will help Southern California!

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L.A. County: December 2008 Home Values

Seal prior to 2004 lawsuit threat
Image via Wikipedia

You guessed it–home values are still going down. December home sales for L.A. County show a median home value of $320,000, down from the $340,000 of november and 36% lower than November of 2007. Of course, neighboring counties are doing worse, some by a wide margin, but that is hardly cause for joy. There’s no doubt we’re all in this together.

As always, some areas are in worse shape than others. By now, we expect to see huge price drops in North L.A. County and we surely do: Lancaster shows medians of $115,000 and $116,000 [93534,93535], representing drops of 50% and 38% respectively over last year, while 93536 shows a median of $199,000, 35% less than last year. This is grim news as it most certainly means foreclosures and short sales for many. Those that remain must somehow deal with a loss of up to 50% of their home’s value over last year. Sadder still is the story in Palmdale where one ZIP[93591] has lost a spectacular 74% of its median home value in one year to arrive at a crushing $65,000.  Other Palmdale areas show losses of 46% to a median of $116,000 [93550]and 35% to a median of $225,000 [93551].

Other areas hard hit by the home value drop include many areas in Los Angeles City, including Hawthorne, Watts and Compton along with others. In our own area, Pomona continues to lead the way down with a 50% drop in 91768 to a median of $173,000, 41% in 91766 to a median of $223,000 and 38% in 91767 to $216,000. Other large drops occurred in Baldwin Park [42% to $235,000], South El Monte [41% to $270,000], Whittier 90602 [47% to $318,000], but, for the most part, the San Gabriel Valley‘s median home values are higher than the county median and have dropped less.

San Dimas, for instance, shows a 14% drop over last year to $465,000, though that is based on very few sales, itself a poor harbinger for the future. Arcadia dropped about 24% to a median of about $750,000 across its two ZIP codes. Monrovia is down 11% to $478,000, again well about the County median.  Covina has lost around 20% to a median in the high $300,000s.  Walnut has actually gained value to a median of $634,000. Guess you’re doing something right, Walnut. Glendora is down a bit over 20% in both 91740 and 91741 to medians of $343,000 and $419,000 respectively. La Verne is down 6% to $465,000 which represents very good value. Buy in LaVerne. Claremont is down a measly 2% to a median of $525,000.

Many of these medians are based on very few sales, so we can expect them to change, possibly radically, inthe near future. South Pasadena, for instance, now is up 11% to a median of $1,200,000, but that is  based on only 3 sales for the whole month. Condo sales have been abysmal, as expected, and many median values are based on 1 or 2 sales. The median condo price in L. A. County is $290, 000, down 25% over November 207. Sales, though, are way off.

It’s clear that the pace of decline is slowing and the median for L. A. County is dragged down by horrendous numbers in some parts of the City of L. A. as well as Palmdale, Lancaster and the high desert areas  like  Littlerock [down 51% to a median of $140,000]. Established suburbs, such as those in the San Gabriel Valley, with good schools, well-managed city governments and alreay-built and paid-for infrastructure are doing much better than outlying districts. It is also true, though, that if our Current Recession deepens cities will be less able to maintain these infrastructure amenities in the face of shrinking  tax base  from closing auto malls, lost retail outlets and rising unemployment.

Statistics provided by MDA DataQuick and are printed in the L.A. Times.

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