Posts Tagged ‘California Real Estate’

Intero Insider: Is California Rebounding? Is It Really?

By Gino Blefari | January 27th, 2010 0 Comments

Last month, home sales in California were up almost 17% over November, and more than 10% over December 2008. This would indicate that progress is being made. Indeed, lots of people are predicting (as many do at the beginning of each year) that there will be a marked turnaround in market value and that things will do nothing but get rosier.

But there’s a problem that not a lot of people are talking about.

Raise your hand if you’ve heard of Strategic Mortgage Default.

No? Let’s talk about it.

Strategic Mortgage Default occurs when a homeowner, finding his home worth less than he owes on his mortgage, intentionally allows it to go into foreclosure. Let me repeat that: intentionally. Right or wrong, lots of people have done it. And many, many more are considering it. The thinking, typically, is that throwing good money after bad will just lead to … nothing. Many people believe that their homes will never again be worth what they paid for them. As such, they think, “Huh. No more property taxes, maintenance, insurance? That sounds good.”

In 2010, based on when many parts of California saw their real estate markets “top out”, many homeowners will have adjustments in their mortgages kick in. One saving grace here might be that interest rates are quite low, so payments mightn’t change all that much. But these adjustments, coupled with new taxes just passed in the state and the realization that their homes aren’t worth close to what they paid might be enough to have many people throwing in the proverbial towel.

While all of this might sound bleak, it would be naive to issue feel-good platitudes and not face the reality of the situation head-on. Strategic Mortgage Default will do its part to radically raise the number of bank-owned for sale in California. And there are lots already.

If you’re planning on selling your house this year, these homes — part of what we call “shadow inventory” — could play a big role in where you can, realistically, set your price. If you’re planning on buying, you’ll want to know how to position yourself to get the best price possible on your purchase.

Strategic Mortgage Default is going to be something you’ll hear more and more about in 2010. Like “short sale”, “REO”, and “foreclosure”, it’ll become part of the daily vernacular.

Pretending that the world is draped in sunshine and rainbows won’t solve anything. It might make people feel better for a while, but it won’t solve anything. Facing reality is the only thing that gets the job done. Your Intero Real Estate professional is ready to deal with reality. Let us know how we can help.

  • Get new posts via email
  • Subscribe

2010 market forecast: The long recovery continues

By Gino Blefari | November 24th, 2009 0 Comments

After three years of pain, the housing market appears to at last be on the mend.

The California Association of Realtors is projecting a median price increase of 3.3% in 2010. This would have looked anemic just a few years ago, but comes as welcome news to homeowners who have watched their finances – and, in many cases, their lives – turned upside down by collapsing values.

The National Association of Realtors predicts the number of home sales to increase by 13.6% percent in 2010 – fueled, in part, by a rosy forecast for interest rates, which the association sees remaining low through 2010.

At Intero, our view of the Northern California market is not much different. We expect to see continued vitality in the first-time homebuyer market, which accounts for nearly half of all volume. The expansion and extension of the homebuyer tax credit combined with an extremely favorable interest rate environment will see to that.

Vital signs improve in the move-up market

But the key to any housing recovery over my more than three decades in this business has been the “move-up market.” Until those who sell to all those first time buyers in turn move up, the market remains tepid. In 2009, we saw few signs of improvement here due to the huge number of bank owned properties. These properties are not owned by people who move up – they are owned by institutions purging bad assets. You see the problem.

While we do not see this changing dramatically in 2010, we do expect the move-up market (and, in time, the luxury market) to show signs of life for three reasons:

  1. The expansion of the home buyer tax credit beyond first-timers
  2. The middle and upper segments of the market offer prices that are still dramatically lower then their 2005 highs (as opposed to the entry-level market, where prices have already risen from their bottom and multiple-offer scenarios are now commonplace)
  3. The relative strength of the tech sector in Northern California will continue to increase as the economy recovers, fueling demand in the upper strata of the market

Are happy days here again?

Surely, things are looking better heading into 2010 than they have in a long time. While the twin specters of unemployment and foreclosure will continue to exact a toll, it will be less severe. We are moving to a normal market.

But here is my caveat: Normal is not what we experienced in the 2001-2005 bubble. Do not expect credit to become as easy to obtain as it was (and may some of the more “creative” loan products from those days rest in peace!) and do not expect home values to snowball at reality-defying rates.

Those days are gone, at least for now.

But if you want to find a place to live at a reasonable price, if you seek to sell into a market with a strengthening level of demand, and if you believe in the undeniable value of real estate as a long-term investment … well, 2010 may just be your year.

  • Get new posts via email
  • Subscribe

Is There An “Up” Side To All Of These Foreclosures?

By Gino Blefari | September 23rd, 2009 0 Comments

The California Real Estate Market has been hit, and hit hard. That’s no secret.

Statewide, the percentage of mortgage holders in California who have either missed several payments and are in the early states of foreclosure climbed to 9.5%. Combine this staggering figure with job losses and the recession, in general, and the state is likely to see a huge increase in the number of foreclosures.

But is there an “up” side?

Certainly, no one wants to capitalize on anyone else’s misfortune, but there is another perspective. If you’re in the market to buy a house, the news is almost entirely good.

Let’s take a look.

First off, inventory levels may be at all-time highs, and in all price ranges.

Second, sales prices are nothing short of terrific. Case in point: in August 2008, the median price paid for a home in California was $301,000. By August 2009, that number had fallen 17.3% to $249,000. For buyers, this has “good” written all over it.

Mortgage rates are at their lowest levels since the 1960s. Lower rates greatly increase a buyer’s purchasing power. Buyers will be able to get more home for their dollar — more “bang for the buck”; for families looking to upsize, this is the perfect opportunity.

There are fantastic incentives for buyers right now. Last week, we told you about the CAR Mortgage Protection Program, and we hope every home buyer knows about the First Time Home Buyer’s Tax Credit (which is set to expire on December 1st). Your Intero agent can answer any questions you might have about either of these groundbreaking programs.

Last, but by no means least, home ownership has real, sustainable value. Not just financially, but from a personal standpoint, as well. Owning a home gives you a greater sense of well-being and gives you a real sense of investment in your community.

So, yes. While it might be difficult to look at the current data on foreclosure and see a bright side, there really is one. Talk to your Intero agent today about what this can mean for you.

  • Get new posts via email
  • Subscribe