CONNIE on with NEIL CAVUTO- Fox Business Mar 27, 2009

"IT'S THE APPRAISAL STUPID", says Neil Cavuto.
Click on this link to see: Hoping for a Housing Boom

Too many times Sellers are waiting until after they have accepted an offer to purchase before knowing if the buyer will be able to get a loan for that amount. Will the home appraise and what will happen if it does not?

These questions and more were discussed with Connie De Groot, Coldwell Banker Real Estate Broker in Los Angeles, and Jonathan Miller, Miller Samuel Inc. Real Estate Appraisers & Consultants- New York City.

Buyers Are Buying But Is It Happening Everywhere?

THE RECENT DATA DOES SHOW THAT BUYERS ARE BUYING! IT SEEMS AS THOUGH WE HAVE A BIFURCATED MARKETPLACE IN WHICH LOW END HOMES, (ESPECIALLY THOSE UNDER 300,000 DOLLARS) ARE SELLING WELL AND HIGH END HOMES (HOMES OVER 1MILLION) ARE SITTING. THIS ALMOST "ALL OR NOTHING" MARKETPLACE CAN BE EXPLAINED IN PART AS FOLLOWS:

1. BIG INCENTIVES FOR FIRST-TIME BUYERS!
First-time buyers accounted for half of all home sales last month!(NAR) They are typically entry level buyers looking for bargains and they are finding them since 40 to 50 percent of the transactions in Feb were distressed sales. . Distressed sales are also found to sell for approx. 20percent less than the normal market price. With a national supply of housing at 9.7 months supply, this trend could continue. Couple this incentive with the 8000 dollar tax incentive for first- time buyers and for California Residents on purchases of new homes, an up to 10000 dollar tax credit (effective Mar 09) this is a great time to buy if you are qualified.

2. LOAN RATES ARE AT HISTORIC LOWS (AND NOW JUMBO LOANS ARE COMING DOWN)!
According to Freddie Mac, for a 30 year, conventional, fixed-rate mortgage, last month's average mortgage rate was the second lowest since data collection began 1971. Rates have been high for jumbo loans and lenders have been reluctant, up until recently, to do them so many of these buyers could not afford to buy high end homes. The climate does seem to be improving for these types of loans with rates in the mid 5's.

3. WHEN PRICES COME DOWN - BUYERS RESPOND- BUT IT MUST BE A "DEAL"!
Existing- home sales in the West of the country increased 30.4 % over Feb 08
The Median price in the West of the country dropped 30.3 % from Feb 08
Sales in Los Angeles 32.4% higher than Feb 08 and the Median Price Change: Down -38%
Sales in Riverside 59.3 % higher than Feb 08 and the Median Price Change: Down -41.5 %
Sales in San Bernardino 87.1 % higher than Feb 08 and the Median Price Change: Down -47.2 %
Sales in SoCal 41.3% higher than Feb 08 and the Median Price Change: Down 38.7%
Sales in the Bay Area 26.1 % higher than Feb 08 and the Median Price Change: Down -46.20 %
In the Southland, foreclosure re-sales accounted for 56.4 % of Feb resale activity.
In the Southland, Government-insured, FHA mortgages made up about 38 %of all purchase loans in Feb compared to 6.4 percent in Feb 08.4.

4. WHEN WORD GETS AROUND MOMENTUM BUILDS.
Just as many purchased homes years ago because they heard about all the money others had made in real estate when the market was going up, it does seem apparent that more and more buyers are looking seriously at the opportunities that do exists today- Great Deals, historically low rates and an enormous selection of inventory. True Story:I know a broker in Phoenix that put in an offer on a bank owned house for 60,000 which was close to the asking but he was up against 10 other buyers. Stories like this are tempting me to go home shopping in Phoenix or areas where the "price is right".

Is this a good time to buy? Well The S&P/Case-Shiller U.S. National Home Price Index reported prices dropping 18.2% for the year. It was the greatest loss recorded in the report's 21-year history. Prices dropped in every one of the 20 cities studied.

Today's Real Estate News

San Francisco Chronicle: Is Seller Financing a Boom or Bust?
By Betsey Schiffman
03/13/2009
Listings using the term “seller financing” have increased in recent months, as more sellers try to distinguish their homes from others.

Reuters: BofA seeks more jumbo mortgages: report
03/13/2009
Citing the company’s “balance-sheet capacity,” Bank of America today announced it is seeking to produce more jumbo mortgages.

Inman: ‘Foreclosure’ Web searches near 3-year peak
03/13/2009
Online searched-engine queries including the phrase “foreclosure” have increased in recent weeks, according to a Web metrics company.

Some Details On The Housing Plan Which Aims To Help 9 Million Homeowners

Some of the points:

1. It is limited to borrowers who owe up to 5 percent more than their home is currently valued. So if you are under water by a greater percent you most probably can not take advantage of this program.
2. Some California cities like Modesto and Merced have a rate of about one out of every 10 homeowners that will not qualify because they have a mortgage in which they owe more than 50 percent than their home is currently worth.
3. A large number of homeowners that will not qualify for this program are in the hardest hit states- California, Florida, Arizona and Nevada.
4. Of the nearly 52 million homeowners with a mortgage, almost 14 million (27 percent) owe more on their mortgage than the home is currently worth and this is according to Moody's Economy.com. In Nevada almost half of all borrowers are "under water" as of December 2008 according to First American CoreLogic.
5. The modification program lasts until 2012 and borrowers who are eligible must provide their most recent tax return and 2 pay stubs, as well as an "affidavit of financial hardship" to qualify.
6. Borrowers are only allowed to modify their loans once and mortgages for single family homes above $ 729,750 are excluded.
7. Lenders may reduce rates to as low as 2 percent for 5 years but after that the rate will go to about 5 percent until the mortgage is paid.

I will continue to post updates on this topic.

FROM HOPE TO HOPELESS- by Connie

PRESIDENT OBAMA RAN MUCH OF HIS CAMPAIGN ON THE WORD "HOPE". THESE PAST FEW WEEKS HIS MESSAGE HAS BEEN QUITE THE OPPOSITE. NOW SOME HOME SELLERS SAY THEY FEEL THERE IS NO "HOPE" OF SELLING.

HELP and HOPE EXISTS ON THE LOW END BUT HIGHER END HOME OWNERS ARE SUFFERING.

Disappointing Data gathered from the MLS for Beverly Hills Zip 90210 and only for Single Family Residence AND only from January 1 to March 1 of each year.

2007 49 Sales over 1 million dollars
2008 25 Sales over 1 million dollars
2009 9 Sales over 1 million dollars

It is common to find that a buyer can not qualify for a loan or that they want to cancel an escrow because the daily news is so unsettling. What I did not expect is for Sellers to call me and tell me they want to take their home off the market because there is NO HOPE of selling in this market.

1. At the start of this year I experienced a lot of activity and optimism due in part to hopes for this new President.
2. With the Stimulus being discussed, the bad news increased and the message of hope was lost. 3. Buyers seem to be disappearing especially from higher end markets, and now most recently, many sellers are feeling hopeless and want to give up trying.
4. This is dangerous since some of these sellers have little equity and waiting may bring more of these Sellers to foreclosure if they do not qualify for assistance.
5. California Home Sales are very strong in the low end hard hit areas because of the obvious deal-great prices, tax incentives to first time home buyers of 8000 dollars, a California state tax credit of up to 10,000 dollars for the purchase of a new home and both the federal tax incentive of 8000 and the California state tax credit of 10,000 can be taken by a buyer who qualifies for both.
6. Unless we have some real incentives like better rates for jumbo mortgages or investment tax credits to reward those that are taking a risk buying today, the higher end will continue to suffer.
7. Sales of existing, single-family homes soared 100.8 percent in January in California, and the median price declined 40.5 percent, accordingto the latest report from the CALIFORNIA ASSOCIATION OF REALTORS®.