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®.

HIGH END HOUSING UPDATE

Million-dollar home sales plummet in Golden State
February 3, 2009

California million-dollar home sales plunged last year to their lowest level in five years, the result of a bone-dry mortgage market for prestige-home financing, as well as a decline in the value of many homes just over the million-dollar threshold, a real estate information service reported.

A total of 24,436 Golden State homes sold for a million dollars or more last year. That was down 42.5 percent from 42,506 in 2007. It was the lowest sales count since 20,595 were sold in 2003. In 2006 the $1 million-plus total was 50,010, in 2005 it was 54,773, and in 2004 it was 36,990, according to MDA DataQuick.

Total California home sales - including all price levels - increased 2.5 percent last year, to 393,703 from 383,748 in 2007. Of last year's sub-$1 million sales, at least 2,052 homes had previously sold for more than a million. One in sixteen homes sold for a million dollars or more last year; the year before it was one in nine.

"Discretionary spending in the housing market has pretty much been on hold the past fifteen months. The core of last year's distress was clearly in affordable areas that had a lot of turnover in 2005 and 2006. That distress could migrate up the price ladder if this recession proves nasty for high-income households," said John Walsh, DataQuick president. "A lot of home sales in the upper half of the market have been on hold for months, waiting for financing," he said.
While the number of home purchase mortgages below the old $417,000 conforming limit increased by 21 percent last year, the number above decreased by 51 percent, DataQuick reported.

Statewide, there were 608 sales for more than $5 million last year, 386 sales were in the $4-$5 million range, 963 in the $3 million range, 2,899 sales in the $2 million range, and the rest between $1 million and $2 million. The 608 sales for more than $5 million was a record high, up 7.6 percent from 565 in 2007.

The most expensive confirmed purchase was a 11,407 square-foot 6-bedroom, 10-bathroom Bel Air house built in 1926 which went for $38,000,000 in October. The largest home was a 4-bedroom, 8-bathroom 20,000 square-foot house in Corona Del Mar in Orange County. The sales price was unavailable, but the April purchase was financed with a $17.6 million mortgage.

Most $1 million-plus condos were sold in San Diego, Los Angeles and San Francisco.

The median-sized million-dollar home was 2,494 sq.ft. with 4 bedrooms and 3 bathrooms. The median price per square-foot for all million-dollar homes was $569, down 3.3 percent from $588 in 2007.

Around 24 percent of the $1 million-plus buyers paid cash, up from 14 percent in 2007. In the over-$5 million category, more than half of the purchases were cash. Of those who did finance their purchase, the median down payment was 30 percent of the purchase price. Lending institutions most willing to provide mortgage financing were Wells Fargo, Bank of America and Union Bank.

Area Number Sold 2007 Number Sold 2008
90210 Beverly Hills 275, 192
90049 Brentwood 332, 219
90272 Pacific Palisades 303, 214

Inspiring The Nation Would Help-by Connie

CONFIDENCE IS DIFFICULT TO FIX BECAUSE IT IS EMOTIONAL. IF PRESIDENT OBAMA WERE TO AGAIN FOCUS ON INSPIRING THIS NATION, IT MAY CAUSE SOME TO MOVE FORWARD AND INVEST -AND THAT COULD GO A LONG WAY TO HELP THIS STRUGGLING ECONOMY AND HOUSING.

As an citizen of this country, I wanted to share my thoughts:
This is a nation that believes in and supports the power of the INDIVIDUAL to change his or her life, cause change in this nation or influence the world.

President Obama, long before he said to the country “Yes We Can” he probably said to himself- “Yes I Can”. If he can become President of this great nation, then perhaps more of us can find ways to meet our needs and even surpass our goals.

We always have the power to change if we believe that we can.

Let's not forget that this country has always offerred people hope for a better life. And people keep coming to this country because of the unlimited opportunity that exists to those who are willing to work hard. When we start to change our basic principals we will change the ultimate potential our market can offer.

By the way, I lived in Europe for approximately 7 years and although I enjoyed the experience, I would never replace our system with anything I experienced anywhere in the world.

Fed Chairman Bernanke Testifies on TARP Performance and Credit Turmoil

Written by: Ken Sweet FOXBusiness

In his testimony in front of the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke said Tuesday that the central bank’s new lending programs have eased some of the extensive problems in the credit markets, but banks should not be expected to immediately start lending.
The testimony is part of the Congress’ inquiry into the performance of the $700 billion TARP program and sharp decrease in lending since markets froze late last year. Chief executives of major financial houses, including Goldman Sachs (GS: 94.7301, 4.1201, 4.55%), Morgan Stanley (MS: 22.94, 1.84, 8.72%), Bank of America (BAC: 6.08, 0.51, 9.16%) and Citigroup (C: 3.65, 0.25, 7.35%), will testify on Wednesday.
In his testimony, Bernanke the Federal Reserve has been “encouraged” by the response of these newly created programs, including facilities to purchase commercial paper, asset-backed securities, credit card securities and student loans, and said the programs could be expanded to additional classes of investments if warranted.
“The Federal Reserve has responded forcefully to the financial and economic crisis since its emergence in the summer of 2007,” Bernanke said.
Since the passage of the $700 billion TARP rescue program, there has been heightened criticism from both Washington and the general public that banks are not lending enough to keeps the economy going. Consumer credit levels have declined month over month, according to the Fed, and anecdotal evidence has come from small businesses that lending is not available.
Bernanke said that despite many banks’ access to these additional programs, “concerns about capital, asset quality, and credit risk continue to limit the willingness of many intermediaries to extend credit.”
Despite the banks’ alleged unwillingness to lend and the decline in the stock markets, Bernanke said that certain parts of the credit markets -- including mortgage rates and agency debt -- have improved. Money market funds have begun to see “modest inflows” since the government instituted stabilization measures in September.
Bernanke continued to emphasize that the central bank has additional tools available at its disposal now that its key lending rate is now at its “effective floor.”

Connie On Fox Business "Bulls & Bears" with Dave Asman Dec 24, 2008

Connie appeared on Fox Business "Bulls & Bears" with anchor Dave Asman to discuss the recent increase in re-financing due to the most recent lowering of rates. Will this help housing? Connie De Groot and Greg Rand of New York were once again asked to comment on this issue. You can view the entire segment by visiting http://www.conniedegroot.com/ and click on "Connie on Tv".

Comment's On Connie's Blog Dec 5, 2008

"I like the ideas as they would certainly encourage people to buy now and create confidence in the market which currently is not there. The people who are now in the market to buy are unsure of what might be ahead for housing prices and rates, and this would be a way for them to hedge against any potential losses."
Jeff Sclesinger-Priority Financial Network
818-385-1970
http://www.jeffschlesinger.com/)

"It would work in theory but there are other factors that would recreate the same mess we are already in without any regulation."
John T.

"Capital gains idea is great. There also has to be a happy medium between handing out credit to everyone, and the current locked upsituation."
Ed R.

Treasury's Low-Rate Mortgage Plan- Would This Help Housing?

Reducing rates will increase demand but lenders need to relax their guidelines or many ready willing buyers will be turned away. An attractive rate would get some buyers off the fence but with most buyers thinking tomorrow's prices will be better, I think additional incentives are needed. Also, if buyers think lower rates will be around for awhile then there will be no real urgency to buy today.

Here are my suggestions to GET BUYERS TO BUY NOW:

Lower mortgage rates but make it for a limited period of time.

Eliminate all capital gains on all existing homes purchased within the next 12months under 1 million dollars for as long as they own the property and withno limit on the number of purchases.
All buyers receive an investment tax credit equal to 10 percent oftheir down payment up to 20 percent down. This concept would immediately create additional demand and help stabilize the decline in housing prices.

The Capital Gains exemption would cost taxpayers almost nothing and for 1 trillion in sales,the investment tax credit would cost 20 billion dollars. This is a very small amount compared to the numbers we hear about every day.

This incentive will offer a future reward to buyers who buy now. It will offset the risks of buying today when many think things will continueto decline tomorrow and it will help all home owners and builders by helping to set a floor on housing prices. Increasing demand will help stabilize prices and help preserve homeowner equity and keep more loans from defaulting.

Home Builders Make Plea for Federal Aid

I went on Fox Business a few weeks ago to speak about 2 ways I believed would help increase demand in housing. Although my idea will not solve every problem demand will help set a floor on housing and begin to effect all those that are dependent on housing. The idea was to eliminate capital gains on any home purchased within the next 12 months and to also offer an investment tax credit of 10 percent of any down payment up to a 20 percent down payment. This would not require a person to have the home be their primary residence and would not limit the number of purchases or length of ownership.

This article just came out in the Wall Street Journal today. I have only posted parts of that article.

NOVEMBER 24, 2008

Wall Street Journal
By NICK TIMIRAOS


The builders' lobby is ramping up its sales pitch for a $250 billion stimulus package called "Fix Housing First," arguing that financial markets won't recover until home prices stop falling. They are calling for a generous tax credit for home purchases and a federal subsidy that would lower a homeowner's mortgage rate.

Congress resisted a similar effort to pass a larger tax credit earlier this year, instead creating a $7,500 credit for new-home purchases that had to be paid back over 15 years, effectively extending an interest-free loan.

The homebuilders' proposal would offer home buyers a tax credit equal to 10% of the home's value, capping it at $22,000, nearly three times the $7,500 credit Congress offered to new buyers earlier this year. Builders say the earlier credit didn't work because it wasn't big enough and had to be repaid.

Builders also want subsidies for interest rates on 30-year fixed-rate mortgages for government-backed "conforming" loans, which currently are around 6.2%, to bring rates down to 3% for loans made in the first half of 2009 and 4% for those in the second half of the year.

A rate reduction of about 1% on a 30-year mortgage typically costs the lender -- in this case the government -- around 4% of the principal. So a 2% buy-down on a $200,000 mortgage would cost $16,000. The NAHB estimates the subsidy portion of its proposal would cost the Treasury $143 billion.

Other critics say that while a large tax credit could motivate buyers to get off the fence, it would do nothing for homeowners unable to refinance mortgages they can't afford, which is arguably a bigger problem.

One idea with broader support -- but with a potentially bigger price tag -- is an interest-rate buy-down that would allow existing homeowners to refinance to lower rates. Chris Mayer, senior vice dean of Columbia Business School, has suggested that the government push interest rates down to 5.25% for homeowners who prove that they can afford to live in their new homes and can document their income.