Palos Verdes Foreclosure Report

• Are foreclosures increasing or decreasing
• What are the discounts at auction?
• Are filings increasing or decreasing?
• What percentage of homes are going back to the banks as opposed to 3rd parties?
• Are the bids higher or lower than last year?

This and more is available from my monthly Palos Verdes Foreclosure Report

Gradual Recovery for Housing and the Economy Expected in 2012

Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections at a residential forum here at the 2011 Realtors® Conference & Expo. 

You can view the entire presentation by going here: 2012-california-real-estate-forecast  The article will take a long time to load as it’s a 23mb Power Point presentation and will work better if you choose to download and save instead of view online when prompted by your browser.  At the end of this article you will see a link to get Real Estate Transaction Trend information for Palos Verdes and the South Bay such as this chart that shows the balance between supply (new listing volume) and demand (pending sale volume)

Lawrence Yun*, chief economist of the National Association of Realtors®, said home sales should be stronger. “Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently,” he said. “Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

Yun projects growth in Gross Domestic Product to be 1.8 percent this year, then rising moderately at a rate of 2.2 percent in 2012. With job growth of 1.7 to 2.2 million next year, the unemployment rate is expected to decline to 8.7 percent by the second half of 2012.

Mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012.

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year,” Yun said. “Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities.”

Existing-home sales are forecast to edge up about 1 percent this year, and then rise another 4 to 5 percent in 2012. Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011.

NAR presently is benchmarking* existing-home sales, and downward revisions are expected for totals in recent years, although there will be little change to previously reported comparisons based on percentage change. There will be will be no change to median prices or month’s supply of inventory. Publication of the improved measurement methodology is expected in the near future.

New-home sales are expected to be a record low 302,000 this year, rising to 372,000 in 2012. Housing starts are forecast to rise to 630,000 next year from 583,000 in 2011. “Although a double-digit growth in new-home sales and housing starts sounds encouraging, the projections remain historically soft relative to long-term underlying demand,” Yun explained.

With falling inventory, the median home price should rise in 2012. “Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012,” Yun said.

“Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve,” Yun added. “If we could maintain sound and reasonable mortgage underwriting standards, the market would be able to avoid a future big boom and bust cycle, but mortgage standards remain overly stringent.”

Also speaking was Richard Peach, Senior Vice President at the Federal Reserve Board of New York, who said the economy is under-performing. “Nearly two-and-a-half years since the end of ‘the great recession,’ the economy continues to operate well below its potential,” he said. “Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level.”

Peach said the current business cycle remains 7 percent below its peak and is longer than other recession cycles since 1953. He added the employment to population ratio is historically low, and there’s been a shift in the distribution of income with corporate profits up strongly while employment compensation is down.

Peach believes there is a sizeable level of shadow inventory that will result in rising foreclosures. “My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” he said. This would help to absorb the inventory and stabilize the housing market.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

About the Chief Economist

Lawrence Yun

Lawrence Yun is Chief Economist and Senior Vice President of Research for the National Association of REALTORS® Research department . He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members. Dr. Yun creates NAR’s real estate market forecasts and participates in many economic forecasting panels, including Blue Chip and the Harvard University Industrial Economist Council. He appears regularly on financial news outlets and is a frequent speaker at real estate conferences throughout the United States. In 2008, USA Today listed him among the top 10 economic forecasters in the country.

Dr. Yun has been with the REALTORS® market research department since the year 2000. Prior to that, he worked as an economic consultant to the U.S. Department of Veterans Affairs and the U.S. Department of Education. From 1995 to 1998, while a research associate at the University of Maryland, he was based in the former Soviet Union where he developed economics programs at several universities to help in the transition from communism to a market based economy.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market, such as population changes in sampled areas, to ensure accuracy. NAR began its normal process for benchmarking sales at the beginning of this year in consultation with government agencies, outside housing economists and academic experts.
There will be no change to median prices or months-supply of inventory. Although there will be downward revisions to sales volume and unsold inventory, there will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc.
In the past NAR has benchmarked to the decennial Census, most recently to the 2000 Census, because it included home sales data. However, the data are no longer included in the Census, so we’ve had to develop a new approach using an independent source to improve methodology and to permit more frequent revisions.
Preliminary data for the new benchmark will undergo broad review shortly by professional economists and government agencies. After any issues that may surface in the review process are addressed, we will update monthly seasonal adjustment factors and publish revisions

Deadline for appealing your property tax is November 30, 2011

Do not pay for this service; there are many scammers out there that charge HUNDREDS of dollars for this.  Many professional customer service real estate brokers will help you gather the necessary data for free or you can do this on your own. 

You can file the form (below) online or by printing out the form below by going here 2011-decline-in-value-review-application

If you have any questions on this and you live in the areas shown in the home search sections below, then let me know I will help you.

Also at the site above, you may find other forms helpful to your property tax situation.  Let me know if you have any questions and again, I will do my best to help.

Here are some general guidelines to keep in mind when it comes to making an appeal to lower your property taxes.

• Homeowners should keep in mind that property taxes do not always correspond with home values, because local governments typically don’t measure values every year and some have limits on annual property-tax increases.
• As a result, current property taxes might reflect the home’s value when the market was healthier. According to the Congressional Budget Office, property-tax adjustments lag behind changes in home prices by an average of three years.
• Although homeowners cannot change their property-tax rate, which is set by the local government, homeowners can get their assessment lowered if they appeal to their local assessor.
• One key to a successful appeal is fact checking the assessor’s work. About half of all successful appeals come from homeowners pointing out an error in the assessor’s description of the home, according to one property tax expert.
• During the appeal process, which is similar to a less-formal court hearing, homeowners may present their case to several local officials or representatives. The simplest way to convince officials that a property has been incorrectly valued is to provide evidence of the sales price of homes that are comparable to the property being discussed. This should include square footage, amenities, and neighborhood characteristics. Sale documents and photos of the property in question, as well as the comparable properties also should be brought in.
• Homeowners who have made improvements or substantial changes to the property should be cautious about appealing an assessment though, as it could have negative effects and actually increase the property’s value and, in turn, the property taxes.

It’s always a balancing act in the crystal ball business

Just the other day I wrote in this blog that even if you believe sale prices are going lower, given that interest rates are sure to climb (the Fed can’t keep printing money forever without consequences), it may still be financially prudent to buy now versus waiting for prices to bottom.

First of all, are you really that good at predicting tops and bottoms in any market?  Tell me, how’s your 401K doing?  That will give you a clue as to your prognosticating abilities

Secondly let’s make a couple of assumptions using a couple of facts.

FACTS

• Fact one: the median price of a home sold on the Palos Verdes Peninsula in the last 12 months was $1,133,425
• Fact two: a 30 year fixed rate mortgage is around 4% right now (if you pay a point or so)

ASSUMPTIONS

• Assumption one: Home prices will fall another 10% before they bottom, so now the median price of a home is $1,020,083
• Assumption two: What with the Fed printing money, interest rates go up to 6% (historically still low, but higher than now)
• Assumption three: You are injecting a 25% downpayment on your purchase

So what happened … by waiting, you saved $113,342 in the price of the home, but guess what, you ended up, even with a lower priced home and lower loan amount, actually paying $275,293 more in interest payments over 30 years for a net loss of $161,951. 

Ahh, but I hear what you’re saying … “George, I’m not going to own this house for a full 30 years”.  Ok, that makes sense, so what happens after just 10 years.

The results are not as dramatic, but you still lose money by paying a lower price assuming interest rates go up.  Be honest, do you really think interest rates will stay this low?  Look, I’m no better than anyone else at predicting the market.  I’m just suggesting that if the right house comes on the market, negotiate hard for it, don’t wait.  Own the home now at an interest rate you may never see again.

For more information, visit http://www.homeispalosverdes.com

30-Year Mortgage Rates Drop Under 4% Again

For the second time this year, the 30-year fixed-rate mortgage dropped below 4 percent and continues to hover around record lows, Freddie Mac reported in its weekly mortgage market survey.

Yet overall, “fixed mortgage rates were little changed this week amid a mix of economic data reports,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at mortgage rates for the week ending Nov. 10:

• 30-year fixed-rate mortgages: averaged 3.99 percent with an average 07 point, down from last week’s 4 percent average. The last time the 30-year fixed-rate mortgage dropped below 4 percent was Oct. 6 when it averaged 3.94 percent. Last year at this time, 30-year rates averaged 4.17 percent.
• 15-year fixed-rate mortgages: averaged 3.30 percent with an average 0.8 point, dropping slightly from last week’s 3.31 percent average. Last year at this time, 15-year rates averaged 3.57 percent.
• 5-year adjustable-rate mortgages: averaged 2.98 percent, with an average 0.6 point, rising from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.25 percent.
• 1-year ARMs: averaged 2.95 percent with an average 0.6 point, up from last week’s 2.88 percent average. A year ago at this time, the 1-year ARM averaged 3.26 percent.

In what price range can you expect to buy a home in Palos Verdes

The latest information is best described in this chart.  To see larger picture, either click the graphic or go here Palos Verdes real estate price ranges

The price ranges are in 200K increments, so as you can see, there were almost 80 sales in the last 6 months of homes in Palos Verdes in the $750,001 to $950,000 price range.

Is it safe to buy or sell Palos Verdes Real Estate

Have YOU signed up for my other proprietary charts? If you haven’t and want the link, please go to this site to agree to the conditions and sign up. The conditions are quite simple – you must agree to keep the links and contents private for your use only and not share the data in any manner whatsoever without my express written permission. http://www.homeispalosverdes.com/content/article.html/1396074/real-estate-trend-charts

The BIGGEST CHALLENGE for sellers now is pricing their homes correctly. Now just because the market is soft doesn’t mean that one should not buy. But if you’re a buyer, you have to be careful and you have to buy “right” and for the “long term”. Interest rates are low, incredibly low and even if you bought today and prices dropped a bit more, you will still likely be just fine long term. Why? Two reasons.

1) The market will recover. I’ve been in real estate for 30 years. I saw what happened in the early 80s and the early 90s and saw the market recover during both down cycles. And I heard the same thing then that I do now. “Oh, prices will never be as high as they were in ever again”. You know what? They were, and they exceeded those levels. And they will again.

2) Even if prices drop some more, which I think they likely will, buying today is likely still ok, as what if interest rates go up a percent or more in the next year or two, which I think they will (the Fed can’t get away with printing money forever). Higher interest rates on a lower priced home may still mean higher ownership costs for the long term. So you may be better off buying now.

But if you’re a seller now, OR if you know someone thinking of selling … you have to know this. Let me put it this way. You’re standing in your yard ok? Now, someone is up on the roof with a really, really sharp sword and drops it from the sky. Are you going to catch it with your bare hands?

It’s an old stock broker’s adage … “No one likes to catch a falling sword”. Same with real estate, the only way you’re going to sell your house in today’s market is IF the buyer perceives themselves as being compensated for the risk of buying in a soft market; one in which prices in 6 months to a year are more likely to be lower than higher compared to now. Does that make sense? So do your friends a favor … those that are thinking of selling … tell them to get real and hire a broker like me that will tell them the TRUTH.

And what’s my documentation for making this advice? This is just one of the charts you would have access to if you signed up in the link above. We were doing ok here on prices for a while. A channel was forming in which prices were bouncing around. But look at what just happened; a bit of a break to the down side.

So in conclusion, it’s ok to buy, but buy right and if you’re a seller, you must price right. Study your competitive sales and know that you’re going to have to price your home a bit LOWER than what competitive homes sold for in the last 6 months. Sorry, but that’s the way it is. And if you’re looking for a real estate broker that will tell it like it is so that you can make decisions that are in YOUR best interests, well … you’ve found one in me.

Thanks!

Palos Verdes Peninsula parcel tax measure narrowly passes

With all precincts reporting, Measure M had approval from 68.5 percent of voters. It needed a two-thirds majority to pass.

Supporters said the $374 annual parcel tax – set to continue indefinitely – is necessary for the high-achieving Palos Verdes Peninsula Unified School District to counteract state cuts to education funding.

Julie Trell, co-chairwoman of Keep Our PVP Schools Strong, said she felt the pro-M campaign was helped by a get-out-the-vote push asking parents to go to the polls on Election Day.

The tax, which provides an exemption for senior citizens, amounts to the exact same dollar figure that property owners are paying now for two parcel taxes, at $165 and $209 per year. Both are set to expire in 2013.

The measure provoked controversy – and opposition from some vocal critics who have supported district taxes in the past – because of its lack of a sunset date.

Trell said that element was one of the advantages of Measure M because it means the district won’t have to keep asking voters for tax extensions. And an army of volunteers won’t have to mobilize every few years in support of the district.

“It’s secure funding. … We don’t have to go back every time. It’s just such a huge effort, and to not have to do that is such a huge relief,” said Trell, who co-chaired the campaign with district mother Kim Rutledge.

Critics said that without an expiration date, the measure will install a permanent tax on Peninsula property owners. They additionally didn’t like the fact that the measure will allow the school board to add an annual increase to account for inflation.

Supporters of Measure M responded that the school board will have to vote each year on continuing the tax at a public hearing where residents can protest. And voters can bring an initiative to overturn the tax.

Since 2000, Peninsula voters have funded three school district construction bond measures and three parcel taxes.

A 2009 parcel tax extension garnered a fairly close 68.9 percent of the vote, down from previous elections but slightly above Tuesday’s result.

District officials had said that without Measure M, schools would see “devastating cuts,” including 130 layoffs and funding reductions to athletic programs, counseling and academic intervention initiatives. Class sizes would have increased.

The existing parcel taxes bring in about $7 million each year, funding regular operations in the district’s $90 million budget.