Homebuyers were buying up foreclosures making sales go up 6.7 percent. Sales figures on the other hand, were still below average for the month of September for the Bay Area and southern California. DataQuick, a real estate information service home in San Diego revealed that home sales were lower than the figure seen in August, which is down 6.2 percent with a total of homes sold at 35,404 in September.

The median home price in September for September was $249,000, which is down 6 percent from what was seen in 2010 and the same as was seen in August of 2011. This is the 12th continuous year over year decrease in the median price. This means that many of the homes sold for half or less than what the home was worth.

DataQuick president, John Walsh stated the number of potential home buyers was growing but the demand is not seen in the numbers yet.

He stated, “Empty-nesters want something smaller, growing families want something bigger,” and went on to say, “People still die, they get married, retire — all of this generates demand. And only a fraction of that demand is being met in today’s market.”

A large amount of the homes that sold in September were foreclosures along with short sales in which the bank sold the home for less than the mortgage. The figures show that more than half of the homes that sold in California in the month of September were foreclosures or short sales.

The figures showed around 33.8 percent were foreclosures down from the 34.3 percent seen in August and 35.6 percent seen in September 2010. Reports showed 18.7 percent were short sales, which is up from the figure seen in August of 17.5 percent and 15.6 seen in September of 2010.

Home sales in southern California were up 0.3 percent from September 2010 but were down from the 7.7 percent seen in August of 2011 bringing the figure to 18,149. The median price for southern California fell 5.2 percent from 201o to $280,000 and only up 0.4 percent over the August figures.

The Bay Area saw home sales increase 6.6 percent from 2010 but down from the figure seen in August to 6,749. The median price for the area decreased 7.6 percent from 2010 and was also down from the month of August to 365,000.

The Federal Housing Finance Agency that oversees mortgage sources Freddie Mac and Fannie Mae stated they were easing the terms of the 2 year old Home Affordable Refinance Program that aids borrowers who have kept up with their mortgage payments but have not been able to refinance due to drops in home values.

In order to help these borrowers, FHFA stated it would lose the cap that stops any owners if their mortgage is more than 125% of the value of the property from participating in HARP. HARP is a program backed by Freddie Mac and Fannie Mae.

FHFA’s acting director, Edward DeMarco stated, “Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

One lawmaker after talking with DeMarco in October stated that the expanded program could aid between 600,000 to one million borrowers, but went on to say that it is only a small fraction of the around 11 million homeowners that are underwater.

President Barack Obama is likely to endorse the initiative during a speech in Las Vegas. The president will use the trip to raise money for his re-election campaign as well.

The White House is not certain just how many homeowners the program can help, but Gene Sperling, White House economist states it is too early to tell how many homeowners would “benefit from the changes announced today or could be announced in the future.”

The New York Times stated the new initiative as a part of a program that the president would be announcing to help address the nation’s economy while Republicans are reluctant to pass his jobs plan.

==
This is the latest attempt of the White House to deal with a major factor that is slowing the economy – the housing market – and is also added to the political liabilities for Obama’s re-election bid, which is also jeopardized by high unemployment in the United States.

Previous federal programs to stop or slow down foreclosures have failed.

To encourage banks to get on board in the program, FHFA is remodeling it to protect lenders so they do not have to buy back HARP loans if underwriting problems are found later. Lenders will only need to verify that the borrowers have made six of the last mortgage payments. The new rules also eliminate the need for appraisals in the majority of cases.

FHFA stated that the government-controlled Fannie Mae and Freddie Mac would waive specific fees for borrowers that refinance into loans with a shorter term, like 15 years, intending to encourage homeowners to pay down the amount they owe in a shorter time period.

One of the Obama administrations in the hopes of helping with foreclosure efforts, HARP was announced in March 2009, which was thought, would help around 5 million borrowers. At this time, only around 894,000 borrowers have used the program to refinance their loans.

FHFA announced it would extend the program until Dec. 31, 2013. The program is limited to loans that were guaranteed prior to June of 2009 via Fannie Mae and Freddie Mac.

New York Fed president William Dudley during a speech at Fordham University’s Gabelli School of Business in New York stated, “Breaking this vicious cycle is one of the most pressing issues facing policy makers.”

If Congress does not extend the expiration deadline, FHA loan limits will end starting on October 1, which will result in changes that can affect potential borrowers and the housing market. FHA loans provide borrowers competitive rates along with terms, and only require a 3.5% down payment.

Allowable debt ratios are higher than the normal debt ratio limits seen with conventional loans. Additionally, there are not any income limit qualifications, which allow more individuals to qualify for the loans.

In an effort to help the home buying market, Congress raised the loan limit until September 30. Lawmakers at this time have not come to an agreement when it comes to extending the loan limit. If this loan limit is dropped several California home buyers looking for larger mortgage will need to apply for jumbo or conventional loans. This may cause these individuals to have to put up larger down payments and pay higher interest rates.

Potential home buyers should keep an eye on the following if the loan limits are decreased.

• Lower loan limits – The conforming loan limit decides the maximum mortgage amount that FHA, Fannie Mae, and Freddie Mac can buy or guarantee.

• Decreases by county – Under the new FHA loan limits, some counties in California will see major drops in their loan limits. Santa Clara County will see a $104,250 drop.

• Jumbo loans – The current FHA loan limit is $729,750. After October 1, that limit may decrease to $625,500. All mortgage loans higher than this amount will be known as nonconforming jumbo loans, which normally have rates that are 0.875% to 1.5% higher than conforming rates and require higher down payments.

• More stringent requirements – FHA loan requirements may permit lower credit scores.

As reported by the magazine, the average home price in San Diego is $555,768, making the San Diego metro one of the most expensive places to live in the United States. The average price is not the same figure used by real estate professionals who use the median price instead of average home price. Apartment rentals on average are around $1648 per month, which is double the national average. San Diego has a median household income of $62,901.

San Francisco also made it on the most expensive list in third place. The average home price in San Francisco $808,481, with rentals around $2035, which is, triple the national average. The median household income is $74,876.

Last year the rate was up 14.3% over 2009 and marked the third consecutive annual increase. In 2010, there were 46.2 million Americans living in poverty, which is up from 43.6 million in 20009, which marked the fourth consecutive annual increase and the largest number ever seen of American living in poverty since the beginning of the Census Bureau’s reports in 1959.

The Bureau also released information on the real median household income in the United States in 2010, which was $49,445, a 2.3% fall from the figure seen in 2009.  Since 2007, the year prior to the recent recession, real median household income has fallen 6.4% and is 7.1% below the median household income peak that was seen in 1999, before the 2001 recession, the Bureau stated. This is the very first time since the Great Depression that the median household income after adjusting for inflation did not raise for an extended period.

Lawrence Katz, Harvard economics professor, stated, “This is truly a lost decade,” and went on to say, “We think of America as a place where every generation is doing better, but we’re looking at a period when the median family is in worse shape than it was in the late 1990s.”

In addition, the figure of Americans that do not have health insurance increased from 49 million in 2009 to 49.9 million in 2010, with the overall percentage still at 16.3%, according to the Census report.

Retail sales hit $389.5 billion in August, which is the same as was seen in July and is 7.2% higher than what was seen in August of 2010 as reported by estimates by the Census Bureau.

Total sales for the period of June through August 2011 were up 7.9% from the same time a year ago. Retail trade sales were up 0.1% from July 2011 and 7.5% higher than last year. Gasoline station sales were up 20.8% t from August 2010 and non-store retailer’s sales were up 10.4% over last year.

The Consumer Price Index for All Urban Consumers rose 0.4% in the month of August, as reported by the Bureau of Labor Statistics. The seasonally adjusted rose in the “all items” index was broad-based, with continuing raise in the indexes for gasoline, food, shelter and apparel. The gasoline index increased for the 12th time in the last 14 months which led to a 1.2% rise in the energy index, while the food index increased 0.5%, which is the largest increase seen since the month of March.

The Bureau reported the Producer Price Index for finished goods was unchanged in the month of August. A 1.1% rise in finished consumer foods prices and a 0.1% advance in the index for finished goods less foods and energy offset a 1.0% fall in prices for finished energy goods.

The Producer Price Index for intermediate materials, supplies, and components declined 0.5% in the month of August, the first decrease since the month of July 2010. The Producer Price Index for crude materials for further processing rose 0.2% in the month of August.

First unemployment claims was at 428,000 for the week that ended on Sept 10, a rise of 11,000 from the prior week’s revised figure of 417,000, according to the Employment and Training Administration. The four-week moving average was 419,500, a rise of 4,000 from the previous week’s average of 415,500.

Insured unemployed workers during the week that ended on September 3 were 3,726,000, a decline of 12,000 from the prior week’s level of 3,738,000. The four-week moving average was 3,741,000, a rise of 1,250 from the prior week’s average of 3,739,750.

Upcoming financial news
August construction starts
Building permit totals
Existing homes sales for august
Initial jobless claims data for last week
Leading economic indicators report for August

The new guides combine all of the multifamily program changes along with guidance such as FAQ, mortgagee letters, and notices all in one document. This information was at times hard for lenders to collect and even staff members at HUD had trouble finding. The guide will also provide precise clarity around affordable housing transactions, which is an area that has been neglected in other versions or guides.

In theory, the time it takes to process could improve via using the new guide due to the fact that lenders and HUD staff will not have to spend as much time debating on what is allowed along with saving time on research. On the other hand, do not expect this to be a fast answer to the problem as the business that has flooded in over the last year still has to be gone through which will take some time.

Phil Melton, managing director at New York–based MAP lender Centerline Capital Group stated, “The long-term effect of the MAP changes will be really beneficial,” and went on to say, “But you still have a short-term issue that’s going to take some time to play itself out. You still have to get through the current logjam.”

Turn around times are seeing improvements, however, they are still not quick. A new construction loan via a Sec. 221(d) (4) program can still take up to a year, while a refinance or acquisition loan via a Sec. 223(f) program can take between seven to nine months.

Of course, the timeline will vary according to the program as well as the HUD office you are using. A few offices such as the one in Columbus, Ohio states their turn around for Sec. 223(f) applications is 60 days.

This can be confusing once again as the definition of days was also changed in the new guide. The agency now guarantees a pre-application review of 45 days for Sec. 221(d) (4) loans with another 45-day review of the firm commitment application. Prior to this new guide, calendar days were used but now they are measured in business days, which make the time line longer.

Even with these days outlined in the new guide, the idea is of course the best practice but they are not reality.

Ed Tellings, FHA chief underwriter at Columbus, Ohio–based MAP lender Red Mortgage Capital stated, “To be honest, I don’t think many offices at this point, given their staffing and resources, can meet the time frames that are established,” and went on to say, “It’s a little better now than it was six months ago, and that has a lot to do with HUD getting through that volume of business they received last September.”

The current loans being processed are from last September. The loan changes by the FHA were changed in July of 2001 to make them less generous for market-rate deals while debt service coverage went up, and leverage went down. The deals were sent prior to September 1, 2010, which was placed in under the previous generous terms, which buried the agency in more paperwork and of course more volume.

What this did was cause the FHA to become a victim of their own guidelines. During the last fiscal year, the FHA processed a record $10.4 billion in multifamily deals, which surpassed in August, with more than a month left to go in the 2011 fiscal year.

The capital markets are improving and more lending options are slowly becoming available, several borrowers still think waiting on FHA is the best way to go. Sec. 221(d) (4) deals are quoted under 5 percent, which is an awesome rate for a 40-year, non-recourse money that can go up to 83.3 percent leverage on market-rate deals. While a Sec. 223(f) deal for a refinance or acquisition are currently being quoted in the low–4 percent range.

The FHA has made other improvements to keep it all moving. The FHA will refund the fee for an application that has not been gotten to yet while some of its overwhelmed offices, like in San Francisco, are sending their workload to less-overwhelmed offices, like Phoenix, Arizona. The FHA also overhauled its loan closing a document that has not been done in the last 20 years, regulating underwriting and narrative templates and streamlining the process.

Lenders are delighted with how the new MAP guide turned out and congratulate the HUD multifamily team, in particular Chris Tawa, Dan Sullivan, and Janet Golrick, for delivering on their promise.

Tellings stated, “By providing clear guidance, it should allow people to move quicker on those issues where HUD offices and lenders get hung up,” and went on to say, “HUD’s done a really good job of taking a lot of questions and issues and putting them all in one place.”

American Home Shield has prepared a list of tips to help families prepare their homes for autumn and winter, which includes maintaining your heating unit and plumbing system before those temperatures drop down to freezing.

To get your heating system ready:

Your heating system should be inspected and cleaned by a professional
If you have furniture over the vents in the floor, it is time to move them so you can receive clear air flow.
Check your air filters, clean or change as needed.
Before doing any type of maintenance, read the manufacturer’s recommendations. If you do not have the owners guide any longer, you can always find it online.
Do a test run. Do not wait until the temperature is cold outside, do a test run. Turn on the heat and let it run for thirty minutes and listen for strange or unusual sounds or noises while making sure it is working correctly.

To get the plumbing system ready:
Insulate all pipes that may be prone to freezing like those that are close to an outside wall, exposed pipes such as an outside faucet, or any pipes that are found in unheated areas of your home.
Make sure your water meter box’s lid is closed to stop the meter from freezing.
Know where the master shut off valve is located so you can turn off the water in the event of a leak or if a water line breaks.
Use electric heat tape or even insulation on any pipes in crawl spaces or outdoors to stop them from freezing.

Dave Quandt, Senior VP of Field Services for American Home Shield stated, “Plumbing and heating systems are like any other machinery; they require some basic maintenance to keep them functioning properly.”

“Unfortunately, if regular maintenance doesn’t take place and a system or appliance fails, it’s usually at the time of need and you’re left with a crisis which can require a quick and more expensive decision.”

Copyright© 2011 RISMedia, the Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Short sales are transactions in which borrowers owe more on their mortgages than their homes are worth, known as underwater, where the lending company agrees to a discounted payoff. In San Diego County 18.7% of the home resale market for the month in June was short sales, which is up from 2% we saw five years ago, states local real estate tracker DataQuick.

Short sales are growing, however, the process of the closing take time, is uncertain, and changes all the time, which can hinder interested parties.

Kurt Wannebo, a San Diego broker that has over 6 years of experience in short sales stated, “Short sales are changing all the time,” and went on to say, “The banks change their processes all the time … and there are new laws and new short-sale government programs.”

A new state law that was signed in July is meant to help protect short sellers may make the process even longer, more uncertain, and cost the seller more.

Who should use a short sell?

In most cases, those that opt for a short sell are ones that can no longer afford their mortgage and want to walk away as their investment is no longer there.

Shelia Brady and her husband purchased a condo in Rolando for $285,000 in 2004; the condo is now in escrow being sold as a short sale for $120,000. The couple not only lost value but also was behind on their house payment due to surgery that stopped her from working for 2 ½ months while her husband has been unemployed for 2 years.

Why would this couple use a short sell instead of letting the foreclosure process take over?

“You have such a strong moral obligation toward your mortgage,” Brady said. “You sign a document saying, ‘I will do this.’ ”

Greg Ives, 33, purchased a downtown San Diego condo at the Hard Rock Hotel to be used as a rental investment for $405,000. The value on the property depreciated and the amount he could charge for rent depreciated. Once he paid his mortgage, he found he was $1,000 under for several months. He filed for a secure loan modification but was denied, he then decided on a short sale. After five long months, the deal closed. He still owes the lending company and will have to pay $340 per month for the next ten years. He stated that his best option was a short sale. “I’m grateful to be done with it,” Ives said.

For any questions regarding selling your property via a short sale or if you are interested in a buying a short sale property, contact one of our expert real estate agents in the San Diego area.

She stated, “When you have an open house in La Mesa, you have a lot of people coming by, but it has to be priced right. People are still looking for a deal. Many of the people looking, grew up here, now have families and want to come back.”

Homes close by the Village are selling faster than other areas but to many this is not a huge surprise. The homes are normally smaller and when it comes to price, they are in the first tier. Aaron M. Kerper, a La Mesa Realtor with Prudential California Realty, as well as the current president of the East San Diego County Board of Realtors stated this signifies a “seller’s market.”

Those are certainly words we have not heard in a long time. Aaron Kerper explains the reason he is stating it is a sellers market after going over the graphs, charts, and statistics.

Kerper explanation, “With respect to La Mesa (zip codes 91941 and 91942), we actually have several different markets operating within those zip codes, depending on the price-point and the type of home being offered.” “Looking at the last two years, it’s a seller’s market in the under $400K market. Homes are selling at close to asking price—with prices up 5.1% in June over the same month two years ago, up 1.6% year over year.” “Lenders are now agreeing to do short sales and banks are putting their homes on the market. There are 25% more homes on the market, 65% more in escrow and 70% more sold than two years ago. Property is moving through the pipeline at this price point.”

One house that is being held open by Jeanne Koopman in North Mesa is one of the largest in the community at 2550 square feet. The home has been on the market for one hundred days listed for $375,000. This is a traditional sale. The home owners selling the home are in the middle of a divorce and are motivated sellers. Koopman believes the home will sell, but it will take more time. The home needs a few repairs and is the largest home in the area.

When you have six months of inventory on the market is it considered a “market in the balance.” At the price range there are 2.6 months of inventory which definitely shows a sellers market.

Kerper teaches real estate courses at Grossmont/Cuyamaca and Southwestern Colleges takes a different look at the stats a more academic view. “Looking at the history is very important. Unlike the stock market, you have to be willing to look it at over a span of time. There are more properties on the market in the last few months than there were two years ago. Two years ago, there was a lot of uncertainty or fear. People were hunkering down and people in distress couldn’t get their properties on the market.” Basically,” Kerper stated, “the market has corrected itself. Sellers are putting their homes on the market at realistic prices.”

In the La Mesa area, more homes are coming to the market in the $400K to $800K price range. Banks are working with buyers for foreclosures and short sales. However, with more than 6 months of inventory and a large difference between the list prices and the selling price it makes the area a buyers market in this price range.

“This has been a very hard-hit group. There are not first-time buyers in this price range. These buyers are more particular—looking for a “wow” factor—their move is more a “want” than a “need.” But what’s important for sellers to know is that the market is still moving,”

A restored historic Craftsman home listed by Jill Smith of Leonard Smith Associates one block from the Village is listed for $449,000, which is the low end of the tier. This home has been on the market two months. The home owners have been renting the home out for the last year. As soon as the tenants gave notice, they were moving the home owners but the home on the market. The home is in excellent condition with a separate workshop and parking in the alley.

“There are definitely more people out there looking,” he says. “But it’s the banks that are holding us up.”

Kerper added, “Availability of credit is important. As you go up in price, the market tightens. If jumbo loans are not available or offered only at high interest rates, that means significant down payments are being required. So it’s a different picture for homes in the $400K to $800K price point.”

Across the hill, a traditional sale listed by Peg and Tom Keeley of Keller Williams with homeowners that really do not wish to move but are looking to downsize. The homeowners are wanting to not only downside but also move closer to their daughter living in North County.

She explains the downstairs could be converted to a “granny flat.” It is a basement that has a separate entrance, private bath, along with fireplace. The value range is $619,900 to $639,900, which is in the 2nd tier pricing. The home has been on the market a little over 2 months.

“More buyers are coming out, but the sales are still pretty stagnant. He points out that the maximum amount FHA will loan is coming down to $540K in October. This could help spur the sale of this home.”

Mark and Joy Berner, real estate agents with Century 21 Award, have a home listing with a prominent Russell Road address on Mt. Helix for $995,000. The floor plan was created by the owners with entertaining guests in mind. A few of the furnishings are a bit dated since it was built in 1962 however, the floor-to-ceiling windows offer breath taking views.

“At the upper end, things are still pretty slow,” Joy Berner stated. During open houses, the home is getting quite a bit of traffic. If this home had been on the market a few years back it would have been a bidding war. Today, the home has been on the market close to 100 days and has been in escrow once, but it fell through.

Aaron Kerper corroborates the depressed state seen at the higher end of the market with homes in the price of $800K to $1.5 million.

“There was a period three months earlier this year when no homes in this price point sold. There has been a tremendous fluctuation in home prices at this end of the market. Currently there is a one-year inventory of these homes, and even though that is less than last year, it most certainly is a ‘buyer’s market’ in this price range. If you compare it to 2004-05, prices between $1.5 million and $3 million don’t exist anymore.”

Attached homes in La Mesa are mainly priced around $50K to $249K, and according to Kerper priced at this lower price point, which represents a “seller’s market.” The number of attached homes that are for sale, pending, and sold increased last month. The number of units on the market increase by 155 percent over 2009 but there is only 3.8% inventory. “People gravitate towards these because they’re affordable,” says Kerper.

The real estate market in La Mesa may not be coming back strong, but we are seeing a sellers market in two different segments, which are under-$400K single-family homes and attached homes. Sales are still slow and prices more open to discussion in the $500K+ range.

Kerper stated, “I am a third-generation real estate broker. When my family came here, La Mesa was the first place they settled. My grandfather built his first home here. One of my grandmothers still lives here on Severin Drive. Although I work all over, I concentrate my business in East County. I’ve been with the Prudential office in La Mesa for 11 years.” “La Mesa remains a place that people seek out and find desirable—East County’s finest community.”

The monthly composite index of manufacturing activity report from the Institute for Supply Management showed a fall to 50.9 in the month of July after seeing a 55.3 reading in the month of June. Any reading that is above 50 shows expansion. This was the 24th month in a row of expansion.

The monthly composite index of non-manufacturing activity as reported by the Institute for Supply Management decreased to 52.7 in the month of July from the figure of 53.3 seen in the month of June. This was the 19th month in a row for seeing expansion in the services sector.

An increase in total construction rose 0.2 percent to bring the amount to $772.3 billion in the month of June, after seeing a gain of 0.3 percent in the month of May. Economists believed there would an increase of 0.1 percent in the month of June.

Factory orders dropped 0.8 percent in the month June to a seasonally adjusted $440.7 billion, after seeing a 0.6 percent increase in the month of May. Not including the volatile transportation sector, orders increased 0.1 percent in the month of June.

The seasonally adjusted composite index of mortgage applications according to the Mortgage Bankers Association increased 7.1 percent for the week that ended on July 29, refinancing applications rose 7.8 percent, and purchase volume increased 5.1 percent.

First claims for unemployment benefits decreased by 1,000 to 400,000 for the week that ended on July 30, continuing claims for the week that ended on July 23 increased by 10,000 to 3.7 million. The monthly unemployment rate decreased to 9.1 percent in the month of July from the figure of 9.2 percent in the month of June.

Forward Look at the Economic Calendar
August 10 – wholesale trade on August 10
August 11 – international trade
August 12 – retail sales