Mortgage rates sink to record low

By Holden Lewis • Bankrate.com

With mortgage rates near record lows, this is a swell time to refinance as long as you’re a fan of “I Love Lucy,” because “you’ll have some ‘splaining to do.”

The benchmark 30-year fixed-rate mortgage fell 3 basis points this week, to a record low 4.29 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.41 discount and origination points. One year ago, the mortgage index was 4.5 percent; four weeks ago, it was 4.41 percent.

The benchmark 15-year fixed-rate mortgage fell 2 basis points, to 3.42 percent. The benchmark 5/1 adjustable-rate mortgage fell 2 basis points, to 3.05 percent, and the benchmark 30-year, fixed-rate jumbo rose 2 basis points, to 4.85 percent.

Bankrate began gathering weekly mortgage rate data 26 years ago, on Sept. 25, 1985. This week’s benchmark rates on the 30-year fixed, 15-year fixed and 5/1 ARM are record lows since that time. The previous records had been set the week before.

Sunset Bridge 14-Day Reconstruction Closures and Detours Starts Friday – Get ready

Head’s up….

Starting Friday, September 30, 2011 the EB Sunset Bl to SB 405 on ramp
will be closed 24/7 for intersection reconstruction. The traveling public
should anticipate delays and is encouraged to plan ahead when traveling
through an active construction zone. For additional information please
see attached notice.

I-405 Sepulveda Pass Improvements Project
Metro Community Relations – Sunset Segment

Cultural Event at The Grove

Councilman Tom LaBonge and the City of Los Angeles will celebrate the 55th anniversary of America’s Sister Cities program with “SISTER CITIES CULTURAL DAY AT THE GROVE” on SUNDAY, AUGUST 21, from 1pm to 5pm at THE GROVE AT FARMERS MARKET.
Over 50 musicians, dancers, drummers, and singers from eight of the twenty-five Los Angeles Sister Cities will perform for free on the stage in The Grove’s outdoor park.
Participating cities include Beirut, Lebanon; Berlin, Germany; Eilat, Israel; Guangzhou, China; Jakarta, Indonesia; Lusaka, Zambia, Mumbai, India; and Taipei, Taiwan.

Sunday, August 21, 2011
1pm to 5pm
The Grove at Farmer’s Market
Fairfax & 3rd Street
Free Admission.

Cultural Day at The Grove

Open House Hollywood Home – Sunday 4/3 2-5pm

1633 North CURSON Avenue, Los Angeles, CA 90046

3BR/2BA gated remodeled California Craftsman in highly desirable area of the Hollywood foothills. Formal dining room, vaulted ceiling and fireplace in living room. Gorgeous newer chef’s kitchen with beautiful custom cabinetry, marble counters and attached family room. Bonus room that can be used as separate guest/maids quarters or office. Amenities include hardwood floors, wood moldings, built-ins, and updated bathrooms. Beautiful landscaping throughout the property, lovely outdoor patio area with vine Pergola great for outdoor dining and entertaining. 2 car garage + carport. 1ST OPEN HOUSE – SUNDAY 2PM TO 5PM

For more details on the house please visit: www.HouseOnTheHils.com

Search for Homes

www.HouseOnTheHills.com

West Hollywood Art Deco Open Sunday 1/9/11 from 1-4pm

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1151 N Fuller Ave #3 – Client Detail

The Rollercoaster Real Estate Decade

PARSIPPANY, NJ-Call them the naughty aughties, the owing aughties or some other phrase, the decade just concluding has been a turbulent one for anyone in the property business, says “Commercial Real Estate in the 21st Century,” a report by Coldwell Banker Commercial.

The decade began with steadily rising prices, followed by two years of a major decline. As the decade turns, however, real estate is back on a cautious upswing. “It is becoming a solid investment class once again,” says Fred Schmidt, president and COO of CBC.

Technology was a running factor throughout the decade. The dot-com bubble that fueled office space growth prior to 2000 burst early that year, leaving data centers and offices vacant, the report notes. By 2004, the survivors had moved into good space, and another round of tech-related expansion was under way. The need for data center space has continued to grow, as “cloud data” from sites including Google, YouTube and Twitter requires storage.

The middle of the decade, from 2005 to 2007, the report said, can be called “prosperous times across all property types–sales were up, vacancies were down, cap rates were at historic lows and rents were rising. Development was fast paced–construction and other bridge financing was readily available and inexpensive—and the market was enjoying quite a ride,” it noted.

This came to a halt in 2008, when unemployment rose, housing prices fell, and homeowners began defaulting on risky mortgages. Lending ceased as banks struggled and failed and the securitization market for commercial mortgages collapsed. Office sales in 2008 were down 70% from the previous year, and vacancy rates in 2009 reached 15-year highs. Unemployment will remain a factor in the office sector. Yet compared with the downturn of the early 1990s, “we’re not overbuilt,” Schmidt says.

Retail transactions also suffered after focusing for much of the decade on secondary markets such as Pittsburgh, Orlando, Denver and Salt Lake City. After the collapse, the bulk of the activity was in small single-tenant deals. While transactions did pick up by the end of 2009, vacancy rates remain high, largely as shoppers look increasingly to the Internet to shop.

“Retail is probably the most interesting one to discuss,” Schmidt says. The hottest sector 15 or 20 years ago, he notes, retail may now be affected by a seismic shift in its operations as the Internet continues to gain power as buying vehicle. “How does it manifest itself? We don’t know yet,” he says. It does create an opportunity, however, the report says. It isn’t all bad news though. Internet retailers now use more warehouse space.

Multifamily, too, had its ups and downs. Early in the decade, secondary markets flourished, with sales volumes doubling in some areas. During the credit crunch, this sector held up best. And multifamily will be propelled by the young adults forming their first households. Schmidt says.

As 2010 progressed, the market was coming back. Financing was returning, as CMBS issuances increased. Shoppers began returning to the stores in the spring, fueling hopes of a retail revival. “The market is gradually correcting,” Schmidt says. “Right now is a good opportunity to buy commercial real estate.”

The Realities of Real Estate: Looking at the list price

By BOB and DONNA McWILLIAMS
Capital Gazette Communications
Published 12/05/10

Beyond this starting point, there are other considerations you should be mindful of when deciding on a list price. Your list price can affect the marketability of your house in ways that aren’t readily apparent on the surface. From a buyer’s standpoint, the list price can provide some insight regarding the seller’s mindset with respect to perceived value, as well as how that seller might respond in price negotiations. Additionally, the list price can also have a significant impact on how often the house is shown and how buyers react to the property once they come to take a look. More specifically, here are some other issues to consider in determining your list price.

Relationship to market value: The spread between what your list price and what the house is actually worth (market value) sends a signal to buyers and their agents. When we see a house listed for significantly more than market value, it usually indicates one or more problems with the seller. At times, the seller may have borrowed a lot against the house or paid a high price for the home and is attempting to recover their investment. Or, the seller may simply have an unrealistic idea of what their house is worth. Either way, asking more for a house doesn’t make it worth more. Sellers in these situations can be difficult to negotiate with and may be unwilling or even unable to come down in price. So if you select a list price that is a good bit above market value, know that it will send a negative signal to buyers. Some sellers say, “They can always make an offer,” but in reality, buyers won’t make an offer. Instead, they’ll just wait you out, looking for a big reduction in the list price. Making some negotiating room is reasonable these days. However, at a certain point, a high list price will just leave you dead in the water.

The importance of price points: As you might expect, the pool of potential buyers is reduced as you move up the scale on house prices. And, there are certain price points that can noticeably change the number of buyers who will consider looking at your property. When people search for houses on the Internet or set in their mind how much they’re willing to spend, there are certain numbers they designate as a cutoff point. For example, $500,000 and $1,000,000 are significant price points for homes in our area. Since January 1, 2010, there were 150 detached homes sold in Anne Arundel County that were priced between $750,000 and $999,999. But once you go over that magical million dollar mark, the number of homes sold drops dramatically. For those homes priced between $1,000,000 and $1,249,000, only 27 were sold during the same period. The same big drop-off occurs for houses priced just above $500,000.

Part of this is driven by buyers who see these numbers as common self-imposed limits, but it is also the result of how homes are financed. In this area, mortgages exceeding $417,000 can result in what’s called a non-conforming loan. This means the interest rate will be a bit higher, usually around an eighth of a point. That’s not a lot, and it’ll result in the difference of just a few bucks a month on your mortgage payment, but it can be a barrier for some buyers. And, if you want to borrow a million dollars or more, the banks really get strict. The enhanced pat down at the airport is nothing compared to what lenders will put you through to get one of those big loans.

So when selecting a list price, be aware that going just over a major price point, like $500,000 or $1,000,000 can be risky. If the market value of your house is on one side of these price points and you put your list price on the other side, you may not even show up on the radar screen for someone who may be willing to make you a good offer. There can be some exceptions, like if you’re a little uncertain about the true market value, or you have some time to sell; but generally, violating one of these price points without the value to back it up will make for a tough sale. If you’re thinking about pricing your house at $505,000, you’ll almost certainly get more for your house and sell it quicker if you start out at $499,000.

Buyer expectations: The list price is also important in that it sets up certain expectations for buyers who come to look at the house. In most cases, people who go into houses above $750,000 or so anticipate finding things like granite counters, stainless appliances and a number of other features commonly found in higher priced homes. Sometimes other amenities or the location of a property can compensate for that lack of granite in the kitchen. The last thing you want to do is disappoint the buyer. You want them to walk through the door and say, “For the money, this place is a little better than I expected it to be.” Especially in today’s market, where buyers are still in the driver’s seat, you don’t want to be the house that’s a letdown. If your house doesn’t have the same qualities of other houses listed in a similar price range, then be sure you’ve got a very legitimate and obvious reason for running with the big dogs. For example, if you’ve got lime green Formica counters and harvest gold appliances but five feet of water at your pier, that might make your house worth the same as or even more than one with granite and stainless but only two feet at the pier. An experienced agent can help you determine if you’re accurately estimating the trade of one feature for another.

In sum, the list price you select is much more than just a number that signifies what you’re willing to take for the house. In the end, most homes sell pretty close to their market value. But the list price you start off with can help you or hurt you. If you pick the right number up front, even if it’s lower than you think it should be, the end result could be a higher number than you expected in the final sales price.
A graph to accompany this column can be viewed at 101205realities

Housing: Stuck and Staying Stuck

Inventories of Unsold Homes Are Swollen, but Anticipation of Further Price Declines Makes Buyers Scarce.

By NICK TIMIRAOS And SARA MURRAY

For months, home buyers and sellers have been stuck in a curious stalemate, with sellers reluctant to lower prices and buyers staying on the sidelines.

New data suggest the standoff eased slightly last month, as sales of existing, or previously owned, homes rose 7.6% from July’s extremely low levels, according to figures released Thursday by the National Association of Realtors.
But while the housing market may have halted a slide that began in April after federal home-buyer tax credits expired, it still faces a long recovery, and buyers remain scarce. The August figures were the lowest for any month since 1997 except for July.

And while the number of unsold homes fell 0.6% in August to 3.98 million, it would still take 11.6 months at the current sales pace to clear the inventory. That’s the second highest figure since the realtors’ group began tracking the data in 1999, behind July’s 12.5 months.

“The only way to sell a home in this environment is to drop the price,” said John Burns, a housing consultant based in Irvine, Calif.

The housing numbers have prompted a debate among economists about how much further prices need to fall to resuscitate sales. Home prices are likely to fall another 2.2% this year, according to the consensus estimate of 114 economists and housing analysts surveyed this month by MacroMarkets LLC, a provider of hedging products.

The picture varies from region to region. Home prices in several Florida and Nevada markets are likely to fall at least another 5%, while parts of Texas and Oklahoma could post modest gains over the next year, said Eric Fox, vice president of statistical and economic modeling at Veros, a real-estate analytics firm in Santa Ana, Calif.

Nationally, prices in July fell by 0.5% on a seasonally adjusted basis following a 1.2% decline in June, according to figures this week from the Federal Housing Finance Agency. The S&P/Case-Shiller home-price index issues its report on July prices next week. Consequently, sellers face a difficult decision: get off the market or cut the price. Sonja Brisson decided to get out. After listing her home for three months, she began interviewing prospective renters on Tuesday. Ms. Brisson, who is moving to live with her fiancé, will lose money renting her Seattle town home, but said it was better than competing with distressed sales going for 30% less than what she paid for her property.

Renting the home is “just a total crapshoot,” she said. “Nobody saw this coming, and nobody can see the end of it.”

Weak demand in the housing market comes amid other signs that the economy is improving, but at a painfully slow pace. An index of leading economic indicators, which aims to help predict where the economy is headed, rose 0.3% in August after increasing 0.1% in July, the Conference Board said Thursday.

Much of the lingering weakness in demand is linked to sluggish improvement in the job market. Some 465,000 people filed new claims for jobless benefits last week, up 12,000 from the week before, the Labor Department said Thursday.

Without jobs, families are still relying on tactics they employed during the recession—such as households doubling up—to make ends meet. That’s pulling down demand for housing and, in turn, prices and construction.
“As those jobs get created, people who have been doubling up will start moving out of those homes and demand will pick up,” said Patrick Newport, an IHS Global Insight economist. “As that happens—it’s going to happen very slowly—the glut will start coming down.”

The weak economy is just one reason why buyer psychology remains depressed. The housing market also faces a “shadow inventory” of four to five million potential foreclosures that have not yet come to market but could put pressure on prices if they do.

“Why do you rush out today to buy something when you think there are going to be millions more for sale soon,” said Michael Feder, chief executive of real-estate data firm Radar Logic Inc. The question, he said, is “how much lower do prices have to go to attract the buyers?”

Even investors, who have been active over the past year buying homes at what they believed were big discounts, are pulling back. “They think everything will be cheaper next year,” said Mr. Burns.

As prices fall, more sellers could find themselves in Patrick Minton’s shoes. He’s already dropped the price on his Seattle home to $400,000, which is less than what he owes. He’ll already have to pay transaction costs out of pocket.

Jobless Claims Increase

The home hasn’t received any offers, and he isn’t willing to cut the price any more unless his bank agrees to a short sale. Mr. Minton, a 42-year-old software developer, listed his home in July after getting divorced and said he’d stay if the bank would let him refinance at current rates. “It’s not the bank’s fault that the house isn’t worth what I paid for it, but unforeseen things have forced me into this position,” said While 11 million borrowers are underwater, or owe more than their homes are worth, another 2.5 million will join them if prices decline just another 5%, according to CoreLogic Inc., a real-estate analytics firm.

“They’re between a rock and a hard place,” said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage that operates in nine states. “They’d capitulate if the bank would let them.”

Leading Indicators Rise

That is suffocating the market because those sellers are also would-be buyers. “Right now, we have investors and first-timers in control of the market, and until that changes, we will never be on the mend,” said Mark Hanson, an independent housing analyst in Menlo Park, Calif.

The housing market will eventually need more buyers like Robert Gifford, who spent six months with his wife scouring their Beacon Hill neighborhood in southeast Seattle before pulling the trigger on a sale in July.

When it came time to sell their smaller home this month, they didn’t dawdle. They cut the listing price by around 10% to $334,000, and it quickly went to contract.

“We didn’t want to become an involuntary landlord,” said the 31-year-old engineer.

Surprise! Banks help more homeowners than Obama

By Tami Luhby, senior writerAugust 30, 2010: 7:15 AM ET

NEW YORK (CNNMoney.com) — Remember how everyone complained that banks weren’t doing enough to help troubled borrowers?

Well …

Banks have realized that foreclosing on home after home after home may not be in anyone’s best interest — least of all their own. So they’ve ramped up the number of loan modifications they’re handing out to their delinquent clients.

Banks are doing nearly twice as many modifications under their own foreclosure prevention initiatives than under the Obama administration’s signature Home Affordable Modification Program, known as HAMP.

But before homeowners rejoice, they should take a close look at the terms of their bank modification offers, consumer advocates say. Many may not be as good as HAMP, which lowers monthly payments to 31% of pre-tax income.

“We don’t know if they are sustainable based on the monthly payment,” said John Snyder, manager of foreclosure prevention programs at NeighborWorks America, adding banks don’t release a lot of information about their modifications. “We’re not sure what to think.”
Reducing interest and principal

Banks have long come under fire not doing enough to help troubled homeowners, particularly when the mortgage crisis started spinning out of control in 2007. Many loan servicers initially addressed the problem by tacking on the missed payments, which only increased strapped homeowners’ monthly burden.
Best recovery bets: 7 cities on the mend

More recently, however, banks have trumpeted their in-house efforts to stem the foreclosure tidal wave. They are calling more attention to their own programs at a time when the president’s plan is being widely panned for its ineffectiveness.

Servicers completed nearly 644,000 so-called “proprietary permanent modifications” in the first half of this year, compared to 332,000 such adjustments made under the Obama program, according to Hope Now, a consortium of mortgage servicers, investors and housing counselors.

About half of borrowers who don’t land a permanent HAMP modification are given an in-house adjustment, according to federal statistics.

“The vast majority of modifications getting done are happening outside of HAMP,” Mike Heid, co-president of Wells Fargo Home Mortgage, told a House of Representatives panel in June.

At the hearing, bank executives credited the president’s plan with setting an industry standard for loan modifications. But they told lawmakers that their own programs have helped far more people.

About 78% of banks’ in-house modifications involved interest rate and principal reductions, Hope Now found.

Housing advocates are increasingly calling on banks to reduce principal because many homeowners owe so much more on thier mortgages than their home are worth. Banks have been loathe to cut loan balances, and virtually no government-subsidized modifications involve this step, in large part because Fannie Mae and Freddie Mac do not allow it. The two mortgage finance giants guarantee many of the loans eligible under HAMP.

Outside of the Obama plan, however, banks have started to warm to principal reductions.

Wells Fargo, for instance, said last week it has reduced more than $3.1 billion in principal on nearly 60,000 loan modifications in the past 18 months. It uses a combination of principal adjustments, interest rate reductions and term extensions to assist its borrowers, the bank said.
Not the same

Unlike the Obama program, however, bank modifications can vary widely and few details are available about them. Housing counselors say they have heard of some with unfavorable terms.
Calculator: How much is your house worth?

Ida Ward was none too pleased with the permanent modification offer she received last month.

The Atlanta middle school teacher had called her mortgage servicer in the spring of 2009 after seeing her income drop considerably. She was enrolled in a trial HAMP modification, which reduced her monthly payments to $1,424, down from $2,430.

After more than a year in the trial period, Ward received a final loan modification agreement. But she soon realized she had been shifted from the president’s program to an in-house Chase modification with “horrible” terms. Her loan was being amortized over 40 years at a 5% interest rate with a $197,500 balloon payment due at the end. She must now pay a little more than $2,000 a month.

“These banks should be ashamed of the terms that they are giving to borrowers,” said Ward, who said she had no choice but to accept the offer. “The loan modification process is flawed and deceptive to borrowers.”

A Chase spokeswoman said that Ward did not meet the qualifications for a HAMP modification, but the bank was able to give her an adjustment that it believes will allow her to keep her home. To top of page