Tag Archives: lending

Is Orange County’s Housing Market Turning A Corner?

ImagePerhaps it’s a nervous tic left from the ugly housing collapse, but considering the remarkable Orange County rebound – a surge in homebuying and pricing that literally nobody forecast – I’m perplexed as to why a mild midwinter cooling has heightened anxiety among numerous real estate pros.

Some of the supposed worry spots in the latest Orange County Housing Report by market watcher Steve Thomas don’t concern me at all. For instance, you’ll see that his estimate of the time to sell a home – new listings divided by new escrows – has doubled in a year. But the current “market time” pace of two months is still a sign of a hot market.

As for a 15 percent drop in new escrows, that just shows how last year’s ultra-tight inventory forced many shoppers to act quickly – perhaps foolishly, in hindsight – as they feared missing out on a quickly warming market.

A 67 percent increase in Orange County inventory for sale also isn’t a huge concern to me. It’s actually to be expected when home supply a year ago was essentially nil. Homes to buy were so rare that they were selling as soon, if not before, they hit brokers’ listing services. And a growing supply can actually lure shoppers back to the game. Many frustrated home seekers stopped looking after numerous failures in multiple-bidding wars.

What does worry me some about our move toward more “normal” homebuying conditions is this:

• Orange County homes on the market, as of Feb. 27, were 5,403 – up 2,166 in a year.

• Vacant homes on the Orange County market, typically a marker for sales by a third-party owner or a motivated seller, were 29 percent of all listings this month versus 14 percent a year ago. What could explain the year’s roughly 1,000-residence jump in vacant homes for sale?

• Don’t blame the lenders. Troubled Orange County properties for sale – foreclosures from banks or short sales requiring bank approval – were just 255 at the end of last month. That’s 19 less than a year ago.

• About half of the surge in the supply of Orange County homes for sale is linked to vacant homes not tied to lending issues.

Add that up, and it’s a clear sign that investors, many of whom bought Orange County homes at a deeply discounted prices in recent years, are ready to cash in.

The Orange County real estate agents that analyst Thomas talks to say higher asking prices have put off many local house shoppers. That helps explain the recent slowdown in deal-making.

Sellers were getting away with pricing homes above recent comparable sales, Thomas says. “But buyers no longer want to pay more than what’s fair.”

Thomas adds that this surge in investor listings is more evidence that last year’s jump in prices was a bit overdone, “and says that there’s not a lot of appreciation left.”

To be fair, investor actions should not be seen instantly as a market problem. For example, their buying fever help propel the Orange County recovery to an unforeseen velocity last year.

But an investor rush to cash out might pose a significant hurdle for the market’s progress. If demand remains sluggish, will these owners discount their asking prices to prune their holdings, thus quickening an expected cooling of the appreciation pace?

Even if these absentee owners do sell, what do they do with their profits?

If those dollars leave real estate, or the region, the market doesn’t get the “move up” benefit of a typical homeowner sale – that is, a seller then turns into a new buyer.

Forget eyeballing the Federal Reserve or mortgage rates; any increase in borrowing costs will be offset by lenders’ increased willingness to lend. Don’t worry about the local job market, another creator of new house seekers. It will do swell in 2014.

Keep an eye on what the savvy investors who got in low will do next. If they exert great selling pressure, it could be a losing scenario for Orange County housing.

Contact the writer: 949-777-6727 or

Contact the writer: jlansner@ocregister.com

Foreclosure – What You Need To Know

After just closing another short sale transaction in Anaheim a few things came to mind. There are things that we often don’t say enough as real estate experts that are well versed in foreclosure prevention.

Did you know that many lenders are giving sellers thousands of dollars $$$ in relocation assistance at the close of escrow in a short sale transaction?

We have helped many clients successfully navigate away from foreclosure and have provided many options including loan modification, deed in lieu of foreclosure and short sale. Don’t face foreclosure alone! We are here to help and there is NO obligation.

Even if you’re not in foreclosure and are just having trouble making ends meat, reach us today to ask any of your real estate, lending or foreclosure questions.

Dustin and Leah Wise
The Wise Team at Keller Williams Realty
714-875-3667 call/text
Dustin@TheWiseTeamOC.com
BRE # 01520106

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Buena Park First-Time Homebuyer Program

The City of Buena Park First-Time Homebuyer Program provides assistance to first-time homebuyers through a deferred 30-year second mortgage loan of up to a maximum of $58,500 at 3% simple interest.  The funds may be used toward the purchase of a single-family home or condominium/townhome in Buena Park.  The borrower must provide a minimum 3% down payment to participate in the program.  This program utilizes CalHome funding and is limited to those at or below 80% of the Area Median Income of Orange County as determined by HUD.  Please review our program guidelines for additional requirements and restrictions.  For more information regarding the program, please see the attached First-Time Homebuyer Program Brochure  

First-Time Homebuyers must submit an application with all required documentation in person.  Program pre-approvals will be given to those who meet the minimum requirements.  This program is administered on a first-come, first serve basis.

Reach us today if you have any additional questions or want to learn more about the home buying process! 

The Wise Team 

(714)698-WISE

Dustin@TheWiseTeamOC.com

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Attention Renters: Home Affordability at All Time High

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The median home price in California is currently $353,190. Based on this (and assuming a 20% down payment) the monthly mortgage plus taxes and insurance would be $1,670. The income needed to qualify for that purchase is $66,940. 

To put that into perspective there are many cities in Orange, Riverside and LA County where $350,000 will buy a 3 bedroom, 2 bathroom single family home.  

We realize that coming up with the down payment is a daunting task. Just know that there are options that allow for 100% financing (through the veterans administration) and as little as 3-3.5% down for Conventional and FHA financing respectively. 

We are here to answer all of your real estate and lending questions. Contact us today for a private consultation to learn more about buying a home and the necessary steps to take to secure your financing. 

The Wise Team

(714)698-WISE call/text

Dustin@TheWiseTeamOC.com

Are Lending Standards Too Tight?

This article made me think back to a time just a few short years ago when lending standards were quite a bit different. In fact, some programs were almost completely FICO score driven, required no income documentation and in some cases required no assets. Fast forward a few years and some would say the standards are not only too tight but are inhibiting the ability for some to buy and further pushing back a real estate recovery. What do you think?

Home ownership affordability is at a record high due to low home prices and all-time low mortgage rates. But housing experts have blamed banks’ tightened lending standards for keeping more buyers on the sidelines because they are unable to qualify for financing.

Lending standards increased sharply after the financial crisis in 2008, and even after the recession ended in 2009. Lenders have yet to ease their stricter standards, according to a report by Goldman Sachs economists Hui Shan and Jari Stehn.

Why? The researchers say it’s mostly because there’s less money available to lend.

“During the housing boom, as brokers produced a flood of new mortgages, Wall Street bankers churned out a torrent of mortgage-backed bonds for investors waiting to snap them up,” an article at MSNBC.com notes, in describing the study’s findings. “That market has all but vanished; 90 percent of new mortgages written today are backed by the government.”

Also, researchers found that lenders are swamped with more paperwork, which is also causing delays in processing. Many lenders have issued stricter documentation requirements before they’ll approve a loan. Nowadays, nearly 90 percent of mortgage applications require “full documentation” before getting approved. From 2000 to 2006, less than 60 percent of applications required “full documentation,” researchers found.

Source: “Tight-Fisted Mortgage Lenders Pressure Home Sales,” MSNBC.com (Jan. 27, 2012)

Editor’s Note: Another reason banks have tightened up their lending is because Fannie Mae and Freddie Mac are requiring banks to repurchase some of the loans they’ve made. As reported by Bloomberg News, banks don’t want to get hit with more mandatory repurchases, so they have added “overlays” (such as minimum downpayment, debt ratio, etc.) to FHA, Fannie, and Freddie standards, and are only making the most conservative loans.

Source = RealtorMag

I do agree with the editor’s note. The threat of potentially having to buy back a non-performing mortgage has caused quite a few lenders to have higher standards (known in the industry as guideline overlays) than what is technically required. Even so qualifying for a mortgage these days isn’t impossible nor nearly as hard as the mainstream media would make it out to be. A phone call to a reputable and trustworthy lender should be your starting point and if you don’t know one we would be happy to give you a referral.

Email Dustin@TheWiseTeamOC.com for more info.