Archive for January, 2008
January 27, 2008
Let’s review: People are walking away from their homes because they can’t afford their mortgages. Consumer debt is at an all-time high. No one is saving any money.
So, in response, our House of Representatives passes a so-called “economic stimulus package.” The provisions that everyone is most excited about are: 1) tax rebates of up to $1,200 per taxpayer; and 2) a hike in the limit for Fannie Mae and Freddie Mac (i.e., government-backed) mortgage loans, from $417,000 to somewhere in the $700,000 range.
Naturally, no one objects to getting a little extra cash, including, it would seem, the media, because virtually all of the news stories have focused on the rebates. Maybe reporters are no better money managers than the rest of America.
Does anyone think these checks are going to be used to pay off bills? No — and, in fact, the government doesn’t want people to. It wants everyone to start spending to “stimulate the economy.” And, according to this story, that’s exactly what folks are planning to do.
And, as millions of people walk away or are forced from their homes because they can’t afford them, what does our wise government decide to do? Why, raise the limits on federally backed mortgages, of course! That way, more people can buy homes they can’t afford. Then, when they walk away from those houses, we taxpayers will be on the hook for them instead of the private sector.
America is a nation of money addicts, and now our government, instead of encouraging prudence and fiscal responsibility, is underwriting further indulgence. Which isn’t surprising, considering that our national debt is $9.2 trillion. Rampant, irresponsible spending is a way of life in our country, and it starts at the top. So no wonder people think it’s OK run up thousands on credit cards and declare bankruptcy, or take out huge mortgages and walk away when they can’t pay them.
Meanwhile, people who try to save money get screwed. A six-month certificate of deposit pays about 4 percent interest right now. And a money-market checking account at Bank of America will earn you — get ready — a whopping one-quarter of one percent in interest.
Maybe the higher limit on federal mortage loans won’t matter anyway, since, realistically, hardly anyone in this country can qualify for a loan of that size. However, that’s not what the National Association of Realtors thinks, as it self-servingly backs a higher loan ceiling.
What we need are 1) lower home prices, 2) more responsible lending, and 3) more restraint on the part of consumers. Since 3) is not going to happen, we’ll need to rely on 1) and 2). Lower home prices should happen organically, simply because people cannot afford homes at their current prices. Once prices come down to more reasonable levels (years from now), let’s hope regulations are in place to prevent the indiscriminate lending of the past.
Recent Redfin posts:
Affordable Housing that Doesn’t Look It
Some Short-Sale Condos in Studio City
January 26, 2008
11438 Moorpark Street. Unit 3
Studio City, CA
Was : N/A Now: $479,500
-1441 Sq.ft
-3 Bedrooms/ 3 bathrooms
MLS# B2101952 (Cut and Paste the MLS # into the Redfin search box)
4216 Ethel Ave, Unit 9
Studio City, CA
Was: N/A Now: $529,000
-1174 Sq.Ft
-2 Bedrooms / 1.5 Baths
-Very up-graded
MLS# F1750127 (Cut and Paste the MLS # into the Redfin search box)
January 26, 2008
It is being discussed that when The President makes his State of The Union address next week, he will ask Congress to vote on increasing the maximum level on conforming loans. The current level is right now, $417,000. According to this news story I am supplying, it might be raised to $625,000. This will mean that a borrower will be able to borrow money for a home loan at a $625,000 amount or lower, and pay the current favorable rates we now are seeing on fixed rates. In my opinion, this is huge. This could change the housing industry here in California by making home loans more affordable to borrowers and significantly reduce the foreclosure rate. Here is the news story for you to read:
WASHINGTON, D.C. - The National Association of Realtors® urged President George W. Bush and Congress to help homeowners and the national economy by loosening constraints on Fannie Mae and Freddie Mac as an integral part of a federal stimulus package.
“We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two government-sponsored enterprises,” said NAR President Dick Gaylor, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost homebuyers’ confidence levels, resulting in increased sales and economic activity.”
NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000. “This change will permit more families to enter the housing market by making more mortgages available with lower interest rates. Increased home sales will lower inventories and immediately start stabilizing the housing market and the economy,” Gaylord said.
In addition, NAR has been actively advocating for quick passage of the Federal Housing Administration Reform bill. A reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and credit crunch. “FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” said Gaylord.
In a letter to congressional leaders, NAR estimated that lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion. An additional NAR report shows that increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.
“This is the quickest way to help the hurting housing market,” said Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars. We strongly urge Congress to take these actions, in any stimulus plan, to stabilize the housing market and protect homeowners.”
January 25, 2008
That’s the goal Mayor Najarian is setting for Glendale’s Doran Street project, which the city is looking to expand to a total of 60 residential units. The plan would incorporate two additional parcels to also include “27,500 square feet of public green space” (yay!) Via the News-Press:
The Craftsman-style project is already well-known in development circles for its groundbreaking use of federal New Market Tax Credits. Glendale and Pasadena pooled about $7.5 million to purchase the tax credits, which they sold to Washington Mutual for a 39%, or $3 million, return — providing the development cash.
Down payment assistance loans of $30,000 are in the works for each affordable unit. If ownership changes hands, the loan is to be paid back for assistance reuse. “The residents that get in there will be lucky,” deems Councilman Dave Weaver, chairman of the Housing Authority.
How do you get in on such luck?
From the developer, Heritage Housing Partner’s website (PDF)—
To be eligible for this program, households must meet the following criteria:
- First time homebuyer (low and moderate income programs only) – participants must not have claimed a deduction for mortgage interest or taxes on real property claimed as a principal residence or held title for a property within the last three years, unless you have been displaced by public action or other qualified exception. Workforce Income buyers can currently or have previously owned property but must intend to occupy the HHP home as a primary residence. Fair Market Income buyers do not have any occupancy or ownership restrictions.
- Income-qualifying – Eligible participants must demonstrate that their total household income falls between the income restrictions defined on each housing development. Properties are typically restricted to a variety of income levels including low, moderate, and workforce income. Heritage Housing also has some homes available on the fair market without income restrictions.
- Qualification for a conventional mortgage – Participants must be able to qualify for an appropriately-sized conventional mortgage. Preference will be given to pre-approvals for affordable mortgage products from the California Housing Finance Agency (CalHFA). For more information on CalHFA and for a list of approved lenders, visit www.calhfa.com
Applications for Doran Gardens available beginning in 09.
image via Glendale News-Press
January 25, 2008
This week, I’m devoting my posts to Westchester. I thought we’d look at the overall averages for what’s listed in this neighborhood under the LAX airspace.
(Results are an estimate based on listing stats from Redfin.)
Average price of single-family homes: $795,000
Average home square footage: 1,881 square feet
Average days on the market: 78
Just for kicks, I thought I’d look at the home that’s been on the market the longest - 6411 W. 83rd St. - for 362 days. Can you believe it?
January 24, 2008
This story, about a California couple’s lawsuit against their buyer’s agent, appeared in The New York Times this week. In 2005, the couple, Marty and Vernon Ummel, moved from the Bay Area to Carlsbad to be closer to their children, employing the services of a buyer’s agent in purchasing a $1.2 million home.
Mrs. Ummel now claims that the buyer’s agent, Mike Little, a veteran with ReMax, failed to inform them that other homes in the same development were selling at the same time for substantially less.
Mr. Little, who refers to Mrs. Ummel as “a nut job” in the article, plans to argue that the Ummels’ situation is due to their own lack of due diligence.
The story was The Times’ most e-mailed the day it appeared, and it has generated considerable comment, including this post on the Redfin corporate blog. Mrs. Ummels isn’t the most sympathetic character in the world: She’s someone whose bad side you wouldn’t want to be on. Also, people who buy $1.2 million homes aren’t exactly hurting for money.
But I find it interesting that this agent has divorced himself from all responsibility for the Ummels’ overpayment for the house. What did the Ummels pay him $30,000 to do? Unlock lock boxes? When people hire real estate agents, they expect them to look out for their interests. Agents have immediate access to information that normal people don’t know how to get to or don’t have time to find out, such as how much the house up the street just sold for. In this case, the Ummels claim that such information was concealed from them.
Whatever its outcome, this case will be interesting. It might open the door for similar suits if the Ummels prevail, or result in some new rules.
Your thoughts?
Recent Redfin posts:
Pasadena Proves “Nobody Walks” Axiom Wrong
Fresh & Easy — And Dry
January 24, 2008
On Wednesday, as I was leaving the Hollywood LA Fitness at Hollywood and Sycamore, I noticed people milling around in the under-construction Fresh and Easy market. Sure enough, the place had opened its doors at 10:00 that morning (click here for Curbed LA’s writeup and crazy pictures). I’d never been in a Fresh & Easy before, and I was impressed. It looks like a bit of a hybrid between a Trader Joe’s and a Ralphs — you can get fresh spicy tuna rolls and all manner of organic products, but you can also get Diet Coke and Lay’s Limon potato chips. Prices were excellent — a pound of butter was $2.08; the chips were $2.63. Outside the store, which is on the ground level of the complex, there’s a brand-new courtyard with outdoor seating that’ll undoubtedly become a local gathering place.
Big-time competition for TJs and Ralphs, to be sure, except for one thing: This store can’t sell alcoholic beverages. Retail liquor licenses are limited based on the population of the surrounding area, and in this particular geographic parcel, there are no licenses available. A couple of the workers told me that the store’s only chance is if another nearby retail establishment, such as the Longs Drugs across the courtyard, gives up or loses its license (because of sales to minors, for instance).
So until that unlikely event unfolds, the Fresh & Easy will be fresh, but, if you like a little wine with your meal, not so easy.
January 23, 2008
We’ve all heard that foreclosures are on the rise. On Tuesday, the quarterly numbers came out for California. Brace yourself.
Here’s the link to the L.A. Times article. The exerpt below is from a short story posted on latimes.com on Tuesday afternoon:
A record 31,676 Californians lost their homes to foreclosure in the three months ended Dec. 31, the third-straight quarter of record-breaking foreclosures, records released today show. Foreclosures were more than double the level of the worst quarter of the last real estate downturn, when 15,418 homes were taken back by lenders in the third quarter of 1996, according to DataQuick Information Systems.
Whoa. And most experts are saying things are going to get worse before they get better. Here’s a quote from economist Christopher Thornburg of Beacon Economics:
The foreclosure peak of 1996 occurred at the end of an economic recession, Thornberg noted. That makes the sharp rise in foreclosures more alarming, he says, because the recession is just beginning. “If you think the market’s bad now, wait a year,” he said.
Yikes.
On the same subject, check out this item from the L.A. Times’ L.A. Land blog. Turns out the foreclosure stats include a number of people who can afford their mortgages, but are choosing to walk away because their homes have lost value.
In Southern California, Riverside County saw the biggest increase in default notices from the same quarter a year ago — up 119%. Which county was second? San Bernardino County, you say? Nope — it was affluent Orange County (116%), followed by San Bernardino County (106%), San Diego County (95%), Ventura County (89%) and Los Angeles County (83%).
Recent Redfin posts:
A Condo with a Sordid Past
A 91st St. Sale
January 23, 2008
A citywide evaluation of ‘walkability’ will be conducted Saturday in Pasadena, reports the Star-News. Just how does one go about define ‘walkability’ apart from the obvious benchmarks of walkway width, traffic/street light functionality, and general safety?
Project consultant Deborah Murphy promises the project will cover a broad focus: “We’re looking for the good, the bad and the ugly”.
Teams will report on the sights, sounds, and even odors encountered on their paths- noting any “unpleasant smells”. You gotta dig the thoroughness. Already an imminently walkable city, this project demonstrates Pasadena’s push of a conscious lifestyle shift encouraged upon its citizens:
“Pasadena has some wonderful pedestrian-friendly neighborhoods right now, and we want to build on that and make the entire downtown an enticing place for people on foot,” said Carla Walecka, Downtown Pasadena Walkabout chairwoman and a Playhouse District board member. “We want people to do their shopping, get to their jobs, have lunch or dinner, entertain themselves, all on foot.”
I’ve done some probing of my own of Pasadena’s recent listings, and herewith I give you: The Pricey, The Small, and The Concrete.
The Pricey:
620 W California BLVD is in the upscale southwest part of town and you know it by its asking of $1,295,000. For a 3/2, 1,339 square-footer, this works out to $967 per.
Bush’s refund won’t even buy you one precious square foot here.
The Small:
As a frequent visitor to this area, everything 85 N Madison AVE #22 claims about its environs are true. 210 freeway close, walking distance to City Hall, Paseo, Old Town. The most distinct truism? “Practice the art of living in small places!”
At 439 SQ.FT., you’re going to have to.
The Concrete:
840 E Green ST #111 lists its property style as “Modern”– and if you need be convinced, one look at the liberal concrete wall and ceiling slathering prominently displayed throughout this 1/1 loft ought to do it. At least you can get some respite in the flooring, right? Not so fast! Stained concrete.
An aggregate lover’s paradise, no doubt.
January 23, 2008
This home on 7140 W. 91st St. recently got taken off the market. It’s a four-bedroom, two-bathroom home that sold for $725,000. But you probably want to know all the other stats too, right?
Well, it was on the market for about three months (92 days if you want to be exact). The house has a total of 1,781 square feet of space and sits on a 6,600 square foot lot. The original list price was $779,000. After waiting… and waiting for the magical offer, the owners finally decided to drop the price down to $749,000. I don’t have pics I can post for you all, but I can tell you it looked like a clean (and empty) home when it sold.
Let’s also look at what else is selling nearby to do a little comparing:
7230 W. 91st St./3bd, 1bth/$729,000
7333 W. 90th St./ 3bd, 1 bth/$750,000
I know the 7230 address has a rental sign as well, in case it doesn’t get sold. I guess it’s a little insurance in this market if a sale doesn’t happen soon.
