Alexis McGee, president of foreclosure tracker ForeclosureS.com.

Us: In 2011, how do you think the pace of defaults and foreclosures will fare in California and Orange County in particular? Why?

Alexis: I expect California’s initial notices of default, which peaked in the third quarter of 2009, to continue its decline in 2011. There will be a change in the property types that enter foreclosure in 2011. I expect to see more “higher end” homes enter foreclosure, and a significant drop in “entry level” homes in 2011. Trustee sale auctions and foreclosures, however, will continue to rise in 2011 as lenders clean out their pipeline of backlogged foreclosures from the moratoriums of 2009 and 2010. However, as during the past downturn of the 1990’s, I don’t expect lenders will flood the market with distressed properties, but instead slowly release their properties for sale over a longer period of time.

Us: In 2011, how well will distressed properties sell? Will banks do “better” with short sales and their ability to get REO (bankers’ Real Estate Owned) through the market? Why?

Alexis: I expect 2011 to be a banner year for distressed property sales. With the moratoriums behind us, banks have a backlog of REO properties they need to liquidate and they will cautiously step up those efforts in 2011. During the robo-signing debacle at the end of 2010, many banks were not confident in delivering clear title with their REO’s, so they redirected their liquidation efforts to their short sale departments. Banks are now approving short sales much quicker (30 days versus 90 days or longer) and closing them in many cases at wholesale investor prices. For investors and buyers, 2011 will be a great time to submit wholesale REOs and short sales offers, as your chances for success will be high.

Us: Will troubled borrowers get any more help in 2011 … Or is their fate basically sealed? Why?

Alexis: Decisions made in Washington, and our state capitals has had a huge impact on home sales and prices to date. It’s hard to predict what our government will do next, but I do expect our elected officials will continue to try and affect positive change to the real estate markets in 2011 through various stimulus programs. However, I don’t see troubled borrowers getting any more help in 2011 than they did in 2010. What they need most is a principal balance reduction to return their underwater homes back in the black. However the reality is that neither banks nor the government can afford to bail everyone out. I expect our elected officials in 2011 to continue to talk big about “Making Homes Affordable” but does little that actually helps keep people in their homes.

Us: What your overall outlook for California/Orange County real estate for next year. How much will distressed property’s performance impact that outlook? Why?

Alexis: I expect the California housing will improve overall in 2011 and will be driven by the economy and job growth. However, it remains a story of two markets – entry level homes are in low supply, with multiple offers and increasing prices – but high end homes have increasing inventory and decreasing prices.

Us: What will be the surprise real estate news we’ll be talking about a year from now?

Alexis: Although the Fed is committed to keep interest rates at record low levels, I do not believe they will not be successful in 2011, and interest rates will rise. While home affordability decreases when interest rates rise, higher rates do not necessarily mean a decrease of buyers and a collapse in the housing market as others believe. The surprise in 2011 will be a strengthening in the housing market from an increase in demand for housing, when buyers who have been sitting on the sidelines, jump in to grab once in a lifetime deals, once historically low mortgage rates rise, before they are gone forever.

So are local home prices up or down? Has the double dip started?

For this argument, let’s watch year-over-year price changes — good for sensing longer-term trends because the seasonality of the homebuying business is diminished.

Here’s goes:

California Association of Realtors: If this trade group’s supposed to be the industry cheerleader, it’s curious they’ve got the only negative numbers. CAR’s median selling price for single-family homes sold in Orange County in October was $488,020 — down 4.4% from the year-ago period. That was eye-catching because it’s the first year-over-year drop in this data series since August 2009. And, it’s also the first year-over-year drop we’ve seen here at The Register among the slew of home-value markers were usually follow.

DataQuick: Private trend trackers say that as of mid-November, found selling prices up barely from a year ago. A median price of $435,000 was up just 1.2% from a year ago. On a year-over-year basis, this home-price benchmark has been positive since September 2009. However, October’s pricing was up just 0.3% in a year and this latest price reading is the lowest since April’s $430,000.

Real Estate Research Council of Southern California: This group of academics and industry types, based at Cal Poly Pomona, gets local appraisers to value the same homes every six months to create a curious local history of pricing. Orange County home values at the 39 sample residences were rising at a 4.5% annual rate in October, up from a 1.4% gain found in April. By this math, home values were declining from April 2007 through October 2009 (for a 31% drop.)

CoreLogic: In conjunction with RERCSC, these private data trackers produce a metric that estimates the value of all residences within the county, regardless whether they sold or not. This benchmark shows that the value of all Orange County homes at $395 billion as of the third quarter. That marks a $19.5 billion increase — or 3.1% — in a year.

FHFA Index: The federal regulator of mortgage giants Fannie Mae and Freddie Mac’s marker shows Orange County values up 2.8% in the year ended in the third quarter, second consecutive year-over-year gain after 13 straight declines. This home-price index is derived from data gleaned from loans bought by these two mortgage investors.

Standard & Poor’s/Case-Shiller: The local slice of this index series — widely watched on a national level — showed home values for Orange and Los Angeles counties up 4.36% from a year ago in September. That’s the 9th consecutive year-to-year increase by this measure, produced by private trend trackers. But it’s also the smallest annualized gain since the first month of the current streak back in January.

Zillow: The online housing tracker’s attempt to gauge the value of all homes in the region — Orange and L.A. counties — showed prices up 0.8% in the year ended in October. For the entire year, Zillow sees local values down $39 billion — or 2.2 percent — to $1.7 trillion.

Clear Capital: Another private valuation firm shows values for Orange and Los Angeles counties rising at a 5.4 percent annual rate as of November. However — and perhaps most noteworthy — this same barometer was falling at a 1.7 percent rate for the current quarter vs the previous three-month period. And, that decline made the LA/OC market the nation’s 6th-best performing big market for the period.

PS: If we mash these indexes together, weight their impact on a regional composite index by timeliness and Orange County content, we find that local values were rising at a 1.4% annual rate as of Sept. 22.

November 19th, 2010, 11:29 am · posted by Mary Ann Milbourn

November 18th, 2010, 11:26 am · posted by Jon Lansner

posted by Jon Lansner

How bad of a summer was it for real estate nationwide? Well, you know it wasn’t pretty in California!

New Realtor data shows that California single-family home resales fell 7.3% from the second quarter to the third quarter as a federal tax break for buyers expired. That left California homebuying’s pace 13% below a year ago.

However, that 7.3% quarter-to-quarter decline in California was the second best performance — yes, B-E-S-T — among the states.

Only Nevada — down 6.4% — fared any better. Hardest hit state was Minnesota, off 46% in those three months alone! Nationwide, it was a 25% tumble.

Perhaps California’s advantage — if we can call this a plus — was the the tax break (worth up to $8,000) was likely not a major deal to our house shoppers. So any springtime home surge created by shoppers’ desires to qualify for the tax break — as we heard of elsewhere — was not a major factor. Still, considering all the real estate angst around this region, you can see why people are REALLY worried about housing elsewhere!

Curiously, here’s another snapshot of how things have changed: Our state’s recent relative recent “strength” makes California 11% of the U.S housing market, by single-family homes resold — largest share of any state. That’s up from 6% near the market’s peak in 2007.

Check out chart at right shows Realtor data — third-quarter house sales; change from previous quarter and years — for the Top 5 and Bottom 5 as ranked by percentage quarterly change.

November 4th, 2010, 10:28 am - posted by Jeff Collins

Fixed-rate mortgages held steady this past week, but adjustable-rate mortgages again fell to record lows, Freddie Mac reported today.

Click on charts to enlarge

This marks the sixth straight week in which one mortgage type or another hit a record low.

Mortgage rates have been falling steadily in tiny increments since April as investors flock to the security of U.S. Treasuries  that influence home loan rates.

Freddie Mac Chief Economist Frank Nothaft noted also that since inflation is low, there’s no impetus to raise interest rates on long-term Treasury bonds.

“With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows,” he said.

Freddie Mac’s latest weekly survey results show:

• Thirty-year fixed-rate mortgage: 4.24% with 0.8 of a point (or 0.8% of the loan balance) paid up front. That’s up just 0.01 of a percentage point from last week’s rate, which translates into an increase of just $1.17 in the monthly interest payment on a $200,000 loan. The combined increase in interest over 30 years would be $421, so it’s virtually unchanged. But this rate is down nearly a full percentage point from the 2010 high of 5.21% on April 10. That 1% drop translates into a $117 savings in monthly interest payments and $42,000 over the life of a $200,000 loan. The low for this loan type is 4.19% in records dating back to 1971.
• Fifteen-year fixed-rate mortgage: 3.63% with 0.7 of a point paid up front. That’s down from last week and just 0.01 of a percentage point above the low in records dating back to 1991. Fifteen-year rates have dropped 0.89 of a percentage point from April’s 2010 high, which translates into a monthly payment savings of $89 and a total interest-cost savings of $16,100 over the life of the loan.
• Five-year adjustable-rate loan (ARM): 3.39% with 0.6 of a point paid up front. That’s the lowest rate in records dating back to 2005 — and the 20th record low this year. With this type of loan, monthly payments are fixed for five years, then adjust based on prevailing rates for the remaining years.
• One-year ARM: 3.26% with 0.7 of a point paid up front. That’s the lowest rate in records dating back to 1984, the second such record this year. This loan type is fixed for the first year and adjusts periodically after that.

Orange County will have a half-million-dollar housing market again by 2012, and home sales volume will rebound by a whopping 43% over the next two years, according to the latest UCLA Anderson Forecast for the O.C. housing market.

Economists with UCLA’s Anderson Forecast foresee O.C. home prices climbing above $500,000 in 2012 for the first time since April 2008. Prices are expected to appreciate from 6.6% to 9.3% a year through 2015 — and, all told, grow 49% in the next six years.

By 2016, prices may be back to, or just under, the all-time highs reached at the pinnacle of the housing boom.

As for home sales, UCLA foresees transactions jumping 27.5 in 2011 and continuing to climb through 2014, almost reaching the boom-time levels.

“Expect a sluggish housing market for the remainder of this year and into next spring,” the forecast states. “At that time, pent up demand, rising affordability, and dissipating fear of a faltering economy should push sales higher.”

While UCLA forecasters don’t expect another recession, they believe that the recovery will be slow, calling the housing market recovery “fragile.”

In addition, there’s a wild card that could change the housing outlook for the worse, UCLA economists warned. If the shadow inventory of homes with delinquent mortgages should abruptly get pushed through the foreclosure process, “this would impact selling values,” the forecast states.

” … Under the alternative scenario, the more conventional recovery in housing would be delayed until later in 2011 or early 2012, though more sales and stable prices will still characterize the housing market for the next 12 months.”

Specifically, the forecast states:

• The median price of an O.C. home, or price at the midpoint of all sales, would rise to $460,545 in 2011 and to $503,450 in 2012. Currently the median is $445,000, according to DataQuick.
• Prices would continue rising through 2016, when the projected median would be $639,650. The peak median price for an entire year was $627,548 in 2006, according to UCLA. (The monthly high was $645,000 in June 2007.)
• Home sales would jump to 40,974 in 2011, up from a projected 32,139 this year.
• They are projected to peak at 49,913 in 2014, then fall by 4.7% over the next two years. By comparison, homeowners sold 54,120 sales in 2005, the year before the housing slump began.
• UCLA’s forecast is more optimistic about home sales statewide this year than the California Association of Realtors forecast issued earlier this month. The Realtors projected that California sales this year would drop 10% to 492,000 units; UCLA forecasts that statewide sales will drop 7.6% to 505,270.

For calendar month September – DataQuick’s freshest stats — Orange County homebuying patterns showed:

• Fifty-one of O.C.’s 83 ZIP codes had gains in their respective median selling price. Overall, buyers’ prices were up 3.7% from a year ago.
• Taking sales volume into consideration, home-sale pricing is up in ZIP codes representing 40% of the Orange County market.
• Six of 83 O.C. ZIP codes had median sales prices above $1 million last month.
• Fifty of 83 O.C. ZIP code had year-over-year sales declines last month — or 60% of the market.
• Overall, countywide sales were  down 10.7% from a year ago.
• Just one ZIP code had a sales gain of 100% or more. Five had sales drops greater than 50%.
• Fifteen local ZIP codes had both sales gains and price gains in September (highlighted in green below). These double-gainers had combined sales volume equal to 23% of the Orange County market.
• For a detailed report on the price moves, CLICK HERE!