Ventura County Star Article from 22 February 2009
By J.W. Elphinstone and Alan ZibelAP real estate writersSunday, February 22, 2009
Between the $75 billion foreclosure plan President Barack Obama revealed on Wednesday and the $787 billion economic stimulus he signed a day earlier, the government is promising a range of programs aimed at getting new help to homeowners.
But not everyone who needs help will get it.
While some homeowners who owe more than their house is worth will get help, many of those who are most severely “underwater” in their mortgages won’t get bailed out.
So who does qualify for the assistance? What exactly will they get — and when will they get it?
Here are some questions and answers:
Q: What if I’m a homeowner on the brink of foreclosure?
A: Homeowners who are behind on their mortgage payments or struggling to keep current may qualify for a mortgage modification under the Homeowner Affordability and Stability Plan that Obama unveiled Wednesday.
To qualify, the house must be your primary residence, your mortgage payment must be greater than 31 percent of your monthly gross income and your loan mustn’t exceed current Fannie Mae and Freddie Mac loan limits, which vary by region and max out at nearly $729,750.
Owners of two-, three- and four-unit properties are eligible as long as they live in one unit as a primary residence. Only first mortgages are eligible for a modification. More detailed requirements will be available March 4.
Q: What if I’m not near foreclosure? Do I get any assistance?
A: Borrowers who are current on their mortgages but can’t refinance into lower interest-rate loans because their homes have fallen in value are eligible to refinance into a 30- or 15-year, fixed-rate loan under the plan, but only if their loan is held by mortgage finance companies Fannie Mae or Freddie Mac.
To qualify, homeowners can’t owe more than 105 percent of their home’s current value on their first mortgage. Borrowers with a second mortgage are eligible as long as their first mortgage isn’t more than 105 percent of their home’s value. The value of your property will be determined after you apply to refinance.
Skeptics say it’s going to be difficult for borrowers to figure out whether their loans are held by Fannie or Freddie. “I’m not sure people are always going to get a straight answer,” said Bert Ely, a banking industry consultant in Alexandria, Va.
Q: Any breaks for first-time homebuyers?
A: Under the economic stimulus plan that Obama signed Tuesday, first-time homebuyers who purchase a home between Jan. 1 and Dec. 1 will be eligible for a tax credit of 10 percent of the value of the home, up to $8,000.
Homeowners don’t have to pay back this credit over the next 15 years, the way they had to with the $7,500 tax credit enacted last summer. However, homebuyers would have to repay the credit if they sold their homes within three years.
First-time buyers are defined as those who haven’t owned a house for at least three years.
Q: Any other breaks for current homeowners?
A: Homeowners also can get a tax credit of up to $1,500 by making their homes more energy efficient this year or next. Many projects qualify, such as installing energy-efficient windows, doors, furnaces or air conditioners, or adding insulation. Homeowners can get back 30 percent of their expenses, up to $1,500.
Q: Will there be more assistance down the road?
A: The Obama administration is working with lawmakers to pass a bill that will allow bankruptcy judges to modify the terms of primary home loans in court.
The lending industry is fighting this plan, arguing that it will make lending a risky proposition in the future. But with support mounting, the industry’s efforts are primarily focused on limiting the scope of the bankruptcy proposal, rather than blocking it completely.
Q: How soon can I expect to take advantage of these benefits or aid?
A: The refinancing and loan modification programs start March 4. The first-time homebuyer tax credit is in effect from the first of the year through the end of November. The “green” home tax credit applies to energy-efficient improvements made through 2010.
Q: What should I do until March 4?
A: If you’re interested in refinancing or applying for a loan modification, collect all necessary documents to give to your lender.
These include your most recent pay stubs and/or other documents detailing the income you receive, your most recent tax return, information about your second mortgage if you have one, payment information on your credit cards if you carry a monthly balance and payment information on all other loans, like student loans and car loans.
Q: What if I’m facing foreclosure now, and can’t wait until March 4?
A: Contact your mortgage servicer or mortgage lender. Many lenders said they will postpone foreclosure sales on home loans that could qualify for the modification.
Sunday, February 22, 2009
Stimulus Plan Includes Tax Breaks for Individuals
Article from Ventura County Star - 22 February, 2009
By Michelle Singletarymailto:Singletarysingletarym@washpost.com
Sunday, February 22, 2009
The stimulus plan that President Barack Obama has signed into law contains a few tax treats for individuals. But before you jump for joy, please pay close attention to the details so you know exactly which provisions can benefit you, and how.
One of the biggest breaks being trumpeted is a new $8,000 first-time homebuyer tax credit. I say “new” because some believe it completely replaces the $7,500 tax credit passed as part of last year’s Housing and Economic Recovery Act.
It does not.
There are two breaks for first-time homeowners in the tax code now. Which credit you can take depends on when you purchased your home.
If you’re a first-time homebuyer and you purchased your home on or after April 8, 2008, and by Dec. 31, 2008, you do not qualify for the $8,000 first-time homebuyer’s credit recently signed into law by Obama.
You can still take the $7,500 tax credit, but you have to pay that back because it’s not really a credit. It’s a 15-year, interest-free loan from the IRS.
The $8,000 tax credit is available for qualifying home purchases made from Jan. 1, 2009, until Dec. 1, 2009. Did you notice I wrote Dec. 1?
That’s how it’s worded in the law.
I know there will be people who will read Dec. 1 as the end of the year, Dec. 31 — and those who make that mistake may be in for a nasty surprise. You naturally would think the cutoff would be the end of the year. After committing to spend $787 billion dollars, it’s idiotic that homebuyers weren’t given the extra month to qualify for this credit.
At least the $8,000 is a true credit, that is, if you don’t plan on moving within three years. A tax credit is much more valuable than a deduction. A credit reduces dollar for dollar the amount of tax you owe. A deduction merely reduces the amount of your income that is taxable.
If you take advantage of the $8,000 tax credit and then sell your home or it no longer remains your principal residence within 36 months of the purchase date, you will have to pay back the full $8,000.
However, as with the $7,500 credit, if you sell and your gain is less than the credit, then you only have to repay up to the amount of the gain. If you die before the credit/loan is repaid, any outstanding amount is forgiven.
I’ve never liked the $7,500 credit because of its lengthy loan feature. Repayment for the $7,500 begins the second tax year after you take the credit. So if you claim the credit on your 2008 tax return, you have to begin paying back the money in 2010.
There’s something else to take into account. If your status is married filing separately, you can’t get the full $8,000 credit or $7,500 credit.
Instead, you get $4,000 of the $8,000 credit and $3,750 of the $7,500 credit. People filing as single are eligible for the full credit. Don’t complain to me about the difference in treatment between a single tax filer and married filing separately. It is what it is.
If you are still not sure which first-time homebuyer credit you qualify for, call the IRS. You don’t want to end up owing money on a loan you thought was a credit.
Here are several other tax breaks passed into law:
- For 2008, the child tax credit is refundable if 15 percent of the taxpayer’s earned income is in excess of $8,500. The new law would reduce this floor in 2009 and 2010 to $3,000. “It makes the full benefit of the child tax credit available to a larger number of low- and moderate-income workers,” said Eric Smith, a spokesman for the IRS.
- You get a one-year deduction for state or local sales or excise tax paid on new-car purchases up to $49,500. The deduction does not include interest on the loan, as some media reports have said. Additionally, the deduction is “above the line,” which means that it can be taken even by those who do not itemize other deductions on their tax returns. To qualify, you have to have an annual adjusted gross income below $135,000 for individuals or $260,000 in the case of joint returns.
- Money withdrawn from a 529 college savings plan is not taxable if it’s used for qualifying expenses. Under the stimulus plan, computer expenses will now be considered an allowable expense for 529 college savings plans.
- The plan exempts the first $2,400 of unemployment insurance benefits from federal income taxes in 2009.
One more thing, please note that many of the tax breaks in the stimulus plan apply only for your 2009 tax return — not the current tax filing season.
— Listen to Michelle Singletary discuss personal finance every Tuesday on NPR’s “Day to Day.’’ To hear her reports online, go to http://www.npr.org/.
Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com.
By Michelle Singletarymailto:Singletarysingletarym@washpost.com
Sunday, February 22, 2009
The stimulus plan that President Barack Obama has signed into law contains a few tax treats for individuals. But before you jump for joy, please pay close attention to the details so you know exactly which provisions can benefit you, and how.
One of the biggest breaks being trumpeted is a new $8,000 first-time homebuyer tax credit. I say “new” because some believe it completely replaces the $7,500 tax credit passed as part of last year’s Housing and Economic Recovery Act.
It does not.
There are two breaks for first-time homeowners in the tax code now. Which credit you can take depends on when you purchased your home.
If you’re a first-time homebuyer and you purchased your home on or after April 8, 2008, and by Dec. 31, 2008, you do not qualify for the $8,000 first-time homebuyer’s credit recently signed into law by Obama.
You can still take the $7,500 tax credit, but you have to pay that back because it’s not really a credit. It’s a 15-year, interest-free loan from the IRS.
The $8,000 tax credit is available for qualifying home purchases made from Jan. 1, 2009, until Dec. 1, 2009. Did you notice I wrote Dec. 1?
That’s how it’s worded in the law.
I know there will be people who will read Dec. 1 as the end of the year, Dec. 31 — and those who make that mistake may be in for a nasty surprise. You naturally would think the cutoff would be the end of the year. After committing to spend $787 billion dollars, it’s idiotic that homebuyers weren’t given the extra month to qualify for this credit.
At least the $8,000 is a true credit, that is, if you don’t plan on moving within three years. A tax credit is much more valuable than a deduction. A credit reduces dollar for dollar the amount of tax you owe. A deduction merely reduces the amount of your income that is taxable.
If you take advantage of the $8,000 tax credit and then sell your home or it no longer remains your principal residence within 36 months of the purchase date, you will have to pay back the full $8,000.
However, as with the $7,500 credit, if you sell and your gain is less than the credit, then you only have to repay up to the amount of the gain. If you die before the credit/loan is repaid, any outstanding amount is forgiven.
I’ve never liked the $7,500 credit because of its lengthy loan feature. Repayment for the $7,500 begins the second tax year after you take the credit. So if you claim the credit on your 2008 tax return, you have to begin paying back the money in 2010.
There’s something else to take into account. If your status is married filing separately, you can’t get the full $8,000 credit or $7,500 credit.
Instead, you get $4,000 of the $8,000 credit and $3,750 of the $7,500 credit. People filing as single are eligible for the full credit. Don’t complain to me about the difference in treatment between a single tax filer and married filing separately. It is what it is.
If you are still not sure which first-time homebuyer credit you qualify for, call the IRS. You don’t want to end up owing money on a loan you thought was a credit.
Here are several other tax breaks passed into law:
- For 2008, the child tax credit is refundable if 15 percent of the taxpayer’s earned income is in excess of $8,500. The new law would reduce this floor in 2009 and 2010 to $3,000. “It makes the full benefit of the child tax credit available to a larger number of low- and moderate-income workers,” said Eric Smith, a spokesman for the IRS.
- You get a one-year deduction for state or local sales or excise tax paid on new-car purchases up to $49,500. The deduction does not include interest on the loan, as some media reports have said. Additionally, the deduction is “above the line,” which means that it can be taken even by those who do not itemize other deductions on their tax returns. To qualify, you have to have an annual adjusted gross income below $135,000 for individuals or $260,000 in the case of joint returns.
- Money withdrawn from a 529 college savings plan is not taxable if it’s used for qualifying expenses. Under the stimulus plan, computer expenses will now be considered an allowable expense for 529 college savings plans.
- The plan exempts the first $2,400 of unemployment insurance benefits from federal income taxes in 2009.
One more thing, please note that many of the tax breaks in the stimulus plan apply only for your 2009 tax return — not the current tax filing season.
— Listen to Michelle Singletary discuss personal finance every Tuesday on NPR’s “Day to Day.’’ To hear her reports online, go to http://www.npr.org/.
Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com.
"Show me the note" Can Stall Banks' Efforts to Foreclose
Ventura County Star Newspaper Article from 22 February 2009
Request for original buys time
By Mitch StacyThe Associated PressSunday, February 22, 2009
How the mortgage process worked
Kathy Lovelace, of Zephyrhills, Fla., says she was able to stop foreclosure proceedings by asking that the lender produce the original mortgage note.
Attorney Chris Hoyer of Tampa, Fla., runs the Consumer Warning Network Web site, which offers free court documents to homeowners faced with foreclosure.
ZEPHYRHILLS, Fla. — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill.
Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.
Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.
“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”
In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.
More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Barack Obama unveiled a plan to spend $75 billion to help homeowners fend off foreclosure.
Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.
“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”
Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”
Deutsch said the original note is almost always electronically retained and can eventually be found. Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holders of loans.
Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point. Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure — no letters from the lender, no court filings.
The law firm handling the foreclosure for the lender refused to comment.
A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.
The first big success of the produce-the-note movement came in 2007, when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.
Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost its home. Still, he considers that a success.
“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”
Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.
“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”
April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.
On the Net:
Consumer Warning Network: http://www.consumerwarningnetwork.com/
American Securitization Forum: http://www.americansecuritization.com/
Request for original buys time
By Mitch StacyThe Associated PressSunday, February 22, 2009
How the mortgage process worked
Kathy Lovelace, of Zephyrhills, Fla., says she was able to stop foreclosure proceedings by asking that the lender produce the original mortgage note.
Attorney Chris Hoyer of Tampa, Fla., runs the Consumer Warning Network Web site, which offers free court documents to homeowners faced with foreclosure.
ZEPHYRHILLS, Fla. — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
And just like that, the foreclosure proceedings came to a standstill.
Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.
Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.
“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”
In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.
More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Barack Obama unveiled a plan to spend $75 billion to help homeowners fend off foreclosure.
Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.
“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”
Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”
Deutsch said the original note is almost always electronically retained and can eventually be found. Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holders of loans.
Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point. Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure — no letters from the lender, no court filings.
The law firm handling the foreclosure for the lender refused to comment.
A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.
The first big success of the produce-the-note movement came in 2007, when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.
Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost its home. Still, he considers that a success.
“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”
Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.
“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”
April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.
On the Net:
Consumer Warning Network: http://www.consumerwarningnetwork.com/
American Securitization Forum: http://www.americansecuritization.com/
Bargains Spur Feeding Frenzy at Low End of Home Market
Ventura County Star Article from February 20,2009
But housing prices still sliding, experts warn
By Jenni Mintz (Contact) Friday, February 20, 2009
Grim economic news isn’t stopping some homebuyers from pouncing on distressed properties, even as experts warn that prices could fall further.
Spurred by foreclosure sales, Ventura County’s home sales shot above year-ago levels for the seventh straight month in January, MDA DataQuick reported Thursday. There were 578 new and existing homes and condominiums sold last month, up 36.6 percent from 423 the previous year, but down 34 percent from 876 in December, according to the real estate information service.
The median, the point where half the homes sold for more and half for less, was $335,000 in January, falling 29.9 percent from $477,750 for the same month in 2008. The median has fallen for 30 consecutive months, plunging 46.8 percent from its $630,000 peak in December 2005.
The steep decline was attributed to sliding prices and types of homes that were sold.
Foreclosures comprised 49.1 percent of last month’s resale activity. Upper end of market listless “The bottom end is selling like hotcakes,” said Brian Troop, president of Simi Valley-based Troop Real Estate. “There’s not a lot of activity in the upper end of the market.”
Lower-end properties are hot sellers for several reasons, Troop said. Many buyers are investors wanting to buy at the bottom of the market, but there aren’t a lot of homeowners who are looking to move up, he said. If they did, the availability of mortgage loans might be an obstacle.
Lenders have been tight with upper-end mortgages, but Troop thinks that will change with the passage of the economic stimulus package, which increased loans backed by Fannie Mae and Freddie Mac to $729,000 through the end of the year. Record low prices and interest rates and the recently enacted $8,000 tax credit available to first-time homebuyers are other perks, he said.
The average rate on a 30-year fixed mortgage dropped to 5.04 percent this week from 5.16 percent last week, Freddie Mac said Thursday. A year ago, a 30-year fixed-rate mortgage averaged 6.04 percent.
“The opportunity for buyers is the best I’ve seen, and I’ve been in the business since 1978,” Troop said. He said the average sales price has flattened out in the lower market, where he’s seeing five to 10 offers on a home and properties selling for more than the listed price.
But many people are still skittish.
“Nobody I know is buying now — everybody is afraid of losing their job,” said Dave Lake, an IT analyst for a healthcare company in Westlake Village. Awaiting ‘break-even point’ Lake said he’s renting until the market corrects to a sustainable level. He expects prices to fall 20 to 30 percent in Westlake Village in the next year, and then drop an additional 5 to 10 percent for several years after that.
“I’m waiting for the break-even point, where the cost of owning approaches the cost of renting,” he said, adding that he expects that to happen in the next 18 months in Westlake Village.
For many first-time homebuyers and investors, it’s not worth trying to time the price bottom perfectly, said John Walsh, DataQuick president. “They’re happy to lock in substantial discounts relative to the peak.”
That was reflected in a sales spurt across Southern California, where a total of 15,227 new and existing homes and condominiums closed escrow last month, up 52.5 percent from 9,984 a year ago.
The Southland median was $250,000, down a record 39.8 percent from $415,000 in January 2008, and the lowest since it was $242,000 in February 2002, DataQuick reported.
Foreclosures represented 60 percent of all homes resold. Sales of newly built homes were the lowest for the month of January in at least 21 years, DataQuick reported.
Default notices and foreclosures have slowed, but many economists agree that it could take years for the housing market to recover and prices to rebound.
Dennis Torres, executive director of real estate operations and adjunct professor at Pepperdine University’s Graziadio School of Business and Management, expects prices to continue to fall at least through 2009.
“In Ventura County, I see them going down more than they are now, but I do not see the rate of decrease anywhere near what it was,” Torres said.
On the Net:
http://www.dqnews.com/
But housing prices still sliding, experts warn
By Jenni Mintz (Contact) Friday, February 20, 2009
Grim economic news isn’t stopping some homebuyers from pouncing on distressed properties, even as experts warn that prices could fall further.
Spurred by foreclosure sales, Ventura County’s home sales shot above year-ago levels for the seventh straight month in January, MDA DataQuick reported Thursday. There were 578 new and existing homes and condominiums sold last month, up 36.6 percent from 423 the previous year, but down 34 percent from 876 in December, according to the real estate information service.
The median, the point where half the homes sold for more and half for less, was $335,000 in January, falling 29.9 percent from $477,750 for the same month in 2008. The median has fallen for 30 consecutive months, plunging 46.8 percent from its $630,000 peak in December 2005.
The steep decline was attributed to sliding prices and types of homes that were sold.
Foreclosures comprised 49.1 percent of last month’s resale activity. Upper end of market listless “The bottom end is selling like hotcakes,” said Brian Troop, president of Simi Valley-based Troop Real Estate. “There’s not a lot of activity in the upper end of the market.”
Lower-end properties are hot sellers for several reasons, Troop said. Many buyers are investors wanting to buy at the bottom of the market, but there aren’t a lot of homeowners who are looking to move up, he said. If they did, the availability of mortgage loans might be an obstacle.
Lenders have been tight with upper-end mortgages, but Troop thinks that will change with the passage of the economic stimulus package, which increased loans backed by Fannie Mae and Freddie Mac to $729,000 through the end of the year. Record low prices and interest rates and the recently enacted $8,000 tax credit available to first-time homebuyers are other perks, he said.
The average rate on a 30-year fixed mortgage dropped to 5.04 percent this week from 5.16 percent last week, Freddie Mac said Thursday. A year ago, a 30-year fixed-rate mortgage averaged 6.04 percent.
“The opportunity for buyers is the best I’ve seen, and I’ve been in the business since 1978,” Troop said. He said the average sales price has flattened out in the lower market, where he’s seeing five to 10 offers on a home and properties selling for more than the listed price.
But many people are still skittish.
“Nobody I know is buying now — everybody is afraid of losing their job,” said Dave Lake, an IT analyst for a healthcare company in Westlake Village. Awaiting ‘break-even point’ Lake said he’s renting until the market corrects to a sustainable level. He expects prices to fall 20 to 30 percent in Westlake Village in the next year, and then drop an additional 5 to 10 percent for several years after that.
“I’m waiting for the break-even point, where the cost of owning approaches the cost of renting,” he said, adding that he expects that to happen in the next 18 months in Westlake Village.
For many first-time homebuyers and investors, it’s not worth trying to time the price bottom perfectly, said John Walsh, DataQuick president. “They’re happy to lock in substantial discounts relative to the peak.”
That was reflected in a sales spurt across Southern California, where a total of 15,227 new and existing homes and condominiums closed escrow last month, up 52.5 percent from 9,984 a year ago.
The Southland median was $250,000, down a record 39.8 percent from $415,000 in January 2008, and the lowest since it was $242,000 in February 2002, DataQuick reported.
Foreclosures represented 60 percent of all homes resold. Sales of newly built homes were the lowest for the month of January in at least 21 years, DataQuick reported.
Default notices and foreclosures have slowed, but many economists agree that it could take years for the housing market to recover and prices to rebound.
Dennis Torres, executive director of real estate operations and adjunct professor at Pepperdine University’s Graziadio School of Business and Management, expects prices to continue to fall at least through 2009.
“In Ventura County, I see them going down more than they are now, but I do not see the rate of decrease anywhere near what it was,” Torres said.
On the Net:
http://www.dqnews.com/
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