Posts Tagged ‘good news’

PENDING RATIOS STILL IMPROVING

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The ratio between pending sales and listed properties is the best single indicator of future market direction.
Silicon Valleys Pending Home Sales Index (PHSI) has now improved for 16 months in a row from from February 2011 to May 2012.
A PENDING SALE is defined as a Signed Purchase Contract.
Given the Federal Reserves commitment to keep rates down for at least another year this trend seems sure to continue with a steady increase of home prices.

Praise Where It’s Due

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A small but very welcome glow of sanity from a historically well run Bank.

After acquiring $117.3 billion dollars worth of option adjustable rate mortgages (ARMs) in its acquisition of Wachovia last year, banking giant Wells Fargo is now practicing a rare but effective loan modification strategy: the cramdown.

Through September of this year, Wells Fargo has forgiven an average of $46,000 on approximately 43,500 high-risk loans in its portfolio. The typical debt reduction is around 20% of the loan principal, though in rare cases Wells Fargo has cut as much as 30%. Reports put the six-month default rate of loans modified by Wells Fargo at 15-20%, less than half the current rate of 40% suffered by the rest of industry’s extend-and-pretend modifications.

Debt reduction is only one of many tools Wells Fargo is using to aid its distressed borrowers, and is currently not being used as a blanket fix for all underwater homeowners.

My Opinion: While this is a national story and certainly only a very small slice of the current problem pie, a mortgage lender taking into account the need for principal reduction is a big acknowledgement that the underwater state of many homeowners’ mortgages require this type of treatment. This is something other lenders and Congress need to understand when considering the mortgage quandary. Continuing to “kick the can down the road” with “extend and pretend” modifications will do nothing to solve the massive negative equity problem. The fact that the small glimmers of hope — in the form of cramdowns — are coming from a lender and not the regulators really speaks to the hands-tied, head-buried-in-the-sand mentality which must be overcome if we are to move ahead with a recovery.

Re: Wells Fargo Cuts as Much as 30 Percent in Principal from the Wall Street Journal

Why Be A Buyer Now

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Why do I make more money in December than any other Month of the Year? and why do I expect this year to be even better.
Here’s why.

1. Most Realtors think this is a slow time and choose to take more time off. RESULT; less competition.

2. There are fewer Listings and fewer Buyers, but those who are active  are serious. RESULT; more productive use of time.

But this year things are very different. There will still be fewer Agents working and fewer Buyers looking, BUT there will be many more Listings to choose from.

WHY? Because we will still have all the normal Sellers who are serious, PLUS a large number of REO Properties which are not affected by the holidays. Banks know that each day they own a property costs them a lot of money so they will be putting them on the market as soon as they can regardless of the time of year.

So why be a Buyer now? Because you will have less competition but more properties to choose from. (Not to mention the extended and improved Tax Credit Program).

A Fluke or a Sea Change

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At the low end of the Santa Clara and Alameda Counties single family home market ($300-$400k) I’ve got used to having to make multiple offers ror each Buyer before getting a deal

I’ve also noticed this creeping up to the $400-$450k market.

However, until last week there was no sign of the same thing happening at higher price levels in the more “up scale” neighborhoods.

Here’s what just happened just 10 days ago

Fri 9:30 I enter a nice new Cambrian listing for $665,000 and schedule for the following weeks Campbell/Cambrian Broker Tour.

Sat Open House has 35 groups of people through.

Sun Open House had 29 more.

By noon Monday I’d received 3 excellent offers and we had accepted a full price clean one.

Early afternoon I get a call from the organizer of the Brokers Tour telling me that the tour had been canceled as all the scheduled properties had sold over the weekend and I would have been the only property to tour. I was actually sitting at my keyboard to update to a Pending Status, so in fact there were no new listings left to tour.

Is this a onetime situation, or a harbinger of calmer waters coming fast?

Here’s The Good News

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These days when every mass media empty suit is competing to see who can spread the most gloom and doom let me point out one very positive outcome of all this, especially for the Real Estate Market.

It’s great for mortgage interest rates. When stock markets go down it’s because a lot of people are selling. Where do you think they put the money received from the sales?

How about the traditional safe haven BONDS? This drives up the prices on Bonds.

When Bond prices go up, interest rates go down. That is exactly what happened yesterday when we saw 2 reductions and modified rate sheets during one day.

If your mortgage was in process you might have received a call late yesterday to discuss locking in the interest rate.