This Winter: A Test for Tri-Valley Home Sales
December 1, 2009
Despite recent figures showing that house prices have increased for the last three months, concerns for this winter are starting to appear that housing may be in for a deep freeze. Two main factors are at the focal point of the debate: default and distress sales and artificially low interest rates. One or a combination of the two could slow down home sales and shift home prices downward.
In the Tri-Valley area, default and distress properties have been waning. The last few months have seen less foreclosure and short sale properties come on to the market. Six months to over a year ago, these default and distressed homes where primarily found in the lower to middle price ranges. Many of the homeowners in this price range had secured subprime mortgages which later resulted in big problems and consequently led to foreclosures and short sales. Now, things are beginning to shift away from the lower to middle priced homes. More homes at the middle to upper price ranges are expected to become default and distress sales according to a recent New York Times article. “Plenty of pain yet to come,” said Joseph Shapiro, chief United States economist for MFR.
In talking to homeowners, I have identified that some homeowners at the higher price points have been more equipped financially to survive the downturn in the market. Despite job losses or reduction in income, they have been able to live off savings or the liquidation of stock for a longer period of time. Some have been able to adjust their lifestyle while others have found jobs to replace lost income. However, for those who have not been able to overcome their hardship, they are faced with the grim reality that their life savings is being wiped out. They may be left with no choice but to consider giving up their home to short sale or foreclosure.
On top of the potential for more default and distressed sales, another factor that could weigh in on home sales is Read more
Focus on Credit. Enough Said.
October 8, 2009
How many of you can’t get that jingle out of your head from the commercial on television touting “free credit report dot com”. I am now seeing a therapist about it. Despite joking about my current mental state, credit has been making headlines recently both nationally and in the Tri-Valley area and is quite a serious subject. With many homes turning to short sales and foreclosures, some homeowners don’t realize the huge impact that a short sale or foreclosure can have on their credit and subsequently their future buying power.
In a recent article by Strategic Equity, Dave Muti, author of “Mortgages: What You Need to Know,” was asked how a credit score is calculated and tips for increasing it. The Fair Isaac Corporation created the most common credit score used today - the FICO score. It ranges between 350 and 850. The higher the score, the better the interest rate you can secure. 720 is the credit score threshold that you don’t want to drop below in order to secure the best rates. If you drop below 500, you may not even be able to secure a mortgage.
The following are five critical credit criteria reported in the article:
- Payment History - This pertains to your track record for paying your bills. It makes up 35% of your score. Essentially, this means paying your bills on time. A mortgage “late” is much more serious than a credit card “late”
- Credit Ratio - How much you owe is 30% of your score. Just because you owe less does not translate to having a better score. This score is determined between the various types of credit you have opened (see #3 below). There needs to be a balance between how much you owe and how much you have available to you. Having too many credit cards can be a negative and having only one could be as well. The goal is to have a lot of credit available to you, and to then use that credit, while at the same time not maintaining a high balance.
- Credit Type - The type of accounts you have makes up Read more
Dublin, San Ramon, Danville, Pleasanton, and Livermore’s August Real Estate Update
August 9, 2009
This graph consists of real time inventory numbers for Danville, Dublin, Livermore, San Ramon and Pleasanton. Here are the active real estate housing stats for the Tri-Valley cities for the month of August.The current market conditions for the Tri-Valley appear to be leading us toward a classic case of supply and demand. Inventory numbers continue to drop across the board in the Tri-Valley area and buyers are actively pursuing homes through open houses and showings. Logic would lead us down a path that as more buyers purchase homes and the inventory numbers continue to wane, we should see a stabilization of home prices. I deeply believe that we are headed in the right direction, however I still want to see how the fall and winter months turn out before I become a true believer. There are a few factors that are impacting my decision. First, I am still interacting with a number of homeowners who are in financial trouble. Second, there is speculation that banks may end their moratorium on pursuing foreclosures. Third, we are currently in the traditionally busiest time of year for real estate activity in the Tri-Valley.
Be Prepared: Trial Period for Modified Mortgages Exists
July 5, 2009
There is an interesting new twist to the whole loan modification procedure. Mortgage modifications may require a three-month trial period in order to test the borrower’s ability to make payments under the modified loan structure. If the borrower meets the requirements during this trial period then the loan modification will be finalized. During the trial period a loan could be reported as delinquent and in most cases the foreclosure process will be suspended.For the most part, this trial period is specific only to the federal government’s Home Affordable Modification program. However, expect modification programs that fall outside of the federal government’s program to implement the trial period as well.
In a recent article by Marcie Geffner of Bankrate.com, she describes 10 things that a borrower needs to know about the trial period. To read more about those ten items, please click on this link, Modifying Mortgage Trial Period
Real Estate Transactions Have a New Thorn in Their Side – Appraisals
June 10, 2009
Do you remember the days when a home would come on the market in the Tri-Valley, get ten offers and sell for $100,000 over the asking price? I do. I was involved in numerous transactions where homes sold well over their listed price. Did you know that in order for these homes to be finalized and actually record as a sale - an appraiser was part of the process and their requirement was to determine the value of that property? In many cases, the value of the property was appraised at over the asking price. Unfortunately, this unrestricted approach to appraisals has come back to haunt us.The previous appraisal process has fallen under significant scrutiny and the result is a 180 degree switch. Appraisals are causing havoc to the real estate community in a new way. This new appraisal mess isn’t picking sides. Both sellers and buyers are impacted negatively. Here is what is different.
On May 1, the Home Valuation Code of Conduct or HVCC came into affect. This changed the appraisal rules for conventional loans, Fannie Mae and Freddie Mac. The primary impact is Read more
TriValleyVine Resident Author
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ADAM GOLDEN REALTOR™ 925.899.6103 |
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