Hoffman Realty Group

Experts Advise "Now Is The Time To Buy" As The Economy Shows Signs of Recovery

2012-02-05T00:40:34Z

In a survey conducted by Zillow, 100 economists from The Wall Street Journal, the Business Week, U.S. News & World Report, J.P. Morgan and others all say now is the time to buy a home.

There's a common belief among many that a much brighter outlook on the overall economy and housing itself is at hand. Unemployment numbers are down both nationally and locally. In Folsom, the unemployment rate is only 4.9% or half of the current10.9% unemployment rate in Sacramento County.

The National Association of Realtors Housing Affordability Index is up nearly 20 points this month to 169.5. In Sacramento County the number stands at 72, up 4 points from this time last year. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.

Expectations going forward are that we are going to start seeing limited appreciation beginning in 2013 in most housing markets across the country as we pull out of the housing recession.

The naysayers who question whether now is the time to buy a house must be looking at the people who bought five years ago and lost money ‐ many did ‐ where their house is worth less than what they paid for it. More and more it is looking like that's not going to happen over the next five years.

Take a look at the "Shadow Inventory" of homes across the US. Notice that in California, its less than 5 months. Another sign that banks are slowly but surely getting these liabilities off their rolls. Once this happens our housing crisis should come to an end.

In 2003 financial consultant John R. Talbott wrote a book: The Coming Crash in the Housing Market: 10 Things You Can Do Now to Protect Your Most Valuable Investment. In it he predicted the housing crash. In 2006, he wrote another book: Sell Now!: The End of the Housing Bubble. This time he forecasted prices were going to drop dramatically, which they did. Like Nostradamus, he is the person prior to the bubble, who called the bubble, and at the peak of the bubble, called the peak and said prices are going to fall. Just last week, he came out and said, "I've been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home."

From the looks of things, he and others, may just be right.

Area Foreclosure Sales Increase 23.8%

2012-01-27T09:00:00Z

Irvine-based RealtyTrac said Wednesday that sales of Sacramento foreclosures soared 23% during the third quarter, according to a new report.

Of more interest to those who are selling out of desire rather than need is the fact that the average price for a foreclosure property was 28.9% below the average price for homes not in foreclosure, RealtyTrac said.

More than 50% of all homes sold in the Sacramento region during the third quarter were in some stage of the foreclosure process.

Here in Folsom 316 homes are currently either Bank Owned (REO) or at auction. Perhaps an even better indicator is that approximately 60% of all actively listed homes in the Folsom zip code are Short Sales, a percentage of which will likely go to foreclosure, further fueling the number of foreclosure sales and continuing to push home prices downward.

Zillow Forecasts Prices Will Continue To Drop

2012-01-24T23:50:46Z

Zillow is predicting home prices across the US will decline by 2.7-3.2% this year.

While Zillow still anticipates home values to fall an additional 2 to 4 percent before reaching a bottom, there is light at the end of the tunnel. "Encouraging precursors to a true stabilization of home values are falling into place as the new year begins," said Zillow Chief Economist Dr. Stan Humphries. "Home sales will show a more consistent upward trend this year, slowly reducing the amount of vacant housing inventory. This increased demand will eventually start to put a floor under home values later this year."

The full forecast and further commentary can be found on the Zillow Real Estate Research page.

Home Sales Rise But Prices Continue to Decline

2012-01-21T16:04:33Z

California home sales rose for the third consecutive month in December, marking the highest level since January 2011, according to data from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Sales also were up from a year ago, marking the sixth consecutive annual increase.

"With the economy slowly improving, home buyers - investors and first-time buyers alike - took advantage of affordable interest rates and made a push to close escrow by the end of year," said C.A.R. President LeFrancis Arnold. "Robust sales over the past few months signal the housing market is treading above water on its own in the first full year without the government stimulus that has helped housing in the last couple of years."

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,940 in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. December's sales were up 3.3 percent from November's revised pace of 504,420 and were up 0.1 percent from the revised 558,840 sales pace recorded in December 2010. The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Median prices increased 1.8% last month to $285,920, from November's revised $280,960. But prices were down 6.2% from December 2010's revised median of $304,770, the association said.

"Fourth quarter sales were stronger than we expected, thanks to recent improving consumer confidence and an economy that's slowly showing signs of growth. As a result, sales came in slightly above our fall projection," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "For 2011 as a whole, sales reached a preliminary 497,860 homes sold statewide, up 1.1 percent from the 492,290 homes sold in 2010. However, the statewide median price declined 6.3 percent for the year, to reach a preliminary $285,950, down from the revised $305,010 recorded in 2010.

"Home prices are stabilizing for the distressed market, where we see robust demand, but we continue to see downward pressure on home prices in some higher end markets," said Appleton-Young.

Other key facts of C.A.R.'s December 2011 resale housing report include:

* Housing inventory remains tight throughout California, with the Unsold Inventory Index for existing, single-family detached homes declining to 4.2 months in December, down from 5.0 months in November and down from a 5.0-month supply in December 2010. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

* Thirty-year fixed-mortgage interest rates averaged 3.96 percent during December 2011, down from 4.71 percent in December 2010, according to Freddie Mac. Adjustable-mortgage interest rates averaged 2.79 percent in December 2011, compared with 3.31 percent in December 2010.

* The median number of days it took to sell a single-family home edged up to 58.7 days in December 2011, compared with a revised 58.0 days for the same period a year ago.

Falling Home Prices Cause More Area Borrowers To Comtemplate Walking Away

2012-01-12T15:19:39Z

With so many Folsom area homes worth less than the balance of their mortgages I've been getting more calls from people asking about simply walking away, a process lenders call "strategic default."

For many there is a double edge sword; guilt and morality are one side, and objective financial analysis is on the other.

Strategic defaults are on the rise across the country.

A survey last year by two Northwestern University finance professors found that roughly 30% of mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22% from 2009. A trend that is very worrisome to mortgage lenders.

Over the past year, borrowers and many industry analysts have held out hope that a housing recovery would reverse the rising tide of "negative equity." But even in a desirable location like Folsom, home prices have dropped 7.5 percent over the past year, leaving more homeowners underwater than before.

When prices do stabilize, underwater borrowers could very well face a long wait before they have sufficient equity to sell their homes without having to bring money to closing to cover a shortfall. Nationally, many economists are forecasting prices may bottom out in 2013, but that house prices won't recover their 2006 peak until 2023, if ever.

Many homeowners simply can't or don't want to wait that long.

In the early stages of the housing crisis, the main causes of defaults included unemployment or other financial setbacks and adjustable mortgages that reset to unaffordable levels. Now, five years into the housing recession, strategic defaults are growing as financially healthy borrowers learn of friends or family who have decided to walk away.

Researchers point to a number of forces that are driving borrowers to walk away from their mortgages. At the top of the list is borrowers don't feel any personal connection to their lender, and, the mortgage lending industry's widespread reluctance to modify loan terms has changed attitudes about walking away.

Given all of this, I continue to advise the majority of home owners who find themselves in a negative equity position, and, who are unable to make their payment, to go the route of a short sale rather than strategically default. Here's why.

In a short sale both you and the lender often come out better than if you simply walk away, or, wait for the bank to force you out via foreclosure.

Federal and state law prohibits lenders from trying to collect from a borrower any money they forgive in a short sale. California recently passed a that prohibits junior lien holders from doing the same. Both laws now make it possible for home owners to Short Sale their homes without worry of having to pay back any monies to their lenders after their Short Sale closes.

In a short sale you are eligible to buy another home much sooner than if you strategically default or go through a foreclosure, and in most instances your credit rating will heal faster, which is important in the short term as renting is more difficult with a default on your record. With so much to learn and know about short selling your home I've put together an entire web site full of information that will help you better understand the process.

Distressed Home Sales Continue To Weigh Down Market; Recovery Not Likely To Be In 2012

2011-12-30T00:19:41Z

As we turn the page to another year, many economists are in general agreement that we have not yet hit bottom in regard to declining home values.

"It's unlikely prices will rise next year in most markets," said Jed Kolko, chief economist at real estate information site Trulia. Stan Humphries, chief economist at real estate research company Zillow Inc., said in a related story "The unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013."

This is certainly not good news if you are thinking of selling your Folsom home.

On the bright side, in Sacramento County, home sales are up and inventory is shrinking, but the reason the median price is declining is that more buyers are flocking to less expensive homes.

Reports show an average of just 4.2 months supply of homes currently on the market, a 31% decline from a year ago. In the most desirable areas of Sacramento, inventory is as little as two months.

The numbers are very similar in Folsom.

Across all price ranges there are only 2.1 months of inventory, down 49% from the 4.1 months of inventory we had this time last year.

Sales of entry-level homes in Sacramento have increased 23 percent, while sales of those priced higher than $250,000 increased just 2 percent.

Sales of entry level homes in Folsom below the same $250,000 price point are up 36% from this time last year, while sales of plus $250,000 homes are only up 4%.

Those of you who are selling out of desire rather than necessity should take a careful, and objective, look at your home's current market value before you enter the fray. It could end up saving you needless aggravation and wasted time if your price is not shared by the market.

Folsom California Real Estate Market Report

2011-12-13T15:06:17Z

The median sales price for homes in ZIP code 95630 in Folsom from Sep 11 to Nov 11 was $281,750 based on 290 sales. Compared to the same period one year ago, the median sales price decreased 7.6%, or $23,250, and the number of sales increased 2.1%. Average price per square foot for homes in 95630 was $156, a decrease of 4.3% compared to the same period last year. There are currently 292 resale and new homes in ZIP code 95630 on Trulia, including 453 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in 95630 was $343,044 for the week ending Nov 30, which represents a decrease of 2.1%, or $7,180, compared to the prior week.

Half of homes in area said to be underwater

2011-11-16T14:31:07Z

The following article was recently posted on Sacbee.com.

By Rick Daysog
rdaysog@sacbee.comThe Sacramento Bee

Housing prices in Sacramento have fallen to pre-boom levels as more than half of homes in the region are now worth less than their mortgages, a new report said.

Zillow, the Seattle-based real estate website, said its index for Sacramento home prices for the third quarter dropped 11.2 percent to $200,000 compared with the year-earlier quarter.

The price decline comes as 50.9 percent of all mortgages in the region are now underwater, which is nearly double the national average, the company said.

In September, foreclosure sales represented nearly 40 percent of all home sales in the Sacramento region, and nearly half of all local resales went for a loss.

"We're clearly dealing with a crisis of confidence that is keeping potential buyers on the sidelines, fueled largely by high unemployment and more general economic uncertainty," said Stan Humphries, Zillow's chief economist.

Keep Your Home California Expands Eligibility and Benefits

2011-11-09T14:26:17Z

SACRAMENTO, Calif.--(BUSINESS WIRE)--California's program to provide mortgage assistance to homeowners struggling to remain in their homes is making it easier to become eligible for help.

"This expanded eligibility will allow more families to qualify and receive greater assistance"

Keep Your Home California, a federally-funded program administered by the California Housing Finance Agency, announced today that it is removing the "cash out" restriction from all four programs and will allow homeowners who own additional properties to qualify for much-needed assistance. Additionally, the length of time unemployed homeowners may receive mortgage assistance has been extended and the amount of money available has been increased.

"This expanded eligibility will allow more families to qualify and receive greater assistance," said Claudia Cappio, Executive Director of the California Housing Finance Agency. "We are continuously evaluating our experience so far and making adjustments like these based on the initial results of the Keep Your Home California program."

Keep Your Home California is a $2 billion effort established under the U.S. Treasury's Hardest Hit Fund to offer mortgage assistance to low and moderate income homeowners who are delinquent or facing imminent default on their mortgage. There are four programs that make up Keep Your Home California, all of which have been developed to address different aspects of the current housing crisis and help homeowners facing financial hardships.

Nearly 8,000 homeowners have benefited or are in process to receive funds from the state-run program, which was fully implemented in February.

The primary changes are:

Removing the "cash-out" restriction from all four Keep Your Home California programs. Homeowners were previously not eligible for the Principal Reduction Program if they had consummated a cash-out refinance on their home. This exclusion has now been eliminated under all four programs.
Allowing homeowners who own additional properties to qualify for Keep Your Home California. Under the new policy, homeowners can own additional properties, which will help address situations where homeowners were additional signers on a home for a relative.
Increasing mortgage assistance for unemployed homeowners from six months to nine months. Out-of-work homeowners will now be able to receive as much as $3,000 per month for up to nine months to cover mortgage, tax and insurance payments through the Unemployment Mortgage Assistance Program. Homeowners must be receiving benefits from the California Employment Development Department to be eligible.
Increasing maximum funding from $15,000 to $20,000 to reinstate past-due mortgage loans. The Mortgage Reinstatement Assistance Program allows homeowners who have faced a financial hardship to reinstate their past-due mortgage loans, basically catching up on their loan payments.

"Homeowners who might have been found ineligible before are encouraged to contact Keep Your Home California again to see if they qualify under these new guidelines," Ms. Cappio said.

In addition to the Unemployment Mortgage Assistance Program and the Mortgage Reinstatement Assistance Program, Keep Your Home California also offers a Principal Reduction Program that will lower the amount owed on mortgages by as much as $50,000 in an effort to achieve affordable monthly payments for the homeowner. The Principal Reduction Program requires the mortgage servicer to match the amount on a dollar-per-dollar basis, so the maximum benefit to a homeowner could be a $100,000 reduction in principal.

A fourth program, the Transition Assistance Program, provides as much as $5,000 in relocation costs for homeowners who have decided to transition out of homeownership through a mortgage servicer-approved short sale or deed-in-lieu of foreclosure.

In order for homeowners to qualify for any of the four Keep Your Home California programs, their mortgage servicers must be participating. Almost 50 mortgage servicers now participate in the program; these servicers cover more than 85 percent of the mortgages in California. For a list of servicers and the programs they participate in, visit www.KeepYourHomeCalifornia.org/participating.htm.

Homeowners seeking information about the program are encouraged to call 888.954.KEEP(5337) between 7 a.m. and 7 p.m. weekdays and 9 a.m. to 3 p.m. Saturdays, or visit www.KeepYourHomeCalifornia.org (a Spanish-language site is available at www.ConservaTuCasaCalifornia.org).

Foreclosure Prevention Program Offers Hope To Distressed Homeowners

2011-11-01T16:01:37Z

Even if you've been told 'No' dozens of times, you may move into the 'Yes' category with a program called Keep Your Home California (KYHC).

A small but growing number of distressed homeowners in California are keeping their houses because of a state program funded with $2 billion in federal stimulus money.

KYHC is a free federally funded program for California homeowners who have suffered a financial hardship, to help them stay in their homes, maintain an affordable mortgage payment and avoid foreclosure. KYHC offers three programs to assist homeowners:

· Mortgage assistance of up to $3,000 per month for six months to cover home payments and associated costs for homeowners who are collecting unemployment benefits and are in imminent danger of defaulting on their home loans.

· Funds to help homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. The program will provide up to $15,000 per household to reinstate mortgages to prevent foreclosures.

· Money to reduce the principal owed on a mortgage for a home where the homeowner is facing a serious financial hardship and owes significantly more than the home is worth. This program requires lenders to match any assistance provided by Keep Your Home California.

Each of these programs is funded by the U.S. Treasury Department as part of its "Hardest Hit Fund," specifically designed to assist states most affected by the foreclosure crisis.

In order to apply to KYHC, your financial situation must meet specific requirements. All six requirements must be met to qualify.

1. You must have suffered a financial hardship that puts you at risk of default on your mortgage due to changes in household circumstances such as death, illness, disability, unemployment or loss of income.

2. You must own and occupy your home as your primary residence.

3. Your home must be located in California.

4. You must NOT own any additional properties or have co-signed for a family member or friend on any additional properties.

5. The current amount you owe on your first mortgage must not exceed $729,750

6. Your current mortgage must be through a participating servicer OR through a servicer that has signed an agreement with CALHFA MAC. A homeowner cannot receive assistance if their servicer has not signed an agreement with CALHFA MAC.

7. Sacramento County household income cannot exceed $90,100.

Those who qualify for assistance are not required to make payments; however, if you sell your home or fail to maintain your loan in good standing for three years from receiving the assistance, the lien becomes a loan and you may be required to pay it back at time of sale.

If you are among those struggling to remain in your home, I encourage you to review the Keep Your Home California web site www.KeepYourHomeCalifornia.org and determine if you qualify for one of the programs.

Folsom Homes Values Continue To Fall

2011-10-11T13:48:09Z

The most recent Zillow Median Home Value Price Per Square foot Index for Folsom California ending the week of August 31, 2011 shows the values of all homes in the Folsom area are still falling. This index calculates the median value of all closed sales in a particular geographic area.

Can You Buy a New House and Then Short Sale Your Old One?

2011-10-04T22:42:08Z

More and more I'm being asked; "can I buy a new house and then short sale my old one?"

The answer is "yes", but only under certain circumstances.

For most people, buying a new home means getting a new mortgage.

In today's brave new world of mortgage underwriting unless you have 30% equity in your existing home you won't be able to offset the payment by showing it as a rental. This means your qualifying ratios will be calculated using 100% of the old mortgage payment and the new payment on the home you are buying along with your other debts.

This underwriting guideline is meant to stop people from what's known as "Buy and Bail."

"Buy and Bail" is when a seller knows they are underwater on their current home. The only way to get out of their home is by way of a Foreclosure or Short Sale. And this is what they plan to do immediately after closing on their new home. The general opinion by industry experts is anyone who takes this path is committing mortgage fraud.

Another barrier to buying a new home is the type of home being purchased.

Generally speaking if you are buying a larger home in the same area, with a larger mortgage, or, you are relocating for a job, the new lender making you the home loan won't be concerned with what you plan to do with your old home since you're being qualified with 100% of that payment plus your new payment. In reality few people are doing this right now. Most are looking for ways to reduce not increase their housing costs. Seeing a similar house down the street at half the price and half the monthly mortgage payment is enticing. Lenders know this and are wise to people who attempt to "buy down" when their existing home doesn't have the minimum 30% equity discussed above. If you can't afford your current mortgage it stands to reason you can't afford a new lower one while keeping current on your older more expensive one. This is a red flag that you'll likely dump your old house once you close on the new one.

Let's say you are able to meet the litmus tests discussed above; qualifying ratios, buying up or relocating. Here's another important consideration before you run right out and attempt to short sell your old home.

Industry experts agree that you can't attempt to sell your old home for 90 days from the date you close on your new one. I can't tell you why it's 90 days, but I'm guessing that three months passes the "smell test" that you indeed did plan on keeping the house, most probably as a rental. And after this time you decided to sell it rather than hold it. Maybe you couldn't rent it, or rent it for the amount needed to cover the mortgage. Whatever the reason, 90 days must be an adequate amount of time to please those folks who actively look to prosecute those who intentionally defraud. I'd suggest consulting with an attorney to get a legal opinion on this issue to protect yourself from later being accused of wrong doing.

Folsom Short Sales: Why do some buyer's offers get accepted while others are declined?

2011-09-12T08:00:53Z

I receive calls all the time with questions about short sales. One of the most asked is “why wouldn’t the lender accept my offer?” Here is one I thought you would benefit from my answer.

“I am looking to buy a short sale. The seller wouldn’t accept my offer. My agent told me it was because the short sale lender has told them they wouldn’t accept the offer.

I am a cash buyer and can’t understand why they wouldn’t take my offer. Why do some buyer’s offers get accepted while others are declined? Jonathan.”

Click here to discover how other sellers successfully did a short sale and avoided foreclosure.

Here is the answer to his question. Usually the offer that is accepted is the one that is offering the highest sales price.

Sure banks and short sale lenders like cash offers. But, that is only everything else is the same. They won’t accept a cash offer when it is lower than other offers on the table.

Here is an example. A normal homeowner is selling their house. It is worth $400,000 and he is asking $400,000 for the home.

A buyer offers $350,000 cash. “You should accept my offer because it is cash”, the buyer says. Meanwhile another buyer offers $400,000 and they have already been approved for a loan.

If you were that seller, what would you do? Would you take a little risk to make an extra $50,000? Most people would. In fact, there isn’t much risk because the buyer has already been approved for a loan.

Yes, cash does matter. But, these banks want to reduce their losses as much as possible. They are already losing tens and hundreds of thousands on a short sale.

They own these homes cash. They don’t have to get their money out right away. They like cash offers, but they like to reduce their losses even more.

Sacramento Area Home Prices Drop 9.8% Past Year

2011-09-08T14:22:23Z

Clear Capital, a Truckee-based real estate research firm is reporting that weakening consumer confidence and a high percentage of distress sales in the market are reasons why they are predicting a stormy rest of year for area home prices.

As calculated in their Home Data Index Market Repot, home prices in the capital region were flat for the past four months, up just 0.3% during the May to August period, making Sacramento the ninth worst performing market in the nation during the period. Year over year home prices have dropped 9.8%. The major reason for this is 38.2% of the available homes to be purchased are REO/Bank Owned homes.

The HDI Market Report provides the most current data available (through August 2011), and includes relevant analysis of how local markets perform compared to trend data at the national level

Highlights of their most recent report include:

· The Midwest region leads the nation with a seasonal quarterly home price gain of 7.3%, followed by the Northeast at 4.9%, South at 3.5% and West at 0.7%.

· The gains of summer are not recouping the longer-term declines, and national yearly home prices are down -6.2% compared to last year's levels.

· Jacksonville replaces Detroit as the lowest performing major market, posting a -2.7% quarterly price change.

· Low economic confidence is causing potential buyers tend to sit on the sidelines, despite record affordability levels in many markets. This hesitancy is spurring a growing sentiment to stay agile to better pursue potential job opportunities, causing some consumers to postpone home purchases. These factors support Clear Capital's projection of downward home price movement for the remainder of 2011.

Lowest Performing Markets: The West Fares the Worst

11 of the 15 lowest performing major markets reside in the West region.
Negative quarterly price changes creep up in the lowest performing markets, expanding to seven markets compared to five in last month's report, and all 15 of the markets listed maintain yearly price declines.
Jacksonville's -2.7% quarterly price decreases displaces Detroit as the lowest performing major market.

The West region largely missed out on seasonal gains experienced by the other regions, and as a result, the majority of the lowest performing major markets reside in the West, from the MSAs in Washington state, down the coast into California and Nevada, and then to the south to MSAs in Arizona. Negative quarterly numbers expanded their presence this month with seven of the 15 markets seeing price declines and all of the lowest performing markets showing yearly declines. REO saturation has been on the decline, but 11 of the bottom 15 markets remain well above the national rate.

Folsom Homes Report

2011-08-29T21:17:08Z