Is This the Shift in the Down Cycle?

After three years of shrinking equity and, at the same time, the expansion of the number of homeowners underwater in home value, the Federal Reserve economists, who conduct "massive research" into mortgage balances and home value changes, have some better news. According to their "flow of funds" survey, "homeowners' net equity grew by nearly $1 trillion" from 1st through 3rd quarter of 2009, and in the 3rd quarter of 2009, net equity increased by $418 billion. The down cycle could be shifting, per this article in the Washington Post (see link).

According to Zillow, the percentage of homeowners with negative equity is on the decline in many housing markets including Los Angeles. Riverside, heavily impacted by foreclosures, also saw improvement.

The median Southern California price for houses and condos in January, per Dataquick, was $271,500, up 8.6% from one year earlier, and buyers who paid all cash accounted for almost 29% of January sales, the highest such figure since 1988. FHA loans accounted for almost 37% of all home purchases. Loans over $417,000 accounted for only 14% of all home loans in January.

In Long Beach, probably thanks to the first time buyer tax credit (which expires in April), and to growing recognition that current prices are the best real estate opportunity in years, properties in escrow (up 36%) and median sales price (up 6%) have both risen overall in the period since one year ago.

Is Purchasing a Probate Property a Good Way to Buy?

This article by Online Ed makes some good points:

Why is Probate sometimes a good way to find property? The probate process involves the creation of an inventory of all assets of an estate, followed by the distribution of assets necessary to pay off all remaining debts the estate may owe. Often times the heirs to an estate will have to liquidate some of these assets in order to satisfy the debts and liabilities of the estate. Houses are frequently the largest repository of value in an estate and often need to be liquidated in order to settle the estate.

Even if the home doesn't need to be sold to cover liabilities, the heirs will frequently sell the property in order to distribute the proceeds to multiple individuals. If the property needs maintenance or repair before it can sold at fair market value, that usually means someone is going to have to invest time and money to make those repairs themselves or hire someone else to do so. All too often, it takes family members more time and money than was ever anticipated. If the heirs live some distance away, or in another part of the country, the process of renovating and preparing a house for sale becomes even more demanding. Faced with those options and the potential windfall of cash from an immediate sale, most people will opt to sell – and will be willing to do so at a substantial discount. Remember, holding on to a vacant house in order to realize a bit more profit is not without cost or risks. There’s insurance, utilities, yard maintenance, and the ever-present risk of break-in or vandalism.

In addition, the heirs to the estate may be willing to finance the property with very favorable terms in order to make the deal work. This is especially true if the property has no mortgage and is owned free and clear.

In Long Beach, since 2009, out of all 1-4 unit residential properties, there are currently a total of 74 properties in the probate category that are active, in escrow, or sold, in the SoCalMLS. Considering that since 1/1/2009, in the same 1-4 unit category, there were 3505 properties sold in Long Beach, per the MLS, the probate properties are thus a small category of property. But then why should the buyer be concerned about these? Because it may pay to be prepared, just as it pays to be prepared for a short sale, an REO bid, a property under a timeline because it has a notice of default on it and may soon go into bankruptcy, and other categories which may require court approval, or even auction.

And, in some areas, it may be best to assume that a strong market price will be negotiated (many heirs study area sales too) , but the opportunity for the buyer may be that other buyers may choose to not buy a fixer, or take an as-is sale with no repairs by the seller.

It pays to know what you the buyer might be capable of doing in this market.

Another First for Buying: California Mortgage Protection Program

It's so hard to not be helped right now, especially if you're a first time buyer. On top of the $8000 tax credit available right now, California Association of Realtors is also offering a mortgage protection program. More security can be yours if you fit the bill:

Did you know? Through the California Association of Realtors' Housing Affordability Fund qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months to help pay the mortgage. This program began in April of 2009 and continues through the end of 2010. Another great program for first time buyers that adds additional security to their home buying experience! So if you, or someone you know is, are a first time buyer, this program will last until the funds are depleted, or 12/31/2010. This program actually began in April, 2009, and will last until the end of this year, or until funds have been depleted prior to that time. Qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months.

TO QUALIFY FOR THE MORTGAGE PROTECTION PROGRAM APPLICANTS MUST:

• Be a first-time home buyer or co-buyer – someone who has not owned property in the last three years
• Open escrow April 2, 2009, or later, and close on or before December 31, 2010 .
• Use a California REALTOR® in the transaction (fee for referral does not qualify) ·
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed)

Applications are available--don't miss this opportunity for another benefit of buying at this time.

http://www.juliahuntsman.com/ for a property search, information on buying residential property.