Lower Loan Limits and a Higher 20% Minimum Down Payment?

Without an extension or permanent change enacted by Congress, loan limits will decrease from $729,750 to $625,500.  Couple that with new demands for a minimum 20% down payment for conventional loans and strict debt-to-income ratios, and there could be a very sad situation.

In many states these changes may not change too many people's lives.  But in California where the market has for years been higher than other areas of the country, those changes could be critical, decreasing ability of buyers and sellers to purchase and sell, and hurting the recovery of our market. There are 27 California members of Congress who have spoken out against these changes. Everyone should know how their homebuying or homeselling future could be impacted by these changes, and possibly be shut out of the market.

And to make matters more confusing, there have been alternate proposals, and different ideas of what defines a Qualified Residential Mortgage, meaning those mortgages that could be exempt from the new rules. While it may have started with good intentions, these new rules, if passed into law, could have unintended, unknown effects.



Know Your Local, Local Market: A Call to Confidence, for Buyers AND Sellers

Don't short change yourself.

Sometimes people act as if they are just looking for a reason to feel bad, and any attempts to correct, or just gently push away, negative assumptions are met with even stronger resistance.  Twice in four days, the negativity virus has struck people I'm talking to. (The open house rate can be much higher.) One person believed he has the worst looking house possible and that it will never sell, when in fact, a few immediate corrections, including some paint, costing $1000-$1500 would probably put the home on its path to a motivated buyer in at least his house price median. Unfortunately, this owner has fallen prey, over and over, to the repetitious negative media message about "the bad market", all the while knowing nothing about his neighborhood statistics. He couldn't believe he actually had an opportunity somebody out there is looking for: a solid little house with a large back yard in a nice neighborhood under $350,000. Instead, he was looking backwards at perceived complications and difficulties, not forward into the light of a sold property. Maybe he's just not ready, but just in case he's reading this, the light of a sold property can be a very happy light.

This is the real job of a real estate agent: educating the client, which in turn would fire them up with more enthusiasm and motivation about taking action. It's a shame to see a person get into a real funk, a downward spiral of mopiness, when I'm hearing there are buyers looking and looking for certain opportunities. Repetition of the message is where it's at.  The media knows this, and feeds on the human tendancy to embrace fear.  So Realtors have to know it also: We have to be prepared over and over, to show, act and tell wherever and whenever, the postive truths about a client's local market, and show them what solutions could work best for them, over and over. You can't convince someone of something they really don't want to be convinced of, however, repeating things over and over is the key to all learning. Yes, it's a challenge. 

I tried to explain to my prospective seller that the first time buyers are out there in great numbers, in fact, in Los Angeles County, about 60% of first time home buyers can afford a median-priced home (at the height of the market it was about 10%).  At the end of 2010, the LA County median priced single family home was $323,000 (per CAR), and for April 2011, it was $333,000 (per tax data).  And then I tried to explain that investors with all or 50% cash have been very strong in the market also, composing 30-50% of all sales in some markets, actually making it tough for the first time buyers who get outbid.  So Mr. Seller, for the right property in the right area, there's competition out there. Our unsold inventory in Long Beach is recently at 2-3 months (that used to be called a seller's market), the housing affordability index is now where it was in 1999 and 2000. The trickle up effect is that the higher end homes are selling more--those over $750,000 in Los Angeles County have decreased in supply of inventory compared to one year ago.

Just give peace a chance.

Single Family Sales--Market Snapshot for May & Past 12 Months in Long Beach

Date: Avg price Dec 2010 to May 2011
'Single Family Residence'
 'Long Beach'

The most sales of single family homes in Long Beach within in past 2 years is in the $200,000-$300,000 price range: a total of 1,347. The top selling area in that price range in the last 12 months was in North Long Beach, with 821 closed sales in the last 12 months, and continues to have the highest sales volumes for May, at 71 sales, in the same price category!

Based on a group of 60 listings, Bixby Knolls/California Heights area averaged $562,025 in May with 25 sales, with the Plaza and Los Altos areas at 21 and 20 sales for May. The top 5 areas in average sales price for May are Belmont Heights at $878,900, Belmont Shore/Naples at $842,000, Park Estates at $749,000 (4 sales), Bixby Knolls/Cal Heights, and Lakewood Village at $544,000. Remember, these monthly average sold prices are based on properties sold during May, and are not their list prices.
Overall, the chart, based on MLS data, shows an  upward trend--with monthly variances--in average price since December 2010 for the City of Long Beach.

New Listing: 555 Maine Ave., 309, Emerald Villas, downtown Long Beach

 Looking for that desirable "under $200,000" price? You have found it here. This is such an attractive east-facing unit in the Emerald Villas, bright and sunny in the mornings. Besides a great floor plan that features a master bedroom/master bath, plus a 2nd bedroom with a hall bath, inside laundry, and a third floor view, the buyer also receives all the appliances (microwave, refrigerator, stove AND stackable washer/dryer). The living room features a gas fireplace, and floor-to-ceiling beveled-seam mirrors on its entire south wall, plus Pergo flooring. Although it's not needed that often, this unit also has central air and heat. This is a nicely maintained unit that has been recently carpeted (bedrooms), painted in the last 2 years, with newer appliances since 2007.

If the buyer needs a loan source, I can possibly help with a source that provides 3% and 5% down conventional for condos. The building is currently FHA-approved, but its status for FHA after July 31 is unknown at this point. The HOA common areas include rooftop deck, central atrium pool and spa, and exercise room. HOA fees on this unit are $245/month and includes two side-by-side parking units. Location is near an elementary school, and all downtown amenities, including the Aquarium, Convention Center, and nearby freeway access.

Take advantage of this opportunity! These units sold in the $350,000 range in the high market. To see more on this unit, go to Long Beach Homes and Condos.  Now listed at $179,000! UPDATE: This unit is now re-sold.

Credit Impacts on a Short Sale? You Make the Call

I try to help people with this question: short sale or foreclosure, which is the better option? For most people, my reaction is, “Short sale, of course!” This has been mostly because I was always under the impression that a short sale, although still a ding on your credit, was easier on the score than a foreclosure.



But for some time, other sources have been saying, and according to a recent blog post by FICO Banking Analytics, that there is no real difference in the effect a short sale or a foreclosure has on your credit score. Supposedly, both the impact in points and the time to fully recover is about the same for both events.


But all this time I believed that the short sale was superior to foreclosure, largely because of its less adverse effects on credit. So I was forced to do further research into which was the better option. In doing so I learned about benefits of a short sale I wasn’t even aware of, and found that the FICO blog was not true all the time for everyone.


The fact is, each borrower’s credit situation is different, and the way that a creditor reports a short sale to bureaus is different. The reality is that hundreds of thousands of distressed homeowners who have chosen a short sale have experienced a lesser impact on their credit than those who have chosen foreclosure. One of the differences, for example, is how long the borrower had been delinquent on payments prior to the short sale, along with other credit factors.


And, another very big mitigating factor is that in a short sale, a distressed homeowner may be able to obtain another mortgage sooner than someone who has a foreclosure on his or her record. Did you know that more and more employers pull credit before hiring a potential employee, and a foreclosure might keep you from getting a job. Some employers pull credit reports on existing employees, and a foreclosure may not bode well for job advancement in certain industries.
To see a special report, go to www.juliahuntsman.com/briefcase/29690_526201142402PM32754.pdf  which can be downloaded.

These benefits stacked against the negatives of foreclosure, including the embarrassment of public announcement and literally being kicked out of your home, make, in my opinion, short sale the reigning champion.



Now you make the call!

Common (and Costly) Mistakes Borrowers Make

Getting a mortgage can be daunting, especially when there’s a lot of your hard-earned money at stake. It’s critical to spend a few hours researching how a mortgage works (or at least as much time as you’d spend researching a vacation or a car purchase) before you begin the process. Unfortunately, nearly half of prospective home buyers don’t understand essential mortgage information, according to a recent mortgage survey conducted by Zillow Mortgage Marketplace. This lack of basic knowledge is likely leading borrowers to make costly mistakes. Here are some of the most common mortgage misunderstandings, and how to avoid them. My comments are in italics--Julia.

Buying Mortgage Discount Points – Nearly half ( 45 percent) of those surveyed in the Zillow poll believe they should always buy discount points when obtaining a mortgage. However, because mortgage discount points have an upfront cost that can be recouped through a lower interest rate over the life of the loan, the decision should depend on how long you intend to own the home. In some cases, you may not plan to remain in the house for long enough to break-even after buying points. A discount points calculator can help you do the math.

Not Monitoring Rates - Mortgage rates can change multiple times throughout the day, similar to how stock prices fluctuate. But more than half (55 percent) of the people polled thought rates were set one time each day. To get the optimum rate, it’s important to monitor rates and talk to different lenders. When you compare various rates make sure you are comparing the exact same loan. I find prospective buyers with loan quotes or pre-approvals obtained 6 months or one year ago, thinking the terms will still apply! No, they probably won't.

Contacting Just One Lender – Many buyers believe lenders are required by law to charge the same fees for credit reports and appraisals. One-third (34 percent) of survey respondents do not understand that lender fees are negotiable and can vary by lender. Borrowers can save money by reaching out to several lenders and comparing rates and fees. Online services which allow for comparisons to various lenders can be a helpful start, but your story may not quite fit the online scenario which are generalized estimates. And trying to change lenders in the middle of your escrow may not be possible, so you should do your homework up front.

Not Considering Various Loan Options - Many people may automatically avoid certain loan products, like Adjustable-Rate Mortgages (ARMs) because they don’t understand how they work. For example, when asked if interest rates on 5/1 ARMs always reset to a higher rate after five years, the majority of those polled (57 percent) said yes. In actuality, after five years, the rate could increase or decrease, meaning that there’s a possibility for a borrower’s monthly payments to go down. Whether an ARM makes sense for you depends on your personal situation such as your appetite for risk and how long you plan to live in the home. As you consider different loan products, ask your lender to go through the worst-case scenarios to avoid any surprises during the life of the loan. This can be a very helpful step, along with being open-minded to hear and consider ALL possible options for you.

Not Knowing Basic Terms – As you begin to think about securing home financing, you may hear terms like "FHA loans" and "pre-qualification" get bandied around. According to Zillow research, many people don’t know what those terms mean. Forty-two percent of prospective home buyers thought only first-time buyers could qualify for FHA loans, and 37 percent believed if they pre-qualify for a loan it means they’ve secured financing. Familiarize yourself with basic mortgage terms before reaching out to a lender. Most importantly, don’t be afraid to ask your lender, or even your real estate agent, lots of questions about the loan throughout the process.  To"pre-qualify" for a loan does not mean you've secured financing, and neither does "pre-approval" (the preferred step to take), because loan approval is still ultimately contingent upon all the necessary lending steps being taken to fund the loan at close of escrow, including appraisal.

See article at Real Estate Insider News:  Common (and Costly) Mistakes Borrowers Make

Long Beach Single Family House Sales in April 2011

For the top ten sales areas (by numbers of sales), for both April 2011 and April 2010, does it look like we're having more houses sold? Yes!


April 2011 Long Beach House Sales

Based on a total of 130 listings for April 2011 and about 83 listings for April, 2010, these charts are the picture of activity for these areas.  The most sales in April 2011 (in this chart) took place in the Bixby Knolls/California Heights area at 38 sales closed, at an average selling price of over $449,000. Belmont Heights shows 20 sales at average of $631,000 and 21 sales at a $455,000 average in the Plaza/Ranchos.

April 2010 Long Beach House Sales

This seems to be a downward price shift and an upward shift in sales, from last year's lower number of sales and higher prices.  Last April the emphasis was on Belmont Heights/Alamitos Heights area which had a total of 19 sales at an average of $862,000 selling price, followed by 2 other areas with averages of $546,000 (Lakewood Plaza/Ranchos) and $481,000 (Los Altos areas).



In fact, Altos Research indicates for THIS WEEK, there is a decrease in days on market for all of Long Beach residential properties, currently the average is 150 days, a decrease from prior weeks. (Some properties are getting offers in 7 days after hitting the MLS.)

Will there will be a point where lower price and increasing number of sales signals triggers the opportune time to buy for an even greater number of buyers? If you think this is the critical time for you in one of these areas, or another, call me to find out how I can assist you!



April 2011 Condo Market in Long Beach



Condo sales April 2011

 There were 93 condos sold last month (April, 2011) in Long Beach, ranging from a high of $700,000 at 1400 Ocean Blvd. to a low of $49,000 at 315 W. 3rd St.  Of those, 27 were all cash transactions--nearly one-third of the total; 44 were financed with conventional lending; 13 through FHA lending.  The downtown area had 13 of the all-cash sales, or almost 50%.

In the Bluff Park area, selling prices ranged from $435,000 to $335,000 for 2-3 bedroom condos, and $234,000 for a one-bedroom. Downtown Long Beach south of 7th St. (excluding Ocean Blvd. properties), the average price was $147,000 for a 2 bedroom under 900 sq. ft., to a maximum of $248,000 for a 2 bedroom unit over 1100 sq. ft.  Condo properties in and around Marina Pacifica and Bay Shore Drive sold at a maximum of $688,000 and a minimum of $300,000.

To find out more about buying a condo or obtaining financing, please visit my website http://www.juliahuntsman.com/, or call me!

What Do You Do After Finding Out About the Notice of Default?

What if you have a Notice of Default recorded on your property? What then?
This is what happens when your bank or loan servicer no longer is receiving your mortgage payments, and they initiate legal action as stated in your loan documents, and according to California state law.

Once you start down this path, it can be a tough course to change unless you have the financial resources to pay the bank past due payments, plus interest and penalties.

Non payment can occur because your income has been reduced, you lost your job, your payment is going to increase above your means, and last, but not least, you wanted to get a loan modification and you were advised to stop making your payments.
The last reason is a common one, but it can lead the borrower down the wrong path. By the time he/she is behind 2-3 months in payments, it may turn out the homeowner does not qualify for the loan modification program. We hope you didn't pay anyone fees up front, because that's illegal now. PLEASE do not pay anyone an upfront fee for a loan modification, and get a second opinion at least before you stop making payments.
Your credit score will drop and the effect will continue as long as payments are not made, because every month the bank is reporting another 30-day late payment.
You have about 111 days from the recordation date until the time of the foreclosure sale. If your loan was made between Jan. 1, 2003 and Dec. 31. 2007, there is an additional 30 days for the lender to contact the borrower.  The Notice of Sale is usually recorded 20 days before the end of that period.
What can you do? 1) Pay your loan and make it current. 2) Put it on the market to sell it, either as a "regular" sale or a short sale depending on your loan-to-value plus costs of sale. 3) Rent it out, if you think market rent will cover the monthly costs, or your income will be able to make up the difference. 4) Try giving it back to the bank if there's only a first mortgage--if there's a 2nd with a different lender a deed-in-lieu will probably not work.

If you have considered all your options and you can't keep the property and your funds don't cover the deficient amount, please investigate a short sale. In most cases you will be able to obtain a future mortgage sooner than if you have a foreclosure--or a deed-in-lieu--on your credit report. More banks and servicers have become more efficient and able to deal with the volume of short sales in the market, and more buyers are willing to wait out the time period involved. Depending on the lender and the program, some short sales are being approved and closed within 90 days and less.  But remember, you have just a certain amount of time to obtain a buyer and get short sale approval, and then close escrow. Banks may extend the sale date one or more times, but usually they want an accepted offer in hand by a qualified buyer. So it's back to the loan modification point-in-time: think twice about not making your payment unless you know what's on the road ahead.

It will cost you nothing to weigh your options, a fact that more people should remember in spite of it being such a difficult thing to think about while you're in it. In fact, a lot of people let their properties go into foreclosure without having tried to sell it. Please don't do that without consulting with a real estate professional who's had experiernce with distressed properties.

Please contact me for a printed format on your foreclosure timeline, and for more information about the your options, and the difference between short sales and foreclosure. You may also go my distressed property page and also here for more information on foreclosure timelines and prevention.

The House Market in Long Beach Has Increased Last 3 Months



Long Beach Sales of Single Family Houses last 6 months

The Long Beach single family home market has been busy, especially in the last 3 months. Both the average sales price and the number of sales of houses has gone up.  The chart to the right is based on a group of about 1100 listings in the entire city, from November 2010 to the April 26, 2011, where the average price has risen from $379,515 to $419,100:

Month, #of Sales, Avg Price

Nov 2010 150  $379,515

Dec 2010  143  $387,407

Jan 2011   166  $374,575

Feb 2011  184  $404,359

Mar 2011  223  $435,699

Apr 2011  226  $419,100

LB condo avg price last 6 months

The news about condos is not the same: based on results of 330 condo listings in the same time period, the average condo price in Long Beach as a whole has dropped $225,042 to $133,969.

Figures for certain homeowner associations and certain local markets may vary, because of the concentration of sales data in the distressed property markets in certain geographic locales, which impact the overall city-wide results.
Data for Los Angeles County also shows a year-over-year drop for March of about $26,000 in the median sale price from March, 2010. In general, the condo market has been impacted strongly because they were the entry-level property by buyers who were vulnerable to the economy, a distressed property market which now attracting cash investors. However, for zip code 90803, Belmont Heights, Belmont Shore, Bluff Park and Naples, for the last 6 months, the stats show an upward trend--based on 42 listings--the sale price has increased from an average of $291,400 to $390,000. For 90802, we are back to the decrease in average selling price for the last 6 months: $225,000 in November to $100,000 in April, based on a group of 120 listings. Zip code 90814 has also decreased in its condo prices (Bluff Heights, parts of Belmont Heights, Rose Park areas).

For an evaluation of your house or condo, contact me, especially if you are not certain if your loan value is higher or lower than the market price for your home. There are options, and you should know your options now.
All chart data from CRMLS Matrix.