Foreclosure Update

The West is leading the way!!!.....except it’s not for a good thing, it’s in regards to foreclosures. August saw a considerable jump in foreclosure starts over July, which comes in the form of a notice of default or notice of trustee sale, depending on the state. This is unfortunate given the opposite has been true of recent and foreclosure starts were shrinking. In fact, every single state saw a rise in foreclosure starts in the month of August.

The Bank of America umbrella seems to be getting most of the blame for these troubles. Although other banks such as Wells Fargo saw increases, it appears that Bank of America is leading the way with an astounding 116% increase in August over July. On one hand this could be because of a back log that was created by various hold ups by both internal matters like simply working out the kinks in procedures as well as government hindrances often in the form of one new law after another. On the other hand, this situation could be largely due to the troubled economy and struggling citizens finally reaching their breaking point. It’s mostly like some sort of combination of both.

It takes, on the average, more than a year to complete the foreclose process. So in large, this increase won’t even likely affect the market for some time. It is, however, just another part of the constant challenges faced by the economic recovery. Until we’re able to gain control on upside down real estate, we will continue to struggle to make headway on a reasonable recovery.

In California alone, foreclosure starts increased by a whopping 69.5%! That’s the highest amount in a year. The figure wasn’t much better for San Luis Obispo County with an increase of 56.35% from July to August. Santa Barbara County, too, struggled with a 61.73% increase, and unfortunately also saw an increase of 6.50% over the prior year, 11.33% higher than SLO County.

Percentage wise in Santa Barbara County, Lompoc and Goleta take the cake with over 100% increases in foreclosures from July. However, it’s Santa Barbara and Santa Maria, numbers wise, which saw the most damage. They had over 50 and +/-100 foreclosures, respectively, in the month of August.

For San Luis Obispo County, San Luis Obispo and Arroyo Grande appear to be taking the largest hit in foreclosures. SLO topped 20 for the month of August which is up 61.54% from July. Arroyo Grande only increased by 37.50%, but that’s not necessarily a good thing since they too were at or about the 20 mark, the percentage wasn’t as high of an increase because their July figures were already higher than SLO’s.

The Silver Lining – One person’s unfortunate situation can be another person’s opportunity. The continual assembly line of foreclosures will help to keep home prices low. Low home prices and more foreclosures will help to keep interest rates at historical lows. Those who have the means can take advantage of this situation. Many people who even think they don’t have the ability to get into a home actually do have opportunities available to them. There are many programs available that allow people to purchase a home for very little down. Call a REALTOR, contact your Mortgage Representative, email your Financial Planner, and discuss your situation with them so they can help you figure out a game plan to help you reach your goals.

Zachary S. Johnson, REALTOR, www.805RealEstate.com

Real Estate Market Update

Sales of single-family detached homes in California for the month of July brought mixed results. They dropped by 4.1% from the prior month, however, they rose by 4.5% as compared to July of 2010. So on a month-to-month basis we saw a slowdown, but on an annual basis we saw increased activity. Figures weren’t any better for new homes as this year’s sales pace is on a path that, if it continues, would be the worst year in nearly 50 years!

The pull back is largely contributed to the roller-coaster ride that is the economy. With mortgage rates at historical lows, you would think that people would be rushing out to purchase their dream home or investment property. But uncertainty in the stock market, job security and our government’s competency are keeping even the most qualified and stable potential home buyers on the sidelines.

People seem to be more in favor of saving their hard earned money rather than spending it on a down payment for a home. What many people don’t realize is that there are many programs out there for home buyers that will allow them to put little money down and still be able to purchase a quality home that they can afford, usually at about the same monthly cost as their current rent.

Low home prices plus low mortgage rates equals great opportunity to purchase real estate. Another reason to make a move and purchase a home, those of you that will need to obtain a jumbo loan, will have greater difficulty achieving that come October 1^st. That’s when Fannie Mae and Freddie Mac high cost loan limits that were raised in 2008 will expire and revert back to their lower levels. If you live in San Luis Obispo County and need a loan over $561,200, it will be more costly and more difficult to purchase a home.

Living where we live on the beautiful Central Coast, that dollar amount is easy to reach. There will be tougher loan qualifications requirements and higher interest rates and down payments because of this change. So if you fall into this category, it would greatly behoove you to talk to your Mortgage Representative today and look into your options. Don’t hesitate to contact me as I know several very qualified Mortgage Representatives that can review your finances and provide quality information you can use in your home buying plan.

Zachary S. Johnson, REALTOR, www.805realestate.com

Sales and Price Figures for May

Central Coast vs. State-Wide StatsSales and Price Figures for May
By Zachary Johnson
California home sales in May were down 5.8% from April and down 14.4% from the previous year. The slowdown in the demand is widely contributed to the concern from would-be buyers about the strength of the economy, the difficult buying process that’s associated with many short-sales and REOs, and the difficulties in obtaining acceptable financing. These factors along with the circumstance of lenders listing distressed properties at a more deliberate pace, are all playing a role in reduced home sales and longer listing periods.

The California statewide median price of an existing, single-family detached home sold, decreased by 70 basis points (0.7%) from April to May going from $293,800 to $291,760. May’s median price was down 10.9% from the $327,460 recorded in May of 2010.

The figures coming out this month were not a surprise, however, since there was a significant decrease in April pending sales coupled with an unusually strong performance last May, largely due to the expiring tax credits pushing sales and prices up somewhat artificially. The economic difficulties of recent past are also reflected in the sales and price figures.

Unsold Inventory for existing, single-family detached homes was 5.4 months in May, unchanged from April, but up as compared with May of 2010 which produced a 4.5 month supply.

Mortgage rates have seemed to remain on the lower end of the historical spectrum. 30 year fixed mortgage interest rates averaged 4.64% during May 2011, down from 4.89% in May of 2010, according to Freddie Mac. Adjustable Rate Mortgage (ARM) interest rates averaged 3.13% in May, compared to 4.01 the same time last year.

Despite the difficulties being felt throughout California, the Central Coast has been faring better. For San Luis Obispo County, the sales pace for an existing Single Family Home decreased by only 3.4% from April and actually INCREASED by 5.0% from May 2010. A 2.4% and 19.4% respective difference, for the better, as compared to the state-wide averages. The decrease in median price from April to May surpassed the state’s figures by about 1.5%, unfortunately going from $390,180 down to $381,450. However, the year over year figure for SLO County only decreased by 1.3% from $386,670 to $381,450, a large contrast to the 10.9% decrease for all of California during the same time. Another important note, inventory is also down by 11.7% from May of last year.

Santa Barbara County had even better figures in most areas. The main blow was a 17.0% year over year decrease in the median price of existing single-family homes. In May of 2010 the median price for this category was $513,890 and for May of 2011 it was recorded as $426,320. The positive aspect of May’s figure, is that it’s up 9.10% from April 2011’s median price of $390,910. The sales pace for SB County is also very uplifting, with sales up 4.7% from May 2010 and sales up an astonishing 17.6% just from April.

With the larger market of California suffering some recent troubles, the data from the Central Coast shows you that we do still live in somewhat of a bubble here. And because our area is considered to be so desirable to many “outsiders”, we are able to stay ahead of state and national markets, something that should be kept in mind whenever reading or listening to the news regarding such topics. We tend to hold our value and recover at a higher level than the rest of the state and nation in large. (http://www.car.org/newsstand/newsreleases/2011newsreleases/maysalesprice/, 06/15/11)