Okay before everyone gets all bent out of shape about the title of the post let me get you up to speed on what prompted such a bizarre/potentially offensive statement.
Fannie Mae was placed into conservatorship of the Federal Housing Finance Agency (FHFA) on September 7, 2008. Unlike the banks that, at the time, were receiving large chunks of bailout money from the US taxpayers, Fannie Mae was not given a lump sum of money. By placing them into conservatorship the government basically bank rolled Fannie Mae. The extent of their backing was only limited by the budget ceiling of the entire Federal government as allowed by law. In layman's terms: This would be like if you were sitting in Vegas at a $100/hand table losing for hours and taking out markers well beyond your ability to repay. Then all of a sudden your multi-million dollar relative comes in and declares to the pit boss "I got his back....put him on my tab". In retrospect, that is a better analogy than I planned because Fannie Mae was essentially gambling with the types of loans they were insuring at that time. Anyway, I digress.
Flash forward to present day. Fannie Mae just posted a 2nd quarter profit of 10.1 billion dollars. They have pledged to make a 10.2 billion dollar payment to the treasury next month bringing their total dividend payments to the treasury at roughly $105 billion dollars. Considering they had borrowed $116 billion dollars from the taxpayers that is not as impressive as one might think but definitely on the right track.
So what does this have to do with Obama and the mob? I am almost there, I promise.
Just yesterday President Obama decided to come out endorsing a bill to start winding down Fannie Mae. Is this a horrible idea? No. However, this is the most absurd timing on so many different levels. Who are his advisers that allowed/encouraged such a premature speech? Here are the main three reasons why our President has egg all over his face:
1. Anyone that has ever seen an old mob movie or a movie about gambling with a bookie knows "dead men don't pay". You know what, I will even take it a step further. If you have ever seen "Rounders" the movie I believe John Malkovich's muscle says it verbatim. So what was our commander in chief thinking? As a U.S. taxpayer I am a little confused why AT MINIMUM the principal balance of our $116 billion is not paid back before such pointed comments are made. After all, I believe dead companies would have just as hard of a time paying back the money they owe as dead men. I am not a genius but I believe dead is universal across genres. Oh yeah, and there is also the fact that we as taxpayers (aka the treasury) own about 80% of the stock for Fannie Mae. That price is currently $1.56/share apparently on its way to $0. I can already hear the contrarians saying "calm down, he said unwind....not kill". Noted, now onto point number two and why I still think it is putting the cart before the horse.
2. I get head hunters calling me all the time to try and recruit me to some big fancy high paying position. Disclaimer: Please disregard the author's enormous ego....the previous statement is completely false. Businesses stay competitive by having the ability to attract and recruit talent. So what kind of talent do you think Fannie Mae will be able to recruit with the commander in chief of our great nation gunning for them? Better yet let's talk retention, what employee at Fannie Mae did not go in and update their resume yesterday? My final point, what kind of productivity do you expect from employees and management of a company that the President of the United States wants to shut down? Goals and aspirations drive most of us to strive for more and ultimately increase our productivity. It doesn't matter whether that goal is a management position, higher compensation, or a better office. The bottom line is Fannie Mae will not have any of those to offer any of its employees. So where is the incentive to keep working hard and boosting profits?
3. Last I heard we were still struggling to create jobs. I am not sure how many employees Fannie and Freddie Mac have combined but I imagine it is not a small number. So have we now recovered enough that President Obama believes he can start laying off thousands of jobs? If so, he has a lot more faith in this "recovery" than I do at the moment.
Let me clear a few things up. I am not an Obama hater. I am also not saying the dissolution or restructuring of Fannie Mae and Freddie Mac is not inevitable. But for the love of all that is fundamental about business can we not get paid back and maybe get our economy on track before making such radical comments? Here's a towel Mr. President, please wipe that egg off your face before your next speech.
Thursday, August 8, 2013
Saturday, July 27, 2013
Another bubble?
As you may have noticed all of Southern California has had a recent surge in home values over the first half of the year. As a result of a slight sign of life, all the doomsayers started coming out saying another bubble was forming and the rise is unsustainable. It is true that the FED is threatening to takeaway the 85 billion of mortgage backed security and bond buying that has artificially driven rates down to ridiculous levels over the last year. It is also true that interest rates directly affect affordability and how the FED handles the eventual end to this support and it will play an integral role in the housing market moving forward.
However....let us put a couple things in perspective.
First, there is that little thing that drives up prices on everything from houses to candy bars over a duration of time. Yeah, we have all heard the stories growing up about our parents buying their first home for $20,000 or buying a candy bar for a nickel. To hit that point home I just saw candy bars the other day for $1.50 each. So is it that crazy that your parents first house is now worth $600K. Obviously, there are more factors to consider and I could analyze it to death until you fall asleep or stop reading....but I believe that is sufficient for laying out the basic principle.
Secondly, is the cost of renting versus owning. We have a fantastic home for sale in Cypress. It is a 1 bedroom, 1 bath with a extra den/office off of the living room. (MLS # OC13141977) It has a two car attached garage with laundry hook-ups, as well, which is nice for a 1 bedroom. My point is, it is superior to almost any comparable apartment rental on the market if you were looking to rent. What got me thinking about this blog post was when I ran some numbers for a potential buyer. They were looking into doing an FHA with minimum down and asked what the payment would look like per month. At today's rates with principal, interest, mortgage insurance, property taxes, and HOA dues the payment is still under $1950/mo!!!! If that sounds like alot of money to you then you haven't been looking to rent lately. While home prices have stayed depressed over the last 5 years rents have skyrocketed. So with rents and ownership payments almost identical with a minimum investment it seems unlikely to me that any sort of "bubble" is developing.
Going forward....all eyes are on the FED.
However....let us put a couple things in perspective.
First, there is that little thing that drives up prices on everything from houses to candy bars over a duration of time. Yeah, we have all heard the stories growing up about our parents buying their first home for $20,000 or buying a candy bar for a nickel. To hit that point home I just saw candy bars the other day for $1.50 each. So is it that crazy that your parents first house is now worth $600K. Obviously, there are more factors to consider and I could analyze it to death until you fall asleep or stop reading....but I believe that is sufficient for laying out the basic principle.
Secondly, is the cost of renting versus owning. We have a fantastic home for sale in Cypress. It is a 1 bedroom, 1 bath with a extra den/office off of the living room. (MLS # OC13141977) It has a two car attached garage with laundry hook-ups, as well, which is nice for a 1 bedroom. My point is, it is superior to almost any comparable apartment rental on the market if you were looking to rent. What got me thinking about this blog post was when I ran some numbers for a potential buyer. They were looking into doing an FHA with minimum down and asked what the payment would look like per month. At today's rates with principal, interest, mortgage insurance, property taxes, and HOA dues the payment is still under $1950/mo!!!! If that sounds like alot of money to you then you haven't been looking to rent lately. While home prices have stayed depressed over the last 5 years rents have skyrocketed. So with rents and ownership payments almost identical with a minimum investment it seems unlikely to me that any sort of "bubble" is developing.
Going forward....all eyes are on the FED.
Thursday, May 19, 2011
Latest Housing and Employment numbers are in...
So there is good news and bad news...
Jobless claims declined for the second straight week. Unemployment benefits for the week dropped 29,000 to 409,000. This beat the median estimates which were calling for the benefits to drop to 420,000. This further points to the fact that April's surge might have been more of a result of temporary events and not a sign of a deeper erosion in the job market.
Now for the not so good news. Although, if you read my blog you will not be surprised by this data.
Here is the latest data:
WASHINGTON (MarketWatch) - Sales of existing single-family homes and condos fell 0.8% in April to a seasonally adjusted annual rate of 5.05 million, the National Association of Realtors reported Thursday. The decline was a surprise. Economists surveyed by MarketWatch expected sales to rise to 5.25 million units in April, based on a surge in pending home sales in March. Sales rose a revised 3.5% in March to 5.09 million units, down from the initial estimate of a 3.7% rise to 5.1 million units. The median price of homes sold was down 5% in April from last year at $163,700. Inventories of existing homes for sale rose 9.9% to 3.87 million units in April, representing 9.2 months' supply, up from 8.3 months in March
Keep in mind that this is national data and not specific to our area.
Jobless claims declined for the second straight week. Unemployment benefits for the week dropped 29,000 to 409,000. This beat the median estimates which were calling for the benefits to drop to 420,000. This further points to the fact that April's surge might have been more of a result of temporary events and not a sign of a deeper erosion in the job market.
Now for the not so good news. Although, if you read my blog you will not be surprised by this data.
Here is the latest data:
WASHINGTON (MarketWatch) - Sales of existing single-family homes and condos fell 0.8% in April to a seasonally adjusted annual rate of 5.05 million, the National Association of Realtors reported Thursday. The decline was a surprise. Economists surveyed by MarketWatch expected sales to rise to 5.25 million units in April, based on a surge in pending home sales in March. Sales rose a revised 3.5% in March to 5.09 million units, down from the initial estimate of a 3.7% rise to 5.1 million units. The median price of homes sold was down 5% in April from last year at $163,700. Inventories of existing homes for sale rose 9.9% to 3.87 million units in April, representing 9.2 months' supply, up from 8.3 months in March
Keep in mind that this is national data and not specific to our area.
Friday, May 13, 2011
Numbers don't lie....do they?
Last month seemed to me to be the slowest month in real estate since I started in 2003. Oddly enough, it wasn't for the lack of business. We had a few listings and a handful of buyers keeping us busy. However, it just seemed like we were working in a vacuum. Open Houses had very few visits, the inventory for my buyer's needs was lacking, and despite all the "all cash" offers that went through one of our properties they never pulled the trigger. I talked to a few other agents that expressed the same somber conclusion about the month of April. So I decided to look at some statistics and see if numbers backed up the ghost town feeling. Here are the sales statistics for Huntington Beach in 30 day increments.
Last 30 days..............157 sold
Prior 30 days.............143 sold
Prior 30 days.............107 sold
Prior 30 days.............102 sold
To put it in perspective the same dates in 2010 yielded 95, 99, 110, and 184 sales respectively. So although more houses have sold this year than last YTD, the april-May numbers are still concerning. Historically the first three months of the year are a horrible time to buy or sell. I often refer to it as our ill timed summer vacation. However, last year is more indicative of the surge in sales that ususally starts to take place as the ground dries up and people start leaving their houses again. Who am I kidding, in Huntington we just don't go outside because it is an uncomfortable 67 degrees and not in the 70-80 range where we don't feel lethargic. Anyway, this year we are about 15% off our abismal sales from last year! I will monitor this and post again in a month or so to see if this is just a slump or a sign of what is to come.
Last 30 days..............157 sold
Prior 30 days.............143 sold
Prior 30 days.............107 sold
Prior 30 days.............102 sold
To put it in perspective the same dates in 2010 yielded 95, 99, 110, and 184 sales respectively. So although more houses have sold this year than last YTD, the april-May numbers are still concerning. Historically the first three months of the year are a horrible time to buy or sell. I often refer to it as our ill timed summer vacation. However, last year is more indicative of the surge in sales that ususally starts to take place as the ground dries up and people start leaving their houses again. Who am I kidding, in Huntington we just don't go outside because it is an uncomfortable 67 degrees and not in the 70-80 range where we don't feel lethargic. Anyway, this year we are about 15% off our abismal sales from last year! I will monitor this and post again in a month or so to see if this is just a slump or a sign of what is to come.
Tuesday, February 8, 2011
Inflation....it's like watching an old horror film
We all know it is there lurking around the corner waiting for our young attractive vulnerable actors/actresses....aka country. We all know it is going to be a huge problem in the future. (hence the obscene gains in gold and gold producers over the last year +.) However, we live in a see no evil hear no evil time similar to our scantily clad soon to be victims in the metaphor above.
After all, don't we hear enough doom and gloom with the earnings projections, Greece and Spain's debt woes, and let us not leave out the latest rendering of the classic tune "protest like an Egyptian". With all this going on it is nice to hear manufacturing is improving, production seems to be picking up some steam, and the unemployment rate is falling.(disclaimer: If I remember correctly we added 36K private sector jobs last month, the fact that the unemployment percentage in this country dropped from the 9.4% to 9% between Dec. and Jan. simply tells me that people stopped looking and gave up. How do you add 36K net jobs in the private sector and have that significant of a drop in the unemployment rate without doubling our military personnel or some sort of U.S. genocide that took potential workers off the table.)
I digress from my point....today China raised its rate .25% for the 3rd time since October to combat inflation. As a result, our treasury auction was a disaster as the faux pas "i" word worked its way through the market and investors began anticipating the same thing eventually happening in the US. Now we haven't had nearly the growth that China has seen over the last few years so this isn't an apples to apples comparison. However, it should be noted that our rates rising does numerous things. First, as I said in my last blog, it prices people out of the fragile housing market if it is not a gradual increase. Second, Adjustable rate mortgages that people are treading water with because their house is underwater will now be on the rise. Also, all that debt that the treasury is selling off on a weekly basis to fund QE2....well I think it goes without saying that the higher the yield the more interest the US is going to have to pay back to borrow that money. (I guess it didn't go without saying). Finally, remember all that money that the banks are lending because they are getting it so cheap.....(insert sarcastic grin).....imagine what how brutal lending is going to be when the lending window isn't just throwing money to the banks.
So now that you are panicking wondering what do I do? Here is some free advice: (disclaimer: you get what you pay for)
1. Pick your investments wisely as you will be fighting inflation. I personally would not be bullish on US Treasury Bonds.
2. For the love of all that is good in this world get a fixed rate mortgage. Rates are on the rise but they are still ridiculously low and inflation will cause higher rents....(light bulb) a rental property with a loan at 4.875% when rates jump to 6% and rents increase is going to look pretty swanky.
3. There was always one day a month that my dad would do all the bills and I knew that was not a day to cross, question, or annoy my dad...because it was crunch time to budget and/or make cuts. Let's just say that 'ol lady liberty is going to be having "bill day" for a couple years coming up. We dug ourselves in a giant hole and surprise, surprise, throwing money at it hasn't decreased the pile of money we owe. Be patient....
4. The price of Vodka is going to increase....get those martinis flowing
Until next time....
After all, don't we hear enough doom and gloom with the earnings projections, Greece and Spain's debt woes, and let us not leave out the latest rendering of the classic tune "protest like an Egyptian". With all this going on it is nice to hear manufacturing is improving, production seems to be picking up some steam, and the unemployment rate is falling.(disclaimer: If I remember correctly we added 36K private sector jobs last month, the fact that the unemployment percentage in this country dropped from the 9.4% to 9% between Dec. and Jan. simply tells me that people stopped looking and gave up. How do you add 36K net jobs in the private sector and have that significant of a drop in the unemployment rate without doubling our military personnel or some sort of U.S. genocide that took potential workers off the table.)
I digress from my point....today China raised its rate .25% for the 3rd time since October to combat inflation. As a result, our treasury auction was a disaster as the faux pas "i" word worked its way through the market and investors began anticipating the same thing eventually happening in the US. Now we haven't had nearly the growth that China has seen over the last few years so this isn't an apples to apples comparison. However, it should be noted that our rates rising does numerous things. First, as I said in my last blog, it prices people out of the fragile housing market if it is not a gradual increase. Second, Adjustable rate mortgages that people are treading water with because their house is underwater will now be on the rise. Also, all that debt that the treasury is selling off on a weekly basis to fund QE2....well I think it goes without saying that the higher the yield the more interest the US is going to have to pay back to borrow that money. (I guess it didn't go without saying). Finally, remember all that money that the banks are lending because they are getting it so cheap.....(insert sarcastic grin).....imagine what how brutal lending is going to be when the lending window isn't just throwing money to the banks.
So now that you are panicking wondering what do I do? Here is some free advice: (disclaimer: you get what you pay for)
1. Pick your investments wisely as you will be fighting inflation. I personally would not be bullish on US Treasury Bonds.
2. For the love of all that is good in this world get a fixed rate mortgage. Rates are on the rise but they are still ridiculously low and inflation will cause higher rents....(light bulb) a rental property with a loan at 4.875% when rates jump to 6% and rents increase is going to look pretty swanky.
3. There was always one day a month that my dad would do all the bills and I knew that was not a day to cross, question, or annoy my dad...because it was crunch time to budget and/or make cuts. Let's just say that 'ol lady liberty is going to be having "bill day" for a couple years coming up. We dug ourselves in a giant hole and surprise, surprise, throwing money at it hasn't decreased the pile of money we owe. Be patient....
4. The price of Vodka is going to increase....get those martinis flowing
Until next time....
Friday, January 21, 2011
Numbers tell the tale
As unfathomable as it seems the housing market is slowly validating the minority of people who claim we are experiencing a recovery. According to CAR....California home sales rose in December, posting their highest level since May.
"December's sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher," said C.A.R. President Beth L. Peerce. "December's sales opened escrow in October and November. Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,"
However, with yesterday's horrific auction of TIPS, investors appear to have given up on the idea that inflation is going to play a significant role in monetary policy. This is also evidenced in the fact that rates have been trending higher into the new year. The problem with that is a small rate jump will get people off the fence as the CAR President said. However, a more than gradual rise in rates consistently throughout the year might just push people off the fence as their affordability dwindles.
Here is summation of the rest of the report:
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,680 in December. December's sales were up 5.9 percent from November's revised pace of 491,590 but were down 6.8 percent from the revised 558,840 sales pace recorded in December 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from a revised $296,690 in November but was down 1.6 percent from the revised $306,860 median price recorded for the same period a year ago.
"While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "For 2010 as a whole, sales reached 494,900 homes sold, down 9.5 percent from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2 percent to reach $302,900 for the year, up from the $275,000 recorded in 2009," she said.
A greater than usual drop in listings combined with the sales increase caused C.A.R.'s Unsold Inventory Index to decline more than one month. The Unsold Inventory Index for existing, single-family detached homes was 5.0 months in December, down from 6.2 months in November. The index was 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 57.5 days in December 2010, compared with 35.1 days for the same period a year ago.
Source: BusinessWire
"December's sales increase reflects buyers taking advantage of rock bottom interest rates and improved affordability since the first half of the year, when prices were higher," said C.A.R. President Beth L. Peerce. "December's sales opened escrow in October and November. Rates hit their absolute lowest in October but began edging higher in November, prompting buyers to get off the fence,"
However, with yesterday's horrific auction of TIPS, investors appear to have given up on the idea that inflation is going to play a significant role in monetary policy. This is also evidenced in the fact that rates have been trending higher into the new year. The problem with that is a small rate jump will get people off the fence as the CAR President said. However, a more than gradual rise in rates consistently throughout the year might just push people off the fence as their affordability dwindles.
Here is summation of the rest of the report:
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 520,680 in December. December's sales were up 5.9 percent from November's revised pace of 491,590 but were down 6.8 percent from the revised 558,840 sales pace recorded in December 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
Following three consecutive monthly declines, the median price of an existing, single-family detached home sold in California increased 1.7 percent from a revised $296,690 in November but was down 1.6 percent from the revised $306,860 median price recorded for the same period a year ago.
"While sales rose in December, the sales pace in the second half of the year was lower than the first half as the housing market weaned itself off home buyer tax credits," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "For 2010 as a whole, sales reached 494,900 homes sold, down 9.5 percent from the 546,860 homes sold in 2009. However, the statewide median price increased 10.2 percent to reach $302,900 for the year, up from the $275,000 recorded in 2009," she said.
A greater than usual drop in listings combined with the sales increase caused C.A.R.'s Unsold Inventory Index to decline more than one month. The Unsold Inventory Index for existing, single-family detached homes was 5.0 months in December, down from 6.2 months in November. The index was 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 57.5 days in December 2010, compared with 35.1 days for the same period a year ago.
Source: BusinessWire
Tuesday, July 13, 2010
Huntington Beach Housing Statistics as of July 13th, 2010
Sorry, it has been a while since I have updated the blog. Short sales take a lot more time than standard sales and they seem to be the predominant force in the market right now. Hanging out all day on the phone with the banks offers very little time for blogging and updating the website. That being said, I wanted to continue my thread of the trends in the foreclosure and preforeclosure activity in Huntington Beach to seek out patterns and trends which will help buyers and sellers navigate this unique market. So here are the numbers broken down by zip code:
92648 - 280
92649 - 158
92647 - 186
92646 - 267
For a grand total of 891
Of those figures 292 are condos and townhomes, 561 are Single Family Residences and PUD's, and 38 are land, business, or multifamily.
Good News! That was an improvement in every zip code from the last blog in April!
In addition, there are 676 total Active listings on the MLS for Huntington Beach. That is slightly higher than April. Although skeptics might see that as a negative, I personally think a healthy market requires slightly more inventory than the figure from the last blog entry. Plus, with the tax credit recently ending, in my opinion that inventory could have shot through the roof. I believe these are all healthy signs of a snails pace recovery, albeit a recovery and not a double dip.
Now on to the bad news...of the 891 people that are distressed in Huntington Beach only 147 have their home on the MLS. Now don't get me wrong. I am not the realtor that wears the red blazer with the Realtor pin anchored to my lapel for the world to see. I do not believe that a short sale is the answer for all distressed homeowners. However, that being said, it is beneficial for far more than 17%. Legislation is constantly providing more and more benefit to short selling over a standard foreclosure. Fannie and Freddie will now (with re-established credit) let you purchase within 2 years with 20% down with a short sale on your credit. With a standard foreclosure you will have to wait 7! That means 83% of the distressed homeowners will not be re-entering the housing market for 7 years. That is not a healthy statistic for the economy or the housing market. Plus, deficiency judgements are being sought after like never before forcing many of these former homeowners to file for bankruptcy. That also is not healthy for the economy/housing market. Many of the horror stories of 12 month escrows and cash contributions have also been addressed with recent legislation. However, the average homeowner seems to be unaware of this advancement. I talk with more and more buyers/sellers/ and even other Realtors at my open houses that have no idea that short sales are not nearly as ugly and painful as they were even six months ago. I think this area of concern because:
1.) Confidence will not be restored in the market place when there are this many foreclosures looming.
2.) Bad/outdated information leads to frustration and buyers give up trying to buy.
3.) Potential Sellers are out of the real estate game for the better part of a decade and might be so frustrated after dealing with deficiency judgements and HOA litigation that they might not ever want to come back into the market.
Luckily there is a simple solution to this problem. Whether you are a Realtor/friend/parent/sibling/grandparent/etc it makes no difference...if you are not up to date on current information for distressed homeowners KEEP YOUR MOUTH SHUT. You will cause more harm than good. The more people that are actually guided to professionals that can help them the faster we will all get through this and can go back to griping about healthcare and leave the real estate market alone for a while.
As always call or e-mail me with questions...
Jason Kiffe
Real Estate Broker
Lic # 01430639
949-293-9959
428 Main St #207
Huntington Beach, CA 92648
92648 - 280
92649 - 158
92647 - 186
92646 - 267
For a grand total of 891
Of those figures 292 are condos and townhomes, 561 are Single Family Residences and PUD's, and 38 are land, business, or multifamily.
Good News! That was an improvement in every zip code from the last blog in April!
In addition, there are 676 total Active listings on the MLS for Huntington Beach. That is slightly higher than April. Although skeptics might see that as a negative, I personally think a healthy market requires slightly more inventory than the figure from the last blog entry. Plus, with the tax credit recently ending, in my opinion that inventory could have shot through the roof. I believe these are all healthy signs of a snails pace recovery, albeit a recovery and not a double dip.
Now on to the bad news...of the 891 people that are distressed in Huntington Beach only 147 have their home on the MLS. Now don't get me wrong. I am not the realtor that wears the red blazer with the Realtor pin anchored to my lapel for the world to see. I do not believe that a short sale is the answer for all distressed homeowners. However, that being said, it is beneficial for far more than 17%. Legislation is constantly providing more and more benefit to short selling over a standard foreclosure. Fannie and Freddie will now (with re-established credit) let you purchase within 2 years with 20% down with a short sale on your credit. With a standard foreclosure you will have to wait 7! That means 83% of the distressed homeowners will not be re-entering the housing market for 7 years. That is not a healthy statistic for the economy or the housing market. Plus, deficiency judgements are being sought after like never before forcing many of these former homeowners to file for bankruptcy. That also is not healthy for the economy/housing market. Many of the horror stories of 12 month escrows and cash contributions have also been addressed with recent legislation. However, the average homeowner seems to be unaware of this advancement. I talk with more and more buyers/sellers/ and even other Realtors at my open houses that have no idea that short sales are not nearly as ugly and painful as they were even six months ago. I think this area of concern because:
1.) Confidence will not be restored in the market place when there are this many foreclosures looming.
2.) Bad/outdated information leads to frustration and buyers give up trying to buy.
3.) Potential Sellers are out of the real estate game for the better part of a decade and might be so frustrated after dealing with deficiency judgements and HOA litigation that they might not ever want to come back into the market.
Luckily there is a simple solution to this problem. Whether you are a Realtor/friend/parent/sibling/grandparent/etc it makes no difference...if you are not up to date on current information for distressed homeowners KEEP YOUR MOUTH SHUT. You will cause more harm than good. The more people that are actually guided to professionals that can help them the faster we will all get through this and can go back to griping about healthcare and leave the real estate market alone for a while.
As always call or e-mail me with questions...
Jason Kiffe
Real Estate Broker
Lic # 01430639
949-293-9959
428 Main St #207
Huntington Beach, CA 92648
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