What About Rental Properties?

Calculated Risk carried a story today about a woman of modest means who had bought a 2nd property as an investment -- I assume she used it as a rental. (The woman was originally interviewed on PBS). Now, she's having a hard time paying two mortgages and would like the government to bail her out. Remember back two or three years ago when everybody was encouraged to buy rental property? And many, many people did who had never been landlords before? Remember we were all told "Don't worry if the rents don't cover the mortgage. Your long-term gain in value from the equity will more than make up for any shortfall you're experiencing now." I was dubious at the time and now I'm worried. Here's my question: what's going to happen to the tenants in those properties if and when the owner defaults on a mortgage? How will the properties be maintained? What happens to tenants when their building is foreclosed?

3000 Foreclosures in the SFV

The Daily News published a story today on the increased amount of foreclosures in the Valley -- almost 3,000 in 2007. Not really surprising, except for the part that I actually read the Daily News instead of LAT.

These Three Sold Quickly

See update 2/4/08, above -- Woodland is back on the market. Here are three Burbank properties that defied expectations by selling in 18 days or less. The yellow house, at 4310 W. Woodland, listed for $499,994 and sold in seven days. The center house, at 1420 E. Tujunga, has a great view but kind of a 70's "Boogie Nights" facade. It was listed for $910,000. The third is a townhouse on Olive that was listed in my office for $439,000. Peter, the listing agent, says it was a mess. Is the local market speeding up again or are these just the exceptions that prove the rule?

I'm Quoted again in the Burbank Leader

I'm quoted again in today's Burbank Leader regarding housing prices in Burbank. Click here to read the article.

Good news on interest rates and loan limits

This just in, and it's good news. What it means: conforming loan limits are currently at $417,000. Home buyers who can get those loans can also get really low interest rates -- 5.15%! A rise in the loan limits really helps us here in CA, where most houses cost more than $417,000, by lowering monthly payments considerably.
Note: not a signed law yet!
Bush, Lawmakers Say Accord Reached on Stimulus Plan (Update2)
2008-01-24 14:15 (New York)
By Roger Runningen and Laura Litvan
Jan. 24 (Bloomberg) -- The Bush administration and House
lawmakers announced agreement on an economic stimulus package
that would distribute rebate checks to 117 million families and
give businesses incentives to invest in equipment...The accord includes a provision allowing Fannie Mae and Freddie Mac, the largest U.S. mortgage finance companies, to temporarily buy mortgages of up to $625,000, exceeding a $417,000
federal limit...

Foreclosures

Today's L.A. Times has a great article plus charts on the latest area foreclosure stats. Personally, I'm really tired of all those free market posters out there in the blogosphere that are cheering this development. Yes, some folks scammed a mortgage. But the majority of people being foreclosed are individuals and families that wanted to put down roots in a community, wanted a better living situation, wished to get their kids in betters schools, etc., and just believed the pie-in-the-sky stuff the lending and real estate industries were handing out. Okay, enough rant. I will have a new page on my website shortly that will describe options for those that can't make their mortgages.

This Week's Notice of Default List

I just looked at the list of notice of defaults filed in L.A. County this week. Simply put, a NOD is filed when a homeowner is three-plus months' behind in mortgage payments. It's the first step in a foreclosure. Lots and lots of NODs were filed for properties in Lancaster and Palmdale. So many, in fact, that I expect those communities to be ghost towns soon. Just about every community had at least one or two (I think Burbank had about 7, and Studio City had about 4), but L&P had dozens. Yikes.

A House for $195,000?!

Not that Glassel Park is for me, but check out this price! Only $195,000! This is about $300,000 under the county average. Of course, the house is only 650+ sf, the lot is only 2100+ sf, it sounds like a tear-down, you'd have to be armed to the teeth to live here, but still... FYI, it's on Arthur Street
Marketing Remarks: Probate, no court confirmation required but subject to Attorney approval. Yes!! an entire house under $200,000. Bring your imagination to polish this gem into a great first home or investment opportunity. Open kitchen w/sunny nook opens to cozy living room, 2 bedrooms, 1 bath (tax records show 1br/1ba) & large laundry room, private rear patio, long driveway to single garage w/bonus room on top (missing access stairs). All inspections to be completed prior to submitting, no contingencies, call Listing Agent for Pre-Submission package prior to writing. No conditions/contingencies. Buyer responsible for termite report/completion, retrofit compliance and city reports. Sold AS IS.

Another cool blog...

I just learned about Real Sedated -- thanks, Dana! I'm envious when I say that it's much funnier than this site.

News about appraisals

And there's another great article from today's L.A. Times real estate section about the appraisal side of the real estate equation. It's by Dian Hymer and is in the House Hunting column. Excerpt: "Because property values are under pressure in some areas, lenders may ask to see information about comparable listings that sold within the last three months (prior to the current market, appraisals up to six months' old could be used)." And "for some lenders...want information about comparable properties that are currently for sale. Current list prices that are lower than recent sale prices could be a red flag..." And "...borrowers may be required to increase their cash down payment by 5%...," "It has become more common recently for lenders to require two appraisals..." Finally, some good advice: "Check with your loan agent to find out how long it will take to process and fund your mortgage." In other words, staff cutbacks have increased processing times.

We know, we know -- it's a declining market

There's a great article in the L.A. Times Real Estate section today about the current real estate market. Yes, prices and sales are declining. What makes this article different from others is the experts quoted: Thornberg from UCLA's Anderson school and the Dataquik's Jon Karevoll. These two are widely considered to be experts' experts. Here are a couple of excerpts:
". To hear Christopher Thornberg of Los Angeles consulting firm Beacon Economics tell it, home sellers can expect the bad times to get worse, and to stick around for a while."There will be close to a 30% decline" from the peak, Thornberg said. "Prices will continue to go down in 2008. I think between 2009 and 2011, we will have what you call a 'bleeding phenomenon' where prices stay flat, which means they lose value in real terms." Losing value in real terms occurs when appreciation fails to keep pace with inflation.Thornberg's advice for would-be sellers and those struggling to pay readjusted mortgages: Get out now."If you sit on the sidelines, it is going to get worse," he said. "And if you want to sell your house now, price it down big time."Paying the piperBefore launching Beacon, Thornberg wrote reports for the UCLA Anderson Forecast, which warned as early as 2001 that easy credit was propelling home prices to unsustainable levels. Now, he said, homeowners are paying the price."
And "DataQuick analyst John Karevoll says the uncertain state of the national economy makes forecasting a tricky proposition."Jobs, growth in the economy, interest rates -- all of these things are highly volatile," Karevoll said. "It's almost impossible to make a reliable prediction because of the volatility of these numbers."If the United States manages to avoid a recession, Karevoll said, prices will probably stabilize this summer or autumn -- well short of the 30% decline suggested by Thornberg."First, we have to digest this bad apple we ate with these sub-prime mortgages," he said."
So where does this leave sellers? I think sellers should consider selling only if they have to. If you are happy where you are, if it works for you and your family, consider staying put.

R.E. Prices down 11.7% YOY

Thanks to Peter Viles and his LALAND blog for this statistic. Apparently, Dataquick has measured sales data and homes in the area are now selling for 11.7% less than they did at this time last year. From a boots-on-the-ground perspective, that sounds about right. Didn't UCLA's Anderson Biz School predict a 12% drop in prices for 2007 at the beginning of last year?

Fire at Michael's

Last night, there was a fire at Michael's Restaurant on Olive. Two adjacent homes were also burned. The fires were set by two 17-year-olds, according to the police, and did serious damage to all the properties, although Michael's is open for lunch. More news when there is some.