Sunday morning reading: a contrarian view from Ben

Here's Ben Stein's column from today's New York Times. Now, I have to say that I love love love love love Barack Obama. And I love Ben Stein, too, but not in the same way. Ben questions Obama's choices for his economic team and also asks about how effective public works projects are in bringing the economy around. Hmmm. Interesting food for thought.

Bring on the recession

It's "Black Friday" morning. AP is already reporting that a Walmart worker was trampled to death at dawn today by unruly shoppers looking for deals. Jeez, people, how much crap do you have to acquire? At what price? Is a good shopping deal worth somebody's life? Should Walmart change its slogan from "Save money. Live better" to "Save money. Live"? Sorry, but if you ask me, the recession/depression can't happen fast enough if people are killing each other over big screen tvs.

A great article about eviction from The New Yorker

Remember Addie Polk? She's the 90-year-old Akron lady who shot herself just as the sheriff was coming to evict her after her house was foreclosed. Here's the story from the Nov. 24, 2008 issue of The New Yorker. The article also explores preditory lending. Cut to the end: Addie survived, but it is unknown at present where she'll live.

Another reason to be thankful -- low interest rates.

Interest rates just took a dive. A conforming 30 year fixed rate (up to $417,000) can be had today for 5.375%. It's 5.5% for loans up to $625,000.

I hope you find many things to be thankful for this Thanksgiving!

My visit to Palmdale

I spent the afternoon yesterday in Palmdale, the foreclosure capital of L.A. County. No, I was not showing property. Shameless plug: My husband, Steve, and his cat have a book out titled The World is Your Litter Box. It's a how-to manual for cats and is very funny. Anyway, I go along with Steve to all the So. Cal. Barnes & Noble signings.

I haven't been to Palmdale in years. From the press it has received lately, here's what I expected: broken-down cars by the side of the road. Lots of homeless people. Board-ups all over the city. Signs on telephone poles re name-your-price homes for sale. In short, a community in a deep, deep recession/depression.

That's not what I saw. At all. The major shopping area had tons of traffic, busy franchises, and no board-ups. Lots and lots of people out and about, and none of them looked particularly troubled. In short, I saw a thriving community. (And yes, the Barnes & Noble was busy all afternoon and we sold out the stock.) Now, I'm not saying that area is not ground zero for foreclosures. I'm just saying. Perhaps I need to wait a year for the blight to set in?

Why aren't more troubled homeowners seeking assistance?

HUD Secretary Says Programs Are Ineffective
Two government programs intended to help hundreds of thousands of borrowers avoid foreclosure are having negligible effects, a top Bush administration official acknowledged Wednesday. One program will be revamped immediately, and the other possibly in the near future.
“The response has not kept up with the need,” Steven C. Preston, Secretary of Housing and Urban Development, said to the National Press Club. “Many Americans who should be getting help are not getting help.”

The FHASecure program announced in August 2007 has helped only about 4,000 delinquent borrowers, Mr. Preston said. The other, Hope for Homeowners, has received just 111 applications from distressed homeowners since it was introduced on Oct. 1. He outlined changes intended to encourage more participation in the Hope for Homeowners program.

Under the new rules, lenders would be allowed to take a smaller loss. New loans can be made for 96.5 percent of the home’s current value, rather than the previous 90 percent. Even with the changes, borrowers would still have to pay back half of any appreciation to the government if they sell the house or refinance."

Bizarre. Thanks, Dana Dukelow, for this article. Why aren't more distressed homeowners seeking assistance?

Burbank smells like death?! Wha???

Curbed L.A. asks why a particular portion of Burbank smells like death. Huh? As always, the responses are very amusing. I think it's due to all the condo and loft developers who have starved to death in the last few months.

Are local home prices down 21%? Or 41%?

Here are some new statistics on our local housing market from today’s L.A. Times. Be careful when reading this article: It appears that while sales prices in the region (not sure how “region” is defined) are down 41%, L.A. County’s drop is 29%, and its median sales price is now $355,000. And, homes in the top third of the market have fallen 21%. Quite a wide swing in stats, I would say. Here are the relevant quotes from Peter Hong, the article’s author:

"Los Angeles County's median home sales price was $355,000, down 29% from a year ago.”

"Low prices did drive sales up 56% from a year ago. But a market bottom remains elusive, and a rebound in prices is not on the horizon." (Yes, I know this is not good news.)

"Last month's Case-Shiller Home Price Index, which tracks home sales by price tiers, showed that Los Angeles-area homes priced in the bottom third of the market had fallen 42% from their peak prices by late last summer -- but those in the top third had dropped 21%."

Mr. Hong also points out that foreclosed homes have dragged down the average price. Here’s how that works. If the majority of homes on the market are foreclosures with their lower prices, the majority of sales will be foreclosed homes with their lower prices as well.

Now, more real estate news from today’s Burbank Leader. The news is good for sellers as the average home sales price in Burbank inched up to $544,166 in October. For Glendale, it went up to $673,365 – close to double the county average.

Jeremy Oberstein, the article’s author, also cites a market index for both cities. It is based on a month-to-month ratio of new listings, active listings and days a house is listed as available on the market. Burbank’s market index for October is 0.41, and Glendale’s is 0.32. An index higher than 1.20 indicates a healthier market for home sellers, while a figure less than 0.80 reflects a more advantageous market for home buyers. I have emailed Mr. Oberstein and asked about the source of the index data.

Here are the relevant quotes from the Burbank Leader article:

"In Burbank, the average sale price for a home inched up to $544,166 in October, slightly higher than September’s figure and 11.3% less than the same point in 2007."

New Conforming Loan Limits

Starting soon, conforming loan limits will drop to $625,500 from $729,000 for L.A. County. Still pretty good, in my opinion. And interest rates are good this week and still in the band between 5.5% and 6.75%, depending on the size of the loan.

I'll list the new FHA guidelines once they're set.

As always, thanks to lender Dana Dukelow for this info!

The fires hit home

One of my favorite escrow officers is Margie Dansby at Intervalley Escrow. Margie has been a wonderfully calming prescence during otherwise difficult situations, and has been a very creative problem solver.

Margie lost her home in the Sylmar fire this weekend. I can't imagine how terribly she must feel. My thoughts and all good wishes are with her.

Sunday reading from L.A. Times

This article by Matthew DeBord appeared in today's L.A. Times Opinion Section. The title and subtitle just about say it all: "The Gang's All Here - The dream of owning a house turns into reality shock when the neighborhood is home to drug turf wars and bikers." Mr. DeBord and his family purchased a home in Glassel Park last year and were "following a particular gentification script." They had some expectations that this marginal neighborhood was slowly improving -- yes, they did due diligence and checked it out before they bought -- but they found that the Avenues gang is still firmly entrenched there. And it probably will be for years to come.

The article is touching and true. It puts the lie to the idea that if a locality's homes obtain "correct price discovery" then wonderful people will flock to buy homes there and magically turn the area into a dream neighborhood. No, they won't, necessarily -- some neighborhoods will still be degraded, regardless of attractive home prices. Gangs, crime and blight move in and become impossible to get out. And the community stays a less desirable place to live, no matter what the average home price is. Hats off to DeBord and his family for having the heart, guts and sense of humor to stick this out.

Finally -- an easy-to-read chart on mortgage workouts

Confused about the plethora of mortgage workout programs? Me too. Finally, here's an easy-to-read chart that details specific programs, eligibility, restrictions, etc. Please feel free to cut, paste, and send this on to anybody who may be having difficulty paying their monthly mortgage. Thanks for this, C.A.R.

Fire in the Valley

We're watching the news and a large portion of the north SFV is burning. If you are being affected by the fires, and if I can help you in any way today, please don't hesitate to phone me.

It's not just us.

I just returned from a week in Paris. Yes, I know; I'm a lucky, lucky person and we had a great time. Anyway, when I was last there eight years ago, I saw maybe one real estate office the entire time I was there. And now, there's a real estate office on every block. With beautiful pictures of apartments and flats for sale in the window. And they're not cheap -- studios in nice neighborhoods seem to be listing for $450,000 and up. I read that real estate has increased in price in Paris by 79% since 2005! I also understand that the Paris real estate market has slowed quite a bit (I have no knowledge of lending, title or mortgage issues there). So we're not the only country/state/city that had a real estate run-up and is now having problems, it seems.

Gorgeous Spanish in Adams Hill

My colleagues, Daina and Stacy, just listed a gorgeous Spanish in the Adams Hill neighborhood on the border of Glendale and L.A. The home has 4 bedrooms, 2 baths, 2365 square feet, a back yard, a view, and has been completely remodeled. The address is 3291 Romulus, L.A. 90065 and the listing price is $844,500. You can visit my website for more pics and info: http://www.judygraff.com/, and then visit the featured listings link. Please contact me if you'd like to arrange to see this beauty.

A Realtor-take on the election

This is my third presidential election as a Realtor. How do these elections effect the market? Like everything else, hope is good and uncertainty is bad, and not just for home prices. No, I don't believe that prices will begin to turn around after tomorrow. But if the general zeitgeist is positive, buyers feel better about purchasing. For this reason and many others, I support Barack Obama. I don't expect his election will bring us rainbows, unicorns, and a Dow at 20,000; the economy is still going to be tough for the foreseeable future. But I think there's no doubt that his message has been one of hope and positive change. And I expect him to continue to deliver that message if he is elected.

Sunday reading plus comments. Yes, from the NYT Business Section.

Here are two great articles from today's New York Times' Business section. Gretchen Morgenson wrote the first, titled Was There a Loan It Didn't Like? about a senior mortgage underwriter's experiences at WaMu. As you might expect from the title, the underwriter, Ms. Cooper, was pressured by higher-ups to approve any and all loans, regardless of what the loan applications and packages looked like.

I take issue, though, with a couple of statements in the article. First, mid-way through the article and Ms. Cooper's story: "Although Ms. Cooper couldn't see it, the wheels were already coming off the subprime bus." C'mon. Everybody who thought about this process at all figured out in advance that many people would eventually not be able to pay back their huge debts. This is why usury laws have existed throughout history. Also, "Hidden fees meant brokers could easily make between $20,000 and $40,000 on a $500,000 loan." Huh? How hidden could fees be when they're thoroughly itemized at closing? And all states require complete itemization as part of their consumer protections. And $20k to $40k? The standard origination fee is 1%, and that would be $5,000. Yes, there are garbage fees like processing, document fees, etc., but I've never, ever heard of them amounting to more than 2% of the loan. But whatever; it's a great article anyway.

The second article is by my new favorite economic columnist next to Ben Stein, Robert J. Shiller. Titled Challenging the Crowd in Whispers, Not Shouts, and it's about the group-think that led the Fed, prominent economists and other major financing institutions to ignore the mortgage market meltdown until it was too late. The article's tag says, "A taxi driver seemed to sense what economists didn't." Uh, yeah.