SHORT SALES Category
Redding Home Sales Rise Sharply
FHA LOANS, INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS
2012 thus far is shaping up to be a great year for the local real estate market. Closed home sales are already 21% ahead of last year’s pace! 862 homes have already sold and closed since the beginning of the year compared to 685 for the same period a year ago. All of my inventory data is derived from the Shasta MLS which relies on its members to report listing and sales activity.
The vast majority of homes selling today are priced under $300,000. Of the 208 homes sold in April, 191 were sold for $300,000 or less. The most active price bracket is the under $150,000 range which tallied 105 closed sales in April.
For homes in Redding, the average cost-per-square-foot has remained relatively steady at about $108/sq ft. The average home is defined as a home with between 1500-2000 sq ft.
Inventory has tightened significantly over the past year. 1034 homes were listed for sale in early May 2011 compared to 751 today. The number of bank-owned homes in the inventory has dropped more than half from 202 last year to 96 today. Short sales have increased their share of market activity with 69 active listings and 235 in escrow today. Last year there were 94 active listings and 153 short sale properties in escrow.
Of the 632 pending home sales, 63% are distress sales-bank-owned or short sale listings. This percentage is in line with what we have been seeing in the local markeplace these past two years.
Interest rates for home loans continue to push lower. Today, a 30-year fixed rate loan is available (for those with good credit and verifiable income) at 3.75%. A 15-year fixed is down to 3.09%. This good news is dampened somewhat by a rise in mortgage insurance fees associated with FHA loans, one of the more popular types of loans in this area.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS OF LOCAL REAL ESTATE EXPERIENCE
530-224-6767 OR 530-941-7492
www.thereddingrealestateguy.com
Redding Real Estate: Home Sales On Fire!
FHA LOANS, HOME LOANS, SHASTA COUNTY, SHORT SALES
The number of homes sold in February 2012 soared more than 62% over February 2011 in the Redding/Shasta County area! Low interest rates and low home prices have increased affordability to levels not seen in decades. Here are the numbers:
- 207 home sold in February 2012 compared to 129 a year ago
- 92% of homes sold in February had a list price under $300,000
- 732 homes were listed for sale as of March 5, down 37% compared to the previous year
- 541 homes were pending compared to 472 in early March 2011
- 141 bank-owned homes and 204 short sales equalling 64% of pending home sales are “distressed” properties
- 418 homes have closed escrow in 2012, up 69% for the same time period in 2011
Mortgage rates for fixed-rate loans are averaging 3.17% for a 15-year loan and 3.9% for a 30-year loan. Investors paying cash and first-time buyers using FHA loans dominate the market.
Wild cards which could impact home sales in 2012 include Adjustable Rate Mortgage interest rate resets and strategic defaults by homeowners underwater on their loans. Of the 47 million loans nationwide, 3.6 million are delinquent and 12,533,155 are underwater 125% or more! We still have a long way to go before the housing market recovers and returns to any sense of normalcy. At least we appear to be headed in the right direction!
BRAD GARBUTT
BROKER/REALTOR ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
FREE CONSULTATIONS TO BUYERS AND SELLERS
530-941-7492
REDDING REAL ESTATE:2011 YEAR IN REVIEW
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
2011 was another difficult year for property sellers here in the north state but buyers took advantage of low prices and near record low interest rates for financing their purchase. Sales were up while prices declined. Here is a summary of how 2011 stacked up based on data from the Shasta Multiple Listing Service (MLS):
- 2404 homes changed hands compared to 2066 in 2010, an increase of 14%
- The median price dropped from about $160,000 to $145,000 for homes sold on Shasta MLS
- The average Redding home value held steady starting the year at $106/sq ft to $107/sq ft at year’s end
- 1161 closed sales were bank-owned homes
- 258 closed sales were short sales
- Nearly 60% of closed sales were distress sales
- Inventory of active homes dropped from 1242 in January 2011 to 940 in January 2012
- Interest rates average 4% for a 30-year fixed rate compared to 4.75% one year ago
- 2011 land sales total 178 compared to 201 in 2010
- Mobile home closings totaled 129 in 2011 compared to 135 in 2010
- 25% of the closed sales sold for $100,000 or less
- 71% of the closed sales sold for $200,000 or less
- 89% of the closed sales sold for $300,000 or less
- The most expensive home sold was $2.6 million for a home in Palo Cedro
- Only four homes sold for over $1 million
- The least expensive home that sold was for $17,000 in Shasta Lake City
2012 kicked off with 904 active listings, 494 pending home sales, 134 bank owned properties listed for sale and 207 short sale listings. Of the 494 pending sales, 146 are bank owned and 178 are short sales, indicating 66% of pending sales falling into the distress category. A significant percentage of the short sales fail to close because lenders refuse the buyer’s offer with many of these ultimately being foreclosed upon or are deeded back to the bank by the owner.
The drop in median price is due to the lopsided nature of our local market where sales are focused in the lower price brackets. Rumor has it more and more bank owned properties will saturate the market in the months ahead. Thus far, sales of bank-owned properties are brisk with no lack of demand by eager first-time buyers or investors paying all cash. Home and apartment rents have remained fairly level since the real estate bubble burst in 2006.
I expect a steady increase of units sold year-to-year with 2010 being the bottom. Prices will remain soft for homes priced over $300,000 while some appreciation can be expected for homes valued under $200,000.
BRAD GARBUTT
BROKER ASSOCIATE
530-224-6767 OR 530-941-7492
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Redding-Shasta County 3rd Quarter Housing Market Update
HOME LOANS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Home sales in the Greater Redding area have picked up significantly year-over-year from 2010. As of today, 1844 homes have closed escrow in the area served by the Shasta Association of Realtors Multiple Listing Service.
Last year at this time, 1582 homes sold and closed. This represents a 16% increase in sales activity. Two factors contributed to the increase in my opinion-higher affordability due to lower home prices and historically low interest rates. Currently, home buyers with good credit can secure a 30-year mortgage at or below 4% and the 15-year rate is close to 3.3%! Low interest rates increase affordability and buying power for first-time buyers and investors are finding buying rental homes pencil out better than expected.
Inventory of available homes has been tight in 2011 with only 1159 active home listings available today. Last year in early October 1537 homes were listed for sale, 25% more than today. Pending home sales are higher despite the skimpier supply with 485 homes in escrow today compared to 421 a year ago.
Bank owned properties (REO’s) and short sales (distress sales) account for more than 60% of sales activity. Of the 485 pending home sales, 150 are bank owned and 150 are short sales. There are 186 active listings which are REO’s and 214 short sale listings.
Home prices continue to decrease, dropping 7.5% thus far in 2011. Last year home prices dropped 11%, which was the steepest decline since the housing bubble burst in 2007. Overall, prices are down 45.6% from the peak in 2006, The avearage sales price today of $176,299 is similar to 2002, when the average price was $174,023.
Home prices appear to have stabilized for the low end of the market for the typical Redding home (defined as a home between 1500-2000 sq ft). In the first quarter of 2011, the typical home sold at $106.15/sq ft, $107.31/sq ft in the second quarter and $108.83/sq ft for the quarter that just ended.
Of the 221 homes that sold in September 2011, 195 were priced under $300,000. No homes priced over $550,000 sold in September. Nearly 100 of th0se sales were priced at or below $150,000.
The raw numbers indicate we have two distinct markets in the Redding/Shasta County area: the very active low-end market below $200,000 and the sluggish mid-to upper-end market! If banks are holding off listing homes which would appeal to first-time buyers and investors, they should reconsider. Many, well-qualified buyers are ready, willing and able, just waiting for affordable properties in good condition to be placed on the market.
Contact me if you have any real estate questions.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
530-941-7492 or 530-224-6767
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
Redding Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Despite all the press regarding foreclosures and their negative impact on the real estate market, Redding seems to be bucking the trends. Inventory of homes available for sale today is 1261 compared to 1575 last year at this time. That equates to roughly 20% less homes for sale, which could be the first sign of price stabilization.
A local real estate appraiser noted in his recent newsletter the average price per square foot has held steady this year at $106. The typical Redding home is 1500-2000 square feet. There are 549 homes in escrow today compared to 467 a year ago. That figure is also about 20% higher than 12 months ago.
The number of bank owned properties listed for sale (184) is down significantly from the beginning of the year (255). Where’s that shadow inventory people are talking about? We need more home listings in the lower price brackets to satisfy the strong demand.
Mortgage rates have dropped again after rising the first quarter of 2011. Well-qualified buyers can secure a 15-year loan at 3.75% or a 30-year fixed at 4.5%. The low downpayment FHA loan and no downpayment USDA loan products are still available. Those with low credit scores (under 600) may still qualify if they can tender a larger downpayment.
Short sale inventory has spiked from 211 at the beginning of the year to 225 today. Fortunately, the number of properties pending the short sale process have increased from 97 in January to 144 today.
Year-to-date 952 homes have closed escrow compared to 866 at this point in 2010 or about a 10% increase year-to-year.
It would appear many buyers are jumping off the fence and buying believing we are at or near the bottom of this lengthy market downturn. Most of the activity is occurring in the under $300,000 price range. Of the 220 homes sold in May, 204 were listed for $300,000 or less. Nearly half were priced below $150,000.
First-time buyers and investors account for the lion’s share of buyers in the home marketplace today.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 28 YEARS LOCAL SALES EXPERIENCE
Credit Score Damage From Foreclosure Alternatives Outlined
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
FICO released an analysis of credit score damage caused by short sale, deed in lieu of foreclosure and foreclosure. The bottom line is all three alternatives result in no significant difference in credit score impact. However, the better your credit score was before the delinquencies, the longer it will take for your credit score to fully recover.
The study found:
- The negative impact on one’s credit score depends on the starting score
- Regardless of the action taken, all three strategies result in about the same credit ding
- Declaring bankruptcy has the largest negative impact on anyone’s credit score
- Expect to wait 7-10 years for your credit score to fully recover from preforeclosure levels
- Short sales completed with a deficiency to the lender will result in 30-35 additional point drop compared to a short sale where there is no deficiency
Variables that determine how large of a drop one can expect include whether the borrower:
- was 30 days or 90 days late on payments
- Had a higher or lower credit score before foreclosure avoidance startegy implemented
- whether there was or was not a deficiency loss on a short sale
- whether foreclosure or bankruptcy events occurred
FICO does not divulge details about the formula used to generate credit scores. The actual credit score impact depends on many other factors so it is possible for more or less damage depending on individual credit profiles.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
Redding Real Estate Market Update Q1
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
The first quarter of 2011 is in the books! The Redding residential home market has been very stable thus far in 2011. 1242 homes were available for sale in early January. Today, the number of active listings stands at 1260 today compared to 1424 a year ago . Spring usually brings a spike in the number of homes listed for sale.
Pending home sales are up considerably from the beginning of the year. 494 homes are in escrow compared to 344 in early January on par with sales levels for the same date in 2010. Of the nearly 500 homes in pending escrows, nearly 200 are bank owned (REO’s) and 136 short sales. That works out to precisely 2/3rd’s of homes in escrow being distress sales - about 10% higher than a year ago.
Homes priced under $250,000 account for more than 80% of pending sales. 453 homes have closed escrow year-to-date, about 10% ahead of last year’s pace. The number of REO listings is up 77% from one year ago. Short sale listings are down nearly 10% over the same time period.
Investors and first-time home buyers make up the majority of purchasers in today’s real estate market.First-time buyers benefit from low interest rates and the fact housing affordability is way up in this part of California. However, buyers must have great credit, documentable income and, as one local lender recently joked, be willing to “bring their entire filing cabinet” to me so Ican prove your ability to repay the loan. A significant number of investor buyers bring all cash to the closing table avoiding the headaches and hurdles created by overzealous underwriters wishing to cover their hind end!
One last thought, some banks are working hard to get borrower’s loans approved, others are working hard to find an excuse to deny them a home loan. Ask your Realtor for lender referrals to avoid losing time and money working with the wrong lender.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
Short Sales Short Circuited By “Game of Chicken”
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES
A recent article in THE WALL STREET JOURNAL highlighted a scenario I see in my day-to-day practice of real estate. A property seller, buyer and first lien holder all agree to accept a certain price only to have the second lien holder ask for more money. It’s noteworthy that the second lien holder would get wiped out and not recieve even a penny if the first lien holder forecloses, but nonetheless they demand thousands more than offered to sign off on the short sale deal.
The news article cites an example of a La Jolla condo owner with a cash offer from an investor. He was forced to try a short sale when the value of his condo sankwell below the amount owed to his lenders. He owed $260,000 to the first lien holder (now Freddie Mac) and $50,000 to the second lien holder, being handled by Specialized Loan Servicing, LLC. Freddie Mac has offered Specialized $3,000 to release their lien, an amount typical in the short sale transactions I’ve been involved with. SLS is holding out for $7,000.
The end result is a game of chicken, where the second lien holder tries to extract additional monies from the seller, buyer, first lien holder or real estate agents involved. Unfortunately, in many cases the game ends in a foreclosure, and the second-lien holder gets nothing.
Reasons cited by second lien holders for playing this game include:
- the mortgage payments are still current
- they wish to pursue the borrower for any deficiency but may relinquish that right by agreeing to a short payoff
- they believe they have nothing to lose since their loan is worthless anyways due to falling home prices
Here are some interesting stats quoted in the article:
- 11 million homeowners owe more than their homes are worth
- Another 2.5 million have 5% equity or less
- About 1/3 of the 1.33 million loans in some stage of foreclosure have second liens
- Second loans are typically owned by banks and credit unions
- Most first mortgages are held by Fannie Mae, Freddie Mac or investors in mortgage securities
- Loan servicers are overwhelmed trying to handle the short sale process
- Declining home prices create disputes over values used to approve short sales
- Lenders are wary of fraud, which the short sale process is subject to, by anxious homeowners
California law protects certain borrowers from being pursued by lenders who foreclosed or agree to a short sale. Purchase money loans for owner-occupied primary residences are usually exempt from lenders seeking deficiency debt repayment. However, California homeowners that refinanced or took out second loans usually lose all protections if they agree to a short sale. Lenders will release the lien so the property can be sold, but reserve the right to chase after the borrower for the loss they incurred.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE SALES EXPERIENCE
Arnie Vetoes Bill To Expand Short Sale Protections
INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHORT SALES, TIPS FOR SELLERS
Last week, Governor Schwarzenegger vetoed SB 1178 (Corbett) which would have expanded anti-deficiency protections to homeowners that refinanced their purchase money loans. The bill was sponsored by the California Association of Realtors. Realtors sought protection for homeowners that refinanced their loans without realizing anti-deficiency protections were lost in the process.
Anti-deficiency laws were passed in the 1930’s during the Great Depression. The law limited the borrowers liability to the property value itself, not the borrowers personal assets. If the bank forecloses, resells the property and ends up taking a loss, the bank cannot then go after the borrower for any deficiency.
Unfortunately, the 1930’s era law did not anticipate thousands of borrowers refinancing their loans to secure a lower interest rate. Few borrowers realized doing so would make them personally liable for the entire amount of the new mortgage. And banks didn’t go out of their way to tell them. SB 1178 would have extended those anti-deficiency protections to those that refinanced their loans.
The law would not reward those that refinanced to pay bills or buy boats, cars or motor homes. In the event the refinance allowed the owner to extract cash equity, the homeowner would have to prove they put the extra money back into the property for remodeling, upgrades, swimming pool or adding on to the home.
Realtors feel Arnie misinterpreted the intent of the bill. In essence, the governor believed the bill would reward borrowers for bad decisons by interfering with an existing contract. Realtors were trying to close a loophole that allows lenders to also look to the borrower, not the property exclusively, for security for the loan granted.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Foreclosure Relief Scam With A Twist
INDUSTRY NEWS, SHORT SALES, TIPS FOR SELLERS
The Federal Trade Commission (FTC) issued a warning to consumers regarding a foreclosure rescue scam designed to exploit financially struggling homeowners. The scam service offer promises to perform a forensic audit of your mortgage loan documents to determine if your lender complied with state and federal lending regulations. The “auditors” claim you can use the audit to:
- avoid foreclosure
- accelerate the loan modification process
- reduce your loan principal
- cancel your loan obligations
In reality, these scam artists are using half truths and outright lies to get the upfront fee of several hundred dollars according to the FTC. I have had clients from Redding/Shasta County ask me about these services and I actually spoke to one such “auditor” located in San Juan Capistrano. He wanted to charge my client several thousand dollars to conduct the audit. When I pressed him for details and a guarantee, he made it clear there was no guarantee they would find anything and the fee was non-refundable. I told my client to not pay this company a dime and we subsequently completed a short sale.
Red flags to look for and avoid include:
- guarantees to stop the foreclosure process-no matter what the circumstances are
- instructs you not to contact the lender, lawyer or credit or housing counselor
- collects an upfront fee before providing any services
- only accepts payment by cashier’s check or wire transfer
- suggests you rent your home so you can buy it back over time
- asks you to transfer your property title
- offers to buy your house for cash at an inflated price inconsistent with current market values
- pressures you to sign papers before you’ve had a chance to read them thoroughly
For legitimate help, call 1-888-995-HOPE for free certified housing counseling from HUD. The national hot line is open 24/7 to assist you in a foreclosure avoidance strategy.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
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