Need A Mortgage? Better Sooner Than Later!
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
February 24th, 2010
The Federal Reserve propped up the housing industry last year by buying up $1.25 trillion in mortgage backed securities but has told banks that will end this spring. Investors typically buy these securities but stopped after the housing bubble burst. The Fed’s actions averted certain disaster by keeping money in the loan pipeline as well as keeping mortgage interest rates artificially low. The big concern moving forward is will investors re-enter the market after the Fed pulls out ensuring a continued supply of mortgage money.
Many economists believe interest rates will have to increase to attract investors for these mortgage-backed securities. Some optimistically predict a slight rate increase from 5% currently to near 6%. Others believe rates would have to rise above 7% before investors will jump back in.
The Fed may have to step in again and buy loans through it’s GSE’s known as Freddie Mac, Fannie and Ginnie Mae in the event mortgage rates spike due to a lack of funds available for mortgages. Other government program changes will also impact the real estate market in the near future:
- The Federal home buyers tax credit is set to expire at the end of April
- Underwriting rules for the popular FHA loan program are tightening
- Many borrowers attempting loan modifications will be denied adding to the foreclosure crisis
The end result could be fewer buyers and more inventory of distress sales ultimately causing more price erosion forcing property values downward. This is likely to be the case until jobs that pay a living wage are created due to economic recovery. Some speculate that the government will extend a helping hand if their actions derail the housing sector recovery.
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
Home Foreclosures Subsiding Elsewhere
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR SELLERS
February 22nd, 2010
RealtyTrac reported its January numbers for foreclosure properties which include notices of default, auctions and bank repossessions. There was a 10% decrease from the previous month however the 315,716 foreclosure filings for U.S. properties was 15% higher than one year earlier.
Nevada has the honor of the highest number of filings for the 37th straight month. Other Western States making the top 10 include Arizona, California, Oregon, Utah and Idaho. Phoneix is the only large metro area that saw an increase from the previous month.
Las Vegas saw a 2% decrease from the previous month but retains the title of highest foreclosure rate-1 of every 82 housing units with a foreclosure filing. Six California cities had foreclosure rates in the top 10-
- Modesto-1 in every 107
- Stockton-1 in every 107
- Riverside-San Bernardino-Ontario-1 of every 109
- Merced-1 of every 109
- Vallejo-Farfield-1 of every 112
- Bakersfield-1 of every 118
The Central Valley saw a construction boom and rapid price appreciation during the bubble which explains why these same areas are tops in foreclosure activity. Locally, foreclosure filings have been up and down month-to-month with no clear downward trend as of yet. One could argue that foreclosure activity is focused in newer subdivision developments sold during the bubble however some foreclosures are a result of cash-out refinances on homes in more established neighborhoods that later lost significant value.
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
Housing Affordability Remains High For First-Time Buyers
INDUSTRY NEWS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS
February 18th, 2010
Lower home prices combined with low interest rates bumped up the First-Time Buyer Housing Affordability Index (FTB-HAI) for California to 64%. During the bubble, this index bottomed out just over 20%. This number reflects the number of households that can afford an entry-level home assuming a 10% down payment and an adjustable interest rate of 4.5%.
I would prefer this index be calculated using a stable 30-year fixed rate loan. The high usage of adjustable rate loans caused many of the problems we are dealing with today. The California Association of Realtors (CAR) also tracks affordability for certain counties and regions within the state. The most affordable region is the High Desert at 84%. The area of San Luis Obispo won the least affordable honor at 48%.
Here’s how other regions ranked:
- United States-77%
- Northern California-65%
- Northern Wine Country-58%
- Southern California-63%
- San Diego-57%
By county:
- Sacramento County-79%
- Merced-84%
- Riverside-78%
- Marin County-40%
- San Fransisco-35%
The Redding area is lumped in with Northern California. Sacramento has higher affordability due to higher incomes. The index compares median incomes to median home prices to determine affordability. Despite a lower median price in Shasta County, lower incomes prevent our area from ranking higher by this index. Statewide the median price for the 4th quarter 2009 was $257,940. The minimum household income needed to purchase the median priced home is $44,100.
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
Get Paid To Pay Your Mortgage?
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
February 15th, 2010
That’s right! An experimental program has been launched to entice homeowners not to walk away from their mortgages that are underwater by offering a cash reward if they keep their payments current. According to a Wall Street Journal blog, Loan Value Group LLC is launching a pilot program to determine if rewarding borrowers with cash is enough to keep them from abandoning their home loan(s).
The mortgage investor will base the size of the incentive on factors such as the amount the borrower is upside down on their loan, their income, and other risk factors. The “responsible homeowner reward” will grow over a period up to five years as long as the homeowner makes scheduled mortgage payments. The general idea is to change the psychology from the buyer’s perspective from focusing on how much they owe to how much they could gain by staying the course. The reward is not large enough to offset negative equity but allows the borrower to keep their home until prices stabilize and possibly recover value and avoid negative impacts to credit scores caused by foreclosure.
I believe the problem is too big for this program to help. Banks will do anything to keep these overpriced assets on the books which makes them look stronger on paper. Once the properties are foreclosed and resold at a loss, the true value of these properties will be reflected on their balance sheets which will not make shareholders happy. Likewise, top exec’s will have a hard time justifying obscene bonuses if their financial statements are bleeding red ink.
Any borrower considering a program that modifies their original loan should proceed with caution. California law dictates that purchase-money loans do not allow the lender to seek a deficiency judgement. In other words, a bank cannot come after you for a loss after foreclosure if the loan was used to purchase the home. However, if the loan was modified or refinanced after the original purchase, the lender can typically pursue the debt through collections after a foreclosure for years to come. Borrowers should consult with qualified tax and legal professionals before agreeing to a refinance or loan modification to determine if any protections are being lost in the process.
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 SALES EXPERIENCE
Redding Real Estate:Newer The Home, Higher The Value!
INDUSTRY NEWS, REDDING LIFESTYLES, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
February 9th, 2010
A local appraiser points out that homes 5 years of age or newer have the highest average value on a cost per square foot basis. The average price of a newer home is $286,172 or $155.9 per square foot. The average of homes 6 years or older drops precipitously to $116.7/square foot. All homes sold in the area served by the Shasta MLS average $121.6/square foot. To get a rough idea of what your home is worth, multiply your square footage by the average cost per square foot based on your home’s age.
My own numbers indicate homes for sale on the Shasta MLS inched up to 1329. Pending home sales have risen to 429 Monday compared to 382 one month earlier. The number of bank foreclosures listed for sale continues to rise with 176 available active home listings.. That number was less than 120 for most of 2009. 111 of the total pending home sales are bank repo’s. 138 homes have closed escrow thus far this year.
Short sales continue to be a significant part of the market. 233 sellers are trying to sell their homes for less than what is owed. Together with foreclosures, distressed sales are predicted to represent half of all transactions in 2010.
Those that lose their homes to foreclosure can expect to wait 3-4 years before being qualified to buy a home again. Members of credit unions may be able to purchase again in as little as a year. Credit unions typically hold their loans instead of selling them to Fannie or Freddie GSE’s allowing them to set their own rules for reconsideration. Divorce, medical bills or job loss may be legitimate reasons for allowing someone to re-enter the housing market on a case-by-case basis. Chapter 7 bankruptcy is likely to prevent one from buying for 5 years or more.
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 SALES EXPERIENCE
Should Shasta County Restaurants Be Graded?
REDDING LIFESTYLES, SHASTA COUNTY
February 4th, 2010
A local reporter blogged recently about how disgusting the health department report was for one of his favorite Redding restaurants. I blogged about a solution that would cost little or nothing for the county to implement. I believe Shasta County residents and visitors alike would benefit from this simple program already in place in many other counties across California. Here’s my September 2008 post:
As a director for the California Association of Realtors, I attend meetings three times a year in cities across the state. This is my 10th year traveling for the Shasta Association of Realtors, and one healthy practice I’ve noticed elsewhere but lacking locally, is a restaurant grading system.
How does it work? The Shasta County Environmental Health Department sets up a system of conducting a health inspection of all restaurants in the county (yes, they already do this) and issues a grade based on the inspection results (no, they don’t do this). If a restaurant achieves a 90% or better compliance (for example) with health laws regarding food handling, food safety and cleanliness, they are issued a large letter “A” on a piece of paper which they can prominently display in the window or door of the eating establishment, for all to see.
Guess what? All restaurants want to display that big letter “A” in their window. They make an extra effort to keep their place of business in order, otherwise they will loose their badge of honor. Such a simple concept, yet our local health officer has not implemented such a program. A couple of phone calls to other counties that have a program in place, by a local health department employee, would get the ball rolling for Shasta County. Is that too much to ask?
Travelers, like me, familiar with the program seek out dining establishments that passed their health inspections with flying colors. Shasta County maintains a website, as other counties do, that list the results of the most recent health inspections of area restaurants. I don’t have the time to check and re-check the website for my favorite haunts so establishing a grading system seems like a no-brainer.
Our health department head is one of the highest paid public employees at the county, earning nearly $200,000/year plus benefits. Isn’t it time to develop a simple way for all of us to know before we walk in the door of our favorite eating place how they did on their last health inspection? What do you think?
530-224-6767 or 530-941-7492
BRAD GARBUTT
Do Our Local Hospitals Use The Pronovost Checklist?
REDDING LIFESTYLES, SHASTA COUNTY
February 3rd, 2010
March 2010 Consumer Reports featured an article detailing a recent study on bloodstream infections contracted during hospital stays. A simple checklist system, called the Pronovost checklist, has been found to dramatically reduce infection rates when implemented and followed by caregivers.
One key element allows nurses to make doctors follow all the steps without fear of retaliation. Have our local hospitals adopted the recommendations of this simple procedure?
Only 27 states have laws that require hospitals disclose their infection rates. The good news is many hospitals have reduced central line infections to zero. However, one New York City hospital had an infection rate nearly 400% above average!
Here is a summary of what the checklist requires of caregivers:
- Wash their hands using soap and water or alcohol gel before and after examining a patient, inserting the catheter, and replacing, accessing, repairing, and dressing the catheter.
- Disinfect the patient’s skin with an appropriate antiseptic before inserting the catheter and during dressing changes.
- Use full-barrier precautions by using a mask, cap, sterile gown, and sterile gloves when inserting the catheter. Also, the patient should be covered by a large sterile sheet.
- Don’t place the catheter in the groin area. This area is difficult to keep clean.
- Remove unnecessary catheters. Evaluate daily whether any tubes or catheters can be removed if they are no longer essential.
Since all hospitals have not adopted this practice, family members or friends should take this list along and ask whether the hospital uses it. If you have a choice in selecting the hospital for care, check if they publish their infection rates and go to the hospital with the lowest rate.
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 SALES EXPERIENCE
Why Are there Fewer Homes For Sale in Shasta County?
INDUSTRY NEWS, SHASTA COUNTY
February 2nd, 2010
![santacruz-103[1]](http://movetoredding.com/files/2009/11/santacruz-1031-300x199.jpg)
California’s Unsold Inventory Index declined to 3. 8 months in December compared to 5.6 months in December 2008. This index is an important barometer of the overall condition of the real estate market because it indicates how long it would take to deplete the supply of homes for sale at the current sales pace.
Economists believe the reason for the sharp decline is due to “discretionary sellers” exiting the marketplace. These are homeowners that do not have to sell their homes and have decided to wait out the market on the sidelines hoping for better times. Some believe this low inventory level is only temporary-expecting a significant rise as banks list more foreclosures for sale.
Looking back, the bottom seems to have been August of 2007 for home sales though the median price did not hit bottom statewide until a year ago. Since then, home prices in California have actually risen 8.45% to a median price of $306,820. This period also has seen 10 consecutive months of price increases. Redding has not followed suit due to high unemployment and lack of equity refugees relocating from urban areas.
Here is a snapshot of the local real estate market:
- The inventory of homes available for sale on the Shasta MLS today is 14% less than a year ago.
- The number of homes in escrow is 27% higher than last year at this time.
- 111 homes have closed escrow thus far for 2010.
- 100 homes in escrow are bank-owned and 172 active listings are bank foreclosures.
More rigorous loan underwriting rules take effect at the end of March that could disqualify many local prospective home buyers. Time will tell if this has a negative impact on the number of homes for sale locally.
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 SALES EXPERIENCE
Know An FHA Borrower Struggling With Mortgage Payments?
FHA LOANS, REAL ESTATE LEGISLATION, TIPS FOR SELLERS
February 1st, 2010
President Obama signed into law a program to assist FHA borrowers experiencing financial hardship before they fall behind in payments. The Helping Families Save Their Home ACT of 2009 grants FHA broader authority to hopefully prevent FHA borrowers from slipping into foreclosure. Prior to this law taking effect, borrowers had to be behind in payments before seeking loss mitigation assistance. Late payments usually cause an immediate drop in credit scores which then can trigger credit card issuers to raise interest rates.
FHA sees this new program as a win-win for borrowers who get to keep their home and FHA protects their insurance fund from unnecessary losses. Here are some additional details:
- A borrower considered “facing imminent default” is one that is current on payments or less than 30 days late but has experienced a significant reduction in income or some other hardship that will prevent making future payments in a timely fashion
- Allows for a forbearance agreement to be created that allows the loan servicer to postpone, reduce or suspend payments due on a loan for a specific amount of time
- Allows qualified borrowers to reduce their payments permanently through an interest rate reduction or loan reamortization to an affordable level by using a portion of their insurance with a loan modification. Principal deferred becomes an interest free subordinate loan which is repaid once the first loan is paid off
The hardship must be documented by the borrower to the loan servicers satisfaction. The cause of hardship may include one or more of the following:
- Unemployment, reduced job hours, reduced pay, or a decline in business for self-employed would all be considered as reasons for loan modification. A scheduled temporary shutdown of the employer would not be reason enough to qualify for a loan modification
- Death in the family, permanent or short term disability or serious illness qualify as hardships
The loan servicer makes the final decision. If you know someone struggling to make house payments, ask them if they have an FHA loan. If so, direct them to HUD’s website or contact me for further information.
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 EXPERIENCE
Redding Foreclosure Activity Update
INDUSTRY NEWS, SHASTA COUNTY
January 28th, 2010
The number of bank-owned properties (REO’s) listed for sale in Redding/Shasta County is on the rise. Currently there are 174 active REO listings on the Shasta Multiple Listing Service. This number is up significantly from last year when just over a hundred were available on any given day. Nearly a quarter of the 400 pending home sales are REO’s. However, based on 2009 totals, almost half of the closed home sales were REO’s or short sales.
The uptick in REO inventory could be due to banks releasing more properties into the marketplace or fewer REO’s being purchased. Has the market hit a saturation point? In 2009, the number of REO’s was steady for the first 10 months of the year but started climbing in early November. This coincides with the expiration of the federal tax credit which was extended to April of this year. It is also possible that Shasta County’s unemployment rate has finally impacted home sales.
Elsewhere in California and the nation home prices seem to be stabilizing. Prices are actually increasing in most of the major metro areas according to reports I’ve read. However, home prices locally have been on a steady decline. Last year, the average home price fell 12% in Redding and has dropped around 40% since the peak in the fall of 2007.
The good news is there are about 200 fewer homes listed for sale today compared to a year ago. Pending home sales are also up by about 25% from last January. Consumer confidence is on the rise despite the nation’s waning approval of our president’s efforts to get our economy back on track.
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 REAL ESTATE SALES EXPERIENCE
PREMIER SERVICE® is the focus of Real Estate Professionals/GMAC. We are located in Redding, CA (at the North end of the Sacramento River Valley) in the midst of river, lake, ranch and mountain terrain.
Our Customer Satisfaction Rating, based on an independent survey, exceeds 97%. This is reflected in our 2008 "QUIE" Award recognizing the TOP 10 REAL ESTATE COMPANIES in NORTH AMERICA! REP/GMAC in #2.
