I found The 680 Blog in my many online travels and decided to link to it, especially since its audience is truly East Bay. Agent Doug Buenz interprets “RealtorSpeak” for us:

“I’m Gorgeous Inside” = I know the house isn’t that great on the outside, and neither is the inside, but I have to put something on the sign for crying out loud. Seems as good a choice as any.

“Low Maintenance Yard” = There is nothing alive in the yard to maintain. Basically cement/deck and dirt.

“Contractor’s Special!” = House basically needs to be rebuilt from the ground up.

“Motivated Sellers” = Sellers are really motivated to sell at that price. Their motivation, however, dissipates quickly as your offering price drops.

“Seller says make an offer” = House is overpriced, and rather than reduce the price like most smart sellers, seller wants to hedge his bet in case someone with more money than brains wants to pay him too much for the house. And this is smart, because there are so many of those buyers out there.

I like when Realtors have a sense of humor and don’t pester me with phone calls or email saying that I’m “bringing down their industry” by writing about foreclosures. So thanks, Doug!

And if anyone has any more of these descriptions, please share!

This nugget from Calculated Risk, talks about how Countrywide Financial allegedly sent a memo to its employees:

A portion of HELOC customers have already or will soon be notified by CFC Loan Administration that their HELOC draws have been suspended indefinitely. These HELOCs were identified as candidates for suspensions for various reasons including:

Significant decrease in supporting property value – If the customer’s current untapped equity (home value minus all mortgage liens) drops by 50% or more from their HELOC opening date, his/her line will be suspended.

HELOC payment delinquency – If the customer’s payment is made two or more days after the grace period ends, his/her line will be suspended.

Product Terms/Conditions Violation – In cases where the customer violated terms or conditions of the HELOC Agreement, his/her line will be suspended.

Examples include, but are not limited to: HELOC on property originated as owner occupied, but now believed to be non-owner occupied or unpaid taxes or insurance on the subject property.

Be aware that there may be other actions that could trigger draw suspensions.

This is not a one-time event, but an on-going strategy as we continue to manage our lending risk.

My favorite phrase from the letter is, “As this dynamic mortgage market continues to evolve, we must remain vigilant in reviewing and addressing areas that pose risk to the company.”

It’s been a while, but I said we would talk about predictions for 2008 by our readers and elsewhere.

From Christopher Thornberg, economist from Beacon Economics (courtesy of Los Angeles Times Opinion section):

The cold, hard truth is that foreclosures are serving only to hasten the painful process of shifting housing prices back to a level the market can sustain. Prices must and will fall. Everywhere. Probably 25% to 30% from their peak. 2008 is the year when gravity will reassert itself. You should be adjusting your expectations of your home’s value so that it’s correctly aligned with market realities. And when making important financial decisions today, be realistic and factor those declines in.

From Richard:

The new year will see continued and more drastic price declines in all communities with a few housing construction bankruptcies and a number of mortgage broker exits. The monthly regional RE blurb will be thinner and show more one’s and two’s in their six figure prices and with more talk of how to win with foreclosure “deals”. The year 2008 will be dangerous for buyers and disastrous for sellers who cannot ride out the correction at the end of 2009, or 2010. Just call me Mr doom and gloom.

From Chuck:

Many many more foreclosures, Both what were thought to be GOOD credit risks and the known Sub’s Jobs falling out of the sky as the wealth effect (lack of) takes hold deeper and deeper and sales suffer widely across all areas. Oil …is the wild card as always and it drives inflation pressures, but I would say stays in the 90’s pushing towards 130 PB on occasion. interest rates don’t go down, they (the Fed) have to stave off inflationary pressures what a long winded way to say what I see in 2008 is a longer lasting recession then we have had in the 22 years.

Don says:

2008 will be uneven, appreciation in desirable areas and 12%+ declines in the inland CA communities. If fannie and freddie raise the jumbo limit to a more reasonable number the market should be stimulated.

 Grubb & Ellis Co.:

U.S. economic growth, which is expected to be sluggish this year, should be enough to keep commercial real estate leasing markets stable, although somewhat less exuberant than 2007. Buyers and sellers will begin to reach some consensus regarding post-credit-squeeze property pricing levels, keeping real estate investment transactions flowing, although down from the record levels of 2007.

 From Barbara E. Hernandez:

My personal prediction is only that we will continue to head to the bottom of the market in 2008 with numerous foreclosures and resets still coming up. Our recession will be identified by numerous economists by June and consumer confidence drops.

Yeah, I know I was playing it a little safe, but hey, I did predict the recession last year!

June 11, 2007: If you all don’t know by now, I think a recession is well on its way. I think all the signs are there. But I also tend to be fiscally pessimistic, so you may want to consult your financial planners.

Either way, while real estate is a great long-term investment, there are better short-term options out there. Even certificates of deposit are promising more than 5 percent, which is probably going to be twice what any price appreciation is going to be on houses this year. I suggest that the average person would be better off not investing in real estate at this time for any big returns in the next year or two. (Please note that flipping has all but ceased, only after several were badly burned.)

We will see how well we did next year!

If you’ve seen these commercials, or the corresponding Web site, you might get chills from the creepy cheerleading by the National Association of Realtors. Its “Every market is different” mantra isn’t accurate, unfortunately. It’s all in a downturn (see my last post.)

“Did you know 60 percent of a family’s wealth comes from their home’s equity?” the Stepford Wife asks.

Either way, it’s not a surprise that the NAR puts out self-serving facts and tries desperately to put a positive spin on the housing market. Are you buying it?

The title of this is paraphrasing what Rick Sharga, VP of marketing for RealtyTrac told me yesterday for this story.

“This is not a phenomenon limited to a certain type of socioeconomic class and geography,” said Rick Sharga, vice president of marketing for RealtyTrac. “There’s no one area of the country, or the state, for that matter, that’s immune.”

Sharga said that numbers will continue to rise, especially with many mortgages set to reset from teaser rates in late May and June.

The number of San Joaquin County foreclosures rose 301 percent from the last quarter of 2006, the most in the Bay Area. Next were Santa Clara (254 percent), Contra Costa (218 percent), San Mateo (193 percent), Alameda (180 percent) and Solano (125 percent) counties.

OK, you ask, what does that mean? It means that in some places, it’s still more than doubling. In other places it isn’t. Does that mean foreclosures are going down? No, it simply means that the foreclosures have saturated the area and there’s no way mathematically they can double. (As in San Joaquin County, it’s unlikely a year from now it will rise 300 percent because it has risen so far already.)

Over the weekend, kram asked about how many subprime loans are out there and at what foreclosure rate. I found over at the Mortgage Bankers Association, this information from December 2007:

                         % of Loans   % Foreclosed

As you can see, a little more than 13 percent make up all subprime loans. And if you’re asking how many that is? It’s around $1 trillion and the actual number is unknown, but according to Sen. Charles Schumer D-NY:

Since 2005, the number of subprime loans has more than doubled.  In both 2005 and 2006, approximately 3 million subprime loans were made, as compared to 6.7 million in 2006, resulting in $1.2 trillion in outstanding debt by the end of last year.  It is estimated that at least one in five subprime loans will end in a lost home.

I saw this on “The Daily Show” and thought sometimes a picture is worth a thousand words. It’s Gerri Willis, CNN Personal Finance editor, talking about how the subprime meltdown/foreclosure fiasco led to the tragic economic downturn. She also uses the phrase “Holy Guacamole!”

Notices of Default

Source: DataQuick Information Systems Inc.                                    

If you saw my story today (yes, I contributed but it didn’t have my byline on it) then you know that foreclosures are still continuing. Personally, I don’t think we’re seeing the end of this phenomenon and as you can see from the statistics, they are starting to explode in Santa Clara, Marin and Sonoma counties.  Also exploding are the counties of Monterey and Santa Cruz which are feeling the hurt later than those in the Central Valley.

Although the high level of foreclosure of activity was distributed throughout the state, it was highest in San Benito (314.3 percent), Monterey (260.1 percent), Merced (203.2 percent), Sonoma (199.7 percent) and San Joaquin (189.7 percent). The highest percentage of notices went to the state’s Central Coast.

Default notices are sent to homeowners when they miss at least one payment and are an early indicator of possible foreclosure. An estimated 41 percent of those who received a notice of default emerged from the foreclosure process by bringing their payments current, refinancing or selling their home and paying off what they owe. A year ago, it was about 71 percent.

According to that last statistic, that means more than half of those who received a notice of default lost their home. Those who are missing payments are more likely to lose their home than save it.

I am not advocating suing anyone. It’s just the headline of this news article from the New York Times (registration may be required.)

That makes this the first housing collapse in which large numbers of buyers had a real estate professional explicitly looking after their interests. The Ummel case poses the question: In a relationship built on trust, where promises are rarely written down and where — as in this case — there is no signed contract, what are the exact obligations of these representatives in guiding their clients through a sizzling market?

“Agents have a lot of fiduciary duties, but they don’t make money unless they close the sale,” said Joel Ruben, a real estate lawyer in Manhattan Beach, Calif. “In an inflated market, there are built-in temptations to cut corners.”

Yikes! Are we ready for a spate of lawsuits? The Ummel case, in San Diego County, could be a landmark case and should be a wake-up call to real estate agents everywhere.

I was just talking to a real estate agent today and told him that several agents tried to talk me into buying a home before I sold my previous home. I dismissed their “happy talk” that it was good idea (especially since several people who did that last year lost at least one of those homes to foreclosure.) He told me some agents are far more about making a sale than looking out for the client’s best interests.

Buyer beware!

In an effort to show I’m not a Snarky McSnark blogger who just complains about housing and has no substance, I’m writing about affordable housing.

In many people’s views, affordable housing in the Bay Area has always been an oxymoron, right? Well, not true. Several organizations, including the San Francisco-based Bridge Housing, develop affordable homes for families making less than the median income. What does that mean? According to the guidelines for a $293K-$405K single-family, detached home in American Canyon, buyers must be:

First-time home buyer

Household income for 1 must not exceed $53,100 for median (income) homes , $63,700 for moderate homes

Household income for 2 must not exceed $60,600 for median, $72,800 for moderate.

Household income for 3 must not exceed $68,200 for median, $81,900 for moderate.

(Continues through 8 in household.)

Also available are condominiums townhomes in Dublin Ranch, can’t find the price, but for a family of four income cannot exceed $100,600.