Irvine Housing Blog

So last year in this time period 339 homes sold and this year 232 sold. Thats a 30% decrease in volume. I wonder if the sellers that are listing homes at 2005 comps plus 15% have any idea of these number.

This is what I really don’t understand. The realtors(tm) have to know these number. Given this, why do they bother listing houses without demanding that the sellers price them so that they will sell.  One explination that most of the sellers are just “testing” the market…...looking for that hard to find greater fool.

Any real estate agents out there care to explain the logic behind putting a house on the market at a price that will not sell?
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Nano,

Just imagine if they accounted for the number of houses sold as a ratio of houses available at the time.  The number would get even higher; I’m not sure how much but it would.

I see price increases in half of 8 zip codes, and price decreases in the other half.  Sales are down most places, and price decreases were rare before, so things are changing… but slowly, and there’s no broad freefall yet.

Everyone looking for big price drops is banking on REOs driving the market down sharply.  Will mortgage investors, guarantors, and regulators allow enough to be dumped on the market for that to happen?  Or will they come up with a combo rescue plan, consisting of one or more of:

1. New loan modifications that ease payment requirements significantly and for a long time

2. New (quasi-) government agency (FNMA etc) guarantees for holders of existing mortgage loans and/or new buyers of mortgage loans

3. Lower short-term rates from the Fed ?

I think it all depends on how widespread the homeowners’ pain is.  If the downdraft is severe enough to drop prices by 50% here in S Calif, then it may well be big enough to drop them by 20% in most other markets.  I think all 3 actions above would be triggered before then.

I just received an unsolicited letter from a major national bank that currently holds a first mortgage on my second home.  The existing loan is fixed or 10 years.  They are offering a no-cost change of terms to another 10 year fixed product at a rate 1.5% lower than the existing note rate.  I have paid a month ahead of time the entire time since the loan was originated, so it’s not like they are worried about me paying.

Very interesting.

Their appetite for those types of workouts will diminish greatly after word gets out of the moral hazard that they are encouraging.

Don’t be surprised, Surprised.  The bank isn’t dumb for the following reasons:

1.  They know it’s your 2nd home.
2. If you refinance to the lower rate, you lose the non-recourse protection of your purchase money loan.

Non-recourse is the protection people have when they buy a home that if something happens and the bank forecloses, the bank can’t come after their other assets.  Once you refi, that protection is gone. 

Right now interest is still low enough and property values high-enough that the banks can refinance and meet the LTVs.

Plus, they’ll be able to show the court they tried to make payments easier for you.  To me, it looks like two birds with one stone, they take away your non-recourse escape and they demonstrate already “helping” lower your payments. Trouble later and you’re probably on a spit.

Just a guess, there are points and fees.

No.

A buddy of mine is a long-time broker.  Here’s the problem as he tells it:  The seller wants 2005 / 2006 prices.  If you, the broker, tell him he won’t get it, you won’t get the listing because another broker will promise the seller that he is a better agent than are you, and he has contacts, and he has buyers waiting in the wings.  So, if you are an ethical, realistic broker and give honest opinions and advice to a potential client, you will lose the listing.  Sellers don’t want the truth right now - they want to hear that, with the right agent, they will get what the last guy got in mid-2006.  That’s just the way it is…

And in 3 months, you come back, ask how it’s going and take the other clown out of the picture.

I don’t see a seven-figure median anywhere.