How Are The Adjusting Loans Affecting Us?

I was having a conversation the other day with an agent and the topic of loans adjusting came up. I told him I had some information on loans and the month they are adjusting and he made the comment that when we start to see a decrease in the number of loans coming up for adjustment that could be one of the first signs the market is improving. I think the logic is that the properties that these loans on are future foreclosures and bank owned properties. If the number of these properties that have loans that are being recast decreases then so will the number of foreclosures and properties going back to the bank. These are the types of properties that are dragging the market down. The Chart above was sent to me by a company called CoreLogic that has been keying data on these adjustable rate loans for years now. As you can see from the chart that the number of loans in the county that are adjusting is beginning to decrease. This would appear to be one more sign that we are getting closer to seeing the market pick back up. A few months of data might not be enough to really get excited about, but I do think the direction of the numbers is certainly down. I would love to hear your comments.

Tune Up Your Website.

So you are trying to tune up your website? Well here is a nifty little tool that I will be happy to see get to Santa Barbara. It is called Altos Research. It is a tool where you can request real estate sales information on most of the major western metropolitan areas. Since that doesn't include Santa Barbara County, I chose to look at Manhattan Beach in Los Angeles County. You'll notice I was able to include a chart that they generated. One of the free services is you get an html code to paste in to your website to show the chart that has been created for your area. Here is some more information on Manhattan Beach. It is a fun little tool to play with and I'm sure they are in the process of expanding to Santa Barbara. I think the tech folks refer to this as a widget. Maybe not. One other piece of future wear is a website called Terabitz. This site is going to allow you to customize a Google map with things like schools or listed properties etc. It is easy to play with and try out. See You In Escrow!

Why Would Buyers Wait?

I have been soaking in the statistical information that I heard last week at the economic forecast. I just read an article regarding the National Association of Realtors August numbers. I have had a number of conversations with local loan agents and the only conclusions I can draw is it is a good time to buy. Both the forecast and the article above are showing that the median home price is staying pretty steady. In fact the national number reported by the Association of Realtors is saying the median price actually rose a bit from August of 2006. As far as interest rates go, Joan Gibson from Chase pointed me in the direction of the Freddie Mac interest rate charts. If you look at some of the busiest markets Santa Barbara has seen for home sales like 1997 to 2000, those rates were in the low to mid 7% range and you had to pay over 1 point for those loans. We had many months in the South County during those times when the number of transactions was over 300. Rates are better now. My conclusion is this, prices are staying pretty steady (maybe they will dip a little) rates are good and there are plenty of properties to choose from. It sounds like a good time to buy. Did I mention that some sellers seem willing to negotiate. I think buyers are sitting on the sidelines not wanting to be the first one to jump in and I'm not sure that is the right strategy. Any Comments?

The Daily Sound Got It Wrong

I was at the same forecast that the reporter from the Daily Sound was at and came away with a completely different opinion. The article that was written had a title "Real Estate Outlook Grim" that wasn't my interpretation. I would have entitled the article "Santa Barbara Real Estate Rebounding in 2008". The information relayed by the article regarding foreclosures and defaults is very misleading. That article stated "During the first part of this month there have been 578 home foreclosures and defaults in the county. On the south coast, 91 foreclosures were recorded, while there were 14 in the Santa Ynez Valley, 121 in the Lompoc Valley and 352 in the Santa Maria Valley, the booklet says." Well that is just wrong, Let me set the record straight, there are 578 homes that are currently in the process of being foreclosed upon. It takes at least 4 months for a lender to complete a foreclosure so that 578 is at best a 4 month picture of homes in the process of foreclosure. These properties can also be sold during that time or the borrower can make good on the loan. That explanation translates to the other areas (South Coast, Santa Ynez Valley, Lompoc Valley, & Santa Maria Valley) where The Daily Sound stated these numbers were for September. I did a little research in Dataquick myself and I show that there have been 234 trustees deeds recorded in the County through the end of August. That means that 234 properties have been taken back by a lender or sold to someone at a foreclosure sale for the entire year of 2007. There have been 3089 transactions in that same time period in the entire county. That makes the trustee sale about 7.5% of all the transactions. There have been 51 REO deeds recorded. That means a bank has taken back a property and sold it to a new owner. That isn't even 2% of the market so far this year. Historically these numbers are higher than we are used to seeing, but there are many transactions going on that aren't as highly advertised as these. If you want to see some additional information on the state and what is happening check out Dataquick. This chart will give you some perspective but won't be the same data I have discussed. The data above is more current. I am done ranting about this right now. Have a terrific day and See You In Escrow!

Today's Santa Barbara Economic Forecast

I learned this morning that some of the most influential pieces of Santa Barbara's real estate market are things I had never really thought about. For instance did you know that the Tiger Salamander is a huge problem in the North County when it comes to trying to do any development. It has caused projects to be delayed by years, as well as creating many plan changes. I thought I would include a photo since I had no idea what one looked like. One major influence in the south county is the 101 freeway. It isn't wide enough and building any new homes is made extremely difficult because of the added traffic the new home owners would cause. The suggestion for fixing this was widening the freeway and putting in some kind of bus program for commuters. Seems to make sense to me, but I am a bit of a skeptic. I think we are going to have traffic problems no matter what we do. A brief over view of the housing forecast goes something like this. We will continue to experience flat appreciation with the possibility of some decline. Foreclosures will continue to affect the market in the North County. The number of transactions through the end of the year will be similar to what we have experienced recently. We should see a pick up in the number of transactions in 2008. Mark described our rebound as a gradual one looking like a U shaped curve instead of a quick recovery which would be better represented on a chart as a V shaped curve. You can download the economic forecast book at www.californiaforecast.com with the password of subprime until Monday 9-24-07. I'm going to do my best to take a look at some of the information in the book and post some comments in the future on what the numbers are telling me. SEE YOU IN ESCROW!

Google Real Estate Tools?

Seeing as my blog is hosted on Google's Blogger site, and I have taken advantage of the tools they provide to see how often my site is being accessed and have used their advertisements, I thought I would do a little commercial for some of the tools I know about that might be helpful to real estate agents. Of course I'm sure you know Google as a search tool and it is probably one of the most successful ones available. They haven't stopped there. I'm not exactly sure what the business model might be but they seem to be creating a large number of tools you can access from the web. One of the most recent ones they have been perfecting is Google Documents. You can either create or load word docs and spreadsheets that can be accessed from any Internet computer. The latest feature that is available is an online presentation program similar to Power Point. The presentation program gives you a web address you can use as a link on your website.If you want to see an example check out MyTechOpinion. I can think of a number of presentations that might be useful, like one to out of area clients or one to clients on the statistics of your market. Another tool that I have found particularly interesting is Picasa. You can load photos of listings and with a few clicks of the mouse create a slide show you can post on your website. Picasa also has a simple way for you to view all your albums on your phone. Other tools I could elaborate on are video, IGoogle, Gmail..... If you haven't checked out all the productivity tools Google has you are missing the boat. Oh, and 2 more things. You get all these features with one account and they are all FREE!

August Loan Activity In Santa Barbara

Could August have been any more of a duplicate of July? There were 941 residential loan transactions in August and 947 in July. I would have expected more of a difference with all the attention the media has been paying to rates and the sub prime loan meltdown. There were some differences between the North County and south County though. The number of purchase transactions in the South County slid by 22% while the average purchase loan amount went up. The number of non purchase loans in the South County was down only 13 transactions to 505, not much of a difference. In Santa Maria the number of purchase transactions was up 14% from July while the non purchase loans were up slightly, about 3%. In Lompoc the number of purchase loans was up significantly from July, over 43%. The non purchase loans went down by just 2 transactions there. So if all you did was look at the county number you would have missed the fact that the North Counties purchase loans were up pretty significantly while the South's purchase loan volume declined. The refinance markets stayed pretty steady in both areas as compared to July. Remember to click on any of the charts to view a large version. To review June or July's charts just refer back to my previous posts for those months.

Lois Capps Visits Santa Barbara Assoc of Realtors

Lois Capps came by The Santa Barbara Association of Realtors and spoke with a group of about 25 real estate agents today. The conversation focused mainly on legislation that is in process. One piece of proposed legislation is FHA reform and the main piece of this legislation is raising the FHA loan limit to $417,000. This wasn't met with much enthusiasm as the Real Estate agents attending thought this was not going to affect Santa Barbara since purchase loans are generally much higher than that. They believed the limit should be considerably higher. One other piece of legislation the group was in favor of was Mortgage Cancellation Forgiveness. This would allow a homeowner that has to sell their property for less than the mortgage is to avoid having to pay income tax on the debt that would be forgiven in these short sales. Currently this shortage is being taxed as income even though the seller never received the money. Two other items that were spoken about and the real estate agents were not in favor of were Carried Interest and Banks in Real Estate. Carried interest is a way to tax partners of a partnership that do not put in any money in a transaction. They have essentially been earning sweat equity and when the property is sold their profits have been taxed at the capital gain rate. The new legislation would tax this profit as ordinary income thus increasing the tax burden to the partner. The last issue being banks in real estate has been around for a while now and certainly wouldn't be anything real estate agents would be in favor of. The most spirited conversations turned towards the media over exaggerating the credit crisis and what should be done if anything to more regulate the lending industry so things like this don't happen again. Lois seemed genuinely pleased that the topic of Iraq didn't come up and she thanked everyone for expressing their thoughts.

Santa Maria and Lompoc August Sales Statistics

August in the North County of Santa Barbara did not show any signs of life. The number of transactions is still down significantly from last year. The Santa Maria area and Lompoc area combined had 133 closed transactions in August. August of 2006 had 173 transactions close. There has been a 22% drop in the number of transactions in this year compared to the same time frame in 2006. Real Estate in these markets is really being affected by the number of homeowners finding themselves in over their heads. I have heard estimates that 10% of the listings are bank owned properties. This will certainly affect prices in those areas and I believe is causing the market their to take longer to adjust to the pricing pressures. I am finding one bright spot in looking at the numbers. The lenders credit problems have been affecting the market and I think Augusts numbers would have been better if it weren't for that surprise, so maybe their will be a rebound soon. It would be good to hear other's opinions on what they believe is going to happen.

Santa Barbara Home Sales Activity For August 2007

2007 in the South County of Santa Barbara has been a year where the number of transactions appeared to be on a real come back over last year through May. Then June's numbers were slightly lower than last year and July's number was significantly better than 2006. The August number has dipped again to be slightly lower than 2006. There isn't any doubt that the credit crunch drama has played a role in causing the number of transactions to slow down a bit. I think this may be good news in the not too distant future. I'm hearing agents tell me that buyers are waiting on the side lines a bit until their are some better loan programs and or prices drop a bit. What that means to me is the this pent up demand should start surfacing shortly as people start getting a little confidence back. The charts are showing every area being about the same as the 2006 number for August. Goleta, Montecito, Santa Barbara are all down a bit while Carpinteria/Summerland is up a few transactions for the month. Remember you can click on the images to view a larger chart.

Yahoo's 10 Best Places to Live

I was browsing another blog today (Edhat is a great local resource) and they had a link to Yahoo's 10 best places to live. Santa Barbara County made the list. San Luis Obispo made the list as well as Santa Fe New Mexico and a few others. The article talked about the cost of living in our community and recommended us as a place to live because of the beauty we are sourrounded by. Check out the list and see who we are competing with as a desirable place to live.

Close That Escrow!

I'm getting asked some questions about the amount of cancellations we are experiencing here in Santa Barbara. We have been pretty lucky in that our cancellation rate for resale transactions has not gone up much. There have been some close calls with some last minute issues getting resolved. I think this is due in large part to the real estate agents truly doing a fantastic job with regards to managing the transaction and communicating with their clients. We have seen some issues with loans taking a little longer to get approved but all in all nothing too bad. Buyers and Sellers are a bit more on edge as a generalization and I know communication between all the parties is critical to keeping everyone's emotions in check. On the refinance side of the equation the story is a bit different. We are seeing more and more borrowers who don't seem to be able to have their properties appraise high enough for them to refinance out of their existing adjustable rate loan. This is causing the cancellation of many a refinance escrow. The underwriting of these loans is also an issue. Borrowers are not being allowed to borrow money without showing that they will really be able to make the payments. These issues are particularly prevalent in the North County. I have been through this a few times now in my 26 year career and I know that communication and a professional approach to the business will certainly help close those escrows. The other piece of the puzzle is to choose experienced professionals to be involved in your transactions. People you can trust like the escrow officers and staff at Lawyers Title Co.

Santa Barbara Real Estate Appreciation Rates

I was asked the other day about appreciation rates for each of the communities in the South County of Santa Barbara. I pulled out some data and began to figure them. I could only find good data through the end of June 07. Here is how they broke down comparing all of 06 to what I had for 07. For the entire South County prices had appreciated 9.48%. In the city of Santa Barbara prices had declined by 1.96%. Goleta showed a 3.53% decline while Carpinteria was up 1.15% and Montecito was up a whopping 12.50%. Needless to say after looking at this information most if not all the appreciation is in the Montecito area. Real Estate sales have been slow in all the areas mentioned but Montecito and it certainly affects the overall numbers significantly. One other thing that affects the numbers is that the data I had to work with does not separate out property types and so commercial property sales are also included in these numbers. The commercial agents I've spoken to are saying that property sales in that market have been busy in 07, but they were as well in 06.

Miramar Hotel?

So read today in the Daily Sound that the Miramar Hotel is running in to yet another snag in it's renovation process. This snag has to do with relocating a road that residents think may cause some flooding. It is almost hard to believe at this point that the Miramar is ever going to be finished. I got married back in 1994 and all the guests who came out from Michigan stayed at the Miramar and really did love it. It was hard to beat the location, and the price was right since it needed refurbishing even then. The developer, Rick Caruso in a verbal statement has offered local homeowners a 1 million dollar donation, free drains installed on neighbors properties as well as free hotel accommodations in the event of a flood. I would say he is doing all he can to get this issue resolved. If I were a neighbor I'm not sure what is worse the potential flood or having the eyesore that the Miramar has become remain. It sounds like Caruso may be forced to leave the road where it is. This property is such a prime piece of Santa Barbara Real Estate that really does need to be used to it's potential. Good Luck Mr. Caruso!

Real Estate and Middle School Boys

I spent an interesting week last week at an orientation camp for my 6th grade son's middle school. I was one of 2 adult male chaperons for 24 middle school boys. I got back to work and wasn't quite sure what to make my next post and then it hit me. What does the real estate market today have in common with 6th, 7th, & 8th grade boys? The answer is that it is very unpredictable. These boys enjoyed clowning around and being 13 year olds their imagination is their only limitation. They say things and you have no idea where that thought came from and then when asked to explain a food chain the answer rolls right off their tongues. Pretty incredible and baffling all at the same time. Well, that is the type of market we are in. One day an escrow officer is opening 4 transactions and then the next week nothing. Every transaction is now a real unpredictable adventure. One of the key ingredients of course is the lender and whether or not a borrower is going to qualify for a loan. Another item that can really make for an interesting escrow is a short sale. Boy, I can't tell you the twists and turns a transaction like that can have. So I recommend we all hang on, work hard and smile, because whether it is the real estate business or herding middle school boys it is going to be interesting.