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June 2008 News Letter - Local Real Estate News For South East LA

by Southern Californias Top Producing Mother & Son Te

The average sales price on homes has dropped over $110,000 in our local market area from exactly 1 year ago according to figures derived from SoCal MLS.  We have seen many families now struggling with these balloon payments that are causing them  to lose their homes.  This unfortunate struggle has caused home owners to make difficult choices regarding their homes.  Some are trying to do a loan modification to try to keep their payments affordable after the payment spike, while others are realizing that a short sale might be their best option.  (Check out our real estate blog to get a general idea of what a short sale is)   

Many homeowners were put into subprime mortgages that at the time seemed like a good idea, but once the 2 year fixed payment period ended, homeowners were unable to afford the newly adjusted payment.  Payments on these subprime mortgages shoot up anywhere from $1,000 to $3,000 after the fixed payment period has ended.  The graph below shows the result of many people having to resort to selling their home in a short sale. 

 Figures above are taken from statistics obtained from SoCal MLS and correspond to the following cities:  Alhambra, Bell, Bell Gardens, Bellflower, Cerritos, Downey, Duarte, Huntington Beach, Huntington Park, La Habra, La Mirada, Lakewood, Montebello, Norwalk, Paramount, Pico Rivera, South Gate, Whittier,

When thousands of families can no longer afford their homes, they have no other choice but to try to sell their home at a discounted price.  And now since many families are going through the same struggles, the supply of homes available for sale has sky rocketed causing home values to decline.  

Looking at the last couple of months it almost seems as though home values are stabalizing.  It's very difficult to tell whether or not home values will decline further or not because many  still have not had their payments adjust to a higher payment.  There are thousands of families still comfortable in their fixed payment period and will eventually have to deal with their mortgage payments adjusting to higher levels. 

If you or someone that you know are going through this difficult situation with a home, please contact us so we can help you and give you the proper counsel.  There are several options that you have and we can explain them to you with great clarity.

What is a "Short Sale?" What is an "REO?"

by Southern Californias Top Producing Mother & Son Te
Below is a general descrition of the difference between a "Short Sale" and an "REO":
Unfortunately many of the cities that we do business in, such as the areas of South East Los Angeles, and North Orange counties seeing an over supply of homes for sale.  The following are how many short sales there are in our local area of Los Angeles for single family residences.  
Downey:  138
Norwalk: 188
Whittier: 157
Pico Rivera: 60
Santa Fe Springs: 10
Lakewood: 83
Long Beach: 318
This list can go on and on.  So that you have an idea of how many Short sales there are out there compared to regualr sales, there are currently 271 single family homes that are for sale.  So roughly speaking, for the city of Downey short sales make up about 33% of the available homes that are for sale. 
 In a short sale you are trying to sell the property before it goes into foreclosure.  The bank, on a short sale is basically allowing the home owner to sell their property for less money than what they owe on it.  For example if the home owner owes $400,000 but in this market the property is only worth $300,000 the bank decides whether or not they will accept an offer at $300,000 and take the $100,000 loss.  In order for a seller to be able to be eligible to do a short sale they must be at least 1 month delinquent.  It is more beneficial for the bank to do a short sale than to go into foreclosure because when banks have to many foreclosures on their record, they are given less and less money to lend out. 
 
Once the seller is delinquent on their first payment the clock begins ticking before the property goes into foreclosure.  Typically a home owner will have 6-8 months to try to sell their property in a short sale.  If the home owner never has any offers in that entire period of time and no one expresses any interest in buying the property, it will go into foreclosure  
Now if it doesn’t sell at a “Foreclosure sale” (where investors typically buy properties), then it becomes an REO (Real Estate Owned) also known as “Bank Owned.”
 
If you are looking at a property and it says bank owned, that typically means that it may have already went through foreclosure and possibly no one placed a high enough bid on it to purchase it.  The bank, or the "Investor" in such cases has re-listed the property in another attempt to sell it at a reasonable price .  REO's typically but not in all cases need work done.  
We hope this informtaion helps.  If you have any more questions regarding short sales or REO's please do not hesitate to contact us.  We are experts at these types of real estate sales.  
 

California April 2008 Home Sales

by Southern Californias Top Producing Mother & Son Te

A total of 31,150 new and resale houses and condos were sold statewide last month. That was up 26.8 percent from 24,565 in March and down 10.9 percent from 34,949 for April last year. While last month's total made for the slowest April since 1995 when 27,625 homes sold, it was the first month since August last year that wasn't a record low in DataQuick's statistics, which go back to 1988.

Of the homes sold in April, 37.7 percent were foreclosure resales, up from a revised 35.4 percent in March.

The median price paid for a home last month was $354,000, down 1.1 percent from $358,000 for the month before, and down 26.9 percent from $484,000 for April a year ago when the median peaked. Around half the drop in median is due to shifts in the types of homes selling, and how those homes are financed.

The typical mortgage payment that home buyers committed themselves to paying last month was $1,578. That was down from $1,606 in March, and down from $2,258 for April a year ago. Adjusted for inflation, mortgage payments are back to where they were in mid 2003. They are 22.2 percent below the spring 1989 peak of the prior real estate cycle. They are 37.2 percent below the current cycle's peak in June 2006.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is at a six-year low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is increasing, DataQuick reported.

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Photo of The Mother & Son Team - Maria Palacios & Chris Gon Real Estate
The Mother & Son Team - Maria Palacios & Chris Gon
Berkshire Hathaway HomeServices, California Properties
16911 Bellflower Blvd
Bellflower CA 90706
(877) 883-1003
Fax: 562-381-9113