In an effort to ease the saturation on the MLS, lenders have slowed the rate at which they are filing default notices and moving on foreclosures. The result is more shadow inventory, more delinquent mortgage squatting, and another delay for the hoped-for housing market recovery.
Irvine Home Address … 14951 GROVEVIEW Ln Irvine, CA 92604
Resale Home Price …… $419,900
I fought it for a long time now
While drowning in a river of denial
I washed up, fixed up, picked up all my broken things
'Cause you left me, police tape, chalk line
Tequila shots in the dark scene of the crime
Suburban living with a feeling that I'm giving up
everything for you
Oh, oh, oh, how was I supposed to know
That you were oh, oh, over me
I think that I should go (GO!)
Something's telling me to leave but I won't
'Cause I'm damned if I do ya, damned if I don't
All Time Low — Damned If I Do Ya (Damned If I Don't)
Since mid 2008, foreclosure statistics have been largely meaningless. Prior to 2008, defaults were tethered to delinquencies, and foreclosures promptly followed defaults. Since the amend-extend-pretend dance got started, delinquencies rose for another two years while default notices and foreclosure auctions happened at whatever rate the banks felt was appropriate at any given time. Right now, with prices falling in nearly every market, lenders are turning off the flow of properties in an effort to manage MLS inventories and stop prices from falling any further..jpg)
In the short term, it is probably the right policy for the lending cartel to operate under. If the price drops continue unabated, more borrowers will strategically default. Of course, as banks stop issuing notices of default and stop foreclosing on delinquent borrowers, they add to their shadow inventory and encourage strategic default because borrowers know they can get years of free housing. Lenders really are between a rock and a hard place.
Since this is a cartel, and since the GSEs are not playing along, each lender that delays foreclosure will ultimately recover less from the property than if they foreclose now. Lenders still seem to be suffering from the delusion that prices will come back and they will get more if they wait. It isn't going to happen that way. The overhang of inventory will be with us for years, and each disposition will prevent any meaningful appreciation. For each cartel member the choice is to sell now or sell later and get less. Under those circumstances, the incentive to cheat is strong, and the reward for withholding inventory is only more denial.
The number of Californians entering foreclosure is at lowest level since 2007
Notices of default against California homes dropped 17% in the second quarter from the first quarter and 19.2% from the second quarter of 2010. Banks repossessed 10.9% fewer homes than a year ago and 1.4% fewer than in the first quarter.
July 20, 2011 — By Alejandro Lazo, Los Angeles Times
The number of Californians entering foreclosure dropped steeply in the second quarter to the lowest level since 2007, a sign the foreclosure crisis in the Golden State could be easing as the housing market stabilizes and regulators increase scrutiny of lenders.
No, it is not a sign the foreclosure crisis is easing. First, there is no foreclosure crisis. There is the foreclosure cure which ailing lenders are avoiding. Second, a decline in foreclosures is not a sign lenders are running out of people to foreclose on. It isn't until the shadow inventory is gone that we can talk reasonably about the foreclosure cure having taken its effect.
Notices of default filed against California homes dropped 17% from the previous quarter and 19.2% from the same period last year, according to San Diego research firm DataQuick. A total of 56,633 homes received a notice of default, which is the first formal step in the foreclosure process.
DataQuick President John Walsh attributed the second-quarter declines to a steadier housing market.
The more I read John Walsh's statements, the less credibility he has. He is a data provider not a data analyst. In short, he is a clueless shill who really shouldn't be quoted for stories like this.
“Homeowner distress spreads fastest when home price declines are steepest,” Walsh said in a statement. “And it now appears likely that, barring some new economic shock, the worst of the price declines are behind us.”
Walsh is calling the bottom? Again? One of these times he will be right, depending on how many times he makes this prediction in the next two or three years before we finally reach a durable bottom.
The number of homes taken back by banks also fell in the second quarter. A total of 42,465 homes were repossessed during those three months, a 10.9% decline from a year earlier and a 1.4% drop from the first quarter. On average, California homes took 10 months to wind their way through foreclosure, up from 9.1 months in the previous quarter and the year-earlier period.
Foreclosures have slowed nationally partly because homeowners are challenging them in court and the nation's biggest banks are negotiating a settlement with regulators over faulty repossession practices.
Some experts believe that if a settlement is reached, foreclosures could surge again once banks overhaul their practices and compensate borrowers. But unlike states where the foreclosure system is overseen by the court system, California has seen a steady decline in default notice filings for more than two years with the housing market recovering faster than other hard-hit regions.
Since we do have non-judicial foreclosures, our system has the potential to process foreclosures quicker; however, that has nothing whatsoever to do with the decline in default filings. Banks are managing inventory, pure and simple.
Still, a steady flow of distressed properties could continue for years, said Robert Hooker, executive director of the Inland Empire Economic Recovery Corp., a San Bernardino nonprofit that buys, rehabilitates and sells foreclosed homes.
“This current decline is probably short-lived because the banks are readjusting themselves,” Hooker said. “They still have a tremendous amount of shadow inventory, and they don't want to saturate the market.“
Finally, half way through the article we hear from someone who knows what they are talking about.
And Bruce Mirken, a spokesman for the Greenlining Institute in Berkeley, said many troubled homeowners still remain in serious need of government assistance.
“It's way too early to pop the champagne corks,” he said. “Dropping back to 2007 levels is a positive trend, but foreclosures in 2007 were quite high by historical standards — more than double the rate in preceding years. There are many reasons to doubt whether the housing market has really turned the corner, and the need for serious foreclosure relief and principal reduction has absolutely not gone away.“
No, there is no need for “serious foreclosure relief and principal reduction.”
I have an idea. For everyone who thinks loan owners need principal reduction, why don't they go knock on doors on their own street until they find an underwater loan owner not making their payments. It shouldn't take more than ten attempts to find one. Once a delinquent mortgage squatter in need of principal reduction is found, they should write them a personal check and tell them to send it to the bank. It's grass-roots political activism at its best. I can support that initiative because I don't have to see any of my tax money going to support someone else's entitlements.
The second quarter marked the lowest level of default notices received by California homeowners since the second quarter of 2007. That was when the subprime mortgage crisis was pushing the nation into the throes of a credit crunch that would end in financial crisis and the most severe recession since the Great Depression.
Last quarter's numbers were also well below the record 133,431 default notices filed in the first quarter of 2009, when home prices were still dropping sharply.
Homeowners in more affluent, coastal counties were less likely to enter foreclosure than those in other parts of the state. Mortgages on properties in San Francisco, Marin and San Mateo counties were the least likely to go into default, while those in Kings, Sutter and Yuba counties were the most likely, DataQuick reported.
Loan owners in coastal California are much more likely to be admitted to shadow inventory than borrowers in other parts of the state. Lenders don't want to take the losses that are still forthcoming. From the article, one could surmise that coastal California is more prosperous and less subject to mortgage delinquency. Nothing could be further from the truth..png)
In one sign that the most beaten-down areas of the state might be getting some relief, the default-notice decline was greatest in the state's least expensive communities, where foreclosures had been the most prevalent, DataQuick said.
Most loans receiving default notices last quarter were made in 2005 through 2007, the tail end of the bubble, indicating that the most distressed homeowners in the state bought their properties during the run-up in home prices and during the height of the shoddy lending practices that pervaded the mortgage industry.
The most active lending institutions foreclosing on Californians were JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. Although 56,633 default notices were filed in the second quarter, they involved 55,153 homes because some borrowers were in default on multiple loans.
alejandro.lazo@latimes.com
Lender filings are down everywhere. Someday, not today, lender filings will be down because borrowers are not delinquent on their loans. Then, and only then, will the housing market's supply problems be solved. Unfortunately, we won't reach the point of zero shadow inventory and low delinquency rates for several more years.
$419,900 for 800 square feet
Being a flipper of auction properties, I was intrigued by today's featured property. A forty year old 800SF property in Las Vegas would probably sell for $31,000 at auction. Here in Irvine, it fetches $311,000.
The flippers did a very tasteful job on the renovation, and they likely spent a large sum of money on their 800SF gem. It isn't 40 years old inside anymore.
What do you think? Was this flip a good idea? Will they get $419,900 for this?
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599
sales@idealhomebrokers.com
Irvine House Address … 14951 GROVEVIEW Ln Irvine, CA 92604
Resale House Price …… $419,900
Beds: 2
Baths: 1
Sq. Ft.: 800
$525/SF
Property Type: Residential, Single Family
Style: One Level, Traditional
Year Built: 1971
Community: El Camino Real
County: Orange
MLS#: S666630
Source: SoCalMLS
Status: Active
On Redfin: 7 days
——————————————————————————
IF SPECIAL IS IMPORTANT, YOU SHOULD TAKE THE TIME TO VIEW THIS TOTALLY REFRESHED LOVELY SINGLE STORY FAMILY HOME. No Mello Roos, No Association Dues, just a short walk to a distinguished elementary school, a blue ribbon middle school, a high school and a community park with basketball court. This fantastic remodeled home is complete with new kitchen cabinets including a large island and buffet counter with beautiful granite counter tops, all new stainless steel appliances, nice distressed look flooring thruout with new carpet in the bedrooms. Also included is a serene outdoor living area that flows right into the house thru french doors. Last but not least a beautiful relaxing bathroom that you wont want to every come out of. All of the beautiful decorator touches will be well beyond your expectations. Dont forget to take a alook at the clubhouse for the kids in the backyard.
——————————————————————————————————————————————-
Proprietary IHB commentary and analysis
thruout? alook? IF SPECIAL IS IMPORTANT? WTF? No, I want a house that isn't special. Special is not important to me.
a beautiful relaxing bathroom that you wont want to every come out of… Sorry, but I will always want to get out of the bathroom.
Did they count the clubhouse in order to ge to 800SF? This house puts a new meaning to cozy.
Resale Home Price …… $419,900
House Purchase Price … $311,000
House Purchase Date …. 5/20/2011
Net Gain (Loss) ………. $83,706
Percent Change ………. 26.9%
Annual Appreciation … 126.3%
Cost of Home Ownership
————————————————-
$419,900 ………. Asking Price
$14,697 ………. 3.5% Down FHA Financing
4.48% …………… Mortgage Interest Rate
$405,204 ………. 30-Year Mortgage
$87,784 ………. Income Requirement
$2,048 ………. Monthly Mortgage Payment
$364 ………. Property Tax (@1.04%)
$0 ………. Special Taxes and Levies (Mello Roos)
$87 ………. Homeowners Insurance (@ 0.25%)
$466 ………. Private Mortgage Insurance
$0 ………. Homeowners Association Fees
============================================
$2,966 ………. Monthly Cash Outlays
-$328 ………. Tax Savings (% of Interest and Property Tax)
-$536 ………. Equity Hidden in Payment (Amortization)
$24 ………. Lost Income to Down Payment (net of taxes)
$125 ………. Maintenance and Replacement Reserves
============================================
$2,251 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,199 ………. Furnishing and Move In @1%
$4,199 ………. Closing Costs @1%
$4,052 ………… Interest Points @1% of Loan
$14,697 ………. Down Payment
============================================
$27,147 ………. Total Cash Costs
$34,500 ………… Emergency Cash Reserves
============================================
$61,647 ………. Total Savings Needed
——————————————————————————————————————————————————-
The pace of foreclosures depends on geographic area and the banks that are prevalent. Because I was looking at newer construction, I saw a lot of builders who went under. It has taken a while but nearly all of that inventory is being cleared. Some took longer because the builder must have been hanging on and some also developed small cluster neighborhoods (8 lots of infill in a 75+ year old neighborhood). To some degree, the builder has a relationship banker, and there had probably been a lot of back and forth. I saw a few short-sales resulting from peak refinances, but those got resolved nearly a year ago.
The continued refrain that foreclosures are the problem hides two truths. Foreclosure is not the end of the world for a family or an individual. It is a forced move, but as long as there is somewhere else to go, the stress of not being able to afford their home will be gone. Then foreclosure resales offer properties at affordable prices for the next buyer.
Perhaps John Walsh is only part of the problem. He also produces economic reports for builders to use with their lenders. So, in that respect, he is much like CAR, NAR. But, isn’t it really Alejandro who is acting the part of analyst by picking and choosing which quotes to put in his article? It’s immediately obvious when none of his articles make sense, have no point, come to no conclusion.
I agree with you 100% Jonathan Lasner of the OC Register is an equal offender. They both pass off pro real estate propaganda as journalism. What happened to reporting the news rather than retyping the press release?
It seems that the system will keep doing what they are doing till they get burned. It’s just a matter of time till the RE market implodes and a flood of inventory will hit the market at once.
Given the current situation of the nations debt ceiling, I feel that day may just be around the corner.
What advertiser do you think are keeping the OCR in business?
The real estate industry is typically the largest advertiser in local and regional newspapers.
Lasner is merely a schill doing his job, confusing him with a journalist is plain naive.
I stopped reading Lansner’s blog a year or so ago…he apparently doesn’t understand statistics, because the reporting was consistently like this: housing is up, now housing is down, now housing is up, now housing is down – measuring often from the last month’s data point. That’s almost completely useless. Same thing with housing sales. He reminds me of a day trader trying to chase the market around…futile.
Talk about space efficiency, if that’s in the Willows, that floorplan is actually 780sft on a single floor. TIC can barely fit a 3/2 into 1700sft on two floors nowadays.
At least it’s on a huge lot compared to the home size (4800sft). In 1999, homes like these were running less than $150k, comps today are still running mid $300k.
Who thinks these will eventually get back down below $200k?
From OCRegister:
Some market details from the Thomas report, listings and deals in escrow last 30 days; share of distressed homes of all listings; market time in months for various periods; and average listing price …
Slice Listings % Distress Deals Time (month) 2 week ago 1 yr. ago 2 yr. ago Avg. list$
Irvine 839 25% 203 4.13 4.14 4.04 2.64 $849k
? Tustin 359 33% 93 3.86 3.72 3.39 3.04 $724k
? Lake Forest 207 53% 65 3.18 2.65 2.82 1.72 $428k
? O.C. ($750k-$1m) 1,051 15% 215 4.89 4.74 4.81 4.43 $873k
All O.C. 11,320 34% 2,894 3.91 3.96 3.91 2.69 $885k
Coverage of other data reports from Thomas ARE HERE!
50+% Distress sales in Lake Forest. Only 25% in Irvine. Data need to address detached SFU and aggregate housing units and especially not homes. I’ve never seen a family or home sold in America. Just houses, condo, timeshares, etc.
Tom,
Markets are always going up or down. It is rarely ever perfectly flat over a short time. It’s the game to promote urgency to buy or sale and thereby generating a commis or fee. Wall Street lives on bubble creation and can benefit on improved Main Street. Main Street lives on a good economy and indirectly MIGHT benefit from a excellent WS. America needs to wake up and know the difference between the two streets.
Going back to yesterday’s discussion, it made me think of a saying my HS history teacher used to say: if its equally unfair, then its fair. I think that really applies to incomes and taxes. People look at how much they are taxed and freak out but at the end of the day, its all relative to what others are getting or doing. Your spending power and cost of goods is in part based on what people can support so its all relative. My wife and I only look at our take home and that number isn’t bad at all. We made $280K last year and after 401Ks and taxes, we brought home over $160K. If I am taxed more on the top part of my earnings and I end up with $150K next year so be it. As long as it is equally applied across the board than I don’t really care. I realize the tax code has major flaws and loopholes but this isnt about that. Its about looking at pay differently and not staring at what you theoretically could have gotten had you not paid taxes but realizing that we are all being taxed so look at the numbers after the taxes.
And all this talk about working hard and taking on extra degrees is only meaningful if everyone starts at the same part of the ladder. I work hard and have busted my tail to grow at my company and earn a higher income than my peers at the same company but lets not kid ourselves, I started higher on that ladder by no choice of my own. I am not excusing laziness or saying that one cannot break from their current situation and earn more but we also should have some understanding of how we ended up where we did.
Hey… how are paying less than HALF? Woodbury Renter makes over $209k and he said he paid HALF.
:cheese:
rkp, my initial point was simply an observation – “Isn’t it odd that my PITIA takes 21% of my gross income, while income/payroll taxes take 35%?”
I then just whined about being attacked daily by our President and outlined the rhetoric that really angers me. That fact that this rhetoric is being repeated daily just magnifies everything.
To your point about starting positions, I think it is an interesting discussion point. If we truly want “fairness” in taxation, then we could consider adjusting tax rates based upon your parent’s(s’) average annual lifetime earnings. Wouldn’t that be fun? Considering my background and my wife’s, we might receive a substantial decrease in taxation to adjust for the unfairness of our upbringing!
Your attitude is fairly unusual.
Back in my mortgage-paying days, I was amazed at the extent to which the government was subsidizing my lifestyle via the mortgage-interest tax deduction. I couldn’t work up any anger over taxation because of that. At other times I get annoyed at what the money is spent on – banking bailouts and such come to mind – but the fact of taxation is inevitable, so why work up high blood pressure about it.
Call me sheeple. Maybe it’s Stockholm Syndrome, or I’m an enabler of the state, but so be it.
If I’m sick, I’m no sicker than folks who become red-faced at the possibility that hedge-fund founders might have to pay more than 15% on their earnings.
rkp
“As long as it is equally applied across the board than I don’t really care.”
But it isn’t.
For the most part it is equally applied. I am not saying flat tax but a system that is equally applied so that it isnt unfair. I believe the majority of W2 earners, whether they make $10K a year or $1M a year are paying their taxes. Sure there are really rich people that figure out ways to avoid but as far my lot in life, I am a W2 earner at a fortune 500 company and setting aside the CEO and a few of his direct staff, I think all of us try to maximize our deductions but end up paying what turbotax spits out.
That’s part of the problem! If you’re a “professional” – e.g. doctor, lawyer, dentist, CPA, etc. – there’s a STRONG incentive to stop earning wage income (W2) and start earning income through a business entity.
Then you can put your luxury car lease and your wife’s “through the business” and every meal eaten is suddenly business related. Also, that 2-week family vacation to Hawaii, well, that was through the business too ’cause we spend 1 day at a conference.
Why would you want to perpetuate this?
The point is, there’s a line at which taxation goes from “easy to pay” to “no way in hell I’m paying.”
10% is easy. That’s probably why religions ask for 10%. It’s a healthy percentage, but it’s doable.
20% starts to hurt. If you’re below the median income, it requires difficult choices. If your household makes $300K, you start to wonder if you couldn’t be better allocating that than the government ($4T Arab wars?).
30% is painful. This really changes who you could be living. Nobody under the median income pays this. Higher-earners will start cheating at 30% – earning income through a business, deducting a home office that really doesn’t qualify, etc.
40% is punishment.
50%+ makes you start to consider ending the work if the measures described above aren’t working or you’re an honest person.
I don’t know many W2 at $1 million income. The large earners get reclassification of the wages into long term incentives and taxed at long-term capital gain. Say Joe wage earner gets a $10,000 bonus — it’s taxed at the typical marginal wage rate of 20-30% Fed. Say Jane exec. gets a $500,000 bonus. Jane is allowed to restruct the bonus to long-term incentive and be taxed at 10 to 15%. Only one time I’ve seen it not work cause the guy left the company and lost the bonus. I’ve seen lots of the middle to high corporate guys have the company pay for everything (one guy with $50,000 study to see which is the best school for their kids, housing for 5 years, then $ as if they purchased a house — he left the company shortly after cashing out on the housing package and getting a big severance package), transportation and expenses for the family to be with them during meetings and conferences (vacations), no deductible on insurance, fully salaries while working full time at another company (usually before serverance starts), daily transportation and all meals.
I too just go the TurboTax routine. My $600 CA tax guy was just asking me what deductions I have and not explaining what was available. Missed lots of deductions that way.
Exactly Newbie, these are the games played at the higher levels.
I’d speculate that the households paying the highest effective income tax rate on all income, benefits, etc., are those with two higher-earners that aren’t quite obscenely high.
e.g. A lawyer with wage income of $150K married to a dentist with wage income of $150K.
You guys make great points. I agree there is incentive to start our own business or do something else than be a W2 wage earner. But I definitely am better off than making less and paying less tax or dropping the income cause the tax is so high.
We have considered my wife not working and being full time mom but we would still lose $25K or more of take home pay. Sure we would save child care costs and probably would save more on eating out as food can be cooked but we are still giving up $25K take home. Whether the tax was high or low, we are always leaving something on the table. That decision doesnt change because the tax is higher or lower, it changes because of personal life choices. I have friends where it is a wash (due to low income, not more tax) and they still work because they enjoy it and cant do the whole full time mom thing.
As far as higher W2s paying taxes or not, my boss is in that $1M earner and he can put up to 50% in a tax deferred account but the rest he pays taxes on just like me and you.
Speaking of tax deferred accounts. That’s another thing I can whine about. For a few years my contributions to my 401k were limited to 2% due to the IRS’ “highly compensated employees” rules for non-discrimination (non-highly compensated employees have to contribute to 401k plan or else highly compensated employees can only contribute 2%).
Then, just as I was able to contribute a healthier percentage, my wife’s firm changed their Safe Harbor plan and now she’s only able to contribute 2%!
Grr…
IrvineRenter,
The “Lovely” dog picture really took your blog over the top today. Really funny. :-}