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In the midst of our heated political debate there is anger and resentment from either side.
"Pay more taxes . . . No live within the income." "Let's go to war . . . I like peace." "They are greedy . . . You are too." "The bankers are crooks . . . The government was behind it." "Don't cut entitlements . . . Establish a budget." " Give me, give me . . . Why should I?" " I drink tea . . . I occupy." "That politician lied. . . . So what they all do."
I have followed the dialogue with interest. On the current level we will never find common ground. There is nothing on which we agree. May I suggest a paradigm shift?
Human nature never changes. Selfishness and its byproducts; greed, power, wealth etc. are common vices of all people in all ages. The history of individuals and also that of rulers is that people love power and wealth. The Constitution spread the power from central government to the local states, hence to the counties and cities. The hope was to give power to the local people. We are each individuals who combined as a culture, constitute this nation. Our government is a reflection of us.
A culture is a group of people with common values. Today, we are a divided people. We have lost our common culture. It does not appear that the unifying force will come from D.C.
When we as a people return to the values our grandparents believed in, we can again be a united nation.
My grandparents and your grandparents believed in a set of core values. Those core values are honesty, integrity, personal responsibility, charity, thrift and love for all people. Those values were the culture of this nation. Why did we discard the unified culture for this current mess? When we again live and proclaim a common culture/value system, then the divisions will begin to evaporate.
Jesus came to proclaim peace on earth - goodwill toward all people. His message is the one hope we have of recreating a common culture; the hope of once again being a unified nation. DR. MLK made great strides by proclaiming that message. Our government is a reflection of who we the people really are.
I can not change the world. But I can certainly change the way I do business. Do I demand honesty of myself? Do I insist that each bargain is fair to all involved? Do I choose peace or anger? Do I choose truth or propaganda? Do I support corrupt politicians because they serve my purpose?
When our society is willing to live by the golden rule in our home, in our business, in our community, in our union; and yes, even in our personal investment strategies; we will see positive change. There is no doubt that then these very ideas will invade the corporate boardrooms and yes even the halls of Congress. Our government and industries are merely reflecting who we are and what we are willing to accept. These values were once the character of our country.
MLK prayed that people would be known for their CHARACTER and not their skin color. When we are a people of character, we will only elect people of character. Our country will have to reflect our value system.
JFK is so frequently quoted as saying,"Ask not what your country can do for you, Rather ask what you can do for your country." We can all do something for our country. We can live lives of character and then demand the same from the politicians. I am "Deputy Dave - the Broker" Please let me know your thoughts.
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Sales Data During the month of September there were 50 homes sold in Eastvale. Nine were bought for cash. About half of the sales closed within $5,000.00 of the asking price. 16 houses sold for more than $5,000.00 above the listing price. About the same number sold for a price that was more than $5,000.00 below the listed price. The days on the market centered around 60 days. Current Inventory There are 246 homes currently listed for sale. Standard sale is 102, REO is 21 and distress sale is 141. Prices range from $263,000 to $550,000. There is one listing for $1,750,000. There are 4 homes listed at $500,000 or above. There are about 125 listed at $350,000 or less. There are about 45 in the $400,000 range. There are 26 homes listed at $300,000 or less. Eastvale remains a desirable community of affordable homes. The new City Council is proving to be interested in providing the services the community wants. They are planning a resident friendly growth strategy. Eastvale is a great place to call home!
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In a special election in March 2011, the voters in the communities of Mira Loma, Rubidoux, Glen Avon and the surrounding areas, voted to incorporate as a city. The City of Jurupa Valley will begin on July 1, 2011. Congratulations to the community leaders who have organized this effort and brought it to a successful conclusion. The City will include the previously unincorporated area north of the Santa Ana River to the Riverside County Line. Eastvale incorporated the land west of the I-15. Eastvale and Jurupa Valley will share a boundary along the freeway. This new city will be in place to address the local issues of the residents. Jurupa Valley and Eastvale are strategically situated to oversee the Planning and growth of the west end of Riverside County. It will be exciting to watch the leaders work together to make the communities a choice location within the greater inland empire. At present the area has been hard hit by the downturn in real estate values. The new cities Eastvale and Jurupa Valley will be organized to facilitate resident friendly growth policies as the economy rebounds. We can all expect that the Jurupa Valley leaders will lead the city to continue to be a home for people who prefer a more rural lifestyle. Cityhood is very likely to enhance the property values as the new leaders focus on local issues. Jurupa Valley leaders will be pulling together several smaller communities that have had local identity. They are now united in a larger context of being one bigger city, the City of Jurupa Valley. The city leaders will develop and direct new policies and programs for the residents of the various communities. Best wishes to the City of Jurupa Valley.
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Standard Sale - also called an Equity Sale
The standard sale is a sale in which the seller has equity in the property. The seller can sell the property for more than the loans against it. The purchase negotiation is completed with the seller and does not require the bank to approve. The seller will pay off the current loan from the new loan obtained by the buyer. Foreclosure
Foreclosure is the legal process in which the home owner who has failed to make the loan payments has the home taken from them. The owner loses ownership of the property. Usually it is the bank that ends up owning the property. Bank Owned or REO
In the past, banks were not structured to manage real estate. They have a division designated to handle homes they obtain through foreclosure. The person who processes the sale of the bank owned houses is the Asset Manager. In banking jargon the bank owned property is refered to as "Real Estate Owned" (REO). The Asset Manager is responsible to manage the sale of the asset on the open market. The asset manager will list the bank owned house with a real estate agent. The agent places it on the Multiple Listing Service. Bank Owned, Foreclosure and REO are terms that roughly mean the same thing. Short Sale
When someone owes more for their house than they can sell it for, they are "Upside down" in their house. The home owner can list the home for sale as a Short Sale. The sale will be subject to the bank taking a loss on the home loan. Loan Modification
A home owner can ask the bank to change the terms of a loan. The terms include things like, the loan balance, the interest rate, the monthly payment or a combination of factors. The banks will modify loans on a case by case basis. If there is a change in the buyers income or some other unexpected event, there is a good possibility they may consider a "loan mod". It can be a long and detailed process. There are efforts being made to make the process uniform and timely. Strategic Default
Strategic Default is the decision of a homeowner to quit making payments and let the bank have the house back. The owner makes sufficient money to pay the debt but the house is not worth the value of the loan. The bank will not modify the loan bacause there is not a hardship suffered by the owner.
**********Make a Confidential Phone Call ********* In California it is illegal for anyone to charge a home owner an upfront fee to negotiate a short sale or a loan modification. In just a few minutes on the phone we can help you understand your options. The national economy and the overall housing problem is creating an emotional and stressful problem for many people. We do not know what is best for you but we want to help you know your choices. Home owners who are under stress have two choices. They can either save their home or they can find a way to get out of the home. The whole process is keeping many people awake nights. Give us a quick call. In just a few minutes on the phone we can provide you with up to date information. This information allows you to clearly know your options. We provide this courtesy phone call without cost or obligation. After this call you will understand the options available to you.
Call Deputy Dave 951-217-7301 Broker DRE #01852925
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Current inventory of Eastvale homes for sale
Bank Owned (REO) Homes for Sale Sunday 10/17/10 there are about 26 (REO) homes for sale Standard or Equity Sales Sunday 10/17/10 there are about 66 standard sales listed Short Sale or other sales Sunday 10/17/10 there are about 171 homes in this category Altogether there are about 263 homes listed for sale. Over the past few months the available housing inventory has been inching up. At the same time the closing prices seem to be a little bit softer. Since the tax incentives expired there has been a slowing trend in the market. Earlier this year the number of closed sales had been averaging around 50-60 recorded sales per month. It has been dropping since the tax incentives expired. In the last 30 days there were only 17 closings recorded. These numbers indicate that the buyer pool is for the present on the sidelines. This week, buyers seem to be taking a wait and see approach. The changing market You have heard that several banks stopped moving forward with foreclosures. This is being done in order to clean-up their poor paper trail on foreclosures. This is not an indication that there will be a new forgiveness of loans or some other approach. It merely means that they have been forced to make their paperwork processes correct. The issues are that they must have proper signatures before a Notary and similar issues. On a positive note there is a significant improvement in the condition of the REO homes for sale. Just a year ago many homes were pretty well beatup. Today most of the REO homes have been repaired. Most REOs are now "turn key" ready. Buyer Information Buyers know that the REO, standard sale and short sale processes are confusing. Many buyers do not want to consider a short sale purchase because of the complex process. Presently they are the largest category of listings. For the buyer who is not under a time pressure to buy, there are really good deals in the short sale market. Yes, there have been problems and many frustrating issues in short sales. The banks seem to be pressing for making the process more "Buyer Friendly." We understand the different strategies necessary to finalize a transaction. We can navigate you through the complex process. . . . we can make it happen for you. First my team can help you find just "the right home." We begin by creating a list of homes that meet your personal desires. We check the Multiple Listing Service (MLS) for the homes for sale that meet your criteria. Then we schedule a viewing of the homes that look interesting to you. We will walk you through the complex process. . . . we can make it happen for you. Call: "Deputy Dave" 951-217-7301
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There has been a dramatic change in the market in the last few months.the most notable change is the inventory volume. Most of 2010 the inventory has been around 120 homes for sale. As of September 30 it is about 255. The inventory has doubled. while the number of sales has dropped a bit. the monthly sales volume has been around 60 homes sold each month. For September it dropped to about 50. The banks are releasing more bank owned properties. Currently there are 28 REO homes. Most of this year we have had aroung 12-15 bank owned homes listed. There is another noticable change. Comparing the selling price to the listing price we see a shift. Most of this year homes were selling for a few thousand over asking price. September saw about half of the sales were right at the asking price or a few thousand dollars less. Cash is not king. Of the 11 homes listed as selling for cash several were bought above asking price. The market currently has over a dozen homes of 3000 square feet or more, listed at $350,000 or less. There are homes in Eastvale on the market for under $300,000. That indicates that the asking price is getting lower. These trends are different than the information I read from national reports. There is nothing about this report that signals danger. It is apparent that the market is slowing down a bit. I can only imagine that this slowing trend is closely related to the national election cycle. Many people are uncertain about the future. After the election there will be more certainty about the economy and what people can expect for the next year or two. If you are in the market to buy, You may want to start shopping and get a bargain on your Dream Home.
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Just a few thoughts. Everyone knows we need good jobs to stabilize the economy. Jobs will enable people to buy things. People who are confident in their job are willing to upgrade their overall lifestyle and their home. Simply put we need jobs. Temporary jobs are not the answer. We need long term jobs. But it is not just any job. Jobs do not increase wealth. New jobs are a byproduct of a growing and profitable business enterprise. Question; if jobs create wealth, why don't we all hire 10 people? When an entrepreneur or inventor develops an idea the idea springs into a new business, new wealth is created. The wealth producing enterprise can afford to hire new workers. The jobs are created because someone is producing new goods or services. The liberal administration is set on wealth redistribution. The very idea of redistribution of the wealth is not an encouragement for business to spend its nestegg developing new markets. America has leaders who tell business,"You make it and we take it." The government can create jobs. Government jobs are merely overhead to the private sector market. Government jobs of necessity drain the vitality out of successful businesses. Government programs can give stimulus money to an industry or a tax benefit for a project. The overhead of these programs must be funded by taxing profitable enterprises. Question; Have you noticed that businesses are uncomfortable in expanding and hiring new workers under the looming regulations of the Health Care Bill and the uncertainty of what new government regulations that are pending? This administration reviles business and then tries to bribe them into hiring new workers. The blame placed on the Bush administration has been relentless. The new administration immediately changed the course. They promised they could spend us into prosperity. (Did the people who bought houses thay can not afford help them spend their way into prosperity?) The recovery plans are not working. In fact they are making the problem worse. The micro-management of bureaucrats is choking business. The Democrats are aware that their plans are not working. To save their political future, they are now considering going back to some of the proven techniques. They are refreshing a Republican concept of not raising taxes. In essence they are admitting that their method of stimulating the economy is a failure. You may object that these viewpoints may not be totally accurate and factual. You may for the most part disagree with them. However, they are attitudes that reverberate throughout the business community. These perceptions must be corrected before we can see any economic recovery. When will that happen? Who knows? We have a few weeks before the national election. The election could signal a change of direction. Regardless, at this time the national feeling of uncertainty is creating an attitude of "wait and see". Most people are very concerned about the future. America was built on the concepts of freedom and personal initiative. If a business wants to make a significant move they have to think inside the box or a czar may slap them down. So what is the good news? The fearful attitude has paralized many people. This thinking is creating a buying opportunity. Prices and interest rates are begging for takers. This is a great opportunity for those who are able to buy a home. Many homes are selling at a price that is at or even below their replacement costs. In the down market, it is the optomist who succeeds.
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You may find this blog offensive. I speak as an American who believes we can correct problems if we can identify the problem. Our country is in a political campaign and it appears that finger pointing and name calling are more common than any realistic discussion of the current situation. Over the past few years, we have experienced a major decline in real estate prices. It is easy to blame one party or the other for the mess and defend our position with partisan sound bites.I am writing this blog with the hope that someone can enlighten me. Let me know what I am misunderstanding about how the crisis occurred. I am asking questions that lead me to different conclusions than the daily Democrat/Republican rage. Please help me with some of my questions. Who is the insurance company?As a Realtor, I have profited from the government promoted loans. It is personally profitable for me to sell to FHA buyers. As a home owner I have had FHA loans. When you get one of these loans, you pay a premium in the event that you faltered on the loan, the bank would be paid. I am asking you to explain to me why the government had to pay taxpayer money rather than the "insurance company" that collected the premiums. Did greedy bankers cause the bubble?
This is a very interesting question. A greedy banker says, we will make a $10,000.00 commission on this loan. We will lose $200,000 when we foreclose on the house. . . Let's go for it!! Enter Derivities.
Simply put, you package the bad loans and resell them. Sell the trash to buyers who do not do any due dilligence. They are the rich people. Why did our government feel compelled to bail out the rich people and not the struggling home owner? Where were the bank regulators? Is this the kind of oversight you would expect? Am I the only one who can see this as the culmination of a long history of a our government's promotion policy encourage this foul plan? Now the partisan politicians want to blame a person not a bi-partisan policy. Is it true that there were pressures placed on banks to make loans to certain groups of unqualified buyers or face being charged with civil rights violations? Did government policies generate housing demand?
Under FDR the government got into the the banking and housing industry. The government began promoting policies for home ownership. President L. B. Johnson continued the process. He declared a "War on Poverty." One feature of the war was to make housing affordable for almost anyone. Since that time there have been various government policies the drive the home ownership programs. Is it possible that the government is behind the housing bubble? After all, no partisan Democrat is willing to admit that during the "Bush" years, we had a great, growing economy. Did the house of cards fall? Did anyone give warning? You only need to go as far as You Tube to see warnings about Fanny and Freedie being in trouble. Those people were reviled by Barney Frank and other social engineers. Is it fair to say that the unifying thread in the run-up to this mess is the government policies of social engineering? I'm looking forward to reading your comments.
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There is exciting news from the west end of Riverside County. The election on Tuesday finalized years of work and planning to create a new city. The election was a resounding "YES" to the proposal to incorporate as an independent city.Eastvale will formally begin in November. Just 10 years ago this area was dairies and farms. Today there are very few farms remaining. The area is a wonderful new community consisting primarily of larger homes on pool sized lots.
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Buyers are looking for the Foreclosure. They have heard that the foreclosure is the real deal. Last year banks, in the Corona/Riverside area, dumped some badly damaged properties onto the market. They were accepting anything just to clear out their bad inventory. you could easily pick up a place and get some sweat equity. Today you need to think of those as "The good old days!" That was then this is now. Today many banks are managing the rehabilitation of their vandalized properties. They paint and repair the home to make it a turnkey property. They are slowly releasing inventory of vacant properties onto the market. The banks new policy is to minimize the losses that they once realized because of their panic selling. Their new policy seems to be to release the vacant properties in determined and systemmatic manner. Their new policy is creating a consumer confidence in the market. The banking industry has had major procedural changes since 2008. The government involvement has moved them from a rapid foreclosure procedure to a new process of placing emphasis on Loan Modification and Short Sale. Today banks use foreclosure as a last and least desirable solution. Look at the numbers. In Corona - Eastvale there were 70 homes sold in January. Today there are nine Bank Owned properties listed. There are 79 Short Sale listings. The banks are not yet up to speed in handling short sales. They are under pressure to do loan modifications whenever possible. The sooner they take the hit on a short sale the sooner it is off their books. Most banks are gearing up to streamline the short sale process. The business as usual model for the next two to three years will be short sale. The result of this procedural shift is that it will smooth out the next spike anticipated by the loans that are pending a reset. The market must anticapate not only the impact of the reseting loans but also the growing anger over upside down loans that are presently being paid monthly by responsible owners. Owners who are seriously considering a Strategic Default. Thus far the banks have succeeded in stabilizing the market locally. Prices are slowly climbing. Each month that passes with increased values creates a softens the impending blow of a wholesale Strategic Default spike. Bad loans being considered, house values of today seem to be unrealistically low. Why? In today's dollars, a preponderance of the homes selling are selling at a price that is below their replacement cost. From an investment standpoint, many homes can be purchased and rented out for a gross return around 8% or more. Throw the inflation factor on top of that return and you may understand why so many homes only stay on the market for a few weeks. As a Realtor in the Eastvale area I regularly have people tell me they do not want to get involved with a Short Sale transaction. Buyers know the facts. They have heard of the many short sale cases that drag on for months and just as they are ready to close the whole deal finally explodes! Believe it or not, the banks are moving to change that situation. It is taking time for them to retool for the new model.
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Strategic Default - is it the next wave of homes to hit the market? Strategic default is what banks call the event when people who can afford to make the payments decide to walk away. It is not the fact that the home owner can not make their house payments, it is that they CHOSE NOT to make payments. They continue making payments on a home that is not worth the loan against it. Most Americans are honest, ethical and responsible people. They try to pay their debts.
Many Americans harbor resentment and a growing anger because Washington DC insiders are being bailed out with tax dollars while the struggling home buyer is receiving no relief. It appears that the government is covering the losses the banks took on the bad loans that they made. Why should an individual have to personally pay mortgage payments for a bad debt?
These links are examples of the information homeowners are viewing.
(Note: you may have to cut and paste the links)
http://topforeclosuretraining.com/blog/2010/02/09/are-we-being-duped/ http://www.youtube.com/watch?v=SFuWW-Sju0c www.mybudget360.com/the-art-of-strategic-mortgage-defaults-the-coming-wave-of-foreclosures- It is possible that this kind of information is finding expression in the "Tea Parties." However, Americans have a strong sense of fairness. They grapple with the idea that they have a moral obligation to pay their house payment. But, there is a growing feeling that the government is helping the insiders get rich and ignoring the middle class Americans. This growing problem is not a hidden or concealed fact. The banking system has factored it into their forecasting. The banks are trying to prevent foreclosures. Foreclosure is expensive. They pay residents to move to prevent the necessity of an eviction.The property is vandalized and must be maintained while vacant. Banks want to do loan modifications. If some of the information (see links above) is correct, it is possible that they are not even losing money on a short sale. There is also an additional solution for the banks to use. The bank can rent to the former owner under an arrangement of "Lease for Title." The bank can then hold the house until it is to their benefit to sell it. As a local Realtor in the Corona Eastvale community, I have a strong confidence in the fact that the market in this area has stabilized. I have seen the prices increase over the past year. Yes the inventory has reduced to a two month level. Yes, there are many houses waiting to come onto the market. It will be another year or two before there is a feeling of a stable market. As a local Realtor, I am happy to discuss [with you] what all of this means to your own personal situation.
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2009 is behind us. We begin the new year with brisk sales. Eastvale posted some 70 closed sales in January. There are roughly 140 active listings. These numbers indicate there is a two month inventory. This is the pattern we have seen recently. That is, there seems to be a steady stream of homes coming onto the market to keep the inventory around a two month supply. The lowest price was $304,900 and the highest recorded was $543,000. The smallest home is around 2100 square feet and the largest being 4,763. The cost per foot for the smaller homes is higher than the cost per square foot for the larger homes.Smaller homes sell for about $130-$140 per foot. Some of the larger homes sold for around $100 per foot. Most of the homes sold for more than the listing price. Some cash offers were above listing price. The majority of homes sold rather quickly. The oldest listing took 283 days to sell while the quickest sale was 3 days. Presently homes are selling rather quickly. What is causing the buying spree?
1. The fact is that most of the homes are selling at a price that is below the replacement cost of the equivalent house.
2. The fact that the home loan available today is cheaper than can be expected in the near future. The anticipation of a loss of value in near future is offset by anticipation of increased loan interest. Roughly, if interest increases by one percent the payment will increase by about 10%.
3. There is an incentive to get the tax credit for buying now.
4. Presently, real estate is thought to be a good place to invest in an asset that should maintain current value or should grow in value. Real estate has historically been seen as a hedge against inflation The big question is; are prices going up, down or staying level? Overall it appears that prices are inching upward slightly. Eastvale is rapidly coming to be recognized as a desirable hometown. It is becoming a community of choice. It is a good time to consider buying a home or two in Eastvale.
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Can anyone predict the future with any certainty? I doubt there is anyone who can. Although, the politicians will tell you with certainty what will happen. It is just a simple matter of approving their proposal. They leave you with the threat that If you do not do their plan then everything will be bad. Without being political, can we look at events and draw conclusions that seem reasonable? How can we project what to expect in 2010? 2010 is an election year. The pressure is on the politicians to do something to earn your vote. They must kill the gloom and worry that public currently feels because of the poor economy. They must do something to encourage the economy to grow. The politicians must try to bring unemployment down. If they can not do so, they will probably do something to at least give the perception that the economy is growing. That pereception alone creates consumer confidence. They hope to translate the confidence into votes. Conclusion: The economy and jobs will NOT continue the downward spiral as we approach the election There has been no hesitation for politicians to pay out enormous amounts of money to save the big, huge, enormous businesses. The dollars spent merely add to the national money pool. The dollars do not reflect an expanded Gross National Product. The dollars have been added to the available dollars without any additional GNP. The added dollars spread over the same GNP is classic inflation. Also known as the deflating of the dollar. Conclusion: We can expect to realize heavy inflation in the not too distant future. Wealth is created by the production of goods and services. If there are no new goods and services, there is no new wealth. The strength of the USA economy has been the initiative and the imagination of individual taking the risk to a new product or service. Politics aside, the economic engine (small business) will find ways to prosper under the given circumstances. America has experienced a "roaring 20's" episode over the past several years. Everyone was living good. The banks let people live high on borrowed money. 2009 saw the end to easy money. 2010 will be a year in which small businesses and individuals will have a better opportunity to borrow. Conclusion: More money will be available to qualified borrowers. The reports reveal there is a 2-3 year inventory of loans that have not yet been reset. The banks are planning on making lease for keys and streamlining loan mods in an effort to flatten the spike. America has seen the building of new homes come to a virtual stop. There is the perception that there is an excessive inventory of houses. The new houses that were built and selling at inflated prices, were being occupied. Many larger houses were lived in by more than one nuclear family. The housing inventory was being effectively utilized. There was not an idle inventory of houses. The houses that are vacant today are a result of economic pressure. They are not the result of too many houses being built. When the resident/home owner could no longer afford the house they had been buying, the house became vacant. Most of the former home owners still wish they could buy a house. The economy prevents them being able to buy. Banks are holding foreclosed houses off the market and allowing the market to stabilize. This process has produced an increase in house prices. Bankers know that the value is not dropping. They also know that the current price of many homes is at or below replacement costs. They are holding appreciating assets. They will wait it out. The lower housing prices and the low yield on many other investments are bringing investors to the market. They are able to get 6%-10% return in today's rental market. This return is NOT dependent on appreciation. Real estate has usually been a good investment during inflationary periods. There is very little new construction coming on the market. Overall, the housing inventory is getting older. Without replacement housing being built, it is a depreciating inventory. Conclusion: There are not excessive houses that can not be absorbed in a stable economy. The inventory will reasonablly be absorbed when the economy recovers. There will be a demand for new construction at that time. 2010 will see the employment picture begin to turn around. We will see inflation threatening the recovery. Banks will have to develop loan policies to allow for home loans to a different buyer than in the past. Your job may be your credit. Interest will not stay low. Housing in the Eastvale, Corona and Norco area was hit hard by the downturn. Over the last year, it has actually seen an increase in prices from the lows of January, February 2009. The bank owned houses are hitting the market in a systemmatic manner. The government bailout is still playing a role in the market but overall it appears we are at present in a stable market. Conclusion: It seems reasonable to project that 2010 is a good year to buy a house or two.
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The "Foreclosure Fire Sale" is over! The first half of 2009 was a time to buy a distressed foreclosure house. The house was in "poor repair". That is politically correct for saying the house was "trashed!" Common knowledge at that time was, to get a bargain on a house; buy a foreclosure. Those houses were sold "As Is". Today in the Eastvale area, there are a few foreclosures that do not show well. They are the exception. The new business model of the banks is different. Most foreclosed homes are now cleaned, repaired, painted, landscaped and generally they are "move in" ready. Some banks do not want the property to be advertised as being a foreclosure. The banks now manage the foreclosures in a much different manner than they did just a year ago. Here is the good news and bad news about the change. The bad news is that if you missed the "Fire Sale," you missed out. It is over. The good news is that the new banking business model is creating a stable market. Do not expect to see more panic sales in the near future. Most of the homes on the market today are "Short Sales." The bank controls the sale price to assure the house sells for a fair market price. Short sales are not panic, price slashing sales. The bank takes a loss, but the house sells at a fair price. The primary determining factor in today's market is affordability. Can the buyer afford the house. The buyer must realistically qualify to make the loan payments. That factor is an indication that we are in a standard housing market. An additional factor is the appraisal of the home. Just because a buyer offers a given amount does not mean that the bank will loan on that price. This is just another indication of a stable market.
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What is ahead for the housing market? The real estate market expansion was fueled in part by loans that did not amortize (pay down the balance). They also had below market interest rates for the first few years. These loans scheduled a large increase in the monthly payment after a few years. With the price of houses increasing, buyers thought they could sell their home if they could not refinance their "Toxic loan". When prices began dropping the sell option was not possible. During 2008 we saw countless foreclosures hitting the market. The neighborhood blight and dead real estate market are the result. There are still toxic loans that are due to adjust over the next two years. This fact makes us think the problem will continue to falter for the next two years. Looking ahead to 2010 there may be some good news. Loan Modification is the first option. Banks are being pressured to modify loans whenever possible. The federal government is providing banks incentives to modify loans. If the owner can not pay a regular house payment even with the terms of the loan modification terms, the banks now have two other options. The bank may chose to accept a short sale. The home owner sells the house for less than the loan balance and the bank takes a loss. The bank can now offer "Lease for Keys". The owner of the home may be able to pay market rate rent for the house. If so, the owner of the house will be given a lease. They can stay in the house and rent from the bank. To stay in the house under the lease terms, the owner must sign over the title to the house giving the bank ownership of the house. The expected result of this practice is that the bank will not be in a crisis to dump distressed homes on the stressed market. The banks can hold the houses. They will have the option of releasing them into a stable market at some time in the future. There is one other factor that is at play in today's market. The federal stimulus money is beginning to reach the Inland Empire.There is a large inventory of blighted homes on the market. The City of Fontana has money to buy, refurbish and sell homes. This project will aid low income families get into a home that the family can afford. The Inland Empire Economic Recovery Corporation is also rehabilitating houses. It is a public/private corporation that has stimulus money backing it. This corporation will also be a player in getting blighted houses off the market. Both of these operations are just beginning to swing into action. They should make a real difference at the low end of the market. They will help low income families get into a home without fear of being victimized by a toxic loan. The results to expect from these changes are encouraging. 1. Now that the banks have the ability to release homes onto the market at a selected pace, the market should not experience another drop in prices. The controlled market will be stable. 2. Stimulus money is backing the low income housing component of the market, which takes the less expensive homes off the market. 3. Now the moderate income buyers can buy a home with confidence. They do not need to fear a new wave of foreclosures slamming the market.
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