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I often get asked “have we hit bottom yet?” Mostly by seller’s wanting to know if they can finally count on selling their property without taking a bath and dealing with the uncertainty of a rapidly falling market. Signs are finally improving locally. Take a look at the comparison between Zillow’s local report on sales prices vs. C.A.R.’s (California Assoc. of Realtors) 2011 forecast.

Locally the Zillow data shows we may have hit bottom in April of this year with Median prices on the uprise. Compare that to the state of California statistics showing the median price statewide up over 10% from 2009 vs. 2010 and a slight upward projection for 2011.

CALIFORNIA ASSOCIATION OF REALTORS® releases its California Housing Market Forecast for 2011:
Small increases projected in both home sales and median home price

LOS ANGELES (Oct. 4) – A weaker-than-expected economic recovery will result in a projected decline in California home sales for 2010, although home sales are expected to edge up slightly in 2011, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) “2011 California Housing Market Forecast” released today.

California home sales for 2010 are forecast to decline 10 percent from the 2009 sales figure of 546,500 homes sold. Sales in 2011 are projected to increase a lackluster 2 percent to 502,000 units compared with 492,000 units (projected) in 2010. After two consecutive years of record-setting price declines, the median home price in California will climb 11.5 percent in 2010 to $306,500 and increase another 2 percent in 2011 to $312,500, according to the forecast.

“California’s housing market will see small increases in both home sales and the median price in 2011 as the housing market and general economy struggle to find their sea legs,” said C.A.R. President Steve Goddard. “The minor improvement in the housing market next year will be driven by the slow pace of recovery in the economy and modest job growth. Distressed properties will figure prominently in the market next year, but we also expect to see discretionary sellers play a larger role,” he said.

“As the U.S. economy continues its tepid recovery, we’ll see some improvement in California’s economy,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “We expect a net jobs increase of approximately 1.4 million jobs in California for the year to come and an improvement in unemployment figures,” she said.

“The situation in the California housing market continues to be a tale of two housing markets,” said Goddard. The segment of the market under $500,000 has been driven by distressed sales, while higher-priced areas of the state have been constrained by restricted financing options, and increasingly have experienced an increase in the number of distressed properties. Sales in the low end have been constrained by a lack of inventory, putting upward pressure on prices. Multiple offers on lower-end homes have been very common, according to Goddard.

“A lean supply of available homes for sale will drive prices up at the low end, but larger inventories and limited, less attractive financing will cause continued softness at the high end,” said Appleton-Young. “There’s some indication that lenders will accelerate the number of foreclosures coming on market, further adding to the housing supply, but we do not anticipate that lenders will flood the market with distressed properties,” she said.

“The wild cards for 2011 include federal housing policies, actions of underwater homeowners, and the strength of the economic recovery,” said Appleton-Young. “What is certain is that favorable home prices and historically low interest rates will continue to make owning a home in California attractive for those who are in a position to buy,” she said.

2011 Forecast Fact Sheet

Real estate deals in which lenders agree to take less for a property than the balance on the mortgage have tripled since 2008, a report says. Instead of taking over homes through foreclosure and then selling them, many lenders are agreeing to short sales, in which a home is sold for less than the owner owes on the mortgage.

By Tiffany Hsu, Los Angeles Times – August 11, 2010

Sales of homes for less than the amount of their outstanding mortgage debt have tripled since 2008, particularly in California and the Sunbelt, according to a report released Tuesday.

Known as short sales, the increasingly common transactions for financially troubled homeowners are projected to balloon to 400,000 in 2010, according to Core Logic, a Santa Ana company that provides services to the real estate and mortgage markets. By comparison, existing homes sold at a seasonally adjusted annual rate of 5.37 million units in June, according to the National Assn. of Realtors.

In an economy in which jobs are scarce and a quarter of homeowners owe more on their property than it’s worth, short sales are appealing to investors, banks and owners as a cheaper way out than foreclosure.

Such sales will likely remain routine as the mortgage industry attempts to stabilize, according to the report from Core Logic.

Through short sales, lenders and struggling homeowners agree the property will be sold at a loss, allowing the seller to escape crushing debt or the stigma of default. But in the process, the sellers watch their credit scores suffer and the funds they invested in down payments and renovations disappear.

And with fluctuating home prices, lenders can be reluctant to approve short sales. The transactions can be a hassle to execute, especially when multiple loans on a home mean a slew of creditors are included in negotiations.

Also, lenders have been burned in some short sales when they agreed to a below-market sale price only to see the property resold later at a significantly higher price.

Still, even though the number of short sales is still relatively small, the increase shows that lenders now view the transactions as “a good compromise between foreclosures and trying to ride out the market,” said Richard K. Green, director of the USC Lusk Center for Real Estate.

The number of transactions has exploded to more than 160,000 in 2009 from roughly 96,000 the year before. More than a quarter of the transactions occur in California, with another quarter split between Arizona, Texas and Florida.

About 4% of short sales are then resold within 18 months, according to Core Logic. The firm studied the short sales of more than 250,000 single-family residences over the last two years.

Short sales, Green said, could actually end up boosting the job market. Unemployed homeowners who can escape underwater mortgages have an easier time moving around, expanding their job search.

“In 2008, it was impossible to do these sales,” he said. “But there’s some regulatory pressure to get stuff off the balance sheet. And lenders are less in denial now, coming to grips with the reality that the economy isn’t going to snap back.”

By Dale Kasler
dkasler@sacbee.com The Sacramento Bee
Published: Friday, Jul. 23, 2010 – 12:00 am | Page 6B

Home prices continued to recover in Sacramento and California last month, even though fewer sales were recorded, according to a report released Thursday.

The findings by the California Association of Realtors were consistent with recent trends showing a steady improvement in the state’s housing market in spite of a shaky economic recovery.

The median sale price in California hit $311,950 in June, a 13.6 percent increase from a year earlier. The volume of sales dropped 4.2 percent from a year ago, the result of the expiration of federal tax credits for home purchases.

California’s market, among the hardest hit anywhere, seems to be recovering at a faster pace than the nation’s. The National Association of Realtors said median prices nationwide rose only 1 percent in June, to $183,700, while sales volumes fell 5 percent.

California prices have improved 27 percent since hitting bottom in February 2009, the Realtors group said.

Sacramento-area prices, while recovering more slowly than California’s, are also going up. The median price has risen 7.6 percent, to $196,220, from a year ago. The Sacramento median price has risen 17 percent since bottoming out in April 2009.

By DAVID STREITFELD Published: July 8, 2010 NY Times

LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.

The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.

“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

“I’m going to be downsizing,” he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”

Carol Pogash contributed reporting.

The Wave of the Future?

It appears the banks are figuring out that they lose less money when they agree to negotiate and get properties sold through a “Short Sale” instead of taking the property back through a Trustee’s Sale foreclosure.

“Short Sale” by definition simply means the asking price will net less than what is owed on the property.

This can be seen statistically right here in South Lake Tahoe as well as throughout the region and country with similar trends.

Take a look at this comparison of the first 1/2 year sales of 2009 vs. 2010 and observe where the changes have occured.

This first chart shows sales volume is up over 33% in Units sold for the first 1/2 of 2009 vs. the first 1/2 of 2010.

Number of Units Sold first 1/2 of 2009 vs. 2010

This 2nd chart shows little change in price for both Average and Median prices.

Average vs. Median Price

Similarly the price trend for the last 9 months straight have been relatively unchanged.

18 Month Price Trend

Time on Market (DOM = Days On Market) is also decreasing as well as the $ Per Square Foot

Days On Market vs. $ Per Square Foot

Percentage of Asking Price Obtained for both the “original” and “current” asking prices have improved.

Percentage of Asking Price Obtained

Finally the chart that shows the biggest change of all these statistics is the % of Short Sales.  This chart shows a small (2.0%) decrease in the percentage of Bank Owned sales that have occured yet more than a 150% increase in Short Sales over the same period of time.

Percentage of Bank Owned & Short Sales

In conclusion it looks like we are in for a Wave of Short Sales so get out your inner tube and ride the wave.

Home Prices Up in April (watch NAR video)

By Stephanie Armour, USA TODAY

Mortgage rates have risen to their highest levels in six months, threatening to delay a housing turnaround by discouraging potential home buyers.The average rate on a 30-year, fixed-rate home loan climbed to 5.29% for the week ended Thursday, Freddie Mac reported. That’s the highest since December and up from 4.91% a week earlier.

In early and late April, the rate was at a record low: 4.78%.

“There’s a real risk interest rates could climb up beyond 6% or 6.5%, which can immediately shut down the housing recovery and undermine the national economy,” says Bernard Baumohl, chief global economist at the Economic Outlook Group. “That’s the big battle to watch in the next couple of months.”

Higher mortgage rates are already having an impact. Applications to buy a home or refinance a mortgage tumbled 16% in the week ended May 29 compared with a week earlier, the Mortgage Bankers Association reported this week. Refinancing activity fell 24%. The MBA’s purchase index rose 4.3%.

Refinancings’ share of mortgage activity dropped to 62.4% of total applications from 69.3% the previous week.

While the Federal Reserve is trying to hold down mortgage rates by buying mortgage-backed securities and Treasury securities, other factors are driving up rates.

Mortgage rates have been pushed up by recent increases in yields on long-term Treasury securities, a benchmark for mortgage rates.

If interest rates rise more, that could make a purchase too expensive for some buyers. Weakened demand would delay the reduction of a high inventory of unsold homes, which is considered essential for the market’s recovery.

Some economists say the fundamental building blocks of a housing recovery are already in place and that rising interest rates will not derail the process.

“(Higher interest rates) could slow down refinancing, but the housing recovery is going to be one that takes time, and we’ll see setbacks on the way,” says Michael Darda, chief economist at MKM Partners. “I don’t think the housing market recovery is going to be derailed.”

Lawrence Yun, chief economist at the National Association of Realtors, say rising interest rates often have a short-term effect of driving more buyers into the market. Those buyers rush to buy so they can lock in rates before they go still higher.

But that impact is short lived.

“Further rises will impact buyers. That’s a risk,” Yun says. “Mortgage rates have been the lifeblood of the market.”

Check regulary for the latest updates. If you wish to use my Lake Tahoe real estate search tool you can find any type of real estate you may want.