Housing Crisis to End in 2012 as Banks Loosen Credit Standards (Maybe)

While I certainly don’t expect to see any major improvements in the local housing market this year (with respect to average sales prices or price/sqft), I also don’t anticipate any drastic declines. Elk Grove currently only has 238 Single Family Residence listings available on the market (this includes equity sales, short sales, and bank owned homes- one house on one lot).  Couple this with the fact that there are currently 855 Elk Grove Single Family Residence listings in contract (this includes homes listed as short-contingent, pending, and pending/bring backup), and you’ll realize that we are actually seeing the pendulum swing back in the direction of this being a seller’s market! This is NOT to say that prices will sky-rocket. However, the simple laws of supply and demand still apply. There are more buyers out there looking to purchase homes in Elk Grove than there are listings. We’re seeing a lot more bidding wars over competitively priced homes and the average “Days on Market” time before listings are going into contract has dropped substantially.  Dare I say it? Stabilization may be on the horizon.

01/24/2012BY: KRISTA FRANKS Printer Friendly View

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.


See Actual Article Here.

2011 Real Estate Reality Check!

Leslie Appleton Young, the chief economist for the California Association of Realtors, recently noted that all that California’s real estate market really needs to right itself is six straight months with no surprises. All the ingredients for a turnaround are there — record low interest rates, outstanding affordability, and very attractive home prices. But economic and political headwinds at home and abroad kept the market from really gaining much momentum this year. To be sure, 2011 was anything but predictable. On top of the tepid economic recovery here in the U.S., there was one crisis after another around the world — the Japanese Earthquake and Tsunami, the “Arab Spring” uprising, a spike in oil prices, political standoffs on Capital Hill, the debt limit ceiling and downgrade of U.S. debt, and most recently the sovereign debt crisis in the eurozone and the subsequent stock market volatility here at home.While California’s real estate market did show some encouraging signs of improvement in certain price segments and communities, skittish consumer confidence, the sluggish economy, stubbornly high unemployment and volatile financial markets all combined to keep home prices and sales flat in most areas. Locally, The Sacramento Bee reported on November 17 that home sales in the Sacramento region in October — the most recent figures available — jumped 19.6 percent from a year ago, according to research by DataQuick, the La Jolla real estate information firm. But the median price edged lower as distressed home sales continued to be the lion’s share of the market. The median sale price in Sacramento County was down 8.2 percent to $157,000, according to The Bee. Placer County saw the median drop 12 percent to $252,000. In El Dorado County, the median was down 12.2 percent to $230,000. And in Yolo County it was off 14.6 percent to $194,750.The California Association of Realtors, in its annual forecast predicts that home sales in California will rise just 1 percent in the coming year. But as we know, real estate is really all about location. And in this challenging housing market, it’s also a matter of price segments. Locally, entry level homes and distressed properties continue to see robust sales in many areas as bargain hunters rush to take advantage of attractive prices and, of course, low interest rates. As a result, we actually have seen inventory drop sharply this year to the lowest level in about two years.Market wide, we are down to 4.2 months supply of homes on the market, according to MLS figures — a 31 percent decline year over year. At the same time, sales year over year market wide were up 16 percent. That trend, if it continues, could be very positive for the market and help it move back towards normalcy.Distressed vs. Luxury Markets
One trend we’ve noticed of late is a drop in the number of bank-owned properties that are listed for sale and an increase in short sales. The reason may be that government regulations and controversies over “robo-signing” have kept more foreclosures from coming on the market. As banks put the robo-signing debacle behind them, we may see more REO properties released in 2012.
While the release of additional distressed properties could keep prices of all homes down in 2012, we suspect that strong demand by investors for these homes will probably keep prices from falling much further. We’ve seen multiple offers for many bank-owned properties, sometimes all cash offers, as investors snap up what they believe to be great bargains.On the other end of the spectrum, the high-end market saw solid buying throughout much of 2011. But in recent weeks we have seen that interest decline, with sales dropping 8 percent in September and inventory levels rising 2 percent from the previous month. Non-distressed mid-market
Homes that are somewhere between distressed and luxury properties – the bulk of the market here in Northern California – probably were the most challenged in 2011. One big reason for the softness is that we didn’t see very many move-up buyers trading their entry-level homes for larger, more expensive properties as they have traditionally done in the past.
Equity homeowners stayed on the sidelines, perhaps due to a lack of confidence in the housing market and the economy in general. They may have been frightened away by doom and gloom news headlines about the housing market, or maybe fear over whether they might lose their job should the economy stumble again. This uncertainty and lack of confidence, I suspect, will continue to some degree into 2012 until there is more positive improvement in the economy.But as we approach the new year there are glimmers of hope that the housing recovery could finally gain some traction.Gradually we’re seeing fewer distressed sales and more “normal” transactions. Despite the recent downturn, the high-end market had a solid year in 2011, which is a good sign for the entire market.In the past, luxury homebuyers – the so-called “smart money” – are often the first to declare a market bottom and jump back in because they have the means to do so once they are convinced the time is right. The other segments eventually follow.Buyers are far more active right now and that, coupled with tight inventories, is helping to firm up pricing while getting serious buyers to be a little more realistic when making offers–especially in the entry-level arena. Properties priced correctly and that show well are getting a tremendous amount of traffic as well as multiple offers in some cases.Additionally, we are finally seeing many banks starting to process short sales in a more streamlined fashion, allowing us quicker short sale approvals. Finally, the news media are starting to join the chorus suggesting a turnaround is near and that now is the time to get back into the housing market. A recent Fortune magazine article declared, “Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.” And The Wall Street Journal followed with a headline declaring, “It’s Time to buy that House.”So will 2012 usher in a steady, predictable economic recovery at long last or another wild rollercoaster ride of economic and political surprises? Only time will tell how it all plays out. Fasten your seat belt

From the first time buyer to the savvy investor – From the seller with equity to the seller underwater and needing options. I am here for you.



You Have Seven Options…

As a three-time certified Short Sale “Specialist,” my specialty is helping struggling home owners avoid foreclosure.  If you’re upside down on your home and you need to make a move you essentially have 7 options to choose from.  More often than not people find that a short sale is ultimately their best solution, however, it’s important that you educate yourself on all of your available options before choosing which is best for you.  If you have questions about how all of this might apply to you, please feel free to give me a call and set up a consultation.  I’m more than happy to discuss your unique situation in person.

Your 7 Options to Choose From Are:

  1. Pay down your mortgage, and sell the property.  This is an option if you have money to spare.  We can sell your home and you pay the difference between what your house sells for and what you owe your lender(s).  The positive to this is you can keep your credit intact.  The negative is that you need disposable dollars to do this with.
  2. Short Sale your property.  A short sale is where we sell your home for less than what you owe.  We need to negotiate with your lender(s) to accept less than what you owe.  Note: There can be tax ramifications depending on if you have a recourse or non-recourse loan. I can explain the difference if you give me a call.  The positive is that you can pay off your loan(s) without any money out of your pocket.  It’s important to realize that in the state of California, there is a law in place (SB458) that protects the home owner from any further recourse/liability once the lender(s) have accepted a short sale, AND you cannot be required to provide a cash contribution as a condition of acceptance of your short sale. The negative depends on how many payments you missed.  It can reduce your credit score 50-150 points.*
  3. Walk Away and allow your property to be foreclosed.  This is a situation where you just walk away from your house.  You can still have negative tax consequences and it can affect your credit by approximately 250 points.  In most cases, a short sale is a better option.*
  4. Bankruptcy.  Sometimes you will be advised to file bankruptcy.  In a lot of cases, people will suggest this because they do not know about other options as mentioned above.  This should be a last resort.  It can affect your credit by approximately 400 points and your credit for for the long-term.*
  5. Deed in Lieu of Foreclosure.  This is a situation where you basically hand the keys over to your lender.  In most cases, the last thing your lender wants is the property back, and if they do, it is normally prior to foreclosure.  At this point, your credit is probably already negatively affected by multiple missed payments.  If you were current with your payments, why would your lender take the property back?
  6. Loan Modification with your Lender.  This is a situation where you want to stay in your property, but can’t afford your current payment(s).  The lender might renegotiate interest rates or reduce your payment and add it on to the back end of your loan.
  7. Rent.  You can rent your property out until the market turns upwards.  In most cases, there will be a negative between the rent you’re able to collect and your loan payment(s).  Most of the experts feel this market will take 2-4 years to turn-around, though I feel those figures may be overly optimistic.  You should be prepared to rent out your property long term and create a budget worksheet to see if you can realistically afford to be compensating for the difference in your mortgage in addition to the cost of rent for your own home stead.

*Reductions to credit scores are estimates only.  Individual situations will produce varying results.

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.

A Winning Combination!

Coldwell Banker and Jessica Hays….
A Winning Combination

I am honored to announce that I have joined forces with Coldwell Banker, one of the most widely respected and trusted real estate names in the nation.

I am certain that my progressive approach to marketing, dedication to perfection and uncompromising service, combined with the unparalleled resources available through Coldwell Banker will create a winning combination.

Together, we are poised to deliver the highest degree of service through our unmatched global network, nationally acclaimed marketing resources and knowledge of the local Elk Grove market.

Please feel free to count on me to be your real estate resource. I am happy to keep you informed with up-to-date market information, and will continue to answer any questions you may have. For expert representation in buying or selling your home contact me today.

From the first time home buyer to the savvy investor; From the seller with equity to the seller underwater and needing options… I am here for you.

SB 458 Signed Into Law

So what does this mean for you? Well, in order to explain the answer to that question, you’ll have to know a few fun facts first.  California is a single action state. That means that if you don’t pay your mortgage, the bank gets one opportunity to act to recover their losses. In many cases, that single action is foreclosure, in which case they reposes the property and then sell it to regain their investment.  When short sales came along though, the waters got a little murky.  It wasn’t clearly defined for us whether or not acceptance of a short sale agreement was legally considered the bank’s single action, after all that particular action is initiated by the borrower, not the lien holder.

BUT in 2010 SB 931 was ratified and said that primary lien holders on purchase money loans could NOT go after borrowers who short sold their home for a deficiency judgment after the fact.  Great! Right? Well, by clarifying that primary lien holders were not able to pursue deficiency judgments, this law opened the door for junior lien holders to move forward.  In effect, they could potentially come back to haunt borrowers who short sold their homes.

Well, that loop hole is no more! SB 458 was signed into law TODAY.  All lien holders are now legally obligated to accept short sales as full settlement of the debt, and will absolutely not have the option to pursue borrowers who short sale the homes after the fact.  Pretty cool day in real estate.

If you’d like to read the details for yourself, check out http://www.car.org/newsstand/newsreleases/sb458/#

As always, From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.
Jessica Hays





Some Common Myths about Energy Saving | Live Green | Better Homes and Gardens Real Estate

Some Common Myths about Energy Saving | Live Green | Better Homes and Gardens Real Estate.

Myth #1 – All fluorescent lighting is bad

Today’s compact fluorescent light bulbs (CFLs) use up to 75 percent less energy than traditional incandescent lighting and, on average, have a life span of up to five years (source: ENERGY STAR). Next time you’re replacing lighting around the home, remember that incandescent lighting has changed very little since the 1800’s, and that one CFL bulb lasts ten times longer than incandescent bulbs of equivalent wattage.Energy Saving Myths

Myth #2 – Installing foam gaskets around electrical outlets and light switches will reduce air leakage

Test measurements conducted by the US Department of Energy show that less than two percent of air leakage in a home is through electrical wall outlets. However the big criminals in this regard are one-pane windows, with a thin sheet of glass, which serves to heat the outside. Or doors left open, particularly in the fall and spring months.

Myth #3 – Leaving lights, computers, ‘sleeping’ TVs, game consoles and DVD/video players on is better than switching them on and off.

This myth has been around since the time that electricity was first harnessed, at the turn of the last century. The small surge of power that occurs with ‘some’ devices when they are turned on is miniscule compared to the power wasted by leaving them on when not in use. And here’s another surprise for you. Even when you’ve turned them ‘off,’ a lot of appliances continue to draw power – ‘phantom power’ as it were – to keep the device in ‘instant-on’ mode or to power lights and LED readouts on the devices. Pull their plugs when not in use, or connect to power bars and switch those off when the devices aren’t in use.

Others-Myths – Cleaning refrigerator coils deliver major energy savings and duct tape placed around joints will keep in the heat (or cold).

Not so. The air in most homes is not so dusty that the heat exchanged through the refrigerator back coils is impeded. And duct tape, while strong, exchanges heat and cold easily.

Don’t Forget to Attend Our FREE Short Sale Workshop! 6/30

This free workshop will break down the short sale process and review all possible options for people who are upside down and struggling.  Be at my office, 7801 Laguna Blvd. Ste. 100 in Elk Grove, CA 95758 at 6pm June 30th- THIS THURSDAY evening!  Even if you decide not work with me right now, you WILL benefit from the information, so please mark your calendars and be there!

Short Sale Workshop!!!

IMPORTANT NOTICE: Better Homes & Gardens Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit. 2. Even if you accept this offer and use our service, your lender may not agree to change your loan.











Did you know…?

As of July 1st 2011 all homes in the state of California are required to have carbon monoxide detectors in them!  I highly doubt that the government will be sending any inspectors to your homes to confirm that you’ve complied.  I mean, how often to you hear about men in black suits knocking on random doors to verify a property has smoke detectors or that their water heater is properly braced to the wall? BUT, if you are selling your home and you will record after July 1st, you will need make sure that you have these detectors before you record to ensure that your property is up to code.  If you’re not selling your home any time in the near future, you may want to consider picking up a few of these detectors anyways… You never can be too safe, right?  As always, From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.


Think you can’t afford the home of your dreams?

You might be able to get closer than you think!  Obviously, the cat is out of the bag on the whole “astonishingly low home prices” thing.  BUT, many buyers in the market today are still finding that it’s difficult to find a home that is both move-in ready and affordable.  This is an especially difficult hurtle to cross if the buyer needs to utilize FHA financing as FHA has several guidelines in place that limit the maximum amount of repairs a potential property can need in order to be eligible for FHA financing which essentially require the property to be “move-in ready” as-is.

THERE MAY BE A SOLUTION!  203K Financing is an FHA program which allows you to finance repairs and improvements on a property at time of purchase.  For example, if you fall in love with a property that is $15,000 in necessary repairs short of being eligible for FHA financing that is listed for $100,000, you may be able to purchase that home via a 203K financed loan in the amount of $115,000.  The bank will require you to obtain at least two bids for all of the repairs/improvements you want completed and then order an appraisal “subject-to” those repairs.  As long as the projected value of the home after the repairs are completed is equal-to or greater-than the loan amount, and the buyers qualify for the loan, you should be in a pretty good spot.

If you have questions, feel free to call me directly or go online to HUD.gov and research the program on your own.

From the first time home buyer to the savvy investor – from the seller with equity to the seller underwater and needing options – I am here for you.