Home Sales Rise, Factory Orders Up

[schizo2buyORnot]

The second link has true inventory numbers. This is a hard fact. Interpret how you may but don’t try and shade a hard fact which indicates that inventories have stabilized year over year. They are not rising on a year over year basis and have not risen on a year over year basis for the last 4 months in SD.

http://www.housingtracker.net/askingprices/California/SanDiego-Carlsbad-SanMarcos/

Stabilizing inventory levels are not indicative of an imploding market.

Impatient renter

In search of a crystal ball . . . .

[HLS]

A number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.

If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?

If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.

In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.

There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.

And of course there are those that are holding and not listing on because………”they don’t want to lose money”

The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.

Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.

Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.

Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.

My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.

The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.

[HLS]

A number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.

If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?

If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.

In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.

There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.

And of course there are those that are holding and not listing on because………”they don’t want to lose money”

The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.

Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.

Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.

Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.

My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.

The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.

[HLS]

A number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.

If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?

If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.

In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.

There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.

And of course there are those that are holding and not listing on because………”they don’t want to lose money”

The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.

Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.

Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.

Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.

My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.

The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.

[temeculaguy]

HLS is the taking over of payments something that is feasible today? In the last downturn I saw it happen because almost everyone had a fixed rate loan and many had lower rates than the current market so it was done in situations where the realtor commisions was the margin of the short, so it worked for both buyer and seller. The buyer got a loan at about the same payment but with a few years knocked off and no downpayment, without the PMI, seller got out intact with no credit ding and no tax bill for the short, it was symbiotic in certain circumstances. Any of those 5-6 people that don’t have a toxic arm and are South of lower 79, you have my e-mail, maybe I can get at or below 6%, sub 30 yrs and the karma factor to boot. Because I have a downpayment I think my best bet is with the standing inventory from the builders but you never know until you see the numbers.

[temeculaguy]

HLS is the taking over of payments something that is feasible today? In the last downturn I saw it happen because almost everyone had a fixed rate loan and many had lower rates than the current market so it was done in situations where the realtor commisions was the margin of the short, so it worked for both buyer and seller. The buyer got a loan at about the same payment but with a few years knocked off and no downpayment, without the PMI, seller got out intact with no credit ding and no tax bill for the short, it was symbiotic in certain circumstances. Any of those 5-6 people that don’t have a toxic arm and are South of lower 79, you have my e-mail, maybe I can get at or below 6%, sub 30 yrs and the karma factor to boot. Because I have a downpayment I think my best bet is with the standing inventory from the builders but you never know until you see the numbers.

[temeculaguy]

HLS is the taking over of payments something that is feasible today? In the last downturn I saw it happen because almost everyone had a fixed rate loan and many had lower rates than the current market so it was done in situations where the realtor commisions was the margin of the short, so it worked for both buyer and seller. The buyer got a loan at about the same payment but with a few years knocked off and no downpayment, without the PMI, seller got out intact with no credit ding and no tax bill for the short, it was symbiotic in certain circumstances. Any of those 5-6 people that don’t have a toxic arm and are South of lower 79, you have my e-mail, maybe I can get at or below 6%, sub 30 yrs and the karma factor to boot. Because I have a downpayment I think my best bet is with the standing inventory from the builders but you never know until you see the numbers.

[HLS]

SURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)

The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.

The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.

That being said, as long as payments are being made, I’d be surprised if loans were actually called today.

The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.

There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.

At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.

I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.

There are people willing to “sell” this way.

[HLS]

SURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)

The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.

The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.

That being said, as long as payments are being made, I’d be surprised if loans were actually called today.

The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.

There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.

At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.

I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.

There are people willing to “sell” this way.

[HLS]

SURE it is possible….Many people in the industry today are under 30 and don’t even know what an assumable loan is. On the Truth In Lending statement (TIL) provided by the lender, there is a box that is checked as to whether the loan is assumable or not. Many ARMS are assumable, usually fixed rate loans aren’t. (There is also a TIL provided by the mortgage broker, but it often isn’t accurate)

The wrap around loan or All Inclusive Trust Deed (AITD) is a way to take over an existing borrower’s payments without refinancing or qualifying for a loan. It can be used when a loan is NOT assumable.

The loan stays in the current name. The deed that is done transfers ownership, but there may be a problem getting it recorded, because in the terms of the note the original borrower is restricted from conveying interest, with a “due on sale” clause.

That being said, as long as payments are being made, I’d be surprised if loans were actually called today.

The buyer is safer making payments directly to the lender, and not to the seller. The seller’s credit is at risk if the buyer doesn’t make the payments.

There are potential problems in having a deed that doesn’t get recorded. It is a way for people today to get into a home without a down payment. If considering this approach, I strongly suggest using a real estate attorney to protect yourself. It can also be accomplished with a lease option or other methods.

At some point you will want to refi and pay off the underlying loan, but if the payment is acceptable, it is probably a larger risk to the seller.
If the buyer chooses to stop making payments and walks, the seller is the one whose credit will suffer.

I don’t want to give tax advice, so check with a CPA about the W-9 status, but I think that it can be worked out for the AITD buyer to get the tax deduction for the interest paid too, as long as the seller isn’t taking it also.

There are people willing to “sell” this way.

[Author]

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