Real Estate Information

Last Week in the News

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The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 0.6% in August after an upwardly revised 0.9% gain in July. It was the fifth straight monthly increase.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending September 18 rose 12.8% to 668.5, the highest since the week ending May 22. Purchase volume rose 5.6% to 288.3. Refinancing applications increased 17.4% to 2,881.5.

Initial claims for unemployment benefits fell by 21,000 to 530,000 in the week ending September 19. The figure was lower than the 550,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending September 12 fell by 123,000 to 6.14 million.

Existing home sales fell 2.7% in August to a seasonally adjusted annual rate of 5.1 million units from 5.24 million units in July. The inventory of unsold homes on the market fell 10.8% to 3.62 million, an 8.5-month supply at the current sales pace, and the lowest level in more than two years.

Orders for durable goods — items expected to last three or more years — fell 2.4% in August after rising 4.8% in July. Economists had anticipated orders for durable goods would rise 0.5%.

The Reuters/University of Michigan consumer sentiment index for September rose to 73.5 from 65.7 in August. Economists had forecast a reading of 70.3. It was the highest reading since January 2008.

The Commerce Department reported new home sales rose 0.7% in August to a seasonally adjusted annual rate of 429,000 from a downwardly revised rate of 426,000 in July. Economists had expected a sales pace of 440,000 units.

Upcoming on the economic calendar are reports on consumer confidence on September 29, pending home sales on October 1 and factory orders on October 2.

CALIFORNIA FORECLOSURE FILINGS DROP

Foreclosures “HAMPered”
by Making Home Affordable Program

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Key findings for August 2009 include:

Notices of Default filings, the first step in the foreclosure process, dropped substantially from July to 36,396 filings, a 19.1 percent decrease. Year-over-year filings dropped by 14.2 percent from August 2008. 

Notice of Trustee Sale filings continued to swing wildly, dropping 15.1 percent from July to 33,362, after having jumped 31.6 percent from June to July. Year-over-year filings dropped by 8.1 percent from August 2008.

Foreclosures scheduled for trustee sale increased to 131,300, a 5.1 percent increase from July, and an 89.1 percent year-over-year increase from August 2008.

Foreclosures sold at auction increased 3.4 percent to 17,829 sales, with a combined loan value of $8.31 Billion. Year-over-year trustee sales remain 32.2 percent lower than August 2008. Just 13.4 percent of scheduled foreclosure sales were sold at auction this month, while 37.9 percent of scheduled foreclosure sales were sold in August 2008. The majority of sales are being postponed to a future date at either the lenders request or with their agreement.

Sales to third party bidders rose 22.3 percent from July, with 3,280 foreclosures sold primarily to investors. As a percentage of total sales, sales to third parties continued to increase; though lenders still took back 81.4 percent of foreclosures at auction, representing 14,327 loans, a decline of 1.6 percent from July.

Opening bids placed by lenders at trustee sale were an average of 39.5 percent lower than the loan balance, and 10.2 percent higher than estimated market value. Opening bids that did not result in a sale to a 3rd party were on average 19.9 percent higher than estimated market value, whereas those purchased by third parties were on average 29.7 percent below market value.

Cancellation of foreclosure sales dropped by 7.5 percent from July to 9,976, with no signs yet that foreclosures being postponed for the new “Home Affordable Modification Program” are being cancelled after successful trial periods.

 “It is clear at this point, that foreclosures are being HAMPered” says Sean O’Toole, founder and CEO of ForeclosureRadar. “Where foreclosures head from here will depend a lot on the administration’s Home Affordable Modification Program, commonly referred to as HAMP. We can clearly see that this program is postponing an awful lot of foreclosures, but don’t expect a wave of foreclosures if it fails, instead expect further government intervention.”

The Home Affordable Modification Program (HAMP) is a critical piece of President Obama’s Financial Stability Plan first unveiled February 9th, 2009, with details released on March 4, 2009. One of three parts of the Making Home Affordable program, HAMP was designed to reduce mortgage payments for up to 3 to 4 million homeowners. Payments are reduced by first lowering interest payments to as low as 2%; then if necessary, extending amortization periods to 40 years, and finally forbearing principal, interest free, until the payment reaches a 31% debt to income ratio for a borrower. The program also provides incentives to mortgage loan servicers for participating, and requires participation by servicers of loans owned or guaranteed by Fannie Mae and Freddie Mac. Through August 2009, 360,165 trial modifications had been started. For more information, see www.makinghomeaffordable.gov.

A key feature of the HAMP program is a 3-month trial period, during which foreclosures are postponed to see whether or not the homeowner makes the new, reduced payment as agreed. As a result, the number of scheduled foreclosures that are being postponed at the lenders request or with their agreement has doubled since details of the program were announced. At the end of August 2009 there were 131,300 foreclosures scheduled for sale, compared to 64,177 at the end of February 2009. If the HAMP trials succeed, foreclosures should begin to cancel at record rates, which has yet to happen. If HAMP trials fail, foreclosure sales should increase, which also has yet to happen.

Mountain House Ca Homes Open House

470 Moraga St in Mountain House Ca 
Saturday 9/12 from 12-4pm

This Saturday The Silveria Team will be hosting an Open House at 470 Moraga St in Mountain House Ca. 
Our team will also be hosting Open Houses in Mountain House at 521 W Viento St Saturday & Sunday from 10am-4pm.

470 Moraga St

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The U.S. manufacturing sector grew for the first time since January 2008. The Institute for Supply Management reported the monthly index of manufacturing activity rose to 52.9 in August from 48.9 in July. A reading above 50 signals expansion. The increase was driven by new orders, which was up 9.6 points to 64.9, the highest reading since December 2004.

The National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, rose 3.2% to 97.6 in July from a revised 94.6 in June. It was the sixth consecutive monthly increase and the highest reading since June 2007.

The Commerce Department reported total construction spending fell 0.2% in July to $958 billion. Economists had expected a flat reading. However, construction of homes and apartments rose 2.3%, posting its best showing since September 2008.

The Labor Department said that productivity jumped at an annual rate of 6.6% in the second quarter of 2009. The increase was the biggest quarterly gain in nearly six years. Labor costs fell at an annual rate of 5.9%, the largest drop since the second quarter of 2000.

The Commerce Department reported factory orders rose 1.3% in July, after a revised 0.9% increase in June. It was the fourth consecutive month of growth. Economists had expected a 2.2% increase.

Initial claims for unemployment benefits fell by 4,000 to 570,000 in the week ending August 29. The figure was higher than the 560,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending August 22 rose by 92,000 to 6.23 million.

The Institute for Supply Management reported the monthly index of non-manufacturing activity rose in August to 48.4 from 46.4 in July. Economists had expected a reading of 48. Figures below 50 indicate contraction.

"How do I know what price range to look in," and "how do i make sure my offer is accepted"

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These are two of the most commonly asked questions from first-time and experienced homebuyers alike. One of the best places to start is by getting home loan pre-approval by a lender upfront in the process. Not only does home loan pre-approval give you peace of mind knowing your price range is already pre-approved by the lender, but home loan pre-approval strengthens your position at the negotiating table, especially in a multiple offer situation.

Some lenders offer both home loan pre-qualifications and home loan pre-approvals. Here’s the difference:

Home Loan Pre-Qualification

• Provides a "ballpark" estimate of your buying power
• Is based on summary information you provide on your income and assets
• Requires satisfactory review of property, financial documents and program requirements to issue final approval
• Is offered by most lenders

Home Loan Pre-Approval

• Provides proof to real estate agents and sellers that you're pre-approved for a specific loan amount
• Is based on verification of your income, credit and assets (in some cases, verification may not even be necessary)
• Requires a satisfactory appraisal and title review and no change in financial condition for final approval
• Is offered by us at no cost as a service to you before you find a home

There was a time when Local Tracy Ca Commercial Real Estate Leasing Brokerage Souza Realty and Development was picky about the tenants it chose to occupy the 130,000 square feet or so of commercial real estate space the company owns around Tracy.

They would check references. Run credit checks. Talk to past landlords. Reject some folks because they seemed too shaky.

“Now, if they have a pulse, we’ll lease it to ’em,” said Mike Souza, who runs the company with his father, Tony Souza. “You just got to go with the flow.”

Though the predicted bursting of a Tracy Ca Commercial Real Estate bubble has yet to materialize, the flow these days is running downward.

“What we’re finding is vacancies are increasing, rents are down,” said Ken Blakemore, the San Joaquin County assessor, recorder and county clerk.

And the rate of return for investors is falling.
The sagging Tracy Ca Commercial Real Estate market has barely begun to be reflected in the property taxes collected by the county, whose tax rolls show a $700 million jump in taxes collected on commercial property from Jan. 1, 2008, to the first of this year.

Still, that’s less than the billion-dollar jump from 2007 to 2008, and Blakemore and others expect that taxes on commercial property, which account for about 30 percent of what is collected countywide, will start to fall.

According to Blakemore, most of the commercial real estate property in the county has yet to be reassessed — unlike housing, which lost 10.7 percent of its value from January 2008 to January 2009.

Downward reassessments would mean less money for local governments, which have already had a tough time making cuts to balance their budgets.

For property owners, fewer people paying less in rent means a drop in income, which likely means some will fail to make their mortgage payments.

“There’s a lot of commercial loans that have big balloon payments on them,” Souza said. “You’ll probably see a lot of foreclosures.”

Souza said his company’s holdings have about a 65 percent occupancy rate, which is up from earlier in the summer, when occupancy for its commercial space fell to as low as 35 to 40 percent, a dismal figure, he said. Commercial landlords in good times shoot for and can expect an 85 percent to 90 percent occupancy rate.

The company, Souza estimates, has helped out about 90 percent of its roughly 40 tenants, either by renegotiating lower rents, by forgiving a few months’ rent or by tinkering with leases in other ways to give tenants a financial break.

Brian Peterson and Blake Rasmussen, commercial real estate brokers in the Stockton office of CB Richard Ellis, are unsure the market will be as bad as some predict.

Peterson said top-of-the-line Class A office space, which here means steel-frame construction in a prominent location, has about a 24 percent vacancy rate for cities in San Joaquin County.

“It’s definitely high,” he said, “but we haven’t seen the foreclosures that we’ve been expecting. Certainly, the risk is there.”

He said there are still tenants to be had for the best office space, though not as many as in the past.

It’s the less-sought-after office space — older buildings with more maintenance problems on less-traveled streets — that will be less likely to make up lost income due to the soft market, he said.

The retail market has also been hit hard, with prominent stores closing at The Tracy West Valley Mall and other places.

But the industrial market “has been very active, all things considered,” Rasmussen said.

A couple of warehouses in Tracy, built on the hope that tenants could be found once they were ready to be occupied, have worked out for investors, he said.

Crate and Barrel leased 1.2 million square feet of warehouse space in Tracy CA recently, and Home Depot agreed to lease space in town as well, although that company has delayed occupancy, Rasmussen said.

The change in the industrial market, the broker said, is that when tenants move into a space, it’s because they are trying to save money by consolidating, rather than because the company is growing.

“Surprisingly, there’s still a fair amount of activity,” he said. “The slide is that development activity is at a standstill.”

That lack of construction could restrict future supply, and though Rasmussen sees demand tapering off because of the recession, he sees “some sense of normalcy returning two years from now.”

When that normalcy returns to Tracy Ca Commercial Real Estate remains to be seen.

What home improvements really pay off when the time comes to sell your house?

That’s an important question for any homeowner contemplating moving or remodeling. And the only possible answer is a somewhat complicated one.

That answer starts with the fact that really major improvements – room additions, total replacements of kitchens and baths, etc. - rarely pay off fully in the near term. It ends with the fact that small and relatively inexpensive changes can pay off in a big way in making your home attractive to buyers if your decision is to move now.

It’s often the case that the most appropriate major improvements are unlikely to return their full cost if a house is sold within two or three years.

Does that mean that major home improvements are always a bad idea? Absolutely not. It does mean, though, that if your present house falls seriously short of meeting your family’s needs you need to think twice – and think carefully – before deciding to undertake a major renovation. Viewed strictly in investment terms, major improvements rarely make as much sense as selling your present home and buying one that’s carefully selected to provide you with what you want.

Even if you have a special and strong attachment to the house you’re in and feel certain that you could be happy in it for a long time if only it had more bedrooms and baths, for example, there are a few basic rules that you ought to keep in mind.

Probably the most basic rule of all, in this regard, is the one that says you should never – unless you absolutely don’t care at all about eventual resale value – improve a house to the point where its desired sales price would be more than 20 percent higher than the most expensive of the other houses in the immediate neighborhood.

Try to raise the value of your house too high, that is, and surrounding properties will pull it down.

Here are some other rules worth remembering:

• Never rearrange the interior of your house in a way that reduces the total number of bedrooms to less than three.
•  Never add a third bathroom to a two-bath house unless you don’t care about ever recouping your investment.
• Swimming pools rarely return what you spend to install them. Ditto for sunrooms – and finished basements.

If you decide to do what’s usually the smart thing and move rather than improve, it’s often the smaller, relatively inexpensive improvements that turn out to be most worth doing.

The cost of replacing a discolored toilet bowl, making sure all the windows work or getting rid of dead trees and shrubs is trivial compared with adding a bathroom, but such things can have a big and very positive impact on prospective buyers. A good broker can help you decide which expenditures make sense and which don’t, and can save you a lot of money in the process