Are we on the cusp of a turnaround here in the south bay?

Ok...I know I'm pulling from a small string of data, but in the last 2 weeks homes have been seriously flying off the market in the $700,000 plus range. I have been showing a lot homes lately, and suddenly almost 40% of them have gone pending in the last 3 days. Granted this is from a pool of about 50 homes but wow!! I haven't seen this much movement in a long time!!! Not only that, there are multiple offers everywhere from Bank Sales, short sales and regular resales. Would love to hear what other agents are experiencing out there!!!

Mountain Winery: Rivers of Chocolate Festival

Don't forget to buy your tix for the Rivers of Chocolate Festival in Saratoga!! I'll be there with my head in the chocolate fountain (if they have one)!

Where: Mountain Winery
When: April 26th, 2009
Time: 1pm-5pm
Why: The revenue from this event will benefit youth programs. EHC LifeBuilders has been helping children, teens, families and homeless persons for nearly 30 years.

For more info and ticket purchase: www.riversofchocolate.org

Why I cringe at area code 765

As a real estate investor, 3 years ago I thought I was the "golden girl" finding these great 50K single family home properties in Indiana renting at positive every year. It was a no brainer! 10% down and I'm cash flowin!

Well, in the midst of big autos crash and burn, me the individual investor is being heavily affected. 2 out of my 4 tenants have stopped paying for the last 2 months due to financial hardship and layoffs and I am now faced with evictions and small claims court. Thank the Lord for my great property management company that handles all of this, but my heart skips a beat every time I see their number pop up! What next! This is why I cringe. On the bright side, my 2 other tenants have been paying their rents for now. Just have to ride it out....

Lessons Learned:
1) Avoid investing in residential areas supported by Big Auto (duh!)
2) Prepare a reserve fund of at least 6 months just in case of situations like these
3) Always screen your renter-check credit and rental history

Extra Extra...Fed Announces $750 Billion More!

From my Friends at Intero Mortgage~

Big news hit the wires yesterday afternoon, as the Fed made a blockbuster announcement that sent Mortgage Bonds into rally mode. The Federal Reserve announced that over the course of 2009, they will purchase an additional $750B of Mortgage Backed Securities in an effort to help shore up the housing market and keep home loan rates low. They had already committed to buying $500B which started in January and was to run until June of 2009. Now they’ve committed this additional $750B to keep the program running until the end of the year or more. On the announcement, Mortgage Bonds exploded higher, leaving prices within whiskers of the best levels ever.

However, most of the media talks and news paper articles this morning are over stating what will take place. The rates will not necessarily drop to 4.5% because of this move. Rather the interest rates will be based on which coupons the Fed purchases. The Fed has not said that they will be buying the lower 4.0% or 4.5% coupon of Fannie/Freddie securities. They’ve not said what coupon level it will be at this point in time. This move will however, help to prolong the interest rate environment that we are already in! And because lenders are still not working at max capacity, they are very likely not going to pass all the gains through to the consumer. The good news is that perhaps this will help lenders feel more comfortable staffing up a bit, as this purchase program will certainly keep rates from moving significantly higher any time soon. Bottom line - although the media is already spinning it differently, this is still not a time for clients to stay on the fence, hoping and waiting for lower rates. Home loan rates remain within inches of all-time historic lows, but may not necessarily move significantly lower based on this purchasing plan - waiting is a very risky move.

The Fed also said they will purchase $300B in long term Treasuries...so why Treasuries? The Fed wants to keep the spread between Treasuries and Mortgage Bonds from widening, because as Mortgage Bond prices move higher, the yield or return on them may not be as attractive as those available in Treasuries. So if the Fed buys Treasuries, the yield on those instruments will also be driven lower, thereby keeping a normal spread between Treasuries and Mortgage Bonds.

Now...something else worth paying attention to - since yesterday's Fed Meeting, the US Dollar has gotten clocked, as the aggressive Fed moves appear quite inflationary. In turn, this has pushed Oil up to $51 per barrel, nearly $5 higher since yesterday afternoon. Gold, which is purchased as a hedge against inflation, is up near $950 an ounce - moving up $60 on the day! While we know there is no inflation at the present time, the chatter of future inflation could have a negative effect on Mortgage Bond prices ahead, or at least stifle their moves higher - yet another reason not to wait and to take advantage of the current historically low rates.

All this being said, we have seen the past a “honeymoon” phase after big announcements like this. That’s likely why bond prices improved dramatically yesterday, and rates are looking very good this morning! They honeymoon phase usually doesn’t last long as investors wake up to the reality of the situation as stated above.

Bank Owned Home Auctions!!! Don't be late!

I just returned from attending an auction for a bank owned home in San Jose and it was quite an experience. Basically, it was a bunch of bargain hunters gathered in a small cul-de-sac in front of the home being auctioned. There were a total of 3 different homes being auctioned.

The auctioneers were working out of the back of their trunk handing out registration cards and bright yellow bid cards. With a karaoke style microphone and an over the shoulder speaker, the auctioneer started the fast paced bidding lingo at 50K and within 10 minutes all the homes were auctioned off and everyone cleared out. There were 2 crawlers making sure no one got left out of the bidding, screaming "ohhh" " aah" everytime someones card went up. Crazy! If you were late you lost out. CLICK HERE TO SEE PHOTO.

I have more info on how these auctions work so ping me if you have questions. Don't forget your checkbook if you go to one of these. They won't let you bid without it.

Home Loan modification 101--Part 1

Ok..I have been getting a lot of emails and phone calls lately on home loan modifications so I'm going to have a series of posts dedicated to home loan modifications.

In this post, I'm going to tell you exactly what "Home Loan Modification" is and who qualifies for it. "Home Loan Modification" is also referred to as a "Loss Mitigation Program." It is the process of renegotiating one's mortgage with their current lender. The definition of "loss mitigation" to the lender is to minimize their loss from a defaulting loan. Loss Mitigation is NOT based on credit or equity. It is solely based on the ability of the homeowner to afford some type of reasonable payment moving forward. A homeowner must exhibit one and / or a combination of the following qualities in order to be considered for loss mitigation by their lender.

1) Inability to afford their mortgage payment recently or currently. Most lenders will not consider the homeowner for loss mitigation unless they are behind in their payments OR they have an adjustable rate that is due to adjust within the next 90 to 120 days. The further behind the homeowner is, the higher the priority is with the lender.

2) A legitimate reason for falling behind on mortgage payments, known as HARDSHIP. We must be able to show that they have recovered or are recovering from the hardship or that the homeowner can afford to make a lower payment on a consistent basis. Legitimate HARDSHIP reasons include the following:

a) Increased expenses or decreased income. b) Rate or payment increase. c) Death in family, divorce, illness, incarceration and many other case by case situations. d) Lenders WILL NOT accept a HARDSHIP that the homeowner says they were tricked by a mortgage broker or any reason where the homeowner points the finger at the lender. I will follow up with more information.

Monday Stats..Inventory in the Rise again!

Here they come!! More homes have arrived on the market for the 3rd straight week in row. Pending transactions are also rising but the number of homes that are coming up for sale are just outnumbering the buyers. Come on buyers! It's ripe out there for the taking!

Single Family Homes
Week /Active/ Pending
3/2/09/ 4224 /1822
3/9/09/ 4300/ 1834
3/16/09/ 4318/ 1919

Condo/Townhomes
Week/ Active/ Pending
3/2/09/ 1504/ 573
3/9/09/ 1501/ 588
3/16/09/ 1513/ 592