BluefoxToday blog : February 2010

I wear blue jeans and casual shoes that are made of cloth and can go in the washer.  To some people, they may think I lack professionalism but if they could encounter what I encounter, as we never know what treasure we will find when we open a door, it will all be forgiven.  Walk a mile in my shoes and learn what to wear (and what you will may encounter) while shopping what is termed "Distressed Property" (REO, Foreclosures, Short Sales.)

From tip toe-ing through pigeon turds & cockroach carcasses and breathing in mold in between (let's not forget elements too) here is a guide on what to wear when searching for an REO or short sale:

Don't bring children if you don't have to!  It would mortify me if brown bear or blannie touched the floor in some of these homes - and I am not the best housekeeper in the world.

Dress for the Elements!  Make sure you are dressing appropriate for the weather.  Distressed property may lack heating or air conditioning.  I would say it is socially acceptable to wear shorts and tank tops in the summer for now while searching for homes.  Bring water in your car to stay hydrated.  In the winter, even though we don't see severely cold winters, make sure you layer up with sweaters and extra pairs of socks.

Be aware of potentially hazardous situations (while this isn't "the norm":)

Squatters:  This does not happen as frequently as it used to.  For the most part, with the market being extremely hot and homes receiving multiple offers + list agent checks and weekly preservation checks, odds of running into a squatter are a little less what they were even a year ago!  Active listings are generally getting multiple visits per day. 

Smells:  Sometimes smells in vacant homes can be overwhelming.  Many times it is due to the fact that someone used the toilet when the water is off.

Mold:  Persons highly allergic to mold should bring face masks when looking at homes to avoid breathing in mold spores. 

Pests:  If cockroaches bug you, you shouldn't be living in Las Vegas!  Many times pest control has been called in after the foreclosure so usually there are just dead bugs everywhere.

Water Damage:  Wear non-skid comfortable shoes. 

Lights Out:  It isn't safe to look by flashlight in homes that do not have electricity.  It is important to schedule appointments during daylight hours.

Trash:  I see it a lot pre-list but now agents are doing a better job at cleaning out their properties but it is still possible (although more rare) to find personal belongings in REO properties.  You will run into trash if you are looking at short sales.  Sometimes the property hasn't been cleaned in years.  There are some that I wonder if they were ever cleaned since they were built.

Green Pools:  Stagnant water sources breed diseases and most notably become a great breeding ground for mosquitos that could bring a concern for West Nile Virus.

More than ever, it is important to work with real estate professionals who know this market to help spot potential hazards because you never know what is hiding behind that closed door!  

Charleston Heights January 2010 Real Estate Resale Market Report:

• Listings (2/15/2010): 87
• Under Contract (2/15/2010): 130
• Sold January 2010: 25
• Month's Inventory: 3.5

Since Last Month:  Listings are DOWN -3, Pendings are DUP +18, Solds are DOWN -14

Why Las Vegas Pendings Are Not Closing

Last Month's Charleston Heights Real Estate Market Report

For More Las Vegas Communities and Reports Click Here

Recent conflicting reports about the housing market and whether or not it is truly in recovery have left consumers as well as those in the real estate business more than a bit confused; those whose business plan is dependent upon a full or quick recovery should proceed with caution. I believe the housing market is far from recovered, and, in fact, will not return to the levels of the past decade for many years—if ever. I see six reasons why the housing market peaks can not return, that it will never regain its past “glory days.”

● Robust home sales are dependent upon consumer confidence in the economy. Consumers must feel that both their personal economy as well as that of the nation is on sound footing before committing to such a major, long-term purchase, especially on the heels of the longest recession in more than half a century. Thus far, consumers are far from confident.

● A vigorous recovery of the housing market cannot occur as long as we have unusually high unemployment. While there is much disagreement on when and how our recovery will occur, the financial experts all agree that unemployment will remain at higher than normal levels for several years, and some projections do not indicate a recovery to “full” employment for as much as ten years. With at least 20 million unemployed or underemployed, and with awareness that many of the jobs lost will never return, a high rate of joblessness could possibly become the norm.

● The dramatic loss of home equity will significantly limit the pool of available move-up buyers. In the past, move-up buyers used the equity from their former home to help them purchase a larger/more expensive one; however, declining home values with the associated loss of trillions in equity means fewer sellers will have the resources to purchase another home.

● A continued high rate of foreclosures will depress both the housing market and the hopes of many potential buyers. The millions who have experienced foreclosure will be automatically ousted from the buying pool. For some, several years of damage to their credit rating will be the defining factor; and others will become permanent renters, avoiding the potential for further pain and the trauma associated with foreclosure.

● A slow increase in mortgage rates will reduce the number of qualified buyers. As we experience the higher mortgage payments associated with rising interest rates, many will fail to qualify for loans on the homes of their choice. Others, having been “spoiled” by the low rates of the past decade, will stay out of the market hoping for a return to those rates.

● Tighter lending restrictions will also result in fewer buyers qualifying for home loans. And the restrictions, combined with the declines in credit scores experienced by millions of consumers will only further reduce the number of buyers.

Additionally, there are other factors such as: high levels of consumer debt, changing demographics, and a diminishing of the appeal of home ownership as a result of experiences during the current recession, will only serve to dramatically alter the housing market for the foreseeable future. While there will always be a group committed to home ownership and will always be homes available for them to purchase, an expectation that the housing market will soon recoup its losses and regain its momentum, for me, seems extremely unlikely.

The Housing Guru: The one source for all your housing questions

Underwater - or upside down - home ownership got worse as the past year wound down. First American CoreLogic published a new research paper on the issue stating that over 11.3 million homes were upside down at the end of 2009, meaning that 24% of all residential real estate with mortgages was carrying that unwelcome label. At the end of the third quarter of 2009 there were 10.7 million houses underwater, so in three months about 600,000 additional properties got whacked.

To stay with the statistics, First American CoreLogic further reports that 2.3 million more homes were heading towards the famous freezing submergence, these being units that had less than 5% equity cushion at year's end. Put together with those already underwater, the picture becomes increasingly bleak, because it now translates to roughly 29% of all mortgages holding that classification.

Nevada continues to top the list of states with the most underwater mortgages, coming in at 70%. Las Vegas area - with communities of Mountains Edge, Summerlin, Anthem, Henderson, Canyon Gate and Rhodes Ranch - predictably hoards the majority of those on account of being the population center.

Underwater mortgage in itself is a serious problem. The homeowner is trapped. He can't sell the property unless he brings hard-earned money to the table to close a deal. He can't refinance either, for the same reason. Generally, no one will do that. This effectively removes a large segment of current mortgage borrowers from the real estate market, putting a sizable dent on the demand side.

Secondly, upside down homeowners are more liable to default on their mortgages. The more they are in negative equity, the more likely it is that they'll lose the property, be it a short sale, foreclosure or deed in lieu. As their FICO scores get dinged badly, they'll be unable to get mortgage approvals for a few years, dealing another heavy blow to the demand function.

Simply looking at what underwater mortgage can do to demand sends shivers down the spine of policy makers, home loan providers, real estate experts and other interested parties. A major headache indeed. Or worse.

 Photo by krossbow

Mountain's Edge January 2010 Real Estate Resale Market Report:

• Listings (2/15/2010):  196
• Under Contract (2/15/2010):  379
• Sold January 2010:  55
• Month's Inventory:  3.6

Since Last Month:  Listings are DOWN -21, Pendings are UP +55, Sales are DOWN -27

Last Month's Mountain's Edge Real Estate Market Report

Mountain's Edge is a newer community so many of the listings are short sales or bank owned.

Mortgage foreclosure statistics of late are showing that the persistently upward trend seems to be waning, which is good news indeed. However, it is only part of the whole real estate picture. The economy remains weak and the stubbornly high unemployment level continues to worry many housing observers, suggesting that homeowners would still be vulnerable. So, how is it that home loan foreclosures are losing steam?

The answer to that interesting question appears to be that mortgage lenders are adjusting strategy to favor short sales over mortgage foreclosures. Campbell/ Inside Mortgage Finance survey just concluded supports that theory. It says that in January nationwide short sales added up to 15.9% of all home purchases while move-in-condition REOs - or real estate owned - clocked in at 13.8% and wrecked REOs held a 13.4% share of the housing market. As recently as in November of 2009 these same categories rode along neck and neck at around 12%. Clearly there is a shift.

First-time home buyers generally favor short sales, as they can still acquire property at low prices and get approved for affordable mortgage money, going either FHA or conventional. Although the short sale process can be agonizingly slow, a first-timer often is willing to put up with that, so long as it is a juicy deal. Why not? Anyway, that's their playground. They are often outmuscled from the REO arena by investors who usually show up with a fistful of dollars, paying cash in other words, and can close pronto. Mortgage banks, like all sellers, tend to give the cash buyer the inside track, to no one's surprise.

Southern Nevada - including communities like North Las Vegas, Silverstone Ranch, Anthem, Rhodes Ranch, Mountains Edge, Mesquite and Pahrump - property owners are certainly toasting the gradual change working its way into the distressed mortgage realm. Las Vegas does have its share of them already in the pipeline and many more to be entered in the coming months. Short sale is easier on the credit report, FICO really, damage than a foreclosure is and can also relieve the homeowner from a deficiency judgment, although to be safe the home loan provider should be asked to put that in writing in great bold letters. 

Short sales becoming a more popular avenue for mortgage providers in dealing with distressed borrowers will help solve the overall housing collapse. Give it some lift. It won't be a cure-all, though. It's just one part of the whole, but a positive one at that.

Sorry for thesse reports being back to back, I forgot to post December's reports!

Summerlin January 2010 Real Estate Resale Market Report:

• Listings (2/15/2009):  679
• Under Contract (2/15/2009):  599
• Sold January 2010:  109
• Month's Inventory:  6.2

Since Last Month's Report:

• Listings UP +30
  
• Pendings UP +47
  
• Sold Units DOWN -57
  

Last Month's Summerlin Report

Most Current Summerlin Market Report

The current mortgage and housing meltdown has been particularly brutal to property owners here in Southern Nevada, home to communities like Henderson, Silverstone Ranch, Anthem, Summerlin, Southern Highlands and Mountains Edge. Nevada has held the lead in most foreclosures by any state for months and that statistic is heavily influenced by Las Vegas valley, the most populous area in the state. Many of those who are still in their homes are often in some stage of the foreclosures process, trying to do a loan modification or have started a short sale campaign. Scores of others are hanging in there, but are trapped because being underwater - the home's value is less than the underlying mortgage - prevents them from selling or even doing a refinance. No one could have imagined that things in the Vegas real estate market could get this severely tangled.

Washington has tried many remedies to help the national housing market, with less than stellar results. It just announced another effort in that regard, this time a more focused one. The new foreclosure-prevention program just announced by President Obama is giving money to the most-affected states - Nevada, Arizona, California, Florida and Michigan - to help them deal with the still roiling housing tsunami. The money, $1.5 billion, comes from the Troubled Asset Relief Program, or TARP, that is being phased out. The basic guidelines are to help homeowners who are either unemployed, are underwater or have second liens that prevent them from doing anything useful. Other than that, each recipient can shape up its own program, so it appears there aren't too many strings attached.  

At this point it's unknown how much of the largesse Nevada is going to get. Obviously the initiative isn't going to reach everyone who could use it, but it can make a rather substantial impact on the foreclosure front in the Las Vegas valley. Those mortgage borrowers who have already lost their homes are unhappy that they weren't offered anything like this. The ones that are now doing a short sale, a home loan modification or are in a pending foreclosure situation might qualify for this, although the specific guidelines have yet to be announced by the housing agency handling this program in Nevada. Still, it can help firm up the base for the state's real estate market and prepare it for a tentative recovery.

OOPSSSSSSSSSSSSSSSSS I almost forgot this one for last month!  You will be seeing another one for January 2010 soon!

Summerlin December 2009 Real Estate Resale Market Report:

• Listings (1/15/2009):  649
• Under Contract (1/15/2009):  552
• Sold December 2009:  166
• Month's Inventory:  3.9

Since Last Month's Report:

• Listings UP +1
  
• Pendings DOWN -46
  
• Sold Units UP +17
  

Last Month's Summerlin Report

Most Current Summerlin Market Report

The Las Vegas Valley (includes Henderson & North Las Vegas) has seen some major market stabilization in the last year!  Absorption for December 2009 is a seller's market @ 3.2 months of inventory.  Some micro-markets (ie,Foreclosures Bank Owned, REO) are extreme seller's markets where there is no mercy to the buyers, multiple offers are the norm!

We are FINALLY seeing a stabilization of inventory and a decrease with escrows (we should have seen that late spring/early summer!)  Good news for buyers?  Still remains to be seen.  We need to get over 10000 active units on the market before it can be stabilized from a seller's market 

Las Vegas Area Market Activity (Includes North Las Vegas, Henderson and Las Vegas)

• Listings (2/15/2010):  10211
• Under Contract (2/15/2010):  14086
• Sold January 2010:  3148
• Month's Inventory:  3.2

Short Sales:

• 47% of Listings
• 22% of Sales

REO (Foreclosures, Bank Owned:)

• 17% of Listings
• 60% of Sales

The above breakdown shows how very few short sales are being closed and how little inventory is in the REO market currently. 

In One Month:  Listings are DOWN -213 units, Contracted Listings UP +845, Sales are DOWN - 987 units.  December's sales were unusually high and January's numbers are still higher than last January.  Close ratios are going lower because much of the pending inventory is short sales which requires LONGER close times. 

 DOWN PAYMENT ASSISTANCE HAS NOT ENDED FOR FIRST TIME BUYERS, HOWEVER!!

Last Month's Pending Report

The Most Current REO (Foreclosure) Report

The Most Current Short Sale Report

The Most Current Las Vegas Area Pendings Report