Cameron Merage is the founder, president and chief executive officer of Costa Mesa-based First Team Real Estate. The chain grew from one office in Huntington Beach in 1976 to 33 offices and more than 1,800 agents in Orange, Riverside and Los Angeles counties as well as the desert area. First Team executives say the housing slump helped their firm increase its size and market share. We recently asked Merage how he sees the housing market’s future.
Us: How do you see what’s happening in the O.C. housing market and when do you think the market will hit bottom?
Merage: For the first time since the down cycle started, the market is now “in alignment” in terms of prices, with sellers & lenders (loss mitigators) on one hand and home buyers on the other.
This is evidenced by the fact that in the month of April, more home buyers and sellers came together and not only had more transactions and achieved more sales than any of the previous months in 2008, but for the first time since April ’06 pending sales almost matched that of 24 months ago. We are also seeing many investors and speculators bidding on properties obviously hoping to better the market turnaround.
Further, second quarter of 2008 will see the economy infused, not only with income tax refunds, but the drastic measures of the federal economic stimulus package. We are now seeing the first glimmer of consumer confidence: our Realtors are reporting substantial increases in the levels of buyer inquiries and an increase in foot traffic, following months of price declines. A recent survey of institutional investors concluded that 86% believe that the market should reach the bottom of the cycle within the next 12 months, but no one can pinpoint down to a month.
Us: How long until we get back to the latest peak, which was when, 2005 or 2006?
Merage: The last peak of the residential real estate cycle in Orange County was in 2005. However, we are not likely to see such a sharp spike for the next five years largely because lenders are more closely regulated for quality control purposes. If for some reason it does happen, it would likely be after the next five years.
Us: What challenges does the current market pose for First Team and how has it impacted your business?
Merage: The volume of real estate transactions has been reduced by about 50% since the peak of 2005. Therefore, we have had to become more streamlined and efficient, with cost containment efforts and more focused on production and revenue enhancement activities.
We try to get more mileage from our company resources. Also, we are a well-established company of more than 30 years and we are used to cycles. We anticipated and prepared for this cycle three years prior to it happening. We are in a competitive market and adding value to our client base and agent base to address current market problems is our first priority.
Us: What strategies does First Team have to cope with this market?
Merage: First Team has always been a counter cyclical company that flourishes during the down cycles. Markets like this are a great opportunity for companies who are well prepared to leverage their strong resources especially if innovative to position the company to grow by solving new problems and challenges that did not exist before.
We have had many successful and established agents join our ranks. We have also experienced acquisitions or mergers of other smaller companies, who find value in our ability to contribute to their success through our unique resources and market solutions.
First Team has developed, and continues to develop, new programs and innovations designed to meet the needs created by cyclical changes., For example, First Team developed “Market Trends,” a proprietary and unique software that gathers and tabulates statistics from the MLS to illustrate the direction and value of home prices by price range in any given neighborhood or community as much as six months in advance. “Hot Buys” is another proprietary First Team tool which agents use to analyze and pinpoint the best real estate values in the market for homebuyers on a daily basis.
This is evidenced by First Team increasing its market share in Orange County in the last two years by approximately 11% to 12%, both in number of transactions and value of the homes it has sold.
Us: What are the challenges of running an independent, locally based chain like yours vs. being affiliated with one of the big, national chains?
Merage: Because the real estate business is essentially local, our size and location have actually proven to be a tremendous advantage for our firm and our clients. We are a regional company that is large enough to have the resources to be competitive, and small enough to be local market experts, and have personal relationships with our clients.
• See what other insiders have told Insider Q&A in recent weeks …
Pimco’s El-Erian says Fed was ‘too late’; sees further real estate weakness
McCarthy Building’s Tracy MacDonald sees construction’s rebound “likely slow”
Century 21’s James Joseph says north O.C. home prices off up to 40%
Xroads’ Marc Berger sees second wave of real estate woes coming
Most likely this guy is talking with bankruptcy attorneys in the back room.
“The end is near!”
Happy days are here again…
Check the look on his face.
“Hmm, lessee……..shall I pick #1, the market is ‘in alignment,’ or shall I go with ‘after the next 5 years’? Yeah, they look pretty stupid………..I’ll go with all of it.”
“President and CEO”………..of a real estate office. Pretty fancy title for another huckster.
High level Realtors know what they are doing. If there ever was a business where the 80/20 rule is applied, it is this one. My guess is most of the bears here were irked by some inexperienced agent who enjoyed the rocket ride of the market of the past several years. It is a good thing that agent licenses are dropping in number. A true professional has a litany of contacts and a professional team behind the scenes which make the process ultra-streamlines and as painless as possible. The next time you are selling or buying: do some research and hire the right agent to assist you with your RE needs. Or you can uese redfin and do alot of it yourself, and save a little cash. If redfin is aiming to be the costco of RE…as we all know, costco is good for some things, and miserable regarding others.
Curious Ed…why would he be a “huckster?” Why the utter disdain for Realtors?
A Bottom here … A Bottom there. 8)
We’ll see about that!
Cam has sold a lot of homes. More than anyone here — by a long shot. He did it by being a tight fisted businessman, and growing when the market was down — just like the all the big, conservative, real estate firms and developers.
So, now, he needs your help to make his investments grow. Go buy a new home. Forget about the huge inflationary forces at play right now with our food and gas.
It may be getting within a stones throw of the bottom, but rocketing up in the next 5 years …
Mulliganville,
You are most probably a realtor or have some real estate interest - so your bias is quite evident. Your guess about why people are so bitter about realtors is totally wrong and once again is representative of realtor behavior of denial and pushing clients over the cliff.
I work with at least 3 distinguished realtors. However only one of them has the decency to not keep saying that ” this is the best time to buy”; ” buy now or you will be priced out”; “renting is a financial boo boo”. We all know how false these statements are. The other reason for the disdain for realtors is because they make these statements without any concern whatsoever about where the buyer might be financially 6 months from now - all they ever care about is their commission.
Finally, realtors and agents do not do adequate research in general to make an informed statement of where the market is headed. There is no consideration of fundamental economic factors like affordability, foreclosure rate, credit availablity etc. All they care about is pulling wool over people’s eyes. So many homes are reverting to banks and being considered as a sale - but are these really a sale? If these account for a jump in sale numbers, isn’t this misleading?
So please continue people’s intelligence at the cost of being in denial and inviting further disdain, lack of credibility and dislike of your profession.
Cheers,
PH
too many beers, he was reading his line graph upside down…the data is good.
and mulligan, the problem the world of realtors faces is that they can only bring minimal value to the equation…an intelligent person can research on their own and will find everything they need on the websites that are available today.
if you hire a realtor folks, DEMAND that you see where they are going to market your home and make sure they do…make sure they also have open houses often and are at the open house for you.
if a realtor is going to make 3% on the sale…make sure that half of that is spent toward the marketing of your home…LIKE THE OLD DAYS…this way the traditional realtor can actually stay relevant.
You should of asked him if he still has a title insurance company paying his rent and other overhead.
Dig Doug, realtors should (and all good ones do) provide excellent marketing. But your “rule” leaves a realtor making 1.5% for all his efforts, which by the way, requires him to FRONT THE OTHER 1.5% FOR YOU with absolutely no guarantee of getting it back. Cheap people know the price of everything, and the value of nothing. I hope all bears take your advice, just wish I could be a fly on the wall to see the results.
Ask him what happenned to his in-house lender.
I like the market trends tool. Just told me inventory in my neighborhood is down 40% from this time last year and days on market are down 50% from six months ago. Deny it all you like, the trends have turned.
A good realtor is one that knows how to negotiate and understands the market place. In the last 10 years there was not any negotiating going on and the market place has only done one thing, go up - so my suggestion is you dont use a realtor that started in the business in the last 10 years.
One more thing, dont let these “newbie” agents tell you that negotiating is telling clients to bid more than the asking price! LOL
Someone should tell Mr. Merage that it’s not kosher to call one of their tools an “Instant Appraisal”. The tool is primitive, to say the least. That besmirches the expertise of professional appraisers and misleads the public.
“We are also seeing many investors and speculators bidding on properties obviously hoping to better the market turnaround.”
Everyone but the delusional bears see it. The speculators on this board are entitled to cheap housing in prime locations.
“We try to get more mileage from our company resources. Also, we are a well-established company of more than 30 years and we are used to cycles. We anticipated and prepared for this cycle three years prior to it happening. We are in a competitive market and adding value to our client base and agent base to address current market problems is our first priority.”
This guy says he saw the cycle coming? Really? Then he should have told every client he had in the last 3 years that its not a good idea to buy if you are looking for a short term investment gain. Not only did he not tell them that, but he probably told them the opposite.
shockg Says:
May 17th, 2008 at 9:44 am
“Everyone but the delusional bears see it. The speculators on this board are entitled to cheap housing in prime locations.”
If the market is yielding cheaper prices in prime locations, why fight it? Here’s your chance to average down if you already own. Who else here wants to buy high?
mortgagemaker Says:
May 17th, 2008 at 9:45 am
“This guy says he saw the cycle coming? Really? Then he should have told every client he had in the last 3 years that its not a good idea to buy if you are looking for a short term investment gain. Not only did he not tell them that, but he probably told them the opposite.”
One of their agents was soliciting for buyers and sellers on foot around Garden Grove. She was handing out flyers of “prime location” properties with prices from 2006. Must be that bad.
mortgagemaker:
“Then he should have told every client he had in the last 3 years that its not a good idea to buy if you are looking for a short term investment gain. ”
Believe it or not, im sure he sold plenty of homes to non-speculators who werent trying to time the market like you.
Price, My point is the prime locations aren’t experiencing steep discounts like Santa Ana is. I want to win the lottery some day but I don’t pin my hopes and dreams on it coming true.
I am not a speculator or a buyer - I’m a mortgage lender - I’ve been telling clients and friends to stop buying and sell since 03. all the way to the end of the escrow id tell them they are making a mistake and paying too much.
“many investors and speculators bidding on properties”
A sure sign that the bottom has not been reached. Historic bubbles end after historic washouts. We simply haven’t had enough pain yet.
We are 20% down in less than a year, and people think that is going to stop on a dime and go flat or turn around? Not possible.
This ends when the bulls on this board are either 1) gone or 2) talking about how cheap houses are. I almost never see anyone talk about how cheap an individual house is, let alone the market as a whole. That’s because it is not cheap - prices only possibly look good when compared to the peak.
Do not be stupid with your money folks. The incredible deals of six months ago, look like sucker’s bets now. And the deals of today, will look just as bad a year down the line.
Housing in Orange County is too expensive and we are not going to slave our mortgage for the next 30 years. No Bailout.
shockg Says:
May 17th, 2008 at 10:15 am
“Price, My point is the prime locations aren’t experiencing steep discounts like Santa Ana is. I want to win the lottery some day but I don’t pin my hopes and dreams on it coming true.”
If Irvine isn’t giving deep discounts, then why worry that bears will plant a footprint there?
shockg - OC did hit the lottery, but we kept buying more and more tickets after we won - only to lose it all back, and it will be all of it back. No money to put down + no money to lend = prices that need to fall to where people making $80k per year can qualify for a home based on todays guidelines. Thats not much of a loan amount and lenders are getting tighter not looser - June 1 FNMA will be rolling out completly new loan parameters - obviously, its not going to be easier qualifying.
Thougtful - you are incorrect. They will be implementing an entire new automated approval decison engine on June 1st. Your right, they did make some new corrections on about March 12th - but on June 1 it an entirely new loan.
The DU rules will be the same as the manual rules, with the possible exception that DU allows some of the written rules to be waived with compensating factors. Stop the lies.
I have not used the new system, because it is not out yet. I dont know one lender that underwrites FNMA loans manually. I’ll let you know how the new DU is when I get a chance to work with it. If you think that anything got easier with these new guidelines you are seriously mistaken. Bud, I am in this business for the long haul, why would i tell lies?
The guidelines I posted are the guideline for DU, except DU can be MORE lenient. Here’s how Fannie Mae sees the two:
“With this Announcement and with Desktop Underwriter (DU®) Version 7.0, we are taking steps to better align our requirements for manual underwriting with DU, implement a comprehensive update to DU’s risk assessment, and put in place new pricing requirements that align with these changes. In some instances, the changes are a contraction of our current policy but in other cases, the changes represent an expansion of our eligibility guidelines.”
“In order to align Fannie Mae’s credit risk appetite for manually underwritten loans with DU Version 7.0, we are implementing several changes to our eligibility requirements, including minimum credit scores and changes to our maximum loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value ratios (HCLTV) (referred to herein collectively as “LTV ratios” unless otherwise noted) for certain transactions.”
Let us know!
All LTV adjustments are already in the guidelines I posted. Let people judge for themselves whether these are harsh or not.
Paid real estate shills have been been consistently wrong for three years now. First it was no bubble. Then it was soft landing. Now it’s “the bottom is here.” Their advice is obviously worthless. Subscribe at your own peril.
Merage is a complete fool. His irrational exuberance is unfounded. I guess merage is also going to fix the credit markets, too. While he is at it, he should run for president. Merage is an idiot whose livlihood is real estate. I don’t trust him like I don’t trust any other unethical real estate agent.
Wow. What a bombshell. So what?
More on jumbo conforming:
Additional Eligibility Changes and Clarifications
• Jumbo-conforming mortgages are no longer subject to a reduction in the LTV, CLTV, or HCLTV ratios if the property is located within a declining market.
• The requirement that fully amortizing ARMs be qualified at the higher of the note rate or fully indexed rate is being modified. In accordance with the requirements of the Fannie Mae Selling Guide, fully amortizing ARMs can be qualified at the note rate. Interest-only ARM qualifying will not change and will continue to be based on the higher of the note rate or fully indexed rate.
• Fannie Mae is clarifying that CPM™ Expedited Review or the Lender Full Review process is not required for attached units in a PUD project. Lenders must follow the “Eligibility Requirements for PUD Projects” stated in Announcement 07-18, Lender Delegation of Project Review Processes and Related Changes for Condominiums, Cooperatives, and Planned Unit Developments (PUDs). Announcement 08-11 Page 2
Each of the above three changes will align the requirements for jumbo-conforming mortgages with standard conforming mortgages.
The fog a mirror approach to real estate lending isn’t coming any time soon back no matter how bad you may want it to. Until it does, its full speed ahead on the decline in home prices. Why you are so excited about loosened standards in light of skyrocketing delinquency rates is a real head scratcher.
Fannie Mae, Freddie Mac and FHA will lead other lenders back out of their massive over correction or they will own the market. Same for the mortgage insurers. Mortgage insurers are in the business of insuring mortgages, period. They will not be allowed to cherry pick the finest loans and leave the scraps for others. Get ready for the Federal National Mortgage Insurance Corporation.
FNMIC, or Fannie Mic!
So if those who think we have bottomed are correct, is it safe to say we will bottom at early 2004 prices or 2003 at 20% plus off.
I see more and more nicer, bigger homes get priced closer and closer to the smaller let’s say ‘less nice’ properties. This downward pressure on quality and price is helping to create opportunity but without cheap financing prices are still a little too much for most too ‘bear’ so we could just muddle along for awhile.
Things look a lot better than they did of years pass, but I could see another 7% to 10% off before we have a real floor that holds.
Forget about those political gimmicks like Freddie Mac’s new policy.
I still remember how people applauded the raise of conforming loan.
Could anybody tell me any good effect it has?
Did anyone else catch his comment: “We anticipated and prepared for this cycle three years prior to it happening?”
So let me get this straight, we now have a local agent that states they not only predicted the turnaround for this market - but they prepared for it. Hmmmm…. Their agents knew the market would turn years ago, and it sounds like they had a good idea as to the depth of what the turnaround would be. I wonder how many of their buyers were told this and how many were told that it was a great time to buy? Seeing that a very significant percentage is now turned over in their loans, I can see how people have great resentment for the local profession.
I would bet plenty of money that most buyers in the last 3 years, if polled, would have preferred that their agents had told them something along these lines and not just the usual sales pitch.
And again, many of us knew we would be reading and listening to these statements today.
Thoughtless:
Who told you quantity of posts mean quality?
Quite frankly I do not get how so many people sit here in these blogs days a night spending countless hours researching statistics after statistic, guidelines like real-estate is the core achievement of human kind. Just invested the time you spend here to develop a career or hobby, life would be great for you and family and stop sweat this houses bottom, houses up, houses down. It is ONLY a house, not cure for cancer or alternative energy source. People were buying/selling houses for thousands of years. People here got to be so obsessive about this topic that I think they need to be medicated. Enjoy the rest of your life, you all going one way or another to end as ashes in a jar or a wood box cost $20 in home depot using 10sqf land. Cheers I am moving on.
Thoughtful,
By any chance are you the subject of the recent news article about the woman whose rear end became stuck to the toilet seat after sitting for there for months? I don’t see any other possible way for a person to sit there and click the refresh button as often as you do.
You know, here is the CEO of a 33 office, regional company, who just focuses on our area, telling everyone that price appreciation is highly unlikely for at least the next 5 years, yet somehow he has been ridiculed due to the nature of his business. Yes, this man must know nothing about RE in this area. Again, the jealousy at the incomes some of these people pull down it transparent. Sorry bears, but admitting the problem is the first step.
In the immortal words of Jules Winfield, allow me to retort: as the Enron boys proved, even CEOs of multi-national companies can be common crooks. Secondly, until you show me a “real estate professional” who in a down cycle is not calling bottom on [insert date], and, regardless of cycle, has ever said it is NOT a great time to buy, they will continue to be subject to ridicule.
And I could care less what his income is.
Yogi..yogi…yogi: a home is listed for 5% at 1,000,000. Same home is listed for 5% at $750,000. Do you honestly think the agent cares about the difference? An emphatic #@&% no!! The agents just want their clients to list the home for a reasonable selling price. In the boom market, agents did not have to do much…buyers just bid up the prices without much help from the facilitator.
Regarding the market, here is what he had to say: “Merage: The volume of real estate transactions has been reduced by about 50% since the peak of 2005. Therefore, we have had to become more streamlined and efficient, with cost containment efforts and more focused on production and revenue enhancement activities.”
I did not see him calling a bottom…did you? He just spoke about April numbers…sorry if they rose for the first time in 24 months…I am sure that goes against the very fabric of housing bust hysteria which is rampant here.
And the Enron comparisons…good heavens…how many companies are in this country and how many have been whamboozled by shady characters? Care to wager a guess? Such a minuscule number it bores the reader to tears. It is as exciting as the US Congress investigating whether Clemens or Bonds juiced…who the hell cares.
alignment? lol hilarious
love the quote about recovery in late 2008 too… we’re practically there and this thing hasn’t even finished imploding yet. my god man
Mulli: I am sorry but I disagree with your interpretation of his statements, quoted here:
“However, we are not likely to see such a sharp spike for the next five years largely because lenders are more closely regulated for quality control purposes”
I just don’t see how he’s even coming close to stating price appreciation will not occur in the next 5 years. I read it as him stating the sharp price appreciation we saw around 2005 is highly unlikely in the next 5 years. Very different indeed. His personal position on the market for the near term was not detailed at all.
He did give plenty of arguments as to why a bottom may hit within the next 12 months - all without stating any other negative aspects of this market aside from the obvious volume. He never stated his personal position on when bottom will hit.
Wouldn’t a purely unbiased report state all the facts (sales, price, inventory, NOD’s, foreclosures, etc.)? I’m sure we can agree on one thing, I don’t think one single article would ever do that.
Lastly, I personally believe he is very experienced and knowledgeable, and was very aware of what was possible in the market and the increased risks buyers were taking. They prepared for it., he stated that. believe they did not prepare their clients. The agent is the one with the knowledge (one reason for using them), and the buyer looks to the agent for information to make decisions, and many times, their personal outlook on the market. You know exactly what I am stating. It does help sell, it’s just dishonest.
Moreover Sigh, Mr. Case and Mr. Shiller are not on the same page regarding the housing market and its direction. Mr. Thomas’ report is the single most accurate tool about CURRENT market trends that we have. But, it is not an ingredient in Bear soup, therefore, it is cast aside as if it is poison. See, if Mr. Thomas were an economist for the area and not a realtor, well, like a tenured professor never to be fired, he would sustain automatic credibility from the entitlement crowd.
NBI, I know you know this: the listing agency has the fiduciary responsibility to their client. They are charged with securing the best deal possible for them. Agencies make money listing homes, not representing buyers. The buyers more often than not are the beginning of the relationship, whereas they will call the same agent to list the home that agent helped them purchase. Unprecedented loose lending coupled with massive speculation gave us our present situation. It is my contention that most “bears” here need to assign blame to the agents involved. The buyers knew the note was adjusting…this was not a surprise. Sorry my man, this debacle is on the lenders for approving someone for a home at the low teaser rate, not the current fixed rate index for the area.
Mulli: I’m not assigning blame. All I intended to state was that the buyer agents were in an advisory position to the buyer - they knew - most acted and will continue to act in a way to ensure the sale, regardless of the buyer’s lack of awareness. I personally know a few agents and have been given the privilege of hearing their thoughts on the market and this very topic. There’s not even a question about it. It’s all business.
I agree - in the end - the loans should not have been made.
But do you disagree with what I’m stating about buyer agents? And this firm has buyer agents, yes? I’m not saying they even acted against their policy - I’m simply stating many buyers were blindsided by the turn in the market and much of that could possibly have been prevented to a certain degree. It’s also a reason why many recent buyers (within the last few years) have resentment for the profession. Personally, I don’t blame anyone for this debacle. I just blame people for not paying their damn bills when their employment never changed.
Here are some good news “snippetts” from a lender friend of mine:
So you’ve heard a lot of mortgage ads on the radio this week. Some offer rates below 5.6 percent (“because we’re nice people too…”) while others “won’t bother” if your rate is above X, no matter if you need cash by the way. Some lenders talk about a “4.5% 30 year fixed refinance strategy” (false) and another one says “you can pay off your loan in 7 years without increasing your current monthly payment (kinda true. LL has this financing product by the way). During the good old days of 2004-2006 when homes sold in hours not months, we saw burped up into this industry the worst loan brokers ever. Sure, you could get a stated, stated 100% financing $1,000,000 loan for a person paid minimum wage, but was it the best for the client? Clearly not, since these loans funded by fly by night operators produced the price suppressed market we’re in today. These opportunists have begun to come back out with mailers, ads, and other gimmicks to again take advantage of your buyers and seller. They whisper fantastic tales of loan rates ultimately too good to be true. To quote The Who*…..“Don’t get fooled again”. Make sure your clients don’t chase rate, but get a program and payment they can live with in the house today, and the one you’re going to sell them when they want to move up.
* you know, the ones whose songs start each of the CSI shows… (the only current cultural reference most will recognize for a band that is as old at the Rolling Stones. But I digress)
Home Buyers, Start Your Engines. By Brett Arends, WSJ On Line. May 15, 2008
If you were thinking of buying a home, start looking. The latest data from the housing market shows that sellers, after months and years in denial, are finally giving in to reality and slashing prices. There is a distance still to go. There may even be a lot to go. But the process, long delayed, is now well underway. The National Association of Realtors on Tuesday released its long-awaited report on prices from the first quarter. The price drops were startling. In many of the former hot spots, from Florida to Nevada to the Californian “Inland Empire,” single-family home prices plunged by 20% to nearly 30% in a year.
Nationwide, the decline from the previous quarter was about 5%, says the NAR. And this, ultimately, is good news. We know prices have to fall. The sooner it happens, the quicker the market can clear. We may not be at that stage known on Wall Street as “capitulation,” but there is more than a whiff of it in the air. Far too many people in the real estate market have spent far too long insisting that denial is just a river in Egypt. They refused to accept there was a bubble on the way up, and refused to admit it even on the way back down. (There’s a few still out there: Last week I got an angry email from a broker who blamed the whole slump on “the media”.) It is simply remarkable how slow this bubble has been to deflate. That, bluntly, is part of the problem. As well…you can imagine what fantasies the sellers were clinging to. “Well, two years ago this home was worth half a million bucks.” The problem: So what? It doesn’t matter what prices were three or two years ago. We were in a bubble. Market psychologists call this “anchoring”, because people anchor their expectations to the past, and it’s a fallacy. Just five years ago, the same home sold for $270,000 and 10 years ago just $200,000. Are those relevant anchor points too? But sellers have at least returned to the bargaining table. If you are in the market for a home, it is time, cautiously, to take a look and, maybe, see if you can play, “Let’s Make A Deal.”
Some good news for a change….. but with important conditions.
Fannie Mae Scraps Declining Markets Policy By Robert Freedman for REALTOR® Magazine.
Fannie Mae will no longer require borrowers to put up an extra 5 percent down payment when purchasing homes in areas deemed “declining markets,” the country’s largest secondary mortgage market company said Friday. Fannie Mae had been hearing concerns from REALTORS® and others for months that its declining-markets policy was bad for the housing market because it discouraged consumers from buying homes in markets hardest-hit by foreclosures. Under the policy change, borrowers can get loans up to 95 percent loan-to-value, even in markets in which prices have been falling. Prior to the change, borrowers could only get loans up to 90 percent to give lenders a 5-percentage-point cushion to protect against possible price declines in the future. The new policy takes effect June First.
Anyone notice what is missing? High Cost Area Jumbo Conforming loans are not part of this policy change. From $1.00 to $417,000 you can get a 95% LTV loan. From $417,000 to $729,600 the maximum is 90%, but lenders will still hit those loans with a 5% reduction in maximum financing so a 90% max is really 85%. The good news is that 95% purchase loans can be had for prices up to $439,900. Anything over a $439,900 price where a buyer wants to put 5% to 10% down will have to close as an FHA purchase. Freddie Mac, Fannie Mae’s competitor in the mortgage market has had this policy in place for about 30 days already.
Rates below assume a 20% down fully documented purchase transaction with a clients FICO score at or above 700. Rate and terms as of 05/16/08 and are subject to change without notice. APR’s have not been calculated.
Conforming 30 Fixed $417,000 and below: 5.625 1.0 point
HCAJ Conforming 30 Fixed $417k to $729k 5.750 1.0 point
Jumbo 30 Fixed $417,000 to $2m 6.875 1.0 point
Standard FHA 30 Fixed $362,000 and below: 5.875 1.0 point
HCAJ FHA 30 Fixed $362k to $729k 6.125 1.0 point
Conforming 5/1 ARM $417,000 and below 4.875 1.0 point
HCAJ Conforming 5/1 ARM $417k to $2m 5.750 1.0 point
( End of report.)
Even MORE good news from another lender friend:
On 6/01/08, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter® (DU®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types.
Among the changes in response to market conditions, in December 2007 Fannie Mae adopted a “Maximum Financing in Declining Markets Policy” that restricted the loan-to-value ratios on properties in markets where home prices are declining, essentially requiring higher down payments in these markets. The new single national down payment policy announced today will supersede that policy. Fannie Mae will continue to provide support for homebuyers that need down payment assistance, and will continue to allow loans with Community Seconds® up to a maximum 105 percent combined loan-to-value ratio.
The market is turning, and the bears are scurrying for their dens. Have a nice snooze until the next peak, Smokey.
Wow, great news, Dood.
But still sad that these buyers will lose their downs or more as prices continue to decline 10-20%…
NBI…here is my take, and i am licensed in 3 states, including CA: A buyers agent can advise all he wants…but he also has to get volume for his broker…it is after all how we make a living. Most buyers are fairly sophisticated and may have looked for a starting point…but during the boom, there were multiple offers on the table a good bit of the time. So, how bad did they want the home? Try going out and picking up a REO today…if it is a decent one, already has multiple offers on it and the offerers are awaiting the bank…at times the wait is 6-12 months…and I am not kidding. The pace during the boom was similar. Too much credit is given to agents regarding pricing. Like today, do we blame the auto salesman for moving his V8 cars and SUV’s? He is just doing his job…the consumer must educate himself on the vehicle, its costs, and is this the right choice in today’s world?
dood - I looked at Thomas’ report. I don’t know what you are seeing…
market time for all homes over $1 million = 12 months+ a severe buyers market indicating prices will drop significantly.
what’s selling? detached homes priced less than $750K - but over half of that inventory is foreclosures and short sales. And for detached homes priced less than $500K, 70+% are foreclosures and shorts.
Here’s what I see, banks, knowing how bad this are going to get, are selling off the properties they currently own before things get worse.
What are you talking about?
–Foreclosures only account for 7% of the current active inventory, totaling only 1,082, but they
account for 25% of current demand. The expected market time for foreclosures has dropped to 1.61 months, a deep sellers
market. Thus, it makes sense that foreclosures are not only fetching multiple offers, many are selling for above their asking
prices. Short sales, where the homeowner owes more than the current market value of their home, total 29.7% of the current
active market, 4,596 homes, but only 19% of demand. The expected market time is 8.94 months. HOWEVER, these
statistics are extremely misleading as most buyers and all agents can attest to. A large portion of these active listings
already have secured an acceptable offer, and in many cases, multiple offers, signed by both the buyer and seller and
submitted to the bank, or banks, because they are “subject to lender approval.” Yet, they remain on the market as active
listings. This is permissible as long as there is a signed “short sale agreement” that allows the seller to continue to actively
market their home until formal lender approval occurs. The reports from the streets are that close to 50% of all short sale
listings have mutually signed offers that are in the lenders hands for their approval process.–
Scott: just because it is a REO does not make it a good buying opp. Yes, even banks may invest money in some of these homes to ready them for the market…do you think they are just going to throw that money away?
Real estate is in a downward spiral. To imply otherwise if the utmost of dishonesty. (My data; Ziprealty, pricing trends)
There is a brief time of celebration each spring; ‘The Spring Bounce’, where we can pretend that there is a recovery and all is just fine. Some standard methods of spring celebration include ‘comparisons of April home sales versus November’, or pronouncing that we ‘haven’t seen a burst in sales activity like this in 4 months’, and other classic ways to froth the uninformed.
This years (paltry) celebration is waning and we begin the season of increasing inventory, and a slowdown of sales. This will bring optimistic must-sell owners a couple steps closer to reality. Banks also, will become wiser in a hurry. An asset that loses thousands of dollars each month in ‘value’ as well as expenses … isn’t an asset … the liability must be released.
I suppose if I was dependent on the real estate industry to put food on the table, then I might be tempted to cheerlead for a fictional recovery. The smart thing to do, would be to alter your career path in a hurry!
I am specifically referring to forward looking statements made by buyer agents to their buyers. It was done, regardless whether or not the agent truly believed it. That’s my point.
I know what drove up pricing - and why did you write about that when it has nothing to do with what I’m stating?
It’s not complicated. It is quite simple. I never said it was easy. It is about business.
As for your statement: “most buyers are sophisticated.” Now you do know that whatever measure by which you are stating that, it happens to be yours. Based on the information garnered from the network of professional contacts within the business I leverage, that is not the case.
A group of buyers were polled last year and something like half did not even know the terms of their loan docs. In 1997, I would have agreed with you. In 2005, hell no. Today? Who knows.
NBI…if you do not know what you are signing…you should not sign it. I am certain there were a few unscrupulous agents out in the mix who would have sold their mom a barn for 500k, but they were the exception, not the norm. Perhaps my opinion is skewed a bit as I deal with the upper end more so than the entry level. Move up buyers should know what the deal is…it is not their first rodeo. Good convo tonight NBI…I enjoyed it.
BITS–sorry bro, but using zillow as a trend indicator is faulty at best, and uselss at worst. Microsoft cannot get Vista to work…how on God’s green earth could Rich Barton and Lloyd Frink program a computer to ascertain the appropriate value for one home over another? They simply cannot. Zillow and Redfin are trendy and information portals at best. There is an old saying: the wealthy did not get that way by wasting their money.
Go check how many zillow listings are in effect for the upper end. Now why do you think that is? On those homes, the seller could save 6 figures in commissions each and every time. I wonder why they do not use Redfin or Zillow as their broker? Perhaps their budget service lacks just that…service.
Cool source BITS…but it is 2 months old…Thomas is talking about right now.
Mulliganville: You don’t really need someone to spell it out for you, do you? Re-read the Q&A; his “prognostication” is nothing more than a business promotion. And don’t capitalize “realtors”–it’s a job, not a title.
Re: “Ed Morgan Says: And don’t capitalize “realtors”–it’s a job, not a title.”
Actually it is a “title” that can only be used by memeber of the NAR/CAR.
–I am supporting them and I agree Cameron Merage is an idiot, however, you are incorrect.
Also re: “mortgagemaker Says: –I’ve been telling clients and friends to stop buying and sell since 03″
–I hope they didn’t listen to you, I personally sold in 2005 and if they didn’t, you cost your “friends” a lot of money.
TYPO____
Re: “Ed Morgan Says: And don’t capitalize “realtors”–it’s a job, not a title.”
Actually it is a “title” that can only be used by MEMBER of the NAR/CAR.
–I am NOT supporting them and I agree Cameron Merage is an idiot, however, you are incorrect.
Sigh, one of your story references is already out ot date. The “declining markets policy” has been dropped for jumbos too. Thanks for the Thomas report, it’s a good one. Amazing to see a deep seller’s market for many property types and areas. My own area is considerably under 6 months. And 1 month for REOs? Wow! It’s also great to see the difference in rate between $417,000 and $729,000 is a measly 1/8th of one percent. I wrote a while back that these loans have the exact same risk, and was ridiculed. It’s always an incredible feellng to be proven correct.
Actually Ed, most spell checkers call for the capitalization. It is a designation, not a job. But you knew that. You knew that not all agents were Realtors, right? It’s cool though…your bitterness is SCREAMING through the type-font. And you did not answer as to why the disdain…again, more bitterness…now why is that?
The Doomie Gloomies suffer from selective amnesia
San Diego is also sizzling:
“Market heating up, but more downside ahead
To my amazement, the market has really heated up this spring, and it seems we are in a temporary plateau. Realtors all over San Diego (and homebuilders) are seeing very high buyer activity, due to lower prices (20% down in some very nice areas like Del Sur), low interest rates, low unemployment. One builder told me last week they are not dropping prices at all for the rest of their phases, due to the high demand.
This increased buyer activity is the reason I have been out in the field so much, and not keeping up with what I love to do: blogging about real estate and the economy.
We are putting together a new website, in talks with the REO department of a major bank, planning more seminars, started a new listing campaign, and spending a lot of time with buyers (both owner occupants and investors). We are not the only ones busy - every realtor I speak with, is really busy.
I just spoke with a friend in Poway, who gave me a dozen stories about multiple offers, someone making an offer without seeing the inside of the home, and full price offers. In Carmel Valley, a few homes we followed close at list price and above list price.
Here is my straight talk on this: we are in a temporary plateau, brought on by the spring bounce, which is really another way of saying “emotional behavior by humans”. There is no reason sales should rise in the spring. People need shelter at all times of the year.
Yet, sales and prices paid rise in the spring. Our charts show average price rises in the spring. This increase in sales and prices paid starts in February, when the days get longer and wamer. Humans think of marriage, growing food, and shelter in the spring-summer months.
If I were looking for a bargain, I would wait until I have fewer buyers competing with me. I’d buy oceanfront in the winter, Palm Springs in the summer.
The imbalances in the market persist, so this is not over. Housing downturns last 7 years, and this is only the 3rd year. The consumer is spent, so the lower spending will cause more job losses.
Texas Instruments in San Diego is closing…I was told this is 200 programmers. Nokia already had their layoffs a year ago. Wall Street is letting go thousands of people. The recession will put a damper on house buying, and further foreclosures will cause tighter lending standards.
If you are buying for the long term and can handle a temporary price drop, (there will be another BUBBLE!), then start looking to buy.
If you are still priced out and want to wait, please do not think you have missed the bottom. Be patient. ”
Good luck with that last part!
“Housing downturns last 7 years, and this is only the 3rd year.”
Idiot!
Haha, Bill couldn’t even spell my typo correctly!
Oh and Bill, does Toll build anywhere else in OC besides Yorba Linda? Is that it? I am pretty sure that is it. I know they build in Riverside, Chino/Corona and San Bernardino as well. Lovely places to call home…no thanks.
THIS from a bubble blogger:
“This increased buyer activity is the reason I have been out in the field so much, and not keeping up with what I love to do: blogging about real estate and the economy.”
“We are not the only ones busy - every realtor I speak with, is really busy.”
“I just spoke with a friend in Poway, who gave me a dozen stories about multiple offers, someone making an offer without seeing the inside of the home, and full price offers. In Carmel Valley, a few homes we followed close at list price and above list price.”
Mulliganville, Mulliganville, Mulliganville,
When I see over 1000 notices of default sent out so far in May, it certainly doesn’t mean housing is recovering in OC.
OC’s prices are down 21% from a year ago.
OC is currently having one of the biggest price drops in the nation right now.
So, how do you come up with the national trends being worse than OC’s?
Furthermore, in the last two weeks sales have all but stopped and inventory is starting to climb again.
Dude is bonkers.
It’s going to be a hoot watching the median climb with the HUGE drop in jumbo rates. Even super jumbos have dropped dramatically.
Somebody here quoted Julius Caesar as saying Men believe what they what to believe. Well he also said “OUCH!, Thats going to leave a Mark”. (get it, leave a Mark?—Mark Anthony? he-he).
Yeah, changing the subject might be the smartest thing you do all day!
I’ll be back to correct more of your gibberish later
Sorry Billy Boy, but activity is up…sales are up in volume, not price…but I am not selling or buying so it is what it is. I suppose Steve Thomas’ report from May 15 is hogwash…as if you could have any later data…you are spinning.
Bill is the resident clown.
Yes, thoughtful, it is very dark in bear world…always the focus on negativity…what the hell did they all talk about from 2000-2006? My oh my. I just wonder, assuming William is accurate, of the 1000 NOD’s sent out…what would you wager the % of them are in the following areas:
Santa Ana
Anaslime
Garbage Grove
My guess would be at least 40%.
“what the hell did they all talk about from 2000-2006″
Haha, good question!
Bill is just bitter, as a matter of fact from now on we could call him Bitter Pill Bill
Thoughtful and Mulligan: You both seem to agree that right now could be defined as a deep sellers market in the OC - or rather in many areas in the OC.
Could you be more specific? Would sales numbers be at the high end of historical numbers? Not simply approaching a normal volume? And we should keep in mind, what you are stating are based on pending sales.
You see, the only homes that are getting those multiple offers are the foreclosures, short sales and great deals that are priced at deep discounts.
A deep sellers market is one where homes are appreciating in price on almost a monthly basis - albeit 0.5% or 3% or 8% or whatever - we are not even close to that market. There would be barely any foreclosures in such a market because they would be selling. Competition for the buyer would be great on ALL properties in those areas – and homes would not be priced at a 10% to 25% discount. A deep sellers market means a seller can go out and price his home above the last previous sale – is that happening today? If so, please provide some data on that – thanks.
It was not more than 9-12 months ago that the bulls on this blog stated that OC RE pricing was not even going down. Let’s be real here. The bulls have not been hitting a good average. Personally, I’m still batting a 100% - simply because I will refrain from calling a conclusion on something when ALL the data does not clearly support that direction.
You are clearly convoluting a bit of good news into something that it truly it is not. If I was to put both of you in front of a bunch of seasoned investors to make such claims - you do realize that you would not be sharing the opinion of many?
By the way - does Steve Thomas share EXACTLY the same opinion as you two - that bottom is clearly evident and value will start to turn this year?
I even remember reading Steve called that the median will decline further – but that may have been an earlier report from him.
Another way to think about this - you do agree that a deep seller’s market would be met by a drastic reduction in foreclosure inventory? Just like back in the 90’s? That was one of the markers we used for purchasing back in ‘97 and more in the few years that followed.
And in certain areas, a deep sellers market would mean NO foreclosures existed for that area - such as my own area (LN.)
Look - I agree that pending sales looks promising - but drawing those conclusions from it at this stage in the game - well that’s just ridiculous. Foreclosure numbers have to decrease, NOD’s have to decrease. Inventory should be decreasing or remain flat at a lower level. And pending sales numbers had better be on the high end of the historical average after seeing double-digit depreciation in ONE YEAR!! Are they even on the high end for any area? Hate to tell you, but 2006 numbers were a sign that RE was on its downcycle – comparing numbers to it doesn’t signify much.
Now back to business: care to put some money down on a wager to see which of your predictions you truly believe yourself? I’m very curious to see which of your predictions you would back with hard cash. And please don’t even think about the worthless median - you know that is has as much use as legs on a fish.
I am thinking you would agree to OC sales volume numbers (closed sales that is) for the remainder of the year will have returned to the historical average for every month. Is that a deal? We’ll meet up again in Feb of ‘09 so I can collect my money. Yes?
Mulli: you still haven’t addressed my statement directly above concerning the buyer agent. When the agent themselves believes the market is or will be turning south - and they make forward looking statements to the buyer that are the complete opposite, do you think that is being dishonest? (I personally know brokers prepped their agents to prepare for the downturn by selling as much as possible - not protect the buyer as much as possible). You see - the selling agent usually does not run into that moral conflict as much as the buyer agent. I have had my own employees state that their agents told them pricing would continue to appreciate, that they will never go down - that the time to buy was right then and there. The agents were almost always made aware of what the buyer’s affordability was - and yet the agent steered them directly into a sale that my firm ended up having to give them a low interest loan in order for them to keep that home.
Lastly – come on guys – let’s lay off the idiot remarks. It’s beneath everyone at this point.
Time to go out and enjoy the day – time to go dancing and listen to some great live music in the sun - later…
Come to think of it: If Steve called that the median would decline further - and you are using the same data as the majority of the basis for your prediction - and you hold Steve in high regard as an excellent predictor - why would your prediction be different from his?
That is, if I am remembering his last report correctly. And yes, I have no intention of researching it right now - I have some beautiful women waiting for me in the Mercedes to go have fun.
I apologize in advance if I am wrong about Steve’s comments.
NBI…I rarely lose my temper and namecall…I do not recall calling Bill any names whatsoever. I am heading out for the day, but will think about your post and address your questions a bit later.
Wow! The four remaining bulls are out in force and feeling cocky. Must all live in the same pen? It does not take much to get you all excited does it? Of course there is an uptick in sales. When prices plummet as they are, that is to be expected. Sales are STILL 50% OFF THEIR AVERAGE NORMS for this time of year, and we are just now entering a recession, that will be particularly harsh in O.C. now that the HELOC money has dried up. Home prices cannot fall sans a recession was one of the many previous bull arguments that have since been debunked. Can’t imagine what you guys are all excited about. Yawn…
this blog has turned into the realtors
love fest… by the way sighburbirdbrain is
probably steve thomas since he posts
his realtor spin ad nauseum… this market
is sicker than anna nicole smith
Mulliganville, you’re a hoot. I don’t have disdain or bitterness for real estate agents at all. Most of you have no education or skills to perform at a real job, so you’ve gotta’ do something for a living–and have to resort to the spell checkers on your computer rather than think for yourself (and by the way, spell checkers aren’t always correct, in context). But at least you know where it is. I’m enjoying the dialog, seriously, even if I do think you’re FOS. XOXOXO
Yup, the bottom is in. Again. And again. And again. The RE market witll have about one bottom per week for the next 450 weeks.
Realtors are on the same level as used car salemen. Of course, there are one or two honest ones out there, but the majority are liars.
High level realtors are just higher level liars.
Just got back.
Ed: “Most of you have no education or skills to perform at a real job”
I cannot say I really agree with that (although I cannot claim I never insinuated the same). Many have BA’s and BS’s and some even have MBA’s - which makes the professional relationship even more important. They damn well know the effect their actions and statements have.
The point I am making to Mulli is that on a professional level, when it comes to buyer agents, they are stuck within a moral dilemma. If you know any buyer agents personally - speak with them about it. I have - the typical response is: its a job and someone has to do it.
Its just the professional aspect of it that doesn’t sit well with me. You see, sellers can usually rely on their agents to do the right thing for them - some make mistakes, of course, but they are doing so with the same intentions - to sell that home for them at the best price they can get. Rarely did a seller say something with an intention that was opposite of the seller’s best interest.
The best intention for the buyer is not considered when it comes to the buyer - agent relationship. A buyer will turn to their agent as a primary resource of information - which includes their opinion on the possible direction of the market. I know for a fact that agents, when asked by their buyer, had stated forward looking statements that were not aligned with their own true belief about the market. As the agent above stated, many agents saw this downturn coming. I just wonder how many told that to their buyers when asked.
This is not being subjective. This is a real objective observation that many will probably disagree with. The fact remains, these agents are not in a position where they can have a strong conscience and be excellent performers at the same time when the market resembles the situation this county was in during 2006. It gets to them. I just want to see how some agents on this blog deal with that dilemma - or if it even affects them at all.
I also personally know of a young agent that was reprimanded by their broker when they got wind of him telling his thoughts to a potential buyer. The sale never went through. He happened to be a son of a close friend. He was in his early 20’s and was very new to the business. He’s since gone back to college to become a lawyer. (I know - the irony)
MrZero ( an approprite name? ) had this to say: “But still sad that these buyers will lose their downs or more as prices continue to decline 10-20%…”
Wanna bet, Mr. Z.? Once the higher proced properties start selling just a LITTLE bit more, the median that you bears love so much will NEVER get any lower than it is this month, or next - AT THE LATEST.
bLOODINTHE STREETS HAD THIS TO SAY: “Real estate is in a downward spiral. To imply otherwise if the utmost of dishonesty. (My data; Ziprealty, pricing trends)
Zip Realty? Are THEY still around? Now, that’s a source to pay attention to.
I would love to read a commentary on this topic between Jon, brokers, recent buyers and agents. A forum, if you will, for people to be able to answer honestly. Maybe even generate solutions. Perhaps a code of ethics that includes a limitation to the buyer/agent relationship; where the buyer and agent are not allowed to discuss forward looking statements.
I do know two very experienced agents that would steer their buyers to educational materials and certain educational programs that were available to people interested in buying, when they were approached with such questions. They would do this and NOT offer their opinion of the market. They are currently top performers in this market today - and back in 2005 and 2006 - they were not to performers – not even close. You make the correlation as to why. Honesty goes along way - sometimes it takes years for it to pay off. Their clientele won’t use anyone else. Their clientele are experienced – so all these buyers are after is the hard work, dedication and integrity of a true professional. A true professional does not have to lie to make a great living.
Personally, I use one of four lawyers for all of our RE purchases and leverage research acquired by a pool of investors, most of which are members within my organization. But if I were to use an agent, the one with the most brutal, bare knuckle honestly is the one that would get my business for years to come.
Sigh: “the median that you bears love so much will NEVER get any lower than it is this month, or next - AT THE LATEST”
Sigh - so you are insinuating that if the median goes up, the values of homes go up?
Where have you been? That has not only been proven wrong time and time again, but never in its life as a metric has it been used for evaluating true RE value. And definitely not by itself - it must accompany an increase in paired sale pricing to show a change in real value.
Care to bet on paired sale pricing? or how about volume returning to historic averages, which obviously is required for real value to shift upwards again, given current inventory.
Did everyone already forget that over 50% of recent buyers (last two or so years) were turned over in their loans based on a study that is not over a month or two old?
Didn’t you already call that the median would have increased already? Or did you recant afterwards? It’s hard to get all this speculation straight nowadays.
You see, I don’t necessarily disagree with the potential for a shift - but the manner in which you guys portray the downturn being over is absolutely ludicrous and unfounded. My 12 year old has more sophistication than that.
I still have yet to read Thoughtful’s retort as to how his comments were exactly aligned with Mr. Roger Rabbit’s during another discussion.
Do you guys sew as well?
Ed, it is ok if you feel I am not educated as a human being. It is your opinion. I know I am educated, having graduated college some 13 years ago, as well as selling all of my Enron stock at $63 : )
The saddest part of this equation is, or the most comical depending upon your POV is the simple aspect that you assume I possess no other marketable skills to perform at a “real job.” Please Ed, do tell the blog the “real job” you attend to to support your family.
Here is the best part…I honestly could care less what you or anyone else in here thinks of my profession, skill set, or career path. 20% of the agents do 80% of the business.
Sorry to have to point out to you that a licensee is not a Realtor until they join an association. I thought everyone knew that…I suppose education is open to interpretation, huh Edward.
NBI: Here is my opinion of the Buyer’s agency moral dilemma as you put it. If any agent tells their client they should buy because values are going north, they are breaching the code of ethics. Nobody can predict the future. Advising a client to purchase based on speculation, well I have a huge problem with this. Illustrating long term potential, based on historical averages would be one thing…but promising growth or imposing fear based on recent upticks in pricing is not advisable.
When a buyer asks me what I think about values and their direction, I ask them a number of questions. First, why are you buying this property? Investment? Primary? How are you paying for it? Financing? Cash? How long do you plan on holding the property? What is your objective–to raise your family here? Expand s.f.? Downsize?
Once we have a clear picture of the needs vs. wants and why they are in the market to begin with, the focus then goes back to what exactly they are wanting to accomplish, and which avenue best accomplishes this feat.
If I am flat out asked if values are going up…my answer every time is nobody can tell you if values are going up or down and by how much. If your stockbroker offers this service to you, please forward his name to me as I need to speak with him pronto!
I hope this helps clarify my position about offering value forecasts in ANY market.
Nobody will probably read this anyway… but just wanted to chime in that as bearish as I consider myself to be, I can vouch that my realtor is somebody whom I respect for telling buyers that this is only a good time to buy if you are in it for the long-term. She has been in the business for 22 years, something I respect, as she has been through a lot in those years. I do not look down on her as a less-than or unethical person. She does her best to make sure her clients are well-informed and if they give themselves enough rope to hang themselves with, I don’t feel she is to be blamed for that, having done the best she can with whom she’s working with. If you feel like a realtor you have met is lacking in some way, I would say don’t let that taint your entire view of all realtors - you can find a better one. Just my .02.
well put Socal78…well put.
I am left nearly speechless from the endless discussion of how realtors influence buyers. BUNK! I cannot imagine myself EVER asking an agent such a silly question. When I am interested in real estate I move forward. When I am not interested in real estate, I don’t. It would never occur to me to ask an agent’s opinion. Never. They are there for a specific purpose, and giving their “feeling” isn’t it.
And that is well put too Thoughtful…yes, i am on the campaign trail.
Not buying it: I’ll humor you no more. I am not going to explain to you how Roger Rabbit and I said the same thing. He said so in that very post. Please stop.
Thanks Mulli!
Mulli: glad to read those statements.
I see your response to the specific question: “asks me what I think about values and their direction” and I agree that is a good, and equally savvy response.
But you do realize that many buyers will insist on getting a direct answer, irrespective of what they intend to do with the home.
And many agents will tell them what they need to hear to make a deal.
Given the fact that many buyers ended up having to use loans that required them to either sell or refinance after a few years of ownership, many, not saying most, but many were in it for the short term. Many asked the same questions to their buyer agents and many still thought it was a great time to buy given the risk that was quickly mounting. The risk that agents were aware of, as stated above by the CEO of First Team.
I do not have objective evidence to support this hypothesis - but rather, just the 13 employees whom I have personally spoken to right before signing off on their low interest loans my firm provided to help keep them in their homes.
If more agents responded as professionally as you, we may not have seen such severity in this market. Emphasis on “may.”
Stockbrokers are another topic altogether. But keep in mind - a stockbroker isn’t (usually) brokering the largest deal of a person’s life. Yet, the laws governing his/her relationship to their clients are way more severe and comprehensive.
Thanks, Mull.
SoCal78: I agree. Not all were out to decieve - most wanted to make the deal and I’m sure many refrained from making purely dishonest statements. However, you are selling a home yes? Were you buying in 2004 through 2006? I’m just pointing out that your relationship to the agent was not the same, or was it?
Big difference in time - big difference in what people were thinking and stating.
Agents were preparing for this downturn in 2004 thru 2006 - what about the buyers that seemed to have been so blindsided?
It would be interesting to have Jon take a poll of buyers that have purchased within the last 4 years to see what they were informed of, if anything, by their buyer agent. We’re talking 2004-2006, not now. It would be hard to pull the wool over people’s faces now.
I had people in the business advising me of one thing, quite accurately I must add. And an entirely different set of people are telling me what they were told when they decided to buy - and this was during one of the worse times in OC history to buy OC RE if not buying for the long long term. Its quite obvious what was going on but to what extent, who knows.
The media also played a part in the fear factor as well.
All comes down to the perception of risk and how so many miscalculated it for themselves.
There are people out there today that believe that if they get approved for a loan, it means they can truly afford it. All goes back to who is advising these people, if anyone.
I wish I could come to the defense of my fellow Realtors and agents and say the majority are highly educated and trained practitioners; I can’t. Multiple times daily I am reminded how many “professionals” involved in real estate sales are idiots. Unfortunately, the requirements to enter the field are ridiculously easy to meet; almost as easy as getting a loan a couple of years ago.
This is not to say that there aren’t some very sharp individuals in the industry. In any field, you have a variance in the intelligence and professionalism of the members. But, until the requirements for obtaining a license to sell real estate are elevated to a higher standard, the real estate industry is destined to be held in contempt by many.
Thoughtful: Find me your statements that correspond to these moderate and inspective statements of Mr. Rabbit:
“that from a historical context the RE market is still in the dumps, and most likely will be for a while.”
“If this trend holds, in the next month or so we can expect a Year over Year increase in volume”
“so far we have not had the corresponding seasonal uptick in inventory”
“that the RE market is still very very sick lives in an alternate reality. But it does appear that baby steps are being made in the market towards recovery”
You mean to tell me that is the impression you have been given on this blog? You must be on something.
As for the difference in your prediction of the median and Thomas’ - I was hoping to either have been proven wrong or read a statement supporting the difference.
Unlike you, I have no ego to bruise - I enjoy facts - sometimes discovery can be a humbling one.
Learn it, live it.
Mulli: I could not agree more.
Maybe a few harsh laws to deter agents from making such statements to their buying clients would help out.
But I agree 100%. If an agent when asked, simply states, sorry but I cannot answer that question, more buyers would have taken the time to find the answer using the correct channels - and of course, during the buying frenzy of 2004-2005, waiting even a day could have meant losing a deal.
That is what is so unique about this area, from other areas in the country that I have done business in. And I see it even in engineering. Its some weird rushed mentality to get in while the getting is good, discounting risk when it should be carefully assessed.
One reason why many defense contractors, who pay dearly when late on a project, repeatedly turn to my firm for solutions. I will not BS to make a deal. Never have, never will. I’ve lost fantastic sales people because of disagreements centered on this very topic. Burned relationships, but usually replaced them with new, equally rewarding ones.
Mulli - I truly enjoyed our convo - thanks
Right on NBI–me too. See you on the blog…
OC Native: I must say though, it is difficult to come across as an informed agent if they’re an idiot. The people I spoke with, the buyers that truly believed what they were told were the beliefs of their agents (some of whom, by the way, were First Team), are very intelligent technical professionals and I respected their decisions they made to believe what they were told. They were given alot of verbal information they should not have been given. They were very young and concerned about housing their families.
The buyers did have some commonality however, and that is their willingness to assess risk with less than adequate information.
Those agents were not idiots.
Be rest assured - I am from NY - we take care of our own. Not one of my employees had to foreclose, at least not involuntarily. Some did choose not to leverage the benefit. Offer to one - you must offer to all.
Mulli and all - good night.
We’re all going to be OK.
Not buying it asked: “Sigh - so you are insinuating that if the median goes up, the values of homes go up?”
Here’s what I think. Right now the median has been downwardly skewed by a larger than normal number of sales in the lower price ranges. I think that the market has shifted and that today’s sales are more balanced - more bigger house sales than there have been - which will result in the median firming up, not dropping any more - until the NEXT bubble, in about 6-8 years.
I think the median, as we see it now, will NOT drop any further, and that it will start to skew up just a tad, with the more balanced sales activity. I predict a fairly flat median in the 520-550 range for the next 20 months, spring of 2010, when I think prices will start to nudge higher again. ( Much slower than this past trough to peak.) I wouldn’t be surprised if we didn’t match the past peak - 05-07 - until 2012-14.
THAT’s what I was implying.
Can someone, (maybe Mulliganville or Thoughtful or one of you other permabulls) clarify the following?
Steve Thomas lists Fountain Valley actives (a market I have been closely watching) at 130 active inventory with 51 of these as foreclosure or shortsale properties. Based on this figure, he estimates the months of inventory…
However, according to Foreclosureradar.com, a service which is also a CURRENT snapshot of foreclosure activity, there are 159 active SFR and Condos in foreclosure proceedings in Fountain Valley.
Now, that puts foreclosure activity being not only MORE THAN what is showing and currently on the market in the MLS (if the Thoughtful’s claims are correct, most foreclosures are already counted in the mls/Thomas’s numbers, right?), but also MORE than the total inventory on the market period! 159 in foreclosure, but 130 active inventory. What does that do to the months of inventory?
Also, Huntington Beach, which I have also been watching closely: Thomas’ numbers are 731 inventory and 143 are foreclosure/short sales… but there are 467 active SFR and condo foreclosures in HB according to Foreclosure radar….
Mission Viejo ditto - Thomas says 444 active, 186 foreclosure/shortsale… but there are 565 active foreclosures per foreclosureradar.
I could go on, but I think you get the drift. I am not cherry picking here, these are areas I am currently interested in and have been watching as I seriously am househunting, and would like to know when the time is right to buy. (”Right time” being when prices are dropping somewhat less than 15-20% per year…) I avail myself of all data that is available and respect everyone’s opinion, adjusting for the spin factor…
But I honestly don’t think that I, or anyone putting their money down, can rely on Thomas’s limited numbers to tell much about where the current market is headed…
Not buying it, you have a terrible memory. Each and EVERY statement you listed has been made by me at various points in time. You have an agenda against me. Fine. I don’t care. And you’re pretty lame with your constant stream of insults, coming on the heels of your admonishing everyone else against hurling them. And the best part? YOU HAVE THE BIGGEST EGO HERE, BAR NONE!
househunting had this to ask: “Can someone, (maybe SIgh or Mulliganville or Thoughtful or one of you other permabulls) reconcile the following for us?
Steve Thomas lists Fountain Valley actives (a market I have been closely watching) at 130 active inventory with 51 of these as foreclosure or shortsale properties. Based on this figure, he estimates the months of inventory… Fine so far.
However, according to Foreclosureradar.com, a service which is also a CURRENT snapshot of foreclosure activity, there are 159 active SFR and Condos in foreclosure proceedings in Fountain Valley.”
Pretty simple, actually. Thomas ONLY charts MLS activity. Foreclosure information companies - of which there are many - look at public records, for NODs ( Notice of defaults.) Many NODs do not make it completely through the foreclosure process, and many of such properties have more than one loan on them - hence, more than one NOD.
And most important, for YOUR question, a HIGH percentage of NOD properties never get on the MLS. Either the homeowner bails out the foreclosure - perhaps with one of the new higher limit, lower rate refinances, or they’re not informed of other alternatives, and eventually lose their house without even trying to bail it out.
That’s MY take, on your question.
NBI:
I completely agree that there are some incredible agents. That is why I said this in my post:
“This is not to say that there aren’t some very sharp individuals in the industry.”
I just wish the percentage of agents who fell into this category was higher.
Thoughtful: “Each and EVERY statement you listed has been made by me at various points in time”
What are you talking about? Rabbit stated these within the last week.
What have you stated in the last week?
Are you kidding me? You think for a second that anything you stated in the last three weeks comes close to what Rabbit stated?
My problem with you is that you are extreme. You take some positive data and run with it like a wild hog. Where’s your sensibility? Your reasoning? You even stated that the median would increase when Thomas predicted the opposite - using the same frickin’ data as the source of your prediction.
You need to step back and re-read your frickin’ posts from these past couple of weeks and tell me that they are as level-headed as Rabbit’s.
You are quick to sling insults at a bear that comes back at you with the same lack of balance. Man - hold yourself to the same measure by which you condem everyone else. Whose got the BIG HEAD?!?!?
And I am only asking you frickin’ questions. I am replying to a coment YOU made to me stating that you made the same comments as Rabbit. I asked where - to prove it - and you whine about it. Stop whining about it and just answer them honestly and completely. I give you that consideration, why don’t you do the same?
OK - I promise this is the last one - when I point out that you are wrong or that I disagree with you, I will clearly state why - stop misconstruing it as insulting you.
Can you take criticism at all? What kind of ego have you been nurturing all your life?
If I’m wrong - I state it - and you have seen that. If I feel I have a point, I will defend it. Most will approach this with a sense of balance and reason. You simply shut off and misconstrue it as someone insulting you. I have no intention of trying to quiet you. I know what is impossible and what isn’t.
Calm down and use some sensibility - you might find that more people actually agree with you when you use balance in your posts.
Not buying it, you either have selective amnesia or don’t read the blog enough. I think it’s the former. And don’t make me dig up the many NASTY things you have said to me. In fact, in the past week.
Wow, got lucky on my first try. Here’s what YOU sound like, not buying it:
“not buying it Says:
May 15th, 2008 at 9:41 pm
Thoughtful:”People like not buying it have talked until they’re blue in the face about their OPINION that anyone who ever used ANY type of short to mid term financing could not afford a 30 year fixed”
If you are not a lying sack of shi@t, please find where I stated that?
ANYONE That has ever used them?
You are trully a pretentious idiot.
So much for amicable debates.”
Thoughtful
Now this is funny. Something was telling me to come back to this and check out your retort - my meeting can wait a second - this will be very fast.
YOU POST A LIE about what I had stated on this blog. You never recant about the fact that you posted a blatant lie and it was not the first time, nor I would guess, will be the last.
I should not have went off as I did, but I am human just like the rest.
WHY DO WE BOTH AGREE TO STICK TO THE FACTS.
If you address each one of my questions in the post you quoted (the one where I accuse you of lying about my statements) and the ones prior above - I trully promise to never get angry again.
It is just frustrating having to debate with someone who will not address the questions but rather will throw every smoke screen out there to divert attention from the facts, and your incorrect assumptions and unfounded predictions.
Please show me where I made those statements, show me where you made those statements that were EXACTLY like Mr. Rabbitts. At this point - I really do not care about the statements themselves - your credibility is HIGHLY questionable. And that is putting it nicely.
I have already proven that I enjoy intelligent debates with those that share differing opinions - your problem is that you are not participating on this blog to debate - you are in this to deceive.
Later…
Ok, I’ll put a collection together for you when I get home.
Here’s a start:
Thoughtful Says:
May 7th, 2008 at 9:45 am
Since I know I will have my position distorted, let me make it clear. I am AGAINST banks being forced to write down mortgage balances. I think that is wrong. I pay everything I say I will pay, and expect the same of others. However, banks also exercised bad judgment, and I see nothing wrong with them making certain loan modifications as their own “stupidity tax”. I am of the belief that the FHA bill might very well be the “stick” that is needed to force the good faith negotiations that are needed. It might turn out that the bill itself is the ingredient needed to bring some order to the situation. I don’t believe that every market that is suffering has an affordability problem. I DO believe we do (or at least did). I have no qualms with prices here adjusting to their rightful level. I happen to disagree with many of you as to what the level is, but that is all.
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