Bob Phillips

Hope Now, the private sector alliance of mortgage servicers, counselors, and investors that is working to help prevent foreclosures, announced today that mortgage servicers provided loan workouts to approximately 183,000 homeowners in April 2008, the highest monthly amount since the program was begun in July 2007. Since July 2007, the industry has helped almost 1.6 million homeowners avoid foreclosure through workouts which include loan modifications and repayment plans.

Here is a link to the entire article, detailing some recent success for the program: http://hopenow.com/upload/press_release/files/Homeowner%20Workouts%20Reach%20Record%20Level%20In%20April.pdf

For more information on HOPE NOW, and to see the full membership of the Alliance, please visit www.HOPENOW.com.

If you know someone who is having difficulty making their mortgage payments please send them a link to this blog, or have them give me a call ( 949-643-2100 ) or an email: agent.BobPhillips@cox.net

Serving South Orange County since 1976 - Bob Phillips, of Altera Real Estate.

Here's a link to our company president's bi-weekly market report for Orange County, California:

http://www.OurAgentSpot.com/sthomas/MarketTime-May-29-08.pdf

For a synopsis, the number of houses going into escrow - demand - has increased dramatically so far this year, to a point better than the past two years. Fueling this growth has been three significant factors.

First, the number of foreclosures and other types of distressed sales has continued to increase. These properties represent more than half of properties going into escrow.

Second, the emergence of all those distressed properties has contributed to significant price declines, throughout our area. Depending on the neighborhood, there have been reductions, from the highs of a year or two ago, ranging from 5% to over 25%.

Third, because of these price reductions, properties have again become much more affordable, especially for first time buyers, who make up more than half of those going into escrow.

This is a great time to be looking for property in our area - there are still some exceptional opportunities out there. The only down side at the moment is that because it's such a bad time to be selling, if you have to sell your present house in order to buy your next one, this isn't a good time for that.

There are two ways to make that a positive experience, however. First, in most cases you'll be getting a terrific buy on your purchase, so a loss on your sale makes it all pretty much a wash. Second, if you're in a position to make your present house a rental, instead of selling it, the rental market is good in our area right now - so, lease your house out for a couple of years, and then sell it in a better selling market.

For any help with any of these scenarios, or just to talk about the possibilities, drop me an email or give me a call. I've been helping my friends and neighbors successfully navigate the local real estate market for over 31 years. Bob Phillips, Altera Real Estate, at 949-643-2100, or click agent.BobPhillips@cox.net .

A lot of my clients are asking about foreclosed houses ( houses taken back by the bank. ) or short sales. ( houses listed for less than the total of loans on the property.) Such properties make up an increasing percentage of both active listings - about 50% - and houses presently in escrow - more than 50%.

The big difference between the two, is that the bank has already completed the foreclosure process on the first type, and so, a faster, more definite escrow can take place. Foreclosures account for less than 25% of present listing inventory, but more than 40% of current escrows.

Short sales are a different type of animal. These are typically houses where the owner is behind in payments, but hasn't lost the house - yet. Most short sales, especially in price ranges under $600,000., are deliberatly UNDERPRICED in order to encourage multiple offers, and to bid the price higher. The MLS is now struggling to deal with a phenomenon wherein the listing agents of these properties already have up to 5 or 10 offers on these properties, but are still presenting them as an active, available listing.

Obviously, only one of the offerers is going to eventually be the successful bidder - MAYBE. Here's the rub. With about 50% of the short sale listings, the listing agent, in spite of their zeal to earn a fee, is not successful in navigating the plethora of offers through the lender's system, and the house eventually gets foreclosed, anyway, negating ALL the previous offers.

Unfortunately, this experience leaves a pretty bad taste in the mouth of the numerous "buyers" who had spent time trying to purchase the short sale listing - frequently, a lot of time. Some of these listings spend months, supposedly in escrow, only to fall completely apart, when the bank opts to foreclose, instead.

In the 50% of these short sale candidates that eventually get foreclosed, the property usually reappears on the market, within a month or two, frequently priced higher than it was as that seductively priced, potential short sale.

Is there good news here? I think so. First, there are a LOT of distressed properties on the market, ( in almost every price range! ) and there appears to be more on the way. Second, most bank repossessions ( REOs, or, Real Estate Owned.) sell like a normal transaction, presumably to the first, qualified buyer to offer a price agreeable to the lender - usually a pretty good buy. Yes, there might be multiple offers, but not nearly as likely as with a short sale listing.

Third, there are some agents, myself included, who know the system with short sales, and who know how to more effectively, and expeditiously get a property through the lender's system, for approval. In the 50% of short sale listings that actually get approved, most of them are excellent buys, as well.

In any case, make sure that the property you are targeting thoroughly meets your needs, either as a place to live, or a good investment ( rental.) property. Location is still the primary criteria to hold to.

Also, this is NOT a time to be thinking of "flipping" a property - buying low, to fix up, and sell for a profit, in a few months. That's NOT likely to happen - not in Orange County, anyway.

If you are thinking of buying one of these properties, OR, know someone in distress, who needs to be selling, please give me a call or an email. It would be my utmost pleasure to be at your service!

Send me an email ( agent.BobPhillips@cox.net ) or give me a call.

Bob Phillips, Altera Real Estate, 949-643-2100. ( http://BobPhillips.net )

Talk to you again, soon.

Here is the latest Orange County Market Report as compiled by the President of our company, Steven Thomas:

Market Time Report: May 15, 2008 Demand Far Exceeds 2007 Levels

Good Afternoon!

Demand is not only dramatically surpassing 2007 levels, it is just shy of matching 2006 levels. The big difference in comparing current demand to demand over the past two years is that it has been improving unabated throughout 2008. This is so contrary to the constant stream of negative news regarding the housing market. That is due to the fact that the media is only provided with SOLD data, which is a snapshot of demand a couple of months ago. As a matter of fact, Dataquick, the company that provides the statistical SOLD and median price data to the media, is going to release the figures for April next week. Orange County housing demand did not exceed last year's demand until the beginning of April, which will not reflect in the SOLD data until May's data at the earliest. With that in mind, expect next week's sold data to fall short of exceeding last year's levels. The disparity will be closer than last month's comparison, but it will still fall short. This is not due to escrows falling apart; it is because in March of this year there were fewer homes placed into escrow compared to March in 2007. So, it is a matter of time before the data that the media is supplied catches up to the story of today: demand is much stronger than last year. Demand, a snapshot of the prior 30 days of escrow activity, has continued its ascent by adding an additional 118 escrows in the past two weeks, bringing the current total to 2,658. Just last year demand was at 2,010 escrows, 648 fewer than today, off by 26%. Two years ago demand was at 2,741 escrows, 83 additional compared to today, or 3% more.

"Steady as she goes" is this best way to sum up the current active inventory. After the active inventory dropped by 604 homes on January 1, 2008, a normal, cyclical phenomena, from 15,328 to 14,724, since reaching 15,363 on January 30^th, the inventory has only grown by an additional 94 homes, or six-tenths of one percent. That does not mean that only 94 homes have come on the market within in that time period; instead, it means there are almost an equal number of homes coming on the market as there are coming off. During the same period of time last year, the active inventory grew by 4,193 homes, or 35%. In 2006, it grew by 4,628, or 57%. The current active inventory is now at 15,457 homes, 20 additional homes compared to two weeks ago. Last year, there were 631 additional homes and climbing at a steady rate. Two years ago there were 2,761 fewer homes on the market; however, if it continues along its current, persistent trajectory, the inventory will be less than the 2006 mark by the end of July of this year.

With steadily increasing demand and a stable active inventory, the expected market time has continued its 2008 descent. Starting the year at 15.6 months, the market time has dropped significantly to 5.82 months today. This is the first drop below the six month mark in 14 months. Last year at this time the market time was at 8.0 months and two years ago it was at 4.63 months. As can be seen below, the expected market time is not following any trends of the prior two years other than the initial beginning of the year drop. If demand continues to improve and the inventory remains steady, the market time can continue to improve.

What other trends can be discerned from the current data? First, it is safe to say that the current market is much different than the past two years. There is tremendous activity for all homes below $500,000. This range now accounts for 47% of the current active inventory and 58% of demand. Last year, this range accounted for only 26% of both the active inventory and demand. 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. This process can take anywhere from a few weeks to months. With 77% of all short sales below $500,000, demand is under stated. So, there is a boat load of activity in the lower ranges in Orange County. The bottom line is this: short sales and foreclosures have enabled housing prices to drop substantially since demand peaked in the first half of 2006. At the beginning of the current cycle there was a stalemate where buyers did not want to buy and sellers did not want to come off of their pricing perches. But, with the implosion of the subprime market and, subsequently, the financial market and lending liquidity, the housing landscape changed significantly. The housing boom had been underwritten by adjustable, subprime loans that began to rapidly reset in the second half of 2007. An unprecedented number of homeowners defaulted on their loans. This trend will continue until the end of 2008 when subprime loan resets will significantly diminish. Currently, 36.7% of the active inventory is either a foreclosure or short sale. Demand increased considerably as prices dropped to levels not seen in years. We are currently experiencing a wave of first time home buyer activity. Almost every Realtor® is working with a first time home buyer. Two years ago nobody was working with a first time home buyer and parents were wondering if their children would ever be able to afford a home in Orange County. First time home buyers have been priced out of the market for years and now that affordability has greatly improved, demand has skyrocketed. The new FHA loan limit of $729,750, allowing buyers with some credit issues who can afford the payment to put as little as 3% down, has helped fuel demand in the lower ranges as well.

Where's the demand in the upper ranges? Finally we are seeing a bit of relief from the affects of the financial market. The disparity between the old $417,000 conventional loan limit and the new $729,750 limit has dropped from three-quarters of a percent to one-eighth. That is a major shift in financing which should increase demand up to the $800,000 level. The disparity between the old conventional loan limit and the new super jumbo loan limit, loans above $729,750, has improved from 1.5% down to 1%. These disparities should continue to improve as the year progresses, and should reach much more comfortable levels by the end of the Summer. So, demand in the upper ranges should slowly improve as liquidity is slowly restored this year. Also, there was a six month lag between the slowdown of the lower and upper ranges in 2007. It stands to reason that a similar lag would apply in the improvement in demand. Demand in the lower ranges really did not surge until the end of February. That would place an increase in demand for upper ranges at the end of August. ( End of report.)

This all seems like great news for our area. If you, or a friend of yours, is considering buying a house, selling a house, or both, please give me a call. With over 31 years of service to South Orange County clients and friends, it would be my pleasure to be of service to you. I'll talk to you again soon.

Send me an email ( agent.BobPhillips@cox.net ) or give me a call.

A third of the year has come and gone. As you may have noticed, a few more listings are coming onto the market. At the same time, the number of houses going into escrow has also grown. There are increasing signals that we may be close to the bottom of our real estate downturn.

The new higher limit "conforming" loans are now taking better shape. For the first month, as lenders tried to get a feel for them, they were priced substantially higher than the "old" conforming loans - $417,000., or less. In recent days, however they have come down to similar pricing, making them a much better deal, as the Government planned, when they raised the limits. ( From the former cap of $417,000., up to $729,500., as they are today.)

The effect this will have remains to be seen, but one plus factor should be this: Current borrowers, paying on an adjustable rate loan that has had its payments increase considerably over its life, might be able to more easily refinance out of it, with better current rates, and much lower payments - in many cases staving off a foreclosure, and enabling them to keep their houses, rather than be forced to sell them or lose them to their current lender. This will most likely happen in time to save a bunch of distressed owners, from losing their houses.

Another positive result from all this good lending stuff now emerging, is the ability to purchase one of the presently low "good buys" that I've been talking about, before they are all snapped up. This snapping up process has already started but there are still some excellent buys out there. Most of them are short sales, lender repossessions, or corporate relocations.

If this is truly the bottom of the market, as I personally see it, most of the good buys will be gone within a month or two, and then we will settle ( by mid summer.) into a fairly normal market, with buyers and sellers being more equally poised - neither having a big advantage, but FAR from the buyers market that has been in place for the past 2 years.

To the seller's advantage, there should be fewer foreclosures, and lender owned properties to compete with. To the buyer's advantage, there will still be a good number of houses to choose from - and play against one another - just at slightly higher prices than some properties that are currently available.

I realize some of this "news" may be contrary to articles you're seeing in today's newspapers, or on the Internet. Here are a couple of huge reasons why: First, most media is reporting data that is MONTHS old - at least 2, sometimes much more. By comparison, I am reporting based on things that are happening right now - this week, last week, etc., much more up to date.

The second factor that helps the media misinform you is that in the vast majority of cases they are using data that is statewide or even nationally based - not the least bit relevant to South Orange County. Do YOU care that the vast majority of California foreclosures are taking place in the Inland Empire, Stockton, or Sacramento? ( or those in Detroit, for that matter.) Again, it isn't really relevant to what is happening locally.

The opinions that I'm sharing with you are based on local information, from someone who has been working in this area, selling local real estate for over 31 years.

When the dust settles ( again, probably by this summer.) from this current housing "crisis", values in South Orange County will probably have gone down somewhere between 10 and 25% from their highs in the spring of 2005, but no where near the 40, 50, even 60% drop predicted by some experts, whether local, or national.

It seems that more and more people ( insert the word: buyers.) are becoming convinced that the market is about to turn around, and not go down much further, if at all.

When I say turn around, that is not to say that prices will start going up again, or that we'll go back to a seller's market, anytime soon. What will probably happen, though, is that prices will firm up, making today's few "good buys" look like absolute steals. I personally expect to have a fairly flat market, with a good equilibrium of buyers and sellers for the next couple of years - before prices start to go up again - which has always happened, ever since I began, 31+ years ago.

If you, or someone you know, is sitting on the fence, waiting for the bottom to "magically" appear, I implore you to get serious. When the bottom does come there is not going to be a bell ringing to announce it. It will only be obvious when it has long passed. By the time the media proclaims a "bottom", it will be 2 or 3 months after the fact, and much too late, to take advantage of.

If you look for the signs, and take what the media is saying with a huge grain of salt, it will become quite obvious and clear. The bottom could very well be here, right now, and the good buys of today might be the lowest prices you'll ever see. If I'm wrong, prices might go down another 4 or 5% ( Maximum! ) this year, but if I'm right, you could be in that preferred investor's position of buying low. Only time will tell.

If you ARE a prospective buyer, I have an exciting new program to share with you - directly from the MLS. It's the latest method of looking for houses, with little assistance needed from your Realtor. You can tweak parameters to your heart's content, for properties pretty much anywhere in California. It is far better than programs you may have been using up to a month ago - like I said, it's new, improved, and easy to deal with. If you would like to check it out, visit http://coto.listingbook.com/?node=3 to set up your own account, or drop me a line and I'll be happy to set one up for you.

If you are thinking of buying or selling real estate in South Orange County, it would be my extreme pleasure to be at your service.

Send me an email ( agent.BobPhillips@cox.net ) or give me a call.

Bob Phillips, Altera Real Estate, 949-643-2100.

Thanks for reading.