Kris & Kim Darney

Something for you to think about when your trying to figure out how to keep that beautiful home you purchased a few years ago. If your like most homeowners, when you purchased your home you put a good chunk of money down. Oh and of course it didn’t stop there….maybe a new kitchen, bathroom updates and some landscaping….bottom line you’ve got a lot into this place!

While taking a Short Sale listing the other day, in a beautiful newer housing development….

Our clients shared their story and what prompted them to turn to a Short Sale. This family was hit with a decrease in income due to the “Government” cutbacks in the husbands line of work. They really had thought long and hard about a Short Sale, and they did there homework. They had pursued all of the necessary documents for loan modification and were ready to start that when ” A light bulb” went on.

The fact that they were barely scraping by as they were making very large house payments was at the forefront of the desision. It was also a much easier decision to make due to the fact that an adjustable rate on the second was going to reset very soon.

For me, listing to the mom of several beautiful children in a big beautiful home struggle with walking away from what was going to be the home they bought to give their children a good life, send them to very good schools and keep them in a good element was heart wrenching.

You see, they had bought this home on a conventional loan, lot’s of money down and then a little later added one of those nasty little home equity loans to do some beautiful landscaping and a pool. It’s now 2009, a pay cut and over $100,000 into the home in the first few months….not to mention the down payment….

This is not an unusual story by any means, I’m sure that many people that read this will be able to relate or knows someone that is or has gone through a similar situation.

For this family the final decision to sell at Short Sale came when they realized they were not the only people in the neighborhood having to sell. Some homes already have posted NO TRESPASSING SIGNS due to Foreclosure.

They chose this neighborhood to raise their children in, they wanted a nice safe environment. Now, vacant homes were selling for less than half of what they had paid. This decline in value was not ony devastating for the homeowners that had invested so much into their dream home, but the ultimate vicim was that beautiful, safe neighborhood that their children once walked to school in everyday.

It was no longer safe for the kids, the area was crumbling around them.

That day will be one I remember, a family that was willing to sacrafice their dreams of owning a wonderful large home in the best neigbhorhood in this “High End” new development had realized that there was no loan modification program that would save “Their Neighborhood” from depreciation!

Shadow inventory is the number of foreclosed homes not currently on the market.

What this means is that when this foreclosed inventory is unleashed, prices will be pushed down much further than projections estimated. Current estimates are a continued drop of 10 to 30% through December 2010.

RealtyTrac compared these figures to it's current inventory which only reflect 30% of foreclosures were listed.*

Also, there are many foreclosure moratoriums that are simply hedging the inevitable foreclosure. (CA SB1137 is one) These homes have not been reported, but they could be double the current projections.

What does this mean?

1. Continued steep drops in home prices beyond the 10 to 30% projections
2. Banks will become property managers and begin renting this inventory to reclaim their losses.
3. The current US financial crisis is here to stay...I believe through 2012.

What I find particularly disturbing is that Wells Fargo reported record earnings today due to the resurgence of refinancing.

Is Wells Fargo hiding something...a stash of unreported or looming foreclosures?

Wells Fargo was the leader of the 80-20 loan just a few years ago.

Today's good news is tomorrows financial crisis. Spin City!

Best,

Kris Darney

Platinum Real estate

*San Francisco Chonicle

Hot off the press…According to the senior director of market economics and risk analysis for Walnut Creek-based PMI Group Inc., a mortgage investor insurance firm, was commenting during an interview Monday about PMI’s recently-released report on home prices.

La Vaughn Henry projects that the Inland Empire will see a bottoming out sometime in 2010…could be as late as December.

….More words of encouragement from La Vaugh Henry…”renewed growth will be fairly tepid” in neighborhoods across California.

Here in the IE…things are tough and once again confirmed that San Bernardino-Ontario-Riverside region ranks No. 2 out of the 10 large metro areas most likely to experience depreciating real-estate values into December 2010, according to the report.

The report’s risk index is calculated using unemployment, mortgage market, interest rate, foreclosure rate and other data.

The Miami metropolitan area is No. 1, the Los Angeles region is No 4. and the Santa Ana-Anaheim-Irvine area is No. 8.

According to Henry, heavy declines are still coming to several California neighborhoods. When asked … “Does that mean another 10 percent, 20 percent or 30 percent? Well, 30 percent is unlikely,” he said. “But it’s highly likely to be double digits.”
Another question to Henry…Once foreclosures get pushed through the market, will several home shoppers still not be able to afford home purchases because they’re weighed down with school loans, car loans and credit card debt? “That’s a valid concern,” Henry said.
“But the biggest concern in the near term is the growth in Unemployment,” he added. “Unemployment in a normal recession spikes (mortgage) delinquencies. We’re in the rarely charted territory of really high unemployment in the state.”

Here is a list of the 10 metropolitan regions most likely to experience falling home prices into December 2010.
1) Miami-Miami Beach-Kendall, Fla.
2) San Bernardino-Ontario-Riverside
3) Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.
4) Los Angeles-Long Beach-Glendale

Kris & Kim share thier Short Sale experience in a series of short videos.  They have helped families in trouble by negotiating Short Sales of proeprties that have become too much for the families to handle.  In many cases, Kris & Kim have helped these same families find homes to rent or lease…most of the families moved into much nicer homes than they sold.  Call Kris & Kim if you need help…714-615-7605.