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Californian foreclosures up 22%
According to data released by ForeclosureRadar.com, foreclosures in California increased 22.24% from September to October. Last month’s foreclosures increased 20.95% from October 2008, which were 42.56% below California’s peak month of July 2008. But since then, the inventory of real estate owned (REO) properties has grown 131.36% in California. “While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction despite the increase this month,” said Foreclosureradar.com CEO Sean O’Toole. “The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo,” O’Toole added, “some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.” The number of foreclosures initiated in October remained level with September levels but this is due in large part to recent legislation enacted in California
that will temporarily slow the foreclosure process. The majority of properties foreclosed on in October were originally purchased with mortgages originated between January 2005 and December 2007.
RCI finds short sales hurdles
According to the latest Realtors Confidence Index (RCI), one out of 10 recent home sales was through a short sale, but realtors are concerned about the hurdles buyers face in short sales. The primary reasons that some short sales fail include an incomplete short sale package, an offer that is too low, and inaccurate appraisals. According to Lynn Madison of the National Association of Realtors (NAR), buyers who are good candidates for short sales are very patient – it can take some lenders four months or longer to approve a short sale – have their financing in order, and don’t have any contingencies in their purchase offer. “Short sale buyers need to have the time to be able to wait for the lender’s approval; some lenders get several hundred contacts every day,” said Madison. “Buyers must also be willing to make an offer that has a reasonable chance of closing and take guidance from their agent. If the offered price is too low, there is a good chance the lender won’t approve the contract.” Charles McMillan, President of NAR, says “As short sales become more commonplace, both buyers and sellers need the help of seasoned, experienced professionals to help them navigate the complexities of a short sale transaction." Hey, that's why we're here!
Mixed news on retail sales
To hear the mainstream media tell it, today's retail sales report by the Commerce Department is all joy and happiness, but it's a bit more complicated than that. The good news is that total retail sales are up by a larger than expected 1.4% in October, much more than the 0.9% economists were expecting. The bad news is twofold: when autos are excluded, sales only rose 0.2%, less than the 0.4% economists were expecting; and there was a sharp downward revision to sales in August, from a -1.5% decline to a -2.3% decline. Sales at non-store retailers rose 1.0%; sales at restaurants and bars rose 1.2%, the largest monthly gain since February; and sales at clothing, department and general merchandise stores all rose modestly, by less than 1%. Sales declines included furniture, electronic and building material stores (2.4%). Lowes, for example, the No. 2 home-improvement retailer, said its third-quarter profit fell 30 percent as customers continued to delay large purchases amid a weak economy. Sales at sporting goods and hobby stores fell 1.2%, the largest decline since May. Gasoline sales were unchanged in the month. Over 2009, total retail sales are down 1.7% while sales excluding autos are down 2.6%.
NAR - issues with second home sales
According to the 2009 National Association of Realtors (NAR) Profile of Home Buyers and Sellers, 2 percent of recent home buyers own one or more vacation homes, 4 percent own two primary residences, and 8 percent own one or more investment properties. There are 8.1 million vacation homes and 40.5 million investment units in the United States, compared with 75.5 million owner-occupied homes. In 2008, vacation homes accounted for 9 percent of all sales while investment homes were 21 percent of transactions; 2009 data will be published next spring. But the there are some problems evolving with it. Second home specialists express widespread concern about appraisal problems resulting from the Home Valuation Code of Conduct implemented in May.
The increased use of appraisers from outside their area of expertise, who generally don’t have access to detailed local market information, often results in low valuations and cancelled sales. Another problem is jumbo loans in resort areas, with lenders requiring large downpayments and “over documentation” for well-qualified buyers. Various local issues are also challenges, including laws prohibiting waterfront property development beyond the high water mark; valuation of boat docks; and points of sale enforcement codes that require various homeowner improvements, often related to energy efficiency and environmental impact. Despite these challenges, demographic analysis indicates the long-term demand for second homes looks favorable because there are large numbers of people in the prime years for buying a second home. Annual NAR survey results show the median age of a second home buyer typically is in the range of 45 to 48.
Credit cards, defaults down, delinquencies up
Several credit companies reported credit card defaults fell in October, but Capital One and Discover said delinquencies rose. Capital One's charge-off rate for U.S. credit cards — loans the company does not expect to be repaid — fell to 9.04 percent in October from 9.77 percent in September, the company said in a regulatory filing on Monday. Discover said its charge-off rate declined to 8.54 percent from 8.69 percent. The drop in defaults sent shares of Capital One up 2 percent in premarket activity. But delinquencies, an indicator of future credit losses, resumed an upward trend in August and climbed more than expected in September, signaling bad loans will rise in coming months and peak later than originally anticipated. Credit card delinquencies rose as more Americans lost their jobs. Capital One's late payments went up to 5.72 percent from 5.38 percent, while Discover's delinquencies rose to 5.72 percent from 5.57 percent. Last week, Capital One Chief Executive
Richard Fairbank forecast that charge-offs will keep rising and remain elevated throughout 2010, hurt by weakness in the housing market and job losses.
Too big to fail? Fail anyway
Kansas City Fed President Thomas Hoenig says that the U.S. economy still faces "significant weaknesses" and urged policymakers to allow large financial institutions to fail if needed. Data showed last week that U.S. consumer sentiment had soured in early November on grim job prospects while a larger-than-expected trade deficit had analysts scaling back estimates for third-quarter U.S. growth. "As we look at reform and the way forward I think the most important think we need to do is to make first of all an accurate assessment of fundamental weaknesses in our financial system and then begin to create better foundations... Our institutions must be allowed to fail no matter what their size or political influence." The Fed has drawn sharp criticism from some lawmakers for its handling of the financial crisis, particularly its controversial decisions to extend emergency loans to large firms such as insurer AIG, which it did not directly supervise. "Our reluctance to deal with 'too big too fail' provides these largest institutions with important advantages over any competitors who are not seen as important," Hoenig said. Really? You don't say.
Above Post Written by: Chris Mclaughlin with Short Sale Riches.com
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