Question: Is the housing market off life support and breathing on its own?  

Possible Answers: Maybe - I think so - Could be - I have no idea !!

What do the "experts" say? Here is a random sample from the past few months:

Families lost 40% to the recession - Federal Reserve.

Half-off Sale in Beverly Hills, $68.5 million list sells for $34.5 million.

Luxury Builder Toll Brothers will construct 2000 units in Orange County, California - Los Angeles Times.

Prices up, sales fall for existing homes - National Association of Realtors.

Underwater borrowers owe about $1.2 trillion more than what those properties are worth - Zillow.

New home sales highest in two years - U.S. Commerce Department.

Consumer spending flat - U.S. Commerce Department.

 Most of these headlines were explained in a way best summarized by Stuart Gabriel, Director of UCLA's Ziman Center for Real Estate:

"The pieces of the housing recovery are falling into place... but a healthy recovery will require improvements in jobs, incomes and consumer confidence, and those underpinnings don't look as strong as they did just a few months ago." June 27, 2012.

In short, "It's the economy, stupid."

                                            #

In talking to many of you who receive this Newsletter, there are pockets where real estate activity is high and multiple offers commonplace. Prices are rising. This is a great sign. But a lot of pain still exists out there. For example, Suna Capital 's list of the top 10 foreclosure cities has 5 in the Western states:

#7 Phoenix-Mesa- Scottsdale, AZ - 1 in 313 homes.

#6 Salt Lake City, UT - 1 in 309 homes.

#4 Sacramento-Arden-Arcade-Roseville, CA - 1 in 277 homes.

#2 las Vegas-Paradise, NV - 1 in 249 homes.

#1 Riverside-San Bernardino-Ontario, CA - 1 in 213 homes.

                                           #

In April, technology firm Ellie Mae Inc. published a report based upon statistical analysis of roughly one-fifth of all new mortgage applications nationwide. According to the study, the profile of the average successful applicant for a "conventional home purchase mortgage" was:

1. FICO credit score of 764.

2. LTV of 78% - that is, 22% downpayment.

3. Debt to Income ratios of 21% for housing expenses, 34% for total household monthly debt.

How about failing to qualify? What was the profile of the average applicant? According to Ellie Mae:

1. FICO credit score of 666.

2. 6% downpayment.

3. Debt ratios of 30% and 46% respectively.

For FHA applicants, average FICO was 701, average downpayment was 5%, and debt ratios were 28% and 41%.

This report was based on February 2012 numbers.

What does it all mean? If you are selling a property and offering an Owner Carry Back, be aware of this information and use it in negotiating terms with your buyer. If you are a buyer who falls short of qualifying for a conventional loan, ask a seller if he will consider carrying the note, understand where you fall short, and then agree to make as large a downpayment as possible that protects both of you. Your average to good credit should help with the remaining terms.

                                          #

"Life is not so short but that there is always time for courtesy."

 Ralph Waldo Emerson.

Sincerely,

Denny Stanz

760-245-5366
760-245-5367 fax
dennystanz@verizon.net
www.CaliforniaNoteBuyerLLC.com