Poway

Monday Morning Coffee

Successful Haircut!

Good morning,

I hope you had a great weekend. Saturday was a milestone of sorts as it is the first time I took Zach for a haircut where he didn’t completely freak out and yell “Done! Done! Done!” from the moment we walked it. I was so relieved he got his own hot dog at Costco. Well, we were supposed to share it, but he figured out if he tore the bun and gave it to me, he could have the hot dog to himself.

Saturday evening we went to Rythm and Vine with our friends John and Jean. It was a Boys & Girls Club fund raiser with local restaurants, wineries and breweries sampling their specialties.

The market continues to be very hot in advance of the Federal Tax Credit expiring, with lower priced homes receiving multiple offers and getting bid up over asking price. Everyone is working like crazy to try and help people get into homes and hoping it doesn’t completely slow down once we get to May.

We were able to get two of the four homes I wrote about last week on the market. The other two will come this week. Here are the ones that we opened up for the first time on Sunday:

4 Bedroom in Garden Gate at 4S Ranch. This is a 2,317 sf Plan 3 home with a full bedroom downstairs, an oversized granite island in the kitchen and a great southern exposure with a view of Black Mountain.

3 Bedroom in Garden Gate at 4S Ranch. This is a 1,914 sf Plan 1 home with an office and full bath downstairs (the office can be used as a guest bedroom with an armoir). The highlight of this home is that it is the largest lot in Garden Gate and has a sunset ocean view (the ocean is a ways a way, but on a clear day, you can definitely see it).

That’s it. Will have 3 more for you next week.

Enjoy the Coffee!

A Different Kind of Athlete

by: Jaye Lewis, , Source Unknown

We found out that Jenny was hearing impaired, when she was four and a half years old. Several surgeries and speech classes later, when she was seven, we found out that Jenny had Juvenile Rheumatoid Arthritis.

She could not put pressure on the heels of her feet, so she walked on tiptoe, and when the pain became unbearable, I carried her. Jenny was fortunate, though, because she did not suffer the deformities, often associated with JRV.

All through grade school, and on into high school, Jenny suffered, yet never complained. She took her medicine, and I would often wrap her feet in steaming towels, and hold her until the pain eased. But, as soon as she could withstand the pain, Jenny, immediately, carried on, as though she were pain free.

She wore a smile on her face, a song on her lips, and a love and acceptance of others, that was, simply, amazing. I don’t remember her ever voicing self-pity. She ran, when she could run. She played when she could play, and she danced when she could dance. And, when she could do none of these things, she took her medicine, and she waited until she could.

Jenny, a beautiful blonde, with warm brown eyes, was never a cheerleader. She never competed in a sport. She could not even take part in a Gym Class, though she took the same health class four years in a row, just so she could pass with a substitute credit each year. She joined the band. She won a place in the Governor’s School for the Arts; yet, no one in the Charleston, South Carolina School System knew what to do with Jenny. The perimeters were, simply, not in place to deal with a student, who was both active and handicapped.

Jenny continued to have one surgery after another on her ears, all through school. Her hearing improved to 60%, and she taught herself to read lips. She carried a pillow to school, all through high school, and once, when she suddenly experienced crippling pain, her friends scooped her up, and carried her from class to class.

She was totally mainstreamed, popular, and funny, attending every football game, cheering the team on, carrying her pillow everywhere she went, so that she could cushion the pain, when she sat down. Then came her senior year. She would be considered for scholarships; however school activities, especially sports, could often mean the difference between receiving an award or losing out.

So Jenny came to a decision; and in her quirky, unorthodox manner, she began to bombard the high school football coach. She begged. She pleaded. She promised. She got her best friend to sign up with her. Finally the coach gave in, with the admonition, “If you miss ONE game, you’re out!” So, Jenny became Manager of the Garrett High School Football Team.

She carried big buckets of water to her teammates. She bandaged knees and ankles before every game. She massaged necks and backs. She gave pep talks. She was continually at their beck and call, and it turned out to be one of the best years for Garrett High School Football Team, in its twenty-five year history. Often Jenny could be seen carrying a bucket of water in each hand, nearly dragging them, along with her pillow tucked under her arm.

When asked why he thought that the team was winning all their games, even in the face of injury, one linebacker explained, in his soft, Charleston drawl, “Well, when you’ve been knocked down, and you can’t seem to move, you look up and see Jenny Lewis, limping across the field, dragging her buckets and carrying her pillow. It makes anything the rest of us may suffer seem pretty insignificant.”

At the Senior Awards ceremony, Jenny received a number of scholarships to College of Charleston. Her favorite scholarship, however, was a small one from the Charleston Women’s Club. The President of the Women’s Club listed Jenny’s accomplishments, starting with her grades, and ending with an excited, “…and the first girl to letter in football, in Garrett High School history!!”

Have a Great Week!

Scott Voak

858 688 0189

Monday Morning Coffee

Good morning,

Hope you had a great weekend. We had the neighborhood garage sale and spent a good part of the week organizing it and then only sold about 10% of our stuff. That’s a lot of work for $70! Of course to get it in the monthly paper I had to set the date back in February and did not realize that it was Spring Break. My mom said I was smart, but then again she was my mom.

I reviewed the Fourth Quarter 2009 Mortgage Metrics Report (so you wouldn’t have to read all 53 pages) and the write-up is on my blog. Highlights are that delinquencies are still increasing, but homes in foreclosure are falling while the number of seriously delinquent homes increased as banks were keeping homes in the delinquent stage longer while trying to work out a modification prior to foreclosing. One stat that jumped out at me – out of all the 3-month trial modifications done under HAMP in the second and third quarter of last year, only 6% were converted to permanent modifications.

Market-wise (homes, not garages) we did see a 1/4 point rate increase last week. This is in line with what I have writen about over the last couple of months: Now that the Fed is not buying mortgages, we are going to see some level of increase in rates. My guess is we hit about 6% this year on the 30 year. That wouldn’t be to bad, but I am worried about the expiration of the home buyer’s tax credit. To capture the federal version of this, buyers must be in escrow by April 30 and close by June 30th. Remember Cash for Clunkers? It did a great job of driving sales for a couple of months and then the couple of months afterwards car sales bottomed out. Since there has been a large tax incentive for buyers to buy now, most people who are interested or capable of buying in the next 6 months are trying to do so now – I am a little concerned about demand this summer. In fact, there is a combination of factors that is concerning:

Interest rates rising due to the Fed not buying mortgages. Each 1% rise in rates eliminates 10% of a buyer’s purchasing power.
Expiration of the tax credit. This has been the major factor in 60% of first time home buyer’s purchases (per NAR).
Banks are starting to release foreclosures. We have been negotiating for bulk REO purchases and it now looks like they are available – this will be an increase in inventory as the top two items slow demand.
Defaults are still rising and modified loans are still re-defaulting at a rate of over 50%.
While the employment picture is not worsening, the actual unemployment rate is not improving – people still need jobs.
I read that the administration wants to increase taxes next year by about 3%. President Obama’s Chair of the Council of Economic Advisors wrote a paper that each 1% increase in taxes exerts a 2% drag on GDP. That would be a 6% drag on GDP if it happens and since the stimulus is winding down and GDP is growing less than 6%, it is possible we will hit another recession.

So, that has me concerned about the future; but for now, the market (especially under $650k) is very hot. I see a lot of people trying to get into escrow by April 30th to get the tax credit. Therefore, I am advising all my clients who are thinking of selling to do so ASAP. People are paying $10-$20k over market price and financing that amount over 30 years in order to capture an $8k tax benefit now. So, naturally, we have a few new homes available this week:

Poway - A very elegant 4 bedroom, 3 bath, 3,600 sf single story with a pool and to-die-for sunset view in the Silver Saddle area of north Poway. This home will go on the market Friday and will be priced at $1.25M and is definitely worth a look if you want a fabulous entertaining home with a lot of privacy and phenomenal views.

4S Ranch – We have two coming on the market in 4S.

First is the one I wrote about last week that is 3 beds plus an office and a phenomenal view. We were delayed a week and will come out with that on Thursday or Friday. I expect it to be priced around $589k

The second one is a model match to the 2300sf home I wrote of last week (yes it’s in escrow already). This one is not quite as upgraded but has southern exposure and a peek of the sunset view. It should also be on the market Thursday and will be priced in the low to mid $600k range.

San Marcos – I wrote of this last week. Larger home with a great yard/pool and fantastic view. Spring Break delayed this one also and we are set for photos on Thursday and will have it on the market Friday afternoon.

Fallbrook – This is a dual master condo that is a short sale. It is off of Gird Rd in south Fallbrook. This one will not hit the market until next week.

Sorry for the length. Enjoy the Coffee (it’s short this week to offset the rest of the email)

Perspective

David, a second-grader, was bumped while getting on the school bus and suffered a two-inch cut on his cheek. At recess he collided with another boy and lost two teeth.

At noon, while sliding on ice, he fell and broke his wrist. Later at the hospital, his father noticed David was clutching a quarter in his good hand. David said, “I found it on the ground when I fell.

This is the first quarter I ever found. This sure is my lucky day.”

Michael Hodgin

Have a Great Week!

Scott Voak

858 688 0189

Treasury Department Foreclosure Report

Foreclosure and Mortgage Deliquencies

Q4 2009

I finally finished the OCC and OTS Mmortgage Metrics Report for the fourth quarter of 2009 (I know you’re jealous at how much fun I get to have). The report looks at all first liens held by most of the largest mortgage servicers. It covers almost 34 million loans totaling almost $6 trillion. It is the raw data before it gets spun by the press or politicians. Here are some highlights and lowlights from the report:

Delinquent Mortgages

Mortgage performance declined for the seventh consecutive quarter. Delinquent mortgages and mortgages in foreclosure rose to 13.6% of all mortgages (once again, just talking about first mortgages).
The percentage of mortages 30-59 days late stayed stable, most of the increase was in seriously delinquent mortgages. This may be a positive as it is showing that the pace of new delinquencies is not picking up, and that loans are staying seriously delinquent longer which is an indication that banks are working longer to modify before moving to foreclosure.
Option Arms continue to be the worst performing loans with only 662% current.
There was a large increase in the number of seriously delinquent prime loans as the number jumped fro 838k to 976k in one quarter. Almost 1 in 25 prime borrowers is more than 60 days late on the mortgage.
Overall, 7.1% of all mortgages are seriously delinquent (60+ days late) and an additional 3.4% are 30-59 days late.
Although the Sub-Prime and Alt-A loans have the highest percentage of delinquencies, the Prime loans have the highest number – this is important as if the percentage of prime loans going bad keeps rising it has a real chance of bringing the market down again. However, these are also the borrowers that have the best chance of recovering if employment and the economy continue to recover after the stimulus expires.

Home Retention Actions

The number of home retention actions slipped by 19.1% compared to the third quarter. This is probably likely to the fact that HAMP received so much publicity in the third quarter that most people who were eligible applied then.
Discouraging number on the HAMP program was that although 349k people had entered the 3 month trial period in the second and third quarters, only 21k of those received permanent modifications during the fourth quarter. That’s about a 6% conversion rate (it’s too early to have data to see how many re-default). If that is an accurate number (it is possible that many were delayed past 3 months by paperwork issues, etc.) then the program is really a failure. Let’s hope the numbers get better.
More than 50% of HAMP trial plans and modifications are for prime borrowers
There were almost twice as many home retentions started as foreclosures (this would also explain the increase in seriously delinquent mortgages as they stay delinquent until fully modified).
The percentage of loans modified that had principal reductions fell to 6.8%. Rate reduction and capitalization (adding your late payments back to the loan) were the most common modifications.
HAMP modifications only included principal reduction 0.1% of the time, but they did utilize principal deferral 26.8% of the time.
42% of all modifications decreased payments by 20% or more – this is important to the borrower being able to keep up with payments on the modified mortgage.
82% of HAMP modifications decreased payments by 20% or more.

Modified Loan Performance

The performance of modifications continues to improve over time:
- Only 33.5% of loans done in the second quarter of 2009 were 60+ days late six months later compared to 42.7% of loans in the first quarter.
- Only 14.7% of loans modified in the third quarter were 60+ days late 90 days later as compared to 30.8% of the loans done in the first quarter of 2009.
Loans 30+ days late were obviously a higher percentage; 47.5% after 6 months for loans modified in the second quarter and 29.8% after 3 months for loans modified in the third quarter. Both of these are significantly better than they were prior to the second quarter.
The highest Re-Default rate is for Government-Guaranteed loans (FHA, VA, etc.) with 67.8% 60% days late a year after modification (these are obviously reflecting pre-HAMP modifications as none have been modified for a year yet).
One reason to be a little more positive about HAMP modifications (if more get completed) is that they seem to be reducing payments by 20% or more, and historically loans that have payments reduced by 20% or more have a re-default rate of only 39.8% a year later (as opposed to 67% if the payments are unchanged).

Foreclosures

Newly initiated foreclosures declined in the 4th quarter as homes are staying in the seriously delinquent phase longer as lenders are working harder on modifications.
Completed foreclosures increased by 8.6% over the previous quarter and 35.7% higher than a year ago.
There are almost 4x as many foreclosures as short sales and Deed-in-Lieu actions, although short sales are up 96.8% over a year ago.
7.8% of all subprime mortgages are in foreclosure while only 2.3% of prime mortgages are in foreclosure (however since there are more prime mortgages, there are actually more total prime loans in foreclosure than subprime).

A couple of key numbers to look at next quarter will be:

How many of the HAMP trial periods get converted to permanent modifications.
If the loans that are seriously delinquent transfer into the foreclosed or modified category.
If loans modified in the third quarter of 2009 and later continue to have a lower re-delinquency rate.

I expect that the data for the first quarter will continue to improve and the real questions will come with the second and third quarter data as that data will reflect the market after the stimulus has expired.

Monday Morning Coffee – Rock ‘n Roll Edition

Monday Morning Coffee

Post Earthquake

Good Morning!

Hope your Easter Eggs didn’t get scrambled in the earthquake. Outside of the Rock and Roll interuption, we had a nice Easter with friends coming over for dinner (we did a Prime Rib Roast that was so good I had to post it on Facebook). Zach enjoyed the day – he doesn’t understand Easter yet, but anytime he gets a stuffed animal and chocolate it’s a good day.

If you want to check out the San Diego sales statistics for March, I took an early look on the blog.

I saw a couple of interesting articles this week that put forth the premise that the Fed exiting support of the mortgage market may not be that large an issue. The arguments for this are twofold:

Since the Fed has been buying all the mortgages, individual and institutional investors have been only able to buy T-Bills or corporate bonds. The feeling is that mortgages are more secure now because the qualification standards are higher (not too sure about this as we are seeing FHA hand out pretty easy money) so investors will buy the mortgages for the higher return than T-Bills.
Since the number of homes being sold is less than during the bubble and most of them are re-sales (as opposed to new construction), there will not really be that much additional loans needed (because when a buyer takes out a new loan on a re-sale house, the seller is paying off a loan).

These both are strong arguments and help explain why we have not yet seen rates rise as anticipated. The factor that could mess both arguments up is if a wave of new foreclosures hit the market – and though it is expected, it has not materialized yet.

We started marketing two homes last week that I mentioned in last Monday’s Coffee. The sites are up now:

4 Bedroom (1 bedroom downstairs) - 3 Bath – 2,344 SF home on Baylee Lane in Garden Gate (south side of 4S Ranch) $619000

3 Bedroom – 2.5 Bath – 1,644 SF home on Manassas on the south side of 4S Ranch (front door is on 4S Ranch Pkwy) $525,000

We have two more coming up in the next couple of weeks in Garden Gate. One is 1900+ sf with a sunset view and the other is 2,344 sf with a view of Black Mountain. More on those next week.

Also, if you are looking for a view home with a pool in San Marcos, we will have one near the end of the month.

That’s it – Enjoy the Coffee!

Winning

His mother told us the story the day after.

Kenneth was in junior high school and was excited and eager about participating in a day of Special Olympics events. While his parents watched expectantly from the stands, he ran, and won the first race. He was proud of his ribbon and the cheers from the crowd.

He ran in the second race. Just at the finish line, when he again would have won, he stopped, then stepped off the track. His parents gently questioned him. “Why did you do that, Kenneth? If you had continued running, you would have won another race.”

Kenneth innocently replied, “But, Mom, I already have a ribbon. Billy didn’t have a ribbon yet.”

Clifford and Jerie Furness

Have a Great Week!

Scott Voak

858 688 0189

San Diego Home Sales – March Numbers

San Diego Resale Activity

March, 2010

An early look at San Diego home sales for March shows sales almost even with last year (2664 in 2010 vs 2717 in 2009). As 2010 numbers are preliminary, I expect that by the time all San Diego Real Estate agents convert their escrows to solds, the 2010 number will by higher than 2009 by a small number.

The number of homes actively offered for sale in San Diego at the end of March fell by 37% when compared to a year ago. This number has been consistent all quarter but will shrink dramatically next month and then swing positive in May as we are entering the period where the inventory had it’s large contraction last year. Current inventory is sitting at 10,011 homes (up from 9,584 in February).

Homes in escrow are almost identical to last year and about 8% above February.

I would expect that this month we will see closings in the 2700-2900 range, above last year as buyers rush to take advantage of the dual state and federal tax credits before the federal credit expires at the end of the month. Because the $8,000 federal credit is good for buyers who are in escrow by April 30th, I expect the number of homes in escrow to rise as we are seeing multiple offers on all reasonably priced listings under $650k. I believe the overall result will be solid sales and prices in April and May with some softening into the summer (when compared to historical numbers – June may have more sales than April, but not as many more as is typical)