Interesting times out there. I just got back from a Foreclosure Crisis Town Hall meeting up in Riverside with Assemblymember Ted Lieu. Assemblymember Nestande was a co-sponsor of the event but was not in attendance.
You might remember Ted Lieu recently for ABX2 7 – that was the one where the headlines trumpeted a ’90 Day Moratorium on Foreclosures’ but four paragraphs in you found the text that said it didn’t apply to over 90% of the lenders in California. But everybody remembers the headlines and figures we got a reprieve until September 15. Wrong. Lieu told us today he was pleased to get 90% compliance with the bill. If you’re confused, refer to that other 90% in the previous line – they were already comlpliant before the bill. But it was the catchy headline – ’90 Day Foreclosure Moratorium’ that created another artificial barrier to returning to a normal market. IMHO
According to a recent statement released by the HELP Program, Riverside County was hit by 16,829 NOD’s in the past 120 days. During that same period, 7,441 places sold. Almost 17,000! That sounds like a ton of homes, doesn’t it? And it is – that’s no joke.
But talk to any Realtor® in the region and you hear the same story – NO INVENTORY. How many office stories have you heard that involve 21 or 43 or 97 offers on a home, 27 of them cash? Even discounting for multiple-buyer offers, it looks like we could absorb a pretty big hit quickly and without major impact to our median price level. Maybe.
But nobody can tell you what rathole those foreclosed homes are disappearing down. Our market is running contrary to what a lot of the country is experiencing right now. Our prices locally have been stable for months, our inventory is at unhealthy low levels – 1.8 to 2.2 months and record sales volumes dating to last September, have been slowed by the lack of homes to sell. The elusive ‘shadow inventory’.
In addition to the much deserved savaging the banking industry, Lieu’s agenda included an opportunity to take questions and many of these were sad. Sometimes we tend to look at the numbers for what’s happening in the market. Numbers like tens of thousands of homes, 100,000’s of thousands nationwide – trillions in bail-outs, but each of those numbers, at a micro level, is a family down the block or maybe even closer to home. And several of them were heard today. One gentleman enumerated a litany of obfuscation by one of the nations largest banks, others spoke of the ‘limbo’ they seem to descend into – with no help in sight, a confusion of solutions or lack thereof, and being prey to every scam artist and grifter that can afford a phone line or postage stamp.
Lieu was aware of these problems and more. He is targeting the lending industry with performance-specific incentives tied to better response on shorts-sales and loan restructure. One of the problems here-to-fore has been that most of the problems in the mortgage crisis have been engineered by just a very few banks and they are federal banks. As we’ve repeatedly seen in the real estate industry, they frequently urinate on our state laws and contracts with impunity. Well tell me I’m lyin’ on that.
But Lieu is trying a work-around. He acknowledges it will be an uphill battle but he feels the time is right to enact bills to provide more relief and force the banks to be good citizens and willingly give of their resources and assets for the benefit of those who can no longer fulfill their contract for a variety of reasons. I’m not sure I agree with his premise and will wait to see more of this new legislation.
When National Association of Realtors® Chief Economist Lawrence Yun spoke with us at GAD Institute last week he specifically noted that California appears to have turned the corner. Prices have stabilized across the state, sales for the first quarter were way up which has driven inventory to it’s lowest level in years – we appear to be through the worst of it. Yun even forecast that California MIGHT see appreciation of between 4% and 5% in 2010. But that’s just Ole Larry talking, you know.
So we might be throught the worst of it UNLESS, of course, some mis-guided legislation comes out that forces banks to pull back, seeks to inject additional government intervention at a state level or inadvertently extends the length of time this cycle lasts. And don’t tell me they’re not capable of screwing up a two car parade.
To date – of the billions and billions of dollars spent on a variety of alphabet bail-outs, estimates range from 1.5 to about 3% of applicants actually successfully completing a loan mod through GOVERNMENT run programs like the much touted Making Home Affordable program. That’s abysmal!
Banks are either incompetents overwhelmed by the onslaught or brilliantly involved in some vast worldwide conspiracy to withhold homes from the market. I don’t have the answer to that one. I’m not sure Assemblymember Lieu does either but I applaud him for his efforts to bring this to the community. There were several people in attendance today who may have been helped by one of the federal, state and local program volunteers at the session. And that’s how this will happen – not in an avalanche, but by helping a few people at a time into and out of their homes. That’s our business. Can we just get politicians the hell out?
Well. That’s just my opinion – I could be wrong.