Home values in Los Angeles,....are expected to dive another 20.2% over by June 2010,....

Homes: About to get much cheaper
By Les Christie, CNNMoney.com staff writer
On 11:07 am EDT, Tuesday October 20, 2009
Buzz up! 1270 Print.If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope.

Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said.

In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years.

If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011.

In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out.

Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%.

Prices had stabilized

The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%.

Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however.

"I'm afraid Case-Shiller may be just a temporary reprieve," he said.

He pointed out that the tax credit for first-time home buyers helped support prices during the three months of Case-Shiller gains. By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors. But the market assistance ends when the credit expires on Dec. 1.

Hunter also sees a new wave of foreclosure problems coming from higher priced loans and prime mortgages. He expects a high failure rate for option ARM loans that were issued to prime customers so they could buy homes in bubble markets, such as California and Florida. In those areas, prices for even modest homes had skyrocketed.

Winners

A handful of metro areas will buck the trend, according to Fiserv. Six markets will remain flat, and 33 will actually post gains. The biggest winner will be the Kennewick, Wash., metro area, where home prices have ramped up 8.9% over the past three years and are expected to increase another 3.4% by June 2010.

Fairbanks, Alaska, prices are anticipated to rise 2.5%, while Anchorage will climb 2.1%. Elmira, N.Y., prices may inch up 1.8%.

The nation's biggest metro area, New York City, will underperform the nation as a whole over the next two years, according to Fiserv. Prices, which have already fallen 21.7% to a median of $375,000, are expected to fall 17.4% by June 2011.

Home values in the nation's second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. Chicago prices, which have fallen 25.2% to $227,000, will drop only 4.1% over the next 12 months and then starting to climb.

The Detroit metro area now has the dubious distinction of having the lowest home prices in the country. Prices have dropped 51.7% to a median of $50,000. They're expected to fall another 9.1% and then stabilize.

Low rates keeping homes affordable

Low rates keeping homes affordable

INLAND REGION: The market is still shaky, but mortgage applications and refinancings are on the rise.

Falling interest rates are fueling a rise in home mortgage applications and refinancings in the Inland region, though experts aren't yet ready to declare the beleaguered local housing market on the road to full recovery.

Virginia-based Freddie Mac, a government-backed corporation that provides mortgage capital to lenders, released a study Thursday showing 30-year fixed-rate mortgages averaging 5.08 percent, down from 5.14 percent a week ago and 6.35 percent a year ago.

For full story, go to http://www.pe.com/business/local/stories/PE_Biz_S_mortgages04.38b40b4.html

Tips for First Time Home Buyers

So you’re thinking about buying your first piece of real estate? Before you even begin looking at a potential property, you need to make sure you can qualify for a mortgage. The following are some useful “tips for first time home buyers
.”

The first thing any potential homeowner should do is obtain a free credit report, either from Annualcreditreport.com or via a free trial website.

Once you’ve got your credit report at your fingertips, analyze it and determine what your monthly expenditures are. You will see a monthly payment next to each liability on the credit report. Add up all those payments and jot it down somewhere. These are your total monthly liabilities and will be important when determining how much you can afford.

Also scan the credit report for derogatory accounts and clean them up as best you can. If you’ve got delinquent accounts, resolve them. If you see collections, call the companies the disputes are with and do your best to make a deal. If everything looks good, you can move on. If not, you may want to repair your credit to a mid-score above 680 or higher before beginning your property search.

*One important note: Do NOT open any new credit accounts or make any large purchases using your credit cards within a few months before applying for a mortgage. This includes buying that plasma screen on a Best Buy card for your new crib. It can drive your credit score down needlessly which will result in a much higher interest-rate.


Now that you’ve got your credit in order, it’s time to figure out how much you can afford. Most banks and lenders allow borrowers to have a debt-to-income ratio up to 45%. Read more about debt-to-income ratios.

By taking your total liabilities and adding it to a monthly housing payment, and dividing that number by your monthly gross income you’ll come up with your DTI.

Let’s look at an example:

$10,000 monthly gross income
$1,500 total monthly liabilities

We know from the above example that your total monthly payments can’t exceed $4,500, or 45% DTI based on your $10,000 gross monthly income.

So if you already have $1,500 in total monthly liabilities, you can add a housing payment of $3,000 a month. This doesn’t leave much room in this market.

Let’s look at the same example with a housing payment, including taxes and insurance based on California rates:

$550,000 purchase price
$440,000 loan amount
6.25% interest rate
$2291.66 monthly interest-only payment
$572.92 monthly taxes
$128.33 monthly insurance
$2,992.91 total monthly housing cost

In the above scenario, a potential homeowner making $10,000 gross income a month can barely afford a $440,000 loan paying the interest-only payment. What does this tell us?

It tells us that there are a ton of homeowners out there living paycheck to paycheck and overstating income to qualify for homes they simply can’t afford. At least not in the eyes of banks and lenders that require borrowers to keep their DTI below 45%.

So now you’ve got an idea of what you’ll be able to afford. There are a number of mortgage calculators out there that will give you a better idea of what you can qualify for.

Now that you’ve got your credit profile in check and you know what you can afford, you’ll need to make sure you’ve got a verifiable housing history and seasoned assets.

Most lenders ask that you verify your last 12 months housing history. You can do this with cancelled checks or a VOR (Verification of Rent) from your landlord. This is important to determine the payment shock effect on the borrower.

Liquid assets are always helpful when applying for a loan, and are almost always a necessity for a first-time homebuyer. Make sure you have an account with at least two months PITI (Principal, interest, taxes and insurance) available. Also make the money in said account has been there for at least two consecutive months to ensure that it is seasoned. Banks and mortgage lenders don’t give much weight to unseasoned assets, as any friend, relative, or even a broker or loan officer can easily dump assets into your account before you apply for a mortgage to boost your net worth.

Now that you’re prepared, it’s time to be vigilant and proactive. Avoid predatory lenders and do your interest rate homework. Check out a rate sheet from the bank or lender that you’re being quoted from. Ask what the rate adjustments are. Ask if the loan carries a prepayment penalty and for how long? Get all the facts before you sign anything. And once you like it, lock it!

With all this preparation behind you, the loan flow will be a comfortable process with few surprises. It might not be perfect, but if you follow these rules you will definitely save money and reduce stress!

Let’s review the tips for first time home buyers in a condensed format:

- Order a free credit report
- Review your credit and clear up any derogatory accounts
- Do NOT open any new credit accounts or make any large purchases
- Calculate your total monthly liabilities
- Figure out your DTI and what you can afford
- Make sure you have a 12-month verifiable housing history
- Make sure you have a seasoned asset account with at least 2 months PITI
- Do your interest rate homework
- Lock your interest rate


Need some loan advice..call Angelica

310 665 8688

want an agent to help

call me..818 422 2040

Home Sale recovery??

"The latest encouraging data came May 4, when the National Assn. of Realtors said its index of pending home sales rose 3.2% from February to March.

First of all, remember what pending means. These are homes that have gone under contract -- but have not actually sold. The Realtors' association says that based on historical data, the pending sales numbers do closely track future sales. But the correlation is much stronger in the year-over-year data than it is in the month-over-month numbers. The increase over March 2008 was much more modest, just 1.1%."

This is not a recovery....

Cheaper Homes Selling Well

More than 40% of all sales nationally -- is being driven by banks unloading foreclosed homes at distressed prices. Higher-end homes are not selling anywhere near as well as cheaper homes. That's not an indicator of a truly healthy housing market.

At the Milken Institute's Global Conference last week in Los Angeles, leveraged-buyout king Thomas Lee pointed to a slide showing the large number of "Alt-a" adjustable-rate loans due to reset in coming months. These loans -- made to buyers with decent credit but who were required to show less documentation of their income -- could default in larger numbers, to the extent that they reset at higher rates.

Ok here comes the truth...

Another 10% to Go?

Donald Brownstein, chief investment officer for money manager Structured Portfolio Management, told Milken conference attendees that his internal calculations show home prices have to fall about 40% off their peak before hitting bottom. The latest Standard & Poors/Case-Shiller home price index numbers showed a 30% decline from the peak in the summer of 2006, meaning we still may have a ways to go.


This edit of an article posted on my website is the subject of my concerns...and like I said before...

the trump is right.

Home prices not low enough....

This is ridiculus..yes stupid and greed riden. Let's rant...yes let's grab the pitchforks anf flame throwers..err ok molotov cocktails and show the banks why they are wrong about this market....OK..Ok..I see home sales in general trying to inch upwards the NAR(National Associations Of Realtors) says like 3 %..that's proproganda to hype peoples expectations...This is what's really going on..Banks don't want to lend in the Los Angeles area more than 250K... that's where my approved clients are qualifying at.

In Los Angeles..250K buys you in 8 out of 10 of the properties I see, homes listed in areas which were highly inflated before the crash...so the banks are still getting 100% mark up from pre 2000 year level values...(year 2000..125K, year 2005..500K.. now 250K) Ok and if you look at these properties you'll need a contractor to fix something..Get a home inspector and you see..this is one big scam....the best thing to do is to move out of LA...or buy some dirt and really get your money's worth. I could go on but the gist of the story is...you cannot beat the bank no matter what. they will always come out on top.