U.S. MULTI HOUSING MARKET STRENGTH FORECAST
Top 10 Markets 2010-2014United States Overall Score* Rank

1.     Los Angeles 64.8
2.     Washington, D.C. 60.5
3.     Orange County, Calif. 60.1
4.     San Diego 58.3
5.     Oakland/East Bay, Calif. 58.1
6.     Long Island, N.Y. 56.5
7.     Atlanta 55.7
8.     Portland, Ore. 55.0
9.     Westchester County, N.Y. 54.8
10.   San Francisco 53.5

*Markets were ranked from 0 to 100 against 15 property, economic and
demographic variables.

Click here to see the original article, including their other top 10′s.  http://www.4-traders.com/GRUBB-EGRUBB-ELL-29387/news/GRUBB-EGRUBB-ELL-Grubb-Ellis-Predicts-Commercial-Real-Estate-Will-Decline-More-Slowly-in-2010-Recove-13301525/ 

SOURCE Grubb & Ellis Company

It appears that if people aren’t running, they are confused.

These discussions have prompted me to delve into Oakland’s inventory under $100k.  Here is what I found:

Parameters: All Oakland, all active, all pending, all single family residences
352 Active + Pending listings

Active: 178
Average days on market active: 80
Average list price active: $67,915

Pending: 174
Average days on market pending: 56
Average list price pending: $77,243

So what does this tell me?  Let’s look at the DOM for both the active and pending.  One could conclude that since half of all properties are pending, and all pending properties have a lower DOM than average, then the good houses are being swept up fast.  Now, one could also argue that because these properties consist of bank-owned, short sales, and traditional sales, the short sales could easily be pushing the average DOM up.  What this also tells me is that because the pending properties have a higher list price than the actives that it is not necessarily the low, low end houses that are being purchased. 

Here is what has sold over the past 2 months in Oakland:

Number of Solds: 179
Average days on market: 59
Average list price: $79,042
Average sales price: $72,457

You must be wary of what the newspapers are reporting.  If you are looking for deals in Oakland be prepared to compete with multiple offers and you would be best to have all cash.  You also need to be prepared to buy it now; if you like the house and it works for your needs, don’t wait for further price reductions.  If you aren’t in a multiple offer situation, rather than wait for a reduction, submit your offer at a lower price.  Otherwise you will most likely miss your opportunity.

“I’ve just heard some exciting news and thought I’d pass it along. Fannie Mae, who buys most of the loans which are placed up to $625,500, has just announced that they will be lifting the restrictions for Investor buyers. Currently, there is a maximum amount of loans that a buyer can have (4) and after this is released, the new maximum of 10. There will be higher credit requirements, down payments and reserves required but it will greatly help those of you with well qualified buyers who have been restricted by the maximum 4 financed property rule.”

The Economy 2009
*GDP: -1.9%
*Unemployment: 9-10%
*Inflation: 1-2% (Mild)
*Interest Rates: 2% by year end
*Oil: $40-$45
*Dow: 8000 – 9500
*Recession: won’t end until beginning 2010

Real Estate 2009
*Prices will decline another 8-10%.
*Foreclosures will continue to rise, especially in CA, NV, AZ, FL.
*Sales will be up 30-60% in foreclosures and first time buyer areas, sales will decline 6-10% due to loss of wealth, jobs, and buyers.
*Commercial real estate, especially malls and office buildings, will decline 10-20%.  Inventroy will grow 10-20% and loans will be harder to get.
*Lower home mortgage rates will stay low and the government will help, but only for $417,000 conforming and below.
*Jumbo loans will still have 6.5 – 7.5% rates, need significant down payments, and at least 700 FICO score.
*New home prices will continue to decline another 10 – 15%.
*The bottom of the real estate market will vary by area.  Some will bottom by the end of 2009 by going back to 2000 prices while the more distressed areas will not reach the bottom until 2011 as prices need to go back to 1997-1998 prices.

She also said that it is a great year for first time buyers–more affordability, low interest rates, and declining prices.

The first graph is for single family homes in Alameda County, the second graph is Contra Costa County.  The blue bar shows “sold,” the green bar shows “for sale,” and the triangles show “pending.”

First of all, let’s look at the obvious.  Both graphs show a similar pattern with January being the lowest in inventory.  In February inventory goes up, peaks in April/May, and then starts to go back down.  In Oct. 2007 the market and economy were completely different yet the pattern is still the same. 

Look how low inventory got late 2008, yet sales were up from the same time the year before.  Why is this?  Money is a lot cheaper right now, and with home prices falling across both counties, more people are able to enter the market, including first time homebuyers and investors.  Both counties are experiencing opposing economic microclimates: certain areas within each county are experiencing record numbers of foreclosures while others are holding strong, and even experiencing multiple offers.

As the next wave of loans are about to reset inventory will continue to climb, as will the number of foreclosures.  I expect this wave to be consistent throughout the rest of the year.

Freddie Mac Cuts Maximum Number of Financed Properties

Freddie Mac recently announced guideline changes that will greatly affect residential real estate investors.

Beginning August 1st, 2008 the following changes will go into effect:

A borrower may not have more than four financed 1-4 unit properties, including the subject property.
For cash out refinances the borrower must own the property for at least six months prior to refinancing.

For a complete update on new Freddie Mac guideline changes go to:
http://www.freddiemac.com/sell/guide/bulletins/pdf/bll042208.pdf.

Short sales. No, they aren’t sales that close quicker than the standard 30 days (by Bay Area standards). In a nutshell, a short sale is when the amount the borrower owes in loans is higher than what the property would sell for. Many lenders will allow the property to be sold for less than the amount owed on a mortgage and forgive the rest of what is owed.

Why on earth would a lender agree to such a thing?

Banks are in the business of lending people money, not owning their homes. By agreeing to a short sale the lender can avoid a lengthly and often costly foreclosure, with the owner paying off the loan for less than what is owed on it.

Each lender will have its policies and procedures for handling a short sale and the process can be lengthy, sometimes taking up to 3 or 4 months to complete. They will want a plethora of documents, so for those unorganized folk out there, you may need to hire a personal organizer to help you sort through everything. Most won’t even begin the process until there is an offer on hand.

Alameda and Contra Costa Counties have been deemed “declining markets” by the lender-powers-that-be. Oh man. That doesn’t sound so good. And it appears that areas of declining markets are also areas high in short sales. This does not bode well for Oakland, one of the leading cities in both foreclosures and short sales.

Up against the possibility of a short sale? First step: call your bank.

Now this is some scary juice.

In order for HESA to apply, there are four conditions that need to be met:

1. Residential property (1-4 units)
2. Owner occupies one unit
3. Notice of default recorded
4. Buyer does not intend to occupy

Items to note:

1. The seller must be given notice that he/she has a statutory five day right to cancel the purchase agreement.
2. No agent can represent a buyer in such a sale without securing a bond – which is not currently available.

What to do:

1. Ask that the title company provide a Property Profile and have them include any recorded NOD’s.
2. Highlight any recorded NOD’s on the Preliminary Title Report
3. On a regular basis, check for newly recorded NOD’s

With foreclosures on the rise, I think it is important that all consumers, not just agents and brokers, know about this. Buyers and Sellers alike need to understand that if all four of the above conditions have been met, an agent cannot represent you in this sale.

1. “Trump Style Negotiation” by George Ross. This book offers insights into Donald Trump’s big-thinking negotiating style.

2. “Buy Even Lower” by Scott Frank and Andy Heller. Aimed at investors. This book shows how to buy single family houses targeted at below-market prices.

3. “The Automatic Millionaire Homeowner” by David Bach. Shows how home ownership can lead to wealth. If you only read one book on this list, list should be it.

4. “Real Estate Debt Can Make You Rich” by Steve Dexter. For buyers and agents who want to understand the inner-workings of the morgage industry and for investors who need to know how “good debt” can be created to maximize profits.

5. “Bubbles, Booms, and Busts” by Blanche Evans. This book explains the signals of local rising, falling or neutral local home sales markets.

6. “Success as a Real Estate Agent for Dummies” by Dirk Zeller. Explains the ins and outs of selling real estate.

7. “Who Says You Can’t Buy a Home?” by David Reed. Explains how mortgage lenders look at borrowers in this tell all book.

8. “Everything to Know Before Buying a Co-Op, Condo, or Townhouse” by Ken Roth. The author shares personal experiences and explains pros and cons of this type of ownership.

9. “Confessions of a Real Estate Entrepreneur” by James A. Randel. This book explains how to add value to real estate.

10. “The Reverse Mortgage Advantage” by Warren Boroson. Explains all aspects of senior-citizen reverse mortgages and emphasizes on the potential pitfalls as well as the benefits.

HONORABLE MENTION:

1. “Trump: The Best Real Estate Advice I Ever Received” by Donald J. Trump
2. “Find It, Fix It, Flip It!” by Michael Corbett
3. “Landlording on Auto-Pilot” by Mike Butler
4. “Two years to a Million In Real Estate” by Matthew A. Martinez
5. “Home Buying for Dummies, Third Edition” by Eric Tyson and Ray Brown