First-time buyers find silver lining in foreclosure cloud

More than one-third of Los Angeles County families could afford to buy an entry-level home in the first quarter - 66 percent more than a year earlier - thanks to an epidemic of foreclosures that depressed prices, a trade group said Tuesday.

During the first three months of 2008, 35 percent of county households could afford to buy their first home, the California Association of Realtors said. That compares with 21 percent a year earlier and 28 percent during the last quarter of 2007.

The latest figures are the highest since the association began tracking housing affordability in 2003 - another hopeful sign for Southern California's troubled real-estate market, analysts say.

"I would personally wait a year, but if you are a buyer, this would be a good time to buy a home," said Dennis Torres, director of real estate operations for Pepperdine University's Graziadio School of Business and Management.

Tuesday's report came a day after Data Quick Information Systems reported that house and condo sales were 22 percent higher in April than in March. Most of the sales were in areas hard hit by foreclosures, with homes less than $500,000 accounting for 66 percent of sales.

Torres predicted that prices will continue to fall, putting houses within reach of more potential buyers but also causing anguish for homeowners watching their equity evaporate.

He cautioned, however, that worries about inflation could result in higher interest rates that would again put a drag on affordability.

"We haven't been visited by our old friend rapid inflation, but he's out there and coming to dinner," Torres said.

The association's First-time Buyer Housing Affordability Index reflects the percentage of households that can afford to buy an entry-level home - one priced at 85percent of the median price in their area.

That factored out to a $390,450 home in Los Angeles County in the first quarter. A family would have had to earn $74,320 a year to qualify for it.

A year earlier, before the credit crisis took hold and the real-estate market tumbled, an entry-level home would have cost $496,120. That meant the qualifying income level was $100,000 then.

The index assumes a 10 percent down payment and an interest rate of 5.65 percent.

The association index also demonstrates how the current market conditions vary from community to community.

For example, affordability ranged from a high of 64 percent in the High Desert, which includes the Antelope Valley, to a low of 29 percent in Monterey.

"Essentially we're working our way out of the downturn and coming back up," said Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based association.

"The moderate to low part of the market - under $500,000 - is where you are seeing the activity. People are responding to lower prices," she said.

And mortgage rates are helping, too. The rate for a 30-year fixed-rate loan averaged 5.65 percent in this year's first quarter, compared with 6.3 percent a year earlier.

The association report also showed that:

The monthly mortgage payment for an entry-level home in Los Angeles County, including taxes and insurance, was $2,480.

Statewide, 44 percent of households could afford an entry-level home in the first quarter, compared with 33 percent during the last quarter of 2007. The increase was attributed to a 1percentage-point decrease in interest rates and a 14.3 percent drop in the entry-level median home price.

Statewide, the minimum household income needed to buy an entry-level home costing $356,350 was $67,830. The monthly payment would be $2,260.

In Ventura County, 43 percent of households earned the $86,400 a year needed to buy an entry-level home costing $453,890. The monthly mortgage payment would be $2,880.

In the Inland Empire, hard hit by foreclosures and price declines, 57 percent of households earned the $46,450 needed to buy an entry-level house costing $244,000. The payment would be $1,550.

Appleton-Young expects affordability to continue improving as more foreclosed homes come on the market and drive prices down further.

And that's good news for someone looking for a first home.

"I think they are going to make a dent in the supply. Is it going to evaporate overnight? Absolutely not. It will be a slow workout," she said. "We're still into the wave of foreclosures."

By Gregory J. Wilcox, Staff Writer
greg.wilcox@dailynews.com 818-713-3743

Ok first timers, what are you waiting for? Don't miss out on an excellent opportunity.

Start looking NOW!

Call me and I will help you get started!

See you around the neighborhood!

Home Buyers, Start Your Engines

If you were thinking of buying a home, start looking.

The latest data from the housing market shows that sellers, after months and years in denial, are finally giving in to reality and slashing prices.

There is a distance still to go. There may even be a lot to go. But the process, long delayed, is now well underway.

The National Association of Realtors on Tuesday released its long-awaited report on prices from the first quarter. The price drops were startling.

In many of the former hot spots, from Florida to Nevada to the Californian "Inland Empire," single-family home prices plunged by 20% to nearly 30% in a year.

Even more remarkable was how far prices had fallen just from the previous three months. In greater Las Vegas, for example, single-family home prices are down about 20% compared to the first quarter of 2007… and about 9% compared to last fall. In certain parts of California, the quarter-on-quarter declines are more than 10%. And there are similar pictures from Boston, Mass., to Tucson, Ariz., to, well, lots of places in Florida.

Nationwide, the decline from the previous quarter was about 5%, says the NAR. And this, ultimately, is good news. We know prices have to fall. The sooner it happens, the quicker the market can clear. We may not be at that stage known on Wall Street as "capitulation," but there is more than a whiff of it in the air.

Far too many people in the real estate market have spent far too long insisting that denial is just a river in Egypt. They refused to accept there was a bubble on the way up, and refused to admit it even on the way back down. (There's a few still out there: Last week I got an angry email from a broker who blamed the whole slump on "the media".)

It is simply remarkable how slow this bubble has been to deflate. That, bluntly, is part of the problem.

In the Las Vegas area, for example, NAR data shows single home prices peaked in early 2006. Yet by the middle of last year, when everyone and their Aunt Sally already knew we were deep into the biggest housing bust since the Great Depression, prices had only been cut by around 4%.
No wonder sales volumes collapsed and the number of unsold homes skyrocketed.
You can imagine what fantasies the sellers were clinging to. "Well, two years ago this home was worth half a million bucks."

The problem: So what? It doesn't matter what prices were three or two years ago. We were in a bubble. Market psychologists call this "anchoring", because people anchor their expectations to the past, and it's a fallacy.

Just five years ago, the same home sold for $270,000 and 10 years ago just $200,000. Are those relevant anchor points too?

Fact: Even though Las Vegas single family home prices are down about a quarter from their peak, NAR data shows they are still nearly 45% above their levels in early 2003.
The picture is similar in other former hot spots.

It remains to be seen how much further prices have to fall.
As always, quality and scarcity command a premium. But remember that a burst bubble is still a burst bubble and everything is affected.

Cisco Systems is a top quality technology company with real profits, but its shares still fell about 80% in the dotcom crash.

There is no desperate rush to buy real estate. (The best way to play the real estate crash was to buy the homebuilding stocks when they bottomed out in January, as written in this column at the time.)
But sellers have at least returned to the bargaining table. If you are in the market for a home, it is time, cautiously, to take a look and, maybe, see if you can play, "Let's Make A Deal."

Copyright: By Brett Arends, The Wall Street Journal

Buyers it's time to start shopping around, especially you first timers!!! As I mentioned before inventory is high, interest rates are low and FHA is going STRONG... Don't miss out on a great opportunity, FIND YOUR NEW HOME!!!

This Sunday, May 25, I will be holding an OPEN HOUSE at 800 Pacific Ave #305 between 12 - 4pm. Great buy @ $179,500! Scroll down to view slideshow of property.

See you around the neighborhood

Long Beach Pride 2008

Why Ask For An FHA Loan?

There are lots of reasons to ask your lender for an FHA loan instead of taking a conventional or an expensive and risky sub-prime mortgage loan. Why not take advantage of the many benefits and protections that only come with FHA:



Easier to Qualify - Because FHA insures your mortgage, lenders are more willing to give loans with lower qualifying requirements so its easier for you to qualify.


Less than Perfect Credit - Even if you have had credit problems, such as bankruptcy, its easier for you to qualify for an FHA loan than a conventional loan.


Low Downpayment - We have a low 3% downpayment, and that money can come from a family member, employer or charitable organization. Other loans don't allow this.


Costs Less - Many times, FHA loans have competitive interest rates because the loans are insured by the Federal Government. Always compare an FHA loan with other loan types.


Help You Keep Your Home - The FHA has been around since 1934 and will continue to be here to protect you when the others walk away. Should you encounter hard-times after buying your home, FHA has many options to help keep you in your home and avoid foreclosure.


There is more to buying your home then the monthly house payment. Why not ask for an FHA loan that will help you buy your house and keep it too? Tell your lender you want an FHA loan for all the reasons above- FHA is a wise choice.

This is truly a great opportunity for all you first time buyers. The inventory is high, interest rates are low, aggressive sellers that NEED to sell, and FHA going strong. I'm noticing much more movement in the market, especially here in our neck of the woods, meaning that prices will not stay low for too much longer. ACT NOW, real estate will ALWAYS appreciate over time! For more info contact me and I will walk you through the qualifying process.

See you around the neighborhood!

First Time Buyers' Dos And Don'ts

First Time Buyers' Dos And Don'ts

If you are a first time home buyer, you have a lot to learn.

Working from a blank slate you must build an understanding of the housing market, determine what you can afford, land a loan and hone in on a home that's a good fit for your lifestyle.

The transaction will likely become your largest asset ever so there's little room for error.

It is a daunting task, but you can ease your concerns if you take the process step-by-step, watching your footing as you move along the path toward the American Dream.

Below is a list of "Dos and Don'ts" to help first timers turn that stress into the self-confidence you'll need to move closer to your first home.

The list focuses on areas first-timers typically stumble over in their initial home buying attempt. Knowing what you could face will help you avoid some of those trip ups.

The Dos:

DO examine your credit standing. You need to know your credit standing. You may need to request corrections if there are errors. You may need to adjust your habits if your credit behavior is less than sterling. And you need to take those steps before seeking a loan. Your credit report is free from AnnualCreditReport.com, the federally regulated place to go. You can stagger retrieval of your credit report from each of the big three credit bureaus, getting one from a different agency every four months. Your report is free, but you may have to pay a nominal fee for your credit score (a numerical scoring of your creditworthiness) depending upon your state law and other factors.

DO explore a mortgage pre-approval or commitment. An early green light on a loan will put you in a good negotiation position when you find your dream home. It will also help you shop within your budget.

DO line up a dream team of professionals. You may need a real estate agent, attorney, mortgage broker, home inspector and others to be your professional eyes during your home search.

DO buy for your lifestyle. Your first home may not be your last, so try to anticipate how long you'll live in your home and buy based on plans for the duration. Raising kids, starting a business, taking on a new job, housing Grandma could all impact the size or type of home you need first.

DO heed housing priorities. Separate your "wants" from your "needs" so you know where you can compromise to stay on budget.

The Don'ts:

DON'T get taken by the first house or neighborhood you see. Keep an open mind and spend sufficient time finding the right fit in a house and neighborhood for your needs.

DON'T buy more than you can afford. Lenders will often loan you as much as your financial condition warrants, but that may not be what you can comfortably afford. It's better to live with a comfortable mortgage on a smaller home than to struggle every month paying a mortgage on a house with more room than you really need. The down payment, closing costs, monthly expenses and taxes must in total all be within your income and savings range.

DON'T treat your home like a stock portfolio. Homes appreciate and depreciate in cycles which often aren't so predictable. Don't expect your home's value to skyrocket. Buy a home because you need a roof over your head, not for a quick profit.

DON'T try to time the market. Pinpointing the bottom of the market almost always happens after the market has started to turn up. How, otherwise, can you see the bottom? Focus on personal lifestyle needs, not market trends, in terms of timing your home buy.

DON'T sign for a confusing mortgage. Shop around for the best loan, read every detail of your loan contract and get some help understanding terms and provisions that confuse you. Avoid exotic, "creative financing," multi-option loans you don't understand. Again, lifestyle is key. Get a loan that fits.

Written by Broderick Perkins

I hope this helps all you first timers out there... Check out Find My New Home and search for your new home.

See you around the neighborhood!