Thursday, August 29, 2013

The effects of rising interest rate, relative to real estate

As interest rates begin to rise the yield on the 10 year U S treasury bill will rise a well.  What this means is that it will cost more for home owners each month when buying a home.  For example a $850 mortgage could see a rise of $8.50 on a one point change.  A rise in the rate could also force the first time homebuyer out of the market.  

The bigger  questions is how high will the rise be and will there be more increases to follow?   On Friday, it opened at 2.76% and hit a high of 2.86% before closing at 2.83%.  The yield on 10 year U.S. Treasuries is up nearly 120 basis points since the beginning of May, and almost everyone on Wall Street seems convinced that it is going to go much higher.

Monday, August 5, 2013

Nice move by Amazon?

With print media disappearing this is a good move by Jeff Bezos in  acquiring The Washington Post.  He go it at a steal, paying only $250 Million, this will add significant  value to Amazon.

Its tablets could give its customers access to online news and it archive.  Further, think of the advertising revenue they will receive.  I believe this is the way of the news for the feature and Amazon is shifting in the right direction.

Thursday, July 18, 2013

The age of the Cash Buyers

One of the new trend in real estate today is that cash buyers are controlling the 250k and below market.  I expect this trend will continue until the foreclosure bobble subsides or cash buyers exhaust there will to buy.  These cash buyers are buying all the homes in this price range, and there are no signs of slowing down.  Once the homes are acquired they then flip them into a fifty thousand dollars or greater net profit.             
If this trend continues  the prices  of homes will  rise in that segment of the market (250K and below).  It also means that in the short run qualified FHA, VA, and Convention buyers are forced out of the market.  

What is the solution?  Is there a solution in the short run?

Tuesday, July 31, 2012

What is a Notice of Default?

The notice of default (NOD) is the first legal action in the foreclosure action in California. The next step is advertising in the paper and then the sale is scheduled the time from nod to sale is typically 90 – 120 days if there are no delays in the process.  Notice of Default is mailed to the owner. It is an official notice that is recorded in the county recorder’s office. This notice is advising the owner that they are in default of the agreement and if the loan is not brought current within 90 days the bank has the right to foreclose which in California usually occurs on the court house steps through an auction process. Just because the bank has the right they do not always exercise it immediately.
If the bank has an offer during the NOD period they very often but not guaranteed will not exercise their right to foreclose. Even if they have an auction date (trustee sale) you could get it postponed. An owner or selling agent cannot contact the asset manager. I say cannot because they will not have the contact person or number. Asset managers are only involved when the home is foreclosed on and becomes bank owned (REO). At that time they deal only with the listing agent. If you would like more information please do not hesitate to contact me.

Sunday, March 25, 2012

BofA to offer rentals as foreclosure alternative

Bank of America says it has begun a pilot program offering some of its mortgage customers who are facing foreclosure a chance to stay in their homes by becoming renters instead of owners.
The "Mortgage to Lease" program, which was launched this week, will be available to fewer than 1,000 BofA customers selected by the bank in test markets in Arizona, Nevada and New York.
Participants will transfer their home's title to the bank, which will then forgive the outstanding mortgage debt. In exchange, they will be able to lease their home for up to three years at or below the rental market rate. The rent will be less than the participants' current mortgage payments and customers will not have to pay property taxes or homeowners insurance, the bank said.
"This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support," Ron Sturzenegger, legacy asset servicing executive of Bank of America, said in a statement.
Among requirements to qualify for the program, homeowners must have a BofA loan, be behind at least 60 days on payments and be "underwater," owing more on their mortgages than their homes are worth.
The bank based in Charlotte, N.C., said it will at first own the homes, then sell them to investors. If the program is successful, it could be expanded to include real-estate investors who buy qualifying properties and keep the occupants on as tenants.
"If this evolves from a pilot into a more broadly based program, we also see potential benefits from helping to stabilize housing prices in the surrounding community and curtail neighborhood blight by keeping a portion of distressed properties off the market," Sturzenegger said.
Foreclosure tracking firm RealtyTrac says foreclosure activity has picked up in some states, as banks deal with a backlog of homes with mortgages that had gone unpaid yet remained in limbo due to delays stemming from foreclosure-abuse claims, according to
Nevada has the nation's highest foreclosure rate as of last month, with one in every 278 households in the state receiving a foreclosure-related filing, twice the national average, according to RealtyTrac. Arizona ranks third behind California, while New York has not been as hard hit, with one in every 4,604 households receiving a foreclosure-related filing.

Wednesday, September 21, 2011

What can history tell us?

As I look back at the history of Finance relative to this country, I though about some interesting similarities to the cause of the Great depression.While these may not be directly similar their impact to the economy are comparable.  American companies taking jobs out of the country to avoid high wages regulations and taxes over the long run has a huge impact on the economy.  Why, because the wage earner can’t buy or spend what has gone to another country. This parallels the Smoot-Hawley Tariff in 1930 to help protect American companies.  Another is the connection of banks to real estate, thus causing major bank failures.  Which explain why the government keeps pumping money into them so they don't fail. Read the article from NPR on how the banks are spinning the latest problem.

Let’s us take a look at what caused the Great Depression, the worst economic depression in US history? It was not just one factor, but instead a combination of domestic and worldwide conditions that led to the Great Depression. As such, there is no agreed upon list of all its causes. Here instead is a list of the top reasons that historians and economists have cited as causing the Great Depression.

The effects of the Great Depression was huge across the world. Not only did it lead to the New Deal in America but more significantly, it was a direct cause of the rise of extremism in Germany leading to World War II.
1. Stock Market Crash of 1929
Many believe erroneously that the stock market crash that occurred on <a href="">Black Tuesday</a>, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression.
2. Bank Failures
Throughout the 1930s over 9,000 banks failed. Bank deposits were uninsured and thus as banks failed people simply lost their savings. Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This exacerbated the situation leading to less and less expenditures.
3. Reduction in Purchasing Across the Board
With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation.
4. American Economic Policy with Europe
As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation.
5. Drought Conditions
While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. The area was nicknamed "The Dust Bowl." This was the topic of John Steinbeck's The Grapes of Wrath.