Monday Morning Numbers 2/28/11

Been fighting a cold for the past several days. The upside is that I get this real deep, sexy Barry White voice going on in the mornings. "Can't get enough of your love, baby." Yeah, OK, maybe that doesn't work so well for me... Let's stick to what I do - here are this week's numbers:

Active Listings: 124

Contingent Listings: 41

Pending Listings: 36 (17.9% of the inventory)

New listings: 8

Months of inventory: 6.1
Click here for the updated price per square foot chart.

A week ago active listings jumped up a bit and pending listings declined. This week it appears that we've gotten back to about where we had been before for the past several weeks. Our pending listings are still kind of weak as a percentage of the total inventory, so we'll want to keep an eye on that.

Later this week I'll be back with an update on North Lompoc.

Getting Through the Loan Process

If you believe everything you see on TV, you'd think that nobody can qualify for a mortgage anymore. And if you've read this blog for any period of time, you've probably heard me say repeatedly that you shouldn't believe everything that you see on TV. The fact is, people are still qualifying for loans all the time. I guess the key thing here is the word "qualifying". There was a time not that long ago when you really didn't have to do much to qualify for a loan. And of course, we all know how that turned out...

So you wanna buy a house, and you don't have a couple of hundred thousand in the bank. Here are a few ideas on how to best get through the lending process so you can get from Point A to Point B:

#1 - Use a local lender.

No, wait, that didn't come off quite right - let's try that again:

Use a local lender!

Much better. One of the most common mistakes that I see from buyers is their insistence on using an out of town lender. They figure that they'll get a better rate (they won't) or that they'll do their friend/cousin/cousin's friend in Omaha a favor and shoot him some business. Maybe they have an out of town bank or credit union that they've always done business with and feel some sense of loyalty. In any case - you want to blow up your deal? This is a real good way to go about it. Out of town lenders are much less responsive, and they typically aren't clued into the local processes and customs. And when things start to get a little sideways - and trust me, that can be very common - you're going to want either yourself or your agent in close contact with someone who is competent. And not of small import here is the fact that the local lender relies enormously on repeat and referral business, and at least in this part of the world that is reflected in their performance. You think that some internet lender cares much about referral business?

#2 - Know your credit. Do you pull your credit report periodically to scan it for potential red flags and incorrect entries? You should. As qualification requirements have gotten tighter, credit scores have become more and more critical. And there are specific cut-off points for most loans, and even a couple of points one way or another can be the difference between qualifying or not.

#3 - Don't argue with the lender, just provide whatever he/she asks for. Even if you already gave it to them a few weeks ago. Give it to them again. And be ready to do it again in a few weeks. And don't be shocked if they come up with something new to ask for a few times through the process. Like I said, we aren't in the 2004 market anymore, so the lenders are really ratcheting down the qualifications these days.

#4 - Lock up your credit cards after you go into escrow. You should get this advice from your agent and lender as well, but just in case they missed telling you this... You need to know that your credit will get pulled again late in the game, right before the loan funds. And if you've gone out and bought new furniture for the new house on credit during escrow, you might just tip your ratios and/or credit score over into "no loan for you" territory.

#5 - Use a local lender. I know I said that already, but it's important enough to repeat.

None of this stuff is brain surgery. Some might argue that things have tightened up a bit too much over the past few years, but I'll be honest: I'd rather be here than where we were back in the days when all you had to do to get a $500K mortgage was fog a mirror in the presence of a loan officer. This is sustainable. This is healthy. Owning a home is something to be earned. It isn't a birthright.

Monday Morning Numbers 2/21/11

Good morning everyone. We got pulled out of town for most of last week, so I'll have to get you that post on surviving the loan process later this week. Not a pleasure trip, I'll just leave it at that. At least it appears that we missed the nasty weather. Let's take a look at this week's market stats:

Active Listings: 131

Contingent Listings: 37

Pending Listings: 33 (16.4% of the inventory)

New listings: 12

Months of inventory: 6.4
Click here for the updated price per square foot chart.

We had a moderate spike in our inventory and a dip in our pending sales last week. Those were the first noticeable changes that we've seen in several weeks, and coming weeks will tell us if those numbers were temporary blips or the beginning of a trend.

Like I said, come back later this week and I'll get you that post on the lending process.

Monday Morning Numbers 2/14/11

Happy Valentines Day! Hope everybody gets a chance to spend it with someone special. Let's take a look at our numbers for this week:

Active Listings: 122

Contingent Listings: 38

Pending Listings: 41 (20.4% of the inventory)

New listings: 9

Months of inventory: 6.3
Click here for the updated price per square foot chart.

Our months of inventory edged up a little bit this week due to slower sales, but the raw inventory numbers haven't changed much for several weeks now. Come back later this week and I'll talk about some tips to help buyers get through the loan process.

Focus On Central Lompoc

This week we're back into looking at a neighborhood, and we're back around to Central Lompoc. For some background on the area, take a look at my first post on the area from a couple of years ago. Good grief, have I been writing this blog for two years now?

We have an interesting mix of numbers here this time around. We have 20 active listings on the market this afternoon, and unlike what I've been reporting for the area in the past, only 4 of these are REO's. 7 are short sales, and 9 are non-distressed. We do have 9 contingent sales in the area, and all of those are distressed (1 REO/8 SS).

Sales were slow for a while here, but appear to be picking back up. We have 13 pending sales now (4 REO/4 SS/5 Trad), again pointing to a little bit of a slowdown in distressed property activity here. But over the past three months, we've only had 13 total sales (8 REO/3 SS/2 Trad).

It would appear from the sold units in the past three months that we're seeing a little bit of a decline in values. But some of that is due to a lower overall level of sales than we've typically been seeing here and a higher percentage of REO sales over those three months. We sold just about half as many units here in the past three months as we sold in the previous three months, and any time you get a spike in the REO percentage of sales, you're almost bound to see some decline in values. On the other hand, with a lower percentage of our current active and pending listings being REO's I would expect to see some rebound in values a few months from now.

I still haven't figured out next week's topic, but I'm sure I'll come up with something between now and then. See you here next week.

Monday Morning Numbers 2/7/11

Well, that was a lackluster ending to the NFL season. An OK but not great game (and as a Bears fan I'm wired to hate the Packers). Probably the lamest batch of ads that I can remember. And that halftime show? Well, I'll just say that I'm probably not the target audience. And now we gotta wait 7 months to see any meaningful on-field action, if they can figure out the labor agreement thing.

OK, let's get to what you came here for:

Active Listings: 121

Contingent Listings: 38

Pending Listings: 39 (19.7% of the inventory)

New listings: 12

Months of inventory: 6.0
Click here for the updated price per square foot chart.

Another week, another similar looking set of numbers. We did see some more new listing activity this week, and it's interesting to note that out of those 12 new listings, there wasn't a single REO. I suspect that we'll see a minor run of REO listings sometime in the near future, because my running list of unlisted REO properties has edged up to the mid-60's. That's on the high side of where it tends to be. In the past when it gets up to that level we usually get a little bit of a run of them.

Later this week I'll take a look at activity in the central part of town. That's usually a good one to check in on because it's probably our highest volume area, and I can do a better job of spotting market trends.

A short sale rant...

If you've been reading this blog - or any other real estate resource - for the past couple of years, you've been hearing a lot about short sales. I've been telling you for a while that we're seeing a slow increase in the market share for short sales, and I've been expecting that to continue. And now, I'm going to spew a little bit of bile on the subject.

One of my pet phrases when I'm trying to work with an intractable short sale lender is that I'm performing what I like to call a "Cranial-Rectal Extraction" (CRE) on them (well, not to them directly - that wouldn't be very tactful or productive). I've had some success doing that in the past, but it seems that more recently, but with some of these, we're gonna have to break out the jaws of life to get that done.

Look, I've said this before, and I'll say it again - short sales aren't the absolute hopeless mess that they were in 2007 and 2008. But you know what? The progress being made by the major lenders has been pathetically slow. We've been in this mess for a long time, and they've had 3 or 4 years to figure out how to deal with this and fix their processes. And they haven't. I keep hearing things from them that they're improving their processes, and frankly I'm reminded of those Domino's ads that were running last year. You remember those? The ones where they acknowledged that they were making some crappy pizza in the past, but now they've reworked their recipes and they're making some really good pizza now?

Well, you know what? When it comes to short sales, the major loan servicers are still making some pretty crappy "pizza".

It's not just me. I spent most of last week down in San Diego at the California Association of REALTORS® Winter Meetings, and short sales were probably the biggest topic of discussion. And the discussions that I heard at various meetings weren't exactly filled with nice things. From senior leadership all the way down, I was hearing a lot of frustration with how these things are working. I heard more than one of my fellow directors making noise about pulling all of their business - everything from loan referrals to their own personal banking - from banks that shall remain nameless in this space. I heard one or two of them echoing something that I've had occasion to ponder myself: they were about to make a personal business decision to swear off ever touching a short sale where (insert name of your least favorite lender) is involved.

I know, I know... These are complicated transactions, the loan servicers have to answer to the investors that actually own these mortgage notes (and there are tons of those). And there are also second lien holders and mortgage insurance companies to deal with on these transactions. And I don't care. I'm tired of hearing that they're getting better, and I'm even more tired of hearing why they can't fix things.

I've made this point here before: About 40% of all the homes in our market are in a negative equity position. We aren't alone, and in fact there are several areas where that number is much worse. And the primary way we're going to get out of that hole is through property transfers of these negative equity properties. That can happen one of two ways - short sales and foreclosures. And consider for a minute that at least from what I can see, foreclosures sell for about 15-20% less than non-foreclosures. And yet somehow, it seems that we're still seeing way too many situations where short sales get honked up and the property gets foreclosed. And that's not good for anybody.

So what to do? Government intervention? Yeah, that's gonna work... But on the other hand, the free market has failed us horribly on this count, and I can't help but think that if our political leadership could come up with some useful way to standardize the process and hold the banks accountable, at least it couldn't get worse. I suppose that those of us in our industry are going to have to keep engaging the banks, both at a leadership level and down here where the rubber meets the road. And keep working on that CRE - even if we have to break out the power tools.