Signs of a Recovering Market?

The statistics we report from MLS data in San Francisco shows some interesting and hopeful signs that the overall market is beginning to recover. 

The 4th quarter of 2009 showed an increase in the number of properties shown in four of five categories of properties we survey and all five categories are up substantially compared to the 4th quarter last year (yes, I know, the last quarter of 2008 was a horrible time and you would expect the number of sales to be low but since then sales have risen steadily).

Click here to see the entire report in PDF.

Prices are still down -- in most cases average sales prices for 2009 are where they were in 2003/2004.

Click here to see the larger version.

So it seems that like much of the rest of the economy, there are tentative signs of recovery but it's likely to be a long, slow process.  Which is probably a good thing overall when it comes to real estate.

A "Gift" from the MTA?

Despite all the recent hoopla over the proposed plan to extend parking meter hours, we seem to be the beneficiaries of a gift from the SF MTA – meters along our block of Market St. now allow up to two hours of parking. I don’t want to talk about it too loudly because … but at least you can now park on the street without having to run out to feed the meter every 55 minutes.

Waiting Periods for Re-establishing Credit

Here's some information from our mortgage partner, Prospect Mortgage, on waiting times imposed by Fannie Mae for approval of mortgages for people who have had bankruptcies, foreclosures etc.:

FNMA- Waiting Periods for Derogatory tradelines; BK's, Foreclosures, Deed in Lieu, Pre-Foreclosure

• Bankruptcy (Chapter 7 or Chapter 11)

A four-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action. Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action.

• Bankruptcy (Chapter 13)

A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The time period required to re-establish credit for Chapter 13 bankruptcy actions is measured as follows: This policy recognizes that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four year time period for reestablishing credit. Exceptions for Extenuating Circumstances: No exceptions are permitted to the two-year time period after a Chapter 13 discharge.

• Multiple Bankruptcy Filings

For a borrower with more than one bankruptcy filing within the past seven years, a five-year period is required to re-establish credit, measured from the most recent dismissal or discharge date. Note: The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. Exceptions for Extenuating Circumstances: A three-year time period is required to re-establish credit, measured from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.

• Foreclosure

A five-year period is required to re-establish credit, measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower. Additional requirements apply after five ears up to seven years following the completion date: Exceptions for Extenuating Circumstances: A three-year period is required to re-establish credit, measured from the completion date of the foreclosure action. The additional requirements listed above apply after three years and up to seven years following the completion date, except the minimum credit score of 680 is not required. • two years from the discharge date, or • four years from the dismissal date. • The purchase of a principal residence is permitted with a minimum 10% down payment and minimum representative credit score of 680. • The purchase of a second home or investment property is not permitted. • Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time. • Cash-out refinances are not permitted for any occupancy type.

• Deed in Lieu of Foreclosure

A four-year period is required to re-establish credit, measured from the completion date (the date the deed-inlieu was executed). Additional requirements that apply after four years and up to seven years following the completion date: Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the completion date. The additional requirements listed above apply after two years and up to seven years following the completion date.

• Preforeclosure Sale

A two-year period is required to re-establish credit, measured from the completion date. Exceptions for Extenuating Circumstances: None.

Brian Fisher
Northwest Regional Underwriting Manager
818-854-1454 blackberry 818-661-1712 fax

Thanksgiving

It's that time of year when we celebrate and ponder those things for which we are thankful.  To be honest, most of us spend more time eating, drinking, and having good times with friends and family than we do "pondering".

Sometimes it takes a little perspective to make you realize just how thankful we should be.  Read this from a recent editorial in the Toronto Star:

Back in Uganda, President Yoweri Museveni is taking the low road by letting a bill worm its way through parliament that declares war on homosexuals. Sponsored by government MP David Bahati, it would impose the death penalty on HIV-positive gays or lesbians who have sex, consign any other homosexuals to life in prison, and slap three-year jail terms on anyone who fails to report such "crimes."  Stephen Lewis, the Canadian who led UN AIDS efforts in Africa, rightly denounces the bill as "a twisted world of sexual paranoia" and "lunatic." Harper's government yesterday called it "vile and hateful."

Think about what your life would be like if this were the law where you live.

Zillow Accuracy - Buyer and Seller Beware

Prompted by a periodic e-mail we receive from Zillow about the "value" of our house (apparently its value has gone up $50K in 30 days -- really? in this market?), I took at look at Zillow's own statistics for how accurate their value estimates are.

In San Francisco more than 25% of properties that that sold had a selling price that was different than the Zillow estimate by more than 20%. Half of sold properties had Zillow estimates that were at least 10% different than the selling price.

In Marin county it's worse. 40% of properties that sell have Zillow estimates that are off by 20% or more.

Zillow is certainly a popular web site for home owners and would-be home owners who like playing the "I wonder what it's worth?" game and it has an appeal to those of us who are hooked on tracking stock market indexes. But as a serious valuation tool in our market, it's not at all useful. In fact it can actually get in the way of a realistic assessment of the value of a particular home but setting unrealistic expectations.

I find some disturbing parallels between the Zillow process and processes in use these days by mortgage lenders who try to create second appraisal opinions using similar tools. Ask any real estate agent with current experience and I'll bet he/she will be able to regale you with tales of deals gone bad because of a flawed appraisal process.

Tip of the Week

I don't know if this will be exactly a weekly feature but I wanted to share with you various resources we run across from time-to-time that may be useful for you.

Today's tip is a web link:
http://dbiweb.sfgov.org/dbipts/

This link takes you the the San Francisco Department of Building Inspection site where you can see the permit status for a property. You can search by street address or APN number. In addition to showing construction permits, it also shows electrical and plumbing permits (which are not shown on the 3R report) and any building complaints filed against the building/owner. While not a substitute for a formal 3R report, it's an easy way to get an early look at the current permit history of a property. One of the shortcomings of the service is that older building permits are not on line. For example, the 3R report for our current listing on Chenery shows permits starting in 1961; the online system only shows more recent permits.

Cautious Signs

Lord knows I'm not one to be ahead of the bandwagon. I never install 1.0 software and never buy a car in the first year of manufacture. And maybe we're looking a little too hard for signs of improvement in the economy.

So, with those disclaimers out of the way, consider these two items:

• 
  
  The Conference Board Employment Trends Index (ETI)™ saw a small uptick in May. The index now stands at 89.9, increasing 0.2 percent from the revised April figure of 89.7, and down 20 percent from a year ago.
  "While it is too early to say that the ETI has bottomed, the moderation of the last two months is certainly a sign that the decline in job losses is real and signals that the worst is over," said Gad Levanon, Senior Economist at The Conference Board. "However, as the economic recovery over the coming months is likely to be very slow, we still expect the unemployment rate to continue to increase to double digits by the end of this year and into 2010."

• The U.S. unemployment rate was the highest in 26 years, but the loss of 345,000 jobs in May, fewer than expected, was seen as a sign that the job market was no longer in free fall.