Welcome to 2010

Westcoe Realtors, Riverside California…Well hello everybody.  I took some desperately needed R & R over the holidays, but we’re back and ready to rock and roll with real estate in 2010.  However, before we head into 2010, let take a look today at some of the issues that have been in the media for the past 30 days or so and bring you up to speed.

Loan Modifications…lots of talk by the Obama administration about demanding that lenders do more on their loan modifications, but the bottom line here is that this still represents a minuscule portion of what is happening in our market.  In reality, we have all seen that the administration really has very little power over the lending industry (this is not a political statement…either party would probably be in the same boat), so the government can huff and puff all they want about loan modifications, but the simple truth is that they are very complicated, hard to do, and therefore still have a very long way to go.  Better, but by no means good.

As an aside regarding loan modifications, please be aware that if you have your loan modified, your credit score will drop substantially…and this surprises some people.  Remember…a loan modification is another way of saying that you cannot pay what was promised when the loan was originated, so technically speaking you are in default on the original note and want it modified…hence a drop in your credit scoring.

Short Sales…Getting better, but still a black hole quagmire, depending upon who the lender is.  In a real estate nut shell, a “good” lender to work with will probably get you a closing in 4-5 months…and a “bad” lender will take 9-10 months….and that is assuming that you can make the sale happen at all.  Yes, this is ridiculous, and yes, this is a lousy way to do business…but that’s the market we have, and there is nothing we can do about it except try to work within the “rules” set down by the banks.  Again, the Obama administration is attempting to pressure the major lenders to do a much better job, but good luck with that.  In the end, stay patient, and hope for a little good luck along the way.

Bank repos…they are still locked away in a drawer some where, waiting to be sprung on the market at some random time in the future.  The formula for when banks release their standing inventory is as secret as the KFC chicken recipe, but we still maintain that the banks are far more interested in looking good for Wall Street than they are in ridding themselves of their foreclosed properties.  Remember, some banks can hide their loan losses right up until they sell the property (not when the repossess it)…so stay tuned for further notice, and expect the number of repossessions available for purchase to remain scarce.  Wish we had better news here because we all need these properties to get released and sold, but we do not control the flow…only react to it.

New Housing Starts…They are way down, and will stay way down for many years.  Do not look to new home building to be a part of this market for quite some time.  The reason is that prices have dropped so low that builders in our area simply cannot build and make a profit…so they will pass until they can.  It makes no sense to build a home for $275,000 that can only be sold for $250,000.  Some builders even feel tract land has no value…as in ”0″…for this reason.  Therefore, in most cases, the only new homes being built today are by lenders who have had to foreclose on partially built tracts and thereby have no choice but to finish the building and sell at a loss.  Otherwise, this market has a long way to go before builders come back to build.

All of the above have had some media attention over the past month, and so we hope this information brings you up to speed on exactly what is happening at the moment.  As we head into 2010, we will, as always, make every attempt to keep you informed on anything that affects the real estate market in our Riverside area.

 In the meantime, lets just keep our heads down and keep plowing away, because for all the hassles associated with our housing market at the moment, we still have one of the greatest places in the country to live…just look at the weather maps this week!

Take care, and let us know if there is any information you would like us to address on this blog.