New home sales dropped to an annual pace of just 283,000, according to the Commerce Department. That was down 8.1% from a slow September and 28.5% from 12 months ago when the annualized sales rate was at 430,000.

Housing experts from Briefing.com had forecast a sales pace of 314,000.

“The new home market delivered another turkey of a performance last month,” said Mike Larson, a housing market analyst with Weiss Research. “Sales fell sharply across most of the country.”

Sales are off nearly 80% from the housing boom peak pace of 1.4 million, set in July 2005. Sales have remained near historic lows this year despite very attractive mortgage interest rates that slash the monthly costs of homeownership.

The Commerce Department also revised August sales figures downward to 275,000, which represents the record low point for new homes sales since it started tracking figures in 1963.

There’s a major factor depressing home sales of all kinds, according to David Crowe, chief economist for the National Association of Home Builders.

“We’re fallen significantly in the number of people forming their own households,” he said. “They’re worried about the economy and they’re worried about their jobs.”

Full Article

Real Estate Inventory up. Shadow Inventory Rose and Building Permits are Down.

In this video, Jason Gilbert, real estate investor and founder and President of SOCALCIA, inc. teaches what a Real Estate Owned (REO) is and how to maximize your profits with them.

SOCALCIA is a Southern California Real Estate Investment Club.

There is no cost to join and you can network with some of the big real estate heavy weights of Southern California.

For more information about SOCALCIA, check out:

www.socalcia.com/intro

The report dissects the benefits of a drafted bill, H.R. 5028, also known as The Right to Rent. Under the legislation, homeowners entering the foreclosure process would be able to occupy their homes for up to five years, while paying rent to a lender. Rent would be based on fair market price as determined by an independent appraiser and adjusted annually.

“This would give homeowners an important degree of security, since they could not simply be thrown out on the streets,” wrote Dean Baker and Hye Jin Rho, co-director of and research assistant at CEPR. “This policy should also benefit neighborhoods in the most hard-hit areas, since they would not have large numbers of vacant homes following foreclosures.”

The CEPR report, which compares the costs of owning a home and renting in 16 major metropolitan statistical areas around the U.S., found that homeowners would see substantial reductions in costs by becoming renters if they rented in a bubble-inflated market. Savings are much less, however, if the market was not affected by the housing bubble.

For example, in the Los Angeles MSA, homeowners would save $1,586 per month by becoming a tenant. The median home price in 2006 and 2007 was $608,600. Based on that number, CEPR found the monthly cost of ownership as $3,128 versus $1,420 to rent.

New York/New Jersey, Sacramento, San Diego and San Francisco savings are all over $1,000.

In Detroit, however, the marginal saving is only $89 between owning and renting  home. MSAs including Baltimore, Chicago, Cleveland, Minneapolis, Philadelphia, Phoenix, and Tucson had a difference of less than $500.

“With roughly one-in four mortgages underwater, the loan modification plans put forth so far have done little to help homeowners facing foreclosure,” said Baker.  “Right to Rent, on the other hand, would benefit millions, provide families with real housing security, and could go into effect immediately.”

And it could fill adequate demand. According to a survey done recently by Apartments.com, 60% of respondents said they prefer renting to buying a home. Almost 30% said they had never rented before but are currently looking for an apartment.

The CEPR report includes an appendix with cost analysis for 100 MSAs around the country. Amounts for houses are based on costs for a house that sells at 75% of the median house price. The basis for rental costs is the Department of Housing and Urban Development’s Fair Market Rent for a two-bedroom apartment. The calculations used assume the homeowner faces a marginal tax rate of 15%.

View the full report here.

As readers no doubt know, there is a lot of actual and shadow residential real estate inventory in the US. The time from serious delinquency to foreclosure has lengthened considerably, due not just to crowded court dockets, but also bank/servicer disinclination to take possession (reasons include that investors take a dim view of bank real estate holdings; the bank is liable for expenses, most important real estate taxes, once it takes possession; more foreclosures would lead banks to have to write down clearly overvalued second mortgages, leading to losses and lowering bank capital levels).

Most analysts have argued that it would be preferable to accelerate the process of clearing the overhang of housing inventory, since prices need ultimately to return to price level in relationship to incomes and rent rates more in line with long standing historical norms. And the officialdom seems to accept this view, since Fannie and Freddie are pressuring servicers to move faster on foreclosures.

But what if this resolution process has new land mines planted in it? What if there are not widely understood impediement to foreclosed properties ending up with new owners? If there are good reasons buyers will have reason to be leery of buying houses out of foreclosure, we could have a lot of homes sitting vacant, a blight on neighborhoods and a source of even greater losses to banks and investors.

http://www.nakedcapitalism.com/2010/09/latest-real-estate-time-bomb-title-of-foreclosed-properties-clouded-wells-fargo-dumping-risk-on-hapless-buyers.html

Rehabs are where the BIG money in residential real estate is . . . Buy ‘em, Fix ‘em, Flip ‘em.

Erin recently started fixing & flipping at age 24 when he arrived in San Diego broke with no money, no family, no friends, no car and no job.

He lived in low income Section 8 housing, then borrowed $1,000 for his 1st deal, and flipped it 3 weeks later for $15,000 profit.

Erin now closes on 3-5 deals each month, and the profits range from 5 figures to even 6 figures!

After starting in May of 2009, Erin has closed on $5 Million in transactions.

Come meet Erin at our next free workshop, where he will show you how he does it and reveal to you what is working best in THIS market, including:

• How he FINDS the deals
• How he FUNDS the deals (with none of his own money)
• How he FIXES the deals (without swinging a hammer)

How he FLIPS the deals at lightning speed for massive profits (or you can hold them for high cash flow)

NOTE:
Erin is looking to grow his team and work with a few people who attend the workshop. That could be
you!

Erin does not have a seminar or a course to sell, so DO NOT MISS this rare opportunity to hear one of the SoCal’s Top 5 investors share his secrets with you in true rags-to-riches style!

Where: UCSD Copely Theater (Click for directions)
When: Networking 6:30; Meeting 7-9 PM

Membership NOT required to attend ANY meeting!!

While 18.2% of all homes sold for a loss, that’s down about 2.5% from the same period a year earlier. Zillow spokeswoman Jill Simmons said that losing deals in O.C. peaked at 25% in February 2009, the month after median home prices hit bottom.

According to Zillow, losing deals were greater among condos.

Zillow figures show that 13.5% of single-family homes sold for a loss, down nearly 4% from the year before. But 29.5% of condos sold at a loss, up 1.3%.

http://lansner.ocregister.com/2010/08/30/1-in-5-o-c-homes-selling-at-a-loss/79413/

With sharp drops in sales of existing and new homes plastered over the front pages and leading the nightly newscasts, it’s no wonder the real estate doomsayers on Wall Street have been working overtime.

And there’s no minimizing the bad numbers we’ve been seeing: A surprising 27 percent decline in resales from June to July, and a 12 percent drop in sales of newly-built houses during the same period.

Yes, most economists predicted that the months following the tax credits’ expiration would be negative, so we were forewarned.

But let’s not get caught in a Chicken Little economic trap here. Hidden among the recent negative numbers have been some positives that aren’t getting much attention.

http://realtytimes.com/rtpages/20100830_realestateoutlook.htm

The CMHPI Purchase-Only Series includes only property values based on home purchases with a conventional mortgage. Freddie calculates the values for the nation, all 50 states and the nine Census divisions. The numbers are not seasonally adjusted.

National home values did increase 3.1% from the previous quarter, the first time since the second quarter of last year that home values rose in all nine Census divisions.

Amy Crews Cutts, the deputy chief economist at Freddie Mac, said the second quarter increase was due in part to the homebuyer tax credit that expired in April.

http://www.housingwire.com/2010/08/30/home-values-drop-0-2-from-a-year-ago-freddie-mac

Recently, Tampa Bay Realtor Christine Hensley’s $153,000, 1800-square-foot ten-year old short sale cancelled unexpectedly. The seller allegedly could not get comfortable with what he would really owe the lender after the closing.

One week later, Hensley’s buyer closed for cash on a brand new upgraded 2100 square- foot Centex home for $170,000 cash, or about $2 per square-foot less than the short sale.

Within two days of asking for interviews from Centex if they had any recent sales resulting from burnt-out, distressed sale shoppers in Central Florida we had three stories and had to withdraw our request.

“I purchased a new home because I will never ever go through a short sale nightmare again in my lifetime,” said buyer Lynn Buonviri. Her dream short-sale fell through when the seller cancelled without telling anybody, refused to move out, and would not come to the door. The fact that she had just arrived after pulling a trailer 1,000 miles for the scheduled final inspection, did not help.

“My broker negotiated with the bank and owner for 5.5 months. The stress on both of us was incredible, but the idea of going through this again was unbearable.”

Fortunately, everything worked out for both buyer and broker.

http://realtytimes.com/rtpages/20100901_disgruntled.htm