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First Quarter Market Update for Eagle Rock, 90041

Our average prices went down about 30% in the last 3 years. That does not necessarily mean your property is worth 30% less today than it was worth in March, 2007, but we can safely say that you would have a serious challenge expecting to sell your house for the same amount you might have sold it for 3 years ago.

First Quarter Update for Eagle Rock
First, let’s look at how far we’ve come from the best times which were 3 years ago:

90041 Graph 2007-2010

90041 Graph 2007-2010


Our average prices went down about 30% in the last 3 years. That does not necessarily mean your property is worth 30% less today than it was worth in March, 2007, but we can safely say that you would have a serious challenge expecting to sell your house for the same amount you might have sold it for 3 years ago.
The good news is that we are moving upward as you can see over the last month and the last year. In our market area, sales and prices bottomed out about a year ago. Currently on the market (April 25, 2010) in the 90041 zip code, we have 21 properties, 5 of which are short sales and 2 are foreclosures. Today, we have 15 in escrow that are short sales, 1 that is a foreclosure. Closed so far this year are 10 short sales and 6 foreclosures. That’s 6% of the sales are foreclosures and 22% are short sales. Compared to the figures for last year, we can see definite improvement. At the end of 2009, 42% of the year’s sales had been foreclosures and 17% were short sales.
Several regular sales are on the market and in escrow as people have adjusted their expectations and are selling at prices lower than they might have gotten in 2007, but higher than they would have made in 2009. Available inventory in Eagle Rock and surrounding areas is very low. Good, well-priced properties are selling in multiple offers for higher than asking prices. There is pent-up demand right now, both for people to sell and for people to buy. Did you know that my “niche market” is regular sales?
What about the Shadow Inventory? This is the “tidal wave of foreclosures that are going to be dumped on the market, further reducing prices” that we keep hearing about. I subscribe to Foreclosure Radar and there are definitely 80 properties in the 90041 zip code that are scheduled to go to Trustee’s Sale. But the truth is, most of these sales have been rescheduled over and over again. The banks are not planning to “dump” these properties. One foreclosure that sold through the MLS this year, 2051 Ridgeview, had been in arrears in payments for over a year before they finally foreclosed, then the foreclosed owner was allowed to continue living in the property for another year, then the house was listed for $598,000 and eventually sold for cash for $625,000! Considering the fact that the house had settlement, foundation, and water intrusion issues, that was a darn good price for it! Also, having had only 6 foreclosures sell in the first quarter of the year is quite low compared to the past year.
What about refinancing to lower my interest rate? For the last couple of years, it has been almost impossible for many of us to refinance because our loan to value (LTV) ratios were too high. That is, appraisals on these refinances were shockingly low and the lender wouldn’t redo the loan unless you had at least 20% equity (LTV). This has been forcing some homeowners into foreclosure because they bought or refinanced in 2004-2007, have had job layoffs or life changes (i.e. divorce) that caused them to need to lower their housing expenses yet they couldn’t qualify for a short sale or a refinance. Today, they might qualify for one or the other. You may not get an interest rate below 5%, but if your current rate is 6% or more, you might find it a reasonable time to try refinancing. Or you might consider selling. Call me.
One challenge today is with lenders and appraisals. Even though the market has improved and values are higher, lenders are very slow to approve purchase loans and are requiring seemingly endless reams of documentation. They seem to be fearful of approving a loan without having at least 6 inches of verifications. I think they do judge them by the inch. While the mortgage broker might have a stake in how close the loan process stays within the contingency period, the eventual underwriter who signs off on the approval seems to be unwilling or unable to do it in a timely fashion. Are they overworked? Underpaid? Hostile? You tell me.
Appraisers sometimes are coming in at values that seem completely unrelated to actual closed sales that are higher. Also, they are relating “distress sales” equivalent to “regular sales.” In other words, they evaluate a foreclosure or a short sale price equally to a regular sale. They are also overlooking condition as a component of value. In other words, a foreclosure that has been stripped of its fixtures might be used as the best value compared to a good home that has been well-cared for but is similar square footage.
Real stories: An appraiser took it upon himself to downgrade the value of a midcentury modern compared to a Craftsman by $35,000 based on its style. Come on! Who can make that kind of value judgment? This same appraiser gave no value to an additional parcel of land that was a “buildable” 6,000 square foot lot. The buyer’s agent filed a rebuttal to this appraisal (which had come in $50,000 below the sales price) and was able to have the appraisal reviewed and upgraded to the sales price. This is one way professional Realtors are dealing with these issues.
Many properties are not appraising for sales price, but the buyer and seller work it out. Each case is different and resolved in various creative ways. But the days when multiple offers guarantee a good sales price and subsequent closed escrow are not with us. It takes a team effort between agents, buyers and sellers to negotiate transactions today. This is why you should work with full-service professionals to represent you in the purchase or sale of your property.

Today's Loan Jungle
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