Mark Wisterman's Paradise & Lake Oroville Real Estate Blog

 Merry Christmas, everyone. We had a very slight sales rebound last week in the Lake Oroville real estate market, but again not much on which to comment. I think the biggest news in the current market environment  is that inventories are continuing to shrink. I have provided a chart at the bottom of this post which graphs the nature of the inventory trends.  Be sure to click on the graph for a larger view of it.  As a buyer you will want these inventories to show increases as this will keep prices more affordable. As a seller you should like the trend that has been developing since June. Shrinking inventories will result in higher prices over time. 

Click here or on chart for larger view

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I recently attended a workshop put on by the City of Oroville Housing Development Department regarding changes to the First Time Home Buyer Financing Assistance Program that the city has had in place for a number of years now. Up until about 4 years ago the program was easy to explain to buyers as it was a pretty straightforward program. The City would provide secondary financing of up to $100,000 at 3% simple interest with no payments being required on the loan. The buyer would simply pay off the loan and any accrued interest whenever the buyer decided to sell the home.

Needless to say the program has been quite popular, especially when home values were going through the roof and nearly all first time home buyer were being squeezed out of the market.

But something else happened to the program when prices started their run up. The City of Oroville got greedy and decided that they would get into the real estate business by competing against local contractors in buying up vacant city lots, constructing their own homes, and requiring that they be financed through their loan programs when they were sold.

For a while everything was working like clockwork for the city. They were buying lots on the cheap, building average quality homes, and making a lot of money while values kept escalating and they kept raising the prices. But, as with many government programs, things have since not gone well.

Just as the market was beginning to pull back, the City had a total of 9 homes in their inventory, 6 complete and 3 under construction. it was obvious that they were getting nervous about market conditions because they arranged a workshop to solicit ideas from REALTORS®, and lenders on how they could get these homes sold. Unfortunately, there was not much of a turnout for the meeting. I happened to be the only REALTOR® in attendance, as many others had decided to participate in the annual Oroville Association of REALTORS® picnic instead. In addition to me and city officials, there were three or four lenders in the room. Read the rest of this entry »

It seems that my blog posts may be being read even by Congress.

On November 14, 2009 I blogged about the financial state of The Federal Housing Administration (FHA) and the possibility of an increase in the minimum downpayment requirement from 3.5 percent to 5% in order to obtain an FHA loan to purchase a home in the Lake Oroville real estate market and beyond.

Seems that I am not the only one thinking this way. RealtyTimes.com has an article about this very thing.

CLICK HERE to read the article.

Now, before revealing my answer to kick starting this real estate market, lets do a quick review of where we are today.

Remember, in part one of this two part post I reminded you that this mortgage mess in which we find ourselves has resulted in MILLIONS of home owners (3 million this year alone) losing their homes. Also, recall that I think that a major portion of these displaced former home owners could probably qualify to buy a home today if it weren’t for the fact that their foreclosure or short sale would be reflected on their credit report for the next 3-5 years. In addition, it seems to me that it would be extremely time consuming to attempt to figure out which of these borrowers were sold a “bill of goods”, which ones had no idea what they were doing, or which ones were just plain irresponsible in handling their finances.

My request for what your ideas might be to fix this was answered by one of my most loyal readers, Steve Davis  who wrote:

“One could start the qualification on who gets help and who does not by the ones that put 20% or more down were really qualified buyers – vs the low or no down people who should have never purchased a home.”

I do agree with Steve that we could start allowing those who had originally put 20% down access to new loans. but we still have the issue of credit scores for these people too.  So what should we do? Read the rest of this entry »

With all the hoopla surrounding the extension of the first time home buyer tax credit, as well as the expansion of a smaller credit to existing home owners, I think it is time to develop a plan that actually addresses the LONG TERM needs of this market. I am talking about more than just the Lake Oroville real estate market here. We need a national solution.

As you know, I am not a big fan of using taxpayer dollars to pay people to buy homes. These handouts, in my view, are only band aid solutions where a tourniquet may be the better answer.  They do nothing to stabilize the market. In fact the tax credit is just going to delay the inevitable unless something is done soon to spur market demand for housing.

What I would like to do, over the next couple of blog posts, is to get your opinion on a plan that I think will finally put this real estate market back on the tracks, without government money.  And just so you know, it must be a great idea because I thought of it while taking a shower.  (If you have never heard of this theory before it must be because you take baths).

So let’s get started fixing this thing. Read the rest of this entry »

Bet that got your attention, huh? While, for now this is a simply an attention getting headline, the reality is that there is a chance this could actually happen.

A recent audit of the FHA loan progran recently revealed that the agency has fallen significantly short in the amount of loan reserves that it is required, by law, to have.  These loan reserves are used to pay claims from lenders when an FHA loans are foreclosed upon.

I don’t want to get overly technical about this but the law requires FHA to have an amount equal to 2% of the outstanding loans that they insure in a reserve account to pay for claims. The current reserves that the FHA has on hand is .53% . Barely a quarter of what is required.

With FHA financing being almost the only way to get a home loan these days, pressure has been mounting on the agency’s reserves.

There are a number of scenarios that, if accurate, could bring these reserves back into line. An article in a recent issue of the Washington Post goes into more details on these scenarios.

The potential impact of this on both buyers and sellers in the Lake Oroville real estate market could be dramatic. Among the solutions to the problem would be to raise the premium the FHA charges for mortgage insurance. This would help build the reserves but, at the same time, increase one’s house payment.

Another would be to raise the amount of money required as a down paymentfor the loan.  Currently an FHA loan requires a down payment of 3.5% of the purchase price, increased recently from 3%. On a $200,000 home a buyer of an Oroville home now needs to have a downpayment of $7,000. If the requirement is raised to 5% that same home will require a down payment of $10,000. A  42% increase! 

There is no doubt, should either or both of these scenarios be put in place, that it will slow the sales of homes. The end result should be that buyer’s will have to work and save a little bit more than they are now before buying a home. This, in my view is a good thing.  

The bottom line here is that the FHA is currently the lifeline to this housing market and it is vital that it stay solvent.

I don’t know about you, but I would much rather increase these requirements, even though it may temporarily sqeeze some buyer’s out of the market, than to have the whole prgram collapes under its own weight.

Oroville homes, Paradise homes, Chic properties, Butte County Listing. For sale

President Obama signed into law the extension of the first time home buyer tax credit. Included in this extension was an expansion of the credit to current homeowners who have owned a home in 5 of the last 8 years.

The extension and expansion allow buyers in the Lake Oroville real estate market, and beyond,  to claim the credit as long as you are in a binding contract no later than April 30, 2009 and close not later than June 30, 2009.

And no ,you are not allowed, on May 5th, to back date your contract to April 30th.

Below are links to  further information from the National Association of REALTORS® (NAR) on the new rules for the credit. Please take the time to read and understand them as you are ultimately responsible for following the rules. And please let me know if you need any further explanation on how this credit works.

NAR Tax Credit FAQ

NAR Tax Credit Extension Chart

Oroville Homes, chico real estate California properties, paradise for sale listings

5:19pm – Attention buyers and sellers in the Lake Oroville real estate market.

The California Association of REALTORS® (CAR) just announced that the U.S. Senate has passed the unemployment extension bill which also contains an extension and expansion of the homebuyer tax credit. According to CAR the bill now moves to the House of Representatives for their consideration.

As usual, I will update you as more information comes available.

5:35 pm- Here are more specifics on the bill that passed the U.S. Senate earlier today. Click here for report

The working group of the Oroville Association REALTORS®  met with officials of the Lake Oroville Area Public Utility District (LOAPUD) yesterday to continue discussions aimed at crafting a fair and balanced solution to the issue of faulty sewer laterals in the district and throughout the greater Oroville real estate market.

You recall that the district, under pressure from the State of California to do something to avoid  possible contamination of ground water,  intended to implement the onerous and unfair program of requiring sewer laterals to be tested and repaired before allowing the sale of a home within the district to close escrow.  This point of sale requirement is bad on nearly every level and I have adamantly voiced my opposition to this since becoming aware of the requirement in July. If you would like to refresh your memory on the issue please click on the link below to see my previous blog posts about this.

History of LOAPUD Posts

In addition to LOAPUD officials, REALTORS®,  title company representatives and myself, the meeting was also attended by representatives from the other two sewer districts in town, (City of Oroville and Thermalito Irrigation District), as they too are looking to implement a sewer lateral repair program.

The result of this latest meeting was very encouraging as all parties not only expressed a willingness to work together to come with a workable solution but also actually discussed alternatives to the existing plan.

The idea that seemed to garner the most positive response by all is a variation of what I suggested in my blog post of August 27th when I said: Read the rest of this entry »

Remember a couple of posts ago when I said this about Wall Street analysts and weather reporters?

“By the way, do you think these “analysts” have gone to the same school as weather reporters, they are hardly ever right and they get paid for it.”

Well, here is the proof. Two separate investment firms have totally different opinions regarding the future of housing prices. 

Click here to see their opinions

Yes, this is the shortest Oroville real estate post I have ever done. But, don’t get used to it!!!