Mark Wisterman's Paradise & Lake Oroville Real Estate Blog

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 »

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 »

Weekly sales of homes in the Oroville real estate market made a good comeback last week as the effects of the first time homebuyers tax credit continues to drive the number of sales.  Unfortunately for sellers, the tax credit is doing nothing to boost home values, as nearly 50% of sales are for “distressed” properties.

See Expanded Chart

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With the expiration of the Federal First Time Home buyers tax credit looming, along with discussions over extending the deadline and expanding the program, I thought now might be a good time to consider what the impact and future  consequences of these programs may be.

Loyal readers of this blog know that I believe that free market forces are a much better tool than government intervention when it comes to solving this real estate market downturn. Unfortunately though, the current state of the real estate market was created by government intervention. Banks being told by Congress to loan to less than historically credit worthy borrowers and monetary policy that flooded the market with “easy” money created a real estate bubble that burst with such force that it sent a “nuclear” mushroom cloud of foreclosures raining down on every community in this nation. We are now dealing with the fallout of these foolish mandates and policies by expecting Congress to fix what they screwed up in the first place.

So here were are, some 3 1/2 years into this correction, and it seems that the more things change, the more things stay the same. Not only do we have the Fed keeping interest rates artificially low, we have cries from REALTOR® organizations and other groups to continue to provide a sort of “housing welfare” program by paying someone to buy a house. Not only that, but the call has now gone out to pay MORE money to people to buy a house. 

I know that my view of this is not going to be popular with my brethrens of real estate, but as you know I do not blog in order to espouse the populist view. I blog to share my perspective about real estate issues facing my fellow Americans.

The big question in my mind is how do we reform this housing welfare system that has been created without causing greater harm to the market and property values? When will we be able to end these programs and how? What happens when the Fed decides to end the cheap money gravy train?

As I look at the Oroville real estate market stats each week I see who is really benefiting from the current incentives..THE BANKS!!!  Virtually the only segment of the real estate market that is being impacted by these policies is the foreclosure (read bank owned) market.  I grant you that shrinking the inventory of foreclosures is an important part of the cure but is not the only part. The greater urgency is home valuations. The market cannot return to health until a floor is put under prices and we have significant price appreciation that enables those who own a home to have sufficient equity to either refinance or sell. 

Until that happens I consider these credits more of a bank bailout than a housing stimulus plan.

I welcome your comments on this.

The Oroville real estate market continues on its average curve. Average list price and average sold price maintained their elevated levels from last week thanks to 4 sales of $300,000 and higher.  Inventory issues are beginning to impact sales as most of the buyers right now are first time home buyers looking in the very low price ranges and the majority of these Oroville homes will not qualify for financing without having repairs made to them.

The major issue with this market is that many home owners that would like to sell and move into a bigger or smaller home, but they owe more on their homes than they are currently worth. Until something happens to free up this “move up” market we are going to be stuck at this low average sales price.  Of course, as I have been saying for months, great for buyers, not so great for sellers.

A lot of conversation is taking place in the real estate industry right now concerning the pending expiration of the first time home buyer’s federal tax credit and whether or not the feds are going extend it past the November 30, 2009 deadline.

Most of what I hear from people in the Oroville real estate market is that they feel an extension isneeded in order to keep this real estate market going in the right direction. Granted, most of the people I discuss this with are in the business of selling Oroville homes, and generally speaking REALTORS® haven’t met a housing subsidy they don’t like. And yes, for the record, I have benefited from the added property sales that have undoubtedly been generated by the tax credit.  But, aside from adding commissions to real estate agents pockets what good has the credit actually done in improving the overall market. I say, the effects have been marginal to the overall market, at best.

Ok, so I know I am no economist, but I get to play one on this blog. After all it is my blog, ( yeah, ok,  I’m a control freak!).  But here is my take on this:

The only thing, in my view, that  the $8,000 tax credit has undoubtedly accomplished is that it has brought some buyers off the fence in order to take advantage of the government handout. And frankly, if the governement is offering it,  you might as well take what you can get. The credit has done nothing to make homes more affordable or loans easier to qualify for. The fact is that lending standards have continued to be tightened; and housing affordability is at historical highs due to the banking crisis and the huge number of “distressed” property sales that have occurred as a result over the past 3 years. But, yes it is true, there are more first time home buyers in the market now than at anytime in recent memory. So, for one segment of the overall market (bank owned properties), the credit has generated an increase in sales activity.

There is one major segment of the market however that needs to recover that is not being helped by the credit whatsoever. That is the so-called move up market. Those current homeowners ( not banks) that would like to sell in order to up size, or downsize for that matter, but are unable to sell due to market valuations. Until values stabilize and begin moving up to the point where current owners are no longer “under water” it is going to be very difficult to get the move up market going again. The $8,000 tax credit does nothing to help them, and these are the people who need the most help. Instead we give money to those who are already get the benefit of the severely depressed prices.

Taking a step back and looking at the big picture it looks as if the credit’s unintended consequences (or maybe intended consequences if you are a conspiracy theorist), has been to help the banks get rid of their inventory while doing nothing to address the 900 pound gorilla in the room.

My big concern is that getting money from the government to buy a house or buy a car or to buy anything, is like giving the consumer economic cocaine. It only takes once or twice to get hooked on it and the fear of consumer withdrawl will cause the Congressional junkies to keep pushing more at us.

I say let the free market do it’s thing.

To kick-off their campaign to implement their plan to require homeowners to ask permission to sell their homes, the local sewer districts spoke publicly for the first time to our local newspaper in an effort to spin public opinion to their way of thinking.

While the story was well written by Oroville Mercury-Register reporter Mary Weston, it is quite obvious from its content that the Lake Oroville Area Public Utility District (LOAPUD) was less than forthcoming about what their true intentions are.

Take a look at the article and see for yourself ,and then be sure to read the rest of my commentary.

Click here to read story
What LOAPUD failed to tell reporter Weston is that they in fact have no program in place to provide assistance to homeowners to fix leaky laterals. They also failed to mention that leaky laterals may be less than half the problem with sewer capacity as they readily admit that half the problem may be with their own main line. Yet they claim they have no money to fulfill their duty to maintain their OWN lines. Which by the way, is the reason we pay our sewer fees.

They also failed to disclose that they intend to interfere in the sale of any home in the district by not allowing the sale to happen until the seller pays to have costly lateral testing done at the homeowners expense, which could result in some homes not being able to be sold at all.

They also failed to say that a homeowner will have to pay for the same costly lateral test whenever a permit is issued for any repairs or improvement being done on the home. For example, replacing a $600 water heater could end up costing thousands of dollar due to lateral test and potential repair costs.

Once again, they failed to mention that Ordinance 1-09 of the Comprehensive Sewer Rules and Regulations, which mandates these onerous and archaic rules is set to be implemented in the coming days.

Mr. Brown and his board also don’t tell you that this ordinance creates undue discrimination against home sellers and those homeowners who keep their homes maintained while potentially allowing major polluters to continue to pollute.

This ordinance does nothing to address the issue they are trying to resolve. It simply creates more problems. It is quite frankly a big smoke screen (pardon the pun) designed to place the burden created by their own lack of maintenance and poor planning upon homeowners who are already footing the bill for the district’s incompetence.

This type of ordinance has had devastating financial consequences in nearly every place that hit has been tried. For each of the two districts that are touted in the article as ‘models’ for what is being forced upon us here, there are many more sewers districts across this country that have abandoned the program after seeing is negative impact.

Even the districts in the Lake Tahoe Basin, one of the most environmentally sensitive areas in the country, have opted out of such ordinances because it have been proven that it DOES NOT WORK.

Homeowners in the all three sewer districts of the Oroville real estate market need to make their voices heard and stop enactment of this ordinance and all ordinances like it.

Lately, a  lot of attention has been paid to the newest proposal to help stem the escalating cost of health care in this country and to provide health insurance to every American.  Each time this topic comes up the debate rages over the proper course of action to take in order to fix the problem.

While Congress and the media get all worked up over this, I think I have the best solution of all.

Instead of EVERYONE having health insurance, how about NOBODY having health insurance.

At least in the way everyone has become accustomed to.

Insurance was originally created to cover only CATASTROPHIC events. Not the day to day events of our lives. For some reason health insurance it the only type of insurance no longer being used as was originally intended.

  Read the rest of this entry »