Mark Wisterman's Paradise & Lake Oroville Real Estate Blog

As a reader of this blog you know that the market guidance I give for the Lake Oroville real estate market and Paradise real estate market is intended to provide a forward looking perspective to where the market is going.

Attempting to take into consideration all the factors that affect the market and trying to provide accurate guidance into the future is a balancing act to say the least. The biggest challenge in trying to do this is in separating the hype from reality.

Every day you hear the hype but rarely the reality.

I think the reason this Lake Oroville real estate blog is so popular is that readers have realized that the perspective and advice I give is based solely what I see the realities of the market to be. For example, if you go back to some of my previous blog posts you will see that I was maybe the only REALTOR you heard saying that the tax credits would not help the market in the long term; that the market cannot recover until we find a way to get some of the 8 million or so who have been foreclosed on back into the market; and that government “purchase incentives” will only prolong the pain homeowners and sellers are going through with regards to home values.

My contact with two separate buyers in the Lake Oroville real estate market over the past couple of weeks has led me to believe that we are about to see the very small beginnings of a truly sustainable recovery in home sales and home values.

This belief is based on the fact that each of these buyers were coming to me following their homes being foreclosed upon in late 2007 and early 2008.  With FHA lending standards allowing a borrower to get a loan with a foreclosure of 3 or more years old on their credit report, these buyers are poised to get back into the market and find another home to purchase.

With the first big wave of foreclosures rolling through the real estate market in 2008 it stands to reason that there should be the beginnings of an uptick in real estate transactions sometime in the middle of 2011 as many of those who lost their homes may possibly qualify again for a loan.

And as corny as this may sound, with the much lower prices and the almost free, fixed interest rates, many of these buyers may look back on their foreclosure with fond memories as it enabled them to get out of a house they most likely over paid for and which they financed with an adjustable loan with a top rate that would make a loan shark blush.

Time is a great healer, isn’t it?

With the stroke of his pen the President of the United States has extended the deadline for first time home buyers to close their real estate transactions to September 30, 2010.

As with the old deadline, the extension only applies to home buyers that were under contract on or before April 30, 2010.

The extension will allow an estimated 180,000 first time home buyers, many of whom are in the Lake Oroville and Paradise real estate markets, whose loans got caught up in the backlog of files that lenders encountered by being less than prepared for the easily foreseeable crunch of home loans that resulted from buyers making a mad dash to beat the April 30th contract deadline.

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• Tuesday Tax Time: the “Home Buyers Credit Extension” Edition  thriveal.com)

This just came across the wires and I wanted to make sure all of you in the Lake Oroville and Paradise Ca real estate markets hear it here first:

(June 29, 2010)—The United States House of Representatives has just passed HR 5623, the Homebuyer Assistance and Improvement Act of 2010, by a vote of 409-5. This bill extends the deadline for closing tax credit eligible transactions from June 30 to September 30, 2010. The bill moves to the Senate where the outcome is much less certain. I will continue to update you as the events move forward.

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• Will Congress Extend the Tax Credit Closing Deadline?  blogs.wsj.com)
• Today in Congress  dailykos.com)
• Extension to Home Buyer Tax Credit Deadlines Resurrected by House of Representatives  findwell.com)
• U.S. House Extends Closing Deadline for Homebuyer Tax Credit  businessweek.com)

The United States Senate failed to pass a bill yesterday that, among other things, would have extended the home buyer tax credit until September 30, 2010.

The bill, H.R. 4123, included an amendment allowing home buyers the three-month extension on the tax credit. The extension, though, only applied to buyers who signed purchasing contracts before the original April 30 deadline.

With a backlog of transactions waiting to be processed, and in danger of not closing by the required deadline of June 30, 2010,  the National Association of REALTORS®, as well a mortgage lender groups, had urged Congress to extend the time for escrow closings to the proposed September time frame.

Unfortunately for those of you in the Lake Oroville real estate market and the Paradise real estate market in danger of not closing your transaction on time, the provision for the extension was added as an aside to an unemployment bill that had become a political hot potato.

Why Congress can’t do the common sense thing, (oh wait, my English teacher told me never to use the words Congress and common sense in the same sentence), and vote on these unrelated issue separately is beyond me.

If you are in danger of missing this deadline you might want to turn up the heat on your loan officer, as loan processors and underwriters could really care less about your time frame

There is still an outside chance that this extension amendment and be added to another bill or simply be voted on on its own merits. My advise though is don’t assume anything.

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• Tax Credit Extension is Dead in the Water  zillow.com)
• Tax Credit Paperwork Extension Denied  rerockstar.com)
• 200,000 could lose out on homebuyer tax credit  money.cnn.com)

Today’s news that new homes sales are at their worst level in recorded history comes on the heels of yesterday’s report that existing home sales we down more than 2% while the “experts” were expecting an increase of almost 6%, is great example of what I am afraid is going to be another 6 months to a year of pain for sellers and homeowners.  I hope I am wrong , but I fear that I am not.

But, wait!! I thought the government’ s tax credit program was supposed to stabilize the market. If you listened to, and believed what,  the National Association of REALTORS® and the California Association of REALTORS® have had to say about the credits, you should be seeing a recovery by now. But, what we are beginning to see, on a National basis, (which is what most of us read and hear about) is a rapid move of the market toward the place it would have already gone,if  the people who should know better would have been honest about the ultimate impact of these credits they were supporting.

Instead these groups landed on the side of  getting a quick “fix” instead of thinking long term. Now we have to look even longer term because the inevitable has been prolonged.

Now let’s be honest here. I and my office associates, here in the Lake Oroville and Paradise real estate markets,  no doubt benefited from the temporary increase in sales that resulted from the credits. Our sales numbers increased like everyone else’s.  I would, however, have gladly sacrificed the short term benefits in order to re-establish a viable, vibrant and free real estate market. One that has staying power.

As it is we are saddled with the hangover from the housing version of  Cash For Clunkers, or as I prefer to call it:  “Funds For Foreclosures”

If you think that I am all gloomy and doomy about this market you are wrong. I think that expiration of these tax credits now allow us to come back to reality and now focus on the real cause of this market today. UNEMPLOYMENT!!!!!!!!!!!!!!!!

Maybe a softer real estate market going into election season will be one more reason to finally get us the changes we need in order to get  our country’s, and our state’s, economic engine restarted.

As they say, Everything Happens for A Reason.

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• Existing Home Sales Drop 2.2%  online.wsj.com)
• Housing: How Bad Will It Get?  blogs.wsj.com)
• May New-Home Sales Plunge 32.7%  dailyfinance.com)
• Calif.’s first-time buyer tax credit almost gone  lansner.ocregister.com)
• American Land Title Association Urges Congress to Extend Closing Deadline for Homebuyer Tax Credit  eon.businesswire.com)

Senate OKs new tax credit closing deadline

Congress is riding to the rescue for all of you in the Lake Oroville and Paradise California real estate markets who have qualified for the first time home buyer tax credit  by having a home purchase contract in place before the April 30, 2010 deadline, and are in danger of not being able to get the purchase closed by the deadline of June 30, 2010 because your lender is overwhelmed by the backlog of paperwork created by the frenzy.

With just two weeks before the expiration of the tax credit program ,an amendment to HR 4213 was added which, if signed by the President, will  extend the closing deadline to September 30, 2010. The extension was requested by the mortgage industry will allow a backlog of over 180,000 purchase transactions that were begun before the April 30th deadline to be completed. While this is a wise, and fair move on the part of Congress to agree to extend this deadline, it is important to understand that it THE EXTENSION IS NOT YET OFFICIAL.

With only 2 weeks to go before the original expiration date of the program, it is important for you, if you are one of these 180,000 transactions that has not closed, to keep pressure on your lender to get your loan done.  In this political environment it would be foolish to think that the proposed deadline extension of September 30th is a done deal. 

I will keep you updated as new information becomes available.

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• Senate approves home tax credit extension  seattletimes.nwsource.com)
• Home-Buyer Tax Credit Update: Senate Moves to Extend Closing Deadline  blogs.wsj.com)

 Hello again Paradise CA real estate market watchers and welcome back to your weekly stats. There is really not anything of note in this weeks’s report. With the deadline to qualify for any type of homebuyer tax credit fast approaching, I would expect to seeing some upward movements in the stats over the next 4-6 weeks.

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• Housing market is ripe for ‘fixer-uppers’  seattletimes.nwsource.com)
• Short Sales of Real Estate Increase Sharply  seekingalpha.com)

Today marks the first day of the waiver of FHA’s “anti-flipping” or as I call it, the “anti-free market” rule. Under the ill- advised rule a home that was purchased with the intent of being “flipped” has to be held by the owner for at least 90 days before it would be eligible to be purchased with an FHA-back loan. The effect of the rule was to cause an unnecessary obstacle to a real estate investor purchasing a “fixer,” renovating it and putting it back on the market for a profit.

 In the days of the flaming real estate market, FHA’s motive was to slow down the rate of home price increases and profit taking by homeowners who wanted to take advantage of the current market conditions.

With the number of foreclosed properties on the market, many of which are in such bad condition that they would not qualify for any type of loan, the FHA is now looking for real estate speculators and investors to help bail out the market. With the 90 day holding period waived for the next year, investors can now snap up some of the great deals that are available, renovate them as quickly as they can so that they will qualify for a loan, and get them back on the market so buyers can take advantage of the available federal homebuyer tax credits.

This should significantly increase the number of turn-key livable homes on the market in the Paradise &  Lake Oroville real estate market,  something that is sorely needed right now.  Going forward I would like to see FHA permanently rescind the regulation as it interferes with the free market. Only when the government gets out of the way will the market repair itself.

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• Investors dominate home flipping, auctions  sfgate.com)
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Well, another year is behind us here in the Lake Oroville real estate market and it is time for the obligatory look back over the past year.

However, to look at only a snapshot of this past year does not provide the perspective that you have become accustomed to expect from this blog. So what I have done to provide this perspective is to go back as far as our multiple listing database goes and extract monthly data for the median home prices as well as the number of home sales that occurred dating back to October 2005.

To get a better look at these charts you can either click on the links below or click on the individual graph.

Oroville Monthly Median Price

Oroville Monthly Home Sales

Before moving on, let’s be sure we all know what median prices are. The median of any set up numbers is the number in the middle of the set where 1/2 of the numbers is lower and 1/2 of the numbers is higher than the median number. Here is an example: Read the rest of this entry »

The following chart is something I produced to give you a visual idea of what the price ranges of  homes  currently for sale in the Lake Oroville real estate market..

As you can see, the inventory levels, as compared to nealry all other price ranges, are quite low in the $100,000 and below range which is what is mostly selling due to the $8,000 federal tax credit.  The highest inventory we see is in the $200,000 – $300,000 price range. In my view this is the price range that will need to pick up the sales pace before we see any lasting improvement in the level of home valuations.  Unfortunately, for sellers I don’t see a big turn in home sales at these price ranges in the near future. I hope, however that I am wrong.

Weekly sales data will be available here later today!