Mark Wisterman’s Oroville Real Estate Blog

Welcome to your weekly Oroville real estate market stats. Note the addition I have made to the chart showing how much a property sold for as a percentage of its list price. Watching this number should provide some insight into whether or not the price of homes is stabilizing.  Enjoy your week and have a safe Independence Day weekend.

Click to see more data

I found this article, written by Peter S. Goodman of the New York Times,  on CNBC.com this morning and thought it would be more informative to the Oroville real estate market in it’s original state than trying to explain it myself.  The bottom line to this article is that the banks continually shoot the real estate market in the foot at nearly every turn. This is just another example of how inept and clueless they are.  

Paper Avalanche Buries Plan to Stem Foreclosures

Somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit.

Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November.

“I don’t know what happened,” says a customer service officer who identifies himself as Chris. “I don’t know if there was a glitch in the system, whether it was transferred from one call center to the other.”

Think of the documents as being part of a pile massing inside the bank, Chris suggests. “This pile is not going to be moved forward at any point in time.”

Ms. Montenegro and her colleagues suffer these sorts of excruciating exchanges all day long. It is a potent indication of the difficulties afflicting the $75 billion taxpayer-financed program created by the Obama administration in an effort to avoid foreclosure for as many as four million distressed homeowners.

Under the plan, the government offers mortgage companies $1,000 for each loan they agree to modify, then another $1,000 a year for up to three years.

Read the rest of this entry »

I just received an e-mail from the California Association of REALTORS®  (C.A.R.) which contained information regarding a fraud warning recently issued by the California Department of Real Estate (DRE) alerting consumers about loan modification scams and how to protect themselves. Because of the importance of the message to homeowners, I have copied this directly from the C.A.R. website so as not to leave anything out.

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 DRE issues fraud warning
The DRE recently issued a fraud warning alerting consumers about loan modification scams and informing consumers of what they can do to protect themselves. The alert is available in both English and Spanish.  Last July, the DRE had fewer than 10 complaints involving loan modification companies; today the department has 750 pending investigations. In addition, since last October, the DRE has filed more than 200 Desist and Refrain Orders. A list of the companies and persons the DRE has filed an action against can be viewed at http://www.dre.ca.gov/cons_drs.asp.It is worth noting that not all firms who collect advance fees for loan modification services do so illegally, the DRE said.  In general, only licensed real estate brokers and attorneys operating within the scope of their license may collect advance fees. Real estate brokers must have their advance fee agreement reviewed by the DRE prior to its use to ensure it is compliant with real estate law.

C.A.R. also has learned of what appears to be a loan modification assistance program and lead generator, from a company using the legislative bill number 3648, that looks as if it’s a government entity, complete with a misleading seal closely resembling a governmental seal but that is not affiliated with the government. C.A.R. cautions all members to be on the alert for schemes seeking funds from REALTORS® or consumers with no value, or that may be misleading or unlawful.

More Info

I know this has nothing to do with real estate but I could not let the day go by without acknowledging the passing of the #1 second banana in show business. I practically grew up watching Ed McMahon and Johnny Carson on the Tonight Show. 

One of the things that made the Carson/McMahon era of the Tonight Show so popular with me was the interaction between these two longtime friends. Some of the funniest moments on that show were when Johnny and Ed would start in on each other. I would have tears in my eyes from laughing so hard at those two performing at their best.  The show has never been as good since they called it quits.

When Mr. Carson passed away it was certainly the end of an era when comedy could be funny without being vulgar, or profane. It was the end of a time when you could be funny talking about something somebody had done without being called a racist or a homophone, or a chauvinist.  It was the end of joking about politics and politicians without being mean spirited and hateful. It was just good old clean  fun and laughs, and for over 30 years Ed McMahon was a vital part of this never to be seen again comedy style. Seeing Ed on TV in his later years pitching life insurance, or the Publisher’s Clearing House Sweepstakes, always jogged my memory of the great shows Johnny and Ed did together. Luckily I have many of those shows on VHS tapes that I recorded over my years of being entertained by them.

I think tonight I will dust one of those tapes off and take a stoll down memory lane and listen to Ed say one more time,”Heeeerrrrreeee’s Johnny.”

God Bless you Ed. May you rest in peace.

Hello again, Oroville real estate stats fans. Here are the latest sales numbers from the Sierra North Valley mls for the Oroville area.  Number of units sold is still hanging in there but it would be nice to see increasing numbers. Highest priced sale of the week was a property I sold for a nice price of $465,000.  There was also a sale in the $300,000 range which may be a glimmer of hope that the homes in the upper price ranges are starting to sell. Again only time will tell.

After spiking to nearly 6% interest rates have settled back down to the 5.25% range.

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It seems that one Senator is finally seeing the light when it comes to the tax credits being made available to first time home buyers.

When the idea of first time homebuyer tax credits was first being discussed, a proposal was made in the U. S. Senate that the credit be as much as $15,000. As the bill made its way through the process the amount was reduced to $8,000 and was signed into law.

I remember saying, as the debate was taking place that, although I thought the housing market market should be allowed to correct itself without government interference, if the government was going to ”stimulate” anything is should be housing.  After all isn’t everyone saying that the housing bubble is responsible for the terrible economy. Why are we putting trillions of dollars in places that have nothing to do with housing? 

If the government thinks these credits are worthwhile (over the long term I am not so sure) we need to make them available to ALL homebuyers, the credit needs to be much larger than $8,000, and buyers should be able to use the credit in lieu of down payment monies.

Two things have now happened since the program went into effect. 1. The Department of Housing and Urban Development (HUD) has determined that the credit can be used instantly as part of an increased down payment and/or for buyers closing costs. 2. Senator Johnny Isakson (R-GA) has introduced a bill to increase the credit to $15,000 and make the credit available to ALL homebuyers.

Again, although I am generally opposed to government interference in the free market, if it is going to happen it should be a bigger proposal than it is. My proposal would be to make the credit 10% of the purchase price of the home with a cap of $50,000. Because this program is going to artifically improve home prices over the short term (the goverment is paying buyers to buy homes),  it will be necessary to ween us ofr the program over a longer period of time than just one year in order to keep home prices from falling off a cliff when the program is terminated. I propose to put this program in place for a 5 year period and begin phasing out the credit after the first 2 years.

The truth is that the market will correct itself without all these credits and will be stronger for it. But Senator Isakson and I feel the same way;  If you are going to do it make sure it will get the job done.

It is nice to know that, on this,  I am not alone

 This is part 5 of a series of 5 articles written to provide a more local perspective of the real estate markets to buyers and sellers in the Oroville real estate market as well as the surrounding Butte County areas of Chico, Paradise, Biggs and Gridley CA. I welcome your comments on this or any of my blog articles.

Sellers-Listen Up!!

In the previous 4 blog entries of  this series we have discussed some of the historical trends seen in the California real estate market.  While these numbers are not specific to the Oroville real estate market, they serve as a much better guideline than when analyzing the national numbers. There is an old saying in the real estate business that “all real estate is local.”  There is not a better time to remember this phrase than today. When looking and listening to news about real estate activity do not buy into the national numbers.  Look at activity numbers that are closer to home. This is my motivation for bringing weekly sales activity of the Oroville market to you. I want to give you as much information about Oroville home sales as I can in order for you to make quality decisions.

As a current seller or potential seller there is only one ‘nationally’ reported number to which you should pay close attention. That is the weekly reports on the number of mortgage applications being submitted to lenders.  This number, provided by the Mortgage Banker’s Association demonstrates just how sensitive the consumers are to interest rates.

Just as I have warned in  previous writings, mortage applications have taken a steep dive as a result of the run up of rates over the past couple of weeks.  Mortgage applications fell over 15% last week as a result of the increase.  Remember our talk of  how from an historical standpoint the current rates are a bargain. Well right now buyers aren’t seeing it that way. The fall of application activity is a message to the financial markets that rates need to be lower.  Buyers could care less about historical data right now. They want their 5% interest rate.

Sellers, for this  reason, if you are considering the sale of your Oroville home, but are waiting for values to go up, you may want to reconsider your strategy.  Any increase in interest rates is going to reduce the number of buyers, thus suppressing the price of your home. The low rates increase the housing affordability index bringing more buyers into the market. Doesn’t it make more sense to have your home on the market while more buyers are looking?

Another stat for sellers to consider, one that we also previously discussed here, is that over the long term California housing prices have, on average, increased in the neighborhood of 4% per year since 1973.  If you are waiting for that big  jump in prices to occur before placing your home on the market  you may be waiting for something that may not happen again for 10-15 years. But, even if I am wrong and prices do take a big  jump, it is still going to negatively affect the average seller. Let’s look at an example: Read the rest of this entry »

This week’s sales numbers for the Oroville real estate market show a substantial improvement over the previous week’s numbers as well as the sales numbers for the past few weeks. Total sales volume is up dramatically bouyed by 4 sales that were at, or topped, the $300,000 price level.  Sales at this price level have been virtually non-existent for weeks. In coming weeks keep an eye the number of Oroville homes for sale. When begin to see a consistent downward movement in this number it will just be a matter of time before home prices start to increase.

CLICK HERE to see entire chart

 Here are your weekly numbers reflecting last week’s sales activity for the Oroville real estate market.

We are still coasting along slowly with just a small uptick in the average sales  price.  Long term outlook got a little cloudy in the past week as interest rates jumped nearly 1 percentage point in about 10 days.

I have made one change to the information I am providing you. In past weeks I have been tracking total listings for sale in the Oroville area. I have switched that to show you total single family homes currently for sale in the greater Oroville area.

 Remember, buyers, that I have been saying how good rates are. You need to pay attention to the fact that with rates in this historical low range the pressure is for rates to go UP.  In very general terms, a good stock market day usually means a higher interest rate day.  

See the expanded chart

Wisdom for Buyers

 The following is part 4 in a series of 5 articles written to provide a more local perspective of the real estate markets to buyers and sellers in the Oroville real estate market as well as the surrounding Butte County areas of Chico, Paradise, Biggs and Gridley CA. I welcome your comments on this or any of my blog articles.

One of the striking things about the current condition of not only the Oroville real estate, but the real estate market in general is what happens to mortgage applications with the rise and fall of interest rates. Lately what we see each time interest rates move into the 5.5% range is that mortgage applications for purchases and refinances hit the skids. What is striking to me about this is that here we are with the lowest rates in the history of mankind and a rise from 5% to 5.5% has everyone running to the exits.

Now the one thing you will find in all of my writings is that I speak the plain truth, and that I try to provide to you the wealth of knowledge and experience I have gained in my15 years in this market in order for you to make proper decisions regarding your real estate needs. Today is no different. So buyers listen carefully:

 If you think interest rates of 5.5% are high, you better buy a house NOW OR you may NEVER ever buy one.!

To help you get a grip on this reality I refer you to the small chart below. The California Association of REALTORS®recently released their 2009 Annual Historical Data Summary providing data through the end of 2008. Within that report is data showing the annual average of conventional loan mortage rates dating back to 1973.Fro purposes of this discussion I reduced the chart down to show the lowest mortgage rates in each of  last 4 decades.  As you can see between 1973 and 2008 the lowest annual average rate for fixed rate mortgages (FRMs)  was in 2003 at 5.83%. The expanded view of this chart is even more revealing. Using the data from the entire chart shows that interest rates from 1973-2008 averaged over 9%. Those of you who have dicussed interest rates with me over the years have heard me say time and time again that any interest rate below double digits is “historically”  a good rate. The data back me up on this.

Again, keeping things in perspective, I would not recommend anybody go out and pay 9% for a loan today. That would be unwise. But it is important to realize that, just as I feel the real estate market has bottomed out, so too do I feel that interest rates are at the bottom. In fact, rates are this low due only to government intevention. The next major move for rates, barring any unforseen economic or political event, is UP. It will certainly not surprise me to see rates in the 7% range sometime in the coming 12 months as the nation’s economy continues to heal. Just my opinion, but I think history is on my side.  The ringing is getting louder!!