Archive for September, 2009

Is The Glass Half Empty or Half Full?

half empty half full When it comes to predicting the state of the economy and the real estate market its like looking at a glass of water.

Is it half full or half empty?

Neither.

We are no where near a recovery nor are we at the bottom.

STOCK MARKET:

In the short run the stock market will get better before housing .

People  who have lost a lot of personal wealth are anxious to make up some of that loss.

With low interest rates on CD’s, Treasuries, The Stock market appears to be half full.

REAL ESTATE

Real Estate is another story. Real estate in general lags behind other markets and with unemployment data at 10% nationally I think the Real Estate Market glass is half empty.

I predict we will see more foreclosures as more people are going to be unable to modify their loans or pay their mortgage while unemployed.

I think home prices will continue to decline because of the increase in foreclosures.

I think there will be fewer home buyers due to tighter credit,  or if the First time Home buyer credit is not renewed or  if FHA runs out of money.

According to the Home Builders Association there will be fewer new homes being built due to lack of credit and financing.

I would love to hear your comments….

Written by Jack Lewitz | Discussion: No Comments »

Listen to NPR Report “FDIC is Running out of Money”

Written by Jack Lewitz | Discussion: No Comments »

Time is of the Essence

Sand clock

During the past six (6) months we continue to see high volume of foreclosures in all five (5) counties.
What appears to be shifting is the number of foreclosure sales versus the number of short sales.

The reason for the increase in foreclosures can be explained in different ways.

One would expect the number of foreclosures to increase when the State Moratorium on Foreclosures was lifted.

Another reason is buyers in general are not willing to wait for a Short Sale to be approved by a bank and are looking to get the best price and are opting to purchase Bank Owned properties.

>
County # of Sales # of Short Sales # of Bank Foreclosures % Short Sales % Bank Owned
Cook 12,297 966 4,431 8% 36%
Lake 2,655 234 706 9% 27%
McHenry 1177 160 270 14% 23
Dupage 2,972 274 505 09% 17
Will 2563 254 758 10% 30

Written by Jack Lewitz | Discussion: No Comments »

Short Sales Could be the Solution to Housing Market Only if..

Campbell Communications surveyed 1,000 real estate agents and found 19 % of all home sales during January and February of 2009 were Short Sales. On average there is one Short Sale for every two foreclosed property sales.

Short Sales are more cost effective than a foreclosure because they avoid the legal expense of a foreclosure, maintenance expenses, and interest and real estate tax expenses. In addition, Short sales can be completed  with less marketing time and exposure to price fluctuations in the market.

Short sales also are better for the seller. The seller will not have a foreclosure on their record and often are fore given of the debt after the sale.

If Short Sales are so good why are we not doing more of  them.

According to Campbell Communications, for every completed short sale, three fail due to slow responses to the offers.

It is not uncommon for short sales to take a minimum of 5 months to get a response or acceptance from the bank.

Why does it take so long to get a response. For one thing, the Banks are usually not the decision makers in a Short Sale. Banks typically are only servicing the loan and need approval from the investor.

If Short Sales are better than a Foreclosure then here is my solution to the problem.

Take banks out of the equation and stop rewarding them with money incentives.

If banks are not the decision makers in Short Sales then why reward them with cash.

I suggest we set up another review process for Short Sales.

buyers, seller, lender, and investor, and the Fed need to be part of the process.

Why the Fed?

The number one problem with Short Sales is Investors do not want to take a loss on their investment.

(The loss is the difference between what is owed on the mortgage and the price being offered in a Short Sale.)

In order to get more Short Sale approvals the Fed could guarantee the loss to the investor.

When the Short Sale is finally approved by all parties then they must perform or be in default.

If buyers default then they could be loose their earnest money. If sellers or lenders default then buyers could sue for specific performance.

Finally, Short Sales could become the Solution to the Housing market only if we take necessary steps to change how it is currently operating and streamline the process.

Written by Jack Lewitz | Discussion: No Comments »

Do You Feel the Recession is Over?

Last week we heard news that the “Recession is Over” and that we are on the “Road to Recovery”.  Economists looked at several indicators from consumer confidence, stock market,housing, and concluded that the “Worst is Over” and we should be coming out of the recession.

Why it appears we may be coming out of a recession there were words of caution. Both Fed Chairman  Bernake and Treasury Secretary Geithner warned us that even though we are coming out of a recession it may not feel like it and it will be slow.

There are still concerns about unemployment and predict the number of people unemployed will continue to lag even though we are in a recovery.

Written by Jack Lewitz | Discussion: No Comments »

Truth or Consequences

televisions-11-longest-running-game-showsI think we need to think about who we are rewarding and who we are hurting . While the intentions of the Making Home Affordable Mortgage Program ( HAMP) is supposed to be help homeowners who have fallen behind in their mortgage the number of people being helped is below the estimates. Originally it was thought that the program would help 9 million people faced with foreclosure and clearly this is not the case.

With unemployment rising in some areas modifying loans will not work. Yet the other day a client of mine said she received a call from the bank and has decided to pursue a loan modification with them even though she is unemployed.

I think the public does not understand that banks are under pressure to modify more loans and by attempting to modify more loans they get paid two ways. The get money from the homeowner and money from the federal government for servicing and modifying the loan.

Someone needs to tell the truth and let people know that if they default on the new loan they will have to pay the consequences. If a homeowner defaults on the new loan the bank can accelerate the foreclosure process.

Written by Jack Lewitz | Discussion: No Comments »

Another Bank Problem Becomes Your Problem

Embedded video from <a href=”http://money.cnn.com/video” mce_href=”http://money.cnn.com/video”>CNNMoney.com Video</a>

Written by Jack Lewitz | Discussion: No Comments »

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