Los Angeles County Foreclosures for October decline 51% from September’s numbers.

The October foreclosure numbers for Los Angeles County show a steep decline in new foreclosures, or trustee sales, for the month, with 2,389 foreclosures for the entire region. This represents a decline of 51% from September’s foreclosures, which is the largest decline for the last two years according to PropertyShark.

October foreclosures follow the same pattern as in prior months, with the Palmdale / Lancaster area leading the region in the number of foreclosures for the month.  Palmdale’s zip code 93550 tops the list of new foreclosures with 98, with the other areas rounding out this month’s Top 15 zip codes significantly lower. To summarize the Top 15 for the month, the Palmdale / Lancaster area has 303 of the total 640 foreclosures in the Top 15, Norwalk comes in at number 4 with 49, Pacoima is at number 5 with 47, and the rest of the list is rounded out by Southgate, Sylmar, Long Beach, Los Angeles and Baldwin Park, with zips 91706 in Baldwin Park and 90002 in Los Angeles at the bottom of the Top 15 list with 30 foreclosures each.

The Palmdale / Lancaster area fortunately was able to share in the downward trend for foreclosures this month, with declines of 50% or more in many of their zip codes. Compared to the August 2008 foreclosures, Palmdale’s zip code 93550 had 196 foreclosures in August vs 98 in October, for a 50% decline. Lancaster’s zip code 93535 had 162 foreclosures in August vs 73 in October, for a 55% decline.

 For Santa Clarita, foreclosures remain relatively low with 100 foreclosures for the entire region. Valencia’s zip code 91355 leads the region in foreclosures with 15 for the month, followed by a tie at 14 for Valencia’s zip 91354 and Canyon Country’s zip 91387. Foreclosures continue to hit the low-to-middle priced homes the hardest, with an average loan of $445,424 for foreclosures in the Santa Clarita area.

If you are behind on your mortgage payments, remember that there are options available to you that may help you to either save your home or at least have less impact on your credit report than a foreclosure would. Ask your lender about the possibility of a loan modification, which would help you to stay in your home, or a short sale, which would allow you to sell your home for less than the current mortgage balance. A qualified Realtor® should be able to help you to work through either of these options. Need help? Call Santa Clarita Realtor® Linda Slocum at 661.670.0349.

Desperate for sales, builders are creating department store copies of layaway plans for prospective homebuyers.

Builder layaway plans will be rolling out shortly, encouraging buyers to commit to new home purchases before they have enough down payment funds to actually purchase the home. Plan names range from “PASSBOOK to the American Dream” from Hovnanian to “Buy & Save” plan from Beazer, but all work basically the same.

These plans are supposed to keep buyers on a ”steady savings track” and “act as a motivational time line” so potential homebuyers can accumulate their down payment funds by saving on a regular schedule. Should you save for a home with a department store Christmas club-like program run by a builder? “We kind of tagged on to that idea,” says Klinger of Hovnanian Mortgage. “We’re saving for a house the old-fashioned way, the way that it was always supposed to be.”

Hmmm… my B.S. detector is spiking out at this point…

First of all, you can save on your own by creating a Christmas club-type account at your bank. If you have automatic payroll deposits, you can have a portion of each paycheck automatically allocated to this account, and voila! you have a home purchase fund that’s fully under your control. Secondly, in California there are still down payment assistance programs through CalHFA. While not available to all buyers, these programs are available to many who will be financing under the various FHA programs. And lastly, why would you want to be committed to a builder for some future build date, unless they’re offering you some sort of additional incentives to do so?

Yeah, I’m a Realtor and I sell homes, but puleeeeze don’t insult my buyers’ intelligence!

If you’re working to save up that 3% FHA-required down payment, here are a few simple steps to help out:

• Set up a separate bank account as your “House Fund”. You can open an account normally called a Christmas Fund account at your bank, and use it for your house instead. DON’T TOUCH this account, other than for the purchase of your new home!
• Set up automatic deposits into your House Fund through your payroll department at work. They’ll let you allocate a specific dollar amount or a specific percentage of each check to this new House Fund bank account. If you’re an independent contractor, make a commitment to deposit a certain amount (or percentage) of each check into your House Fund.
• Monitor ALL of your expenses, including Starbucks and doughnuts, and cut the fat (no pun intended) out of your budget. You’ll be amazed at how much the small things add up! Use a debit card instead of cash so all of your expenses are recorded and easily monitored. You can use Quicken or Money to track your expenses to make this process a lot easier.
• Set a time line, and work backwards from there. If you want to purchase a home 6 months from now and need a $7,500 down payment for a $250,000 home, how much will you need to save from each paycheck to get there? If you’re starting with $1,000 in savings, you’ll need to save $6,500 in down payment funds, or $1,083 per month. If this is too much for your budget to handle, plan on extending that time line a bit so you won’t end up living off of Kraft Mac ‘n Cheese for the next several months.
• Talk with a lender about the availability of down payment assistance programs through CalHFA. It could be that you won’t need to save up all those down payment funds after all… wouldn’t that be nice? Your Realtor can help you with the rest… closing costs can often be negotiated as part of the purchase contract, whether you’re buying from the builder or from a regular seller.

Need help figuring this all out? Call me! You can reach me at 661.670.0349 or email me at Linda@SantaClaritaRealEstateBlog.com.

Homes sales in Southern California area are up 65% for September 2008 as compared to the same period last year.

The good news for the Southern California economy is that homes are selling once again. September 2008 home sales in the Southern California region were higher than in any month since December 2006. and the year-over-year gain was the highest for any month since 1988 according to DataQuick.

Although this increase is astounding, everything must be looked at in context to get the true picture of the real estate market. September 2007 sales represented a record low, since changes in the lending industry had bumped up the rates for jumbo mortgages the month before. And 50% of the homes sold in September 2008 had been foreclosed on sometime within the prior year.

“More impressive was that this September’s sales volume bucked the seasonal norm and rose above August,” says DataQuick president John Walsh. Foreclosure resales by county continues to tell an interesting story, as Riverside County once again tops the list at 68.9%. Los Angeles County is near the bottom of the list this month, with foreclosure sales at 39.1%.

With the higher level of foreclosure resales comes a decline in prices. The median price for the SoCal region dropped to $308,500, which is the lowest since May 2003. However, the median price never tells the complete story, since it is affected by regional price depreciation, relatively slow high-end sales, and the rising market share of foreclosure resales, which tend to sell at a discount. Also, remember that the Palmdale-Lancaster area continues to dominate the foreclosures in the Los Angeles County region. For 3rd quarter foreclosure (trustee sale) stats, click here.

California Housing Agency offers down payment assistance to qualified first time homebuyers.

One of the biggest challenges facing first time homebuyers is coming up with enough money for a down payment. Fortunately, first time homebuyers in California may be able to take advantage of the down payment assistance programs offered by CalHFA (California Housing Finance Agency). These programs provide either low-interest or no-interest loans for qualified first time homebuyers to cover their down payment or closing costs, and are considered to be “junior” loans (2nd mortgages). Payments are generally deferred on the 2nd mortgages created by these programs.

Homebuyer Qualifications

• In order to qualify for the CalHFA down payment assistance program, you must be a first time homebuyer. For purposes of CalHFA, a first time homebuyer is someone who has not owned and occupied their own home during the last 3 years. However, this requirement may not be necessary if you are buying in a Federally-designated Targeted Area.
• Certain income requirements must also be met for the CalHFA program. For Los Angeles County, the moderate income limits are $90,960 for 1-2 person households and and $106,120 for households with 3 or more occupants. The low income limits are $54,576 and $62,762, respectively.
• The home purchased must be within certain purchase price limits for the county. For Los Angeles County, the maximum purchase price is $729,750 for most areas, and may be as high as $734,891 for new construction purchases in Targeted Areas.
• CalHFA down payment assistance funds are only available for owner-occupied homes. You must live in the home for the entire term of the loan, or until the home is sold or refinanced.
• The homebuyer must meet the lender’s credit, income and loan requirements.
• The homebuyer must a citizen or other national of the United States or a qualified alien. 
• The homebuyer must complete homebuyer education counseling and received a certificate of completion through an eligible homebuyer counseling organization. 

Available Down Payment Assistance Programs

Be sure to check with a qualified CalHFA lender for updates to any of the program requirements. As of the time of this writing, the available down payment assistance programs are as follows:

• Affordable Housing Partnership Program (AHPP)
  • A joint effort by CalHFA and cities, counties, redevelopment agencies and housing authorities. A deferred payment subordinate loan from a locality assists first-time homebuyers with down payment and/or closing costs. 
• California Homebuyer’s Downpayment Assistance Program (CHDAP)
  • Creates a deferred-payment junior loan of an amount up to the lesser of three percent (3%) of the purchase price or appraised value. 
• Extra Credit Teacher Home Purchase Program (ECTP)
  • A low interest rate CalHFA first loan, together with a forgivable interest CalHFA junior loan to assist eligible teachers, administrators, staff members and classified employees to purchase their first home. 
  • Amounts range from $7,500 to $15,000, depending on the location of the property, or 3% of the purchase price, whichever is greater. This junior loan is only available when combined with a CalHFA first mortgage loan. Interest on the junior loan is deferred and may be reduced to zero if the borrower meets continued eligibility requirements. 
  • This program may be combined with other CalHFA-approved down payment assistance loans or grants (with the exception of CHDAP) to help in the purchase of the home.
  • In order to qualify for this program, the homebuyer must be employed by a High Priority K-12 public school. High Priority schools are those with API scores in the bottom 50%, have no API scores and 70% of the student are eligible for free or reduced cost lunches, or are county continuation schools. In the Santa Clarita Valley, Bowman High School is the only continuation school.
• School Facility Fee Down Payment Assistance Program (SFF)
  • A conditional grant program that provides assistance to buyers of newly constructed homes throughout California. 

Finding a Lender

If you’re a first time homebuyer wanting to take advantage of the California down payment assistance programs, you must use a lender who is qualified by the CalHFA. You can search for lenders here for an updated list. Santa Clarita area lenders qualified for these programs include the following:

• First Mortgage Corp (661) 964-0700
• Universal American Mortgage (661) 702-0140
• CTX Mortgage (661) 255-1854
• Wells Fargo Mortgage (661) 284-6446 and (661) 799-4682
• Washington Mutual Mortgage (661) 254-8700
• National City Bank (661) 260-2751
• Wescom Credit Union (888) 493-7266 x5900

Happy house hunting! If you need a qualified Realtor to help you find your home, please contact Linda Slocum at (661) 670-0349.

Homestead protection may save your home and your home equity from unsecured creditors.

Homesteading in California can provide up to $150,000 in protection against creditors who may sue to force you to sell your home to pay the amounts that you owe them. The amounts owed can be as the result of lawsuits, or just from having overextended credit.

There are two types of homesteads available: an automatic homestead and a declared homestead. An automatic homestead protects some of your home equity until you sell your home, as long as you live in the home (you cannot homestead an investment property). A declared homestead can protect your home equity for up to 6 months after you sell your home, as long as you use the proceeds to buy a new home within 6 months and declare a homestead on that home.

Automatic Homestead

An automatic homestead is in place if you live in the home that you own. You do not have to complete any forms, and it protects your home equity until you sell your home. However, an automatic homestead does not provide the same level of protection as a declared homestead. 

A homeowner who is overextended financially and is being dunned by creditors or debt collection agencies should consult an attorney for advice on the need for filing a homestead declaration. If you are in financial trouble, or expect to be in financial trouble, you may want to consider filing a declared homestead.

Declared Homestead

A declared homestead is filed at the County Recorder’s Office on a properly signed and notarized form that you can either buy in an office supply store or download for free. According to the California Department of Consumer Affairs, “A properly prepared and recorded homestead declaration immunizes the home (and the land on which it is situated) from many (but not all) legal enforcement measures. For example, if a homeowner files a petition in bankruptcy, it may be possible, because of a homestead declaration, to retain the home, or at least a portion of the equity in the property, instead of losing it to creditors.”

In other words, if you sell your home voluntarily without a declared homestead in place, the protection of your home equity may be lost. This means that the proceeds of the sale of your home will go to the judgment creditor or creditors rather than to you, the owner, to use in purchasing another home. Remember that you must purchase a replacement home within 6 months and file a declared homestead on that new home in order for your homestead protection to remain in place.

A declared homestead will NOT protect you from foreclosure by your mortgage lender if you are behind in your payments. Nor will it protect you from a mechanic’s lien or if you are behind in child or spousal support. If you are unsure as to how to complete the Homestead Declaration form, you may wish to hire a homestead filing service. By law, these services cannot charge more than $25, including notary and filing services. You can also find various do-it-yourself guides that will provide examples as to how to complete the form.

At the County Recorder’s Office, the documents presented will be reviewed and recorded, with the original document being mailed back to you within 4-6 weeks. The base fee for recording documents is $7 for the first page, and $3 for each additional page. Certified copies can be requested for $6 for the first page and $3 for each subsequent page.

NOTE: The Van Nuys County Recorder’s Office will be closed until November 30, 2008. If you need to file a declared homestead before then, you’ll need to travel to the Lancaster office instead. Documents may also be mailed to: Document Analysis and Recording, P.O. Box 53115, Los Angeles, CA 90053-0115. Be sure to include the proper filing fees with each document to be recorded. For more information, call (562) 462-2125 in Los Angeles County.

How Much Equity Does a Homestead Protect?

A homestead can protect your home from unsecured creditors in the following amounts (there is no difference in amounts for automatic or declared homesteads):

Disclaimer: This information is not intended as a substitute for legal advice. Be sure to consult an attorney if you are having financial difficulties or if you are unsure of the homestead process. If you are considering filing bankruptcy or need assistance with foreclosure prevention, contact attorney Ray Bulaon at 818.243.7745.

Builders cut home sizes and building costs in hopes of selling more homes and increasing their bottom line.

KB Home has announced plans to introduce smaller homes with simplified designs in an effort to attract first-time homebuyers and to increase their sagging bottom line. Gone are the McMansions of a few years ago, to be replaced by homes with smaller square footage and less wasted space.

KB will also be standardizing a lot of features, much as Lennar has already done in the Santa Clarita area. If you visit any of the Lennar homes in the West Hills, West Creek or RiverVillage developments in Valencia, you’ll notice similar cabinets, countertops and flooring in all price levels. The Lennar homes are virtually move-in ready, with designer paint on the walls and refrigerators included (earlier models included washer and dryer as well). KB has been known for the exact opposite… everything was NOT included, with items such as fireplaces and separate tub and shower in the master bath treated as extras, and no designer touches whatsoever without paying an extra fee to their design center.

Builders can save a lot of money by bulk-ordering a lot of the components used in building a home, such as windows, cabinets, countertops and more. This process can be even more effective by ordering only standard-sized windows, for example, so all homes use the same windows and no extra fees are paid for custom sizes.  Buyers will still be able to visit the KB design center to customize their new homes… the design center will still provide thousands of options for carpet, floor tile and more, and will remain a large profit center for the builder.

What the smaller homes will be lacking will primarily be the formal living spaces, to be replaced by “flex” space instead. With flex space, the main features of the house, such as kitchens, stairways and plumbing, remain the same, but certain areas can be either added or altered to be used as bedrooms, lofts or dens without adding significant cost to the home. As KB’s president and chief executive Jeffrey Mezger said, “You can’t sit and wait for the market to come back to you. You have to retool your product.”

I don’t know why builders continue to include the formal living spaces in many homes anyways… these are areas that most homeowners don’t use very often, and many would prefer to have usable square footage instead of rooms that just collect dust. Could it be that the change in the real estate market has also brought about a builder’s reality check in the way that people really use their homes? While some families do use formal dining rooms once or twice a year, the use of formal living rooms have gone the way of the dinosaur for the most part, at least in the Southern California area.

It’s funny that the home-buying public tends to be brainwashed into thinking that they must have a formal dining room that will accomodate their existing oversized dining room table, even though they haven’t used that table in the last 10 years. Quite an expensive room, and a waste of square footage in many cases, just to house a special table! It’s not uncommon to see single-guy homes where they’ve converted the formal living spaces into screening rooms and home gyms, or to see formal living or dining rooms converted into playrooms in homes with small children.

The upside to this standardization is that in many cases new home buyers will start out with nicer flooring, countertops and other features than they would if they were required to pay extra in the builder’s design center for these upgrades. The downside is that while the homes are generally nicer overall, they all look pretty much the same. Generic homes will be replacing McMansions, and hopefully consumers will begin to have more control over their discretionary spending as well.

Federal tax credits for energy efficient home improvements have been extended into 2009.

The recently-signed “Emergency Economic Stabilisation Act of 2008″ included an extension of the residential tax credits for energy efficient improvements. The previous tax credits expired at the end of 2007.

The new tax credits for installing energy efficient improvements are only good for 2009 installations - there will be no tax credits for improvements installed during 2008. So, if you’re doing some tax planning for 2009, it may be best to hold off on doing these types of improvements until after January 1!

Tax credits are available for insulation, replacement windows, water heaters, and certain high efficiency heating and cooling equipment. However, be aware that not all Energy Star rated improvements are eligible for the tax credit. Be sure to check EnergyStar.gov for rules and more details.

Here are some examples of the federal tax credits that are available to homeowners:

• Windows: 10% of cost, up to $200, for qualified ENERGY STAR windows, skylights and storm windows
• Doors (exterior): 10% of cost, up to $500, for qualifying doors (most ENERGY STAR doors will qualify)
• Roofs (metal): 10% of cost, up to $500, for qualifying ENERGY STAR metal roofs
• Insulation: 10% of cost, up to $500, for qualifying insulation (not vapor retarders or siding)
• Air Conditioning (split or package systems): $300 for qualifying systems, not all ENERGY STAR systems qualify
• Water Heaters (tankless only): $300 for qualifying systems
• Cars: Credits are available for certain cars, and is limited by 60,000 per manufacturer before a phase-out period begins
• Solar Water Heating: 30% of cost, up to $2,000, not available for water heaters used for pools or spas
• Solar Power (Photovoltaic): 30% of cost, up to $2,000, must provide electricity for the home
• Fuel Cells: 30% of cost, up to $1,000 per kW of power that can be produced

Please be aware that California may provide similar credits as well! See Go Solar California and California Solar Initiative for more information on solar power and available tax credits for California homeowners. Currently the California solar water heating credit is only available as a pilot program in San Diego. Southern California Edison (SCE) is also offering 90-minute Homeowner Solar Information Sessions, with upcoming sessions in Santa Barbara and Santa Monica. You can also take SCE’s Online Home Energy Survey to learn more about saving energy in your home.

Foreclosures continue to rise in Los Angeles County, although Santa Clarita foreclosures still remain relatively low compared to the surrounding areas.

Foreclosure auctions (trustee sales) continue to rise in Los Angeles County for the 3rd quarter of 2008, increasing 9% compared to the previous quarter according to data provided by PropertyShark. Foreclosures from 2007 vs 2008 for the 3rd quarter are up 196%.
The most foreclosures in Los Angeles County were by Countrywide, followed by Washington Mutual. The Palmdale/Lancaster areas continue to top the list of foreclosures, with Sylmar near the top of the list as well. Palmdale’s zip code 93550 has the highest rate of foreclosures, at a rate of one in every 45 homes. Lancaster’s zip code 93535 follows close behind, with one in every 46 homes in foreclosure. The Top 15 zip codes in Los Angeles County for the 3rd quarter of 2008 are below.

Los Angeles County Foreclosures 3rd Quarter 2008

Santa Clarita’s foreclosure hot spots continue to be Canyon Country zip codes 91351 and 91387, with over 100 foreclosures during the quarter for each zip code. This puts these zip codes at rankings 35 and 36 of the top foreclosure zip codes for Los Angeles County for the 3rd quarter of 2008. Remember that each zip code can have significantly more or less homes than surrounding zip codes, so while Valencia’s 91355 has 53 foreclosures for the quarter, that’s only about 0.5% of the total homes in the area.

Santa Clarita Foreclosures 3rd Quarter 2008

 

Santa Clarita single family home sales statistics for August 2008 and 2007

The Santa Clarita real estate market is showing some signs of recovery, with new escrows for single family homes for the month of August up by 120 vs August 2007, and active listings down by 619. New listings were 348 in August 2008 vs 506 in August 2007, for a decrease of 158. The ratio of new escrows to new listings has improved as well, with the number of new escrows representing 75% of the number of new listings in August 2008 vs 28% in August 2007.

Homes are still taking some time to sell, with average days on market at 115 days in August 2008 vs 90 days in August 2007. This is partly due to short sales, which generally remain as active listings until an offer is accepted by the bank. This approval process can take 30 days or more, depending on the bank (or banks) involved.

Sales were relatively constant, with 199 sales in August 2008 vs 186 sales in August 2007. However, the median price of single family homes sold was down by $200k in August 2008. However, this number may be a bit misleading, since the median price is affected by both the price level of homes sold (lower priced vs higher priced) as well as the price reductions that have taken place in this timeframe.

The good news is that homes are selling, and that investors are starting to jump back into the Santa Clarita real estate market. The not-so-good news is that a lot of these homes are short sales and bank owned (REO), which is an indicator that there are still some troubled homeowners out there. However, the percentage of truly troubled homeowners (meaning that they have a true financial crisis) vs the homeowners who just want to “bail” so they can buy a larger home at a lower price, is hard to determine. Also hard to determine is the number of homeowners who are having trouble making mortgage payments due to “resets”, or mortgage rate adjustments, vs those who did cash-out refi’s for $200k or more and now want to walk away from that free and clear via the short sale process.

Santa Clarita Valley real estate sales for August 2008 continue to show median price declines from the previous year in most areas.

While the majority of the Santa Clarita Valley continues to show median price declines for August 2008 as compared to August 2007, the number of homes sold is showing some improvement. Investors are starting to buy homes again, and many Realtors are reporting that they are receiving multiple offers once again. In addition, many of the banks have finally put systems in place that make it possible to get final approval of a short sale in 30 days or less, so more of these distressed properties are being sold.

Acton had a surprising 24.4% increase in the median price of homes sold in August 2008 as compared to August 2007, and Castaic had the smallest decline for the remaining part of the region at only 4%. Canyon Country’s zip code 91351 had the largest decline in the Santa Clarita Valley at 45.7%, and also the area’s lowest median price at $282,000.

The table below shows single family home sales only, with the percent change in median price between August 2008 and August 2007. Remember that the median price is determined somewhat by the price range of homes that have sold, where a larger number of lower-priced homes sold will bring down the overall median price. Jumbo loans, or those over $417,000, continue to decline in the Southern California region.

According to DataQuick, a total of 19,366 new and resale houses and condos closed escrow in Southern California in August 2008. That was down 4.7% from 20,329 in July but up 9.1% from 17,755 in August 2007.  So does this mean that the Southern California real estate market is recovering? “Some expect prices to bottom out soon, too,” says John Walsh, DataQuick president. “That may happen, but history suggests that few of us will time the bottom precisely.”

What about foreclosures? How are they affecting the current statistics? DataQuick reports that foreclosure resales made up 45.5% of all Southern California resales last month, up from 43.7% in July and 10% a year ago. These figures represent the percentage of homes resold in August that had been foreclosed on at some point in the prior 12 months, and exclude short sales or preforeclosures. Foreclosure resales were highest in Riverside County, at 65.2% of resales. Riverside County also shows the largest overall sales increase in the Southern California region, driven mainly by bargain hunters picking up bank-owned (foreclosed) properties.