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April 13, 2011 1 comment

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Dave & David Warner
First Team Real Estate

Dre #’s 01236069-01236519


The Foreclosure Report – 2010 Annual Summary

January 19, 2011 Leave a comment

From Foreclosure Radar

Dave & David Warner


The first half of 2010 saw relatively good news for most participants in the foreclosure market. Foreclosure cancellations rose as homeowners saw more short sales and loan modifications approved. Investors quickly flipped their foreclosure purchases for solid profits as buyers hurried to take advantage of tax credits. As the tax credits expired, however, the market began to slow. Foreclosure cancellations also began to drop as the government push for loan modifications waned and short sales slowed with the rest of the housing market. Finally, in the beginning of the third quarter, the robo-signing scandal led to dramatically lower foreclosure sales, including a complete halt by Bank of America for nearly two months.

Foreclosure Starts 2007-2010
For the first time since the foreclosure crisis began, Arizona, California, and Nevada saw a drop in the filing of new foreclosure actions. Oregon and Washington, however, continued to climb, but with much lower percentage increases than the prior 2 years.

Foreclosure Starts represent: Notice of Default filings in CA, NV and OR; Notice of Trustee Sale filings in AZ and WA.

Foreclosure Sales 2007-2010
Foreclosure sales dropped in 2010 for the first time in Arizona and Nevada. California dropped for the second year in a row, while Oregon and Washington both saw increased foreclosure sales.

Foreclosure Sales is based on auction sales either back to the bank or to a 3rd party. Numbers based on auction results except for 2007 to 2009 for states other than CA where we counted the filing of trustees deeds.

State 2007 2008 2009 2010
Arizona # Starts 45,225 109,086 145,423 119,790
% Change n/a +141% +33% -18%
California # Starts 280,095 442,612 504,425 338,999
% Change n/a +58% +14% -33%
Nevada # Starts 38,690 75,814 106,425 86,010
% Change n/a +96% +40% -19%
Oregon # Starts 8,176 14,371 22,302 24,574
% Change n/a +76% +55% +10%
Washington # Starts 14,844 27,966 36,947 42,161
% Change n/a +88% +32% +14%
State 2007 2008 2009 2010
Arizona # Sales 18,775 66,685 94,979 70,588
% Change n/a +255% +42% -26%
California # Sales 96,901 251,544 202,215 189,810
% Change n/a +160% -20% -6%
Nevada # Sales 11,242 37,637 45,420 42,828
% Change n/a +235% 21% -6%
Oregon # Sales 1,809 6,129 12,056 16,781
% Change n/a +239% +97% +39%
Washington # Sales 4,724 11,810 22,699 25,920
% Change n/a +150% +92% +14%

Foreclosure Crisis Milestones

February 2005 Fed Chairman Alan Greenspan tells the US House Financial Services Committes that: “I don’t expect that we will run into anything resembling a collapsing [housing] bubble.”
February 2006 Fed Chairman Ben Bernanke says, “Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise, but not at the pace that they had been rising.”
May 2007 Fed Chairman Ben Bernanke says, “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”
July 2008 The Housing Economic Recovery Act is signed into law. Clearly too little, too late.
September 2008 Fannie Mae and Freddie Mac are put into conservatorship by the US Treasury as concerns about their ability to raise capital and debt threaten to disrupt the US housing and financial markets.
September 2008 Treasury Secretary Henry Paulson announces the Troubled Assets Relief Program (TARP). Though in the end troubled assets were largely purchased by the Fed rather than through TARP, it signaled the beginning of significant government intervention into the foreclosure market.
September 2008 CA Senate Bill 1137 goes into affect. While intended to slow foreclosures and increase loan modifications, it accomplished little more than foreclosure delays.
February 2009 The American Recovery and Reinvestment Act offers tax credit for first-time homebuyers, which is later extended to April 2010 and expanded to include repeat buyers. Like cash-for-clunkers it provides short-term stimulus to the housing market.
March 2009 Obama Administration announces “Making Home Affordable” loan modification program (HAMP), creating the most exotic mortgage ever offered, and lawmakers request a voluntary foreclosure moratorium pending implementation.
April 2009 Financial Accounting Standards Board approves mark-to-model for mortgage-backed securities creating incentives for lenders to sit on bad loans rather than foreclose or approve short sales or loan modifications.
May 2009 The “Helping Families Save Their Homes Act of 2009” provides renters impacted by foreclosure with additional protections.
December 2009 Nationwide campaign to push the The Home Affordable Modification Program (HAMP) continues an artificial delay of foreclosures, but ultimately helps only a few.
April 2010 Home Affordable Foreclosure Alternatives (HAFA) promotes short sales and deeds-in-lieu of foreclosure, but has little impact beyond delaying the inevitable.
October 2010 Robo-signing scandal over documentation issues in judicial foreclosure filings leads to nationwide delays in foreclosure sales.

Weekly Mortgage Rates 1/6/2011

January 6, 2011 Leave a comment
January 6, 2011 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM
Average Rates 4.77 % 4.13 % 3.75 % 3.24 %
Fees & Points 0.8 0.8 0.7 0.6
Margin N/A N/A 2.75 2.76

From Freddie Mac

Dave & David Warner

Irvine…..For Developer, California Dream Is a Reality

January 4, 2011 3 comments

In the latest sign that financing is starting to trickle back into California’s property market, a group of investors is pumping cash into a huge, but stalled, $1.4 billion master-planned community being developed on the site of a former military base.

Under terms of the investment, Boston-based State Street Bank & Trust Co., a unit of State Street Corp., and a group of investors that includes several private-equity funds and pension funds will provide $400 million in cash and credit to the project, called Heritage Fields at El Toro. The project, in Irvine, Calif., is being developed by Five Point Communities Inc., a company that is majority-owned by home builder Lennar Corp.

The transaction represents a significant step forward for Five Point, which like other developers has struggled to find financing for horizontal development, or the work that goes into building roads, sewers and other infrastructure that needs to be laid before homes and commercial buildings can be built.

By the end of 2010,  the company had invested more than $1.3 billion in the project, and needed at least $400 million to get the development moving again. Emile Haddad, Five Point’s chief executive and controlling partner, said construction of the first homes should begin in 2012.

The transaction also shows how nontraditional sources of capital are starting to migrate into California’s housing market, one of the few markets in the country that is showing pockets of strength. Hedge funds, in particular, have emerged as a go-to source for the financing of land ventures.

The Orange County Register/Zuma PressThe former El Toro naval base is being redeveloped into a master-planned community in Irvine, Calif.

“If you look at the folks in the housing industry who are actually putting construction dollars back to work for horizontal and vertical development, you can count them on one hand,” said Tom Reimers, a Southern California land broker with Land Advisors Inc. “We’re going to need private equity to move things along. It’s new blood, new money.”

Heritage Fields at El Toro calls for 5,000 new homes, 5.2 million square feet of commercial space and a public park twice the size of New York’s Central Park. The development is being built on the site of a former naval air base in Orange County, which once was used by President Richard M. Nixon, who often flew on Air Force One to his home in nearby San Clemente.

Lennar purchased El Toro from the Navy at the height of the housing boom in 2005, borrowing $775 million from Lehman Brothers Holdings Inc. to finance the purchase of the land. Lennar added about $700 million more in equity from its own funds and from investors, including two affiliates of private-equity company Cerberus Capital Management LP, investment firm Rockpoint Group LLC, and computer tycoon Michael Dell’s MSD Capital LP.

Under a separate agreement, Lennar will buy out Cerberus’s stake in the project, although Mr. Haddad declined to provide details on the stake. “This is definitely one of the most complicated deals I’ve ever worked on,” Mr. Haddad said.

An overleveraged Lehman, burdened by a number of huge commercial real-estate investments like the El Toro project, filed for bankruptcy protection in September 2008. In December 2010, a federal bankruptcy judge in New York approved the sale of the $775 million Heritage Fields mortgage note to State Street for $153 million.

After what Mr. Haddad described as several months spent crisscrossing the country for meetings in Boston, New York and California, Five Point closed on the restructuring deal two days before New Year’s Eve. State Street agreed to reduce the outstanding debt balance on the deal to $210 million, then gave the developers a $180 million line of credit to complete land development.

By putting more money into the deal, State Street is taking a big bet that Mr. Haddad can get the project up and running in short order, and start producing strong cash flows from selling home sites and land for commercial buildings to builders, who will then construct and build homes and office and retail properties.

But the project isn’t a slam dunk. The economy remains weak and while the California housing market has improved, it isn’t clear that the market can support such a project.

“Everyone is talking about residential land deals as if they are all the same. My view on this is simple. Not all deals are the same. Not all locations are the same. And not all management is the same,” Mr. Haddad said. “This is the right deal, in the right location.”

Mr. Reimers, the Irvine land broker, said the Irvine area is expanding. Several companies have located in and around the nearby Irvine Spectrum commercial center, including drug-makerAllergan Inc., computer company Western Digital Corp. and the University of California, Irvine, providing jobs.

“Putting a significant amount of money to work in an Irvine master-planned community is probably as low risk as you can go,” he said.


The Wall Street Journal

Dave & David Warner

Weekly Primary Mortgage Rates

December 9, 2010 Leave a comment
December 9, 2010 30-Yr FRM 15-Yr FRM 5/1-Yr ARM 1-Yr ARM
Average Rates 4.61 % 3.96 % 3.60 % 3.27 %
Fees & Points 0.7 0.7 0.6 0.6

From Freddie Mac

Dave & David Warner

Real Estate

The 10-year Treasury rate hits 3.1 percent. Expect higher mortgage rates.

December 7, 2010 Leave a comment

The 10-year Treasury rate hits 3.1 percent for the first time in about 6 months. Expect higher mortgage rates.
From National Association of Realtors

Dave & David Warner

Bidding Wars Are Back in Some Markets

December 1, 2010 4 comments


In another sign of a housing-market recovery, bidding wars are back.

Not everywhere. But in some upper-middle-class suburbs around San Francisco and New York, and other areas where prices have hit bottom, first-time buyers eager to take advantage of relatively low prices and low mortgage rates are actually driving up prices, says Tara-Nicholle Nelson, an analyst at Buyers are competing at the low end of the market, too, for homes under $200,000 and foreclosures, as buyers with smaller budgets take a stab at ownership.


But experts say bidding wars play on buyers’ worst fears. When an offer is rejected, it fosters a sense of urgency, so they’ll place more aggressive offers on the next homes they bid on, says Ms. Nelson. In the worst-case scenario, buyer psychology could boost home prices beyond what they’re really worth.

That’s the kind of whirlwind that led to the last bubble, “with the potential for financial disaster for buyers who overspend,” says Jack McCabe, an independent housing analyst.

To avoid a bidding war, here are three things a buyer can do:

Research a neighborhood’s inventory. In a real buyer’s market, houses sit on the market for more than six months before selling. To find out how long is typical in a given neighborhood, compare the number of active listings to those under contract — if there’s a glut of houses on the market, there will be far more of the former than the latter.

Watch the jobs numbers. Areas with strong employment numbers are more likely to see bidding wars, because that’s where more people have the credentials — a down payment, work documentation — to buy a home, says John Mulville, a vice president at Real Estate Economics, which tracks real-estate data.

Don’t go to war over a foreclosure. Bank-owned foreclosures sell for about 36% less than regular listings, according to RealtyTrac, and they account for about 16% of all sales.

But buyers often lose track of their goal with a foreclosure — to buy a home at a big discount — when competing offers kick in, says Mynor Herrera, a Weichert Realtor who specializes in Washington, D.C., and Montgomery County, Md. In general, buying a foreclosed property at 30% above the asking price wipes out any savings from a foreclosure.

—AnnaMaria Andriotis