Blog

September 2011

September 21, 2011 - California foreclosures set to surge

California default notices spiked 55% in August, and the number may keep rising in the coming months as mortgage servicers shake off the robo-signing freeze, according toRealtyTrac Senior Vice President Rick Sharga.

In August, servicers filed 28,961 default notices in California, the first stage of the foreclosure process in the state, RealtyTrac showed. Another filing trackerForeclosureRadar found a similar boost in foreclosure starts along the West Coast and said Bank of America led all major banks with a 116% jump in August alone.

The industry has not yet returned to normal or necessary foreclosure activity levels, but progress is certainly being made.

From January 2010 through September 2010, California NODs averaged 28,000 per month. That dropped to 26,000 per month for the rest of 2010 after the robo-signing scandal broke in October, when servicers were found to be signing affidavits en masse and without a proper review of the loan files.

The slowdown continued into the early part of this year, with the NOD average dropping to 22,000 for the first seven months of 2011.

These filings peaked in March 2009 at 58,858 and averaged roughly 42,000 per month that year, the highest average since RealtyTrac began reporting the numbers.

A restarted foreclosure process means prices in California are set for possibly more drops, but the effect will not be seen immediately, according to Michael Simonsen, co-founder and CEO of the data analytics firm Altos Research.

Analysts expect house prices nationally to double-dip in the winter ahead and finally hit bottom in the spring of next year. JPMorgan Chase analysts long said the fall could be as much as 5%.

According to the California Association of Realtors, the median home price in the state reached its highest level this year in August to $297,060, though it is still down 7.4% from the year before. Prices could face other challenges such as the expiration of the conforming loan limits in October and the ongoing deficit struggle, CAR said.

September 21, 2011 - California real estate group expects modest rise in home sales, prices in 2012

California home sales and median prices should improve only slightly in 2012, as the the tepid economic recovery, uncertainty and tight lending keep the lid on greater momentum for housing.

The California Association of Realtors forecasts the state's home sales will grow about 1% next year to 496,200 units, following essentially flat sales of 491,100 this year. CAR said 491,500 homes sold in 2010.

Despite the run of unforeseen global events in the first half of this year that slowed the overall economy, 2011 home sales are projected to essentially remain unchanged from last year. Looking ahead, the fundamentals of the housing market — such as low mortgage rates, high housing affordability and favorable home prices — are expected to continue, but at this point, a strong housing recovery will depend on consumer confidence, job creation and the availability and cost of home loans.

However, distressed sales will remain a key segment of California's housing market next year, she said.

California default notices spiked 55% in August, and the number may rise in coming months as mortgage servicers shake off the robo-signing freeze, according to RealtyTracSenior Vice President Rick Sharga.

The California median home price is forecasted to increase 1.7% in 2012 to $296,000. The median home price for 2011 projects about 4% lower than $291,000 last year.

Still, any number of factors could throw off CAR's forecast.

Prices could face other challenges, for example, such as theexpiration of the conforming loan limits in October and the ongoing deficit struggle.

"The wild cards for 2012 are many, including federal, fiscal, monetary and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery,” said Leslie Appleton-Young, vice president and chief economist at CAR.

Strategic defaulters are underwater borrowers who intend to remedy their "upside-down situation" by simply walking away from their mortgages.

The Fox Business article paints a clear picture of a 67-year-old strategic defaulter who is walking away from a $166,000 loan.

So is this man a distressed borrower who lost his job, fell ill or landed on unexpected hard times? No, not really. Those situations tend to garner sympathy, and rightfully so.

Instead, this man admits he collects two pensions, Social Security and generates additional income through a small business.

The defaulter also has the ability to make his payments, but lost his drive to do so when home values dropped, leaving him $45,000 underwater.

The borrower's attitude recently changed in other ways. He now wants to live in the city, but he can't sell his home in this economy. Even if he could, it's impossible to get back what he paid. It's a type of new-car syndrome, but on a large scale.

Yet rather than sticking it out, the homeowner called a firm that readily advises homeowners on how to strategically default on their mortgages. If the borrower gets his heart's desire, he will simply walk away from the mortgage, sending the home into foreclosure while remaining cash-rich and free to move on.

Good move, right?

Of course, his neighbors won't be so lucky. They will now be living next to an REO.

Call it the strategic default phenomenon, if you will, but it's more than a trend. It's a threat to the power of contracts and an attack against all Americans who are paying for the mortgage crisis in the form of tax dollars that supplement housing initiatives and maintenance on foreclosures. Not to mention that declining home values and tighter lending standards that are keeping new homeowners on the sidelines.

Mind you, we are not talking about those who are truly in distress. Foreclosures from unexpected life changes are a different beast altogether.

While businesses should not be excused for unethical practices, the idea that homeowners are committing a permissible sin by not paying affordable debt is not admirable. In fact, it's an insult to borrowers who never bought in the bubble and to other homeowners who keep paying on underwater mortgages despite their frustrations.

A few months ago, an attorney working in default raised the following question: What if the strategic defaulter had made money on the same house? If he bought the home for $144,000 and gained a $20,000 profit, could the originator then call the borrower and ask him to split the earnings?

F. Scott Fitzgerald's famous American novel, "The Great Gatsby," dealt with a similar phenomenon in his time. While Fitzgerald's rant against the "careless people" of society in Gatsby was interpreted as an assault against rich aristocrats, his rant was more about carelessness in general. And the principle goes across class boundaries. In his worldview, those who are careless make decisions without consequences. They enjoy the fruits of the high-rolling times and let others pick up the tab when things go bad.

Certainly in the mortgage crisis there were many people and companies who were careless. But the idea that strategic defaulters are common heroes pushing back against a rigged system is the biggest slap in the face to all homeowners who bought into the American Dream only to be stung by the mortgage crisis.

September 16, 2011 - California home sales surge in August with prices at highest point of year

California home sales posted an increase from both the previous month and previous year, while the median home price rose to its highest level this year, according to data from the California Association of Realtors.

Closed escrow sales of existing, single-family homes rose to a seasonally adjusted 497,390 units in August, up 8.6% from a revised 457,930 in July and up 10.2% from a year ago, according to CAR, which gets its data from more than 90 local real estate associations and multiple listing services statewide.

The August statewide median price of an existing, single-family detached home sold in California was $297,060, up 1% from a revised $294,050 in July, but down 7.4% from the $320,860 median price for August 2010.

The unsold inventory of existing, single-family homes was five months in August, down from five and a half months in July.

The median number of days it took to sell a single-family home was 52.7 days in August, up from 45.5 days for the same period a year ago.

Foreclosure starts increased in five West Coast states from the previous month: California, Arizona, Washington, Oregon and Nevada.

BofA foreclosure starts more than doubled in August, jumping 116% from the previous month. Wells Fargo and U.S. Bank  also showed increases but fell short of the BofA restart, according to ForeclosureRadar, which monitors West Coast states.

Bank of America along with many others froze the foreclosure process in the fall of 2010 to sort out mishandled foreclosure documentation in a scandal that became known as robo-signing. The 14 major servicers signed consent orders with federal regulators earlier this year. After a review of 2,800 foreclosure files – roughly 200 per bank – regulators found "insufficient processes" and ordered more in-depth third party look backs.

Bank of America appears to be primarily responsible for the surge in foreclosure starts this month,. Since their average time to foreclose has recently increased to more than a year, it is unclear that these foreclosure starts will lead to an increase in foreclosure sales anytime soon.

In California, it takes an average 333 days to complete the foreclosure process, which is 49 days more than one year ago.

September 14, 2011 - Godmother Cafe to Open for Dinner and Sunday Brunch 

Chef Chris Bocchino, formerly chef/owner of Terra Restaurant, is partnering with Dolores Rivellino, owner of The Godmother of Malibu Cafe, to add Sunday brunch and dinner to The Godmother, located at the Malibu Racquet Club. Previously, The Godmother had been open only for lunch.

Bocchino's venture will be called Cal-Fresco at The Godmother, a nod to his penchant for serving California cuisine alfresco style. The Godmother's comfortable outdoor setting, surrounded by the mountains and with a view overlooking the nearby tennis courts, should be a perfect expression of his theme. 

Bocchino plans to serve brunch items such as almond brioche French toast, a goat cheese-asparagus scramble with fresh basil and veggie breakfast potatoes, a roasted vegetable salad with quinoa, a dry aged beef sirloin burger with caramelized onion and an artisan cheese board. Prices will range from about $10 to $15, with sides (chicken-apple sausage, fresh fruit, sour cream coffee cake) costing about $6. Sunday brunch will begin this Sunday. The hours will be 10 a.m. to 3 p.m.

For dinner, there might be house-made four-cheese ravioli in browned butter and fried sage, pan-seared sea scallops with a roasted corn and fava bean ragout, a marinated jidori chicken breast with bacon and leek mac and cheese or a double-cut korabuta pork chop with horseradish mashed potatoes and braised Tuscan kale. Prices range from about $8 for soup (The Godmother's famous tomato bisque) to $12 for salad and $12 to $28 for entrees including pasta and filet mignon. Dinner service begins Sept. 14 and will be Wednesday through Saturday from 5:30 p.m. to 9 p.m.

Desserts will feature the recipes of Bocchino's wife Kristine, a professional pastry chef and general manager of Savory  restaurant in Malibu. Her local roots include growing up in Paradise Cove; she and her husband live in Calabasas.

Bocchino, who has 20 years of professional experience in both corporate and individually owned restaurants, also did stints at two of the region's best eateries—Remi (executive chef), and Michael's (chef de cuisine), both located in Santa Monica. He was also chef de cuisine at MIXX in Sonoma County and executive chef at Whisper Lounge in Hollywood as well as a consultant for Falcon Restaurant & Lounge in Hollywood and Playa Cantina in Playa del Rey. He has also cooked in private homes.

Since leaving Terra in 2009 (his partner bought him out), he has run a gourmet food truck called Cal-Fresco, stationed last summer in the outdoor tasting room of Saddlerock and Semler Wines on Mulholland Highway.

At Terra, which closed early this year, he was known for growing many of the herbs he used at the restaurant, and he plans to do the same at Cal-Fresco at The Godmother. On the restaurant property, he is currently growing not only herbs, but also lots of veggies, including kale, pole beans, arugula, beets and purple carrots.

Both Bocchino and Rivellino say the partnership is a perfect pairing of like-minded food professionals. The Godmother remains open for lunch Tuesday through Saturday from 11:30 a.m. to 3 p.m.

You do not have to be a member of the racquet club to eat at The Godmother.

Cal-Fresco at The Godmother is located at the Malibu Racquet Club, 23847 Stuart Ranch Road. The phone number is 310-456-3254.

September 14, 2011 - Sea Level Rise Could Cost Malibu More Than $600 Million

Rising sea levels over the next century could be an economic disaster for Malibu, according to a state-commissioned study by San Francisco State University economists. The report, which was released Tuesday, includes information on Broad and Zuma beaches in Malibu as well as beaches in San Francisco, Venice, Carpinteria and San Diego County.

According to the report titled "The Economic Costs of Sea-Level Rise to California Beach Communities," if sea levels rise 4.6 feet between now and 2100, the cost of the effect on the two Malibu beaches could be $28.5 million in structural damage, $498.7 million in lost tourism spending due to eroded beaches attracting fewer visitors and $102.3 million in habitat and recreation losses.

"Sea level rise will send reverberations throughout local and state economies," said Philip King, associate professor of economics at San Francisco State and author of the report.

The study was funded by the California Department of Boating and Waterways.

The report was released just one day after the Malibu City Council approved the formation of the Broad Beach Geological Hazard Abatement District. With a board consisting of Broad Beach homeowners and a Malibu West representative in an advisory role, the district will oversee and fund various projects to protect Broad Beach from erosion and other damage.

                        Active            Pending          MTD/Sold      YTD/Sold

Homes             321                  42                    18                    108

MMH                21                    4                      3                      21

Condos             44                    9                      5                      36

Land                227                  12                    5                      32

Leases             269                  3                      50                    340

Income          2                      0                      0                      1        

A reading of the names of the 2,977 people who died in the terrorist attacks and other events will take place at the Malibu university on Sunday.

Pepperdine University in Malibu will host a Remembrance for the victims of the Sept. 11 terrorist attacks on Sunday that promises to be powerful and memorable. The 10th anniversary remembrance will begin at 11 a.m. with a reading of the names of the 2,977 people who died and will conclude with a ceremony at 4 p.m. Both events will take place at Alumni Park.

Also, there will be a screening of United 93, a film about the passengers—including Pepperdine alumnus Thomas Burnett—who brought down one of the planes intended to strike an American structure. The screening will take place at 1 p.m. at Elkins Auditorium.

The traditional display of nearly 3,000 flags—representing each person who died—on the university's front lawn is being installed this week. Called the Wave of Flags, it aims to be a powerful reminder of the terrorist attacks that left the world stunned and scarred.

Also on Sunday, Pepperdine's Heroes Garden will be open throughout the day except from 2 p.m. to 2:30 p.m. when it will be closed for a private ceremony. The garden will be rededicated in memory of Burnett.

Burnett's widow, Deena Burnett Bailey, will speak during the afternoon ceremony. Also expected to speak are Pepperdine President Andrew K. Benton and California Assemblywoman Julia Brownley.

The screening of United 93 will be followed by a talk with actor Christian Clemenson, who played Burnett in the film. Craig Detweiler, director of Pepperdine's Center for Entertainment Media and Culture, will host the conversation.

Pepperdine is located at 24255 Pacific Coast Highway. All events are free and open to the public. Go here for more information.

Fueling international investors is their sense that U.S. home prices are a bargain. A favorable currency rate is also working to their advantage. The value of the dollar has fallen against most foreign currencies, making U.S. residential property even cheaper.

In 2011, international buyers came from a total of 70 countries. The top five — Canada, Mexico, China, U.K., and India — accounted for 53% of all transactions. International transactions occurred across the U.S., but four states accounted for 58% of all transactions: Florida had 31%, California had 12%, Texas had 9% and Arizona had 6%.

The average price paid by international buyers was $315,000, compared to the overall U.S. average of $218,000. This year's report showed that 45% of purchases were below $200,000.

Many real estate purchases were also at the high end. The New York Times recently reported a big increase in Chinese businessmen purchasing luxury property in New York City, where $1,500 per square foot is considered cheap compared to $2,000 in Hong Kong, $3,600 in London and $4,300 in Monaco.

Want to jumpstart your international real estate business? Consider obtaining a membership in the Certified International Property Specialist (CIPS) Network, a special group within NAR. Through multiple education and networking opportunities, the CIPS Network helps real estate agents capitalize on the lucrative international market. 

MLS Address City Price Bed/Bath Map 11-544061 5901 Clover heights Avenue Malibu $4,975/Month 4/2.0 667/C1 11-543145 22626 Pacific Coast Hwy. #8 Malibu $1,250,000 2/2.0 629/C6 11-540445 31834 Broad Beach Road Malibu $2,495,000 3/2.75 626/G7 11-545327 325 S. Bedford Drive Beverly Hills $2,750,000 5/5.5 632/F3 11-533717 6228 Sycamore Meadows Drive Malibu $3,995,000 3/3.5 668/A1 11-514265 24420 Malibu Road Malibu $12,750,000 4/4.5 628/   View all Malibu homes for sale here.

Prices rose a substantial 3.6%, compared with the three months ended March 31. But home prices are still down 5.9% compared with the second quarter of 2010.

The rise in home prices came after three consecutive quarters of drops, as reported by the S&P/Case-Shiller national index -- an influential gauge of residential real-estate markets.

The year-over-year decline was a bit more than the than the drop of 4.7% that had been forecast by a consensus of experts at Briefing.com.

A separate monthly index of home prices in 20 major metro areas also reported a month-over-month gain of 1.1% for June, and a drop of 4.5% year-over year.