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Long Beach Mortgage Rates Report: May 12, 2008

Long Beach mortgage rates dropped, then rose to their original level, last week. Ive been advising mortgage borrowers to lock all rates at application, regardless of closing date. Did I miss an opportunity to improve clients rates? I dont think so. My approach is more one of limiting losses than improving gains and last week, I thought there was a threat of higher mortgage rates in Long Beach; I still do.

Inflation data is released Wednesday and Unemployment data is due out Thursday. These two figures could be the tempest in the teapot and really affect mortgage rates. We just think there is too much risk to be floating (holding out for a better rate). If markets overreact (and they usually do) well change that recommendation but for now, we think its prudent to lock your mortgage rates.

Currently, the 5/1 ARM offers the best value at 4.875% wholesale rate. The 30 year fixed rate loan is 5.875% wholesale rate. While there is risk in losing the rate after 5 years, most borrowers dont hold a mortgage that long. If you are thinking of moving in the next few years, it would be well to examine the benefits of refinancing your home loan to a low 5/1 ARM rate.

Contact me at (858)-777-9751 with more questions.

PS: Congratulations to our host, Laurie Manny. The success of Long Beach Real Estate Home has quickly drawn the admiring eyes of the national real estate industry. She is one of the featured speakers at the BloodhoundBlog Unchained Social Media Marketing Conference brought to you by Zillow.com, in Phoenix, next week. She is also invited to be on a panel at the Inman Real Estate Connect and has participated in California Association of REALTOR discussions, about new media.

Lauries early adoption of new media technologies has given her a decided advantage over real estate agents whom are still relying on traditional media to sell homes. If youre reading this, you are probably included in the 85% of home buyers who start their search online.

Long Beach Real Estate - A Peek Inside the Business of Selling Long Beach Real Estate

Here on our Long Beach Real Estate site I usually write purely real estate related articles targeted at educating and informing buyers and sellers of Long Beach Real Estate. Today I would like to give you a little peek into the business side of things and explain how they can affect the sale or purchase of your Long Beach homes.

In a recently published post I disclosed the 2008 closed sales in Long Beach; 674 of them, through 4/30/08. While the chart shows the sales increasing each month, the sales figures are still very low. (Includes sales of homes, condos, lofts, co-ops, Oyos, 2-4 units and 5+ units as recorded on the MLS)

Jan 130
Feb 153
Mar 179
Apr 212
Total: 674

These are difficult times for those of us surviving in the real estate industry. Going into this down market there were about 2900 licensed Realtors on record, there are currently about 1600 licensees active in the Long Beach area. Every market will support a certain amount of agents based on the closed sales of that market. Each agent needs a certain amount of closed sales in order to survive. Lets assume that 8 to 10 closed sales for the year are required for a Realtor to even survive this market; 674 closed sales would produce 8 to 10 sales for the year, for between 200 and 250 Realtors. Those sales are currently spread across 1600 current licensees, which would equate to less than ½ of a sale for each Realtor for the first 4 months of 2008.

In the real estate industry we have an 80/20 saying. It states that 20% of the agents do 80% of the business. 20% of 1600 agents = 320 which would equate to about 2 closed sales for the majority of the 20% still doing business.

So how are 1600 Realtors surviving a market with sales that will currently only support 200 to 250?

Some have other income, or a spouse or significant other with income.
Some have taken on Part or Full time jobs, while trying to juggle their real estate.
Some have anticipated this market and made plans to survive it.
Some are making enough sales to manage.

What of the 80%? That is 1280 agents, still active, for the last 4 months. How are they surviving with little or no sales? Well, they either have spousal support a trust fund or they have accepted salaried positions. Lets take a look at that. Real estate is a more than full time job; it is a commitment which permeates every hour of every day of our lives. Real estate transactions require a lot of attention on a daily basis. Escrow, title, lenders, inspections, appraisers banks and more need to be attended to, mostly during normal business hours. Buyers need to see properties around their schedules which often means after work or weekend showings. Sellers properties often need tending, flyers run out; keys go missing from a lock box or end up in another box on the same property. A pipe may burst on a listing with an out of town owner; anything can happen. How is an agent who has accepted employment elsewhere, with a set schedule, going to be able to deal with the schedule and responsibilities of a full time Realtor? How does that affect the buyer or seller? Has the agent even disclosed to the buyer or seller that they are not fully available? Do you know if your agent is available to conduct business, full time on your behalf?

Long Beach Own Your Owns - OYOs

What the Heck is an OYO?

Why would I want to own one?

Long Beach has been home to many Own Your Owns over the years. They can be found throughout Downtown Long Beach, Alamitos Beach, Bluff Park and into Belmont Heights; older, usually 2 or 3 story buildings tucked between newer and sometimes taller buildings. Recent Condo Conversions have trimmed the numbers of available OYOs considerably. OYOs used to be a really good investment, selling for considerably less than Long Beach Condos, they proved to be a very desirable purchase. When they successfully converted to condominiums owners realized large profits. Often condo conversion was the motivation for purchasing an Own Your Own.

Many buyers ask about OYOs. They want to know if they are the same as a condo, or more like a stock cooperative.

OYOs are similar in ownership to condos in that they are both fee simple ownership with individual tax bills and deeds. OYOs are a pre-condominium form of ownership, mostly built in the 50s. They generally sell for less than condos and are occasionally candidates for condo conversion, if they qualify, at which time they increase in value dramatically. Often OYOs will not have sufficient parking to qualify for condo conversion.

Can We Get Long Beach Homeowners To Pay Back Their Mortgages?

HR 5830: The FHA Housing Stabilization and Homeowership Retention Act of 2008 , is designed to provide relief for homeowners in trouble by refinancing their loan to reflect lower housing valuations. If the current lender ˜forgives 10% of the loan balance, it allows a homeowner to enter into an equity sharing type of arrangement for a refinanced loan.

I offered my analysis of and support for this bill, on BloodhoundBlog. A discussion arose about a change on social mores, most often associated with younger, first time home buyers. It seems that the compunction that comes with a mortgage default has disappeared.

My questions for discussion are:

Long Beach California Real Estate Sales Update

January - April 2008

The real estate market in Long Beach has begun to shift. We have witnessed a steady rise in homes and condos for sale in Long Beach since the beginning of the year, as is witnessed by the chart provided. Buyers who have been waiting out the real estate market hoping to get that incredible deal are now buying those Long Beach homes and condos they have been wanting.

Interest rates are still great, although lenders are tightening up on lending standards. It is getting more difficult to procure a home loan unless your income and credit scores are high, your credit history is good and your debt ratio is low. As we progress into the summer months lending standards will become even more stringent.

Long Beach Mortgage Rates Reports

If you are one of the consumers who has been sitting on the sidelines waiting for Long Beach real estate prices to drop before you begin your buying process, you might want to speak to a mortgage lender pretty soon. Run your credit, find out if you qualify for a home loan sufficient to make that purchase. You may also decide to go ahead and buy now while Long Beach prices are low, some concessions are still being granted and home loans are still available to consumers with less than pristine credit.

Real Estate Sales in Long Beach California - 2008 - Year to Date

2008	HOMES	CONDOS	LOFTS	CO-OPs	OYOs	2-4 UNITS	5+ UNITS	TOTAL
JAN	72	40	2	1	0	9	6	130
FEB	94	32	2	1	1	17	6	153
MAR	107	48	2	1	0	17	4	179

1/4	273	120	6	3	1	43	16	462

APR	134	51	1	3	0	17	6	212
MAY
JUN

2/4
subttl	407	171	7	6	1	60	22	674

JUL
AUG
SEP

3/4
subttl

OCT
NOV
DEC

TOTAL