California housing supply moving back to normal

   Irvine consultant John Burns reports this month that California's glut of unsold homes "is starting to come back in balance, while Florida's supply is completely out of whack."

   Burns says falling prices and the state's $10,000 home buyer tax credit have brought the supply of homes for sale in the state to less than a 10-month inventory, while San Diego and Orange County have less than five months' supply.

   But job losses will mean no bottom soon: "While California's supply is returning to norm, its economy is not," Burns writes.

--Peter Y. Hong

  

Kimpton Hotels ready to mount buying spree

The hotel industry is in the doldrums, but that may give an aggressive San Francisco hotel the opportunity to expand by picking up distressed properties it couldn't otherwise afford. Kimpton Hotels & Restaurants has almost $250 million in a fund it raised last year to snare discounted properties and is now close to a deal to buy 15 floors in a recently completed 82-story Chicago skyscraper called the Aqua.

Kimpton would buy its space for a new hotel for $56 million, Crain's Chicago Business reported. Another hotel company agreed to pay  more than $84 million three years ago, but walked away when the hospitality market took a hard turn for the worse.

Kimpton already owns 42 hotels in 19 cities, including the Palomar in the Westwood neighborhood of Los Angeles. The company has identified more than 500 other hotels it might want to acquire, said investment banker Donald Wise of Johnson Capital. "Given the current lack of financing available for hotel development and Kimpton's dry powder, the company is likely able to negotiate favorable terms for its investments," Wise said.

Roger Vincent

Fed to first-time buyers using FHA financing to get advances on tax credit

Home buyers using Federal Housing Administration financing to purchase a house can turn that federal tax credit into upfront money now. From the Associated Press' "Government allowing FHA borrowers to get advances on $8,000 tax credit" via Latimescom:

Thousands of first-time home buyers will be able to get short-term loans so they can quickly make use of a new $8,000 tax credit to pay for some of the costs of buying a home.

The Federal Housing Administration on Friday released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them effectively receive the credit in advance, so they don't have to wait to get the money from the Internal Revenue Service.

So buyers who qualify for FHA mortgages can make a purchase with only 3.5% down and get the credit "advance" or "loan" to help out with closing costs. The thinking is this latest action will help sop up some of the "oversupply" of housing. To me, it doesn't seem like buyers will have enough invested to be motivated to stick it out should prices continue to drop.

-- Lauren Beale

Thoughts? Comments?

Hot Property: Shannen Doherty lists Malibu home for $4 million

 

Actress Shannen Doherty has put her ocean-view Malibu residence on the market at $4 million.

The gated contemporary has five bedrooms and 4 1/2 bathrooms in 3,410 square feet of living space. Set back from a private street by a long driveway, it sits on more than an acre of landscaped grounds with mature trees, a swimming pool and a spa.

Robert Radcliffe of the Radcliffe Group, Sotheby’s International Realty, Pacific Palisades, has the listing. To see more photos, check out the gallery.

-- Lauren Beale

Thoughts? Comments?

Photo: There are high-pitched ceilings, large picture windows and multiple skylights. Credit: Mike Zent

U.S. foreclosures, delinquencies set new records

    The percentage of homes foreclosed upon and delinquent mortgages hit all-time highs in the first quarter of this year, the Mortgage Bankers Assn. reports today.

     Foreclosure actions began on 1.37% of first mortgages in the first quarter, according to the MBA's national delinquency survey. The delinquency rate -- loans with missed payments but not in foreclosure -- rose to a seasonally adjusted 9.12% of all loans outstanding.

     Those percentages were the highest in the MBA's records, which go back to 1972.

      MBA chief economist Jay Brinkmann called the latest figures "sobering but not unexpected." The jump in foreclosures was to be expected as various temporary foreclosure freezes by governments and lenders expired.

     Brinkmann noted foreclosures on prime, fixed-rate loans doubled last year, and prime mortgages now comprise the largest share of new foreclosures. "More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults," he said.

     In other words, foreclosures are moving up the price ladder from sub-prime to prime territory.

     The Census Bureau, meanwhile, reported today that new home sales continue to languish. They were down 34% in April from April 2008. Sales rose slightly in April above March, posting a 0.3% month-to-month gain, which the bureau noted was statistically insignificant.

--Peter Y. Hong

Hot Property: Ex-NFL linebacker Mike Croel sells Sunset Strip-area home

 

Former NFL and XFL linebacker Mike Croel has sold his Sunset Strip-area home for $1,912,000.

The renovated contemporary has four bedrooms and 5 1/2 bathrooms in 5,380 square feet of living space. The walled compound includes a guesthouse and a lagoon pool.

Ernie Carswell of Teles Properties, Beverly Hills, co-listed the with Sarah Blanchard of the same office. Deedee Howard of Prudential California Realty, Beverly Hills, represented the buyer.

In the 90046 ZIP Code, 31 single-family homes sold in the first quarter at a median price of $942,000, according to MDA DataQuick. That was an 8.1% price drop from the first quarter of 2008. In April, 22 homes in that ZIP sold for a median price of $553 per square foot.

Public records show Croel purchased the home in 2003 for $875,000.

--Lauren Beale

Thoughts? Comments?

Photo: The gated two-story house has four fireplaces, high ceilings, a domed skylight and exposed wood. It had been listed at $1,999,000 in early March. Credit: Lee Manning

Mortgage-backed bond investors push for higher interest rates

Investors buying bonds backed by Fannie Mae and Freddie Mac mortgages are demanding higher interest rates, Bloomberg News reported today.

Why should anyone but bond buyers care? Well, if the buyers won't accept lower yields, the bond issuers will have to get loans with higher interest rates to bundle up and sell. And since the vast majority of all U.S. mortgages are now winding up in Fannie and Freddie securities, that could mean more costly loans for anyone buying or refinancing a house.

In a bid to keep rates down, the Federal Reserve has been aggressively buying Fannie and Freddie bonds. But the Bloomberg report suggests that the efforts may not be working as well as the Fed hoped.

From the article:

The Fed, seeking to use lower home-loan rates to stem the housing slump and bolster consumers, said March 18 it would increase its planned purchases of so-called agency mortgage bonds by $750 billion, to as much as $1.25 trillion, and start buying government notes. Rising mortgage-bond yields, driven higher in part by climbing Treasury rates, means the Fed now “faces a challenge to its ability to sustain low mortgage rates,” according to Jeffrey Rosenberg at Bank of America Corp. 

The report notes that the yields on 10-year Treasury bonds, a traditional indicator of fixed-rate mortgage trends, are at six-month highs.

The average rate on a typical 30-year mortgage for the week ending May 21 was 4.82%, Freddie Mac said last week. When Freddie issues its new rate report Thursday, will the average have crept closer to 5% again?

It sure looks like the answer is yes.

-- E. Scott Reckard

Commercial real estate pros still glum

Most real estate professionals remain gloomy about the prospects of the commercial property market turning around this year and predict further price declines, according to a recent poll.

There have been few large property sales since the credit market froze last summer. Only a third of the 1,500 respondents to a survey taken by online property listing service LoopNet, however, said they expect sales activity to recover in 2009.

Most of the survey's respondents, 42%, are not expecting the market to pick up until 2010. A large number of the respondents, 26%, are even more pessimistic. Those commercial real estate investors, brokers and owners don't expect to see a recovery until 2011.

Prices have to come down 10% or more from current levels to restart the market, according to two-thirds of the respondents. Many think the market will come down farther than that. About 37% of the professionals predicted prices will go down as much as 20% while 30% said values will go down more n 30%

As a group, owners are more optimistic, both in terms of the timing of the recovery and the expected level of price declines, than are investors and brokers, LoopNet said.

-- Roger Vincent

Are loan modifications merely postponing default?

Consumer advocates expressed some skepticism today about a Fitch Ratings study predicting a high redefault rate for mortgages that are restructured to avert foreclosure.

The study, which I wrote about in today's Times, looked at mortgages bundled up on Wall Street during the housing boom to back debt securities. It projected that 65% to 75% of subprime mortgages in these loan pools would be at least 60 days delinquent within a year of when they were modified.

Center for Responsible Lending officials said the study doesn't adequately account for the more drastic lowering of payments expected as Obama administration loan-mod programs kick in. The buzzword here is "sustainability" -- getting the loan payment to a level at which the borrower can realistically be expected to afford it over time.

The Obama programs aim at persuading lenders and loan investors to reduce payments on first mortgages to 31% of a borrower's income. The initiatives include financial incentives for mortgage customer-service firms to accomplish this by lowering interest rates, extending loan terms and sometimes suspending interest payments on part of the principal of the loan.

"The Fitch report applies to non-Obama plan mods," Center for Responsible Lending spokeswoman Kathleen Day said in an e-mail. "So this just shows the need for real sustainable mods."

Any thoughts on whether Fitch was overstating the potential problems?

-- E. Scott Reckard

[UPDATED] Hot Property: Kings player lists Manhattan Beach townhouse for $2.15 million

L.A. Kings defenseman Tom Preissing has put his Manhattan Beach townhouse on the market at $2.15 million.

The Spanish-style home, with four bedrooms and four bathrooms in 2,660 square feet, sits about two blocks from the water. There are ocean views from the kitchen, dining room, living room and decks. It was built in 2006 and is listed with Ed Kaminsky of Shorewood Realtors, Manhattan Beach.

There were 23 single-family homes sold in the 90266 ZIP Code in April at a median price of $1,521,000, according to MDA DataQuick, an increase of 6.4% from April 2008.

-- Lauren Beale

Thoughts? Comments?

This version has been updated to correct factual errors.