Foreclosures, Affordability and Financing

Bayer Facts of Moreno Valley, CA: 3/5/2008

Moreno Valley Foreclosures

Notices of Default reported: 2/5/2008 70
2/12/2008 63
2/20/2008 56
2/26/2008 127
3/4/2008 101

= about 333 NODs per month – and for February 2008 about 108 homes are reported as sold in MLS (some by the auto close option).  There are 380 properties in Moreno Valley listed as pending in MLS – 244 pending since: 2/5/2008.  So even if each pending over the past month sold – there are more new Notices of Default.

Affordability

On 2/19/2008 C.A.R. reported the entry level affordability in California reached 33%, in the 4th quarter of 2007.  Which is the percentage of homebuyers can afford an entry level home. The calculation of mortgage payment is based on an interest rate of 6.21% with a 10% down payment.
The improvement was from 1 in 4 families that could afford the statewide entry-level home in the 4th quarter of 2006 to 1 in 3 families in the 4th quarter of 2007.

For Riverside / San Bernardino the affordability rate for the current period is 46% (almost ½) compared to 34% (about 1 family out of 3) 1 year ago.  For Riverside / San Bernardino the entry-level home price for the 4th quarter of 2007 was: $287,330 (basically 85% of the median home price per area) – with an estimated monthly mortgage payment with taxes and insurance at: $1920 and a qualifying income of: $57,600 (30%).

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Financing

We at Bayer Appraisals have been surveying listings reported as sold by “auto sale” in MLS and finding the following:  7 out of 15 properties (we called about) reported as “closed” had not, due to the auto closing feature now part of our MLS.  Agents when asked did not like the new feature and sometimes did not know their pending sales were coming up as “closed”.   All together 10 agents were kind enough to talk about what they are seeing now.  They are seeing more activity and reported multiple offers – generally on the lower priced homes – typically on properties in move in condition.

FHA financing is hot in the around $200,000 price range and below; with down payment assistance common.  Tighter underwriting is a problem, often with last minute demands (such as larger down payments) extending the escrow times, or killing deals.  Some agents report an increase in desk reviews.  One agent had a problem where a desk review came in lower then the appraised value / purchase price.  100% financing is basically gone, and even 5% down might not be enough, for conventional loans.  Agents expressed a belief that foreclosures will remain a problem and prices will continue downward.

Hot news from Wil at MTGexperts.com – the new Fannie Mae / Freddie Mac – conforming loan limit is now: $500,000 in Riverside / San Bernardino Counties.

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