Moreno Valley: fewer sales / prices up

Riverside: fewer sales / prices up

Banning – Beaumont: fewer sales / Distress sale prices up slightly

Sun City – Menifee: sale numbers up slightly / prices lower

Perris – Nuevo: fewer sales / prices up

Hemet – San Jacinto: fewer sales / prices up for the REOs only

Sketchers USA

Birth of wine vineyards in Moreno Valley – North of the 60 freeway – east of Theodore St.

Moreno Valley Community College – Lasselle Street south of Iris – open

Moreno Valley Medical Campus –for Kaiser Permanente – on Iris west of the Moreno Valley Community Hospital – approved

Connection of Kitching Street south of Alessandro Blvd – under construction

March Life Care on March Air Reserve Base – see www.marchhealthcare.com – coming

New Neighborhood Park – Corner of Filaree and Perris Blvd.

Bayer Facts: June 22, 2010

Provided by Beverly A. Bayer, SRA (appraiser) 951 247-3674

Data shows home prices (after the big drop) are moving up – not only in Moreno Valley, but in the 7 County area.  However, from the high median price (in 2006-2007) in Moreno Valley to the lowest median price in 2009 – for 3 of 4 Moreno Valley zip codes – the $ drop was: $262,500 (68%); $270,000 (73%) and $275,000 (68%).  In the 1990 – 1997 drop the percentage decline was: 39%, 41% and 37%.  And the $ drop more in the range of $79,000.

Although home prices are going up, I am seeing a slight increase in inventory (homes for sale) and a slight slowing in the number of sales – which is (over-all) increasing the months of inventory – in the communities near Moreno Valley, CA.

Changes in Median Moreno Valley Prices over 4-years: May 2006 vs. May 2010

Chart with above data….

Most of the current listings are short sales and most of the sales are the REOs; based on rate of sales, we have about 2.7 months of Standard Sales in inventory; 38 days of REO inventory and 3 months of short sale inventory.  In the time period from 5/22/2010 to 6/22/2010 only 240 single family homes sold in Moreno Valley – in the same time period 1-year ago 403 homes sold and in 2008 (same time period) 312 homes sold – so fewer homes are selling.  The most interesting change is in the type of sales with an increase in the percentage of short sales in 2010, over 2008 & 2009 (from 8% & 11% 2008/2009 to 35% this year).

National Unemployment: 9.7 in May 2010; it was 9.4% in May 2009, and 5.5% in May 2008.

Riverside / San Bernardino Counties unemployment in April 2010 was: 14.2%, in April 2009: 12.1% and in April 2008: 6.7%.

Above is the percentage of Riverside County families that can afford the median priced home in the County.  In California the affordability rate in the first quarter was: 49 and the National affordability rate for the quarter was 65.  Looking back for each May between 1990 and 2005 the lowest affordability rate in this County was 14 and the highest 56 (the average was 43% rounded).  Foreclosure information is showing a decline in numbers.

Moreno Valley home prices over 3-months by house size.   Looking at 1400-1600 sq’ data 50% or ½ (25-75 percentile) sold between $130,000 and $163,000, with the actual middle price at: $145,000.

Looks like lots of motel rooms and distribution centers…

SanSai Grill (Towngate Center) hey, its good – lunch included salad, soup and main dish

Sports Authority (Towngate Crossing) big store – lots of cool sporting stuff (also new: Nubi Yogurt)

Straw Hat Pizza (Cactus Commerce Center) Cactus Ave / Elsworth

Hampton Inn & Suites (TownGate Promenade)

Carl’s Jr & Panda Express (Moreno Beach Plaza) Nice to have a Panda Express on the east end

Moreno Beach Dental (Moreno Marketplace)

Jack In The Box (old Wendy’s site Perris & 60)

Arby’s (Iris Plaza)

Opening Soon

iWash Express (on Sunnymead, east of Graham)

Fresh & Easy 2-locations (Frederick & Cottonwood) and (Ironwood & Heacock)

Q Nails and Spa (Moreno Marketplace)

The Coffee Spot (Elsworth Plaza)

Ayres Suites (Towngate Promenade)

Izvernari Professional Office (Perris / Myers)

Approved

Sonic Resturant (Alessandro / Indian)

Fresh & Easy (Iris / Oliver)

Carino’s Italian Grill (Towngate Promenade) construction on hold

Famous Dave’s Barbeque (Towngate Promenade) in plan check

On the Border (Towngate Promenade) construction on hold

Red Lobster (Towngate Promenade) construction on hold

Lowe’s (Moreno Beach Marketplace) construction on hold

Hangar C-17 Resturant & Sports Bar (Elsworth Plaza)

Rite-Aid (Alessandro / Moreno Beach)

Hawthorn Inn & Suites (Cactus / Elsworth)

Office Space (TownGate Square)

Under Construction

Additional parking (Towngate Center) WinCo Foods is the anchor

PetSmart, Staples, Wescom Credit Union (Moreno Beach Plaza)

Multi-phase renovation of Moreno Valley Plaza

Lakeside Cleaners (Moreno Marketplace) tenant improvement

Goodyear Tire (Iris Plaza)

N & R Square (Perris / Alessaandro) anchor to be Warehouse Shoe Sale

La Quinta Inn & Suites (Frederick / Sunnymead)

Major Things in Planning

WinCo Foods (Alessandro / Lasselle)

96-residential units / commerical (Alessandro / Lasselle)

Walgreens (Alessandro / Moreno Beach)

Komar Cactus Plaza (Cactus / Commerece) residential / resturant / hospitality

Retail Center (Pigeon Pass / Hemlock)

Marriott TownePlace Suites (Komar Cactus Plaza)

Sleep Inn Suites (Olivewood Plaza)

Value Place – extended stay hotel (Sunnymead / Heacock)

Medical office condos  (Cresta Bella)

Self-Storage (Graham / Alessandro)

Office Building (Olivewood Plaza) Sunnymead / Graham

Imperial Village – Senior Retirement Community Center (Nason / Brodiaea)

Industral

Alere Property Group (Heacock / Cardinal Way) 756,340 Sq’ & 423,015 Sq’ Distrubtion centers, Lowe’s. O’Reilly Auto Parts

84 Lumber Co (Heacock /Nandina)

First Industrial Realty Trust (Nandina / Perris) industrial / distrubtion ; (Nandina / Heacock / Indian) 1.2 million Sq’ total buildings and another large development at Indian /Iris

Gateway Business Park – industrial Condos (Alessandro / Day)

Highland Fairfield (60 / Redlands / Theodore) Sketchers USA – in plan check

IDI (Perris / Grove View) distribution center

Komar Investements (San Michele / Heacock / Indian) distribution center -in plan check

overton Moore Properties: (Cactus / Day) and (Cactus / Frederick) warehouse /distribution

Prologis (Pettit / Quincy) 6 buildings 2,224,419 Sq’ – in planning

Ridge Property Trust (Quincy / Redlands) 943,800 Sq’ building – in planning

Ross Dress for Less Distribution Center – expansion – under construction

Vogal Engineers, Inc – distribution center in planning (Oleander / Indian / Perris)

Western Realco: 4 buildings – in planning (Iris / Heacock)

posted 6/19/2009 for more infomation go to: www.moreno-valley.ca.us

Beverly A. Bayer, SRA   (Moreno Valley real estate appraiser)

Puerto Rico at 14.4%

Michigan at 14.1%

Oregon at 12.4%

Rhode Island & South Carolina at 12.1%

Californa at 11.5%

Nevada at 11.3%

North Carolina at 11.1%

With the following States also having 10% or more unemployment: Washington D.C. (10.7%); Florida (10.2%); Illinois (10.1%); Indians (10.6%); Kentucky (10.6%); Ohio (10.8%); Tennessee (10.7%)

The National Unemployument Rate in May 2009 was: 9.4%, up from 5.5% in May 2008.

Beverly A. Bayer, SRA – Moreno Valley, CA: Real Estate Appraiser

The “Code” requires a 3rd party to seperate the loan originator on a mortgage loan from the appraiser assigned to value the property. .  This was intended to remove the pressure some loan officers placed on the appraiser to help them make the loan.  Appraisers have in the past been asked to give a value estimate on a property before seeing it, before a formal appraisal request is made; other times the appraiser was informed of the “value needed” as a target value to hit.  Appraisers who were not considered ‘team players” often  lost clients, or were denied payment for work done.  Lenders went as far as to establish “black lists” of appraisers, not because they were bad at what they did, but because they were considered “deal killers”.

Too often the preferred appraiser, was the one most likely to over-value, for that best served the needs of the client who works for a commission based on loans funding.  Plans to license and regulate loan originators is only now really being considered.  In the crazy days leading up to the mortgage mess, too many people were making lots of money (making loans) to care if they were good  loans or bad loans.  And it only became a “problem” when loans started to fail in large numbers.

So on May 1, 2009, it was required that all loans delivered to Fannie Mae or Freddie Mac must certify the “code” was followed.  Because few lenders had a good third party ordering system, Appraisal Management Companies (AMC) become the preferred method of ordering appraisals.  The AMCs in order to attract lender clients, often required the appraiser to accept lower appraisal fees, and expected the appraisals to be completed in short periods of time.  More experienced appraisers bulked at the fees and turn times and refused the assignments; resulting in the work often going to the less experienced or even out-of-the-area appraisers.

Now, it is important to understand with any profession there are people who are good at what they do, and others that are not.   Appraising might seem easy to the less experenced appraiser, it is only with time and experience that we learn good appraising takes more time and understanding the factors that affect real estate value.  And any job done on the quick, is likely to be troublesome, especially if the worker is inadequately paid for the job.

As part of the “Code” there needs to be a level of quality control over the appraisals, and I believe this is where the real problems are happening.  We need to know who or what is doing the quality control.  There are computer programs that can search for violations of appraisal guidelines or inconsistences in a report.  However, in the real world it is not always possible to stay within the guidelines.  For example there are guidelines about how far away is too far for a comparable property sale used in an appraisal; but when there is a shortage of sales of similar properties – the appraiser has to expand the distance search to find good data.  As long as the appraiser has a good reason for what they have done and why – a guideline is just a guideline – not a requirement.

Other times the appraisals might be reviewed by non-appraisers, or less experienced appraisers willing to do review work on the cheap.  It is human nature to believe the way we do something is the only way something should be done – appraisers with a good backgrounmd in appraising and a good sense of fairness can look at work done by another that is reasonable, but not completely the way they would have done it.  Less experienced reviewers can be quick to find fault if the report does not minic the way they work.  One thing that is often over-looked is the appraiser actually saw the property (possibly inside and out); and the reviewer (at best) might have driven past the property months (or even years) later.

So what I think is happening is the quality control is finding possible (or real) problems with the less experienced appraisers (willing to do the work), who do not have the skill or guts to defend their work , so they back off (down) in the valuations or plug in (unreasionalbe) data requested.  These may be the same appraisers who “hit the needed values” requested by their previous clients.  It might be an issue of low self worth (afterall they are accepting low fees and unreasonable requirements) and that has resulted in bad valuations under the old system and under the new system.

Older appraisers are being pushed out of the business, either by clients to don’t value the truth, or are not willing to pay more for “quality” appraisals.  So why should we care?  We should care that bad loans are prevented – for every loan that goes bad not only hurts the owner of that loan, but also the family who loses their home.  All the irresponsible lending allowed homes prices to skyrocket, and with reality (the the difficulty of homeowners to make their payments) hit and homes were lost to foreclosure; and prices dropped – do we see the danger done by (among other things) agressive real estate valuations.

Much of the anger about the HVCC is coming from loan makers, mad with the extra cost of appraisals, the longer wait to get the appraisal back (which seems to be a back log in the quality control process) and add to that values coming in below the contract prices – likely to killing the deals.  Appraisers are mad about the lower fees they are being pushed to accept, if they want to continue doing mortgage appraisals.  And some appraisers who have not locked up work with AMCs and are now finding the rosters are closed.  And now I am hearing about the AMCs being slow in paying their appraisers and one case where the client did not like the value and the AMC has chosen not to pay the appraiser (this actually is NOT allowed in the Code).

The “code” does require the borrower receive a copy of the appraisal at least 3 days before the loan closes.  Things you might want to check: how far is the appraiser’s homebase from the property location (the appraiser’s address is on the signature page); is the person who saw the property the person who signed the report (who signs the report certifies they saw the property – if they did not they have violated appraisal law); is the information in the appraisal correct, look especially to the neighborhood and market conditions – too many appraisers fill these spots with generic comments; and share the appraisal with your real estate agent and ask if the choice of comparables used are recent, similar and appropriate.  If you find problems in the appraisal complain to your lender.  If the appraisal is preventing your loan, you might want to hire an independent appraiser to review your appraisal and bring that review to your lender.

Beverly A. Bayer, SRA

is about: $90,000; for Banning / Beaumont about: $95,000; for Perris / Nuevo about: $107,000; and for Sun City /

Menifee about: $131,000.  For homes between 2000 – 2200 the median prices are about: $135,000 San Jacinto / Hemet;

$200,000 Banning / Beaumont; $145,000 Perris / Nuevo; and $210,000 Sun City / Menifee.  The general trend for these

communities is a dropping in the number of homes for sale and homes selling fast.  Unless the trend of more homebuyers

than properties for sale does not continue – prices will be expected to increase.

23802 Parkland Avenue

1474sq’        built 1986    .11 acre lot

16605 Vista Conejo Drive

1123sq’        built 1997    .12 acre

24372 Electra Court

1381sq’        built 1985    .12 acre

Tried to sell the house in 2008 (listing expired on 5/13/2008 at: $199,000).

Loan modification done 2/11/2009 for $313,951 for 27 years.

12659 Meadbury Drive

1582sq’        built 1982    .17 acre

28919 Gifford Avenue

1450sq’        built 1974    .20 acre

28817 Maltby Avenue

1531sq’        built 1987    .30 acre

10911 Mendoza Road

2286sq’        built 1988    .15 acre

24634 Huntley Drive

1933sq’        built 1986    .20 acre

15346 Calle Camelia

2570sq’        built 2004    .13 acre

22824 Tea Rose Lane

2197sq’        built 1987    .20 acre

6 (60%) became foreclosures, 2 (20%) sold as short sales, 1 person was able to get a loan modification and one loan seems to be OK.  The search was based on close of escrow date through MLS and 13 sales were found (3 were kicked out because the close of escrow date from a second source did not fit my search date range).  Those 3 also became foreclosures – so really the foreclosure rate was: 69%.  Really only 1 loan seems to have been successful and it was the loan with a 20% down payment.  7 out of these 10 loans were for 100% financing.  The average effective interest rate in 2006 was: 6.53% – 6 of the 10 loans had higher adjustable rate loans.  The property on Vista Conejo had an interest rate of 9.32% (the monthly payment on $355,000 at 9.25% against a 6.5% loan would be a difference each month of about $675).

It helps to look back at the insanity to understand what went wrong.  Moreno Valley home prices right now are at the levels from 2001 (over a 60% decline – over what they were about 3 years ago).  Based on responsible lending the local affordability rate was at 18% (18 families out of 100 could afford the median priced home) in the 3th quarter of 2006 – most recently the rate was at 65%.   Obviously loans were being made beyond what families could afford, often with 100% financing.  Without reasonable lending guidelines home prices were allowed to continue to increase, until reason and reality set in and the buyers disappeared.  Without buyers (or buyers able to get financing) home sales stop until the prices attract buyers (and lenders) back into the market.

Beverly A. Bayer, SRA

First Chart is showing what percentage of a population can afford the median priced home, in its area – for Riverside / San Bernardino Counties the lowest percent of families that could afford the median priced home was in the third quarter of 2006 at 18% – now in the first quarter of 2009 it is 65% of families that can afford the median priced home, which is superior to the National affordability rate of 64% for the first quarter of 2009.

Next chart is the number of Moreno Valley homes in foreclosure, or lender owned over time.  NOD = Notices of Default – the first step in the foreclosure process; NOT = Notices of Trustee Sale – date has been set for the foreclosure transfer back to the lender; and REO = Real Estate Owned or properties now owned by their lender.  Note the total number was fairly stable until May 2009; First noticed by an increase in the Notices of Default, followed by the NOTs (homes going to the foreclosure auction) and now the growth is in the number of lender owned homes (REOs).

Next chart is based on the number of active listings divided by the number of pending sales (over 1-month) to reflect the months of standing inventory (which is the time needed – based on sales for the current number of listings to sell).

Breaking down the listings / pending sales over 1-month – the following was found based on type of sale:

• Only 6% of listings are Standard sales and 88% of Standard sales are selling.
• 22% of listings are REO and 63% of REO properties are selling.
• 60% of listings are short sales, but only 13% of short sales are selling.

Next chart is the changes in Unemployment (local area is Riverside – San Bernardino – Ontario, CA)

Next chart is the median sales price per square foot for the 4 zip codes in Moreno Valley – between Jan 2008 and April 2009.  For contrast the median prices per square foot from July 2006 (about the top of the market) to April 2009 are:

The low (very affordable) home prices are attracting buyers, and we have seen a shift from too many homes for sale and too few buyers – to too many buyers and not enough properties (priced correctly).  This will result in price increases.  However, more foreclosures will increase the inventory and a growing unemployment problem might push some potential homebuyers out of the market.

Beverly A. Bayer, SRA – Appraising MorenoValley.com

Looking at the median home prices provided by dqnews.com we can see the trend in Moreno Valley prices by zip code over time.  Home prices were on the rise in the 1980s hitting a high in 1990.  Home prices fell about 1/3 between 1990 and 1997.  It took about 4 years (to 2001) for homes prices to get back to the prior highs of 1990. The acceleration of home prices started a few years later, that huge increase in median prices – almost to the $400,000 mark was not in line with real income, but the result of aggressive lending.  That irresponsible lending resulted in the foreclosure problem that we are working through now, as too many families found themselves in homes and loans they could not afford.  Lenders anxious to get the foreclosed homes off their balance sheet, often under priced them to get them sold, and everyone was in a race to under price, bringing prices down at a very fast pace.  As prices went lower buyers became interested.  The issue now is too many buyers (many of them investors) in the marketplace and not enough well priced listings – this has resulted in multiple offers and up bidding; with the final step being a noticeable increase in home prices.