Remember it only took a 15% to 20% decrease in borrowing costs to net a 3% increase in home values
Borrowers in Negative Equity Declining as Home Values Gain: Report
09/12/2012 By: Esther Cho
About 600,000 borrowers rose above negative equity in the second quarter of 2012, CoreLogic reported Wednesday.
According to the company’s analysis, 10.8 million, or 22.3 percent, of residential properties with a mortgage remained underwater for the second quarter of 2012. The second quarter figure is a decrease from the first quarter of this year, when 11.4 million properties, or 23.7 percent, were underwater.
Even though negative equity is said to be a driving factor for default, 84.9 percent of underwater borrowers managed to stay current on their payments.
“The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year,” said Mark Fleming, chief economist for CoreLogic. “Surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity.
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Proprietary OC Housing News home purchase analysis
3550 West SWEETBAY Ct Unit C Anaheim, CA 92804
$229,000 …….. Asking Price
$26,000 ………. Purchase Price
9/8/1988 ………. Purchase Date
$203,000 ………. Gross Gain (Loss)
($2,080) ………… Commissions and Costs at 8%
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$200,920 ………. Net Gain (Loss)
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780.8% ………. Gross Percent Change
772.8% ………. Net Percent Change
9.1% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$229,000 …….. Asking Price
$8,015 ………… 3.5% Down FHA Financing
3.60% …………. Mortgage Interest Rate
30 ……………… Number of Years
$220,985 …….. Mortgage
$68,733 ………. Income Requirement
$1,005 ………… Monthly Mortgage Payment
$198 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$57 ………… Homeowners Insurance at 0.3%
$230 ………… Private Mortgage Insurance
$285 ………… Homeowners Association Fees
============================================
$1,776 ………. Monthly Cash Outlays
($151) ………. Tax Savings
($342) ………. Equity Hidden in Payment
$9 ………….. Lost Income to Down Payment
$49 ………….. Maintenance and Replacement Reserves
============================================
$1,341 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$3,790 ………… Furnishing and Move In at 1% + $1,500
$3,790 ………… Closing Costs at 1% + $1,500
$2,210 ………… Interest Points
$8,015 ………… Down Payment
============================================
$17,805 ………. Total Cash Costs
$20,500 ………. Emergency Cash Reserves
============================================
$38,305 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."Comparative Market Analysis
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$149,000 3539 West GREENTREE Cir #130 |
0 miles 1 bd / 1 ba 798 Sq. Ft. |
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$199,000 3557 GREENTREE |
0 miles 2 bd / 2 ba 1,026 Sq. Ft. |
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$159,000 10657 BELL St #5 |
0.45 miles 1 bd / 1.5 ba 987 Sq. Ft. |
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$299,000 9586 MAMOTA Way |
0.79 miles 2 bd / 2 ba 1,221 Sq. Ft. |
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$174,000 7652 CERRITOS Ave Unit F |
0.79 miles 2 bd / 1.5 ba 750 Sq. Ft. |
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$219,900 10372 West BRIAR OAKS Dr Unit C |
0.87 miles 2 bd / 2 ba 1,073 Sq. Ft. |
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$228,000 10392 West BRIAR OAKS Dr #149 |
0.87 miles 2 bd / 2 ba 1,100 Sq. Ft. |
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$199,000 3010 West CHERYLLYN Ln #5 |
1.16 miles 2 bd / 1 ba 834 Sq. Ft. |
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$206,000 3050 West CHERYLLYN Ln #23 |
1.16 miles 3 bd / 2 ba 1,103 Sq. Ft. |
High-end foreclosures are rare, but growing
Elvira Grau, a party planner who appeared on The Real Housewives of New Jersey, has lost her $3 million home in Cresskill, Bergen County, to foreclosure.
It’s one of a growing number of high-end foreclosures – a sign that housing distress is not limited to lower-income neighborhoods.
Grau and her husband, James, own Space Odyssey, a former warehouse in Englewood they bought in 2005 and turned into a 26,000-square-foot entertainment venue. Elvira Grau appeared on The Real Housewives in 2010, planning a party for one of the show’s stars, Teresa Giudice. But the Graus were apparently not able to keep up the $17,500 monthly payments.
Million-dollar-plus foreclosures like the Graus’ are rare, but are on the rise, according to RealtyTrac, a California company that follows the foreclosure market. Although the numbers of foreclosures on properties with mortgages over $1 million are still tiny – less than 2 percent of all foreclosures nationwide – they have more than doubled since 2007, RealtyTrac said.
For buyers of luxury homes, the rising number of foreclosures in this price range offers the potential for better deals, since such dwellings generally sell at discounts that could total hundreds of thousands of dollars.
As in the case of the Graus, several observers said, high-end foreclosures often involve business owners.
But whether it’s a $200,000 house or a $2 million house, the basic story is the same. During the housing boom, households took on too much debt, in the form of mortgages or home-equity loans. Often, the mortgages were exotic loans with low initial payments that were followed by higher costs later.
When families faced job losses or other setbacks as the economy fell into recession, many couldn’t keep up with the mortgage payments, said Daren Blomquist, a RealtyTrac vice president.
High-end homeowners in trouble have taken longer to fall into foreclosure because they typically had more of “a financial cushion to fall back on to keep making their mortgage payments,” Blomquist said. “They’ve been able to hold out longer.”