The median price paid for a Southland home last month was $290,000, up 3.6 percent from $280,000 in both March this year as well as April 2011, according to San Diego-based DataQuick.

Last month’s median was the highest since the median was also $290,000 in December 2010. The year-over-year gain in the April median was also the first since December 2010, when the median rose a scant 0.3 percent.

Although price pressures have no doubt formed in some areas, the year-over-year increase in the April median price also reflects two other trends: the decline in the share of sales that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas, and a shift toward a greater portion of sales this April in the higher-cost coastal markets. In April last year, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented 68.0 percent of the region’s sales, compared with 71.5 percent last month.

April’s $290,000 Southland median was 17.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 42.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.

“The housing market continued its painfully slow crawl back toward normalcy last month. You can see it in the fading role of foreclosures, the uptick in median prices here and there, and the higher levels of sales in coastal counties,” said John Walsh, DataQuick president.

“Of course, there are still a lot of things that make this market abnormal,” he said. “Investor and cash buying are still unusually robust. The jumbo loan market has yet to recover, and the use of plain-vanilla adjustable-rate mortgages, or ‘ARMs,’ remains far below normal. Lots of homeowners are ‘underwater,’ and the market remains awash in uncertainty over the economy, home prices, and the way lenders will handle the many thousands of homeowners who are behind on their mortgage payments.”

Last month a total of 19,284 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 3.4 percent from 19,953 in March, and up 5.1 percent from 18,344 in April 2011.

The change in sales between March and April has varied widely over the years. On average, sales have risen about 1 percent between those two months since 1988, when DataQuick’s statistics begin. On a year-over-year basis, Southland sales have increased for four consecutive months, and for eight out of the last nine months. However, last month’s sales were still 21.0 percent below the average for all the months of April since 1988.

The Southland housing market saw a modest uptick in mid-priced sales last month. But contrary to the general trend in recent years, sales of lower-cost homes fell. The latter is partly the result of the dwindling number of foreclosures re-selling and the overall decline in the inventory of homes for sale.

The number of homes that sold for less than $200,000 in April fell 4.7 percent from a year earlier, while the number that sold for between $200,000 and $400,000 rose 5.5 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 3.5 percent year-over-year. The number of sales above $800,000 fell 3.0 percent from a year ago.

Distressed sales – the combination of foreclosure resales and “short” sales – made up about 47 percent of last month’s resale market. That was the lowest level since the figure was 45.1 percent in April 2008.

Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 28.6 percent of the resale market last month, down from 31.5 percent in March and down from 33.8 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were also 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.4 percent of Southland resales last month. That compares with 18.9 percent the month before and 17.3 percent a year earlier.

Credit remained tight last month but the influx of more traditional home buyers this spring has brought slightly higher levels of adjustable-rate financing and “jumbo” loans.

Adjustable-rate mortgages (ARMs) accounted for 7.1 percent of last month’s Southland home purchase loans, up from 6.4 percent the prior month and down from 8.5 percent a year earlier. Since 2000, a monthly average of about 36 percent of purchase loans were ARMs.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.9 percent of last month’s purchase lending – the highest since December 2007. April’s figure was up from 16.4 percent the prior month and 17.4 percent a year ago. In the months leading up to the credit crisis that hit in August 2007, jumbos made up about 40 percent of the market.

Investor activity held near a record-high level in April, and the share of buyers paying cash remained at double the historical average.

Absentee buyers – mostly investors and some second-home purchasers – bought 27.8 percent of the Southland homes sold last month. That was down from 28.2 percent the prior month and up from 25.4 percent a year earlier. The record was 29.9 percent in February this year. Last month’s absentee buyers paid a median $220,000, up from $212,000 the month before and $210,000 a year earlier. Absentee buying was greatest in the Inland Empire, where it represented 35.8 percent of all homes sold last month, up from 35.6 percent the month before and 33.1 percent a year ago. Since 2000, the Southland’s absentee buyers have purchased a monthly average of about 17 percent of all homes sold.

Cash purchasers accounted for 31.5 percent of April home sales, down from 32.4 percent the month before and roughly even with 31.8 percent a year earlier. Cash buyers paid a median $225,000 last month, up from $215,000 the prior month and $210,000 a year ago. Since 2000, the monthly average for Southland homes purchased with cash is about 15 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 29.3 percent of all purchase mortgages in April. Last month’s FHA level, which was the lowest for any month since August 2008, compared with 30.0 percent the month before and 33.5 percent a year earlier.

In April, 20.5 percent of all Southland home sales were for $500,000 or more, up from 19.6 percent the month before and the same as a year earlier. Last month’s level was the highest since July 2011, when it was 20.7 percent. The low point for $500,000-plus sales was in January 2009, when only 13.8 percent of sales were above that threshold. Over the past decade, a monthly average of about 28 percent of homes sold for $500,000 or more.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment Southland buyers committed themselves to paying was $1,096 last month, compared with $1,063 in March. Last month’s figure was down from $1,181 for the same month last year. Adjusted for inflation, last month’s typical payment was 53.6 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 62.0 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is much lower than peak levels reached in recent years. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

A jump in sales from February to March is normal for the season. Last month’s sales were the strongest for the month of March since 39,811 were sold in 2007. On a year-over-year basis, sales have increased the past eight months. California sales for the month of March have varied from a low of 24,565 in 2008 to a high of 68,848 in 2005, while the average is 43,883. DataQuick’s statistics go back to 1988.

The median price paid for a home last month was $251,000, up 5.0 percent from $239,000 in February, and up 0.8 percent from $249,000 for March a year ago. The year-over-year increase was the first since September 2010. The bottom of the current cycle was $221,000 in April 2009, while the peak was $484,000 in early 2007.

Distressed property sales – the combination of foreclosure resales and “short sales” – continued to make up more than half of California’s resale market.

Of the existing homes sold last month, 32.5 percent were properties that had been foreclosed on during the past year – the lowest level for any month since January 2008. Last month’s figure was down from a revised 33.9 percent in February and down from 39.1 percent in March 2011. The all-time high was in February 2009 at 58.5 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.9 percent of the resale market last month. That was down from 20.4 percent the month before and up from 18.5 percent a year earlier.

The typical mortgage payment that home buyers committed themselves to paying last month was $901. That was up slightly from January’s $893, which was the lowest since $882 in February 1999. Adjusted for inflation, last month’s typical payment was 59.8 percent below the 1989 peak of the prior real estate cycle, and 67.4 percent below the 2006 peak of the current cycle.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Indicators of market distress continue to move in different directions. Foreclosure activity is high, but well below peak levels. Financing with multiple mortgages is low, down payment sizes are stable, and cash and non-owner occupied buying remain at or near record levels, DataQuick reported.

A total of 56,258 Notices of Default (NODs) were recorded at county recorders offices during the first quarter of this year. That was down 8.5 percent from 61,517 for the prior three months, and down 17.6 percent from 68,239 in first-quarter 2011, according to San Diego-based DataQuick.

Last quarter’s tally of 56,258 NODs was the lowest since 53,943 NODs were recorded in second-quarter 2007. NOD filings peaked in first-quarter 2009 at 135,431.

“Prices peaked five years ago and then started to fall off a cliff. Foreclosure activity goes up when property values decline, and the worst of that decline was happening three years ago. Right now, property values in many areas appear flat,” said John Walsh, DataQuick president.

“A few years back, there were some breathtakingly negative forecasts making the rounds regarding the foreclosure problem, some of which have played out, and some of which haven’t. The ‘shadow supply’ has yet to result in a second huge wave of foreclosures. The ‘reset problem’ hasn’t really materialized, largely because interest rates are resetting down, not up. And, remarkably, whole batches of presumed ‘toxic’ mortgages continue to perform. There’s no doubt that housing, especially negative equity, is one of the biggest drags on a struggling economy, but it’s not necessarily playing out the way some pundits thought,” he said.

The most active “beneficiaries” in the formal foreclosure process last quarter were Bank of America (10,419), Wells Fargo (7,577), Bank of New York (5,380) and JP Morgan (5,343).

The trustees who pursued the highest number of defaults last quarter were ReconTrust Co (mostly for Bank of America and Bank of New York), Quality Loan Service Corp (Bank of America), NDEx West (Wells Fargo) and Cal-Western Reconveyance Corp (Wells Fargo).

Most of the loans going into default are still from the 2005-2007 period. The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for three years, indicating that weak underwriting standards peaked then.

Although NOD filings dropped across the home price spectrum last quarter, they remained far more concentrated in California’s most affordable communities. Zip codes with first-quarter 2012 median sale prices below $200,000 collectively saw 8.9 NODs filed for every 1,000 homes in those zip codes, while the ratio was 5.6 NODs filed per 1,000 homes for zip codes with $200,000 to $800,000 medians. For the group of zip codes with median sale prices above $800,000, there were 2.3 NODs filed per 1,000 homes.

On primary mortgages, California homeowners were a median nine months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $17,897 on a median $319,418 mortgage.

On home equity loans and lines of credit in default, borrowers owed a median $4,978 on a median $75,000 credit line. The amount of the credit line that was actually in use cannot be determined from public records.

San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Notices of Default are recorded at county recorders offices and mark the first step of the formal foreclosure process.

Although 56,259 default notices were filed last quarter, they involved 55,368 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit).

Of the state’s larger counties, mortgages were least likely to go into default in Marin, San Francisco, and San Mateo counties. The probability was highest in Tulare, Sacramento and San Joaquin counties.

Trustees Deeds recorded (TDs), or the actual loss of a home to the formal foreclosure process, totaled 30,261 during the first quarter. That was down 3.2 percent from 31,260 filed the prior quarter, and down 29.7 percent from 43,052 during first-quarter 2011.

Last quarter’s Trustees Deeds total was the lowest since the third quarter of 2007, when 24,209 were filed. The all-time peak was 79,511 in third-quarter 2008. The state’s all-time low was 637 in the second quarter of 2005, DataQuick reported.

Just as with NOD filings, foreclosures remained far more concentrated in the state’s most affordable neighborhoods. Zip codes with first-quarter 2012 median sale prices below $200,000 collectively saw 5.9 homes foreclosed on for every 1,000 homes, compared with 2.6 foreclosures per 1,000 homes for zip codes with medians between $200,000 and $800,000 and less than one – 0.8 – foreclosure per 1,000 homes in the group of zip codes with $800,000-plus medians.

While 1.45 million of California’s 8.7 million houses and condos have been involved in a foreclosure proceeding over the past five years, 835,000 (9.6 percent) have been lost to foreclosure.

Foreclosure resales – homes that had been foreclosed on over the past 12 months – accounted for 33.5 percent of California resale activity last quarter, down from a revised 33.6 percent the prior quarter and 39.8 percent a year ago. The statewide figure peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales varied significantly by county last quarter, from 9.0 percent in San Francisco County to 55.2 percent in Yuba County.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 20.2 percent of statewide resale activity last quarter. That was up from an estimated 19.6 percent the prior quarter and up from 18.1 percent a year earlier.

On average, homes foreclosed on last quarter took 8.5 months to wind their way through the formal foreclosure process, beginning with an NOD. That’s down from an average of 9.7 months the prior quarter and 9.1 months a year earlier.

At formal foreclosure auctions held statewide last quarter, an estimated 33.4 percent of the foreclosed properties were bought by investors or others who don’t appear to be lender or government entities. That was up from an estimated 29.2 percent the previous quarter and up from 23.2 percent from a year earlier, DataQuick reported.

Notices of Default (Trustees Deeds further down)
houses and condos

includes additional counties

Trustees Deeds Recorded (number of homes foreclosed on)
houses and condos

If you have ever been in an auto accident, you know that insurance adjusters from both sides examine the accident to determine the comparative negligence. If the fault was fifty percent yours, you are responsible for 50 percent of the damage.

Having tracked hundreds of thousands of foreclosures, we have yet to see a single case where the owner was making their payments, did everything right, and still lost their house. This seems to be lost on most that see foreclosures as “the problem”.

We have long said foreclosures are not the problem, negative equity is. Despite what you may hear about the housing crisis, negative equity was not caused by a downturn in the economy, nor job loss. A run away credit bubble caused it. While we believe banks and government deregulation were primarily to blame, do homeowner’s really have no responsibility?

Lets look at two real life examples:

1. Owner purchases a property in 2004 for no money down. Over the next two years she pulled out $140,000 of equity. In 2007 she defaults on the loan.  In 2011 the bank takes the property back in foreclosure. One year later, 2012, she is finally evicted from the property after living there for five years without making a payment. She is now in the news for breaking back into the home to fight what she says is an “unlawful foreclosure”. The lender was forced to secure the property with steel doors and window coverings to keep her out. What really are her damages? What consideration does she deserve? What consequences should she suffer?
2. An eighty-year-old couple in poor health needs money for medical bills. They are collecting social security and yet qualify for three back-to-back option ARM loans in a three-year period, resulting in outstanding debt of $500,000. Each time they refinanced, the loan fees and prepayment penalties nearly exceeded the amount they received at close of escrow. Now that the payments are increasing, they can no longer afford to stay in the home they have owned for 30 years. Clearly they were refinancing of their own free will, using the cash they received, but were also put into loans they could obviously not afford. Who is at fault here? Should they be entitled to live out their final years in the home?

Both of these examples are of people who took cash out of their homes. Should the rules be different for them, then for those who purchased with no money down and never took cash out, but are now upside down? And what about those who did everything “right” and put 20 percent or more down, yet now find themselves underwater?

These are real questions of fairness that we rarely see addressed.

First it seems to us that it would be fair and equitable, to not allow any principle reductions on cash out. Instead we think the underwater, cash out, portion of any mortgage should be converted to unsecured debt. This allows lenders to fully pursue collection, while allowing borrowers the right to eliminate the debt in bankruptcy without fear of losing their home. If the borrower doesn’t want this option, then they can try to negotiate a short sale, or deal with the consequences of foreclosure – fair all around.

As for principle balance reductions, those should be strictly limited to amounts used to purchase a home, where the home has since fallen in value, through NO direct fault of the borrower. This is fair because banks were in a far better position to realize that prices were unsustainable at the peak, then the average homeowner, who kept hearing that prices would only go up, or that there was no bubble.

What’s most unfathomable to me is why anyone condones breaking the law by suggesting its ok to break and enter into homes that have been foreclosed on. Even if one intends to take a stand, is that really the right way? And is foreclosure actually bad for homeowners? Why in the world would anyone take a stand against a process that, at least in California, allows you in many cases to walk away from a huge debt with nothing but a hit to your credit report. In some countries not paying one’s debts means jail time.

The saddest thing I see today, is that the worst actors, who signed up for the worst loans, and cry the most about unjust foreclosures are the most likely to get help from the banks. While prime borrowers with great credit, traditional 30-year financing who didn’t use their house as an ATM, and showed respect for the law, rarely get a decent loan modification no matter the circumstances, and often have short sale requests declined.

What do you think? Can you honestly say only the banks are to blame?