Banks Tighten Lending Standards

According to a Federal Reserve report, banks tightened standards for all types of loans in the second quarter. About 35 percent of senior loan officials said they tightened standards somewhat and none of the 51 responding banks said they loosened standards for prime mortgages. The rest said their standards for mortgages remained the same or were substantially stronger. Banks also told the Fed that they expected to maintain strict lending standards until at least the second half of 2010. “Most banks have woken up to the fact that there is a lot more risk in their loan books than they ever thought possible,” says Joel Conn, president of Lakeshore Capital LLC in Birmingham, Ala. That has caused many banks to reconsider their requirements for future lending, Conn says.
I am not pushing for the ‘free and easy’ lending from four or five years ago, what is really needed is a more pragmatic, level headed approach. The pendulum has swung to the other extreme and has now created some of its own problems. We work with a lot of local lenders that do phenomenal job and are bending over backwards to help their Realtor counterparts keep deals together

Problems in the higher end market

A few other points. (Very telling of where our problems are regarding lending/underwriting)

For all of San Joaquin Co. Jan 09 to date only 63 Homes sold between $500,000 and $999,999 for same period last year 120 Sold. 48% Decrease

For all of San Joaquin Co. Jan 09 to date only 5 Homes sold from $1,000,000 and Above for same period last year 12 Sold. 60% Decrease

Foreclosures represent approximately 75% of ALL Pending and Sold properties in San Joaquin County. Our REO listing inventory currently only comprises approximately 25% of listed properties (we know the ‘shadow inventory’ is out there), Short Sales now comprise approximately 50% of listings.

What will the Fed do??

The government has infused Trillions of dollars into the system - which in a vacuum for right now, was the right thing to do. HOWEVER, forget about predicting inflation or speculating on inflation. A direct result, if the government's attempts are successful, WILL be inflation. No doubt. The only real tool the Fed has is to print new monies and infuse into the system to jump start things or to raise rates and try to cool things down. As mentioned before - eventually, near term, buying power will errod.

Some positive news...

April 10 (Bloomberg) -- U.S. stocks rose for a fifth week, capping the steepest rally since 1933, as Wells Fargo & Co.’s higher-than-estimated earnings and speculation banks will pass government stress tests spurred optimism that the industry’s slump is ending.

March Update

March 25, 2009
Quick Facts:
· Existing, single-family home sales increased 83 percent in February to a seasonally adjusted rate of 620,410 on an annualized basis
· The statewide median price of an existing single-family home decreased 40.8 percent
in February to $247,590
· C.A.R.’s Unsold Inventory Index fell to 6.5 months in February, compared with 15.3 months in February 2008
· The median number of days it took to sell a single-family home declined to 51.5 days in February 2009, compared with 69.3 days in February 2008

Late Updates

I've been somewhat remiss in keeping up with the blog - sorry.

As of March 08, 2009 per MetroList MLS data there are 231 ACTIVE listings in Lodi and 1642 in Stockton. For Lodi, 137 or (59%) are REO (Foreclosure) and Short Sale properties and in Stockton, REO and Short Sale properties add up to 1376 or (84%). Most everyone, including anxious Buyers and Realtors have noticed inventories dropping and choices of decent REO and other type properties have gone from a pool to a puddle.
Currently, Lodi has 93 homes PENDING Sale and on average is closing 49 Homes a month with only an inventory of 231 of homes. Simply stated we have about a 4-month inventory of homes. Stockton is chewing through their inventory at an even faster pace with 1236 PENDING Sales and on average 519 Sold homes a month. Based on Stockton’s inventory and average number of Sold homes they have about a 3-month inventory of homes available

Homeowner Affordability and Stability Plan

See for yourself: Homeowner Affordability and Stability Plan just this past week by President Obama. Take a look at the Executive Summary posted on the White House website, http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ExecutiveSummary.pdf