Looking at efforts to keep California foreclosures under control and from increasing greatly in California will mean first of all looking at how the...
Looking at efforts to keep California foreclosures under control and from increasing greatly in California will mean first of all looking at how these foreclosures began to increase over the last two or three years. Naturally, much of it can be chalked up to the penchant for speculation along with certain structural defects in California’s real estate markets as well.
To begin with, anybody who understands real estate will say that California real estate tends to be more expensive than just about any other real estate in the country with a few exceptions such as Honolulu, Boston and Marin County. The false assumption that many made about real estate in California was that it would continue to climb in price forever, though that has now been proven false.
Sadly, large numbers of real estate owners and investors bought into that myth, despite plenty of warnings that every economic boom is inevitably followed by a downturn or a bust. The current downturn, after it finally showed, was noticeably acute and more vigorous than it might have been had so much not taken so long to build up. When the top blew off, in other words, it blew off strongly.
There were also a few problems with the state’s real estate market that helped it in one way but also tended to be a drag in another way, especially when it came to collecting property tax revenues from it. That’s because of California’s famous Proposition 13 and its prohibition against raising property taxes more than a certain specifically delineated amount over time.
For those on the buying and of the real estate market, this initiative — known as Proposition 13 — helped to make real estate out in California artificially attractive for quite a long time. With reasonable property tax rates (at least for California), many more buyers than would normally be expected got into the market in a big way. Of course, the recession caused the bottom to drop out.
Now, the Golden State is trying to dig out of a hole created in part by a steep rate of increase in CA foreclosures that it might not have had to deal with if it were not for these sorts of structural defects. In 2009, the Golden State enacted into law the “California Foreclosure Prevention Act” as a way to help slow down the rate of residential foreclosures.
This is mainly done through what the state calls a 90 day “holding” period, which is added on to the normal time line that most standard foreclosures must adhere to. It is requiring that lenders wait an extra 90 days after they’ve sent a notice of default to be recorded before they can move to record and publish a Notice of Trustee’s Sale. There are certain criteria that must be met, by the way.
Even though California foreclosures have climbed steadily to heights not seen just several years ago, that rate actually shows some signs of decline and improvement though there are an equal number of economic experts who say that it is sure to climb further in the future. At present, what’s more important is that California is trying to stop the bleeding and stabilize its rate and force it down. There are many people who are hoping it succeeds, and soon.
Understanding efforts to prevent from increasing drastically means, understanding how the foreclosure rate out in California increased so dramatically over the last few of years. We have got the best inside info on properties.
How Golden State leadership can deal with California foreclosures will mean understanding how California found itself in a foreclosure problem in the first place and also how California began to experience the issue several years before it broke out into the rest of the country. Some of it has to do with real estate speculation and some of it has to do with a lack of will on the part of state leaders.
When looking at something like CA foreclosures and the rate at which they’ve been increasing for the last several years it’s important to understand that real estate in the Golden State — like real estate in Florida or Arizona or Las Vegas — was doing a land office business for nearly a decade, beginning in the mid-1990s. Supply was being outstripped by demand and home prices went up accordingly.
California political leadership — just like leadership in most every other state — encouraged this boom in real estate for a number of reasons, including that more people buying more homes meant increasing tax revenues. This encouraged the state and its municipalities to add sometimes-needed services, all on the expectation that the good times would continue to roll on forever. But no real estate boom has ever not been followed by a bust.
As far as California goes, this bust in real estate prices probably first began in a serious way in 2006 though San Diego and other cities began to feel a softening of the markets about a year before that. Still, easy lending and easy (meaning low interest rate) money kept people flocking to the market for a few more years before it all finally began to come down in a serious way.
That let down in the markets began to really take off in mid-2007. After the financial markets themselves finally went down badly in late 2008, the real estate market out in California ground to a halt. At that point, the rate of increase in CA foreclosures really took off, with the state now featuring six of the top 10 cities in the country in terms of foreclosure. That’s not an enviable record to hold, it must be said.
State leaders have been trying to do certain things aimed at reducing the rate of CA foreclosures over time. They’ve been working with the federal government to get the word out (and to administer) certain programs that home owners can take advantage of to reduce their mortgages, for one. Also, the state has a law on the books (due to expire in 2011) that has added additional time to the foreclosure process.
It’s hoped that loan modification and the extension of time (by 90 days) in the foreclosure timeline may encourage more homeowners to try to hold onto their properties, though the fact is median home prices in the Golden State have declined by 30 to 50 percent or more in many areas of the state. For those with homes worth far less than they owe, foreclosure seems to be an increasingly-common first resort, even.
Whether anything to do with the rate of CA foreclosures will ever be truly amenable to anything other than the natural corrections that market forces seem to impose as a matter of course is a question for the ages. Some think that the Golden State’s foreclosure rate may even be stabilizing and could even be dropping. Time will tell on that forecast, it seems.
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How the rate of California foreclosures affect the San Diego markets in terms of real estate purchases and sales is very interesting. San Diego County and the city of San Diego both depend on each other for survival, and “America’s Finest City” (which is what San Diego bills itself as) is facing a series of budget challenges that are only exacerbated by the rate of foreclosures in the state.
For pretty much all of 2009, the average sale price of a home in San Diego fell noticeably. And even though $300,000 might seem like a lot for a home, especially for those from distressed cities in the Midwest, that price is a very significant decrease in the price of a home in San Diego and San Diego County from pre-2009 levels.
There has been, lately, a sliver of sunshine peeking through the dark gray clouds hovering over the Golden State when it comes to real estate prices, at least down in San Diego. It seems that the September to November 2009 time frame saw an average price increase of 1.6% or nearly $5000 on the sale of the average home. This increase is at least something, one must say.
Still, property values in San Diego have declined by about 35% over the last five years, so anybody who bought in to the real estate market during that period is looking at a home that now is probably worth much less than they owe on it. Sad to say, but anybody who bought into those properties can have little chance of improving their positions in the short term, it must be said.
Of course, cultural shifts in how many people are looking at the so-called “stigma” that used to be attached to foreclosures mean that many people have begun to look at this prospect (foreclosure) is nowhere nearly as serious as it once was considered. This has affected the rate of CA foreclosures somewhat, and America’s finest city is no more immune to this than any other city in California.
To understand how hard-hitting this decline has been, consider that the average listing price for a home in San Diego in 2009 was nearly $496,000. Now, match that up with the average home sales price of just a bit over $300,000 and it’s easy to see why the rate of CA foreclosures they continue to be an issue at least until home prices can begin a concerted upward swing.
What many may not realize about California is that even when a person can sell his or her home “short” (meaning, selling it for market price regardless of what is owed on it) the state has been vigorously taxing the difference between its sale price and what’s owed on it. Being stuck with a, for example, tax bill on the $200,000 difference may be actually forcing more foreclosures than intended.
San Diego is, of course, a very nice place to live and it possesses many attributes that most cities around the country might not possess in great number, including a very nice housing inventory. Investors who have studied the market and who might be willing to demonstrate some patience might actually be able to take on the rate of CA foreclosures and make something of it down in San Diego, often to profitable result.
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While it’s certainly the case that California is undergoing a stiff crisis due to the nature of foreclosures, it might actually be the case that there might be investment potential in CA foreclosures in the years ahead. Certainly, it’s going to be important for anyone thinking of investing in real estate out in California to understand what caused the rate to go up if only to avoid the problem in the future.
To understand how one might benefit as an investor from CA foreclosures and their increase over the last couple of years, it’s first necessary to understand how California began to experience a rate of foreclosures that was not foreseen in the past. As was noted, no small amount of speculation was occurring, though the surprise in this particular instance was that it was occurring among even plain home buyers and sellers.
At its most basic, the phenomenon consisted of many sellers and buyers, all of whom were assuming that they’d be able to get into or out of homes with significant profits not soon after they purchased or sold these homes. Unfortunately, the always-inevitable market correction surprised many people still sitting on homes or real estate before they could dump them. Homes had become disposable investment instruments, it seemed.
Leveraging simply means that one takes on debt in order to acquire an asset that might return a significant reward at some point in the near or far future. These people took on mortgages for homes that they probably couldn’t afford, all on the expectation that the homes would soon increase steeply in value. Lax lending and easy-to-get mortgages helped to contribute to the problem.
This went on all the time out in California, where even the drive through clerk at the local fast food restaurant was getting into a home way over his market level. This was due to extremely easy lending and cheap money, for one. Exotic loans were put together and became practically normal. They allowed for “interest only” loans that eventually would turn into regular loans.
All of this worked for a decade or more, though the foundation for this kind of lending was a house built on sand. People were expecting to buy half-million dollar homes and then dump them in a year with a 30% profit in many cases before those loans began to increase in payment. However, the bottom fell out quickly and there are now sea of owners out there sitting on properties they cannot afford.
An investor, however, who might be considering looking at foreclosed properties or the real estate market in general out in California needs to understand that it’s going to require a tolerance for risk and also a longer view been used to be the norm. Add in that most will need stronger cash reserves than in the past and those who can meet these criteria might actually be able to do something with these homes.
CA foreclosures have stung the Golden State hard of late, and the fact that the state was never very good at managing property tax revenue due to certain public initiatives has also hit it with some appreciable impact. However, a smart and savvy investor willing to get into the market at its bottom and then ride a building way to the top may be able to do something, even in California.
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California foreclosures and how they might affect California commercial properties should really be studied by anybody who is either sticking with Golden State real estate or is considering jumping into the California markets. Some may question whether it’s a good idea to stay in such a down market but it’s a fact that a savvy investor can make money no matter characteristic of the market in question.
At present, California is dealing with a 15% rise in the rate of CA foreclosures and many feel that now is not the best time to get into the market if it hasn’t really hit the bottom. Some experts feel, though, that it has while other experts believe the current foreclosure rate portends trouble with commercial property markets and that an investor should study carefully before jumping in.
What may be going on, at least in commercial real estate, is that many banks and holders of commercial loans have been extremely reluctant to begin the process of reclaiming the property backing those loans. With many residential foreclosures already on their plates, these banks are looking for any way to get these properties into more stable situations, even if it means taking some loss on them.
Loss, as a term of art, in real estate means different things to different lenders. However, the fact is many lenders would rather deal with some loss rather than a complete loss which is something that may confront them when it comes to commercial properties if the situation remains as it is. Financially-strong investors might be able to get into the current California market and do something with it, truth be told.
Investors of these kinds are sometimes known pejoratively as “vultures” but that’s not exactly a fair description of either their value or what they do. Any market will require investors willing to come in and take distressed goods, services or properties and they’re often needed as much as so-called prime investors, especially when a market depends on investment to bounce back from a down cycle.
It’s an open question whether this exact moment in time is the best time to get into the acquisition of distressed properties, though, because other experts believe the rate of CA foreclosures — both in residential and commercial properties — is going to go through what’s called a “double-dip, ” in terms of prices these properties will fetch.
Many investors should look at handling this sort of possibility by watching the markets closely to see whether or not they have really bottomed out and then begun a long-term climb back up to reasonable levels. It may be that an investor at present will need to stick with a “purchase and hold” strategy or just sit out until the market bottoms for good and then starts climbing, if that hasn’t happened has yet.
For an investor who has a lot of guts and a high tolerance for risk when it comes to dealing with CA foreclosures and what can be made of them in the commercial real estate markets, it could be a favorable environment. That’s because there’s a lot of commercial real estate chasing not a lot of renters or buyers. Supply and demand is on the side of the buyer, it would seem.
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A look at California foreclosures and the future future of California is easier looked at than assessed. This is especially when it comes to the Golden State of California, because the state has been so affected by the downward turn in the broader economy as well as in its real estate market. Answering it, therefore, requires looking at how the foreclosure rate went up in the first place.
Like a lot of other states and regions in the country, the rate of foreclosures out in California began climbing as many people began to suffer the effects of an incipient recession (which started earlier out in California) and found that they couldn’t afford the homes they were in. Some of this is due to their speculating that it be able to get out of the market before it dropped, which didn’t happen.
Unfortunately, the recession that has hit the entire nation first broke out in California a few years ago and caught many home owners out there unawares. Sadly, many of these homeowners were sitting on initially-low mortgages that were tied to interest rate adjustments that soon led to monthly payments going through the roof.
Equally as sadly, many of these people bought much more home than they really couldn’t afford, with the expectation that they’d be out of those homes before their original mortgages adjusted upwards. Most times, the gamble would pay off in they’d be gone and into an even bigger home but with a significant profit on the sale of the original home in their pockets.
But this is all part of a natural boom and bust economic cycle, not only in real estate but in most other aspects of the economy. The bust eventually occurred and it was a very sudden one at that. However, the difference this time is that more people are less hesitant to go the foreclosure route, which means that the rate of CA foreclosures is steeper than many economists assumed it would be.
It doesn’t help that California was somewhat limited in what it could do to bank money or fund mechanisms that might have been able to deal with this before hand because the property tax revenue it was collecting was artificially limited by the famous Proposition 13, the famous anti-property tax initiative. Once the decline in home values began it was inevitable that the rate of CA foreclosures would go up.
The first thing that the state probably should try to do is stabilize the foreclosure rate and prevent it from increasing any further, and the federal government has been helping in that regards with a number of innovative programs that might help. Getting the word out to many California property owners, though, has been tough as has been getting them to forestall or put off foreclosure as a first, rather than last, resort.
It would seem that the rate of CA foreclosures is almost a natural side effect of the speculative real estate activity that had been occurring for at least a decade out in California. Unfortunately, the state has only a few tools it can use at present due to its own budgetary issues brought on at least in part by Proposition 13. Hopefully, though, it’ll be able to do something more comprehensive in the near future.
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The current recession and California foreclosures in the Golden State should be studied in order to understand how what happens out in California can eventually spill over to the rest of the nation. It’s especially important to study this issue if the time is coming when getting back into California real estate markets it’s going to happen. This can help one to avoid repeating the same mistakes, at least.
Probably only those who have been living in outer space or in a deep cave haven’t heard that the country — and especially California — has been suffering from one of the deepest recessions since the Great Depression. At the present time, California’s nickname (“the Golden State”) doesn’t seem to be particularly apropos, though most feel that it certainly will be at some point in the future.
It’s important that people continue to believe that things can be done when it comes to the rate of California foreclosures, especially as they pertain not only to the foreclosures themselves at their affect on the broader economy. It’s hard, though, to do so because, of the top 10 cities in terms of foreclosure rate, California can boast of having six of those. Some are in the north and some are in the south.
There are many different reasons for why the Golden State and its housing market has found itself in the doldrums, including that too many people were out there chasing properties that they thought they could make a quick buck off of, relatively speaking. In good times, there’s nothing wrong with this, but when the recession kicks in it can hurt people caught on the short end of the market timing strategy.
It’s the belief of most experts that California and its real estate markets will straighten out in the future, though it’s true that the present is being hurt by the economy and the recession that it is experiencing. While most experts think the recession has ended in most of the country, they also believe that California may not see any relief until 2012 or later.
What this usually means when it comes to real estate is that a shortage of ready and willing buyers will continue, especially out in California. Additionally, the Golden State suffers from a number of budget issues — some structural and some beyond its control — which also isn’t helped by the fact that more people are moving out and are moving in. This affects revenue collection, for one.
When California begins experiencing a consistent out-migration, it’s inevitable that the rate of CA foreclosures would rise, at least in the short term. It hurts right now because there’s little belief that an army of buyers will be arriving to purchase the ocean of foreclosed and on-the-market properties at present. That’s because many of these properties are now worth less than what is owed on them or what the market is commanding for them.
So then; it looks like California foreclosures and the recession out in California and in the rest of the country is forcing many to consider taking strong action to get control of a tough circumstance. Whether anything can happen in 2010, which is an election year, remains to be seen. More likely, action on the rate of California foreclosures stronger than what’s already been taken will have to wait until January, 2011.
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Coming to grips with rate of California foreclosures in California will be necessary for owners and investors of real estate in the state if it’s going to be able to emerge from the current recession and budget ills plaguing California. There are a number of different reasons for how California got to where it is today and there are no easy solutions, it needs to be said.
A number of experts in the real estate industry and in economics say that the problem with California foreclosures can be traced back to the mid-70s and the taxpayer revolt that ended up with the passage of California’s Proposition 13. This anti-property tax initiative came into being in 1978 and was an attempt to limit what people thought were unrealistic and unwarranted increases in property taxes.
Whether or not Prop 13 was helpful or harmful to the overall health of the Golden State is a matter for conjecture an argument on both sides. What’s clear at the present time, though, is that the Golden State has a real problem with increasing rate of foreclosures. Many people hope that state leadership can come up with solutions that address the issues and which are long-lasting.
As in any other part of the country, municipalities and states all tend to look at property taxes and revenue collection as the best method for increasing public services, many of which are very popular though ultimately unaffordable during bad economic times. California is a national leader in the extension of such services and its attitude about the services eventually spread to the rest of the country.
The crash in the financial markets in late 2008 was the inevitable result of a number of pie-in-the-sky assumptions made when it came to real estate and homes. California found this out as soon as a steady stream of buyers for properties started to dry up, and a swelling housing inventory often went unsold. Add in that many people were losing their jobs in the recession and the problems really began to snowball.
Of course, the rate of California foreclosures began to climb steadily above its previously-manageable (if anything of the sort is actually “manageable”) levels, and soon the state and its municipalities found itself sitting on a vast amount of unsold or foreclosed-upon properties. With nobody buying, even the steady rate of tax revenue coming in in the past also began to dry up.
There also seems to be an acceptance on the part of many current home owners in the Golden State that foreclosure is no big deal and that it should be looked upon as a reasonable fiscal alternative to staying in a home many of these owners can no longer afford. That is more a question for moralists, though the problem is in the here-and-now, in the state needs to deal with it, also in the here-and-now.
All is not completely lost out in California, of course, because there have been signs that the rate of CA foreclosures has been stabilizing at least in the short term. Whether that short-term stabilization can evolve into a long-term environment remains to be seen. It will depend on how effectively California can get a handle on its budget issues, it seems. If so, California may just be the place to invest in again.
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If you have tried to purchase a house in California, you have encountered an instrument known as a deed of trust. This deed involves three parties; the borrower, the money lender, and the neutral third person who gets foreclosure rights if ever they arise. This is the basic tool used with regards to CA foreclosures.
In a deed of trust there is also a clause empowering the third party to get the rights to implement the collection of the entirety of the debt. This means that the third party has the authority given by the lender for him to sell your property in the event that you default on your debt payments and face foreclosure.
The entire process of foreclosure begins once you fail to meet your mortgage payments. This process involves the lender repossessing the house in order to try and recover their initial costs on the debt. The lender can either sell or occupy the home but in both cases of foreclosure they would ask you to vacate the premises.
If what you have agreed upon was a non-judicial foreclosure, the trustee will need to fulfill certain requirements before they can sell the property. Contrary to how it sounds, this is actually a pretty fast and simple process. It is not necessary for the trustee to get a court order before they can ask you to vacate or any order from the court before they can sell the property. This kind of foreclosure happens if there was no power-of-sale clause in the deed of trust.
In the absence of a power-of-sale clause in the loan document, judicial foreclosure is permitted in California and involves the court’s final judgment of foreclosure. The property is then sold publicly; a recorded document is issued in the interest of public notice that the property is being foreclosed upon.
The borrower can reclaim the property after foreclosure sales, if the payment is made upfront which includes the sum of the unpaid loan in addition to the cost procured in one year after the foreclosure sale. That is unless the original lender included the full price bid. In that instance, cost procured is calculated for the period of three months, only.
Unlike other states, deficiency judgment may not be permitted in California, unless special conditions prevail. It cannot be obtained when a property in foreclosure is sold through a non-judicial public sale or if the foreclosure relates to a purchase money mortgage. The laws that govern California foreclosures are found in California Civil Code, Section 2924.
So, as you can see, the foreclosure process in California is very strict. Your best bet would be to make all your mortgage payments on time each month. Lets face it – no one wants to have their home foreclosed.
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Looking for good news in the Golden State’s rate of California foreclosures, if any can be found, will be necessary for those looking to hold onto California property or who are thinking of getting into it in the future. In any market, even a down one, money can be made though it’s usually made by investors who are savvy, intelligent and have a fair amount of intestinal fortitude.
Commonly, most people who invest in these kinds of distressed markets when it comes to something like CA foreclosures are known as “vulture investors.” This is an inaccurate term for a group of investors that help to keep economic activity going at least at low levels while the broader markets recover from a recession. Banks and other lenders are also counting on these kinds of investors to take properties off their hands, at present.
That’s because California has been experiencing a drop-off in its real estate market, in some areas of the state, for the last several years. This drop-off can be attributed to a number of reasons, some of which have to do with buyer and seller behaviors while others have to do with actual problems and how the state manages its housing inventory, for the most part.
Today’s foreclosed and “distressed” housing inventories in states like Florida and California tend to be higher in quality than such homes were in the past. Back then, homes that ended up in these categories were usually run down and needed a lot of rehabilitation. Leaving aside why homes today are ending up in foreclosure so quickly, an investor might do well by looking at this kind of market.
For the most part, a savvy investor wishing to look at CA foreclosures and get involved in the investment side of things would be smart to look at what are called “REO” properties. REO stands for “real estate owned, ” and are those properties that are owned by lenders who held the mortgage note given to them by the former buyers of those properties.
When it comes to the Golden State’s real estate markets and how they’re affected by CA foreclosures, an investor will need to make sure he or she understands these markets extremely well. That’s because they will need to understand that investing in such properties will mean getting in at a low price and then squeezing the property for the maximum return on investment at some point in the future.
For example, certain homes in the Riverside-San Bernardino area may be selling for well under half of what they once sold for. If any property holder can be found willing to sell for twenty to fifty-cents on the dollar, it just may be that the market has stabilized enough to see a decent return of at least 10% on that investment in a short period of time.
In the past, such a relatively low return on investment in California (30% was more common) might not have made much sense but that’s not the case nowadays. Taking CA foreclosures, turning them around and then reselling them, could be much more of a success than would normally be possible, in fact. For smart investors, who are willing to invest properly, there are real upsides to this kind of investment activity.
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