Jumbo Loan Defaults in the Luxury Market
by Roberta Murphy
Ed McMahon may wonder what else in new in defaulted real estate, but yesterday, Standard & Poor’s Ratings Service reported that even prime jumbo loans are starting to buckle.
Over a period of just one month–from June to July, 2008–jumbo loans originated in 2006 saw mortgage delinquencies rise 13.2 percent, while 2007 delinquencies rose 7.3 percent. Overall, mortgage delinquencies in the luxury real estate market are relatively low, with prime jumbos originating in 2006 reporting a serious delinquency rate of just 2.48 percent.
(For a more detailed report, go to: Prime Jumbos Showing Strain: S&P : Housing Wire)
It also appears that originations in the luxury market may be tightening. Thursday evening, Billy Taylor with Villa Sotheby’s International Realty in Del Mar, whispered that Chase Mortgage is pulling out of jumbo loan originations (at least at the broker level).
My prediction? There will be much more discussion about creative and seller financing in the months ahead. If financing is required for the purchase of a luxury home, it may be the seller who provides it.
Finally, stay tuned for Bob Dyson’s radical mortgage rescue program that could stabilize the real estate market very quickly–and that is quickly gaining prominent political support….
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read comments (2)California Luxury Home Foreclosures?
Yes, there are plenty of luxury home foreclosures in California–and you can now search them whenever you wish.
When in San Francisco last month for the Inman Connect conference, I was at last able to meet the foreclosure wizards at Foreclosure Radar–and make a decision to go with them.
We have long been searching for a comprehensive foreclosure search tool to offer the readers of our San Diego real estate blog. I had been to the Foreclosure Radar site, was impressed with its features, but wondered how they could be integrated for our readers searching for foreclosure information.
The problem was solved in San Francisco. We can now offer the most comprehensive pre-foreclosure, auction sale, foreclosure and REO search available–at least for the state of California. Now you can see available foreclosures in Beverly Hills, Brentwood, Palo Alto, Rancho Santa Fe, La Jolla, Coronado, Bel Air, Newport Beach, Carmel, Atherton, Ross, Belvedere (perhaps)…..
Finally, you can search for uber luxury homes, estates and mansions in foreclosure. Nothing is held back:-)
Enjoy your search!
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7 Bargaining Secrets for Luxury Home Buyers
If this is the worst real estate market (for sellers) in recent history, then surely it creates some of the best buying opportunities of a lifetime as well.
We are seeing smart money aggressively buying in our San Diego real estate market, and hear reports of the same elsewhere. The properties are being bought as fix-and-flippers or are being held as longer term rentals.
We receive inquiries about these homes almost daily; but more recently, we are being consulted about strategies for buying luxury homes at bargain prices. These buyers may not have to sell their existing home to buy another, or are open to exchange possibilities.
Below are 7 strategies we use to help our luxury home buyers (and others) get some of the best luxury bargains on the market.
- Study Market Time: Luxury homes in general may take longer to sell because of pricing, custom features and a more limited pool of buyers. But that doesn’t mean sellers are any less motivated to move on with their lives. At one time, we thought little of $million-plus homes sitting on the market for 90 days or more. These days, we seek buying opportunities if a home has been on the market over 60 days and are seeing some heavy price discounting if days on market goes over 90 days.
- Check Tax Records and other Sources: Is there more debt on the home than what it is worth? Has a Notice of Default been filed that would indicate a looming foreclosure? If so and if this is a home of interest for our buyer, we submit an offer contingent on the successful negotiation of a short sale (where the lender sells the property for less than what is owed). In this case, either we or professional negotiators deal with the lender(s) to reach the best possible price for our buyer.
- Did Owners Pay Cash or Have They Owned Their Home for Longer than 10 Years? These sellers may be in a position to sell at a discount or may be motivated to do so due to life transitions or other investment opportunities. They may also be open to owner-financing for all or part of the home mortgage.
- Are You Open to Remodeling? Homes sold in as-is condition are more likely than others to sell at a substantial discount. Owners, especially when the home has been on the market for some time, are often overwhelmed with the thought of remodeling and updating–and fearful that their decor choices will not suit potential buyers. Especially in the uber luxury home market, older or outdated homes are sometimes sold at land value.
- Foreclosoure Sales: The f-word (foreclosure) is occurring even in the luxury home market. Highly leveraged homes purchased in the last few years are more frequently ending up on the courthouse steps. Foreclosure purchases, which require cash and carry no disclosures or guarantees, offer both great potential for profit–and dire dangers for the uninformed. Bidding should be non-emotional and it is best to have a professional bidding for you–but only after thorough-as-possible research has been done regarding the home’s condition, its history and resale potential. Cracked slabs, structural defects and boundary line encroachments are unwelcome surprises.
- Home Exchanges: This is a rather novel strategy for those trying to sell their luxury home in a bloody market. Life transitions encourage luxury homeowners to make moves. Empty-nesters may wish to relocate from their large estate to something equally posh but far less demanding in upkeep. Others may have expanding families that crave acreage, pools, tennis courts or equestrian facilities. In the Southern California market, Owner-Broker Bob Dyson and Villa Sotheby’s International Realty have set up a property exchange platform that allows homeowners to directly exchange properties and ownership. It is a tactic that helps to support neighborhood values and removes many of the pressures involved in having a home on the market for an extended period of time.
- If the property you want is listed, have your agent check the other real estate agent’s listing history. If that agent tends to have listings on the market for a long time, you may wish to lower your offer. On the other hand, if the agent prices properties aggressively and has short “days on market,” you may consider coming in near to or at list price. You will likely find the listing is already priced at or below market to attract multiple offers.
A combination of patience, perseverance and the ability to move quickly will serve all astute buyers of real estate these days, but the greatest potential of all may lie in the luxury real estate market where replacement value could far exceed the purchase price.
Email Us or call 877-818-8197 or call/text me at 760-402-9101
The Luxury of Thunder
Will Verizon Thunder on i-Phone’s Parade?
Last month, I attended Inman Connect in San Francisco, where one of the speakers onstage at the Palace Hotel tried to pull something up on his new 3G Apple i-Phone, but had no service.
Frustrated, he lamented AT&T’s poor coverage and compared the i-Phone to a Lambborghini running on a VW engine–and I joined the audience applause.
Why Apple tied its flagship phone to a carrier with such spotty coverage
(unless you are traveling abroad) escapes me. I can’t even reach a close friend just 3 miles away in Carlsbad, CA on her AT&T cell because it is outside its coverage area.
I love Apple and its products. This article is being written on an i-Mac and I lust after the 3G i-Phone, but stick with Verizon for cell service because of its unbeatable coverage. Being out of range for calls just doesn’t work well for a San Diego Realtor.
It’s a painful choice: Go with Apple and suffer AT&T’s spotty coverage areas, or stick with Verizon and my trusted Blackberry and not have to worry about lack of service?
For professional reasons, there is no alternative but to stay with Verizon–but there may be hope on the horizon–or at least by the third quarter of this year. Research in Motion (RIMM) is coming out with the new Thunder Blackberry that will be carried exclusively by Verizon and Vodaphone.
With just four clicking keys, this black beauty will run on 3G EV-DO Rev. C as well as GSM HSPA for international use. This will apparently allow the Blackberry Thunder to operate in any country with 3G or better internet access. There are rumors that the Thunder may even be faster than the i-Phone for downloads.
Where there’s thunder, there’s lightning–and there may be some fireworks in the telecom biz to watch at year’s end. If Research in Motion’s Blackberry Thunder is as slick as I think it is, we’ll probably contract with Verizon for another two years.
This article also appeared on another blog for which I write: Technology Undressed.
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The Luxury of Gnarly Head Zinfandel
by Eve Sieminski
I am convinced California wines are a no-brainer.
Recently, another wine blogger recommended we try a fantastic $8 French wine. This was in response to an earlier article where I recommended TBD Zinfandel, available at Trader Joe’s.
My thoughts about this recommended French red?
Pee pee water! I wouldn’t cook with it, let alone serve it to guests. In fact, the experience only reaffirms my belief in California wines.
A recent discovery of mine is Gnarly Head Zinfandel. This is an old-vine California Zinfandel lives up to the dark and lush description on the bottle–is absolutely fantastic! It delivers all the punch
you want from a Zinfandel, without the punch of a price over $20.
This luscious Zin can be found for as little as $7.99. After giving it a try, I rushed back to Major Market and bought several more bottles for our wine cellar. Gnarly Head Zinfandel is also available at other market for around $10 to $12 per bottle–and is well worth the price.
Truthfully, I was a little put off when I first saw the name. Gnarly doesn’t exactly describe my favorite wines,
but this old vine Zin has become one of my hands down and glass-up favorites–at least for the price.
Remember, my search focuses on outstanding wines under $20 per bottle–and Gnarly Head comes in well under that mark.
An important note about Zinfandels: Make sure your Zin is an Old Vine–and remember that any Zin under 14%
alcohol is not worth the price. Most outstanding Zins start at 14% and go up from there.
You may also wish to read:
Luxury on a Gold Plated Shoestring
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