A blog about Business & Finance, Kern County, and Neighborhoods.
Real Name: Chris Craddock Address: 3400 Calloway Dr #800 Bakersfield, CA 93312 Cell: (661)900-2222 Gender: male Member Since: June 30, 2007 Last Signed In: October 11, 2008 Profile Views: 572 Blog Views: 7189 What is up in Bakersfield Real Estate with the HUD's and REO's? Is it a Buyer's or a Seller's Market? Zero Down goes Bye Bye! Looking for the "Timber!" point of Bakersfield Real Estate Spring Has Sprung When the Buyers Return to Capistrano Home Tours, the Stock Market, Auctions, and Mortgages Financial Forecast Countrywide may be under Federal Investigation for Securities Fraud Local Honey, Spring Forward! June 07 July 07 August 07 September 07 October 07 November 07 December 07 January 08 February 08 March 08 April 08 May 08 June 08 July 08 August 08 September 08 October 08 
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Location:
3400 Calloway Dr #800,
Bakersfield, CA 93312
I just compiled a new list of REO properties. If you are interested, drop by, call or email me. I have added HUD properties, which are kind of like foreclosures, but of government loans. There are only about 16 listed in the Bakersfield MLS right now--some in Bakersfield and some in Tehachapi, Mojave, Delano, etc. That number could be growing, especially if the Bail Out or any subsequent attempts to revive our economy involve buying mortgages. Anyway, the HUD homes might become a bigger story in the future, but for now only a few brokers have signed up as HUD brokers. This is a requirement to make offers on HUD homes. Only the HUD brokers have access to the HUD keys, so if you want to see one of these properties, you will need to use a HUD broker. For further information on HUD homes, go to their website: How many REO (bank-owned, forclosure) properties are on the market in Bakersfield right now, on October 10, 2008? Broken down by zip codes, there are Of the 3,324 houses listed in Bakersfield right now, 1,213 REO's = 36% As a Real Estate Agent in Bakersfield, California I am interested in spotting trends, both nationwide and locally. One good test of whether we are in a Buyer's or a Seller's market is called the Absorption Rate. That means looking at the inventory of homes, seeing how many sold in the past month, then dividing the total inventory by the amount sold. This gives you an idea of how many months it would take to sell off all the houses at the current pace of sales if no new homes went on the market. Though the numbers are constantly changing, and this model is a simplification of what is going on, it can nevertheless give you a really good idea of what is going on. The tipping point between a Buyer's or a Seller's Market is 6 months. If it would take longer than 6 months to sell off all the available houses, then the market is saturated, and that favors the Buyer. Sellers are the Supply, and Buyers are the Demand. If it would take less than 6 months, then the Sellers have an advantage, according to the Law of Supply and Demand. In a Buyer's Market, if you find a motivated Seller, who really wants to Sell, or has to Sell, you can make low ball offers and have a good chance of being accepted. But once the tipping point of 6 months or less absorption rate is reached then you might find lots of Buyer's trying to get the same property, and the bidding becomes competitive and you might have to offer more to out bid the others. The lower the absorption rate, the more it favors the Seller. Let's take a look at the numbers: Right now there are 3,301 homes for sale in Bakersfield in the MLS, and of those 3,301 there are 1,151 Traditional Homes, 1,208 REO, or Bank Owned, foreclosure properties, and 942 Short Sales. The Short Sales are homes that are offered for less than what is owed on the mortgage, and they require the lender's approval. REO's have already been foreclosed and the banks are trying to sell them to recover as much of the money as possible, but Short Sales require the lenders to let the Buyers off the hook and write off the loss. So, of the 3,301 homes for sale right now in Bakersfield 35% are Traditional Sales, 37% are REO, and 28% are Short Sale offerings. From September 1st to October 1st, 2008 there where 604 Sales in Bakersfield, California. That translates to a 5.48 month absorption rate. Of the 604 sales in September, 161 were traditional sales, 378 where REO sales, and 65 were Short Sales. That means 27% Traditional Sales, 63% REO Sales, and only 10% Short Sales. If we break up Bakersfield by zip code, then we get different numbers. For an example, I will use the 93312 zip code, which is the zip code for where my office is located in Northwest Bakersfield. There are 352 homes for sale in 93312, with 133 being Traditional Sales, 86 being REO, and 133 being homes offered as Short Sales. That's 38% Traditional, 24% REO, and 38% Short Sale. 104 homes were sold in 93312 zip code from September 1st to October 1st. That is a 3.38 month absorption rate. 93312 is even more of a Seller's Market than Bakersfield as a whole. Of the 104 homes that sold in September, 35 or 34% were Traditional Sales, 51 or 49% were REO's, and 18 or 17% were Short Sales.
I just read an article by Gretchen Wenner about Seller Assisted Down Payment Programs going away. I knew this was coming and was watching out for it, but since it is now a topic in the Bakersfield Californian, here is what I think about it. An example is the NEAMIAH program. It is a non-profit organization that takes money from the Seller and donates it to the Buyer to cover their downpayment. They also pay a fee to the non-profit organization on top of that, about $500 in some cases. Why would a Seller do that? In a slow market like we are in now, that may be the only way to get a property sold. An FHA loan requires at least a 3% downpayment. The sub prime meltdown and the skyrocketing rate of foreclosures has caused the government to act. The thinking is that if a Buyer doesn't have a stake in his investment, he will be more likely to just walk away if he has trouble making the payments. In a perfect world, this law would be a good thing, but with the glut of foreclosures already on the market, it is dragging down house prices. The only way out of the jam we are in is to burn through all of these REOs so the market can stabalize, and perhaps begin to rise again. Though the sub prime meltdown might have been exacerbated by zero down loans, there were other problems that were a more direct cause of the problems, such as allowing non documented stated income loans, and Adjustable Rate Mortgages where the interest rate goes up after an initial introductory period, making the mortgage payment rise to the point where the Buyer can no longer afford it. In a rising market, you could refinance, but in a falling market, if you have no equity, that option is not open to you. I see this happening a lot: you have loose or no regulation, but then there is a big melt down, so then there is a knee jerk reaction to over regulate. I don't think ending seller assisted down payment programs right now is a good idea, given that sales are already slow. If you were planning to use a program like that to buy a house, you better hurry up. If you can't get in Escrow before October, you will have to save up the down payment, or have a family member or friend "gift" it to you. There might be an extension of the programs, but it is hard to say. I have heard that the programs were ending before, but so far they haven't. This time it looks like the programs will end, but it will have a severe dampening effect on an already soggy market.
Location:
12121 Timberpointe,
Bakersfield, CA 93312
I was listening to All Things Considered on March 30, 2008 and I heard an interesting exchange. The usual economic truism — as demand goes down, the prices go down— doesn't seem to apply in the current troubled housing market. Many homeowners prefer not to sell their home than to take a penny less than their inflated asking price. You can listen for yourselves on the National Public Radio website by clicking on the link above, or get the gist of the conversation from my paraphrase: Behavioral Finance is the study of how psychology impacts financial decision making. For instance, pricing their home in a declining market. When a homeowner thinks they are going to take a loss if they sell their house, they are inclined, instead, to gamble by setting a much higher asking price, hoping that they can beat the odds and a magic buyer will appear willing to pay at least what they originally paid for it so that they can feel they haven't taken a loss on their investment. That is called the psychological aversion to a sure loss. The psychological pain is something that is difficult for most people to accept, so the pain is deferred. In normal times sellers ask for 12% more than they think is reasonable, and it takes an average of 6 months to sell. In a down market sellers ask for 33% more, not 12%, a third more, and it might take 2 years to sell, if they manage to sell it at all. Sellers who look like they won't negotiate and have priced their houses too high are one of the main reason that transactions don't happen. There are still buyers out there, but they won't buy at the price the sellers are asking. The buyers are also fearful that if they do buy, the prices will decline even more, and they will also face the pain of having made a bad investment. The turn-over rate goes way down. Prices may continue to go down, and as they decline there will be more pain. Some investors will start buying the houses when they can be turned into profitable rentals. Others are waiting for the prices to come down so they can afford them. There will be buyers, there will be bargains, and finally the excess inventory will be sold, and the market will return to normal. Getting back to Bakersfield Real Estate, here are some specific examples and other observations relating to Professor Shefrin's findings: Apart from the psychological reasons, there is also a purely financial reason. If the price drops below the amount still owed, then the house is upside-down, under water, and would be termed a short sale and require bank approval for it to be sold for less than the amount of the loan. Banks don't seem to be doing this as much as just waiting for it to go into foreclosure, and then selling it--even if they have to drop the price to get it to move. Perhaps they have less of a psychological barrier to overcome and are just trying to cut their losses and move on. The Asset Managers at the bank aren't the ones who issued the mortgages, and their feelings aren't as wrapped up in the deal. It doesn't hurt their feelings if they are taking a loss. This gives the REO listings an advantage. They are just trying to find the price at which the house will sell, the timber point, if you will. They chop and chop at the price until the house sells, like chopping down a tree. Timber! To illustrate, our office recently sold a house in the Fox Run subdivision on Timberpointe. It was an REO, bank owned foreclosure property. Most of the houses on that street and in the Fox Run subdivision were much larger. It was just a medium sized 3 bedroom. But at $174,900, it enlisted a flurry of offers, and the price was bid up to well over $200,000 when the dust finally settled. There were at least 15 offers, and more people who would have made offers if they thought they had a chance. When I hear that the market is slow, I am reminded of the man who said, "No one goes downtown anymore. It's too crowded!" So, if a house is priced right, it could get multiple offers. It might even go for more than the listing price.
Today, Friday March 21st, we had a Real Estate Caravan, and who should arrive but The Easter Bunny? Somehow, I never see The Easter Bunny and Sheryl Gallion of Ticor Title in the same place, and this has been going on since 1984?!?!?!
March 17th, St Patrick's Day, and then two days later, the swallows return to Capistrano. Someone I know has a birthday on March 19th, so I incorporated a little of the Capistrano legend and lore into a birthday greeting. Did you know that the swallows fly all the way from Argentina? Legend has it that they carried twigs in their beaks, so they could rest in the water, using the twigs as little life rafts. Saw a great blog from the Real Estate agents of San Juan Capistrano, who tied the story into their observation that the buyers seemed to be returning along with the swallows. Though the evidence is anecdotal, and may even be apocryphal, here it is: When the Buyers Return to Capistrano The next day I went to the luncheon sponsored by REPERs (Real Estate Professional's Educational Resource) and The Bakersfield chapter of The Women's Council of Realtors at the Stockdale Country Club: WCR Bakersfield (They haven't updated their website in a while. I wonder if they would let me in to their events for free in exchange for updating their website?) The speaker was Liz Callihan, and she brought her Texas-sized wisdom and common sense to the subject of technology in Real Estate. Smart Phones, Texting, Blogging, Tablet Lap Tops, Mobile Printers, Miniature Digital Voice Recorders, Mobile Scanners, and 500 gigabyte back-up units were just a few of the devices she demonstrated. Want to scan receipts on-the-go, and have the information automatically entered into your accounting software? Try this neat receipt scanner: Use a digital voice recorder to capture ideas--or even write the Great American Novel. Then you can use Dragon Naturally Speaking software to type it up: Want to have a FREE phone number where you can receive faxes and have them sent to your email? Sign up for eFax: Want the latest tech info, and also great how-to videos that show you how to set up and use all these great gadgets? Try cNet: Liz Callihan had many great tips and tricks that would benefit any Real Estate Agent, business person, or entrepreneur. She recommends that you put lanyards on your keys, and all of these gadgets, so you won't lose them. For smart phones, get ones with big keyboards, and big buttons. Not only are they easier to press the buttons without hitting the one next to it, you can also see them better. The iPhone? More like iCandy--it looks good, but you can't really use it for business. And Vista? When you buy a new computer they try to force it on you, but they've had so many returns and complaints that you can now demand Windows XP, and Microsoft has backed off and is now committed to supporting XP for at least 2 more years. If your computer is slow and locks up if you try to run more than 2 or 3 programs at the same time, check your RAM (Random Access Memory). Right click on the My Computer icon, and then choose Properties. It will show you how much RAM memory you have. You might have a gazillion gigs of memory on your hard drive, but then you skimped on RAM memory. Liz compared the hard drive memory to a storage unit, and the RAM was a truck. When you want to use a program, it is loaded into RAM much like a truck picks up your stuff from the storage unit. If you have tons of stuff, but then try to move it with a little tiny truck, there is a bottleneck. You need a BIG RIG!!! 2 gigabytes of RAM memory will dramatically increase your computer's speed. Liz Callihan dropped by our office after the luncheon to talk tech (minus the geek speak) with our sales manager, Nancy Harper, and I. She really has a gift for explaining how to use technology in plain English. Her engagement for the WCR is an annual event. Here is Liz Callihan's web site: Another National Speaker on useful technology is Dick Betts. His website has a lot of useful information as well: Remember, The Key to Bakersfield Real Estate is Chris Craddock, Realtor.
I am constantly scanning the media, looking for signs about which direction our economy is going, and wondering how that will affect the housing market. They say that Economics is "the dismal science" but I find it exciting--especially when you translate all the numbers, graphs, and trends into cold, hard cash. It's all about the Benjamin's (as in Benjamin Franklin, the face on the $100).
Here are a few articles I have found, and not all the news is bad. Playing the Housing Slump: The article in the Wall Street Journal actually says that NOW is a good time to buy a house. But not so good to sell a house. It is a buyer's market, but if you must first sell your current house before you can buy, then it is a little harder to take advantage of the housing slump. But if you want to trade up to a bigger and better house, now is still a good time. Though you would lose a bit on the sale of your current house, you would make up for it on the other end. Or if you want to buy a second house as a vacation home, now is also good. Finally, if you want to help your kids get their first home, now would be a great time. UCLA experts don't buy recession Those whacky, contrarian economists over at UCLA are saying that 2008 will be disappointing, but not a recession. They claim that they predicted the last recession, when the conventional wisdom was that we weren't headed for one. If they are right again, that could be good news. Read all about it in the LA Times. Bloomberg reports on that other Benjamin, Bernanke, and his vigorous efforts to shore up our economy. Again, it's all about the Benjamins. This is a related story about the same thing, the Benjamins, i.e. Bernanke and the feds. This time it is from NPR (National Public Radio) instead of Bloomberg. Credit Proves Tough Even for Good Borrowers For people who don't like to read that much, this is a pod cast from NPR's Morning Edition of March 11th, 2008: Renee Montagne gets a firsthand account of the paralysis in the credit markets with Hugh Johnson, chief investment strategist at Johnson Illington Advisors. Johnson says borrowers are reluctant to make loans these days even to people with good credit. The New York Times and other media outlets have reported that Countrywide may be under investigation for misrepresenting their financial position at a time when the sub prime mortgage melt down was looming. Meanwhile, Countrywide CEO Angelo Mozilo was one of three mortgage industry executives brought before a Congressional committee on Friday to defend their exorbitant pay at a time when their companies were booking huge losses. Does this mean that if I have a mortgage with Countrywide I might not have to pay it? No, silly. Countrywide is in the process of being acquired by Bank of America, and all of this investigating and Congressional committee business should have no effect on you. The share of all home loans with payments more than 30 days late, both prime and fixed-rate loans, rose to a seasonally adjusted 5.82 percent, the highest since 1985, the Mortgage Bankers Association said in its report. Forty-two percent of new foreclosures in the fourth quarter were people with adjustable-rate subprime mortgages, given to borrowers with limited or tainted credit records, according to the report. Those types of loans accounted for about 7 percent of all mortgages.
Location:
4308 California Ave,
Bakersfield, CA 93309
She found some local honey, from Kern County, at Lassen's Groceries at 4308 California Ave, next to Long's Drugs. It wasn't cheap, but she isn't sneezing, and she isn't drowsy. And I always thought local honey was something musicians on the road had in every town they played. Speaking of Spring, this Sunday, March 9th, is time to Spring Forward (Remember Spring Forward, Fall Back? Remember to set your clocks forward one hour on Sunday Night to adjust for Daylight Savings Time. But getting back to honey, this morning on the California Report on NPR I heard a piece about the theft of honey. It has become very valuable lately due to Colony Collapse Disorder. Colony Collapse Disorder (CCD), formerly called Fall Dwindle Disease, refers to the unexplained disappearance and dying off of many honey bee colonies being observed across the United States. Brian Beekman, a third generation bee keeper in Fresno, recovered about 128 beehives that had been branded inside with his logo. That is a great name for a bee keeper, Beekman, and I remember a bee keeper with that last name who lived around San Francisco. His nickname was "B" Man, and he wasn't the same guy, but I'll bet he was from the same family. Another branch of the Beekman family has a great website. They also make honey wine, or mead. Another source of local honey, produced right here in Bakersfield, is Wilson's Pollination & Honey. If you want local honey, go to the honey locator website, and there you can search for honey producers by state. Wilson's is on their list. Another great source of information and recipes about honey is honey.com. Did you realize that honey is available in many different varieties? When bees visit mostly one kind of flower as they gather nectar, the honey they produce has a unique taste, aroma and color from that particular flower. The main varietals of honey are Alfalfa, Alfalfa/Clover, Basswood, Black Locust, Blackberry, Blueberry, Buckwheat, Red Clover, Sweet Clover, White Dutch Clover, White Sweet Clover, Cotton, Gallberry, Goldenrod, Mesquite, Mixed Flower, Orange Blossom, Palmetto, Raspberry, Star Thistle, Sunflower, Tallow, Tulip Poplar, Tupelo, and Wildflower. Mesquite honey would sure go good with mesquite barbeque. Bass players might enjoy Basswood honey. Van Morrison sang about Tupelo honey. Bobby Goldsboro sang about honey, too, but that song is just about the sappiest song ever written. I asked Melody Duncan about her local honey experiment, and she said it was still working. When I told her about the bee hive theft in Fresno, she said there was a sign at Brimhall and Renfro offering a reward for information about another bee hive heist. Winnie the Pooh was seen fleeing the area, with Piglet, Yogi Bear, and Boo Boo close behind. http://www.honey.com/
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