I usually like to focus on real estate in California, but sometimes it's interesting and a little shocking to see how the ripple effect travels across the country. The following article talks about the possible financial dangers of flipping homes during a housing frenzy in Las Vegas.
Real Estate flipping goes cold in Las Vegas. In the rampant real estate speculation of the Las Vegas valley three years ago, people lined up outside Pulte Homes sales offices overnight as if they were waiting for the release of the latest video game console or hot new movie. Having seen his house in an upscale part of suburban Henderson, Nev., jump $200,000 in value in 18 months, Sam Schwartz felt he couldn't miss any part of the boom. He spent the night in the parking lot with a TV, snacks and drinks, along with about a hundred other people. Schwartz intended to buy a new home and then quickly sell it within the year - for a huge profit. Most people waiting were flippers just like him, he said. But when home prices unexpectedly took a backward step, many investors seeking to cash in quickly were left "upside-down," owing more on their mortgages than what their homes were worth. The result was a glut of homes in the marketplace, communities spotted with empty houses and for sale signs - and a foreclosure rate in Nevada that leads the nation as owners unable to sell became saddled with unbearable debt payments. The day Schwartz reserved his home, the sales staff was raising prices $20,000 after every fifth buyer came inside. The $500,000 house he and his wife were eyeing had shot up to $540,000 by the time they sat down. Somehow, it still seemed like a good deal. He and his wife put down $5,000 on a home that cost $560,000 with upgrades. While the Schwartzes were able to cancel before closing on a property that suddenly was worth only $490,000 - and recoup their deposit on a legal technicality - others were less fortunate. Click here to read more.
Potential for real estate fraud grows as more homeowners face foreclosure. The potential for real estate fraud has soared, driven by a surge in default notices sent to thousands of struggling California homeowners during the past several months. It happened to Maria Pastor in November 2002. When she met Edgar Berrazueta, she thought that "he was a decent person, a kind person." She realized that something was wrong when she and her daughter began looking over the loan documents. She couldn't figure out the new monthly payment — if it would be lowered or if it would adjust each month. In this instance and others, Berrazueta arranged "cash-out" refinance loans, but concealed it from his clients, intercepted the cash-out checks and deposited them into his bank account, according to the Ventura County District Attorney's Office. In August 2005, he was sentenced to three years and eight months in prison. Click here to read more.
Wealthy housing markets shrug off subprime woes. Analysts expect that, like Manhattan, San Francisco, parts of Los Angeles, Seattle and a handful of other affluent urban markets for homes will evade the housing slowdown. Their economies are strong and demand for housing from higher-wage earners there remains buoyant. Also, those markets have few subprime borrowers. Subprime mortgages allowed borrowers with blemished credit and limited resources to buy homes, typically entry-level homes in fast-growing regions with affordable housing such as the Inland Empire region east of Los Angeles. By contrast, subprime borrowers are rare in affluent markets such as West Los Angeles because affordable homes are in short supply. Click here to read more.
Buying Distressed Homes: Foreclosures, Short Sales, REOs. While all short sales are foreclosures, not all foreclosures are short sales. To further complicate matters, REOs are not short sales either, but some intended short sales can end up as an REO. Learn more about foreclosures, short sales, and REOs. When is the best time for you to buy a distressed property? Click here to read more.
Resale home prices up 11 percent. Sales volume in valley declines 37 percent. Sales volume for all types of homes in the valley declined 37 percent in March from a year ago, with new-home sales experiencing a particularly soft month with nearly a 53 percent decline from March 2006, DataQuick reported. Still, overall home sales in the valley were up considerably in March compared with February. Units sold jumped nearly 33 percent - 937 homes sold in March from 705 in February, DataQuick reported. The valley's median home price was up from February as well, rising to $400,000 from $393,000 for all types of homes, and to $455,000 from $451,000 for existing single-family homes that sold, DataQuick reported. Across Riverside County, the overall median home price rose 0.2 percent to $420,000 in March compared with year-ago figures, even as sales volume plummeted nearly 47 percent. Click here to read more.
Be reasonable with real estate, readers told. Here's a sampling of some of the e-mails answered by Andi Kang, a certified financial planner at Financial and Retirement Management in Huntington Beach; Georgette Hurley, a Mission Viejo CFP; John M. Ingram, a CFP with the Keller Group in Irvine, and Jacob Shen, a CFP with Ameriprise Financial in Irvine. Click here to read those real estate questions and answers.
~Tina Jan~
Coldwell Banker Kivett-Teeters
1655 E. Sixth St.
Beaumont, CA 92223
Work: 951-845-5520 Ext. 105
Fax: 951-845-4916
Cell: 909-446-2666
Toll-Free: 1-877-TINAJAN
tina.jan@coldwellbanker.com
www.tinajan.com
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