Remember from my July 18th post “Napa Valley Real Estate, a Tale of Two Times Two Markets“ was the number of distressed sales (in foreclosure, a short sale or a bank owned property, REO) increasing for homes priced $800,000 to $2,000,000, especially up valley. By up valley I mean the Cities of St. Helena, Calistoga, Angwin, Deer Park, Oakville, Rutherford and the Town of Yountville. Today, there are 4 distressed sales of 82 active listings in this price range, compared to 3 of 87 on June 2nd. (Sorry but I was gone for July) Keep tuning in for this as a new monthly stat I will regularly tract from now own. Next look September 1st. Seems like my comments in last months post about the supposed shadow inventory of distressed properties in this price range in the Napa Valley is just not happening??? Even the Wall Street Journal is speaking out about this, “Debate Rages Over Supply of Foreclosed Homes“.

This all started from my July 18, 2009 post “Napa Valley Real Estate, a Tale of Two Times Two Markets“ tracking the number of distressed sales (in foreclosure, a short sale or a bank owned property, REO) for homes priced $800,000 to $2,000,000, in the upper part of the Napa Valley. By upper I mean the Cities of St. Helena, Calistoga, Angwin, Deer Park, Oakville, Rutherford and the Town of Yountville. Today, there are 3 distressed sales of 87 active listings in this price range, compared to 4 of 82 on May 1st. Keep tuning in for this as a new monthly stat I will regularly tract from now own. Next look will be August 1st for I will be at a family reunion on July 1st. 

Again, it seems the shadow inventory of distressed properties in this price range in the Napa Valley is just not happening??? It must be happening elsewhere for the press continues with the opposite story. This weeks story of foreclosure woe in  upper end properties is from Carolyn Said in the San Francisco Chronicle, “Foreclosures shifting to affluent ZIP codes“.

All I can say, maybe the Napa Valley is truly a bit of heaven and we will see less of this happening here. At least my statistics continue to confirm this. Stay tuned.

I have often heard stories about quite a few home owners stopping payment on their mortgages and remaining in the home for over a year before the dreaded foreclosure actually happens but have not seen a better article giving facts than David Streitfeld’s “Owners Stop Paying Mortgages, and Stop Fretting” in The New York Times. Here are a few excerpts:

Foreclosure procedures have been initiated against 1.7 million of the nation’s households.

The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.

More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000.

In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days.

Though I don’t have factual information to confirm this, another Realtor who I respect told me recently he has one client who has been in the home for 27 months without making a payment. Even though in a recent California Association of Realtors newsletter I recently read in which it stated nearly 70% of home owners in distress will continue to pay their mortgages, the above facts gives me pause. How do you feel about this?

California median home price increases, sales decrease in April
Home sales decreased 8.1 percent in April in California compared with the same period a year ago, while the median price of an existing home rose 21 percent, according to C.A.R.’s April sales and price report.

Delinquencies, foreclosure starts increase in first quarter
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 10.06 percent of all loans outstanding in the first quarter, up 59 basis points from the fourth quarter, and up 94 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.  

The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the first quarter was 4.63 percent, an increase of five basis points compared with the fourth quarter of 2009 and 78 basis points from one year ago.

Taken in total from the California Association of Realtors newsletter, Newsline:

Nearly 60 percent of homeowners with a mortgage say they would not consider strategically defaulting on their home regardless of the amount they still owe, according to an ongoing survey tracking home buyers’ attitudes toward foreclosures.  The survey, conducted by Trulia.com and RealtyTrac, also found 45 percent of U.S. adults age 18 and older are at least somewhat likely to consider purchasing a foreclosed home in the future, compared with 55 percent a year ago.

The survey also found the likelihood to consider purchasing a foreclosure decreases with age: 65 percent of renters ages 18-34; 63 percent of renters between the ages of 35 and 44; and 54 percent of renters ages 45-54 said they are at least somewhat likely to consider purchasing a foreclosure, compared with 31 percent of renters 55 years and older.

Nearly 20 percent of U.S. adults expect bank-owned homes to offer a realistic price discount of less than 25 percent off the value of a similar home that was not in foreclosure. However, 36 percent say they expect to receive a discount of 50 percent or more when purchasing a bank-owned property, according to the survey.

Remember from my July 18th post “Napa Valley Real Estate, a Tale of Two Times Two Markets“ was the number of distressed sales (in foreclosure, a short sale or a bank owned property, REO) increasing for homes priced $800,000 to $2,000,000, especially up valley. By up valley I mean the Cities of St. Helena, Calistoga, Angwin, Deer Park, Oakville, Rutherford and the Town of Yountville. Today, there are 4 distressed sales of 82 active listings in this price range, compared to 4 of 81 on April 1st. Keep tuning in for this as a new monthly stat I will regularly tract from now own. Next look June 1st. Seems like my comments in last months post about the supposed shadow inventory of distressed properties in this price range in the Napa Valley is just not happening??? Even the Wall Street Journal is speaking out about this, “Debate Rages Over Supply of Foreclosed Homes“.

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California’s tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a “qualified principal residence,” borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

Reprinted from the California Association of Realtors Realegal

Remember from my July 18th post “Napa Valley Real Estate, a Tale of Two Times Two Markets“ was the number of distressed sales (in foreclosure, a short sale or a bank owned property, REO) increasing for homes priced $800,000 to $2,000,000, especially up valley. By up valley I mean the Cities of St. Helena, Calistoga, Angwin, Deer Park, Oakville, Rutherford and the Town of Yountville. Today, there are 5 distressed sales of 80 active listings in this price range, compared to 5 of 80 on March 1st. Keep tuning in for this as a new monthly stat I will regularly tract from now own. Next look May 1st.

I have been tracking this for six months now. The motivation for my doing so started by the constant rumor I would listen to when talking to many others in the real estate business, my fellow agents, loan brokers, escrow people, heck even an occasional office manager would warn us about this happening. Even the press got into the act. The local paper, The Napa Register, running two articles on February 23, 2010, “Million-dollar bargains?” and “Distressed real estate market creeping into larger properties“; and the Los Angles Times article on February 19, 2010, “High-end home sellers lower their sights“. With this type of hype, buzz no wonder it was easy to feel the “sky was falling”.

The only thing I can say, the facts are proving this wrong. Since I have been reporting on the facts, November 2009, the numbers have been 3/89, 2/76, 3/79, 5/80 & 4/81. Yes I realize I said six months and there are only five numbers. I missed December of last year, sorry!

The only conclusion I can draw, the inventory is down and this is consistent throughout the Napa Valley, and yes there are a few more distressed sales but the world is not falling apart here in paradise. I even checked the number of solds for the last six months for the same dollar range of distressed homes and there was only one.

Tune in next month and see if this trend, or should I say lack of one, continues.

Last week the Governor vetoed the state bill which make California tax law the same as the federal government in forgiving mortgage debt for those who sell their homes for less than the they owe on their home due to the junk attached to the bill. Another example of our great government at work.  The California Association of Realtors is working on two stand alone bills to reinstate this tax relief which expired some time ago.

Governor Schwarzenegger last week vetoed a bill that would have prevented California homeowners who sold their homes via short sales or received loan modifications in 2009 from being taxed on the forgiven mortgage debt.  Schwarzenegger vetoed the bill, which would have aligned much of the state’s tax code with that of the federal government’s, because it contained an unrelated provision regarding tax refunds for the state’s largest businesses.  Although the governor vetoed this particular bill, he expressed his support for banning taxation of forgiven mortgage debt, and immediately called for the legislature to send him a bill to provide tax forgiveness prior to the April 15 tax-filing deadline. From the California Association of Realtors Newsline