Burbank Real Estate Blog: Burbank Real Estate Agent Ana Connell (Keller Williams Realty)

Magnolia Park Vintage Car Show and Festival August 23, 3pm-9pm

The Magnolia Park Partnership and residents will be hosting a 4 block street fair and car show!  Between Hollywood Way and California.

Admission is free and it promises to be a fun event!

I have lived in Magnolia Park for 15 years and this event is one of the many reasons I love being a Burbank resident!  Come out and join the fun.

Another interesting week as crude oil continued it's correction, but the market gave some gains back amid earnings and worries over the state of financial institutions.

• The Fed approved new rules to protect consumers against mortgage fraud.  These rules are expected to go into effect October 1, 2009.  The intent is to protect against deceptive practices and establish a new set of advertising rules for mortgage lenders.

• California enacted a new Foreclosure Reform Law last week to stem the tide of high foreclosure rates.  The new law requires mortgage lenders to contact homeowners in order to go over options that would avoid foreclosure.  One important provision is that owners acquiring foreclosed properties would be required to maintain the exterior of vacant properties.  It also extended the time frame residential tenants have to vacate foreclosed properties from 30 to 60 days.

• Stocks finished a tough week................read on

Don't forget that on August 5th, 5-8pm, is National Night Out!

This annual event will take place at the Chandler Bikeway and Keystone. The goal is to strengthen neighborhood spirit by encouraging residents and law enforecement to work together on community projects and goals.

What's exciting is that they will be showing the master plan for future bike paths in Burbank.

Sponsored by the Burbank Police Department, Friends of the Chandler Bikeway and Burbank Park and Recreation and Community Services.

There's always the good news and the bad news.......I'll start off and end with the good stuff, there's not much today.

On a positive note crude oil prices have been much lower this past week as the bubble seemingly has burst on the speculation that was driving oil prices up.   Crude oil finished the day at $125.50, up $1.05.........but, quite a bit lower than the $145+ prices we were seeing in the last two weeks.  Hand in hand with that the dollar continues to strenthen.

Stocks however, had a dismal performance....down 283 points to finish the day at 11,349.  The decline was led by financial institutions, which posted their worst drop in 8 years and home builders.  The amount of writedowns due to the mortgage mess continues and based on what analysts are saying, we're not out of the woods yet.

Washington Mutual shares declined a staggering 31% in the last two days, just to an example of the carnage out there.  One positive note on all this is that those home buyers looking to purchase a foreclosure may have more to choose from soon in addition to the current supply. 

Existing home sales for June were down 2.6% .  What's troubling about this is that although the median price of a home fell 6.1% inventories were up to an 11.1 month supply signaling that the housing market is still struggling.  Tight lending standards and slightly higher mortgage rates are making things a bit challenging.

Jobless claims were up.

Other news came from the Federal Reserve’s Beige Book report for the latest six-week period.  It shows the economy as increasingly weak across most of the U.S.

All 12 districts reported slower home sales, continuing big inventories and falling home prices.

New York and Chicago also reported that buyers had increasing difficulty getting mortgage financing. The survey said tighter credit standards are hurting commercial real-estate activity.  California, Arizona and Nevada "have seen sharp increases in home foreclosures," the Fed said.

The good news is that many analysts think the worst is behind us.......having said that many also note that it will probably be another 6-9 months and another 10-15% downside until we're looking at an upswing in home prices.  I do continue to tell home buyers that there are many bargains out there with the current inventory of foreclosures. 

Don't wait too long as interest rates are expected to rise in the next year.  That extra 10% discount on home prices may not be worth as much next year as it is today!

The big news for the week came late on Friday.

After market close, it was announced, that IndyMac Bank, a leader in “Alt-A” loans, had been seized by the Office of Thrift Supervision, due to a run on deposits. This made IndyMac Bank the 2nd largest federally insured financial institution to be seized by US regulators. The largest failure, if you are curious, was in 1984, Chicago’s Continental Illinois Bank and Trust. A successor institution, IndyMac Federal Bank FSB, will open next week.

About now I’m remembering two years ago, when many prominent individuals were talking about how the subprime situation was under control said it would produce minimal fallout. What caused all this was the huge number of defaults on mortgage loans made to, well, people who could not afford them. More troubling is the fact that there has clearly been little to no oversight of these institutions.

The why is easy, everybody seemed to be making money, investors were making money and more people were given the ability to buy property, so it seemed like a win win for all.

Problem is that if it seems too good to be true, it probably is.  Some blame US Senator Shumer from New York, for creating this mess.  Last month he blamed their lax lending rules for putting the institution on the brink of collaspe.  He may have accelerated it, but let's be clear, IndyMac is to blame.  Instead of using common sense they allowed greed to drive their internal policies. Now they and many shareholders and depositors are paying for their greed, not to mention the people who should not have been sold those mortgages in the first place.

IndyMac managed to acrue $900 million in losses. So now depositors are left with the grim reality that only $100,000 on deposit with Indy Mac Bank will be insured. What’s even more troubling about all this is that the FDIC has 90 institutions on it’s troubled bank list and Indy Mac Bank was not one of them. So this begs the question of how many more might fail.

Other news....can be found at the Burbank Real Estate Report!

Of note:

*FOMC left rates unchanged with the target funds rate at 2% and the discount rate at 2.25%

* Consumer Confidence-came in at 50.4 one of the lowest readings and some economists are surprised since, in their words, "the expansion of the economy is underway", meaning we are not in a recession. I would argue that most individuals are not feeling the positive effects of an expansion. Consider that overall real wages have remained stagnant in the last 30 years and that prices for many essential items have increased over that time, not the least of which is the price of a gallon of gasoline. Add to that the negative effects on net worth that lower real estate prices have produced and I'm not so sure things are as rosy on Main Street as the economists and Wall Street gurus would like. I'm still a believer that we have relied on consumer credit as a fix all for too many years and now we're feeling the pain when consumers can't keep up with their debt load. We'll see how all this plays out over the next few years. * New Homes Sales -512,000 units sold representing a 2.5% monthly decline and a 40% year on year decline. New Home prices were down 5.1% to an average of $231,000.

Read More.....

* Leading Indicators, inched up .1% trying to suggest that the economy will not officially dip into a recession.(Monday)

* Producer Price Index .2% increase seems tame following the 1.1% surge last month. (Tuesday)

* FOMC Meeting Minutes the Fed lowered it’s forecast for economic growth and indicated that it was pausing in it’s interest rate strategy for a while. They believe that while growth is contracting in the first half of 2008 it will rebound in the latter half of the year.(Wednesday)

* Jobless Claims came in at 365K which seems to suggest a stabilization in the jobs market.(Thursday)

* Exisiting Home Sales dropped by 1% in April and inventories rose from a supply of 10 months to 11.2 months.(Friday)

* Bonds…2 year 2.45%, 5 yr. 3.15% and the 10 yr. 3.85%….so far as market has not closed on the day yet, but will close early for the Memorial Day Holiday.

* Crude oil has been the big story this week hitting record highs, right now it’s sitting at $132.82 per barrel, below the record of $135 it hit yesterday.

Of note this past week:

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Here is the report for April and as you can see sales can vary greatly by area.

One thing is clear, however, money is still tight and sales are down. Latest forecasts have the turnaround starting later this year and into 2009. The recovery does hinge on access to loans and in many cases buyers are not qualifying under the current banking standards. A record 62% of banks reported tighter lending standards for prime mortgages and 72% have tighted subprime mortgage requirements(no surprise here).

Fixed mortgage rates are expected to rise to 6.2% later this year and 6.3% for 2009.

To keep things in perspective.....home prices in Los Angeles/Long Beach/Orange County areas increased 6.2% over the last 5 years.

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* Retail Sales - down .2%, less autos it was up .5% which was unexpected. Business Inventories- up .1% reflecting that fact that most businesses are trying to keep inventories low during the slow down. (Tuesday)

* Consumer Price Index - up .2% which was much better than expected, energy came in almost flat which is a mystery to me! (Wednesday)

* Jobless Claims -371,000 reflecting poor conditions in the labor arena.

* Industrial Production,-down .7%, worse than expected and again pointing to more widespread weakness in manufacturing.

* Philidelphia Fed Survey-continues to show weakness in manufacturing and came in down 15.6%.

* Empire State Manufacturing Survey-down 3.2%

* Housing Market Index-came in at 19 with the component for buyer traffic being very weak in May.(Thursday)

* Housing Starts- at 1.032M reflected an increase of 8.2% in May.

* Consumer Sentiment fell from 62.6 in April to 59.5 in May, lowest level in 28 years. Not surprising as inflation continues to be a top concern for consumers and rising gasoline and food prices are hurting wallets everywhere.(Friday)

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