Real Estate Insider - Week of March 27

RECENT FED MOVES ARE SIGNIFICANT

Since the near collapse of Bear Stearns, the Fed has moved swiftly to clearly identify methods to create a “FIX” for many aspects of what’s wrong with our real estate environment, the credit markets and buyer confidence.

As I’ve stated before…there has been a lot of money just waiting on the sidelines afraid to invest in the real estate market, the bond market or the stock market. It is now affecting real estate worldwide.

Every investor that I know is looking for the bottom or a signal that the bottom has been identified and that well-thought-out solutions are in place. We just got that signal this past week.

The Fed is moving in the following 6 directions to deal with both the past and the future:

1. BROKERAGE FIRM CREDIT ISSUES
Over the past eight years, brokerage firms have created exotic loan/investment programs and have been allowed to act much like banks - but without the same high bank lending standards and requirements set by the U.S. Government bank regulators.

1. The Fed this past week has taken a bold new approach to treating investment firms much like ailing banks and has demonstrated that with a $30 billion loan to Bear Stearns through J.P. Morgan. (Sure would have enjoyed being in that meeting on Saturday night.)
2. The loan was made for liquidity purposes as the failure of a major ailing brokerage firm would have been just as significant, or have a greater affect on the public, as would a bank failure in these modern times of exotic finance instruments and methods.
3. The Fed’s unique approach, their timeliness and their ability to show flexibility should be applauded by all of us even though it comes with a price…More National Debt. BUT this time, with a payback provision and a better chance to get it back than loans made to other foreign countries in the past.
4. A few days after the loan commitment by the Fed, J.P. Morgan threw a new wrinkle in the deal - a purchase of Bear Stearns by J.P. Morgan for $2.00 per share - down from $171.00/share just 14 months ago.
5. After an uprising of Bear Sterns shareholders, the price seems to be adjusting upwards to around $10.00/share as of this writing… further securing the loan made by the Fed.

2. FANNY MAE AND FREDDIE MAC LOAN PURCHASES
It appears that a deal has been struck for the Federal Government to acquire significant questionable loans from Fanny and Freddie (two government sponsored - but independent - lending institutions).

These loans, or the properties securing them, will become the property of the government and will be disposed of hopefully better than the RTC (Resolution Trust Corporation) properties of the early 1990s.

This move both transfers the asset (good or bad) to the Fed and to HUD (Housing and Urban Development) and provides Fanny and Freddie with fresh new liquidity to loan to current and future homeowners with new, more stringent lending guidelines.

3. THE STIMULUS PACKAGE

1. Approved by Congress and the President and already underway, the stimulus package will send a lot of money to the public starting in mid-May of this year.
2. They are finding this task much more difficult than they planned at the Federal and I.R.S. level and I am sure they wish they could rethink the whole program…but it was the ONLY solution on the table at the time. (Fourth Quarter 2007)

4. INTEREST RATES
Reducing rates, (also one of the ONLY solutions at the time) has created a concern over a double-edged sword –

1. Lower rates for borrowers
2. Fear of inflation along with significant devaluation of the dollar abroad

Each move in interest rates has been watched closely worldwide as to its effects both in the United States and abroad.

Surprisingly, the dollar has held up better than most thought and is showing a significant rebound despite the assumption that we are printing a heck of a lot of new money and circulating it into the world economy like never before.

5. INCREASING LOAN LIMITS ON CONFORMING LOANS
Loans, backed or “Guaranteed” by the U.S. Government are called conforming loans.

Loan limits for conforming loans have been increased as of this past month to as high as $750,000 in some areas all tied to an index for at least one year.

This is a good thing for two reasons…

1. It provides capital for home loans and refinances
2. And it is more “in line” with current-day home pricing

This is a significant move by the Fed.

6. REFINANCE CAPITAL
Much needed to attack the adjusting home loans of 2008 and 2009, new conforming loans and loan limits will help stop the future increase of potential foreclosures by providing much needed refinance capital for current homeowners at more stable interest rates.

THE END RESULT
The world’s response, the stock market response, and the real estate industry response have all been positive.

The Fed has demonstrated to me that they are now looking at the whole picture - not just the individual parts. They have crafted a direct road map to solving all the issues that resulted from our out-of-control exotic lending practices of the past 6 years.

These recent moves will motivate other foreign markets to consider similar adjustments and scrutiny into their lending practices and lending institutions.

EXPECT MORE FINANCIAL INSTABILITY
You can bet there will be more shoes to drop in both the financial and real estate markets, but, for the most part, they will all fall in one of the above six areas of concern.

The Fed’s decision to assist brokerage firms will be the subject of talk in other institutional boardrooms around the country attempting to figure out what advantages exist for them in their periods of re-adjustment. Their response will dominate the news for months to come, as will continued write-offs.

BUYER CONFIDENCE
Because of slow reporting by the government and other reporting entities, we will get one or two more months of inaccurate, delayed reports on both real estate activity and buyer confidence. This will still have an effect on some of the buying public. Check out the following link describing this very thing –

http://www.realtor.org/RMODaily.nsf/pages/News2008032601?OpenDocument

Expect a report any day revising the downward turn in buyer confidence issued in the past few days by the University of Michigan. These people are so behind the curve in all directions. They should take a page out of the “American Idol” voting process.

We are already seeing the return of buyer confidence…first on Main Street and now on Wall Street. Open house activity is way up across the nation…new listings are experiencing activity that we have not seen in years…and offers are being presented and accepted.

This is the Fed SIGNAL people have been waiting for and it will lead to the “V” shaped recovery I have been predicting rather than a long drawn out “U” shaped recovery.

Money will again flow into industry, business, development, and real estate in a more orderly fashion over the next several months.

I hate to say it, but we all needed the belt tightening.

Ultimately, the United States will again prove itself as the leading economic engine of the future - one that has learned to deal with economic cycles in a more organized and logical manner. This time, after a significant scare!!!

And That’s How I See It

Real Estate Insider - Week of March 11

MARKET CONDITIONS AS OF MARCH 11, 2008

Our U.S. government reports to us in various ways about our economy and many related issues. The stock market reacts to all these reports on a daily basis and drives us all crazy.

Unfortunately - and even more crazy - most of these reports and the data that is provided is sometimes 60 to 90 days old. This information is of no use to any of us in this fast moving global economy.

With today’s technology, all of us should be receiving current information on a daily or weekly basis - not 90 days later.

As an example, internally, our management staff is provided real estate information on Villa Sotheby’s International Realty and Dyson & Dyson Sotheby’s International Real Estate sales and listing activities on a daily, weekly and monthly basis. This report includes specifics on each sale. Information like:

List and sales price
Average time on the market
Where the buyer originated from
How far above or below list price did the property sell

On a weekly basis, we also receive traffic reports giving us insight into buyer moods, general traffic trends, internet hits, advertising calls, open house traffic, walk-in clients and desired price ranges.

We then test our information against data received from local boards of REALTORS® as to traffic, pending sales, new listing inventories and other pertinent information.

It is amazing the story this information tells us and the trends it unveils. We utilize this information to make swift strategic business decisions. We are developing a system to automate and deliver this, and other information, on a regular basis to those who are interested. [sign up for the latest on real estate trends]

Some of the information we have recently gathered points to a new trend we are observing not only locally, but nationally.

Maybe coincidental, but within days of the Feds establishing new guidelines for government-backed home loans and new higher loan limits, we’ve noticed buyers have returned to open houses, new listings are getting significant showings and energy has again returned to the real estate marketplace.

FOREIGN INVESTORS ARE LEADING THE PACK

As an example, eight of our last 14 sales in our Palm Valley Country Club office in Palm Desert, California this past week were to Canadian buyers. In addition, I personally have received calls from serious buyers from France, Lima Peru, Ireland, Italy and Mexico City in just the past few weeks.

A few weeks ago we also sent an email to some 26,000 real estate agents promoting a destination resort property that we are representing in Costa Rica and it produced 21 serious buyers.

In our last newsletter we predicted that the real estate market would begin to recovery by second quarter of this year and it looks as if it has already started in many markets.

The most significant buyer traffic trend right now is centered around prime properties in prime locations.

BUYERS

Bulk Buyers (people and companies who buy multiple distressed properties) who have been writing “Letter of Intent Offers” but have not been proceeding have now become serious continuing with the offer process as they see our trends and anticipate the bottom.

First-time home buyers are also ceasing the moment and residential property trades are clearly working in many markets.

LENDERS

Some portfolio lenders have repositioned themselves with new guidelines to address the coming demand. Many lenders are again interviewing underwriters to further handle the new demand for both refinance and new loans.

Lenders that prospered during the “stated income” and “sub prime” era have either gone out of business, are going out of business, or have written off most of their losses (maybe two more quarters of right-offs). Once these final shoes drop, the focus will certainly return to the future and buyer confidence in home ownership will return as will greed and the great desire to take advantage of a magnificent future real estate market.

I still believe we will see a “V”-shaped recover rather than a long drawn out “U”-shaped recovery.

SELLERS

Unfortunately, market conditions have caught many homeowners unprepared for this prolonged downturn in real estate. What will emerge is a significant effort to repair all the credit damage that resulted from this most recent cycle.

Hopefully, the government will help here. There is discussion in Washington to isolate the credit market of 2006-2008 as “unusual” and lighten credit requirements associated with debt issues during those years. Let’s see how long that will take to make its way through Washington.

Some sellers have decided to ride this market out, others are selling at reduced prices, some are considering trading properties and others are sensing its time to finally move where they have always wanted to be.

REAL ESTATE BROKERS AND AGENTS

The entire real estate industry has taken a giant step backwards. Agents have adjusted their personal overhead downwards. This is a good thing, ultimately a stress reducer and a needed cleansing process for many of us.

Those agents still in the business are reinventing themselves by looking to technology and new ways to serve their clients and reach a much larger audience.

Brokers are learning new ways to run their businesses from smaller facilities with greater automation and better communication systems.

The new focus for the real estate business is efficiency and nitch marketing.

As I continue to say – these are truly exciting times, but took a real estate market like this to experience a paradigm shift in how real estate sales will be performed in the future.

And that’s just a little Insight from a Real Estate Insider.

Real Estate Insider - Week of February 11

Today I'd like to take a deeper look at the state of real estate. Although it's a brand new calendar year, I still see some negatives yet to come in '08.

INSURANCE COMPANY ISSUES

Insurance companies for years have been insuring the top end of residential real estate loans. Any loan over 80% Loan To Value (LTV) usually required the borrower to pay Private Mortgage Insurance (PMI). This insurance guarantees the lender that, if the borrower fails to pay mortgage payments and is foreclosed on, then the insurance company would pay the lender any losses they would incur.

With the foreclosure market escalating, losses in these categories of insurance are climbing at an alarming rate. Insurers are claiming these loans are fraudulent - which triggers a clause in most PMI agreements with lenders. Lenders, of course, are arguing that the loans are not fraudulent. Meanwhile, liability to both lender and insurance company are climbing daily.

As we get ready to experience more than $1 TRILLION (yes, with a "T") of adjustable rate loans adjusting upwards, many are already preparing for the loss of their home. Some have even stopped making payments or have bought or rented elsewhere knowing their credit will be damaged.

THE LOCAL ECONOMY

With every residential property sale usually two families move - one moves out and another moves in. This one transaction usually triggers some 1,000 other transactions within a community - from the purchase of everything from new furniture to linens to opening up accounts with dry cleaners and drinking water delivery.

In an "off" market, every one who relies on these real estate transactions feels the ripple down effect that impact all sectors of the economy.

These two issues alone are resonating across the country and are creating the worst case of "No Buyer Confidence" that I have experienced in my 40 years in the real estate industry.

SLOW GOVERNMENT REPORTING

Government reporting is FINALLY catching up to reality and reports are reading that property values are hitting 5- to 20-year lows that have never been seen before in many US communities.

SOLUTIONS AHEAD "AS I SEE IT" IN 2008

AUCTIONS

As I mentioned in my last email, I have personally experienced some recent auctions in Southern California and Nevada and all of these auctions were well-run and well-attended. Attendees were qualified and ready to buy and, in general, these auctions sold out with many of the properties selling at MORE THAN retail value. Auctions have proven to me that property will return to home ownership and to investors much more swiftly than any downturn experienced in times past.

HEDGE FUNDS

Also this month, I have personally experienced what is happening in the hedge fund markets. I have met with hedge fund managers who, in many cases, are the same people who accumulated hedge funds from investors around the world for the loans now going into default. These fund managers are going to individual investors and are accumulating large pools of capital to be used by these funds to acquire defaulting properties in large "bulk purchases." In some cases, hundreds of properties at a time.

Our company alone has written "letters of intent" on several large blocks of residential properties for clients that will be purchased at significant discounts from the banks. The hedge fund-owned properties are then put back up for sale to the general public through either auctions or real estate firms with the intent of significant profit and gain for their investors.

CONFORMING LOANS

Congress is about to pass an increase in conforming loan limits. Conforming loans are home loans guaranteed by the federal government. This practice and the formation of the FHA (Federal Housing Administration - now referred to as HUD) began just after WWII to stimulate and promote home ownership. This was the beginning of the "middle class" in American in the late 1940s, and has afforded many families great wealth and financial growth.

Higher conforming loan limits (as high as $730,000) are being proposed and will solve several major problems as we see them today:

Home owners will refinance immediately and avoid adjustable loan rate increases
Mortgage brokers will be back in the game everywhere
Banks and savings and loan lenders will again return to lending practices under the government's guaranteed loan programs through FHA and other government sponsored lending programs
Investor confidence will return...home owner confidence will return...inventory will reduce swiftly...buyers will re-enter the home buying market and buyer confidence will return with a vengeance

GOOD MINDS AT WORK

The current real estate market conditions are affecting the world economy for reasons mentioned above. A lot of very wise people are working on many models and scenarios that are aimed at fixing the current pandemic, while establishing some new guidelines that might assure that this will not happen again.

The federal government and the Treasury are both really focused on this issue like never seen before. It takes this type of concentration by leadership to make change in a timely manner.

BUYER/INVESTOR CONFIDENCE

Despite the negative issues mentioned above, and assuming some of the solutions I have mentioned, I believe that we will see a "V" shaped rebound of our economy rather than a slow "U" shaped recovery all to begin by 2nd quarter of '08 and expand rapidly throughout the year.

There is a lot of cash and good credit on the sidelines waiting for the bottom of this market.
Great real estate inventory is on the market everywhere.
Sellers more than ever "have" to sell.
Main Street and Wall Street are both more than ready, willing and able to make this problem go away.

So, conditioned on the timeliness of the proposed governmental changes mentioned above, I'm predicting - "Investor and residential Buyer Confidence begins to return in second quarter of '08."

And that's "How I See It".

Bob Dyson

Real Estate Insider - Week of February 1

If you are like me, in addition to daily monitoring your local real estate market and local economic issues, you are glued to CNBC and other Wall Street news services. Observing the inconsistencies in the market, the slow response to main stream issues and the lack of leadership nationally can make you crazy!

Politicians have jumped on this ridiculous stimulus package like it makes sense - convincing us further that decision-making at the national level is late, based on old data and is totally out of reason.

Looking for solutions...looking for the bottom...and looking for answers is the main focus of many in business today, as we are all attempting to chart a new course towards reinventing a stable economy.

As related to our local and personal real estate holdings and their value, a new course is being charted. This is How I See the market.

FINANCING

Lending interest rates and the cost of money are reaching new lows this month, making the housing affordability index the best we have seen in many years.

Most mainframe lenders have taken a giant step back and are moving towards loaning their own money and keeping the loans in their portfolios. Many have terminated their relationship with mortgage banking firms and are no longer looking to sell their paper to what is left of hedge fund buyers.

This new type of lending, enhanced by higher conforming loan limits, signals both an opportunity and a fix for the market.

Investors and first time home buyers can enter the market with some confidence.

Lower rates and higher loan limits become the best fix for the many people getting ready to experience adjustable rate increases on their home loans. This alone could stop the alarming rising rate of foreclosures.

AUCTIONS

Sarasota, Fl., Las Vegas and most recently San Diego have experienced successful property foreclosure auctions in the past four weeks. San Diego saw more than 3,000 people show up at the convention center with a $5,000 cashier's check each to bid on some 200 properties. The sale was not only successful in removing hundreds of foreclosures from the market, but saw many people OVER BIDDING for these properties, signaling a strong desire by many to get back into the real estate speculation game. There is a lot of investment capital out there and on the sidelines.

Never a fan of auctions - I have changed my mind! I believe auctions will significantly and quickly help move foreclosed properties back into the hands of investors and home owners, thus further stabilizing the market and helping us to further identify "the bottom".

HOME EXCHANGES

In the short time since our last newsletter, we have opened escrow on several home exchanges. The most significant is a $1.2 million home trading for an $8 million property in Rancho Santa Fe.

For those with good income, good equity and good credit, the act of "trading places" is proving to be a great way to unlock frozen equity and move on with your life.

Check out www.HomeExchangeProgram.com if you would like to check out how home trades work.

BULK BUYERS

Investors are out in droves looking to pick over unsold developments and foreclosed properties. They are leaving the looking phase and are moving towards the letter of intent and close of escrow phase - moves that are also signaling "the bottom". Many of these properties will come back on the market as excellent buys for future home owners. And that's "How I See It".

In my next message, I will explore buyer confidence and take a look at what should be happening on a national leadership level.

Bob Dyson

Real Estate Insider - Week of January 21

WELCOME TO THE SECOND REAL ESTATE INDUSTRY UPDATE

I launched this update earlier this month and hoped that it would strike a cord - and from the response, it most certainly has. My first update detailed a Real Estate Industry Initiative that is a way to buy and sell homes in less time in today's interesting Real Estate market. I received quite a few responses about the Home Exchange Program - all positive and all encouraging. We are just days away from launching this program in San Diego and I wanted to update you on our progress and let you know how you can get involved. If you have any questions or comments, I'd love to hear from you. Thanks and enjoy.

A QUICK RECAP

Several brokers, agents and industry service providers in San Diego have banded together this month to launch the first Real Estate Industry Initiative - one that we think will help stabilize a troubled Real Estate marketplace.

The Home Exchange Program is simply taking our clients who have good equity, good jobs and good credit and matching their wants and desires to move up with other clients selling their homes who desire to move down.

We're just exchanging properties. It is actually as simple as two purchase agreements, each contingent upon the concurrent close with the other. Both clients get new loans and are a buyer in one escrow and a seller in the other.

The process IS working. We provide all parties with work sheets, we move sales prices and new loan amounts around with our lenders and, in most cases, satisfy the needs of both clients.

HOW TO PARTICIPATE

To best understand this new program please click on the following link to visit www.HomeExchangeProgram.com. The site still has a few bugs to be worked out, but you can start uploading your property(ies) to the site. Also, check out the interactive Home Exchange Calculator that can help you determine if this program works for you.

When you first visit the link to upload your property(ies), you are going to want to set up a complimentary account. You can do this by clicking the Login button that is located along the top of the page. This account, which is available at no cost, will allow you to update your property anytime.

Once you have created a login, you can then begin uploading your property(ies) for evaluation. In order to properly analyze whether your property(ies) is a good candidate for a trade, you will need to submit the following information:

Property Address
MLS Number (if currently listed with an agent)
At least one photo (and up to 6 photos) of the property
A description of the property highlighting its features
The asking price of the property and the current loan balance
Whether you are interested in moving up in price, down in price or laterally
What are your exchange destination/property requirements (i.e. Seller would consider an exchange for a 3 bedroom, 3 bath, single-story home with a pool in Carlsbad, CA or Encinitas, CA)
Contact information

Real Estate agents and sellers alike can participate in this program. If you would like to discuss the Home Exchange Program, please give me a call at 858.481.2046 or email me.

And that's "How I See It".

Bob Dyson

Real Estate Insider - Week of January 11

THIS MONTH I AM PROUD TO ANNOUNCE THE LAUNCH OF AN ON-GOING REAL ESTATE INDUSTRY UPDATE

This hopefully informative look at the industry is designed to keep our friends and business associates up-to-date on current events in Real Estate and provide insider commentary from someone who has been in the industry for nearly four decades - or, How I See It.

With our Real Estate business stretching from Southern California to Southern Nevada and our deep connections with Brokers, Lenders, Investors and Building and Development Industry Leaders all over the world, I am confident that we can provide sound information and innovative ideas to improve your place in the Real Estate realm.

With all the alarming issues facing us in Real Estate ownership and all the turmoil in Real Estate lending, I have been searching endlessly for new directions for all of us and I am dedicated to providing you with options and solutions that I discover along the way.

As questions arise, please feel free to contact me either by phone, blog or email or, if you're in the neighborhood, stop by our marketing studio in the Del Mar Plaza in Del Mar, Calif.

So, in an effort to kick of a new year with new ideas, here is a Real Estate Industry Initiative that is a new way to buy and sell homes in less time in today's market. This program will be launching later this month.

I look forward to communicating with you. Thanks and enjoy.

REAL ESTATE INDUSTRY INITIATIVE

Several brokers, agents and industry service providers in San Diego have banded together this month to launch the first Real Estate Industry Initiative - one that we think will help stabilize a troubled Real Estate marketplace.

First Some Facts:

There are more than 25,000 homes for sale in San Diego County. We believe there are also more than 19,000 qualifed buyers who wish to purchase a home in San Diego RIGHT NOW.

So where are the buyers and who are they?

They are home owners living right here in San Diego.

They are home owners with "Frozen Equity" - people who want to relocate right now but must sell their home first.

The Media:

Granted, there is a real problem with the Real Estate lending process these days. However, the media has done an excellent job paralyzing the general buying public and has scared them away from purchasing homes.

Recent statistics provided by First American Title Company show that in San Diego County, the Palm Desert/Palm Springs areas and Las Vegas, the foreclosure activity is centered in small pockets of those communities.

Areas like Rancho Santa Fe, Del Mar, Indian Wells and Summerlin have experienced very little impact from local foreclosures, however those communities have been brought down by media hype and generalities.

It seems that nobody at the media level, or especially the government level, is paying attention to details. Our congressmen who are holding hearings on these issue don't even know what questions to ask - much less are able to present viable solutions.

Been There, Done That:

In January 1993 - in a similarly challenging Real Estate Market - several of us in the industry began calling our listing clients and we asked them one question: "When you sell your home, are you moving up in price, down in price or out of the area?"

From that calling session forward, our little group began selling homes at an incredible pace. In January of that year alone, we sold 48 properties.

How We Did It:

We took our clients who had good equity, good jobs and good credit and matched their wants and desires to move up with other clients selling their homes who desired to move down.

We simply exchanged properties. It was actually as simple as "I'll buy yours and you'll buy mine."

Two purchase agreements, each contingient upon the concurrent close with the other. Both clients get new loans and are a buyer in one escrow and a seller in the other.

The process and the response was exceptional. We provided all parties with work sheets, we moved sales prices and new loan amounts around with our lenders and, in most cases, satisfied the needs of both clients.

Exchanging Properties in Today's Real Estate Market:

Today, we are taking our exchange idea of the '90s, dusting it off and are updating it with today's technologies.

What is evolving is an industry supported effort to help buyers and sellers with good credit, good jobs and solid equity move NOW.

To best understand this new program please click on the following link to visit www.HomeExchangeProgram.com. The site is still under construction, but you can get a feel for how exchanges work.

Real Estate agents and sellers alike can participate in this program. The more of us who participate, the more of us who will start helping this Real Estate market right itself and thus will help "All Ships to Rise."

If you would like to discuss the Home Exchange Program, please give me a call at 858.481.2020 or email me.

And that's "How I See It".

Bob Dyson