Is Oakland County and South East Michigan any different then the rest of the country?    I can relate to this information, many homeowners I have spoken to are having the same problem with their values for their luxury homes.

In a recent Superstar Interview with Valerie Fitzgerald…who dominates the Beverly Hills Luxury Home Market, known as the Agent to the Stars…shared that the trend now is to not show off your wealth. Not to be conspicuous. So, its likely that the greater determinant in the falling luxury home values isn’t truly lack of financing but, lack of desire.

Its also worth noting that the rent to own ratio is still valid for homes in this range. For example, you can rent a beach close home worth $2,000,000+ in Southern California for $3-5000 per month….sure, that is a hefty rental payment. But, consider what the mortgage payment on that home would be. Lets assume a 20% down payment….a mortgage balance of $1,600,000…add in taxes etc…..depending on interest rates the house payment would be $11,000-$14,000 per month. (not including the upkeep on the home).

Chances are ….people with money have money because they learned how not to be wasteful. Does it make sense to tie up $400,000 into a down payment then be obligated to $11,000+ per month in house payment when you could rent the same (exact) home for $3,000 per month?

You tell me. How does this make sense?

Will luxury home prices fall to the point where the rent vs own ratio is in line? I doubt it. But, you never know……maybe we are going to see luxury homes fall even further than ‘normal’ home values.

Article from WSJ.com

Falling real estate prices are becoming as much a feature of high-end neighborhoods as ocean views, infinity pools and four-car garages.

While the latest data suggests prices for mainstream homes may be stabilizing after several years of pain, the news for luxury homes isn’t looking as good.

That’s bad news for sellers, naturally, but anyone in the market for a home listed for $2 million or more will find deeply discounted asking prices—and may be able to command even lower prices.

On Tuesday, data from the Federal Housing Finance Agency showed that average home prices ticked up 0.3% nationwide between June and July, including a 1.6% bounce on the west coast. The gains are modest, and they are partly influenced by the season—higher-end homes tend to sell better in late spring and early summer, as families try to move before the school year. Analysts are disappointed the rise was not higher.

Nonetheless, prices have now risen three months in a row. And compared with the disastrous events of the past few years, anything other than Armageddon is apt to raise spirits.

But these numbers only relate to homes purchased with conforming loans backed by the FHFA—in most areas, that describes mortgages of up to $417,000, or up to $713,000 in the country’s most expensive regions.

A stone patio surrounds the pool outside a spec home at 38 French Road in Greenwich, Conn. The city is seeing the worst home-sales market—and deepest discounts—in decades.

“The $10 million to $30 million properties are on the market for a very long time,” says Cathy Wood, a real estate broker covering Beverly Hills and surrounding areas for realty firm Gibson International. “They’re seeing a lot of price reductions.”

Realtors, she says, “are now selling $500,000 condos, when they used to sell $5 million homes.

Across the country in hedge-fund haven Greenwich, Conn., local broker Eric Bjork at Prudential Real Estate finds a similar effect. “There’s a new level of value being set,” he says. “The $8 million [homes] are selling for $6 million, and the $10 millions are selling for $8 million. When you do the math, it looks like an adjustment of 20% to 30%.”

You’ll find similar anecdotal data in several high-end markets. But real estate Web site Trulia.com, which tracks listing prices on multiple listing services across the country, took a look at what’s happening to listing prices for homes over the $2 million mark.

Such homes only account for about 2% of the properties listed on the site, but represent 25% of the total price reductions by value. Overall, sellers listing homes for more than $2 million have dropped their asking prices by a total of $7 billion, with an average price reduction of 14%. The average for all properties tracked by Trulia is only 10%.

Data for individual Zip codes is intriguing, whether you’re in the market or you just like to rubberneck. According to Trulia data, 28% of the homes currently for sale in Beverly Hills (Zip code 90210) have dropped their price, with an average discount of 11%. In Aspen, Colo., (81611), 39% of the homes have cut their price, by an average of 16%.

On New York’s Upper East Side (10065), no less than 40% of the homes have slashed prices—and by an average of 18%. In California, some of the most exclusive areas in Newport Beach, Big Sur and Monterey have seen a third of the sellers reduct prices, by an average of about 15%. Malibu? More than half have cut prices.

Chip Case, economics professor at Wellesley College and one half of the Case-Shiller index duo, says that some of these markets may be finally catching up to the wider housing market crash. “That level was more in the hold-out category,” Mr. Case says. “Up until recently the foreclosures weren’t hitting that level .But they are now. There’s no question about that. You’re seeing some contagion from the prime level to the luxury end.”

Bottom line: At the high end, it’s a good time to be shopping for that dream home.

During—and after—a bubble, investors often hope that “quality assets” will hold value. It’s usually a vain hope. Just ask people who owned luxury condos in Tokyo after 1990, or investors in Cisco Systems (CSCO) after the tech-stock bubble popped. Real estate is not that different.

Sooner or later, even rich homeowners need to sell. They get divorced. Their company collapses. They relocate or retire. And, when they get tired of waiting, they cut their price. Factoring in taxes, upkeep and the opportunity cost of keeping money in a non-performing asset, an empty luxury home may be costing owners a lot just by sitting there. That gives them a powerful incentive to make a deal.

You need to hire PaulMychalowych.com, the short expert to help you navigate thru selling your home in this market.

The following is the specific law description:

Recently enacted Senate Bill 306 does not require lenders to review short sale requests from sellers and their agents within 21 days.  The new California law, which addresses certain escrow procedures, has been mischaracterized by some practitioners as landmark legislation calling for a 21-day turnaround for short sale approvals.

The new law inserts a short payoff amount request into the existing payoff demand law which generally requires a lender to respond to a request for a payoff demand statement within 21 days from when it is requested, typically by escrow.  The new law essentially requires, after a short sale has already been approved, for the lender to respond to a request for a short-pay demand statement within 21 days.  The lender’s response to escrow can be a short-pay demand statement or even, depending on the circumstances, a written statement electing not to proceed with the proposed transaction.

Another provision of SB 306 may also cause confusion.  In practice, a lender may approve a short sale subject to its review of a closing statement prepared by escrow, but the lender does not review that closing statement promptly.  Under the new law, if a lender fails to approve the closing statement within four days, the closing statement shall be deemed approved, but only if it is “not clearly contrary to the terms of the short-pay agreement or the short-pay demand statement provided to the escrowholder.”  The new law does not bind a lender to a short payoff amount in an offer that the lender has not approved.

Senate Bill 306 contains other technical changes in real estate related laws, such as, but not limited to, the following:

• Expanding the existing requirement for a lender to contact certain borrowers to explore options for avoiding foreclosure at least 30 days before filing a notice of default, to include not only owner-occupied residences, but also owner-occupied residential property with two-to-four dwelling units.
• Extending the existing requirement for a lender to record a notice of sale from 14 to 20 days before a trustee’s sale.  This provision does not change existing law requiring a lender to wait at least 20 days after mailing a notice of sale before conducting a trustee’s sale.

This new law comes into effect on January 1, 2010.  The full text of Senate Bill 306 is available at http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0301-0350/sb_306_bill_20090806_chaptered.pdf.

Are you a homeowner? Are you underwater in your mortgage? If not, just wait: You probably will be.

Two separate studies this week show an explosion in the number of single-family, owner-occupied homes that are now worth less than what’s owed on their mortgages. And one says that nearly half of U.S. homeowners will be in the same boat before the nation’s economic crisis recedes. This was from DS News “For many,” that report says, “the home has morphed from piggy bank to albatross.”

Equifax and Moody’s Economy.com estimate that falling home values left 16 million homeowners, about 24 percent of the nation’s total, with negative equity at the end of June. That’s six million more than this time last year.

A report by two Deutsche Bank analysts came up with similar figures, estimating that about 26% of U.S. homeowners were underwater. Even more ominously, they projected that 25 million homes overall – 48% of the market – will be worth less than the mortgage balance by early 2011, when they expect prices to stabilize.

“We project the next phase of the housing decline will have a far greater impact on prime borrowers,” Karen Weaver and Ying Shen wrote in the report.

That outlook conflicts with recent signs of a bottom and recovery in housing markets. As DS News reported this week, the Treasury department’s chief economist said increased home sales and lower inventories are “easing downward pressure on house prices,” and the recession’s “grip on the economy is easing.”

Instead, things still are likely to get worse before they get better, suggested Mark Zandi, the chief economist for Moody’s Economy.com.

“That such a high proportion of homeowners are underwater is testimony to the severity of the foreclosure crisis and the risk that it still poses to the broader economy,” he said.

Check this out…Wachovia is setting the benchmark for the Short Sale process…the days of 30, 60, 90 days waiting for a short sale approval are over.

 Today on a call with Robert “Bobby” Jackson; Asset Manager, Wachovia we were treated to one of the most exciting and industry moving initiatives that will change the way Real Estate is bought and sold for many years to come.

 “Wachovia Short Sale”…as it’s branded…was rolled out in Northern California and has been a huge success. Wachovia is partnering with Real Estate Agents to expedite offers on short sales. Imagine…45 days to close a short sale…that’s 45 days from the day the offer is sent to Wachovia. This “Best Practice” will change the way short sales are done by every bank…nationwide and it’s brilliant!

 Of $160Billion in real estate loans held by Wachovia, $80Billion is in California!!! Wow…Of this…30,000 of Wachovia’s California mortgages are 60 days + late with no notices of default…People need help…Our economy needs help!

Tim Harris comments: On this call Mr.Jackson revealed some simply startling facts. For example: In California alone there are currently 110,000 homeowners who are now 60 days late. In other words, on the path to foreclosure. Oh..and thats JUST FOR WELLS FARGO AND BOA. The actual numbers are certainly considerably higher. He also revealed that in the Bay Area of California they are approving short sales that are for 10% of the previous bubble price. Example, a $350,000 house that just sold short for…..$35,000. When we asked what they thought the near and long term future of the real estate markets were….’do you see any bottom to the markets anytime soon’…his answer was that they see no bottom and that all the national lenders he has spoken with are expecting things to get significantly worse.

With pressure on banks to dump bad assets…banks have been bundling these mortgages and selling them for pennies on the dollar just adding to the foreclosure epidemic. With moratoriums placed on foreclosures, Wachovia’s pro active measures will set the standard for mortgage economic recovery. 

As you may know…Wachovia was bought by Wells Fargo and the “Wachovia Short Sale” is only a test…but it has the potential of changing the Real Estate industry. You’d think the geniuses that run Chase/WAMU and BofA/Countrywide would follow this program and embrace the successful trail that Wachovia’s cut.

 What next…Wells Fargo must expand this program nationwide and do it’s part in Helping Homeowners!

This initiative has the potential of changing our economy. The stigma of the short sale is no more. Buyers will make offers on properties knowing that they will get a response in a few days…not months.

 “Wachovia Short Sale” is Epic!

As always…thanks to Tim & Julie Harris…Harris Real Estate University for teaching us the Secrets to the Short Sale!

There are a handful of well known folks like Dr. Shiller who have been painfully accurate about the real estate markets. Their opinions are not effected by associations, politics or the real estate business.

We want you to be prepared for the worst all the while be hopeful for the best. Having this mindset will make it so you are prepared financially, emotionally and educationally. There is nothing to fear about this housing market provided you are have the tools that this market requires.

HOME prices in the United States have been falling for nearly three years, and the decline may well continue for some time. David G. Klein

Even the federal government has projected price decreases through 2010. As a baseline, the stress tests recently performed on big banks included a total fall in housing prices of 41 percent from 2006 through 2010. Their “more adverse” forecast projected a drop of 48 percent — suggesting that important housing ratios, like price to rent, and price to construction cost — would fall to their lowest levels in 20 years.

Such long, steady housing price declines seem to defy both common sense and the traditional laws of economics, which assume that people act rationally and that markets are efficient. Why would a sensible person watch the value of his home fall for years, only to sell for a big loss? Why not sell early in the cycle? If people acted as the efficient-market theory says they should, prices would come down right away, not gradually over years, and these cycles would be much shorter.

But something is definitely different about real estate. Long declines do happen with some regularity. And despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline.

There are many historical examples. After the bursting of the Japanese housing bubble in 1991, land prices in Japan’s major cities fell every single year for 15 consecutive years.

Why does this happen? One could easily believe that people are a little slower to sell their homes than, say, their stocks. But years slower?

Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market.

Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.

Among couples sharing a house, for example, any decision to sell and switch to a rental requires the assent of both partners. Even growing children, who may resent being shifted to another school district and placed in a rental apartment, are likely to have some veto power.

In fact, most decisions to exit the market in favor of renting are not market-timing moves. Instead, they reflect the growing pressures of economic necessity. This may involve foreclosure or just difficulty paying bills, or gradual changes in opinion about how to live in an economic downturn.

This dynamic helps to explain why, at a time of high unemployment, declines in home prices may be long-lasting and predictable.

Imagine a young couple now renting an apartment. A few years ago, they were toying with the idea of buying a house, but seeing unemployment all around them and the turmoil in the housing market, they have changed their thinking: they have decided to remain renters. They may not revisit that decision for some years. It is settled in their minds for now.

On the other hand, an elderly couple who during the boom were holding out against selling their home and moving to a continuing-care retirement community have decided that it’s finally the time to do so. It may take them a year or two to sort through a lifetime of belongings and prepare for the move, but they may never revisit their decision again.

As a result, we will have a seller and no buyer, and there will be that much less demand relative to supply — and one more reason that prices may continue to fall, or stagnate, in 2010 or 2011.

All of these people could be made to change their plans if a sharp improvement in the economy got their attention. The young couple could change their minds and decide to buy next year, and the elderly couple could decide to further postpone their selling. That would leave us with a buyer and no seller, providing an upward kick to the market price.

For this reason, not all economists agree that home price declines are really predictable. Ray Fair, my colleague at Yale, for one, warns that any trend up or down may suddenly be reversed if there is an economic “regime change” — a shift big enough to make people change their thinking.

But market changes that big don’t occur every day. And when they do, there is a coordination problem: people won’t all change their views about homeownership at once. Some will focus on recent price declines, which may seem to belie any improvement in the economy, reinforcing negative attitudes about the housing market.

Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.

Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC.

www.paulmychalowych.com www.paulmrealtor.com www.motorcityshortsale.com

Homeowners at a crossroads….

Finally, there might be some good news for struggling homeowners. Thousands of mortgage loans that were supposed to reset at a higher rate this spring won’t be changing, putting off the grim threat of foreclosure or bankruptcy for many Americans by as much as a year. Unfortunately, the reprieve will only be a temporary one.

A year ago, real estate forecasters were warning that spring 2009 would be the start of a whole new wave of foreclosures. Across the country option adjustable-rate mortgages (ARMs), an especially scary loan type often compared to a ticking time bomb, were set to detonate at an accelerating pace.

But something happened that few could have predicted. Interest rates dropped to historically low levels and the wave of resets could now be delayed until well into 2010. As a result, many borrowers—who have the option of making payments so low that they don’t even cover the interest, which is then added to the original loan balance—now have some breathing room.

Third of Loans Deeply Delinquent

Credit Suisse (CS) estimates (click here to see the chart) that the resets will begin to accelerate next spring, rising from about $4 billion resetting in March 2010 to a peak of $14 billion in September 2011. The current level is about $1 billion. About $500 billion of option ARM loans are outstanding, according to the bank. “Things have gotten pushed out,” says Chandrajit Bhattacharya, director in U.S. Mortgage Strategy for Credit Suisse. “Right now it looks like the big increase is probably going to be somewhere toward the middle of next year.”

Option ARMs typically reset after five years, at which point the monthly bill increases 65% or more. About 37.5% of option ARMs originated in 2005 are still outstanding, 63% of the 2006 vintage are outstanding, and 82% of the 2007 loans remain, according to Barclays Capital (BCS). And about a third of the outstanding loans in these years are deeply delinquent.

In a given month, between 4% and 5% of borrowers who are current on their option ARMs taken out in 2006 and 2007 default in the following month, says Sandeep Bordia, Barclays’ head of residential credit strategy, who also expects resets to be delayed until next year. “These things have been performing horrendously,” Bordia said. “I don’t know how much of it will last into the recast.”

Third of Loans Deeply Delinquent

Credit Suisse (CS) estimates (click here to see the chart) that the resets will begin to accelerate next spring, rising from about $4 billion resetting in March 2010 to a peak of $14 billion in September 2011. The current level is about $1 billion. About $500 billion of option ARM loans are outstanding, according to the bank. “Things have gotten pushed out,” says Chandrajit Bhattacharya, director in U.S. Mortgage Strategy for Credit Suisse. “Right now it looks like the big increase is probably going to be somewhere toward the middle of next year.”

Moving Out of Option ARMs

But real estate analysts were predicting that many option ARMs would reset sooner as loan balances hit specified principal caps, typically 110% to 125% of the original principal. The decline in interest rates means that it would take much longer to hit the principal cap and many borrowers will instead face a reset only at the five-year mark.

The Mortgage Bankers Assn. is also estimating that the lower interest rates will delay the resets. But the group also expects that lenders will help borrowers move out of the option ARM products before they reset. Many of the investors who can’t easily qualify for modifications and the borrowers beyond help have already lost their homes, says Michael Fratantoni, vice-president of single family research and policy development for the Mortgage Bankers Assn.

And the homeowners who are holding option ARMs when the wave of resets hits won’t face as big a shock because interest rates have fallen, adds Fratantoni. “Interest rates have come down to the point where the resets that are going to occur are going to be a bit of a non-event,” he says. “Very few borrowers will experience the recast.” But Nicholas Chavarela, managing attorney for Orange (Calif.)-based America’s Law Group, which represents borrowers negotiating modifications, says banks remain reluctant to reduce principal for underwater borrowers.

Cutting Debt-to-Income Ratios

The Obama Administration’s loan modification plan, which only applies to owner-occupied homes, is a step in the right direction, Chavarela said. But lenders won’t do what’s needed unless they’re forced to, he said.

Under the plan, taxpayers and participating lenders would share the cost of cutting borrowers’ debt-to-income ratio to 31%. Loans terms could be extended to 40 years and interest rates dropped to as low as 2%. But option ARM borrowers would likely have to pay more each month, even with a modification, because they’d suddenly be required to pay both interest and principal. “The Obama plan needs to be built upon,” Chavarela said.

But even if they can refinance many borrowers can’t afford the higher payments. Philip Tirone, president of the Mortgage Equity Group in Los Angeles, said he reached out to borrowers with option ARMs, offering to help them refinance into a fixed-rate mortgage with a low interest rate. “For them, it’s all about the payments,” Tirone said.

Time to Work with Lenders

Keith Gumbinger, vice-president of HSH.com, a publisher of loan information in Pompton Plains, N.J., said the lower interest rates have helped to diminish the option ARM problem. But it remains unclear how many option ARMs are left to reset and how many borrowers will be able to get out of the loans before it’s too late. Moreover, by the time they do reset it is unclear whether the economy will be better off. If home values and unemployment continue to weaken, it will become even harder to refinance. But the delay in resets gives some motivated borrowers time to work with lenders and negotiate a solution.

“I don’t think this is going to be the tsunami that was forecasted a few years ago,” Gumbinger said. “But it’s probably bigger than a ripple in a pond.”

www.paulmychalowych.com    www.paulmrealtor.com

Every morning when we look for new content for this blog the first place I turn to is Diana Olick. Why? Simple, she delivers the housing data from all perspectives and isn’t afraid to tell the truth. Here is her latest blog post about the critical housing numbers being released this week..

The last week of every month is always the most data-rich, with new and existing home sale reports, price reports from S&P Case Shiller and the FHFA government price index. This month will be particularly interesting, since the jambalaya will include the quarterly delinquency survey from the Mortgage Bankers Association this Thursday.

The street is predicting existing home sales to increase, based largely on the sales surge of distressed properties. No question, the bottom feeders are back in the game, as are first time home buyers.

We are hearing from our thousands of realtors that its not JUST first timers that are buying,……its ‘investors’ as well. I have to tell you, that makes me very very nervous. What will those ‘investors’ do if the prices of homes continues to drop? How many of these ‘investors’ were planning on flipping the house? If history tells us anything its that most investors will walk from their ‘investment homes’ the second they realize the profit potential is gone. Las Vegas anyone?

But these sales are not the type of sales necessary for meaningful recovery in housing. Don’t get me wrong, we need to unload the foreclosure inventory, but without real “organic” sales, that is move-up home buyers and sellers, there is no way to put a bottom on home prices.

Yep, she is spot on. The housing recovery has to start from the least expensive homes and work its way up. The first time buyer is buying the existing home of the move up buyer etc. The biggest segment of any market is the move-up buyer. And in this market where equity is being wiped out its the move up buyer who is suffering the most. For this market to ever return to anything resembling a balance there must be more agents educated on how to successfully list and sell short sales.  www.motorcityshortsale.com

I know there is a common perception that foreclosures and distressed sales are really only happening in the big boom-to-bust states, i.e. California, Florida, Nevada and Arizona. California makes up roughly 10 percent of the U.S. population and very roughly ten percent of the nation’s total housing units.

In April, California single family home sales made up 12.8 percent of total U.S. single family home sales. So, while slightly higher, it’s not as if California sales are wildly out of whack from what normal demographics would suggest.

That said, with jumbo loans still a lot tougher and more expensive to obtain, and buyer incentives really favoring the lower-priced starter homes, my concern lies in sales above the median home price (and remember that’s half the nation’s housing market). The quarterly delinquency survey looks back to Q1 of this year, so not the most timely, but that’s when we really started to see job losses surge.

While there’s obviously going to be a lag time between when a homeowner loses his/her job and when they get into trouble on their mortgage, I think we’re really going to see the meaningful impact of job losses in this report, especially on prime, non-exotic loans. These are the homes that the bottom feeders and the first time buyers are still priced out of.

What does this mean? Simple, housing above the FHA loan limits will be experiencing the largest percentage drops in values. Happening because 1) They can’t re-fi because they have no or too little equity 2) New lender standards that won’t re-fi in areas where there are too many foreclosures…(even when the sellers have equity!) 3) They can’t find buyers because the move-up buyers who would be the luxury homes natural buyer can’t sell their home. 4) Consumer (hate that term) trends are changing away from the McMansions.

So before anyone starts calling a bottom to this housing market, if only in sales and not prices, keep an eye on the numbers this week. Foreclosures are the key, and if this new breed of distressed loans starts to grow in size, we may be looking at another bump in the road to recovery.

Legislation to give homeowners who are on the brink of losing their home a 90-day period to work out a payment plan with their lending institution has been signed by the Governor. House Bills 4453-4455, now Public Acts 29, 30, and 31 of 2009, would allow consumers who are on the brink of foreclosure a 90-day period to attempt a loan modification plan.

Further provisions of the legislation would require the lending institution to provide the borrower with written notice of the reason for default, information on the mortgage holder including the name, address, phone number, and an assigned contact with the mortgage holder. If an agreement is reached with the mortgage holder, the loan will not be foreclosed upon if the borrower is able to abide by the terms of the agreement. Additionally, language was reinserted into the bill that gives homeowners the right to take their case to court if a lender does not cooperate on a loan modification plan. This legislation further stipulates that a borrower would not qualify for this program if they qualify for President Obama’s Federal Loan Modification Program. While the MAR fully supports keeping homeowners in their homes, the MAR believes that the judicial aspect of this legislation that was reinserted may clog up the judicial system, thus “dragging” the process out and increasing costs. However, given the increasing number of foreclosures in this state, these bills are a big step in keeping Michigan citizens in their homes.

California is about to get hit by another foreclosure wave. 

Pre-foreclosure notices in the state jumped by 80% in the first quarter of 2009 from the previous quarter, according to a new report from DataQuick Information Systems of San Diego, a sign that foreclosures in California will rise sharply in the coming months.

Foreclosure moratoria and a state law that slowed down foreclosures had artificially depressed new foreclosure filings at the beginning of the year. The newest data shows how those foreclosures are wending through the system as lenders play “catch-up.”

Some 135,000 default notices were sent out in the first three months of the year, an 80% increase from the fourth quarter of 2008 and a 19% increase from the previous year period. That’s higher than any quarter DataQuick has measured since its tally began in 1992.

The DataQuick report also found that foreclosure activity was spreading out from the state’s most affordable (and battered) inland regions, reaching areas that have been less affected to date. Those affordable housing markets, which have 25% of the state’s housing stock, accounted for 47.5% of all default activity during the quarter, down from 52% last year. Notices of default jumped by 40%, for example, in San Luis Obispo County on the central California coast. Defaults were up by 38% in Los Angeles County and by 35% in San Francisco.

Mortgages made in 2006 were the most likely to trigger a default notice, and those loans had a 8.5% default rate. Loans made in 2005 had a 4.9% default rate, while those made in 2004 had a default rate of less than 1%.

What can you do now?

There is expected to be massive tsunami of homeowners who are simply making the decision to sell their homes through a short sale vs. staying in a home, hoping that one day it may be worth what they paid.

No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale. Selling your home through a short sale doesn’t need to be a shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves “upside down” — that is, they owe more on their mortgage than their house is worth.

Late last year, CNBC Financial Guru Jim Cramer was telling homeowners to ‘Just Walk Away’. (Watch the video on YouTube.com.)

25 Worst Real Estate Markets for 2009

We are clearly in uncharted waters. The current housing crisis is different from all the previous housing recessions. It is well known that many financial institutions sold mortgages in a deceptive manner — for example, by approving people for loans they couldn’t really afford — then why should homeowners feel obliged to honor their commitments?

From a homeowner’s perspective, why should they stay in a home that is depreciating? Often times it’s possible to rent the same style home in the same area for half (or less) than their current mortgage

payment. Assuming it takes years for the market to recover, the homeowner who sells their home via a

short sale now will be far ahead of the person who ‘stuck it out’.

Get a copy of my free ebook “Should I Short Sale My Home” at:  www.paulmychalowych.com  or www.paulmrealtor.com

Paul Mychalowych’s extensive, first-hand experience with SE Michigan real estate from all perspectives – as a longtime buyer, seller and property manager, and eventually as a licensed real estate agent – give him a uniquely informed insider edge in the local market.

Shoppers can get more house for their money across price ranges in south east michigan and oakland county 

In 2006, Paul recognized that the market was changing and he had to learn new skills to help his clients. Paul, with the guidance of Harris Real Estate University, learned how to negotiate short sales. He has since completed short sale negotiations for clients with Countrywide, Citibank, GMAC, and Wells Fargo, to name a few lenders. Paul has been quoted by the Detroit News and Free Press for his insights into the short sale and realestate markets. For more information, please find Paul at:

Paul Mychalowych

248-935-2754

www.paulmychalowych.com  or www.paulmrealtor.com