This page is updated monthly. An opportunity for our investors to get a sense of how Peter Winn and the staff at Westminster view the market now and in the near future.
We are seeing the first signs of the Federal Government’s $700 billion bailout starting to shift the log-jam in the credit markets.
Inter-bank lending is starting up again and the yield spread on these transactions is falling, indicating that the Banks are feeling it’s safer to lend to each other.
The banking industry still seems reluctant to lend money to homebuyers; consequently FHA and VA money is being used for a substantial amount of transactions.
In California, foreclosure numbers have spiked. These numbers are a little misleading as a good percentage of new foreclosures are due to the banks holding back from filing new defaults in the last three to four months while they waited to see if the Government was going to offer to buy up a lot of their delinquent and upside down loans. A backlog of defaults is being filed now they see that is not going to happen.
Loans reset traditionally on January 1st. Lower interest rates have removed the edge off the resets.
We expect defaults in California to peak in the next 90 to180 days due to an aggressive rewrite program being undertaken by the major lenders. Their strategy is to try to keep homeowners in their homes at any cost.
We are seeing signs of increased investor and first time buyer activity in the lower end of the California market. This is due to the attractive pricing on the MLS caused by high inventories and particularly the high percentage of REO and short sale properties.
Certain markets are showing as much as 50% of new listings going pending within thirty days and a further 20% going pending within 60 days. This is leading to a flattening of the drop in values in certain areas and is the first hint of a bottom in several markets or signs at least that those markets are within five to ten per cent of the bottom.
We have identified three markets where we think a bottom is in sight and four more where we believe it will be visible within six months.
Buying now in these markets, just ahead of the curve, seems the most savvy investment decision.
We are still advising our investors to turn properties rather than hold them as rentals. We feel this is prudent advice for the next three months. Only good below fundamental value two to four unit buildings that are clean and located in good areas would earn a "hold" recommendation from us.
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