SAN FRANCISCO, Calif –OBSNews- Despite the historic downturn in the housing market in the United States several real estate websites have seen their operations increase substantially and have received millions of dollars in funding from investors. 

It is estimated that in the past twelve months over $50 million has been poured into online real estate marketing and brokerage businesses by venture capitalists and other investors.  Trulia.com, Zillow.com, Terabitz.com, and Redfin.com are among the companies who have received substantial funding to increase operations.

Newspapers and other traditional forms of advertising for the real estate industry have seen their real estate ad revenues plummet.  In a statement released recently Pat Talamantes, the Chief Financial Officer for the McClatchy Company, which owns a large number of newspapers in market across the US, said, “a majority of the decline continued to come from newspapers in California and Florida, two states severely affected by the real estate downturn, and we are feeling the impact of worsening economic trends.”

McClatchy reported revenue declines of 14 percent in January with a dramatic 35 percent decline in real estate advertising.

One company that is seeing its online real estate activities pick up dramatically is Sacramento, California based http://www.TheHomeBuyingCenter.com.   This company provides homeowners who want to sell their houses quickly an opportunity to speak with a real estate investor about the value of their home and receive a professional investor opinion, or PIO.   The company also helps people who want to buy a foreclosure home find and acquire properties at below-market prices. 

Company president Patrick McGilvray commented, “as you can imagine, with foreclosures being such a hot topic, we have been flooded by interested home sellers and buyers.  We have been in discussions with several groups of angel investors, interactive media companies, and a few venture capitalists.  We have had some very attractive offers to help us finance our growth, and we’re in the process of reviewing several proposals.

SACRAMENTO, Calif –OBSNews- On Thursday March 6, 2008 the Federal Reserve reported that during the final three quarters of 2007 the amount of equity that Americans had in their homes dropped to below 50%.  This is the first time that Americans have owed more on their homes collectively than they have owned since 1945.  This statistic shows that American homeowners borrowed large amounts of money against the value of their homes in recent year..  For homeowners who are trying to sell their properties to avoid foreclosure this statistic indicates a difficult market reality.

Mark Zandi, the head economist for Moody’s http://www.Economy.com, said “Consumers are growing more cautious, first, because they are now worth less, and they know it.  He added, “Secondly, they can’t borrow against their homes as aggressively as they did.

Economists point to falling home equity and link it to lessened consumer spending in other parts of the economy, especially home improvement and construction spending.  When this trend will reverse itself is anybody’s guess, but the consensus among real estate experts is that housing prices will continue to decline until sometime in 2009.

Approximately 10% of American houses, or 8.8 million, are estimated by Economy.com to have ‘negative equity.’  This means that more is owed on a house than the current market value.  Governmental fixes to this problem appear to have driven a wedge between Federal Reserve Chairman Ben Bernanke and the Bush administration’s Treasure Secretary Henry Paulson.  Bernanke recently came out in favor of urging lenders to write down principal amounts owed by homeowners while Paulson has spoken out against such a practice.

“Falling home equity has definitely caused a lot of people to think twice about trying to sell their house now.  Yet, we are still helping hundreds of homeowners a week who want to understand their options when they choose to sell a house,” said foreclosure expert Patrick McGilvray, president of Sacramento, California-based http://www.TheHomeBuyingCenter.com

McGilvray added, “We’re helping hundreds of people every month buy and sell houses, and it’s a great time for prospective home buyers who are looking for a bargain on a foreclosure house.  For people with a good job and a decent credit rating there are incredible deals out there in great neighborhoods.”

Despite the often gloomy news about US real estate, the National Association of Realtors reported that prices for housing actually rose in more than 70 metro regions, including a handful that reported increases of more than 10%.

SAN FRANCISCO (Reuters) - “The golden dream by the sea” is how Gov. Arnold Schwarzenegger has fancifully described California. Yet for thousands who bought homes during the Golden State’s latest housing boom, foreclosures have turned recent months into a nightmare.

Economists disagree whether soaring foreclosures in California suggest the world’s eighth-largest economy is poised to slump or if it is just seeing its share of disarray from the subprime segment of the mortgage lending industry.

Whatever experts call it, Dorothy Hicks, 74, a retired federal employee in Oakland, California, is seeing her American dream of owning a home teetering on the edge of collapse. After refinancing into an adjustable-rate mortgage last year, she faces possible foreclosure on her home of nearly 40 years.

Hicks says she was told the mortgage was a fixed-rate loan, but was soon overwhelmed by soaring payments when its interest rates rose. “By the time you pay (utility) PG&E, the telephone and the mortgage, you don’t have any money,” she said.

Christopher Thornberg of Beacon Economics in Los Angeles says California’s economic outlook will darken as a growing number of households slash consumer spending to meet rising mortgage payments, especially on adjustable-rate and subprime loans that became popular for those with weak credit.

“We have a lot more of these shady mortgages out here, so that doesn’t bode well,” he said. “We’re due for a very traditional consumer-led downturn.”

RECESSION OR RESILIENCY?

Analysts had expected California’s economy to cool because its housing market has slowed from the torrid pace of recent years. Prices, long far above the national average, are flat or slipping as sales decline.

A report last week by DataQuick Information Systems pointed to additional trouble. The real estate trend tracking service tallied a record 17,408 homes in the state falling to foreclosure in the second quarter.

While a fraction of California’s 8.4 million residential properties, the foreclosures marked a jump of nearly 800 percent from a year earlier, propelled by markets awash in subprime loans.

Countrywide Financial Corp., the largest U.S. mortgage lender, last week slashed its 2007 forecast, suggesting that rising delinquencies and defaults may spread beyond subprime borrowers to borrowers with stronger credit.

“Business is picking up and I think it’s going to continue,” said Patrick McGilvray, president of TheHomeBuyingCenter.com, a Sacramento firm that matches distressed homeowners with investors and home buyers.

Other experts say California’s mortgage troubles will be largely contained to risky borrowers who bought houses more expensive than they could afford, as well as their lenders. But they see no signs of a slowdown in consumer spending or recession.

Howard Roth, chief economist for the state Department of Finance, said the economy of California, the most populous U.S. state, is fundamentally solid. Its current housing troubles pale compared with the beating the housing market suffered in the early 1990s from gutted aerospace payrolls, he said.

The state’s unemployment rate was 5.2 percent in June, compared with nearly 10 percent in late 1992 and early 1993, when Californians desperate to leave the state were parting with their homes at fire-sale prices.

“In the early 1990s we were losing a major industry and losing it for good. Now we’re paying the price for a housing bubble, but housing will come back,” Roth said. “We really haven’t lost jobs yet. That may happen. But in the early 1990s we lost over 500,000 jobs.”

SACRAMENTO — According to the Federal Home Loan Mortgage Corporation and other real estate companies such as The Home Buying Center.com more than $1 trillion in adjustable rate mortgages (ARMs) will reset this year bringing higher monthly payments and a corresponding increased risk of foreclosure to thousands of homeowners.Analysts are divided on what this change will mean for the American and global economies, but many families and commentators are worried. Many Californians, and their counterparts in the rest of the country, live paycheck-to-paycheck and, because of unrestrained credit card spending, actually spend more than they make every year.

According to DataQuick Information Systems in 2000 only 18.9% of homebuyers in the Sacramento region purchased properties using ARMs. This number dropped in 2001 to 12.1%, but spiked to 65.1% in 2004, and 72.8% in 2005. The number for 2006 was 62.5%. ARMs were created for sophisticated buyers who planned to live in a given house for a few years, but their use has mushroomed dangerously.

“Offering people long-term credit secured by a mortgage on a single family home has been one of the tools that helped fuel the American dream of home ownership,” opined Patrick McGilvray, J.D., President of http://www.TheHomeBuyingCenter.com. He continued, “In recent years though, this tool has become perverted and only a very few will ultimately profit. In years past people could not buy a home until they showed that they had the discipline, or luck, to be able to provide a 20% deposit on the home they wanted. I believe that 100% financing arrangements and the proliferation of ARMs will ultimately hurt the American consumer and our economy as a whole.”

The deterioration in fiscal responsibility of average Americans has been a trend for a long time, but in recent years the skyrocketing value of homes in the West, especially the central valley of California, has provided homeowners an easy way out. Mortgage lenders, banks in particular, have reaped large revenues from fees, points, and interest charges by selling home equity lines of credit (HELOCs) and refinancing schemes to homeowners.

Many homeowners were seduced by solicitations like, “pay off your high interest credit card debt.” But, debt refinancing often creates a house of cards for ordinary working people. The stability of these houses will be tested in the months to come.