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- 5 Strategies for Navigating the Summer Clearance Sale - on Real Estate!
- May 20, 2011
- From Tara's blog on Trulia:
Home prices are low, interest rates are low - real estate is basically having a summer clearance sale! But unlike buying a clearance-priced car or computer, making the wrong move in this real estate 'sale' can have disastrous effects, from losing your dream home due to a bad bid to ending up with a money pit of a property.
Here are a few money-saving, pitfall-avoiding tips and tricks for buyers who want to do some smart home shopping this summer.
1. Have a vision in place, before you start your house hunt. Actually, have several visions in place. Have a financial vision, complete with a clear picture of what your total income and expenses look like, in the “after homebuying” view, including what you pay out for your home and related expenses, like HOA dues and homeowners’ insurance. Have a vision of your life in your new home, including what you want to do, with whom and where you want and need to go - in the work, family and recreation areas of your life.
If you kick off your conversations with your mortgage broker and real estate agent with a clear understanding of the lifestyle you are looking to create, you’ll be much less likely to get derailed. With a clear vision in place and, ideally, on paper, you can clearly communicate your wants, needs, goals and financial boundaries to your professionals, telling them what you can afford, rather than trying to shoehorn your financial plans into one-size-fits-all mortgage guidelines. With a vision, the temptation of an uber-low-priced, but completely inappropriate, home will not lure you into buying the wrong place for your needs. (Nor will an amazing home that is simply out of your personal price range - no matter how great a value it is for the money!)
2. Don’t let affordability get between you and reality. High affordability doesn’t necessarily mean you can get every single thing you want - and name your price. The fact is, even people who are spending millions for their homes don’t get everything they want! I’ve seen buyers insist that they need X number of bedrooms and Y number of bathrooms in move-in condition for a price that is just not going to happen, even in this clearance sale climate, and end up looking and looking, ad infinitum.
If your agent has shown you home after home that is what you want, but has sold for more than you want to spend, and you’re confident that you can find or cut a better deal because the market is down and you just os happen to be a brilliant negotiator (!), you might be at risk of falling into this trap. There are deals to be had, but if you don’t stay grounded in reality, you’ll end up chasing your tail and missing out on the tax and lifestyle advantages of homeownership.
If you’ve been house hunting for months and months on end, your agent keeps trying to tell you that you should search in a lower price bracket, you have repeatedly gotten overbid or you just can’t seem to find the precise home you seek in the location and price range you seek, at least consider the possibility that you might have an outsized wish list for your budget. Take a step back, revisit your vision, and remind yourself what’s really important. It’s okay to save some “must-haves” and “deal-breakers” for your next home purchase!
3. Get a local expert to brief you on the local market, then screen out the noise. Now more than ever, it’s essential to have laser beam focus on the information and strategies that will get you what you want - whether it’s an amazing deal on the home you’ve always wanted or simply success at becoming the owner of your first home at a price you never thought would ever be possible. Otherwise, you’ll end up all over the place, spending your time, money and sanity attending auctions, getting worked up over distressed properties that aren’t yet for sale, trying to negotiate deals with sellers who are in no position to cut them and having your lowball offers on bank-owned properties rejected time after time.
Don’t let a news story about a guy in Minnesota who got a home for $3.27 be the basis for your entire home buying strategy. Instead, ask around and get referrals to a local broker or agent who has a track record of helping the people you know. Read their answers on Trulia Voices and ask them your own questions to get a sense for whether they might be a good fit for you - if they are, and you trust them, then consult with them on the dynamics of your local market. The market is down everywhere, relative to 2006. But some markets - and some neighborhoods within markets - are still seeing multiple offers and home prices which are relatively recession-proof, compared to what you’d expect from the national news.
Once you have a strategy in place, work it - don’t let your acupuncturist or shoe repair guy convince you that your strategy is wrong, that you could get the place for cheaper or that the bank should absolutely do every single repair, or you should walk away from the deal. Many would-be buyers lose out on great homes because they take negotiating advice from their holistic veterinarian over that being offered by their broker or agent.
4. Read everything. Good faith estimates. Contracts. Disclosures. Inspection reports. There is a long, long list of multi-page documents that are very easy to “just sign” when you’re in the heat of the hunt and think you’re on the scent of an amazing deal. I’m not suggesting you ask for a week-long pause button to read every document, either - rather, read them when you get them, ask questions, and keep asking until you understand the documents.
Many buyers this summer will make offers on more than one home before they get into contract on “the one,” and many of those properties will be short sales or foreclosures. With distressed properties, every contract is different, so it behooves you not to go on autopilot, just skimming the papers as you might otherwise. Also, inspection reports might reveal red flags and condition issues that you’d normally expect to see in the seller’s disclosures. It’s especially critical, in these situations, to fully understand as much as you can about the property, your loan, and your obligations and due dates under the contracts.
5. Stop your mental accounting and do the actual math - on paper. In the field of behavioral economics, mental accounting refers to the tendency we humans have of doing math in our heads, separating things like easy money (e.g., the so-called “instant equity” from buying a home for less than it’s supposedly worth) from hard-earned wages and salary, and making spending decisions differently from these different mental accounts.
On the scent of a good deal, and in the heat of the hunt, even the most meticulous homebuyer can go up a few thousand in offer price to beat out other buyers. No problem, right? Well, but then when the inspector uncovers a few needed repairs, they make a mental guess as to what they’ll cost, and add that in - again, mentally. Then, when the lender requires a few extra thousand bucks than expected to close, that goes on top, but again, only mentally. And mental money tends to stretch a bit longer than real money does!
So, you can see how it’s possible to break the bank when you thought you were in great shape because you scored such a great purchase price for the property itself.
Even if you hate budgets with every iota of your being, buck up on this one project, pull out the calculator or open up a spreadsheet and keep track of every line item. Get actual repair bids during your inspection period, to the extent possible, and get your math mojo on. It’s fine to buy and incur these overages here and there, but keeping track of them is key. You know what I like to say - surprises are for birthday parties, not for real estate transactions, and not for your bank account, either!
Keeping a strict tab on the expenses you incur during the transaction - or will need to incur afterwards -- will save you so much drama later.
- The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them)
- May 10, 2011
From Tara's blog on Trulia:
The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them)
Roughly forty percent of the homes for sale on today's market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, and sometimes not), but they also have a reputation for causing buyers to become distressed, too!
Transactional snafus, last-minute surprises and long, drawn-out escrows that never close seem to be par for the course.
Instead of avoiding these properties altogether, get educated about the most common dramas that go down in these deals, and how you can avoid falling victim.
1. Run-on (and on, and on) escrows.
When you’re buying a home (or selling one, for that matter), time is absolutely of the essence. And buyers reasonably expect that the big time suck in real estate is in the house hunting process itself; seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right?
Not so much, when it comes to some distressed property sales. I’ve heard tell of the occasional, swiftly-moving escrow on an REO (real estate owned - by the bank). But for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal the deal. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days’ or weeks’ worth of time to the escrow.
And short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months (!) to get the deal closed, after the seller has accepted the contract.
Avoid the drama by: expecting your escrow to run long, and being pleasantly surprised if it doesn’t. Expectation management is everything. Make sure you take these extended timelines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how long your rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate, if rates are rising rapidly during the time you’re waiting for the deal to be done.
2. Bank won't take lowball offer.
If I had a dollar for every time I’ve received a question from an outraged reader to the effect that a buyer has had their short sale or REO offer rejected on grounds that it was too low, even though the bank has no other offers, I could buy a foreclosure myself (admittedly, it’d be one of those $150 foreclosures in some blighted town with tax liens and no plumbing, but still).
Banks owe their shareholders and investors a duty to get as much as they can for these properties. Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition. Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table.
Avoid the drama by: working with your agent to make a realistic offer, based on recent comparable sales in the neighborhood, not just on what you think you can get away with. You can waste a lot of time, spin a lot of wheels and lose out on a lot of properties making lowball offer after lowball offer on distressed homes. Sit down with your broker or agent, review the ‘comps’ and make a smart offer that reflects a good value for you, is within your budget and is not bizarrely out of the realm of the fair market value of the property.
3. Last minute postponements/cancellations.
These transactions have an uncanny way of being delayed at the last minute - or never going through at all, through no fault of the wanna-be buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the checkboxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account.
Avoid the drama by: staying as flexible as possible with your moving plans as long as possible. Best practice is to plan on some overlap between the time you can be in your last place and your scheduled move-in date. Also, if you’re in contract on a short sale, you should take the point of view that you don't have a firm deal until you get the bank’s approval of the transaction. So don’t even think about starting to make moving plans or paying for home inspections and appraisals until you know the bank has greenlit the deal and that the purchase price and terms they’ve approved work for both you and the seller.
4. The bank’s black box.
Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on.
Make an offer on a bank-owned property or a short sale? It’s a crap shoot - could be days, but could also, easily, be weeks or months before you know what’s going on. And no amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made. And that “black box” into which your offer disappears at the benk level is very frustrating.
Avoid the drama by: continuing your house hunt until you have an answer back. Maniacally pestering the listing agent for answers or harrassing your buyer’s broker into spending hours on hold with the bank is highly unlikely to get you any insight. (With that said, it does make sense for your agent to check in regularly - sometimes even daily - with a short sale or REO listing agent to stay updated on any developments with the property and to make sure your offer/transaction stays in the front of their mind.)
Most of the angst in these situations arises when a buyer feels they passed on properties that would have really worked for them when they pinned their hopes on a distressed home. You can only control your efforts and activities, not the bank’s. So, consult with your own broker or agent about staying proactive in viewing and even pursuing other properties until you have a firm “yes” from the bank on your short sale or REO offer. Until that time, and usually for a short time after you get the bank's approval, you have the right to back out of the transaction if you need to (make sure your broker briefs you on precisely when your right to rescind your offer or exercise contingencies - i.e., bail - will expire).
5. Double standards.
In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various timelines. Seller has to provide disclosures by X date, open the property to inspections - with utilities on - by Y, and close and move out by Z. REO and short sale buyers, on the other hand, are often dismayed to find that even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like.
Avoid the drama by: chalking it up to the (admittedly irritating) way things are - the price you pay to buy from the bank. Realize that working with the bank on the bank’s terms is unavoidable when you buy a distressed property. Then, go into the deal with realistic expectations - including the expectation that the bank will drag its feet, despite expecting you to keep every deadline - and you’ll be less frustrated, and less likely to make poor decisions out of frustration.
Also, make sure you do respond in a timely manner to the bank’s requests and your obligations under the contract. I’ve seen banks capitalize on buyer delays in returning signatures and removing contingencies to accept higher offers they received in the interim. Don’t lose your home on a technicality because you assume that the bank’s lackadaisacal timelines apply to you as well.
- Forbes Predicts San Jose Real Estate on the Rise in 2011
- February 2, 2011
- San Jose tops the list of cities where home values are expected rebound the most this year, according to a Forbes article:
"The result is a Top 10 list made up of cities boasting an outlook for job growth and rebounding economies in 2011."
"California touts the most metros on the Top 10 list. San Jose (No. 1), Santa Ana (No. 2) and San Diego (No. 5) offer housing markets where property prices are expected to rise steadily over the next three years."
Average Home Price: $511,186
12-Month Forecast: 3% increase
Three-Year Annualized Forecast: 2% increase
Full details "The Best and Worst Cities for Home Values in 2011":
- Trulia Rent vs. Buy Index - Q1 2011
- February 2, 2011
- News release: http://info.trulia.com/index.php?s=43&item=113
Interactive map: http://trulia.movity.com/rentvsbuy/
Full list the 50 largest U.S. cities: http://info.trulia.com/file.php/3323/rent_vs_buy_50+Cities_2011_Q1.pdf
Definite buy in CA: Sacramento, Fresno, Long Beach, San Diego, San Jose.
Definite rent in CA: San Francisco.
In between: Oakland, Los Angeles.
- Trulia Going Global
- February 2, 2011
- Now the world is flat and globalization is everywhere. Can real estate market be globalized? You bet!
Trulia partners with ListGlobally and, in a few months, we can search for international listings through Trulia.
News release: http://www.truliablog.com/2011/01/13/trulia-going-global/
- Places to Buy Home and State of the Market in SF Bay Area
- September 28, 2010
- I thought you might like to read this. Just to pass on some real experience of my client in the Bay Area housing market, even in Livermore! It is a mixed bag situation and usually depicts a great momentum changes around the elbow of a growth curve. Time to act decisively in good potential neigborhoods.
"One of my older relatives are looking to relocate to the bay area. They are in the 80s age group. They are looking for a starter home 3 bed/2bath preferably 500,000. They are keen on a single family home with some garden. A good neighborhood with families is critical.
After looking at many south bay neighborhoods, we settled on South Livermore. I had never visited south Livermore before but we found it to have several nice neighborhoods and a cute but small downtown. These areas are closer to the south end where the vineyards are located (off 84) and there were also some good areas closer to the Livermore labs. We increased our budget a little bit and found very nice homes in very desirable neighborhoods. We were really surprised at how fast the homes was selling. One we really liked but was on a busy street sold on the afternoon, which we saw only in the morning. A couple of homes sold before we could even get to see them. These houses were about 1-8 DOM before they were sold. Makes me wonder about the downturn.
Anyway, we found our home and the sellers have accepted with one condition. They want to exclude their redwood deck from the inspection. What would the implications of this? If the risk is a few thousand $, then we can take the risk. However, unsure what larger implication this has."
- $8,000 Tax Credit Ends Soon
- September 1, 2009
- Act fast! Homebuyer tax credit ends soon
There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home.
By Les Christie, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) -- Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.
Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.
The bad part: It ends on Dec. 1.
Because it usually takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.
"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."
Sense of urgency
What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)
In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.
"That's why there's such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they're taking three to six months to do that."
That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.
Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.
The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.
"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn't want to move in because of the [less than perfect] conditions the homes are in."
That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.
"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."
Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He's spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He's stretching the cash by doing much of the work himself.
Cash for Clunkers effect
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.
In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program.
"It's just like Cash for Clunkers," said Robert Dye, a senior economist for PNC Financial Services Group. "It runs the risk of a let-down as the program runs its course."
Johnny Isakson, R-Ga., who is a former real estate broker, is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions.
The effort has drawn strong industry support.
"We need to stimulate the move-up buyer," said Century 21's Kunz, "so it works its way up the pricing food chain. That's what we need to get inventory moving again."
- How is Zestimate Calculated?
- August 18, 2009
- A lot of us use the Zestimate on zillow.com to get the value of a house. How is it calculated? Watch the Zillow videos.
For real estate professionals:
For general site users:
- Real Estate Seminar (Part II)
- August 15, 2009
- The second part of the seminar had 25-30 attendees from Cisco. The questions from the audience were very specific:
- is real estate in bay area hitting the bottom yet?
- when is a good time to buy?
- how is the rental market in bay area?
- shall we look outside of bay area if we want positive cash flow?
- what are the tax advantages of real estate investment?
- what about loan options for investment properties?
Dr. Ho addressed the questions based on his first-hand info on the market and 30+ years of experience of seeing the ups and downs in the real estate market in bay area. It was a greatly informative and educational seminar, for veteran investors as well as first-time home buyers.
- Real Estate Seminar (Part I)
- August 10, 2009
- Last Friday, Dr. Ho hosted a real estate seminar in San Jose with 35-40 attendees from Cisco, including their family and friends. It was an open forum with the purpose to address questions on people's mind regarding real estate and investment in bay area.
Dr. Ho brings together his expertise in medical knowledge and 30+ years of experience in real estate, and started the session with an anatomy on decision making:
- Should I buy?
- Can I buy?
- Will I buy?
After all, buying your first home or an investment property is probably one of the most important decisions to make in life. Dr. Ho went on to open up the floor to the audience, addressing their specific questions as well as throwing in some fundamental guidelines for real estate investment. Some highlights:
- 4 Quadrants: wage earner, salary earner, business owner, investor. The goal is to become an investor and make the money work for you.
- Dr. Ho's 2 Principles of Real Estate Investment, from his 30+ years of experience (sorry we can't divulge the "secret" here; you'll have to attend the seminar or contact Dr. Ho otherwise to find it out)
- Criteria to buy an investment property: cash flow analysis, ROI, rental market, supply and demand curve
- Your own home is not an investment, as contrary to some popular belief.
- Why does the housing market behave like a basketful of rice?
The session was nicely concluded with a delicious catered lunch and mingling among the attendees. It was a diverse audience with some people looking to buy their very first home, and some others looking to add more investment properties to their portfolio. People exchanged information and learned from each other.
- Find out where mortgage rates, home sales, and the median price are headed
- July 26, 2009
- Find out where mortgage rates, home sales, and the median price are headed. The Association recently released a mid-year update of our 2009 Housing Market Forecast. Click here to view.
- Bay Area Cities Ranked in Top 25 Places for Rich Singles
- July 21, 2009
- #5 Santa Clara: high tech as well as sports loving.
#20 Campbell: bar hopping in Campbell?
#21 Sunnyvale: how about Segway polo?
Complete list: http://money.cnn.com/galleries/2009/moneymag/0906/gallery.bplive_richsingles.moneymag/index.html
- Bay Area Home Sales and Median Price Rise
- July 21, 2009
- Home sales in the Bay Area jumped to their highest level in almost three years, the result of improved mortgage availability and a perception among potential buyers that prices have bottomed out. The median price paid for a home increased month-to-month for the third month in a row, a real estate information service reported.
A total of 8,644 new and resale houses and condos sold across the nine-county Bay Area in June. That was up 16.1 percent from 7,447 in May and up 20.4 percent from 7,178 in June 2008, according to San Diego-based MDA DataQuick.
Home sales have increased on a year-over-year basis the last ten months. June sales have varied from a low of 7,118 in 1993 to 15,735 in 2004 in DataQuick’s statistics, which go back to 1988. Last month was 16.1 percent below the 10,306 for an average June.
“Getting mortgage financing this last year has really been an egregious process, especially for borrowers in the upper half of the market. We’re just now seeing the beginnings of more normal mortgage lending patterns. There’s still a long way to go, but it looks like the worst of the grind is over,” said John Walsh, MDA DataQuick president.
The median price paid for all new and resale houses and condos sold in the nine-county Bay Area was $352,000 last month, up 3.1 percent from $341,500 in May and down 27.4 percent from $485,000 in June 2008. It was the highest since $375,000 last October.
The current median is 47.1 percent below the $665,000 peak reached in June 2007. It hit a low of $290,000 in March this year. About half the downturn appears to be price declines, the other half is the absence of of high-end home sales in the statistics, which pulls the median down.
Financing with home loans above the old “jumbo” limit of $417,000 edged up to the highest level in almost a year. Last month 28.8 percent of all Bay Area mortgages were jumbos, the highest since 31.9 percent in August last year and well above the bottom of 17.1 percent last January. Two years ago jumbos accounted for more than 60 percent of all home purchase loans.
Bank of America and Wells Fargo are the two most active lenders in the Bay Area with 30 percent of the market between them.
Use of government-insured FHA loans – a common choice among first-time buyers – represented 24.1 percent of all Bay Area purchase loans in June, down from a record 26 percent in April but up from 10.7 percent a year ago.
MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales counts were estimated in Alameda County.
Last month 37.3 percent of all homes resold in the Bay Area had been foreclosed on in the prior 12 months, down from 40.5 percent in May and the lowest since 36.0 percent in August 2008. The peak was 52.0 percent in February this year. By county, foreclosure resales ranged last month from 6.3 percent of all resales in Marin to 62.7 percent in Solano.
The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $1,585 last month, up from $1,443 the previous month, and down from $2,407 a year ago. Adjusted for inflation, current payments are 39.7 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 55.4 percent below the current cycle's peak in July 2007.
Indicators of market distress continue to move in different directions. Foreclosure activity remains near record levels, while financing with adjustable-rate mortgages is near the all-time low but has recently edged higher. Financing with multiple mortgages is low, down payment sizes and flipping rates are stable, and non-owner occupied buying is above-average in some markets, MDA DataQuick reported.
Sales Volume Median Price All homes Jun-08 Jun-09 %Chng Jun-08 Jun-09 %Chng Alameda 1,441 1,753 21.7% $455,000 $335,000 -26.40% Contra Costa 1,528 1,817 18.9% $378,000 $250,000 -33.90% Marin 258 271 5.0% $846,000 $710,000 -16.10% Napa 113 108 -4.4% $440,000 $355,000 -19.30% Santa Clara 1,626 2,090 28.5% $612,000 $445,000 -27.30% San Francisco 571 561 -1.8% $726,750 $635,000 -12.60% San Mateo 565 622 10.1% $690,000 $565,500 -18.0% Solano 511 851 66.5% $300,000 $185,000 -38.30% Sonoma 565 571 1.1% $389,500 $300,000 -23.00% Bay Area 7,178 8,644 20.4% $485,000 $352,000 -27.40%
Source: MDA DataQuick Information Systems, www.DQNews.com
- New Tools for Home Buyers
- July 12, 2009
- You are walking in the neighborhood and see a house for sale that you really like. You can't wait to check out the details: price, square footage, sales history, etc. Now, whip out your iPhone and check out everything at your fingertip.
As an investor, you wonder how profitable an investment property will be? What's cash flow like? Log on to InvestorLoft.com to sort the properties by different options.
With so many properties priced below market, you are interested in finding out how many times a house has dropped its price, and by how much, so that you may price your offer accordingly. Check out Trulia.com for price reductions.
Video is an efficient means of communications these days. Why not use it for real estate? Watch realtors talk about the areas that they service in, and, better yet, watch listing videos when you hunt for your favorite home.
Check out the latest and the greatest new tools for home buyers.
- Interesting Housing Anecdotes
- June 27, 2009
- Several interesting stories I heard recently:
REO SFH in Tracy: the same kind of house was priced at $280K last year. Peak was $550K+. Now the listing price is $220K. A buyer offered $230K (5% over) but didn't get it. The whisper number is $250K (~15% over).
Another REO SFH in Tracy: 20 yr old, 1,500+ sq ft, 3 BR/2BA. The listing price is $120K, market value $180K, offered $140K (17% over), didn't get it either.
SFH in San Jose Berryessa area: 25 yr old, 1,500 sq ft, 3 BR/2.5 BA. The listing price is $410K (below market). Got 70 offers in 7 days! $480K (20% over) will likely get it.
SFH in West San Jose, Lynbrook High: 1,200 sq ft, 4BR/2BA, listing price in the high $700s. On major street with a bus stop right in front of the house. It went sales pending after one open house!
It seems a lot of investors from out of the state/country are buying distressed properties in CA. Heard there are a surge of applications to get TIN (temporary SSN) from foreign investors who pay cash for homes in the bay area lately.
- Fantastic Campbell SFH Next to Saratoga - Open House
- June 26, 2009
- 4 Bedrooms, 3.5 Bathrooms
Living: 2,050 SqFt, Lot: 6,000 SqFt
List Price: $869,000
Open House This Weekend
06/27 (Sat) 2 PM-4PM
06/28 (Sun) 2PM-4PM
Contact: Dr. Richard Ho, (408)828-0189, prkho@DrHoRealty.comBrand New Total Rebuilt - remodeled Single Family House in Campbell next to highly desirable Saratoga LG. Efficient, elegant floor plan and style. Easy living . Priced to sell and move in. Approximately 2050sf living space.LIKE NEW! COMPLETE ADDITION AND REMODEL! GREAT SCHOOLS! FANTASTIC VALUE! Two master suites with full baths - total of 4 bedrooms! 4 as NEW bathrooms! Spacious family room area with entertainment bonus center. Great floor plan! Gourmet kitchen! Spacious and bright! Desirable neighborhood that borders Saratoga! Close to commute and shopping. Great Campbell Schools.
More details on Zillow.
- Available New Home Purchase Tax Credit Funds Dwindle
- May 31, 2009
- In March the California State Legislature passed a law establishing a personal income tax credit for purchasers of a qualifying principal residence. The tax credit is capped at the lesser of $10,000 or 5 percent of the purchase price for the purchase of a principal residence that has never been occupied between March 1, 2009 and March 1, 2010.
Over the past two months homebuyers have reserved over $65 million in tax credits, with only $35 million in available credits remaining, according to the California Franchise Tax Board. It is important for buyers to be aware that the seller must file paperwork with the state within seven days of the sale for the buyer to qualify for the credit.
The credit provides in equal amounts ($3,333 for the $10,000 credit) over the three successive taxable years beginning with the year in which the purchase is made.
Qualifying residences must never have been occupied and must be eligible after purchase for the Homeowner's Property Tax Exemption. The taxpayer must live in the home as his principal residence for at least two years, or be subject to payback for any tax credits received.
Unlike the federal tax credit, the state has limited the total amount of credits that may be claimed to $100 million. Because of this provision buyers must make a tax credit reservation, and credits will be allocated on a first come first served basis.
The California Franchise Tax Board (FTB) is accepting applications (via form 3528-A) for allocation (reservations) of credit by fax only (916-845-9754). For more information about the credit reservations, applicable forms and the number of credits still available, please see this California Franchise Tax Board Web page.
President Signs Law to Limit Foreclosures
President Barack Obama last week signed into law S. 896, the Helping Families Save Their Homes Act, an NAR-supported bill that includes provisions to limit foreclosures and keep families in their homes. The bill seeks to help home owners by providing a safe harbor for mortgage servicers who make a good-faith effort to modify troubled loans, and it makes changes to increase the use of the Hope for Homeowners program, which encourages replacement of troubled loans with safe FHA-backed financing. The bill also strengthens oversight of FHA-approved lenders and it establishes a task force to investigate mortgage foreclosure fraud.
The new law loosens the Hope for Homeowners (H4H) program requirements to help homeowners refinance out of their troubled mortgages and into more affordable, fixed-rate FHA-insured loans. If refinance proceeds are insufficient to pay off existing liens, the existing lien holders must voluntarily agree to a short payoff, but a new inducement is an opportunity for them to share in the homeowner's equity. Other changes to the H4H program include monetary incentives for both the participating servicers of the existing loans and originators of the FHA refinance. Millionaire borrowers (with net worth over $1 million) are now excluded from the program.
Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give at least a 90-day notice to terminate a bona fide tenant. The following shall be considered bona fide tenants:
• the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
• the lease or tenancy was the result of an arms-length transaction; and
• the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a federal, state, or local subsidy.
A 90-day notice to terminate is sufficient for a month-to-month tenant or if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends. This new 90-day notice requirement applies to foreclosures of a federally-related mortgage loan or residential real property, except for properties under rent control, rent-subsidized programs (such as Section 8), or other state laws that provide additional protections for tenants. This law expires on December 31, 2012.
Other provisions of the Helping Families Save Their Homes Act include a 4-year extension of the $250,000 FDIC deposit insurance to December 31, 2013, protection for loan servicers who establish qualified loss mitigation plans from liability for an alleged breach of duty to maximize mortgage values for their investors, $130 million for foreclosure prevention counseling and education, and $2.2 billion to strengthen homeless programs.
- Market Update in May
- May 9, 2009
- In response to my May 6th post below:
No wonder since the last 30 days we are seeing the foreclosed properties (e.g. REO= Real estate owned by bank) in Silicon Valley and the starter properties have received multiple and multiple offers. I have witnessed the record of 75 offers in Milpitas! I believe the bottom of the Silicon Valley housing market has been well supported and we might see a momentous increase in the property values soon.
- $$ for Homebuyers
- May 6, 2009
- Final Score: $8,000 for Homebuyers
First-time purchasers get a tax credit windfall if they buy before December.
Les Christie, CNNMoney.com staff writer
There's a nice windfall for some homebuyers in the economic stimulus bill. First-time buyers can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
“I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?”
The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll withholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll withholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
“[The Senate version] would have done a lot more to turn around the housing market,” said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). “We have a lot of reports of people who would be coming off the fence because of it.”
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors.
The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. “I think there are many homeowners who would be trading-up but they have had no buyers for their own homes,” Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the down payment. Then, when the buyers receive their tax credit from the IRS, they pay back the state. Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of homeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
Reprint courtesy of CNNMoney.com
- New San Jose SFH on Saratoga Border
- April 28, 2009
- Contact Richard (408)828-0189, firstname.lastname@example.org Yorkton Way, San Jose 951304BR 4BA, 2,200 SqFt, 6,000+ lot
Newly built in 2008. Listing price $899,000.
- LIKE NEW!
- COMPLETE ADDITION AND REMODEL!
- GREAT SCHOOLS!
- FANTASTIC VALUE!
- Desirable neighborhood that borders Saratoga!
- Three master suites with full baths--total of 4 bedrooms!
- 4 as NEW bathrooms!
- Spacious family room area with entertainment bonus center.
- Great floor plan!
- Gourmet kitchen!
- Spacious and bright!
- Close to commute and shopping!
- Great Schools!