Everyone has an opinion about the real estate market. The media, neighbors and family all sound off with voices that are often compelling, especially if you are considering making a move by either a purchase or sale of real estate.
Turn off the voices inside your head. When you are in the housing market everyone wants to give you advice, including the media, neighbors, and family. You would do best to listen to a trusted professional's advice, rather than the voices of these others. Frankly, the decision to buy or sell a home is huge, and listening to these other sources may not be in your best interests. The media reports gross numbers usually on a national basis, which has only limited utility for an individual. Polling the neighbors is never a great idea when you are making a large purchase or sale. And family. Uncle Ernie and sister Sue have been butting into your business for years, whether it is a control issue or they just have an opinion about everything. While we love our relatives, their advice is sometimes just plain wrong.
Where can you turn to for sound advice? First, insist on a look at the real numbers... the numbers in your local market or the area where you want to buy or sell. My website at www.SCVhometeam.com keeps active links to the most recent data in our local market area. The data has been formatted to be fairly easily understood, and we keep them posted here because the numbers form the foundation for our services to our clients, whether they are buyers or sellers.
What do the numbers say? It appears to us that this is a remarkably stable market, albeit there is a reduced sales volume in both numbers of homes sold and in total dollar volume. However, the prices show great stability for both single family detached homes and for attached homes such as condos and townhouses. Home ownership is not a month-to-month investment, but something that you both live in and leverage for long-term wealth creation.
Just as you wouldn't turn to the media or relatives for legal representation or medical treatment, why should it be any different when it comes to real estate counsel? That is where I come in. I'll give it to you straight. Sometimes folks would be better off staying right where they are. If so, I tell them that. Usually, however, people delay a decision to make a move well beyond the time that they should, either living in a home that no longer suits their lifestyle or delaying a purchase and long-term, hurting their opportunities. While I only get paid after an escrow closes, if a move doesn't work for my clients I'll tell them and they can make up their own minds. When it makes sense to make a move, I'll work with you from beginning to end, and beyond.
But the place to start is with your needs and goals. Give me a call and let's get started.
Thursday, December 14, 2006
Complaint Says Zillow's Estimates Are Misleading
The National Community Reinvestment Coalition, a Washington, D.C.-based nonprofit that promotes equal access to credit and capital for underserved communities, is taking aim at real estate Web site Zillow.com. In a 12-page complaint filed with the Federal Trade Commission, NCRC insists that Zillow's home-valuation tool is inaccurate and misleading. An audit by NCRC reveals that Zillow's so-called "Zestimates" are wrong over 67 percent of the time, and many home owners have expressed concerns about valuations that are too high or too low. NCRC Executive Vice President David Berenbaum says the complaint is in no way tied to NCRC's close relationship with the Center for Responsible Appraisals & Valuations; he says the coalition is worried about low-income home owners falling prey to unscrupulous lenders that use inaccurate valuations from Zillow. However, Don Kelly of the Appraisal Institute notes that no bank he knows of uses Zillow's Zestimates when writing mortgages.
Source: Seattle Post-Intelligencer, John Cook (10/27/06)
© Copyright 2006 Information Inc.
Copy from The Real Blog v.2 10/30/06
Source: Seattle Post-Intelligencer, John Cook (10/27/06)
© Copyright 2006 Information Inc.
Copy from The Real Blog v.2 10/30/06
Wednesday, December 13, 2006
For Sale, By the Owner's Ego
Feelings Often Play as Big A Role as Logic in Setting Prices, Research Finds
By Kirstin Downey
Washington Post Staff Writer
Saturday, November 4, 2006; F01
Sam LeBlanc tried to cushion the blow when he gave his wife, Karyn, the bad news. He told her to take a breath and think it over, because he knew that what he was telling her would hurt.
Her condominium isn't worth nearly as much as she thought.
"I was a little crushed," Karyn recalled.
People may think they make cold, hard decisions in financial transactions such as buying and selling a house. Increasingly, though, research shows that emotions play as big a role as intellect.
For Karyn, for example, the condo she bought in the District's Palisades neighborhood in 2002 was the first big, independent purchase she had ever made. She proudly added many special touches, including a closet organizing system she thought would be the envy of any woman. But she and Sam got married, had a baby and decided to sell the condo. Over the past few months, Sam did a lot of market research and decided they should ask $269,000.
The number came as a blow to Karyn, because she knew similar units, including some she thinks weren't as nice, sold last year for $280,000.
"You want to believe it's worth a lot more because you've invested your time and energy on it," Karyn said.
Evidence is mounting that people set prices, particularly for housing, as much on ego and self-image as on an objective review of the market.
Click for full article
By Kirstin Downey
Washington Post Staff Writer
Saturday, November 4, 2006; F01
Sam LeBlanc tried to cushion the blow when he gave his wife, Karyn, the bad news. He told her to take a breath and think it over, because he knew that what he was telling her would hurt.
Her condominium isn't worth nearly as much as she thought.
"I was a little crushed," Karyn recalled.
People may think they make cold, hard decisions in financial transactions such as buying and selling a house. Increasingly, though, research shows that emotions play as big a role as intellect.
For Karyn, for example, the condo she bought in the District's Palisades neighborhood in 2002 was the first big, independent purchase she had ever made. She proudly added many special touches, including a closet organizing system she thought would be the envy of any woman. But she and Sam got married, had a baby and decided to sell the condo. Over the past few months, Sam did a lot of market research and decided they should ask $269,000.
The number came as a blow to Karyn, because she knew similar units, including some she thinks weren't as nice, sold last year for $280,000.
"You want to believe it's worth a lot more because you've invested your time and energy on it," Karyn said.
Evidence is mounting that people set prices, particularly for housing, as much on ego and self-image as on an objective review of the market.
Click for full article
MarketWatch: Mortgage delinquencies jump
MarketWatch: Mortgage delinquencies jump
U.S. homeowners had a harder time keeping up with their mortgage payments in the third quarter, the Mortgage Bankers Association said Wednesday, with the delinquency rate rising to 4.67% from 4.39% in the second quarter. A year ago, 4.44% of mortgage holders were 90 days or more past due on their loans.
The foreclosure rate inched higher in the third quarter, with 1.05% of mortgages in the foreclosure process vs. 0.99% in the second quarter, the MBA said. While delinquency rates on all types of loans rose in the third quarter, it was the subprime category -- loans made to less creditworthy borrowers, that shot up the most to 12.56% from 10.76% a year ago."As we expected, in the third quarter delinquency rates increased across the board. However, increases were noticeably larger for subprime loans, particularly for subprime ARMs," said Doug Duncan, chief economist for the MBA. "This is not surprising given that subprime borrowers are more likely to be susceptible to the cumulative increases in rates we've experienced and the slowing of home-price appreciation that has resulted," Duncan said.
The jump is modest and not a significant factor in the local market. For example, the Santa Clarita area has less than 20 REOs on the market out of an inventory level of around 2,500 homes on the market.
U.S. homeowners had a harder time keeping up with their mortgage payments in the third quarter, the Mortgage Bankers Association said Wednesday, with the delinquency rate rising to 4.67% from 4.39% in the second quarter. A year ago, 4.44% of mortgage holders were 90 days or more past due on their loans.
The foreclosure rate inched higher in the third quarter, with 1.05% of mortgages in the foreclosure process vs. 0.99% in the second quarter, the MBA said. While delinquency rates on all types of loans rose in the third quarter, it was the subprime category -- loans made to less creditworthy borrowers, that shot up the most to 12.56% from 10.76% a year ago."As we expected, in the third quarter delinquency rates increased across the board. However, increases were noticeably larger for subprime loans, particularly for subprime ARMs," said Doug Duncan, chief economist for the MBA. "This is not surprising given that subprime borrowers are more likely to be susceptible to the cumulative increases in rates we've experienced and the slowing of home-price appreciation that has resulted," Duncan said.
The jump is modest and not a significant factor in the local market. For example, the Santa Clarita area has less than 20 REOs on the market out of an inventory level of around 2,500 homes on the market.
DataQuick: Southland home sales slowest since 1997
Southern California home sales remained at their slowest pace in nine years last month as the market continued to rebalance itself after several years of heated activity. Prices are still leveling off, a real estate information service reported.
The median price paid for a Southland home was $487,000 last month, up 0.6 percent from $484,000 in October and up 1.7 percent from $479,000 for November a year ago. The year-over-year increase was the lowest since February 1997 when the $160,000 median was up 1.3 percent from $158,000 a year earlier.
A total of 20,388 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.8 percent from 22,117 in October, and down 26.2 percent from 27,637 for November a year ago, according to DataQuick Information Systems.
A decline from October to November is normal for the season. Last month's sales count was the lowest for any November since 1997 when 18,305 homes were sold. Since 1988 November sales have ranged from 13,537 in 1991 to last year's 27,637, the average for the month is 21,200.
The median price paid for a Southland home was $487,000 last month, up 0.6 percent from $484,000 in October and up 1.7 percent from $479,000 for November a year ago. The year-over-year increase was the lowest since February 1997 when the $160,000 median was up 1.3 percent from $158,000 a year earlier.
A total of 20,388 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.8 percent from 22,117 in October, and down 26.2 percent from 27,637 for November a year ago, according to DataQuick Information Systems.
A decline from October to November is normal for the season. Last month's sales count was the lowest for any November since 1997 when 18,305 homes were sold. Since 1988 November sales have ranged from 13,537 in 1991 to last year's 27,637, the average for the month is 21,200.
The Archive of The Real Blog
Longtime readers of The Real Blog know that this is actually the third version of The Real Blog. Yes, there is ancient history back there in the archives, starting from a very modest reverse chron page at It's Our Move (click for the Original), to a later, fairly short-lived version at Prospero/Delphi that used a standard Blog format (click for The Real Blog v.2). While I liked how it looked, it wasn't really made for commercial use so I have come over to the Blogger format.
Many of the articles have been moved over, but there may be a few articles back in the archive that you might like to see.
As I re-populate this v.3 with current articles and commentary, I will also be jazzing up the look. If you have any comments or suggestions on how The Real Blog can be improved, I invite you to make them!
Wednesday, December 06, 2006
Special Report: Risks of a Serious Home Price Decline
Special Report
December 2006
Straight talk about our local housing market
Tired of the ‘happy talk’ by your neighborhood Realtor or mortgage broker about the condition of our local housing market? The housing market is changing and headed on a trend downward, recently dropping through the line dividing price appreciation and into modest drops in prices. While there is significant evidence of a general stability in prices in our local market, there is increasing doubt about the future. While economic growth has been high and unemployment low, many analysts see an increasing possibility of a shallow recession over the next 14 months. How much of this is a psychological reaction away from the heady speculative fever of just a few years ago and a swing to unreasoning pessimism in the market can only be assessed at some time in the future. Right now there is a serious reluctance of many buyers to make a home purchase, and a lot of uncertainty that is holding them back. As this pessimism continues, the probability of a serious housing downturn is much higher—and that of an much-heralded "soft landing" much lower—than most people acknowledge.
An Atypical Housing Market
Home prices are notoriously "sticky" on the way down. As demand decreases and sellers find they can't get the prices they want, many take their homes off the market and stay put. This reduction in supply helps to offset the reduced demand, and prices pretty much stay flat until wages rise or economic conditions improve enough that demand starts to rise again. Thus, a sustained rise in home prices is typically followed by a period of flat or mildly declining prices until the cycle can begin again.
December 2006
Straight talk about our local housing market
Tired of the ‘happy talk’ by your neighborhood Realtor or mortgage broker about the condition of our local housing market? The housing market is changing and headed on a trend downward, recently dropping through the line dividing price appreciation and into modest drops in prices. While there is significant evidence of a general stability in prices in our local market, there is increasing doubt about the future. While economic growth has been high and unemployment low, many analysts see an increasing possibility of a shallow recession over the next 14 months. How much of this is a psychological reaction away from the heady speculative fever of just a few years ago and a swing to unreasoning pessimism in the market can only be assessed at some time in the future. Right now there is a serious reluctance of many buyers to make a home purchase, and a lot of uncertainty that is holding them back. As this pessimism continues, the probability of a serious housing downturn is much higher—and that of an much-heralded "soft landing" much lower—than most people acknowledge.
An Atypical Housing Market
Home prices are notoriously "sticky" on the way down. As demand decreases and sellers find they can't get the prices they want, many take their homes off the market and stay put. This reduction in supply helps to offset the reduced demand, and prices pretty much stay flat until wages rise or economic conditions improve enough that demand starts to rise again. Thus, a sustained rise in home prices is typically followed by a period of flat or mildly declining prices until the cycle can begin again.
The Southern California real estate market, however, is anything but typical, and there is no good reason to think that the ride down will be any more typical than the ride up. As a matter of fact, there are several factors that pose great risks to the standard-issue "soft landing" scenario:
- Southern California prices are so far out of line with incomes, and income growth so slow, that it would take a very long time for incomes to catch up in the usual manner.
- Southern California's poor affordability renders it unusally susceptible to rising interest rates and tightening lending standards.
- A significant portion of Southern California homebuyers are dependent on continued home price growth to maintain their fiscal solvency.
- The local Southern California economies are vulnerable to a slowdown in either housing activity or home price appreciation.
- Southern California homes are priced based on purchases made over the past few years of unrealistically high expectations of future gains.
Nobody can predict exactly how a market is going to play itself out; the best one can do is to assess the probabilities of potential outcomes. To that end, my purpose as I detail each of the above points is to explain why the probability of a serious housing downturn is far higher—and that of a soft landing far lower—than most market participants acknowledge.
Incomes Have a Lot of Catching Up To Do
As discussed above, if home prices overshoot there usually follows a period where prices stay somewhat flat or decrease mildly until wages "catch up" and the ratio of home prices to incomes returns to normalcy. For instance, the last housing downturn saw nominal home prices decline about 10% from peak to trough. Ten percent may have felt like a lot to homeowners at the time, but such a fall was actually quite mild compared to that experienced by the ratio of home prices to incomes, which fell by a full 25%.
The price-flattening scenario is not likely going to happen this time around due to the last six years tremendous increase in home prices far outstripping smaller gains in per capita income. Santa Clarita’s median home price is $477,000 (Money Magazine) and its 2005 per capita income is $26,861 according to Wikipedia. If prices were to suddenly flatten out right now, assuming a continuation of last year's national wage growth at 4.6%, it would take nearly 17 years for home prices to get down to the historical average of 8.5 times per capita income. It would take 23 years for home valuations to get down to the low points that have followed each prior boom.
That's a long time to go without the local economy experiencing any hardship. Keep those figures in mind the next time someone tells you that home prices "will just flatten out for a while until incomes catch up."
It should be noted that if incomes were to start growing significantly faster than they are now it would not take so long for home prices to get back in line. However, such wage inflation would in all likelihood be accompanied by rising mortgage interest rates, which brings me to the next area of concern.
Credit Risk
The California Association of Realtors (CAR) Affordability Index places Los Angeles affordability at 19% at the time of this writing. This means that only the top 19% of income earners can "afford" to purchase the median-priced home using a 20% down payment on a fixed-rate mortgage.
It is obviously not the case that fully half of all homes are being bought by the most highly-paid 19% of Los Angeles county residents. Instead, what's going on is that people have been getting around the low affordability by making very small down payments and getting "creative" loans whose monthly payments start quite low but increase over time (interest-only, negative amortization, adjustable-rate, or "option ARM" mortgages). This kind of borrowing is quite prevalent—of all Southern Californai mortgages issued in 2004, 75% were adjustable-rate, over 40% were interest-only, and about 25% involved no down payment.
While this "buy now, pay later" strategy has worked well for many, it has rendered the Southern California housing market unusually vulnerable to rising interest rates or tighter lending standards. If rates were to rise or lending standards tighten (e.g. higher required down payments, lower acceptable payment to income ratios, or fewer "stated income" loans a.k.a. “liar’s loans”), large swaths of potential buyers would effectively be priced out of the market at current home valuations.
Moreover, if rates are significantly higher when all those ARMs start to adjust, some of the more overleveraged ARM-holders might find themselves unable to afford the higher payments and be forced to sell their homes. The resulting increase in "motivated sellers," combined with the above-described inability for homes to be purchased at current prices, would almost guarantee a significant home price decline.
Dependency on Rising Prices
Certain homeowners are vulnerable not just to rising rates but to flattening home prices, as well. The nature of many mortgages being taken out in our local market area all but ensures that, even if interest rates stay low, monthly payments on those mortgages are rising and/or will rise significantly in the future. Holders of interest-only loans, which as I mentioned made up almost half of all Southern California mortgages in 2004, will see their payments increase once the principal payoff period begins. Negative amortization borrowers' payments will increase even more, as their principals actually increase for the first few years of the loan. If holders of these loans do not have a home equity cushion to fall back on, a lot of them will find that their payments eventually increase more than they can afford.
Many buyers of rental property are even more overtly dependent on rising prices. The disparity between sale prices and rent prices is bigger in our local area than many other areas of the country. Landlords have willingly taking on negative cash flows with the expectation that future equity gains will more than cover the loss.
A lot of Southern California property owners, be they investors or not, are banking on equity gains. As those equity gains fail to materialize and prices simply remain flat, or fall, many of these overleveraged homeowners will be in trouble. An increase in foreclosures and must-sell inventory could very well be the result.
Housing and the Economy
The entire Southern California economy, as a matter of fact, has grown quite dependent on a robust housing market. Growth in the construction and real estate industries has significantly outstripped overall level of job growth:
Santa Clarita has an impressive 18% job growth over the last five years, as compared to an average job growth in the nation of under 10%. Given the growth in the real estate and mortgage industries locally, as well as construction and remodeling, an estimated 50% of new local jobs over the past several years have been related to the housing market. The slowdown in home sales is beginning to cause job losses in the housing sector, increasing unemployment or precipitating further out-migration from our local market area. As to the glut of Realtors and mortgage brokers in our local market area, there are already indications that many are leaving the business or moving to part-time status.
Southern California's economy has also benefitted from the housing boom, albeit in a less direct manner, via the "wealth effect." As Californians have watched their net worth skyrocket along with home prices, they have spent more money due to their perceived fiscal health and in many cases have pulled out home equity to directly finance their spending. Sales tax revenues, which is a pretty good proxy for retail sales activity, has outstripped income growth. That money has to come from somewhere, and home equity loans are the source.
Between 2002 and 2004, retail activity grew twice as fast as incomes. While it's difficult to nail down the causes of this disparity with any precision, there is little doubt that the home equity wealth effect played a major role. If California home prices were to flatten for any length of time, the stimulus provided by equity gains would eventually be removed and economic activity would have to fall back in line with incomes. Southern California's economic dependence on both continued brisk housing activity and ever-increasing home prices poses a major risk to the soft-landing scenario.
Speculative Premium
Considering mortgage interest, property taxes, insurance, and maintenance, it typically costs well over twice as much per month to purchase a given home than it does to rent. (I am talking about actual money spent—principle payments are not included in this calculation—and I have taken the mortgage interest tax deduction into account). While home ownership certainly has its advantages, such as long-term wealth formation as well as an excellent source of retirement funds, people have never before been willing to pay so much more to buy than to rent. Why did they do it over the last six years?
The answer is that the expectation of future equity gains has become priced into the housing market. When people feel that an investment is sure to go up in price, they are willing to pay more for that investment—especially if they fear being eventually priced out of the chance to buy it. The widespread acceptance of the idea that real estate provides enormous, relatively low-risk gains had caused a "speculative premium" to be added to the price of homes in Southern California.
According to The Economist magazine, a 2004 poll of Los Angeles homebuyers found that they expected their home prices to increase a stunning 22% per year for the next decade. This has been moderated over the housing market’s performance over the past two years, but is an indication of just how unrealistic and a little bit crazy many people had become. That rate of appreciation is obviously quite impossible: assuming current interest rates and income growth rates, Los Angeles homebuyers one decade hence would find that the monthly payment on a median-priced home was over 3 times the median monthly income! Whether it's realistic or not, however, Los Angeles homebuyers actually were expecting gains of this magnitude, and they were paying whatever they had to in order to "get on the ride."
As home price appreciation has flattened out and prices begin to fall, this artificial source of demand has disappeared, as has the mistaken idea that no price is too high for real estate. As people have once again started to see a home as a place to live instead of a lottery ticket, many have started to ask themselves why they were paying so much in mortgage when they could rent for so much less. The speculative premium, in other words, has begun to be removed.
Miscellaneous Objections
The factors discussed above should give a good idea why it is possible—and likely—that home prices will experience a downturn, and why the odds could be stacked against a soft landing. Having said my piece about the risks, let me address some of the common objections to the idea that home prices could decline significantly:
It would take a recession to cause a housing downturn. The fact that Southern California's last housing bust coincided with a recession, as housing busts often do, seems to have given this idea special tenacity. However, several of the above-outlined risks to the market, including interest rate increases, credit tightening, and increased foreclosures, could take place absent a recession or possibly even cause a recession. Additionally, people making this argument rarely acknowledge that the region is especially prone to recession due to its dependence on continued gains in the housing market. Besides, there are other developing macro-economic factors that may lead to a recession that are beyond the scope of this article.
There isn't that much speculation going on. This is simply not true. People have gotten interest-only or negative amortization mortgages because that's was the only way they could afford a house and were manifestly speculating that their equity will rise faster than their payments. The fact that they lived in the house doesn't mean that they weren’t speculating. Furthermore, while single family homes are still mostly owner-occupied, condos have seen a lot of speculative activity: I would estimate that about 30% (or more) of condo purchases over the last few years were made by speculators in our local area.
Southern California has a limited supply of land. It sure does, but this in no way renders it immune to a housing downturn. As one of many examples, home prices in Japan, whose land supply is quite a bit more limited than ours, have fallen almost 40% since the early 1990s. Los Angeles prices fell 20% in the early 90s, after a boom that pales in comparison to the current price runup. A limited supply of land does not justify a rapid rise in home prices, nor does it preclude a home price decline.
Everyone wants to live here. Suffice it to say that it is the ability of people to sustainably afford homes at these prices, and not Southern California's desirability, that is in question. In fact, California was no less desirable five years ago, but prices were a lot less.
People need somewhere to live. This argument seems to be implying that because people need somewhere to live, and you can live in homes, homes therefore cannot decline in price. It's certainly true that housing markets are not as liquid and volatile and crash prone as the stock market. But the idea that homes can't decline in value because people live in them is neither borne out by the evidence (homes have declined in price many, many times in the past) nor by logic (didn't people need somewhere to live 5 years ago?).
People have been saying we're in a bubble for a while, and it still hasn't popped. We have been in an obvious bubble for quite some time now—how does the fact that someone recognized it as such make the idea any less valid? A bubble occurs when excessive optimism pushes an asset price higher than its fundamentals would dictate. That Southern California homes were overpriced two years ago and are now more expensive doesn't mean that they weren't overpriced in the first place. It means that they are even more overpriced now. And the price trend has tipped from appreciation to decline.
Playing the Odds
Again, neither I nor anyone else can predict exactly how the market will behave in the future. If a five percent decline in housing prices are going to cause you to lose sleep, you probably shouldn’t be buying real estate right now. If your ownership timeline is under four or five years, you may be better off renting over that time. It is true that everyone needs a place to live and as long as you have a good idea of your timeline and you use an appropriate mortgage instrument in combination with a rational financial plan, you should be fine in buying a place, but keep speculative mania out of your decision. All-in-all, given the risks facing Southern California housing, there is a significant risk that a serious price decline is a much greater probability than most people expect.
If you are considering a home purchase, give me a call and my team of trusted mortgage advisors and financial planners will work with you to help you determine the best course for you and your future.
Monday, December 04, 2006
The Real Data for Our Local Market Area
Everyone has an opinion about the condition of the local housing market.
While most people outside of the business use national media sources for their real estate news, I find that there is a disconnect between what the national media says housing is doing, and our local market.
I depend on the real sales data to assess the market. Even within the local market, which I will define as the northern Los Angeles area valleys and most particularly the Santa Clarita Valley and adjoining areas, there are neighborhood and other small area sub-markets. While the national and even some of the local data can give an overall direction, when we are talking real money if you are either a serious prospective seller or buyer, a close analysis of the numbers and trends is needed for comparable homes and areas. Not every Realtor is skilled at it. I am.
But I digress.
The real numbers show that prices have gone down slightly in our area year-to-year, and while the numbers of homes on the market has gone up the rate at which homes are coming on the market is slowing. The home sales number has leveled off instead of showing a continued drop, and overall the market is stabilizing. While many home buyers have been hoping for a significant drop in prices, it hasn't happened so far and with conditions as they are now, is not likely to happen. So those who are looking to steal homes will continue to wait. In the business these people who wait are referred to as 'renters'.
For homeowners who have depended on continued appreciation to fund their lifestyles, that train has left the station. Stable or slightly dropping prices is a pause in the market. If you bought your home a year or so ago with the idea that you could cash out at a substantial profit, it should not be news to you that it's not happening. If you can't handle the mortgage as it re-adjusts, you might consider refinancing into a more stable loan with payments you can make, or consider selling your home and moving to one with more sustainable payments.
People are buying homes. Homes are being sold. It's not at the rate either in numbers or with the appreciation that was happening just a few years ago, but despite the opinions of some, our local market is making an adjustment but prices in general are holding up fairly well.
The real data for our local market can always be found at www.SCVhometeam.com . Just scroll down to the local information section and look for the local market data section.
Are you a serious home buyer or home seller? Please give me a call today at 661-312-9461.
While most people outside of the business use national media sources for their real estate news, I find that there is a disconnect between what the national media says housing is doing, and our local market.
I depend on the real sales data to assess the market. Even within the local market, which I will define as the northern Los Angeles area valleys and most particularly the Santa Clarita Valley and adjoining areas, there are neighborhood and other small area sub-markets. While the national and even some of the local data can give an overall direction, when we are talking real money if you are either a serious prospective seller or buyer, a close analysis of the numbers and trends is needed for comparable homes and areas. Not every Realtor is skilled at it. I am.
But I digress.
The real numbers show that prices have gone down slightly in our area year-to-year, and while the numbers of homes on the market has gone up the rate at which homes are coming on the market is slowing. The home sales number has leveled off instead of showing a continued drop, and overall the market is stabilizing. While many home buyers have been hoping for a significant drop in prices, it hasn't happened so far and with conditions as they are now, is not likely to happen. So those who are looking to steal homes will continue to wait. In the business these people who wait are referred to as 'renters'.
For homeowners who have depended on continued appreciation to fund their lifestyles, that train has left the station. Stable or slightly dropping prices is a pause in the market. If you bought your home a year or so ago with the idea that you could cash out at a substantial profit, it should not be news to you that it's not happening. If you can't handle the mortgage as it re-adjusts, you might consider refinancing into a more stable loan with payments you can make, or consider selling your home and moving to one with more sustainable payments.
People are buying homes. Homes are being sold. It's not at the rate either in numbers or with the appreciation that was happening just a few years ago, but despite the opinions of some, our local market is making an adjustment but prices in general are holding up fairly well.
The real data for our local market can always be found at www.SCVhometeam.com . Just scroll down to the local information section and look for the local market data section.
Are you a serious home buyer or home seller? Please give me a call today at 661-312-9461.
Are You a Serious Home Buyer?
Home Buyers are not equal.
Perhaps that is a provocative statement, but let me take a moment to explain.
Home Buyers buy homes. That might be self-evident, but some people think that because they might look at homes either on the Internet, through whatever open houses happen to be open on a particular afternoon, or they get a Realtor to open up some homes so they can see them that they are 'Home Buyers'.
While some of these people might eventually become home buyers, these activities in themselves don't make people home buyers. These activities are among those that home buyers will take, but there are two other essential steps that must be taken before one is a serious home buyer.
1) Pre-approval with a reputable lender. This is not a pre-qualification, which means next to nothing these days with some lenders' requirements so loose that their qualification guidelines basically involve not much more than fogging a mirror. Pre-approval means that the lender is committed and will give you the money to purchase a home up to a maximum, subject only to the appraisal coming in at or above purchase price and delivery of clear title and termite report. Verification of income, debt and credit? Already done. All we have to do is find a suitable house. Serious bonafide home buyers do this.
2) Signed Buyer Broker Agreement. Serious home buyers employ a Realtor directly, and while this is relatively new in California real estate practice, it gives a level of seriousness to the home search that is essential for the home buyer to be assured that every possible home meeting (or exceeding!) the buyers' needs are considered, and that the home is purchased at the best price possible. While all of the usual Multiple Listing Service homes are included in the home search, there are other 'under-market' homes that can also be brought to the attention of the home buyer. Non-MLS homes such as For Sale By Owner homes, various distress sales such as NODs and REOs, agent and office exclusives, and various classes of pocket listings can be ferreted out and brought to the attention of the serious home buyer. Some of the best deals are made this way.
Some of you are wondering why these so-called 'under-market' homes aren't within the home search criteria of every agent from the get go. There are three reasons: 1) these homes take a lot more effort to find to begin with, 2) they are usually not 'clean' deals, in that there are usually problems associated either with the properties, title, or seller, and 3) because the agent commission is not determined up front in most cases, the risk of doing a lot of work for nothing is substantial.
The first two situations go with the territory, in my opinion. It's why it is called 'work'. The third condition is critical to my doing my best work on your behalf. This is almost self-evident if you think about it, but most people are pretty oblivious to how Realtors get paid. This business isn't conducted as a public service out of the goodness of our hearts by independently wealthy knuckleheads. Like you, Realtors have bills that have to be paid.
One of the terms of the Buyer Broker Agreement is the matter of commission. If the seller does not offer a commission (unlike all MLS listings), the buyer agrees to pay the agent's commission at a pre-agreed upon rate at close of escrow. That way, your agent (me) knows that there will be a paycheck after all the work is done and you the buyer know that absolutely every stone was turned over in a comprehensive home search. Commission is not paid up front, it gets included in the other costs of sale and are paid at close of escrow.
The very best deals are made by home buyers and their Realtors when a Buyer Broker Agreement (BBA) is entered into up front. There are of course other details advantageous to the home buyer in a BBA that we will cover in detail. One of the big ones is that if the seller offers a selling commission upfront as in all the MLS listings, there can be a substantial credit to you the buyer for closing costs. All the way around you, the buyer, win with a Buyer Broker Agreement. Serious home buyers take the time and effort to understand this and often embrace this tool.
However, there will be some home buyers who balk at it, even though there are substantial benefits to them by using a BBA. That is still workable with me when I am representing you on a home purchase. Penciled out and bottom line a BBA is to your benefit, but as the old saw says, 'You can lead a horse to water...'
It just is not an effective use of time to pre-negotiate a sales commission with every single FSBO or REO or other owner of property that otherwise meets your purchase criteria but does not offer sales commission up front. After all, this happens before you have even seen the property and after sometimes lengthy negotiations and all the paperwork, we might drive up to the curb and you may well just turn up your nose and say 'Next!' for one reason or other.
In summary, home buyers who get pre-approved and have a signed BBA are the most serious home buyers, get the majority of the Realtor's time and attention, and get the best deals. Together we will get you the best house and the best deal possible, without question.
So what are the other types of buyers? Casual buyers, or 'if the right house and the right deal happens to appear' types of buyers might be how some buyers can be described. Most of them terrific people of course, but they just don't have that serious intent and motivation of a serious home buyer. To start off, many of these people won't talk with a reputable lender and get pre-approved for a purchase loan before they go shopping for a home. This shows a definite lack of seriousness. Some actually say they don't need a loan and are an all cash buyer. While people with 'all cash' do exist, at this market's current price level they are fairly rare. When people tell me that they will buy a home for all cash but are unwilling to provide any verification, warning bells start ringing. Unless I have a personal level of knowledge about their abilities, I start thinking 'drug dealer' or 'pathological liar'.
Most people who buy a home or investment property need a loan for the purchase, and many who have described themselves as an 'all cash buyer' have ended up getting a loan for a purchase. More of these alleged all-cash buyer types just disappear after a while and end up as a waste of time. And they do not buy homes, so can they really be regarded as 'home buyers'? No. Then there is the very unfortunate situation of clients falling in love with a home that they just cannot afford to buy. Be smart, get pre-approved as the first step in a home purchase, not the last.
Of course, there are those who refuse to talk with a reputable lender, or have an unknown lender who will tell them anything but end up in basically as bait and switch artists, or simply can't actually fund the loan at close of escrow. As you can imagine, that situation causes problems for everybody. If the home buyer has their lender put a pre-approval letter in writing, subject only to appraisal, etc., that is what we want. If there is a question or concern I may urge the home buyer to make a back-up application with someone I know will actually fund the loan. If the lender is questionable, most listing agents require a prospective home buyer make a back-up loan application with a reputable local lender as well. It doesn't cost anything and it is good insurance in case the original lender will not perform. People who fool around with deals and interest rates just too good to be true are often burned by what often turn out to be disreputable mortgage brokers.
So how about the people that I come across who describe themselves as 'buyers', from sources such as open houses, my website (www.SCVhometeam.com), sign calls, ads, referrals, or just people I know? There are lots of people that I know who will buy a house that if it is priced so low that if they could buy and then sell tomorrow for a guaranteed no-risk big profit, might do so. Of course some of these folks are Big Story tellers, and even if given the best deal in the world served up to them on a platter would in the end not write an offer to purchase. But some would. While the stories of quick riches in real estate are the stock in trade of late night infomercials, and $200 seminars, let's get real.
You've got to walk the walk if you want me to take the talk seriously. If your primary criteria for purchase is a screaming great deal, then a Buyer Broker Agreement is essential. That puts you at the very front of the line. Call me today and let's get together if you want to get serious. If you just want me to send you information by email, fine. But I can't regard you as a serious home buyer.
Finally, there is a huge number of people who indicate by their actions that they are simply not home buyers. There folks give incomplete or wrong information on open house cards or on the website forms, or who don't respond to emails or phone calls or letters or generally have a reduced or even non-existent level of contact. Somehow, they will never manage to get together face-to-face with me... there's always some excuse. I am pretty sure they have the same kind of non-relationship with one, two, or a half dozen other Realtors. Fine. It takes all kinds. But they cannot in any way be described as 'serious home buyers.'
While I understand that not everyone is ready to buy a home today, unless someone who has self-described themselves as a 'home buyer' has some level of communication, if only to say 'not now, maybe next year', is certainly not going to get a lot of attention from me, but may get a periodic email or letter so that they know they can contact me when the time is right for them. Honestly, until the level of communication goes up a few notches and we get together face-to-face I won't be spending a lot of time finding the best deal on the market for these non-serious people. I concentrate my time and resources on the serious one. Again, this is not a public service. This is what I do for a living.
So for those who won't get pre-approved and/or won't enter into a Buyer Broker Agreement, maybe they are home buyers, and maybe not. The lack of commitment to taking the steps that will actually result in a home purchase is an indicator of a certain lack of seriousness or even of loyalty and/or respect for my time and efforts. While some will eventually buy a home, I can't commit unlimited time and efforts to those who won't take some basic steps that indicate they are serious home buyers. There are people who will and those wonderful folks get undivided attention. The rest get what is left.
That is just how it really works in the real estate business. While other Realtors probably won't give it to you straight, I will, and just have. People in the real estate business don't have unlimited time, and Realtors only get paid on commission at the successful close of escrow. There is no wage or salary involved, we are paid only after escrows close. A lot of time is spent trying to identify serious home buyers, and frankly, any time spent on those who don't buy homes is time wasted.
So, if you are serious about buying a home, call me. Let's get together and let's get you into a wonderful home and a great investment. For those who are honest and loyal, there will be some terrific rewards in a great deal of a home purchase and service second to none. Period.
I look forward to meeting with you!
Perhaps that is a provocative statement, but let me take a moment to explain.
Home Buyers buy homes. That might be self-evident, but some people think that because they might look at homes either on the Internet, through whatever open houses happen to be open on a particular afternoon, or they get a Realtor to open up some homes so they can see them that they are 'Home Buyers'.
While some of these people might eventually become home buyers, these activities in themselves don't make people home buyers. These activities are among those that home buyers will take, but there are two other essential steps that must be taken before one is a serious home buyer.
1) Pre-approval with a reputable lender. This is not a pre-qualification, which means next to nothing these days with some lenders' requirements so loose that their qualification guidelines basically involve not much more than fogging a mirror. Pre-approval means that the lender is committed and will give you the money to purchase a home up to a maximum, subject only to the appraisal coming in at or above purchase price and delivery of clear title and termite report. Verification of income, debt and credit? Already done. All we have to do is find a suitable house. Serious bonafide home buyers do this.
2) Signed Buyer Broker Agreement. Serious home buyers employ a Realtor directly, and while this is relatively new in California real estate practice, it gives a level of seriousness to the home search that is essential for the home buyer to be assured that every possible home meeting (or exceeding!) the buyers' needs are considered, and that the home is purchased at the best price possible. While all of the usual Multiple Listing Service homes are included in the home search, there are other 'under-market' homes that can also be brought to the attention of the home buyer. Non-MLS homes such as For Sale By Owner homes, various distress sales such as NODs and REOs, agent and office exclusives, and various classes of pocket listings can be ferreted out and brought to the attention of the serious home buyer. Some of the best deals are made this way.
Some of you are wondering why these so-called 'under-market' homes aren't within the home search criteria of every agent from the get go. There are three reasons: 1) these homes take a lot more effort to find to begin with, 2) they are usually not 'clean' deals, in that there are usually problems associated either with the properties, title, or seller, and 3) because the agent commission is not determined up front in most cases, the risk of doing a lot of work for nothing is substantial.
The first two situations go with the territory, in my opinion. It's why it is called 'work'. The third condition is critical to my doing my best work on your behalf. This is almost self-evident if you think about it, but most people are pretty oblivious to how Realtors get paid. This business isn't conducted as a public service out of the goodness of our hearts by independently wealthy knuckleheads. Like you, Realtors have bills that have to be paid.
One of the terms of the Buyer Broker Agreement is the matter of commission. If the seller does not offer a commission (unlike all MLS listings), the buyer agrees to pay the agent's commission at a pre-agreed upon rate at close of escrow. That way, your agent (me) knows that there will be a paycheck after all the work is done and you the buyer know that absolutely every stone was turned over in a comprehensive home search. Commission is not paid up front, it gets included in the other costs of sale and are paid at close of escrow.
The very best deals are made by home buyers and their Realtors when a Buyer Broker Agreement (BBA) is entered into up front. There are of course other details advantageous to the home buyer in a BBA that we will cover in detail. One of the big ones is that if the seller offers a selling commission upfront as in all the MLS listings, there can be a substantial credit to you the buyer for closing costs. All the way around you, the buyer, win with a Buyer Broker Agreement. Serious home buyers take the time and effort to understand this and often embrace this tool.
However, there will be some home buyers who balk at it, even though there are substantial benefits to them by using a BBA. That is still workable with me when I am representing you on a home purchase. Penciled out and bottom line a BBA is to your benefit, but as the old saw says, 'You can lead a horse to water...'
It just is not an effective use of time to pre-negotiate a sales commission with every single FSBO or REO or other owner of property that otherwise meets your purchase criteria but does not offer sales commission up front. After all, this happens before you have even seen the property and after sometimes lengthy negotiations and all the paperwork, we might drive up to the curb and you may well just turn up your nose and say 'Next!' for one reason or other.
In summary, home buyers who get pre-approved and have a signed BBA are the most serious home buyers, get the majority of the Realtor's time and attention, and get the best deals. Together we will get you the best house and the best deal possible, without question.
So what are the other types of buyers? Casual buyers, or 'if the right house and the right deal happens to appear' types of buyers might be how some buyers can be described. Most of them terrific people of course, but they just don't have that serious intent and motivation of a serious home buyer. To start off, many of these people won't talk with a reputable lender and get pre-approved for a purchase loan before they go shopping for a home. This shows a definite lack of seriousness. Some actually say they don't need a loan and are an all cash buyer. While people with 'all cash' do exist, at this market's current price level they are fairly rare. When people tell me that they will buy a home for all cash but are unwilling to provide any verification, warning bells start ringing. Unless I have a personal level of knowledge about their abilities, I start thinking 'drug dealer' or 'pathological liar'.
Most people who buy a home or investment property need a loan for the purchase, and many who have described themselves as an 'all cash buyer' have ended up getting a loan for a purchase. More of these alleged all-cash buyer types just disappear after a while and end up as a waste of time. And they do not buy homes, so can they really be regarded as 'home buyers'? No. Then there is the very unfortunate situation of clients falling in love with a home that they just cannot afford to buy. Be smart, get pre-approved as the first step in a home purchase, not the last.
Of course, there are those who refuse to talk with a reputable lender, or have an unknown lender who will tell them anything but end up in basically as bait and switch artists, or simply can't actually fund the loan at close of escrow. As you can imagine, that situation causes problems for everybody. If the home buyer has their lender put a pre-approval letter in writing, subject only to appraisal, etc., that is what we want. If there is a question or concern I may urge the home buyer to make a back-up application with someone I know will actually fund the loan. If the lender is questionable, most listing agents require a prospective home buyer make a back-up loan application with a reputable local lender as well. It doesn't cost anything and it is good insurance in case the original lender will not perform. People who fool around with deals and interest rates just too good to be true are often burned by what often turn out to be disreputable mortgage brokers.
So how about the people that I come across who describe themselves as 'buyers', from sources such as open houses, my website (www.SCVhometeam.com), sign calls, ads, referrals, or just people I know? There are lots of people that I know who will buy a house that if it is priced so low that if they could buy and then sell tomorrow for a guaranteed no-risk big profit, might do so. Of course some of these folks are Big Story tellers, and even if given the best deal in the world served up to them on a platter would in the end not write an offer to purchase. But some would. While the stories of quick riches in real estate are the stock in trade of late night infomercials, and $200 seminars, let's get real.
You've got to walk the walk if you want me to take the talk seriously. If your primary criteria for purchase is a screaming great deal, then a Buyer Broker Agreement is essential. That puts you at the very front of the line. Call me today and let's get together if you want to get serious. If you just want me to send you information by email, fine. But I can't regard you as a serious home buyer.
Finally, there is a huge number of people who indicate by their actions that they are simply not home buyers. There folks give incomplete or wrong information on open house cards or on the website forms, or who don't respond to emails or phone calls or letters or generally have a reduced or even non-existent level of contact. Somehow, they will never manage to get together face-to-face with me... there's always some excuse. I am pretty sure they have the same kind of non-relationship with one, two, or a half dozen other Realtors. Fine. It takes all kinds. But they cannot in any way be described as 'serious home buyers.'
While I understand that not everyone is ready to buy a home today, unless someone who has self-described themselves as a 'home buyer' has some level of communication, if only to say 'not now, maybe next year', is certainly not going to get a lot of attention from me, but may get a periodic email or letter so that they know they can contact me when the time is right for them. Honestly, until the level of communication goes up a few notches and we get together face-to-face I won't be spending a lot of time finding the best deal on the market for these non-serious people. I concentrate my time and resources on the serious one. Again, this is not a public service. This is what I do for a living.
So for those who won't get pre-approved and/or won't enter into a Buyer Broker Agreement, maybe they are home buyers, and maybe not. The lack of commitment to taking the steps that will actually result in a home purchase is an indicator of a certain lack of seriousness or even of loyalty and/or respect for my time and efforts. While some will eventually buy a home, I can't commit unlimited time and efforts to those who won't take some basic steps that indicate they are serious home buyers. There are people who will and those wonderful folks get undivided attention. The rest get what is left.
That is just how it really works in the real estate business. While other Realtors probably won't give it to you straight, I will, and just have. People in the real estate business don't have unlimited time, and Realtors only get paid on commission at the successful close of escrow. There is no wage or salary involved, we are paid only after escrows close. A lot of time is spent trying to identify serious home buyers, and frankly, any time spent on those who don't buy homes is time wasted.
So, if you are serious about buying a home, call me. Let's get together and let's get you into a wonderful home and a great investment. For those who are honest and loyal, there will be some terrific rewards in a great deal of a home purchase and service second to none. Period.
I look forward to meeting with you!
Friday, December 01, 2006
Great Deals During Holiday Season
Sellers benefit from pool of serious buyers
If you are a serious home buyer, the absolute best time of the year to buy is between Thanksgiving Day and New Year's Day and extending into January. There are fewer home buyers are in the market during the holiday season so competition is low while those homes that are on the market during the Holidays have anxious sellers who are usually highly motivated to sell and will listen to any reasonable purchase offer.
During the Holidays most unmotivated sellers take their listings off the market, thinking that there are no buyers ready to buy. Actually, there are many home sales that take place during this "slow season," and for buyers who are ready to take action, there can be some terrific incentives either offered by motivated sellers, or negotiated into the deal by your Realtor (me, of course!).
Sellers that have their homes on the market now are ready to listen to all reasonable purchase offers. And for a select few buyers, we can get some extraordinary deals! In other words, it's a great time to be a home buyer.
If you are a motivated home seller, especially in the lower price ranges in your community, this can be a superb time of year to sell.
Buyers who are in the market now are usually very anxious to buy, perhaps motivated by a job transfer, marriage or divorce, birth or death in the family, down-payment gift from parents, year-end salary bonus, or other buying incentives. The tax advantages to closing the sale before the old year runs out can also be substantial.
For example, many home buyers want to close their purchases by Dec. 31 to claim the extra tax deductions, such as for loan fee points, pro-rated property taxes, and prepaid mortgage interest. However, if you can't move out by year-end, you can probably rent-back for a month or two from the buyer providing the sale is recorded before New Year's Day.
An extra seller bonus is if the home was your principal residence at least 24 of the last 60 months before the sale, Internal Revenue Code 121 gives you up to $250,000 tax-free capital gains (up to $500,000 for a qualified married couple filing a joint tax return).
If you want a deal in our local market area, let get started! Give me a call at 661-287-9164.
If you are a serious home buyer, the absolute best time of the year to buy is between Thanksgiving Day and New Year's Day and extending into January. There are fewer home buyers are in the market during the holiday season so competition is low while those homes that are on the market during the Holidays have anxious sellers who are usually highly motivated to sell and will listen to any reasonable purchase offer.
During the Holidays most unmotivated sellers take their listings off the market, thinking that there are no buyers ready to buy. Actually, there are many home sales that take place during this "slow season," and for buyers who are ready to take action, there can be some terrific incentives either offered by motivated sellers, or negotiated into the deal by your Realtor (me, of course!).
Sellers that have their homes on the market now are ready to listen to all reasonable purchase offers. And for a select few buyers, we can get some extraordinary deals! In other words, it's a great time to be a home buyer.
If you are a motivated home seller, especially in the lower price ranges in your community, this can be a superb time of year to sell.
Buyers who are in the market now are usually very anxious to buy, perhaps motivated by a job transfer, marriage or divorce, birth or death in the family, down-payment gift from parents, year-end salary bonus, or other buying incentives. The tax advantages to closing the sale before the old year runs out can also be substantial.
For example, many home buyers want to close their purchases by Dec. 31 to claim the extra tax deductions, such as for loan fee points, pro-rated property taxes, and prepaid mortgage interest. However, if you can't move out by year-end, you can probably rent-back for a month or two from the buyer providing the sale is recorded before New Year's Day.
An extra seller bonus is if the home was your principal residence at least 24 of the last 60 months before the sale, Internal Revenue Code 121 gives you up to $250,000 tax-free capital gains (up to $500,000 for a qualified married couple filing a joint tax return).
If you want a deal in our local market area, let get started! Give me a call at 661-287-9164.
Monday, November 27, 2006
The Bear of Bears
Some people say a storm is developing in the housing market. While our local area has been something of a safe harbor in many ways, the national media has regular features on the overall housing market which is not positive, to say the least. While too many commentators have a Chicken Little approach, here's an article that incorporates other data which indicates that for some, the sky may be indeed falling. While many of my fellow Realtors are busy putting on a happy face, I will continue to bring you all of the information that I think may be important to you in determining when to buy and when to sell.
The Coming Collapse in Housing
John Mauldin
What Will Collapse Housing Prices?
The Grand Disconnect
89 Booming Cities
Where's The Unemployment From Housing?
Two Price-Break Triggers
The Fed to the Rescue?
The Coming Collapse in Housing
John Mauldin
What Will Collapse Housing Prices?
The Grand Disconnect
89 Booming Cities
Where's The Unemployment From Housing?
Two Price-Break Triggers
The Fed to the Rescue?
Tuesday, November 21, 2006
Price Gains in Luxury Home Market
Cautious buyers slow sales, offers
Monday, November 20, 2006
Inman News
Luxury home values posted slight gains in Los Angeles, San Diego and San Francisco in the third quarter of 2006, as housing markets overall continued to see a slip in sales.
Values on homes worth more than $1 million were up 0.6 percent in Los Angeles from the previous quarter and up 5.4 percent from a year ago, according to an index released by First Republic Bank, a provider of wealth management and private banking services. The average luxury home in Los Angeles is now a record $2.37 million.
San Diego values increased 1.9 percent from the second quarter, and gained 5.4 percent from a year ago. The average luxury home in San Diego is now a record $2.18 million.
San Francisco Bay Area values increased 1.1 percent from the second quarter and gained 4 percent from a year ago. The average luxury home in San Francisco is now a record $2.96 million.
"Luxury home values posted very modest increases in the third quarter in Los Angeles, San Diego and San Francisco," said Katherine August-deWilde, chief operating officer of First Republic Bank. "This trend is due to growing inventory, longer sales time, and greater caution among buyers because of the uncertainty in the market."
In Beverly Hills, buyers are more cautious than they have been in several years. "There is some hesitation in all price ranges," said Steve Frankel of Coldwell Banker Previews Estate Division in Beverly Hills. "I am still getting lots of showings on properties $10 million and above, but buyers are being sensitive. They're saying, 'I am willing to pay, but I'm not willing to overpay.' Two years ago, they would overpay and wait for the market to catch up."
In Montecito, near Santa Barbara, the number of sales is falling. "There are still legitimate buyers and sellers out there, but it is a difficult market," said Jeff Farrell of Coldwell Banker Previews International in Montecito. "Prices and inventory in Montecito have stayed about the same. But buyers are more reluctant, and sellers don't want to bite the bullet to put prices where they should be. There are definitely transactions happening, but they are fewer."
In the beach communities of Orange County, the number of sales is also down significantly, although prices are still stable. "In the coastal market at $3 million and above, homes are still selling fairly well," said Rob Montgomery of HOM Real Estate in Newport Beach. "Generally speaking, sales volume has been down 30 percent to 35 percent, but pricing has gone up as much 8 percent or 9 percent."
In the luxury community of Rancho Santa Fe, sellers are adjusting their expectations. "It's definitely a buyers' market," said Madeleine Gere of Gere Group Properties in Rancho Santa Fe. "The buyers are there, but they're being very cautious. They're waiting to see how prices will go. When a home is priced right, it's a multiple offer situation. Demand is keeping the market alive here. The whole world wants to be here."
However, in the coastal communities of La Jolla, Del Mar and northern San Diego County, the market is somewhat strong. "From $2 million to $4 million, the market is hot in Del Mar and La Jolla," said Janet Lawless Christ of Coldwell Banker Previews in Rancho Santa Fe. "Above $8 million, the market is also hot. Between those price ranges, there is more competition because new inventory is coming onto the market."
In San Francisco, prices and sales appear to be falling. "I see price reductions, and homes selling below the asking price," said Naomi Glass of Coldwell Banker in San Francisco. "Few things are moving. People are hesitant because they see an uncertain market."
On the San Francisco Peninsula, the market is also trending downward. "In Los Altos Hills, it is a buyers' market," said Ethel Green of Intero Real Estate in Los Altos. "People are very discerning and slow to make decisions. The home has to be in pristine condition to sell. People who are not getting the prices they want are taking their houses off the market. It's actually a great time to buy."
In Marin County, the lower tier of the luxury market is doing well. "The market from $2 million to $4 million feels strong," said Tina McArthur of Pacific Union in Larkspur. "We just had eight offers on a home that went over the asking price. If a house is done nicely, is on flat land and is the quintessential family home, no one is batting an eyelash over these prices."
First Republic's Prestige Home Index is produced each quarter with Fiserv CSW Inc., a provider of automated property valuation services and home-price metrics to U.S. financial institutions.
Monday, November 20, 2006
Inman News
Luxury home values posted slight gains in Los Angeles, San Diego and San Francisco in the third quarter of 2006, as housing markets overall continued to see a slip in sales.
Values on homes worth more than $1 million were up 0.6 percent in Los Angeles from the previous quarter and up 5.4 percent from a year ago, according to an index released by First Republic Bank, a provider of wealth management and private banking services. The average luxury home in Los Angeles is now a record $2.37 million.
San Diego values increased 1.9 percent from the second quarter, and gained 5.4 percent from a year ago. The average luxury home in San Diego is now a record $2.18 million.
San Francisco Bay Area values increased 1.1 percent from the second quarter and gained 4 percent from a year ago. The average luxury home in San Francisco is now a record $2.96 million.
"Luxury home values posted very modest increases in the third quarter in Los Angeles, San Diego and San Francisco," said Katherine August-deWilde, chief operating officer of First Republic Bank. "This trend is due to growing inventory, longer sales time, and greater caution among buyers because of the uncertainty in the market."
In Beverly Hills, buyers are more cautious than they have been in several years. "There is some hesitation in all price ranges," said Steve Frankel of Coldwell Banker Previews Estate Division in Beverly Hills. "I am still getting lots of showings on properties $10 million and above, but buyers are being sensitive. They're saying, 'I am willing to pay, but I'm not willing to overpay.' Two years ago, they would overpay and wait for the market to catch up."
In Montecito, near Santa Barbara, the number of sales is falling. "There are still legitimate buyers and sellers out there, but it is a difficult market," said Jeff Farrell of Coldwell Banker Previews International in Montecito. "Prices and inventory in Montecito have stayed about the same. But buyers are more reluctant, and sellers don't want to bite the bullet to put prices where they should be. There are definitely transactions happening, but they are fewer."
In the beach communities of Orange County, the number of sales is also down significantly, although prices are still stable. "In the coastal market at $3 million and above, homes are still selling fairly well," said Rob Montgomery of HOM Real Estate in Newport Beach. "Generally speaking, sales volume has been down 30 percent to 35 percent, but pricing has gone up as much 8 percent or 9 percent."
In the luxury community of Rancho Santa Fe, sellers are adjusting their expectations. "It's definitely a buyers' market," said Madeleine Gere of Gere Group Properties in Rancho Santa Fe. "The buyers are there, but they're being very cautious. They're waiting to see how prices will go. When a home is priced right, it's a multiple offer situation. Demand is keeping the market alive here. The whole world wants to be here."
However, in the coastal communities of La Jolla, Del Mar and northern San Diego County, the market is somewhat strong. "From $2 million to $4 million, the market is hot in Del Mar and La Jolla," said Janet Lawless Christ of Coldwell Banker Previews in Rancho Santa Fe. "Above $8 million, the market is also hot. Between those price ranges, there is more competition because new inventory is coming onto the market."
In San Francisco, prices and sales appear to be falling. "I see price reductions, and homes selling below the asking price," said Naomi Glass of Coldwell Banker in San Francisco. "Few things are moving. People are hesitant because they see an uncertain market."
On the San Francisco Peninsula, the market is also trending downward. "In Los Altos Hills, it is a buyers' market," said Ethel Green of Intero Real Estate in Los Altos. "People are very discerning and slow to make decisions. The home has to be in pristine condition to sell. People who are not getting the prices they want are taking their houses off the market. It's actually a great time to buy."
In Marin County, the lower tier of the luxury market is doing well. "The market from $2 million to $4 million feels strong," said Tina McArthur of Pacific Union in Larkspur. "We just had eight offers on a home that went over the asking price. If a house is done nicely, is on flat land and is the quintessential family home, no one is batting an eyelash over these prices."
First Republic's Prestige Home Index is produced each quarter with Fiserv CSW Inc., a provider of automated property valuation services and home-price metrics to U.S. financial institutions.
Monday, November 20, 2006
Holidays are best time to be a buyer
Holiday season is the greatest gift for home shopping
Friday, November 17, 2006
By Robert J. Bruss Inman News
During the slow home sales holiday season between Thanksgiving and New Year's Day, even extending through Super Bowl Sunday in many communities, few people think of buying a house or condominium. However, if you want to purchase a home and can drag yourself away from holiday festivities, this is the absolute best time of the entire year to be a home buyer.
Why is that, you ask? The answer has two parts: (a) only serious motivated sellers have their houses and condominiums listed for sale during this slowest season of the year for home sales, and (b) competition from other prospective home buyers is at its lowest now so your purchase offer will be extremely welcome and seriously considered by a motivated home seller.
There is an additional reason 2006 year-end is an especially good time to be a home buyer. That reason is it is a "buyer's market" in most cities, meaning there are more homes listed for sale today than there are qualified buyers in the market so sellers (and their listing agents) are extremely anxious.
It's a great time to be a home buyer. But not such a good time to be a home seller.
BEFORE SHOPPING FOR A HOME, SHOP FOR A MORTGAGE. However, before rushing out to buy a house or condo, smart home buyers first get approved in writing for a home mortgage. This is a slow time of year for mortgage lenders so they welcome your loan application.
Although mortgage brokers can arrange mortgage pre-approvals, the letter or certificate must come from an actual lender, such as a bank or mortgage banker. Most home mortgage pre-approvals are valid for 60 to 90 days.
Don't even consider a mortgage "pre-qualification," which means only, "We looked at your loan application and you appear to qualify but we haven't actually verified your credit and income." In other words, a mortgage pre-qualification is worthless.
However, home buyers should understand a lender's mortgage pre-approval is subject to (a) the lender's appraisal of the home you decide to buy, and (b) reverification of your credit and income (don't apply for additional credit or go out and buy a new car before you complete your home purchase).
WORK WITH AN EXPERIENCED BUYER'S AGENT. After obtaining a written mortgage pre-approval from a lender, the next step to buying a home during this best time of the year to purchase is to work with an experienced buyer's agent who understands the market in the vicinity where you want to buy.
Ask friends, relatives and business associates for recommendations of buyer's agents. Although any licensed agent can be your buyer's agent, many agents prefer to list homes for sale rather than working with home buyers who are often "time wasters."
A buyer's agent costs nothing extra. The reason is the listing agent of the house or condo you purchase will split the sales commission with your buyer's agent. Only in the rare event you buy a "for sale by owner" (FSBO) home and the seller refuses to compensate your buyer's agent would you owe any sales commission.
EXPECT YOUR BUYER'S AGENT TO PREPARE A "CMA" BEFORE MAKING YOUR PURCHASE OFFER.
When you find "the house" or "the condo" you want to buy, before making a purchase offer ask your buyer's agent to prepare a written CMA (comparative market analysis). This CMA is the same form the listing agent prepared for the seller when the house or condo was listed for sale.
However, your CMA will be up to date, whereas the seller's CMA might be several months old. The CMA shows (a) recent sales prices of comparable nearby residences within the last few months (never older than six months); (b) current asking prices of similar neighborhood homes now on the market for sale; and (c) asking prices of recently expired comparable listings (usually overpriced).
As a savvy home buyer, you probably will have inspected many of the homes on your CMA. With the help of your buyer's agent, you can use the CMA information to arrive at a fair purchase-price offer.
Many buyer's agents recommend making a purchase offer based on a per-square-foot basis. For example, if nearby homes of comparable quality construction recently sold for $150 per square foot, you might want to make your purchase offer based on $150 per square foot.
Be sure to attach a reasonable good faith deposit check to your purchase offer. If you are making an especially low offer far under the seller's asking price, a substantial deposit accompanying your offer will often convince the seller you are a serious buyer.
You can be sure your buyer's agent will use the CMA prepared for your use to show to the home seller and the listing agent to justify your purchase offer as being reasonable.
However, if the seller doesn't accept your purchase offer, a luxury of buying during this slow season is there are few other home buyers in the market. The result is you usually need not be in a rush to respond to a counteroffer or make a new purchase offer.
Waiting a few days to respond, presuming you still want to buy the residence, will often make the seller think, "That was a pretty good offer. Maybe I should have accepted it."
KEEP YOUR PURCHASE OFFER SIMPLE.
As experienced buyer's agents will tell you, it's best to keep your purchase offer as simple as possible. "A confused mind usually says no" is a very true motto. For this reason, it is best to include only a few contingency clauses in your purchase offer. Typical contingencies are:
1. LENDER'S APPRAISAL CONTINGENCY. Presuming you need a mortgage to finance your purchase, be sure to include a mortgage lender's appraisal contingency clause in the purchase offer. If the home doesn't appraise for at least the amount of your purchase offer that was accepted by the seller, then you don't have to complete the purchase and can get your good faith deposit fully refunded.
2. PROFESSIONAL HOME INSPECTION CONTINGENCY. Smart buyers make their home-purchase offers contingent on their approval of a professional home inspector's report to be obtained by the buyer after the seller accepts the purchase offer.
The cost is usually around $300. Buyers should always accompany their inspector for the two- to three-hour inspection because it is a good way to become familiar with the home and to discuss any unexpected material defects that are discovered.
A good source of experienced professional home inspectors is to hire a member of the American Society of Home Inspectors (ASHI). To find local ASHI inspectors, go to http://www.ashi.org/ or phone 1-800-743-2744.
If the professional inspection report reveals serious undisclosed home defects, as the buyer you can (a) cancel the purchase and obtain refund of your good faith deposit, (b) reopen negotiations with the seller to obtain a repair credit, or (c) if the seller refuses to renegotiate, go ahead with the purchase anyway (presuming you badly want the home).
3. SALE OF YOUR CURRENT HOME CONTINGENCY. During the last few years of a home "seller's market" in most cities, this contingency fell out of favor with home sellers and real estate agents. But during a buyer's market where any purchase offer is very welcome, many home sellers will accept a purchase offer that is contingent on the buyer's sale of their current home.
However, to be fair to the seller, most sellers will insist on keeping their homes listed on the market for sale while the buyer tries to sell his/her current home. In addition, most realty agents suggest a 48-hour or 72-hour contingency-release clause. That means if another buyer produces an offer acceptable to the seller, the first buyer then has 48 or 72 hours to remove his/her contingency clause for sale of their current residence.
SUMMARY: The season between Thanksgiving and New Year's Day, even extending to Super Bowl Sunday in many communities, is the slowest time of the year for home sales so it is an especially good time to be a home buyer.
Friday, November 17, 2006
By Robert J. Bruss Inman News
During the slow home sales holiday season between Thanksgiving and New Year's Day, even extending through Super Bowl Sunday in many communities, few people think of buying a house or condominium. However, if you want to purchase a home and can drag yourself away from holiday festivities, this is the absolute best time of the entire year to be a home buyer.
Why is that, you ask? The answer has two parts: (a) only serious motivated sellers have their houses and condominiums listed for sale during this slowest season of the year for home sales, and (b) competition from other prospective home buyers is at its lowest now so your purchase offer will be extremely welcome and seriously considered by a motivated home seller.
There is an additional reason 2006 year-end is an especially good time to be a home buyer. That reason is it is a "buyer's market" in most cities, meaning there are more homes listed for sale today than there are qualified buyers in the market so sellers (and their listing agents) are extremely anxious.
It's a great time to be a home buyer. But not such a good time to be a home seller.
BEFORE SHOPPING FOR A HOME, SHOP FOR A MORTGAGE. However, before rushing out to buy a house or condo, smart home buyers first get approved in writing for a home mortgage. This is a slow time of year for mortgage lenders so they welcome your loan application.
Although mortgage brokers can arrange mortgage pre-approvals, the letter or certificate must come from an actual lender, such as a bank or mortgage banker. Most home mortgage pre-approvals are valid for 60 to 90 days.
Don't even consider a mortgage "pre-qualification," which means only, "We looked at your loan application and you appear to qualify but we haven't actually verified your credit and income." In other words, a mortgage pre-qualification is worthless.
However, home buyers should understand a lender's mortgage pre-approval is subject to (a) the lender's appraisal of the home you decide to buy, and (b) reverification of your credit and income (don't apply for additional credit or go out and buy a new car before you complete your home purchase).
WORK WITH AN EXPERIENCED BUYER'S AGENT. After obtaining a written mortgage pre-approval from a lender, the next step to buying a home during this best time of the year to purchase is to work with an experienced buyer's agent who understands the market in the vicinity where you want to buy.
Ask friends, relatives and business associates for recommendations of buyer's agents. Although any licensed agent can be your buyer's agent, many agents prefer to list homes for sale rather than working with home buyers who are often "time wasters."
A buyer's agent costs nothing extra. The reason is the listing agent of the house or condo you purchase will split the sales commission with your buyer's agent. Only in the rare event you buy a "for sale by owner" (FSBO) home and the seller refuses to compensate your buyer's agent would you owe any sales commission.
EXPECT YOUR BUYER'S AGENT TO PREPARE A "CMA" BEFORE MAKING YOUR PURCHASE OFFER.
When you find "the house" or "the condo" you want to buy, before making a purchase offer ask your buyer's agent to prepare a written CMA (comparative market analysis). This CMA is the same form the listing agent prepared for the seller when the house or condo was listed for sale.
However, your CMA will be up to date, whereas the seller's CMA might be several months old. The CMA shows (a) recent sales prices of comparable nearby residences within the last few months (never older than six months); (b) current asking prices of similar neighborhood homes now on the market for sale; and (c) asking prices of recently expired comparable listings (usually overpriced).
As a savvy home buyer, you probably will have inspected many of the homes on your CMA. With the help of your buyer's agent, you can use the CMA information to arrive at a fair purchase-price offer.
Many buyer's agents recommend making a purchase offer based on a per-square-foot basis. For example, if nearby homes of comparable quality construction recently sold for $150 per square foot, you might want to make your purchase offer based on $150 per square foot.
Be sure to attach a reasonable good faith deposit check to your purchase offer. If you are making an especially low offer far under the seller's asking price, a substantial deposit accompanying your offer will often convince the seller you are a serious buyer.
You can be sure your buyer's agent will use the CMA prepared for your use to show to the home seller and the listing agent to justify your purchase offer as being reasonable.
However, if the seller doesn't accept your purchase offer, a luxury of buying during this slow season is there are few other home buyers in the market. The result is you usually need not be in a rush to respond to a counteroffer or make a new purchase offer.
Waiting a few days to respond, presuming you still want to buy the residence, will often make the seller think, "That was a pretty good offer. Maybe I should have accepted it."
KEEP YOUR PURCHASE OFFER SIMPLE.
As experienced buyer's agents will tell you, it's best to keep your purchase offer as simple as possible. "A confused mind usually says no" is a very true motto. For this reason, it is best to include only a few contingency clauses in your purchase offer. Typical contingencies are:
1. LENDER'S APPRAISAL CONTINGENCY. Presuming you need a mortgage to finance your purchase, be sure to include a mortgage lender's appraisal contingency clause in the purchase offer. If the home doesn't appraise for at least the amount of your purchase offer that was accepted by the seller, then you don't have to complete the purchase and can get your good faith deposit fully refunded.
2. PROFESSIONAL HOME INSPECTION CONTINGENCY. Smart buyers make their home-purchase offers contingent on their approval of a professional home inspector's report to be obtained by the buyer after the seller accepts the purchase offer.
The cost is usually around $300. Buyers should always accompany their inspector for the two- to three-hour inspection because it is a good way to become familiar with the home and to discuss any unexpected material defects that are discovered.
A good source of experienced professional home inspectors is to hire a member of the American Society of Home Inspectors (ASHI). To find local ASHI inspectors, go to http://www.ashi.org/ or phone 1-800-743-2744.
If the professional inspection report reveals serious undisclosed home defects, as the buyer you can (a) cancel the purchase and obtain refund of your good faith deposit, (b) reopen negotiations with the seller to obtain a repair credit, or (c) if the seller refuses to renegotiate, go ahead with the purchase anyway (presuming you badly want the home).
3. SALE OF YOUR CURRENT HOME CONTINGENCY. During the last few years of a home "seller's market" in most cities, this contingency fell out of favor with home sellers and real estate agents. But during a buyer's market where any purchase offer is very welcome, many home sellers will accept a purchase offer that is contingent on the buyer's sale of their current home.
However, to be fair to the seller, most sellers will insist on keeping their homes listed on the market for sale while the buyer tries to sell his/her current home. In addition, most realty agents suggest a 48-hour or 72-hour contingency-release clause. That means if another buyer produces an offer acceptable to the seller, the first buyer then has 48 or 72 hours to remove his/her contingency clause for sale of their current residence.
SUMMARY: The season between Thanksgiving and New Year's Day, even extending to Super Bowl Sunday in many communities, is the slowest time of the year for home sales so it is an especially good time to be a home buyer.
Thursday, November 16, 2006
Santa Clarita Real Estate Market in Transition
As reported for months, the local real estate market is in a transional state, with buyers gaining the upper hand in negotiations with sellers for the sale of properties. As I have been telling my clients for a while, if you are serious about buying a home there are some real deals to be made.
Today's local paper had an article about the how the median price had slipped a little more than 3% for properties on a year-to-year basis, with numbers of sales slipping 30% from a year ago. This, while the inventory of homes on the market has fallen from the previous month's totals, but risen significantly from a year ago. Readers of this Blog get this kind of news months earlier than the local papers, it appears.
What does the local housing market have to do with you? The answer totally depends on your individual situation. For some people, making a move in this environment makes absolutely no sense. While newcomers to this Blog might be startled to read the previous sentence from a Realtor, I am not your average Realtor. You probably expected some variant of the following: 'For some people, making a move by either buying or selling a home right now is the smart move'. Both statements are true, but again, totally dependent on your individual situation.
If you want a straightforward analysis of what you should do, call me at 661-312-9461 and we will make an appointment to get together and find out.
Today's local paper had an article about the how the median price had slipped a little more than 3% for properties on a year-to-year basis, with numbers of sales slipping 30% from a year ago. This, while the inventory of homes on the market has fallen from the previous month's totals, but risen significantly from a year ago. Readers of this Blog get this kind of news months earlier than the local papers, it appears.
What does the local housing market have to do with you? The answer totally depends on your individual situation. For some people, making a move in this environment makes absolutely no sense. While newcomers to this Blog might be startled to read the previous sentence from a Realtor, I am not your average Realtor. You probably expected some variant of the following: 'For some people, making a move by either buying or selling a home right now is the smart move'. Both statements are true, but again, totally dependent on your individual situation.
If you want a straightforward analysis of what you should do, call me at 661-312-9461 and we will make an appointment to get together and find out.
The New MLS: Removing Local Boundaries
Expanding the Real Estate Database Is Key to the Future
As reported today in an article by Inman News, one of the critical developments in the real estate industry is the merging of local Multiple Listing Services into regional and eventually, a global, MLS. Our local Realtor's Association has recently announced that the local CRISNET MLS, which directly covers the Santa Clarita and San Fernando Valleys, will merge with SoCalMLS which covers much of southern Los Angeles County and all of Orange County. The combined MLS will have 55,000 members and will become the largest MLS in California and the second largest in the nation.
The two MLS services already belong to the Southern California MLS Alliance, a consortium of multiple listing services serving over 100,000 real estate professionals via a cooperative exchange of information among Southern California MLS databases.
This consolidation of and cooperation between databases gives members the opportunity to provide better service to their clients, the buyers and sellers of real estate. In a society awash with information, reliable property and sales information is essential to a rational and trusted market.
As reported today in an article by Inman News, one of the critical developments in the real estate industry is the merging of local Multiple Listing Services into regional and eventually, a global, MLS. Our local Realtor's Association has recently announced that the local CRISNET MLS, which directly covers the Santa Clarita and San Fernando Valleys, will merge with SoCalMLS which covers much of southern Los Angeles County and all of Orange County. The combined MLS will have 55,000 members and will become the largest MLS in California and the second largest in the nation.
The two MLS services already belong to the Southern California MLS Alliance, a consortium of multiple listing services serving over 100,000 real estate professionals via a cooperative exchange of information among Southern California MLS databases.
This consolidation of and cooperation between databases gives members the opportunity to provide better service to their clients, the buyers and sellers of real estate. In a society awash with information, reliable property and sales information is essential to a rational and trusted market.
Thursday, November 09, 2006
Protect Your Privacy!
ALERT: YOUR NAME IS BEING SOLD — TAKE ACTION NOW!
Here's breaking news you need to know...and you need to let all your family and friends know right away as well.
Having credit checked is an important and necessary step in the home buying process, as well as something that is done on a regular basis for any number of reasons — increasing a credit line on your Visa, applying for insurance, or buying a car. But very few people realize that each time their credit is checked, the "inquiry data" that the credit bureaus (Equifax, TransUnion, Innovis or Experian) has on file has now become a commodity. This information is being sold by the credit bureaus to other lenders...and also to companies that sell and resell the same names and personal information.
That's right — the credit bureaus have found a way to increase their revenues at your expense...and without your permission. These "inquiry leads" include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are selling your personal, confidential information to competing creditors...and making millions. Your privacy is being sold, not just once, but over and over again.
And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously "passed on" the information to them, because they knew that they'd be able to offer much better interest rates and terms. Ouch!
The good news is that you can make it stop, right away. And pass this information on to everyone you know — your friends, family members, neighbors and coworkers.
The consumer credit reporting industry has provided a way to "opt out" and remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com. You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period — at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.
BONUS: Opting out will also protect you from "pre-approved credit offers" arriving via mail...one of the leading causes of identity theft in the US.
You certainly have the right to shop for the best professional to meet your lending needs — but this should be done when and how YOU choose, not being done without your consent or permission. Looking around should be on your terms, not being done as a sneak attack, because they think you won't know better. And unfortunately, these unsolicited marketing tactics are a nuisance and intrusive, but quite legal.
So take your privacy back. Take five minutes right now — opt out, and pass it on. Refuse to be a part of this system.
ALERT: YOUR NAME IS BEING SOLD — TAKE ACTION NOW!
Here's breaking news you need to know...and you need to let all your family and friends know right away as well.
Having credit checked is an important and necessary step in the home buying process, as well as something that is done on a regular basis for any number of reasons — increasing a credit line on your Visa, applying for insurance, or buying a car. But very few people realize that each time their credit is checked, the "inquiry data" that the credit bureaus (Equifax, TransUnion, Innovis or Experian) has on file has now become a commodity. This information is being sold by the credit bureaus to other lenders...and also to companies that sell and resell the same names and personal information.
That's right — the credit bureaus have found a way to increase their revenues at your expense...and without your permission. These "inquiry leads" include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are selling your personal, confidential information to competing creditors...and making millions. Your privacy is being sold, not just once, but over and over again.
And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously "passed on" the information to them, because they knew that they'd be able to offer much better interest rates and terms. Ouch!
The good news is that you can make it stop, right away. And pass this information on to everyone you know — your friends, family members, neighbors and coworkers.
The consumer credit reporting industry has provided a way to "opt out" and remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at www.optoutprescreen.com. You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period — at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.
BONUS: Opting out will also protect you from "pre-approved credit offers" arriving via mail...one of the leading causes of identity theft in the US.
You certainly have the right to shop for the best professional to meet your lending needs — but this should be done when and how YOU choose, not being done without your consent or permission. Looking around should be on your terms, not being done as a sneak attack, because they think you won't know better. And unfortunately, these unsolicited marketing tactics are a nuisance and intrusive, but quite legal.
So take your privacy back. Take five minutes right now — opt out, and pass it on. Refuse to be a part of this system.
The Election Is Over, Time to Buy a Home!
The midterm elections are over, and as expected in the last month housing activity has dipped. It happens everytime there is an election, and this one is no different.
What is the likely impact on the housing market as a result of the latest silly season ending? Well, at least we have a better idea about the direction of the country. OK, a little better idea. While the commentary among political circles is diverse over the impact, from we are on the brink of disaster (coming from the Pubs), to we have stepped back from the brink of disaster (coming from the Dems), we now can all refocus on what is happening in our own world. That is an intensely personal decision based on individual and family circumstances.
Basically, it is a good time to make a move. While most readers figure this as the usual Realtor line, bear with me for a moment.
First, the talk over the past three or more years of a housing bubble bursting just has not happened. Sure, sales have slowed (down about 30% y2y) and prices are a little soft in our local area, but not precipitously so. In fact, the real data indicates a leveling of prices y2y, or maybe a slight (under 5%) drop in prices in some areas. This is hardly a burst bubble, but is in reality a lot like a little air coming out of the market.
Second, I want to talk with buyers for a moment. Interest rates have come down a bit from some highs earlier this year, but with loans available for fixed rates under 6.5% and for lots of other kinds of loans with much lower interest rates that may be better suited to your budget and long-term plans, this is a good buying environment if you want to buy a home with more than a three year time frame. Plus, there is a lot of variety of homes and prices in the marketplace. Finally, there are some steals of deals to be made IF you have a great agent (that's me!) working to find and negotiate a great deal for you!
Sellers. The flipper seller has had his or her day. If you bought your property more than two years ago, and thought you would sell it around now for a huge profit, well, you will likely have a modest profit, but not a huge one. Bought last year? Depending on what you picked, who you used as a Realtor, and what your purchase price was, you are probably better off keeping the home, as long as you can make the payments. If you can't pay the mortgage, get out now. Call me today. No joke. Do it. Which brings me to a very important point... if you don't need to sell, don't put your home on the market. If it's on now, take it off the market. While the numbers of homes on the market has been dropping lately, the amount of inventory is still too high which gives people the feeling that the market is dead. It isn't the case, but with too many signs in yards, that is the impression. So, if you don't need to sell, take your home off the market.
Finally, if you do need to sell, price your home right. Over priced homes are a drag on the market, sellers get anxious and frustrated, and Realtors who take overpriced listings are not doing anyone any favors. Price your home to sell, keep it clean, choose a great Realtor (me!), and let's get your home sold!
The midterm elections are over, and as expected in the last month housing activity has dipped. It happens everytime there is an election, and this one is no different.
What is the likely impact on the housing market as a result of the latest silly season ending? Well, at least we have a better idea about the direction of the country. OK, a little better idea. While the commentary among political circles is diverse over the impact, from we are on the brink of disaster (coming from the Pubs), to we have stepped back from the brink of disaster (coming from the Dems), we now can all refocus on what is happening in our own world. That is an intensely personal decision based on individual and family circumstances.
Basically, it is a good time to make a move. While most readers figure this as the usual Realtor line, bear with me for a moment.
First, the talk over the past three or more years of a housing bubble bursting just has not happened. Sure, sales have slowed (down about 30% y2y) and prices are a little soft in our local area, but not precipitously so. In fact, the real data indicates a leveling of prices y2y, or maybe a slight (under 5%) drop in prices in some areas. This is hardly a burst bubble, but is in reality a lot like a little air coming out of the market.
Second, I want to talk with buyers for a moment. Interest rates have come down a bit from some highs earlier this year, but with loans available for fixed rates under 6.5% and for lots of other kinds of loans with much lower interest rates that may be better suited to your budget and long-term plans, this is a good buying environment if you want to buy a home with more than a three year time frame. Plus, there is a lot of variety of homes and prices in the marketplace. Finally, there are some steals of deals to be made IF you have a great agent (that's me!) working to find and negotiate a great deal for you!
Sellers. The flipper seller has had his or her day. If you bought your property more than two years ago, and thought you would sell it around now for a huge profit, well, you will likely have a modest profit, but not a huge one. Bought last year? Depending on what you picked, who you used as a Realtor, and what your purchase price was, you are probably better off keeping the home, as long as you can make the payments. If you can't pay the mortgage, get out now. Call me today. No joke. Do it. Which brings me to a very important point... if you don't need to sell, don't put your home on the market. If it's on now, take it off the market. While the numbers of homes on the market has been dropping lately, the amount of inventory is still too high which gives people the feeling that the market is dead. It isn't the case, but with too many signs in yards, that is the impression. So, if you don't need to sell, take your home off the market.
Finally, if you do need to sell, price your home right. Over priced homes are a drag on the market, sellers get anxious and frustrated, and Realtors who take overpriced listings are not doing anyone any favors. Price your home to sell, keep it clean, choose a great Realtor (me!), and let's get your home sold!
Friday, November 03, 2006
Buydowns Expected to Regain Popularity
Buydowns, in which sellers put money toward a buyer's mortgage payments during the first years of the loan, are expected to regain popularity as the housing market slows.
This arrangement often allows sellers to pay an amount less than what they would have shaved off their asking price. Buyers, in turn, benefit from lower monthly payments in the first few years and a lower interest rate, which rises by a percentage point each year until the buyers take over the entire payment.
If the home is to be the buyer's primary residence and the buyer has a credit score of at least 660, Fannie Mae permits lenders to qualify the loan applicant at the first-year interest rate. Buyers of second homes or investment properties must be qualified at the full rate.
Source: Hartford Courant, Kenneth R. Gosselin (11/02/06)
Buydowns, in which sellers put money toward a buyer's mortgage payments during the first years of the loan, are expected to regain popularity as the housing market slows.
This arrangement often allows sellers to pay an amount less than what they would have shaved off their asking price. Buyers, in turn, benefit from lower monthly payments in the first few years and a lower interest rate, which rises by a percentage point each year until the buyers take over the entire payment.
If the home is to be the buyer's primary residence and the buyer has a credit score of at least 660, Fannie Mae permits lenders to qualify the loan applicant at the first-year interest rate. Buyers of second homes or investment properties must be qualified at the full rate.
Source: Hartford Courant, Kenneth R. Gosselin (11/02/06)
IRS Examines Popular Real Estate Write-Offs
The staff of the nonpartisan Joint Committee on Taxation is taking a close look at two kinds of tax write-offs that home owners regularly use.
Its goal is to insure that the IRS collects more money without having to raise taxes.
The committee proposes requiring local governments to provide copies of home owner tax statements to the IRS that distinguish between regular and special assessments. That way, the IRS could slap the hands of taxpayers who try to deduct those nondeductible special assessments.
The committee also would require lenders to distinguish whether a loan was a first mortgage or a refinance. Tax payers must amortize points they pay for a refinance over the term of the loan. Collecting taxes that are improperly deducted in the first year rather than amortized would net the IRS $70 billion in this year alone, the IRS estimates.
Similarly, the committee proposes that lenders report whenever a refinancing led to a new loan amount $100,000 larger than the previous balance. That will alert the IRS to interest write-offs in excess of those permissible under widely misunderstood rules.
For most tax payers, the legally deductible portion is the original mortgage debt they incurred to make their home purchase, plus all subsequent capital improvements, minus payments to reduce that principal over the course of the loan.
Source: Washington Post Writers Group, Kenneth R. Harney (10/28/2006)
The staff of the nonpartisan Joint Committee on Taxation is taking a close look at two kinds of tax write-offs that home owners regularly use.
Its goal is to insure that the IRS collects more money without having to raise taxes.
The committee proposes requiring local governments to provide copies of home owner tax statements to the IRS that distinguish between regular and special assessments. That way, the IRS could slap the hands of taxpayers who try to deduct those nondeductible special assessments.
The committee also would require lenders to distinguish whether a loan was a first mortgage or a refinance. Tax payers must amortize points they pay for a refinance over the term of the loan. Collecting taxes that are improperly deducted in the first year rather than amortized would net the IRS $70 billion in this year alone, the IRS estimates.
Similarly, the committee proposes that lenders report whenever a refinancing led to a new loan amount $100,000 larger than the previous balance. That will alert the IRS to interest write-offs in excess of those permissible under widely misunderstood rules.
For most tax payers, the legally deductible portion is the original mortgage debt they incurred to make their home purchase, plus all subsequent capital improvements, minus payments to reduce that principal over the course of the loan.
Source: Washington Post Writers Group, Kenneth R. Harney (10/28/2006)
Realtors' ad campaign says time is right to buy, sell
Trade group puts full-page ads in 6 major newspapers
Friday, November 03, 2006
Inman News
Thomas Stevens, NAR president
The National Association of Realtors trade group is paying for advertisements in six major U.S. newspapers to promote home purchases and sales, the association announced today.
The ad campaign, launched by the trade group's leadership, carries the message, "It's a great time to buy or sell a home," and notes that interest rates have fallen for seven months in a row and are near 40-year lows, while for-sale home inventories are "higher than they have been in decades and prices have stabilized," the association announced today.
Meanwhile, home sales have slowed nationwide and the winter months are traditionally a slow period for home sales. The association reported last month that the sales rate for existing-homes fell for the sixth straight month in September, and sales were down 14.2 percent that month compared to September 2005.
There was a for-sale home inventory of 7.3 months in September based on the sales pace at that time -- a supply over six months typically indicates a market that favors buyers. And the U.S. median existing-home price dropped 2.2 percent to $220,000 in September compared to September 2005.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.4 percent in September, compared with 5.77 percent in September 2005 and 6.52 percent in August 2006.
In a separate report, the Realtor group announced this week that its index tracking pending-home sales fell to the lowest level of the year in September and was down 13.6 percent in September compared to September 2005. The association's Pending Home Sales Index is considered a leading indicator for closed existing-home sales in the following two months.
The Realtor group's advertisement appears today in the Wall Street Journal and USA Today, and will appear Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune, the association announced. The ad will appear in the same newspapers again during the Nov. 12 weekend.
"Prices overall have stabilized"; "large inventory won't last"; "positive outlook"; "real estate is a great investment"; and "don't delay" are among the messages in the ad.
"Former Federal Reserve Chair Alan Greenspan recently said that housing prospects are looking up. 'Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.' According to industry estimates, 2006 will be the third-best year on record for home sales," the ad states.
In its announcement about the ad campaign, the Realtor group stated, "The perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year."
Thomas M. Stevens, NAR president and senior vice president of Realogy Corp.'s NRT Inc., said that two new television and radio ads directed at home buyers and sellers will begin airing in January. Those ads are a part of the association's $40 million public awareness campaign.
Stevens said in a statement that market conditions are a "perfect alignment of low rates and extraordinary inventory."
***
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Copyright 2006 Inman News
Trade group puts full-page ads in 6 major newspapers
Friday, November 03, 2006
Inman News
Thomas Stevens, NAR president
The National Association of Realtors trade group is paying for advertisements in six major U.S. newspapers to promote home purchases and sales, the association announced today.
The ad campaign, launched by the trade group's leadership, carries the message, "It's a great time to buy or sell a home," and notes that interest rates have fallen for seven months in a row and are near 40-year lows, while for-sale home inventories are "higher than they have been in decades and prices have stabilized," the association announced today.
Meanwhile, home sales have slowed nationwide and the winter months are traditionally a slow period for home sales. The association reported last month that the sales rate for existing-homes fell for the sixth straight month in September, and sales were down 14.2 percent that month compared to September 2005.
There was a for-sale home inventory of 7.3 months in September based on the sales pace at that time -- a supply over six months typically indicates a market that favors buyers. And the U.S. median existing-home price dropped 2.2 percent to $220,000 in September compared to September 2005.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.4 percent in September, compared with 5.77 percent in September 2005 and 6.52 percent in August 2006.
In a separate report, the Realtor group announced this week that its index tracking pending-home sales fell to the lowest level of the year in September and was down 13.6 percent in September compared to September 2005. The association's Pending Home Sales Index is considered a leading indicator for closed existing-home sales in the following two months.
The Realtor group's advertisement appears today in the Wall Street Journal and USA Today, and will appear Sunday in the New York Times, Washington Post, Los Angeles Times and Chicago Tribune, the association announced. The ad will appear in the same newspapers again during the Nov. 12 weekend.
"Prices overall have stabilized"; "large inventory won't last"; "positive outlook"; "real estate is a great investment"; and "don't delay" are among the messages in the ad.
"Former Federal Reserve Chair Alan Greenspan recently said that housing prospects are looking up. 'Most of the negatives in housing are probably behind us. The fourth quarter should be reasonably good, certainly better than the third quarter.' According to industry estimates, 2006 will be the third-best year on record for home sales," the ad states.
In its announcement about the ad campaign, the Realtor group stated, "The perfect conditions for buyers are likely to change as sales pick up, prices gain traction and conditions improve for sellers next year."
Thomas M. Stevens, NAR president and senior vice president of Realogy Corp.'s NRT Inc., said that two new television and radio ads directed at home buyers and sellers will begin airing in January. Those ads are a part of the association's $40 million public awareness campaign.
Stevens said in a statement that market conditions are a "perfect alignment of low rates and extraordinary inventory."
***
--------------------------------------------------------------------------------
Copyright 2006 Inman News
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