San Diego Real Estate Blog

San Diego County Home Prices Up For 12 Straight Months according to last Wednesdays  San Diego Union Tribune coverage in the Business section, only San Francisco’s market rose more. This is in keeping with history of price points over the years. San Francisco always seems to lead the way in prices. This being our observation over many years and not addressed in the article.

California will continue bumping along and doing fine while the rest of the nation will have its’ ups and downs. The rest of the country is not a direct indicator of our prices. That is something I have learned over the years and this article certainly takes nothing away from that feeling or conclusion. If you would like to see results in your particular zip codes of interest, email them to me at rob@robdennyhomes.com. I’ll get you a comparison going back 12 months or more!

Seven Things All Borrowers Should Know About FHA Loans as talked about by FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).

1. FHA loans are not only for lower-income borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans, but borrowers do need to substantiate income and assets by submitting proper documentation.

2. FHA loans are not only for first-time buyers. Many people believe FHA loans are available only to first-time home buyers, but this is not the case.

3. FHA loans are not just small loans; in fact, loan amounts can be as high as almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county.

4. FHA loans are not affiliated with the section 8 housing program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.

5. FHA loans are often more affordable than conventional loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5%.

6. FHA-approved condo developments are more desirable to buyers. With 87% of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.

Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.

Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers. Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply.

7. FHA loans are assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) may be transferred to the new buyer subject to qualification.

Will you use FHA financing to purchase your home? Do you have more questions about FHA? Contact Rob Denny today at rob@robdennyhomes.com or visit my website www.robdennyhomes.com.

Happy 4th Of July! There’s nothing like to celebrating the day of our Independence with family and friends. Here’s some facts about the 4th from the US Census Bureau -

1. Thirty places nationwide have “liberty” in their name.

2. Eleven places have “independence” in their name.

3. Five places adopted the name “freedom.”

4. There is one place named “patriot” — Patriot, Indiana.

5. There are five places called America.

6. There’s a 1-in-6 chance the beef on your backyard grill came from Texas. The Lone Star State is the leader in the production of cattle and calves.

7. The Lettuce in your salad or on your hamburger probably was grown in California, which accounts for nearly three-quarters of USA lettuce production.

8. The value of fireworks imported from China is $128.8 million, representing the bulk of all U.S. fireworks imports ($135.6 million).

9. “The British are coming! The British are coming!” These days, this cry applies to tourists rather than “redcoats.” Nearly 5 million tourists from the UK visited the United States in a recent year, more than from any other country except Japan.

10. The dollar volume of trade last year between the United States and the United Kingdom was $74 billion, making the U.K. our sixth-leading trading partner today.

Have a Happy, fun and safe 4th of July!

Any Good News Regarding Short Sales?  Just a year ago, when pre-foreclosure and foreclosure properties were entering the market in unimaginable numbers, many real estate agents were estimating six to 10 months at best to complete a short sale. Now, some are beginning to see closings in as few as 10 weeks. That’s good news for sellers, the housing market and the U.S. economy.

The improvement is a product of a few key developments creating momentum in the lending industry. First, banks are starting to adjust to the market and becoming more proactive in creating systems and solutions for homeowners in distress. Second, and arguably more important, the U.S. Treasury has enhanced the guidelines and incentives for banks that are committed to improving the loan modification and short sale processes.

The Home Affordable Foreclosure Alternatives (HAFA) program, announced in November 2009 and fully implemented April 5, is the government’s answer to the problem. It’s a supplement to the February 2009 Home Affordable Modification Program (HAMP) that outlines a separate set of criteria for short sales or deeds-in-lieu to address the group of homeowners who are facing foreclosure because loan modification hasn’t worked out.

HAFA provides that missing next step for homeowners who are not approved for modifications. Now, they can pursue a short sale in a more timely and orderly manner. Here are some of the ways the HAFA program is already improving the process (For more details on the program, you can visit realtor.org and search “HAFA”):

-Standardizes paperwork and timelines?-Requires lender response on an offer within 10 days?-Allows for preapproval on pricing of a short sale?-Eliminates deficiency judgments on first mortgages?-Offers $3,000 in relocation assistance?-Pays servicers $1,500 toward administrative costs

In today’s real estate market there are many, many ways to buy and sell residential real estate. Contact me at rob@robdennyhomes.com so we can discuss the best solution for you or search over 20,000 homes for sale at http://robdennyhomes.com.

Can it be possible? Despite the housing bust and high foreclosure rates, in some areas we don’t have enough homes to sell. There is currently an eight-month supply of homes on the market — meaning that, at the current sales pace, it would take eight months to run through the backlog.That’s still a lot compared to the six-month supply that is expected in a normal market, but it is much better than it was. In March, there were nearly 2% fewer homes on the market than there were a year ago, and 21.7% fewer than the record of 4.6 million in July 2008.

In California, almost all cities have a short supply of single-family homes.That’s especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors.The supply of homes that sell for less than $300,000 is at 3.2 months statewide, down from an already low 3.3 month supply 12 months ago.Inventory of moderately priced homes, those between $300,000 and 500,000, fell to 4.2 months in March, down from 4.5 months in March 2009.There are plenty of more expensive homes in California, but this inventory is going quick: inventory for million-dollar-plus homes has dropped from 21.6 months to 10.9 months.

What is your price range for purchasing a home in Carlsbad, Encinitas, Cardiff, Rancho Santa Fe and any other community from Old Town to Oceanside?

Call or email me today cell 858-504-0449, RobDennyHomes@gmail.com!

RELAX… I’ll handle the details.

NCSDAR reports that April was an outstanding month for real estate sales and closings. The market, driven by lots of factors, not just the tax credits seems to be finding solid footing at last. The average sales price per transaction is almost two and a quarter times higher than it was last year. Listings sold volume is up, sales are up and far fewer sales are falling out of escrow due to buyers failing to qualify. Many have been affected in this area of buyers not qualifying like everyone else. This problem is also quieting down as the lenders are now getting and using clearer guidelines in qualifying buyers. This is good for everyone in our economy. If you would like a detailed home trend report for your area, email your desired zip code(s) to RobDennyHomes@gmail.com.

You want to buy a foreclosure? Remember, there are both great opportunities and great pressures and pitfalls in this market.

First, you have to decide at what stage of foreclosure you want to buy. There are three options: 1. pre-foreclosure; 2. sheriff’s auction; 3.

“The safest and best way to buy is when it’s a bank-owned property,” said Rick Sharga, a spokesman for RealtyTrac, the online marketer of foreclosure properties.

Pre-foreclosure: These homes are in the foreclosure process, but they have yet to be sent to auction. Owners are typically trying to unload them because they are “underwater,” owing more on the homes than they are worth.

As a result, potential buyers must negotiate a deal with the lender as well as the owner. That makes buying at this stage of foreclosure complicated and slow. But, you have the advantage of being able to inspect the home before purchase — which isn’t the case in other types of foreclosure sales. Sharga warned, however, that prices are usually higher than at other stages of foreclosure.

Sheriff’s auction: These sales yield the lowest prices, but they are fraught with difficulties. Often the house is unavailable for inspection, leaving buyers with a long list of expensive repairs — and much larger bill than they intended. This stage is usually best left to the professionals, the contractors and investors who regularly bid on these places and know what they’re doing.

Repossession: This occurs after the home has gone through a sheriff’s auction but does not sell and the bank gains possession of the property. Homebuyers may not get the best bargains during this stage, but they can nearly always perform a thorough inspection before closing, minimizing costly surprises. Plus, the property comes with a clear title.

In addition, the banks selling these places may extend preferential financing terms to the buyers and may have made some repairs before putting the property on the market.

Even in this safer stage, though, homes are still sold in “as is” condition. That means the bank won’t pay for cosmetic issues. Although, they will often pay for some or all of repairs that are health and safety issues. That makes the home inspection even more critical. You do not want to buy a bank owned or really any home for that matter, without paying for your own home inspection.

Since you’re buying from a corporation, not an individual, the buying process can be faster, so be prepared to move quickly. Many times a listing goes on sale on a Friday and is sold over the weekend.

Having your financing in order for a quick purchase is very attractive to banks. Buyers and their agents need to be on top of everything from the inspection to the financing. Some banks will even give you discounts for closing quickly. On the other hand, they may charge a per diem fee for late closings.”

Once you’ve decided which type of home to buy, there are several common mistakes foreclosure buyers should take care to avoid. These include:

Getting caught up in a bidding frenzy: The banks often under-price repossessions, hoping to generate excitement, attract multiple bids and sell them quickly. The problem is, as in any auction-type sale, bidders get excited and pay too much.

There are 800,000 REOs in the banks’ inventories. There’ll be another home to bid on tomorrow. At the same time, low ball offers are often scoffed at. A good agent should be able to show you comparables to make a strong offer.

Underestimating repair costs: Take full advantage of the home inspection and don’t delude yourself about how much the repairs will cost.

In some cases where a lot of work is required, take along someone who can give you a good estimate of how much repair costs will come to.

A good rule of thumb would be to factor in a cushion of 10% to 20% of the purchase price to pay for unexpected repairs. If you end up not using it, go on vacation after 6 months.

Buying in a neighborhood flooded with foreclosures: This is most important for people buying for the short-term. Any neighborhood saturated with REOs and foreclosures may be headed for further price falls. If you’re planning to relocate within a few years or buying a bigger house, that could mean selling at a loss. A better bet, if you can find it, is to buy the only foreclosed home in an otherwise stable community. That’s more likely to hold its value.

According to the Census Bureau, new home sales improved in March at the fastest single-month rate in 47 years. New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 last month, compared to an upwardly revised annual rate of 324,000 in February.

The March sales were the strongest since last July, and the percentage gain was the biggest on a month-over-month basis since a 31% gain in March 1963.

New-home sales spiked in every region of the United States. The South saw the biggest jump in new home sales, up 43.5%, while the Northeast region saw sales climb 35.7%. The West and Midwest regions both saw single-digit percentage growth, with the West up 6% and the Midwest up 4%.

The Census Bureau data followed a report from the National Association of Realtors on Thursday that showed existing home sales soared nearly 7% in March, as new homebuyers raced to buy up properties before a tax credit expires on April 30.

The Census Bureau estimated that 228,000 new homes hit the market in March. At the current sales rate, it would take 6.7 months to sell through that inventory, down sharply from an estimated 9.2 months of inventory in February.

While things are not great, a firming housing market and improving jobs market (experts are predicting unemployment for April to be a still high 9.6% compared to 9.7% for March) shows we are heading in the right direction.

One thing I am asked often by clients and other agents is the impact of Foreclosures, short sales and died of lieu on credit scores. If you’re delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much?

Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.

Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.

Here are the average hit your credit will take:

30 days late: 40 - 110 points

90 days late: 70 - 135 points

Foreclosure, short sale or deed-in-lieu: 85 - 160

Bankruptcy: 130 - 240

To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.)

The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus a longer credit history, lower utilization of total credit limit and no missed payments on any account. The other consumer has two slightly damaged accounts. Neither have any accounts in collection or adverse public records.

See the chart above to see how each scenario affected each borrower.

One reason credit companies were so closed-mouthed is that they often can’t definitively state how much each delinquencies will affect scores because there are too many variables.

Some borrowers will fall much more steeply than others for the same payment problem. Picture someone who has just one mortgage and one other credit account.  If they miss one payment that would impact their scores a lot more versus a mature credit user with 15 accounts, one missed payment would just be a blip.

The point loss also depends on the borrower’s starting point: People with very high credit scores have more to lose than low-score borrowers; the impact of a single blemish on an 800 score is more than on a 500.

It gets worse when you face foreclosure, depending on whether you lose your home through foreclosure, short sale or deed of lieu.

Credit bureaus generally slash scores equally for those three resolutions to someone losing their home. The important thing is that it’s reported that you paid less on a settled account.

Some borrowers may think that because they never missed a payment, they can “walk away” from their homes with relatively little impact on scores. Not true. When a deed-in-lieu or short sale is reported as a partial payment, it’s treated as a serious delinquency just like a foreclosure.

Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score.