San Diego Real Estate Blog

The homebuying season is starting early this year, thanks to the expanded first-time and move-up homebuyer tax credit.

Typically, the busiest time for home shopping starts in March and continues through May, but this year buyers who want to take advantage of the tax credits have to hold a signed contract by April 30 and close the deal by June 30.

That is getting people off the couch.

“The tax credit will absolutely have an effect,” says Pete Flint, CEO of residential real estate search engine Trulia.com. “It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand.”

Source: USA Today, Stephanie Armour (01/20/2010)

Long-term mortgage rates fell for the third straight week, pushing the average rate on 30-year fixed home loans below 5 percent again, according to Freddie Mac.
This week, average interest on 30-year mortgages was 4.99 percent, compared to 5.06 percent last week and 5.16 percent a year ago.
Rates on 15-year fixed loans also followed bond yields lower, averaging 4.40 percent, compared to 4.45 percent last week; and adjustable-rate mortgages also fell this week.

With a new April 30 deadline in place for clients to take advantage of a federal home-buyer incentive, real estate practitioners now have slightly less than four months to get their qualified prospects under contract before the cut-off date.
In order to maximize this opportunity,I have revamped my marketing materials to reflect changes in the rules — which now allow certain repeat buyers, as well as first-time buyers, to get a tax break.
In addition to promoting home-buying based on today’s lower home prices and historically low interest rates, I also convey to my clients that there is no requirement that they sell their current residence at once — or ever.
On top of polishing up my marketing approach, I am freeing up time so that I’m available to spend more time guiding buyers and hosting property showings.
I am thoroughly knowledgeable about the supply of properties priced up to $800,000, which is the maximum price for a home to qualify for the tax credit.
Finally, I keep all other parties involved in transactions — from lenders to inspectors —on top of things and at the ready because most motivated house-hunters will want to move quickly once they have found their ideal property.

December 2009 Summary Report

Single-Family Detached Homes

• The median price for all homes in North San Diego County – single-family detached and single-family attached – remained at $370,000 in December 2009.1

• The median-priced single-family detached (SFD) home in North San Diego County decreased 0.6 percent to $436,000 in December 2009 from $436,250 in November 2009. The SFD median price in Non-North County zip codes rose 0.89 percent to $353,000 in December 2009 from $349,900 in November 2009.

• Year-over median SFD price in North San Diego County increased 16.19 percent from $375,250 in December 2008, continuing a trend of rising year-over prices from August 2009 following 22 months of price declines. Year-over median price rose 5.37 percent in Non-North County from $335,000 in November 2008, the third straight month of year-over increases.

• The countywide median SFD price increased 1.6 percent to $385,000 in December 2009 from $378,950 in November 2009, and increased ten percent year-over from December 2008 – this was the fourth month of year-over price increases county-wide.

• The overall median price for single-family detached homes was $414,000 in 2009, compared to $454,000 in 2008.

Single-Family Attached Home Prices

• North San Diego County median-priced single-family attached (SFA) home fell 5.45 percent to $238,750 in December 2009 from $252,500 in November 2009. The Non-North San Diego County SFA home median price declined 4.76 percent to $200,000 in December 2009 from $210,000 in November 2009.1

• North San Diego County SFA median prices increased 13.69 percent year-over from $210,000 in December 2008 continuing a five-month trend of year-over price increases, the last three of which increased over 10 percent. This trend counters 24 months of year-over declines.

• Non-North County median SFA prices rose 2.56 percent year-over from $195,000 in December 2008.

• The county-wide SFA home median price fell 4.23 percent to $215,000 in December 2009 from $224,500 in November 2009, and increased year-over 7.5 percent from December 2008.

• The median number of days-on-market for North County SFA homes sold remained at 33 in December 2009. The average number of days-on-market declined to 65 in December 2009 from 67 in November 2009.2

Lawerance Yun, NAR Chief economist, projects an additional 900,000 first-time buyers will qualify for the extended tax credit, in addition to about 2 million who have already purchased; 1.5 million repeat buyers also are expected to benefit from the credit.

“Many trade-up buyers, who have historically timed their purchase based on school-year considerations, will have to accelerate their buying plans if they need the tax credit to make a trade,” Yun said. Repeat buyers do not have to sell their existing home to qualify for the credit, but they must occupy the home they buy as their primary residence.

Yun added that mortgage interest rates cannot remain at rock-bottom levels for a sustained period and will likely inch higher in 2010. But the tax credit impact in the first half of the year and expected job-growth impact in the second half will support home buying activity and absorb enough inventory to bring a rough balance between buyers and sellers. Home prices are expected to stabilize or even modestly rise as a result in 2010.

Home prices in 45 of the largest housing markets are expected to fall another 4.2 percent before they hit bottom in March, according to First American CoreLogic’s LoanPerformance Home Price Index.

By October 2010, prices are expected to be heading upward again by about 1 percent compared to 2009.

The report warned that this progress could be jeopardized by an increasingly large “shadow inventory” of homes owned by banks but not yet on the market. The problem is particularly acute in Michigan and Ohio cities, the report said. It projected a 12.7 percent further decline in values in Detroit, an 11.4 percent decline in most of the rest of southeast Michigan, and a 6.3 percent fall in Cleveland.

The report expects the strongest recoveries next year in California cities. These include:

1. San Francisco, up 5.7 percent

2. Los Angeles, 5 percent

3. San Diego, 4.7 percent

4. Sacramento, 4.6 percent

Source: Inman News (12/21/2009)

On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement – a new addition to this year’s list – recouped 128.9 percent of costs, followed by upscale fiber-cement sliding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.

On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1 percent of remodeling costs compared to 73.8 percent in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3 percent costs recouped.

Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl sliding replacements, which returned more than 79 percent of costs. In addition, several types of window replacements – midrange wood, midrange vinyl, and upscale vinyl – all returned more than 76 percent of costs upon sale.

Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1 percent and 50.7 percent of project costs.

Regionally, cities in the Pacific states of Alaska, California, Hawaii, Oregon and Washington once again outperformed the rest of the nation in terms of remodeling costs recouped upon resale.

Source: NAR

November 2009 Data

1. The median price for all North County home sales – attached and detached – decreased 1.35% in November 2009 from October 2009, to $370,000.

a. Detached homes in North County rose 1.45 percent, from October 2009 to November 2009, from $430,000 to $436,250.

i. Detached home prices OUTSIDE North County decreased 1.4% from October 2009 to November 2009, from $355,000 to $349,900.

ii. November 2009 median single-family detached homes in North San Diego County increased 21.86%, from $358,000 in November 2008. The median price OUTSIDE North County for single-family homes rose 7.66 percent from the $325,000 a year ago.

iii. The countywide median price of homes sold decreased from $380,000 in October 2009 to $378,950 in November 2009 and was up 11.62% from the November 2008 number.

b. Attached home prices in North County increased during November 2009 by 5.54%, from $239,250 a month earlier to $252,500.

i. Non-North County attached home prices increased 2.44% in November 2009; from $205,000 to $210,000.

ii. North County attached homes increased 40.28% from $180,000 a year ago.

c. Median days-on-market for single-family detached homes in North County remained at 35 days in November 2009. The number of North County single-family homes sold fell 18.13% last month, from 772 to 632. There was a year-to-year increase of 9.15% for home sales in November 2009 compared to November 2008.

1. For several months, the California and local housing markets have been experiencing a sales rebound as a result of low interest rates, a continuing supply of distressed properties coming to market, and a continuing reduction in the fear factor on the part of prospective homebuyers.