San Diego Real Estate Blog

The California Association of Realtors (CAR) reports that 84 percent of home buyers use the internet as a significant part of the home buying process, according to its 2009 Survey of California Homebuyers.

“There is so much more information made available to us online, when you go to the actual home, it’s just a validation process for what you’ve seen online,” says Douglas de Jager, co-founder of Dothomes.com another new online listing service.

Browsing for housing on the Internet has become just about as important as having a real estate agent help find a home to buy, but the ease of finding a home on the Net does not guarantee a bargain.

The lack of uniformity in quality control, geographic coverage and search methods from one Web site to another, still often renders the online search less than complete. Plus, most buyer expectations are unrealistic, as many sellers have listened to their Realtor and already aggressively priced their homes.

Here are some things you can look for when bargain shopping-

Look for languishing listings. Heavily discounted homes are 83 percent more likely to have been on the market for 90 days or more. Most sellers will hesitate to accept a low offer if the property has been on the market for only a few weeks.

Find fixer-uppers. Heavily discounted homes are 73 percent more likely to need some fixing up. People who sell homes before fixing them up are usually more concerned about speedy selling than peak price. Get the home inspected before you buy so you know exactly what needs work.

Retreat from remodels. Heavily discounted homes are 20 percent less likely to feature a noteworthy remodel. This also means sellers who sink money into major remodels before they list could be missing out on certain buyers.

Pick properties with pared prices. Homes that are already heavily discounted are 28 percent more likely to already have price reductions. Uh, No Kidding.

Hunt homes with long-time owners. Heavily discounted homes are 52 percent more likely to have been seller-owned for 20 years or more. The longer a seller has owned a property, the more equity he has likely accumulated, and the more likely he is to make significant price concessions.

Put your finger on a flip. On the other hand, heavily discounted homes are 9 percent more likely to have been owned for less than five years. A home owner or investor in trouble may be motivated by the need to quickly reclaim capital, rather than wait for equity growth.

Don’t bank on bigger bargains from bank-owned homes. Heavily discounted homes are 9 percent more likely to be a short sale or bank-owned. Banks lower prices as much as possible from the beginning to unload distressed properties as quickly as possible, but no so much to take more of a loss than is necessary.

And after all that work, call a Realtor to see how much of your info gathering on the internet is accurate/current.

Single-Family Attached Homes

The North San Diego County median-priced single-family attached (SFA) home increased 6.67 percent to $240,000 in February 2010 from $225,000 in January 2010, following two months of price declines. The Non-North San Diego County SFA home median price rose from $200,000 in January 2010 to $205,750 in February 2010.1

North San Diego County SFA median prices increased 32.6 percent year-over from $181,000 in February 2009, the seventh month of year-over price increases (five of which exceeded 13 percent) following 24 months of year-over declines.

The county-wide SFA home median price increased 1.9 percent to $215,000 in February 2010 from $211,000 in January 2010, and increased 16.22 percent year- over from February 2009.

The median number of days-on-market for North County SFA homes sold fell to 41 in February 2010 from 42 in January 2010. The average number of days-on- market fell to 66 in February 2010 from 75 in January 2010.2

The number of sold SFA units fell 11.21 percent from January 2010 to February 2010 in North San Diego County, and decreased 2.92 percent in Non-North County. Year-over sales decreased 9.17 percent in North County from February 2009 (after three months of year-over increases) but rose 6.15 percent in Non- North County.

SFA listings (active and contingent) in North San Diego County rose from 1,368 ending January 2010 to 1,492 ending February 2010. San Diego County (active and contingent) SFA listings increased to 4,811 at the end of February 2010 from 4,483 in January 2010. North County SFA active listings increased 5.97 percent year-over but decreased 3.9 percent countywide.

The state Legislature approved and Gov. Schwarzenegger signed into law in March a homebuyer tax credit for California. Here’s what you need to know about the program.

How much is the tax credit?
The homebuyer tax credit is for up to $10,000 or 5 percent of the purchase price – whichever is less – for the purchase of a newly constructed, previously unoccupied home. There is also a tax credit of up to $10,000 for the purchase of an existing home by a first-time homebuyer.

How much money is available in funding for the program?
There is a $200 million allocation for the entire program, divided evenly between the two parts. In other words, $100 million is authorized for new construction and $100 million for existing home purchases by first-time homebuyers.

When does the tax credit begin?
The program starts May 1 and will run until the end of the year or until funding runs out, whichever comes first. A similar program in 2009 lasted less than four months before the funding was exhausted.

How does a homebuyer qualify?
Once a customer signs a contract to purchase a home, they are allowed to reserve a tax credit provided the contract is entered into on or after May 1. The state’s Franchise Tax Board (FTB) allocates the credits on a first-come, first-served basis. The homebuyer may submit a certification to the FTB upon entering into a sales contract, and must submit a properly executed settlement statement to the FTB within two weeks of close of escrow. In order to receive the tax credit, escrow must close no later than Dec. 31, 2010, unless a credit has been reserved prior to that date, in which case the home must close escrow before Aug. 1, 2011.

How does the program work?
The tax credit is paid out in equal parts over a three-year period (i.e. $3,333 for 2010, $3,333 for 2011, $3,333 for 2012). Purchasers must reside in the home for at least two years. There are no income limitations to be met by purchasers, and there is no repayment requirement unless the purchaser sells, rents out or moves out of the home before two years expire.

What about the federal homebuyer tax credit?
Unless Congress and the President choose to extend the current federal program, it will end April 30, the day before the state program begins.

How will customers know if there is still funding available?
The FTB will track and publish that information on its website at www.ftb.ca.gov. The FTB website will also have more information and all the necessary forms homebuyers will need.

ActiveRain awards members points based on participation and their individual involvement within the network and community.  While there is a much more complicated and technical explanation of how the point system works, this post is to provide you a general overview of how points are earned and distributed that to ALL ActiveRain members.

ActiveRain points are earned based on a members individual activities and efforts. Points are accumulated over the duration of the Calendar week which “Starts Monday morning at 12:00am Central Time, and Ends Sunday night at 11:59pm Central Time.”

In early 2009, the Fed embarked on a $1.25 trillion mortgage-backed securities (MBS) purchase program to help keep mortgage rates low and stimulate the economy. The amount purchased varied from week to week, reaching a peak of $33.2 billion in the week of March 25, 2009. The Fed has been gradually reducing the size of its purchases at a pace consistent with a March 31 conclusion of the program, and the most recent weekly purchases have been down to around $10 billion.

As the date nears, the big question is what will happen when the MBS purchase program ends. This program is unprecedented, making the outcome difficult to predict, and forecasts vary widely. Estimates for the impact on mortgage rates from the conclusion of the program vary from an increase of one percent to no change. Those who predict higher mortgage rates point to a basic change in the fundamental supply and demand. The added demand from the Fed was widely credited with moving rates lower, and a decrease in demand would typically push rates higher. However, other economists argue that investors respond only to unexpected news. In this view, since the Fed has telegraphed the end of the program for months, there should be little reaction around March 31. The Fed itself has indicated that they expect a modest increase in mortgage rates due to the end of the program.

The Obama administration’s newest foreclosure-prevention efforts, expands on the government’s marquee foreclosure prevention program, Making Home Affordable. That program was originally expected to reach as many as 4 million borrowers, but it is not on track to help so many.

To reach its goal, the administration is adding tools to help lenders reach struggling borrowers who have lost their jobs or who are “underwater” because home values have plunged and they now owe more than their homes are worth.

Administration officials said the new efforts are not designed to help all troubled borrowers, but rather those who stand the best chance of recovering. That approach, they said, should help further stabilize the housing market and the economy at large.

“We’re not going to stop every foreclosure. It wouldn’t be fair. It would be too expensive, and it probably wouldn’t succeed anyway,” said Diana Ferrell, deputy director of the National Economic Council, which advises the president.

The administration’s plan, to be implemented over several months, requires lenders to slash jobless borrowers’ payments for three to six months, adopting a strategy used by the industry and applying it more broadly.

Does it matter whether a real estate agent charges you a flat commission rate — say 6 percent — or quotes you a flat rate but adds hundreds of dollars labeled an “admin” or administrative fee?

Helen R. Kanovsky, general counsel at the Department of Housing and Urban Development, clarified the government’s position on controversial add-on fees in a recent letter to industry lawyers. During the past several years, many brokerage companies began adding fees onto their commissions to generate higher revenue. The fees came with a variety of names — “processing” and “ABC” among others — and were charged to sellers and buyers, payable at closing.

But a U.S. District Court Judge’s decision last year threw the industry into an uproar when he concluded that add-on fees violate federal law when there are no specific services performed to justify the extra cost. This forced the National Association of Realtors and other industry groups to urge brokers and agents to reexamine their approach to pricing.

HUD never issued detailed guidance to the industry following the court decision on what’s legal — and what’s not — until Kanovsky’s letter. Here’s what she said, in essence: Federal law does not govern how much realty brokers can charge their customers. But it does govern how brokers and agents disclose their compensation to consumers. Commissions may be quoted “using a flat fee, a percentage of the sales price, or a combination” of the two. The revised HUD-1 settlement sheet in use nationwide since Jan. 1 has lines where the commission charges and splits can be listed. However, Kanovsky warned that if the total charges “exceed the amount of the commission for listing and selling the home that are reflected in the real estate broker’s or agent’s listing agreement,” then HUD has the legal power to review the extra charge “to determine whether additional services were provided” to justify the add-on.

Buyers should ask about all compensation and fees in any transaction. If you’re asked to pay fees you’ve never heard of, or that come with vague justifications, don’t roll over. Just say no.

Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.

Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.

“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.

“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.

It’s nice to see some psoitive things being reported for a change. That sure can’t hurt anything.

The average home in the USA has appreciated +1.7% (in aggregate, not per year) over the last 5 years (i.e., 2005-09). Homes in Wyoming have performed the best, gaining +26.7% on average. Homes in Nevada have fared the worst, losing 40.4% of their value (source: Federal Housing Finance Agency).

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the federally-supported tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence. It also authorizes a tax credit of up to $6,500 for qualified repeat or move-up homebuyers.The new tax credit expires April 30, 2010 (buyers must be under contract by April 30, 2010, and close on or before June 30, 2010). That means homebuyers should act now. With an estimated cost of $10.8 billion over 10 years (estimated by the Joint Committee on Taxation), it is not likely that the credit will be extended beyond the existing deadline of April 30, 2010.

The tax credit, combined with low interest rates and affordablehome prices, makes this a great time to buy.

Higher income limits may allow more homebuyers to qualify. For sales occurring after November 6, 2009, income limits have increased from $75,000 to $125,000 for single taxpayers, and from $150,000 to $225,000 for married taxpayers who file jointly.

The maximum eligible purchase price has increased. The new maximum of $800,000 allows more buyers to qualify. This new maximum purchase price limit applies to both first-time and repeat homebuyers.

The amount of the tax credit is different for first-time and repeat homebuyers.

•First-time homebuyers may qualify for a credit of up to $8,000 (10% of the purchase price of the home or $8,000, whichever is less).

•Repeat/move-up homebuyers may qualify for a credit of up to $6,500 (10% of the purchase price of the home or $6,500, whichever is less).

No repayment is required. The tax credit does not have to be repaid as long as homebuyers use their new home as their principal residence for at least three years after the purchase.

In another sign of the times (crazy as they may be) on April 5, 2010, in an effort to end the foreclosure crisis, the Obama administration will start paying troubled homeowners to “Shortsale” their home. This latest program, which is still being fine tuned, will allow owners to sell for less than they owe and will give them a little cash to speed them on their way. Reports show more than five million households are behind on their mortgages and risk foreclosure. Only a small percentage of homeowners have been helped by the government’s $75 billion mortgage modification plan. The administrations biggest concern (as it should be) is that millions of foreclosures could delay or even reverse the economy’s tentative recovery. I think if you look at history, there is little doubt getting our country back on track will come.

The plan calls for  the servicing bank and second position (if there is one) to get $1,000. And now the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.” through the housing industry. Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

Whether this plan works or not time will tell. I guess it’s good the administration is going to give the money directly to the people instead of lining the pockets of their cronies at the banks who give huge amounts of monies to both parties election campaigns.