Posts Tagged ‘housing’
Friday, September 8th, 2017
Believe it or not, there are MANY homeowners who are underwater, still, years after the mortgage meltdown. According to Core Logic, 6.1% – 3.1 millions homes – of all mortgaged CA homes have negative equity, as of the first quarter of 2017. Short sales are also increasing recently as many variable mortgages that were obtained back in the heyday before the crash recently reset.
If you are underwater, delinquent with your mortgage payments, or about to be, or if you are making payment on a loan(s) that reset and the increased payments or rates are a struggle, you need to be proactive, and act sooner rather than later.
Here are some options to help you start thinking and researching:
1. Call your lender(s). If you are late on payments or are about to be, you need to call your lender asap. They can help you figure out a plan. They likely will start with the possibility of a loan modification, where your payments can be reduced if you qualify.
Note here that depending on how much your payments are and how deeply underwater you may be, a loan modification may not make sense, but it is still important to go through the motions as a first step to try options.
2. Refinance. This is great in theory but if you are underwater and there is no equity in your home it is not possible. If there is at least 10% equity in your home then definitely find a good mortgage professional (call me if you need a referral) and go this route.
3. Sell the house if you have enough equity. This will allow you to move on and make a smart purchase that fits into your budget, or rent. Of course if you are underwater chances are you do not have equity in your home so this would not be an option for you. But if you can sell your home and make a little money to pay down some debt and get into a rental or inexpensive replacement property, it is best to do that sooner rather than later.
4. Short sale. This is a great option if you are underwater and the loan modification does not work or provide enough financial relief. It will effect your credit but not as badly as a foreclosure. Make sure you speak with a real estate agent who is familiar with short sales and knows how to negotiate with the bank(s), and that you really understand the process and consequences – click here for more information on short sales. There is a timeline for short sales that can help you figure out how long it might take before you would have to move out – click here to access the timeline for California.
4. Other options. If a short sale is not right for you for whatever reason, there may be other options (such as a deed in lieu of foreclosure and possible lender or government programs – there are also specific programs for military members and possibly others so you need to do thorough research) that could work depending on your circumstances. Again, it is important to find an expert who can provide appropriate counsel that will allow you to make informed decisions.
4. Foreclosure. This is a final option if you have exhausted others and there is no relief in sight for getting out of your mortgage obligations. Make sure that before you go down this road you have investigated other options that may apply to you. Foreclosures can seriously affect your credit scores for years.
6. Credit counseling. If your debt issues extend to other areas or credit, such as high credit card balances or trouble paying bills, you should seek counseling to help you get back on track so you can pay down your debt and move on. Don’t focus on the trouble you have, but on improving it so you can be sure not to make the same mistakes again down the road. There are some amazing credit counseling programs and helpers out there – I know of a wonderful attorney who handles this so let me know if you need the referral.
The bottom line is that if you are in trouble with your mortgage and other debt, do not wait until it is too late. The door for other options could close on you, forcing you to foreclose on your home. If you act early you can usually come to a better solution that will allow you to move on without taking such a hard hit to your credit score.
Friday, August 18th, 2017
The real estate market is going CRAZY…well, at least in my local area. After over a year of increased prices and low inventory, multiple offers and crazy shenanigans so that people can get into homes, there are some strange things going on all of a sudden – since the start of August.
Here is what I am seeing in the San Diego market:
Longer market times – Many homes are taking longer to sell compared to those that sold just within the last few months. Even neighborhoods where homes were literally receiving multiple offers on the first day on market are sitting now. Many eventually reduce and on the average I am seeing some homes take around 60 days just to go into escrow.
No more multiple offers in most cases – You would think that the continued lack of inventory would make multiple offers a common occurrence still, but many homes are sitting on the market and reducing prices before they finally go into contract.
Lots of price reductions – I am seeing this all across the board – from condos to single family homes to 2-4 unit income properties. Sellers continue to hit the market with high prices – at comparative sales value or higher – only to have to reduce after 30 days or so due to lack of offers.
Buyers are making low offers – This is for real folks, so if you are a seller be prepared! It is happening all over. I think buyers are tired of rising prices and competition for homes, and they are starting to feel that if a seller won’t take a lower offer, they won’t buy. This is also true with short sales, even though banks no longer accept crazy low offers like they once did years ago.
Escrows are cancelling – I have seen this first hand with my own listings and I have heard from other agents as well – buyers are cancelling escrows at what seems to be a higher rate than we have seen in a long time.
I have reached out to other agents and escrow officers and it seems I am not the only one who feels the market is in such an interesting place. Many agents feel that August has always been a slow month for real estate sales – the end of summer with last vacations prior to kids returning to school, visitors leaving the city, etc. (here in San Diego we have a LOT of summer visitors!)
But there are some who think that this change is indicative of what is to come. Many buyers who were unable to purchase homes due to lack of inventory and multiple offer situations, have decided to rent and wait until the market drops or until there is more inventory available (which really goes hand in hand with prices dropping or at least stabilizing).
I will reiterate my belief, as stated in many blogs, that I do not think we will have a bubble burst or a housing crisis in the near future, but I do think tides are changing. A buyer’s market is starting to blossom and at some point it will flourish. If inventory picks up it will only fuel the change.
Monday, August 14th, 2017
Here we go again…short sales seem to be hitting the market once again, due to rates resetting on adjustable interest rate loans. Back in the heyday of the housing market meltdown these types of properties were often times great buys, so long as a buyer had the patience to wait.
For those not familiar with short sales, they occur when a home is valued for less than what is owed on the mortgage. As a condition of the sale the lender must approve the contract and terms in order for the sale to proceed.
The bad news is that short sales are still anything but “short” in so far as timing is concerned – I still have not figured out why this is the case, but if I were the bank I would try to get through them a lot quicker in order to avoid losing more money. But I digress.
Aside from taking a long time, in most cases, to be approved, short sales are not quite the bargain they once were. Lenders used to accept lowball offers in order to get the short loans off their books, rather than face foreclosure (which typically costs a lender about $20,000). Faced with so many short sales it was easier for the lenders to accept low offers.
Once the supply ran out, the housing market started to recover, and short sales were fewer and farther between, most lenders wised up and refused low offers. Now, although most of them would rather save the money and approve a short sale over a foreclosure, they tend to be tougher when it comes to offers.
Lenders want to see that an offer is close to comparable value. So if the homes in the neighborhood are all selling for $1M and a buyer offers $950k on a short sale, chances are the lender will counter the price as a condition of acceptance. The best way to get a “deal” is to make an offer that is slightly under comparable values in order to avoid a lender counter offer.
If you are a buyer contemplating a short sale purchase, make sure your agent really does his/her homework on comparables and talks to the listing agent. I do believe you can get a decent price on a short sale, but they are not the “deal” they used to be.
Thursday, August 3rd, 2017
It is usually typical for the real estate market to slow as summer winds down, but many people ask me if I think the market will continue on it’s current path – rising prices and lack of inventory. This subject is discussed on a daily basis in the media by real estate agents, economists and buyers and sellers. I read a lot of it – from those claiming that the market will continue on it’s path, others predicting a bubble, and all sorts or in-between predictions. So how is one to know where the market it really heading?
First of all, no two markets are the same. So while right now in Los Angeles there are still bidding wars going on in some neighborhoods, here in San Diego it really varies as to price, neighborhood and type of property. Investors are still out there trying to pick up good deals, especially in the attached market under $600,000 and with 2-4 unit properties. Many 2-4 unit properties that were sitting for a long time are suddenly entertaining multiple offers.
Attached homes – Townhomes and condos are still “hot” here in San Diego County, especially those in nice areas close to highways, beaches and shopping/dining/transportation. Those priced under $600,000 still seem to be going fast. For example, in Carlsbad (North Coastal San Diego), in the month of July the average market time for sold condos and townhomes was 32 days, with 39 of these properties in escrow now. There are currently 48 active condos/townhomes listed on the market in Carlsbad that are priced under $600,000. 9 condos/townhomes sold in July with an average market time of 32 days. The average sold price was $428,533.
Detached Homes – There are currently 78 detached homes for sale in Carlsbad that are priced under $1 million. 57 homes went pending in July with an average market time of 22 days and an average list price of $842,000. Only 5 homes under $1 million sold in Carlsbad in July, with an average market time of 16 days and an average sales price of $802,000. Of the active listings, average market time so far is 37 days, with 19 of those properties having been on the market less than 10 days. Of course, this “detached homes” field includes all 4 zip codes in Carlsbad and multiple types of detached homes – varying with location, age and upgrades/amenities.
Homes located in certain neighborhoods seem to sell much faster. For example, the Mar Brisa neighborhood of Southwest Carlsbad (with the exception of one listing that has not sold for over 60 days and has dropped price several times) tends to sell very quickly, oftentimes in days or even before hitting the MLS. So location is a big factor, and many buyers are willing to pay over asking price to get into neighborhoods with little to no active listings.
As I always say, if you are in the market to purchase or sell residential or 2-4 unit income property, it is important to contact a skilled area agent who can provide you with a complete, detailed analysis of the specific area on which you are focused.
Crystal Ball Predictions – The question I am asked the most is “what will happen in the real estate market in the next year?” I usually chuckle and say that if I had a crystal ball I would be a very rich person! But I do believe that while prices will not shoot down drastically, that we are entering a “correction” period. I think we will see prices stabilize and the market very slowly start to revert to a buyer’s market. That means that prices will not likely rise much more, but of course there may be some highly desirable areas that do still see rises for a short time.
Many buyers are getting frustrated with the high prices and low inventory and are thus deciding to put property searches on hold, opting to rent until the market changes. While interest rates will likely rise that does not seem to be enough of an incentive for buyers to jump in when facing high prices and multiple offer situations. So in my opinion I believe we will see prices drop slightly, maybe more for properties that are not selling. Higher inventory levels would help keep demand filled and prices a bit more stable, so hopefully we will see that happen as we head into the later part of this year and the year to come.
Tuesday, May 30th, 2017
People are always asking me how they can save money on home purchases and sales, and legislation under California Propositions 60 and 90 is one of the best ways to do just that. BUT, you have to meet certain qualifications.
Proposition 60 and 90 help home sellers transfer their current residential tax base to the purchase of a new home, saving potentially thousands of dollars in taxes. Proposition 60 is for intra-county transfers (between the counties of San Diego, Orange Los Angeles, Riverside, Alameda, El Dorado, San Bernardino, Santa Clara, San Mateo, Tuolumne and Ventura. Proposition 90 allows for the same advantage with inter-county transfers.
This all sounds great, right? Here is the fine print…in order to qualify:
1. The home owner (only one of them) must be at least 55 years of age. Co-owners cannot both qualify.
2. The home being sold must be a principal residence
3. The present home must be sold and the new home must be equal or lesser market value to the original property
4. If the property is held in a trust the seller will need to be the beneficial owner of the trust, not merely the trustee
5. The replacement property must be purchased or built within 2 years (before or after) of the sale of the current property.
6. “Your original property must have been eligible for the homeowners’ or disabled veterans’ exemption either at the time it was sold or within two years of the purchase or construction of the replacement property.”
As an example let’s say you purchased your home many years ago for $400,000 and it’s current market value is $800,000. If you sell this home and purchase a home that is $800,000 or less, should you qualify under Proposition 60 or 90 you will be able to take your current tax basis (tax on the $400,000 home plus the increases that have accrued over the years) to a replacement home that is purchased for $800,000 or less. This is a huge savings because most counties tax about 1-1.25% on real estate purchases.
For more details on eligibility requirements to take advantage of Prop 60 or 90, click here.
Tuesday, April 25th, 2017
If you are a home buyer or plan to buy or sell in the future, and if you are using a third party website online to look at inventory: Beware. Zillow and Trulia, two of the biggest third party consumer property websites in the industry, have recently changed their policies. This means that there are listings that may not ever show up on their sites – bad news for buyers, sellers and real estate agents.
Zillow announced to all agents that effective May 1 agents will no longer be able to manually upload listings to their sites (Zillow and Trulia). Since many MLSs around the country do not have agreements with Zillow to automatically transfer listing data (Sandicor, the San Diego MLS, included), the only way for listings to get on Zillow/Trulia after May 1 will be for each brokerage to have an agreement with the company. With so many brokerages many may not pursue such agreements.
This could hurt buyers worst of all, as those who are not working with real estate agents (who rely on the MLS for property data – the best and original source) may miss out on new listings. In a market with low inventory and multiple offer situations popping up, a buyer could lose out on purchasing homes.
Although this new rule is supposed to roll out on May 1, Zillow seems to not have waited that long. I had a listing that disappeared from the sites last week. I had to apply to my MLS to provide me with a number I can share with Zillow that will allow it to capture my future listings. But the process can take 7-10 business days – just enough time for a buyer to completely lose out on seeing and making an offer on a great home, and there are likely agents who do not realize their listings will or have disappeared.
My advice to buyers it to use only MLS sites – this means having an agent set up a search for you directly from the MLS. You can access that search and do a reverse search, which will allow you to see other listings. If you must use a third party site, I recommend Redfin, as they somehow pull from MLSs, and their data is updated almost instantly. They also provide more accurate value estimates on properties, in my opinion.
Thursday, March 16th, 2017
As many in the real estate industry anticipated, the mortgage interest rate has been raised, and predictions are that rates will go up again, possibly multiple times this year. What does that mean for home buyers, sellers and the real estate market in general?
1. Inventory will likely remain low. Since inventory in most markets is already low the rise in rates could keep it that way. That is because home sellers who were considering selling may choose to stay in their homes. Those who have low mortgage rates currently may decide not to make a move if their new rates will be higher – it will all depend on numbers for many sellers. OR – there is always a chance that rising rates may cause some to sell quickly in order to prevent being locked into their homes for potentially years to come…it will remain to be seen.
2. People may be priced out of markets. If there are fewer homes on the market then home buyers will have a more difficult time finding homes due to high demand and low supply, which normally creates higher prices. As competition heats up, some buyers – likely many first time home buyers – will be priced out of the housing markets in many areas. Unless home builders supply the market with new inventory there could be a stall ahead.
3. Cash buyers will continue to play a role. In many markets, especially condo and townhome markets priced at $650,000 and under, I believe cash buyers will continue to be out in force snatching up these properties. Many first time buyers will have to contend with these cash buyers, and usually that is a losing game for the buyer who is getting a loan (since cash buyers do not require appraisals and can close more quickly; not having to rely on a lender to get the sale closed is a plus to many home sellers).
4. Rental market will continue to be saturated. If the above holds true then the already saturated rental market will continue to be busy – landlords will be able to make good money and raise rents because there will be plenty of renters needing homes who will pay the higher prices if current tenants cannot. This point correlates with the increase in cash buyers that we have seen lately in the “lower end” markets – many of them have been purchasing the lower priced properties for income potential, and it is a great time to make money in the rental market.
5. Real estate industry could see changes. With less inventory real estate brokers and agents could see a big change in the industry. Much like the exodus of sales people during the foreclosure crisis of 2008-2011, I predict many agents will again leave the business because they will not be able to survive in such a tight market. I also predict agent commissions will go down if there are fewer homes which sell faster.
The bottom line is that the real estate market in many areas, at least here in San Diego County and others in California, is still “hot,” but it is getting more difficult for people to get into it. This could affect future home ownership rates and the real estate industry as a whole.
Friday, March 10th, 2017
This seems to be the million dollar question right now as home buyers survey the lack of inventory and multiple offer situations present in many markets. A strong seller’s market and high prices make some buyers nervous. So is it better to buy now or wait?
There are a few very good reasons why now is the time to make that home purchase:
Interest rates are rising – We have already seen this happen and word is they will do so again this year, likely several times. This affects mortgage payments and down payments, so jumping in and securing that lower rate now could be smart. It is also important to note that some lenders are charging a lot more for interest rate lock extensions, so that is something to think about if you have a long escrow period or are pursuing a short sale.
Lack of inventory – Inventory in many markets is still very low – San Diego County included. Many buyers cannot find properties to purchase and when they do there are often multiple offers, especially in the $650,000 and under price range. Cash buyers are out in force as well in many lower range markets, making it even harder for first time home buyers. Being picky is getting more and more difficult – right now is a good time to be preapproved and ready to write an offer once you find a home that meets your criteria. See the home as soon as it comes on the market and submit your best offer right away.
Prices are not dropping as we head into the “busy season” – Lack of inventory is making it difficult as demand outpaces supply. Unless this changes we will not likely see price drops in the busy Spring and Summer months to come. The buyer who decides to wait this period out may find herself down the road with still low inventory and higher interest rates.
Here is an example: A house that currently sells for $766,000 with an interest rate of 4.75% and a 20% down payment would yield a payment of a little over $4000 a month. To get that same payment down the road with a home price drop to $727,000, assuming a higher 5.125% interest rate increase, the buyer would be losing $1585 over 3 years. So even if prices drop 5% and rates increase 3/8th of a percent, the buyer who purchases with a lower rate now will be ahead in the long run.
Uncertainty – Worry about the future and economy is still prevalent among home buyers. Uncertainty about taxes and home write offs, as well as the expected rise in interest rates, make some buyers hesitate to make big purchases. The real estate market, like any market, is cyclical. If you are buying a home with a long term commitment then it is a great time to do so, before there are more rate hikes.
Before you decide whether it is best for you to purchase now or wait, it is important to discuss your scenario with you accountant or financial adviser, an experienced real estate agent in your area and your mortgage professional. Information is power.
Tuesday, January 31st, 2017
The new housing report was released yesterday by Case-Shiller, indicating that U.S. home prices are still rising. Of course this is really area dependent, but if you are a potential buyer or seller you might feel worried, and justifiably so. Keep reading for important information and advice.
The report covers major metropolitan cities and states that prices in these areas rose by 5.27% in November – above expectations of economists, and also up from the previous month of 5.1%. What does this mean for buyers and sellers? Let’s take a look at some important considerations.
Local markets: Of course these studies are general and tend to focus on big cities, so it is important that you contact an experienced real estate agent in your local market to see what is going on in the area. But, the thing to take away from this data is that prices are not easing up. Combine that with the next factor…
Inventory is still very low: Again, your local market must be studied to get an accurate glimpse and set expectations (your real estate agent can help with this), but using my local North San Diego market as an example I know that this is painfully true. I have buyers who simply cannot find homes, and multiple offer situations in some categories – like properties under $600,000 – are still the norm. With low inventory and prices staying put or rising, a buyer does not benefit from waiting to purchase, especially considering the next factor…
Springtime is coming: Traditionally the “hot” season for housing, spring and summer are just around the corner. But in my view we are already in the heat of things. Hopefully more inventory will pop up as we head into that “busy” season, but honestly I think the entire last year and especially this Fall and Winter, can be considered busy in housing – at least here in San Diego. Waiting until Spring could put buyers in even more of a quandry, bringing an increase in the buyer pool: more competition can drive prices up again.
The National Home Price Index also rose by 5.6% annually – up from 5.5% the previous month. High demand is causing these prices to continue on an upward trend. It is important to note, as some doubters or “bubble-talkers” as I call them, may believe, that these trends are NOT similar to those that occurred prior to the last housing crisis in the early 2000s.
How is this market different than that prior to the last crash?
1. Factors driving prices are not the same. Prior to the crash people were driven by speculation and anticipation of growth. Instead, healthy market factors like a strong job market and low mortgage rates are driving this market.
2. Lending is stricter. Lending requirements are not as loose as they were during the time prior to the last housing crash, so not everyone can qualify for a loan.
3. Demand is high but supply is not. Prior to the last market crash, there is a much lower supply of inventory in most areas. It is not so easy to find property to purchase. Many would-be sellers are afraid to sell, as they don’t know where they will move if there is such low supply and so much demand – so it’s a great time to be a seller if you have the time to wait it out on a subsequent purchase.
The moral of all this information is that if you are a potential seller you are in a great position. But if you have to buy after selling you need to have a “plan B” in place – e.g. stay in a furnished month to month apartment or temporarily move in with a relative or friend will put these people in ideal situations to sell and wait for the right home. But buyers have it a bit tougher – the best advice I can give is to BE PREPARED. Get preapproved, start looking at everything in your price range and desired area – even those homes that may not be as upgraded as you like or in the exact neighborhood you wanted. Do your homework and be ready to pounce once you find that “right” home.
Monday, January 2nd, 2017
San Diego is definitely a desirable place to live, and as one of the most visited places in the United States it’s no wonder why – we have the best weather, beautiful beaches, great food and nightlife, culture, incredible places to walk and hike, and so much more. There is nowhere else I’d rather live!
As we head into the new year here are some of the happening stories highlighting San Diego and the local real estate market.
San Diego Ranked 5th “Hottest” Real Estate Market in U.S. – Realtor.com ranked San Diego as the 5th “hottest” real estate market in the country. This is great news for the local market. The story pointed out that demand has especially grown since the election, likely due to increasing mortgage interest rates, and that the low supply levels heading into the new year will keep prices high – great news for sellers. Median sales time is 53 days in San Diego county, compared to 88 days nationwide.
San Diego Remains Top Destination for Foreign Buyers – We still rank as one of the top places for foreign buyers, especially those from China and Canada. San Diego is up there with Los Angeles, Orange County and San Francisco as the top places to purchase property in California. Speculation that this trend will continue in 2017 as many feel the US economy and the dollar will strengthen.
San Diego Home Sales Could be Protected by State Supreme Court Ruling – I have blogged about “dual agency” many times, and my position has always been that real estate agents should not be able to represent both the buyer and seller in a real estate transaction. The reason for this is that I feel it is virtually impossible to exercise a fiduciary duty to both parties – it can create too many conflicts of interest. The California Supreme Court seems to be coming closer to agreeing with this sentiment.
In November the court ruled that “a listing broker has a fiduciary responsibility to the buyer and the seller when his brokerage firm is representing both, setting a significant precedent for obtaining and sharing information in residential and commercial transactions.” While there are currently disclosures required which allow such situations, this ruling could be paving the way to no longer discontinuing them in the future…stay tuned for more.
If you need any information about property in the San Diego county area please feel free to contact me. Happy New Year!