You Can Buy a Home Now

It's not a trick, you can buy a home now!

Just go to my property search page at http://www.juliahuntsman.com !

How Many REO and Short Pay Properties Are There in Belmont, Alamitos Heights?

The filing of notices of default increases each quarter in California, per Dataquick on October 23rd, "Foreclosure resales have emerged as a major market factor, accounting for 47.6 percent of all California resale activity last quarter" but not all areas are impacted as heavily as others:

So far, for areas falling in the 90803, 90814 zip codes, the MLS listings are showing, out of 257 residential properties up to 4 units listed, there are 27 "short pay" and "NOD" listings, 3 in bankruptcy, and 11 REOs (bank-owned properties). The 4-bedroom, 2100+ sq ft Alamitos Heights single family home at right is an REO property that has been on the market for 8 days, and is competitively priced at $679,900. Looking for your next home? This is a great residential area close to the coastline, Cal State Long Beach, the 405 and 605 Freeways, and a few blocks from a major grocery chain store, bank and eateries.

BUT, did you know that we (meaning Realtors) have an REO Advisory that goes along with your offer on a bank-owned property? Be sure and ask for this important disclosure because you the buyer should know that owners of bank-owned properties are not legally required to provide you with certain information that you would expect from a "equity" seller, and you may even be asked to sign the bank's addendums, and in some cases, the bank's own contract form, that are not the same as the standard Realtor contracts. They are exempt from the transfer disclosure statement, the natural hazard disclosure statement (although the listing agent is not exempt from this), the supplemental property tax notice, Mello-Roos lien disclosure, the 1915 Improvement Bond Act notice (that's how you learn about other taxes affecting your property), and notice of private transfer fees, or the earthquake guide book. After all, they never lived in the property, and took it back in foreclosure, so they just want to sell it. Also, they often will do no repairs, including termite repairs, or so they say. As time goes on, though, I'm hearing that banks are more willing to contribute towards buyer closing costs.

Unlike the last recession, REO properties in this market are not well-prepared for sale, may need a lot of repairs, or just plain smell bad requiring the buyer to use a lot of imagination to see the ultimate potential. The issue in some communities has been such that laws have been passed forcing banks to maintain their properties and drain the swimming pools.

So, buyer beware, but if you can get past the physical condition and the disclosure issues, or lack thereof, you may find a great home.

The same story goes for a "short pay" property, and indeed, there are a growing number these days. If you make an offer on one, be sure you receive a "short pay" advisory with your contract--this details conditions surrounding the bank's approval of the seller's market value of the property vs. the mortgage amount owed and how it may affect you, the prospective buyer. You may be in a for a wait just for an initial response, especially if there is also a second lender whose approval must also be obtained. Banks vary in their efficiency handling these offers, and much depends on the completeness of the seller's package, along with the growing number of properties affected.

One thing that's immediately affecting the number of Notices of Default filed right now is that lenders are required to contact borrowers in advance of filing default notice. Just how much this is affecting the market, and how far into the future, is unknown:

"It's unclear just how much foreclosure activity will be time-shifted into future months. We'll know more when we have fourth-quarter numbers. What's interesting is that the surge in activity certainly did level off during the second and third quarters. A lot of the market's distress is working its way through the system and the spectacular jumps in activity may be behind us. Or it may be that those processing the default paperwork are just maxed out," said John Walsh, DataQuick president.

So, when all is said and done, take advantage of the opportunity before you.

Foreclosure or Short Pay Debt? New Laws

Starting September 25, 2008, the federal income tax exemption for debt forgiven on a home loan now partly applies to California's state income taxes.

Federal law provides a tax exemption for debt forgiveness on a loan incurred for acquiring, constructing, or substantially improving a principal residence up to $2 million if the debt is discharged from 2007 through 2012.

Under the new California law, the maximum qualifying debt is $800,000, and the maximum exclusion is $250,000. The California law only applies to a debt discharged in 2007 or 2008. (Info by California Association of Realtors)

Market Forecast for 2009 by CAR

It's time for the annual California Association of Realtors' market forecast which always consists of many more Powerpoint slides than what is shown here.

For the buyers and sellers of the next year, it's time to think, if not act. The trends already show certain things:

• Contrary to the decrease in sales for the past two years, this year California single family home sales have jumped up by 12%, and will continue to increase next year, along with an increase in the 30-year-fixed rate mortgage.
• The overall median house price is projected to decline from 2008's 37% decline to a much smaller decline for 2009 of another 6%.
• The notices of default issued in Southern California during the second quarter of 2008, over 68,228, exceeded the previous record high of 61,541 notices in the first quarter of 1996.
• Highest number of the sub-prime adjustable rate loan resets (69% of all California subprime loans) peaked in 2008, declining to 24% in Los Angeles County in 2009 and to 8% in 2010. The decline is similar for the rest of California.
• The Alt-A adjustable rate loan (58% of all Alt-A loans in California) resets, however, will peak again in 2010, with the highest percentage of those loans being in Southern California and San Francisco.
• FHA and VA mortgages are now just over 20% of the mortgages, offering favorable rates for first-time buyers.
• Percentage of first-time buyers is the greatest in the last 7-8 years, getting closer to 40% of all buyers.
• Los Angeles County had the highest number of sales in August, 2008.
• In Los Angeles County, bank-owned (REO) properties sold at about 80% of all sales prices, and non-bank-owned sales prices were over 100%--OR, the median price of REO properties were $325,000, compared to non-REO properties at $420,000. Why? Unlike the last down market, the bank-owned properties are often in the "fixer" category, to the extent that laws are recently passed forcing banks to physically maintain their inventory of homes to prevent blight in neighborhoods. For another "take" on the business of making an offer on bank properties, read this Realtor's candid description of her experience.
• Overall, California 2008 sales are up by 85%, compared to an overall decline in sales in the rest of the country.

For buyers, it's very important at this time to know what to expect when submitting an offer on the bank-owned property, or the seller's short sale property, where the bank is again involved in approving the seller's request to sell for less than is owed on the property. The "credit crunch" and bank bailouts come into play here, the seeming inefficiency of many banks along with organizational mergers, have all impacted how those properties are dealt with. So buyers need to know what kind of seller they are dealing with, the difference between the distressed sale and the "normal" equity seller, who might be in a better position to help a buyer with closing costs.

As more buyers recognize their opportunity, will it mean once again having to compete with other offers? The temptation to wait for a lower price may also ultimately bring more buyer competition into the market.

Those "Down Home" Prices

The saying goes "All real estate is local", but nevertheless we have some national news:

The National Association of Realtors has revised its 2008 median home sales price prediction to a downward fall of 8.3 percent, as opposed to an earlier 2008 prediction of a 7 percent drop in price.

California Association of Realtors reports that the number of sales for October are currently 85 percent above the low from one year ago. In August, the median statewide price was $350,140, about a 40 percent decrease from one year ago. Manhattan Beach and Santa Monica were among the 10 highest median price cities in the state. Mountain View's median home price increased by 17% over last year.

Locally, Los Angeles County, figures for August 2008 for single family homes show a median price of $390,000--down from August 2007 median price of $590,250. Does that mean all houses have dropped $200,000 from last year? More likely, fewer houses in the higher price range have sold than the many distressed properties selling at lower prices, representing a much bigger opportunity for the first time buyers. County-wide, about 450 more single family properties sold in August 2008 than one year earlier, while fewer condos sold in the same time period.

Nationally, "the median resale home price is expected to be $200,700 in 2008 and to rise 2.8 percent next year, while the median new-home price is expected to drop 5.1 percent this year to $234,500 and to rise 2.6 percent next year." (Inman News).

Locally, the median price in August for single family homes in Long Beach zip code 90803 (Belmont Heights, Belmont Shore, Naples, etc.) was $885,000, down about 15% from one year ago, but 90802 (downtown, Alamitos Beach, etc.) actually increased by about 19% from one year ago. Zip code 90805 had a median price of $260,000 with the highest number of sales in Long Beach--50--in August 2008.

For a customized property search, please contact me. It's a good time to buy! If you're a motivated seller, there's very likely a good buyer for your property.

Julia Huntsman, Broker Associate, e-PRO®, REALTOR®
All California Brokerage, Inc.
562-896-2609
mailto:ocean@surfside.net
http://www.juliahuntsman.com/
http://www.longbeachrealestate.blogspot.com/
http://www.longbeachrealestate.listingbook.com/

Are You Wanting to Buy, But Waiting?

Trulia just completed a survey on homeownership:

The results from our national American Dream Housing Study conducted by Harris Interactive are in. “70 Percent of Non-Homeowners Have No Plans To Purchase a Home in the Next 12 Months; Nearly Half in 18-34 Age Group Say It’s Too Costly to Purchase a Home in Today’s Market”.

If you're one of the people who are believe that too, (it's true, homes cost more than a nickel) just remember, there are programs to take advantage of (it might put you into the 30%):

Tax Credit - Find out if you qualify for the $7500 tax credit

FHA Loans - Hope for Homeowners Act of 2008

California Housing Finance Agency - First mortgage loan and down payment assistance programs, including teachers.

County of Orange Mortgage Assistance - First time homebuyers in Orange County areas.

Los Angeles County Home Ownership Program - Down Payment assistance program, buyer education

Long Beach Housing Development - Help for first time buyers with down payment assistance as a 2nd mortgage.

Veterans Administration - For active and retired miliary personnel. No down payment for loans under $417,000, see site for all requirements.

Acorn Housing Organizaton - For moderate-to-low-income buyers with lower credit scores, maximum loan amount $500,000.

National Homebuyers Fund - For first time and repeat buyers. Allows for non-traditional credit and flexible sources of income.

Schools First Credit Union - Located in Orange County, but open to all public employees and their family members anywhere in California. Can use credit union-approved lender only. Cannot own a property in the last 3 years.

CalPERS - California Public Employees Retirement System - Offers a 95/5 program allowing 5% personal loan borrowed against retirement account.

CalSTRS - State Teachers Retirement Servie - Allows for FICO score as low as 620.

Other city and local housing programs include those for Anaheim, Bellflower, Buena Park, Chino, Corona, Fullerton, Garden Grove, Irvine, La Mirada, Long Beach, Los Angeles, Orange County Redevelopment Agency, Westminster Redevelopment Agency. Call me for contact information.

NOTE: The Nehemiah, HART and Ameridream programs are no longer in effect.