A First Time Buyer Story in Surf City USA

The City of Huntington Beach did not seem like a likely place to find an affordable first time buyer program. During the high point of the market, it was tough to find a single family home there under $600,000. The home of the Seacliff and other high end developments located within a stone's throw from the coastline were not within reach of the average buyer needing down payment assistance. But that's all changed. Huntington Beach is now offering a program giving up to 20% of the purchase price, not exceeding $100,000, as down payment assistance in the form of a silent second mortgage loan at zero percent interest.

As of August 2009, the maximum purchase price is $515,000, a minimum 3% contribution from the borrower, and annual income limits apply: Between $72,300 maximum for one person up to $136,350 for a family of 8 persons in one household. This and similar programs are for buyers who intend to occupy the property as their principal residence.

So how many houses or condos currently on the market might work for this program? There are currently 124 houses and condos in this price range in Huntington Beach. One of them might be for you and your family, if you fit the qualifications of this program. A 20% down payment at zero interest is an opportunity not to be overlooked. If you have the 3%, or $15,450, for your contribution, plus meet the lender's other loan requirements, please call me for more details on this program and finding a lender who can carry out this program.

Long Beach CA Sales Report for November 2009

The downward slide in amount of inventory is not in sight. For houses, condos and lofts, as listed in the SoCalMLS, the number of properties for sale in November 2009, per MLS data, numbered 1,180, about 100 properties fewer than in October, and 795 fewer than in November 2008.

The Long Beach months supply of inventory has gone from 8 months a year ago to 3 months in November 2009, a steady decline.

The high months for new inventory this year were January, March and June.

Properties in escrow--272--are up by 30% compared to one year ago, with the highest number in escrow during May and June, 2009.

The median sold price for Long Beach is up 12% from one year ago, citywide. from $318,000 to $354,750. (Local zip codes or neighborhoods may reflect a different percentage for specific areas.)

The listings decline is just part of the larger picture: Per Zip Realty's survey nationally, the 579,413 multiple listing service listings in the markets is down 27.64% from November 2008. It’s the 17th straight month that gross listings for all markets declined month-over-month.

In the meantime, the distressed properties make up about 50% of the market, and many more are not yet on the market. Foreclosure Radar allows a free map search by city or zip code of REO, auction and pre-foreclosure properties. Most properties still show lower estimated market values than their loan amounts, which could ultimately lower prices in some areas, but the overall median price increase may be testimony to demand for inventory.

Call for a customized report for your area or zip code--this is a great tool to see the overall trends for value and activity, and to see where your listing price or home value is in relation to other competing MLS listings near yours.

For a free general and area property searches, go to the MLS searches at www.juliahuntsman.com.

How Does Bankruptcy, Foreclosure or a Short Sale Affect the Borrower?

The FICO® score was established by the Fair Isaac Corporation and is one of several systems which evaluate a borrower's credit worthiness by assigning a numeric value. A score of over 720-740 points is considered the desired range of eligibility for a conventional loan by many lenders. Before the current economic downturn, a score of 680 was acceptable and eligible for many conventional loan programs, but that score now does not meet many, if not most, current guidelines. The borrower should take into consideration that FICO® or other credit scores are now checked when applying for home insurance, rentals, a car loan, and employment, to name a few, an individual's credit worthiness is an important fact of life. When a borrower is considering the best course of action, they often do not realize exactly for how long and in what ways a distressed property situation will affect them.



The pie-chart shows the parts of a FICO® score found at www.myfico.com and the aspects of a credit score. While there are general estimates as to the "hits" to your score for bankruptcy, foreclosure, short sales, and late payments associated with these events, opinions differ and are not exact, in spite of what information you may find on various internet sites. Other factors in the borrower's credit history may also impact the total score.

However, certain Fannie Mae borrowing guidelines are known:

• A 10% down payment purchase of a principal residence is allowed 5-7 years after a foreclosure sale completion date (3 years for "extenuating circumstances").
• A 10% down payment purchase is allowed for a principal residence and other types of properties 4-7 years after a deed-in-lieu was executed.
• 2 years after a "pre-foreclosure" sale (may or may not be same as short sale conditions).
• 4 years after a bankruptcy discharged or dismissed.
• 2 years after a Chapter 13 bankruptcy is discharged or dismissed.

FHA may have slightly more lenient guidelines for post-event home purchases, and the borrower should check with a lender. The idea here is not to give a complete listing of guidelines--a discussion with an experienced lender would be good for that--but to let the borrower know what the timeline will be depending on his/her actions and plan accordingly. The potential tax consequences depending on circumstances of the property should be reviewed before filing for bankruptcy, for example.

The choices in some cases are not avoidable, but in all cases, a borrower should obtain more information to be prepared.

No More Paying Loan Modification Fees in Advance

Effective October 11 through January 1, 2013, no one (and that includes attorneys, real estate professionals, lenders and everyone else) may charge advance fees for arranging loan modifications for 1-4 residential units--that means your house, condo, duplex, triplex, fourplex, or other type of home.

Many borrowers have paid, and lost, anywhere from $3,000 to $8,000 without obtaining the desired loan modification. For some people, this meant losing their financial cushion to people who could not deliver. Prior to this law coming into effect, the Department of Real Estate's legal requirements for taking advance fees were complied with by a rather short list of entities and individuals statewide--it was extremely short when compared with the huge numbers of loan modification companies, groups or entities advertising their services everywhere you looked.

Fees may now be collected after promised services have been performed (but the law does not apply to loan modification fees and agreements entered into before October 11).

Making Improvements to Your Property: Where Should You Stop?

There are two types of property owners: homeowners who will move in and live in the property, and investors who never plan on living in the property.


The following points are mostly for investors who are "rehabbers", but owner occupants might find some helpful points here as well in order to gain perspective on a project.


Don't overimprove a property. It's a common mistake to think that all the money put into a property will be added to the original buying price so that the owner will obtain a 100% return on the brand new kitchen, brand new bathroom, or brand new hardwood flooring. Watch out for the following problems if you bought a property to fix and sell:

• Falling in love with your property.
• Remodeling it as if it's the home you've always dreamed about.
• Trying to make it a model home.
• Making upgrades or improvements to show how well you do them.
• Justifying an improvement because it adds to curb appeal (non-monetary return).
• Applying the same formula to every property.

Keep in mind that a buyer doesn't care how much you spent. There is a difference between doing a good rehabilitation and fixing up the house vs. injecting your personal living standards into your choices. Buyers often understand the difference, and even though they may like all the expensive hardware that came from the historic replica source, they may not see it as adding to the value of the property. You must know the needs of the your target buyer. Avoid making your project what you would buy for yourself--you must make it serve the needs of your target buyers.

You must get to know your local (very local) market. Learn to look at your project the way an appraiser does: no more than one mile out from your property, and less than that if it's a different type of neighborhood. Learn what people in the area of your property are really looking for: what do they identify with. They buy in a certain area for a reason, so find out what they admire about their location, the style of homes in the area and why they want a 1970's house, a 1950's house or a 1920's house--there are huge differences in those groups. There were major sociological changes in the generations that served those houses, so taking a 1920's house, ripping out a formal dining room wall and adding a breakfast bar is often viewed as a major flaw by buyers who prize that era of housing. Putting in the same formula kitchen and bathroom re-do in an older area built up over time which contains diverse historic architectural styles could be the wrong decision. Buyers who like older homes want precisely that--a rehabber is probably going to serve the local market far better with modern improvements that blend with the era of the particular custom home, not the one-size-fits-all contractor approach. If you're a contractor, you will need to expand your perception of what it takes to market and sell a home.

For homeowners, take time to think out your ideas, consult with an architect if necessary. Do they work well with the original design and purpose of your particular home?. Mistakes I've seen lately include:

• Enlarging a bathroom in an original 1940's house to include the latest jacuzzi bath, window styles, 1920's(?) floor tile, and hardwood cabinetry which does not match the rest of the house, all by taking a closet of the neighboring bedroom. This now changes the number of bedrooms the house has, potentially lowering its value for many buyers.
• Converting a kitchen pantry into a second bathroom which opens directly into the kitchen. Bad floor plan.
• Removing original doorways in order to obtain more kitchen space so that the original circular traffic flow of the home is now obstructed.
• The aforementioned breakfast bars added by losing a dining room or kitchen wall.

Consult with sources about calculating the return on improvements, including cost vs value reports in Remodel Magazine. In the end, it's important to find out what original features of a property are desired by the local market, whether you're a homeowner or a rehabber, because those may be what brings the buyer when the property is on the market next time.

Long Beach CA Sales Report for October 2009

For residential 1-4 unit properties in Long Beach (that includes condos, houses, lofts, for October 2009, the median price is down 3% from one year ago: $340,000 down to $329,000 for the city.

• The number of sold properties reached a high point during the summer, but in October the total number of sales decreased by 20% from one year ago.
  It also took less time to sell a property in 2009 than in 2008.
• One of the most dramatic pictures continues to be the decrease in inventory by over 50% since one year ago--
• This has been a steady decline in inventory over the last 12 months, to just over a thousand residential properties on the market at the end of October 2009.
• The number of properties in escrow is up by 23%.
• The number of new properties listed is down by over 31% from one year ago.
• What this all adds up to is the months' supply of inventory has decreased from 7 months one year ago, to 2 months this year, meaning at the current rate of sales, all housing inventory in the category would be gone in two months, if no new listings came on the market.

For buyers, especially in the market under $400,000, this has meant fierce competition, not just in Long Beach but in the entire Southern California area, since this is the market that is in the most demand for 1st time homebuyers that make up at least 60% of home sales at this time. Buyers in this range continue to be out bid by all cash, or more cash down payment, buyers. For this group of buyer it's very important to be persistant and to be patient (although after both buyer and agent have been through many many rejected offers, it takes even more fortitude than ever).

The West Coast market should be helped out in 2010 as the temporary jumbo loan limits initiated for 2009 have been extended through 2010 . Nevada, California and Florida are the top 3 states nationwide in number of foreclosure filings, and according to RealtyTrac, and October was the third consecutive month for a drop in numbers of foreclosed properties, however, what the impact of foreclosed inventory will bring in 2010 with new scheduled loan resets remains to be seen.

For a more specific look at your neighborhood or zip code and pricing your property to sell, please call me or e-mail me to receive a local report. To find all active listing on the market, go to the MLS property tab at www.juliahuntsman.com.

How to Buy a Bank-Owned Home

Just a little humor here, but sometimes how true!

Extension of $8000 Tax Credit--Now Also $6500 for Repeat Buyers

Update November 6th: This bill is now signed into law. The extension for this credit is until April 30, 2010, with a 60-day extension if a contract is entered into before that. First time buyers, this is your big chance! Repeat buyers who currently own now have a great incentive also!

The United States Senate passed a resolution on October 29th to extend the $8,000 first-time homebuyer tax credit originally set to expire on November 30. Once the Senate officially votes on the bill it will move to the House of Representatives, which strongly supports the extension. The Obama administration has also signaled its strong support for an extension of the tax credit.
Aside from the first-time homebuyer credit, the new plan would offer a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more. The tax credits would be available to buyers who sign purchase agreements on a new or existing principal residence, not over a selling price of $800,000, between December 1, 2009 and April 30, 2010, and who will close escrow before June 30, 2010.

The income limits for all buyers would be increased from the present levels to higher incomes of $125,000 per year for individuals and $225,000 for married couples.
The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.
According to the Treasury Department, more than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the first-time homebuyer tax credit.
A California Association of Realtors survey of first-time home buyers shows that 40 percent would not have purchased a home without the tax credit.

Are You Getting Your Garage Door Tax Credit?

Installing a new garage door will give your home a new and refreshing look to your Long Beach, Cerritos, Lakewood, Seal Beach and Los Alamitos home, in addition to giving you certain financial benefits. First of all, by enhancing the appearance of your property, you receive added value, and increased energy efficiency. Tax credits, as part of the February 2009 stimulus plan signed by President Obama, are allowed for installation of approved insulated garage doors on this list of manufacturers.

If your new garage door is installed in 2009 or 2010, you may be able to reduce your tax bill by $1500 with this tax credit or 30% of the product's cost. Among other requirements, the garage must be associated with your principal residence, and expected to remain in service for at least 5 years.

What a good way to add appeal and value to your home, and receive a financial benefit in the tax credit and reduced energy costs at the same time. Many times when there are rooms next to or above a garage, they are the hottest in the summer or the coldest in the winter. These insulated garage doors reduce this inefficient escape of heated or cold air, making you more comfortable and paying less for it in hearing and air conditioning bills. There are a variety of styles to choose from, depending on your taste and color scheme. There is sure to be a door to complement the style of your home.

How Will Gustavo Dudamel Improve Your Neighborhood?

Last night’s live broadcast of a free performance of two major orchestral works performed by the Los Angeles Philharmonic at Walt Disney Hall conducted by the 28-year-old Gustavo Dudamel brought in a new wave—an electrifying wave of music and awareness that will pour over and affect even the most ordinary, the most musically uninitiated. This new conductor of the L.A. Phil, a former child prodigy who has already been professionally conducting orchestras for over 10 years, is a product of the music education program of his native Venezuela, known as El Sistema, the life work of Jose Antonio Abreu, a musician and Dudamel’s mentor. Venezuela’s state of musical affairs, 30 years ago, in the words of Abreu, was similar to how arts is and has been treated in this country:

"Music and art education were at that time confined to families who could afford to buy instruments. I felt that music education and art should be part of the patrimony of the whole country. From the beginning, I had the idea of inserting strong teachers in classrooms in sectors with dire social needs.

"In those cases, it's not just the lack of a roof or of bread, it's also a spiritual lack - a loneliness and lack of recognition. The philosophy of the system shows that the vicious circle of poverty can be broken when a child poor in material possessions acquires spiritual wealth through music. Our ideal is of a country in which art is within the reach of every citizen so that we can no longer talk about art being the property of the elite, but the heritage of the people."

Venezuela has had all the problems of children of poverty who are deprived with few opportunities for enlightenment. Does that sound familiar? Due to the initial and continuing work of Abreu, government backing and funding of $29 million supplies the funding for a program that involves children everyday in learning classical music from 2 pm to 6 pm, the prime hours our children are left alone without supervision and to get into possible trouble.

Other countries, including the UK, are introducing similar programs. California, its legislators and its schools, need to stop pushing away music education and the arts, they need to stop viewing them as a secondary and insignificant form of unnecessary learning. The mutuality in the Venezuelan system, the emphasis on achievement involving "team" support with parental involvement, providing a lot of opportunity to be the best you can, not necessarily a prodigy, seems to be producing confidant and high achievers in the Venezuelan system whether inside of or away from the field of music. In the words of Jose Antonio Abreu, we too have many children with a lack, a lack of recognition, a lack of identity, and whose loneliness is preyed upon by those who lead gangs and recruit for them, where the end result is crime and more money spent on a large prison population. The study and performance of music and the arts is not for the isolated few, it should be an opportunity for everyone. Right now, gang involvement is an equal opportunity factor in every public school for most, if not all, children in this country, with a tremendous social and financial cost to its citizens. This country, and California, now needs to give other forms of learning and advancement equal opportunity to its masses. It needs its own El Sistema.

While there is no space here to include a full discussion of the postive effect of music on learning, and on the brain, be rest assured it does. The study of music encourages and requires physical and mental coordination, enables poor readers to read better, requires certain math skills, and then gives that music student a worthy goal for which to strive. Wouldn't you like to have that child growing up near you, knowing he or she is living with a productive purpose and the means to do so?

Long Beach Residential Inventory Decreased by 50%

The September graph, shows for a one-year period, the number of for sale residential properties throughout the City of Long Beach (single family houses, condos and lofts). In September 2008, there were 2,265 properties on the market; in September 2009, there were 1,247.

The overall Long Beach months supply of inventory in the same period decreased from 7 months in September 2008, to 2 months in September 2009. In other words, at the present rate of sale, all existing inventory would be sold in two months.

Able and Baker, Two People in the Subprime Economy

Here's what I found in my e-mail today:

Let’s discuss two California families and the real estate market. We’ll call them Able and Baker.

Able sold a home at the top of the real estate market for $500,000 and bought a new home for $800,000, paying 10% down and getting a new adjustable rate mortgage for the remainder. Baker stayed in their existing $500,000 home and we all applauded Able for selling at the top of the market.

There are many different opinions on the amount of the drop in prices but we can all agree prices have dropped, more in some areas than others. For our example, we will use a simplified 35% drop on all homes.

Today, Able is in their home with a loan still around $720,000 and can’t refinance because their value is $520,000. Their property taxes are still hovering around $8,000 per year (my note: but does he know about property tax reduction offered by the county?). This is called being underwater, and they could be facing tax problems because of forgiveness of debt, etc.

Baker decides to sell today and finally move up to a bigger home. Their home has dropped in value and they think they have suffered a loss of $175,000 as the home is worth only $325,000. They sell and buy the former $800,000 home for $520,000. They get a loan for $468,000 at the current rate of under 5% and their taxes will be about $5,200 per year.

They might also qualify for a $8,000 tax credit and other inducements in today’s market. Also, there could be appreciation as the market recovers and would you rather have appreciation start now on a $325,000 home or a $520,000 home? Plus they’re living in their move-up home and the family is happy. So, who is better off now. Able or Baker?

Do you think we're at the bottom of the market?

See http://www.juliahuntsman.com/ for property searches.

Thinking Green: Using Light Colored Roofing and Paint

In a visit with one of my past clients today (who painted his roof white after his house closed escrow over 10 years ago), it came as a revelation that California has passed a law effective July 1, 2009, that residential roofs on new construction, both flat and sloping, must be re-roofed with a white or light material. Actually, the law for a white flat roof has been in effect since 2005. See this article provided through the California Energy Commission.

The argument is of course for energy savings, and reflects a practice long used in ancient societies that populate hot climates where light or white clothing is standard practice, and whitewash is used on all structures. The cooling effect has long term energy savings implications, especially for the Western states, and especially for California where energy conservation is fast becoming an outright demand. A California Energy Commission board member states that it has long been known that white-roofed buildings stay cooler in hotter weather:

"painting urban surfaces in warm parts of the world white or a light color could offset the carbon emissions of all 600 million of the world's cars for 18 to 20 years — at a savings equivalent to at least $1 trillion worth of CO2 reductions."

"It turns out that they cool the air outside of their walls, too. On a typical summer day, Los Angeles is 5 degrees warmer than surrounding areas, and studies have consistently shown that by far the largest factor in this discrepancy is the absorption of solar heat by dark roofs and pavement — a phenomenon known as the "urban heat island" effect."

So far, this law affects new construction, but doesn't it make sense to apply these principles to existing structures wherever possible? Rethinking guidelines for historic homes might be in order.

Your Southern California Housing Trends Report

A new report -- click on the banner for your 1 Minute Housing Market, video report, metropolitan area quarterly and monthly prices, information on local Southern California prices by city, daily update reports, national housing trends, statistics and demographics, and more consumer articles!

Five Principles of Home Staging

Home staging is economical and a well-proven benefit to Realtors and home owners alike. Here are some basic staging principles every home seller can use:

Become a Seller, Not a Dweller
Homeowners must make the mental shift necessary to become Sellers, not Dwellers. It is only then sellers are able to realize they own a commodity to be sold and no longer their home. The way we live in our homes is different than the way we sell our homes. With this mental shift in place, the next step in the process may begin.

Clean and De-clutter
De-cluttering is the first principle used in home staging. Clutter is defined as those items in a room that are not necessary for its function or beauty. Clutter can be too many books, knickknacks, or accessories. With staging, only key accessories and furniture remain. The property will immediately appear more spacious and well cared for.

Here are some tips to keep in mind as it applies to de-cluttering:
A buyer wants to purchase a move-in ready home. A house that is not clean implies deferred maintenance.
A buyer is purchasing square footage. Clear the clutter to create the impression of more space.
Let the light in; buyers are drawn to open, airy spaces.

Appeal to the Masses
With the de-cluttering process accomplished, the next phase is depersonalizing. The buyer will want to mentally personalize it and imagine living in the house when it becomes theirs. This includes using neutral tones throughout as well as general updates which will appeal to the largest segment of potential buyers.

Realtors no longer have the almost impossible task of telling homeowners their faux finished pink bathroom really needs a neutral tone of paint (put in before and after of pink bathroom) or their beloved collection of gargoyles will turn off potential buyers.

If You Can't See It, You Can't Sell It.
Curb appeal is everything. It's the first impression a potential buyer gets of the home. Remember, if you can’t see it you can’t sell it. The easiest and best way to determine what needs to be done to the outside of the home and the lawn is to walk across the street. Look objectively at what the home looks like from that vantage point. Then, take the following curb appeal test:

1. Are the gutters clean and in good repair?
2. How does the driveway look?
3. Do the shrubs need pruning?
4. Do the trees need trimming?
5. How do the flower beds look?
6. Is the walkway leading to the house inviting?
7. Does the lawn look clean and neat?
8. Are the house numbers clearly visible?
9. Does the entryway and front door make a great first impression?
10. Are toys, tools, hoses and any other distracting items put away?


It is only after answering and addressing the above curb appeal issues that the seller will have passed the “curb appeal test.”

Maximize Strong Points; Minimize Shortcomings
Finally, it’s important to show off the home’s best features, while hiding its flaws. Showcase focal points such as fireplaces, wood floors, and expansive views and divert attention away from less attractive features by creating alternate interest.

If a home seller is willing to follow these simple steps – clean and de-clutter, depersonalize, increase curb appeal and maximize the home’s strong points - they greatly improve the chances of selling their home quicker and for top dollar.

Amie Hebert Chaney, a Home Staging Expert (HSE), says Home Staging is the art of preparing a home for market to give the best possible first impression to potential buyers, resulting in a quicker sale and higher profit. The intent behind home staging is for potential buyers to be able to see the home as theirs. Copyright© 2008, Amie H. Chaney. All right reserved. For information contact FrogPond at 800.704.FROG(3764) or email susie@FrogPond.com.

Long Beach, Cerritos, Lakewood Unsold Inventory Index in Steady Decline

The residential inventory in many areas of Long Beach is steadily declining, as of today in Long Beach, there are 831 single family homes and condos listed as "active" in the MLS (down from about 870 just a few weeks ago), with 775 in escrow.
Cerritos has 66 active residential listings, and has 67 in escrow.
Lakewood has 99 active listings, and 148 residential properties in escrow.

The gap of available properties is closing.

The median price statewide has increased for the 5th straight month, as sales in lower priced inventory has dropped, and more sales occurred in the upper ranges.

While the suspense concerning future inventory continues, as the home supply backlog grows, it's important to keep in mind: nobody knows for certain how and when and where the increase in inventory will happen.

Per the California Association of Realtors August report:

"With inventory levels well below the long-run average, a supply shortage at the low to middle-tiers may have constrained sales in lower-priced homes and led to an increase in the median price. The supply of homes is expected to increase later this year as the number of foreclosures continues to rise from last year. However, the government and lenders’ efforts in modifying loans, combined with delays in processing the backlog of delinquencies may ease the number of defaulted loans, thus making a prediction on the number and timing of the flow of distressed properties less certain."

Find a residential or investment property through the MLS search.

Moving Forward or Still Going in Circles?

With more properties now receiving offers within days coming on the market, multiple offers, and selling over list price, at least some smart buyers are beginning to understand a current reality. They are having to compete against investors, or against other buyers who have more cash than they do. The days of casually looking, window shopping and low-ball offers should be left behind as quickly as possible. Thinking that the mountain will come to Mohammed, as wishful thinking takes over pricing reality, should be done with. It is time to stop moving in circles, the one where offers are made, lost in the multiple offer shuffle, then repeated again at the next property where the cycle repeats itself, over and over again.

It is time to move forward.

It is time to make the winning bid. To make the winning bid, a realistic property has to be chosen, and that realistic property may be one which doesn't look so attractive initially, but is in the right area, and for which suitable financing is available. Perhaps it will require a higher down payment, or an FHA rehab loan. Otherwise, choosing the price you want in an area you don't really feel certain about, and then expecting the seller to reduce the price to your lowered expectations, is sheer folly. It is time to move forward.

There's been much talk about the REO properties that will hit the market, perhaps before the end of this year. And will they bring a new low in bargain prices? That's the way many buyers continue to act. But there's so far been evidence supporting stabilization in prices, if not a regional increases in price. A 3% increase in the West according to the Clear Capital Home Data Index report discusses how the momentum built in recent months could carry over into REO properties placed on the market in the future as buyers worry they are missing out on the bottom of the market.

The time for the $8000 tax credit is still in effect until December 1, 2009. Whether you're interested in houses, condos or units, please contact me. I can help you move forward.

Fewer Homes to Buy as Sales Increase, Prices Jog Upward

Various industry sources have reported that June, 2009 showed the highest California median price this year at $274,740 (statewide median). June sales showed at 20 percent increase over the prior year. The statewide unsold inventory in June was at 4.1 months, locally the figure is even lower. Per the July 2009 report from California Association of Realtors: "The index is now 3.5 months lower than a year earlier and well below the peak of 16.6 months in early 2008. In fact, low inventories may constrain sales and contribute to upward pressure on home prices through the rest of the busy season."

The higher end properties are accounting for more sales, with properties below $500,000 accounting for about 76%, down from 85% at the beginning of the year. From March to June, the market share of distressed properties declined, contributing to the increase in median price.

Los Angeles County median sales price, July 2009, at $340,000; Orange County median at $490,000.

News about Southern California from Dataquick as of August 18th:

"In the region’s more affordable areas, many first-time buyers continued to choose government-insured FHA financing. Such loans were used to finance 37.2 percent of home purchases last month, up from 36.9 percent in June and 19.7 percent a year ago. "

"The recent drop in foreclosure resales, coupled with the rise in high-end sales, has helped stabilize some of the regional home price measures. But there’s still quite a bit of distress out there, and plenty of unknowns with regard to how lenders and borrowers will choose to proceed,” said John Walsh, DataQuick president.

And probably the most telling comment about the future:

“Even if we are at or near bottom,” he added, “history suggests we could bounce along that bottom for quite a while.”

Sales Increasing Now, What Will Next Year Bring?

There is a great deal of talk lately about the upward climb in sales, that maybe we're seeing the bottom of the market, and that prices are down from this time last year, but it's the 5th straight month of sales increases, and the best sales record in several years . . . so maybe prices are stabilizing, or even headed up a little? That's happening in some places, and yesterday's great REO panel of experienced brokers even said it's impossible to underprice a property today because it will get multiple offers and sell for more.

But take a look at the Credit Suisse chart at the right and the pink part of the graph--the reset of the "option adjustable rate" loans. Those are the loans where the "start rate" of 1% were thought by many borrowers to be their permanent loan rate, and not the introductory rate which if always paid at that payment level (and most people did that), meant the remainder of the interest of the real interest rate was added on to their principal loan amount and thus increasing it. It was one more way to end up "under water" on the home value, and end up as a loan modification customer, a short sale candidate, a bankruptcy claimant, and/or as a foreclosure recipient. And then, most importantly, notice that the reset periods do not decline until well into 2012.

Along with the recent sales increase is declining inventory: In Long Beach today there are 877 active residential listings in the MLS, and there are 753 in escrow. Also, as of 8/18/2009, there are 1910 Notices of Default filed, 1224 Trustee Sales filed, and 1426 REO properties, not on the market yet, making a total of 4,560 properties not yet on the market. (Some of the NODs may have successful loan modifications, but there is also a separate study of the percentage of loan mods that end up failing and do end up in foreclosure.) These figures are for Long Beach alone--similar profiles could be drawn for cities throughout the State of California.

Tied in with this is the talk of "shadow inventory" and the rumors that banks will flood the market with all of their pent-up inventory at once. But that is unlikely to happen in such an overt way, despite the hope of many prospective buyers who believe a $400,000 house might eventually sell for $25,000. Received yesterday in my e-mail from DSnews.com:

Perhaps it’s “government pressure to clean up balance sheets,” or the thawing out of home sales, the need for capital, or the growing pool of players in the mortgage-backed assets market. Whatever the motivation, more banks are beginning to unwind their positions in toxic residential loans.

See this story about a Milwaukee-based bank that sold 800 troubled Arizona mortgages to an undisclosed investor, thus clearing $297 million of bad loans from its balance sheets. Will this trend catch on with major banks who decide to sell off in bulk to cut their losses? There seems to be more interest now by investors willing to acquire properties associated with "toxic loans".

The current shrinking inventory may be a combination of things: the loan modifications, the foreclosure moratoriums which have been delaying filings, and the ultimate decisions by banks as to the handling of foreclosed properties, plus the "catching up" with loans in default for months and that are yet to go into foreclosure. Those involved with the REO market believe that over time, perhaps as soon as in a few short months, the inventory will once again increase greatly, continuing to affect housing market prices, and the real estate market will not fully recover from the effects of the subprime market until 2012-2014, as indicated by the chart above.

So what should equity sellers do? Take advantage of this period of time, and realize that now, when there is less competition and many cash buyers (accounting for one-third of the multiple offers on many REO properties), may be a better time to sell than a year from now, when you could end up being a short sale if your equity continues to decline with the market. In some areas short sales and bank-owned properties already dominate the inventory; in the last year certain zip codes that seemed immune, or less impacted, to these issues are now common, such as:

• In 90803, 23% of the 177 active and pending listings are distressed sales
• In 90802, 68% of the 280 active and pending listings are distressed sales

and in the future, if the local and statewide foreclosure statistics are any indication, distressed sales will impact equity sales even more severely than they are now.

If you would like to know about the current market value of your home, please contact me. To see properties on the market in your area, you may search by zip code or city, price, etc., at the MLS property search button at http://www.juliahuntsman.com/.

Have Your Documents Ready When You Call Your Lender

Are you at the critical point of "do I stay or do I go?"

In California, there are currently about one-third of all mortgages "under water", so many borrowers are contacting their lenders concerning loan modifications, or payment catch-up, their pre-foreclosure status, or a combination of all three. Borrowers are frustrated with the amount of time it takes when they contact their lender. Some banks are gradually become more efficient as they are assigning more people to their loss mitigation and loan modification efforts. Banks are still very swamped, and the average consumer is unaware of their low staffing and high demand.

To find a faster answer on which point of action you need to take, and to save yourself and your mortgage servicer precious time, when you call you should have ready:

• The most recent monthly mortgage statement


• Pay stubs or other documents showing your household's monthly pre-tax income


• Most recent tax return


• Second loan or home equity line of credit statements


• Account balances and minimum monthly payments on credit cards, car loans, student loans or other debt.


• A short, concise description of the financial hardship that is causing - or leading to - a mortgage delinquency.

See this Freddie Mac video posted on their site and on YouTube: Stop Foreclosure--Documents Your Lender Needs -- it's had over 4,000 hits in the last 30 days.

If you have decided you need to consider selling as a "short pay" (not all loan modification requests are granted by banks), please contact me for a market valuation and information on how I can help you with the process. Typically, different bank personnel involved in a short pay approval are other than those you may already have been dealing with on your loan modification effort, but your information you have gathered up to this point may save you some time.
Contact me for more information.

How To Be Beautiful with Dry Gardens in Southern California

We love lawns, we love lush green semi-tropical plants, and we love them in dry, desertous Southern California because they grow so well here in this temperate and sunny climate.

But did you know? Lawns and outdoor landscaping consume as much as 49% of our water use in the Long Beach area. If you've seen my past blogs on the subject, you know that Los Angeles and other Southern California cities, including the other desert areas, have been concerned about water use for a long time--for decades, as a matter of fact. Yet, we persist in our East Coast style of landscaping brought here by our forebears. This becomes more expensive with the passing of time--Long Beach is scheduled to raise its water rates this fall, although residents have done well so far in reducing water consumption by 10% through the current city-mandated watering schedule restricting outdoor use to 3 days per week at certain times.

Lawns in particular had a purpose in the past, and it wasn't related to beauty. Lawns derive from the green pastures once kept by owners of cows, because back when we were a more agricultural, less industrial society, financial status and its production could be measured by the amount of land people owned, their crops and their animals. Cows needed green grazing areas, so the more cows one owned, the more pasture was required, and this over time became the foundation for our attachment to lawns, long after the cows disappeared from the average homeowner's life.

Today, we need to fit in with our natural climate conditions, as well as the current water shortage upon us. Beautiful Long Beach Landscapes right into saving money while creating beautiful gardens using native plants. The photos above are "before" and "after" of one house selected by a Long Beach landscaping program. Another great source is at BeWaterWise for landscape and planting ideas.

For more information, go to http://www.juliahuntsman.com/gardening-landscaping-for-home.html

Existing Home Sales Rise for Third Straight Month

It's starting to sound like a broken record but we keep getting more and more positive news about the housing market.

The National Association of Realtors reported that sales of previously owned homes increased at a faster-than-expected annual pace. Existing home sales increased at a 3.6% rate and had its third straight monthly gain.

This is the first time since early 2004 that we have had three straight months of increasing sales and points to the housing market continuing to heat up. They also reported that inventories of existing homes were down 0.7%. With inventories declining and home sales increasing, now is the time to jump into the market before these low home prices are history.


Which leads to another topic that has been making the rounds: that there is a "shadow" inventory held by banks which when released onto the market, will bring prices down even further. Not so fast, say some mortgage brokers I've talked to. It's very unlikely that large amounts of such inventory will be released simultaneously by banks. For one thing, major lenders are in the process of negotiating many loan modifications and would probably not release major inventory onto the market in any one area which could then depress prices, and their existing mortgage loans, even further. It could also depress equity sellers' values causing some of those to go into short sales if prices declined due to a flood of REO inventory.


The fact is, the $300,000 price range is and has been very competitive for investor buyers, and almost impossible for first-time owner occupant buyers for months now.


As the sales activity has indicated, what we need are more reasonably priced listings on the market. Sellers, are you listening?
See www.juliahuntsman.com for more real estate information.

How Many Condos are Listed in Long Beach Under $250,000?

About 4 years ago, someone left a comment/question on one of my blog posts asking where in Long Beach a condo could be found for $250,000. I don't know where that person is now, perhaps they have already taken the plunge into homeownership, but if not, now is a much better time for looking for that condo.

A search in all of Long Beach on the MLS shows 185 active listings for studios, 1, 2 and 3 bedroom condominiums at $250,000 or less. Typical of today's market, many are short sales, however opportunity knocks for the buyer who has the ability and patience to wait.

The Marina Pacifica complex shown above has several listings in the lower price range. and this photo features a listing (CLW-09378967) for a studio at $199,000 with HOA fees of $379/month.

When getting pre-approved for a condominium purchase, a buyer should be aware of items such as the HOA dues amount, number of parking spaces and their location, whether or not the building is FHA approved, building amenities, and association documents as spelled out in the contract.

In other associations, monthly fees may range from under $100/month to several hundred dollars a month, so it's important to find which associations will work for you.

Condo living is usually a closer community living than a house in a neighborhood may be. Condos are a great doorway to homeownership, and may offer an opportunity to live in a desired area that the buyer may not otherwise be able to afford.

Turn An REO Fixer Into Your Palace

DID YOU KNOW . . . .

THAT the foreclosure/bank-owned property (REOs) market is shrinking? There are several reasons for this, but basically, it may be the buyer's opportunity to get a very good deal on the right property under conditions acceptable to the seller.

THAT the County of Los Angeles' HERO program works with foreclosed/abandoned properties which may be purchased with a 1% down payment, and provides down payment assistance for low-to-middle-income households, for up to $10,000 of the purchase price. This program is for single family homes up to $493,000 and condos up to $394,250. Call me for more information on approved lenders and other requirements for this program.

THAT the Good Neighbor Next Door Program through HUD helps law enforcement officers, teachers and emergency medical technicians purchase an available home, at a very large discount. Teachers must be full-time in an accredited school, other personnel must be employed by a unit of the federal, state or local government, including an Indian tribal government. Eligible buyers may receive up to a 50% discount off the HUD appraised value, as well as an extremely low $100 down payment if the buyer qualifies for an FHA-insured mortgage. This program may be used in conjunction with the FHA 203(k) program also. Contact me for more information about this program. This program is for homes in one of many of hundreds of designated areas.

THAT the FHA 203(k) Residential Rehab Loan may offer financing in conjunction with several types of buyer program (but not all) and is a great way to gain up front financing to remodel or repair the home of your choice. If you find a fixer property in an area you would like, but the house needs work, this loan is a way to accomplish those repairs within your overall mortgage qualification, so that you're not paying for repairs out-of-pocket, but amortizing them over time. Repairs may include flooring, fencing, roofing, windows, foundation, appliances, heating, A/C and termite.

Turn a fixer into a palace. These programs are just some of the ways a first-time, or return buyer, may find a new home under very advantageous conditions.

PLEASE CONTACT ME AT JULIA@JULIAHUNTSMAN.COM FOR A LIST OF HOMES THAT ARE ELIGIBLE FOR THESE PROGRAMS. NOT ALL SUCH HOMES MAY NECESSARILY BE FOUND THROUGH THE MLS. I CAN ALSO HELP POINT YOU TO THE RIGHT AREAS THAT APPLY TO THESE PROGRAMS.

Long Beach Summer Park Concert Series

Long Beach Municipal Band
Summer 2009 - Centennial Concert Series
June 30th through August 14th
All concerts start at 6:30 p.m.

PERFORMANCE DATES AND LOCATIONS

WEEK 1 - (June 30 - July 3)
1909-1924: In 1909 the City of Long Beach announces the formation of the Long Beach Municipal Band! Through these early years the music of George M. Cohan, George Gershwin and other composers from Tin Pan Alley had America singing. The Studio Band and Barbara Morrison kick off the summer in style.

Tuesday, June 30 Whaley Park
Wednesday, July 1 Los Cerritos
Thursday, July 2 Marine Stadium
Friday, July 3 El Dorado Park
WEEK 2 - (July 7 - 10)
1924-1937: From the Roaring Twenties came great music like Ragtime and Dixieland jazz. George Gershwin wrote his “Rhapsody in Blue.” Even though times were tough during the 1930s it was a great time in American music. John O’Campo sings with the Studio Band.

Tuesday, July 7 Whaley Park
Wednesday, July 8 Los Cerritos
Thursday, July 9 Marine Stadium
Friday, July 10 El Dorado Park
WEEK 3 - (July 14- 17)
1937-1950: Americans danced to the music of the famous big bands such as Tommy Dorsey, Benny Goodman, Count Basie and Glenn Miller. The Swing Dolls as “The Andrews Sisters” will stop by with a special treat you won’t want to miss. Derek Bordeaux brings his high energy and soulful Motown sound to the parks of Long Beach.

Tuesday, July 14 Whaley Park
Wednesday, July 15 Los Cerritos Park
Thursday, July 16 Marine Stadium
Friday, July 17 El Dorado Park
WEEK 4 - (July 21 - 24)
1950-1965: Duke Ellington records with the Count Basie band and Ella Fitzgerald records eight records making up the “Great American Songbook.” Elvis Presley, the “King of Rock ‘n’ Roll” has three records which sell over one million copies. Our own first lady of song, Barbara Morrison, returns for a second set with the Studio Band.

Tuesday, July 21 Bixby/Bluff Park
Wednesday, July 22 Los Cerritos Park
Thursday, July 23 Marine Stadium
Friday, July 24 El Dorado Park
WEEK 5 - (July 28 - 31)
1965-1979: From the Beatles and Stan Kenton to John Williams and Stevie Wonder the tumultuous ‘60s and ‘70s produced an overwhelming variety of musical genres. During this remarkable time The Carpenters started their singing careers at Cal State Long Beach. Carol Welsman sings with the Studio Band.

Tuesday, July 28 Bixby/Bluff Park
Wednesday, July 29 Los Cerritos Park
Thursday, July 30 Marine Stadium
Friday, July 31 El Dorado Park
WEEK 6 - (August 4-7)
1979-1995: The 1980s continued to bring major changes in the music scene; the invention of the CD and MTV! In musical theater, Phantom of the Opera attracts record audiences. "Porgy and Bess" finally receives its acceptance as world class opera with its first performance by a major company, The Metropolitan Opera. Jackie DePiro sings with the Studio Band.

Tuesday, August 4 Bixby/Bluff Park
Wednesday, August 5 Los Cerritos Park
Thursday, August 6 Marine Stadium
Friday, August 7 El Dorado Park
WEEK 7 - (August 11-14)
1995-2009: Now it’s our time after 100 years of music. We look back on the unbelievable musical journey of the Long Beach Municipal Band and salute all who have come before. During this final week of the 2009 summer season you will hear the latest and greatest music of the stars of today performed by one of the finest community bands in the history of our nation - your Long Beach Municipal Band! Tony Galla will have the park up and dancing for a super finale with the Studio Band.2009.

Tuesday, August 11 Bixby/Bluff Park
Wednesday, August 12 Los Cerritos Park
Thursday, August 13 Marine Stadium
Friday, August 14 El Dorado Park


History
The Long Beach Municipal Band is one of the most distinguished and professional Municipal Bands in the United States. The player personnel in this wonderful ensemble includes the best of the Southern California's symphony, studio recording and jazz performers. This diversity of talent provides Long Beach audiences with impressive concerts of jazz, movie, musical and light classical literature. The Band also combines with talented guest vocalists weekly to guarantee that your family's summer evening in the park will be the highlight of the week.

The Long Beach Municipal Band has been entertaining area residents for 99 years. Its history is well known and appreciated not only in this community but also in music circles around the world. Present conductor Larry Curtis continues a tradition of musical excellence established by such notable conductors as the famous Sousa cornet player Herbert L. Clarke and composer J. J. Richards.

How To Avoid the 10 Most Common Mistakes Sellers Make

If you are thinking of selling, you should keep these things in mind. They are not new, but sellers often overlook things they think are not important, when nothing could be further from the truth!

How Does an Owner Cope with a Coastal Property Near Rising Water Level?

If you live in California, and Southern California in particular, your property may be near the coastal areas and at or near sea level--and therefore closer to the water table levels. At certain times of the year there are annual high tides, i.e., the one seen almost up to the asphalt level of Pacific Coast Highway through Huntington Harbour.

Houses with basements, or more likely crawl spaces under the raised foundation, may show signs of moisture or even flooding. This is dealt with by creating sumps--or holes in the ground to collect water--and installing sump pumps. The pumps may be set up with connectors (i.e., a hose) to carry the water off the property, via drains, or whatever method complies with local codes.

While a buyer should obtain professional assistance about the best type and system to install, if you're buying property almost level to the water, don't be surprised to find out you may have to deal with this.

In more extreme cases, you may want to find out about subsidence and call in another expert. You will want to review the natural hazard disclosure reports, and even local flood zone reports available online through FEMA. Also, be aware that if the property is in a specific FEMA flood zone, additional insurance may be required before your lender will fund your new loan, or otherwise require you to obtain the additional insurance if you already own the property. You may be able to obtain an elevation certificate issued by a qualified surveyor if your property sits at a high enough elevation.

For more information about contacting an appropriate local professional, please feel free to give me a call.

Are You Looking Into Selling Your Property as a "Short Sale"?

Although the terms "short pay" or "short sale" are heard frequently, some people are still asking what they mean: It means the property owner owes more on his/her property than it can be sold for, or sold for after paying all the standard closing costs. In other words, the seller is "under water". Briefly, the mortgage holder(s)--there may be more than one loan on the property--must agree to accept the lower payoff amount, which means the bank is losing money on the seller's outstanding loan amount. The owner must "apply" for that approval by submitting financial information and a written statement about the reasons for their situation. As more and more properties are involved in this situation, some banks are finally, at long last, gaining some level of efficiency at dealing with all the short pay applications. Guidelines for the seller include submission to the bank of a signed and dated financial worksheet (usually in a standardized format), and signed and dated hardship letter, as well as a copy of the listing agreement, and letter of authorization for the party helping you with your short sale to communicate with the bank about your loan.

The sale generally must be an "arms-length" transaction; you cannot sell to someone you have a close personal relationship with, i.e., family member, personal friend, even a neighbor.

Different banks have different approaches about when to best receive submission of the seller's package for approval; and these approaches have changed from one time period to another, even in the last several months, so it may be difficult to know what to expect. Some mortgage holders will want the seller's package up front; other banks seem to respond faster when an offer has been obtained and is sent with the seller's package so that the seller's package does not "sit" at the bank and get lost.

The contract terms between the buyer and seller is negotiated as if it were a normal sale, but it's important to note that all disclosure about the short sale status must be given, and the buyer must in almost every case be willing to wait at least 60 days for the entire process. Even though the bank is not the seller, its role is key in whether the property gets sold and for what price. And, the bank will want an accounting of all costs of sale, and may not approve certain costs in order to preserve its bottom line. Banks have also been known to "approve" in advance a certain amount as the selling price, hoping that a buyer will be found at that price and they will therefore lose less money, but the market may decline, so the actual selling price may be less the longer it takes to find a buyer, or the approved price may not be realistic for the specific area of the property.

The Obama Administration will soon be issuing short sales guidelines and standardized forms--the outcome for all lenders to participate is yet unknown. It is hoped these guidelines will prevent future unrealistic negotiations among all parties, and faster treatment of short sales to assist stabilizing the real estate market.

As more loans entered into 2-3 years ago come up for their reset dates, the short sale process will continue to be a "staple" in the market, making a more uniform process mandatory. Some areas are completely dominated by either short sale/pre-foreclosure properties on the market, or bank-owned properties that have already been through foreclosure.

Any seller contemplating this as the only possible way to sell their property should also seek any legal and tax advice at the same time, especially if also contemplating bankruptcy.

Short sales generally have less impact on one's credit (assuming there are no or very few missed mortgage payments) than does a foreclosure, which will stay on the credit report for a much longer period of time and be a more severe "hit". Even with the FICO hits of missed mortgage payments, a short pay may be preferable for several reasons, including that the IRS has allowed debt forgiveness on mortgage amounts involved in the short sales. Foreclosure carries a longer period of impact on one's credit, something to think about when FICO scores are used in insurance applications, employment promotions, and of course, credit application.

There are many related and complex issues with these situations, and much confusing information which seems to change or modify on a monthly basis, and even legal and tax advisors are not totally familiar with impacts on credit scores in these two situations. For the most accurate information and opinion, contact a reliable loan professional who is in contact with borrower's credit reports on a regular basis.

More recently, per National Association of Realtors website:

On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program, expected to launch in late July. Among other things, the new program:

Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.

Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.

What's For Sale in Long Beach under $300,000?

This is a popular price range for many 1st time buyers, the group of people who are among the most active and largest group of buyers looking on the market now.

In 2007 in Long Beach, there were less than 350 residential condos, own-your-owns, coops, and single family properties in this price range. Last fall, the inventory doubled to more than 700 listings in this group.

As of June 16, the MLS is showing 430 properties in this category: 185 active listings are single family homes under $300,000 in various zip codes (but not 90803 or 90814). In a sampling of the first 25 on the list, 19 of them are short pay or REO properties. In the last 25 on the list, 23 out of 25 are short pay or REO properties.

For condos, co-ops and own-your-owns (lofts excluded), there are 241 condos, etc., with about the same percentage of REOs and short pays: 21 out of first 25 on the list. The difference with condos is that they also represent many areas of town, including 90803, 90815, 90814. But not all condo opportunities are alike: Be prepared to face monthly HOA dues of as much as $600 for Marina Pacifica, where there have been several such sales. The price may be low, but the monthly payment must be able to accommodate the association expenses.

For the buyer who is heading out on a home search with their REALTOR, and with a valid mortgage pre-approval in hand, be prepared, because due to shrinking inventory, lower sales prices, and many other first-time buyers, you may have severe competition and deal with many multiple offers on the property you would like--some houses in particular have seen over 30-50 offers--and only one will be chosen. And, a frustrating fact is that that buyer may be an investor with lots of cash, or all cash. Also, the qualified FHA buyer, with 3.5% down payment, may have a much harder time competing, not just because of their lower down payment, because FHA offers must be appriased by an FHA appraiser who is required to report on certain property conditions according to government guidelines.

If the FHA buyer is considering a condo, which will probably be somewhat less competitive than a house, there are still HOA requirements to be met under FHA guidelines. Ideally, the buyer will select a property in an association that is already FHA-approved under the HUD guidelines. (Ask me, I can help you find out.) Otherwise, the buyer must hope for a "spot" approval, and that may have a more uncertain outcome until the transaction is further along in escrow and underwriting approval is obtained.

So what can the buyer do in this situation? Try to find a property that will work for you and with your loan, maybe a property that is getting less attention from other buyers. It may be your golden opportunity. It may require patience, it may require imagination, and it may not have granite countertops in the kitchen to start, and it may require some compromise on some of your criteria, but in the end if you want to be a homeowner, you have to start somewhere, and the gains could be very great in the end.

For a specific list of properties to be sent by e-mail, please contact me, OR go to http://www.juliahuntsman.com/ to see various current property searches from the MLS.

What's In An Appraisal for All Parties?

You might think "HVCC" refers to a heating system, but no, it refers to property appraisals performed under the new Home Valuation Code of Conduct. This Code came about through the New York State General Attorney Andrew Cuomo's agreement with FNMA and Freddie Mac and the Federal Housing Finance Agency, those agencies that create the rules for loans that buyers need.

What it means for the buyer and the seller both is that conventional loans obtained for single family homes fall under this new appraisal code. (Not for FHA loans.) Appraisals have always been important: the lender did not want to loan on a property which did not match a true market value. Diligent Realtors have always advised sellers to price their properties realistically, and advised their buyers of a realistic selling price according to local market comparables, in essence, the property had to be sold twice, once to the buyer and again to the lender. The subprime market blurred this picture for quite a while, but sometimes the cure is just as bad as the problem.

To counter the effects of the subprime market, effective May 1, neither lenders nor their staff are allowed to select the appraiser, nor are they allowed to have "substantive" communication with the appraiser or the appraisal management company (AMC) which now is the new level of bureaucracy managing the assignment of appraisers. The new system may have started more problems than it ended.

Some assigned appraisers may not be familiar with an area--coming from a different county even--have no particular vested interest as to the outcome of the appraisal, consumers are being advised their appraisal will cost about $100-$150 more and they may have to lock in their rates for a longer period of time, which will also cost them more. If the consumer changes lenders, they must pay for an additional appraisal. The AMCs pay low fees, thus attracting only the inexperienced appraisers, some of whom are failing to adequately appraise a home. See The Wall Street Journal's article on this.

The AMCs are unregulated, and do nothing the reduce fraud (the reason they were established in the first place), and transactions are being cancelled in some instances, at a great cost and inconvenience to both the buyer and seller. One professional association estimates that HVCC will cost consumers 2.8 billion dollars a year in extra fees.

These issues make an already form-and-disclosure-intensive transaction even more challenging and difficult under increasingly stringent legal and professional standards, especially in California which has the reputation of being a very litigious state. But I'm sure professionals in Michigan, for instance, probably feel the same way.

Now is the time to know your market, and be prepared to address a possible appraisal gap as a "Plan B" to closing escrow, which could mean that if the difference is not too great between appraisal and contract price, that buyer and seller split the difference. Not great, but it could be an option to not meeting the closing date.

The Cost of Waiting to Buy Revisited

Six months ago (they've passed quickly), I covered this topic via an article by Pat Zaby complete with payment scenario.

Last week's upset in the Treasury bond market , a more complex subject, ultimately sent mortgage interest rates up, with higher payment impact, that the earlier post referred to:

Let's make an assumption that the prices may still decline 5% more before they start appreciating again. If while a buyer was waiting for the price on a $250,000 to go down 5% to $237,500, and the interest rate goes up one percent from 5.25% to 6.25%, which is entirely possible, the buyer's monthly payments will increase almost $79 per month.

Or putting it another way, some buyers who qualified before last week may now have lost as much as 10% of their original buying power. In fact, some mortgage professionals feel that because of the current economic forces driving the purchase of bonds vs. mortgage-backed securities, the edge on low interest rates--below 5%--is gone, and maybe gone for good. If you're just starting in the market, figure it's the luck of the draw. But if you've been looking for a very long period of time, or renewing your search after being away from it for a long time, your loan information probably needs to be updated.

One brighter spot is that the procedure is being put in place for the imminent start of a statewide down payment assistance program offering a "silent second" for first time homebuyers (up to 3% of purchase price, income restrictions apply, FICO score over 680) and which may be used in conjunction with the FHA 3.5% down payment. If you're in that category, you might still be ahead if you fit this program.

See my earlier post on waiting to buy.

$8,000 Tax Credit is Once Again a Help With Costs for 1st Time Buyers

There has been much confusion in the past several weeks about using the credit for a down payment, as HUD announced a tax credit but then rescinded the offer.

Now, the latest information from HUD (May 29th) is now that the $8000 tax credit for FHA borrowers "may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs." The HUD credit may not be used in place of your 3.5% down payment, but you may use it to cover closing costs, or as a loan through specified programs set up by lenders.

This is a great opportunity for first time buyers to buy real estate in the Long Beach area with additional some financial assistance!

Give me a call to learn how to utilize this program to your best advantage!

Back to Reality--No Using the $8000 Tax Credit for Down Payment

This has already been addressed in many other quarters, but just for the record, I'm including it here: Apparently, the HUD letter ML 09-15 has been rescinded as of last Thursday morning because it violated a federal law effective as of October 1, 2008, and now there's just a big blank space on NAR's site where the announcement used to be. The fact is, FHA loans do not allow for down payments that in themselves are loans, but may allow for gift down payments from certain sources as spelled out in FHA guidelines.

So the $8000 credit-as-down-payment is NOT going forward. And, for the ML 09-15 proposal to occur, there would have to be in place:

--State agencies approved WITH MONEY for the downpayment
A change to the HUD guidelines on the timeframe that is allowable for a loan….currently must be amortized over 10 years with no balloon.
--A change to the IRS guidelines allowing your refund to be assigned to a state or non-profit entity.
Source - Tara Ryan, Primacy Mortgage

In the meantime Buyers, you have until December 1, 2009 to otherwise utilize the $8000 tax credit.

California's New Home Tax Credit for $10,000

Announcement from California Association of Realtors: (NOTE: As of this morning, well over half of the $100,000,000 funds for a new home purchase are now committed, although not paid out. Buyer must close escrow, and then apply with 7 days after close of escrow.)

"This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

"The FTB began accepting applications for allocation of credit by fax only (916.845.9754), on March 1, 2009. They began processing the applications on a first-come, first-served basis, on May 1, 2009. The processing delay was necessary to allow them time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. It will take at least a few weeks to process all the applications they received and mail credit allocation letters. Please be patient and do not send applications more than one time.
California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from the FTB. They will review applications and allocate credit on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. They expect to report total credit allocations allowed beginning May 15. Until then, they will continue to report data on applications received. "

Doesn't the fact that over half the funds are now committed since March 1 show the increase in buyer purchases?

First Time Buyers: $8,000 Credit May be Used as an FHA Loan Down Payment

First-time homebuyers: Get the fast road to your $8,000 tax credit. Shaun Donovan, secretary of Housing and Urban Development (HUD) announced on May 12 that Federal Housing Administration (FHA) will allow its FHA lenders to allow homeowners to use the $8,000 tax credit as a down payment.

Secretary Donovan said.

'We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment.' According to Donovan, the FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Rather than waiting for refunds after the closing, funds will be available at the closing. A second mortgage will be filed and repayment terms will vary. It is important to keep the home as a primary residence for at least 3 years.

Q&A summary of other requirements for this credit:

Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a "first-time home buyer" the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer's tax credit is determined by two factors:
a) The price of the home-the credit is equal to 10% of the purchase price of the home, up to $8,000.
b) The buyer's income-single buyers with incomes up to $75,000 and married couples with incomes up to $150,000-may receive the maximum tax credit.

If the Buyer(s)' Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income-over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Properties are Selling in Long Beach 90803

The buyers have gotten in the Spring action mode in Long Beach's 90803 zip code--and for some buyers, there are issues of multiple offers in certain parts of Long Beach within days of the property coming on the market. This is a result of the combination effect of sellers pricing their property correctly, presenting it well (even staging it, that's been betting the fastest offers), and buyers who are pre-approved and motivated to buy.

In a quick review of the MLS, in the 90803 zip code (Naples, Belmont Heights, Belmont Shore areas), there are 101 active single family home listings waiting for a buyer, and there are 30 single family homes currently in escrow, list price between $425,900 (Island Village) to $3,350,000 on the water with a boat dock (Naples)--days on market ranged from "0" to "395".

In the same area are 54 condos waiting for a buyer, ranging from $189,000 to $1,095,000 in complexes such as Marina Pacifica, Village on the Green, Bixby Village, Spinnaker Cove, and in areas of Naples, Bluff Park, the Peninsula, and Belmont Heights. There are 19 condos in escrow, ranging up to $669,000 in asking price, having been on the market from 3 days up to 364 days.

For motivated sellers, believe it or not, we need more inventory. If you would like a market analysis of your home or income property, at no obligation, there's nothing to lose by talking over the current value of your home. I can even send you market comps via e-mail, plus other valuable market information.

Prices are still low, and motivated buyers should check out their financing options now.

To find more Bixby Village properties on the market, go to Long Beach Condos, Lofts and Associations, which is updated through the MLS, so you will get current information on which listings are on the market.