May 2015: Average Price of a Single Family Home in Long Beach CA: $590,000

The average price of a single family home in Long Beach at the end of May was $590,000, an increase from $427,000 in January of 2013. The overall market in California is characterized by fewer first-time homebuyers, lower homeowner turnover, static turnover in rentals. Employment levels are not expected to rise to pre-recession levels until 2019, even though California has regained all the jobs lost due to the 2008 recession. High level of speculation by investor buyers drove prices upward beyond the borrowing capacity of occupant buyers. California homeowners underwater in their home values is around the 9-10% level, and is another chunk of the population which is holding back movement in the market due to inability to move on.
Relocating baby boomers are anticipated to be a forward movement in selling and then buying -- however, that will vary greatly by geographic location in the state. According to an estate sale professional who works in the Long Beach area and is kept very busy with approximately three estate sales per week, it would seem many people in this area are not moving until the very end.
 Buy-and-hold owners may finally begin to let loose of their accumulated rental inventory (this has been a major impact in areas such as Riverside County), which hopefully will occur prior to a major rise in interest rates. (Interest rates bipped up twice yesterday.) This investor-held group is considered to be a massive shadow inventory which may not be released for another two-plus years, and at what price? For now, there is a gradual 3% annual increase in the number of new jobs, and a price-flattening trend compared to 2013 and 2014, all of which is helpful to bringing an upward trend in sales volume and inventory over time.

Who May Run and Check Your Credit in California?

Homebuyers seeking a purchase or refinance mortgage, or people wanting to buy appliances on payment plans or using their credit cards, are among those who will have their credit reports checked.  The federal Fair Credit Reporting Act requirements state who can look at or order your credit report.

Such people may include landlords, credit card issuers, car loan lenders, student loan lenders and insurance companies and government agencies.   However, at least ten states (California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington) have passed laws prohibiting employers from pulling credit reports at all or restricting how and when employers may use them to make hiring or other job decisions.  According to the Fair Credit Reporting Act, access is restricted to businesses or government agencies that meet the permissible purpose requirements.

Concerning landlords:  If a landlord has a property managed or listed by a Realtor with a written contract in place giving the broker permission, the broker may be allowed to run the credit of a prospective tenant.  Or, the Realtor can also assist the property owner by helping the landlord find a source for running credit (about $25), with action performed and the report reviewed by the landlord.   The Realtor may be doing all other agreed functions for renting, but the credit report responsibility lies with the landlord if not otherwise expressly allowed for in the contract.  It would be a good idea for landlords and tenants alike to find out what should be of concern to a landlord.  Landlords can check rental history, accounts, debts, foreclosures and general credit worthiness.  For individuals who experienced getting a notice of default and foreclosure, even though they had other good credit, they found it was not easy moving to a good rental property, and some found that getting a co-signer was necessary.

To find out what can be included in your credit report and other resource material, Privacy Rights Clearinghouse and Nolo contain additional information.  For California information on accessing a free annual credit report, see the California Office of the Attorney General.

Rental Scams: Don't Fall For Them

One of the downsides of all the home listings on the internet is the abuse of them by hijackers.  They

go to sites such as Zillow and Trulia, choose a property and turn a legitimate listing into a so-called rental ad, with the listing agent not finding out until he/she receives a bunch of phone calls about a "rental".  In a very expensive and limited rental market, a renter is doubly frustrated when finding out that the seemingly good deal is too good to be true.  So not only is it a waste of time for those searching for a rental property, it's also an extreme annoyance to the listing agent whose listing is illegally used as a dupe and all the misdirected phone calls, as well as the time it takes to correct the situation on the listing site. 

The smarter people knew before they called me that $1200 per month rent for a 2800 sq. ft two-story house in a nice neighborhood of $500,000-$600,000 selling prices was suspicious, but they called me anyway after they drove by the property.  Some actually called the name given on the fake rental ad, which of course used my listing photos and information as if it were their own, and were told to send money before they would be given any more information.  This is the tipoff--a legitimate landlord or management company does not request money, i.e., security deposit or rent, up front for information. 

And another scenario may be that the rental does not exist at all.  Yet another is a rental sign in front of an actual advertised property that is for rent, or it may be a bank-owned property for sale.  In this situation the false advertiser is attempting to get business by re-directing prospective renters to actual rentals--one company has been complained about in California, yet they popped up again with their red and white rental signs on wooden stakes posted on properties that are not their rentals. 

For more information, contact the Federal Trade Commission.  Avoid sending money to people you don't know.

Have You Heard of PACE for Energy/Water Savings?

Keeping Cool

The Property Assessed Clean Energy Program, or PACE, makes it possible for an owner to finance certain improvements and pay for them via an assessment on the owner's property.
There are a wide range of conservation improvements allowed and which vary by program, but most PACE programs include  improvements such as solar panels, energy star rated core plumbing systems, duct replacement, electric vehicle plug-in stations, pool circulating pumps, water heaters, and furnace.  They work in conjunction with a local public agency, and are available for both residential and commercial properties.

To be eligible, the homeowner must be current on property taxes, with no judgment liens or federal or state tax liens, not in bankruptcy, can't be delinquent on any mortgages or late on property taxes (some exceptions), and there are limits based on the mortgage percentage value of the property.


Property tax liens associated with the homes underlying the security, which are meant to fund energy-savings measures, are senior to all other liens - including mortgages on the properties financed by Fannie Mae and Freddie Mac (which currently finance close to 90% of US mortgages).  Read more at Reuters.  Since they don't like not being in first lien position, the Federal Housing Finance Agency (FHFA) ordered Fannie and Freddie to avoid financing mortgages on homes with PACE liens already on them,  Generally, all loans following FHFA guidelines must obtain consent before being allowed to enter into a PACE program, or the lender may declare the loan in default if owner does not pay off the lien. These conditions also affect refinancing as well, especially if the loan was obtained after July, 2010.

Homeowners who may find that PACE works well for them are:

• Those who have sufficient equity or whose improvements are not that costly and therefore, would not have difficulty paying off the lien if they need to sell or refinance their home
•  Those who intend to remain in their homes for the duration of the assessment and do not plan to refinance 
•  Those whose PACE program will offer to subordinate the PACE lien in circumstances beneficial to the homeowner.

HERO

Certain PACE programs, such as the HERO PACE program are now offering to subordinate their liens in certain instances, generally for a fee.  If the PACE lien is subordinated the buyer may be able to enter into a PACE agreement and obtain consent from a conventional lender.  Homeowners in areas with HERO PACE programs should inquire with the entity. Not all cities have approved this program; according to their site, HERO programs are locally available in the cities of Carson, Bellflower, City of Industry, Hawthorne, Lomita, Garden Grove, Huntington Beach, Fountain Valley, Stanton, Westminster, Cypress, to name several.  Long Beach, Los Angeles, or Lakewood are not included at this time. 

California FIRST

This program  appears to cover Long Beach and other areas, but an address must be entered in order to find out. Their criteria and financing terms are available on the site.

FHA

Energy Efficient Mortgages have been around since the 1990s, and may work for the owner with an FHA loan. Contact an FHA lender for more information. 

Secondary Financing

Another alternative is a home equity line of credit, for people with enough home equity, which may provide some tax advantages, including lower interest rates than the PACE programs. This type of loan would automatically be paid off in sale of a home.

Similar to solar panels, any PACE lien must be disclosed to a prospective buyer and will most likely be found in the preliminary title report given to a buyer. The seller may be in the position of having to pay off the lien in order to sell, depending on the circumstances involved.

And, a property owner should always first consult with a tax advisor regarding their own circumstances before accepting any of these loans. Interest paid on PACE liens may not be tax deductible but there may be a capital gains benefit based on the improvements.

California Home Solar Panels - Buy or Lease?

Solar Panels

Solar panels are one of the many energy saving and money saving systems available to the homeowner. But save yourself some possible future headaches by investigating, beforehand, whether you should purchase or lease these panels.  Leasing seems a great way to go because it's a lot less money up front compared to buying panels outright.

Advertising your home as energy efficient seems like a great way to get a buyer fast.  But, when it comes time to sell, leased panels may turn into an outright headache for all parties:

• Your buyer will have to take over your lease payments and qualify for the lease--extra expense they may not have counted on, or a lost deal if they can't or won't agree. The monthly cost of the lease must be included in the assessment of lender's debt ratios.
• You, as the seller, may lose your next home you're in escrow for, or a job loss, if you can't move on time.
• Or, you the seller may agree to pay up on the complete lease in order to move on--one couple in Fresno paid $22,000 to get out of the lease and sell their house.

The solar leasing company may say that very few times such issues arise, since most buyers either agree to take over the lease, or most sellers can pre-pay it to move on. However, just know that leased solar panels, whether you're the buyer or seller, must be dealt with in a property transaction.

A leased solar system will usually show up on a preliminary title report because of the recorded UCC-1 filing which secures the system. But even if there's not a recorded filing, the seller must disclose the system in the transaction by checking the appropriate box on the Seller Property Questionnaire and/or on the Transfer Disclosure Statement.

In the standard Realtor contract form in California, the buyer review of lease documents and approval of solar leased panels is one of the contract contingencies, and can cancel the contract if the lease terms are not acceptable to the buyer. Buyer and seller could also negotiate on each paying an acceptable contribution towards the lease, as one option.

If the seller thinks another good reason for installing solar panels is because they increase the appraised value of the home, think again.   Leased panels are not allowed under FNMA appraisal guidelines, however owned solar panels do have appraised value and are included per underwriting guidelines.

So before obtaining leased panels, the property owner should ask the company:

1. What are the credit and other requirements required for a buyer to assume the solar lease?
2. Does the company offer alternatives to buyers with weak credit, such as placing a cash deposit?
3. Does the solar company have a dedicated team or other procedures to facilitate the transfer of leases to buyers?
4. How long does it take typically for the lease transfer to occur? 
5. Can a lease be transferred easily within the timeframe of a thirty day escrow?

 See Ken Harney's recent Washington Post article on solar panels.  For a more indepth article on this subject about issues during a California residential transaction involving leased solar panels, please contact me!

New Transaction Closing Rules with CFPB - Part II

Note:  The new start date is October 1, 2015. 6/28/2015.
Mark August 1, 2015 as the date on which transactions will be impacted!

The Consumer Financial Protection Bureau is an independent agency which operates withoutCongressional supervision, one of the few such entities in the country, and is considered a least accountable agency (by just about everybody including Congress).  It oversees banks and financial institutions, credit unions, students loan, credit card companies, payday lending companies, mortgages, foreclosures.  (It resulted from the Dodd Frank Act which came into place as a result of the economic crash, and its director was appointed by President Obama.)

The CFPB is not federally funded, but instead issues fines to banks for their bad behavior:
Wells Fargo - $24 million; Chase - $11.7 million, NewDay Financial - $2 million; and just the other day, per their website "Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures".  Yes, there have been failures by the banks, but how we got to a bureau that seems to have no oversight seems to be borrowing a page from the bank failure book.

But for now, consumers, lenders, escrow, title and real estate agents are at the beginning of changes will are most certainly to lengthen the average 30-day transaction to 10-15 days longer.

New terms:
Escrow=settlement agent
Lender=creditor
Day loan docs are signed=consummation day
Close of escrow day=settlement day
LE=loan estimate (no longer a good faith estimate)
CD=Closing Disclosure (replaces HUD-1)

Buyers and sellers, get familiar with all terms but know that "CD" is a 5-page disclosure which must be received by the borrower a minimum of 3 business days before signing of loan documents.  It doesn't matter if you can read and sign in 3 hours, you must wait 3 business days before loan documents can be signed.  What if you ask the seller, and the seller agrees, to compensate the buyer $350.00 towards the buyer's closing costs during escrow?  The borrower receives a new CD and must wait 3 business days.  If the lender decides to mail out the CD to the borrower instead of allowing digital signature time, then the lenders will give a total of 7 business days from send out.

Sellers, I can only say this:  Make reasonable repairs, including all carbon monoxide and smoke detector placements where required,  prior to listing to avoid delays with appraisers calling out such repairs, which will require a second visit by the appraiser, and which also costs the borrower more, in order to avoid these delays.
Buyers, If you decide to make an offer on a property which requires numerous or even just a few, repairs, be prepared for a longer transaction, because everytime a change is made, a new 5-page CD goes out to the borrower from the lender.  You can see how the time starts adding up, going well beyond the existing 17 and 21 days for buyer to investigate and remove contingencies.
Other examples of changes which will require 3 business day re-disclosure:
Changes in APR; changes in the loan product; addition of a pre-payment penalty.
Realtors must be prepared for these changes and be able to work with their clients on these timelines.

A sample calendar provided to me recently shows Day 1 starting on a Monday (Saturdays are included as business days, Sundays are excluded), going all the way through to Day 38 in a NORMAL transaction showing the lender's schedule, but this calendar did not take into account what else could be happening between the buyer and seller during the various contract contingency period, which is how further issues and additional time periods could come up. There is much that will be found out on a practical level when the time comes, because there are still unknowns in these new requirements.
Additional issues:  Lenders may refuse to work with certain escrow companies, and therefore buyer and seller may not be able to choose in some circumstances, because the lender may force both parties to transfer the file to another company.  Please remember, California escrow companies already are "vetted" and responsible to the Department of Business Oversight which maintains their own rigorous standards.

At this point, consumers need to change some of their expectations, both with their loans and the property transaction itself, and who they may be able to select for services.
These are nation-wide changes, not just something happening in one county or one state.  Some industry professionals are saying they've never seen anything like this during their 30 or 40 years in real estate (and they don't mean it in a nice way), so what happens after August 1 will be different--that much we know.

Just Sold! 1030 E. 2nd St #8, Cute Condo

Too bad you missed this one!

Cute one-bedroom condo with upper floor courtyard view in Alamitos Beach.  It came with garage parking, a huge plus in this older established neighborhood of multi-unit structures, and community laundry.

This 1950's building has been upgraded with newer windows and updated exterior color. This well-maintained condo came with an upgraded heating/cooling feature, very nice hardwood floors and a remodeled kitchen which all helped this condo sell fast!

Standard sale, conventional loan; sold 4/10/2015 at full price $210,000.

If you are interested in a market analysis for your propertym whether it's a condo, single family or income units, please contact me:

Julia Huntsman, Broker REALTOR
562-896-2609
Huntsman Properties
Licensed since 1994, #01188996
www.juliahuntsman.com

Market Stats for 1st Quarter, Long Beach CA and Nearby Cities

Not surprisingly, with the low low interest rates, prices have climbed especially with single family homes.  Condo prices have varied, and do vary by zip code, especially in Long Beach where completely different areas have their own pricing.  All median prices in the chart below are for cities regardless of specific areas, and this chart is meant to show an overall trend for the 1st quarter of 2015:

MEDIAN SALES PRICES	1/1/2015	3/1/2015
Long Beach Single Family	$482,500	$540,000
Long Beach Condo	$310,000	$275,000
Long Beach Multi-Family	$599,000	$620,000
Lakewood Single Family	$443,500	$475,000
Lakewood Condo	n/a	$300,005
Lakewood Multi-Family	$452,000	$579,000
Cerritos Single Family	$602,000	$638,000
Cerritos Condo	$285,000	$453,000
Cerritos Multi-Family	n/a	n/a
Bellflower Single Family	$418,000	$395,000
Bellflower Condo	$300,000	$280,000
Bellflower Multi-Family	$550,000	$602,000

Data provided by Market Analyzer

New Transaction Closing Rules -- Starting August 1 by CFPB

Be Careful Crossing the Road of Financial Protection

The Consumer Financial Protection  Bureau was brought into being by the Dodd-Frank legislation, and the CFPB has teeth which are being inserted into the lives of lenders, and therefore the lives of home buyers and sellers.

The "Know Before You Owe" rule, effective August 1, 2015, is bringing a new closing document (6 pages) and is doing away with our HUD-1 statement (3 pages) in the form of a non-uniform closing package which does away with the uniform coded costs which have been in existence for . . . decades.  By non-uniform is meant that lenders can call their categories what they so choose, and therefore may be different from one bank to another all across the country.  On the other hand, "the new forms resolve the problem of redundant and overlapping information presented in the standard Real Estate Settlement Procedures Act (RESPA) and Truth In Lending Act (TILA) disclosures that lenders are required to send to borrowers following submission of a mortgage application and just prior to the closing." See, for a very indepth industry discussion, this article by Patrick Barnard.

One of the net results is that there's more pages to get to a closing, and the closing will probably end up being extended well beyond the initial escrow period IF there are credits back which must be given a 3-day period to sign on and disclose to the lender.  So if, for example,  the seller agrees to credit the buyer $500 for some repairs rather than perform the repairs, that will require a written documented disclosure to the lender, the total of such amounts may not exceed the lender's cap.  Such a $500 agreement between buyer and seller will require a new good faith estimate from the lender, which in turn adds to costs by some lenders.  Another fact of life is the cost involved for escrow companies and lenders to retool their technology because they will be required to be in sync on this process.

Since this is being  implemented on a national basis, it will affect procedures and laws in all states.  The bottom line for buyers and sellers is that a 30-day escrow may turn into a 45-day escrow, which impacts people's moving plans for making the smallest of changes.

More will be said here on this issue, but the bottom line for residential buyers and sellers is to grasp the transactional costs and fees, including termite inspection (very costly sometimes) and what they agree to agree on with each other in the beginning.  I can see a world of even more advance planning on both sides.

Water Heaters Are About to Cost Much More

If you need a new water heater, consider buying one in the next three weeks.

Effective April 16, 2015, water heater replacement rules will go into effect.  A new amendment to the National Appliance Energy Conservation Act will require higher energy ratings on all new residential gas, electric, oil and tankless gas water heaters.  The changes will impact how they are designed, manufactured, tested, distributed and installed, as many will be taller, wider and heavier than your current installation.  Because of the potential increase in size, the homeowner may have an additional cost of housing the new heater in a larger cabinet.

 According to  the U.S. Department of Energy, "Standards mandatory in 2015 will save approximately 3.3 quads of energy and result in approximately $63 billion in energy bill savings for products shipped from 2015-2044. The standard will avoid about 172.5 million metric tons of carbon dioxide emissions, equivalent to the annual greenhouse gas emissions of about 33.8 million automobiles."  For water heaters under 50 gal., this greater efficiency is achieved by adding more insulation (making it bigger).  For larger water heaters, heat pumps will be required, and some larger water heater may be discontinued because they cannot meet the standard.  In the end, there will be less energy consumed, but not before the consumer pays more up front.  Also, the self-help install program will just not work, licensed plumbers will be a fact of life.  

And according to EnergyStar.gov site at least 30% of a home's energy is spent on heating and cooling:

According to the Bradford White website "It is important for contractors to understand that products manufactured before April 16, 2015, can be bought and installed after the changeover date."  However, since production of the new standard units started some time ago, some stores have been stocking up for some time, so older manufacture dates may be harder to find.

To extend the life of your current water heater, drain it yearly, and if possible, add a water softener to decrease sediments.   For more information go to http://www.energy.gov/search/site/water%20heater.