Property Tax Exemptions from Reassessment

Did you know that in certain California counties you are able to transfer your tax base? A taxpayer who is 55 years of age or older may transfer the Proposition 13 base-year assessment value of his or her principal residence to any replacement dwelling of equal or lesser value in the same county and, sometimes, in another county ( Cal. Rev. & Tax Code § 69.5(a)(1)and (2)). And, you may have up to two years before the sale or two years after the sale of the original dwelling to purchase or construct the replacement property. The catch is, your replacement property must be of equal or lesser value than your sold property. So, if you're thinking of selling your principal residence located in Los Angeles County and moving to Alameda, Orange, San Mateo, Los Angeles, San Diego, Santa Clara or Ventura Counties, you may transfer your tax base to those locations provided all the transfer qualifications are met. Otherwise, the transfer applies if you stay within the same county you're selling in.

Mortgage Rates Leap Up

According to Bankrate.com, the 30-year fixed is overall around 6.5%, and mortages are the highest in 4 years. Fewer people are refinancing than in the last 9 months or so. Buyers sometimes forget that a change in their mortage rate will increase their monthly payment faster than a slight increase in a sales price on a new purchase, depending on the amount involved. Why wait, if you're thinking of a new purchase?

February Pending Home Sales

The leveling out of pending home sales (homes in escrow but not yet closed) is another indicator of a slowing market. The index of 100 is equal to 2001 activity, the first year NAR uses in this comparison. "The index in the West fell 7.6 percent to a level of 110.9 in February and was 14.8 percent below a year ago." See the article for other regions in the country. David Lereah, NAR’s chief economist, said most of the cooling in the housing market has already occurred. “We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales with some month-to-month fluctuations,” he said. “This normalization is healthy because it is taking a lot of the pressure off of the decision process for both home buyers and sellers – pressure that was driving abnormal rates of price growth across much of the country over the last few years.”

Your New Credit Score

Just when you thought you knew about your credit score, it's all changed. The 3 national credit reporting companies got together and developed a new system which they think is more consistent and objective. The current FICO score system was developed by Fair Isaac Company some years ago. The VantageScore will use a score up to 990, and is based on the type of breakdown you probably learned in school, with a score below 600 being an "F", a score above 900 being an "A".

Interest Rate Increase

The trend may be towards yet another rate increase. One-year and five-year adjustable interest rates are looking less attractive when compared wtih the 30-year fixed rate mortgage. The upward pressure on mortgage rates is a downward pressure on home prices. Rates have already edged up, slowing re-fi activity overall.

Southern California Still Sells

In Southern California, sales of new single-family houses and condominiums saw their strongest February since 1988, according to statistics compiled by real estate research firm DataQuick Information Systems. Last month, sales rose 9.5% to 4,980 from January's 4,550, and were up 19% from the year before. (Los Angeles Times, March 25, 2006.)

As we've been saying for some time, the local economy is diverse enough, and the housing supply is tight enough, that in spite of the rising inventory, overall conditions still create a demand for real estate. Condominiums are often the more affordable option for first-time buyers as it's still possible to find a 2-bedroom unit for $450,000-$500,000, or less, depending on the area and size of the unit, but some within blocks of the shoreline may still be found at this price.

California Median Home Price for February

.... was $535,470, with Newport Beach at the highest median home price and Yorba Linda at the lowest. It took longer to sell a single family home this February compared to Feb. 2005. The median price is 13.7 percent higher than last year, but 2.9 percent lower than January 2006's median price. There continues to be the highest home inventory than we've had for several years. It would take over 6 months to deplete the current supply; this time last year there was only 3 months inventory, which buyers felt accutely when they made offers which often turned into competition with other buyers.

The median price for condos statewide is $433,140, an increase in price from January. Follow the link for more info.

Buy Before Really Seeing?

The photos are good, and they do tell a story, but is it the same one you would get after you moved in? The internet is such a useful tool in previewing, but would you actually buy it based on photo previews? That's where this article claims many people are headed are in the future, but in a high priced market that demands the utmost in buyer financial resources, this is just a wait-and-see. California is the most disclosure-oriented of most of the states, but that still hasn't prevented buyer remorse. Hmmm ...

February's Southern California Median Home Price

February's prices set a new record, however the number of homes sold in 6 counties was the lowest number in 5 years. The median price according to Dataquick was $480,000, much lower than the statewide median price, but up from the So Cal median price of $469,000 one year ago. The real estate bubble forecasts are not alive and well at this point, according to this article: foreclosure activity is low, down payment sizes are stable as are property flipping rates.

Inflation Concerns Give Rise to Rate Increase

Gains in manufacturing and service industries and higher labor costs are the reason for the increase in the 30-year fixed rate, up to an average of 6.37 percent. This is the highest rate since 2003. The Los Angeles region average according to Bankrate.com was 6.48 percent at about a half point.