Attractive Loan Options

A lot of people are taking a look at the Best Places to Live lately.

First time buyers should know that there are programs returning to the loan market that have not been very active for some time. California's Housing Finance Agency has an excellent program which offers several features depending the buyer(s). In the past, the income caps on such programs were often too low to assist many buyers, but on this one, Los Angeles County guidelines allow over $80,000 annual income for up to two buyers, with higher amounts for 3 or more buyers and more units. The interest rates are more competitive than regular conforming loans, and there are features allowing for assistance in closing costs payments and down payment coverage through this program. And, this loan is available for a FICO score as low as 620, pretty unusual in today's loan environment.

FHA loans are still bound by the same loan limits--there has been a push to increase the loan limit for California due to the higher market. They also have a variety of features for down payment assistance and closing costs, however, HUD, this month, just disallowed the seller from helping on the buyer's down payment as their tracking showed there was a much higher default on this type of loan (this kind of assistance has never been available on conventional loans). But all the other loan options remain the same, including government sponsored assistance, employer assistance, and down payment from a relative. FHA loans require PMI which previously was not tax-deductible, however that changed as of January 1, 2007, making FHA loans more "user-friendly". They already have the advantage of having extremely competitive rates with certain programs. FHA loans basically have more liberal lending guidelines, including not using FICO scores (but they do look at the overall buyer risk profile), because their sole purpose is to assist buyers in need.

This IS a good time to be a buyer; and, if you're waiting for the market to come down before you buy, keep in mind that most buyers and sellers are about 2 years behind the market, so by the time you think it's a good time to buy, the market could have changed already. And real estate prices are local, so for updated information on pricing for an area you're interested in buying or selling, feel free to contact me for a market analysis.

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Long Beach Buying Opportunities Under $300,000

Wow --- in a check on today's MLS, there are 360 listings under $300,000: single family, own-your-owns, condos and coops. Some of them are previous foreclosures and are now bank-owned properties, although if you look online, you won't see that in the property description. Some are currently in pre-foreclosure with sellers hoping to sell very soon at a price acceptable to their bank.

Here are some location examples of lower-priced properties in Long Beach which include the Lafayette, Cooper Arms, the Willmore, a newer building above Belmont Heights, and a small house (great for an investor) in upper Belmont Heights:

For more information on these properties, inlcuding rental estimates, or a financial scenario for buying, please contact me. For a property search, go to http://www.juliahuntsman.com.
Julia Huntsman, Broker
Lic 01188996

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CAR's Annual Expo and Tradeshow

You've probably read in the news headlines by now that the median price in California is projected to fall by about 4% overall in 2008, a figure presented by Leslie Appleton-Young in her Wednesday 2008 forecast (112 slides linked).

Having heard presentations on Wednesday and Thursday by Leslie Appleton-Young, CAR's chief economist, Jack Kyser of the Los Angeles Economic Development Corporation, Frank Nothaft from Freddie Mac, and Richard Green of George Washington University, one consistent message was that the impact of borrowers taking negative amortization and other subprime loans they could not handle has affected certain states much more severely than was ever thought. Although these economic experts differed somewhat in their market recovery time projections, all agreed that 2008 would probably not be a year for the bottom of the foreclosure market impact, and that it could take 1-2 years beyond to see the end of this issue. Markets where borrowers did not enter the subprime loan arena are actually seeing a price stabilization or increase in home values--these include Idaho and Texas. In spite of the subprime loan issues (and all the media attention), the first reason people experience foreclosure is still due to loss of employment. Los Angeles County is more stable than other areas of the state. The buyers having the most difficult time are those in the $500,000 and lower price range--the loan picture has tightened and a 5% down loan and 100% financing is reviewed very stringently by lenders, although the softening in prices in many areas is helping first time buyer affordability.

It also should not be surprising that this year's seminars included foreclosures and short sales, and how they should be handled by agents, buyers and sellers. Buying opportunities are out there, and sellers who want to sell should present their homes and price them to sell, not to sit. Please remember that there are buyers buying and sellers selling right now, so if you'd like to consider how to be one of these, or for a free professional evaluation of your home's current market and selling price, please contact me.

For an MLS search, please go to http://www.juliahuntsman.com to see 3 choices in finding houses, condos, and up to 4 units. For a commercial property search, please contact me.

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Two Upcoming Arts Shows

Local artist Dawn Morishige is having an artist reception in her Buyart Studios at 2828 E 10th St., Long Beach on November 3rd, 2-8 pm for a show that runs through November 24th.

Dawn's contemporary room dividers are remniscient of Japanese screens, and are truly unique and unusual in their design and materials, and are also featured in another local store at The Marketplace.

Fellow artist Jason DeBose will also be featuring his digital photographs which are from his travels in many countries and other U.S. states.

Take a look at her website at http://www.buyartstudios.com/ to see more.

A second show in Signal Hill this Saturday, the 13th:

Friends of Signal Hill Cultural Arts - is putting on an art show, free food and wine!
There will also be music, Saturday 4 to 8 pm at the Signal Hill Community Center, 1780 East Hill Street, Signal Hill, West of Cherry behind Police Station and Library.

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"Mansionization": Which Home is Largest-of-All?

Under discussion for much of this year, the Long Beach City Council's agenda last night finally brought it to the city level. Citizens from neighborhoods such as The Ranchos, Belmont Shore and Belmont Heights have been most vocal about the impact of built-out remodels or rebuilds on the character and "feel" of their neighborhoods. It's not too difficult to find throughout Long Beach (or adjacent cities) many examples of houses which are built out to the maximum in lot coverage with as little setback as possible, in the trend to have the largest home possible in a given amount of space. Where a neighbor saw a tree in his neighbor's yard, he now might be able to reach out and touch the neighbor's new second story wall. As real estate appreciates, so does the desirability of location, location, location, and many owners felt there was an advantage to tearing down the old and rebuilding today's desirable floor plan. So does the owner have all the rights here, or do other area residents who chose to invest in a neighborhood partially because of it's architecture, age, density level (or lack of), and general "comfort" level with the street.

So the City Council last night voted 8-0 on a motion concerning Belmont Shore and Belmont Heights which proceeds which a current interim ordinance limiting construction to two stories (there have been many 3 story remodeled houses in the Shore), and further study reducing the number of variances allowed, the appropriateness of decreased turning radius for cars with homes on alleys, architectural projections, front yard setback, standards for remodels and new construction, using community involvement on design guidelines.

For some owners, just as when some areas voted to become historic districts in the 1980's and 1990's, these guidelines may be viewed as too limiting and an infringement on their property rights and change what they view as "functionally obsolete." It's a valid point--for hundreds of years people have built their homes in a way that fit the social structure of the time, sometimes long after that social structure was gone and "custom" took over. How do people upgrade a floor plan they believe is "functionally obsolete" but then not infringe on their neighbor's privacy? The other question is, do people need as much space as they think they do? I think a big question centers on privacy and desire for personal space especially in metropolitan areas which have seen their populations grow drastically. They're squashed in on the freeway to get home, and now their big plasma TV does not fit in that little 1928 or 1952 living room.

But will this really prevent sales? I don't think so--I think people in these neighborhoods will ultimately find a balance between living in a temperate climate vs. their lifestyle and available resources. (Photo is California bungalow in Alamitos Beach area, the kind of house that some people love and look for, other people think is way too small.)

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California's Updated Property Tax Withholding Laws

California's property tax withholding laws have been revised recently, and below are some basics per the legal counsel of California Association of Realtors.

An important thing for buyers and sellers to note is that the REALTOR is not the person charged with informing the buyer and seller, it is the escrowholder (although it certainly helps if your REALTOR is knowledgeable and prepares you beforehand).

If the escrow officer does not inform the buyer of their requirements to withhold, then the buyer is not obligated to withhold the money from the seller. (This concerns California law only; the IRS also has additional requirements.)

"Buyers must withhold 3 1/3 percent of the gross sales price on sales of California real property interests from both individuals (e.g., "natural" persons) and non-individuals (e.g., corporations, trusts, estates) and pay this amount to the Franchise Tax Board (FTB), unless an exemption applies (Cal. Rev. & Tax Code §§ 18662(e)(1)(A), (B), (2)(A)). Escrowholders must give buyers written notice of these withholding requirements. If the escrowholder fails to give the buyer this written notice, then the buyer is off the hook for the withholding tax liability. ( (Cal. Rev. & Tax Code §§ 18662(e)(3)(B).) Typically, the escrowholder submits both the form and money withheld to the FTB.

The exemptions include:

the sale of property for less than $100,000 (Cal. Rev. & Tax Code § 18662(e)(3)(A)); for individuals,

the sale of a principal residence or a property last used as a principal residence (Cal. Rev. & Tax Code § 18662(e)(3)(D)(i));

the sale of a decedent's principal residence by the estate (Cal. Rev. & Tax Code § 18662(e)(3)(D)(i));

the sale of property by a corporation with a permanent place of business in California (Cal. Rev. & Tax Code § 18662(e)(3)(D)(v));

an Internal Revenue Code (IRC) § 1031 exchange (without any recognized gain)(Cal. Rev. & Tax Code § 18662(e)(3)(D)(ii));

an involuntary conversion under IRC § 1033 (Cal. Rev. & Tax Code § 18662(e)(3)(D)(iii));

the sale of property at a net loss (or a net gain not required to be recognized) for California income tax purposes (Cal. Rev. & Tax Code § 18662(e)(3)(D)(iv));

seller's tax liability, calculated at the maximum rate regardless of seller's actual rate, will be less than 3 1/3% and seller certifies that fact under penalty of perjury. (For tax rate for corporations, see Cal. Rev. & Tax Code § 23151 or 23186; for maximum tax rate for other sellers, see Cal. Rev. & Tax Code § 17041.) (Cal. Rev. & Tax Code § 18662(e)(2)(B).)"

The required amount withheld in escrow must be transmittd to the FTB within 20 days after the close of escrow, and during escrow, the escrow officer should provide the buyer with an instruction form for the escrow officer to transmit those funds.

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Market Activity in East Long Beach 90815 for September 2007

According to residential resale transactions recorded at the Los Angeles County Recorder's office for August, there were 306 transactions in zip codes 90802 through 90815--a decrease of 18% in sales for the same period in 2006 for the same area which shows 372 transactions.

California Association of Realtors reports a 27.8% decline statewide in numbers of sales for August compared to the same period last year, and an approximate 5% decline in median sales price.

Locally, though, it appears that all trends as showing in the Southern California MLS are down except the price:

Taking just the one zip code 90815, generally considered East Long Beach and including the varied housing characteristics of Los Altos, La Marina, Park Estates, Bixby Hill, Artcraft Manor, College Park West, and Stratford Square neighborhoods, 17 single family homes closed in September selling at 95% of the list price at an AVERAGE (probably very close to the median) price of $754,911 after an average of 55 days on the market--a decrease of 23% from September 2006.

The 90815 area for September, 2006, 22 single family homes closed at an average of $711,318, at 97% of the list price, after an average of 74 days on the market

For the 90815 in 2003 there were 39 sales, after 19 days on the market, selling at 99% of the list price at an aver sales price of $497,038. 2003 is the year showing the most recorded transactions from the Los Angeles County Recorder for the 11 zip codes mentioned above in the last 5 years at 423 total transactions.

The 90815 house at the right does not fit the average sale picture above--It features many interior upgrades including kitchen and bathrooms, has an earlier room addition which makes a den or a 4th bedrom, yet remains on the market after a year. The current asking price is $668,950--it's a great house for a young family because it's within walking distance to the elementary and middle schools, near shopping and the airport. If you would like to know more contact me, or find this property (it now has a little tree in the front) here.

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Sales Activity Comparisons for Long Beach and Cerritos

The number of houses selling over $1,000,000 in the 90803 zip code now equal about half of total sales of single family homes during July and August. While there are those who say that this fact skews the overall median price, it's still a fact that there is a market in this price range where it did not exist a few short years ago. In August, the AVERAGE sales price of 17 closed escrows, per the MLS, was $1,283,876 at an average of 64 days on market with the selling price about 91% of the original list price. In July, 25 properties closed escrow after an average of 68 days on the market at an average selling price of $1,408,653, at 92% of the original list price. The lower end of sales in this area was around $600,000, and up.

If these prices shock you, just look at the blue-footed doobie for a minute.

The story for July and August of 2006 for 90803 was almost the same for average price and number of sales (18 for both months), but the average time on market was MUCH longer: 124 days on market in July and 97 days on market for the average sale of $1,175,000 in August.

The story in Cerritos is similar: August of 2006 saw 53 days on the market, July was 42 days on market. August of 2007 was 26 days on the market (half the time to sell from one year ago) and July of 2007 the average sale time was 29 days on the market.

For both years the sale to list price percentage is higher than Long Beach--in July of 2006 it was 97% of the original list price and in July of 2007 it was 95% of the original list price. The average sale price has declined in those two months to $715,789 for August and $747,754 for July of 2007.

If you still want to be in Long Beach near the beach, the house at the right is on the market for $689,900 in Belmont Heights. For more information, call me or go to www.juliahuntsman.com and find 261 Grand on the property search engine.

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Old Saying in Real Estate: "First You Have to Sell It to the Buyer and Then ...

... you have to sell it to the appraiser." In a rising market appraisals are usually not a cause of concern, but the market of the last two years is seeing a return of cautionary words about knowing the appraisal process. This is where sellers are smart to choose agents who provide them with realistic comparables when listing their property, and this is where it's smart for buyers to work with agents who are familiar with their prospective new home.

Sellers who bought recently may not be happy with the actual rate of return on their new purchase, particularly if they've refinanced lately, or took out a home equity line, or had a 100% mortgage to begin with. Sorry, but your equity won't be so great, if any. Furthermore, in the words of a local loan representative who sent me an e-mail on appraisals today:

"The appraisal process often confuses consumers and loan officers. They may feel that their home is worth a higher dollar amount, and so the appraised value doesn't always make sense to them or sales staff because there has been so much time and effort invested in the file. It is important to know that the appraiser is completely independent from borrowers, buyers, sellers, and Real Estate Agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules. In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. The most important feature of a home is location, location, location."

It's not uncommon for sellers to think their lovely home is worth more because of $50,000 invested in certain upgrades, but that depends on the age of the home. Per our friend from Wachovia, "the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal" because much of the total remodel cost usually involves demolition and upgrading of the basics such as plumbing and wiring. Upgrades in a very new home would get a higher return on the investment because they are an addition to the cost of building the new home. The value of those upgrades will depend on the local value of other recent sales with similar upgrades.

If you have an all cash buyer and no lender appraisal is required, you may or may not deal with an appraiser because the buyer may still want a 3rd party opinion.

A most difficult thing in a transaction where the buyer is obtaining a loan is to have the appraisal reviewed prior to closing--last minute questions can delay the closing. The best of all possible worlds is for sellers to realistically price their properties for their area.

(And why is there this picture with the dog? Because I couldn't find a photo of an appraiser.)

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Local Water Use Restrictions

The City of Long Beach has declared a water shortage and issued revisions to the municipal code concerning water use which ought to be of interest to all Southern California cities.

Record low rainfall and an 8-year drought in the Colorado River watershed, used by much of Southern California, along with other impacts such as a federal court Endangered Species Act ruling on August 31st, necessitated new rules for the City of Long Beach:

Washing driveways, sidewalks, parking areas, patios or other outdoor cemented or paved areas with a garden hose, unless it is attached to pressurized water broom;

Irrigating any landscape with potable water between 7:00 a.m. and 6:00 pm;

Irrigating any landscape more than three days per week.

The City imports almost half of its water and states a water supply shortage is imminent without immediate conservation, and is mandating the use of water pressure devices on all hoses. Just click on the link above for complete information.

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