Holiday Things to Do and See in Long Beach

If you were a tourist in the area, what would you like to visit? (Or, maybe you live here, but you're looking for something to do in the holiday period.)

The Long Beach Museum of Art, in a former turn-of-the-20th-century residence, is on the bluff overlooking the Pacific Ocean, with Claire's Cafe, outdoor sculpture, and recent gallery addition.

The Aquarium of the Pacific has winter day camps, educational programs for children, holiday events, harbor cruises, the aviary and the Shark Lagoon, an online learning center, and many many exhibits throughout its halls. Not to be missed. And visit the Queen Mary's hotel, ballroom, restaurants and shops--this is a historic ship still retaining many original features. El Dorado Park is one of the largest area parks in Los Angeles County--ponds, ducks, lots of parking, and has a Nature Center with walking trails.

And, for more gardens, visit the Earl Burns Miller Japanese Garden at CSU Long Beach. The campus is also home to the Richard and Karen Carpenter Performing Arts Center, and its holiday schedule of events--easy parking access off of Atherton.

For an easy walk over water, try the Belmont Pier or the Seal Beach Pier just over the line in Orange County. You might be there in time for the Christmas Parade in Belmont Shore or the Seal Beach Christmas Parade in Old Town, or take a holiday boat ride for the Harbor Lights.

If you're looking for property while you're here, please visit my property search page, or give me a call at 562-896-2609.

Freddie Mac Suspension of Foreclosure Sales

Hope you have a Happy Thanksgiving.

Starting today, sale of single family homes and 2-4 units on loans held by Freddie Mac will not be sold until the suspension period is over on January 9, 2009. Vacant single family homes are excluded from this suspension. This is to allow more time for Freddie Mac's loan modification program to be implemented. Read the Do's and Don'ts of Foreclosure.

If you are in this position, or close to it, please don't stop answering your phone or reading your mail. Lenders are now attempting loan modification programs, and engaging representatives to speak to you in person. (Ask for identification.) You could be hurting your chances of success if you ignore the many attempts made to contact you; some loan modification programs are the only chance the borrower will have to catch up, until you improve your FICO score and can get an improved refinance. If you would like to know more, please call me.

Are You Taking Advantage of Your Decline in Market Value and Homeowner Exemptions?

Do you know about your property tax reduction option? Generally, the median home price in California is about the same as 2004, so if you bought your residence after that time, you might want to apply to the Los Angeles County Assessor for a reduction. You have until the end of this month to get your application in, so there's not much time left, but basically, you need to find two comparable properties that support your application that sold close to January 1 and through March 31 of 2008. The Assessor's site has the form and directions needed for this. You can find your own comparables through this site, but if you want help from me, please e-mail me or call me, and I will gladly provide you, via e-mail, with MLS closed listings.

If you live in Orange County, please contact your tax assessor there.

Also, some people may not be filing their Homeowner's exemption -- you may obtain a $7000 reduction in your assessed tax value (that's usually based on the selling price of your home). Originally, $7000 was a significant amount when the home values were $35,000. Today, you may get about $50-$70 off your total tax dollars owed, but a penny saved is a penny earned. You can download the form from the Los Angeles County site, for this and other exemptions including those for veterans, instititutions, real property transfer exclusions between parent/child and grandparent/child, seniors' exclusions, and disaster relief.

Lender-Owned Property Inventory in Long Beach Areas

As mortgage lenders develop their loan workout programs, the number of lender-owned properties coming on the market may slow down. In the meantime, many REO (real estate owned, or bank owned) properties are an opportunity for the investors and 1st-time buyers who are ready to buy.

Long Beach - 14% of the single family houses and condos listed in the CARETS-SoCalMLS (new expanded version of combined MLSs in Los Angeles, Riverside, Orange and San Bernardino Counties as of 11/11/2008!) are REO properties: 228 out of a total of 1,636.

Multi-unit (2+ units): 11%, 44 out of a total of 389.

(for photo at right, see post on Long Beach Ebell)

Cerritos - 10% of SFRs and condos: 11 out of a total of 112.

Lakewood - 13% of SFRs and condos: 29 out of a total of 226.
Multi-unit listings: 0 out of 9 listings.

Signal Hill - 11% of SFRs and condos: 5 out of a total of 55.
Multi-unit listings: 0 out of 10 listings.

Huntington Beach - 6% of SFRs and condos: 42 out of a total of 647.
Multi-units: 0 out of a total of 55.

Los Alamitos/Rossmoor - 5% of SFRs and condos: 4 out of a total of 73.

Seal Beach - 1% of SFRs and condos: 1 out of a total of 68.

Cypress - 4% of SFRs and condos: 4 out of a total of 90.

San Pedro - 4% of SFRs and condos: 11 out of a total of 280.
Multi-units: 14%, 2 out of 14.

Active listings only are given here, but for reference, per Dataquick on 10/23: "Foreclosure resales have emerged as a major market factor, accounting for 47.6 percent of all California resale activity last quarter." Not all market areas are equally impacted.

What is not shown in the list above are other "special condition" listings, such as short sales, probates, relocation or bankruptcy listings. The short sale listings in particular are an indication of future REO listings. For a list of short sale listings, please contact me.

For a comprehensive list of REO properties not all of which may be listed on the MLS, contact me.

For information on guidelines for loan modification, please contact me. I may be able to help you with Countrywide, Washington Mutual/Chase, IndyMac, Citigroup and the Hope for Homeowners.

What's the Life Expectancy of Your Home?

Consumerism has taught us to think about fast replacement, instead of "making it last".

How long will your house last? Watching the house restoration shows on TV should give some clues, but here's some specifics from a Los Angeles Times article by Calvin Woodward dated 2/16/1997, and more from the a 2006 National Assn of Homebuilders home life expectancy chart:

Dishwasher - 10 years

Microwave - 9-11 years (mine was going strong at 16 years)

Brick, masonry, stone wall - 100 years

Wood decks - 15-20 years

Garage door openers - 10-15 years

Furnaces - 15-20 years

Drywall -

Heat/Smoke detectors - 5-10 years

Natural stone counters - lifetime

Cultured marble counters - 20 years

Kitchen cabinets - 50 years

Garage/laundry cabinets - 100 years

Gas range - 15 years (that depends, too, some are 50-60 years old or more)

Wood flooring - 100 years +

Vinyl floors - 50 years

Carpet - 8-10 years (depends on traffic)

Roof, asphalt or wood shingles and shakes- 15-30 years; slate, 50-100 and more

Gutters - 30 years

Concrete walk - 24 years

Swimming pool - 18 years

PVC piping - 25 years

Polyvinyl fences - lifetime

Asphalt driveway - 15-20 years

These are general guidelines only, because quality of maintenance is a strong factor in the life of any of these items. Geography is the other: a salt-air climate will have a much different impact than a dry desert climate.

2009 FNMA and Freddie Mac Loan Limits Just Announced

Fannie Mae and FHA loans limits were "temporarily" increased to $729,750 in our market area as a part of an overall Economic Stimulus Plan. Well, those loan limits are due to sunset on December 31, 2008.

The Federal Housing Finance Agency just announced today that, for the Los Angeles-Long Beach-Santa Ana metropolitan region, the new 2009 conforming loan limits are $625,500 for one unit (house, condo, etc.), $800,775 for 2 units, $967,950 for 3 units, $1,202,925 for 4 units. The conforming loan limit in other areas will remain at $417,000. Link to high cost area loan limits.

Consult your lender for more details.

Long Beach First-Time Home Buying Assistance

Good news for first time buyers in the Long Beach area: The buyer affordability index is higher than it's been in several years--in Los Angeles County it's up to 40% or higher. Condo prices in particular have softened a great deal, and house prices are lowering also.

One of the best bets for first time buyers right now are FHA loans because of 3% or 3.5% down payment, flexible credit score guidelines, and somewhat more forgiving debt ratios. For a few people with FICO scores over 740 who plan on buying a single family residence, there might be minimal opportunities for a 5% down loan. Otherwise, buyers will need to have 10% down payment or more. Additional programs (requiring specific lenders) is the California Housing Finance Agency, a program that may work in combination with loans.

Down Payment Assistance Program

The City of Long Beach, however, does have a second mortgage assistance program for first-time buyers who purchase a primary residence in the City and in certain areas, with as little as 1% of the purchase price out of their own funds, and who meet certain eligibilty requirements, as of October 1st.

The borrower must currently live or work in Long Beach or show evidence of a job offer in the city, and household income for two adults cannot exceed $57,400, for example, or $71,800 for 4 adults. The maximum sales price for the City's program is for condos under $332,500 and single family residence with a sales price under $500,650. For example, today, in the Southern California MLS, there are over 475 active listings for 2+ bedroom condos or houses priced at $350,000 and under in Long Beach. Not all of these fall within the areas specific to the City program, but, for example, if you enjoy the downtown area and adjacent sections, this program could be for you. First, you must be pre-approved with a qualified lender for this program. If you contact me, I can help you find a lender working with this City program.

As part of your homebuyer education, it's important to find a good loan officer; yes, internet research helps with some basic information, but one of the pitfalls for many buyers is in making decisions or coming to conclusions about financing based on random internet searches that only tell part of the story. Lending guidelines have changed radically during 2008; keeping your information updated and developing contact with an experienced financial person is crucial to your home purchase.

You Can Buy a Home Now

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

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

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

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

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

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

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

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

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

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

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

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

Foreclosure or Short Pay Debt? New Laws

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

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

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

Market Forecast for 2009 by CAR

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

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

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

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

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

Those "Down Home" Prices

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

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

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

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

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

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

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

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

Are You Wanting to Buy, But Waiting?

Trulia just completed a survey on homeownership:

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

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

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

FHA Loans - Hope for Homeowners Act of 2008

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

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

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

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

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

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

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

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

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

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

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

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

Bixby Village: Your Next Home

The Bixby Village area began as a new development of over 350 homes and townhomes in the 1980's.

The single family homes that sit along the east side of the complex have golf course views. On the interior are the townhome groupings with tree-lined greenbelts and guest parking areas, entered from the interior roadways. This area is actually one of the few townhome developments in Long Beach and is well situated adjacent to CSU Long Beach, a major grocery chain store and shopping center, and other nearby shopping malls within several minutes' driving distance.

The townhome floorplans may be 2 or 3 bedrooms, and range between 1700 sq. ft. to over 2300 sq. ft. and include vaulted ceilings, fireplaces, formal dining areas, larger kitchens and patios for sitting or entertaining off the living room and dining areas, and attached 2-car garages. Some floorplans in both types of properties include a downstairs den or bedroom. Most bathrooms are still furnished with the original marble-style counters, large tubs and shower enclosures. The homeowner association includes a pool and clubhouse. The architecture is Cape Code style in several shades of blended exterior colors, ranging from warmer sand to cooler blue tones.

Single family homes are larger 3-bedroom plans, going up to over 2700 sq. ft.

Currently, there are 5 active listings in this development, 4 are single family homes ranging in asking price from $749,000 to $899,000; the townhome is currently listed at $665,000. Selling prices in the last 3 months for the townhomes (no SFR sales in that time) ranged from $580,000 to $665,000.

This complex is a great opportunity to live within a 5 minute drive of the beach and Belmont Shore, yet be close to the 405 freeway.

For more information, call me at 562-896-2609 or visit my site for Long Beach Condos, Lofts and Associations to search for current properties in Bixby Village for townhomes and condos. For condos, townhomes and single family homes in and adjacent to Bixby Village and the golfcourse, see the Bixby Village area listings here.

Julia Huntsman, Broker, e-PRO®, REALTOR®

Summer Sales Active in the Long Beach Areas

This 5-bedroom and 3500 sq. ft. Long Beach estate home in Belmont Heights (with guest quarters) closed escrow in August and sold for $1,950,000 after being on the market for 18 days before going into escrow.

What happened with other residential properties in July and August (as listed in the So Cal MLS)? In Long Beach, Cerritos, Lakewood, Seal Beach and Signal Hill, properties were on the market about 74 days before going into escrow, and sold at about 93% of their original list price:

Long Beach

Condos

• 132 sold
• Selling price range: $73,100 - $885,000
• Selling price to original list price (SP/OLP) - 91%
• Average of 74 days on market (DOM)

Houses - July

• 178 sold
• Selling price range: $100,000 - $2,825,000
• SP/OLP - 92%
• Average of 70 DOM

Houses - August

• 190 sold
• Selling price range: $102,000 - $3,800,000
• SP/OLP - 94%
• Average of 82 DOM

Signal Hill

In a city previously populated by more oil derricks than houses, this 1946 and 1070 sq. ft. bungalow sold at $275,000 after 42 days on the market, very fast for a short sale. No garage. This is the low end of this market in an older neighborhood. New view houses on the hill sell for triple.

• 17 houses and condos sold
• Selling price range: $280,000 - $1,128,182
• SP/OLP - 96%
• Average of 75 DOM

Cerritos

This spacious 1970 four-bedroom 1820 sq. ft. home in Cerritos sold at $640,000 after 79 days on the market, under conditions of a notice of default and a short sale.

• 47 houses and 5 condos sold
• Selling price range: $238,800 - $1,299,000
• SP/OLP - 95%
• Average of 58 DOM

Lakewood

• 105 houses and 8 condos sold
• Selling price range: $252,000 - $789,000
• SP/OLP - 93%
• Average of 65 DOM

Seal Beach

This oceanfront, with Catalina views, 3-bedroom 4200 sq. ft. home with lap pool and wine cellar sold for $5,500,000 after being on the market for 237 days.

• 15 houses and 6 condos sold
• Selling price range: $240,000 - $5,500,000
• SP/OLP - 91%
• Average of 89 DOM

Even A Middle School Student Could Get It

Quote of the week:

"Amid the extraordinary financial events of the last few days, the Fed kept monetary policy on hold. In doing so, the Fed made clear its desire, to the extent possible, to separate its monetary policy decisions from the circumstances surrounding particular financial institutions." -- Peter Kretzmer, economist at Bank of America (my italics). And we also learn today that the Federal Reserve will not reduce the rate.

In times of market volatility it's easy to speculate on impacts, effects, and the future--overall negativity. Unfortunately, the subprime mortgage fallout is having a continuing story in the downfall of certain financial institutions. The story of this down market is not one of major job loss, as it was in the 1990's, where people declared bankruptcy and lost their houses due to lack of income--it's one characterized by the wrong loans for the wrong borrower, often made with lack of disclosure. Bank of America, for example, is still standing because it did not join the subprime bandwagon, although it certainly offered many loans with more flexible guidelines that it doesn't offer now. The worst part of all this, in the end, is that fewer banks will be around for consumer choice--at least that's the way it looks now.

One of the terms buyers need to know is "RESPA", which stands afor Real Estate Settlement Pratices Act. Before you assume this is something totally boring and far too much legalese, just remember that one of the reasons borrowers got into trouble is that they didn't understand their costs statement, didn't really look at their Good Faith Estimate required by the borrower to give to them--if they had, and if they knew just a little bit more about the basis of loan financing, they might not have ended up with what they did.

Unfortunately, these things are not taught in high school, even a middle school student could get it (parents, you must know that sometimes I get phone calls from kids who're reading my blog and have a question), but buyers under the crunch of fast decision making are encountering terms and practices they have infrequent or no experience with.

Reform of the RESPA is underway, with the end goal of making disclosures to buyer easier and more clear. That's still not a guarantee that the end result will be less complicated than what we have now, just different.

In the end, buyers need to familiarize themselves with their proposed loan, and their upcoming home purchase, and take the time to do it.

What Does the Fannie/Freddie Takeover Mean to You?

Fannie Mae (FNMA) and Freddie Mac (FHLMC) are two of the government sponsored enterprises established by the U.S. Congress to make loans and loan guarantees. They reduce the cost of capital for certain borrowers, including homeowners. They are regulated, no longer by HUD, but by a new regulator, the Federal Housing Finance Agency (FHFA) under the recent reorganization signed into law in July by President Bush.

The 12 GSE banks which also help finance housing are also a cause of concern to those who "worry that the rapid growth of other government-sponsored enterprises, most prominently the 12 Federal Home Loan Banks, eventually might create headaches for the financial industry and American taxpayers." The home loan banks, which were created during the Depression amid a wave of bank failures, have lent billions of dollars to banks and thrifts that are themselves exposed to troubled home loans.

In terms of names we recognize (per a New York Times article) "Washington Mutual, the nation’s largest savings and loan, nearly doubled its borrowing from the Federal Home Loan Bank System over the last year, to $47.7 billion, according to government filings. The Wachovia Corporation has also ramped up its borrowing, in part because of its acquisition of Golden West, a big California lender. In 2007, before it was sold to Bank of America, the Countrywide Financial Corporation took out more than $53.2 billion as it fought to stay afloat." Perhaps you've noticed the TV ads to bring in new customers--the mortgage side of some banks is struggling and they are attempting to build up their retail side with new customer accounts.

"Collectively, the home loan banks have never reported a loss in the system’s 76-year history. Many experts say the risk that lenders will fail to pay back the home loan banks is small, particularly because the loans are secured by collateral in the form of high-quality mortgages and other protections. Still, the explosive growth of the system concerns some analysts, who worry that the loan banks enable overly aggressive lenders to continue to make loans. "

On the other hand, the GSEs hold nearly half --or $5 trillion-- of all mortgages in the U.S. and account for almost all of the new mortgages in California, and one question is, will a privatized Fannie and Freddie change the availability of the fixed 30-year mortgage? The lack of institution-based mortgage securities may mean more expensive capital, and more expensive home loans. This will greatly affect the markets in areas such as California and reduce homeownership, if these GSEs are not allowed to carry out their basic mission?

Bay Harbour, Long Beach--Finding Your Next Home

Bay Harbour's private residential area near Alamitos Bay was developed by Warmington Homes in the 1980's. If you're looking for larger single family homes near the cool ocean breezes and great association amenities, this could be for you--plenty of opportunity for exercise with lovely greenbelts, three tennis courts, two pools and spas, and a 24-hour "guard shack" at the gated entry.

Of 198 homes, seven are currently on the market (see map locations) and range in size from about 2500-3000 sq. ft., depending on the plans. These three- and four-bedroom plans in contemporary Tudor and Mediterranean architecture are open and contemporary layouts designed for gracious living and entertaining. Many features include: cathedral ceilings and crown molding, central air and heat, open family rooms, double-side fireplaces, laundry room, walk-in closets, patios for outdoor dining, direct access from garage and many more individual upgrades with specific properties.

Low HOA fees are another great feature of the association. (Compare to the much higher $400-$500/month fees for luxury condos along Ocean Blvd.)

For current listings, please contact me by phone or e-mail. Asking prices currently range from the higher $900,000s to about $1,500,000, a great price range when comparing to other properties of that size and general location!
Or, to see current listings right now in Bay Harbour, please go to my Long Beach Condos, Lofts and Association Homes link for Bay Harbour.

Julia Huntsman, Broker
01188996

Buyer Affordability--Loans vs. Price Decrease

The good news is that more buyers don't need as much annual income in order to qualify, but what about loan qualification?

First of all, price drops are out there, especially with condos. If a condo is for you, this is the time to start examining your options. Right now, a qualified buyer could find a one-bedroom condominium in Belmont Heights for as low as $190,000 with dues at $252/month, and downtown prices start even lower at $75,000 for a studio with dues at $126/month. If you prefer a single family home, try a lovely 2 bedroom/1 bath home in Lakewood's Carson Park area (no REO or short pay) for $349,000.

The really good news is that the qualifying income needed is also much lower than a year ago: $62,870 annual income will now buy a home selling at $329,000, so even less income will be needed for that one-bedroom condo. See the August 19 affordability report from California Association of Realtors for the second quarter of 2008.

But next, suppose you don't have a lot of cash saved up for down payment. Let's face it, mortgage lending is returning to more traditional parameters, with the departure of lenders both large and small, the Bank of America takeover of Countrywide being one example. But 3% down is still possible for an FHA loan, which will also allow a family member (only) to assist on the down payment. Otherwise, the vast majority of conventional loans are leaning towards 10% down payment. On the other hand, there are still-valid down payment assistance programs through local cities such and Long Beach, Los Angeles, Bellflower, Buena Park, Irvine, La Mirada, Westminster, plus other sources such as ACORN, NHF Access, CalSTRS, CalHFA, and various neighborhood housing services and credit unions in Los Angeles and Orange Counties--keep in mind these programs are often driven by income levels and geographic location. However, programs allowing down payment contribution from the seller, such as the HART, are no longer allowed after the end of September.

If you would like to find out how you might be able to qualify for a loan, and one of these programs, call or e-mail me.

"The FIRPTA Fix"--HERA of 2008

What this fix means under the Housing and Economic Recovery Act, much to the relief of sellers everywhere, is that the seller is no longer required to provide the seller's Social Security number to the buyer in order to fulfill the IRS requirements when selling property. The new option is to provide that on a form to escrow or "qualified substitute" who in turn povides a statement to the buyer. This, by the way, comes under the Foreign Investment in Real Property Tax Act, otherwise known as "FIRPTA", and sometimes I find it searched for as "ferpta" (just a little side note if you want to find it under the right acronym). Although California buyers are currently required to sign a Realtor-based FIRPTA form saying the seller's Social Security number will in no way be misused or abused, obviously there is less exposure by only providing it to the qualified 3rd party, or escrow officer.

Per California Association of Realtors: "The federal withholding law is now similar to California's Franchise Tax Board (FTB) policy which allows the escrow officer to remove the seller's tax ID number from the buyer's copy of the California withholding tax statement, but not other copies."

Key Provisions in New Housing Bill

Trying to follow this new law? Like the thread under this little reader, it will take time to unwind and fully realize the impact on buyers, lenders and current homeowners.

The Republicans most in favor of this new law were those whose districts are most impacted by high foreclosures and vacancy rates. Most of the Democrats were happy. It's been a controversial bill, and there are still doubts and disagreements by many as to its complete effectiveness. (Here's a housing example from right here in the Long Beach area: Yesterday, in a comparable market analysis for a specific downtown property, on one street in 90802 there were 20 condos listed under $300,00, 15 of which were listed as vacant. )

Signed this morning without the usual Congressional member representation at the meeting (the President was not originally in favor of it), the Federal Housing and Economic Recovery Act of 2008 includes:

New permanent higher cap on loans that can be purchased by Fannie Mae or Freddie Mac--$625,500 (that up from the previous limit, down from the 2008 temporary loan limit). The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

• New independent agency will regulate the two entities which now own more than half of the nation's $12 trillion of residential mortgage debt.


• Truth-in-lending requirements that explain a borrower's refinanced mortgage, new purchase mortgage, or home equity line of credit purchase.


• The FHA may now insure the full value of a home on a reserve mortgage, up to $625,000.


• Homeowner access to HUD home finance counseling services.


• Program to help refinance current eligible homeowners into 30-year, fixed rate mortgages--lenders may have to accept a lower loan amount.


• Community Development Block Grant funds to help rehabilitate foreclosed homes in areas of high foreclosures.


• Tax benefit of $7500 or 10% of home's purchase price, whichever is less, for first time homebuyer with $75,000 in adjusted gross income or $150,000 for couples filing jointly. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.


• Starting October 1, forbid the FHA from insuring mortgages where a seller contributes to the buyer's down payment (seller-assisted programs such as the HART and Nehemiah programs). Down-payment assistance from family, employers and other nonprofits is still allowed.

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So You Want to Pay Off Your Mortgage Faster?

Like these guys, we would all like to find a way to save money. But what will it cost?

Today I received a nice letter from my mortgage lender inviting me to pay off my loan 61 months sooner by making payments twice a month. I would save thousands of dollars in interest. I couldn't agree more. All I have to do is enroll in a special plan where half of my regular monthly payment would be taken directly from my account, for a total of 26 drafts a year, which would be sent to my mortgage lender. On the second page of the mailer, there's a nice chart showing my remaining balance for the next 29 years, the new plan balance, and the equity growth I would gain each succeeding year until the entire balance would be paid off at the end of year 24.

But--couldn't you just pay more principal when you want to? Why does this plan want $375.00 from me to set up automatic withdrawals? First of all, you don't have to pay anything extra to pay down your principal, and second of all, $375.00? Didn't that used to cost $150.00 or so for those who were actually willing to pay for the service? That's probably because the people at the outside insurance agency which sets it up want their cut, too.

Paying principal down is good, but right now, I need that $375.00 for gas. I can just write in an extra amount in the principal column on the monthly statement for free.

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Money in the Wind--No More Seller-Assisted Down Payment Programs

The House of Representatives has voted, with the Senate soon to follow, giving $300 billion in assistance to FNMA and Freddie Mac.

The legislation passed yesterday by the House would authorize Paulson to bail out Fannie and Freddie while placing few restrictions on them. Fannie and Freddie debt totals about $5 trillion, which would cause world-wide catastrophe if they failed, and the projected $25 billion cost to U.S. taxpayers over the next two years may not happen anyway, per the Congressional Budget Office, only a 50% chance, if you want to take comfort in that. Lawmakers said they expected the Senate to approve the measure later this week, and the White House said President George W. Bush would sign it into law.

Included in this is the elimination of seller-assisted down payment programs such as the HART, AmeriDream, and Nehemiah programs. These programs allowed a process where the seller could contribute to a 3rd party non-profit entity funds which were then sent over to the buyer via escrow, who could apply them for his/her down payment. These "seller-assisted" programs are now blamed for the loss of $4.6 billion in FHA's funding reserves, to the current level of $16.4 billion. Traditionally, down payment funds are from the buyer's own sources, but in these particular programs sellers were allowed to help the buyer who had little or no money. When buyers have less money in the deal, they are considered at much higher risk of loan default, and in still current down payment programs, a requirement is for the buyer to have a minimum of 1% of their own funds contributing to the purchase.

The current temporary loan limit of $729,000 would be changed to a permanent level of $625,000 for conventional and FHA loans, and allows a tax refund for first-time homebuyers of up to 10% of the home's purchase price, but no more than $7500, but the refund is basically a tax-free loan which must be paid back over 15 years.

There is much more to this proposal, which will probably be signed into law by President Bush who has dropped his opposition to it, and made effective possibly October 1.

How this bill can help you. Here's some of what homeowners need to know. Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program. Click on the article to read more about eligibility for this FHA program which, if passed, will be available through FHA approved lenders.

Please contact me for more information.

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

http://www.longbeachrealestate.listingbook.com

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Luxury Home on Rivo Alto Canal, Naples Island

Facing Rivo Alto Canal, custom home built in 1989 on two lots, 700 sq. ft. 4-car garage (not tandem), and two boat docks. Kitchen has walk-in pantry, wine refrigerator and adjacent informal dining with water view, rooftop deck, two fireplaces, large formal dining room, plus family room. Large upper master faces canal--great opportunity for the buyer looking for a larger home on Naples Island! Many more amenities. Click on photo for more details, or for a showing.


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Quote for the Week: Buy Now If You See the Home You Want

"The plain fact is that you don't know when real estate will be at bottom until it's too late. If you see a home you love, buy it now if you plan to be in it a long time. And know that the headline writers want to whip you up and make you crazy about the economy. They sell fear. Stay calm and stay well to do." Ben Stein "Don't Panic - Buy Index Funds and Real Estate"

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New California Law Requiring Notice from Lenders

New law in California requiring lenders to contact homeowners 30 days prior to filing a Notice of Default (NOD), so don't overlook your mail, especially when it comes from your mortgage lender:

"FORECLOSURE RELIEF BILL BECOMES LAW This week, the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013. The full text of Senate Bill 1137 (Perata) is available at http://www.leginfo.ca.gov/.

- Contact Between Lender and Borrower: Effective on or about September 8, 2008, a lender, trustee, or authorized agent may not file a notice of default until 30 days after contacting a borrower to assess the borrower's financial situation and explore options for avoiding foreclosure. A lender must generally contact the borrower in person or by telephone, or satisfy due diligence requirements for contacting a borrower. During the initial contact, the lender must inform the borrower of the right to request a meeting with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency. A subsequent notice of default must include the lender's declaration that it has contacted the borrower, tried with due diligence to contact the borrower, or the borrower has surrendered the property. A lender who had already filed a notice of default before the enactment of this law must include a similar declaration in the notice of sale. This requirement to contact borrowers applies to loans secured by owner-occupied residences made from 2003 to 2007. Certain exemptions apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.

- Maintenance of Vacant Properties: Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the exterior of vacant residential property. Violations of this law include permitting excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to take action to prevent mosquitoes from breeding in standing water, or other public nuisances. This law authorizes a governmental entity to impose a civil fine up to $1,000 per day for any violation, as long as the owner has been given notice and an opportunity to remedy the violation. A violator must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed.

- 60-Day Notice to Terminate Tenants: Effective July 8, 2008, a tenant or subtenant in possession of a rental housing unit that has been sold through foreclosure is generally entitled to a 60-day written notice to quit, not just 30 days. However, a borrower who remains on the property after foreclosure may be served a three-day notice to terminate. This law does not affect, among other things, rent-controlled properties with just-cause evictions. Effective on or about September 8, 2008, the lender, trustee, or authorized agent posting a notice of sale must also post and mail a specified notice of a tenant's right to a 60-day eviction notice from the new owner, unless other laws apply. This requirement to notify tenants of their rights applies to loans secured by residential real property where the borrower has a different billing address than the property address." per California Association of Realtors

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If You're Waiting For Prices to Come Down ....

Last Wednesday the Federal Reserve decided to leave the federal funds rate alone, for the time being.

"The Fed is in a quandary. The economy has slowed, led by a decline in home sales and rising inflation, stemming primarily from increasing energy prices. The Fed's primary role in relation to the economy is to combat inflation and preserve economic growth. To combat inflation, the Fed will ultimately have to increase interest rates in coming months. What Does This Mean to You?"

Here's what my colleagues at You Should Own have to say:

"If you're looking to buy a house, consider these key points:

• Home prices in some areas are at five-year lows, while personal incomes in that same period have increased.
• Homes are more affordable for many right now, particularly first-time home buyers.
• Sellers are extremely motivated and many buyers in our area have benefited from the unbelievable deals that exist today.
• Experts foresee a strong rebound in home prices when the economy
  begins to recover, according to a new report from the Joint Center for Housing
  Studies.
• That means buyers today will be sitting on valuable properties tomorrow."

Much is made of the recent foreclosures and subprime loan issues that have stalled the market, but due to the overall streamlining of loan underwriting due to uniform credit scoring and automated underwriting, the largest rise in homeownership occurred between 1994 and 2001. According to Harvard's Joint Center for Housing Studies' 2008 report, unless another one million homeowners lose ownership it will not dip below the 2000 level of ownership. Even if that does occur, "once the oversupply of housing is worked off and home prices start to recover, the use of automated underwriting tools, a return to more traditional mortgage products, and the strength of underlying demand should put the number of homeowners back on the rise."

It's been noted for several years now that the formation of new households due to changes in the population will impact the demand for housing over time (including the current Harvard report), so I'm still betting that "buyers today will be sitting on valuable properties tomorrow."

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Southern California Cities in Escrow

Here's the general trend of current pending sales of several cities noted through the SoCalMLS record, first taking all residential and commercial properties at all prices, and second looking at condos and houses in escrow and listed over $750,000 (second group for some cities):

• Long Beach - 19% (approx. 576 plus 2499 active); 12% (30 pending, 213 active)


• Norwalk - 21% (approx. 134 plus 493 active)


• Cerritos - 31% (approx 65 plus 147 active); 21% (76 pending, 281 active)


• Bellflower - 20% (approx 82 plus 319 active);


• Cypress - 24% (approx. 57 plus 166 active);


• Lakewood - 29% (approx. 115 plus 283 active); 17% (2 pending, 10 active)


• Stanton - 24% (approx. 51, plus 160 active);


• Seal Beach - 18% (approx. 50 plus 221 active); 23% (10 pending, 33 active)


• Downey - 20% (approx. 135 plus 554 active); 6% (6 pending, 97 active)


• Huntington Bch - 20% (250, plus 1014 active); 21% (76 pending, 281 active)

For properties over $750,000, Downey appears to be the least successful in that market. Both Huntington Beach and Long Beach escrows range up to the $5,000,000 price.

This is an "unscientific" local market assessment to take a look at general trends in the area, with the only price breakdown for residential being over or under the $750,000 mark, a completely arbitrary price point based on my personal experience with buyer comments about their affordability.

The first-time buyers and others in the $300,000-$350,000 price range are out in full force, recognizing that with the buyer affordability index at 44% (California Association of Realtors), now is the time to buy. Sales activity is historically higher at this time of year, but my opinion is that the second half of 2008 will fare better than the first half of 2008 and all of 2007. "Short Pay" sales seem to be more than half the market in some areas, but the good news is that some banks are becoming faster and more efficient in handling their approvals and closings on these properties.

Are higher end properties over $750,000 selling slow in all areas (see Dataquick article)? Not in Seal Beach or Huntington Beach--whereas that seems to be true in Long Beach, Downey, Lakewood, with Cerritos doing better in that price range.

Many bank-owned properties right now are a poor reflection on the market, most of them are sold in poor condition with no attempt at any basic carpet and paint clean-up, a minimal cost, so those either invite lowball offers or sit longer on the market.

Yep, More News on California's Rise In Sales, and Prices

I hope all buyers are taking note of the following right now, because if this buying trend is true as a lot of recent sales indicates it is, the trickle-up effect will take place for homes in the higher price ranges.

From Associated Press today:

As foreclosures push down California housing prices, first-time home buyers surge into the market. The California median home price fell 30 percent in May, the sharpest decline in 20 years, since DataQuick Information Systems began keeping records. The drop in home prices has sparked a home-buying rally that's beginning to reverse more than two years of monthly year-over-year sales declines. "Inland markets hit hardest by foreclosures and falling prices are now the most likely to post higher sales than last year," says Andrew LePage, a DataQuick analyst. "These communities have been attracting first-time buyers, first-time move-up buyers and investors." Richard Cosner, president of Prudential California Realty, says buyers of homes whose prices have declined in the last 18 months from $400,000 to $200,000 must compete with multiple bidders. "For the first-time homebuyers and for that bottom tier of homes, we've found what the bottom of the pricing is," Cosner says.

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Recent Market Activity in Long Beach--It's A "Sold" Time

The constant reporting on the number of foreclosures, i.e., such as this today from Inman News:
"California had the highest volume of foreclosure filings, with filings reported on 71,930 properties" is not saying what else is going on.

Unfortunately, I've had less time recently to devote to writing as many posts, but in checking the local Southern California MLS today for all residential and commercial listings, including leases, there are 2,473 active listings, with 555 in escrow (backup and pending categories).

Since April 1st, 564 properties have closed escrow; of that same number, in the last 30 days, 238 properties have closed escrow. Is it just because it's Spring and Summer, or is the market actually picking up. Another casual statistic overheard today is that Long Beach's inventory has in the past few weeks been reduced by one-third.

If activity in recent weeks is any indication, $300,000 is the bottom of the market in many areas for single family residences and $200,000 is the bottom for 2-bedroom condos. The bank-owned properties are so attractively priced in many cases that the investors and first-time buyers are having to compete with each other in multiple offer situations. In the last week, one condo was on the market 4 days and received 15 offers, another single family received 30 offers, and the same story for two other houses in the South Bay, also just listed days before, in residential neighborhoods. The winning offers on these properties were as much as $50,000 over asking price (in the case of the condo) and $20,000-$30,000 for the houses in this scenario, as-is, no repairs.

In spite of more activity, loan requirements are not necessarily that much easier, for example, some banks are going to 15% down payment requirements after July 1 (for conventional loans), and all lender sources have tightened up their FICO requirements. If you're buying a condo, be aware that new FNMA guidelines are requiring a closer look at the HOA's financial reserve funding status, plus a few other issues.

So if you're interested in a property, maybe this is finally the time for you to find your new home. You can take a look at http://www.juliahuntsman.com, but for a more targeted search, go to HomeBuyers Market (where you can mute the auditory on the video if you want to just watch).

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Are Reductions Finally Leading to the Price Change Point?

Along with the general information from National Association of Realtors that April's pending sales were up 6.3%, Lawrence Yun, the chief economist, also says,

“Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it’s unclear if they are investors or owner-occupants,” he says. “Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts.” See the pending home sales by region since 2005.

Some buyers are already discovering this locally. Single family house properties under $400,000 and mid-$300,000's in previously desirable areas are getting multiple offers, while the condo market and new home sales may be sitting a while longer. Per Realist's tax data information, the Los Angeles County median single family price for April, 2008 is $445,000 ($570,000 one year ago); for condominiums, $405,000 ($459,000 one year ago).

While California is officially not a "declining market" as of June 1 per FNMA and Freddie Mac, the proof is in whether or not the lenders follow suit with appropriate programs which will benefit first-time buyers in particular. Right now FHA is the most viable product for first-time buyers or low-down payment buyers. For additional assistance, please contact me or search properties at http://www.juliahuntsman.com/.

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