June's Median Price Showing An Increase in Long Beach/Lakewood Area

Single family median price in Long Beach

The median price in Long Beach for a single family home has gone up for June 2010 to $370,000, with a total of 205 homes sold in this category for the month. This is a general increase from the $353,000 median in June 2009. The number of days on the market is trending downward gradually, the current average is 66 days, compared to 72 last year. Of course, this is a broad figure designed only to show a general trend, since prices vary from local area averages of $250,000 to well over $1,400,000 in single family homes in Long Beach.

Lakewood single family median price

It's a similar story for the City of Lakewood, a smaller city conceived of through city planning in the 1950's and with not so much diversity in housing inventory and selling prices as Long Beach. In June of this year, the single family home median price was $400,000 compared to $375,000 last year.

Los Angeles County as a whole shows the same trend for single family homes: $342,000 this year, $326,000 last year, for the months of June (however, that's a drop from May 2010 median which was $350,000).

Condos in Long Beach are still not as strong as houses, but overall, offer a great investment while their prices are still lower. The median at $232,500 for the city has risen 2% from last year, but has fluctuated greatly in that time, with days on market currently at 96, lower than last year's 108.  The lowest days on market of 66 was in October 2009, matching end of year buying but mostly the 1st expiration of the $8000 tax credit. For Los Angeles County, the condo median dropped to $315,000 from $360,000 one year ago.

The Current Market is Offering Incredibly Low Interest Rates!

This afternoon I did an interesting calculation because I was playing around with a feature on my website. First of all, did you know interest rates are well below 5% on a 30-year fixed, even as low as 4.25%? Second of all, do you expect that to last forever? It's lower than any rate since the 1960's and before, and certainly lower than any rate in the last 15 years since I've been helping buyers and sellers.


I did this calculation for my 2 bedroom/2 bath condo in Bixby Knolls which is currently listed at $182,500. The default down payment was 20%, the default interest rate was 6%, so using those numbers for calculate principal and interest (only), the monthly payment came out to be $875.34. (That's the price of a one-bedroom rental in some areas.) But knowing that interest rates are much lower right now, I changed the assumptions to 4.25% and assuming an FHA buyer, I used 3.5% down, and based on a loan amount of $176,112.50, the monthly P&I payment came to approx $866.37!! (Please do not use this scenario for your final loan calculations as disclosed by a lender, this is intended for general information only.)

In other words, with lower interest rates right now a buyer could be saving the difference between $6387 and $36,500 to get the practically same payment for less money compared to the higher interest rates of just 1 and 2 years ago.

Back to my earlier point: it won't last forever, so why not take advantage of the market now if your only reason is that you're "waiting"?

I am here to help you with finding a new property, so I hope you'll let me do that, because you will be helping yourself!

Owners Have Options, But What is Best?

There have been numerous programs designed to assist the distressed homeowner launched under the Obama Administration. Most recent is the July 1, 2010 Home Affordable Unemployment Program (HAUP) designed to reduce, or suspend mortgage payments for at least 3 months, in coordination with the loan servicer's guidelines. The loan must be under $729,750 and originated on or before January 1, 2009, and must be in default already, or almost there. Monthly mortgage payment must be reduced to less than or equal to 31% of the borrower’s gross monthly household income and may be suspended in full. Borrowers who went through the Home Affordable Modification Program (HAMP) are not eligible, but a loan modification program may be put in place for the HAUP borrower once a job is found.

The programs available to borrowers are:

• Home Affordable Unemployment Program (HAUP)
• Home Affordable Refinance Program (HARP) - among the requirements is that the existing loan cannot be more than 125% of the current market value of the property, and must be an owner-occupied 1-4 unit property.
• Home Affordable Modification Program (HAMP) - A prime requirement, among several, is that it can be a property with either one or two loans on it, but the payment on the first loan (P.I.T.I.) must not exceed 31% of the gross monthly income of the borrower. Many borrowers have had trouble meeting that payment-to-income percentage figure, and then do not qualify for that loan mod.
• Home Affordable Foreclosure Alternative Program (HAFA) - This is a program with specific forms, guidelines and timelines and must be offered to the borrower by the participating bank if the HAMP loan mod has failed. There are certain protections and benefits to the qualified borrower under this program, but one problem has been the 2nd lien holders who refused to participate because they may not receive as high a payoff under this program. The buyer of such a property must also cooperate with certain timelines.

Lenders who chose to participate in one program are required to participate in all of them, which is currently about 140 lenders. IMPORTANT: To find out if your lender is, go to http://www.makinghomeaffordable.com/contact_servicer.html. Read about other aspects of these programs at http://www.makinghomeaffordable.com/.

If you have an FHA or VA loan, those loans will have their own version of this program.

Last, but definitely not least: Borrowers in distress who understandably do not want to give up their home, normally have a very difficult time "putting their foot down" on the subject of just how long they will attempt to pursue a loan modification with their bank before giving up. While some servicers are more responsive and are actively working with their borrowers, there are many others who are falling between the cracks.

 If a borrower has lost their job and is concurrently in a job search while attempting to pursue a loan mod that's already been started, or if a borrower keeps hearing that the bank needs an item that the borrower has already submitted, perhaps multiple times, or if the bank or servicer keeps adding new items required before it can give an answer to the borrower, my advice is: BORROWER BEWARE. The fact is, time is slipping away--you have no loan modification, plus you may now have a notice of default recorded on your property, and then the notice of sale will be posted to your door shortly before your 121 days are up. Some banks are taking their time recording a Notice of Default, but others are very unforgiving and will NOT extend your sale date without either the loan modification in place or an accepted contract from a buyer, because they need to move forward with that property. For most people, selling their property under short sale conditions has less severe long-term impact than going through foreclosure. Please contact me for more information about those conditions.

Please, don't let foreclosure sneak up on you while you keep telling yourself you're going to get the loan modification after you just send in one more piece of requested information. You must meet the servicer's requirements, and many people don't qualify due to financial circumstances. Before you get to that stage, investigate an optional short sale possibility early while you still have time to find a buyer, negotiate the contract, submit your short sale package, and get through escrow. This could make the difference between 2-3 years' impact on your credit record vs. 7 years' impact due to foreclosure.

There Ought To Be A(nother) Law

Short sales have been here and are here in large numbers for quite a while into the future. Many lenders are getting better in certain respects about speeding up their responses, even if it's not a HAFA program which does have numerous requirements, in their regular short sales. There can be many aspects and issues in a short sale depending on the bank or servicing company involved, if a notice of default has been filed, if a notice of sale date is already set, if the HOA dues are delinquent, how many lienholders there are, to name a few.

But what is one thing that's going on a lot? Second position mortgage lienholders who are refusing to accept the payoff from the first, and decide instead they would rather have their investors get nothing rather than something. So typically these 2nd lien negotiators, who are probably looking at a computer screen bearing instructions from their bosses, are allowing the entire property to go into foreclosure over a failure of $5,000-$10,000. Many do not want to deal with the HAFA program, due to the few thousand dollars obtainable under that program, nor even 10% payoff offers from the first, so their response is to say they will take nothing rather than something, and let it go into foreclosure, presumably under the belief they will be able to come back and get it later. What many servicers may not understand is that in certain states, such as California, they have no deficiency rights after foreclosusre when the loan was original purchase money mortgage on a principal residence.

And so what do we need? I know we have plenty of laws, but we need another one. We need another law that prevents junior lienholders from obstructing the successful completion of a short sale:

"...passing legislation barring junior lien holders from preventing a short sale and forcing a foreclosure would be wildly beneficial to the heart of America. It would keep homes occupied, free up capital, curb the slide in property values and it wouldn’t cost the taxpayers, or anyone else, a dime."

Also, as Lawrence Belland says on Foreclosure Radar:

"... in 37 other states the investor could accept the offer and still have the right to pursue the deficiency. That’s why forcing the foreclosure doesn’t make sense to me; it defies logic."

Second lienholders always knew they were just that, in second position. They were all too willing to make loans, and others have been very willing to buy them up, based on the continuing inflation in the subprime market. They just don't like to face reality now.
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Interest Rates at Mostly Lowest of Historic Lows--This is Money In Your Pocket

One perspective many buyers and sellers (who are able to sell now) could benefit from right now is the long-term historical perspective to realize just what this point in time can mean for them. While many articles may directly address buyers, the flip side is for the sellers who are looking for the right buyer, and the more buyers that fit in a seller's net, the greater chance each party has for a successful catch . . . I mean, sale!
I could hardly say the following points better, so I'm just going to give you Pat Zaby's post on buying,

You Can Afford to Buy and Haven't...Are You Crazy?

This may be the best buyer's market that we'll see in our lifetimes. There are lots of legitimate reasons why a person should be taking advantage of this market if they are able.
Obviously, if a person doesn't have the down payment or credit score, they won't be able to seize this opportunity. If a person is concerned about losing their job, that would be a valid reason for not buying now. If you are planning on relocating in the next year or two, maybe now isn't the time to buy.

On the other hand, if a person doesn't own a home, has good credit and job stability, they should seriously consider capitalizing on this unique combination of opportunities. A qualified real estate professional can explain all of the reasons and even suggest some very interesting financing alternatives.

Top Ten Reasons to Buy a Home NOW

Interest rates incredibly low – the rates are hovering at near historic lows. Interest rates play a huge part in the cost of housing together with the price and shouldn't be overlooked. The average mortgage interest rates for the past four decades were: 1970's 8.9%; 1980's 12.7%; 1990's 8.1%; 2000's 6.3%. Most experts agree that they're going to rise this year.

Lower Prices - Recent price adjustments have made good values that haven’t been available in some situations for years. Current buyers are able to take advantage of the discounted prices.

Selection is good – In a seller's market, buyers sometimes have to accept a home that may not meet their needs completely because of short supply. Inventories in most markets and certain price ranges are higher which allow buyers better choices.

Negotiate financing concessions – FHA, VA, and Conventional allow the seller to contribute towards financing concessions for the buyer. The money can be used for buyer's closing costs, pre-paid items or interest rate buy down.

Costs for FHA loan going up – Currently, a seller can pay up to 6% of the sales price in financing concessions but the number will be reduced to 3% later this year; the date has not been announced yet. The annual MIP for FHA loans will also probably be going up this year which will increase the monthly payment. Buyers who get in now will pay the lower fees.

Interest and property tax deduction – the U.S. is one of the few countries in the world that allow an interest and property tax deduction for homeowner/taxpayers.

Source of funds with deductible interest - a homeowner can borrow up to $100,000 above their acquisition debt and deduct the interest regardless of what purpose the money is used. This is a great opportunity to consolidate debt at a lower interest rate and be able to make the interest deductible that otherwise may not have been.

Capital gain exclusion – the U.S. allows qualified homeowners to make a profit on their home without having to pay tax on the gain.

Borrowing against equity is non-taxable event – taking money out of the equity in your home does not require recognizing capital gains income.

The combination of reasons to buy a home may never be stronger than now.

Interest rates are going up; it is just a matter of when. Inventories are starting to be absorbed by current demand. New home construction is down considerably which could lead to higher prices due to not enough annual housing units to keep up with the population. Prices have started to climb in some markets; others will surely follow.

A basic rule of investing is to buy low and sell high. There will be some buyers who take advantage of the current opportunities and will look back and remark how fortunate they were to act when they did. There will be others who look back on these conditions and say "We should have bought then." Hindsight is always 20/20. Evaluating the present and acting takes equally clear vision. The help of a trusted professional can make the difference. (reprinted with permission by Pat Zaby; emphases in bold and italics are mine)

In the meantime, the federal tax credit for $8000 is over, and the California tax credit is almost gone, the FHA seller negotiation cap will be reduced soon, but right now, a buyer with good credit will probably get an interest rate under 5% and even 4.5% in some cases, meaning over the life of a 30-year loan, you can save thousands of dollars.

And, most Americans just don't realize this, but this country is one of the few that allows a 30-year loan, most other countries require payment in 1/3 to 1/2 that time.
To easily find properties on the market, go to http://www.juliahuntsman.com/, "Find Properties".

Long Beach Has Several Farmers Markets, Find One Here

Sunday  from 9 a.m to 2 p.m. is a great time for visiting the Long Beach Farmer's Market at the Marina. Held weekly in the parking lot on Sundays, it's got vegetables, hot cooked food, orchids, fresh cut flowers, baked goods, and animal adoption opportunities too. To name a few. Plenty of parking as well. Farmers/vendors come from as far as Riverside and Bakersfield to set up booth every week. Prices are sometimes no cheaper (in my opinion) for some food items than the grocery store, but are a lot fresher and direct to the buyer, and one of the really great benefits is having a great variety of food to choose from.

This particular market is adjacent to the ongoing 2nd+PCH project still being planned and negotiated, so someday the landscape here might look very different with new development, especially across the street. Take advantage of this now and check other farmers markets at Bixby Knolls, Downtown and one at Marina Park on Wednesday afternoons (not on the link), and in the city of Cerritos. And it's BYOB, Bring Your Own Bag.
And, haven't we become so used to foods flown in from foreign countries that we might have forgotten our local growing seasons? See this crop calendar for California.

Long Beach Single Family Houses in May Are in Demand

Single family homes in Long Beach seem to be the one property type showing some consistency in price and numbers of sales recently. At the end of May, the median price of houses currently on the market was up 5% over last May, going from $375,000 to $395,000; while the median price of sold properties was up 28% compared to May 2009. The peak for sold price was in November, not surprisingly, as the initial homebuyer tax credit was scheduled to expire in December. The trend dropped in December, but the median list price and sold price has trended upward since then. Time will tell if the current tax credit extended to April 1, and the extended period to close until September 30, will show a similar peak, or will there continue to be activity?
I keep saying this, but many buyers, especially first-timers, don't realize that low mortgage rates (currently as low as 4.5% paying one point) is actually a price drop on your home. And for condo buyers who are seeing higher HOA fees compared to 5-8 years ago, a lower mortgage rate can make up for higher monthly fees. Plus, the borrower pays much less on the total loan over a 30-year period. See the entire May single family report.
Condos seem to see more peaks and valleys in the last year, with the median price of currently listed condos being down 2%, to $235,000 from $239,000 in May 2009, and the median price of solds is up10%, $200,000 to $220,000, since May 2009, with the overall supply of condo inventory now trending down for the last several months.

Price and Value -- It's Increasing for Southern California Lately

The buyers' tax credit had an effect: There were more sales. And the low mortgage rates are helping (below 5% with paying one point). Per Dataquick, May sales of houses and condos in Southern California were the highest since May 2006: "...what we saw in May was partly driven by government stimulus".  May's typical monthly mortgage on new purchases was approximately $1293 -- do you remember when it was about $2200?--but that's still an increase from 2 years ago. Home flipping is trending higher--current rules require an investor to wait 90 days. Sales volume is up in Los Angeles and Orange Counties in this category, and so is the median price: $345,000 and $450,000. Although houses and condos cannot be compared across the board in all ways, nor can all geographic areas, this seems to be an overall general trend in price and sales. And, buyers who paid all cash account for over 24% of May sales. That's 10% higher than the 23-year monthly average.  This is not news to those buyers who have submitted offer after offer and continually lose out in the median price range. Will this trend hold, and how much had to do with the tax credit, which ended April 30th?
California Association of Realtors reports that April sales (May's report not out yet) for single family homes statewide increased 21% over previous April, to $306,230, but sales volume decreased statewide by 8.1% from prior April for SFRs. From C.A.R. on May 24th, "Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for April may be exaggerated due to compositional changes in housing demand." So, in other words, real estate is local.

Just Listed: Three-unit Property in a Long Beach Historic District

This 1920's vintage triplex is located just inside the Hellman Street Craftsman Historic District at 761 Walnut Ave. The front building has two side-by-side townhome-style units with hardwood floors and Arts and Crafts era tiled faux fireplaces with original built-in bookcases, natural wood. One unit has an updated kitchen. Rear unit is a one-bedroom over garage, laundry room (currently not used) at rear of garage. Very charming private rear yard with patio and gazebo, partially fenced.

Current asking price is $405,000.
Please contact me for more information on this property.

What Do the Experts Say (About the Home Buying Market?)

As we are going towards the second half of the year, and entering our summer period with the Memorial Day holiday weekend, I have to ask:

Do YOU think the real estate market has nowhere to go except for DOWN? You're not the first one! History proves that even the experts have had it all wrong, time and time again. Consider these quotes from history’s “experts”:

#1. "Houses cost too much for the mass market. Today's average price is out of reach for two-thirds of all buyers."

#2. "The goal of owning a home seems to be getting beyond the reach of more and more buyers."

#3. "If you are looking to buy, be careful. Rising home values are not a sure thing anymore.

#4. "Most economists agree.... a home will become little more than a roof and a tax deduction, certainly not the lucrative tax investment it once was..."

#5. "Financial planners agree that houses will continue to be a poor investment.

#6. "A home is where the bad investment is.

Below is a list of sources and publishing dates from the quotes, above:

#1. Science Digest 1948
#2. Business Week 1969
#3. Miami Herald 1985

#4. Money Magazine 1986

#5. Kiplinger's Personal Finance Magazine 1993

#6. San Francisco Examiner 1996

You can be the judge. If this is what the "experts" were saying throughout the years.... do you really think there is ever a truly bad time to own a home?
Don't get spooked out of buying or owning a home. Real estate is still a great investment..... history tells us so! I look forward to hearing from you soon.
(Courtesy Joe Tishkoff, Skyline Financial.)

Find residential real estate and income properties at http://www.juliahuntsman.com/, click on my property search.
For headlines about California market trends, go to http://www.car.org/media/pdf/consumer/Beyond_the_Headlines__052710.pdf .

HAVE A SAFE HOLIDAY.

New Listing: Bixby Knolls Condo 2 bedroom 2 bath - One of the Area Lowest Prices

The seller is still working to get ready for showing, but this Bixby Knolls condo is a great value at $180,000 for a front end unit with 2 bedrooms and 2 bathrooms and no one below. This is a great value in an FHA approved building. Has one parking space in gated garage with storage.

No interior photos yet, will include those in it goes into the MLS at the end of the month.

Interior features are kitchen area Pergo flooring, new kitchen counters, lots of kitchen/dining storage cupboards, and new dishwasher. Seller is freshening up with new paint, and bathroom has new tile floors.

The complex is conveniently located near the 405 FWY and the Bixby Knolls and Atlantic Ave. shopping/restaurant corridor. HOA dues are about $225 monthly. Complex has very nice pool and patio area, and community laundry. One parking space. This is an equity sale!

Call me to find out more about this property. 3510 Elm, #1, Long Beach, CA.

Find this and more properties at http://www.juliahuntsman.com/

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

562-896-2609. CA DRE #01188996

Seller, Please Take Yourself Out of the Picture

At Awkward Family Photos there's one thing you can see a lot of--the kind of kids pictures and engagement photos you really don't want showing on your walls when your property is on the market. I don't know what the people at the left were thinking of, and the photo at the right was showing off the kids modeling Dad's cabinetry with a much-loved family pet.

I know what you're thinking: That you don't have anything as crazy as these photos on your walls because your photos show much better taste. After all, they were taken by an expensive portrait photographer showing the close family gathered in formal attire in a classic setting as a beautiful holiday memoir--nothing goofy about that. Why wouldn't you want to proudly show off your family for buyers coming through your home?

Well, in a nutshell, photos in your home may represent you and your family members in a very personal way, and buyers read clues about you and possibly make opinions which may not help sell your home. Even if they do identify, or sympathize, with the Star Trek outfits because they have the same picture on their bookcase, is this the focus of their seeing your home? Because personal objects are usually a distraction to the buyer, a detour into personal aspects of the seller's live(s)that is best avoided if you want an offer soon. You want to present your property, not you and your family, to get it sold as quickly as possible for the best price. You are now selling a product, as cold as that may sound, into which the buyers are trying to see their pictures, furniture, etc. So, sellers, so after seeing the photos voluntarily submitted by those who are having a good laugh at themselves, http://www.awkwardfamilyphotos.com/ , then go around your home and take yourselves out of it as much as possible, so that someone else can put themselves into it. Oh yes, thanks for California Association of Realtors for leading me to this entertaining site. I might submit a photo or two myself.

The Return of the 5% and 10% Down Payment on Conventional Loans

This is welcome news for borrowers (up to $417,000) whose only option was FHA if they didn't have 10% or 20% down payment funds. This is also welcome news for sellers of single family homes because buyers whose loan amount is $417,000 or less may now borrow with a 5% down payment. Yes, we know there are cash buyers out there with that amount of money, because the FHA buyers in the Southern California market have regularly been beaten down by the all cash buyers or 50% down buyers. But assuming the borrower is well qualified, pre-approved with a lender with a track record (and I mean fully pre-approved), and motivated, a seller may well want to seriously consider such a committed prospect who as a great desire to purchase his/her first home.

And, also in the good news department, is the return of the 10% down conventional loan for condos. This has been almost impossible to get in recent history from most lenders, and this is good news for sellers also, because it relieves the issue of an FHA borrower whose lender may well have to fully approve the entire association before closing escrow. Not only is this time consuming and requires a lot of work by both the lender and the homeowner association, the HOA may not, in the end, meet FHA standards criteria. In fact, sellers, did you know that if your association has 5% or more owners delinquent 30 days or more in their HOA dues payments, there is a problem with loan qualification.  This is true for both FHA and conventional loans.
But back to the good news. For associations which can overcome any such issues, the 10% down conventional loan opens up the door for many more borrowers and thus a faster sale for the seller.
So if you're thinking of selling, contact me for all your possibilities. Buyers who have been holding off should get rolling while interest rates are still in the 5% area (that's usually included paying one point of the loan amount).

Right now there are 349 single family homes listed in the MLS in Long Beach under $438,000 (for the 5% down buyer). In Lakewood, there are 96 single family homes under $438,000.  No, they don't have ocean views, but find them in east Long Beach, Wrigley, Ridgewood Heights, Alamitos Beach for Long Beach, and Lakewood Park and Lakewood Mutuals for City of Lakewood, plus other areas that might be worth your investigation especially if you are a first time buyer, or looking for a down sized smaller home.
Please find these different areas at http://www.juliahuntsman.com/ by clicking on links from the first page (scroll down first).

House and Condo Selling Prices in Long Beach for April 2010

Was April the month of the "Effect of the IRS Tax Credit"?  While I've been telling some people that the median price of condos, townhomes and lofts was still trending downward, for the city as a whole, it's been trending upward, by quite a bit. Truthfully, it's been jumping around all over the place. March and April saw increases from the prior year, with April showing a 25% increase in median price from last year to over $240,000, but not as high as September, 2009's median price of $255,000.

A similar graph for single family homes for April shows a 10% increase in the median price for Long Beach, to $370,000, with a different peak in price showing for last November at over $400,000 (the first "end" of the IRS buyer tax credit). For Los Angeles County in March, per tax data, condos priced at $325,000, a decrease from $330,000 in March 2009.

The median price for the city does not tell the entire story, and anyone wishing an analysis of their zip code or housing area should contact me for a custom report. For Los Angeles County per tax data, the single family home median price for March 2010 was at $340,000, an increase from $303,000 for March 2009.

Sales volume for LA County in March in both categories increased over the prior year.

Long Beach, just by looking at these statistics, is definitely looking like the "bright spot" as described recently by CAR economist Leslie Appleton-Young.

Buying Without Selling? Equity Will be a Player.

If you're thinking of buying a new home and renting out your current home, it will pay to plan in advance. By asking a few questions, you will start to shed light on an important subject.
 For instance, do you know your current rental market and what a reasonable rent could be expected for your property? By checking local classified ads and online rental sources, plus speaking with other local owners who are landlords, you should be able to find out fairly easily. Will that amount cover your current payment, plus property taxes, plus HOA dues, if a condo? If it doesn't you need to know what your negative cash flow will be (the amount extra every month that you will have to contribute out of your income) every month. Then, by speaking with a mortgage professional about pre-approval for a new home purchase, after a discussion about your income, debts and expenses, plus that possible negative cash flow, you will soon find out if this plan will work. And, there's another wrinkle: Since the subprime market debacle, lenders have increasingly formulated tighter lending guidelines, and one of them is that a current property needs to have a good 30% equity in it to meet a more recent lender requirement, and without that equity, there will will be no loan approval on that basis alone for a new purchase. Unless the borrower can qualify for a new purchase based on his complete monthly expenses, excluding tenant contributions, plus the new mortgage. This requirement came about to eliminate loans to borrowers who, due to falling home prices and a potential short sale, walked away from their former residences after closing escrow on a new home.

This means that if you're hoping to obtain a loan modification, but are not sure about how long you'll be living there (when do we ever know the future for sure?), it will pay to think in advance about your loan-to-value. The reality is, many borrowers do not meet that 30% standard, (see this blog in Seattle) and can't otherwise qualify, and thus are forced into thinking about a short sale (or even other options, depending on their circumstances), which in turn impacts how soon you may be able to borrow again in the future. FNMA actually revised their standards a few days ago, loosening the timeline to 2 years to buy after a short sale for borrowers with 20% down, and longer for those with a lower down payment. This is an improvement, and for those who can revive their credit scores and save money in that time, it will mean a good recovery.

For an estimate for your property, contact a Realtor to provide you with a comparable market evaluation at no obligation. It would also be a great time to discuss all options which could be open to you, find out future ramifications. This is the time to find out. Find current properties in your area at the MLS search at www.juliahuntsman.com, as well as other resource information. Or contact me for recent "sold" properties to establish a value for your property. To keep up with the local area, also see my page at http://www.facebook.com/LongBeachHomesandCondos .

Why Some Loan Modifications Are So Hard to Get

So far, only 17% of borrowers nationally have completed a loan modification and made it through the trial payment period under the Home Affordable Modification Program (HAMP) guidelines. One of the problems is that the HAMP guidelines only factor in the payments made on the 1st mortgage, and do not include the borrower's 2nd mortgage if there is one, which is often up to 20% of the original purchase value, and other total family expenses.  Fewer borrowers can qualify, and thus end up in foreclosure anyway.

But there are other reasons too, which may have to do with why you, the borrower, or you the Realtor, keep faxing in requested documents and short sale packages, over and over after the people at the bank say they never received it, or it got lost. Or why the bank foreclosed anyway, even though it had a viable buyer and a loan ready to fund one day before the sale date.  Sometimes lenders really don't want to modify a loan.

There is such a thing as Net Present Value (NPV) a complex model designed for HAMP to be used by lenders and loan servicers which is to determine if the borrower meets certain tests. However, the input criteria for those tests is not disclosed to the public. So if a borrower calls up his/her (HAMP) bank at the bank's or servicer's designated number and receives the response that they do not qualify for a loan modification, it may be because the representative is using the NPV software program which performs automatic calculations.  The FDIC, however, did publish their NPV model, shown on page 3.

If you are a borrower and want to know if you can avoid a long long wait to find out from your bank if you qualify for a loan modification under HAMP guidelines based on the NPV model for which the government is allegedly unwilling to publish the critical parameters, then you might want to try out Martin Andelman's offer to use his software which he says is using HAMP guidelines.
If your bank thinks your home is worth more than your current loan balance, it will not have a lot of incentive to modify your loan because it will pay them to go into foreclosure, and then put it back on the market as an REO.  And another stickler in the side of the Obama Administration are the investors who bought securitized mortgages that were sold in bundles, by Well Fargo to Goldman Sachs as one example, and now those investors are a player in the whether or not your loan gets modified:

The names of investors who actually buy mortgage-backed securities aren’t publicly available, but typically they can be foreign governments, 401(k)s, college endowments and pension funds. . . . "there could be literally anywhere from one to commonly several dozen institutional investors, and those institutional investors will be representing literally thousands of pensioners and individual investors,” says Bill Frey, head of Greenwich Financial Services.

And banks say they may have agreements with those investors, and may say they are the reason a certain loan cannot be done, but may also be unwilling to provide specific information about their "agreements."

There is more to this story, but if you are a borrower attempting to get a loan modification, be aware that not all banks are letting the timelines go by beyond what's required by law for issuing a Notice of Default and a Notice of Sale. Banks are not chartered to hold real estate, even though many are doing just that. Do not be afraid to contact a qualified tax advisor, an attorney who specializes, and/or a Realtor about your options concerning foreclosure, a short sale, or bankruptcy. The best of all possible worlds for most people is to get their loan modified, but are you going to be one of the 17% who do, and how long are you willing to wait to find out? 

Capital Gains Tax Going Up in 2011

April 15th is now upon us and soon disappearing, but for those who need to consider their capital gains, there is a window until January 1, 2011 before the 20% capital gains tax returns, after an 8-year hiatus at the 15% level.

If you have owned an investment property for more than one year, you could be subject to the long term capital gains tax, and beginning in 2013, an additional 3.8% tax on certain investment income which is subject to income tax, including capital gains, for those in higher income brackets, will also apply.

Investment property owners often consider a 1031 exchange as one method to avoid these capital gains taxes, evening combining several properties they no longer want to manage into one new property. There are certain rules and timelines governing these exchanges which must be complied with in order to obtain the IRS tax deferment.

Although California's February 2010 median sales price of a single family home has risen by over 14% from February 2009, you should find out the market activity in the immediate area of your property, because all real estate is local.  The trend could be up or down nationally, or statewide, but find out comparable prices of similar properties within the last 3 months and within one mile or less of your property.  And, even though the prices may continue upward for you, will that help you if the property has to be taxed at 20% capital gains after January 1, 2011?

For a standard chart to calculate your basis, and gain, at the 15% rate and then compare to the 20% rate, and then analyzing with and without a 1031 tax exchange, contact me. You will need certain information to make a reasonably accurate estimate, and of course, you should consult your tax advisor for specific financial calculations for your circumstances. For doing a sale and 1031 exchange, however, you will want to use a real estate professional who will provide the necessary disclosures and ability to handle the real estate transaction, and an extremely reliable and qualified intermediary for the exchange portion of the sale.

For basic information concerning exchanges, go to http://www.juliahuntsman.com/1031_Exchanges.html.

California $10,000 Buyer Tax Credit Is Coming Very Soon!

Some of you may not yet know about the $10,000 California tax credit which will go into effect on May 1, 2010, until the end of the year, or until the funds run out. $200,000 million total is allocated--half to new construction purchases and half to an existing home purchased by a first time homebuyer. Purchasers must reside in the home for two years, and there are no income limitations to be met, and no repayment as long as the purchaser stays in the home for two years. The status of funds available (there's no guarantee how long this money will last) will be published at http://www.ftb.ca.gov/.  Note: May 6 update article.

The credit is either $10,000 or 5 percent of the purchase price, whichever is less. So if a $500,000 home is purchased, the buyer would receive the $10,000 credit, which would be payable in equal amounts over 3 years.

The homeowner submits a certificate to the FTB after entering into a purchase contract.

Buyers who are not taking advantage of the IRS tax credit, ending April 30th, have this second opportunity given by the State of California.

In case you need more of a picture of how things are working in the buyer's favor, please see the interest rate histories at http://www.housingmatrix.com/index.php/interest-rate-histories.html where the viewer may look at the 30-year history, 10 years, etc.

Current interest rates (which are moving up right now) are still close to the range of where rates were in the late 1960's and early 1970's, unlike the high peak during the early 1980's when rates were in the 18-20% range. However, a snapshot of last week shows rates moving above 5% when they have been below 5% much of the last year for 30-year fixed mortgages. So for a $400,000 loan amount, the monthly principal and interest payment at 5% would increase by $61.00 a month if the rate goes up to 5.25%, or $732.00 annually.

For a customized list of homes, please contact me, very easy to send via e-mail. For February's trends in Long Beach, see my earlier post on trends in condos and houses, and the inventory.

For a similar report on your immediate neighborhood or zip code, contact me via phone or e-mail. I can easily send you one by e-mail.
For a current property search, go to http://www.juliahuntsman.com/ for condos, houses, income property and other MLS listings. And, join my fan page (see column to the right) to keep up with information and important tips!

National Open House Weekend, April 10-11

While this weekend will be noted by many as Long Beach Grand Prix weekend (oops, it's next weekend!), an honored tradition here in Long Beach since the 1970's, others will take the opportunity to visit an open house. The upcoming weekend is the first ever REALTOR® Nationwide Open House Weekend which will be held April 10–11.

Yes, there is such a thing as good behavior at an open house! An open house is an event held inviting the public onto a seller's private property to find an interested buyer.


Don't be afraid to speak to the agent holding open the house! But please know that it is VERY IMPORTANT to state immediately if you are already working with another agent. Let the open house agent know so they can adjust their conversation accordingly, and prevent any misunderstandings. Also, if you're not working with an agent yet, this may be a good time to meet and consider someone.

While interaction is good, be respectful of the agent’s time who is hosting the open house and don’t monopolize their time. If nobody else is there, please, feel free to stay and chat all you want, in fact, that's a great way to meet a Realtor and learn about the local market. But if the open house is attended by many people, please know that the agent will want to greet all of the open house guests and be sure they are available to answer questions. Should you wish to, let the open house agent know you would like to schedule another time for a more indepth conversation.

Please keep an eye on your entire family – if it’s just you or a party of adults – go in and have fun. If you have small children with you – please keep them with you (even hold the child's hand) at all times.

Don't eat or bring food or drink into someone’s home unless it’s provided there as a refreshment, and please, do not use the bathroom facilities.

Treat the home as you would want yours treated, and wipe your feet before going in. Dusty bare feet are likewise not advisable.

Every one is entitled to an opinion, but while inside please refrain from making "put-down" remarks about the home you are visiting.

Sign the guest register. If you’re working with an agent, please make that notation – even write their name down if you don't have their business card with you. If you’re not, but you do NOT want to be contacted, just indicate so – but please sign in. It helps us let the seller know how many people attended, and to know what advertising works and what doesn’t. if you saw the advertisement online, say so. If you just followed the directional signs, please mark that, but it helps sellers and their agents (and someday that could be you) to know the best marketing for their properties.

If you’d like a list of homes in an area of interest, please call (or e-mail) me.  Julia Huntsman, Broker, Lic 01188996.

(Thanks to Jennifer Klaussen in Arlington, VA for the inspiration for this post.)

Condos vs. Houses: How's it Going?

There it is, all in one picture: a condo building and two large homes, side-by-side, each property owner choosing where to live for individual reasons. And among those reasons would most certainly be affordability, but then even if a condo buyer could include the market value of either of the two houses in his price consideration, would he or she, looking down from a condo window, still want to buy the house with the large lot, square footage, maintenance, and property taxes? (The former owner of the house on the right once told me that he did make such a choice will standing in an upper floor condo next door.) These particular properties happen to be at two extremes of size and value (the condos are in the $500,000 range and the houses are double and triple that), but many people will ultimately prefer a house over a condo if they can also choose other adjustments in their criteria.

Nationally, condo inventories are higher than houses, but according to the National Association of Realtors, "the condo market has actually outperformed the single family market recently. In February, condo sales were up 30.3 percent YOY in comparison to 4.3 percent for single family homes. Starting in July of 2009 condo sales have been running at rates higher than the total for either 2008 or 2009."

In Long Beach, the months supply of inventory ending in February 2010 for single family homes is 3 months (down 44% from last year: 1045 vs. 1290 in 2/09), while the months supply of inventory for condos and lofts is 3.75 months (down 46% from last year: 449 condos on the market vs. 592 in 2/09).

Long Beach condos in escrow were up by 42% from 2/09; the number of houses in escrow were up by 30% from 2/09. The median sold price for houses in Long Beach, however, has increased from $310,000 to $350,000, while the median price for condos has decreased from $237,000 to $203,000. (These trends may vary somewhat by specific areas.) Days on market has decreased for both, but overall condos are spending less time than houses on the market.

Historically, in the local market, condos are the first time buyer's most likely choice due to price, and yet because of the distressed market many of those borrowers are having trouble, and condos are the likely choice of many investors and all cash buyers as prices make them more and more attractive.

Although March's figures are not available yet, more inventory in both categories has been coming on the market locally, and the California tax credit as well as what's left of the federal tax credit are helping to spur more action.

Stay tuned.

Short Sale Sellers and Sellers with 2nds, Take Heed

Some sellers of short sale properties could be feeling the impact well into the future. Some lenders have been selling unpaid second mortgages and home equity lines to collection agencies, to later go after the borrowers with repayment plans. Many of these are part of the "80/20" zero down loans, where the second was a huge chunk of the original equity, and now could very well be gone as a $500,000 house value has shrunk to $400,000. A seller should obtain a written release of full satisfaction when short pay approval has been granted, which a knowledgeable negotiator, whether it's your Realtor or another licensed individual, can obtain. California has certain protections already concerning purchase money mortgages, however, second liens may be a future problem.

But, even if you did sell short sale and obtained release and satisfaction, every seller of a short sale should now know that California has previously followed federal law concerning the Mortgage Debt Relief, but this year that relief is threatened due to certain unrelated provisions in a tax bill currently under consideration which Gov. Schwarzeneggar has said he will veto, thereby eliminating tax protections for those whose properties were "underwater" in a short sale. If this bill is not signed, short sale sellers will be on the hook for their California tax for a short sale come April 15th. This is the time to contact your California legislative representatives.

Yet another California Senate Bill 1178 (Corbin), if passed, would protect holders of second mortgages who refinance and stay in their homes, against future collections by banks which could be attempting to regain their lost funds. And, a new Obama Administration program which takes effect on April 5th also aims to protect owners with second mortgages by requiring lenders to send notice to short sale borrowers that partial sale proceeds were used in full satisfaction to pay off the second lien holders. This release, however, only applies to sales conducted under the Home Affordable Foreclosure Alternatives program, or HAFA, the program taking effect April 5th. It is complex and lengthy, demonstrated by the 43 pages in the link, and servicers participating can be found at this HAFA participant servicers link. A HAFA short sales fact sheet outlines the basics.

Home Buyer's Fair, a Southern California Consumer Opportunity!

This weekend is the time to use your free time for your future advantage! Attend the free 3rd Annual Homebuyer Fair this weekend, March 13th and 14th at the Los Angeles Convention Center, sponsored by the Los Angeles Times and the CALIFORNIA ASSOCIATION OF REALTORS®. With more than 50 educational seminars and 65 booths, there will be many many opportunities to learn about navigating the home purchase process and the market.

This is for all buyers--first timers and investors alike, as well as homeowners, so the attendee will find information on home insurance, buying foreclosures and short sales, how to plan for your first purchase, finding a Realtor and finding a mortgage lender, how to negotiate your loan modification, and tax credits. Many seminars are also presented in Spanish.

See seminars at http://www.homebuyersfair.com/seminars and general information, including parking ($12) at http://www.homebuyersfair.com.

See exhibitors at http://www.homebuyersfair.com/exhibitors
Find me at Pacific West Association of Realtors Saturday afternoon after 2 pm!

Dear Buyer, Are You Ready to Own?

Dear Buyer,

Many of us have heard all our lives that owning your own home is the American Dream, and that's what our goal should be. To be sure, we (still--but you might have to fight to keep them, see person to the right) have our tax deductions on mortgage interest and property taxes, among other things, so there are ways we are helped when owning property. And, to be sure, many people are paying more in rent, or nearly so, than they would be in after tax savings on a mortgage.

But there's another factor the first time buyer should consider strongly: Are you really ready to own? Because the truth is, there are certain responsibilities that come with ownership, and you will benefit greatly by thinking of these in advance, before you start going to open houses and getting excited, before you talk to anyone about buying anything.

Do you have a budget? Are you used to living under a financial plan, if not on paper, at least in your head? All the loan disclosures and property disclosures on earth will not help you if you are not prepared for life after you close escrow.

Create a long-term budget to help estimate all the costs of homeownership. Items such as property taxes (estimate at 1.25% of your current California sales price), your personal insurance, utilities, closing costs, appraisal fees, escrow fees, homeowner association dues, other home maintenance costs (roof, painting, plumbing), homeowner’s insurance fees, and moving costs should be included in the budget. Have you really estimated what you might have left over at the end of the month after your usual monthly expenses, and, assuming your lender qualified you for it, are you comfortable with that? And, besides financial ability and readiness, there is what I call "emotional readiness": the desire to own and the willingness to handle the commitment to ownership.

You will probably be better able to outlast temporary short term financial challenges if you have given some time and preparation towards the above, plus other homebuyer education with your Realtor. By doing so, I predict you will find both the home search process (another topic) and the entire buying process a better experience overall.

You may find a helpful free site at HouseLogic.com, where you can explore all these issues and more. This site is for both new buyers and current property owners to help estimate costs, explain maintenance and insurance issues and home improvement programs, types of financing, budgeting, costs, market trends, tax deductions and tax incentives, and much more!

Love, Your Realtor

P.S. There are many free online budget programs, or if you would like one of mine, I would be happy to e-mail it to you (this offer is open to anyone).

Is This the Shift in the Down Cycle?

After three years of shrinking equity and, at the same time, the expansion of the number of homeowners underwater in home value, the Federal Reserve economists, who conduct "massive research" into mortgage balances and home value changes, have some better news. According to their "flow of funds" survey, "homeowners' net equity grew by nearly $1 trillion" from 1st through 3rd quarter of 2009, and in the 3rd quarter of 2009, net equity increased by $418 billion. The down cycle could be shifting, per this article in the Washington Post (see link).

According to Zillow, the percentage of homeowners with negative equity is on the decline in many housing markets including Los Angeles. Riverside, heavily impacted by foreclosures, also saw improvement.

The median Southern California price for houses and condos in January, per Dataquick, was $271,500, up 8.6% from one year earlier, and buyers who paid all cash accounted for almost 29% of January sales, the highest such figure since 1988. FHA loans accounted for almost 37% of all home purchases. Loans over $417,000 accounted for only 14% of all home loans in January.

In Long Beach, probably thanks to the first time buyer tax credit (which expires in April), and to growing recognition that current prices are the best real estate opportunity in years, properties in escrow (up 36%) and median sales price (up 6%) have both risen overall in the period since one year ago.

Is Purchasing a Probate Property a Good Way to Buy?

This article by Online Ed makes some good points:

Why is Probate sometimes a good way to find property? The probate process involves the creation of an inventory of all assets of an estate, followed by the distribution of assets necessary to pay off all remaining debts the estate may owe. Often times the heirs to an estate will have to liquidate some of these assets in order to satisfy the debts and liabilities of the estate. Houses are frequently the largest repository of value in an estate and often need to be liquidated in order to settle the estate.

Even if the home doesn't need to be sold to cover liabilities, the heirs will frequently sell the property in order to distribute the proceeds to multiple individuals. If the property needs maintenance or repair before it can sold at fair market value, that usually means someone is going to have to invest time and money to make those repairs themselves or hire someone else to do so. All too often, it takes family members more time and money than was ever anticipated. If the heirs live some distance away, or in another part of the country, the process of renovating and preparing a house for sale becomes even more demanding. Faced with those options and the potential windfall of cash from an immediate sale, most people will opt to sell – and will be willing to do so at a substantial discount. Remember, holding on to a vacant house in order to realize a bit more profit is not without cost or risks. There’s insurance, utilities, yard maintenance, and the ever-present risk of break-in or vandalism.

In addition, the heirs to the estate may be willing to finance the property with very favorable terms in order to make the deal work. This is especially true if the property has no mortgage and is owned free and clear.

In Long Beach, since 2009, out of all 1-4 unit residential properties, there are currently a total of 74 properties in the probate category that are active, in escrow, or sold, in the SoCalMLS. Considering that since 1/1/2009, in the same 1-4 unit category, there were 3505 properties sold in Long Beach, per the MLS, the probate properties are thus a small category of property. But then why should the buyer be concerned about these? Because it may pay to be prepared, just as it pays to be prepared for a short sale, an REO bid, a property under a timeline because it has a notice of default on it and may soon go into bankruptcy, and other categories which may require court approval, or even auction.

And, in some areas, it may be best to assume that a strong market price will be negotiated (many heirs study area sales too) , but the opportunity for the buyer may be that other buyers may choose to not buy a fixer, or take an as-is sale with no repairs by the seller.

It pays to know what you the buyer might be capable of doing in this market.

Another First for Buying: California Mortgage Protection Program

It's so hard to not be helped right now, especially if you're a first time buyer. On top of the $8000 tax credit available right now, California Association of Realtors is also offering a mortgage protection program. More security can be yours if you fit the bill:

Did you know? Through the California Association of Realtors' Housing Affordability Fund qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months to help pay the mortgage. This program began in April of 2009 and continues through the end of 2010. Another great program for first time buyers that adds additional security to their home buying experience! So if you, or someone you know is, are a first time buyer, this program will last until the funds are depleted, or 12/31/2010. This program actually began in April, 2009, and will last until the end of this year, or until funds have been depleted prior to that time. Qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months.

TO QUALIFY FOR THE MORTGAGE PROTECTION PROGRAM APPLICANTS MUST:

• Be a first-time home buyer or co-buyer – someone who has not owned property in the last three years
• Open escrow April 2, 2009, or later, and close on or before December 31, 2010 .
• Use a California REALTOR® in the transaction (fee for referral does not qualify) ·
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed)

Applications are available--don't miss this opportunity for another benefit of buying at this time.

http://www.juliahuntsman.com/ for a property search, information on buying residential property.

Time Is Moving Along for First Time and Repeat Buyers

The Southern California Home Buyer's Fair will be taking place March 13 and 14 at the Los Angeles Convention Center. It's a great start for the keys to homeownership, if you're free to go that weekend. However, the $8000 tax credit for 1st time buyers will be ending in April 2010, and will be extended only to complete your escrow if you have signed a contract at that point in time. Per the IRS site, the credit

• Applies only to homes used as a taxpayer's principal residence.


• Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.


• Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

And, although this new proposal by Gov. Schwarzenegger is still "up in the air", to continue encouraging homeownership among Californians, the Governor will propose to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers. The buyer must not be a dependant and must be purchasing a home that does not belong to a relative. Under the Governor’s proposal, the Franchise Tax Board will extend the credit to buyers who purchase homes until $200 million dollars in tax credits have been granted.

PLEASE, if you're thinking of buying this year, do not assume that the $8000 tax credit will once again be extended as it was at the end of 2009. Many Congressional members were not in favor of this extension for various reasons. Californians may benefit from the additional proposal, however, that is unknown as of yet.

If you want to buy, start taking action now. If you need loan options, I will be happy to refer you. Remember, for purposes of these programs, a 1st time buyer is one who has not owned property in the last 3 years.

Please contact me if you are ready to proceed--remember, rates are still low.

For more information on buyer programs, go to http://www.juliahuntsman.com/.

Quick Fact: More Single People Buy Real Estate

Many developments have taken place in just the last 10 years:

According to National Association of Realtors in Dec. 2009, the percentage of U.S. homes bought by married couples has declined in the last decade.
Married couples bought 60% of homes last year, down from 68% in 1999. Single women purchased 21%, up from 15% in 1999, and single men bought 10%, up from 7%.

Fewer people are buying detached single family homes, but more people are buying in the suburban neighborhoods.

Today, 90% of the buyers are searching online first--up from 37% 10 years ago.

But, unchanged is the median age for homebuyers--it's still 39 (did Jack Benny do this survey?) And neighborhood qualify, affordability and convenience to work location are still the top buyer priorities. And 8 out of 10 surveyed consumers believe owning a home is an investment in their future.

Foreclosure Timeline in California

If your loan was obtained between 2003 and 2007, and you meet certain other guidelines, your timeline (for a non-judicial foreclosure, the most common in California) from the first day of the pre-foreclosure period up through the Notice of Sale, will be about 152 days.

The Notice of Default may be filed 30 days after the lender contacts the borrower to explore options avoiding foreclosure for the borrower.

Three months after the NOD is filed, the Notice of Trustee's Sale may be recorded and then published over a period of 3 weeks. The borrower has 5 days prior to the sale to cure the default, which means catching up on the entire debt, and all other interests and costs. On Day 152 of this timeline, the lender may sell the property to the highest bidder at public auction.

If the seller is contemplating selling, there is a minimum of 4 months at the time the NOD has been filed. Since many sellers are in a short sale position and would need to list their property, find an eligible buyer, submit their entire financial package to the lender and obtain the lender's approval, 4 months is not enough time since the standard bank approval time is still around 90 days.

If the homeowner is experiencing financial distress and is now starting to not pay the mortgage, they need to immediately recognize their situation and allow for 6 to 8 months in which to get their property listed and sold, if that is to be the course of action. Most people do not want to sell, and make the mistake of hanging on too long until they lose the house through foreclosure. This is usually the worst course of events from which it takes longer to recover in terms of credit eligibility and future mortgage eligibility. Credit is checked for rental applications, insurance, and employment, so the distressed homeowner may be affected in many other ways.

If an owner is in bankruptcy, or has surrendered the property, the initial 30-day notice requirement does not apply.

For other owners not in the 2003-2007 loan origination period, the original foreclosure timeline applies, which is about 121 days total.