Home Projects in Los Angeles area: Cost vs. Value



10 Remodel Projects



It's that time of year when homeowners might be thinking of making some improvements.  Or, if you're buying a home this year, you'd like to know what your best improvement might be to fix up a new home.

Remodeling Magazine 2013 report breaks down project costs and returns by geographic area.

For the Los Angeles area, a steel entry door replacement offers one of the highest returns on cost--not everyone wants one for their front door, however.  Perhaps that won't fit in with the local guidelines if you live in a historic district, but you definitely would want one if you have an attached garage with a direct entry into the house for local fire code reasons.

Outdoor decks and garage door replacements are the next high value return projects. Garage doors especially when the garage is attached to the house affect the appearance of your home greatly.

Vinyl or wood window replacements are high on the list of return as well, especially when offering dual-paned inserts.

Interestingly, bathroom remodels and bathroom additions are between 50% and 65% return on value, yet when shopping for a home, updated bathrooms and kitchens are quite significant for most buyers.

All 2013 projects have increased in return on value since 2011, click here for the entire list of projects.

Long Beach is Among the Top 10 Markets in the Country

Homes Along Alamitos Bay, Long Beach

The top 10 markets in the country right now are ranked as follows, according to Michael Sklarz, principal of Collateral Analytics and contributing author to Home Value Forecast :

Top Markets

1. Boston-Quincy, Massachusetts
2. Cambridge-Newton-Framingham, Massachusetts
3. Indianapolis-Carmel, Indiana
4. Santa Ana-Anaheim-Irvine, California
5. Oxnard-Thousand Oaks-Ventura, California
6. Raleigh-Cary, North Carolina
7. Los Angeles-Long Beach-Glendale, California
8. Wichita, Kansas
9. Colorado Springs, Colorado
10. San Antonio-New Braunfels, Texas

The high end markets in the Bay Area and around Los Angeles are showing stronger price growth compared to lower priced markets. The buyer profile shows lower loan-to-value mortgages, and are affected less by the current tight underwriting circumstances.   Manhattan Beach has seen prices rise to all-time highs; Los Angeles County may be in the early stages of an upward price cycle.  These markets were included in the top 10  "based on factors such as sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio, and foreclosure and REO activity."

Is this a permanent situation? A company called Radar Logic says that the current rise in prices is unsustainable, and that the entry of so many investors with all-cash may actually be dampening growth, and that this situation will not last with even growth into the future for some time to come.  Diminishing inventories have helped fuel sudden price growth, and "Corporate investors were most active during November in hard-hit markets. In fact, half of all corporate purchases took place in just five markets-ones considered especially affected by the housing crisis. Those markets include Miami, Los Angeles, Phoenix, Atlanta, and Las Vegas," areas where investors paid 25% more in November, 2012 than the same time the previous year.

How Much Can Be Saved With a 15-Year Mortgage Payment?

15 year loan vs. 30 year loan payments

A 15-year loan mortgage payment is not what all buyers can afford, but lower rates are making them very attractive for those consumers who have the ability to make the higher payments.

The 15-year mortgage accounted for nearly a third of all refinanced loans in the first 7 months of 2012, compared to 2007 when they made up just 8.5%.   And the California Association of Realtors reports that "statistics from the Mortgage Bankers Association show that a 15-year loan accounted for 23 percent of refinancing applications in November of last year."

Not only are the long term interest savings for a new purchase evident in the chart to the right, some owners could also actually reduce their current 30-year payment depending on when they took out their existing mortgage:

". . . a couple who signed up for a 30-year $300,000 mortgage in January 2004 with a 5.75% fixed rate would have a roughly $1,751 monthly payment. By refinancing the remaining balance of about $255,828 into a 15-year fixed rate loan at 2.81%, the new monthly payment would be slightly lower at almost $1,744."



Another advantage is that equity is built into the home faster with a short term loan.  Don't miss the opportunity to take advantage of today's lower interest rates if you possibly can!



Are You a California Owner of A Timeshare Property? Beware of Fraud

Timeshares . . . can be a flexible vacation option for many people.  It's a form of property ownership shared with other owners, usually for resort condominiums and vacation home purposes, and can often be utilized in various states and even countries, and offer cheaper accommodations than staying in a hotel or B&B for a week.  The downside is, timeshare ownership may be tough to sell in a down market; there just isn't a huge demand for it when money is tight and/or the market values have declined.

The California Department of Real Estate has just issued a warning and consumer alert concerning the latest wire transfer fraud schemes being perpetrated on timeshare owners. 

Beware of websites, or any other marketers, promising and to buy or help you sell or rent a timeshare, after an upfront fee is paid.  Scammers are requesting payment by money order, wire transfer, bank cashier's check, or upfront cash by the victim, after which they disappear and no further sale or rental of the timeshare takes place.  Vacation timeshares are popular in California, Hawaii and Florida, but properties owned in Mexico are popular targets right now, so avoid dealing with telephone calls or e-mails.

Do not fall for something that sounds "too good to be true", and the DRE advises the owner to contact the timeshare resort developer concerning the communications he/she may be receiving.  The DRE states that amounts wired by gullible owners range from $3250 to $85,000.

Beware of any requests for upfront money to be wired to anyone's account for work not yet done!

Here is more information about who to contact and what you can do if you have been scammed (i.e., the California Attorney General; local district attorney and law enforcement; FTC; FBI, and others.

And, please be aware that in California, proper licensure for upfront fee payment must be obtained.

Please don't let yourself be taken in by fraudulent schemes.

Buying or Renting--What's Best for You?

What should buyers be considering BEFORE they buy?  Looking on the internet gets people into the initial stage of exposure, before they even call a REALTOR.   Most people think the property viewing stage is fun, both on the internet and in person, and it should be enjoyable.  But what about the advance homework?  Internet photos and marketing can get you hooked, but it can also be a nervous, even fearful time, coming to the decision to submit an offer when you're new to the process. Even if you're a repeat buyer, buyer's remorse or indecision will have far less impact if you think over some things in advance, and consider now what your fears may be (it's not unusual to have a few).

Sticker Shock:  Renting might be cheaper than owning -- do you have a mortgage pre-approval with estimated costs before you go out and look?

Home Maintenance: Are you prepared to spend time on painting, fixing leaks (or hiring someone), mowing a lawn, saving up for a new roof? Do you know how much it will cost to heat that pool every month--or just keep it clean? And then there's annual insurance premiums.  Just some of the things to think about.

Have you checked out all utility bill costs for a house vs. your one-bedroom apartment? It would be a smart thing to do now. 

Being a Buyer In An All-Cash Competition

I hear from buyers who put in offer after offer, but don't get the house because of losing out to the all-cash buyer or mostly cash buyer. 

What does such a buyer need to do?  First of all, be prepared to be persistent, and persevere. Next, be totally pre-approved with a good lender.  Know the difference between the average "pre-qualification" letter and a good pre-approval letter from a reputable lender with a local track record and who can close on time, and not surprise you with last-minute underwriting issues that could have been avoided up front.  A good REALTOR can be of tremendous assistance here by pointing you in the right direction, not only with all buyer preparation for an offer, but with the local market. See how quickly you can close, and be willing to negotiate with the seller on some extra days to accommodate their moving date. Be prepared to provide all necessary documentation at the time you submit your offer, sellers want to know they can close the deal with motivated and qualified buyers, not get stuck putting the house back on the market again.

Keep in mind that cash buyers may not offer a seller the most attractive offer, and that a good price from a well-qualified buyer who is getting a loan may stand a very good chance with a motivated seller.  Keep your offer terms clear and simple, and bear in mind that trying to change your contract terms after acceptance by the seller could cause them to cancel and go with one of their backup offers.

Let the seller know you are very interested in their property as your next home (presumably you are), and tell them that when you make an offer.

Last, but not least, review the 10 items to the right to remind you about being a successful buyer! I'm experienced with both 1st time and repeat buyers and can help you position yourself towards success for your next purchase, contact me at 562-896-2609.

People Still Want to Own Their Own Home



The majority of adults still think buying a home is the best long-term investment, and see homeownership as an important long-term financial goal. The majority of renters want to own in the future, and over half of first-time homebuyers bought because they were tired of renting. Over 90 percent of adults surveyed were happy with their decision to buy!

 

 

Are you ready to prepare for buying? Contact me, a Long Beach Realtor with 18 years' experience.

California's Housing Market Projected to Rise in 2013

The good news is that prices are rising in California and the share of underwater mortgages is dropping, but the fact is that 29% of California mortgages are still "underwater" and 15% of them are still more than 125% loan-to-value.

Housing affordability is at records highs with California still over the 50% mark, meaning more than half of California households can afford to buy. Mortgage lending is very tight and "defensive", and appraisals are problematic (example: Many 20% down borrowers are finding their new property doesn't appraise as high as what they agreed to pay for it, but if they can put down another 10% of the purchase price, the lower loan-to-value erases the appraisal issue), and listing inventory is down by more than half compared to one year ago, so opportunity is scarcer.  In fact, in Los Angeles County, we have an average of 2 months of inventory--down from 8 months 2 years ago.  For December, Long Beach had 1.9 months of inventory. 

Why is this?  One reason is that many sellers are stuck where they are due to underwater value, or they are skeptical of moving on, and also because large amounts of foreclosed inventory is being bought up by investors in bulk and rented out.   Distressed sales volume is decreasing gradually, and in California statewide, equity sales are now about 64% of the market.  But expect short sales to stick around, they have been about 23-24% of the market since 2011.

2013 California Market Recovery

There is a pent-up housing demand, and job creation is one thing that can loosen up the housing market--the prediction is that new housing construction will begin again in California with the improvement in jobs. 

Each city and each area has it's own local real estate market, but tight inventory, short sales, and loan issues are very much a universal picture in the local, state and national areas.  Overall, the California market is predicted to increase in 2013.


And, another important fact:  According to a REALTOR survey, buyers are more optimistic than ever before about buying, in spite of all these other factors -- because housing affordability still makes this a great time to buy (something seller need to think about also).  Thanks to Leslie Appleton-Young, California Association of Realtors, and her report of January 11,2013.

For an agent very familiar with the Long Beach/Lakewood/Cerritos areas, please contact me at julia@juliahuntsman.com, or my phone!

Benefits of the New (and Extended) Tax Laws for 2013

Much has been written about the last-minute passage of the "fiscal cliff" issues by the federal government.  But, remember there are state level issues as well, some of which are still being worked on in California., specifically SB 30.

In 2007, the new law provided, for five years, incentives for sellers to accept short sales by, in many instances, forgiving taxes that would have been due for the forgiven debt amount.

Previously, when a lender forgave a portion of borrower debt, the forgiven amount was, in many instances, considered taxable income for the borrower.

This tax incentive for sellers to participate in short sales was just extended by Congress for another year, expiring January 1, 2014; however, California's exemption under the Mortgage Forgiveness Debt Relief Act expired at the end of 2012, and currently forgiven mortgage debt is taxable state income.  SB 30 (Calderon) has been introduced, and if and when passed by the California legislature, it will make California conform to federal law, and will be retroactive to January 1, 2013.

Not all debt is forgiven in every instance. Sellers should check with their tax consultant for exceptions. For example: Maximum amount that can be forgiven is $2,000,000. To be forgiven, the debt must have been used to buy, build or substantially improve their principal residence

Other housing-related provisions brought into effect with the new laws are:

• A 10% tax credit up to $500 for homeowners' energy improvements to an existing home, and is retroactive for 2012.
• Capital gains rates remain at 15% for incomes under $400,000 (individual) and $450,000 (joint); above those income levels gains will be taxed at 20%.  On sale of principal residence, the gains rate remains at $250,000 (individual) and $500,000 (joint).
• An 2011 expired tax deduction for mortgage insurance premiums (MIP and PMI on loans) has been restored and is retroactive through 2012.
• The new "Pease Limitations", per California Association of Realtors, are at "$300,000 for married taxpayers filing jointly and $250,000 for single taxpayers (i.e., a married couple with an AGI of $400,000 would be $100,000 over the threshold; the couple’s deductions would be reduced by $3,000 which is 3% of $100,000). No matter how high a taxpayer's AGI, the Pease reduction cannot exceed 20 percent of the amount of itemized deductions otherwise allowable for the year." These were named after Ohio Congressman Don Pease and were first enacted in 1990.
• The first $5 million dollars in individual estates and $10 million for family estates are now exempt from the estate tax. After that, the rate will be 40%, up from 35%. The exemption amounts are indexed for inflation.
• More at http://www.toptennewhomecommunities.com/blog/fiscal-cliff-bill-addresses-some-key-housing-issues/

Summary for Recent Real Estate Trends at end of 2012

Happy New Year for 2013 -- there are positive signs in the housing market, and we hope that they will continue!

Pending home sales continue to rise (Pending means those in escrow, scheduled to close), as shown by the Pending Homes Sales Index which rose nationally by 1.7%, and is at the highest level in the last two-and-one-half years.  Pending homes sales have risen consecutively for the last 19 months.
The November median price for a single family home in the Los Angeles Metropolitan Area rose to $327,840 from $269,440 in November, 2011!  The share of distressed sales (mostly REOs and short sales) for single family homes in the Los Angeles area has decreased to 35% from 46% one year ago.

The market is not determined just by whether the prices go up or down, there are a lot of other factors, including whether or not sellers are motivated to sell because that in turn depends on other economic factors which create the movement in housing.  Inventory is a big issue right now, no question of it.

How will the "fiscal cliff" measures affect real estate (still not resolved as of this moment)?  An unrenewed date for the Mortgage Debt Relief Act will require homeowners who went through short sales, loan modifications and other resolutions to pay taxes on forgiven debt. And will the mortgage interest tax deduction be reduced or removed? That will affect most homeowners in the country if that happens.

Will borrowers be subjected to new mortgage rules in 2013? The lending environment is already stringent, making it difficult even for some 20% down borrowers, so buyers should be aware if how conventional vs. FHA loan opportunities could work for them in the future. The topic of "qualified mortgage" rules is being examined in the coming year, and the big question is will it mean that all borrower for conventional loans be required to put down a minimum of 20%--that's a tough hill to climb.

There is some good news in the housing market now, but it will need economic support in a variety of ways to keep that going.

If you have a reason to sell, please contact me for a free evaluation of your home's value! Find properties at www.juliahuntsman.com for the latest area listings of all residential properties.

Increase of 24% in November Home Values in California Since 2011

November median prices for home sales in California have increased by double digits compared to one year ago, and the number of sales have also increased on a year-over-year basis as well.

Higher priced homes sold at increased numbers in November, even as sales declined overall in lower-priced areas due to fewer homes available for sale. In the Long Beach/Lakewood/Cerritos area, homes under the $500,000-$450,000 range in particular have sold very fast with multiple bids.  The California statewide median price for a single family detached home increased in November to $349,300, up from October's median of $341,370, an increase of 2.3%.  November's median price was up 24% from the November, 2011, and that is the biggest year-to-year increase since June, 2004!

Additionally, California's inventory for single family homes is down to 3.1 months overall (in some areas such as Riverside County, it's far less), and this is a decrease from 5 months of inventory one year ago.

Interest rates have dipped further to a November average of 3.35% for a fixed-rate 30-year mortgage; and it's taking fewer days to sell a home: an average of 37 days compared to 56 days one year ago.

Long Beach Housing Inventory Graph
 

In Los Angeles County, the median price is $337,000, an increase of 15% from one year ago, with the unsold inventory index at 2.9 months, down from 5.6 months one year ago (that means all existing unsold housing would sell at the current rate of sale within 2.9 months if no new listings come on the market--six months of inventory is more the number we should have.) And, this picture on inventory is not unique to Long Beach, it is typical of the local cities, county, state and national status of housing inventory.

As a side note, appraisals and buyer's lender financing issues have not away, which are topics for another post.
With the increase in prices, more homes are getting a little more equity--to find out what your values could possibly be, please find out your home's value from current and complete information directly from our Realtor MLS and tax inventory.  Even if you have no intention of selling in the near future, you may need market information about your property for a variety of reasons, such as re-financing, planning an estate, or just for your own information.

P.S. For a little Christmas spirit, see my photos of a few decorated houses at www.facebook.com/longbeachhomesandcondos -- and "like" me too.

Open House - Alamitos Heights - Expansive Mid-Century

Open house today on fantastic remodeled mid-century style home. Dec. 16, 2012 noon-4 pm.

Take a break from Christmas shopping and stop by to see an amazing home! 5 bedrooms, 4.5 baths, pool.



795 Los Altos Ave., in the Long Beach neighborhood of Alamitos Heights.

See more open house information.

Julia Huntsman, Broker
01188996

The Fiscal Cliff - or Tax Breaks That Could Be Gone

At the end of 2012, depending on what happens between the political parties, there could be many expiring tax provisions that originated in the George W. Bush Administration, when 2012 was the sunset year for so many breaks.

Federal income tax rates are scheduled to increase in 2013, with tax brackets currently spread from 10%-35% changing to 15%-39.6%. Long term capital gains will increase from 15% to 20%, and other long term capital gains tax rates which apply to qualifying dividends will be taxed as ordinary income.

The 2% reduction in the payroll tax  for Social Security will expire, something which concerns many businesses.

Estate taxes will return to 2001 and the $1,000,000 exclusion for taxes, and the top tax rate increases from 35% to 55%.  (In 2001, there weren't nearly as many $1,000,000 properties to inherit as there are now.)

Earned income tax credits, child tax crfedit and the Hope tax credit will revert to lower limits.

Student loan interest will no longer be deductable after the first 60 months of repayment.

Have you been affected by the Alternative Minimum Tax? the exemption amounts will be lowered, affecting many more individuals (a tax that was only supposed to affect the highest income earners has been affecting more and more of the middle class).

Will tax rates for income earners under $200,000 or $250,000 (households) annually change, or will the tax rates for the vast majority of Americans be impacted as well?

And, once again, there are issues about the "debt ceiling", and what measures may have to be enacted in order to allow the government to meet its obligations.

The Mortgage Debt Relief Act is also set to expire; this act is what allows short sale sellers and individuals who took out a mortgage in a certain time period and were foreclosed on under certain conditions to not be taxed on the forgiven or cancelled debt. Should this Act not be extended, the tax burden of many distressed sellers will be increased.

And, last but not least, there is the issue of whether the mortgage interest deduction will continue and in what form--In California 89% of those who took the mortgage interest deduction earned less than $200,000. Losing the deduction would cost the average California taxpayer over $3,900.

Are you concerned? I hope you are and that you contact your Congressional representative to express your opinion.

www.juliahuntsman.com
www.longbeachrealestate.blogspot.com
www.facebook.com/longbeachhomesandcondos

December Events Around Long Beach Area

Local events and happendings in the Long Beach/Lakewood area, and some are tonight!


Las Posadas Procession and Fiesta at Rancho Los Alamitos on December 16.

See events at Rancho Los Cerritos for Christmas Festival and Tour -
Old Time Christmas Festival, 1-4 p.m., Sunday, December 9; 
Saturday & Sunday, December 15-16: Christmas Candlelight Tours, 5:30-7:30 p.m.

Long Beach Airport will open up a brand new concourse and terminal soon! See gallery photos and article.  See article about original mosaics recently found in the original terminal which were part of the WPA's projects.

Parade of 1,000 Lights, 5:30 to 7:30 p.m. , Saturday, Dec 8, boat parade between Shoreline Marina and Rainbow Harbor.

The Christmas Tree Lane Parade will take place from 5 to 7 p.m. Saturday, Dec. 8, on Daisy Avenue between Burnett Street and Pacific Coast Highway, Long Beach.

Naples Boat Parade, Sat. Dec. 15th, 6 p.m.,  off Naples Plaza and Marine Stadium.

See photos for the Victorian Christmas at the Banning House in Wilmington.

Huntington Harbour Board Parade, Dec. 8, 5:15 p.m., off Pacific Coast Highway, Huntington Beach.

New Real Estate Laws for 2013

California new real estate laws are coming up effective January 1, 2013, and here are a few:

For transactions in homeowner associations, documents are ordered in escrow to go to the buyer, for which there are typically fees charged for the preparation of these documents.  A homeowner association cannot collect a cancellation fee for sales disclosure documents (1) when a written cancellation by the party ordering documents is received by the HOA before work is performed; and (2) when a written cancellation by the party ordering documents and HOA was compensated for any work performed--the HOA must refund all fees collected if a request is cancelled in writing and work had not yet been performed on the order.

Hazard Disclosures: Sellers must now disclose the location of gas and hazardous liquid pipelines, from information in a database.  This information would most likely be coming through hazard disclosure companies hired by the seller in escrow to make these and other disclosures.

Property owners will continue to have anti-deficiency protection on refinanced loans on their property, except for a refinance where cash is taken out. 

Month-to-month tenants of properties in foreclosure must be given 90-day notice to vacate after foreclosure--in six languages (after March, 2013, and there are 4 exceptions to this).  Lease tenants may remain until end of lease term under all terms of the agreement.

Helping Distressed Homeowners Keep Their Homes -- No dual tracking, meaning no sale of property if an alternate foreclosure prevention method has been approved in writing by all parties (investors, lienholders and mortgage insurers).  See my previous post .

Vacant REO properties must be maintained (an existing law which has not been extended indefinitely).

Foreclosure notices must have a summary of information accompanying them, in six languages.

Property taxes -- the death of a co-tenant will not trigger a reassessment of the property, providing certain conditions are met.

Buyers of foreclosed properties have opportunity to correct substandard conditions of at least 60 days before an enforcement agency can take further action.

If you would like the specific legal descriptions of any of these laws, please contact me with your e-mail and name information, I will be happy to forward you additional information!

What is For Sale Under $300,000 in Long Beach?

MLS R1205418 - Click to see listing

Periodically (maybe once a year) I've been tracking this price range about affordable properties in Long Beach. 
One thing to know since my last post on this subject in May, 2012:  The market has changed, and for more than one reason.  Not only are prices going up in some areas, but at the same time there is far less inventory than even just a few months ago. 

Currently, in the MLS, the total number of active listings for $300,000 or less for single family homes, condominiums, lofts, own-your-owns, and coops comes to the grand total of 167 as of this date.  Compare that to 618 properties in May of 2011.

 

The breakdown is as follows:

• Single family homes (some of which homeowner association listings in PUDs) comprise 62;
• There are 80 condominiums listed;
• There are 7 coops (similar to condos but have different property tax arrangements)
• No lofts in this price range;
• There are 18 own-your-owns listed (also similar to condos but different property tax mode)

The number of listings is down due to various market forces, not the least of which is fewer distressed properties on the market. In general, market inventory has decreased by 60-75% since this time last year.  Also, the market prices are actually increasing compared to October of 2011, sometimes by as much as 20% on a month/year to month/year comparison in some zip codes of Long Beach.  See a south Los Angeles County/north Orange County regional report for overall market trends for areas including Lakewood, Cerritos, Huntington Beach, Newport Beach and inland cities including Fullerton.  While the picture may vary individually within each city or zip code, the trends are reported here.

There are even more complex trends within the picture presented here, such as the future of the mortgage debt relief  forgiveness being uncertain which is probably impacting some short sale sellers from putting their property on the market, whether or not there is "shadow inventory" which will be added to the market in 2013 (that's another topic of discussion).

For a property search of these areas go this property search tab, where all types of properties, including 2,3, and 4 units, may be searched throughout Long Beach, Los Angeles County and Orange County and all cities in Southern California. (Currently, all active, backup and pending status listings are shown in this search.)

Are you thinking of selling? Please contact me.

What is a HAFA short sale?

Short sales have not gone away by any means.  Although the number of actual short sales for residential properties has decreased greatly just since the beginning of 2012 in the south Los Angeles County/north Orange County region, the number of homeowners estimated to be in an "underwater" value position is about 25%-30% of the market. A search in today's MLS in the City of Long Beach, out of 492 active residential listings, about 71 are listed under short sale conditions, or about 14% of the active market.  Interestingly, the number of short sales in October 2012 compared to October 2011 has actually increased by 28% overall in the same general region, with short sales being about 6% of the combined market in all the local cities of this local region.

There are, however, reasons for a decline in short sales, one of which is there is still a great number of owners who go into foreclosure without ever attempting to list their home first; next, some do list their home but are unsuccessful in selling before the bank takes it over.  Nationally, more than 7 out of 10 homeowners go into foreclosure without visible intervention.

Currently, there are over 100 lenders participating in the HAFA (the government-subsidized Home Affordable Foreclosure Alternative), including Citimortgage, Bank of America, Wells Fargo, and many servicers.

For a homeowner to participate in this program, there must be certain requirements met--your home must be listed with a local real estate agent, and the necessary documents must be submitted before December 31, 2013, and close by the following September of 2014.  First, it must be a loan other than one by Fannie Mae or Freddie Mac, or insured by FHA, or the VA.  It must be a first trust deed originated before Jan. 1, 2009, and the loan amount for a house or a condo (1 unit) must be under $729,750. The borrower must comply with the specific timelines in this program. The borrower may have more than one property approved for sale under this program, but cannot have purchased a property in the last 12 months..  Last but not least, the borrower must be in a hardship situation.

Now, HAFA will not apply to all borrowers because about 60% of California's mortgages were issued under Fannie Mae, which is excluded from HAFA.  (But Fannie Mae and Freddie Mac also have hardship program, please contact me for information.)  The bank or servicer may not attempt to collect any additional sums (i.e., cash or note) from the borrower after the property is approved for a HAFA sale, and the bank may not complete a foreclosure sale if the borrower complies with the HAFA sale terms.

There's about 9 steps to complete (including close of escrow) to go through a successful HAFA short sale.  What are the pluses? You may have some financial incentives to move under this program, and you may also be able to obtain a release of your second lien. 

Are you being scammed?  See this video here for the 5 basic trouble signs you want to watch out for.

The same banks have their own "cooperative" short sale programs which are similar to the HAFA program; currently Bank of America in particular is doing an outreach to certain borrowers.
For more specific information see Making Home Affordable and a HUD telephone number to call for housing counseling. 

This is a sale which requires the assistance of a real estate professional.  Please contact me for more specific information which can be e-mailed to you about this program.  Please remember you may have other options (do you think you still have equity in your property? that actually happens), and there are other short sale programs being offered right now, some of which offer a great deal of cash incentive to the borrower, so please call me about the HAFA or any other short sale program. Don't let your house go into foreclosure if you can possibly help it.

Julia Huntsman, 562-896-2609

Borrowers are always advised to seek advice from their tax and/or legal professionals.

Eliminating Your Second Lien -- Do Some Checking First

Under a new program by offered by Bank of America for home mortgage second liens, about 150,000 of its borrowers are being contacted to apply for full forgiveness.  Based on the total dollar amount forgiven so far for the number of borrowers, the average is about $69,000. 

If you're currently in a short sale, this could potentially cause a delay, or worse, if you're already on track for closing on the first and time is running as you approach your closing date.  The release time required for completion of the second loan is running about 90 days, so accepting that release will result in a delay of your short sale, or even worse, a loss of that transaction if the investor/servicer on the first will no extend time to close.

Make sure you're really going to get freedom from a difficult mortgage burden.  Say you're not in a short sale, and you receive the offer from Bank of America or one of the other major banks, make sure you get a proper estimate of your home's value from a professional.   If your first loan balance is about $465,000, and your second balance is still around $45,000-$50,000 because you got an 80/10/10 loan (you had 10% down payment, and got a 10% second mortgage) getting your second loan released won't do you any good right now because it will not put you into an equity position--I forgot to mention, you just found out that at best your house is currently worth $450,000 from your neighborhood REALTOR who has checked all the sales within the last 4-6 months in your neighborhood.  If releasing that lien puts you into an equity position, and you're not under a short sale timeline that cannot be extended, then the second lien forgiveness program could be for you.  But make sure you read the entire letter, because if your first is currently in default and on a foreclosure track, getting the second forgiven will not prevent the first's foreclosure. That will still require separate action to stop the foreclosure (there can be different banks and/or different investors on each loan).  Bank of America also makes is very clear that they are choosing who gets invited to this event, you as the borrower cannot pursue it without being invited. (It's not personal, it's just that there are many conditions affecting second mortgage liens.) The fact is, Bank of America took over Countrywide's loans, and Countrywide did a lot of "piggyback" loans, which are probably some of the seconds that are part of this offer. 

It's also wise to review beforehand any possible impact to your credit score (debt cancellation may actually impact your score), reporting to the IRS, and any bankruptcy issues you may have.

If you need an estimate of value on your Long Beach, Cerritos, Lakewood, Seal Beach home, or somewhere near these cities, please contact me.  If you would like more information about a short sale and you're in Long Beach, Cerritos, Lakewood, or in Los Angeles County or Orange County, please contact me.

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

and don't forget to "like" us at www.facebook.com/longbeachhomesandcondos

Complacency Could Kill Real Estate Opportunity

What does the California Homeowner Bill of Rights Mean for You?

Gov. Jerry Brown signed this Bill of Rights on July 11, 2012 and it will take effect on January 1, 2013.  This law will help homeowners avoid foreclosure by prohibiting lenders from engaging in "dual tracking", by requiring a single point of contact for the borrower, and by giving the borrower the right to sue the lender for violations of this law.  It applies to first trust deeds on owner-occupied properties that are 1-4 units. 

The single point of contact doesn't necessarily mean the borrower will deal with only one person throughout the process, but it means "one person at a time." 

What California borrowers wanted was protection from the foreclosure process when trying to obtain a loan modification--the foreclosure department in the bank was not talking to the loan modification department and the borrower who thought they were well on their way to keeping their home, suddenly lost it in foreclosure. 

There is much more information and guidelines in this law, so for more information, please contact me with your contact information and I can e-mail or fax the entire summary about this law to you.

Don't be one of the homeowners who loses a home without searching out your other options.  Foreclosure may affect you in many ways, including candidacy for future jobs, obtaining some insurance premiums, and much more, because credit histories are often reviewed by a wide variety of sources in your life, which will make determinations about you based on what they see there.  Do all you can to avoid the pitfall of foreclosure--find free information here.

What's the 2013 Prediction for California Home Prices?

Assumptions:

The PITI is based on the prevailing median price in the

2nd Quarter 2012. The PITI is calculated based on an

 underlying effective FRM interest rate of 3.92%,

 a 20% downpayment,

and corresponding loan amount.

The monthly rent is derived from

RealFacts Q2 2012 estimates for a

3bd 2ba average asking rent.

The California Association of Realtors annual conference was held earlier this month in Anaheim.  The 2013 Forecast extensively covered all phases of the residential market, with a total of 136 PowerPoint slides as part of CAR economist Leslie Appleton-Young's annual presentation. 

At the closing section, Market Opportunities for 2013, four points were made:  1) Home prices are rising, but still very attractive; 2) Look for return on interest for investment opportunities; 3) interest rates are at historic lows; and finally, 4) first-time buyers: rent v. buy?  Do The Math!.

The current story for many buyers and sellers has twists and turns all along the road, but it's still a time to not be passed up!

For California, the median price of a single family home is projected to rise in 2013 from $317,000 at the end of 2012 up to $335,000 in 2013.  At this point, buyers are more optimistic than sellers about future home prices:  49% of sellers think prices will go down in one year, and 9% of sellers think they will go up.  But while 49% of buyers think prices will stay flat, 25% of buyers think prices will go up.  And those buyers are probably going to be right--last year the projected price increase for 2012 was for a 1.7% increase, but the current projected actual increase by the end of 2012 is 10.9% increase.

Median home price for So Cal Counties

The median home price in Los Angeles County went up over 10% from August 2011 to August 2012, with REO sales making up only 12% and short sales making up 24% of the total sales in August 2012.

The Mortgage Debt Relief Act Is Hanging in the Balance For Long Beach Area Owners

In 2007, the Mortgage Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure.

The act has helped many California distressed homeowners find solutions to avoid foreclosure and opened up options to them that were previously unavailable.  This Act removed the tax responsibility on forgiven mortgage debt and allowed short sale sellers and owners of foreclosed homes to recover more quickly from selling their principal residence as a distressed property.  

 

Although there is less coverage in the media about homeowners who owe more than their home is worth, those owners make up about 22% of the nation's homeowners.

The Mortgage Debt Relief Act, however, was only intended to be a temporary solution and is now set to expire at the end of 2012.  This law has already been extended twice.  There is a bill in Congress that would extend it again, but it is unclear if it will pass. For distressed homeowners, this means that time is limited to take advantage of this program.

Time is running out. But there is still a chance to change your financial direction and avoid foreclosure.  Call today to find out the current process for listing and selling your property as a short sale--the banks have streamlined their process greatly compared to the past, and limited inventory has made buyers more willing to wait for the short sale process.

Just one more thing: please don't think that if this law is not extended, that a short sale is not possible because that is not true.  What it means is that the tax forgiveness period will be over, which will impact both short sales and foreclosed properties.  Please remember that with a short sale, with the vast majority of properties, there is less of a loss for the bank to accept than when it is not sold and goes straight into foreclosure. Either way, the homeowner will be responsible for this difference between the bank's loss and the mortgage amount, if the MDRA is not extended.

 

Contact me, Julia Huntsman, CDPE, at 562-896-2609 and see more short sale information at www.juliahuntsman.com - Help for Homeowners.

Los Angeles and Orange Counties Home Price Snapshot

Orange County's median single family home price was Orange County $567,710 in August 2012, up from $551,160 in July 2012, and up from $508,910 in August 2011.

Median price of a single family home in Los Angeles County was $344,770 in August 2012, up from $334,190 in July 2012, and up from $312,900 in August 2011.

Home Improvement Tips--Cost vs. Value Report

There's a lot of information available about getting a new look for your home, or getting it prepared for marketing, or just getting it fixed.  But how do you know the best areas to invest your time and effort?  Every year Remodeling Magazine publishes its online report -- it's a great resource to consult with to find out what your best choices might be, both from a popularity standpoint and a financial one.  If you're thinking about or considering selling, why spend tons of money or time on a big improvement that may be your best personal choice (if you're going to live there indefinitely), but not one that the majority of buyers may deem significant, or vice-versa? Find out what the trends may be in your region. The improvement picks are not necessarily the same each year.  The annual "Cost vs Value" report for 2012 is not out yet, but should be soon, but here is the link to the Los Angeles area version from 2011.

Also, If you go to www.juliahuntsman.com and scroll down to "Houselogic", you can click and go to their main website for more home improvement tips and maintenance.  This is a really useful resource as you can save items to make your own collection.  Houselogic is another great resource from the National Association of Realtors.

Frankly, when it comes to home colors, I go to a store like Dunn-Edwards and get their paint color chips--they also have very nice brochures putting together a coordinated palette of colors for interiors and exteriors--as well as colors that could be used for various architectural styles and periods. Historical colors can be important, especially if you're located in a historic district where there may be local rules or guidance on period color selection.

If you use Facebook, "like" my page at www.facebook.com/longbeachhomesandcondos while you're there and you can follow my blog posts where I put out information for both buyers and sellers, or just look at my blog at www.longbeachrealestate.blogspot.com from time to time!

Best Time Ever to Save on a Mortgage Payment in Southern California

30-year mortgage rates since Sept. 2007

Dear Buyers:

Did you know rates are about 3.49% right now? Best time ever to save on a new mortgage payment in the Long Beach, California area!

Rates have trended downward since 2008, and that means you will pay less on your monthly mortgage payment for the same selling price. 

See what your monthly median payment will be at different interest rates and different selling prices.

The lower chart was made up when interest rates were a little higher, but get out your calculator to easily compute a selling price at a lower rate as follows:

Comparisons at higher rates/higher prices

For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI (principal, interest, insurance and taxes) will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.  So, for a $400,000 home at today's 3.49 percent mortgage rate, the monthly PITI would be about $1885, and a savings of over $100 at a 4 percent rate.

Pulsenomics, in its latest quarterly survey shows housing prices for the future.
Price appreciation/depreciation expected over the next five years:
2012: -.4%
2013: +1.3%
2014: +2.6%
2015: +3.2%
2016: +3.5%

The average pre-bubble (1987-1999) annual appreciation was 3.6%.
(Thanks to KCM Blog for Pulsenomics data.)

New and Easier Guidelines for FHA Approval of Homeowner Associations

The fallout rate for FHA approved homeowner associations has been huge over the last 2 years. FHA-approved condominiums are often one of the best entry level paths for first time buyers into homeownership.  But the Federal Housing Administration (FHA) just eased some of its restrictive guidelines, bringing their rules into the sphere of the current economic market, and bringing more opportunity to sellers and buyers.

One example of change is the acceptance of FHA loans in complexes which included commercial units--often located on the first floor, such as the Lafayette in downtown Long Beach or one of the newer loft projects in San Pedro.  The revised rules changed from allowing 25% to now allowing 35% of the project to be retail or commercial, and possibly more.

Another difficult requirement concerning the personal legal liability for condo board officers for being responsible for certain knowledge that could be well beyond their actual ability to know, with a penalty up to 30 years in prison, has now been changed to "less scary language."

And, significant in these economic times, the requirements concerning delinquent dues and length of time delinquent has been expanded to 15% of owners may be up to 60 days late (not the previous 30 days) to meet FHA approval for the project. 

While these may not seem like significant changes to some, by checking the list of FHA approved projects in Long Beach, compared to the far greater number that were FHA approved for many years, it's not difficult to see the impact on buyers, sellers, and the lending market.  See the complete article by Kenneth Harney.

Market Update, And More Home Price Directions Are Moving UP

California prices by county

The median price paid for a Southern California home rose to $309,000 in August--that's an overall median for Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties--that's an increase of 10% compared to August 2011, and the highest median price since August 2008's median of $330,000.

Short sales and foreclosures (the distressed property market) are trending downward by 1%-2% from  July and previous months.  That does not mean they are going away, because the distressed property market is predicted to be here for a long time into the future.  The good news is that higher prices mean a lift out of the short sale category for some prospective sellers, or a higher net from a sale to put towards a new purchase. Short sales in the 6-county area were about 17% of sales, but locally, there are specific areas where they are still 50% or more of the market.

Drops in foreclosure inventory,  increases in sales of higher priced properties are part of the increase in home price.  The increase in numbers of properties in escrow is impacted by the lowest interest rates since the 1940s, which are likely to stay that way for some time into the future, this August was the highest August sales in the last 6 years.  The volume of sales however, is still 15% below the average calculated since 1988.

Investors, or "absentee buyers" bought 27% of the homes last month, and buyers paying with cash were 31%, paying a median amount of $235,000, an increased amount from last year.

Credit conditions for buyers, and therefore for sellers, are strict.  Buyers who currently occupy their homes and want to purchase a new one not only must meet all those loan requirements, but satisfy the lender's requirement for at least 30% equity or more in their property. If your property is currently a rental, the property's equity may not be an issue assuming you have satisfied other lender conditions.

Find more local trends for houses and townhouse/condos in Los Angeles and Orange Counties including housing affordability, months of inventory, median sales price (now up at 5.9% at $450,000 for the region covered by this report), and local inventory amounts. Just go to my site for this local regional report that covers cities including Lakewood, Long Beach, Cerritos, Seal Beach, Huntington Beach, Newport Beach down to Aliso Viejo and Rancho Margarita, out to Yorba Linda and Placentia, and many more cities in between.  A more specific report is available by zip code (here is 90713 in Lakewood) or by city--this one is for Long Beach.

For a copy of your local report, please contact me and I will be happy to send it to you.

Some selected prices:  the highest median sales price in the local region:  Corona del Mar at $1,700,000; Cerritos, $499,900; Long Beach, $320,000; Signal Hill, $410,000; Cypress, $422,500.

Click on the link to see Dataquick's Southern California report for August. Do you want to find out your home's current value?

Please go to What is My Home Worth for more information.

When Am I Able to Buy Again?



Seasoning Requirements
 

The distressed property market began some time ago, and some people are beginning to wonder when they will be able to buy again.

Credit scores are important as well, depending on how severe the situation was and how long it will take to recover.

This is meant as a general guide only. 

For instance, if your short sale closed escrow in September of 2009, you could be eligible for an FHA loan, depending on your other loan criteria of course.  IF you have certain extentuating circumstances and were current on your mortgage at throughout the short sale, you may not have any waiting period for a new FHA loan.

To obtain a conventional FNMA loan, your waiting time is as early as 2 years after a short sale closed if you have 20% down payment.  And, for a FNMA loan, IF you can show certain extenuating circumstances, your wait might be only 3 years after a foreclosure.

Bankruptcy is one of the most damaging events to your credit, but if you work diligently to restore your credit as soon as possible, your wait could be much shorter in order to buy.  Paying bills on time and getting new credit established, perhaps by obtaining a secured credit card, are essential to improving your status as a good loan risk, according to John Walsh of Total Risk.

Please contact your lender (or I can refer you to one) for circumstances about your particular situation, because it may vary somewhat from the information here. Please contact me--I want to help you, even if you're not able to buy now.

The Interest Rates are Down but Has the Cost Gone Up?

A lot of buyers know that rates are down, way down, and therefore feel they don't need to be in a hurry to buy. But there's more to the story than that.

The Housing Affordability Index from the National Association of REALTORS® shows the drop in interest rates over a period of time since 2009.  The interest rates for were 4.37% in January, 2012, and down to 3.81% in June, 2012.  In January and February of 2012, the monthly payment as a percentage of income was 12.% and 12.0%, the lowest for the entire period of the chart, but increased to 13.9% in June. That means a buyer is spending a larger percentage of his/her income on mortgage payments. 

Yes, rates are low, but with low housing inventory all across the nation, and more buyers than there are sellers, there is an upward pressure on prices.

And why is that? Because the median home price went from $154,600 in January to $190,100 in June, a 23% increase. These home prices are on a national level.

So what is going on locally? Many areas are still trending downward, but upward trends are happening all around:  The average home price in Signal Hill has gone up .8% annually, and 23% comparing August 2012 to August 2011.   The average home price in Belmont Heights/Belmont Shore/Naples (90803) has gone up 10% over the last 12 months.  The median sales price in Cypress is up 8%; Long Beach median sales price is up 1.4%; Cerritos is up 11.3%; Bellflower is up 8.5%. If you would like a monthly price report on one of these areas, they are readily available to send to you.

One of the most popular posts on this blog was The Cost of Waiting to Buy which continues to tell a part of the story.

Is now the time you're ready to take action? 

Top 10 Mistakes Buyers Make

 

California Association of Realtors has made a very nice graphic about their list of buyers' top 10 mistakes in a transaction.  Since they have the experience of hearing from many agents all over the state, they would be in a position to hear the most common complaints.

Personally, I haven't had equal experience with every single one of these items when working with a buyer, but when I think about, I can come close.
Item 1:  In every market, there seems to be a certain buyer who makes a below market offer (possibly known as "lowball") and wonders why the seller didn't respond with a counteroffer, or at least hear from the listing agent. Buyers, if you are this type of offeree, please know the seller is not ever required to respond (although it's nice of them to do so) if they don't like your offer.  Even if you are totally right about the price, and sometimes you are, it doesn't matter. Because the seller has a different perception, and does not agree with yours, even if you are right. Which leads to an important point: a good contract agreement reflects a meeting of the minds. Buyers, sometimes you have to either move on, or wait and see.  

And then there's the frustration of Item 2, where the seller accepts another buyer's offer. That other