How Long to Wait to Buy After Foreclosure or Other Negative Event

According to The State of the Nation's Housing 2015 report published by Harvard University, "Up to 1 million households who lost their homes to foreclosure have already restored their credit standing, making them again eligible for FHA and other mortgages, and 1.5 million more could do so shortly."

Return buyers are coming back into the market, and will continue to do so, but one of the problems is, many buyers out of the millions who were foreclosed upon between 2008 and 2014 are not aware of the guidelines under which they may repurchase. Plus, many buyers are under the impression that all purchases for owner occupied mortgages require a 20% down purchase.  This is not a mandatory requirement but depends on which kind of loan being applied for, and how long it's been since the negative event was concluded in the past. Briefly, FHA loans allow for a minimum of 3.5% down, VA has similar program, and conventional loans may be 5%-10% down and offer different interest rates and scenarios for the buyer.  Twenty percent down loans are great to have, but many people cannot meet that level, so please understand there are other options.

A lot of buyers who suffered a financial hardship in the past are genuinely surprised when they realize that the FHA or VA loan allows them to purchase again after just 1-3 years, depending on circumstances. Let’s take a look at the 2016 mortgage waiting periods:

AFTER FORECLOSURE:
Conventional loan:  Close of escrow, meaning new loan date, must be 7 years from foreclosure date.  And, under a new rule, if you included the foreclosure in a bankruptcy, you can qualify after 4 years instead of 7 years. Contact your lender for more details on how to qualify under this new rule.

FHA  It is 3 years before you can repurchase again using FHA financing. Contact your lender to find out how you may quality after just one year (this means meeting "special circumstances" which fewer borrowers will be able to meet).

VA.  It is only 2 years before you can repurchase again using VA financing.

AFTER A SHORT SALE:

Conventional.  It is 4 years before you can repurchase again using Conventional financing.
New Rule: There was a new change implemented recently (see below), whereby if you included the short sale in a bankruptcy 13, you can qualify after 2 years instead of 4 years.

FHA. It is 3 years before a buyer can repurchase again using FHA financing. But there are 2 less commonly used ways to help you qualify in less than 3 years if you can meet them under suffering an "economic event" as defined by FHA.  Contact your lender for more information on this, but be aware that showing loss of income and other events must be documented and approved in the loan.

VA. It is only 2 years you can repurchase again using VA financing.

AFTER BANKRUPTCY:
Here are the current 2016 waiting periods when you can purchase or refinance again after a Bankruptcy and want to obtain either Conventional, FHA or VA financing.

Conventional. For a chapter 7 Bankruptcy it is 4 years and 2 years for a chapter 13 bankruptcy, before you can repurchase again using Conventional financing.

FHA. For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before you can repurchase again using FHA financing. Or, see above for how you can qualify again after just 1 year if you experienced an economic event.

VA. For a chapter 7 Bankruptcy it is 2 years, and 1 year for a chapter 13 bankruptcy, before you can repurchase again using VA financing.

Another option if you want an alternative to these guidelines, is a portfolio lender (a loan that is not  re-sold on the market after close of escrow), which may be an option, but there may be higher loan rates.

To find out your eligibility, I can help you with finding resources to doublecheck on dates, so please contact me, or, contact a lender if you know one who is well-versed in these guidelines, to find out your eligibility for a mortgage.

Financing Energy Efficient Property Improvements via the HERO Program (aka PACE)

The clue to how these programs work when purchasing qualifying energy efficient improvements is in the name:  Property Assessed Clean Energy (PACE).  These particular programs are NOT loans or leases, they are County-approved financing programs whereby a bond is issued to the lender for projects permanently affixed to a property, repaid through property taxes.  Homeowners repay financing annually through an assessment on their property tax bill.  The projects could be solar panels, windows, doors, air conditioning and heating, to name a few.

While the attraction is in the no-money down for specific residential improvements (there are commercial programs as well),  the prospective customer should read the fine print before purchasing.  Under these HERO/PACE programs, the are liens placed on the homeowner's real estate tax bill which, because it's a property tax assessment, takes priority over a home loan. Should the homeowner wish to sell or re-finance, be aware that FNMA and Freddie Mac--source of most conventional mortgages--are prohibited by the Federal Housing Finance Agency from purchasing a mortgage loan on that property until the entire lien is paid off or does not have priority over a first mortgage lien.  (FYI:  most mortgages are sold to those entities.)   Here are additional words of warning from Kevin Nunn, a lender in the Sacramento area:

If the system is owned make sure it is not financed through one of the PACE programs that are being promoted right now. Homeowners are led to believe these “assessments” will just transfer over to a new buyer. Fannie Mae and Freddie Mac have been very clear that they will not purchase a loan with these “assessments” in place. It often comes as a very big surprise to owners and Realtors that the PACE must be paid off or they may only be able to sell to a cash buyer.

 On a Los Angeles County property tax bill, the lien assessment would be located under "Direct Assessments" section.  Some examples of how the assessment will appear are WRCOG Hero, LACEP RES PACE, LACEP RES 2016, LACEP COMM or California Hero to name a few.

If the homeowner stops making property tax payments, the assessment becomes a priority lien in front of a new first trust deed.  Also, when selling, the seller under California Association of Realtors purchase contracts, is required to make a disclosure to the buyer during escrow of any type of lien or lease of equipment on the property.  As an involuntary lien, it will also show up on a preliminary title report passed to the buyer during escrow, at which point the buyer may decided he/she doesn't want to pay an annual $3000.00 assessment in addition to regular property taxes.  

The seller or buyer may pay off the lien before close of escrow  (assuming the buyer is willing and able), or the amount may be split between them.  

While these programs have been most popular in the Inland Empire, they are now approved in Los Angeles County and almost all cities in  LA County, including Long Beach.  

However, there are other owned or leased equipment programs which are in place based on different criteria, and may be less complicated than those under HERO/PACE programs, so be sure to check the difference.

Down Payments and PMI: Get the Facts

If you're in the market to buy a home, your down payment is likely top of mind. And no doubt you've heard the rule of thumb that you shouldn't buy a home unless you can put 20% down. Before accepting this myth, it's important to do your homework, weigh the pros and cons regarding your down payment options and get the facts, such as:

• A growing number of borrowers are putting down between 5 and 10%.
• Today, you can put down as little as 3% through mortgage options like the Freddie Mac Home Possible AdvantageSM mortgage.

It's a fact that the more you put down, the lower your monthly mortgage payment will be and the less you'll owe the bank. It's also a fact that homebuyers who put at least 20% down don't have to pay Primary Mortgage Insurance (PMI), an added insurance policy that protects the lender if you are unable to pay your mortgage. However, if putting 20% down is not an option or will deplete all of your savings and leave you with no financial cushion, it's probably not in your best interest.

While you'll have to pay PMI for a conventional loan with a down payment of less than 20%, you'll still be able to take advantage of today's low mortgage rates – especially the 30-year fixed rate mortgage that can offer you security and peace of mind throughout the life of your loan.

Plus, once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.

THE MATH: $200,000 HOME – 5% Down vs. 20% Down

	5% DOWN PAYMENT	20% DOWN PAYMENT
Down Payment	$10,000	$40,000
Loan Amount	$190,000	$160,000
Mortgage Type	30-year fixed-rate	30-year fixed-rate
Interest Rate	4.5%	4.5%
Monthly Mortgage Payment (Principal and Interest)	$962.70	$810.70
PMI	$80.75*	$0
	$1,043.45**	$810.70**

*Assuming an insurance rate of 0.51%; this cost can be cancelled from your payment once you reach 20% equity in your home for conventional loans.
**Does not include property tax and homeowners insurance payments

Carefully evaluate your finances to determine how much you can afford and talk with your lender or housing professional about down payment options that make best sense for you.

Starting in 2016, Delinquent HOA Fees May Be A Part of Your Credit Score

Consumers' financial obligations for mortgages, auto payments and credit card payments have long been part of their credit profile. However, HOA dues payments have not. Although non-payment of HOA dues, in California, can eventually even trigger foreclosure by the Board of Directors, these payments have not been in included in credit reporting agencies. Now, Sperlonga, a credit data aggregator, is the first company to provide HOA payment and account status data to Equifax, which is one of the three major credit-reporting agencies. "A full rollout of the new HOA reporting to Equifax will go live in October 2016. And property owners who do pay on time will see a similar reflection on their credit scores. " 

According to the Community Association Institute, homeowner associations and property management companies collect approximately $70 billion in HOA payments each year through at least 333,000 community associations." Owners with a history of delinquent payments and/or non-payment can cause a great deal of financial problems for an association, especially smaller associations fewer than 10 units where there is a smaller risk pool. An HOA's operating budget and reserve funds may not be able to keep up with needed maintenance and infrastructure replacements without timely payments by all members, and those associations with more available funds will be stuck with fees and costs of pursuing delinquent owners, an eventual cost to all owners.

If you're contemplating buying a condominium or other property within a homeowner association, you are also agreeing to pay for your share of the common area upkeep, including insurance and maintenance costs. This is one of the reasons why your lender must order certain documents from the association during escrow to make sure you are well qualified to cover the fees and costs, as well as including that information in your upfront loan qualifying process. For people who may have reasons for temporarily falling behind in payments, a board may well be negotiable in setting up a payment plan--it would pay to approach the Board or your property manager for a discussion before becoming a delinquent owner.

Beautiful Signal Hill Home in Skyline Estates Waiting for a Buyer!

Home on Sea Ridge

This desirable highly sought after home is still on the market.

It is located in the beautiful Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 

View towards San Pedro

Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round. 

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS#  PW16034526.

View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609.

Sales Volume in Los Angeles County is Down, Prices Continue Upward in 2016

Long Beach, a great city to live in.

The median price of an existing, single-family detached Los Angeles County home rose in March to $545,000 from $535,250 in February. The March 2015 median price was $510,000.  All data comes from Realist. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling as well as a general change in values.

But while prices are going up in the County as a whole, sales volume has decreased dramatically:
the number of single family homes sold in March 2016 was 1,853; in February, 2016 it was 3,924; in March 2015 homes sold was 6,380 and in February, 2015 it was 5,109.  This is a sales volume decrease of 50% and greater compared to the same time last year.

The 2016 sales volume for Orange County is a similar picture, but with lower numbers: total SFR sales are 1432 and 1407 for February and January, respectively.

Less inventory means much more competition for buyers in Long Beach, especially in the lower prices range under $500,000 which sell in 40-60 days on average (or less), while properties in the $1,000,000-plus range are on the market for well over 90 days on average.

While housing prices continue upward, housing affordability in California is increasingly a topic of concern.  Another indication of housing prices is that investors are buying fewer single family and multi-family properties.  California Association of Realtors's 2016 California Investor Survey found 10 percent of real estate investors purchased more of the other types of properties, such as commercial, land, and mobile homes, in the past year compared to previous years.

Lack of inventory, especially in Southern California, can be an issue for sellers who want to move on--but for those moving out of the area, or for those who have all cash for a purchase, the ability to move on may be much easier, and would bring more housing inventory onto the local market for sale. From that standpoint, it's a good time to sell while interest rates are still so low.  Please contact me for a customized report on home value for your property!

Some Homeowners May Be Helped by New Principal Reduction Plan

Grow a new start

While the number of distressed properties on the market has declined greatly, there are those homeowners who are still suffering through with high mortgage payments.  While the Los Angeles/Southern California home market has risen greatly and lifted many "underwater" mortgages out of the pits, some may still find help in this new loan principal reduction program by the Federal Housing Finance Agency.

Nationwide, this program is expected to help approximately 33,000 borrowers, not a large number overall compared to the housing crisis at its peak, a fact the program's critics like to point out: too little too late.  The unpaid principal balance must be no more than $250,000, borrowers must be 90 days delinquent prior to March 1, 2016, and the loan-to-value must be 115% of fair market value. This program is considered a final effort to avoid foreclosure for borrowers who cannot afford to pay their mortgage.  (Just a reminder: a complete assessment of an applicant's financial status with all documentation to be submitted, will most certainly be required in order to apply and be approved.)

FHFA will be sending out solicitation letters by October 15, 2016.  Requirements are outlined at this link.

For another program, California Housing Finance Agency (CalHFA) offers Keep Your Home California, a program that over 62,000 Californians have qualified for so far.  This program offers four different kinds of assistance, including mortgage principal reduction assistance.   By following their online series of questions, you can find out if you qualify.

California Retrofits for Earthquake May Save A Lot of Grief

Foundation

For 1000 owners living in certain Southern and Northern California zip codes including Los Angeles, Pasadena, South Pasadena, Santa Monica, West Hollywood, and elsewhere, money was available as of January 1 for grants up to $3,000 for earthquake retrofit. 

Although those owners have probably all been selected by now, basic retrofits are not costly overall and can be done by following the idea in the illustrations.  By doing simple bolting and bracing, a lot of damage can be prevented and may even cost less than $3000 depending on who performs the work or the construction issues of the foundation and walls.  Cripple walls are not present in all homes, but if they are, and the house is not bolted to the foundation (pre-1933 homes were not required to be), then a retrofit ought to be of special interest.

Crawl Space view

Since Long Beach is a larger city than Pasadena, and was developed in the same eras, it seems quite an oversight that it was not included in this program.


Earthquake Brace and Bolt, site for the California Residential Mitigation Program, explains more, and also provides FAQs and a search engine for licensed contractors.

Why should this be of so much importance? "California has two-thirds of the nation's earthquake risk. Some 2,000 known faults crisscross the state, producing an average of 102 earthquakes a day – more than 37,000 a year. Certain structures that lack adequate bolting and bracing are more vulnerable to earthquake damage. Older houses are often not bolted to their foundations and lack bracing on the wood framed exterior walls enclosing the crawl space. Houses without adequate bolting and bracing are prone to sliding or toppling off their foundation during an earthquake. This type of serious damage can be prevented with proper seismic retrofit of the crawl space."

What can you expect if you buy a pre-1933 home in Southern California?  You may very well find that no retrofit has been done, and it's not something that is ordinarily asked of the seller during escrow because it's not a "repair".  Such work is usually up to the new owner of the property, and is well worth the expense.   Why didn't the previous owner do that work? That's the topic of another post.

See http://www.latimes.com/local/lanow/la-me-ln-quake-retrofit-grants-expanding-to-more-california-single-family-homes-20151118-story.html

February Home Prices in the Long Beach Area for February 2016

February 2016 Los Angeles County Sales

Why the sluggishness in sales?  The ripple down from the top tier of sales is being felt:  "In markets like Oakland, Portland and Washington, the prices for high-end homes are rapidly rising — the rungs of the ladder are moving further apart — and that makes it harder for people who own mid-tier homes to trade up. And when they get stuck, people who own starter homes have a harder time trading up, too."  http://preview.tinyurl.com/gpdc3lj  San Francisco could easily be mentioned too.

It's always speculated in an election year that sales are affected, but it is more likely due to higher prices and lower affordability overall.  

In Los Angeles County, the median priced home in February, 2016 was $530,000 (up from $457,870 in January, 2016), and condos were at $450,000, (up from $409,000 in January, 2016). However, the February sales volume for each type was less than half of the prior year volume, and well below January sales numbers.

Below are average prices for Cerritos, Long Beach, Lakewood , and Seal Beach single family homes.  The four cities have changed between -1.8% to 14% from January.  Current average price - Long Beach $637,112; Cerritos - $682,431; Lakewood $4501,775; Seal Beach $1,066,938.

Average condominium prices increased only in Long Beach, by 22.8%, and are ranging from $237,666 (Cerritos) to $289,667 (Seal Beach), $292,500 (Lakewood) and $379,522 (Long Beach).

While there is an increase in Long Beach average home price, it has the advantage of offering greater types and prices in the housing market compared to surrounding cities.  Still a good time to buy with lower interest rates!

New California Disclosure to be Made by Condo Associations per AB 596

Is your HOA FHA-approved?

This was actually signed into law last August 12th by Gov. Jerry Brown, requiring condominium associations to disclose to their members whether their developments have been approved for FHA or VA financing. This is an annual disclosure along with the other HOA disclosures submitted 30-90 days prior to the end of the fiscal year.  AB 596 adds the requirement that, on a separate piece of paper in at least 10-point font, there will be statements saying whether or not the development has been certified by FHA or the Department of Veterans Affairs.

I believe I have posted before about the declining number of FHA (or VA) approved homeowner associations.  Why is this important?  Because the available number of buyers for a condominium increases accordingly.  There was a time when "spot" I believe I have posted before about the declining number of FHA (or VA) approved homeowner associations.  Why is this important?  Because the available number of buyers for a condominium increases accordingly.  There was a time when "spot" loans could be done, but no more.  The entire complex must be approved for FHA loan, that also applies for VA loans too.  But when a complex is approved for FHA, the VA requirements are similar.

To give an idea of how extreme the problem is, out of 228 complexes listed in Long Beach on Hud.gov, all of which were once FHA approved, 17 out of the first 25 on the list are expired; 20 out of 25 on the second set are expired.  That's 37 out of  50 complexes listed are unable to sell units to an FHA buyer. And so on.

One-quarter of the state's housing stock is located in common interest developments, and according to Bob Hunt, a California Association of Realtors director, fewer than 30% are approved for FHA financing, and even fewer for VA financing.  This situation does not have to exist.

Many association members are unaware of the status of their HOA, and many think it may be FHA approved because it was in the past.  The guidelines changed:  spot loans (per unit approval) was eliminated, and associations are required to renew their FHA status every 2 years.

If your association has a property manager, they should be able to help.  If not, there are lenders who are familiar with the application process and may readily give their assistance.  Please contact me for more information if you need it.

The important thing to realize is that many qualified buyers can buy with an FHA loan on 3.5 percent down payment, and obtaining a ready, willing and qualified buyer for a property can go much faster with FHA approved associations.

Selling Prices as of February, 2016 for Long Beach/Lakewood Single Family Homes

Here are the median closing prices for several zip codes covering

The far west area of Long Beach (90810);
Belmont Heights/Shore and Naples areas (90803);
Carson Park-Long Beach and Lakewood (90808);
and Lakewood Mutuals (90712).

Prices are current as of the last day of February, 2016, from one year prior.

Median Selling Prices

90810  $379,900 | +17.2%

90803  $992,500 | +13.8%

90808  $644,500 | +17.2%

90712  $495,000 | +6.5%

   The Average Selling Prices* are a little different :

 90810  $362,000 | +11.8%

   90803  $1,162,165 | +24.6% 

90808  $648,131 | +7.9%

90712  $498,489 | -1.6%

*(median=midpoint price of all selling prices; average=sum of all selling prices divided by total number of properties sold)

Law Enforcement Cracking Down on Online Home Rental Scams

Don't get fooled by a fraudulent "rental"

The rental housing landscape has been the target of fraudsters.

For instance, a legitimate "for sale" listing which shows up not only on the local REALTOR multiple listing service (MLS), and then (according to licenses) automatically fanned out to such sites as Realtor.com, Trulia, Zillow, etc., and also possibly manually entered by the listing agent into other sites such as Craig's List, is hijacked.

Actual listing agent information is deleted by person(s) attempting to misrepresent the listing, but the rest of the listing information, including photos, is resubmitted as a rental property with a new rental price, often one which does not support local neighborhood values, but gets the fraudster plenty of emails or phone calls.  The purpose of this is to get an unsuspecting renter to wire money to the "agent", before agreeing to see the property.  Of course, after they obtain money, there is no showing of the property--the fraudster may live on the other side of the country, or in another country.  This has personally happened to me, and to other area agents as well.  To get the false information and listing deleted online takes time and phone calls, including phone calls from renters who went to my listing to verify its existence, and then called me from the "for sale" sign.  Of course, it's not for rent, it's for sale.  Moral of the story:  Do not send money or personal information to see a rental.

Another local scenario in the 562 area code is where another rental company with a different area code goes to vacant properties and puts up their own rental sign so that they will get phone calls off someone else's property for which they have no contract to lease or to sell.  Yes, they've been reported so they quit for a while, but after a while, the signs pop up again. 

This is a nationwide problem.  If you are a landlord, you should also take notice of this issue.
Always try to first verify the actual agent or owner of a listing, because this is happening just often enough to cause headaches for all concerned.

Below is an online article for the Freddie Mac Blog published today about this very issue, worthwhile reading for everyone on how to recognize and protect yourself from these schemes. 
Law Enforcement Cracking Down on Online Home Rental Scams: Law enforcement started the year by cracking down on fraudsters using phony online real estate ads to fleece would-be renters.

December Average Sold Prices in Cerritos, Long Beach, Lakewood and Seal Beach

In Los Angeles County, the median priced home in November 2015 was $457,870 and $489,310 in December, 2015 for all of California.

In the chart below are average prices for Cerritos, Long Beach, Lakewood , and Seal Beach single family homes for the past 2 years through December 2015.  The four cities have increased between 12% and 20% in that time.  Current average price - Long Beach $611,735; Cerritos - $699,438; Lakewood $529,903; Seal Beach $1,070,400.

 

Average condominium prices are more similar for all four cities, ranging from $383,000 (Cerritos) to $312,000 (Seal Beach).

November 2015 Sales Prices in California

California home sales volume and median prices for November, 2015:

Top Concerns for the 2016 Market

Although the Consumer Financial Protection Bureau states "no problem", many REALTORs are experiencing delayed closing with the new TRID (TILA/RESPA Integrated Disclosure) rules implemented October 3rd.  For about half of those responding to a survey, closings took up to 40 days to close.  While this may not be of concern to all-cash buyers, buyers obtaining financing and sellers in contract with those buyers may have to be prepared for taking extra time to close, at least while the industry is in the earlier phase of these new mortgage/escrow rules.

Some years ago FHA revised their rules on eligible condo HOAs--Since an entire association was required to become "FHA-approved", and for only two years at a time, the number of approved condos has declined severely.  This reduces the number of eligible buyers for a condominium severely and is a factor everywhere for FHA condo buyers.  Association members are advised to take up this issue with their boards -HUD provides a resource for current status - and apply for renewal.  Some lenders are willing to provide this service without cost, especially if there is an  active buyer for that complex.  Contact me for more information.  VA approvals for condos are also required for VA buyers, and these are another important source of condo buyers.   However, for buyers obtaining FNMA loans there are no restrictions on percent of owner-occupied units, a major qualifier on FHA loans. 

Tight inventories are still a factor nationwide, as buyers can attest to after they have experienced multiple offer situations.  Buyers who are fully approved and prepared to make realistic offers have more success, although the price range under $500,000 in many Southern California cities is competitive.  Below is a trend chart for "months of inventory" for Long Beach.  Neighboring cities are similar.  A 6-month supply (how long the inventory would last at the current rate of sale) is considered the norm, but has not been the norm for several years. The chart shows 1.5 months.


Tight credit standards continue to affect sales.  There was a time when a 700 FICO score meant smooth sailing, but the average FICO score on all closed loans in the third quarter was 723, the lowest level in at least four years, according to Ellie Mae. Two years ago, the average score for denied applications was 729.  In other words, keep up your credit score but minimizing debt and no delinquencies.

Low appraisals continue to be problematic.  This is a large subject by itself, but the short summary is: Find a good REALTOR to work with, whether you're a buyer or a seller, and avoid over-inflated pricing.

More Trends:

Cash sales continue to decrease; buyers are interested in walkable areas (check the WalkScore for your neighborhood), "green" homes, or older homes with upgraded environmental efficiency, are on the buyer lists in many areas, new home sales are up in some areas (however, older Southern California cities are less impacted by this demographic), rents may increase by as much as 8% in some areas, so buying at today's lower interest rates will still be cheaper than renting.

For a free property search, go to www.juliahuntsman.com Property search page.

Please contact me for a more specific home analysis for your property.  As a licensed REALTOR for over 20 years, I can help whether you have a home or investment property sell.

HAPPY NEW YEAR!

Some New California Laws for 2016

New CA laws for 2016

One of the more interesting new laws for 2016 allows transfer of deed without going through probate court.  As a transfer-on-death deed, it allows a homeowner, effective January 1, 2016, to transfer to a named beneficiary a one-to-four unit residential property without going through a probate action.  The property cannot already be part of another will or trust, but must be separate and apart.  So if you have not included a property in your trust, or you don't have a will or trust yet, but you want a property that is yours to go to someone automatically upon your date of death, you may do so by this Transfer on Death Deed, sign and notarized and recorded within 60 days.  It is revocable in case you change your mind.  This a form deed accompanied by 24 FAQs explaining it. The law lasts through January, 2021.  Assembly Bill 139.

There are a number of laws involving no penalties for water use and lawn appearance during a drought.

Extended indefinitely is the victim's rights law to terminate tenancy, where he or she or a household member was a victim of an act of domestic violence, sexual assault, stalking, elder abuse or human trafficking and that the tenant intends to terminate the tenancy.  The time to give notice has been reduced from 30 days to 14 days.  Assembly Bill 418.

Senate Bill 655 pertains to new mold/habitability standards pertaining to landlord/tenant law. A change from current law, this new law  now provides that a lessor (landlord) is not obligated to repair a dilapidation relating to mold, as specified, until he or she has notice of it, or if the tenant is in substantial violation of the duty to keep the property clean and sanitary, and thereby substantially contributes to the existence of the mold. This law authorizes a landlord to enter a dwelling to repair a dilapidation relating to mold.  There are current definitions about substandard housing, and "this law specifies that visible mold growth, as determined by a health officer or a code enforcement officer, is a type of inadequate sanitation and therefore a substandard condition. However the presence of mold that is minor and found on surfaces that can accumulate moisture as part of their proper and intended use would not constitute a substandard condition."

For a complete list of 2016 laws which also address consumer protection, HOA regulations and drought conditions and FHA disclosures, disclosure required by AirBnB rentals, to name a few, please contact me.  I will be happy to forward them to you.
Lic #01188996

VA Loans Are Still a Very Good Option for Military Service Members

Benefits for Nation's Heroes

VA loans offer no down payment, competitive interest rates, easier credit standards, and easier loan qualification guidelines. Other loans may be harder to get due to an applicant's frequent moves, but this is not a problem with VA loans.   Interest rates may be .05 to 1% lower than a conventional loan.

These loans are offered to current or former service members who have served for a certain period of time and can obtain a Certificate of Eligibility.

Service members may also obtain USDA loans (not common in metropolitan areas), FHA loans and other conventional loans.  But often the advantages to a VA loan, for those who qualify, are so good they can't pass it up.

VA loans are used both on new purchases and refinances. There is no private mortgage insurance (PMI) found on other loans with low/zero down payment, which saves money from the beginning.

The Department of Veterans Affairs guaranteed 630,000 loans in 2013, an all time high.  To find a qualified VA lender, please contact me, or go to a company such as Veterans United Home Loans.  Not all lenders are well-versed in VA loans, so it pays to get a personal referral to someone in your area.  Please feel free to contact me.

Affordability in the California Housing Market

With the improvement in the California housing market since the "bottom of the market" in 2009, affordability has changed.

California's housing affordability index is at 29 percent, meaning 29 percent of California's homebuyers can afford the median-priced home of $487,420, which is a statewide figure.  The required income is just over $98,000.  To compare, 38 percent of the California population makes an annual income of $78,000 or more.  While not all single buyers may fit this profile, couples able to use both incomes to qualify are more likely to suceed, especially in the lower-priced condo market in certain cities.

In spite of this affordability declining over time, it appears to have stabilized in the 30% range.  Has it affected sales volume? Apparently not, because sales volume has increased 5.7% since the same time last year.

Downtown Long Beach

Will gradually increasing interest rates affect California's housing market?  Hopefully not, if the economy and labor markets continue to stabilize or grow.

What is the Long Beach median single family home price doing?  Here are the latest citywide figures:




 Long Beach condo price for the citywide median price of under $350,000
is posted below:

Cost vs. Value - What Improvement Projects Pay Off?

Sometimes the lower cost improvement may pay off best, especially if the seller is considering fixing up to sell.  See this article for more information on how less is more.

Avoiding Buyer's Remorse--Is That Possible?

Sometimes no matter how much research is done in advance, buyers may still suffer the pangs of remorse after a purchase, and buying a home is no different.  There are seemingly endless disclosures made in a California real estate transaction for buying a residence, but with so much going on after escrow is opened, a buyer should have "eyes open" as much as possible during the home search period.  Searching for homes on the internet, which is performed by almost all buyers in the initial stages, is one part of the home search. 

But in order to avoid the awful feeling that something is wrong after you've closed escrow, try to focus on what are the most important things to you from the very beginning.  For many people, having the right neighborhood, schools, as well as the features of the home itself, are key to their happiness.

Feelings of happiness/regret vary by age, region, demographics and income level.  According to a 2014 study of 2000 adults by Redfin (a large brokerage), if you lived in the West, were over 65,  male, and had an income over $100,000, you were more likely to have less buyer remorse.  For example, 85% of people over 65 said they would buy their home again.  Women with children under the age of 18 (27%) were more likely to express regret. 

How to avoid feeling regret?  Know your local market, i.e., shopping, schools, neighbors and neighborhood, commuting time, as well as loan types and interest rates, buyer competition (or months of inventory) and local list-to-sell percentages.  These are all basic factors about buying a home.  Determine your top priorities - and I do like to remind people that priorities can change as they become familiar with their actual buyer environment.  Knowing the neighborhood may mean knocking on doors to see the people to ask their opinions--a Realtor can go with you for introductions, but your Realtor cannot tell you information that you need to discover personally, if this is important to you. Taking time to order and review property reports, and review transaction documents are essential to homeowner happiness.


There will probably not be a perfect home, but the list of dissatisfactory items will be much shorter the more conscious the buyer is, and the more thought put into, about the home choice.  Not only does this extra work reduce later buyer remorse, but it reduces anxiety.  Prior education, in my opinion, reduces unrealistic expectations and produces more long-term satisfaction.  Going over the buyer/seller contract may seem very dry in the beginning before the home search, but there may be much later reward in owner satisfaction! Taking the time to discuss your opinions of homes you've viewed with the Realtor helps your agent help you.  Realtors know what size bathrooms and closets you can probably expect with a certain age of house, in a given area--most Cerritos homes are more contemporary in style than the majority of Long Beach neighborhoods which date from earlier eras.  This kind of discussion can help you judge if you should change a priority or not. 

Buying a home is a significant purchase, it should be accompanied by a corresponding understanding.

A Few Facts About the California 2016 Housing Market

Every fall a comprehensive report comes out by the California Association of Realtors assessing the current year's activity and projections for the next year.  The second slide shows prior years selling prices and percent change from prior year, interest rates, and affordability indices.

Interestingly, when asked "Which of the following is your dream home?", 32 percent of those surveyed want a Craftsman bungalow, getting the highest number of votes.  Perhaps that's not surprising when you, the audience member, look at the settings for numerous TV shows and home advertisements, i.e., "Blue Bloods" for one. Craftsman homes have lots of wood, warmth and old-fashioned craftsmanship plus a feeling of years of established family ownership in practically all cities in the U.S.

Certainly in Long Beach there are several neighborhoods in which to find one.  But, what does it take to own one?  From 2010, the CA median house price has risen from $305,000 to the current $476,000, and up to a projected $491,000 for 2016.  The good news for buyers is that the rate of increase is slowing to a projected 3.2% increase for next year.  But the other news for buyers is that, as early as December, we may receive the long awaited news about an interest rate increase--already anticipated in the financial markets.  So the rates under 4% for so long are likely to be up to 4.5% next year.  Sales volume is still expected to go higher, hopefully a release from the long-depressed inventory.

Using statewide medians, that 2015 median priced home at $476,000 is probably going to be about $15,000 higher, and the interest rates will be about .5% higher.  Looking at principal and interest only, a mortgage payment could go from $1796.11 (20% down, SP $476,000, 3.99%) to $1990.26 per month for a 2016 $491,000 house at 4.5% interest with same assumptions.

For buyers who do not know any other market except the current very low interest one, this may seem like very foreign territory.  But it's still not such a bad time to buy.

Too see the entire CAR 2016 report in pdf format, click here or see below in ScribD

2016 California Economic Market Forecast

How Much Can You Rely on Automated Home Value Widgets?

Have you looked for a new car lately?  If you're like me, you checked out everything you could find on the internet before you ever went to a dealership for a test drive. 

The websites have interior and exterior 360 degree photos, closeups, zoom capability, video, and even the actual car price, which we equate with value. That's something we love, knowing the price, not the one we have to haggle over. You get everything on the internet except the new car smell--minus one more thing, the actual driving experience.

It's the same with house listings, there's so much available information on numerous sites, and the photos often make them look so attractive that you might think you want that one .  But unlike a car, a house price reflects many more "moving parts", condition, location, upgrades, additions, deferred maintenance, permits or lack thereof, remodel, the immediate surroundings, earthquake zones, flood zones, and much more.  And like buying a car, you really have to be there to see for yourself. The asking price could be very different from value when all is said and done with negotiations and the appraisal.

So what does this mean for AVMs (automated valuation models) such as Zillow and its "Zestimates", and other valuation widgets found on many home search sites?  It means that they are tools, rather general tools, but like driving the car and seeing the house, you have to be there. AVMs can't judge the condition of the house, or know how many prior water damage claims were submitted on it, or check the unpermitted rooms, or see if there are title defects which will prevent mortgage financing.  Zillow values are calculated on public records (strictly data oriented) and user submitted data points (selective pool of information).  By the time a given property is negotiated through buyer/seller agreements, the value may be off by as much as 30% from a Zillow estimate.   Zillow's CEO recently sold his house:

     To see a Zestimate at work, consider the fact that in July of this year Zillow Group CEO Spencer Rascoff listed his four-bedroom home in Seattle, Washington, for $1.295 million. At the time, the Zillow Zestimate valued the home at about $1.39 million. That’s over 7% higher than the list price, but within the Zillow median margin of error.
     Gordon Stephenson, the listing agent for Rascoff, told industry publication Inman that Zillow probably overestimated the value of Rascoff’s home because “its algorithm might not have accounted for the home’s unique floor plan.”  Christian Science Monitor, November 14, 2015.

When an appraiser performs his/her job during escrow, an AVM is not a part of the process. When a Realtor helps a seller or buyer established listing or offer price, knowledge of appraisal parameters may be used along with knowledge of recent sales and individualized comparisons to other properties. 
Algorithms and weights assigned to data can be educational up to a point, depending on what properties get caught in the AVM's net, but when a buyer sees multiple houses combined with knowledge of area sales, the reasons for the final result become known. 
So automated robotic prices are fun to look at and may help educate on overall price range for a given area, but they are not a substitute for a complete home price determination.

See the complete Christian Science Monitor article.

Signal Hill's Skyline Estates Dream Home with World-Class Views!

Home on Sea Ridge

This desirable highly sought after home is located in the Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 

View towards San Pedro

Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round. 

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS# PW15230654

View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609. CA Lic. 01188996

Listing Broker:  Boardwalk Properties

Congress Still May Tax Mortgages to Pay for Highways

The real estate industry and those purchasing or selling residential properties are often the focus/target of politicians looking for a vehicle for passing a law. They don't always get passed, fortunately, so the general public is usually not aware. However, the following bill is still in the works, and is a good example of another attempt to get, in this case homeowners, to pay more money for something which should be funded by the entire public, assuming it is truly needed:

 Back in July the U.S. Senate passed a long-term Transportation funding bill that includes a tax on mortgages to pay for the construction of highways. To make it more palatable to Republican lawmakers, this tax has been disguised as a “fee.” This tax isn’t small potatoes either.

On a median priced home in California ($489,560), homeowners could pay over $8,000 for this tax.

While the Senate has passed its version of the long-term Transportation bill, the House has merely passed a short-term version to keep the federal Transportation Department open. The House plans to pass its own version sometime this fall, but there’s no guarantee that this new tax won’t be included in that version. The California Association of REALTORS® is actively opposing this approach to paying for the highway bill and is encouraging the public to get involved.

People are urged to visit www.nomortgagetax.org and go to the “Take Action” tab to send a personal message to Congress to oppose the tax. The public can also get updates on Facebook at www.facebook.com/no.mortgage.tax or follow the campaign on Twitter™ at @NoMortgTax.

Under current law, a portion of every conforming loan, (those backed by Fannie Mae and Freddie Mac) includes a fee used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called guarantee fees (or g-fees). In 2011 Congress added on an additional.1% increase on the interest rate of every Fannie and Freddie mortgage to fund a six month extension of unemployment benefits. That “add on” was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.

The U.S. Senate’s highway bill extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced home of $489,560 using a typical conforming loan with a 20% down payment will pay an additional $8,100. This figure is sure to rise with an increase in sales prices.

You can contact your representative (go to the website above) to register your opinion on this.