Can Everybody Take a Deep Breath? Please?

The venerable NYT made it official yesterday – this is the worst real estate market since the Great Flood. Sales are spiraling down, prices are cratering nationwide. Can another recession dip be far off? Yahoo echoes the vibe today, and if you really want to get a look at the dark inner workings of the American mind, scroll down to the accompanying comments. All 45,000 of them, as of this writing. Yeck!

We don’t know where they get their numbers, but let’s assume that they’re accurate for the U.S. as a whole. But wait! Last time we looked, real estate was still a local business. This is not Tampa or Las Vegas, after all. Or is it?

We checked the MLS, our private site where brokers share all listing and sales data, and compared Marin sales year on year for July. Included are all condo and single-family home sales above $50k, to avoid getting rental data. Results below.

Compared: July ’09 and July ’10

We’ve actually sold a few more homes, for about nine percent more than July a year ago. While these numbers are far lower than the high flying days of 2006, say, we think they reflect a more or less normal market. Healthy, even. And in July this year, 25% sold in the first 30 days they were listed, as compared to 15% in July of ’09, indicating stronger demand coupled with more realistic pricing.

And remember, buyers rushed to close escrow before june 30 to take advantage of the Federal Tax Credit, so homes that normally would have closed in July were squeezed into June.

If you want specific information about your home or neighborhood, give me a shout. And don’t believe everything you see in the news.

How to buy a foreclosure in Marin

Many buyers, especially first-timers, hope to purchase a foreclosed property at a bargain price, according to CNN Money.  While purchasing a foreclosed home can be a wise choice for some buyers, it is important that buyers understand the differences in buying at different stages of foreclosure and be prepared to take on the challenges typically associated with each.

• There are three basic stages of foreclosure in California: Pre-foreclosure, trustee’s sale, and repossession, often called an REO or real estate owned by the bank.
• Pre-foreclosure homes are in the foreclosure process, but have not yet been auctioned.  Owners of pre-foreclosed homes often try to sell the properties because they are “underwater,” meaning they owe more on the mortgage than the home currently is worth.  Many homeowners attempt to sell via short sale, where the lender must agree to accept less than the amount owed on the mortgage.  Buying at this stage of foreclosure often is a complicated and slow process. However, buyers of pre-foreclosed properties often are given the opportunity to inspect the home prior to purchasing, whereas this is not always the case when buying at other stages of foreclosures.
• The second basic stage of foreclosure is the public auction at a trustee’s or foreclosure sale.  Homes in this stage often are well priced, but also come with challenges to buy.  These homes may not be available for inspection and buyers may later discover the property needs numerous repairs.  As a result, many of the homes at auction are purchased by investors and contractors who have experience working with homes needing numerous repairs, or taken back as REO by the foreclosing lenders.
• If a home does not sell to a third party at the trustee’s auction, the bank takes the property–the final stage of the foreclosure process. Although homes in this stage typically do not offer buyers the best prices, buyers generally can perform a thorough inspection of the property prior to closing.

People we know who have been on the Marin County Courthouse steps for years tell us that many “newbies” have jumped in, and prices are being pushed up to the point where bargains are scarce now. To get the full story, Call Me or please click here.

Has Your Marin House Value Gone Up or Down? POLL Results

Last week we asked you,  our blog and Twitter folk, whether you thought your house value is going up or down. Below is a chart of your responses, along with your comments.

Your Comments:

“It is holding its own, with perhaps a drop. Doesn’t matter to me, because I’m not moving any time soon. Kentfield will continue to be strong, due to location and schools. It’s part of the Gold Coast and will maintain its value over time.”	virtualtruth
“Live in Forest Knolls; I can recall only five houses sold in canyon area. I don’t believe many are putting their house on the market with an uncertain future looms.”	Anonymous
“Owned the house since 1989… in my opinion value peaked in 2006….”	cg
“AND I don’t want to know!”	pc
“Just guessing here…”	altjl

Thanks to all of you who took a few minutes to complete our POLL and leave your comments. To some degree, we are all just guessing. This morning I was startled to learn that nearly 40% of the homes and condos on the Marin market today are in escrow, with accepted offers. Now that the holidays are over, maybe we will begin to see a bit more inventory – the buyers are certainly out there looking. If you are thinking of selling, call me now because this may be as good as it gets this year. Buyers? As we work out of the stormy season we will begin to see lots more homes to choose from. Now’s the time to start searching, so you can make an informed decision when the right place comes up. What are you thinking?

At-risk FHA Borrowers in Marin Will Receive Early Relief Assistance

Homeowners with loans insured by the Federal Housing Administration (FHA), including those in Marin County, experiencing financial hardship now are eligible for loss mitigation assistance prior to defaulting on their mortgage, the Dept. of Housing and Urban Development announced Friday. Previously, borrowers with FHA-insured loans were not eligible for such assistance until after they had missed payments.

FHA also issued guidance to FHA-approved loan servicers on how to assist FHA borrowers who are facing “imminent default,” defined as an FHA borrower who is current or less than 30 days past due on the mortgage obligation and is experiencing a significant reduction in income or some other hardship that will prevent him or her from making the next required payment on the mortgage during the month that it is due. Unfortunately, in this economic climate, that includes more and more of us in Marin County.

To become eligible, borrowers must be able to document the cause of the imminent default which may include, but is not limited to, a reduction in, or loss of, income that was supporting the mortgage; or a change in household financial circumstances.

Loan servicers must document the basis for its determination that a payment default is imminent and retain all documentation used to reach its conclusion. The servicer’s documentation must also include information on the borrower’s financial condition. Not yet known is how this will affect the creditworthiness of the borrower. Call me for further information, 415.302.7787. Cheers!

Survey Results Are In

On Monday we sent a survey out to you, our Marin Report and Twitter followers, asking What do you think is the main reason that people hesitate to buy a home today? Here’s what you had to say.

Other responses:

“All of the above. new day, new economy. everyone is stuck.”
“Waiting for the bottom”
“Kid going to college”
“Not ready to take on a 2nd mortgage.”

Comments:

“Homes, like castles, are several fold too expensive for most people -even relatively well to do people. My first home cost me $47K, your articles discusses homes which cost 30X as much. Just too expensive relative to income and savings.” Dr. Gordon

“The loan modification programs are absolutely not happening. everyone is stuck at their present loan. we need to do a national reset of all mortgages at 4% and to present values. this is the only way to get the housing market moving. all in or all out.”

“I think the hesitation is for a number of reasons, prime example is the number of hoops people have to jump through to get a mortgage, in addition to what it takes to qualify and the lack of income on investment is also a problem. Thanks for asking!”

“Regarding the condos, I believe their HOA fees are too high and the value is less than the fee. Add to that, the ability of the HOA board to require owners to come up with exorbitant sums to pay for painting or roofing, which should have been covered by the monthly fee all along. Who is getting the money here? And who wants to add on $400-600 extra per month on top of mortgage payments? Needs more transparancy and accountability!”

“Bankers, in a rush to beat the new credit card rules have closed credit card accounts or severely lowered available credit on many customers. This has, no doubt, lowered credit scores, making it almost impossible now to qualify for a jumbo loan.”

We will discuss these items in future posts. Thanks for taking our POLL.

Top 5 Trophy Sales of 2009 for Marin County

Recession? Market crash? Job loss? For you and me, certainly. For the buyers of these luxury homes, not so much. Here, for your amusement, or amazement, are the five most expensive home sales of 2009, along with our mostly respectful comments, and a minimum of snark.

For #5, we visit the fog-kissed hills of exclusive Tiburon, where, “paying tribute to European elegance” is apropos, of course. This 7,000 square foot “Gold Coast” home on 1.25, first listed for $8,500,000 sold for $7,500,000, elevator included.

140 Antonette Drive

Tiburon

List Price:

$8,500,000

Additional Pictures

Public Remarks: Contemporary, while paying tribute to European elegance, this spectacular view property represents a rare opportunity to acquire a home of significant architectural stature. Magnificent park-like grounds. Recently compltd w/state-of-the-art technology (inc. elevator), this home offers a formal floor plan combined with California comfort to insure year rnd indr/ outdr living. A private sanctuary on 1/1/4 acres w/incredible water & bridge views.

Selling Price:

$7,500,000

Treasury Gives Fanny, Freddie Blank Check

In light of what many view as the failure of their Foreclosure Alternatives Program (FAP), the U.S. Treasury  announced on Christmas Eve that it was removing  limits on federal financial aid for Fannie Mae and Freddie Mac, the companies which were seized by the government in September 2008 amid mounting mortgage losses. Restrictions had capped aid at $200 billion for each firm: Freddie  has tapped $51 billion and Fannie has used $60 billion to date.

The government said it was removing the caps to “leave no uncertainty about the Treasury’s commitment to support these firms as they continue to play a vital role in the housing market during this current crisis.”

This helps the Marin property owners in at least three ways:

1.  Now that these companies are fully backed, without condition, by the U.S. government, which controls 70% of each firm, the companies can borrow at the most favorable rates. After all, with the Federal security net, there is no risk to a lender. Freddie and Fanny can then make mortgages at lower rates. Ergo, cheaper mortgages for buyers.

2.  The Treasury, by now permitting Freddie and Fannie to retain larger mortgage-asset portfolios, will allow them to provide more significant loan modification assistance to greater numbers of seriously troubled Marin borrowers.

3.  Most important, they will reduce the principal amount owed by borrowers who are delinquent or upside down, something not permitted until now. While some mortgage companies had reduced interest rates to lower payments for delinquent borrowers, none had been willing to reduce the principal owed. Owners who have equity in their home will be less likely to walk away or allow the home to go into default.

What next, Jumbo Loans?

For more details, or if I can help in any way, call Jack now at 415.300.0432

Visualizing the Effect of Tax Credits

Guest blog from Altos Research

Ah the glorious Home Buyer Tax Credit. Consumers lust for it, and NAR spent a fortune getting it extended. Realtors are indeed finding it a valuable incentive for business this year.

40 Largets Metros, by price quartile. Days on Market and Absorption Rate. 90-day Rolling Average, single family homes. (Click for full image)

And housing stimulus goes beyond the tax credit too, the feds are pumping money into mortgages, keeping rates on conforming loans ridiculously low.

But Uncle Sam doesn’t do jumbos.  And while eight grand makes a big impact on a $150,000 home. For a $750,000 home, not so much. Besides, if I can’t get a jumbo loan, who’s going to use it anyway? So all the money is aimed at the entry points in the market.

All sounds good, I suppose. But is it working? Maybe too well. In city after city, housing demand is active at the entry level and dry everywhere else.

Check it out. This chart shows the 40 largest metro markets in the US, each divided into four price range quartiles. We looked at the Days on Market and Absorption Rate for each. (note: the absorbed stat is measured as of last Friday and is not exactly a count of everything “sold”, closings take a while, contracts fall through. The actual sold won’t be known for a few months, so this number is close enough.) Red is bad relative to the whole country. Green is good. Click through to get the full chart.

Notice that in almost every single metro housing demand, as indicated by higher absorption rates and lower time on market, is significantly more active  in the bottom price quartile (4) and gets weaker as you climb the price range.

As a result of all these goodies, the US Housing market is now like the retailer with a predictable clearance-sale schedule. No one wants to buy at regular prices. I can wait till Boxing Day.

More reading on the tax credit and how Realtors should get it while it’s hot.

Home Buyers Tax Credit Extended, Expanded

More good news for Marin consumers and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers.  We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Call me for further information, 415.300.0432. Cheers! Jack

How to Save Big Bucks NOW on Your Marin Property Tax Bill

The Upside of a Down Market

Home process sliding in your neighborhood? Just received a shocking tax bill from the county? Do what many of my clients are doing, and contest the assessed valuation  of your home (as listed on your tax bill) with the Marin Tax Collector.

Reduce Your Tax Now

Property taxes are ad valorum, or based on the assessed market value of your property. The county uses a formula based on your original purchase price and Prop. 13, then bumps your taxes every year. If you can show that homes similar to yours are selling for less than your assessed value, the tax collector will reduce the amount of tax you owe.

You need to send them a completed Request for Informal Review form and a list of similar properties near your home that have sold recently.  Comparable properties need to be like yours in respect to lot size, square footage, and other improvements.

I’ll run the comparable properties for you from the multiple listing service and send them to you without cost or obligation. But contact me right away – 415.300.0432 or jack@mmsmarin.com – because your request must be received by the County no later than December 31 to reduce this year’s tax. So hurry!