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.

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. In Marin County, to take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

For more information, call me at 415.302.7787 right away. Cheers!

Don’t miss this: Take $6,500 to $8,000 off your Federal income tax

First time homebuyer? Trading up? Uncle Sam is here to help. Seriously.

You can reduce your taxes by buying a house this year. But you better hurry. First-time homebuyers who qualify can subtract up to $8,000 from their income tax, and homeowners who buy another residence can cut their taxes by up to $6,500. The Worker, Homeownership, and Business Assistance Act of 2009 has established these tax credits, which have been extended until June 30, 2010.

Generally, if you’ve lived in and owned your current residence for at least five consecutive years and you choose to buy another residence you can take up to $6,500 off your taxes. Likewise, if you haven’t owned your own home before you can deduct as much as $8,000. And if you don’t owe that much in taxes, the government will send you a check for the difference. But you need to hurry, because in order to qualify, you must be in contract by April 30, and close no later than June 30. And, yes, you can use the credit as part of your downpayment. There are maximum limits on the price of the homes, and other qualifying criteria, but most Marin homes sold today will qualify.

Call me at 415.302.7787 or mail me at jmclaughlin@fhallen.com for more information, or Go here. Cheers! Jack

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.

Marin Real Estate Report, Trophy Sales Edition

In our continuing efforts to offer only the most critical real estate market data and advice, we bring you Part 3 in our five-part series about the fanciest homes to be acquired last year in Marvelous Marin County. Our Countdown number three priciest property of 2009 is a snug cottage tucked atop a hillside near Tiburon. It includes such essentials as twelve foot ceilings and a foyer you can park your Winnebago in. Six bedrooms and the requisite San Francisco skyline views, of course. Considering the original asking price was $10.5 Million back in 2008, clearly it was a steal at only $9 Million.

3 Rolling Hills Road Tiburon Asking Price: $10,500,000

Single Family
Bedrooms: 6                     Selling Price: $9,000,000
Baths F/H: 8                     Days on the Market: 312/312
Total Rooms: 15             Year Built: 2008
Approx SF: 7475          APN: 058-141-19
Lot SF/Ac: 29272
________________________________________ General Information ________________________________________

Broker’s Remarks: New, world-class, 6 bedroom, 8 bath, gated estate scheduled for completion March 2nd. This is one of Tiburon’s premier lots with sweeping views of San Francisco, Golden Gate Bridge, Angel Island and Mount Tamalpais. The home features an infinity pool, spa/gym, theater,and game room. Architectural details include ten to twelve foot ceilings, a 24 ft tall entry, radiant heat, and an elevator.

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.