It is a buyers/sellers market in Uptown. So how can that be?

It is a buyer’s market in that prices are 13 per cent lower in the past three months than during the same period a year ago. Median prices are down from an average of $588,000 to $513,771 when combining the zip codes, 92104, 92103 and 92106. The median number is the middle number in a range of numbers.

It is a seller’s market because single family homes stay on the market no more than 51 days in Uptown. That means a very low inventory of available homes for sale. If you want to sell your home, you can sell it in a flash, especially if the price is below $600,000.

How to buy a home in Uptown? Be well qualified. Bring cash or at least 20 per cent down. Listings have to be checked every day as multiple offers abound on every home, especially if it is under $500,000. You have to be ready to look and act immediately.

How to sell your home? The key to selling a home is marketing. Use a broker who can give you excellent advice on how to stage a home and then how to market it. Even the photographer used to photograph your home makes a difference in the buyers it draws and the ultimate amount you will net on the sale of your home.

Uptown single family homes are a superb investment. There is limited supply with no place to build but up. There is a huge demand. Prices in San Diego have historically doubled every 10 years. And you can’t beat the appreciation on these homes when you put 20 per cent down, but earn appreciation on 100 per cent of the value of your home.

First time homeowners have been getting an $8000 tax credit since January as part of the economic stimulus package enacted earlier in 2009.

This tax credit, scheduled to expire at the end of November, has been extended until April of 2010.

A whole new group of homeowners, those who have owned their homes for at least five years, will get a $6,500 tax break under the new federal program.

“This is expected to be the last extension of the history-making tax credits, geared to stimulate the housing industry and the economy, according to Congressman Johnny Isakson, R-Ga., a former real estate executive who championed the proposal,” quotes the Associated Press.

Here are some of the provisions of the program:

• For both tax breaks a home must be purchased by April 30, 2010 and close by June 30.
• The credits are available for those buying primary homes, condos or townhouses under $800,000. Vacation homes and investment property are not eligible.
• The credit would be extended to military families serving outside of the U.S. for at least 90 days, until June 30, 2011.
• The credit would be phased out for individuals making greater than $125,000 or $225,000 combined. Under the previous plan, the full credit was given to taxpayers making $75,000 or $150,000 combined. There was a sliding scale of credit given to taxpayers who earned more than that.
• “Refundable” means that if you owe no tax, you would get $8,000 back for the first-time program. If you owe $1000 in taxes, you would get $7000 back. Our clients tell us the tax credit comes back very soon after filing for it.
• If the new home is owned less than three years, the credit must be repaid.
• We are not tax professionals and encourage you to contact your tax professional or tax attorney to see how these tax credits affect you.

We’re helping lots of first-time homebuyers make the most of these programs!

San Diego has lots of amazing opportunities for first-time homebuyers including affordable prices and low interest rates. Combined with the Tax Credit programs, things have never been better! We’d love to show you how easy and affordable it can be to buy a home of your own; contact us today!

The San Diego median housing price has inched up every month since April.

According to DataQuick, following are the Median prices for all homes starting in April 09.
March $285,000
April $290,000
May $295,000
June $314,000
July $320,000

What is driving the market up slowly is the sale of foreclosures in the lower price ranges that continue to dominate the market. Homeowners continue to go into default, and there is continuing debate about how fast the foreclosures are being released by the banks.

I have been hearing in real estate circles that the banks are holding on to foreclosures, releasing them slowly to keep prices from crashing. The story goes that a flood of foreclosures will hit the market. The problem is that I have heard this rumor for more than six months, and the foreclosures continue to drip onto the market. Will the flood come—who knows?

There is a huge volume of buyers in the low-end price range. However, many of their offers don’t get accepted as banks are more likely to accept the all-cash offers being made by investors. Also, first time buyers in the low-end price range often lack the sophistication to listen to their realtors about what to offer. They tend to think there are good deals out there and offer a low-ball price. Then the investors come in with a slightly higher price—all cash—and the homes are gone. Additionally, banks will accept a slightly lower all cash offer as they see it most likely to close.

Another tendency for some first time homebuyers is to be unrealistic about what one can get for whatever amount they have to spend. Some will not pay attention to what comparable homes to the ones they want sell for and insist that they want to make low ball offers because they think they should be able to get that home because it is what they want. They don’t appreciate the long-time practice of buying what they can afford, gaining equity in a home, and then moving up to a more expensive, more desirable home later.

One agent told me she worked for a foreclosure sales company and did open houses in the low end homes to attract buyer clients. She did open houses on the low cost homes, picked up 80 buyers, but did not close with any of them because the buyers refused to offer enough to make their offers attractive. There is a distrust of realtors with many first time buyers who think they are recommending solid offers because they just want to sell a house. Or they think that since there is a lot of data on the internet—often faulty—that they know better.

The truth is, to compete with cash-laden investors, buyers have to offer a decent price. The banks who are selling the homes are wary about first time buyers whose loans often don’t go through in the current very difficult loan market. My experience with those underwriting loans has been that underwriters are getting scared of losing their jobs and coming up with more and more borrower requirements at the end of the process.

The banks are even more frustrating in dealing with short sales. There was a promise that they would be timely in dealing with short sales, but those of us dealing with short sales are not seeing that happen.
I have one short sale going with Chase which picked up the Wamu loans after acquiring it, and they are just sitting on a perfectly good offer. I cannot contact a negotiator directly; one simply gets a customer service person who says they are evaluating it. One colleague told me that dealing with Bank of America, which picked up Countrywide loans, is like dealing with the Bermuda Triangle.

The prices of move-up homes and luxury homes are increasing modestly, according to an article in Business Week. This is a very good sign because in the end, the middle and upper market needs to move up for a housing recovery. However, a quick look at median prices of luxury homes is that they are not increasing in price in San Diego. There is a prediction in real estate circles that move-up and luxury foreclosures will hit the market, further dipping prices. Given all the rumors going around by so-called experts, that is yet to be seen.

Fewer foreclosures and limited inventory continue to fuel the rise of San Diego County median real estate prices to increase for the third straight month. Analysts are cautiously seeing this as a possible indicator that the housing market may be leading San Diego County out of the recession.

San Diego County's median home price rose for the third consecutive month in June, hitting $314,250, the highest figure since October, and raising hopes that the ailing housing market finally may be on the mend, according to real estate analysis firm Dataquick.

The June median home price was a 6.5 percent increase over May but still 15 percent below June 2008, DataQuick reports. The median is the midpoint of all sales, with half above and half below that figure.

DataQuick reported that median price for resale houses in June was $350,000, a 7.7 percent increase from May but a 13.6 drop from one year ago. The median price for resale condos was $210,000, a 5.5 percent increase from the previous month but a 19 percent drop year over year.

A 90-day moratorium on foreclosures in California has been implemented by California legislators today, according to “The Truth About Mortgage.” As a result of a bill enacted in the state legislature, lenders will either need to renegotiate a loan or provide 90 days’ notice before foreclosing on a property.

I think the legislature has good intentions, but this will probably drag out foreclosures a bit longer. Many borrowers are so far underwater that renegotiating is unlikely. Many borrowers have just given up, but they will be able to remain in their homes 90 more days, delaying the pain for a quarter.

On a similar note, Equifax reports that mortgage delinquencies may have peaked. About 7 per cent of borrowers were a month late on their mortgages last month, a staggering 58 per cent higher than this time last year but just 1.3 per cent higher than April. Despite this good sign, there are a number of loans scheduled to adjust upward in the next few years. This could mean a rocky road in the housing market for the next few years—bad for those losing their homes and good for first time buyers.

San Diego real estate prices have risen 6.4 percent over April 2009. We have been seeing multiple offers on most everything that is reasonably priced for some months. This increased demand and low inventory has resulted in higher prices. This rise has been fueled by record low interest rates, the $8,000 federal tax credit for first time buyers, and relatively low home prices.

Home prices are now are at 2003-2004 levels, just before the 2006-2006 bubble and moving upward, making San Diego an excellent long term investment. Even at today’s lower prices, real estate has doubled in the last ten years. Even the sales of new homes have increased 2.4 per cent, bringing much confidence to builders.

The bottom line is that there is a dearth of single family homes in San Diego’s Central and beach areas, and little room to build. Therefore, the values of single family homes will soar, making them the best long-term investment.

Some tidbits from “The Truth About Mortgage.com” Fiftyfive per cent of Americans are interested in buying a foreclosed home, according to Trulia. The California Association of Realtors reports that is an increase of 46 percent from last year.

Unfortunately, prospective buyers expect to pay 50 percent less for a foreclosed home, which is not the case. One can expect a good deal, but not that much of one. The market is sorely in need of more foreclosures and regularly listed homes.

FHA loans, which require only a 3.5 percent down payment, have increased 169 per cent in the first half of 2009. Buy a home with that little down.

A tip from Bright Star Realty: If you have been holding off in selling your home, this is the perfect window of time to do so. Many folks are ready to buy and can’t find enough homes to satisfy their demand. By listing your home at a fair market price, the home seller is likely to get many, many offers. Take advantage of a seller’s market. Call us.

Home sales are up 43 percent in April 2009 over last year, according to DataQuick, which tracks home sales in San Diego. It also reported that home prices have remained flat for the last three months. Most sales are in the bottom end of the market, but sales of middle and higher end homes are picking up a bit.

My experience, and that of many Realtors, is that inventory is very low out there with multiple offers on all reasonably priced homes in the low to middle price ranges.

DataQuick reports that home inventory would take 4.9 months to sell. Six months’ inventory is considered a healthy balance between buyers’ and sellers’ needs.

Many of us believe that inventory is, in actuality, much less, as many of the homes on the market are short sales which sell very slowly or not at all.

So you want to refinance and you don’t have much equity in your home? The Homeowner Affordable and Stability Plan (HASP) enacted by President Obama in February 2009 may be the answer for you.

We have found that many of our clients would like to take advantage of today’s historically low interest rates because home prices have dropped, leaving them with very little equity in their homes. To be safe, lenders like to see 20 percent equity in a home to refinance. For example, they would want a home with an $80,000 loan be worth at least $100,000. Then if prices continued to decline, they would be safer in their investment in your home.

What HASP does is allow refinances on loans owned or guaranteed by Fannie Mae that are up to 105 percent of the home value.

Normally, loans with under 20 percent equity are covered by Mortgage Insurance that covers lenders if homes with little equity default. Mortgage insurance is either paid monthly by the borrower or is included in a slightly higher loan interest rate.

One cool thing about this program is that the borrower does not have to have mortgage insurance to refinance if it already does not have mortgage insurance, and one only needs a credit score of 620.

Second homes and investment properties are also eligible for this program. One catch to all of this program only applies to loans of $417,000 and below. This is a problem in San Diego as many adjustable loans on higher priced houses are coming due and they will be difficult to refinance.

If you think you might qualify for this program, please give us a call so that we can check to see whether you loan is owned or guaranteed by Fannie Mae. This may be a way to reduce your monthly payments by getting you into a mortgage with a lower interest rate.

Jumbo Loans need help.

Interest rates on jumbo loans are a huge problem these days. It is kind of a crazy thing that lenders would rather give lower interest rates on two $400,000 homes than on one $800,000 home. Jumbo loans are generally above $417,000 and sometimes higher in San Diego.

What is crazy about it is that most people who qualify for an $800,000 loan have much higher net worth and resources than someone who would qualify for a $400,000. In my mind, the $400,000 loans are riskier, and, in fact, loans below $417,000 have defaulted more than the high priced loans. Yet the higher priced housing market (huge in San Diego) is stagnant because lenders refuse to lower jumbo rates.

It is true that we are starting to see more short sales and foreclosures in higher priced homes as many adjustable rates set in 2005 and 2006 are coming due. But they never will be up to the scads of foreclosures we have seen in the lower priced markets.

So if the housing market is to fully recover in San Diego, it is essential that lenders lower jumbo rates.

Short sales happen when home loans are worth more than the market value of a home. Some estimates are that at least 30 per cent of homeowners in San Diego owe more for than their home is worth. These are homeowners who bought at the top of the market in ’05 or ’06 or who refinanced their homes in that period when sales prices were at a peak.

With a short sale, the seller puts their home on the market for a price lower than what they owe. They then ask their lender to allow them to sell their home at this lower price, with the lender accepting the current (lower) market price and writes off the rest of the loan.

A preponderance of available homes for sale in the San Diego market are short sales. According to the San Diego County Assessor, only about 25 percent of these homes close as short sales. About 75 percent of short sales eventually become foreclosures and sell as such. This is because the process lenders have for dealing with short sales is cumbersome, time consuming and often ineffective. Also, there are so many short sales that most lenders are not set up to handle them; therefore the process goes very slowly. The irony is that if the lenders responded to short sale offers more effectively and avoided foreclosures, they would save money in a number of ways. They would be rid of the non-paying home mortgages sooner, and short sale homes with someone living in them often are in better condition than foreclosures.

Another factor is that even though 25 per cent of short sales close as short sales, there are always multiple offers on them. Many of the prospective buyers though find another home before the short sale concludes and therefore drop out of the competition for the short sale homes.

According to the National Association of Realtor’s President Obama’s administration has put in new incentives and procedures under it’s new Foreclosure Alternatives Program (FAP) to encourage lenders to address and process short sales. These include $1,000 to lenders for completing a short sale in lieu of foreclosure, $1,500 to borrowers for moving/relocation costs and up to $1,000 to help lenders pay off junior lien holders (lenders who are in secondary positions on their homes.)

Lenders must give eligible homeowners at least 90 days to sell their home, and lenders are allowed to settle the debt by acquiring the home without foreclosure. Borrowers must met the minimum FAP standards set under the program for homeowners who are not behind in their payments to modify their loans. The program is in place through 2012.

Apparently, the HUD Secretary Shaun Donovan was just kidding. Three days after he said the $8,000 tax credit could be used for a downpayment for a home, he said it would not be allowed—at least for the time being.

Speculation is that he might have changed his mind because of the risk involved. Currently, the FHA insures loans with a 3 ½ per cent down payment. That has turned out to be a risky move in the past, when seller funded downpayments were allowed by the FHA. This essentially meant nothing down, and buyers were more likely to walk away from a home with no downpayment investment.

Last summer FHA commissioner Brian D. Montgomery said the FHA anticipated $4.6 billion in unplanned losses due to these seller funded downpayments.

The words from the HUD secretary is not official, but for now at least using the tax credit for a downpayment is not allowed.

Source: The Truth About Mortgage.com

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

"We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment," Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at "The Real Estate Summit: Advancing the U.S. Economy," at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Stay tuned to this website for more details of implementation of this plan.

Source: NAR

The San Diego housing market prices are rising. A client just put in an offer for a small home North of Adams in Normal Heights, and there were 12 offers in three days. To be competitive we had to go above the price comparable properties sold for in the last three month.

Basically, a house is worth whatever a person is willing to pay for it. When there is a high demand for properties and short supply, prices increase. When there is a low demand and large supply of homes, prices go down. However, most people are only willing to pay current market value for a home—not more or less.

There actually is a shortage of homes in the low to median prices areas. The shortage of homes exists because many people’s mortgages are higher than their houses are worth after the recent price decreases. Therefore, most people don’t sell their homes and move unless they have to (in case of death, divorce, job relocation). So there is a shortage of available homes.
Foreclosures have come onto the market, mostly in the low to middle price range. Currently, there are multiple offers on these homes and people are starting to bid these homes up to higher prices. People understand the $8000 tax credit for first time homebuyers is only good through November, and people seem to sense we are at a price bottom for now.

The moral of this story is if you want to get into a home in the San Diego market at reasonably low prices, this is the time.

This morning’s news showed Moody’s Economy.com stating that the San Diego real estate market has not hit bottom. That is not my experience on low priced houses in San Diego’s South Bay and the cities just East of San Diego.

The current urban legend from those working in the REO (real estate owned by banks) industry is that banks are releasing homes onto the real estate market slowly to keep prices from bottoming further. And I do see foreclosures being released every week. And as homes in the $200,000 and under range are released to the market, multiple offers are generated in a weekend—sometimes as many as a dozen. We are starting to see a bidding war on homes in this price range. And with the law of supply and demand, one would expect to see prices rise.

In fact, San Diego area prices are creeping up slowly. Zillow reports an increase of 2.3 per cent since March. What is keeping them from rising as this normally when demand increases is pressure on appraisers to keep prices down. For some time now, appraisers have been expected to consider the declining market in their evaluations of home values. Even though appraisers are licensed, lenders making loans on homes are second guessing them by doing value audits of appraisals to assure they are not too high.

I believe this is having a dampening effect on what would be the natural rise of real estate prices as more people are in the market to buy, at least on the lower end of the market. I talk to listing agents who are getting multiple offers above the asking price but fear that the appraisers won’t appraise them at these price, as they are acting very conservatively in terms of appraisals.

This is a natural reaction to the excesses in 2005 and 2006 when unscrupulous appraisers would appraise homes for anything that would be proposed. But now I believe it is time for appraisers to allow the free market to work and allow prices to rise as they will. The stimulus of an $8,000 tax credit and available FHA loans with as little as 3.5 per cent down is working. So appraisers, let the stimulus work! People in this country have lost billions of value in their homes. If the market naturally rises, let it!

The IRS is willing to give you a tax credit of 10 per cent of your home price or $8,000, whichever is lower. To qualify, you have to be a first time homebuyer. That means you can’t have owned a home in the last three years and don’t make more than $75,000 a year or $150,000 combined. Click here for more detailed information. See your tax advisor for how this affects you.