What Did Real Estate Do On Its "Summer Vacation?"

Generally speaking the Bay Area real estate market has seen a bit of a bounce this summer with sales increasing in all categories...in entry level homes and condos up to the high-end market.
National figures showed June with an 11% increase in home sales and the Bay Area seemed to share that trend with July sales up 15% over July 2008. As the number of sold units continues an upward trend, price recovery is a bit of a mixed bag depending on the area. The entry level median price is increasing in all counties, due to very little supply against a healthy demand. The just-under, just-over $1M mark seems to be holding its own, with a few multiple offers out there for the right property in a sought-after community. The higher end properties...over $2M... have, in the past 30 days, seen more activity than at any time this year, but price remains a critical factor as to which properties seeing this activity actually go into contract. The higher the price-point, the more critical it is to have a very attractive list price. Sellers who are selling are very realistic about marketing price, and Buyers who are buying are recognizing good value when they see it, and are taking action swiftly. For cash buyers or those with large down payments, this could be a great time to pick up a bargain in the luxury home market.
Several of our offices are talking about a post Labor Day surge in new listings. The Buyer appetite seems to be there, as long as the listings are priced right. Typically August is the slowest of summer months with vacations taking priority, however this month has seen the best Buyer activity all year long for many offices.

What if Your Mortgage is Sold?

About half of all mortgage loans are sold from one lender to another, usually because the first lender isn't equipped to collect payments, manage escrow accounts, pay taxes and insurance, respond to questions, and prepare payoff statements when the property is sold or refinanced. Some borrowers receive letters in the mail telling them about the sale of their loan a few days after closing, while others may not receive a notice for years.
In the mortgage industry, this is called a “transfer of servicing,” and is a common practice. Borrowers shouldn't be concerned about these changes, as the most lenders transfer their servicing rights. Generally, the selling of a loan from one lender to another is a smooth transition and doesn't impact the borrower....but every so often, there's a misstep by either the loan buyer or the loan seller.
Under the National Affordable Housing Act, when a mortgage loan is sold, the borrower is required to receive a “goodbye” letter from their current servicers at least 15 days before their next payment is due. The letter must state the name, address, and telephone number of the new servicer, the date the old company will stop collecting payments, and the date the new company will start accepting them. But under the 'Helping Families Save Their Homes Act', signed by President Obama on May 20, the new owner of the loan, which may or may not be the servicer, also must notify the borrower of the transfer within 30 days, known as the “hello” letter.
The “hello” letter should outline the same information as the “goodbye” letter sent from the former loan servicing company.
Borrowers should be cautious if they receive a “hello” letter without receiving a “goodbye” letter, as they may be the intended victim of a scam by someone who is hoping to unlawfully receive the monthly mortgage payments. Concerned borrowers should contact their current loan servicer to verify if their loan has been transferred. If it hasn’t, authorities should be notified immediately.
In most cases, a mortgage payment sent to the old servicer automatically will be forwarded to the new servicer for a brief amount of time, typically 60 days. However, if payments are not sent to the correct servicer, they could become lost, and the homeowner may incur late fees....and possibly credit prob ems.

And We Think California Prices are High!

Someone sent me an email featuring this house...really a historic hallway.
It's 9 1/2 feet wide and 42 feet long and is billed as the narrowest house in New York City. But there's nothing small about its asking price: $2.7 million.
Located at 75 1/2 Bedford St. in Greenwich Village, the red brick building was built in 1873, sandwiched between 75 and 77 Bedford.
It's famous for other reasons, too. Corcoran real estate broker Alex Nicholas says anthropologist Margaret Mead and poet Edna St. Vincent Millay once called it home.
The three-story structure boasts plenty of light with large windows in the front and back, and a skylight.
The current owner bought it in 2000 for $1.6 million.
Nicholas says it's a place for someone who wants a little history.

Some Really Useful Websites

My friend Lynn Gross-Cerf who runs Organization...and More shared these helpful sites from Better Homes and Gardens Magazine, and I wanted to pass them on to you. I'm sure that you are familiar with many of these, but some are new:

Novadebt.org – budgeting
Mint.com – tracking were your money is spent
Restaurant.com – discount dining coupons
Entertainment.com – discount dining coupon book
Gasbuddy.com – find the cheapest gas prices
Redplum.com – food shopping coupons
SmartSource.com – food shopping coupons
BHG.com/features/living-green – tips on using home made cleaning products
Insurance.com – check your insurance coverage
Pearbudget.com – simple budget for kids
JustThrive.com – money management tools for kids
Pillbot.com – prescription cost comparison
PharmacyChecker.com – prescription cost comparison
DealNews.com – comparison shop
Pricegrabber.com – comparison shop
Gazaro.com – electronics
Pricespider.com – electronics
Shopittome.com – clothing, bags and shoe deals
PromotionalCodes.com – manufacturer discounts
Freeshipping.org – shipping offers and codes
Prepaidreviews.com – compare phones and plans
Energystar.gov/taxcredits – tax credit for purchasing energy efficient items
Priceline.com – hotels
CheapCheapCheap.com – hotels
Craigslist.org – virtual garage sale
Freecycle.org – free stuff

Mid priced Homes in Sunnyvale

A reader commented on yesterday's post, asking about homes in the $750,000 to $1 million range in Sunnyvale. Because of the extremely low inventory (see my post dated August 17) this has been a very active market. Open houses are very well attended, and all but overpriced...or underloved...houses are moving quickly, often with multiple offers. I've noticed sold signs sprouting even on busy streets such as Remington, a sure sign of a recovering market. Of course, schools continue to be a factor in desirability and value, and condition and location are always important, but low interest rates are keeping buyers out there, and we're not seeing many short sales or bank owned properties in that price range, especially in Sunnyvale.

Real Estate and the Stock Market

Rick Turley, our San Francisco Bay Area President of Coldwell Banker, had some great insights to share about the effect of the stock market's jump on higher end real estate.
Here are some highlights.
Some high-end Sellers may be saying no to potential contracts on their home as they think by waiting another four to six months (thanks to the stock market’s recent gains) they may get more for their homes. Of course every home is unique and each market is very local, but by and large, the higher end of housing probably won’t follow this reasoning. First, what we know is that in a “normal” market (of which this market is anything but), the average lag time between the two is 18 months (not four to six months). It’s also important to point out that we probably aren’t out of the woods as it relates to the volatility in the stock market and overall health of our economy. Many analysts are suggesting that our recovery may be “W” shaped rather than “V” so we could be looking at more challenges ahead.
Focusing less on the stock market and more on the level of supply and demand in the particular market and neighborhood will most likely be more helpful. In most markets, the upper-tier price point remains relatively soft; in some cases offers can be few and far between, and may be worth a second look. A few examples: In San Mateo and Santa Clara counties, there’s currently less than a month and a half’s supply of inventory for homes under $750,000. For homes over $3M, there is a 13 month supply. In San Francisco, for homes under $1M – there is a 2 months supply of inventory. For homes over $3M, a 14 month supply. That’s not to say buyers should be throwing out unrealistic offers and expecting them to be accepted. The real story here is that across the board we’re seeing very favorable increases in interest and in buyer activity. Sellers may want to consider taking advantage of that interest…before the typical seasonal slowdown.
For those who focus on the stock market daily, it is probably a better indicator for the economy as a whole rather than a predictor of where real estate is headed. With the DOW closing Thursday at just over 9,300, it doesn’t suggest home values will rise in a direct correlation, but it may mean that the recession is subsiding which would be good news for us all.

Citizen Involvement

I've been called for jury duty next week, and I can't get an answer form the Superior Court phone message or from their website. Maybe a live person on Monday morning can tell me what to do. My juror number is fairly high, so a call-in on Monday should be OK.
I'm also very interested in the hotly contested upcoming city council elections on November 3 in Cupertino and Sunnyvale. SILVAR (Silicon County Association of Realtors) will host a candidates forum for its members at a couple of its upcoming district tour meetings to hear what they have to say. We'll also be interviewing candidates in these cities who want to be considered for endorsement by the SILVAR PAC. The endorsements are expected to be released by mid-September, and since I'm a member of the PAC committee this year, my input will count.

Modifying a Loan

A couple of posts ago, I wrote about the difficulty a homeowner was having in modifying a loan on his house. Here are some tips from an attorney with the National Consumer Law Center in Boston for borrowers experiencing difficulties and frustration getting through to their loan servicer when trying to obtain a loan modification, and dealing with these loan servicers when they do.

*Consumers should keep detailed written records of every contact they have with their servicer, including logs of phone calls and copies of written correspondence.
*If the servicer makes a promise, such as crediting a payment, modifying the loan, or stopping a foreclosure sale, for example, the homeowner must get it in writing.
*When seeking a loan modification, consumers should send a request in writing asking the servicer who owns the mortgage loan. Some banks and investors have policies on which loans they will modify.
*Consumers should beware of servicers advising them to stop making payments because they have applied for a loan modification. Instead, homeowners should continue making payments for as long as possible, even if they can't make the payment in full. Otherwise, the loan will accrue more interest, and will cost more in the long run.
*Borrowers who feel they cannot resolve their problem or those who think their servicer may be violating their rights are advised to contact a non-profit housing counselor or seek legal help. Housing counselors can help negotiate a loan modification for free.
*Consumers can visit the Treasury’s homeowners Web site to find out if they qualify for a loan modification under the Obama administration’s Making Home Affordable program.

Birthday Weekend is Over...Back to Work

I've been meaning to write about the intriguing statistics we heard at the Realtors' tour meeting last week. Listings for sale in Santa Clara County are half what they were a year ago, down to 3577 from 7039! Sales of distressed properties (bank owned) in the county were so active that they outnumbered listings nearly 3 to 1.
Inventory in our local district, Sunnyvale, Cupertino and Santa Clara, is way down also. Available Cupertino single family homes have not been this low...125... since February of this year, and at that time weekly sales were 24 out of that number. Last week, pending sales were 84! Sunnyvale listings were at 121, even lower than February's 128, and pending sales were at 103, as compared to 57 in February. Santa Clara listings were about half February's number, and sales last week actually outnumbered listings, 133 to 87.
Still, in the higher end, we’ve seen cases of five to 10 percent list price reductions in properties that haven’t moved, and a final and acceptable offer coming in a little below that. That’s not to say buyers should throw out ridiculous numbers. Parts of the Bay Area have held their value better than most of the entire country. While it may take longer to get the buyer and seller to agree to terms, transactions are happening, and with open minds on both sides, we are beginning to see more positive movement for all.

Treasury Announces Home Price Decline Protection Incentives

In a recent post: "Too Little, Too Late," I talked about the minuscule numbers of loan modifications taking place, despite all the Federal encouragement going on. Banks had been offered $1000 per modification given (in addition to all that stimulus money!) and they were still dragging their heels. One caller to Bill Brinker's "Money Talk" radio show described the runaround he was getting after he lost his job and was trying to avoid getting behind on payments by modifying his loan terms...a frustrating process that has been going on for weeks, as he was referred to one source after another.
As part of its effort to expand relief to struggling homeowners, the U.S. Dept. of the Treasury just released the Supplemental Directive for its Home Price Decline Protection (HPDP) program, a component of the Home Affordable Modification Program. HPDP provides additional incentive payments for modifications on properties located in areas where home prices have recently declined. The purpose of the program is to encourage additional lender participation by helping to offset any incremental collateral loss on modifications that do not succeed. All HAMP loan modifications begun after Sept. 1, 2009, are eligible for HPDP payments.
The “pay-for-success” structure of HAMP provides incentives to create sustainable mortgage modifications in a manner most cost effective for taxpayers, but as with the previous incentives, I wonder if it will do any good.

Where Does it make Sense to Invest?

A member of my dance club told me that he was considering and investment in Stockton real estate. He owns several rentals in the Bay area, and heard that there were bargains to be had there. True enough.
- Home values in Stockton have fallen 60.9 percent since the market peaked in 2006.
- In June, sales were down 12 percent year-over-year.
- The Zillow Home Value Index there fell 29.9 percent in the second quarter, compared to 32.9 percent in the first quarter.
- But foreclosures continue to be an issue, with 69.2 percent of all sales in June being foreclosure re-sales.
In the best of conditions, owning rental property so far away from home can be a problem. A reliable rental market (and reliable renters!) is essential. A top quality manager is also important. Sometimes a "bargain" is nothing but a headache for an investor in this uneven market.

All Cash Wins Every Time

This morning's newspaper brought statistics showing pretty much what we've been seeing...that some areas remain stronger than others, that extremely high end homes are still selling slowly, and that the big number of bargainers are concentrated in the very low end (under $450,000.) Not in this issue, but in one a couple of days ago, there was an article that exposed what we are seeing over and over in these less expensive bank-owned and short sale houses: the winning buyers in large multiple offers are not first time home buyers, but investors, who are able to pay all cash, or have huge down payments. The banks will accept these, even though the offers are lower than those made by someone trying to buy a house using FHA or 90% financing. The deck seems to be stacked against the first time buyers. Banks that received all this stimulus money aren't ready to take any chances, even to promote home ownership.

Follow Up on the Ice Cream Social

I wrote in an earlier post that I had written an essay about the changing demographics in the area, and that I had won a neighborhood ice cream social for 100 neighbors in a contest sponsored by Dreyer's Slow Churned Ice Cream. I held the party at the Sunset Oaks clubhouse, many people met their neighbors for the first time, and everyone loved the ice cream. One lady tried a dozen flavors and said that it was more fun than a wine tasting. There were probably close to 100 guests in all, many of whom I had never met.
An associate at Coldwell Banker brought her two daughters, Charlotte and Catherine, who were my helpers, along with my friend Larry (who acted as official roaming photographer and trucked everything to the clubhouse and back) and Bill Tom, the board treasurer who had offered to help. Bill and Catherine scooped (there were about a dozen flavors at a time kept on ice in back of the table, with the lids in front in a row, so people could make their choices.) That left me free to greet people as they came into the pool area, show them the name tags and how to enter the door prize drawing (for free ice cream coupons) and mix and mingle. Charlotte took over the children's table and had them doing crafts and getting temporary tattoos applied (neater than face painting.) We had a helium tank and balloon for the kids.
We're talking about reinstating the Fourth of July barbecue next year, so the event was a complete success.

Too Little, Too Late

The administration recently released its first monthly report detailing the progress to date of the Making Home Affordable (MHA) loan modification program. The purpose of the report is to document the number of struggling homeowners already helped under the program, provide information on servicer performance.
This comprehensive plan to stabilize the U.S. housing market was announced in February. Two weeks later on March 4, detailed program guidelines were published and authorized servicers were supposed to begin modifications immediately. MHA provides $75 billion for sustainable mortgage modifications through the Home Affordable Modification Program.
Some progress has been made, but not enough, considering the $50 billion dollars set aside for this program. As of July, only 9 percent of eligible borrowers have seen their mortgage payments reduced with modified loans. 10 lenders have not reduced a single mortgage, and the lenders who received billions in federal bailout money...B of A and Wells Fargo...have lagged far behind government expectations. Bank of America modified only 4 percent of eligible loans, Wells Fargo 6 percent, and Wachovia (which was taken over by Wells Fargo) just 2 percent.
With 1.5 million homeowners receiving at least one foreclosure-related notice in the first half of this year, it's time for these banks to speed things up.

Commentary

There was a letter to the editor in Sunday's Merc from a reader in San Leandro (strange that he reads a San Jose newspaper). He disagreed with an editorial that said that the new appraisal requirements were hurting the real estate market, and blamed the housing meltdown, at least in part, on the appraisal process. Of course
there were inflated appraisals done by unscrupulous lenders, just as buyers were approved who should never have qualified for loans, but that situation does not exist today. In fact, banks are more conservative than they have ever been, now that the abuses of the meltdown have come to light.
What he doesn't seem to realize is that extremely low appraisals brought in by out-of-area appraisers are not a "healthy correction in the market" but a detriment to an already depressed market. Honest local appraisers must base value of properties on recent sales (less than 3 months old.) If an appraisal comes in too low because the appraiser is unfamiliar with the area, a potential sale may not happen, and both the buyer and seller are hurt. He calls the complaints about inexperienced appraisers "a ruse by real estate agents unhappy with reforms in the market."
I am one Realtor who is in favor of reforms, but only those that make some kind of sense, and charging buyers twice as much for an off-the-wall appraisal by someone from the central valley or Sacramento doesn't make any sense at all.

Guess I Spoke Too Soon

The news today included another two billion for the Cash for Clunkers Program, so perhaps the first time buyers' incentive credit will survive for a while, also. If the government is able (or thinks it's able) to subsidize new cars to get gas guzzlers off the road and help the ailing auto industry, maybe it can continue to partially subsidize first-time home buyers and get the foreclosed homes off the market...while helping to revive depressed neighborhoods and the real estate market as a whole.
Now if only we could just create more jobs...