A Positive Take on the Local Real Estate Market

Rick Turley, our regional president of Coldwell Banker, recently wrote this promising prediction.
"2009 was a challenging year in real estate. The good news is that we started to see a positive turn in the housing market as the year wore on, thanks in part to the first-time home buyer stimulus and indications that the economy was starting to improve. So what will 2010 bring?
With the increases we are seeing in the S&P 500 (up 20.5% YTD) and the economic improvements we are seeing on a global scale, things seem to be moving in the right direction. This makes prospective home buyers feel more confident about their future and the home they may choose to buy. So much of our business is affected by consumer confidence.
But I would caution that we probably aren’t out of the woods as it relates to foreclosures. With unemployment figures still frighteningly high, there are still quite a few homeowners out there who are struggling with their payments. And now there is a great deal of evidence that it isn’t just in the entry level arena; it is also hitting the mid-level and luxury market, too.
The big question remains: When will the “shadow” inventory of already foreclosed homes begin to be released, now that the government has lifted the moratoriums on foreclosures. Once we start to move through those properties, we should begin to see a better, more solid grounding for the real estate market.
The fact is, we live in one of the most desirable regions in the world. Certainly we’ve taken our fair share of hits over the last three years, but our region’s desirability, economic vitality, culture, weather and overall market conditions make it a sought-after place to live. We generally have a much healthier economy in the Bay Area. In terms of a US housing recovery, predicted to be slow, long, and modest; ours will probably be more favorable than most. As we track Bay Area sales activity, we are seeing more encouraging signs.
Based on what we’re seeing, we’re estimating that we can expect sales to moderate to a more sustainable pace. We are already seeing a rise in housing prices in the entry level, and may see a modest rise in our mid-level price points, and most likely we’ll see further adjustments downward in the high end. But this new normal is much more sustainable and will provide a solid foundation to build upon. It makes me excited about the future and gives us all hope for a productive and healthy 2010."

Real Estate News to Be Thankful For

My very best to you as you prepare for time with family and friends to enjoy the Thanksgiving holiday. In our professional lives we have a lot to be thankful for, having endured some of the most critical and challenging economic times this year that we’ve ever seen. But there is some good news.
The number of first-time home buyers rose to 47 percent of all home sales during the past year, up from 41 percent last year, according to NAR’s 2009 Profile of Home Buyers and Sellers. The increase marked the highest on records dating back to 1981. The previous high was 44 percent in 1991.
These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up – they absorb inventory, free existing owners to make a trade and stimulate related goods and services.
Happy Thanksgiving!

Questions Asked About the Extended Tax Credit

The Tax Credit has new income limits. If the Buyer’s Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

Tarp Interest for Unemployed Homeowners?

The Mercury News had an article this morning, saying that the new wave of foreclosures is beginning...previously qualified borrowers who are now unemployed.
The lack of aid to jobless homeowners has been identified as a big weakness in the administration's plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program "was not designed to address foreclosures caused by unemployment," which are now the main cause of default. Many lawmakers have also complained about the slow pace of loan modifications that might have helped this situation.
Rep. Barney Frank said Monday that he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay their mortgages.
Frank, chairman of the House Financial Services Committee, said,"These are people who are very responsible, very thoughtful. They got a home, it's above water, they've got equity, but they're unemployed, and you can't afford mortgage payments on unemployment."
The program would be funded using the interest banks pay on the $700 billion Wall Street bailout, known as TARP. It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.
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Another Bug in the Loan Process

Interest rates are great right now, and that's good news for home buyers, but lenders are making it harder for borrowers with less than perfect credit to qualify.
Now there's a new "bug" in the loan process.
Some consumers with exceptional credit reports and high FICO scores are being denied mortgages by Fannie Mae’s automated underwriting system because there is a notation in the credit report that the consumer has disputed an item.
Under the Fair Credit Reporting Act, consumers can dispute inaccurate information on any account in their credit files, but once a consumer disputes an item, a notation to this effect is made in the file. Until the notation is removed, most credit-scoring systems won't factor the disputed item into the consumer’s score.
However, with the recent surge in companies claiming to “clean up” blemishes on consumers’ credit reports, some lenders are finding that these credit companies are disputing accurate, but negative items, hoping the consumer will qualify for a loan before the dispute is resolved.
Applications that are denied through Fannie Mae’s automated underwriting system are sent back to the lender for manual underwriting. It is then up to the lender to determine and document whether this information is accurate and underwrite the borrower’s credit accordingly.

Best Home Improvements for Home Sellers

Nearly 1,000 real estate agents cast their votes on which do-it-yourself home improvement projects will help sellers get top dollar.
HomeGain.com's 2009 Top 12 Home Improvements Survey Results showed that cleaning and de-cluttering was the easiest and most cost-effective way to make your home more appealing to buyers. For as little as $100-$200, sellers could see as much as a 10 times increase in their sale price. These are all projects that you can do on your own or with a little help, so you won't see replacing your roof or adding a deck on this list.
Most of the recommended projects come in under $500, with an return on investment of at least 100 percent.
Even for some of the more expensive projects, like updating your kitchen for $1,500, you can replace the hardware and touch up the cabinets, just so that buyers don't see any glaring issues. New appliances are actually very cheap right now, and often come with free installation, so don't let an old fridge or dishwasher kill your deal.
The total return on investment for all 12 of these projects could total more than $20,000. For a median priced home, that's about a 10% increase in your sales price.
Check out the HomeGain HomeSaleMaximizer for customized recommendations in your ZIP code.

Another Reason to Take Off Your Shoes

Those of us in the real estate sales industry are accustomed to removing our shoes when we tour homes, and we supply shoe covers and "No Shoes, Please" signs for our listings. I always thought that we did this for only two reasons: to protect clean carpets from dirty footprints, or to respect the beliefs of the owners.
But the California Association of Realtors came out with third reason in their 'Green Tip of the Week'
"It’s flu season and you know you’re supposed to wash your hands, but don’t neglect your feet and your home’s indoor air quality. The germs on your shoes find their way into your home and carpets. According to one study, 27 percent of the bacteria in the home are the E. Coli virus. For a healthy home, leave your shoes at the door."

More Detail on the Extended and Amended Tax Credit Bill

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill has kept 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. The purchase price of the home is capped at $800,000.
Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the tax credit. According to California Association of Realtors' research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.

The Story of the Townhouse Sale

Amazing in even our unusual market... By the 1:00pm time we had set for the presentations to begin, there were eleven offers written on my Sunset Oaks townhouse listing. Because I was also representing a buyer (with the seller's permission) I had asked my broker to sit in on the presentations, to ensure fairness and eliminate any hint of favoritism. I also had any emailed or faxed offers sent to her, so I would not see them before "the show began" The seller and her husband came to the office, and the agents arrived at 20 minute intervals, presented their offers and gave a brief bio of the buyers.
A couple of the offers were at or below list price (indicative of first timers in this market) but it soon became clear that the majority were well above that price. Toward the end, there was an offer that came in as-is, with no appraisal contingency, and only a 4 day loan contingency. Their price and terms were the best, and the agent cited their willingness to pay cash for any differential between the appraised price and their offering price. They also paid for an accelerated appraisal by their lender. My buyers were close enough to be #2, but this offer was clearly the best.
The appraiser actually called for an appointment the following day, and the assessed valuation came in quite high. The buyer quickly committed to pay the difference, and removed their contingency. A happy ending.
Today, I ran into a neighbor who had bought my nearby listing of the same model over a year ago. She was aware that prices had gone down close to 15% since their purchase, and she was very pleased to hear that values are headed back up.

THE HAPPIEST PLACE IN AMERICA? IT'S SUNNYVALE!

I was recently sent this article...not a real surprise. I love living here.
SUNNYVALE, Calif. – The City of Sunnyvale, long-known as the Heart of Silicon Valley, can now add a new accolade: The Happiest Place in America. And it must be true, because the Dr. Oz show will feature Julia Blom, owner of Sunnyvale's Country Gourmet restaurant, on the Monday, November 9 show, to talk about Sunnyvale.

The declaration of Sunnyvale as the Happiest Place in America is the result of a Gallup Poll conducted with the American Insurance Plans and Healthways. The ongoing survey began in January 2008, and polls 1,000 Americans per day over a 350-day period to create the Gallup-Healthways Well-Being Index. The survey ranks factors that help measure well-being in America's rural and urban communities. The poll studies not only the absence of infirmity and disease, but also a state of physical, mental and social well-being. The results of the poll were posted in March 2009.
According to Dr. Oz Show Publicity Executive Jenifer Rogers, Dr. Oz will spotlight Sunnyvale as the Happiest Place in America. Dr. Oz will include Blom and a woman from Hazard, Kentucky, ranked as the Unhappiest Place in America, in his show, and offer them an opportunity to switch places. The show will explore whether the physical location of where a person lives has an impact on that person's way of life. Researcher Sonja Lyubomirsky will help Dr. Oz reveal the five steps to happiness.
This episode of the Dr. Oz Show is scheduled to air at 9 a.m., Monday, November 9 on KTVU Channel 2, and at 8 p.m. on KICU Channel 36.

This should be interesting. I have eaten at her restaurant, which is right down the street from me, at the corner of Fremont and Mary Avenues,

Tax Credit Extension to Pass

After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.
The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.
The tax credit has fired the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2 percent higher than the 5.10 million-unit pace in September 2008.
The legislation also includes provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department's Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

Now We Have to Wait

The latest estimates show that some 400,000 additional sales occurred this year due to the first time home buyer tax credit...about 8% of all sales this year.
In the latest news, The Senate has reached a compromise on extending and expanding the $8,000 tax credit for first-time home buyers. While its passage remains uncertain, this plan would extend the existing credit for first-time homebuyers, while offering a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to homeowners who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to close. The measure still faces votes in the full Senate and the House, next week at the earliest. I'll keep you informed.