I Wish that These Prophets Would Agree

In the May 1 issue of the Wall Street Journal, June Fletcher looked into her crystal ball and wrote "Don't look for the housing market to improve until the daffodils bloom next spring. The latest S&P/Case-Shiller Home Price Index shows that new and existing home prices fell 12.7% in February from a year earlier, and according to economists who convened at the spring construction forecast conference of the National Association of Home Builders in Washington, D.C., last week, the trend will continue until early next year, dragging down prices. The consensus view was far gloomier than a few months ago, when housing economists predicted the bottom would be reached in late summer or early fall."
Then, just a few days later on May 6, Cyril Moulle-Berteaux wrote an article in the same paper, headed: "The Housing Crisis Is Over."
He started off with "The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now." His logic is that the current housing bust is already three years old, and that homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in. The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do."
Who do we believe? This summer's sales could well be the test, but either pundit would agree that the turnaround will be slow in coming.

What a Real Estate Appraiser Says

Nancy Dierx, of Real Estate Appraisal Professionals, spoke at the Realtors' tour breakfast this morning. She talked about a new code of conduct for appraisers that will be required in the beginning of 2009, but is already being used in the field. Unethical appraisers were implicated in much of the subprime scandal, and the industry is trying to clean up its image. One of the changes that will change our market is that appraisers can only use comparable sales that are three months old or less. Six month old comparables were previously allowed.
One of the many questions involved short sales, and their impact on surrounding property values. I had heard of a case recently where the lender forgave much of the loan balance on a small condo in Sunnyvale. It sold for $280,000, but recent sales of other units were in the mid $300's. Nancy said that unless there was a pattern of these lower sales, the appraised valuation would not be affected.

Market Flash from Coldwell Banker

Last year at this time they said, “For all our regions, February to March sales activity rose by 15% at least, almost 40% at most.” And we saw a similar trend again for March 2008 as sales rose in many of our Northern California counties. Now the question is whether this is the start of a pattern leading us into the late spring and summer months?
In Santa Clara County: Sales are down year-over-year, however, that is while contrasting a particularly strong March 2007 with March 2008. We learn more from Santa Clara’s numbers by looking at an 11% increase in sales since February, or a better-than-most 10% decline in median for the year.
Interest Rates: The Fed seems to be on the right track. New York Times’ columnist Paul Krugman said recently, “I believe we’ve been lucky to have Ben Bernanke as Federal Reserve chairman during these trying times. He has thought long and hard about both the Great Depression and Japan’s lost decade in the 1990s, and he recognized, more quickly than others might have, that we were in a situation bearing a family resemblance to the great banking crisis of 1930-31. His first priority, overriding every other concern, had to be preventing a cascade of financial failures that would cripple the economy.”
Do we have a crippled economy? No, we have an economy that is not what we are used to. Do we have “easy” credit? No, but if you can qualify, 30-year fixed is at 5.72%, 15-year fixed is at 5.29%, 5/1 ARM is at 5.31%. These are remarkably nice numbers and much lower than we thought they might be this spring.
Inventory: It is spring and because of it, many counties are seeing increased inventory in their marketplaces. However, at the very high end, you might not find the selection you have enjoyed for the last year or so. This means the market is recovering, and that is a good thing.
Overall Assessment: Guarded but certainly not gloomy. Prices have adjusted downwards in many areas but interest rates have stayed quite moderate in exchange for tightening the criteria on qualifying borrowers which is helping buyers. If you are getting ready to sell your home, price your home competitively and be sure it shows well; and if you are getting serious about home buying, be sure to get pre-qualified first. You may discover that this spring and summer are the most rewarding seasons in a couple of years.

The Shredder Van was Here

Our office had arranged for Shred-It to be in the parking lot at noon today, and I hired wonderfully efficient (and strong) Clutterboy AKA Tom Anderson yesterday to help me box up my pre-year 2000 escrow files and tax records, and organize the newer ones into the filing cabinets in my garage. We filled three boxes with papers for recycling...those that had no personal information, such as condominium CC&Rs, and we threw away a big pile of broken rubber bands. I also found a check for $150 from the title company, made out to me and dated January of 2004. Wow!
Today, seven large boxes of my important, but outdated, documents went through the shredder, and I feel much more organized and secure.
If you've been wondering what to keep and what can be discarded, check this list from . Wachovia Securities

Credit Getting Tighter

Good clients of mine, with excellent credit, are hunting through various lenders to get a line of credit that would have been easy to arrange a year ago.
Getting a mortgage today is not what it used to be. Not long ago, anyone could get a loan. Now it's a challenge.
Mortgage insurers, whose backing is required for borrowers who can't afford the traditional 20 percent down payment on a home, have already flagged nearly a quarter of the nation's ZIP codes where they refuse to insure some home loans. Our entire state is blackballed on some insurers' lists because of high foreclosure rates and price declines, even though some areas are doing well.
Banks that have lost billions because of bad choices during the housing boom are now reverting to strict lending standards not seen in nearly 20 years, according to industry data and interviews with lenders.
For new home buyers and those seeking to refinance, it can mean higher down payments and a higher bar for credit scores, among other requirements. We thought that the interest rate cuts by the Fed would make getting a home loan and refinancing easier,
but this recent tightening of loan requirements threatens to dampen sellers' prospects for the spring home-buying season.

Don't Be Caught Unprepared

I wrote earlier, announcing Earthquake Preparedness Month, and sending along a useful link. On Friday, I received an even better one from my friend, professional organizer, Lynn Gross-Cerf. This one is useful, because it helps you be ready for an earthquake (and they keep warning us that another one is coming) but also various other disasters, such as fires, floods and terrorism. Don't just leave it for the Boy Scouts. Check out the DisasterCare site and Be Prepared.

Odor Removal for Good

One of the biggest problems faced by Realtors is how to explain to our sellers that there are unpleasant smells in their house or townhouse that will keep them from getting the best price when they sell...or keep them from selling at all!
Common sources such as those from smoking, pets, and cooking (especially from fish and curries) and more extreme odors from plumbing and sewage backup, are all potential problems. Air fresheners, ozone and deodorizers may mask the smells for a while, but they keep coming back. Repainting and cleaning or replacing carpets or drapes are only temporary solutions. Odor molecules can migrate through carpets to sub-floors, and through walls and sheet rock to the studs.
We had a presentation yesterday by Rainbow Services in Saratoga, a company that uses a non-toxic method to remove odors for good and guarantees its work. Several Realtors in the room had used their service and recommended it highly.