Tired, But Happy

The Coldwell Banker offices are already four weeks into our Building Hope for Humanity fundraiser and have raised more than $15,000 for Habitat for Humanity!
But our work isn’t done yet; we still have four weeks left in our fundraiser to raise money so we can build hope for humanity in 2010!
Today we added more to the fund by preparing and serving a full breakfast to our Cupertino office. Lots of work...but lots of money raised, too.
We are also selling and purchasing raffle tickets, sponsoring an auction, and holding a tea party in November.
Our Coldwell Banker Blitz Build Week is almost here! Starting September 21, Coldwell Banker Managers, Agents, staff and executives from throughout our Northern California family will be participating in Habitat for Humanity builds throughout the 15 counties where we work. Together, we are truly making a difference for our neighbors, building stronger, more sustainable communities.

“Yes, the Housing Market has Rarely Looked Better.”

That was the headline in a September 2 Wall Street Journal article. This was a really interesting piece which looked at numbers from Standard & Poor’s and NAR. The following is an excerpt from the article:
“Last week, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.
In short, the data suggest that real-estate prices hit a bottom some time during the second quarter, and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free-fall. That means if you've been sitting on the fence, it's time to act.
Ordinarily I'd never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than now.”
It's nice to hear someone from the media say that it’s a great time to buy.
For a local look at our past two weeks in real estate: Our Cupertino office reports that agents are working hard, but things seem a bit quieter. It is really tough holding some of these short sale and REO transactions together, and inventory in many areas is surprisingly low.

Is FHA in Trouble?

Will taxpayers have to bail out the FHA? Realtors and lenders have been relying on the FHA for the past year as the only source of financing for home buyers who have less than 20 percent down payments.
The Federal Housing Administration stepped up to guarantee low-down payment mortgages for riskier buyers after the mortgage market crashed. Now with many of them in default, the FHA’s losses have mounted, and it’s possible that its reserves will fall below the 2 percent level required by law. If that happens, taxpayers may have to bail out FHA.
Some housing analysts say that this will lead to even tighter restrictions on FHA mortgages, which could be disastrous for the housing market.
The 10 states with the most FHA-insured mortgages are: Texas, California, Florida, Georgia, Ohio, Illinois, Pennsylvania, Michigan, Virginia and North Carolina.

Time is Running Out

...to claim the $8,000 first-time homebuyers tax credit. It ends on Dec. 1.
Because it often takes around 90 days to close on a house after a contract is signed, buyers have very little time left to act. What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range.
We are seeing fewer repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe....This can take as much as six months.
That means a first timer putting a bid on a short-sale might not get an answer from the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy of multiple bidders.
The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.
Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the newborn housing recovery could slump.
In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program.
Johnny Isakson, R-Ga., who is a former real estate broker, is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions. The effort has drawn strong industry support.

Get Out of the Kitchen

The California Association of Realtors comes out with a "Green Tip of the Week" in their emails to us. This one read...
'Keep in mind this summer that your oven and stove generate a lot of heat, which causes your air-conditioning to turn on more frequently. Consider cooking outside on the grill or cook in a microwave.'
Certainly, many back yard barbecues will take place this Labor Day weekend, and I must admit that because I live alone, my microwave gets more than its share of use.
But except for creating a side dish to bring to a Labor Day Potluck, I've vowed to save on stove use and help the economy by adding one more tip to the list for this week: Eat Out More!

Time to Get Out the Crystal Ball

Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index is at the highest level since June 2007.
Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said. “Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25% of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable.”
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30, 2009 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible- it is taking approximately two months to complete home sales in the current market.
NAR is encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy.
We expect sales of existing homes to rise through the fourth quarter, but Yun said “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year. However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”

More Discouraging News about the Sunnyvale Town Center

I recently read that the smaller local banks which had been exempt from the early fallout from the subprime home loan fiasco were now in trouble because of the tough market for builders who were their primary borrowers.
This is probably a major reason that local funds are not available for our beleaguered Town Center....and now, Devcon Construction Inc. has filed a $16.6 million mechanic’s lien against the property, one of more than a dozen such claims that have been filed with Santa Clara County in the last three weeks.
It was a rare step for Devcon, which has never filed a lien of this magnitude.
The Sunnyvale property is owned by two limited-liability corporations, Downtown Sunnyvale Mixed Use LLC and Downtown Sunnyvale Residential LLC. Both are affiliated with San Mateo’s Sand Hill Property Co. and Rreef Alternative Investments, a global investment-management business owned by Deutsche Bank.
The liens secure Devcon’s and the subcontractors’ ability to foreclose on the project and to sell the land and improvements to satisfy their claims.
The city of Sunnyvale announced March 11 that construction on the $750 million remake of the 36-acre center would slow because the developers were struggling to secure additional construction loans. The two limited-liability companies got $108.8 million in construction financing from Wachovia Bank in August 2007 to start the Sunnyvale project, according to public records, and Rreef and Sand Hill have invested more than $200 million in equity, according to the city of Sunnyvale. About 40 percent of the project is complete.
The property owners have paid Devcon through March, but neither Devcon nor myriad subcontractors have been paid for work completed in April, May, June or July.
In this terrible commercial real estate market...what bad news is next?