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?

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.