According to various economic and real estate pundits, we’ve hit bottom and are on our way back up! 

At a recent conference hosted by NSDCAR (North San Diego County Association of Realtors), John Tuccillo, a former Chief Economist for the National Association of Realtors, George Chamberlin, Executive Director of The Daily Transcript, and several other renown experts, all seemed to agree – we hit bottom sometime around March of 2009.  This graph from statistics gathered by NSDCAR shows the median prices starting to rise again after a steady two year decline. 

Of course, each niche varies and has its own specific statistics – some markets are still declining and some are going gangbusters – but overall, there is light at the end of this long dark tunnel!

With rates still at historic lows (roughly 5% with no points for a 30 yr fixed conforming loan!!), PLUS tax incentives, PLUS prices still low but drifting upwards, this is a great time to buy!  As one of my colleagues put it, “if you don’t buy now, you’re either broke or stupid!”  Kind of mean, but true!

Give me a call if you want to jump in and take advantage of the awesome opportunities out there right now (760-815-1318), or visit my website and do some searching on your own: www.DreamHomesByTheBeach.com.  North San Diego County Real Estate – a fantastic investment in your future and a paradise to live in!

Effective February 1, 2010 the Department of Housing and Urban Development (HUD) will relax FHA rules that previously prohibited insuring mortgages on homes that are owned by the seller for less than 90 days – a move that could help expedite the rehabilitation and resale of foreclosure properties. 

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Flipping: before and after

On multiple occasions, this has affected my business personally -  I’ve shown a buyer a home that had been purchased by an investor, rehab’d and put back on the market, i.e. “flipped”, but because they could not obtain an FHA loan on the property if it was owned less than 90 days, these homes were beyond their reach.  The process of buying, fixing, and reselling foreclosed properties can often be achieved in less than three months time, so this policy was hurting both buyers and investor sellers.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sales price of the property is 20 percent or more above the seller’s acquisition cost, the lender must meet specific conditions for the waiver to apply.
• The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

You can read the full text of the HUD waiver here.  The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to purchase a foreclosure as a short-term investment!  Call me, Eva Meier, if you’d like assistance taking advantage of this new policy - there are many opportunities in coastal north San Diego County! 760-815-1318.

The National Oceanographic and Atmospheric Administration (NOAA) has issued an El Nino Advisory, stating that the El Nino conditions are expected to strengthen and last in the Northern Hemisphere throughout  the winter of 2009-2010.

For those of us in Southern California, North Coastal San Diego County in particular, that means way more rain than we’re used to.  There’s no doubt we need it after so many years of water shortages, but the torrential downpours can cause problems. 

• Make sure all your drains and gutters are cleared of debris and are functioning properly before the rain hits. 
• If your home doesn’t have gutters, you may consider having them installed.
• Visually inspect nearby storm drains before the storm season and after every rain.
• If drain are obstructed, notify your local Dept of Public Works 

Stay dry and enjoy the show!

Unethical Appraisal Processes During the Real Estate Boom

During the heyday of the new millennium real estate market, 2000–2006, unethical and sometimes illegal actions became common in the housing appraisal industry.  Inflating values became the name of the game.  Since most everyone believed there was no top to the market, this rounding off upward was supported by all of the players. Appraisers who answered to banks, realtors and mortgage companies tended to value properties higher than their worth often under pressure from their vested employers.
 

Inflated Appraisals Contribute to Bursting of Real Estate Bubble

These unsupportable high appraisals eventually helped drive the real estate bubble to burst in late 2006.  These unwise practices finally led to legal action by the Attorney General of New York in late 2007.

Trying to keep everybody honest, New York attorney general Andrew Cuomo sued the appraisal subsidiary of First American for conspiring with Washington Mutual to inflate appraisals.  The problem later spread to the mortgage giants Fannie Mae and Freddie Mac with national disastrous results for everyone.

An Attempted Fix of the Appraisal Process – HVCC

The public embarrassment surrounding this law suit forced all major lending agencies into creating the “Home Valuation Code of Conduct” (HVCC). The HVCC established a stringent set of rules addressing who can conduct appraisals and how they should be done.  Under these new rules, the appraiser may not be affiliated with or have any contact with any parties involved in the transaction.

HVCC’s Intention to Protect the Consumer Backfires

The new HVCC rules took effect in May of 2009 and, ironically, are now working against our now slowly recovering housing market.  Appraisers, who are unaffiliated with anyone connected to the sale, are under no pressure to meet deadlines and often submit low appraisals based on a lack of substantiating information regarding the properties they are working on.  This downward bias will slow recovery and further push against the market when we need everything going our way.

A Example of HVCC Pressures at Work in Cardiff, CA

Here’s a personal example of what happened to me as a North San Diego Real Estate Agent, helping a client try to purchase a Cardiff CA condo.  My buyers were renting a unit in Park Place Bluffs, a lovely Cardiff CA condo complex.  They very much wanted to buy a property there.  When one came on the market, a short sale, of course, and asking $265k-305k, they submitted an offer the first day, smack in the middle: $285k.  Unfortunately, 18 others also wrote offers!  We were all asked to resubmit our highest offer, and did so at $310k.  The 5 top bidders (we were among them), with offers between $310 and $320k, were then instructed to rewrite our offer for $290k, BECAUSE THAT IS WHERE THE LISTING AGENT THOUGHT THE PROPERTY WOULD APPRAISE!!, and submit along with credit scores, recent bank statements, recent pay stubs, etc, and the best candidate would win!  We ended up not being selected, and my buyers actually found a much better home in a different neighborhood.  So, here’s a property that 19 people were clamoring all over to buy, 5 of whom were willing and able to fork up between $310k-$320k, and it’s on the books as $290k!!  This does not help home values stablizie and recover!

Bottom Line – HVCC is Bad for Real Estate Recovery

The new HVCC has merit and in a normal market could work well.  But now, when the market is just beginning to recover, is not the time to push prices down by undervaluation.  This new solution for a past problem should be suspended until the cure will not kill the patient.

The bit of drizzle we’re getting today isn’t making a dent in our low water stores.  The San Dieguito Water District, the authority serving Encinitas CA homes, Leucadia CA homes and Cardiff CA homes, has recenty bumped us up from a level 1 “drought watch” to a level 2 “drought alert”.  So we’d better stop whining about the grey, wet weather and hope for a true downpour!

Effective July 1, 2009, here are the new guidelines that will apply:

• no washing down of paved surfaces
• eliminate landscape water run-off
• repair all leaks within 72 hrs of notification
• watering of yards is limited to no more than 3 days per week from June 1 – October 31
• homes with odd numbered addresses can water, Sunday, Tuesday and Thursday
• homes with even numbered addresses can water, Saturday, Monday and Wednesday
• Apartments and condos and businesses can water, Monday, Wednesday and Friday

Those of us living in these communities as well as other parts of San Diego County must all do our share to cut back on our water usage.  We tend to take our water supply for granted and don’t realize how fortunate we are to have access to reliably clean and fresh water.  So many don’t have that luxury…

But if that doesn’t motivate you, just keep in mind that non-compliance with water use restrictions during a Level 2 condition will result in a violation being issued and a fee being added to the water bill!

A buyer’s market

With the median California home price down 40-50%, homebuyers are definitely in the driver’s seat these days here in the Golden State.  And “first-time homebuyers”, i.e. those who haven’t owned a property in the last 3 years, really rule the road!

An even better “first-time” homebuyer’s market

In the past, the affordability index all but pushed these buyers out of homeownership, particularly when looking for San Diego homes for sale.  These folks have been saving and waiting, and waiting and saving, AND, finally, their time has come!  Unlike so many others who would like to take advantage of this great market, first time homebuyers, by definition, have no home to sell!  In addition, with the incredible interest rates out there right now, and the $8000 tax credit authorized by the American Recovery and Reinvestment Act of 2009, conditions are perfect for first time homebuyers. 

Better act fast

That said, this window of opportunity is a narrow one, and closing fast.  The market has definitely hit bottom in many low end areas, or, in fact, already passed it – and competition for these homes is starting to drive prices back up.   Moreover, the $8000 credit expires on December 1st, so eligible buyers had better act quickly!

Where the hot deals are

The coastal North San Diego County home markets  showing the biggest number of foreclosures, short sales and REO’s, are Vista, San Marcos and Oceanside.  There are almost 3000 properties under the conforming limit ($417,000) on the market right now in North County!  To learn more about how you can take advantage of this great buyer’s market and the various incentives available, give me a call (760-815-1318).  Don’t let this opportunity pass you by!

I found myself stuck in another traffic bottleneck this morning.  It took me half an hour to drive off the exit ramp and creep the 1/2 mile to my Coldwell Banker Del Mar Village office.  And, what gets me is that it was totally avoidable!

Del Mar Fairgrounds

I ought to know better after living and working next to the Del Mar Fairgrounds for the last 20 years!  Summer after summer, we locals learn to arrange our schedules around the traffic patterns generated by the San Diego County Fair and the race track season.  The problem is we forget that the Fairgrounds are also used throughout the year for a variety of events. In fact, the facifilites are used for over 350 events a year.  They include weddings, receptions, equestrian and other animal shows, concerts, craft shows, home shows, car shows and other social and consumer events.

When there’s an event going on, it can take hours to go a mile, and sometimes, there’s no way to turn around and take another route.  It can be rather frustrating, to say the least, and as I mentioned, it’s totally avoidable!  I am hereby promising myself to visit http://www.sdfair.com/ and check the schedule once a month to make sure I know what times and days to avoid.  Hey, and who knows?  I may even learn about an event I wouldn’t want to miss!  For example, I’m sure my 2 yr old and my 4 yr old would enjoy the circus that’s coming next week – I never would have known about it had I not written this post and checked the schedule!

If you’d like to take advantage of the great prices out there and buy a second home – a launching pad, so to speak – to all the wonderful events at the Fairgrounds, give me a call (760-815-1318)!  It is a phenomenal time to buy.  Or, if you just can’t take the traffic anymore and want to sell your Del Mar CA home, I have buyers for you!  Give me a call!

Running out of prefixes for 760

With the ever growing number of cell phone and fax users on the planet, combined with the tremendous increase in the quantity of homes in North San Diego County, the region using the 760 area code has rapidly been running of out of telephone numbers. 

To split or not to split 760 and 442

The traditional fix in the past has been to split the area into two, with one portion transferring over to a new area code.  This kind of split puts an enormous burden on small businesses as they must reprint stationery, business cards, advertising materials, signage, etc., not to mention the danger of losing connection to former customers.

A successful fight to keep 760!

442 Overlay map from www.Keep760.org

Thanks to an organized effort by keep760.org, and to the community participation in response to their urging, we have succeeded in getting the California Public Utility Commission (CPUC) to agree to an overlay instead.  What this means is that every number that begins with 760 will remain the same.  Only newly issued numbers in the overlay region will contain the new area code, 442.  The two area codes will coexist within the same geographical area.  This is phenomenal news and a huge victory for those of us doing business in this region.  And for those who live in Cardiff CA homes, Encinitas homes, Leucadia homes or owning property in other areas of North San Diego County, we have been spared a monumental inconvenience.

A minor downside

The only down side, and its merely a minor nuisance, is that the Federal Communications Commission (FCC) requires dialing the area code + telephone number for all calls where an area code overlay exists. But with most equipment featuring autodialing and speed-dialing, we’ll barely notice it.

Low end has hit bottom, but Del Mar is still on the way down

While the lower end in San Diego County is selling like hotcakes, with multiple offers and major frustration for those trying to purchase, the buyers still have the upper hand in higher end markets like Del Mar. 

Depreciating vs Appreciating Market

The de facto definition of a depreciating market is one where the rate at which inventory is coming on the market is faster than the rate at which property is going into escrow.  Your basic supply/demand equation…  The low end in San Diego County – everywhere from Oceanside, Vista, and San Marcos to Clairemont, Linda Vista and Mira Mesa – is seeing a definite slowing in new inventory and a huge number of new escrows.  From what I can see, they’ve already hit bottom.  The demand is putting pressure on prices, which are bound to start creeping up soon as a result.  In contrast, home prices in Del Mar, Carmel Valley, Solana Beach, Rancho Santa Fe, and other high end coastal North San Diego County markets, have yet to hit bottom.  The following graph showing says it all:

Del Mar CA Market Activity - a declining market

This set of circumstances provides an incredible opportunity for those interesting in getting their foot in the door into Del Mar Real Estate.  For the inside scoop on the great values, give me a call (760-815-1318) or do your own research on our site DreamHomesByTheBeach.com.  Don’t let this market pass you by!

Rampant short sales and huge lender losses

I understand the pain lenders must feel with all the losses they are suffering right now.  So, why doesn’t someone from within, from within and above, streamline the process so they can minimize their losses and move on??  The extent of the bureaucracy is unbelievable.

The short sale process: a classic bureaucractic quagmire

A prime example of lenders cutting off their noses to spite their faces is what’s happening with my clients P and T.  They are all cash buyers, ready to act swiftly and close within a couple of weeks, but looking in areas where virtually every listing is a short sale or a foreclosure.  We restricted our search to properties whose listing agents had specifically told us they were extremely close to getting bank approval.  We wrote offers on two properties, both with reassurances that we should have an answer within a week or two at the latest.  It has been 6 weeks with the first, and almost 5 with the second.  We get no courtesy updates, no calls even inquiring whether we are still in the game or have found another property. 

The perfect property with an imperfect agent

Meanwhile, we’ve been keeping tabs on the market, checking out new listings, hoping for an REO (banked owned) property that would meet their needs – these sellers (i.e. the banks) generally respond quickly and we’d be able to close in a couple of weeks.  No such luck, but we did find The Perfect Property.  The problem is,

1. it’s a short sale,
2. it just came on the market, and
3. the listing agent has done no homework. 

This particular listing agent lists homes with particularly low prices to generate lots of offers, submits them ALL to the lenders (there’s a first and a second trust deed holder), and then waits for them to make sense of them all.  While the banks are proceeding with the short sale approval process, he continues to submit offers as he receives them, bogging down the system.  Eventually, the lenders come back with a minimum approved figure, of which the listing agent then informs all buyers, giving them an opportunity to respond with their highest and best offer.  Then, buyers must wait again for the next round of bureaucrats to assess the offers and pick one. 

A very long wait

We were informed this process would take 90 days!  Here are a couple of high quality buyers, willing to pay FULL price, all cash, and the lenders are stupid enough to risk losing them.  It all could be settled within a matter of a couple of weeks.  But because the lenders haven’t taken the time to create an efficient system for dealing with offers, and because the listing agent is lazy and doesn’t want to do the extra work of finding the best offer to present to the lender, we have to sit around and wait for this inefficient process to run its course…  We may or may not stick around…