Mardi Boettcher's Blog

In this market, where homeowners have to compete with the “fire sale” prices of bank owned homes, it more important than ever for homeowners to be realistic about their home’s values.  It often is difficult for homeowners to objectively value their homes, which often reflects their sense of personal style.  However, by consulting with a REALTOR®, using online resources, investigating neighborhood trends, and soliciting the opinion of friends, homeowners can arrive at a reasonably accurate appraisal.  If they cannot accept the reality of the situation, I recommend that they wait for a more favorable selling climate.  On the positive side, they will often more than make up the loss from the savings on their new purchase.  It is important to have their agent help them “crunch the numbers” before making the final decision.

If they are having financial difficulties, it is critically important for them to consult with their real estate consultant to get accurate information on all their options and the possible consequences.

I have heard that U.S. Senate leaders might have moved closer to an agreement about replacing the expiring $8,000 tax credit for first-time homebuyers with a smaller one that expands access to more borrowers.  The existing credit is due to end Nov. 30.

 The proposed legislation would reduce the size of the tax credit to 10 percent of the sale’s price and cap it $7,290.  This tax credit would be available on home purchases that would go into contract by April 30th, and borrowers would have an additional 60 days to close the sale.

 The new agreement, if passed, would expand the credit to “step-up” borrowers who have lived in their current home for at least five years.  The income eligibility for first-time homebuyers would remain the same at $75,000 for individuals and $150,000 for couples.  The income criteria for step-up buyers would be $125,000 for individuals and $250,000 for couples.  The credit would be limited to homes costing $800,000 or less.

I think this is a great plan and believe it will relieve the current gridlock in the middle price range market.  Keep your fingers crossed!

Existing Home Sales came in better than expected, at 5.57M vs. the expectation of 5.35M.  The very important number….levels of inventory, shrank to a 7.8 month supply, down from a recent high of 10.1 in April.  The National Association of Realtors also reported that last month’s sales were 45% First Time Homebuyers, as they rushed in to take advantage of the $8000 tax credit. 

I still think the tax credit will be extended.  Not only will this help buyes, but the increased demand may cause prices to rise and that will encourage sellers to move forward with listing their homes.  It will be a win win for everybody.

Senate Banking Committee chairman Chris Dodd, D-Conn., went on the record Tuesday calling for a seven-month extension of the $8,000 first-time homebuyer tax credit, which is set to expire in five weeks.  Sen. Dodd said home prices are stabilizing but “we still need to use every tool at our disposal to try and fix this problem.” The White House has yet to reveal its position on the extension. The National Association of Realtors and other trade groups are supporting the extension.  Jay Brinkmann, the chief economist for the Mortgage Brokers Association told the committee that one great unknown facing the market is the affect on interest rates when the Federal Reserve stops purchasing mortgage-backed securities from Fannie Mae and Freddie Mac.  He noted that there is growing concern over the issue saying, “While the most benign estimates are for increases in the range of 20 to 30 basis points, some estimates of the potential increase in rates are several times those amounts.”

Pay close attention to this last bit.  At our office meeting last week, Dick Selzer said that he thinks interest rates will go up rapidly.

I’ll keep you posted.

Home buyers still are paying less than a home’s asking price, but had slightly less negotiating power in August than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3 percent, less than the last listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July, according to the report. Negotiating power peaked in January 2009, when buyers were paying 4.5 percent less than last listing price, a median of $10,096.

Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.

Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.

“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”

In our local area, inventory is low.  There are multiple offers on many properties and many are selling for more than the list price.   This means that buyers must be well qualified and pre-approved by a lender, and sellers must be realistic about pricing.  We are seeing more listings now that are not bank owned or short sales and they are selling well….if the seller has it priced competitively.

Dick Selzer says that the ecomominc indicators suggest that interest rates are bound to go up in the near future, and he thinks they will go up quickly this time.  Of course, no one knows for sure, but it is his opinion (and he’s often correct) that buyers who wait for a better time to buy, are going to regret it.

At Realty World-Selzer Realty, we don’t try to “sell” people.  We always have our clients’ best interests in mind.  That’s how we’ve build our stellar reputation….and reputation is very important to business success in a small town.

I recently had a conversation with a client who wants to wait a couple of years to purchase because she thinks prices will continue to go down with more bank owned homes coming on the market.  I told her that, in this area, the inventory of bank owned properties has really slowed down.  One colleague of mine described it as “drying up.”  Perhaps that is just a temporary situation.  Time will tell.  In the meantime, the lowest priced homes are getting multiple offers with the winners offering as much as $20,000 or more over the asking price.  The consensus among the local Realtors is that we have passed the bottom and are headed back up. 

Below, is an article from C.A.R. with the latest data for the state, but bear in mind that we are a unique local market here.  The areas that had massive growth are the areas that seem to be hurting the worst.  Our lack of housing keeps our prices elevated.  That’s why there were ten offers (6 of them first-time buyers) on a house I tried to get for some clients last weekend.  (They didn’t want it badly enough to bid as high as I recommended and they didn’t win.)    Here is the article…..

Foreclosure filings decrease less than 1 percent in August
Foreclosure filings, including notices of default, scheduled auctions, and bank repossessions were reported on 358,471 U.S. properties in August, a decrease of less than 1 percent from July, and an increase of nearly 18 percent from August 2008.  The report by RealtyTrac^® also shows one in every 357 U.S. housing units received a foreclosure filing in August.

“The August report demonstrates that there still is an ample supply of properties filling the foreclosure pipeline even while the outflow of bank-owned REO properties onto the resale market is being more carefully regulated,” said James J. Saccacio, chief executive officer of RealtyTrac. “After hitting a high for the year in July, REOs dropped 13 percent in August, but we also saw a record high number of properties either entering default or being scheduled for a public foreclosure auction for the first time.”

California documented the nation’s third highest state foreclosure rate, with one in every 144 housing units receiving a foreclosure filing.  California REOs declined 32 percent from the previous month, but continued to post the highest overall total of any state, with 92,326 properties receiving a foreclosure filing in August. California’s total was down 15 percent from the previous month and was also down 9 percent from August 2009—he first year-over-year decrease in California foreclosure activity in RealtyTrac’s monthly reports.

Six California metro areas documented foreclosure rates among the top 10 in August. Stockton posted the nation’s second highest metro foreclosure rate—one in every 74 housing units received a foreclosure filing—followed by Merced at Number 3 (one in 78), Riverside-San Bernardino-Ontario at No. 4 (one in 80), Vallejo-Fairfield at No. 5 (one in 82), Modesto at No. 6 (one in 84), and Bakersfield at No. 10 (one in 94).

With housing prices down, mortgage rates at a 30-year low and foreclosures soaring, you have plenty of incentives to jump into the real estate market.  

“Time is of the essence”  right now because the $8,000 tax credit stimulus expires at midnight, Nov 30, 2009.  In order to be sure you make the deadline, you need to be in escrow by October 1, 2009.  So get your pre-approval letter and select your home ASAP.

While foreclosures can offer you big discounts, many bank-owned properties require substantial repairs.  You will need to know what you are getting into and I can guide you safely through the search and buying process.

For a free list of foreclosed properties go to www.bankownedweekly.com/mendocino

People are always asking me how the market is doing, and for quite some time, I’ve been saying that I think we have hit bottom and that the market is headed back up.  The news media (who unwittingly control the economy) have reported positive gains, but often the national statistics do not apply to our local area.  Here are the latest and greatest stats from my California Association and it is truly good news. 

It’s also interesting to note that the Tax Credit has fueled the rally with a whopping 40% of buyers who said they wouldn’t have bought without it.  There is talk of extending the deadline beyond the Dec 1^st deadline, but with the national debt skyrocketing, I think it may not happen.  If you want to take advantage of it, you had better be in contract by October 15^th to ensure you can close in time.  Loan underwriters are slammed and approvals are taking up to an extra two weeks.

I’ve highlighted the main points for you, in case you are in a hurry.

Home sales increased 12 percent in July in California compared with the same period a year ago, while the median price of an existing home declined 19.6 percent, C.A.R. reported yesterday.  “The federal tax credit for first-time buyers played a critical role in the purchase decision of many buyers,” said C.A.R. President James Liptak.  “Nearly 40 percent of first-time buyers said they would not have purchased a home if the tax credit was not offered.  Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers.”

Closed escrow sales of existing, single-family detached homes in California totaled 553,910 in July at a seasonally adjusted annualized rate.  Statewide home resale activity increased 12 percent from the revised 494,390 sales pace recorded in July 2008.  Sales in July 2009 increased 8.1 percent compared with the previous month.  The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the July pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during July 2009 was $285,480, a 19.6 percent decrease from the revised $355,000 median for July 2008, C.A.R. reported.  The July 2009 median price rose 3.9 percent compared with June’s $274,740 median price.

“July marked the fifth consecutive month of month-to-month increases in the median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “This was the largest increase on record for the month of July based on statistics dating back to 1979.  The yearly decline in July also was the smallest in the past 19 months.”

If you know me, you know that I’m not fond of political humor because so much of it vilifies people personally, instead of focusing on the issues and solutions.

However, this sketch from The Daily Show is very clever, not at all mean-spirited and really made me laugh.

It stars the U.S. Secretary of the Treasury, who can’t seem to price his home to sell.  Welcome to my world Mr. Geithner!

http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation

Many thanks to Craig Forte, Real Estate Business Coach and Executive Editor of AgentInnerCircle.com for sending me the link in his Agent Inner Cirlcle Newsletter.