Cautious, but Good News for the San Diego Housing Market in 2010

With prices up 6.6% in San Diego County, the medium priced home now $325,000, and the number of homes sold up 18% compared to one year ago, it is fair to say that San Diego County is in a stabilizing market. Just last week appraiser, Leon Crowell, confirmed, "We can no longer say we are in a declining market. "

While some are cautiously optomistic about the unemployment rate improving from 10.7% in October, the highest rate since the Great Depression, to 10.3% in November. According to Chrisopher Thornberg, who was one of the first economists to forecast a major recession, said the recession has hit it peak. "All the data shows that the U.S. economy has more or less bottomed out. We should only be surprised if unemployment wasn't peaking. The bigger issue is how fast of a recovery we're going to see," said Thornberg, who works for Beacon Economics in Los Angeles.

Coupled with the news that foreclosures rates are dropping. According to the MDA DataQuick, San Diego County Foreclosures by all lenders totaled 11,393 from January to October was down from 15,414 for the same period last year. The reduction continues, the number of foreclosures in October 2009 numbered 1,346 dropping 4.7% to 1,283 in November. Some believe under government pressure and incentives, banks are delaying or canceling foreclosures while working with home owners to modify their loans or arrange for short sales.

In the short term, the reduction in foreclosures and the reduction in unemployment could help stabilize the economy and housing market, prompting homeowners with equity, not in distress, to sell and buy another home. Some believe that many owners will still hold back because of loss in value compared to a few years ago. Since 2006, prices tumbled as a result of many homes being lost to foreclosures. But as one of my wise sellers recently said, this is the time to sell and move up because "while my home value has fallen, I will get a better deal on my new home and 10 years from now, the home I am buying will be worth much more in proportion."

So while I agree with Thornberg, the question is how quickly the recovery will occur, it does seem there is hope on the horizon.

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Uncle Sam's Christmas Gift

While everyone is bustling around buying gifts and attending parties, there are still serious buyers out there making multiple offers on well maintained homes.

If you atticipate the need to sell your home, now is a great time to market it. The number of homes for sale are typically lower at this time of year due the holidays. With fewer serious buyers trampling through your home and the Christmas decorations adding a romantic ambience, make it the perfect time to sell.

If you need to sell, it definitely won't get sold unless you have it on the market. Worried about theft? Hiring a Realtor who uses computerized Sentri lockboxes, provides the ability to track agents and their clients entering the home.

Many sellers think waiting until spring is the best time to sell. However this year, with the Tax credit extension, buyers must have an accepted offer by April 30, 2010 and close by June 30,2010 leaving only a few more months. So if you are facing a possible foreclosure and want to sell your home before that, you need to consider that banks typically take several months to approve short pay sales.

If you are moving up, you may qualify for the $6500 tax credit. The tax credit does have income limits and the home-price cannot be above $800,000. Read more about it in Homebuyer Tax Credit Extension & Expansion . However, if you can afford to move up, this is the perfect time to sell and buy a bigger or better home.

Many move-up home buyers say they are waiting for home prices to go back up to regain the equity that they have lost in the last couple of years. For those who have lost all of their equity, there is no choice. They must wait for the equity to return. However, for those who have some equity and plan to wait until they regain what they have lost, may find themselves behind the curve.

Several years from now when home prices begin to rise again, as they historically do in San Diego County, the home equity growth will all be in proportion to the price of the home. For example, if you purchase a home of $350,000 versus a home of $700,000, in 10 years from now if the home value rises 10% then you will have gained $70,000 in the $700,000 versus $35,000 in the $350,000 home. During the downturn, if you have lost about 30% of your home equity, on your $350,000 house, then you will be down about $150,000 in equity. In comparison, the $700,000 house has lost about $300,000 in equity, twice as much. So in the long run when home prices go back up as they historically do, by moving up now, then you will be up $150,000 in equity.

Don't delay take advantage of Uncle Sam's Christmas Gift.

Homebuyer Tax Credit Extension & Expansion

If you haven't heard the news already, the First Time Home Buyer Tax Credit has been extended, as well as the new bill includes a tax incentive for existing homeowners as well. Homeowners who have owned their current homes at least five years, are now eligible for tax credits of up to $6,500 when they purchase a new home. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010 and close by June 30.

The credit is available for the purchase of principal homes costing $800,000 or less, excluding vacation homes. Single individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000 would not be eligible.

Other provisions in the bill, include taxpayers will be eligible to claim the credit on purchases made in 2010 on their 2009 income tax returns. The bill also established that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

While some may feel the tax credit may be adding to the National debt, according to the National Association of Realtors, economists estimate that the current tax credit has already contributed approximately $22 billion to the general economy, and approximately 2 million people will take advantage of the tax credit this year.

Some think that they didn't need to give such large tax credits. Or was it large enough? What do you think?

If you would like more information, please contact me.

Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Buyers, Don’t Forget Your Pre-Approval Letter!

Many buyers consider shopping for a home, like a buying a car. When is the last time you checked with your lender before buying a car? However, it is a much bigger investment and by getting a preapproval letter, you can step smoothly into home ownership.

But you looked on-line at a mortgage calculator. These wonderful tools are helpful to get a rough idea of what your monthly payment might be, but a lender will use many factors to decide what type of loan you qualify for and for how much.

If you are serious about buying a home, check with your Realtor® on who they might refer. Realtors® know which lenders will deal with their clients in a professional, timely manner and will find any obstacles upfront, rather than half way through the purchase that might cause a problem.

A preapproval letter from a lender, before you begin seriously shopping for a home, will save you hours of wasted time and frustration for the following reasons:

1) A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a “pre-qual” from a Web site is just as easy. Enter some information, click “submit” and in no time you have a letter. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.

2) You’ll know how much money you can qualify to borrow. Most home buyers have a rough idea of how much they would feel comfortable paying every month on their mortgage. However, there’s no quick-and-dirty way to translate that monthly payment into a specific maximum mortgage amount because other factors — down payment percentage, mortgage insurance, property taxes, adjustable interest rates and so on — are part of the calculation. And, you might not be qualified to borrow as much as you think you should be able to borrow, depending on your income, your debts and your credit history.

3) You’ll have more leverage in negotiations with the seller. Sellers often prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point in a close multiple offer situation. And, you might feel more confident about making an offer with a pre-approval letter in hand and the knowledge that you’ll be able to obtain a mortgage.

4) Your Realtor® will work harder on your behalf. A pre-approval letter signals to your real estate agent that you’re a well-qualified buyer who is serious about purchasing a home. The increased likelihood of a closed sale — and a commission — will naturally motivate your agent to devote more time and energy to you. In fact, some agents won’t even show property to buyers who don’t have a pre-approval letter.

5) A few caveats: Pre-approval letters are not binding on the lender, are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, apply for credit or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.

--Virginia Hall
ABR®, CRS®, e-Pro®, GRI®
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Clear Choice: Upgrading Windows

If you feel a draft every time you walk by your windows, it’s probably time to replace them. Likewise, windows that stick, glass that is cold to the touch, and costly energy bills despite new insulation and other home repairs are all signs that you’ve put off replacing them for too long.

Whether you intend to buy and install the windows yourself or have a pro do it for you, do the research first. Know your window type: double-hung windows that slide up and down, casement windows that swing out, awning windows, etc. Then pick your preferred framing material, such as wood, vinyl or fiberglass. Each has its advantages and disadvantages, from style to price to longevity.

You must also consider where you live; energy needs in the Northwest differ from those in the Deep South. Ratings for energy efficiency, light visibility, air leakage and other factors are available from government programs such as Energy Star, publications such as Consumer Reports and industry sources such as the National Fenestration Rating Council.

Armed with the right information, you can shop smarter. Have a target price in mind, get estimates and have the patience to wait for the best possible price.



Sources: http://www.energystar.gov.www.nfrc.org/

Handy tip: The sun’s rays cause window streaking, so save that part of spring cleaning for a cloudy day. Source: www.realsimple.com

3 Low Cost Tips for a Sure Sale: Preparing Your Home to Sell

As home prices begin to slowly rise, homeowners think about preparing their homes to sell. The goal of taking some time to prepare your home is to sell in the shortest time for the most money. A good place to start is contacting an experienced Realtor®, a few months in advance, for advice on how to prepare your home.

Where do you begin?

1. Clean and De-clutter. The least expensive, yet the most important task, that people underestimate is a thorough scrubbing of the home. When you are selling your home, you need to cleans every corner, bleach out spots or replace grouts in kitchen and bathrooms. Aluminum, mirrors and windows must shine. Clean walls, or touch up paint, and lastly clean carpets.

If you have been squeezing by furniture, you need to remove a piece furniture to open up the room. Clear out as much as possible to make the home look bigger. Clear off counters and table tops. Visit a few open houses to see what works. Remove all personal photos or items. Think Model Home, impersonal. Preparing a home to live in and sell, are two very different things.

2. Curb Appeal. Mow and edge the lawn or weeds. With the water regulations, you may need to add some Ammonia Sulfate to your lawn and water a bit more to green it up. Check with your local nursery for more information. Right before listing the home, add some colorful plants out front.

3. Repair or Replace. Some homeowners begin with a home inspection by a qualified home inspector, before putting it on the market, to correct any issues that may be used to negotiate the price down. A few hundred dollars in an inspection and repairs, may save the homeowner thousands of dollars in the price.

While quite often homeowners know where the problems are, but may not have the money needed to deal with them. To save money, they may try to do the repairs themselves. Simple repairs may be okay, but often you need an expert to fix the problem. Otherwise, you may fix it so no one else can fix it. Then it may end up costing more in the long run. Anyone who has ever looked under a kitchen sink and thought replacing a garbage disposal would just be a easy fix, a matter of unscrewing a few screws and screwing on a new one, can attest to this.

If you do not have the money to make the repairs, the price may need to be adjusted or credits may be given to the buyer. So knowing up front what you need to do will save time and money.

Another issue that impacts many homes in San Diego County due our expansive soil includes cracked foundations. Signs that may turn buyers away such as cracks in walls and flooring should be investigated before trying to repair or cover them up. The expert's report may say it is nothing, putting the buyer at ease, or it may say it will cost thousands of dollars to repair. Either way, the law requires that you disclose material facts like this to the buyers. While you may not have the money to make the repairs, this has to be disclosed. The buyer has a right to know what they are buying. This may impact the price, but save you a visit to court.

Other issues that need to be disclosed, if you have knowledge of it, include unpermitted rooms. If you are uncertain, it is up the buyers to investigate. However, knowing up front, could save time with FHA or VA buyers who may not qualify for their loans as a result of unpermitted rooms. See my blog FHA & VA Buyers Be on Look Out--10 Most Common Home Problems .

Using these 3 simple tips will help you sell your home faster and for top dollar. For other home selling tips see my blog Price Wars and Beauty Contests--8 Simple Tips to Win.

--Virginia Hall
ABR, CRS, e-Pro, GRI
Coldwell Banker Residential Brokerage
(619)258-8585

The San Diego Appraisal Nightmare

The buzz among Realtors today is the appraisals are coming in low, gumming up the sale of homes. While the inventory of homes decreases in San Diego County, the law of supply and demand pushes prices upwards. However, how far above the last comparable home sale can they go?

Sellers can ask a ten-million dollars for their home, but will the comparable home prices in the area support the price? This is a fair and honest question that Sellers need to seriously consider when choosing a price to list their home at.

The pendulum seems to have swung the opposite direction. A few years ago, appraisers chosen by lenders, seemed to search for properties that supported the rising prices. When prices began to turn, declining, and people began to walk away from homes that were no longer worth what they payed for them, the appraisers were often blamed for over-inflating the home prices. Some were even held accountable for their inaccurate appraisals.

Now appraisers are faced with a several challenges and producing conservative prices that are seeming to error on the low side, rather than risk over-valuing a home. Some believe that due to new regulations, appraisers are now chosen from a pool rather than the individual lenders in hopes of a more impartial appraisal, has led to appraisers sometimes working out of unfamiliar territories. They may not know be familiar with the local area and only have the multiple listing information about properties versus first hand knowledge. The second issue they face is there is still a supply of lower priced foreclosures and short sale homes that may be the only comparable homes available.

So what is a seller to do when their home appraisal comes in under the offer price? You can appeal the appraisal, which involves reviewing it to find factual errors, detailing why the comparable homes were not good comparisons, and coming up with better comparable homes. Or there is always back to the drawing board and renegotiate the price.

As the number of offers multiplies on well maintained or even average homes with good bones, sellers will be looking for the buyers prepared to bring in extra cash to pull the appraisal and offer price together should it come in low. So buyers need to be prepared with extra cash to back up their offers.

--Virginia Hall
ABR,CRS, E-pro, GRI
Coldwell Banker Residential Brokerage
(619)258-8585

What are FHA Buyers to do? The New FHA 203K Loan Option

First time home buyers are growing frustrated as the number of available homes for sale in San Diego County declines. They can't seem to find a home that will qualify for their FHA loan or they can't seem to beat out the all cash and conventional loan buyers.

FHA loans have strict guidelines on what and won't qualify. Homes that will not qualify include those that are missing kitchen cabinets, heaters, toilets, worn roofs, unpermited garage conversion, or perhaps the seller won't pay for the required termite work.

What are FHA buyers to do? Don't give up. Looking through all those foreclosures and homes with deferred maintenance may now be the way to go. A new loan called the FHA 203K has recently emerged onto the scene. It will give buyers the opportunity to buy a home that may be in need of up to $35,000 in repairs. The repairs can include termite work, a new roof, a new kitchen or bathroom updates, converting back an unpermited garage. Often the seller or the bank won't pay for these improvement. Yet without many of these repairs being addressed the home would be uninhabitable. So there is usually less competition for these homes.

How does the FHA 203K loan work? Buyers still need to meet the FHA loan guidelines and bring in their 3 1/2% down . However, the big difference is the cost of needed renovation or upgrades will be added to the loan. The contractors have to be approved and the repairs must be completed within 6 months following the close of escrow. The added inspections and paper work can extend out the escrow a couple of weeks. While the interest rate may be higher than the traditional FHA loan, some sellers may be willing to help with closing costs to pay down interest rates to keep the loan affordable for the buyer and get the home sold.

So FHA buyers don't despair. There is still time to find that first home and collect the $8,000 tax credit. For more information on the tax credit, see my blog Uncle Sam Giving Money Away to First-Time Homebuyers .

--Virginia Hall, ABR, CRS, e-Pro, GRI
Coldwell Banker Residential Brokerage
Direct (619)258-8585
DRE#01409760

Raze the Roof

From painting and HVAC to organizing and yard upkeep, there’s so much to think about when it comes to home care that it’s easy to overlook the one thing that protects it all — until it starts to leak.

Your roof is one of the most important parts of your house, and it also happens to take the biggest beating, thanks to the elements and general wear and tear.

A new roof is a hefty investment — it can cost $6,000 to $20,000 or more — so how do you know when to replace it or just repair it? Here are some tips for knowing when to patch and when to overhaul:
• As a general rule, roofs usually last 12 to 20 years, depending on the climate. If your roof is approaching the 20-year mark, shingles are more likely to be worn out, and flashing around chimneys, eaves and skylights might have decayed, leaving your roof prone to leaks.
• If there are a lot of missing or torn shingles, as opposed to just a few, then it’s best to replace the roof. Shingles also curl up and crack as they age, making them unable to resist water and exposing your home to leaks and interior damage.
• Inspect the interior walls that touch the roof. If paint is missing, they are moist to the touch or there are water stains in the house, it’s clear that water has seeped in, and the roof will most likely need to be replaced. But finding one or two leaks in a specific location could mean that a roof patch will be enough to stall any potential damage.
• Extreme weather can wreak havoc on your roof. If prolonged conditions such as rain, hail and direct sunlight have exposed parts of the house from the top, a minor patch will not be enough to protect the interior, and the roof will need to be replaced.
Keeping your roof clean and in good repair should prevent costly replacements for years to come. But before attempting any patch or replacement, talk to an experienced roofer.

Sources: DIYLife.com, ExtremeHowTo.com

FHA & VA Buyers Be on the Look Out--10 Most Common Home Problems

With no more 100% conventional financing available, many first time home buyers are turning to the FHA and VA lending. While the FHA loans require 3.5% down and, if you qualify, the VA loans requires zero down, these loans do have their challenges.

With the interest rates still reasonable, many investors and conservative borrowers are out making their moves on lower end properties that can make the offers from FHA and VA borrowers less appealing because of the stringent property condition requirements and financial volatility of the buyer and their qualifications.

The number of well maintained homes grows limited in San Diego County, increasing the number multiple offers. While it is possible to find a clean home that qualifies for FHA or VA lending and still have the seller pay your closing costs, it is more challenging. When competing with multiple offers, being able to pay some of all of your closing costs will definitely help your position.

However, if you have limited funds and need the seller to help pay for your closing costs, then you should plan to look at homes in a slightly lower price bracket and plan to offer above the asking price, or be prepared to settle for a home that is slightly dated but functional.

While the home condition guidelines for the FHA and VA loans are very similar, they are not always clear cut. The home will be inspected by a specially trained appraiser who will note any safety or health issues that may pose a risk for the buyer and require they be fixed before close of escrow. Below is a list of some of the most common list of repairs that will require attention before having an appraisal for a FHA and VA loan:

1. Any useful components (appliances if present, floor covering, etc.) of the home, especially the roof, should have 2 years of useful life remaining. A roof should not be leaking and have no more than 3 layers of shingles.
2. If the homes was built prior to 1978 , exterior and interior paint that is peeling must be scraped and painted.
3. Must have a functioning heater. Wall heaters must be designed to heat the entire home.
4. Health and Safety Hazards (ie. electric garage door opener won't reverse with resistance; burglar bars, etc. )
5. Broken windows and doors should be replaced.
6. Safety handrails should be installed in open stairwells of three or more stairs.
7. Termite inspections required, as well as any infestations of any kind should be exterminated (ie., insects, mice, bats, etc.)
8. Damaged or inoperable plumbing has to be repaired.
9. Structural or foundation problems must be repaired. Crawl spaces must be accessible for inspection.
10. Electrical box/system should have no frayed or exposed wires.

VA and FHA requires that Condo complexes be approved. Since very few FHA and VA loans were being used when many of the newer developments were being built and some of the developers did not want to pay the extra fees required to get that approval, you may want to check these websites for complexes that are approved . For FHA see https://entp.hud.gov/idapp/html/condlook.cfm and for VA http://condopudbuilder.vba.va.gov/2.2/frames.html.

Sometimes, the buyer can negotiate in the purchase agreement that certain obvious conditions be fixed. However, quite often the sellers may not be able to or won't repair these items. So it may be in your best interest to avoid the problem homes all together.

--Virginia Hall
DRE License 01409760
Coldwell Banker Residential Brokerage

19 Helpful Water Saving Tips

As of June 1, 2009, mandatory water restrictions started for most of San Diego County. A three year drought has reduced the supply from the state water project in Northern California. We are already using reserves for everyday water. For more information about the restrictions, you can visit http://sandiego.about.com/od/governmentcities/qt/water_tips.htm

Here are 19 tips for conserving water on your own:

In The Bathroom
1. While waiting for hot water to come through the pipes, catch the cool, clean, water in a bucket or a watering can. You can use it later to water plants, run your garbage disposer, or pour into the toilet bowl to flush. (Can save up to 50 gallons a week per person.)
2. Replace your regular showerheads with low-flow showerheads. (Can save up to 230 gallons a week.)
3. Keep your showers down to five minutes or less using a low-flow showerhead. (Can save up to 75 gallons a week per person.)
4. Turn the water off while lathering-up in the shower. Then turn the water back on to quickly rinse. (Can save up to 75 gallons a week per person.
5. Take shallow baths, no more than 3 inches of water. (Can save up to 100 gallons a week per person.)
6. Replace your older model toilets with new ultra-low-flush models. (Can save up to 350 gallons a week.)
7. Check your toilets for leaks. Drop a dye tablet or a teaspoon of food coloring (avoid red) in the tank. If color appears in the bowl after 15 minutes, you probably need to replace the "flapper" valve. (Can save up to 100 gallons a week for each toilet repaired.)
8. Flush the toilet only when necessary. Never use the toilet as an ashtray or wastebasket. (Can save up to 50 gallons a week.)
9. Never let the water run while brushing your teeth or shaving. (Can save up to 35 gallons a week per person.)

In The Kitchen
10. Hand wash dishes just once a day using the least amount of detergent possible. This will cut down on rinsing. Use a sprayer or short blasts of water to rinse. (Can save up to 100 gallons a week.)
11. If you have a dishwasher, run it only when you have a full load. (Can save up to 30 gallons a week.)
12. Scrape food scraps off dishes in the garbage can or rinse them off with very short blasts of water. (Can save up to 60 gallons a week.)
13. Never use hot, running water to defrost frozen foods. Plan ahead and place frozen items in the refrigerator overnight or use the microwave oven. (Can save up to 50 gallons a week.)
14. Rinse vegetables and fruits in a sink or a pan filled with water instead of under running water. (Can save up to 30 gallons a week.)
15. Run your garbage disposer only on alternate days. (Can save up to 25 gallons a week.)

Around The House
16. Repair all leaky faucets, fixtures and pipes both inside and outside your home. (Can save more than 150 gallons for each leak.)
17. When doing the laundry, never wash less than a full load. (Can save up to 100 gallons a week.)

Outdoors
18. Set lawn mower blades one notch higher since longer grass reduces evaporation. Leave grass clippings on your grass, this cools the ground and holds in moisture.
19. Mulch, compost and wood chips are available at the Miramar Greenery.

From the City of San Diego's Water Conservation program.

Join your neighbors and community in conserving water.

---Virginia Hall

San Diego County Median Home Prices Slowly Climb

Good news for the over-all San Diego market. The countywide medium home price increased again in May. According to the DataQuick the Median Home Price hit $295,000in May, a $15,000 rise since January and $5000 in May.

Since January, three out of five areas of San Diego County continue a modest recovery. While overall prices are still down 22.6% from a year ago, Buyer activity remains steady.

While the number of "All Homes and Condos" sold countywide decreased by 133 in May compared to April, the number of "New Homes and Condos" increased by 19. Most of May’s increases were seen in higher valued condo sales, which increased from $182,000in April to $199,000 last month.

For example, while Santee showed a 4% decrease in resale house prices from April, the New Home and Condo sale showed increases from April--resale condo prices rose 4% along with new home sales 28%.

While the number of foreclosures decreased from 43.1 percent of all resales in May compared to 51.1 percent in March, some believe the 90 day foreclosure moratorium that went into effect on 6/15/09 along with banks attempting to modify loans may be producing a temporary reduction in the number of foreclosures.

"DataQuick analysts suggested that home prices may have bottomed out, but caution that price depreciation may be hitting more affluent neighborhoods because of mortgage defaults and impatient owners of higher-end homes who need to sell in the current market," according to Ned Randolph, San Diego Business Journal.

The number of homes sold at prices greater than $500,000 has gradually increased from 18.8 percent in March to 20.5 percent in April to 23.1 percent in May.

However, with the reduction in the number of homes available down to about two months supply, demand should continue to push prices slowly upwards.

--Virginia Hall
Coldwell Banker Residential Brokerage