Homescopes

In Piedmont, Rockridge & Montclair there are lots of opportunities to enjoy the Holiday season that don’t cost anything. 

On Wednesday, December 3rd at 7:15 pm, the annual Holiday Tree Lighting Ceremony at the Piedmont Community Center.

The Holiday Stroll in Montclair Village is on Thursday December 4th at 6 pm.  Entertainment to be the Girl’s Choir, California Revels, Pacific Boy’s Choir & the Piedmont High School Jazz Band.  Santa arrives at 6:20 !

If you enjoy holiday light displays, visit Picardy Drive in Maxwell Park and also 56th, 57th and 58th between Brann & MacArthur. 

Don’t miss the elaborate outdoor creche and light display at the Mormon Temple on Lincoln Ave.

Happy Holidays! 

Buying a home should be fun, not stressful. I help my clients by taking on much of the behind-the-scenes details, which lowers their stress.  As you look for your dream home, keep in mind these tips for making the process as peaceful as possible.

1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.

5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life. 7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.

During the past few months, some banks have become more “user-friendly”  with the disposition of the property.  In many cases, the Loss Mitigation Managers, who work for the Bank have been given the mandate to sell these properties as quickly as possible.  My last transaction was representing an young couple who wanted to buy a home in Pleasant Hill California.  The Bank offered the property for $585,000.  We offered $507,000 and they agreed.  Of course Banks want a pretty clean deal.  My buyers did a Pest and Home Inspection, they came back with only minor issues.  Being Bank approved, the buyers closed the escrow in 18 days.  Buying property from a Bank can save you a lot of money if you are careful, do the necessary reports and show them that you’re serious.

I just want to wish all my readers a Happy Thanksgiving and remind you if you are around tomorrow about the Festival of Lights, one of Yountville’s premier holiday events from 2-6 PM. From Yountville Chamber of Commerce’s web site:

In 1831, George Calvert Yount saw the Napa Valley and declared, “In such a place I should love to clear the land and make my home. In such a place I should love to live and die.”

As the first non-native settler in the Valley, Yount enlisted local Wappo Native Americans to help him build a Kentucky blockhouse and a mill. In 1855, he commissioned a surveyor to lay out the city. The new community was christened Sebastopol, even though there was a town with the same name in nearby Sonoma County. George Yount planted the first grape vine cutting into the fertile soil of the Valley. In 1867, two years after Yount’s death, the town was renamed Yountville in honor of its founder.

Gottleib Groezinger established a massive brick winery, wine cellar and distillery in 1870, and the community was soon planted with grapes. In 1884, the Grand Army of the Republic established the Veteran’s Home to honor and care for those injured in service to their country. The Home was given to the State of California in 1897. Gradually Yountville became a quiet residential town. In 1965, it was incorporated as an official California city, and shortly thereafter, the old Groezinger property was revitalized as Vintage 1870, a complex of shops, galleries and restaurants which turned Yountville into a charming visitor attraction.

Through the years until the present day, Yountville has retained its rural charm and residential character while encouraging the commercial centers to retain the charm and taste that has become synonymous with Yountville. Today’s visitor will find a variety of gourmet restaurants, charming lodgings, exquisite retail shops, antiques and art galleries, and world-class wine tasting opportunities. Sunrise hot air balloon rides, an afternoon of golf, a historical walking tour, a set of tennis or a bicycle ride down a quaint vineyard lane are just a sampling of what Yountville has to offer.

In Yountville, the seasons come to life with festivals, celebrations and events! In March Yountville celebrates the Napa Valley Mustard Festival with “A Taste of Yountville!” This all-Yountville showcase features traditional samplings of gourmet restaurant fare, olive oil, vinegar and mustard as well as fine wine and micro-brew tastings. A cornucopia of lifestyle demonstrations by retailers and innkeepers, including fashion shows, tours, furniture restoration demonstrations and celebrity chef mini-workshops awaits visitors.

Christmas past comes to sparkling life the day after Thanksgiving with the kick-off of Yountville’s “Festival of Lights,” heralding a joyous month-long celebration of holiday events and entertainment through New Year’s Eve. Strolling musicians, jugglers, face painters and artists join Yountville’s restaurants and wineries along Washington Street. Vendors offer sumptuous samplings, holiday treats and the wine that makes the Napa Valley famous. That evening join Santa as the entire town is set aglow with thousands of sparkling white lights.

Like most things in life, what was in vogue many years ago comes back into vogue after many years of being dormant. This applies to clothes, music and real estate !

For the past 6 or 7 years, interest rates have been so attractive, what used to be called “creative financing” has had little play in the recent market.

Now that the market has slowed down, some of these “creative” techniques are coming back.

Owners are now helping the buyers finance the purchase by carrying back a note as part of the purchase price. This could be a first loan or even a second loan.

There is another way, home sellers can help buyers obtain financing without the need to carry paper.

By buying down the buyers’ interest rate, the home seller can still obtain all cash for his property and keep the sales price up while bringing the buyers’ monthly payment down. It does cost a home seller money to buy down the buyers’ loan rate, but as I will show below; the cost of the interest rate buy down to the home seller is less than the price reduction required to bring to buyers’ monthly payments down to the same level.

Let’s look at a $750,000 purchase with 20% down ($150,000) for a $600,000 loan.

A typical 30 year fixed rate loan at 0 points might be 6.125%.

The loan payment would be $3,646.

If the home seller would pay 1 point towards the buyer loan, the rate would be reduced to 5.625% and the monthly payment would be $3,454.

1 point would cost the home seller 1% of $600,000 or $6,000 so effective sales price would be $744,000.

If the home seller was to just reduce the price to $744,000 and the buyer got an 80% loan with no rate buy down, his payment for 80% loan of $3,616 - which is a $30 reduction in the buyer monthly payment - whereas with the 1% buy down, the buyers’ monthly payment is reduced $192.

What price could a buyer pay for the house without a buydown and keep his monthly payment at the buy down payment of $3,454?

At 6.125%, $3,454 would borrow $568,456 and with the same $150,000 down, a buyer could buy a house for $718,456.

With this example….one can see….a home seller can pay $6,000 towards the buyers’ interest rate - generating a new sales price of $744,000 while the buyer will have a payment on a $744,000 house equivalent to a home purchase of $718,456 without the buy down.

Effectively the seller is able to obtain $25,544 ($744,000 less $718,456) more for his house while making his home more affordable for the buyer. This creates a win win situation for both the home seller and home buyer.

Please let me know if you have further questions.

You may also contact Linda Lunsman at Princeton Capital for more specifics.

Here is the latest Cost vs Value for typical improvements many home owners consider or undertake to improve their homes. For a copy of the complete article, see  “2008 Cost vs. Value Report: Still Many Happy Returns for Home Rehabs” from Realtor Magazine.

NAR 2008 improvement cost vs value averages

You would have to be living under a rock to have missed this today, so here is a newsflash for all you subterranian dwellers. Henry Paulson’s latest bailout plan now consists of borrowing $800 Billion from The Fed to buy up mortgage assets, consumer credit card debt and car loans.

In his article, “Fed bets $800 billion on consumers“ on CNNMoney today, writer Chris Isidore shares Uncle Henry’s latest plans:

“The Federal Reserve and Treasury Department on Tuesday unveiled a plan to pump $800 billion into the struggling U.S. economy in an attempt to jumpstart lending by banks to consumers and small businesses.

The government hopes that these initiatives will enable more money to flow to consumers in the form of loans than has occurred so far in previous bailout plans.

One program will make $200 billion available from the Federal Reserve Bank of New York to holders of securities backed by consumer debt, such as credit cards, car loans and student loans.

The Treasury Department will allocate $20 billion to back that lending in order to cover any losses that the New York Fed might suffer.

In addition, the Federal Reserve, announced it will purchase up to $500 billion in mortgage backed securities that have been backed by Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote home ownership. It will also buy another $100 billion in direct debt issued by those firms.”

Hmmm, buying mortgage backed securities . . . wasn’t that how TARP was sold to Congress in the first place? The idea of the US Government buying up toxic mortgage assets in an attempt to get the three remaining solvent banks to start underwriting mortgages is enough to get any red-blooded Realtor’s blood pumping again. If this restarts the housing market, let’s all be sure to thank the lobbyists working for NAR, and remember them on our Christmas lists.

The Fed goes the original plan one better by setting aside $200 Billion to buy securities backed by auto loan and credit card debt. Hmmm, let me see if I get this straight . . .

The idea behind mortgage backed securities was that they were safe because they were backed by the houses those mortgages were written against, and the logic was that those were APPRECIATING assets. This worked great until housing prices started falling, and the underlying assets were worth LESS than the loans on them.

A car drops 20% in value the minute you drive it off the lot, so you are already upside down on the loan if you put down less than 20%. The car ads are all touting $0 down, so let’s assume that most buyers today are putting down less than 20%. So . . . is this Groundhog Day?

Don’t get me started on buying credit card debt . . .

This is another reason I don’t work in the Treasury Department. That, and that pesky question about blog articles that would embarrass the President.

You can read the full text of the article HERE.

Thanks for reading . . .

We had our weekly meeting and listing tour this morning.  Only one home was on tour:  181 Tarragon Avenue.

This is a lovely six year-old home in the Capriano development in the northwest part of Morgan Hill.  The home is priced competitively at $989,000 and is being sold by the original owners.  It is a 3706 sq.ft. home with 4 bedrooms/4.5 bathrooms and is situated on a 9583 sq.ft. lot.  The backyard feels private and comfortable and boasts a very large spa with no pool but the spa is often the most used portion of a pool/spa combination anyway!

At our meeting we discussed the drop in interest rates due to the Fed’s purchase of $500 billion in mortgage backed securities.  Rates dropped below 6%.  This bodes well for purchases and refis.  Should be a happy Thanksgiving for many who may be helped by this and will be able to stay in their houses!

One of the most interesting measures of the tension between buyers and sellers in a real estate market is the “Months Supply of Inventory” figure. What this number tells us is the number of months it would take to sell the existing number of homes for sale at the present rate of closed sales.

Buyers Market or Sellers Market?

Generally six months of inventory is considered to be a market balanced between buyers and sellers. Anything less, and sellers are advantaged in negotiations. Anything more, and the trend favors buyers. Two years ago in Sonoma county, there were 6.2 months of entry level inventory for sale.

When the first wave of foreclosed properties began hitting our market in force in 2007, the inventory piled up to a high point that so few properties were selling, as many more were coming on the market. Consequently, MSI (Months Supply of Inventory) ballooned to a 14.8 months supply, a strongly favored buyers market.

Early in 2008, banks began slashing prices and buyers have been increasingly active ever since. (See my posts under market updates beginning in March to track this trend.) The lower priced properties, driven by foreclosures, have steadily been absorbed by first time buyers and investors.

They have been gobbling up REO’s so quickly that now there are only 2.7 months of inventory available at the current rate of new listings and sales, a strongly favored sellers market.

If you are a buyer interested in purchasing an REO home, it is important for buyers to be prepared for the market realities especially for the most solid homes in the best locations.

1. You must have a STRONG pre-approval. In many cases first time buyers will be competing with all cash investors for the same properties.
2. You may need to make multiple offers on a stream of properties before you land the right one.
3. It ALL DEPENDS. Make sure you have a committed working relationship with a realtor who is knowledgeable about the changing market, and who knows how to present and negotiate your offer(s) in the best light.

Just as sellers have learned (in some cases!) to be realistic, it is important for buyers to do the same. Happy hunting!

At first glance the overall supply and demand trends for Sonoma County real estate from October 2006 through October 2008 show gentle trend lines that belie the turbulence of our market. The number of units for sale (all residential types and all price ranges) is down modestly (3.9%) from 3284 units then to 3155 units now. The peak was 3608 units for sale in August 2007 with some seasonal trending over the 25 months. The number of units sold has increased by a robust 33% however, to 508 units from 381 units in October 2007.

Days on market for properties in contract has declined from 93 days (peak 112 in January 2007) and the number of properties under contract has grown significantly from 372 to 553. The number of pending Sonoma County home sales is the highest in 4 years. Last year at this time, pending sales were hovering between 166 and 286 units per month! Now they are running 450 to 550. The reason for the change? Banks got aggressive and drastically lowered the list prices of bank-owned (REO) properties creating lots of competitive, interested buyers.

The true story behind any particular home investment is driven by intensely local conditions rather than broad average trends: single family home, country property, vineyard property, fixer or condo. It is absolutely a function of price point with the bulk of the activity under $500,000.

The following graph shows the same trend lines as above(active inventory versus sold listings) for all residential Sonoma County sales under $500,000.  Since the median home price was nearly $600,000 at the market peak in 2005-2006, very little was available under $500K. Since then, it has declined county wide on average jut over 30%–there’s that word again, on average.    While the overall number homes for sale has declined slightly since October 2006, under $500,000. it has nearly doubled.  The number of units sold in this price range has increased nearly 200% in the last 25 months.  Bottom line is the banks figured out pretty quickly how to move REO inventory and both investors and first time buyers are competing for the best of these homes.  Result–inventory is declining faster than it is coming on the market and overall sales velocity has increased, all fueled by the REO bargains.