Here's part of an article about the current real estate market ...

Monday, July 24, 2006

Diane Wedner
The Los Angeles Times

The Southern California real estate market is cooling, but industry analysts say the tumbling prices, glut of houses, and 8 percent to 10 percent interest rates that marked the recession of the early 1990s are nowhere in sight.

Instead, business appears to be chugging along, with prices up an average of 7.4 percent in the last year. The number of existing homes and condos sold has dropped as much as 13 percent in some areas, but new-home sales, which make up 22 percent of the market, are showing strong gains, according to DataQuick Information Systems, a real estate research firm.

Most big builders, wanting to avoid a repeat of the '90s — when they were stuck with unsold homes after the recession hit — now build houses only after pre-selling them.

John Karevoll, chief analyst for DataQuick, says the psychological barrier to home buying — when interest rates reach a number that discourages buyers and pushes home prices down — is 7.8 percent, but economists don’t expect rates to reach that level.

So existing home sales have returned to what has been historically normal. Because some homes are on the market longer, David Toyama, a Coldwell Banker associate, has seen a subtle shift in favor of buyers, who for several years struggled to purchase properties — especially at the entry level — and finally are getting some breaks from sellers willing to accept contingencies.

"I love this market right now,” says Toyama. "Sellers are more reasonable, buyers are getting in the market, and the flip artists are gone. We all win."

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here's a column about having the right expectations during your home search ...

How can I make sure I buy the right house?

Monday, July 24, 2006

By Dian Hymer
Inman News

No one likes to admit they bought the wrong house. But, it happens.

Decades ago, one couple who live in the Oakland Hills in Northern California bought their first home because they fell in love with the setting. They were in competition with another buyer and had to make a snap decision. Soon after moving in, they realized that the house had a dysfunctional floor plan. There was no comfortable place to sit down for a meal; the kitchen was small and there was no dining room.

A year and a half later, they sold the first house and bought another a few blocks away that had both an eat-in kitchen and a formal dining area. However, this house was too small and had only one bathroom. Two years later, they moved again. They got it right the third time when they bought a house that suited their long-term housing needs.

This was an expensive way to learn what they needed in a home. The fees associated with buying three times and selling twice within less than four years amounted to more than $100,000, adjusted for inflation. It could have been worse. There was significant home-price appreciation during the time that this couple bought and sold. So, they realized a profit on the sales, even after deducting the transaction fees. This would not have been the case if they'd bought and sold several times when the real estate market was either flat or declining.

The current housing market is in transition. The rate of home-price appreciation has declined from the robust pace of a year ago. Although prices are holding up well in many areas, prices could dip in housing markets that are overbuilt or are subject to an economic downturn.

With relatively low interest rates and more inventory to choose from in many areas, this could be a good time to buy if you find the right property. But, if you buy the wrong house in the current market, you could actually lose money if you want or need to sell within the next several years.

HOUSE-HUNTING TIP: Here are a few guidelines to help make sure you buy the right home the first time:

-- Don't let yourself feel pressured into buying because interest rates are rising, or because you're tired of where you're currently living. Bad home-purchase decisions are often made under pressure.

-- Many listings are staged for sale. Don't be distracted by a good decorating job. You're buying the house or condo, not the furnishings. Force yourself to look past the staging to make sure that it offers you the amenities you need, like adequate storage space or a good yard for children.

-- Avoid reactionary buying. The couple in the above example was so intent on improving their dining experience that they failed to take into account that they also needed two bathrooms and more living space for the house to work long-term. Before making a commitment to buy, make a list of the features that your current home lacks. This will help you generate a comprehensive wish list that doesn't overlook something critical.

For example, if you entertain a lot, you'll want a home with generous public spaces. If you're a serious cook, the kitchen amenities will be a priority. However, if you cook little and have parties catered, a fabulous kitchen may not be as important.

THE CLOSING: Compromising is a part of the home-buying process. The perfect house doesn't exist -- not at any price. Just make sure your compromises don't leave you wanting to move again soon.

Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here is an article about the Fed chief's views on real estate market ...

July 21, 2006

Barbara Hagenbaugh
USA Today

So far, all appears to be well with the slowing housing market, Federal Reserve Chairman Ben Bernanke told members of the House Financial Services Committee yesterday.

"The downturn in the housing market so far appears orderly. The level of [housing] activity is still relatively high on a historical basis," Bernanke says.

In response to questions about the risk of rising interest rate driving more mortgage holders into foreclosure, Bernanke says the Fed estimates that 20 percent of outstanding mortgages have variable rates and half of those are set to change interest rates this year.

"So there will be some effect on variable-rate mortgages," Bernanke says. "But it should be a relatively slow process that would provide some cushion."

Bernanke's testimony came a few hours before the Fed released minutes from its latest meeting in June, when policymakers raised interest rates for the 17th time in two years. The minutes largely echoed Bernanke's testimony on the economy and suggested Fed officials are unclear about what they will do with rates in the months ahead.

When asked directly about another increase, Bernanke refused to comment.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here's an interesting article, great news for we Orangecrest owners ...

Student scores on state proficiency tests can drive up housing prices, a new study suggests

REALTOR® Magazine Online

A study of Ohio school districts showed that an increase of about 20 percentage points in the proficiency test “pass rate” increased home values in a school district by about 7 percent – even after considering other factors that can have an impact on home values.

“In Ohio, there are districts with 20 percent pass rates and some with 85 percent pass rates, so based on our findings that would result in about a 23 percent difference in house values solely because of the schools. It is not trivial amount,” says Donald Haurin, co-author of the study and professor of economics at Ohio State University.

More complex measures like how much proficiency test pass rates improved between the 4th and the 9th grades didn’t have much impact on home values.

Haurin says that’s a shame because paying attention to the pass rate rather than the improvement rating favors schools in affluent areas where students arrive at school well prepared.

“That school district will look good on average test scores no matter what it does with its students,” Haurin says.

Meanwhile, schools that work hard and improve their students’ test scores don’t get the credit they deserve and as a result don’t get as much taxpayer support even though they are definitely adding value to their students’ education.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here's an interesting advice column about planning for retirement ...

Homeowner seeks rental income during retirement

Wednesday, July 12, 2006

By Robert J. Bruss
Inman News

DEAR BOB: My home of 30 years has become too large for me to maintain. I would like to purchase a two-family duplex so I can have some rental income for my retirement years. I have been told it is possible to avoid the huge tax on the sale of my home by purchasing a building of equal value. But if I pay the sale tax, I cannot afford to buy a duplex. I am a senior citizen and need to supplement my income. Please clear this up for me -- Natalie M.

DEAR NATALIE: If you are a single principal-residence seller, you qualify for up to $250,000 tax-free capital gains. Internal Revenue Code 121 requires you to have owned and occupied your principal residence at least 24 of the 60 months before its sale. If you are married and your spouse also meets the 24-month occupancy test, then you qualify for up to $500,000 tax-free principal-residence sale profits.

But your plan to buy a duplex with the sales proceeds is irrelevant.

If you own your home free and clear, or nearly so, have you thought about a reverse mortgage to provide lifetime tax-free income so you can remain in your home? A reverse mortgage can solve your cash-flow problem. Details are in my special report, "The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

Adding Daughter and Spouse to Title was a Big Mistake

DEAR BOB: A few years ago, we bought a vacation home and added our daughter and son-in-law to the title so they could claim part of the mortgage interest and property taxes they paid. Since then, the vacation home has greatly appreciated in market value. Guess what? They are now getting a divorce. The son-in-law (whom we still like very much) claims a one-fourth interest in the vacation home. Is this legal? -- Ron R.

DEAR RON: Yes. If he is a one-fourth owner of the vacation home, he remains a one-fourth owner until the divorce is final and the assets are divided between the two ex-spouses.

Unless you needed your daughter and her husband on the title to obtain mortgage financing at the time of purchase, now I'm sure you realize it was a major mistake to add them to your title. At this time, there is no way to undo that situation. In the divorce settlement, the ex-husband will somehow be compensated for his one-fourth interest in your vacation home.

Stepped-up Basis Applies to Inherited Property

DEAR BOB: Until I started reading your educational columns, I had never heard about "stepped-up basis." Does this mean, for example, after my dad dies I will inherit his house at its current value and if I sell it the next day, I won't owe any capital gains tax? -- Nancy H.

DEAR NANCY: Presuming your dad leaves his house to you in his will or his living trust, you will then receive it with a new stepped-up adjusted cost basis of its market value on the date of his death. For full details, please consult your tax adviser.

The new Robert Bruss special report, "Probate Property Profit Secrets Revealed," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here's an article about the current state of real estate ...

July 11, 2006

Reuters News

Despite all the warnings about a housing bubble about to burst, 2006 still will be the third-strongest year on record, according to mortgage finance company Freddie Mac."

Although the direction of housing activity is unambiguously heading cooler, we remain confident that the climate is still temperate,” Freddie Mac says in its monthly economic outlook.

Freddie Mac expects 30-year mortgage rates to average 6.8 percent for the remainder of 2006, and for gross domestic product to grow 3.5 percent this year, slowing to 3.3 percent growth in 2007. Consumer prices are expected to rise 3.1 percent in 2006 before downshifting to a 2.5 percent increase the following year.

Freddie Mac predicts the economy will generate 1.6 million to 1.8 million new jobs this year. It forecasts that the unemployment rate will rise to 4.8 percent by the final quarter of this year and climb to 4.9 percent in 2007.

Freddie Mac also forecast housing starts to fall 7 percent from 2005 to 1.92 million units in 2006 and drop another 9 percent in 2007 due to rising home prices and mortgage rates.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Here is an article about why you should look for a "Realtor" with ethics ...

What it means to be a 'professional'

Wednesday, July 05, 2006

By Dr. Kevin Boileau

Editor's note: This is the first of an occasional article series on ethics in the real estate business. The writer will tackle timely issues and take ethics questions from readers at opinion@inman.com.

What Does It Mean to be a Professional?

The other day a car salesman boasted to me that he was a consummate "professional," and that he always did his job in a "professional" manner. I asked him how he knew that this was so, and he engaged in a long-winded conversation about satisfied customers, pleasing the manager, and being able to sleep at night. I listened carefully and wondered how he was so certain that he was meeting "professional" standards.

He was in a hurry so I didn't bother to explain to him that there really is a technical, traditional definition of "professional" status, which includes three criteria: 1) specialized knowledge; 2) group identification and membership; and 3) agreed-upon education and training, including ethics training, certification by examination and continuing education.

While he might have met the first two criteria, I wasn't sure that he could meet the third. To attain professional status, someone selling goods or services must be obligated to follow certain, written ethical standards of practice. This allows individuals in a specific industry to maintain specific behavioral expectations among themselves as well as toward their target consumers. Without a written code of ethics, standards are nebulous and therefore cannot be formally learned or enforced. This breeds moral chaos.

In contrast, with written moral standards, certification and training, individuals have a real opportunity to develop clear expectations and trust amongst themselves and consumers. In this case, they could actually become professionals.

The Value of Having a Fiduciary Duty

One of the earmarks of being a professional is that an individual has a fiduciary duty to each of his clients that is clearly spelled out in a written code of ethics. Two good examples of professional status are lawyers and Realtors.

In contrast, non-professionals are workers who do not have a fiduciary obligation toward the people with whom they do business. The extent of this individual's ethical obligation is usually delineated by contract (which also makes it a legal obligation), informal standards of the industry, or traditional expectations of the company for which he works.

Two good examples of non-professional status are courtesy clerks at grocery stores (formerly called "boxboys") and haybailers (usually young men who stack bales of hay onto flatbed trucks). More specifically, having a fiduciary duty requires a professional to never put his own interest above the interest of his client. It requires the highest good faith and fair dealing, which often requires the sort of guidance a parent provides to his or her children.

Professionals who carefully abide by their fiduciary duties consistently and fully create trust in consumers and in potential customers. This is good for business. Without this fiduciary duty carefully delineated in a written code of ethics, it is much more difficult for a group of individuals who work in a service industry to create trust among members of the public.

Boileau is CEO of BPI Consulting Group and co-executive director of Ethical Lending Foundation, and has published several articles and books on ethics, psychology and conflict resolution.

Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula