Median single-family home price reaches $580,090

Tuesday, April 24, 2007

Inman News

The rate of single-family home sales plummeted 20.8 percent while home prices rose 3.2 percent in March compared to the same month last year, the California Association of Realtors trade group reported today.

The condo sales rate dropped 13.5 percent while condo prices rose 1.2 percent year-over-year in March.

The median price of an existing, single-family detached home in the state in March was $580,090, while the median price of an existing condo was $435,770.

The seasonally adjusted annual rate for closed-escrow sales of existing, single-family detached homes in the state totaled 427,110 in March, according to information collected by the state Realtor group from about 90 local Realtor associations. This rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity.

"March sales fell below the levels of recent months in reaction to an uptick in mortgage rates earlier this year along with tighter underwriting standards. The year-to-year decline in March was larger than in recent months in part because sales in March 2006 were the strongest in all of last year," said Colleen Badagliacco, CAR president, in a statement.

"Recent news regarding foreclosures and the subprime situation had an adverse impact on the market psychology of many buyers, leading some to delay their home-purchase decisions."

The median time on market for for-sale properties dropped below 60 days for the first time since October 2006 while the inventory continued to rise, which is "a sign of price softness in the coming months," stated Leslie Appleton-Young, CAR vice president.

The trade group's Unsold Inventory Index for existing, single-family detached homes in March was 8.7 months, compared with 4.7 months in March 2006. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Thirty-year fixed-mortgage interest rates averaged 6.16 percent during March compared with 6.32 percent in March 2006, according to Freddie Mac, while adjustable-mortgage interest rates averaged 5.44 percent in March compared with 5.42 percent in March 2006.

The median number of days it took to sell a single-family home was 56.2 days in March, compared with 44.5 days (revised) for the same period a year ago, the association announced.

According to regional sales data collected from dozens of Realtor associations -- which is not seasonally adjusted -- median home prices dropped most in North Santa Barbara County (down 11.8 percent), Northern California (down 9.9 percent), and San Luis Obispo (down 6.1 percent) from March 2006 to March 2007.

Meanwhile, median prices increased most in Santa Barbara County (14.2 percent), Santa Clara (9.2 percent) and the San Francisco Bay (5.6 percent) regions.

A separate report that covers local statistics generated by the Realtor group and research company DataQuick Information Systems found that 36.4 percent, or 140 out of 385 cities and communities, showed an increase in their respective median home prices in March compared to March 2006. DataQuick statistics are based on county records data rather than MLS information.

Statewide, the 10 cities and communities with the largest median home-price increases in March 2007 compared with the same period a year ago were: Union City, at 26.5 percent; Berkeley, 23.8 percent; Culver City, 22.2 percent; Los Angeles, 17.9 percent; San Rafael, 17.8 percent; Hawthorne, 15.6 percent; West Hollywood, 14.6 percent; Claremont, 14.4 percent; Morgan Hill, 14 percent; and Laguna Niguel, 13.9 percent.

The 10 cities and communities with the largest drop in median price in March compared to the same month last year are: Brentwood, down 39 percent; Ripon, down 29.3 percent; Millbrae, down 28.4 percent; Aptos, down 25.9 percent; Westside, down 25.8 percent; Burlingame, down 23.8 percent; Galt, down 21.7 percent; Half Moon Bay, down 21.5 percent; National City, down 21.2 percent; and La Mesa, down 20.9 percent.

The 10 cities and communities with the highest median home prices in California during March 2007 were Los Altos, $1.66 million; Manhattan Beach, $1.61 million; Saratoga, $1.57 million; Newport Beach, $1.4 million; Burlingame, $1.31 million; Santa Barbara, $1.1 million; Los Gatos, $1.08 million; Lafayette, $1.05 million; Rancho Palos Verdes, $1.04 million; and Danville, $1.03 million.

And the 10 cities and communities with the lowest median prices in March were: Twentynine Palms, $163,500; Joshua Tree, $171,000; Barstow, $176,000; Ridgecrest, $194,000; Delano, $215,000; Porterville, Crestline and Yucca Valley, all $220,000; and California City, $225,000.

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

Monday, April 23, 2007

By Benny L. Kass
The Washington Post

Worried sellers are again considering financial incentives, including taking back a second mortgage to entice buyers.Several factors can make a second trust, as it is often called, attractive to buyers and sellers, including:

• The buyer won’t need to come up with so much cash.
• The seller can set the interest rate below what the buyer could get almost anywhere else.
• A seller can defer a portion of any capital gains tax he might owe on the property.

But there is also at least one big negative to consider. The second trust will be recorded in the land records after the first loan and always will be in the second position. If the first loan goes into default and the lender forecloses on the property, the second trust will be wiped out. The seller holding the second trust can sue the borrower based on the promissory note that is usually signed, but that might be pointless if the borrower has no money.

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

Company to provide up to $20 billion in financing

Thursday, April 19, 2007

Inman News

U.S. mortgage buyer Freddie Mac on Wednesday said it will purchase $20 billion in fixed-rate and hybrid adjustable-rate mortgage products to provide more stable financing alternatives for borrowers of high-risk subprime loans.

The subprime lending segment has been in turmoil after rising defaults caused Wall Street investors to pull back on purchasing these loans, which in turn caused several subprime lenders to go out of business.

A congressional committee held a hearing on Tuesday where the heads of Freddie Mac and Fannie Mae each said that the companies are developing new loan types to help distressed borrowers with high-risk mortgages to keep their homes.

A key federal regulator during Tuesday's hearing also urged lenders to extend flexible terms to struggling borrowers.

Freddie Mac's announced products, currently under development by the company and slated to be introduced by mid-summer, will limit payment shock by offering reduced adjustable-rate margins, longer fixed-rate terms and longer reset periods, the company said.

"The problems facing borrowers in this segment of the market are of deep concern to Freddie Mac. Two months ago, we announced several pro-borrowers steps, including the enhanced underwriting standards and more consumer-friendly mortgage products for borrowers with impaired credit," Richard F. Syron, chairman and CEO of Freddie Mac said in a statement Wednesday.

"Today, we're again ramping up our commitment through this $20 billion pledge to assist families caught up in the subprime crisis and to make the market more stable and transparent for all borrowers," he said.

The commitment follows Freddie Mac's recent announcement that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure. Among other things, the company will require that subprime ARMs -- and mortgage-related securities backed by these subprime loans -- qualify borrowers at the fully indexed and fully amortizing rate.

The company also said it will limit the use of low-documentation products in combination with these loans; require that loans be underwritten to include taxes and insurance; and strongly recommend that the subprime industry collect escrows for taxes and insurance, as is the norm in the prime sector.

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

7 questions to ask before signing contract

Friday, April 06, 2007

By Robert J. Bruss
Inman News

Spring is the busiest season for condominium sales. There are many reasons for buying a condo instead of a house. They make great affordable first homes. They also make great "last homes" if you are downsizing from a large family house to a smaller residence.

Although condos are no longer the "ugly ducklings" of housing since they now often appreciate in market value about the same as comparable single-family detached houses, there are special questions condo buyers should ask to avoid buying a "bad condo." Buying a condo can be more complicated than buying a house.

CONDO ADVANTAGES. The many reasons for buying a condo instead of a house include (1) usually less expensive than buying a similarly sized single-family house; (2) exterior maintenance is the responsibility of the condo homeowner's association; (3) the security of leaving your condo for an extended period without worry (called "lock and leave"); (4) homeowner tax benefits similar to houses; (5) pride of ownership from being an owner rather than a renter; and (6) potential resale profit as the condo appreciates in market value. However, local supply and demand greatly affects this last potential advantage.

CONDO DISADVANTAGES. Depending on your viewpoint, potential condo disadvantages might include:

1. Being subject to the rules of the condo homeowner's association.
2. Unexpected increases in monthly fees and special assessments for maintenance costs.
3. Policies and rules you don't like -- such as no pets or no rentals.
4. Poor-quality maintenance or management which affect enjoyment and resale values.
5. Poor soundproofing (the number one complaint of condo owners).
6. Lack of freedom to do as you wish, such as have noisy parties.
7. Neighbors you don't like or who don't like you.

ASK KEY QUESTONS TO AVOID BUYING A BAD CONDO. To minimize chances of buying a bad condo, which you will later regret, here are the seven key questions to ask to avoid buying a bad condo:

1. WHAT IS THE FINANCIAL CONDITION OF THE CONDO ASSOCIATION? If you are considering purchase of a brand-new condo, to attract buyers the developer has probably set the monthly condo fees very low. Watch out for inadequate allocations for replacement reserves which are sure to increase in future years as the building ages and needs repairs.

If you are considering buying an older condo, study the replacement reserves. Depending on the building's age and anticipated replacements, such as a new roof every 15 to 20 years, if reserves are inadequate a large special assessment might be levied on each owner when an unexpected cost arises.

For example, I own a condo where each owner incurred a $2,000 special assessment to replace the leaking windows.

There is no minimum replacement reserve guideline, but two standards are (a) at least $2,000 to $3,000 per unit, and/or (b) 25 percent of the annual gross income for the homeowner's association should be in the reserve account.

Smart condo buyers ask if there are any major replacements anticipated in the next 12 months and if there will be a special assessment. Review the board of director's meeting minutes for the last six months to determine what issues are being discussed.

2. HOW DO THE MONTHLY FEES COMPARE WITH COMPARABLE NEARBY CONDO COMPLEXES? The answer is important not only to your wallet, but to the resaleability of the condo. When the condo fees are very high compared to the competition, that holds down the market value of condos in that complex. Be sure to inquire what services are included, such as central heat and air conditioning.

3. IS THE CONDO ASSOCIATION PROFESSIONALLY MANAGED? Unless it is a small condo building of five units or less, professional management is a good sign. The cost usually pays for itself because an experienced condo manager knows where to get repair discounts that often "save" the equivalent of the professional manager's fee.

A related question to ask is how long the professional manager has been managing the complex. The right answer is: the longer, the better. That indicates the condo owners are satisfied.

For example, in the condo complex where I own a unit, the management company has been there over 30 years and the current manager has been with us over 20 years (after his father retired). Needless to say, we are very pleased with the service quality.

4. HOW GOOD IS THE SOUNDPROOFING? Because poor soundproofing is the number one complaint of condo owners (especially for buildings converted from apartments), when you focus on buying a specific unit, it pays to test the soundproofing.

This can easily be done by asking the upstairs, downstairs, and adjacent neighbors to turn on their TVs and stereos to normal levels and see if you can hear them in the unit. Also, check for upstairs noisy floors, especially in wood construction buildings if the upstairs neighbors don't have carpets with heavy padding.

5. WHAT IS THE PERCENTAGE OF RENTERS? Mortgage lenders know the risk of foreclosure default in condo complexes with more than 20 percent to 30 percent renters is very high. Many lenders either refuse to finance units in such complexes, or they charge above-normal interest rates.

The reasons are absentee landlords often have little interest in properly maintaining the condo complex and their renters aren't as considerate as owner-occupants. The result can be declining maintenance quality.

Condo complexes with anti-renter rules are considered very desirable for owner-occupants and often bring premium resale prices.

6. HAS THE CONDO UNIT BEEN PROFESSIONALLY INSPECTED AND DID THE SELLER PROVIDE A DEFECT DISCLOSURE REPORT? Most states now have laws and court decisions requiring condo and house sellers to disclose know defects. Smart buyers carefully study these written disclosure forms before making purchase offers.

In addition, savvy buyers include in their condo purchase offers a contingency approval clause for a professional inspection of the unit after the offer is accepted. The buyer should always accompany the inspector to discuss any undisclosed defects discovered.

7. ASK CURRENT RESIDENTS, "WHAT DO YOU LIKE BEST AND LEAST LIVING HERE?" Or you might prefer to ask, "Would you buy a condo here again?"

Most condo owner-occupants are friendly and willing to share their good and bad experiences. Be sure to talk with several residents just to be sure you aren't talking with a "bad apple," professional complainer. Just to verify your soundproofing test of the unit you are considering for purchase, casually ask, "How is the soundproofing here?"

SUMMARY: Condominium buyers can't ask too many questions because buying a condo is much different than buying a house. By asking the right questions, costly mistakes can be avoided.

More details are in my special report, "The 10 Key Questions Condo Sellers Hope Buyers Don't Ask," is available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

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