The M & M Team

Falling Prices, Low Rates Prod California Homebuyers

2009-07-10T10:12:00.000-07:00

Favorable home prices, record-low interest rates, and the belief that rates will rise in the near future were the primary motivators leading home buyers to purchase, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2009 Survey of California Home Buyers”.

Here is what you need to know...

· Sixty-eight percent of buyers said price decreases motivated them to buy a home, while 39 percent reported low interest rates helped them move to a better location. Twenty-three percent claimed the likelihood that rates will move up as the motivating factor.

· Housing affordability has improved dramatically in response to the decline in home prices along with historically low mortgage rates, creating a tremendous opportunity for home buyers in California. Home sales in California rebounded in 2008 and early 2009, reflecting the combination of favorable prices, low mortgage rates, and home buyer tax credits, fueled primarily by sales of distressed properties that accounted for more than half of the state’s transactions.

· Forty-nine percent of all buyers purchased a home through a traditional market sale, while 38 percent purchased a REO/bank-owned property, according to the survey. Reflecting the difficulty in closing short sales--properties selling for less than the loan amount--only 13 percent of buyers purchased a short-sale property.

· Home buyers who purchased a REO or bank-owned property experienced the highest level of difficulty in obtaining financing, compared with a more traditional transaction. They rated the level of difficulty as 8.9 (on a scale of 1 to 10 with 10 representing the greatest level of difficulty in obtaining financing) compared with a 7.7 for home buyers with a traditional market sale and 7.6 for short-sale home buyers.

Sales Surged as Buyers Gained Interest in Distressed Properties

2009-07-08T10:34:00.000-07:00

After back-to-back years of steep decreases in sales, annual sales in the California housing market bounced back and increased 27 percent to 439,830 in units in 2008. The first quarter of 2009 extended the rally in sales and showed a strong performance with a seasonally adjusted annualized sales figure of 590,390, an 83 percent increase from the same quarter of 2008. The increase in sales was due in large part to the growth in the absorption of distressed properties with huge mark-down in prices.

Distressed Properties Dominated Areas with High Growth in Sales
Results from the 2009 Survey of California Home Buyers show that distressed sales made up more than half of the sales in California. While 49 percent of all buyers from the survey bought a home through a regular market sale, 38 percent bought an REO/bank-owned property, and 13 percent bought a short-sale property.

Counties where distressed sales dominated were areas that experienced highest growth in sales in the first quarter. Solano, Riverside, San Bernardino, and Kern – counties in which over 80 percent of home sales were distressed sales -- all had a year-to-year increase in sales of 169 percent, 108 percent, 136 percent, and 120 percent respectively in the first quarter of 2009.

Home Buyers Optimistic About Prices in the Long Run
With deeply discounted distressed sales flooding the market, prices dropped significantly since early 2008. The median price of existing detached homes declined 38.2 percent in 2008 from the previous year, a trend that continued into the first quarter of 2009 with a 40.1 percent decline.

Despite the decline in prices, home buyers were optimistic about the future direction of home prices in their neighborhood. Results from the 2009 Survey of California Home Buyers suggest that while fewer than one in 10 (8 percent) of buyers surveyed believed prices would go up over the next year, 34 percent believed prices would go up in the next 5 years, and 60 percent thought prices would go up in 10 years.

Information provided by the California Association of REALTORS®

Searching for a Bottom in the Housing Market

2009-07-07T12:29:00.000-07:00

With consumer confidence rising in May to its highest level in eight months, housing starts increasing more than 17 percent in May compared with the previous month, and sales of existing homes climbing 2.9 percent in April nationwide, it appears that the housing market may be stabilizing.

Here is what we know...

· Although sales of existing, single-family homes rose 35.2 percent in May in California, compared with a year ago, the median price declined 30.4 percent. Some industry analysts predict that as specialized adjustable-rate mortgages, known as option ARMS and Alt-A mortgages, reset over the next 18 to 24 months, prices could decline further before stabilizing.

· “We are seeing strong buying activity, particularly in those boom and bust markets, where prices have declined significantly. Buyers are coming in and fighting over properties – there is multiple bidding in California and Florida,” says Lawrence Yun, chief economist with the NATIONAL ASSOCIATION OF REALTORS®.

· Sales of existing homes are soaring as many investors and first- time buyers purchase distressed properties. Yun estimates that about 50 percent of current sales involve distressed properties, and he expects the trend to continue as foreclosures rise in the months ahead.

· Although some economists predict home prices will continue to decline in the coming months, California’s median home price rose for the third consecutive month in May, posting the largest monthly increase on record for the month of May.

· Some buyers are trying to time the bottom of the market and purchase once it appears that prices are consistently and steadily rising. Many housing forecasters advise against this approach as buyers should not view their homes solely as investment opportunities. Historically, the average annual rate of return on a home lived in for five years or more is nearly 12 percent, based on data C.A.R. has collected over the last 40 years.

May Home Sales Increased 35.2%, Prices Declined 30.4%

2009-07-01T14:54:00.000-07:00

Home sales increased 35.2 percent in May in California compared with the same period a year ago, while the median price of an existing home declined 30.4 percent, C.A.R. reported last week. “With affordability for first-time buyers at a record high, sales of existing, single-family homes continued to remain above the 500,000 level for the ninth consecutive month,” said C.A.R. President James Liptak. “Buyers are beginning to realize that the combination of favorable home prices, historically low mortgage rates, and first-time home buyer tax credits, may not align again for many years.

“The sales gains over last year have diminished in recent months,” he added. “This trend is expected to continue through the end of the year, as limited inventory at the moderate and low end of the market constrains sales activity,” he said.

Closed escrow sales of existing, single-family detached homes in California totaled 556,590 in May at a seasonally adjusted annualized rate. Statewide home resale activity increased 35.2 percent from the revised 411,770 sales pace recorded in May 2008. Sales in May 2009 increased 2.9 percent compared with the previous month.

The median price of an existing, single-family detached home in California during May 2009 was $267,570, a 30.4 percent decrease from the revised $384,540 median for May 2008, C.A.R. reported. The May 2009 median price rose 4.2 percent compared with April’s $256,700 median price.

1761 Woodscent Lane, Simi Valley, CA

2009-06-26T20:40:00.000-07:00

California Housing Market Shows Pockets of Recovery

2009-06-26T13:16:00.000-07:00

A surge in home sales that started in some of California’s more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state’s real estate market may be in recovery mode.

Here are some facts...

Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.

Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.

Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.

Although the median price in the state has risen for four consecutive months, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.

Where Does REALTOR.com Get Their Information?

2009-06-25T13:48:00.000-07:00

Recently, we've had a number of people contacting us with questions about properties or information regarding those properties they had found online. Sometimes the answers we give are unfavorable because the property in question is off the market or the online site was displaying inaccurate information. How does that happen? Today, we wanted to take a little time to discuss how REALTOR.com and other third party sites like Trulia.com and Yahoo.com receive their information.

When a seller decides to list their home, they contact a REALTOR® to plan out a marketing scheme. Every REALTOR® belongs to a local association that provides a Multiple Listing Service (MLS). The MLS is a database where a REALTOR® can store precise details about the seller's property. This allows other REALTORS® in the association who have access to the MLS know which houses are available for sale and all the details they need to relay to a buyer.

Third party sites like REALTOR.com, Trulia.com and Yahoo.com are NOT an MLS. In actuality, these sites, upon written request (and sometimes for a fee), pull the data directly from the local MLS's database. Just like making a copy from an original, it doesn't always come out exactly the same. The third party sites will have some discrepencies. What's more, these sites are only allowed to pull public information. There is more complete information on the MLS database.

While we think that these third party sites are a great tool to get you started, we urge you to take the information you find with a grain of salt. NOTHING is more complete, accurate and up-to-date than your REALTOR®'s MLS. If you are serious about finding a new home, put your REALTOR® to work!

$10,000 "New" Home Tax Credit Nearly Gone

2009-06-24T16:22:00.000-07:00

A couple months ago we discussed that the Franchise Tax Board (FTB) in California has allocated $100 million for tax credits. Buyers that purchase new homes are eligible to receive up to $10,000. Recently, the FTB has announced that the tax credits will soon be gone. The FTB has received more than 9,800 applications, claiming nearly $95 million as of June 17, and plans to accept 12,000 applications to allow for duplicates, revisions, or invalid applications.

This tax credit is available for qualified buyers who, on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. To apply, an application for new home credit must be completed by the buyer and seller within one week after the close of escrow and faxed by the escrow person to the FTB at (916) 845-9754. The FTB will continue to report the certificates issued on a weekly basis until the full $100 million has been used up. FTB expects to complete processing all certificates in August. Each applicant will receive a notification indicating the amount of credit allocated or denied.

California Real Estate Market Snapshot - June '09

2009-06-22T12:52:00.000-07:00

Market Report

June, 2009	Current Period	Last Period	Last Year	Month-to-Month Change	Year-to-Year Change
Existing Home Sales	540,360	523,490	362,170	3.2%	49.2%
Median Home Price	$256,700	$253,040	$404,470	1.4%	-36.5%
Unsold Inventory Index	4.6 months	5.0 months	9.8 months	-8.0%	-53.1%
Median Days On Market	48.7	48.8	51.8	-0.2%	-6.0%
30-Year Fixed Mortgage	4.81%	5.00%	5.92%	-0.19%	-1.11%

Source: California Association of REALTORS®

Market Analysis:
The California Association of Realtors First-Time Buyer Housing-Affordability Index measures the percentage of households that can afford to purchase an entry-level home in California. The index is the most fundamental measure of housing well-being for first-time buyers in the state. The First-Time Buyer Housing-Affordability Index stood at 69% in the first quarter of 2009, compared with 46% in the first quarter of 2008. To give you a comparison of how significant a 69% index is, you only have to compare the 2009 index with the 2007 index, which stood at 26%. The formula for the index takes into account the median price of homes, current interest rates, and average income. Simply stated, only about 1 in 4 California households could afford an entry-level home in 2007, but, today, almost 7 out of 10 households can afford an entry-level home. The current index is the highest ever recorded. The 69% Housing-Affordability Index is one positive outcome resulting from the sub-prime mortgage crisis. A few years ago, many first-time home buyers were having to go out of state to find affordable housing, but, today, California is now offering affordable housing. The California housing market today offers low prices, low interest rates, and ample inventory (especially in the middle and upper price ranges). The high California taxes and a double-digit unemployment rate will keep the housing market from overheating in the near future.

Information provided by: Wright Brothers Communications

Tips For Selling Your Home to a First-Time Buyer

2009-06-19T10:22:00.000-07:00

Favorable home prices, low mortgage rates, and tax credits are luring many first-timers into the market. Although favorably priced foreclosures and short sales may be the most appealing option to first-time buyers, traditional sellers also are able to compete and attract these buyers.

Here are some tips...

· If you are a seller that has not defaulted on your loan, your transaction, in this market, is very welcoming. Currently, over half of all sales are foreclosures or short sales. With those transactions the seller's lender has to approve all offers. This can be a very long and complicated process. Short sales can last up to a year in escrow. The appealing traditional sale is a transaction only between buyer and seller and usually lasts between 30-45 days in escrow.

· One advantage traditional sellers have is that lived-in, well-maintained homes are easier for buyers to imagine themselves living in compared with vacant foreclosed homes. Lived-in homes have great appeal to first-timers for practical and financial reasons.

· A survey conducted last year found that 81 percent of first-time buyers said move-in conditions were very important, while only 7 percent reported they were looking to purchase fixer-uppers.

· Lived-in homes offer warmth and emotion, a sentiment that some agents say can go a long way in selling a property. Additionally, these properties likely have well-maintained lawns and landscaping, as opposed to vacant, foreclosed homes, often which have dead or overgrown lawns.

· Extra touches like a fresh coat of paint, decluttering, and the removal of unpleasant odors will help to make a good first impression with buyers.

· Offering to help pay closing costs or buy down a mortgage rate also can help traditional sellers compete in today’s market. These may be enticing options to buyers, especially those who plan to live in the home for more than a few years.

· To help buyers more easily transition into homeownership, sellers may want to consider offering a home warranty that covers major systems in case problems arise after the sale closes. This practice is highly recommended and traditional in our market.

· Most buyers know that home prices have declined in many markets, so they’re being more aggressive in their offers. Sellers are advised not to quickly write off low-ball offers. As one agent advises, every offer deserves a counteroffer to get the conversation started.

California Running Out of $10,000 Tax Credits

2009-06-18T18:20:00.000-07:00

First-time home buyers wanting to take advantage of the state’s $10,000 tax credit may have less time than originally expected. California set aside $100 million to help home buyers purchase newly built homes, hoping to jump start the residential-construction market. According to state officials, the tactic has worked well and is helping to entice home buyers into the market. However, there only is approximately 20 percent of the program’s funding remaining.

The program launched in March, and as of June 3 nearly $24 million in tax credit certificates already had been issued, according to the state’s Franchise Tax Board, leaving nearly $76 million in credit available. Many applications still are in the pipeline awaiting approval. If all of the submitted applications are approved, only $17.5 million would remain in the fund.

The California state legislature is considering adding another $200 million to the program. However, securing approval may be difficult due to the state’s estimated $24 billion budget deficit. A bill to extend the program already has won Assembly approval and now is awaiting activity in the state Senate.

CalHFA Offering 30-year, Fixed Rate for First-Time Buyers

2009-06-17T16:49:00.000-07:00

The California Housing Finance Agency (CalHFA) recently announced it is offering Cal30, a fixed rate, 30-year loan with up to 95 percent financing. (That means only 5% down!) This new loan program is available for eligible first-time home buyers.

In addition to the Cal30 program, CalHFA also offers the California Homebuyer’s Downpayment Assistance Program, which can provide loans of up to 3 percent of a home’s value to assist with down payments and closing costs; the School Facility Fee Down Payment Assistance Program, which provides conditional grants to buyers of newly constructed homes for down payments, closing costs, upgrades, or other costs associated with the first mortgage loan; and the Affordable Housing Partnership Program, a joint effort between CalHFA and more than 300 cities, counties, redevelopment agencies, housing authorities and nonprofit housing organizations to assist with down payments and closing costs.

More information can be found here.

Mortgage Interest Rates are on the Rise!

2009-06-12T11:44:00.000-07:00

A direct quote from a Branch Manager at one of the major lenders in our area:

"The volatility continues as Mortgage Bonds opened lower this morning, but then erased their losses. Since May 21, the 4.5% coupon has shed 556 basis points, pushing home loan rates to the highest level since the Federal Reserve announced its Mortgage Backed Security purchase plan back in November. Fears of future inflation and added supply have been the culprits behind the recent sell-off."

What does that mean? In short, mortgage interest rates are on the rise and might continue to rise in the short term. Today, according to our Mortgage Rate Watch, the average rate in America for a 30-year-fixed loan is 5.85%.

Let's put that into perspective... Let's say Buyer 1 purchased a home back on May 21st for $500k with a 20% down payment. Let's also say Buyer 2 purchase a home today (not even a whole month later) for the same price and down payment. Who do you think is kicking themselves in the butt?

	Date	Purchase Price	Loan	Rate	Monthly Payment
Buyer 1	May 21, 2009	$500,000	30-Year-Fixed	4.5%	$2,026.74
Buyer 2	June 12, 2009	$500,000	30-Year-Fixed	5.85	$2,359.76

That's over $330 a month that Buyer 2 is paying more than Buyer 1. For those of you considering to wait longer for prices to go down, you might want to reconsider. Even if the price magically drops another 10% (to $450,000), at today's rate your monthly payment is $2,123.79. Still $100 over Buyer 1's payment.

3 Quick Ways To Ruin a Transaction

2009-06-09T11:17:00.000-07:00

Take offers and counteroffers personally
Anytime someone puts an offer on your home, it is a compliment. Reacting personally to a poor offer or counteroffer is destructive to your end goal: completing the transaction. Instead of reacting, try to understand the possible reasons for such a divergence in the perceived value of the home. Has your home decreased in value since you first put it on the market? Is the other side unqualified to make a larger offer? Is this simply a tactic to see how low you will go? Depending on the reason, there are several ways to secure a positive outcome. Good Advice: ALWAYS COUNTER! If you receive a poor offer/counteroffer do not just walk away. Even if you have to counteroffer back only slightly better then your original offer! Let the other side make the decision to walk away.

Include everyone in the decision
Including friends and family members in your decision-making process makes a lot of sense in the opening stages of a transaction. Your loved ones can help you find a home you love, free up the funds you need, and support you throughout the process. However, once you begin making and responding to offers, the process moves very quickly. Consulting with everyone you care about slows the transaction and may cause the other side to lose interest--particularly if you are competing with other buyers and/or sellers. Good Advice: TRUST YOUR REALTOR®! Your agent has the knowledge and the experience of how offers are made, countered, accepted and rejected. They go through this process on a daily basis. Your friends/family, although looking out for your best interests, may not be the most qualified.

Play hardball
Bait-and-switch tactics, "hard ball", excessive demands, and intentional deception will derail your transaction in a hurry. Keep in mind that real estate transactions are about much more than the numbers; they are about people. If the other side feels like it has been "taken", there are a myriad of ways they can make your life difficult. Also, keep in mind that it’s normal for a buyer to feel a little remorse the day after an offer is accepted; be sensitive to this tendency. Good Advice: The smoothest and easiest transactions are the ones where both buyer and seller feel like they have "won" a little. If either party "wins" everything, that usually doesn't make the other party too happy.

Housing Picture Brightens in California

2009-06-08T10:31:00.000-07:00

With the state’s median price rising for the second consecutive month in April, and sales of existing, single-family homes remaining above the 500,000 level for the eighth month in a row, California is being closely watched as a barometer of the economy. Some economists believe these two factors indicate the state’s median price could be at or near the bottom.

Here's what we know...

· Sales of existing, single-family homes increased 49.2 percent in April in California compared with the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) April sales and price report.

· As the level of unsold inventory declines, the state’s median price will likely stabilize. Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008.

· The median price of an existing, single-family detached home in California during April 2009 was $256,700, an increase of 1.4 percent compared with the prior month, but a 36.5 percent decrease from the revised $404,470 median of a year ago.

· Favorable home prices in many parts of the state have led to an increase in affordability for first-time buyers. In the first quarter of 2009, affordability rose to 69 percent, enabling many to take advantage of first-time buyer programs and near record-low interest rates.

Home Buyer Tax Credit Can be Applied to Closing Costs

2009-06-05T10:38:00.000-07:00

U.S. Dept. of Housing and Urban Development (HUD) Secretary Shaun Donovan recently announced that the Federal Housing Administration (FHA) will allow home buyers to apply the administration's new $8,000 first-time home buyer tax credit toward the purchase costs of a FHA-insured home. The American Recovery and Reinvestment Act of 2009 offers home buyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent down payment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of the announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.

Median Price Up for Second Month in Row

2009-06-03T13:01:00.000-07:00

The median price of a home in California rose two consecutive months for the first time in nearly two years, beckoning calls for a bottom in home prices. The statewide median price of an existing detached home rose from $253,040 in March to $256,700 in April. The 1.4 percent monthly gain was the second in a row after a 2.2 percent gain in March.

After Unprecedented Volatility in the Median Price…

The California median price experienced unprecedented volatility, with a string of double-digit year-to-year percentages over the period from September 2007 through January 2009, nearly all in the 20 to 40 percent range. While recent rates of change were still large by historic standards, they are expected to diminish in magnitude over the course of the next few months. Sales of existing detached homes remained in April with 540,360 homes sold on a seasonally adjusted and annualized basis, a gain of 3.2 percent from the March figure of 523,490 and 49.2 percent above last year’s April sales of 362,170 homes. April sales fell short of January and February when sales exceeded 620,000 homes but were strong by any other standard. The high levels of sales over the first four months of 2009 may be attributed to large increases in sales in lower-priced inland markets where high concentrations of distressed sales have forced steep price reductions.

…Have Prices Hit Bottom?

So have prices hit bottom? There is no simple answer. The statewide median has remained at roughly $250,000 for four months running in what appears to be a bottom. If the flattening out of prices at vastly more affordable levels entices buyers off the fence, the median price could hold at its present level or even experience some upward momentum. However, the weak economy and an anticipated peak in foreclosures later this year may limit or more than offset that momentum and drive prices below their present levels sometime between now and early in 2010. In the end, it is still not clear that home prices have hit bottom. Regardless, the desire to get a home at the lowest possible price must be balanced with obtaining a favorable mortgage rate and finding a home that will meet the buyer’s needs over a 5 to 10 year time horizon.

Source: California Association of REALTORS®

Can a Buyer Use the Listing Agent as Their REALTOR®?

2009-06-02T13:43:00.000-07:00

Recently, a number of buyers have been asking the question, "Can a buyer use the listing agent as their own REALTOR®?" The quick answer: Yes... but the buyer is at SERIOUS risk!!! Here's why:

In every transaction a REALTOR® must disclose using the Agency Disclosure Form, his/her "Agent Relationship" with the buyer/seller. There are three types of realtionships: A Buyer's Agent, a Seller's Agent and Dual Agent (where agent represents both buyer and seller). In each relationship an agent has the obligation to provide "A Fiduciary duty of utmost care, integrity, honesty and loyalty in dealings with (their clients)."

When a listing agreement between the agent and the seller is signed, the agent discloses that he/she is working as the "Seller's Agent" and has a fiduciary duty to do what's best for the seller. If a buyer wants to write an offer using the same agent, the agent can disclose to both parties that he/she is now a Dual Agent, however, where do the boundaries lie for their respective fiduciary duties? What loyalties, integrities, and honesties are shared or crossed? How does one agent negotiate a price when the seller wants more money and the buyer wants to pay less? Whose side does the agent pull for?

When a buyer is represented by their own REALTOR®, that agent has the fiduciary duty to provide excellent service ONLY to the buyer. There are no boundaries to cross and the agent will negotiate and fight for what's right for the buyer. In many cases, a buyer's agent can also negotiate a price that saves them more money than trying to use only the listing agent.

Picture this... Let's say two people had to go to court to resolve an issue (completely unrelated to real estate). Have you ever seen the defendant use the same lawyer as the plaintiff? NO! Each person has their own representative plead their case.

When a buyer decides to purchase a home, they should have a REALTOR® represent their side of the transaction. After all, it is the largest investment of their life!

Is Buying a Home in Today's Economy a Good Idea?

2009-06-01T11:20:00.000-07:00

As a long-term investment, homeownership is still one of the best investments for individual households.

"Why" you may ask? After all, the headlines say the housing market is down and out. with defaults rising at an alarming rate, and mortgage markets so frozen that buyers can't get a home loan at any price.

What buyers need to realize is that housing markets, like all markets, inevitably have their ups and downs. And homeownership has a track record that is virtually unmatched by any other purchase in terms of its real benefits.

Despite the turmoil in mortgage lending, if you have good credit, a job and steady income, you will find there is still plenty of mortgage credit to be had at good rates. For well-qualified buyers, rates are running at near historical lows.

Homeownership's Real Value

Here are a few examples of why, dollar for dollar, homeownership is a solid stepping stone to a future of financial security and the single largest creator of wealth for many Americans.

Over the long-term real estate has consistantly appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually, report economists at the National Association of Home Builders.

Five percent may not seem much at first, but here's an example that will put it into perspective: say you put 10 percent down on a $200,000 house, with an ivestment of $20,000. At a five percent annual appreciation, that $200,000 home would increase in value $10,000 during the first year. Earning $10,000 on the original down payment of $20,000 is an extraordinary 50 percent annual return.

In contrast, putting that $20,000 down payment into savings and possible earning a 5 percent gain would only yield a $1,000 profit.

Compared to Stocks

Looking at it another way... Over a longer period of time, if someone put $10,000 into the stock market in 1996, the average annual S&P return would make that investment $21,500 today--an increase of $11,500. The median home price in 1996 was $140,000. Today the median price is $240,000. That's an increase of $100,000!

Don't miss out on the benefits of homeownership.

How to Create a "Green" Bathroom

2009-05-28T14:46:00.000-07:00

The bathroom is a great place to conserve water! Here's how:

No dripping: Fix leaky toilets and repair dripping faucets—a leaky toilet can waste up to 600 gallons of water a month.

Go Low-Flow: High-efficiency bathroom sink faucets and accessories such as faucet aerators can reduce your standard flow by more than 30 percent, without sacrificing performance. Other areas where you can reduce your water flow include the toilet and shower. Install an aerated showerhead and you could cut water use by up to 70 percent. An old-style, single-flush toilet can use more than three gallons of water per flush; modern reduced-flow or high-efficiency models average a little more than one gallon.

Turn off the water: Try to remember to turn off the water when brushing your teeth or shaving. You could save up to four gallons of water per minute!

Information provided by: http://green.car.org

7 Reasons to Own Your Own Home

2009-05-27T15:42:00.000-07:00

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the cost involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10, according to the National Association of REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you'll never see again, but mortgage payments let you build equity ownership in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your mortgage payments don't go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

HOMEOWNERS BEWARE: Foreclosure Rescue Scams

2009-05-26T09:59:00.000-07:00

With the recent rise in foreclosures, foreclosure-related scams have exploded onto the real estate scene. These so-called “foreclosure rescue companies” claim they will help save your home, but in reality are out to make a profit -- at your expense.

Red Flags for Foreclosure Rescue Scams
If you are at risk of or in foreclosure, you should be on the lookout for foreclosure scams. Here are some of the red flags to watch out for:

• Asks for money upfront before providing any service
• Instructs you not to contact your lender, lawyer, housing counselor, family, friends, or others
• Asks for mortgage payments to be made directly to his or her company or a bank account set up by that person, rather than your lender.
• Requires payment only in the form of cash, cashier’s check, or wire transfer
• Promises to stop the foreclosure process, no matter the circumstances
• Advises you to transfer your property deed or title to his or her company
• Offers to fill out paperwork for you
• Asks for something to be done immediately and without delay. This includes pressuring you into signing paperwork that you have not had the chance to read thoroughly or do not fully understand
• Encourages you to lease your house and buy it back over time
• Offers to buy your house for a fixed price that is not set by the housing market at the time of sale
• Asks for you to give a power of attorney
• Asks for signatures on a grant deed or deed of trust
• Asks for signatures on a document that has lines left blank
• Fails to provide copies of signed documents
• Refuses or fails to put an oral promise in writing

Report Fraud
If you have been a victim of a foreclosure-related scam or approached by a scam artist, you may report the incident to the following organizations and government enforcement agencies:

• California Attorney General - http://ag.ca.gov
• California Department of Real Estate - www.dre.ca.gov
• Department of Housing and Urban Development (HUD) - www.hud.gov
• Federal Trade Commission (FTC) - www.ftc.gov
• Your local Better Business Bureau - www.bbb.org

Legitimate Resources
If you are at risk of foreclosure or have already received a foreclosure notice, you should contact your lender immediately.

Homeowners also may seek the advice of a reputable housing, financial or credit counselor, attorney, or other qualified professional. Homeowners may visit the U.S. Department of Housing and Urban Development (HUD) Web site at http://www.hud.gov to view its Guide to Avoiding Foreclosure and its list of California HUD-approved housing counseling agencies. In addition, the non-profit Homeownership Preservation Foundation has a 24/7 toll-free Homeowner’s HOPE Hotline at (999) 995-HOPE.

This information was provided by The C.A.R. Legal Department.

Homebuyer Tax Credit Chart

2009-05-22T10:40:00.000-07:00

For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law.

Here’s a quick summary of the two tax credit laws:

HOMEBUYER TAX CREDIT	FEDERAL ($8,000)	CALIFORNIA ($10,000)
Amount of Tax Credit	10% of purchase price not to exceed $8,000.	5% of purchase price, not to exceed $10,000. Maximum tax credit for all taxpayers is $100 million to be allocated on a first-come, first‑served basis.
Principal Residence	Yes. Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).	Yes. Property purchased must be a qualified principal residence and eligible for the homeowner’s exemption from property taxes (Cal. Tax & Rev. Code § 218).
Type of Property	House, condominium, townhome, manufactured home, apartment cooperative, houseboat, houstrailer, or other type of property located in the U.S.	Single-family residence, whether detached or attached, condominium, cooperative project unit, houseboat, manufactured home, or mobilehome.
First-time Homebuyer	Yes. The buyer (and buyer’s spouse if any) must not have owned a principal residence during the three-year period before date of purchase.	No. The buyer need not be a first-time homebuyer.
Unoccupied Property	No. Property may have been previously occupied or not.	Yes. Property must have never been previously occupied as certified by the seller.
Minimum Occupancy Requirement	Must be the buyer’s principal residence for 36 months after purchase, otherwise credit must be repaid.	Must be the buyer’s principal residence for 2 years after purchase, otherwise credit must be repaid.
Income Restriction	Yes. Tax credit begins to phase out if modified adjusted gross income is over $75,000 (or $150,000 for joint filers). No tax credit at all if modified adjusted gross income is over $95,000 (or $170,000 for joint filers).	No.
Date of Purchase	January 1, 2009 to November 30, 2009, inclusive. (Note: A repayable $7,500 tax credit is available for purchases from April 9, 2008 to December 31, 2008.)	March 1, 2009 to February 28, 2010, unless $100 million funding runs out.
Refundable	Yes. Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.	No.
Repayment	The buyer need not repay the tax credit if the buyer owns and occupies the property for at least 36 months after the purchase.	The buyer need not repay the tax credit if the buyer owns and occupies the property for at least two years immediately following the purchase.
Multiple Buyers (not married to each other)	The $8,000 tax credit may be allocated between eligible taxpayers in any reasonable manner.	The $10,000 tax credit may be allocated between eligible taxpayers based on their percentage of ownership.
Maximum Credit for All Taxpayers	N/A	$100 million.
When to Claim	Full tax credit may be claimed on 2008 or 2009 tax returns.	1/3 of total tax credit may be claimed each year for 3 successive years (e.g. $3,333 for 2009, $3,333 for 2010, and $3,333 for 2011).
Tax Agency	Internal Revenue Service (IRS).	Franchise Tax Board (FTB).
How to File	First-Time Homebuyer Credit (IRS Form 5405) to be filed with 2008 or 2009 tax returns	Specific procedure for claiming credit includes completing an Application for New Home Credit (FTB Form 3528-A).
When to File Form	Form 5405 must be filed with 2008 or 2009 tax returns.	FTB Form 3528-A must be faxed by escrow to the FTB within one week after close of escrow and filed with the buyer’s 2009 or 2010 tax returns.
Exceptions	Acquisitions by gift or inheritance, acquisitions from related persons as defined, and buyers who are nonresident aliens.	Credit allowed is not a business credit under Cal. Tax & Rev. Code § 17039.2.
Legal Authority	26 U.S.C. section 36.	Cal. Rev. & Tax Code section 17059 (as amended by Senate Bill 15).
Date of Enactment	February 17, 2009.	February 20, 2009.

Readers who require specific advice should consult an attorney. This information was provided by The C.A.R. Legal Department.

Housing Affordability Reached 69 Percent in Q1

2009-05-20T13:57:00.000-07:00

The percentage of households that could afford to buy an entry-level home in California stood at 69 percent in the first quarter of 2009, compared with 46 percent (revised) for the same period a year ago, according to a C.A.R. report released last week. C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

The minimum household income needed to purchase an entry-level home at $213,040 in California in the first quarter of 2009 was $38,090, based on an adjustable interest rate of 4.96 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $1,270 for the first quarter of 2009.

At $38,090, the minimum qualifying income was 41 percent lower than a year earlier when households needed $65,030 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with the income level of a typical California household, where the median household income is $61,030.

The First-time Buyer Housing Affordability Index also rose 7 percentage points in the first quarter of this year compared with the fourth quarter of 2008, due to a 14.1 percent decrease in the entry-level median home price.

At 83 percent, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 49 percent, followed by the Orange County region at 56 percent.

Mortgage Modifications are Happening! Get Yours!

2009-05-15T10:37:00.000-07:00

The Obama administration’s “Making Home Affordable” program is beginning to have an impact. As of last week, Chase Mortgage, the servicing side of JP Morgan Chase, had modified 15,000 home loans under the program. Bank of America also has sent out 100,000 letters to borrowers whom could benefit.

Homeowners wanting to receive a mortgage modification should begin by visiting the government Web site, www.MakingHomeAffordable.gov. Once there, borrowers can take a quiz to find out if they are eligible for a mortgage modification under the “Making Home Affordable” program. At the end of the quiz, based on the answers provided, the site will tell borrowers if they are likely to qualify for a modification under the program.

The site also provides helpful tips about gathering the proper paperwork, including pay stubs; tax returns; savings account records; mortgage statements; second mortgage information, such as home-equity loan statements; credit card bills; and information on other debt, including student and car loans.