Archive for November, 2009
Redding Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Last year about 1/3 of all homes sold fell in the distress sale category. This year that number has increased to 44%-no big surprise. Next year expect half of all sales to be distressed sales-either bank foreclosures (REO’s) or short sales. So far, 1792 homes have closed escrow on the Shasta MLS for 2009 of which 622 were REO’s and 172 were short sales.
Currently, just over 1400 homes are for sale. 133 of these active listings are REO’s. 231 are short sale listings-where the total loans and closing costs exceed the home’s value. 464 homes are pending sales. That works out to 3 homes available for every home pending. This is much better than 2007 when there were seven homes for sale for each home pending.
The average cost for a 1750 square foot home in Redding hovers just below $130/square foot. That number was $139 at the beginning of the year. 211 homes closed escrow in October-up from 178 a year earlier. 77% were priced at or below $250,000. No homes sold over $700,000.
The foreclosures taking place today are primarily on homes owned by creditworthy borrowers in financial distress due to job loss or a cut in hours. The economy is to blame, not sub-prime loans. Banks have the unenviable task of foreclosing then selling these properties. Placing too many of these homes for sale in the same area at the same time could drive down values which would undermine other loans on neighboring properties held by these banks. Taking too long to get these REO’s off the books could prolong the housing crisis by several years. The inventory of REO’s in Shasta County is on the rise despite a nearly insatiable appetite for these homes by first-time buyers and investors. 2010 may be the year the real estate market turns the corner heading for better times.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Home Remodeling On The Cheap
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SENIORS
One side effect of the housing meltdown is plenty of out of work contractors willing to work for less just to pay the bills. A recent article in the Wall Street Journal estimates “remodeling prices are down 5% to 10% across the U.S. from their peak”. I would venture to say that number is even higher in the North state due to our very high unemployment rate. The article points out that spending on home remodeling projects from the record peak of $146 billion for third quarter 2006 to the third quarter 2007 has dropped to $118 billion for the year ending in the first quarter of 2009.
The factors cited for causing this decline include the sluggish real estate market, decreasing home prices and tighter credit. Most remodeling projects take place within 18-24 months of a home purchase. Lower number of units sold means fewer remodeling projects to follow. Lower home values mean homeowners can’t tap equity for remodeling projects. Tighter credit standards preclude borrowing for some wanting to remodel their homes.
In some areas, new home builders are venturing into the remodeling business creating additional competition for contractors that make their bread and butter focusing on the remodeling segment of the construction industry. Most remodeling project costs are 1/3 materials and 2/3 labor. Contractors are paying more for taxes and insurance but building material costs have declined for most materials not made from oil. Contractors resisting price cutting to land jobs are finding that others will knock down their bids to lock-up a remodel contract. One downside is the low bidder can’t finish the job at the agreed upon price “leading them to cut corners or even abandon the job”. The lowest price may not be the best value warn industry experts.
Another pitfall is possibly hiring someone that is an unlicensed moonlighting amateur. This can lead to shoddy work and little recourse due to the fact there is no license to file a complaint against.
My wife and I have jumped on the remodel bandwagon this year by replacing all of our plumbing and light fixtures, windows and two bathroom remodels. Next we hope to replace all our flooring and eventually a major kitchen remodel. Contractors are anxious to bid our work and are responsive to our calls unlike the boom times when you only got to speak to an answering machine and had a 50/50 chance of getting a return call.
Contractors need the work and our economy needs the cash circulation so jump in if you have the need and financial capability.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Key Indicators Home Values Will Increase Highlighted
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
Snippets of news cautiously point to positive economic signs indicating the bottom of the real estate market is here.
However, an article in Smart Money takes these generalizations a bit further suggesting there are six signs a home you are considering buying is about to rise in value. Here they are:
- Unemployment Rate-Common sense, higher unemployment, less potential buyers in a given market place. Shasta County’s double-digit unemployment rate will keep prices down until this number drops to the historic average
- Rising Incomes-Numerous websites will give you income data for cities and even individual neighborhoods. The Bureau of Economic Analysis is one such site.
- Fewer foreclosure filings and sales-The local paper has laid out these numbers monthly or can be obtained through Realty Trac. This indicator has not been favorable this year for Shasta County.
- Declining inventory- Today, just over 1400 homes are listed for sale. The highest inventory level locally during this bubble burst was about 2500 in 2007. Overall the inventory has been very stable with minor seasonal variation.
- Shrinking list-to-sales price ratios- I haven’t been tracking this but would guess it’s not shrinking yet in our local market.
- Decreasing sale prices-That has certainly been the case for 2009 here in Shasta County. I would peg that number close to 20% for this year alone, more than 40% for 2006-present. The low-end of the price spectrum seems to have bottomed but I expect the upper-end not to bottom until 2010-2011.
Our local market stats show some signs of recovery but that could stall or tank if some of these numbers don’t improve in the coming months. Reduction in unemployment and foreclosure filings are what I feel is absolutely necessary locally before we can say this ugly chapter of the housing meltdown is behind us.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Fannie Mae Offers Foreclosure, Lease-Back Option
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
Last week, Fannie Mae announced a new program targeting borrowers that can no longer afford their home. In exchange for expediting the foreclosure process the borrower is offered the right to lease back the home for up to a year. This allows the lender to avoid the more costly and time consuming traditional foreclosure process while the borrower gets to stay put and pay fair market rent while creating opportunity for the borrower to regroup financially.
Dubbed the “Deed for Lease” program, after going through a qualifying process and being approved, the borrower would transfer title to Fannie Mae using a deed-in-lieu of foreclosure. The advantage to the borrower is this process results in a smaller credit ding than a straight foreclosure, which can damage credit so severely securing a rental is difficult. This option could also be helpful if the borrower works at a job nearby or has children attending area schools.
Some particulars include:
- Must be at least one payment (but not more than 12) behind
- Must have applied for and been denied a loan modification
- Must prove your ability to pay fair market rent (rent can’t exceed 31% of monthly gross income)
Don’t bother applying if you can afford your current mortgage payment but would rather walk away because your property is upside down. Don’t do this because you want to buy the house back when Fannie Mae offers it for sale- your credit is unlikely to be strong enough a year after the deed-in-lieu.
If interested, click below for Fannie Mae’s loan look-up feature to see if your loan is held or insured by them. FHA, VA and other government backed loans are ineligible.
Click here to see if Fannie holds your loan:http://loanlookup.fanniemae.com/loanlookup/
The program will not work if:
- Fannie Mae is only a second lienholder
- Borrower can’t get a second loan released
- Borrower has filed for bankruptcy
- Borrower is involved with litigation concerning the property
- Zoning or Homeowner Association rules prohibit renting
Some would argue this program will only prolong the agony of finding the bottom of this current housing market meltdown. I doubt many qualify for this program so the impact, in my opinion, will be negligible. If lenders were to aggressively foreclose and dump distressed properties on the market simultaneously, it could lead to a death spiral of home value erosion creating wave after wave of foreclosures. This program, along with other efforts underway may eventually bring price stability to a battered, but vital, segment of our economy.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Fine Points Of Homebuyer Tax Credit Discussed
INDUSTRY NEWS, REAL ESTATE LEGISLATION, TIPS FOR BUYERS, TIPS FOR SELLERS
An enrolled agent from Southern California once again spoke with local Realtors about the extension and expansion of the federal tax credit for homebuyers. Earl M. Salter, said this tax free credit not only applies to first-time buyers but homeowners who have owned and lived in their personal residence for 5 consecutive years during the last 8 years (Long-time Residents). First-time buyers and long-time homeowners must have a home under contract by June 1, 2010 and close escrow before August.
Additionally, the new law raises the income limits (Adjusted Gross Income or AGI) from $125,000 to $145,000 and for married couples filing jointly from $225,000 to $245,000. To qualify for the tax credit, long-time residents can buy the replacement property now and sell their current principal residence or keep it as a rental property. The credit is up to $8,000 for first-time buyers and $6,500 for married long-time residents or $3,250 for married filing separately.
Other important details include having to repay the credit if you sell within 3 years. The tax credit can be used immediately for closing costs if the loan is a government-backed loan such as FHA. Otherwise, the buyer can wait until filing their 2009 tax return for the credit. Ammending the 2008 return is another option but due to processing time, Earl said it’s better to wait and file for the credit with the 2009 return.
The bill, H.R. 3548, is called the Workers Homeownership and Business Assistance Act of 2009. More details of the bill will be released once the technical details are worked out and published by the federal government.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
E.A. Discusses Tax Implications of Short Sales
Enrolled Agent, Earl M. Salter, addressed members of the Shasta Association of Realtors regarding what sellers of over-encumbered homes should expect from the IRS. Homeowners in this predicament should consult with an accountant or enrolled agent prior to pursuing a short sale. It is a viable option for those that took out a purchase money loan to buy the home originally. However, if the property was refinanced or is not the primary residence of the homeowner, selling short could create unwanted income tax liability.
Earl said 95% of the time a property owner has no tax liability if the property was their personal residence and the loan was taken out to purchase the property. These loans are referred to as “non-recourse loans”. A homeowner should make sure their lender will issue a 1099C after the transaction closes. If the lender will not provide this debt forgiveness form, the lender could pursue the loss for up to 10 years. Some lenders are selling these debts to collection agencies which will pursue the homeowner for the amount forgiven. Earl said a good indicator a 1099C will not be issued is when the loan has been sold to investors.
In the event a homeowner is not provided a 1099C, bankruptcy may be the only option to get out from under the debt. To add insult to injury, the IRS may consider any debt forgivness income and tax the “gift” accordingly. The same will happen if a borrower successfully negotiates a loan modification with a principal reduction.
Anyone considering a short sale should consult with a tax professional before determining a course of action. Failure to do so could result in unexpected tax consequences. Contact me if I can be of help.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
GMAC No More-Rebranded ‘Real Living’
The GMAC brand is no more as Brookfield, the parent company of GMAC Real Estate, re-branded the entire franchise to Real Living. Real Living, according to a corporate profile summary, “emerged in 2002 as the largest, independently- owned company in the Midwest and the seventh largest real estate brokerage”. The Ohio-based brokerage established themselves as a “lively consumer-focused brand” utilizing Internet technologies to assist consumers in the decision-making process.
Here are accolades from industry watchers:
- Inman News-2005 most innovative Franchise Broker of the Year
- REALTOR Magazine-2006 Most Productive Agents in the Nation
- Entrepreneur Magazine-2006 Top New Franchises
- Web Marketing Association-2007 Standard of Excellence Award
- Swanepoel Trends Report-2008 Most Promising New National Brand
Real Living is built on family, innovation and results according to the news release. Prior to being acquired by Brookfield, a Canadian firm, Real Living had 2,500 agents operating from 120 offices in 20 states. Real Living also offers:
- home financing
- title services
- relocation services
- auctions
- home warranties
Real Living was one of the first companies to invest heavily in the Internet to “provide more functionality and features for home buyers and sellers, and more streamlined marketing and online tools for agents and brokers”.
I am excited about the opportunity to join an innovative company among the most productive in the business. Look for our new real estate signs around Redding/Shasta County in the weeks and months ahead!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY OF LOCAL REAL ESTATE EXPERIENCE
What If I Stop Paying My Mortgage?
Many homeowners across the nation, particularly those that owe more than their home is worth in today’s market, are asking themselves this question before making their monthly mortgage payment. Here is a time line of what to expect:
- Expect your lender to report your missed payment to credit bureaus by the first day of the following month.
- The late payment knocks down your credit score by up to 200 points assuming this is the first missed payment.
- Your other creditors will take note of your nosediving credit score and either raise your interest rates or cancel your credit account or at least lower your credit limit.
- If your credit limits are lowered, this triggers and increase in something known as the utilization rate, which lowers your credit score even more. This will impact your score for up to 7 years with the greatest impact occurring the first two years.
- Your lender will contact you to see what is going on. If no payments are made within 90 days, your lender may refuse any future payments unless you have contacted them beforehand and a course of action is agreed upon.
- The foreclosure process generally begins once four payments have been missed. The process takes 4-5 months start to finish if the lender pursues the foreclosure vigorously under a deed of trust.
- You will be thrown out of your home. Some will offer cash for keys, others will hire an attorney to do an eviction. With the backlog of foreclosures these time frames may be extended by several months.
If you want to keep your home, call your lender and discuss loan modification options before you miss any payments. You may also be able to deed the property to the lender and rent it back under a new program for loans held by Fannie Mae and Freddie Mac. Seeking the advice of a real estate attorney may be in order before you decide a course of action. Contact me if you have any questions.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Racial Discrimination Is Alive and Well
INDUSTRY NEWS, REAL ESTATE PRACTICE
Beverly Hills Properties was just hit with a $2.725 million dollar fine from the U.S. Department of Justice for housing discrimination. According to an article from the California Association of Realtors, a lawsuit brought in August of 2006 claimed Donald T. Sterling and others engaged in discrimantory practices including refusing to rent to African-Americans, Hispanics, and families with children.
In Koreatown buildings, apartment owners refused to rent to non-Koreans. The real estate firm manages about 119 apartment buildings with over 5,000 units in the Los Angeles area. They allegedly misrepresented the availability of units and kept internal reports of tenants’ racial profiles.
The settlement is the largest ever obtained for rental housing discrimination. In addition to the fine, the defendants must take action to ensure non-discrimantory actions in the future including fair housing training for employees and monitoring their compliance with fair housing laws for the next three years.
The bulk of the settlement monies will be placed in a fund to pay tenants harmed by the defendants’ discriminatory practices. A great outcome considering how difficult it is to uncover these acts and prosecute violaters.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Buy A Home With Nearly Nothing Down, Again!
FHA LOANS, HOME LOANS, INDUSTRY NEWS, TIPS FOR BUYERS
Lenders are always searching for ways to help buyers leverage their good credit to buy homes. Wayne Barni, local loan broker with ChoiceOne, reviewed a loan program dubbed CHF Access. This program uses an FHA first mortgage which requires a 3.5% downpayment and a 3% second mortgage that can be used toward the downpayment or closing costs. Essentially, the borrower can get in for 0.5% downpayment. Here are some details:
- Downpayment can be a gift from a family member
- 2nd mortgage has a 15 year term at 8.25%
- Seller may contribute up to 6% of purchase price for closing costs
- Both first and second are fixed-rate loans
- No prepayment penalty on either loan
- Maximum loan amount is $417,000
- Maximum income for Shasta County residents is $66,840
- Loan for primary residence only
- Loan can be used for FHA approved condos, manufactured housing and single family homes
- Not limited to first-time buyers
- Buyers OK 2 years after bankruptcy or 3 years after foreclosure
- Buyers must take online homebuyer education course
Credit scores play a role so not everyone will qualify. Buyers should have credit scores at or above 620. Some lenders will raise the bar further to 640. Borrowers may be able to make some adjustments to their credit score by following the advice of a good loan officer.
For more details, give me a call or drop me an email. Wayne can be reached at 530-224-6707.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL SALES EXPERIENCE
PREMIER SERVICE® is the focus of Real Estate Professionals/GMAC. We are located in Redding, CA (at the North end of the Sacramento River Valley) in the midst of river, lake, ranch and mountain terrain.
Our Customer Satisfaction Rating, based on an independent survey, exceeds 97%. This is reflected in our 2008 "QUIE" Award recognizing the TOP 10 REAL ESTATE COMPANIES in NORTH AMERICA! REP/GMAC in #2.
