Archive for January, 2010
Redding Foreclosure Activity Update
The number of bank-owned properties (REO’s) listed for sale in Redding/Shasta County is on the rise. Currently there are 174 active REO listings on the Shasta Multiple Listing Service. This number is up significantly from last year when just over a hundred were available on any given day. Nearly a quarter of the 400 pending home sales are REO’s. However, based on 2009 totals, almost half of the closed home sales were REO’s or short sales.
The uptick in REO inventory could be due to banks releasing more properties into the marketplace or fewer REO’s being purchased. Has the market hit a saturation point? In 2009, the number of REO’s was steady for the first 10 months of the year but started climbing in early November. This coincides with the expiration of the federal tax credit which was extended to April of this year. It is also possible that Shasta County’s unemployment rate has finally impacted home sales.
Elsewhere in California and the nation home prices seem to be stabilizing. Prices are actually increasing in most of the major metro areas according to reports I’ve read. However, home prices locally have been on a steady decline. Last year, the average home price fell 12% in Redding and has dropped around 40% since the peak in the fall of 2007.
The good news is there are about 200 fewer homes listed for sale today compared to a year ago. Pending home sales are also up by about 25% from last January. Consumer confidence is on the rise despite the nation’s waning approval of our president’s efforts to get our economy back on track.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Is Fed Poised To Kick Crutch Holding Up Housing Market?
HOME LOANS, INDUSTRY NEWS, TIPS FOR BUYERS, TIPS FOR SELLERS
Low interest rates enjoyed in 2009 by home buyers and homeowners refinancing may be history come March. The Federal Reserve propped up the ailing housing market by quietly buying up mortgage-backed securities and lowering key interest rates which influence costs for consumer borrowing. Lenders loaned money only because they knew government sponsored enterprises (GSE’s) were willing to buy them. The investor pool that normally buys these securities seized up during the housing meltdown forcing the government to step in before lending came to a grinding halt.
Now the Feds have decided it’s time the lending industry stand on its own. Investors will need to step up and buy mortgage-backed securities or home loans will become extremely difficult to find. Banks rely on investors to buy these loans to back-fill their balance sheets with money to loan to future mortgage seekers.
Some believe there is a pent up demand in the private sector to buy these investments. The big question is will they be willing to buy at the artificially low mortgage rates or will they demand higher returns? Some predict rates will rise to 6% or possibly 7% or higher for the popular 30-year fixed rate mortgage in order to satisfy the rate of return demanded by private investors nervous about the health of the housing sector.
The Feds may have to once again support the financial markets if they don’t buy these securities at auction. Fannie and Freddie GSE’s are ready, willing and able to buy up to $300 billion in mortgage securities during 2010 if called upon to do so. Private industry does not want government in the loan, banking or car manufacturing business so this is the next logical next step-assuming the private sector loosens their purse strings and gets back to churning money through the economy.
Other factors that could derail a housing sector recovery include:
- Tightening of FHA loan rules regarding credit and downpayment requirements
- Investors buying stocks and bonds with capital previously used to buy mortgage securities
- Expiration of federal tax credits for home buyers
- Banks destabilizing home prices by clearing their books of foreclosed properties
Lending industry insiders predict the volume of loans funded in 2010 will be half that of 2009. This could lead to the double dip recession experts have been warning about, especially in areas like ours with a fragile economy.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Is Your Taxable Property Value Too High?
LOCAL GOVERNMENT, SHASTA COUNTY, SHORT SALES, TIPS FOR SELLERS
Proposition 8 requires county assessors review property values used to calculate property tax bills when the current value drops below the base year valuation. Some California assessors have waited for property owners to request a new appraisal while others, including our elected assessor Leslie Morgan, have taken the initiative to examine thousands of properties purchased after 2002. Leslie Morgan and members of her staff updated Realtors on actions taken by their department to bring area property values in line with the current market at our weekly MLS meeting.
More than 32,000 of Shasta County’s 95,000 properties were reviewed and approximately 16,400 saw a drop in their taxable value. In fact, Shasta County property owners collectively paid $12.5 million less in property taxes as a result of Leslie’s actions. This translates to billions of dollars of lost property values across the county. Sacramento feels the hurt because they keep the lion’s share of property tax dollars that are collected by the county and forwarded to the state’s general fund. Only 13 cents of each tax dollar is returned to the county.
The challenge for county appraisers is selecting from two distinct pools of sales data-arms length transactions involving owner occupied, well-maintained properties or distress sales which include neglected bank-owned properties and short sales. Referred to as two-tiered market comparables, the appraisers must decide which pool to draw sales data from when conducting a reappraisal.
The county also received more than 500 appeals from property owners contesting the value of their property as reflected on the tax roll. This usually happens when the tax bills are mailed out each fall. Less than half of these properties were adjusted downward according to Leslie. Appeals are accepted after the tax year begins July 1 but the appraisal must reflect the value as of January 1 of the current year.
Another challenge is the lack of closed sales to choose from. The slow real estate market means there are fewer properties in a given location to use for an appraisal. This is an even greater challenge in rural areas of Shasta County. In some cases, the appraisers are so buried with a backlog of properties to evaluate they encourage property owners to file a formal appeal to protect their rights to have their property reassessed. This way they can have the value adjusted at a later date and receive a refund if there was an overpayment of property taxes.
One positive note is the inflation rate was negative for 2009 so the county will not be adjusting property tax bills upward this tax year. Prop 13 allows up to 2%/year increase if the CPI has increased by at least that amount.
Legislators are discussing possible revisions to Prop 13 in light of the spending problem in Sacramento. There is a push to split the tax roll-assessing commercial properties differently than residential properties. If this happens, it would be one more reason for businesses to move out of California.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Local Housing Agencies Launch Foreclosure Assistance Program
HOME LOANS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS
Shasta County, along with the cities of Redding, Anderson and Shasta Lake have landed a grant of $1 million to assist home buyers wishing to purchase a foreclosed home in designated neighborhoods. Most of Shasta Lake is eligible for the program as well as Anderson Heights and Ravenwood subdivisions in Anderson. The program has been dubbed C4-HAP. Interested home buyers should contact the Shasta County Department of Housing and Community Action at 1450 Court Street Suite 108 Monday through Friday from 8 a.m to 1 p.m. to add your name to the waiting list for loan applications.
Here are some important points:
- The program is only available until June 2010
- Purchase price is limited to $190,000 or less
- The assistance is a forgivable 0% interest silent second loan
- The loan is forgiven after 5 years
- Household income limits apply depending on household size
- Do not need to be a first-time home buyer, but you can’t presently own a home
- Property must be located in specific census tracts to qualify
- Buyer must occupy home as primary residence after purchase
- The average loan amount is expected to be $45,000
- Once the money is used up, there will be no additional funding
A single homebuyer can’t make more than $3,910/month. A family of 8 can make up to $7,370/month. The money allocated to this program will help roughly two dozen home buyers.
For more details, contact the following:
- Jodi White at City of Redding-225-4173
- Jessaca Lugo or Loree Byzick at City of Shasta Lake-275-7464 or 275-7463
- Torri Glasgow at City of Anderson-245-6431
The goal of the program is to help homebuyers purchase distressed properties which in turn helps prevent neighborhoods from blight caused by neglected vacant homes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE SALES EXPERIENCE
Federal Reserve Earns $46.1 Billion Profit Thus Far From Bailout Efforts
Maybe bailouts do have a silver lining! The Federal Reserve announced last week it made a record $46.1 billion as a result of gains on securities it purchased to shore up the financial system. The Fed is not in the business of making money but this was a side effect of bailouts to aid the banking industry. The profits were turned over to the Department of Treasury.
The primary goal of the Federal Reserve is taking actions that stabilize monetary systems. They can buy or sell securities, print money or adjust interest rates banks charge each other. The Fed purchased mortgage-backed securities in 2009 to keep interest rates low. These securities pay a higher rate of return than Treasury securities which helps explain the windfall profits.
This could change if the financial markets take a turn for the worse. However, Fed officials believe the investments are safe. This news should silence those concerned President Obama put too many taxpayer dollars at risk to shore up the financial sector of the economy. Of course, there are many Americans that will never admit his gamble paid off!
Besides making great returns on securities, the Fed reported $2.6 billion in profits from currency swap arrangements with central banks in 14 countries and $700 million from fees charged to banks for services provided by the Fed.
It would appear that bailouts authorized by President Obama have averted a catastrophic meltdown of our financial systems as well as paid a handsome return to taxpayers. The fact that many banks are paying back TARP funds and even GM has begun paying back some of their bailout funds indicates our new president probably made the right moves.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
Cal Fire Warns Of Big Weather Change
REDDING LIFESTYLES, SHASTA COUNTY
Things are changing out in the Pacific which, if it comes to fruition, could dramatically change the dry weather pattern the Redding area has seen thus far this winter. According to weather forecasters at Cal Fire, the high-latitude block that has kept storms away has collapsed. Also, a powerful branch of the jet stream has developed and is expected to roar across Northern California bringing high winds and heavy precipitation.
This wet weather pattern has been absent for several years. Coincidentally, El Nino happens to be peaking in the Eastern Pacific which energizes the jet stream with moisture. Due to the low latitude of the jet stream, the storms are expected to be quite cold initially. This weather pattern is expected to arrive Sunday and continue for at least a week. It’s possible the Sierras will see tens of feet of snow above 3000-4000 feet. Lower elevations can expect at least 3-4 inches of rain statewide. However, the north state may see 5-10 inches in lowlands and 10-20 inches in “orographically-favored” areas. Locally, Shasta Dam and the Shasta Lake tend to wring out significantly more moisture from passing storms than nearby valley areas.
Forecasters are unanimous that after this week-long event, a “reloading”will occur with a strong possibility of a Pineapple express pattern developing bringing warm moist storms that could trigger moderate flooding as it melts the copious amounts of accumulated snow. The unusual thing here is many different forecast models are in ”truly remarkable” agreement about these predictions.
I tend to be skeptical of long term weather predictions but this news is spreading like wildfire (pun) and it doesn’t hurt to batten down the hatches in preparation for what might be the drought busting winter many of us have waited for.
530-224-6767 or 530-941-7492
BRAD GARBUTT
RELTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Redding Home Prices Slip Further in 4th Quarter 2009
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Despite news that prices have bottomed elsewhere in California, Redding home values dived nearly $4 in the average cost per square foot in the last quarter of 2009 from $133.35/foot to $129.7/foot. The average cost per square foot year-to-year dropped from $148.16/square foot in the final quarter of 2008 representing a 12% drop in value for homes in Redding for the year.
A local appraiser tracks these statistics and reports them monthly to others in the local housing industry. These numbers are for Redding only and could be higher or lower depending on each property’s amenities. Newer homes will generally sell at a higher cost per foot while older homes will sell for less. The average home size is about 1750 square feet in Redding.
The avearge home price followed suit dropping from $260,102 in 2008 to $226,466 in 2009. According to the local paper, the median price for Shasta County finished the year at $185,000. This reflects lower values in neighboring communities of Anderson, Cottonwood and Shasta Lake City. In general, smaller homes around 1000-1200 square feet will sell at a higher cost per square foot and homes over 2000 square feet will sell for less than the average. This is due to the fixed costs associated with building a home-land and permit fees, that are about the same for any sized home.
As of Monday, January 11, 2010 there are 1313 active residential listings, 377 homes pending, 165 bank owned homes listed for sale and 215 property owners attempting a short sale. The big change here is the number of bank repo’s for sale. Last year the number hovered between 100-120 from June through October. Since October, that number has crept up steadily to today’s level. Based on the number of NOD’s (Notices of Default) being filed in Shasta County, this trend is not likely to change anytime soon. Our higher-than-average unemployment rate may be to blame.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Chico, Oroville and Pardise To Join Statewide MLS
INDUSTRY NEWS, REAL ESTATE PRACTICE
Cal REDD, the new statewide Multiple Listing Service (MLS), will begin the task of transitioning these areas away from their current MLS software provider to the new statewide MLS system. The acronym stands for California Real Estate Dynamic Data. This software was developed by a private firm at the direction of the California Association of Realtors (CAR). CalREDD is owned and operated by Realtors as a non-profit mutual benefit corporation and subsidiary of CAR.
CAR hopes more of the 60+ associations across the state will follow suit and convert in the near future to CalREDD. Thus far, Merced and Madera have switched to CalREDD with Lake County adopting the system recently. MLS’s can dump their current software vendor entirely or run both systems parallel until association leadership decide to a permanent switch.
One benefit of the new system, assuming the majority of real estate practitioners across the state get on board, is agents will be able to access listing data from most parts of the state, not just their local market area. This could be helpful in assisting Realtors’ clients contemplating a move to another area of the state. Agents will be able to provide detailed information about property for sale in the area under consideration. Assuming the agent does not want to represent the prospect in that area, referral to another Realtor is likely to follow.
The development and launch of this new software has not been without controversy. Considerable angst existed during the development phase as agents and brokers pondered how sharing their local market data with agents outside their market area would impact their business. Heretofore agents have been very protective of their local MLS- afraid agents unfamiliar with their area will attempt to represent buyers from afar. In reality, this practice is discouraged by most brokers since agents selling property in unfamiliar areas increases chances of costly litigation.
Personally, I see increased market exposure for property sellers since their listing can be accessed by more than 170,000 agents across the state, assuming the system is embraced by the vast majority of real estate practitioners. Who cares where the buyer comes from or who represents the buyer if they want to buy a property listed for sale?
In the past I have tried to list or sell properties outside my local market area but ran into resistance from agents in those areas. They basically have drawn a line in the sand saying ”you stay over there and I’ll stay over here!” - don’t step on my toes. What they fail to understand is a California real estate license entitles the bearer to sell anywhere in the state, not just one locale.
A statewide MLS has been in the works for nearly a decade primarily to address issues agents in metro areas faced trying to access all the MLS services that served their geographic market area. Understandably, some regions felt CAR was moving too slowly developing a statewide MLS while others thought things were progressing too quickly. Some of these areas spent considerable sums developing software to allow data sharing within their regions and now are reluctant to mothball their systems to join CalREDD. Existing software vendors also stand to lose millions in revenues and have voiced concerns regarding CAR’s efforts to develop a statewide MLS.
The Shasta Association of Realtors has not decided whether or not to stay with its current software vendor (FLEX) or adopt the statewide MLS, or run both systems parallel in what is known as a hybrid system. Now that our neighbors to the south have made a leap of faith, we will monitor their experience and contemplate a change at some future date- if it is in the best interest of Redding area Realtors.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE SALES EXPERIENCE
Olney Creek Residents In New Floodplain Not Alone
INDUSTRY NEWS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SENIORS
A recent article in the LA TIMES reports tens of thousands of homeowners in Southern California are being required to purchase expensive flood insurance because FEMA has updated maps placing their homes in high-risk flood zones. Apparently, more than 150 cities and unincorporated areas in LA, Orange, Riverside, Ventura and San Bernadino counties have been notified of the new requirement.
Estimates peg the additional insurance premiums between $500-$1,700/year. Homeowners with a federally-backed mortgage (FHA, VA, Fannie Mae, Freddie Mac) will be required to purchase the costly flood insurance. More than half of all mortgages are federally insured or backed loans. Failure to purchase the insurance will result in lenders buying(forcing) the policy and billing the borrower for the policy which is usually at a higher cost than one purchased by the homeowner.
Hundreds of homeowners in south Redding along Olney Creek, east of HWY 273 have been notified the levee built about 30 years ago does not meet the revised height requirements to withstand a 100-year flood event. Property owners may be required to purchase pricey flood insurance this year. Cost estimates are comparable to those quoted for SoCal. A levee along the Santa Clara River in Oxnard was decertified just like the one in Redding, adding 1800 homes to a flood zone.
Property owners that own their property free and clear of loans can assume the risk by electing not to buy flood insurance. Others may hire a surveyor to certify the elevation of their property or home is above the designated flood zone (elevation certificate) if they believe they reside on higher ground.
Modern technology has allowed engineers to more precisely define limits of flood zones. FEMA feels they are doing homeowners a service by notifying them of a potential risk before disaster strikes.
The problem stemmed from flood maps that in some cases were more than 40 years old. In other cases, railroad berms identified on maps as providing flood protection have been eliminated. Local government agencies, including Redding, have asked the federal government for grants to fund engineering studies in affected areas to check the accuracy of the new flood designations.
Renters and homeowners in areas rezoned may want to contact FEMA for information on its National Flood Insurance Program. More than 90 insurance companies work with FEMA to offer flood policies. When purchased prior to a flood map zone change taking effect, the cost is substantially less.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Shadow Inventory Hangs Over Real Estate Market
Experts have been trying to peg the number of foreclosed homes banks are sitting on while pondering when to list them for sale. Core Logic, a subsidiary of First American Title Insurance Company, estimated that number at 1.7 million as of September 2009, according to an article cited in a news release by the California Association of Realtors. This compares to 1.1 million one year earlier.
This is referred to as “shadow inventory” because it is a supply of properties not yet recognized in the marketplace. This inventory includes foreclosed homes, properties taken back through deeds in lieu of foreclosure and loans at least 90 days delinquent.
The “visible supply” according to Core Logic was 3.8 million units in September 2009 which is significantly lower than the 4.8 million units available a year earlier. At current sales rates, that represents a 7.8 month supply compared to 10.1 months the previous year.
The conclusion is we still have a huge inventory of properties to sell before the real estate market returns to normalcy. The only way this time period will shorten is if the economy in general starts adding permanent jobs that pay a living wage. Some of last year’s increase in sales activity was attributed to the federal tax credit and very low interest rates. Some fear once the incentives expire, sales will fall and home prices will follow.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
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