Archive for February, 2010
Luxury Homes On Sale For Half Off?
INDUSTRY NEWS, TIPS FOR SELLERS
![santacruz-103[1]](http://movetoredding.com/files/2009/11/santacruz-1031-300x199.jpg)
Example after example can be found nationwide of discounted prices for high-end real estate. Nicholas Cage recently reduced the asking price for his 11,817 square foot English Tudor in ritzy Bel Air from $35 million to $17.5 million. A 21,897 square foot mansion in Greenwich, Conn. with 14 bedrooms, 13.5 bathrooms on 40 acres with a view of Long Island Sound was listed for $125 million two years ago and recently reduced to $60 million. The home of Suzanne Somers and Alan Hamel known as Les Baux de Palm Springs started at $35 million and has reportedly been reduced to $12.9 million- which works out to a 63% price reduction!
What about Redding? I listed the home pictured above in October in Stanford Hills at $995,000. This Street of Dreams showcase home originally sold in 2005 for $1.5 million to a local doctor. He proceeded to add a guest house (pushing the total square footage above 5000), shop and more landscaping investing several hundred thousand more. The property was bought by an out-of-area hospital to facilitate his transfer for more than $900,000 then quickly resold and closed in December for $875,000. Two doors down, a bank foreclosure was just listed this week at $795,000. It is another Street of Dreams home that originally sold for more than $1.6 million.
The bottom line for those with luxury homes is be realistic if you want to sell soon. Fortunately, many of these homes are owned free and clear and the owners can wait out the market. If you can’t wait, owners should focus on prices of recent closed sales, not list prices of comparable homes. In fact, to avoid chasing the market downward, smart sellers will pinpoint the fair market value then set the asking price under that to capture a sale before the market values slip even further.
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
Phony Foreclosure “Audit” Scheme Unmasked
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS, TIPS FOR SENIORS
State Attorney General Jerry Brown is warning California homeowners in mortgage distress about a new scam designed to skirt recently implemented loan modification regulations. If you haven’t heard, it is now illegal for real estate agents, attorneys or anyone else to charge upfront fees for loan modification services. This latest scheme gets around this law by offering owners wishing to stave off foreclosure an expensive audit to determine if any fraud took place with regard to state and federal laws during the loan origination process.
Several months back, a client of mine received a solicitation from one such firm. They wanted $3,500 to do a “forensic audit” of my clients loan in an effort to uncover evidence of fraud which could then be used to negotiate a loan modification. I called the number on the letter on behalf of my client. The man I spoke with indicated he was located in San Juan Capistrano and formerly worked as a loan officer. I asked if there was any guarantee my client would be granted a loan modification and he said there was not. In fact, if fraud was discovered, my client would have to cough up thousands more to begin the process of taking the lender to task on the alledged fraud.
I referred my client to a non-profit credit counseling agency and he just informed me he has been granted a trial loan modification on his loan. This is not the first time I have helped a client avoid getting scammed by dubious loan modification service providers. To prevent being a victim of one of these schemes, the attorney general and Department of Real Estate make the following recommendations:
- Don’t pay upfront fees. Foreclosure consultants are prohibited from collecting advance fees
- Don’t ignore letters from your lender or loan servicer
- Don’t transfer title or sell your house to a” foreclosure rescuer”. This scam convinces homeowners they can stay in their home as renters and repurchase the home later (at a lower price). It could also be part of a fraudulent bankruptcy filing. The scammer can evict you and keep your home.
- Don’t make mortgage payments to anyone except your lender or loan servicer. Fraudulent consultants keep the money and you lose your home.
- Never sign a document without reading it. Many homeowners have unknowingly transferred title to someone intent on evicting them.
I would add to this list another caution-talk to your lender first before signing anything regarding any service that you believe will help you save your home from foreclosure. Deal directly with your lender’s loss mitigation department and employ one of the many non-profit credit counseling agencies if you need additional assistance.
These scam artists think nothing of taking advantage of those facing foreclosure. Contact me if I can be of any help.
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
Need A Mortgage? Better Sooner Than Later!
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
The Federal Reserve propped up the housing industry last year by buying up $1.25 trillion in mortgage backed securities but has told banks that will end this spring. Investors typically buy these securities but stopped after the housing bubble burst. The Fed’s actions averted certain disaster by keeping money in the loan pipeline as well as keeping mortgage interest rates artificially low. The big concern moving forward is will investors re-enter the market after the Fed pulls out ensuring a continued supply of mortgage money.
Many economists believe interest rates will have to increase to attract investors for these mortgage-backed securities. Some optimistically predict a slight rate increase from 5% currently to near 6%. Others believe rates would have to rise above 7% before investors will jump back in.
The Fed may have to step in again and buy loans through it’s GSE’s known as Freddie Mac, Fannie and Ginnie Mae in the event mortgage rates spike due to a lack of funds available for mortgages. Other government program changes will also impact the real estate market in the near future:
- The Federal home buyers tax credit is set to expire at the end of April
- Underwriting rules for the popular FHA loan program are tightening
- Many borrowers attempting loan modifications will be denied adding to the foreclosure crisis
The end result could be fewer buyers and more inventory of distress sales ultimately causing more price erosion forcing property values downward. This is likely to be the case until jobs that pay a living wage are created due to economic recovery. Some speculate that the government will extend a helping hand if their actions derail the housing sector recovery.
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 SALES EXPERIENCE
Home Foreclosures Subsiding Elsewhere
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR SELLERS
RealtyTrac reported its January numbers for foreclosure properties which include notices of default, auctions and bank repossessions. There was a 10% decrease from the previous month however the 315,716 foreclosure filings for U.S. properties was 15% higher than one year earlier.
Nevada has the honor of the highest number of filings for the 37th straight month. Other Western States making the top 10 include Arizona, California, Oregon, Utah and Idaho. Phoneix is the only large metro area that saw an increase from the previous month.
Las Vegas saw a 2% decrease from the previous month but retains the title of highest foreclosure rate-1 of every 82 housing units with a foreclosure filing. Six California cities had foreclosure rates in the top 10-
- Modesto-1 in every 107
- Stockton-1 in every 107
- Riverside-San Bernardino-Ontario-1 of every 109
- Merced-1 of every 109
- Vallejo-Farfield-1 of every 112
- Bakersfield-1 of every 118
The Central Valley saw a construction boom and rapid price appreciation during the bubble which explains why these same areas are tops in foreclosure activity. Locally, foreclosure filings have been up and down month-to-month with no clear downward trend as of yet. One could argue that foreclosure activity is focused in newer subdivision developments sold during the bubble however some foreclosures are a result of cash-out refinances on homes in more established neighborhoods that later lost significant value.
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 SALES EXPERIENCE
Housing Affordability Remains High For First-Time Buyers
INDUSTRY NEWS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS
Lower home prices combined with low interest rates bumped up the First-Time Buyer Housing Affordability Index (FTB-HAI) for California to 64%. During the bubble, this index bottomed out just over 20%. This number reflects the number of households that can afford an entry-level home assuming a 10% down payment and an adjustable interest rate of 4.5%.
I would prefer this index be calculated using a stable 30-year fixed rate loan. The high usage of adjustable rate loans caused many of the problems we are dealing with today. The California Association of Realtors (CAR) also tracks affordability for certain counties and regions within the state. The most affordable region is the High Desert at 84%. The area of San Luis Obispo won the least affordable honor at 48%.
Here’s how other regions ranked:
- United States-77%
- Northern California-65%
- Northern Wine Country-58%
- Southern California-63%
- San Diego-57%
By county:
- Sacramento County-79%
- Merced-84%
- Riverside-78%
- Marin County-40%
- San Fransisco-35%
The Redding area is lumped in with Northern California. Sacramento has higher affordability due to higher incomes. The index compares median incomes to median home prices to determine affordability. Despite a lower median price in Shasta County, lower incomes prevent our area from ranking higher by this index. Statewide the median price for the 4th quarter 2009 was $257,940. The minimum household income needed to purchase the median priced home is $44,100.
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 SALES EXPERIENCE
Get Paid To Pay Your Mortgage?
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
That’s right! An experimental program has been launched to entice homeowners not to walk away from their mortgages that are underwater by offering a cash reward if they keep their payments current. According to a Wall Street Journal blog, Loan Value Group LLC is launching a pilot program to determine if rewarding borrowers with cash is enough to keep them from abandoning their home loan(s).
The mortgage investor will base the size of the incentive on factors such as the amount the borrower is upside down on their loan, their income, and other risk factors. The “responsible homeowner reward” will grow over a period up to five years as long as the homeowner makes scheduled mortgage payments. The general idea is to change the psychology from the buyer’s perspective from focusing on how much they owe to how much they could gain by staying the course. The reward is not large enough to offset negative equity but allows the borrower to keep their home until prices stabilize and possibly recover value and avoid negative impacts to credit scores caused by foreclosure.
I believe the problem is too big for this program to help. Banks will do anything to keep these overpriced assets on the books which makes them look stronger on paper. Once the properties are foreclosed and resold at a loss, the true value of these properties will be reflected on their balance sheets which will not make shareholders happy. Likewise, top exec’s will have a hard time justifying obscene bonuses if their financial statements are bleeding red ink.
Any borrower considering a program that modifies their original loan should proceed with caution. California law dictates that purchase-money loans do not allow the lender to seek a deficiency judgement. In other words, a bank cannot come after you for a loss after foreclosure if the loan was used to purchase the home. However, if the loan was modified or refinanced after the original purchase, the lender can typically pursue the debt through collections after a foreclosure for years to come. Borrowers should consult with qualified tax and legal professionals before agreeing to a refinance or loan modification to determine if any protections are being lost in the process.
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
Redding Real Estate:Newer The Home, Higher The Value!
INDUSTRY NEWS, REDDING LIFESTYLES, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
A local appraiser points out that homes 5 years of age or newer have the highest average value on a cost per square foot basis. The average price of a newer home is $286,172 or $155.9 per square foot. The average of homes 6 years or older drops precipitously to $116.7/square foot. All homes sold in the area served by the Shasta MLS average $121.6/square foot. To get a rough idea of what your home is worth, multiply your square footage by the average cost per square foot based on your home’s age.
My own numbers indicate homes for sale on the Shasta MLS inched up to 1329. Pending home sales have risen to 429 Monday compared to 382 one month earlier. The number of bank foreclosures listed for sale continues to rise with 176 available active home listings.. That number was less than 120 for most of 2009. 111 of the total pending home sales are bank repo’s. 138 homes have closed escrow thus far this year.
Short sales continue to be a significant part of the market. 233 sellers are trying to sell their homes for less than what is owed. Together with foreclosures, distressed sales are predicted to represent half of all transactions in 2010.
Those that lose their homes to foreclosure can expect to wait 3-4 years before being qualified to buy a home again. Members of credit unions may be able to purchase again in as little as a year. Credit unions typically hold their loans instead of selling them to Fannie or Freddie GSE’s allowing them to set their own rules for reconsideration. Divorce, medical bills or job loss may be legitimate reasons for allowing someone to re-enter the housing market on a case-by-case basis. Chapter 7 bankruptcy is likely to prevent one from buying for 5 years or more.
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
Should Shasta County Restaurants Be Graded?
REDDING LIFESTYLES, SHASTA COUNTY
A local reporter blogged recently about how disgusting the health department report was for one of his favorite Redding restaurants. I blogged about a solution that would cost little or nothing for the county to implement. I believe Shasta County residents and visitors alike would benefit from this simple program already in place in many other counties across California. Here’s my September 2008 post:
As a director for the California Association of Realtors, I attend meetings three times a year in cities across the state. This is my 10th year traveling for the Shasta Association of Realtors, and one healthy practice I’ve noticed elsewhere but lacking locally, is a restaurant grading system.
How does it work? The Shasta County Environmental Health Department sets up a system of conducting a health inspection of all restaurants in the county (yes, they already do this) and issues a grade based on the inspection results (no, they don’t do this). If a restaurant achieves a 90% or better compliance (for example) with health laws regarding food handling, food safety and cleanliness, they are issued a large letter “A” on a piece of paper which they can prominently display in the window or door of the eating establishment, for all to see.
Guess what? All restaurants want to display that big letter “A” in their window. They make an extra effort to keep their place of business in order, otherwise they will loose their badge of honor. Such a simple concept, yet our local health officer has not implemented such a program. A couple of phone calls to other counties that have a program in place, by a local health department employee, would get the ball rolling for Shasta County. Is that too much to ask?
Travelers, like me, familiar with the program seek out dining establishments that passed their health inspections with flying colors. Shasta County maintains a website, as other counties do, that list the results of the most recent health inspections of area restaurants. I don’t have the time to check and re-check the website for my favorite haunts so establishing a grading system seems like a no-brainer.
Our health department head is one of the highest paid public employees at the county, earning nearly $200,000/year plus benefits. Isn’t it time to develop a simple way for all of us to know before we walk in the door of our favorite eating place how they did on their last health inspection? What do you think?
530-224-6767 or 530-941-7492
BRAD GARBUTT
Do Our Local Hospitals Use The Pronovost Checklist?
REDDING LIFESTYLES, SHASTA COUNTY
March 2010 Consumer Reports featured an article detailing a recent study on bloodstream infections contracted during hospital stays. A simple checklist system, called the Pronovost checklist, has been found to dramatically reduce infection rates when implemented and followed by caregivers.
One key element allows nurses to make doctors follow all the steps without fear of retaliation. Have our local hospitals adopted the recommendations of this simple procedure?
Only 27 states have laws that require hospitals disclose their infection rates. The good news is many hospitals have reduced central line infections to zero. However, one New York City hospital had an infection rate nearly 400% above average!
Here is a summary of what the checklist requires of caregivers:
- Wash their hands using soap and water or alcohol gel before and after examining a patient, inserting the catheter, and replacing, accessing, repairing, and dressing the catheter.
- Disinfect the patient’s skin with an appropriate antiseptic before inserting the catheter and during dressing changes.
- Use full-barrier precautions by using a mask, cap, sterile gown, and sterile gloves when inserting the catheter. Also, the patient should be covered by a large sterile sheet.
- Don’t place the catheter in the groin area. This area is difficult to keep clean.
- Remove unnecessary catheters. Evaluate daily whether any tubes or catheters can be removed if they are no longer essential.
Since all hospitals have not adopted this practice, family members or friends should take this list along and ask whether the hospital uses it. If you have a choice in selecting the hospital for care, check if they publish their infection rates and go to the hospital with the lowest rate.
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
Why Are there Fewer Homes For Sale in Shasta County?
California’s Unsold Inventory Index declined to 3. 8 months in December compared to 5.6 months in December 2008. This index is an important barometer of the overall condition of the real estate market because it indicates how long it would take to deplete the supply of homes for sale at the current sales pace.
Economists believe the reason for the sharp decline is due to “discretionary sellers” exiting the marketplace. These are homeowners that do not have to sell their homes and have decided to wait out the market on the sidelines hoping for better times. Some believe this low inventory level is only temporary-expecting a significant rise as banks list more foreclosures for sale.
Looking back, the bottom seems to have been August of 2007 for home sales though the median price did not hit bottom statewide until a year ago. Since then, home prices in California have actually risen 8.45% to a median price of $306,820. This period also has seen 10 consecutive months of price increases. Redding has not followed suit due to high unemployment and lack of equity refugees relocating from urban areas.
Here is a snapshot of the local real estate market:
- The inventory of homes available for sale on the Shasta MLS today is 14% less than a year ago.
- The number of homes in escrow is 27% higher than last year at this time.
- 111 homes have closed escrow thus far for 2010.
- 100 homes in escrow are bank-owned and 172 active listings are bank foreclosures.
More rigorous loan underwriting rules take effect at the end of March that could disqualify many local prospective home buyers. Time will tell if this has a negative impact on the number of homes for sale locally.
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
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