INDUSTRY NEWS Category
Redding Home Sales Rise Sharply
FHA LOANS, INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS
2012 thus far is shaping up to be a great year for the local real estate market. Closed home sales are already 21% ahead of last year’s pace! 862 homes have already sold and closed since the beginning of the year compared to 685 for the same period a year ago. All of my inventory data is derived from the Shasta MLS which relies on its members to report listing and sales activity.
The vast majority of homes selling today are priced under $300,000. Of the 208 homes sold in April, 191 were sold for $300,000 or less. The most active price bracket is the under $150,000 range which tallied 105 closed sales in April.
For homes in Redding, the average cost-per-square-foot has remained relatively steady at about $108/sq ft. The average home is defined as a home with between 1500-2000 sq ft.
Inventory has tightened significantly over the past year. 1034 homes were listed for sale in early May 2011 compared to 751 today. The number of bank-owned homes in the inventory has dropped more than half from 202 last year to 96 today. Short sales have increased their share of market activity with 69 active listings and 235 in escrow today. Last year there were 94 active listings and 153 short sale properties in escrow.
Of the 632 pending home sales, 63% are distress sales-bank-owned or short sale listings. This percentage is in line with what we have been seeing in the local markeplace these past two years.
Interest rates for home loans continue to push lower. Today, a 30-year fixed rate loan is available (for those with good credit and verifiable income) at 3.75%. A 15-year fixed is down to 3.09%. This good news is dampened somewhat by a rise in mortgage insurance fees associated with FHA loans, one of the more popular types of loans in this area.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS OF LOCAL REAL ESTATE EXPERIENCE
530-224-6767 OR 530-941-7492
www.thereddingrealestateguy.com
Landlords Beware of Latest Rental Scam
A warning was recently issued by the Apartment Owners Association regarding a lady named Sunny operating a sham business called Successful Rent. Sunny claims to represent out of country tenants looking to rent homes or apartments. She contacts landlords of vacant properties, sends someone over to fill out an application, then tenders a cashier’s check to place a hold on the unit. She also offers to run the credit report for free to save the landlord the hassle.
So far everything looks like business as usual until move-in day. Sunny calls the owner and says the tenant found another place and they want their money back. She has the owner cut her a check for the deposit amount. Within a week or two, the owner gets a letter from their bank indicating the cashier’s check was a phony. The owner is out hundreds to more than a thousand dollars due to the fraudulent check.
The easy way to avoid being ripped off is wait until the tenants deposit check clears before issuing a refund. Also, do your own credit check and background check on any prospective tenant.
Finally, rent the movie Pacific Heights to find out how lucky you are you didn’t rent to Carter Hayes!
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
530-224-6767 OR 530-941-7492
www.thereddingrealestateguy.com
FHA Loans Soon To Be More Costly to Buyers
FHA LOANS, HOME LOANS, INDUSTRY NEWS, TIPS FOR BUYERS
Mary Lake Sunset
Starting April 1, home buyers utilizing FHA financing will see a significant increase in the Mortgage Insurance Premium (MIP) paid upfront by buyers. The MIP premium will rise from the current 1% to 1.75%. Besides the one-time upfront fee, the monthly MIP will also rise 0.1% for loans under $625,000 and 0.35% for loans above $625,000 beginning June 1.
MIP is charged to FHA buyers to cover the cost of foreclosing on loans and liquidating properties which go into default. FHA loans are originated by banks and mortgage bankers using their own capital, with the stipulation HUD will step in and take over the loan if the buyers default. Since the federal government backs these loans, borrowers can purchase a home with as little as 3.5 % down payment monies. In theory, the MIP pays the cost of administering the program so taxpayers do not have to subsidize this loan program. VA loans for veterans are structured similarly.
Other changes to the FHA loan program coming soon include reducing the amount a seller can credit the buyer for closing costs. Currently, sellers can offer up to 6% of the purchase price for the buyer to use for loan fees and other costs to secure a loan. Indications are this will be capped at 3% in the near future.
The reasons cited for the changes in a recent article in The Los Angeles Times include the fact demand for FHA loans has increased to 40% of all new home purchases. Despite the rapid growth in usage, capital reserves have declined far below levels mandated by Congress. Combined with increasing delinquencies, the program is under pressure to rebuild reserves and make the program self-sustaining once again. During the housing bubble, FHA loans were only utilized by a small number of home buyers because conventional loans offered no money down loans.
Borrowers looking now can avoid these fees by taking action before the fee hikes take effect by either buying now or asking your loan officer to secure a case number and buy a home within 60 days after the upfront MIP takes effect.
Feel free to contact me with any questions.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENE
530-941-7492
Hidden Fee In Mortgage Interest Rate to Rise!
HOME LOANS, INDUSTRY NEWS, TIPS FOR BUYERS
Most consumers are unaware three components make up the interest rate of a mortgage. Congress has mandated an increase in one of these components starting this spring. Other increases are expected later in the year according to a recent article in The New York Times.
For several decades now, the guarantee fee has been charged by government sponsored entities(GSE’s) Fannie Mae and Freddie Mac. This fee is not broken out in any disclosure documents provided by the lenders but is incorporated into the interest rate paid by borrowers. The interest rate has three components: the guarantee fee, a loan servicing fee and the largest part of the interest charge going to the bank or investor who buys the loan.
The guarantee fee, the one that is going up, is basically a form of mortgage insurance which offsets losses to investors should the loan go into default (non-payment). The fee increase was incorporated into a larger bill signed into law by President Obama in December, which extended by two months the payroll tax deduction.
The fee increase amounts to 10 basis points which equates to a tenth of one percent added to the mortgage interest rate. One way to avoid the fee is to seek out a lender that holds their loans (aka portfolio loans) instead of selling them off to the secondary market. Credit unions and community banks are lenders most likely to retain their loans.
The guarantee fee not only helps government sponsored entities Fannie and Freddie offset risks, it helps pay the overhead expenses to operate these agencies, in theory saving taxpayers from subsidizing them with tax dollars. However, the housing bubble burst has cost taxpayers in many ways including losses of home equity caused by price declines, losses in retirement accounts due to reactions on Wall Street to the bubble burst and taxpayer dollars given to these GSE’s to shore up their balance sheets.
This fee increase will be hardly noticeable considering mortgage rates are currently near record lows. In fact, some analysts believe rates are excessively high considering the fact the Federal Reserve is loaning money to banks at 0% and banks in turn are loaning money out at nearly 4% for a 30-year fixed rate loan. The typical margin is 2-2.5%, not 4%!!
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
530-941-7492
American Dream of Homeownership Alive and Well
A recent survey found Americans overwhelmingly support home ownership and oppose government changing laws
regarding the mortgage interest deduction or making home loans more difficult to obtain. Here are some of the findings in the poll conducted earlier this month by Public Opinion Strategies and Lake Research Partners:
- 75% agree it is” appropriate and reasonable for the federal government to provide tax incentives to promote home ownership.” Renters and owners alike agreed to this statement. 81% of Democrats and 71% of Republicans and Independents answered in the affirmative.
- 66% believe the federal government should help home buyers secure a 30-year fixed rate mortgage. Loans insured by HUD’s FHA loan program is an example of how the government can help buyers purchase a home with a low down payment and fixed-rate.
- 73% oppose changing or eliminating the mortgage interest deduction regardless of which political party they were affiliated with. 77% of Republicans, and 71% of Independents and Democrats agreed with this statement.
- 68% would be less likely to support a candidate in favor of eliminating the mortgage interest deduction. Respondents from all three parties agreed in virtually equal numbers.
- 96% of home owners, including 84% who are upside down on their mortgage, are happy with their decision to own.
- 79% would advise a family member of friend to buy. 69% of home owners “underwater” on their mortgage would give the same advice.
- Regardless of the turbulence which recently impacted the housing market, 74% still believe homeownership is their best long-term investment.
- Nearly 80% consider owning their own home is very important to them.
- Nearly 70% of non-home owners say buying a home is still one of their goals
- Worries about continued employment and saving for a down payment are deemed the biggest barriers for those wishing to buy a home.
These survey results of 1500 likely voters are consistent with other recent polls by Pew Research and New York Times/ CBS News. This survey was featured in a January 11, 2012 article published by the National Association of Home Builders.
It would appear, despite the negative fallout from the burst of the housing bubble, the American Dream of home ownership is alive and well.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
530-224-6767 OR 530-941-7492
California Plumbing Retrofit Mandate On Horizon
INDUSTRY NEWS, LOCAL GOVERNMENT, REAL ESTATE LEGISLATION, TIPS FOR BUYERS, TIPS FOR SELLERS, TIPS FOR SENIORS
Residential and commercial properties built for use on or before January 1, 1994 will face costly plumbing retrofits before the end of the decade. SB 407 was signed into law by Gov. Arnold Schwarzenegger on Jan1,2010. The law will trigger replacement of older plumbing fixtures to new water conserving fixtures on certain dates.
On or after January 1, 2014, all single-family residential properties undergoing alterations or improvements will have to replace all noncompliant fixtures before certificate of final completion can be issued by the local building department.
On or after January 1, 2014 specific building alterations or improvements to multifamily and commercial properties must replace noncompliant plumbing fixtures as a condition for issuance of a certificate of completion and occupancy by the local building department.
On or after January 1, 2017 a seller of a single-family home must disclose in writing to a potential buyer the new requirements for plumbing retrofits and whether the property includes non-compliant plumbing.
On or after January 1,2019 a seller of multifamily or commercial property must disclose in writing the plumbing retrofit requirements and if any noncompliant fixtures exist in the property to be sold.
By January 1, 2019 all non-compliant plumbing fixtures in multifamily or commercial properties must be replaced with water-saving plumbing fixtures.
The law does not appear to mandate point-of-sale retrofits for single-family homes. However taking out a building permit before, during or after the home purchase could trigger the reqirement that plumbing fixtures be replaced. Home buyers will want to famailiarize themselves with the requirements in order to avoid expensive retrofit costs after purcahsing a pre-1994 built home.
BRAD GARBUTT
RELTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
530-224-6767 OR 530-941-7492
Redding Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Despite all the press regarding foreclosures and their negative impact on the real estate market, Redding seems to be bucking the trends. Inventory of homes available for sale today is 1261 compared to 1575 last year at this time. That equates to roughly 20% less homes for sale, which could be the first sign of price stabilization.
A local real estate appraiser noted in his recent newsletter the average price per square foot has held steady this year at $106. The typical Redding home is 1500-2000 square feet. There are 549 homes in escrow today compared to 467 a year ago. That figure is also about 20% higher than 12 months ago.
The number of bank owned properties listed for sale (184) is down significantly from the beginning of the year (255). Where’s that shadow inventory people are talking about? We need more home listings in the lower price brackets to satisfy the strong demand.
Mortgage rates have dropped again after rising the first quarter of 2011. Well-qualified buyers can secure a 15-year loan at 3.75% or a 30-year fixed at 4.5%. The low downpayment FHA loan and no downpayment USDA loan products are still available. Those with low credit scores (under 600) may still qualify if they can tender a larger downpayment.
Short sale inventory has spiked from 211 at the beginning of the year to 225 today. Fortunately, the number of properties pending the short sale process have increased from 97 in January to 144 today.
Year-to-date 952 homes have closed escrow compared to 866 at this point in 2010 or about a 10% increase year-to-year.
It would appear many buyers are jumping off the fence and buying believing we are at or near the bottom of this lengthy market downturn. Most of the activity is occurring in the under $300,000 price range. Of the 220 homes sold in May, 204 were listed for $300,000 or less. Nearly half were priced below $150,000.
First-time buyers and investors account for the lion’s share of buyers in the home marketplace today.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 28 YEARS LOCAL SALES EXPERIENCE
Study:Homeowners Recoup Solar Investment Upon Sale
INDUSTRY NEWS, TIPS FOR BUYERS, TIPS FOR SELLERS
Appraisers have struggled valuing homes with expensive solar arrays for loan and sale purposes. A recent study found homeowners who spend thousands on solar systems get all of the investment back and in some cases more than was spent! However, new home builders who incorporated solar weren’t as lucky.
The soon-to-be-released study was conducted by Lawerence Berkeley National Laboratory. Researchers analyzed sales of 2000 solar homes in California from 2000-2009. The resale values were compared to 70,000 comparable non-solar homes. Here are some of the findings:
- Solar systems added $5.50/watt on average
- Systems installed on existing homes saw their home values increase by $6/watt
- Solar systems cost about $5/watt to install
- New homes equipped with solar only returned $2.30-$2.60/watt
- The typical home solar system generates about 3.1 kilowatts and adds $17,000 in value
The study is welcome news to companies that sell solar systems. It is also expected that appraisers will embrace the study as supporting an increased value determination for homes equipped with solar. More importantly, homeowners are saving money and being “green”.
Builders surveyed about the significant discrepancy between returns on solar in new vs. existing homes state they view solar as one attribute among many green features added to the home. On the other hand, homeowners who invested thousands on a solar system, then sell, expect to recover their investment. Apparently, home buyers see the value of solar and are willing to pay more than a similar home without solar.
This will give solar installation companies something to crow about as they explain the pro’s and con’s of buying an expensive solar system. I suppose if enough homeowners opt to buy solar, we can postpone building more power generating facilities!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL SALES EXPERIENCE
Home Ownership Remains The American Dream
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS
Despite the housing bust and the foreclosure mess, a recent study by Pew Research Center revealed 81% of Americans still believe homeownership is the best long-term investment. That figure is down only slightly from the 84% of respondents who strongly or somewhat agreed to the same question in 1991. 2142 adults were surveyed in early March 2011.
Here are some other interesting findings:
- 47% of the 1222 homeowners surveyed said their home is worth less now than before the recession began
- 31% said their value is the same
- 17% said their home is worth more
Overall, home prices nationwide are down about 31% from pre-recession levels according to the S&P/Case-Schiller Index. However, homeowners still have a more optimistic outlook on owning vs. renting. Only 31% of renters strongly agree homeownership is a good long-term investment compared to 41% of homeowners.
The sample group consisted of respondents as follows:
- 57% own a home
- 30% are renters
- 13% have other living arrangements such as living with family
Only 24% of renters say they rent by choice. The overwhelming majority would prefer to own if they could. An associated question regarding long term financial goals showed a high correlation between “being able to live comfortably in retirement” and “being a homeowner” instead of a renter. 80% of respondents rated both as extremely or very important.
The “wealth effect” created by the market bubble during which time home prices soared 137% changed consumer behavior. Spending and borrowing surged during the run-up in prices then quickly reverted back to more sane behavior once the bubble burst.
One final conclusion drawn from the study is the longer people have been homeowners, the more likely they believe homeownership is a good investment. They also correctly believe the bubble led to inflated home prices unaffordable to young Americans in their 20’s and 30’s.
The value drop in the Redding/Shasta County area is closer to 50%. The fact that the majority of local home buyers today are first-time buyers and investors confirm this studies findings-homeownership is still the American dream!
530-224-6767 0r 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Realtors Publish New Shasta County Road Atlas
It was years in the making, but the 2011 Shasta County Road Atlas is hot off the press and available for purchase. Not only does it cover Shasta County, but portions of Trinity and Tehama Counties. The map book consists of more than 70 pages of glossy maps and indexes in a spiral binding. The maps sell for $20.
The Shasta Association of Realtors contracted with Vestra Resources here in Redding to produce the map book. Realtors proofed the map in an effort to make sure it was as accurate and up-to-date as possible. The last map book produced by Compass Maps was more than 6 years old. That company went out of business.
Realtors know a good map book is a handy tool even with GPS and navigation units becoming more and more popular. These map books are favorites with emergency service providers, delivery truck drivers, contractors or anyone who travels in the north state for sales or service.
You can purchase a copy at the Shasta Association of Realtors office at 840 Remor Street. Call 223-0410 for directions!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
CORNER OF COURT AND PLACER IN REDDING
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