SHASTA COUNTY Category
Redding Real Estate Market Review For 2010
SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
The last year of the first decade of the 21st century is in the history books. 2066 homes sold in the greater Redding area including Anderson, Shasta Lake City and unincorporated areas of Shasta County. 201 land parcels sold and 135 mobile homes sold, all but 18 were mobiles located in mobile home parks.
The number of active home listings plummeted to 1246 on New Years day. 356 homes were in pending escrows. Of the pending home sales, 125 are bank owned properties and 97 were short sales. The year concluded with 2 of every 3 home sales being distressed properties.
Speaking of distressed properties, 253 active bank-owned properties are listed for sale. That’s nearly 100 more than a year ago. Short sale listings account for 213 of the active listings. These are properties that are listed for less than what it would take to pay off the loan and closing costs.
Looking ahead, the Redding/ Shasta County area real estate market will continue to be dogged by impending foreclosures and tight restrictions on mortgage borrowing. My experiences of late indicate local institutional lenders are in a state of paralysis. Overwhelmed by loan applications for purchases and refinances, loans are taking months, not weeks to close. Regional lenders currently offer the best service as big banks flounder.
The entry level priced homes dominate sales activity. The median price hovers around $160,000 and homes priced under $350,000 represent more than 3/4 of all sales. Expect more of the same until the pace of foreclosures drops dramatically.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVIVNG REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Short Sales Short Circuited By “Game of Chicken”
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES
A recent article in THE WALL STREET JOURNAL highlighted a scenario I see in my day-to-day practice of real estate. A property seller, buyer and first lien holder all agree to accept a certain price only to have the second lien holder ask for more money. It’s noteworthy that the second lien holder would get wiped out and not recieve even a penny if the first lien holder forecloses, but nonetheless they demand thousands more than offered to sign off on the short sale deal.
The news article cites an example of a La Jolla condo owner with a cash offer from an investor. He was forced to try a short sale when the value of his condo sankwell below the amount owed to his lenders. He owed $260,000 to the first lien holder (now Freddie Mac) and $50,000 to the second lien holder, being handled by Specialized Loan Servicing, LLC. Freddie Mac has offered Specialized $3,000 to release their lien, an amount typical in the short sale transactions I’ve been involved with. SLS is holding out for $7,000.
The end result is a game of chicken, where the second lien holder tries to extract additional monies from the seller, buyer, first lien holder or real estate agents involved. Unfortunately, in many cases the game ends in a foreclosure, and the second-lien holder gets nothing.
Reasons cited by second lien holders for playing this game include:
- the mortgage payments are still current
- they wish to pursue the borrower for any deficiency but may relinquish that right by agreeing to a short payoff
- they believe they have nothing to lose since their loan is worthless anyways due to falling home prices
Here are some interesting stats quoted in the article:
- 11 million homeowners owe more than their homes are worth
- Another 2.5 million have 5% equity or less
- About 1/3 of the 1.33 million loans in some stage of foreclosure have second liens
- Second loans are typically owned by banks and credit unions
- Most first mortgages are held by Fannie Mae, Freddie Mac or investors in mortgage securities
- Loan servicers are overwhelmed trying to handle the short sale process
- Declining home prices create disputes over values used to approve short sales
- Lenders are wary of fraud, which the short sale process is subject to, by anxious homeowners
California law protects certain borrowers from being pursued by lenders who foreclosed or agree to a short sale. Purchase money loans for owner-occupied primary residences are usually exempt from lenders seeking deficiency debt repayment. However, California homeowners that refinanced or took out second loans usually lose all protections if they agree to a short sale. Lenders will release the lien so the property can be sold, but reserve the right to chase after the borrower for the loss they incurred.
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 REAL ESTATE SALES EXPERIENCE
Popular FHA Loan Program Changes Rules
FHA LOANS, HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
Just a few years ago, virtually anyone could qualify for 100% financing even with stinky credit. Those loans evaporated after the bubble burst causing an upsurge in usage of FHA loans in the Redding/Shasta County real estate market. The reason is the relatively low down payment requirements (3.5%) offered by the FHA loan program. Due to its popularity, and defaults on loans, HUD is tweaking the program in hopes of stemming a tide of red ink.
The two primary changes involve the upfront fee collected from the borrower (being reduced) and the mortgage insurance premium (MIP) tacked on to the payment (being increased). The MIP is going up from 0.5-0.55% to 0.85-0.9% depending on the size of the downpayment. The upfront insurance premium is dropping from 2.25% to 1%. This fee is either paid in one lump sum at closing or rolled into the loan and paid over the life of the loan.
On the surface this does not sound too bad but in the real world this will cost the borrower dearly over the long run. Here’s an example provided by FHA and detailed in a recent article in THE NEW YORK TIMES. A borrower puts 3.5% downpayment on a purchase price of $154,000 (the median home price today) and finances the upfront mortgage insurance fee into the loan. The mortgage payment, including principal, interest, taxes, homeowner’s insurance and both mortgage insurance premiums goes up from $1,205/month to $1,238/month. The increase includes the drop of the upfront MIP from $3,344 to $1,486 but the monthly increase in the MIP from $68 to $111.
All FHA loans require mortgage insurance while conventional loans have a sliding scale for insurance rates if the borrower tenders less than 20% downpayment. The FHA MIP can be eliminated after 5 years if the loan-to-value ratio drops below 78%. This can be accomplished by paying down the principal, appreciation of the property value, or a combination of the two.
FHA has for the first time set a minimum credit score threshold of 500. Those with credit scores between 500 and 580 must tender a 10% downpayment. However, practically speaking, most lenders will require higher credit scores to assure they can get the loans insured by FHA. The financial meltdown has created a vast new realm of buyers that heretofore would have never considered an FHA loan due to the hefty mortgage insurance premiums. Company executives, teachers, and people with six-figure incomes are now applying for FHA loans!
The desire to leverage real estate purchases with a minimal downpayment is alive and well, despite the added cost for the opportunity to do so.
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 EXPERIENCE
Redding Home Prices Slip Further In October
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
Redding City Hall
The average Redding home is a three bedroom , 2 bath home with about 1750 square feet. One local apprasier has tracked the value of the typical Redding home for the past couple years and his last report indicates the average cost per square foot took a big hit in October. The last quarter of 2009 and the first two quarters of 2010 showed signs of price stabilization. Then, the average cost per square foot for the typical home hovered around $127/square foot.
The same statistic for October showed a slip to $111/square foot, or a 13% drop. The descent started in the summer months after the federal tax credit expired. Coincidentally, the number of bank owned properties listed for sale on the Shasta MLS spiked during the spring and summer months. Beginning in May of this year, when 160 REO’s (Real Estate Owned or bank repo’s) were listed for sale, the number of REO’s steadily climbed to today’s level of 263 active listings out of 1445 total home listings. That represents a 39% increase of REO’s listed for sale in a 5 month time period.
David Benda reports monthly on the number of Notice’s of Default (NOD’s) filed in the Shasta County Recorder’s office. For October, that number of NOD’s, the first step in the foreclosure process, exceded 400. This is my crystal ball to what the future holds. Until the tide of foreclosure filings subsides, prices will continue to fall. Sellers need to take this information into consideration when pricing or negotiating a sale of their real estate.
The bad news for sellers is good news for buyers. Affordability has never been greater during the past several decades than today due to prices about half what they were at the peak and interest rates that have not been this low since 1951. Some financial experts believe fed actions to flood the market with $600 billion in securities will backfire and long term interest rates will rise, not fall. If that is true, now may be the time to make a move.
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 OF LOCAL REAL ESTATE EXPERIENCE
Mortgage Rates Drop, But Credit Bar Rises?
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
According to a recent article in Smart Money, the minimum credit score to get the best rates and terms on a mortgage just increased by 40 points. A FICO score of 680 use to be the break-point between great credit and good credit. Now the line has been upped to 720, according to Smart Money author AnnaMaria Androitis.
If this is true, the Redding/Shasta County real estate market could be adversely impacted. Local loan brokers and loan officers have told me in the past the average credit score in this part of California hovers in the low 600’s. The higher the credit score bar is raised for a borrower to obtain the best loan terms, the fewer prospective buyers able to take advantage of historic-low interest rates.
AnnaMaria points out that a 680 credit score used to be something to be proud of. Such a score implied you paid your bills on time, perhaps getting dinged on a refi, but all and all qualified for the best interest rates. The change has now put this score solidly in the second-tier, potentially costing a borrower thousands over the life of a typical mortgage loan.
Other factors that impact credit scores:
- Length of credit history-15 years or more is tops
- Low credit card balances-in relation to total available credit
- Applying for new credit cards
For those near the break-point, a credit inquiry can push you down a tier. Increasing your credit balances above 30% of your total available credit could also send your score downward.
To maintain or increase your credit score, pay bills on time, pay your balances down and avoid applying for new lines of credit.
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
Redding/Shasta County Real Estate Market Update
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
Redding home prices slipped downward in the third quarter to $122/square foot on average for a 1500-2000 square foot home. That represents about $4/square foot less than the 2nd quarter of 2010. The number of homes listed for sale dropped from the August high-point of 1649 to 1521 this week.
Pending home sales peaked at 529 in May as buyers rushed to take advantage of the federal tax credit. Today, 431 homes are in escrow. More than 58% of pending sales are distressed properties-147 are bank-owned and 102 are short sales.
The majority of sales remain concentrated in the under $300,000 price range. 183 homes sold in September of which 157 were listed at or below $300,000. Year-to-date home closings are 1610. Roughly 2000 homes should close by year’s end.
The number of available bank-owned homes listed for sale has risen steadily over the summer. In early June, 196 REO’s were listed for sale. Today, 260 bank-owned properties are looking for a buyer. The voluntary foreclosure moratorium by Bank of America has had no impact locally.
Interest rates continue to drop. The 30-year fixed rate is just over 4% and the 15-year fixed is in the mid 3% range. Lenders today are reluctant to give firm interest rate quotes due to new underwriting guidelines which take into account a variety of factors besides credit scores.
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 REAL ESTATE EXPERIENCE
Developers Envisioned Kids Secret Fishing Spot
REDDING LIFESTYLES, REDDING RECREATION, SHASTA COUNTY
Mary Lake in West Redding was pondered as a secret fishing lake for youngsters after the lake and 203 acres surrounding it was purchased by a group of developers around 1980. The developers-Brent Owen, Robert “Buzz” Loring and John Fitzpatrick- offered the 5-acre lake and adjacent land to the city for a park that would be the centerpiece of a future housing development.
Redding Planning commissioner Charlie Moss embraced the idea of restricting the lake to children only. Even “Spike” Naylor, regional manager of the California State Department of Fish and game agreed. At the time, the lake had populations of bluegill, large-mouth bass, golden shiners and mosquito fish. Unfortunately, the lake was never restricted to kids only fishing and is popular today with anglers of all ages.
Mary Lake was previously called FalkesLake, False Lake, Falk Lake and St. Mary’s Lake over the past 100 years according to an article in the Record Searchlight published June 1981. Historians are unsure how the lake came to be. Some believe the lake was built to create a water source for irrigation while others believe it was part of a mining operation. The earliest records indicate the lake was owned by William Falke before 1909. After he died, his family lost the property at a tax auction to Charles Lang. In 1931, it was sold to O. Merlo. Later the land was purchased by St. Joseph Catholic Church. That’s when the lake was named St. Mary’s Lake. In 1980, the Diocese of Sacramento sold the lake and surrounding acreage to the developers.
In 1984, the first lots of the new Mary Lake subdivision were sold just off Placer near Wisconsin. After the first phases of Mary Lake were sold, the area near the lake was developed, the park was constructed and given to the City of Redding. A generous donation from The McConnell Foundation paid for part of the construction cost to pave a concrete path around the perimeter of the lake.
In more recent times, the city met with Mary Lake residents to discuss plans to add grass lawns and a lighting system for the trail. Residents asked the city to keep the park in as natural state as possible dissing the idea of lights and grass. The city agreed and today they mow the weeds that grow around the lake and occasionally remove dead or dying trees that create a hazard.
Today, the 17-acre Mary Lake Park provides a wonderful walking and picnic spot for visitors near and far. It continues to be a vibrant ecosystem for fish, water fowl, mammals of many sizes and shapes. As a longtime Mary Lake resident, I have enjoyed the view of the lake from my home and the inviting trail which ties into the extensive and ever-expanding Westside Trail system.
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
Why Move To Redding?
REDDING LIFESTYLES, REDDING RECREATION, SHASTA COUNTY
I ask that question of every out-of-town prospect I have shown property to in the past 26 years and the answers have some common denominators. Here are the most common responses:
- To be closer to family
- To get away from more eartquake prone areas of California
- To be closer to recreational areas for boating, fishing, hunting and camping
- To escape the crime, congestion and smog of urban areas
- To be away from perceived targets of terrorism
- To be in a warmer climate
I moved to Redding in the early 1980’s for several of the above reasons. First, I experienced several large earthquakes while growing up in the SoCal area and while attending college on the North Coast. I didn’t want to live in an area where large earthquakes were common. Secondly, I love mountains and lakes and found Redding’s location the ideal spot to take advantage of California’s natural wonders. Next, the absence of lung burning smog was an important attribute attracting me to Shasta County.
I have lived in Washington and Idaho and traveled to most of the Western States and always looked forward to returning to Redding. Despite lacking some of the cultural activities offered by larger metro areas, Redding has much to offer those that wish to live in a rural area surrounded by natural beauty. Enduring some hot summer weather and cool rainy winters is small sacrifice for months of mild days and beautiful vistas!
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
Redding Home Prices Slip Again?
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
After 3 quarters of relative stability, Redding home prices lost about $8/sq ft in July. Blame an onslaughtof bank-owned properties (REO’s) for the decline. The second quarter of 2010 saw a slight increase to $126.54/sq ft from $125.34 in the first quarter 2010. The last quarter of 2009 pegged the average cost per square foot at $128.08. Forty home sales for July in Redding only averaged out at $118.21/square foot.
The number of active homes for sale on the Shasta MLS for all areas of Shasta County sits at 1635 today, up from 1526 a year ago. There are 443 homes in escrow compared to 500 last August at this time. Of those pending sales, 140 are bank-owned and 119 are short sales. That works out to 58% of the pending sales being distressed properties-REO’s or short sales. Last year, 40% were distress sales.
The number of REO’s listed for sale has risen steadily from 160 the first of this year to 229 today. 1200 homes have closed year-to-date, slightly more than a year ago at this time. The Federal and State tax credits pumped up sales in the spring but have expired now leaving the market to find its own way during these difficult economic times. Record low interest rates have not motivated buyers timing their entry into the marketplace. Home equity loss due to declining values has prevented many homeowners wishing to take advantage of these rates from refinancing.
Markets elsewhere in California, specifically the coastal areas, have stabilized or experienced year-over-year double-digit appreciation noted in some areas such as San Jose. Redding is suffering under higher than average unemployment and loss of equity refugee buyers from nearby metro areas. One positive note for July is the sale and closing of 5 riverfront properties from Redding to Anderson between $405,000- $537,500!
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
Do You Know Your Redding Home’s Walkability Score?
INDUSTRY NEWS, LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR BUYERS
Location, location, location is taking on a new meaning in the 21st century as home buyers switch from focusing on schools and neighborhoods to proximity to stores and public transportation. Urban planners cite concerns over future oil prices as the main reason for the shift. They say baby boomers with empty nests and their children buying their first home both are shying away from large lots in remote areas prefering neighborhoods near big box stores, public transportation and entertainment venues.
According to an article published recently in THE WALL STREET JOURNAL,many websites have sprung up to assist home buyers rate a property’s walkability. One such site, www.WalkScore.com allows users to enter a property address and receive a score from 0-100 pegging the walkability of the neighborhood. The scale goes from “car dependant” to “walkers paradise”.
Redding is slowly catching up to this trend with recent zoning changes that allow mixed uses for downtown area parcels. The new Kobe’s Steakhouse location is one example of allowing restaurant,offices and residential units under one roof. Unfortunately, Redding planners for decades preferred island subdivisions away from retail and commercial areas. Most Redding residents must hop in their car to go grocery shopping, take in a movie or eat out. Urban sprawl has been the norm as Redding sought to expand the city limits to gain additional land for development. In recent times, our city officials have experienced the financial pain of extending utilities, maintaining streets and providing police and fire protection to those furthest from the city’s core.
There is mounting evidence that housing prices are higher for properties within walking distance of amenities.One such study was published by the non-profit group CEOs for Cities. For each one point increase in a Walk Score values increased by as much as $3,000!
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
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