TIPS FOR BUYERS Category
REDDING REAL ESTATE:2011 YEAR IN REVIEW
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
2011 was another difficult year for property sellers here in the north state but buyers took advantage of low prices and near record low interest rates for financing their purchase. Sales were up while prices declined. Here is a summary of how 2011 stacked up based on data from the Shasta Multiple Listing Service (MLS):
- 2404 homes changed hands compared to 2066 in 2010, an increase of 14%
- The median price dropped from about $160,000 to $145,000 for homes sold on Shasta MLS
- The average Redding home value held steady starting the year at $106/sq ft to $107/sq ft at year’s end
- 1161 closed sales were bank-owned homes
- 258 closed sales were short sales
- Nearly 60% of closed sales were distress sales
- Inventory of active homes dropped from 1242 in January 2011 to 940 in January 2012
- Interest rates average 4% for a 30-year fixed rate compared to 4.75% one year ago
- 2011 land sales total 178 compared to 201 in 2010
- Mobile home closings totaled 129 in 2011 compared to 135 in 2010
- 25% of the closed sales sold for $100,000 or less
- 71% of the closed sales sold for $200,000 or less
- 89% of the closed sales sold for $300,000 or less
- The most expensive home sold was $2.6 million for a home in Palo Cedro
- Only four homes sold for over $1 million
- The least expensive home that sold was for $17,000 in Shasta Lake City
2012 kicked off with 904 active listings, 494 pending home sales, 134 bank owned properties listed for sale and 207 short sale listings. Of the 494 pending sales, 146 are bank owned and 178 are short sales, indicating 66% of pending sales falling into the distress category. A significant percentage of the short sales fail to close because lenders refuse the buyer’s offer with many of these ultimately being foreclosed upon or are deeded back to the bank by the owner.
The drop in median price is due to the lopsided nature of our local market where sales are focused in the lower price brackets. Rumor has it more and more bank owned properties will saturate the market in the months ahead. Thus far, sales of bank-owned properties are brisk with no lack of demand by eager first-time buyers or investors paying all cash. Home and apartment rents have remained fairly level since the real estate bubble burst in 2006.
I expect a steady increase of units sold year-to-year with 2010 being the bottom. Prices will remain soft for homes priced over $300,000 while some appreciation can be expected for homes valued under $200,000.
BRAD GARBUTT
BROKER ASSOCIATE
530-224-6767 OR 530-941-7492
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
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-Shasta County 3rd Quarter Housing Market Update
HOME LOANS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Home sales in the Greater Redding area have picked up significantly year-over-year from 2010. As of today, 1844 homes have closed escrow in the area served by the Shasta Association of Realtors Multiple Listing Service.
Last year at this time, 1582 homes sold and closed. This represents a 16% increase in sales activity. Two factors contributed to the increase in my opinion-higher affordability due to lower home prices and historically low interest rates. Currently, home buyers with good credit can secure a 30-year mortgage at or below 4% and the 15-year rate is close to 3.3%! Low interest rates increase affordability and buying power for first-time buyers and investors are finding buying rental homes pencil out better than expected.
Inventory of available homes has been tight in 2011 with only 1159 active home listings available today. Last year in early October 1537 homes were listed for sale, 25% more than today. Pending home sales are higher despite the skimpier supply with 485 homes in escrow today compared to 421 a year ago.
Bank owned properties (REO’s) and short sales (distress sales) account for more than 60% of sales activity. Of the 485 pending home sales, 150 are bank owned and 150 are short sales. There are 186 active listings which are REO’s and 214 short sale listings.
Home prices continue to decrease, dropping 7.5% thus far in 2011. Last year home prices dropped 11%, which was the steepest decline since the housing bubble burst in 2007. Overall, prices are down 45.6% from the peak in 2006, The avearage sales price today of $176,299 is similar to 2002, when the average price was $174,023.
Home prices appear to have stabilized for the low end of the market for the typical Redding home (defined as a home between 1500-2000 sq ft). In the first quarter of 2011, the typical home sold at $106.15/sq ft, $107.31/sq ft in the second quarter and $108.83/sq ft for the quarter that just ended.
Of the 221 homes that sold in September 2011, 195 were priced under $300,000. No homes priced over $550,000 sold in September. Nearly 100 of th0se sales were priced at or below $150,000.
The raw numbers indicate we have two distinct markets in the Redding/Shasta County area: the very active low-end market below $200,000 and the sluggish mid-to upper-end market! If banks are holding off listing homes which would appeal to first-time buyers and investors, they should reconsider. Many, well-qualified buyers are ready, willing and able, just waiting for affordable properties in good condition to be placed on the market.
Contact me if you have any real estate questions.
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
530-941-7492 or 530-224-6767
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
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 Invetment 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
Redding Real Estate Market Update Q1
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
The first quarter of 2011 is in the books! The Redding residential home market has been very stable thus far in 2011. 1242 homes were available for sale in early January. Today, the number of active listings stands at 1260 today compared to 1424 a year ago . Spring usually brings a spike in the number of homes listed for sale.
Pending home sales are up considerably from the beginning of the year. 494 homes are in escrow compared to 344 in early January on par with sales levels for the same date in 2010. Of the nearly 500 homes in pending escrows, nearly 200 are bank owned (REO’s) and 136 short sales. That works out to precisely 2/3rd’s of homes in escrow being distress sales - about 10% higher than a year ago.
Homes priced under $250,000 account for more than 80% of pending sales. 453 homes have closed escrow year-to-date, about 10% ahead of last year’s pace. The number of REO listings is up 77% from one year ago. Short sale listings are down nearly 10% over the same time period.
Investors and first-time home buyers make up the majority of purchasers in today’s real estate market.First-time buyers benefit from low interest rates and the fact housing affordability is way up in this part of California. However, buyers must have great credit, documentable income and, as one local lender recently joked, be willing to “bring their entire filing cabinet” to me so Ican prove your ability to repay the loan. A significant number of investor buyers bring all cash to the closing table avoiding the headaches and hurdles created by overzealous underwriters wishing to cover their hind end!
One last thought, some banks are working hard to get borrower’s loans approved, others are working hard to find an excuse to deny them a home loan. Ask your Realtor for lender referrals to avoid losing time and money working with the wrong lender.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESIONALS
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
Lenders Using Facebook To Investigate Borrowers
REAL ESTATE PRACTICE, TIPS FOR BUYERS
I received an email from a client I sold a house to recently alerting me of an interesting call he received from his lender. A representative of the lender visited and read comments on his Facebook page about trials and tribulations he encountered while revamping a rental property he owns here in the north state after it was vacated by indoor pot growers. He resides in SoCal but is in the process of selling his home there to relocate to the Redding area.
His lender, like most lenders, plans to sell his loan in the secondary market (think Fannie Mae or Freddie Mac). Most lenders try to sell their loans to recover their capital since most of their profits come from the upfront fees, not waiting years and years for the borrower to repay their loan in monthly installments. In his case, they were preparing to sell the loan and wanted to verify the home was in fact going to be used as his primary residence as stated on his loan application. After reading his comments on Facebook, the lender suspected he fraudulently purchased the home to be used as a rental with an owner-occupied loan, which offer more favorable terms than non-owner occupied home loans.
My client possessed moving van receipts and documentation proving he listed his SoCal home for sale. I believe this satisfied the lender concerning his true intention to move to Redding. This story certainly makes a point that one should be careful what is posted on social media sites because you never know who might be reading!
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 REAL ESTATE EXPERIENCE
Wells Fargo Lowers Credit Score Bar for FHA Loans
FHA LOANS, HOME LOANS, TIPS FOR BUYERS
Wells Fargo implemented new underwriting rules in mid-January that will help buyers with credit scores below 600. 
Borrowers with credit scores as low as 500 can now qualify for a loan if they meet certain requirements. Here’s an outline of their new loan policies:
- Borrowers with credit scores of 500-579 must make a 10% downpayment and the downpayment cannot be a gift or provided by a downpayment assistance program such as those offered by Redding and Shasta County.
- Borrowers with credit scores between 580 and 599 must tender a 5% downpayment under the same conditions as above.
- Borrowers with credit scores of 600 or better can make a downpayment as low as 3.5% and gift funds are acceptable.
In all cases, Wells Fargo is limiting closing cost credits to the borrower from the property seller to 3%. In the past, seller contributions up to 6% were allowed.
An FHA loan is a government insured loan. The loans are processed and funded by FHA approved lenders. If the borrower defaults on the loan, the government steps in, makes the lender whole, then resells the property after foreclosure.
Historically, this program has not cost taxpayers a dime. However, the decline in home prices, the struggling economy and the marked increase usage of the FHA loan program has resulted in red ink. HUD, which oversees this loan program, recently modified the mortgage insurance requirements to increase revenues to cover losses. Today, borrowers can expect to pay more in upfront fees and monthly payments of mortgage insurance premiums to keep FHA solvent.
For additional details, contact Mike Whitman at Wells Fargo in Redding at 226-2646.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESIONALS
CORNER OF COURT AND PLACER IN REDDING
NEARLY 30 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Redding/Shasta County Pending Home Sales Soar
HOME LOANS, TIPS FOR BUYERS, TIPS FOR SELLERS
2011 started with 255 pending home sales according to the Shasta Multiple Listing Service as of January 3rd. Today, 405 homes are in escrow. That is a nearly 60% increase in just one month. How can this be?
Some of this can be attributed to dozens of last year’s pending listing inventory expiring on the last day of 2010. Many real estate agents schedule listings to expire the last day of the year. Once these agents realize their listings had expired, they reinstated the listings causing a spike in the pending listing count. This explains about half the spike. The other half is likely due to the upward bump of interest rates that occurred in December. Rates increased about 1/2 % from their historic low point reached in November. Buyers waiting on the fence jumped in when rates started inching upward.
The number of active listings has not changed significantly since the beginning of the year. Today there are 1251 active listings comapred to 1242 on January 3,2011. Likewise, the number of bank owned properties listed for sale is about the same as January 3- 255 vs. 253 today. Short sale listings are also static- 211 then vs. 205 today. The pace of home closings is steady at about 35 homes/week or 159 year-to-date.
Personally, I have noticed an upsurge in activity. The calls I receive on ads, signs, Internet postings and from past clients plus agent referrals are all up from a year ago. 2011 is starting off much brighter than 2010! I have to believe it is not just the beautiful spring-like weather but renewed optimism amongst those wishing to buy and sell. This may be the pent up demand beginning to unleash itself-just in time to absorb the much-talked-about surge of bank owned “shadow inventory” expected in the months ahead.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
NEARLY 30 YEARS LOCAL SALES EXPERIENCE
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