TIPS FOR BUYERS Category
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
Redding Real Estate Prices Stabilizing?
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
According to one Redding appraiser who tracks average home prices, prices are slowly ticking upward. The low point since the bubble burst in 2006 was March with 91 home sales with an average sales price of $203,830 or $121.08 per square foot. May saw 99 home sales averaging $214,352 or $124.6 per square foot. It would not be unreasonable to say the market is showing signs of stability especially if we’re talking about entry level homes priced below $250,000.
Inventory of available homes on the Shasta Multiple listing service is 1552 today, up from early January’s low of 1301. Pending home sales sit at 467 today, down from the peak of 529 the first week of May. This is likely due to the rush to buy before federal tax credits expired at the end of April. Closed sales for residential properties in 2010 total 824 units thus far.
Nearly 200 homes listed for sale are bank-owned homes, an all-time high for this market cycle. Another 248 homeowners are short sales or pre-foreclosure homes. 141 bank-owned properties are in escrow. 137 short sale listings are also in escrow. These two categories of distress sales represent 60% of the pending sales activity but less than 30% of the active listings.
Shasta County is still experiencing a high number of properties working their way through the foreclosure process. Unemployment is dropping slightly but remains nearly double the national average. Mortgage rates dropped unexpectedly due to European financial turmoil causing investors to move money into US securities. The 30-year fixed rate is around 4.75%!
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
Safe Harbor Law Makes Vacation Home Purchase Attractive
INDUSTRY NEWS, REAL ESTATE LEGISLATION, TIPS FOR BUYERS, TIPS FOR SELLERS
The IRS has finally set ground rules for those that use a tax deferred 1031 exchange to purchase a vacation rental home that later becomes a primary or second residence. In the past, the IRS would penalize those that did this because it violated the tax deferment rules 1031 exchanges were designed to address. Many Americans found themselves with big tax bills when they exchanged their investment property for a vacation home which they later used as a primary or secondary residence.
Now the IRS has set rules for those that buy a vacation home using a 1031 exchange. The owner must use the home no more than two weeks a year and must rent the home out for at least two weeks a year for at least two years after purchase. After two years, the owner can convert the home to his or her second or primary residence while still avoiding the capital gains tax consequences provided by the exchange law. The owner must charge fair market rent, have a written lease for the rental period and it must be an arm’s length transaction- no renting to a family member.
Visiting the home to perform maintenance does not count toward the owner’s two-week time limit. The benefit here is someone with investment property such as income units, commercial buildings or land that has substantially increased in value can exchange it for a home they eventually want as a primary or secondary residence. Until now, selling one to buy the other would trigger a capital gains tax event or prevent the owner from using the home for personal use.
For specifics on this safe harbor provision in the tax code, contact Russell Marsan of IPX Exchanges at 800-406-1031. He can give you particulars on the tax law and assist as an exchange facilitator. I can assist you with the sale or purchase of the investment or vacation property.
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
California And IRS Ramping Up Audits Of Homebuyers Claiming Tax Credits
INDUSTRY NEWS, TIPS FOR BUYERS
Fraud is rampant according to state and federal taxing authorities triggering a high number of audits of those who filed returns claiming one or more of the various homebuyer tax credits. The Feds have offered a $7,500-$8,000 tax credit for first-time buyers and California has a $10,000 tax credit for new home purchasers. The Feds also added a $6,500 tax credit for existing homeowners purchasing another home.
IRS Form 5405 is attached to the tax return to prove one is eligible for the tax credit. Unfortunately, some see an opportunity to get a size-able check from the government as easy money. Audits have found many claiming the tax credit never bought a home.
In response, state and federal tax agencies have hired thousands of auditors to verify these claims. The only documentation requested to prove eligibilty is a certified copy of the closing statement provided by the escrow company. This form can be hard to come by in California because real estate closings are handled differently here than most states. The buyer is provided a partial HUD-1 closing statement reflecting their costs but do not receive the seller’s version of this statement. The IRS prefers a certified HUD-1 signed by both buyer and seller.
To prove a buyer has actually purchased a home and qualifies for one of the credits, a local tax preparer recommends including optional documentation including any of the following:
- driver’s license showing the address of the home purchased
- utility bill in the buyer’s name for the new home
- copy of homeowner’s insurance policy
- copy of grant deed
Though not required, these items may speed the approval and issuance of the tax credit check. The incidence of fraud is not unlike the problems the IRS has been dealing with concerning the Earned Income Tax Credit for dependants. The IRS has discovered multiple people claiming the same children resulting in over-payments.
The fact our state and federal governments are broke has made combatting this type of fraud a top priority for the IRS and Franchise Tax Board. Tough economic times may also be motivation for some who wish to cheat the 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 REAL ESTATE EXPERIENCE
First-Time Buyers Capitalize On Interest Rates, Lower Home Prices and Tax Credits
INDUSTRY NEWS, REAL ESTATE PRACTICE, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent report from my trade group, the California Association of Realtors (CAR), states 47% of homes sold last year were snapped up by first-time buyers. CAR lead economist Leslie Appleton-Young predicts a dip in this number for 2010 due to the expiration of the federal tax credit. The federal tax credit, in conjunction with a state tax credit targeted at buyers of new homes, successfully moved many renters off the fence into homeownership. However, she admits her forecast for a decrease in number of first-time buyers in 2010 could be wrong if the high end home market weakens significantly.
The statistics cited came from a survey of 15,000 Realtors conducted across California last summer. The uptick is significant considering first-time buyers only made up 35.9% of buyers in 2008. The highest level recorded was 50% in 1995.
Other forecasts/findings of the study include:
- 5.8 months of unsold inventory for starter homes (6.2 months in 2008)
- 14.8 months of inventory for “top end” homes (26.9 months in 2008)
- Half of all home sales were distressed properties (bank-owned or short sales)
- Slight reduction in volume of units sold for 2010(-2.7%)
- Price increases/decreases will vary by area and price category
She predicts the strongest recovery will be in areas with the sharpest price declines and most distress properties listed for sale. The upper end will “see a more sluggish price performance over the next couple of years”. She believes the reason the middle and upper end markets will not fare as well is due to the fact prices have not declined (yet) as much as the low end of the market.
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 LOACL SALES EXPERIENCE
Redding/Shasta County Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Distress sales continue to represent a significant number of homes selling in today’s market. The second week of March was marked with 465 homes pending. Of these, 133 are bank-owned homes and 157 are short sales or 41% of all homes under contract. These same two segments of the market only account for 31% of the 1379 active listings.
February saw 131 homes sold. 85% were listed for $300,000 or less. More than a third of the homes sold were priced under $150,000. Ten more homes sold this February than a year ago. The number of bank-owned properties listed for sale has doubled from a year ago.
Home prices continue to slide downward as noted by a local real estate appraiser. The last quarter of 2009 saw the average cost per square foot of homes in all areas served by the Shasta MLS drop from $122.75 to $114.86. On the positive side, prices for new homes actually increased to $158.29/square foot from $147.72. However, there have been far fewer new homes sold year-to-date than the last quarter of 2009. Homes more than 5 years old in Redding sold on average for $125 the end of 2009 and for $120 thus far this year.
The area price declines can be pegged to continuing high numbers of homes in various stages of foreclosure due to high unemployment and sharp price declines after the housing market bubble burst. Banks seem to be in no hurry to clear their books of overvalued assets which prevents steeper declines in prices in the near term but prolongs the overall recovery of the housing sector.
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
Energy Efficient Mortgage Program Discussed
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
Jonathon Bell, mortgage banker with US Lending in Redding, briefed Realtors on a loan program that allows home buyers to secure a loan to buy and upgrade a home simultaneously using an Energy Efficient Mortgage (EEM). The investor for the loan allows the borrower to add funds into the loan to complete energy efficient retrofits. Most homes built prior to 1994 will qualify.
The concept allows the home buyer to borrow slightly more than they might otherwise qualify for because the higher payment will be offset by lower utility bills. The borrower must pay for a home energy audit using a local HERS (Home Energy Rating System) auditor at a cost of about $350. A report will be produced detailing which energy efficient improvements qualify for the loan program. Monthly energy savings must exceed the additional mortgage payment costs.
Common items covered include windows, HVAC systems, insulation and weatherization of doors, windows, pipes and walls. Water heaters and energy efficient appliances may also be candidates for replacement. Once the buyer selects the items to be upgraded, the loan amount is adjusted to cover the labor and material costs, the loan is closed and funds are held to pay contractors upon completion of the work.
Other benefits to an EEM may include:
- Federal Tax Rebates
- City Utility Rebates
- P,G&E rebates
Check with your tax preparer and utility providers for specific programs and rebates. Homes to be built may qualify for an EEM if additional upgrades are desired above current building codes.
For more information, call Jonathon at 530-356-8658.
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
Inability To Make Mortgage Payments Tops Reasons To Sell
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent survey of California home sellers found that the biggest reason cited for putting their home up for sale was difficulty meeting the monthly mortgage obligations. Two thirds of sellers surveyed sold their home due to financial challenges caused by job loss or increases in their mortgage payment.
Complicating factors included an inability to refinance due to declining property values and tighter loan underwriting standards. Homeowners usually explore all their options including refinance as a way to keep their home. Loan modification, short sale, deed in lieu of foreclosure and deed-leaseback are potential options available to sellers who do not want to lose their home to foreclosure.
Other findings of the survey include:
- 99% of sellers chose to work with a Realtor
- 72% cited the agent’s ability to get a higher price as the primary reason they used a Realtor
- Homes sold on average $20,958 less than the listed price
- First-time sellers accounted for 44% of all sellers-a 33% increase from 2008
- Job loss was cited by 18% of sellers as the reasoning for listing their home for sale
- Nearly three-fourths of sellers expressed concerns whether a buyer could secure a loan
- 63% of sellers lost a sale with 70% of those failed escrows due to buyer inability to get an acceptable mortgage
- 26% of buyers had buyer’s remorse and canceled the sale
- 50% stated the sale did not close on time
This year may see an improvement in some of these numbers as prices stabilize and fewer homes begin the foreclosure process across portions of the state. Unemployment rates will need to drop before a housing recovery can get a foot-hold here in the Redding/Shasta County area.
bradgreps@yahoo.com
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
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
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