Redding Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
June 13th, 2011
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
April 22nd, 2011
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
April 15th, 2011
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
INDUSTRY NEWS, SHASTA COUNTY
April 6th, 2011
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
Credit Score Damage From Foreclosure Alternatives Outlined
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
April 4th, 2011
FICO released an analysis of credit score damage caused by short sale, deed in lieu of foreclosure and foreclosure. The bottom line is all three alternatives result in no significant difference in credit score impact. However, the better your credit score was before the delinquencies, the longer it will take for your credit score to fully recover.
The study found:
- The negative impact on one’s credit score depends on the starting score
- Regardless of the action taken, all three strategies result in about the same credit ding
- Declaring bankruptcy has the largest negative impact on anyone’s credit score
- Expect to wait 7-10 years for your credit score to fully recover from preforeclosure levels
- Short sales completed with a deficiency to the lender will result in 30-35 additional point drop compared to a short sale where there is no deficiency
Variables that determine how large of a drop one can expect include whether the borrower:
- was 30 days or 90 days late on payments
- Had a higher or lower credit score before foreclosure avoidance startegy implemented
- whether there was or was not a deficiency loss on a short sale
- whether foreclosure or bankruptcy events occurred
FICO does not divulge details about the formula used to generate credit scores. The actual credit score impact depends on many other factors so it is possible for more or less damage depending on individual credit profiles.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
NEARLY 30 YEARS LOCAL REAL ESTATE EXPERIENCE
CORNER OF COURT AND PLACER IN DOWNTOWN REDDING
Redding Real Estate Market Update Q1
SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
April 1st, 2011
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
March 31st, 2011
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
Redding Adopts Reasonable Granny Flat Rules
REAL ESTATE LEGISLATION, SHASTA COUNTY, TIPS FOR SENIORS
March 30th, 2011
Redding city councilors recently relaxed rules governing the construction of second units within the city limits. Realtors have successfully lobbied the state legislature to require planning agencies adopt rules detailing the requirements for property owners who would like to add a second home for a caregiver or family member. The idea behind AB 1866 is to address the burgeoning baby boomer population by allowing a second residence on parcels zoned for one home. Many seniors would prefer to stay in their own home as opposed to moving to a retirement or assisted-living arrangement. Having an on-site caregiver makes this possible.
Municipalities across the state adopted codes for second units. However, some planning agencies made these rules so restrictive building a second unit is nearly impossible. Redding initially adopted stringent rules but recently amended the zoning ordinance to make them more workable in the real world. Here are some of the changes:
- Note the purpose of the changes is to recognize second units are more affordable and energy efficient
- Second dwelling is not required to meet the density requirements of the General Plan or Zoning Ordinance
- Lot size can be as small as 6000 square feet as long as the lot is at least 60′ wide
- Allows second units to be up to 800 square feet as long as it is 30% smaller than the main residence
- Second units can be attached or detached
- Requires one off street parking space per bedroom of the second dwelling
- Allows the second unit to be larger than the main house if the second unit is intended to be the primary residence
- Rules can be further relaxed if the second unit will house a disabled person
The amendments can be found in Chapters 18.43 and 18.15 of the city of Redding Zoning Ordinance.
Now, the Shasta Association of Realtors will ask Anderson, Shasta Lake City and Shasta County to follow Redding’s lead by adopting reasonable second unit rules. Realtors believe construction of second units should be encouraged in response to public demands for more affordable housing alternatives.
Redding already attracts many retirees from elsewhere due to its low crime, recreational opportunities and affordable real estate. Allowing them to build a second residence for a caregiver or family member without lots of “red tape” will encourage them to move here or stay here when their needs change. Hopefully, the word will get out and more property owners will take advantage of these new and improved rules for granny flats!
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 REAL ESTATE EXPERIENCE
Californians Have Best Credit Scores In Nation
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY
February 14th, 2011
A recent article in a mortgage trade journal pointed out the fact California mortgage applicants have the highest credit scores in the nation. According to the article authored by Heather Cernoch, prospective borrowers in California have average credit scores of 755, 20 points higher than the national average.
Hawaii came in second in the credit score ratings at 751. States in the northeast did well while the lowest credit scores were found in the Southeast region. Mississippi had the lowest average credit score at 695.
I suspect Redding/Shasta County avearge may be lower than California as a whole. The collapse in real estate prices locally in conjunction with double-digit unemployment and conversations with local lenders lead me to believe the average here is significantly lower.
Today, many homeowners with good jobs and credit are wrestling with the idea of strategic defaults on loans for their primary homes, second homes and investment properties. A strategic default is defined as a borrower who elects to walk away from their property because the mortgage is underwater, not because of any financial hardship.
As one mortgage industry expert points out in the article, Californians have managed to weather the wave of foreclosures and precipitous price drops without serious damage to their credit ratings. Let’s hope this trend continues!
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 REAL ESTATE SALES EXPERIENCE
Wells Fargo Lowers Credit Score Bar for FHA Loans
FHA LOANS, HOME LOANS, TIPS FOR BUYERS
February 11th, 2011
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
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