Redding/Shasta County Pending Home Sales Soar
HOME LOANS, TIPS FOR BUYERS, TIPS FOR SELLERS
February 7th, 2011
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
Experts Differ On Future of California Housing Market
INDUSTRY NEWS, TIPS FOR BUYERS, TIPS FOR SELLERS
January 21st, 2011
Ask an economist, educator, foreclosure expert and developer their predictions for California’s housing market and you will get a mixed bag of responses. Leslie Appleton-Young, cheif economist for the California Association of Realtors, was optimistic in her belief California home prices will edge upward 2% in the coming year. Others predict prices to remain flat and one foreclosure expert predicts a 5% decline in prices.
Experts agree it will take years for prices to reach price levels attained at the 2006 peak. Leslie believes the moderate and low end of the market have stabilized but further price erosion can be expected for the high end of the market. Location will be an important factor determining which areas will recover first. Inland areas will not see a recovery for “a long time” according to Richard Green, director of the USC Lusk Center for Real Estate. Coastal areas from La Jolla to Marin can expect prices to recover to their peak within 5 years. Jobs will be key to price recovery.
Locally, high unemployment in the Redding/ Shasta County area and the lack of equity refugees from the metro areas will hold our market down. Key industries that once thrived here are gone and not likely to return. Service, government and recreation jobs have taken a hit with the slow national economy. Efforts by government officials at all levels to cut spending may further cripple an already battered housing industry.
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
Redding Real Estate Market Review For 2010
SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
January 11th, 2011
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
Stiff Penalty Likely For Strategic Default By Affluent Homeowners
HOME LOANS, INDUSTRY NEWS
December 20th, 2010
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A strategic default is defined as a homeowner who is capable of making their mortgage payment but elects to let the property go into foreclosure because the mortgage is underwater or the property is no longer wanted. Second homes and rental properties are examples of properties purchased by affluent property owners which are likely to be let go if they owe more than they’re worth in today’s market.
A recent article in THE NEW YORK TIMES claims homeowners who decide to stop making payments on a property they no longer wish to keep could be denied a new mortgage for 7-10 years. Not only will their credit be damaged for a lengthy period of time, they could put themselves in a situation where the lender is suing them for the amount of money owed or lost (termed a deficiency) by the bank. Laws allowing a lender to pursue an owner for a loan loss vary from state to state.
In so-called “recourse”states, the lender may go after the home owner’s assets including their primary residence. Maine, New Jersey and Hawaii are examples of recourse states.
In “non-recourse”states, a lender must look only to the value of the subject property to satisfy the outstanding mortgage balance if they take the property through foreclosure, deed-in-lieu of foreclosure or agree to a short sale. However, these laws may only protect the homeowner if the loans were used to purchase the property as the borrower’s primary residence. Refinance, Home Equity Lines of Credit or loans on second homes and investment properties may not have this protection from pursuit for deficiency losses by the lender(s). Florida, Connecticut and Arizona fall into this category.
California, along with Idaho and New York, fall into a third category referred to as “single-action” states which allows the lender to foreclose on the owner or file a civil lawsuit for the full loan amount. I have heard this referred to as judicial or non-judicial foreclosure. Most foreclosures in California are non-judicial and can be accomplished in 4-6 months from start to finish. However, if the lender believes the seller has substantial assets or has intentionally damaged the security through vandalism or stripping the property of fixtures, they may pursue a judicial foreclosure which allows a judge to award a deficiency judgement.
Anyone considering a strategic default should consult with an attorney to discuss potential consequences legally and financially before stopping payments to their lender(s). Since every home owner’s financial situation is unique, consulting with a qualified expert is critical to determine the best course of action to unload an unwanted 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 27 YEARS LOCAL REAL ESTATE EXPERIENCE
Short Sales Short Circuited By “Game of Chicken”
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES
December 13th, 2010
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
December 6th, 2010
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
HUD Launches Comprehensive Housing Data Website
INDUSTRY NEWS, TIPS FOR BUYERS, TIPS FOR SELLERS
December 2nd, 2010
Yesterday, the U.S. Dept. of Housing and Urban Development (HUD) launched a new website that consolidates data
from regional, state and county agencies. The economic and housing market data is derived from the Census Bureau, Labor Department, State and Local governments, housing industry sources and HUD’s own economists. Here are some of the reports available:
- Market At A Glance-includes economic and housing data trends for metropolitan areas and counties nationwide. This data will be updated monthly and HUD econimists will tweak the data to reflect regional information.
- Regional Housing Market Profiles-extracted from the U.S. Housing Market Conditions Report detailing employment statistics, population changes, and building permit activity, housing rental and sales activity.
- Regional Narratives-broad overviews of housing and economic trends for ten regions of the U.S. using information from state and local government economists, housing industry sources and from their own investigations.
- Comprehensive Housing Market Analysis-a historical perspective comparing three different time periods: 1990-2000; 2000-as-of date of the analysis; and from the as-of date to up to three years in the future.
HUD Assistant Secretary Dr. Raphael Bostic touts the new website as “…a powerful new tool that’s easy to use, and offers the public a remarkable look at their local economic and housing markets.” He goes on to say “current and reliable data should not be hard to come by“ believing this tool will be helpful to state and local leaders, developers, the real estate industry and the general public.
To visit the website, click here: http://www.huduser.org/portal/regional.html
For a sample of Redding market statistics, click on the “Market At A Glance” tab and select Redding, Ca. from the pull down menu under State/County. Some Redding/Shasta County housing data is missing, but there is plenty of relevant market data including economic, population and housing market trends.
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
Will The Seller Throw In The Ski Boat To Clinch A Sale?
HOME LOANS, TIPS FOR BUYERS, TIPS FOR SELLERS
November 23rd, 2010
A couple weeks back, while showing a home in Redding, a buyer tossed out this question as he was eyeing the seller’s boat parked under a canopy in the backyard. He was surprised when I told him that was not a good idea. In fact, I give my clients this same advice even if they are asking about the fridge, washer and dryer. Mixing personal property with real property as bargaining chips can backfire on the buyer for a number of reasons.
First, the buyer will have the privilege of paying property taxeson the personal property rolled into the purchase price. Let’s say the seller agreed to throw in the $10,000 ski boat in lieu of a reduced price to appease the buyer. The buyer could have taken $10,000 off the price of the home but got a boat instead. Assuming the buyer is not securing a mortgage to make the purchase, the buyer will pay property taxes forever on the value of the boat because it was rolled into the purchase price. Once the buyer gets title to the boat, the assessor will levy a personal property tax on the boat, so the buyer pays taxes twice on that one boat. Adding furniture, appliances, hot tub, plasma TV’s or anything else considered personal property can cause the same problem for the home buyer.
Secondly, if the buyer is getting a loan, the buyer gets the additional privilege of paying interest on the boat purchase since it was rolled into the price of the real estate. If the lender finds out personal property was included in the sale, the appraiser may put a value on the personal property and make a deduction from the appraisal in that amount, potentially jeopardizing the loan.
Thirdly, the seller and real estate agents have a potential headache if the buyer discovers a major problem with the personal property item included in the purchase. If the boat takes on water or the compressor on the fridge fails, the seller or I get an angry call from the buyer.
Bottom line-keep personal property out of a real property purchase to keep the taxable value to a minimum, prevent unwanted interest expenses and warranty issues from arising. I’ve never had a buyer or seller disagree with this explanation as to why mixing the two types of property is a bad idea.
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 Home Prices Slip Further In October
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
November 19th, 2010
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
California Voters Just Say Yes To New Taxes?
INDUSTRY NEWS, LOCAL GOVERNMENT
November 9th, 2010
The votes have been counted and 111 of 194 measures and tax bonds in last week’s election passed. Flying in the face
of calls for reducing big government, a majority of Californians have approved school bonds, hotel taxes, parcel taxes, utility taxes and local vehicle taxes. Another 20 measures are too close to call according to the California Taxpayers Association.
Here is a short list of voter approved measures:
- 43 of 63 school bonds (nine too close to call)
- 7 of 17 hotel taxes
- 12 of 12 marijuana sales taxes
- 13 of 44 parcel taxes (seven too close to call)
- 13 of 21 sales taxes
- 12 of 21 utility user taxes
- 5 of 7 local vehicle registration taxes
Defeated measures include:
- San Diego 0.5% sales tax increase (voted down by 70% of voters)
- $69/year school tax voted down by 59% of Santa Clara voters
- 1% sales tax in Half Moon Bay voted down by 53% of voters
The results indicate voters are willing to pass tax increases that benefit their local communities despite all the rhetoric about overspending by bureaucrats.
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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