The Market As We See It!

The content of this newsletter was obtained from press releases from Realogy Corporation
and Coldwell Banker Residential Brokerage in recent weeks

The past few weeks have been an economic roller coaster. We have watched the market dip and climb as fear, frustration and questions in the stock and real estate markets mount.

What we are experiencing is the results of combining over-inflated pricing with unsound lending practices and greed. How many of you really believe that a home valued at $150,000 in 2001 should really be worth $447,000 in 2005? As a result of borrowing based on inflated prices, we began to see the foreclosures soar and by the end of summer the results took their toll bringing down major investment firms and banks.

As this situation took years to emerge, so may the recovery. However, we now see economic, political and business leaders work together to plan a recover strategy rather than attempting to individually fix this enormous problem. This lays the foundation for a solution instead of hoping that the problem fixes itself.

On the positive side, we now have prices approaching that 2001 value level. We also still have very attractive interest rates in the 6% range. (In 2001 interest rates were in the 7% range) There is a positive up-tick in the market as smart investors and home-buyers are snapping up those bargains. As a result, the inventory in the greater Sacramento market decreased from an 11+ month supply in July to a 5-1/2 month supply in September. We have seen an increase in units and conversely as decrease in price of the distressed properties, but they are selling. In many cases, we have seen the return of multiple offers and steady open house attendees starting as well.

There is no doubt that the state of the markets has much to do with consumer confidence and trust in the financial sectors. The credit crisis weighs heavily on everyone’s mind, and once that is eased, it will aid in an economic rebound.

To help with that, Realogy Corporation, the parent company of CENTURY 21®, Coldwell Banker®, ERA®, Sotheby's International Realty® brands. approached the U.S. Department of Treasury with a practical solution to help stimulate the housing market and lead to a broader economic recovery. The proposal calls for a short-term government buy-down of mortgage rates to at least 4.5%, for a 30-year fixed rate mortgage. This incentive would apply to the purchase of all new and/or existing homes sold up to $1 million in price. As recently as October 15th, Realogy conducted a national survey about mortgage rates with responses from its residential brokerage companies the results of which underscore the rationale behind its proposal. The company thinks the pent-up consumer demand for housing, is more than sufficient to stabilize housing with 95% of its brokers expecting an increase in home sales up to 25% and would have strong stabilizing impact on average home sales prices.

Folks, why wait for the Government? I have been successfully writing offers with seller concessions where in the sellers contribute toward the buyer's closing costs including but not limited to buying down the interest rates for years. If you wait for the pack, you will most definitely be competing for homes and perhaps having to pay more than if you act now!

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After the foreclosure

Eric, I've talked a lot about what to do if you are in trouble with other options to avoid foreclosure. But what if you're one of the unfortunate ones who have lost your home to foreclosure. Again, the word is, don't put your head in the sand.

If ever there is a time in credit history that future credit grantors will be compassionate and forgiving for those who have lost their homes to foreclosure, the time is now. However, how you behave after the foreclosure is critical.

When you know your foreclosure is eminent, start packing. The sooner you get out, the better it will be for you. Whatever you do, don't let it go to an eviction. Not only will you still have to move, but in all probability you'll be slapped with an addtional judgement for fair market rent for the time you remain after. Additionally in one case we just experienced, they were also charged for the bank's attorney's fees and if that is not bad enough, they now have the foreclosure followed the eviction judgement. Talk about "credit curtains".... and it's not necessary.

Most lenders understand the heart ache and the burden these homeowners are facing. To help them out, most are offering "cash for keys" as an incentive for those who have lost them homes to move. In essence, if you agree and move out within the time frame - usually 2 weeks - and leave the property broom clean and free of all debris, the bank will trade you relinquishing the property for a check. As always, if you have more questions, please don't hesitate to give me a call at 973-4532.

Ose vs. McClintock - Slick ads vs. Issues

Eric Hogue and I have talked many times about advertising and how slick ads often work whether it is in business or in politics, even when they are misleading. Doug Ose has really been spending a lot of money on his ads and I have to say they are extremely clever even though they are definitely misleading. On one hand you have Tom McClintock, who regardless of where he resides has been a tried and true conservative. He has held strong to his conservative beliefs and issues even though they have cost him many an election. Doug Ose, who I have known since he was about 6 years old and I supported, when he represented me in the 3rd district has not. He became a huge disappointment to me during his tenure in Congress with his voting record especially when it came to taxes and gun issues. I now live in the 4th district and originally was working on Rico Oller's campaign, but when McClintock was romanced by the Republican Party to run for the 4th district, Rico and I both threw our support behind Tom. I would suggest that if you are a staunch conservative and a 2nd Amendment person like myself, do not be fooled by those expensive ads. Doug has a terrible rating by both tax payer groups and the NRA, the California Gun Owner's Association, Safari Club International and other hunting and conservation organizations! Let me share with you a personal experience regarding Doug while in Congress. I had the honor to represent the Sacramento Chapter of Safari Club International back in Washington, D.C. where we lobbied Congress on many important gun and wildlife conservation issues. Because I grew up with Doug, I contacted his office letting him know that I would be part of the delegation from Northern California and would appreciate a few minutes of his time to share our views on these issues. When we arrived at Doug's office, we were informed that the Congressman would not be meeting with us, but had arranged to have one his aides hear our message. That aide was a cute young woman who had little or no experience or background in hunting and gun issues. She was very polite, but it was a huge disappointment that Doug would not personally make time for us after traveling so far. On the other hand, Congressman Doolittle met with us and when our allotted time was up, instructed his staff to move his next appointment back 10 minutes as our issues were extremely important to the people he represented. He wanted to make sure he had the facts right! Later that night, in discussions over dinner, I learned that Doug had quietly joined the ranks of what hunters and gun owners call the "anit's" . Anti guns and anti hunting. Tom McClintock on the other hand is in complete step with the issues that are dear to me and my fellow Americans who believe in the 2nd Amendment. At a recent dinner I had the opportunity to speak with him on Northern California issues like the water, our King Salmon crises and he is all over keeping Northern California wet (he wants to build the Auburn Damm and rattled off facts and figures surrounding that issue) and working to preserve our treasured resources. That is why he has the endorsement of the Placer Republican Party. I know the farther North you go up the state, the deeper the support for McClintock goes. A man who sat next to me at that dinner had driven down from Redding to attend and was extremely concerned about the aspects of Doug Ose representing the Northern Part of the state. He said that he did not believe that Doug Ose understood the issues of rural Northern California. Very interesting in light of the remarks Doug's recent ads have fostered.

Now, do you want to know how I really feel? What ever you do, get involved, ask questions about the issues and past voting records and regardless of who you support, please get out and vote and vote your conscious,

Folks when it comes to having someone represent you in your real estate matters and are looking for someone who cares as much about you and your money as you do, I hope you will look at my record, talk to people who have turned to me and give me a call at 973-4532. I would be honored to put my 39 years of experience (career Realtor) to work for you and prove in real estate as in politics, experience is not expensive, it is priceless.

Changes In The Wind

Yesterday, the California Association of Realtors came out with new numbers on existing home sales in the Greater Sacramento Area. Sales for February compared with February 07 were up 11%. However, the prices were down about 30%. The news focused on the negative part of the drop in prices, however, I think it is truly the silver lining to this horrible crises we are in. With interest rates still down below 6%, a home that sold last year around $350,000. is now priced in the $245,000 range. The payment for that same home also has gone way down from approx. $2500. to around $1700. If you then add in the tax benefits, that exampled $1700. payment actually computes out to an after tax housing cost of about $1400. per month. What are you paying in rent? Also, if history repeats itself, and it has as long as we have been keeping records in the real estate industry, eventually those prices will go back up. Can you honestly say that you can save $100,000 in the next ten years? If you can, way to go! But imagine that if you combine that disciplined savings ethic with the appreciation by buying now, you can double your potential net worth.

Today, I checked the numbers on active listings….the available inventory is down in all 4 counties about 10%. Hmmm..... amazing! Sales went up, inventory went down. In our meeting this morning, agents were complaining that they are facing competition among buyers with multiple offers (as many as 8 to 10 offers) on many of the homes their clients seek to purchase.

I am constantly hearing from buyers that they are waiting for the bottom… Folks, take stock in what's happening, prices are down, interest rates are down, inventory is starting to go down, activity is up….. feels like changes are in the wind to me… the bottom? You’ll only know for sure when it is too late and prices are soaring back up.

If you’re thinking about either buying a home or an investment property, don’t wait…. Give me a call at 973-4532. Remember, my 39 years of experience includes several markets just like this! You know what I say, experience is not expensive, it is priceless!

Facts vs. Fiction

I wanted to clarify some facts vs. fiction. I received a call from an investor who is interested in buying homes for investment. He said he that he knew he could buy houses in good areas between $40,000 and $100,000. My response was “Really!” Where are they, I will buy them.

The facts are that home prices in Elk Grove, Natomas, Lincoln and other hard areas hit that have hundreds of bank owned homes on the market have prices as low as $100 to $115. per square foot. Many of those homes are getting multiple offers. I personally wrote several offers on homes in that range for investors paying all cash with quick closes and we did not get them. In every case, the investors were sure that their all cash offers would sway the banks to accept a slightly lower price. Wrong!!!! In following up, I found the successful buyers were other investors who had lost out on their first attempts and stepped up to the plate and paid full asking price and got the homes. In the last couple of weeks, we are seeing multiple offers on properties up to $150. per square foot.

I closed on a home last Friday with 1100 sf for $116,000. ($105 per sf) That home needed a new roof, carpet, paint, new windows and new fences. The bids for those repairs were $15,600. So the acquisition cost of this home came out at $119. per sf. The buyer was a savvy investor. He paid cash and closed in 15 days.
Contrarily to the hundreds of bank owned properties in the aforementioned areas, there are currently 11 Bank owned homes in Roseville/Rocklin between 2000 and 2400 sf. They are priced between $300k and $360k. that is about $150. per sf. While $115. a square foot sounds better than $150. per square foot, if the potential growth of the investment is better in Roseville than Elk Grove, which is the better investment? One of the ways to determine the upswing is to look at what the home you're looking at sold for at the top of the market. That is a likely indicator of where it will go again in the future.

The other thing to keep in mind is if this is your personal residence, where do you want to live? How much is that worth to you?

Those are facts, if you want more information about a specific area or situation, give me a call at 973-4532.

One Man's Loss; Another Man's Opportunity

There is a saying goes, one man’s loss is another man’s opportunity. How true that is in today’s real estate market. As tragic as this whole loan debacle is for so many of our neighbors, if you’re in the market to buy, you should be licking your chops.

Let me give you some examples from the elk Grove area. There is currently a home listed at $190k that sold in. 06 for $377k. It's a nice 3 bedroom, 2 bath home and with 100% financing (FHA with seller concessions) you can have it for about $1400. per month. My guess, is that you probably would be paying that in rent in today's market. And if you're an investor, with a modest down payment, you would be in a pre-tax break even situation in most cases with these prices. As always, run the numbers by your accountant or tax professional to make sure they apply to your particular situation.

There is a pending sale with a list price of $269,000 that sold in 05 for $455k. That home with 3% down would have a monthly payment of approximately $1900. per month including 6% interest.

I am putting a home on the market for $275k next week that sold brand new in early 04 for $336,000. The seller added thousands of dollars in improvements to the home on top of that. Again, with today's fully amortized loans and modest down payments, you can own a home for pretty close to what you are paying in rent. These values are repeated all over Sacramento.

Add to that interest rates in the high 5’s and low 6’s what are you waiting for? Call me at 973-4532. I would like to discuss what you are looking for and what kind of investment and monthly payments would be involved in either buying a home for you to enjoy or adding to your investment portfolio.

Eric Hogue will tell you, when you sit down with me, my main focus is you & what’s best for you. Let me put my years of experience to work for you and prove that experience is not expensive, it is priceless! Again, my number is 973-4532.

Beware of new foreclosure scams

NBC news did piece this weekend on the latest foreclosure scam? I heard about this a few weeks back, so it’s great that it’s getting national exposure. Companies are popping up all over soliciting homeowners who are behind on their mortgage with a walk away service. They have a large package of paper work that the homeowner must complete; in some cases they actually have the homeowner deed the property over to the company and they charge the homeowner fees of between $900. and $1500. They promise to handle the paperwork to allow the homeowner to walk away with minimal hassle and get a fresh start. Keep in mind, if you do a deed in lieu of foreclosure with your lender, you can walk away with about the same amount of hassle and damage to your credit report and it costs you nothing.
Once the homeowner moves out, they rent out the properties pocketing the rent. At the same time they often work on selling the property with a short sale, but if that’s not successful, they do nothing to negotiate any form of settlement on the loans. That means that the homeowner is often at risk of having a deficiency judgment show up within the next 4 years against them. These judgments start the agony of paying for the house they walked away from all over again.
Many of these companies are making millions and providing no real additional benefit to the homeowner. Sadly, NBC reported that what these companies are doing is not necessary illegal because of the disclosures hidden in the paperwork the homeowner completes. It reaks of more of the same smoke and mirrors that got unsuspecting homeowners in trouble in the first place.

Folks, you need to work with someone you know. Coldwell Banker is a name you can trust & I have been with them for over 22 years and in the real estate business for 39 years. I have been associated with Eric Hogue for 5 years. So give me a call at 973-4532 and let me put a real plan of action to work for you. In my plan, we guide you to explore all your options so you can choose the one that's right for you. Working with a mortgage resolution specialist, we provide you with a full package which includes allowing us to negotiate a short sale with your lender. However, you remain the owner and in full control of your ultimate destiny. We provide a referral to legal and tax experts to make sure you consider the option of bankruptcy. Additionally, we guide you to negotiate with your lender in an attempt to get your lender to rewrite your loan and stay in your home. We do this for no money up front.

So, again, give me a call at 973-4532. Remember, experience is not expensive, it is priceless!