Thank you, Buyers AND Sellers!

Inman News reported this week  that the National Association of Relators recently released their Profile of Home Buyers and Sellers. 

The good news is that first-time homebuyers increased to 46% of all home sales, compared to 41% in the 2008 report.

85% of the sellers in the survey used a real estate professional, and 64% of those choose their agent BASED ON REFERRAL or PAST experiences with an agent. 

Customer service DOES pay off.

36% found their home via their agent and almost an equal amount found their home on the Internet.  This is great news for agents and Internet services. It is REALLY bad news for print, only 2% found homes via print or newspapers! 

I could go on and on, but I’ll let you read the rest of the article on your own.  The study mirrors my own experiences over the 18 months showing hard work and innovation do pay off for both the agent and client.

Mortgage rates continue to fall

Brian Louis of Bloomberg reported that the average 15-year fixed hit a record low of 4.32%.  The 30-year fixed inched down to 4.83%. 

Rates are still stellar, and with the tax-credit expanded for some “step up” buyers, it’s still a great time to buy or refi.

San Diego Co. Prices Inch Higher

Roger Showley of the U-T reported this week that the average price of homes inched a up for the first time since June of 2006.  Wow, it’s been a long time since THAT happened.  I know that prices within the city peaked in November of 2005, exactly four years ago. 

Low interest rates, along with the first-time homebuyer tax credit have helped immensely to stop the real estate free fall.  2009 looks like it was a lot better than 2008. 

2010 will be interesting.  The Fed is going to stop its purchase of mortgage backed securities by March 31, and the first-time homebuyer credit is set to expire on April 30.  HUD has decided to keep the temporary (higher) loan limits on conventional loans in place through 2010. No one has a crystal ball, but 2010 has the potential to be bumpy.

The Foreclosure Issue

We all need to face this, foreclosures are not going away anytime soon.  Alan Zibel of the AP confirmed this week that the Great Recession has brought with it high unemployment which is putting the squeeze on people trying to make their mortgage payments.  These aren’t people who bought something they couldn’t afford with a subprime loan.  These are the people losing their jobs and can’t make payments on A-paper (see 30-year fixed conventional) loans.  Add this to the many Option ARM loans resetting next year (and even more in 2011), and you’d be hard pressed not to admit that foreclosures won’t be a factor until 2012.

Kathleen Howley of Bloomberg throws her two cents in by adding that there are also increased losses on FHA loans.  To be fair, FHA loan guidelines are MUCH more strict than anything we saw in the subprime market.  Default is occuring due to high unemployment (and underemployment).

Update on the Homebuyer Tax Credit

Brian Faler of Bloomberg News has reported that the it is highly likely that the Senate will vote to extend the homebuyer tax credit this week.  Notice I’m calling it HOMEBUYER tax credit, because it will also include some current home owners.

Quoting the article, “Homebuyers who have lived in their prior residence for at least five years could receive a credit of $6,500. Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify.” 

The tax credit would be extended to April 30, 2010.  Homes worth over $800k would not be eligible for the credit.  Faler also report that lawmakers said they would not extend the tax credit again, but never say never in an election year.

UPDATE: The Senate voted this morning 98-0 to extend the homebuyer’s tax credit.  It now heads to the House of Representatives for a vote there.  You can get the full story here at Marketwatch.

UPDATE 2: The House of Representatives just past the Homebuyer’s Tax Credit.  The President will sign it tomorrow morning, per Diana Olick of CNBC.

Buyers speak their minds!

About 10 days ago, Kelly Bennett over at Voice of San Diego posted this.  She found the original message over at Piggington.  The title says it all.

2009 will go down as the year of Buyer’s Hell. 

Having worked with half-doznen buyers this year, I find the original message to be very accurate.  One couple that I worked with started looking in January of ‘09 and didn’t close on a house until 7/31.  Actually, that wasn’t that bad.  I started working with my friends Martin and Laura in December ‘08, looking in Temecula.  We finally had an accepted offer on a short sale in March, we closed the third week in September.  Oh, the adventures we had!!!  I’m currently working on an article where I will share all of our unique experiences.

No, it’s NOT your parent’s market!!!  It’s been very tough for buyers and their agents, and I don’t see it getting any easier for some time.  The patient ones will win out, but it’s tough.

Neighborhood Profile – Bird Rock

As I state in my “About” page, I tell everyone that I was not going to talk mortgages and real estate 7/24/365. 

This is one of those moments. 

I’m hoping that I can do neighborhood profiles of different areas in San Diego from time to time.  I decided to start with my own ‘hood, Bird Rock.

Bird Rock is located at the south end of La Jolla. The area was originally subdivided by the M Hall Company in 1906 (Bird Rock City-by-the-Sea) and in 1907 (Bird Rock Addition). 

There were only a handful of families who lived there until World War II.  Imagine living in the Village and telling people you were moving to Bird Rock, “Why are you moving way out THERE, in the COUNTRY?”  True statment.

By 1970, most of the lots had been built out.  One of the unique aspects of the area is it’s commercial strip, a three and a half block long area that has been servicing the needs of the area since the mid-1940’s.

When talking to old-timers, I’ve learned that in the 1950’s and 60’s, the commercial area had such a variety of stores, that the only reason why you ever had to leave Bird Rock was to go to the doctor.  Even a number of motels were built in the area.  Pictured below was my favorite, the Inn at La Jolla.

Inn at La Jolla, built 1951 by Robert L. Hanniman, demolished 2003

After being here a number of years in the 1990’s, I decided to become involved in the local comuninty group, the Bird Rock Community Council.  Back then, the commercial strip looked like it needed some TLC and the organization stressed beautification and safety along the boulevard.

During the early 2000’s, the community continued its beautification efforts that began back in the 1990’s.  Back then, the BRCC led the effort to pick and plant a street tree along La Jolla Blvd., which would give a canopy effect over the sidewalk.  The street tree picked was the Gold Medallion tree.

Gold Medallion Tree on La Jolla Blvd.

Fast forward to 2009, when the community celebrated the 7th Annual Taste of Bird Rock.

I guess I’ve been too busy over the years, especially during the summer, to attend this event.  I made a point to go this year after a neighbor of mine offered to throw a pre-event cocktail party at his home a block off of La Jolla Blvd.

The event actually surpassed my expectations.   There were way more food stations than I expected, and I counted at least three bands in different locations.

Looking south on La Jolla Blvd at the 5500 block

There were businesses open that had nothing to do with being a restaurant.  One of my favorites is G-Whiz.  This store recently moved to Bird Rock from its Turquoise Street location in Pacific Beach.   This great store for party decorations, wrapping paper, greeting cards, balloons, etc.  Nicole Gerle (aka Nikki), has been delivering balloons for our big 4th of July party at the house for 13 or 14 years at 7 a.m. on the day of the 4th. 

G Whiz's gleaming new store front in Bird Rock

I’ll never forget about 10 years ago greeting her at the door as she was bringing in the balloons as she was saying, “I’m getting married today!”.  A great memory!!! 

Nikki came up with the wonderful idea of handing out snow cones during the Taste of Bird Rock, a good idea during a late afternoon during the summer.

Nikki serving one of a couple hundred snow cones she handed out during the Taste of Bird Rock

Having the boulevard blocked off really gave me a chance to walk around and examine the landscaping that was put in after the street was reconfigured for roundabouts a few hears ago.  My opinions of the roundabouts haven’t changed, they are overkill and a waste of money (each cost $500k), but I do think the landscape medians were a nice addition to the street.  It was  something everyone agreed on 10 years ago, and for the most part, is a happy addition to the streetscape. 

Landscape median looking south at the 5600 block.

As I walked down the street that day, there seemed to be bands at every intersection.  I counted three that day.  All of them were very good, and they attracted both adults and children.  Three bands a block away from the ocean, in the middle of La Jolla Blvd in July.  How cool was THAT?

One band was situated at one of the intersections

Bubbles and music at the 5700 block

On the site of the old Chevron gas station, local children displayed their artistic talent.  They drew pictures of different aspects of living in Bird Rock.  The pictures were fun to look at, and they all did a great job!

Local children display their artistic talent!

One of my favorites is below, it’s of the Bird Rock.

A drawing of the Bird Rock by one of the young local residents.

Even though we were in the middle of summer, there was a touch of Mardi Gras in the air as one of the locals was passing out beads at one of the food stations. 

Bird Rock version of Mardi Gras, during the summer of course!

One of the big hits of the Taste of Bird Rock had to do with a historic flavor.  Philomene Offen, a local resident and outstanding volunteer at the La Jolla Historical Society, spent approx. 200 hours during the late spring and early summer putting together the history of Bird Rock on a number of story boards. 

I met with Philomene a few times to give her material I had and gave her suggestions on people to meet with.  I had done my own research years ago on my own, so I thought by helping her it would get her on a research ”fast track”.  Philomene spoke with old timers and various historic organizations.   She thought it would be a good idea to get the exhibit indoors and I agreed.  It wouldn’t take much of a breeze to knock the boards off their easels.

Philomene smartly got the use of the Masonic Lodge, which is situated right on the sidewalk in the middle of the commercial strip. 

Entrance to Bird Rock History exhibit at the Masonic Lodge.

The exhibit covered different eras and aspects of life in Bird Rock, the elementary school, the war years (World War One AND Two), the history of traffic issues, merchants and businesses through the years, etc. 

One of my most favorite topics was that of the train (and later trolley) that ran through Bird Rock to downtown La Jolla.  The train ran from 1894 to 1918.  The trolley ran from 1924 to 1940.

The trains and trolleys of La Jolla

Mike Mishler, staff archivist at the La Jolla Historical Society, was kind enough to donate some of his own time to staff the exhibit with Philomene.  

Mike Mishler and Philomene Offen (with magifying glass in hand)

The exhibit was such a hit that Bird Rock Coffee Roasters, an independent coffee bar in Bird Rock, agreed to display parts of the exhibit so the public can view and appreciate it for a longer period of time.

After 103 years, Bird Rock seems to be rolling along.  There have been some “downs” over the last 10 years, but things seem (as a whole) to be looking up for what some call “Baja La Jolla”.  The ‘hood has a strong sense of identity. 

I think we’re all looking forward to the next Taste of Bird Rock, and what the next 103 years bring.

Foreclosures down a bit, defaults are up

Roger Showley of the Union-Tribune reported last week that foreclosures were down, but defaults were up last month.  Lenders are having a tough time working with borrowers who are having trouble making their payments.

John Walsh, President of DataQuick, made the comment about loans funded in mid and late 2006 are really ugly.  And the pain seems to be moving from inland San Diego County to the coast. 

Analyst Andrew LaPage of DataQuick said he is concerned about the level of distress out there that hasn’t even entered into the foreclosure market yet, something that I’ve been concerned about for a while.

I think the October figures will be interesting.  I think many people are holding off buying until they know that the tax credit will be extended.   That along with the holidays being a lousy time of year for real estate anyway is making it look like inventories will be rising, and prices should be lowering a bit, on average.

Lehman’s BACK!! (Sort of)

Maybe this is really for all of my old mortgage peeps, but I read an article last week that actually provided some good news.  Aurora Loan Services out of Littleton, CO is going to begin to start funding loans again.  ALS is/was the mortgage arm of Lehman Brothers Holdings, Inc.  Yes, THAT Lehman.

To me this is a big deal.  Flashback to the early 2007 when I was working in purchase clearing at Plaza Home Mortgage.  For people like me, the bottom didn’t fall out last September, it started to fall out about Feb. of 2007.  Suddenly overnight, it became almost IMPOSSIBLE to sell our loans to ALS.  The credit lines started to clog up (fast) and suddenly the mortgage world changed in an instant.  It seemed that guidelines were being changed on a daily basis as the credit markets were starting to freeze.

Fast forward to Sept. 2008 when Lehman fell off a cliff after 158 years.  The nation was in shock, except for people that worked in the mortgage industry that saw that coming almost a year-and-a-half earlier.

Options and choices are a good thing, and it’s a good thing that ALS will start to fund loans again under Lehman, which is technically under Barclays Plc. now.   This will provide more choices in the market, which should benefit the consumer.

Tax Credit Fraud?

Jim Abrams of the AP wrote last week at that Congress held oversight hearings on the first-time homebuyer tax credit.   Treasury Inspector General for Tax Admin. J Russell George testifed at the House Ways and Means Committtee that the IRS did not require taxpayers to provide the paperwork documenting that they actually PURCHASED a home.  He also told them they had found hundreds of minors had filed tax returns claming the tax credit.

I still think that the tax credit will get extended, but my money is on the tax credit remaining at $8K for first-time homebuyers only, and that the extension will only be for six months. 

The chatter on CNBC is starting to equate this programs with “Cash for Clunkers”, which it is in a way, but so what?  It’s been a great incentive for people who waited and played by the rules.  The $8K stimulates the economy by allowing the buyers to renovate their home and buy NEW appliances.  It helps stabilize the housing market and gets people to spend some money.  I’m hoping the exension will be passed before Congress goes on their Thanksgiving break.  Stay tuned.

UPDATE:  It looks like the Senate is going to take up the issue of of extending the tax credit this week, per MS-NBC.com.  Bloomberg is reporting that there are two versions on the table.  One version would keep the current $8k amount until April 1, then it would be reduced by $2k for each succeeding quarter until it would be phased out by then end of 2010.  Another proposal would extend the $8K credit to next June, expanding it to all couples making $300k or less.