That should extend the current mini-boom in starter homes through the winter, but will probably result in a slowdown in April or May, maybe sooner!

Unlike the previous deadline, which required homes to close escrow by 12/1, homes now need only be “under contact” by April 30th and close escrow by June 30, 2010.

According to the Washington Business Journal,  “The legislation also increases the income eligibility limits for the tax credit from $75,000 to $125,000 for individuals, and from $150,000 to $225,000 for joint filers. The cost of the home cannot exceed $800,000.”

The move-up buyer credit is a slightly smaller $6,500, and the same income and home price limits apply.  To qualify, the buyer must have owned and occupied a primary residence for a period of at least five consecutive years in the previous eight years.

I’m still seeking clarification on two aspects of the move-up buyer program:

1.  Must the buyer sell their current home to qualify, or can they rent it out?

2.  Can the buyer’s new home be of less value than their current home?  In other words, it the credit only applicable to buyers literally moving up in price, or could someone moving down or relocating take advantage of it?  The best I can tell, the new home must cost more than the old one, but I haven’t found the specifics yet.

If you find the answer to either of these questions, please post them in a comment below, along with a link to your source.

The last extension?

There’s no guarantee the credit will be extended again.  In fact, the ever growing federal deficit may make a further extension unlikely.  Georgia Senator Johnny Isakson of Georgia stated the credit will not be extended further.   However, 2010 is an election year for 1/3 of the Senate and all of the House, so anything could happen.

How’s that apply to me?

Sellers: This is going to be a different winter, with more activity than usual.  If you want to sell in 2010, you’d be wise to be ready to hit the market early in the new year.   It would be wise to contact a competent, experienced Realtor now to save time, money, and hassle in preparing and staging your home.   (We can help you locate a good agent in your area–just use  “Contact Us” link at the upper left corner of this page.)
Buyers also need to act fast  to take advantage of an amazing combination of low interest rates, low prices, plus a big tax credit.   We expect the spring buying season to be especially crazy this year, possibly with interest rates rising.  Serious buyers should start their search now to get the best value and the least time pressure.

Are some economists still practicing "voo doo?"

(11/4/2009, by Dave Emerson)  With prices and interest rates both down, 2009 has been an excellent year for buyers.  In fact, over the past several months multiple competing offers have been the rule on  properly priced and staged entry level  listings—sometimes as many as 15 competing offers!

That, in turn, has been good for sellers, as we’ve seen homes selling quickly and prices moving up again, although nowhere near the insane peaks we saw several years ago. Rates are still near lows that haven’t been seen since 1958!

I just completed a review of California economists’ projections for the future, and there’s quite a range:

• Our California Realtors’ Chief Economist, Leslie Appleton-Young  is predicting a 3.3% average  statewide home price increase for 2010, with distsressed properties still driving the market.
• UCLA, however,  is predicting So Cal price increases in the double digits for 2010, returning to their 2004 peak between 2012 and 2017, depending on the county, with OC lagging behind.
• Cal State Fullerton says local prices will actually drop 2% through  next summer, then finish flat or slightly up.
• Veros, an automated valuation system says O.C. homes will be up 2%  from 9/1/2009 to 9/1/2010.
• First American Title’s CoreLogic Division, on the other hand, expects Orange County homes to go up 9.5% from 8/1/2009 to 8/1/2010 and Los Angeles County prices to rise 6.3% during the same period, the biggest gain in CoreLogis’s projections for the nation’s ten largest cites.
• CorLogic’s numbers also indicate that Orange County August 2009 prices were down about 7.5%  from August 2008.

The list goes on.  Bottom line: Most economists are cautiously optimistic about next year, but nobody really knows what’s next.

A “double dip” recession may still be in the cards, but eventually interest rates will start moving up and stay up.  There are way too many variables, from the ongoing incompetence in Sacramento, Washington, and Wall Street to the chaos in the Middle East and Korea, to name a few.

Our projection? After a winter slowdown that’s milder than normal we’re expecting prices to resume their slow upward movement early next year, at least through spring.

Sales activity will hopefully also remain strong, and interest rates will begin increasing for good sometime in 2010.  Rates are still near lows that haven’t been seen since 1958, and probably won’t be seen again in my lifetime.

What to do? Simple:  What works for your personal situation.

What we wrote here  2 years ago  in “What to do when nobody knows what’s next” still applies today:

The key is to base your decision making primarily on what you know, not on speculation about market trends. Market timing is nice, but it’s highly speculative and subject to surprises from the Feds, politicians, consumers, other nations, and even terrorist attacks. Instead of trying to precisely time the market, figure out what you really want or need and brainstorm options, work, & wait until you find an acceptable solution.

As my mortgage broker once told me when I was trying to time the interest rate market in locking a loan, “if the loan works at the current rate, go ahead & take it. ” In other words, don’t gamble by passing up something that works.

As my mother used to say, “A bird in the hand is worth 2 in the bush.”

I’ve been telling buyers all year that this November and December may present the best buying opportunity for decades.   With Congress on the verge of extending the first time buyer’s tax credit and adding a credit for other buyers as well, that’s more true now than ever.

Still, no buyer should expect to be able to flip their purchase in a few years based on appreciation, unless they really now what they’re doing.  The old rule of thumb is back:  Don’t expect to make any money on appreciation (after the costs of buying and selling are deducted) unless you’ll be living there five years.   If  you can do it in less then that, consider yourself lucky (or blessed).

Likewise, sellers who want to move out or move up and can accomplish close to what they want today, shouldn’t hesitate.  When interest rates are back to 9% or more, it’s going to be a lot harder.  That could come sooner than you expect.

If you can make it work, do it now, because tomorrow is still a closed book. All we really have is today.

If you’d like specific input on your situation, or have questions or observations, use the comment box below & we’ll get back to you.  Better yet, other readers might have something to add as well.  Please keep the language family friendly.  If you prefer to keep your question confidential, use the “contact us” link at the top left of this page.  We’re always happy to put our 30+ years of  Southern California real estate experience to work for you!

It's your money!

Yesterday I gave you detailed information about filing to get your Orange County, CA Property Tax reduced.

Since informal appeals for the 2009-2010 tax year must be postmarked today, here’s the instant version:

3 Quick steps to find out if you should file:

1. Do you own Orange County, California real estate that was purchased or reassessed (i.e., change in ownership) between 1/1/2001 and 1/1/2008? (If so, go to step 2, if not, there’s probably no need to file an appeal.)
2. Click here for a link to the Orange County Assessor’s Office that will tell you if your Orange County Property is scheduled for an automatic review this year. All you need is the property address, and the info is then just 2 clicks away. If you’re scheduled for an automatic review, you’re probably fine, but you can file an informal review (see below for how) if you want to make sure they have your comparable sales data. If you’re not scheduled for an automatic review and you bought between 1/1/01 (or maybe 2002) and 1/1/08, go to step 3.
3. Go to EasyTaxFix.com, complete step 1 only to find out what, if any, they estimate your likely savings at if you do appeal. Again, all you need is the property’s address, and it’s free, but their info isn’t always that accurate. For example, they weren’t even close my current tax assessment–if you don’t remember, look at last year’s tax bill. If your estimated savings aren’t worth the hassle, skip it. If they are, proceed to the next section before closing the window on your computer

Options on how to file an Informal Appeal for OC property:

You have several choices now, but your paperwork needs to be postmarked today, Thursday, April 30:

1. $40 option (fastest & cheapest–but do you get what you pay for?): Click the “apply now” box on your computer screen that’s still open from step 3 above and for $40.00 EasyTaxFix.com’s computer will prepare the appeal (including the comparable sales) and give you instructions. All you have to do is pay, print, sign, and get into today’s mail.
2. $65 option (if you’re not sure the appeal’s needed or don’t want to go with the cheapest option): Go to CaPropertyTaxSavers.com, click on “order your kit” on the right, and they’ll essentially do the same thing, but supposedly using some additional data. I’d recommend you first click the “Quick Analysis” box, which will give you their computer’s assessment of what you’ll save on your taxes. It only costs $11, and that will be applied to the cost of your $65 personalized tax appeal kit.
3. Free option for do-it-yourselfers with free time today: Click here for a link to a pdf file of the one page informal appeal form from the Orange County Assessor. Complete, sign, & mail to the address given, with today’s postmark (4/30/09). They request 3 comparable sales, but the Assessor was quoted in the Register as saying they’ll process the form with or without your comparables. At this late date, I’d just let them do the work. For more on options for obtaining comparables, see my post from yesterday.

There it is. As simple and easy as I can make it.

You’re welcome! Just remember which Realtor took care of you when you or a friend need to buy or sell. Dave Emerson, 562.822.7653. Go ahead–put it in your cell under “Realtor.”

And thank you!

President Obama greets Arizona high school students after announcing his housing plan Wednesday

2/20/09 Details continue to emerge on the President’s newest plan directed at helping those in trouble with their mortgage. One of the better summaries I’ve seen so far was in an e-mail I received from James Liptack, President of the California Realtors’ Association:

This Wednesday President Obama unveiled the Homeowner Affordability and Stability Plan, which will offer assistance to as many as 9 million homeowners, while attempting to prevent the destructive impact of foreclosures on families and communities.

The plan contains three main components, and only applies to primary residences. The loans referenced in the plan cannot exceed Freddie Mac/Fannie Mae conforming loan limits.   [Note from Dave:  In California there are 2 "conforming loan" limits in 2009:  The "normal" conforming loan limit of $417,000, and the "jumbo conforming" loan limit of $625,900.  So far I haven't been able to figure out which limit is being referenced--if you have a reliable link or statement that clears this up, please let us know in the comment box below]

The first component is directed toward homeowners suffering from falling housing prices who still have equity in their homes, but no longer have the 20 percent equity needed to refinance.  Under the plan, homeowners who have conforming loans  owned or guaranteed by Freddie Mac and Fannie Mae will be allowed to refinance their homes, even if they do not have 20 percent equity left in the house. The U.S. Treasury Dept. estimates that about 5 million homeowners will be helped by this portion of the program.

The second component, known as the Homeowner Stability Initiative, is designed to assist homeowners who are “underwater” on their mortgages. The $75 billion initiative will bring together lenders, servicers, and the government so that all stakeholders share in the cost of the modification.  Primary mortgages would be reduced to monthly payments that do not exceed a 38 percent debt-to-income ratio, with the costs of doing so borne by the lender. The government and lender then would split the costs of further reducing the monthly payments until they were at a 31 percent debt-to income ratio. An important aspect of the initiative is that homeowners do not have to be delinquent to participate.

The Homeowner Stability Initiative also will create incentives for servicers, mortgage holders, and homeowners. Servicers would receive an up-front fee of $1,000 for every eligible modification meeting the initiative’s guidelines. Guidelines are scheduled to be released by March 4. Mortgage holders will receive an incentive payment of $1,500, and servicers $500, for modifications made on loans that are current but at risk of imminent default.

The final aspect of the Homeowner Stability Initiative is creating clear and consistent guidelines for loan modifications. The Obama Administration plans to work with federal agencies, banking and credit union regulators, and the private sector in order to develop loan modification guidelines that can be implemented across the entire mortgage market. While adoption of the guidelines will be voluntary for the private sector, all financial institutions receiving Financial Stability Plan assistance going forward will be required to implement the loan modification guidelines.

The government estimates that between 3 and 4 million homeowners will benefit from the Homeowner Stability Initiative component of the plan.

The third component of The Homeowner Affordability and Stability Plan is supporting low mortgage rates by strengthening Fannie Mae and Freddie Mac. The Treasury Dept. plans to increase their Preferred Stock Purchase Agreements with both Fannie Mae and Freddie Mac from its current $100 billion in both entities to $200 billion in each. The Treasury Dept. also will continue to purchase Fannie Mae and Freddie Mac mortgage-back securities in order to help promote stability and liquidity in the marketplace.  Additionally, the Treasury Dept. will increase Fannie Mae and Freddie Mac’s portfolios by $50 billion, for a total of $900 billion. The Obama Administration will work with Fannie Mae and Freddie Mac to support state housing finance agencies in serving home buyers, such as CalHFA. Funding for this will not come from TARP money but from the Housing and Economic Recovery Act.

While some of the details still are being developed, such as the modification guidelines, the Obama Administration plans on using programs and funding already allocated for The Homeowner Affordability and Stability Plan and will need little legislative approval for programs under the plan.

More details will emerge over the weeks ahead.  This is a controversial plan that would have done a lot more good a year ago before the foreclosure crisis spun out of  control to the current economic debacle.

My mother would say it’s like “closing the barn door after the horses are already out.”

For a number of perspectives on how helpful these programs will be to the Orange County real estate market, check out “$75 billion mortgage aid will help few O.C. home owners” by the Register’s mortgage blogger and writer, Mathew Padilla.

For borrowers having trouble making payments, it’s usually a good idea to start with a call to your lender to see what they can do.

You might also find the Chicago Tribune’s Q & A on Obama’s plan helpful.

As always, if you want to discuss your specific situation, especially in your property is in the Greater Long Beach or West Orange County area, feel free to give us a call at 562.430.0262.

(2/13/09)  In a report released earlier this month, Moody’s “Economy.com” predicts a nationwide home price bottom in metropolitan areas in the 4th quarter of 2009.

While we think that may be possible, we think there are a number of red flags Moody’s may be neglecting.  We’ll explain our own theory of when to buy or sell after we discuss Moody’s new report

Giving some evidence that there’s no recession among economists, you can buy the report for only $3,995 from economy.com, or you can read Moody’s summary and key findings below for free: 

Housing in Crisis: When Will Metro Markets Recover?
Near-term prospects for housing markets in a recessionary environment

SUMMARY:

Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that housing is about to hit bottom. Housing in Crisis: When Will Metro Markets Recover?, a comprehensive new study, evaluates the near-term prospects for housing markets in a recessionary environment.

KEY FINDINGS

• House prices will stabilize by the end of this year.
• The national Case-Shiller house price index will decline by another 11% from the fourth quarter of last year for a total peak-to-trough decline of 36%.
• By the end of this unprecedented downturn, house prices will have declined by double digits peak to trough in nearly 62% of the nation’s 381 metro areas. In about 10% of metro areas, price declines will exceed 30%.

AUTHORS

• Mark Zandi, Chief Economist
• Celia Chen, Senior Director, Housing Economics
• Cristian deRitis, Director, Credit Analytics
• Andres Carbacho-Burgos, Economist

Dave here again. If you’re dying for more info from Moody’s but don’t have a spare $3,995 lying around, here’s the teaser Economy.com supplied for free on their website:

Executive Summary

The U.S. housing market downturn has gone from bad to worse, dragging the broader economy into what threatens to be the worst economic setback since the Great Depression. Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures.

Almost three years into the housing downturn, most indicators of the market’s performance continue to worsen. By the end of 2008, construction had fallen to its slowest pace since the Census Bureau began collecting data in 1959, inventories of homes were at a record high, and house prices had plummeted. Home sales seemed to be stabilizing, but only because of a surge in sales of foreclosed properties. Rising job losses and mounting negative home equity, combined with lax mortgage underwriting standards earlier in the decade, have rapidly eroded mortgage credit quality, further depressing the market.

The housing bubble was inflated by numerous forces. The most important were the flawed process of mortgage securitization, a lack of regulatory oversight, and old-fashioned hubris. The bubble is now deflating with a vengeance. The boom began to recede in earnest in the spring 2006 selling season. The surge in prices during the first half of the decade, along with monetary tightening by the Federal Reserve, had made housing unaffordable, even with anything-goes mortgage lending. House prices have since fallen by 25%, bringing prices back to where they were at the beginning of 2004.

The erosion of credit quality fueled the financial market crisis, which further depressed the housing market. Financial institutions are taking hundreds of billions of dollars in losses from the bad mortgage-related investments they made during the boom. These losses fed the financial panic that hit a fever pitch at the end of last summer after the government took over Fannie Mae and Freddie Mac. Credit markets froze, hurting not only mortgage borrowers but also disrupting nearly all businesses. These forces sent a mildly contracting economy into a full-blown recession.

Not only is this housing downturn unprecedented in depth, but it reaches across the nation. House prices have fallen in about 70% of all metro areas over the past several years. Although prices in most metro areas declined modestly during this period, price depreciation from peak exceeded 5% in 116 metro areas and exceeded 20% in about 50 metro areas. Those metro areas with the most exposure to nonprime and investor lending, and that consequently experienced the greatest runup in prices during the boom, are suffering the greatest declines on the downside of the housing cycle. California and Florida prices, for example, have descended by 50% or more from peak, but no area of the country has been spared.

Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view…

For an additional summary of the report by Reuters, click here.

What do we think?

1. We will see multiple bottoms, not one nationwide bottom.  In Southern California, we expect the bottom will come earlier for most communities in the coastal plain, later for condos and inland areas.   (See “A Southern California Bottom?“)
2. A few months ago, before the bottom fell out of the whole economy, we thought there was a good chance of a bottom this winter.  We now think that, although prices may move upward this spring in Los Angeles and Orange Counties, they may also decline again this summer and fall.
3. The Case Schiller index lags by about 6 months (click the link for details), so a turnaround this spring in prices going into escrow might not be reflected until the 4th quarter Case Schiller reports, which is about the most optimistic scenario possible.
4. Most economists now seem to be predicting a bottom in real estate prices sometime next winter.    You might want to compare Moody’s report with a January interview of P.M.I.’s director of economic analysis LaVaughn Henry, who sees a bottom in Orange County home prices early in 2010.  Click here for the interview, in Jon Lansner’s excellent OC Register real estate blog.
5. The current economic crises is unprecedented, and nobody can be certain how the current situation will unwind.   (See our classic post from November 2007, “How low will prices go?”)  Nobody knows for sure.  We think there’s a chance that we’re passing the bottom right now, in terms of what’s going into escrow, but that bottom may still be a year away, or many years away.  Just too many variables.   What’s a buyer or seller to do?
6. In uncertain times, your personal situation should be primary.  If you find a home that you love and can afford, and if  your income is secure, why not take advantage of today’s extremely low prices and interest rates?  (See our classic post on what to do in uncertain times.)
7. To discuss your specific situation, give Blair or myself a call at 562.822.SOLD.  We’ve been selling Greater Long Beach and Orange County real estate since 1980, and know how to get the job done in any market.  We’ve seen it all, but we’ve never seen anything like this!

Certainly there’s nothing like the miracle of birth–a miracle we’ve been blessed with four times in the last three years as our four amazing grandkids entered the world. God has blessed us with a wonderful family, which helps put some of the craziness of the current economy and Southern California real estate in proper perspective.

The winter holidays help achieve the same thing.

Hanukkah: A celebration of light, freedom, and God’s power

As Christians, Barb and I find inspiration in the story of Hannukkah, and spent some time trying to help our kids understand the significance of the event. In John 10:22 we find Jesus apparently celebrating Hannukah in the temple when his teachings sparked an effort to stone him. While Jesus’ opposition by the religious power structure of his day ultimately resulted in his crucifixion, his appreciation of Hanukkah should motivate Christians of today to at least respect and learn from the events that preceded Christ by about 200 years.

Here is a summary of Hanukkah, or Chanukah, from the orthodox Chabad website:

Chanukah — the eight-day festival of light that begins on the eve of Kislev 25 — celebrates the triumph of light over darkness, of purity over adulteration, of spirituality over materiality.

More than twenty-one centuries ago, the Holy Land was ruled by the Seleucids (Syrian-Greeks), who sought to forcefully Hellenize the people of Israel. Against all odds, a small band of faithful Jews defeated one of the mightiest armies on earth, drove the Greeks from the land, reclaimed the Holy Temple in Jerusalem and rededicated it to the service of G-d.

When they sought to light the Temple’s menorah, they found only a single cruse of olive oil that had escaped contamination by the Greeks; miraculously, the one-day supply burned for eight days, until new oil could be prepared under conditions of ritual purity.

To commemorate and publicize these miracles, the sages instituted the festival of Chanukah. At the heart of the festival is the nightly menorah lighting: a single flame on the first night, two on the second evening, and so on till the eighth night of Chanukah, when all eight lights are kindled.

On Chanukah we also recite Hallel and the Al HaNissim prayer to offer praise and thanksgiving to G-d for “delivering the strong into the hands of the weak, the many into the hands of the few… the wicked into the hands of the righteous.”

Chanukah customs include eating foods fried in oil — latkes (potato pancakes) and sufganiot (doughnuts); playing with the dreidel (a spinning top on which are inscribed the Hebrew letters nun, gimmel, hei and shin, an acronym for Nes Gadol Hayah Sham, “a great miracle happened there”); and the giving of Chanukah gelt, gifts of money, to children.

Click here for the complete story of Chanukah, and here for a comprehensive “How To” guide for the observances and customs of Chanukah.

Christmas: A celebration of joy, peace, and God’s love

About 170 years after the Maccabean victory celebrated by Hanukkah, Christians believe God again miraculously sent light and deliverance into the world, this time in the form of an infant who was son of both man and of God, the ultimate gift of love.

This time we’ll let first century physician and historian and Gospel writer Luke fill in the details of that first Christmas, roughly 20 centuries ago about 12 miles outside of modern Jerusalem:

The Birth of Jesus Christ

2:1 In those days a decree went out from Caesar Augustus that all the world should be registered. 2 This was the first registration when Quirinius was governor of Syria. 3 And all went to be registered, each to his own town. 4 And Joseph also went up from Galilee, from the town of Nazareth, to Judea, to the city of David, which is called Bethlehem, because he was of the house and lineage of David, 5 to be registered with Mary, his betrothed, who was with child. 6 And while they were there, the time came for her to give birth. 7 And she gave birth to her firstborn son and wrapped him in swaddling cloths and laid him in a manger, because there was no place for them in the inn.

The Shepherds and the Angels

8 And in the same region there were shepherds out in the field, keeping watch over their flock by night. 9 And an angel of the Lord appeared to them, and the glory of the Lord shone around them, and they were filled with fear. 10 And the angel said to them, “Fear not, for behold, I bring you good news of great joy that will be for all the people. 11 For unto you is born this day in the city of David a Savior, who is Christ the Lord. 12 And this will be a sign for you: you will find a baby wrapped in swaddling cloths and lying in a manger.” 13 And suddenly there was with the angel a multitude of the heavenly host praising God and saying,

14 “Glory to God in the highest,
and on earth peace among those with whom he is pleased!”

15 When the angels went away from them into heaven, the shepherds said to one another, “Let us go over to Bethlehem and see this thing that has happened, which the Lord has made known to us.” 16 And they went with haste and found Mary and Joseph, and the baby lying in a manger. 17 And when they saw it, they made known the saying that had been told them concerning this child. 18 And all who heard it wondered at what the shepherds told them. 19 But Mary treasured up all these things, pondering them in her heart. 20 And the shepherds returned, glorifying and praising God for all they had heard and seen, as it had been told them. (Luke 2:1 - 19, English Standard Version)

Barb and I hope your Holiday celebrations look beyond the food, sales, and stresses to the love, joy, peace, light, and power that G-d himself wants to give each of us as we trust in him. May your family’s holiday celebrations be blessed!

This being an election year. the government sprung into unprecedented action. . . repeatedly. Just this Monday we saw the Federal Reserve dramatically slash the fed funds rate to. . . zero!

Where’s that leave the Southern California real estate market. Pretty much where we were back on August 30th, when we wrote the following:

Where to buy now: While we believe recovery for the desert area and the Inland Empire may not come unti spring of 2010, we now believe the next four months are likely to present the best buying opportunities for most property classes in the coastal plain of Los Angeles and Orange Counties.

Why? As we’ve indicated in “Our Two R.E. Market Cycles,” in most years both sales volume and prices for homes going into escrow tend to bottom in November and December. People are too busy preparing for the holidays to buy homes but lenders and builders are trying to unload inventory before year’s end.  It’s almost like an annual “year end clearance” sale for real estate.

With the number of homes going into foreclosure beginning to decline and effects of the federal housing relief bill beginning to kick in (see “The good news about the ‘Housing and Economic Recovery Act’ “), we think the odds now are that this winter’s apt to be as good as it gets for buyers looking in the more built out areas of So Cal.

What’s more, interest rates are still near historical lows and are expected to gradually rise over the years ahead.  Very low prices and rates make for an excellent buying opportunity.

Finally, there are literally hundreds of thousands of buyers sitting on the fence right now waiting for the market to bottom.  Once they all sense the time is right, you’ll have far more competition from other buyers than you have right now.  If you’re not early, you’ll be late.   Once everybody recognizes a golden opportunity, it’s too late to take advantage of it.

Due to the annual cycle, we know activity’s apt to pick up starting 12/26, we think the prudent buyer should at least get her feet wet in the market now.  (From “Who should buy Southern California Real Estate between now and Christmas?”)

Please don’t misunderstand.  We continue to believe that we’re in uncharted territory and nobody can be absolutely certain what will come next (see our classic post from November, 2007: “How low will prices go?“).  But the further we get into this dramatic downturn, the more clearly we can see what may well be the bottom.

What we know:

You don’t sell Southern California real estate for 30 years without learning a few things about our real estate cycle.  And we can observe a few other things from current market activity–activity that Data Quick won’t report until mid March when today’s purchase contracts show up in the February medians.   So here’s some things we know for sure or are fairly certain of:

1. The bottom for sales volume in Southern California real estate was passed last winter.  Year-over-year sales figures are up dramatically, fueled by the foreclosure bargains and other distressed sales such as “short sales.”
2. The volume of sales entering the foreclosure market is beginning to decline, especially in the stable (established–not new) areas of the Coastal Plain.  Homes financed with the worst of the subprime loans have already been foreclosed and resold.  There is not an infinite supply of such homes.  In addition, a variety of federal programs for distressed homeowners are beginnning to kick in.
3. Most well-priced bank owned homes in Southern California’s coastal plain are getting competing offers.
4. Interest rates are exceptionally low.
5. The fed is working hard to get banks to lend more, relaxing their over-reaction to the mortgage crisis.
6. Real estate sales and prices almost always bottom in December (which is reflected in DataQuick closing stats for February and March).
7. Even in the unlikely event unemployment reached 10%, 90% of the population would still be employed.
8. Home prices in Southern California have been rolled back to 2003 levels.
9. Combining low prices with low interest rates makes Southern California homes more affordable than they have been in many, many years. . . possibly since the bottom of the last recession.
10. Dramatic cut backs by builders are reducing the available supply of housing units.
11. Southern California still has the best climate, most diverse economy and most innovative economy in the nation.

All in all, there’s a very good chance this may be the best time to buy.

Every now and then it hits me what a very special place I’m privileged to live in.  Today’s one of those days.  There are many things to love about Southern California, here are a few that hit me today:

1. The weather: December 6th, 2008.  Forecast high in my home town of Los Alamitos in the mid 70s.  Low in the fifties.  Crystal clear, warm, sunny day.  I took my shirt off when I went outside to jog a couple miles.  We went to a local Christmas parade last night in shirt sleeves.
2. The sunshine: Every year I tally in my journal the number of days I don’t see the sun.  It averages about five.  Somehow, it seems like we get most of the little rain we get at night.  And almost never on the Rose Parade.  I tell my friends that was the deal the Rose Association made with God about a hundred years ago.  No Rose Parade on Sundays, so people can get to chuirch, and no rain on their parade!  Maybe the NFL should try that one!
3. The geography: I live about 12 minutes from the beach.  1 minute from a nice local park.  An hour from the San Gabriel Mountains, which include a peak over 10,000 feet high and two major ski resorts.  To the east, the San Bernardino Mountains include a peak over 12,000 feet high, several alpine lakes, and three more major ski areas.  I could see both mountain ranges clearly this morning, as well as Mt. San Jacinto, just South of Palm Springs.  (Did I mention the deserts?)  It’s not all that hard to snowboard (or ski) and surf (or boogie board) on the same day, but I would recommend a wet suit for the Pacific in winter.
4. The rivalry: Right now, I’m taking a break from the USC - UCLA game, where my Westwood alma mater is doing better than expected. . . so far.  USC-UCLA is the only true cross-town rivalry among NCAA Division 1 schools in the country! Both schools are within the Los Angeles city limits, only about 12 miles apart.  Many USC students live in Westwood, by UCLA.  When I went to UCLA, it wasn’t uncommon for athletes from the rival schools to room together.  My best friend in high school went to USC while I went to UCLA.

Rival banners are flying throughout my neighborhood.  Three  of the sixteen families on my cul-de-sac have UCLA alum, but we have SC season seat holders & alum anchoring the start of the street.  My mother and I both graduated from UCLA, my son’s girlfriend hopes to go there.  My boss is a USC alumn.  Both are great schools with great traditions.  And a great, but generally friendly rivalry.  As a tribute to the Trojans, let me share the words to USC’s famous Fight Song, at least the way I learned them at UCLA (with apologies to my friends from “Figueroa Tech”):

Fight on!  for USC.

You pay a fee; you get a degree!

You’ll be smarter than me, because I went to USC!

I went to USC!  I went to USC!

Just kidding.  I think they’re both great schools, one public, one private, two of several dozen outstanding colleges and Universities ranging from Cal Tech to the University of San Diego.

I could go on and on.  Diversity.  Opportunity.  Culture.  Great churches.  Great museums.  Great beaches.  Great mountain biking.  Over 100 languages spoken in local schools.  Forward thinking.

Sure, we’ve got a lot of people, but locals figure out ways to deal with and even enjoy it.

For me. So Cal is a wonderful place to live year round.  If you live someplace else and want to move here, I just happen to know a good So Cal Realtor.  Actually, quite a few, since Blair and I mainly cover  West Orange County and Greater Long Beach.

Happy Holidays from Southern California!

]]> http://socalrealestatenews.com/blog/i-love-southern-california/feed/ http://socalrealestatenews.com/blog/guess-what-class-of-real-estate-is-up-nationwide/ http://socalrealestatenews.com/blog/guess-what-class-of-real-estate-is-up-nationwide/#comments Fri, 21 Nov 2008 22:24:44 +0000 Blair Newman and Dave Emerson http://socalrealestatenews.com/blog/?p=234 (by Dave Emerson)  In the midst of all the current bad news, we found some good news for you!d

One class of real property is up almost 9% from a year ago.  The price increases are shutting out some new buyers!  Can you guess what it is?

According to an artilce in Tuesday, November 18th’s Christian Science Monitor, it’s farmland.

In Iowa, farm land is up 18% from a year ago.  In South Dakota it’s up 21%.

Several reasons are cited, but the primary one is an increase in profits from agriculture.  A large part of that results from the big push for ethanol produced from corn.  That drives up corn prices, which in turn drives up beef prices, among other things.  It’s also driven up our cost of groceries.  More unintended consequences from our beloved federal government!

Here in California, however, up until a few years ago farmland prices across the state were being driven up by contractors buying farms to build new homes.  Obviously, the price of land for housing has dropped dramatically over the last few years.

So, if you’ve been hankering for a dairy farm outside of Victorville or to grow cotton outside of Fresno, you may be looking at your golden opportunity.  In 20-30 years, you should be able to sell out to a developer & retire, or rebuy farmland further out of town.

That’s what dozens of Dutch dairy farmers have been doing as long as I’ve been alive.  When I was growing up what’s now Cerritos was Dairy Valley.  No valley, but lots of dairies.  Those prudent Dutch farmers sold out & moved to Chino back in the late 1960s.  20-30 years later they repeated the process, moving even further out.

Over the long haul, very few investors have lost money in real estate.  It’s the short haul where folks get into trouble.

Political humorist Will Rogers had a lot of great sayings that relate to our current economic turmoil:

An economist’s guess is liable to be as good as anybody else’s.

Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?

I don’t make jokes. I just watch the government and report the facts.

We always want the best man to win an election. Unfortunately, he never runs.

If Stupidity got us into this mess, then why can’t it get us out?

But my favorite is his oft-quoted mantra about investing:

Buy land, God ain’t making any more of it!

Just ask those corn farmers in South Dakota.  Or those retired milionaire dairy farmers who started out in So Cal’s Dairy Valley years ago.

(11/17/08)  The following links to resources for fire victims are pasted in from the California Association of Realtors’ website.  Feel free to post other helpful information as a comment.  (No comment box below?  Click the blue “Comment(s)” just under the headline.)

Help is available.  Take it one day at a time and, by the grace of God, you’ll get through it.

What To Do After the Fire

Apply for FEMA Disaster Relief Funds
http://www.fema.gov/assistance/index.shtm
Those affected by the California wildfire should apply for assistance by calling toll-free to (800) 621-FEMA (3362).  Disaster victims may register by calling this number.  You do not have to wait to go to a disaster assistance center.  The number for speech and hearing impaired individuals is (800) 462-7585.  Federal disaster assistance available for residents and businesses in the affected counties includes temporary housing assistance, disaster loans and other needs assistance grants.

CARe!
http://www.carehelp.org/
Provides free disaster recovery help, information and guidance in the Poway, Rancho Bernardo, Lakeside and East County.

C.A.R. Legal and Tax Assistance Links
C.A.R.’s legal What’s New page offers links and information on tax, legal and other issues for wildfire victims.

FHA Mortgage Insurance for Disaster Victims
http://www.hud.gov/offices/hsg/sfh/ins/203h-dft.cfm
The Section 203(h) program allows the Federal Housing Administration (FHA) to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.

Governor’s Office of Emergency Services: November Southern California Fires
http://www.oes.ca.gov/WebPage/oeswebsite.nsf/Content/BE714C2AD6CF5CC088257503000412BE
The California office of Emergency Services provides information and links to various sites for information about assistance programs for wildfire victims.

San Bernardino County Office of Emergency Services
http://www.sbcfire.org/oes/site_links.asp
The County of San Bernardino has launched a temporary phone service to offer information about resources for wildfire victims, including information on shelters, school, road closures, and various social services.

American Red Cross: Picking up the pieces after a fire
http://www.redcross.org/services/disaster/0,1082,0_569_,00.html
Created by the American Red Cross, this information encourages you to take precautions to help stay safe and speed up your recovery after a fire.  It also offers ideas on what you can do to help make yourself and your home safer in the future.

Disaster Recovery: A guide to financial issues
http://www.redcross.org/services/disaster/beprepared/FinRecovery/
This free guide offered as a public service of the American Institute of Certified Public Accountants (AICPA), AICPA Foundation, the American Red Cross, and the National Endowment for Financial Education® (NEFE®), provides financial recovery information to victims of disaster.

Claims personnel from Farmers Insurance Group of Companies® deployed to SoCal
http://www.farmers.com/FarmComm/catastrophe.html
Customers who have been ordered to evacuate, have suffered damage, or lost their home because of the widespread wildfires, should immediately contact Farmers’ 24 hour claims hotline (800) HelpPoint (435-7764) for immediate assistance.  Customer care centers have been established at
• Kennedy High School, 11254 Gothic Avenue in Granada Hills, CA
• San Fernando High School, 11133 O’Melveny Avenue in San Fernando, CA
• Sylmar High School, 13050 Borden Avenue in Sylmar, CA 91352

Mercury Insurance standing by to assist wildfire victim customers
http://mercuryinsurance.com/corporate/pdf/SoCalWildfiresRelease111608.pdf
Customers of Mercury Insurance who have suffered property loss and/or damage can report claims 24 hours a day, seven days a week by calling (800) 503-3724.

Insurance-Related Issues

California Department of Insurance Wildfire Information
http://www.insurance.ca.gov
DOI can be contacted for general information and guidance about insurance claims by calling (800) 927-HELP (4357).

United Policyholders Addresses Insurance Issues
http://www.unitedpolicyholders.org/disaster/tip_recovery.html#CA
United Policyholders, a non-profit charity, publishes reliable, free buying tips and honest, “road-tested” practical claim advice.

Fire Preparedness Information

What to Take When You Evacuate
http://www.redcross.org/services/disaster/0,1082,0_6_,00.html
A list from the American Red Cross about what to take during voluntary and immediate evacuations.

Animals Lost in Disaster
http://www.disastercenter.com/pets/animals.htm
Information for people who have lost pets, livestock, or other animals during a disaster.Tips to Mitigate Risks and Losses Resulting from Fire
Prepared by the American Red Cross http://www.redcross.org/services/disaster/0,1082,0_584_,00.html

Spanish-language information:
http://www.redcross.org/services/disaster/foreignmat/resfispn.html

Talking About Fires with Children
http://www.disastercenter.com/guide/fire.html
Information from the California Disaster Center to help prepare families for fire, including developing a family disaster plan.

Information from the American Red Cross about Disasters and…

Children: http://www.redcross.org/services/disaster/0,1082,0_602_,00.html

Seniors: http://www.redcross.org/services/disaster/0,1082,0_9_,00.html

Pets: http://www.redcross.org/services/disaster/0,1082,0_604_,00.html

Farm Animals: http://www.redcross.org/services/disaster/0,1082,0_11_,00.html

Financial Preparedness: http://www.redcross.org/services/disaster/0,1082,0_605_,00.html

Creating a Family Disaster Plan
http://www.disastercenter.com/guide/family.htm
Steps to take to create a family disaster plan to expedite voluntary and forced evacuations in the event of an emergency.