Area Agency On Aging
Christy Cantrell
(800) 510-2020
Hello Christy,
It was wonderful speaking with you yesterday on behalf of Sara. You and your organization do wonderful work for folks like Sara.
As you know, Sara is 76 years old and living alone in a rented apartment in Ventura. She is frustrated, desperate, despondent and scared to death. She has high blood pressure, osteoporosis, cataracts in both her eyes (which she says her medical insurance refuses to cover) and she took a bad fall this last year. Oh, she is going deaf as well.
Until now, her rent has been $850/month, but new property owners have raised her rent to $1,150/month. Her Master Card reset her card limit to $200 without her immediate knowledge and she used this card to make up the difference for her rent. As a result, the new owners charged her a $50 bounced check fee on top of her increase in rent. She says she has less than 2 months before she will be evicted from her home.
I’m told rent control does not exist in Ventura County except for mobile homes in Thousand Oaks, so she has no recourse to the $300/month increase in her rent. That’s a 35% hike in her housing expenses and she doesn’t even have a mortgage!
One of my co-workers and I received a request for help from Sara. Sara knows we are both Realtors and she was hoping we knew of properties she could afford. In the spirit of the season, we have did a county-wide MLS search for anything renting for less than $1,000/month but had no luck. There may be something in the classified’s, but with her fixed income at just over $900/mo, it is unlikely we can improve her situation even if we do find something. She will still need food, clothing, utilities and medical care.
We have been making phone calls to local agencies and charities, but we haven’t had a great deal of success. Admittedly, we are not experienced at finding people like her the most appropriate help, but we have tried to do our best.
Christy, you indicated you have had prior contact with Sara, that she has made some unfortunate choices in health care providers, and in not applying for all the assistance she could be receiving. I’m sure that could be true, but from what Sara has told me, she has always tried to be self-sufficient until now. She’s been proud to take care of herself and slow to ask for public aid. Now that her housing expenses have jumped, she has little time left to change her situation, mostly because she has tried so hard to be independent.
The more I investigate what resources are available to her this time of the year, the more I understand her emotional distress. Many state and county agencies I contacted during this last week, have exhausted their annual budgets. Next year’s budgets are probably going to be much smaller for elderly assistance. Many of the larger agencies such as the Area Housing Authority of the County of Ventura are on holiday until 5 January 2009. Others, such as Section 8 Housing have a 2 to 4 year waiting period after application is made for Elderly Housing Assistance. These folks are without funding or on holiday.
This is evidently a very bad time of the year for finding financial assistance, or guidance. Yet this is typically a time of the year when rents are raised.
I’ve been told by numerous agencies that Sara is not unusual in her plight. Agencies have told me there are literally thousands of seniors asking for help. Evidently, more than a few elderly folks live out their final days on the street. This is euthanasia by default. I find it really hard to understand how this could be, in an area of Southern California that is home to so much individual wealth.
My co-worker and I have heard Sara say she might feel compelled to take her own life. She has said that she doesn’t want to do that, “because she wouldn’t get to see her son in heaven if she did.” But she told me today that the ocean is so near, she might just go there and end her troubles. She has also mentioned that she wishes she could just die in her sleep, that “she is angry at God because he won’t let her end her life that way.”
I’m not a mental health professional but I feel confident in saying that Sara’s stress is probably preventing her from making the right choices for herself.
I’m a member of the giant Baby Boomer generation, and I can foresee a time in the not too distant future, when people like myself will be approaching Sara’s age and mental competence. Obviously, we are going to need to be much better prepared than she. I think my generation’s retirement pardigm needs some major shifting. I’m sure we all need to contribute a bit more of our individual energy and earnings to that future time. We shouldn’t rely on the charity of others to survive, but perhaps we could develop a more efficient, effective and dignified response to elderly care than Sara has received.
In any case, you were extremely helpful today Christy. I appreciate your continued efforts at the “Area Agency on Aging” to help Sara. I also received some very useful and heartfelt guidance from Regina Fitzgerald at “Project Understanding.” My co-worker and I made calls to more than 20 departments and agencies today.
You and Regina and a very nice lady (who’s name I didn’t catch) at the after hours information desk of “Adult Protective Services” offered us very constructive advice and guidance. Your organizations don’t seem to draw much public attention or anything near the appreciation that I’m sure your efforts deserve, but you have thoroughly impressed us. You folks truly are leading the charge on one of our nation’s most unrecognized, immediate challenges.
I’m convinced from what I have seen, that we in America are not at our best when providing for the elderly. I served 23 years in the military and I love my country, but I’m embarrassed at how poorly we treat our seniors.
On behalf of Sara - Thank you Christy
Mark Thorngren
Wednesday, December 31, 2008
Thursday, December 18, 2008
Renters vs Foreclosures
December 15, 2008
Fannie Mae Lets Renters Stay Despite Foreclosures
By CHARLES DUHIGG
In a move that provides relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market, the loan giant Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.
It is the first nationwide effort to provide widespread relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae — a government-controlled mortgage finance company — into a national landlord.
It may also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter relief. “There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. “It’s really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit.”
In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into thefuture.
Many financial institutions — including JPMorgan Chase and Bank of America — have policies to evict renters after foreclosure, company representatives said. Fannie Mae’s initiative is expected to initially benefit as many as 4,000 renters living in foreclosed homes owned by the company. Fannie Mae has traditionally only bought and sold mortgages. But when a loan held by the company goes into foreclosure, Fannie Mae gains ownership of the underlying property until it is resold to new investors.
Fannie Mae owned 67,500 properties in foreclosure at the end of September, according to the company’s most recent filings. Most of those were owner-occupied. Under the new policy, former owners will most likely not be eligible to rent homes they lost in foreclosure.
Last month, both Fannie Mae and Freddie Mac, the other government-controlled mortgage giant, temporarily suspended foreclosures and evictions until early January. Fannie Mae will now offer renters in foreclosed properties month-to-month leases until the property is resold.
A company representative said program details were still being worked out. “While it may be sometimes tougher for us to sell a property when people are in it, we understand that lots of people are in tough situations right now,” said Chuck Greener, a Fannie Mae spokesman. “If a renter wants to stay in their home, we’ll make that happen. And if they want to move out, in many cases we’ll help them pay for the move.”
A spokesman for Freddie Mac said that the company was looking at a number of options, including a program similar to Fannie Mae’s, but that no decisions had been made. The companies’ regulator, James B. Lockhart of the Federal Housing Finance Agency, issued a statement on Sunday saying that he expected both companies to update their policies shortly regarding renters living in foreclosed properties.
Both Fannie Mae and Freddie Mac were taken over by Mr. Lockhart’s agency this year and now operate in aconservatorship. Representatives of some major banks said it was unclear if Fannie Mae’s new policy would prompt their institutions to change theirs. “We’re not in the business of managing rental properties, and we’re not in the business of being a landlord,” said Thomas Kelly, a spokesman for JP Morgan Chase, which owns about two million loans. “Clearly the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.”
Some lawmakers and housing advocates say such policies are unjust. “If your loan is owned by Fannie Mae, you get to stay in your home. If your loan is owned by someone else, you’re on the street,” said Mr. Taylor of the National Community Reinvestment Coalition. “These banks need to realize they’re in the property management business now, whether they like it or not.”
Some lawmakers have complained that evicting renters is unfair. In November, the Los Angeles City Council voted to draft a law that would bar financial institutions from evicting renters living in foreclosed homes.
Last year, the House passed a measure that would require the new owner of a foreclosed property to inform renters at least 90 days before an eviction. That bill failed to pass the Senate.
Law enforcement officers in some states have refused to evict residents of foreclosed properties. But Yadilka Torres, who rents a home in New Haven, Conn., for $775 a month, had no such protection. Fannie Mae took possession of her house in September, when it went into foreclosure.
Even though she was current on her rent, she received an eviction notice saying that she and her two young children would have to leave. She looked for another apartment but could not find anything affordable. Under Fannie Mae’s new policy, she will now be allowed to stay.
“I was feeling so nervous,” Ms. Torres said. “I’ve tried very hard to pay the rent and to pay all my bills, and it seemed unfair this was happening. I’m very grateful we won’t have to move.”
Fannie Mae Lets Renters Stay Despite Foreclosures
By CHARLES DUHIGG
In a move that provides relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market, the loan giant Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.
It is the first nationwide effort to provide widespread relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae — a government-controlled mortgage finance company — into a national landlord.
It may also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter relief. “There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. “It’s really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit.”
In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into thefuture.
Many financial institutions — including JPMorgan Chase and Bank of America — have policies to evict renters after foreclosure, company representatives said. Fannie Mae’s initiative is expected to initially benefit as many as 4,000 renters living in foreclosed homes owned by the company. Fannie Mae has traditionally only bought and sold mortgages. But when a loan held by the company goes into foreclosure, Fannie Mae gains ownership of the underlying property until it is resold to new investors.
Fannie Mae owned 67,500 properties in foreclosure at the end of September, according to the company’s most recent filings. Most of those were owner-occupied. Under the new policy, former owners will most likely not be eligible to rent homes they lost in foreclosure.
Last month, both Fannie Mae and Freddie Mac, the other government-controlled mortgage giant, temporarily suspended foreclosures and evictions until early January. Fannie Mae will now offer renters in foreclosed properties month-to-month leases until the property is resold.
A company representative said program details were still being worked out. “While it may be sometimes tougher for us to sell a property when people are in it, we understand that lots of people are in tough situations right now,” said Chuck Greener, a Fannie Mae spokesman. “If a renter wants to stay in their home, we’ll make that happen. And if they want to move out, in many cases we’ll help them pay for the move.”
A spokesman for Freddie Mac said that the company was looking at a number of options, including a program similar to Fannie Mae’s, but that no decisions had been made. The companies’ regulator, James B. Lockhart of the Federal Housing Finance Agency, issued a statement on Sunday saying that he expected both companies to update their policies shortly regarding renters living in foreclosed properties.
Both Fannie Mae and Freddie Mac were taken over by Mr. Lockhart’s agency this year and now operate in aconservatorship. Representatives of some major banks said it was unclear if Fannie Mae’s new policy would prompt their institutions to change theirs. “We’re not in the business of managing rental properties, and we’re not in the business of being a landlord,” said Thomas Kelly, a spokesman for JP Morgan Chase, which owns about two million loans. “Clearly the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.”
Some lawmakers and housing advocates say such policies are unjust. “If your loan is owned by Fannie Mae, you get to stay in your home. If your loan is owned by someone else, you’re on the street,” said Mr. Taylor of the National Community Reinvestment Coalition. “These banks need to realize they’re in the property management business now, whether they like it or not.”
Some lawmakers have complained that evicting renters is unfair. In November, the Los Angeles City Council voted to draft a law that would bar financial institutions from evicting renters living in foreclosed homes.
Last year, the House passed a measure that would require the new owner of a foreclosed property to inform renters at least 90 days before an eviction. That bill failed to pass the Senate.
Law enforcement officers in some states have refused to evict residents of foreclosed properties. But Yadilka Torres, who rents a home in New Haven, Conn., for $775 a month, had no such protection. Fannie Mae took possession of her house in September, when it went into foreclosure.
Even though she was current on her rent, she received an eviction notice saying that she and her two young children would have to leave. She looked for another apartment but could not find anything affordable. Under Fannie Mae’s new policy, she will now be allowed to stay.
“I was feeling so nervous,” Ms. Torres said. “I’ve tried very hard to pay the rent and to pay all my bills, and it seemed unfair this was happening. I’m very grateful we won’t have to move.”
Tuesday, December 9, 2008
Rise In First Time Home Buyers
Buyers, Long-Term Plans NAR Home Buyer and Seller Survey Shows Rise in First-Time Buyers
ORLANDO, November 08, 2008
The latest consumer survey of home buyers and sellers shows first-time buyers have risen in market share and plan to own their homes longer than buyers in the past. The study was released here today at the 2008 REALTORS® Conference & Expo.
The 2008 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, marketing, preferences and experiences of home buyers and sellers.
Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. “First-time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home,” he said. “Given low home prices, plentiful supply and affordable interest rates, it’s been an optimal time for entry-level buyers with a long-term view.
“Considering the temporary first-time buyer tax credit and improvements to the FHA loan program, we expect stronger entry-level activity as the flow of credit improves – that, in turn, should free more existing owners to make a trade in 2009.”
The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006. “Although modest, this is a meaningful gain for the 12-month period ending at the close of June, and more recent independent data show a stronger uptrend in first-time buyers who are helping to reduce excess inventory,” Yun said.*
According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.
The median downpayment by first-time buyers was 4 percent, up from 2 percent in 2007; the number purchasing with no money down fell from 45 percent in 2007 to 34 percent in the current survey.
“The study covers transactions through the middle of 2008, so we can assume the downpayment numbers have shifted recently because credit tightened and no-downpayment loans all but disappeared around the close of the survey,” Yun explained.
Of first-time buyers who made a downpayment, 69 percent used savings and 26 percent received a gift from a friend or relative, typically from their parents. Another 7 percent received a loan from a relative or friend, while 16 percent tapped into a 401(k) fund, stocks or bonds. Ninety-two percent chose a fixed-rate mortgage.
NAR 2008 President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said consumers rely heavily on the expertise of real estate agents to navigate the market. “This is the biggest transaction most people are ever involved in, so the qualities they’re looking for in a real estate agent include reputation, honesty, integrity and knowledge of the market,” he said. “Both buyers and sellers want agents to provide context, advice and know-how. The vast majority would use their agent again or recommend their agent to others.”
Only 1 percent of sellers chose an agent based on his or her commission. Forty-six percent report the real estate agent initiated a discussion of compensation, while 24 percent of sellers brought up the topic and the agent was willing to negotiate the commission or fee. Thirteen percent of sellers did not know commissions and fees are negotiable.
Nearly nine out of 10 home buyers and sellers would definitely or probably use the same agent again or recommend him or her to others, consistent with the 2007 findings. The survey shows that 81 percent of home buyers and 84 percent sellers used a real estate professional, comparable to 2007.
Thirty-eight percent of sellers found their agent as a result of a referral, while 26 percent used the agent in a previous home purchase. Similarly, 43 percent of buyers relied on referrals to find an agent, while 18 percent of repeat buyers used an agent from a previous transaction.
The percentage of buyers who purchased a home in foreclosure jumped to 6 percent of transactions in the 2008 survey from 1 percent in 2007. Another 38 percent of buyers considered purchasing of a home in foreclosure but did not, primarily because they could not find the right home.
Commuting costs factored greatly in neighborhood selection, with 41 percent of buyers saying they were very important and another 39 percent saying transportation costs were somewhat important. “Since fuel costs began rising in the latter part of the survey period, it’s reasonable to assume they’ve become even more important to home buyers since,” Yun said. “We’ve heard from our members that commuting costs are playing a bigger role in buyers’ decisions.”
Environmentally friendly features also were important, cited by 90 percent of buyers. Heating and cooling costs were of primary importance, followed by energy efficient appliances and energy efficient lighting.
Buyers searched a median of 10 weeks and viewed 10 homes. Of buyers who used an agent, 61 percent chose a buyer’s representative. Nearly nine out of 10 consider their home a good investment, and almost half see it as a better investment than stocks. Fifteen percent of buyers own two or more homes.
The typical repeat buyer was 47 years old, earned $88,200, purchased a home costing $236,000 and plans to stay in that home for 10 years. Repeat buyers made a median downpayment of 15 percent, but 10 percent paid cash for their property.
The median age of home sellers was 47; income was $91,000. Three-quarters were married couples, had been in their home for six years and moved a median distance of 19 miles. Their home was on the market for eight weeks; 5 percent of sellers who also purchased a home reported selling their home in a short sale.
Forty-two percent of sellers offered incentives to attract buyers, such as assistance with closing costs or home warranty policies. The typical home sold for 96 percent of the listing price, and 86 percent of sellers were satisfied with the selling process. Fifty-two percent of sellers were trading up to a larger home, while 22 percent were downsizing.
The study found that 81 percent of sellers used full-service brokerage, in which real estate agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent chose limited services, which may include discount brokerage, and 9 percent used minimal service, such as simply listing a property on a multiple listing service. All of these types of services are provided by Realtors® as well as non-member agents and brokers. The results are identical to findings in 2007 and comparable to findings in 2006.
Primarily, sellers want agents to price their home competitively, market the property, find a buyer and sell within a specific timeframe.
Home buyers are consistent in their expectations of real estate agents. Buyers thought the most important agent services are helping find the right house, and negotiating sales terms and price. Because agents often are chosen based on a referral, or were used in a previous transaction, two-thirds of buyers contacted only one real estate agent in the search process.
Buyers used a variety of resources in searching for a home: 87 percent used the Internet, 85 percent used a real estate agent, 62 percent yard signs, 48 percent attended open houses and 47 percent looked at print or newspaper ads. Fewer buyers rely on a home book or magazine, home builders, television, billboards and relocation companies. Buyers most commonly start their search process online and then contact a real estate agent.
When asked where they first learned about the home purchased, 34 percent of buyers said a real estate agent; 32 percent the Internet; 15 percent from yard signs; 7 percent from a friend, neighbor or relative; 7 percent home builders; 3 percent a print or newspaper ad; 2 percent directly from the seller; and 1 percent a home book or magazine.
Eighty-seven percent of home buyers who used the Internet to search for a home purchased through a real estate agent, in contrast with 72 percent of non-Internet users who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
Local metropolitan multiple listing service Web sites were the most popular Internet resource, used by 60 percent of buyers, followed by Realtor.com, 48 percent; real estate company sites, 46 percent; real estate agent Web sites, 43 percent; for-sale-by-owner sites, 19 percent; and local newspaper sites, 11 percent; other categories were smaller.
Sixty-one percent of buyers are married couples, 20 percent are single women, 10 percent single men, 7 percent unmarried couples and 2 percent other. Twenty-six percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.
Seventy-eight percent of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing.
Fifty-five percent of all homes purchased were in a suburb or subdivision, 17 percent were in an urban area, 16 percent in a small town, 10 percent in a rural area and 2 percent in a resort or recreation area. The median distance from the previous residence was 12 miles.
The level of for-sale-by-owner transactions was 13 percent, up slightly from a record-low market share of 12 percent in both 2007 and 2006. The level of homes sold without professional representation has trended lower since reaching a cyclical peak of 18 percent in 1997.
A large number of these properties were not placed on the open market – 45 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances.
Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance is 7 percent – the rest are unrepresented sellers in private transactions. This matches the results in the 2007 study and marks a downtrend from 10 percent sold on the open market in 2004.
The median home price for sellers who used an agent was $211,000 vs. $153,000 for a home sold directly by an owner, but there were important differences between the two. Unassisted sellers were more likely to be in a rural area or small town where sellers are more likely to know potential buyers. In addition, the home was more likely to be a mobile or manufactured home, and the owner’s income was lower than that of sellers using agents.
The most difficult tasks reported by unrepresented sellers are selling within the planned length of time, getting the right price, preparing the home for sale, and understanding and performing paperwork.
NAR mailed an eight-page questionnaire in August 2008 to a national sample of 133,000 home buyers and sellers who purchased their homes between July 2007 and June 2008, according to county records. It generated 10,053 usable responses; the adjusted response rate was 7.9 percent. All information is characteristic of the 12-month period ending in June 2008 with the exception of income data, which are for 2007. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.
# # #
*A separate report by HouseHunt, Inc., based on a survey of 2,000 real estate agents, shows 50 percent of homes purchased in the third quarter of 2008 were by first-time buyers.
© Copyright NATIONAL ASSOCIATION of REALTORS® Headquarters: 430 North Michigan Avenue, Chicago, IL 60611
DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
ORLANDO, November 08, 2008
The latest consumer survey of home buyers and sellers shows first-time buyers have risen in market share and plan to own their homes longer than buyers in the past. The study was released here today at the 2008 REALTORS® Conference & Expo.
The 2008 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, marketing, preferences and experiences of home buyers and sellers.
Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. “First-time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home,” he said. “Given low home prices, plentiful supply and affordable interest rates, it’s been an optimal time for entry-level buyers with a long-term view.
“Considering the temporary first-time buyer tax credit and improvements to the FHA loan program, we expect stronger entry-level activity as the flow of credit improves – that, in turn, should free more existing owners to make a trade in 2009.”
The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006. “Although modest, this is a meaningful gain for the 12-month period ending at the close of June, and more recent independent data show a stronger uptrend in first-time buyers who are helping to reduce excess inventory,” Yun said.*
According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.
The median downpayment by first-time buyers was 4 percent, up from 2 percent in 2007; the number purchasing with no money down fell from 45 percent in 2007 to 34 percent in the current survey.
“The study covers transactions through the middle of 2008, so we can assume the downpayment numbers have shifted recently because credit tightened and no-downpayment loans all but disappeared around the close of the survey,” Yun explained.
Of first-time buyers who made a downpayment, 69 percent used savings and 26 percent received a gift from a friend or relative, typically from their parents. Another 7 percent received a loan from a relative or friend, while 16 percent tapped into a 401(k) fund, stocks or bonds. Ninety-two percent chose a fixed-rate mortgage.
NAR 2008 President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said consumers rely heavily on the expertise of real estate agents to navigate the market. “This is the biggest transaction most people are ever involved in, so the qualities they’re looking for in a real estate agent include reputation, honesty, integrity and knowledge of the market,” he said. “Both buyers and sellers want agents to provide context, advice and know-how. The vast majority would use their agent again or recommend their agent to others.”
Only 1 percent of sellers chose an agent based on his or her commission. Forty-six percent report the real estate agent initiated a discussion of compensation, while 24 percent of sellers brought up the topic and the agent was willing to negotiate the commission or fee. Thirteen percent of sellers did not know commissions and fees are negotiable.
Nearly nine out of 10 home buyers and sellers would definitely or probably use the same agent again or recommend him or her to others, consistent with the 2007 findings. The survey shows that 81 percent of home buyers and 84 percent sellers used a real estate professional, comparable to 2007.
Thirty-eight percent of sellers found their agent as a result of a referral, while 26 percent used the agent in a previous home purchase. Similarly, 43 percent of buyers relied on referrals to find an agent, while 18 percent of repeat buyers used an agent from a previous transaction.
The percentage of buyers who purchased a home in foreclosure jumped to 6 percent of transactions in the 2008 survey from 1 percent in 2007. Another 38 percent of buyers considered purchasing of a home in foreclosure but did not, primarily because they could not find the right home.
Commuting costs factored greatly in neighborhood selection, with 41 percent of buyers saying they were very important and another 39 percent saying transportation costs were somewhat important. “Since fuel costs began rising in the latter part of the survey period, it’s reasonable to assume they’ve become even more important to home buyers since,” Yun said. “We’ve heard from our members that commuting costs are playing a bigger role in buyers’ decisions.”
Environmentally friendly features also were important, cited by 90 percent of buyers. Heating and cooling costs were of primary importance, followed by energy efficient appliances and energy efficient lighting.
Buyers searched a median of 10 weeks and viewed 10 homes. Of buyers who used an agent, 61 percent chose a buyer’s representative. Nearly nine out of 10 consider their home a good investment, and almost half see it as a better investment than stocks. Fifteen percent of buyers own two or more homes.
The typical repeat buyer was 47 years old, earned $88,200, purchased a home costing $236,000 and plans to stay in that home for 10 years. Repeat buyers made a median downpayment of 15 percent, but 10 percent paid cash for their property.
The median age of home sellers was 47; income was $91,000. Three-quarters were married couples, had been in their home for six years and moved a median distance of 19 miles. Their home was on the market for eight weeks; 5 percent of sellers who also purchased a home reported selling their home in a short sale.
Forty-two percent of sellers offered incentives to attract buyers, such as assistance with closing costs or home warranty policies. The typical home sold for 96 percent of the listing price, and 86 percent of sellers were satisfied with the selling process. Fifty-two percent of sellers were trading up to a larger home, while 22 percent were downsizing.
The study found that 81 percent of sellers used full-service brokerage, in which real estate agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent chose limited services, which may include discount brokerage, and 9 percent used minimal service, such as simply listing a property on a multiple listing service. All of these types of services are provided by Realtors® as well as non-member agents and brokers. The results are identical to findings in 2007 and comparable to findings in 2006.
Primarily, sellers want agents to price their home competitively, market the property, find a buyer and sell within a specific timeframe.
Home buyers are consistent in their expectations of real estate agents. Buyers thought the most important agent services are helping find the right house, and negotiating sales terms and price. Because agents often are chosen based on a referral, or were used in a previous transaction, two-thirds of buyers contacted only one real estate agent in the search process.
Buyers used a variety of resources in searching for a home: 87 percent used the Internet, 85 percent used a real estate agent, 62 percent yard signs, 48 percent attended open houses and 47 percent looked at print or newspaper ads. Fewer buyers rely on a home book or magazine, home builders, television, billboards and relocation companies. Buyers most commonly start their search process online and then contact a real estate agent.
When asked where they first learned about the home purchased, 34 percent of buyers said a real estate agent; 32 percent the Internet; 15 percent from yard signs; 7 percent from a friend, neighbor or relative; 7 percent home builders; 3 percent a print or newspaper ad; 2 percent directly from the seller; and 1 percent a home book or magazine.
Eighty-seven percent of home buyers who used the Internet to search for a home purchased through a real estate agent, in contrast with 72 percent of non-Internet users who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
Local metropolitan multiple listing service Web sites were the most popular Internet resource, used by 60 percent of buyers, followed by Realtor.com, 48 percent; real estate company sites, 46 percent; real estate agent Web sites, 43 percent; for-sale-by-owner sites, 19 percent; and local newspaper sites, 11 percent; other categories were smaller.
Sixty-one percent of buyers are married couples, 20 percent are single women, 10 percent single men, 7 percent unmarried couples and 2 percent other. Twenty-six percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.
Seventy-eight percent of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing.
Fifty-five percent of all homes purchased were in a suburb or subdivision, 17 percent were in an urban area, 16 percent in a small town, 10 percent in a rural area and 2 percent in a resort or recreation area. The median distance from the previous residence was 12 miles.
The level of for-sale-by-owner transactions was 13 percent, up slightly from a record-low market share of 12 percent in both 2007 and 2006. The level of homes sold without professional representation has trended lower since reaching a cyclical peak of 18 percent in 1997.
A large number of these properties were not placed on the open market – 45 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances.
Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance is 7 percent – the rest are unrepresented sellers in private transactions. This matches the results in the 2007 study and marks a downtrend from 10 percent sold on the open market in 2004.
The median home price for sellers who used an agent was $211,000 vs. $153,000 for a home sold directly by an owner, but there were important differences between the two. Unassisted sellers were more likely to be in a rural area or small town where sellers are more likely to know potential buyers. In addition, the home was more likely to be a mobile or manufactured home, and the owner’s income was lower than that of sellers using agents.
The most difficult tasks reported by unrepresented sellers are selling within the planned length of time, getting the right price, preparing the home for sale, and understanding and performing paperwork.
NAR mailed an eight-page questionnaire in August 2008 to a national sample of 133,000 home buyers and sellers who purchased their homes between July 2007 and June 2008, according to county records. It generated 10,053 usable responses; the adjusted response rate was 7.9 percent. All information is characteristic of the 12-month period ending in June 2008 with the exception of income data, which are for 2007. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.
# # #
*A separate report by HouseHunt, Inc., based on a survey of 2,000 real estate agents, shows 50 percent of homes purchased in the third quarter of 2008 were by first-time buyers.
© Copyright NATIONAL ASSOCIATION of REALTORS® Headquarters: 430 North Michigan Avenue, Chicago, IL 60611
DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
YOUR MONEY
It May Be Time to Think About Buying a House
By RON LIEBER
Published: December 5, 2008
Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.
Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.
Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.
That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.
Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.
If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.
But if you are a potential first-time buyer yourself, or lending or giving the down payment to one, you are probably as frightened as you are tempted by all the “For Sale” signs that have become “On Sale” signs. So let’s quickly review some of the still-grim pricing data in certain areas — and consider the reasoning offered up by first-time buyers who have forged ahead anyhow.
As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines. The verdict was that buyers in 33 of the markets could see a decline by 2012, including potential six-figure drops on an average home in the New York City, Los Angeles, San Francisco and Seattle metropolitan areas.
This is obviously scary. (I’ve linked to the study, a joint effort of the Center for Economic and Policy Research and the National Low Income Housing Coalition, from the version of this article at nytimes.com/yourmoney.) It’s worth noting, however, that these predictions came before the government made its most recent move to reduce borrowing costs.
Also, the price projections in the study are based, in part, on the fact that the ratio of purchase prices to annual rents is still higher in many areas than the historical average, which is roughly 15 times rents. While past figures may well have some predictive value, I have never been convinced that first-time buyers compare a home that they could own and one that they would rent in purely or even primarily economic terms.
When Jaime and Michael Proman moved this fall to Minneapolis, his hometown, from New York City, they craved a different sort of life after two years together in a 450-square-foot studio apartment. “We didn’t want a sterile apartment feel,” said Mr. Proman, who is 28 (his wife is 26). “We wanted something that was permanent and very much a reflection of us.”
The fact is, in many parts of the country there are few if any attractive rentals for people looking to put down roots and enjoy the sort of amenities they may spot on cable television home improvement shows. Comparing a rental with a place that you may own seems almost pointless in these situations, especially for those who are now grown up enough to want to make their own decisions about décor without consulting the landlord.
Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.
You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.
John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.
While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable. A. C. Panella, who teaches communications at Pasadena City College in California, waited until she had a tenure-track job before buying a home in the Highland Park section of Los Angeles with her partner, Amy Goldman, a lawyer for a nonprofit organization. “We could afford the mortgage payment on one salary, were something to come up,” Ms. Panella, 31, said. “It’s really about being able to stay within our means.”
For many first-time home buyers, that philosophy stretches to the down payment, too. Ms. Panella and her partner put down 20 percent when they bought their home in September, as did the Promans when they bought their home in the Lowry Hill neighborhood of Minneapolis.
Alison Nowak, 29, put just 3 percent down on a Federal Housing Administration-backed loan last month when she and her partner, Lacey Mamak, bought a $149,900, 800-square-foot home several miles south of where the Promans live. “Anything that is an opportunity also has a bit of risk,” she said. Her house was in foreclosure before a plumber bought it and fixed it up. “One way we mitigated it was that we bought a really tiny house in a very good neighborhood.”
One other strategy might be to buy new instead of used. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, says he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.
Finally, allow yourself to consider how it would feel if you bought and then prices dropped another 10 or 15 percent. It might not bother you if you plan to stick around. Plenty of people seem to be making a longer commitment to their homes. According to a survey that the National Association of Realtors released last month, typical first-time buyers plan to stay in their home 10 years, up from 7 last year.
Perhaps people are more aware that they will not be able to build equity as rapidly as others did in the real estate boom. Or they simply have more confidence in hard, hometown assets now than in other markets.
“We wouldn’t let another decline bother us,” said Michael Proman. “You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”
Ready to buy, or waiting it out? Post a comment at nytimes.com/yourmoney or write to rlieber@nytimes.com.
More Articles in Business » A version of this article appeared in print on December 6, 2008, on page B1 of the New York edition.
It May Be Time to Think About Buying a House
By RON LIEBER
Published: December 5, 2008
Five or 10 years from now, when the financial crisis has ended and housing prices are up smartly once more, we will look in the rearview mirror and realize that we missed a golden age for first-time home buyers.
Then, everyone who sat on their down payment savings accounts for a few years too long will kick themselves for not taking advantage of what may turn out to be the buying opportunity of a lifetime for those who can qualify for a mortgage.
Unfortunately, we do not know when this golden age will begin, because we will be able to identify a bottom to the housing market only with the benefit of hindsight. But as it does with the stock market, the moment will probably arrive when everyone is feeling the most pessimistic.
That moment is certainly getting closer. Housing prices have fallen drastically from their peak levels in many areas of the country. Rates on 30-year fixed-rate mortgages are already close to 5.5 percent, and this week there were suggestions that the federal government might try to drive them down to 4.5 percent, a truly incredible figure to be able to lock in for three decades.
Meanwhile, first-time home buyers have the same advantage they have always had, which is that they do not have to sell their old place before buying a new one. That is an added advantage in areas where many available houses simply are not moving, because the people trying to sell them will not be bidding against you.
If you’re hoping for a recovery in the housing market, you ought to be cheering on the first-time home buyers. When they purchase homes, their sellers are free to move on or move up, stimulating further sales.
But if you are a potential first-time buyer yourself, or lending or giving the down payment to one, you are probably as frightened as you are tempted by all the “For Sale” signs that have become “On Sale” signs. So let’s quickly review some of the still-grim pricing data in certain areas — and consider the reasoning offered up by first-time buyers who have forged ahead anyhow.
As is always the case with real estate, much depends on location. One study, “The Changing Prospects for Building Home Equity,” tries to predict where today’s first-time buyers in the 100 biggest metropolitan areas may actually have less home equity by 2012 as a result of continued price declines. The verdict was that buyers in 33 of the markets could see a decline by 2012, including potential six-figure drops on an average home in the New York City, Los Angeles, San Francisco and Seattle metropolitan areas.
This is obviously scary. (I’ve linked to the study, a joint effort of the Center for Economic and Policy Research and the National Low Income Housing Coalition, from the version of this article at nytimes.com/yourmoney.) It’s worth noting, however, that these predictions came before the government made its most recent move to reduce borrowing costs.
Also, the price projections in the study are based, in part, on the fact that the ratio of purchase prices to annual rents is still higher in many areas than the historical average, which is roughly 15 times rents. While past figures may well have some predictive value, I have never been convinced that first-time buyers compare a home that they could own and one that they would rent in purely or even primarily economic terms.
When Jaime and Michael Proman moved this fall to Minneapolis, his hometown, from New York City, they craved a different sort of life after two years together in a 450-square-foot studio apartment. “We didn’t want a sterile apartment feel,” said Mr. Proman, who is 28 (his wife is 26). “We wanted something that was permanent and very much a reflection of us.”
The fact is, in many parts of the country there are few if any attractive rentals for people looking to put down roots and enjoy the sort of amenities they may spot on cable television home improvement shows. Comparing a rental with a place that you may own seems almost pointless in these situations, especially for those who are now grown up enough to want to make their own decisions about décor without consulting the landlord.
Still, for anyone feeling the urge to buy, a number of practical considerations have changed in the last year or two. The basics are back, like spending no more than 28 percent of your pretax income on mortgage payments, taxes and insurance. Even if a lender does not hold you to this when you go in for preapproval, you should hold yourself to it.
You will also want to start now on any project to improve your credit score because it may take several months to get it above the 720 level that qualifies you for many of the best mortgage rates.
John Ulzheimer, president of consumer education for credit.com, a consumer credit information and application site, suggests starting to pay down and put away credit cards months before you apply for a loan. That is because the credit scoring system could penalize you if you use a lot of credit each month, even if you always pay in full. Also, check your three credit reports (it’s free) at annualcreditreport.com and dispute errors.
While no one can easily predict the likelihood of losing a job, Friday’s startling unemployment figures suggest the need for caution if you think you might be vulnerable. A. C. Panella, who teaches communications at Pasadena City College in California, waited until she had a tenure-track job before buying a home in the Highland Park section of Los Angeles with her partner, Amy Goldman, a lawyer for a nonprofit organization. “We could afford the mortgage payment on one salary, were something to come up,” Ms. Panella, 31, said. “It’s really about being able to stay within our means.”
For many first-time home buyers, that philosophy stretches to the down payment, too. Ms. Panella and her partner put down 20 percent when they bought their home in September, as did the Promans when they bought their home in the Lowry Hill neighborhood of Minneapolis.
Alison Nowak, 29, put just 3 percent down on a Federal Housing Administration-backed loan last month when she and her partner, Lacey Mamak, bought a $149,900, 800-square-foot home several miles south of where the Promans live. “Anything that is an opportunity also has a bit of risk,” she said. Her house was in foreclosure before a plumber bought it and fixed it up. “One way we mitigated it was that we bought a really tiny house in a very good neighborhood.”
One other strategy might be to buy new instead of used. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, says he believes that a steep drop-off in inventory of new homes is coming soon, thanks to a rapid decrease in home builder activity.
Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan.
Finally, allow yourself to consider how it would feel if you bought and then prices dropped another 10 or 15 percent. It might not bother you if you plan to stick around. Plenty of people seem to be making a longer commitment to their homes. According to a survey that the National Association of Realtors released last month, typical first-time buyers plan to stay in their home 10 years, up from 7 last year.
Perhaps people are more aware that they will not be able to build equity as rapidly as others did in the real estate boom. Or they simply have more confidence in hard, hometown assets now than in other markets.
“We wouldn’t let another decline bother us,” said Michael Proman. “You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”
Ready to buy, or waiting it out? Post a comment at nytimes.com/yourmoney or write to rlieber@nytimes.com.
More Articles in Business » A version of this article appeared in print on December 6, 2008, on page B1 of the New York edition.
Saturday, November 8, 2008
Port 121 at Seabridge Marina - Oxnard, CA
Port 121 at Seabridge Marina
Port 121 is part of the master planned community at Seabridge Marina. It is probably one of the last major residential communities to be approved by the California Coastal Commission for the foreseeable future. The Seabridge Marina takes advantage of breath-taking mountain views, easy ocean access and world class shopping, culture, and recreation within a few minutes drive.
The Channel Islands National Park is a 20 mile boat ride off the coast to the West.
As I write this on 8 November, 2008 the Weather Channel is reporting over 12 inches of rain in parts of Washington State, near-record snow fall in South Dakota with drifts high enough to trap home owners inside, and cold winds blowing through Chicago. Here in Ventura County we are enjoying clear, sunny skies, with temps in the high 70’s and low 80’s. It is not difficult to understand why people move here from all over the world.
Seabridge Marina new home communities are being offered at very competitive prices compared to the older harbor side communities in the LA Basin. If you like yachts, backdoor mooring for your yacht and a fabulous clubhouse / pool complex – Seabridge Marina is a real eye-opener. If you want a luxury loft style living space, Port 121 at Seabridge Marina is really the only game in town.
Port 121 is a Townhome complex made up of two buildings – Phase 1 and Phase 2 - fronting on the Marina Village area of Seabridge Marina. The first building – Phase 1 - is rapidly nearing completion with 35 units. Sales began in July and there are 24 units still available as of early November 2008. That means these homes are selling at a rate of about 3 a month. None of the units will be available for move-in until early 2009. These first 35 units are scheduled for completion sometime between January and March.
Phase 1
Phase 1 is a three story building with keypad security and elevator access. There are 8 floorplans which include first floor live/work units combining business office space with second floor quarters. The office units have already sold out in Phase 1. The majority of the units are residential and include single story and two story loft homes. These homes are being offered with a long list of luxury upgrades included standard. A few of these upgrades include:
- “Metro Maple” European style cabinetry
- Living Room and Master Bedroom pre-wired for plasma tv’s
- Video/Audio system including interior inside monitor for visitor communication and access
- Category 5 high speed data transmission wiring at all Bedrooms, Loft, Living Room and
Kitchen (per plan). Fiber optic cable with central hub included in each residence
Gourmet Kitchens include:
- Whirlpool Gold stainless appliance package, including:
- Self-Cleaning slide-in Gas Range
- 1.7 cubic ft. family capacity microwave hood combo
- 4-cycle, 5-level dishwasher with optional settings
- Granite Countertops with 6” backsplash
- Australian stainless steel sink with stylish Delta Chrome faucet
- In-Sink-Aerator disposal
- Spacious Pantries (per plan)
- Convenient Center Island (per plan)
Master Suite Baths include:
- Granite Countertops at both bath vanities.
- “Laguna” square sinks with striking chrome bath hardware and accessories
- Attractive tile shower/tub surrounds including shower enclosure with matching chrome
Accents.
This is just a very small sampling of the many upgrades included as standard with Phase 1. The cost of these upgrades has been heavily subsidized by the builder to get people interested.
Not all of these upgrades will be included as standard in Phase 2 !!!!
Also, it is important to know what is not included in either phase:
- You must buy your own Refrigerator
- Washer and Dryer - The washer and dryer must be a stackable unit.
Phase 2
Phase 2 will be twice as large as Phase 1 with 75 units and 4 stories. Where Phase 1 had only 2 water view units, Phase 2 will have 17 water view units. Phase 2 construction has been halted at the foundation and will not resume until sometime near 2011. These units are premium locations at Seabridge and the hope is to be able to offer them when the market is stronger and the builder can more easily justify higher prices and recoup some of the massive investments made prior to the current market slump. Prices will be anywhere from $100,000 to $200,000 more for the same floorplans currently available in Phase 1!
Phase 2 has been built immediately adjacent to harbor boat slips and features gated underground parking the same as in Phase 1. A fabulous harbor walkway runs immediately behind the property. Owners may have 1 or 2 parking spaces depending on the unit they purchase above them.
What is all this going to cost?
On the face of it, this community is a real bargain. You can actually buy a 1 bedroom, 1 bath for less than $350,000 ($349,990). The 6 plans still available in Phase 1 are priced from the $350,000 range for a Plan A on up to $599,990 for a Plan F single bedroom. You can also get a premium two bedroom Plan J with up to 1,732 sq ft for $550,990. The 3 other plans fall somewhere in between. So what we are talking about is a unit priced somewhere between $350,000 and roughly $600,000. Not bad at all for the seaside location, luxury amenities and brand new everything. But there are a few more considerations…
Mello-Roos
This is a new development. That means we can automatically expect a Mello-Roos (see my Mellos-Roos blog). When Proposition 13 passed in 1978, it severely limited the abilty of state and local governments to use property taxes to construct public facilities and services. Things like road maintenance, traffic lights, street lights, storm sewers, water mains, etc for new home developments. The Mello-Roos Community Facilities Act of 1982 enables “Community Facilities Districts (CFD’s) to be established by Counties, Cities and School Districts as a means of obtaining this community funding.
Simply put, a Mello-Roos allows local CFD’s to collect a monthly tax from new home buyers instead of through state property taxes. The developer does not have to pay for these services so they don’t usually include their cost in the home price. That allows the homebuyer to purchase their home at a lower price from the developer. The CFD Mello-Roos just makes sure that the new home buyer does pay for these services without violating state law or impacting the bottom line for the developer. This is a 30 year Mello-Roos at Port 121.
HOAs
HOAs are Home Owner Association dues for the upkeep and maintenance of the landscaping, security systems, walkways, recreation center, pool – you get the idea. These fees are based on the square footage of the units purchased and can range from $290/month for a plan A to as high as $381/month for a plan J. These are “developer subsidized for the first 4 years of home ownership,” after which the community HOA’s will revert to an additional $100 dollars a month for each plan.
It is also interesting to note that these HOA costs are actually inclusive of a Seabridge Marina HOA and a Port 121 HOA. The two are separate HOA’s paid concurrently by the new home owner.
Besides your principal and interest for your mortgage, there is a 1.25% Annual Ventura County Property Tax based on your Home Sales Price. Amount / 12 for monthly cost.
Mortgage Insurance is .0026 times the Loan Amount / 12 for monthly cost.
Plan Costs
Here is a little break down of the plan costs and parking available for Phase 1 units.
Plan/ HOA/ Mello-Roos/ Total/Month/ # Parking Spaces
A/ $290/month/ $223/month/ = $513/month/ 1 space
B/ $335/ $263/ = $598/ 2
E/ $350/ $263/ = $613/ 2
F/ $335/ $263/ = $598/ 1
G/ $365/ $263/ = $628/ 2
J/ $381/ $340/ = $721/ 2
So what does all this add up to?
The least expensive Port 121 unit is the single bedroom Plan A. Your mortgage amount will depend upon the amount you borrow to finance this home. There are a number of conventional and FHA programs to help first time home buyers into a mortgage. Some will pay a portion of the down payment and even most of the closing costs when combined with CAL-HFA programs. They probably won’t beat the incentive offered by the developer.
The developer is working with DHI Mortgage www.dhimortgage.com to offer an interested buyer several incentives. They will pay closing costs. These are costs which cannot be financed into the loan itself and can be considerable. Roughly $4,000 to $8,000 or more depending on your purchase price, credit rating, etc. (This is a shoot from the hip value – check with your lender.)
Another developer incentive to buy down the interest rate for purchasers to “around 6%”. Interest rates fluctuate daily, so this is a very rough rate.
These numbers will certainly rise over time with a $100 increase in the HOA guaranteed after 4 years. These are Phase 1 numbers only. Phase 2 purchase prices and associated monthly HOA and Mello-Roos will most certainly be much higher.
-All offers must be accompanied by a $7500 deposit.
-No contingent offers will be accepted. If you need to sell a property in order to
purchase this one. It cannot be a contingency of purchase.
-There is a normal (required by law) 3 day right of recission on any offer made.
Summary
This is a luxury community and it really is going to be tough for a first time home buyer to manage. For a larger family, Port 121 is going to be a tight squeeze with only 1 or 2 bedrooms. However, if you don’t want to mow your lawn or do any home maintenance at all, this is a very user friendly opportunity. If you are not concerned by the monthly costs, the homes are very comfortable. I’m told many are being purchased as second homes by investors and folks wanting a scenic get-away retreat from LA.
Make no mistake though, these are not economy homes by any definition.
I would hazard a guess that if you believe real estate is a cyclic market that will generally trend upwards in value, that land is not an unlimited quantity in Southern California, and that seaside properties are often in greater demand than similar homes further inland, you will find these homes to be a good value. Maybe a good long term investment as well.
Warmest Regards,
Mark Thorngren
mark@markthorngren.com
www.markthorngren.com
Free Realty Times Video Newsletter
(805) 504-0228
All of the figures used in this report were current as of the day written. I cannot guarantee the accuracy of any of the information presented beyond today. All prices and fees are subject to change without warning.
Port 121 is part of the master planned community at Seabridge Marina. It is probably one of the last major residential communities to be approved by the California Coastal Commission for the foreseeable future. The Seabridge Marina takes advantage of breath-taking mountain views, easy ocean access and world class shopping, culture, and recreation within a few minutes drive.
The Channel Islands National Park is a 20 mile boat ride off the coast to the West.
As I write this on 8 November, 2008 the Weather Channel is reporting over 12 inches of rain in parts of Washington State, near-record snow fall in South Dakota with drifts high enough to trap home owners inside, and cold winds blowing through Chicago. Here in Ventura County we are enjoying clear, sunny skies, with temps in the high 70’s and low 80’s. It is not difficult to understand why people move here from all over the world.
Seabridge Marina new home communities are being offered at very competitive prices compared to the older harbor side communities in the LA Basin. If you like yachts, backdoor mooring for your yacht and a fabulous clubhouse / pool complex – Seabridge Marina is a real eye-opener. If you want a luxury loft style living space, Port 121 at Seabridge Marina is really the only game in town.
Port 121 is a Townhome complex made up of two buildings – Phase 1 and Phase 2 - fronting on the Marina Village area of Seabridge Marina. The first building – Phase 1 - is rapidly nearing completion with 35 units. Sales began in July and there are 24 units still available as of early November 2008. That means these homes are selling at a rate of about 3 a month. None of the units will be available for move-in until early 2009. These first 35 units are scheduled for completion sometime between January and March.
Phase 1
Phase 1 is a three story building with keypad security and elevator access. There are 8 floorplans which include first floor live/work units combining business office space with second floor quarters. The office units have already sold out in Phase 1. The majority of the units are residential and include single story and two story loft homes. These homes are being offered with a long list of luxury upgrades included standard. A few of these upgrades include:
- “Metro Maple” European style cabinetry
- Living Room and Master Bedroom pre-wired for plasma tv’s
- Video/Audio system including interior inside monitor for visitor communication and access
- Category 5 high speed data transmission wiring at all Bedrooms, Loft, Living Room and
Kitchen (per plan). Fiber optic cable with central hub included in each residence
Gourmet Kitchens include:
- Whirlpool Gold stainless appliance package, including:
- Self-Cleaning slide-in Gas Range
- 1.7 cubic ft. family capacity microwave hood combo
- 4-cycle, 5-level dishwasher with optional settings
- Granite Countertops with 6” backsplash
- Australian stainless steel sink with stylish Delta Chrome faucet
- In-Sink-Aerator disposal
- Spacious Pantries (per plan)
- Convenient Center Island (per plan)
Master Suite Baths include:
- Granite Countertops at both bath vanities.
- “Laguna” square sinks with striking chrome bath hardware and accessories
- Attractive tile shower/tub surrounds including shower enclosure with matching chrome
Accents.
This is just a very small sampling of the many upgrades included as standard with Phase 1. The cost of these upgrades has been heavily subsidized by the builder to get people interested.
Not all of these upgrades will be included as standard in Phase 2 !!!!
Also, it is important to know what is not included in either phase:
- You must buy your own Refrigerator
- Washer and Dryer - The washer and dryer must be a stackable unit.
Phase 2
Phase 2 will be twice as large as Phase 1 with 75 units and 4 stories. Where Phase 1 had only 2 water view units, Phase 2 will have 17 water view units. Phase 2 construction has been halted at the foundation and will not resume until sometime near 2011. These units are premium locations at Seabridge and the hope is to be able to offer them when the market is stronger and the builder can more easily justify higher prices and recoup some of the massive investments made prior to the current market slump. Prices will be anywhere from $100,000 to $200,000 more for the same floorplans currently available in Phase 1!
Phase 2 has been built immediately adjacent to harbor boat slips and features gated underground parking the same as in Phase 1. A fabulous harbor walkway runs immediately behind the property. Owners may have 1 or 2 parking spaces depending on the unit they purchase above them.
What is all this going to cost?
On the face of it, this community is a real bargain. You can actually buy a 1 bedroom, 1 bath for less than $350,000 ($349,990). The 6 plans still available in Phase 1 are priced from the $350,000 range for a Plan A on up to $599,990 for a Plan F single bedroom. You can also get a premium two bedroom Plan J with up to 1,732 sq ft for $550,990. The 3 other plans fall somewhere in between. So what we are talking about is a unit priced somewhere between $350,000 and roughly $600,000. Not bad at all for the seaside location, luxury amenities and brand new everything. But there are a few more considerations…
Mello-Roos
This is a new development. That means we can automatically expect a Mello-Roos (see my Mellos-Roos blog). When Proposition 13 passed in 1978, it severely limited the abilty of state and local governments to use property taxes to construct public facilities and services. Things like road maintenance, traffic lights, street lights, storm sewers, water mains, etc for new home developments. The Mello-Roos Community Facilities Act of 1982 enables “Community Facilities Districts (CFD’s) to be established by Counties, Cities and School Districts as a means of obtaining this community funding.
Simply put, a Mello-Roos allows local CFD’s to collect a monthly tax from new home buyers instead of through state property taxes. The developer does not have to pay for these services so they don’t usually include their cost in the home price. That allows the homebuyer to purchase their home at a lower price from the developer. The CFD Mello-Roos just makes sure that the new home buyer does pay for these services without violating state law or impacting the bottom line for the developer. This is a 30 year Mello-Roos at Port 121.
HOAs
HOAs are Home Owner Association dues for the upkeep and maintenance of the landscaping, security systems, walkways, recreation center, pool – you get the idea. These fees are based on the square footage of the units purchased and can range from $290/month for a plan A to as high as $381/month for a plan J. These are “developer subsidized for the first 4 years of home ownership,” after which the community HOA’s will revert to an additional $100 dollars a month for each plan.
It is also interesting to note that these HOA costs are actually inclusive of a Seabridge Marina HOA and a Port 121 HOA. The two are separate HOA’s paid concurrently by the new home owner.
Besides your principal and interest for your mortgage, there is a 1.25% Annual Ventura County Property Tax based on your Home Sales Price. Amount / 12 for monthly cost.
Mortgage Insurance is .0026 times the Loan Amount / 12 for monthly cost.
Plan Costs
Here is a little break down of the plan costs and parking available for Phase 1 units.
Plan/ HOA/ Mello-Roos/ Total/Month/ # Parking Spaces
A/ $290/month/ $223/month/ = $513/month/ 1 space
B/ $335/ $263/ = $598/ 2
E/ $350/ $263/ = $613/ 2
F/ $335/ $263/ = $598/ 1
G/ $365/ $263/ = $628/ 2
J/ $381/ $340/ = $721/ 2
So what does all this add up to?
The least expensive Port 121 unit is the single bedroom Plan A. Your mortgage amount will depend upon the amount you borrow to finance this home. There are a number of conventional and FHA programs to help first time home buyers into a mortgage. Some will pay a portion of the down payment and even most of the closing costs when combined with CAL-HFA programs. They probably won’t beat the incentive offered by the developer.
The developer is working with DHI Mortgage www.dhimortgage.com to offer an interested buyer several incentives. They will pay closing costs. These are costs which cannot be financed into the loan itself and can be considerable. Roughly $4,000 to $8,000 or more depending on your purchase price, credit rating, etc. (This is a shoot from the hip value – check with your lender.)
Another developer incentive to buy down the interest rate for purchasers to “around 6%”. Interest rates fluctuate daily, so this is a very rough rate.
These numbers will certainly rise over time with a $100 increase in the HOA guaranteed after 4 years. These are Phase 1 numbers only. Phase 2 purchase prices and associated monthly HOA and Mello-Roos will most certainly be much higher.
-All offers must be accompanied by a $7500 deposit.
-No contingent offers will be accepted. If you need to sell a property in order to
purchase this one. It cannot be a contingency of purchase.
-There is a normal (required by law) 3 day right of recission on any offer made.
Summary
This is a luxury community and it really is going to be tough for a first time home buyer to manage. For a larger family, Port 121 is going to be a tight squeeze with only 1 or 2 bedrooms. However, if you don’t want to mow your lawn or do any home maintenance at all, this is a very user friendly opportunity. If you are not concerned by the monthly costs, the homes are very comfortable. I’m told many are being purchased as second homes by investors and folks wanting a scenic get-away retreat from LA.
Make no mistake though, these are not economy homes by any definition.
I would hazard a guess that if you believe real estate is a cyclic market that will generally trend upwards in value, that land is not an unlimited quantity in Southern California, and that seaside properties are often in greater demand than similar homes further inland, you will find these homes to be a good value. Maybe a good long term investment as well.
Warmest Regards,
Mark Thorngren
mark@markthorngren.com
www.markthorngren.com
Free Realty Times Video Newsletter
(805) 504-0228
All of the figures used in this report were current as of the day written. I cannot guarantee the accuracy of any of the information presented beyond today. All prices and fees are subject to change without warning.
Monday, October 13, 2008
What's Going On At Victoria Estates in Oxnard, CA
Victoria Estates In Oxnard, CA
Think of a premium community with all the amenities including a guarded gate, swimming pool, spa, recreation building and parks - built between late 2002 and 2004. Put it next to an award winning golf course that also just happens to be adjacent to where the Dallas Cowboys practice in late summer. Fill the sky with fresh air from the Pacific Ocean about a mile away and cool breezes which defeat the need for air conditioning. Put two major yachting harbors with restaurants and shopping - equidistant to the North and South about 4 miles. Now take these gorgeous homes which recently were listed from the high $800K’s to the $1.3M range and subtract $100K to $200K from their sales price – nothing is currently listed above $812,900 and one home is currently being listed for $550,000!
That’s Victoria Estates.
Today is October 13, 2008 and I have just finished looking at everything which has come to the market in Victoria Estates since October 1, 2007. There were 65 properties listed in the local MLS (Multiple Listing Service). By my count, there were an almost equal number of Foreclosures and Short Sales (33) as there were conventional home sales (32).
These are truly tragic numbers for home owners and sellers. They accurately reflect the time period during which home mortgages were given to anyone with a pulse, often with variable rate clauses which nobody ever expected would activate. Get behind on your mortgage? Just refinance in a year and drop your rate. Worst case, just put it on the market and it will sell in a day.
Then things changed. The new Fed chairman raised interest rates 9 times in one six month period. Home prices began to soften as fewer folks could afford the new mortgage rates and the high home prices. Homes took longer to sell because home owners knew their homes were worth and insane amount of money and would not compromise. Gradually, home owners began to see their interest rates adjust upwards on their new homes and they were suddenly upside down on their mortgages. They owed more than they could easily sell their homes for. Still, sellers refused to “give away their homes.”
The rest is history. Home owners couldn’t refinance to a lower mortgage rate on a home that was worth less than when they purchased it after only a year or two. Banks couldn’t make as many stated income loans and found they needed to tighten up their lending limits. This made it harder for folks to buy homes from the people desperately trying to sell. Banks began to pull out of escrows that had been approved just days earlier. We lost 1/3 of our mortgage lenders in the fall of 2007.
Victoria Estates is the poster child of the Real Estate Meltdown.
Victoria Estates is a buyers dream. There are 5 tracts within the Victoria Estates Development.
River Glen 1 This tract has had 14 homes listed during the last year. HOA’s range from $120/Month to $144/Month.
River Glen 2 This tract has had 4 homes listed during the last year. HOA’s range from $140 to $144/Month.
Glen Eagles This tract has had 13 homes listed during the last year. HOA’s range from $120 to $144/Month.
Legacy This tract has had 24 homes listed during the last year. HOA’s range from $120 earlier this year to as high as $147 this year.
Pacifica This tract has had 10 homes listed during the last year. HOA’s range from $120 late last year to $150/Month late this year.
I have spent considerable time in the last several months escorting astute investors, bargain hunting new home buyers and folks who just want to live somewhere special into Victoria Estates. I don’t have a crystal ball, but I don’t think these beautiful homes will continue to fall in price forever. In a shorter time than most “experts” predict, I think we’ll see home values in this development firm and turn.
There are 15 homes currently listed between $550,000 and $812,900. Many are short sales which I do not personally recommend, but they can be done. Ask me why I don't like short sales and I can recount a number of horror stories. Still there are some reasonable opportunities. There 8 homes currently in escrow ranging in price from $599,000 for 2,900 sq ft, to $830,000 for a home just under 4,500 sq ft.
If you are not from California these prices will shock you. If you are from California and are aware of what near ocean properties sell for, these prices will shock you as well.
17 homes have sold in the last 12 months for prices ranging from $570,000 this last April, to a home which sold for $875,000 a month earlier in March! Let me illustrate how volatile our market is with an example of our market right now. The last 3 homes which sold in Victoria Estates were all sold in July. They were all 4 bedroom and 3 bath homes built in 2003 and they sold within 3 days of each other.
The first was a 2,882 sq ft home sold July 22 for $704,000.
The next was a smaller 2,464 sq ft home sold July 25 for $605,000. That is $100,000 less and only about 400 sq ft smaller.
The last home was a larger 3,137 sq ft home sold July 25 for $640,000, but with a smaller yard. Still, that is a $64,000 lower price for a larger home!
The 2 lower priced homes were on 7500 sq ft lots while the higher priced home was on a 12,000 sq ft lot.
There were 10 properties which were cancelled during escrow and they ranged in price from $629,000 for a 3,300 sq ft home, to a home originally offered for $1,300,000 for 4,000 sq ft. It was reduced in price after 188 days on the market to $800,000 before it was cancelled. That might have proved to be an unfortunate decision as home prices over the last year have dropped to a median $704,000 in Victoria Estates.
There were also 13 homes which became expired listings in the last year. Most homes are listed for a six month period, but can be listed for any time frame the seller desires and the listing agent will agree to. These homes were listed for $679,000 for a 2,700 sq ft home on up to 1,099,000 for a 3,100 sq ft home. Most likely, these folks can afford to wait out the market.
It is interesting to note that 25 of the properties this year, of the 65 that were listed, did not sell but were cancelled, expired or released from showing.
Again, 11 homes were foreclosures and 22 were/are short sales. Those numbers just totally destroy any normal market price supports.
It’s definitely hunting season for buyers at Victoria Estates.
Just as an aside, I have also checked the rental market from what is on the MLS. These are probably not all the rentals for the year - a lot of that happens outside of the MLS. There were 9 homes listed for rent, ranging from $2,800/Month for a 2,700 sq ft home, to $3,500/Month for a 3,300 sq ft home. Both of those homes are currently available along with a 3,600 sq ft home for $3,000/Month.
Some investors are purchasing these homes and renting them back to their former owners. Everyone wins a bit in that situation. Families can keep their kids in school and maybe buy some time to decide their next move. Investors can rent the home at a bargain rate to someone who will very likely take good care of their investment.
I hope you have found this information useful. All the figures and information used for this report were drawn from my own personal experience working in Victoria Estates and from the information available to all realtors in the Ventura County Regional Data Share. I would be happy to share CMA’s for any of the 5 tracts with interested folks and can even send you mapped reports of these tracts as well. Please know that I do value your comments and suggestions.
Please feel free to contact me for additional information on these homes at:
mark@markthorngren.com or call me direct at: (805) 504-0228
You are welcome to visit my website at http://www.markthorngren.com/ where you can also keep up with current mortgage and real estate news in a video format from RealtyTimes.com. It’s fun, informative and it updates nearly every day. Bookmark it and use it as often as you like.
It is important that you know, that I do have time for you, your family, friends and people you like who could use my help right now. Your introductions are my greatest compliment.
Warmest Regards,
Mark Thorngren
Tuesday, August 26, 2008
Can You Tell Me What a Mello-Roos Is
As always, today’s families recognize the importance of living in a community that’s as desirable as their home itself. Mello-Roos enables critical community facilities to be provided whenever they’re needed at a lower cost ultimately to homeowners. By doing so, Mello-Roos ensures a higher quality of life for every family in that community. Perhaps most importantly of all, Mello-Roos helps preserve the value of your new home investment.
Where did Mello-Roos Come From?
When Proposition 13 passed in 1978, it severely limited the ability of local governments to use property taxes to construct public facilities and services. As a result, Californians were forced to find new ways to fund public improvements in their respective locales.
The Mello-Roos Community Facilities Act of 1982 was co-authored by Senator Henry Mello of the Monterey area and Los Angeles assemblyman Mike Roos. Enacted by the California legislature, the Act enabled “Community Facilities Districts” (CFD’s) to be established by Counties, Cities and School Districts as a means of obtaining this crucial community funding. Today the colloquial name for the Facilities Act of 1982 is simply “Mello-Roos.”
What Public Facilities are Funded by Mello-Roos?
The Problem: Before Proposition 13, state and local governments used income collected through property taxes to build new roads, schools and other necessary community facilities. In order to continue building residential areas, these same governments were forced to require builders of new communities to pay for these public facilities. Consequently, these funds were added to the cost of the new homes. These price increases hurt new home buyers and fewer people were able to afford these higher priced homes.
The Solution: Since state funds are not available to provide the quality of facilities necessary in every community in California, Mello-Roos makes the acquisition of timely financing possible. In addition, Mello-Roos can provide financing for other vital community needs. These needs include the construction and maintenance of public roads, traffic light systems, storm sewers, water mains, police stations, fire stations, ambulance services, public libraries, recreational parks, museums and cultural facilities.
Now homeowners are paying for these improvements through their Mello-Roos Community District as part of their property taxes, spread out over 20 years or more instead of as an initial increase in their home purchase price.
How is Community Funding Provided?
Let’s say, for example, that plans for a new school are approved in your Community Facilities District. To finance the school, tax exempt municipal bonds are issued. These public bonds are repaid (or secured) over an extended time through the levy of a special tax (Mello-Roos) on properties that benefit from the facility. This tax is usually added to the annual property tax bills (over a 20-25 year period) of residences within the CFD.
Commercial and industrial property owners are also subject to Mello-Roos. All proceeds raised from Mello-Roos assessment must be used exclusively to finance the specific public facilities and/or services that were authorized in your CFD.
How Much Will I Be Assessed?
This will vary from one CFD to another. Typically, an adopted formula that relates to the size of the home (square footage or lot size) is used to determine the amount of an individual assessment. In general, the special taxes and assessments do not exceed 1% to 1.5% of the market value of new homes. Moreover, the total amount of all annual taxes (including property tax) usually does not exceed 2% to 2.5% of the home’s market value.
Will My Mello-Roos Tax Increase?
It can. This special tax can increase up to a maximum rate of 2% per year over a 25 years period. On the other hand, it’s possible that this tax will decrease, should state or other funds become available that could be used to reduce existing bond indebtedness, or be used to construct new facilities in lieu of additional bond sales.
Can I Choose How to Pay for Mello-Roos?
Yes. As already mentioned, the special assessment can be added to your property tax bills until your portion of the tax is paid off. A schedule of maximum special tax payments over a period of 25 years is available to homeowners prior to the close of escrow. Those who purchase a new home also have the option to pay for their Mello-Roos tax in it’s entirety at the time they buy. However, because statistics indicate that the average homeowner in California moves every 7 years, it’s often prudent to spread the payments over time.
Why Can’t Builders Bear the Cost of these Facilities?
They can. But ultimately, the builder must recover these considerable costs in the form of higher home prices. Commercial construction loans acquired by builders typically incur higher rates of interest than CFD financing, which accrues at significantly lower rates. That makes the Mello-Roos a cheaper option for you.
Does Mello-Roos Makes Sense?
Not all new home communities are affected by Mello-Roos special taxes. For example, sometimes a new neighborhood is built within existing communities. Because public facilities are already in place, they are not subject to Mello-Roos taxes. However, as cities expand into adjacent undeveloped areas and farmland, newer developments will continue to use the Mello-Roos device to finance improvements we all take for granted in our neighborhoods.
Mello-Roos lowers these costs a bit since CFD (Community Facilities Districts) financing is less expensive than what builders would have to charge to underwrite commercial loans.
So California voters approved Proposition 13 to lower their taxes. Our lawmakers took the constraints we imposed on State and local government spending and developed a way to fund all the infrastructure we expect in a new home development. They did it by collecting Mello-Roos assessments from those homeowners in new neighborhood developments instead of taxing all California voters. Wouldn't it be interesting to know how many of those new home owners voted for Proposition 13?
What’s the Bottom Line?
New home developments often advertise sale prices which do not emphasize special assessments like the Mello-Roos. Between HOA’s and Mello-Roos and other assessments, you can easily see an additional 2% monthly charge based on the sale price. Since this is not a developer added cost, but one that is imposed by local government, these homes look like huge bargains. Not entirely misleading, it is still a little bit like advertising a brand new car without the tires.
Check the fine print. This is your local Community Facilities District answer to Proposition 13. It is a way of coping with a difficult situation. Instead of the State, County or local Communities footing the costs for these street lamps and schools – you the new neighborhood homeowner become the bottom line.
Warmest Regards,
Mark Thorngren
Much of this article was shamelessly copied from title company reports. Namely Fidelity National Title Company and Chicago Title. Two very fine and naively trusting supporters of my business.
Special thanks to Tammie Coulter of Stewart Title Company for contributing material for this offering.
The preceding summaries are provided for informational purposes only. For a more comprehensive understanding of the legal/tax consequences of Mello-Roos, appropriate consultation is recommended with an attorney and / or a CPA for specific advice.
www.markthorngren.com
mark@markthorngren.com
(805) 504-0228
Where did Mello-Roos Come From?
When Proposition 13 passed in 1978, it severely limited the ability of local governments to use property taxes to construct public facilities and services. As a result, Californians were forced to find new ways to fund public improvements in their respective locales.
The Mello-Roos Community Facilities Act of 1982 was co-authored by Senator Henry Mello of the Monterey area and Los Angeles assemblyman Mike Roos. Enacted by the California legislature, the Act enabled “Community Facilities Districts” (CFD’s) to be established by Counties, Cities and School Districts as a means of obtaining this crucial community funding. Today the colloquial name for the Facilities Act of 1982 is simply “Mello-Roos.”
What Public Facilities are Funded by Mello-Roos?
The Problem: Before Proposition 13, state and local governments used income collected through property taxes to build new roads, schools and other necessary community facilities. In order to continue building residential areas, these same governments were forced to require builders of new communities to pay for these public facilities. Consequently, these funds were added to the cost of the new homes. These price increases hurt new home buyers and fewer people were able to afford these higher priced homes.
The Solution: Since state funds are not available to provide the quality of facilities necessary in every community in California, Mello-Roos makes the acquisition of timely financing possible. In addition, Mello-Roos can provide financing for other vital community needs. These needs include the construction and maintenance of public roads, traffic light systems, storm sewers, water mains, police stations, fire stations, ambulance services, public libraries, recreational parks, museums and cultural facilities.
Now homeowners are paying for these improvements through their Mello-Roos Community District as part of their property taxes, spread out over 20 years or more instead of as an initial increase in their home purchase price.
How is Community Funding Provided?
Let’s say, for example, that plans for a new school are approved in your Community Facilities District. To finance the school, tax exempt municipal bonds are issued. These public bonds are repaid (or secured) over an extended time through the levy of a special tax (Mello-Roos) on properties that benefit from the facility. This tax is usually added to the annual property tax bills (over a 20-25 year period) of residences within the CFD.
Commercial and industrial property owners are also subject to Mello-Roos. All proceeds raised from Mello-Roos assessment must be used exclusively to finance the specific public facilities and/or services that were authorized in your CFD.
How Much Will I Be Assessed?
This will vary from one CFD to another. Typically, an adopted formula that relates to the size of the home (square footage or lot size) is used to determine the amount of an individual assessment. In general, the special taxes and assessments do not exceed 1% to 1.5% of the market value of new homes. Moreover, the total amount of all annual taxes (including property tax) usually does not exceed 2% to 2.5% of the home’s market value.
Will My Mello-Roos Tax Increase?
It can. This special tax can increase up to a maximum rate of 2% per year over a 25 years period. On the other hand, it’s possible that this tax will decrease, should state or other funds become available that could be used to reduce existing bond indebtedness, or be used to construct new facilities in lieu of additional bond sales.
Can I Choose How to Pay for Mello-Roos?
Yes. As already mentioned, the special assessment can be added to your property tax bills until your portion of the tax is paid off. A schedule of maximum special tax payments over a period of 25 years is available to homeowners prior to the close of escrow. Those who purchase a new home also have the option to pay for their Mello-Roos tax in it’s entirety at the time they buy. However, because statistics indicate that the average homeowner in California moves every 7 years, it’s often prudent to spread the payments over time.
Why Can’t Builders Bear the Cost of these Facilities?
They can. But ultimately, the builder must recover these considerable costs in the form of higher home prices. Commercial construction loans acquired by builders typically incur higher rates of interest than CFD financing, which accrues at significantly lower rates. That makes the Mello-Roos a cheaper option for you.
Does Mello-Roos Makes Sense?
Not all new home communities are affected by Mello-Roos special taxes. For example, sometimes a new neighborhood is built within existing communities. Because public facilities are already in place, they are not subject to Mello-Roos taxes. However, as cities expand into adjacent undeveloped areas and farmland, newer developments will continue to use the Mello-Roos device to finance improvements we all take for granted in our neighborhoods.
Mello-Roos lowers these costs a bit since CFD (Community Facilities Districts) financing is less expensive than what builders would have to charge to underwrite commercial loans.
So California voters approved Proposition 13 to lower their taxes. Our lawmakers took the constraints we imposed on State and local government spending and developed a way to fund all the infrastructure we expect in a new home development. They did it by collecting Mello-Roos assessments from those homeowners in new neighborhood developments instead of taxing all California voters. Wouldn't it be interesting to know how many of those new home owners voted for Proposition 13?
What’s the Bottom Line?
New home developments often advertise sale prices which do not emphasize special assessments like the Mello-Roos. Between HOA’s and Mello-Roos and other assessments, you can easily see an additional 2% monthly charge based on the sale price. Since this is not a developer added cost, but one that is imposed by local government, these homes look like huge bargains. Not entirely misleading, it is still a little bit like advertising a brand new car without the tires.
Check the fine print. This is your local Community Facilities District answer to Proposition 13. It is a way of coping with a difficult situation. Instead of the State, County or local Communities footing the costs for these street lamps and schools – you the new neighborhood homeowner become the bottom line.
Warmest Regards,
Mark Thorngren
Much of this article was shamelessly copied from title company reports. Namely Fidelity National Title Company and Chicago Title. Two very fine and naively trusting supporters of my business.
Special thanks to Tammie Coulter of Stewart Title Company for contributing material for this offering.
The preceding summaries are provided for informational purposes only. For a more comprehensive understanding of the legal/tax consequences of Mello-Roos, appropriate consultation is recommended with an attorney and / or a CPA for specific advice.
www.markthorngren.com
mark@markthorngren.com
(805) 504-0228
Wednesday, July 23, 2008
Senator Feinstein Update on FHA Limits
Dear Mr. Thorngren:
Thank you for contacting me to express your support for permanently increasing the conforming loan limit. I appreciate the time you took to write and agree with you.
The Federal Housing Administration (FHA) plays an important role in insuring home mortgages for those in underserved communities. It is critical that FHA programs be modernized to provide more homebuyers and borrowers looking to refinance with the opportunity to obtain an FHA loan. This remains especially important in California where the cost of housing remains high. For homebuyers faced with so-called "jumbo loans" subject to higher interest rates, raising the government-sponsored enterprise (GSE) conforming loan limit will bring more liquidity to the market and lower interest rates.
On February 13, 2008, the President signed the Economic Stimulus Act of 2008 (H.R. 5140) into law. As the bill was being developed, I sent a letter to Senator Majority Leader Harry Reid (D-NV) expressing strong support for increasing the previous GSE conforming loan limit of $417,000 and the FHA loan limit of $362,790 to $729,750. While I am pleased that a temporary increase was included in the bill, the new loan limits will expire on December 31, 2008.
On July 11, 2008, the Senate passed the "Foreclosure Prevention Act of 2008," (H.R. 3221) introduced by Senators Christopher J. Dodd (D-CT) and Richard C. Shelby (R-AL). Prior to Senate consideration of the bill, I urged Senators Dodd and Shelby to keep the FHA loan limit and GSE conforming loan limits at the current level of $729,750. The Senate passed its version of H.R. 3221 on July 11, 2008. While the Senate-passed version of the bill would only raise the loan limits to $625,500, the House-passed version would keep them at their current level. On July 11, 2008, I joined 52 members of the California Congressional delegation in sending a letter to leaders of the Senate and House leadership urging them to retain the $729,750 limits in the final version of this important bill.
I fully support the higher limit and will continue to push to make it permanent.
Thanks for writing.
Sincerely yours,
Dianne Feinstein United States Senator
Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.
Thank you for contacting me to express your support for permanently increasing the conforming loan limit. I appreciate the time you took to write and agree with you.
The Federal Housing Administration (FHA) plays an important role in insuring home mortgages for those in underserved communities. It is critical that FHA programs be modernized to provide more homebuyers and borrowers looking to refinance with the opportunity to obtain an FHA loan. This remains especially important in California where the cost of housing remains high. For homebuyers faced with so-called "jumbo loans" subject to higher interest rates, raising the government-sponsored enterprise (GSE) conforming loan limit will bring more liquidity to the market and lower interest rates.
On February 13, 2008, the President signed the Economic Stimulus Act of 2008 (H.R. 5140) into law. As the bill was being developed, I sent a letter to Senator Majority Leader Harry Reid (D-NV) expressing strong support for increasing the previous GSE conforming loan limit of $417,000 and the FHA loan limit of $362,790 to $729,750. While I am pleased that a temporary increase was included in the bill, the new loan limits will expire on December 31, 2008.
On July 11, 2008, the Senate passed the "Foreclosure Prevention Act of 2008," (H.R. 3221) introduced by Senators Christopher J. Dodd (D-CT) and Richard C. Shelby (R-AL). Prior to Senate consideration of the bill, I urged Senators Dodd and Shelby to keep the FHA loan limit and GSE conforming loan limits at the current level of $729,750. The Senate passed its version of H.R. 3221 on July 11, 2008. While the Senate-passed version of the bill would only raise the loan limits to $625,500, the House-passed version would keep them at their current level. On July 11, 2008, I joined 52 members of the California Congressional delegation in sending a letter to leaders of the Senate and House leadership urging them to retain the $729,750 limits in the final version of this important bill.
I fully support the higher limit and will continue to push to make it permanent.
Thanks for writing.
Sincerely yours,
Dianne Feinstein United States Senator
Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.
Saturday, July 5, 2008
Update on RiverPark Development in Oxnard
Here is a little update to a blog I wrote about the RiverPark development last year. This is inresponse to questions about the local High Schools, gangs, flood zone considerations and home buying expenses. There are also some very basic suggestions for people considering a home purchase in the next few months to make their experience more productive and less stressful.
Yes there are some real expenses with living in Riverpark that include Mello Roos, Oxnard City tax and HOA fees. The Mellos Roos and City tax can total close to 2% of the purchase price yearly, while HOA's average around $250/month. So, for a $450K home, your are talking about an extra $1,000 a month in home expenses.
Having said that, my experience has been that these are nicely built homes at very competitive prices even with the additional add-on expenses. In the last year, these same homes have had a number of price reductions and incentives thrown in to make them really good opportunities for folks who need a brand new home. So for the same $400K to $450K this year, you can often find yourself making an offer on a much nicer home for the same money.
My daughter attends High School at El Rio and we have found their programs for college bound students to be outstanding. There are some possible new developments for students as well which include El Rio High becoming one of only two High Schools in Ventura County (Newbury Park High is the other) to qualify for an international student accelerated learning class this year. It should be fully instituted by next year.
Gangs are a problem in Oxnard, but there have been some very effective law enforcement initiatives taken in the last few years to cripple their influence.
RiverPark has it's own school, fire department and is building some shopping areas as well.
In order to address the flooding issues, I would recommend you contact the City of Oxnard Public Works Department, FEMA for flood plain maps at www.FEMA.gov or http://www.floodalert.fema.gov for a list of insurance companies that offer flood insurance in your area. You can find additional commments on flooding issues in my latest blog on my personal website http://www.markthorngren.com.
Should you buy now or wait. Let's look at each possibility.
Buy later....or Buy now. Home prices will most likely continue to fall for months if not years yet. My personal bet is some areas will turn around before others. Unless you know your neighborhoods intimately, you may have difficulty recognizing when it begins to happen. According to local title information (Land America Lawyers Title - Tom Piszczek - (805) 302-8667) home prices in Oxnard have gone down over 34% from March'07 to March '08, and 16% in Camarillo over the same time frame. Those are some pretty big numbers.
I always do a Comparative Market Analysis of my own for my clients. This is a one year look at a very specific neighborhood for any property my clients are interested in making an offer on. I find price trends, comparative home sale prices and listing information to base the offer or sale price for sellers and buyers needs.
Let us say that home prices continue down for at least another year. During the year we may see the buyers continue to take advantage of this market. Some of these folks are investors who are very savvy to our local markets.
In January my clients purchased a home listed for $600K in a neighborhood with a $604K median price. The sellers were motivated and my buyers made an offer for $450K plus $8,000 in closing costs. It was accepted! That is a 25% price reduction - almost a full years price drop right now!
Those are the kinds of deals that can happen in today's market. Does it always happen like that? No, but such a thing was unheard of a year ago. Will that type market last another year? Impossible to say.Mortage programs are much more strict but progress has been made through FHA and CalHFA to make 100% financing still available to qualified first time home buyers. Very competitive rates are available through FHA for most other well-qualified individuals.
You should have yourself pre-approved with a lender you trust before you go looking for a home. If you don't know what you can afford, you are wasting your valuable time. Also,most realtors are not going to spend a lot of time driving people around at $4.65/gallon if they don't know what they are qualified to purchase or what program best fits their personal needs.
Get several Good Faith Estimates from different lenders and tell them what you are doing. Make them compete for your business! Watch you expenses and fees shrink as they try to lure you their way. Make sure the good faith estimates include pro-rated taxes, Title and Escrow fees. It is not uncommon to receive Good Faith Estimates that look very competitive until you realize they don't include all the normal expenses for your transaction.
Ask your competing lenders to explain any differences in competing Good Faith Estimates. Sometimes your realtor can give you and idea of what is really happening as well.
FHA comforming loan limits have been raised from $417,000 to roughly $729,000 until December 31 of this year. There is great pressure being put on Congress to extend this deadline and it may indeed be extended. Hasn't happened yet but might. If it doesn't, FHA limits will probably default back to $417,000 next year. There are not very many single family detached homes available in California for less than $417,000.
We have no idea what interest rates will do over the next 12 months. That is a very fundamental gamble if you are undecided about when to buy. A very small interest rate change can have an immense effect on the interest you pay over 30 Years. Right now the Fed is under increasing pressure to start raising interest rates again. Higher gas prices, food prices and shipping costs are having a huge inflationary impact on our economy. That should be a concern to more people than just home prices. I'm guessing that after the presidential election we could see higher home mortgage interest rates.
This is a buyers market. It will continue to be a buyers market for months to come. When it changes, it will change gradually and at different times in different towns and neighborhoods. You won't easily see the change until you are past it. That is my thought on today's market. What do they say about a bird in the hand?
Warmest Regards,
Mark Thorngren
http://RealtyTimes.com/REUv/MarkThorngren or
http://www.markthorngren.com
(805) 504-0228
Oxnard – Riverpark – 1,800 homes along the Santa Clara River
The largest new home development currently being built in Oxnard is Riverpark There are 15 different home plans by my count, located just North off the 101, along the banks of the Santa Clara River. HOA’s vary by neighborhood, by square footage and by builder. Standard Pacific Homes is currently marketing the Celadon tract. Their HOAs can run from less than $100.00 up to nearly $300.00. There is also a 30 year Mello Roos which is about 1.1% but it is combined with a city special tax assessment. Agents in the development have told me to just multiply the Sale Price x 1.9 to get a rough idea of the combined total. Add the HOA and you will come close to your monthly fees. The HOA in the homes built by Standard Pacific Homes includes outside maintenance, landscaping and lender insurance – typically fire. Add these to your mortgage payment for your monthly housing costs. This does not include all utilities or your personal property insurance. Even with all the added costs, the homes tend to be very competitively priced with more floor space than I would expect. In one case that I know of, a home was offered for 70K below market with a special 6% give back at close of escrow. It was the last home in the tract and had fallen out of escrow previously. This was a nicely upgraded home in a nice location. Good things can happen. Call them to find out what is currently available or I can check for you if you prefer.Shea Homes is offering the Market Street Tract of luxury townhomes. Plans 1 – 4 range in price from 486K for 2,362 sq ft to 545K for 2,631 sq ft. HOAs are up to $292 for Phase 2. This covers the Riverpark master association dues ($32) with the balance for Fire and Casualty Insurance of the building and exterior maintenance of the building. There is a property tax rate of 1.15% of the sale price, plus a Mello Roos Tax Assessment of $4,587 per year. Several other tracts are still under construction. They have a new school opening there this Fall. There are very nice websitesq at http://www.riverparklife.com/ or www.standardpacifichomes.com or www.SheaHomes.com.The tract names are:• Celadon• Destination• Luminaria• Market Street• Promenade• The Avenue• Tradewinds• Trellis• Westerly• Collage• Meridian • Morning View• Veranda• Waypoint • Daybreak
May 10, 2008 Mark J Thorngren
Mark has summed it up really well, about the declines yet to come, the variations in the markets in terms of turning down and up (coastal is last to fall, first to rise for example), and that lending is fairly loose if you look at higher limits and 100% financing for FHA. We had 140 FHA sales last month.
This is where I disagree on interest rates: since it's all about the monthly payment, any rise in interest rates NECESSITATES a lower home price.
If I were even thinking of selling, I would make sure I sold BEFORE1. Interest rates rise, thus shutting out more buyers and forcing me to lower my price 2. More foreclosures increase the supply of homes. As Chris Thornburg was quoted in the NC Times today, nothing is more pernicious to prices, than a high supply.
Yes there are some real expenses with living in Riverpark that include Mello Roos, Oxnard City tax and HOA fees. The Mellos Roos and City tax can total close to 2% of the purchase price yearly, while HOA's average around $250/month. So, for a $450K home, your are talking about an extra $1,000 a month in home expenses.
Having said that, my experience has been that these are nicely built homes at very competitive prices even with the additional add-on expenses. In the last year, these same homes have had a number of price reductions and incentives thrown in to make them really good opportunities for folks who need a brand new home. So for the same $400K to $450K this year, you can often find yourself making an offer on a much nicer home for the same money.
My daughter attends High School at El Rio and we have found their programs for college bound students to be outstanding. There are some possible new developments for students as well which include El Rio High becoming one of only two High Schools in Ventura County (Newbury Park High is the other) to qualify for an international student accelerated learning class this year. It should be fully instituted by next year.
Gangs are a problem in Oxnard, but there have been some very effective law enforcement initiatives taken in the last few years to cripple their influence.
RiverPark has it's own school, fire department and is building some shopping areas as well.
In order to address the flooding issues, I would recommend you contact the City of Oxnard Public Works Department, FEMA for flood plain maps at www.FEMA.gov or http://www.floodalert.fema.gov for a list of insurance companies that offer flood insurance in your area. You can find additional commments on flooding issues in my latest blog on my personal website http://www.markthorngren.com.
Should you buy now or wait. Let's look at each possibility.
Buy later....or Buy now. Home prices will most likely continue to fall for months if not years yet. My personal bet is some areas will turn around before others. Unless you know your neighborhoods intimately, you may have difficulty recognizing when it begins to happen. According to local title information (Land America Lawyers Title - Tom Piszczek - (805) 302-8667) home prices in Oxnard have gone down over 34% from March'07 to March '08, and 16% in Camarillo over the same time frame. Those are some pretty big numbers.
I always do a Comparative Market Analysis of my own for my clients. This is a one year look at a very specific neighborhood for any property my clients are interested in making an offer on. I find price trends, comparative home sale prices and listing information to base the offer or sale price for sellers and buyers needs.
Let us say that home prices continue down for at least another year. During the year we may see the buyers continue to take advantage of this market. Some of these folks are investors who are very savvy to our local markets.
In January my clients purchased a home listed for $600K in a neighborhood with a $604K median price. The sellers were motivated and my buyers made an offer for $450K plus $8,000 in closing costs. It was accepted! That is a 25% price reduction - almost a full years price drop right now!
Those are the kinds of deals that can happen in today's market. Does it always happen like that? No, but such a thing was unheard of a year ago. Will that type market last another year? Impossible to say.Mortage programs are much more strict but progress has been made through FHA and CalHFA to make 100% financing still available to qualified first time home buyers. Very competitive rates are available through FHA for most other well-qualified individuals.
You should have yourself pre-approved with a lender you trust before you go looking for a home. If you don't know what you can afford, you are wasting your valuable time. Also,most realtors are not going to spend a lot of time driving people around at $4.65/gallon if they don't know what they are qualified to purchase or what program best fits their personal needs.
Get several Good Faith Estimates from different lenders and tell them what you are doing. Make them compete for your business! Watch you expenses and fees shrink as they try to lure you their way. Make sure the good faith estimates include pro-rated taxes, Title and Escrow fees. It is not uncommon to receive Good Faith Estimates that look very competitive until you realize they don't include all the normal expenses for your transaction.
Ask your competing lenders to explain any differences in competing Good Faith Estimates. Sometimes your realtor can give you and idea of what is really happening as well.
FHA comforming loan limits have been raised from $417,000 to roughly $729,000 until December 31 of this year. There is great pressure being put on Congress to extend this deadline and it may indeed be extended. Hasn't happened yet but might. If it doesn't, FHA limits will probably default back to $417,000 next year. There are not very many single family detached homes available in California for less than $417,000.
We have no idea what interest rates will do over the next 12 months. That is a very fundamental gamble if you are undecided about when to buy. A very small interest rate change can have an immense effect on the interest you pay over 30 Years. Right now the Fed is under increasing pressure to start raising interest rates again. Higher gas prices, food prices and shipping costs are having a huge inflationary impact on our economy. That should be a concern to more people than just home prices. I'm guessing that after the presidential election we could see higher home mortgage interest rates.
This is a buyers market. It will continue to be a buyers market for months to come. When it changes, it will change gradually and at different times in different towns and neighborhoods. You won't easily see the change until you are past it. That is my thought on today's market. What do they say about a bird in the hand?
Warmest Regards,
Mark Thorngren
http://RealtyTimes.com/REUv/MarkThorngren or
http://www.markthorngren.com
(805) 504-0228
Oxnard – Riverpark – 1,800 homes along the Santa Clara River
The largest new home development currently being built in Oxnard is Riverpark There are 15 different home plans by my count, located just North off the 101, along the banks of the Santa Clara River. HOA’s vary by neighborhood, by square footage and by builder. Standard Pacific Homes is currently marketing the Celadon tract. Their HOAs can run from less than $100.00 up to nearly $300.00. There is also a 30 year Mello Roos which is about 1.1% but it is combined with a city special tax assessment. Agents in the development have told me to just multiply the Sale Price x 1.9 to get a rough idea of the combined total. Add the HOA and you will come close to your monthly fees. The HOA in the homes built by Standard Pacific Homes includes outside maintenance, landscaping and lender insurance – typically fire. Add these to your mortgage payment for your monthly housing costs. This does not include all utilities or your personal property insurance. Even with all the added costs, the homes tend to be very competitively priced with more floor space than I would expect. In one case that I know of, a home was offered for 70K below market with a special 6% give back at close of escrow. It was the last home in the tract and had fallen out of escrow previously. This was a nicely upgraded home in a nice location. Good things can happen. Call them to find out what is currently available or I can check for you if you prefer.Shea Homes is offering the Market Street Tract of luxury townhomes. Plans 1 – 4 range in price from 486K for 2,362 sq ft to 545K for 2,631 sq ft. HOAs are up to $292 for Phase 2. This covers the Riverpark master association dues ($32) with the balance for Fire and Casualty Insurance of the building and exterior maintenance of the building. There is a property tax rate of 1.15% of the sale price, plus a Mello Roos Tax Assessment of $4,587 per year. Several other tracts are still under construction. They have a new school opening there this Fall. There are very nice websitesq at http://www.riverparklife.com/ or www.standardpacifichomes.com or www.SheaHomes.com.The tract names are:• Celadon• Destination• Luminaria• Market Street• Promenade• The Avenue• Tradewinds• Trellis• Westerly• Collage• Meridian • Morning View• Veranda• Waypoint • Daybreak
May 10, 2008 Mark J Thorngren
Mark has summed it up really well, about the declines yet to come, the variations in the markets in terms of turning down and up (coastal is last to fall, first to rise for example), and that lending is fairly loose if you look at higher limits and 100% financing for FHA. We had 140 FHA sales last month.
This is where I disagree on interest rates: since it's all about the monthly payment, any rise in interest rates NECESSITATES a lower home price.
If I were even thinking of selling, I would make sure I sold BEFORE1. Interest rates rise, thus shutting out more buyers and forcing me to lower my price 2. More foreclosures increase the supply of homes. As Chris Thornburg was quoted in the NC Times today, nothing is more pernicious to prices, than a high supply.
Sunday, April 27, 2008
FEMA & Camarillo Floodplain Issues
When my family first moved into Camarillo back in 1998, the city was experiencing widespread flooding from "La Neina". The rains were heavy for weeks at a time and many of the lower elevations around town were suffering. Since that time many extensive flood control projects have been carried out around the county.
Notable among the projects was a thorough clean up and channeling of the Calleguas Creek. This creek had overflowed in several locations where roads crossed it. The bridge embankments were too narrow and had caused the creek to back up at several locations. New bridge construction and a host of other improvements have greatly eased the risk of flooding in Camarillo.
Despite these improvements, FEMA went ahead and redrew flood maps for our city which include diagrams of areas likely to flood over a 100 year time frame. FEMA has expanded the flood areas to include a new, even less likely area of flooding called the 500 year flood area.
The City of Camarillo which has spent a great deal of it's resources to protect itself from flooding, has been understandably concerned about FEMA's new maps. The city has worked to provide homeowners with a better understanding of the effects the new maps may have on the need for and the cost of insuring their homes because of FEMA's new maps.
Insurance companies often require homeowners to carry flood insurance according to the way these FEMA maps are drawn. Insurance can run from around $300 to upwards of $2,000 per year and is normally required for Federal or federally related mortgage financing.
I have copied and scanned some of the literature the City of Camarillo distributed during 2006 in response to FEMA's new maps. I would be happy to email these to anyone with an interest in their property status.
The long and short of it all appears to be that if you live in one of the mapped areas, you would be well-advised to contact the City of Camarillo, FEMA and your home insurer to determine how each will treat your property. Contact information for City of Camarillo - Public Works Department Ph (805) 388-5340 or www.ci.camarillo.ca.us. FEMA - John Magnotti at (202) 646-3932 or john.magnotti@fema.gov or www.fema.gov/mit/tsd.
Warmest Regards,
Mark Thorngren
http://www.markthorngren.com & http://realtytimes.com/REUv/MarkThorngren
Notable among the projects was a thorough clean up and channeling of the Calleguas Creek. This creek had overflowed in several locations where roads crossed it. The bridge embankments were too narrow and had caused the creek to back up at several locations. New bridge construction and a host of other improvements have greatly eased the risk of flooding in Camarillo.
Despite these improvements, FEMA went ahead and redrew flood maps for our city which include diagrams of areas likely to flood over a 100 year time frame. FEMA has expanded the flood areas to include a new, even less likely area of flooding called the 500 year flood area.
The City of Camarillo which has spent a great deal of it's resources to protect itself from flooding, has been understandably concerned about FEMA's new maps. The city has worked to provide homeowners with a better understanding of the effects the new maps may have on the need for and the cost of insuring their homes because of FEMA's new maps.
Insurance companies often require homeowners to carry flood insurance according to the way these FEMA maps are drawn. Insurance can run from around $300 to upwards of $2,000 per year and is normally required for Federal or federally related mortgage financing.
I have copied and scanned some of the literature the City of Camarillo distributed during 2006 in response to FEMA's new maps. I would be happy to email these to anyone with an interest in their property status.
The long and short of it all appears to be that if you live in one of the mapped areas, you would be well-advised to contact the City of Camarillo, FEMA and your home insurer to determine how each will treat your property. Contact information for City of Camarillo - Public Works Department Ph (805) 388-5340 or www.ci.camarillo.ca.us. FEMA - John Magnotti at (202) 646-3932 or john.magnotti@fema.gov or www.fema.gov/mit/tsd.
Warmest Regards,
Mark Thorngren
http://www.markthorngren.com & http://realtytimes.com/REUv/MarkThorngren
Monday, March 31, 2008
Senator Dianne Feinstein on Home Ownership Assistance
Dear Mr. Thorngren:
Thank you for contacting me regarding homeownership assistance programs. I appreciate the time you took to write and welcome the opportunity to respond.
The Federal Housing Administration (FHA) plays an important role in insuring home mortgages for those in underserved communities. It is critical that FHA programs be reformed to provide more homebuyers and borrowers looking to refinance with the opportunity to obtain an FHA loan. These opportunities are especially important in states, such as California, where the cost of housing is high. For homebuyers faced with jumbo loans subject to high interest rates, raising the government-sponsored enterprise (GSE) conforming loan limit will bring more liquidity to the market and lower monthly interest rate costs.
On February 13, 2008, the President signed the Economic Stimulus Act of 2008 (H.R. 5140) into law. I strongly supported the provision of this bill which temporarily increases the FHA loan limit and GSE conforming loan limit to 125 percent of an area's median home price, up to a maximum of $729,750. On February 5th, the U.S. Department of Housing and Urban Development published these revised limits for California. Please know that I will carefully monitor the FHA, Freddie Mac, and Fannie Mae as they implement these new loan limits. You may review the newly published FHA loan limits at http://www.HUD.gov. The GSE loan limits can be viewed at http://www.ofheo.gov.
You may be interested to know that conference negotiations to resolve the differences between the House-passed version of the FHA reform bill (H.R. 1852) and the Senate-passed version (S. 2338) are ongoing. These two bills would permanently increase the FHA loan limit, lower down payments, and increase the availability of FHA's reverse mortgage program, among other reforms. I understand that this issue is of major importance to Californians facing high home prices and the threat of losing their home to foreclosure. Please know that I will continue to do everything I can to help on this critical issue.
Once again, thank you for writing. I hope you will continue to keep me informed on issues of importance to you. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.
Thank you for contacting me regarding homeownership assistance programs. I appreciate the time you took to write and welcome the opportunity to respond.
The Federal Housing Administration (FHA) plays an important role in insuring home mortgages for those in underserved communities. It is critical that FHA programs be reformed to provide more homebuyers and borrowers looking to refinance with the opportunity to obtain an FHA loan. These opportunities are especially important in states, such as California, where the cost of housing is high. For homebuyers faced with jumbo loans subject to high interest rates, raising the government-sponsored enterprise (GSE) conforming loan limit will bring more liquidity to the market and lower monthly interest rate costs.
On February 13, 2008, the President signed the Economic Stimulus Act of 2008 (H.R. 5140) into law. I strongly supported the provision of this bill which temporarily increases the FHA loan limit and GSE conforming loan limit to 125 percent of an area's median home price, up to a maximum of $729,750. On February 5th, the U.S. Department of Housing and Urban Development published these revised limits for California. Please know that I will carefully monitor the FHA, Freddie Mac, and Fannie Mae as they implement these new loan limits. You may review the newly published FHA loan limits at http://www.HUD.gov. The GSE loan limits can be viewed at http://www.ofheo.gov.
You may be interested to know that conference negotiations to resolve the differences between the House-passed version of the FHA reform bill (H.R. 1852) and the Senate-passed version (S. 2338) are ongoing. These two bills would permanently increase the FHA loan limit, lower down payments, and increase the availability of FHA's reverse mortgage program, among other reforms. I understand that this issue is of major importance to Californians facing high home prices and the threat of losing their home to foreclosure. Please know that I will continue to do everything I can to help on this critical issue.
Once again, thank you for writing. I hope you will continue to keep me informed on issues of importance to you. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.
Tuesday, March 18, 2008
Subsidized Housing Programs in Ventura County
Many folks coming to Ventura County find the home buying process a daunting task. Without a good credit score, a large income or substantial down payment, things can be just plain tough. To tell the truth, there are many realtors and real estate consultants that have very little knowledge of what kind of help is available to these folks. Everyone seems to rely on lenders or mortgage brokers for knowledge of financial assistance programs. Most lenders have some kind of in-house programs or might even know a little bit about FHA and CAL-HFA programs. After that, knowledge of most home buyer assistance programs gets a little thin.
Last week I was browsing our local newspaper's real estate section and came across an article about the Area Housing Authority of the County of Ventura. I’ve heard of some of their programs before but had never found source material. I felt like a gold miner that had just stumbled across the mother lode. I downloaded 31 pages of their material and had to quit because I was using up all my printer's color cartridges. There is a very large amount of helpful information on their wonderful website. Check out http://www.ahacv.org/home_buyers_workshop.shtml.
This page will give you time, place and date for the next home buyer workshops. The following information is taken directly from the county website.
"The Area Housing Authority is committed to serving the community by being a resource for housing information. With the skyrocketing prices of homes in Ventura County, first-time home buyers are often overwhelmed with the decision of whether to buy a home here, continue renting, or move to a cheaper area.
Many new home buyers are unaware of State and local programs that help with down-payments, closing costs, and lower interest loans. Households with income between $55,000 and $113,000 may qualify for a variety of assistance programs.
The Area Housing Authority sponsors educational home buying workshops in English and Spanish several times throughout the year. The workshops are provided through a mutual agreement with experts in local, State and federal funding resources.Workshops cover tax benefits, raising your FICO score, and loan options for first-time buyers available through the state of California.
To find out more or to reserve a spot in an upcoming workshop, please call 1-800-549-0337, extension 167. Seating is limited at our workshops and we encourage you to reserve your place to ensure adequate seating. To speak with Housing Authority staff regarding a workshop, please call 805-480-9991, extension 235.For a schedule of upcoming workshops, please click here or go to http://www.ahahomebuyingschool.com/ ."
To find information on Housing Programs which include:
-Section 8
-Low Rent Public Housing
-Agency Owned/Managed Housing
-City Sponsored Rental Assistance
Click on http://www.ahacv.org/index.shtml & click again on the Housing Programs Tab (left side)
The Area Housing Authority of the County of Ventura serves the cities of Camarillo, Simi Valley, Moorpark, Thousand Oaks, Ojai, Fillmore and the unincorporated areas of Ventura County.
So what happens if you don’t live in one of those 7 areas?
Easy. Oxnard. Port Hueneme, Santa Paula and the City of San Buenaventura (Ventura) all have their own housing authorities which you can find contact information for at: http://www.ahacv.org/community_resources.shtml.
None of these programs are exactly the same, but most of them provide a degree of benefit and usually can be combined with FHA or CAL-HFA loan programs to provide most of your lending needs. The combination of programs is really remarkable help for first time buyers. By the way, the definition of a first time buyer is not what you might think. It can be someone who has not purchased a home for 3 years. Check with your lender and Housing Authority folks for details.
For those folks who are having a really difficult time just finding a place to lay their heads, there is some provision for them as well at: http://www.ahacv.org/emergency_housing.shtml
This is some really great information on local agencies that provide emergency housing assistance. Here is the basic info from that link.
"The Area Housing Authority does not provide emergency housing services. Please contact the agencies listed below for emergency housing information.
You may also call the 211 Help Line by dialing 2-1-1 from any land line phone (cell phone users, 800-339-9597. The 211 Help Line provides information about and referrals to health and human services, including emergency housing. The 211 Help Line is available 24 hours a day, 7 days a week, and multi-lingual service is available.
Homeless Information and Referral (County of Ventura, Human Services Agency)Phone:805-987-6715 or 805-484-2082Hours:M – F 8am to 4:30pmWebsite:http://www.vchsa.org/Ventura County Homeless and Housing Coalitions(temporary winter shelter locations)Website: http://www.vchhc.org/
Ojai Community Assistance Program (through HELP of Ojai)Phone:805-640-3320Hours:M – Th8:00am – 12:00pm and 1:00pm to 5:00pmFriday 8:00am – 12:00pm and 1:00pm to 4:00pm
Coalition to End Family ViolencePhone:805-983-601424-hr Hotline: 800-300-2181 or 805-56-1111Website:http://www.thecoalition.org/
RAIN Project Transitional Housing (County of Ventura)Phone:805-389-3308 (24-hrs)Address:1732 South Lewis Road, Camarillo
Community Action of Ventura County (Goldberg House)Phone:805-648-6088Address:946 E. Thompson Blvd., Ventura,Hours:M – Th: 8 am - 3:30 pmFriday: 8 am – 3:00 pm
Simi Valley Homeless PartnershipPhone:805-527-2533
Housing Reports and Necessary Documents http://www.ahacv.org/housing_reports_and_docs.shtml
Administrative Housing Plans and Documents
Admissions and Continued Occupancy Policy (ACOP)
Agency Owned Housing Plan
Section 8 Admin Plan
Organizational Emergency Plan
Public Housing Application
Instructions for Public Housing Application
Board of Commissioners
Current Board Agenda - Coming Soon
List of Commissioners
Data and Reports
Income Limits
Payment Standards
Utility Allowances
Overview of Assistance by Community
Detailed Summary of Assistance by Community
2007 What Can You Afford
Community Housing Programs - Coming Soon
Presentations
Myths of Affordable Housing Presentation (July 2007) - Coming Soon
If you do not have the Free Adobe PDF Reader, Click Here to get it.
March 21, 2007 Income Limits
Median Family income for a family of four is $79,500
There is a great deal more information available for renters, folks looking for the reduced price housing maintained by the various housing authorities and income limits to qualify. Some of these programs require you to use their approved lenders. Others allow you to shop for the best deal on your new home mortgage program costs. There is everything here you need to get started except a really good local mortgage broker to help steer you through this sea of information.
I can fix that. Call Aracely Avila (805) 504-0221 or email Aracely@YieldFinancial.com. Aracely once worked for the Oxnard Housing Authority and has more than 10 years experience helping your home ownership dreams to come true.
Of course you are welcome to contact me or browse my website for additional Chamber of Commerce websites, or the individual city websites and county information. http://www.markthorngren.com/.
Warmest Regards,
Mark Thorngren
Last week I was browsing our local newspaper's real estate section and came across an article about the Area Housing Authority of the County of Ventura. I’ve heard of some of their programs before but had never found source material. I felt like a gold miner that had just stumbled across the mother lode. I downloaded 31 pages of their material and had to quit because I was using up all my printer's color cartridges. There is a very large amount of helpful information on their wonderful website. Check out http://www.ahacv.org/home_buyers_workshop.shtml.
This page will give you time, place and date for the next home buyer workshops. The following information is taken directly from the county website.
"The Area Housing Authority is committed to serving the community by being a resource for housing information. With the skyrocketing prices of homes in Ventura County, first-time home buyers are often overwhelmed with the decision of whether to buy a home here, continue renting, or move to a cheaper area.
Many new home buyers are unaware of State and local programs that help with down-payments, closing costs, and lower interest loans. Households with income between $55,000 and $113,000 may qualify for a variety of assistance programs.
The Area Housing Authority sponsors educational home buying workshops in English and Spanish several times throughout the year. The workshops are provided through a mutual agreement with experts in local, State and federal funding resources.Workshops cover tax benefits, raising your FICO score, and loan options for first-time buyers available through the state of California.
To find out more or to reserve a spot in an upcoming workshop, please call 1-800-549-0337, extension 167. Seating is limited at our workshops and we encourage you to reserve your place to ensure adequate seating. To speak with Housing Authority staff regarding a workshop, please call 805-480-9991, extension 235.For a schedule of upcoming workshops, please click here or go to http://www.ahahomebuyingschool.com/ ."
To find information on Housing Programs which include:
-Section 8
-Low Rent Public Housing
-Agency Owned/Managed Housing
-City Sponsored Rental Assistance
Click on http://www.ahacv.org/index.shtml & click again on the Housing Programs Tab (left side)
The Area Housing Authority of the County of Ventura serves the cities of Camarillo, Simi Valley, Moorpark, Thousand Oaks, Ojai, Fillmore and the unincorporated areas of Ventura County.
So what happens if you don’t live in one of those 7 areas?
Easy. Oxnard. Port Hueneme, Santa Paula and the City of San Buenaventura (Ventura) all have their own housing authorities which you can find contact information for at: http://www.ahacv.org/community_resources.shtml.
None of these programs are exactly the same, but most of them provide a degree of benefit and usually can be combined with FHA or CAL-HFA loan programs to provide most of your lending needs. The combination of programs is really remarkable help for first time buyers. By the way, the definition of a first time buyer is not what you might think. It can be someone who has not purchased a home for 3 years. Check with your lender and Housing Authority folks for details.
For those folks who are having a really difficult time just finding a place to lay their heads, there is some provision for them as well at: http://www.ahacv.org/emergency_housing.shtml
This is some really great information on local agencies that provide emergency housing assistance. Here is the basic info from that link.
"The Area Housing Authority does not provide emergency housing services. Please contact the agencies listed below for emergency housing information.
You may also call the 211 Help Line by dialing 2-1-1 from any land line phone (cell phone users, 800-339-9597. The 211 Help Line provides information about and referrals to health and human services, including emergency housing. The 211 Help Line is available 24 hours a day, 7 days a week, and multi-lingual service is available.
Homeless Information and Referral (County of Ventura, Human Services Agency)Phone:805-987-6715 or 805-484-2082Hours:M – F 8am to 4:30pmWebsite:http://www.vchsa.org/Ventura County Homeless and Housing Coalitions(temporary winter shelter locations)Website: http://www.vchhc.org/
Ojai Community Assistance Program (through HELP of Ojai)Phone:805-640-3320Hours:M – Th8:00am – 12:00pm and 1:00pm to 5:00pmFriday 8:00am – 12:00pm and 1:00pm to 4:00pm
Coalition to End Family ViolencePhone:805-983-601424-hr Hotline: 800-300-2181 or 805-56-1111Website:http://www.thecoalition.org/
RAIN Project Transitional Housing (County of Ventura)Phone:805-389-3308 (24-hrs)Address:1732 South Lewis Road, Camarillo
Community Action of Ventura County (Goldberg House)Phone:805-648-6088Address:946 E. Thompson Blvd., Ventura,Hours:M – Th: 8 am - 3:30 pmFriday: 8 am – 3:00 pm
Simi Valley Homeless PartnershipPhone:805-527-2533
Housing Reports and Necessary Documents http://www.ahacv.org/housing_reports_and_docs.shtml
Administrative Housing Plans and Documents
Admissions and Continued Occupancy Policy (ACOP)
Agency Owned Housing Plan
Section 8 Admin Plan
Organizational Emergency Plan
Public Housing Application
Instructions for Public Housing Application
Board of Commissioners
Current Board Agenda - Coming Soon
List of Commissioners
Data and Reports
Income Limits
Payment Standards
Utility Allowances
Overview of Assistance by Community
Detailed Summary of Assistance by Community
2007 What Can You Afford
Community Housing Programs - Coming Soon
Presentations
Myths of Affordable Housing Presentation (July 2007) - Coming Soon
If you do not have the Free Adobe PDF Reader, Click Here to get it.
March 21, 2007 Income Limits
Median Family income for a family of four is $79,500
There is a great deal more information available for renters, folks looking for the reduced price housing maintained by the various housing authorities and income limits to qualify. Some of these programs require you to use their approved lenders. Others allow you to shop for the best deal on your new home mortgage program costs. There is everything here you need to get started except a really good local mortgage broker to help steer you through this sea of information.
I can fix that. Call Aracely Avila (805) 504-0221 or email Aracely@YieldFinancial.com. Aracely once worked for the Oxnard Housing Authority and has more than 10 years experience helping your home ownership dreams to come true.
Of course you are welcome to contact me or browse my website for additional Chamber of Commerce websites, or the individual city websites and county information. http://www.markthorngren.com/.
Warmest Regards,
Mark Thorngren
Lower Prime Rate vs Higher Mortgage Rates
Market Changes, Prime Rate Reductions vs Home Mortgage Rate Increases
There is a very defined difference now from the last six months that has made many of us optimistic for the year. I had many folks last year who wanted to wait with their purchase because of falling home prices, and many home sellers were still hanging tough with their prices. Obstinate sellers who have not kept up with the market, have continued to suffer from falling home prices and are now much easier to work with as they realize their predicament. Home Buyers I have been talking with over the last year or two are now calling me to make their initial consultations. I like that! That did not happen last year. That is another reason why I’m optimistic.
Last Fall, I had a large number of home sales that began escrow but did not finish because of mortgage changes during escrow, and seller’s not willing to compromise on terms. That is changing now. Mortgage programs are beginning to gel and lender standards are stabilizing from the free fall – here today, gone tomorrow – conditions that existed last Fall. Our buyer climate is much different this year and presents fewer fundamental changes. We have a much better chance to make it through each escrow this year.
The next challenge our industry faces will be how to reconcile falling interest rates from the Fed with rising home loan interest rates. Investors are worried about the bond market. As the Fed lowers it’s interest rates, the bond market suffers and mortgage investors in the secondary market raise their home mortgage interest rates. Home buyers will tend to save more money on their home purchases with a lower interest rate than on a modest home price decrease. We have seen interest rates fall in January, then turn around and move up steadily through February. Those rate changes will have a far bigger impact on buyers than a 7% to 10% decrease in home prices. Do the math on any home you care to pick and I’ll bet you see what I mean.
I think we need to carefully watch to see if the cost of mortgage loans continues to increase. If the Fed continues to cut the Prime Rate, the response from secondary investors & the bond market may be to raise the cost of home mortgage interest rates. It is possible that rising home loan interest rates could more than offset falling home prices. Home buyers may pay less and have more to choose from if they buy now.
Sellers will most likely continue to experience an eroding of home prices, with stiff competition from bank foreclosures until the number of foreclosures falls in a year or two.
Just the way I see it today.
Warmest Regards,
Mark Thorngren
htttp://www.markthorngren.com
There is a very defined difference now from the last six months that has made many of us optimistic for the year. I had many folks last year who wanted to wait with their purchase because of falling home prices, and many home sellers were still hanging tough with their prices. Obstinate sellers who have not kept up with the market, have continued to suffer from falling home prices and are now much easier to work with as they realize their predicament. Home Buyers I have been talking with over the last year or two are now calling me to make their initial consultations. I like that! That did not happen last year. That is another reason why I’m optimistic.
Last Fall, I had a large number of home sales that began escrow but did not finish because of mortgage changes during escrow, and seller’s not willing to compromise on terms. That is changing now. Mortgage programs are beginning to gel and lender standards are stabilizing from the free fall – here today, gone tomorrow – conditions that existed last Fall. Our buyer climate is much different this year and presents fewer fundamental changes. We have a much better chance to make it through each escrow this year.
The next challenge our industry faces will be how to reconcile falling interest rates from the Fed with rising home loan interest rates. Investors are worried about the bond market. As the Fed lowers it’s interest rates, the bond market suffers and mortgage investors in the secondary market raise their home mortgage interest rates. Home buyers will tend to save more money on their home purchases with a lower interest rate than on a modest home price decrease. We have seen interest rates fall in January, then turn around and move up steadily through February. Those rate changes will have a far bigger impact on buyers than a 7% to 10% decrease in home prices. Do the math on any home you care to pick and I’ll bet you see what I mean.
I think we need to carefully watch to see if the cost of mortgage loans continues to increase. If the Fed continues to cut the Prime Rate, the response from secondary investors & the bond market may be to raise the cost of home mortgage interest rates. It is possible that rising home loan interest rates could more than offset falling home prices. Home buyers may pay less and have more to choose from if they buy now.
Sellers will most likely continue to experience an eroding of home prices, with stiff competition from bank foreclosures until the number of foreclosures falls in a year or two.
Just the way I see it today.
Warmest Regards,
Mark Thorngren
htttp://www.markthorngren.com
Thursday, February 28, 2008
The Market is Waking Up In Ventura County For Home Buyers
I spoke with Bob Curtiss the Regional Sales Director for Property I.D. today. This company provides natural hazard property disclosures to home buyers. Without getting too deep, this company researches a home to see if it is in a flood hazard, fire hazard, or earthquake hazard area and discloses this and much more information to buyers and sellers so they can be aware of what environment the home is in. They are the best at what they do in my experience. They are always in demand by realtors for their excellent service to our home buying clients.
Bob gets around, and I enjoy speaking with him because he is the harbinger of news in real estate for a large area in Southern California. He had just returned from a business trip to Lompoc, Santa Maria and the Solvang, Santa Ynez area. The word from Bob is that business in home sales is booming in those areas. That has not always been the case, but especially in Lompoc this is a big change.
Yesterday I was helping some folks who were in the process of finishing up their escrow and were signing their loan documents at one of our local Title and Escrow companies. As you may already know, these folks represent a neutral third party provider of escrow services. They manage the money and paperwork flowing between the home buyer and the home seller. When nobody is buying a home, they aren't working. When the industry is busy, they put in some very long hours.
In this case I was discussing our local market with Margaret Kelly of LandAmerica Lawyers Title. Margaret is a beautiful lady and an awesome talent with a 20 year track record of success in our local market. By the time Margaret becomes involved in a transaction, it means that a realtor has been working with prospective home buyers to determine their needs, locate their dream home and negotiate a purchase agreement with the home sellers. This process can last a few weeks or it can last upwards of a year or more. My point is, by the time Margaret sits down with my clients, the market shift has already matured a month or so.
Margaret says the last 3 or 4 weeks - most of the month of February - have been markedly busier than previous months. She is busy once again. People are making up their minds to get off the fence and make their home choice now. The conditions are wonderful for some awesome home opportunities and buyers have seen it, made their decision and are now a month into the process with Margaret.
I wrote of this market change several weeks ago. Now many service providing professionals like Bob and Margaret are confirming these observations. I can't wait to see what all the newspapers say about our market when next month's reports on this month's sales show the increase. All the rhetoric about our market continuing to wither for another 2 years we hear from "economic experts" will be difficult to reconcile with the facts.
Is our market healed now? I don't think so, but I think it is beginning to heal. I think we must define our market first. Let's say our market is made up of home buyers and home sellers.
The home buyers are now beginning to come out in force. They are taking advantage of current high inventories, low prices and falling interest rates. They are dialing in the new changes to FHA, Fannie Mae and Freddie Mac programs and seeing huge opportunity for themselves and their families.
Home sellers continue to suffer. They are seeing more buyers at open houses, but the buyers are fussy. As prices continue to fall and foreclosures continue to scue neighborhood prices, sellers continue to suffer long listing periods and declining equity. Much of this is driven by the continued foreclosure problem, but some of this is also due to more restrictive lender requirements as well as generally negative news coverage of our market.
I think all of these negative market forces are slowly beginning to correct themselves.
Mortgage programs requirements are more restrictive than a year ago, but there are new, higher lending limits from all the federal lenders. Combining these programs with CAL-HFA programs from the state, gives some well qualified first time home buyers real hope again for finding affordable housing. I think lender programs will continue to improve and become more user friendly in coming months. Don't look for stated income loans to make a strong come back any time soon though!
As home sales continue to increase and lending practices standardize over the coming months, I think we will begin to see a gradual shrinking of our home inventories. Developers are slow to build when prices are soft, so our inventory of homes will tend to build very slowly. As demand continues to build, the relatively fixed number of homes available will slowly drive prices back to stable market values.
I think this process will accelerate once the foreclosure problem eases.
I spoke with Bob Curtiss the Regional Sales Director for Property I.D. today. This company provides natural hazard property disclosures to home buyers. Without getting too deep, this company researches a home to see if it is in a flood hazard, fire hazard, or earthquake hazard area and discloses this and much more information to buyers and sellers so they can be aware of what environment the home is in. They are the best at what they do in my experience. They are always in demand by realtors for their excellent service to our home buying clients.
Bob gets around, and I enjoy speaking with him because he is the harbinger of news in real estate for a large area in Southern California. He had just returned from a business trip to Lompoc, Santa Maria and the Solvang, Santa Ynez area. The word from Bob is that business in home sales is booming in those areas. That has not always been the case, but especially in Lompoc this is a big change.
Yesterday I was helping some folks who were in the process of finishing up their escrow and were signing their loan documents at one of our local Title and Escrow companies. As you may already know, these folks represent a neutral third party provider of escrow services. They manage the money and paperwork flowing between the home buyer and the home seller. When nobody is buying a home, they aren't working. When the industry is busy, they put in some very long hours.
In this case I was discussing our local market with Margaret Kelly of LandAmerica Lawyers Title. Margaret is a beautiful lady and an awesome talent with a 20 year track record of success in our local market. By the time Margaret becomes involved in a transaction, it means that a realtor has been working with prospective home buyers to determine their needs, locate their dream home and negotiate a purchase agreement with the home sellers. This process can last a few weeks or it can last upwards of a year or more. My point is, by the time Margaret sits down with my clients, the market shift has already matured a month or so.
Margaret says the last 3 or 4 weeks - most of the month of February - have been markedly busier than previous months. She is busy once again. People are making up their minds to get off the fence and make their home choice now. The conditions are wonderful for some awesome home opportunities and buyers have seen it, made their decision and are now a month into the process with Margaret.
I wrote of this market change several weeks ago. Now many service providing professionals like Bob and Margaret are confirming these observations. I can't wait to see what all the newspapers say about our market when next month's reports on this month's sales show the increase. All the rhetoric about our market continuing to wither for another 2 years we hear from "economic experts" will be difficult to reconcile with the facts.
Is our market healed now? I don't think so, but I think it is beginning to heal. I think we must define our market first. Let's say our market is made up of home buyers and home sellers.
The home buyers are now beginning to come out in force. They are taking advantage of current high inventories, low prices and falling interest rates. They are dialing in the new changes to FHA, Fannie Mae and Freddie Mac programs and seeing huge opportunity for themselves and their families.
Home sellers continue to suffer. They are seeing more buyers at open houses, but the buyers are fussy. As prices continue to fall and foreclosures continue to scue neighborhood prices, sellers continue to suffer long listing periods and declining equity. Much of this is driven by the continued foreclosure problem, but some of this is also due to more restrictive lender requirements as well as generally negative news coverage of our market.
I think all of these negative market forces are slowly beginning to correct themselves.
Mortgage programs requirements are more restrictive than a year ago, but there are new, higher lending limits from all the federal lenders. Combining these programs with CAL-HFA programs from the state, gives some well qualified first time home buyers real hope again for finding affordable housing. I think lender programs will continue to improve and become more user friendly in coming months. Don't look for stated income loans to make a strong come back any time soon though!
As home sales continue to increase and lending practices standardize over the coming months, I think we will begin to see a gradual shrinking of our home inventories. Developers are slow to build when prices are soft, so our inventory of homes will tend to build very slowly. As demand continues to build, the relatively fixed number of homes available will slowly drive prices back to stable market values.
I think this process will accelerate once the foreclosure problem eases.
Unfortunately, we don't appear to have a good solution on how best to ease the foreclosure crisis. Foreclosures will have a continued dampening effect on our market until that problem can be effectively addressed or has time to work it's way out. Sort of like trying to fight a large forest fire. Eventually it will burn itself out, but we all would like to minimize it's damage and find a good way to fight it.
News media coverage will begin to shift back closer to reality as sales numbers increase once again. No thanks to them.
The article I have included in this blog comes from the Ventura County Star and illustrates my point. I expect we'll see more of these articles in the coming months as newspapers and other media finally pull their heads out of the sand and look around at the real world again.
Mark Thorngren
http://www.markthorngren.com/
Good news on the real estate, mortgage front
Jim Woodard, ColumnistSunday, November 11, 2007
Despite discouraging news on the financial front, the sluggish home sales market should bottom out by the end of the first quarter of this coming year, it was noted in a recent study and report from the National Association of Home Builders.
The housing market will start to turn around next year for a number of reasons: the overall economy and job growth will continue to move ahead at a decent pace, core inflation is under control, the credit crunch in mortgage markets is showing signs of easing, the supply-demand equation will be better balanced as builders begin to whittle down their excess inventories, and another Federal Reserve interest rate reduction of a quarter-point on Oct. 31 will help keep mortgage rates low.
That's the prediction of David Seiders, chief economist for the NAHB.
"With the housing sector facing a large backlog of unsold inventory, new construction starts and permits won't begin to move forward until sales firm up. Home sales should bottom out by the end of the first quarter of next year, and housing starts will be up in the third quarter, assuming the inventory overhang stabilizes," he said.
The tightening standards for home mortgages will not derail a national recovery in the housing market, according to the NAHB. However, it will complicate the system for a while.
The negative impact of the new standards on housing markets comes in two forms. First, tightening lending standards have reduced the availability of some loans and raised the price to riskier borrowers. Second, it creates the potential for a cycle of defaults and price declines, depending on the local home price environment and strength of the local economy, the NAHB study report noted.
NAHB's short-term forecast is based on several assumptions: skillful management of monetary policy by the Federal Reserve, maintenance of solid growth in personal income and employment, a manageable wave of home mortgage foreclosures and better performance of mortgage markets going forward.
The report observed that the long-term potential for housing activity is very good. "By the end of 2009, we may be at a pace of 1.5 million units of new housing production (including manufactured homes). Once we are out of the woods, we should see good growth in front of us — maybe 2 million units per year," it stated.
While there is much press coverage about today's troubled real estate markets, there are many markets throughout the country that have minimal subprime mortgage exposure and are now experiencing a stable market.
These markets experienced modest and sustainable home price appreciation during the boom years and have relatively strong local economies. The markets are positioned to outperform the national trends with earlier and stronger recoveries than the more troubled markets, according to NAHB's chief economist.
These little-publicized markets are primarily located in the Pacific Northwest, mountain states and in the Southeast. The areas are now recording single-family home construction permits at or above pre-boom levels.
"The contrast between the strongest and weakest markets across the country points out substantial regional variation and suggests that steep nationwide home price declines and mortgage defaults are unlikely," Seiders said.
There's more good news on the mortgage front. More people are managing to keep up with payments on mortgage loans made in recent months, according to data from First American Loan Performance, a research firm.
The trend reflects more conservative lending policies adopted by mortgage companies this year in the wake of a surge in defaults and foreclosures, said Mark Carrington with First American. "Even so, defaults continue to rise in proportion to the overall number of home loans outstanding nationwide, mostly those made between 2003 and 2006 when lending standards were growing more lax," he said.
An increasing number of parents of college-bound offspring are purchasing a condo or small house in the area of the college for their student's residence while attending the college or university. In some cases, it appears to be more cost-effective than paying for a room in a dorm.
The student will often rent out a portion of the purchased unit to another student to minimize the investment. When the student's attendance at the college is completed, the unit will be sold, hopefully at a profit.
There are now about 3 million campus houses and condos that have been purchased by students or their parents, according to a report from the National Association of Realtors. That represents about 8 percent of the nation's 37.4 million investment properties, but excludes 6.8 million vacation homes.
In addition to the possible financial advantage, owning such a residence gives the student more freedom, and a choice of roommates. For parents, it offers a chance to recoup some of the rising costs of higher education, assuming it turns out to be a good investment.
Many parents are spooked by the unknowns in such an arrangement. Can the extra space be rented at the projected rental amount? Will the student handle his extra freedom responsibly? Will the property later sell at a profit? These and other concerns tend to keep the dorms fully occupied.
(Jim Woodard, a Ventura resident, writes a nationally syndicated column and freelance features in addition to his Star columns. He also is a storyteller with a Web site at: www.jimwoodard.net. E-mail: Storyjim@aol.com.)
News media coverage will begin to shift back closer to reality as sales numbers increase once again. No thanks to them.
The article I have included in this blog comes from the Ventura County Star and illustrates my point. I expect we'll see more of these articles in the coming months as newspapers and other media finally pull their heads out of the sand and look around at the real world again.
Mark Thorngren
http://www.markthorngren.com/
Good news on the real estate, mortgage front
Jim Woodard, ColumnistSunday, November 11, 2007
Despite discouraging news on the financial front, the sluggish home sales market should bottom out by the end of the first quarter of this coming year, it was noted in a recent study and report from the National Association of Home Builders.
The housing market will start to turn around next year for a number of reasons: the overall economy and job growth will continue to move ahead at a decent pace, core inflation is under control, the credit crunch in mortgage markets is showing signs of easing, the supply-demand equation will be better balanced as builders begin to whittle down their excess inventories, and another Federal Reserve interest rate reduction of a quarter-point on Oct. 31 will help keep mortgage rates low.
That's the prediction of David Seiders, chief economist for the NAHB.
"With the housing sector facing a large backlog of unsold inventory, new construction starts and permits won't begin to move forward until sales firm up. Home sales should bottom out by the end of the first quarter of next year, and housing starts will be up in the third quarter, assuming the inventory overhang stabilizes," he said.
The tightening standards for home mortgages will not derail a national recovery in the housing market, according to the NAHB. However, it will complicate the system for a while.
The negative impact of the new standards on housing markets comes in two forms. First, tightening lending standards have reduced the availability of some loans and raised the price to riskier borrowers. Second, it creates the potential for a cycle of defaults and price declines, depending on the local home price environment and strength of the local economy, the NAHB study report noted.
NAHB's short-term forecast is based on several assumptions: skillful management of monetary policy by the Federal Reserve, maintenance of solid growth in personal income and employment, a manageable wave of home mortgage foreclosures and better performance of mortgage markets going forward.
The report observed that the long-term potential for housing activity is very good. "By the end of 2009, we may be at a pace of 1.5 million units of new housing production (including manufactured homes). Once we are out of the woods, we should see good growth in front of us — maybe 2 million units per year," it stated.
While there is much press coverage about today's troubled real estate markets, there are many markets throughout the country that have minimal subprime mortgage exposure and are now experiencing a stable market.
These markets experienced modest and sustainable home price appreciation during the boom years and have relatively strong local economies. The markets are positioned to outperform the national trends with earlier and stronger recoveries than the more troubled markets, according to NAHB's chief economist.
These little-publicized markets are primarily located in the Pacific Northwest, mountain states and in the Southeast. The areas are now recording single-family home construction permits at or above pre-boom levels.
"The contrast between the strongest and weakest markets across the country points out substantial regional variation and suggests that steep nationwide home price declines and mortgage defaults are unlikely," Seiders said.
There's more good news on the mortgage front. More people are managing to keep up with payments on mortgage loans made in recent months, according to data from First American Loan Performance, a research firm.
The trend reflects more conservative lending policies adopted by mortgage companies this year in the wake of a surge in defaults and foreclosures, said Mark Carrington with First American. "Even so, defaults continue to rise in proportion to the overall number of home loans outstanding nationwide, mostly those made between 2003 and 2006 when lending standards were growing more lax," he said.
An increasing number of parents of college-bound offspring are purchasing a condo or small house in the area of the college for their student's residence while attending the college or university. In some cases, it appears to be more cost-effective than paying for a room in a dorm.
The student will often rent out a portion of the purchased unit to another student to minimize the investment. When the student's attendance at the college is completed, the unit will be sold, hopefully at a profit.
There are now about 3 million campus houses and condos that have been purchased by students or their parents, according to a report from the National Association of Realtors. That represents about 8 percent of the nation's 37.4 million investment properties, but excludes 6.8 million vacation homes.
In addition to the possible financial advantage, owning such a residence gives the student more freedom, and a choice of roommates. For parents, it offers a chance to recoup some of the rising costs of higher education, assuming it turns out to be a good investment.
Many parents are spooked by the unknowns in such an arrangement. Can the extra space be rented at the projected rental amount? Will the student handle his extra freedom responsibly? Will the property later sell at a profit? These and other concerns tend to keep the dorms fully occupied.
(Jim Woodard, a Ventura resident, writes a nationally syndicated column and freelance features in addition to his Star columns. He also is a storyteller with a Web site at: www.jimwoodard.net. E-mail: Storyjim@aol.com.)
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