The Value of a Home

We should embrace the emotional side of home ownership, not hide from it.

Coldwell Banker today launches a new TV commercial promoting home ownership (The Value of a Home).  The timing coincides with the spring buying season that we enjoy from March through June each year.  Actor Tom Selleck handles the voice over to appeal to those nostalgic Magnum P.I. lovers out there.  It addresses the emotional side of residential real estate sales.

Realtors often talk facts and figures, sometimes assuming that a purchase or sale is always a rational, economics based decision.  The reality is the opposite.  More often than not, we buy homes because they make us feel something.  We should embrace the emotional side of home ownership, not hide from it.  When it comes down to it, how we feel every day matters most.

Click on link to view:  The Value of a Home

Short Sale Relief On Way? Maybe…

*NOTE:  Article paraphrased from email by Kathy Mehringer, Director of Risk Management / Short Sale Advisor for Coldwell Banker Residential Brokerage

Clients and agents are starving for information and solutions to the delays and roadblocks of the short sale process.  A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance, but with the lender’s approval.  Often a sound bite on the news leads to confusion and misinformation.  Certainly we should be be the source of industry news but we need to be accurate!  The legislation described below is PROPOSED.  You can be sure that the National Association of Realtors is pushing for some homeowner/Realtor relief but there are hurdles yet to overcome.  Even if the bill passes, as written, it will not be a cure-all for what ails us.

To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.  Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17.

“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”

The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.  The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer will be limited to one extension of no more than 21 days.

The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.  According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.

“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, Realtors are supportive of any effort to improve the process for approving short sales.”

Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”  The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.  When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.

In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.

My two cents:  I agree with most of what’s said in this piece, with the exception of the comment that says short sales don’t negatively effect real estate values like foreclosures.  They may not record as low as many foreclosures, but they do typically record lower than other non-distressed sales.  Short sales and foreclosures are treated by appraisers of non-distressed sales the same as ANY comp, thus they bring down values in the neighborhood.

Newport Beach Real Estate Cycle–What’s up for 2012?

Why we live here. Crystal Cove State Beach.

It is important to remember that no matter the economy, our real estate market still follows the same trends on a calendar year.  It just varies in degree of severity.  So, what can we expect for this year?  Here is my guesstimate, based on past annual cycles.

• January remains sleepy, but phones begin to ring thanks to nice weather and low interest rates.
• In February people come out after the Super Bowl and more listings come to market.  February 18-19 and 25-26, expect slower weekends with local families away for winter break.
• March picks up with more active listings, but count on basketball fans to skip the open houses for March Madness.
• April, May, and June see many good listings in escrow while families strive to move in and get settled over summer.  Many buyers attempt to close with little disruption in the school year, time to make improvements on their new purchase, and get settled and meet the new neighbors before the grind of school starts back up.
• July and August are slower than you think, with fewer escrows per month than spring.  Summer vacations and good weather lures buyers to the beach, rather than open houses.
• Early September is slow until after Labor Day and two weeks into school, then we see a spurt of buyer activity through October and into early November.
• As Thanksgiving approaches, things slow dramatically.  Only serious buyers with more urgency (or serial lookers) will be out and about.  Expect little new action until a week or two after New Years.

Sounds overly simple?  Perhaps, but we seem to follow similar behavior patterns regardless of the Dow Jones or who is in the White House.  Let’s hope for a year of economic growth and general peace with returning prosperity.  It is the Chinese New Year today, after all.  The Year of the Dragon is supposed to be the luckiest!

Loan Rates At All Time Lows!

1245 Blue Gum Lane -- IN ESCROW

With home values bottoming out (and in some cases bouncing back), and with interest rates at or near all time lows, I expect to see increased buyer activity in the coming months.  Add those two facts with our typical high volume season of spring into early summer and we have a recipe for a strong first half of 2012.

Our 30-year fixed conforming loans up to $417K are at 3.625%, and jumbos from $625K-$2M are at 4.125%.  Even better, the 10-year fixed to ARMs are at 3.375% and 3.625% for conforming and jumbos, respectively.

The “conforming jumbo” range from $417K to $625K are coming in at 3.875% for a 30-year fixed loan.

Keep your eyes peeled for more homes coming to market in February and March.  If the right one comes along, there has never been a better interest rate climate.  Maybe the wait is over…

*Note:  Mortgage information provided by Tim Sibley at First Capital Mortgage:  949.874.0374.

Restoring FHA Mortgage Limits?

It is expected that both the House and Senate will vote today on restoring the FHA mortgage limits. FHA mortgage limits, both the 125% calculation and the $729,750 maximum, should be restored for two years until December 31, 2013.