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The $100 million in tax-credit money is holding up OK. If every applicant got the full $10,000, we’re about a quarter of the way done, after nine business days:

Applications for First-Time Buyer Credit received as of 5/13/2010:

Yesterday’s article in the U-T suggested that home prices in SD County were rising because the median sales price in 1Q10 had risen 14.7% year-over year.

Are prices rising?

There will always be occasional lucky sales, and a few lowballs that succeed.  To identify a solid trend, the best place to look is in tract neighborhoods, and compare model-matches: 

We submitted the purchase offer, utilizing the new strategy dubbed, “Tuna Melt”:

List Price: $2,375,000

Offer Price: $1,800,000, with $100,000 reductions each month. Offer good for 4 months.

I always like to include a compelling case to help justify the offer. 

Evidence submitted:

• Sellers’ purchase price: $1,750,000, November, 2005.
• Zillow Zestimate: $1,295,000 (up from $900,000 less than a year ago).
• Tax Assessor’s Value: $1,600,000 (even number = re-assessed within the last year).
• House has been on the market since the beginning of 2008.

There has only been 4 sales in the last six months over $1 million.  One of the four sales that closed for $1.3-something had mentioned in the remarks, “Was once listed for $3,500,000″.

I also said that it’s not just us, that all buyers would look at this evidence the same way, and expect to buy the house well under list.  This was the response from the agent, who CC’d the sellers too:

Zillow does not know CRAP. The Sellers are not going to counter. The offer was too low, and the approach as to the $100,000 reduction per month was offensive.

Watch the creative techniques, sellers are sensitive enough.

From the U-T, more hoopla about rising prices:

Resale-home-prices-rise-percent-first-quarter-2010

At least this made the cut, although it was the sixth paragraph down:

Although San Diego prices rose, they remain far below the peak set in 2005, and some analysts say the increase reflects a change in market mix — more high-priced homes selling than in previous quarters — than a major increase in value.p>

The misleading part is that they keep saying that “prices rose”.  All that happened was that the median price went up, that’s it. Here is the brief ‘market mix’ noted above of SD County detached homes in the first quarter:

It looks like there are more mid-range and high-end homes selling, which skew the median sales price. Let’s work in some more detailed analysis over the next few days. Any personal observations?

It looks like Bank of America foreclosed on approximately $6 million in loans on the package deal offered for sale in Leucadia.  The same agents who sold Magno-Bressy are on this case too, and it seems very casual and soft-sold.  Are there dozens of buyers waiting in the wings after they saw how Magno-Bressy turned out? Take a look:

Being a realtor means you get to see things beyond the imagination; some good, some not so good.

The worst can be seeing how some people live, particularily those less fortunate. How the previous owner allowed this to happen is beyond me, but she collected the rent from this tenant to the end, even though she didn’t make payments for at least a year (I represented the buyer).

Zach Fox keeps stirring the pot – where did he learn that?

From his SNL blog:

On the crucial question of whether underwater borrowers will continue to pay their mortgages or walk away, Luigi Zingales, a professor of finance at the University of Chicago Booth School of Business, told SNL that much could depend on whether a new business idea gets off the ground.

Zingales’ comments, which did not quite fit into the Block’s rundown on strategic default risks, suggest foreign entrepreneurs could play a large role with a new type of bank: a lender that specializes in giving new mortgages to high-credit quality borrowers who walked away from an underwater property.

Without legacy assets, the bank would have no fear of encouraging strategic default or cannibalizing its customer base.

“That would really be gasoline on the fire. The main reason why people don’t [walk away] is because they think they will have a very hard time getting a house in the future,” Zingales said. “But if somebody comes and says, ‘You know what, you have always had a good credit, you’re in a bad situation today, I’m sort of going to give you that offer,’ then I think [strategic default] might become irresistible.”

Although Zingales declined to offer any detail on who might be considering such a business idea and noted that it remains purely hypothetical, he said the idea has been floated.

“It makes perfect sense,” he said. “If I am a new lender, that’s the way to do business.”

If it does happen, the fallout could verge on pandemic; Zingales’ latest study indicates that 74% of borrowers consider a good credit score “very important.”

Zach’s blog post from Friday also covered more about strategic defaults – click here.