The market has been hot lately because the inventory is low. There are only 5,880 detached, and 3,043 attached active listings in the MLS – about 38% of what it was in September 2007.
Waiting buyers are frustrated and should be jumping at new product – how are the June listings faring?
This is the chart of all the detached listings that came on the MLS in June, and the number that have gone pending. If the market is hot, and realtors price them within 5-10% of being right, we should see a third or half of new listings selling:
Town or Area
# Found Buyers
Those towns are hot – there are plenty of buyers waiting, and close to half of every house listed sells right away. What about the ‘tonier’ parts of town?
Town or Area
# Found Buyers
Houses stand the best chance of selling when new on the market, yet SIXTY new listings have come on the MLS in Del Mar and Rancho Santa Fe, and NOT ONE of them have found a buyer?
The foreclosure process for many houses is dragging down to a slow crawl. Lenders are buried, short sales could be in the works, and the free-loading homeowners have no incentive to cooperate.
But once the lenders finally complete the trustee sale, they’re not done.
They have to get the occupants to leave.
Tenants now get 90 days to vacate – from B of A’s Tenant Assistance Flyer:
The “Protecting Tenants at Foreclosure Act of 2009” took effect May 19, 2009 and applies to properties with a foreclosure date of May 20, 2009 or after. This new bill requires 90 days notice to vacate or notice to quit, depending on the state guideline requirements for tenant occupied properties. Should the tenants produce a bona fide lease, then the terms of the lease will be honored. A bona fide lease must be at arms length, the tenant cannot be the prior mortgagor, spouse or child of the mortgagor, the lease must have been executed before the notice of foreclosure, and the lease must be fair market rent for the area.
Doesn’t that sound like they just got into the landlord/property management business? Not only will tenants get an automatic 90 days to vacate, if they have a lease that goes longer, it sounds like they can stay, as agreed.
Say an owner’s mortgage is worth $400,000 but his house is valued at $300,000. The government would refinance the $400,000 loan with two new loans. Fannie Mae, the mortgage financier now under government control, would provide a first loan for the market value of the house, in this case $300,000. The Treasury would issue the second loan, in this case for $100,000.
The Treasury loan would be interest-only and would provide the vesting part of the program. For each year that the homeowner keeps up payments on both loans, one-fifth of the Treasury loan would be forgiven.
“This gives homeowners the incentive of returning to a positive net-equity position before their hair turns grey — maybe even in time to pay for their children’s college education,” Klowden and DeVol wrote in a summary.
They estimate that the cost to Treasury (and thus to taxpayers) of saving 1.5 million homes from foreclosure or abandonment with this plan would be between $75 billion and $100 billion. That assumes the government wouldn’t jeopardize the original lenders’ balance sheets by forcing them to share in the cost via haircuts on their loans.
DeVol concedes that the Milken proposal would be a handout to the usual suspects in the housing crash — mainly, California, Florida, Nevada and Arizona — because those are the places where the negative-equity problem is dire.
So Nebraska doesn’t need the program, but would have to help foot the bill.
This is another crazy proposal in a series of nutty ideas to prop up the housing market, and will probably fall by the wayside, like the rest.
But here’s the best quote in the article:
Richard Green, director of the USC Lusk Center for Real Estate, also favors the debt-for-equity swap concept to permanently reduce mortgage balances for struggling homeowners. The need is chronic, he says, in places like Riverside County, “where prices aren’t coming back to where they were, maybe in our lifetimes.”
Yesterday chart showed that in 2005 the SD median-priced home was 9.7x the median income!
It’s not just Riverside County. Let’s get used to the idea that we won’t be seeing the bubble-era prices for a very, very long time.
There has been discussion about San Diego home prices reverting back to their ‘normal’ trend, but what is normal? 3x income? 4x income? 5x income?
The few times I’ve spoken up about the income question, I’ve said “Who cares about the median income for the county, what counts is the income of the potential buyers”. Not everyone who lives in the county is looking to buy a home, and at this point they are most certainly a minority.
But comparing the trend is noteworthy, because over time there should be a statistical ‘norm’.
Harvard has charted the affordability index for each metro area, the comparison of median household income to median home price through 2006. I used the city-data report of median household income ($61,793) to their median home price ($556,500) for 2007.
For 2008 and 2009 the income used was $60,000, and the Dataquick median home price for May ($380,000 and $295,000). This is the chart of median price/median household income:
Since 1980 the number has never been under 4.0.
Yes, today’s median sales price is skewed artificially low due to the hot lower-end markets, but overall it looks like the relationship has gotten somewhat back in line.
Yes, the higher-end is screwed up, and has a long ways to go. The median sales price so far this month for the 126 detached sales from Carmel Valley to Carlsbad is $800,000. But as more higher-end sellers sell for less (instead of not selling), this number should trend higher if the median sales price rises, and incomes stay the same.
What if the median income goes down at the same time?
Example: Median sales price trends up to $350,000 due to additional higher-end sales, and the median income drops to $55,000. New ratio is MSP = 6.36 x income.
I’m not sure we’ll depend on this relationship to tell us much in the future.
You keep hearing about the fury of activity in lower-end areas like Oceanside, here’s a video of the REO that hit the MLS a week ago at 4773 Sequoia.
It had been assigned to me in September, but it took six months to get the tenant out. He was an active-duty Marine who said he’d take the cash-for-keys, then changed his mind and chose the full eviction instead. The appraisal got kicked around for a couple of months, and well, here we are.
This will be a case where the delay probably helped the cause, because currently there is such a shortage of decent homes under $200,000 that buyers are swarming.
This is a video compilation of four clips, the first two are intros to tie together what you’ve seen in the past to this property, and the last clip is another new listing in the same neighborhood:
The new Webbie videocam doesn’t do that well in these smaller houses, but now I know.
The June Chapter 7 liquidation of what had been a billion-dollar Southern California homebuilder has reached into San Diego County and hundreds of residential parcels from Black Mountain Ranch to Oceanside have been affected.
In its Chapter 11 reorganization bankruptcy filing in February, WL Homes LLC of Newport Beach said its sales volume in 2008 was cut by more than half from 2007’s $948 million.
The company listed $1.3 billion in assets and $977 million in debt as of Nov. 30, 2008.
WL Homes, with roots dating back 161 years, was formed in April 1998 when John Laing Homes, a British homebuilder, merged with Watt Homes — an entity founded by Los Angeles developer Ray Watt.
Watt was instrumental in building much of the housing in Fairbanks Ranch, and constructed such projects as San Diego Country Estates in Ramona and The Landing condominium complex in Coronado. Laing entered San Diego County in 2002, with projects such as the 219-home Tides at Water’s End in Carlsbad and the 86-home Woodley Hills in the San Elijo Hills master plan in San Marcos.
WL, which continued to market homes under the Laing banner after the merger, had explored the possibility of going public, but opted instead to remain private. It was then acquired in 2006 by Dubai-based Emaar Properties, one of the world’s largest global real estate development companies, for a reported $1.05 billion in cash. While Emaar has reportedly invested more than $600 million in the U.S. builder since the acquisition, it informed WL at the end of last year that unsecured financing Laing would no longer continue.
At the time of the February Chapter 11 filing, the homebuilder still held out hope the company might be saved, but defaults mounted and by early June the homebuilder filed a Chapter 7 liquidation request earlier this month.
While WL prepared itself for liquidation, Bank of America (NYSE: BAC) filed motions in Superior Court to foreclose on the planned 76-home Sentinels @ Del Sur development within the Black Mountain Ranch master plan. Black Mountain Ranch LLC, the master developer of Del Sur, was also named in the foreclosure. BofA is being represented by the Costa Mesa law firm of Snell and Wilmer LLP of Costa Mesa, which referred calls to BofA.
Fred Maas, Black Mountain Ranch president, said he believe his firm was named because BofA wants to be able to sell the remaining lots without the covenants, conditions and restrictions (CC&Rs) that run with the Sentinels property. He plans to fight the lender’s move.
“The CC&Rs are there for a reason. We want to keep a tight reign on Black Mountain,” Maas said, adding that Bof A has kept him in the dark as to what is happening with the property.
What hasn’t happened with the Sentinels are sales. Opened in August 2007, WL was only able to sell four homes through the first quarter of this year and, according to MarketPointe Realty Advisors, none of those sales came in 2009. The two- and three-bedroom homes were priced from $875,000 to $921,000.
According to Superior Court documents, WL, as of about three weeks ago, owed $9.33 million on what had been a $23.39 million construction loan from BofA that was secured by the Sentinels property. BofA officials would only say the Sentinels was working its way through the court process, but that the court had yet to appoint receiver.
The Sentinels was not the only project where WL was having trouble.
BofA revealed that a court appointed receiver is already in place for the Breakaway at Arrowood development, which had 130 homes planned in Oceanside. In that case, only 34 closings were recorded from September 2006 through the first quarter of this year, according to MarketPointe. Those four-bedroom homes were priced from $454,990 to $489,900.
Sometimes, as in the case of Silhouette, a 96-home development in 4S Ranch that got underway in March 2006, the sales got off to a strong start, only to fizzle later. While Silhouette managed to close 65, it still had the remainder to sell when WL filed Chapter 11.
Three other WL projects under the John Laing banner in San Diego County also had similar problems.
These include a planned 100-unit townhome property known as Palomar at St. Cloud that posted just 10 closed escrows since it started in September 2007. Two other projects were substantially reduced from their original sizes. The San Luis at St. Cloud development in Oceanside had 14 of 16 units sold through the first quarter of this year. The problem, according to MarketPointe, was the developer originally planned a 138-unit project.
The case was a similar one at Laing Luxury Village in the Crosby Estates master plan above Rancho Santa Fe that posted 32 closings out of 35 offered through the first quarter of the year. MarketPointe said that project at some point was cut in half from its original 70 units. WL’s developments also include two major projects in Orange County. One is a 575-home project built on the former Marine Corps Air Station in Tustin and the other is a 1,000-lot development in San Clemente.
There were two REOs that we put on the market last week – this is the bigger one, a 2,031sf one-story house on Pismo Bay in North Oceanside. The lender has been more willing to spend up to $10,000 for improvements lately, so we’ve been taking them up on it:
If this house would have hit the market with the old carpet and paint, we would have been lucky to sell it, because $359,800 is a truckload of money near the back gate.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!