Price: $639,900 for 3br/2.5ba 2,352sf townhouse
Area median price: $672,500
For $639,900, you could get this three-bedroom, 2.5 baths 2,352-square-foot townhome, with granite counters, a security system, Bose speakers and attached garage. On a lagoon, the home affords a water view from most rooms, and it’s in a community with walking trails near a beach.
Homes at the median price in Carlsbad are typically larger and more expensive than retirees are looking for, says broker Tony Cannon of Keller Williams Realty. For substantially less — $374,000 — you could get a home more suitable for empty nesters: a two-bedroom, two-bath, 1,100-square-foot home with a patio, garage and a low-maintenance yard in a community with a pool and spa, on about one-eighth of an acre, Cannon says.
The weather and the beach are the main draws for retirees in Carlsbad, which ranks among the “top 10 beach towns.”
“East Coast people come out here because the weather is nicer,” Cannon says. “It’s mild all year long. We get people from Canada, other parts of California, even Arizona and New Mexico. If you live within 5 miles of the beach, you don’t need air conditioning.”
Wells Fargo has been long-rumored to be suffering from their portfolio of second mortgages/home equity loans. This from TheStreet:
NEW YORK — The biggest cost ahead for large mortgage servicers may not be “robosigning” settlements or buying back bad debt – it’s the follow-on mortgage products like home-equity loans that take longer to go sour.
A report on Monday by CreditSights is the latest sign that the biggest cost to banks from the mortgage crisis could be home-equity loans – whose credit-card-like aspects tend to keep borrowers current long after they’ve maxed out the first mortgage.
CreditSights estimates that Wells Fargo has the most exposure to home-equity costs, at $7.8 billion. JPMorgan Chase is right behind with $7.2 billion, followed by Bank of America at $4.9 billion and Citigroup at $3.6 billion. However, the expected lag in performance has allowed big servicers to prepare for the coming HELOC write-offs.
“Home equity will lag because home equity, by its nature, we find lags the underlying prime and the underlying real estate and lags more than most other things,” JPMorgan CEO Jamie Dimon explained in an earnings call last week. “We try to account for that in our reserving.”
Wells Fargo will be the hardest hit for overall costs of the foreclosure crisis, using CreditSights’ figures, with an $11.2 billion, or $2.13 per share, reduction of earnings on an annualized basis.
Bank of America has the second-highest exposure, at $9 billion, or 90 cents per share, followed by JPMorgan at $8.8 billion, or $2.24 per share. Citi’s much-smaller mortgage servicing division would face costs of $4.2 billion, or 14 cents per share
Q: Does the new health care law impose a 3.8 percent tax on profits from selling your home?
A: No, with very few exceptions. The truth is that only a tiny percentage of home sellers will pay the tax. Only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.
The sort of people who would have to pay the tax might include, for example:
A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
An “empty nester” couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy.
Thus, for the vast majority, the 3.8 percent tax won’t apply. The Tax Foundation, in a report released April 15, said the new tax on investment income (including real estate) “will hit approximately the top-earning two percent of families” when it takes effect in 2013.
The MERS debacle will go on for years, and be full of legal wranglings along the way.
The biggest issue? The notes and trust deed have been physically separated by MERS, and according to the U.S. Supreme Court ruling in 1872, a mortgage has no separate existence from the note. It sounds like the money owed would then convert to being unsecured…or will it extinguish?
It’ll be a long road, so let’s just digest in smaller pieces – excerpts from this Bloomberg article sent in by SM that also cites several court cases, mostly favoring MERS:
1. About 60 percent of newly originated loans are on the MERS system, Lejarde said. Since its inception in 1995, it has carried 66 million loans and currently has between 23 million and 25 million active loans, she said.
2. A big selling point for the company is its cost savings. It charges $6.95 for every loan registered, Lejarde said. With an average cost of about $40 for filing a mortgage assignment with local counties, MERS has saved the industry about $2.4 billion, Merscorp Chief Executive Officer R.K. Arnold said in a September 2009 deposition in an Alabama suit.
3. The company is accused in two whistleblower suits filed this year of cheating California and Nevada counties out of millions of dollars in recording fees. In 2006, New York State’s highest court told one county it had to record MERS mortgages against its wishes. The county said MERS cost it $1 million a year.
4. Eventually high courts in states with judicial oversight of foreclosures will have to review MERS’s role, Patrick A. Randolph, a professor at the University of Missouri-Kansas City specializing in real-estate law, said in an interview. “It’s a question of state law,” Randolph said. “The problem is simply confusion about a word the courts are not used to seeing in this context — the word ‘nominee.’”
5. MERS says it has the right to foreclose because the borrower grants the company legal title to the mortgage and it forecloses as agent for the promissory-note holder. “Courts around the country have repeatedly upheld and recognized this right,” MERS said in an Oct. 4 e-mailed statement.
Since March 2009, supreme courts in Arkansas, Kansas and Maine have found that MERS had no standing in foreclosure proceedings under their states’ laws. The company lends no money and suffers no injury, the panels said.
MERS’s relationship to the bank that owned a loan in question was “more akin to that of a straw man than to a party possessing all the rights given a buyer,” the Kansas Supreme Court wrote. “What stake in the outcome of an independent action for foreclosure could MERS have?”
All we need is more soundbites like this, and we’ll be off to the races. Potential buyers who are gainfully employed and have ample resources will gravitate to these articles, especially when they’re quoting the guy with the most negative foreclosure stats.
Foreclosures have long appealed to investors who are looking for instant equity—and willing to roll up their sleeves. Often, buyers can purchase such homes for 20 percent to 60 percent off their potential market value.
“There is probably three more years of extraordinarily high levels of distressed inventory before we burn through this supply,” said Rick Sharga, senior vice president of RealtyTrac.com. “This is a market where somebody who does their homework can save significant money on a home purchase and create a nice investment opportunity on a longer-term basis.”
Investors entering the market today, however, will have to employ a different strategy than those who came before. If you’re looking to renovate and flip, forget it. But if you’re in a position to buy and hold, with the intent of either renting your property or sitting on it until the real estate recession subsides, the market is ripe for the picking.
According to RealtyTrac.com, Nevada, Florida and Arizona lead the nation in foreclosure rates, while Sunbelt cities and states, including Las Vegas, Nevada, Modesto, California, and Cape Coral-Ft. Myers, Florida are posting the largest number of foreclosures.
For investors, notes Sharga, a rocky residential market and a growing inventory of foreclosed homes could mean a bigger potential payoff down the road.
“If you combine a down market with the kind of discount you’d be looking at with the typical foreclosure, that doubles your opportunity for success when the market comes back,” he said.
“Many foreclosure investors won’t purchase a property unless it is at least a 30 percent discount,” said Sharga. “That’s because you’ll typically need to do a rehabilitation to bring the property back up to the neighborhood standard, you’ll probably have to finance it for a short period of time and it’ll cost you some money to market the property.”
It may be not sit well to profit from someone else’s misfortune, but keep in mind that when you purchase a distressed property you’re not just doing your investment portfolio a favor.
By reducing the inventory of available homes, you’re also helping to stabilize the residential real estate market, which, in turn, will buoy the troubled U.S. economy.
Comments in the latimes.com about September sales:
“We are in the doldrums. Nothing much is happening,” said Richard Green, director of the USC Lusk Center for Real Estate. “We are now kind of bumping along, not doing particularly well, but not doing any worse either, and that is probably where we are going to be for a while.”
Glenn Kelman, chief executive of online brokerage Redfin, said the uncertainty in the marketplace after the expiration of tax credits had created a standoff between buyers and sellers.
“There are a huge number of buyers touring houses, but they have no sense of urgency whatsoever,” Kelman said. “They are all convinced that property values will drop. They are probably right, and they all want a discount.”
And sellers, “instead of lowering their prices,” he said, “are boarding up their windows for the winter, and they are going to wait for the spring.”
“Today’s market can be characterized as much by activity that’s not happening, as by the activity that is happening. We’re seeing distress-selling, bargain-hunting and entry-level buying, while the rest of the market is still largely on hold,” said John Walsh, MDA DataQuick president.
“As many wait for this market uncertainty and turbulence to pass, demand is being generated and is accumulating. At some point, the mortgage spigot will be re-opened and there will be a surge of buying activity, probably financed with low interest rates,” he said.
The comparisons for detached MLS sales in North SD County Coastal:
Month/Yr
# of sales
Avg. $$-per-sf
DOM
Sept ’05
265
$530/sf
55
Sept ’08
183
$419/sf
70
Sept ’09
229
$376/sf
73
Aug. ’10
210
$367/sf
62
Sept ’10
216
$396/sf
74
Remember how the sales in September and October ’09 were unusually high? This year detached sales in September were only down 6% year-over-year, with a 5% increase in average cost-per-sf.
Lake Mead, the vital Colorado River reservoir outside Las Vegas, hit a record low Sunday, The New York Times reports. The reservoir is the lowest it’s been since being filled in the late 1930s, just 39 percent full.
Millions of people — San Diegans included — rely on the reservoir’s water.
So what does its drop mean here?
In the short term, nothing. It doesn’t have any impact on San Diego’s supply even though we relied on the river for 61 percent of our water in 2009. But it does send a bad signal that the river supplying the Southwest’s lifeblood is continuing to face pressure — a pressure that scientists say is growing as the climate warms.
If the lake continues dropping, it will first cause problems for cities in Arizona and Nevada before San Diego. Those states hold lower-priority rights to Colorado River water than California does.
Right now, Lake Mead is filled to 1,083 feet above sea level. If it drops to 1,075 feet, the U.S. Bureau of Reclamation will declare a shortage and implement cuts the seven Colorado River states agreed to in 2007. Those cuts hit Arizona and Nevada — not California.
The cuts would stay in place until the reservoir hits 1,025 feet. Then the shortage is renegotiated and becomes an issue that could affect California.
The Bureau of Reclamation’s current plan for the coming year calls for an increase of up to 40 percent in the amount of water delivered to Lake Mead from Lake Powell, the big reservoir upstream, a step that could help equalize the amount of water in each reservoir and possibly avoid triggering the shortage declaration.
Musings about current market conditions – the sellers aren’t happy about my lowball offers, but what else do you got? Expect that listings will be cancelling in disgust, with sellers thinking it’ll be better next year.
But selling won’t be “better” in spring or summer or whenever, not as long as the internet is still working – because buyers know the score….and the comps.
Kris Berg reviewed the new Freakonomics movie, and how they criticize realtors for telling their clients to sell early. Just like in their book, they refer to a study that realtors wait longer to sell their own personal residences, and get more money. In the end, the one guy states that he’d rather wait to get his hypothetical extra $10,000 that magically comes one week later.
The movie makers are just picking on a common target, realtors. If they really wanted to get some scoop, they’d include the rampant short-sale fraud or how realtor inexperience is costing the clients. No, instead they keep the focus on a hypothetical case that sounds juicy – the reality is:
1. Today the listing agents are telling sellers to hold out, not dump and run.
2. Agents who over-price their own house are commonplace; it’s because they aren’t very good.
3. Today you are either priced to sell, or priced to sit. There isn’t magic that happens a week later.
Here are two studies that back up what we see on the street, from thelatimes.com:
If you’re considering listing your house and you’re serious about selling, you’re better off being realistic right from the get-go. This is according to a New Zealand housing analyst whose study of online buyer habits echoes one done this year in the United States.
Alistair Helm, chief executive of Realestate.co.nz, concluded that a property receives four times as many views in the first week online as it does a week later. His company looked at 1,100 New Zealand properties during a six-week period in July and August.
Helm told the New Zealand Herald that the “most important people in the market” are serious buyers who are searching online every day, and they’re fully aware when a home that might meet their needs becomes available.
A few months ago, the online brokerage Redfin.com looked at traffic for listings in multiple markets.
The homes studied had gone on the market early this year and had been for sale at least 60 days, and the listings had been updated — had a price change or some other significant condition change — at least once.
Redfin.com came to the same conclusion: Brand-new listings get four times as many online viewings in that initial week as they do immediately afterward.
If you’re fishing for an unrealistic price, you may be blowing it, the company said.
Author Mary Umberger writes for the Chicago Tribune.
The foreclosure activity has been throttled around the coastal areas this year.
There are only 27 La Jolla SFRs on the auction list, and the few that get foreclosed every month (26 this year) are fairly unremarkable. Here are the latest from the Jewel:
Carlsbad, Calif.
