Whole Foods Condos
Be a part of the vibrant downtown Encinitas scene – it’s shaking!
Be a part of the vibrant downtown Encinitas scene – it’s shaking!
A look back at a time when kids took a stand. Warning: flashback alert!
Trulia has issued their 2014 predictions:
Jed the Economist predicted some changes in the market – here is his #3:
Repeat Buyers Take Center Stage.
2013 was the year of the investor, but 2014 will be the year of the repeat home buyer. As prices rise, buying homes will become less attractive to investors as well as first-time homebuyers, but repeat buyers will be able to offset the higher price of the home they buy with the higher price from the home they sell.
This idea probably looks sexy from his perch in the ivory tower, but on the street it is much harder to accomplish.
Yes, there will be people who won’t mind paying more for the next one if they can get more for theirs. The difficulty is with the logistics.
If you are thinking of moving up or down, here are the choices:
1. Offer to purchase a home, contingent upon selling yours. While this provides great convenience to you, there’s not much chance any seller will go for it. If it is a decent house and priced correctly, there will be enough non-contingent buyers that you’ll get kicked to the curb by the listing agent who won’t give you the time of day – even if you are the highest bidder.
2. Sell yours first, and rent. This is the best solution if you want to use the equity in your home to buy the next, but nobody likes the double-move. Plus, if the prices keeps moving and/or your criteria is so tight that few homes are a match, you could be left waiting for a while.
3. Buy first, then sell. If you can use other money for your down payment, and qualify for the payments on both homes, you got it made. My rule-of-thumb is that you need to pay 50% more for your next house to make it worth it – spending 10% to 20% more only gets you another bedroom or bigger yard. How many people can qualify for their current house, AND the new house that is 50% higher-priced?
4. Leave town. You still have to juggle one of these three options, but if you move to a cheaper area then the qualifying for both loans is a little easier.
5. Take an ARM. There are lenders now who will allow you to rent your old house, and apply the new rent amount towards your income for qualifying purposes. But you will get a portfolio product, which means a 7-year, or 10-year ARM, not a 30-year fixed rate.
None of these options look very appealing to most homeowners, and it’s one of the main reasons the inventory has been as low as it has – staying put is usually the best alternative.
To accomplish a move-up, you have to be really motivated – either the old house is killing you, or you have money burning a hole in your pocket.
If the market will be depending on the move-up buyer as a primary source of sales, it’s going to be a slow year.
These are some of the hottest markets in the country for real estate recovery, and all have had a pause in pricing over the last couple of months:
Sellers will be expecting the frenzy to re-ignite next year, but will pricing start advancing again? It will probably be case-by-case, depending on location and condition/quality of the home for sale. Get good help!
The inventory is dropping steadily now, and any new listings that hit the market during the rest of December must have motivated sellers!
North SD County’s Coastal Region (La Jolla-to-Carlsbad)
The UNDER-$800,000 Market:
Date | ||||
November 25 | ||||
December 2 | ||||
December 9 |
The $800,000 – $1,400,000 Market:
Date | ||||
November 25 | ||||
December 2 | ||||
December 9 |
The $1,400,000 – $2,400,000 Market:
Date | ||||
November 25 | ||||
December 2 | ||||
December 9 |
The OVER-$2,400,000 Market:
Date | ||||
November 25 | ||||
December 2 | ||||
December 9 |
We’ve been averaging 50 pendings per week in the fourth quarter, and the past week almost kept up. With only two weeks to go to Christmas, we can say the market has held up through the holidays. It would have taken a big 4Q drop-off to make anyone think that next year was going to be different.
Weekly NSDCC New Listings and New Pendings
Week | ||
May 30 | ||
June 5 | ||
June 11 | ||
June 17 | ||
June 24 | ||
July 1 | ||
July 8 | ||
July 15 | ||
July 22 | ||
July 29 | ||
Aug 5 | ||
Aug 12 | ||
Aug 19 | ||
Aug 26 | ||
Sep 2 | ||
Sep 9 | ||
Sep 16 | ||
Sep 23 | ||
Sep 30 | ||
Oct 7 | ||
Oct 14 | ||
Oct 21 | ||
Oct 28 | ||
Nov 4 | ||
Nov 11 | ||
Nov 18 | ||
Nov 25 | ||
Dec 2 | ||
Dec 9 |
Thanks to daytrip for sending in this story on FHA reducing loan limits:
As of Jan. 1, the limits for FHA-insured loans in the nation’s most expensive areas will be $625,500 for a single-unit dwelling, down from $729,500. The upper limits are for areas with the highest housing costs, including Los Angeles, Orange and Santa Barbara counties, the San Francisco Bay Area and Silicon Valley.
The limit varies for other areas. For example, Riverside and San Bernardino counties will top out at $355,350, San Diego County at $546,250 and Ventura County at $598,000.
The FHA historically provided insurance on smaller loans so first-time borrowers and people with modest incomes could get mortgages. Its role changed and Congress increased the limits in 2008 during the financial crisis, when home loans not backed by the government dried up.
More recently, banks have been eager to write jumbo mortgages for well-heeled borrowers without government support.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The reduction from $697,500 to $546,250 is a welcome relief for San Diego buyers. The FHA mortgage insurance is outrageous, and buyers are much better served getting a conventional or jumbo loan, even if it takes saving a while longer for a bigger down payment.
But what’s the current impact of FHA financing?
Here are the totals of FHA financed purchases of detached NSDCC homes in the 2nd and 3rd quarters, compared to the overall sales:
Year | |||
2011 | |||
2012 | |||
2013 |
What has become the nation’s subprime loan was only used in 2% of the NSDCC purchases this year. With prices going in the opposite direction of their loan-limit, FHA loans should become extinct around here.
Here is a tour of Richard’s new listing in the 92130.
There were 25 groups who came through open house today in the rain, 2 1/2 weeks before Christmas.
Sunday’s open house is cancelled, offer accepted!
Comparing this year’s November sales to the peak years, we can see that last year was a real anomaly, caused by the frenzy kicking into high gear.
You can also see how average pricing trailed the sales count in 2005 and 2006, only to have Angelo goose the market with the no-down, no-doc neg-ams up to $1,500,000 for one last burst in 2007.
With last month’s sales re-calibrating lower, and using the historical trend as a guide, shouldn’t we see the average cost-per-sf start to top out – and be dropping in 12 months?
North SD County’s Coastal November Sales and Avg. $/sf
Year | ||||
2002 | ||||
2003 | ||||
2004 | ||||
2005 | ||||
2006 | ||||
2007 | ||||
2008 | ||||
2009 | ||||
2010 | ||||
2011 | ||||
2012 | ||||
2013 |
Of course, this is the new normal. It’s possible that November sales slowed down because buyers became more picky, and fewer homes were deemed worthy. This waiting-buyer demand is hard to measure – if you are in that group, let us know your thoughts!
This typifies today’s flipper – get a deal on a lazy short-sale, add lipstick, boast of the improvements (“completely remodeled from top to bottom’), and shoot for outrageous profit. What a country!
The California Association of Realtors’ political action committee gave $500,000 to the state Democratic Party the day before the Democrat-dominated Franchise Tax Board effectively resolved a months-long legislative fight over the state’s tax treatment of short sales.
Tuesday’s donation, reported Wednesday evening, matches the $500,000 the Realtors gave state Democrats in May. The group also gave the party $168,000 earlier in the year and more than $1 million in 2012.
The 2013 contributions, by far the largest to the party in the current election cycle, will help Democratic attempts to keep their two-thirds legislative supermajorities in 2014.
Realtors spokeswoman Lotus Lou denied any connection between the two events. Wednesday’s legal opinion from the Franchise Tax Board stemmed from a September clarification on the issue by the IRS, she said.
“The two did not have any relation to each other,” Lou said.
In her legal opinion, Franchise Tax Board chief counsel Jozel Brunett cited the clarification by the IRS that forgiven debt after a home is sold for less than the amount owed on it should not be treated as taxable income.
“This is welcome news for Californians who have had to short sell their homes this year,” Board of Equalization member George Runner said in a statement. “We learned last month they wouldn’t face a federal tax penalty. We now know they won’t face a state tax hit either.”