Really? Multiple Bidding Wars on Homes?
As of May 1st we are seeing mutliple bidding wars on homes. The inventory is limited at this time. Will we see another run away real estate market with sales over the asking price going forward?
As of May 1st we are seeing mutliple bidding wars on homes. The inventory is limited at this time. Will we see another run away real estate market with sales over the asking price going forward?
The TBWS Daily show recently produced this video regarding the number of foreclosures on the horizon. For the past several years the nomber of foreclosures coming to the 'For Sale' market has been very limited. As the state in this video, since the beginning of the current downturn, we have had about 4,000,000 foreclosures nationwide. In this video they predict that we could be looking at an additional 8,000,000 foreclosures during the next few years.
As a buyer, this could mean that prices could remain at the current level or decline slightly. As a seller, this means that prices could remain at the current level or decline slightly. As I see it, we are in a market that will not experience a tremendous amount of price adjustment to either the upside or downside. So, if you are waiting for prices to go up or go down, that probably will not happen very soon.
With interest rates at such low levels, we may someday discover that this was the absolute best time to either buy or sell a home.
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In this video, George Chamberlain, Executive Editor of the San Diego Daily Transcript, interviews the President of the San Diego Association of Realtors. As you will see in this video, the market is strong. Prices are firming, sales volume is up, and most of all the number of homes for sale has declined sharply. This video is called 'The Scoop' and is a service of the S.D.A.R.
Each month Prudential California Realty publishes Market Trend Reports for San Diego. We find that both people considering the purchase of a home and likewise those considering listing their home for sale, want information that they can use to help make the buying or selling decisions. This is a good source of information regarding trends in the Real Estate market. This report is also provided for the upscale market.
Are we finaly in a 'Real Estate Martket' where it makes sense to just 'DIVE IN'?
For what has now become at least a 5 year period of waiting for some people, it may be that perfect time to just go ahead and buy that home you have been waiting for. In this video, Stan Humphries, Zillow Chief Enonomist, predicts that prices will continue to decline very modestly through out 2012 and then stabilize in 2013. Looking forward, the prediction is that in 2014 and 2015 the prices will remain flat or possibly tick up slightly. And then in 2016 we will begin to see a normal but somewhat modest rate of increase in the 3% to 5% range.
Depending upon what you believe to be the situation with home loan interest rates, this may be the year to buy......
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Should you Rent or Buy?
A few minutes ago I sent this Rent vs. Buy presentation to a client who is relocating to North San Diego County. I think that this is a presentation that bears consideration. I certainly welcome different points of view, so please tear this thing apart. Remember, I already said that “Cash Flow” in not a factor in this presentation.
A few weeks ago I was holding an open house at which I met a couple of Physicians. They were coming to this area and were going to be here for only three years. When I asked why they were not going to just rent their reply really made me think. The said that they could rent for about $3000/month or buy a similar home for about $500,000.00. In the three years that they were going to be in the area they figured that they would pay out $108,000.00 in rent. The way they looked at is was that if they bought for $500,000.00 they would put $100,000.00 down and have a monthly payment of around $2600.00. At the end of the three year period they would sell and probably get most of their initial purchase price back. (We have to remember that CASH flow is not a factor in their argument).
The formula that they used for the return of their initial purchase price went something like this. If they were able to sell for the same price that they paid, then after paying all of the costs to sell they would wind up with about $462,500.00. They used 7.5% as an estimate of what their costs to sell would be. Then if they applied the savings in income tax, things like the interest deduction, property tax deduction, depreciation of the portion of the home used for business, etc. Their cost of owner ship would be even less. When I presented the argument that interest is a tax deduction vs. tax credit and that their tax savings would be their effective tax rate as it applies to their interest expense their response was that if they pay 4.0% interest their total expense would be around $42,000.00 over the three years, maybe less. Their effective tax rate is 35% so they save $14,700.00 on Federal Income Tax plus what they save on their state taxes. The same theory would apply to the Property Tax expense.
Anyhow to make a long story short, these folks figured that if they sell the home for exactly what they paid ($500,000.00) they would loose $37,500.00 in sales costs, $27,300.00 in interest after the federal tax formula is applies, and $10,725 in property tax (again after application of the federal tax formula). There for they feel that after adding up all of the after tax expenses they would spend about $75,525 as a true cost of ownership versus $108,000 actual cost of renting. They also figured that if the prices were to drop an additional 5% during the time that they own the home they would loose an additional $25,000.00 and still they would break even.
The 2011 HomeDex Annual Report was just released this week. We always look forward to this annual edition as it reflects the entire year as opposed to the month over month reports. Because the entire year's sales volume is used, there is a more accurate portrayal of what took place in the Real Estate market during the past year.
It is pretty easy to be a 'Monday morning quarterback' when we read this sort of report, the real challenge is to firgure out what will happen to the market in the months or even the years to come. The fun thing about all of this is that even when we are in the middle of the heat of the market we usually do not know what really happened until about three months have passed.
Here are a couple of high lights from this years annual report:
The median price for a North San Diego County single-family detached homes sold in 2011 was $430,000. The represents a 6.52% decline from the 2010 price, which was $460,000. The 2010 price of $460,000 was up $50,000 from the 2009 price of $410,000. And, the 2009 price was down 9.69% from the 2008 price of $454,000.
Even more interesting is that Fallbrook (92028 zip code), Oceanside (92054 zip code), Rancho Santa Fe (92067 zip code), Solana Beach (92075 zip code), and Carmel Valley (92130 zip code); all showed an increase in the median price over 2010.
The median priced single-family attached home in North San Diego County dropped 4.13% to $232,000 from $242,000 in 2010.
HomeDex is provided by the North San Diego County Association of Realtors
Click on this link to view the entire report. 2011 HomeDex Annual Report
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December 27, 2011 | 8:11 am
Home prices in the nation’s largest cities fell in October for the second straight month, continuing to dash hopes that the sluggish housing market is headed for an upturn.
The Standard & Poor's/Case-Shiller index, a measure closely followed by economists, showed price drops in 19 of 20 cities since September. Overall, prices slipped 1.2% month-over-month and fell 3.4% compared with October 2010.
The decline is typical of the season, when home buyers back off after the busy summer period. But coming off of five straight months of increases, the retreating prices in the fall suggest that weakness in the market may stretch into 2012.
Atlanta was on particularly shaky ground, according to the index. Prices there declined 5% in October after falling 5.9% in September and were down 11.7% over the last 12 months. Atlanta, along with Cleveland, Detroit and Las Vegas, had average prices that were lower than they were in January 2000.
In Los Angeles prices were down 1.5% in October after sliding 0.8% the month before. Year over year, L.A. prices are down 4.9%.
The Case-Shiller data cast a pall on recent, more promising market feedback. Last week, the Commerce Department said construction of new homes and apartments was up 9.3% last month from October and up 20.1% compared wikth November 2010.
Sales in California were up 4% last month compared with the same period a year earlier, though they fell 4.2% from October, according to real estate research firm DataQuick. The median home price in the state was $244,000, down 4.3% from a year earlier but up 1.7% from October, the report found.
original link: http://latimesblogs.latimes.com/money_co/2011/12/home-prices-fall-in-october-says-case-shiller-report.html
By Christina Macone-Greene on Dec 23, 2011 with Comments 0
CARLSBAD — A recent unanimous City Council vote made an important change for homeowners who have a second dwelling unit on their property. Rent restrictions have been lifted and homeowners can now charge the market value of their unit.
Before the vote, homeowners who had a second dwelling unit fell under the same category as developers who built multiple residential units and had to comply with the city’s Housing Element by renting to lower income groups.
But that’s all changed.
According to Corey Funk, associate planner for the city of Carlsbad, second dwelling units, or SDUs, are now split into two categories: inclusionary and noninclusionary.
Funk presented the proposal to City Council and it approved the revisions to the city’s Zoning Ordinance and Local Coastal Program Amendments for SDU rent regulations.
The inclusionary SDU was not amended. It will still go into effect when a developer builds multiple residential dwelling units and must provide 15 percent of the units as affordable housing.
“Developers doing a larger scale project must comply with the inclusionary housing ordinance, so we created the ‘inclusionary’ term to build that type of ordinance,” Funk said.
For a homeowner, a noninclusionary SDU label was issued distinguishing the difference between the reasons why a homeowner builds this type of dwelling unit versus a developer.
And those goals are quite different.
A noninclusionary SDU, Funk said, has a kitchen and bathroom and can serve as multiple functions. The unit can be used as a guest house, a mother-in-law quarter, or an office.
The noninclusionary SDU used to be restricted to at least low-income housing. Low income, Funk said, is defined by 50 to 80 percent of the area median income.
Funk said this proposal was brought to City Council because of a previous project that was presented to the Planning Commission a couple of years ago.
The topic of a SDU on a single-family residential property raised some awareness.
The Planning Commission felt that putting rent restrictions on homeowners was a burden.
City Council agreed.
City Council members felt that it was time to give homeowners the freedom to rent out their SDU at a fair market rate. Above all, staff said the noninclusionary SDU label was still consistent with the Housing Element requirements.
“The Housing Element counts the inventory of affordable housing opportunities and depends on SDUs to meet those goals,” Funk said. “When the noninclusionary SDUs were rent restricted we were counting them toward the low-income category for the housing element, but we also have to plan for the moderate income.”
Income categories include very low income, low income, moderate and above moderate. The calculations are similar to those used at U.S. Department of Housing and Urban Development.
With homeowners now renting their units at a reasonable market rate, staff expects these units to be at affordable to moderate income levels, which will fall under the Housing Element guidelines.
Recent calculations show that the city of Carlsbad has a total of 215 SDUs. A total of 39 noninclusionary SDUs are part of this number.
“The noninclusionary SDUs are a small percentage,” Funk said.
Original Link http://thecoastnews.com/2011/12/second-unit-rent-restrictions-lifted-for-homeowners/
