Here is a good article about rehabbing REOS for Profit
I’ve been looking into this locally. REO means bank owned, but the best deals seem to be at the foreclosure auction sales.
The local scene is somewhat different than what is described in the article. Yes, some people rehab rough homes, keep them and rent them, but others people have been successfully buying homes at auction (for less than the mortgage amount), fixing them up and selling them for a good profit on the open market.
This benefits the market, because rough homes which would not qualify for financing do not come on the market and sell for low prices, the fixed up homes command good current market prices and the new owners are pleased to get homes in good, updated condition at those prices.
I was concerned that the lapse of the home-buyer tax credit might turn the market down. It has hit prices a bit, but not significantly. Fixed up homes at reasonable prices are still selling well.
This article is from a foreclosure listing service. I subscribe to a similar service and get search pre-foreclosure, foreclosure sale and REO listings for you.
Rehabbing REOs for More ROI
By Octavio Nuiry
Staff Writer
Attention foreclosure buyers: Plenty of roughed-up repos are yours for the taking. From the hills of San Francisco, Calif., to the sands of Cape Coral, Fla., repo rehabbers are snagging discounted digs before the sector snaps back. Cash-strapped lenders, anxious to shore up their depleted balance sheets, are slashing prices and accepting lowball offers, according to investors and brokers across the country.
As foreclosures skyrocket, a growing number of investors are becoming enamored with the idea of buying up foreclosed properties, fixing them up, renting them out, getting them to cash flow until the market turns or selling them for a tidy profit.
Consider repo rehabber Jeremy Burgess. Burgess, a 30-year old real estate investor from Washington state who moved to Detroit, Mich., in 2007, is finding real estate gold in Southeastern Michigan. Burgess – who started real estate company Urban Detroit Wholesalers with his wife, Jeanna Kiehle, and partner Jared Pomranky three years ago — buys, renovates, then flips properties wholesale to out-of-state investors or rents them to locals. Since 2007, Burgess has expanded his business despite the bust, closing more than 150 deals. He views the downturn as an opportunity to build his real estate empire and distinguish his firm from others. He typically renovates 12 to 15 properties a month, and is working on seven flips right now.
How does he do it?
Rehabbing Just Right
Burgess uses four filters to home in on prime REO investments: First, he clusters all his purchases in just two ZIP codes – 48235 and 48221 – on the west side of Detroit. Secondly, he seeks neighborhoods where homeownership is 70 percent or higher. Third, he looks for areas where 50 percent of the homeowners earn $35,000 annually or more a year. Finally, he searches for communities where families have two or more kids with at least a secondary education or higher.
"This helps me narrow down my investment," claims Burgess, who buys clean, well-kept, foreclosed homes in good or up-and-coming middle-class neighborhoods. "It allows me to cut out 80 percent of the properties I see."
Burgess said he has four or five real estate agents bird-dogging properties for him, and the leads they generate are sent to his assistant, who he trained how to spot repo gems. Asked what makes a top-notch repo rehabber, Burgess said: "First, you need an awesome team on the ground. Second, a lot of people under-rehab, which gets you 30 to 40 percent less in rents or resale value. And don’t over-rehab."
He buys Detroit foreclosures for a mere $12,000 – and pays all-cash. He and his partner then hire a non-profit group, Motor City Blight Busters, to do the rehab work, saving thousands on labor costs. Motor City hires and trains local laborers to work as apprentices on the job, keeping costs down. Typically he puts $13,000 to $17,000 worth of improvements into each home, replacing the roof, windows, renovating bathrooms, kitchens, adding new light fixtures, new doors, painting and landscaping.
"I have 14 rentals right now," said Burgess, noting that his company can get a 12 to 20 percent return on its investment. "Right now 70 percent of my business is wholesaling foreclosures to out-of-state investors. I have 13 wholesale deals I’m working on now."
He said average rents in Detroit are $800 to $900 a month. Rental properties generate $300 a month each in positive cash flow.
Wednesday, August 4, 2010
Wednesday, July 14, 2010
Do You Need TO Hire A Buyer's Agent?
Beware! Don’t just call the number of the agent who is advertising a home for sale. They are representing the seller of the property, not you. You can hire your own buyer’s agent (an agent who represents you and your interests) and they will be paid from the sellers anyway. It will not cost you anything and may save you a bundle.
This is an article from the FHA (The Federal Gov.) about when and how to hire a Real Estate agent to represent you when you are looking to purchase property.
Which comes first? The Realtor or the house?
Many times when talking to people about buying a home this question inevitably comes up. Why do I need a real estate agent if I don't have a house picked out? Or why can't I just use the one with the sign in the yard?
Most people tend to rank real estate agents right up there with lawyers and dentists. Ok, maybe not that bad. Perhaps buyers feel they will be pushed into something by the Realtor. Maybe they think there is a special incentive that the Realtor gets by steering a buyer to certain properties. Most of the fears that buyers have about Realtors are just plane false. It could also be due to a lack of basic knowledge on how the process works.
When a property is listed for sale, most of the time the commission that the seller is willing to pay is set. (The common exception to this is HUD Repossessions which we will explain later.) The commission to sell the home is usually around 6% of the sales price. So if you are a buyer and walk into a house for sale without your own Realtor, the Realtor that put the sign in the yard is going to make the entire 6% commission of the sales price. Does he have an incentive to get you to pay the highest price possible? Sure, he works for the seller. The more you pay, the happier his client is. And the more you pay, the higher the commission for the realtor. There are things called dual agency and some other technical stuff, but if your impression is that the seller's realtor has your best interest at heart you are misguided. The seller's Realtor cannot work for both the seller and the buyer at the same time effectively.
If however, you hire your own real estate agent to help negotiate the transaction, then the 6% commission is generally split between the two real estate agents so each Realtor makes 3%. The seller is still paying the same amount regardless of how many Realtors are involved. The big difference here is that your real estate agent's job is to represent your interest only. They want to get the deal done for you! If you are a happy client, you are likely to refer business to them for doing a good job.
Some people might feel that the real estate agent is pushing them to pay a higher price because then they get a higher commission. Rarely would this ever be the case. Let's say the difference in what you want to pay and what you agent is recommending is as much as $10,000. The commission on that increase is only $300. Most agents split that with their real estate broker so they get about $150. Would it be worth $150 in extra income to possibly lose a sale? Remember that the difference was $10,000. Most price differences are usually just a couple of thousand dollars apart.
If you want a real estate agent to work hard for you in finding the perfect home at the right price - you need to be loyal to them. No real estate agent wants to spend hours researching information for a buyer, only to have them go use another real estate agent. One way to show that you are serious about working with an agent is to sign a "Buyers Brokerage Agreement." This document basically states that you will work only with them in finding a house, and if you go off and use another agent without first getting out of the contract, then you owe the agent a commission. You will find that by using this contract you get more time and effort on your agent's part.
However, before you ever sign one of these contracts you want to make sure that this is the real estate agent and brokerage company that you want to work with. You should interview the agent. Ask questions about their typical deals, typical clients, experience, communication style, and anything else you feel is relevant. Remember you are hiring them to work for you.
This is an article from the FHA (The Federal Gov.) about when and how to hire a Real Estate agent to represent you when you are looking to purchase property.
Which comes first? The Realtor or the house?
Many times when talking to people about buying a home this question inevitably comes up. Why do I need a real estate agent if I don't have a house picked out? Or why can't I just use the one with the sign in the yard?
Most people tend to rank real estate agents right up there with lawyers and dentists. Ok, maybe not that bad. Perhaps buyers feel they will be pushed into something by the Realtor. Maybe they think there is a special incentive that the Realtor gets by steering a buyer to certain properties. Most of the fears that buyers have about Realtors are just plane false. It could also be due to a lack of basic knowledge on how the process works.
When a property is listed for sale, most of the time the commission that the seller is willing to pay is set. (The common exception to this is HUD Repossessions which we will explain later.) The commission to sell the home is usually around 6% of the sales price. So if you are a buyer and walk into a house for sale without your own Realtor, the Realtor that put the sign in the yard is going to make the entire 6% commission of the sales price. Does he have an incentive to get you to pay the highest price possible? Sure, he works for the seller. The more you pay, the happier his client is. And the more you pay, the higher the commission for the realtor. There are things called dual agency and some other technical stuff, but if your impression is that the seller's realtor has your best interest at heart you are misguided. The seller's Realtor cannot work for both the seller and the buyer at the same time effectively.
If however, you hire your own real estate agent to help negotiate the transaction, then the 6% commission is generally split between the two real estate agents so each Realtor makes 3%. The seller is still paying the same amount regardless of how many Realtors are involved. The big difference here is that your real estate agent's job is to represent your interest only. They want to get the deal done for you! If you are a happy client, you are likely to refer business to them for doing a good job.
Some people might feel that the real estate agent is pushing them to pay a higher price because then they get a higher commission. Rarely would this ever be the case. Let's say the difference in what you want to pay and what you agent is recommending is as much as $10,000. The commission on that increase is only $300. Most agents split that with their real estate broker so they get about $150. Would it be worth $150 in extra income to possibly lose a sale? Remember that the difference was $10,000. Most price differences are usually just a couple of thousand dollars apart.
If you want a real estate agent to work hard for you in finding the perfect home at the right price - you need to be loyal to them. No real estate agent wants to spend hours researching information for a buyer, only to have them go use another real estate agent. One way to show that you are serious about working with an agent is to sign a "Buyers Brokerage Agreement." This document basically states that you will work only with them in finding a house, and if you go off and use another agent without first getting out of the contract, then you owe the agent a commission. You will find that by using this contract you get more time and effort on your agent's part.
However, before you ever sign one of these contracts you want to make sure that this is the real estate agent and brokerage company that you want to work with. You should interview the agent. Ask questions about their typical deals, typical clients, experience, communication style, and anything else you feel is relevant. Remember you are hiring them to work for you.
Thursday, July 1, 2010
Homebuyer Tax Credit Closing Deadline Extended
Re: NAR Update: Tax Credit Deadline Extended; Flood Insurance Program Reinstated
Dear fellow REALTOR®,
I am happy to report that Congress has passed a bill extending the Homebuyer Tax Credit closing deadline to September 30, 2010. This is a huge win for REALTORS® and homebuyers, and NAR worked closely with members of Congress to make it happen.
The extension applies only to transactions that had ratified contracts in place as of April 30, 2010, and have not yet closed. There will be no gap between June 30 and the date the President signs the bill into law.
Additionally, Congress has extended the National Flood Insurance Program (NFIP) through September 30th. The bill is retroactive and will cover the lapse period from June 1, 2010, to the date the law is enacted. NAR will continue to work with Congress on the NFIP Reform bill, and we will keep you posted on those efforts.
For additional information on both the tax credit deadline and the NFIP, visit Realtor.org/Government_Affairs.
Neither of these bills would have passed without your support. Nearly 83,000 REALTORS® responded to our latest Call for Action, sending more than 250,000 letters to Congress asking them to extend the National Flood Insurance Program. I know many of you also raised your voices in support of extending the tax credit deadline.
Dear fellow REALTOR®,
I am happy to report that Congress has passed a bill extending the Homebuyer Tax Credit closing deadline to September 30, 2010. This is a huge win for REALTORS® and homebuyers, and NAR worked closely with members of Congress to make it happen.
The extension applies only to transactions that had ratified contracts in place as of April 30, 2010, and have not yet closed. There will be no gap between June 30 and the date the President signs the bill into law.
Additionally, Congress has extended the National Flood Insurance Program (NFIP) through September 30th. The bill is retroactive and will cover the lapse period from June 1, 2010, to the date the law is enacted. NAR will continue to work with Congress on the NFIP Reform bill, and we will keep you posted on those efforts.
For additional information on both the tax credit deadline and the NFIP, visit Realtor.org/Government_Affairs.
Neither of these bills would have passed without your support. Nearly 83,000 REALTORS® responded to our latest Call for Action, sending more than 250,000 letters to Congress asking them to extend the National Flood Insurance Program. I know many of you also raised your voices in support of extending the tax credit deadline.
Wednesday, June 30, 2010
Is It The Bottom?
This blog is mostly concerned with the local Sonoma County market, but once in awhile I'll include other information. This is hot off the wires from one of my favorite Real Estate gurus, Adiel Gorel of ICG.
He has been helping people invest in different parts of the country for many years and here are some notes from a recent conference call:
Is it the bottom?
Maybe. Hard to predict precisely, but prices are very far down from peaks and have generally stabilized.
Some homes are selling for far less than construction costs.
Some examples:
$70k to buy .
It would cost $160k to build and would sell with builder’s profit in addition to costs.
Shadow inventory is often talked about. (Bank owned by not on the market.) The area graphs show that they bank owned properties are going down a bit as a % of the total in places like Phoenix.
Financing is the challenge:
Banks could get softer or harder. Too many variables to predict.
Logic and the banks do not co-exist. We may not see the complete picture.
If you own less than 4 properties with loans, you can get a loan
If you own more than 4 properties with loans on them, 25-30% down
or buy with cash, even use retirement account money.
Once banks relax a bit, you can refi. and get your money back
There are some special situations with builder/developer financing.
Cash flow is strong, even with 20% down because of low mortgage interest rates and
Average rental prices have come down 10-15%
Some housing prices have come down up to 70%
Markets:
CA and NY some areas
Love Sacramento market
But little left. Too many investors
Likes diversified economy and bigger areas.
AZ, NV, FL , he likes best
Las Vegas
VA loans with 5% down.
Prices down 75% from peak.
Still good long term demographic projections.
Phoenix
Uptick from 2009
Does not think the new proposed law in AZ will affect it long term.
Still good long term demographic projections.
Florida:
Orlando
$40 to $43 per ft for fairly new homes.
Bank owned properties.
$60k priced homes.
Slightly better than Tampa or Jacksonville, because of better economy due to tourism and conventions (which are starting to come back.)
Still good long term demographic projections.
Atlanta
Non-recourse loans available.
20-22% down, new homes, cash flow. Tenant with option to buy.
Oklahoma City
5 yr loan with 25% down
30 yr loan, 40% down
$50-60k - to 100k
Denver
Some flipping there
A lot of patience and a strong stomach
Other areas,
Like Washington, Idaho, the deals are not generally there. There are some foreclosures, but prices have not come down so much generally.
Dallas has some malaise, not as good bargains. Did not go up so much and has not come down so much.
Still likes single-family homes for most investors.
Duplexes and 4 plexus: be careful of the areas for these.
Apartment buildings
More like operating a business.
Best are 150 to 300 units with onsite managers.
Sometimes smaller complexes are OK if managed by a specialty firm which manages several of these.
Flips:
Does not recommend short term flips as much as longer term:
Safer, but not as quick, to keep for a year or 2.
Buy quality:
Not too fancy areas, but good solid areas with school districts and good value.
You can buy junk for less, but there is more risk.
Existing properties:
Some mods are going through.
Short refis. These are rare.
$5000 fee or 1% of loan
What to do with investment properties currently owned with negative cash flow?
If only $100 to $200 negative and you have good credit to preserve, keep them.
If not, you need to consider individual situations.
Monday, June 28, 2010
Mortgage Rates at 50-year Lows...if you can get them
As this article says, mortgage rates are indeed at historic lows, but.....you need to have cash or a good job and credit to get that great financing.
Local prices are stable to increasing in the lower segment of the market (under $400k) and great discounts are available for some higher priced properties.
It is indeed a great time to buy.....if you can qualify. Give us a call. We work with a couple of great loan people who can do a no-cost evaluation of your situation.
Mortgage rates hit 50-year lows and it likely won't matter
Jun 25th 2010 at 3:00PM
The good news: Mortgage rates dropped to their lowest levels in more than 50 years.
The bad news: You need to have a job and impeccable credit to get them.
The average 30-year fixed loan rate tumbled to 4.69% this week, down from 4.75% last week, Freddie Mac reported. These are the lowest rates since the mortgage giant began keeping records in 1971 and the last time rates were lower was in the 1950s.
Nobody expects the falling rates to matter much. They aren't likely to snap the housing market back to life. And they aren't likely to benefit anyone who is unemployed, underemployed or who has had their credit rating dinged in the recession. Sales of new homes fell 33% after the federal tax credit incentives expired at the end of April and while existing home sales are still showing better numbers, experts say those numbers are being buoyed by the tax credit buyers still in the pipeline and trying to close escrow.
The bad news: You need to have a job and impeccable credit to get them.
The average 30-year fixed loan rate tumbled to 4.69% this week, down from 4.75% last week, Freddie Mac reported. These are the lowest rates since the mortgage giant began keeping records in 1971 and the last time rates were lower was in the 1950s.
Nobody expects the falling rates to matter much. They aren't likely to snap the housing market back to life. And they aren't likely to benefit anyone who is unemployed, underemployed or who has had their credit rating dinged in the recession. Sales of new homes fell 33% after the federal tax credit incentives expired at the end of April and while existing home sales are still showing better numbers, experts say those numbers are being buoyed by the tax credit buyers still in the pipeline and trying to close escrow.
As long as prospective home buyers are worried about their financial well-being and job security, many will be reluctant to take the plunge, Greg McBride, senior financial analyst with Bankrate.com, told MSNBC.
The falling rates are tied to investors nervous about Europe's debt crisis and the global economy and who have shifted their money into safe Treasury bonds. Mortgage rates generally track Treasury bonds.
Tuesday, June 22, 2010
Distressed Property Programs Making a Bit of Progress
I do not report on national trends very often, because they often do not usually give an accurate picture of local trends, but this is a good general article on the distressed housing market, which seems to mirror what is happening locally.
Lenders are still a long way from doing what is needed, but there does seem to be a bit of progress in helping homeowners retain their homes.
June 22, 2010, 2:46 p.m. EDT
Modifications rise sharply on some mortgage loans
60-day-delinquent loans fall for first time in two years, Fannie and Freddie say
By Amy Hoak , MarketWatch
CHICAGO (MarketWatch) -- Loan modifications through the government's Home Affordable Modification Program tripled in the first quarter compared to the fourth quarter, according to data that covers loans held by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency said Tuesday.
Also, loans 60 or more days past due fell for the first time in two years, dropping by nearly 23,800 to about 1.7 million in the first quarter, according to the FHFA's latest quarterly Foreclosure Prevention & Refinance report.
Overall, the FHFA said various efforts to keep homeowners out of
foreclosure, including loan modifications, short sales and deeds-in-lieu,
rose 75% in the first quarter compared with the previous quarter, to a
total of 239,000 completed "foreclosure prevention activity" efforts.
Permanent mortgage modifications through the government's Home
Affordable Modification Program rose to 136,000 at the end of the first
quarter, up from 43,000 in the fourth quarter. Homeowners must
successfully complete a trial modification period in order to make their
modification permanent.
About 66% of modifications completed in the fourth quarter reduced
borrowers' monthly payments by more than 20%.
Meanwhile, cumulative refinance volume through the Home Affordable
Refinance Program rose 53% to nearly 291,600 at the end of the first
quarter, up from 190,180 in the fourth quarter. The program allows
existing Freddie and Fannie borrowers who are current on their
mortgage payments to refinance and reduce their monthly mortgage
payments at loan-to-value ratios up to 125%.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie
Mac and the 12 federal home loan banks; the numbers in the report
don't reflect the Federal Housing Administration's efforts to prevent
foreclosures.
A broader view
Overall, the total number of homeowners receiving restructured mortgages since April 2009 increased to 2.8 million; also, half of homeowners unable to enter a permanent HAMP modification get an
alternate modification with their servicer, according to a separate report Monday from the Department of Housing and Urban Development and the Treasury Department.
The 2.8 million figure "includes more than 1.2 million homeowners who have started HAMP trial modifications and nearly 400,000 who have benefitted from FHA loss- mitigation activities," the report said. "Of those in the HAMP program, 346,000 have entered a permanent modification, saving a median of more than $500 per month," See HUD and Treasury's monthly housing scorecard.
"The good news is the industry is doing more than the government modifications," said Faith Schwartz, senior adviser for HOPE NOW, a private-sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "They start with the government mods to see if they fit."
Treasury Secretary Tim Geithner said in a news release Monday: "The Administration's housing policies, combined with actions of the Fed, have lowered mortgage interest rates, helped stabilize home prices and reduced the rate of foreclosures, repairing some of the damage caused by the financial crisis to the financial security of millions and millions of American families."
Separately, the percentage of loans in foreclosure or with at least one payment past due was a non-seasonally adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, according to a Mortgage Bankers Association report in May. That works out to about 6.2 million loans somewhere in the delinquency or foreclosure process. See story on 14% of mortgages delinquent or in foreclosure.
Lenders are still a long way from doing what is needed, but there does seem to be a bit of progress in helping homeowners retain their homes.
June 22, 2010, 2:46 p.m. EDT
Modifications rise sharply on some mortgage loans
60-day-delinquent loans fall for first time in two years, Fannie and Freddie say
By Amy Hoak , MarketWatch
CHICAGO (MarketWatch) -- Loan modifications through the government's Home Affordable Modification Program tripled in the first quarter compared to the fourth quarter, according to data that covers loans held by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency said Tuesday.
Also, loans 60 or more days past due fell for the first time in two years, dropping by nearly 23,800 to about 1.7 million in the first quarter, according to the FHFA's latest quarterly Foreclosure Prevention & Refinance report.
Overall, the FHFA said various efforts to keep homeowners out of
foreclosure, including loan modifications, short sales and deeds-in-lieu,
rose 75% in the first quarter compared with the previous quarter, to a
total of 239,000 completed "foreclosure prevention activity" efforts.
Permanent mortgage modifications through the government's Home
Affordable Modification Program rose to 136,000 at the end of the first
quarter, up from 43,000 in the fourth quarter. Homeowners must
successfully complete a trial modification period in order to make their
modification permanent.
About 66% of modifications completed in the fourth quarter reduced
borrowers' monthly payments by more than 20%.
Meanwhile, cumulative refinance volume through the Home Affordable
Refinance Program rose 53% to nearly 291,600 at the end of the first
quarter, up from 190,180 in the fourth quarter. The program allows
existing Freddie and Fannie borrowers who are current on their
mortgage payments to refinance and reduce their monthly mortgage
payments at loan-to-value ratios up to 125%.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie
Mac and the 12 federal home loan banks; the numbers in the report
don't reflect the Federal Housing Administration's efforts to prevent
foreclosures.
A broader view
Overall, the total number of homeowners receiving restructured mortgages since April 2009 increased to 2.8 million; also, half of homeowners unable to enter a permanent HAMP modification get an
alternate modification with their servicer, according to a separate report Monday from the Department of Housing and Urban Development and the Treasury Department.
The 2.8 million figure "includes more than 1.2 million homeowners who have started HAMP trial modifications and nearly 400,000 who have benefitted from FHA loss- mitigation activities," the report said. "Of those in the HAMP program, 346,000 have entered a permanent modification, saving a median of more than $500 per month," See HUD and Treasury's monthly housing scorecard.
"The good news is the industry is doing more than the government modifications," said Faith Schwartz, senior adviser for HOPE NOW, a private-sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "They start with the government mods to see if they fit."
Treasury Secretary Tim Geithner said in a news release Monday: "The Administration's housing policies, combined with actions of the Fed, have lowered mortgage interest rates, helped stabilize home prices and reduced the rate of foreclosures, repairing some of the damage caused by the financial crisis to the financial security of millions and millions of American families."
Separately, the percentage of loans in foreclosure or with at least one payment past due was a non-seasonally adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, according to a Mortgage Bankers Association report in May. That works out to about 6.2 million loans somewhere in the delinquency or foreclosure process. See story on 14% of mortgages delinquent or in foreclosure.
Thursday, June 17, 2010
Sonoma County Real Estate Update June 2010
This is a good article about the current state of the real estate market in Sonoma County.
It mentions a couple of the biggest question marks going forward: the lapse of the Federal tax credits and the number of distressed properties.
There is breaking news that the completion of sales qualified for the tax credit now in the pipeline (accepted offer by last April, but not yet closed escrow) may be extended from the end of June until Sept., but no word on any new extension of the tax credit for new sales from this point forward.
May home sales, prices increase in Sonoma
County
By SAM SCOTT
THE PRESS DEMOCRAT
Published: Wednesday, June 16, 2010 at 6:22 p.m.
Sonoma County home sales increased for the fourth consecutive month, rising nearly
8 percent from April to May, but activity still trails last year.
Buyers purchased 410 single-family homes in May, up from 381 in April but down
slightly from 416 a year ago.
Prices, meanwhile, increased for the first time in five months. The median price hit
$362,000, up 5 percent from April and up 4 percent from a year ago.
“It shows we have a very steady growth in demand in the marketplace,” said Rick
Laws, manager at Coldwell Banker in Santa Rosa, who compiles The Press
Democrat’s monthly housing report.
But others said economic uncertainty was still keeping the market down. Sales have
dropped nearly 9 percent in the first five months of the year, compared to the same
period a year ago — despite a $8,000 federal tax credit for home buyers who signed
their contracts by April 30.
“It’s just sort of a mediocre market right now,” said Mike Kelly, senior sale
consultant at Keller Williams Realty in Santa Rosa, who added that unemployment
and job insecurity were partly responsible.
Unemployment in Sonoma County doubled over the past two years and has hovered
in double-digits in 10 of the last 11 months, receding only slightly to 10.6 percent in
April.
The true impact of the federal tax credit won’t be felt until June sales figures are
finalized, Kelly said. The credit extends to people who signed by the April deadline
but close by the end of June.
Laws said he didn’t think the end of the tax credit would have a big impact on the
housing market. The credit offered an incentive to buy, but ultimately wasn’t enough
to make or break most deals, he said.
Both Kelly and Laws said the mix of sales is changing as the market settles into a
more normal pattern. There has been reduced inventory in distressed properties —
usually either short sales or foreclosed properties, the “rocket fuel” in much recent
buyer interest, Kelly said.
In February 2009, more than 75 percent of homes sold in Sonoma County were
bank-owned properties, according to Laws. In May less than 47 percent were.
As banks put fewer properties on the market, buyers are increasingly having to
compete with each other, particularly for homes in the lower end of the spectrum,
Laws said.
He said the market was “bifurcated.” Above $500,000, he said the situation tends to
favor buyers. Below $400,000, it is generally a seller’s market with inventory not
meeting demand, Laws said.
“If the value is there and the house is in good condition and in a good neighborhood
and priced at market, it gets multiple offers,” said Glen Hurley with Platinum Real
Estate, who is president of the Santa Rosa Chapter of Realtors.
The return of “normal sellers” who aren’t trying to unload distressed properties is
encouraging, Kelly said. When they sell, they tend to “buy up.” A short sale or foreclosure, however, is rarely matched with a corresponding purchase.
The competition is driving up home prices. The median price for a single-family
home, $362,000 in May, was its highest level since December 2009.
The median is the mid-point at which half the homes sold for more, and half for less.
Sonoma County home prices peaked in August 2005 when the median hit $619,000
before tumbling to a low of $305,000 in February 2009.
Through May the median price of a single-family home sold in 2010 was $350,000,
up 10 percent from the same five-month period last year.
“There is very little inventory,” said Paula Gold-Nocella, a broker with Prudential
California Realty in Healdsburg. “That’s what’s driving the price up.”
It mentions a couple of the biggest question marks going forward: the lapse of the Federal tax credits and the number of distressed properties.
There is breaking news that the completion of sales qualified for the tax credit now in the pipeline (accepted offer by last April, but not yet closed escrow) may be extended from the end of June until Sept., but no word on any new extension of the tax credit for new sales from this point forward.
May home sales, prices increase in Sonoma
County
By SAM SCOTT
THE PRESS DEMOCRAT
Published: Wednesday, June 16, 2010 at 6:22 p.m.
Sonoma County home sales increased for the fourth consecutive month, rising nearly
8 percent from April to May, but activity still trails last year.
Buyers purchased 410 single-family homes in May, up from 381 in April but down
slightly from 416 a year ago.
Prices, meanwhile, increased for the first time in five months. The median price hit
$362,000, up 5 percent from April and up 4 percent from a year ago.
“It shows we have a very steady growth in demand in the marketplace,” said Rick
Laws, manager at Coldwell Banker in Santa Rosa, who compiles The Press
Democrat’s monthly housing report.
But others said economic uncertainty was still keeping the market down. Sales have
dropped nearly 9 percent in the first five months of the year, compared to the same
period a year ago — despite a $8,000 federal tax credit for home buyers who signed
their contracts by April 30.
“It’s just sort of a mediocre market right now,” said Mike Kelly, senior sale
consultant at Keller Williams Realty in Santa Rosa, who added that unemployment
and job insecurity were partly responsible.
Unemployment in Sonoma County doubled over the past two years and has hovered
in double-digits in 10 of the last 11 months, receding only slightly to 10.6 percent in
April.
The true impact of the federal tax credit won’t be felt until June sales figures are
finalized, Kelly said. The credit extends to people who signed by the April deadline
but close by the end of June.
Laws said he didn’t think the end of the tax credit would have a big impact on the
housing market. The credit offered an incentive to buy, but ultimately wasn’t enough
to make or break most deals, he said.
Both Kelly and Laws said the mix of sales is changing as the market settles into a
more normal pattern. There has been reduced inventory in distressed properties —
usually either short sales or foreclosed properties, the “rocket fuel” in much recent
buyer interest, Kelly said.
In February 2009, more than 75 percent of homes sold in Sonoma County were
bank-owned properties, according to Laws. In May less than 47 percent were.
As banks put fewer properties on the market, buyers are increasingly having to
compete with each other, particularly for homes in the lower end of the spectrum,
Laws said.
He said the market was “bifurcated.” Above $500,000, he said the situation tends to
favor buyers. Below $400,000, it is generally a seller’s market with inventory not
meeting demand, Laws said.
“If the value is there and the house is in good condition and in a good neighborhood
and priced at market, it gets multiple offers,” said Glen Hurley with Platinum Real
Estate, who is president of the Santa Rosa Chapter of Realtors.
The return of “normal sellers” who aren’t trying to unload distressed properties is
encouraging, Kelly said. When they sell, they tend to “buy up.” A short sale or foreclosure, however, is rarely matched with a corresponding purchase.
The competition is driving up home prices. The median price for a single-family
home, $362,000 in May, was its highest level since December 2009.
The median is the mid-point at which half the homes sold for more, and half for less.
Sonoma County home prices peaked in August 2005 when the median hit $619,000
before tumbling to a low of $305,000 in February 2009.
Through May the median price of a single-family home sold in 2010 was $350,000,
up 10 percent from the same five-month period last year.
“There is very little inventory,” said Paula Gold-Nocella, a broker with Prudential
California Realty in Healdsburg. “That’s what’s driving the price up.”
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