Marin Real Estate Pulse

According to an article published in the Los Angeles Times, a Short Sale can hit your credit rating up to 130 points according to researchers at VantageScore. While this is a big hit there are several advantages to a Short Sale over letting your home foreclose. Typically owners that sell their home short have missed several months of mortgage payments and that is usually what affects your credit. The actual formulas for calculating credit scores are kept secret but typically you can get a new home loan in less than three years after a short sale.

If the bank forecloses on your home your credit rating can take a hit of up to 150 points and the record of foreclosure can stay on your credit report for seven years.

For those that choose Bankruptcy look for a credit drop of well over 300 points and ten years on your credit report.

To read the full story click on this link.

Buying a foreclosure is for the pros with a big checkbook. In Marin a “real” foreclosure is literally sold on the steps of the courthouse on Fifth Avenue in San Rafael. The buyers have several denominations of Cashers Checks that add up to the maximum they will pay. They bid against each other and the bank that holds the loan on the house and is foreclosing on it. The bank has the upper hand because they don’t have to write a check unless the bidding goes over the loan amount.

You will be bidding on a house you likely have not seen on the inside. No bank will lend you money until you buy the home. This is a cash transaction that does not come with title insurance.

When you hear someone say they bought a foreclosure that usually means they purchased a home that has already been foreclosed on by the lender. They are known as REO’s, which stands for Real Estate Owned (by the bank). When buying an REO the paperwork sucks. Banks expect buyers to start their inspection and financing timelines without so much as a signed offer acceptance from the bank. In many cases the acceptance of the offer is conveyed to the buyer verbally. As you know, in real estate verbal does not cut it, the law requires everything in writing. But as long as you are getting a good deal are you really going to fight with the bank that selling the house?

Homes are also sold in pre-foreclosure status which may mean the seller had a notice of default (they are late in mortgage payments) or it is a short sale. In a short sale the seller gets the bank to agree to sell the home for less than the amount owed.

Warren Carreiro

The Marin County real estate market is hot again. We are seeing multiple offers on many homes and condos. It looks like the deep price reductions along with first time home buyer tax credits and historically low interest rates have buyers bidding in droves.

One measure of how “hot” a real estate market is what percentage of homes on the market are in escrow. A common formula is:

Buyer’s Market: less than 25% of home in escrow

Neutral Market: 25 to 40% of homes in escrow

Seller’s Market: more than 40% of homes in escrow

The hot price range in Marin is anything $600,000 or less. That is where we have 52% of available listings in escrow. The next price jump from $600,000 to $800,000 is also doing well at 33%

As we move up the price range the picture changes. From $800,000 to one million the figure is 22%, a buyer’s market. Homes at one to one and one half million are 17% and over 1.5 million just 9% are in escrow.

Those numbers include condominiums and homes combined. When we lump all price ranges together Marin has 28% in escrow which is higher than we have seen for well over a year. I don’t know how this will play out with the “talked about” last wave of foreclosures but Marin has not been hit nearly as hard as other counties anyway.

My view is if you are looking for a high end home the prices are dropping but if you are in the lower price range waiting to buy will just cost you more money.

Warren Carreiro

Monday, June 01, 2009

The Novato housing market is on fire, the inventory can’t keep up with buyers. At least that is the case for single family homes priced between $400,000 and $500,000. For those that don’t know that is the lower end in Marin County.

A majority of those homes are receiving multiple offers. When agents outside the area visit Marin they tell us our market is booming. The newspapers give a different impression, one that says real estate is still in a slump, and it is for most of the country and many areas of Marin.

What is it about Novato that is drawing all the buyers? Well for one, Novato got hit on prices much more than most other towns. Just a year or two the $400,000 homes were selling for close to $700,000. Novato has a history of pricing volatility both up and down. One January just a few years ago prices increased 10%. Then late last year it seemed you could not price your home low enough to attract buyers.

Today there are 26 single family homes priced between four and five hundred thousand and 20 of those homes are in escrow. That is 77% in escrow which is defined as a strong sellers market. The buyers of those homes are typically investors or first time homeowners.

While Novato may be enjoying its hay day the high priced homes in Marin are taking price reductions daily. There just are not that many buyers willing to spend a couple of million for a home.

Warren Carreiro, Broker

The number of sales and median price of Marin county single family homes has fallen dramatically over the past five years. All the numbers below are from January 1 to May 18 (YTD) for each year.

While single family sales overall are down 55% from 2005, for homes one million or more sales for the same period are down 74%. For home $500,000 or less the number of sales are up 1,300% (6 to 78).

So when we read the headlines “Median Price Plummets” don’t just assume that every house has lost half its value (some have). The truth is prices are down but what really is affecting the median price is sales at the low end have jumped while sales at the high end have plummeted. When the median price is calculated it does not take into account which homes are selling.

Number of Single Family Sales January 1 to May 18 for past five years

Source: BARIES Marin County MLS

Median Marin County Price for January 1 to May 18 for each year

Source: BARIES Marin MLS

Information deemed correct but not guaranteed.

Tuesday HUD’s Federal Housing Administration said it would allow first time homebuyers to use the Federal tax credit of $8000 toward the down payment at closing on a purchase.  WOW!  They are going to allow approved lenders and local and state governments to issue short term bridge loans to buyers for their down payment.  Once the tax credit is received, the loan would be paid back.  BUT (isn’t there always a “but”??) lenders need to figure out how to create the qualification method, the proper and legal paperwork, and have all these details approved by FHA……..the tax credit expires December 1^st so they better get moving!!  HUD predicts that 53% of the purchases in 2009 will be by first time home buyers.

PS: for a look at current Marin home sales stats follow this link.

Warren Carreiro, Broker

Propositions 60 and 90 were passed by California voters and lets you transfer your current property tax rate to your new home sell and purchase your primary residence. These propositions apply if you or your spouse are 55 or older. In some situations the rules also apply to permanently disabled individuals (prop 110).

This is not intended as tax advice, I am not qualified to offer that so please check with your accountant, attorney and the county assessor to verify you qualify.

The basic rules are:

1. The home must be your primary residence.
2. You or your spouse must be 55 or older when you sold your primary residence.
3. The replacement property must be purchased two years before or after you sell your primary residence.
4. This exclusion may only be used once in a lifetime.
5. The replacement property must be of equal or lesser market value.
   1. 100% if purchased before the sale of your home
   2. 105% if purchased up to one year after the sale
   3. 110% if purchased in the second year.
6. Prop 60 only applies if you new home is in the same county as the one you sold.
7. Prop 90 allows transfer to a different county if the new county allows. Most counties do not follow prop 90 so check with the assessor before you count on this. Counties change their rules so check again even if you have previously done so.

The counties take the rules very seriously so don’t think or try to “beat the system” because it will come back to bite you. Also, the rule refers to market value and in some cases counties are looking at REO (Bank Owned Homes) as not selling at market value. For more information look at the Board of Equalization web site.

Warren Carreiro, Broker.