by Roberta Murphy

Carlsbad, CA–There might be some small cause for celebration for owners of single family homes in North County with the news that median home values increased 1 percent from January, 2009 to February, 2009–from $361,250 to $364,900. And the reason that small increase might warrant at least a small sigh of relief is that year over year (02/2008 to 02/2009), home prices in this area have declined by a whopping 29.15 percent from $515,000 in Febuary, 2008.

So, any increase, no matter how small, could represent the beginning of a thaw in the San Diego real estate market.

The condo market, though, is still suffering in North San Diego Count,y where attached home prices have continued to fall. In the one month period between January and February, median prices decreased an additional 8.59 percent–from $198,000 a month earlier to $181,000 in February. A year ago, condo prices here stood at a median of $310,000.–which represents a drop of 41.6 percent.

That one month period also shows a drop in the median days on market (DOM) from 54 days in January to 52 days in February. Sales activity has also pick up speed in the last year, with a year-over-year increase of 22.57 percent (443 in 2/2008 v 543 in 2/2009).

With the implementation of the first time homebuyer’s tax credit of $8000, I expect to see a jump in North County condo prices in the year ahead–as well as with homes that fall within FHA and VA lending guidelines. Interest rates are still low, and there are plenty of incentives for buyers of San Diego real estate.

Finally, to lump all of North San Diego County into one statistic can be very misleading, because median prices for single family home in Rancho Santa Fe hover at $2.7 million, while Escondido, Vista and parts of Oceanside are now ranging under $300,000.

And it’s the lower end of the market that is congested with investors and first time homebuyers trying to get the bargain homes while they are still available–and where multiple offers are commonplace.

Click to search the San Diego MLS or feel free to give me a call at either 877-818-8197 or 760-402-9101 to discuss local market conditions. I’ll also be happy to email a detailed report for just about any San Diego area zip code.

I always advise our real estate sellers to reveal everything they know about their home in the mountain of disclosures we have them sign. It is a time for true confessions–and we do this for two very good reasons:

1. Buyers need to be fully informed by sellers regarding the home they are buying.

2. We wish to protect our sellers from legal consequences for failing to do so.

It turns out that sellers may now be held liable for partial disclosures–and could end up in court for half-truths. In the recent appellate court case of Calemine v. Samuelson, Seller Samuelson owned a condo which had a long history of lawsuits against the builder and subsequent contractors for water intrusion into some of the units in the condo development.

Samuelson reportedly revealed only the most recent repairs made in 1998, when he sold his condo in 2002. No water intrusion problems had occurred in his unit since those repairs. He also correctly noted on the the Transfer Disclosure Statement that he was aware of flooding, drainage or grading problems with the condos–but failed to list prior lawsuits against the builder (1986) and a repair contractor (1996).

And as luck would have it, Buyer’s garage flooded three years after close of escrow.

Would he have bought the condo if he had known about the prior litigation? Maybe, maybe not–but the buyer certainly has the right to know of matters that might impact his home and its value.

Of course, you and I might justifiably wonder about the consequences of a seller not being aware of litigation that may have occurred 20 years earlier. How can we disclose something about which we know nothing?

I think the answer might lie with the Homeowner’s Association’s management company providing a separate and simple form disclosing all past and current litigation affecting the property they manage.  In fact, my husband and partner Mike Murphy sits on the board for the La  Costa Chateaus HOA and is going to suggest that their management company issue this short report to all potential buyers of these La Costa condos.

That would help insure buyers are fully informed–and would protect sellers from potential litigation for failing to make full disclosure on items of which they may have no knowledge.

San Diego real estate investors, though, will have to meet new minimum requirements:

Those buying a 5th, 6th, 7th, 8th, 9th or 10th home must meet the following standards set forth by Fannie Mae:

1. 720 credit score
2. 25% down payment for a 1-unit (30% for a 2-4 unit)
3. No mortgage delinquencies in the last 12 months
4. 6 months of reserves for each investment property

In other words, Fannie Mae is re-opening the lending spigot for real estate investors having good credit, ample reserves and a sizeable down payment . Logically, Fannie Mae believes that this change will allow investors to “play a key role in the housing recovery.” That is because under current guidelines, investors with four or more properties–and who are going to foreclosure auctions–were unable to obtain mortgage funds under Fannie Mae guidelines. Instead, they were forced to use “hard money” loans–or cash reserves to complete their purchases.

This change should help expedite the San Diego foreclosure liquidation process–and provide more support for the San Diego housing market.

And finally, homeowners with more than four properties will be able to participate in the ongoing conforming mortgage Refi boom. Until now, they, too, have been stymied by the four-property restriction.

For additional reading:

Let’s Resurrect Assumable Loans
Want to Modify Your San Diego Home Loan?
San Diego Real Estate News Upbeat–Sorta
San Diego Foreclosures Take a Holiday

Wall Street and pundits have been buzzing about how the luxury real estate market has turned cold–even in Manhattan, San Francisco…as well as Rancho Santa Fe.  And more than a few are whispering about the great buys to be found in the luxury real estate market.

As of this writing, there are 256 homes on the market in Rancho Santa Fe’s 92067 zip code, and of those, only four are attached dwellings.  A full third of those Rancho Santa Fe homes have had price decreases from the original dates of their listing–and we are even beginning to see short sales and pending foreclosures within this wealthy community.

Still, the average price for a home in Rancho Santa Fe runs $4,984,596, while the median comes in at $3,420,000–and the average price per square foot rings in at $699.  Of course, most of these homes sit on precious acreage, which is not counted in that figure.

The average days on market for a Rancho Santa Fe listing is running 141 days, with a median of 104 days.   And according to the Sandicor MLS, the least expensive home in Rancho Santa Fe (92067) is $866,500 for a large 2-bedroom condo on Via de Santa Fe, while most expensive is a dazzling estate on Los Arboles priced at $35 million.

We advise Rancho Santa Fe sellers who don’t have to sell to wait until market conditions improve–unless they have their eye on another irresistable real estate opportunity.  In that case, one can expect to sell low–and hopefully buy even lower.

Click to search Rancho Santa Fe real estate listing opportunities –and enjoy the hunt!

Don’t let San Diego’s plunging median sales price fool you. December’s Existing Home Sales data has San DIego home sellers either smiling–or groaning.

Nationwide and just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring’s home buying season could be a competitive one.

Declining home prices helped fuel home sales, at least in San Diego. Nationally, the median sales price — the point at which half of all homes sold for more and half sold for less — was $175,400, down $32,000 from last year.

In the San Diego real estate market, sales are up 34.7 percent from December, 2007 with a median price of $300,000–down from $430,000 during that same period. It is also interesting to note that San Diego foreclosures have also declined as a proportion of resales, going from 52 percent of sales in November to 50.4 percent in December.

San Diego real estate prices may not yet be at bottom, but it appears we may be approaching some sort of equilibrium–just like other areas of the country. The most important part of December’s Existing Home Sales report, though, isn’t making headlines.

Looking at December’s sales pace, it would now take 9.3 months to exhaust the existing home supply. Last month it was 11.2 months. This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.

This is the classic definition of Supply and Demand.

Economists note that the keystone of housing’s recovery will be rebalancing the supply of homes for sale. Paired with the all-time low in housing starts, December’s Existing Home Sales data could very well signal a coming recovery in the real estate market.

(Image courtesy: The New York Times)

We frequently get inquiries regarding oceanfront homes in San Diego–and love showing those properties. Therefore, it truly snagged our interest when we heard that Earl Charles Spencer, Princess Diana’s younger brother, was searching for a home along the San Diego coast.

If you recall, Spencer gave the touching eulogy for Princess Diana at her funeral–and is a noted historical author as well as a reproducer of fine royal antiques.

It seems he looked at beach estates for a couple of days, before checking out of his La Jolla hotel last Saturday morning.

If I were searching today for the ultimate in San Diego beach homes, I would put La Jolla Farms listings at the top of the list along with homes in La Jolla Shores–or perhaps a Del Mar Beach home. On the other hand, Charles Spencer might consider luxury real estate in Coronado, where former Coronado resident and divorcee Wallis Simpson lived prior to her marriage to Britain’s King Edward VIII.

• The U.S. employment outlook continues to deteriorate
• Consumers and businesses continue to cut spending
• The housing sector is still showing weakness

In addition, the FOMC addressed the “extremely tight” credit conditions for U.S. households and business, even as it said some financial markets are showing signs of improvement. 
To the Fed, the latter is a precursor for the former.  For Americans needing new mortgages or other forms of credit, it may mean that getting approved gets easier sometime late this year.
Most importantly, the Fed’s press release again mentioned the policy-setting group’s intention to “employ all available tools” to promote economic growth.  This includes the open-market purchasing of mortgage-backed debt that has helped fuel the current Refi Boom. The Fed indicated a willingness to extend the program beyond the initial $500 billion, if necessary.
For each of the Fed’s interventions, though, there is a trade-off. 
Buying securities costs money and the Fed — literally — comes up with the cash by printing it.  The extra supplies devalue the U.S. dollar which, if left unchecked, can cause the Fed’s plan to backfire in the form of runaway money supply-led inflation.  The Fed is aware of this risk and is pledged to monitoring it closely.
Overall, mortgage rates worsened today after the Fed’s statement.
Source
Parsing the Fed Statement
The Wall Street Journal Online
January 28, 2009

http://online.wsj.com/internal/mdc/info-fedparse0928.html

Therefore, markets aren’t really concerned about what happens to the benchmark lending rate today. Markets will instead focus on the Fed’s proposals to revive (if not save) the U.S. economy.
In its post-FOMC press release last month, the Federal Reserve pledged to “employ all available tools” to get the economy rolling in the right direction.  Some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance sheets.
But since that meeting, the Fed has put its money where its press release is. Earlier this year, the Fed started a program to buy $500 billion in mortgage-backed debt and those ongoing purchases are part of what’s keeping mortgage rates relatively low.  The Fed has since made it easier for member banks to borrow money, too.
Each of these steps is meant to pour much-needed fuel into the U.S. economic engine. The Fed is also  pledging to keep trying new approaches–at least until something works.  And this is what mortgage markets–and San Diego mortgage brokers– will be concerned with today.
If the Fed’s next stimulus plan is judged ineffective or too costly, mortgage markets will likely sell off, causing San DIego mortgage rates to rise and making housing payments even more expensive.  The jump could be somewhat sudden because Fed announcements are often met with emotional, knee-jerk reactions.
By contrast, if the Fed’s next steps are seen as being on target, we can expect mortgage rates to fall only slightly.  To some extent, this outcome is already priced into rates as of this morning.
The FOMC’s official press release hits at 2:15 PM ET.
(Image courtesy: The New York Times)

San Diego’s mild winter is almost over, but that doesn’t mean it’s too late to make smart, money-saving, winter heating choices for those days when you need to knock off the chill.

This 4-minute video from the NBC Today Show covers the important stuff:

• Because “circular” thermostats are only accurate to within 6 degrees, what you should do about it.
• How to know if your furnace is energy efficient.
• How “pull-away” caulking can seal windows that leak heat.
• Using eco-heaters for room-by-room warming

The video’s highlighted ways to winterizing your home range in cost from a few–to a few thousand–dollars. Each, however, pays for itself via home heating bill savings over time.

Unfortunately, the bad news for rate shoppers doesn’t stop there.

Because Freddie Mac’s rate survey is conducted on Tuesday but its reports aren’t released until Thursday, the published data doesn’t even account for the previous 48 hours of activity in which rates and fees have risen further.

Versus last week, 30-year fixed, conforming mortgage rates are up 0.16% on average nationwide.  On a $200,000 home loan, this equates to a roughly $20 extra per month, or $7,055 over the life of a 30-year loan.

The Era of Low Rates may not be over, but it may be time to get off the fence.

(Image courtesy: Freddie Mac)