Many Looking for a Good Deal!

USA Today ran a story reporting that despite the falling prices in many parts of the country and the number of foreclosures rising, there is "a small yet growing number of bargain-hunting buyers." This is something we have definitely noticed here in the East County area of San Diego.

According to to article, first-time homebuyers that have so long now been priced out of the market because of the "frenzied 2001-2005 market" are the buyers that are among those most attracted to real estate today. This is something else we are seeing with our own clients. Happily, we currently have at many first-timers who are talking to our wonderful mortgage broker, Jeff Merritt of Granite Mortgage in La Mesa, California, to see what they can qualify for! If we are happy, these buyers are jazzed and ready to roll!

In "November 2007," the article goes on to say, "39 percent of buyers were first-timers, up from 36 percent in 2006, according to NAR. The key impediment to buying? Meeting tighter bank qualifying criteria." But is that so much of a bad thing? It is excruciating for our clients to go through a short sale (in other words, they are upside down with no other way out but bankruptsy and/or foreclosure). The tougher criteria will help these new buyers not to end up in that unenviable position. Better to rent and save as much as possible than to jump the gun.

Interestingly, USA Today reported that "international buyers increasingly are looking at opportunities in the U.S. real estate market. Declines in the value of the dollar against other currencies and lower prices translate into a discount of up to 30 percent for some foreign buyers.
Investors from other states also are seeking bargains in those markets hardest hit by the real estate downturn. Some are even buying properties sight-unseen for conversion to rentals until the market heats up again – a risky proposition, according to some observers." Just today a loan officer at the bank where we were opening up a new account told us this very same thing! The good news about this, according to this loan officer, is that this international interest will stimulate the real estate economy. That is a good thing!

by Debbie

Multiple Offers? Now?

You betcha. In January, we began looking for a house to purchase with our kids as an investment. We're here in San Diego, out in the East County, and our price range was $429K or less. We definitely wanted location, location. We found one in Lakeside that we liked that was a short sale (the sellers were upside down, in other words) and a great buy. It was actually still in great condition and at least $100K under any other house in the neighborhood. We put in our offer and waited. And waited. And waited. The banks are notorious for very slow response times. In the meantime, another offer came in. Still we waited. We kept looking at houses, but couldn't beat this deal, but at least we'd have backup ideas. The bank came back $50K higher so we bowed out. We put offers in on several others and each time there were multiple offers! Surprised? So were we.

This year, each and every time one of our buyers has offered on a property, there have been multiple offers. This goes for condos under $250K and for homes under $450. This has been true for short sales or bank repos. Our buyers get frustrated. Leah, our buyers agent, has put in 7 offers for one of her buyers, and each time they have been outbid! They're still looking.

Granted we're all wanting that great buy. But what this tells us is that despite all of the doom and gloom about the economy and the real estate crisis, there are A LOT of people out looking for bargains, and that is a very good thing! So though we are definitely slower this year, we are encouraged by all this competition and will keep on keeping on!

by Debbie

Forbes.com Says San Diego Prices May Rise Over Next Half Year

Some good news, guys! And we are seeing it in buyers beginning to be active, though still afraid to get their feet wet. We bought a house for investment, and we're not alone in the industry. Our main lender contact just bought a house to fix and possibly flip, as well! It is definitely in the air! Read this excerpt from Forbes.com...

Subprime still matters, as do the concentration of adjustable rate mortgages. Transaction volume, however, especially over the next 12 months is becoming an increasingly important gauge of a market's health. This month the National Association of Realtors reported that sales volume of existing homes was up 2.9%, the first such month-to-month rise since July.

In cities like San Diego, one of five major metros where transactions rose, that's good news, assuming it's sustained. What makes transaction volume a good indicator is that it shows how easy it is for people to get loans and how much confidence there is in the market. If mortgages are available and buyers have some faith in the value of the home, they're more likely to buy.
San Diego's present conditions suggest that over the next half-year, prices may start to rise. That's because "there's usually a three- to six-month lag between when transactions go up and prices go up," says Jonathan Miller, president of Miller Samuel, a Manhattan real estate appraisal firm.

Another good sign for the coming year? Increased credit availability.

We took into account increased Fannie Mae and Freddie Mac (GSE) loan limits. The new legislation will open up credit in markets such as Sacramento and San Diego by boosting the GSE loan limit by 125% of the median price. That's a huge deal for San Diego, where 18% of the market will see improved lending conditions, based on projections by Radar Logic, a New York-based real estate research firm.

http://www.forbes.com/2008/03/31/homes-risky-property-forbeslife-cx_mw_0331realestate.html?partner=email

And the Survey Said...!

Standard & Poor's announced: Shiller home price index for 20 cities fell a record 2.4 percent between December and January and has dropped a record 10.7 percent from the same period a year ago, according to January figures released Tuesday. Of the 20 cities studied, all posted declines year-over-year except Charlotte, N.C., which rose 1.8 percent. All 20 cities posted month-to-month declines.

What does that mean to you?


National surveys such as these are useful in measuring broad macroeconomic trends but are of marginal value to the individual consumer in the process of buying or selling a home. That’s because real estate prices are set at the local level and can vary dramatically from market to market, neighborhood to neighborhood, and home to home based on a variety of factors.

NAR on Tuesday reported an increase in sales nationally for the first time in seven months. This gain is encouraging because increases in sales were not expected until the second half of the year.

According to a C.A.R. report, February sales volume in California was up 9.5 percent compared with January, marking the fourth month in a row that figure inched higher

In the market here in East County, falling prices have recently stimulated sales as buyers (including us!) take advantage of the downturn. As inventories of homes are drawn down, prices should begin to stabilize.

The California Economy according to Bloomberg

Business reporter Daniel Taub interviewed C.A.R. Chief Economist Leslie Appleton-Young about the California economy on Bloomberg, Thursday March 20, 2008.

What this means for you, the consumer:

• Prospective borrowers worried about the foreclosure crisis should obtain pre-purchase homeownership counseling. A Harvard University analysis found that borrowers who received classroom and individual counseling were, respectively, 23 percent and 41 percent less likely to become 60 days delinquent than equivalent borrowers who did not undergo counseling.
• Calling the market low is a difficult task, and it's most often spotted in the rear-view mirror, according to MSN. While prices in many markets may have not yet hit their lowest point, the bottom may be near. And in other areas, only the pace of sales has been affected; prices have held firm or increased. Waiting for the absolute bottom puts consumers at risk of missing the best prices and getting caught up in a market on the upswing.

Making sense out of the news is just another way I serve East County as Your Personal Realtor!

CNBC Reports: "S&P sees end to subprime mortgage writedowns"

Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.

What this means for the consumer:

• S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
• The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
• Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.

Making sense of the news is another way I serve East County as Your Personal Realtor!

The Wilmers Jump In!

We decided to buy a house for an investment! Sure, prices may inch lower, but the buys out there appeared too good for us to pass up. We have been shopping homes for our children since January in the $300K to $400K range. There are a lot to choose from here in East County, most of which are short sales and a few which are bank owned (i.e., already foreclosed). What we found was that every house - without fail, that the four of us liked and decided to put in an offer to purchase, received multiple offers! Hmmm.... We thought no one was buying real estate? WRONG! The under $400K market is heating up, and the under $350K market is HOT. Now, not every home under $400K is getting snatched up. Buyers are definitely shopping location. If the home is in a good location and is priced below comparables, it is selling.

The catch, of course, is that these properties need help. We were looking for what we called a "screamin' deal." The screamin' deals are, well, messy! The homes need TLC. Paint, flooring and landscape are necessary to appeal to this market's pickier buyer or renter, depending on the investor's plan. We aren't positive what we will do with our investment yet. If we can make a profit, we will resell it after we get it spiffed up. If prices have dropped lower at that time, we know we can rent it and cover our costs because it is in a great neighborhood.

We are excited about this new venture for us! We have been wanting to invest in real estate for many years but prices have kept us from taking the plunge, other than owning our own home. We believe that now is the time. We'll keep you posted on the results.