I just got back from the City of Bellflower, annual State of the City address.  This year's theme was "Reaching for the Stars/Growing Together".  Bellflower is such a wonderful example of small town USA stuck in the middle of the big cities that surround it.  I love this event because it always feels like old home week.  One of the handouts at the luncheon table was a reprint of an article in American City & County magazine their December 2008 issue.  In this issue they name the top 10 list of The 2008 Crown Communities Award winners showcase local government ingenuity.  Bellflower made the list.  Now that's impressive.  In the article they tell how the awards recognize innovative projects and programs that local governments have completed in the last year.  The winners represent the best that local governments have to offer and exhibit how creative problem solving and collaboration produces impressive results.  These winning efforts made at a local level have earned the City National attention.  Also featured at the luncheon was a second grade teacher, Pam Leestma from Bellflower's Valley Christian School along with some of her students.  These students participated with NASA to become the first-ever school in California to talk live through a downlink to the astronauts aboard NASA's International Space Station.

I spent some time this past week with an agent from the Seattle area who is considering a move to Southern California.  We talked about the differences in our markets and there really aren't many.  They have all the same issues there we have, although their market has started some rebound.  More buyers looking, more sellers being realistic and property actually being sold or at least making it to escrow.  He did tell me that one of the things they had to do to 'unstick' the market was get creative with financing.  In this day and age of property getting harder and harder to finance and approvals getting harder and harder to get, we need to be careful what we can do and say to Buyers.  It wasn't long ago that a credit score of 580 would get you a subprime loan, and if your score was 680 or higher you were in good shape.  A 720 score could get you anything you wanted.  Today if your score is not in the 700's you need to rethink your ability to buy, unless you have a huge downpayment.  One thing they discovered in the Seattle area was that people are trying to get the rate down as low as possible.  And why not, if your loan is a 30 year fixed that rate will be with you for a long time.  Although the payment may only be a few dollars less a month and it may not help you qualify for much more house, over the 30 year period it's allot of money, no matter how you look at it.  So what the Agents and lenders are doing in that market is encouraging Sellers to contribute to a 'rate buy-down' for the buyer.  In this market most sellers are paying all or a portion of the buyers closing costs, why not put some of that money to great use and help the Buyer buy the rate down to the 4.5 they want it to be!  It makes sense for everybody.  The seller is putting out the money anyway, the buyer needs and/or wants a better rate and and everybody's goals get met.  The lender doesn't care as long as the buy down is paid for.  Everybody wins in this scenario.  If you are on the fence about a purchase, I think this is worth a try.  It was common in the last downturn, it's time to bring the practice back.  If you aren't sure how this works, give me a call and I'll be happy to go through it with you.

And now we wait....to see what effect it has on our industry and the market.  I for one have high hopes that some of the things in the bill will stimulate home buyers.  First time home buyers for sure need to review their situation and get ready to jump into this market with both feet.  Yes the rate of foreclosures coming to the market will slow, but the impact on interest rates is fabulous, and the inventory is still good.  Most importantly don't forget that $8,000 tax credit.  The National Association of Realtors was pushing for a $15,000 tax credit.  We didn't get it.  But the $7,500 tax credit, which was really a loan, it had to be repaid has not become a tax credit.  I haven't seen all the details but it appears that if you are first time buyer and you qualify for the credit, it will come off your taxes and not have to be repaid if you plan to stay in your home for at least 3 years.  Piece of cake.  With the cost of buying you should plan to stay in your home for at least 3 years, actually I would say 5 to 7 at a minimum.  I can't wait to see and hear all the details.  If you haven't been out looking you should be.  Call me, I'll get you an online search account so you can begin your search for a home.  Send me an email - sign up on line at this site - just do it.  Until we all agree to get out there and do it, we'll remain stalled and that's not what the stimulus package intended us to do.

Just when I thought the foreclosure market was slowing, all the news seems to indicate it is continuing to increase the number of listings in the market.  For the first time, I have been working with investor buyers who are seriously looking at the foreclosure market to provide great investment opportunities.  I read a statistic this morning that 1 in every 2 sales closed in the state of California was a foreclosed property.  In some states that number is even higher.  The number of foreclosures is definitely skewing the figures we traditionally look at.  Prices in statewide are down about 41% from one year ago.  The median price in the state in December was 281,500 and the days on market - how long it takes to sell a home - has gone from 68 days in Dec. 07 to 46 days in Dec. 08.  In the middle of all this mess we continue to hear bits of good news.  The affordability for first time buyers continues to get better it is currently at 53%.  That means 53% of people who have never owned a home can qualify today to buy a home at their current income level.   I guess what we as Realtors need to do is make sure that the public, first time buyers and investors know where these properties are and are informed enough to make offers.  Most of the properties I show that are Foreclosures are in great neighborhoods.  Some of them need some work, but many don't.  They are liveable, rentable and great opportunities.  If you want to see a list of foreclosed properties in your area, give me a call and I'll get you set up with a list of properties in the area you are interested in.

It actually looks like we could be on the verge of hearing about the new tax credit proposed in the Legislation.  The current tax credit is 7,500 and although it has been called a tax credit, it is actually a loan.  The 7,500 must be repaid.  Unlike the new proposed tax credit bill which would provide a direct tax credit to ANY homebuyer who purchases any home.  The amount would go up to $15,000 or 10% of the purchase price, whichever is less.  It does say that home purchases must be made within one year
of the bills passing, but the REALLY BIG NEWS is that the tax credit would not have to be
repaid.  You would be able to claim the credit on your 2008 income tax return.  It does specify however that this must be your principle residence and the government will recapture the credit if the home is sold within 2 years of the purchase.  

This is such great news for homebuyers that have been sitting on the fence.  It is everybody's hope that along with the ever falling interest rates buying a house, especially if you are a first time buyer would be more attractive than ever.

I wait with baited breath to hear this has passed.  I know many of my clients have been on the fence and this could be a great incentive.  I'll keep you posted as I hear more.

For a long time I have been trying to deny that I needed to be involved in the Foreclosure market.  I just thought that the banks had made it so difficult for all of us to get anything done that I would prefer to scale down my business than list or sell anything that was a Foreclosure, Bank Owned or REO property.  By the way these terms all mean the same thing!  Then last night I hear that the moratorium on filings by the banks was lifted yesterday and we are getting ready to see another flood of foreclosures come to the market.  I read the statistics on sales in the state and specifically in my market areas.  I was shocked to find that the affordability rate in California was now at 53%.  That means that at the current home prices with the current interest rates, 53% of the population of this state can qualify to buy a home with an FHA loan.  I never thought I would see a number that high.  For many of the past 5 years we heard numbers like 18% - 20%.  The interesting thing is that of all the properties being sold, many of them foreclosures, the purchasers are first time buyers.  If you have read anything on my website you'll know I have a soft spot for helping first time buyers.  In many cases buying a home can now cost you less than renting.  That's a fabulous thing and for many buyers will be the beginning of their family and wealth building for the future.  I knew when I heard all of this that I wanted to be more involved in finding these properties and helping the bank find buyers.  If you have any questions or comments about buying foreclosed property call me, we have allot to talk about.

Sometimes I feel like I'm lecturing instead of just sharing my thoughts, but I keep hearing the same question over and over - Do you think that prices will drop further?  And the follow up - Do you think they'll ever go back up?  As an example I spoke with a Seller today who has been procrastinating about selling for over a year.  They bought their condo in the early 90's and now they owe next to nothing on it.  Even in this down market, they'll make a profit.  Oh sure not as much as they would have just a year ago, but enough to afford to pay cash for the home they have their eye on out of town.  As the market continues to shift, buyers need to remember something about sellers.  Once the market shows signs of improvement, the really good deals will begin to slip away.  Sellers won't be interested in making the kind of concessions they are today.  So as buyers sit on the fence and wait to be sure they are at the bottom before moving forward, the pent up demand will show up and buyers may be faced with lots of competition for the best homes available.  The biggest hazard with trying to time the market is that while interest rates are very low, what most people don't realize is that the impact interest rates can have on the real monthly costs of home ownership.  Even a 10% drop in home prices is immediately nullified by a 1 percent increase in interest rates on a 30 year fixed loan.