Dawn Rivera’s Fremont & East Bay Real Estate Blog

The current economic crisis is having a lasting impact on many older Americans, forcing them to make difficult financial decision because they have so little time and resources available to them to recover from losses in the housing and financial markets.

A new survey from Golden Gateway Financial shows that these losses are causing many seniors to consider retiring at a later age than originally planned. The survey asked Americans aged 62-and-older how the economic crisis was affecting their retirement plans. Not surprisingly, the number of respondents planning to retire after age 70 because of the economic crisis increased substantially from those planning to retire at that age before the crisis.

“Even though some economists are beginning to grow optimistic, older Americans continue to feel real pain and must make hard trade offs and decisions,” said Eric Bachman, founder and CEO of Golden Gateway Financial. “This is the worst possible time for the 40 percent of seniors now considering delaying retirement to be searching for jobs. It’s unfortunate that the hopes and dreams of these retirees are being put on hold.”

Overall, the survey found that many seniors understand exactly how the economy is affecting their retirement finances and plans. It also illustrates the concern that many seniors have about the prospects for their continued ability to sustain retirement. Additional observations include:

- Before the economic crisis, 67 percent of respondents planned to retire before age 70
- Now, the number of seniors planning to retire by age 70 dropped to 40 percent
- Before the economic crisis, 30 percent of those surveyed planned to retire after age 70
- Now, almost 50 percent of seniors plan to retire after age 70
- More than 40 percent of seniors polled said the current economy has had some kind of negative affect on their ability to retire
- More than 50 percent of respondents said they are concerned that their overall net worth may no longer be enough to sustain their retirement
- 86 percent of seniors said they had a reasonable understanding of their net worth, and 50 percent said that net worth had declined by between 10 and 30 percent

The independent online survey, conducted with United Sample, Inc. (www.unitedsample.com) in partnership with Golden Gateway Financial, polled a nationwide representative sample of more than 500 senior citizens aged 62 or older. A complete list of questions and percentage answers are available at the Golden Gateway Financial website or by contacting the company.

Positive News: U.S. Housing Starts up Second Straight Month in June

(Market Watch)-New construction of U.S. houses expanded for the second straight month in June after hitting a record low in April, the Commerce Department estimated Friday.

Starts rose 3.6% in June to a seasonally adjusted 582,000 annualized units stronger than the 531,000 pace expected by economists surveyed by Market Watch. This is the highest level of starts since last November.

Starts of new single-family homes rose by 14.4% to 470,000 in June, while starts of large apartment units fell 29.4% to 101,000. Building permits, a leading indicator of housing construction, rose 8.7% to a seasonally adjusted annual rate of 563,000. This is the highest level of permits since December.

SACRAMENTO – The pace of home sales at California new-home communities in May was still below year-ago levels but continued to improve from preceding months, the California Building Industry Association reported today.

The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 26 percent below May 2008, but is improved from the 31 percent decline in the prior month and is the fourth consecutive month of that improvement trend.

During May, 3,019 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 4,094 in May 2008. Sales of single family homes were down by 30 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 24 percent and sales of condominiums were off by 16 percent.

Compared with the same period last year, the median base price of homes sold dropped by 5 percent.

Non-seasonally adjusted total new-home sales were 9 percent higher than levels seen last month. This is an improvement from a year ago when the April-May interval was a decline of 6 percent. While sales volume is still approximately one quarter off year-ago levels, the steadily shrinking year-over-year sales declines suggest the market is stabilizing.

Jonathan Dienhart, Director of Published Research for HWMI, notes the recent month-to-month increases are a positive sign.

“Typically March is the strongest selling month of the year, not May,” said Dienhart. “The incremental gains since March are counter to this typical seasonal trend, which suggests the market has found the bottom and is truly stabilizing, albeit slowly. But with the state tax credits for home purchases running out and continued troubles in the broader economy, it is not yet clear that an actual recovery is at hand.”

Robert Rivinius, CBIA’s President and CEO, agreed, and added that the continued weakness in the new-home market means that policy-makers need to reduce government fees and restrictions – and to stop trying to impose additional barriers.

“State and local governments must remember that we need to be building more new homes and apartments – not less – to meet the demand caused by our steadily growing population. Many communities have actually reduced impact fees in order to accommodate new housing, we must see more of that, and the continuation of the state tax credit will be critical to sustaining the improvements in the marketplace,” said Rivinius.

Been out looking for an entry-level single family home in Hayward, CA? If your answer is yes, then you’ll have experienced first hand the craziness that’s become reality in the current Hayward, CA market. No matter which property you choose to visit, chances are there are folks there already, and, as you leave, odds are very good that others are pulling up behind you.

The entry-level market for detached single family homes in Hayward, CA has gone plain nuts.

Nuts might be good for squirrels but last time I checked, those cute, furry-tailed rodents don’t qualify as first-time home buyers. What’s all the fuss? I’ll explain the issues and implications at the end of this post, however, let me first set the stage.

Single family homes 1,200 square feet and smaller are flying off the market like pancakes off the grill during a lumberjack festival. Inventory is WAY down and sales are WAY up. In fact, in an unprecedented market maneuver, pending sales numbers are actually out pacing the supply of existing homes for sale. It doesn’t take a rocket scientist to realize that something is up and to agree that things can’t continue this way for long.

So where are we headed? Does this mean we’re at the bottom of this particular market? You tell me. It would appear that prices have stabilized and have been on a plateau for quite a while. There is a mere difference of $4,000.00 between the average sold price from November, 2008 until April, 2009. However, list prices are headed back up – a sure indicator that at least one group believes the market has turned – sellers.

As I’ve stated in other posts, the bottom of the market cannot be officially called until both Average Sales Prices AND Average Square Foot Prices are either flat or climbing.

While not yet perfectly level, the numbers are looking very, very good. We may not be at the absolute bottom, but we’re so close that if I was in a submarine, I’d be sounding the collision alarm and looking for something secure to hang on to.

Lastly we have Months of Inventory. A quick search on Google reveals many pundits stating that approximately 6 months of inventory indicates a level market. More inventory reveals a Buyer’s Market, less precludes a Seller’s Market. Anyone thinking we are still in Buyer’s Market in this category is simply in denial. True, we’ve not seen prices pounding back upward, but, from personal experience, I can tell you that almost every home in this group is ending up with multiple offers and is selling for over asking price. And here is a part of the rub – most of these homes go on the market with artificially low prices for the specific purpose of securing multiple offers and driving the prices back up again.

Here are 3 Critical Facts you need to know about this market:

1. We are running out of inventory at the bottom of the market.

There are a few reasons for this:

There was a hold on foreclosures from late 2008 until April 01, 2009. Although foreclosures are back on track, new properties have not yet hit the market in any kind of significant volume. That may change any moment.
Unprecedented numbers of buyers are hitting the market because of record low mortgage rates, rock bottom prices and good, old fashioned “spring fever.”
The $8,000.00 tax credit and its impending deadline are pushing buyers to cash in before it is too late. Even the confusion about whether or not the credit can be used for the down payment is fueling frenzies in some quarters.

2. Many homes are going pending that ARE NOT actually closing.

Because of the shrinking inventory, many buyers are starting to write on short sales – buyers that would’ve historically avoided them a brief 3-4 months ago. Once in contract, short sales show up as pendings, but take so long to close they actually mess up the pending numbers (that is the only way more homes can go pending than are actually on the market!). The success rate of short sales is somewhere between 10-20%, and they can take up to 9 months to close. To add to the confusion, many buyers submit an offer on a short sale, it gets marked pending, then those very same buyers go get offers accepted on OTHER short sales as well. While those escrows are slowly stewing in their short-sale crock pots, those same buyers actually go out and manage to get an REO into escrow! One buyer – three escrows? You betcha! You gotta know two of those escrows are NOT going to close, thus adding to the overall confusion in the current market.

3. Current list prices are artificially low.

Banks and their listing agents have figured out the “list low – sell high” strategy and are whipping it into an art form. Low ball offers on REOs are WAY gone unless it’s a dog of a property and has been sitting on the market an awfully long time. If you see something out there priced way too low to be real, guess what …

Lastly, remember that short sale listing agents are also pricing way below market value just to get you through the front door. Problem is, there is absolutely NO guarantee that the bank will actually sign off on the “list price” or your subsequent lower offer.

I believe this situation will be temporary.

We cannot continue to have more homes go pending than are actually coming on the market – this is supply and demand economics 101. Something has to give. I believe it will be supply: in my opinion, we are going to see a resurgence of foreclosed homes into the market in the near future that will level the playing field. Many of these will be existing short sales that have been sitting out there a long time. And in some cases, short sale homes, once foreclosed, will go back on the market at a higher price than their list prices as short sales. This is simply because they were priced far too low to begin so as to attract visitors and offers.

Bottom line: I personally do not believe homes at the bottom will go down much more in value, if at all. I believe homes in the upper end will be the ones taking the hit. And I also am going to predict that by mid-summer, we should be back to at least 3 months of inventory.

So how to respond to all of this?

Be a wise buyer. Cooler heads always prevail and make the money in markets like this while those who respond with panic end up losers every time. Set a limit and stick to it – it may be a while before you land a house, but with careful work and due diligence, you will find one that you can finally call “home.”

Hi all I hope you had a wonderful 4th of July. Here is something to help keep you and your family safe the rest of the summer.

Summer is a time for recreation, but it is also a time that brings new hazards. PECO encourages you to take your time to make sure children and family members stay safe and have fun at the same time during outdoor play, particularly around water or when summer storms occur.

Electricity is essential energy – it keeps us cool in the summer, lights our house, keeps the refrigerator cold, and runs the TV, stereo and computers. But you can create dangers with electricity. It doesn’t take much power for someone to hurt themselves – an adult can be killed with less than one-fifth of the electricity it takes to light a bulb.

Children often do not understand the dangerous situation that they can create with electricity. Take some time to get down and view the surroundings from a child’s vantage point to identify possible dangerous situations. For safety outdoors, PECO recommends children and adults follow these rules:

- Always assume that electrical equipment is energized. Stay away from electrical equipment on the ground and overhead. Never climb a utility pole or tower. Don’t play on or around pad-mounted electrical equipment. Electrical power poles and utility equipment should never be used as a playground.
Never climb trees near power lines. Even if the power lines aren’t touching the tree, they could touch when more weight is added to the branch.

- Fly kites and model airplanes safely away from trees and overhead power lines. If a kite gets tangled in a tree that’s near power lines, don’t climb up to get it.

- Never go into an electric substation. Electric substations contain highly dangerous high-voltage power equipment. Don’t retrieve a toy or rescue a pet that goes inside.

- Look up and around you. Always be aware of the location of power lines, particularly when using long metal tools like ladders and pool skimmers.

Doug Mokoid, PECO safety manager, suggests adults teach what they know about electrical safety. In most instances, Mokoid said, if potential safety concerns are taken into consideration and handled proactively, accidents could be avoided. “Electricity and water can be a dangerous combination for people,” he said. “Caution children and family members about the danger of using electrical appliances in wet areas – even wet grass can create a dangerous condition.”

- Supervise the use of extension cords outside, check them carefully for exposed wires, and make sure they are in good shape, and not frayed or cracked. Use only extension cords that are rated and marked for outdoor use, and are large enough to handle the current needed for the device you are using.

- Check that the prongs on the extension cord plugs are clean, not broken or bent. Make sure the ground prong is intact in a three-prong plug, and avoid use of adapters.

- Summertime is water recreation time for millions. While enjoying water activities, don’t create a dangerous situation that will dampen your summer fun. According to the federal Consumer Product Safety Commission (CPSC), deaths and serious shocks occur in and around swimming pools each year.

- Never touch an electrical appliance if you are wet; always dry off completely. And, never swim during a thunderstorm. If children wish to play with sprinklers or hoses, reinforce that they should be set up well away from any electrical outlets or appliances.

- Be careful using electrical appliances outdoors. Whether it is a bug zapper, an electric charcoal lighter, or a radio or CD player, caution must be exercised. Use battery operated, rather than electrical, appliances near swimming pools. Keep electronics and electrical appliances and tools at least 10 feet away from pools, ponds and wet surfaces.

- Be sure you use outlets that have weatherproof covers and ground fault circuit interrupters (GFCI) to prevent serious shock injuries. Any electrical outlets within 20 feet of a pool or spa should be equipped with a GCFI, or ground fault circuit interrupter. Use portable GFCIs for outdoor outlets that don’t have them.

- Never install pools underneath or near power lines. Watch for and stay away from overhead power lines when cleaning pools, sailing or fishing. Pools and decks should be built at least 5 feet away from all underground electrical lines, and at least 25 feet away from overhead electrical lines.

- Summer is often a peak season for one of the nation’s deadliest weather phenomena-lightning. That is why the National Weather Service has adopted the saying: When Thunder Roars, Go Indoors! Lightning can strike up to 10 miles from the area in which it is raining, even if you don’t see clouds. This means that if you can hear thunder, you’re within striking distance.

“If thunderstorms and lightning are approaching, the safest location is indoors away from doors and windows with the shades drawn. Stay away from water, electric appliances and other objects that could conduct electricity, and use only cordless or cell phones to make emergency calls,” said Mokoid. Phone use is the leading cause of indoor lightning injuries in the U.S.

A direct strike is not necessary for lightning voltage to enter your home through phone lines, electrical wires, cables and plumbing. Turn off and unplug appliances well before a storm nears – never during. Don’t expect a surge protector to save appliances from a lightning strike, unplug it as well. More information on lightning safety can be found at the National Oceanic and Atmospheric Administration website at www.lightningsafety.noaa.gov.

After a recent spike seen in mortgage rates, some consumers are wondering whether they’ve missed their chance to refinance into an ultra-low rate. Fear not: While the conforming 30-year fixed-rate mortgage hit a daily average of 5.81% last Thursday 06/18/09, it averaged 5.53% on Tuesday06/23/09, and it’s possible that rates could continue to fall. Predicting interest rates is like predicting who is going to win the World Series in January,I feel the recent spike is somewhat of an aberration, I expect rates will continue to drift down.

Why the recent run-up in rates? Over the past month or two, the economic skies have brightened somewhat, and the threat of trillion-dollar budget deficits for the foreseeable future, the potential for significant inflation, and few clues as to how the government might extricate itself from intrusions into markets created a landscape that was not appealing to investors.

Now, rates are retreating partly because inflation doesn’t seem as immediate as investors feared. In my opinion, nothing fundamentally has changed in the economy over recent weeks to warrant the rate rise, yet he expects volatility through the remainder of the year as investors debate the economy’s health. Realistically, I think that the rates will drift under 5% again. It may take a month, may take two months.

It’s also important, however, to realize that extremely low rates likely won’t be around forever. Luckily, we have seen rates drop some this week, which should help many consumers breathe a little easier. But the fact remains, the government’s plan of purchasing mortgage-backed securities cannot go on indefinitely, and when it ends, we will most certainly see a spike in rates. The hope is that the Fed can keep rates low long enough to kick-start a housing recovery. Whether that will work remains to be seen.

Hi loyal readers, here is some new market info for you. Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5.

The Pending Home Sales Index in the Northeast shot up 32.6% to 78.9 in April and is 0.8% above a year ago. In the Midwest the index rose 9.8% to 90.4 and is 11.1% above April 2008. The index in the South slipped 0.2% to 93.0 in April but is 3.5% higher than a year ago. In the West the index rose 1.8% to 94.8 but is 2.9% below April 2008.

There are numerous buyer assistance programs around the country. Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location.

Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.

NAR’s (national asso. of realtors) Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.

A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.

The relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons, Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.

The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline.

For more information, visit http://www.realtor.org.

If your buying a home, you’ll probably be signing up for homeowner’s insurance as well. In fact, many lenders will require that you purchase a homeowner’s policy before your mortgage can be approved.

Most homeowner’s insurance policiesnincludenboth property and liability coverage. The property section covers damage to your possessions, home, garage or other structures on your property. It also covers offsite housing if you must move out of your house while repairs are being made. Personal property coverage will usually pay 50% of replacement value, although there may be a limit on such items as jewelry.

Most lenders require that you have Insurance (which is typically based on market value) before you close. Because the market value is a broad figure that doesn’t take specific features into account, chances are it’s much less than what your actual costs would be. Market value is based on such factors as the age and condition of your home, and the value of comparable homes in your area.

If you have any questions about the real estate industry, call me. As your real estate professional, I would be happy to help you with all of your real estate needs.

Buying a home is one of the biggest investments you’ll ever make. you want to protect yourself and your investment during the purchase transaction with title insurance.  If you own the land that the house is on, you have a strong right to the property.  But if others have rights to it through liens, unpaid taxes or minning rights, they are also part owners of the property.  Even if you know nothing about these risks, as the homeowner you are still vunerable to such claims on your property.  Title Insurance, which protects against claims on your real estate by others, requires that certian risks be eliminated before the policy takes effect.  It then covers hidden risks thereafter.  If you have to go to court in regard to your property the title insurance company will pay for your legal counsel  If you lose your rights you should be protected up to the amount of the policy.  The cost of title insurance is usually less than five percent of the cost of your home, but be aware that the coverage may not be automatic.  Make sure you discuss a title insurance policy with your loan agent.  When you are ready to buy a home, call me, as your real estate professional I’ll be happy to help you through the process.

 The Obama Administration has announced efforts to help bring more relief to responsible homeowners under the Making Home Affordable Program. There has been an effort for greater affordability, for homeowners, by reducing interest rates on their second mortgages as well as a set of measures to help underwater borrowers stay in their homes. Treasury secretary Tim Geithner said “With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan.”  “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is critical to stabilizing our financial system overall.”

The Second Lien Program, one of the new details, will work together with first lien modifications offered under the Home Affordable Modification Program to deliver a more conclusive, affordability solution for struggling borrowers. Second mortgages can create huge challenges, even when a first lien is modified. Up to 50% of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. The second mortgage always has a higher interest rate than the first lien.

Under the Second Lien Program, when a Home Affordable Modification is initiated on a first mortgage lien, servicers participating in the Second Lien Program will automatically reduce payments on the second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury.

Separately, the Administration has also announced steps to join the Federal Housing Administration’s (FHA) Hope for Homeowners with Making Home Affordable. Hope for Homeowners requires the holder of the mortgage to accept a payoff below the current market value of the home, allowing the borrower to refinance into a new FHA-guaranteed loan. Refinancing into a new loan below the home’s market value removes a borrower from a position of being “underwater” to having equity in their home. By increasing a homeowner’s equity in the home, Hope for Homeowners can produce a better outcome for borrowers who qualify.

Under the recently announced changes and, when qualifying borrowers for a Home Affordable Modification, servicers will be required to determine eligibility for a Hope for Homeowners refinancing. Where Hope for Homeowners proves to be viable, the servicer must offer this option to the borrower. To ensure proper alignment of incentives, servicers and lenders will receive pay-for-success payments for Hope for Homeowners refinancings similar to those offered for Home Affordable Modifications. These additional supports are designed to work together and take effect with the improved and expanded program under consideration by Congress. The Administration supports legislation to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75% of all loans in the country are now covered by the Making Home Affordable Program.

Continuing to bolster its outreach around the program, the Administration also announced a new effort to engage directly with homeowners via MakingHomeAffordable.gov. Homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov.

For more information, visit www.MakingHomeAffordable.gov.