January 2010 Market Report

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January 2010 Market Report for Humboldt County

Welcome to another Market Report for Humboldt County Real Estate Sales. Sales numbers slipped for the first month of January, but this is standard for the First month of the year. It tends to be the slowest time because of the holidays the prior month.

January 2009 saw 80 sales vs. 81 sales for 2010, but there were more listings in 2009 (1416) than in 2010 (1153). Inventory is down to 14.23 Months of Inventory vs. 17.70 for 2009.

What does this mean? Less downward pressure on prices, this is good for sellers but signals to buyers that the market has likely hit the bottom. Coupled with the highest afforbabilty since March of 2004 (27%) and low interest rates, this makes for an excellent buying opportunity.

Where does the market go from here? Good question! If I could predict the future, I'd be living on my own private island somewhere, but since I can't I'll have to give it my best guess. I believe that the prices of homes will bump along the "bottom" until there is a real economic recovery. Look for sales activity to increase through the year and In the mean time, there is a very real possibilty that two factors could affect the market.

1. Credit could dry up even further. Thus far, FHA has powered the market across the country, but if HUD makes significant changes to FHA loans by increasing the down payment from 3.5 % to 5% or requiring higher credit scores this could push many more buyers out of the market. This loweres the demand and pushes prices lower.

2. The Federal Tax credit for First Time and Move Up buyers is not renewed (again) causing sales activity across the nation to drop substantially. This is scheduled to occur on April 30th. (You must be in escrow on a home by that date to qualify.)

In any event as we move towards recovery interest rates are likely to increase, this affects a buyer by cutting into their buying power, so I think now is a great time to buy.

No matter what happens, a home is always more than an investment, it's a place to celebrate and live life with friends and family. Feel free to browse Humboldt County Listings and then call me if you see something you like, I'd be happy to help you find a place to call home!

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Extension and Expansion of the Federal Tax Credit!

President Obama on Friday, Nov. 6 signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday.The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
What does this mean? Well, First Time Buyers will get up to an $8000 tax credit to buy their first home and move up buyers will qualify for a $6,500 credit. I think that this will spur Market Activity for the first half of 2010 and afterwards, we may see a slight drop in activity. Time will tell, but if you're thinking of moving up to a larger house, 2010 is your year to do it!

Seller Pays for Buyer's Closing Costs

Welcome again to my Real Estate blog. I recently had an issue come up in a transaction that left my buyers a bit confused, and could potentially be a problem for Buyers in the future, so I thought that I'd address this: Closing costs.

These days, many buyers are asking sellers to pay for their closing costs or a portion of the closing costs. This is the money that is required to close a transaction. This includes loan fees/expenses, the down payment, buyer's title insurance(ALTA), seller's title insurance(CLTA), escrow fee and associated tranfer fees (private, city or county).

There are only a fee of these expressly referenced in the CAR purchase agreement:

1. CLTA (Owner's Title Insurance).

2. Escrow Fee

3. Tranfer Tax (Humboldt County)

Typically, these are split between Buyer and Seller - 50/50, and are only a small portion of these expenses. On a $300,000 home the escrow fee is: $621.00, the CLTA is $1184.00 and the transfer tax is $1.10 per 1000 or $330.00. The total is: $2135.00

The problem arose because of the number of offers I'd written for these particular buyers. I have written 5 offers for them The buyers didn't want to hear the full explaination each time, so when it came to the "allocated costs"I said, "The costs are split." This meant that the costs discussed in the contract were split: escrow, title insurance, and transfer tax. The buyers thought we were splitting the closing costs. They thought that is was ALL of the closing costs.

Quite a big misunderstanding if I do say so myself.

As a buyer, you have the right to ask a seller to pay for some of the closing costs, but it has to be specifically asked for. A dollar figure needs to be provided to the seller so they know what their bottom line is. This is only fair.

Ideally, you have met with a lender and received a "Good Faith Estimate". This is a document that out lines the closing cost and all of the fees for any given loan amount. By law it has to be provided to a borrower prior to closing, but the lenders that I use provide them up front. This way you will know what you can ask for.

The bottom line is that if you pay them now or have the seller pay them, they will be paid. If you have them paid upfront, it's done. If they are paid for by the seller, they are financed over 30 years. This is because the seller would have taken less for an offer that didn't include closing costs. So keep that in mind: there are no freeies in real estate: you always pay.

Negotiations can be tricky, but keep a realistic outlook and try not to be attached to the outcome. Happy Home shopping!

Inspections - "Kicking the Tires"

So you've decided to purchase a house, you may be asking, "How am I to know what I'm buying?"
The answer lies in the inspections. This is an important consumer protection provided to the buyer of Real Estate which allows the buyer time to kick the tires and check under the hood, so to speak.
Buyer's Inspections are a very important of the Home Buying process, and by default they matter a lot to the seller as well. Any contract has a 17 day period for buyer's investigations (or longer if you change the timeframe). During this time it is the duty of the seller to provide the buyer with all Statutory Disclosures required by law and the Buyer should conduct any and all inspections that they deem necessary. These inspections include, but are not limited to:

• Wood Destroying Pest Inspection, an inspection that investigates the whether the structure has current infestation of wood destroying organisms such as: termites, fungus, dry rot, wood boring beetles, etc (called section I); conditions that may lead to infestation(s) (called section II); recommendations for conditons to be inspected and repaired by other trades people (i.e. roofers) and informational notes about the current condtion of the house, such as plumbing existing over finished drywall or freshly painted surfaces.This inspection will also have a diagram denoting the location of each condition and a corresponding number based on what type of problem is present. These Numbers will also have a bid to fix the condition.



• A Home Inspection, that investigates the Systems of the Home: Plumbing, electrical, etc. It also has information regarding the health and safety of the home.



• A Roof Inspection, examines the roof and will make suggestions and cost of repairs to guarantee the water tightness of the roof for 3 more years.



• Investigations of local building codes, can you build, subdivide or add a mother-in-law?



• Neighborhood makeup - do you like the neighborhood?



• Personal factors - are you getting a divorce, having another child, getting married and if so, will this house work for you?



• Review of the disclosures - is there something that has been disclosed that you can't live with? Has someone died in the last 3 years in the house?



• Square footage - is the home the correct square footage?



• ETC.

You get the idea...
If you discover some adverse condition during this time period, the buyer may also make a request for repairs or other corrective action (including but not limited to a credit from the seller to the buyer or a new negotiation of the price). This request should be given to the seller before the 17 day inspection timeframe is up. A buyer may also cancel the contract as a result of the information discovered or disclosed during these inspections. The seller is bound by the contract to return your earnest money deposit.
Once a Buyer is satisfied with their inspections or has negotiated with the seller for repairs, they would release their investigation contingency. When the inspection contingency has been released, default on the part of the buyer will result in the loss of the buyer's earnest money deposit.
The most important inspection (at least with residential real estate) is the Wood Destroying Pest Inspection. They are so important that Completed Pest Inspections are filed with the Pest Control Board and can be searched for on the pest control board website . For a small fee, a buyer can obtain a copy of a past Pest Inspection.
For my money the best Inspector in our area is Mike Strickland, not only is he a nice guy, but he's a straight shooter, which I like an appreciate.


When Listing a Home, I ask the seller to get a Pest Inspection up front. Why should a seller do this? It's because a seller can price the home correctly if there is Pest work that needs to be completed. You can also usually avoid a secondary negotiation after the inspection timeframe. The Buyer won't come back on the seller to ask for a credit for the work that they already knew about.


Even if a home is purchased as-is, inspections should be performed. You want to know what as-is, is!
Looking to buy?
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Buying a Home in Humboldt County

Whether you are a first time home buyer or a seasoned Real Estate investor, buying a home can be a stressful event. In 2008, one of the things you may be wondering is should I buy a house now? The answer is YES!

Buying in Humboldt County, California

1. Prices are falling.

On the whole prices are coming down from the previous years. Because homes are staying on the market longer and there is less competition to buy homes, Sellers must reduce their prices. also, gone are the days of buying a Home "AS-IS". Sellers are willing to negotiate on repairs.

2. Interest rates are low.

As of this posting (1/10/2008) Interest Rates for Buyers with good credit and full documentation on loans are BELOW 6%. The key is to have good credit and good income.

When money is cheap, it's a good time to buy!

3. Inventory is high.

Although, inventory isn't as high as it was a few months ago, it is still very high, so buyers have more homes to choose from. As prices fall, that house you want that was just out of your price range is liable to fall into your lap. but don't expect miracles, it's rare to find a house that will fall $100,000 in price, unless you're looking at high end real estate.

4. Fewer Buyers.

Fewer Buyers equals more competition to sell a home. These are favorable buying conditons that lead to...

5. Sellers that are willing to negotiate.

When there is more competion to sell homes, Sellers that are motivated will work with a Buyer, from the time the initial contract is signed to negotiation of repairs that are discovered during your inspection time frame (17 days, more to come on this in a later posting).

6. When the Investors are out that means its a good time to buy.

Blood is in the water, so to speak, and the Savvy buyers are coming out of the woodwork. These are experienced investors who were waiting around for these types of conditions. Investors are looking mainly at Houses priced in the 200K range. They may not be complete dumps

How many times have you heard "buy low and sell high"? That's what these investors are looking to do.

If you have any questions about the buying process call me at 707-616-3456.

Of course email works too: andy@azalearealty.com

If you'd like to browse the MLS for homes for sale click this link