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!

Short Sales: A Buyer's Guide

As the Housing Bubble continues to let out air and drags down the Economy, many Sellers find that the value of their home has decreased BELOW the amount they owe to their lender (the BANK). I actually have a client that owes $420,000 on a home that is now worth $200,000! How can a Seller avoid foreclosure and limit the damage to their credit? The answer is Short Sale!



For a Buyer, this can present a terrific opportunity to purchase a home at an outstanding value, while still retaining the ability to perform inspections and get a home that has not been "trashed" by a angry homeowner. There are some considerations for Buyers and what follows is a list of things every Buyer of Short Sales should know.



1. Short Sales are not Short! The term Short Sale refers to a Seller "shorting" the amount owed to the Lender. It is not uncommon for a short sale to take as long as 6 months or more.



2. Buyers need to be pre-qualified or pre-approved by a lender and present a letter to the seller with the offer. This is a terrific idea with any sale ( I always do it) but the seller's agent has to put together a packet to send to the Lender, and part of this packet is proof that the buyer can perform.



3. Buyers need to find out who the seller's lender is. This can be helpful because a savvy buyer's agent can know approximately how long a transaction could take.



4. As crazy as this may sound: Each lender deals with Short Sales differently. Countrywide originated many of the loans in the last 3 years, so understandably, they get the most requests of short sales. As a result, they probably take the longest to approve.



5. Only 20% of short sales close. Why? Buyer's get cold feet or find something else, Lenders reject offers and in rare cases, Sellers get loan modifications.



6. The Lender is actually not the owner of the loan, they are a company that services the debt. What does this mean? They collect and distribute the money paid on the mortgage. Many times the loan is bundled with many other loans and sold to investors. Each investor has their own criteria as to what steps need to be taken.



7. Buyers should keep looking for a house, even if they have an offer accepted by a seller. Why? Because the offer could be rejected; the house could be foreclosed on; or they could miss out on another sale that isn't Contingent on Lender approval. A buyer doesn't have a fully executed contract until they have Lender approval.



8. NEVER release the Earnest Money deposit to an escrow company or a seller. You want full control over that money and you never know what will happen. This does not apply to traditional sales, probate sales or REO sales, just Short Sales.



9. Make clear in the offer or with the Listing Agent that ,if accepted, your offer should be the ONLY OFFER submitted to the lender. Any other offers should be put in a back up position. Every additional offer that gets presented to the lender will only SLOW DOWN THE PROCESS. This benefits no one, not the buyer and not the seller.



10. Be ready to accept the property AS-IS. The big question here is whether to perform inspections upon acceptance by the seller. I say yes, but there is an inherent risk: if the transaction falls apart, you lose out on the money spent on inspections. On the other hand if you wait until approval by the Lender, you may find an adverse condition that will affect the desirablity or the amount you want to pay. If you do choose to wait and you request the lender to make more concessions, you run the risk of extending the approval process (which could result in foreclosure) or being told by the lender, "NO".



11. Be prepared to have long periods of time without an answer or an update. Why? Because the agent commonly has no contact with the Lender's Negotiator. To be precise, they have a don't call us, we'll call you mentality. This does not mean that the listing agent shouldn't call after all the squeaky wheel gets the grease.

It's best for a buyer of a Short Sale to be flexible in the sale as to the close date and the process. Pick a reliable agent to help you through the process and have faith that the deal will close...eventually.



For more information about distressed sales, short sales or foreclosures call Andy @ 707-616-3456 or email me: andy@azalearealty.com





Opinions expressed on this blog are those of Andy Parker and not those of any other person or entity.

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