When the rebound arrives, desirable zip codes will see price jumps first.  Real estate is always local.  

Here are a few things to start watching in your neighborhood: 

How fast are homes selling?  It is a good sign when price drops slowly down, inventory levels are actually a better gauge of where your market is headed.  Ask a Realtor to tell you the number of listings now on the market in your area and the number of homes sold over the past year.  An example would be that there are 100 listings and there were 240 sales last year, or an average of 20 per month.  That equals a five-month supply, which is considered stable.  More than six months and it’s a buyer’s market; less than three and sellers probably have the upper hand. 

Compare your neighborhood’s price-to-rent ratio with what it was before the housing boom.  Calculate the price-to-rent ratio, or the price of a home divided by one year’s rent on a comparable one.  In general, it’s cheaper to buy when the price-to-rent ratio is below 15. 

A decrease in foreclosure filing is often an encouraging sign but not always the case depending on the processing delays in foreclosures.   Distressed owners tend to fall behind on lawn cutting and house painting long before a foreclosure.  If you see several places in disrepair, don’t expect your home value to rise soon. 

If you area is a prime location.  As buyers return, they naturally grab places with short commutes and better schools and amenities which will help increase the sales price.

 A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms.  LOCATION:  the proximity to work and entertainment over home size and they are less interested in media rooms and pools.

Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle. 

Those in the 18-34 age group cited the following concerns:   62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.  

Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers:  The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops. 

The majority, 70% of respondents said owing a home is part of their American dream.  This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +. 

Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.

Related articles

• Is homeownership still part of your American Dream? (sfgate.com)

Remember that owning rental property is time consuming, expensive, challenging, and many investors lose money. 

Mistake 1:  Confusing a cheap deal for a good deal – You can buy homes at a low price but that doesn’t mean you can rent them out.  They usually aren’t any more appealing to rents than they are to buyers.  Also less-desirable school districts may hamper renting your property. 

Mistake 2:  Overlooking key costs – Knowing potential rent is not enough.  You should also factor in closing costs 3-6%, costs to fix up the place and maintain it, and your holding costs.

 Mistake 3:  Forgetting that time is money – You lose money when your home is empty, whether you are trying to rent it, in between tenants or painting.  You may be better off accepting a lower rent than waiting for a higher-paying tenant. 

Mistake 4:  Assuming you will sit back and watch the rent roll in – You are a rent collector and sometimes tenants lose their jobs and stop paying rent.  Evicting them can take several weeks without rental income coming in. 

Mistake 5:  Underestimating repair costs – Carpet in rentals typically must be replaced every five years and you may have to repaint after every tenant.  The National Association of Residential Property Managers suggests setting aside six months of expenses so that you will have funds if a major repair is needed. 

Mistake 6:  Assuming that owning a rental is the same as owning a home – You might put up with flaws in a home that a renter won’t tolerate.  A property manager can handle most headaches, but you should expect to pay up to a month of rent for finding and screening tenants and up to 10% of the monthly rent for management fees.

Related articles

• 6 Mistakes Investors Make (nashvilleareahomes.wordpress.com)

View a video of C.A.R. Vice President and Chief Economist Leslie Appleton-Young discussing the 2012 Housing Market Forecast.

SAN JOSE (Sept. 20) – California home sales and median price are predicted to improve only slightly in 2012, as the continuation of the tepid economic recovery, uncertainty about the future, and funding challenges for residential mortgages are expected to keep the market moving sideways, with little foreseeable momentum in either direction, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 California Housing Market Forecast” released today. 

The forecast for California home sales next year is for a slight 1 percent increase to 496,200 units, following essentially flat sales of 491,100 homes this year compared to the 491,500 homes sold in 2010.

“Despite the run of unforeseen global events in the first half of this year that slowed the overall economy, 2011 home sales are projected to essentially remain unchanged from last year,” said C.A.R. President Beth L. Peerce.  “Looking ahead, the fundamentals of the housing market – such as low mortgage rates, high housing affordability, and favorable home prices – are expected to continue, but at this point, a strong housing recovery will depend on consumer confidence, job creation, and the availability and cost of home loans.

“Discretionary sellers will play a larger role in next year’s housing market,” said Peerce.  “Those who held off selling in 2011 may list their homes in 2012, thereby improving the mix of homes for sale compared with the last few years.  Additionally, distressed sales will remain an important segment of the overall market as lenders continue to work through the foreclosure process.”

The California median home price will increase 1.7 percent in 2012 to $296,000 in 2012, according to the forecast.  Following a double-digit increase in the median price in 2010, the median home price will decrease a projected 4 percent in 2011 to $291,000.

“2012 will be another transition year for the California housing market, as the continued uncertainty about the U.S. financial system, job growth, and the stability of the overall economy remain in the forefront for all market participants,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “An improvement in job growth, consumer spending, and corresponding gains in housing are essential to a broader recovery in the economy, but would-be buyers will remain cautious as they weigh these myriad uncertainties against the clear opportunities presented by today’s very affordable housing market.

“The most likely scenario is for the modest recovery to continue, and this should push sales up slightly next year by 1 percent and maintain levels that are significantly higher than those recorded during the depths of the housing downturn.

“The wild cards for 2012 are many, including federal, fiscal, monetary, and housing policies; the contentious political climate during an election year; and the strength of the U.S. economic recovery,” said Appleton-Young.

Appleton-Young will present an expanded forecast Wednesday afternoon during CALIFORNIA REALTOR® EXPO 2011 (http://expo.car.org/), running from Sept. 20-22 at the San Jose McEnery Convention Center in San Jose, Calif.  The trade show attracts nearly 6,500 attendees and is the largest state real estate trade show in the nation. 

Don’t miss “Why Lenders Can’t Lend:  The Economic Perspective” during CALIFORNIA REALTOR® EXPO 2011.  C.A.R. Vice President and Chief Economist Leslie Appleton-Young will moderate a panel of renowned economists as they delve into the front- and-center issue facing the market and REALTORS® next year.  The panel is scheduled to be held Thursday, Sept. 22, from 2 p.m. – 3:30 p.m. at the San Jose Convention Center.
2012 FORECAST FACT SHEET

f=forecast

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

When the rebound arrives, desirable zip codes will see price jumps first.  Real estate is always local.  

Here are a few things to start watching in your neighborhood: 

How fast are homes selling?  It is a good sign when price drops slowly down, inventory levels are actually a better gauge of where your market is headed.  Ask a Realtor to tell you the number of listings now on the market in your area and the number of homes sold over the past year.  An example would be that there are 100 listings and there were 240 sales last year, or an average of 20 per month.  That equals a five-month supply, which is considered stable.  More than six months and it’s a buyer’s market; less than three and sellers probably have the upper hand.

Compare your neighborhood’s price-to-rent ratio with what it was before the housing boom.  Calculate the price-to-rent ratio, or the price of a home divided by one year’s rent on a comparable one.  In general, it’s cheaper to buy when the price-to-rent ratio is below 15. 

A decrease in foreclosure filing is often an encouraging sign but not always the case depending on the processing delays in foreclosures.   Distressed owners tend to fall behind on lawn cutting and house painting long before a foreclosure.  If you see several places in disrepair, don’t expect your home value to rise soon. 

If you area is a prime location.  As buyers return, they naturally grab places with short commutes and better schools and amenities which will help increase the sales price.

Image by MightyBoyBrian via Flickr

Harris Interactive, a market research firm’s bi-annual survey on purchasing a home found the following from a recent online survey: 

Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle. 

Those in the 18-34 age group cited the following concerns:   62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.  

Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers:  The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops. 

The majority, 70% of respondents said owing a home is part of their American dream.  This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +. 

Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.

Related articles

• Is homeownership still part of your American Dream? (sfgate.com)

Image via Wikipedia

The Sacramento Beepublished an article September 26, 2011 with the following statistics compiled by RealtyTrac and Foreclosure-Response.org.  They placed our region’s shadow inventory at 53,256 homes in the four surrounding areas of Sacramento, Yolo, Placerand El Dorado counties.

They included in this number three categories of distressed properties:

• 12,285 houses already owned by banks but not sold
• 19,367 units whose owners have received an initial foreclosure notice, or notice of default, but have not been foreclosed on
• 21,604 homeowners who are 90 days or more delinquent on their payments but have not received a notice of default

Lenderare starting to pick up the pace on repossessions once again.  The figures provided by RealtyTrac show foreclosures in the area soared 76% from July to August, the highest number in 11 months.

Based on this “shadow inventory” it would take a year and a half to sell these distressed homes.

To read the complete article by Rick Daysog of the Sacramento Bee click here

Image by Bohman via Flickr

With married couples comprising less than 50% of all US households, home buyers are changing.  A growing number of non-family households, according to a report from John Burns Real Estate Consulting are on the increase.  Non-family households where no one is related to the house holder have increased nearly five times in the last 50 years from 7.9 to 39.2 million. 

A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms.  LOCATION:  the proximity to work and entertainment over home size and they are less interested in media rooms and pools.

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• Emerging Demographic Means Changes For Real Estate Market (robertsinohue.wordpress.com)

Current law requires this information come from the Homeowner’s Association “HOA” and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents.  HOA generally have provided the document for approximately $75 to $250.  In the past HOAs have been delegating document preparation to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation.  This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1000, for other documents which were “bundled” with the required documents. 

AB 771 addresses this by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees.  The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided.  The seller of the home must complete this form and transmit it to the prospective purchaser along with the required documents.  This will eliminate any uncertainty for the prospective purchase as to exactly which documents are being provided and the precise fees being charged in those documents.