Home Buyer’s Credit, Am I Eligible?

Remember the $8000 home buyer’s credit? It’s set to expire at the end of this month, November 2009. Never fear, though, Congress has thoughtfully both renewed and expanded it.

For first-time home buyers: This is the extension of the first-timer’s credit, only now it’s even better. Before, you were completely phased out–meaning no credit at all–if you as a single made above $95,000 or as a couple over $170,000. Now, singles can earn up to $125,000 or couple up to $225,000 and still get the credit.  That’s a big improvement, especially in big cities where wages are higher to match the cost of living.

Who is a first-timer? If you are over 18 and haven’t owned a home in the past three years, you’re a first-timer. For this credit, you must have an accepted contract on a home before April 30, 2010 and, oh yes, you cannot buy that home from a relative. And, you must keep the home at least three years or pay back the credit.

Now, the expansion: Move-up buyers are now eligible to receive up to $6500 tax credit as well. Same income rules apply: not over $125,000 for singles and not over $225,000 for couples.

You don’t even have to sell your current residence, but the new home must become your principal residence. If you do sell your current home, watch carefully because for purposes of this credit, any taxable profits must be added to your income. But, wait, taxable profits? Remember that if you are selling your principal residence, as a single you can deduct up to $250,000 gain as tax free and a couple up to $500,000. So, this is really an issue for high-priced properties owned for the most part a good long time. Most recently-purchased homes in California are underwater at this point.

So, this is a good thing,no?

When Is the Best Time To Buy?

Every home buyer has had to contemplate this question. Are the prices low enough? Do I have enough down payment? Is there too much competition right now?

Of course, the short answer to the question is–when you are ready. When you are just tired enough of  smelling your neighbors dinner and breakfast and listening to their fights and their tv viewing choices–when you are tired of searching for a parking place or telling friends they better walk over–when you get the latest notice of a rent increase, an annual event or —well there’s any number of things that may tip the scales.

So, what time of year is the absolute best time to buy? That used to be easier to answer than it is today. The advent of year-round schools has changed home-buying patterns which used to peak in the late spring and early summer months as families wanted to “finish out the year.”

To me, the answer is easy. When members of the seller herd start saying, “I’ll put it on the market after the holidays” or when buyers say, “I’ll look again after the New year,” that’s the best time to buy OR sell.

This time of year–fall, especially after Halloween through what we laughingly call winter until maybe February is  the best time for buyers and sellers. Why? It’s simple. Most people gradually turn their attention from the hard, concentration of finding that right home to making pumpkin pies and attending holiday parties.  That’s right–the competition thins out–a lot.

This year  the shrinking pool of buyers may be more pronounced than ever unless Congress decides to extend the highly-popular $8000 home buyers’ credit which expires December 1st. If not, buyers you are in luck. The field is more open now as the herds have moved into holiday pasture. Most of them won’t be back until after tax time…

And for sellers, yes, it’s true you have fewer buyers available to you, but your property stands out more, assuming it’s properly priced and prepared, of course. It must be, too, because you wouldn’t have your property out there at this time of year if you were not a very serious seller. Sellers at this time of year don’t put up with the inconvenience unless they are highly motivated–just like the intrepid buyers.

 

 

Can’t Get a Loan? Here’s Some Help

These days getting a loan is much tougher than in the “good old days”  before September 2007. In fact, if you are self-employed, it’s very difficult. Or, if you are an investor, it’s next to impossible unless you have already made a bundle and can put 40% down on that bargain you spotted driving around your neighborhood or scrutinizing the repo lists.

From adversity comes opportunity as the saying goes. From the Great Crash of 2007 is springing an entire new industry–peer-to-peer lending where individuals can borrow at better rates and less paperwork from other individuals who are able to make much better-than normal rates on any spare cash they may have.

What do you do if you want to jump on a great deal but don’t have the cash readily available?  Enter peer-to-peer or personal lending. Essentially, this type of lending is for any money need, not just real estate.  It’s become popular partly because of that ubiquitous Internet which is putting people together in  hitherto unimaginable ways.

Let’s say your daughter wants to buy a condo, and you want to lend her the money, but want to make it business-like. Go to Virgin Money . Yes, this is the same Richard Branson company with the airline and the record stores. This company specializes in loans among family members or at least among people who already know each other, so-called social loans. That is, it facilitates the process and puts everything on a business-like footing by supplying loan documents, processing, and third-party collecting.  The company also does small business loans and this year added wholesale mortgage loans.  This way, you can set up the loan to your daughter as though you were a regular bank and expect repayment in the same way. Fees vary from $99 to $2000 depending on complexity.

Then, if you prefer to borrow from strangers or have no relatives with extra cash, you can always go to Prosper where you can get a loan based on your credit score for up to $25000 to pay for school, credit card debt or whatever else you may need the money for. Don’t worry about privacy. If you are a borrower, your identity is not revealed so no potential lender will  contact you personally or even know who you are. And, once lenders have committed, they are not allowed to back out, so borrowers have some security.

Another site worth considering is Lending Club. This peer-to-peer site purports to  offer investors higher returns and borrowers lower-cost loans through its online financial network eliminating the high cost of traditional banks.

Borrowers with good credit can get 3-year-term personal loans from $1,000 to $25,000 at fixed rates that are often significantly better than rates from conventional sources. Investors can an earn higher returns: the average net annualized return has been over 9.5% since 2007. Money invested goes to the Lending Club borrowers chosen by the individual investors who generally spread their investment across tens or hundreds of qualified borrowers.

These are just a few of the many sites which are doing these kinds of loans. To find more, check out this video

Mortgage Aid Event in L.A.

Image by woodleywonderworks via Flickr

Some 30% of all California mortgages appear to be underwater, so loan modification is a term many have come to know. We’ve also come to realize that the process is long, complicated, and in many cases, expensive. The end result is usually not as good as hoped, despite the apochrophal stories we’ve all heard about balance reductions and interest rates of 2%. If true–very rare…

But now–help is at hand–and it’s not going to cost a penny. A five day mortgage aid event, running September 24th through Monday September 28th, brings counselors from Boston-based Neighborhood Assistance Corp of America [NACA] comes to Los Angeles. The $1 million cost of the event is funded by federal grants.

Here, counselors will scan homeowners’ mortgage documentation and send the files to nearly 2,000 on-site servicers and lenders, including representatives from Wells Fargo, Chase and B of A, who will be there to negotiate more affordable loans.

If you are in trouble with our mortgage, what have you got to lose? No more run-around from bank servicers. They will be right there. The Save the Dream Tour, launched in Cleveland, will continue on to Chicago, St Louis as well as Phoenix, la Vegas and San Francisco.

You can register for an appointment as http://www.naca.com or toll-free at 888-499-6222.

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Why Don’t Men Live As Long As Women In Pictures

Thanks to Dr Mercola for the pictures. I don’t know who took them, but they are definitely representative of common behavior–of men, of course! The whole deal is to get the job done and I’m for that, but somehow these pics show us why we shouldn’t be so work-oriented.

I’ve seen this kind of thing all over the place and thought [to myself ], “How crazy!.” I just can’t imagine women behaving like this or is that a stereotype? Please let me know your opinion. Take a peek at these pics and see what you think.What kind of thing have you seen people doing?

Great New Mapping Tool: Los Angeles

Wow! The L.A. Times has produced a really great new mapping tool of all the neighborhoods in L. A. It’s interactive, so all you do is run your cursor over a neighborhood and then up pops a landscape view along with all sorts of information about demographics of the area. Way to go L.A. Times! I predict this map is going to get hits from all around the world. People are crazy to know more about our fair city and this is a great introduction.

Plus, the paper intends to keep adding to the mapping tool so that points of interest, restaurants and who knows what else will appear interactively as well..What a great idea! As a faithful reader of the N.Y. Times, I can attest to the many interactive maps produced by that paper and they are awesome, such as the interactive electoral districts during the 2008 presidential elections.

We have really needed such an ability to get around our neighborhoods as well. I’ve always wondered exactly where among other unfamiliar areas is  Lake View Terrace ? Now I know. Somehow I thought it was near CalState L.A., but it’s certainly not. And where’s the lake? Anyway, this tool is way cool.  Thank you, L.A. Times…

Here’s a screen shot:

Now, how about the rest of L.A. County? We’ve got some great stuff to share as well…

SoCal Home Prices: What’s Happening June 2009?

Southern California has become a kind of barometer for troubled home values.  Unlike Nevada and Florida’s transient and part-time populations, in  Southern California  it’s actual home- and condo-owners who live on their properties full-time who are in trouble. Or, we have local investors who find their rental properties are no longer worth the trouble of keeping they are so far underwater. As mentioned in an earlier post, statewide, about 27% of homeowners are now underwater. With the unemployment rate at over 12% and rising, with even the state laying off workers, that percentage is most likely going to get worse.

Six counties make up Southern California. Here are the stories of the two extremes of the spectrum. On the one end is Orange County, richest of all the counties, full of gorgeous new homes and award-winning planned communities. On the other end is San Bernardino, the New Appalachia, where poverty is grinding and the marginal population is being pushed from the other, richer, surrounding counties. The contrast is stark.

Orange County shows that in some ways things are getting better for us. In Orange County, for instance, last month [June 2009] home values dropped only 8% over last year. That’s the slowest drop in a long time. The median price in Orange County is now $485,000. Some cities have held steady or even improved: Aliso Viejo held last year’s median value of $600,000; Anaheim Hills increased about 10% across its two ZIP codes to a median of $498,000 [92807] and $640,000 [92808]; Fullerton in 92833 decreased less than 2% from last year to a median of $378,000; Fountain Valley also decreased 2% to a median $570,000. Two areas of Irvine increased in median value in 92303 up 5% to $690,000 and in 92616 up 4% to $662,000. Its other areas decreased around 15% to over $600,000 with pricey 92603 down 34% to a median of $920,000.

Laguna Hills rose 1% to a median of $629,000 while Laguna Beach lost 21% over last year to a median $1,265,000. Must be tough. This, of course, makes us wonder what is happening in the highest priced areas, Newport Beach and Newport Coast? Well, there were really too few sales to decide. What sales did take place were unmistakably downward in price, but it would be hard to get too much higher…Corona del Mar had 12 sales in the month showing a 40% slide from last year to $1,180,000.  Seal Beach is now a median of $710,000 while Huntington Beach now has two areas with many sales bring its median to $587,000 [92646 down 5%], $522,000 [92647  down 3%], $695,000 [92649 down 21%] and $822,000 [92649 down 17%].

Orange County does have a few working class areas, such as Santa Ana which shows three areas actually down to a median of less than $300,000 [92701 to an incredible $213000, 92704 to $288,000, 92707 to $255,000]. Orange 92868 is down 10% to $318,000, though its other ZIPs are all closer to $500,000 and holding fairly firm. One area of Garden Grove and one area of Anaheim have medians of less than $300,000 [92844 to$298000 and 92805 to $272,000].

What does this mean? Orange County is the most affluent county in Southern California and its citizens have the most in reserves. Unemployment is less here, but the pain is being felt. As the recession grinds on and the unemployment rate rises, biting deeper into the ranks of middle- and upper-income workers, even here values tumble. In California the recession shows no signs of abating.

Other area counties are suffering terribly, especially San Bernardino, the hardest hit of all. Despite record losses in home values there from 2007 to 2008, home values countywide dropped another 40% in June 2009 over June 2008. The median home value in San Bernardino in now $135,000, almost unbelievable…

Outlying areas have been very hard hit. Twentynine Palms in down 45% to a median $80,000.Yucaipa and Yucca Valley are down 24 and 26% respectively to $215,000 and $100,000 median. The High Desert is a disaster area: Apple Valley is down over 50% to a median of around $88,000; Victorville is down 40% to a median of about $95,000. The good news there? Hundreds of homes are being sold…Sales are very brisk at these prices, so maybe the bottom is near. It must be. These prices are below replacement value, meaning we can’t build homes for these prices.

The City of San Bernardino itself has only one ZIP with a median value of over $100,000 and that is 92407 at $140,000, a drop of 31% over last year. The rest of the city has plunged in value nearly 50% to closer to $58,000 and, while some homes are being sold, sales are by no means brisk. This is the New Appalachia where SoCal poverty is concentrated and food stamps are common currency. This is where our charity dollars should be going.

More affluent areas, as always, are doing better, but still dropping. Upland has dropped 6% in 91784 to $471,000 median and to $259,000 in 91786, down 13%. Rancho Cucamonga has dropped over 25% in all areas to a median now of around $300,000 and in 91739 almost $400,000. But, the housing stock here is mainly new and high quality. This is a tremendous dip. Rialto is down 32% to $198,000. Colton is down 42% to $110,000. Chino Hills, also with newer housing stock, has dropped only 6% to a median $298,000, again undeard of… Ontario’s hightest median value is $235,000, down almost 30% over last year. Fontana is down around 35% to $122,000 in 92335, to $185000 in 92337 and down 18% to $260,000 in 92336. Again, in Fontana hundreds of homes are being sold, many below replacement value.

Really, there’s no good news in San Bernardino County.

More Animal Babies You Won’t Believe

Babies are surprising and animal babies get themselves into predicaments…Here’s a group of wonderful pictures that I wanted to share with you because, really, I am so fed up with banks!

If you can reist these, you’re a better man than I am, Gunga Din!

Tsunami of Foeclosures Coming

So much for all the “good” news coming out of  D.C. Goldman Sachs, JP Morgan Chase, B of A are all happy campers with their billions in profits, while the rest of us lose our jobs and watch our state sink into bankruptcy. No one ever mentions that, besides the TARP money since repaid,  Goldman Sachs got $12 Billion from AIG to cover hedge fund losses. And, of course, where did AIG get the dough to cover its insurance policies? Why, funny you should ask, that also came from tax payers…So, it’s kind of an endless circle of taxpayer funds creating “wealth” for these jokers while the rest of us starve. That’s capitalism, right?

But, back to real estate…What does all this have to do with real estate. Plenty, as it turns out. Chase and B of A are, of course, banks, now, in fact, the biggest banks in the country. That means they also control a majority of the mortgage loans and how the rising default rate is to be handled. In case you hadn’t heard, default rates are up and rising. Could that have anything to do with the also rising unemployment rate now over 10% in 30 states and 12.6% in California last time I checked. Here, even the “good” state jobs are now at risk and going down the tubes faster than your 5-year-old at Raging Waters.

With no job or prospect of a job, when underemployed or working only part-time or sporadically, home owners can’t cover their mortgage payments. Add to that, the factor of plunging prices. It’s estimated that by now, after more than a year of record foreclosures and drops in home values, 27% of all California home owners are under water, that is, they owe more than their homes are worth. Of course, the smart ones are short selling their homes. It’s hard to give up the old homestead and all the work and money put into it, but once the underwater mark hits 30% loss of equity, it really makes more sense to let it go. It will be years before that equity returns given the numbers involved.

What about the refi program discussed in a previous post? For some, that might be an option. It’s no help if you’ve lost your job. You won’t qualify.  If you still have a job and can afford the payments, this is an option. Though, notice–you still owe the money your home is no longer worth. You do pobably have a better rate and more managable payments, but, the debt is still there.

What about the loan mod program also discussed in a previous post? Well, there we’re back to these big banks, Chase, B of A, Wells Fargo and all the rest. These banks do most of the loans in the country, so borrowers  have to apply to these banks to get  loan mods.  Obama’s Homeowners’ Stabilization program, announced amidst much hopeful optimism in March, has proved less than effective, shall we say. Chase trumpets that it has modified 138,000 loans since April. That sounds reasonably good, but the program was supposed to modify more than 4 million in 3 years…Not much of a start, so far…

Then, there’s B of A which says it’s done 45,000 loan mods since April. That’s for the ENTIRE COUNTRY.  Think about this: California ALONE had 135,431 notices of default [NODs] send out from January through March of this year. B of A and its newest acquisition, failed California-based Countrywide, probably account for at least 30% of those loans or 40,000 loans. So, B of A is basically DOING NOTHING to help at this time of NATIONAL CRISIS. And, remember 27% of California homeowners are under water and so need to have their loans modified. How many actual borrowers would that be? I don’t know, but we have 35 million people, so that’s got to be in excess of 1 million loans….Nationwide, in the first quarter 1.8 million homeowners fell more than 60 days behind on their loans, 15% more than the prior quarter [Q4 08]. To repeat: this is a NATIONAL CRISIS.

What is going to happen next? Is B of A going to change its corporate culture and start helping homeowners?  Not bloody likely. Digging deeper into the trough of public money is more apt  to be that bank’s continuing attitude.  Just try to do loan mods with Countrywide and B of A or short sales. They take forever–4 months is the minimum; there is no maximum time.  The paperwork demanded is just stunning. B of A NEVER, to my knowledge, forgives even one penny of any under water loan balance as some banks actually are doing.   Its idea of what it owes to the common good is EXACTLY ZILCH, NOTHING, NADA.

So, those foreclosures, kept off the market by useless cycling of paperwork in rejected refis and loan mods, will come onto the market, especially here in California.  Last summer, foreclosure sales statewide hit a high of 26,500 a month.  Before this year is out, we may well beat that record. I am one of many real estate brokers who supply lenders with estimates of value or broker price opinions [bpo] and I can say, anecdotally, that I am very busy, often doing 3, 4 or even 5 every day.  If  I am that busy, so are the others who do this work. That means so many foreclosures looming…

Why Do You Have Trouble Getting Help With Your Mortgage?

Where’s all the money going? We all have our  ideas… This past week, almost under the radar, the Congress passed yet another “Supplemental” war spending bill–$97 billion for our wars in Iraq and Afghanistan… And, these wars are accomplishing exactly what? Nobody seems to know.  We do know this money is supplemental to the already bloated Defense Department budget which consumes nearly 40% of the total U.S. budget.

How does it break down? Well,f or the 2009 fiscal year, the base budget rose to $515.4 billion. Adding emergency discretionary spending and supplemental spending brings the sum to $651.2 billion.  This does not include many military-related items that are outside of the Defense Department budget, such as nuclear weapons research, maintenance and production (about $9.3 billion, which is in the Department of Energy budget), Veterans Affairs (about $33.2 billion), interest on debt incurred in past wars, or the wars in Iraq and Afghanistan (which are largely funded through extra-budgetary supplements, about $170 billion in 2007). As of 2009, the United States government is spending about $1 trillion annually on defense-related purposes.

Military discretionary spending accounts for more than half of the U.S. federal discretionary spending, which is all of the U.S. federal government budget that is not appropriated for mandatory spending. Every year it rises, but it is not sustainable. Soon, the government will not be able to make mandated payments, such as Social Security and Medicare, which are in direct support of its citizens–US–since it will be too impoverished  supporting military adventures abroad and monstrous military expenditures at home. Altogether the US is spending HALF  of the entire world’s military budget, over 8 times as much as the next biggest spender, China.

There you have it. In case you’re wondering why you get no help with health care or your mortgage, that’s why.