Has the Market Bottomed Out?

9 07 2011

This was a quote from the Secretary at HUD (Housing and Urban Development).

I think it’s very unlikely that we see a significant further decline. I think the real question is when will we start to see sustainable increases? Some think it will be as early as the end of the summer or this fall, others think it will be next year. And I wish I had a crystal ball on that. My sense, though, is in the long run it’s a good time to buy, whether it’s five months away or a year away, to see sustainable increases.

–HUD Secretary Shaun Donovan, being interviewed by Candy Crowley, anchor at CNN. Crowley asked Donovan if he believes the market has “bottomed out.”

Its positive thinking and hopefully we will see a substantial upswing in home values. I have been reading quotes like these for a while and we have had a couple of up tics follow closely but a couple down tics in home vaules. Either way its nice to hear hear others being optimistic about our house market. For example…..

Ranked on a scale of 1-9, with 1 being “abysmal” and 9 being “excellent,” San Diego scored 5.63, compared with 5.04 in last year’s report.

Washington ranked first, but its 7.01 score in investment was still below “excellent.”

The top 10 markets and their scores on the 1-9 scale for 2011, ULI says, are:

  1. Washington, 7.01
  2. New York, 6.56
  3. San Francisco, 6.34
  4. Austin, 6.29
  5. Boston, 6.20
  6. Seattle, 6.09
  7. San Jose, 6.08
  8. Houston, 6.02
  9. Los Angeles, 5.84
  10. SAN DIEGO, 5.63

 

 





This Month in Real Estate: July 2011

5 07 2011





FHA Financing…What Does That Mean?

29 06 2011

A FHA insured loan is a Federal Housing Administration mortgage insurance backed mortgage loan which is provided by a FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. To obtain mortgage insurance from the Federal Housing Administration, a mortgage insurance premium (MIP) equal to a percentage of the loan amount at closing is required, and is normally financed by the lender and paid to FHA on the borrower’s behalf. Depending on the loan-to-value ratio, there may be a monthly premium as well.

The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance. Some FHA programs were subsidized by the government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers. Over time, private mortgage insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI.

The National Housing Act of 1934 created the Federal Housing Administration (FHA), which was established primarily to increase home construction, reduce unemployment, and operate various loan insurance programs.[1] The FHA makes no loans, nor does it plan or build houses. As in the Veterans Administration’s VA loan program, the applicant for the loan must make arrangements with a lending institution. This financial organization then may ask if the borrower wants FHA insurance on the loan or may insist that the borrower apply for it. The federal government, through the Federal Housing Administration, investigates the applicant and, having decided that the risk is favorable, insures the lending institution against loss of principal in case the borrower fails to meet the terms and conditions of the mortgage. The borrower, who pays an insurance premium of one half of 1 percent on declining balances for the lender’s protection, receives two benefits: a careful appraisal by an FHA inspector and a lower interest rate on the mortgage than the lender might have offered without the protection.

History

Until the latter half of the 1960s, the Federal Housing Administration served mainly as an insuring agency for loans made by private lenders. However, in recent years this role has been expanded as the agency became the administrator of interest rate subsidy and rent supplement programs. Important subsidy programs such as the Civil Rights Act of 1968 were established by the United States Department of Housing and Urban Development.

In 1974 the Housing and Community Development Act was passed. Its provisions significantly altered federal involvement in a wide range of housing and community development activities. The new law made a variety of changes in FHA activities, although it did not involve (as had been proposed) a complete rewriting and consolidation of the National Housing Act. It did, however, include provisions relating to the lending and investment powers of federal savings and loan associations, the real estate lending authority of national banks, and the lending and depositary authority of federal credit unions.

Further changes occurred in the 1977 Housing and Community Development Act, which raised ceilings on single-family loan amounts for savings and loan association lending, federal agency purchases, FHA insurance, and security for Federal Home Loan Bank advances. In 1980 the Housing and Community Development Act was passed; it permitted negotiated interest rates on certain FHA loans and created a new FHA rental subsidy program for middle-income families.

On August 31, 2007, the FHA added a new refinancing program called FHA-Secure to help borrowers hurt by the 2007 subprime mortgage financial crisis.

On March 6, 2008, the “FHA Forward” program was initiated. This is the part of the stimulus package that President George W. Bush had in place to raise the loan limits for FHA.

How to obtain an FHA loan

Second, the potential lender assesses the prospective home buyer for risk. The analysis of one’s debt to income ratio enables the buyer to know what type of home can be afforded based on monthly income and expenses and is one risk metric considered by the lender. Other factors, e.g. payment history on other debts, are considered and used to make decisions regarding eligibility and terms for a loan.FHA does not make loans. Rather, it insures loans made by private lenders. The first step in obtaining an FHA loan is to contact several lenders and/or mortgage brokers and ask them if they originate FHA loans. As each lender sets its own rates and terms, comparison shopping is important in this market.

Section 251 insures home purchase or refinancing loans with interest rates that may increase or decrease over time, which enables consumers to purchase or refinance their home at a lower initial interest rate.

FHA’s mortgage insurance programs help low- and moderate-income families become homeowners by lowering some of the costs of their mortgage loans. FHA mortgage insurance also encourages lenders to make loans to otherwise credit-worthy borrowers and projects that might not be able to meet conventional underwriting requirements, protecting the lender against loan default on mortgages for properties that meet certain minimum requirements, including manufactured homes, single and multifamily properties, and some health-related facilities. The basic FHA mortgage insurance program is Mortgage Insurance for One-to-Four-Family Homes.

FHA allows first time homebuyers to put down as little as 3.5% and receive up to 6% towards closing costs. Specific FHA lender overlays may be tighter. For example very few lenders will allow a seller to contribute more than 3% toward allowable closing costs. If little or no credit exists for the applicants, the FHA will allow a blood relative, such as a parent, to co-sign for the loan without requiring them to reside in home with first time homebuyer. This is called a Non-Owner-Occupied Co-Borrower. Depending on the state you reside in, you may receive a discount on your State Transfer Taxes at settlement. Again, the specific FHA lender’s underwriting guidelines will have their own standards. Very few lenders will fund FHA loans for buyers without a minimum 620 FICO score. For below 620 FICO scores, interest rates will be higher.

Down payment grants

Down payment assistance and community redevelopment programs offer affordable housing opportunities to first-time homebuyers, low- and moderate-income individuals, and families who wish to achieve homeownership. Grant types include seller funded programs, the  Grant America Program and others, as well as programs that are funded by the federal government, such as the American Dream Down Payment Initiative, or local governments, often using mortgage revenue bond funds.
(note: Video used for informational purposes only. This in no way is promoting this video’s services)

On May 27, 2006, the IRS issued Revenue Ruling 2006-27, categorizing the non-profit seller funded down payment assistance programs (DPA programs) as “scams.” The IRS ruled that organizations such as AmeriDream and Partners in Charity are no longer eligible for non-profit status and are not acting as “charitable organizations” as defined by the IRS. This ruling was based largely on the circular nature of the cash flows, in which the seller pays the charity a “fee” after closing. Many believe that the “grant” is really being rolled into the price of the home. According to the Government Accountability Office, there are higher default and foreclosure rates for these mortgages.

On October 31, 2007, the Department of Housing and Urban Development adopted new regulations to ban so-called “seller-funded” down payment programs. The new regulations state that all organizations providing down payment assistance reimbursed by the property seller “before, during, or after” that sale must cease providing grants on FHA loans by October 30, 2007, with the exception of the Nehemiah Corporation. Nehemiah is the beneficiary of a lawsuit settlement with Department of Housing and Urban Development in April 1998. The terms of that settlement will allow Nehemiah to operate until April 1, 2008. Ameridream was granted an extension to the new regulations until February 29, 2008.

Several similarly operated government grant programs were introduced in response to the IRS Revenue Ruling in May 2006. Their governmental status made them exempt from the IRS Ruling, but they are still affected by the HUD Rule Change. One such organization was The Grant America Program, which was conducted by the Penobscot Indian Nation and had been available to all homebuyers in all fifty states.






GreenRealEstateSD.com 100th Post!!!

22 06 2011





San Diego’s Solar Panel Movement: AB 920

21 06 2011

If you owned a solar power system that generated more electricity than you used, and those surplus solar electrons were sent to the grid for use by your neighbors, don’t you think your utility should pay you for that electricity? We think so.

AB 920 (Huffman), the Solar Surplus Power bill, is inherently about creating fairness within California’s solar market and about spurring ever greater consumer interest in investing in solar power bringing with it important environmental and economic benefits to the state.

Thanks in large part to the support and vision of Governor Schwarzenegger and the California State Legislature, California is a world leader in developing and promoting solar power. Our Million Solar Roofs Initiative is one of the biggest and boldest solar initiatives in the world.

The road to a million solar roofs, however, is long. While the state saw tremendous growth in solar last year, California has to go from today’s 50,000 solar roofs to 1,000,000 by 2016. To achieve this feat, California must remove all barriers for consumers wanting to invest in solar energy and more deeply penetrate the consumer driven market for solar power.

PROVIDES GREATER FAIRNESS FOR CONSUMERS BY REQUIRING WHOLESALE COMPENSATION FOR SURPLUS POWER: Today’s solar system owners “lose” surplus electricity at the end of each year, essentially giving it away for free to their utility, even though the utility can turn around and sell that electricity at the full bundled retail rate to other utility customers. This “give away” is a barrier for many Californians wanting to go solar. We estimate that over 500 Californians are generating surplus power each year and giving that power to their utility without compensation.1 AB 920 would require the PUC, through a rulemaking procedure, to determine the appropriate wholesale rate.

REMOVES PERVERSE INCENTIVE FOR CONSUMERS TO WASTE ELECTRICITY: By giving solar system owners fair compensation for the surplus electricity they generate above and beyond their own on-site electricity needs, AB 920 removes a perverse incentive for solar system owners to waste electricity so as not to give any way or “lose” any to the utility. Furthermore, AB 920 would encourage greater efficiency and conservation at home and at a solar business;

ALLOWS UTILITIES TO COUNT PURCHASED SURPLUS POWER TOWARD RPS REQUIREMENTS: To encourage utility support of solar power and to reward those utilities that do the most to support roof-top solar installations, AB 920 would allow the utility to count the amount of electricity purchased by the utility through this surplus power program toward their annual renewable portfolio standard goals.

In short, AB 920 is a simple, no-brainer bill that will help remove unnecessary barriers to solar power in California, help encourage greater conservation and efficiency and provide fairness for both the consumer and the utility company within today’s growing solar market.

For more information on this bill and how it may affect you click here





A Green LEEDer of Coronado

17 06 2011

Give Lorton Mitchell a blank piece of paper and a piece of land and watch him go to work. The longtime Coronado builder and third-generation Coronadan has been creating beautiful homes here since 1983. He also just gave Coronado a special honor–a gold medal.

Lorton Mitchell Custom Homes received special accolades by winning the Leadership in Energy & Environmental Design (LEED) Gold Certification for Bella Vista, their latest project at 701 First St. This is Coronado’s first Gold LEED Certification for a home and speaks volumes about the contractor’s dedication to protecting Coronado’s landscape.

LEED is an internationally recognized green building certification system. Achieving LEED recognition is not easy. It involves extreme effort on behalf of the architects, designers and builders from conception to completion. It adds time and expense to a project, but the end result radiates from the intense preparations that go into it.

A LEED winner must focus on energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impact on the surrounding homes and area.

The architectural visionary for Bella Vista was Coronado’s Dorothy Howard, who worked hard to add a level of detail typically reserved for the highest examples of Spanish Revival architecture.

The interior design team of Stephanie Davis and Mark Pugh (Davis-Pugh Inc.) made sure nothing inside the house competed with or distracted from the rare, seaside view the location presented.

“Lots of thought went into this,” said Mitchell. “Big houses are at a disadvantage for LEED presentations right off, so we knew going in that we had our work cut out for us. Still, we did this because it was the right thing to do. Our whole criterion was based on achieving this end result. We’re very pleased.”

When driving by Bella Vista, it’s not readily apparent what treasures lie within those unpretentious Spanish-styled walls. “We intentionally wanted to blend into the neighboring community no matter how difficult the challenge,” said Mitchell. “It would have been easy to create a grand palace with large, heavy doors and a massive presence. Certainly the size of the property could have sustained such a palace.”

Indeed, it took real sensitivity to walk through a vacant lot and see so ambitious a goal–a home that consisted of understated elegance and cutting-edge green technology, the likes of which Coronado has never seen.

Energy efficient and environmentally sensitive features include heated floors, hidden photovoltaic and hot water solar panels on the roof. Twelve individual zones throughout the home allow for you to heat or cool each room independent of the others to suit the occupant’s comfort level.

Bella Vista probably has the most sophisticated heating and cooling system in Coronado, but the irony is that the home is so well oriented and insulated that you would seldom need to employ it, said Mitchell.

The area in and around 701 First St. has had quite a history. Two hit TV series were filmed on this stretch of beach–Harry O with David Janssen and Coronado 9 with Rod Cameron.

Large car-carrying ferryboats plied the waters in Bella Vista’s front yard from 1886 through 1969. Before that, pioneer aviator Glen Curtiss landed his airplane on that stretch of dirt, and before that, Kumeyaay Indians foraged for food along these banks.

The history of this stretch of bayside beach was not lost on Mitchell. He grew up just two blocks away. “I designed and built my first boat on this beach when I was 11,” he said with a twinge of irony.

Most days, as the twilight hues engulf San Diego Bay, Mitchell can be found on his large paddleboard maneuvering along the waters just off Bella Vista, admiring his handiwork and appropriately feeling a larger part of that history.

Bella Vista is featured on the cover of this month’s San Diego Home/Garden Lifestyles Magazine, a major prize unto itself. The article, by veteran journalist David Coddon, starts out, “Coronado’s Bella Vista manse is architecturally supreme, responsibly green and a sight to be seen.”

The home is unpretentious, yet unbridled elegance. Of the roughly 38 lots on this bay side of First Street, Bella Vista is one of the few homes where bay and street lots are combined. “Someone rich and famous could live here and no one would know,” said Mitchell.

Bella Vista measures just over 9,000 square feet and boasts seven bedrooms and nine bathrooms within its walls. This includes a two-bedroom, two-bath casita in the rear and an enclosed garage that can house up to eight cars. An oversized turntable (designed by Coronadans Bill Gise and Jim Newhall) allows cars to be moved around like Tonka Toys.

There is a separate prep-kitchen and an elegant wine vault, both of which lend the house to large parties and fundraisers. Spacious rooms and patios seemingly beg to host major events. Clearly comfort was a top priority with the design team.

Walking through the house you are immediately struck by the natural lighting, the windows looking out on to San Diego Bay, the vaulted, exposed beam ceilings and adherence to the lovely arches used so predominantly in construction of the early Spanish missions.

The entire home gently steps down to the water to avoid a heavy presence, and offers a breathtaking 180-degree view that takes in San Diego Bay from the Coronado Bridge north to Point Loma.

Mitchell’s previous projects have demonstrated a wide variety ranging from quaint alley homes to large estates along the golf course. For years he has held a fascination with Santa Barbara Spanish-style homes, which is romantically evident in this latest project.

“Over the years I’ve seen many homes that literally die after 30 years. They were built in haste, and without a lot of concern about what materials or techniques were employed,” said the popular builder.

“Seeing that makes me want to build homes that will last, that will enhance the property and the neighborhood, that will stand the test of time. I fully expect our homes to last 100 years or more,” said Mitchell.

Bella Vista, the waterfront home at 701 First St., took 16 careful months to create. It is currently on the market. Lorton Mitchell Custom Homes has more than 100 completed projects in Coronado. For more information call 619-435-3446 or visit their website atwww.lortonmitchellhomes.com.





New Map Feature Helps Renters and Owners Spot Crime

16 06 2011

Trulia.com always has stood out from other real estate websites with its clean, modern pages and extensive use of maps and infographics to show off home information.

Now, the San Francisco-based company has added another sharp, polished tool for agents and people interested in moving somewhere new: crime maps.

The web app, still in testing (beta) phase, combines a map interface with up-to-date crime statisticsfrom a variety of sources — including other mapping websites — allowing potential buyers and renters to check into the safety of their future home.

Where this tool differs from its partners and other websites such as San Diego Regional Crime MAPS is its use of a “heat map” to show areas with the most activity, reducing the clutter found on other apps and organizing the data by neighborhood or cross street.

But notably, Trulia’s crime map uses a Facebook commenting system for the areas and neighborhoods, allowing the people who live in and frequent those places to discuss recent events, ask questions and give first-hand accounts of incidents that happened.

On the downside, the maps may take longer to load on older, lower-end computers or look choppy while scrolling because they’re made up of multiple images.

The crime maps aren’t part of Trulia’s mobile-app selections but they run fine on the latest smartphone browsers.

While the company has no timetable for the release of a final version of its crime tool, it hopes to integrate crime data into existing maps, add more functions and update the information more quickly.

 





San Diego home prices, sales fall from 1 year ago

13 06 2011

From San Diego Union Tribune

Home prices and sales in San Diego County fell in May from one year ago, following the same downward trend seen throughout Southern California, which remained in record-low sales territory last month.

Numbers from DataQuick Information Systems show May’s median price for all sales in San Diego was $324,500, down 4.6 percent from last year but up 0.9 percent from April. Sales fell 20.4 percent in May from a year ago to 3,087 and dropped 5.8 percent from April.

Looking at the six major counties in Southern California, prices remained at their three-year low and prices continued to slide year-over-year for the 11th straight month, DataQuick researchers said.

San Diego County had the steepest year-over-year sales drop among the six counties in the company’s monthly analysis. Los Angeles, Orange and San Bernardino counties saw drops in the 18 percent range.

San Diego’s price drop year-over-year was the lowest among the Southern California counties. Los Angeles’s home prices fell the most, at 7.2 percent.

Thoughts with Pat:

This update may came as a surprise to a lot of you. The news can sometimes confuse and mislead people into thinking that we as individuals are up, down, going to die etc. With so much happening in the US and World economic markets these days it only seems natural that housing prices would ride the same roller coaster ride. Take a deep breathe and look around you. Your still alive, your still working, don’t get caught up in the day to day retardness that the news and stat companies throw at you. Its all how you look at it. Don’t look at this down turn as a negative that the world is ending, instead look at it as an amazing time for you to get into a home that you could not have afforded 5 years ago. The San Diego and California Markets are in SALE mode!! My recommendation is go find your agent and get out there and look at whats on Sale right now, you are going to be surprised at what is now affordable to you.

 





Net Zero Office Building Here in San Diego

7 06 2011

[youtube http://www.youtube.com/watch?v=x0ACgSGJvXs&w=480&h=390]





Eco Leader in San Diego

2 06 2011

The way to creating a sustainable home is as easy as keeping it simple, said Bay Area-based architect Michelle Kaufmann, known nationally for her eco-friendlymodular homes.

She gave San Diegans on Wednesday several tips on incorporating “green” into our lives without having to try too hard, during a lunchtime seminar at theCalifornia Center for Sustainable Energy in Kearny Mesa.

–Try reused materials. Bamboo has become a popular material but she tells people to be mindful of where it comes from because “not all of it is created equal” and could be from an unsustainable source. She also talked about recycling glass bottles to make countertops.

–Consider meters that show you how much energy and water you are using in real-time instead of at the end of the month. This will make you more conscious of how much you consume.

–Conserve energy. She suggests buying appliances with an Energy Star rating, adding insulation to homes and installing triple-paned glass, if the budget allows for it.

–Don’t forget renewable energy. But don’t let that be your first step. Try to find other, easier ways to conserve energy first, then consider items such as solar panels.

–Save water. Kaufmann recommends putting in dual-flush toilets and systems that harvest rainwater.

She wrapped up her presentation with three words: Keep it simple.

Samples of her work:



The Glidehouse was inspired by architect Michelle Kaufmann’s own “green” home. Her idea is to create simple, sustainable homes in a factory to cut down on time and building materials. The Glidehouse model is available in two to four bedrooms, two to three baths and can vary between 1,632 to 2,244 square feet. The starting price is $360,000. Photos courtesy of mk designs.

The Glidehouse model, created by architect Michelle Kaufmann, is available in two to four bedrooms, two to three baths and can vary between 1,632 to 2,244 square feet. The starting price $360,000.

 

Thoughts with Pat:

I am consistently trying to find new and up coming green projects, innovators, leaders and technology so that I may better serve my clients and the people around me. Michelle Kaufmann is one such person. Her way of thinking outside of the box on home construction has helped lead the way in green modular home design and production. With people like her and the ideas she is using we can all make a difference, even if its only a small step at a time.