More Homebuyers Willing to Compromise

Do you agree with survey results saying that More Homebuyers Willing to Compromise than home sellers?

-David

Should you buy an old or new home?

We know the tradeoffs between buying a new or used car, but how about when it comes to a home?

Should you buy an old or new home?

How to Know When It's Time to Buy

Here's a fun way to determine whether it's time for you to buy a home!

http://www.realestate.com/advice/flowchart-am-i-ready-to-buy-a-house/

FHA Limit Back to $729,500; Fannie and Freddie remain at $625,500

From Grant Norris of mortgage broker Platinum Capital:

Congress passed a bill, and President Obama signed it, that allows the FHA to back mortgages of up to $729,500, six weeks after the limit dropped to $625,500. The move makes it easier for more buyers to get low-interest FHA loans. Obviously members of Congress had trouble letting Freddie & Fannie take on any more risk given the billions in taxpayer money that have gone their way. The two agencies are politically toxic, but legislators felt pressure to re-raise the limit, so compromised by raising the FHA limit. Loans backed by Fannie Mae and Freddie Mac will continue to have a $625,500 limit. Loans that exceed the Fannie, Freddie and FHA limits move into the jumbo realm, as we know, where 30-yr mortgages carry higher interest rates and require 20% or more down. FHA programs usually allow lower down payments and are more forgiving of imperfect credit, but also carry higher fees, so more-affluent buyers tend to prefer Fannie and Freddie loans when they qualify for them. 

One Site's Top Ten Cities of Interest to Buyers

Might not have guessed that Riverside and Oxnard were among the top ten cities in demand, but who's to doubt the search statistics of a popular real estate site?  Here, according to Forbes via Trulia, are the Cities Where People Are Hunting For Homes. - David

Do the Research: South Bay Home Inventories are Not High!

Do the research! Here are the actual levels of single family homes for sale in the South Bay Beach Cities and El Segundo.  

Note that although many factors would characterize this as a "Buyers Market," the level of inventories is low.  This represents an opportunity for sellers to list their properties at a time when competition is quite limited, and when low interest rates make mortgages affordable to your target buyers.  This is a "seam" in the marketplace that smart sellers can use to their advantage. 

Charts like this and in much greater detail, updated daily, are always available at www.BeachCityDigs.com by clicking on the "South Bay Market Data" tab.   - David

Living Peacefully with your Mother-In-Law

This Forbes.com article highlights a new book by Michael Litchfield, entitled in-laws, outlaws and granny flats. Our aging population is resulting in a number of shifts in homebuyer preferences, including elevators, main floor bedrooms, and mother-in-law quarters.

In the Beach Cities, that can mean a guest house (yes, a few properties have them) or even "bootleg" quarters crafted from a re-purposed basement or suite.

No Help For Housing In Bernanke's Operation Twist

Tough times in housing include the reduced effectiveness of the Fed's tools to enhance the housing market.  As discussed in this Forbes article, the Fed's attempt to flatten ("twist") the yield curve (attempting to reduce long term rates by shifting its holdings from shorter to longer term Treasuries) can't can't help the housing market unless buyers are willing and able overcome uncertainty and pull the trigger.

Six Reasons to Buy a Home Now

From Kiplinger, 6 Good Reasons to Buy a Home Now!  Call me if you need more (homes or reasons)! - David

Area STAR test scores show gains - The Daily Breeze

The results of the latest Area STAR testing are in, as reported in this article by the Daily Breeze.  The article features a convenient graphic that lets the reader easily compare scores by area, including California and LA County overall, plus South Bay area cities/school districts individually.

Outstanding proficiency scores in Manhattan Beach and Hermosa Beach lead the pack, but Wiseburn and other locales have strong showings as well.  Don't miss Wiseburn School District (including the Holly Glen area of Hawthorne)!  It's a great price performer for first time homebuyers.

Note: The percentages shown are not average scores!  They are the percentage of students who scored "Proficient" or better.

Zillow Got You Down? Look Beyond the Averages!

Speaking with a good friend and very savvy client this morning, I happened to comment that "Zillow is directionally correct 50% of the time" for overall prices in a given local market.  Of course this is because Zillow uses mathematical algorithms that fail to address property condition, changes in sales mix, shortages in inventory, and similar qualitative and quantitative factors not available without a modicum of local expertise.

As an example, relying on Zillow, one could easily conclude that property values in Manhattan Beach have suffered to the tune of 5-8% in recent months.  This dramatic but misleading conclusion results from what I call the "tyranny of averages." By this I mean that averages of non-homogeneous groups (e.g., newer homes vs. older, desirable homes vs. teardowns, better locations vs. commercially-impacted streets, markets including builders vs. markets without significant building activity) are little more than hash totals until underlying factors are revealed.

In the Manhattan Beach Tree Section and in East Manhattan, few newer, larger, highly-desirable, well-located homes have been available in the inventory of homes for sale in recent months.  I have well-qualified buyers for both RIGHT NOW, and have yet to find suitable properties to match their needs. As a result, Tree Section statistics are skewed toward smaller, less-desirable properties that have been marching through the ranks.  Zillow interprets this as meaning Tree Section sales volumes and values are down, an uninformed conclusion.

The reality:  South Bay Brokers' sales are up 18% year-over-year from 2010.  Of course that's a composite number too, but I can give you the details!  In fact, many such details can be found at the South Bay Market Data section of this very Beach City Digs Blog!

So as frequently mentioned in this blog, watch out for averages.  You'll find them rampantly reported in the general press, which is a great place for real estate ads but seldom for actionable real estate news.

Instead, rely on a qualified real estate professional who knows and understands the micromarket, the underlying factors, the prevailing trends, and how to have peace of mind dealing with them all. -David

For foreign buyers, fire sale in U.S. real estate - MarketWatch

In this commentary by Kathleen Madigan, the foreign buyer's perspective on US real estate, including a link to the National Association of Realtors' take on the matter.  Foreign demand is another source of support for real estate prices in the States, and another reason we won't see further decline in the prices of homes in desirable locations.

This is not to support our government's ongoing devaluation of the dollar, but it is an example of how world markets can offset the effects of our own missteps. - David

Family finds $45,000 in new home

A good turn by a family who got more than they bargained for in their new home.

Thanks to the AP for publishing good news too! -David

Homebuyers: Could We Perhaps Interest You in Something by Frank Lloyd Wright?

That's Frank on the left.

Currently on the market, Amazing Frank Lloyd Wright Homes for Sale - FoxNews.com. Window shoppers welcome! - David

22nd CONSECUTIVE YEAR WTH THE HIGHEST RESIDENTIAL VOLUME PER AGENT

Even the LA TIMES Thinks Now May be the Time to Buy!

Any time the LA Times writes about real estate, it's difficult to know whether to expect which theme will dominate: "doom" or "gloom."  So when they publish an article saying Now may be the time to buy a home, something big must be going on (or the business editor was vacationing).  There is: interest rates are on the upswing as we've been saying for some time.

Don't lose sight of the fact that higher rates reduce affordability, so potential sellers should be as interested in this news as potential buyers.

Now if you check the reader-submitted comments accompanying the Times article online, you're bound to see the doom and gloomers arguing for waiting till rates go up, thinking this will cause prices to crash.  These folks miss two critical points: the crash already happened (not sure how anyone could have missed that), and affordability is hugely impacted by rates.  - David

Cash Buyers on the Move

We are definitely seeing this effect in the South Bay.

Cash Buyers Boost Battered Housing Markets - WSJ.com

Those who stored cash are purchasing real estate in the highest price ranges, but also at more moderate levels - - sometimes as investments.  Many of the Strand and Hill Section (Manhattan Beach) sales have been all cash in recent months, and those aren't on sale! - David

5 must-knows before buying a pool home

Ever wished you had a pool? Naturally, there are some unique considerations to take in to account. From a value standpoint, it's important to realize that a pool is not always viewed as an asset. For one thing, it's not always summer (and this year in our area, it never was!). Here are some additional important factors from Inman News. - David

Record Low Rates for Fixed Mortgages

Another record set.  With South Bay prices having stabilized since February, we now have an unique and historic opportunity to purchase real property. - David

More info: Fixed mortgage rates hit record lows: Freddie Mac Mortgages - MarketWatch

New Home Sales Plunge - - Wait, I Thought They Were Up!

A recent post on this blog told of how home sales were considerably up in May.  In this one, I'm relaying a report by the Wall Street Journal that home sales were considerably down in May.  Head spinning yet?

Both posts are true, revealing the difficulty in understanding the housing market by merely glancing at headlines.

The posts refer to different measures:

• Sales of existing ("used, gently or otherwise") homes were indeed up 19.2%
• Sales of new (previously unoccupied) homes (often mistakenly interpreted as new sales of existing homes) were down by 32.7%.

Why would this be the case, and which if either should you care about?

Well, new home sales are certainly good for the economy, but they are a small percentage of the total inventory of houses.  But besides pure levels of buyer demand, new home sales are greatly dependent upon the number of new homes that builders are building!  So if homebuilders are not building as many homes as before (they aren't), or if special financing isn't being offered in this market, then that measure will tend to decline.  You should care about this if you are a homebuilder, or invest in homebuilders, or are an economist, or live next door to an enormous new tract offering big discounts and 0% financing..Personally, I care much more about the number of new housing permits issued than the number of new homes sold.

Existing home sales have to do with the natural turnover of the nation's inventory of homes, whether built in 2009 or 1909, so long as they've been previously occupied.  This is a much more telling economic indicator with respect to the housing market.  You should care about it if you're a current or prospective homebuyer or seller!  But like any measure, I wouldn't worry too much about it on a month to month basis.  Because it may or may not be "seasonally adjusted," and it may or may not be affected by factors as simple as a different number of days in the month!

More info: New Home Sales Plunge - WSJ.com

For the real story, you need local data.  Ask your Realtor! -David