If you missed your chance to reap the benefits of the first-time homebuyer tax credit this past year, you will get one more shot.  The Senate passed a bill on Thursday 98 to 0 that will extend the original first time homebuyer tax credit for another seven months and expand the bill to benefit some current homeowners looking to buy a new home. The bill should reach the House floor by next Thursday and then require the signature of the President.

So what does this new bill consist of? Well, for starters, contrary to many of the proposed bills, this bill does not increase the amount of tax credit. It remains $8000 for first time homebuyers. However this time around, if you are currently a homeowner that has owned your home for at least five consecutive years, you are eligible to receive a $6500 tax credit if you buy a new primary home. In other words, if you are buying a 2^nd home you will not get a tax credit, but if you looking to move and buy a new primary residence, you might be eligible.

Who is eligible? Obviously first time homebuyers, and as previously mentioned, folks that have owned a home for at least five consecutive years. But the bill limits the purchase price of the home to $800,000 and there are income caps, which disqualify any individual who makes more that $125,000 annually and couples who make more than $225,000. In addition, this tax credit offer won’t last as long the second time around. One must sign a contract by April 30 2010, and close on the home by June 30^th to qualify. And if you think they will probably end up extending the offer even further, think again.

According to Dina ElBoghdady of the Washington Post reported that Sen. Johnny Isakson (R-GA), “a longtime advocate of the tax credit, praised passage of the bill in his chamber but said the extension would be the last one. “Tax credits like this only work by creating the sense of urgency to take advantage of them”.  So if you are considering buying a home and are eligible for the tax credit, you better get a move on.

But will this extension of the tax credit really stimulate more home sales? Stephen Ohlemacher of the Associated Press reported that there are those like Senator Kit Bond (R-MO) who question its effectiveness. “For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home,” Bond said. “And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place”.  Though there may be plenty of truth to that statement, it seems that at this point there is nothing else that can be done to at least try and stimulate home buying. And the 98-0 vote in favor of the bill confirms that our Senators don’t think there is anything else that can be done either.

Some may consider this good news, for others it doesn’t help their employment status. Either way, the unemployment number in San Diego County dropped to 10.2% in September from 10.6% in August.  In fact, it’s not just San Diego that’s registered a drop in unemployment rates – it’s the whole State of California with a 12.2% rating in September, decreasing from 12.3% in August.

Let’s try and see what this means.  First, there are some economists who warned that it’s not such a good idea to put too much stock in these figures because they were sourced from a government-conducted telephone survey of households, which is generally, a less accurate way of getting the information.  It’s more logical to rely on payroll numbers which are based on data coming from a broad sampling of employers.  Others believe, however, that a drop (even something this small) is still a good sign because at least, there’s minor movement in the right direction.  It is also very possible that this slight drop is an indication that massive layoffs are beginning to taper off and slow down. 

However, even if unemployment rates are going down, it doesn’t necessarily mean that new jobs will be easy to find.  Experts are even speculating that the slowdown in unemployment rates means that the once-jobless have now found part-time jobs or jobs that don’t involve payroll, like consulting jobs for instance.  Some may even have opted out of being part of the workforce for the meantime, in their frustration from trying to find a job.  Others may have decided to return to school or enrolled in training courses to boost their resumes once the job market picks up. 

The retail and services sectors are primarily two of the segments in the employment market where there are new jobs being offered.  Retailers are being positive about sales and intend on providing good service to their customers, hence the new hires.

What does this mean if you’re thinking of purchasing real estate? Real estate prices are often driven by unemployment rates. If we’ve reached the ceiling or close to it for unemployment then it is safe to say we are at the bottom or close to the bottom of the real estate market. Prices can only drop so much while unemployment rises. Once employment starts to stabilize, you will see the real estate market start to bounce back. It may not bounce back quickly but it will come back. Try to take advantage of the San Diego real estate market.

There was a comment to the previous article earlier this week that mentioned she and her husband were planning on waiting about a year for home prices to drop even further before considering buying a home. Not a bad plan by any means considering the fact that many areas will indeed continue to drop in home prices. But it occurred to me that there may be other things one might consider before officially putting off buying a home for a year. For example, have you seen what mortgage rates are at these days? They’re absurdly low! So I thought I’d briefly discuss some things that I have been reading up on this week regarding the issue of whether to buy now or to wait.

For starters, I want to discuss home buying as opposed to refinancing because refinancing is a slightly different beast than buying a home; Mainly because it heavily involves the equity (or lack thereof) in your property. That being said, there is a different train of thought that goes with when to refinance and when to wait.  And so, without further ado……….

James Hagerty of the Wall Street Journal reported this morning that Jay Brinkman, chief economist of the Mortgage Bankers Association, said “rates on 30-year fixed rate mortgages for borrowers with strong credit scores are likely to be in the range of roughly 4.6% to 4.75% at least through the summer.” This dip in rates came after last Wednesday’s announcement by the fed that they were committed to buying an additional $750 billion in mortgage backed securities (in addition to the 500 billion already committed). So this begs the question: How long can rates possibly stay this low? Peter Thompson of Illinois Mortgage Rates and News wrote a great, in depth article on this and he goes into the three schools of thoughts on what will happen going forward:

1. “The Fed buying will push rates steadily lower, possibly into the mid to low 4s. This is the view you hear in the media.” He goes on to say, ” This may happen, but it will take a lot more than just the Fed buying to get rates this low, and with lenders still near capacity, they are keeping more of the profit for themselves instead of passing it along to consumers.”
2. “Rates will stay low, but closer to the range we are in now. This means rates will stay affordable longer, but may not go a lot lower.”
3. The law of unintended consequences kicks in and instead of rates dropping, fear of inflation and the devaluation of the dollar drives rates higher than they were before. There are a lot of inflation hawks out there, and I agree that down the road we are going to have to deal with inflation. But that is in the future.”

For #1 to happen, banks would need to start cranking out loans at a ridiculous rate, which most likely isn’t going to happen. And #3 may be in the cards, but not in the immediate future, so I, like Peter, think that #2 is the most likely result. So that’s good news for homebuyers looking to hold off buying for a little longer.

The bad news is, low rates don’t make getting the loans any easier. Banks have yet to loosen their grip on the lending guidelines that have been tightened almost to the point of strangulation after the sub-prime mortgage disaster. Only borrowers who can make sizable down payments, have plenty of assets, a steady job, and impeccable credit, are getting the loans at these low rates.

So even if you are waiting for a certain market to bottom out or mortgage rates to dip even further, it cannot hurt to look into the matters of financing now. That way, when you do wish to buy, you will know what you qualify for before looking to find that perfect home.

When the President came to California yesterday and announced that the state will receive $145 million to help communities hard-hit by the foreclosure crisis, I thought to myself, “$145 million? That’s pocket change.” I realized then, that with all the stimulus packages, and budgets plans, and financial talk that have been spattered about the news like a massive Pollock painting in the last few months, my perception of the actual worth of $145 million dollars had been greatly skewed. $145 million can go a long way, can’t it?

The funds, as the President said on Thursday, “will be used to purchase and rehabilitate vacant, foreclosed homes and resell them with affordable mortgages.” He goes on to add that the funds “will also provide mortgage assistance and rehabilitation loans for low-income and middle income families.” The program that generated these funds, “was created as part of the Housing and Economic Recovery Act of 2008, which permits state and local governments to purchase foreclosed homes at a discount and rehabilitate or redevelop them”, reports the Associated Press. “Additionally, funds will come from the massive stimulus package.” Who knows how much additional funding from the stimulus package will actually go towards California’s foreclosure problem, and who knows how far this money can go to do all the things that the program is intended to do.

After-all, according to the RealtyTrac research firm, there were filings for 80,775 foreclosures on California properties in February. Oooooowweeeee, that’s a fair bit of foreclosures. How much money are we getting again? Of course, that number is slightly skewed due to the foreclosure moratorium that took place starting at the end of November and ended towards the end of January. For those unaware, the moratorium basically just halted the foreclosure process for that time period in an effort to keep people in their homes during the holiday season. So during that time, the amount of foreclosure filings piled up. But now that it’s over, we’ve got a lot to deal with. It would be interesting to get a number on the average dollar amount that will be spent per foreclosure with this money and see how big of dent the $145 million can actually make.

But I don’t mean to sound like Debbie Downer. $145 million is a fair bit of money. And hopefully a nice chunk of the money that California gets from the stimulus package will help as well. And moreover, this money will certainly help rejuvenate some neighborhoods in the state, and any bit of progress that can be made to lessen the enormity of this foreclosure crisis is a damn good thing.

By Andrew Brentan

I don’t get it. I’m not going to complain by any means, but I don’t quite understand how the new home construction projections surged up 22% from January. Steven Bernard of the Associated Press reported this morning that, “The Commerce Department said new home construction rose to an annual rate of 583,000 in February from a revised 477,000 in January. Economists forecast construction would drop to a pace of around 450,000 units, according to Thomson Reuters. Building permits, a key measure of future activity, also rose unexpectedly.” Economists were predicting a 6% decrease, and suddenly there’s a 22% increase in projections? What gives?

I read articles this morning in damn near every major newspaper I could find and not one of them offered any possible explanation on this. Like I said, I’m not complaining. The markets of course, responded favorably to this report and even offset the concerning news that Nokia is laying off 1,700 workers. But my question is how, when there are record-breaking amounts of residential inventory on the market across the country, there is a sudden burst in desire to build more homes that are not being bought up any time soon?

Jeff Bater and Brian Blackstone of the Wall Street Journal may not have offered any explanation on the projection, but they did address my question/concern: “…some are wary a rebound in home construction will only add to the glut of inventories, particularly, new homes at higher prices-an especially tough sell in this market.” Yes gentlemen, I’m wary. Chew on these stats that they went on to rattle off: “Sales of new homes have fallen for six consecutive months through January and are down nearly 50% from January 2008, while inventories have ballooned to a supply of 13.3 months, which is driving prices lower and holding off would-be buyers.” And so I’ll pose the question again…what on earth made the projections of home construction rise 22% from last month? I feel like the Commerce Department is just playing with our emotions to build some confidence. Well, confidence with a healthy dose of skepticism…but as of today, it seems to be working.

By

Andrew Brentan

San Diego (Mira Mesa community)

Graphics by David Foster
ZIP: 92126
Metro area: San Diego-Carlsbad-San Marcos, Calif.
Annual home sale increase: 119%
Fourth-quarter sales: 195
Median home price: $337,500
Median home price change: -13.2%
Nondistressed sales percentage: 48%

48 % de las ventas en este código postal son propiedades convencionales – No Foreclosure -; el ajuste en precio medio de vivienda es -13%. Estaremos tocando fondo? Nadie lo puede asegurar, pero este es un indicador interesante. Date la oportunidad de diversificar tu portafolio, invertir en un inmueble donde puedas vivir con tus afectos momentos inolvidables, proteger tus intereses y posicionarte para generar plusvalía en el próximo ciclo económico. La suerte se da cuando concurren en tiempo y espacio, la preparación y la oportunidad.

Publicado el BusinessWeek en línea Marzo 10 / 2009

619-370-7473
mmuniz@axiasd.com

A Call to Agents

My superiors, the President and CEO of Axia Real Estate Group in San Diego, have asked me to write a blog announcing that we have now expanded our business into Riverside County and that we are looking for agents to work in both Riverside and San Diego.  I said to them, “Superiors, with all do respect, this is not something to discuss on a blog. This is something to announce on the home page of the website or take out an ad in the Reader or SignOn SanDiego.”  As you can tell by the fact that I am indeed writing a blog on our business expansion, I did not win this argument. And so, without further ado, let me introduce to you, Team Aguilar of Axia Real Estate Group:

Under the direction and leadership of Carlos Aguilar (President), and Howard Blum (CEO), Axia Real Estate Group, Inc. has been helping buyers and sellers in the San Diego region for over a decade. Carlos loves using the line that he has “been in real estate longer then he would care to remember” which was voted by me, to be his most over-used line of 2008. But he has been at it for a long time — originally licensed in California in 1972. The bottom line is, the man knows everything there is to know about real estate in California and he’s a pleasure to work for and with. And even if he wasn’t the one paying my salary, I’d say the same thing.

So, now that Team Aguilar has expanded into Riverside, we are looking for experienced real estate agents to join our group and work both Riverside AND San Diego regions. Agents should be experienced, knowledgeable, and willing to follow up on leads. If you are interested, or have any questions, call Toll Free Number at (888) 317-1496 or email info@teamaguilar.com.

In this current economic slump, I have been hearing people speak optimistically of all the opportunities that present themselves in such times. “What opportunities?” I find myself asking and getting annoyed at their statements, which seems to make everything seem ok, when in fact there are many who are having a very difficult time. It’s like getting defecated on by a bird and having someone reassure you that it’s good luck.

Well, for some there are opportunities in the form of affordability. Company shares, business-operation expenses, and buying real estate are all areas that people and businesses are able to capitalize on. But for most people and businesses, this is a time not so much of opportunities, but for adjustments.

In the Southern California real estate world, a booming, ever-expanding, bottomless pit of wealth just a few years ago, companies and individuals have had to face the harsh reality of the aftermath of the biggest real-estate bubble bursting in the history of our economy. For many, their way of doing business was shattered as there were no longer willing buyers knocking on their doors, and sellers were being forced to sell their home for less than it was worth. But there are those that have experienced this type of market before, and it are these individuals and companies that have adjusted their way of doing business in order to weather this economic downturn.

Carlos Aguilar, president of Axia Real Estate Group, Inc. in San Diego, is one such individual who has successfully adjusted to this new marketplace by selling REO’s. Real Estate Owned (REO) are properties owned by a lender, usually a bank, who retained the property after an unsuccessful foreclosure auction. And with all the foreclosure taking place in Southern California, REOs have proven the most consistent way to get a paycheck as a real estate agent. Banks are in possession of huge amounts of properties that need to be sold, and they will outsource the duty of selling these homes to real estate agents such as Carlos. “When I saw that the market was changing and it would be providing REO business, we changed hats and got into it last year,” Carlos stated. And it has proved successful as currently Axia’s REO division, www.TeamAguilar.com is bringing in 80% of his business.

But simply “changing hats” isn’t an easy option for many.  The banks are unloading a lot of responsibility to those selling their REOs and they need to be certain their assets are in the hands of people with experience.  Carlos obtained his experience selling REO’s in the early 90’s amidst the Savings and Loan Crisis and economic recession “Most companies involved [in selling REOs] that are having success know people in the industry. The REO industry seems to be fairly tight and the relationships I had in the past working for other operations are the big reason why I am getting business today.” And it’s not just experience that is required to sell REOs. It’s an entirely different beast than the average real estate transaction.

In addition to the usual marketing and negotiating required in a real estate deal, selling REOs involve other, less glamorous tasks. Frequently homes are left in horrible conditions and intense cleaning is required commonly costing upwards of $2000 to $3000. Ordering and maintaining utilities, managing evictions and re-keying properties, filling out the tedious and redundant Broker Price Opinions (more information on BPO’s search “Newsstand” at www.car.org), and keeping the banks or asset managers informed and happy. “Every bank requires different things, and every bank requires a sea of paperwork” Carlos adds regarding the downsides of REO work. “It’s by no means the most glamorous side of real estate, but in times such as these, we would be hurting for business without it.”

And so, depending on how one looks at things, transitioning from being a regular real estate agent to selling REOs might be a type of opportunity that Carlos and others in his field are taking advantage of, but this is an opportunity that is brought on by necessity and not a hope to strike it rich. As most of us are forced to position ourselves to weather the storm ahead, it is important to simply make the adjustments in our life and business necessary to get through these times. And who knows, maybe an opportunity is waiting to present itself to you.

Andrew Brentan is a contributor to Team Aguilar’s blog.

On August 31, 2007, ACC Capital Holdings announced that it was closing Ameriquest (Argent Mortgage was the wholesale division) by no longer taking loans and selling its loan servicing unit to Citigroup.

Does this mean on September 1st 2009 all of the 2/28 (2 year fixed) loans will have been weeded out of various loan servicing portfolios?

If it does, we will have to wait until September 1st 2010 for the 3/27 (3 year fixed) loans!

The middle of 2007 was when we saw just about every mortgage wholesaler shut down their operations. Some went out of business and some shut down their mortgage wholesale division. If you consider that the majority of the current foreclosures being sold right now are the end result of some of these loans then it would be simple to say that once we pass this period of fixed loans we should see some improvements to the real estate market.

What is the difference with this market compared to markets of the past? When this market turns the availability of financing will never likely reach the levels we have recently experienced. Let’s say that we start to see considerable improvements in the early part of 2010 that would mean that we still have another 1.5 years of a rather gloomy real estate market from today.

My feeling is that the market will slowly start to improve once we work through this cycle of mortgage loans. Even when this happens it will take time and there is no telling what other negative economic factors will come into play such as inflation, the war and the overall condition of the economy. There are so many factors that will play into this real estate recovery.

I hope that you aren’t expecting a quick recovery to this real estate market. The reality is that it’s going to continue for another couple years.

I know this isn’t directly related to real estate but I found it interesting and it will have some impact on retail commercial real estate in San Diego and many other parts of the country. Here is a list of Starbucks in San Diego County that are going to close. Is this a sign of a recession? Don’t you get tired of all the media talking about the possibility of a recession? Lets face it, were in a very bad economic time and the closing of 600 Starbucks is a good example of people thinking twice about spending $5 a day on coffee. I guess it’s back to the instant coffee for a while!

Even as much as I love going to Starbucks (occasionally) I found that the number of Starbucks you would find in some areas was a little bit of an over kill. I live in Downtown San Diego and 4 of the Starbucks closing on this list are in the downtown San Diego area. I can think of 11 locations in about a 16 block radius in the downtown San Diego area.

Below you will find the list of Starbucks closing in San Diego. Starbucks will manage to survive and do just fine as we get past this bad economic time but it is interesting to see how so many people are cutting out expenses like this.

6556 3RD & H ST 3037 H ST CHULA VISTA CA
11223 OTAY RANCH TOWN CENTER 2015 BIRCH RD CHULA VISTA CA
551 MIRA MESA 9450 MIRA MESA BLVD SAN DIEGO CA
5637 MISSION GORGE RD 6171 MISSION GORGE SAN DIEGO CA
6514 1ST & MARKET 101 MARKET ST SAN DIEGO CA
6592 COLLEGE & LINDO PESSO 5131 COLLEGE AVE SAN DIEGO CA
6726 EUCLID AVE & FEDERAL BLVD 1722 EUCLID AVE SAN DIEGO CA
6818 UNIVERSITY & ARAGON 6511 UNIVERSITY AVE SAN DIEGO CA
9471 30TH ST & EL CAJON 2990 EL CAJON BLVD SAN DIEGO CA
9583 NATIONAL & 36TH 3582 NATIONAL AVE SAN DIEGO CA
10631 PARK & UNIVERSITY 3830 PARK BLVD SAN DIEGO CA
11837 11TH & C 1122 BROADWAY AVE SAN DIEGO CA 

For a complete list of Starbucks closing and to find out if your favorite Starbucks will be closing in your area please view the complete list here.