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.

Maybe this is the one for you, Team Aguilar is proud to be offering a new listing on the market that is a beautiful home in the heart of La Mesa. This home in La Mesa features 3 bedrooms, 1 bath and beautiful hard wood floors. It’s recently been cleaned up with new paint, appliances and features great hard wood floors throughout the home. If you look at other similar homes in the area this particular home really feels like a home. It’s move in ready and has been maintained and taken care of. If you are in the area and would like to take a look please feel free to contact us so we can make arrangements to show you this beautiful home.

According to www.cyberhomes.com this property located at 3414 Trophy La Mesa CA 91941 is valued at $378,043. You can read a full report of the value of this property by going to the website and typing in the property address. One thing that Cyber Homes mentions is that the real estate market has declined over the last many months and you have to take into consideration that now may or may not be the best time to purchase. Let me give you my 2 cents on why this may be a good time to purchase.

What we are presently experiencing in the San Diego Real Estate Market is what many other counties in the country are experiencing. Huge declines in home prices! What will be the factor to stabilizing these home values? The value of real estate can only come down so much before several things start to happen. 1 being that people who are presently renting a home decide that they can make a sacrifice and actually afford to purchase instead of continuing to pay rent. 2 Investors feel that it’s within their investment guidelines and they start to purchase and suck up extra real estate inventory.

What we have seen in San Diego are huge drops in home prices which I feel have just about reached the bottom. We are starting to see home values level off and many investors and 1st time home buyers are jumping into the real estate market. This may or may not be the right home for you but it’s definitely a home worth looking at. It priced @ $299,000 and may be something that you can purchase, own for a few years and use the gained equity to buy a larger home. If you are an investor, this may be a perfect long term rental for you to consider.

MLS #: 080038969 Axia Real Estate Group, Inc. Team Aguilar Carlos Aguilar 619-743-4118

IRS Code – Taxation of a Real Estate Short Sale

This information on taxation of a real estate short sale is not to be taken as tax advice. It’s is for general reference only and you should consult your tax preparer.

We receive this question almost daily. I will try to simplify this response to make it as easy to understand as possible. On December 20^th, 2007 President Bush signed into law the “Mortgage Debt Relief Act of 2007“. President Bush was quoted saying the following about this new law, “When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes.  So I’m working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on cancelled mortgage debt.” ─ President George W. Bush, 9/1/2007

Previously, if your home value declined and you sold your home for less then what you owed to the bank the previous tax code would allow the IRS to tax the amount of forgiven debt and treat this amount as income.

Now, based on the new “Mortgage Debt Relief Act of 2007″ the amount of debt that is forgiven is not tax considered additional income and you will not be subject to paying taxes on the forgiven debt. This would apply to any debt discharged on or after January 1^st 2007 which is secured by a primary residence which the debt is incurred in the purchase, construction, or substantial improvement of the primary residence.

This is the bill as it reads on the house.gov website, source is http://www.house.gov/

Permanent exclusion from gross income of discharged home mortgage indebtedness. The bill would amend current law, which requires taxpayers to include discharges of mortgage indebtedness as income and to pay tax on this income. The bill would provide a permanent exclusion for any discharge of indebtedness (on or after January 1, 2007) which is secured by a principal residence and which is incurred in the acquisition, construction, or substantial improvement of the principal residence. Instead of including this amount as income, the basis of the individuals principal residence would be reduced by the amount excluded from income under this bill. This proposal is estimated to cost $1.379 billion over 10 years.

Long-term extension of the deduction for private mortgage insurance. The bill extends the deduction for private mortgage insurance for seven years (through the end of 2014). Current law limits the deduction for private mortgage insurance to payments made prior to the end of 2007. The bill would provide that payments will qualify for this deduction whenever they are paid so long as the contract is entered into after 2006 and before 2015. This proposal is estimated to cost $570 million over the next 10 years.

Modification of the qualification tests for cooperative housing corporations. The bill would modify the requirements for qualifying for the special rules available to cooperative housing corporations. Under current law, a cooperative housing corporation must meet several requirements, including a requirement that 80 percent or more of the cooperative housing corporation is earned from the corporation’s tenant-stockholders. The bill would provide two alternatives to this 80 percent rule (i.e., one based on square footage and another based on cooperative expenditures). These two alternatives will make it easier to qualify as a cooperative housing corporation. This proposal is estimated to cost $22 million over 10 years.

Modification of exclusion of gain on sale of a principal residence. The bill amends the current law exclusion of up to $250,000 ($500,000 if married filing a joint return) of gain realized on the sale or exchange of a principal residence. Under current law, the sale of a home will qualify for this exclusion if the home is a taxpayer’s principal residence for at least two of the five years ending on the sale or exchange. This exclusion applies even if the home was initially purchased as a second home. Under the bill, if a taxpayer moves their principal residence to a second home, the taxpayer will only be able to utilize this exclusion to the extent that it relates to the period of time when the home was first used as a principal residence. The bill grandfathers use before 2008. This proposal is estimated to raise $2.005 billion over 10 years.