The real estate industry is going through the worst economic crisis in more than 60 years; however, we are seeing some improvement. This is good, because in order for our economy to get back on track, we need a stable housing market.
California sales numbers continue to be considerably stronger than nationwide numbers. The increase in residential sales was driven in large part by deeply-discounted distressed properties providing more affordable housing as prices adjusted to the unsustainable growth that occurred during the first 6 years of this decade. California Association of REALTORS® (CAR) anticipates that the foreclosure wave should hit a peak in the second or third quarter of this year with a decline in the share of distressed properties to follow.
California’s residential market has seen larger price declines when compared to many other parts of the country. Indeed, the February median price for homes nationally is $30,400 less than it was a year ago, in California it is $170,670 less, and in our mountain area, it is $73,000 less. The February 2009 median prices are as follows: nationally, $165,400; California, $247,590; and locally, $217,500, though, our mountain-area median price for the first quarter of 2009 is $225,000. CAR Vice President and Chief Economist Leslie Appleton-Young attributed the California median price declining by a larger margin than the nationwide median price because the under $500,000 portion of the market experienced larger price declines than other market segments due to the large share of distressed homes for sale.
Nationally, February home sales when compared with the same period a year ago were down 10 percent, although, in California, home sales increased 83 percent, and locally, our home sales increased by 100 percent. In fact, our residential sales are up by 60% overall in the first quarter of 2009 compared to the same period of time a year ago, and Ahwahnee, Bass Lake, Coarsegold, Mariposa, North Fork, Oakhurst, and Wishon have all seen an increase in residential sales. It is expected, though, that the percentage gains we are experiencing in California for home sales will decrease in coming months as current sales are compared against the extremely low numbers that prevailed during the early months of the credit crunch.
Other reasons why we are seeing an increase in home sales—besides the greater number of distressed properties on the market—is because people are getting the tools and incentives they need to buy. This includes the recent stimulus package that provides some homebuyers a tax credit of $8,000 that doesn’t have to be repaid if the borrowers own their home for at least 3 years, higher FHA loan limits in some areas, and other incentives.
Those trying to sell their land though are not as fortunate. In the first quarter of 2009 we had 4 land listings that sold compared to last year’s 15. That is a 73 percent drop from the previous quarter. Of the four land listings that sold, there was one each in the following communities: Ahwahnee, Coarsegold, Mariposa, and Oakhurst.
Though, financing continues to be challenging for some as a result of tougher underwriting standards, interest rates have improved. According to Freddie Mac, 30-year fixed-mortgage interest rates averaged 5.13 percent during February 2009 compared with 5.92 percent in February 2008 and adjustable-mortgage interest rates averaged 4.87 percent in February 2009 compared with 5.03 in February 2008. Rates continued to decline into March. Rates as of the week ending March 19, 2009, was 4.98% for 30-year fixed and 4.61% for 15-year fixed with fees/points at 0.7%.
Following are some additional local statistics:
Number of active listings in our multiple listing service (MLS) as of April 1 is 777: residential, 390; land, 337; manufactured home in a park, 30; commercial, 19; and business opportunity, 1. I expect to see an increase in the number of listings as typically they increase in the second quarter of the year and reach a plateau from June through August before decreasing as the year draws to a close.
Of the 75 properties that closed the first quarter of 2009: 20 were less than $175,000; 34 were between $175,000 and $300,000; 10 were between $300,000 and $350,000; 10 were between $350,000 and $450,000; and 1 was between $600,000 and $700,000.
There are currently 54 properties in escrow and 34 of them are listed below $300,000. Of the remaining 20, 19 of them are between $300,000 and $500,000, with 1 between $700,000 and $800,000.
Almost 300 properties expired or were withdrawn the first quarter of 2009 with the average days on market for those properties at over 300.
Local active listings are experiencing approximately 300 days on market; for our sold properties, it is 200.
Wednesday, April 15, 2009
Sunday, April 5, 2009
Home Expo Proceeds to Benefit Habitat for Humanity® of Mariposa County
The Yosemite Gateway Association of REALTORS® (YGAOR) is holding its first Mountain Area Home Expo Saturday, April 18. The home expo is a free event and will be at the Old True Value Building in the Von’s Shopping Center from 9 a.m. to 4 p.m. with local vendors and educational sessions.
The YGAOR Affiliate Committee has been working on this expo for more than six months. During the planning process, it was important for the committee to identify an organization to receive a portion of the event proceeds, and they selected Habitat for Humanity® of Mariposa County.
I was fortunate to be able to join six members of the committee when they met with three officers of Habitat for Humanity® of Mariposa County: Delores Hahn, president; Beth Tomsick, vice president; and Jovan Trujillo, treasurer. I learned at the meeting that there are 58 counties in California. Of those counties, 53 have joined Habitat for Humanity® as an affiliate: an independent, locally-run, nonprofit organization. Mariposa is celebrating their first year as an affiliate.
Madera County does not have a Habitat for Humanity®; although, some YGAOR affiliates and REALTORS® are exploring the possibility of setting up a Habitat for Humanity® in Madera County. If you’d like to participate in establishing a Habitat for Humanity® in Madera County, please send an email to beverly@oakhurstrealestate.net or call 559-760-7600 so we can add you to the list of potential charter members. Habitat for Humanity® of Mariposa County has offered their assistance in mentoring us if we decide to move forward with this very worthwhile endeavor.
Habitat for Humanity® of Mariposa County will be at the home expo with information about the organization, how one can apply to be considered for a home through Habitat, and how people can assist families with partnership housing. Partnership housing, according to Habitat, is based on the idea that those in need of adequate shelter work side by side with volunteers to build simple, decent houses. The first partnership house was completed in 1969 in Georgia.
Hahn said, “Habitat is a hand up not a hand out.” In addition to a down payment and the monthly mortgage payments, homeowners invest hundreds of hours of their own labor—sweat equity—into building their Habitat house and the houses of others. The family selected to receive a home from Habitat must volunteer a minimum of 350 hours and at least 100 hours on their own home. Many families choose to volunteer more hours than the required minimum, added Hahn.
The local selection committee chooses homeowners based on their level of need, their willingness to become partners in the program, and their ability to repay the no-interest loan. The homeowners’ monthly mortgage payments are then used to build more houses. Indeed, since Habitat for Humanity® International was founded in 1976, they have built and rehabilitated more than 300,000 houses and provided shelter for more than 1.5 million people in over 90 countries. In fact, last year, Habitat was named the 14th largest homebuilder in the United States. What is amazing about this statistic is that volunteer labor builds and rehabilitates all the homes for Habitat.
Habitat for Humanity® of Mariposa County can use more volunteers. They are in need of someone to work in the office on the first and third Thursdays of the month and they have several other volunteer opportunities. Their regular meetings are open to all. Their next meeting is next Tuesday, April 7, at 6 p.m. at Mariposa Lutheran Church. Hahn said, “Attending these meetings is a great way to keep up with what is going on and to choose a place you wish to help.” To learn more about the Habitat for Humanity® of Mariposa County, visit www.mariposahabitat.org.
The YGAOR Affiliate Committee has been working on this expo for more than six months. During the planning process, it was important for the committee to identify an organization to receive a portion of the event proceeds, and they selected Habitat for Humanity® of Mariposa County.
I was fortunate to be able to join six members of the committee when they met with three officers of Habitat for Humanity® of Mariposa County: Delores Hahn, president; Beth Tomsick, vice president; and Jovan Trujillo, treasurer. I learned at the meeting that there are 58 counties in California. Of those counties, 53 have joined Habitat for Humanity® as an affiliate: an independent, locally-run, nonprofit organization. Mariposa is celebrating their first year as an affiliate.
Madera County does not have a Habitat for Humanity®; although, some YGAOR affiliates and REALTORS® are exploring the possibility of setting up a Habitat for Humanity® in Madera County. If you’d like to participate in establishing a Habitat for Humanity® in Madera County, please send an email to beverly@oakhurstrealestate.net or call 559-760-7600 so we can add you to the list of potential charter members. Habitat for Humanity® of Mariposa County has offered their assistance in mentoring us if we decide to move forward with this very worthwhile endeavor.
Habitat for Humanity® of Mariposa County will be at the home expo with information about the organization, how one can apply to be considered for a home through Habitat, and how people can assist families with partnership housing. Partnership housing, according to Habitat, is based on the idea that those in need of adequate shelter work side by side with volunteers to build simple, decent houses. The first partnership house was completed in 1969 in Georgia.
Hahn said, “Habitat is a hand up not a hand out.” In addition to a down payment and the monthly mortgage payments, homeowners invest hundreds of hours of their own labor—sweat equity—into building their Habitat house and the houses of others. The family selected to receive a home from Habitat must volunteer a minimum of 350 hours and at least 100 hours on their own home. Many families choose to volunteer more hours than the required minimum, added Hahn.
The local selection committee chooses homeowners based on their level of need, their willingness to become partners in the program, and their ability to repay the no-interest loan. The homeowners’ monthly mortgage payments are then used to build more houses. Indeed, since Habitat for Humanity® International was founded in 1976, they have built and rehabilitated more than 300,000 houses and provided shelter for more than 1.5 million people in over 90 countries. In fact, last year, Habitat was named the 14th largest homebuilder in the United States. What is amazing about this statistic is that volunteer labor builds and rehabilitates all the homes for Habitat.
Habitat for Humanity® of Mariposa County can use more volunteers. They are in need of someone to work in the office on the first and third Thursdays of the month and they have several other volunteer opportunities. Their regular meetings are open to all. Their next meeting is next Tuesday, April 7, at 6 p.m. at Mariposa Lutheran Church. Hahn said, “Attending these meetings is a great way to keep up with what is going on and to choose a place you wish to help.” To learn more about the Habitat for Humanity® of Mariposa County, visit www.mariposahabitat.org.
Monday, March 23, 2009
Ripple Effect Between Education and Housing
Recent state budget cuts have drastically reduced K-12 public education funding; consequently, some of our local schools are at risk for closure. Wawona Elementary School and Bass Lake Elementary School have been given the rest of this school year and next school year to figure out ways to make up their deficit in order to stay open. This decision was reached at the Bass Lake Joint Union Elementary School District board meeting March 11. As a result, our schools need community support. In the coming months, you may be asked to assist these schools as they look at ways to keep the schools open long term.
Why are these local schools important? I’ll address this question from a REALTOR® perspective as well as from a community perspective.
How are the schools? This may be the most common question fielded by REALTORS®, and the answer plays a role in virtually every residential real estate decision in the United States. This means that quality schools provide a foundation to ensure a flourishing community, and this ripple effect between education and housing necessitates that the real estate community take a direct interest in improving our primary and secondary schools.
According to the 2007 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers, schools were listed as a deciding factor for 28% of home buyers. A recent NAR survey showed that Americans rank quality of public schools second only to crime when deciding where to live. Therefore, REALTORS® especially need to be educated about what our schools have to offer as we work with prospective buyers to our area and market listings for our sellers and being knowledgeable about our schools is an essential component of the services we provide.
Of all the local neighborhood amenities that can influence a buyer's decision to purchase a home, proximity to good quality schools is one of the most influential. Even buyers with no children care about the reputation of the local schools because they know that schools directly affect a community’s vitality as well as a home’s resale value. Whereas young families will often want to know about the performance of local elementary schools and preschools and families with older children will want to know about the performance of high schools and will often want to obtain information on colleges as well. Parents may also want to know about the availability of sports and other extracurricular activities such as art or music. Other important factors are test results as well as the ratio between students and teachers.
We need to get the word out that what we have to offer in our local schools is what people want. It benefits us all when people are attracted to our area, whether you are a REALTOR®, homeowner, business person, local resident, retiree, parent, school classified or certificated employee, or school administrator. More information about our school programs and student success stories need to get out to our community.
I’d like to see a flyer or brochure regarding our local schools and available programs made available to hand out to not only prospective buyers but also to patrons visiting our local businesses, restaurants, doctors’ offices, preschools, movie theater, bowling alley, and more. School websites should also be utilized as an educational and communication tool.
I’ve been a trustee on the Bass Lake Joint Union Elementary School Board since November 2006. Although my interest first stemmed from my involvement as a parent, I’ve come to realize that serving on the school board is beneficial to the community because of my special knowledge of the relationship between quality education and real estate. It also allows me a unique perspective to how a school functions and the role community members can take in supporting our schools. Please consider doing what you can for our local schools and mountain community.
Many of our local service clubs and businesses have realized the connection between schools and the community and have volunteered their time as well as donating funds for various school projects. However, our local schools need you now more than ever.
Why are these local schools important? I’ll address this question from a REALTOR® perspective as well as from a community perspective.
How are the schools? This may be the most common question fielded by REALTORS®, and the answer plays a role in virtually every residential real estate decision in the United States. This means that quality schools provide a foundation to ensure a flourishing community, and this ripple effect between education and housing necessitates that the real estate community take a direct interest in improving our primary and secondary schools.
According to the 2007 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers, schools were listed as a deciding factor for 28% of home buyers. A recent NAR survey showed that Americans rank quality of public schools second only to crime when deciding where to live. Therefore, REALTORS® especially need to be educated about what our schools have to offer as we work with prospective buyers to our area and market listings for our sellers and being knowledgeable about our schools is an essential component of the services we provide.
Of all the local neighborhood amenities that can influence a buyer's decision to purchase a home, proximity to good quality schools is one of the most influential. Even buyers with no children care about the reputation of the local schools because they know that schools directly affect a community’s vitality as well as a home’s resale value. Whereas young families will often want to know about the performance of local elementary schools and preschools and families with older children will want to know about the performance of high schools and will often want to obtain information on colleges as well. Parents may also want to know about the availability of sports and other extracurricular activities such as art or music. Other important factors are test results as well as the ratio between students and teachers.
We need to get the word out that what we have to offer in our local schools is what people want. It benefits us all when people are attracted to our area, whether you are a REALTOR®, homeowner, business person, local resident, retiree, parent, school classified or certificated employee, or school administrator. More information about our school programs and student success stories need to get out to our community.
I’d like to see a flyer or brochure regarding our local schools and available programs made available to hand out to not only prospective buyers but also to patrons visiting our local businesses, restaurants, doctors’ offices, preschools, movie theater, bowling alley, and more. School websites should also be utilized as an educational and communication tool.
I’ve been a trustee on the Bass Lake Joint Union Elementary School Board since November 2006. Although my interest first stemmed from my involvement as a parent, I’ve come to realize that serving on the school board is beneficial to the community because of my special knowledge of the relationship between quality education and real estate. It also allows me a unique perspective to how a school functions and the role community members can take in supporting our schools. Please consider doing what you can for our local schools and mountain community.
Many of our local service clubs and businesses have realized the connection between schools and the community and have volunteered their time as well as donating funds for various school projects. However, our local schools need you now more than ever.
Sunday, March 8, 2009
Impaired Bodies of Water Identified in Madera and Mariposa Counties
March 16 Deadline for Comments on Draft 2008 303(d)/305(b) Integrated Report
A component of AB 885 (see January 11 blog entry), regarding septic and well requirements, involves Section 303(d) of the Clean Water Act, which requires states to develop a list of impaired bodies of water and a priority ranking for addressing the impairments. The 303(d)/305(b) Integrated Report serves a dual purpose because AB 885 regulations require an existing septic within 600 feet of an impaired body of water to have a qualified professional determine whether the septic system is contributing to the impairment. If it does, the owner must retrofit the septic system with supplemental treatment. The approximate cost for a retrofit is $45,000, according to a letter from the Coarsegold Resource Conservation District to the Central Valley Regional Water Quality Control Board. The deadline for comments regarding the bodies of water included in the Draft 2008 303(d)/305(b) Integrated Report is March 16, 2009.
Madera County District 5 Supervisor, Tom Wheeler, would like to ensure that Madera County water bodies are not included in this report. Wheeler said, “If the state is going to require individuals to undergo expensive studies and even more expensive retrofits, it should be held to a high standard of proof that the systems are a likely cause of the water impairment.”
The bodies of water in Madera County currently listed for inclusion are Ash Slough, Berenda Creek Slough, Cottonwood Creek, and Dry Creek. Others listed for inclusion that I will briefly review are Fresno River, Hensley Lake, Lewis Fork, and Willow Creek. To see the complete list and supplemental information, visit: http://www.waterboards.ca.gov/centralvalley/water_issues/tmdl/impaired_waters_list/303d/index.shtml.
Fresno River:
Samples were taken from the Fresno River in Ahwahnee, at Spangle Gold Creek, and in Oakhurst both upstream and downstream of the wastewater treatment facility. The reason Fresno River was included, according to the report, is low dissolved oxygen. The report states that applicable water quality standards are exceeded and a pollutant contributes to or causes the problem. Classifying oxygen as a pollutant appears questionable; especially as low dissolved oxygen cannot be remediated like a metal or toxin. Testing took place from August 2001 to June 2002. The samples that I noted in the report that showed evidence of low dissolved oxygen though were only in August and October of 2001.
According to Professor Steve Blumenshine, CSU Fresno, dissolved oxygen concentrations (mg/L) are affected not only by biological activity, but also by elevation, temperature, and water movement. Thus, the timing of the sampling could be very important. He said, “A good deal of oxygen will have been generated by primary production at the end of a warm and sunny day. Likewise, dissolved oxygen would be rather low just prior to dawn because all of these primary producers will have been respiring (using) oxygen overnight.”
Blumenshine studied Fresno River in 2003 and 2004. The data shows a direct correlation between discharge and dissolved oxygen. This suggests that the findings of low dissolved oxygen were due to low discharge and stagnant water at the sampling sites. Both the CSUF study (2003 and 2004) and the results in the report (2001 and 2002) used SWAMP (Surface Water Ambient Monitoring Program) protocols.
Hensley Lake:
Samples were taken from Hensley Lake at Andy’s Cove, north end of Andy’s Cove, the inflow and outflow areas of Hensley Lake, and near Restroom #7 to the east. Hensley Lake was included in the report due to low dissolved oxygen and pH. The samples that I noted in the report that showed evidence of low dissolved oxygen were in August and October of 2001 (as was Fresno River). Seven of the 13 samples taken exceeded the evaluation objective pH of 8.3. The exceeded results were found in August and October of 2001 as well as June 2002 and ranged between 8.5 and 9.38.
Lewis Fork:
Results in Sugar Pine and Cedar Valley along Lewis Creek exceeded ammonia levels according to the report. The report concludes that the water body-pollutant combination should be included because applicable water quality standards are exceeded and a pollutant contributes to or causes the problem. The results here were unclear to me as in one area it shows 2 of the 4 samples exceeded the guidelines and in another area it shows that 0 of 4 samples exceeded guidelines. Samples were collected August 2001 to October 2001.
Willow Creek:
Willow Creek monitoring occurred from 1986 to 1996. At the North Fork Willow Creek sampling location, below Bass Lake, 2 out of 11 annual maximum temperature values (years 1990 and 1995) exceeded the temperature criteria for steelhead. For the South Fork Willow Creek sampling location, below a Forest Service Road, 8 out of 11 annual maximum temperature values exceeded the criteria for steelhead (PG&E, 2001). The risk assessment approach used by Sullivan et al. (2000) suggests that an upper threshold for the annual maximum of 21.0°C for steelhead will reduce average growth 10% from optimum. The report also included information regarding a Willow Creek study showing reduced surface flow. It also found that water heats up due to solar radiation above the confluence with Whisky Creek. During the study, the measured temperature in this area was 29°C at mid-day. Whisky Creek has a coldwater input and has a healthy trout population (Price, 2002). Including temperature as a pollutant is problematic, especially as temperature cannot be remediated like a metal or toxin.
Other Bodies of Water:
Many other bodies of water are listed and I was unable to locate a reference by county. Thus, I was unable to compile a complete list for our other neighboring counties including Mariposa and Fresno. However, some bodies of water outside of Madera County that I noted include McClure Reservoir in Mariposa County and Millerton Lake in Fresno County. The pollutant listed for both of those bodies of water is mercury. Fish tissue samples were tested and some exceeded the US EPA (Environmental Protection Agency) fish tissue criterion for human health. According to the draft report, fish samples collected were from fish with total lengths greater than 150 mm, which represent fish most commonly caught and consumed by sport fishers and their families. At McClure Reservoir, 3 of 3 samples collected exceeded the criterion. At Millerton Lake, 7 out of 21 samples collected exceeded the criterion. Environmental conditions noted in the report that may account for the findings included mining activity during the Gold Rush era. In these cases, I would not argue about the inclusion of these bodies of water as it is important to address the mercury impairment. However, requiring those with wastewater treatment systems to hire a qualified professional to determine if their system is contributing to the impairment (AB 885 regulation) is unreasonable.
Deadline for Comments Monday
Please view the documents and send comments about the Draft 2008 303(d)/305(b) Report by 5 p.m., March 16, 2009, to Danny McClure, Regional Water Quality Board, Central Valley Region, 11020 Sun Center Drive #200, Rancho Cordova, CA 95670. For questions or additional information, McClure can be contacted at 916-464-4751 or by email at dmcclure@waterboards.ca.gov.
A component of AB 885 (see January 11 blog entry), regarding septic and well requirements, involves Section 303(d) of the Clean Water Act, which requires states to develop a list of impaired bodies of water and a priority ranking for addressing the impairments. The 303(d)/305(b) Integrated Report serves a dual purpose because AB 885 regulations require an existing septic within 600 feet of an impaired body of water to have a qualified professional determine whether the septic system is contributing to the impairment. If it does, the owner must retrofit the septic system with supplemental treatment. The approximate cost for a retrofit is $45,000, according to a letter from the Coarsegold Resource Conservation District to the Central Valley Regional Water Quality Control Board. The deadline for comments regarding the bodies of water included in the Draft 2008 303(d)/305(b) Integrated Report is March 16, 2009.
Madera County District 5 Supervisor, Tom Wheeler, would like to ensure that Madera County water bodies are not included in this report. Wheeler said, “If the state is going to require individuals to undergo expensive studies and even more expensive retrofits, it should be held to a high standard of proof that the systems are a likely cause of the water impairment.”
The bodies of water in Madera County currently listed for inclusion are Ash Slough, Berenda Creek Slough, Cottonwood Creek, and Dry Creek. Others listed for inclusion that I will briefly review are Fresno River, Hensley Lake, Lewis Fork, and Willow Creek. To see the complete list and supplemental information, visit: http://www.waterboards.ca.gov/centralvalley/water_issues/tmdl/impaired_waters_list/303d/index.shtml.
Fresno River:
Samples were taken from the Fresno River in Ahwahnee, at Spangle Gold Creek, and in Oakhurst both upstream and downstream of the wastewater treatment facility. The reason Fresno River was included, according to the report, is low dissolved oxygen. The report states that applicable water quality standards are exceeded and a pollutant contributes to or causes the problem. Classifying oxygen as a pollutant appears questionable; especially as low dissolved oxygen cannot be remediated like a metal or toxin. Testing took place from August 2001 to June 2002. The samples that I noted in the report that showed evidence of low dissolved oxygen though were only in August and October of 2001.
According to Professor Steve Blumenshine, CSU Fresno, dissolved oxygen concentrations (mg/L) are affected not only by biological activity, but also by elevation, temperature, and water movement. Thus, the timing of the sampling could be very important. He said, “A good deal of oxygen will have been generated by primary production at the end of a warm and sunny day. Likewise, dissolved oxygen would be rather low just prior to dawn because all of these primary producers will have been respiring (using) oxygen overnight.”
Blumenshine studied Fresno River in 2003 and 2004. The data shows a direct correlation between discharge and dissolved oxygen. This suggests that the findings of low dissolved oxygen were due to low discharge and stagnant water at the sampling sites. Both the CSUF study (2003 and 2004) and the results in the report (2001 and 2002) used SWAMP (Surface Water Ambient Monitoring Program) protocols.
Hensley Lake:
Samples were taken from Hensley Lake at Andy’s Cove, north end of Andy’s Cove, the inflow and outflow areas of Hensley Lake, and near Restroom #7 to the east. Hensley Lake was included in the report due to low dissolved oxygen and pH. The samples that I noted in the report that showed evidence of low dissolved oxygen were in August and October of 2001 (as was Fresno River). Seven of the 13 samples taken exceeded the evaluation objective pH of 8.3. The exceeded results were found in August and October of 2001 as well as June 2002 and ranged between 8.5 and 9.38.
Lewis Fork:
Results in Sugar Pine and Cedar Valley along Lewis Creek exceeded ammonia levels according to the report. The report concludes that the water body-pollutant combination should be included because applicable water quality standards are exceeded and a pollutant contributes to or causes the problem. The results here were unclear to me as in one area it shows 2 of the 4 samples exceeded the guidelines and in another area it shows that 0 of 4 samples exceeded guidelines. Samples were collected August 2001 to October 2001.
Willow Creek:
Willow Creek monitoring occurred from 1986 to 1996. At the North Fork Willow Creek sampling location, below Bass Lake, 2 out of 11 annual maximum temperature values (years 1990 and 1995) exceeded the temperature criteria for steelhead. For the South Fork Willow Creek sampling location, below a Forest Service Road, 8 out of 11 annual maximum temperature values exceeded the criteria for steelhead (PG&E, 2001). The risk assessment approach used by Sullivan et al. (2000) suggests that an upper threshold for the annual maximum of 21.0°C for steelhead will reduce average growth 10% from optimum. The report also included information regarding a Willow Creek study showing reduced surface flow. It also found that water heats up due to solar radiation above the confluence with Whisky Creek. During the study, the measured temperature in this area was 29°C at mid-day. Whisky Creek has a coldwater input and has a healthy trout population (Price, 2002). Including temperature as a pollutant is problematic, especially as temperature cannot be remediated like a metal or toxin.
Other Bodies of Water:
Many other bodies of water are listed and I was unable to locate a reference by county. Thus, I was unable to compile a complete list for our other neighboring counties including Mariposa and Fresno. However, some bodies of water outside of Madera County that I noted include McClure Reservoir in Mariposa County and Millerton Lake in Fresno County. The pollutant listed for both of those bodies of water is mercury. Fish tissue samples were tested and some exceeded the US EPA (Environmental Protection Agency) fish tissue criterion for human health. According to the draft report, fish samples collected were from fish with total lengths greater than 150 mm, which represent fish most commonly caught and consumed by sport fishers and their families. At McClure Reservoir, 3 of 3 samples collected exceeded the criterion. At Millerton Lake, 7 out of 21 samples collected exceeded the criterion. Environmental conditions noted in the report that may account for the findings included mining activity during the Gold Rush era. In these cases, I would not argue about the inclusion of these bodies of water as it is important to address the mercury impairment. However, requiring those with wastewater treatment systems to hire a qualified professional to determine if their system is contributing to the impairment (AB 885 regulation) is unreasonable.
Deadline for Comments Monday
Please view the documents and send comments about the Draft 2008 303(d)/305(b) Report by 5 p.m., March 16, 2009, to Danny McClure, Regional Water Quality Board, Central Valley Region, 11020 Sun Center Drive #200, Rancho Cordova, CA 95670. For questions or additional information, McClure can be contacted at 916-464-4751 or by email at dmcclure@waterboards.ca.gov.
Saturday, February 28, 2009
Could You Save Money if Your Property was Reassessed?
Many property owners are frustrated when their taxes rise as the market value of their property falls. Due to the decrease in local property values, many property owners believe their property’s assessed value is greater than its fair market value and have been contacting local REALTORS® to assist in locating sales of comparable properties. Once the property owners have this information, they can submit a form to the Madera County Assessor’s Office requesting a reduction in property taxes. This is permitted via Proposition 8, which amended Proposition 13, to reflect declines in property value.
Proposition 8 allows for the reassessment of qualified properties; thus, a reduction of property taxes. However, Proposition 8 reductions in value are temporary reductions due to the fact that the current market value of a property has fallen below its current (Proposition 13) assessed value.
“The market downturn has impacted those who bought when property values were high,” said Tom Kidwell, Madera County Assessor. Therefore, the Assessor’s Office is currently reviewing approximately 37,000 transactions dating back to 2004. Kidwell estimates that about 15,000 properties have declined in value—about 25 percent of the total number of properties in the county—below their Proposition 13 values and will automatically be reassessed by his office this year. Last year, they reduced about 1,500 property values.
Kidwell said, “Over the next two months, staff will be working on this. They will take a look to determine if the value is accurate and to determine what the right value should be.” When they are done with this automatic review, the Assessor’s Office will send out notices to the property owners they’ve identified as having property that has declined in value. They will then begin processing the written requests for review.
Keep in mind that because of the protection already offered by Proposition 13, the majority of properties in Madera County will not qualify for this reduction in value for property tax purposes. However, if you think your property might qualify, you’ll need to complete a form. You can find this form by going to http://www.madera-county.com/assessor and selecting “Decline in Value Prop 8” in the left side menu. The form may then be accessed at the bottom of the page. You can also call 559-675-7710 and ask to have the form mailed or faxed to you. You can make this request up to December 1, 2009, and it is a free service to you.
The form requests comparable sales information. It is important to note that the information should be from sales prior to January to no later than March because the review will be reflective of market conditions as of the lien date, the first of January, of the tax year in question. If you ask a REALTOR® to assist you in identifying property, make sure to share this detail with him or her. Generally when REALTORS® look up comparables, we look at a different window of time based on the date of the request and recent sales.
If you submit a request to the Assessor’s Office, they cannot guarantee to process it right away—especially over the next two months. However, Kidwell said they will review all requests; if a property owner disagrees with the Assessor’s Office findings, they can file an appeal with the Assessment Appeals Board.
However, if the assessed value is reduced, it must be reviewed annually thereafter and can be raised or lowered by any percentage in value the first of January (Proposition 8 assessments are not restricted to the 2 percent maximum of Proposition 13). Though, according to Kidwell, “In no case may a value higher than a property’s Proposition 13 factored base year value be enrolled.”
He added that Proposition 13 continues to protect all property taxpayers throughout Madera County and the State of California by putting a ceiling on increases in assessed value for property tax purposes. In most cases, the assessed Proposition 13 factored base year value is still below the current market value.
Although statewide sales in January 2009 increased 100 percent when compared with the same period a year ago, the median price of an existing home fell 40.5 percent according to the California Association of REALTORS® (C.A.R.). The median price of a home for January 2009 was $254,350 compared to the January 2008 revised median of $427,200. Thus, although we are seeing an increase in real estate purchases, prices are down. Therefore, while buyers are taking advantage of the favorable home prices and historically low mortgage rates, now might be a great time for existing property owners to take advantage of Proposition 8’s ability to seek tax relief.
Proposition 8 allows for the reassessment of qualified properties; thus, a reduction of property taxes. However, Proposition 8 reductions in value are temporary reductions due to the fact that the current market value of a property has fallen below its current (Proposition 13) assessed value.
“The market downturn has impacted those who bought when property values were high,” said Tom Kidwell, Madera County Assessor. Therefore, the Assessor’s Office is currently reviewing approximately 37,000 transactions dating back to 2004. Kidwell estimates that about 15,000 properties have declined in value—about 25 percent of the total number of properties in the county—below their Proposition 13 values and will automatically be reassessed by his office this year. Last year, they reduced about 1,500 property values.
Kidwell said, “Over the next two months, staff will be working on this. They will take a look to determine if the value is accurate and to determine what the right value should be.” When they are done with this automatic review, the Assessor’s Office will send out notices to the property owners they’ve identified as having property that has declined in value. They will then begin processing the written requests for review.
Keep in mind that because of the protection already offered by Proposition 13, the majority of properties in Madera County will not qualify for this reduction in value for property tax purposes. However, if you think your property might qualify, you’ll need to complete a form. You can find this form by going to http://www.madera-county.com/assessor and selecting “Decline in Value Prop 8” in the left side menu. The form may then be accessed at the bottom of the page. You can also call 559-675-7710 and ask to have the form mailed or faxed to you. You can make this request up to December 1, 2009, and it is a free service to you.
The form requests comparable sales information. It is important to note that the information should be from sales prior to January to no later than March because the review will be reflective of market conditions as of the lien date, the first of January, of the tax year in question. If you ask a REALTOR® to assist you in identifying property, make sure to share this detail with him or her. Generally when REALTORS® look up comparables, we look at a different window of time based on the date of the request and recent sales.
If you submit a request to the Assessor’s Office, they cannot guarantee to process it right away—especially over the next two months. However, Kidwell said they will review all requests; if a property owner disagrees with the Assessor’s Office findings, they can file an appeal with the Assessment Appeals Board.
However, if the assessed value is reduced, it must be reviewed annually thereafter and can be raised or lowered by any percentage in value the first of January (Proposition 8 assessments are not restricted to the 2 percent maximum of Proposition 13). Though, according to Kidwell, “In no case may a value higher than a property’s Proposition 13 factored base year value be enrolled.”
He added that Proposition 13 continues to protect all property taxpayers throughout Madera County and the State of California by putting a ceiling on increases in assessed value for property tax purposes. In most cases, the assessed Proposition 13 factored base year value is still below the current market value.
Although statewide sales in January 2009 increased 100 percent when compared with the same period a year ago, the median price of an existing home fell 40.5 percent according to the California Association of REALTORS® (C.A.R.). The median price of a home for January 2009 was $254,350 compared to the January 2008 revised median of $427,200. Thus, although we are seeing an increase in real estate purchases, prices are down. Therefore, while buyers are taking advantage of the favorable home prices and historically low mortgage rates, now might be a great time for existing property owners to take advantage of Proposition 8’s ability to seek tax relief.
Thursday, February 19, 2009
Protect Your Home from this “Silent Killer”
It’s important to safeguard your home from carbon monoxide (CO) gas because it is impossible to see, taste, or smell the toxic fumes of CO. Therefore, it is often called the silent killer since it can kill you before you are aware it is in your home. CO accidentally kills about 170 Americans each year. About 70 of those deaths were associated with home heating equipment. In addition, several thousand people go to hospital emergency rooms each year to be treated for CO poisoning.
A few months ago, an Oregon family purchased—as part of a school fundraiser—a Thanksgiving weekend getaway in an $8.9 million home in Colorado. Carbon monoxide leaked into the home from a snowmelt system in the crawl space causing the deaths of the parents and their children (ages 10 and 8).
In another instance, the mother of someone I’ve known for years had health and memory issues. This prompted the family to place a CO detector in her Oakhurst home to determine if CO was a possible factor. Within 24 hours, the meter registered 280. The manufacturer’s instructions state that 100 is considered hazardous. Thus, she left the dwelling at once. It is fortunate that this family thought to even test for CO. They are currently working with a local HVAC (heating, ventilating, and air conditioning) company trying to determine the cause of the readings the detector obtained.
Most confuse the symptoms of CO exposure with the flu or food poisoning as the symptoms are similar. Exposure to CO can impede coordination, worsen cardiovascular conditions, and produce fatigue, headache, weakness, confusion, disorientation, nausea, and dizziness. High levels of CO exposure can result in death.
Thirteen states have laws mandating the use of CO detectors; California is not one of them. Our state requires smoke detectors but not ones for CO. Placement of the detectors is crucial. Homeowners should not install CO detectors directly above or beside fuel-burning appliances, as appliances may emit a small amount of CO upon start-up. A detector should not be placed within 15 feet of heating or cooking appliances or in or near very humid areas such as bathrooms. CO rises with warmer air temperatures and so mounting the device on or near the ceiling is often recommended. Additional detectors on every level and in every bedroom of a home provide extra protection.
Ken Card, with Advanced Home Inspections, said that improper or weakened furnace seals are a common occurrence, especially in older homes. Review of your furnace is recommended as a cautionary measure to protect the inhabitants of the home from the possible mixing of combustion gases, such as CO, with the circulating air in your home. If your home inspector or HVAC professional advises repair, immediate attention to this concern is recommended. “When completed, you can call the gas company for a final inspection,” said Card.
Card added, “One way this fatal mixture can occur is through small gaps at the base of the furnace. This is where the air from your home is drawn into the furnace to be reheated and then blown back into the rooms of your home. The blower unit performs this function by creating a vacuum. If the base of the furnace is not sealed to the platform, this vacuum can pull exhaust gases from the furnace into the air stream. These exhaust fumes can then be circulated to every heat register in the house, to the obvious detriment of you and your family.”
A CO hazard, especially in our mountain area, also includes chimneys, which can be blocked by birds' or squirrels' nests. This can cause deadly CO gas to enter a home. This danger can be lessened by having chimneys professionally cleaned each year.
Homeowners should be aware of the risks of CO exposure. CO is produced as a result of incomplete burning of carbon-containing fuels including coal, wood, charcoal, natural gas, propane, and fuel oil. According to the U.S. Environmental Protection Agency, CO can be emitted by combustion sources such as unvented kerosene and gas space heaters; leaking chimneys and furnaces; back-drafting from furnaces, gas water heaters, wood stoves, and fireplaces; gas stoves; generators and other gasoline powered equipment; automobile exhaust from attached garages; and tobacco smoke.
Visit the Consumer Product Safety Commission (CPSC) website for information on CO at http://www.cpsc.gov/CPSCPUB/PUBS/466.html. One of the items on the site includes what you should do when the CO alarm sounds. Most importantly, it stresses that you should never ignore an alarming CO detector. It is warning you of a potentially deadly hazard. If the alarm signal sounds, do not try to find the source of the CO. Instead, immediately move outside to fresh air and call 911. After calling 911, do a head count to check that all persons are accounted for. Do not reenter the home until emergency services responders have given you permission. You could lose consciousness and die if you go in the home. If the source of the CO is determined to be a malfunctioning appliance, do not operate that appliance until it has been properly serviced by trained personnel. Also, make sure that motor vehicles are not, and have not been, operating in an attached garage or adjacent to the residence.
CPSC also urges consumers to have a professional inspection of all fuel-burning appliances—including furnaces, stoves, fireplaces, clothes dryers, water heaters, and space heaters—to detect deadly CO leaks. CPSC recommends that every home should have at least one CO detector that meets the requirements of the most recent Underwriters Laboratories (UL) 2034 standard or International Approval Services 6-96 standard.
A few months ago, an Oregon family purchased—as part of a school fundraiser—a Thanksgiving weekend getaway in an $8.9 million home in Colorado. Carbon monoxide leaked into the home from a snowmelt system in the crawl space causing the deaths of the parents and their children (ages 10 and 8).
In another instance, the mother of someone I’ve known for years had health and memory issues. This prompted the family to place a CO detector in her Oakhurst home to determine if CO was a possible factor. Within 24 hours, the meter registered 280. The manufacturer’s instructions state that 100 is considered hazardous. Thus, she left the dwelling at once. It is fortunate that this family thought to even test for CO. They are currently working with a local HVAC (heating, ventilating, and air conditioning) company trying to determine the cause of the readings the detector obtained.
Most confuse the symptoms of CO exposure with the flu or food poisoning as the symptoms are similar. Exposure to CO can impede coordination, worsen cardiovascular conditions, and produce fatigue, headache, weakness, confusion, disorientation, nausea, and dizziness. High levels of CO exposure can result in death.
Thirteen states have laws mandating the use of CO detectors; California is not one of them. Our state requires smoke detectors but not ones for CO. Placement of the detectors is crucial. Homeowners should not install CO detectors directly above or beside fuel-burning appliances, as appliances may emit a small amount of CO upon start-up. A detector should not be placed within 15 feet of heating or cooking appliances or in or near very humid areas such as bathrooms. CO rises with warmer air temperatures and so mounting the device on or near the ceiling is often recommended. Additional detectors on every level and in every bedroom of a home provide extra protection.
Ken Card, with Advanced Home Inspections, said that improper or weakened furnace seals are a common occurrence, especially in older homes. Review of your furnace is recommended as a cautionary measure to protect the inhabitants of the home from the possible mixing of combustion gases, such as CO, with the circulating air in your home. If your home inspector or HVAC professional advises repair, immediate attention to this concern is recommended. “When completed, you can call the gas company for a final inspection,” said Card.
Card added, “One way this fatal mixture can occur is through small gaps at the base of the furnace. This is where the air from your home is drawn into the furnace to be reheated and then blown back into the rooms of your home. The blower unit performs this function by creating a vacuum. If the base of the furnace is not sealed to the platform, this vacuum can pull exhaust gases from the furnace into the air stream. These exhaust fumes can then be circulated to every heat register in the house, to the obvious detriment of you and your family.”
A CO hazard, especially in our mountain area, also includes chimneys, which can be blocked by birds' or squirrels' nests. This can cause deadly CO gas to enter a home. This danger can be lessened by having chimneys professionally cleaned each year.
Homeowners should be aware of the risks of CO exposure. CO is produced as a result of incomplete burning of carbon-containing fuels including coal, wood, charcoal, natural gas, propane, and fuel oil. According to the U.S. Environmental Protection Agency, CO can be emitted by combustion sources such as unvented kerosene and gas space heaters; leaking chimneys and furnaces; back-drafting from furnaces, gas water heaters, wood stoves, and fireplaces; gas stoves; generators and other gasoline powered equipment; automobile exhaust from attached garages; and tobacco smoke.
Visit the Consumer Product Safety Commission (CPSC) website for information on CO at http://www.cpsc.gov/CPSCPUB/PUBS/466.html. One of the items on the site includes what you should do when the CO alarm sounds. Most importantly, it stresses that you should never ignore an alarming CO detector. It is warning you of a potentially deadly hazard. If the alarm signal sounds, do not try to find the source of the CO. Instead, immediately move outside to fresh air and call 911. After calling 911, do a head count to check that all persons are accounted for. Do not reenter the home until emergency services responders have given you permission. You could lose consciousness and die if you go in the home. If the source of the CO is determined to be a malfunctioning appliance, do not operate that appliance until it has been properly serviced by trained personnel. Also, make sure that motor vehicles are not, and have not been, operating in an attached garage or adjacent to the residence.
CPSC also urges consumers to have a professional inspection of all fuel-burning appliances—including furnaces, stoves, fireplaces, clothes dryers, water heaters, and space heaters—to detect deadly CO leaks. CPSC recommends that every home should have at least one CO detector that meets the requirements of the most recent Underwriters Laboratories (UL) 2034 standard or International Approval Services 6-96 standard.
Sunday, February 8, 2009
Going Green: Doing Our Part
What is the bigger producer of green house emissions? It may surprise you that it is not cars but homes. With the nexus of real estate transactions and the green movement being homes, it makes sense for REALTORS® to get involved in helping California consumers make more sustainable choices in the office and home setting.
According to the Wall Street Journal, “American businesses could save $1.72 billion each year merely by getting employees to shut off their computers at night or allowing the machines to enter an energy-saving mode.” However, there is so much more than we can all do besides turning off our computers at night.
When the Yosemite Gateway Association of REALTORS® built their new building in 2004 and 2005, it was important to incorporate items considered green into and around the structure. We installed motion sensors throughout the building; thus, our lights turn off if motion is not detected within a certain pre-set period of time. Our heating and cooling system is zoned for efficiency when areas are not in use. We have low-watt fluorescents and CFL light bulbs. We incorporated low-flow water fixtures in our bathroom and into our exterior water features. Our landscaping irrigation is on timers and programmed according to the water company schedule for conservation and our plants are low-water tolerant. In addition, the parking lot lights are on timers and settings adjusted monthly.
The California Association of REALTORS® (C.A.R.) is also doing its part to become a more environmentally friendly organization and is leading the way toward a greener world. One of the things that C.A.R. has done to assist with this effort was to create a green website with the goal to provide information to homeowners, REALTORS®, and the general public on how to green their living spaces. The website is http://green.car.org.
The C.A.R. green website has many helpful features. One feature goes over the most common misconceptions about green homes, such as, green homes are more expensive; anything that claims to be green is green; a new home is always a green home; green homes look unconventional, and; green homes are uncomfortable.
There is also a section on water conservation. Did you know that using less hot water can same you money? Water heating accounts for about 13 percent of home energy costs. Also, reducing water usage reduces energy usage.
Resource conservation, which refers to the usage of renewable and eco-friendly materials in building and construction as well as reducing waste and recycling products, can also save the environment by reducing waste during construction. An average 2,000 square foot home produces about 7,000 pounds of waste.
Improved air quality is also important. The air in homes can be 10 times more polluted than outdoor air from contaminants such as mold and bacteria, chemicals, allergens, etc. Much of the indoor pollution that exists in homes stems from materials in the house. Pressed-wood is often made with adhesives that release chemicals in homes for years after installation. Also, many paints, floor finishes, and sealants emit unhealthy volatile organic compounds.
At home, the electricity load is increasing due to the use of miscellaneous electronic devices such as television (TV) converter boxes (cable, satellite, and other) and other devices such as VCR’s, DVD players/recorders, stereos, computers, printers, fax and copy machines, toasters, and coffee makers. These devices can draw as much power when they are turned off as when they are turned on. In fact, one converter box consumes about half the electricity of a new Energy Star refrigerator. In my household, we have six converter boxes. However, using a power strip helps. Power strips make it easy to cut off the power to your devices by easily flipping the switch rather than unplugging each individual device. Just be sure to get a power strip that is designed and rated for the devices you plan to plug into it. Power strips are also good for plug-in loads for items such as mobile phones, blue-tooth devices, portable music devices, and more.
Other ways to reduce green house emissions in your home or office is to buy all-in-one models (for example, a printer, copier, fax, and scanner) and Energy Star equipment. Energy Star estimates that swapping to a new, efficient refrigerator would save enough money to light the average household for nearly four months with an overall payback of about three years. Using natural resources for energy such as solar and wind is also helpful.
It’s important to note that newer doesn’t always mean more energy efficient. For example, plasma-screen and LCD TV’s use significantly more energy than older tube sets. However, today’s more efficient refrigerators use half the power of refrigerators made before 1993. Replacing old computers with new computers is also helpful in reducing energy.
I challenge you to set a goal to do what you can to make your office and home more green prior to Earth Day, which is coming up in about two months on April 22. Share with others what you are personally doing to reduce green house emissions and encourage others to join you in doing their part. Together, we can make a difference.
According to the Wall Street Journal, “American businesses could save $1.72 billion each year merely by getting employees to shut off their computers at night or allowing the machines to enter an energy-saving mode.” However, there is so much more than we can all do besides turning off our computers at night.
When the Yosemite Gateway Association of REALTORS® built their new building in 2004 and 2005, it was important to incorporate items considered green into and around the structure. We installed motion sensors throughout the building; thus, our lights turn off if motion is not detected within a certain pre-set period of time. Our heating and cooling system is zoned for efficiency when areas are not in use. We have low-watt fluorescents and CFL light bulbs. We incorporated low-flow water fixtures in our bathroom and into our exterior water features. Our landscaping irrigation is on timers and programmed according to the water company schedule for conservation and our plants are low-water tolerant. In addition, the parking lot lights are on timers and settings adjusted monthly.
The California Association of REALTORS® (C.A.R.) is also doing its part to become a more environmentally friendly organization and is leading the way toward a greener world. One of the things that C.A.R. has done to assist with this effort was to create a green website with the goal to provide information to homeowners, REALTORS®, and the general public on how to green their living spaces. The website is http://green.car.org.
The C.A.R. green website has many helpful features. One feature goes over the most common misconceptions about green homes, such as, green homes are more expensive; anything that claims to be green is green; a new home is always a green home; green homes look unconventional, and; green homes are uncomfortable.
There is also a section on water conservation. Did you know that using less hot water can same you money? Water heating accounts for about 13 percent of home energy costs. Also, reducing water usage reduces energy usage.
Resource conservation, which refers to the usage of renewable and eco-friendly materials in building and construction as well as reducing waste and recycling products, can also save the environment by reducing waste during construction. An average 2,000 square foot home produces about 7,000 pounds of waste.
Improved air quality is also important. The air in homes can be 10 times more polluted than outdoor air from contaminants such as mold and bacteria, chemicals, allergens, etc. Much of the indoor pollution that exists in homes stems from materials in the house. Pressed-wood is often made with adhesives that release chemicals in homes for years after installation. Also, many paints, floor finishes, and sealants emit unhealthy volatile organic compounds.
At home, the electricity load is increasing due to the use of miscellaneous electronic devices such as television (TV) converter boxes (cable, satellite, and other) and other devices such as VCR’s, DVD players/recorders, stereos, computers, printers, fax and copy machines, toasters, and coffee makers. These devices can draw as much power when they are turned off as when they are turned on. In fact, one converter box consumes about half the electricity of a new Energy Star refrigerator. In my household, we have six converter boxes. However, using a power strip helps. Power strips make it easy to cut off the power to your devices by easily flipping the switch rather than unplugging each individual device. Just be sure to get a power strip that is designed and rated for the devices you plan to plug into it. Power strips are also good for plug-in loads for items such as mobile phones, blue-tooth devices, portable music devices, and more.
Other ways to reduce green house emissions in your home or office is to buy all-in-one models (for example, a printer, copier, fax, and scanner) and Energy Star equipment. Energy Star estimates that swapping to a new, efficient refrigerator would save enough money to light the average household for nearly four months with an overall payback of about three years. Using natural resources for energy such as solar and wind is also helpful.
It’s important to note that newer doesn’t always mean more energy efficient. For example, plasma-screen and LCD TV’s use significantly more energy than older tube sets. However, today’s more efficient refrigerators use half the power of refrigerators made before 1993. Replacing old computers with new computers is also helpful in reducing energy.
I challenge you to set a goal to do what you can to make your office and home more green prior to Earth Day, which is coming up in about two months on April 22. Share with others what you are personally doing to reduce green house emissions and encourage others to join you in doing their part. Together, we can make a difference.
Tuesday, February 3, 2009
Mortgage Meltdown to Financial Freeze to Slight Thaw
About a month ago, I shared local real estate statistics for our area. Although statistics vary by region in California, it is often helpful to know what is happening in the real estate market in the state and in the nation. The global and domestic financial markets also play a role in where we are today in our real estate market. In fact, the recent slowdown in housing prices has gone hand in hand with a slowdown in a number of industrial countries’ economic growth.
The deterioration in housing was initially tied to real estate finance, and we saw the credit crunch and recession choking off business and consumer spending. Prior to the credit crunch hitting the real estate market in September 2007, residential properties for sale for more than $1 million were relatively unaffected. In reviewing the sales in November of 2008 to 20007, there is a marked reverse trend. In 2008, the higher the price, the longer the home was on the market versus 2007 where the higher priced homes were on the market for a shorter period of time. Now, approximately 80% of sales are under $500,000. Sales of properties that are $500,000 or more have continued to decline. In addition, although United States sales have remained flat since September 2008, California sales are up 102%.
When we look at a more thorough breakdown of the credit crunch, first-time homebuyers with zero down payment has gone down dramatically since 2006 when it reached a high of more than 40%. In 2008, that number dropped to 5.7% for first-time buyers. The 2008 average for all home buyers was 3.4% with a 2% average for repeat buyers.
The number of residential sales in California went up in 2008. California hit its low in 2007 (October 2007) and dropped 44% from 2005. Previous lows were in 1982 (down 61% from 1978) and 1992 (down 25% from 1988). Estimated sales in 2008 increased about 23% with sales in 2009 expected to increase by 8%.
Prices of residential property in California reached its peak in April 2007 at $594,110. The 2007 median was approximately $558,000. The November 2008 median price was $285,680 (down 52%). The estimated 2008 median price is $372,000 with a forecast for the 2009 median price of $300,000 (down about 19%). Oscar Wei, C.A.R. Senior Research Analyst, said, “With the economy deteriorating and the financial system struggling to stay above water, distressed properties with deeply-discounted prices will continue to affect the market. Home prices may not show clear signs of stability until mid 2009.”
The decline in home prices has brought the cost of housing more in line with household income, improving affordability across the state. This should be especially helpful for first-time buyers who can qualify for a home loan.
According to the Mortgage Bankers Association, the long-run average of foreclosures is 0.9%. However, as of the third quarter of 2008, that had increased to 3.9%. The delinquencies long-run average is 3.9% with the 2008 third quarter delinquencies at 5.8%.
C.A.R. economists don’t believe inflation will be a problem in 2009. Consumer confidence though is at its worst level in decades. The December 2008 index was 38. In 2000, it was over 140. In 1992, another low point of residential sales, the index reached just under 50. A lot of people have a wait and see attitude regarding our recent presidential election; so, we may see the consumer confidence creep up.
Our current recession is anticipated to be the worst in our working lives. However, the first two quarters of 2009 will be extremely weak with an expected turn around in the second half of 2009 due to monetary stimulus programs. In 2010, we expect a positive growth rate in the U.S. Economy.
Job numbers track economic activity with a lag. When it looks like we are getting better, unemployment is getting worse; California is approaching 10%. However, California is doing better than the rest of the nation regarding jobs.
Some of the short-rate treasuries paid negative interest and we were upside down. This was the case for a period of time. We have moved away from that distressing period of time and corporate lending has begun again. Other indicators of stress have also improved. More liquidity is being pushed into the system. In addition, the spread between mortgage rates and underlying securities has never been higher. We still have a lot of risk built into mortgage rates that consumers are facing at this time.
Former President Bush and other leaders had a meeting to discuss the global market. An agreement is likely to come to pass and will be coordinated with our domestic market. Matt Roberts, C.A.R. Federal Government Affairs Manager, said it would be an effort as it is an international effort to reform the financial market and getting constituents to understand this is a hurdle.
Leslie Appleton-Young, C.A.R. Chief Economist, said the banking system is unregulated and this has to change. Thus, from crisis to stabilization, we now need restructuring. “With a system like we have, a certain amount of transparency is what we need so we can look at risks.” She added that people don’t trust the loan being described to them as accurate. In fact, 22% of those obtaining a loan didn’t understand the terms of their loan according to a C.A.R. survey.
*Statistical information from the California Association of REALTORS® (C.A.R.). Other information, unless otherwise specified, is from two C.A.R. economists (Leslie Appleton-Young and Robert A. Kleinhenz) speaking at the C.A.R. January Strategic Planning and Finance Forum or the International Real Estate Forum.
The deterioration in housing was initially tied to real estate finance, and we saw the credit crunch and recession choking off business and consumer spending. Prior to the credit crunch hitting the real estate market in September 2007, residential properties for sale for more than $1 million were relatively unaffected. In reviewing the sales in November of 2008 to 20007, there is a marked reverse trend. In 2008, the higher the price, the longer the home was on the market versus 2007 where the higher priced homes were on the market for a shorter period of time. Now, approximately 80% of sales are under $500,000. Sales of properties that are $500,000 or more have continued to decline. In addition, although United States sales have remained flat since September 2008, California sales are up 102%.
When we look at a more thorough breakdown of the credit crunch, first-time homebuyers with zero down payment has gone down dramatically since 2006 when it reached a high of more than 40%. In 2008, that number dropped to 5.7% for first-time buyers. The 2008 average for all home buyers was 3.4% with a 2% average for repeat buyers.
The number of residential sales in California went up in 2008. California hit its low in 2007 (October 2007) and dropped 44% from 2005. Previous lows were in 1982 (down 61% from 1978) and 1992 (down 25% from 1988). Estimated sales in 2008 increased about 23% with sales in 2009 expected to increase by 8%.
Prices of residential property in California reached its peak in April 2007 at $594,110. The 2007 median was approximately $558,000. The November 2008 median price was $285,680 (down 52%). The estimated 2008 median price is $372,000 with a forecast for the 2009 median price of $300,000 (down about 19%). Oscar Wei, C.A.R. Senior Research Analyst, said, “With the economy deteriorating and the financial system struggling to stay above water, distressed properties with deeply-discounted prices will continue to affect the market. Home prices may not show clear signs of stability until mid 2009.”
The decline in home prices has brought the cost of housing more in line with household income, improving affordability across the state. This should be especially helpful for first-time buyers who can qualify for a home loan.
According to the Mortgage Bankers Association, the long-run average of foreclosures is 0.9%. However, as of the third quarter of 2008, that had increased to 3.9%. The delinquencies long-run average is 3.9% with the 2008 third quarter delinquencies at 5.8%.
C.A.R. economists don’t believe inflation will be a problem in 2009. Consumer confidence though is at its worst level in decades. The December 2008 index was 38. In 2000, it was over 140. In 1992, another low point of residential sales, the index reached just under 50. A lot of people have a wait and see attitude regarding our recent presidential election; so, we may see the consumer confidence creep up.
Our current recession is anticipated to be the worst in our working lives. However, the first two quarters of 2009 will be extremely weak with an expected turn around in the second half of 2009 due to monetary stimulus programs. In 2010, we expect a positive growth rate in the U.S. Economy.
Job numbers track economic activity with a lag. When it looks like we are getting better, unemployment is getting worse; California is approaching 10%. However, California is doing better than the rest of the nation regarding jobs.
Some of the short-rate treasuries paid negative interest and we were upside down. This was the case for a period of time. We have moved away from that distressing period of time and corporate lending has begun again. Other indicators of stress have also improved. More liquidity is being pushed into the system. In addition, the spread between mortgage rates and underlying securities has never been higher. We still have a lot of risk built into mortgage rates that consumers are facing at this time.
Former President Bush and other leaders had a meeting to discuss the global market. An agreement is likely to come to pass and will be coordinated with our domestic market. Matt Roberts, C.A.R. Federal Government Affairs Manager, said it would be an effort as it is an international effort to reform the financial market and getting constituents to understand this is a hurdle.
Leslie Appleton-Young, C.A.R. Chief Economist, said the banking system is unregulated and this has to change. Thus, from crisis to stabilization, we now need restructuring. “With a system like we have, a certain amount of transparency is what we need so we can look at risks.” She added that people don’t trust the loan being described to them as accurate. In fact, 22% of those obtaining a loan didn’t understand the terms of their loan according to a C.A.R. survey.
*Statistical information from the California Association of REALTORS® (C.A.R.). Other information, unless otherwise specified, is from two C.A.R. economists (Leslie Appleton-Young and Robert A. Kleinhenz) speaking at the C.A.R. January Strategic Planning and Finance Forum or the International Real Estate Forum.
Friday, January 30, 2009
Animals Often Victims of Hard Times Too
With the increase in distressed sales, such as foreclosures, families are being forced to vacate their homes and rental properties resulting in an increasing number of abandoned pets. This is generally due to families moving to rental properties that do not allow pets or due to family finances that are too strained to continue to care for their pets. Recently, two local REALTORS® were showing a foreclosed home to their clients and they found dead cats inside. In another case, a dog died due to dehydration; food was left but not water. Another case involving abandoned horses resulted in penalties of $85,000.
Kirsten Gross, director of Madera County Animal Services, said, “The foreclosure component is substantial but doesn’t account for the entire increase.” This year they’ve seen an increase of between 500 and 700 animals. She added that they generally receive about 9,000 pets a year. Less than 3,000 of the animals are adopted or rescued. Sadly, about 6,000 are euthanized. According to Sharon Fitzgerald with the Eastern Madera County SPCA (EMC SPCA), California’s Central Valley region has the third highest euthanizing rate in the United States.
Individuals can relinquish their pets to Animal Services in Madera. However, it is important for people to know that when faced with the need to find a home for their family pet, that before going to Animal Services, there are other resources. Gross suggests to first check with other animal agencies, friends, and relatives and make an attempt to find another home for their pet. She also recommended Craig’s List.
If you are being foreclosed on or must move to a residence that doesn’t allow for pets, please call the EMC SPCA or other animal agency with enough lead time so they can help. When they are aware of a pet that needs a home, they will try to adopt out or find an approved location for fostering.
“The problem is way beyond what anyone could imagine. Almost every home in our area has at least one pet,” said Fitzgerald. “When people lose their home, finding a rental that allows for pets often proves to be difficult.”
Vickie Deane also expressed the desperate need for animal-friendly rentals. “Please consider opening your home to individuals with pets if you have a rental property.” Besides the need for rental homes, due to strained finances, food for pets is also needed. Deane’s Thrift Shop supports “A Cause 4 Paws.” For people who need food for their animals, pet food is available from the Manna House via “A Cause 4 Paws” and from others that donate. For those that can donate pet food to the Manna House, small bags and cans are preferred. You can also bring in food to the Thrift Shop, which is located behind Oakhurst Cleaners off Highway 41, and she will ensure that the food makes it to the Manna House.
Abandonment is a misdemeanor; however, egregious cases could be treated as a felony. AB 2949, which went into effect January 1, amended California's Civil Code to require property owners, including banks or other corporate entities, to immediately notify animal control officials when animals are abandoned at foreclosed properties. California law states that any person or private entity shall immediately notify animal control officials for the purpose of retrieving live animals that have been abandoned, lost, or are in need of care due to cases of extraordinary emergencies.
California law also states that animal agencies must take charge of animals if able to do so. Agencies in our area include Madera County Animal Services (675-7891, www.madera-county.com/animalcontrol), EMC SPCA (683-1266, www.emcspca.org), Sierra Cares Animal Advocates (683-1214), and others. More resources are on the Madera County website. You can see some of the animals that Madera County Animal Services and others have for adoption at www.adoptapet.com. The EMC SPCA pets available for adoption can be found at www.emcspca.org/adopt.html.
The volume of animals is too great for Animal Services to take a report or pursue legal action on every case according to Gross. She said Animal Control is first and foremost concerned about the health and safety of the animals. If they receive a report, provided the animal is not in need of emergency care, they must post a notice for the owner to correct. They have to wait 24 hours before they can take an animal. However, at a recent conference I attended, I learned that another law exempts the posting of a notice of right to reclaim property for abandoned animals in circumstances such as foreclosure or termination of a rental agreement.
If you see an abandoned animal, please make the appropriate phone call. Be aware of excessive barking. This may be a sign of stress and abandonment. In addition, if you are able, please help those agencies that are helping to prevent animal abandonment.
The EMC SPCA is here to help in three core areas according to Fitzgerald. She said they want to prevent the birth of unwanted animals, provide shelter for those that fall through the cracks, and provide education. They could use your help as a volunteer or for donations for their shelter fund, spay and neuter program, or feral cat program. The EMC SPCA’s feral cat program, called TNR (Trap Neuter Return), will provide traps, pay the neuter fee, and then return feral cats.
Another agency, HOPE (Halt Overpopulation with Prevention and Education) Animal Foundation, located in Fresno is strictly a low-cost spay and neuter clinic. They can be reached at 271-0209 or you can check out their services and fees via their website at www.hopeaf.com.
Please share with others that animal abandonment is a crime and that there are several local agencies willing to help find homes for pets. For various reasons through the years, I’ve needed assistance finding a home for a dog and cat. Local agencies helped me. Please give these agencies an opportunity to assist you if you find yourself in need of finding a home for a pet.
Kirsten Gross, director of Madera County Animal Services, said, “The foreclosure component is substantial but doesn’t account for the entire increase.” This year they’ve seen an increase of between 500 and 700 animals. She added that they generally receive about 9,000 pets a year. Less than 3,000 of the animals are adopted or rescued. Sadly, about 6,000 are euthanized. According to Sharon Fitzgerald with the Eastern Madera County SPCA (EMC SPCA), California’s Central Valley region has the third highest euthanizing rate in the United States.
Individuals can relinquish their pets to Animal Services in Madera. However, it is important for people to know that when faced with the need to find a home for their family pet, that before going to Animal Services, there are other resources. Gross suggests to first check with other animal agencies, friends, and relatives and make an attempt to find another home for their pet. She also recommended Craig’s List.
If you are being foreclosed on or must move to a residence that doesn’t allow for pets, please call the EMC SPCA or other animal agency with enough lead time so they can help. When they are aware of a pet that needs a home, they will try to adopt out or find an approved location for fostering.
“The problem is way beyond what anyone could imagine. Almost every home in our area has at least one pet,” said Fitzgerald. “When people lose their home, finding a rental that allows for pets often proves to be difficult.”
Vickie Deane also expressed the desperate need for animal-friendly rentals. “Please consider opening your home to individuals with pets if you have a rental property.” Besides the need for rental homes, due to strained finances, food for pets is also needed. Deane’s Thrift Shop supports “A Cause 4 Paws.” For people who need food for their animals, pet food is available from the Manna House via “A Cause 4 Paws” and from others that donate. For those that can donate pet food to the Manna House, small bags and cans are preferred. You can also bring in food to the Thrift Shop, which is located behind Oakhurst Cleaners off Highway 41, and she will ensure that the food makes it to the Manna House.
Abandonment is a misdemeanor; however, egregious cases could be treated as a felony. AB 2949, which went into effect January 1, amended California's Civil Code to require property owners, including banks or other corporate entities, to immediately notify animal control officials when animals are abandoned at foreclosed properties. California law states that any person or private entity shall immediately notify animal control officials for the purpose of retrieving live animals that have been abandoned, lost, or are in need of care due to cases of extraordinary emergencies.
California law also states that animal agencies must take charge of animals if able to do so. Agencies in our area include Madera County Animal Services (675-7891, www.madera-county.com/animalcontrol), EMC SPCA (683-1266, www.emcspca.org), Sierra Cares Animal Advocates (683-1214), and others. More resources are on the Madera County website. You can see some of the animals that Madera County Animal Services and others have for adoption at www.adoptapet.com. The EMC SPCA pets available for adoption can be found at www.emcspca.org/adopt.html.
The volume of animals is too great for Animal Services to take a report or pursue legal action on every case according to Gross. She said Animal Control is first and foremost concerned about the health and safety of the animals. If they receive a report, provided the animal is not in need of emergency care, they must post a notice for the owner to correct. They have to wait 24 hours before they can take an animal. However, at a recent conference I attended, I learned that another law exempts the posting of a notice of right to reclaim property for abandoned animals in circumstances such as foreclosure or termination of a rental agreement.
If you see an abandoned animal, please make the appropriate phone call. Be aware of excessive barking. This may be a sign of stress and abandonment. In addition, if you are able, please help those agencies that are helping to prevent animal abandonment.
The EMC SPCA is here to help in three core areas according to Fitzgerald. She said they want to prevent the birth of unwanted animals, provide shelter for those that fall through the cracks, and provide education. They could use your help as a volunteer or for donations for their shelter fund, spay and neuter program, or feral cat program. The EMC SPCA’s feral cat program, called TNR (Trap Neuter Return), will provide traps, pay the neuter fee, and then return feral cats.
Another agency, HOPE (Halt Overpopulation with Prevention and Education) Animal Foundation, located in Fresno is strictly a low-cost spay and neuter clinic. They can be reached at 271-0209 or you can check out their services and fees via their website at www.hopeaf.com.
Please share with others that animal abandonment is a crime and that there are several local agencies willing to help find homes for pets. For various reasons through the years, I’ve needed assistance finding a home for a dog and cat. Local agencies helped me. Please give these agencies an opportunity to assist you if you find yourself in need of finding a home for a pet.
Monday, January 26, 2009
Current Real Estate Market has a Larger Proportion of Distressed Sales
In our current market with its increased number of distressed properties—such as short sale, foreclosure, and REO (real estate owned or lender/bank owned) properties— the value of surrounding properties are impacted and non-distressed properties for sale may find it difficult to get an offer at fair market value (FMV).
A distressed property sale generally includes any property that sells below FMV. Other examples of distressed properties include properties in which sellers are in a position where they must or want to sell a property, generally to get out from under mortgage payments. This could include sales as a result of a divorce, job loss, decreased income, poor health, probate, and a myriad of other types of sales.
Let me explain some of the real estate terms commonly used in our current market in relationship to distressed sales, such as foreclosure, REO, and short sale. Foreclosure is a legal process with set timelines and outcomes and begins when a property owner, usually after a couple of missed payments, receives a notice of default (NOD). Some may call property that has received an NOD a pre-foreclosure, though this is strictly a marketing term. At this point, the property owner has the option to bring his or her account current and avoid foreclosure proceedings. If the property owner is unable to bring his or her account current, the property will be put up for sale at a public auction known as a trustee sale, which is held at the court house in the county where the property is located. Only experienced investors should consider a trustee sale. When purchasing property at a trustee sale, there could be risks such as title problems, IRS liens, people still occupying the property, structural problems, superior loan pay offs, and more. If no one offers the minimum bid—generally because the outstanding balance on a home is too high or an investor, after doing his or her research, realizes the property is not a good investment—the property will end up as an REO.
With REO properties, ownership has reverted back to the lender. An REO is listed by a REALTOR®, who is hired by the lender, to sell the property that has been foreclosed. The lender will remove all liens on title and clear issues that may slow down the sale of the property. However, there are reported instances where unknown liens have appeared after the close of escrow and the new buyer is held responsible. One recent case in the Inglewood area involved a $35,000 utility district assessment.
Most REO properties are listed fairly close to the price the bank will accept. Lenders have already taken a big loss and offers significantly lower than the listed price on these properties will normally be disregarded. Lenders are usually very motivated to sell these properties though providing a great opportunity for qualified buyers. Lenders are not in the property management business and do not want to delay recovery of their investment any longer than necessary. Whereas REO properties are in the possession of the lender as a result of foreclosure or forfeiture, short sale properties are still in the possession of the owner. However, any contract must be approved by the lender. Short sales, in most circumstances, are the first step to avoid foreclosure.
The term short sale refers to a property that is generally in the foreclosure process but is sold prior to auction for an amount less than what is owed to the lender. Not all short sale listings though are properties in foreclosure. If property owners know they will not be able to continue to make their payments at some point in the near future, they can keep their account current while attempting to sell their property and make arrangements with the lender for a short sale prior to the owners missing a payment or entering foreclosure.
Lenders will consider a short sale for various reasons; although, a letter of hardship must be submitted with a multitude of additional paperwork required by the lender. Lenders evaluate all requests on a case-by-case basis and will also consider, among other things, the appraisal amount of the property and market conditions. Lenders may prefer a short sale in lieu of going through the foreclosure process because the cost of foreclosing on a property may be more than the bank’s loss by taking a short sale, and even if the property goes to auction, the bank may still be forced to take it back as an REO, which they would then have to maintain, list, and sell.
Short sales can take months, are very complicated, and the outcome is not guaranteed. Also, each lender handles short sales differently. Both sellers and buyers of a short sale need to be patient since lenders—especially if you are dealing with a property with a first and a second mortgage—will require more work than a typical real estate sale. If a short sale is approved, it is important to know that the sale will, in most cases, still show up as a short sale foreclosure on the sellers’ credit report.
“A short sale, once sold, will show satisfied after 2 years and the sellers can qualify for an FHA and conventional loan,” said Daniel Roberts with Evofi-One. “However, if a foreclosure shows, it generally takes from 4 to 7 years depending on how the lender reports and how they extend the credit report. The best way to handle it is to try mediation. If that does not work, the lender at least can show they tried before they foreclosed.”
Andrew Pence with Acceptance Capital said, “For a foreclosure, it is at least 3 years to obtain FHA financing and 4 years to obtain conventional financing. However, if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has re-established good credit since the foreclosure, the lender may grant an exception to the 3-year and 4-year requirement.”
Pence further explained that extenuating circumstances include serious illness or death of a wage earner, for example; on the other hand, the inability to sell the house because of a job transfer or relocation to another area is not an extenuating circumstance.
However, before sellers request a short sale from their lender, they should consult with their CPA and attorney because depending on the type of loan and the sellers’ financial situation, it may or may not be the best option.
Although, most recognize that distressed properties can be a great value for home buyers, purchasing a distressed property also helps property owners by relieving them of a heavy burden or by providing lenders the ability to recover all or a portion of their investment.
Locally, I know that not all agents with listings in our MLS (Multiple Listing Service) have properly identified their listings that fall into the foreclosure, short sale, or REO categories (under Features/Terms). This makes it difficult to determine the number of distressed properties we have among our residential listings. However, I would estimate that at minimum a quarter of our residential listings are distressed.
A distressed property sale generally includes any property that sells below FMV. Other examples of distressed properties include properties in which sellers are in a position where they must or want to sell a property, generally to get out from under mortgage payments. This could include sales as a result of a divorce, job loss, decreased income, poor health, probate, and a myriad of other types of sales.
Let me explain some of the real estate terms commonly used in our current market in relationship to distressed sales, such as foreclosure, REO, and short sale. Foreclosure is a legal process with set timelines and outcomes and begins when a property owner, usually after a couple of missed payments, receives a notice of default (NOD). Some may call property that has received an NOD a pre-foreclosure, though this is strictly a marketing term. At this point, the property owner has the option to bring his or her account current and avoid foreclosure proceedings. If the property owner is unable to bring his or her account current, the property will be put up for sale at a public auction known as a trustee sale, which is held at the court house in the county where the property is located. Only experienced investors should consider a trustee sale. When purchasing property at a trustee sale, there could be risks such as title problems, IRS liens, people still occupying the property, structural problems, superior loan pay offs, and more. If no one offers the minimum bid—generally because the outstanding balance on a home is too high or an investor, after doing his or her research, realizes the property is not a good investment—the property will end up as an REO.
With REO properties, ownership has reverted back to the lender. An REO is listed by a REALTOR®, who is hired by the lender, to sell the property that has been foreclosed. The lender will remove all liens on title and clear issues that may slow down the sale of the property. However, there are reported instances where unknown liens have appeared after the close of escrow and the new buyer is held responsible. One recent case in the Inglewood area involved a $35,000 utility district assessment.
Most REO properties are listed fairly close to the price the bank will accept. Lenders have already taken a big loss and offers significantly lower than the listed price on these properties will normally be disregarded. Lenders are usually very motivated to sell these properties though providing a great opportunity for qualified buyers. Lenders are not in the property management business and do not want to delay recovery of their investment any longer than necessary. Whereas REO properties are in the possession of the lender as a result of foreclosure or forfeiture, short sale properties are still in the possession of the owner. However, any contract must be approved by the lender. Short sales, in most circumstances, are the first step to avoid foreclosure.
The term short sale refers to a property that is generally in the foreclosure process but is sold prior to auction for an amount less than what is owed to the lender. Not all short sale listings though are properties in foreclosure. If property owners know they will not be able to continue to make their payments at some point in the near future, they can keep their account current while attempting to sell their property and make arrangements with the lender for a short sale prior to the owners missing a payment or entering foreclosure.
Lenders will consider a short sale for various reasons; although, a letter of hardship must be submitted with a multitude of additional paperwork required by the lender. Lenders evaluate all requests on a case-by-case basis and will also consider, among other things, the appraisal amount of the property and market conditions. Lenders may prefer a short sale in lieu of going through the foreclosure process because the cost of foreclosing on a property may be more than the bank’s loss by taking a short sale, and even if the property goes to auction, the bank may still be forced to take it back as an REO, which they would then have to maintain, list, and sell.
Short sales can take months, are very complicated, and the outcome is not guaranteed. Also, each lender handles short sales differently. Both sellers and buyers of a short sale need to be patient since lenders—especially if you are dealing with a property with a first and a second mortgage—will require more work than a typical real estate sale. If a short sale is approved, it is important to know that the sale will, in most cases, still show up as a short sale foreclosure on the sellers’ credit report.
“A short sale, once sold, will show satisfied after 2 years and the sellers can qualify for an FHA and conventional loan,” said Daniel Roberts with Evofi-One. “However, if a foreclosure shows, it generally takes from 4 to 7 years depending on how the lender reports and how they extend the credit report. The best way to handle it is to try mediation. If that does not work, the lender at least can show they tried before they foreclosed.”
Andrew Pence with Acceptance Capital said, “For a foreclosure, it is at least 3 years to obtain FHA financing and 4 years to obtain conventional financing. However, if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower and the borrower has re-established good credit since the foreclosure, the lender may grant an exception to the 3-year and 4-year requirement.”
Pence further explained that extenuating circumstances include serious illness or death of a wage earner, for example; on the other hand, the inability to sell the house because of a job transfer or relocation to another area is not an extenuating circumstance.
However, before sellers request a short sale from their lender, they should consult with their CPA and attorney because depending on the type of loan and the sellers’ financial situation, it may or may not be the best option.
Although, most recognize that distressed properties can be a great value for home buyers, purchasing a distressed property also helps property owners by relieving them of a heavy burden or by providing lenders the ability to recover all or a portion of their investment.
Locally, I know that not all agents with listings in our MLS (Multiple Listing Service) have properly identified their listings that fall into the foreclosure, short sale, or REO categories (under Features/Terms). This makes it difficult to determine the number of distressed properties we have among our residential listings. However, I would estimate that at minimum a quarter of our residential listings are distressed.
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