Altadena Real Estate

Sellers dropped their asking price on nearly one in four homes listed for sale on Trulia.com during the last year by an average of 10.6%, the company in a report identifying the markets experiencing the most and biggest price reductions. Although Trulia’s analysis did not include foreclosure properties, it showed that asking prices are being slashed more severely in areas hardest hit by foreclosures.

According to the report, price reductions averaged 23% in Detroit, 16% in Las Vegas, 15% in Miami, and 13% in Phoenix and Mesa, Arizona.

But luxury markets like New York City also saw price reductions exceeding the national average. Homes with a selling price above $2 million were reduced by 14.3% on average, compared with 9.7% for homes under $2 million.

While 23.6% of homes listed for sale nationwide on Trulia between June 1, 2008 and June 1, 2009, saw at least one price reduction, the percentage was considerably higher in some markets. Of particular note is the fact that homes in Los Angeles were reduced an average of 32%.

This translates into some amazing opportunities for people looking to purchase…whether first time buyers or current homeowners looking to move up or down.

Some excellent news for Buyers hoping to take advantage of the $8,000 first time home buyer tax credit:

The Federal Housing Administration issued formal guidelines allowing first-time home buyers to apply a federal tax credit of up to $8,000 toward the purchase of a home with an FHA-backed mortgage. While the tax credit can’t be used to meet the FHA’s 3.5% minimum down payment requirement, it can be used as an additional down payment and for other closing costs. For the average FHA-insured mortgage of $182,000, buyers must bring to the closing table or finance about $8,600 in costs on top of their down payment — about $5,460 in closing costs (typically around 3% of the sales price) and $3,185 for FHA’s initial 1.75% mortgage-insurance premium.

In announcing the release of the guidelines, Secretary of Housing Shaun Donovan called them “another important step toward accelerating the recovery of the nation’s housing market.” The ability to “monetize” the tax credit and apply it to a home purchase will not only help families purchase their first home, Donovan said, but “present an enormous benefit for communities struggling to deal with an oversupply of housing.”

The National Association of Home Builders has estimated that the tax credit will generate 160,000 home sales — 101,000 purchases by first-time buyers and 59,000 purchases by existing homeowners who will be able to sell their home and trade up. FHA’s market share has grown from 1.9% in the fourth quarter of 2006 to 23.7% in the last three months of 2008.

The guidelines for monetizing the first-time homebuyer tax credit have been anxiously awaited for more than two weeks. After Donovan announced the initiative in a May 12 speech to members of the National Association of Realtors, the U.S. Department of Housing and Urban Development released and abruptly withdrew a set of guidelines that were later described as a draft version. The final guidelines for lenders, spelled out in Mortgagee Letter 2009-15, explain the conditions under which FHA-approved lenders and nonprofits, and federal, state and local government agencies may purchase the tax credits anticipated by homebuyers.

Our beautiful listing at 5039 Angeles Crest Highway in La Canada was just reduced by $125,000 to $1.2 million:

Set on a secluded half acre-plus site down a private drive, this remarkable 1939 Hacienda evokes a true sense of the romance of 19th Century California. Designed and constructed by noted engineer Robert Van Stan and his wife Marie Van Stan, this home was recognized as “one of the most comfortable and attractive” of its age. Original plans and records detail the reinforced adobe walls, custom cabinetry and gabled Spanish tile roof.

Its classic floor plan features four bedrooms, two and three-quarter baths, formal dining room, den with bar, kitchen with breakfast nook, and separate laundry room. The grand living room has a dramatic arched entry, wood-burning fireplace, built-in window seat overlooking the backyard, and cathedral ceiling with exposed beams. A free-standing family room, located across the breezeway, is well suited for use as a home office or media room.

Authentic period details, including original hardware and fixtures, wood-beamed ceilings, planked doors, multi-paned casement windows, and colorful tiles, are found throughout.

The extensive grounds offer a pool, verandas, paths and patios. Mature fruit and shade trees, gardens and walkways, undeveloped spaces and intimate settings contribute to the privacy and seclusion. This home is truly a unique piece of Old California that remains in modern La Canada Flintridge.

Please call or email for an appointment to view this amazing property. You can see additional pictures on our web site at www.Haussler.com.

Good news from Washington, D.C., today. The Obama administration announced new details under its Foreclosure Alternatives Program (”FAP”) enabling servicers and borrowers to pursue short sales and deeds-in-lieu of foreclosure in cases where the borrower is generally eligible for a Making Home Affordable modification but does not qualify or is unable to successfully complete the three month trial period. The program, effective through 2012, requires that prior to proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

It’s encouraging that the administration has recognized the need to streamline the short sale and deeds-in-lieu processes, and has provided viable options to homeowners who have fallen behind on their mortgages but owe more than their homes would sell for in today’s market.

Incentives in the FAP program include $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens ($1 from the government for every $2 paid by the investors to the second lien holders).

The FAP includes streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter to minimize complexity and increase use of the short sale option. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements, based on an appraisal or one or more broker price opinions, issued no more than 120 days before the date of the short sale agreement.

In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. The property also must be listed with a licensed real estate professional with experience in the neighborhood, and no foreclosure may take place during the marketing period, of at least 90 days, as specified in the Short Sale Agreement.

The Short Sale Agreement also must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received. Servicers may not charge fees to borrowers/homeowners for participating in the program. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement, plus any extensions.

The National Association of Realtors (”NAR”) released some “mixed” news today. While it’s nice to have our beliefs validated with hard data, this information supports what Steve and I have been seeing in the marketplace…

The median resale single-family home price fell in 88% of the 152 metro areas tracked in the first quarter compared to the same quarter last year, according to an NAR report, with 18 areas reporting price increases. Nationally, the median price of resale single-family homes dropped 13.8% year-over-year in the first quarter, to $169,000. The association blamed sales of foreclosures and short sales for “downwardly skewing median prices,” noting that “distressed homes typically are selling for 20% less than traditional homes.”

Seven of the metro areas with the sharpest year-over-year price declines in the first quarter are in Florida, seven are in California and three are in Ohio.

Honolulu had the highest median single-family resale home price among all of the markets tracked in the first quarter, at $570,000, followed by San Jose ($450,000); Anaheim, Calif. ($435,800); New York-Wayne-White Plains, N.Y.-N.J. ($429,900); San Francisco ($402,000); Nassau-Suffolk, N.Y. ($376,700); Northern New Jersey-Long Island, N.Y.-N.J.-Pa. ($374,500); Newark-Union, N.J.-Pa. ($358,200); Bridgeport-Stamford-Norwalk, Conn. ($347,400); and Boulder, Colo. ($328,400).

Regionally, the median price of single-family resale homes slipped 19.8% in the West, 15.9% in the Northeast, 10.8% in the South and 6.8% in the Midwest in the first quarter compared to the same quarter last year, NAR reported.

Also today, NAR released statewide sales statistics for resale single-family homes and condos. The seasonally adjusted annual rate for sales of resale homes was 4.59 million in the first quarter, down 3.2% compared to fourth quarter 2008 and down 6.8% compared to the first quarter 2008 rate. This rate is a projection of a quarterly sales total over a full year, adjusted to account for typical seasonal fluctuations in sales activity. First quarter sales grew in 17 states compared to the fourth quarter, with sales up in six states compared to first quarter 2008.

“Sales in the first quarter do not reflect an impact from the first-time homebuyer tax credit,” NAR reported.

Home sales jumped in several states that have been hit hard by foreclosures — sales were up 116.8% year-over-year in the first quarter in Nevada; up 80.6% in California; 50.2% in Arizona, 25% in Florida; 12.2% in Virginia; and 11.9% in Minnesota.

Regionally, sales were up 24.3% in the West in the first quarter compared to first quarter 2008, while dropping 20.1% in the Northeast, 13.1% in the Midwest, and 12.7% in the South.

Many people believe that their homeowner’s insurance policy provides protection against most disasters. Sadly, most people don’t discover there is an issue with their policy until they have a major claim. To protect your home and your wallet, the first question you should address is whether you have the right type of coverage for the risks in your area. The second issue is whether you have the appropriate amounts to cover any losses that you may incur.

Here are some valuable tips to ensure that you have adequate coverage:

1. PAY FOR ADDITIONAL COVERAGE FOR “SPECIAL” ITEMS
If you have jewelry, computers, artwork and other valuables that exceed your basic policy limits, you will need a special rider to cover those items. The same is true when it comes to insuring for earthquakes, floods and hurricanes. For example, assume that there is a major earthquake in your area. During the quake, your next-door neighbor’s gas line breaks. Both of your homes burn down. In this case, your fire insurance policy would not cover your loss because an earthquake was responsible for the fire. To be covered, you would have needed a separate earthquake policy.

Most home insurance policies cover “water damage.” The challenge is that if the damage comes from the ground up (i.e. from a flood), it is not covered unless you have flood insurance. To determine whether your property is in a flood plain, visit the FEMA Web site where you will also find a wealth of information about what is available on a federal level to protect your property.

2. DON’T OVERPAY FOR BASIC HOMEOWNER’S COVERAGE
Many lenders will automatically ask you to insure your property for an amount equal to the loan amount. In many places in the country, the loan amount is significantly higher than the replacement value of the improvements. Carrying “extra” coverage is a waste of money.

3. INSURE FOR “FULL REPLACEMENT VALUE”
Make sure that your insurance policy covers “full replacement value.” Some policies reimburse you only for the “depreciated” value of your appliances and other household items. Also, make sure that your policy provides for replacement with the same quality. You don’t want a $1,000 stove to replace your $7,000 top-of-the-line restaurant-style range. Check with your insurance agent to make sure these provisions are in your current policy.

4. DOCUMENT YOUR HOME’S CONTENTS
Take pictures of as much of your house as possible. Include both the inside and the outside. If you have a video camera, use that as well. Many people overlook artwork, silver, china, clothing and other items. Store your pictures and videos in a safe place away from your property.

5. MAKE SURE YOUR HOME MEETS THE INSURANCE COMPANY’S REQUIREMENTS
People sometimes forget to maintain their fire extinguishers and smoke detectors as required by their homeowner’s policy. Failure to have these protective devices in good working order could result in denial of your claim.

6. IF YOU OWN A CONDO, PURCHASE A POLICY SEPARATE FROM THE HOA’S POLICY
The “master policy” on a condominium building provides for replacement of the building. It does not provide for replacement of your personal belongings, nor does it insure you against theft or other types of losses. You will need a condominium owner’s policy to cover those additional risks.

7. CONSIDER PURCHASING AN “UMBRELLA POLICY”
These policies provide extra liability coverage from both auto accidents as well as for your home.

If you have questions about your coverage, speak to your insurance professional. Also, it’s wise to compare costs and levels of coverage. Check the Consumer Affairs Web site to learn more about how your insurance company ranks as well as what to do if you have a problem with a claim.

The California Association of Realtors (”CAR”) reported that the pace of single-family home sales in California soared 63.8% year-over-year in March, while the median price of single-family homes in California dropped 39% during the same period. CAR also noted that the single-family median price rose 2.2% from February 2009 to March 2009 while the monthly sales pace slid 16%.

By comparison, the National Association of Realtors reported a 12.4% median price drop for all resale home types and a 7.1% drop in the sales pace of previously owned homes in March compared to the same month last year.

Statewide, it took a median 48.3 days to sell a single-family resale home in March 2009, down from 56.8 days in March 2008, according to CAR.

And CAR’s Unsold Inventory Index for single-family resale homes was five months in March 2009, compared with 12.2 months in March 2008 — the index is a gauge of how long it would take to exhaust the inventory of for-sale homes at the monthly sales pace.

Bottom line… prices in California have dropped significantly more than those in most other parts of the country. It’s a great time to purchase. But, the party is starting to come to an end as evidenced by the recent increase in median prices and the decline in inventory.