Top Concerns for the 2016 Market

Although the Consumer Financial Protection Bureau states "no problem", many REALTORs are experiencing delayed closing with the new TRID (TILA/RESPA Integrated Disclosure) rules implemented October 3rd.  For about half of those responding to a survey, closings took up to 40 days to close.  While this may not be of concern to all-cash buyers, buyers obtaining financing and sellers in contract with those buyers may have to be prepared for taking extra time to close, at least while the industry is in the earlier phase of these new mortgage/escrow rules.

Some years ago FHA revised their rules on eligible condo HOAs--Since an entire association was required to become "FHA-approved", and for only two years at a time, the number of approved condos has declined severely.  This reduces the number of eligible buyers for a condominium severely and is a factor everywhere for FHA condo buyers.  Association members are advised to take up this issue with their boards -HUD provides a resource for current status - and apply for renewal.  Some lenders are willing to provide this service without cost, especially if there is an  active buyer for that complex.  Contact me for more information.  VA approvals for condos are also required for VA buyers, and these are another important source of condo buyers.   However, for buyers obtaining FNMA loans there are no restrictions on percent of owner-occupied units, a major qualifier on FHA loans. 

Tight inventories are still a factor nationwide, as buyers can attest to after they have experienced multiple offer situations.  Buyers who are fully approved and prepared to make realistic offers have more success, although the price range under $500,000 in many Southern California cities is competitive.  Below is a trend chart for "months of inventory" for Long Beach.  Neighboring cities are similar.  A 6-month supply (how long the inventory would last at the current rate of sale) is considered the norm, but has not been the norm for several years. The chart shows 1.5 months.


Tight credit standards continue to affect sales.  There was a time when a 700 FICO score meant smooth sailing, but the average FICO score on all closed loans in the third quarter was 723, the lowest level in at least four years, according to Ellie Mae. Two years ago, the average score for denied applications was 729.  In other words, keep up your credit score but minimizing debt and no delinquencies.

Low appraisals continue to be problematic.  This is a large subject by itself, but the short summary is: Find a good REALTOR to work with, whether you're a buyer or a seller, and avoid over-inflated pricing.

More Trends:

Cash sales continue to decrease; buyers are interested in walkable areas (check the WalkScore for your neighborhood), "green" homes, or older homes with upgraded environmental efficiency, are on the buyer lists in many areas, new home sales are up in some areas (however, older Southern California cities are less impacted by this demographic), rents may increase by as much as 8% in some areas, so buying at today's lower interest rates will still be cheaper than renting.

For a free property search, go to www.juliahuntsman.com Property search page.

Please contact me for a more specific home analysis for your property.  As a licensed REALTOR for over 20 years, I can help whether you have a home or investment property sell.

HAPPY NEW YEAR!

Some New California Laws for 2016

New CA laws for 2016

One of the more interesting new laws for 2016 allows transfer of deed without going through probate court.  As a transfer-on-death deed, it allows a homeowner, effective January 1, 2016, to transfer to a named beneficiary a one-to-four unit residential property without going through a probate action.  The property cannot already be part of another will or trust, but must be separate and apart.  So if you have not included a property in your trust, or you don't have a will or trust yet, but you want a property that is yours to go to someone automatically upon your date of death, you may do so by this Transfer on Death Deed, sign and notarized and recorded within 60 days.  It is revocable in case you change your mind.  This a form deed accompanied by 24 FAQs explaining it. The law lasts through January, 2021.  Assembly Bill 139.

There are a number of laws involving no penalties for water use and lawn appearance during a drought.

Extended indefinitely is the victim's rights law to terminate tenancy, where he or she or a household member was a victim of an act of domestic violence, sexual assault, stalking, elder abuse or human trafficking and that the tenant intends to terminate the tenancy.  The time to give notice has been reduced from 30 days to 14 days.  Assembly Bill 418.

Senate Bill 655 pertains to new mold/habitability standards pertaining to landlord/tenant law. A change from current law, this new law  now provides that a lessor (landlord) is not obligated to repair a dilapidation relating to mold, as specified, until he or she has notice of it, or if the tenant is in substantial violation of the duty to keep the property clean and sanitary, and thereby substantially contributes to the existence of the mold. This law authorizes a landlord to enter a dwelling to repair a dilapidation relating to mold.  There are current definitions about substandard housing, and "this law specifies that visible mold growth, as determined by a health officer or a code enforcement officer, is a type of inadequate sanitation and therefore a substandard condition. However the presence of mold that is minor and found on surfaces that can accumulate moisture as part of their proper and intended use would not constitute a substandard condition."

For a complete list of 2016 laws which also address consumer protection, HOA regulations and drought conditions and FHA disclosures, disclosure required by AirBnB rentals, to name a few, please contact me.  I will be happy to forward them to you.
Lic #01188996

VA Loans Are Still a Very Good Option for Military Service Members

Benefits for Nation's Heroes

VA loans offer no down payment, competitive interest rates, easier credit standards, and easier loan qualification guidelines. Other loans may be harder to get due to an applicant's frequent moves, but this is not a problem with VA loans.   Interest rates may be .05 to 1% lower than a conventional loan.

These loans are offered to current or former service members who have served for a certain period of time and can obtain a Certificate of Eligibility.

Service members may also obtain USDA loans (not common in metropolitan areas), FHA loans and other conventional loans.  But often the advantages to a VA loan, for those who qualify, are so good they can't pass it up.

VA loans are used both on new purchases and refinances. There is no private mortgage insurance (PMI) found on other loans with low/zero down payment, which saves money from the beginning.

The Department of Veterans Affairs guaranteed 630,000 loans in 2013, an all time high.  To find a qualified VA lender, please contact me, or go to a company such as Veterans United Home Loans.  Not all lenders are well-versed in VA loans, so it pays to get a personal referral to someone in your area.  Please feel free to contact me.

Affordability in the California Housing Market

With the improvement in the California housing market since the "bottom of the market" in 2009, affordability has changed.

California's housing affordability index is at 29 percent, meaning 29 percent of California's homebuyers can afford the median-priced home of $487,420, which is a statewide figure.  The required income is just over $98,000.  To compare, 38 percent of the California population makes an annual income of $78,000 or more.  While not all single buyers may fit this profile, couples able to use both incomes to qualify are more likely to suceed, especially in the lower-priced condo market in certain cities.

In spite of this affordability declining over time, it appears to have stabilized in the 30% range.  Has it affected sales volume? Apparently not, because sales volume has increased 5.7% since the same time last year.

Downtown Long Beach

Will gradually increasing interest rates affect California's housing market?  Hopefully not, if the economy and labor markets continue to stabilize or grow.

What is the Long Beach median single family home price doing?  Here are the latest citywide figures:




 Long Beach condo price for the citywide median price of under $350,000
is posted below:

Cost vs. Value - What Improvement Projects Pay Off?

Sometimes the lower cost improvement may pay off best, especially if the seller is considering fixing up to sell.  See this article for more information on how less is more.

Avoiding Buyer's Remorse--Is That Possible?

Sometimes no matter how much research is done in advance, buyers may still suffer the pangs of remorse after a purchase, and buying a home is no different.  There are seemingly endless disclosures made in a California real estate transaction for buying a residence, but with so much going on after escrow is opened, a buyer should have "eyes open" as much as possible during the home search period.  Searching for homes on the internet, which is performed by almost all buyers in the initial stages, is one part of the home search. 

But in order to avoid the awful feeling that something is wrong after you've closed escrow, try to focus on what are the most important things to you from the very beginning.  For many people, having the right neighborhood, schools, as well as the features of the home itself, are key to their happiness.

Feelings of happiness/regret vary by age, region, demographics and income level.  According to a 2014 study of 2000 adults by Redfin (a large brokerage), if you lived in the West, were over 65,  male, and had an income over $100,000, you were more likely to have less buyer remorse.  For example, 85% of people over 65 said they would buy their home again.  Women with children under the age of 18 (27%) were more likely to express regret. 

How to avoid feeling regret?  Know your local market, i.e., shopping, schools, neighbors and neighborhood, commuting time, as well as loan types and interest rates, buyer competition (or months of inventory) and local list-to-sell percentages.  These are all basic factors about buying a home.  Determine your top priorities - and I do like to remind people that priorities can change as they become familiar with their actual buyer environment.  Knowing the neighborhood may mean knocking on doors to see the people to ask their opinions--a Realtor can go with you for introductions, but your Realtor cannot tell you information that you need to discover personally, if this is important to you. Taking time to order and review property reports, and review transaction documents are essential to homeowner happiness.


There will probably not be a perfect home, but the list of dissatisfactory items will be much shorter the more conscious the buyer is, and the more thought put into, about the home choice.  Not only does this extra work reduce later buyer remorse, but it reduces anxiety.  Prior education, in my opinion, reduces unrealistic expectations and produces more long-term satisfaction.  Going over the buyer/seller contract may seem very dry in the beginning before the home search, but there may be much later reward in owner satisfaction! Taking the time to discuss your opinions of homes you've viewed with the Realtor helps your agent help you.  Realtors know what size bathrooms and closets you can probably expect with a certain age of house, in a given area--most Cerritos homes are more contemporary in style than the majority of Long Beach neighborhoods which date from earlier eras.  This kind of discussion can help you judge if you should change a priority or not. 

Buying a home is a significant purchase, it should be accompanied by a corresponding understanding.

A Few Facts About the California 2016 Housing Market

Every fall a comprehensive report comes out by the California Association of Realtors assessing the current year's activity and projections for the next year.  The second slide shows prior years selling prices and percent change from prior year, interest rates, and affordability indices.

Interestingly, when asked "Which of the following is your dream home?", 32 percent of those surveyed want a Craftsman bungalow, getting the highest number of votes.  Perhaps that's not surprising when you, the audience member, look at the settings for numerous TV shows and home advertisements, i.e., "Blue Bloods" for one. Craftsman homes have lots of wood, warmth and old-fashioned craftsmanship plus a feeling of years of established family ownership in practically all cities in the U.S.

Certainly in Long Beach there are several neighborhoods in which to find one.  But, what does it take to own one?  From 2010, the CA median house price has risen from $305,000 to the current $476,000, and up to a projected $491,000 for 2016.  The good news for buyers is that the rate of increase is slowing to a projected 3.2% increase for next year.  But the other news for buyers is that, as early as December, we may receive the long awaited news about an interest rate increase--already anticipated in the financial markets.  So the rates under 4% for so long are likely to be up to 4.5% next year.  Sales volume is still expected to go higher, hopefully a release from the long-depressed inventory.

Using statewide medians, that 2015 median priced home at $476,000 is probably going to be about $15,000 higher, and the interest rates will be about .5% higher.  Looking at principal and interest only, a mortgage payment could go from $1796.11 (20% down, SP $476,000, 3.99%) to $1990.26 per month for a 2016 $491,000 house at 4.5% interest with same assumptions.

For buyers who do not know any other market except the current very low interest one, this may seem like very foreign territory.  But it's still not such a bad time to buy.

Too see the entire CAR 2016 report in pdf format, click here or see below in ScribD

2016 California Economic Market Forecast

How Much Can You Rely on Automated Home Value Widgets?

Have you looked for a new car lately?  If you're like me, you checked out everything you could find on the internet before you ever went to a dealership for a test drive. 

The websites have interior and exterior 360 degree photos, closeups, zoom capability, video, and even the actual car price, which we equate with value. That's something we love, knowing the price, not the one we have to haggle over. You get everything on the internet except the new car smell--minus one more thing, the actual driving experience.

It's the same with house listings, there's so much available information on numerous sites, and the photos often make them look so attractive that you might think you want that one .  But unlike a car, a house price reflects many more "moving parts", condition, location, upgrades, additions, deferred maintenance, permits or lack thereof, remodel, the immediate surroundings, earthquake zones, flood zones, and much more.  And like buying a car, you really have to be there to see for yourself. The asking price could be very different from value when all is said and done with negotiations and the appraisal.

So what does this mean for AVMs (automated valuation models) such as Zillow and its "Zestimates", and other valuation widgets found on many home search sites?  It means that they are tools, rather general tools, but like driving the car and seeing the house, you have to be there. AVMs can't judge the condition of the house, or know how many prior water damage claims were submitted on it, or check the unpermitted rooms, or see if there are title defects which will prevent mortgage financing.  Zillow values are calculated on public records (strictly data oriented) and user submitted data points (selective pool of information).  By the time a given property is negotiated through buyer/seller agreements, the value may be off by as much as 30% from a Zillow estimate.   Zillow's CEO recently sold his house:

     To see a Zestimate at work, consider the fact that in July of this year Zillow Group CEO Spencer Rascoff listed his four-bedroom home in Seattle, Washington, for $1.295 million. At the time, the Zillow Zestimate valued the home at about $1.39 million. That’s over 7% higher than the list price, but within the Zillow median margin of error.
     Gordon Stephenson, the listing agent for Rascoff, told industry publication Inman that Zillow probably overestimated the value of Rascoff’s home because “its algorithm might not have accounted for the home’s unique floor plan.”  Christian Science Monitor, November 14, 2015.

When an appraiser performs his/her job during escrow, an AVM is not a part of the process. When a Realtor helps a seller or buyer established listing or offer price, knowledge of appraisal parameters may be used along with knowledge of recent sales and individualized comparisons to other properties. 
Algorithms and weights assigned to data can be educational up to a point, depending on what properties get caught in the AVM's net, but when a buyer sees multiple houses combined with knowledge of area sales, the reasons for the final result become known. 
So automated robotic prices are fun to look at and may help educate on overall price range for a given area, but they are not a substitute for a complete home price determination.

See the complete Christian Science Monitor article.

Signal Hill's Skyline Estates Dream Home with World-Class Views!

Home on Sea Ridge

This desirable highly sought after home is located in the Signal Hill development of Skyline Estates. Situated on a unique promontory in the highly coveted “Sea Ridge” with sweeping and explosive views from Palos Verdes to the Pacific Ocean to Newport Beach. The views from this home are unparalleled. The three-level floor plan features a formal dining room, formal living room, spectacular ‘Chef’s’ kitchen with GE Monogram appliances, double ovens, center island and breakfast bar that opens up into the family room with expansive windows offering impressive views of downtown Long Beach. 

View towards San Pedro

Three bedrooms are located on the first floor with one being a second master en-suite. The spacious master retreat features lounge, massive walk-in closet. master bath with dual vanities and spectacular tub featuring city views. Wonderful backyard with fireplace and BBQ is perfect for entertaining year round. 

Excellent location close to the community walking trails, and pool. Just minutes to Belmont Shore, Downtown Long Beach and freeway access.
Association dues include community pool and paved road.
Information per MLS# PW15230654

View of downtown Long Beach

See the video and/or find out more about this home, please contact me at 562-896-2609. CA Lic. 01188996

Listing Broker:  Boardwalk Properties

Congress Still May Tax Mortgages to Pay for Highways

The real estate industry and those purchasing or selling residential properties are often the focus/target of politicians looking for a vehicle for passing a law. They don't always get passed, fortunately, so the general public is usually not aware. However, the following bill is still in the works, and is a good example of another attempt to get, in this case homeowners, to pay more money for something which should be funded by the entire public, assuming it is truly needed:

 Back in July the U.S. Senate passed a long-term Transportation funding bill that includes a tax on mortgages to pay for the construction of highways. To make it more palatable to Republican lawmakers, this tax has been disguised as a “fee.” This tax isn’t small potatoes either.

On a median priced home in California ($489,560), homeowners could pay over $8,000 for this tax.

While the Senate has passed its version of the long-term Transportation bill, the House has merely passed a short-term version to keep the federal Transportation Department open. The House plans to pass its own version sometime this fall, but there’s no guarantee that this new tax won’t be included in that version. The California Association of REALTORS® is actively opposing this approach to paying for the highway bill and is encouraging the public to get involved.

People are urged to visit www.nomortgagetax.org and go to the “Take Action” tab to send a personal message to Congress to oppose the tax. The public can also get updates on Facebook at www.facebook.com/no.mortgage.tax or follow the campaign on Twitter™ at @NoMortgTax.

Under current law, a portion of every conforming loan, (those backed by Fannie Mae and Freddie Mac) includes a fee used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called guarantee fees (or g-fees). In 2011 Congress added on an additional.1% increase on the interest rate of every Fannie and Freddie mortgage to fund a six month extension of unemployment benefits. That “add on” was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.

The U.S. Senate’s highway bill extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced home of $489,560 using a typical conforming loan with a 20% down payment will pay an additional $8,100. This figure is sure to rise with an increase in sales prices.

You can contact your representative (go to the website above) to register your opinion on this.