Santa Rosa, CA

REALTORS - AMBASSADORS FOR ENERGY EFFICIENCY?

Sonoma County has recently announced a community action plan to generate discussion and education about the issues and challenges we face in dealing with the impact of global climate change. We are very proud of our county for initiating this undertaking as many "talk" about what needs to be "done" but few implement the difficult tasks necessary to change. I was happy to attend a meeting sponsored by the county to promote the involvement of Eco-Green certified real estate agents in this enterprise. This is NOT going to be an easy fix and most of us know it. What we need is leadership and direction and the real estate community can be a part of it.

Here are the main points discussed at the meeting.

1. Home Energy Rating Service (HERS).. The HERS home analysis is a national energy rating system and is one of the requirements necessary to receive an energy improvement mortgage. A signed retrofit contract is necessary before the close of escrow. Completion of the retrofit must be within three of months of closing escrow. All funds are paid by the escrow company to the contractor after HERS has given verification that the work is done correctly. There are two (2) types of EEM (energy efficient mortgages). One is for new construction and the other is for older homes in need of an energy retrofit.

2.Assembly Bill 811(AB 811). The California legislature is developing a municipal financing program the details of which are still being crafted. This will supplement federal sources of funding for energy retrofit.

3.Green building is becoming more popular as people realize that "green" living and energy costs in the future will increase significantly as effort to deal with global climate change gathers momentum. This means that contractors and builders who are on the leading edge of green building practices will be more and more in demand. Obviously realtors should keep abreast of these developments and provide guidance to their clients. Leaders in the real estate community should take the opportunity to encourage the changes in attitudes and behavior that the climate challenge requires us to make as a people.

3.A wonderful web site to answer many questions and also make you think of other aspects of green living is www.builditgreen.org.

VINTAGE HOMES - MORE THAN JUST CHARMING!

WILL BANKS BALK AT LOWERING MORTGAGE RATES?

Some reporters and analyst in the financial media are now saying mortgage rates will not decline appreciably despite the feds purchase of another trillion dollars in mortgage backed securities and federal debt. According to these sources banks have no incentive to pass through the lower interest rates to consumers, home buyers and other creditors because they are already doing a brisk refinancing and loan origination business at current historically low rates.Iit may be in this view to keep the spread between what they pay for funds and what they charge for funds as wide as possible in order to restore their balance sheets to better health.

All this may seem logical from the point of view of the banks immediate financial interest. But it should be remembered that the stability of the financial system cannot be restored in the absence of economic recovery and vice versa. So lowering the cost of mortgages and other consumer debt should be in the banks long term interests because doing so will contribute to restoring economic growth and stability. In any event, homeowners with existing adjustable rate mortgages will benefit because the indexes to which such rates are tied are going to decline over the next year or so.

WILL BANKS BALK AT LOWERING MORTGAGE RATES?

With so many questions about what is selling and what is not and what prices these listings are selling for I figured I would start posting current market statistics. This page contains local sales stats for Santa Rosa California Real Estate? Following are the stats for the February 2009 market as well as what is currently available in the Santa Rosa residential real estate market. Residential meaning, Single Family Homes as well as Condos Farms/Ranches.

As of Today March 17, 2009 Santa Rosa has the following:

1127 Active Listings with:

List Price Range $65,500 - $10,900,000

Average List Price $475,691

Median List Price $300,000

Of these 1127 listings, 305 are Bank Owned aka REO or Foreclosure properties & 470 are Short Sales

Out of these 1127 Listings, 499 are in Escrow in the "Contingent" status:

List Price Range $65,500 - $1,175,000

Average List Price $287,789

Median List Price $265,000

Of these 499, 144 are Bank Owned & 282 are Short Sales

Of these 1127 Listings, 102 are In Escrow in the "Pending" status i.e. All Contingencies have been removed:

List Price Range $92,000 - $4,700,000

Average List Price $363,684

Median List Price $262,400

Of these 102, 62 are Bank Owned & 14 are Short Sales

190 Listings Sold i.e. Closed Escrow During the month of February 2009:

List Price Range $65,000 - $2,950,000 * Selling Price Range $70,000 - $2,800,000

Average List Price $316,130 * Average Selling Price $309,122

Median List Price $264,900 * Median Selling price $260,000

Of these 190 listings, 118 were Bank Owned & 30 were Short Sales

Santa Rosa has been following suit of being heavily loaded with bank owned (foreclosed homes) and short sale listings. As you may note while going over these stats there will usually be a larger number of short sales in escrow but when it comes to the numbers of listings that actually closed escrow and sold the numbers will be heavier on the bank owned/REO side.

What Does All This Mean?

Considering the current available volume of listings and that we have been consistently selling approx 222 listings a month, Santa Rosa has 5 months of inventory. If I break these numbers out further, we have about a 2.5 month inventory of Bank Owned homes and a 18 month inventory of Short Sales.

Have I Missed An Important Piece of Information You Were Hoping To Find?

Upon Request I am happy to further drill down these stats to a more specific neighborhood within Santa Rosa, such as The McDonald District, or Montgomery Village as examples.

Please come back mid month next month for the March stats.

The administration's plan for stemming the tide of foreclosures that has been drowning the housing market and threatening the entire economy has several elements. But its focus is on loan modification for homeowners who are under extreme financial stress or hold underwater mortgages. In essence, it provides a framework of rules and incentives to; (1) encourage lenders and servicers to reduce the monthly mortgage payments of homeowners whose mortgage debt is too high as a proportion of monthly income or whose mortgages are "under-water;" and (2) and make refinancing available to homeowners whose loan - to - value is less than 80% through Fannie Mae and Freddie Mac. This plan has sparked spirited debate among housing experts for its scope and workability.

In the plus column the imitative is praised by those who like the plan argue that:

(1) The administrations plan will require real loan modifications that benefit homeowners as opposed to the work-out plans that the lending industry has been calling loan modifications.

(2) The administrations proposal aims at reducing monthly mortgage payments to 31% of income, which will keep homeowners in their homes. Industry initiated modifications aim at 38% of monthly income which still leaves the homeowner under severe financial stress.

(3)The administration plan provides lenders with flexibility with achieving its goals. Lenders/ Servicers can reduce interest rates, extend the term of the mortgage, reduce principle or a combination of all three to get monthly payments down to the 31% target.

In the negative column the major criticisms are:

(1) The plan provides for a step up in interest rate on modified loans of 1% a year after 5 years until the rate is equal to the prevailing rate at the time the loan was modified. This provision critics say it just kicks the can down the road and will put borrowers back in financial stress when their loans readjust.

(2) The plan does not require lenders to write down principal despite the decline in housing values. This means that the homeowner will bare all of the losses in the housing downturn.

(3) The plan, in trying to focus narrowly on the "responsible and deserving" homeowners, is overly complex and will be difficult to execute. A better alternative, some critics argue, would be for the government to buy mortgages from the servicers at a discount price and then carry out the loan modifications itself.

A good over view of these issues is Tim Fernholz's article " Is Modification Enough" in the on-line version of The American Prospect.

A major complaint I hear from my clients is that the two- tiered system the banks are using to price conformimg loans is just another method of gouging the public.Conforming loans, are those that can be sold to Fannie Mae, Freddie Mac and Ginnie Mae, the so-called government sponsored enterprizes"GSES." This past fall, the Congress raised the conformimg loan amount from $417,000 to $662,500 in high cost areas like Sonoma County in Northern California.The banks however have continued to change a higher interest rate on loans in excess of the $417,000, not withstanding the fact that loans up to the new limit $662,500 are just as secure and credit worthy since they can be sold to the "GSES." So when the banks claim that loans above the original conforming limit ($417,000) but below the new limit ($662,500) ARE SOMEHOW RISKIER they are just blowing SMOKE. What they ARE doing is restoring THEIR balance sheets by overcharging the home buying public, who, as tax-payers, have already contributed to the multi-billionaire dollar bail out of the banking system. Talk about CHUTZPAH! Shades of Shylock.

Now is not the time to be playing these games with the over-burdened home owning middle-class, on which the recovery of this economy will ultimately depend.