CJ Brasiel

In 1978, the ballot initiative "People's Initiative to Limit Property Taxation" was put in place by the voters of California. This initiative basically restricted the increase in property taxes per year to 1% of value. The result was a 57% cut in property taxes for California. This initiative also placed a high bar for change by requiring 2/3rds majority vote in local elections. The origination of this initiative came from the belief that older citizens should not be priced out of their homes via ever increasing property taxes. Valid argument.

Some argue it has limited the housing market re-sale side (less inventory,high demand, pushing prices up), has increased rents, and has created a demand for new construction on smaller and smaller amounts of available land. It has been argued that not only do the long term residents benefit from a demand partially created by Proposition 13, but also benefit in services paid for by new home owner's property tax rate. There is not doubt that Proposition 13 has contributed to the affordability issue for new home owners in the Bay Area. There are many opinions about Proposition 13 and the debate heats up again and again.

Now, as home prices decline many home buyers that purchased homes after the year 2000 are asking why they are paying the same amount for property taxes. My property tax bill actually increased this period in spite of losing $95,000 in equity from December 2007 to December 2008. Therefore, I wanted to offer some resources to help those who have lost value on their property and have yet to see an adjustment on their tax bill.

Recently, Santa Clara County Tax Assessor indicated nearly 200,000 property tax bills would be reviewed to see which were eligible for a re-assessment. This process is planned to be completed by June. In the mean time, you can apply for an appeal via the Santa Clara Tax Assessor's web site. There are two ways to make an appeal. You can make an informal appeal before August 15, 2009. If the assessor does not agree you can apply for a formal appeal between July 2nd and September 15th. There is also a great down-loadable booklet from the Board of Equalization that can explain the process of appeal. Click here for Frequently Asked Questions.

Be aware that recently many scams have popped up from companies wanting to charge you a fee to appeal your property taxes. Some charge upward to $200 dollars. The Santa Clara Tax Assessor's office charges a $30 application fee. The application is pretty straight forward and takes just a little home work on the part of the home owner.

If you need help gathering information on the market, let me know. I offer a complete market analysis of your home, indicating recent sales data, photos, and a value range that can be used to support your appeal. There is no charge for this service. Contact me if you would like more information.

I look for something positive to occur regarding real estate every day. For most of 2008, I embraced the hope that a new president promised. I started to get excited as I witnessed sales numbers go up while interest rates lowered to 4.8% in December 2008. I re-energized when it was official that the Housing Stimulus Plan was about to be approved.

The good news. Nearly 4 million home owners will receive help. Those who still have their jobs and are current on their payments, will receive help in modifying their loans. That is wonderful news. Unfortunately, less than 7% of homeowners in San Jose will benefit from the this plan. The following chart was provided by Zillow.

The good news. The plan will provide a $8000 tax credit for new home buyers. Unfortunately, those who qualify for the tax credit do not make enough to afford a median priced home in San Jose in this new lending environment requiring a minimum of 10% down and many times 20% down payment is required. Those who can afford a median priced home, make more than the maximum ($75,000) income allowed to receive the credit.

The good news. The stimulus plan sent money to the state and is promised to save or will create 400,000 jobs. Unfortunately, the Governor of California has implemented a
"1 percentage point increase in the sales tax in April and the higher vehicle license fee in May. By then, about 2.4 million out-of-work state residents will be receiving higher unemployment benefits and more than 2 million Californians will be eligible for more food stamp help, according to the Center on Budget and Policy Priorities, a Washington think tank."

The good news. There are lots of deals to be had in the real estate market. Nearly 40% of the San Jose housing inventory is represented by short sale listings and nearly 20% are bank owned foreclosures. However, more and more, offers from buyers with FHA loans and 3.5% down are being turned down by the asset managers because they do not believe they will close on time; if at all. The average FHA loan application takes 5.4 weeks to close.

The good news. Well, I am not sure exactly what the good news is anymore. Tomorrow is another day and the forecast says there will be some sunshine. One can only hope.

It was raining this weekend so I was unable to show houses and had no open houses scheduled. Therefore my options were to read or study the MLS. Reading makes me sleepy so the MLS won out. Each day I hear a great deal from the real estate pundits trying to predict the housing market. Have we seen the worst of it? Are some neighborhoods at bottom? Where are the best deals for first time home buyers? Where are the best deals for investors? All, very important questions.

Many say the next "wave" for the distressed property market is in adjusting mortgages. I have been unable to find a source that tells me how many home loans are adjusting in San Jose. The challenge with that idea is that many loans are actually adjusting down not up. In general the logic is missing on why that would be the next wave except how it might apply to negative amortization loans.

To me the next wave of housing challenges are completely related to job loss. More specifically blue collar, manufacturing job loss. Why? The largest group to purchase homes using exotic loan products were the very people looking for a way to afford a house in the Bay Area on an average blue collar income. This very group were more likely to pool incomes from different family members and when one of those sources loses their job, the house payment is in jeopardy. Loan modifications are not offered to the unemployed, recently disabled, or recently divorced. The home becomes under water quickly.

Which leads us to the short sale process. Oh my, don't get me started. Bottom line, short sales are not being approved as quickly or as often as they should be to stem the tide of foreclosures. More and more short sales will move toward foreclosure. Another guaranteed, downward pull on the market.

The potential areas for deals are where the distressed property inventory is the largest proportion of the total active listings. This first graphs shows the number of short sale and REO listings as a percentage of the total active listings. There is no "bottom of the market" per se when short sales are a large majority of the active listings as those are the very listings that will move toward foreclosure and become bank owned.

Next the condominium and town home (attached) market. The Gilroy market has really taken a beating with the REOs. One of the listings, a 2-bedroom, 2 bath condo is for sale for $98,900. If that does not scream "investor", I am not sure what will. Yet, there are more deals to be had closer to Silicon Valley and this may be the reason why the condominium market has not moved faster in Gilroy.

But obviously the majority of the inventory for Santa Clara County resides in the city limits of San Jose. Therefore, I wanted to break down by neighborhood the distressed market, to see what patterns might present. I am going to go out on a limb and say that Blossom Valley, Santa Teresa, and Down Town San Jose are going to become the next hot bed for REOs. All three neighborhoods are seeing 2-5% per month drops already. The short sale process does not work well in dynamic markets. Whereas a REO agent sends an updated market analysis each month. The short sale agent only sends in a market analysis when an offer is received. By the time the loss mitagator gets to the file (If you are lucky, within 30 days.), the market can drop another 2% and not surprising, the buyer has found a better deal somewhere else.

Is the condominium and town home market any different for San Jose neighborhoods? I believe we can say that the investors and first time buyers will be scooping up the Alum Rock condominium and town home market. Close to down town. Great student rentals. Again, pulling out my crystal ball, I would say Berryessa is prime territory for the next wave of good deals on REOs.

So what to make of all these pretty graphs? First, a large portion of the distressed homes are still being kept up in the air by short sales. The process is not working to reduce these homes quickly. Second, we all know that the sooner we reduce the inventory of over priced or slow moving homes (because of repairs, location,etc.) we will have a better chance of stabilizing the market. If you are a seller, you should be tidying your house and adjusting your price down at least every month. Third, the key to a market turn around is showing buyers how they can be pre-approved in this new loan market and how to find the great deal in the neighborhood they want. Finally, we must do this all quickly before the next wave of job losses place more homes in jeopardy.

If you are an agent reading this, I encourage you to throw your opinion into the hat so readers can hear professionals discuss the market in Santa Clara County. If you are a buyer or seller, you need to be working with an agent who is as determined as a bull dog to work this market. Agents who are shy about short sales, hesitant to recommend FHA loans, or can't manage an REO will not be the professional that gets you through this current market.

One last point. Many of the neighborhoods have less than 20% of their inventory in distressed listings. It may be raining but much like our beautiful hills, sometimes it takes a good rain to make everything all green again.

I love the Santa Teresa neighborhood. You have the wonderful Santa Teresa Park with 1,627 acres of trails and the historical Bernal-Gulnac-Joice Ranch that offers visitors a taste of how a ranch was ran in the early 1800s. Add in La Colina park for weekend soccer, kite flying, and picnics and you have a well rounded family neighborhood. I have biked many times along Curie and Colleen Drive to get to Almaden Lake Park and have many great memories of the area. As with many neighborhoods, Santa Teresa has seen its share of short sales and foreclosures. This week I wanted to point out a few homes with the intention of helping restore this great neighborhood to equilibrium.

As neighborhoods go, Santa Teresa has seen some stabilization in the market prices and with last quarter 2008 sales. Referring to the chart below you can see inventory is coming down, sales steady, and an almost neutral market between buyers and sellers. Of the 110 active listings, 27 are REOs and 49 are short sales. In the last three months, 31 homes sold (3 shorts sales, 21 REOs, and 7 traditional sellers).

The focus of the post is to share with you some potential deals in the Santa Teresa neighborhood. These homes are bank owned. Also referred to as REOs, foreclosures, or corporate owned.

Before you drive out, take a look at street view on Google. A great tool for scoping the street. This is particularly important for Bayliss. In 2005, this very home sold for $745,000. Now it is listed at a 33% discount from that peak value. Very nice home if you can manage the view.

Many of these homes are large and are great for extended families. Take Keeler Court for example. Great house with 2300 square feet, nice upgrades, on a nice neighborhood street. This home last sold in 2004 for $580,000. That definitely tells you a little bit about the market adjustment. Some predict by the time our housing crisis is over we will be back to 2002 prices.

The home on Camino Verde is literally at the entrance of the Bernal-Gulnac-Joice Ranch. Great park. I have seen wild pigs, wild turkeys, rattlesnakes, and lots of deer when hiking this hill. The views of the valley are amazing once you make it to the peak. Even if you don't buy this home, make a point of visiting this park.

Dondero Way has a bathroom for each of the four bedrooms. Of course, permits are unknown. Another great house with views of the hills. Non-permitted additions always present challenges. Many times I have found that permits were applied for but simply not finalized. If you want to investigate permits, San Jose offers an on-line search. This site provide a way to see what, if any, permits were submitted for and the status. A great resource for any buyer.

Pemba backs up to Santa Teresa Boulevard. It last sold in 2005 for $615,000 and is now listed at $400,000. This is a change in value of nearly 35%. With a little TLC this home could be a great start for a young family.

All of these homes can be found on Trulia. A great place to start your search for a home because it provides so much addtional information about the price trends and other pertinent market information. All of these homes are ready to show and if you would like to check them out please let me know. You can also search for foreclosures by map here. Whether you are looking for an REO or not, Santa Teresa provides a great chance for a new beginning in a great family neighborhood.

After looking at what seems like a million homes, you have found one you like, made an offer and your REALTOR called to tell you, "Your offer has been accepted and you are now in contract." Congratulations! Now what? First, your agent should provide you with a next steps to-do-list. I normally send an email message out to my clients outlining the steps to closing escrow and picking up the keys to their new homes. Here is a basic overview of the steps to completing the purchase:

1.) Immediately follow up with your loan officer and update any documents they might need. For example, updated pay stubs or bank account statements. Your contract date to release the loan contingency is X date. Review the Good Faith Estimate with your loan officer and REALTOR. Discuss a strategy of when to lock rates. Your deposit check will be held in escrow within 48 hours of confirmed acceptance of the contract.


2.) Make arrangements with your lender in regards to how the appraisal will be ordered and the manner in which it will be paid for. Find out the typical turn around for an appraisal report from your lender. Your contract date to complete an appraisal and to assess the value is X.

3.) Decide what inspections you want to complete on the home and schedule them asap. The contingency period to inspect the property per the contract ends on X date. If you need recommendations for inspectors, let me know. I always recommend you be there for the inspection but if you can or can not, I will be there. (Not all agents attend inspections.)

4.) Begin working on home owners insurance. You will need to complete any shopping and determine what type of coverage you will need and who you will be obtaining insurance from. Once you have an insurance agent and/or policy provide your lender with a copy of the policy information and agent contact information.

5.) Review disclosures provided by the seller in a timely manner. Ask questions and get answers. If further investigation is needed about any part of the disclosures provided, complete prior to releasing applicable contingency.

6.) Review inspection reports and decide if any repairs are needed prior to closing. Work with your agent to decide if any estimates for work are needed and schedule a time to obtain said estimates. Consult with your agent on whether or not any part of the contract should be amended based on inspection reported findings.

7.) If the home has a Home Owner Association, make sure you have received the Convenants, Codes, and Restrictions, Financial Statement, Insurance Policy for the Home Association. Review this big pile-o-papers carefully. Ask questions and get answers to any concerns you have about the HOA and/or management of the HOA.

8.) Talk to neighbors. Find out about the neighborhood. Walk around at different time periods. Assess noise, activity, parking etc., before releasing the physical contingency. I provide my clients with a list of questions for neighbors. I also recommend they visit CrimeReports.com and review police reports for the area.

9.) Appraisal OK, Loan Approved, Loan Rate Locked, Disclosures Read, Physical Condition Released...you are now very close to closing escrow on the home. Complete a final walk-thru to make sure all is as it was ( or better) when you made the offer. Review the Settlement Statement, referred to as the HUD statement with your loan officer and agent.

10.) Decide how you will hold title on your new home. Sign loan documents, title documents, final contract, and escrow documents. Bring a photo I.D. and a cashiers check made out to the title company for the remaining balance of closing costs and down payment. Once the loan has funded, the escrow officer will work with the county recorder to record the title in your name. Once recorded, your agent will provide you with the keys to your new home. Congratulations!

Now of course, this is the straight forward closing steps and it is not uncommon to have some zig zags along the way. Make sure you are in constant communication with your lender and REALTOR. Be aware of time lines and take time to read the documents provided. If you do hit some speed bumps, work with your loan officer and agent to find the solutions or the way out of the contract. When making this large of a purchase, do not leave anything to chance. If you stay on top of the process, the next phone call you'll be receiving is, "Congratulations! The title is recorded and you are now the new home owner!"