Ruth Mills

Rockrose Development Corporation has begun offering an interesting incentive to potential buyers. They will buy the property back. Anybody who purchases one of their hundreds of condominiums in New York, can, if values continue to fall, sell the apartment back after five years for 110% of what they paid. Home builders have been forced to come up with innovative ideas to urge people to buy as inventories of unsold homes are at their highest since the early 60s and sales are at their lowest levels in decades.

In addition to money-back clauses, some sellers are offering credits for renovation projects, mortgage protection for buyers who become unemployed and cash incentives for lenders to control interest rates. Although interest rates are near record lows and housing affordability is higher than ever, many potential homebuyers are still hesitant to act with unemployment at its highest since ‘83 and property values expected to drop another 20% by the end of 2010. Rockrose is not the only company with outrageous ideas to draw in buyers. In Estero, Florida, Toll Bros. is offering a $100k incentive to buyers of its homes in Belle Lago Villas. The incentive can be used for customizing options like upgrading kitchens, bathrooms, or flooring, etc. or can be applied to closing costs, reducing principle, or buying down interest rates.

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A Toll Bros. official says the incentive has brought increased interest. The nation’s housing market is experiencing its worst crisis since the Great Depression and the effects have spread throughout the economy as well as the rest of the world. A springtime pickup in the market could help spur a recovery for the world’s largest economy. As part of a broader economic stimulus plan, the government is offering an $8,000 tax credit to first-time buyers who purchase a home before November 30. Many Americans, however, are still hesitant to buy fearing the loss of their job. To help alleviate those fears, Toll Bros. has launch a “Mortgage Protection Plan”, under which the company will pay the mortgage of buyers who lose their jobs. According to the Commerce Dept., sales of new homes rose 4.6% in February after setting a record low level in January. Sales have fallen over 41% from last year and are almost 76% below their peak in July 2005. Reducing interest rates in another method being used to bring buyers into the market. Lennar Corp., for example, is offering to qualified buyers a 30 year fixed rate mortgage with a 3.625%, even as rates average between 4.7% and 4.8%. The rate does come with several stipulations.

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The economy is still in a downturn. However, evidence that the recession is slowing exists in rising demand for products, increased consumer confidence, a slowing of nationwide layoffs, and more companies reporting profits.

The National Association for Business Economics (NABE), based on its latest quarterly survey, says that key indicators such as unemployment, capital spending, profit reports, and industry demand are still in decline, though the rate of decline is abating. The report follows similar statements made by the Federal Reserve last week. The Fed said that five of its 12 regional banks reported a slowing in the economic decline. The NABE survey, however, reported 93% of respondents expect the GDP to decline this year. That is 15 more pessimist outlook responses than in its previous survey in January. In the latest survey, fewer companies reported a decline in demand for its products than those reporting a rise in demand. From those two numbers, the NABE gets the net rising index for industry demand, which improved from -28 to -14 from the Jan. survey to the latest one.

The January figure was the worst in the survey's history going back to 1982. Some industries, finance, real estate, services, and insurance actually reported positive net rising indexes. Others such as information and communications, transportation, and utilizes remained in decline.

Profit margins are also on the rise for many companies. In the latest survey, almost 15% of respondents claimed rising profits and 46% said profits were falling. The remaining respondents reported no change, making the net rising index -31%, up from January's -42%, when 11% of respondents reported a rise in profits and 51 reported declines. A key indicator for business growth, capital spending, improved as well. 16% of respondents reported raising capital spending, while 32% cut back and 52% reported making no change.

Remaining low are employment prospects and wages, which are at their lowest since the survey's inception. The survey had 15% of companies report a rise in employment, unchanged from the Jan. survey, and 40% experiencing a drop in employment, 4% lower than in Jan. Hardest hit was the goods-producing sector, which saw 82% of it's companies reporting job losses and none reporting growth. Meanwhile, the financial, real estate, and investment sectors reported stabilization. The future for jobs looks shaky with many experts expecting job losses to continue. Only 15% of companies expect to create new jobs, which is slightly worse than the 16% planning new hiring in the Jan. survey. The number of companies planning job cuts, however, from 40% to 34%. Search La Jolla Real Estate today.

California Energy Commission has published data that show slumping figures in the state's number of applications for solar energy rebates in the new housing sector. There were three hundred applications in the first two months of 2009, as opposed to twelve hundred applications in the last two months of 2008.

Experts from the Commission have made a loose connection between the failing housing market and the burgeoning solar market. The California Solar Initiative is run by the state Public Utilities Commission and inspired by Governor Schwartzenegger (R), The rebate program was begun in 2007, and through out that time the California housing market has seen the average price for a home fall from over $400,000 to under $300,000, from December 2007 to December 2008. These numbers are from the California Association of Realtors. The new home construction has been halved as a result of the falling market prices, according to the California Building Industry Association.

A larger trend may be evident from the lower number of applications, as the rebate program allows for 36 months to complete the solar project from the time the application is granted. What this suggests is that the pessimism about the future of the housing market by investors points to a longer term recession.

There is another market for solar photo voltaic cells in existing homes, or a solar retrofit. The numbers released by the CSI show almost as much dramatic loss for residential applications for retrofit as applications for new construction. The real drive behind the governor's vision of one million solar rooftops was the retrofit sector of the housing/energy market. The numbers for 2009 are significantly lower from only one year ago, by almost half.

The experts at both the CEC and the PUC point to a rebate level change from 2008 to 2009 was about to take place. Also it is thought installers feared the removal of a federal tax incentive, and there is always a notable short-term slow down when a rate change goes into effect.

However, the PUC has pointed out that they have never had the number of completed installations before, with over eleven megawatts interconnected in the first two months of 2009. Mary Sterkel from the CSI has admitted that this is not the best picture for the solar sector, but points to consolidation of investor companies as a contributing factor for the solar slow-down.

The two largest investor-owned utility companies in California are Pacific Gas & Electric Co. (PG&E) and Southern California Edison (SoCal Edison). Officials at both utility companies seem aware but not panicked about the new projects low numbers. They also insist the rebate level change has had a short-term impact.

A spokeswoman from PG&E said the numbers were lower everywhere and that it was too early to determine if that was a trend. And SoCal Edison maintains that their numbers for the first of 2009 are above the number of applications for solar projects for the same time in 2008, regardless of the end of year boost seen in November and December 2008. Managers of solar projects from both companies surmised that the new construction applications for solar rebates will be slow for quite some time. Search La Jolla Condos.

In the current housing market, people can afford bigger homes than a few years ago. But, just because you may be able to buy your piece of luxury real estate in La Jolla, that doesn’t necessarily mean you can afford to own it. While home prices have been dropping steadily, other costs associated with maintenance and upkeep for a home haven’t. Here are some factors to consider when deciding just how much house you can afford.

A bigger home means higher property taxes. Property taxes are generally calculated by dividing the total amount of taxes needed by the local government by your home’s total value. So even though your new home’s value is comparable to your old one, your share of the tax could be higher as property values may have dropped in the area. As the recession continues, local governments across the country have had to raise local property taxes to recover from budget shortfalls in other areas.

Home insurance can vary widely from state to state and town to town, but, generally speaking, they are calculated based on a homes square footage. Hence, moving into a bigger home could raise the insurance cost.

Owning a larger home also means it will cost more to maintain it. Experts recommend you factor in 1.5% to 4% of your home’s value toward maintenance costs when budgeting. Other costs associated with home ownership, such as repairing a roof or replacing ductwork, furnaces, etc. have gone up. The Bureau of Labor Statistics estimates the costs for homeowners have risen 2.4% in 2008. So pay special attention to these factors when budgeting to maintain a healthy financial outlook for many years to come.

Economists and housing market analysts say that with home prices comparable to 2002 and continuing to fall, we could be in for a lengthy period of fairly affordable housing. Typical prices of homes are currently below historical averages in comparison with incomes making them affordable to more buyers than any time since 2000. And if unemployment continues to rise, prices should drop even further.

The median sales price for homes in the South California area in January was 250k, a 40 percent drop from January a year ago, according to a report released Thursday by MDA DataQuick. The falling prices are largely attributable to an increase in foreclosed homes, which represented about sixty percent of January’s sales. Experts say that prices should continue the current trend, falling another 25 to 30 percent before stabilizing. Unemployment claims have been historically high in recent months, which should contribute to the continued dropping in home prices, as people already unemployed or in fear of layoffs are unwilling to buy a home. One analyst predicts that the trend in falling home prices will continue until the middle of 2010. He predicts that In Los Angeles the trend could continue into 2012. The last time LA area home affordability was normal in ‘92, prices continues to drop until ‘97. The La Jolla real estate market has also benefited from falling home prices, as there has never been a better time to purchase a home in La Jolla. La Jolla condos have also hit price drops that we have not seen in years. In addition, many experts are saying that the La Jolla and San Diego real estate market have possibly hit bottom and are beginning to show signs of recovery.

In contrast, the price of homes in higher income areas tend to drop more slowly during a recession as those homeowners are more secure and less affected by foreclosure avoid being compelled to sell their homes. Homes sales in the affluent areas of Bel-Air, Beverly Hills, Santa Monica, Laguna Beach and Newport Beach were all significantly below average as prices have not dropped significantly so the areas have not benefited from the bargain hunting atmosphere that has boosted sales in less affluent areas in recent months.

As home prices and mortgage rates continue to drop, affordability is on the rise. DataQuick of San Diego reports that the average monthly mortgage payment for homeowners in Southern California in January was $1081 as compared with $1239 in December ‘08 and $1940 January of last year. Allowing for adjustments for inflation, average payments are currently 51 percent lower than those from the spring of ‘89, considered the peak of the last real estate cycle and almost 60% lower than the current cycle‘s peak, June of ‘06.

The median price of homes sold dropped significantly in all counties in the Southern California area. The lowest median price of homes reported was San Bernardino County (162k) and Riverside County(195k) due to mass foreclosures. L.A. County’s median price(300k) was down 35 percent from January last year as was San Diego County’s median of 280k. Ventura County’s median dropped 30 percent to 335k and Orange County’s fell 29% to 370k.