Jon Sterling 619-630-9294

San Diego Real Estate - Jon Sterling from Jon Sterling on Vimeo.

We have noticed for a while that first-time buyers were driving the home sales in the San Diego real estate market. Right now, there is a perfect storm of low mortgage rates and tax credits for first-time buyers of new construction homes in California.

The problem? California is running out of money to fund the tax credits.

Originally, $100 million was reserved for the first-time buyer tax credit, and now less than $20 million remains. If the low mortgage interest rates weren't enough to motivate buyers to buy now, perhaps the shrinking pool of tax credit money will provide the extra motivation. Plus, interest rates aren't likely to get any lower and have risen over the past week or so.

Get moving!

Here's some information on the California first-time buyer tax credit (you can read more at the California Franchise Tax Board website).

Ways to have your tax credit denied:

• Somebody has lived in the house before.
• Your application isn't received withing the first week after closing escrow.
• California runs out of money for the credit before your application is processed.

Other important pieces to note:

• The home must be a primary residence.
• The home must be a single family residence.
• You have to live there for two years.
• You'll have to return a portion of the credit if you move before two years have passed.
• California is monitoring this credit and may require proof from you at any given time.
• The credit is not refundable.

More information for first-time buyers can be found at the posting First Time Buyer Questions From San Diego. You can also SEARCH FOR SAN DIEGO REAL ESTATE here.

There is a dream house raffle being held in San Diego to benefit the Ronald McDonald House Charities. The winner of the raffle can choose between the $1.9 million house and $1.6 million cash. There are other prizes available as well and the tickets are $150 each. The drawing will be held on June 20, 2009.

The Ronald McDonald House Charities provide help for families who have children experiencing a medical crisis. Regardless of what the economy is doing, there are medical emergencies and families who need help. This is a great opportunity to give back to the community.

For more information on this raffle or other fundraisers held by the Ronald McDonald House Charities, visit www.rmhcsd.org.

This is an email excerpt from a message to one of my clients today. The client appreciated the information, so I thought it would be good to share.

Are home prices still dropping in San Diego?

Yes. There was a slight increase in prices in certain pockets of San Diego in February, but it is not the beginning of a trend. The increase in prices was due to a temporary shortage of housing inventory. With all of the loan modification efforts underway, the lenders froze their foreclosure activity in November and December. That freeze created a shortage which drove some prices up, but it won't last.

The notices of default (NODs) filed in January in San Diego County were up 25% (3353 of them). It takes a few months to get from NOD to foreclosure sale, but that's an indication of more foreclosures on the way.

The median price in February 2008 was $430,000 and the median price in February 2009 was $325,000. Nobody knows the bottom of the market until it starts to climb again. As a buyer, the advantages of very low mortgage rates and the first-time buyer tax credit are significant right now. The most important question I ask buyers today is how long they intend to keep the property. If it's less than three years, this might not be the best time for that person to buy real estate. There are other factors, but planning to keep a property long-term is an important one because prices could continue to drop. If the buyer plans to live in the property or rent the property indefinitely, this is probably the best time to buy real estate in our lifetimes.

What type and size of home is available in the $225K to $350K price range?

This will largely depend on the neighborhood. Sarah has seen some of the single family homes in this price range in neighborhoods she likes, and I would be happy to email you the same information.

What options are available in the distressed sale arena, where we would be buying from a lender?

There are 10,984 foreclosure homes in San Diego right now. The average price of those homes is $266,000. Many of those need serious work, which can impact the lending options. We can deal with those on a case-by-case basis, and there are plenty of distressed property opportunities. Most lenders use real estate agents and third-party asset management companies to market their properties, and I have resources to find the others.

What do you think about us buying a duplex and renting one half of it?

I'm a big fan of two, three, and four-unit buildings. Anything above four units does not qualify for residential lending, and there are other complications. Getting someone else to pay part of your mortgage is great for long-term wealth building. I like to tell my clients to treat their real estate purchases like the game Monopoly. Just keep telling yourself, "four green houses, one red hotel, repeat."

Mangled Mortgage is the single best resource for agents working in battered real estate markets. Check it out today!

Statistics don't lie.

Your clients need to understand numbers. They are inundated with media messages that may or may not represent the entire ststistical story accurately. It's your job to be sure they have good information so you can guide them through the buying and selling processes.

A question everyone in real estate hears is, "How's the market?" Your answer will often determine whether or not that person will continue their real estate coversation with you. If the conversation stops after you answer, you should probably adjust your approach to this subject.

"The market it terrible."

Wrong answer. It's never terrible, and nobody wants to hear about it if it is. Try again.

"It has been interesting lately."

Still weak. Next!

"The foreclosures in our area are presenting great opportunities for buyers."

Getting better. Let's improve upon this.

"One out of every 35 homes in our city is in some stage of foreclosure. Our average market time is 62 days and mortgage interest rates make this the best purchasing opportunity since the Great Depression. Properties are selling at an average of 95% of their list price, mainly because cash investors are buying one-third of all the houses sold."

That's better.

When you use statistics to tell your story, you become more valid in the eyes of consumers. First of all, you demonstrate that you understand the numbers and what they mean to buyers and sellers. Secondly, you are removing emotion from the equation when you speak in numbers. Lastly, numbers are the language of business and real estate is a business.

I use foreclosure statistics (my favorites are ForeclosureRadar.com, Realty Trac, and the info I get from my title rep at First American) in my market because foreclosure sales are on everyone's mind. I tell my sellers that inventory is the lowest it has been in five years and notice of default filings are the highest they have been in five years. That means it's a great time to list today, but might not be a great time to list in six months. I have charts and graphs to show the statistics in a visually appealing way and help me tell my story about the numbers.

I use the same information when I talk to my buyers. I let them know we will most likely be in a multiple bid situation because 85% of the properties sold are getting multiple bids. I also tell them we are expecting another wave of foreclosures, but we don't know exactly when that will happen. Mortgage interest rates are at historic lows and the tax credit expires December 31st, so that's where we need to focus our attention.

The same set of statistics tell that story. Nothing about my conversations with my clients is bent or misrepresented. All I'm doing is obtaining good data, interpreting that data, and telling my clients what it means to them. I do this because it's my job.