Ray Perry; Realtor, CRS, GRI, e-PRO

Real Estate Outlook: Sales Picking Up Tempo

Here's an important question about the current market: To figure out where we are in the current real estate market, do you look at home prices or do you focus on sales?

In a real estate market where an estimated 35 to 40 percent of all home sales are foreclosures or short sales - in other words, distressed properties-- prices don't tell you much more than the obvious that we are still "correcting" the excesses of the boom years, still peeling back those wild and unsustainable hyperinflationary price run ups.

So it's no surprise that median prices are down, year to year, in Lake County and other areas across the nation.

Sales statistics, on the other hand, tell you how fast buyers are responding to those lower prices -- and greatly improved affordability.

Right now, in Lake County sales are definitely increasing. According to information gathered from the Lake County Multiple Listing Service (MLS), fourth quarter sales are 55 percent higher than a year ago.

In a recent report from the California Association of Realtors (C.A.R.) sales are way up in most areas of California. This is great news, and we're in a recession. .

No question that a high proportion of these sales are distressed properties.

A total of 3,157,806 foreclosure filings, including default notices, auction sale notices and bank repossessions, were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006, according to RealtyTrac®'s 2008 U.S. Foreclosure Market Report^TM. According to the report, 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007.

But that's what the bottom of a real estate cycle looks like: Value-savvy buyers see the opportunities, move in and mop up the mess left over after the big party.

Happily, in this cycle, they're getting real help from the capital markets: Mortgage money is at historically-attractive low levels, and is readily available to anyone with a down payment and reasonable credit.

Rates fell again last week to an average 5.12percent for 30-year fixed loans, according to Reality Times Interest Rate Watch, and to 4.80 percent on average for 15 year loans.

If you can spot the opportunities -- and have the resources -- it's not a bad time to be a buyer.

For more information contact Ray Perry at Ray@RayPerry.com or http://RayPerry.com

LAKE COUNTY- Home sales increased 19.2 percent in December in Lake County compared with the same period a year ago, while the median price of a home fell 37.4 percent according to information gathered from the Lake County Multiple Listing Service (MLS).

Closed escrow sales of homes in Lake County totaled 45 in December according to the MLS. The median price of a home in Lake County during December 2008 was $150,000, a 37.4 percent decrease from the $239,500 median for December 2007 according to the MLS. The December 2008 median price fell 18.9 percent compared with November's $185,000 median price. The countywide median dropped below $150,000 for the first time since early 2002.

The median price can be a bit deceiving because of the low numbers however the quarterly figures reflect the same picture.

Inventory has been steadily declining since May and along with the increased number of sales shows that many buyers are taking advantage of the low prices. Historically sales drop off in December through February and reach their peak in May.

Highlights of Lake County's housing figures for November 2008:

Lake County's Unsold Inventory Index for homes in December 2008 was 14.5 months, compared with 17.2 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Thirty-year fixed-mortgage interest rates averaged 5.14 percent during December 2008, compared with 6.21 percent in December 2007, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.95 percent in December 2008, compared with 5.48 percent in December 2007.

The median number of days it took to sell a single-family home was 177 days in December 2008, compared with 199 days (revised) for the same period a year ago.

What does this all mean?

Prices are at their lowest in years along with interest rates. January has historically been one of the months when homes sell at their lowest prices. Investors and savvy buyers are snapping up many of the bargains as reflected in the lower inventories and higher sales numbers. Now would be the time to buy a home if you have good credit scores and down payment money. Some sellers are working with buyers by helping out with down payments. If you are considering buying or selling property, call Ray Perry at 277-9255 Ext 101 or email Ray@RayPerry.com for more information. http://rayperry.com

By Ray Perry

LAKE COUNTY, CA-Home sales increased 15.8 percent in July in Lake County compared with the same period a year ago, while the median price of an existing home fell 25.9 percent, the Lake County Multiple Listing Serves (MLS) reported.

"Sales improved significantly in July 2008," said California Association of Realtors (C.A.R.) President William E. Brown. "Deeply discounted, distressed sales continue to drive volume in many regions of the state.

"Year-to-year increases in the number of transactions ranged from a 6.7 percent increase in the San Francisco Bay Area to a 176.5 percent increase in the Riverside/San Bernardino region," he said. "In general, greater percentage gains occurred in lower-priced areas that had been most adversely affected by the market downturn since late 2005 and that are concurrently experiencing the biggest declines in prices."

Closed escrow sales of homes in Lake County totaled 88 in July according to information collected from the MLS. Countywide home sale activity increased 15.8 percent from the revised 76 sales pace recorded in July 2007. Sales in July 2008 increased 41.9 percent compared with the previous month.

The median price of a home in Lake County during July 2008 was $200,000, a 25.9 percent decrease from the revised $270,000 median for July 2007, the MLS reported. The July 2008 median price fell 8.9 percent compared with June's revised $219,450 median price.

"Once again, the 40.3 percent year-to-year decrease in the median price of a home was an all-time record, surpassing the previous record set in June with a 37.9 percent decrease," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "Since the statewide median remained in the $585,000 - $595,000 range through August of last year, the market will continue to experience significant year-to-year adjustments through August even if the median price holds steady over the next few months," she said. "The statewide median was last in the $350,000 range in early 2003."

The Lake County market as well as the rest of the country is being driven by the large volume of foreclosures at this time. Sellers who are not in foreclosure have to compete in the existing market. This is not a problem if they have some equity in their home and are planning to buy right away, their next home may also be selling at a reduced price so it is relative to the situation. As volume of sales increase eventually so will the prices. We may see a slight drop in volume over the next few months as the foreclosure market gets snapped up but it appears that we are at or close to the bottom of the market. The savvy buyer should take advantage of the low prices while they can.

Highlights of Lake County's Housing Figures for July 2008:

• Lake County's Unsold Inventory Index for homes in July 2008 was 13.7 months, compared with 18.5 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

• Thirty-year fixed-mortgage interest rates averaged 6.47 percent during July 2008, compared with 6.70 percent in July 2007, according to Freddie Mac. Adjustable mortgage interest rates averaged 5.24 percent in July 2008, compared with 5.71 percent in July 2007.

• The median number of days it took to sell a single-family home was 148 days in July 2008, compared with 134 days (revised) for the same period a year ago.

To find what your home is worth, call Ray Perry.

Ray Perry is a Realtor® with CPS Country Air Properties and can be reached at 707-277-8000 Ext 101 or email http://www.move2lakecounty.com/content/contact.html

On Sunday September 7, 2008 at 11:00 AM the Treasury Secretary of the United States announced that the government will be taking Fannie Mae and Freddie Mac into conservatorship.

The first thing to understand is that conservatorship simply means control. Fannie Mae and Freddie Mac, also known as agencies, are the backbone of the real estate and mortgage financing markets. These agencies are responsible for making sure that there is always adequate funding for consumers to obtain mortgage financing for real estate.

Fannie and Freddie are government sponsored agencies, which means that the government created them. However, up until Sunday, the government did not control them. Fannie and Freddie are public corporations.

As you have been hearing reported for the last few months, both of these agencies have been suffering financial losses in the billions of dollars. These losses are directly related to the national housing and financing crises that exists.

The record number of foreclosures, mortgage delinquencies and personal bankruptcies are destroying the value of the mortgage securities that Fannie and Freddie hold in their portfolios. Simply put, mortgage securities that are held by these tow agencies are backed by the consumers ability to pay their mortgages on time. When consumers are not able to pay their mortgages, and the value of real estate declines, the securities that these agencies hold, loose value. This results in the agencies inability to operate and ensure that additional funding will be available for future lending. In the end, they cannot survive without help.

The bottom line is that the current credit crisis has reached epidemic proportions and that the survival of Fannie and Freddie is a must. The government stepped in to take control was the only solution to ensure that funding will be available for mortgages and to provide stability to the housing market.

What does this mean in general?

Below are bullet points that explain the major aspects of the government takeover and how it will affect the market.

• The United States Treasury now has the ability to provide an unlimited amount of funding to purchase mortgage backed securities from these agencies. The ability for Fannie and Freddie to sell their securities that money will remain available for lending.

• The government control means that these companies are now backed and controlled by the government. This will almost immediately begin to create stability within the financial markets. The stabilization of the financial markets is one of the first steps to creating an economic recovery.

• The bailout of these agencies will be paid for by the taxpayers, however unlike the Bear Stearns bailout, the stockholders in Fannie and Freddie will not be rewarded. Treasury Secretary Paulson has made it very clear that prior to any stockholder receiving any dividends from either Fannie or Freddie; the taxpayers must be paid back first.

• At the present time there is no estimate as to how much the bailout will cost the taxpayers. A major factor in determining the total cost will be determined by how quickly the financial and real estate markets stabilize.

• Interest rates are expected to remain stable for mortgage financing over the next few months. Rates are significantly lower since the announcement making financing more affordable. As of Tuesday morning Jacie Casteel from Sterling Mortgage in Lakeport reported that rates have dropped to 5.875 with zero points for a 30 year fixed Mortgage.

What opportunities exist for homeowners and homebuyers?

• With the stabilization of the markets, the decline in property values is expected to slow down. If you have been waiting for values to drop further, it is possible that the bottom is very near and sitting on the sidelines much longer may cause your cost of homeownership to increase. The time to act is NOW.

• Lending guidelines may get a little tougher with new government control. This potentially means that accessing funds for mortgage lending may become a little more challenging and make it harder for borrowers to qualify. Once again, if you have been waiting to purchase or refinance your home, now may be one of the most affordable times to do so.

There are many unknowns pertaining to the takeover of Fannie Mae and Freddie Mac. However, the takeover was a must and the actions of the government will eventually bring badly needed stability to the markets helping to reinvigorate the battered housing market in the U.S.

To find out how this effects your property value go to http://rayperry.com

Lately there has been a lot of interest in the Clear Lake Riviera Homeowners Association. Some have expressed concern about the way meetings are conducted, the tactics used for enforcing the Covenants, Conditions & Regulations (CC&R's), questioning what the association dues are paying for or how the money is spent, or even if there is a need for an association.

Let's face it, when we moved here we knew there was an association and what the rules were. If we didn't like them we could have selected another location. There are plenty of subdivisions around the lake that were created without CC&R's, many choose to live or not to live in those areas because there is no conformity or little enforcement of the county regulations unless there is a complaint. This can be readily seen by driving around the county through various neighborhoods.

Because Lake County is mostly rural the county government is responsible for enforcing the county ordinances. Those departments are underfunded and understaffed so policing the county for violations is a monumental task depending on the complaints of neighbors to blow the whistle on violations before they enforce the ordinance. The same goes for the Forest Service. There is not enough staff to police each and every violation of weed and brush abatement that occurs.

As a result, neighborhoods are formed with their own CC&R's for the benefit of the residents to help police themselves. Rules and regulations are agreed upon to help keep some conformity to the community and keep property values up.

Disbanding the association because of not agreeing with the way its run is like throwing the baby out with the bath water. If the members of the association don't like the policies they can change them. If they don't like the way things are run, they can get involved. If they don't like the board members they can nominate someone they like and vote them in. Currently the association is accepting nominations to fill two board positions. The deadline is April 15, 2008. As adults we realize that Santa's elves won't be the ones at 2:00 a.m. still trying to put the bicycle together and the Tooth Fairy doesn't pay the $3,000 orthodontist bills. Someone has to make it work.

As a non-profit corporation, the association is a major corporation with a catch-the board members and committee members aren't paid with salaries, benefits and luxury cars. They are paid with a rekindled sense of community pride and enthusiasm. Their accomplishments are their rewards.

Unfortunately many complain about the association but few get involved. The board would love for the membership to help with the operations, special events and long range goals of the community association. They handle all of the day-to-day operations and all aspects of the financial and administrative responsibilities. They also do long range planning, conduct monthly meetings work on CC&R revisions along with attempting to personally man and keep active 8 plus committees.

As association members you can and should get involved. They are looking for homemakers, professionals, retirees & students to volunteer and serve on one of the following committees.

Purpose: To meet Federal and State disclosure requirements as outlined in the Davis-Sterling Act, Civil Code and Corporate Code. To update the membership on upcoming events, rules and regulation changes, etc.

Purpose: To inspect/patrol, to in-process applications, for the purpose of ensuring compliance with governing documents and the building guidelines. To ensure the aesthetics of the community, and preserve property values.

Purpose: To promote and encourage member's participation on the board of director, to meet election/nominating deadlines as per governing documents, to conduct candidate orientations in May, host ballot counting in June and host social in July.

Purpose: To assist the manager and treasurer in the compilation of reports, put cancelled checks in numeric order, box up records, drop off materials, etc., for the auditor's annual review.

Purpose: To assist the board in large scale projects that affect the entire community - neighborhood watch programs, etc. To assist with research, fact finding, costing, etc.

Purpose: To work with the Treasurer and property manager to compile a budget proposal for the Board of Directors. ■