Meredith Martin

September 2007 ~ September 2009

4,073 ~ Properties for Sale ~ 3,226 (20% less)
447 ~ Under Contract ~ 648 (45% more)
447 ~ Sold ~ 492 (10% more)
$761,000 ~ Median Sales Price ~ $641,000 (16% less)
38 ~ Days on Market ~ 53

Which means even though there's less inventory to choose from (contrary to popular belief), month's supply of inventory is down nearly 50% from Sept 2007, Buyers are taking their sweet time - evidenced by the significant increase in average days on the market.

If you've ever wanted to know anything about HOA rules and regulations - what's legal and what isn't - I highly recommend subscribing to Davis-Sterling's newsletter. They are a law firm that specialize in the often gray area of Condominium HomeOwners Associations in California. Their weekly newsletters are full of what amount to hilarious (but more often legitimate) questions and answers. I keep meaning to post about swim diapers and how the Center for Disease Control has strictly banned them as well as non toilet trained kiddies from public pools.

MANIC BEHAVIOR
QUESTION: When I was manic last year, I put trash in front of another homeowner's door and during the period of one hour, I walked back and forth to her door 13 times which was on the surveillance camera of the pool deck. The board fined me 13 x $200 = $2,600 saying it was justified even though it was one incident. Now they are threatening to file a lien on me if I don't pay it in 30 days. They refused internal dispute resolution and alternative dispute resolution. Can they refuse my request?
ANSWER: Your manic behavior probably scared the daylights out of everyone and earned you a well-deserved fine. The size of the fine may or may not be deemed reasonable by a judge. It will depend on whether the judge believes your actions constitute one incident or 13 incidents. You're lucky the owner didn't seek a restraining order. Regarding the threat of a lien, the board cannot lien your unit for unpaid fines. Civil Code 1367.1(e) As for ADR, the board is not required to accept your request for mediation or arbitration. However, the board should not refuse your request for "internal dispute resolution."

Reprinted from Davis-Stirling.com by Adams Kessler
Previous Newsletters and to sign up [Davis-Stirling.com]

Courtesy of Julian Hebron, a local mortgage banker (aka direct lender, which are handy guys to have on-call in this lending climate) and all around guy-in-the-know, here is an update on rates, and the direct impacts to the housing market from the newly signed 'Stimulus Plan'.

STIMULUS SUMMARY-THE WHOLE BILL
President Obama signed the $787 billion American Recovery & Reinvestment Act into law Tuesday, February 17. Funds will be allocated as follows, and consumers can track spending and time lines at http://www.recovery.gov/. The site is a pretty clever re-branding of the package that was branded as wasteful by a unified Republican minority in Congress. These categories aren't fully defined on the site yet, and this doesn't include a roughly $1 trillion bank rescue plan that's forthcoming from Treasury. I cover the housing highlights in a separate section below.
Tax Relief: $288b. State and Local Fiscal Relief: $144b. Infrastructure and science: $111b. Protecting the Vulnerable: $81b. Health Care: $59b. Education and Training: $53b. Energy: $43b. Other: $8b.

STIMULUS SUMMARY-HOUSING PROVISIONS
Below are summaries of key housing provisions of the American Recovery & Reinvestment Act. Housing help that's not in the Recovery Act explicitly but seems likely to fall in the "Protecting The Vulnerable" category** (unless it is part of the Treasury plan) is a $50b investment plan for borrowers who haven't yet been late on mortgage payments but are struggling. This is great for individual homeowners and critical for housing overall to stop the foreclosure spiral and stabilize home prices-foreclosures are estimated to top two million this year.
$729,750 Loan Limit Returns: FHA and Conforming loan limits we saw last year for high-cost areas have been restored. But please note that this change will take a few weeks for lenders to implement and price. Remember: the spreads between $417k-cap and $729k-cap loans were a lot wider than the current $417k vs $625k spreads. Note also that reverse mortgage limits have been increased from $417,000 to $625,500.
First-time Home Buyer Tax Credit: The tax credit for first time home buyers was increased from $7500 to $8000 for homes purchased between January 1, 2009 and December 1, 2009. A tax credit is equivalent to money in your hand, whereas a tax deduction just reduces taxable income. The credit no longer needs to be paid back as long as you live in the home without selling it for 3 years. The $7500 version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame. If you bought the home in 2008, the credit remains $7500, and it still needs to be paid back over a 15 year time frame beginning in 2011 when you file your 2010 returns. The credit phases out for couples making over $150k or singles making over $75k. The credit remains refundable. This means that first-time home buyers who owe less than $8000 in taxes for the year are still eligible for the full $8000 credit when they file their tax returns. In that case, the IRS will write you a check for the difference between $8,000 and your actual tax bill. The credit can be claimed on your 2008 tax returns that you file by April 15, 2009, even if you buy the home in 2009.
Home Improvement Tax Credit: The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1500. Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters. Generally, your home improvement contractor and/or the manufacturer selling the improvements issues a certification that clarifies whether the improvements meet the necessary standards for energy efficiency. Most modern windows, furnaces, and air conditioners meet these requirements.

RATE UPDATE
Zero-points rates on conforming loans up to $417k and super-conforming loans up to $625,500 have improved to start this week as stocks have sold off and mortgage bonds have rallied-when bond prices rise in a rally, yields (or rates) drop. With the government participating in mortgage bond markets, lenders are pricing more conservatively than market levels might suggest because it's harder than ever to predict which way markets will move. So we continue to see favorable terms on points: one point gets .625% to .875% lower in rate, so borrowers break even on a one-point buy down in 12-18 months. Jumbos 30yr fixed loans for SFR loans from $729k to $5m are looking good at 6.625%.

Julian Hebron works for RPM Mortgage and can be reached directly at Julian@rpm-mtg.com
**Editors note - Washington Mutual/Chase has just set up a brand new department dedicated to recasting loans solely for borrowers who have not defaulted on their loans. I am told it is so new, many of the bank employees do not yet know of it. Being as I have many clients with Wamu loans, myself included, I'll let you know if it works.

The 2007 Cost vs. Value Report establishes cost-to-construct benchmarks for a set of common remodeling projects, then estimates how much of that investment will be recouped at resale in the current market. It's a must read for those needing more space, like many of my clients with growing families, but are weighing the risk/reward for selling and upgrading in this kind of market.

San Francisco Job Costs:

"What the Numbers Mean"

When comparing cost estimates for actual projects, remember that averaging tends to have a leveling effect on "Job Cost" data from the 2007 Cost vs. Value Report. And as always, seemingly small differences in size, scope, or quality of finishes can dramatically affect final project cost.

It's also important to consider whether a remodeled space reduces the perceived number of rooms or available square footage. For example, carving a half-bath out of unused storage space under a stair case is an obvious gain in usable space. But converting an existing bedroom into a master bath, while a positive development in many respects, may reduce the total number of bedrooms below the minimum expectation of typical prospective buyers."

The full article can be found here on the Handley Wood Remodeling website, and is quite the interesting read. (The 2008/09 numbers are due out soon).