Tom Lyons

Many factors have come together which make it attractive, and a smart long term wealth building strategy, for first time homebuyers to purchase in 2009!!

• Lower house prices help first time buyers affordability.
• Historically low interest rates should remain low through 2009. The Federal Reserve Board is taking numerous steps to reduce mortgage rates.
• Federal government income tax breaks:
• $7,500.00 existing credit for first time buyers
• Existing IRS income tax breaks for homeowners
• More Federal income tax breaks may be coming in 2009

In many cases it is now cheaper to own a home than it is to rent.

Please also remember that this window of opportunity to purchase low priced houses with extremely low interest rates will not stay open forever.

Owning your first house may never be more affordable than it will be in 2009!!

Tom Lyons Real Estate Team

Real Estate Experts in Livermore, Pleasanton, Dublin, San Ramon, Danville, Tracy, Mountain House, Manteca, and Lathrop California

www.tomlyons.com

www.tomlyonsforeclosures.com

realestate@tomlyons.com

925-216-1105

Get a leg up on building your long term wealth!

As realtors we see the good, the bad and the ugly with all things connected with the Great Real Estate Collapse of 2006-2009. We see the good when we help a young family, first time homebuyers, purchase a house, or foreclosure, at a great price; after all, these same buyers couldn't afford to buy this same house a year ago; the price was too high. We see the bad and we experience, unfortunately, the ugly as we live through, as our clients live through it at the same time, the sad and sometimes tragic family consequences associated with short sales, foreclosures, lost jobs, and plummeting house values.

But hidden in this, and unspoken, are stories of people who demonstrate great personal integrity in tough times, people whose inner strength, faith, and display of "True Grit", lift them and their families above the consequences of these difficult housing situations.

Here is one of those stories. More will follow.

This is the first in a series of true stories about the human side of what has happened during our national housing tragedy. Based on true stories that have happened in the Northern California (SF Bay Area) real estate market during 2007 - 2009, they demonstrate that people can bounce back, that people can survive, and that there is a silver lining in every storm cloud that wind blows our way. The real names of people involved in this situation have been changed to protect the innocent...

If you have a true story that you'd like to share please email me at realestate@tomlyons.com

The Teacher

Chris B is a high school English teacher whose lifelong dream is to help minority youngsters get a good education. Of Filipino descent himself, Chris grew up poor, put himself through college by working several jobs at the same time, then became a teacher so that he could help, and teach, children.

He married a pretty girl he met in college and they named their first son "Eli", in honor of Eli Manning, the NY Giant quarterback. While watching their young three year old son run around the house wearing an Eli Manning football jersey, while throwing a football, I asked them why they named their son Eli.

"Because Eli and the entire Manning family are good people." was their answer. "They're a close knit religious family and everything that we read about them shows that Eli is always trying to do the right thing." they added. "We're big football fans and we admire him."

Running around the house with Eli, barking and nipping at his heels, was a little white puppy dog that they named "Peyton" .... named after you know who. Chris is currently 35 years old and his wife Cheryl is 32.

In May of 2006, based on the advice of their realtor and their lender (both no longer in the business) they bought a 3/2/1100 sq. ft., 10 year old home in Dublin Ca. for $640,000. "The value in the home will surely go up over the next year" their realtor told them, so they dumped their entire life savings of $35,000 into the house ... to do a 95% LTV loan, stated income, no docs. Once they moved in they were advised, by this same realtor, to get an equity line and remodel the kitchen so that they could sell, in a year or two, "at a huge profit" and get a bigger mousetrap. So now they had a first and an equity line totaling $638,000 ... and their total monthly payment (PITI) was a whopping $5000.00 per month. But their take-home monthly pay was approximately $7500.00 per month .... So their monthly mortgage was a whopping 67% of their monthly take home. Ouch!

Chris and Cheryl quickly learned a couple of things. First, (from day #1) that they could not afford the mortgage payment ... so immediately they had to take money out of their savings each month to make the house payment. Second, that there would be no "huge profits" as house values were actually coming down, in Dublin California, before they purchased the home.

So Chris took on extra work, at school, coaching high school wrestling, to earn extra money. Cheryl got a second job as a part time secretary. Month by month, though, they had to dig into their savings, and 401K, to pay the mortgage. They hung on as long as they could, they tried to do the right thing, but in the Spring of 2008 I got the call to come and see them.

They were at the end of their rope; they had exhausted all of their funds in an attempt to stay current with their mortgage; they were embarrassed, guilt ridden, and ashamed about the entire situation; but they could no longer pay the mortgage. So they called me about doing a short sale. This after they had hung on for almost two years .... taking money out of savings and retirement each month, to pay their mortgage. This is the part about personal integrity, the fact that they tried to do the right thing, as they saw it, for such a long period of time.

The first thing that we told them was not to feel ashamed, not to feel embarrassed, that little of this was their fault and that this same situation was happening to thousands of families in the East Bay area of Northern California. Their realtor and their lender, had they been real pros, instead of the shysters looking to make a quick buck that they were, would have told them the truth back in May of 2006; namely that the housing party was over and that house values were coming down. They trusted and believed what they were told; they were sold a bill of goods. Like thousands of other families.

And here you have a teacher who could not afford to pay for their home in the city that he taught school.

So in May of 2006 they paid $640,000 for their "dream" house ... in June of 2008 we listed it for $375K and had two full price offers in 10 days.

Their first loan was with Countrywide for $608,000, and since Countrywide was now B of A, and since the State of California reached a $3.3 billion settlement with B of A in the Summer of 2008, against Countrywide for illegal loan practices, we felt a glimmer of hope that some help might be on the way. But Countrywide told them that "their loan did not qualify for a modification???" Their short sale package was submitted to Countrywide Home Loan 4 times, each time sent registered mail - return receipt requested - before Countrywide finally acknowledged that they received it. As of this writing, in December 2008, they have been denied a short sale because Countrywide claims they have not received some of Chris's financial papers that we have mailed, faxed, and mailed again to a specific rep at Countrywide 4 times!!

Their second loan of approximately $30,000 is with Citibank; we can't get through to them on the phone; after holding for ten minutes Citibank's phone system drops the call. So after sending Citibank the short sale package several times over the past 90 days, we still don't know if that package is in the right hands; they've never acknowledged receipt.

We don't know the ending of this story. But Chris and Cheryl have reached the end of their rope. They moved out of their house, left it vacant, and moved into an affordable rental in a neighboring town. They are so disillusioned at the real estate market, the banking system, their prior realtor and lender, and everything else about this fiasco, that they will never move back into their house, even if Countrywide becomes smart enough, and humane enough, to offer them the loan modification that they need and deserve.

And to think that this is happening to a young teacher which is, arguably, the noblest of professions.

If it doesn't kill you ...

But through all of their troubles, the other day they told me something memorable. Their financial and house troubles have strengthened their marriage. Because of their troubles they've become closer. They now know how silly it is to blame, or criticize, or pick a fight, with each other over the small trivial things that used to bother them before. Why get upset with your partner because they forgot to take out the garbage when you have this .... Gargantuan ... financial burden hanging over your head every minute of the day? They've learned to love each other, they've learned how to forgive and forget, a lesson that many never learn. The little Sigmund Freud that lives in all of us might conclude that they may be better off for having lived through their two year nightmare?

Copyright 2008 by Tom Lyons. All rights reserved.

Tom is an experienced agent (18 years) who works in the following East Bay communities of the San Francisco Bay Area. Cities covered are Livermore, Pleasanton, Dublin, San Ramon, Danville, Tracy, Mountain House, Manteca, and Lathrop.

The question that I hear most often these days from clients, friends, and potential clients is "Are we at the bottom?" Or ..."Are real estate prices going to continue to do down?" Buyers don't want to pay too much ...sellers, who can't really sell their houses right now, are waiting for some kind of recovery so they can sell their house, and investors, well, they want to buy at the absolute bottom of the market.

So ..."ARE WE AT THE BOTTOM OF THE REAL ESTATE MARKET YET?"

The answer to that is yes and no....

Yes, we are at the bottom in most cities in the lower price ranges .... For Livermore that price range is in the high $200's to low $300's. For Tracy, Mountain House, Manteca, and Lathrop the lower range is $120's to the low $200's. Lower range in Pleasanton, Dublin, San Ramon, Danville is the mid $300's to low $400's.

We are at the bottom here .... homes in these price ranges, in these cities, are selling fast. Most are bank owned REO's which are priced below current market value (CMV) and they are selling very quickly with multiple offers on the ones that are the best bang for the buck. Because of the high demand and lower supply the average months supply in these price ranges, in these cities, is approx. 2-3 months. With a 2-3 months supply of houses you normally don't see any price erosion. (Months supply equals total available house inventory divided by sales over the last 30 days)

HOW ABOUT THE MID PRICE RANGES AND HIGHER?

Mid and upper price ranges are a different story. Mid range prices in our area can be anywhere from $300K (In the Central Valley) to $700K (Pleasanton) There seems to be more downside to these yet as the months supply of available homes hovers around the 6 month mark. A 6 months supply of houses means that further price erosion is likely. In the upper price ranges, where supply is hovering around the 12-15 months mark, well, the house prices on these kinds of homes still has a way to fall.

SO WHAT"S IT ALL ABOUT ALFIE?

To summarize, it is absolutely the best time for investors, and first time home buyers, to jump in and purchase a lower priced home before all these marvelous bargains disappear. And disappear they will. For those of you with higher priced homes looking to sell .... we think that you should stay the course and not try to sell right now. If you did decide to sell .... you'd probably get a lot lower price than you'd be looking for.

For more info check out our new foreclosure website at http://www.tomlyonsforeclosures.com

Thanks for reading

As of 11/08, bank owned REO's are still selling like hotcakes in Northern California. Prices have dropped so low, that in many cases it makes more financial sense for people to buy these homes, than to rent. In the Northern California cities of Manteca, Lathrop, Tracy, Mountain House, Livermore, and Dublin there is a feeding frenzy when these REO's hit the market priced correctly. Many receive 6-10 written offers within a week from being listed!

The properties are being snapped up by:

• First time buyers
• Investors

Many investors are buying multiple properties right now. One investor, who owns a local carpet company, has bought over 30 properties within the last 6 months. Talk about a smart investor!!

For more information about the foreclosure situation in Northern California please go to my new website

http://www.tomlyonsforeclosures.com

http://www.tomlyons.com

Thanks!

Tom L