Category Archives: The HomeReach Weekly

Where is the San Diego Housing Market Headed?

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By David Tal
Published Oct. 1, 2010 in My Hometown Magazine

As Broker of Home Reach Real Estate, it is my job to keep my clients and agents well educated on the local real estate climate. Having a clear and realistic picture of the market gives our clients a competitive advantage when it comes to making their home buying and selling decisions.

To get a clear understanding of where we’re going, it is important to identify where we’ve been. 2009 was a tough year for most. Thousands of San Diegans lost their homes, we can’t ignore that. Home values continued to drop in many areas throughout San Diego County and it was still difficult to get approved for a loan. But with home values depreciated, many buyers and investors jumped back into the real estate market. The US government also stepped in with the FHA loan, a government backed mortgage, making it much easier to get a loan, and with only 3.5% down. Also, many banks started refinancing their clients to stem the flow of foreclosures. In addition to all of those incentives, the government stepped in with an $8,000 Tax Credit for first time homebuyers, a smashing success that helped tens of thousands of people buy homes.

Total sales volume in 2009 increased 22% compared to the year before.

The tides have turned. Many areas of San Diego have now seen home values increasing. Chula Vista, for example, has seen almost 8% in home value appreciation over the last 12 months. It seems every desirable property has multiple offers on the table. On top of that, the rental market has been strong. This has brought many investors into the housing market because they can get good investment returns on properties they pick up.

Another Wave of Foreclosures may be on the horizon.

Homebuyers have had a hard time grabbing a bank owned home or condo in recent months. One reason is buyers surged in the first two quarters of 2010 because of the $8,000 tax credit offered to first time homebuyers and the slew of government backed incentives. Though buyer demand is high, however, it’s equally true that inventory has slowed down. A lot of inventory has been bought in the last 12 months, but that still doesn’t account for it all. The truth is, the banks have been holding on to a lot of their REO foreclosure assets, in hopes of stabilizing the housing market and protecting the values of their current and future inventory of homes they will throw on the market. The idea is if they flood the market with foreclosures it will only hurt home values further. Although many people agree with their strategy, everyone is wondering how long they can continue to trickle homes on the market before they need to start paying back government and taxpayer loans and need to start liquidating these homes faster. They can’t hold on to them forever. Timing is everything too. If it isn’t seamless, it could potentially create another little dip for home values that could trigger another scare in the housing market, further fueling the problem.
An estimated 3,000,000 loans are in default, and many of them are not receiving loan modifications. When they can’t get a loan modification, homeowners are left with two options. They can attempt to “short sale” their home, but if that doesn’t work out, they will usually end up losing their home to foreclosure.

In summary, it’s very hard to predict how the housing market will perform later this year and into 2011, but many signs are looking up. San Diegans are buying homes and with far more stable loans. The government has stepped in with incentives and programs to boost lending. Further, the economy seems to be slowly turning the corner. At the end of the day, it’s job creation and economic stability that will guide the housing market upward once again.

To search all San Diego homes for sale, visit us at www.HomeReach.com.

David Tal
Home Reach Real Estate
Broker/REALTOR®/President
mobile: (619) 955-7706
efax: (619) 872-2471
www.HomeReach.com

San Diego Foreclosures:

San Diego Real Estate Company Helps Solve Homelessness

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(We forgot to post this in April) – The 1st Annual HomeReach.com “One Round. One Cause.” Golf Tournament, Presented by PING, will take place on April 28, 2010 at Maderas Golf Club. Take five minutes to get to know more information on the upcoming tournament and why PING came on board for this fantastic event. Visit HomeReach.com and click on the banner to sign up today! Solutions for Change is solving family homelessness permanently through a revolutionary model known as the Solutions University. Families spend 500 days on campus and 500 days off campus.

HomeReach.com Golf Tournament – Sign Up Today!

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On April 8th, CEO of HomeReach.com, David Tal was on San Diego Living with Rich Mundy form PING Golf, the presenting sponsor of the tournament. April 28th is soon approaching! Click here for complete details.

San Diego Real Estate Expert, David Tal’s HomeReach Weekly

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Get $3,000 to short sale your home?

April 8, 2010 – In an ongoing effort to stave of foreclosures, the government has been coming up with new ways to help troubled borrowers.  Their newest program may just do the trick!

A short sale is when a troubled borrower owes more on his home than it is actually worth; therefore, he can’t even sell it, but rather is forced to foreclose.  Short sales help the borrower sell the home, once approved by the lender to accept a short payoff.  Lenders like this method because it saves them tens of thousands of dollars in most cases to avoid the foreclosure process and sell it while it’s in a better condition.

Tragically, only a small number of homeowners have been approved for a short sale by their lenders, and the small percentage of people who were approved had to wait for a 6-9 month short sale process.  In many cases, they lost their homes to foreclosure during this tedious and time straining attempt.

On April 5th, the government enacted the new Home Affordable Foreclosure Alternatives program, known as HAFA.  Under this new legislation, borrowers will receive $3,000 to relocate.  Short sale servicers will earn $1,500 for handling the transaction.  The holders of the mortgages, or investors, will receive $2,000 for participating and helping to share proceeds with any secondary lien holders.

Lenders that participate must make it clear to the homeowners as to what market price they will be willing to accept, and they must approve offers that meet the guidelines within 10 days.

There is no doubt this program will help thousands of people, and speed up the short sale process.  In many market areas, it’s been estimated that up to 2/3 of all transactions this year will be from short sales.  A foreclosure does twice as much damage to your credit score than a short sale, so homeowners should really consider this option before they just walk away from their homes.

Consult your local agent to discuss your options and alternatives to foreclosure!

Visit us online at HomeReach.com to view all San Diego homes for sale.

Real Estate Expert, David Tal’s HomeReach Weekly

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A new $10,000 housing tax credit for CA homebuyers!

March 25, 2010 – Last March in California, a $10,000 tax credit was enacted for homebuyers who purchased new construction homes in an effort to stimulate the housing market and help developers that were stuck with a glut of inventory on their hands.  The state allocated $100,000,000 for the program.  It was a huge success.  It was too popular in fact, because 4 months later, the fund ran out.

A new bill has been introduced in the California State Senate that would reintroduce this tax credit incentive as early as May 1st, coinciding with the end of the Federal first time homebuyers tax credit that ends April 30th.

With resale homes getting absorbed at rapid rates, many buyers are turning to new home sales which can offer great incentives from the developers like credits for upgrades, waiving Home Owner Fees for a given amount of time, major price reductions, and more.  If the state tax credit gets a new lifeline, so will developers of new homes, and homebuyers alike.

Stay tuned for more information on the California State Senate’s $10,000 tax credit for new home sales.

Visit us online at HomeReach.com to view all San Diego homes for sale.

San Diego Real Estate Expert, David Tal’s HomeReach Weekly

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Why You Should Always Use a Real Estate Agent

March 11, 2010 – Like any business, there are people who specialize in real estate.  Many buyers and sellers out there think they can do this without the guidance of a professional real estate agent by their side.  Now I’m not saying that all agents are created equal, but having an expert can save you time, money, and help you avoid the pitfalls of the real estate game.

Buyers have so many tools at their fingertips these days.  They can search all the homes for sale, find recent sales, and do plenty of research on their own. Not everyone is so savvy, but even those who are should understand the basic rule of thumb.  Going straight to the listing agent will not benefit you.  The main reason is the listing agent is representing the seller, and is negotiating on the seller’s behalf.  His job is to get as much money from you.  Let me repeat that.  The listing agent is trying to get you to increase your offer as much as possible.  Where is the benefit in this?  Exactly.  An agent representing you as a buyer will do exactly that, and will work and negotiate on your behalf to try and get the seller to lower his price as much as possible and get you the best deal.  But negotiating aside, everyone needs a second eye, and a guide to help him or her with their decisions, especially big ones like buying real estate.  Experienced and knowledgeable agents are looking at deals and seeing transactions daily, giving them much more information than a buyer who just decides now that he’s interested. They can share neighborhood trends and information and help you get a clear picture of what’s going on in the market.  They also know of deals before they hit the market, giving you a competitive edge.

Home sellers feel they can save on commissions by trying to list their home by owner and forego the exposure of the Multiple Listing Service, known as the MLS.  They don’t feel they need agents to bring them a buyer.  But time and time again they are proven wrong.  Here’s the latest statistic from the National Association of REALTORS®.

88% of for sale by owners end up using a real estate agent to sell their home!

That’s right, 88%!!!!  What these home sellers lost was time and time is everything when you are trying to get your home sold for as much money as you can get.  Simply listing your home on Craigslist just won’t do it.  Even if you do get lucky and get an offer that way, it’s probably not the best offer you can get.  Exposing your listing to every buyer and agent out there using the MLS system will drive more buyers and offers your way.  The more offers, the better your chances of getting top dollar for your property.

When it comes time to buy or sell your next home, always speak to an experienced agent that specialized in your submarkets of interest.

Visit us online at HomeReach.com to view all San Diego homes for sale.

San Diego Real Estate Expert, David Tal’s HomeReach Weekly

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Lock in a 30 Year Mortgage under 5% While You Can!

March 4, 2010 – Home mortgage rates are at an all time low, slipping to incredibly low rates in recent months.  Today, a buyer can get a loan under 5% with most lenders.  These are historically low mortgage rates that are fueling the housing recovery in San Diego.

Last spring, in an effort to keep mortgage rates stabilized, the Federal Reserve began buying back over $300 billion in Treasury notes.  Due to these low rates, people are buying homes and refinancing in large numbers.

It’s a great time to buy a home when home prices are low and especially when they are coupled with low mortgage rates that you can lock in for 30 years!  It’s no wonder mortgage applications soared 16% in recent weeks.

In dollars and sense, a 1% jump in the rate of a mortgage would mean paying about 10% more per month for the same home.  The government has also stepped up its shot in the arm for the housing market with the FHA, or government backed loan, aimed at helping people get into homes that qualify but with less of a down payment.  FHA loans allow buyers to purchase a home for as little as 3.5% down and with extremely competitive rates.  Banks are willing to give these loans because Uncle Sam is backing them up.

If you’re a buyer on the fence, you may want to consider that these rates won’t stay low forever, nor will home values.  Get out there and get some information.  You’ll be surprised.

Visit us online at HomeReach.com to view all San Diego homes for sale.

What on Earth is a Short Sale and why should I care?

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If you’re house hunting these days, chances are you’ve run into dozens of short sale listings.  As a Broker, I’ve noticed quickly how little consumers really understand about the term.  The common misunderstanding is that a short sale is just like a foreclosure, but it’s not nearly the same.

Short Sales help people who are underwater on their homes with minimal financial loss.  For example, if homeowner Joe has a loan for $500,000 on his home, but his home is currently only worth $350,000, Joe is considered to be “underwater” on his property by $150,000.  Joe is most likely selling his home because he can’t afford the monthly payments, but how can he sell it when he owes more than it’s worth? Without a short sale, his only option is foreclosure or refinancing, if allowed to.

A common option for Joe is to just stop making the payments on his home, in which case the lender can step in and foreclose on his property.  Joe is kicked out and his credit will be affected for up to 7 years, making it harder for him to get credit cards, auto loans, mortgages, personal loans and even rentals.  Landlords check your credit too!

Joe has another option, in which he puts his home on the market and receives market offers for his property.  He then takes that fair market value offer to his lender, and he, with the help of his real estate agent will negotiate a “short sale” with the lender.  In this scenario, the homeowner and the agent will make the case to the bank that the owner can no longer continue to make the monthly payments.  In many cases, it may be far easier and cost the lender much less to “forgive” the $150,000 the home is “under” and let the sale take place.

For a lender, the short sale is becoming much more appealing these days.  The lender is strictly concerned with his bottom line.  If the homeowner is allowed to settle his debt or “short sale” with the lender, then he is very likely to leave the property in a good condition to ensure the sale takes place.  If, however, the lender decides to foreclose on the home instead, the lender will have to factor in extremely costly and time-consuming foreclosure proceedings, lawyers and other expenses, only to sell the property for fair market value anyways.  The other risk they take is that the homeowner, who may feel betrayed or taken advantage of, will destroy the property and cause major damage to the home upon vacating.  We see this all the time from angry homeowners who were kicked out.  This will in turn make it even harder for the lender to sell after foreclosing and the costs of repair are unpredictable.

The good news for a homeowner who completes a short sale is his credit will NOT be marked by a FORECLOSURE on his credit history, but rather a “debt settlement” flag.  Further, in most cases, this only affects their home buying power for 2 years.

If you find yourself in this position, consider short selling your home and renting for 2 years.  Prices will still be low, even if they rise a bit, prices will be very low compared to what they were in 2006’s peak, and you’ll find yourself owning another home sooner than you think.

San Diego Real Estate Expert, David Tal’s HomeReach Weekly

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Three Cash Flowing Neighborhoods in San Diego!

February 18, 2010 – It would have seemed unimaginable for the past few years.  More neighborhoods in San Diego are cash flowing, making them extremely appealing for homebuyers and investors alike.  On average, San Diegan’s are now only paying 16% more to own than they would to rent.  That is a small premium to pay to own your own home and gain from it’s appreciation, tax incentives, and vast benefits.  Compare that to 2006, when it cost 66% more to own than to rent and it’s easy to see why the attractiveness of owning a home back in 2006 came to a quick and strong halt.  The last time owning a home was only 16% more expensive on average in San Diego was in 1999.

  1. Oceanside, CA – Oceanside is the 2nd highest selling community in San Diego County, selling thousands of homes each and every month.  Values dropped 40-50% from their peaks but dropped only 7% for 2009 with an upward trend in the last 4 months of the year.  Strong rental demands from government military and naval bases, as well as thousands of young families moving slightly farther away from city centers find great values here for their money.  Investors have taken note too!!!  See the Best Deals in Oceanside
  1. Chula Vista, CA – Believe it or not, Chula Vista is selling more homes each month than any other neighborhood in the County.  There are really two completely different areas of Chula Vista, divided by the 805 Freeway, and spread over 5 zip codes.  The greater part of 3 of those zip codes were only built in the last decade and they are stunning.  For those who have visited, they know what I mean.  It’s clean, brand new, beautifully landscaped, wide streets, homes with some actual land, it’s safe, exciting and the values are on a league of their own.  New schools, parks, shopping centers, business districts and restaurant/nightlife line the avenues of the new Chula Vista, nestled just east of the 805 freeway and just south of Bonita.  Chula Vista was hit the hardest by foreclosures since most of it was built during the peaking years of the housing bubble.  Now, homes values have dropped 40-60% and rents have remained strong because of the schools and low housing costs we have today.  Come take a look for yourself.  Chula Vista is cash flowing!  View Foreclosure Deals in Chula Vista
  1. Imperial Beach, CA – Imperial Beach hasn’t been as popular as other coastal areas like Pacific Beach, La Jolla and Del Mar.  But those areas have weathered the storm better and have always been expensive.  Imperial Beach is now getting a 2nd look, not just from homebuyers, but the city too, which has zoned coastal areas of Imperial Beach as a Redevelopment District.  The Imperial Beach in 10 years from now will be a very different place than it is now, but already we’re seeing major tenants moving into the neighborhood, and redevelopment along the coastline.   Dozens of home owners are taking time to upgrade and update their homes, realizing the future potential of their home.  Imperial Beach is San Diego’s most affordable coastal city for all that it has to offer, with direct access to Coronado Island and the 5 Freeway. Within a two block radius of the naval base, there are dozens of 1 and 2 bedroom foreclosures, completely upgraded, priced between $80,000 and $150,000 that can rent for $800 to $1,500 per month!  Cash flow baby!  View all Imperial Beach Bank Owned Homes!

Visit us online at HomeReach.com to view all San Diego Foreclosures by area or zip code.

San Diego Real Estate Expert, David Tal’s HomeReach Weekly

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Tips for Buying Foreclosures

February 11, 2010 – San Diego Foreclosures are at the top of every homebuyer’s wish list.  With distressed banks trying to unload their assets at record rates, they have drastically cut home prices and put them on the market to sell, and to sell fast!  The longer banks hold on to these assets, the more it costs them in upkeep, attorney fees, property taxes, insurance, utilities, etc.

Here are some helpful tips to buying foreclosures in San Diego’s recovering housing market.

1. Be patient!

With so many buyer’s competing for the best foreclosure bank owned bargains, many of these deals are getting bid up so high that they are no longer the bargain they appeared to be.  It’s best to stick to a price you feel comfortable with and don’t let your emotions carry you into uncomfortable territory.  There are more foreclosures on the way, and the right one for you may hit the market tomorrow or next week!

2. Get pre-approved with the same bank that owns the home

If you’re making an offer on a home owned by Wells Fargo, they may favor your offer over others if you pre-approve with them directly as well.  This is a way for the seller to minimize the risk that you’ll come across third party lender issues, and they may be able to make some gains working on your loan as well.  You can never be forced to use a certain lender so you can always change your mind and choose another lender.

3. Don’t be afraid of a fixer upper

Most banks sell their homes in “as-is” condition.  They rarely want to get into the business of making repairs and other accommodations, as it’s not in their best interest to do so.  That being said, they price the homes accordingly.  Since fixer upper homes usually take more imagination and capital, there are fewer buyers competing for them, so you also have a better chance of getting your offer accepted.  In most cases, the homes are priced far lower than it would take to bring them up to speed again.  Unfortunately, many homeowners who are foreclosed on leave their homes in less than good conditions, and sometimes they trash the home.  A buyer that can look beyond this can get a great deal by investing some time and effort in their new home.

4. Wait for the home to sit for a few days before making an offer

As I’m sure you’ve already noticed if you’re making offers in today’s market, foreclosures tend to have multiple offers within days of being listed.  This is because the buying frenzy has created an environment of desperation.  Some homebuyers have been trying for months to get their offers accepted, so now their strategy has turned to making offers on many more properties, many times without even looking at the homes in person yet.  Tell your agent to talk to the listing agent or seller and try to get a good read of what the other offers may be like.  By waiting a few days for the bulk of the offers to come in, you may get a competitive advantage by waiting for other buyers to show their cards first.

5. Preview homes with a contractor

Having a good contractor by your side when you’re touring properties can be very helpful.  A contractor can tell you how big or small a problem is.  Many times issues may appear more complex than they really are. Conversely, many times what may appear to be a minor issue may actually involve a lot more than expected.  A good agent can help you leverage this information when you’re writing offers.

6. Keep your offers simple and clean

With so many offers on the table, banks much rather go with a simpler contract that doesn’t ask for dozens of little items or ones with lengthy contingency periods, complex addendums, and inconsistent requests.  For the banks it’s all about the bottom line and a quick closing.  Having an agent that’s well versed and experienced in bank owned foreclosures, also known as REOs, is crucial when you’re putting your offer together. Good agents know what a clean offer looks like, while at the same time protecting your interests.