This is a really great video that explains the tax credit for first time home buyers.

Today’s housing market is like none other we have seen in awhile.  I hear agents talk about how bad the ’80s were but this market is different in many respects.  In order to purchase a home in this market, it is best if the home buyer prepares for potential hurdles that can be placed in between them and the door to their new home.

The first hurdle is summoning the courage to buy a home in a downward trending market.  Tell your friends you are house hunting and inevitably they will say, “Oh man, I would wait.  It is surely going to drop some more.”  That may be true but for most people buying a home is very different then buying a stock.  Some people buy because they absolutely hate renting.  They crave to paint the walls any color they want.  They want to have a dog, or a water bed, or a private jacuzzi for skinny dipping.  Whatever the reason, they want a home.

The second hurdle is relentlessly trolling the multiple listing service (MLS) and the multitude of other home search sites.  I do not know of a single site that has it all.  Look at this site for school districts.  Look at that site for street view.  Look at this site for market trends.  Some like Trulia, Zillow, and RealtyTrac have a lot of information but it may not always be as accurate as we would like.  Part of the process is simply deciding how you like to search.  By map? By criteria? By school district?  I offer my clients a variety of ways to search and I also offer the option to receive homes directly to their email inbox based on their specific search criteria.  There is no doubt internet house searches will continue to improve.  However, sifting through the inventory takes a trained eye and a deep knowledge of a variety of neighborhoods.  This is where a good agent can add value to  the online real estate search. (more…)

In the last couple of weeks, I have heard more and more real estate agents and loan officers tell me that they believe we might be near the bottom of the housing market in San Jose.  Their biggest support for this theory is kind of interesting.  It goes like this: ” How much lower can home prices possibly go?” Hmm. Well there you are.  Scientific, (not), analytical (not), a hypothetical guess (barely), coming right from the professionals.

I decided to look at the stats to see if I could see any indication that we are near the bottom of the housing market in San Jose.  I looked at the average sales price for each neighborhood for single family homes, condominiums, and town homes from February 2008 to February 2009.  Out of the 15 neighborhoods, 7 were continuing to trend down on average sales price.  Saratoga had a huge down in January and then a huge up in February so I will call that a wash.  Four areas, Milpitas, Central San Jose, Cambrian, and Willow Glen showed an average sales price slightly higher in February 2009.  Certainly hard to call one month’s results a trend in this market.  Especially, when over the last year we have seen some bump ups in almost all the neighborhoods at one time or another.

The most interesting graph came from the Alum Rock neighborhood.  Alum Rock has been hit hard as a result of sub-prime lending.  Alum Rock was one of the last areas to “boom” in San Jose.  It was also one of the first to show signs of trouble.  Over and over again, I see the “entry” level markets hit hardest by the sub-prime debacle.  There were not a lot of sub prime loans made in Atherton.  You see the results of sub-prime lending where minorities, blue collar workers, double and triple job Mom and Dads, with extended families  wanted a part of the American Dream.  But I digress.

Alum Rock has been fairly in regards to average sales price for the last 4 months.  Number of listings on the market coming down and new listings are down as well.  With 4 months of steady numbers, you might very well be able to call this a trend.

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Buyer’s look forward to closing escrow (COE), because they have been told that after escrow closes they will receive the keys to their new home.  Signing documents regarding the purchase of a home can be a little overwhelming for some and for others a white and black blur.  For many clients simply signing their legal name after years and years of signing their “preferred” name is enough of a challenge, let alone reading and understanding all that they sign.   With that in mind, I wanted to take a moment to explain some of the documents involved in the purchase of real estate.

The Escrow Officer’s Role.
Simply put, this is a third party that insures that the contractual obligations of the buyer and seller are documented as satisfied.  They provide a neutral environment to sign documents and insure that the monies are dispersed according to the contractual directions.  Many times, escrow agents are employees of a title company.  In Santa Clara County, commonly the seller or listing agent chooses the escrow and/or title company that will be used for the transaction. However, it is actually the right of the buyer to designate.  If you have a preference, please make sure you discuss it with your agent at the time you create the purchase contract.

The difference between a mortgage and a deed of trust.
In California, the deed of trust is utilized as a security device for real property.   It is held by a third party (many times a title company- called the trustee) and has two simple functions.  The first responsibility of the trustee  in regards to the deed of trust is the reconveyance of the deed (ownership) from the trustee to the borrower once the note is paid off.  The second job of the trustee is in regards to the foreclosure process if the borrower fails to pay.  In essence, the trustee insures the contractual agreements between the beneficiary (lender) and the trustor (the borrower) are satisfied.

The mortgage as the security device.
There is no third party in the set up.  There is the lender and there is the borrower.  In this situation the borrower is dependent on the lender to transfer title to the borrower once payment is received in full.  The lender is dependent on the borrower paying off the debts as prescribed in the note or has the right to begin foreclosure proceedings.  So even though we might refer to paying our “mortgage” each month, the more accurate description in California would be loan payment.

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The downtown area of San Jose is unknown to many. If you are not a student of San Jose State University, you may not even know there is a downtown San Jose. But for some of us, it is just the right size of downtown. For the most part, you can find parking fairly easily without spending a week’s paycheck. You can play Monopoly in the park, visit The Tech, or the Discovery Museum, see a ballet, or find a bite to eat in one of the 166-or-so restaurants. There are some great neighborhoods in downtown San Jose, including Naglee Park, Roosevelt Gardens, Hyde Park, Japan Town,and Hensley.

As like many neighborhoods in San Jose, downtown is seeing its share of foreclosures.  Any time a neighborhood has too many homes listed for sale by banks, the prices in that neighborhood suffer.  Selling foreclosed (REOs, bank-owned, corporate owned) homes is a way to stabilize housing prices and move the neighborhood forward.

First a look at the overall trends for the downtown San Jose housing market.  The amount of homes for sale is trending down. Overall, it is still a “buyer’s market” but take a look at the next chart regarding recent sales.

Here you can see the sales have increased in the first part of 2009.  There have been some deals. First time buyers and investors alike have helped to move these homes off the market.  A very good sign overall.  Currently, of all active single family detached homes listed in San Jose downtown, 33% are short sales and 15% are bank owned.  Overall, that places 40% of the downtown area in some state of distress. You can see why we need to make sure everyone is aware of the deals  and move this neighborhood toward stability.

Granted, like any selection of foreclosed listings there are always some major fixer-uppers.  The home at 338 E. Julian (below) has seen better days.  In 2005, this home (built in 1908) with 2 bedrooms and 1 bath, sold for $450,000.  At that time it was labeled as a “fixer-upper”.  Before that it sold in 1998 for $164,950.  It is currently an active listing, as a “fixer-upper” for $168,773.  Wow. What an example of the change in market.

This home is currently listed by Equity Capital.  It has been on the market for 342 days.

Here is a list of all 18 foreclosed detached homes in the 95112 zip code:

Here is the list of condominiums or town homes that are currently bank-owned in downtown San Jose:

It is time to take back these neighborhoods.  It is time to bring back affordability and reasonable value to the oldest and coolest neighborhoods in downtown San Jose.  Consider these homes as your next home or as your next investment.  Reap the incredible benefits of a buyer’s market and the benefit of being a positive force in a community.  If you would like to see any of these homes, contact me.

In 1978, the ballot initiative “People’s Initiative to Limit Property Taxation” was put in place by the voters of California.  This initiative basically restricted the increase in property taxes per year to 1% of value.   The result was a 57% cut in property taxes for California. This initiative also placed a high bar for change by requiring 2/3rds majority vote in local elections.  The origination of this initiative came from the belief that older citizens should not be priced out of their homes via ever increasing property taxes.  Valid argument.

Some argue it has limited the housing market re-sale side (less inventory,high demand, pushing prices up),  has increased rents, and has created a demand for new construction on smaller and smaller amounts of available land.  It has been argued that not only do the long term residents benefit from a demand partially created by Proposition 13, but also benefit in services paid for by new home owner’s property tax rate.   There is not doubt that Proposition 13 has contributed to the affordability issue for new home owners in the Bay Area. There are many opinions about Proposition 13 and the debate heats up again and again.

Now, as home prices decline many home buyers that purchased homes after the year 2000 are asking why they are paying the same amount for property taxes.  My property tax bill actually increased this period in spite of losing $95,000 in equity from December 2007 to December 2008.   Therefore, I wanted to offer some resources to help those who have lost value on their property and have yet to see an adjustment on their tax bill. (more…)