“Buyers who scrambled to close escrow in May to take advantage of federal and state tax credits before they expired impacted the number of homes sold last month,” said C.A.R. President Steve Goddard. “Although we expect sales to be lower in the second half of the year because of the absence of the government stimulus, they should remain above the long-run average and be significantly higher than the trough in 2007, when sales bottomed out.

“Although the tax credits are no longer available, it’s important to keep in mind that home prices are substantially below their peaks and interest rates remain at historic lows, making this a very affordable time for many first-time buyers to purchase a home of their own,” he said.

C.A.R.’s Unsold Inventory Index (UII) also rose to 4.8 months in June from 4.2 months in June 2009, but still remains lower than the long-run average of a 7.1-month supply of unsold inventory.

More information at: http://www.car.org/newsstand/newsreleases/junereport/

The company reported that 70,051 notices of default were filed at county recorder offices in California during the second quarter, down 13.6 percent from the first quarter and down 43.8 percent compared to second-quarter 2009.

Also, the share of resale, foreclosed homes sold in the state dropped to 36 percent in the second quarter, down from 49.9 percent in second-quarter 2009 and 42.5 percent in first-quarter 2010. NODs, which mark the formal entry of a home into the foreclosure process in California, peaked at 135,431 in first-quarter 2009.

The share of foreclosure resales ranged from 9.5 percent in the San Francisco area to 61.7 percent in the Imperial Valley area during the second quarter, DataQuick reported.

“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales,” said John Walsh, DataQuick president, in a statement. “Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves underwater, which is a significant factor in letting a home go.”

Although no shortage of REOs and short sales, the demand is driving sale prices above the listing price. Last month the $355,000 average selling price of a typical short sale and the $295,000 average selling price for an REO exceeded their average listing price by 101 percent. Multiple offers are common. In contrast, the average selling price of a non-REO, non-short sale home was $425,000, which was 94 percent of their listed price.

Discounting the inflated monthly sales numbers, attributed to one time tax credits, the most significant market change this summer is the number of sellers attempting to sell their home through a short sale process.  At best, negotiating a short sale with the ultimate decision maker, the lender, is a frustrating time-consuming process that can go sideways for a variety of reasons. Currently, more than one of every four listings is marketed as a short sale.

Other information and data for the Placerville, El Dorado County, California areas is available at www.sierraproperties.com

KEEP THIS IN MIND!

• The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline. First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.

• Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.

• The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline. Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.

• Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction.

To read the full story, please click here:

http://money.cnn.com/2010/06/30/news/economy/homebuyer_tax_credit/index.htm

National occupancy rates for senior housing, which change in response to different factors than those that affect the rest of the residential housing market, registered a small drop in the first quarter of 2010, according to the National Investment Center for the Seniors Housing and Care Industry (NIC).

This increased housing availability reflects a decline of approximately 0.3% in occupancy for both independent living and assisted living facilities nationwide. Rental prices continued to grow, but at a slower rate than before, undoubtedly influenced by the increased availability of space.

The NIC expects the decline in occupancy rates to reverse in the near future, as reduced construction puts a cap on the supply of senior housing. [For more information on current construction in California, see first tuesday’s Market Chart, CA Single- and Multi-Family Housing Starts.]

first tuesday take: The demand for senior housing is primarily determined by one single factor: the number of senior citizens. Unlike factors affecting demand for other forms of real estate, this factor is always both quantifiable and predictable.

As a result, the senior housing market is rarely subject to the violent rises and falls that beset the housing market at large. As this news item shows, however, even the senior housing market is influenced by the state of the economy. The drop in occupancy rates is a temporary setback for a constant market, but you can expect it to be quickly reversed by the unstoppable forces of demographics.

The boomers are on their way to these facilities, and their dis-savings to pay for assisted living with be felt more by a stock market decline than a real estate sales decline. Savvy agents will be on hand to get those listings from the boomers as they shed their current residences and move to be closer to their grandkids.  Anticipate that trend correctly, and you may get rich on broker fees.

Re: “Seniors housing occupancy falls, rent growth continues,” from the National Investment Center for the Seniors Housing & Care Industry

Bradley Markano • Jun 10th, 2010  first tuesday Realty Publications, Inc.

Other top business leaders polled by the Conference Board — and quoted last week by the Wall Street Journal – said they are now “confident that the U.S. will see sustained growth through 2010″ – with moderate gains in employment, consumer spending and consumer confidence.

That’s hugely important for housing of course – and offers a strong answer to economic doomsayers who predict a sharp drop in home sales and real estate activity following the expiration of the tax credits. The latest housing and mortgage numbers certainly look encouraging:

Pending home sales jumped by more than five percent in March and another 10 percent in April, according to the National Association of Realtors. That’s 21 percent higher than the previous year for the same months.

New applications for loans to purchase houses took another big jump — up 13 percent over the previous week, according to the Mortgage Bankers Association. MBA vice president for research, Michael Fratantoni, said that last week’s FHA and VA share of home purchase applications soared above 50 percent — the highest it’s been in more than two decades.

“I see no signs of a double dip,” said John C. Williams, director of research at the San Francisco Fed. “The economy continues to gain momentum, and consumer spending and business investment continue to improve.”

The prediction goes counter to what many analysts believe, but Williams pointed to surveys that show home, car, and retail sales are up. “It’s kind of a natural part of the process — you cut back for a couple of years, and then you need to replace things eventually,” Williams said.

Source: Los Angeles Times, Alana Semuels (05/18/2010)

As the Federal $8,000 tax credit ends, it would seem that here, nothing is lost as the first time buyer can trade that credit for a $10,000 State tax credit.  However, they are far from similar. 

The key differences between the two credits are…

1. The Federal credit comes in one chunk $8,000 if you qualify – and relatively soon after which helps the home buyer recoup perhaps up to 100% of his move-in on the deal.
2. The Federal tax credit was not conditioned on a tax liability, thus even if you did not owe once cent in taxes, you could still receive the $8k – SWEEEEET! 

The State credit is paid out in 3 increments of maximum $3,333 each over tax years 2010, 2011 & 2012.  This is a lot less up front.  Secondly, and more important is this…you can only get the credit against actual state income taxes owed in those tax years.  

Here is a typical example on a first time buyer purchasing an average home at $275,000. 

On a USDA 100% loan (or FHA 96.5%) the payments (PITI) are about $2,000.  If the borrower meets guideline ratios of 31/41 for this purchase (assuming about 10% of income goes to other debts like auto, credit cards, etc) Annual income to qualify is $77,400. 

The tax writeoff for owning this home is about $11,000 so this tax payer itemizing his deductions will take off about $15,000 for taxable calculations.  A family of 4 on this income will have a State tax liability of $1,640 so that is the maximum tax benefit he car reap from the State credit.  Multiply this by 3 years and his $10,000 is diminished to actual credit benefit of $4,920 or less than ½ of the limit. 

What happens to the other $5,080?  Absolutely nothing!  The State of California is off the hook.  This means that the $100 Million designated to the first time buyer program is likely diminished to about $50 Million – pretty clever of your lawmakers.  This extra money will not be designated to go out to more first time buyers unless they re-write the law.  And they cannot compute the leftovers until 2013! 

• Many of the luxury amenities once considered necessities among home buyers, such as community clubhouses, dog parks, golf courses, and 24-hour security, are no longer priorities, according to the survey. Repeat buyers also said a swimming pool isn’t a must, but a children’s playground with walking paths are essential.

• One of the takeaways from the survey, according to an architect firm, is that buyers nowadays should rethink space. For example, buyers should look for kitchen cabinets that go all the way to the ceiling for added space and efficiency. They also should pass on high-priced focal stairways, opting instead of steps that are tucked away and out of sight.

• Buyers also should be on the lookout for dead space. If the dining room or media room is eliminated, at least some of the square footage should be dedicated to secondary bedrooms. The once-standard 10-by-10 bedroom no longer is acceptable to most buyers.

• The survey also found that many buyers have transitioned toward green features, such as high-efficiency appliances, insulation, and windows that are not large areas of glass. However, many buyers did not report the use of recycled materials as a necessity.

• Other findings from the survey show that large kitchens, with islands, are desirable, as are main-floor master bedrooms, and two-car garages.

Full story at:  http://www.latimes.com/classified/realestate/news/la-fi-lew4-2010apr04,0,2602030.story

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