by Kris Berg on May 31, 2006
Well, the big Open House extravaganza was a moderate success on Sunday. We had seven of our listings in Scripps Ranch open and a huge ad running in an attempt to cross-market and generate some enthusiasm. We had a total of 53 visitors over the three-hour period - Not a bad day’s work. I sensed much interest but also much reluctance on the part of buyers to take the plunge. I know - This is starting to become an all too familiar mantra, but it is reality. Each of these listings, in our opinion, is priced properly; in several cases value abounds! The price-sensitive buyers out there, however, continue to take their time. From their perspective, the world is their oyster, and they for the most part continue to believe that prices will soften even more. Where prices will go from here is the $64 question, but buyers should not forget that any future retrenching in pricing which comes at the expense of higher interest rates may not leave them in a better position. Say you can get a 6.75% interest rate loan today. A 1/2% upward swing in mortgage rates will mean that you will have to see an approximate 5% price savings in that home you are eyeing up to realize the same monthly principal and interest payment. Put another way, today’s $700,000 home would have to cost $665,000 later if interest rates rise by 0.5%, but will it? Hopefully, buyers will begin to take this into account as they straddle the fence and wait for that “more favorable” market.
by Jan Meyer on May 26, 2006
In the below $550,000 price range, property values have fallen and continue to fall. Several months ago, when prices were higher than they are today, we came in contact with an investor who decided they wanted to sell their property. To that end, they commenced to make several improvements to their 3 bedroom townhome (not at our suggestion). This project took 4 months. They made the improvements themselves, rather than hire a contractor who could get the job done within a week or two. The have lost several thousands of dollars by “doing it themselves” slowly and surely. We come across this all the time when people are trying to save pennies. The result is they need to be OK with losing thousands. The words that make us wake up in a cold sweat at night is “we have plenty of time to sell; we are in no hurry.” What we hear is “we are fine with losing thousands and thousands of dollars”.
by Steve Berg on May 24, 2006
Okay, I’m a getting a bit tired of hearing (and talking) about our current market in San Diego. Yes, we all know it has softened, blah, blah blah. I too, have been guilty of preaching this negativity. Enough of this! Now consider the following:
1. PRICING: List prices are continuing to adjust to more reasonable levels in many more homes (we call these “Smart Seller” homes). Buyers are starting to get a sense of VALUE;
2. INTEREST RATES: The yield on the governments’ 10-Year Treasury has pulled back from it’s recent high of 5.20% to close at 5.04% today. Although having no direct correlation to mortgage rates, they do generally follow the 10-year Treasury pattern (up and down). If history is any lesson, mortgage rates should pull back a little, as well, at least in the short term;
3. TIMING: Timing IS everything! It’s the “right time of the year”. Many people who want, or need, to sell and/or buy purposely wait until the Spring/Summer timeframe.
While it’s premature to suggest that the convergence of these basic factors will result in the next boom cycle (far from it), the message here is simply one of optimism (or is it reverse negativity? - whatever). It is now officially a “buyers market”, meaning there is about six months of inventory out there. It also means that there are, inherently (one guess only)… BUYERS!
We knew they were there. They were just waiting for the right time and perception of value. For many buyers who have been sitting on the sideline, this may be the right time to pull the trigger. We are certainly starting to see buyer interest pick up, albeit in a more timid fashion than what we have been accustomed to over the past 4-5 years (I call these “The Spoiled Years”).
No, it’s not “The Housing Boom - The Sequel”, but it is reason for more optimism.
Steve B.
by Kris Berg on May 23, 2006
A picture is worth a thousand words.
# of Homes Held Open (Our Listings): 3
Total # of Visitors to Open Houses (Our Listings): 4
# Showings (Our Listings/11 Total): 23
# Offers Generated: 1
Total Scripps Ranch Listings, Single-Family Homes, 5/23/06: 151
Total Scripps Ranch Listings, Single-Family Homes, 5/15/05: 76
Total Scripps Ranch Homes Opening Escrow, Single-Family, 4/23/06 - 5/23/06: 33
Total Scripps Ranch Homes Opening Escrow, Single-Family, 4/16/05 – 5/16/05: 51
by Kris Berg on May 20, 2006
Awhile back, I vented about the “lazy agent”. You probably know him (or her). This person is the one that chose a career in a service industry but refuses to provide service, the one that feels inconvenienced when required to perform the duties of their profession, and the one that often forgets that their most important duty is to their client, even though providing proper representation requires a lot of ongoing time, effort and often money. >My three newest entries into the Lazy Agent Hall of Fame are:
1. The agent who called me on Friday to make an appointment to show one of our listings. “May I show the home between 10:00 and 2:00 on Saturday?” he asked. After calling the seller to confirm that the time was alright, I delivered the news to the agent. I told him that the property is on lockbox, so please feel free to show. “I don’t have a lockbox key”, responded my new friend. “I was hoping you could show the home to my clients”. Hmm…. Was I supposed to hang around the home during that four hour period waiting for his call? Or maybe I was going to be in charge of their entire home tour.
2. The agent whose listing I was making an appointment to show on Friday. This agent was a very nice man with a big real estate company. I was able to make my appointment to show his listing but then felt compelled to point out that the street name he put in the Multiple Listing Service for this property was misspelled. “By the way, you have incorrectly spelled the name of the street; (Street Name) does not have an “h” in it. Thought you would like to know”. He responded, “Really? It doesn’t? Huh. Anyway, leave your business card when you are done showing the home”. OK, I admit, maybe this is more “sloppy” than “lazy”, but it really bugged me, and I had to get it off my chest.
3. The agent that sent me a client today. This is my personal favorite. I was showing homes this morning to a woman who called me yesterday. One of the four homes I was showing was our listing; the others were not. She told me that before she called me, she had called another agent to make an appointment to see his listing. He told her that he was all the way downtown and didn’t have time to show the home. “But I am a buyer”, she said, to which he responded that she should go find herself an agent. By the way, she didn’t like his listing nor did she care for the one on the street with an extra “h”. I will give these agents feedback if they call, but I am not holding my breath.
by Steve Berg on May 19, 2006
Every week I receive updated interest rate quotes via e-mail from my two favorite mortgage lenders (both of whom will soon be Contributors to this Blog). Each quote, of course, identifies the current rate for Jumbo (>$417,000) and Conventional (<$417,000), 30-year and 15-year fixed rate mortgages, as well as rates for various (and many) other types of loans. What IS NOT clear in these quotes is whether (or not) the rate assumes any so-called "Loan Origination Fees" or "Discount Points". It's the same for most mortgage rate quotes I see in the newspaper and elsewhere. It may say "No Points", for example, but that does not mean there are not costs.
I need to make certain that when my clients ask me where rates are at any given moment (which occurs frequently), I can provide them with reliable data. So I called to confirm what, if any, fees are assumed in the rate quotes and found out the following:
Quote for a 30-year fixed rate, no Discount Points, Jumbo mortgage (last week, both mortgage companies) = 6.5%. HOWEVER, both companies also assumed a 1% Loan Origination Fee in that rate, which is apparently a fairly common practice for most lenders. It turns out that a true “no cost” rate for a Jumbo loan was actually 7% (note: there are still costs, but not nearly as significant).
So, if you are thinking about a home purchase, make certain to take this into consideration as you work through your calculations. And do not hesitate to ask your lender (earlier rather than later) to clarify ALL potential fees associated with a particular loan. Depending upon your own personal situation, Loan Origination Fee’s and/or Discount Points may (or may not) make sense.
Steve Berg
by Steve Roque on May 18, 2006
San Diego real estate has always been a good solid investment. We recently helped Jose and Leonila upgrade their real estate investment portfolio. We employed a 1031 Tax Deferred Exchange in which we sold their small one bedroom condo in Mission Valley. They had owned it for about 4 years and it had served its purpose. By selling it, using the 1031 vehicle, they transferred their equity to a 3 bedroom 2 bath single family house in West Mira Mesa. Rent values are higher, they have no Mello Roos or HOA fee, and the new property will appreciate at a much better rate than the small condo did. Jose and Leonila are hard working people who have modest incomes. They recognize the value of owning real estate and along those lines, have sacrificed and saved over the years and accumulated three nice rental properties, in addition to their primary residence. The American Dream lives.
