GOLDEN OPPORTUNITIES
By David GellesPublished: June 20 2009 01:54 |
Last updated: June 20 2009 01:54
Back in October, Sotheby’s real estate agent Betty Brachman was finalising the sale
of a $2.5m luxury condominium overlooking San Francisco Bay. The two-bedroom,
two-bathroom flat, which enjoys view of the Golden Gate Bridge, is in one of the
city’s best buildings, with a full-service doorman. And the buyers were planning to
pay cash for what would have been their third home.
This article can be found at:
http://www.ft.com/cms/s/2/40f29bca-5ba3-11de-be3f-00144feabdc0,_i_email=y.html
"FT" and "Financial Times" are trademarks of The Financial Times.
Copyright The Financial Times Ltd 2009
Thursday, June 25, 2009
Article Comparing San Francisco Market with Sonoma County
Wednesday, June 17, 2009
High End Sonoma County Real Estate
Living large in Sonoma County
Real estate crash hasn't hurt market for these premium properties
http://www.pressdemocrat.com/article/20090613/ARTICLES/906139922/1318/LIFESTYLE09?Title=Living-large-in-Sonoma-County
By CLARK MASON THE PRESS DEMOCRAT
Published: Saturday, June 13, 2009 at 3:00 a.m. Last Modified: Saturday, June 13, 2009 at 10:31 p.m.
Tucked into the hills of Sonoma County are exclusive, private estates still commanding prices that seem from a gilded age.
Real estate values have plummeted for a typical home in Sonoma County, but not for the ultra-premium, multimillion-dollar end of the market.
Currently, there are 20 residential properties in Sonoma County listing for more than $5 million.
The affluent buyers are seeking a Wine Country lifestyle that includes a showcase home, land, views, privacy and often a small vineyard. Add to that some gorgeous landscaping and amenities such as a guest house, swimming pool and maybe a tennis court.
“When you get north of $3 million, you’re really getting into spectacular properties with more acreage and some real ‘wow’ factors,” said Rick Laws, a Realtor with Coldwell Banker in Santa Rosa.
While Napa County has been the traditional prime domain for ritzy Wine Country properties, Sonoma County is increasingly being sought out by the rich, often as a location for a second, or even third, home.
“I’ve sensed a shift in the last year or two. Sonoma is holding its own with Napa,” said Diane Krause, a Frank Howard Allen Realtor who just sold a $6.4 million estate off Norrbom Road in Sonoma. “It used to be everyone first wanted to go to Napa. I find it equally split now.”
Farther up Norrbom Road, actor Danny Glover of “Lethal Weapon” fame just sold his home on a 40-acre property for $4.1 million to hedge fund manager Nathaniel Simons and his wife, Laura Baxter Simons, both 42.
Realtors say the buyers of the exclusive properties tend to come from wealthy Bay Area enclaves, but might have made their money in banking, venture capitalism or managing hedge funds.
The multimillion-dollar properties usually aren’t snapped up immediately. The $5-million-plus homes on the market now have been listed for sale for more than six months, on average.
“You don’t have a climate in the market where people are just throwing money at properties. A few years ago they were,” said Sheri Morgensen, a San Francisco agent for Sotheby’s International Realty. “Buyers are approaching cautiously now, doing their homework.”
As she spoke, Morgensen stood in the chef’s kitchen of one of her listed properties, a $6.5 million estate on 23 acres in Dry Creek Valley near Healdsburg, one of the most prestigious appellations in California.
It came on the market in April. Two qualified potential buyers toured it last week.
“It’s very sophisticated, stylized,” Morgensen said of the grand scale of the house, its contemporary design and massive picture windows offering views past slate patios, Japanese gardens, a Koi pond, vineyards and up the valley.
A well-stocked wine cellar was off to the side, near the garage sheltering a Ferrari and a Bentley sedan.
The property sold for just under $4 million five years ago when purchased by the current owners, who Morgensen said are in the furniture manufacturing business and travel extensively.
As so often is the case with the high-priced properties, the buyers and sellers like to keep a low profile and will require real estate agents to sign confidentiality agreements.
Morgensen also is handling what could be the most expensive piece of real estate on the market in Sonoma County — a $29 million, 640-acre ranch off Wallace Creek Road featuring two “exquisite” homes among redwood forests, heritage oaks and vineyards.
“It’s a world-class ranch,” said Morgensen. “Very significant people have looked at it.” She said inquiries have come from as far away as China.
Real estate statistics show there has been a slight drop — 7 percent — in the median price of expensive homes in Sonoma County between May 2007 and May 2009. But because the pool of homes in that range is small and the properties tend to be unique, experts caution that it is hard to read anything meaningful into the data.
Laws, who prepares a monthly real estate report for The Press Democrat, said there has been a slight downward trend in the number of sales of high-end properties.
For example, at the end of May, there were 64 residential properties for sale for more than $3 million. Three sold during the month.
In May of 2008, there were 52 for sale and two sold.
And in May of 2007, there were 51 on the market and five that sold that month.
Along with a slight increase in inventory, prices for the high-end properties have come down slightly. But Laws said “it’s not like the market is glutted, or there’s been a cataclysmic change,” similar to the flood of foreclosed properties that helped drive down prices at the low end of the housing market.
“For the most part, when you get north of a million (dollars for a house) people have a little more financial staying power and they’re not necessarily forced to dump these properties,” he said.
On the other hand, even the upper crust can be more cautious about spending.
“I think the bottom line is our economy obviously slowed down in the last few years and it affects everyone’s wallets,” he said.
Real estate agents say that when a special property comes along at an attractive price, even if it’s in the multiple millions of dollars, there are ready buyers with money. And it’s often done with cash.
“It has slowed somewhat, but there are definitely buyers out there buying high-end properties,” said Mary Anne Veld-kamp, a Coldwell Banker Realtor. “People are looking for value.”
Selling a super-premium piece of real estate can take a national, even international marketing effort. It’s all about exposure, including display ads in publications such as the Wall Street Journal, and Web sites that feature rare and unique luxury real estate.
“It only takes one. It’s only one buyer,” Morgensen said.
Library researchers Vonnie Matthews and Teresa Meikle contributed to this story. You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Real estate crash hasn't hurt market for these premium properties
http://www.pressdemocrat.com/article/20090613/ARTICLES/906139922/1318/LIFESTYLE09?Title=Living-large-in-Sonoma-County
By CLARK MASON THE PRESS DEMOCRAT
Published: Saturday, June 13, 2009 at 3:00 a.m. Last Modified: Saturday, June 13, 2009 at 10:31 p.m.
Tucked into the hills of Sonoma County are exclusive, private estates still commanding prices that seem from a gilded age.
Real estate values have plummeted for a typical home in Sonoma County, but not for the ultra-premium, multimillion-dollar end of the market.
Currently, there are 20 residential properties in Sonoma County listing for more than $5 million.
The affluent buyers are seeking a Wine Country lifestyle that includes a showcase home, land, views, privacy and often a small vineyard. Add to that some gorgeous landscaping and amenities such as a guest house, swimming pool and maybe a tennis court.
“When you get north of $3 million, you’re really getting into spectacular properties with more acreage and some real ‘wow’ factors,” said Rick Laws, a Realtor with Coldwell Banker in Santa Rosa.
While Napa County has been the traditional prime domain for ritzy Wine Country properties, Sonoma County is increasingly being sought out by the rich, often as a location for a second, or even third, home.
“I’ve sensed a shift in the last year or two. Sonoma is holding its own with Napa,” said Diane Krause, a Frank Howard Allen Realtor who just sold a $6.4 million estate off Norrbom Road in Sonoma. “It used to be everyone first wanted to go to Napa. I find it equally split now.”
Farther up Norrbom Road, actor Danny Glover of “Lethal Weapon” fame just sold his home on a 40-acre property for $4.1 million to hedge fund manager Nathaniel Simons and his wife, Laura Baxter Simons, both 42.
Realtors say the buyers of the exclusive properties tend to come from wealthy Bay Area enclaves, but might have made their money in banking, venture capitalism or managing hedge funds.
The multimillion-dollar properties usually aren’t snapped up immediately. The $5-million-plus homes on the market now have been listed for sale for more than six months, on average.
“You don’t have a climate in the market where people are just throwing money at properties. A few years ago they were,” said Sheri Morgensen, a San Francisco agent for Sotheby’s International Realty. “Buyers are approaching cautiously now, doing their homework.”
As she spoke, Morgensen stood in the chef’s kitchen of one of her listed properties, a $6.5 million estate on 23 acres in Dry Creek Valley near Healdsburg, one of the most prestigious appellations in California.
It came on the market in April. Two qualified potential buyers toured it last week.
“It’s very sophisticated, stylized,” Morgensen said of the grand scale of the house, its contemporary design and massive picture windows offering views past slate patios, Japanese gardens, a Koi pond, vineyards and up the valley.
A well-stocked wine cellar was off to the side, near the garage sheltering a Ferrari and a Bentley sedan.
The property sold for just under $4 million five years ago when purchased by the current owners, who Morgensen said are in the furniture manufacturing business and travel extensively.
As so often is the case with the high-priced properties, the buyers and sellers like to keep a low profile and will require real estate agents to sign confidentiality agreements.
Morgensen also is handling what could be the most expensive piece of real estate on the market in Sonoma County — a $29 million, 640-acre ranch off Wallace Creek Road featuring two “exquisite” homes among redwood forests, heritage oaks and vineyards.
“It’s a world-class ranch,” said Morgensen. “Very significant people have looked at it.” She said inquiries have come from as far away as China.
Real estate statistics show there has been a slight drop — 7 percent — in the median price of expensive homes in Sonoma County between May 2007 and May 2009. But because the pool of homes in that range is small and the properties tend to be unique, experts caution that it is hard to read anything meaningful into the data.
Laws, who prepares a monthly real estate report for The Press Democrat, said there has been a slight downward trend in the number of sales of high-end properties.
For example, at the end of May, there were 64 residential properties for sale for more than $3 million. Three sold during the month.
In May of 2008, there were 52 for sale and two sold.
And in May of 2007, there were 51 on the market and five that sold that month.
Along with a slight increase in inventory, prices for the high-end properties have come down slightly. But Laws said “it’s not like the market is glutted, or there’s been a cataclysmic change,” similar to the flood of foreclosed properties that helped drive down prices at the low end of the housing market.
“For the most part, when you get north of a million (dollars for a house) people have a little more financial staying power and they’re not necessarily forced to dump these properties,” he said.
On the other hand, even the upper crust can be more cautious about spending.
“I think the bottom line is our economy obviously slowed down in the last few years and it affects everyone’s wallets,” he said.
Real estate agents say that when a special property comes along at an attractive price, even if it’s in the multiple millions of dollars, there are ready buyers with money. And it’s often done with cash.
“It has slowed somewhat, but there are definitely buyers out there buying high-end properties,” said Mary Anne Veld-kamp, a Coldwell Banker Realtor. “People are looking for value.”
Selling a super-premium piece of real estate can take a national, even international marketing effort. It’s all about exposure, including display ads in publications such as the Wall Street Journal, and Web sites that feature rare and unique luxury real estate.
“It only takes one. It’s only one buyer,” Morgensen said.
Library researchers Vonnie Matthews and Teresa Meikle contributed to this story. You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@pressdemocrat.com.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Article on Vacation Homes- Wall Street Journal
Second Chances
How to squeeze more money out of vacation homes
http://online.wsj.com/article/SB10001424052970203334304574165623033858060.html
By SUZANNE BARLYN
(See corrections and amplifications item below.)
Vacation homes, once a sign of prosperity, have become financial burdens to many amid the economic slump. With a little creativity, however, it is possible for owners to squeeze extra cash from properties that might otherwise be a drain.
The Journal Report
See the complete Your Money Matters report.
Some people who bought second homes as national real-estate prices peaked during 2006 now have less money to pay the bills and are facing the unenviable choice of selling at a loss—if they can—or waiting out the market. The median price of a vacation home fell 23% in 2008 from 2007, according to the National Association of Realtors, and sales have dropped nearly 31% from 2007.
“Second homes have become an ugly stepchild in an environment [where] people aren’t even buying first homes,” says Cicily Maton, a financial planner for Aequus Wealth Management Resources LLC in Chicago.
Owners who are stuck with those homes can try to make do, at least temporarily, by using their homes to produce extra income and minimize taxes. Some options, such as refinancing to a more favorable loan or delaying improvements, are obvious. Others require more planning.
With that in mind, here are some ideas about how to keep a vacation home afloat on less money:
Become a Landlord
Some people who once used their vacation homes solely for their own enjoyment are now renting them out, says Sarah Kuzma, corporate relations director for Meyer Real Estate in Gulf Shores, Ala. A second income stream, in addition to tax write-offs for maintenance and repairs, makes this option appealing in many cases, she says.
Homeowners can hold on to more of that rental income by marketing the property themselves. An effective do-it-yourself Internet campaign can cost less than $500, compared with the 10% to 25% of total rental income that real-estate agents and management companies may charge to find tenants.
Jack Russell of Lexington, Ky., who bought a five-bedroom vacation home in Kiawah Island, S.C., in 2004, has chosen the do-it-yourself route. For $249, he advertised his home on a Web site called Vacation Rentals By Owner, or VRBO.com. A Facebook group he started at no charge directs users to that ad. He also advertised on Google, which produced hundreds of clicks, for about $200 during a three-month period, he says.
The strategies have generated substantial interest, says Mr. Russell, who expects to rent the property for 26 weeks per year. A property-management company oversees cleaning and inspections of the home, which rents for $7,600 per week during the summer.
Renting a property for even one or two weeks can produce found money. Homeowners can rent their property for up to 14 days without reporting the income to the Internal Revenue Service, says Michael Kay, a certified financial planner in Livingston, N.J. The strategy can produce a windfall for people who own property in areas that hold one-time annual events, such as the Sundance Film Festival in Park City, Utah.
Help Yourself—and Others
Donating vacation-home use to a charity that auctions the time to raise cash provides a tax break that could help homeowners in softening vacation rental markets, such as Malibu, Calif., and Kauai, Hawaii.
Honore Frumentino of Northbook, Ill., donated her vacation home in Palm Bay, Fla., to two silent auctions—one that benefited a church and another to help defray medical costs of a seriously ill community member. Typically, people who attend the auction bid on the vacation week and pay the sum to the charity. The homeowner can, in many cases, then deduct the fair market rental value from his or her income taxes, regardless of the amount paid to the charity.
Some companies offer online services that link vacation-home donors with charities that want to auction vacation time. VacationHomesForCharity.org is one such Web site. Run by The Society of Leisure Enthusiasts, a Denver company that provides marketing support to vacation homeowners and rental companies, the service lists donated vacation-home time free of charge and negotiates with charities to contribute a small portion of rental proceeds toward the owner’s cleaning costs. Property owners can mandate their own rules, such as bans on pets or smoking.
Many retirees decide to settle down in a longtime family vacation home. But some treasured locations are becoming more difficult to afford as retirement portfolios and incomes decline. Donating a home to charity, while retaining a life estate—the right to live in the house until death—can generate a substantial tax deduction that can stretch across several years, according to Rawson Hubbell, vice president, investment management and trust, at Boston Private Bank & Trust Co.
He recently advised a 65-year-old couple, who live in a $2 million lakefront home in New Hampshire, to set up a charitable life estate. Too much of the couple’s net worth was tied up in the home, whose mortgage had been paid off, he says. The couple was expecting a significant payout of deferred compensation, which is taxable as income. He suggested setting up a charitable life estate to offset that burden, leaving them more money for spending. A charity would own the property after their deaths, but the couple would receive a $900,000 tax deduction, which could put as much as $315,000 in their pockets over five years, he says.
Generally, people can deduct up to 30% of their adjusted gross income for this type of gift, so a deduction this large is best planned for a year in which there is a major taxable event, he says.
The couple has no children, but those who do and want to leave something behind may have to weigh other options, such as selling or living on less cash.
Appeal Your Taxes
Property taxes are becoming more burdensome for many vacation homeowners, particularly as more municipalities try to make up for budget shortfalls by raising taxes.
James Rubino, a tax attorney in Stamford, Conn., says property-tax appeals are now more common. Many homeowners whose properties were reassessed when the real-estate market peaked are stuck with high values for tax purposes, even though prices have since declined. “People aren’t very happy about that,” he says.
To get a reduction, homeowners must argue the valuation is wrong, either because an appraiser compared the home with properties that weren’t equivalent, or made a mistake, such as miscalculating square footage, says Mr. Rubino.
David Carmichael, a property tax lawyer in Eugene, Ore., says he is helping a friend appeal taxes on land in Bend, Ore., a city near the Cascade Mountains. The property cost $100,000 in April, but the tax assessor recognizes $310,000 as its real market value, says Mr. Carmichael. He plans to use that discrepancy to argue a tax appeal.
Property taxes in Oregon, he says, are based on either assessed or real market value, whichever is lower. He is hoping the assessor will reduce the property’s real market value, for tax purposes, to $100,000, which would be less than half the 2008 assessment of $239,270. The owner’s property taxes could decline by more than $2,000 annually if the appeal is successful, he says.
Homeowners need to weigh, however, if the savings will outweigh legal costs. Some attorneys will work on a contingency basis, typically charging one-third of the taxes a homeowner saves if the appeal is successful. Others may charge between $200 and $300 per hour, regardless of who wins.
Share the Load
Some owners run vacation homes like businesses. Finding a partner to purchase an interest in the home and contribute to overhead expenses could relieve some of the burden.
The best partner isn’t necessarily a friend or relative, but someone who will adhere to a written agreement that outlines responsibilities, income and a schedule for personal use, says Andy Chapman, president of Halo Business Advisors in Clinton, Miss. “Make sure you get either your share of the income or time,” he says. These types of investment properties typically operate through a legal structure, such as a limited liability corporation or general partnership. A lawyer or accountant can determine the most appropriate option for minimizing taxes and liability.
Many families set up family limited partnerships or family limited liability companies to reduce a property’s value for estate-planning purposes. Giving relatives an immediate ownership interest in a property, instead of making them wait until the owner dies, may inspire them to contribute to the home’s upkeep. “It doesn’t need to be looked at only as an estate-planning tool but as a way of sharing wealth and also the burdens,” says Mr. Kay, the financial planner in Livingston, N.J.
Typically, the home’s owners set up a general partnership or company and then give shares to family members. They’re often difficult for recipients to sell or convey, making the property less valuable, which can help minimize estate taxes. Mr. Kay warns, however, to follow IRS guidelines about discounting the property’s value in a fair and reasonable manner. The IRS has scrutinized what he calls “ridiculous” discounts. “They have problems when people get greedy,” he says.
--Ms. Barlyn is a Dow Jones Newswires staff reporter in Jersey City, N.J. She can be reached at suzanne.barlyn@dowjones.com.
Corrections & Amplifications:
Homeowners can’t take a federal tax deduction for donating use of a vacation home to a charity. This article incorrectly reports that such donations were deductible.
How to squeeze more money out of vacation homes
http://online.wsj.com/article/SB10001424052970203334304574165623033858060.html
By SUZANNE BARLYN
(See corrections and amplifications item below.)
Vacation homes, once a sign of prosperity, have become financial burdens to many amid the economic slump. With a little creativity, however, it is possible for owners to squeeze extra cash from properties that might otherwise be a drain.
The Journal Report
See the complete Your Money Matters report.
Some people who bought second homes as national real-estate prices peaked during 2006 now have less money to pay the bills and are facing the unenviable choice of selling at a loss—if they can—or waiting out the market. The median price of a vacation home fell 23% in 2008 from 2007, according to the National Association of Realtors, and sales have dropped nearly 31% from 2007.
“Second homes have become an ugly stepchild in an environment [where] people aren’t even buying first homes,” says Cicily Maton, a financial planner for Aequus Wealth Management Resources LLC in Chicago.
Owners who are stuck with those homes can try to make do, at least temporarily, by using their homes to produce extra income and minimize taxes. Some options, such as refinancing to a more favorable loan or delaying improvements, are obvious. Others require more planning.
With that in mind, here are some ideas about how to keep a vacation home afloat on less money:
Become a Landlord
Some people who once used their vacation homes solely for their own enjoyment are now renting them out, says Sarah Kuzma, corporate relations director for Meyer Real Estate in Gulf Shores, Ala. A second income stream, in addition to tax write-offs for maintenance and repairs, makes this option appealing in many cases, she says.
Homeowners can hold on to more of that rental income by marketing the property themselves. An effective do-it-yourself Internet campaign can cost less than $500, compared with the 10% to 25% of total rental income that real-estate agents and management companies may charge to find tenants.
Jack Russell of Lexington, Ky., who bought a five-bedroom vacation home in Kiawah Island, S.C., in 2004, has chosen the do-it-yourself route. For $249, he advertised his home on a Web site called Vacation Rentals By Owner, or VRBO.com. A Facebook group he started at no charge directs users to that ad. He also advertised on Google, which produced hundreds of clicks, for about $200 during a three-month period, he says.
The strategies have generated substantial interest, says Mr. Russell, who expects to rent the property for 26 weeks per year. A property-management company oversees cleaning and inspections of the home, which rents for $7,600 per week during the summer.
Renting a property for even one or two weeks can produce found money. Homeowners can rent their property for up to 14 days without reporting the income to the Internal Revenue Service, says Michael Kay, a certified financial planner in Livingston, N.J. The strategy can produce a windfall for people who own property in areas that hold one-time annual events, such as the Sundance Film Festival in Park City, Utah.
Help Yourself—and Others
Donating vacation-home use to a charity that auctions the time to raise cash provides a tax break that could help homeowners in softening vacation rental markets, such as Malibu, Calif., and Kauai, Hawaii.
Honore Frumentino of Northbook, Ill., donated her vacation home in Palm Bay, Fla., to two silent auctions—one that benefited a church and another to help defray medical costs of a seriously ill community member. Typically, people who attend the auction bid on the vacation week and pay the sum to the charity. The homeowner can, in many cases, then deduct the fair market rental value from his or her income taxes, regardless of the amount paid to the charity.
Some companies offer online services that link vacation-home donors with charities that want to auction vacation time. VacationHomesForCharity.org is one such Web site. Run by The Society of Leisure Enthusiasts, a Denver company that provides marketing support to vacation homeowners and rental companies, the service lists donated vacation-home time free of charge and negotiates with charities to contribute a small portion of rental proceeds toward the owner’s cleaning costs. Property owners can mandate their own rules, such as bans on pets or smoking.
Many retirees decide to settle down in a longtime family vacation home. But some treasured locations are becoming more difficult to afford as retirement portfolios and incomes decline. Donating a home to charity, while retaining a life estate—the right to live in the house until death—can generate a substantial tax deduction that can stretch across several years, according to Rawson Hubbell, vice president, investment management and trust, at Boston Private Bank & Trust Co.
He recently advised a 65-year-old couple, who live in a $2 million lakefront home in New Hampshire, to set up a charitable life estate. Too much of the couple’s net worth was tied up in the home, whose mortgage had been paid off, he says. The couple was expecting a significant payout of deferred compensation, which is taxable as income. He suggested setting up a charitable life estate to offset that burden, leaving them more money for spending. A charity would own the property after their deaths, but the couple would receive a $900,000 tax deduction, which could put as much as $315,000 in their pockets over five years, he says.
Generally, people can deduct up to 30% of their adjusted gross income for this type of gift, so a deduction this large is best planned for a year in which there is a major taxable event, he says.
The couple has no children, but those who do and want to leave something behind may have to weigh other options, such as selling or living on less cash.
Appeal Your Taxes
Property taxes are becoming more burdensome for many vacation homeowners, particularly as more municipalities try to make up for budget shortfalls by raising taxes.
James Rubino, a tax attorney in Stamford, Conn., says property-tax appeals are now more common. Many homeowners whose properties were reassessed when the real-estate market peaked are stuck with high values for tax purposes, even though prices have since declined. “People aren’t very happy about that,” he says.
To get a reduction, homeowners must argue the valuation is wrong, either because an appraiser compared the home with properties that weren’t equivalent, or made a mistake, such as miscalculating square footage, says Mr. Rubino.
David Carmichael, a property tax lawyer in Eugene, Ore., says he is helping a friend appeal taxes on land in Bend, Ore., a city near the Cascade Mountains. The property cost $100,000 in April, but the tax assessor recognizes $310,000 as its real market value, says Mr. Carmichael. He plans to use that discrepancy to argue a tax appeal.
Property taxes in Oregon, he says, are based on either assessed or real market value, whichever is lower. He is hoping the assessor will reduce the property’s real market value, for tax purposes, to $100,000, which would be less than half the 2008 assessment of $239,270. The owner’s property taxes could decline by more than $2,000 annually if the appeal is successful, he says.
Homeowners need to weigh, however, if the savings will outweigh legal costs. Some attorneys will work on a contingency basis, typically charging one-third of the taxes a homeowner saves if the appeal is successful. Others may charge between $200 and $300 per hour, regardless of who wins.
Share the Load
Some owners run vacation homes like businesses. Finding a partner to purchase an interest in the home and contribute to overhead expenses could relieve some of the burden.
The best partner isn’t necessarily a friend or relative, but someone who will adhere to a written agreement that outlines responsibilities, income and a schedule for personal use, says Andy Chapman, president of Halo Business Advisors in Clinton, Miss. “Make sure you get either your share of the income or time,” he says. These types of investment properties typically operate through a legal structure, such as a limited liability corporation or general partnership. A lawyer or accountant can determine the most appropriate option for minimizing taxes and liability.
Many families set up family limited partnerships or family limited liability companies to reduce a property’s value for estate-planning purposes. Giving relatives an immediate ownership interest in a property, instead of making them wait until the owner dies, may inspire them to contribute to the home’s upkeep. “It doesn’t need to be looked at only as an estate-planning tool but as a way of sharing wealth and also the burdens,” says Mr. Kay, the financial planner in Livingston, N.J.
Typically, the home’s owners set up a general partnership or company and then give shares to family members. They’re often difficult for recipients to sell or convey, making the property less valuable, which can help minimize estate taxes. Mr. Kay warns, however, to follow IRS guidelines about discounting the property’s value in a fair and reasonable manner. The IRS has scrutinized what he calls “ridiculous” discounts. “They have problems when people get greedy,” he says.
--Ms. Barlyn is a Dow Jones Newswires staff reporter in Jersey City, N.J. She can be reached at suzanne.barlyn@dowjones.com.
Corrections & Amplifications:
Homeowners can’t take a federal tax deduction for donating use of a vacation home to a charity. This article incorrectly reports that such donations were deductible.
Tips for Selling Your Home to a First-Time Buyer- Wall Street Journal
Tips for Selling Your Home to a First-Time Buyer
http://online.wsj.com/article/SB124510978756816993.html
By AMY HOAK
A federal tax credit of up to $8,000 is nudging many Americans into buying a home for the first time -- good news for those trying to sell one.
Still, selling a home isn't easy in most markets today. To get the typical first-time buyer to bite and submit an offer, a house has to stand apart from the competition -- and there's a lot of it, including foreclosure homes that are selling at hefty discounts.
One big thing working in favor of the traditional seller: A lived-in, maintained home is easier for buyers to imagine themselves living in than a vacant foreclosure. That has great appeal for someone buying a home for the first time, for practical and financial reasons.
"First-time buyers are skeptical of buying homes that need improvement. Sellers certainly don't need to remodel the kitchen, but they want to make sure that their home showcases very well," said Eric Mangan, a spokesman for ForSaleByOwner.com.
In fact, while nearly half of brokers polled for a Coldwell Banker survey last year found that affordability was the No. 1 concern for first-time buyers, 81% said move-in conditions were very important to these buyers. Only 7% said first-time buyers were looking to purchase fixer-upper homes that they could buy on the cheap and renovate.
Those feelings are likely just as strong today as lenders generally require larger down payments, unless the mortgage is backed by the Federal Housing Administration. Higher down payments means buyers have less cash left over for improvements, said Leslee MacKenzie, of Coldwell Banker Hickok & Boardman Realty in Burlington, Vt.
"They're doing what they can to save for the down payment," she said, and that will deplete some of the funds a home buyer would have for repairs. "They're concerned about out-of-pocket expenses upon taking ownership."
While foreclosures that are in severe disrepair can be a huge turnoff for a first-time buyer, some banks will make improvements to their foreclosure stock, fixing them up so that they meet FHA standards and a buyer's needs, said Chuck Whitehead, of Coldwell Banker Associated Brokers in Southern California. These homes can be stiff competition for the rest of the for-sale inventory.
Never fear; there are still ways to outshine other homes on the market. Assuming you've priced the home correctly, here are five ways to lure a first-time buyer:
1. Maintain and stage.
A home that has been taken care of throughout the years will offer a stark contrast to a vacant, empty foreclosure. "If someone is living there, the landscaping is not dead," Mr. Whitehead said. "There is warmth in the home," and that can go a long way in selling a property. "It's all about the emotion, of having the ability to see what they can have."
As with any home, a fresh coat of paint, decluttering and the removal of unpleasant odors can go a long way to making a good first impression. But be careful not to over-improve the home, because the investment might not be worth the cost.
2. Mention that you'll help pay closing costs.
Whether it's in the marketing material or in the listing, this could be an extra motivator to reel in a buyer. Generally, there's a good chance they'll ask for closing cost help anyway, but it might pay off to be proactive and offer it at the beginning, said Heather Joubran, a real-estate agent with Re/Max Central Realty in Lake Mary, Fla.
If rising mortgage rates have your buyer spooked, consider paying mortgage points to bring the rate down, Mr. Mangan said. But consider a buyer's timeline for staying in the home before deciding if this is the most effective way to help; paying points generally makes sense for those staying in a home for more than a few years.
3. Offer a home warranty.
First-time buyers are often coming from a rental, and they are used to calling a landlord when there's a problem. To help them more easily transition into homeownership, provide them a warranty that covers major systems when problems arise, Ms. Joubran said.
4. Offer a buyer mortgage protection.
In some cases, it might make sense to address buyers' fears by purchasing insurance so they can keep up with their mortgage even if after losing a job. Coldwell Banker has such a program through its parent company, Realogy.
Basically, the plan will make several months of mortgage payments in the event that the buyer becomes unemployed. "There are people with secure jobs who are still nervous. This can give them just a little more comfort," Ms. MacKenzie said.
5. Don't snub low offers
Buyers know prices have fallen, so they're being aggressive in their offers -- sometimes extremely aggressive. But even if they come in with a shocking lowball offer, don't scoff at it.
"My rule of thumb is every offer deserves a counteroffer," Ms. Joubran said. "At least counter them back. It gets the conversation going."
Write to Amy Hoak at amy.hoak@dowjones.com Printed in The Wall Street Journal, page D10
http://online.wsj.com/article/SB124510978756816993.html
By AMY HOAK
A federal tax credit of up to $8,000 is nudging many Americans into buying a home for the first time -- good news for those trying to sell one.
Still, selling a home isn't easy in most markets today. To get the typical first-time buyer to bite and submit an offer, a house has to stand apart from the competition -- and there's a lot of it, including foreclosure homes that are selling at hefty discounts.
One big thing working in favor of the traditional seller: A lived-in, maintained home is easier for buyers to imagine themselves living in than a vacant foreclosure. That has great appeal for someone buying a home for the first time, for practical and financial reasons.
"First-time buyers are skeptical of buying homes that need improvement. Sellers certainly don't need to remodel the kitchen, but they want to make sure that their home showcases very well," said Eric Mangan, a spokesman for ForSaleByOwner.com.
In fact, while nearly half of brokers polled for a Coldwell Banker survey last year found that affordability was the No. 1 concern for first-time buyers, 81% said move-in conditions were very important to these buyers. Only 7% said first-time buyers were looking to purchase fixer-upper homes that they could buy on the cheap and renovate.
Those feelings are likely just as strong today as lenders generally require larger down payments, unless the mortgage is backed by the Federal Housing Administration. Higher down payments means buyers have less cash left over for improvements, said Leslee MacKenzie, of Coldwell Banker Hickok & Boardman Realty in Burlington, Vt.
"They're doing what they can to save for the down payment," she said, and that will deplete some of the funds a home buyer would have for repairs. "They're concerned about out-of-pocket expenses upon taking ownership."
While foreclosures that are in severe disrepair can be a huge turnoff for a first-time buyer, some banks will make improvements to their foreclosure stock, fixing them up so that they meet FHA standards and a buyer's needs, said Chuck Whitehead, of Coldwell Banker Associated Brokers in Southern California. These homes can be stiff competition for the rest of the for-sale inventory.
Never fear; there are still ways to outshine other homes on the market. Assuming you've priced the home correctly, here are five ways to lure a first-time buyer:
1. Maintain and stage.
A home that has been taken care of throughout the years will offer a stark contrast to a vacant, empty foreclosure. "If someone is living there, the landscaping is not dead," Mr. Whitehead said. "There is warmth in the home," and that can go a long way in selling a property. "It's all about the emotion, of having the ability to see what they can have."
As with any home, a fresh coat of paint, decluttering and the removal of unpleasant odors can go a long way to making a good first impression. But be careful not to over-improve the home, because the investment might not be worth the cost.
2. Mention that you'll help pay closing costs.
Whether it's in the marketing material or in the listing, this could be an extra motivator to reel in a buyer. Generally, there's a good chance they'll ask for closing cost help anyway, but it might pay off to be proactive and offer it at the beginning, said Heather Joubran, a real-estate agent with Re/Max Central Realty in Lake Mary, Fla.
If rising mortgage rates have your buyer spooked, consider paying mortgage points to bring the rate down, Mr. Mangan said. But consider a buyer's timeline for staying in the home before deciding if this is the most effective way to help; paying points generally makes sense for those staying in a home for more than a few years.
3. Offer a home warranty.
First-time buyers are often coming from a rental, and they are used to calling a landlord when there's a problem. To help them more easily transition into homeownership, provide them a warranty that covers major systems when problems arise, Ms. Joubran said.
4. Offer a buyer mortgage protection.
In some cases, it might make sense to address buyers' fears by purchasing insurance so they can keep up with their mortgage even if after losing a job. Coldwell Banker has such a program through its parent company, Realogy.
Basically, the plan will make several months of mortgage payments in the event that the buyer becomes unemployed. "There are people with secure jobs who are still nervous. This can give them just a little more comfort," Ms. MacKenzie said.
5. Don't snub low offers
Buyers know prices have fallen, so they're being aggressive in their offers -- sometimes extremely aggressive. But even if they come in with a shocking lowball offer, don't scoff at it.
"My rule of thumb is every offer deserves a counteroffer," Ms. Joubran said. "At least counter them back. It gets the conversation going."
Write to Amy Hoak at amy.hoak@dowjones.com Printed in The Wall Street Journal, page D10
National Housing Inventory Article- Wall Street Journal
Housing Inventory Drops Again in May
http://online.wsj.com/article/SB124459071397099951.html
By JAMES R. HAGERTY
The number of homes listed for sale declined again in many U.S. cities last month, though supplies are generally plentiful.
Inventory Falls, Supply Still Ample
See housing inventory data, by metropolitan area.
The supply of homes available for sale in 28 major metropolitan areas at the end of May was down 3.9% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates.
On a national basis over the past 25 years, inventories typically have shown little change in May from April levels, according to Zelman & Associates, a research firm.
Compared with the year-earlier month, the May inventory in the 28 metro areas was down 24%. The National Association of Realtors says about four million homes were listed for sale nationwide at the end of April. That was down about 11% from a year earlier.
The exact level of supply remains unclear because the figures from the Realtors and Zip do not include all of the foreclosed homes that banks are preparing to sell. According to some industry estimates, as many as half of those homes are not included on multiple-listing services at any given time. Some foreclosed homes are not listed because they are being offered as rentals; others are awaiting repairs or are subject to litigation or other delays.
Despite those uncertainties, Thomas Lawler, a housing economist in Leesburg, Va., says the recent decline in inventories and the slow pace of home construction "indicate that home prices in many parts of the country could be nearing a bottom." Integrated Asset Services LLC, Denver, reported Tuesday that its national house price index in April was unchanged from a month earlier and down 13% from April 2008. A recent uptick in mortgage interest rates is likely to deter some potential buyers.
The Zip data do not include New York City. But Miller Samuel Inc., an appraisal firm, reports there were 9,551 cooperative apartments and condominiums on the market in Manhattan at the end of May. That was down 8% from a month earlier but up 9% from May 2008.
Write to James R. Hagerty at bob.hagerty@wsj.com Printed in The Wall Street Journal, page D6
http://online.wsj.com/article/SB124459071397099951.html
By JAMES R. HAGERTY
The number of homes listed for sale declined again in many U.S. cities last month, though supplies are generally plentiful.
Inventory Falls, Supply Still Ample
See housing inventory data, by metropolitan area.
The supply of homes available for sale in 28 major metropolitan areas at the end of May was down 3.9% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates.
On a national basis over the past 25 years, inventories typically have shown little change in May from April levels, according to Zelman & Associates, a research firm.
Compared with the year-earlier month, the May inventory in the 28 metro areas was down 24%. The National Association of Realtors says about four million homes were listed for sale nationwide at the end of April. That was down about 11% from a year earlier.
The exact level of supply remains unclear because the figures from the Realtors and Zip do not include all of the foreclosed homes that banks are preparing to sell. According to some industry estimates, as many as half of those homes are not included on multiple-listing services at any given time. Some foreclosed homes are not listed because they are being offered as rentals; others are awaiting repairs or are subject to litigation or other delays.
Despite those uncertainties, Thomas Lawler, a housing economist in Leesburg, Va., says the recent decline in inventories and the slow pace of home construction "indicate that home prices in many parts of the country could be nearing a bottom." Integrated Asset Services LLC, Denver, reported Tuesday that its national house price index in April was unchanged from a month earlier and down 13% from April 2008. A recent uptick in mortgage interest rates is likely to deter some potential buyers.
The Zip data do not include New York City. But Miller Samuel Inc., an appraisal firm, reports there were 9,551 cooperative apartments and condominiums on the market in Manhattan at the end of May. That was down 8% from a month earlier but up 9% from May 2008.
Write to James R. Hagerty at bob.hagerty@wsj.com Printed in The Wall Street Journal, page D6
Article on Sonoma County's Real Estate Market
Is Sonoma County's real estate market stabilizing?
http://www.pressdemocrat.com/article/20090615/BUSINESS/906159891
By MICHAEL COIT THE PRESS DEMOCRAT
Published: Monday, June 15, 2009 at 7:22 p.m. Last Modified: Monday, June 15, 2009 at 7:22 p.m.
Home sales remained strong in May and supplies continued to shrink, signs that Sonoma County’s housing market could be starting to stabilize, according to a new report.
But a new wave of foreclosures is looming on the horizon and one analyst warned that prices are not expected to hit bottom until the end of the year, at the earliest.
The region’s 412 homes sold in May was the highest for the month in four years, according to The Press Democrat real estate report prepared by Rick Laws with Coldwell Banker in Santa Rosa.
Buyers continued to nibble away at the backlog of unsold homes. There was a 3 1/2-month supply of homes on the market at the end of May, based on the pace of sales. Three to four months is widely considered a balanced market putting buyers and sellers on equal footing.
Competition is strongest for lower-priced homes, primarily properties seized by banks through foreclosure or unloaded by sellers before they lose them to lenders. Nearly two-thirds of all sales were properties priced under $400,000.
“Buyers are clamoring for them. As soon as a home comes on the market, we’re on it,” said Beth Robertson, a broker with Century 21 Classic Properties, in Rohnert Park.
Because buying is concentrated in lower price ranges, the county’s median price fell to $350,000 in May. The median — the point where half the homes sell for less and half sell for more — was down 17 percent from a year ago, but the rate of decline slowed to its lowest level since the beginning of 2008.
“People know that properties are priced to buy. They’re afraid of missing out,” said Kris Anderson, a broker with Allstate Mortgage Company, in Santa Rosa.
Buyers also have been motivated by mortgage interest rates that have risen the past several weeks, but remain near historic lows. The monthly loan payment for a $350,000 home purchased with a 10 percent down payment and a 30-year loan is $1,789 today, down from $1,940 a year ago, Anderson said.
“They sense that now is the time to buy, especially since rates have gone up here of late,” she said.
Sales also picked up some at higher prices, with 25 percent of purchases above $500,000 compared with 15 percent a month earlier.
As a result, the median increased 11.1 percent from April, when it stood at $315,000.
Still, the market is dominated by foreclosure homes and short sales, where owners owe more than the price they hope to get.
While buyers are snapping up distressed homes, the supply could swell again if banks put more on the market, said Chris Smith, a CPS agent in Santa Rosa who sells foreclosed homes.
“The fact that the banks held foreclosures off the market from the foreclosure agents dried up the supply,” he said.
Some banks held off selling foreclosed homes this spring after President Obama launched an effort pushing lenders to help owners stay in homes, Smith said. Banks also didn’t want to help drive prices lower by flooding the market, he said.
After receiving a handful of foreclosure listings the past two months, Smith received six in the past week.
“I think we’ve got another wave of foreclosures that is about the same size as the first wave that we had,” Smith said.
Foreclosure and short sale homes flooded the market more than a year ago following a mortgage meltdown largely centered in loans made to homeowners with spotty credit.
Today, fewer homeowners in the county are going into foreclosure. Banks foreclosed on 1 percent of existing mortgages in April, down from 1.41 percent a year ago, according to First American CoreLogic, a real estate research company.
But foreclosures could pick back up as more homeowners fall behind on their mortgages. In April, 3.78 percent of all mortgages in Sonoma County were at least 90 days past due, up from 3.66 percent a year ago, according to First American.
A rise in troubled loans could keep housing mired in a downturn into next year, said Eduardo Martinez, a senior economist for Moody’s Economy.com who tracks Sonoma County and other California regions.
“The pipeline of delinquencies has been increasing. That has made the pie of potential foreclosures bigger,” he said. “It’s still pretty bleak.”
A larger supply of distressed homes would be good news for buyers seeking more affordable homes. But those properties depress property values — the median price is down 43 percent from the peak four years ago — and remain a drag on any recovery in the housing market.
Sonoma County home prices could hit bottom by the end of this year, at the earliest, if an economic recovery takes hold later this year, Martinez said.
“The big question is if unemployment continues to increase. If we start seeing a recovery picking up steam by the beginning of the fourth quarter, the foreclosures will at least slow down and unemployment will slow down and that will help the financial position of a lot of people,” he said. “We’re still a quarter or two away before we give the all clear signal.”
http://www.pressdemocrat.com/article/20090615/BUSINESS/906159891
By MICHAEL COIT THE PRESS DEMOCRAT
Published: Monday, June 15, 2009 at 7:22 p.m. Last Modified: Monday, June 15, 2009 at 7:22 p.m.
Home sales remained strong in May and supplies continued to shrink, signs that Sonoma County’s housing market could be starting to stabilize, according to a new report.
But a new wave of foreclosures is looming on the horizon and one analyst warned that prices are not expected to hit bottom until the end of the year, at the earliest.
The region’s 412 homes sold in May was the highest for the month in four years, according to The Press Democrat real estate report prepared by Rick Laws with Coldwell Banker in Santa Rosa.
Buyers continued to nibble away at the backlog of unsold homes. There was a 3 1/2-month supply of homes on the market at the end of May, based on the pace of sales. Three to four months is widely considered a balanced market putting buyers and sellers on equal footing.
Competition is strongest for lower-priced homes, primarily properties seized by banks through foreclosure or unloaded by sellers before they lose them to lenders. Nearly two-thirds of all sales were properties priced under $400,000.
“Buyers are clamoring for them. As soon as a home comes on the market, we’re on it,” said Beth Robertson, a broker with Century 21 Classic Properties, in Rohnert Park.
Because buying is concentrated in lower price ranges, the county’s median price fell to $350,000 in May. The median — the point where half the homes sell for less and half sell for more — was down 17 percent from a year ago, but the rate of decline slowed to its lowest level since the beginning of 2008.
“People know that properties are priced to buy. They’re afraid of missing out,” said Kris Anderson, a broker with Allstate Mortgage Company, in Santa Rosa.
Buyers also have been motivated by mortgage interest rates that have risen the past several weeks, but remain near historic lows. The monthly loan payment for a $350,000 home purchased with a 10 percent down payment and a 30-year loan is $1,789 today, down from $1,940 a year ago, Anderson said.
“They sense that now is the time to buy, especially since rates have gone up here of late,” she said.
Sales also picked up some at higher prices, with 25 percent of purchases above $500,000 compared with 15 percent a month earlier.
As a result, the median increased 11.1 percent from April, when it stood at $315,000.
Still, the market is dominated by foreclosure homes and short sales, where owners owe more than the price they hope to get.
While buyers are snapping up distressed homes, the supply could swell again if banks put more on the market, said Chris Smith, a CPS agent in Santa Rosa who sells foreclosed homes.
“The fact that the banks held foreclosures off the market from the foreclosure agents dried up the supply,” he said.
Some banks held off selling foreclosed homes this spring after President Obama launched an effort pushing lenders to help owners stay in homes, Smith said. Banks also didn’t want to help drive prices lower by flooding the market, he said.
After receiving a handful of foreclosure listings the past two months, Smith received six in the past week.
“I think we’ve got another wave of foreclosures that is about the same size as the first wave that we had,” Smith said.
Foreclosure and short sale homes flooded the market more than a year ago following a mortgage meltdown largely centered in loans made to homeowners with spotty credit.
Today, fewer homeowners in the county are going into foreclosure. Banks foreclosed on 1 percent of existing mortgages in April, down from 1.41 percent a year ago, according to First American CoreLogic, a real estate research company.
But foreclosures could pick back up as more homeowners fall behind on their mortgages. In April, 3.78 percent of all mortgages in Sonoma County were at least 90 days past due, up from 3.66 percent a year ago, according to First American.
A rise in troubled loans could keep housing mired in a downturn into next year, said Eduardo Martinez, a senior economist for Moody’s Economy.com who tracks Sonoma County and other California regions.
“The pipeline of delinquencies has been increasing. That has made the pie of potential foreclosures bigger,” he said. “It’s still pretty bleak.”
A larger supply of distressed homes would be good news for buyers seeking more affordable homes. But those properties depress property values — the median price is down 43 percent from the peak four years ago — and remain a drag on any recovery in the housing market.
Sonoma County home prices could hit bottom by the end of this year, at the earliest, if an economic recovery takes hold later this year, Martinez said.
“The big question is if unemployment continues to increase. If we start seeing a recovery picking up steam by the beginning of the fourth quarter, the foreclosures will at least slow down and unemployment will slow down and that will help the financial position of a lot of people,” he said. “We’re still a quarter or two away before we give the all clear signal.”
Mortgage Article from NY Times
Mortgages
Beware of Neighbor’s Home Foreclosure
By BOB TEDESCHI
Published: June 14, 2009
A report from the Center for Responsible Lending says that homeowners who are concerned about their home’s value should watch for signs of trouble among their neighbors.
http://www.nytimes.com/2009/06/14/realestate/mortgages/14mort.html
Beware of Neighbor’s Home Foreclosure
By BOB TEDESCHI
Published: June 14, 2009
A report from the Center for Responsible Lending says that homeowners who are concerned about their home’s value should watch for signs of trouble among their neighbors.
http://www.nytimes.com/2009/06/14/realestate/mortgages/14mort.html
Wednesday, May 13, 2009
Real Estate Article from Press Democrat
Home sales jump in April
By MICHAEL COIT
THE PRESS DEMOCRAT
Published: Monday, May 11, 2009 at 4:07 p.m. Last Modified: Monday, May 11, 2009 at 7:26 p.m.
A spring surge in Sonoma County home sales picked up strength in April, as sellers in financial distress and banks unloaded houses at low prices.
The good news for buyers was more bad news for home values. The median sales price fell to $315,000 — nearly 28 percent below a year ago. Prices are hovering near an eight-year low, meaning the housing downturn has wiped away much of the gains from the boom that pushed the median to a record $619,000 in 2005.
But sales are rising, climbing for the 13th straight month. Buyers purchased 432 houses in April, up more than 26 percent from a year ago and well above the typical volume for the month, according to the monthly Press Democrat home sales report prepared by Rick Laws with Coldwell Banker.
The outlook is for continued strong sales over summer, said Debby Benson-Miller, a Prudential California Realty agent in Rohnert Park. As prices drop, more Sonoma County residents can afford to buy a home.
“We are finally at a place where people who couldn’t afford homes can. We’ve got plenty of buyers out there looking for stuff right now,” Benson-Miller said. “Most properties have been priced to sell. We’re seeing a lot of multiple offers on properties.”
The sales activity is cutting into the supply of homes for sale, a sign the housing market is beginning to tighten. There was nearly a four-month supply of homes for sale in the county at the end of April, based on the current pace of sales, down from a nearly seven-month supply a year ago.
A three- to four-month supply of homes is widely considered a “balanced” market where buyers and sellers are on equal footing.
But looming large is another glut of properties expected to hit the market this summer and later this year. A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process.
“More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,” said CJ Holmes, a real estate broker in Santa Rosa.
Foreclosed homes began flooding Sonoma County’s housing market about two years ago as more homeowners faced difficulty refinancing loans or selling homes. But sales remained sluggish until banks started slashing prices.
Distressed properties continue to dominate the market. Two of every three homes purchased in April were sold by banks or homeowners avoiding foreclosure.
Nearly half of all homes sold in April were priced at less than $300,000. The tilt toward less expensive homes dragged down the median to $315,000. The median — the price at which half the homes sold for more and half for less — dipped 1.6 percent from March.
Buyers seeking their first home and investors adding to rental property holdings are jumping at the best deals and sometimes bidding up prices. Buyers swamped a recent open house for a 1,400-square-foot, three-bedroom home in a desirable northeast Santa Rosa neighborhood that was listed for $262,000 — about half what it was worth when prices were peaking about four years ago.
“We’re still getting offers on stuff that’s in poor shape and on the busiest streets. That tells you there’s not a lot of inventory to choose from,” Benson-Miller said.
But a new wave of foreclosures is building. More county homeowners are falling behind on their mortgages, and some could lose homes to banks while others sell to avoid foreclosure. The latest data indicates 4.7 percent of mortgages in the county were 90 days or more late in March, up from 3.5 percent a year earlier, according to First American CoreLogic, a real estate research company.
Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported.
A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said.
“If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,” she said.
Despite the surge in sales, new listings are outnumbering purchases. Sellers put 587 houses on the market in April, well above the 432 sales.
Some new listings were homes previously reported as sold, but the deals never closed. These typically involve sellers seeking a price below what is owed on the mortgage. Banks can take several months to review such short sales and may not agree to the price. Buyers may become frustrated or find a better deal and back out of the sale.
“So no matter what we sell, we’re still getting a bunch of new listings,” Holmes said.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
By MICHAEL COIT
THE PRESS DEMOCRAT
Published: Monday, May 11, 2009 at 4:07 p.m. Last Modified: Monday, May 11, 2009 at 7:26 p.m.
A spring surge in Sonoma County home sales picked up strength in April, as sellers in financial distress and banks unloaded houses at low prices.
The good news for buyers was more bad news for home values. The median sales price fell to $315,000 — nearly 28 percent below a year ago. Prices are hovering near an eight-year low, meaning the housing downturn has wiped away much of the gains from the boom that pushed the median to a record $619,000 in 2005.
But sales are rising, climbing for the 13th straight month. Buyers purchased 432 houses in April, up more than 26 percent from a year ago and well above the typical volume for the month, according to the monthly Press Democrat home sales report prepared by Rick Laws with Coldwell Banker.
The outlook is for continued strong sales over summer, said Debby Benson-Miller, a Prudential California Realty agent in Rohnert Park. As prices drop, more Sonoma County residents can afford to buy a home.
“We are finally at a place where people who couldn’t afford homes can. We’ve got plenty of buyers out there looking for stuff right now,” Benson-Miller said. “Most properties have been priced to sell. We’re seeing a lot of multiple offers on properties.”
The sales activity is cutting into the supply of homes for sale, a sign the housing market is beginning to tighten. There was nearly a four-month supply of homes for sale in the county at the end of April, based on the current pace of sales, down from a nearly seven-month supply a year ago.
A three- to four-month supply of homes is widely considered a “balanced” market where buyers and sellers are on equal footing.
But looming large is another glut of properties expected to hit the market this summer and later this year. A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process.
“More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,” said CJ Holmes, a real estate broker in Santa Rosa.
Foreclosed homes began flooding Sonoma County’s housing market about two years ago as more homeowners faced difficulty refinancing loans or selling homes. But sales remained sluggish until banks started slashing prices.
Distressed properties continue to dominate the market. Two of every three homes purchased in April were sold by banks or homeowners avoiding foreclosure.
Nearly half of all homes sold in April were priced at less than $300,000. The tilt toward less expensive homes dragged down the median to $315,000. The median — the price at which half the homes sold for more and half for less — dipped 1.6 percent from March.
Buyers seeking their first home and investors adding to rental property holdings are jumping at the best deals and sometimes bidding up prices. Buyers swamped a recent open house for a 1,400-square-foot, three-bedroom home in a desirable northeast Santa Rosa neighborhood that was listed for $262,000 — about half what it was worth when prices were peaking about four years ago.
“We’re still getting offers on stuff that’s in poor shape and on the busiest streets. That tells you there’s not a lot of inventory to choose from,” Benson-Miller said.
But a new wave of foreclosures is building. More county homeowners are falling behind on their mortgages, and some could lose homes to banks while others sell to avoid foreclosure. The latest data indicates 4.7 percent of mortgages in the county were 90 days or more late in March, up from 3.5 percent a year earlier, according to First American CoreLogic, a real estate research company.
Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported.
A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said.
“If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,” she said.
Despite the surge in sales, new listings are outnumbering purchases. Sellers put 587 houses on the market in April, well above the 432 sales.
Some new listings were homes previously reported as sold, but the deals never closed. These typically involve sellers seeking a price below what is owed on the mortgage. Banks can take several months to review such short sales and may not agree to the price. Buyers may become frustrated or find a better deal and back out of the sale.
“So no matter what we sell, we’re still getting a bunch of new listings,” Holmes said.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Subscribe to:
Posts (Atom)
